Victorian Legal Services Commissioner v Spaulding [No 3]
[2017] VSC 510
•28 August 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2016 01258
| VICTORIAN LEGAL SERVICES COMMISSIONER | Plaintiff |
| v | |
| LEWIS JAMES SPAULDING | Defendant |
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JUDGE: | Ginnane J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 August 2017 |
DATE OF JUDGMENT: | 28 August 2017 |
CASE MAY BE CITED AS: | Victorian Legal Services Commissioner v Spaulding [No 3] |
MEDIUM NEUTRAL CITATION: | [2017] VSC 510 |
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LEGAL PRACTITIONERS — VCAT recommendation that lawyer’s name be removed from the roll of practitioners — Application that practitioner’s name be removed — Professional misconduct — Dealings with clients and other solicitors — Failing to provide full explanation of his conduct to the Legal Services Commissioner — Failing to comply with previous orders of VCAT — Previous professional disciplinary history — Order that practitioners name be removed from the roll —Legal Profession Uniform Law s 23(1)(c).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Snow | Solicitor to the Victorian Legal Services Commissioner |
| For the Defendant | No appearance |
HIS HONOUR:
The Victorian Legal Services Commissioner (‘the Commissioner’) seeks an order that the name of the defendant, Lewis James Spaulding, be removed from the roll of Australian Lawyers maintained by the Supreme Court of Victoria (‘the Supreme Court roll’). The application follows a recommendation by the Victorian Civil and Administrative Tribunal (‘VCAT’) that Mr Spaulding’s name be removed from the roll of practitioners.[1] The Commissioner relies on the inherent jurisdiction of the Court and on s 23(1)(c) of the Legal Profession Uniform Law.
[1]Rule 14.13 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 provides that following such a recommendation by VCAT the Commissioner shall forthwith apply to the Court to determine whether the name of the lawyer should be removed from the Supreme Court roll.
The completion of the proceeding was delayed because of problems serving Mr Spaulding with court documents, he having left Australia in May 2014. Orders have been made to use every avenue to serve him with the relevant process. That has not been achieved, but on 3 August this year, Emerton J made an order dispensing with the requirements of service.
The principal affidavit in support of the Commissioner's application is by Shifra Cohen, solicitor to the Commissioner, who states that Mr Spaulding was admitted to practice in Victoria on 4 September 1989, and on the same day commenced to hold a trust practising certificate. His certificate has taken various forms over the years. He held a principal trust practicing certificate from 1 July 2001 to 20 December 2013. For a substantial part of that period, it appears that he acted as a sole practitioner.
The Commissioner’s case is that for a long time, Mr Spaulding has shown incompetence and a lack of understanding of his obligations as a lawyer. Those obligations are owed to the court, the public and the authorities that regulate the legal profession. The Commissioner contends that Mr Spaulding lacks insight or remorse for his conduct, and it is necessary to remove his name from the Supreme Court roll to protect clients, to impose some sanction for his conduct, and to maintain the confidence of the public in the legal profession. No allegation of dishonesty was made.
The Court must consider whether the degree of Mr Spaulding's misconduct is sufficient to support a conclusion that he is not a fit and proper person to remain a legal practitioner.
VCAT’s recommendation is contained in the decision of Senior Member J Smithers of 24 December 2015.[2] The Senior Member stated that:
fitness to practise involves three things: honesty, knowledge and ability. Here, the professional misconduct, which has occurred in a wide range of situations demonstrates that Mr Spaulding lacks knowledge and ability such as not to be a fit and proper person to practise. He cannot be held out as a person who is ‘a fit and proper person to be entrusted with the important duties and grave responsibilities which belong to a solicitor’.
It may be that in earlier times Mr Spaulding had a higher level of ability to act as a solicitor. But on the information before the Tribunal now, he does not have the requisite knowledge and ability, and there is no indication of this changing in the future. Thus, I find he is unfit to practise and will remain so for the indefinite future.[3]
[2]Victorian Legal Services Commissioner v Spaulding (Legal Practice) [2015] VCAT 2048.
[3]Ibid [25]-[26].
I have considered whether there is utility in making the order the Commissioner seeks against Mr Spaulding as he is overseas and nothing has been heard of him for more than three years. But, a practitioner cannot avoid the consequences of his actions by travelling overseas.
In his decision, the Senior Member summarised the Commissioner’s submissions regarding penalties, which included that while Mr Spaulding had not demonstrated dishonesty, there had been:
Many years of incompetence, delay/inactivity, actions which had the effect of inflaming and complicating situations, disrespectful and invasive conduct towards colleagues and clients, taking undue advantage of vulnerable clients and unsatisfactory billing practices. It was submitted this behaviour has brought the profession into disrepute. It was put that there was no utility in imposing a fine, additional CPD, or any other orders; the only orders which should be made are a lengthy prohibition on practising and a recommendation to the Supreme Court.[4]
[4]Ibid [10].
VCAT found Mr Spaulding guilty of seven charges of professional misconduct. The matters before VCAT arose from complaints made by four individuals and by another firm of legal practitioners, concerning Mr Spaulding's professional conduct. The sixth matter was that Mr Spaulding had failed to provide a full explanation for his conduct in response to the Cook complaint. The seventh matter was that Mr Spaulding had engaged in professional misconduct for failing to comply with previous orders of the Tribunal.
The Senior Member made a number of findings about Mr Spaulding's conduct, including that:
[He] has aggressively pursued misguided courses of action in relation to a number of different types of matters. At various times his conduct towards clients has been dismissive and insensitive and he has failed to provide the required costs disclosure. He has behaved in an erratic, and sometimes bizarre manner. For periods, he has been out of contact, with no explanation being given.[5]
This case has some aspects in common with the matter of Rushford. The practitioner has apparently ceased to function effectively, giving rise to complaints from numerous clients. He has withdrawn from contact with the regulator and made it difficult for the regulator to send correspondence to him. He has failed to comply with statutory demands for information to be provided to the regulator, and breached a subsequent VCAT order that he do so. There is no dishonesty alleged, but a trail of unhappy clients whose experience has left them out of pocket, with poor outcomes in their matters, severely inconvenienced, and justifiably offended, aggrieved and disillusioned. Certainly, the reputation of the profession has suffered from the experiences of multiple clients, and others, who have been involved in the matters the subject of this case. The clear impression left is that it is contrary to the interests of the public (and which is related) the reputation of the profession, for Mr Spaulding to be allowed to practise.
In relation to the conduct, the subject of the seven findings of professional misconduct in this case, Mr Spaulding should be prevented from applying for a practising certificate for a substantial period. For the reasons set out above, both general and specific deterrence are substantial factors here. There is nothing in mitigation. Mr Spaulding has engaged in a broad range of actions which comprise professional misconduct. I have concluded that he should be prevented from practising for five years.[6]
[5]Ibid [20] (citations omitted).
[6]Ibid [21]-[22] (citations omitted).
Now, it is true that there was nothing put in mitigation of Mr Spaulding’s conduct because he took no part in the proceedings before the Tribunal or the Court. It may be that things could have been advanced in his favour, as they were in earlier proceedings against him before VCAT. But, the decision not to take part in the proceedings was made by Mr Spaulding.
The Senior Member referred to the relevant authorities including Legal Services Commissioner v Rushford[7] where Bell J stated:
The tribunal is rightly independent of the Commissioner and has a central role in the statutory scheme for the discipline and regulation of the legal profession in the public interest. It is implicit in the provisions conferring the power on the tribunal that any recommendation for removal is to carry appropriate weight at the court. It is therefore important that the tribunal's reasons for making a recommendation be given clearly and fully, as they were in this case.[8]
[7](2012) 38 VR 141 (‘Rushford’).
[8]Ibid [12] (citations omitted).
His Honour stated that:
The conduct or circumstances which may establish that a person is no longer a fit and proper person to be on the roll of practitioners are not closed. Judgments of the High Court have repeatedly stressed the need to consider ‘the whole position’. The authorities refer to criminal offending, mental incapacity, serious private misconduct and professional misconduct, as examples of what may need to be examined. This includes recent and past conduct, including pre-admission conduct, making due allowance for the passage of time and any restoration of character.[9]
…
Past conduct and circumstances may be very relevant but the question before the court is one of present and future fitness to practise. Therefore, an application for removal must be decided on the basis of the evidence and other material which is then before the court. The question is whether the practitioner has been shown, at that time and not when any misconduct was committed, not to be a fit and proper person and ‘will likely remain so for the indefinite future’. Considering whether the practitioner's unfitness to practise is likely to be indefinite allows consideration of whether suspension (for example), rather than removal, is the appropriate response in the circumstances.[10]
[9]Ibid [20].
[10]Ibid [23] (citations omitted).
His Honour noted that the standard of proof was the civil standard of the balance of probabilities, but the observations in Briginshaw v Briginshaw[11] needed to be taken into account as the consequences of the order sought are serious.[12]
[11](1938) 60 CLR 336.
[12]Rushford (2012) 38 VR 141 [24].
Bell J took into account that while the misconduct which gave rise to the Tribunal’s finding was not of the gravest kind, it had occurred over a number of years.[13] His Honour stated that:
absent proper explanation, repeated non-compliance by a legal practitioner, with orders of the tribunal in such proceedings is a very serious matter. It suggests that the practitioner does not appreciate his or her legal and professional responsibilities. In the present case, the instances of non-compliance were several, and formed part of a pattern of conduct and were unexplained.[14]
[13]Ibid [37] (citations omitted).
[14]Ibid [41].
In a recent decision, Victorian Legal Services Commissioner v Horak[15], McMillan J, in deciding that the defendant's name should be removed from the roll of practitioners, took into account that his conduct, both as admitted, and as evidenced by his prior disciplinary hearings, indicated a fundamental lack of understanding of his obligations and duties of a legal practitioner.
[15][2016] VSC 780 (‘Horak’).
Prior proceedings against Mr Spaulding
Mr Spaulding has been the subject of previous professional disciplinary charges as a legal practitioner.
In 2004, Mr Spaulding was charged before the Legal Profession Tribunal for conduct involving a failure, when called upon, to furnish a full written explanation for his conduct, and in respect of a client’s complaint.[16] The Tribunal found the charges proved and concluded that:
…the legal practitioner quite deliberately refrained from complying with the provisions of section 149. He quite deliberately disregarded the letters in relation thereto received from Professional Standards.
We are of the unanimous view the legal practitioner’s flagrant disregard and breaches of section 149 constitute a very serious departure from the standard to be expected of a reasonably competent practitioner.[17]
[16]Law Institute of Victoria Ltd v Spaulding (T0066 of 2004 and T0076 of 2004) (4 August 2004).
[17]Ibid 6.
The Tribunal also stated:
In regard to the nature of stress, the strain and the pressures placed upon him, considerable corroboration in relation to what it is that the legal practitioner himself said in relation thereto, is given in the reference by Mr Simon Wilson, one of Her Majesty's counsel and Mrs Barwon, the Office Manager. Not only do we regard the legal practitioner to have committed serious breaches of the [Legal Practice] Act, and given unsatisfactory evidence in relation thereto, we entertain grave reservations in relation to his continued management of his practice in the absence of appropriate skilled management advice and implementation of appropriate management practices.[18]
Mr Spaulding was reprimanded, ordered to pay a fine, ordered to receive specified management and accounting advice, and to pay the Law Institute of Victoria's costs.
[18]Ibid 7.
Then in 2008, Mr Spaulding appeared before Senior Member Howell in VCAT proceedings brought by the Legal Services Commissioner.[19] Mr Spaulding was found guilty of professional misconduct in that he contravened provisions of the Legal Profession Act 2004, namely, a failure to comply with a requirement made by the Legal Services Commissioner that he provide a full written explanation of his conduct in relation to a complaint lodged with the Commissioner. He was fined $2000 and ordered to pay the Commissioner's costs.
[19]Legal Services Commissioner v Spaulding [2008] VCAT 318.
The Senior Member of the Tribunal said:
The factors relied upon by Mr Spaulding in his submission that there was no contravention of the Act also are relevant to his submission that the contravention amounted to unsatisfactory professional conduct rather than professional misconduct. I accept the evidence of Mr Spaulding that he endured pressures in his practice and problems of a personal nature, although matters of that kind are endured by almost every legal practitioner from time to time, and are present in almost every case where a practitioner is charged with a disciplinary offence. I also accept Mr Spaulding's evidence that he found it necessary to devote a great deal of time to his soil excavation business and his house construction business, although those obligations were self-imposed in the knowledge that he also needed time to conduct a legal practice.[20]
[20]Ibid [14].
The Senior Member observed that a person who lodges a complaint about a practitioner is entitled to a prompt response to the complaint.
Then on 14 April 2008, again before the same Senior Member, Mr Spaulding was found guilty of a similar offence, failing to provide a full written explanation of his conduct in relation to the subject matter of a complaint lodged with the Commissioner and was fined $2000 and ordered to pay the Commissioner's costs.[21]
[21]Legal Services Commissioner v Spaulding [2008] VCAT 684.
On 5 December 2013, Her Honour Judge Jenkins sitting as a Vice President of VCAT, by orders made by consent, found Mr Spaulding guilty of four charges of professional misconduct which had been brought against him by the Legal Services Commissioner and ordered that he comply by 20 December 2013 with ‘s 4.4.11 Legal Profession Act obligations relevant to the four charges’, which involved complaints by four persons about his conduct.
On 17 December 2013, Judge Jenkins made findings against Mr Spaulding.[22] He had pleaded guilty to five charges of professional misconduct. The first charge included failing to provide cost disclosures to a client; failing to account to a client for the payment of the client's costs; failing to pay a barrister when directed to do so by the client; causing a deficiency in his firm's trust account; and his failure to deposit the client's costs in a general trust account of his firm as soon as practicable after receiving them. The second charge concerned his delay in lodging a duty assessment document and transfer of land form for the transfer of a property thereby causing the clients to incur additional expenses; his retention of the client's documents; his failure to account to them for their costs; and his retention of the sum of $8000 which the client had directed be disbursed to a barrister.
[22]Legal Services Commissioner v Spaulding [2013] VCAT 2144.
The third charge concerned a failure without reasonable excuse to comply with the requirements of an inspector. The fourth and fifth charges concerned his failure to provide a full written explanation of his conduct in respect of clients’ matters.
The Tribunal ordered that Mr Spaulding was ineligible to apply to the Legal Services Board for the issue or renewal of any local practising certificate prior to 1 July 2015. He was declared a disqualified person, and directions were made as to the conditions that might be applied to him practising after that period of disqualification had ended.
Judge Jenkins summarised Mr Spaulding’s submissions, including that he had suffered a substantial heart attack in 2010, which had left him in a coma in intensive care for four days followed by a recovery period of four months. Her Honour mentioned character references and the financial consequences of suspension or disqualification.
Under the heading ‘Analysis and Findings’, Her Honour stated:
Neither counsel referred the Tribunal to any case law. However, the circumstances of the current case clearly present serious examples of misconduct, combining the following elements:
(a)Serious complaints of two commercial clients over a protracted period;
(b) Misconduct extended over an appreciable period of time, namely, approximately two and a half years;
(c) There was no acceptable explanation given for the Respondent's apparent ignorance of and failure to comply with his statutory obligations towards his clients;
(d) The misconduct represented a serious breach of trust in the solicitor-client relationship;
(e) The absence of any significant extenuating circumstances; and
(f) The failure or refusal of the Respondent to provide answers to legitimate enquiries made by the Applicant, which further aggravated the anxiety and frustrations already caused to his clients.
The above circumstances in combination represent a most serious dereliction of duty by a legal practitioner, both in respect of his breach of statutory obligations towards his clients, and the proper maintenance of trust accounts as well as a serious breach of professional ethical behaviour.[23]
[23]Ibid [147]-[148].
On 20 February 2014, charges brought by the Legal Services Commissioner against Mr Spaulding again came before Judge Jenkins at VCAT. Her Honour found the charges proved in that Mr Spaulding failed to provide a full written explanation of his conduct relevant to four charges as required by the orders of 5 December 2013.[24] He was ordered to pay a fine of $1000 on each charge, an aggregate $4000, and ordered to pay the Commissioner's costs.
[24]Legal Services Commissioner v Spaulding [2014] VCAT 198.
An affidavit of Luke Priday, solicitor to the Commissioner, establishes that fines and costs that have been ordered to be paid by Mr Spaulding to the Legal Services Commissioner have not been paid. That, in itself, is a significant factor. It is clear that Mr Spaulding knew that those fines and costs had to be paid, yet he left the country and, it seems, remains overseas without making any arrangement for their payment.
Findings
I make the following findings on the evidence presented by the Commissioner.
First, that Mr Spaulding has repeatedly failed to provide the Commissioner with a full written explanation when a complaint has been made about his conduct. Second, that that failure shows his disregard of his obligations to the regulator. Third, the nature and number of the complaints made and proved against Mr Spaulding indicate that he lacks understanding and insight of his obligations to clients, and that his conduct towards them has caused them considerable distress and financial hardship. Fourth, his conduct has caused frustration and aggravation to clients, and, therefore, is likely to have affected community confidence in the legal system and in the practice of law by practitioners in this State. Fifth, Mr Spaulding has chosen not to take part either in the proceedings before Senior Member Smithers or in the proceedings before this Court. Sixth, previous sanctions seem to have had little effect on Mr Spaulding’s conduct. Seventh, he has failed to comply with Tribunal orders, including paying fines and costs. Eighth, all these matters show a lack of understanding of his obligations as a legal practitioner, and show that he lacks the personal qualities and skills required of a legal practitioner with clients, whom are often in very difficult circumstances. Ninth, VCAT’s recommendation that has led to this proceeding appears soundly based.
As McMillan J said in Horak:
There comes a point where to allow a practitioner to remain on the roll in spite of their behaviour would be to indicate a tolerance or condonation of the impugned behaviour. To do so would bring the legal profession into disrepute.[25]
[25]Victorian Legal Services Commissioner v Horak [2016] VSC 780 [76].
To grant the Commissioner’s application, I must be satisfied that at the time of the hearing, the practitioner is not a fit and proper person to be a legal practitioner and is likely to remain so for the indefinite future. I am so satisfied because of my findings that I have set out.
I am satisfied accordingly, that Mr Spaulding is not a fit and proper person to practise law or to act as a legal practitioner, and I order that his name be removed from the roll of Australian lawyers maintained by the Supreme Court of Victoria.
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