Law Society of the Australian Capital Territory v Burns
[2012] ACTSC 91
•8 June 2012
LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY v DIANA MARY BURNS
[2012] ACTSC 91 (8 June 2012)
PROFESSIONS AND TRADES – Lawyers – Removal from the roll – Defendant not a “fit and proper person” – By consent – Application granted.
PROFESSIONS AND TRADES – Lawyers – Jurisdiction, practice and procedure – Supreme Court’s inherent jurisdiction to control and discipline lawyers – Power to remove from roll.
PROFESSIONS AND TRADES – Lawyers – Removal from the roll – Necessity for Court to record findings – Where conduct does not fall within Legal Profession Act s 389 – Where no “suitability matter” raised – Dishonest or misleading conduct – Lack of candour with Law Society.
Legal Profession Act 2006 (ACT), pts 2.6, 4.5, div 4.1.2, ss 26, 37, 99(1), 104, 386, 387, 389, 416, 419, 425(3)(a), 431(3), 447, 448, 462
Supreme Court Act 1933 (ACT), s 11
Legal Profession Regulation 2007 (ACT), s 10
Australian Capital Territory (Self-Government) Act 1988 (Cth), s 48A
Corporations Act 2001 (Cth), s 178A
Ex parte Attorney-General (Cth); Re a Barrister and Solicitor (1972) 20 FLR 234
NSW Bar Association v Cummins (2001) 52 NSWLR 279
Re Davis (1947) 48 SR (NSW) 33
Re Davis (1947) 75 CLR 409
Re Guild (1979) 32 ACTR 13
No. SC 466 of 2011
Judge: Refshauge, Penfold, Burns JJ
Supreme Court of the ACT
Date: 8 June 2012
IN THE SUPREME COURT OF THE )
) No. SC 466 of 2011
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY
Plaintiff
AND:DIANA MARY BURNS
Defendant
ORDER
Judge: Refshauge, Penfold and Burns JJ
Date: 11 August 2011
Place: Canberra
THE COURT ORDERS THAT:
The name of Diana Mary Burns be removed from the roll of people admitted to the legal profession under the Legal Profession Act 2006 (ACT) maintained by this Honourable Court pursuant to s 27 of that Act.
Diana Mary Burns pay the costs of the Law Society of the Australian Capital Territory; such costs to be assessed or agreed.
IN THE SUPREME COURT OF THE )
) No. SC 466 of 2011
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY
Plaintiff
AND:DIANA MARY BURNS
Defendant
Judge: Refshauge, Penfold and Burns JJ
Date: 8 June 2012
Place: Canberra
REASONS FOR JUDGMENT
THE COURT:
Introduction
On 18 July 2011, the Law Society applied for an order that the name of a legal practitioner, Diana Mary Burns, be removed from the roll of people admitted to the legal profession under the Legal Profession Act 2006 (ACT) (the roll) on the ground that Ms Burns was not a fit and proper person to remain admitted to the legal profession. The Law Society’s application also sought any other orders that the Court considered appropriate. The Law Society did not apply for, or invite the Court to make, any finding about whether Ms Burns’ conduct constituted professional misconduct or unsatisfactory professional conduct.
The application was supported by an affidavit sworn on 14 July 2011 by Robert Reis, the Professional Standards Director of the Law Society, which in turn attached an affidavit sworn on 14 April 2011 by Ms Burns describing her conduct over the period from 2006 until 2010. The basis of the Law Society’s application was that the conduct of Ms Burns as set out in her affidavit shows that she is not a fit and proper person to remain admitted to the legal profession. The Law Society did not provide any evidence other than that contained in Ms Burns’ affidavit and nor did it make any submissions identifying the particular aspects of Ms Burns’ conduct on which it relied.
Ms Burns consented to the making of the order sought by the Law Society.
The Court agreed that the order sought by the Law Society and consented to by Ms Burns should be made, and made the order at the end of the hearing.
Although the Law Society did not make submissions and did not invite the Court to give reasons, it is, as explained below, desirable for the Court to provide reasons for the making of the order. In particular it is important to articulate the specific aspects of Ms Burns’ conduct that have justified the removal of her name from the roll.
The need to give specific reasons for the order
Future applications for admission
First, the reasons for a person’s removal from the roll may be relevant in any subsequent application for re-admission as a practitioner. In NSW Bar Association v Cummins (2001) 52 NSWLR 279, the New South Wales Court of Appeal (Spigelman CJ with whom Mason P and Handley JA agreed) held that even where the order removing a name from the Roll of Legal Practitioners is not opposed by the practitioner, the Court should record its findings, saying (at 285; [24]–[25]):
24In a case such as the present, where there is no substantive contest as to the ultimate operative order which the Court should make, it is of particular significance that the Court should record its findings. As Kirby P said in The Prothonotary of the Supreme Court of New South Wales v Ritchard (Court of Appeal, 31 July 1987, unreported) at 4:
For the ordinary case, the Court has adopted the principle that, normally, it will state its findings on the totality of the matters put forward as constituting professional misconduct, so that these will be available to be dealt with, should they ever become relevant to any future application by the former solicitor for readmission to practise.
His Honour referred to Law Society of New South Wales v Seymour (Court of Appeal, 14 April 1982, unreported) and Bridges v Law Society of New South Wales [1983] 2 NSWLR 361 at 362.
25 Kirby P went on to say in Prothonotary v Ritchard (at 4–5):
... Although the opinion must be reached that the offences warrant at the time of order permanent removal, the removal of a solicitor from the Roll is not necessarily intended to be permanent in fact. See Ex parte Evatt; Re New South Wales Bar Association (1971) 71 SR (NSW) 153 at 157 ... People can redeem themselves and demonstrate it by later conduct as a number of cases in this State, both of solicitors and barristers, show. Because that opinion may give encouragement, in due course of time, to an application to be readmitted, it is all the more important that the unfortunate saga of the opponent's misdeeds should be collected and found by the Court.
Regulation of the legal profession generally
Secondly, the reasons given by a Full Court for ordering a person’s name to be removed from the roll may be useful in the regulation of the profession, both directly, as a warning to other practitioners, and also by providing guidance to both the relevant professional body (in this case the Law Society) and to the ACT Civil and Administrative Tribunal (ACAT), which plays a significant part in the regulation of the legal profession in the ACT including through its role in the processes for dealing with complaints about legal practitioners.
Statutory framework
The Legal Profession Act makes extensive provision for the regulation of the legal profession in the ACT. Among other things, it provides a mechanism for dealing with complaints against legal practitioners, involving an initial determination of a complaint by the appropriate professional body (pt 4.5) which may be appealed to the ACAT by the complainant or the legal practitioner concerned (s 416). There is a separate power for the professional body to apply to the ACAT for an order in relation to a complaint about a practitioner (s 419); the application must specify the charge (for instance, unsatisfactory professional conduct or professional misconduct), that is said to arise from the complaint (s 419(3)). On a finding of unsatisfactory professional conduct or professional misconduct, the orders the ACAT can make include “an order recommending that the name of the practitioner be removed from the local roll” (s 425(3)(a)).
Section 431(3) deals with the role of the Supreme Court:
If the ACAT makes an order recommending that the name of an Australian legal practitioner who is a local lawyer be removed from the local roll—
(a) a copy of the order may be filed in the Supreme Court; and
(b) the Supreme Court may order the removal of the name from the roll.
Thus, there is an express power in the Supreme Court to remove the name of a local practitioner from the roll following a complaint process through the relevant professional body and the ACAT. Whether that Supreme Court power must be exercised by a Full Bench is not explicit in the legislation, but in The Legal Practitioner v Council of the Law Society of the ACT (2011) FLR 118, Refshauge J concluded (at 126–7; [66]) that it should be so exercised.
Statutory basis for removal from the roll
As noted, an order recommending that a practitioner’s name be removed from the roll can be made by the ACAT, if the ACAT is satisfied that the practitioner has been guilty of unsatisfactory professional conduct or professional misconduct. Those two concepts are defined in div 4.1.2 of the Legal Profession Act:
386 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.
NoteSee also s 389 (Conduct capable of being unsatisfactory professional conduct or professional misconduct).
387 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.
Note See also s 389.
...
389Conduct capable of being unsatisfactory professional conduct or professional misconduct
Without limiting section 386 or section 387, the following conduct can be unsatisfactory professional conduct or professional misconduct:
(a) conduct consisting of a contravention of this Act;
Note This Act is defined in the dictionary.
(b)charging of excessive legal costs in connection with the practice of law;
(c) conduct in relation to which there is a conviction for—
(i) a serious offence; or
(ii) a tax offence; or
(iii) an offence involving dishonesty;
(d)conduct of an Australian legal practitioner as or in becoming an insolvent under administration;
(e)conduct of an Australian legal practitioner in becoming disqualified from managing or being involved in the management of any corporation under the Corporations Act;
(f)conduct of an Australian legal practitioner in failing to comply with an order of the ACAT made under this Act or an order of a corresponding disciplinary body made under a corresponding law (including but not limited to a failure to pay all or part of a fine imposed under this Act or a corresponding law);
(g)conduct of an Australian legal practitioner in failing to comply with a compensation order made under this Act or a corresponding law.
NoteVarious provisions of this Act identify particular conduct as conduct that can be unsatisfactory professional conduct or professional misconduct (see eg s 138 (1) (Obligations of legal practitioner partner relating to misconduct—multidisciplinary partnerships)).
That is, unsatisfactory professional conduct is conduct in connection with the practice of law “that falls short of the standard of competence and diligence” expected “of a reasonably competent Australian legal practitioner”, and professional misconduct includes:
(a)unsatisfactory professional conduct that, in general terms, involves a substantial or consistent failure of competence or diligence; and
(b)conduct, whether or not in connection with the practice of the law, justifying a finding that the practitioner “is not a fit and proper person to engage in legal practice”.
In considering whether a person is a fit and proper person to engage in legal practice, regard may be had to the “suitability matters” relevant to an application for admission or for the grant or renewal of a practising certificate (s 387(2)). The “suitability matters” are outlined in s 11:
11Suitability matters
(1) Each of the following is a suitability matter for an individual:
(a)whether the person is currently of good fame and character;
(b)whether the person is or has been an insolvent under administration;
(c)whether the person has been convicted of an offence in Australia or a foreign country, and if so—
(i)the nature of the offence; and
(ii)how long ago the offence was committed; and
(iii)the person’s age when the offence was committed;
Note 1The admission rules may make provision for the convictions that must be disclosed by an applicant and those that need not be disclosed.
Note 2Section 13 (References to conviction and quashing of conviction) provides that reference to a conviction includes a finding of guilt, or the acceptance of a guilty plea, whether or not a conviction is recorded.
(d)whether the person engaged in legal practice in Australia—
(i)when not admitted, or not holding a practising certificate, as required under this Act or a previous territory law that corresponds to this Act or under a corresponding law; or
(ii)if the person was admitted—in contravention of a condition of admission; or
(iii)if the person held an Australian practising certificate— in contravention of a condition of the certificate or while the certificate was suspended;
(e)whether the person has practised law in a foreign country—
(i)when not permitted under a law of that country to do so; or
(ii)if permitted to do so, in contravention of a condition of the permission;
(f)whether the person is currently subject to an unresolved complaint, investigation, charge or order under any of the following:
(i)this Act or a previous territory law that corresponds to this Act;
(ii)a corresponding law or corresponding foreign law;
(g)whether the person—
(i)is the subject of current disciplinary action, however expressed, in another profession or occupation in Australia or a foreign country; or
(ii)has been the subject of disciplinary action, however expressed, relating to another profession or occupation that involved a finding of guilt;
(h)whether the person’s name has been removed from—
(i)a local roll, and has not since been restored to or entered on a local roll; or
(ii)an interstate roll, and has not since been restored to or entered on an interstate roll; or
(iii)a foreign roll;
(i)whether the person’s right to engage in legal practice has been suspended or cancelled in Australia or a foreign country;
(j)whether the person has contravened, in Australia or a foreign country, a law about trust money or trust accounts;
(k)whether, under this Act, a law of the Commonwealth or a corresponding law, a supervisor, manager or receiver, however described, is or has been appointed in relation to any legal practice engaged in by the person;
(l)whether the person is or has been subject to an order, under this Act, a law of the Commonwealth or a corresponding law, disqualifying the person from being employed by, or a partner of, an Australian legal practitioner or from managing a corporation that is an incorporated legal practice;
(m)whether the person currently is unable to satisfactorily carry out the inherent requirements of practice as an Australian legal practitioner.
The fact that Ms Burns’ conduct does not fall within the kinds of conduct described in s 389, which sets out a non-exclusive list of actions that can be unsatisfactory professional conduct or professional misconduct, and does not clearly raise a suitability matter, makes it even more desirable that we set out our reasons in this matter.
Inherent jurisdiction of Supreme Court
Apart from the complaints process outlined at [8]–[10] above, s 462 of the Legal Profession Act preserves the inherent jurisdiction of the Supreme Court:
The inherent jurisdiction and powers of the Supreme Court in relation to the control and discipline of local lawyers are not affected by anything in [ch 4, Complaints and discipline], and extend to—
(a) local legal practitioners; and
(b) interstate legal practitioners engaged in legal practice in the ACT.
There appears to be no doubt that the inherent jurisdiction of the Supreme Court in relation to the control and discipline of lawyers includes the power to remove the name of a practitioner from the roll of admitted practitioners: Re Davis (1947) 48 SR (NSW) 33 at 35–6; Re Davis (1947) 75 CLR 409 at 414, 419, 423, 427, 429; Supreme Court Act 1933 (ACT) s 11 (and see Australian Capital Territory (Self-Government) Act 1988 (Cth) s 48A); Ex parte Attorney-General (Cth); Re a Barrister and Solicitor (1972) 20 FLR 234 at 240–1; Re Guild (1979) 32 ACTR 13 at 29.
Effect of removal from the roll
The removal of a name from the roll following the statutory process outlined at
[8]–[10] above has specified consequences. Among other things, the Legal Profession Act establishes a register of disciplinary action (s 448), on which is to be recorded particulars of disciplinary action (defined in s 447 to mean specified action taken, under that Act or a corresponding law, following a finding by a court or tribunal of professional misconduct or unsatisfactory professional conduct by an Australian legal practitioner).
However, because this matter has proceeded as an application for the exercise of the Court’s inherent jurisdiction (rather than for action under the Legal Profession Act), and without the Court being asked to make a finding of professional misconduct or unsatisfactory professional conduct, it seems that our Order will not be required to be recorded on the register of disciplinary action.
Reasons for making the order
The evidence
Ms Burns’ affidavit, comprising 61 pages of narrative and another 257 pages of annexures, tells a tragic story. It is unnecessary to describe the circumstances leading to Ms Burns’ downfall in detail, but as noted it is necessary to identify the nature of the conduct that has made it appropriate for her name now to be removed from the roll.
The affidavit provides brief background information, noting that Ms Burns obtained an unrestricted practising certificate (UPC) in 1992 and set up practice as a sole practitioner, and then describes in considerable (although not always exhaustive or completely clear) detail the events of the period from 2006 until July 2010. At the centre of Ms Burns’ troubles was her attempt to sell her practice (which by 2004 was operating from premises in Kingston and Gungahlin) to a person who would not have been able to comply with all the obligations imposed on the owner of a law practice but who, over time, induced Ms Burns to cooperate in a variety of more or less improper temporary arrangements intended to buy time until he could legally take over the practice.
Matters emerging from the evidence
Origins of Ms Burns’ troubles
The first thing to note is that Ms Burns’ legal troubles started in 2006 when she and her husband became aware that their son, then living in Melbourne, was struggling with a substance abuse problem and seemed to have “lost his way”. They decided to move to Melbourne to support him, and Ms Burns began looking for a buyer for her practice. Throughout the following five years, their son’s on-going problems, and the impact of those problems on Ms Burns and her husband, affected Ms Burns’ ability to deal with the difficulties in which she became enmeshed after she began looking for a buyer for the practice.
Ms Burns’ ignorance of requirements of legal practice
It was Ms Burns’ bad luck that the only potential buyer who made what she considered a reasonable offer to buy the practice, one S, was a person who, whether because of his own ignorance or otherwise, did not make any contribution to ensuring the propriety of the arrangements between himself and Ms Burns. However, before referring to S’s role in Ms Burns’ difficulties, it is necessary to point out that Ms Burns was to a significant extent the architect of her own misfortune. Ms Burns had spent nearly 15 years as a sole practitioner engaged largely in conveyancing work including, apparently, sales of businesses, an area in which compliance with a statutory framework and ensuring that all legal technicalities are dealt with properly are fundamental. Despite this, she seemed to have an inadequate understanding of the framework in which legal practice must be conducted in this jurisdiction, of the ways in which property is held by and transferred between various kinds of entities and, more generally, of the need to understand a statutory framework before seeking to act under it.
Practice arrangements and the sham transactions
Although Ms Burns’ husband had only ever held a restricted practicing certificate (RPC), the practice’s financial affairs had been run for many years on the basis that he had an equal financial interest with Ms Burns, and she described him as “a 50% partner”.
While the position under the current Legal Profession Act is not clear, we note that under the Legal Practitioners Act 1970 (ACT) (in force until 2006), there was a prohibition on a legal practitioner practicing as a solicitor in partnership with another legal practitioner unless the first-mentioned legal practitioner held a current unrestricted practising certificate (s 22(1)).
The prospective buyer S also did not hold a UPC. S’s lack of a UPC was recognised by Ms Burns and by S as an obstacle to Ms Burns finally severing her connection with her practice and, in particular, concluding her responsibility for the practice’s trust accounts. Ms Burns accepted, without checking, S’s assurance that obtaining a UPC would be a mere formality after he had been admitted as a legal practitioner for five years. In fact, the current legislation (s 10 of the Legal Profession Regulation 2007 (ACT)) does not provide for any automatic grant of a UPC based on elapsed time since admission; instead, the criteria are, relevantly, at least two years total experience in any of several kinds of legal practice in the five years before applying for a UPC and that the applicant has “attained such a level of professional skill, and gained such professional experience, that it is appropriate that an unrestricted practising certificate be issued to the person.”
Ms Burns did not initially advert to whether a person who did not hold a UPC could own or buy a law practice, believing that the only requirement was for there to be a UPC-holder supervising the practice’s trust account. As noted, Ms Burns’ confusion may have been to some extent explicable if it is correct that any relevant restrictions arise only from the contents of the individual’s practising certificate, but that confusion does not explain her failure to check the status of her prospective buyer until she was told by one of her employees that she could not sell her practice to S. Only then did she seek advice from the Law Society.
Ms Burns says that Larry King of the Law Society advised her as follows:
It is legally possible for a person who is not a legal practitioner to acquire an interest in a legal practice in the ACT.
However, the legal practice must be incorporated. It is quite common for the legal practice to be registered as an incorporated legal practice and for a person who is not a legal practitioner to acquire a share in the company in consideration for the payment of a monetary amount to the company to acquire that share.
We have not been able to find anything in the Legal Profession Act requiring shares in an incorporated legal practice to be bought from the company rather than from another shareholder, and it may be that this aspect of Mr King’s advice has lost something in Ms Burns’ re-telling.
Having received Mr King’s advice, Ms Burns then set up a company and agreed with S, despite the Law Society advice, that the sale agreement for the practice would show the company as the seller of the practice (rather than as the owner of the practice and the issuer of a share in the company that would be sold to a prospective buyer). As well, Ms Burns made no inquiries about the circumstances in which a legal practice could be incorporated or the rules applying to such practices, which are set out in detail in pt 2.6 of the Legal Profession Act. No notice that the company proposed to engage in legal practice in the ACT was given to the Law Society Council as required by s 104 of the Legal Profession Act. Perhaps more surprisingly, Ms Burns took no steps to transfer her practice or any part of it, or any of the assets of the practice, to the new company. In due course, forms showing the transfer of shares in the company from Ms Burns’ husband to her prospective buyer S were signed. The share transfer was never notified to ASIC (as required by s 178A of the Corporations Act 2001 (Cth)), although Ms Burns says that she had asked for the appropriate forms to be lodged and believed this to have been done.
Following an inquiry from the Law Society, Ms Burns completed a form identifying herself and S as the “legal practitioner directors” of the purported incorporated legal practice, without knowing, and without seeking to discover, what the term “legal practitioner director” required and, in particular, whether S was qualified to be identified as a “legal practitioner director”. In fact, S was not so qualified, because s 99(1) of the Legal Profession Act defines “legal practitioner director” of an incorporated legal practice as “a director of the legal practice who is an Australian legal practitioner holding an unrestricted practising certificate”.
The incorporation of the company and the dealings in its shares seem to us to have been a sham transaction intended to create a false picture of what Ms Burns was in fact doing in respect of the sale of her practice.
Despite the steps (albeit inadequate) taken in an attempt to create an incorporated legal practice, both payments by S ($170 000 for the practice operating in Kingston and $100 000 for the practice operating in Gungahlin) were made by cheques made out to Ms Burns and the amounts were declared as to half each by Ms Burns and her husband in their personal income tax returns.
Following S’s payment of $170 000 for the Kingston part of Ms Burns’ practice,
S retained all income from that part of the practice from 1 October 2007. After
S’s payment of $100 000 in February 2008, he also retained all income from the Gungahlin part of Ms Burns’ practice.
Later, even when she realised that she had got herself into serious trouble over her dealings with her practice, Ms Burns assumed (despite the scope for earlier cancellation or supervision mentioned in s 37 of the Legal Practitioners Act) that she could not ask the Law Society to cancel her UPC until the end of the relevant financial year, and so let matters slide for a further five or six months.
Finally, in March 2010, Ms Burns and her husband signed an agreement (intended to be made with S and his associate D, but in fact never signed by either of them) that Ms Burns believed would among other things install D as the new UPC-holder for her practice and thereby relieve her of responsibility for the trust accounts. Despite her growing concern about the legal position that she found herself in, Ms Burns signed this agreement without taking any legal advice.
We have already expressed the view that the incorporation of a company and the dealing in its shares by Ms Burns and S amounted to a sham transaction. We note at this point, however, that nothing in these reasons should be read as indicating any views about the ultimate legal effect of the various transactions entered into by
Ms Burns and described above. In particular, given the failure to transfer any part of the business’s assets to the company set up by Ms Burns, the various unorthodox agreements purporting to transfer some kind of interest in the practice to S,
S’s payments of a total of $270 000 to Ms Burns and his subsequent receipt of the income of the practice for some years and the obscure impact of the Legal Profession Act and associated legislation on those several attempts to transfer something to S, the legal status of Ms Burns’ business and its assets, at the end of the transactions described in Ms Burns’ affidavit, is entirely unclear.
Ms Burns’ entanglement with S and her neglect of her practice
As a result of her ignorance of important matters, and her failure to check on relevant issues, Ms Burns was vulnerable to the risks inherent in engaging in a joint venture with her buyer S who, as already noted, did not make any contribution to ensuring the propriety of the arrangements between himself and Ms Burns.
When Ms Burns first discovered that S had no UPC, she believed that this would be rectified in a matter of months when S completed the requisite five years since his admission, and did not object to remaining involved in the practice to a limited extent, to satisfy what she believed were the legal requirements, until that time came.
By the time Ms Burns was convinced that S was unlikely to obtain a UPC (which realisation, it must be said, seems to have taken an inordinately long time to dawn on Ms Burns) she was, as already described, enmeshed in a series of complex financial arrangements with S and, more significantly, had allowed her practice to deteriorate in various ways for which she, as the UPC-holder if not the beneficial owner of the practice, was ultimately responsible. The problems with the practice included:
(a) that the trust accounts had not been properly maintained;
(b) that the practice had not been providing a proper service to clients and had been the subject of multiple complaints to the Law Society; and
(c) that S had been conducting, through Ms Burns’ practice but without her knowledge and mainly funded by Legal Aid ACT, a criminal practice that was itself, apparently, being improperly conducted, at least in relation to financial arrangements.
We note, however, that although Ms Burns’ affidavit refers to S’s criminal practice being conducted through her firm as if this were inappropriate, the source of that impropriety is not clear to us, and we can only assume that it arises from conditions attached either to Ms Burns’ unrestricted practising certificate or to S’s restricted practising certificate, neither of which is in evidence.
Some of the defects in the way the practice had been run may have been entirely attributable to S’s actions. For instance, Ms Burns’ evidence is that S assured her on several occasions that he was not conducting any criminal work through her practice, although her affidavit also records that in August or September 2008, S mentioned that he was doing some family law and criminal work through the practice but that Ms Burns let this comment pass. However, Ms Burns describes other conduct of her own that left open the possibility of impropriety, including that after Ms Burns “sold” part of the practice to S and moved to Melbourne, returning to Canberra only for a few days most weeks to “supervise” the practice, she began leaving signed blank trust account cheques at the practice, and continued to do so until the auditor queried this approach several months later.
Dishonest or misleading conduct and failure to be candid with Law Society
Finally and most seriously, Ms Burns’ affidavit records a series of occasions on which she consciously engaged in dishonest or misleading conduct, including repeated failures to be candid in her dealings with the Law Society. These include the following:
(a)In October 2007, Ms Burns accepted a cheque for $170 000 from S without having a signed sale agreement, then signed and backdated a sale agreement some days or weeks later that Ms Burns acknowledged did not accord with the advice she had been given by the Law Society and that referred to a payment, by S to the company that Ms Burns had set up, that had never been made. Ms Burns recognised that this agreement was drafted to satisfy the Law Society’s requirements and reflected a transaction that had in fact already taken place.
(b)In June 2008, Ms Burns had a discussion with Rod Barnett, then President of the Law Society, about the amount of supervision she needed to provide in her practice; although Ms Burns claims to have said that she had sold her practice to S, she concedes that she did not tell Mr Barnett about the payments she had received for the practice, or the fact that S was receiving the income from the practice and paying her a consulting fee, or about what she describes as the “re-documentation” of the sale of the practice. Ms Burns says that at this point she still did not understand that there was a serious issue about the sale of her practice to S while he did not hold a UPC.
(c)Also in June 2008, Ms Burns replied to an inquiry from the Law Society with a letter that she concedes omitted some relevant details and generally
was not intended to assist the Law Society with its enquiries into the operations of the Practice but, instead, to make out that nothing was amiss, thereby leaving me unhindered to leave the Practice once and for all after 10 November 2008.
(d)In July 2008, Ms Burns signed a letter to the Law Society about various accounting and other issues. The letter had been prepared by S, and Ms Burns acknowledges that she signed it without regard to the contents and that some of the contents were not true. She says: “I signed the letter [S] drafted for me knowing it to be false because I was desperate. I wanted to be rid of the Practice and the problems with the Law Society and I was prepared to do whatever [S] wanted.”
(e)In September 2008 (following inquiries by the Law Society to S), Ms Burns and R, at S’s request, prepared and signed a “Heads of Agreement” purporting to set out the arrangements between Ms Burns, her husband and S about the transfer of the practice. Ms Burns conceded that the Heads of Agreement was “a fiction”. She was also aware that when S signed the document, after Ms Burns and her husband signed it, he had dated it 26 September 2007 (a year before it was actually signed). Ms Burns said that by that time she
was in damage control. Things were not working out at all as I had envisaged. I felt as though I needed to keep helping [S] and do everything he asked me if I was to get out of the mess with him. I was in over my head. ... I was simply focused on getting to 10 November 2008 when I could leave Canberra.
(f)In December 2008, Ms Burns attended a meeting requested by Michael Phelps on behalf of the Law Society. She did not correct what she thought was Mr Phelps’ mistaken impression that she still owned the practice. Mr Phelps provided a draft statement for Ms Burns to sign. Ms Burns signed the statement only after Mr Phelps had incorporated changes that had been proposed by S and which Ms Burns sent on to Mr Phelps knowing that the suggested changes included material that was not true. Ms Burns said that she did this because she “had to maintain the subterfuge [S] and I were engaged in about who owned the practice until [S] obtained his UPC.” She acknowledged also that she did not take the opportunity of the meeting with Mr Phelps to make a full disclosure about the sale of the practice and try to resolve the issues.
(g)In late 2009, Ms Burns, despite having decided not to renew her practising certificate for the 2010/2011 financial year, did not then contact the Law Society to try to resolve the status of her practice, instead simply stopping her attendance at the practice.
In general terms, the effect of Ms Burns’ approach to the Law Society was to obstruct its efforts to discover what was going on in Ms Burns’ practice, which if successful might have enabled the Law Society to help Ms Burns extricate herself from her own difficulties, and to protect clients of the practice, at a much earlier point.
Conduct that justified removal of Ms Burns’ name from the roll
Ms Burns’ dishonest and misleading conduct, and in particular her lack of candour in her dealings with the Law Society, as described at [42] above, satisfied us that she was not a fit and proper person to remain on the roll, and was the ground on which we made an order for the removal of her name from the roll.
As noted, there was no evidence before us except Ms Burns’ affidavit. That evidence provided an adequate basis for findings that Ms Burns had engaged in dishonest and misleading conduct and had not been candid with the Law Society, and that she was not a fit and proper person to remain on the roll. However, the evidence was not sufficiently clear in relation to other possible inadequacies in Ms Burns’ conduct of her law practice for us to make any other findings; the absence of any such findings should not, however, be taken as any kind of approval for any of the conduct described above.
I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.
Associate:
Date: 8 June 2012
Counsel for the applicant: Mr M Phelps
Solicitor for the applicant: Phelps Reid Lawyers
Counsel for the respondent: Ms B Gallagher
Solicitor for the respondent: Meyer Vandenberg Lawyers
Date of hearing: 11 August 2011
Date of reasons for judgment: 8 June 2012
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