Legal Services Commissioner v Rosen
[2015] QCAT 339
•2 September 2015
| CITATION: | Legal Services Commissioner v Rosen [2015] QCAT 339 |
| PARTIES: | Legal Services Commissioner (Applicant/Appellant) |
| v | |
| Warren Lance Rosen (Respondent) |
| APPLICATION NUMBER: | OCR151-13 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | 20 August 2015 |
| HEARD AT: | Brisbane |
| DECISION OF: | Justice Carmody Assisted by: Ms Megan Mahon, Legal Panel Member Prof Susan Dann, Lay Panel Member |
| DELIVERED ON: | 2 September 2015 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | THE TRIBUNAL ORDERS THAT: 1. The respondent, within 30 days: a) Repay the complainant $9,170.17 in legal services fees pursuant to s 464(a) of the Legal Profession Act 2007 (Qld). b) Pay the complainant $7,500.00 in compensation for the adverse costs order made by the Federal Magistrates Court on 23 November 2011, pursuant to s 464(d)(i) of the Legal Profession Act 2007 (Qld). |
| CATCHWORDS: | PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – PROFESSIONAL MISCONDUCT AND UNSATISFACTORY PROFESSIONAL CONDUCT – APPLICATION FOR COSTS –– where the respondent was a legal professional practicing in family law – where the respondent was representing the complainant in respect of a property management dispute – where the respondent had formerly represented the complainant’s husband in a previous property management dispute – where the legal representatives of the complainant’s husband filed an application for an injunction restraining the respondent from acting for the complainant on the basis of an apparent successive conflict of interest – where the complainant instructed the respondent to contest the application for an injunction – where the Federal Magistrates Court granted the injunction restraining the respondent from continuing to represent the applicant – where the complainant filed a complaint regarding the conduct of the respondent with the Legal Services Commissioner – where the complainant filed an application with the Queensland Civil and Administrative Tribunal for compensation for legal costs and expenses incurred in prosecuting the property management dispute – where the conduct of the respondent constituted unsatisfactory professional conduct – whether the complainant should receive compensation for legal costs and expenses incurred in prosecuting the property management dispute. Legal Profession Act 2009 (Qld) ss 418, 420, 452, 462, 464, 465, 466 |
APPEARANCES and REPRESENTATION:
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
This is an application for compensation filed by the complainant under s 464 of the Legal Profession Act 2007 (Qld) against the respondent legal practitioner for compensation for losses and costs incurred as a result of the respondent’s unsatisfactory professional conduct.
On 3 August 2015 the respondent was found by this Tribunal to have committed unsatisfactory professional conduct by representing the complainant against a former client in circumstances giving rise to a real risk of misuse of confidential information obtained in the course of the earlier representation in contravention of Rule 4 of the Legal Profession (Solicitors) Rule 2007 (Qld).
The applicant filed a Notice of Intention to Seek Compensation Order on 9 August 2013. Following the Tribunal’s decision on 3 August 2015, the Tribunal invited the applicant and respondent to file submissions relating to the application for compensation. Neither party filed submissions regarding the application for compensation, therefore the Tribunal must resolve the matter on the evidence and submissions adduced during the hearing.
A compensation order may only be granted where: (a) the complainant has suffered pecuniary loss as a result of the impugned conduct; and (b) it is in the interests of justice that such an order be made.[1]
[1]Legal Profession Act 2007 (Qld) s 465(1).
The complainant claims $49,530.75 in compensation, which comprises of:
1.$8,000.00 in costs paid to Mr McKee for an adverse costs order arising out of the application for an interlocutory injunction restraining the respondent from acting for the complainant (the “Adverse Costs Order”);
2.$13,270.17 in professional fees paid to the respondent for legal services delivered in respect of the property settlement proceedings (the “Respondent’s Service Fees”); and
3.$28,260.58 in legal service fees and disbursements paid to McCarthy Durie, the complainant’s legal representatives in the property settlement dispute following the termination of the respondent’s retainer (the “McCarthy Service Fees”).
The Adverse Costs Order emanated directly from the failure of the respondent to comply with his professional obligations under Rule 4 of the Legal Profession (Solicitors) Rule 2007 (Qld) and to exercise professional judgment and independence through dissuading the complainant from unnecessarily resisting an application for an interlocutory injunction. As the Adverse Costs Order caused the complainant to incur costs which would not have otherwise been sustained but for the improper conduct of the respondent, the complainant is entitled to $8,000.00 in compensation.
The Respondent’s Service Fees will be partly recoverable insofar as they would not have been incurred had the respondent been exercising professional judgment and independence. The respondent appears to have been aware of the conflict of interest immediately on being retained by the complainant. The respondent notified Mr McKee of the potential conflict on 19 April 2011. Although Mr McKee failed to promptly object, he did not expressly waive – on the basis of full and complete information – his right to object to the respondent’s continued representation of the complainant. As Mr McKee was unrepresented, the respondent should have known that his failure to object would not give rise to an implied waiver. Accordingly, the respondent should have terminated his representation of the complainant on becoming aware of the successive conflict of interest. Therefore, the complainant should prima facie be entitled to recover the full value of the legal service fees expended.
The complainant, however, received some benefit from the legal services delivered by the respondent. The complainant, therefore, should not be unjustly enriched by the defalcation of the respondent, and the respondent should not be punished for his substantial error of judgment. The respondent, therefore, should be entitled to a monetary award reflecting the value that the complainant received from the services delivered by the respondent. Having examined the itemised tax invoice submitted by the respondent to the complainant, I am satisfied that an amount of $4,100.00 appropriately reflects the value that the respondent received from the work performed by the respondent, making full allowance for unnecessary costs, services and disbursements incurred. Accordingly, the complainant should be awarded $9,170.17 in respect of the Respondent’s Service Fees.
The McCarthy Service Fees will not be recoverable insofar as they were not caused, directly or indirectly, by the respondent. The complainant has adduced no evidence tending to show that the whole, or any portion of, the McCarthy Service Fees would not have been incurred but for, or materially because of, the unsatisfactory professional conduct of the respondent. To award the McCarthy Service Fees in favour of the complainant would result in the unjust enrichment of the complainant at the expense of the respondent or otherwise penalise the respondent. Either outcome is not within the scope of the legislative purposes and intention of ss 464-465 of the Legal Profession Act 2007 (Qld).
Although the complainant should be awarded $17,170.17 in compensation, this Tribunal is bound by s 466(3) of the Legal Profession Act 2007 (Qld), which provides that the Tribunal cannot grant a compensation order under s 464(d) in excess of $7,500.00 without the consent of the complainant and law practice. As the complainant and the law practice have not consented, this sets an upper threshold to the amount of compensation which the Tribunal may award for any order made in reliance on s 464(d) of the Legal Profession Act 2007 (Qld).
Accordingly:
1.The respondent should be required to repay the complainant $9,170.17 in legal services fees pursuant to s 464(a) of the Legal Profession Act 2007 (Qld); and
2.The respondent should be required to pay $7,500.00 in compensation to the complainant for the adverse costs order made by the Federal Magistrates Court on 23 November 2011, pursuant to s 464(d)(i) of the Legal Profession Act 2007 (Qld).
Orders
The Tribunal orders that:
1.The respondent, within 30 days:
a) Repay the complainant $9,170.17 in legal services fees pursuant to s 464(a) of the Legal Profession Act 2007 (Qld).
b) Pay the complainant $7,500.00 in compensation for the adverse costs order made by the Federal Magistrates Court on 23 November 2011, pursuant to s 464(d)(i) of the Legal Profession Act 2007 (Qld).
0
0