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

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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.

A Queensland law firm acted for a woman who said her brother owed her money. Proceedings for its recovery were contemplated. An Adelaide silk whose first name is Malcolm and whose middle name is Fraser (now a Supreme Court judge) was involved, as an acquaintance of the client rather than as counsel instructed by the law firm.

The lawyer followed the client’s instructions and lodged a caveat on her brother’s house asserting an entitlement ‘as equitable mortgagee pursuant to a loan agreement dated May 1990’. That did not refer to a written agreement, but the Statute of Frauds provides for writing requirements in respect of agreements creating interests in land such as equitable mortgages. So if there was no written agreement, it was a problem.

The lawyer believed that there was a written loan agreement providing for the equitable mortgage, but did not check, which she acknowledged was an error of judgment. The client had told the lawyer that the paperwork, including the agreements, were with an Adelaide silk. Of course there may have been written loan agreements, but it did not follow that they provided for the creation of an equitable mortgage.

The silk had provided particulars of the caveatable interest to the client, and the client to the solicitor, in writing. They did not say there was an equitable mortgage which satisfied the writing requirements.  The Commissioner suggested that the complexity of the particulars suggested, au contraire, that there was nothing so simple as an equitable mortgage which satisfied the writing requirements. But the particulars did refer to terms of the agreement without any suggestion that they were oral or implied.

Oddly, the particulars given by the silk are not set out in the judgment, and it seems that the silk had in mind the lodgment of a caveat: see [11]. If so, then unless the silk who is now a Supreme Court judge was equally negligent, this was a case in which the wrong caveatable interest was claimed rather than that a caveatable interest was claimed in circumstances where a competent lawyer would see that there was no caveatable interest. When the solicitor sent the caveat to the client, who was in contact with the silk at that time, the client signed it and returned it.  But when the caveat was challenged by requisition, it was not pursued and never registered, so there is something puzzling about the facts which are not fully set out in the Tribunal’s reasons.

The solicitor’s counsel summarised her position thus:

‘In short, whilst in hindsight [the solicitor] might have done better not to make the assumption about the written agreement it is apparent how the assumption came to be made – [the client] referred to a loan agreement, as did the particulars (which provided a date) and rather precisely expressed terms, [the client] said that documents including agreements were with [the silk], [the solicitor] believed there to be pressure from [the client] to prepare and lodge the caveat urgently and [the client] never said either when instructing [the solicitor] or later dealing with [the partner who took over when the solicitor went on holidays], that there was no written agreement.’

His Honour and the other members of the Tribunal found at [70] – [72] that:

‘the absence of [a date for the agreement and of any reference to clause numbers in the silk’s particulars], whilst it might have caused a practitioner to seek additional information, does not lead to the conclusion that the failure to inquire further amounted to a “very stark misapprehension of instructions” or a “stark lack of curiosity”.

This is not a case where there is any suggestion of dishonesty or unethical conduct, nor can it be concluded on the evidence that there was any substantial or repeated error. It was an isolated instance.

In the circumstances, the Tribunal finds that the conduct was more in the nature of a mere slip and certainly not, as is submitted by the Commissioner, a very stark misapprehension of instructions followed by an equally stark lack of curiosity and it was not conduct which fell so far short of accepted standards of competence that it amounted to unsatisfactory professional conduct. In terms of the decisions in [Legal Services Commissioner v McClelland [2006] LPT 13] and [Legal Services Commissioner v Bone [2013] QCAT 550], the conduct was not sufficiently substantial to be unsatisfactory professional conduct.’

The solicitor went on holidays and a partner of the firm took over her files while she was away, during which time the caveat was the subject of requisitions which led to the partner learning that there was no written agreement providing for an equitable mortgage, so that the caveat was never registered on the brother’s title. Nevertheless, the partner caused the firm to put out a bill which included entries for attempting to lodge the caveat. The Commissioner charged him too with unsatisfactory professional conduct constituted by billing for work which, because it was negligent and yielded no benefit for the client, should never have been billed.

The Tribunal found that even if the partner knew before putting out the bill that there was no written agreement, it did not follow that he knew or ought to have appreciated that a mistake had been made by the firm such as to disentitle it from billing for it.  It was not the firm that was being prosecuted

More fundamentally, however, there was no allegation that the partner billed the fees knowing that they were unbillable. There was, in fact, no allegation as to his state of mind at all, and this was determinative. The Tribunal only dealt with the Commissioner’s submissions as to inferences which should be drawn about the partner’s state of mind ‘for the sake of completeness’ and only, it may be inferred, because it wanted to point out that they were wrong. The Tribunal observed:

‘In the case of an allegation relating to the rendering of an account in circumstances where there is no entitlement to do so, a factor which will generally be regarded as significant is the knowledge which the practitioner has of the circumstances, which mean that there is no entitlement. It may also be relevant whether the practitioner should have been aware of the lack of entitlement or was reckless in the way in which the account was rendered. If the practitioner had no knowledge of these circumstances at the time the account is rendered, then another factor that might become relevant is the action taken by the practitioner after becoming aware of the lack of entitlement.

None of these issues are raised in the discipline application and so are not an aspect or element of the charge made against Mr Devlin.’

The Commissioner sought to criticize the partner for not amending the bill so as to abandon the claim for fees for the caveat once the facts finally came out after the solicitor’s return from leave. The Tribunal was admirably adamant: that conduct was not alleged in the charge, and it was not going to consider it, even as retrospectant circumstantial evidence telling upon the conduct which was charged.

See also:

Tags: 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