Legal Services Commissioner v Bone

Case [2013] QCAT 550
CITATION: Legal Services Commissioner v Bone [2013] QCAT 550
PARTIES: Legal Services Commissioner
(Applicant)
v
Paul Ernest Bone
(Respondent)
APPLICATION NUMBER: OCR213-12
MATTER TYPE: Occupational regulation matters
HEARING DATE: 11 September 2013
HEARD AT: Brisbane
DECISION OF:

Justice Alan Wilson, President

Assisted by:

Mr Geoffrey Sinclair
Practitioner Panel Member; and

Dr Margaret Steinberg AM
Lay Panel Member
DELIVERED ON: 16 October 2013
DELIVERED AT: Brisbane
ORDERS MADE:

1.    The application for disciplinary proceedings against the respondent is dismissed.

2.    The applicant is to pay the respondent’s costs of and incidental to charge 3, incurred after 31 May 2013, as assessed on an indemnity basis.

3.    The applicant is to pay the respondent’s costs of and incidental to charges 4-8 inclusive, up to the time of their withdrawal, as assessed on an indemnity basis.
CATCHWORDS:

PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – DISCIPLINARY PROCEEDINGS – PROFESSIONAL MISCONDUCT OR UNSATISFACTORY PROFESSIONAL CONDUCT – where the respondent’s articled clerk took instructions to prepare wills for a husband and wife – where the respondent was appointed as the executor of the wills – where the wills contained a clause entitling the respondent to charge professional fees in relation to the administration of the estates – where the respondent did not inform the husband and wife of the charging clause – where r 10.1 of the Legal Profession (Solicitors) Rule 2007 provided that, in those circumstances, a solicitor must inform the client of that clause, in writing, before the client signs the will – where the respondent charged fees for ‘care and consideration’ – where the costs agreement did not contain a provision allowing for a charge of that kind – where the applicant contends the respondent’s conduct amounts to unsatisfactory professional conduct – whether the respondent’s conduct has the requisite degree of seriousness or substance to come within the meaning of unsatisfactory professional conduct

PRACTICE AND PROCEDURE – EVIDENCE – EXPERT EVIDENCE – where the respondent filed affidavits from legal practitioners experienced in wills, probate and succession practice – where the affidavits contain evidence about the operation of r 10.1 of the Legal Profession (Solicitors) Rule 2007 – where QCAT Practice Direction No 4 of 2009 limits parties to one expert; requires notice be given to the other party; and requires that all experts attend a conclave convened by a QCAT Member – where these requirements did not occur – whether the respondent may call expert evidence where the requirements for calling such evidence have not been met

PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – DISCIPLINARY PROCEEDINGS – COSTS – where the applicant originally brought eight charges against the respondent, but withdrew six before the final hearing – where the respondent seeks an order that the applicant pay the costs in respect of the charges that were withdrawn as well as the costs associated with the remaining charges if they are dismissed – where s 462(4) of the Legal Profession Act 2007 provides that the Tribunal…

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Legal Services Commissioner v Bone [2013] QCAT 550
Case
[2013] QCAT 550
Decision Date

CaseChat Overview and Summary

In the matter of Legal Services Commissioner v Bone, the Queensland Civil and Administrative Tribunal (QCAT) was tasked with determining whether Mr Bone, a solicitor, had engaged in unsatisfactory professional conduct by charging for care and consideration in the administration of two estates. The Commissioner alleged that Mr Bone breached r 10 by not properly informing the clients of the potential conflicts of interest when they appointed him as executor of their wills and charged for care and consideration without proper authority. Mr Bone contested these allegations and sought indemnity costs for the proceedings.

The central legal issues revolved around whether Mr Bone breached r 10 by failing to inform the clients of potential conflicts of interest and by charging for care and consideration without proper authority. The Tribunal had to consider the nature and purpose of r 10, the adequacy of Mr Bone’s communications with the clients, and whether his actions fell below the standard of competence and diligence expected of a reasonably competent solicitor. Additionally, the Tribunal examined the relevance and admissibility of expert evidence provided by Mr Bone.

The Tribunal concluded that Mr Bone did not breach r 10 as there was no evidence that he failed to inform the clients of the potential conflicts of interest or that his actions fell below the standard of competence and diligence expected. The Tribunal found that Mr Bone had properly reviewed his practices and was taking corrective action, which was acknowledged by the Queensland Law Society. The Tribunal also noted that the expert evidence provided by Mr Bone was not admissible due to procedural shortcomings, such as the failure to notify the Commissioner and the absence of a conclave as required by QCAT Practice Direction No 4 of 2009. Consequently, the Tribunal dismissed the charges against Mr Bone.

As a result of the Tribunal’s decision, the Commissioner’s charges against Mr Bone were dismissed, and the proceedings were concluded without any disciplinary action being taken against him. Mr Bone was also not required to refund any further amounts, as he had already reimbursed the fees charged for care and consideration.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

The Tribunal made directions for the hearing of the matter on 17 May 2013. At that hearing Mr Bone, through his lawyers, advised that he would seek indemnity costs in relation to charges 3 – 8. The Commissioner was directed to advise Mr Bone and his solicitors by 31 May 2013 which of the remaining charges 1, 2 and 3 would proceed. Notwithstanding that direction, the Commissioner did not inform Mr Bone until 29 August 2013 that he was not proceeding with charge 3.Expert Evidence A number of affidavits have been filed on Mr Bone’s behalf from senior lawyers experienced in wills, probate and succession practice, including one from the Public Trustee. The affidavits primarily contain what is in effect expert evidence from the deponents about, for example, the mischief to which r 10 is directed, and Mr Markert’s conduct. QCAT Practice Direction No 4 of 2009 contains specific provisions about evidence of that kind: it limits parties to one expert; requires that notice be given to the other party; and, also, requires that all experts must attend a conclave convened by a QCAT Member, Adjudicator or the Principal Registrar. None of these things occurred here, or were sought by Mr Bone or his representatives. For these reasons, the Tribunal has disregarded that evidence.Charge 1 Rule 10.1 of the Solicitors Rule requires that a solicitor who receives instructions from a client to draw a will appointing the solicitor as an executor must inform the client in writing and before the client signs the will of any entitlement of the solicitor to claim commission, of the inclusion in the will of any provision entitling the solicitor to charge professional fees and, if there may be an entitlement to claim commission, that the person could appoint, as executor, a person who might make no claim for commission. The purpose underlying the rule was explained by Habersberger J in Szmulewicz v Recht[4]: [I]t seems to me that the point of rule 10.1 is that it is an attempt to ensure that a testator is given full information and advice by his solicitor about a clause in his will which potentially causes a conflict between the solicitor’s fiduciary duty to his client and his personal interest.[4][2011] VSC 368 at [39]; see, also, In the Will of Shannon (1977) 1 NSWLR 210. Later, his Honour said at [44]:In my opinion, a solicitor putting forward a will for a client to sign, which contains a clause such as the one in this case, must explain to the client all of the pros and cons of the inclusion of the clause even if it was the client who suggested the clause, so that it is clear that the client has given his or her informed consent to a clause which otherwise would give rise to an objection on the ground of conflict between fiduciary duty and personal interests. The solicitor cannot assume that the client understands all of the ramifications of including the suggested clause, no matter how sophisticated or astute the client may be with respect to financial matters. Under s 418 of the LPA unsatisfactory professional conduct includes conduct of an Australian legal practitioner happening in connection with the practice of law which 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. Under s 420 a breach of a ‘relevant law’ (which would include r 10) is capable of constituting unsatisfactory professional conduct.[5][5]LPA s 420(1)(a).

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Mr Q was released from hospital on 18 December and returned to his home with his wife. He properly executed his will there that day.Mr Bone’s administration of the estates Mr Bone acted as executor of the estates and, also, as solicitor for the executor between 24 December 2008 and 15 October 2010. On 24 December 2008 he entered into two costs agreements with himself (one in respect of each estate) which provided that the calculation of his professional fees when acting as the estate solicitor would be at an hourly rate, with other usual items. Neither agreement provided, however, that he could charge a fee for care and consideration. In the course of acting for Mrs Q he rendered five bills between January 2009 and April 2010, and in three of them he charged for care and consideration of, in total, $910.70. The total costs he charged for administering Mrs Q’s estate was $12,928.63. In Mr Q’s estate he rendered 10 bills, charging care and consideration in five of them in the total sum of $2,525.84. The total of all bills was $74,541.22. Mr Bone admits that he did not, as executor, object to any of the bills which included components for care and consideration or object to some which charged hourly rates for non-legal work. Upon becoming aware that he had not been authorised to charge for care and consideration he refunded the total amount of those charges in both estates, $3,436.54, to the beneficiary AKF.The disciplinary proceedings against Mr Bone AKF complained to the Commissioner in September 2010. On 20 October 2010 the Commissioner wrote to Mr Bone advising of the complaint and stating that the issues raised were mismanagement; inefficient management; a breach of r 10; a conflict of interest; wrongly profiting from a fiduciary relationship; failing to account for trust funds; and, charging excessive fees. Mr Bone replied in a detailed and extensive way (in a 14 page letter, with attachments) in November 2010. The Commissioner then referred the matter to the Queensland Law Society (QLS) for investigation. The QLS wrote to Mr Bone and he, again, responded promptly and in detail. The QLS wrote to him again in March 2011 and his response was similarly prompt, and comprehensive. On 24 May 2011 the QLS wrote to the Commissioner recommending that Mr Bone’s breach of r 10 be dismissed on the basis that there was no public interest in taking disciplinary action if Mr Bone agreed to review any other wills prepared by him and to explain to any affected will-maker the effect of any similar charging clauses, and to prepare any necessary codicils at no charge to any clients. The QLS also recommended that a costs assessment be obtained in relation to the administration of the estates, in contemplation of a disciplinary charge in relation to overcharging for care and consideration. In June 2011 the Commissioner wrote to Mr Bone enclosing copies of the QLS report and recommendation letter and seeking his response. On 16 August 2011 Mr Bone replied, through his present solicitors, that he had changed his practice in relation to the preparation of wills and was reviewing all wills prepared by him and writing to will-makers to advise of the effect of charging clauses. He was also, he said, advising will-makers that he would without charge prepare a codicil to effect any changes the will-maker may require – i.e., that he was taking the very course suggested by the Law Society.