Council of the Law Society of the Australian Capital Territory v the Legal Practitioner (Occupational Discipline)
[2009] ACAT 30
•7 September 2009
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
COUNCIL OF THE LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY v THE LEGAL PRACTITIONER (Occupational Discipline) [2009] ACAT 30
LP 8 of 2008
Catchwords: OCCUPATIONAL DISCIPLINE – LEGAL PRACTITIONERS – money of client retained by legal practitioner – “transit money” as defined in the Legal Professions Act 2006 (ACT) – whether legal practitioner entitled to exercise a lien over a cheque – whether section 225 of the Legal Professions Act 2006 (ACT) overrides a lien – presumption against loss of common law rights.
Legal Profession Act 2006 (ACT) ss 419, 210, 225, 229,
ACT Civil and Administrative Tribunal Act 2008 (ACT)
ACT Civil and Administrative Tribunal (Transitional Provisions) Regulation 2009 (ACT), regulation 30
Leeper v The Primary Producer’s Bank ofAustralia Ltd (1935) 53 CLR 250
Potter v. Minahan (1908) 7 CLR 277
Re Jordison: Raine v Jordison [1922] 1 Chancery 440
Protean Enterprises Pty Ltd v Randall [1975] VR 327
Butterworths, Halsbury’s Laws of Australia, Vol 16 (1997)
Butterworth, Riley's Solicitors Manual (at 18,000.5)
Pearce and Geddes, Statutory Interpretation in Australia (6th ed, 2006)
Tribunal: Mr CG Chenoweth Presiding Member
Mr A O’Neil Senior Member
Mr G Wright Member
Date of Orders: 7 September 2009
Date of Reasons for Decision: 7 September 2009
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) LP 8 of 2008
BETWEEN:
COUNCIL OF THE LAW SOCIETY
OF THE AUSTRALIAN CAPITAL
TERRITORY
Applicant
AND:
THE LEGAL PRACTITIONER
Respondent
TRIBUNAL:Mr CG Chenoweth Presiding Member
Mr A O’Neil Senior Member
Mr G Wright Member
DATE: 7 September 2009
ORDER
That the Application of the Law Society of the Australian Capital Territory in respect of the conduct of the Legal Practitioner be refused, for reasons set out in the attached reasons for decision.
………………………………..
Mr CG Chenoweth
Presiding Member
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) LP 8 of 2008
BETWEEN:
COUNCIL OF THE LAW SOCIETY
OF THE AUSTRALIAN CAPITAL
TERRITORY
Applicant
AND:
THE LEGAL PRACTITIONER
Respondent
REASONS FOR DECISION
An application was made by the Law Society of the Australian Capital Territory ("the Society") under the provisions of the Legal Profession Act 2006 (“the LP Act”) to the Disciplinary Tribunal constituted by the LP Act. The application was dated 20 November 2008. It alleged that the conduct of the Respondent in failing to pass on a refund cheque from an estate agent to the Respondent’s client, and in purporting to exercise a lien over the cheque until his costs were paid, constituted unsatisfactory professional conduct.
After the application was filed, the ACT Civil and Administrative Tribunal Act 2009 (“the ACAT Act”) came into operation. At the same time, the LP Act was amended. Under section 419 of the LP Act, an application for an order in relation to a complaint by a “relevant council” (which includes the Society) against a legal practitioner was to be heard by the ACT Civil and Administrative Tribunal constituted by the ACAT Act (" the Tribunal").
Under regulation 30 of the ACT Civil and Administrative Tribunal (Transitional Provisions) Regulations 2009, where an application has been made to the Disciplinary Board but no hearing has been conducted prior to the commencement of the ACAT Act, then under Regulation 30(2) the application is taken on and after the commencement day of the ACAT Act to be an application to the Tribunal under the LP Act. As a consequence of these provisions, the matter is properly before the Tribunal.
The Respondent is the holder of an unrestricted practicing certificate issued by the Society. He conducts a small suburban legal practice, principally in the area of conveyancing.
In or about September 2007, the Respondent was instructed to act on behalf of clients in relation to the purchase of a property in north Canberra. At the time that instructions were given, the clients paid a sum of $1000 to the real estate agent as a holding deposit. This was placed in the agent’s trust account.
A contract for the sale of the property was prepared by the vendor’s solicitors but never entered into because certain conditions required by the clients were not agreed by the vendors. By an e-mail message of 14 September 2007, the clients notified the agent that the conditions that they required had not been met, and also that the clients were contemplating changing their solicitor from the Respondent to some other practitioner. No other practitioner was named in the email.
The clients also concluded the email to the agent by stating "If you wish to proceed, we can talk further, otherwise we permit you to put the property back on the market (as indicated in the 13 September fax) and return our $1000 deposit which we gave at the beginning of negotiations." From the instruction sheet sent by the agent to the Respondent at the commencement of the matter, it appears that the only address for the clients that the agent had was care of the Respondent.
In accordance with the instructions from clients, the agent forwarded to the Respondent’s office a cheque payable to the clients drawn on the agents trust account in the sum of $1000, representing a refund of the holding deposit. The Tribunal finds that the Respondent received the cheque for $1000 as a consequence of his engagement by the client as a legal practitioner.
When the clients of the Respondent advised him that they did not wish to use his services, he rendered an account for $387 (including disbursements) for the work undertaken up to the time that the instructions were discontinued. The Society takes no issue with the level of fees charged.
10. The Respondent did not operate a trust account. Upon receiving the cheque from the agent, he kept it in his file pending payment or agreement on his outstanding fees. It is clear that he intentionally exercised a lien over the cheque. Once the fees were agreed, and before they had been paid, the Respondent sent the agent’s cheque to the (then former) clients.
11. In 2006, the provisions of the LP Act introduced the definition of "transit money" in section 210. “Transit money” is defined as money received by law practice subject to instructions to pay or deliver it to a third party, other than an associate of practice. Under the definition of “trust money” in the dictionary at the end of the LP Act, transit money is included as part of trust money.
12. The issue that the Tribunal has to decide is whether a legal practitioner who receives a cheque that falls within the definition of transit money must pass on that cheque within a reasonable time as required by 225 of the LP Act even though the practitioner has not been paid his or her costs, or whether the legal practitioner has the right to exercise a solicitors possessory lien over that cheque for unpaid costs.
13. The common law rule or right is that a solicitor has a general lien which extends to documents which have come into his or her possession in his or her professional capacity even for a particular purpose, at any rate after that purpose has been served. This was set out in the High Court case of Leeper v The Primary Producer’s Bank ofAustralia Ltd (involuntary liquidation) (1935) 53 CLR 250 at p.256 per Rich J. Dixon J. Evatt J. and McTiernan J.
14. At common law a legal practitioner may have the benefit of a retaining or general lien pursuant to which the practitioner may retain a client’s personal property in the practitioner’s possession until all costs owing to the solicitor in his or her professional capacity have been paid. This lien extends to cheques and bills of exchange. Halsbury’s Laws of Australia 1997 ed. Vol 16 at 250-1025 and 250-1030.
15. The existence of a lien referred to in the above authorities is also discussed in Riley's Solicitors Manual, which confirms that the retaining lien gives practitioners the right to retain until all their costs and charges as practitioners are paid all documents or other chattels, including money, that are the property of clients and have come lawfully into the practitioner’s possession. Riley, para. 18,000.5
16. It should also be noted that under section 229 of the LP Act, where trust money is paid into a general trust account for a person, the practitioner may exercise a lien including a general retaining lien for the amount of legal costs reasonably owing by the person to the practice. There would not appear to be any prohibition on a practitioner who receives transit moneys from paying those moneys into the trust account and then paying them out, in accordance with the instructions to the third party. If the respondent had taken this course then a lien could have been exercised under section 229(1)(a) of the LP Act.
17. Counsel for the Society argued that the introduction of transit money as a new category of trust money with the specific obligation to pay or deliver the money as required by the instructions relating to the money as soon as practicable, by necessary implication overrode the solicitors lien which would otherwise exist in relation to the cheque. A practitioner had no option but to pass on the whole of the transit money or the cheque which constituted it when received.
18. Counsel for the Respondent argued that there was nothing in the definition of transit money or otherwise in the LP Act which specifically overrode a solicitor’s lien, and that existing rights such as a solicitors lien should only be overthrown by a clear wording of the statue. In the absence of that, the presumption of statutory interpretation that the legislature does not intend to interfere with existing legal and equitable rights unless clearly stated, should be upheld.
19. Counsel cited the well-known authority of Pearce and Geddes "Statutory Interpretation in Australia", sixth edition, page 182 at para 5.23, where the authors state: "While it is conceded by the courts that legislation can override the common law, the courts require that it be clearly shown that the legislature intended to do so”. At para.5.24, the authors referred to various authorities in support of the presumption against alteration of common law doctrines without the legislature "expressing its intention with irresistible clearness: ..." This quote is from the judgment of the High Court in Potter v. Minahan (1908) 7 CLR 277 at p.304 per O’Connor J.
20. This doctrine was summed up in the dictum of Younger L.J. in Re Jordison: Raine v Jordison [1922] 1 Chancery 440 at 465 where his Lordship said "The Legislature is not, by the use of other than the clearest words, to be taken to have subverted in any statute fundamental principles whether of law or equity. It is a matter of judicial obligation to the Legislature itself that the Court in construing the statute shall make that presumption." This comment was cited with approval in the 1974 Victorian Full Supreme Court case of Protean Enterprises Pty Ltd v Randall, which was the subject of argument before the Tribunal.
21. In the Tribunal's judgement, the introduction of the statutory provision of "transit money" with its attendant obligation to pass those moneys on to the client within the time specified or a reasonable time, cannot by implication alone destroy the solicitors general lien otherwise exercisable over the cheque. If the legislature intended that this situation should have arisen in relation to this particular class of trust moneys, (as opposed to other trust moneys which when put in the general trust account could thereby be subject to a lien), clear wording would be required to demonstrate that this was the intention of the legislature.
22. Not every error of law by a legal practitioner is to be regarded as constituting "unsatisfactory professional conduct." Even if the argument as to the abolition of a general lien over a cheque returned from an agent for transmission on to the client because the cheque constituted "transit money" was accepted by the Tribunal, it would not be an error of such magnitude that it could come within the concept of "unsatisfactory professional conduct." The issue of the parameters which govern this subsection of trust money appears to be a novel one in practice, arising from recent provisions in the LP Act. In view of the argument before the Tribunal, it could not be said that the matter was of such clarity or general understanding that a failure to comply would attract the disciplinary process.
………………………………..
Mr CG Chenoweth
Presiding Member
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Tribunal Staff
PART A FILE NO: LP 08/8
APPLICANT: COUNCIL OF THE LAW SOCIETY OF THE ACT
RESPONDENT: THE LEGAL PRACTITIONER
COUNSEL APPEARING: APPLICANT: MR WALKER
RESPONDENT: MR CLYNES
SOLICITORS: APPLICANT:
RESPONDENT:
OTHER: APPLICANT:
RESPONDENT:
TRIBUNAL MEMBER/S: MR CG CHENOWETH
MR A O’NEIL
MR G WRIGHT
DATE/S OF HEARING: 23 JUNE 2009 PLACE: CANBERRA
DATE/S OF DECISION: 7 SEPTEMBER 2009 PLACE: CANBERRA
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )
COMMENTS:
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0
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