Hagan v Council of the Law Society of New South Wales

NCAT Occupational|2022-03-28|Before: Armstrong J

Hall v Council of the Law Society of New South Wales [2020] NSWCATOD 96 In the matter of Spero Pitsikas (No 1) (1995) 1 LPDR 5 Kerin v Legal Practitioners Complaints Committee (1996) 67 SASR 149; [1996] SASC 5650 Law Society of New South Wales v Maharaj [2017] NSWCATOD 79 Legal Services Commissioner v Shulsinger [2010] VCAT 965 Legal Services Commissioner v Livers [2017] NSWCATOD 117 Lucatonio v Kleinert [2009] NSWSC 853 McDonald v Director-General of Social Security (1984) 1 FCR 354; [1984] FCA 57 Medcalf v Mardell [2002] UKHL 27; [2003] 1 AC 120 New South Wales Bar Association v Evatt (1968) 117 CLR 177; 1968 HCA 20 Re Stanhill Consolidated Ltd [1967] VR 749 Shi v Migration Agents Registration Authority (2008) 235 CLR 286; [2008] HCA 31 Smith v New South Wales Bar Association (1992) 176 CLR 256 Spalding v Radio Canberra Pty Ltd (2009) 166 ACTR 14; [2009] ACTSC 26 Youssef v NSW Legal Services Commissioner [2020] NSWCATOD 85 Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115 Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 270; [1957] HCA 46 Texts Cited: None cited Category: Principal judgment Parties: Anthony Mark Hagan (Applicant) Council of the Law Society of New South Wales (Respondent) Representation: Counsel: A McGrath (Respondent)

Solicitors: D Thompson, Kennedy & Cooke Lawyers (Applicant) File Number(s): 2021/00213162 Publication restriction: The publication of evidence given in the proceeding and documents lodged with the Tribunal which identify the executrix, the complainant, her siblings or her deceased father (the testator) is prohibited.

Introduction

Anthony Mark Hagan (the Solicitor) seeks administrative (or merits) review of a decision made by the Professional Standards Committee as delegate of the Council of the Law Society of New South Wales (Council), in respect of disciplinary action taken against him by the Council.
By letter dated 25 June 2021, the Council resolved that the Solicitor had engaged in unsatisfactory professional conduct. That resolution related to two aspects of the Solicitor's conduct. The disciplinary action had also raised another aspect of the Solicitor's conduct, found not to be unsatisfactory.
The Council determined that the Solicitor had engaged in unsatisfactory professional conduct in the following terms: "1. Unethical conduct 2. Breach of s 138 of the Legal Profession Uniform Law NSW 2015."
The Council resolved to: 1. caution the Solicitor under the Legal Profession Uniform Law (NSW) (Uniform Law), s 299(1)(a); and 2. require the Solicitor to provide a written apology to the complainant in a form approved by the Director of Legal Regulation: Uniform Law, s 299 (1)(c). (the Decision)
The Council gave written reasons for the Decision.

Background

Whilst the Solicitor is one of several partners of his firm, we will refer to it as his firm, and the relevant trust account operated by the firm as his trust account, for simplicity in these reasons. As a principal of his firm, the Solicitor is severally responsible 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 salient facts in this matter are not in issue.
The Solicitor acted for a client (executrix) who was both the executrix and a beneficiary of the will of her husband (the testator). The testator has four adult children, also named beneficiaries of his will.
The Solicitor first acted for the executrix in respect of unrelated matters and, subsequently, in respect of her administration of the testator's estate.
The testator died on 18 June 2015.
In his will, the testator appointed the executrix to that role. The will made specific bequests followed by bequests in these terms: 7. I give the residue of my estate to my Trustee UPON TRUST to sell by Public Auction or Private Treaty such as shall not consist of money upon trust for such of my wife [executrix] and my children [named] as shall survive me in equal shares PROVIDED that if any of my children die before me but leave children who survive me then such children shall be entitled to take the share which their parent would have taken under my Will had such parent survived me.
After the testator's death, the proceeds of three life insurance policies were dealt with by the executrix, and the proceeds of at least one policy were subsequently deposited to the Solicitor's trust account.
Two of those policies were held with AMP. One was held with MLC. Whilst concerns were raised about the Solicitor's conduct in respect of each of those policies, it is one of them upon which the Decision primarily rests. We will describe that as the "first AMP policy".
By letter from AMP dated 8 September 2015 addressed to the Solicitor's firm, $19,887.78 was released to the executrix under the first AMP policy. The letter attached a cheque, payable to the executrix by name with no added qualification. The accompanying cheque was deposited to the Solicitor's trust account.
The letter took the following form (excluding the addressing and signature block): "ACCOUNT NAME [testator's name] PLAN NUMBER [redacted] Dear Sir/Madam Claim - payment finalised Open Ended Lifestyle Protection Plan Life insured name(s): Esta [testator's name] We wish to inform you that the death claim for Esta [testator's name] has been finalised. Please find enclosed our cheque payable to [executrix] for $19,887.78 as payment for this benefit. We hope this will be of assistance to your client at this difficult time. We're here to help. If you have any queries about this claim, please contact us."
Despite the lengthy investigation of the matter by the Council, there remains some confusion as to whether those moneys were deposited to the Solicitor's trust account in the name of the executrix personally, or that of the executrix as executrix of the estate. However, given the particularisation of the complaints and the Council's concession that at the relevant time the Solicitor genuinely believed that the proceeds belonged to the executrix, nothing turns on this.
On 23 September 2015, the Solicitor disbursed the proceeds of the first AMP policy from his trust account. The sum of $14,245.28 was released to the executrix. The balance of $5,642.50 was transferred from the Solicitor's trust account to his general account in payment of an invoice rendered to the executrix, but for work unrelated to the administration of the testator's estate.
On 26 March 2016, the executrix swore an affidavit setting out the assets and liabilities of the estate in the course of obtaining probate. The affidavit was witnessed by the Solicitor. The affidavit did not include the proceeds of any of the life insurance policies as assets of the estate.
On 29 April 2016, solicitors for one of the adult children of the testator (the complainant) wrote to the Solicitor confirming that they were aware of the existence of the three insurance policies, their policy numbers and present value, and noting that two of the policies named the testator as owner of the policies and insured his life. The letter advised that the third policy was owned by the testator but insured the life of one of the testator's adult children.
On 11 May 2016, the Solicitor wrote to the complainant's lawyers in direct response to the letter of 29 April 2016, asking, relevantly, why "life insurance policies, which named a beneficiary other than the deceased" should form part of the testator's estate.
After subsequent correspondence passed back and forth between the Solicitor and the solicitors retained by the complainant, the Solicitor informed the complainant that two of the policies including the first AMP policy did in fact form part of the estate because they insured the life of the testator and named the testator as beneficiary.
It appears that the Solicitor later arranged for return of the sum of the moneys disbursed to his general account and those paid to the executrix, to his trust account as estate property.
The complainant raised a complaint with the Council about various aspects of the Solicitor's conduct.
The handling of the complaint followed an appropriate course, whereby the Solicitor was advised of the Council's concerns and was given an opportunity to respond. Subsequently, on 25 June 2021, the Council made its Decision resolving the complaint. The Solicitor was notified of the Decision by letter of that date.
The Decision relied upon the Council's satisfaction that two aspects of the Solicitor's conduct constituted unsatisfactory professional conduct, as set out in its reasons for the Decision at [69], under the heading "[c]onclusion."
The conclusion was that the unsatisfactory professional conduct of the Solicitor consisted of: 1. sending the inaccurate correspondence of 11 May 2016 to the complainant's solicitor (which the Council described as "unethical conduct" but we will refer to as the "Correspondence Conduct"); and 2. distributing the proceeds of the first AMP policy, totalling $19,887.78, from his trust account contrary to the provisions of Uniform Law, s 138 (which we will refer to as the "Trust Distribution Conduct").
In the Decision, the Council also resolved to close another aspect of the complaint against the Solicitor, relating to the timing of the appointment of the executrix of the testator's will to that role. Unsurprisingly, neither party disagrees with that aspect of the Decision. In the absence of argument to the contrary that conduct does not appear to warrant a finding of unsatisfactory professional conduct to us. We will not refer further to that conduct, or the related complaint, unless otherwise relevant to the issues to be determined by the Tribunal.
Various other aspects of the Solicitor's conduct had been complained about and previously considered by the Council, but those aspects of the complaint were closed at an earlier meeting of the Council's Professional Conduct Committee. None of those aspects of the Solicitor's conduct were found to warrant further investigation regarding unsatisfactory professional conduct or professional misconduct.
The Solicitor maintains that he has not engaged in any form of misconduct. He also says that he is prevented from providing a frank, complete or proper explanation for his conduct due to obligations he owes to his client the executrix, which she may waive but has declined to.

Relevant law unrelated to the nature of the review proceedings

Proceeds of a life insurance policy generally form part of the deceased's estate where: 1. the deceased is the policy owner; and 2. the deceased's life is the life insured; and 3. there is no nominated beneficiary other that the deceased.
Given the first AMP policy provided a total benefit of less than $100,000, the Life Insurance Act 1995 (Cth), s 211 relevantly provides: 211 Probate or administration not necessary in certain cases - a single policy (1) If: (a) there is only a single policy under which money is payable by a particular life company to the personal representative of a deceased person; and (b) the money does not exceed $100,000 or such other amount as is prescribed for the purposes of this paragraph; the company may pay the money to: (c) the spouse, de facto partner, parent, child, brother, sister, niece or nephew of the deceased person; or (d) a person who satisfies the company that he or she is entitled to the property of the deceased person: (i) under the deceased person's will; or (ii) under the law relating to the disposition of the property of deceased persons; or (e) a person who satisfies the company that he or she is entitled to obtain probate of the will of the deceased person or to take out letters of administration of the deceased person's estate. (1A) For the purposes of paragraph (1)(c), if one person is the child of another person because of the definition of child in this Act, relationships traced to or through the person are to be determined on the basis that the person is the child of the other person. (2) A company may pay the money without requiring the production of any probate or letters of administration. (3) A company that makes a payment under this section is discharged from all further liability in respect of the money payable under the policies. (4) A person to whom a company makes a payment under this section must apply the money in due course of administration. (5) In this section, money, in relation to a policy, means the total of the money payable under the policy, less any debt due to the company under, or secured by, the policy.
We pause to note that the parties disagreed about whether s 211 or s 212 of the Life Insurance Act was the applicable provision. Section 212 is in the same terms as s 211, save that it applies where there are two or more policies under which money is payable by a particular life company to the personal representative of a deceased person, totalling less than $100,000. The parties did not expand on their disagreement in argument. It seems to us that s 211 is the applicable provision, as the second AMP policy did not insure the life of the testator. We understand that the executrix may have transferred ownership of that policy to herself, surrendered it, and obtained the residuary value. In any event, the parties do not suggest that the application of either provision should lead to a different result. We will not deal with this issue further.
A negligent act by a solicitor might not infringe disciplinary standards, even though unacceptable: In the matter of Spero Pitsikas (1995) 1 LPDR 5; Legal Services Commissioner v Livers [2017] NSWCATOD 117 at [22].
The Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) ("Conduct Rules") provide, relevantly: 4 Other fundamental ethical duties 4.1 A solicitor must also: 4.1.1 act in the best interests of a client in any matter in which the solicitor represents the client, 4.1.2 be honest and courteous in all dealings in the course of legal practice, 4.1.3 deliver legal services competently, diligently, and as promptly as reasonably possible, 4.1.4 avoid any compromise to their integrity and professional independence, and 4.1.5 comply with these Rules and the law. … 8 Client instructions 8.1 A solicitor must follow a client's lawful, proper and competent instructions. … 9 Confidentiality 9.1 A solicitor must not disclose any information which is confidential to a client and acquired by the solicitor during the client's engagement to any person who is not: 9.1.1 a solicitor who is a partner, principal, director, or employee of the solicitor's law practice, or 9.1.2 a barrister or an employee of, or person otherwise engaged by, the solicitor's law practice or by an associated entity for the purposes of delivering or administering legal services in relation to the client, EXCEPT as permitted in Rule 9.2. 9.2 A solicitor may disclose information which is confidential to a client if: 9.2.1 the client expressly or impliedly authorises disclosure, 9.2.2 the solicitor is permitted or is compelled by law to disclose, 9.2.3 the solicitor discloses the information in a confidential setting, for the sole purpose of obtaining advice in connection with the solicitor's legal or ethical obligations, 9.2.4 the solicitor discloses the information for the sole purpose of avoiding the probable commission of a serious criminal offence, 9.2.5 the solicitor discloses the information for the purpose of preventing imminent serious physical harm to the client or to another person, or 9.2.6 the information is disclosed to the insurer of the solicitor, law practice or associated entity.
In a separate but related issue to a solicitor's obligation to maintain confidentiality, a solicitor has an obligation to proactively assert and protect the client legal privilege (or legal professional privilege) enjoyed by the solicitor's clients and former clients: Re Stanhill Consolidated Ltd [1967] VR 749 at 752.
Privilege attaches to "…documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings": Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543; [2002] HCA 49 at [9].
The obligation not only attaches to relevant documents produced in the course of a solicitor's retainer, it includes not giving evidence about privileged matters: Re Stanhill Consolidated Ltd [1967] Vic Rp 92; [1967] VR 749 at 752; Garde Wilson v Legal Services Board [2007] VCAT 1406 at [89].
The privilege belongs to the client, not the solicitor: Spalding v Radio Canberra Pty Ltd (2009) 166 ACTR 14; [2009] ACTSC 26 at [17]. For that reason, a solicitor may not waive it without the express instructions of the client or former client: Garde-Wilson v Legal Services Board.
As a result, a solicitor's obligation to maintain confidence and privilege may conflict with that solicitor's obligation to co-operate in the investigation of, or the solicitor's ability to resist disciplinary complaints made by someone other than the solicitor's own client. If the complainant is the client, the client is deemed to have waived privilege to the extent necessary for the solicitor to defend the allegations: Uniform Law, s 321.
As was said by Lord Bingham in Medcalf v Mardell [2002] UKHL 27; [2003] 1 AC 120 at [23], and has been referred to with apparent approval in Australia in respect of legal practitioner disciplinary proceedings in Legal Services Commissioner v Shulsinger [2010] VCAT 965 at [98] and [137]: "…The court should not make an order against a practitioner precluded by legal professional privilege from advancing his full answer to the complaint made against him without satisfying itself that it is in all the circumstances fair to do so. This reflects the old rule ... that a party should not be condemned without an adequate opportunity to be heard. ... the court should not make an order unless, proceeding with extreme care, it is (a) satisfied that there is nothing the practitioner could say, if unconstrained, to resist the order and (b) that it is in all the circumstances fair to make the order."
The Uniform Law provides, relevantly: 138 Holding, disbursing and accounting for trust money in general trust account (1) Except as otherwise provided in this Part, a law practice must - (a) hold trust money deposited in the law practice's general trust account exclusively for the person on whose behalf it is received; and (b) disburse the trust money only in accordance with a direction given by the person. Civil penalty: 50 penalty units. (2) Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law. (3) The law practice must account for the trust money as required by the Uniform Rules. Civil penalty: 50 penalty units. …
Section 296 of the Uniform Law defines unsatisfactory professional conduct as including 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.
Section 299 of the Uniform Law provides for a local regulatory authority, such as the Council, to determine whether a lawyer has engaged in unsatisfactory professional conduct. It also provides for various disciplinary orders, including a caution, reprimand, apology and for a fine of up to $25,000.
The Uniform Law also provides: 371 Requirements - complaint investigations (1) For the purpose of carrying out a complaint investigation in relation to a lawyer or law practice, an investigator may, by notice served on the lawyer or a legal practitioner associate of the law practice (as the case requires), require the lawyer or associate to do any one or more of the following - (a) to produce, at or before a specified time and at a specified place, any specified document (or a copy of the document); (b) to provide written information on or before a specified date (verified by statutory declaration if the requirement so states); (c) to otherwise assist in, or cooperate with, the investigation of the complaint in a specified manner. … 466 Provisions relating to certain requirements under this Law (1) This section applies to a requirement under - … (d) section 371 to produce documents, provide information or otherwise assist in, or cooperate with, an investigation; or … (2) The validity of the requirement is not affected, and a person is not excused from complying with the requirement, on - (a) the ground of legal professional privilege or any other duty of confidence; or … (3) A person is not excused from complying with the requirement on the ground that compliance with the requirement, or an answer, document, information or assistance provided in complying with the requirement, may tend to incriminate the person. (4) Any information, document or other thing obtained as a direct or indirect consequence of a person complying with the requirement is admissible against the person in proceedings or procedures - … (c) relating to a disciplinary matter - but is not otherwise admissible in evidence against that person. (5) A person complying with the requirement is not subject to any liability, claim or demand merely because of compliance with the requirement and, without limitation, is not liable for any loss or damage suffered by another person as a result of the person's compliance with the requirement. (6) A failure of an Australian lawyer or Australian-registered foreign lawyer to comply with the requirement is capable of constituting unsatisfactory professional conduct or professional misconduct. (7) A local regulatory authority may recommend to the designated local regulatory authority that an Australian practising certificate or an Australian registration certificate be suspended while a failure by the holder to comply with the requirement continues.

The nature of these review proceedings

There are two quite separate pathways which may bring legal practitioner disciplinary matters before this Tribunal. Decisions of the Tribunal need to be read with an eye to that distinction.
One pathway, not relevant to these proceedings, is that disciplinary proceedings can be brought to the Tribunal for determination in the first instance: Uniform Law, s 300.
The other pathway, which applies to this application, is that once a legal disciplinary decision has been made by the Council under Uniform Law, s 299, the solicitor may seek administrative review of that decision: Uniform Law, s 314; Legal Profession Uniform Law Application Act 2014 (NSW) (Application Act), s 126.
In administrative review proceedings, the relevant statutory scheme and considerations have been thoroughly and helpfully summarised in two earlier decisions of differently constituted Tribunals: Youssef v NSW Legal Services Commissioner [2020] NSWCATOD 85 and Hall v Council of the Law Society of New South Wales [2020] NSWCATOD 96. We agree with and adopt the more extensive consideration of the issues contained therein, which we will synthesise as relevant to these proceedings, as follows: 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 Application Act and the Civil and Administrative Tribunal Act 2013 (NSW) (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 Council's decision, our decision is taken to be the decision of the Council and has effect as the decision of the Council on and from the date of the Council'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 to examine 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 31 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 these proceedings (as there is no question of professional misconduct involved): 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 the party's 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 action taken by the Council was 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) 106 NSWLR 383; [2021] NSWCA 339. Consequently, in reaching the correct and preferable decision on review, we should approach the matter on the same basis. 10. This 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) are 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 at [135]. 12. Natural justice requires that the solicitor in question 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 Uniform Law, s 299(2)(a). 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.
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 - Did the Solicitor engage in unsatisfactory professional conduct?

The Solicitor contends that he is precluded from giving a complete explanation of his conduct due to the privilege held by the executrix in matters arising from communications between her and the Solicitor for the dominant purpose of providing the executrix with advice and legal services.
Somewhat curiously, the Solicitor has never deposed that there are communications to which privilege or confidentiality attaches, which he might otherwise rely upon. Not all communication between solicitor and client attracts privilege. The Council, however, accepts the Solicitor's assertion that he believed at all relevant times that the first AMP policy nominated the executrix as beneficiary. On that basis, so shall we.
The Council concedes that the principle in Medcalf v Mardell is sound but submits that it is a general principle and, in this case, the facts of the situation justify a different approach. In essence, the Council says that the circumstances obliged the Solicitor to make independent enquiries to verify the correct state of affairs, irrespective of what his instructions may have been.
We have also taken into account that the Solicitor owes the executrix a duty of confidentiality.
For those reasons, we will only make findings adverse to the Solicitor as to his conduct if satisfied that there is nothing the Solicitor could say, if not constrained by his professional obligations, to resist the finding, or if we are satisfied that he was obliged to independently verify the circumstances in any event.

The Correspondence Conduct

In argument at the hearing, we put to the Solicitor's representative the proposition that there is nothing which could have been the subject of the Solicitor's instructions from the executrix which excused the positive, and incorrect, assertion by the Solicitor that the first AMP Policy "nominated a beneficiary other than the deceased". It was apparent that, up until that point, the Solicitor had not grappled with the fact that he had made a positive and unqualified assertion in that regard. After our providing some time outside of the hearing for the Solicitor to take advice and to provide instructions, we were informed that the Solicitor accepted that his conduct in respect of making the assertion was "incorrect and … inappropriate."
However, the Solicitor maintained that it did not fall below the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer. Rather, the Solicitor maintained that the correspondence should be read as the Solicitor "attempting to advance… his client's case and in accordance with his instructions, [and] might also … be attempting to resolve the matter by requesting, as he did, for documentation to be provided by the complainant's solicitors".

The Trust Disbursement Conduct

In our view, it is appropriate to break down the assessment of the conduct of the Solicitor in respect of this issue into the following questions: 1. Should the Solicitor have recognised that the policy proceeds must only be used for the administration of the testator's estate, or put on notice of the need to make further enquiries? 2. If the preliminary answer to (1) is yes, what were the Solicitor's obligations when releasing moneys from his trust account?
The Council did not contend that there is a universal rule that solicitors must confirm all their instructions or otherwise verify all instructions from their clients.
Rather, the Council contended that, in this specific situation, the appropriate standard of competence and diligence required the Solicitor to take reasonable steps to do so.
The relevant circumstances said to enliven a duty on a reasonably competent solicitor to confirm the instructions of the executrix were that: 1. A competent solicitor would know of the Life Insurance Act, s 211; 2. This should be considered in the context of the references to the "Esta" (taken to mean estate) of the testator in AMP's letter of 8 September 2015 and the account name referring to the testator; and 3. The invitation to the Solicitor to seek clarification if required.
The Council contended that compliance with the Solicitor's duty was to be achieved either: by reviewing the underlying life insurance policy documents to ascertain if, in fact, the executrix was nominated as the beneficiary; or by making inquiries of the life insurance companies, before disbursing the proceeds from trust.
The Council submits that Uniform Law, s 138(1)(b) is a "strict liability civil penalty provision" which does not require any element of mens rea or fault. It accepts, however, that on a payment under Life Insurance Act, s 211 being made by a life insurance company, the legal title in the moneys passes to the person to whom it is paid, subject to a charge in the nature of a fiduciary obligation to apply it to the administration of the estate.
The Council further submits that a breach of Uniform Law, s 138(1)(b) can occur where moneys are disbursed in circumstances where the solicitor in question has not ascertained: whose instructions the solicitor can accept in order to disburse funds held in trust and how the solicitor can disburse the funds, given the status or capacity of those giving instructions to the solicitor.
The Council accepted that the letter from AMP, which we have reproduced at [15], is ambiguous.
Nonetheless the Council asserts, without expansion in argument, that it can be inferred that AMP would not have released the moneys to the executrix in her capacity as spouse of the testator under the Life Insurance Act, s 211 but must necessarily have done so in her capacity as executrix of the estate.
In our view, the Council appears to have conflated the requirements of Uniform Law, s 138(1)(a) and s 138(1)(b) to an extent in its submissions in that it maintained that the Solicitor had also breached s 138(1)(a) by failing to take the necessary steps to ascertain the basis on which the executrix received the monies payable under the first AMP policy. The Council also referred to the fiduciary obligation on the Solicitor to advise a client, referring to a line of authority supporting the proposition that a solicitor's retainer extends to proactively giving appropriate advice. The submissions also referenced a decision of the former NSW Administrative Decisions Tribunal (a predecessor of this Tribunal) in Council of the Law Society of NSW v Butt [2012] NSWADT 47. That decision, however, related to a solicitor who deposited a cheque to his trust account and made subsequent disbursements from trust without the authority of the payee of the cheque. Given the different factual situation here, we did not find that decision to be of significant assistance.
In argument, the Council agreed that the complaint in respect of the Trust Disbursement Conduct was particularised as a breach of Uniform Law, s 138(1)(b) only and did not seek to amend those particulars.

The Correspondence Conduct

There is nothing in respect of this conduct, notwithstanding any inability of the Solicitor to divulge the nature of his instructions from or advice to the executrix, which leads to a conclusion that the Solicitor's conduct was anything other than that which falls well short of the high standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer. We are satisfied that the conduct amounted to unsatisfactory professional conduct.
The Solicitor did not indicate in his letter to the complainant that he 'was instructed' that the policies had specified beneficiaries other than the testator (if authorised by his client to do so). Nor did he simply question the basis for the complainant's assertion that the proceeds were estate property.
Rather, he made a positive assertion that each of the policies "nominated a beneficiary other than the deceased". He was not entitled to do so without personally satisfying himself as to the truth of that assertion. That he may have been instructed that the policy named a beneficiary other than the testator but is prevented from raising that in his own case if he was, is not to the point. His positive assertion was made without knowledge of the statement's veracity. The assertion could, and should, have been independently verified before being made. If he was unable to make such independent verification for any reason, the assertion simply should not have been made.
There was a significant risk of a mischievous consequence of the conduct. The complainant may have relied upon the assertion by the Solicitor, given his position and obligations as an officer of the court, to cease enquiries as to why the policy proceeds were not applied to the testator's estate. On the evidence before us it appears likely that, if this had occurred, the testator's estate may not have been properly administered.
Furthermore, all persons engaged in dealings with a solicitor should be entitled to accept that a solicitor will not make positive assertions without first satisfying themselves of the truth of that which is asserted. Trustworthiness, in that respect, is a fundamental aspect of membership of the profession. Failure to meet that standard undermines the due administration of the legal process. It may, if allowed, cause significant extra delay and expense to parties seeking redress for their legal rights due to the need for independent verification of all statements made by a legal practitioner.

Should the Solicitor have recognised that the policy proceeds must only be used for the administration of the testator's estate, or put on notice of the need to make further enquiries?

Section 211 of the Life Insurance Act (as with s 212) is a somewhat anomalous provision. It has received no relevant judicial attention that we were taken to or have located ourselves. It is anomalous because it allows moneys which are clearly estate moneys to be paid to people not otherwise lawfully obliged to act for the benefit of the estate. The obligation to do so, in our view, arises from the application of the statute itself by virtue of s 211(4) which requires the recipient to "apply the money in due course of administration of the estate".
Despite the long investigation of this matter by the Council, and the Solicitor's duty to cooperate in that investigation, we have no more information about the nature of the payment to the executrix now than that which can be derived from AMP's letter of 8 September 2015 and the cheque attached to it at the time, other than the fact that the first AMP Policy did not name the executrix as beneficiary.
In our view, the Council quite properly acknowledged that AMP's letter of 8 September 2015 is ambiguous. The mere fact that it may have made reference to the "esta[te]" of the testator or referred to the account as being held in his name does not assist us to form any concluded view consistent with the Decision. Nor does it allow a reasonable inference to be drawn against the Solicitor, particularly given the seriousness of the complaint.
With the benefit of hindsight, it is clear that the moneys were not paid to the executrix as beneficiary of the policy. However, we cannot be satisfied that should have been apparent to the Solicitor, or sufficiently clear as to put him on guard that he should make independent enquiry to verify his apparent instructions.
The expression in the AMP letter of its "… hope this will be of assistance to your client at this difficult time", is consistent with an intent that the moneys were being released to the executrix for her benefit, not forming part of the estate and provided simply to assist in the prompt administration of the estate.
Whilst not required to do so (Lucatonio v Kleinert [2009] NSWSC 853), it was open to the Council to lead evidence of an expert nature as to why a reasonably competent solicitor would have been alerted from the correspondence to the likelihood of the payment being made under Life Insurance Act, s 211. The Council did not lead any such evidence.
We agree with the Solicitor's submission that s 211 does not create a presumption that funds received by a spouse of the testator in these circumstances are to be taken as having been paid under that section.
In our view, the fact that the payment was made without reference to any obligation on the recipient under Life Insurance Act, s 211(4) and the letter referred to a hope that it would "… be of assistance to [the executrix] at this difficult time", made the Solicitor's acceptance that it was the proceeds of a policy to which the executrix was a beneficiary a reasonable one.
This finding is fortified by the lack of any probative evidence that the Solicitor was on notice of anything to the contrary prior to receiving the correspondence from AMP and accompanying cheque. Nor is it asserted that he played any part in seeking release of the funds.
The Council seemed to be alive to this deficiency in its case before the Tribunal. In the event that we reached the conclusion we have on this issue, the Council invited us to set aside the Decision and remit the matter to it for further consideration. The Council also suggested that we recommend that it give the Solicitor a direction utilising Uniform Law, ss 371(1) and 466, which would require and allow him to disclose his instructions despite any issue of privilege or confidentiality, so that further information could be gathered. Quite why the Council had not taken that step of its own volition in the years during which these complaints were investigated was not explained.
We do not agree that we should remit the matter for further consideration. There are several reasons for this including: 1. The fact that the investigation of the complaints has already taken several years; 2. That the Council could have utilised the provisions of ss 371(1) and 466 Uniform Law to compel responses from the Solicitor during its investigation but did not do so, despite knowing since 28 June 2019 that the Solicitor alleged that he was constrained in his response to the complaints due to client legal privilege (or legal professional privilege) that the executrix declined to waive; 3. In our view, even if the Council could establish that the Solicitor should have looked behind his client's instructions and ascertained that the first AMP Policy proceeds were paid to the executrix under the terms of Life Insurance Act, s 211, the executrix was still the "person on whose behalf" the payment was received into trust, to use the terms of the Uniform Law, s 138(1)(a). This would be so notwithstanding her subsequent obligation under Life Insurance Act, s 211(4), or the fact that she may have directed that it be deposited to the trust account in the name of the estate as a step toward compliance with that obligation; 4. On that basis, the Solicitor was entitled, and indeed required, to "disburse the trust money only in accordance with a direction given by" the executrix, as set out in Uniform Law, s 138(1)(b); 5. There is no allegation that he disbursed the moneys other than in accordance with a direction of the executrix; 6. Even if the Council could, after further investigation, establish that the Solicitor should have investigated the nature of the payment to the executrix of the first AMP policy proceeds, that is not the complaint.
Furthermore, as best we can ascertain from a document contained at page 106 of the parties' agreed bundle, on an interpretation of the will agreed to by all beneficiaries the executrix was entitled to a distribution of $19,865.78 from the estate in accordance with cl 7 of the will. (The actual distribution appears to have been reduced by the value of the second AMP policy, but the retention of that policy's proceeds forms no part of the matters we are asked to review).
This is to be contrasted with the $19,887.78 initially derived by the executrix from the first AMP Policy.
On the basis of what had, until recently, seemed settled law, the combined effect of the Probate and Administration Act 1898 (NSW), ss 44, 61 and 92 was that the executrix had no title to a chose in action belonging to the testator until probate is granted, and could not administer the estate. However, on grant of probate, the effect of s 44 was to retrospectively validate dealings with the estate property by the executrix before that grant: Byers v Overton Investments Pty Limited (2001) 186 ALR 280; [2001] FCA 760 at [23] - [24].
However, in Carolyn Deigan as executrix for the estate of the late James Boyd Lockrey v Barnard James Fussell [2019] NSWCA 299, White JA (noting that Bathurst CJ (as his Honour was) and Macfarlan JA did not decide the issue) expressed a different view, saying, of the proper construction of the relevant sections: 173. In my view, the nettle should be grasped. Is it the case that before a grant of probate a bank cannot transfer moneys standing to the credit of a deceased's account into an estate account in the name of the executor? Can an executor, before or without the grant of probate, not use those moneys to pay debts, funeral or testamentary expenses? Can an executor, before or without grant of probate, not transfer chattels to those entitled under the will? In my view on a purposive construction of ss 44 and 61 of the Probate and Administration Act, considering the background of those provisions, the executor does have such powers.
If the executrix did have those powers, there may have been nothing unlawful in the executrix making a distribution to herself by way of payment of her legal expenses in an amount less than her entitlement under the estate, or improper in the Solicitor facilitating it. The executrix risked not being indemnified if the distribution exceeded her lawful entitlement but, again, a failure of the Solicitor to advise her in that regard is not the complaint.
Even if the executrix was not entitled to make the distribution at the time, the effect of Probate and Administration Act, s 44 may have retrospectively validated her dealing when probate was granted.
It also appears to us that if the executrix had received the money specifically as executrix of the estate, she was not required to retain it in the Solicitor's trust account. She was free to hold it in an account elsewhere. As a result, she was entitled to require the Solicitor to return the balance of the first AMP policy proceeds, in the sum of $14,245.28, to her. We cannot identify a lawful right or obligation allowing the Solicitor to prevent her from doing so. Again, he had an obligation to advise her as to her obligations to the estate, but a failure to do so is not the complaint.
Finally on this point, in our view, the protective orders made by the Council in the Decision in respect of both the Correspondence Conduct and the Trust Disbursement Conduct are appropriate in respect of the Correspondence Conduct taken in isolation, for reasons we will come to.

The correct and preferable decision

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 disciplinary (or protective) orders to be made, albeit that they do not constitute a closed list. As we set out at [48(9)] above, we should apply the same principles on review of the Decision. 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; 4. the enhancement of confidence in the public in the integrity of the profession.
In deciding on the appropriate protective orders following a finding of misconduct, we may take into account any failure by the practitioner "to understand the error of his ways": New South Wales Bar Association v Evatt (1968) 117 CLR 177 at 184; [1968] HCA 20.
At the hearing, we raised with the parties that the Correspondence Conduct alone, if we were satisfied that the complaint was made out, may warrant a more serious outcome for the Solicitor than that which had been applied by the Council in its Decision. We raised the prospect that a fine may also be warranted. Certainly, we consider the Solicitor's conduct to be serious, and to fall well short of what was expected of him, for the reasons in [68] to [72] above. We are also troubled by his ongoing inability to acknowledge his transgression from the appropriate standard, even after conceding that his conduct was incorrect and inappropriate.
However, the Council did not seek a more significant protective outcome, and we are mindful of the extensive and lengthy nature of the investigation regarding the Trust Distribution Conduct, which we have found not to constitute unsatisfactory professional conduct.
There is also no suggestion that the Correspondence Conduct related to anything other than an isolated incident.
Weighing those issues, we are satisfied that the original outcome is appropriate, albeit that it should relate solely to the Correspondence Conduct.

Confidentiality

The parties agreed, and we are satisfied, that it is appropriate to make an order prohibiting the publication of the names of the executrix, the complainant, her siblings and the testator, to ensure the privacy of persons, other than the Solicitor, who are discussed in these reasons.
Section 64(1)(c) of 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 the publication of evidence given before the Tribunal.
In Council of the Law Society of New South Wales v Diaz [2021] NSWCATOD 9, the Tribunal (differently constituted) considered relevant factors for making an order prohibiting publication of the names of the respondent lawyer's clients. The Tribunal there stated at [4] and [5]: "In its decision in Council of the Law Society of New South Wales v CZD [2017] NSWCATOD 31 the Tribunal outlined the analytical process which the Tribunal might adopt in considering such an application. Essentially, this is to weigh the principle of open justice, from which the proposed order is a clear departure, against the benefits to be had from the order. Here the order only concerns the names of the Respondent's clients whose affairs were involved in the alleged breaches. Their identities are not, in the present case, at all relevant to the nature of the alleged breaches or the circumstances in which they are alleged to have incurred. Moreover, since the order requested does not restrict publication of the name of the Respondent or details of his conduct, the exemplary lessons to be drawn from the public identification of solicitors against whom the Tribunal makes findings and of their conduct will not be compromised if in the event the Tribunal finds against the Respondent."
We agree with the extract reproduced from that earlier Tribunal decision. Similar considerations apply in the current circumstances.

Costs

In proceedings of this nature, s 60 of the NCAT Act governs costs, meaning that special circumstances warranting an award of costs must be demonstrated: Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115. The parties advised that there were to be no applications for costs.

Orders

Our Orders are as follows: 1. The decision of the Council of the Law Society of New South Wales dated 25 June 2021 is varied as follows: 1. Anthony Mark Hagan has engaged in unsatisfactory professional conduct in respect of the conduct described in these reasons for decision as "the Correspondence Conduct" only. 2. Anthony Mark Hagan is cautioned pursuant to s 299(1)(a) of the Legal Profession Uniform Law (NSW); and 3. Anthony Mark Hagan is required to provide a written apology to the complainant in a form that is approved by the Director, Legal Regulation, Council of the Law Society of New South Wales, within 21 days of the date of these orders, pursuant to s 299 (1)(c) of the Legal Profession Uniform Law (NSW). In the event that the parties cannot agree upon the terms of that apology, the parties have liberty to apply. 1. Pursuant to s 64(1)(c) of the Civil and Administrative Tribunal Act 2013 (NSW), publication of evidence given in the proceeding and documents lodged with the Tribunal which identify the executrix, the complainant, her siblings or her deceased father (the testator) is prohibited.

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 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: 07 July 2022

Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015(NSW)s 4, 8, 9

(2021) 106 NSWLR 838

(2021) 106 NSWLR 383

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