Legal Practitioners Complaints Committee and Penkin - [2006] WASAT 62

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: VOCATIONAL REGULATION

ACT: LEGAL PRACTICE ACT 2003 (WA)

CITATION: LEGAL PRACTITIONERS COMPLAINTS COMMITTEE and PENKIN [2006] WASAT 62

MEMBER: JUDGE J CHANEY (DEPUTY PRESIDENT)
MR C RAYMOND (SENIOR MEMBER)
MR J MANSVELD (MEMBER)

HEARD: 23 AND 30 NOVEMBER 2005 ADDITIONAL DOCUMENTS FILED 21 DECEMBER 2005

DELIVERED : 17 MARCH 2006

FILE NO/S: VR 312 of 2005
VR 313 of 2005

BETWEEN: LEGAL PRACTITIONERS COMPLAINTS COMMITTEE
Applicant
AND
KEVIN MICHAEL PENKIN
Respondent

Catchwords:

Professions Legal practitioner Unprofessional conduct Alleged failure to account Allegation of charging for attendances where alcohol consumed excessively Conflict in evidence as to receipt of funds and consumption of alcohol Standard of proof Inconsistencies in complainant's evidence

Legislation:

Nil

Result:

Complaints dismissed

Category: B

Representation:

Counsel:

Applicant: Mr AS Stavrianou
Respondent: Mr JRB Ley

Solicitors:

Applicant: Law Complaints Officer
Respondent: Self-represented

Case(s) referred to in decision(s):

Briginshaw v Briginshaw (1938) 60 CLR 336

Case(s) also cited:

Nil

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of the Tribunal's decision

Allegations were made to the Tribunal that, in September 2000, a legal practitioner, Mr Kevin Michael Penkin, acted unprofessionally in two respects. First, it was said that he failed to account to his client for $900 provided to him on account of costs. Second, it was said that he charged the same client for an attendance at the client's home, notwithstanding that he consumed an excessive amount of alcohol during the attendance.
Mr Penkin denied both allegations. He said that the $900 was never paid to him and that he did not consume alcohol at the attendance. He produced his notes of the attendance to support his case.
The Tribunal heard evidence from the client, a witness who was at the meeting in question, and Mr Penkin. There were significant inconsistencies in the evidence of the client and the witness especially on the question of consumption of alcohol, although it was clear that both the client and the witness drank a significant amount on the occasion in question. In the light of these inconsistencies, and the practitioners unshaken denials of both allegations, the Tribunal concluded that it was not satisfied, to the required standard, that the allegations were established on the evidence. Accordingly, both allegations were dismissed.

Introduction

The Legal Practitioners Complaints Committee (the Complaints Committee) brings two complaints of unprofessional conduct against the respondent, Mr Penkin. Both arise from events said to have occurred at a meeting between Mr Penkin, and his client, who we will simply refer to as Mr N, on or around 4 September 2000.
The first allegation is that at the meeting on 4 September 2000, Mr Penkin obtained $900 from Mr N on account of future fees, but failed to deposit that sum into his trust account, or otherwise account to Mr N for the money.
The second allegation is that, on or around 12 October 2000, Mr Penkin rendered to Mr N an account which contained a charge for an attendance on 4 September 2000 during which attendance it is alleged Mr Penkin drank a significant amount of alcohol.
The practitioner denies that Mr N paid him $900 or any amount on account of future fees on or around 4 September 2000. Accordingly, he says that there was nothing for him to deposit in the trust account nor for him to account to Mr N. As to the second allegation, Mr Penkin admits that he sent an account to Mr N on 12 October 2000 and that that account contained a charge for the attendance on 4 September, but denies that he drank any alcohol during the meeting. Mr Penkin contends that the charge made was a proper charge for the professional services rendered at the meeting.

The evidence

Prior to July 2000, Mr N was represented by another solicitor, Mr Burley of Ray Burley & Associates. Mr Burley had acted for Mr N in respect of a criminal charge of causing an explosion likely to cause serious injury to property and a charge of breaching a restraining order. The explosion had occurred when Mr N had gone to the home of his estranged wife in September 1998 and caused an explosion. At the time, Mr N was subject to a violence restraining order which had been obtained against him in July 1998 by his daughter.
Following the explosion, on 16 September 1998, Mr N's wife also obtained a violence restraining order against Mr N restraining him from contacting her or coming within the vicinity of her home for a period of two years.
Mr N subsequently appeared in the District Court in May 1999 and pleaded guilty to causing the explosion and to the breach of the violence restraining order in relation to his daughter. He was sentenced to a period of imprisonment on each charge with both sentences being suspended. Sometime after the District Court proceedings were completed, Mr N instructed Mr Burley to act for him to endeavour to negotiate a settlement of matrimonial property with Mr N's wife. It would appear that that matter had not progressed significantly when Mr Burley died in July 2000.
Immediately prior to his death, Mr Burley was working from the same premises as Mr Penkin. Shortly after Mr Burley's death, Mr N retained Mr Penkin to act for him in relation to the property settlement. He initially had a telephone call with Mr Penkin not long before Mr Burley's funeral. They first met at Mr Burley's funeral on 14 July 2000, although there was no discussion at that time of professional matters.
The first meeting between Mr N and Mr Penkin in relation to matrimonial property affairs occurred on 5 August 2000 at Mr N's home in Padbury.
In his witness statement, which comprised his evidence‑in‑chief, Mr N said that soon after his first meeting with Mr Penkin, Mr Penkin told him that things were "starting to get going" and asked him to pay some money for fees. Mr N said that he did not remember Mr Penkin naming an amount or saying what the money was to be used for.
Mr Penkin denied ever having made any request for payment of fees on account. Mr N was cross‑examined at some length as to precisely when the alleged request was made, and as to its terms. In the course of that cross‑examination, Mr N made reference to a payment which he said he made of two amounts of $500 in cash and one payment of $50, also in cash on 30 August 2000. He was very vague as to when the request for funds on account was made, and said that he suggested a figure of $1000 as a payment on account of costs, and Mr Penkin agreed to that amount. We will return to our findings in relation to this conflict later in these reasons.
Mr N agreed that the meeting on 5 August 2000 was for the purposes of Mr N providing instructions to Mr Penkin to draft a letter to Mr N's wife in relation to the property settlement. However, while Mr Penkin was at Mr N's home, police arrived to serve an application for the extension of the violence restraining order (VRO) obtained by Mr N's wife which was due to expire in September 2000. The application for an extension was returnable on 30 August 2000. Mr N instructed Mr Penkin to act for him to oppose the extension of the VRO.
On 11 August 2000, the practitioner sent a letter to Mr N's wife. On 14 August, Mr Penkin wrote to Mr N enclosing a cost agreement for Mr N's signature. The schedule to the costs agreement identified the subject matter of the instructions as both the property settlement and divorce, and the proceedings in relation to the restraining order. Item 5 of the schedule was entitled "monies paid in advance", and the word "nil" was inserted. Mr N said that he read the costs agreement, agreed with its contents and subsequently signed it.
In subsequent proceedings between Mr Penkin and Mr N in the local court at Perth, Mr N filed a partial confession of debt in which he asserted that he had made payments of $500 in cash on 8 August 2000 and again on 11 August 2000 and a payment of $50 in cash on 30 August 2000. Item 5 of the schedule to the costs agreement, which Mr N did not sign until 29 August 2000, is inconsistent with Mr N's assertion that, prior to signing the costs agreement, he had paid a total of $1000 to Mr Penkin on account of costs. In cross‑examination, Mr N said that he "obviously missed" that item in the schedule, and accordingly he did not query the entry.
It should be observed at this point that Mr Penkin denies receipt of the two payments of $500 in early August 2000 or the $50 on 30 August 2000. There was no accounting for any such payments in the subsequent invoices rendered by Mr Penkin to Mr N. In the local court proceedings Mr N did not endeavour to set off the two payments of $500 and the payment of $50 against Mr Penkin's ultimate account to him, apparently on the basis that, unlike the $900 which forms the subject of the first allegation, Mr N considered he could not prove the two payments of $500.
On 25 August 2000, Mr Penkin received a facsimile from solicitors acting for Mr N's wife. The facsimile advised that the application for extension of the VRO was proceeding. Mr Penkin sent a copy of that facsimile to Mr N, and they subsequently agreed to meet at Mr N's home on the evening of 29 August 2000 to prepare for the hearing of the VRO the next day. That meeting took place as arranged.
The application for variation of the VRO did not proceed to hearing on 30 August 2000, apparently because the magistrate expressed some doubt as to his power to extend the order. The matter was adjourned to 5 September 2000 for hearing to enable the magistrate to consider that issue.
Arrangements were then made for the practitioner to meet with Mr N at Mr N's home on the evening of 4 September 2000. The purpose of the meeting was to enable Mr Penkin to take a statement from a witness, Mr H, who was to give character evidence for Mr N at the hearing of the VRO extension application.
Mr N said that Mr H arrived at his house at approximately 7:30 pm, and Mr Penkin arrived at about 8:00 pm. In cross‑examination, however, he accepted that Mr Penkin may have arrived at 9:00 pm as Mr Penkin contended he did. Mr N agreed that he and Mr H had a "couple" of drinks before Mr Penkin arrived. Mr H's evidence was that he arrived at Mr N's house at about 8:00 pm.
Mr N said in his witness statement that the three of them were drinking for the whole of the evening. He said that three bottles of wine were consumed between the three of them over two to three hours, as well as most of a carton of beer. He estimated that Mr Penkin drank three or four stubbies of beer and said that the three of them drank approximately the same amount of alcohol. Mr N was cross‑examined about that evidence. He said that he and Mr H "had a couple of beers… prior to Mr Penkin arriving", although he then changed that evidence saying that he usually drinks wine and he would have had a few wines, but no beer. He explained the statement in his evidence‑in‑chief that the three had drunk the same amount of alcohol as meaning that they were drinking "drink for drink" whether it was wine or beer. He said that Mr Penkin was drinking wine, but at one stage was also drinking beer.
Mr H estimated that he probably had a half a dozen beers saying that he was "limited to that amount because I had to drive home". He estimated that Mr N drank about the same amount as he did. He said that, during the evening, he saw Mr Penkin drink three or four stubbies of beer and three or four glasses of wine. In cross‑examination, Mr H said that he drank approximately four to six stubbies that night, and that Mr N was drinking beer. He said that Mr N drank not more than six stubbies.
Mr Penkin denied he had any alcohol to drink that night.
In Mr N's letter of compliant to the Complaints Committee he said nothing about Mr Penkin drinking alcohol at the meeting on 4 September 2000. In referring to the earlier meeting of 29 August 2000, however, Mr N made an allegation of the consumption of 500 millilitres of Johnny Walker.
Mr N stated that in the course of the evening Mr Penkin raised the matter of Mr N providing him with money for fees, and he gave Mr Penkin $900 cash. He said that Mr Penkin did not give him a receipt. Mr N said that he had withdrawn that money from his visa account two days earlier to pay to Mr Penkin. Mr N's visa account statement shows a cash advance on 2 September 2000 (a Saturday) of $900. In his letter to the Complaints Committee, Mr N said that he paid that sum by way of 18 $50 notes.
Mr H said that he saw Mr N give Mr Penkin $900 in cash. He said this occurred towards the end of the evening between 10:00 pm and 11:00 pm. In cross‑examination, Mr H said that he heard Mr N count out the money and hand over to Mr Penkin $50 and $100 notes ‑ mainly, he thought, $50 notes. He said that the money was counted out in hundred dollar lots, but he didn't watch to see the denominations of the notes making up each one hundred dollar lot.
Mr Penkin denied receiving any money that evening.
Mr Penkin produced notes of the instructions he took from Mr H on 4 September 2000. The notes occupy some six pages, and contain information relating to Mr N and his relationship with his estranged wife and daughter. Mr Penkin said that the notes were of information given to him by Mr H for the purpose of preparing Mr H's evidence for the VRO extension the following day. In cross‑examination, Mr H agreed that he had given information to the effect obtained in the notes to Mr Penkin, at the meeting on 4 September 2000. Both Mr H and Mr N acknowledge that, at least for part of the time that evening, Mr Penkin was carrying out the purpose of the meeting, namely to interview Mr H for the purpose of Mr H's evidence.
The VRO extension proceedings were eventually completed, and on 12 October 2000, the respondent sent Mr N an account for his services from 10 August to 10 October 2000. No charge was raised in relation to the initial attendance on 5 August 2000. The account was itemised, and included a charge of $832 for an attendance with Mr N and Mr H on 4 September 2000, for a duration of 3.2 hours. On a time-costed basis, the itemised account totalled $8262, but that amount was reduced in the invoice to $5000 plus disbursements. The account contained no reference to any monies paid on account of costs, and specifically no mention of the $900 said to have been paid on 4 September 2000.
Mr N said that, when he received the account in mid October 2000, he had a meeting with Mr Penkin the same night and queried why the account didn't mention a credit of the monies he had paid. Mr N said " I told him that I assumed the invoice must be less than [sic] money I had already paid him. He said 'no, that was cash'. The only other thing he said about the money that I paid him was that it was 'used up'". He said that Mr Penkin refused to tell Mr N what the money was used for, but merely said that it was for "just bits and pieces".
On about 9 November 2000, Mr N paid $1000 in reduction of the account of 12 October 2000. Mr Penkin said that that payment came after he had spoken to Mr N by telephone about payment of the account, and that at no stage had Mr N disputed the first account or said that it should be reduced to take into account any payments made on account.
Mr Penkin continued to act for Mr N in relation to the property settlement matter until the end of January 2001. On 11 January 2001, Mr Penkin sent Mr N a further account for $1320.72 for fees and disbursements for acting between 16 October and 13 December 2000.
Mr Penkin said that on 31 January 2001 he had a telephone conversation with Mr N in which Mr N told him that he could not afford to pay his debt to Mr Penkin immediately but he expected to be in a position, the following month, to make an offer to pay off the debt by instalments and that he would be able to pay the balance in full when he finalised his property settlement with his wife. Mr N was vague in his recollection of that conversation but did not substantially dispute it. Mr Penkin's account of the conversation is consistent with a letter of the same date which he sent to Mr N which recites the conversation in some detail. The letter then set out the terms upon which Mr Penkin's firm would refrain from commencing proceedings for recovery. The amount of indebtedness referred to was the total of the two invoices less the $1000 paid on 9 November 2000.
According to Mr Penkin, Mr N telephoned him on 7 February saying that he would pay off the debt at $100 per month from 21 February 2001, with the balance payable in full when the property settlement was finalised. Mr Penkin sent a letter to Mr N confirming that conversation and again setting out the terms upon which he would refrain from commencing enforcement proceedings. The amount of the debt was again the full amount of the two accounts less the $1000 paid in November. Mr N signed that letter and returned it to Mr Penkin.
Mr Penkin said that in neither of the conversations leading to the letters of 31 January and 7 February 2001 did Mr N raise a question of having paid $900 which had not been accounted for. Mr N was cross‑examined about that matter. He agreed that he did not raise the question of payment of $900 at that stage because "I had written that off virtually".
Mr N then paid the agreed sum of $100 per month from 22 February 2001 until 28 November 2001. He did not, however, provide certain information as to his financial position which the agreement of 7 February 2001 required him to do. Accordingly, Mr Penkin wrote to Mr N on 3 December 2001 seeking that information and enclosing a statement of account of payments made to that point.
According to a file memo prepared by Mr Penkin's secretary, on 17 December 2001, she spoke to Mr N by way of a follow up to Mr Penkin's letter of 3 December 2001. According to the note, Mr N told her that he was still trying to negotiate a settlement with his wife who was being stubborn. Mr Penkin subsequently determined that the family court proceedings had in fact been concluded by consent orders at the beginning of December. Those orders required a payment to Mr N by his wife of $25 000 within 60 days. Mr Penkin wrote to Mr N on 11 December 2001 threatening to commence action for the outstanding costs unless certain information was provided immediately. Mr Penkin subsequently established that the proceeds of the property settlement were due to be paid on 25 or 29 January 2002. On 29 January 2002, Mr Penkin telephoned Mr N and was told that the property settlement had been finalised but the proceeds had been disbursed to pay various other creditors and that Mr N had no money to pay the balance of the debt.
Mr Penkin then said that he would institute proceedings immediately. Mr N responded that he thought he could raise some money immediately and pay the balance by instalments. On 30 January 2002, Mr Penkin again wrote to Mr N confirming the terms of a new agreement for payment of the outstanding fees by way of an initial instalment of $2800 and the balance at the rate of $50 per week. The initial instalment was paid, and instalments of $50 were paid on 12 occasions between 5 April 2002 and 9 August 2002.
When the payment of instalments ceased, Mr Penkin's secretary wrote to Mr N on 11 September 2002 demanding immediate payment of instalments. On 24 September 2002, Mr Penkin issued proceedings against Mr N in the local court claiming the then balance of $2318.53.
In response to the summons, Mr N filed a confession of debt claiming that he had paid four amounts, including the $900 on 4 September 2000 on account of costs. The confession sought to set off only the $900 payment.
Mr Penkin applied for summary judgment on the whole of the claim, and was successful as to the amount of the claim less $900 in respect of which leave to defend was granted. The claim by Mr Penkin against Mr N was eventually comprised by a payment by Mr N to Mr Penkin of $2000 in full and final satisfaction of the claim.

The standard of proof

The allegations against Mr Penkin are serious. They have a potentially serious impact on his standing, reputation and livelihood as a legal practitioner. In this case, there is a direct conflict of evidence between Mr Penkin on the one hand, and Mr N and Mr H on the other, in respect to the critical factual issues. The appropriate standard of proof which the Complaints Committee must satisfy is the balance of probabilities. In view of the seriousness of the allegations, it is necessary that the Tribunal "feels an actual persuasion of the occurrence of events or the existence of facts which are an issue" before making findings adverse to Mr Penkin – Briginshaw v Briginshaw (1938) 60 CLR 336 at 361‑363.

The charge for the meeting of 4 September 2000

It is convenient to deal first with our findings in relation to the allegation that Mr Penkin charged for an attendance on 4 September 2000, when he consumed a substantial quantity of alcohol on that occasion.
It is clear that, at the meeting on 4 September 2000, Mr Penkin carried out legal work. There is no issue that the purpose of the meeting was for Mr Penkin to interview Mr H for the purpose of preparing Mr H to give evidence at the VRO extension hearing. Mr N and Mr H agreed that Mr Penkin did interview Mr H, and Mr Penkin's notes confirm the information he obtained. Mr Penkin was clearly entitled to charge for doing legal work. The only basis upon which his charge for that meeting might be said to be unprofessional is if he spent a substantial portion of the time in social discussion rather than carrying out professional services, or that he drank alcohol to the extent that he was not capable of properly performing his professional function.
The evidence of both Mr N and Mr H concerning what Mr Penkin was alleged to have drunk, and the quantity he drank, is quite unsatisfactory. There were inconsistencies between the evidence of Mr N and Mr H as to who drank what at the meeting. Mr N's evidence‑in‑chief that a total of three bottles of wine and almost a carton of beer were consumed was inconsistent with his later evidence as to the quantity of alcohol consumed, and Mr H's evidence on the point. Mr H conceded that when being questioned by Mr Penkin about the matters contained in Mr Penkin's notes, Mr Penkin was not affected by alcohol. Significantly, Mr N made no mention of drinking at the meeting on 4 September 2000 when he wrote to the Complaints Committee, notwithstanding mentioning the consumption of 500 millilitres of Johnny Walker at an earlier meeting. Prior to having that letter put to him, Mr N had said in cross‑examination that he never bought whisky and did not drink it, evidence which he had to retract when shown his letter to the Complaints Committee.
It is likely that both Mr N and Mr H consumed a significant amount of alcohol during the course of that evening. There are, however, too many inconsistencies in the evidence of Mr N and Mr H to conclude that if Mr Penkin drank anything that night, it was a significant amount capable of interfering with his capacity to properly undertake the professional task for which the meeting was called. On balance we prefer the evidence of Mr Penkin that he did not consume alcohol at the meeting on 4 September 2005.
The evidence does not support a finding that Mr Penkin acted unprofessionally in charging for his attendance at Mr N's home on 4 September 2000.

Payment of $900

The evidence of Mr N and Mr H in relation to the payment of $900 was more specific than the evidence concerning Mr Penkin's alleged drinking at the meeting. Mr Penkin was equally firm in his denial that the money was paid.
Having carefully considered all of the evidence, we do not accept the evidence of Mr N and Mr H that $900 was paid to Mr Penkin on 4 September 2000. There are a number of reasons for not accepting that evidence.
First, in the light of their vague and conflicting evidence in relation to the allegation which both witnesses made as to Mr Penkin's drinking, the credibility of their evidence generally suffers. The fact that both witnesses seemed intent on establishing that Mr Penkin drank to excess at that meeting, but made such inconsistent assertions raises concerns as to the veracity of their evidence generally. Given the seriousness of the allegation concerning the failure to account for monies paid, we are not prepared to accept their evidence in the light of Mr Penkin's denial, which was unshaken by cross‑examination.
Second, Mr N said that the $900 was paid by him following a request for payment of monies on account. We do not accept that evidence. Mr N's evidence, as we have observed, was vague on this issue. His evidence that Mr Penkin did not suggest an amount to be paid, but rather Mr N suggested the figure himself seems somewhat unlikely. Having given evidence that he volunteered to, and did, in early August, pay $1000 on account of costs, there was no explanation as to why a further $900 was paid. Nor is Mr N's version consistent with his allegation that two payments of $500 had already been made. If that were true, and it was true that the parties had effectively agreed to a payment of $1000 on account, then no further payment would have been required on 4 September 2000. We prefer Mr Penkin's unshaken evidence that he made no request for payment on account.
Third, Mr Penkin's alleged conduct in relation to the receipt of $900 is entirely inconsistent with what appears to be fairly meticulous accounting in relation to payments received after the invoice of 12 October 2000 was rendered. That account involved a reduction from a time costing perspective of in excess of $3000. Mr N's evidence as to Mr Penkin's responses when the $900 payment was allegedly raised by Mr N on receipt of the October 2000 invoice, namely that the money "was cash", was "used up", and was used for "just bits and pieces" seems inherently improbable in the light of the detailed bills which were rendered.
Finally, and most significantly, Mr N conceded that, apart from immediately after receiving the first account, did he make any complaint to Mr Penkin about the failure to account for $900 (or indeed the $1950 which, according to the confession of debt, had been paid and not accounted for). That was so notwithstanding that there were numerous discussions and renegotiations in relation to payment of the debt and the regime for payment of the outstanding accounts over an extended period.
In the circumstances, the Complaints Committee has not established to the requisite standard that the payment was made. Both complaints should be dismissed.

Orders

The applications are dismissed.

I certify that this and the preceding [57] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUDGE J CHANEY, DEPUTY PRESIDENT