Woods v Legal Ombudsman
[2002] VSCA 133
•9 August 2002
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 3743 of 2002
No. 3744 of 2002
| JAMES MALCOLM WOODS AND ANOR - and - BRENDAN GEARY | 1st Applicant 2nd Applicant |
| v. | |
| THE LEGAL OMBUDSMAN | Respondent |
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APPLICATION ON SUMMONS
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JUDGES: | WINNEKE, P. and CHERNOV, J.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 9 August 2002 | |
DATE OF JUDGMENT: | 9 August 2002 | |
MEDIUM NEUTRAL CITATION: | [2002] VSCA 133 | |
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Practice and Procedure - Application for stay of orders of professional disciplinary Tribunal pending hearing and determination of appeal - Stay not granted.
| APPEARANCES: | Counsel | Solicitors |
| For the 1st Applicant | Dr G Griffiths, Q.C. and Mr R Attiwill | Garland Hawthorn Brahe |
| For the 2nd Applicant | Mr S Gillespie-Jones | Garland Hawthorn Brahe |
| For the Respondent | Mr M. Rozenes, Q.C. and Mr P.M. Taft | Aitken, Walker & Strachan |
WINNEKE, P.:
The applicants, Woods and Geary, were at relevant times directors of the corporate entity called "Law Partners Australia Pty Ltd", which is a "corporate practitioner" registered under Part 10 of the Legal Practice Act 1996. Law Partners is also an applicant in these proceedings.
On 25 June of this year, the "Full Tribunal" of the Legal Profession Tribunal, after a lengthy hearing of a number of disciplinary charges preferred by the Legal Ombudsman, found each of the applicants guilty of misconduct within the meaning of s.137(a) of the Act, cancelled the practising certificates of each of the personal applicants from 16 August 2002 and ordered that they not be eligible to apply for a practising certificate for a period of 8 years calculated from the above date; and that in respect of the corporate applicant, cancelled its practising certificate, ordered that it be deregistered as from 16 August 2002 and that it not be entitled to apply for re-registration as an incorporated practitioner for 8 years from the same date. The Full Tribunal also ordered the applicants to pay $253,344 as costs to the Legal Ombudsman, which order it stayed until 25 September 2002. The depth and gravity of the misconduct found by the tribunal is described in paras.4 to 6 of the Tribunal's "reasons for decision" given on 25 June of this year, and I will append the paragraphs to which I have referred to this judgment.
Each of the applicants has now appealed to this Court from the decision of the full Tribunal pursuant to s.170(1) of the Act, which permits such an appeal on a "question of law" only. Each applicant has filed and served a notice of appeal asserting what are claimed to be questions of law materially affecting the Tribunal's decision. The questions are not the same in each of the notices, but they do overlap. They include assertions that the charges were duplicitous, that they lacked particularity, that there was a denial of natural justice in a number of respects, that there was a failure to apply particular rules of evidence including the rule in Jones v. Dunkel, that the evidence was insufficient to support the findings; and that the penalties imposed were excessive and failed to properly discriminate between the two applicants. There were other grounds taken.
Each of the applicants then set out a number of grounds of appeal which are too numerous to here record. I would simply point out that the notices are open to similar criticisms which this Court has made in other cases where a right of appeal is given on questions of law alone. It is the question of law relevantly involved in the Tribunal's decision, which is the essence of the appeal right given[1]; and furthermore, to frame questions in the way in which they have been in these notices, most or all of which commence with the words "whether the Tribunal erred in finding", etc.; or "whether the Tribunal erred in imposing a penalty which is manifestly excessive" is a practice more apt to confuse than to clarify[2].
[1]See Hannebery v. Legal Ombudsman [1998] VSCA 142 at para [14].
[2]See State of Victoria v. Bacon [1998] 4 V.R. 269 at 285-6; H.J. Heinz Co. v. Turner [1998] 4 V.R. 872 at 875-6.
What is before this Court today is an application on summons by each of the applicants for a stay of operation of the Tribunal's orders pending hearing and determination of the appeals. In support of those applications, each of the personal applicants has sworn and filed one or more affidavits. In his first affidavit, Woods says that he has acquired Geary's interests in the corporate entity. Although other affidavits, particularly those filed on behalf of Geary, seem to be far from clear as to this aspect, Mr Gillespie-Jones, on his behalf, has told us today that Geary no longer has any equity in Law Partners and that at the moment he is one of the "partners" who uses the corporate entity services. Woods says that he has informed all the other "partners" in the practice of the result of the proceedings before the Tribunal and that they have expressed a desire that the practice continue. These "partners" have no equity in the corporate entity, but have given a retainer to that entity to "manage their practices" including the provision of office space, use of plant or equipment, etc. The "partners" render accounts under the name of "Law Partners", but they cannot accept trust moneys. Their remuneration is the fees recovered less the "service fee" payable to the corporate entity. Mr Woods has attested that if this corporate entity cannot continue, the business will be lost and the other partners' businesses will be dislocated. Law clerks and migration agents, secretarial staff and others will, he says, suffer. He, too, will be unable to generate income to service mortgage debts and other debts which he owes to his former wife and other persons. Mr Woods says that "serious consequences" will flow to him as a result of the consequences of the tribunal's decision. He concedes that before the Tribunal hearing began, he had taken steps to ensure that the sort of things which led to those proceedings could no longer occur. He has cut his ties, for example, with the non-legally qualified Mr Huang, who used the office of Law Partners and its name and facilities to strip certain Chinese clients (namely Zhai & Chang) of their assets and income, and that he has put an end to what appears to have been a regular practice of the entity to acquire equity interests in companies which they instructed their Chinese clients to create as a prelude for applying for business migration visas.
In his affidavit, Mr Geary attested to matters similar to those attested to by Mr Woods. In essence, it is put on behalf of the two individual applicants that their financial hardship, and that of the "partners" in the business, will be assured unless a stay is granted; thus destroying the subject matter of their appeals to this Court. It is said that the public interest can be relevantly protected by imposing conditions upon them in the form of undertakings from each of them which they say they are prepared to give.
Legal practitioners who seek a stay of orders made by their disciplinary Tribunal, while an appeal is pending or for any other reason, have the onus of persuading the Court that such a stay should be granted. There are a number of balancing factors which will bear upon the Court's decision as to whether such an indulgence should be afforded. The first is that disciplinary proceedings against those who hold themselves out to the public as fit to practise (in this case the solicitors) are sui generis. The discipline imposed, whilst punitive in its application to the practitioners involved, is very largely protective of the public interest[3]. Other matters which this Court will take into account will include the seriousness of the conduct which has led to the Tribunal's decision and the prospects which the instituted appeals have of succeeding. In this case there can be no doubt about the seriousness of the misconduct of these applicants, which is identified in the Tribunal's reasons for decision. Certain aspects of that misconduct seem to be recognised by each of the individual applicants in the affidavits tendered, although, as the Tribunal itself noted, one is left to wonder just how insightful the individual applicants are of the depth of the misconduct of which the Tribunal found. Amongst other things, the Tribunal found that they had put pressure on their clients to release them from "all liability" in respect of the transactions which formed the subject of the charges; and had constructed documents to absolve themselves of guilt.
[3]See Hannebery v. Legal Ombudsman [1998] VSCA 142 at para [22] and the authorities there cited.
The appeal notices, having regard to the grounds on which the applicants rely to suggest material errors of law on the part of the Tribunal, do not seem to me - notwithstanding the submissions put before us by counsel on their behalf - to raise serious prospect of success. Without seeking to determine the merits of those grounds, those at the forefront go to procedural matters rather than the substance of the findings. It is accepted that the Tribunal has fashioned its orders in the manner to which I have adverted previously to provide the opportunity to the applicants to put their affairs in order before surrendering their certificates. Mr Geary has surrendered his interest in the corporate entity, but Woods has not done so.
Dr Griffiths submits that the Act provides an appellate process and the fact that his client has shown a desire to pursue an appeal provided by the statute should be accepted by this Court as a major, if not the major, factor in the determination of whether a stay should be granted because his client's right will be rendered nugatory unless such a stay is granted. The respondent challenges this. Woods and Geary, so the respondent says, can surrender their interest in the corporate entity in favour of
others acceptable to the respondent or the Recognized Professional Association (RPA), in which case the respondent and the Institute would be amenable to the continuation of the registration of the entity, pending the determination of the appeal. The respondent, however, is not prepared to accept the undertakings proposed by the applicants.
In my view, the respondent is correct in its submission that, in determining whether to grant a stay, the Court should regard the public interest as dominant to the personal interest of the applicants. I agree with counsel for the respondent that the undertakings which the applicants have offered, and the steps which they say they have put into effect to prevent a repetition of the conduct condemned by the Tribunal, will do little to protect the public interest during the time which will intervene between now and the time when the appeal, even if given expedition, can be heard and determined. Having weighed the competing factors for and against a stay of the Tribunal's orders, I am not - for my own part - prepared to grant a stay in the terms sought. I would therefore dismiss the application.
CHERNOV, J.A.:
I would also dismiss the application for the reasons given by the learned president.
WINNEKE, P.:
The Court orders that the costs of this application will be costs in the appeal.
ANNEXURE
REASONS FOR DECISION OF THE LEGAL PROFESSION TRIBUNAL
Misconduct by Law Partners
Law Partners has been found guilty of misconduct on charges 1, 2, 4, 5 and 6. It has been registered as an incorporated practitioner since May 1997. A summary of our findings in relation to Law Partners is set out in pages 1, 2 and 3 of the summary tendered by Mr. Taft (Exhibit A). Our findings in relation to charge 1 are set out in paragraphs 82 to 88 inclusive of our reasons for decision given on 8 May 2002; in relation to charge 2 our findings are set out in paragraphs 89 to 96 inclusive of our reasons for decision; in relation to charge 4 our findings are set out in paragraphs 98 and 99 of our reasons for decision; in relation to charge 5 our findings are set out in paragraph 100 of our reasons for decision and in relation to charge 6 our findings are set out in paragraph 101 of our reasons for decision.
We do not propose to recapitulate all of the relevant findings relating to misconduct by Law Partners which are set out in our reasons for decision on 8 May 2002 and referred to in the summary of findings dated 22 May 2002 tendered by Mr. Taft (Exhibit A). Suffice to say that the misconduct by Law Partners involved the following matters –
Intermingling of the business affairs of two clients, Zhai and Chang, with the business affairs of Law Partners; failure by Law Partners to disclose pertinent matters to Zhai and Chang; failure to explain various conflicts of interest to Zhai and Chang; failure to explain the need for Zhai and Chang to obtain independent legal advice; failure to ensure that Zhai and Chang obtained independent legal advice; failure to supervise the activities of an unqualified person, Huang, in his conduct of work for Zhai and Chang in Law Partners office; failure to assess adequately, if at all, the business of City Paragon Café; continuing to act for Zhai and Chang after becoming aware through its directors Woods and Geary of the circumstances in which Zhai and Chang had signed a contract for the purchase of the business; failure to advise Zhai and Chang as to the terms of the contract for the purchase of the business which was prepared by Huang, using Law Partners’ precedents, with no regard to the interests of Zhai and Chang; attempting to conceal its wrong doing by obtaining a comprehensive release from Zhai and Chang for past and future liability; attempting to avoid investigation of its conduct; entering into an arrangement with Huang which involved income sharing; attempting to have Zhai enter an agreement which had it eventuated would have contravened Section 442(2) of the Legal Practice Act 1996.
Misconduct by Woods
Woods has been found guilty of misconduct on charges 1, 2 and 6. He is aged 43 years and he was admitted to practice in 1983. For 18 months, until very recently when he resigned by reason of our findings in this matter, he was Chairman of the Legal Practice Management Section of the Law Institute of Victoria. In paragraph 4 hereof we have identified the paragraphs in our reasons for decision given on 8 May 2002 in which our findings concerning charges 1, 2 and 6 are set out.
Without recapitulating all of the relevant findings relating to misconduct by Woods set out in our reasons for decision given on 8 May 2002 and referred to in the summary Exhibit A we note the following matters which were involved in the findings of misconduct by Woods –
The Tribunal did not accept Woods’ sworn evidence as to various matters concerning his dealings with Zhai and Chang; we did not believe some statements made by Woods to the Legal Ombudsman in the course of her investigation; failing to give advice to Zhai and Chang concerning various conflicts of interest which arose from arrangements made by Law Partners with Zhai and Chang; failing to advise Zhai and Chang to obtain independent legal advice; failing to ensure that they obtained independent legal advice; writing a letter dated 3 December 1998 to Li for Zhai containing statements which he knew were false; intermingling the business affairs of Zhai and Chang with his business affairs; failing to explain important documents to Zhai; having Zhai and Chang execute a shareholders’ agreement on 20 November 1998 when he knew that no explanation had been given to them about the agreement or about conflicts of interest arising from the agreement and knowing that they had no opportunity to obtain independent legal advice before executing it; failing to assess adequately or at all the business of City Paragon Café; failing to exercise control and supervision of Huang; failing to give advice to Zhai or Chang as to their positions and rights under the contract for the purchase of the business after he became aware of the contract entered into by them; after the events of 5, 6, 9 and 11 November 1998 failing to recommend or insist that Zhai seek independent legal advice as to either his rights under the contract or his rights against Woods and Law Partners; writing a letter dated 22 January 1999 to Li demanding comprehensive releases and secrecy as a condition for Law Partners continuing to carry out its retainer and thereby attempting to conceal its wrong doing. We did not accept Woods’ sworn evidence concerning alleged conversations with Power of the Law Institute about Law Partners’ arrangements with Huang as to his remuneration, nor did we accept his evidence that he believed that the arrangement with Huang was simply a way of structuring Huang’s remuneration which did not involve income sharing from Law Partners’ legal practice.
Misconduct by Geary
Geary, who is aged 34 years, has been found guilty of misconduct on charges 1, 2, 4 and 6. Since 1997 he has been an accredited specialist in property law by the Law Institute of Victoria. In paragraph 4 hereof we have identified the paragraphs in our reasons for decision given on 8 May 2002 in which our findings concerning charges 1, 2, 4 and 6 are set out.
Again, without recapitulating all of the relevant findings related to misconduct by Geary set out in our reasons for decision given on 8 May 2002 and referred to in the summary, Exhibit A, we note the following matters which were involved in the findings of misconduct by Geary –
We rejected the sworn evidence of Geary concerning events on 5 November 1998 when Zhai and Chang signed in Law Partners’ office the contract for the purchase by them of the City Paragon Café; we found that statements made in a letter dated 5 November 1998 written by Geary to Zhai were false; contrary to Geary’s evidence of some involvement by him in the contract, we found that the contract showed no signs in its drafting of the involvement of a solicitor, we did not accept Geary’s evidence that he made alterations to the contract to protect the interests of Zhai and Chang; we did not accept Geary’s evidence that he did not have a discussion with Li or Zhai about a cooling off period in the contract; we found that Geary did not give Li or Zhai proper legal advice on 9 November 1998 that would have protected the position of Zhai or Hua Fu under the contract; we found it impossible to accept Geary’s evidence that he was unaware of the joint venture arrangements being made by Law Partners, of which he was a co-director, with Chinese immigration clients in 1998; we found that at no time did Geary give advice to Zhai and Chang as to the conflict of interests which arose through L P Investments holding an interest in Hua Fu; we found that Geary, contrary to his evidence, became aware on 5 November 1998 of the highly prejudicial contract signed by Zhai and Chang on that day in Law Partners’ office. At no time did he give advice to Zhai and Chang as to their rights under the contract nor did he do anything to protect their interests; there was an improper intermingling of the financial affairs of Geary through Law Partners and L P Investments with the financial affairs of Zhai and Chang and companies controlled by them; Geary, whilst aware of the highly prejudiciial transaction in which his clients, Zhai and Chang were involved, contented himself with preparation of the letter dated 5 November 1998 which included false statements and which was designed to protect Law Partners; we did not accept Geary’s “diary note” which purported to be a record made by Geary of a meeting with Zhai on 5 November 1998 as a genuine contemporary document. We found that it was an attempt to exonerate Law Partners and to shift responsibility for the purchase of the business of City Paragon Café to Zhai and Chang; at no time following the events of 5, 6, 9 and 11 November 1998 did Geary recommend or insist that Zhai seek independent legal advice as to his rights under the contract or his rights against the practitioners; we found that Geary knew the prejudicial nature of the contract Zhai and Chang had entered into on 5 November 1998 but he failed to advise them in relation to rescission; on 9 November 1998 when consulted by Zhai wanting to be released from the contract Geary acted with complete disregard for his interests; Geary by the letter dated 22 January 1999 attempted to have Zhai enter into an agreement with Law Partners which would have contravened section 442(2) of the Legal Practice Act 1996.
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