Legal Services Commissioner v Healy

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QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL


CITATION:

Legal Services Commissioner v Healy [2025] QCAT 171

PARTIES:

LEGAL SERVICES COMMISSIONER

(applicant)

v
JOHN FRANCIS HEALY

(respondent)

APPLICATION NO:

OCR269-23

MATTER TYPE:

Occupational regulation matters

DELIVERED ON:

7 May 2025

DELIVERED AT:

Brisbane

HEARING DATE:

23 April 2025

JUDGE:

Justice Davis

Assisted by:
Mr Richard Barnes, Practitioner Panel Member
Ms Patrice McKay, Lay Panel Member

ORDER:

1.   Charge 1 is proved and unsatisfactory professional conduct is established.

2.   Charge 2 is proved and unsatisfactory professional conduct is established.

3.   The LSC shall file and serve any material and written submissions on sanction and costs by 4.00 pm on 14 May 2025.

4.   The respondent shall file and serve any material and submissions in reply by 4.00 pm on 21 May 2025.

5.   Each party shall have leave to file and serve a notice requesting to make further oral submissions by 4.00 pm on 28 May 2025.

6.   In the event that no notice pursuant to order 5 is given by 4.00 pm on 28 May 2025, the issue of sanction and costs will be determined on any written submissions received without further oral hearing.

7.   Costs reserved.

CATCHWORDS:

PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – PROFESSIONAL MISCONDUCT AND UNSATISFACTORY PROFESSIONAL CONDUCT – GENERALLY – where the respondent was retained by a client to act in a de facto property settlement – where the de facto partners executed a binding financial agreement pursuant to the Family Law Act 1975 – where the terms of the binding financial agreement provided for the transfer of the de facto partners’ interest in two properties from one to the other – where the respondent was provided with executed transfer documents for the transfer of the opposing party’s interest in the two properties – where the respondent undertook to only use the transfer documents for “stamping purposes, pending settlement” – where the opposing party withdrew the respondent’s authorisation for the use of the transfer documents – where the respondent used the transfer documents to unilaterally effect the transfer of the property – where the respondent was charged with breach of his undertaking made in relation to transfer documents and the failure to act with competence and diligence – whether the respondent was guilty of professional misconduct – whether the respondent was guilty of unsatisfactory professional conduct

PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – GENERALLY – where the respondent was charged with the breach of an undertaking and the failure to act with competence and diligence – where the Commissioner submitted that the Tribunal could make findings as to the respondent’s knowledge that their alleged conduct breached the undertaking – where the pleaded charges did not make any allegation about the respondent’s state of mind at the time of the alleged conduct – where it was not put to the respondent in cross-examination that he had knowledge that his alleged conduct would breach the undertaking – where the respondent’s evidence did not support a…

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Details
Case
[2025] QCAT 171
Decision Date

CaseChat Overview and Summary

The Legal Services Commissioner brought an application against John Francis Healy, a solicitor in private practice, pursuant to section 452 of the Legal Profession Act 2007. The application alleges that Mr Healy engaged in professional misconduct while acting for a client in a de facto property settlement, specifically in relation to a binding financial agreement (BFA) executed under the Family Law Act 1975. The key issue is whether Mr Healy breached an undertaking made to another legal practitioner and whether he acted with the required competence and diligence.

The legal issues before the court were whether Mr Healy breached an undertaking given to another legal practitioner and whether his conduct was unsatisfactory professional conduct. To establish professional misconduct, it was necessary to prove that Mr Healy breached the terms of the undertaking, but not necessarily that he had a specific state of mind at the time. The court found that Mr Healy breached the undertaking by using transfer documents for purposes other than stamping, despite being countermanded by Jane's legal representatives. Additionally, Mr Healy failed to act with the necessary competence and diligence, particularly in misinterpreting the BFA and not adhering to Jane's instructions.

The court concluded that Mr Healy was guilty of unsatisfactory professional conduct. The court held that Mr Healy's understanding of the BFA, influenced by a typographical error, was incorrect, and he proceeded to use the transfer documents without proper authorisation, leading to a breach of the undertaking. The court found that even if Mr Healy was honestly mistaken, it did not absolve him of responsibility. Therefore, the charges of unsatisfactory professional conduct were upheld.

The final orders of the court included the establishment of unsatisfactory professional conduct on both charges, the requirement for the Legal Services Commissioner and Mr Healy to file submissions on sanction and costs by specified dates, and the reservation of costs. The court further stipulated that if no further oral submissions were requested by a certain date, the issues of sanction and costs would be determined based on written submissions alone.

Orders

Orders of the court

1. Charge 1 is proved and unsatisfactory professional conduct is established.

2. Charge 2 is proved and unsatisfactory professional conduct is established.

3. The LSC shall file and serve any material and written submissions on sanction and costs by 4.00 pm on 14 May 2025.

4. The respondent shall file and serve any material and submissions in reply by 4.00 pm on 21 May 2025.

5. Each party shall have leave to file and serve a notice requesting to make further oral submissions by 4.00 pm on 28 May 2025.

6. In the event that no notice pursuant to order 5 is given by 4.00 pm on 28 May 2025, the issue of sanction and costs will be determined on any written submissions received without further oral hearing.

7. Costs reserved.

Background

Background to the litigation

An application was brought by the Legal Services Commissioner (LSC) pursuant to s 452 of the Legal Profession Act 2007 against John Francis Healy. Mr Healy is a solicitor in private practice. The application alleges professional misconduct arising from Mr Healy’s performance of a retainer concerning a binding financial agreement (BFA) executed by his client pursuant to the Family Law Act 1975. Significantly, it is alleged that he breached an undertaking which he gave to another legal practitioner acting in the matter. Background John (a pseudonym) and Jane (a pseudonym) lived in a de facto relationship for about seven years before separating in early 2020. They sought to have their financial affairs settled by a BFA entered into pursuant to s 90UD of the Family Law Act. At the time of separation, John and Jane owned properties at Keperra and Russell Island. Both were subject to mortgages, one to the Commonwealth Bank of Australia (CBA) and one to the National Australia Bank (NAB). Mr Healy acted for John in the property settlement. Bridge Brideaux Porta Lawyers initially acted for Jane. Mr Healy prepared the first draft of the BFA and sent it to Bridge Brideaux Porta. After some negotiations about terms, the BFA was executed by both John and Jane. The terms of the BFA, which are relevant to the current application, are:“1. Assets and liabilitiesThe assets and liabilities of the parties are set out in annexure A of this agreement. The parties confirm that they agree with the estimated values as set out in annexure A.2.Transfer of real property(a) [Jane] will do all acts and things and sign all documents necessary to transfer to [John] her right title interest in the [Keperra property] and [the Russell Island property] (the real property) at the expense of [John] (the transfer).(b) The transfer is to occur at a time to be agreed between the parties, but by no later than thirty (30) days of the signing of this agreement by both [John] and [Jane] (the settlement date).(c) Contemporaneously with the transfer [John]:(i)will assume all liability for and indemnify [Jane] against all payments for the mortgage debt secured over the property;(ii)will assume all liability for and indemnify [Jane] against all rates, taxes, duty and outgoings of or with respect to the property or the transfer of the property of whatsoever nature and kind;(iii)will refinance the mortgage debts currently in joint names into a new loan/s and mortgage/s in his sole name; and(iv)will pay to [Jane] the sum of FORTY THOUSAND dollars ($40,000.00) (the payment) in the manner described in clause 3 below.3.PaymentThe payment to be made by [John] to [Jane] as described in clause 3 above is to be made to Bridge Brideaux Porta Lawyers Trust Account by 3.00 pm on the Settlement Date.4.Default provision - Sale of real propertyHowever, it is now agreed between the parties, that should the provisions of clause 3 not be honoured, [John] and [Jane] agree in the alternative, that:(a) Both parties will take all necessary steps and execute all necessary documents to cause the real property to be sold by private treaty at the earliest possible date at a price to be agreed on between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or their nominee and that the proceeds of the said sale be disbursed as follows:(i)Payment of agent’s commission and advertising expenses and legal expenses of the sale;(ii)Payment of any money due and owing to the mortgagee;(iii)The net balance to be divided between the parties as follows:(1) 50% to [John]; and(2) 50% to [Jane].(b) That in the event that the real property fails to be sold by private treaty within a period of three months of the date of this agreement, then each party take all necessary steps and execute all necessary documents to cause the said property to be sold by auction at the earliest possible date at a reserve to be agreed upon between the parties and failing such agreement to be determined by the proper officer of the Real Estate Institute or their nominee and that the proceeds of the said sale be disbursed as follows:(i)Payment of agent’s commission and advertising expenses and legal expenses of the sale;(ii)Payment of any money due and owing to the mortgagee;(iii)The net balance to be divided between the parties as follows:(1) 50% to [John]; and(2) 50% to [Jane].(c) That until the sale of the property the parties continue to pay as they fall due all regular instalments in respect of the mortgage, council rates and water rates in respect of the property.5.Severance of Default ProvisionTo remove any doubt, clause 4 above has no effect and is severable from this agreement if the terms of clause 3 above and the obligations therein are performed by [John] and [Jane].”

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Mr Healy read clauses 3, 4 and 5 literally. In other words, he assumed those clauses correctly referred to “clause 3”, not clause 2. His case was that as John had paid the $40,000 pursuant to clause 2(c)(iv), clause 5 operated so as to exclude the operation of clause 4. As no provision in the BFA made time of the essence, the failure of John to complete his obligations under clause 2 did not avail Jane of a right to rescind. The only avenue to rescission was by application to the Federal Circuit and Family Court. Mr Healy submitted that Jane was therefore bound to proceed to settlement, and consequently he was authorised to deal with the transfer documents for that purpose.Consideration of charge 1 In order to prove charge 1, all that was necessary was to objectively prove that the conduct breached the terms of the undertaking. No specific state of mind of Mr Healy need be proved.[16] [16]Legal Profession Complaints Committee v Detata [2012] WASCA 214. The question facing Mr Healy was not whether or not Jane had a right of rescission. The issue was whether Mr Healy had authorisation to deal with the transfer documents where Jane was asserting otherwise. Whether time had ever been of the essence was also beside the point. The 30-day period prescribed by clause 2 had expired. That triggered clause 4. Both parties therefore had no obligation to unilaterally settle the property division pursuant to clause 2. They could, if they elected to do so, have the property divided pursuant to clause 4 of the BFA. It follows that Mr Healy had no authority to complete settlement in accordance with clause 2. Mr Healy’s underlying understanding, no doubt caused by the typographical error in clauses 3, 4 and 5, was that settlement in accordance with clause 2 was a fait accompli and that Jane had no alternative courses available to her and he was thereby authorised to use the documents to settle. That understanding was incorrect. Even if that understanding was correct, Mr Healy was not authorised to deal with the documents once any authority he did have was countermanded. The transfer documents had been signed by Jane and she was under no obligation to hand them over, except in exchange for performance by John of his obligations under clause 2(c). Clause 2(c) expressly provides that John’s obligations will be performed “contemporaneously with the transfer”. The undertaking was a means by which Mr Healy borrowed the documents so as to stamp them. He held the documents subject to the undertaking, but also clearly subject to Jane countermanding his authority to hold them. Once Biggs Fitzgerald Pike, on Jane’s behalf, withdrew Mr Healy’s authority to deal with the documents, any authority to proceed to settlement was revoked and dealing with the documents was a breach of the undertaking. Mr Healy asserted during his cross-examination that he thought he was entitled to deal with the transfer documents as he did. While I have found that he was wrong about that, and I have held that the LSC have not alleged that he knew his actions breached the undertaking, I should consider whether he was honestly mistaken. If he was, that is a mitigating circumstance upon which Mr Healy can rely.