COUNCIL OF THE LAW SOCIETY OF THE ACT v LEGAL PRACTITIONER X

COUNCIL OF THE LAW SOCIETY OF THE ACT v LEGAL PRACTITIONER X - [2012] ACAT 34 - ACAT 2012 case summary — Zoe

[16]

The incorrect contract was sent. The question is whether that was done negligently.
The respondent had acted for one of the complainants in the sale of a residential property at about the same time, so that both matters were settled within a short period of each other. The contract that was sent was the contract that related to the other property which was a sale, rather than the purchase by both complainants. On one view, the respondent, knowing that there had been two transactions involving two contracts at about the same time should have used extra care when retrieving a contract, to ensure that it was the correct contract that he sent. The letters of 21 February 2008 and 21 April 2008 clearly showed the details of the contract requested.
The respondent in his submissions says that providing the wrong contract was a 'genuine administrative error'. He speculates as to how it may have come about that the incorrect contract was provided, but does not provide a positive explanation.
In the absence of a satisfactory explanation, provision of the incorrect contract can only be regarded as having been done negligently. It was certainly not a case in which the covering letter correctly described the contract which the respondent intended to send, and the incorrect contract was mistakenly put in the envelope.
The Tribunal cannot regard this as a simple error. Having received two letters correctly identifying the purchase transaction, the respondent did not take sufficient care to ensure that he was complying with the mortgagee's solicitor's request, and provides no satisfactory explanation for failing to do so. Reference to the incorrect transaction in the covering letter of 28 April 2008, excludes the possibility of a 'simple' administrative error. Both letters from the mortgagee's solicitor give the reason for requiring the contract, and stress the urgency of the situation as it affected the respondent's clients. There was a magnitude of risk for his clients and particular attention was required.

[19]

Later in the submissions (Para 16) he suggests that after settlement he was entitled to close his file. "This is because the mortgagee/mortgagee's solicitor attends to post-settlement work. If there is no mortgagee's solicitor (example, where the buyer is a cash purchaser, without a bank), then the solicitor will continue to act for the client until the title is registered."
This is a misconception of the duty of a solicitor acting for the purchaser of a property post settlement, and cannot be regarded as a satisfactory explanation for the delay alleged.
The evidence of the respondent indicates that after he was advised by the mortgagee's solicitor of his having sent the incorrect contract, he made many visits to his archives and went through many boxes of archived files in order to locate the relevant contract, but in spite of these concerted efforts, it was not until late October that he was able to locate and provide the contract.
The Tribunal rejects that evidence.
In his affidavit of 27 April 2010, RC deposes to a conversation that he had with the respondent on approximately 29 September 2008. In that conversation RC says that he told the respondent that there was an ongoing problem getting the property transferred. In response, the respondent said: "This is the first time I have heard that there is a problem. I would need to look at the file to know anything about it. The file will be in archives and it will be some effort to get it out." There was no challenge to this evidence in cross examination. The clear inference is that the respondent had done nothing in response to the letter of 5 September 2008 at that stage.
It became apparent in cross examination that the respondent used an outbuilding at his residence as a storage facility. His affidavit affirmed 11 June 2010, Para. 21 indicates that both sale and purchase files were closed on the same day, 21 November 2007. They were numbered consecutively 3405 and 3406 for archival purposes, and placed in the same box, numbered 154, and then placed in storage. He says the sale file was just below the purchase file. In those circumstances, the Tribunal cannot give any credibility to the claim that the purchase contract was difficult to find.
The complainants prepared what they describe as a timeline which appears in Annexure 'A' to Mr Reis' affidavit of 7 December 2009, commencing at page 24. This sets out the actions taken by the complainants during September and October 2008, attempting to expedite registration of their transfer. This includes brief description of their communications with the respondent and his responses.
This evidence indicates that the respondent took no action to locate the contract referred to in the letter from the mortgagee's solicitors of 5 September 2008 at least until 29 September 2008. The Tribunal is satisfied that thereafter his attempts to locate the contract were either non-existent or ineffective for another 4 weeks.
References in the emails that passed between the respondent and the complainants in this period do not support his assertions that he had to go to the archives several times to locate the file. His correspondence makes it clear that an attitude that it was the responsibility of the mortgagee's solicitors to protect his client's interests by attending to rectification drove his inactivity. Even as late as 29 October 2008, he wrongly asserted that the correct contract had been delivered to the mortgagee's solicitor.
It was not until the clamour from his clients had reached what apparently was an unbearable level that the contract was produced. He appears to have been untroubled by the assertion of the mortgagee's solicitor that his own clients were in default throughout this period.
The Tribunal is satisfied that the respondent's conduct in this regard was negligent and that this particular is made out.

[24]

In his submissions, the respondent makes the point that the 20 November 2008 letter does not precisely refer to a letter from the mortgagee's solicitor of 21 April 2008, nor does it refer to a letter from the same source of 21 February 2008. He submits that accordingly, the letter cannot be said to include any deliberate or reckless misrepresentations as alleged by the applicant. He submits that on that basis the Tribunal (Para. 22) should dismiss grounds 2.1.1 and 2.1.2 straight away. This is a simplistic analysis.
The paragraph contains a number of representations: first, that it was nearly seven months after settlement that the respondent was asked to provide the original contract for sale; secondly, that the request was made on or about 28 April 2008 (and by inference, this was the first request) and thirdly, no reason was given for the request. Each assertion is incorrect.
There were two requests for the contract from the mortgagee's solicitors, made in letters dated 21 February 2008 and 21 April 2008. The first request was made approximately 3 and a half months after settlement. The second request was made approximately 5 and a half months after settlement. The reference to 'nearly 7 months' is incorrect, even if the time frame referred to is accepted as relating to the second request only.
The Tribunal's findings in relation to the letter of 21 February 2008 are set out in paragraph 65. Against the background of those findings, the first and second representations must be regarded as incorrect and as involving, by necessary inference, misrepresentations concerning the letter of 21 February 2008. Given the Tribunal's findings, they must be taken to be deliberate misrepresentations.
It is clear that it is the letter of 21 April 2008 that the respondent is referring to in his letter of 20 November 2008. The letter of 21 April 2008 contains, on its face, a reason for requesting the contract. It is alleged by the applicant that the respondent's incorrect assertion that he was given no reason for the request, was either deliberate or reckless. It is a very obvious error for the respondent to have made. The content of the letter of 20 November 2008 and what is known of surrounding events supports the inference that the mis-description was not just careless, but was made with an absence of any care as to the accuracy of the statement.
Indeed, in his letter to the complainants of 21 November 2008, the respondent indicated that he had no record of receiving, or recollection of seeing, the letter of 21 April 2012. There was no basis then for him to make any assertion on 20 November about whether he had been given a reason for the request for the contract. On his own case, he had not read the latter and could not recall it. It is open to infer that his assertion was something that was simply made up at the time. At the very least, it was a reckless misrepresentation.
The Tribunal finds that particulars 2.1.1 and 2.1.2 are made out.

[30]

This particular alleges that the respondent continued the misrepresentation referred to in particular 2.1.3. For the reasons set out above, this particular is also not established.
Having said that, the respondent's attitude to the responsibility of and actions of the mortgagee's solicitor compared to his own is very concerning because it suggests that the respondent misunderstands the duty that a solicitor owes to his or her clients.
The respondent in justifying the statements that he made regarding delay, takes a quantitative approach based on periods of inactivity and attributes fault to others and sometimes to himself, for each period isolated. This approach ignores two fundamental and related principles.
The first is that the respondent's retainer and his duty to his client did not end at the settlement table. The Tribunal takes the view that the respondent's retainer to his clients was to act on the conveyance of the particular property to them. In general terms, this retainer would have ceased only when the title to the property was successfully transferred to them, subject to any mortgage or other agreed third party interest.
The second principle is that the duty that he owed to his clients was not transferred to the solicitors for the mortgagee, in spite of a conveyancing practice of convenience that after settlement involving registration of a mortgage; lodgement of documents and registration is done by the mortgagee's lawyers.
There were long periods during which the respondent's duty was clear, but he was inactive, or he was inactive and relying on the mortgagee's solicitor to take action. There was no evidence that he, at any time, followed up, pursued or took any real interest in, the resolution of the serious problem that his clients faced. The evidence was to the contrary.
The Tribunal makes no comment on the actions of the mortgagee's solicitor, because what they did or did not do, was essentially irrelevant to the continuing obligation the respondent had to his clients to ensure that registration of their interest had been attended to at the earliest reasonable opportunity.
The Tribunal does not agree with the submission of the respondent that he had no responsibility for any delay from the date of settlement to 28 April 2008. That approach is built on his misconception that the mortgagee's solicitor bore the sole responsibility for registration of his clients' title.
After 28 April his duty to effect registration of his clients' title remained, and the mistaken provision of the incorrect contract did not relieve him of that burden. Having regard to the findings made about the respondent's knowledge of the letters of 21 February and 21 April 2008, the Tribunal is satisfied that he was on notice of a serious problem that affected his clients' interests. He should have, at the very least, made his own enquiries to check with the mortgagee's solicitor after 28 April 2008, that the problem was fixed and the transfer of title and security documents satisfactorily finalised.
In this regard, his denial of any communication between his firm and the mortgagee's solicitors between 28 April and 5 September 2008 does not reflect particularly well on him - it begs the question of why he wasn't chasing them to confirm that the problem had been fixed. It was not good enough for him to say that the mortgagee's solicitor bore the sole responsibility.
He should also, in our view, have alerted his clients to the fact that there was a problem, rather than leaving it for them to discover it some months later when they received a bill for overdue rates.
The application in this matter does not include any general allegation of unsatisfactory professional conduct or professional misconduct. There is no allegation that the respondent's conduct generally was such that he failed to act in a way that accords with a reasonable standard of competence or diligence. The application is narrowly focussed on particulars that relate to specific matters. It is not open to the Tribunal to go beyond the grounds and particulars relied on by the applicant to make findings against the respondent in respect of matters that were not raised in the application. While section 421 of the LP Act does allow the Tribunal the power to amend an application on its own motion, that is not a power that is easy to exercise before the evidence is heard and submissions made.

[48]

The repeated references to incorrect advice that may have been given by the ACT Law Society and to the courts rather than the Law Society being the arbiter of compensation claims, are striking. The complainants had only referred to the ACT Law Society briefly as having given advice about the process for lodging a complaint. Nothing was said about advice about compensation. It is possible to read this letter as an attempt to divert the complainants away from that course by asserting that the Law Society was giving incorrect advice, or because only a court could deal with the complainant's claim.
RC replied by email saying that they were not satisfied with the respondent's response; 'Possibly you are right that the Society will not be able to assist us with compensation. Our main objective is to prevent future clients from going through our experience.'
The respondent's letter of 12 December 2008 then followed with its indication that the respondent was now considering writing to RC's employer and its inference that RC's claim 'for the times you were allegedly doing work on this matter' was perhaps improper, or in some way fraudulent.
These communications indicate that the respondent, at least initially, was taking a robust approach to the complaints. His letter of 20 November 2008 sets out a chronology of events, referring to the sending of the incorrect contract and the delay in locating the correct contract. There is no mention of apology and certainly no compensation offer. His final paragraph blaming the mortgagee's solicitor for most of the delays is referred to above.
However, this letter was followed by the complainants' response which referred to the drafting of a complaint to the Law Society. There followed the two letters of 21 November and 23 November 2008 written in a more conciliatory tone and making an unsolicited offer of compensation.
The timing of those letters invites the inference that it was the mention of complaint to the Law Society which changed the respondent's approach. That is to say, in order to stave off the complaint, the offers to settle were made in order to reach an accommodation with the complainants which would result in withdrawal, or the "calling off" of any complaint.
Later correspondence from the complainants made it clear that a settlement with the complainants was not possible on the terms the respondent was offering, so that in the letter of 9 December and then 12 December 2008, stronger steps in bringing pressure to bear were needed.
The respondent was cross-examined at length about his motivations. He admitted that when he wrote the letter of 12 December 2008, he was angry; although he told the complainants that he was considering writing to the employer, he was not going to do so; and, wanted to 'get the settlement thing happening'.
This evidence strongly suggests that the respondent threatened to contact RC's employer in order to intimidate the complainants into dropping their complaint and accepting the respondent's offer. The making of the settlement offer immediately after the advice that a complaint to the Law Society is to be made, links the offer to the complaint, and indicates a hope on the part of the respondent that a settlement would result in the complainant's 'calling off the whole thing completely'. This can only be read as a reference to the complainant calling off the foreshadowed complaint. When the complainants made it clear that compensation was not the main objective, a different tact was adopted by the respondent.
In his affidavit of 11 June 2010, the respondent says that he was attempting to demonstrate to the complainants that they were being unreasonable in the quantum of their claim for compensation. The Tribunal rejects that evidence. Threatening to contact a client's employer could only be at least embarrassing for the client. It is impossible to see that such an experience could in some way educate the client as to the unreasonableness of an offer he had made.
In the circumstances of the case, and particularly in view of the sequence of correspondence between the parties between19 November and 23 November 2008, the Tribunal finds that Ground 3 is made out.
The threat was made by the respondent on only one occasion and was not carried out. However, it must be viewed seriously since it was an attempt to coerce and manipulate his clients to avoid a complaint. The Tribunal takes the view that this conduct constitutes professional misconduct.

At a glance

Court

Decision date

Before

Source

Judgment (53 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (3)

COUNCIL OF THE LAW SOCIETY OF THE ACT v LEGAL PRACTITIONER X (Chanaka Bandarage) (Occupational Discipline) [2012] ACAT 34 (16 May 2012)