Legal Services Commissioner v Rouyanian
[2013] QCAT 57
| CITATION: | Legal Services Commissioner v Rouyanian [2013] QCAT 57 |
| PARTIES: | Legal Services Commissioner (Applicant) |
| v | |
| Andrew Ardashir Rouyanian (Respondent) |
| APPLICATION NUMBER: | OCR095-12 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | On the papers, 30 January 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Justice Alan Wilson, President Ms Julie Cameron Dr Susan Dann |
| DELIVERED ON: | 13 February 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. That the respondent be publicly reprimanded. 2. That the respondent pay the applicant’s costs of and incidental to the application as agreed or assessed, within 6 months of agreement or assessment. |
| CATCHWORDS: | PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – DISCIPLINARY PROCEEDINGS – UNSATISFACTORY PROFESSIONAL CONDUCT OR PROFESSIONAL MISCONDUCT – where the respondent took instructions about the administration of an estate – where the respondent did not consult or consider a relevant legislative provision – where the respondent failed to advise his client about the correct meaning and effect of s 61 of the Succession Act 1981 – where the respondent took steps to bring proceedings on his client’s behalf which may not have been brought had he considered s 61 – where the test for professional misconduct from Adamson v Queensland Law Society applied – where the respondent accepts he should be publicly reprimanded – where the respondent cooperated with the applicant and made early admissions Queensland Civil and Administrative Tribunal Act 2009, s 32 Administration of Estates Act 1925 (UK), s 53 Adamson v Queensland Law Society Inc [1990] 1 Qd R 498, applied |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (‘QCAT Act’). The Panel met to consider the parties’ written submissions on 30 January 2013.
REASONS FOR DECISION
Mr Rouyanian is 61, and was admitted to practice as a solicitor in 1987. In 2008 he was working as an employed solicitor in a law firm when he was consulted by a client about matters arising in the estate of the client’s recently deceased father.
The father’s will purported to leave real and personal property in the United States, and the proceeds of a life insurance policy there to his wife, and real and personal property in the United Kingdom to Mr Rouyanian’s client. The will also appointed the deceased’s brother as sole executor.
Mr Rouyanian was instructed that the deceased may have been divorced from his wife in the United States; that the property in the United Kingdom was mortgaged; and, that his client would like to be able to administer the estate and, importantly, use the proceeds of the American insurance policy to discharge the mortgage over the real property in England.
The client asserts – and Mr Rouyanian does not deny – that Mr Rouyanian advised him that in his opinion, the widow’s gift of the proceeds of the life insurance policy could only be taken by her subject to payment of all estate debts which would include the mortgage debt on the UK property. It was on the basis of this advice that the client instructed Mr Rouyanian to proceed with an application for letters of administration. For reasons which follow, that advice was incorrect.
Subsequently, Mr Rouyanian filed an application for a grant of letters of administration in the estate to his client but, shortly thereafter, another firm of Brisbane solicitors filed a similar application for the widow.
Those solicitors contended that the widow and the deceased had not been divorced and pointed out, in correspondence to Mr Rouyanian, that s 61 of the Succession Act 1981 (Qld) meant that the son would not be able to apply the proceeds of the life insurance policy to discharge the mortgage on the English property. They also pointed out that this provision in the Queensland legislation is effectively mirrored in s 53 of the Administration of Estates Act 1925 (UK).
Those provisions have the effect, in general terms, that property passed under a will also carries any debts or obligations charged against that property.
Eventually the matter went before a judge of the Supreme Court in November 2008. The widow offered to withdraw her application for administration if Mr Rouyanian’s client allowed her the benefit of the life insurance policy.
After the hearing, Mr Rouyanian wrote to his client recommending acceptance of the offer and referred, for the first time in any of his dealings with his client, to s 61 and its UK equivalent and their legal effects.
His client was upset. He wrote to Mr Rouyanian pointing out that when he first instructed him in June 2008 he had given instructions that his principal purpose in contesting letters of administration was, if possible, to obtain the proceeds of the insurance policy so as to pay the mortgage debt on the UK real estate.
It is not clear what occurred subsequently in the estate proceedings, but it appears Mr Rouyanian’s instructions were withdrawn and he had no further involvement in the matter.
Mr Rouyanian was first instructed on 17 June 2008. The competing claims for letters of administration went to court on 20 November and it was not until 24 November 2008 that he wrote to his client explaining the effect of the provisions and, in effect, correcting his earlier incorrect advice.
These proceedings were brought by the Commissioner in March 2012. With the agreement of the parties they were heard and determined on the papers, with exchanges of written submissions.
The legislation under which this disciplinary application is brought, the Legal Profession Act 2007 (Qld) (‘LPA’) contains, in ss 418 and 419, two ‘key concepts’: in particular, they define two classes or levels of misconduct by lawyers. Under s 418 ‘unsatisfactory professional conduct’ is defined to include ‘conduct of an Australian legal practitioner happening 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.’
Misconduct under s 419 is more serious. It defines ‘professional misconduct’ to include unsatisfactory professional conduct involving a ‘substantial or consistent failure to reach or keep a reasonable standard of competence and diligence’; and, conduct that would, if established, ‘justify a finding that the practitioner is not a fit and proper person to engage in legal practice.’
The Commissioner contends that Mr Rouyanian’s failure to advise his client about the meaning and effect of s 61 falls within the more serious category because the widow’s solicitors had alerted him to the meaning and effect of the legislation some time before the matter actually went to Court and he ‘… compounded his incompetence by ignoring, or wilfully closing his eyes to, the existence of section 61 once it was identified by the opposing solicitors.’[1]
[1]Legal Services Commissioner, ‘Submissions on behalf of the applicant hearing on papers’, Submission in Legal Services Commissioner v Rouyanian, OCR095-12, 20 July 2012, at [21].
Mr Rouyanian’s legal representatives contend that because the discipline application initially alleges that Mr Rouyanian is only guilty of the lesser charge, unsatisfactory professional conduct, it is not now open to the Commissioner to argue for the higher offence. Reliance is placed upon the decision of the Court of Appeal in Legal Services Commissioner v Madden (No 2)[2] in which the Court rejected a submission that the Tribunal’s role was analogous to the role of the Criminal Court when imposing a sentence, and opined that the Tribunal is not entitled to draw inferences arising from the facts before it for the purposes, in particular, of determining the proper categorisation of an offence.
[2] [2008] QCA 301.
The discipline application contains an initial allegation that Mr Rouyanian is ‘… guilty of unsatisfactory professional conduct’. It then goes onto assert, however, that upon a finding that he is ‘… guilty of unsatisfactory professional conduct alternatively professional misconduct…’ disciplinary orders should be made.
The attached particulars only, however, use the language of s 418 (unsatisfactory professional conduct) in asserting the Mr Rouyanian ‘… failed to maintain reasonable standards of competence or diligence as expected by a member of the public…’.
It is at least arguable that these aspects of the original application mean that the Commissioner is prevented, under the principle discussed in Madden, from now pressing for a finding under the more serious charge. For reasons which follow, however, it is not necessary to decide the point – because Mr Rouyanian’s misconduct can only, on any view, be fairly and properly categorised as unsatisfactory professional conduct under s 418 and does not qualify as the more serious misconduct envisaged by s 419.
This is because the solicitor’s incompetence involved a sole instance of, in effect, negligence in the conduct of his professional practice: his failure to consider s 61 and, indeed, his failure to do that in circumstances where, as he admits, he was unaware of it. Secondly, that oversight only affected his dealings with his client, and the client’s circumstances, for a relatively short period of time.
Mr Rouyanian was first consulted about the matter in mid June 2008. He did not consult the Succession Act1981 (Qld) or consider s 61, and gave his client incorrect advice. He then moved to make the application for letters of administration for his client but did not file it until 15 October 2008. Five days earlier the widow’s solicitors had written to him advising that she also intended to apply for letters of administration.
On 12 November 2008, the widow’s solicitors wrote to Mr Rouyanian pointing out the effects of s 61. The matter went to Court on 20 November. On 24 November, Mr Rouyanian wrote to his client acknowledging, in effect, that s 61 and its UK equivalent prevented the client from achieving what he had hoped when he first instructed Mr Rouyanian.
The Commissioner’s discipline application asserts that, in those circumstances, Mr Rouyanian failed to maintain reasonable standards of competence or diligence because he ought to have advised his client about the effect of s 61 at the outset of the matter.[3] Mr Rouyanian has never disputed that. Misconduct of that kind – i.e., conduct involving a failure to give correct advice arising from a failure to know, or conduct proper and timely research into, the relevant law – has in all but one case been held to be unsatisfactory professional conduct, rather than the more serious professional misconduct.
[3] Discipline application, Particulars, B1.17.
The Commissioner’s written submissions refer to a number of cases none of which establish, however, that an isolated act of negligence, affecting the transaction in which the legal practitioner is retained during a relatively short period of time, should properly or usually be categorised as an offence of the more serious kind.
In Adamson v Queensland Law Society Inc[4] Thomas J (as his Honour then was) expressed the approach to an allegation of professional misconduct as follows:
The test to be applied is whether the conduct violates or falls short of to a substantial degree, the standard of professional conduct observed or approved by members of the profession of good repute and competency.[5] (emphasis added)
[4] [1990] 1 Qd R 498.
[5] Ibid 507.
Unsurprisingly, it has regularly been held that unsatisfactory professional conduct can, in appropriate circumstances, include negligence.[6] The Commissioner has only been able to turn up one case in which a solicitor who gave her client incompetent advice was held to be guilty of professional misconduct. In Legal Service Commissioner v Kincaid[7], the solicitor was informed by a client who was giving instructions in a de facto property dispute that she had taken money from a company in which her de facto partner had an interest, but she had none.
[6]New South Wales Bar Association v Bland [2010] NSWADT 34 at 193; Legal Services Commissioner v Anderson [2009] QLPT 1; Legal Services Commissioner v Krebs [2009] QLPT 11.
[7] [2008] QLPT 15.
The solicitor not only failed to advise her to replace the money but, instead, suggested that she should withdraw any further money remaining in the company account. The client was subsequently prosecuted for the criminal offence of fraud. In the disciplinary proceedings the solicitor conceded that her conduct constituted professional misconduct – a concession that was plainly warranted in circumstances where the solicitor had, in effect, advised her client to commit a criminal offence. The case is, obviously, an exceptional one.
Mr Rouyanian’s misconduct is much more akin to that of the practitioner in Legal Services Commissioner v McLelland[8]. There, the lawyer failed to give a proper certificate in certain transactions on 16 separate occasions over a period of time. The present Chief Justice, presiding in the Tribunal, accepted that the practitioner’s breach was properly characterised as one going to competence and diligence, amounting to what the legislation at that time categorised as unprofessional conduct (i.e., akin to s 418 in the LPA) and said:
A practitioner must have the wit carefully to read and comprehend a provision… designed for the protection of clients in an area in which he substantially practices. The “failure” referred to in… [the provision] would not embrace all cases of error, but this is substantial enough to fall within its ambit.[9]
[8] [2006] QLPT 13.
[9] Ibid [27].
Mr Rouyanian made a serious mistake. He took instructions in an area of law with which, he admits, he was unfamiliar; did not consult or consider the relevant legislative provision; and, took steps to bring proceedings on his client’s behalf which may not have been brought, had he done so. When he was, some time later, alerted to the effects of the relevant legislation by his opponents he recognised his mistake and alerted his client to it, and the correct position.
In those circumstances his misconduct cannot fairly or reasonably be categorised as something involving a substantial or consistent failure to reach or keep a reasonable standard of competence or diligence, under the test in s 419, or Thomas J’s analysis of it in Adamson. For these reasons the Tribunal is persuaded Mr Rouyanian’s misconduct should, instead, be categorised as unsatisfactory professional conduct under s 418.
As to sanction, the Commissioner acknowledges that Mr Rouyanian has been cooperative and responsive and made appropriate and timely admissions, and his misconduct does not involve any element of dishonesty. He has been the subject of previous disciplinary proceedings involving breaches of regulations relating to trust accounts in 2001-2002 for which he was fined $10,000 and made the subject of orders requiring inspection of his trust account records for two years.
The Commissioner contends, and Mr Rouyanian accepts, that he should be publicly reprimanded. The Commissioner also submits, however, that he should pay a pecuniary penalty in the range $2,000-$5,000. An ancillary dispute has arisen around a submission, from Mr Rouyanian, that he made early admissions of his misconduct. The parties have produced correspondence between the Commissioner and the solicitor going back to December 2010. Mr Rouyanian’s solicitor responded in April 2011 admitting that he did not have regard, from the outset, to s 61. That admission should, on any view, be properly categorised as both frank, and timely – and, for the purposes of determining sanction, early.
The Tribunal is not persuaded that an additional pecuniary penalty is necessary, or appropriate. Mr Rouyanian cooperated with the investigation and made early admissions. His misconduct was an isolated one arising in an area in which he did not regularly practice and in which he claimed no particular expertise. His employment and personal circumstances have changed in a way which makes re-offending unlikely.
He must also pay the Commissioners costs, as assessed or agreed, within six months. The LPA requires, under s 462, that the Tribunal must make an order requiring a person who is found to have engaged in prescribed conduct to pay costs unless it is satisfied that exceptional circumstances exist.
It is suggested, for Mr Rouyanian, that unnecessary costs have been attracted in this matter because of the Commissioner’s submissions in support of the more serious finding of professional misconduct but there is nothing to suggest that, in truth, extra costs arose as a consequence of that submission. Under s 453 of the LPA the Tribunal must hear and decide each allegation in a discipline application and, as these proceedings were conducted, it is not apparent that the parties incurred any costs over and above those which would normally have been expected.
It is also suggested, by Mr Rouyanian’s representatives, that the Commissioner should not have costs associated with the supplementary submission filed by the LSC addressing costs and, also, the question of whether or not Mr Rouyanian had in truth made early admissions of misconduct. The supplementary submission largely, however, addresses the costs issue and is the product of Mr Rouyanian’s own written submission that he should not have to pay costs because the circumstances are ‘quite exceptional’ in terms of s 462 – a matter which, in light of that submission, the Tribunal has necessarily had to address.
There is, then, no basis for tempering an order, in the usual terms, that Mr Rouyanian pay the costs as s 462(1) requires. The costs payable by him will be as agreed or, failing agreement, as assessed, and payment must be made within six months of the event that determines the amount of the costs.
Lastly, both submissions advert to the fact that Mr Rouyanian’s client has sought a compensation order under Part 4.10 of the LPA. No application appears in the Tribunal file and, under the legislation, it could only be made against the law practice which employed Mr Rouyanian.[10]
[10] LPA s 464; See e.g. Legal Services Commissioner v Jiear [2012] QCAT 221.
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