ACT CIVIL & ADMINISTRATIVE TRIBUNAL

COUNCIL OF THE LAW SOCIETY OF THE ACT v LEGAL

PRACTITIONER RN (Occupational Discipline) [2016] ACAT 122

OR 37/2015

Catchwords: OCCUPATIONAL DISCIPLINE – Legal profession – Trust

monies – Online conveyancing firm – Whether payment made at

the commencement of the proposed solicitor/client agreement for

part of costs is trust money – Whether system that pays the sum

directly to an office account or to a trust account and then to

office before written direction is professional misconduct or

unsatisfactory professional conduct by the principal of the firm

OCCUPATIONAL DISCIPLINE – Legal profession – Delay

in arranging return of signed transfer for stamping in acting on

sale of land-whether within tolerable range of human error –

Whether principal guilty of unsatisfactory professional conduct

for such error of employed solicitor – Whether employed solicitor

had taken timely steps to arrange for mortgagee to attend on

settlement –Whether failure to do so with consequent loss of sale

was unsatisfactory – Whether if so principal also guilty of

unsatisfactory professional conduct

OCCUPATIONAL DISCIPLINE – Legal profession – Duty of

frankness and candour – Whether solicitor breached obligation in

responses to the applicant

OCCUPATIONAL DISCIPLINE – Legal profession –

Contract – Cash purchase of property – Failure to arrange

registration of release of mortgage –Whether retainer included

agreement to arrange registration – Agreement to do work

necessary to change ownership – Registration necessary to

change ownership – Failure to tell clients until enquiry – Whether

failure to complete retainer without requiring payment of a

further fee is unsatisfactory professional conduct – Risk to clients

– Error not within tolerable range of human error – Error

constitutes unsatisfactory professional conduct

OCCUPATIONAL DISCIPLINE – Legal profession- Failure

to act competently and diligently in respect of advice re stamp

duty insurance and first home buyers allowance – Failing to

advise concerning potentially adverse contract conditions prior to

exchange or cooling off period–Failing to get a search of the

body corporate records

2

OCCUPATIONAL DISCIPLINE – Legal profession –

Whether alteration of licence agreement without instructions –

Whether respondent at fault where employee allows licence

agreement to be amended without instructions

Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 82

Legal Profession Act 2006 ss 213, 222, 223, 229, 386, 387, 389

419, 423A

Subordinate

Legislation: Legal Profession Regulation 2007 s 62

Legal Profession (Solicitors) Rules 2007 rr 1.1, 1.2, 39(1)

Cases cited: Adamson v Queensland Law Society Inc [1990] 1 Qd R 498

Allinson v General Council of Medical Education and

Registration [1894] 1QB 750

Briginshaw v Briginshaw (1938) 60 CLR 336

Council of the Law Society of the ACT v Legal Practitioner RH

[2015] ACAT 40

Council of the Law Society of the ACT v Legal Practitioner RH

(No. 2) [2015] ACAT 68

Council of the Law Society of the ACT v Legal Practitioner P4

[2015] ACAT 35

Legal Practitioner RH v Council of the Law Society of the ACT

[2016] ACAT 94

Legal Services Commissioner v McGregor [2012] VCAT 1742

Queensland Law Society Inc v Whitman [2003] QCA 438

List of

Texts/Papers cited: Butterworth, Riley's Solicitors Manual

Tribunal: Senior Member B Meagher SC

Member W Pearcy

Date of Orders: 8 November 2016

Date of Reasons for Decision: 8 November 2016

ACT CIVIL & ADMINISTRATIVE TRIBUNAL OR 37/2015

BETWEEN:

COUNCIL OF THE LAW SOCIETY OF THE ACT

Applicant

AND:

LEGAL PRACTITIONER RN

Respondent

TRIBUNAL: Senior Member B Meagher SC

Member W Pearcy

DATE: 8 November 2016

ORDER

The Tribunal finds that:

1 The respondent is guilty of unsatisfactory professional conduct by failing to

comply with sections 222(1) and 223(1) of the Legal Profession Act 2006 in

respect of trust monies as specified in Grounds 1, 2, 11a and 13 (second) of the

amended application.

2 The respondent is guilty of unsatisfactory professional conduct in charging a

client extra fees for registering documents on completion of a purchase and in

failing to attend to such registration promptly in breach of her obligation to act

fairly and with competence and diligence as specified in Grounds 7 and 9b of the

amended application.

3 The respondent is guilty of unsatisfactory professional conduct in failing to

conduct a purchase of a strata title unit in NSW with diligence and competence

as specified in Ground 10 of the amended application.

4 Other than Grounds 3, 4 and 9a which were withdrawn, the remaining grounds of

the amended application are not made out.

The Tribunal orders that:

1 The application be adjourned to a date to be advised for directions as to the filing

and service of any further evidence and submissions concerning penalty and

costs and for a date to be fixed for further hearing in respect of penalty and costs.

………………………………..

Senior Member B Meagher SC

Delivered for and on behalf of the Tribunal

2

3

REASONS FOR DECISION

1. The applicant filed an application for disciplinary action dated 4 September 2015

against the respondent pursuant to section 419 of the Legal Profession Act 2006

(the LPA). A response was filed on 22 December 2015. An amended application

dated 8 August 2016 was subsequently filed.

2. A hearing was held over four days from 22 to 25 August 2016 and at the end of

the hearing the parties were invited to file written submissions.

3. Directions had been given for the filing of affidavits and, apart from documents

contained in tender bundles, the evidence before the tribunal consisted of the

affidavit evidence and oral evidence given on cross examination by some

deponents.

4. The respondent conducts an online conveyancing service. The applicant received

five complaints about this service and the application relates to those five

complaints. Whilst there are some factual disputes, the main issues concern

whether facts that are not disputed constitute professional misconduct, or

unsatisfactory professional conduct.

5. The amended application is ordered by reference to the five complaints. There

are a number of paragraphs setting out mostly factual matters and 17 grounds

alleged to warrant findings of professional misconduct or unsatisfactory

professional conduct.

Preliminary matters

6. It is proposed in these reasons to use the initials of the complainants and other

persons referred to (except the representatives of the parties) in order to protect

their privacy and to minimise identification of the respondent consistent with

section 423A(1) of the LPA. It is also proposed to follow substantially the

structure of the application in deciding the issues arising.

7. Before dealing with each complaint, it is useful to identify the evidence and the

nature of the grounds. There was an introductory submission by the applicant

concerning the credit of the respondent and we will explain our approach to that

submission. Additionally, we address a submission that complaints concerning

the same type of conduct could be dealt with globally. For each complaint we set

4

out the facts that emerge from the application and the evidence that supports

those facts. In doing so, we identify the facts that are in dispute and make

findings about them. Facts that are not disputed have been treated as either

agreed or unchallenged, and we make findings of such facts.

The Evidence

8. The applicant relied on the following affidavits and documents:

(a) The affidavit dated 18 January 2016 of Robert Reis, the Professional

Standards Director of the applicant. He exhibits two large folders of

documents identified as RAR 1. As this folder is referred to throughout the

hearing and this decision it is helpful to explain the contents as Mr Reis has

done in his affidavit. He was not cross examined and there were no

objections to his affidavit. RAR 1 contains the following documents:

(i) The respondent’s file in respect of complainant DK is in volume 1 at

pages 1-120. From other material it is apparent that the respondent

provided this file to the applicant during an investigation. The events

therein took place between May 2011 and 10 November 2011.

(ii) The respondent’s file in respect of complainants N1 and N2 is at

pages 121-282 and concerns events that occurred between 22

December 2010 and 18 January 2012. This was also obtained from

the respondent.

(iii) The respondent’s file concerning complainant AS is at pages 283-

441. These events occurred between May 2011 and September 2011.

This was also obtained from the respondent.

(iv) The respondent’s file in respect of complainant ST is at pages 442-

552 in volume 2. From information learned during the hearing this

was the hard copy of the file given by the respondent’s firm to ST

and in turn given by her to the applicant. These events occurred

between July 2009 and October 2009.

(v) The balance of volume 2 contains correspondence between the

respondent and the Law Society or its lawyers. It is divided

5

according to complaint and by reference to correspondence with

Phelps Reid who currently act for the applicant, having taken over in

January 2014.

(b) Affidavits of complainant CD dated 8 March and 3 August 2016. CD was

not cross examined. She is a former employee of the respondent. The

respondent objected to some parts of the affidavit mainly concerned with

trust account matters. These matters were dealt with by concession on both

sides. CD’s evidence was also tangentially relevant to the complaint of DK

and to the question of adequate supervision by the respondent.

(c) An affidavit of ST dated 19 January 2016. This relates to a complaint by

ST as a client of the respondent. Some parts of her affidavit were objected

to and not admitted. She was cross examined on the phone. There was no

suggestion of her credit being in issue and we accept her evidence as far as

it goes.

(d) An affidavit of DK of 19 January 2016. He is a former client of the

respondent and was not cross examined. His evidence was not

controversial and is accepted.

(e) An affidavit of AS of 16 January 2016. He is also a former client and

complainant. He was not cross examined. Some parts of his affidavit were

rejected or not pressed, because they set out the effect of documents that

spoke for themselves. Again, we accept his evidence.

(f) An affidavit dated 29 July 2016 of Kathryn Riley, a solicitor employed by

the solicitors for the applicant. She was not cross examined and her

evidence is accepted. It attached screen shots of the respondent’s web

pages at various times. It related to the trust account allegations described

below.

(g) Affidavits of Stephen Jones of 14 April 2016 and 3 August 2016. He is an

expert Queensland conveyancing solicitor. He was not cross examined. His

evidence was about the standards expected of lawyers engaged in

Queensland conveyances and relates to the complaints of ST and DK.

(h) Affidavits of Michael James of 15 March 2016 and 1 August 2016. He is

an expert ACT and NSW conveyancing solicitor. He gave evidence about

6

the standards that ought to apply in relation to the matters that are the

subject of the complaints of AS, N1 and N2. He was not cross examined.

(i) An affidavit of N1 dated 22 August 2016. He is a complainant and former

client of the respondent. He attended and was cross examined in person.

We had some reservations about his evidence.

(j) An affidavit of N2 dated 22 August 2016. She also attended and was cross

examined. Again, we had some reservations about her evidence.

(k) A tender bundle which became Exhibit A1. It contained correspondence

between solicitors for the parties; documents obtained on subpoena from

solicitors for the other party in conveyances for N1 and N2, ST, AS and

DK; from the Bank of Queensland (BOQ) in respect of ST; some sample

files and spreadsheets relevant to the trust account allegations and other

miscellaneous documents.

(l) A sample folder, Exhibit A2. This related to the trust account allegations

and was supplemented by a helpful explanation by Mr M Kalyk, junior

counsel for the applicant led by Mr N Beaumont SC. Mr C Erskine SC,

counsel for the respondent, added explanations from his client’s

perspective. As will be seen, the facts necessary to establish these counts

were conceded. We treated the explanations as evidence only to the extent

that they amount to an agreement about the system, or are admissions

against interest. Otherwise they are submissions. As will be seen, this

became academic because of the concessions made.

9. The respondent relied on the following material.

(a) Her affidavits of 12 July 2016; 13 July 2016 and 11 August 2016.

Mr Erskine SC did not read parts of the 12 July affidavit which dealt with

matters the subject of concessions made afterwards. The paragraphs read

were 1 - 41, 16 - 49 (first sentence), 52 - 53, 57 - 64, 65 -76, 77 - 84, 89 -

114. The respondent was cross examined in person.

(b) An affidavit of EC, a solicitor formerly employed by the respondent and

who handled the ST conveyance. He was not cross examined.

7

(c) An affidavit of Stephen Gibson an expert Queensland conveyancing

solicitor whose evidence related to the ST matter.

(d) Tender Bundle Exhibit R1 consisting of two volumes. Volume 2 was not

pressed. The material in volume 1 that was not pressed after objection was

at pages 1 - 5, 8 - 13, 47, 53 - 146 and 150 - 151. The material that

remained included documents from BOQ and a ruling of the NSW Law

Society concerning receipt of fees in advance.

An overview of the grounds

10. The grounds can be grouped into four categories as follows:

(a) Failing to comply with trust account obligations in respect of initial costs

payments of $350 – Grounds 1, 2, 11(a) and 131(the second 13)

2 in the

application.

(b) Attempting to mislead and failing to act with candour in respect of four

complaints – Grounds 6, 8, 13 (the first 13) and 15.

(c) Failing to treat clients fairly and in good faith – Grounds 9, 12 and 14.

(d) Breaching standards of competence and diligence Grounds 5, 7, 10 and 16.

Credit of the respondent

11. In written submissions counsel for the applicant asserted that “From almost the

first answer the Practitioner gave ... the evidence was consistently unreliable, at

best discreditable and at worst deliberately false.” Extensive transcript references

to the respondent’s evidence were given in support of the assertion. During the

hearing we paid careful attention to the evidence of the respondent. We have also

carefully read the written submissions and the related transcript references. It is

not useful to explain the transcript references in detail, but where it is necessary

to mention them in order to explain our reasons in respect of each complaint, we

do so.

12. Having said that, the members of the Tribunal, independently of each other, had

a completely different impression of the respondent’s evidence. She remained

unfailingly courteous and displayed grace under quite hostile cross examination.

1 There are two Ground 13s 2 Ground 13 also referred on a breach in respect of the sum of $240

8

We did not get the impression that she was not being candid and while she may

be mistaken about some matters, bearing in mind that the complaints date back as

far as 2009 and most were in 2011, that is understandable. Our conclusion was

reaffirmed by reading the transcript references provided by counsel for the

applicant. This conclusion is most important in considering complaints made by

the applicant of lack of candour.

Complaint of CD

13. The first complaint is that of CD a former employee of the respondent. The first

two grounds alleged to arise from her complaint are as follows:

Ground 1: Failure to deposit trust monies into trust in breach of

s222 (1) of the act.

From 1 January 2009 to around 16 April 2012, the practitioner

systematically breached s222 (1) of the LPA by failing to deposit the $350

payments into the trust account of the respondent’s firm.

Ground 2: Wrongful transfer of funds from trust to office.

From around 17 April 2012 to the present date, the practitioner breached

s223(1) of the LPA by transferring the $350 payments from the firm’s trust

account to its office account.

14. Grounds 3 and 4 were withdrawn by the applicant on the first day of the hearing.

Grounds 1 and 2 were conceded by the respondent also on the first day of the

hearing. The concessions were to the fact of breach, not to how it should be

categorised in terms of conduct. The underlying facts in support of Ground 1 are

set out in paragraphs 1.1-1.11 of the application. The facts supporting Ground 2

are set out in paragraphs 1.12-1.14. The applicant amended paragraph 1.14 by

deleting subparagraphs (a) and (b) and, in (c), deleting the words ‘in any event’.

15. Ground 11(a), which arises from the complaint of AS, is in the same terms as

Ground 1, as is the second Ground 13 which arises from the complaint of N1 and

N2.

16. The parties agreed that it is appropriate that these later grounds be treated as part

of Ground 1 because they are examples of the general allegation made in Ground

1. This seems to us to be appropriate.

9

17. The references to the $350 payments are dealt with in paragraph 1.1 of the

amended application. It is there alleged that during the relevant time the

Practitioner’s usual and almost invariable practice had been to require clients of

the online conveyancing service to make an upfront payment of $350 at the time

of registering via the website. The reference to ‘registering via the website’ is

explained in paragraph 1.2. It was also explained at length by Mr Kalyk, junior

counsel for the applicant, by reference to a folder of documents that was tendered

and is Exhibit A2. The explanation occurs at pages 38 to 105 of the transcript of

proceedings dated 23 August 2016. Mr Erskine SC explained the process from

his client’s perspective at pages 105 to 111 on the same day. There followed a

discussion about what were the agreed facts that supported the concession set out

at pages 111-114 of the transcript.

18. There was some disagreement about details that were irrelevant. The parties

agreed that the Tribunal should act on agreed facts and not make findings about

the irrelevant matters.

19. Also, because the respondent was concerned about her intellectual property, the

Tribunal was asked to omit detail in its reasons that might unnecessarily reveal

commercial in confidence matters.

20. Apart from the agreement, the Tribunal is satisfied of the basic process from

evidence including Exhibit A2, the affidavit of Kathryn Riley where she deposes

that she had done web searches and captured screen shots as to what transpired,

and RAR 1.

21. The respondent’s website for the online conveyancing service has a page for

prospective clients. They obtain a quote by providing basic details such as name,

address, property details and the like. The quote is given as a lump sum inclusive

of GST. It includes some disbursements that are identified, but not otherwise. If

the client wants to accept the quote, he or she must register by approving a fees

agreement. They are also asked to make an initial payment. The payment during

the relevant period was $350.

22. The client in a typical case provides credit card details and clicks on a link to a

bank portal. A payment to the practitioner’s firm is processed. In due course the

10

practitioner’s account shows the sum as having been paid and the amount is

debited to the client’s credit card. The practitioner issues a tax invoice. An

example of one is in RAR 1 at page 555. It says it is, “part payment of

professional costs and disbursements of and incidental to acting on your behalf.”

This was the form of invoice for a period until mid-April 2012 after the CD

complaint was made. During this period the fees agreement usually contained a

clause 4a that provided, “We require a payment of $350 of our fees and

disbursements when you register for our conveyancing services. We will provide

you with a tax invoice for this amount upon payment.”

23. All money was paid into an office account not a trust account.

24. After the complaint in about November 2011 and February 2012, the word

‘retainer’ was inserted in the fees agreement so that 4a read, “We require

payment of $350 as a retainer for our services when you register on our website.

We will provide you with a tax invoice for the retainer upon payment”. Clause 4b

then provided, “We will deduct the balance of your fees …. (i.e. less the retainer

payment)… on settlement.”

25. The tax invoice then said, “Retainer payment for your behalf.”

26. The fees agreement provided for part payment if the agreement was terminated

early.3

27. There was a special provision in a vendor’s auction transaction that provided for

a refund from the $350 payment if the auction was not successful.

28. Mr Erskine SC, on instructions from his client, said that when there was a

conflict the practitioner refunded the $350 amount.

29. It had been argued on behalf of the respondent that the $350 payment was not

trust money because some work had been done by the time the money was

received and the definition of trust money was not satisfied. This argument was

later conceded to be incorrect.

3 see RAR 1 page 558

11

30. The use of the word ‘retainer’ was intended to create a debt so that the payment

was not trust money. The true position was that, whatever it was called, there

was still an obligation on the respondent to account for the money if a sale did

not proceed and to deduct it from the cost of future work. As senior counsel for

the applicant submitted, a non-refundable up-front payment of a debt to retain the

services of the practitioner would be uncommercial and this payment was not

truly a debt because it was refundable in a number of circumstances.

31. Also, after the complaint in April 2012, the respondent arranged for the initial

payment to be deposited to her trust account. It is common ground that payments

were later transferred to the respondent’s office account before a final bill was

rendered and without written direction from the client.

32. Section 222(1) of the LPA4 provides:

Certain trust money to be deposited in general trust account

(1) As soon as practicable after receiving trust money, a law practice must

deposit the money in a general trust account of the practice.

33. Trust money is defined as follows:

“trust money” means money entrusted to a law practice in the course of or in

connection with the provision of legal services by the practice, and includes—

(a) money received by the practice on account of legal costs in advance of

providing the services; …

34. As submitted by the applicant and conceded by the respondent, the initial

payment although generating a tax invoice and, after mid-April 2012 having a

description as a retainer, was always money that carried with it an obligation to

be refunded in different circumstances. The concession was correctly made and

the practitioner did breach section 222(1) of the LPA.

35. Likewise in respect of Ground 2 it was conceded that there was no written

direction from clients to transfer trust money from the trust account to the office

4 We were given historical extracts of the legislation for the periods 2 February 2009 -21 February 2009. No submission was made about what version of the legislation we should consider. We have checked the changes from 1 July 2006 when it commenced and there are no relevant changes. In any event the period in question extends from 1 January 2009 until the date of the application. The extracts quoted are from the extracts provided

12

account before the matter had progressed substantially. This breaches section 223

of the LPA and section 62 of the Legal Profession Regulation 2007. They

provide as follows:

223 Holding, disbursing and accounting for trust money

(1) A law practice must—

(a) hold trust money deposited in a general trust account of the practice

exclusively for the person on whose behalf it is received; and

(b) disburse the trust money only in accordance with a direction given by the

person.

(2) Subsection (1) applies subject to an order of a court of competent

jurisdiction or as authorised by law.

(3) The law practice must account for the trust money as required by

regulation.

Legal Profession Regulation 2007

62 Withdrawing trust money for legal costs—Act, s 229 (1) (b)

(1) This section prescribes, for the Act, section 229 (1) (b) the procedure

for the withdrawal of trust money held in a general trust account or controlled

money account of a law practice for payment of legal costs owing to the

practice by the person for whom the trust money was paid into the account.

(2) The trust money may be withdrawn as set out in subsection (3) or (4).

(3) The law practice may withdraw the trust money—

(a) if—

(i) the money is withdrawn in accordance with a costs agreement that

complies with the legislation under which it is made and that authorises the

withdrawal; or

(ii) the money is withdrawn in accordance with instructions that have been

received by the practice and that authorise the withdrawal; or

(iii) the money is owed to the practice by way of reimbursement of money

already paid by the practice on behalf of the person; and

(b) if, before effecting the withdrawal, the practice gives or sends to the

person—

(i) a request for payment, referring to the proposed withdrawal; or

13

(ii) a written notice of withdrawal.

(4) The law practice may withdraw the trust money—

(a) if the practice has given the person a bill relating to the money; and

(b) if—

(i) the person has not objected to withdrawal of the money not later than 7

days after being given the bill; or

(ii) the person has objected not later than 7 days after being given the bill

but has not applied for a review of the legal costs under the Act not later than

60 days after being given the bill; or

(iii) the money otherwise becomes legally payable.

(5) Instructions mentioned in subsection (3) (a) (ii)—

(a) if given in writing—must be kept as a permanent record; or

(b) if not given in writing—either before, or not later than 5 working days

after, the law practice effects the withdrawal, must be confirmed in

writing and a copy kept as a permanent record.

(6) For subsection (3) (a) (iii), money is taken to have been paid by the law

practice on behalf of someone if the relevant account of the practice has been

debited.

36. The concession in respect of Ground 2 was correctly made.

Are such breaches professional misconduct or unsatisfactory professional

conduct?

37. Professional misconduct is defined in section 387 of the LPA as follows:

What is professional misconduct?

(1) In this Act:

"professional misconduct" includes—

(a) unsatisfactory professional conduct of an Australian legal practitioner,

if the conduct involves a substantial or consistent failure to reach or maintain a

reasonable standard of competence and diligence; and

(b) conduct of an Australian legal practitioner whether happening in

connection with the practice of law or happening otherwise than in connection

with the practice of law that would, if established, justify a finding that the

practitioner is not a fit and proper person to engage in legal practice.

14

(2) For finding that an Australian legal practitioner is not a fit and proper

person to engage in legal practice as mentioned in subsection (1), regard may

be had to the suitability matters that would be considered if the practitioner

were an applicant for admission to the legal profession under this Act or for the

grant or renewal of a local practising certificate.

38. Unsatisfactory professional conduct is defined by section 386 as:

What is unsatisfactory professional conduct?

In this Act:

"unsatisfactory professional conduct" includes conduct of an Australian legal

practitioner happening in connection with the practice of law that falls short of

the standard of competence and diligence that a member of the public is

entitled to expect of a reasonably competent Australian legal practitioner.

39. These two definitions are supplemented by section 389(1) which provides:

Conduct capable of being unsatisfactory professional conduct or professional

misconduct

Without limiting section 386 or section 387, the following conduct can be

unsatisfactory professional conduct or professional misconduct:

(a) conduct consisting of a contravention of this Act...

Applicant’s submissions

40. In summary, the applicant submitted:

(a) The sustained practice over several years of not depositing money which is

plainly trust money into trust and then, from April 2012 onwards,

transferring it into an office account without complying with the Act, is

professional misconduct and it is not open to characterise it any other way.

(b) A contravention of the Act is capable of constituting professional

misconduct as section 389 provides.

(c) Because of the way conduct is defined, connected instances of misconduct

can be dealt with together and there is no need for separate findings on

Grounds 1 and Grounds 2.

(d) A global finding may be made where there is a continuing course of

conduct arising from a single source.5 We understood that the submission

5 Council of the Law Society of the ACT v Legal Practitioner P4 [2015] ACAT 35 at [6] and [7]

15

included the proposition that where there are several instances of poor

conduct they may, if they have a single theme, be combined so that a single

finding of professional misconduct may be made.

(e) The trust account is sacrosanct and even where the motivation of a

practitioner is innocent, he or she may be guilty of misconduct if the

provisions are not complied with.6

(f) We were helpfully referred to authorities that explain the relevant test at

common law. It is still operative because the statutory definition is not

exhaustive. It was submitted, and we accept, that the common law test is

that set out in Allinson v General Council of Medical Education and

Registration [1894] 1 QB 750. A number of Australian cases that adopt it

are set out in Riley’s Solicitors Manual at 33030.1 (footnote 2). The test is

whether the lawyer has behaved in a manner that would reasonably be

regarded as disgraceful or dishonourable by professional brethren of good

repute and competency.

(g) In this case, the character of the initial payment as trust money is and

always was, clear.

Respondent’s submissions

41. Mr Erskine SC submitted:

(a) The respondent’s conduct is properly characterised as unsatisfactory

professional conduct.

(b) A failure to comply with the legislative requirements does not

automatically constitute professional misconduct.

(c) There is no suggestion of defalcation or other obvious dishonourable

conduct by the respondent.

(d) No complaint has been made that the practitioner did not in fact account for

the payments of $350. There was no complaint that she used the money for

any purpose other than for what was intended, or that she used it for any

reason other than that for which it was given. It can be inferred that in

6 Legal Services Commissioner v McGregor [2012] VCAT 1742 at [34]

16

every case the client was rightly charged for the services of the practice.

The error was in doing so earlier than allowed.

(e) The lack of action by the applicant to stop the practice pending these

proceedings and ever since it received the CD complaint in 2011, leads to

an inference that no real risk was apprehended by the applicant. The

inference is made stronger by the time taken by the applicant to pursue the

matter.

(f) Regular trust account audits were conducted throughout the relevant period

and no irregularity identified.

(g) The case relied on by the applicant of Legal Services Commissioner v

McGregor [2012] VCAT 1742 at [34] that speaks of the sanctity of the

trust account, is distinguishable because in that case there was a deficit in

the trust account and funds of other clients were threatened.

(h) There is a ruling of the NSW Law Society which shows that the issue is not

without difficulty.

(i) The respondent had sought a ruling from the applicant under section 213 of

the LPA but one was not given. The request is at page 15 of RAR 1.

Applicant’s submission in reply

42. It was submitted that we should give no weight to the submission that the Society

did not take earlier steps to prevent the practice. The conduct is what it is.

Consideration

43. We agree with the applicant that trust obligations must be strictly complied with.

The case relied on of Legal Services Commissioner v McGregor [2012] VCAT

1742 is distinguishable as submitted by the respondent. In any event ultimately

each case turns on its own facts.

44. Whilst we agree that it is appropriate to make a single finding in respect of the

conduct described in Grounds 1 and 2, we do not see the repetition of the conduct

as adding to its seriousness per se. Unlike the case of P4,7 the respondent did not

engage in a number of discreditable acts motivated by a wish to avoid repaying a

debt owed. Rather, she engaged in a continuous course of incorrect conduct

7 Council of the Law Society of the ACT v Legal Practitioner P4 [2015] ACAT 35

17

based on a mischaracterisation of money. The fact that the Society delayed action

to stop the conduct does not change its quality, but may be seen as reflecting the

reality of the degree of risk and seriousness of the conduct. The issue of whether

the initial payment was trust money is not as obvious as the applicant submitted.

The applicant did not, as did the NSW Law Society, issue a direction explaining

the potential confusion and how it should be answered.

45. The conduct in our view is unsatisfactory as it is ultimately the responsibility of

the practitioner to know what trust money is and to comply with the legislative

requirements about its treatment. The risk is that the practitioner may become

personally financially embarrassed and, notwithstanding best intentions, the

money could be lost. Whilst there were reasons to be confused about the correct

categorisation of the money, when the full picture is understood, it is clear that

the money is trust money. In any event, if there was a doubt it would have been

prudent to treat it as trust money.

46. It is true that the respondent’s breach was systemic and thus occurred repeatedly

and also true that the breach is capable of being treated as either professional

misconduct or unsatisfactory conduct.

47. The money was used as the tax invoice might suggest, as though it was a

payment for a debt, and that is what clients are likely to have assumed. However,

as is clear, it was for a future debt - it was part payment of work to be done and

refundable in certain circumstances.

48. It seems that no one other than a former employee complained about it. This may

be explained by the likelihood that the client got a tax invoice which has the

character of a debt, but also because, it seems, no client was in fact

disadvantaged. There was no suggestion that the respondent acted to obtain

money she shouldn’t have, or that where refunds were to be provided, they were

not. An inference can be drawn that the respondent acted as she should in

handling her responsibilities, but offended the legislation because the money

went into the office account prematurely.

49. Ultimately, it is a matter of judgment as to whether such conduct is

dishonourable. In our view, taking into account the above submissions, the

18

conduct is unsatisfactory professional conduct because it breaches the legislative

requirements and creates a potential but unrealised risk to clients. Whilst the

continued mischaracterisation of the money after the complaint and the incorrect

transfer from the trust account after April 2012 reflects a continued stubborn

adherence to what is now conceded to be an incorrect view, it was not a secret

and did not involve dishonest or sharp dealing. Thus, it is not professional

misconduct because in our view it involves no actual loss or dishonesty. The

purpose was made known to the clients before they paid. The fact that it was

systemic does not change its character so as to compound the fault exponentially

when repeated but rather, the conduct involved one fault of the same degree of

seriousness being repeated. It is to the credit of the respondent that, with good

legal advice, she finally conceded the point. It is regrettable that she did not get

that advice earlier. It would have saved her considerable stress and expense.

Conclusion

50. The conduct alleged in Grounds 1, 2, 11(a) and the second ground 13 is made out

and taken together, amounts to unsatisfactory professional conduct.

The Complaint of ST - Grounds 5 and 6

51. Ground 5 is an allegation of “Negligent conduct of a conveyance”. It says that in

breach of Rule 1.2 the practitioner failed to conduct ST’s matter with

competence and diligence.

52. The rule is in the Legal Profession (Solicitors) Rules 2007, which have since

been replaced. A breach of a rule is not necessarily a disciplinary offence but

may be evidence of it. In any event, in order to make the findings sought, the

Tribunal must have regard to the Act and the definitions of unsatisfactory

professional conduct and professional misconduct.

53. The undisputed facts are set out below.

54. ST retained the respondent’s firm in July 2009 to act on the sale of a property in

Queensland. An employee of the firm, EC, had the conduct of the matter.

55. EC was an admitted solicitor with a restricted practising certificate.

19

56. The contract of sale provided that time was of the essence. This means that if a

party is not ready on the date for completion the other party may terminate. It

should be noted here that in the ACT and NSW this is not usually the case.

57. The contract was entered into on 3 August 2009. Settlement under the contract

was due to take place on 14 September 2009. On 13 September the solicitors for

the parties agreed to defer settlement to Monday 21 September 2009.

58. To effect settlement the buyer’s solicitor must prepare transfer papers and send

them to the vendor’s solicitor who has them signed and sent back in time for

them to be stamped so that a registrable transfer of title is available at the

settlement date.

59. ST complained that the required work was not done in proper time by EC and

there was a real risk that the settlement might fall though because of this delay.

60. It is common ground that in fact, the work was attended to in time and that the

settlement was not affected by such events.

61. ST wished to buy a property in Tasmania and needed the funds from the sale of

the Queensland property to do so.

62. There is a degree of uncertainty about when the transfer was received by EC and

whether it was sent by him in time, but the post did not arrive. It is important to

try to ascertain from the evidence what the true facts were and not what they

were said to be by ST, EC or the respondent, after the event. This has some

bearing on Ground 6 which complains that the respondent was not frank and

attempted to mislead the Society about this and about another issue with the sale.

63. The other issue arises from the fact that the sale fell through because ST’s

mortgagee, the Bank of Queensland (BOQ) was not ready to settle on

21 September 2009 and the buyer terminated. The complaint is that EC did not

give BOQ the time it needed to be ready.

64. BOQ needed two clear business days to arrange to settle, assuming that the client

had authorised it. It is alleged that EC did not notify BOQ until 17 September

which was the Thursday before the settlement date (a Monday) and that was too

late. The respondent says that this is not clear.

20

65. It is trite and common ground that the relevant standard of proof in disciplinary

proceedings is that referred to in Briginshaw v Briginshaw (1938) 60 CLR 336.

The usual extract referred to is from the judgment of Rich J at 350 as follows:

In a serious matter...the satisfaction of a just and prudent mind cannot be

produced by slender and exiguous proofs or circumstances pointing with a

wavering finger to an affirmative conclusion. The nature of the allegation

requires as a matter of common sense and worldly wisdom the careful

weighing of testimony, the close examination of facts proved as a basis of

inference and a comfortable satisfaction that the tribunal has reached both a

correct and just conclusion.

66. Mr Beaumont SC drew our attention to the distinction made by Dixon J at 3628

between establishing on what date an act occurred that may be part of the

conduct that may be of a serious nature and the ultimate conclusion that it was.

67. It is alleged that the buyer’s solicitor (JCJ) sent the transfer to the respondent’s

firm on 20 August 2009. There does not appear to be a letter of that date with the

transfer document on the file9 of the respondent, but there is a copy of one on the

buyer’s solicitors’ file at Exhibit A1 page 120. There is, at RAR 1 page 534, a

different letter dated 20 August 2009 that is about settlement figures with no

transfer enclosed. There does not appear to be a copy of that letter on the JCJ file.

On 1 September 2009, however, JCJ asks for the transfer.10

On 16 September

2009, JCJ refers back to its 20 August 2009 letter and says it sent the transfer

with a letter of 20 August 2009 and it needs to be returned as a matter of

urgency.11

68. At page 130 of Exhibit A1 there is a phone record of EC saying on 2 September

2009 that he doesn’t have the signed transfer yet. It is not clear whether he is

8 The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency. Thus, Mellish L.J. says: "No doubt the court is bound to see that a case of fraud is clearly proved, but on the question at what time the persons who have been guilty of that fraud commenced it, the court is to draw reasonable inferences from their conduct" (Panama and South Pacific Telegraph Co. v. India Rubber, Gutta Percha, and Telegraph Works Co.[39]) 9 RAR 1, pages 442 – 552. This a copy of the hard copy of the file given back to ST by EC and then given to the applicant 10 Exhibit A1 page 128 and RAR 1 page 507 11 RAR 1 page 497

21

referring to the transfer sent by JCJ which may have been signed by the buyer.

There is reference to it being signed by the buyer in the applicant’s chronology,

but that would not have then been necessary. It may be JCJ are being told that

EC hasn’t got the document from them, which is consistent with the 20 August

letter not being on the hard copy of the file. It may mean he had received the

transfer and sent it on to ST, but was yet to get it back signed by ST. He is again

reminded on 4 September 2009.12

69. The applicant, in its written submissions asserts that EC lost the 20 August letter

as the respondent asked for another in 2012, but it is possible that EC never had

it.

70. What is clear is that the signing of the transfer documents was delayed past a

time that was comfortable and this made ST panic. In any event, that was

remedied in time.

71. There is no clear proof that EC did get the letter of 20 August at that time, or at

all. Having said that, it is admitted by the respondent in her response at 2.7. It is

evident that EC was asked to get the signed transfer back on a few occasions and

was alerted to the problem on 2 September by phone. It is possible he had got the

transfer and sent it and that it got lost, but he still was being reminded to follow it

up by JCJ.

72. Apart from the contemporaneous letters, there have been attempts to reconstruct

the events by EC and the respondent. To the extent that there are no

contemporaneous documents to establish that their description or admissions are

correct, it is difficult to be sure they are. That is because, assuming that they are

doing their best, they may mis-remember or may assume events from other

established events.

73. In her response to the complaint of ST, the respondent assumed that the transfer

had been received and sent to the client by post in August. This is what she says

at 2.10 of the response. She was first involved in reconstructing events when

responding to the Queensland Law Society (QLS) to whom ST had first

complained. In cross examination she said she relied on what EC had told her.

12 Exhibit A1 page 132; RAR 1 page 499

22

Her response to QLS is at RAR 1 page 706 and is dated 21 December 2009. QLS

dismissed the complaint. It was revived in the ACT and she next sought to

explain the events after speaking to EC in January 2012.13

74. In paragraph 2.10 of her response, the respondent says that EC had on

3 September placed the scanned transfer on ST’s e-file that she could access

online. It is said that later, ST told EC that she was having difficulty

downloading from her computer and before then, EC didn’t know ST hadn’t got

the document.

75. In her affidavit of 13 July 2016, the respondent corrects what she previously said

and attaches an email dated 2 September 2009 from EC to ST that shows that the

transfer had not been received by EC as at that date and so, could not have been

sent to ST in August.

76. EC does not shed any light on this in his affidavit as he now cannot recall.

77. The respondent was cross examined on this topic. Her evidence is set out at page

145 and following of the transcript of 24 August 2016.

78. Submissions were made about the credibility of the respondent generally, and

specifically in respect of this and other matters. We deal with the submission

concerning this matter when dealing with the Ground relating to lack of candour.

In any event, even assuming some doubt about the credit of the respondent, she

was not handling this matter and is in the same position as the tribunal in trying

to reconstruct what happened.

79. From the above, it is probable that by 2 September EC had the transfer from JCJ

as he posted it on the e-file. There is no evidence that he chased its return by ST

until 17 September.

80. Stephen Jones, a Queensland solicitor asked to give expert evidence by the

applicant, opines in his affidavit that EC should not have been so tardy and

should have followed it up with his client earlier. We agree.

13 RAR 1 page 693

23

81. It is clear that EC knew he should have done this as he had emailed ST well

beforehand on 7 August 200914

and then on 2 September15

. He indicates that

action should proceed once the contract became unconditional on notification by

the buyer that her property had sold before 4 September in accordance with

special conditions 2 and 3 of the contract.16

This happened when JCJ sent a letter

of 4 September.17

EC had adverted to the need to get the transfer signed in his

email on 2 September to ST. In both emails he adverts also to the release of the

mortgage. He uploaded the transfer to the e-file on 2 September.18

It is not clear

whether what he uploaded was a transfer prepared by JCJ or one he did, but one

that appears to have been prepared by JCJ is at RAR 1 page 477.

82. What follows from this is that he knew what was required but did not follow

through.

83. When the emergency arose on 16 or 17 September he got the problem fixed. He

should have not let the problem arise.

84. This mistake seems to us to fall within the description of human error that on its

own would not be elevated to unsatisfactory professional conduct as explained in

Legal Practitioner RH v Council Of The Law Society of the ACT [2016] ACAT

94 at [119] and the extract from Riley there quoted, namely,:

These standards are not to be determined by reference to lawyers who are

without fault, but of the reasonably competent lawyer. As such, the

standard of reasonableness invoked by the definition aims to distinguish

between conduct that falls within a tolerable range of human error and bad

professional work which falls below reasonable standards of competence

and diligence.

85. We have taken into account the opinion of Mr Jones on this issue and while we

agree with him that it is an error, in our judgment it is not outside a tolerable

range of human error.

86. Even if it were unsatisfactory professional conduct by EC, we still have to

determine whether the respondent herself was at fault. If EC did not know better

14 at RAR 1 page 463 15 at page 464 16 RAR 1 page 546 17 Exhibit A1 page 132; RAR 1 499 18 RAR 1 page 461

24

and it was evident that he was in need of greater supervision, then she might be.

However, that he did know better is evident from what he told ST in his earlier

emails. Mr Jones argues that EC must have been too inexperienced, but that

ignores what he told ST about what was required and ignores his competence in

getting it fixed. There is evidence from EC, who was not cross examined, in his

affidavit of 12 July 2016 about his experience at paragraphs 4-7 and 10. Also the

respondent in her affidavit of 12 July 2016 gives evidence of training at

paragraphs 17-26 and of supervision at paragraphs 27-32. She also confirms

EC’s experience at paragraph 70. The respondent’s credit is in issue generally

but we have accepted it in general terms and have noted that we found her

demeanour to be impressive. In any event, we are satisfied that in this matter EC

did know what to do but did not do it.

87. This is more important in relation to the other complaint by ST namely that the

sale fell through because EC did not arrange for BOQ to be ready to release its

mortgage.

88. Obviously, the loss of the sale was a significant adverse event for ST. There is an

issue as to when EC first asked BOQ to attend. There is no evidence on the BOQ

file of when EC contacted BOQ19

. It is evident that ST had arranged for the

release and signed the form on 3 September,20

which had been sent to its

Buderim branch. A limit was removed by BOQ and it was ready to settle on 23

September (two days too late). It required two clear days’ notice.21

89. There is no evidence to suggest EC did anything to arrange for the bank before

17 September less than two clear business days before settlement was due. Even

then BOQ was not ready until 23 September. BOQ had a loans officer that they

had difficulty with during this time.22

90. When asked, the respondent aided by EC, replied to QLS in December of that

year asserting that notice had been given on 17 September. In her complaint ST

said that BOQ told her it was first contacted on 17 September. This assertion was

19 part of Exhibit A1 pages 200-204 and RAR 1 pages 173 to 213 20 Exhibit R1 page 173,202 21 R1 page 193 22 R1 page 198

25

not questioned by the respondent and it was consistent with what she had said

when first asked. EC, in his affidavit, now can’t recall.

91. Mr Gibson, a Queensland expert conveyancer asked to comment by the

respondent, raised the problem that the date was not clear and if it was before

17 September, EC had not done anything wrong. Thus the respondent’s counsel

submitted that we couldn’t be sure and in such circumstances should not

conclude that there was unsatisfactory professional conduct by EC.

92. It seems to us that more probably than not, EC did not give notice until

17 September. The fact that BOQ was not ready until later, the activity on the file

on that date and not before, and the first recollection in December of that year, all

lead to this conclusion.

93. In any event, as the tardiness of BOQ shows, there was no good reason not to

have done it much earlier. By 4 September EC knew the contract was

unconditional and knew in plenty of time that settlement was to be on 21

September. He knew he had to do it, as he said in two emails at RAR 1 pages

463 and 464.

94. It seems to us that the failure to contact the bank until 17 September or earlier

was unsatisfactory conduct by him. But we refrain from making an adverse

finding about his conduct because he is not a party and has not been heard about

such a conclusion. It would be unfair to now ask him to justify his conduct

bearing in mind the time that has elapsed. For the purpose of this matter, as

against the respondent we assume that it was unsatisfactory

95. The question remains whether the respondent is guilty of such conduct because

of EC’S lapse. Mr Jones concludes that she is, based on her subsequent attempts

to justify the events. We do not accept that either the respondent or EC thought it

was good practice to allow this to occur. Clearly EC had planned to get it done in

plenty of time. As explained in respect of the delay in having the transfer signed,

EC was generally competent and knew what to do but failed to do it on this

occasion. The subsequent arguments to shift blame to BOQ and away from the

respondent are not inconsistent with this and we are unpersuaded by Mr Jones’

argument in this regard. Mr Erskine SC submitted that the expression in the

26

Jones affidavit is unpersuasive as it was quite sweeping and overstated. Mr Jones

was not cross examined, nor was Mr Gibson. We agree that the opinions of

Mr Jones are expressed in unequivocal terms and may be contrasted with the

report of Mr James whose evidence was relied on by the applicant in respect of a

NSW and an ACT conveyance. Mr James appeared to be more even handed in

his report and was thus persuasive. In any event we accept the basic contentions

of Mr Jones in respect of the ST complaint and only differ from him in his

conclusion based solely on the subsequent justification by the respondent as to

her understanding of what is required and what she would regard as good

practice.

Quality Control

96. The applicant also seeks to establish that there were inadequate systems for

quality control. This submission was made in the context of the ST complaint.

97. First, there is a general proposition that given the number and types of errors in

all four matters this must be inferred.23

Mr Erskine responds by pointing out that

these matters represent less than 1 in 1000 of the conveyances in the practice.

This is in paragraph 10 of the respondent’s affidavit. We don’t know how that

number was calculated but accept that in the absence of evidence to the contrary,

it cannot be inferred that such failures are common. Each alleged failure is

different and involves different employees. The complaints, apart from that of

ST, all relate to incidents in 2011. During part of that time we know that CD

came and went and we were told that MS, an employed solicitor, suddenly left.

We are unpersuaded by the general submission. In the case of EC, on the face of

it, he knew what was required and for whatever reason on this occasion, did not

do it. It is not established that this should have been foreseen by the respondent.

98. In its written submissions the applicant asks the tribunal to draw a negative

inference because no document was produced to show that the on-line system

had embedded prompts, or step by step instructions, or that there were manuals

setting out steps or that spot checks were conducted as was deposed in the

respondent’s affidavit. She was asked by the Society to produce files showing

23 this is in the applicants written submissions 120-122

27

these systems and did not do so. When cross examined24

as to why she had not,

she explained that she was concerned to protect her intellectual property. We

understood her to be referring to manuals and similar ‘how to’ instructions. Her

response was described in submissions as ‘incredible’. We can see that there

would be intellectual property in manuals and the like. Also, we can see from the

files in this matter that explanations are given to clients of the conveyancing

steps and timing which appear to be of a common type. Whilst we cannot be

certain how this occurs, it appears that there are auto prompts for standard letters

which in turn explain correctly what is to happen next. We do not think the

respondent’s explanation that there is intellectual property in her systems which

she wishes to protect, is incredible. It is then complained that she changed her

story to say there was no documentary evidence of spot checks. We do not agree

that this is a fair reading of what the respondent said. It is likely that spot checks

are not documented and that is what she was dealing with in her answer. It is not

a change of story, but a change of question from systems generally to spot

checks.

99. The only positive evidence of inadequate supervision was in the affidavit of CD,

who was not cross examined. She said she saw no instance of the respondent

supervising in the short time she was employed there. The evidence is of limited

assistance as it is expressed as a negative conclusion and is based on a short

period of observation with no certainty that the opportunities to observe exclude

it as having happened during that period. As we do not generally see the

respondent as a discredited witness we accept that she did have systems in place.

The errors, occurring here, were by a trusted employee who appears to have

known what he was supposed to do and when, but just did not do it.

100. In the circumstances we are not comfortably satisfied that the failure of EC

occurred because of a corresponding failure by the respondent.

Conclusion Ground 5

101. It follows that we do not accept that Ground 5 is established.

24 Transcript of Proceedings 26 August 2016 page 175ff

28

Ground 6

Lack of Candour

102. This asserts that the respondent breached her obligation under Rule 39.1 of the

Solicitor’s Conduct Rules to be open and frank because in her letter of 17

January 2012 to the applicant, she represented that she had to hand the full file

for ST’s matter and had a proper basis for submitting that the full file did not

support the complaints of ST.

103. It is now common ground that EC gave ST the hard copy of her file soon after

the sale fell through in 2009. It is also said that the hard copy file was given to

the applicant and is in RAR 1 as discussed above.

104. Reading the letter shows that the respondent did not, in words, say she had the

full file. It may be inferred that she thought she had the documents needed to

support the statements she made in the letter. In fact, there does not appear to be

much more that has come to light, even though based on Mr Gibson’s report, the

possibility of there being more material was later raised.

105. It is common ground that the respondent was looking at a soft copy file when she

wrote the letter. She gave evidence that she did not then know that the hard copy

of the file had been handed to ST and said she thought the file was still in the

office somewhere, but in the wrong place. She had again spoken with EC and

was answering the complaint two years after the complaint to the QLS had been

made and dismissed.

106. We have been referred to the transcript of the respondent’s cross examination at

pages 149-151. Her answer – that it might be too much information as to why

she hadn’t explained that she was looking at the soft copy file – taken out of

context, may seem flippant. Mr Erskine SC in his submissions explains that she

was operating a computer based business and she was seeing this through the

eyes of a computer savvy person speaking to less technologically focussed

people.

107. It is useful to explain briefly the reason for the rule and the nature of the

obligation on practitioners to assist the Society when a complaint is made. There

is a short summary in Riley at [35,045] – [35.045.20]. There it is said that the

29

duty does not mean a practitioner must disregard their own interests. The need

for such cooperation is obvious. The Society has an onerous and difficult task

and without being able to rely on a practitioner to help, would struggle to know

what occurred when investigating a complaint. In any event, in any context it

would normally be dishonourable to intentionally or recklessly mislead. The

nature of the duty has been compared to the duty that a lawyer owes to a Court to

be candid.25

There is a tension between defending one’s actions and cooperating

with the Society. It is human nature to defend oneself from accusations of

misdeeds. The case law is full of examples where the self defence was overstated

and led to further grief.

108. It would be fair to say that the respondent did seek to defend herself. Her

conclusion that there was no negligence was incorrect. She is not criticised for

this, but for saying she knew this from having read the file, meaning the whole

file.

109. The only basis we can see that could make this complaint arguable is if it could

be shown that the respondent was impliedly saying that she reasonably believed

on proper grounds that there was no negligence, when she did not in fact believe

this, or was reckless about saying so.

110. It might be thought to be unduly optimistic to assert that there was no negligence,

but given the tardiness of BOQ even when they were notified, the contrary was

not unarguable. Indeed at the hearing, Mr Erskine SC submitted that we couldn’t

say that there had not been adequate notice to BOQ.

25 See Council of the Queensland Law Society Inc v Whitman [2003] QCA 438 at [6] and [7] where the Queensland Court of Appeal said:

“ [6] ...The Tribunal observed: "When faced with such a request or inquiry from their professional body, a solicitor is in much the same position as when dealing with the court. A solicitor has a duty to be truthful even to his own detriment, not just a duty to be truthful, but a positive duty to be full and frank and for his answers to be candid as well as truthful." [7] Especially bearing in mind that the end purpose of the Law Society's investigation is protection of the public, and not the quasi-criminal prosecution of an allegedly errant solicitor directed to the possible imposition of a penalty (see Adamson v Queensland Law Society Inc [1990] 1 Qd R 498, 504, and Mellifont pp 28, 30), one could not gainsay that observation, which is consistent with the high standard of candour and general fidelity expected of practitioners”:

30

111. The criticism of her for using the word ‘file’ without qualification is of itself

without any force. If it was shown that her version of the file showed that she

was not negligent and the ‘full’ version showed she was and she knew this, then

it would be deceptive. It was not sought to show anyone was misled and the

complaint can only be that irrespective of the context, she intended to be

misleading or was recklessly so. This complaint is not made out on the evidence.

Credibility

112. Apart from the specific matters above, we have reviewed the cross examination

in respect of the ST matter set out at pages 144 to 153 of the transcript and find

nothing there that alters our view of the credit of the respondent.26

Conclusion Ground 6

113. We are not satisfied that this ground is made out.

Complaint of DK - Grounds 7, 8 and 9

Grounds 7 and 9 - Negligent conduct of a conveyance - failure to treat client fairly

114. The undisputed facts here are that in May 2011 DK retained the respondent by

her website to act for him and his wife in relation to the purchase of a property in

Pelican Waters Queensland.

115. The retainer was for a set fee which was to include work involved in changing

ownership of the property, but did not include the registration fees for the

transfer and any other necessary documents such as a release of mortgage.

26 The cross examination first sought to demonstrate that a correction by the respondent to her affidavit concerning whether the transfer had been posted in August by reference to an email showing it had been posted on the website in early September was illogical. She agreed and said she was confused. We understood that she had based her belief that the mail had been sent in August on what she was told by EC and if she had read the email more carefully she would have realised that it was unlikely. She later realised that. We accept her explanation that she was confused. Indeed she is in only a slightly better position than the applicant and the Tribunal in trying to reconstruct the events so her confusion is completely credible.

Next she was asked about her state of mind concerning whether she had the whole file or not in early 2012. The questions elide a date in January when she answered the applicant about what she asserted the file showed and April when she wrote to the applicant saying that they didn’t have the whole file. A fair reading of the events is that she thought she had the full file in January-or assumed what she was looking at was all that was useful- but when she tried to find the hard copy to send to the applicant she realised that she did not. We don’t see this as affecting the respondent’s credit.

31

116. The retainer agreement did not specify that the respondent would attend to

registration.

117. The conveyance settled in June 2011 and DK and his wife provided the whole of

the purchase price of $750,000 in cash with no incoming mortgagee.

118. In Council of the Law Society of the ACT v Legal Practitioner RH [2015] ACAT

40, upheld in Legal Practitioner RH v Council of the Law Society of the ACT

[2016] ACAT 94 it was held that the respondent’s retainer included the duty of

getting the title registered. That involved a cash purchaser as well, and the

respondent sought to impose an extra charge for it. This was said to be

unsatisfactory professional conduct. Here, the respondent has conceded Ground

9(b) which is said to be a breach of the obligation to treat the client fairly and in

good faith. Ground 9a is not pressed by the applicant.

119. The problem that arose in this case seems to stem from the approach that it was

not the firm’s job to attend to registration.

120. Because the settlement took place on the Sunshine Coast, the respondent’s firm

arranged for agents to attend the settlement. Settlement instructions were given.

A copy is at page 72 of RAR 1. The document is hard to understand. It seems the

respondent’s firm already had the transfer. No reference is made to the release of

mortgage which would be required as the vendor had a mortgage. This is obvious

from the settlement statement as the main cheque was payable to Westpac. No

mention is made of the title deed, but later27

there is reference to records being

electronic rather than paper, so there may not be a physical document handed

over. It was suggested in cross examination that the release of mortgage was not

obtained that day. There is no evidence that it was not. There is no

correspondence afterwards trying to recover it.28

According to the respondent,

the agent sent the documents to Canberra and registration would occur thereafter.

If a purchaser has an incoming mortgage, the mortgagee attends to registration.

This is the case for most purchases. But this case involved a cash purchase.

During the hearing, the respondent said the agents were based in Brisbane. They

appear to have an office there and also in Maroochydore. If it was intended to

27 Affidavit of DK dated 19 January 2016, Annexure B 28 There is one at RAR 1 page 39 and it was signed on 8 June 2011

32

arrange registration it would have made sense to have the agents attend to it

rather than send the documents to Canberra only to have them sent back again. If

registration was to be left to the client, the documents might be sent back to

Canberra, but it would be expected that the client would be told they had arrived

and needed to be acted on. Instead, the respondent’s firm belatedly asked the

client for the filing fee for the transfer, asked for the wrong money and then later

again, arranged for the release to be lodged.

121. In responding to the complaint that the release had not been lodged for some

months, the respondent said that there was no real risk to the client. Mr Jones in

his report draws attention to the dangers posed by indefeasibility of title under

the Torrens system. He is right, although here it seems the respondent had the

transfer and the release and the mortgagee, whose mortgage remained on title,

was not a person of straw but a bank against which the client had a personal

equity. Although it was undesirable to allow the title to remain uncorrected for so

long, the respondent is right in saying that in this case, there was no great risk.

122. The uncontested facts are that the settlement occurred on 14 June 2011. At this

time MS, a solicitor employed by the respondent, had the conduct of the

purchase. However another employee, ME who was a paralegal, became

involved on 10 June as her email to the client dated 10 June at page 28 of RAR 1,

indicates. At some time after that MS left. CD became an employee after the

settlement but left after five weeks. She started on 27 June and left on 8 August

2011.29

123. DK was not cross examined. He said he got a letter, Annexure B to his affidavit

dated 14 June 2011, reporting on settlement. It was possibly placed on his web

file as promised in the earlier email telling him the matter was settled. The letter

says “We are attending to registration of your purchase with the Queensland

Department of Lands.”

124. Nothing further occurred until 26 July 2011 when the respondent’s firm wrote

apologising for delay in registration of the transfer without mentioning the

mortgage. This is at RAR 1, page 31. DK was asked to pay $50 for this and a

registration fee which was wrongly calculated. He sent the registration fee soon

29 She was not cross examined. See affidavit of 8 March 2016 at [6]

33

afterwards and heard nothing, so he rang and emailed in the week of 25 August

2011.30

He was told that more money was needed for the filing fee by AW,

another paralegal working for the respondent.31

He sent the further money and

the transfer was registered, but the mortgage remained.32

He heard nothing

further so sent an email on 12 October 2011 and drew attention to his name being

misspelt.33

He had no reply and so complained on 17 October.34

The release and

name correction were done on 18 October 2011.

125. Mr Jones says this is unsatisfactory. The respondent has explanations for why

things did not go as planned. We will refer to them in more detail in dealing with

the lack of candour complaint. They could theoretically relieve her of direct

responsibility, if they were good excuses and are correct. Assuming they are, in

our view, that does not assist her in this case. The system, whereby the

documents were sent back to Canberra and not acted upon, is at fault. It may be

because registration was not seen as part of the retainer, although here the

respondent’s firm promised it would be done, albeit for a further small fee, and

seemed to accept that it should take that responsibility. The delay, the lack of

explanation, the mistakes and the overlooking of the mortgage are all indicative

of incompetence. We accept that this is not the usual standard and that there are

countless uneventful conveyances carried out by the respondent competently. In

a complaint about which Mr James reports, he concludes that the number of

errors must make the respondent responsible. In this transaction we come to the

same conclusion. Eventually the problems were fixed without loss to DK.

Conclusion

126. Ground 7 is made out. The conduct we find amounts to unsatisfactory

professional conduct.

127. Ground 9b which asked for extra money to register the transfer is conceded and

is also unsatisfactory professional conduct as explained in paragraph 118.

128. Ground 9a was withdrawn.

30 Annexure C to his affidavit 31 Also Annexure C 32 Annexure E 33 RAR 1 page 40 34 RAR1 page 619

34

Ground 8 Lack of Candour

129. There are two complaints. The respondent’s first response to the complaint of

DK was dated 10 November 2011. It is at RAR 1, page 622. It is a short letter

and addresses the things that needed to be done and asserts they have been done.

The assertion is confirmed by a letter from DK which is at RAR 1, page 623,

thanking the Society for getting it done. The applicant says that the respondent’s

letter to it is misleading because it skates over the delay, which is part of DK’s

complaint.

130. There was cross examination about this issue. It could be said that the letter

implies prompt action by saying that we have attended to registration.35

Mr

Erskine submitted that such an implication is a long stretch. It is a true statement,

but does not assert anything about the length of time taken to attend to

registration. The complaint already set this out and the response did not

challenge it. We agree with Mr Erskine’s submission. The applicant seeks to read

too much into the response. We are not satisfied this was a breach of the

respondent’s obligation.

131. The same letter was criticised for misstating the time it took to correct the name

change. In fact, the evidence bears out that this was acted on immediately, but

not finalised for a time. Thus the letter is not misleading.

132. Implication of promptness is alleged in the way the letter dealt with the

registration of the release of mortgage. We don’t agree the letter is misleading

when read in context. The word ‘once’ may be capable of being seen as implying

no delay, but in the context of a response to the complaint, it is not misleading.

We listened carefully to the cross examination of the respondent on this issue and

although criticism is made of the respondent in respect of her answers, we

believe she was doing her best and accept her explanations in this regard. We

have considered whether she could have given more information in her initial

response so as to meet the obligation to be frank. If a more detailed letter was

sought, as happened later, we can see how there could have been more material

provided. Here, the response is directed to showing that the failures complained

35 see paragraphs 3.30-3.31 of the complaint

35

of had been addressed, rather than when or how they occurred. We do not see

that there is a failure in respect of frankness in the context.

133. In a later response letter dated 9 July 2015, there is reference to CD being in part

to blame. Clearly, she was not with the firm at the time of settlement. She could

well have taken over from MS and been involved for a short time during the

period that registration was not attended to. However, the respondent now says

she was wrong about this and CD was not involved. She explained that she went

through a difficult time with MS gone without much notice and CD starting but

leaving after five weeks. The Society’s application says that this letter incorrectly

asserts that CD was handling the matter at the time of settlement. The letter could

be interpreted to mean that, but it could also be interpreted to be less specific,

saying that CD was involved during the time when registration was not being

affected. This is troubling. The respondent was not cross examined specifically

about one explanation for this statement namely, that she was angry with CD for

complaining to the Society about the trust payments and wanted to get back at

her. It would be unfair to ascribe that motivation to the respondent in the absence

of cross examination about it. During addresses, Mr Beaumont SC submitted that

if the Tribunal thought the statements were not intentionally misleading, then we

should find them to be recklessly so. By this we understand that it is submitted

that the respondent turned her mind to the question of whether what she was

saying was true and decided to say it anyway, without caring whether it was. We

listened carefully to the cross examination of the respondent and did not form the

impression, that she was intentionally trying to mislead the applicant or the

tribunal, or that she was being reckless. With the benefit of hindsight, it can be

seen that the letter should have been more carefully expressed. The point that it

was making does no more than provide an explanation, and as we have found

above, does not excuse her. Whilst in relation to the second letter we have had

some reservations, bearing in mind the Briginshaw test we are not comfortably

satisfied that in this response, the respondent breached the obligation of

frankness and candour.

Conclusion on Ground 8

134. We are not satisfied that Ground 8 has been made out.

36

The AS Complaint - Grounds 10, 12 and 13 (Ground 11a is part of Grounds 1

and 2)

Ground 10 - Failure to act with competence and diligence

135. The facts below are taken from the application and are verified by an affidavit of

AS of 25 January 2016. AS was not cross examined and we accept the facts as

stated by him. Whilst the respondent adds some comments regarding them in her

response and affidavit, she accepts that were many shortcomings in the handling

of this conveyance. Her responses do not challenge the matters of fact but seek to

demonstrate the experience of her staff and the steps she had taken to train and

supervise them.

136. AS retained the respondent’s conveyancing firm in May 2011 to act for him in

relation to a purchase of property in Mortdale NSW. The property was a strata

unit.

137. On 3 May the firm sent an email to AS saying it would do various things

including obtaining a strata search, explaining the contract and advising about it.

In the email he was told that various grants and concessions were available to

him as a first home buyer.

138. The contract was exchanged on 6 May 2011 and it contained a cooling off period

of five days. No advice about that, or the contract, was given to AS in that

period.

139. No strata title search was done before exchange, during the cooling off period, or

at all.

140. The employed solicitor, MS, handling the matter arranged for draft advice to be

obtained from a paralegal contractor based in the Philippines and that was

provided to the firm on 10 May. The advice suggested that the firm should check

various matters that could have affected AS adversely. They were to check

whether tenants were in occupation and whether AS required vacant possession;

to ask AS whether the cooling off period might be waived; amend a deposit

clause that favoured the vendor and check whether there was an agent involved

and if not to delete a special condition dealing with it. It can be seen that these

matters needed to be checked before the contract cooling off period expired.

37

141. A strata search would have revealed that there was a separate title for the garage

which was not provided for in the contract. This was later pointed out by the

vendor’s solicitor and was remedied.

142. No advice was given that there was no stamp duty payable or that AS, who was a

first home buyer, was entitled to a grant from the NSW Government and how to

obtain it.

143. No advice was ever given to AS about the terms of the contract.

144. AS then sought advice about paperwork concerning his finance, but received no

response.

145. On 3 June MS emailed AS and told him he had to pay stamp duty of $9235 and

asked him whether he had adequate insurance for the unit. The email was wrong

as there was no duty payable and the unit was covered by the Owners

Corporation insurance.

146. The mistake was repeated in an email to AS of 14 June 2011 sent by ME, a

paralegal employed by the respondent.

147. Fortunately AS knew the correct position and told the firm by email dated

14 June 2011. He also asked for the strata report and certificates so he could

apply for the first home buyers grant.

148. AW, another employee employed by the respondent, sent him a First Home

Grant Plus Form.

149. Settlement occurred on 17 June 2011. He was sent a report and a bill for $785

(after credit for an initial payment of $350). Unknown to AS at the time, the

invoice included $240 for the non-existent strata report and purported to be for

services that included advice about the contract. He says he then paid it. In fact it

was paid at settlement.36

150. He asked again for the strata report and certificates by email dated 3 July 2011.

36 see Annexure B to his affidavit

38

151. On 4 July he was told by email by AW that there was no strata report and asked

whether he still wanted it, or instead wanted a refund of $240.

152. On 5 July, AS emailed the firm and complained about delays, lack of advice,

incorrect advice and asked for the $240 to be repaid.

153. He did not receive a reply and complained on 25 July 2011 to the NSW Legal

Services Commission. It was forwarded to the applicant on 27 July. It was sent to

the respondent by the applicant on 3 August. AS says he understood from RAR 1

pages 684-687 that it had been sent by email. However page 684 shows the

complaint was addressed to a DX box and was not sent by email. In her

evidence, the respondent explained that she did not have a DX box and did get

the letter, but not for at least two days after 3 August 2011.

154. AS received a refund of the $240 on 5 August and also got a certified front page

of the contract that he had complained about not having received.37

155. On 6 September 2011 the respondent wrote to AS, apologised and paid him

another $242 because he had not been given the contract advice.38

156. The admitted shortcomings by her staff were considered by Michael James, a

Canberra solicitor, with extensive conveyancing experience in ACT and NSW. In

a report attached to his affidavit dated 15 March 2016 he explains in even handed

and persuasive terms that these errors were below the standard expected. He was

not cross examined. He says that, while he accepted the need to use paralegals

and employed solicitors, the failure to obtain the strata report, the failure to

provide any contractual advice and not picking up the separate title for the

garage, individually and collectively, raise a concern as to competence and

diligence of the respondent. He then concludes that whether it is lack of

supervision, lack of protocols, or training, or a quality control system, there was

a failure by the practitioner to meet the requisite standard. Whilst we accept as a

general matter that the respondent did attend to training and supervision and had

triggers for staff to follow, for whatever reason the number of errors of such

potential significance must, in respect of the AS complaint, lead to the

37 see Annexure C to his affidavit 38 see Annexure D of the AS affidavit

39

conclusion that she is responsible for such errors and she is guilty of

unsatisfactory professional conduct in respect of this complaint.

Conclusion - Ground 10

157. We find that the practitioner failed to conduct the AS matter with competence

and diligence and such failure is unsatisfactory professional conduct.

Ground 11 - Trust

158. We have already included Ground 11(a) as part of Ground 1. Ground 11(b)

assumes that the respondent received $240 specifically for payment for the strata

report and it was not used for that purpose. Whilst the language of the refund

letter from the respondent might justify this characterisation, it does not fit with

what happened. In fact, the client was charged an “all up” fee, as he was quoted.

The work to be done was not all done and he did not get the report. Thus they

had overcharged him. It was not a payment by him earmarked for the report, but

part of a larger bill which was payable. A refund was appropriate for failing to

get the report. In our opinion this was not trust money. Little attention was given

to this in submissions. If we are wrong in this conclusion, we do not see it as

adding in any significant way, to the gravity of the conduct covered in Grounds 1

and 2.

Ground 12 - Lack of fairness or good faith, Rule 1.1

159. This ground is contained in the application at 4.38-4.41. It asserts that in paying

itself the full $785 on settlement, the respondent’s firm acted unfairly because

the payment included $240 for a non-existent strata report and $242 for non-

existent advice, and the client had to complain to the applicant to get the refund

belatedly.

160. The respondent said in her evidence that she had sent the refund of $240, before

she saw the complaint. She explained that whilst the letter from the applicant was

dated two days earlier than the letter of refund, she had in fact sent the refund

before she saw the complaint. She was properly challenged by Senior Counsel in

cross examination. We accept her evidence particularly as the complaint letter

was addressed to a non-existent DX. Further, her paralegal had already offered

the refund but had failed to act on the request in a timely fashion.

40

161. The sum of $242 was not a number that was calculated mathematically, but a

discretionary amount that the respondent thought was a fair sum to compensate

AS for not having received the advice. Whilst it is true that by the time of this

second payment the respondent had the complaint, there is no evidence that she

knew until then that the work had not been done. In fact, the finding against her

in Ground 10 assumes she did not know. We do not see this as unfair treatment.

To the extent that this complaint could be sustained, it does not add to the gravity

of the finding in Ground 10.

Conclusion

162. In our opinion Ground 12 is not made out.

Ground 13 (No 1) - Lack of Candour

163. This ground relies on two matters. The first complains that the first substantive

response by the respondent to the complaint, being an email dated 22 August

2011, was misleading in saying that the $242 amount had been repaid to AS

weeks ago. It was refunded on 5 August, which is more than two weeks before,

and whilst it implied that this was before the complaint was received, as we have

found in paragraph 157 we accept that this is correct. Thus, we do not agree with

this aspect of the ground.

164. The second issue relates to a letter of 6 September 2011 about the lack of advice

about the contract. By this time MS had left the firm. The respondent says she

searched the work station of MS and found that he drafted legal advice on 10

May, but for reasons unknown, had not sent it. This is said to contain two

misrepresentations, namely, that MS had drafted it and not the off-shore

paralegal, and that it had been finalised by MS. This is said to be incorrect

because MS had not drafted the advice and the advice had not been finalised. The

respondent in cross examination said she thought MS had looked at it, and that in

the normal course, he would settle it before it was sent. We have not seen the

work station and cannot tell from its appearance whether it could be said that the

document found was an unamended draft from the paralegal, or whether MS had

been making changes, or had done something to adopt it in whole or in part. The

advice is in RAR 1 at pages 429-431. It has MS’s name at the bottom of it. There

is an email from the paralegal at page 432 enclosing an advice. It may be that it is

the document at pages 429 -431, or it may be that those pages were added to by

41

MS by inter alia, placing his name on it. We cannot tell. The respondent was

cross examined about it. She said she had assumed he had done it when she

looked. She was not clear now whether he drafted it, but he may have settled it.

165. The point seems to be whether she said it because it was to her advantage as was

put to her in cross-examination.39

We do not believe it can be so described fairly.

The complaint the respondent was addressing was the lack of advice. She

admitted none had been given and she could not see why not.

166. Whether MS had drafted, settled, or not applied himself to either task, made no

difference to the admission that the advice should have been given and was not.

167. We have accepted the evidence of the respondent in general and here, we are not

satisfied that there was any attempt to deceive, or that to the extent that the

statement is inaccurate, that it was material. In fact we are not satisfied that it is

necessarily inaccurate other than that the word ‘settled’ would be a more accurate

description of the process than ‘drafted’.

Conclusion Ground 13

168. We are not satisfied that this ground is made out.

Complaint of N1 and N2 - Grounds 13(second) 14, 15 and 16

Ground 13 (Second) Trust Money

169. This ground has been found to be part of Ground 1 and is included in the

findings on that Ground and Ground 2 and 11a.

Ground 14 and 16 - Fairness and Competence -Amending a licence agreement

without instructions

170. The facts set out here are taken from the application and the documents,

particularly RAR 1, and are not in issue except where we draw attention to any

contested matter.

171. In December 2010, N1 and N2 retained the respondent to act on the sale of an

ACT property. Two potential sales had fallen through but by 4 August 2011, the

respondent received instructions from the clients’ real estate agent.

39 Transcript of Proceedings 24 August 2016 page 187

42

172. On 18 August 201140

the buyers’ solicitor by email asked for early possession41

for $550 per week from 1 September with completion to be on 16 September

2011. The letter said that there was no compliance certificate42

and that the

buyers would not pay rent if settlement was delayed by not being able to provide

a compliance certificate on completion.

173. The respondent’s firm sent a copy of that email to N1 and N243

seeking

instructions. N1 confirmed that they had the compliance certificate.44

He appears

to have agreed to these matters. The respondent had sent special conditions by

email on 18 August at 2.35 pm to the buyer’s solicitor, Exhibit A1 p 211.

174. AW a paralegal, employed by the respondent, sent a draft licence agreement by

fax at 3.47 pm on 19 August.45

It was also sent by email at 4.09 pm (Exhibit A1

p 213). It required the buyer to pay a fee of $175 for drafting the agreement.

175. There is a further copy of the Licence Agreement at RAR1 p 209-21046

which

has an unsigned handwritten amendment saying “The buyer is not required to

pay the licence fee for any period in which the completion is delayed other than

for the sole default of the buyer.” Also $175 is crossed out and $87.50 is

handwritten in its place.

176. At some point, thought to be shortly after 18 August 2011 by N1, he and N2

attended the office of the respondent and signed the contract. The contract is

thought to have had annexed the licence agreement. N1 says it was in the form

that did not have the amendment. In any event he and N2 deny in their affidavits

dated 22 August 2016 that they agreed to the amendment about delay.

177. AW sent an email to N1 and N247

saying that the buyers won’t pay the $175 fee.

N1 responded on 23 August telling her to pay half of it being $87.50.48

It was not

made clear during the hearing, but the request by the buyers’ solicitor concerning

40 RAR1 page 219 41 this was expected. RAR1 page 223 42 this was mentioned as being sorted at RAR 1 228 on 4 August and that it was obtained on

15 August RAR 1 page 223 43 RAR 1 page 216 44 RAR 1 page 214 45 RAR 1 page 211-213 46 RAR1 page 211 47 RAR 1 page 197 48 RAR 1 page 197

43

the fee of $175 was made by an email dated 22 August at 2.56 pm [see Exhibit

A1 page 214]. It included the request to change the licence agreement to add

words about no licence fee being payable if the settlement were delayed. A good

reason is given for such a change, namely, the buyer would be at the mercy of the

seller if they chose to delay and the occupation fee was above market. AW sent

the email at RAR1 197 on 22 August at 3.27 pm to N1 and N2 asking about the

$175 fee but not the amendment. N1’s response also at RAR197 was sent at 9.31

am on 23 August 2011. The buyers’ solicitor agreed by email

178. Contracts were exchanged on 23 August 2011. The amendment concerning the

sum of $87.50 must have been inserted on that day as no instructions were given

until then. The email from N1 on that day says nothing about the other

amendment.

179. From the file, which is part of RAR 1, it is not possible to tell how this happened,

or who wrote on the amendment, or when. It would not even be clear it happened

then, except that correspondence after settlement between the respondent’s firm

and the buyers’ lawyer makes it clear that it was so amended and then exchanged

with that amendment.

180. Settlement was due on 16 September 2011. Unexpectedly, the client’s mortgagee

was not ready to settle then, so completion was delayed.

181. The sale finally settled on 26 September 2011.

182. The adjustments on settlement prepared by AW, allowed for rent until 16

September, but not until 26 September.

183. N1 protested this with the respondent and went to the buyers’ house to demand

the shortfall (roughly $785) from the buyer and had to be told not to do it.

184. There is in evidence, as an annexure to the respondent’s affidavit, a file note and

a draft statutory declaration by AW. The file note is an answer to a question

posed by the respondent as prepared for her by a consultant with the firm BW, a

senior and extremely experienced retired solicitor49

. The draft and unsworn

49 See paragraph 23 of the respondents affidavit of 12 July 2016

44

declaration is at RAR 1 page 823. The note is RH28 of the respondent’s affidavit

of 12 July 2016. The information provided by AW is given in December 2012.

185. In her note which is in answer to a leading question, she says that she remembers

speaking to N1 on the phone and that he agreed to the change regarding the

occupation fee at the same time as he agreed to the change to the $175 fee. In her

draft statutory declaration she says the request about the $175 was on 22 August

and it was agreed and that on 23 August she had the phone discussion with N1

about the licence fee amendment. She does not say she gave him any advice, nor

does she say she didn’t.

186. She wasn’t called and her explanation is not deposed to by her in an affidavit. N1

and N2 were cross examined.

187. They were asked to recall the events for their affidavits earlier this year. There is

no indication that they had done so before that and after their initial complaints.

188. N1 was in our opinion an unconvincing witness. He answered questions with

questions and parried with the questioner in a manner that appeared evasive,

even if there was nothing to evade. English was not his first language and he may

well have been at a disadvantage because of that. In fairness to him, we do not go

so far as to make adverse findings about his credit, but if the only evidence was

what he remembers now and was based on his affidavit and his oral evidence, we

could not be comfortably satisfied that what he says is right. N2 was more

responsive in her answers, but she clearly remembered little and she was not

involved in the crucial communications about the issue. It was put to her that

they were seeking to get from the respondent the sum of $5000 they did not get

because earlier sales fell through. It was no doubt to be implied that was their

motivation in making the complaint. There certainly was a claim of this at RAR

1, page 626. N2 did not agree.50

It was not expressly put to her that this was their

motivation or that she and N1 were not being truthful because of this.

189. A copy of the license agreement as exchanged was sent to the agent on

31 August 2011 and was uploaded to the website that N1 and N2 had as their e-

file. It was not explored as to whether they looked at it. Presumably if they did,

50 Transcript of Proceedings 23 August 2016 page 75

45

they would have known of the amendment earlier. There is no evidence on the

file of them being told expressly before or after exchange until after settlement

190. AW says that in her email she remembers being told the bank was ready so there

would not be any delay by the sellers. RH 31 is an email dated 8 September

saying that the firm had been told there was no mortgagee. However, the bank

communications start well before that. One such communication occurred on 22

August 2011.51

RH 31 seems to be an example of the left hand not knowing what

the right hand had done already.

191. N1 says the alteration to the licence agreement was clearly against his interest

and he would not have consented to it. In the abstract, it was not as good as the

original clause and so was against his interest to that extent. He had no reason to

think the sale would not proceed on time and he had already lost two buyers. The

amount of delay, if any, would not have resulted in any significant loss. We

cannot conclude that he did not consent just because the amendment was capable

of being against his interest. Nor could we conclude that he would not have

consented if he had been told and advised about it (assuming that he had not been

told or advised). We do not accept his statement now that he would not have

consented if he had known of the proposed amendment then. But clearly he

should have been given the opportunity.

192. There was no explanation for AW not giving evidence, and there is an inference

that can be drawn that she would not have assisted the respondent if called.

193. The strongest evidence that N1 and N2 had not been told of the amendment is

their immediate reaction when they found out. They said that the agreement was

in the form of the unaltered licence agreement. They disagreed with the

explanation given to them and N1 went to the buyers’ house to collect the

shortfall in rent. He seems to have convinced the respondent’s firm as she, or

someone on her behalf, wrote to the buyers’ solicitor asking for it after

settlement.52

51 see RAR 1 page 198 52 see RAR 1 page 140

46

194. It could be argued that N1 was told but did not take it in, or did not understand it.

All his communications, however, show he was sharp and had not misunderstood

anything else. Also, it would have been logical for AW to have asked him at the

same time as she asked about the $175 fee, but inexplicably she appears to have

overlooked it.

195. We have to be comfortably satisfied that he was not told and did not agree to, or

get advice about, the amendment.

196. Whilst there are reasons to refrain from making a positive finding, the fact that

N1 and N2 complained immediately and took steps that showed they believed

they had not agreed, as well as the absence of any evidence to the contrary,

including the failure to call AW and AW’s omission to ask about the amendment

when she asked about the $175 fee, persuade us that instructions were not sought

to amend the agreement.

197. Mr James in his report makes it clear that this is below the requisite standard.

198. He says that the respondent is responsible for this failure for the same reasons as

he said so in respect of the AS complaint. However, the two cases are quite

different and Mr James does not advert to the fact that in this case, there is one

failure rather than several failures and the unusual nature of the conduct. It is one

thing to fail to do a number of basic things, such as get a strata report or advise

about the contract before it is exchanged, or before the cooling off period. It is a

much less foreseeable event that a paralegal would amend a contractual

document without instructions. Moreover, the fact that AW asked for instructions

about the $175, but overlooked the clause regarding the licence fee, shows that

she knew to get instructions, but for no good reason failed to do so on this

occasion.

199. There is no evidence that the respondent knew this had happened, or might have

anticipated such an unusual event.

200. We accept that failing to get instructions to amend a contractual document,

particularly if it could be adverse to the interest of the client, would be a breach

of the obligation of fidelity if done knowingly, and would also be incompetent,

but we are not persuaded that in this case this is the fault of the respondent.

47

201. This ground also involves Ground 16 which says it is not competent to do this

without advice. Clearly the same position applies. If N1 was told, which we have

found he was not, then he still should have been given advice. He was not given

advice because he was not told at all. The assumption that he was told at all is not

made out, so the occasion for advice does not arise. In any event, the

responsibility issue still arises.

Conclusion Grounds 14 and 16

202. We are not satisfied that these grounds are made out.

Ground 15 - Lack of Candour

203. The first complaint is that the respondent misled the applicant by not revealing

that there were no instructions to amend.

204. The letter from the respondent is dated 18 January 2012. It is at RAR 1 pages

649-651.

205. The letter needs to be read as a whole. The respondent’s firm did explain what

the reasoning was on several occasions after the problem arose. When they did,

they did not advert to the possibility that the licence had been amended without

instructions. The letter accurately sets out what the file revealed in some detail. It

explained the reason why the settlement was delayed. In order for us to be

satisfied that the respondent’s response lacked candour we have to find that the

respondent, when writing the letter, knew or believed that there had been no

instructions or advice. As can be seen from the discussion relating to the finding

that there were no instructions, there is reason to think otherwise. We accept the

evidence of the respondent that she believed there was consent and it is clear that

she did not advert to the possibility that there was not when she wrote the letter.

206. We are not satisfied that the complaint in paragraph 5.21 of the application is

made out.

207. The second complaint is that the letter represents that the explanations referred to

occurred before exchange. We do not read it as saying that. It certainly does not

do so expressly, and when read in conjunction with the file, it is clear that the

respondent is doing no more than she could, unless she positively knew

something that was not on the file, namely, that there were no instructions. We

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do not find that the representations alleged in 5.23 of the application are made

out at all. If we are wrong and they could be inferred, we find that it has not been

established that the respondent knew, or believed, that there were no instructions.

This complaint is not established.

208. The next complaint relates to letters from the respondent and her solicitor dealing

with the AW notes and draft statutory declaration referred to in paragraph 5.25.

The letters complained of are a letter of 6 August 2015 and a letter of 21 August

from the respondent’s solicitor. They are at RAR 1 pages 775-800C and 812-

813.

209. Essentially, the respondent was responding to a draft application to the tribunal.

The matter had got to the stage where it was clear that an application was going

to proceed. The investigation phase had been exhaustive and continued over

many years. The circumstances that the respondent was dealing with were not the

usual first response where the applicant knows nothing and relies on the

respondent to give it as much information as she can. It is clear that she did do

that in the letter of 18 January 2012. She was then at an advanced pleading stage

and was responding to the whole application. The applicant knew what was on

the file and what was not. In this context the respondent proffers the statement

that she has documentary evidence. She does not say she has contemporaneous

documentary evidence, but the applicant argues it should be read that way even

though it had the chronology and documents from the file since 2012.

210. Whilst there may be excuses for the delay of over five years and the unusual

course of asking the respondent to give the applicant an advance pleading, it

needs to be taken into account in considering the complaint.

211. The complaint relates to part of a very long letter which escapes complaint

otherwise.

212. Mr Erskine SC submitted that the reference to documentary evidence would

never have misled anyone and certainly not at the stage that the matter had

reached. In order to ascribe intent to deceive we have to conclude that it might

have done so. It did not in fact deceive and inevitably prompted more

information which was provided.

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213. We agree with Mr Erskine SC. This complaint is not made out.

214. It is also complained that the omission of the leading question by the

respondent’s solicitor was an attempt to mislead as the leading question might be

seen as improper in seeking to influence the answer. Whilst the question could

have been better expressed so that it was not leading, it is a long bow to conclude

that it was an attempt to influence the answer. The respondent said she does not

know why her solicitor cut bits out. She was challenged about this in cross-

examination but we accept her evidence. It is unlikely that her solicitor was

seeking to mislead. We are not satisfied that the response was in fact deceptive,

or was so intended to be.

215. The last complaint relates to the explanation given about miscalculating the

payment of commission to the agent.

216. The agent had written a letter saying it had no funds and then that it had $1000

and asking for the balance. The letter was obviously misread by the respondent’s

office and the client was told about it in a reporting letter. How anyone could be

misled by the respondent’s clumsy explanation of these events is hard to

understand. The claim is not established. We are not satisfied in the context that

this is misleading in fact, or that it was intended to be.

Credit issues

217. The respondent was cross examined about this complaint. It was submitted that

she was not truthful. Attention was directed to her answers about AW and what

may be seen as inconsistent answers, or answers that sought to distance her from

blame. It is fair comment that the respondent was putting her best foot forward.

To the extent her answers may have an appearance of inconsistency; we saw this

as an inevitable product of the delay between the events and the hearing. Whilst

there was some confusion and possibly mistakes in her recollection, the clear

conclusions we have drawn are that she appreciated that instructions were

necessary and believed AW that they had been obtained. It would not be a

surprise that such instructions would have been given as there was unfairness if

the agreement was not amended to some extent and two prior sales had fallen

through. Further, the clients would have believed that there would be no delays

on their part

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Conclusion on Ground 15

218. This ground is not made out.

Summary of Conclusions

219. We are satisfied that Grounds 1, 2, 11a and 13 (second one) together constitute

unsatisfactory professional conduct. We also are satisfied that Grounds 7 and 9

constitute unsatisfactory professional conduct and, as they arise because of the

issue about the responsibility to attend to registration, it is appropriate to treat

them globally. Finally, we also find that Ground 10 is unsatisfactory professional

conduct, but it arises from a separate problem, namely, a failure to oversee the

conduct of a matter when MS had departed part the way through, so that there

were a series of mistakes in respect of the matter. We are not satisfied that the

remaining grounds are made out.

220. We should record our appreciation of the assistance given by the legal

representatives of the parties. Both senior and junior counsel for the applicant

provided helpful oral explanations and submissions as well as extensive written

submissions and other material. The solicitors for the applicant provided in a

helpful way numerous documents that were easily referenced. The hearing was

also made much easier by the sensible and informative approach of the

respondent’s counsel and the paperwork provided by her solicitor.

221. It is necessary to reconvene the matter to deal with what penalties should flow

from these findings and the matter will be listed for directions to fix a date and

time for any evidence and submissions to be filed and served in respect of

penalty, costs and any consequent orders.

………………………………..

Senior Member B Meagher SC

Delivered for and on behalf of the Tribunal

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HEARING DETAILS

FILE NUMBER: OR37/2015

PARTIES, APPLICANT : Council of the Law Society of the

ACT

PARTIES, RESPONDENT/: Legal Practitioner RN

COUNSEL APPEARING, APPLICANT N Beaumont SC and M Kalyk

COUNSEL APPEARING, RESPONDENT Mr C Erskine SC

SOLICITORS FOR APPLICANT Phelps Reid

SOLICITORS FOR RESPONDENT Snedden Hall & Gallop

TRIBUNAL MEMBERS: Senior Member B Meagher SC and

Member W Pearcy

DATES OF HEARING: 22, 23, 24 and 25 August 2016