Stephen Warne on professional negligence, regulation and discipline around the world

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Legal Services Commissioner’s new decision making powers

October 11th, 2016 · No Comments

The Victorian Legal Services Commissioner has published a report on his new proactive regulation of the profession.  It tells how risk profiles of practices are being constructed with the assistance of academics to target trust audits and audits of firms more generally (a new thing for law practices which are not ILPs).  It also tells about the exercise of the power to make binding decisions, and alerted me to the fact that the Commissioner now publishes redacted versions of costs determinations at this page. The report says: [Read more →]

→ No CommentsMore articles on: costs disputes · Discipline · Legal Profession Uniform Law · Legal Services Commissioner · National Profession Uniform Law · Professional fees and disbursements · Taxations

D3 and D4 settle with P and take over P’s case against D1 and D2 (-not)

October 7th, 2016 · No Comments

Taylor v Hobson [2016] QSC 226 is a strange old case. Plaintiffs sued defendants for damages alleging they had been misled into purchasing a business.  They sued the vendors and the vendors’ solicitors, alleging that each of the vendors and the solicitors had made misleading representations.  The solicitors (through their insurer) settled with the plaintiffs.  The solicitors promised to pay  a settlement sum to the plaintiffs and the plaintiffs promised to let lawyers appointed by the solicitors’ insurer act for them and run the plaintiffs’ case for them, with a view to recovering damages from the vendors and giving those damages to the solicitor defendants.  It was a creative form of litigation funding, if you will.  But it was a bit too creative for the Supreme Court of Queensland.

The insurer was to appoint new solicitors, not the solicitors which had been representing the solicitor defendants in the proceeding.  Nevertheless, the Court stayed the case as constituting an abuse of process for so long as the defendant-appointed solicitors were running the plaintiffs’ case.  The parties to the settlement might now amend it so as to remove the element of control over the plaintiffs’ case, therefore. The case may continue, and that aspect of the settlement deed which required the plaintiffs to give to the solicitor defendants the proceeds of their claim against the vendors might still have its operation.

→ No CommentsMore articles on: Abuse of process · Negligence

Applications to stay disciplinary decisions pending appeal

October 5th, 2016 · No Comments

I had to convince the Legal Services Commissioner to consent to a stay of orders suspending my client pending an appeal he has brought from VCAT the other day.  Happily the Commissioner consented.  For next time, I squirrel away this re-statement by the New South Wales Court of Appeal of the application to this class of case of the law governing applications for stays in civil proceedings pending appeal in Griffin v Council of the Law Society of New South Wales [2016] NSWCA 275.  (I reported on the first instance decision here, and this latest decision reveals that the solicitor has applied for the removal of his appeal to the High Court so it can rule authoritatively on the application of the freedom of political speech to criticism of the third arm of government, the judiciary.) [Read more →]

→ No CommentsMore articles on: appeals · Discipline · Legal writing · Suspension

Judicial review of decisions to dismiss disciplinary complaints

October 3rd, 2016 · No Comments

A man was acquitted of criminal charges.  The prosecution’s appeal failed.  He complained about the police’s lawyers’ conduct to South Australia’s Bureau de Spank, the Legal Practitioner Conduct Commissioner.  The Commissioner dismissed the complaint.  There was a statutory right of appeal in respect of some but not all categories of decisions at the conclusion of a disciplinary investigation.  Dismissals of complaints were not decisions which attracted a right of appeal.  Furthermore, the Commissioner argued, the man had a right  essentially to prosecute the lawyers privately for misconduct as an ‘aggrieved person’ under s. 82(2)(d), Legal Practitioners Act 1981 (SA).

The Commissioner applied unsuccessfully for the summary dismissal of the judicial review application.  The Court found that even though in any ordinary prosecution which would have followed a disciplinary complaint, the parties would be the Commissioner rather than the complainant on the one hand and the lawyer on the other, the complainant’s connection as the object of the alleged misconduct to the subject matter of the complaint was sufficient to give him standing (or, more precisely, to avoid summary termination of his proceedings on the basis of lack of standing).  And that was so notwithstanding the statutory scheme for appeals which conspicuously excluded him from its tenderness and notwithstanding any right he may have privately to prosecute the lawyers.  The decision is reported as McLeod v Legal Profession Conduct Commissioner [2016] SASC 151.

The situation in Victoria is impacted, in respect of complaints to the Victorian Legal Services Commissioner to which the Legal Profession Uniform Law apply  by part 5.6 of chapter 5 (ss. 312 – 314).  Decisions of the Victorian Legal Services Commissioner under chapter 5 are ‘final, except as provided by this Part’.  The Commissioner is empowered to review his own decision but only at his absolute discretion.  And lawyers have a right to appeal to a person who is presumably intended to be VCAT from a disciplinary sanction imposed administratively by the Commissioner or a compensation order imposed by him for $10,000 or more.

As to the law in relation to the same question in Queensland, see Murphy v Legal Services Commission [2016] QSC 174.

→ No CommentsMore articles on: appeals · Discipline · judicial review · Legal Services Commissioner · National Profession Uniform Law

Third party payer taxations where client bankrupt: WASCA

October 3rd, 2016 · No Comments

In Iron Mountain Mining Ltd v K & L Gates [2016] WASCA 166, the appellant, a listed company, had indemnified one of its directors against the legal costs of lawyers defending the director in criminal charges.  Companies can do this on the basis that the director must repay the costs if he pleads or is found guilty, since it is illegal to indemnify a costs liability incurred as an officer of the company if the costs are incurred in defending or resisting criminal proceedings in which the person is found guilty: ss. 199A-C Corporations Act 2001Note Printing Australia Ltd v Leckenby [2015] VSCA 105; (2015) 106 ACSR 147 [65]. The company paid more than $500,000 in respect of the fees prior to the guilty plea.

The director went bankrupt.  The company applied for taxation of the director’s solicitors’ fees.  By that time, the director had pleaded guilty to some of the charges.  The company was a non-associated third party payer; it promised to pay the lawyers’ fees, but its promise was made to the director and not to the lawyers. The Court found that the right given to third party payers to seek taxation did not adjust the interests of the client and the lawyers; it only adjusted the interests between the third party payer and the client: [Read more →]

→ No CommentsMore articles on: Professional fees and disbursements · Solicitor client bills of costs · Taxations

Does a subrogated claim give rise to a general res judicata if an insured’s loss is partly insured and partly uninsured?

September 5th, 2016 · No Comments

In De Armas v Peters [2015] NSWSC 1050, the Supreme Court of NSW declined to grant leave to appeal from a decision of the Local Court.  The Local Court had allowed a man to sue for the cost of repairs to his car, even though he had previously sued her for car hire costs he incurred while those repairs were being undertaken.  And even though, in that first case, the Local Court had found him to be the negligent driver, not the woman.  Impossible?  There was of course a twist.  The first suit was brought with the involvement of a car hire company from whom the man had hired the car he used while his car was being repaired. No doubt they had told him that the car would be at no cost to him and the cost of the hire would be recovered by the car hire company’s solicitors from the negligent driver.  The second suit was brought by his insurer, having stepped into his shoes through the law of subrogation.  The man’s losses were partly insured and partly uninsured, hence his deal with the car hire company to which he was probably referred by his repairer.  And the woman’s insurer had not taken any defence of abuse of process in either proceeding before she obtained judgment in the first.  You can watch a discussion between AAMI’s solicitor and barrister about the decision on the excellent BenchTV here. [Read more →]

→ No CommentsMore articles on: Abuse of process · Civil Procedure Act 2010 (Vic) · Insurance · Legal writing · Litigation estoppels · Negligence

News from Tibet

August 15th, 2016 · No Comments

For some reason the latest of many stories I keep up with from Tibet, where I have travelled, prompts me to share it with you.  Maybe it’s the contrast with the case of wrongfully convicted Steven Avery, the subject of ‘Making a Murderer’ (did you hear that Brendan Dassey’s conviction has just been overturned?).  Maybe it’s that I too have a 6-ish year old, whose school is forever receiving delegations of kids from China who, and their parents before them, have likely been fed exclusively propaganda about Tibet which they no doubt consider to be a fractious and backward, quaintly religious outpost of neo-feudalists, a wild west.  Maybe it’s the people smuggler angle.  Maybe it’s the amazement at finding a story which causes the Don Dale saga to pale into comparative insignificance. Maybe it’s a frustration with the self-censorship about China which is so pervasive, and the near-complete control by the Communist Party of China of even Australian media (Chinese language media, to be precise).  Maybe it’s that this case has been thoroughly investigated by New York’s Human Rights Watch, whom I trust absolutely, and whose 108 page report forms the basis of much of what follows.

Who knows? But here goes with the short version (I’m going to assume the Tibetans’ suspicions are correct, which seems fair to me, given the Chinese authorities’ lack of enthusiasm for sharing and enthusiasm for repeatedly cremating details of the case). The Chinese framed one of the most senior supporters of the Dalai Lama still in Tibet, Tenzin Delek Rinpoche, himself a venerated lama with a philanthropic flair. They charged him with financing a terrorist bombing, sentenced him to death in a mockery of a trial along with a co-accused whom they probably procured to implicate Tenzin Delek by torturing him.  Delek’s, but not the co-accused’s, sentence was later commuted to life imprisonment.

The Chinese tortured Delek for 13 years, beating him, starving him, throwing boiling or freezing water over him, all the while sarcastically suggesting he use some of his magic lama powers.  They hurriedly cremated him inside the prison without an autopsy after his death in jail, locked his grieving sister and her daughter up without charge for weeks and released them only after trying to have them promise they would not publicly suggest he was poisoned, and harassed or detained 60-80 supporters at around the same time 100 human rights lawyers and activists were thrown into jail. All of which prompted the super-cool looking niece Nyima Lhamo, pictured, to pay people smugglers $10,000 to trudge her across the Himalaya to Dharamsala, the Dalai Lama’s place of exile in the Indian Himalayas, to tell the story, leaving to the depravities of infuriated Chinese officials her ailing mother and 6 year old daughter.

And guess what? Since I started this post, news has reached me that the mother and daughter have gone missing after being detained by Chinese police. And news has also come to my attention of the propaganda video with a purported confession of a prominent lawyer arrested in the 2015 arrests.  As the Washington Post put it, ‘Wang rips apart her entire career of human rights law. Speaking in mellifluous tones while sitting underneath a tree, she denounces her former colleagues and refuses to accept a prestigious human rights prize awarded to her by the American Bar Association.’  The op ed explains how this is achieved: ‘…  the authorities might move to physical torture, including chaining detainees to a “tiger bench” in excruciating positions for days and sometimes weeks, applying electric shocks to their genitals, jolting and beating them with electric police batons, or placing them in long solitary confinement, to name a few. Some activists have been so traumatized as to be unable to speak after being released from detention …’.

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→ No CommentsMore articles on: Human rights and international law · Rule of law

Privilege and disciplinary investigations

August 8th, 2016 · 1 Comment

Lawyers have an obligation proactively to assert and protect the privilege enjoyed by their clients and former clients: Re Stanhill Consolidated Ltd [1967] VR 749 at 752. I wrote about it in this post about the Legal Profession Act 2004 (Vic).  Lawyers have no implied or, I would suggest, ostensible authority to waive privilege belonging to former clients. The administration of justice will protect the privilege of persons who are unaware of the issue arising and make no assertion of the privilege: Legal Services Board v Garde-Wilson [2007] VCAT 1406 at [89].

In investigations of complaints by former clients about their former lawyers, no privilege issue arises, either under the Legal Profession Act 2004 or the Legal Profession Uniform Law.  The complaint would amount to an implied waiver at common law, and the question is put beyond doubt by statute.  Of course, this proposition has its limits and the wholesale use of client secrets against them in a manner disproportionate to the need to divulge them in response to their complaint is a seriously ugly look.  The issue of client privilege arises where disciplinary investigators are investigating complaints by non-clients, or in own motion investigations.  So, for example, I am advising in relation to a complaint made by the husband about conduct by the wife’s solicitors in a matrimonial proceeding between them.

Where a lawyer purports to waive a former client’s privilege without the client’s instructions, or simply fails to consider the question before handing documents over to the State, the law requires ‘the cat to be put back in the bag’ as far as possible: B v Auckland District Law Society [2003] UKPC 38 at [69]; British American Tobacco Australia Services Limited v Cowell [2002] VSCA 197 at [192].  So a disciplinary tribunal might well not receive, or put from its mind, evidence of privileged communications obtained by legal regulators in the course of investigations of non-client complaints where the client had not waived privilege, and indeed exactly that occurred in a VCAT case in which I was involved.

The law in relation to privilege and non-client complaints under the Legal Profession Act 2004 was clearly declared by VCAT.  The situation faced by  lawyers investigated under the LPUL following the complaints of non-clients, and in own motion investigations, in respect of pre-LPUL conduct is not so clear.  It is the subject of this post, which suggests that notwithstanding what the Legal Services Commissioner will tell you is a clear abrogation of privilege by the LPUL for all investigations conducted under it, lawyers in such circumstances should think carefully before giving up privileged communications without their former clients’ informed consent.  They should, in my submission, at least alert their clients to the possibility that the privilege might still be available to be asserted and give them the opportunity to assert it, if they care to sufficiently.

It will be increasingly important in the future to make clients aware that lawyer-client confidentiality has been largely done away with: all a person curious about the advice being obtained by his adversary need do is make a complaint about the adversary’s lawyer.  The old advice that ‘everything you tell me is strictly confidential’ cannot now be given without risking a negligence suit. Every time a solicitor tells a battered woman that whatever she tells him will be just between her and him, and he will seek her permission before using the information publicly or even in the Family Court, will have to add ‘unless your boyfriend or his father or a men’s rights action group make a disciplinary complaint against me, as they are perfectly entitled to do’.  So too the QC representing BHP in relation to tax matters: ‘Of course you understand that all this is privileged (unless the judge, who’s getting pretty cranky at me, refers me off for investigation by the Legal Services Commissioner)’.  I don’t think I’m being hyperbolic; I’m acting at this very moment for a solicitor whom the Commissioner is compelling to divulge privileged communications connected with the subject of proceedings, in a complaint by the other side to the proceedings, mid-proceedings.

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→ 1 CommentMore articles on: Client Legal Privilege · Discipline · Legal Services Commissioner · National Profession Uniform Law · Retainers

Yet more on the obligation on Legal Services Commissioners to plead their case properly and stick to it

August 7th, 2016 · No Comments

Legal Services Commissioner v AL [2016] QCAT 237 is a decision of a disciplinary tribunal presided over by Justice David Thomas, President of QCAT and a Supreme Court judge. It is therefore of high persuasive value, and treats Queensland provisions which are the same as the equivalent Victorian provisions. And it provides what I suggest with respect are the correct answers to the following questions:

  • How negligent do you have to be before you can be found guilty of unsatisfactory professional conduct as defined in provisions which say that the concept includes ‘conduct that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent’ lawyer holding a practising certificate? (Answer at [44] and [27]: substantial and very obvious fallings short of the standard, established by direct inferences from exact proofs.)
  • What must be pleaded specifically in a disciplinary charge? (Answer at [82] – [92]: all states of mind, not only dishonest intents, and all facts to be relied on (‘the charges to be levelled must be fully and adequately set out in the Discipline Application. As a matter of procedural fairness, the Practitioner should not be left in any doubt as to the extent of the allegations that is to be met.’)
  • To what extent is a disciplinary tribunal constrained in its decision making by the allegations specifically made in the charge? (Answer at [96] – [108]: absolutely: if no state of mind is alleged, the prosecution should not be allowed to call evidence as to state of mind; ‘it would be wrong to admit evidence the principal purpose of which is to establish conduct that lies beyond the ambit of the charge’.)
  • Does the mere fact that charges are not allowed on taxation mean that there has been overcharging such as to warrant discipline? (Answer at [76] – [77]: no)

The Tribunal dismissed charges against a solicitor who lodged a caveat pursuant to an equitable mortgage without checking that it satisfied the Statute of Frauds’ writing requirements and against a partner of her firm who took over her files when she was on holidays and billed the client for the work in attempting unsuccessfully to register the caveat.

I move from the specific facts of this QCAT case to general comment (what follows is certainly not veiled reference to the conduct of the Commissioner’s counsel in QCAT). There is a very real reason to insist on the particularization of states of mind in disciplinary tribunals, including particulars of actual and constructive knowledge. These details do not always get left out just because it is thought that disciplinary tribunals are not courts of pleading and such minutiae is not appropriate. Nor do they just get left out because they are thought to be inherent in the allegation, or because of incompetence, or mere mistake. Rather, they get left out because bureaucrats have investigated incompetently and when competent counsel come to plead disciplinary applications based on the investigation, they do not have a sufficient factual foundation to make these allegations, or perhaps are simply too timid.

But sometimes counsel with civil practices, untutored in the art of prosecutorial restraint, and safe in their private belief that the practitioner is in fact much more evil than incompetent investigation established, might fall prey to temptation. Mealy-mouthed, ambiguous allegations might be made which require the practitioner to get into the witness box. Then, all manner of unpleaded allegations as to states of mind and as to completely un-pleaded conduct, justified in relevance as tendency evidence or circumstantial evidence of the pleaded facts, might be cross-examined out of the practitioner and an unpleaded case presented to the disciplinary tribunal in closing. In a tribunal not bound by the rules of evidence, such questioning may be waved through with lip service to the proposition that objections will be dealt with by according appropriate weight to the evidence in the final analysis. Queensland leads the charge against such conduct, and I can’t help thinking it’s because Supreme Court judges seem to get involved in disciplinary decisions more often up there. All power to them. So impressed am I with this latest judgment, I have decided to go on a study tour of the Sunshine Coast in the September school holidays.

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→ No CommentsMore articles on: Alleging fraud & misconduct · Briginshaw · Discipline · Dishonesty · Evidence · fraud · gross overcharging · jurisdiction · litigation ethics · natural justice · negligence as disciplinary breach · procedure · Professional fees and disbursements · prosecutorial failures · prosecutors' duties · Taxations · Unsatisfactory conduct · Wasted costs

A little case about a barrister suing a solicitor for fees

July 14th, 2016 · No Comments

Barnet Jade has given us an admirably constructed decision of Assessor Olischlager, a no-doubt busy decision maker in the Small Claims Division of the Local Court in NSW.  Dupree v Russo [2016] NSWLC 8 was a barrister’s suit for fees against a solicitor.  Call me a dag, but it is always a pleasure to find diligent, elegant decisions carefully considering bang-on authority from the busiest decision makers who generally receive little assistance in the researching and writing of decisions. The decision considers whether costs agreements came into existence by the continued giving of instructions, and between whom, what disclosure obligations the barrister had, and whether the limitation period for suing for the fees was re-set by an acknowledgement of debt by the solicitor.

The barrister offered to enter into a costs agreement jointly and severally with his instructing solicitor and their client.  The offer said that the continuing provision of instructions would be taken as acceptance.  The solicitor continued to give instructions on behalf of the client.  The Court found that a costs agreement arose: the instructions were given by the solicitor personally and as agent for his client, as an act of acceptance on both their parts.  As the Assessor said: [Read more →]

→ No CommentsMore articles on: Costs agreements · costs disclosure defaults · Legal Profession Act · Professional fees and disbursements · The suit for fees