Judges’ referrals to the ATO, police, Legal Services Commissioners

Often enough, judges refer the conduct of lawyers appearing before them (or disclosed by the case they are adjudicating) to the Legal Services Commissioner for investigation.  A recent example is Re Manlio (no 2) [2016] VSC 130.  Judges also refer the conduct of non-lawyer parties to investigative agencies, e.g. where a tax fraud is suggested by evidence in the case.

Generally, this is not done pursuant to any statutory directive or authority.  An exception is s. 202 of the Legal Profession Uniform Law which requires the Costs Court to refer a matter to the Legal Services Commissioner if it considers that the legal costs charged, or any other issue raised in the assessment, may amount to unsatisfactory professional conduct or professional misconduct.  (Compare s. 3.4.46 of the Legal Profession Act 2004 which authorised rather than required the Taxing Master to make a referral.)

I have never been particularly clear about the nature of such a referral, or as to the procedures which ought to be followed. Gibson DCJ set out the principles recently, at least as they apply in NSW, in Mohareb v Palmer (No. 4) [2017] NSWDC 127: Continue reading “Judges’ referrals to the ATO, police, Legal Services Commissioners”

The Civil Procedure Act’s overarching obligation to keep costs proportionate

The Civil Procedure Act 2010 applies to proceedings in the Magistrates’ Court, County Court, and Supreme Court but not federal courts or VCAT. Its overarching purpose is to

‘facilitate the just, efficient, timely and costs effective resolution of the real issues in dispute’: s. 7. Continue reading “The Civil Procedure Act’s overarching obligation to keep costs proportionate”

Lessons from a tome in the dome on the assignment of suits’ fruits

Cruelly, the Legal Services Commissioner prosecuted my client recently for disbursing monies from his trust account to the wrong person, albeit without the slightest dishonest intent, which he said would be regarded by competent and reputable peers as disgraceful or dishonourable.  I say ‘cruelly’ because he made me go to the Supreme Court Library, and read impenetrable equity texts in its dome for hours.  I read the most obscure article I can ever remember reading: P G Turner’s ‘Assignment by Way of Charge’ (2004) Australian Bar Review 280.

The Commissioner said the solicitor’s client had assigned in equity the proceeds of their claims against negligent drivers for the cost of repairing their vehicles.  The assignee was said to be the repairer’s factor.  When the monies came into my client’s trust account, they were said to be ‘charged in equity’ (‘charged in law’ as well in fact, which I never got to the bottom of), such that the solicitor was obliged to pay them not to his client but to the assignee-chargor.  The Commissioner backed down from this claim in the end, but not before I had burrowed into the law.  Harsh.

In this post I gather together some law about assignment of choses in action.  Nothing new.  Just a summary of the law in case you are as ignorant of its nuances as I was before I hit the equity tome in the dome.  The most thorough texts are Heydon, Leeming and Turner Equity Doctrines and Remedies (2015, Lexis) and the superbly written The Law of Assignment by Marcus Smith and Nico Leslie (2013, OUP).

The reason this post is easier to understand and a great deal shorter than either book is that it does not deal with the many exceptions and uncertainties associated with the below propositions, and looks only at the law of Victoria.  And it ignores the Personal Properties and Securities Act 2009. You’d better look up the law yourself if you need to.  What follows might help you make sense of it though. Continue reading “Lessons from a tome in the dome on the assignment of suits’ fruits”

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

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.

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

The Bureau de Spank’s obligation not to publish about disciplinary orders until lawyers’ appeal rights are spent

Parliament is considering a bill to re-instate the disciplinary register, and to prohibit the Bureau de Spank from trumpeting its successes before the respondent practitioners’ appeal rights are exhausted: Legal Profession Uniform Law Application Amendment Bill 2016 (Vic.).  Cl. 150E of the Bill proposes to prohibit the Legal Services Board from providing to the public information about disciplinary orders made by the VCAT’s Legal Practice List while appeals or appeal rights are live.  The prohibition extends beyond publication on the proposed disciplinary register to disclosure of information to the public more generally.

There is a problem with the Bill though: it focuses its protection of the profession on prohibitions of publications by the Legal Services Board about final orders.  The Board shares a website and premises with the office of the Legal Services Commissioner.  The CEO of the Board is in fact the Legal Services Commissioner, Michael McGarvie, who is also the applicant in all disciplinary prosecutions of lawyers in Victoria.  Yet the CEO, qua Commissioner, is content for his staff to write about cases he is prosecuting, before any orders have been made and while the tribunal is considering what orders to make.  On the homepage of the Board + Commissioner’s website, no less.

If parliament is concerned to ensure that the reputation of practitioners is not to be ruined by accounts of current proceedings by one of the parties to them where the aspect of things might change dramatically upon appeal, or even by bad decisions in such proceedings which are to be appealed, it ought to consider adding the Commissioner to the class of person covered by the prohibition, and to make clear that neither the Board nor the Commissioner ought publish details of disciplinary prosecutions while they are before the disciplinary tribunal.

It is not uncommon for appellate courts — the Supreme Court or the Court of Appeal — to reverse decisions unfavourable to lawyers in disciplinary prosecutions of lawyers in VCAT’s Legal Practice List, or to substitute decisions more favourable to lawyers than those of VCAT or the legal regulators.  So the no publicity pending appeal proposition actually has some important work to do in the real world.  Consider, to name a few, Legal Services Commissioner v McDonald [2015] VSC 237PLP v McGarvie [2014] VSCA 253Stirling v Legal Services Commissioner  [2013] VSCA 374Burgess v Legal Services Commissioner [2013] VSCA 142Brereton v Legal Services Commissioner [2010] VSC 378Byrne v Marles [2008] VSCA 78, Quinn v Law Institute of Victoria [2007] VSCA 122Byrne v Law Institute of Victoria [2005] VSC 509. Consider also non-lawyers: Omant v Nursing and Midwifery Board of Australia [2014] VSC 512, and Towie v Medical Practitioners Board of Victoria [2008] VSCA 157 where the Court found that VCAT’s standard orders in disciplinary hearings were contrary to the privilege against penalties.  It will be observed that some of those decisions were made by very experienced members of VCAT’s Legal Practice List, and several by its Vice-President, a judge.

Continue reading “The Bureau de Spank’s obligation not to publish about disciplinary orders until lawyers’ appeal rights are spent”

Solicitor’s correspondence with judge telling him how immature his conduct was doesn’t go down well in disciplinary tribunal

Update, 5 October 2016: this decision is under appeal.  See this post.

Original post: In Council of the Law Society of NSW v MAG [2016] NSWCATOD 40, a Sydney solicitor was disciplined for writing a private letter of complaint to a Federal Court judge the day after a decision was handed down, adversely to his client in favour of the Tax Man.  The next day he wrote to the trial judge a letter not copied to the other side which commenced:

‘As solicitor for the Applicant in this matter, I have serious concerns about your conduct and decision in this matter. These are:

1. The somewhat immature and inappropriate comments you made to me …’ Continue reading “Solicitor’s correspondence with judge telling him how immature his conduct was doesn’t go down well in disciplinary tribunal”

VCAT finds practitioner guilty of conduct prejudicing administration of justice

I only learnt in the last few years that Melbourne is one of the world’s great Jewish cities, with a globally significant series of communities of orthodox adherents.  One of those orthodox communities has delivered up an interesting case.  In Victorian Legal Services Commissioner v AL [2016] VCAT 439, VCAT’s Acting President recently found a well known Melbourne solicitor guilty of two counts of professional misconduct, constituted by breaches of each limb of r. 30.1.2 of the solicitors’ professional conduct rules.

The rule prohibited conduct calculated to, or likely to a material degree to be, prejudicial to the administration of justice, or to diminish public confidence in the administration of justice, or adversely to prejudice a practitioner’s ability to practise according to these rules.

The practitioner’s disciplinary offence was first to state privately to his client’s father his disappointment after an orthodox Jew sitting watching someone else’s case in court had gone out of his way from the well of the court to assist police in the middle of a bail hearing in a criminal prosecution of the practitioner’s client. His second offence was committed when the man, whom I will refer to as the complainant since he lodged the disciplinary complaint which led to the practitioner’s disciplinary prosecution, rang the practitioner and asked him about comments to similar effect which the man had heard the practitioner had made, taping the call. The practitioner expressed directly to the man similar sentiments, expressly invoking the Jewish principle of ‘mesirah’ by which Jews who cooperated with secular authorities against fellow Jews in times and places where Jews enjoyed imperfect protection were ostracized. Jewish authorities have repeatedly said that the principle has no operation in modern day Australia in relation to criminal matters.

The Age has reported, in an article prominently featuring the practitioner, that victims of Jewish abusers have been pressured not to cooperate with police. It reported the Legal Services Commissioner as saying that ‘there was a general principle that made it impermissible for a lawyer to tell a witness they could not inform police about a matter because of a religious or community rule.’ I do not mean to criticise the Commissioner in this regard, because The Age sought his comments prior to the Commissioner’s receipt of the complaint, and the Commissioner was presumably simply responding to a general question about lawyers’ obligations towards witnesses in their cases. But what VCAT’s decision demonstrates is that the practitioner’s comments occurred after the conduct in question which the practitioner believed to have involved false statements based on misinformation, and were directed to a person who was not a witness and who, as far as the practitioner was aware, was simply someone who stood up in the well of the court and interfered in his client’s case. Given that, as far as the practitioner is said to have known, the man who stood up in court had no further role to play in the case or in his client’s drama more generally, it is hard to see how the practitioner could be said to have intended to pressure the man as a victim of a Jewish abuser not to cooperate further with the police in the future in bringing the abusers to justice, as seems to have been the implication. Continue reading “VCAT finds practitioner guilty of conduct prejudicing administration of justice”

The extended duration of the un-renewed practising certificate

Under the Legal Profession Act 2004, if a lawyer applied for renewal of their practising certificate prior to the expiry of the old one, but a decision was not made before the old one runs out, the certificate is extended until either it is renewed or a decision to refuse renewal is finally determined by the exhaustion of all rights of review of that decision.  No one has ever really known what that meant.  There is a statutory review procedure in VCAT and then there are appeals all the way to the High Court.  Are the appeals from the review ‘a right of review of the decision’?  The Supreme Court has now determined that the certificate endures (if not earlier cancelled or suspended by the stipes) until the end of the High Court appeal.

The question arose in Batrouney v Forster (No 2) [2015] VSC 541, handed down by Justice Robson yesterday (see paras [167] – [193]).  It represents a further embarrassment for the Legal Services Board appointed receivers of David Forster’s practice, Hollows Lawyers, with a savage series of costs orders against the receivers in Mr Forster’s favour.  That followed findings that the receivers’ proceedings were in part misconceived, and that they breached more than one provision of the Civil Procedure Act 2010. The question was at what point did Mr Forster cease to hold a practising certificate and so cease to be entitled to claim costs of acting for himself under the Cachia v Hanes (1994) 179 CLR 403 at 411–413 exception to the rule that self-represented litigants are not entitled to costs for work done by themselves.

The question is a matter of significance to practitioners who get themselves fairly deep into trouble.  It means that those whose practising certificates are not renewed may continue to practice and earn income to put towards the legal costs of challenging that decision, and it also means that such practitioners may brief counsel directly in circumstances where, by virtue of Bar rules about direct access, they might not otherwise be able to.  And of course, it also means that if successful in such proceedings, they will get a costs indemnity against the time spent running their litigation.

Mr Forster is a man with his back to the wall, the subject of an avalanche of litigation brought by professional regulators.  Until recently, he had been singularly unsuccessful and much chastised.  It is probably fair to say that some people in the administration of justice, including the profession, would see him as a pariah.  It ought therefore be of some comfort to those responsible for the justice system that this result has obtained.  It suggests that the cab rank principle is alive and well, that judges are capable of dealing with each case impartially on its merits and according to law without being unduly influenced by past cases, and that the State will not protect itself where the law requires that it be dealt with.

Legal Services Commissioner seeks to overturn privilege against penalties

There is an old and well established privilege, the privilege against penalties, which is a relative of the privilege against self-incrimination.  It entitles solicitors facing disciplinary prosecution to stay silent throughout the proceedings until the end of the Commissioner’s case unless the Tribunal makes an order requiring provision of written grounds and an outline of argument identifying in broad terms what is in issue.  And even if such an order is made, compliance will not require the foreshadowing of any evidence or the admitting or denying of any facts.

The other day, a full frontal attack by the Legal Services Commissioner on the privilege in disciplinary prosecutions of solicitors did not result in it being distinguished out of existence.  Though there was no contradictor in the hearing, the President of VCAT, Justice Greg Garde, gave the challenge short shrift in LSC v Spaulding [2015] VCAT 292.

Since practitioners started increasingly exercising their right to stay silent after the disciplinary investigation has concluded and before the conclusion of the Commissioner’s case, the Commissioner has begun increasingly to seek orders for the service of a notice to admit, despite the absence of any rule-based regime in VCAT governing the consequences of non-response to such notices.  Some practitioners have consented to such orders and VCAT has made them.  There may be grounds to review decisions in such cases where the practitioner did not ‘waive’ the privilege, since President Ross said:

‘in the absence of a statutory provision to the contrary, or waiver by a respondent, the effect of penalty privilege is that a respondent cannot be ordered to make discovery, produce documents, provide information or respond to a notice to admit.’

Waiver as a concept in the law generally requires a high level of deliberate abandonment.  No doubt for that reason, the Commissioner began some time ago to alert practitioners to the existence of the privilege when proposing such orders.

President Garde has also made clear that the Tribunal itself has a duty ‘to ensure that a respondent is informed of the options in order to make an informed and voluntary decision whether or not to waive the privilege.’

The President also observed that many professionals will wish to make admissions if for no other reason than to be seen  to be appropriately cooperative, and to attenuate the issues and so diminish the costs which will be payable if the practitioner loses.  My clients often make extensive admissions, sometimes make denials, but often remain silent in relation to some issues and strenuously resist the characterisation of such silences the matters about which they have stayed silent as ‘denials’.  There is, however, nothing to be gained from consenting to an order to provide a response to a notice to admit.  When, as I have found to be the case, the notices are framed in a manner which purports to graft onto VCAT’s procedures a presumption of admission in the event of non-denial, great procedural uncertainty is generated, because, unlike in the state courts, there are no rules of procedure which provide a legal basis to generate such an admission.  And it will often be more convenient for the practitioner to craft the admissions in the form he or she considers most appropriate, possibly in a discursive letter, and at a time convenient to him or her.  Furthermore, the notices to admit usually track the allegations in the Application itself extremely closely, regardless of the admissions made during the investigation in correspondence which is annexed to the Application, so that the requirement to respond to the notice to admit is akin to a requirement to serve a defence, and the drafting, filing and service of the notice to admit generates a substantial cost on a party-party basis.

Finally, for some reason, no one ever seeks orders to serve notices to admit on the Commissioner.  If, for some reason, one were to consent to orders for the provision of a response to a notice to admit, it would seem appropriate to me to reserve a right to reciprocity. Continue reading “Legal Services Commissioner seeks to overturn privilege against penalties”

Executrixes’ denial of deceased’s alcoholism without any proper factual foundation results in indemnity costs order

Hartnett v Taylor [2014] VSC 501 was a Part IV claim for testators’ family maintenance.  The defendant executrixes said that the plaintiffs’ conduct led to estrangement from the deceased and to the deceased’s alcoholism.  The plaintiffs said that the deceased’s alcoholism led to their estrangement, and that is what Sifris J found.  The defendant executrixes’ contention was one which was contradicted by their own witness, the deceased’s doctor, who said that the deceased was an alcoholic before the estrangement with the plaintiffs.  Sifris J said:

’12 It is in my view clear that the defendants’ evidence and contentions in relation to the deceased’s alcohol consumption and the estrangement from the plaintiffs were made in wilful disregard of known facts and were allegations which ought never have been made. This provides a sufficient basis for an order for indemnity costs notwithstanding that the defendants are not personally liable for such costs.’

Regrettably, the plaintiffs do not appear to have argued the case under s. 18(d) of the Civil Procedure Act 2010.  I say ‘regrettably’ because it is desirable that a coherent and easily accessible body of law about the costs consequences of the making of allegations without a proper factual foundation grow up around the new statutory provision.

Then Sifris J denied the second defendant her costs of being separately represented, since there was no need for the two executrixes to have separate representation.

Client obtains Anton Piller order over solicitor’s hard disk in fees dispute

Ho v Fordyce [2014] NSWSC 1404 is a decision in an ex parte application of which the solicitor had no notice and did not participate. There is a dispute between solicitor and client in relation to fees.  The client contended that costs agreements relied on by the solicitor were ‘a recent invention’.  Given that the client asserts that there was no costs agreement, presumably the implication is that someone forged the documents relied on by the solicitor.  The client applied for an Anton Piller-like order allowing IT people to march into the solicitor’s office and copy certain contents of the solicitor’s hard disk in order to preserve evidence which may assist in proving the implied fraud.

In a brief judgment given ex tempore, Rein J granted the application, relying on a decision of the Victorian Supreme Court’s Justice McMillan. The question of the likelihood of privileged material being present on the firm’s computers is not something discussed in the reasons.  It may well be dealt with in the order, which is not reproduced in the reasons. I have never heard of any such application having been made by a client or granted against a solicitor in such circumstances before.

What his Honour said was:

’10  I do not wish to suggest that I am satisfied at this stage that there has been any false creation of documents. Rather there is a contention that it has occurred, and there is some support for that possibility in the evidence which has been presented. If it has occurred it will be difficult to prove and, if the secrecy of this application were not preserved until the point at which someone independent is at the office to obtain copies, the opportunity to establish that there has been recent creation (if that be the fact) will be lost.

11  In other words, for the plaintiff to have to present a normal application for discovery may act to the disadvantage of the plaintiff forensically and, accordingly, in circumstances where (a) the ambit of information which is sought is very narrow and (b) the consequences of the making of these orders will be of very limited effect, if it turns out that there has been no recent creation, weighs in favour of the making of the order.’

Law firm sued for recommending wife hacks husband

London firm Mischon de Reya — cool name don’t you think? — puts out a newsletter about fraud. Here is a bite from the latest one:

‘Lawyers for a woman divorcing her husband recommended computer experts who could hack into her husband’s computer and iPhone. The husband’s lawyers have been given the go ahead to appeal the divorce ruling in what could be a landmark case concerning the use of information obtained legally [sic. but should be ‘illegally’]. The Singapore High Court said that the law firm could be guilty of perjury, breach of professional ethics, and other crimes under the Computer Misuse Act.’
The Straits Times, 17 September 2014

Jury verdict overturned by VSCA because of insinuation in cross-examination without adequate factual foundation

In Green v Emergency Services Telecommunications Authority [2014] VSCA 207, the Victorian Court of Appeal today overturned a jury’s verdict following a nine-day trial. There had been a miscarriage of justice occasioned by the manner in which the plaintiff was cross-examined by the defendant’s trial counsel.  He had made an allegation of recent invention involving a conspiracy between her and her solicitors to concoct a story. Continue reading “Jury verdict overturned by VSCA because of insinuation in cross-examination without adequate factual foundation”

WASCA on the kind of recklessness in making statements which amounts to conduct warranting discipline

Traditionally, the law of professional discipline has differed from the law of negligence in three profound ways.  First, its aim is the protection of the public (though the policy in favour of protecting the reputation of the profession grossly infects the purity of this proposition in most analyses).  Secondly, it is about personal wrongdoing.  Statute aside, there is no law of attributed liability in contrast to doctrines such as vicarious liability in the law of negligence.  And thirdly, simple as opposed to gross negligence was never considered to warrant discipline.  Things got messed up by the introduction into disciplinary statutes of a concept of unsatisfactory professional conduct defined in terms identical to the test for simple professional negligence.

Disciplinary tribunals (and, in my experience, disciplinary investigators and prosecutors) seem to lapse from time to time into the language of ‘should have known’ even outside the prosecution of that species of unsatisfactory professional conduct which is defined by reference to the test of simple professional negligence.  Two practitioners had to go to two Courts of Appeal to reverse decisions on dishonesty charges which were horribly infected by objective reasoning:  Legal Services Commissioner v Brereton [2011] VSCA 241 and Giudice v Legal Practitioners Complaints Committee [2014] WASCA 115.  Surprisingly, the former decision did not get a guernsey in the latter.  The law of recklessness is authoritatively restated in the three separate judgments in Giudice and I have set the whole lot out below along with some observations about Brereton’s Case. Continue reading “WASCA on the kind of recklessness in making statements which amounts to conduct warranting discipline”

Self-represented solicitor guilty of misconduct for breaching a rule expressed to regulate conduct when acting for a client

A Western Australian disciplinary case, Legal Profession Complaints Committee v CSA [2014] WASAT 57 is interesting in a number of ways. A criminal lawyer was the manager of a strata corporation.  She owned two units and the complainant the third. The complainant affixed an airconditioner to a wall which impeded on a common area.  She sought legal advice.  Her lawyers wrote a letter of demand to the complainant and charged a few thousand dollars.  The complainant did not fix the problem within the 14 days demanded, so the lawyer sued in the Magistrates’ Court.  The case was settled on the basis that the airconditioner would be relocated and the lawyer withdrew the proceeding without seeking costs.  When the complainant sold the third unit, the lawyer demanded that the complainant pay her the few thousand dollars her lawyers had charged her for the advice and the letter of demand.  She did so by a letter of demand drafted for her by another lawyer, though the involvement of this second lawyer only emerged at the disciplinary hearing. When the complainant did not pay up, she sued for them in her personal capacity.  The suit was found to have no legal foundation, but the lawyer said that she mistakenly thought that it did have a legal foundation, and that civil proceedings were not her thing. The case says:

1.  The suit was an abuse of process because there was no legal foundation for suing for the recovery of ‘pre-litigation’ legal costs.

2.  The lawyer’s conduct in threatening to bring and then bringing a suit which was an abuse of process was common law misconduct but was also a breach of a rule which prohibited lawyers from claiming on behalf of a client costs in a letter of demand for recovery of a debt because she was acting for herself in writing the letter (even though no legal letterhead or reference to her status as a lawyer was involved).

3.  There is no defence of honest and reasonable mistake in professional discipline.

4.  It is inappropriate for a disciplinary tribunal to make what the prosecutors described as ‘an incidental finding of dishonesty’ in relation to statements made during the investigation in respect of which no charge had been laid in the disciplinary proceeding.  Any such allegation ought to be the subject of a separate process (though the Tribunal then went ahead and found that the allegation was not made out on the Briginshaw standard anyway). Continue reading “Self-represented solicitor guilty of misconduct for breaching a rule expressed to regulate conduct when acting for a client”

Preliminary discovery and the need to have an adequate factual foundation before pleading fraud

As you will probably be sick by now of hearing, I suspect that the law relating to the need to have an adequate factual foundation before pleading fraud will be resorted to more frequently given the new prominence given to it by s. 18(d) of the Civil Procedure Act 2010, the Court of Appeal’s admonition to inferior courts as to the need to consider these matters of their own motion, and the new (or at least newly prominent) remedies for breaches of overarching obligations such as that referred to in s. 18(d).  The new prominence of these laws may make applications for preliminary discovery more frequent, though I must confess it remains a mystery to me why so few preliminary discovery applications are made in general.  It may also make courts more inclined to grant such orders. In Pioneer Energy Holdings v Seth [2014] NSWSC 492, McDougall J granted preliminary discovery under a rule not dissimilar to Victoria’s SCR 32.05 to a prospective plaintiff from prospective defendants to a suit claiming damages for fraud, making reference (at [66]) to s. s 347 of the Legal Profession Act 2004 (NSW).  Section 347 has some of the characteristics of s. 18(d), albeit only in relation to damages claims.  His Honour said, in the course of an ex tempore judgment:

Continue reading “Preliminary discovery and the need to have an adequate factual foundation before pleading fraud”

Section 18(d) of the Civil Procedure Act 2010 (Vic)

Section 18(d) of the Civil Procedure Act 2010 requires litigants and their lawyers alike not to make claims in civil proceedings, or defend such claims, unless ‘on the factual and legal material available to [them] at the time of making the claims’ the claim or defence has ‘a proper basis’.  A court may make any order it considers appropriate in the interests of justice if satisfied that a person has breached s. 18(d): s. 29 and may take any contravention into account in exercising any of its powers, including specifically in relation to costs: s. 28.

As Derham AsJ said in Matthews v SPI Electricity Pty Ltd (No 2) (below):
‘The overarching obligations [including that in s. 18(d)]:

(a)          apply to any legal practitioner or any law practice acting for or on behalf of a party: Civil Procedure Act10(1)(b), (c);

(b)          apply in respect of the conduct of any aspect of a civil proceeding, including, but not limited to any interlocutory application or interlocutory proceeding: Civil Procedure Act11(a);

(c)          do not override any duty or obligation of a legal practitioner to a client to the extent that those duties and obligations and the overarching obligations can operate consistently: Civil Procedure Act13(1); and

(d)          must be complied with by a legal practitioner or a law practice engaged by, or on behalf of, a client in connection with a civil proceeding despite any obligation the legal practitioner or the law practice has to act in accordance with the instructions or wishes of the client: Civil Procedure Act13(2).

In this very workmanlike post, I simply summarise the not particularly illuminating jurisprudence to have emerged around this new provision so far. Continue reading “Section 18(d) of the Civil Procedure Act 2010 (Vic)”

Rules relating to unjustified allegations of fraud, etc.

This post, based on research by Zoe Dealehr, collects together the various Bar conduct rules around Australia relating to the requirement of a proper factual foundation for making allegations of criminality, fraud and other serious misconduct as well as for allegations in litigation more generally.

First of all, the relevant Victorian rules are set out.  They are more detailed than the other states’ and territories’ rules.  Apart from Tasmania’s, the rest of Australia’s conduct rules for barristers are almost uniform and are similar to, but different from Victoria’s.

Tasmania appears to have no conduct rules on the subject, but it is said that it is soon to adopt the national rules which are the foundation for the non-Victorian rules.

Continue reading “Rules relating to unjustified allegations of fraud, etc.”

The costs consequences of failing to prove a responsibly advanced allegation of fraud

The irresponsible advancement in litigation of allegations of fraud undoubtedly triggers the jurisdiction to award indemnity costs and even to make personal costs orders: White Industries (Qld) Pty Ltd v Flower & Hart (1998) 156 ALR 169, approved on appeal at (1999) 87 FCR 134, discussed in this post.

But what about responsibly advanced, but ultimately unsuccessful, allegations of fraud? In a leading case, Woodward J said:

‘It is sometimes said that [special] costs can be awarded where charges of fraud have been made and not sustained; but in all the cases I have considered, there has been some further factor which has influenced the exercise of the court’s discretion: for example, the allegations of fraud have been made  knowing them to be false, or they have been irrelevant to the issues between the parties’.[1]

That statement has been followed subsequently and, in my view, very likely represents the law in Australia.[2]

Nevertheless, it is possible to find statements made, apparently without consideration of Woodward J’s observation, in cases[3] and commentaries which appear to say that the mere failure of a fraud allegation justifies departure from the usual rules of thumb in to costs. Professor Gino Dal Pont’s outstanding Law of Costs speaks of ‘the “rule” that a party alleging but failing to prove fraud is deprived of costs even if successful in the action generally’ without citing Australian authority, before suggesting that it is too broadly formulated.[4]

Conduct rules often require lawyers in Australia to make allegations of criminality, fraud and other serious misconduct only after having warned their clients of the consequences of doing so and obtained specific instructions to go ahead and make the allegations (e.g. Victorian Bar Conduct Rules, r. 34).  Quite what such an advice ought to contain is, I suspect, not immediately apparent to most lawyers.  Conceivably, uncertainty about the content of this obligation, and fear about costs consequences even in the absence of misconduct on the part of those responsibly advancing fraud allegations, are matters which contribute to allegations of fraud being made so rarely.  It would be helpful if the law in relation to the consequences of failing in a responsibly advanced serious allegation were clarified and more widely disseminated throughout the profession. Continue reading “The costs consequences of failing to prove a responsibly advanced allegation of fraud”

Clyne v NSW Bar Association: the leading case on unfounded allegations

Clyne v New South Wales Bar Association (1960) 104 CLR 186; [1960] HCA 40 is a unanimous decision of the Dixon Court confirming the striking off of a Sydney barrister, Peter Clyne, for making unfounded and serious allegations on behalf of a husband against the wife’s solicitor in matrimonial litigation for the admitted purpose of getting the wife’s solicitor out of the case.  Those allegations were in fact made in a private prosecution by the husband of the wife’s solicitor for maintenance. Reading the decision, one might think that striking off the rolls was a relatively harsh penalty by today’s standards for the conduct recorded, especially since his client succeeded at committal in having the wife’s solicitor presented for trial.  And also if one believes Mr Clyne’s autobiography where he asserted:

‘Particulars given by the New South Wales Bar Association made it quite clear that it was not part of the charge to say that my advice to prosecute was wrong, or improper.  Indeed, as I have mentioned before, the advice to prosecute Mann was given in writing, by the eminent and respected Sydney QC, Mr Newton, who later became (and still is) a judge of the New South Wales District Court; and no one has ever criticized Mr Newton for his advice.’

But Mr Clyne had done it before and been sternly warned (see CLR 202) and was unrepentant to the moment he was struck off. Further, he was absolutely one out of the box (he will be the subject of a further blog post) and was no doubt regarded as an excrescence on the legal system to be excised at almost any cost.  He went on to irritate the authorities as a professional tax evader and unashamed advocate of tax evasion, writing many books on the subject and others (e.g. Adventures in Tax Avoidance, How Not to Pay Any Taxes, Guilty But Insane) while living a decadent lifestyle which hopped, first class, between hotels in Sydney and his native Vienna.  Like George Herscu, one of the villains in White Industries v Flower & Hart, Clyne spent time in jail, and only avoided spending more time by fleeing America without a passport while on appeal bail.  He seems to have been intelligent and to have had enough charm to be married to a Welsh entomologist who also wrote many rather different books (e.g. Silkworms, All About Ants, and Plants of Prey).  But his autobiography (Outlaw Among Lawyers; the Peter Clyne Story, Cassell Australia, 1981) reveals a thoroughly dishonest if colourful character with very little if any regard for the law. Continue reading “Clyne v NSW Bar Association: the leading case on unfounded allegations”