Woods v The Legal Ombudsman

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No.3743 of 2002

JAMES MALCOLM WOODS
	v.
THE LEGAL OMBUDSMAN

---

JUDGES:	BATT and CHERNOV, JJ.A. and GILLARD, A.J.A.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	16 November 2004
DATE OF JUDGMENT:	22 December 2004
MEDIUM NEUTRAL CITATION:	[2004] VSCA 247

---

Legal Practitioners – Disciplinary Proceedings – Legal Professional Tribunal – Misconduct – Clients without knowledge of English – Advice in relation to obtaining visa – Advice to form company in which legal practitioners would have interest – Conflict of interest – Failure to advise clients to obtain independent legal advice and to ensure it obtained – Failure to protect clients’ interest in relation to purchase of business – Charge of misconduct based on 15 impugned instances of conduct – Duplicity – Scope of rule against duplicity in disciplinary proceedings – Basis for rule against duplicity – Whether particulars of misconduct alleged course of conduct – Charge not bad for duplicity.

Evidence – Failure to call complainant – Whether Tribunal required to draw Jones v. Dunkel inference – Obvious why complainant not called – No prospect of inference being drawn that complainant’s evidence would not have assisted Ombudsman’s case.

Costs – Indemnity basis – Whether Tribunal made order on impermissible basis – Relevant misconduct by appellant in conducting Tribunal proceedings – “Special” or “unusual” circumstances warranting award of costs on indemnity basis – Costs as between practitioners – Joint and several – Practitioners subject to different charges and number of charges – Whether Tribunal should have made separate costs orders – Joint defence of charges – No error in exercise of discretion - Legal Practice Act, ss.161(1) and 161(4).

---

APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr. R.A. Brett QC with Mr. P. Over	Neill Ogge
For the Respondent	Mr. P.G. Lacava SC with Mr. M.P. Taft	Aitken Walker and Strachan

BATT, J.A.:

I have had the considerable benefit of reading in draft the reasons for judgment of Chernov, J.A. I agree with his Honour’s proposed disposition of the appeal and, save that I am doubtful whether as a matter of language Charge 2 alleges but one charge of misconduct, with his Honour’s reasons.

CHERNOV, J.A.:

At all relevant times the appellant, James Malcolm Woods, was a practitioner within the meaning of the Legal Practice Act 1996 (“the Act”). He and Brendan Geary (“Geary”), who was also a legal practitioner, were partners and carried on practice as solicitors through a corporate vehicle, first known as Law Partners Victoria Pty Ltd and then Law Partners Australia Pty. Ltd. (“Law Partners” or “the firm”), which held itself out as practising in many areas of the law, including migration law. The appellant and Geary held shares in Law Partners and were directors of it. The appellant, who was an accredited migration law specialist, was the effective managing partner of the firm. By notice dated 20 December 2000 the respondent brought a number of charges against the appellant, Geary and Law Partners (“the legal practitioners”) under s.151(2) of the Act. After a lengthy hearing of the charges, on 8 May 2002, the Full Tribunal of the Legal Profession Tribunal (“the Tribunal”), which was constituted pursuant to s.400(2) of the Act, delivered its reasons for decision, finding the legal practitioners guilty of misconduct within the meaning of the term contained in the Act.[1] On 25 June 2002 the Tribunal ordered that the practising certificates of the appellant and Geary be cancelled from 16 August 2002 and that they not be eligible to apply for a practising certificate for a period of 8 years calculated from that date. In respect of Law Partners the Tribunal cancelled its practising certificate, ordered that it be de-registered 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 Tribunal also ordered the defendants to pay $253,344 as indemnity costs to the respondent, which order it stayed until 25 September 2002.

[1]See s.137 of the Act.

Each of the legal practitioners filed a notice of appeal pursuant to s.170(1) of the Act, raising a number of questions of law and setting out a number of grounds that formed the basis of their attack on the Tribunal’s decision. They then applied by summons to this Court for a stay of the operation of the Tribunal’s orders pending the hearing and determination of the appeals. On 9 August 2002, this Court, constituted by Winneke, P. and myself, dismissed the summons and ordered that the costs of the application be costs in the appeal. [2]
[2][2002] VSCA 133.

Geary and Law Partners did not proceed with their appeals. The appellant, on the other hand, continued with his appeal and, by a proposed Amended Notice of Appeal dated 20 October 2004, foreshadowed that he would seek leave to amend his notice of appeal. This application was made to us at the commencement of the hearing. The respondent did not oppose it and, in the event, we granted the appellant leave to file the Amended Notice of Appeal dated 20 October 2004 by which he abandoned all the grounds of appeal contained in the earlier notice other than grounds 4, 7, 7A, 7B, 7C, 30 and 36-39. Relevantly, the appellant seeks orders that the order made by the Tribunal on 25 June 2002 be set aside and that charges 1, 2, and 6, in so far as they are directed against him, be dismissed.

The charges

Given the content of the new grounds of appeal, to which I will refer in more detail later, it is necessary to describe the form of the charge that was preferred against the appellant (and the other legal practitioners) and the Tribunal’s findings in relation to them. The document (“the Charge document”) by which the charges were brought was headed “Charges pursuant to s.151(2) of the Act” and was addressed to the three legal practitioners. By way of what was effectively a preamble, the document then stated the following: the Legal Ombudsman had received two complaints concerning the conduct of the legal practitioners from their former clients, Zhai Fu Shun (“Zhai”) and Chang Anfernee (“Chang”); after investigating the complaints the Legal Ombudsman was satisfied that there was a reasonable likelihood that the Tribunal would find each of the legal practitioners guilty of misconduct and, as a consequence, charges were being brought against each of them “particulars of which are as follows:”. There then followed, on the next page of the Charge document, under the heading “PARTICULARS OF CHARGES” (“the factual particulars”), 76 paragraphs of allegations of fact which are essentially concerned with dealings between the complainants and the legal practitioners. These paragraphs constituted the factual basis for the six charges of misconduct that are set out at the end of the factual particulars.

The first charge – against the appellant, Law Partners and Geary – is contained in paragraph 77 of the Charge document. It asserts that the appellant, Geary and Law Partners were “each guilty of misconduct as legal practitioners” when acting as solicitors for Zhai in his immigration application, in that they required or allowed him to enter into and sign a number of documents in circumstances where there was a conflict of interest between the practitioners and their client. The second charge (“Charge 2”) - against the same parties – is set out in paragraph 78 and alleges that, in consequence of the matters contained in paragraphs 1 to 76 of the factual particulars, the practitioners were “each guilty of misconduct as legal practitioners in the course of engaging in legal practice and whilst acting for Zhai ... in each of the following instances, namely by: …”. There then follow 15 sub-paragraphs – (a) to (o) – each of which identifies an alleged act or the failure to act by one or more of the legal practitioners. Charges 3 (against the appellant and Law Partners), 4 (against Geary and Law Partners), 5 (against Law Partners) and 6 (against the three legal practitioners) are contained in paragraphs 79 to 82 of the Charge document. The Tribunal found that nearly all the relevant factual particulars were proved and none of its specific findings is, in terms, challenged by the appellant.

Law Partners

Before us many factual matters alleged in the Charge document were common ground. Thus, it was agreed that Law Partners carried on a practice, a substantial part of which involved migration law, and, in particular, acted for proposed emigrants from China in their applications for visas which often resulted in their setting up or acquiring businesses here in order to demonstrate their entitlement to stay in this country. Law Partners would ordinarily act for the clients in respect of such transactions. In that context, Law Partners established a China Business Group that was particularly concerned with the setting up, purchase and conduct of such businesses. Each of Zhai and Chang claimed that he lost $135,000 because of the impugned conduct of the legal practitioners.

Relevant persons

I now turn to describe briefly the other persons who participated in the transactions about which Zhai and Chang complained. As will be seen, during most of the relevant period, namely, between August 1998 and February 1999, Zhai resided in China and, consequently, he mainly dealt with Law Partners through his friend, Ms. Angela Li Fang Li (“Li”). Alan Huang (“Huang”), who was a registered migration agent registered with the Commonwealth Department of Immigration, but not a qualified legal practitioner, was the general manager of the Chinese Business Group and was concerned in co-ordinating the marketing and business dealings of Chinese clients of Law Partners. He was not, however, an employee of Law Partners but, to the knowledge, and with the approval, of the principals, was paid a fee by clients of Law Partners for the work he did for them – usually an “up front” fee of $1,500 - as well as being paid a commission by Law Partners for the introduction of clients to the firm. The Tribunal was satisfied that Huang received from Law Partners payments in the order of 20 per cent of the amount paid by clients to the firm for professional services. David Wu (“Wu”), who was not a qualified legal practitioner and was not a registered migration agent, was an employee of Huang. Law Partners had an interest in an investment company, Law Partners Investments (Far East) Pty Ltd (“LPI”), through which it conducted a number of commercial transactions which were related to its practice. The appellant and Huang were its directors and the appellant was the company secretary. One issued share in LPI was owned by Law Partners and the other by Huang. Thus, the entity was, essentially, a joint venture vehicle of the appellant, Geary and Huang.

Findings by the Tribunal

The Tribunal was satisfied of the following matters. Before August 1998, Zhai had engaged a firm of migration agents to obtain for him a business visa known as the 457 business migration visa (“the 457 visa”). This application was unsuccessful at first instance and an appeal process had been filed. At about this time, Zhai asked Li to assist him in taking steps necessary to obtain such a visa. Li spoke only little English and read even less. Zhai could not speak or read any English – that was common ground. On 26 August 1998, Li responded to an advertisement placed in a Chinese newspaper by Law Partners through which the firm offered to provide legal advice and related services to persons seeking to obtain a visa for entry into Australia. The advertisement directed the reader to speak to Huang, which Li did. She told him that Zhai was an applicant for a 457 visa, that the application had been handled by a migration agent, but that it had been rejected by the Department and that an appeal process had commenced. She also told him that Zhai had previously entered Australia under another visa, known as a 456 visa, and had acquired a company, Herald Enterprises International Pty Ltd (“Herald”), through which he conducted the Old Beijing Restaurant in Carlton. Huang was derisive of Zhai’s migration agent and advised Li to engage Law Partners to obtain the 457 visa for Zhai. He told Li that Law Partners would have to submit a new application for such a visa before the appeal on the initial application concluded. He said that unless this was done Zhai would have no hope of obtaining the visa sought. He further told her that Zhai would have to pay Law Partners, by way of fees for its services, $1,500 at the outset, $2,400 for preparation of the documents and another $2,400 when the documents were submitted to the Department. He said that the fees would be put into a fund and if the application was unsuccessful they would be refunded to Zhai. He said it would take about two months to prepare and submit the necessary documentation.

On 26 August 1998 Li, acting on behalf of Zhai, engaged Law Partners to prepare a 457 visa application for him and signed on his behalf a letter of engagement of Law Partners, to which I will make more detailed reference later, which the Tribunal found was prepared by Huang, notwithstanding that, as I have said, he was not employed by Law Partners. She also paid Huang, in accordance with the letter, $1,500. In the course of the meeting with Huang, Li asked that the retainer letter be translated to her, but he refused to arrange for such a translation.

On the following day, 27 August 1998, Huang told Li that, because Zhai would have to demonstrate, for the purpose of the visa application, ownership of a business in Australia, a new company, Hua Fu Enterprises (Australia) Pty Ltd (“Hua Fu”), would have to be incorporated – he said that Zhai would hold 75 per cent of the shares in Hua Fu and LPI the remaining 25 per cent. Huang also told Li that Law Partners would manage Hua Fu and that the establishment of the company in those circumstances would ensure that Zhai’s visa application would be successful. Huang said that the cost of establishing Hua Fu would be $1,000, of which $690 would be the cost of registration of the company, and $310 would be for solicitors’ fees. On the following day Li, on behalf of Zhai, paid Huang the money sought for the establishment of Hua Fu. Shortly thereafter Huang produced for signature by Li, on Zhai’s behalf, documentation required for the registration of the new company as well as seemingly relevant associated documents such as minutes of meetings of directors and shareholders of the company. The Tribunal found that it was Huang who prepared these documents and that at least some of them were false. Thus, it found that the minutes of the directors’ meeting of Hua Fu, purportedly held on 27 August 1998, which show that Zhai, the appellant and Huang were present and that each was appointed a director, were false. Zhai was in China at that time and Li signed Zhai’s name as confirming the minutes at Huang’s direction. She only signed the Memorandum of Association at his request. A few days later, on 31 August 1998, Huang told Li that $100,000 would have to be deposited in Hua Fu’s bank account as soon as possible because the 457 visa application required that Hua Fu hold minimum funds of $100,000.

Li met Huang again on 7 September 1998 and, in the course of that meeting, Huang handed her a letter dated that day for signature by her on behalf of Zhai. The letter essentially retained Law Partners to find for Zhai a business, possibly one in which others would have an equity, and in which he could profitably invest $100,000. The letter stated: “As we have discussed, you are interested in retaining Law Partners to assist you in finding, commencing and managing a business in order to allow you to make a visa application to reside either temporarily or permanently in Australia.” The proposal included Law Partners being engaged by Zhai to manage the business on his behalf in return for which the firm would be given a 25 per cent interest in the business. It also provided that if Zhai proceeded with any investment proposal that might be put to him by Law Partners, it would not charge him fees, other than out of pocket expenses, but if Zhai rejected the firm’s recommendation, it would be entitled to charge him fees which could amount to between $5,000 and $10,000. The letter went on to say, in terms, that in order to protect his interests Zhai should seek independent legal advice. Towards the end of the letter it was stated:

“YOUR OBLIGATIONS
SEEK INDEPENDENT LEGAL ADVICE
Law Partners will be acting on behalf of you personally in the immigration application and will be acting on behalf of the company and the business. We cannot act on behalf of you personally in any of the company or business transactions as we will have a potential conflict of interest on account of our shareholding. In order that you (sic) personal interests are protected in relation to your personal dealings with the company we advise that you should seek independent legal advice.”

The Tribunal rejected Huang’s claim that Zhai was present at the meeting of 7 September 1998 or that Li was ever told about the recommendation in the letter that Zhai should seek independent legal advice. In short, the Tribunal accepted Li’s evidence that she did not understand the terms of the letter of 7 September 1998 and that they were not meaningfully explained to her by anyone from Law Partners. Importantly, it found that at no time did Law Partners, the appellant, Geary or Huang give an explanation to Li or Zhai as to the meaning of the documents or of the need to obtain independent legal advice.

Li left Melbourne for China on 12 September and remained there until 5 October 1998. Prior to her departure Huang told her to tell Zhai that Law Partners would manage Hua Fu and that it would be necessary for him to deposit $100,000 as soon as possible into Hua Fu’s account. He told her that once this was done, Zhai would be able to come to Australia to collect his visa. Not long after her return from China, on or about 13 October 1998, Li paid Law Partners a further $2,400 by way of a cheque drawn on Hua Fu and, on or about 16 October 1998, $100,000 was deposited into Hua Fu’s bank account.

On 31 October 1998 Zhai arrived in Melbourne and on 2 November 1998 he and Li met Huang and Wu. Huang effectively pressured Zhai to purchase a business in Australia, telling him that the ownership of a business would assist him to secure the visa. He said that there were a number of “profitable” businesses available for acquisition. In the course of the next few days Huang and Wu showed Zhai and Li a number of businesses which they said were available for purchase, including a café in William Street Melbourne, known as the Paragon Café. Huang told Zhai that its takings amounted to $9,000 per week and that its annual profit was $170,000. He said that the purchase price was $250,000, reduced from the earlier price of $270,000. Huang and Wu recommended to Zhai that he purchase the business. On 5 November 1998, Zhai, Li and her son (Louie) again attended the offices of Law Partners where they were introduced to a person who was said to be Chang, but who was, in fact, Chang’s brother, Webber Chang (“Webber”). (The Tribunal found that Zhai did not meet Chang until after 5 November 1998.) They were told by Huang that Chang was interested in purchasing the Paragon Café with Zhai and in conducting it with him in partnership. Huang then produced the contract of sale for the Paragon Café and sought to persuade Zhai to sign it as a purchaser. Huang told him that once the contract was signed and $180,000 paid by way of deposit, the business would be handed over to the purchasers on the following day. He said the balance of $70,000 would be raised by way of loan on the security of the business. Huang told Zhai that once the business was purchased, the 457 visa application would be ready for lodging. He emphasised that he had to sign the contract if the 457 visa application was to be successful. Zhai later told Li: “I could not but sign”. In the result, the contract was signed by Zhai and Webber at the meeting of 5 November. The vendors, who were also present at Law Partners, said that before they would sign the contract they wanted to speak to their solicitors (in the absence of Zhai and Li). While Li and Zhai were out of the room the vendors apparently spoke with their solicitors about the transaction and, as a consequence, the contract was amended to show that the full purchase price of $250,000, and not just $180,000, had to be paid to them before they would surrender possession, and Zhai and Webber were required, on their return to the room, to initial the amendments. Geary claimed before the Tribunal that he had prepared the contract of sale, but this evidence was rejected, the Tribunal finding that it was Huang, and not Geary, who prepared the contract.

I interrupt the chronological analysis of the facts found by the Tribunal by interpolating that, as I will mention later in more detail, it was the legal practitioners’ case before the Tribunal that Huang did not introduce Zhai to the Paragon Café business. Rather, they claimed, it was Zhai and Chang who found the business and negotiated the terms of its purchase and then came to Law Partners for assistance in finalising the transaction. The legal practitioners contended that when they were first consulted by Zhai and Chang they advised them that the vendors had made a material misrepresentation about the financial viability of the business and that it was likely to prove to be a financial disaster. They also contended that because Zhai and Chang were “late” in instructing them to act in the transactions, there were only a limited number of things they could do to assist them but that they would, nevertheless, be prepared to do what they could to protect their interests provided Zhai and Chang agreed not to hold them legally liable for any loss that may be suffered as a result of the acquisition. Consistently with this approach Geary produced a letter, dated 5 November 1998, for counter-signature by Zhai and Chang by which they engaged Law Partners to act for them in the acquisition of the Paragon Café. The Tribunal found that this self-serving letter, by which the legal practitioners sought to extricate themselves from potential liability to their clients in respect of their failure to investigate properly the Paragon Café business before its purchase by Zhai and Chang, contained a number of falsehoods to which I will refer later. It also found that, contrary to the claims of the appellant and Geary, no explanation or advice was given by them to Zhai and Chang at the meeting of 5 November 1998 about the terms of the contract relating to the Paragon Café. The Tribunal also found that Zhai was never told by anyone from Law Partners that he had effectively paid money to Huang, as well as Law Partners, for the visa application and that there were no migration requirements that Hua Fu be incorporated, or that Law Partners have an interest in the company. The Tribunal concluded that the setting up of Hua Fu was unnecessary for the purpose of the 457 visa application.

By 9 November 1998, Zhai and Li were concerned about the viability of the Paragon Café and sought to speak to the appellant in relation to it. They were unable to meet him, however, and instead saw Wu and told him that they wanted the purchase stopped. Wu asked Geary to speak to Zhai and Li, and according to the Tribunal, this was the first time that they met him. Geary told them, incorrectly, that although the contract contained a cooling off clause it was not effective because the price was over $200,000 and thus, the contract could not be avoided. Geary denied that he said this, but the Tribunal rejected his denial. It also rejected Geary’s claim that he had met Li and Zhai on 5 November 1998.

It is clear enough that, at least by 16 November 1998, the appellant had become involved in dealing with Zhai and Chang in relation to the Paragon Café transaction and it can be assumed that he must have been aware of the firm’s file in relation to it, including Geary’s letter of 5 November 1998 to Zhai. On 16 November 1998, the appellant prepared a letter to Zhai and Chang advising them of a proposed meeting to be held on 20 November to discuss the purchase of the Paragon Cafe. He said in evidence that a copy of the Shareholders Agreement to which reference was made in the letter was enclosed with it, but the Tribunal found that there was no evidence that this was the case.

On 20 November 1998, Zhai, Li and Chang attended Law Partners and were asked by Huang, over a period of approximately two hours, to sign a number of documents in relation to the Paragon Café business. They received no explanation from him as to the meaning of the contents of these documents. One such document was the Shareholders Agreement that dealt with, inter alia, the ownership of Hua Fu. The Tribunal accepted that this was the first time that they had seen the document notwithstanding the appellant’s claim, which I have noted, that he had sent them a copy of it under cover of the letter of 16 November 1998. When Li asked for a translation of the agreement a member of Law Partners’ staff translated but a small part of it. The agreement re-arranged the shareholdings in Hua Fu from that which was previously represented to Zhai, namely, that he and Chang would be equal owners of the company, to one where 25 per cent was to be owned by LPI and the balance would be held equally between Zhai and Chang. The agreement also provided that Hua Fu was to be the owner and operator of the Paragon Café. Contrary to what was said in the Shareholders Agreement, however, no independent advice was received by Zhai or Chang about the transaction. The Tribunal also rejected the appellant’s claim that Zhai and Chang were advised to see another solicitor, Mr. Fred Tan.

On the next day, 21 November 1998, Zhai left Australia for China and on 23 November 1998 the appellant sent a file note to Huang and Wu with a copy to Geary, in relation to the Paragon Café transaction, that recorded: “This project is a potential problem and must be given the highest priority”.

On about 2 or 3 December 1998, Huang told Li that the expected loan of $70,000 from the National Australia Bank Ltd for the purchase of the Paragon Café would not be available but that such a loan would or might be obtained from the Commonwealth Bank. He essentially told them to go to the bank to arrange for the loan. Li and Chang attended the Commonwealth Bank but were only able to obtain personal loans. Neither the appellant, nor Geary, gave Li any advice about how to negotiate the loan and no-one from Law Partners accompanied them to the bank to assist them in obtaining it.

On 3 December 1998, the appellant wrote a letter to Zhai (sent to Li’s address) and Chang in which he emphasised that “the purchase arrangements which were concluded by you were vastly different from the usual terms of purchase and I have already recorded my thoughts that the difference in the purchase terms was not favourable to you. For this reason, my staff members have spent the last week or so attempting to re-negotiate the purchase arrangements. Unfortunately, this attempt to re-negotiate has not been successful, although it was definitely worth trying”. The Tribunal found the letter was false in that, contrary to the assertion in it, the purchase arrangements were in fact concluded by Law Partners and Huang and not by Zhai and Chang. The Tribunal was satisfied that Huang and Law Partners prepared the contract in accordance with arrangements made between Huang and the vendors and not on the instructions of Zhai, Li or Chang.

On 8 December 1998, Li, on behalf of Zhai, wrote to the appellant asking that no payment be made under the contract relating to the Paragon Café until Zhai had the opportunity of making further enquiries. Notwithstanding this, on 15 January 1999, the appellant told Li and her father that the Paragon Café settlement was “under control” and that the business would be handed over the following Monday. At 4.45 pm. on 15 January 1999 Geary handed a cheque to the vendors’ representatives and obtained the keys to the Paragon Café.

In her evidence, Li said that, upon attending the Paragon Café on 18 January 1999, she found that the equipment did not work and the utilities were not connected. She also claimed that the appellant refused to see her father about this until he had threatened police action. The Tribunal made no finding about these claims, although it was satisfied that Law Partners and the appellant failed to arrange for the proper handover of the café.

On 22 January 1999, the appellant wrote to Zhai and Chang stating, again falsely as the Tribunal concluded, that because they had entered into the transaction before they sought the advice of Law Partners they were at financial risk in relation to the business. He also expressed doubts in that letter about its commercial viability and said that a directors’ meeting had been called for 2 February 1999 for the purpose of deciding what steps should be taken in that regard. The appellant also sought from the purchasers the release of Law Partners from liability concerning the acquisition and operation of the Paragon Café and effectively said that Law Partners would not act unless released, concluding with the advice that the clients should seek legal advice from an independent firm of solicitors. Li said that she did not attend the meeting of 2 February and the Tribunal was not satisfied that it ever took place notwithstanding that minutes were produced by Law Partners which purported to show the presence of the appellant, Huang, Chang, Wu, Geary, Li and two others at such meeting. The minutes also purported to record, inter alia, the appellant’s advice as to directors’ liability for insolvent trading and that Zhai and Chang would each have to invest a further $60,000 to avoid this difficulty. The Tribunal noted that in their evidence Huang, Chang, the appellant and Geary had not referred to the existence of such a meeting and that others from Law Partners, who were supposedly there, were not called to give evidence.

Shortly prior to 3 February 1999, Chang and Li, on behalf of Zhai, consulted Mr Chin Tan of Kennetan Solicitors about their position in relation to the Paragon Café transaction and the involvement of Law Partners. On 8 February 1999, Zhai (who had arrived in Australia from China on 6 February 1999) Li, Chang and Mr. Tan met with the appellant to discuss their options concerning the Paragon Café contract, but nothing was resolved at the meeting. By letter dated 8 February 1999 addressed to Mr. Tan, the appellant advised of the termination of Law Partners’ retainer.

I mention for completeness that at the hearing before the Tribunal the appellant initially claimed that he first met Zhai on 26 August 1998 (which was the day on which Li first attended Law Partners). Zhai’s passport, however, showed that he was in Australia only between 30 July and 11 August 1998 and then between 31 October 1998 until some time in November of that year. In the course of giving his evidence the appellant changed his initial assertion in that regard and said that he met Zhai in early August 1998, but this claim was also rejected by the Tribunal which said that Zhai’s affairs were brought to Law Partners only after Li’s response to the advertisement on 26 August 1998 to which I have referred. It found that Zhai did not attend or consult Law Partners until 2 November 1998.

It is also convenient to mention at this stage that after the case was opened to the Tribunal by the respondents’ counsel, counsel for the legal practitioners objected to Charges 1, 2, 3 and 4 on the grounds that they were repetitious and lacked particularity. After some discussion counsel withdrew this objection and the matter proceeded. As part of her final submissions after the conclusion of the hearing counsel for the legal practitioners again claimed that parts of Charges 2, 3 and 4 were vague and lacked particularity. The Tribunal, however, considered that it was too late for such an objection to be raised given that after the appellant’s withdrawal of the initial objection the proceeding continued to conclusion without any further objection to the charges. In any event, said the Tribunal, it considered that the objection was not well founded having regard to the factual particulars that were set out in the Charge document. I note that the Tribunal’s decision on this issue is not the subject of this appeal.

Grounds of appeal

I now turn to examine the grounds on which the appellant seeks to challenge the Tribunal’s findings of misconduct, insofar as they related to him, and the arguments in support of them.

Grounds 4 and 7C – failure to call Zhai: Jones v. Dunkel

Mr. Brett, for the appellant, first argued grounds 4 and 7C, under cover of which he submitted that the Tribunal erred in not drawing, in accordance with the rule in Jones v. Dunkel[3], the inference from the respondent’s unexplained failure to call Zhai as a witness that his evidence would not have assisted the respondent’s case. The appellant contended that, before the Tribunal, counsel for the respondent conceded that there was no evidence before it as to why Zhai had not been called as a witness. The failure to call Zhai, said counsel, was particularly striking given that Zhai was a party to the charge (by reason of the definition of “party” in s.3 of the Act) and that, as I have noted, the Tribunal drew an adverse inference, purportedly applying Jones v. Dunkel, against the appellant and the other defendants, by reason of their failure to call Wu and a number of others as witnesses concerning the appellant’s claim that a meeting of directors of Hua Fu was held on 2 February 1999 to which I have referred and which, according to the appellant, was attended by, inter alia, Li, an allegation which she has denied. The appellant contended that Zhai could have given evidence about the following “disputed matters”:
[3](1959) 101 C.L.R. 298.

(a) whether Zhai and the appellant met in August 1998 as the appellant claimed;
(b)Zhai’s understanding of the following documents: the letters of 26 August 1998, and 7 September 1998 and the Shareholders Agreement;

(c) whether Zhai understood the need to obtain independent legal advice;
(d) the circumstances leading to the purchase of the Paragon Café;
(e)whether Law Partners, the appellant or Huang had advised Zhai that he should seek independent legal advice, particularly as the appellant gave evidence that he gave such advice on 20 November 1998.

It was asserted that Zhai’s evidence in relation to those matters could have affected the Tribunal’s general findings as to the credit of other witnesses, and in particular, that of the appellant.

The rule in Jones v. Dunkel, which deals with the principle that applies where there has been an unexplained failure by one party to call a witness whom he or she might be expected to call, has been correctly[4] summarised in the joint judgment of Newton and Norris, JJ. in O’Donnell v. Reichard[5] as follows:
[4]Transport Industries Insurance Co. Ltd. v. Longmuir [1997] 1 V.R. 125 at 138 per Tadgell, J.A.
[5][1975] V.R. 916 at 929.

“… where a party without explanation fails to call as a witness a person whom he might reasonably be expected to call, if that person’s evidence would be favourable to him, then, although the jury may not treat as evidence what they may as a matter of speculation think that that person would have said if he had been called as a witness, nevertheless it is open to the jury to infer that that person’s evidence would not have helped that party’s case; if the jury draw that inference, then they may properly take it into account against the party in question for two purposes, namely: (a) in deciding whether to accept any particular evidence, which has in fact been given, either for or against that party, and which relates to a matter with respect to which the person not called as a witness could have spoken; and (b) in deciding whether to draw inferences of fact, which are open to them upon evidence which has been given, again in relation to matters with respect to which the person not called as a witness could have spoken.”

And in Payne v. Parker[6] Glass, J.A.[7] explained that whether a Jones v. Dunkel inference can be drawn depends on whether the following conditions were satisfied:
“(a)the missing witness would be expected to be called by one party rather than the other,

(b) his evidence would elucidate a particular matter (in his favour),
(c) his absence is unexplained.”

[6][1976] 1 N.S.W.L.R. 191.

[7]At 201. Although his Honour dissented in that case as to the outcome of the appeal, he did not differ from the majority on this issue.

It is plain enough that the first of these conditions was satisfied here. In the normal course of events one would have expected the respondent, rather than the appellant, to call Zhai as a witness, given that he was a complainant and was present at a number of the meetings with the various representatives of Law Partners as I have explained. But in my view the second and third conditions were not satisfied. As to the second requirement, Zhai’s evidence would have been only of marginal value in the sense that it would have added little to what Li, Chang, Webber and the documents that were tendered by the respondent disclosed. The “disputed matters” referred to earlier, and about which the appellant claims Zhai could have spoken, were established by the respondent by other evidence. Thus, on the question whether the appellant met Zhai in August 1998, as he originally claimed before the Tribunal, the respondent relied on Zhai’s passport, to which I have referred, which showed that he was not in Australia after 11 August (until 31 October 1998). The respondent also relied on Li’s evidence as to when she first brought Zhai’s business to Law Partners and on the lack of any credible file note of Law Partners to support the appellant’s case on this issue. In any event, the Tribunal simply disbelieved the appellant in his claim that he met Zhai in early August 1998. As to the “disputed matters” in paragraphs (b), (c) and (e) the key issue that they raised was whether anyone from Law Partners ever advised Zhai directly, or through Li, that he should seek independent legal advice as to the transactions in question. It is plain enough that most of the discussions with Law Partners were undertaken by Li, on Zhai’s behalf, and on the few occasions when Zhai was present at Law Partners, Li was also there and her evidence, which I have already noted, was that no such advice was tendered to her or Zhai. Moreover, it was common ground, as I have said, that Zhai did not speak or read English and, to the extent that advice that independent legal advice should be sought by him was contained in the correspondence and the Shareholders Agreement, by itself, it would have had no relevant meaning to Zhai. And, as Li said, that advice was never drawn to her attention (or that of Zhai). To a large extent Li’s evidence was corroborated by Chang. And as to the circumstances leading to the purchase of the Paragon Café – a “disputed matter” referred to in paragraph (d) above – again, the person essentially involved in this was Li and she gave evidence on this issue. I note for completeness that it borders on the inconceivable that Zhai would have given evidence on the so-called “disputed matters” in the appellant’s favour.

In relation to the third condition, it is true that the respondent’s counsel did not tell the Tribunal, in terms, why Zhai could not be called. But in my view, the circumstances of this case were such that no explanation of this would have been expected[8] notwithstanding that it may be assumed that a visa for Zhai’s entry into Australia for the purpose of giving evidence could have been obtained. Given the circumstances of the case, it would have been obvious enough to the Tribunal why Zhai was not called as a witness by the respondent. As I have said, his evidence would have added little to that of Li, Chang, Webber and the documents and, importantly, it was common ground that Zhai did not read or speak English. Moreover, at the time of the hearing he was living in China so that it would have been apparent to the Tribunal that the not insignificant trouble and cost of bringing him to Australia to give such evidence would have outweighed its probative value to the respondent’s case. In the circumstances, I think that the Tribunal would have realised that Zhai’s absence was not due to concern by the respondent that his evidence would not have been favourable to her case, but was due to practical and commonsense considerations. It could be said, therefore, that the reason for Zhai’s absence from the hearing was tacitly explained, or were obvious, to the Tribunal.[9]
[8]See O’Donnell at 929.
[9]I mention for completeness that although Zhai fell within the definition of “party” in s.3 of the Act as the appellant pointed out, he was not a relevant party to the charge in the sense of having any part to play in the carriage of the proceeding before the Tribunal as a plaintiff or defendant would have in an ordinary civil action.

In the circumstances, I consider that the rule in Jones v. Dunkel did not apply simply because Zhai was not called by the respondent as a witness. Consequently, there would have been no proper basis for the Tribunal to infer, as the appellant contends, that Zhai’s evidence would not have assisted the respondent’s case. I note that it is apparent that the Tribunal was well aware of the rule in Jones v. Dunkel, which is hardly surprising given that its Chairman was a retired County Court judge with significant experience in this area of the law. The Tribunal applied the rule against the legal practitioners, as I have noted, on the question whether the meeting of 2 February 1999 was held. It also took account of any unfairness that might have been occasioned to the appellant by reason of his inability to cross-examine Zhai. The Tribunal relevantly said:

“... we have been mindful that we have not heard evidence from Zhai and, of course, the practitioners have not had an opportunity to cross-examine him. To some extent Li’s evidence has taken the place of evidence from Zhai as she acted on his behalf, sometimes on her own and at other times in the company of Zhai, in her dealings with Law Partners over the relevant period … and she reported to him.”

But even if it could be said that the rule applied here and that the Tribunal should have drawn the inference contended for by the appellant, that would not have assisted the appellant’s case unless such an inference could have been properly taken into account by the Tribunal against the respondent for the purpose of it deciding whether:

(a) to accept any particular evidence which has in fact been given and which related to a matter with respect to which Zhai could have spoken;

(b) to draw an inference of fact (against the respondent) which was open on the evidence that had been given, in relation to a matter with respect to which Zhai could have spoken.[10]

Having regard to the evidence of Li and the other material to which I have referred, and given the Tribunal’s conclusions as to her credibility as compared to that of the appellant and most of his witnesses, it is difficult to see how the inference for which the appellant contends would have been taken into account by the Tribunal against the respondent.

[10]See O’Donnell at 929.

In the circumstances, I would reject grounds 4 and 7C.

Ground 7 – duplicity

The appellant next argued ground 7 which, in terms, asserts that “the Tribunal erred by hearing and determining Charge 2 as a single charge notwithstanding that it alleged 15 acts, alternatively, more than one act, of misconduct and was duplicitous.” Relevantly, as I have said, Charge 2 alleges that “[i]n consequence of the matters contained in paragraph 1-76 [of the factual particulars] the appellant [was guilty of misconduct] as a legal practitioner in the course of engaging in legal practice and whilst acting for Zhai (at times on the instructions of Li) in each of the following instances, namely, by: …”. There then follow fifteen paragraphs – (a) to (o) - which set out the acts, or failures to act, on the part of the appellant that are said to constitute, individually and collectively, misconduct on his part. For example, paragraph (a) alleged failure “to supervise the activities ... of Huang, knowing that Huang was being paid money by Law Partners ...”. The remaining paragraphs make allegations in like form.

Mr. Brett argued that Charge 2 breached the rule against duplicity in that it charged the appellant with more than one offence. Alternatively, it was claimed, the charge offended the underlying basis of that rule, namely, fairness to the appellant in knowing precisely what was alleged against him and what misconduct he committed should the Tribunal conclude that Charge 2 was made out. More particularly, counsel said, there were fifteen instances of misconduct alleged against him that were rolled up in Charge 2, thereby causing unfairness in that:

(a)it led the Tribunal to combine in its reasons several disparate types of alleged misconduct – for example, those alleged in paragraphs (a)-(e) – in a single charge;
(b)it resulted in the Tribunal analysing a number of paragraphs in groups (such as paragraphs (a)-(e)) notwithstanding that the charge alleged a separate incident of misconduct in each paragraph;
(c)some of the acts were concerned only with the conduct of one practitioner but were held also to amount to misconduct by another legal practitioner. In that context reference was made by way of example to paragraphs (k) and (l);
(d)many of the paragraphs were repetitive;
(e) the factual basis of each instance or group of instances of alleged misconduct was said to arise from all the matters in paragraphs 1-76 of the factual particulars, which plainly could not have been the case.

I will come back to these examples of alleged unfairness, but I will first look briefly at the ambit of the rule against duplicity as it operates in the area of the criminal law and then consider whether and, if so how, it applies to disciplinary proceedings of the present type.

The rule against duplicity ordinarily prohibits a prosecutor from charging in one count of an indictment, presentment, information or complaint two or more offences provided by the law.[11] It seems plain enough that the basis for the rule is fairness to the defendant in the sense of his or her being informed, at the very outset, what is the specific offence which is being alleged and, if it is established, to have certainty of what charge he or she has been found guilty. Thus, as Evatt, J. explained in Johnson v. Miller[12]:

“It is an essential part of the concept of justice in criminal cases that not a single piece of evidence should be admitted against a defendant unless he has a right to resist its reception upon the ground of irrelevance, whereupon the court has both the right and the duty to rule upon such an objection. These fundamental rights cannot be exercised if, through a failure or refusal to specify or particularize the offence charged, neither the court nor the defendant (nor perhaps the prosecutor) is as yet aware of the offence intended to be charged. Indeed the matter arises at an even earlier stage. The defendant cannot plead unless he knows what is the precise charge being preferred against him. If he so chooses, a defendant has a right to plead guilty, and therefore to know what it is he is being called upon to answer.”

A like view was expressed by Gaudron and McHugh, JJ. in S v. The Queen[13] and by Kirby, J. in Walsh[14].

[11]See, for example, Walsh v. Tattersall (1996) 188 C.L.R. 77 at 84 per Dawson and Toohey, JJ. (who were in dissent, but not on this issue) and at 107 per Kirby, J.; Johnson v. Miller (1937) 59 C.L.R. 467 at 497-498 per Evatt, J.

[12]At 497-498.

[13](1989) 168 C.L.R. 266 at 284.

[14]At 105-106, 111.

Nevertheless, as Kirby, J. recognised in Walsh[15] the rule is not absolute, his Honour giving the example of offences such as keeping a brothel, harassment and trafficking in drugs, where the relevant conduct might be constituted by activity over an extended time, thus permitting multiple acts to be quite properly charged in a single count. Although his Honour opined that little help was afforded by saying that the test is whether multiple acts can "fairly and properly" be identified as part of the same criminal enterprise or activity, he recognised that exceptions to the general rule against duplicity have been allowed where the multiple acts relied on by the prosecution are so close in time and place that they can be viewed as one composite activity or where the offence is one that can be classified as continuing in nature. And, as Lord Diplock said in Director of Public Prosecutions v. Merriman[16]:

“[t]he rule against duplicity… has always been applied in a practical, rather than in a strictly analytical, way for the purpose of determining what constituted one offence. Where a number of acts of a similar nature committed by one or more defendants were connected with one another, in the time and place of their commission or by their common purpose, in such a way that they could fairly be regarded as forming part of the same transaction or criminal enterprise, it was the practice, as early as the eighteenth century, to charge them in a single count of an indictment.”

Although Kirby, J. was critical[17] of what he saw as the “more lenient view” of duplicity adopted by Lord Diplock in Merriman, Dawson and Toohey, JJ. in Walsh referred to the above-cited passage without disapproval[18], their Honours also acknowledging[19] that whilst “... the practice of laying charges of a compendious kind can place an accused in a position of difficulty … in most cases the uncertainty can be dispelled by further and better particulars.”

[15]At 107-108.

[16][1973] A.C. 584 at 593.

[17]At 109.

[18]At 84-85.

[19]At 87.

As is apparent, the above cases were concerned with charges brought for breach of the criminal law. In respect of disciplinary proceedings, particularly those brought under legislation that is concerned with protection of the public interest, as was the case here, and as Mr. Brett recognised, rightly, I think, the rule against duplicity ordinarily does not apply strictly. Nevertheless, the underlying basis of the rule – fairness to the defendant and entitlement to natural justice – can have operation in the context of such disciplinary proceedings. I think that is what the Full Court[20] in R. v. Solicitors’ Disciplinary Tribunal; Ex parte L, a solicitor[21] meant when it accepted that the doctrine of duplicity could operate in tribunal proceedings. Their Honours said[22], by way of obiter:

“It is sufficient to say that a solicitor presented before a full hearing of the Solicitors’ Disciplinary Tribunal should be made clearly aware, before the hearing commences, of that with which he is charged, and what material facts are alleged to constitute the charge or charges against him: see Gee v General Medical Council [1987] 1 WLR 564, at p. 566 (HL); Johnson v Miller (1937) 59 CLR 467 per Dixon J, at p. 489; Evatt J, at pp. 495 and 497.
If a course of conduct is relied upon, it should be made clear that this is so - for duplicity can apply to charges before the domestic tribunals and lead to the striking out of charges suffering from that defect.”[23]

[20]Murphy, Fullagar and Southwell, JJ.

[21][1988] V.R. 757.

[22]At 770.

[23]See, also, Gee v. General Medical Council [1987] 1 W.L.R. 564 at 569 per Lord Mackay of Clashfern.

That the underlying basis of the rule against duplicity will have operation in disciplinary proceedings of the character now under consideration is illustrated by the cases referred to below which also highlight that, although the courts may intervene where the charge before a tribunal combines a series of similar complaints, in order to ensure that natural justice and certainty be accorded to the defendant, such intervention will ordinarily be made, not so much because there has been a breach per se of the rule against duplicity, but rather because the fundamental basis which underlies that doctrine has been offended. For example, in Gee v. General Medical Council[24] the appellant doctor received notice of a charge of serious professional misconduct, alleging that over a period of 13 months he had abused his professional position by repeatedly supplying to individual patients certain drugs. The doctor claimed that the charge was bad for duplicity as it contained a number of separate allegations relating to eight patients. The House of Lords rejected this claim, Lord Mackay of Clashfern (with whom the other Law Lords agreed) stating[25]:
[24][1987] 1 W.L.R. 564.
[25]At 575.

“…the rule against duplicity…would be impossible to apply universally to cases relating to conduct before the [professional conduct committee]. The rule is necessary in the interests of fairness where the only answer that can be returned in respect of a particular charge is guilty or not guilty to the whole charge. It is not necessary in order to obtain fairness where…the [committee] is required to make a determination which distinguishes between facts alleged which are found proved and those which are not found proved, before moving forward to considering a determination as to guilt of serious professional misconduct based on their determination of facts found proved.”

A little later[26] Lord Mackay observed that:
“… there is no unfairness in a procedure in which a number of allegations of fact are set out in one charge and it is alleged against a medical practitioner that these matters of fact, if established, render him guilty of serious professional misconduct provided that he has fair notice in time to prepare his defence of the nature of the evidence to be led in support of these allegations … and provided the [professional conduct committee] charged to adjudicate upon the matter make plain which of the allegations of fact, if any, they have found proved in time for the practitioner to make appropriate submission and lead any further relevant evidence available to him before a determination is made whether he is guilty of serious professional misconduct.”

But his Lordship went on to caution[27]:
“In a case relating to conduct where two distinct types of misconduct are alleged and where the determination that one type of misconduct was established could not reasonably aggravate the seriousness of the other misconduct I should think it would be better and in the interests of clarity for two separate charges to be alleged.”

[26]At 575.

[27]At 575-576.

In Duncan v. The Medical Disciplinary Committee[28] the appellant doctor was charged with disgraceful conduct. The notice of charge contained multiple particulars under four broad categories of indiscretions, namely, (1) breaches of professional confidence, (2) harassment of a co-professional, (3) attempting to persuade an employee to assist in defrauding the Health Department and (4) acting callously and mercenarily towards patients. Cooke, P. noted[29] the ambiguity in the charge, but accepted that it was “understood as charging disgraceful conduct in a professional respect in any one of the particulars, or any of them cumulatively; and that it would be for the Medical Council to decide whether the facts as proved in relation to any one or more constituted such conduct.” The learned President went on to say[30]:

“It cannot be right that every complaint, if to be taken further, must be represented by a separate charge. Further, we do not think that there can be any doubt that a charge may combine a series of similar complaints by alleging a course of conduct in the carrying on of a practice and specifying the separate complaints as particulars or instances.”

A little later Cooke, P. said[31]:
“... a case is conceivable in which over a period a practitioner manifests in a diversity of ways, some more serious than others, such extensive disregard of his professional responsibilities that, viewed as a whole, his conduct can rightly be described as disgraceful in a professional respect... we can see nothing in the Act or in natural justice to prevent the Committee, after investigating a range of complaints, from regarding a comprehensive charge as appropriate as well as separate ones. Indeed it might be against the public interest to deny the Committee any right to present an all-embracing charge. It may be important that the appropriate professional tribunal should be able to look at the practitioner’s whole attitude to practice.”

[28][1986] 1 N.Z.L.R. 513.

[29]At 543.

[30]At 545.

[31]At 546.

Mitchell v. Royal New South Wales Canine Council Ltd[32] provides another illustration of the reduced scope of duplicity in disciplinary proceedings, notwithstanding that the case concerned the disciplinary proceedings brought pursuant to contract rather than statute. The disciplinary committee of the respondent voluntary association had found the appellant dog-breeder guilty of misconduct, arising from her falsely claiming to have financed and published a certain dog handbook. The single charge of misconduct was supported by five particulars which alleged misconduct by reason of breaches of five different club regulations. Breach of the regulation alleged in the first particular was premised on the appellant having acted dishonestly, whilst dishonesty was not an element of any of the second to fifth particulars, which concerned conduct discreditable to the appellant as a member of the Association. Ipp, J.A. (with whom Mason, P. and Stein, J.A. agreed) characterised[33] the charge as duplicitous because, whilst the charge alleged only one offence, there were at least two distinct sets of offences contained in the charge. But his Honour went on to say[34]:

“I do not suggest that the rule against duplicity that is applicable in criminal cases applies necessarily and to its full extent in disciplinary proceedings of voluntary associations. But as the rule is one of “elementary fairness”, the principles that have been developed in criminal law are useful guidelines in determining the nature of the prejudice that may flow from duplicitous charges in such proceedings and the consequences that should ensue.”

His Honour adopted with approval the comments of the House of Lords in Gee to the effect that a technically duplicitous charge (such as the one before him) is permissible, provided that the committee hearing it makes it clear, in good time, which particulars have been proved and which ones have not been proved. If that occurs, said his Honour, the potential unfairness of a duplicitous charge is avoided because the person is aware of precisely what has been found proved and is not prejudiced in his or her further conduct of the case. In the case before him, however, Ipp, J.A.[35] held that the committee had found the appellant guilty of misconduct without stating whether that conclusion was based on a finding of dishonesty or on a finding of discreditable conduct. Thus, there was unacceptable uncertainty as to the basis on which the appellant was found guilty of misconduct thereby justifying curial intervention.

[32](2001) 52 N.S.W.L.R. 242.

[33]At 249.

[34]At 249.

[35]At 250-252.

Collier v. Director of Proceedings[36] provides a more recent endorsement of the principle that a charge of misconduct can be supported by multiple particulars, even where individual particulars were, in and of themselves, sufficient to constitute misconduct. The appellant midwife had been found guilty of professional misconduct by the Nursing Council in relation to her handling of a woman’s pregnancy and subsequent childbirth. The notice of charge had listed twelve particulars of professional misconduct, saying that “Particulars 1 to 12 hereof and your conduct herein amounts either separately or cumulatively to professional misconduct”. The Council found that the midwife’s guilt on any one of several particulars constituted professional misconduct. On appeal, McGechan, J. said[37] that there was “nothing objectionable in charge [sic] particulars which allege more than one factual circumstance, provided the particular is clear enough to allow the person charged to prepare a defence, and provided it can be known from the eventual decision precisely which of a number of circumstances was or were the basis of any finding.” His Honour noted[38] that “the basis on which the Council finds guilt would be evident through its established process of making factual findings before findings as to misconduct. The decision would be transparent.”
[36][2001] N.Z.A.R. 91.
[37]At [9].
[38]At [11].

The matter was put succinctly and, I think, correctly by Stephen Martin of counsel in his article “Duplicity in Disciplinary Charges”[39], in which he said[40]:

“An objection that a charge is duplicitous will fail before disciplinary bodies and before courts of review on most occasions. This is so because the rule is not absolute, but rather part of the flexible notion of procedural fairness. If it is clear that a respondent was called upon to answer several charges, clear findings of fact were made, and no case submissions were entertained, an infringement of the rule will very infrequently, if ever prejudice the respondent. Disciplinary bodies can adopt procedures which will overcome any injustice which duplicity might otherwise have caused.”

[39](1994) 24 Q.L.S.J. 127.

[40]At 133.

It follows, I think, that it is permissible to charge a defendant with misconduct on the basis of an alleged course of conduct even where each instance of impugned conduct may constitute misconduct, provided the defendant can understand the factual and legal bases on which the allegations are made so that the tribunal can determine whether evidence led is admissible and, if misconduct is established, can articulate the basis for the decision. In the present case, I consider that, on its proper construction, Charge 2 alleged misconduct on the basis of a course of conduct notwithstanding the presence of the words “each of the following instances...” in the opening part of Charge 2.[41] In my view, read as a whole, it seems plain enough that Charge 2 alleges but one charge of misconduct followed by particulars or instances of it, rather than alleging fifteen different charges. The impugned instances of conduct were, I think, sufficiently interrelated to constitute a course of conduct. They all concerned the conduct of the legal practitioners, between late August 1998 and early 1999, when they acted as solicitors for Zhai in respect of his 457 visa application which involved the acquisition of the Paragon Café. In the circumstances, it seems to me, that the various instances of conduct alleged in paragraphs (a) to (o) were but particulars of the one offence of misconduct charged by Charge 2. That each of those acts might also have amounted to misconduct is not determinative of whether, on a proper construction of Charge 2, it alleged but one charge which was particularised in the form of the above paragraphs. But even if I am wrong in that conclusion, there is no doubt that the proceeding before the Tribunal was conducted by both parties on the basis that there was only one charge of misconduct alleged by Charge 2 and that it was based on a course of conduct constituted by the conduct alleged in paragraphs (a)-(o). It will be recalled that the appellant’s counsel before the Tribunal abandoned any claim that it was not clear how the charge was being put against the appellant. Moreover, the Tribunal ameliorated any potential unfairness by making clear which of the factual particulars and which of the instances of impugned conduct had been made out. It is on the basis of these findings that the Tribunal concluded that the applicant was guilty of Charge 2. Thus, unlike the position in Mitchell, the Tribunal’s findings in this case made it plain the basis on which it found misconduct so that there was no unacceptable uncertainty in that regard.
[41]See para.[6] above.

Consequently, I consider that there was no relevant unfairness to the appellant in the way in which Charge 2 was framed or as it was pressed before the Tribunal.

The appellant was, of course, not only entitled to have each instance of misconduct specifically identified, as was done in the context of Charge 2, but also entitled to be told which of the factual particulars (in paragraphs 1– 76) were said to be the basis of each instance of alleged misconduct. Thus, it would have been more appropriate if, in the charge, each instance of alleged misconduct identified in paragraphs (a)-(o) was specifically tied to the relevant factual particular or particulars that are set out in paragraphs 1–76 rather than merely alleging, as was done here, that because of “the matters contained in paragraphs 1–76”, the appellant was guilty of misconduct. I note for completeness, that on page 4 of the Charge document the heading attributed to the factual particulars in paragraphs 1–76 is: “Particulars of Charge”. In my view that is plainly a misdescription of the contents of paragraphs 1 – 76 which, as I have said, set out the allegations of fact on which the respondent relied to establish the misconduct alleged by Charge 2. Be that as it may, I consider that nothing turns on these deficiencies in this case given that, as I have noted, the appellant’s counsel before the Tribunal saw no difficulty in understanding what alleged facts related to any particular item of impugned conduct.

I now come back to look briefly at Mr. Brett’s five items of unfairness[42] that he said arose by reason of the form of Charge 2 and the way in which the Tribunal analysed the various alleged instances of misconduct. Four of the five particulars of unfairness to which counsel pointed deal with the form of Charge 2. If there were merit in such a complaint it could have been raised by the appellant with the Tribunal before the evidence was heard and certainly before the matter was determined by it, so that, to the extent that the criticism had substance, it could have been dealt with at the Tribunal level. No such complaint, however, was made and to the extent that the appellant’s counsel did raise a claim of unfairness as to the proceeding, it was essentially confined to the lack of sufficient particulars and, importantly, even that was abandoned. In my view, it is now too late for these matters to be ventilated on appeal with a view to having the findings on Charge 2 declared invalid.
[42]See para.[38] above.

In any event, I do not accept that the appellant was subjected to unfairness in the five ways put by counsel. As to the first alleged unfairness, as I later explain more fully,` the various instances of misconduct were not “combined” in the charge but represented a course of conduct, in the sense to which I have referred, with each such instance being identified in the fifteen paragraphs which effectively particularised the misconduct charged by Charge 2. As to the second complaint, it is true that the Tribunal dealt with a number of the sub-paragraphs of Charge 2 in groups, but that was done for convenience and accorded with commonsense since the alleged acts, or failures to act, in these paragraphs had a common factual thread. For example, paragraphs (a)-(e) of Charge 2 were properly looked at together, given that they concerned the failure to supervise Huang properly. The third complaint is also without merit, since, at the relevant time, each of the appellant and Geary personified and had authority to bind Law Partners and the other partner while acting in the course of the practice. The fourth complaint, which alleges repetition in a number of paragraphs, also lacks substance, because, fairly read, each alleges a discrete instance of misconduct. In any event, to the extent that it could be said that there was some repetition in those allegations, no unfairness followed to the appellant because any repetition did not give rise to an increase in the penalties that were imposed. The Tribunal said that the penalties were imposed on the basis that misconduct was established in reliance on a course of conduct. As to the fifth complaint, it must have been apparent to the appellant that the claim in Charge 2 that all of paragraphs 1-76 of the factual particulars constituted the basis of each of the various instances of misconduct alleged, was plainly wrong. In any event, nothing turns on this deficiency given that, as I have already noted, the appellant’s counsel before the Tribunal saw no difficulty in understanding the basis on which the respondent sought to make out her case.

In the circumstances, I would reject ground 7.

Grounds 7A and 7B – misconduct alleged in Charge 2.

The appellant’s counsel next addressed a number of arguments under cover of grounds 7A and 7B. It was first said that, although Charge 2 alleged a single charge of misconduct, it did so on the basis that the conduct that is set out in each of the fifteen paragraphs amounted to misconduct. Consequently, it was claimed, the Tribunal was required to determine if the matters alleged in each of those paragraphs constituted misconduct. The appellant then contended that there was a “high degree” of duplication in the conduct alleged in paragraphs (a)-(e) of Charge 2 and that the allegations in those paragraphs were no more than variations of the general complaint that the appellant (and the other legal practitioners) had improperly allowed Huang to deal with Zhai unsupervised. A like complaint of repetition was directed to the conduct alleged in paragraphs (f), (h), (i) and (j) (“the four paragraphs”), although there the impugned conduct is alleged in relation to Chang as well as Zhai.[43] It was said in relation to them that the matters alleged amounted to no more than variants of the general allegation made in paragraph (j), namely, that the legal practitioners had intermingled their affairs with those of their clients, with the other paragraphs being no more than specifics of that general allegation. In the circumstances, it was said, the Tribunal erred in finding that the acts in each of these paragraphs constituted separate incidents of misconduct.
[43]I note, however, that the reference to Chang was, strictly, irrelevant to the particularisation of Charge 2 because, as its opening words make apparent, the charge is concerned only with the misconduct of the legal practitioners as against Zhai.

In my view, however, there is no merit to these complaints. As has been previously noted[44], Charge 2, on its proper construction, alleges misconduct on the basis of a course of conduct. But even if it could be said that Charge 2 contains several charges of misconduct, it is quite apparent that the disciplinary hearing was conducted, as I have said, on the basis that it alleged a single charge of misconduct and, as I have also said, the appellant’s counsel before the Tribunal eventually accepted that position. As I have said, duplication might vitiate the Tribunal’s decision if it resulted in the appellant being penalised twice for the same conduct, but this did not happen here. Rather, as I have already noted, the Tribunal imposed a single penalty on the basis that the misconduct alleged “arose from a course of conduct”. Consequently, even assuming that there was some degree of duplication between the relevant paragraphs, this would not vitiate the finding of misconduct.
[44]At para. [46] above.

It was further argued for the appellant that the Tribunal failed to consider separately whether each act alleged in paragraphs (a) to (e) amounted to misconduct. Rather, it was said, the Tribunal grouped the allegations made in these paragraphs and considered them together for the purpose of determining if the alleged misconduct has been made out and it did so, Mr. Brett claimed, without differentiating between the legal practitioners. It is true that, as I have noted,[45] in analysing the conduct alleged in the impugned paragraphs, the Tribunal did so by considering them together in the sense that it looked at the issues raised by them, in the first instance, in isolation from the remaining paragraphs of Charge 2. But, as I have said, it is plain from its reasoning that it adopted this procedure for convenience only, given that the five paragraphs, for example, had a common feature, namely, the alleged failure by the principals to supervise Huang. Having done that, however, the Tribunal considered separately whether the matters alleged in each of those paragraphs have been made out. In the circumstances, I am not persuaded that such an approach by the Tribunal amounted to relevant error.
[45]See para.[51] above.

The appellant also submitted that the alleged wrongful acts which underlie the claims in the four paragraphs, namely, that the legal practitioners intermingled their affairs with those of their clients, cannot, by itself, constitute misconduct and that, therefore, the Tribunal was only able to reach the conclusion that the allegations constituted misconduct by considering impermissibly matters that were not the subject of allegations in the four paragraphs. In my view, however, this argument demonstrates a misreading of the allegations in the four paragraphs and should be rejected. Properly construed, their thrust is that, notwithstanding such intermingling, the appellant failed to take any steps to ensure that the clients obtained independent legal advice in relation to the transactions in which the intermeddling took place. The appellant contested those allegations by contending that he satisfied those obligations, both verbally and in writing, but this was clearly rejected by the Tribunal. Thus, I consider that there is no merit in this submission.

It was further contended for the appellant that the allegations in the four paragraphs were the same allegations that were made in Charge 1 and that, therefore, the appellant has been charged twice with the one offence. In my view, however, there is no substance in this contention. Whilst it may be said that there is some partial overlap as between the allegations in some of the four paragraphs and Charge 1, as a matter of substance, they deal with separate and different wrongful acts albeit, in one sense, acts that are related to one broad act of improper conduct, namely, intermingling of their affairs with those of the clients. The misconduct in Charge 1 is said to be constituted by the legal practitioners requiring, or allowing, Zhai to execute a number of documents notwithstanding that those documents recognised the likelihood of conflict of interest. The four paragraphs, on the other hand, are concerned, with more specific conduct by the legal practitioners, namely:

-becoming parties to the business retainer agreement to which Zhai and Chang were also parties
-failing to identify the potential for conflict between Zhai and Chang with respect to the Shareholders Agreement
-failing to ascertain whether Zhai and Chang had in fact obtained independent legal advice
-intermingling not only their affairs with those of the two clients, but also the financial affairs of LPI and Huang.

In any event, as I have said, to the extent that there was any overlap between some of the impugned conduct alleged in the paragraphs in question, the appellant was not prejudiced by this in the sense that he was not penalised for such duplication in the context of the imposition of penalties.

The appellant then claimed that the Tribunal erred in finding the appellant guilty of misconduct as alleged in paragraphs (k) and (l) notwithstanding that it found that the appellant was not personally implicated in the writing and sending of the letter from Law Partners to Zhai of 5 November 1998 to which reference has been made.[46] The appellant’s complaint was that the Tribunal found that it was Geary who sent the letter, yet it went on to find that the appellant was guilty of misconduct in relation to this communication to Zhai. A like position applied, he said, in relation to the allegation in paragraph (n) which claims that Zhai was advised by Geary that the cooling off period did not apply to the contract relating to the Paragon Café. But, as I have noted, the Tribunal found that the appellant adopted Geary’s acts which were, after all, done in the course of the partnership practice. In the circumstances, he was also relevantly responsible for those acts. It follows that, in my view, this complaint is also without foundation.
[46]See para.[16] above.

The appellant further contended that the allegations in paragraph (g) – failure to assess on behalf of Zhai properly or at all the business of the Paragon Café – amounted to an allegation of “inefficiency as a business advisor” and not one of misconduct in a professional capacity. But as the appellant acknowledged, the Tribunal was satisfied that the legal practitioners, including the appellant, failed to make proper assessment of the Paragon Café business. That was an obligation which they undertook to Zhai in their capacity as solicitors; it was not suggested by them to Zhai that they were acting for him in any other capacity. They chose to offer advice to Zhai that, on one view, could be characterised as business advice, but that it was provided as part of their service to him as solicitors and it was incumbent on them to perform that obligation in a proper manner. Consequently, there is also no basis for this complaint.

It was also argued for the appellant that the conduct impugned in paragraph (o) of Charge 2, which related to the demand by the legal practitioners in the letters of 22 January 1999 to Zhai and Chang to which I have referred[47] that they be released from all liability as a condition of their continuing to carry out their retainer, does not constitute misconduct because it amounted to no more than a breach of the Act by the legal practitioners. This was a reference to the alleged breach of s.442(2) of the Act. But the allegation in paragraph (o) is not based on the appellant’s alleged breach of that provision which, in any event, does not (except possibly to a small extent) proscribe the impugned conduct since it is concerned only with services to be provided. The conduct alleged in that paragraph was a particular of the course of conduct on which the respondent relied to establish misconduct and it was open to the Tribunal to find, as it did, that such conduct amounted to common law misconduct by, inter alia, the appellant. Thus, I think, there is no substance in this complaint.
[47]See para.[25] above.

The appellant also contended under these grounds that the claimed misconduct in paragraph (o) of Charge 2 and that which is alleged in Charge 6 amount to two charges in respect of the one instance of misconduct. Whilst it is true that there is some overlap in the factual context underlying each of the two charges, on their proper analysis it is apparent that they deal with two separate instances of misconduct as Gillard, A.J.A. pointed out in argument. As his Honour said, Charge 6 is concerned with the attempt by the appellant to obtain a release from Zhai, whereas paragraph (o) of Charge 2 is directed at the appellant’s exertion of pressure on Zhai to provide the release sought (as well as agreement to secrecy). Hence, there is no impermissible duplication in the relevant charges as was claimed on the appellant’s behalf. In any event, I consider that no prejudice flowed to the appellant from any such duplication, which was partial only, in the sense that there was no duplication in penalty arising from it.

It follows, therefore, that in my view grounds 7A and 7B have not been made out.

Ground 30 – Charge 6

Charge 6 alleged that the conduct of the legal practitioners constituted by their attempt to have Zhai release Law Partners from all liability in relation to the Paragon Café transaction contrary to the provisions of s.442(2) of the Act, amounted to misconduct. The appellant contended that this charge was misconceived because the alleged attempt to circumvent this provision did not amount to misconduct as defined in paragraph (a) of the definition of that term in s.137 of the Act. More specifically, counsel said that misconduct was relevantly defined in the section as including “wilful or reckless contravention of this Act ...”. The attempt by the legal practitioners to contravene s.442(2) of the Act, said Mr. Brett, does not fall within this definition and, therefore, Charge 6 had to fail. But as Mr. Lacava pointed out, the appellant wrongly assumed that Charge 6 was based on the statutory definition of misconduct. In fact, the charge was concerned with the common law definition of that term and it was well open to the Tribunal to find that an attempt by the solicitors to circumvent the prohibitions of the Act in the manner alleged constituted such misconduct. It follows that I consider that this ground must also be rejected.

Grounds 36 and 37 - penalties

It was argued under these grounds that, in imposing the penalties on the appellant (and the other legal practitioners), the Tribunal did so by reference to impermissible criteria[48]. More particularly, it was said that the Tribunal imposed the penalties on the basis that the appellant’s misconduct involved elements of dishonesty, greed and self-interest and displayed a deliberate disregard by him of the interests of his clients. Yet, said counsel, no specific allegations to that effect were made in the charges (with a possible exception of alleged self-interest) and the Tribunal did not identify on what basis it reached these conclusions. The appellant also complained that the Tribunal concluded that the appellant’s purpose in sending the letter of 22 January 1999 was an attempt by him to conceal his wrongdoing and showed that he had a good understanding of the wrongs done by the legal firm to Zhai and Chang, yet no allegation to that effect was made in the charges or in the factual particulars. In the circumstances, it was claimed, the Tribunal acted without jurisdiction and denied the appellant natural justice by making findings against him without giving him an opportunity to be heard in respect of them.
[48]Hannebery v. Legal Ombudsman [1998] VSCA 142 at [21] per Tadgell, with whom Phillips and Chernov, JJ.A. agreed.

In any event, said Mr. Brett, the Tribunal’s conclusion that the appellant was greedy was made largely because the appellant, through the investment company, was to acquire an interest in the Paragon Café, but this entitlement, argued counsel, should be viewed in context. Mr. Brett pointed out that the 25 per cent interest in the business that was to go to LPI was effectively a payment to the solicitors for the otherwise unremunerated work they would be required to carry out for their clients in assisting them to find the business and then managing it for them until such time as it became profitable. This could take considerable time and money said counsel, and, in any event, there was no guarantee that it would ever return a profit so that the solicitors might never be paid for their work on behalf of their clients.

In my view, however, Mr. Lacava for the respondent was correct in his submission that the Tribunal’s impugned conclusions had nothing to do with it acting without jurisdiction or failing to observe the rules of natural justice. The Tribunal did no more, as counsel submitted, than characterise the appellant’s misconduct that it found established by the evidence. It rejected the appellant’s explanations of the transactions in question and found, as I will explain in more detail later, that he produced documents containing falsehoods in order to try and shift the blame for the potential loss that the clients might suffer by reason of entering into the Paragon Café transaction on the advice of Law Partners, from the firm (and thus, himself) to the clients. To that extent there was dishonesty on the part of the appellant. Moreover, that conduct, and his other acts which were found by the Tribunal amount to misconduct, were pursued for the purpose of profit so that, overall, it was well open to the Tribunal to characterise the appellant’s conduct as involving elements of dishonesty, greed and self-interest.

In my view, the errors contended for under these grounds have not been made out.

Grounds 38 and 39 – indemnity costs

The Tribunal delivered its findings on the factual issues and its decision on whether any and, if so, what charges had been made out, on 8 May 2002. It then adjourned the questions of penalty and costs for approximately 14 days to enable the parties to consider the findings and make submissions to it on those matters. During this period the parties filed with the Tribunal short submissions on these questions and, in due course, spoke to them. The Tribunal then handed down its considered decision on these issues on 25 June 2002. Relevantly, it ordered that the three practitioners, jointly and severally,[49] pay the respondent’s costs of the hearing on an indemnity basis, the amount of which was fixed by the Tribunal after it made a reduction in the entitlement by 10 per cent to reflect the costs associated with hearing and considering Charge 3, which the Tribunal found was not proved. The appellant attacked the costs orders under cover of grounds 38 and 39 on two principal grounds. First, it was said, the Tribunal erred in determining that the Legal Ombudsman’s costs be paid on an indemnity basis because the hearing involved issues of importance and complexity. Mr. Brett submitted that complexity of a matter cannot justify an order for indemnity costs. It was said that the solicitors were entitled to defend themselves against the very serious charges of misconduct and should not suffer a costs penalty in doing so merely because the Legal Ombudsman succeeded against them. It was also said that, in any event, the issues raised at the hearing were of a kind normally dealt with by the Tribunal and could not be properly characterised as “important and complex”. Secondly, it was said, the order that the legal practitioners be jointly and severally liable for the legal costs of the respondent was arbitrary and involved a failure to consider the appellant’s involvement in the conduct charged and whether, at least, some of the costs should be borne severally by the other practitioners. It was claimed that the Tribunal should have made separate costs orders in respect of each practitioner.
[49]Notwithstanding that these words are not in the order, that is its effect. That this is what the Tribunal intended is also made clear from the Tribunal’s reasons where those words appear.

Turning to Mr. Brett’s first argument, it may be accepted that, ordinarily, complexity of the matter before a court or a tribunal does not justify an order that the losing party pay the costs of the successful party on an indemnity basis. The authorities which deal with this issue recognise that, although ordinarily the court will order an unsuccessful party to pay the costs of the successful party on a party and party basis, it may order that such costs be paid on an indemnity basis where it is satisfied that there are “special” or “unusual” aspects of the case which bring it out of the ordinary.[50] Such special or unusual circumstances may be constituted by the losing party misconducting itself in relation to the proceeding[51] and thereby, for example, prolonging its duration.
[50]Spencer v. Dowling [1997] 2 V.R. 127 at 147 per Winneke, P., at 163-4 per Callaway, J.A.; Bass Coast Shire Council v. King [1997] 2 V.R. 5 at 29 per Winneke, P.; MGICA (1992) Ltd. v. Kenny & Good Pty. Ltd. (1996) 70 F.C.R. 236 at 240; Colgate-Palmolive Company v. Cussons Pty. Ltd. (1993) 46 F.C.R. 225 at 232-233; Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Ltd. (1988) 81 A.L.R. 397 at 400-401 per Woodward, J. See also P.C.R.Z. Investments Pty. Ltd v. National Golf Holdings Ltd. [2002] VSCA 24 at [34] per Chernov, J.A., with whom Callaway and Buchanan, JJ.A. agreed.
[51]See the authorities referred to in the preceding footnote and also Australian Guarantee Corporation Ltd. v. De Jager; De Jager v. Registrar of Titles [1984] V.R. 483 at 500-502 per Tadgell, J.; Shepherd v. National Mutual Life Association of Australasia Ltd., 15 November 1994, unreported, Supreme Court of Victoria; J-Corporation Pty. Ltd. v. Australian Builders Labourers Federated Union of Workers (No.2) (1993) 46 IR 301 at 303 per French, J.; Packer v. Meagher [1984] 3 N.S.W.L.R. 486 and Wentworth v. Rogers (No.5) (1986) 6 N.S.W.L.R. 534 at 542 per Kirby, P.

It is clear enough, however, that the Tribunal had the power under s.162(1) and (4) of the Act to order that costs be paid on an indemnity basis and this was accepted by Mr. Brett. In order to determine whether the Tribunal made such an order on a false or impermissible premise, as was contended for by the appellant, it is necessary to consider the Tribunal’s stated reasons for the impugned order, namely, that “the hearing was made more protracted than would otherwise have been the case, and the issues were made more complex, by the practitioners’ attempts, both before and during the hearing, to shift responsibility for what occurred and for the losses suffered by their clients from themselves on to the clients and by their attempts to conceal their own wrongdoing”. An important aspect of the practitioners’ defence was, as I have noted, that it was the clients who entered into the contract to purchase the Paragon Café and only later came along to seek legal advice from Law Partners in relation to the transaction. In support of this case, which was ultimately rejected by the Tribunal, they pointed to what seemed to be contemporaneous correspondence and other documents that appeared to support their claim to which I have referred earlier.[52] It was only after protracted evidence and cross-examination on this issue that it was established to the Tribunal’s satisfaction that such a claim was false in a number of very important respects. Thus, as I have noted, in the letter of 5 November 1998 from Law Partners, written by Geary to Zhai, passages appear which are clearly aimed at conveying the following false impressions. First, that Zhai had come to Law Partners with late instructions, that is to say, after the contract in question had been negotiated and entered into by him. Secondly, because of this the firm might have difficulty in extricating him from the problems and potential losses arising from his entry into the contract and, although it would do its best for Zhai in that regard, it was not prepared to be held responsible for any losses suffered by him from the transaction. The Tribunal, however, found, as I have said, that the claims in the letter as to “late instructions” and the consequential claims, were false, and it is apparent that, in the circumstances, what was sought to be “set up” by that letter was a false defence to a possible claim by Zhai against Law Partners in negligence. Although, as I have noted, this letter was written by Geary, the appellant adopted it and pressed this falsehood as is evident from the documents that were placed before the Tribunal. Hence, the artificial minutes of the supposed meeting of 20 November 1998 to which I have referred. The so-called minutes show, for instance, that Huang told Zhai and Chang to seek independent legal advice, but the Tribunal found that this, too, was false. Mr. Lacava submitted, with some justification, I think, that these minutes are an example of the appellant creating, or taking part in the creation of, a false self-serving document for the purpose of exculpating Law Partners. And as Li and Chang said, they attended Law Partners on 20 November 1998, essentially to sign the Shareholders Agreement, but that there was no formal meeting between the parties as was contended for by the appellant.
[52]See paras.[16], [18], [22] and [25] above.

I note for completeness that, as is made clear from the appellant’s memorandum of 23 November 1998 to Huang, copies of which went to Wu and Geary and to which I have referred earlier,[53] he must have realised by that date that Law Partners was in danger of being sued by Zhai and Chang for negligence in relation to the Paragon Café transaction. He concluded this memorandum, as I have noted, with the following (highlighted) words: “THIS PROJECT IS A POTENTIAL PROBLEM AND MUST BE GIVEN THE HIGHEST PRIORITY.” Yet another set of minutes that were self-serving in the manner referred to were those of the Management Meeting of 19 January 1999 at which the appellant was said to have noted “that the organisation’s new business has been done all wrong from the very beginning”.
[53]See para.[20] above.

Further, by letter to Zhai and Chang dated 22 January 1999, to which I have also referred[54], the appellant continued to lay the false trail by speaking of the fears that he and “other Law Partners staff members have expressed to you on several occasions both orally and in writing about the state of the business proved to be completely correct. In summary, the business is in a parlous state.” It is in that letter that he called for a meeting to be held on 2 February 1999 and noted his concerns about the potential liability of Law Partners. The Tribunal found that, although Li may have received the letter, there was no evidence that the proposed meeting referred to in that letter was ever held. The respondent also highlighted the unusual (yet self-serving) form of the so-called agenda for the proposed meeting which showed that Law Partners were not implicated in the purchase by Zhai and Chang of the Paragon Café business. The agenda seems to be a combination of topics to be covered at the proposed meeting and minutes of that meeting. Thus, it purports to record that the appellant recommended that “compensation be sought from [the] out-going vendors for these misrepresentations and also for the cost of cleaning and repairs to the faulty equipment.” As Mr. Lacava submitted, given the Tribunal’s findings, there could have been nothing further from the truth than the suggestion that action was to be taken by Law Partners for the clients against the vendors of the Paragon Café business.
[54]See para.[25] above.

The appellant built on these self-serving false statements when he wrote on 3 February 1999 to the clients’ new solicitor, Mr. Chin Tan, claiming that the clients had made their own arrangements to purchase the Paragon Café business and that a contrary claim by them would be vigorously contested by Law Partners by reference, inter alia, to “several pieces of correspondence on my file in which we clearly advised them of their folly”, that correspondence, no doubt, being the false self-serving documents to which I have referred. The Tribunal considered that this letter also contained relevant falsities.

Furthermore, in the appellant’s first written response, dated 16 March 1999, to the respondent in relation to the clients’ complaints he attached his proof of proposed evidence in which he claimed that he was unaware that the clients were seeking to purchase “other businesses and first became aware of this on 4 November 1998 when the various parties attended in this office to instruct my partner, Brendan Geary, to handle the purchase file.” It seems that the appellant also provided the respondent with, inter alia, the self-serving documents to which I have referred as well as proof of proposed evidence of Huang and Wu which he said he believed to be correct. But paragraphs 8 and 9 of that proof states, falsely, as the Tribunal found that neither Huang nor Wu were involved in the search by Zhai for new businesses or in Zhai’s decision to purchase the Paragon Café.

Not surprisingly, these and other matters were relevant to the credit of the appellant and the other Law Partner witnesses. The evidence before the Tribunal was tested over a considerable period of time and, as I have said, the Tribunal disbelieved them on these very critical issues and it did so giving clear reasons for coming to that conclusion. Thus, as Mr. Lacava submitted, these matters were of relevance to the question whether indemnity costs should have been ordered. It is one thing, as counsel submitted, correctly, I think, for a legal practitioner to defend himself or herself fearlessly against charges of misconduct. In the ordinary course such conduct would not warrant an indemnity costs order where the practitioner fails, notwithstanding that the hearing was lengthy and involved issues of some complexity. But here, as counsel submitted, the legal practitioners embarked upon a defence that was based on previously prepared false documents and sought to shift the blame for the disastrous financial transaction, for which they were responsible, on to the innocent lay clients in complete disregard of their ethical and other obligations to them, as the Tribunal found.

In my view, it is apparent that the hearing of the matter before the Tribunal was significantly protracted because of the need to investigate the legal practitioners’ false claims, to which I have referred, which involved attempts by them to shift responsibility from what occurred and the loss suffered by their clients from themselves to the clients and by their attempts to conceal their own wrongdoing. Consequently, it was well open to the Tribunal to regard these matters as giving rise to “special” or “unusual” circumstances, warranting a departure from the ordinary rule as to costs and awarding them against the appellant on an indemnity basis. I consider that no relevant error has been shown to have been made by the Tribunal on this issue.

I also consider that the Tribunal did not err in ordering that the legal practitioners be liable jointly and severally for the Legal Ombudsman’s costs. The appellant and Geary conducted a legal practice in partnership, albeit through the corporate vehicle of Law Partners. More importantly, perhaps, it is plain from the correspondence to which I have referred and from other correspondence between them and the Legal Ombudsman in relation to the allegations made against them by the clients that the appellant and Geary acted together in those matters in the sense that each was aware of the relevant transactions and of the “false trail” that was laid by each of them for their joint benefit. In his helpful memorandum in support of his

submission that the Tribunal should have ordered that the costs of the respondent be borne severally by the three defendants, Mr. Brett referred to a number of authorities where courts considered issues similar to those now raised by counsel and recognised that, in an appropriate case, individual defendants may be ordered to bear some or all of the costs of the successful applicant or plaintiff. These cases and those to which I have referred earlier[55], recognised that a court has a wide discretion in deciding how costs are to be borne. The Tribunal here had a like, wide, discretion on that matter. Since the appellant is only entitled to appeal against its decision on the question of law, he must demonstrate specific error on the part of the Tribunal in relation to its impugned decision on costs. The appellant’s claim that the Tribunal error lay in the fact that its costs order was arbitrary and that it failed to consider the appellant’s involvement in the impugned conduct separately from that of the other legal practitioners, is wholly without foundation. The Tribunal’s thorough reasons, read fairly, make it quite apparent that it gave consideration to the parties’ respective roles and responsibility for misconduct and, not surprisingly, concluded, as it was entitled to do, that there was such commonality of interest and responsibility amongst the three defendants in relation to the transactions in question and in the conduct of the hearing before it (in which they were represented by the same counsel) that they should bear the costs jointly and severally. Thus, I would also reject the appellant’s second basis on which he attacks the Tribunal’s costs order.

[55]See footnotes [50] and [51].

For these reasons, I consider that grounds 38 and 39 should fail. It follows that I would dismiss the appeal.

GILLARD, A.J.A.:

I have read in draft the reasons for judgment of Chernov, J.A. I agree with his Honour’s reasons and in my opinion the appeal should be dismissed.

---

[2004] VSCA 247

22 December 2004