Original post: Say you’re a solicitor. You send a bill to your client noting your intention to pay it from monies in your trust account held for the client. Seven days go by and there is no objection to the transfer. Say at this point you have a perfectly good entitlement to appropriate your fees from trust. But you don’t get round to transferring the money on the 8th day. And then the client objects to the transfer, belatedly. Can the solicitor ignore the out of time objection and transfer the money? Continue reading “Transferring monies from trust to pay legal fees: can a client stymie an accrued right to appropriate fees by a late objection to the transfer?”
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”
Russo v Legal Services Commissioner  NSWCA 306 was the subject of my previous post. The Court engaged in a comparatively sophisticated review of disciplinary outcomes in like cases. The purposes of this post is to reproduce that review and comment on the variables which ought to be taken into account in any proper survey of past outcomes.
To survey penalties in like cases has always been an important part of sentencing and should be an important part in imposing disciplinary sanctions. Barbaro (2014) 253 CLR 58;  HCA 2 and Cth v Director, Fair Work Building Industry Inspectorate  HCA 46; (2015) 326 ALR 476 do not suggest to the contrary. They say that the purpose of a survey of like sanctions is to promote consistency in penalties but not the establishment of a range of available sanctions deviation from which is appellable. Buchanan JA observed in R v Macneil-Brown  VSCA 190, (2008) 20 VR 677 at :
‘counsel can best assist a sentencing judge, not by advancing what they consider to be sentences at the lower or upper limits of a sound sentencing discretion, but by making submissions as to the existence and nature of aggravating and mitigating circumstances and providing some guide to the manner in which other judges have approached like cases by supplying sentencing statistics and citing passages from decided cases which bear upon aspects of the instant case.’
I would submit that any survey of fines as a disciplinary sanction must take into account, as an important aspect of the analysis, the financial situation of the person or persons liable to pay it. The specific deterrence of a fine will vary greatly from one practitioner to another. Practitioners who struggle, for personal reasons, are more likely to get themselves into trouble in the first place, and to exacerbate it by less than perfect intercourse with the Legal Services Commissioner. Their financial situations often deteriorate too. Specific deterrence may be achieved by imposition of a fine much smaller than would be imposed on a flourishing practitioner raking it in. General deterrence will also be achieved if the Tribunal is transparent in taking account of financial circumstance. In such a case, the Tribunal might indicate the kind of fine which might have been imposed had the practitioner enjoyed an average post-tax income.
Furthermore, the costs burden borne by the practitioner ought also to be taken into consideration. Costs and fine are inter-related in this way: Environment Protection Authority v Barnes  NSWCCA 246 at  (Kirby J speaking for the Court) applied by analogy in LSC v Bechara  NSWADT 313. The extraordinary costs practitioners are liable to in Victoria following disciplinary prosecutions would very often be more than adequate to achieve specific and general deterrence. If you are prosecuted and reprimanded, made the subject of an editorial on the front page of the Commissioner’s website, and have to cough up $40,000 in unrecoverable solicitor-client costs reasonably incurred and costs liability to the Legal Services Commissioner, that is going to make you think just as hard about doing it again as any comparatively trivial fine you might cop.
Finally, one must be astute to inflation. In my experience, people tend to exaggerate the effect of inflation when considering older fines. Here is a calculator which assists in measuring in today’s dollars a fine imposed some years ago.
For some reason, notwithstanding that NSW is now a part of the legal profession uniform law, the other participant in which is Victoria, no Victorian fines were part of the survey. That strikes me as unusual, since there is a whole statutory office the purpose of which is to promote interstate uniformity in the application of the Uniform Law: the Commissioner for Uniform Legal Services Regulation. Russo’s Case was decided under the old legislation which the LPUL replaced, and which legislation in fact governed the prosecution was one of the issues on appeal. Interestingly, apparently because it was thought that there were no relevant differences between the two regimes, that question was not decided.
This is what the NSWCA said about its survey of fines, and about the appropriate fine in this case: Continue reading “NSWCA surveys fines in NSW lawyers’ discipline decisions over a decade”
Salvatore Russo, a solicitor of 29 years’ standing, was struck off NSW’s roll of solicitors on 16 April 2016 by NCAT. He had received payment from his client for counsel’s fees but not paid counsel for years. Then he was high-handed in response to the client’s entreaties when counsel sued the client directly. The Court of Appeal found a denial of procedural fairness by NCAT. The Tribunal had telescoped the questions of liability and penalty into one hearing. It had failed to give Mr Russo sufficient notice of the fact it was considering striking him off despite the fact by the end of the trial, the Commissioner was not seeking such an outcome any more. Now he’s been struck back on by the NSW Court of Appeal, a fine of $20,000 substituted for his misconduct: Russo v Legal Services Commissioner  NSWCA 306. (In fact, the striking off never came into operation, because he got a stay along the way.) Continue reading “NSW solicitor who didn’t pay counsel’s fees struck back on”
In Dennis v Council of the Law Society of New South Wales  NSWSC 1487, the Law Society suspended a sole practitioner’s practising certificate with immediate effect and appointed a manager to his practice. He had not responded to commands by a trust investigator to produce documents and answer questions in relation to a disciplinary complaint. The Society said that he had failed to do so wilfully and without reasonable excuse, and this, it said, made it necessary to abolish the man’s livelihood.
Hoeben CJ at CL found that the commands were invalid in law, and there had been no failure at all to comply with them. But even if the Society’s interpretation of the provisions of the Legal Profession Act 2004 (NSW) in question had been correct so that there had been a failure to comply with them, his Honour said, this would still not have been an appropriate occasion on which to exercise the ’emergency powers’ which the Law Society exercised. It simply was not ‘necessary’ for the protection of the public to shut down a sole practice like that. Especially since, prima facie, the appropriate place for the complainant to raise the practitioner’s conduct was in the proceedings in the Supreme Court of Victoria which were the backdrop to the conduct complained of and which were pending at the time of the complaint. And more especially still where the practitioner had cited the commercial sensitivity to that litigation of confidential information sought by the Law Society and had suggested that the investigation be paused pending the imminent completion of those proceedings.
Given that the complaint in which the practitioner was said wilfully to have failed to obey the stipes’ commands was the complaint of a non-client, I will be interested to learn what it is about NSW law which means that the solicitor could be obliged to deliver up privileged information even if the commander had the power to issue the commands. The Victorian Bureau de Spank has no such powers: B v Auckland District Law Society  UKPC 38, a decision of the Privy Council and Legal Services Commissioner v Shulsinger  VCAT 965. Continue reading “New South Wales Law Society misconceivedly suspends sole practitioner’s PC peremptorily”
Updated post (25 July 2014): The answer to the question posed by the original post is: yes, he will be struck off. Here are the reasons: Council of the Law Society of NSW V Andreone (No2)  NSWCATOD 81. His failure to make submissions on the question would not have assisted. On the question of whether monies received by solicitors from clients for payment of counsel’s fees are trust monies, and on whose behalf they are held, see Legal Services Board v Gillespie-Jones  HCA 35 about which Melbourne University’s Associate Professor Bant’s learned commentary may be found here.
Original post (published as ‘Will Solicitor Who Failed to Pay Counsel’s Fees be Struck Off?’): The Law Society of NSW wants a solicitor who persistently delayed in paying counsel struck off. The NSW equivalent of VCAT has found the professional misconduct established: Council of the Law Society of NSW v Andreone (No. 1)  NSWCATOD 49, and a hearing on sentencing is pending. In this case, clients had paid bills which included claims by the solicitor for counsel’s fees by electronically depositing monies into the firm’s office account — probably at the firm’s direction, as the Tribunal found.
The Tribunal found without reference to authority that those payments were trust monies to the extent that they satisfied the claims by the solicitor for counsel’s fees, the solicitor not having paid the counsel at the time of their receipt. In other words, the solicitor held the monies on trust for the barristers. But it seems that the Tribunal considered the solicitor’s misappropriation of trust monies and the failure to pay the fees as separate instances of professional misconduct. In other words, the mere failure to pay the fees, given its intentionality and persistence, amounted to professional misconduct. This is what the Tribunal said: Continue reading “NSW solicitor who failed to pay counsel’s fees struck off”
Council of the Law Society of New South Wales v JAX  NSWADT 283 is a case in which the solicitor was disciplined for paying himself out of fees provided to him by his client for payment of counsel’s fees. Ultimately he went bankrupt and did not pay the fees. See also this earlier post on this subject. The decision also represents yet another admonition to pleaders of disciplinary charges to plead dishonesty expressly if they intend to allege it.
There were the following agreed facts: Continue reading “More on solicitors’ obligations to pay counsel’s fees”
The latest decision from VCAT’s Legal Practice List is Legal Services Commissioner v JHMcC  VCAT 231, a ‘guilty plea’ to six charges of professional misconduct. A lawyer purchased a franchise to operate under the name of one of Melbourne’s leading personal injury firms — I never knew such things existed — and was responsible for 1,000 files at a time down in Traralgon. (Don’t try that at home, by the way, kids: I well remember multiple retainers when I was solicitor for a gentleman formerly of the profession who from an office in the suburbs of an Australian capital (not the respondent in this case, obviously), and with the assistance of only non-legal staff, had 1,000 personal injury files open at a time. He was a most vulgar man, insistent on telling me at every opportunity how much money he made, and of the details of his expenditure of it in pursuit of hackneyed hedonism. And he was quite often negligent, apparently regarding the excess he had to pay his indemnity insurer as a cost of business.)
Anyway, our lawyer underpaid tax and suddenly had to pay $160,000 to the tax man, putting financial stress on his business. So, when he received payment of bills from clients, he paid the whole lot into office, wrote cheques made out to barristers for their fees which had been billed to and received from clients as disbursements, and then put them into the bottom drawer to be retrieved and delivered only when convenient to the practice’s cash flow. The solicitor pleaded guilty to six charges of professional misconduct. Charge 6 was of breach of the following fiduciary duty, which I must confess is not one I had previously heard of:
‘to apply such moneys [amounts received for disbursements] in accordance with the purpose for which they were supplied by that client’.
Judge Pamela Jenkins, presently a Vice-President of VCAT and two other members were invited to impose a fine of at least $20,000 and plumped for $25,000. In addition, costs payable by the solicitor were fixed at $6,715.
Update, 31 January 2012: See now Council of the NSW Law Society v Simpson  NSWADT 242 re the meaning of ‘misappropriation’. It was on this point that Justice Bell in Brereton overturned VCAT’s decision: they had not recorded making a finding of dishonest intention.
Original post: Justice Bell yesterday allowed an appeal by Michael Brereton from the decision I wrote about here: see Brereton v Legal Services Commissioner  VSC 378. The matter is to be re-heard by the same tribunal. Mr Brereton is making quite a comeback: see this article in The Australian. Some entertainment for readers of this blog should follow if he makes good his stated intention to sue the Legal Services Commissioner and the Law Institute.
In Deputy Commissioner of Taxation v Law Institute of Victoria  VSCA 73, the Court of Appeal unanimously overturned the trial judge’s decision in Law Institute of Victoria Limited v Deputy Commissioner of Taxation (No 2)  VSC 179, which I posted about here. I posted about round 1, before that, here. Justice of Appeal Mandie, with whom the other judges agreed, said that the documents were ‘innocuous’ and suggested that they would not have attracted public interest immunity even had the Law Institute argued that the nature of their contents was so secret and sensitive that the public interest in keeping them secret outweighed the public interest in protecting the revenue for which the Tax Man wanted them. But the situation was worse than that for the Law Institute, according to his Honour. The Law Institute argued in favour of public interest immunity on the basis that the documents were part of a class of documents so secret and sensitive that they should be protected irrespective of their contents. ‘Bollocks’ said the Court of Appeal. Continue reading “The Tax Man and the Law Institute, round III”
Relatively recently, I posted on the question of whether a Bureau de Spank desiring to rely on a practitioner’s dishonesty or other form of conscious wrongdoing must expressly allege it in the charge, and discussed Walter v Council of Queensland Law Society Incorporated (1988) 77 ALR 228 at 234;  HCA 8. Now, in Legal Services Commissioner v Madden (No 2)  QCA 301 the Queensland Court of Appeal has had a go, and reversed a decision of the Court’s Chief Justice sitting on the Legal Practice Tribunal. The solicitor had previously been disciplined in relation to his trust account. He was charged with gross delay in litigation which resulted in applications by the other side to compel the achievement of various interlocutory steps. He dealt with those applications without advising his client, agreed on his client’s behalf to pay costs, withdrew money to pay those costs from monies held in trust on account of fees and disbursements, and then charged the client fees for his work in fixing up his own mistake. He also acted for both husband and wife in the preparation of a pre-nup, apparently stuffing it up, and then later acted in a matrimonial dispute for the husband alone, described as a particularly obvious conflict of duties.
The Chief Justice made findings of dishonesty in the absence of any allegation of dishonesty in the charge. One might say, in fact, that he went out of his way to do so. First he sought comment in relation to whether on the agreed facts, the Tribunal was free to draw inferences that dishonesty actuated the solicitor’s conduct, and invited the Commissioner to amend the charge so as to allow exploration of that issue. His Honour adjourned the hearing to give the Commissioner time to think about that. On the return of the hearing, the Commissioner declined the invitation to amend. So the Tribunal put out a document specifying, as a matter of procedural fairness, the inferences it was considering drawing, and invited argument. The solicitor swore an affidavit responding to the Tribunal’s document. The Commissioner’s counsel cross-examined the solicitor, but did not put it to him that he had acted dishonestly. The Tribunal then concluded that the solicitor had acted dishonestly, and decided to strike him off rather than go with the fine and reprimand recommended by the Commissioner. Ooffa!
‘Wrong way. Go back!’ said the Court of Appeal. It started with a general proposition:
’54 It is … a well recognised rule of practice in civil proceedings that, although the word “dishonesty” is not necessarily required, any charge of dishonesty must be made in clear terms. In a well known passage in Belmont Finance Corporation Ltd v Williams Furniture Ltd & Ors  Ch 250 at 268 Buckley LJ said: Continue reading “Commissioner’s obligation to charge dishonesty if he intends to allege it”
Update, 8 May 2009: The Westralians have been listening to Justice of Appeal Nettle. Someone over there has thrown a 41 year old Margaret River solicitor into the slammer for almost 8, minimum of nearly 5. He stole almost $900,000 from an elderly man who lived alone on a farm.
Original post: A solicitor was convicted of forgery and given an enforced break from practice of a year. Years later, he stole $100,000 in his trust account from a client. He paid debts and took his family on holidays to Greece and Bali. He confessed as soon as a routine audit of his trust account revealed a discrepancy. He handed in his practising certificate to the Legal Services Board’s delegate, and a receiver was appointed to his practice which was sold. It sounds like the receiver might have been a bit sloppy, because the solicitor remained a signatory to a client account.
A week after being interviewed about the theft of $100,000, (‘amazingly’, as the trial judge put it) he stole another $43,000 from another client which he used to stave off bankruptcy at the suit of the Tax Man. When interviewed about that theft, he lied to the police, asserting that he had the client’s permission to withdraw the money.
The trial judge locked the solicitor up for 6 months and suspended an additional year of imprisonment. The DPP appealed against what it said was the manifestly inadequate sentence. Justice of Appeal Nettle, who warned last year on the need for condign punishment to express society’s special revulsion at lawyers’ theft from their trust accounts, was again party to a judgment in the matter of DPP v George B  VSCA 29 making the same point, and would have increased the sentence on appeal but for certain factors peculiar to this offender: Continue reading “6 months jail for lawyer thief ‘remarkably merciful’”
Legal Services Commissioner v JDG  LPT 17 is a shocking case in which a Queensland barrister was struck off after he lied when confronted by investigators with the true proposition that he had offered to pay a $50,000 bribe to a Magistrate or Crown prosecutor on behalf of a client. He also took $59,000 in cash from the direct access client and popped it into his safe. He used some of it to feed his gambling. He should, of course, have chucked it into a special account. He told his client that: Continue reading “Beak bribe boast bars barro”
R v Maurice B  VSC 254 records the sentencing remarks of Nettle JA apparently sitting in the trial division following a guilty plea by a solicitor who stole a quarter of a million dollars. The solicitor argued the state of his mind was relevant in two ways. First, he said his impaired mental functioning short of psychiatric illness at the time of the offending diminished his moral culpability. Secondly, what appears to have degenerated into a psychiatric illness (depression, anxiety disorder, panic attacks requiring anti-depressants) was a relevant consideration in determining an appropriate sentence.
Based on the psychiatric evidence, Justice of Appeal Nettle gave little truck indeed to the first claim, but did take the mental state of the solicitor by the time he had been through the Legal Profession Tribunal and the criminal charges into account in fashioning an appropriate sentence. In fact, along with the solicitor’s age (67) his mental condition at the time of sentencing was the thing which kept him out of the clink. His Honour conducted a survey of a number of Victorian cases involving thieving solicitors who received suspended sentences of imprisonment and remarked:
‘I doubt that the sentences imposed in at least some of those cases gave due weight to the overriding importance of general deterrence in matters of this kind. For, even allowing that a suspended sentence is a sentence of imprisonment for all purposes, it is manifestly less burdensome than an immediate term of imprisonment. It is also to be remembered that the maximum sentence for the offence of having a deficiency in a trust account has more than doubled since the Legal Professional Practice Act 1958 was first replaced by the Legal Practice Act 1996, from seven years to 15 years’ imprisonment. These days, the idea of a fully suspended sentence in a case of solicitor defalcation will seldom sit easily with the imperative that solicitors who act in fraudulent breach of trust account obligations “must … inevitably suffer severe punishment”.’
The whole of the relevant passage is: Continue reading “Nettle JA on sentencing thieving lawyers”
Issac’s style of legal letter writing is legendary. There are some quite extensive private collections out there. I recall one letter said to have been penned by the man himself which began ‘Dear Sir, you are a petulant lunatic,’ and after some substantive words continued ‘You are a very small cog in a very big wheel and it seems that it will long stay that way.’
I have long been a fan of his extremely colourful and yet less-is-more webpage, which has said, for as long as I can remember, in yellow and red text surrounded by blue fire ‘We at Issac [B] and Co make a firm commitment to a flexible, approach to law’. Such heterodox ebullience can only be tolerated so long in the dark suited depressed salaryman world of the Melbourne legal fraternity, and the other day, the sombre might of the law came down on the iconoclast for what the humourless powers that be characterised as too much flexibility. Continue reading “Issac’s holiday; plea bargaining in disciplinary charges examined”
On 13 August 2008, Deputy President O’Dwyer found charges of misconduct at common law made out against Kylie Minogue’s one-time solicitor, the man towards the centre of the government’s Operation Wickenby investigation, Michael Brereton. See Legal Services Commissioner v Brereton  VCAT 1723. Mr O’Dwyer found he had transferred more than $2.3 million of clients’ money out of his trust account contrary to the trust accounting rules. Since he did not turn up to the hearing, the finding is not altogether surprising. His counsel explained the solicitor ‘was attending to important business matters overseas, having invested in an information technology business with links in America and Europe,’ which makes me wonder whether he could not have used some of his investments to appear by video link. The Age‘s report is here.
The Commissioner is to be commended for making some sense of the very complex business transactions in which the solicitor and his clients were involved, and achieving the making out of the allegations of misconduct which were made out. So too the Tribunal, which had a difficult task in the absence of participation by the solicitor, and produced a spare but careful set of reasons. But it was not all wins for the Commissioner. Continue reading “Kylie’s one-time lawyer goes down, with a ‘disgraceful and dishonourable’ finding”