Frugtniet v Law Institute of Victoria Ltd

[2011] VSCA 184

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2011 0064

RUDY NOEL FRUGTNIET
	Applicant
v
LAW INSTITUTE OF VICTORIA LTD	Respondent

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JUDGES:	HARPER JA and MACAULAY AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	17 June 2011
DATE OF JUDGMENT:	17 June 2011
MEDIUM NEUTRAL CITATION	[2011] VSCA 184
JUDGMENT APPEALED FROM	Law Institute of Victoria Ltd v Frugtniet (Legal Practice) [2011] VCAT 596 (Judge Jenkins)

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STAY OF PROCEEDINGS – Appeal from VCAT – Applicant declared a disqualified person under s 2.2.6 of the Legal Profession Act 2004 – Interim stay granted on undertaking not to hold himself out as a legal practitioner nor to hold himself out as an associate, and not to engage in legal practice or practice as an associate – Whether stay should be extended until the hearing and determination of the appeal – Adverse effect of disqualification on the applicant’s business as a conveyancer and tax and migration agent – Protection of the public – Seriousness of conduct – Merits of appeal – Application for extension of stay refused.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr P Monagle (solicitor)	Peter Monagle Lawyers
For the Respondent	Mr G M Randall	J A Barravecchio, Law Institute of Victoria

HARPER JA:

1. I will ask Macaulay AJA to give the first judgment.

MACAULAY AJA:

1. By summons dated 4 May 2011 Mr Frugtniet, the applicant, sought leave to appeal to the Court of Appeal against the judgment of Judge Jenkins, Vice President of the Victorian Civil and Administrative Tribunal (VCAT) dated 8 April 2011, and a stay of her Honour’s orders pending the hearing and determination of the leave application.[1]   

   [1]The summons also sought an expedited hearing of the leave application and, in effect, the relief that would be sought upon the hearing of the appeal.

1. On 3 June 2011 Tate JA and Almond AJA referred the leave application to a bench of three judges, if leave is considered necessary, and if leave is granted, to hear the appeal instanter.  The stay application was adjourned until today (17 June 2011) but an interim stay until 4.00 pm today was granted upon Mr Frugtniet, by his counsel, undertaking not to hold himself out as a legal practitioner nor to hold himself out as an associate, and not to engage in legal practice or practice as an associate. 

1. The issue before us today, therefore, is whether or not a stay of Judge Jenkins’ order should be granted until the hearing of the leave application and, if leave is granted, the appeal.

1. The order of her Honour made 8 April 2011 was made on the application of the Law Institute of Victoria Ltd (‘the Law Institute’), the respondent to this application, acting as delegate of the Legal Services Board (‘the Board’). The order was that Mr Frugtniet is a disqualified person for the purposes of Division 3 of Part 2.2 of the Legal Profession Act 2004 (Vic) (‘the Act’) for a period of three years. The order was made pursuant to s 2.2.6(2) of the Act. That section permitted the Board to apply to VCAT for an order that a person (other than an Australian legal practitioner) is a disqualified person for the purposes of the Division if in the opinion of the Board that person has been a party to an act or omission that, if the person had been an Australian legal practitioner, may have resulted in a charge being brought in VCAT.

1. Mr Frugtniet is not and never has been an Australian legal practitioner.  Although having obtained a Bachelor of Laws and a Master of Laws, Mr Frugtniet has been twice refused admission to practice, first in 2002 and then in 2005, because of his failure to disclose previous criminal charges and convictions at the time of seeking admission to practice.  Those refusals have been the subject of past decisions of this Court.[2]

   [2]Frugtniet v Board of Examiners [2005] VSC 332 (Gillard J); Frugtniet v Board of Examiners [2002] VSC 140 (Pagone J).

1. The basis upon which the Law Institute (as delegate for the Board) sought the order under s 2.2.6 of the Act was that Mr Frugtniet had lied to a barrister, Mr Lowry, and to Magistrate P Mellas, at the Werribee Magistrates’ Court on 25 May 2010 by representing that he was a legal practitioner when he was not. The contention of the Law Institute, accepted by the Tribunal, was that if an Australian legal practitioner had lied to a fellow practitioner or to a court such conduct may have resulted in a charge being brought in the Tribunal. Such a proposition can hardly be gainsaid[3] although Mr Frugtniet has argued that the relevant conduct was not that he lied but rather that he said he was a legal practitioner.  I will return to this shortly.

   [3]The conduct could found a charge of unsatisfactory professional conduct or, possibly, professional misconduct, under Part 4.4 of the Act.

1. An appeal does not operate as a stay of execution of the decision appealed from, but the Court of Appeal has power to grant such a stay.[4]  Generally speaking, the discretion to grant a stay should only be granted in special or exceptional circumstances.  Whether special circumstances have been established commonly concerns a consideration of the prospects of success on appeal and whether there is a real risk that the appeal will be rendered nugatory in the absence of a stay.[5] 

   [4]Supreme Court (General Civil Procedure) Rules 2005, r 64.25.

   [5]Cellante v Kallis Industries (1991) 2 VR 653.

1. In written and oral submissions the applicant submitted that he had established more than an arguable ground for appeal and that if a stay was not granted the appeal may prove to be nugatory.

1. However, for matters of this nature relevant considerations can be further refined.  The principles governing stay applications in proceedings of this kind have been set out by the former President, Winneke P (with whom Chernov JA agreed) in Woods v The Legal Ombudsman:[6]

Legal practitioners who seek a stay of orders made by their disciplinary Tribunal, while an appeal is pending or for any other reason, have the onus of persuading the Court that such a stay should be granted.  There are a number of balancing factors which will bear upon the Court's decision as to whether such an indulgence should be afforded.  The first is that disciplinary proceedings against those who hold themselves out to the public as fit to practise (in this case the solicitors) are sui generis.  The discipline imposed, whilst punitive in its application to the practitioners involved, is very largely protective of the public interest.  Other matters which this Court will take into account will include the seriousness of the conduct which has led to the Tribunal's decision and the prospects which the instituted appeals have of succeeding.[7]

[6][2002] VSCA 133.

[7]Ibid [7].

1. Whilst in the passage above his Honour was referring to disciplinary proceeding against legal practitioners, and the current proceeding concerns a non-legal practitioner representing himself to be one, the public protection purpose is nevertheless still apposite. That purpose is made clear in s 2.2.1 of the Act, setting out the purpose of the Part in which s 2.2.6 appears, namely,

To protect the public interest in the proper administration of justice by ensuring that legal work is carried out by those who are properly qualified to do so.

1. In summarising the matters which at least ought to be weighed in the balance in the exercise of our discretion, they are:  the need to protect the public interest, the seriousness of the conduct which has led to the Tribunal’s decision, the prospects of success on appeal and the extent to which the appeal might be rendered nugatory should the stay not be granted. 

1. I now turn to the evidence in a little more detail, and to each of those matters.

1. Prior to the first return date of this application the applicant had sworn and filed two affidavits – one sworn 9 May 2011 and another sworn 30 May 2011.  Since that date he has filed two further affidavits, one sworn by himself on 16 June 2011 and one sworn by Mr David Fu, an accountant, on 7 June 2011.

Public Protection

1. In this case it is significant that Mr Frugtniet has twice been refused admission to the profession.  He was refused due to his lengthy history of convictions and charges of dishonest conduct stretching between 1978 and 2003.  That conduct is summarised by Gillard J in the 2005 decision that I referred to earlier.[8]

   [8]Frugtniet v Board of Examiners [2005] VSC 332, [17].

1. It is clear that Mr Frugtniet knew that he was not permitted to act as a legal practitioner yet he was found to have deliberately misled a magistrate and a practitioner in May 2010 to believe that he was a legal practitioner, and indeed he purported to act as one.  Although he seeks to appeal that finding, it is a finding of fact and for reasons which I will come to, it will be difficult to have that finding overturned.

1. There is a very strong public interest in protecting consumers and maintaining the integrity of the profession by ensuring that only those qualified to represent people do so.  It is also significant that Mr Frugtniet currently operates a trust account under his licence as a conveyancer, under the Conveyancers Act 2006 (Vic), a fact only revealed after the matter was considered by Tate JA and Almond AJA.[9]  To my mind this fact demonstrates that, being a person with his track record of dishonest conduct, he does pose a real threat to the public interest. 

   [9]Affidavit of Rudy Noel Frugtniet sworn 16 June 2011, [11].

1. Sensibly and logically, a disqualification under the Legal Profession Act operates as a disqualification under the Conveyancers Act.  Amongst the numerous circumstances which may justify that follow-on effect, an obvious one, to my point of view, is where proven dishonesty is the basis for disqualification under the Legal Profession Act.  It is misconceived to think that the only public interest needing protection is the interest to protect against a disqualified person from appearing in courts as a legal practitioner.  As the facts of this case demonstrate, that public interest also extends to securing protection against a person with the applicant’s history of dishonest behaviour acting as a conveyancer and operating a trust account.

1. Insofar as the protection of the public interest is concerned, it is not adequately protected, in my view, by merely requiring the applicant to undertake not to do what he is not permitted to do in any event and that is to act as a legal practitioner.  Nor is it adequately protected by obtaining an undertaking that he will not act as an associate of a legal practitioner.

Seriousness of the conduct

1. Mr Frugtniet wilfully and consciously lied to a court and practitioner.  In the face of several years of refusal for admission based upon dishonesty, and with the clear knowledge of the seriousness of appearing without being admitted, his conduct assumes a significant level of gravity, in my view.  Added to that, the circumstances reveal that there appears to have been some degree of planning undertaken by Mr Frugtniet in order to get around the limitation which he faced.  I refer here to his alleged use of and reliance upon a power of attorney as the justification for being permitted to appear in Court and to represent the persons who he referred to as his clients.

1. In all of those circumstances it would need a strong case on the merits of the appeal and/or of prejudice to be suffered by the applicant, to outweigh the need for the public protection which I have just mentioned, to justify a stay being granted.

Merits of the appeal

1. I then come to the merits of the appeal. It first needs to be remembered, of course, that in order to obtain leave to appeal under s 148 of the Victorian Civil and Administrative Tribunal Act, Mr Frugtniet needs to demonstrate that the Tribunal erred with respect to a question of law.  Ultimately the grounds of appeal raised are for the Court of Appeal to determine upon hearing more substantial argument, but it is for me to make an assessment of their prospects for the purpose of this application.

1. Insofar as it may be a ground of the proposed appeal that it was not open for her Honour to conclude, as she did, that Mr Frugtniet had lied, in my view there was an abundance of evidence upon which her Honour could have so found.  Any appeal on this ground would be bordering on hopeless.

1. There are other legal arguments which have been put to us by Mr Monagle today as the proposed basis for an appeal on a question of law.  I should say that each one of those which he has mentioned are arguments that were dealt with by her Honour in the decision below.  They include:

· That the proper course to take was to pursue Mr Frugtniet under ss 2.2.2 or 2.2.3, not s 2.2.6 of the Act;

· That s 2.2.6 does not apply to Mr Frugtniet at all because he was not an ‘associate’;

·    It was wrong of her Honour to decide the matter when there was the threat of criminal proceedings; 

·    The investigation instrument authorising the Law Institute to investigate the matter was limited so as to not permit it to conduct the investigation which led to the application;

·    It could not be a lie if Mr Frugtniet was an Australian legal practitioner for him to say that he was, and because that hypothesis formed the basis of the application of the section, then such conduct could not have resulted in a charge against him; 

·    Mr Frugtniet was authorised to appear because he held a power of attorney from those who he sought to represent;  and 

·    Mr Frugniet was not permitted to further cross‑examine the barrister Lowry.

1. For the reasons which her Honour stated, in my view they were each properly dismissed.  Even if that is not the case, the arguments to be put on them are weak.

Prejudice suffered by the applicant

1. The last matter to consider is prejudice and whether or not the appeal would be rendered nugatory if the order was not stayed.  Mr Frugtniet apparently conducts a business as a conveyancer, migration agent and taxation agent, amongst other things.  The only clear evidence of the impact of the disqualification is the effect upon him as a conveyancer.  Under the Conveyancers Act a disqualification under the Legal Profession Act may operate automatically as a disqualification of his licence as a conveyancer.[10]  It may also mean that even if the appeal was successful, he would have to re-apply to be a conveyancer. 

   [10]Conveyancers Ac 2006 (Vic) s 5 ‘disqualification’, s 26, s 28(1)(a).  It seems to be putting it too highly to say that the licence will necessarily be cancelled:  see s 28(1)(b), (c).

1. His accountant, Mr Fu, has estimated that 20 to 25 per cent of his business income comes from his activities as a conveyancer.  He also expresses the opinion that for him to meet his business overheads, it is essential that the conveyancing  income is received.  Mr Fu further expresses the view that Mr Frugtniet will experience great difficulty maintaining solvency of his business if he does not receive that income or is precluded from undertaking his conveyancing activities.  Nevertheless, it is apparent that Mr Frugtniet will maintain the bulk of his business, 75 to 80 per cent of it.  None of the accounts which Mr Fu relied upon have been produced. 

1. Although it is said that the migration and tax agency businesses feed Mr Frugtniet’s conveyancing business, it is not said to operate the other way around so that the inability to conduct his conveyancing business will necessarily impact on his other businesses.  This is not a case in which it is said that there will be an inevitable business failure because of his inability to conduct his conveyancing practice. 

1. The onus is on Mr Frugtniet to demonstrate the requisite degree of hardship to outweigh the other discretionary elements which I have already mentioned. 

1. He has deposed that he has a wife and children to support.  However, I am not convinced that the effect of disqualification will jeopardise the family income in any catastrophic manner.  The mere fact that some hardship will occur is only one element in the discretionary mix of considerations, and if he or his family might suffer some hardship because of the need to protect the public interest, which I regard to be a prominent consideration in this case, then so be it. 

1. For these reasons I would refuse the stay.

HARPER JA:

1. I agree with his Honour's conclusion and his reasons for reaching that conclusion.

1. I would only add that the respondent in this application, the Law Institute of Victoria, indicated when the matter came on for hearing, that it formally opposed the application, but that it was a matter for the Court.  That being so, it is I think appropriate to say that in my opinion the seriousness of the offending as found by the Tribunal is such as to lead me to the belief that the protection of the public must be the paramount consideration when deciding upon the outcome of this application.

1. That seriousness, I think, can be demonstrated by a very brief reference to what I understand to be a transcript of the proceedings before the magistrate at Werribee where the magistrate asked the applicant to identify the firm with whom he worked.  The answer from the applicant was ‘Sole practitioner, your Honour’.  The magistrate then repeated, in the form of a question, what the applicant had said, ‘Sole practitioner?’ to be accorded the reply ‘That's right’. 

1. It was put by Mr Monagle for the applicant in his submissions to this Court that there is some doubt about the meaning of the expression ‘sole practitioner’ and that it can refer to persons who are not legal practitioners.  Indeed it can refer, no doubt, to persons other than legal practitioners; but in the context of the exchange between the applicant and the magistrate, there could be no doubt, in my opinion, that the applicant was informing the magistrate that he was a legal practitioner properly entitled to appear for a client in litigation which the magistrate was then in the course of hearing. 

1. That is, it seems to me, a very serious incident of offending which goes to the honesty of the applicant;  and given (especially) that the applicant has a trust account, does place this Court in the position of being compelled to regard the protection of the public at the forefront of its consideration of this application.

1. Given also the matters to which Macaulay AJA has referred, it seems to me that the only course properly open to the Court is to refuse the application for the stay.

1. The order of the Court will be that the application for a stay of the order made by the Victorian Civil and Administrative Tribunal on 8 April 2011, that pursuant to s 2.2.6 of the Legal Profession Act 2004, Rudy Noel Frugtniet is a disqualified person for the purposes of division 3 of part 2.2 of the Act for a period of three years is refused.

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