LEGAL PROFESSION COMPLAINTS COMMITTEE and STAFFA
[2020] WASAT 58
•2 JUNE 2020
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: LEGAL PROFESSION ACT 2008 (WA)
CITATION: LEGAL PROFESSION COMPLAINTS COMMITTEE and STAFFA [2020] WASAT 58
MEMBER: JUDGE T SHARP, DEPUTY PRESIDENT
MR D AITKEN, SENIOR MEMBER
MS M CONNOR, MEMBER
HEARD: 30 JANUARY 2020, 31 JANUARY 2020 AND 6 MARCH 2020
DELIVERED : 2 JUNE 2020
FILE NO/S: VR 25 of 2019
BETWEEN: LEGAL PROFESSION COMPLAINTS COMMITTEE
Applicant
AND
KEVIN COLIN BENEDICT STAFFA
Respondent
These reasons have been reissued with deletions to par [130] in accordance with O 3 of the Orders made by the Court of Appeal in CACV 131 of 2020
Catchwords:
Vocational regulation - Legal practitioner - Professional misconduct - Unsatisfactory professional conduct - Conflict of interest - Failure to be open and candid with Legal Profession Complaints Committee
Legislation:
Corporations Act 2001 (Cth)
Criminal Code (WA), s 378, s 378(7)
Interpretation Act 1984 (WA), s 46
Legal Profession Act 2008 (WA), s 5(a), s 401-s 469, Pt 13
Legal Profession Conduct Rules 2010 (WA), r 14(2), r 14(3), r 50, r 50(2), r 50(3)
State Administrative Tribunal Act 2004 (WA), s 62, s 87(2)
Result:
Practitioner guilty of professional misconduct
Practitioner guilty of unsatisfactory professional conduct
Category: B
Representation:
Counsel:
| Applicant | : | Mr MD Cuerden SC |
| Respondent | : | Mr GD Cobby SC |
Solicitors:
| Applicant | : | Legal Profession Complaints Committee |
| Respondent | : | N/A |
Case(s) referred to in decision(s):
Blackwell v Barroile Pty Ltd and Ors 51 FCR 347; (1994) 123 ALR 81
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Commonwealth Bank of Australia and Anor v Smith and Anor 42 FCR 390; (1991) 102 ALR 453
Kyle v Legal Practitioners' Complaints Committee [1999] WASCA 115; (1999) 21 WAR 56
Legal Profession Complaints Committee and A Legal Practitioner [2013] WASAT 37
Legal Profession Complaints Committee and Caine [2010] WASAT 178
Legal Profession Complaints Committee and Lee-Steere [2010] WASAT 189
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction and background
Application
This matter comes before the Tribunal by way of an application made by the applicant (Committee) dated 1 March 2019. In its application, the Committee seeks an order that the Tribunal make a finding that the respondent (Practitioner) has engaged in professional misconduct pursuant to s 438(1) of the Legal Profession Act 2008 (WA) (LP Act) and consequential orders pursuant to s 438(2) of the LP Act. The Committee also seeks an order that the Practitioner pay the Committee's costs pursuant to s 87(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act).
The grounds for the Committee's allegation that the Practitioner has engaged in professional misconduct are set out in full later in these reasons, but may be summarised as follows:
(1)the Practitioner, having been engaged by a company (Australian Company) through its managing director (W) to provide legal services to the Australian Company, also provided legal services to W for his personal benefit in circumstances where there was a conflict or potential conflict of the Practitioner's duty to act in the best interests of each of the Australian Company and W;
(2)the Practitioner rendered bills to the Australian Company for legal services performed by the Practitioner for the personal benefit of W;
(3)the Practitioner advised W to transfer money from the Australian Company's bank account to a personal account controlled by W in anticipation of W's entitlements upon the termination of W's employment with the Australian Company; and
(4)the Practitioner was not open and candid in his dealings with the Committee and failed to provide a full and accurate account of his conduct in relation to the Practitioner's professional behaviour.
Suppression order
On the first day of the final hearing in the Tribunal, 30 January 2020, the Committee sought and the Tribunal made an order under s 62 of the SAT Act that the names of witnesses in the proceeding (excluding the Practitioner), the Practitioner's clients and their employees are not to be published.
The making of that order was unopposed by the Practitioner.
Proceedings in the Tribunal
The Committee's application included its Statement of Facts and Contentions. With the consent of the parties, on 15 March 2019 the Tribunal ordered the filing of the Practitioner's statement of facts and contentions (which he did on 13 May 2019) (Practitioner's statement) and referred the matter to mediation to take place on 6 August 2019. The mediation did not result in a resolution of the matter and was terminated.
Following the making of further programming orders, on 29 October 2019 the Committee filed its book of documents (Committee's Book). On 12 December 2019 the Practitioner filed an amended statement of facts and contentions (Practitioner's amended statement) and, on 13 December 2019, his book of documents (Practitioner's book). The Practitioner, through counsel, confirmed that the Practitioner's amended statement was in substitution for the Practitioner's statement and the Practitioner's statement should be disregarded; ts 6, 30 January 2020.
The Practitioner filed his supplementary book of documents (Practitioner's supplementary book) on 16 January 2020 and on 28 January 2020 the Committee filed a supplementary book of documents (Committee's supplementary book).
The Committee's book, the Committee's supplementary book, the Practitioner's book and the Practitioner's supplementary book were all admitted and were marked, respectively, Exhibit 1, Exhibit 2, Exhibit 3 and Exhibit 4.
The Practitioner provided a witness statement dated 20 December 2019 (PWS). The Committee provided a witness statement from W dated 19 December 2019 (WWS) and the Practitioner provided a supplementary witness statement dated 24 January 2020.
The matter was heard over two days, on 30 January 2020 and 31 January 2020. The Practitioner and W gave evidence and were both cross-examined at the hearing.
At the end of the second day, the Tribunal ordered that the Committee and the Practitioner both file written closing submissions. The Committee's closing submissions (CCS) are dated and were filed with the Tribunal on 27 February 2020. The Practitioner's closing submissions (PCS) are dated and were filed with the Tribunal on 5 March 2020.
The parties then sought and the Tribunal allowed them the opportunity to make further responsive submissions orally, and this took place on 6 March 2020.
Facts not contested
The following facts are not disputed between the parties and the Tribunal makes these findings of fact.
At all material times the Practitioner was:
(a)admitted as an Australian legal practitioner within the meaning of s 5(a) of the LP Act; and
(b)the sole legal practitioner director of an incorporated legal practice, Legal Success Pty Ltd, trading as 'Legal Success' (Practice).
The Australian Company at all material times was a company registered pursuant to the Corporations Act 2001 (Cth) on 16 May 2012. The Australian Company was a wholly owned subsidiary of a limited liability company incorporated under the laws of Germany (German Company). The German Company in turn was owned to the extent of 75% by another German company, of which MH was the managing director. The remaining 25% of the German Company was owned by HB, a German resident.
The Australian Company acted as the Australian agent of the German Company for the sale in Australia of equipment and parts made by the German Company for ore beneficiation and for related services.
Until on or around 8 July 2016, W was a director of the Australian Company; Committee's book page 272. Although he had resigned as a director of the Australian Company on or around 8 July 2016, he remained as an employee of the Australian Company as its general manager after that date, until on or around 27 July 2016.
The Practitioner had acted for the Australian Company in respect of various matters, on instructions from W on the Australian Company's behalf, since around May 2012.
Between on or around 24 June 2016 and on or around 28 June 2016, the Practitioner was engaged by W on behalf of the Australian Company to provide legal advice to the Australian Company with respect to various issues concerning its management, including advising the Australian Company as to the rights and entitlements of its employees, including W, against the Australian Company; Practitioner's amended statement para 17.
In an email from W to the Practitioner of 8 July 2016 (Committee's book pages 112-113) from W's private email address (W having previously emailed the Practitioner from the email address of the Australian Company) bearing the title '[W] - Request for Services - Termination', W:
(a)informed the Practitioner that he (W) had or had purportedly been given notice of termination of his employment and had been removed as a director of the Australian Company by resolution of the Australian Company's sole shareholder passed or purportedly passed the previous day, 7 July 2016;
(b)provided the Practitioner with copies of documents that he (W) had received in respect of the termination or purported termination of his directorship of, and employment with, the Australian Company;
(c)sought the Practitioner's advice about the validity of his termination and about other matters relevant to the termination of his employment;
(d)asked the Practitioner to send all correspondence to his private email address, and to invoice him personally on the matter rather than the Australian Company 'unless an outcome is found whereby [the Australian Company] settles all legal fees'.
In another email from W to the Practitioner dated 11 July 2016 (Committee's book pages 114-116), again from W's private email address and again bearing the title '[W] - Request for Services - Termination', W:
(a)attached calculations as to the approximate amount of his employment entitlements as provided by the Australian Company's accountants, based on W's instructions (the amount being stated as $350,158.62);
(b)stated that his (W's) 'objectives' were to obtain confirmation from the Australian Company's shareholder as to his entitlements, to determine if the circumstances of his termination qualified for a redundancy package, to clarify the period of notice he would be paid, and to explore on what grounds, if any, he could leave the Australian Company prior to the expiry of the 6 months' notice period; and
(c)asked the Practitioner to review and advise if there was legal justification for any of his objectives.
In a letter dated 13 July 2016 sent by email to W at the Australian Company's email address (Committee's book pages 120-121), bearing the title 'Termination of Employment', the Practitioner:
(a)said he was separately preparing his advice;
(b)advised W to change immediately the password for all of the Australian Company's bank accounts and not divulge it to any third parties, including officers of the German Company; and
(c)said this advice reflected the Practitioner's concerns that 'some of the documentation emanating from Germany is ineffective and may be invalid', and that 'were [the Australian Company] to be wound up you may lose all your entitlements unless steps are taken to protect you'.
In another letter also dated 13 July 2016 sent by email to W, also at the Australian Company's email address, (Committee's book page 122), and also bearing the title 'Termination of Employment', the Practitioner advised W not to give any advice to the German Company except to the extent it would be beneficial to W to do so, or to the extent he was obliged to do so in the course of his duties as manager of the Australian Company's business.
In a letter dated 14 July 2016 sent by email from the Practitioner to W, also at the Australian Company's email address, (Committee's book pages 125-133), the title again being 'Termination of Employment', the Practitioner:
(a)referred to W having sought the Practitioner's advice 'in relation to the termination of your employment with [the Australian Company]';
(b)gave advice to W about various issues including the issues raised in W's emails to the Practitioner of 8 and 11 July 2016 and W's rights and entitlements as an employee of the Australian Company;
(c)stated that he shared a concern expressed by W that '[the German Company's] plan is to remit funds from [the Australian Company's] account back to Germany. Once that occurs, it would likely be extraordinarily difficult, and possibly very costly, for you to try to recover your employment entitlements. More than likely, [the Australian Company] would be put into voluntary liquidation, and you would be left high and dry'; and
(d)advised W as to a strategy to recover his termination entitlements including writing to the Australian Company's shareholder, the German Company, in that respect.
On or about 15 July 2016, the Practitioner through the Practice billed the Australian Company in respect of his legal services for the period between 8 and 14 July 2016 inclusive; Committee's book pages 136137.
In accordance with the Practitioner's advice to W in his letter of 14 July 2016 that W should write to the German Company, on 15 July 2016 W wrote to MH seeking confirmation as to W's entitlements upon termination of his employment; Committee's book pages 138-139.
MH responded to W in a letter dated 20 July 2016, saying that MH could not provide W with the confirmation he sought; Committee's book pages 140-141.
By email to the Practitioner of 21 July 2016, the subject of which was described as '[W] - Employment [the Australian Company]', W:
(a)sent the Practitioner copies of his letter to MH of 15 July 2016 and MH's response of 20 July 2016; and
(b)asked to meet with the Practitioner 'to clarify the options that I may have to determine the possibilities of having my entitlements paid'.
(Committee's book page 142)
The Practitioner, in a letter of 21 July 2016 sent by email to W, once again at the Australian Company's email address, the subject of which was described as 'Termination and Other Issues' (Committee's book pages 144-145), responded to W's email of 21 July 2016, suggesting that they meet to discuss what options may be open to W, including 'putting a proposal to [the German Company] to resolve the matter'. On 22 July 2016, the Practitioner met with W.
At that meeting on 22 July 2016 (the Practitioner's note of which is at pages 146-147 of the Committee's book):
(a)the Practitioner and W discussed steps that could be taken to protect and advance W's personal interests in obtaining his anticipated termination entitlements;
(b)W informed the Practitioner that he had resigned as a director of the Australian Company on 8 July 2016; and
(c)W proposed 'taking and parking' money from the Australian Company in an amount sufficient to cover W's anticipated termination entitlements.
In a letter of the same date, 22 July 2016, sent by email to W at W's personal email address, bearing the title 'Termination of Employment', the Practitioner:
(a)referred to their meeting earlier that day;
(b)advised W that there was a real risk of W losing a substantial proportion, if not all, of his termination entitlements as a result of his position as managing director of the Australian Company becoming redundant;
(c)said:
'Given the evasive response in the letter of 20 July 2016 from [MH], I see no option but for you to take proactive steps to protect your entitlements. I therefore confirm that my advice to you is that you immediately transfer into a bank account controlled only by you the full amount of your employment entitlements from today up to and including 4 January 2017 as per the advice you have received from [the Australian Company's accountants] and my office'; and
(d)advised that he (the Practitioner) was now aware that W had resigned as a director on or about 8 July 2016 but that this did not alter his advice; and
(e)attached a draft letter for W to send to MH.
(Committee's book pages 150-151)
The draft letter which the Practitioner sent to W, referred to in the preceding paragraph, appears at pages 152-153 of the Committee's book. That letter provided, amongst other things, that:
(a)there was doubt about whether W would be paid his employee entitlements;
(b)'it is patently obvious that the agenda of [the German Company] (the shareholder) is to siphon off the funds of [the Australian Company] to prop up [the German Company's] ailing business in Germany';
(c)'[i]n the circumstances, and on the basis of advice I have received, I have transferred the sum of $[[W] to insert] from [the Australian Company's] account into a holding account controlled by me, to ensure that I receive my full termination entitlements. The above amount is calculated as follows: ...'.
On or about 22 July 2016, the Practitioner through the Practice billed the Australian Company in respect of his legal services provided on 21 and 22 July 2016; Committee's book pages 148-149.
On or about 22 July 2016, W transferred $378,000 from the Australian Company's bank account into a bank account controlled by W himself.
On 25 July 2016, W wrote to MH in terms based on (but not identical to) the draft letter which the Practitioner had prepared on W's behalf and is referred to at [31] and [32]. In his letter he informed MH that, having taken advice and on the basis of that advice, he (W) had transferred the sum of $378,000 from the Australian Company's account 'into a holding account controlled by me, to ensure that I receive my full termination entitlements'; Committee's book pages 154‑155.
In an email dated 27 July 2016 from WM, a legal practitioner engaged by the German Company, WM asked the Practitioner to confirm who the Practitioner's client was at the time he advised W regarding the transfer of funds from the Australian Company's account. In a responsive email of the same date, the Practitioner confirmed that he was 'at all times taking instructions from and providing advice to [the Australian Company], via its manager [W]'; Committee's book pages 162-163.
In a letter of 27 July 2016 sent by email to W, bearing the title 'Termination of Employment', the Practitioner:
(a)referred to two lengthy telephone discussions he had had with W on the afternoon of 26 July 2016;
(b)said:
'as a result of your concerns, which I share, I have agreed with your idea of putting the funds into the holding account and in fact I have stated clearly that that is my advice. This should give you some comfort as no matter how matters unfold, you will be able to state, categorically, that you sought legal advice and acted only in accordance with legal advice';
(c)told W to keep the funds in the holding account, but advised W that he was almost certainly not entitled to receive the termination payments until his employment actually ended, which had not then occurred;
(d)advised W as to the terms of his letter of resignation from the Australian Company; and
(e)concluded by advising W in the following terms:
[i]f you now leave [the Australian Company] I will be obliged to open a file in your name and charge you for my time, including the teleconferences on 26 July 2016 and this advice. Please let me know whether that is agreeable to you.
(Committee's book pages 157-160)
On 27 July 2016, following receipt by W of a letter by email from MH accusing him (W) of misconduct and criminal behaviour with respect to the transfer of the funds and demanding the return of those funds that day (Committee's book pages 166-167), the Practitioner had a telephone discussion with W in which he advised W, with respect to the allegations of misconduct and criminal behaviour made against him, that he disagreed with those allegations.
In a letter of 28 July 2016 sent by email to W at his personal email address, again bearing the title 'Termination of Employment', the Practitioner confirmed that the decision as to whether or not W returns the funds was 'a decision for [W] to make'. He 'readily agreed that [the transfer of funds into a holding account] was appropriate if you had reason to believe that the funds would be transferred overseas and might result in you not being paid' and advised that he believed that the Australian Company would not pay for any of the Practitioner's ongoing work. The Practitioner said he was proceeding on the basis that W would ensure that his tax invoices were paid and he asked W to confirm that this was the case; Committee's book pages 169-171.
On 1 August 2016, the Practitioner through the Practice billed W in respect of his legal services provided between 27 July and 1 August 2016; Committee's book pages 179-180.
In a letter dated 10 April 2017 (Committee's book pages 188-189), the Committee wrote to the Practitioner:
(a)advising the Practitioner that the Committee was investigating a complaint made in respect of his conduct, including that the Practitioner advised W to transfer the funds from the Australian Company's account to a holding account in circumstances in which the Practitioner was aware, or ought to have been aware, that W was not presently entitled to the funds and had no authority to transfer the funds and that the transfer may be regarded as an unlawful act by W;
(b)informing the Practitioner that he had the right to make submissions to the Committee in respect of the conduct complained of;
(c)requesting that the Practitioner provide his entire original file and all documents relating to the matter; and
(d)reminding the Practitioner that he must be open and candid in his dealings with the Committee and must provide a full and accurate account of his conduct, and referred to r 50(2) and (3) of the Legal Profession Conduct Rules 2010 (Conduct Rules).
In his letter to the Committee of 2 May 2017 (Committee's book pages 190-211), the Practitioner:
(a)provided a file of documents which included (amongst other things) the Practitioner's letters of 14 July 2016 and 22 July 2016 (referred to at [24] and [31] respectively of these reasons), his draft letter to MH (referred to at [31] and [32] of these reasons) and his email and his letter both dated 27 July 2016 (referred to at [36] and [37] respectively of these reasons);
(b)said (at par 7(b)) that the Committee was mistaken to state that he (the Practitioner) had advised W to transfer an amount of $378,000 from the Australian Company's account, and that 'that decision was made by [W]';
(c)provided a table of comments with respect to the documents provided in the file to the Committee;
(d)in that table, with respect to the Practitioner's letter to W of 14 July 2016 (referred to at [24] of these reasons), made the comment (Committee's book page 204 para (g)) that:
'note: none of the advice given by me suggested that [W] remove funds from any accounts of [the Australian Company] - that suggestion came from him, and it was no doubt a decision made by him in his capacity as managing director';
(e)in that table, with respect to the Practitioner's letter to W of 22 July 2016 (referred to at [31] of these reasons), said (Committee's book page 205) 'No comment';
(f)in that table, with respect to the Practitioner's letter to W of 27 July 2016 (referred to at [37] of these reasons), made the comment (Committee's book page 206 para (c)) that 'in paragraph 5(a), I confirmed that it was [W] whose idea it was to put funds of [the Australian Company] into a holding account, and that this had been done without any input from me'.
In a letter dated 5 February 2018 (Committee's book pages 212‑215), the Committee again wrote to the Practitioner, requesting the Practitioner to provide further submissions as to, amongst other things, the reference in the Practitioner's notes of the meeting with W of 22 July 2016 (referred to at [30] of these reasons) that he 'take and park the money'.
In his letter to the Committee dated 5 March 2018 (Committee's book pages 219-223), the Practitioner said (at para 1.2(a)) that W can either confirm or deny that W initially transferred the funds of his own volition without his (the Practitioner's) advice or input. He also said (at para 9) that W had already made a decision to put funds into a holding account to cover his anticipated employee entitlements prior to the Practitioner's meeting with W on 22 July 2016 (referred to at [30] of these reasons).
On 4 April 2018, the Committee again wrote to the Practitioner, seeking further submissions; Committee's book pages 224.
In his letter to the Committee of 27 April 2018 (Committee's book pages 229-233), the Practitioner repeated and supplemented the answer he provided to the Committee in his letter of 5 March 2018, and said (at paras 3 and 9(b)) that:
(a)W made the decision to transfer the funds;
(b)W actually effected the transfer before seeking advice from the Practitioner; and
(c)he (the Practitioner) did not advise W to transfer the funds from any account or to any account and that that was a decision that W made.
Allegations against the Practitioner in detail
The allegations made against the Practitioner by the Committee are set out in Annexure A of the Committee's application to the Tribunal as follows:
Ground 1
The Practitioner between on or about 8 July 2016 and on or about 28 July 2016 engaged in professional misconduct within the meaning of s 403 and s 438 of the LP Act, in that his conduct fell short consistently and by a substantial degree of the standard of professional conduct observed and approved by members of the legal profession of good repute and competence and would be reasonably regarded as disgraceful or dishonourable to practitioners of good repute and competence, in that, having been engaged by the Australian Company through its managing director, W, to provide legal services to the Australian Company, namely legal advice with respect to issues concerning the management of the Australian Company including advising the Australian Company as to the rights and entitlements of the employees of the Australian Company (including W) against the Australian Company, the Practitioner provided legal services to W for the personal benefit of W and pursuant to W's instructions in his personal capacity with respect to the same or related matters, namely legal advice to W in relation to the termination or purported termination of his employment by the Australian Company, his rights and entitlements consequential upon the termination of his employment and recovery of his entitlements from the Australian Company consequential upon the termination of his employment, in circumstances in which the interests of the Australian Company and W were adverse and there was a conflict or potential conflict of his duties to act in the best interests of each of the Australian Company and W, contrary to r 14(2) of the Conduct Rules.
Ground 2
The Practitioner on or about 15 and 22 July 2016 respectively engaged in professional misconduct within the meaning of s 403 and s 438 of the LP Act, in that his conduct fell short consistently and by a substantial degree of the standard of professional conduct observed and approved by members of the legal profession of good repute and competence and would be regarded as disgraceful or dishonourable to practitioners of good repute and competence, in that he caused the Practice to render bills to the Australian Company for services performed by the Practitioner for the personal benefit of W and pursuant to W's instructions in his personal capacity, and further in circumstances in which:
(a)W had expressly requested the Practitioner to bill him personally with respect to the legal services the subject of those bills;
(b)the legal services the subject of those bills were adverse to the interests of the Australian Company; and
(c)on 22 July 2016, before the Practitioner caused the Practice to render the bill on that date, W informed the Practitioner that W was no longer a director of the Australian Company.
Ground 3
The Practitioner on or about 22 July 2016 engaged in professional misconduct within the meaning of s 403 and s 438 of the LP Act, in that his conduct fell short by a substantial degree of the standard of professional conduct observed and approved by members of the legal profession of good repute and competence and would be reasonably regarded as disgraceful or dishonourable to practitioners of good repute and competence, in that he advised W to transfer money from the Australian Company's bank account to a personal account controlled by W in an amount equivalent to the estimated amount of W's potential entitlements consequential upon the termination or potential termination of his employment with the Australian Company in circumstances in which the Practitioner knew that W had resigned as a director of the Australian Company on or about 8 July 2016 and:
(a)the Practitioner knew or ought to have known that W had no entitlement to, or interest in, that money;
(b)the Practitioner knew or ought to have known that W had no authority from the Australian Company to transfer that money to a personal account controlled by him or at all;
(c)the Practitioner's advice exposed W to the possibility of being charged with the offence of stealing contrary to s 378 of the Criminal Code (WA) (Criminal Code).
Ground 4
The Practitioner between on or about 2 May 2017 and on or about 27 April 2018 engaged in professional misconduct within the meaning of s 403 and s 438 of the LP Act, in that his conduct fell short consistently and by a substantial degree of the standard of professional conduct observed and approved by members of the legal profession of good repute and competence and would be reasonably regarded as disgraceful or dishonourable to practitioners of good repute and competence, in that by his correspondence to the Committee dated 2 May 2017, 5 March 2018 and 27 April 2018, the Practitioner was not open and candid in his dealings with the Committee and failed to provide a full and accurate account of his conduct in relation to matters covered by requests by the Committee to provide comments or information in relation to the Practitioner's conduct or professional behaviour contrary to r 50 of the Conduct Rules, in that the Practitioner told the Committee that the Practitioner did not advise W to transfer the Funds from the Australian Company's bank account to a personal account controlled by W (Statement) in circumstances in which:
(a)the Statement was false or misleading, or both, as in fact the Practitioner did advise W to so transfer the Funds;
(b)the Practitioner well knew that the Statement was false or misleading, or both, in a material respect and/or that it had the potential to mislead the Committee and the Practitioner intended that the Committee be misled;
(c)alternatively to (b), the Practitioner acted with reckless disregard or indifference as to whether or not the statement was false or misleading, or both, and/or had the potential to mislead the Committee and as to whether the Committee would be misled by the Statement;
(d)further alternatively to (a) and (b), the Practitioner was grossly careless in failing to ensure that the Statement was not false or misleading, or both, in a material respect, and/or had the potential to mislead the Committee.
Standard of proof
The Committee bears the onus of proof. The standard of proof which the Committee must meet in proving its case is the civil standard, namely proof on the balance of probabilities. However, in determining whether on the evidence this standard has been satisfied, the Tribunal will recognise that '[t]he seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony or indirect inferences'; Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 (Briginshaw) per Dixon J at 362.
As the High Court expressed the position in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449 at 450, the significance of Briginshaw is that the seriousness of the matter and of its consequences does not affect the standard of proof, but the strength of the evidence necessary to establish a fact required to meet that standard on the balance of probabilities may vary according to the nature of what it is sought to prove.
Allegations of professional misconduct and unsatisfactory professional conduct are undoubtedly serious and it is therefore considered in proceedings such as these that the Tribunal must, again to quote the words of Dixon J in Briginshaw at 361, feel an actual persuasion of the occurrence or existence of the relevant facts before being satisfied that those facts have been made out.
Statutory framework
The heading to Pt 13 of the LP Act is 'Complaints and discipline'. Part 13 comprises s 401 to s 469 inclusive.
Section 401 of the LP Act provides that the purposes of Pt 13 of the LP Act are to:
(a)provide for the discipline of the legal profession in Western Australia in the interests of the administration of justice and for the protection of consumers of the services of the legal profession and the public generally;
(b)promote and enforce the professional standards, competence and honesty of the legal profession; and
(c)provide a means of redress for complaints about lawyers.
Section 402 of the LP Act provides:
For the purposes of this Act
unsatisfactory professional conduct includes conduct of an Australian legal practitioner occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.
Section 403(1) of the LP Act provides:
For the purposes of this Act
professional misconduct includes
(a)unsatisfactory professional conduct of an Australian legal practitioner, where 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 occurring in connection with the practice of law or occurring 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.
Under s 438(1) of the LP Act, the Tribunal has jurisdiction to make a finding that an Australian legal practitioner has engaged in unsatisfactory professional conduct or professional misconduct.
Section 438(2) of the LP Act provides:
If, after it has completed a hearing in relation to a referral under this Part in respect of an Australian legal practitioner, the State Administrative Tribunal is satisfied that the practitioner is guilty of unsatisfactory professional conduct or professional misconduct, the Tribunal may
(a)make and transmit a report on the finding to the Supreme Court (full bench); or
(b)make any one or more of the orders specified in sections 439, 440 and 441.
Sections 439, 440 and 441 of the LP Act contain the various penalties which the Tribunal may impose if it is satisfied that a practitioner is guilty of unsatisfactory professional conduct or professional misconduct.
Rule 14(2) and (3) of the Conduct Rules provides as follows:
(2)A practitioner must not provide, or agree to provide, legal services for a client if -
(a)the practitioner or the practitioner's law practice is engaged by another client in the same or a related matter; and
(b)the interests of the client and the other client are adverse; and
(c)there is a conflict or potential conflict of the duties to act in the best interests of each client.
(3)Subrule (2) does not apply if -
(a)each client is aware that the practitioner or the practitioner’s law practice is also providing legal services to each other client; and
(b)each client has given informed consent to the practitioner or the practitioner’s law practice providing the legal services to each other client; and
(c)an effective information barrier has been established to protect the confidential information of each client.
Rule 50 of the Conduct Rules provides as follows:
(1)In this rule -
regulatory authority means a local regulatory authority and an interstate regulatory authority.
(2)A practitioner must be open and candid in his or her dealings with a regulatory authority.
(3)A practitioner who is requested by a regulatory authority to provide comments or information in relation to the practitioner's conduct or professional behaviour must -
(a)respond to the request within a reasonable time and in any event within 14 days (or such extended time as the regulatory authority may allow); and
(b)provide in writing a full and accurate account of his or her conduct in relation to the matters covered by the request.
Section 378(7) of the Criminal Code provides:
If the offender is a clerk or servant, and the thing stolen is the property of his employer, or came into the possession of the offender on account of his employer, he is liable to imprisonment for 10 years.
The meaning of 'professional misconduct'
The definition of 'professional misconduct' in s 403(1) of the LP Act is inclusory and is not an exhaustive statement of that term for the purposes of the LP Act. In particular, conduct which constitutes professional misconduct at common law (sometimes referred to as 'unprofessional conduct') can constitute professional misconduct (or unsatisfactory professional conduct) under the LP Act; Legal Profession Complaints Committee and Caine [2010] WASAT 178 at [10], [15] and [19]; Legal Profession Complaints Committee and A Legal Practitioner [2013] WASAT 37 at [9]-[12].
The common law concept of unprofessional conduct was restated by Parker J (with whom Ipp and Steytler JJ agreed) in Kyle v Legal Practitioners' Complaints Committee [1999] WASCA 115; (1999) 21 WAR 56 at [61] as follows:
… This Court has long accepted and applied, in this context, the understanding of the notion of unprofessional conduct which was expressed by the Full Court of the South Australian Supreme Court in Re A Practitionerof the Supreme Court [1927] SASR 58; see, eg, Re A Practitioner (unreported, Supreme Court, WA, Full Court, Library No. 4989, 18 July 1983). It was usefully summarised (at 3) by the Full Court as conduct that would be reasonably regarded as disgraceful or dishonourable by practitioners of good repute and competence, or that, to a substantial degree, fell short of the standard of professional conduct observed or approved by members of the profession of good repute and competence. The first limb of this summary includes, but is not confined to, conduct which occurs in the course of legal practice. The other limb necessarily relates to conduct in the course of legal practice because of the reference to "professional conduct". While the words should not be taken as necessarily an exhaustive or codified statement, the essence of the notion of unprofessional conduct is usefully revealed in these decisions.
The Practitioner's response to the Committee's allegations
Ground 1
The Committee's allegation under Ground 1, in short, is that between on or around 8 July 2016 and on or around 28 July 2016:
(a)the Practitioner was engaged by the Australian Company and by W in the same or a related matter;
(b)the interests of W and of the Australian Company were adverse; and
(c)there was a conflict or potential conflict of duties to act in the best interests of each of W and the Australian Company.
(CCS at para 12)
The Practitioner, through counsel, confirms that the second and third limbs of the Committee's allegation are not in dispute; ts 215, 6 March 2020. It is the first limb of the Committee's allegation which is in issue. The Practitioner says, with regard to the first limb, that during the period between 8 July 2016 and 28 July 2016 he was acting only for W and not for the Australian Company. He says that his instructions from the Australian Company ceased as of 28 June 2016; PCS para 5. The Practitioner accordingly denies that during the relevant period he was acting for both the Australian Company and for W in the same or a related matter and accordingly submits that he is therefore not in breach of r 14(2) of the Conduct Rules.
The Practitioner does, however, concede that by accepting W's instructions on 8 July 2016, in circumstances where he had advised the Australian Company as recently as 28 June 2016 on the same or related matter, his conduct might have been seen to attract the principle that the due administration of justice requires that he not do so. For that reason, the Practitioner submits that his conduct in so doing could be characterised as unsatisfactory professional conduct; PCS at para 17. However, the Practitioner emphasises that because the Committee alleges only a conflict or potential conflict of interest on the part of the Practitioner, the Tribunal should find that the Committee has failed to establish either position; PCS at para 14.
Ground 2
The Committee's allegation under Ground 2, in short, is that the Practitioner engaged in professional misconduct by performing work for W in W's personal capacity but invoiced the Australian Company for that work.
The Practitioner concedes that the invoices issued on 15 and 22 July 2016 respectively were 'inappropriate'; ts 255, 6 March 2020. The Practitioner says that these invoices were sent in error and that they should have been sent to W.
The Practitioner says however that the proper characterisation of the issuing of the two invoices to the Australian Company is not professional misconduct but unsatisfactory professional conduct 'because it's the result of a single mistake'; ts 255, 6 March 2020. He says that this does not constitute professional misconduct as alleged by the Committee because the issuing of the two invoices could not be described as falling short consistently and by a substantial degree of the standard of competence and diligence observed and approved by members of the legal profession; ts 256, 6 March 2020.
Ground 3
The Committee's allegation under Ground 3 is that the Practitioner is guilty of professional misconduct by advising W to transfer money from the Australian Company's bank account to a personal account controlled by W, in an amount equivalent to W's estimated entitlements consequential upon the termination of his employment with the Australian Company.
Paragraph (c) of Ground 3 contains the allegation that the Practitioner's advice exposed W to the possibility of being charged with the offence of stealing contrary to s 378 of the Criminal Code. The Practitioner says that para (c) of Ground 3 is critical as to how the Tribunal should consider the Practitioner's conduct; ts 257, 6 March 2020.
The Practitioner, through counsel, says that:
[t]he trouble is that the assertion that [the Practitioner's] advice exposed [W] to the possibility of being charged with the offence of stealing is speculative. It's all based on hypothesis and it's not changed by reference to section 371, sub-section (2)(f) of the Criminal Code, because as my learned friend put to you, that definition deals with the intent to use the funds and there was never any evidence that [W] intended to use the funds at all. The evidence was that [W] intended to park the funds, put them into a holding account and not deal with them until his entitlements were decided.
(ts 257, 6 March 2020)
The Practitioner submits that therefore the allegation in subparagraph (c) of Ground 3 is not made out. The Practitioner accepts however that the other aspects of Ground 3 still need to be dealt with.
The Practitioner says that as at 22 July 2016, the Practitioner knew that W would be entitled to receive payment in respect of his employee entitlements, although the amount of those entitlements was dependent on a number of factors. The Practitioner, in his view, therefore knew that the Australian Company was indebted to W, although the amount of the debt might change.
The Practitioner also held the view that, after W had been removed as a director, he still possessed authority and responsibility to ensure that the Australian Company paid its employees' entitlements in his capacity as general manager. The Practitioner's advice to W was therefore that W should implement his idea to 'take and park' sufficient funds to ensure that his employee entitlements would be paid; PCS paras 33-36.
The Practitioner concedes that this advice was negligent. He says that he failed to appreciate that:
(a)notwithstanding that the Australian Company was indebted to W, he could not engage in 'self-help' to protect his position by transferring funds to which he was not presently entitled;
(b)W's authority as general manager did not extend to his transferring the funds, in circumstances where W and the new controllers of the Australian Company had not reached agreement on his entitlements.
(PCS para 37)
The Practitioner points out that part of his advice to W was that W should advise the German Company of the fact of his transfer of the funds. This advice was contained in the draft letter prepared by the Practitioner for W (Committee's Book pages 152-153) and in the letter which W sent to the German Company; Committee's Book paras 154155.
The Practitioner says that whether W disclosed the intention to transfer the funds immediately before doing so or disclosed it immediately after the transfer made no difference to the Australian Company's position; PCS para 41.
The Practitioner says that the Tribunal should therefore assess his conduct on the basis that his advice was negligent but did not involve 'any element of dishonesty or sharp dealing' on the part of the Practitioner; PCS para 42.
Ground 4
In Ground 4, the Committee alleges that in his letters to the Committee dated respectively 2 May 2017 (Committee's Book pages 190-211), 5 March 2018 (Committee's Book pages 219-223) and 27 April 2018 (Committee's Book pages 229-233), the Practitioner was not open and candid in his dealings with the Committee when the Practitioner told the Committee that the Practitioner did not advise W to transfer an amount equivalent to the estimated amount of W's potential termination entitlements because in fact the Practitioner did so advise W.
The Practitioner's evidence was that he was of the clear recollection that W had told him on 22 July 2016 that he had already transferred funds to another account to hold pending the determination of his entitlements; PWS paras 88, 145 and 149. The Practitioner accepts that he was mistaken and that the transfer of money had taken place after he had provided his advice of 22 July 2016; PWS paras 89‑91, 98-100 and 162.
The Practitioner points out that when the Committee originally identified the nature of the complaint made against the Practitioner in its letter to the Practitioner of 10 April 2017 (Committee's Book pages 188-189), the Committee identified the relevant complaint against the Practitioner to be that he advised W 'to transfer an amount of $378000 (the funds) from [the Australian Company's] account to a 'holding account' in circumstances where you were aware, or ought to have been aware, that [W] was not presently entitled to the funds and had no authority to transfer the funds and that the transfer may be regarded as an unlawful act by [W]' (original emphasis).
The Practitioner says that his letter to the Committee of 2 May 2017, where it answers the allegation that the Practitioner had advised W to transfer $378,000 into his own account, was true. He told the Committee in that letter that he did not advise W to transfer an amount of $378,000 from the Australian Company's account.
The Practitioner says that he dealt with those aspects of the complaint by providing the Committee with copies of his 'email advices to [W] of 22, 27 and 28 July 2016'. The Practitioner says that he was entitled to expect that the Committee would read all of that material and read his responsive letter in the context of that material; PCS para 58.
The Practitioner says that his letter of 22 July 2016 to W (Committee's Book pages 150-151) along with his proposed letter from W to the Germany Company, (Committee's Book pages 152-153), make it clear that he did not advise W to transfer $378,000.
The Practitioner goes on to say that it is important to recognise that the Committee did not then raise the matter with the Practitioner again until 5 February 2018, some 18 months after the Practitioner had met with W and over nine months after the Practitioner had written to the Committee and provided his file. The Practitioner says that the Tribunal should not place the same reliance on the letter from the Practitioner to the Committee dated 17 October 2016 (Committee's Book pages 186-187) that the Committee does. The Practitioner says that this letter was written the same day as the Committee had refused the Practitioner an extension of time in which to respond and without reference to his file; PCS para 61.
The Practitioner says that his suggestion to the Committee that the Committee contact W to ascertain what occurred with regard to the transfer (Committee's Book page 220) is consistent only with the Practitioner seeking to assist the Committee rather than an intention to mislead it; PCS para 64.
The Practitioner says that '[i]t defies common sense that a person seeking to present a false state of affairs, as the Committee alleges, would encourage investigation'; PCS para 65. The Practitioner says that his acknowledgment, prior to the hearing in the Tribunal, that he had been mistaken about the timing of the transfer of money by W is not consistent with any intention on his part to mislead the Committee; PCS para 67.
Formulation of the Committee's allegations
In its application, the Committee alleges that the Practitioner has engaged in professional misconduct and then sets out four grounds, each of which contains a separate allegation of professional misconduct.
In closing, there was this exchange between counsel:
[COMMITTEE'S COUNSEL]: We are looking in - in grounds 1, 2 and 3, our case is based upon the practitioner's conduct, having objectively fallen below the relevant standard. And we say, in each case, having fallen substantially below. And we also say, having fallen consistently below, because the relevant conduct, for the purpose of establishing a pattern of consistency, is the whole of his conduct over the period from 8 July through to 28 July.
[PRACTITIONER'S COUNSEL]: It's not put as a ground.
[COMMITTEE'S COUNSEL]: Sorry?
[PRACTITIONER'S COUNSEL]: It's not put as a ground, that all these things are (indistinct).
[COMMITTEE'S COUNSEL]: My friend says it's not put as a ground, but each of the grounds does refer to his conduct falling consistently and substantively and substantially - consistently and by a substantial degree - falling short consistently and by a substantial degree of the standard of professional conduct observed and approved by members of the legal profession of good repute and confidence, and would be reasonably regarded as disgraceful or dishonourable to practitioners of good repute and competence.
(ts 221, 6 March 2020)
Later, counsel for the Practitioner said this:
And again, firstly in ground 1 - well, firstly, before I start that, can I point out to the tribunal that this is not a case where there is a ground where it's said the practitioner's conduct taken as a whole amounts to unprofessional conduct. Now, my learned friend in his submissions made - put forward the proposition that you can look at the practitioner's conduct as a whole in coming to the view, for example, in relation to ground 2.
The grounds aren't formulated in that way. Ground 1 deals only with the provision of advice to [W]. Ground 2 deals only with the issues of invoices to the [Australian Company], and ground 3 relates solely to the provision of the advice on 22 July. There is no ground that seeks to put all of that conduct together and to say that taken as a whole the practitioner has engaged in unprofessional conduct.
(ts 250, 6 March 2020)
Later still, there was another exchange between counsel:
[COMMITTEE'S COUNSEL]: I do say that - and this is the way I put it in my submissions earlier - I do say that when it comes to characterisation one - and the focus on consistency - one can have regard to the whole of the conduct before the tribunal.
[PRACTITIONER'S COUNSEL]: See, we object to that. It's not put like that in the grounds.
…
[COMMITTEE'S COUNSEL]: That's an unduly - and I don't say this with criticism - but an unduly pedantic way to approach the grounds to … disaggregate them in that way rather than have regard to the whole of the conduct.
…
[PRACTITIONER'S COUNSEL]: Well, I think the problem with accepting my learned friend's construction of how the matter is framed is that if you, for example, found on a majority of cases that there was to be a finding of unsatisfactory professional conduct, how would - and, for example, on one ground found that it was professional misconduct, how does the tribunal make the order sought? If it's put as all four grounds can go forward to the one order, how is that put? We construed the application as saying there should be a ground - a finding of professional misconduct because in four separate cases that you see … And it was said that he engaged in professional misconduct and there is no attempt between those grounds to interlink the conduct … It's all put in discrete grounds and each ground says there should be a finding of professional misconduct … Well, I think where we differ is the practical aspect of how the tribunal is to deal with evidence of conduct in relation to each ground because we would say it's effectively siloed. It's the allegation made in each ground that's to be dealt with. And my learned friend is saying that, "No, you can look at all of it together".
(ts 263-265, 6 March 2020)
Following conferral between counsel, counsel for the Committee informed the Tribunal as follows:
Your Honour, I've spoken to my friend over lunch about the issue that your Honour raised just before lunch. … The position is that - I think my friend's position is correct, that is, within each of grounds 1, 2 and 4, but not ground 3 because ground 3 is a single instance of conduct on a particular date … Grounds 1, 2 and 3 each allege in their terms that the practitioner's conduct fell both consistently below and substantially below the relevant standard with respect to each of those grounds, and so the committee's position is that the tribunal can have regard to consistency of conduct, if I can put it that way, with respect to each of grounds 1, 2 and 4, but we do not invite the tribunal to look at questions of consistency amongst the grounds themselves … So for example, if the tribunal, for the sake of argument, made a finding of unsatisfactory professional conduct on any one or more of - on two or more of the grounds, we don’t invite you to effectively aggregate the grounds to achieve … a finding of professional misconduct.
Counsel for the Practitioner confirmed that this also reflected the Practitioner's view, saying:
Each of grounds 1, 2 and 4 specify certain conduct … to substantially fall beneath the standard. What I'm keen to ensure is that that conduct in grounds 1, 2 and 4 are aggregated in some way.
(ts 266-267, 6 March 2020)
We believe that counsel meant to say in that last sentence 'are not aggregated in some way'.
In the light of this agreement between the parties, the Tribunal will accordingly deal with each of the four grounds as separate allegations of professional misconduct on the part of the Practitioner.
Disposition
Ground 1
The Practitioner accepts, and the Tribunal finds, that the Practitioner, between 8 July 2016 and 28 July 2016, provided legal services to W in his personal capacity pursuant to W's instructions in his letter to the Practitioner of 8 July 2016, and not for the benefit of the Australian Company; Practitioner's amended statement para 18(c) and para 32, ts 80 and 101, 30 January 2020. The Practitioner also accepts, and the Tribunal also finds, that the interests of W and the Australian Company were adverse and that there was a conflict or potential conflict of duties to act in the best interests of each of W and the Australian Company; CCS at para 12 and ts 215, 6 March 2020.
The issue for the Tribunal in this ground is therefore whether, between 8 July 2016 and 28 July 2016, the Practitioner was also engaged by the Australian Company in the same or a related matter.
The fact that the Practitioner at all relevant times both before and after 8 July 2016 was taking instructions from W himself is not determinative as to whether at any point in time the Practitioner was continuing to act for the Australian Company or acting for W as an individual. It is not in dispute that the Practitioner almost invariably took his instructions from the Australian Company through W.
The Tribunal considers that the Practitioner was acting for the Australian Company when he wrote to the Australian Company on 28 June 2016; Committee's book pages 94-101. That is also not in dispute. The Practitioner says however that from this date forward there was 'no suggestion that the [Australian Company] thereafter requested further advice in relation to the matters addressed' in that letter of 28 June 2016; PCS para 5. The Practitioner says that while he believed that he was still acting for the Australian Company over the days between 8 July 2016 and when he ceased to act on 29 July 2016, 'on any objective analysis he was not'; PCS para 7.
The Tribunal accepts that the Australian Company had not requested any further advice from him but otherwise does not agree with that analysis.
The Practitioner told the Tribunal that he 'considered at the time that [he was] the lawyer for [the Australian Company]'; ts 74, 30 January 2020.
The existence of this belief is supported by the fact that the Practitioner, in an email on 27 July 2016 to WM (Committee's book page 162), expressly confirmed to WM, in response to a query from WM about who the Practitioner was advising with regard to the transfer of funds from the Australian Company, that the Practitioner was 'at all times taking instructions from and providing advice to [the Australian Company], via its Manager [W]'.
It is apparent in any event that, as at 27 July 2016, W was clearly of the view that the Practitioner continued to act for the Australian Company. In a letter of that date (Committee's book page 168) to MH, W refers to the Practitioner as the Australian Company's lawyer. This letter was reviewed and approved by the Practitioner; ts 145, 31 January 2020.
Further, when the Practitioner wrote to W on 28 July 2016 (Committee's book pages 169-171), confirming advice that he had given to W verbally, he included the paragraph:
I advised you not to meet with [WM] on your own. I suggested that you immediately write to [MH] informing him that you will only meet with [WM] in company with [the Australian Company's] legal advisor (meaning me).
In a letter from the Practitioner to WM dated 28 July 2016 (Committee's book pages 173-174), the Practitioner said that '[W] has asked that I be present at any meeting he has with you to resolve the matter, given that I have been acting as legal advisor to [the Australian Company] for many years'.
The Tribunal notes that, in WM's response to the Practitioner dated 29 July 2016 (Committee's book pages 175-177), WM pointed out to the Practitioner, amongst other things, that 'it would be a serious conflict of interest for you to attempt to represent [W's] personal interests, over those of [the Australian Company]'. He goes on to say that '[a]s you are an advisor to [the Australian Company], and not [W], there is no need for any agreement to be reached with you in respect of the terms of the meeting with [W] …'.
There is no evidence as to whether the Practitioner replied to that letter. However, it is apparent that the Practitioner considered the terms of that letter, because, in the Committee's book at page 178, there is a copy of an email sent by the Practitioner on 30 July 2016 to a Mr Cameron Clifton bearing the title 'Employment Law' in the following terms:
Hi Cameron
Do you do employment law?
I have one that I have a conflict on.
Regards
The Committee says that the Practitioner was an argumentative witness (CCS para 9) and counsel for the Practitioner agreed; PCS para 1 and ts 276, 6 March 2020. The inconsistencies between the Practitioner's evidence in his written submissions, in his witness statement and under crossexamination may be explained at least in part by this. However, whatever the reason, the Practitioner's evidence on the point of whether he was acting for the Australian Company during the relevant period in July 2016 is certainly inconsistent. It was the Practitioner's oral testimony that at the relevant time he was acting for the Australian Company through its managing director; ts 80, 30 January 2020. This is in contrast to what the Practitioner said in his written submissions (Practitioner's amended statement paras 18(c) and (d)) and inconsistent with what he said under cross-examination when he told the Tribunal that he now believed that he was acting, during the relevant time, for W alone and not for the Australian Company; ts 84, 30 January 2020. It is also inconsistent with what the Practitioner said in his witness statement, namely that 'I did not hear from [the other director of the Australian Company or HB] during the period relevant to the complaints against me. My instructions concerning [W] and his employment matters were never withdrawn'; PWS para 36. There was a further inconsistency when the Practitioner, under cross-examination, in response to the question '… as at 26 July you considered that you were the lawyer only for [the Australian Company]', said 'I was engaged by [the Australian Company]; ts 143, 31 January 2020. He had already told the Tribunal (ts 112, 31 January 2020) that '[t]here was no other lawyer acting for the [Australian Company]'.
Some of the Practitioner's other answers under crossexamination show that it was the Practitioner's clear understanding that W was instructing him both in W's personal capacity and in W's capacity as managing director (and subsequently manager) of the Australian Company; ts 97 & 104, 30 January 2020 and 115 & 132, 31 January 2020.
The Tribunal agrees with the Committee that, in the words of counsel for the Committee, there is 'no neat divide before and after 28 June 2016'. The Practitioner had been acting for the Australian Company for a number of years (since 2012) and, up to 28 June 2016, he was providing advice to the Australian Company through W on employment issues. That is not in contest. When the Practitioner received written instructions from W on 8 July 2016, it was clear from the express terms of W's email and the nature of the advice being sought that the Practitioner was being asked by W for advice on W's personal behalf rather than on behalf of the Australian Company. The Tribunal has already accepted that the Practitioner was not expressly asked by the Australian Company for further advice about employment matters after 28 June 2016. However, the Practitioner on his own admission (see [112] above) says that he believed at that time that he was still acting for the Australian Company. The fact that he now takes the view that he was not acting for the Australian Company does not assist him. At the time when he took instructions from W as an individual, he considered that he was acting for the Australian Company on the same matter.
The Tribunal concludes that, on the balance of probabilities, and with the comments of Dixon J in Briginshaw in mind, it is more likely than not that during the relevant period the Practitioner was acting for both the Australian Company and W in respect of the same or related matters, namely W's rights and entitlements in relation to the termination or purported termination of his employment by the Australian Company.
Even though the Practitioner before the Tribunal denied that he was acting for the Australian Company from and after 8 July 2016, he also argued before the Tribunal, presumably, although not expressly, in reliance on the exception in r 14(3) of the Conduct Rules, that he had full and unqualified consent of the Australian Company and the German Company to act in a position of conflict between W and the Australian Company in any situation and that he was to prefer the interests of W. W 'was the one person they could not live without'; ts 73, 30 January 2020. When asked whether he understood that 'a lawyer who wishes to act in a position of concurrent conflicts must obtain the fully informed consent of both parties to the conflict', he replied '[y]es, and as far as I was concerned, I had it'; ts 76, 30 January 2020.
For r 14(3) of the Conduct Rules to apply, an information barrier needs to have been established to protect the confidential information of each client. There is no evidence of any such information barrier having been established. In any event, even if the Practitioner had the consent of the Australian Company on an ongoing basis to act for both W and the Australian Company, it is the Tribunal's view that that consent would no longer apply in circumstances where W had been or was about to be removed as both a director of the Australian Company and its manager. Further, even if the Australian Company had consented to its lawyer acting for another party, this could not be described as an informed consent, because the Australian Company was entirely unaware that the Practitioner was acting for W in his personal capacity; ts 75-76 and 78, 30 January 2020.
The Tribunal concludes that the Practitioner had not obtained the informed consent of the parties.
The appointment of a solicitor by a client creates a fiduciary relationship between them. As the fiduciary, the solicitor is required to employ his knowledge, skill and expertise exhaustively in the interests of his client. That obligation was described by the Full Court of the Federal Court in Commonwealth Bank of Australia and Anor v Smith and Anor 42 FCR 390; (1991) 102 ALR 453 at 477 as follows:
Not only must the fiduciary avoid, without informed consent, placing himself in a position of conflict between duty and personal interest, but he must eschew conflicting engagements. The reason is that, by reason of the multiple engagements, the fiduciary may be unable to discharge adequately the one without conflicting with his obligation in the other.
In Blackwell v Barroile Pty Ltd and Ors 51 FCR 347; (1994) 123 ALR 81 at 93, the Full Court of the Federal Court said that the obligation of a legal practitioner:
to provide a client with professional advice and skill uncompromised by the performance of a like duty to another whose interests conflict with those of the client … is an ethical rule of long standing which goes to the core of the solicitor-client relationship, the maintenance and protection of which is a matter of public interest reflected in the doctrine of professional privilege. It is central to the preservation of public confidence in the administration of justice.
The Practitioner's conduct represents a clear breach of r 14(2) of the Conduct Rules.
The Conduct Rules are subsidiary legislation as defined in the Interpretation Act 1984 (WA) (Interpretation Act). Accordingly, a reference to 'this Act' in the LP Act includes a reference to the Conduct Rules (s 46 of the Interpretation Act). It follows that a contravention of the Conduct Rules is conduct capable of constituting unsatisfactory professional conduct or professional misconduct; s 404(a) of the LP Act.
The Tribunal considers that the Practitioner's conduct in breach of r 14(2) of the Conduct Rules is at least unsatisfactory professional conduct, in that it is conduct 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.
The issue is then whether the Practitioner's unsatisfactory professional conduct involved a substantial failure to reach or maintain a reasonable standard of competence and diligence and is thus professional misconduct.
The Tribunal concludes, and we find, that this conduct is professional misconduct. The conflict was, to use the Committee's words, 'obvious and blatant'; CCS para 43. The Practitioner put himself in a position where he could no longer perform his duties to the Australian Company. He knew what it was that W intended to do to protect his claimed entitlements and gave advice in that regard. He was therefore conflicted because he was unable to protect the interests of his client the Australian Company, by at least informing his client the Australian Company of the transfer of funds and advising the Australian Company appropriately, without breaching his duty of confidentiality to his client W. It was, in the Tribunal's view, a substantial failure on his part.
Ground 2
The Practitioner acknowledges, and the Tribunal finds, that it was inappropriate conduct on his part to cause the Practice to render bills to the Australian Company on 15 July 2016 and 22 July 2016 respectively; Practitioner's Amended Statement para 18(e).
The Practitioner accepts that it is clear that W had asked him to bill him personally for the advice and that it was an error on the part of the Practitioner to bill the Australian Company instead. The Practitioner says that the invoices should have been sent to W 'because there's no reason not to'; ts 255, 6 March 2020. In the Practitioner's witness statement, by way of explanation he says that, at that time, he 'did not see [W's] request' and in any event regarded the Australian Company as his client. He 'did not have any reason not to invoice [W], instead of [the Australian Company]'; PWS paras 75-76.
The Tribunal does not, however, accept the Practitioner's claim that this conduct should be regarded as no more than simply an error on his part. We agree with the Committee's submission that the Practitioner's conduct under Ground 2 must be seen in the context that the Practitioner had in fact been asked, clearly and expressly, by W to bill him personally and that the Practitioner was aware that at the relevant time W, while an employee of the Australian Company, was no longer a director. The description of the work carried out, contained in the two invoices, makes it clear that the relevant work being billed for was in respect of advice about W's termination of employment. It was more than a simple error and the Tribunal finds that it was careless of the Practitioner to bill the Australian Company for that work.
The Tribunal does, however, accept the Practitioner's concession that his conduct should be characterised as unsatisfactory professional conduct rather than professional misconduct. The Tribunal finds that the conduct falls short, but not substantially 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. The Tribunal finds that the Practitioner's conduct under Ground 2 is unsatisfactory professional conduct.
Ground 3
The Tribunal has found, at [31] above, that the Practitioner on or about 22 July advised W to transfer money from the Australian Company's bank account to an account controlled by W, in an amount equivalent to the estimated amount of W's potential entitlements consequential upon the termination or potential termination of his employment with the Australian Company. The circumstances of the transfer, the Tribunal has also found, was that the Practitioner knew at the time of that advice that W had resigned as a director of the Australian Company. Further, the Practitioner has conceded (PCS para 37) and the Tribunal finds that
the Practitioner knew thatW had no entitlement to the money in question and thatthe Practitioner knew thatW had not been authorised by the Australian Company to make that transfer.The Practitioner accepts that on 22 July 2016, he advised W to transfer money to cover his entitlements from the Australian Company's account to an account controlled by him; ts 89-90, 30 January 2020.
The Practitioner further accepts that, as a 'fairly basic proposition', the fact that a person might be owed money by a third party does not of itself give that person a legal interest in funds or assets of that third party; ts 135-136, 31 January 2020. Inexplicably though, the Practitioner did not, and does not, accept the proposition that W had no authority to transfer those funds; ts 136, 31 January 2020.
The Tribunal accepts that it may have been W who first proposed that such a transfer be made, but the Tribunal also accepts W's evidence (WWS para 36) that the transfer was not 'a course of action I was prepared to take unless on [the Practitioner's] advice'.
We note the Practitioner's assertion that, at the time of the advice, the Practitioner may not have been aware of the precise amount of W's entitlement. However, this does not affect the outcome of the Tribunal's deliberations on Ground 3.
We do not accept the Practitioner's submission at para 33(b) of the Practitioner's amended statement that the Practitioner merely 'agreed' with the proposal to transfer the funds. In his written advice to W dated 22 July 2016, the Practitioner clearly told W that he saw no option for W but 'to take proactive steps to protect your entitlements'; Committee's book page 150. He advised W to immediately transfer the full amount of his employment entitlements into a bank account controlled by W. The Tribunal does not characterise that advice as merely 'agreeing' with W's proposed action if, indeed, it was W who proposed the action in the first place.
As the Committee has pointed out, it is not the case that W had no alternative, in order to protect any right he may have to receive money from the Australian Company, other than to make that transfer to his own account. The Tribunal considers that it was entirely open to W to apply to the Supreme Court for a freezing order which, in the Tribunal's view, would have been the preferable approach. The Practitioner's evidence in that regard was that he had in fact 'fleetingly' considered the possibility of applying for a freezing order but thought that 'there was another way that was preferable'; ts 137 and 138, 31 January 2020. He said that his reservation about the approach of applying for a freezing order was that he would have difficulty effecting service and he had some doubt as to whether the order would be made ex-parte. A little later, he told the Tribunal that his concerns were 'Time, cost. Just time and cost'; ts 138, 31 January 2020.
In contrast to this evidence, he told the Committee in response to its enquiry that he 'was not in a position to consider alternatives to secure the funds'; Committee's book page 186. That was, of course, in the context of the Practitioner then maintaining that W had already transferred the funds at the time when he sought the Practitioner's advice but, nonetheless, it still highlights the Practitioner's inconsistencies in his account of his conduct.
The Tribunal does not consider that the Practitioner applied his mind at all to the issue beyond the advice to transfer the money to another bank account.
The Practitioner concedes that his advice was negligent (PCS para 37), but considers that his conduct should be characterised as unsatisfactory professional conduct rather than professional misconduct.
The Tribunal does not agree. The Practitioner gave advice to W to the effect that W should transfer money, which did not belong to him and in which he had no interest, to an account in the sole name of W. Even if it had been established that W was owed that money by the Australian Company (which it had not), it was entirely inappropriate to advise W to take that money.
There is no relevant conduct rule, nor was any evidence led as to what the legal profession considers to be the relevant standard to be observed. However, in the Tribunal's view, derived from the Tribunal Members' own knowledge and experience, the Practitioner's conduct, in giving that advice to W, is conduct that could be reasonably regarded as disgraceful and which, to a substantial degree, falls short of the standard of professional conduct observed or approved by members of the legal profession of good repute and competence. The Tribunal concludes that the Practitioner's conduct constitutes professional misconduct under the LP Act.
The Committee has also alleged that the Practitioner's advice exposed W to the possibility of being charged with the offence of stealing contrary to s 378 of the Criminal Code. However, the Tribunal does not accept the Committee's submission that the Tribunal should find that by giving that advice to W, the Practitioner was putting W at risk of being charged with an offence under the Criminal Code. A finding of that nature is beyond the jurisdiction of the Tribunal to make and in any event would be entirely speculative.
Ground 4
The allegation made by the Committee is that, in the Practitioner's correspondence to the Committee dated 2 May 2017, 5 March 2018 and 27 April 2018 respectively, he was not open and candid in his dealings with the Committee, in breach of the Conduct Rules.
Rule 50(3)(b) of the Conduct Rules requires that, when a legal practitioner is requested by the Committee to provide comments or information in relation to that practitioner's conduct or professional behaviour, that practitioner must provide a full and accurate account of his or her conduct in relation to the matters covered by the request.
The Tribunal has found that the Committee wrote to the Practitioner on 10 April 2017 advising the Practitioner that the Committee was investigating a complaint made in respect of the Practitioner's conduct and asking that the Practitioner provide his entire original file and all documents relating to the matter under investigation.
The Practitioner on 2 May 2017 provided the Committee with certain documents, along with a table of comments in respect to those documents. He said specifically that the Committee was mistaken to state that the Practitioner had advised W to transfer an amount of $378,000 from the Australian Company's account to W's account and said that 'that decision was made by [W]'; Committee's book page 192.
The Practitioner, in his table of comments where he refers to the letter from the Practitioner to W of 27 July 2016, notes that he had expressly stated that it was W's idea to put money from the Australian Company into a holding account and that 'this had been done without any input from me'; Committee's book page 206(c).
The Practitioner then responded to the Committee on 5 March 2018, suggesting that the Committee approach W for whatever information it was seeking. He repeated this suggestion in his letter to the Committee on 27 April 2018. He said in that letter that 'it is a simple matter for the [Committee] to ask [W] whether or not he transferred the funds before seeking advice from [the Practitioner]'.
The Practitioner continued to maintain that he did not advise W to transfer money 'from any account or to any account'. The Practitioner, however, agreed that he did 'subsequently tell [W] that in the peculiar circumstances that appertained he was probably justified in doing so'; Committee's book page 232.
The Practitioner has admitted that his statement to the Committee that it was W's idea to put money from the Australian Company into a holding account, without any input from the Practitioner, was incorrect; Practitioner's Amended Statement at para 38(a).
In the Tribunal's view, misleading, or acting with the intention of misleading the Legal Profession Complaints Committee is to be viewed as seriously as is misleading, or acting with the intention of misleading a client, court or Tribunal. The Legal Profession Complaints Committee performs an important role in ensuring the regulation of legal practitioners, which is the purpose of the LP Act[3], pursuant to which the Legal Profession Complaints Committee is established. Unless practitioners' duties of honesty and candour to the Legal Profession Complaints Committee is regarded in that way, its ability to effectively regulate the profession is undermined.
[3] See long title to the Legal Profession Act 2008 (WA).
The purpose of the making of penalty orders is the protection of the public through the maintenance of proper standards within the profession. As such, the impact that the appropriate penalty would have upon a practitioner who is found to have committed misconduct, and personal hardship that may be occasioned to a practitioner by the imposition of a particular penalty are necessarily secondary considerations: Legal Profession Complaints Committee v Detata [2012] WASCA 214 at [47] and Khosa at [66] and [213].
The Practitioner's personal circumstances
The Practitioner filed two affidavits in support of his position which were read at the penalty hearing. The first was sworn on 22 September 2020 and the supplementary affidavit was sworn on 27 October 2020. The Practitioner was not cross-examined on either affidavit.
From the affidavits the Tribunal makes the following relevant findings in respect of the Practitioner's personal circumstances:
(1)The Practitioner is currently 71 years of age. He was sent to Australia in 1956 at the age of five under the Assisted Child Migrant Scheme and lived in an orphanage before he was reunited with his mother at 14 years of age.
(2)In 1968 he was awarded a Commonwealth Scholarship which enabled him to attend university where he chose to study law.
(3)During his studies he was conscripted into the Australian Army during the Vietnam War and although he completed advanced infantry training and trained as an interpreter he was not deployed to Vietnam because the election of the Whitlam Government in 1972 resulted in the plan to send his battalion to Vietnam being cancelled.
(4)He completed his law degree and was admitted to practice on 14 February 1978 and has practiced continually since that time.
(5)He intends to retire from the legal profession on 30 June 2021 but intends to work outside the law after that time.
(6)During his time in practice he has been regularly involved in the provision of pro bono legal advice;
(7)During his time in practice he has only had one prior disciplinary proceeding brought against him. It resulted in a finding of unsatisfactory professional conduct being made in 2011.[4]
[4] Affidavit of 22 September 2020 para 19. The action was 2011 VR 175.
(8)He is married and although his wife works part time, she is financially dependent upon him. He has no other dependants.
(9)He presently has a mortgage over his residence. His income from legal practice last year amounted to just less than $80,000. He expects to earn fees of about $4,000 until his retirement.
(10)His superannuation fund owns the property from which he practices law. He is paid a pension from the superannuation fund which equates to the rent which his practice pays to the superannuation fund less expenses. There is no mortgage over that property. The property is estimated to be worth $600,000. He intends to sell it to enable the mortgage on his home to be paid off.
(11)He currently has only four files open. They are:
(a)Supreme Court action CIV 1337 of 2014;
(b)Supreme Court action CIV 2476 of 2015 (the Mining Action). He states that 74% of his income for the last year was generated by this matter;
(c)District Court action CIV 4140 of 2016 (the Accountant Action); and
(d)District Court action CIV 2454 of 2019 (the Farm Action).
(12)Another solicitor has now been appointed in relation to the Mining Action because of the Practitioner's intention to retire. In his affidavit of 22 September 2020 the Practitioner deposed that despite that, he intended to continue to assist with the preparation of witness statements 'in the short term' because of the complexity of the facts.[5] In his later affidavit he deposed that his instructions in the matter have been put on hold for now.[6] The reasons for that change in position were unstated and it is not clear whether the Practitioner will provide further assistance in the conduct of the Mining Action.
(13)'The Accountant Action' is a claim against his client for the sum of less than $200,000. There is a pleadings battle going on presently. It is unlikely that the matter will get to trial before his proposed retirement on 30 June 2021 and the practitioner is keen to ensure that pleadings, discovery and outlines of witness statements are completed by him before new solicitors are appointed with a view to saving his client considerable legal costs.[7]
(14)'The Farm Action' is a debt recovery action which he expects will be completed prior to 30 June 2021.[8]
The references filed with the practitioner's submissions dated 27 October 2020
[5] Affidavit of 22 September 2020 para 28.
[6] Affidavit of 27 October 220 para 8.
[7] Affidavit of 22 September 2020 paras 26(c) and 29.
[8] Affidavit of 22 September 2020 para 30.
In support of his position the Practitioner has provided references from the following persons:
(a)Ms Anne Payne. Ms Payne is a legal practitioner who states that between 2011 and 2019, other than for a period of two years, she and the practitioner belonged to a professional networking group together. She stated that she would refer clients to the Practitioner where their issues related to matters outside her expertise and within his and that the feedback from those clients was that he provided them with services promptly and professionally. She considers the findings made against him to be in respect of conduct which she regards as out of character based on her knowledge of him in a personal and professional capacity.
(b)Mr Anthony Goldfinch. Mr Goldfinch is a legal practitioner who has known the Practitioner in a professional capacity since the early 1990s. He stated that he has found the Practitioner to be hard working and dedicated to achieving the best results for his clients, particularly if he considers that there has been an injustice done to them. He says that over all of their professional interactions he has found the Practitioner to be friendly and personable.
(c)Ms GiGi Visscher. Ms Visscher is a barrister who is acting on a deferred fee basis on Supreme Court action 1337 of 2014. She states that the Practitioner has, in the course of this Supreme Court matter CIV 1337 of 2014, demonstrated a willingness to go above and beyond, has been diligent and hardworking, dependable, knowledgeable and in her view, a true asset.
(d)Ms Rebecca Lee. Ms Lee states that she met the Practitioner when he briefed her in 2017 and the two have worked closely in the three and a half years since then. She opines that the Practitioner is hard working and diligent in acting in his clients' best interests and that she has not had cause to have any concerns about his integrity.
From those references the Tribunal finds that the Practitioner is regarded, by those referees, as being hardworking, of good repute and competent in the law.
Applicant's position on penalty
The applicant submitted that the Tribunal's findings in relation to the Practitioner's conduct encompassed in Grounds 1 - 3 while bearing upon his competence, were not, either individually or in combination, capable of justifying a conclusion that the Practitioner is not fit to practice law. The applicant submitted that had the findings in relation to Ground 4 not been made, the applicant would have submitted that a disciplinary outcome less than the making and transmission of a report to the Supreme Court (full bench) would have been appropriate.
The applicant submitted that it was the Tribunal's findings in relation to Ground 4 together with the Practitioner's lack of insight, demonstrated by his denial of the alleged conduct and its seriousness and the absence of remorse, which necessitated the Tribunal concluding that the Practitioner is not fit to practice law and, therefore, resolving to make and transmit a report to the Supreme Court (full bench) with a recommendation that the Practitioner's name be removed from the roll of practitioners. The applicant submitted that such a conclusion was especially warranted when those matters are taken together with the conduct found in relation to Grounds 1 - 3. The applicant submitted that a global penalty, being the making and transmission of a report to the Supreme Court with a recommendation that the Practitioner's name be removed from the roll was appropriate.
Despite its submission that the Tribunal should find that the Practitioner is not fit to practice law, the applicant submitted that particular circumstances existed that meant that the Practitioner should be allowed a limited right to practice pending the resolution of the referral to the Supreme Court (full bench). The special circumstances which are said to exist are that CIV 1337 of 2014 is very close to trial, being listed for 10 days from 18 to 28 January 2021 and replacing the Practitioner at this late stage would be very difficult, in particular because he is acting on a deferred fee basis because the plaintiffs cannot afford legal representation.[9]
[9] Those facts are set out in the letter from Ms Visscher to which the Tribunal referred at [18] of these reasons.
It was submitted that the limited right to practice would allow the Practitioner to remain involved in CIV 1337 of 2014 until the anticipated conclusion of the trial, following which (subject to any extension of that limited right to practice which might be granted to the Practitioner by the Tribunal) his practising certificate would be suspended pending the determination of the Supreme Court (full bench).
The applicant submitted that in the event that the Tribunal determined that a period of suspension was the appropriate penalty, that suspension should not take effect until after 28 January 2021 (or such later date as may be ordered pursuant to an order that there be liberty to apply) in order to allow the Practitioner to continue to act in CIV 1337 of 2014 for the same reasons as already stated.
Practitioner's position on penalty
The Practitioner submitted:
(1)a referral to the Supreme Court (full bench) is not necessary in all of the circumstances;
(2)a significant term of suspension from practice is the appropriate penalty having regard to the actual conduct engaged in by the Practitioner and to his personal circumstances;
(3)alternatively, if the Tribunal does resolve to refer the matter to the Supreme Court (full bench) then, rather than making an order for the interim suspension of the Practitioner's local practising certificate, it should be conditioned in a manner not dissimilar to that proposed by the applicant but those conditions should also allow the practitioner to continue to act for the defendants in the Accounting Action and for the plaintiffs in the Farm Action so that that he can earn an income which would allow him to fund his involvement in Supreme Court action CIV 1337 of 2014. The Practitioner also submitted that rather than limit his restricted right to practice to 28 January 2021, the entitlement to practice in that limited way should be expressed to continue until judgment is delivered in respect of CIV 1337 of 2014 (subject to an earlier resolution of the referral by the Supreme Court (full bench)). Two reasons were advanced for that position. First, because there was a real prospect that the trial of CIV 1337 of 2014 would not conclude on 28 January 2021 and the matter would be part heard necessitating the Practitioner's continued involvement beyond 28 January 2021. Second, even if the trial is concluded by 28 January 2021, the judgment would not be delivered by that time and the Practitioner will need to be involved in taking judgment.
The Practitioner submitted that whether he was suspended for a significant period of time or was struck from the roll made little practical difference because any period of suspension would be for a period which went past 30 June 2021, when the Practitioner intended to retire in any event. That is, either outcome would mean that the Practitioner would not be able to return to unrestricted practice before his retirement.
The penalty orders which should be made
In his affidavits of 22 September 2020 and 27 October 2020 the Practitioner deposes that it has been, and remains, his intention to cease the practice of law at the end of June 2021. He says he is not taking any new instructions and currently only has instructions in respect of the four matters referred to in [17(11)] above. However, no undertaking to cease practice from 1 July 2021 has been given by the Practitioner. In that circumstance, while the Tribunal has no reason to doubt that the Practitioner's intention to retire is genuine, the Tribunal has proceeded to consider the question of suspension on the basis that the Practitioner may in fact decide to continue to practice after a period of suspension has been served if one were to be imposed.
The Tribunal accepts that the unsatisfactory professional conduct found in relation to Ground 2, the rendering of bills by the Practitioner to the Australian company when the client was not the Australian company but rather W, which the Tribunal characterised as unsatisfactory professional conduct, is not of a kind which bears upon the Practitioner's competence in relation to matters of law.
However, the Tribunal considers that the findings in respect to the Practitioner's conduct made by the Tribunal in relation to Grounds 1, 3 and 4, do bear upon the question of the Practitioner's competence.
First, the Tribunal found, in respect of Ground 1 that the Practitioner's conduct, which involved a failure to appreciate the existence of a conflict of interest was a ‘substantial failure on his part' which amounted to professional misconduct rather than merely unsatisfactory professional conduct because it fell 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.[10] The Tribunal considers that that failure goes directly to the Practitioner's competence.
[10] Reasons [123]-[125].
Second, in relation to Ground 3, at the liability hearing before the Tribunal the Practitioner accepted that his advice to W to transfer funds from the Australian company to W's own account so as to preserve in Australia funds that would meet the termination payments which it the Australian Company might owe to W was 'negligent'.[11] The Tribunal found that conduct amounted to professional misconduct under the LP Act.[12] In so doing the Tribunal concluded that 'it was entirely inappropriate to advise W to take the money'[13] and that the Practitioner's conduct, in giving that advice, 'is conduct that could be reasonably regarded as disgraceful and which, to a substantial degree, falls short of the standard of professional conduct observed or approved by members of the legal profession of good repute and competence'.[14] Such a finding necessarily calls into question the Practitioner's legal ability or competence.
[11] Reasons [79].
[12] Reasons [141].
[13] Reasons [140].
[14] Reasons [141].
The Tribunal has real concerns about the Practitioner's competence to practice in light of the findings in relation to Grounds 1 and 3 particularly having regard to the Practitioner's long experience in the law and the obvious nature of the mistakes made.
Despite those misgivings, in light of the Practitioner's many years of satisfactory practice, the Tribunal is of the view that the failings identified in relation to Grounds 1, 2 and 3 could be dealt with by way of a disciplinary outcome less than a referral to the Supreme Court (full bench).
Had these been the only matters involved, the Tribunal would be satisfied that a period of suspension from practice would achieve the object of the protection of the public through the maintenance of the standards of the profession and appropriately mark the seriousness of that conduct.
However, the Tribunal is of the view that when taken together with the professional misconduct found in relation to Ground 4, the appropriate disciplinary outcome is that all of those matters should be dealt with by the making of a report and its referral to the Supreme Court (full bench) with a recommendation that the Practitioner's name be removed from the roll of practitioners.
The Tribunal finds that the lack of honesty and integrity displayed by the Practitioner by his conduct in Ground 4 together with his failure to even offer to return the money paid to him by the Australian company is such that, when regard is had to all of the circumstances, it is appropriate that a referral is made to the Supreme Court (full bench) with a recommendation that his name be removed from the roll of practitioners. We go on to explain our reasoning in relation to that conclusion in the following paragraphs.
In respect of Ground 4, the Practitioner was found to have engaged in professional misconduct by failing to be open and candid in his dealings with the Legal Profession Complaints Committee.
The Tribunal found that during the course of its investigation into a complaint made in respect of the Practitioner's conduct, the Legal Profession Complaints Committee wrote to the Practitioner and asked him whether he had given advice to W to transfer $378,000 from the Australian Company's account to W's account and that the Practitioner had responded saying that the Legal Profession Complaints Committee was mistaken that he had given advice to W to transfer $378,000 from the Australian Company's account to W's account. In his evidence before the Tribunal the Practitioner endeavoured to explain that response by claiming that he misunderstood the Legal Profession Complaints Committee's question and that he was responding to it that he had not given advice to transfer the specific sum of money referred to in their correspondence rather than his response being a denial of having given advice to transfer any funds from the Australian Company's account to W's account. The Practitioner's evidence was that his answer was not, therefore, intended to mislead the Committee.[15]
[15] Reasons [161]-[164].
In its findings the Tribunal rejected the Practitioner's explanation for his response, finding that the Practitioner's evidence was disingenuous, that the Practitioner knew the response was false and that, in giving it, he intended to and did mislead the Committee.[16]
[16] Reasons [164]-[166].
From those findings the Tribunal now concludes that the Practitioner's disingenuous explanation for the answer given by him to the Committee which he gave in evidence before the Tribunal was demonstrative of:
(i)a further attempt to evade the consequence of his wrongful conduct; and
(ii)a lack of remorse for the misconduct.
Further, the Tribunal has had regard to the fact that the Practitioner has not returned to the Australian Company the fees which it paid to him when they should have been paid by W.
In his written submissions dated 22 September 2020, which were drafted and filed by the Practitioner himself, and so must be regarded as reflective of his own thinking, the Practitioner contends that it is relevant to the penalty proceedings that no complaint was made by any client or the shareholders of the company about the inadvertent error in issuing the invoices and neither W nor the Australian company has sought reimbursement of any of the fees.[17]
[17] Submissions dated 22 September 2020 para 11.
While those matters are relevant to the Tribunal's considerations, in the Tribunal's view, once his billing error was known to him, the Practitioner ought at least to have offered to refund the fees to the Australian company. From an ethical point of view the Practitioner should not be entitled to adopt the position that he can simply retain the money unless the Australian company is proactive in asking for it back. The Tribunal considers that this attitude shows a lack of appreciation for his wrongdoing and is also demonstrative of a lack of remorse.
In circumstances where:
(a)the Practitioner was not candid in his response to the Legal Profession Complaints Committee of 2 May 2017;
(b)was disingenuous in his evidence before the Tribunal in an effort to explain away his original answer to the Legal Profession Complaints Committee;
(c)was a very experienced practitioner;
(d)because of his disciplinary history, he could be expected to be aware of his obligations to the Committee, which he did not meet when he failed to be candid in his answers to their questions, answered 'no comment' in part of his response to their inquiry and suggested that they could ask W directly for answers rather than asking him;[18]
(e)his professional misconduct and unsatisfactory professional conduct, although all related to essentially one matter, persisted over a period of time and is therefore unable to be regarded as a one off event; and
(f)the Practitioner has not demonstrated insight or remorse,
the Tribunal finds that the Practitioner's conduct encompassed in Ground 4 was incompatible with the characteristics of honesty and integrity that are required for the maintenance of proper standards of the profession.
[18] Reasons [165].
That is the case notwithstanding:
(a)the Practitioner's stated intention to retire from practice on 30 June 2021;
(b)that the Practitioner is not taking any new instructions and is currently acting only on the four matters referred to in [17(11)] above;
(c)the Practitioner's prior good standing in the profession; and
(d)the Practitioner's favourable personal antecedents.
The Tribunal finds that the Practitioner's conduct in relation to Ground 4, which goes to his character, means that those who would deal with him in the law cannot be assured that he will act with integrity at all times. The Tribunal finds that that is not the kind of concern that could be remedied during a period of suspension. In that circumstance the Tribunal concludes that the maintenance of proper standards of the profession and the protection of the public necessitates that it exercise the discretion reposed in it under s 438(2)(a) to make and transmit a report on the findings to the Supreme Court (full bench) with a recommendation that his name be struck from the roll of practitioners.
As we have already adverted to, the parties have each submitted that in the event that a referral to the Supreme Court (full bench) is to be made, an interim suspension of the Practitioner's practising certificate should also be made but not until the Practitioner has been permitted (pursuant to conditions to be imposed on the practising certificate) to continue to act for a specified period of time in the Supreme Court matter CIV 1337 of 2014.
Several matters tell against the conditioning of the Practitioner's practising certificate in either the way proposed by the applicant or the way proposed by the respondent.
First, although it was submitted that judgment may not be delivered in the Supreme Court action before 30 June 2021, when asked what the Practitioner intended to do in relation to continuing to practice in that event, his counsel, after taking instructions from the Practitioner, informed the Tribunal that the Practitioner had not considered that possibility and would make a decision about it if and when it becomes an issue. The inference to be drawn, and which the Tribunal does draw from that answer is that the Practitioner is not committed to seeing CIV 1337 of 2014 to its conclusion. So the plaintiffs in that litigation may in fact find themselves in a position where the matter is part heard or judgment is reserved and the Practitioner retires leaving them without an instructing solicitor. The mischief which the proposed interim step is designed to cure may, therefore, still arise before the litigation is concluded.
Second, the submission that the Practitioner should be entitled to continue to act in respect of the two fee paying District Court matters in order that he can obtain a source of funds which will allow him to continue to act in CIV 1337 of 2014 also gives the Tribunal reason to be concerned that the Practitioner may not be committed to continuing to act in that matter if he cannot continue to act in the District Court matters. The Tribunal appreciates that the Practitioner has not said that he would not do so, but the Tribunal notes that there has not been any unequivocal commitment from the Practitioner that he would do so.
Third, in the event that the Practitioner's practising certificate were conditioned in the way the Practitioner proposes and the three actions are concluded before the decision of the Supreme Court (full bench) in respect of the referral (as he acknowledges might be the case), and the Practitioner then does not renew his practising certificate and so ceases to be entitled to practice on 30 June 2021, the Practitioner will, in effect, have suffered no consequence for the conduct in question. That is because he will have been allowed to conclude his practice in accordance with his presently expressed intentions. In our view the Tribunal ought to be slow to put in place a regime which would deliver such an outcome.
Fourthly, in this case, where there is little information before the Tribunal about the importance or complexity of CIV 1337 of 2014 and no information about any attempts having been made to find solicitors who may be willing to act on a deferred fee basis in place of the Practitioner, and where the plaintiffs could apply to the Supreme Court to vacate the trial dates in order to allow time for alternative solicitors to be identified and to become properly acquainted with the matter (which might have the additional benefit of allowing for the hearing to be listed for sufficient hearing days that will ensure that it can be concluded in one sitting) the Tribunal is not persuaded that it would be appropriate to limit the Practitioner's entitlement to practice for a period of time before an order for interim suspension would come into effect as has been proposed by both parties.[19]
[19] Although the precise terms of those conditions are in issue between them.
Finally, in light of the nature of the Practitioner's impugned conduct the Tribunal considers that it would be an unprincipled approach to take to find that the Practitioner's conduct was such that he ought to be suspended from practice pending a decision of the Supreme Court (full bench) but to allow him a limited right to practice for a period of time for specific clients should they, knowing of the Tribunal's findings and determination, choose to continue to have him act for them. This is not the kind of case where the Tribunal might limit a practitioner's right to practice to a certain area of law satisfied of their expertise in that particular area but concerned that they should not be allowed to practice in another. The Practitioner's impugned conduct went to his integrity generally. That concern is as apposite to his conduct in CIV 1337 of 2014 as it is to other matters.
Costs
Although the applicant originally sought an order that the Practitioner pay its costs in the sum of $68,012.50, an agreement was reached between the parties such that at the hearing the parties consented to the making of an order in the following terms:
Pursuant to s 78(2) of the State Administrative Tribunal Act 2004 (WA), Kevin Colin Benedict Staffa must pay the applicant's costs of the proceedings fixed in the sum of $58,000, such costs to be paid to the Legal Practice Board of Western Australia within 30 days of the date of this order or as otherwise agreed between the Practitioner and the Legal Practice Board.
Having regard to the nature of this matter and the manner in which it proceeded, the Tribunal is satisfied that the sum agreed between the parties to be paid by the Practitioner to the Legal Practice Board is reasonable. Accordingly, the Tribunal is satisfied that it is appropriate to make the order sought.
Orders
The Tribunal proposes to make the following orders:
1.Pursuant to s 438(2) and s 438(4) of the Legal Profession Act2008 (WA) the Tribunal:
1.1.makes and transmits a report to the Supreme Court (full bench) on its findings that that Kevin Colin Benedict Staffa:
(a)engaged in professional misconduct as defined in s 403(1) of the Legal Profession Act 2008 (WA) by providing legal services to a client when the Practitioner and the Practitioner's law practice is engaged by another client in the same or related matter and the interests of the client and the other client were adverse and there was a conflict of the duties to act in the best interests of each client contrary to r 14(2) of the Legal Profession Conduct Rules 2010 (WA);
(b)engaged in unsatisfactory professional conduct as defined in s 402 of the Legal Profession Act 2008 (WA) by rendering two invoices to a client in respect of work carried out for another client;
(c)engaged in professional misconduct as defined in s 403(1) of the Legal Profession Act 2008 (WA) by advising a client to transfer money belonging to another client to a bank account controlled by the first client without the consent or authority of the other client; and
(d)engaged in professional misconduct as defined in s 403(1) of the Legal Profession Act 2008 (WA) by failing to be open and candid in his dealing with the Legal Profession Complaints Committee in breach of r 50 of the Legal Profession Conduct Rules 2010 (WA);
1.2makes a recommendation that Kevin Colin Benedict Staffa's name be removed from the roll of practitioners admitted to the legal profession under the Legal Profession Act 2008 (WA) for that professional misconduct and unsatisfactory professional conduct; and
1.3orders that the Tribunal's report to the Supreme Court (full bench) is to comprise the Tribunal's reasons in Legal Profession Complaints Committee and Staffa [2020] WASAT 58, the Tribunal's orders made on 2 June 2020 in this application, the Tribunal's reasons in Legal Profession Complaints Committee and Staffa [2020] WASAT 58 (S), the transcript of the hearing of the Tribunal on 30 and 31 January 2020 and 6 March 2020 and copies of the exhibits tendered at that hearing, the transcript of the hearing of 4 November and the copies of exhibits and affidavits tendered at that hearing and these orders.
2.Pursuant to s 438(3)(a) Kevin Colin Benedict Staffa's local practising certificate is suspended with effect from [ ] days after the date of this order, until determination by the Supreme Court (full bench).
3.Pursuant to s 87(2) of the State Administrative Tribunal Act 2004 (WA) Kevin Colin Benedict Staffa must pay the Legal Profession Complaints Committee's costs of the proceedings fixed in the sum of $58,000, such costs to be paid to the Legal Practice Board of Western Australia within 30 days of the date of this order or as otherwise agreed between Kevin Colin Benedict Staffa and the Legal Practice Board.
The Tribunal will hear the parties as to the time at which suspension referred to in proposed order 2 should take effect as some time may be required to allow the Practitioner to hand over his files.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
CH
Associate to Judge Glancy
15 DECEMBER 2020
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