Di Giovanni v Council of the Law Society of New South Wales

NCAT Occupational|2024-02-19|Before: Wootten J

88 CLR 449 Marron v J Chatham Daunt Pty Ltd [1998] VSC 110 McDonald v Director-General of Social Security (1984) 1 FCR 354; [1984] FCA 57 Metro Waterloo Pty Ltd v HWL Ebsworth Lawyers [2021] QDC 295 Moody v Cox [1917] 2 Ch 71 New South Wales Bar Association v Evatt (1968) 117 CLR 177; [1968] HCA 20 Quinones v Council of the Law Society of New South Wales [2023] NSWCATOD 43 Shi v Migration Agents Registration Authority (2008) 235 CLR 286 Smith v New South Wales Bar Association (1992) 176 CLR 256 Thompson v Mikkelsen (Supreme Court (NSW), Wootten J, 3 October 1974, unrep) Tobin v Dodd [2004] WASCA 288 Transport Industries Insurance Co Ltd v Longmuir (1996) 9 ANZ Insurance Cases 61-385; [1997] 1 VR 125 Watson v Foxman (1995) 49 NSWLR 315 Youssef v NSW Legal Services Commissioner [2020] NSWCATOD 85 Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 270; [1957] HCA 46 Texts Cited: New South Wales Solicitors Manual Lawyers' Professional Responsibility (Lawbook Co, 7th ed, 2021) - Professor Dal Pont Category: Principal judgment Parties: Maria Di Giovanni (Applicant) Council of the Law Society of New South Wales (Respondent) Representation: Barristers: P Griffin SC (Applicant) R Pietriche (Respondent)

Introduction and uncontroversial facts

Maria Di Giovanni (the Solicitor or the Applicant), in her capacity as a solicitor, acted for both parties in a commercial property conveyance of a multi-million dollar property in Sydney. The owner was a company that acted as trustee for a self-managed superannuation fund of a long-standing client of the Solicitor. That client, his wife (who had recently died), and the Solicitor had over several years formed an association that went beyond being strictly a solicitor and client relationship and was closer to a friendship. For simplicity only, and because the client was by then the sole controlling mind of the vendor, we will refer to the individual client as "the vendor" and the company as "the vendor company".
The purchaser was a company formed by, and for the benefit of, various members of the Solicitor's extended family.
Despite historically being an astute businessman, at the time the sale was entered into the Solicitor felt that the vendor was struggling with the regulatory compliance issues arising from owning a commercial property in a superannuation fund, exacerbated by his wife's recent passing. To use her words, he had "lost his compass", and "struggled to stay on course." After the death of his wife the Solicitor noticed that the vendor "called on her firm with higher frequency". The vendor was 84 years of age and describes himself as being in a "deep depression" at the time.
When the vendor made a final decision to sell the property, after previously changing his mind even after signing a listing authority, the Solicitor discussed with him the potential advantages of a private sale, including the saving of paying no agent's commission or advertising expenses. She advised that certain members of her family, some of whom she had introduced to the vendor at the auction when he bought the premises, may have an interest in purchasing it.
Later, the Solicitor drove the vendor from his home to meet some shareholders of the purchaser, her "family members", at the premises and on a later date witnessed his signature on the contract at his house and acted for both parties in the transaction. The front page of the contract signed by the vendor showed the Solicitor's firm as acting for both parties in prominent letters.
It is not in dispute that the vendor knew at all times the purchaser was an entity controlled by the Solicitor's family members. The Solicitor says she told the vendor that she intended to act for both parties in the transaction.
The Solicitor wrote to her family members after the contract was executed, warning of the potential dangers of both parties being represented by the same solicitor and advising: "As you know we act for the vendor and we have been transparent with this from the outset. We owe a duty to act in the best interests of each client involved in the transaction and, in the event of a conflict of interest arising, we are bound to cease to act for all parties."
No such written advice was given to the vendor or the vendor company, and when the vendor later advised he wished to resile from the contract between exchange and completion, the Solicitor did not follow the course she told her family members she would take if a conflict arose. Rather, she attempted to negotiate mutual rescission, with the vendor company to pay the purchaser's reasonably incurred costs. She was unable to do so.
The Solicitor then provided oral and written advice to the vendor that included that he had limited bases to resile from the contract and that "[a]s we act for both parties in this transaction, it may be prudent for you to obtain independent legal advice."
The vendor instructed the Solicitor to complete the transaction but was clearly unhappy with what had occurred. He was noted by staff at the Solicitor's office to have attended four days prior to settlement and to have been "[v]ery unfriendly, rude and angry." He accused the Solicitor of "not looking after him …".
Nonetheless, the Solicitor persisted in acting for both parties and settlement occurred.
Eighteen months after the sale, the vendor lodged a complaint alleging the Solicitor had acted improperly in a conflict of interest situation. On 19 May 2023, the Council of the Law Society of New South Wales (the Council) made findings that the Solicitor had engaged in unsatisfactory professional conduct, arising from the complaint, in the following terms: "That the Respondent Solicitor and/or the Law Practice acted in the November 2019 sale of the Property in circumstances where there was a conflict of interest between the vendor (the Complainant), the purchasers (the Respondent Solicitor's aunt and uncle) and/or the Respondent Solicitor, in enabling the Respondent Solicitor's aunt and uncle to purchase the Property on commercially favourable terms."
The Solicitor was reprimanded and ordered to undertake targeted ethics training which, to her credit, she did despite challenging the Council's finding.
The Solicitor seeks administrative, or merits, review of that decision. She submits that she acted at all times in compliance with the relevant Conduct Rules and her professional and fiduciary obligations to each client. She says that, at all material times, the vendor was aware that she was acting for both parties and of the family relationship between her and the shareholders of the purchaser. She says that the findings made by the Council reflect an inadequate understanding of the relevant laws and rules and a failure to properly apply the law to the facts of her circumstances.
The Solicitor has little in the way of contemporaneous file notes of her relevant dealings with the vendor. She says she did not have a full appreciation of the importance of that process until she completed the ethics course she was ordered to undertake by the Council.

Outcome

For the reasons that follow, we have decided that the Council's decision was, in essence, correct. The Solicitor should be subject to the protective orders the Council thought appropriate. However, for reasons we will come to, the Solicitor requires further training to that which she has already completed. She will also have to apologise to the vendor.

Non publication orders

Neither party sought an order restricting publication of any of the names of the persons involved in these proceedings.
Section 64(1)(a) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) enables the Tribunal, if it considers it desirable to do so by reason of the confidential nature of the evidence or for any other reason, of its own motion, or on the application of a party, to prohibit or restrict publication of the name of any person regardless of whether or not that person is a party to the proceedings.
There is no public advantage to the names of the individuals who stood behind the vendor and purchaser companies being published. We consider it desirable due to the essentially confidential nature of the solicitor client relationship, and the personal details of the vendor discussed in these reasons, that those details are not published.

The law relevant to these review proceedings

The Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) ("Conduct Rules") provided, relevantly, at the time that in relation to conflicts of interest: 11 Conflict of duties concerning current clients 11.1 A solicitor and a law practice must avoid conflicts between the duties owed to two or more current clients, except where permitted by this Rule. 11.2 If a solicitor or a law practice seeks to act for two or more clients in the same or related matters where the clients' interests are adverse and there is a conflict or potential conflict of the duties to act in the best interests of each client, the solicitor or law practice must not act, except where permitted by Rule 11.3. 11.3 Where a solicitor or law practice seeks to act in the circumstances specified in Rule 11.2, the solicitor or law practice may, subject always to each solicitor discharging their duty to act in the best interests of their client, only act if each client: 11.3.1 is aware that the solicitor or law practice is also acting for another client; and 11.3.2 has given informed consent to the solicitor or law practice so acting. … 11.5 If a solicitor or a law practice acts for more than one client in a matter and, during the course of the conduct of that matter, an actual conflict arises between the duties owed to two or more of those clients, the solicitor or law practice may only continue to act for one of the clients (or a group of clients between whom there is no conflict) provided the duty of confidentiality to other client(s) is not put at risk and the parties have given informed consent.
The complaint was dealt with under s 299 of the Legal Profession Uniform Law (NSW) ("Uniform Law"). That section provides as follows: 299 Determination by local regulatory authority - unsatisfactory professional conduct (1) The designated local regulatory authority may, in relation to a disciplinary matter, find that the respondent lawyer or a legal practitioner associate of the respondent law practice has engaged in unsatisfactory professional conduct and may determine the disciplinary matter by making any of the following orders - (a) an order cautioning the respondent or a legal practitioner associate of the respondent law practice; (b) an order reprimanding the respondent or a legal practitioner associate of the respondent law practice; (c) an order requiring an apology from the respondent or a legal practitioner associate of the respondent law practice; (d) an order requiring the respondent or a legal practitioner associate of the respondent law practice to redo the work that is the subject of the complaint at no cost or to waive or reduce the fees for the work; (e) an order requiring - (i) the respondent lawyer; or (ii) the respondent law practice to arrange for a legal practitioner associate of the law practice - to undertake training, education or counselling or be supervised; (f) an order requiring the respondent or a legal practitioner associate of the respondent law practice to pay a fine of a specified amount (not exceeding $25 000) to the fund referred to in section 456; (g) an order recommending the imposition of a specified condition on the Australian practising certificate or Australian registration certificate of the respondent lawyer or a legal practitioner associate of the respondent law practice. (2) If the designated local regulatory authority proposes to determine a disciplinary matter under this section - (a) the designated local regulatory authority must provide the respondent or associate and the complainant with details of the proposed determination and invite them to make written submissions to the designated local regulatory authority within a specified period; and (b) the designated local regulatory authority must take into consideration any written submissions made to the designated local regulatory authority within the specified period, and may, but need not, consider submissions received afterwards; and (c) the designated local regulatory authority is not required to repeat the process if the designated local regulatory authority decides to make a determination in different terms after taking into account any written submissions received during the specified period; and (d) the rules of procedural fairness are not breached merely because no submissions are received within the specified period and the designated local regulatory authority makes a determination in relation to the complaint, even if submissions are received afterwards. (3) If the designated local regulatory authority determines a disciplinary matter under this section, no further action is to be taken under this Chapter with respect to the complaint. (4) If a complaint contains both a consumer matter and a disciplinary matter and the designated local regulatory authority has already made a determination of the consumer matter under section 290, the designated local regulatory authority may, in subsequently making a determination about the disciplinary matter, take into account the determination already made about the consumer matter, but not so as to make further orders under that section.
The Uniform Law also provides: 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 present application is brought under s 314 of the Uniform Law. Section 314 is in the following terms: 314 Right of appeal or review of decisions of local regulatory authority (1) A respondent lawyer or a legal practitioner associate of a respondent law practice may, in accordance with applicable jurisdictional legislation, appeal to the designated tribunal against, or seek a review by the designated tribunal of, a determination of the designated local regulatory authority under - (a) section 290, in relation to a compensation order for more than $10 000; or (b) section 299. (2) The designated tribunal may make any order it considers appropriate on the appeal or review. (3) It is intended that jurisdictional legislation may provide a right of appeal against or a right of review of the designated tribunal's decision.

The nature of these review proceedings

In review proceedings of this nature, the relevant statutory scheme and considerations have been thoroughly and helpfully summarised in earlier decisions of differently constituted Tribunals: Youssef v NSW Legal Services Commissioner [2020] NSWCATOD 85; Hall v Council of the Law Society of New South Wales [2020] NSWCATOD 96 ("Hall") and Quinones v Council of the Law Society of New South Wales [2023] NSWCATOD 43. In summary: 1. The review in the Tribunal is conducted under the provisions of the Administrative Decisions Review Act 1997 (NSW) (the ADR Act), the Uniform Law, the Uniform Law Application Act 2014 (NSW) (Application Act), s 126 and the NCAT Act; 2. Section 63 of the ADR Act allows the Tribunal to exercise all of the functions that are conferred or imposed on the original decision maker to make the correct and preferable decision. The Tribunal may determine to affirm, set-aside or vary the original decision, or to remit the matter for further consideration. In addition, we may make any other order we consider appropriate: Uniform Law, s 314(3). 3. Our decision takes effect on the date it is made or such later date as may be specified in our decision. If we vary, or make a decision in substitution for, the administrator's decision, our decision is taken to be the decision of the administrator and has effect as the decision of the administrator on and from the date of the administrator's actual decision, unless we order otherwise: ADR Act, s 66. 4. There is no onus of proof on either party. Rather, our task is to determine the matter on the merits. We are not concerned with examining whether there was challengeable error in the process or reasoning by the Council: Donaghy v The Council of the Law Society of New South Wales [2013] NSWCA 154. There is no presumption that the Council's decision is correct: McDonald v Director-General of Social Security (1984) 1 FCR 354 at 357; [1984] FCA 57. 5. We may consider the material before the original decision-maker as well as any relevant new material put before us: Shi v Migration Agents Registration Authority (2008) 235 CLR 286; [2008] HCA 3 ("Shi") at [41]-[42], [98]-[99], [124]; Drake v Minister of Immigration and Ethnic Affairs (1979) 2 ALD 60 at 77; [1979] FCA 39. 6. We are entitled to inform ourselves on any matter in the manner we think fit, subject to the rules of natural justice The rules of evidence do not apply to the proceedings unless it involves a question of professional misconduct: NCAT Act, s 38(2) and cl 20 of Sch 5; Uniform Law, s 301(3). A fundamental obligation is to make findings of fact based on logically probative material and we may rightly have regard to the gravity of any allegations made and to the gravity of the consequences that may flow from the making of a particular finding or decision. 7. We may determine our own procedure (unless the NCAT Act or procedural rules otherwise make provision) and should act with as little formality as the circumstances of the case permit to resolve the real issues in proceedings justly, quickly, cheaply without regard to technicalities or legal forms: NCAT Act, ss 36 and 38(4). 8. However, our inquisitorial role does not mean that a party can simply present what are said to be facts and leave it to the Tribunal to search out the truth of any and all allegations, in effect shifting the burden of providing the evidence in support of their position to the Tribunal: Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389; [2003] HCA 26 at [78]. 9. The purpose of the disciplinary proceedings conducted by the Council, and therefore of our review of the Decision on review, is not to punish the practitioner but to protect the public: Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 270; [1957] HCA 46; New South Wales Bar Association v Evatt (1968) 117 CLR 177; 1968 HCA 20; Council of the New South Wales Bar Association v EFA (a pseudonym) [2021] NSWCA 339. 10. The review involves a two-step process. We must determine whether the Solicitor engaged in unsatisfactory professional conduct and, if so, decide what protective order or orders (if any) were correct and preferable. 11. Our first task is to identify the decision to be reviewed, and the statutory question it answers needs to be identified with some precision "for it marks the boundaries of the review": Shi at [134]-[135], per Keifel J (as Her Honour then was). The Tribunal stands "in the shoes of the original decision maker" and in so doing should consider itself "as though it were performing the function of that administrator in accordance with the law as applied to that person": Shi, per Keifel J, at [135]. 12. Natural justice requires that the Solicitor be advised in clear and precise terms, prior to the hearing, of the nature and the particulars of the case to be met: Smith v New South Wales Bar Association (1992) 176 CLR 256 at 270 per Deane J. This requirement is also embodied in s 299(2)(a) of the Uniform Law. It is therefore critical to ensure that the particulars of the misconduct alleged against the lawyer are carefully drawn to avoid any ambiguity: Kerin v Legal Practitioners Complaints Committee (1996) 67 SASR 149 at 166 per Debelle J; [1996] SASC 5650; Hall. 13. Each case must turn on its own facts and the application of the statutory words, paying close regard to the specific context of the conduct concerned: BRJ v Council of the New South Wales Bar Association [2016] NSWSC 146 ("BRJ") at [98]; and 14. The test is an objective one, and the circumstances of the objective conduct, rather than the professional culpability of the practitioner, is of prime, if not sole, relevance (BRJ at [100]).
There is no controversy between the parties that the relevant provisions in the Uniform Law, the Application Act and the ADR Act apply or that the conduct in issue was conduct occurring in connection with the practice of law in New South Wales. We are satisfied that we have jurisdiction to determine the application.

Consideration

The wording of the Council's determination bears repeating here because it is somewhat problematic in certain respects. The Council determined: "That the Respondent Solicitor and/or the Law Practice acted in the November 2019 sale of the Property in circumstances where there was a conflict of interest between the vendor (the Complainant), the purchasers (the Respondent Solicitor's aunt and uncle) and/or the Respondent Solicitor, in enabling the Respondent Solicitor's aunt and uncle to purchase the Property on commercially favourable terms."
Reference to the Solicitor "and/or the Law Practice" having a conflict in acting for both parties is apt to distract. It was the Solicitor who acted, and as a principal of the firm can be held accountable for work it conducts and for ensuring that reasonable steps are taken to ensure compliance with obligations under the Uniform Law and other professional obligations: Uniform Law, s 34.
The finding's reference to the Solicitor "act[ing] in the November 2019 sale of the Property in circumstances where there was a conflict of interest between the vendor (the Complainant), the solicitor's family members (the Respondent Solicitor's aunt and uncle) …" is unambiguous although strictly incorrect as it was the respective companies who were involved in the transaction.
As to what is to be made of the finding that the Solicitor engaged in "enabling the Respondent Solicitor's aunt and uncle to purchase the Property on commercially favourable terms", it is not clear whether the Council intended that as a separate finding (as indicated by the "and" in the unhelpful conjunction "and/or") or as a particular of the complaint that explains the nature of the conflict.
The Solicitor understood the finding to encompass the Council's satisfaction that she had: 1. acted in circumstances where there was a conflict of interest between the vendor and the purchaser; 2. that this conflict of interest was exacerbated because the purchasers were her aunt and uncle; and 3. that the Solicitor conspired in some way to enable her aunt and uncle to 'purchase the property on commercially favourable terms.'
The Council does not submit to the contrary, but it is difficult to understand how the fact the Solicitor's family members were her relations forms a relevant part of the finding that she acted in a position of conflicted interests. At its highest, it may be treated as a reason to draw an inference that the Solicitor was motivated to benefit one client over another.

Did the Solicitor breach her obligations under r 11 of the conduct rules?

At Chapter 7 of the online edition of the New South Wales Solicitors Manual (Lexis Nexis, as at September 2022), Professor GE Dal Pont (an acknowledged academic authority on these issues to whose writings both parties made reference) addresses the nature and scope of the proscription against solicitors acting in circumstances of an actual or potential concurrent conflict of interest. The author cites the following passage from Tobin v Dodd [2004] WASCA 288 at [45]. "… Sometimes ... even interests which were expected to be, and to remain, coincident may diverge and a situation could be reached in which it would have been necessary for the solicitors to arrange separate representation for each of their former clients. This is a possibility in every case where solicitors act for two or more people with apparently coincident interests ... If the mere potentiality for some conflict of interest to develop between parties, whose interests had hitherto always been coincident, were sufficient to prevent solicitors acting for those presenting with apparently coincident interests, there could never be a situation in which a solicitor could act for more than one person, a theoretical result repudiated by common experience both in and out of court."
Dal Pont cites various authorities concerning purportedly non contentious transactional matters, in cases ranging from Thompson v Mikkelsen (Supreme Court (NSW), Wootten J, 3 October 1974, unrep) to Callachor v Black (2000) 12 BPR 22,439; [2000] NSWCA 347 at [63] per Handley JA. On the specific scenario of solicitors acting for both parties in conveyancing matters, Scrutton LJ in Moody v Cox [1917] 2 Ch 71 at 91 remarked: "It may be that a solicitor who tries to act for both parties puts himself in such a position that he must be liable to one or the other, whatever he does ... [i]t will be his fault for mixing himself with the transaction in which he has two entirely inconsistent interests and solicitors who try to act for both vendors and purchasers must appreciate that they run a very serious risk of liability to one or the other owing to the duties and obligations which such curious relation puts upon them."
After citing this passage, Professor Dal Pont continues at [7085.1]: "There are a variety of examples of situations where conflicts may arise in the basic conveyancing scenario. The lawyer may, for instance, know of a flaw in the title of property, which should be brought to the purchaser's attention at the expense of the vendor. It may also be, more generally, that the lawyer has close family and commercial ties with one of the parties and is tempted to favour that party."
However, writing in Lawyers' Professional Responsibility (Lawbook Co, 7th ed, 2021) [7.115], Professor Dal Pont records that: "No judge or professional rules have gone so far as to outright prohibit a lawyer representing two or more clients in non-contentious work, making this form of representation not unethical per se, even if the clients' interests may potentially conflict … The upshot is that the representation of multiple parties in noncontentious work - the typical example being the conveyance of property - is not unusual, much of its impetus being client driven."
Returning to the online edition of the New South Wales Solicitors Manual on the nature of how informed "informed consent" may cure a conflict of interest proscribed by r 11, Professor Dal Pont observes at [7040.10] that: "As the proscription against concurrent conflicts is grounded in fiduciary law, it follows that, consistent with the principal (namely, the client) being empowered, the client can, if fully informed, consent to the lawyer acting in the event of a (prospective or existing) concurrent conflict. The key to effective consent for this (and other) purposes is that the client be fully informed and understand the consequences of consenting to the (continuing) representation. As the lawyer is better positioned to discern the presence of conflict, the client relies heavily upon disclosure by the lawyer as to the existence, nature and consequences of any such conflict. Nothing short of full disclosure, supported by a strong recommendation that the clients seek independent legal advice on the matter, ordinarily suffices. The mere fact that one or more of the clients are experienced businesspersons is no substitute for full disclosure, and certainly does not amount to an implied consent for this purpose [Mantonella Pty Ltd v Thompson (2009) 255 ALR 367; [2009] QCA 80 at [13] per McMurdo P at [80]-[88] with Muir JA and Fryberg relevantly in agreement]. Where fully informed consent is forthcoming a lawyer need not necessarily decline to represent multiple clients with (potentially) conflicting interests, or withdraw in toto from an existing multiple client retainer. As explained by Byrne J in Marron v J Chatham Daunt Pty Ltd [1998] VSC 110]: … the concern of the law to protect the client as beneficiary of the fiduciary duty owed by solicitors, must accommodate the fact that, in some cases, the client is content to have their solicitor act for another party to the transaction and may even require this. And so the law, being unwilling to impose duties where they are not required, admits the possibility that the client may consent to the existence of the potential conflict. But this consent must be an informed consent. This requires the solicitor to disclose to the client who is in full command of their faculties, not only the circumstances which do or may give rise to the conflict, but also the fact of existing conflict or the risk of future conflict and the implications of and the risks to which these circumstances may give rise ... Where the parties to a transaction are nevertheless content to proceed on this basis the solicitor may properly act. The implications of the conflict in question are that "the solicitor may be disabled from disclosing to each party the full knowledge which he possesses as to the transaction or may be disabled from giving advice to one party which conflicts with the interests of the other" [Clark Boyce v Mouat [1994] 1 AC 428 at 435; [1993] 3 NZLR 641 at 646; [1993] 4 All ER 268; [1993] 31 WLR 1021 6]. This represents a heavy onus on the solicitor, and one best discharged in writing and pursuant to independent legal advice."
As recorded by Barlow QC DCJ in Metro Waterloo Pty Ltd v HWL Ebsworth Lawyers [2021] QDC 295 at [71], in comments unchallenged on appeal to the Queensland Court of Appeal: "[71] A solicitor in commercial practice is generally expected to record in file notes at least important matters arising in conversations with the client and other persons. Where the solicitor has not recorded, either in a file note or elsewhere, the fact or the substance of a conversation in which, for example, the solicitor says that the client gave the solicitor certain instructions, a court in later proceedings in which that conversation is of crucial importance may well have cause to doubt the accuracy of the solicitor's evidence and to prefer that of the client, including where the client denies that the conversation occurred at all. This is not because a court considers, or there is a principle of law, that, in the absence of a written record by the solicitor, it is always the case that "the word of the client is to be preferred to the word of the solicitor, or, at any rate, more weight is to be given to it,"[57] but because it is generally expected that a competent and diligent solicitor will, in the course his or her usual practice, keep a written record of instructions and other relevant matters relayed to the solicitor by the client. This is not only good practice to protect the client's interests, but it also protects the solicitor's interests in case of future litigation (such as this) as, without such a record, the solicitor's evidence may well be disbelieved…"
The footnote to reference 57 is instructive in itself, and records: "Griffiths v Evans [1953] 1 WLR 1424, 1428 (Denning LJ, in dissent). His Lordship went on to say that "If the solicitor does not take the precaution of getting a written retainer, he has only himself to thank for being at variance with his client over it and must take the consequences." Other cases have applied that policy to the absence of notes of instructions, not just the creation and terms of a retainer. It has also been said that, where there is a conflict between the evidence of solicitor and client, "it is not surprising that there should be some leaning towards the interests of the supposedly more ignorant party:" Meerkin & Apel v Rossett Pty Ltd [1998] 4 VR 54, 66."
That does not mean that in such circumstances the client must be accepted. The determination of the question must be based on a careful and objective examination of the evidence adduced: Le Serve v Great Wall Resources Pty Ltd [2010] NSWSC 1213, citing Dew v Richardson (Supreme Court of Queensland, Chesterman J, 18 August 1999, unreported) at [10]; Equuscorp Pty Ltd v Wilmoth Field Warne (No 3) [2004] VSC 164 per Byrne J at [10].
The Solicitor accepts that she commenced acting for both parties on or around 26 October 2019 and did not provide each client with written advice detailing any potential or actual conflicts that could arise due to the nature of her dual representation. She acknowledges that there is inherent conflict in acting for both parties in a transaction of this nature: Applicant's Submissions in reply, 5.4.
Much of the parties' evidence and submissions addressed the issue of whether the Solicitor did or did not advise the vendor that she acted for both parties before or when the contracts were exchanged. The Solicitor seeks to characterise any potential conflict of interest at that point as entirely hypothetical. That is an issue to which we shall return.
However, there can be no doubt that the Solicitor breached r 11.5 of the Conduct Rules when she continued to act for the vendor company (at least) after the vendor expressly instructed her that the company wished to resile from the contract on 2 December 2019 and the purchaser would not consent. At that point, the parties' respective interests clearly and unavoidably diverged. The Solicitor knew what her obligation was at that point, and she had succinctly explained it to her family members in her email to them of 11 November 2019 at 1.48PM. She should have "ceas[ed] to act for all parties", at least in the absence of "informed consent" as required by Conduct Rule 11.5. It is not suggested that such informed consent was obtained in any meaningful way from the vendor.
The High Court in Maguire v Makaronis (1997) 188 CLR 449 at 466 held: "What is required for a fully informed consent is a question of fact in all the circumstances of each case and there is no precise formula which will determine in all cases if fully informed consent has been given."
MacAulay J addressed the issue recently in Break Fast Investments v Rigby Cooke Lawyers [2021] VSC 398. His Honour's reasoning was affirmed on appeal in Break Fast Investments Pty Ltd v Rigby Cooke [2022] VSCA 118. His Honour reasoned at [218]-[220], with citations omitted: "218 The appropriate legal principles were not disputed by the parties. I have already referred to the passage in Clark Boyce v Mouat at paragraph 128 above. Essentially, for the purpose of this case, informed consent means consent given in the knowledge that there is a conflict of duties owed to multiple parties and that, as a result, the solicitor may be disabled from giving advice to one party which conflicts with the interests of the other. 219 What constitutes fully informed consent is a question of fact in all the circumstances of each case. There is no precise formula which will determine in all cases if fully informed consent has been given. Relevant considerations may include whether independent legal advice has been given by a third party. Generally, informed consent will require that an explanation has been given to the client of the risks to the client that its lawyer may not act entirely in its interests if it continues to retain that lawyer. 220 A solicitor placing a client in a situation of such potential risk must ensure that the client is in a position to make a free and informed decision about the matter that is the subject of the retainer. If in those circumstances, the solicitor does not recommend independent legal advice, a heavy burden lies upon the solicitor to demonstrate that he or she has done everything to protect the interests of the client and to ensure that the client is aware of every circumstance that might be relevant to making choices on the matter at hand."
Again, and to an extent working backwards, the question of whether the Solicitor advised the vendor that she was also acting for the purchaser from the outset becomes even less critical in light of these principles because there is not even a suggestion that the vendor gave "informed" consent to the Solicitor acting for both parties in the relevant sense required by Conduct Rule 11.3.2. The Solicitor's case at its highest implicitly asks us to infer the consent was informed because the vendor was an astute businessman who signed a contract knowing the Solicitor was acting for both parties. However, even if we can be satisfied that the vendor knew it was to occur and consented, expressly or implicitly, to the Solicitor acting for both parties, there is no probative evidence that such consent was in any way "informed". Certainly, the Solicitor gave the vendor no information to inform his consent and there is nothing to indicate the vendor had prior experience in transactions where both parties had common representation.
To have given consent on an informed basis, the vendor would at least need to have been apprised of the outcome and effect on him and the vendor company of the potential for conflict later crystallising. As a minimum standard, he should have been advised, at least orally but preferably in writing, that in the event of an actual conflict of interest arising the Solicitor was bound to cease to act for both parties in the absence of informed consent from them both.
The Solicitor's attempt to characterise the possibility of conflict when the transaction was negotiated as purely hypothetical does not assist her. Firstly, that is because Conduct Rules 11.1 to 11.3 are directly intended to address the potential for conflict to arise that has not yet crystallised.
Secondly, the potential for actual conflict to arise is apparent whenever a solicitor or legal firm acts for multiple parties in a transaction of this nature, as reflected by the comments in Tobin v Dodd recorded in [32] above. That potential is even greater where they are acting for both parties before the contract has been exchanged. Despite both wanting to achieve a transfer in title of the property, the clients' interests are adverse in that each wishes it would occur in the way most favourable to them.
The Solicitor's aunt asking her about the availability of a "discount" before the contract was exchanged, which we will put into context later, provides a sufficient example. Were the Solicitor not acting for both parties, she could have taken instructions to ask for one, rather than providing the equivocal response that "[a]unty, it is a matter for you. The value is there. If you don't think so, make an offer". Seemingly, it was her duty to the vendor that led to her comment that "the value is there." Only his interests lay in the Solicitor asserting "value" and the Solicitor's only contemporaneous knowledge of that value came from information conveyed to her in a privileged context by the vendor, when he had previously provided her with the advice in a listing authority from an agent that had contained a price guide: In an analogous context where a fiduciary obligation existed, see Commonwealth Bank of Australia v Smith (1991) 102 ALR 453.
There is always the potential for conflict of the duties to act in the best interests of each client in these circumstances: Beach Petroleum NL v Kennedy (1999) 58 NSWLR 1 at [287].
That was clearly apparent to the Solicitor here, and she advised her family members of it and of some of its consequences. Her failure to advise the vendor of it is unexplained and the consequences for the vendor, at least, if the Solicitor had followed her ethical obligations are not trivial. On an actual conflict arising he would be expected to potentially incur both the financial cost and inconvenience of instructing other lawyers and to lose the assistance of the Solicitor for this transaction, in circumstances where he had reposed his trust in her over several years and had become increasingly reliant upon her.
The Solicitor acted contrary to Conduct Rule 11.3 when she commenced acting for both parties prior to 19 December 2019 and contrary to Conduct Rule 11.5 after that date because there was no informed consent from the vendor that allowed her to do so.

Did the Solicitor tell the vendor from the outset that she was acting for both parties?

Whilst it was not a particular of the complaint, or of the Council's finding, this issue was addressed and, if found, could add to the extent to which the Solicitor could be said to have fallen short of her professional obligations. Conduct Rule 11 speaks both of the need to ensure a client is aware that the solicitor or law practice is also acting for another client (r 11.3.1); and for informed consent to the solicitor so acting: r 11.3.2.
The entire basis of the complaint, as determined by the Council, stems from a quite short statement by the vendor dated 16 July 2021. (s 58 bundle pp 35 - 38). There is no suggestion that the vendor was told that what the statement contained could be treated as the evidence he would give to a court or tribunal. He did not provide an affidavit or statutory declaration and was not cross examined. Whilst he also sent some emails to the Council, they were not probative, except to the extent referred to below. As that statement was the starting point of the Council's consideration, and given its brevity, it bears repeating, save for the relevant identifying particulars of the vendor, the vendor company, and the property. The vendor told the Council that: 4. On 27 March 2018, I purchased through my self-managed superfund … a property … in the state of New South Wales ("the property"). 5. The property was a leased as a child-minding facility and was marketed through commercial real estate agents, Rawsons. 6. I paid $3,300,000. I also paid $165,360 in stamp duty. 7. The property yielded rent in excess of $175,000 plus GST per year. I relied on the income as a self-funded retiree. 8. I instructed my former solicitor, Maria Di Giovanni to assist me with the conveyancing process and the transaction went smoothly. 9. Maria Di Giovanni has been my solicitor for almost 20 years. She used to do all the legal work for my late wife, … and l. 10. My late wife … was the book savvy partner in our relationship. She was the person who dealt with the lawyers and all the paperwork. I am a retired butcher. I do not understand paperwork or legalities. 11. I naturally went into a deep depression when my wife … passed away in 2017. I struggled with the administration and managing our affairs. 12. In or about September 2019, I decided [to] test the market to see what offers the property would attract. I contacted Tom Dolan from Rawsons and requested an information brochure. I was told that I would need a contract for sale drafted before the property could be listed on the market. 13. I was told from Tom Dolan at Rawsons that the property may attract an offer in the vicinity of $3,600,000 because the market had increased. 14. On or about 11 November 2019, telephoned Maria Di Giovanni and asked her to prepare a contract for sale. 15. We exchanged words to the following effect: [Vendor]: "Hi Maria, I would like a contract for sale prepared for that property … I want to test the market". Maria: "Sure … You know, I may have someone interested in buying this property from you. It would save you a heap on marketing fees that you would otherwise spend with a real estate agent. Maria: "My aunty and uncle want to see the property. Can we arrange an inspection?" [Vendor]: "Ok". 16. I did not say to Maria that I was going to commit myself to sale. It was always my intention to return the property to Rawsons to test the market. 17. On 13 November 2019, I received a draft contact for sale from Iron Cove Law. 18. On Saturday, 16 November 2019 at 12pm, Maria Di Giovanni arrived at my house in her white car. She drove me to … meet with the prospective purchasers so they could have a look at the property. 19. When we arrived at the property, there were two people standing out the front who Maria introduced to me as her aunty and uncle, 20. We exchanged words to the following effect: Maria: "This is my aunty and uncle. You may have met them at the auction for this property back in 2017." [Vendor] "l cannot remember either of you, but anyway, I am pleased to meet you both." Maria: "Ok …, I am going to show these people through the property. Please go and sit over there while we have a look. We should not be too long." 21. I waited out the front of the property for approximately 30 minutes. Maria told me not to speak to her aunty and uncle after the introduction. The aunty and uncle left without saying goodbye. 22. After the inspection, Maria and I left in the same car. She made a few comments about how her aunty and uncle loved the property. There was not mention of the property being sold. We did not discuss any prices. 23. We dropped into a pub called the Bangore Inn for a lemonade. Maria used the bathroom and then she dropped me back home. 24. On or about Monday, 18 November 2019, Maria arrived at my house. She appeared to be in a rush and was flustered. 25. We exchanged words to the following effect: Maria: "I am very busy today so I cannot stay long. I have brought the contract for the sale of your property." [Vendor]: "The contract?" Maria: "Yes, you agreed to sell the property to my uncle and aunty." [Vendor]: "I do not remember agreeing." Maria: "…, you are forgetful. You agreed to sell the property on Saturday, 16 November when we drove out to meet them. You can sign the contract here. I am in a rush so I need to leave. You know that if you do not sign today, they can apply to the Courts to force you to sign because you already agreed that you would sell them the property." [Vendor]: "Ok, I'll sign." 26. I was not given an opportunity to read the contract for sale. Maria did not tell me what the price was. I did not receive a letter of advice in relation to the contract. I could not see the price on the front page as it was folder over and hidden. Nor was this directed to my attention. I never gave her any verbal instructions to sell my property. My daughter … attended the meeting as well. 27. I trusted Maria and signed the contract. I felt under enormous pressure because she was in a rush. Also, I trusted that Maria would never do the wrong thing by me because she acted for my late wife and I for 17 years. 28. On 19 November 2019, I was provided with a signed contract for the purchasers. 29. I had some time to review the contract and noticed that the property was sold for the exact same price that I paid for it. I also noticed that settlement was scheduled within 4 weeks on 20 December 2019. 30. I felt like the property had been stolen from under my nose by my solicitor and sold to her relatives for the same price I paid for it two years earlier. 31. I was outraged because I was at a loss, when you consider the high stamp duty I had to pay when I purchased the property. 32. On 2 December 2019, I worked up the courage to attend the offices of Iron Cove Law and confront Maria. I sat in the waiting room for an hour or so. When Maria finally came to see me, we exchange words to the following effect: [Vendor]: "I do not want to sell the property for $3.3million. That is what I paid for it. I want to list it through Burgess Rawson." Maria: It is too late, you have already signed. [Vendor]: But I didn't know what I was doing. How could you do this? What have I ever done to you? I trusted you for 17 years. 33. Maria wrote up a note by hand and told me to sign it. She started yelling at me saying "Do you agree", "Do you agree". I did not know what I was doing. I was extremely anxious and overwhelmed at the point. Maria: "…, you have signed the agreement. I need you to leave otherwise I am calling the police." 34. Maria telephoned the police and they attended. I was asked politely to leave the property and I followed the Police direction. 35. Iron Cove Law provided me with legal advice about how to exit the contract. In short, I was told that the only realistic way to exit the contract would be to obtain a medical certificate from a doctor stating I had a mental illness / incapacity. Maria said that this would have wider ramifications on my own affairs.
From other evidence, it appears that the vendor was mistaken about how long the Solicitor had acted for him, which appears to have been approximately 10 years, and that the police were called on his attendance on 2 December 2019. The Solicitor, or someone in her firm, called the police and they attended when the vendor attended the firm to confront the Solicitor about the issues in dispute in February 2020, well after the contract had completed. There is no corroborating statement from the vendor's daughter.
The Solicitor's evidence was contained in a letter and signed statement (albeit described as a "submission") she sent to the Council in response to the complaint on 2 November 2022. She confirmed the veracity of those documents and was cross examined before us. She says in her statement sent 2 November 2022 (s58 bundle at pp 88 - 96), relevantly, that: On 10 September 2019 the Complainant made an appointment and attended our office. He had with him an Agency Agreement issued by Burgess Rawson for the Sale of the … property. I recall reading the agency agreement to the Complainant and he said words to the effect "It has to go. I can't manage it, I will give these guys a run and return it to the market". I read the agency agreement to the Complainant. A copy of the agreement is in the sale file. The Agency Agreement quoted the agent's estimated selling price as "circa $3,279,000 and $3,607,000". The agent's commission was to be 2.5% + gst plus 10%+ GST over any part of the sale price over $3[m]. I filled out the front page of the agency agreement where it called for solicitor particulars. The Complainant signed the agreement. He asked for a copy of the agreement. My colleague Eleanor Loui copied the document and gave the Complainant a copy. As is our practice, my colleague then prepared a Client Authorisation and had the Complainant sign the authorisation. She made a copy for the Complainant and gave it to him. On 10 September 2019 we scanned and sent the agency agreement to Tom Doran of Burgess Rawson. On the same day Tom Doran returned an executed copy of the agreement by email. On 11 September 2019 we issued a Costs Agreement and commenced preparation of the Contract for Sale. On 17 September 2019 we issued a copy of the draft contract to the Complainant for approval. Later on the same day, 17 September 2019, we received an email from Complainant that sale was 'not continuing'. From a review of our records in the sale file and emails, it appears that on 20 September 2019 my colleague Eleanor Loui sent the Contract to Tom Doran noting the contract was subject 'to our client's final instructions'. Also on that day, the agent phoned Eleanor, he was told that [vendor] not selling on advice of accountant'.
The vendor later changed accountant, which led to him making an appointment with the Solicitor on 16 October 2019. The Solicitor continues: At the 16 October 2019 appointment referred to above, I asked the Complainant about the … property. He indicated that he would be relisting it for sale. Knowing that my relatives were looking to purchase a similar property and knowing they did not have the experience or courage to bid at an auction (despite their many portfolio auction attendances), I asked the Complainant if he would consider an off market sale and asked him - "my aunty and uncle are still looking for a childcare centre, would you consider selling to them?" The Complainant agreed that there was no loss in introducing the property to them. We went through the purchase price, entry costs, saved marketing and commission. I scribbled the numbers on a note and gave this note to the Complainant for him to consider information on pricing. I later phone my aunty and informed her of the opportunity to consider the property off market. My aunty requested an inspection and noting that her daughter worked during the week, requested a Saturday inspection. I relayed this to the Complainant who authorised me to contact the tenant and arrange an appointment at the property. I then took steps to arrange the appointment which was set for 1pm on 26 October 2019. This was the first Saturday that both the tenant and the purchasers were able to make. On 26 October 2019, I picked up the Complainant from his home in […] I lived in Drummoyne at the time and it was convenient for me to pick him up and drive to the appointment. We were the first to arrive to the property. We noted that the tenant had already arrived and was waiting for us. The Complainant and I walked through the property. Shortly after my cousin and her husband arrived. My aunty and uncle could not find the property and I ended up driving to a small shopping centre […] to find them and they followed me to the property. The property is divided into a childcare centre on the ground floor and a residence upstairs. For most of the time of the inspection I stayed with the Complainant and my relatives stayed together. At the end of the inspection my aunty came to speak to the Complainant and me and the following conversation took place: [Aunt] "Thank you for the inspection. We are interested. [Vendor] "You seem like very nice people, it's my pleasure. [Aunt] [talking to me] "What is the asking price?" Maria "I was happy to bring the two of you together but now you and the owner must sort that out between you. This is your domain [Vendor], you have a customer here who wants to know how much the leg of lamb costs" [this was a joke I made noting that [the vendor] was a butcher, I often spoke like this with [the vendor] [Vendor] "What's that?" [Aunt] "What is the asking price?" [Vendor] "$3.2" Maria "Do you mean $3.3 …? [Vendor] "Yes, at least my money back, $3.3m" [Aunt] "Ok, well we need to think it over as if we go ahead it will be my husband myself and my daughter and her husband. Can we think about it?" [Vendor] "Ok, I will give you I week." Before the expiry of a week, my relatives requested a further appointment and subsequently attended the property on 2 November 2019 on their own, that is without the Complainant. At the end of that appointment my aunty telephoned me and said: [Aunt] "Do you think that's the best price? Should we make an offer below his asking price. Will he give us a discount?" Maria "Aunty, it is a matter for you. The value is there. If you don't think so, make an offer." [Aunt] "No, we are happy with the price and will go ahead." On 13 November 2019, we sent the draft Contract of sale to the Complainant with the purchaser's particulars. On 16 November 2019, a Saturday, the purchasers attended my office to sign the Contract. On 19 November 2019, the Complainant attends our office and indicated he wanted to cancel the Contract as he no longer wanted to sell the Property. Later on the same day 19 November 2019, the Complainant sent me the following text message: maria as you say have signed contract and deposit so if they still want continue at the contract price shall call and sign to clear it is up to you now to advise the purchaser all is ok thanks … I fixed an appointment for 2pm on 19 November 2019 to attend the Complainant's home. He replied as follows: Ok maria 2pm on time that your arvo […] here thanks On 2 December 2019 the Complainant attended our office and advised that he has had a change of heart and no longer wishes to sell. He asked me to get him out of the sale. I advised him that Contracts were exchanged and binding. He said word to the effect "they are your relatives, I don't want to sell any more, cancel it, I want you to cancel the Contract". I wrote out his instructions on a filenote and had the Complainant sign it. On 4 December 2019 in accordance with the instructions provided by the Complainant I made the request to rescind the Contract. Also on that date I wrote to the purchasers putting the Complainant's offer of reimbursing the purchasers' costs and expenses associated with the purchase in return. The purchasers rejected the offer and sought to rely on the Contract.
The signed letter of 2 November 2022 (s 58 bundle, p 82-87) is more directly responsive to the vendor's statement. It says, relevantly, and in addition to pointing out other apparent factual errors made by the vendor: 10. In reply to paragraph 18, this is inconsistent with my recollection. I stayed within a few metres of the Complainant at all times during the inspection. On arrival we spoke with the tenant (who was the vendor), we wandered through the Property, inside and outside together, we also inspected the residential unit upstairs together. From time to time my relatives had questions, the same were mostly directed to the tenant. Before leaving the Property, the Complainant did have a conversation with my aunty, the details of which are set out in my submission. 11. In reply to paragraph 19, this is inconsistent with my recollection of the events. Before departing the general … area, I suggested we (the Complainant and l) stop for a refreshment before taking the drive back to the Complainant's home. I do not recall what we drank although a lemonade or lemon squash is consistent with my choice of beverage. We stopped at a Pub. We both used the restrooms. We had general conversation. I do not recall if we specifically spoke about the Property. At that point a price had been established but it was agreed that my relatives would have 1 week to consider the Property and come back to the Complainant. At this point I was unaware whether or not my relatives were in agreement to proceed with the purchase, I had been with the Complainant at all times. 12. In relation to paragraph 20, at 11:16am on 19 November 2019, I received a text message from the Complainant as follows: maria as you say have signed contract and depost [sic] so if the[y] still want continue at the contract price shall call and sign to clear it us up to you now to advise the purchaser all is ok thanks… On this basis an appointment was made for 2pm on 19 November 2019 for me to attend the Complainant's home and I recall being happy that his daughter Samantha would be at home so that she could participate in the meeting. At the time, I had recently provided advice to the Complainant that he should consider involving his children in assisting him with his affairs and this would be a good opportunity. (emphasis added) In relation to the allegation that I was in a rush, this is incorrect. My recollection is that I refused afternoon tea as follows "I don't have time for tea today". On this occasion we sat at the table in the formal dining and lounge area. Usually, we would sit at the smaller dining table in the kitchen area. There was a red tablecloth on the table. I recall that I had with me the purchaser's signed Contract together with copies of the transfer receipts confirming the payment of the deposit. I recall placing the purchaser's documents in front of the Complainant. The Complainant sat on my right and his daughter on my left. I recall placing the vendor's Contract in front of Complainant and, as is my usual practice when I sign up a Contract, I read through the front page of the Contract. I recall specifically pointing out the vendor's name, the fact that the sale was without the intervention of an agent, the purchaser's particulars including the sale price and at this time noted that the purchaser had asked our firm to act on the purchase. [emphasis added] I specifically recall saying: Maria "the sale price is $3.3m" [Vendor] "$3.3?" Maria "Yes" And I recall seeing the Complainant nod his head and look over to his daughter who was at the table with us and following the conversation. The Complainant's allegation of the conversation that took place at his home is incorrect. The date references are wrong. I did not speak the words alleged. I have always spoken to the Complainant with the utmost respect and did not put him under the pressure that he asserts. At this point in time, Contracts were not exchanged, the purchaser had no rights and the Complainant had no obligations. It was only after Contracts were exchanged when the Complainant had a 'change of heart' and asked me to get him 'out of the Contract'. Therefore, there would be no reason why I would refer to the purchaser's right to obtain an order from the Court. The Complainant signed of his own free will. 13. In relation to paragraph 21, this is incorrect. a. The Complainant was provided with a copy of the draft marketing Contract on 17 September 2019. The same contract was used for the sale of the Property to my relatives with the following changes: (i) The removal of the vendor's agent and insertion of 'without the intervention of an agent'. (ii) The insertion of the purchaser's details, including our firm's details as the purchaser's solicitors and the price of $3.3m. This Contract was provided to the Complainant on 13 November 2019. b. The price was established between the Complainant and the purchaser directly at the initial inspection of the Property on 26 October 2019. c. This is not true. I placed the Contract in front of the Complainant flat and pointed with my pen as I read through the front page of the Contract. I may have turned the page over to read the special conditions and refer to the annexures during our meeting but at no time did I cover the front page or fold it up. I showed the Complainant a copy of the transfer receipts of the deposit showing we were holding a full 10% deposit in the sum of $330,000 transferred by the purchaser in two (2) tranches of $165,000 each. I placed these documents in front of the Complainant. I read the documents to the Complainant in the presence of his daughter. d. The Complainant had instructed me to proceed with the sale by text message. The text message is extracted above and a photocopy of my mobile telephone showing the text message is in the sale file. On 19 November 2019 the Complainant had given clear instructions to exchange the Contracts. 14. In relation to paragraph 22, upon returning to my office, I sent an email to the Complainant attaching the front page of the Contract signed by him and the front page of the Contract signed by the purchaser. The Contracts were exchanged in counterparts and dated 19 November 2019. The Property was sold for $3,300,000. The Property had been purchased for $3,270,000. The completion date had been discussed in earlier conversations in which the upcoming Christmas and New Year holiday season (when our office would be closed) would mean completion would need to be prior to the shutdown or after. I recall the Complainant saying words to the effect: [Vendor] "Let's get it done beforehand. Save it dragging on.
Later in that letter (s 58 Bundle, p 86) the Solicitor says that: In this matter, the parties were made aware of my relationship with each of them. The Complainant was aware that the purchasers were my relatives and that they had asked me to be their solicitor. My relatives knew that the vendor (the Complainant) was my existing client and that I was acting for him on the sale. Neither raised any concern or objection. As the parties had met and dealt with each other directly on 26 October 2022 (sic), there was no mortgage on title and finance was not needed to complete the transaction, I did not foresee any potential conflict of interest arising.
Relevantly, nowhere in his initial statement does the vendor directly say that he wasn't told the Solicitor was acting for the Purchaser. An inference may be available that, if the front page of the contract was folded over when presented to him for signature as he alleges, the indication that the Solicitor's firm was acting for both parties may have been obscured. However, that does not address the Solicitor's direct allegation, however briefly stated, that she advised the vendor that the "the purchaser had asked [her] firm to act on the purchase" whilst explaining the contract's terms.
It is difficult to conceive of a better cautionary tale for the importance of contemporaneous file notes and confirmatory correspondence being maintained by a solicitor. In part, the Solicitor sought to explain the failings in her note keeping as resulting from the other business and personal demands upon her time. That may explain the situation but does not excuse it. A solicitor should not take on more work for a client than they can manage with the high level of diligence that is quite properly expected of them.
We should acknowledge the potential difficulty that may arise in the Council arranging for a complainant or other relevant informants to give evidence in proceedings of this nature. Strictly speaking, it may be inapt to describe the vendor as a witness in the Council's case and the Council has no evidentiary onus. However, where it asks us to find that its decision was that which is correct and preferable, it needs to ensure that there is sufficient probative evidence before us to support such a finding.
In evaluating the evidence before us, relevantly: 1. Facts must be proved on the balance of probabilities to our comfortable satisfaction, having regard to the seriousness and importance of the matters alleged: Gautam v Health Care Complaints Commission [2021] NSWCA 85, per Payne JA at [85] to [87]; 2. We need to acknowledge that memory is fallible and a reconstructive process - "All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed": Watson v Foxman (1995) 49 NSWLR 315 at 318-19 per McClelland CJ in Eq; 3. Evidence which is not tested in cross-examination is to be discounted in weight as appropriate "according to all the circumstances of the case": Fulton v Fulton [2014] NSWSC 619 at [111] per Hallen J; 4. The silence of a party may serve to resolve a doubt or an ambiguity regarding the existence of a fact, especially where the facts are peculiarly within the knowledge of the silent party: Transport Industries Insurance Co. Ltd v Longmuir [1997] 1 VR 125; (1996) 9 ANZ Insurance Cases 61-385 at 142; and 5. All evidence "is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted": Coshott v Prentice [2014] FCAFC 88; (2014) 221 FCR 450 at [80], quoting Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970.
We are not persuaded that the vendor did not know the Solicitor intended to act for both parties in the transaction before he signed the contract where: 1. There was initially no direct allegation made by him to that effect; 2. Whilst the Council later enquired of the vendor about whether the Solicitor informed him of the proposed dual representation, and allowed him to provide comment, all that is before us in response are some brief handwritten notes on a copy of that correspondence saying, relevantly, "not disclosed" and "no consent sought or given". In that regard: 1. The handwriting's author is not identified and the only basis to infer it is the vendor's is that it was then attached to an email dated 16 May 2022 saying "[Vendor] advising I am sending off today the required further answers to queries provided…": s 58 bundle, pp 62 & 63. 2. The response is not signed. There is no suggestion that it was prepared in the knowledge it was to constitute the vendor's evidence on this issue; and 3. No opportunity appears to have been given to the vendor to consider the Solicitor's evidence on this topic, to see whether it jogs his memory or is contrary to a specific recollection. That applies equally to the later assertion by the Solicitor in her signed letter to the Council of 2 November 2022 (s 58 bundle pp 82-87 at p 86) that: In this matter, the parties were made aware of my relationship with each of them. The Complainant was aware that the purchasers were my relatives and that they had asked me to be their solicitor. My relatives knew that the vendor (the Complainant) was my existing client and that I was acting for him on the sale. Neither raised any concern or objection. As the parties had met and dealt with each other directly on 26 October 2022, there was no mortgage on title and finance was not needed to complete the transaction, I did not foresee any potential conflict of interest arising. 1. The fact the Solicitor's firm intended to act for both parties is apparent from reading the first page of the contract, which could have occurred when the contract was signed, or at any time afterwards. This is not addressed by the vendor's evidence, despite him having received a copy of the contract on 19 November 2019; and 2. Finally, the vendor's daughter could have given evidence about what occurred when the contract was signed, but there is no evidence from her available to us.

But is the vendor knowing the Solicitor intended to act for both parties the same as "consent"?

That is not to say that we are comfortable with what occurred when the contract was signed by the vendor. On her own case, the Solicitor provided the completed contract to the vendor only when asking him to sign it. She gave no prior, written or thorough advice about it, specifically in respect of her acting for both parties.
It should be borne in mind that the vendor, on the Solicitor's own evidence or direct knowledge from having acted for him in the past: 1. was 84 years old; 2. was recently bereaved; 3. had "lost his compass", and "struggled to stay on course"; 4. had recently "called on her firm with higher frequency"; 5. had reached a stage where the Solicitor had advised the vendor that he should consider involving his children in assisting him with his affairs; 6. had initially told the Solicitor's family members that he would sell the property for $3.2m, when it was apparent to the Solicitor that was not his intent; and 7. had recently changed his mind about selling the property, even after signing a listing authority with Burgess Rawson and having a contract for sale prepared by his solicitor.
In those circumstances, the process followed by the Solicitor appears to be entirely unsatisfactory. One might reasonably have expected those factors to have led her to consider the advice contained in the NSW Law Society's publication titled "[w]hen a client's mental capacity is in doubt."
However, as it does not form part of the decision we are to review, we make no finding in that regard and will not consider it in respect of whether the Solicitor's conduct was unsatisfactory professional conduct, and, if so, what protective orders are appropriate.
But, whilst we need make no finding as to whether the Solicitor breached other professional obligations, and we cannot be satisfied that the vendor did not know the Solicitor intended to act for both parties, that is not the same as him consenting to the Solicitor doing so.
It is axiomatic that in order to consent to something occurring you need to be aware that you have a choice to give or withhold consent. As was said in a different context in Comcare v Dunstan [2014] FCAFC 21 at [39]: … For consent to be given tacitly, at the minimum, it must be established that the person had knowingly, voluntarily and deliberately chosen to remain silent, or to take no action, in the knowledge that a choice was being made, with real alternatives available. While intention may be inferred by conduct, ALH Group Property Holdings Pty Limited v Chief Commissioner of State Revenue (2012) 245 CLR 338; [2012] HCA 6 at [31]-[32], the evidence must be sufficient to support the drawing of the inference…
There is no evidence, even in the nature of an assertion in submissions signed by the Solicitor that the vendor was aware from previous dealings, or made aware by the Solicitor, that he could decide not to agree to the Solicitor acting on behalf of both parties. What the Solicitor said, even with the benefit of hindsight, in her letter to the Council was telling. Broken into its constituent elements, the Solicitor only asserted that: 1. the parties were made aware of her relationship with each of them. 2. the vendor was aware that the purchasers were her relatives and that they had asked her to be their solicitor. 3. her relatives knew that the vendor was her existing client and that she was acting for him on the sale; and 4. neither raised any concern or objection.
In her more direct statement about what she did when taking the vendor through the contract, the Solicitor simply asserts that she: Recall[ed] placing the vendor's Contract in front of Complainant and, as is my usual practice when I sign up a Contract, I read through the front page of the Contract. I recall specifically pointing out the vendor's name, the fact that the sale was without the intervention of an agent, the purchaser's particulars including the sale price and at this time noted that the purchaser had asked our firm to act on the purchase.
At no point was the vendor told he had a choice to make. Therefore, there was not only a lack of informed consent to the Solicitor acting for both parties by the vendor, but of any consent that was explicitly given or could be properly inferred to have been given tacitly.

Did the Solicitor in some way enable her family members to 'purchase the property on commercially favourable terms'?

It would be wrong to view this question through the prism of whether the vendor was better off not selling through an agent, and thereby avoiding paying commission. The allegation is not that the vendor was denied commercial advantage, but rather that the purchaser obtained one.
There is insufficient evidence to satisfy us that this occurred. The only relevant evidence before us is that the vendor was given a price range by a real estate agent, independently of the Solicitor, that the property could be expected to sell for a price between $3,279,000 and $3,607,000, and it did. No other aspect of the terms of the transaction was said to be commercially advantageous to the Solicitor's family members.

Did the Solicitor's conduct that we have found to be proven, and that fell within the bounds of the complaint, constitute unsatisfactory professional conduct?

Not every professional failing constitutes unsatisfactory professional conduct. Rather, the "falling short" of the standard of competence and diligence contemplated by s 296 of the Uniform Law must be sufficiently substantial. An isolated instance, not involving unethical conduct and more in the nature of conduct which might give rise to an assertion of negligence is less likely to amount to unsatisfactory professional conduct: Legal Services Commissioner v Laylee [2016] QCAT 237 at [69] per Thomas J.
However, here there was a substantial and clear failure of the Solicitor to maintain the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer. The Solicitor failed to recognise her obligations under r 11 of the Conduct Rules and to implement even the most basic of processes to seek the vendor's informed consent. A finding of unsatisfactory professional conduct is warranted.

What protective orders are warranted?

In Law Society of New South Wales v Maharaj [2017] NSWCATOD 79 at [24] the Tribunal set out what we accept to be the principal considerations in respect of the appropriate protective orders to be made, albeit that they do not constitute a closed list. Those considerations apply equally to whether the decision of the Council as to the outcome of the complaints was the correct and preferable one. The list consisted of: 1. the gravity of the misconduct; 2. the deterrent effect of any protective order on the further conduct of the practitioner; 3. the deterrent effect of any protective order on the conduct of other practitioners; and 4. the enhancement of confidence in the public in the integrity of the profession.
In deciding on the appropriate protective orders to be made following a finding of inappropriate conduct, we are obliged to take into account any failure by the practitioner "to understand the error of [their] ways": New South Wales Bar Association v Evatt (1968) 117 CLR. 177; [1968] HCA 20, at 184.
The seriousness of the conduct and the need to deter similar conduct by other lawyers are highly relevant here. The fact the Solicitor is still apparently unable to recognise relevant aspects of her transgression also places importance on the need to ensure the protective orders have a deterrent effect on her.
A reprimand is appropriate to reflect the necessity to publicly sanction the Solicitor's conduct.
Whilst we recognise that the Solicitor has undertaken the course in ethics as found to be appropriate by the Council, her conduct in these proceedings, in that she maintains that she in no way breached Conduct Rule 11, indicates that she has not learnt from the course in respect of having gained an understanding of the fundamental complications of acting for both parties in a commercial transaction.
The Solicitor's evidence, which we accept, is that she has now decided not to act on behalf of both parties in a transaction or for family members. However, we can only infer that is because of the effect this complaint has had on her, as opposed to that which it might have on her clients. Given her evidence that conveyancing forms a considerable part of her practice, she should complete a further course with a focus on the nature of informed consent and how conflicts of interest may arise.
The Solicitor should also provide an appropriate apology to the vendor, which was not addressed by the parties but is so clearly warranted on our findings that we see no practical injustice to the Solicitor in not being given an opportunity to address the issue.
So that it is not thought that we have overlooked it, we recognise that the Solicitor has satisfied us that there is no basis to find that she did not tell the vendor she was acting for both parties, or for the Council to have found that her actions led to her family members obtaining a commercial advantage. Our assessment of the correct and preferable protective orders does not encompass any aspect of those allegations.

The Costs

The Solicitor sought an order that the Council pay her costs of this review. This matter being a review under the ADR Act means costs are governed by s 60 of the NCAT Act.
Section 60 provides as follows: 60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following - (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36(3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be awarded by the Tribunal, the Tribunal may - (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (5) In this section - costs includes - (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
The Solicitor submits that the general rule in s 60(1) is displaced on the basis that there are special circumstances. The special circumstances relied on are that: "Grounds exist under s.60 (2) and (3)(c) for the awarding of costs in favour of the Applicant. The basis for asking the Tribunal to depart from the usual costs order in this matter is that the Respondent failed to properly consider the relevant circumstances of the Complaint and give due weight to the submissions advanced on behalf of the Applicant. The analysis and legal reasoning underpinning the orders made is fundamentally flawed. The Applicant should not have been put in the position of having to seek this review. It is submitted that the Tribunal should make a costs order in favour of the Applicant pursuant to s.60 (2) - (3) (c) due to the special circumstances that exist in this case."
We agree, however, with the essence of the Council's submission that: "The Tribunal's jurisdiction does not extend to assessing the Council's alleged noncompliance with its statutory obligations in its investigation of the Complaint … While the Council disputes that it conducted the investigation in breach of its regulatory function under the [Uniform Law], it is the original Decision, not the process by which it was ultimately reached, that engages the Tribunal's review function."
Putting the question of jurisdiction to one side, we do not think the nature or quality of the Council's investigation that led to the decision under review is a relevant special circumstance in respect of costs of the review. There has been nothing in the conduct of these proceedings that appears to us to constitute special circumstances warranting an order for costs in favour of the Solicitor.
The Council, though, sought to reserve its position on costs. Accordingly, we will make no order as to costs at this point but will make directions to hear from the parties on any application by the Council.

ORDERS

The protective orders of the Council of the Law Society of New South Wales dated 19 May 2023 are varied as follows: 1. The Applicant is reprimanded; 2. The Applicant shall, within three months of the date of these orders: 1. complete an ethics tutorial with the Respondent's Ethics Unit which addresses the issues arising from paragraph 82 of this decision; and 2. within seven days of completing that tutorial, is to provide to the Respondent's Director, Legal Regulation (Director) a report which demonstrates, to the reasonable satisfaction of the Director, the Respondent's understanding of matters dealt with in the tutorial. 1. The Applicant is to provide an apology to her client, described in this decision as the vendor, in a form approved by the Director, within 45 days.
We also make the non-publication order foreshadowed earlier and the following directions as to any costs application by the Council: 1. Any application for costs by the Council, together with submissions and evidence in support of the application, is to be lodged with the Registry and given to the Solicitor within 14 days of the publication of these reasons. 2. Any submissions and evidence in response to any such costs application are to be lodged with the Registry and given to the Council within 14 days thereafter. 3. Any submissions in reply are to be lodged with the Registry and given to the Council within 7 days thereafter. 4. Submissions on the application for costs by each party are not to exceed five pages in length. 5. The Tribunal may dispense with a hearing and determine any application for costs on the basis of the written submissions and evidence provided. If the parties oppose this course, they should make submissions on this issue when complying with the directions as to their submissions on the substantive costs application. If a hearing is not dispensed with the parties will be notified of a date for hearing to determine any applications.

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 24 May 2024 - paragraph 92 (4) corrected to paragraph 93 as per cover page indicates 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: 24 May 2024

Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015(NSW)

(the ADR Act), the Uniform Law, the Uniform Law Application Act 2014(NSW)

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