Council of the Law Society of New South Wales v Downey

NCAT Occupational|2023-11-10

REASONS FOR DECISION

The Council of the Law Society of New South Wales ('the Council') has brought disciplinary proceedings against Mr Downey, a solicitor, pursuant to the Legal Profession Uniform Law (NSW) ('the Uniform Law'). The application for disciplinary findings and orders was filed on 7 December 2022 and an amended application for disciplinary findings and orders ('the amended application') was filed on 9 May 2023.
The parties have entered into an instrument of consent dated 3 October 2023 pursuant to s 144 of the Legal Profession Uniform Law Application Act 2014 (NSW) ('the Application Act').
The Council provided an affidavit of Mr Lean sworn on 5 December 2022 and an affidavit of Mr Walton sworn on 6 December 2022. The Respondent provided an affidavit of Mr Downey sworn on 27 February 2023 and an affidavit of Ms Kim sworn on 27 February 2023. Both parties provided written submissions.
The parties requested that a hearing in the matter be dispensed with under s 50 of the Civil and Administrative Tribunal Act 2013 (NSW) (the CAT Act) and that the matter be decided on the papers. An order was made dispensing with a hearing under s 50 of the CAT Act on 4 October 2023.

The Application Act

The Application Act, in s 144 provides: 144 Consent orders (1) The Tribunal may, with the consent of the respondent lawyer contained in a written instrument, make orders without conducting or completing a hearing in relation to the complaint. (2) Consent may be given before or after the proceedings were initiated in the Tribunal with respect to the complaint. (3) If consent is given before the proceedings were initiated, an investigation of the complaint (whether commenced or not) may be dispensed with, and any investigation of the complaint already being conducted may be suspended or terminated. (4) This section does not apply to consent given by the respondent lawyer unless the lawyer and the NSW Commissioner have agreed on the terms of an instrument of consent. (5) Without limiting what may be included in the instrument of consent, the instrument is to contain an agreed statement of facts (including as to the grounds of complaint) and may contain undertakings on the part of the respondent lawyer. (6) The instrument of consent must be filed with the Tribunal. (7) Nothing in this section affects the procedures regarding the initiation of proceedings in the Tribunal where consent was given before the proceedings are initiated. (8) If consent was given before the proceedings are initiated, the proceedings are nevertheless to be initiated with respect to the complaint in the same way as if the consent had not yet been given. (9) The Tribunal is to be constituted in the same way as for the conduct of a hearing into the complaint. (10) In deciding whether to make orders pursuant to an instrument of consent, the Tribunal may make such inquiries of the parties as it thinks fit and may, despite any such consent, conduct or complete a hearing in relation to the complaint if it considers it to be in the public interest to do so.

Background to the relevant property transaction 2. On or around 1 October 2020 Yonda Pty Limited (Yonda) as the lessee and David John Barnden (Mr Barnden) as the lessor executed a lease (2020 Lease) in respect of property located at 46-48 Duke Street, Uralla 2358 in the State of New South Wales and identified as Lots 1 and 2 in Deposited Plan 844141 (Property). 3. In or around November 2020: a. Mr Philip Walton (solicitor) acted on behalf of Ameduri Holdings Pty Limited, Compares Pty Ltd, Tecla Clara Anna Gelonesi, Rocco Gelonesi, Stephen Domenico Circosta and Nicola Circosta (Purchasers) in relation to their purchase of the Property from Mr Barnden; and b. the Respondent acted for Mr Barnden in relation to his sale of the Property. 4. On 20 November 2020, the Purchasers and Mr Barnden entered into a contract for the sale and purchase of the Property (Contract of Sale). The Contract of Sale required Mr Barnden to register the 2020 Lease prior to the scheduled completion date, which was 31 January 2021. 5. On 1 May 2021, to facilitate the purchase of the Property, Yonda (as the lessee) and the Purchasers (as the lessors) entered into a new lease which superseded the 2020 Lease (2021 Lease). The Undertaking 6. On 30 April 2021 the Respondent informed Mr Walton that the parties should complete the settlement of the Contract of Sale on the basis that Respondent will forward the original 2021 Lease to Mr Walton following settlement of the Contract of Sale. 7. On 3 May 2021 Mr Walton sent the Respondent an email which stated: "Could you also provide me with an undertaking to provide the original signed lease (the Original Lease) within 12 hours of settlement and comply with any requisition by the Registrar General". 8. On 3 May 2021 the Respondent sent Mr Walton an email which stated: "The original lease is in the post from Uralla, so I probably will not be able to have it to you within 72 hours, however, I am happy to give my undertaking to deliver it to you within 7 days and to comply with any requisition/s raised by the Registrar General. The workspace is now balanced and ready to settle." 9. The words underlined in paragraph 8 above: a. were not underlined in the Respondent's email; and b. are herein referred to as the Undertaking. 10. On 3 May 2021 Mr Walton sent the Respondent an email which stated: "Thank you your undertaking is accepted." Breach of the Undertaking 11. The Undertaking required the Respondent to deliver the original signed 2021 Lease to Mr Walton within seven days of the date of his 3 May 2021 email, being on or before 10 May 2021. 12. In breach of the Undertaking, the Respondent did not deliver the original signed 2021 Lease to Mr Walton within seven days of his 3 May 2021 email. 13. Mr Walton has not received the signed 2021 Lease. 14. As a consequence of the conduct referred to in paragraphs 11 and 12 above, the Respondent breached the Undertaking. 15. in the circumstances referred to in paragraphs 2 to 14 above the Respondent is guilty of professional misconduct.

The Agreed Statement of Facts essentially repeats the allegations contained in the Amended Application. The respondent has conceded all of those allegations in the Agreed Statement of Facts.
The documents substantiating the allegations form part of exhibit PGW-1 to the affidavit of Mr Walton.
We find that Mr Downey is guilty of the conduct alleged and conceded.
It is alleged that the conduct amounts to professional misconduct.

Professional misconduct

The relevant conduct characterised as professional misconduct is set out in s 297 of the Uniform Law: 297 Professional misconduct (1) For the purposes of this Law, professional misconduct includes - (a) unsatisfactory professional conduct of a lawyer, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and (b) conduct of a lawyer whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the lawyer is not a fit and proper person to engage in legal practice. (2) For the purpose of deciding whether a lawyer is or is not a fit and proper person to engage in legal practice as referred to in subsection (1)(b), regard may be had to the matters that would be considered if the lawyer were an applicant for admission to the Australian legal profession or for the grant or renewal of an Australian practising certificate and any other relevant matters.
The Council relies on section 297(1)(a), which refers to unsatisfactory professional conduct, which is described in s 296 of the Uniform Law: 296 Unsatisfactory professional conduct For the purposes of this Law, unsatisfactory professional conduct includes conduct of a lawyer occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.
The Council also points to s 298(b) of the Uniform Law, which says that "conduct consisting of a contravention of the Uniform Rules" is capable of constituting unsatisfactory professional conduct or professional misconduct. Rule 6.1 of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 ('the Conduct Rules') says: 6 Undertakings in the course of legal practice 6.1 A solicitor who has given an undertaking in the course of legal practice must honour that undertaking and ensure the timely and effective performance of the undertaking, unless released by the recipient or by a court of competent jurisdiction. …
The Council argues that the conduct of Mr Downey, in failing to honour his undertaking, constitutes unsatisfactory professional conduct of a lawyer where the conduct involves a substantial failure to reach or maintain a reasonable standard of competence and diligence, and therefore amounts to professional misconduct.
As set out in the Agreed Statement of Facts, Mr Downey concedes that his conduct amounts to professional misconduct. In his submissions, Mr Downey said, in response to a submission of the Council's, that he did not contend that his conduct was affected by any absence of authority or instructions. Mr Downey also made it clear, again in response to a submission of the Council's, that he did not contend that the Complainant should have "prevailed on a third party to fulfil the Respondent's Undertaking". We accept Mr Downey's submissions on those points. However, we note that a submission was made in Mr Downey's written submission that his ability to comply with his undertaking was out of his control. A solicitor must not give an undertaking in circumstances where its fulfilment will be out of their control.

Undertakings

The nature of an undertaking given by a solicitor was described in Law Society of New South Wales v Waterhouse [2002] NSWADT 204 at [13]: 13 A solicitor's undertaking gives rise to a personal obligation of the solicitor. It is not an obligation undertaken on behalf of clients. The recipient of the undertaking is entitled to assume that the solicitor has taken all steps necessary to ensure that he will be in position to comply with the undertaking when the time arrives to do so.
The critical importance of undertakings being reliable was explained in Vincent Cofini [1994] NSWLST 25: Undertakings are given by legal practitioners for the specific purpose of enabling legal activities to be carried out. Other persons rely upon those undertakings. The undertakings are personal to the legal practitioner and bind that practitioner, not as a matter of contract but as a matter of professional conduct and comity, and will be enforced by the Courts because legal practitioners are officers of the Court and because without enforcement undertakings would be worthless, persons and Courts would be unable to rely on the word of a legal practitioner and this aspect of legal practice, that demands compliance for legal efficiency, would collapse.
Undertakings must not be given by legal practitioners lightly or casually. An undertaking should only be given in circumstances where the legal practitioner is sure that they will be able to fulfil the obligation created by the undertaking. In the Court of Appeal in Western Australia, in Legal Profession Complaints Committee v Detata [2012] WASCA 214 at [50], [52]-[54] Martin CJ said: 50 Undertakings by legal practitioners are a common feature of commercial and property transactions in which legal practitioners are engaged. In some cases, a party might complete a transaction before all relevant conditions are satisfied in reliance upon an undertaking by a practitioner to the effect that he or she will cause a particular condition to be satisfied. In this context, the proffer and acceptance of undertakings by legal practitioners improves the efficiency and expedition of commercial and property transactions and thereby serves to lubricate the wheels of commerce, trade and finance: see Rubik Financial Ltd v Herskope [2010] WASC 343; In the Matter of a Solicitor 'L' (Unreported, VSC, LPA 3 of 1989, 17 - 21 June 1989). … 52 The proffer of an undertaking binding upon a legal practitioner and his or her firm can be expected to enhance the reliability of the undertaking, and thereby the prospect that it will be accepted and relied upon by the party to whom it is proffered. In this way, the proffer of an undertaking binding upon a legal practitioner enhances the achievement of the various purposes to which I have referred, and thereby enhances the public interest. It is therefore vital that legal practitioners perform their undertakings, regardless of whether the undertaking was proffered in error or oversight, irrespective of any change in circumstances, no matter how radical, and irrespective of any hardship to the legal practitioner concerned … 53 Further, it is vital for the maintenance of public confidence in the integrity of the legal profession and its practitioners, and for the maintenance of the confidence which practitioners have in dealing with each other, that performance of their undertakings be enforced: see (Rubik Financial Ltd). 54 For these reasons, the obligation of a legal practitioner to perform his or her undertaking is a solemn obligation of the utmost importance. Failure to perform that obligation will generally be regarded as professional misconduct, and depending on the circumstances, will often be regarded as serious professional misconduct.
In Council of the Law Society of New South Wales v Powell [2019] NSWCATOD 24, the Tribunal said, at [20]: 20 In determining whether to make the orders sought by the parties we must consider, for ourselves, whether it is appropriate to characterise the admitted misconduct of the respondent as professional misconduct. We observe firstly, as is well known, that the legal profession is an honourable one and legal practitioners are expected by the community, by fellow practitioners, and by the relevant regulatory authorities to behave honourably always. It is an everyday occurrence in all areas where lawyers practice that legal practitioners provide undertakings to fellow practitioners and to a wide range of commercial and statutory entities both on their own behalf and on behalf of clients. Other legal practitioners and commercial and statutory entities rely upon compliance with those undertakings in their everyday activities. Such reliance is integral to the efficient and effective functioning of a whole range of activities within our community. It is essential that undertakings given by legal practitioners be genuinely provided and that they be honoured. It is for these reasons that prima facie, a breach by a legal practitioner of an undertaking, whether given during legal practice or not, will arguably constitute a most serious matter, and may, in relevant circumstances, adversely impact upon the integrity of the profession in the eyes of the public.

Consideration

Mr Downey has conceded that his breach of his undertaking given on 3 May 2021 to Mr Walton to provide the original lease to him within 7 days of settlement amounts to professional misconduct. We agree. The settlement took place in reliance on the undertaking. Mr Walton did not receive the original lease within 7 days of settlement, and, inexplicably, according to paragraph 13 of the Agreed Statement of Facts, still has not received the original lease.
Mr Downey's breach of his undertaking is professional misconduct under s 297(1)(a) of the Uniform Law because it constitutes a substantial failure to maintain a reasonable standard of competence and diligence.

Protective Order

We are satisfied that protective orders consistent with the orders proposed in the Instrument of Consent are appropriate to denounce Mr Downey's conduct, both for the benefit of the practitioner and to remind the profession at large of the high standard of conduct expected of legal practitioners. We bear in mind the importance of maintaining public confidence in the legal profession and of protecting the public by reinforcing the expectation that high professional standards will be maintained (see Law Society of New South Wales v Meakes [2006] NSWCA 340 at [114] and Council of the Law Society of New South Wales v Parente [2019] NSWCA 33 at [44]).
We further bear in mind s 260(c) of the Uniform Law, which says: 260 Objectives The objectives of this Chapter are - … (c) to monitor, promote and enforce the professional standards, competence and honesty of the Australian legal profession.
There is no suggestion that Mr Downey has been the subject of any prior relevant complaint. In conceding that his conduct amounts to professional misconduct, he has indicated that he understands the seriousness of that conduct.
Section 299(1)(b) of the Uniform Law gives the Tribunal power to reprimand a practitioner, and section 302(1)(l) of the Uniform Law gives the Tribunal power to impose a fine, not exceeding $100,000, to be paid into the fund referred to in s 456 of the Uniform Law, where the Tribunal has determined that the legal practitioner is guilty of professional misconduct.

Orders

We will make the following orders: 1. David Kelvin Downey is reprimanded. 2. David Kelvin Downey is to pay a fine of $3,000. 3. David Kelvin Downey is to pay the costs of the proceedings of the Council of the Law Society of New South Wales.

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar

Amendments 04 December 2023 - Coversheet and par 1 - the word "Practitioner" changed to "Profession" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 December 2023

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