Council of the Law Society of the Australian Capital Territory v Legal Practitioner 202111 (Kai Zhang) (Occupational Regulation)
[2024] ACAT 66
•9 January 2023
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
COUNCIL OF THE LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY v LEGAL PRACTITIONER 202111 (Kai Zhang) (Occupational Regulation) [2024] ACAT 66
OR 11/2021
Catchwords: OCCUPATIONAL REGULATION – legal practitioner – amendment of commercial documents without notifying lessor’s lawyers – failure to be frank with the Law Society in response to a complaint – non-compliance with a solicitor’s obligation under rules 4.1.2 4.1.3, 4.1.4, 5.1.1 and 5.1.2 of the Legal Profession (Solicitors) Conduct Rules 2015 – professional misconduct
Legislation cited: Legal Profession Act 2006 ss 386, 387, 425, 585
Subordinate
Legislation cited: Legal Profession (Solicitors) Conduct Rules 2015 rr 4.1.2, 4.1.3, 4.1.4, 5.1.1, 5.1.2, 43
Cases cited:ACT Law Society and the Legal Practitioner (Duncan Phillips) [2010] ACAT 67
Council of the Law Society of the ACT v Legal Practitioner 201818 (Chandra Prasad) [2019] ACAT 12
Council of theLaw Society of the ACT v Bandarage [2019] ACTSCFC 1Council of the Law Society of the ACT v LP12 [2018] ACTCA 60
Council of the Law Society of the ACT v Legal Practitioner ‘P4’ (No 2) [2015] ACAT 35
Council of the Law Society of the ACT v Legal Practitioner RN (Rhondda Nicholas)[2016] ACAT 122New South Wales Bar Association v Cummins [2001] NSWCA 284
The Council of the New South Wales Bar Association v Sahade [2007] NSWCA 145
Tribunal:Senior Member M Brennan
Date of Orders: 9 January 2023
Date of Reasons for Decision: 9 January 2023
Date of Publication: 9 September 2024
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) OR 11/2021
BETWEEN:
COUNCIL OF THE LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY
Applicant
AND:
LEGAL PRACTITIONER 202111
Respondent
TRIBUNAL:Senior Member M Brennan
DATE:9 January 2023
ORDER
The Tribunal orders that:
1.Pursuant to subsection 425(1) of the Legal Profession Act 2006, the respondent is guilty of professional misconduct.
2.The matter will be listed for separate hearing on sanction and costs.
3.The applicant file and serve any evidence relevant to sanction by 6 February 2023.
4.The respondent file and serve any evidence relevant to sanction by 1 March 2023.
5.The applicant file and serve any submissions on sanction and costs by 15 March 2023.
6.The respondent file and serve any submissions on sanction and costs by 29 March 2023.
7.The matter will be listed for a one day hearing as to sanction and costs.
……………Signed…..…..
Senior Member M Brennan
REASONS FOR DECISION
Introduction
In the reasons below, a reference to ‘ACAT’ or ‘tribunal’ refers to the ACT Civil and Administrative Tribunal generally, whereas ‘Tribunal’ refers to the member who heard the application.[1]
[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.
This case examines the actions of LP 202111 (the practitioner) in amending the directors’ and guarantors’ details of a corporate tenant on a commercial sublease without advising the lessor’s solicitors, Bradley Allen Love Lawyers (BAL). This was contrary to the latter’s written request. The change had significant implications for the lessor beyond the identity of the directors and guarantors. It resulted in a guarantee in the sublease becoming difficult to enforce due to it being provided by two individuals living in Hong Kong. The case also concerns the practitioner’s responses to the applicant (the Council) following BAL lodging a complaint.
After considering and investigating the complaint, the Council filed an application asking the tribunal to make orders after examining two charges against the practitioner. The first charge covers the practitioner’s alleged: failure to be honest in the course of legal practice; failure to deliver legal services competently; failure to avoid a compromise to his integrity; and/or engaging in conduct which is likely to be prejudicial to or diminish public confidence in the administration of justice and/or bring the profession into disrepute.
In the second charge, the Council alleges that the practitioner intentionally or alternatively recklessly, failed to submit an accurate account of his conduct. As such, he failed to be open and frank with the Law Society of the ACT (Law Society).
This decision examines both charges and considers whether the Council has established that the practitioner’s actions constitute unsatisfactory professional conduct or alternatively, professional misconduct. There will be a further hearing on the protective orders or sanctions to follow the Tribunal’s finding on the characterisation of the practitioner’s conduct and on costs.
Background
The practitioner was admitted as a legal practitioner in the Supreme Court of the Australian Capital Territory in February 2013. He has had an unrestricted practising certificate since July 2015.
On or about 26 May 2017, Ms Vivian Chu signed a Heads of Agreement to sublease premises at 40 Marcus Clarke Street (the premises) on behalf of B & B Investments (Aust) Pty Ltd (the tenant). Prior to this occurring, the lessor’s property agents conducted background checks of the two directors, Ms Chu and Mr Yat Shum. BAL also obtained an ASIC Company Search which detailed that Ms Chu and Mr Shum were the directors of the tenant and were also shareholders with Ms Suk Yee and Mr Man Woo, both of whom resided in Hong Kong.
Ms Chum retained the practitioner in late May 2017 in relation to the tenancy agreement.
On 5 June 2017, the lessor’s lawyers wrote to the practitioner enclosing a number of documents in PDF including the sublease (lease documentation). The covering letter to the documents included the following sentence after the heading: “Amendments to the Documents – we request you do not make any amendments to the documents before discussing same with our office.”
Ms Chu and Mr Shu were named in six sections of the lease documentation, including as the approved guarantors.
After initially meeting on 5 June 2017, the practitioner exchanged numerous text and voice messages with Ms Chu using an application known as WeChat. The messages were written in Chinese and English. These exchanges included discussions about the guarantees the lessor required the directors provide under the sublease. The practitioner detailed how Ms Chu could avoid being responsible for the tenant’s obligations pursuant to the sublease if Mr Woo and Ms Yee were the directors.[2]
[2] Exhibit R2 at [31]
The practitioner electronically changed the names of the directors and guarantors in the lease documentation, so Mr Woo and Ms Yee replaced Ms Chu and Mr Shum. The former two directors’ address was described as being in Crace, ACT.
On 22 June 2017, the practitioner received written confirmation that the directors of the tenant were changed to Mr Woo and Ms Yee when he received a company search from Ms Chu’s accountant.
Later the same day, the practitioner corresponded with an Australian solicitor, Mr Charles Tak Leung Wong, practising in Hong Kong and provided him with the lease documentation for the purposes of witnessing Mr Woo and Ms Yee’s execution of the same. This occurred. In witnessing their signatures, Mr Wong’s address was stated as being in the Sydney CBD.
On 7 July 2017, the practitioner emailed the lessor’s lawyers advising that the lease documentation would be delivered to their reception. He added, “the only change to the list of documents is the cheque for registration which is $140.”
Approximately seven weeks later, the practitioner and Ms Chu exchanged WeChat messages discussing a car park licence linked to the tenancy. Ms Chu asked the practitioner about amending the licence. His advice included that he would not ask the lessor to amend the licence as this would draw attention to the fact that the sublease had been amended without the lessor’s consent.
On 6 September 2017, the practitioner returned the car park licence to the lessor’s lawyers. The front and second pages of the document were amended by hand. The signatories to the car park licence were digitally amended. Again, Ms Chu and Mr Shum’s names were replaced with Ms Yee and Mr Woo’s.
The sublease commenced on 12 October 2017. On the same day, Ms Chu was reappointed as a director of the tenant.
The tenant defaulted in rental payments in approximately December 2018 resulting in the lessor terminating the sublease on 17 February 2019. The lessor commenced damages proceedings in the ACT Magistrates Court (the Magistrates Court proceedings) in December 2019 against Ms Yee and Mr Woo.
The lessor’s lawyers wrote to the practitioner on 27 February 2020 seeking an explanation for the change in directors in the lease documentation. The practitioner’s response on 22 April 2020 included:
…it would be acceptable to assume that your office has vetted all the return documents, which carried both electronic and hand amendments, before granting access to our client. We draw your attention to the fact that proper due diligence, including but not limited to ASIC search needs to be carried out to safeguard clients’ interest. Execution and registration should not be a mare [sic] rubber stamping process where any returned documents will be accepted even if the other side might not have proactively drawn your attention to the change. Due diligence is particularly important where personal guarantees are sought from the tenants.
On 16 June 2020, the practitioner was advised BAL made a complaint made to the Law Society. In providing his response to the complaint, the practitioner advised that he was uncertain that the lease documentation had been edited in June 2017. He added that he had a soft copy of the amended documents, but he was unable to ascertain how or when he had received them or whether they had been edited internally. He advised that he did not recall amending them himself and doubted that he had due to having a practise of delegating such tasks to administrative staff. He added that at that time he was in Melbourne with criminal trials.
The practitioner’s response additionally included that he regretted that he did not explicitly draw the change in directorship to the lessor’s lawyers when he became aware of the amendment and that he did not recall specifically turning his mind to any changes at the time.
Hearing
The hearing was conducted over three days on 11, 12 and 14 July 2022. The Council tendered two affidavits from Ms Chu and affidavits from a director of the lessor, the lessor’s agent, and the Professional Standards Manager of the Law Society. The Council also tendered WeChat messages between Ms Chu and the practitioner covering the period 17 February 2020 to 15 March 2020. Ms Chu and the lessor’s director were cross-examined by the practitioner’s counsel.
The practitioner tendered an affidavit affirmed on 14 June 2022 and WeChat messages dated 5 March 2020. He was cross-examined by the Council’s barrister.
Charges
The application pleads two charges against the practitioner. These charges refer to the Legal Profession (Solicitors) Conduct Rules 2015 (the Rules) and note the Rules impose binding obligations on practitioners pursuant to section 585 of the Legal Profession Act 2006 (the Act):
Charge 1: providing altered lease documents to BAL
The Respondent:
(a) Caused the lease documentation to be altered; and
(b) altered the car park license
and returned, or caused to return, the amended documents to BAL on or about 7 July 2017 and 6 September 2017 respectively, knowing that they had been amended, without bringing BAL’s attention to the amendments and in so doing so breached:
(c) Rule 4.1.2 by failing to be honest in the course of legal practice; and/or
(d) Rule 4.1.3 by failing to deliver legal services competently; and/or
(e) Rule 4.1.4 by failing to avoid a compromise to his integrity; and/or
(f) Rules 5.1.1 and/or 5.1.2 by engaging in conduct which is likely to a material degree to be prejudicial to, or diminish the public confidence in, the administration of justice and/or bring the profession into disrepute.
Charge 2: Responses to the Law Society
The respondent breached Rule 43.2 by internationally, or in the alternative, recklessly failing to submit an accurate account of his conduct in relation to the matter to the ACT Law Society when he made the following statements in his letter dated 13 July 2020:(a) “I am not sure that I didn’t know at the time that the main documents [including the sublease] … were signed (around 22 June 2017) that they had been edited”
in circumstances where he:
(i)instructed an employee of Maxwell and Co to amend the lease documentation;
(ii)emailed the amended lease documentation to Mr Wong on 20 June 2017 to be executed by Ms Yee and Mr Woo;
(iii)was aware that the lease documentation had been amended when he emailed the documents to Mr Wong on 22 June 2017; and
(iv)was aware of these facts when he made the statement to the ACT Law Society;
(b) “In relation to the main documents [including the sublease] I do not recall specifically turning my mind to any changes at the time. To the best of my recollection, at the time I simply returned the signed documents to BALL [sic] as I had received them, without actively considering whether I should or should not mention either change”
in circumstances where he:
(i)had turned his mind to the changes and had advised Ms Chu on or about 20 June 2017 in terms that “we would amend the documents and return them to the landlord representative for execution. If questions were asked about the changes to the documents once returned, then we will have to advise them accordingly; however, if the landlord representative would accept the amended documents, then the lease will progress with the new directors and guarantors. The lease documents were both hand and electronically amended to reflect the true directors at the time of execution”;
(ii)consciously decided to proceed on the basis that the lease documentation would be returned to BAL without prior notification or discussion of the changes; and
(iii)was aware of these facts when he made the statement to the Law Society; and
(c) “I hold a soft copy of the edited documents on my matter file, but I have been unable to ascertain how or when I received them, and I do not know how to for example use the file metadata to work out if they were edited internally”
in circumstances where he:
(i)“instructed an employee of Maxwell and co to amend the lease documentation;
(ii)emailed the amended lease documentation to Mr Wong on 22 June 2017 to be executed;
(iii)was aware that the lease documentation had been amended when he emailed the documents to Mr Wong on 22 June 2017; and
(iv)received the executed amended lease documentation back from Mr Wong’s office by email on 23 June 2017 and by post;
(v)emailed and posted the amended lease documentation on 7 July 2017; and
(vi)was aware of these facts when he made the statement to the Law Society.
The second charge refers to rule 43. This rule requires:
43.1 Subject only to his or her duty to the client, a solicitor must be open and frank in his or her dealings with a regulatory authority.
43.2 A solicitor must respond within a reasonable time and in any event within 14 days (or such extended time as the regulatory authority may allow) to any requirement of the regulatory authority for comments or information in relation to the solicitor’s conduct or professional behaviour in the course of the regulatory authority investigating conduct which may be unsatisfactory professional conduct or professional misconduct and in doing so the solicitor must furnish in writing a full and accurate account of his or her conduct in relation to the matter.
Characterisation of Conduct
The Council submits that charges 1 and 2, either considered globally or separately, constitute professional misconduct within the meaning of section 387(1) of the Act or professional misconduct at common law being conduct that would reasonably be regarded as disgraceful or dishonourable by professional colleagues of good repute or competency or is otherwise capable of bringing the legal profession into disrepute. Alternatively, the Council submits the practitioner’s actions are unsatisfactory professional conduct within the meaning of section 386 of the Act.
In the alternative, the application pleads that charges 1 and 2, either considered globally or separately, constitute unsatisfactory professional conduct within the meaning of section 386 of the Act.
Orders sought
In addition to a finding that the practitioner is guilty of professional misconduct or alternatively unsatisfactory professional conduct, the Council seeks its legal costs on a solicitor/client basis in accordance with the ACT Supreme Court scale.
Response
In his response to the application, the practitioner admitted that he did not identify the amendments made to the lease documentation to the lessor’s solicitors. He added, “he expected in discharging its duties to their client BAL would check the lease documentation … [to] identify the changes.”
The practitioner also admitted communicating with Ms Chu via WeChat messages in providing advice to her. He said that he had been unable to access such messages since late 2017. He did not admit the content of any particular message shared with Ms Chu detailed in the application.
The practitioner further admitted, unsurprisingly, excerpts of his letter to the Law Society dated 13 July 2020, quoted in the application, about his knowledge when he returned the lease documentation to BAL. He added that a letter he sent on 23 April 2021, through his lawyers “further explained and clarified” his 13 July 2020 correspondence.
The practitioner admitted that he had breached rule 4.1.2 by failing to be honest in the course of legal practice;[3] rule 4.1.4 by failing to avoid a compromise to his integrity; and/or rules 5.1.1 and/or 5.1.2 by engaging in conduct which is likely to bring the profession into disrepute.[4]
[3] The rule itself refers to the obligation to be honest and courteous in all dealings in the course of legal practice.
[4] This rule requires 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 practice law, or which is likely to have material degree to: be prejudicial to, or diminish the public confidence in, the administration of justice; or bring the profession into disrepute.
The practitioner did not admit that his conduct in relation to the car park licence as detailed in paragraph 17 breached the rules referred to above.
In relation to charge 2, the respondent said that the inaccuracies in his account of his conduct to the Law Society were reckless but not intentional.
The respondent also admitted that his conduct in relation to the lease documentation and in his letter of 13 July 2020 to the Law Society considered separately, constitute unsatisfactory professional conduct or considered globally, could constitute professional misconduct.
Finally, the practitioner’s response included that he should be ordered to pay the applicant’s costs on a party/party basis in accordance with the ACT Supreme Court scale, not a solicitor/client basis.
Consideration of the Charges
Charge 1
The practitioner’s response reduced the hearing’s scope given the admissions made. He should be commended for this. Notwithstanding this, it is considered the statement within paragraph 11 of his response that “…he expected in discharging its duties to their client BAL would check the lease documentation … [to] identify the changes” demonstrates a failure to take full responsibility for his actions in amending the sublease and not advising BAL. At times, this appeared to be the case during the hearing too.
The practitioner denied some propositions put to him by the Council which appeared at times inconsistent with his response to the charges. For example, the practitioner admitted in his response that on Ms Chu’s instructions, he caused the names of the directors and guarantors to be electronically altered from Ms Chu and Mr Shum to Ms Yee and Mr Woo. However, under cross-examination, the practitioner said that he did not accept that the documents could only have been altered at his firm because of an action he caused to happen. This is also despite the fact the practitioner also answered “no” in being asked if he thought it was possible that someone in his firm could have made such a change without his instruction.[5]
[5] Transcript of proceedings, 12 July 2022, page 131, lines 20-29
Later in his evidence, the practitioner also raised the possibility that Ms Chu may have altered the sublease.[6] It is acknowledged that the practitioner made this comment in a sentence conceding that in any event, he did not inform BAL of the changes made. However, it concerns the Tribunal that the practitioner would suggest Ms Chu may have electronically amended the documents given the totality of the evidence and his admission in the response.
[6] Transcript of proceedings, 12 July 2022, page 132, lines 29-30
Further, when the practitioner was taken to his WeChat exchanges with Ms Chu, he admitted that he told her in March 2020, in the context of the lessor’s joinder of Ms Chu in the Magistrate Court proceedings, that the evidence pointed to him having changed the sublease.[7]
[7] Transcript of proceedings, 12 July 2022, page 157, lines 16-22
The Council submitted such evidence demonstrated the practitioner is not a credible witness. The Council also took the Tribunal to the reasons the practitioner gave for Ms Yee and Mr Woo having Australian addresses in particulars provided to ASIC, which changed earlier details given of their residence in Hong Kong.
In cross-examination, the practitioner denied that he wanted the Hong Kong address for Ms Yee and Mr Woo to be changed to a Canberra address so that it would not be obvious the guarantee was being given by overseas based directors. Instead, he said he wanted this change as it was “in line with instruction given” and that Ms Chu had told him that the address detailed was her mother’s residence.[8]
[8] Transcript of proceedings, 12 July 2022, page 116, lines 8-25
This evidence did not sit well with the WeChat messages attached to the practitioner’s affidavit which included at page 44 the following question from Ms Chu, “to avoid landlord’s queries, they can use my mom’s address in Aust. Would that be ok?” The practitioner’s response was “Yes, you just need to register them there.”
When cross-examined about the fact that Ms Yee and Mr Woo were not residing in Crace, as ASIC was advised, nor proposed to live in Crace and were rather residing in Hong Kong, the practitioner answered, “As I put to you before, it is common as migrants to use the first point of contact address in Australia before they arrive in Australia. If that is the address proposed by the parties, I’m not going to query that.”[9]
[9] Transcript of proceedings, 12 July 2022, page 121, lines 31-35
The Tribunal did not find this evidence compelling. It was clear from the practitioner’s WeChat messages with Ms Chu that an Australian address was given for Ms Yee and Mr Woo, so the lessor would not have concerns about the enforcement of the guarantee.
Looking specifically at the conduct covered by charge 1, the Tribunal considers the practitioner’s actions in amending the names of the directors and guarantors in the lease documentation without advising BAL is extremely serious conduct. The evidence demonstrates that he was aware of the risks of alerting the lessor’s solicitors to the key changes made. For example, in WeChat messages Ms Chu asked the practitioner, “So if the lease is signed by an overseas director, it will be difficult for the landlord to enforce the guarantee. But would the landlord lawyer be aware and advise client that it seems awkward to change directors now?”[10] The practitioner’s translated response was, “Well, that’s up to them to pick up, no?”[11]
[10] Exhibit R2, page 39
[11] Exhibit R2, page 41
In providing the lease documentation, the lessor’s lawyers asked they be contacted before any changes were made. The practitioner acknowledged in cross-examination that he had sufficient time to consider this requirement and that he should have carefully read BAL’s letter to him.[12] It is also considered as significant, in terms of the practitioner’s knowledge of BAL’s request and also the lessor’s lawyers’ understanding that the practitioner accepted this, that on 16 June 2017[13] he asked for three amendments to the lease documentation. He did not make any of these amendments to the lease documentation by hand or electronically.
[12] Transcript of proceedings, 12 July 2022, page 92, lines 29-43
[13] Exhibit A5, page 258
The practitioner admitted in cross-examination that he asked the three changes be made due to BAL’s request that any amendments be discussed. He also accepted the proposition that he knew in June 2017 that the conventional practice between solicitors was to expressly draw attention to any proposed changes to a document.[14]
[14] Transcript of proceedings, 12 July 2022, page 93, lines 11-24
The practitioner further conceded in cross-examination that he was aware in June 2017 that overseas based directors providing a guarantee, as occurred in this case, was going to make the guarantee difficult to enforce.[15] Additionally, he was aware that this was the intention of Ms Chu and her fellow directors from a WeChat message she sent to him on 21 June 2017.
[15] Transcript of proceedings, 12 July 2022, page 109, lines 37-46
In this message, Ms Chu detailed what she was planning to advise Ms Yee and Mr Woo about naming them as the directors and guarantors in the sublease. It includes:
…having thoroughly discussed with lawyer to try minimising the potential risk for signing a 10 year lease… It is suggested to appoint one or both of the other two shareholders as directors and sign the lease. The reason that you are not physically living in Australia will make enforcement of the director guarantee very difficult. This way the director guarantee will become quite meaningless to us in other words it won’t have much impact...[16]
[16] Exhibit R2, page 43
It should also be noted that the practitioner’s advice to Ms Chu included how she could be reappointed to be a director of the tenant company once the lease documentation was executed and sent to the lessor. Ms Chu raised challenges for her in running the business operating out of the subleased premises if she was not a director, such as transacting a merchant bank account. Ms Chu was reappointed as a director of the sublessee company on 12 October 2017, the same date the sublease commenced.
The Tribunal considers this advice and the action taken is relevant in considering the practitioner’s conduct in providing the altered lease documentation to BAL. It further demonstrates the dishonesty alleged in charge 1 was not a spur of the moment action. Rather this conduct was part of a series of actions taken over several months.
Finally, in returning the lease documentation to BAL, the Tribunal considers it significant that the practitioner’s covering email included, “The only change to the list of documents is the cheque for registration”. This was clearly untrue given the changes in directors and guarantors made in the sublease. When asked about this in cross-examination, the practitioner said that he was only referring to a change in the checklist provided by BAL. The Tribunal does not consider this to be credible evidence. The checklist was clearly provided by BAL for his or his firm’s benefit to ensure the complete lease documentation were returned executed and that the payment requested was provided.
The practitioner’s lawyers pressed that their client’s conduct in relation to the execution and return of the car park licence on 6 September 2017, two months after the lease documentation was returned, should not be seen to breach the rules referred to by the Council in its application. This is because the amendments made to the licensees were patently obvious and it could reasonably be expected that BAL would have detected this on receipt, in contrast to the position with the lease documentation.
The evidence demonstrates that the practitioner discussed the licence with Ms Chu and advised that raising the change made to a document which simply permitted her and other colleagues to access the premises’ basement, may draw attention to the changes he made to the lease documentation.
On 29 August 2017 in a transcribed audio message, the practitioner told Ms Chu that:
[He was] not planning to ask the landlord to amend the documents because that would be pointing out the fact that we amended the other one without asking, so we have to be consistent. Either we ask the other one as well, or we don’t ask for this one neither… also I don’t really see any problems in amending by hand I mean crossing out and therefore initialling. But I guess we will just see when we, when we get the documents.[17]
[17] Exhibit A2 at [72]
While the Tribunal accepts that the alterations were far more evident, involving changes made by pen, not amending a PDF document electronically, as occurred with the sublease, it still considers that the practitioner’s actions were dishonest, and compromised his integrity as provided in the rules. This is because he was aware of the lessor’s solicitors’ request to flag any alterations and he did not do this.
Clearly, the amendment made to the carpark licence did not have the same significance in terms of the lessor’s rights as the changes made to the lease documentation. However, the exchange with Ms Chu quote above demonstrates his objective in not raising the change made was to ensure the lessor did not realise the amendment to the lease documentation which potentially had and transpired did have, such significance for the lessor. This is considered to demonstrate dishonesty and would likely bring the profession into disrepute.
Charge 2
Charge 2 deals with the practitioner’s letter to the Law Society dated 13 July 2020. The application refers to three statements made by the practitioner in this correspondence. These were that – he was uncertain that he knew that the lease documents had been edited on or about 22 June 2017; he did not recall specifically turning his mind to any changes made to the documents when he returned them to BAL without considering whether he should refer to a change; and he had a soft copy of the edited lease documents but could not determine how or when he received them and whether they were edited internally.
The Council submits that the practitioner’s 13 July 2020 response was dishonest because he knew the three statements were untrue. The Tribunal notes that the legal work the practitioner undertook for Ms Chu was three years prior to receiving the complaint. While the Tribunal considers it is unlikely that someone in the practitioner’s position would easily forget amending or authorising the amendment of the directors and guarantors’ names in the sublease in question so that a guarantee became difficult to enforce and retaining a lawyer based in Hong Kong to witness the documents’ execution, the evidence presented showed that the practitioner had a more recent opportunity to review what occurred in 2017.
In March 2020, the practitioner met with Ms Chu who advised him of the Magistrates Court proceedings filed by the lessor. At that time, she asked the practitioner if he could access their 2017 WeChat messages. He advised that he could not, due to changing his phone several times.[18] The practitioner also advised in evidence filed, that in 2019 his phone was damaged without him being able to back up previously saved data, including the WeChat messages with Ms Chu.[19]
[18] Exhibit A5, page 439
[19] Exhibit R2 at [25]
In WeChat messages covering the practitioner and Ms Chu’s contact at this time, the practitioner told Ms Chu, “from record, they send me lease with your name, and Coco send me an updated company search, then I sent the amended lease to Charles [Wong].” Ms Chu asked the practitioner, “Did they amend it?” He replied, “so it appears that I changed it after Coco’s e-mail.”[20]
[20] Exhibit A8, pages 14-15. “Coco” is an employee of Ms Chu’s accountant
Additionally, in a letter dated 9 June 2020 to the lawyer representing Ms Chu in the Magistrates Court proceedings, the practitioner wrote, “I advised her [Ms Chu] that we would amend the documents and return them to the landlord representative for execution.”[21]
[21] Exhibit A5, page 433
The practitioner’s review in June 2020 of the background to and action taken to amend the lease documents in June 2017, leads the Tribunal to find that he intentionally failed to submit an accurate account of his conduct to the Law Society when he said a month later that he did not know the lease documents had been edited.
This evidence further leads to the view that the practitioner had also failed to submit an accurate account to the Law Society when he said that he did not recall turning his mind to amendments made to the lease documents when he returned them to BAL. When asked in cross-examination if he knew this statement was untrue, the practitioner admitted, “Yes I did, I guess.”[22]
[22] Transcript of proceedings dated 12 July 2022, page 163, lines 15-19
The practitioner had this understanding a month before he replied to the Law Society. In the referenced 9 June 2020 letter to Ms Chu’s lawyer, he advised that:
If questions were asked about the changes to the documents, once returned then we will have to advise them accordingly; however if the landlord representative would accept the amended documents, and the lease will progress with the new directors and guarantors. The lease documents were both hand and electronically amended to reflect the true directors at the time of execution.
For the reasons given above, the Tribunal also finds that the practitioner’s statement that he had been unable to ascertain how or when he received the lease documents was also untrue. His reference to not knowing how to use the file metadata to work out if they were edited internally appears to have been stated to lead the Law Society to the view that he could no longer reconstruct what occurred in relation to Ms Chu’s matter. This was untrue as his correspondence with Ms Chu and her lawyer demonstrates.
The Tribunal finds that the practitioner breached Rule 43 in the totality of the conduct pleaded in charge 2. He was not open and frank with the Law Society when the latter sought his response to the complaint and his response was not accurate as required by the Rule.
Characterisation of the conduct
The application seeks an order that the two charges when considered together or separately constitute professional misconduct within the meaning of section 387(1) of the Act or professional misconduct at common law, “being conduct that would reasonably be regarded as disgraceful or dishonourable by professional colleagues of good repute and competency and is otherwise capable of bringing the legal profession into disrepute.” Alternatively, the Council seeks an order that the charges considered in each case constitute unsatisfactory professional conduct within the meaning of section 386 of the Act.
Section 386 of the Act details that:
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.
Section 387 of the Act provides:
“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.
Section 585(2) of the Act provides that “Failure to comply with legal profession rules can be unsatisfactory professional conduct or professional misconduct.”
Given the two charges relate to the practitioner’s conduct in relation to one matter, it is considered appropriate to characterise his conduct globally rather than considering each charge separately. This approach has been taken by this tribunal in many decisions.[23]
[23] See for example: Council of the Law Society of the ACT v Legal Practitioner RN (Rhondda Nicholas)[2016] ACAT 122 at [40]; Council of the Law Society of the ACT v Legal Practitioner ‘P4’ (No 2) [2015] ACAT 35 at [6]-[7]; and Council of the Law Society of the ACT v Legal Practitioner 201818 (Chandra Prasad) [2019] ACAT 12 at [17]
In the decision of The ACT Law Society and the Legal Practitioner (Duncan Phillips) in classifying conduct as either professional misconduct or unsatisfactory professional conduct, the Tribunal said:
…it must be borne in mind that there is a sliding scale of seriousness of conduct, depending on the circumstances. There is conduct at the serious end of the “unsatisfactory professional conduct” classification which leads toward the conduct being classified as “professional misconduct” on the basis that it amounts to “a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence.[24]
[24] The ACT Law Society & The Legal Practitioner (Duncan Phillips) [2010] ACAT 67 at [48]
In the Council of theLaw Society of the ACT v Bandarage,[25] the Full Court observed in considering the definition of professional misconduct:
As these definitions are inclusive, recourse may be had to the common law, both for the purpose of understanding the type of conduct that may amount to unsatisfactory professional conduct or professional misconduct and for the purpose of understanding what it means to be “not a fit and proper person” to practise law.[26]
[25] [2019] ACTSCFC 1
[26] [2019] ACTSCFC 1 at [142]
At common law, professional misconduct includes “conduct in the course of legal practice that is reasonably regarded by professional colleagues of good repute and competency as disgraceful or dishonourable.”[27]
[27] The Council of the New South Wales Bar Association v Sahade [2007] NSWCA 145 at [54]
The evidence demonstrates that the practitioner altered the lease documentation in circumstances where he had been asked by BAL to discuss any proposed changes first. His WeChat communication with Ms Chu establishes that he understood the significance of the change he had made to the director and guarantors’ particulars. While it would not excuse this action if performed in a rushed or hasty manner, in this case, the practitioner had some time to consider the implications of his amendments to the lease documentation given the documents had to be executed in Hong Kong and returned to him before sending to BAL. The sublease also did not commence for some months after the tenants executed the agreement.
It is considered that the practitioner’s conduct is extremely serious and constitutes a substantial failure to maintain a reasonable standard of competence and diligence. Members of the legal profession have to be able to trust one another in all their dealings. As noted by Spigelman CJ in a 2001 decision,[28] referred to by the Full Court in Bandarage,[29] “Fellow practitioners must be able to depend implicitly on the word and behaviour of their colleagues.”
[28] New South Wales Bar Association v Cummins [2001] NSWCA 284
[29] [2019] ACTSCFC 1 at [143]
The practitioner appeared to attempt to shift the focus from his conduct in amending the lease documentation without disclosing the same instead to BAL’s failure to detect the electronic amendments. As detailed, the Tribunal found this troubling and demonstrative of a lack of insight about the seriousness of the conduct.
The practitioner’s lawyers in their letter to the Law Society’s solicitors on 23 April 2021 detailed that the practitioner acknowledged that his conduct contributed to serious consequences for the parties involved, including the Magistrates Court proceedings. Further, it was noted that the practitioner acknowledged that this litigation could have been avoided but for his conduct or if not, that this litigation would have occurred because of the informed decisions made by the lessor.
It is also considered extremely serious that the practitioner was not candid in his June 2020 correspondence with the Law Society as covered by charge 2. The ACT Court of Appeal has observed that an “obstructive approach to disciplinary proceedings… In an endeavour to bring the complaint to a conclusion otherwise that on the merits, is inappropriate and inconsistent with a practitioner’s obligation to provide reasonable assistance in the conduct of such an inquiry, by reason of their position as officers of the Court.”[30]
[30] Council of the Law Society of the ACT v LP12 [2018] ACTCA 60
In the letter to the Law Society’s lawyers dated 23 April 2021, the practitioner’s lawyers submitted that due to the Magistrates Court proceedings, which involved him ultimately being joined with Ms Chu, the practitioner had difficulties separating his defence in that matter with BAL’s complaint against him. They added that the practitioner was concerned with how his response to the complaint could be used in the Magistrates Court proceedings. While this provides some explanation for the lack of candour, the Tribunal does not consider that it excuses the conduct.
In the same correspondence, the practitioner’s lawyers expressed their client’s regret that his first account to the Law Society was not given with clearer explanation or with the benefit of the understanding that he now has. This letter was sent after the practitioner received the draft application from the Council.
When the charges are examined together, the Tribunal considers the practitioner’s conduct constitutes professional misconduct, being a substantial failure to maintain a reasonable standard of competence or diligence. In addition, it is considered that the totality of the conduct is such that the practitioner is not a fit and proper person to engage in legal practice. This is because his conduct would be reasonably regarded by professional colleagues of good repute and competency as disgraceful or dishonourable.
Orders
Pursuant to subsection 425(1) of the Act, the respondent is guilty of professional misconduct.
The matter will be listed for separate hearing on sanction and costs.[31]
[31] Directions were made for this purpose on 14 July. They have been amended slightly to allow for the Christmas break.
The applicant file and serve any evidence relevant to sanction by 6 February 2023.
The respondent file and serve any evidence relevant to sanction by 1 March 2023.
The applicant file and serve any submissions on sanction and costs by 15 March 2023.
The respondent file and serve any submissions on sanction and costs by 29 March 2023.
The matter will be listed for a one-day hearing as to sanction and costs.
………………………………..
Senior Member M Brennan
| Date(s) of hearing: | 11, 12, and 14 July 2022 |
| Counsel for the Applicant: | Mr D Moujalli |
| Solicitors for the Applicant: | McInnes Wilson |
| Counsel for the Respondent: | Ms C Webster SC |
| Solicitors for the Respondent: | Mills Oakley |
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