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[2011] WASAT 91
State Administrative Tribunal (WA)
2011-06-21
Mr P, Ms P
Original judgment source is linked above.
ACT : LEGAL PROFESSION ACT 2008 (WA)
CITATION : LEGAL PROFESSION COMPLAINTS COMMITTEE and DETATA [2011] WASAT 91
BETWEEN : LEGAL PROFESSION COMPLAINTS COMMITTEE
Legal practitioner - Professional misconduct - Breach of an undertaking given to another practitioner
Criminal Code Act Compilation Act 1913 (WA), s 409(1)(c)
Law Society of Western Australia Professional Conduct Rules 2008 (WA), r 26
Keppie v Law Society of the Australian Capital Territory (1983) 62 ACTR 9
Legal Profession Complaints Committee and Caine [2010] WASAT 178
Quigley (A Practitioner) v The Legal Practitioners Complaints Committee [2003] WASCA 228
1 The Legal Profession Complaints Committee contended that Mr Mark Anthony Detata had engaged in professional misconduct in that he provided an undertaking to another practitioner not to release certain money from his firm's trust account without the agreement of the owner of that money and the other practitioner's client. Mr Detata had paid some of that money to the other practitioner's client, but then released the balance of the money to its owner without the knowledge and consent of the other practitioner and in the absence of any agreement between the owner of the money and the other practitioner's client.
2 The Tribunal made a finding that the practitioner engaged in professional misconduct.
3 The applicant (Committee) has brought a complaint to the Tribunal under s 438(1) of the Legal Profession Act 2008 (WA) (LP Act) for a finding that the respondent (Practitioner) engaged in professional misconduct in the following circumstances:
4 At the hearing before the Tribunal, which took place on 23 March 2011, the Committee handed in its bundle of documents (Exhibit 1) and called one witness, Mr Jonathon Peter Cooke (Mr Cook). Mr Cook gave oral evidence at the hearing and his witness statement was tendered (Exhibit 2). The Practitioner gave evidence himself (Exhibit 3). The Practitioner also tendered a witness statement from Mr Michael Patrick O'Connor, the Practitioner's principal (Exhibit 4), but only to the extent of paras 1, 2, 3, 30 and 31 of Exhibit 4. Mr O'Connor's statement, Exhibit 4, is however, only in the nature of a character reference for the Practitioner.
5 It is necessary to set out briefly the relevant facts in this matter which are largely common ground.
6 The Practitioner is a certificated legal practitioner within the meaning of the LP Act and is an employed solicitor practising with O'Connor Partners.
7 In 2008, the Practitioner was acting for Mr Memet Demiroski (Mr Demiroski) in connection with certain matters arising from a previous sale of Mr Demiroski's business known as BeetleJuice Juice Bar to Mr Faulds. Mr Mark Andrews (Mr Andrews) was also acting for Mr Demiroski but only in respect of certain criminal offences alleged to have been committed by Mr Demiroski in relation to the sale of that business to Mr Faulds (Criminal Offences).
8 The circumstances of the Criminal Offences were that Mr Faulds alleged that the sale transaction was induced by fraud, and that by reason of the fraud, he sustained losses. Those losses were at least the amount which he paid for the business, $75,000.
9 Mr Cook, an employed solicitor with Mendelawitz Morton, acted for Mr Faulds in respect of the recovery of the losses incurred by Mr Faulds.
10 On 2 December 2008, Mr Demiroski pleaded guilty in the District Court of Western Australia to two counts of fraud contrary to s 409(1)(c) of the Criminal Code Act Compilation Act 1913 (WA).
11 In relation to sentencing for the Criminal Offences, Mr Demiroski expressed his desire to make restitution to Mr Faulds. At that hearing, the sentencing judge observed:
The issue of reparation is going to be significant here in the sentencing exercise. If there is a block of land and if it has the accused has or the offender has equity in it, one would have thought it would be possible for him to provide some sort of security to the complainant and that may well be a matter that would weigh in the sentencing exercise.
(Exhibit 3, Attachment 2 page 15).
12 The block of land to which the sentencing judge was referring was in fact registered solely in the name of Mrs Demiroski, Mr Demiroski's wife and was by that stage the subject of a contract for sale. To provide 'some sort of security' as the sentencing judge had suggested, and presumably to assist Mr Demiroski in relation to his sentencing for the Criminal Offences, on or about 8 December 2008, Mrs Demiroski executed an authority to Metro Settlements to make payment of $190,000 (the trust account money) from the sale of the land into the Trust Account.
13 In a letter dated 8 December 2008 to Mr Andrews (Exhibit 1 pages 24 25) Mr Cook noted that 'Mr Demiroski has offered to pay the sum of $190,000 from the settlement of the sale of a property into the O'Connor Partners Trust Account pending agreement between the parties or a Court order, with the intent that the $190,000 sum will be available to Mr Demiroski to satisfy or partially satisfy his liability to Mr Faulds'.
(a) it is Mrs Demiroski, not Mr Demiroski who is the owner of that property;
(b) Mrs Demiroski has no legal responsibility in respect of her husband's liability for Mr Faulds' losses; and
(c) prima facie Mr Demiroski has no legal rights to the trust account money.
15 In that same letter, Mr Cook requested further security by way of Mrs Demiroski's agreement to:
(a) indemnify Mr Demiroski for his civil liability to Mr Faulds from the trust account money; and
(b) charge her interest in the trust account money with the due payment of Mr Demiroski's civil liability to Mr Faulds.
16 The Practitioner replied to Mr Cook by letter dated 9 December 2008 (Exhibit 1, page 34) (the First Letter) stating as follows:
We refer to your letter of today.
We confirm that we act on behalf of Mr Demiroski in relation to the issue of his civil liability and attach a copy of the sale agreement in relation to Mrs Demiroski's property located at 107 Chesterfield Road in Mirrabooka ("the Property").
Mrs Demiroski has signed an unequivocal agreement to pay the sum of $190,000 into our trust account from the sale of the Property which sum would only be released after agreement between Mrs Demiroski and your client or Court Order. We would also formally undertake not to release any monies from trust absent agreement between Mrs Demiroski and your client. This proposal should afford your client the security he requires.
Please confirm this is agreeable to your client.
We note that it is unfair, unreasonable and oppressive for your client to insist upon Mrs Demiroski signing any document indemnifying her husband. There is no allegation Mrs Demiroski had any involvement in the matters the subject of the criminal proceedings and she should not be visited with the consequences of her husband's actions. Her desire to help her husband is not carte blanche for your client to force her to accept liability for something that she is not accountable for.
We are instructed to record that, at the hearing of this matter on Wednesday, our client's position as set out in this letter will be outlined to the Court in the course of sentencing.
17 Mr Cook replied to the Practitioner on the same day, (Exhibit 1, page 35) expressing his concerns that the Practitioner's undertaking in the First Letter did not adequately protect Mr Faulds' interests.
18 In response, the Practitioner wrote Mr Cook a second letter also dated 9 December 2008 (Exhibit 1, page 41) (the Second Letter) stating as follows:
We refer to your letter of today.
We confirm that Mrs Demiroski has signed an unequivocal and unconditional agreement to pay the sum of $190,000 into our trust account from the sale of the Property which sum would only released after agreement between Mrs Demiroski and your client or Court Order. We would also formally undertake not to release any monies from trust absent agreement between Mrs Demiroski and your client.
We should make clear, if it has not been made already clear, that the sum of $190,000 represents monies paid by Mrs Demiroski for the express purpose of meeting any liability of our client to your client.
This proposal affords your client the security he requires.
Please confirm this is agreeable to your client.
We are instructed to record that, at the hearing of this matter on Wednesday, our client's position as set out in this letter will outlined to the Court in the course of sentencing.
19 Between 8 and 12 January 2009, Mr Cook continued to express his concerns to the Practitioner that Mr Demiroski had failed to provide enforceable security pending determination of the amount of his liability for Mr Faulds' losses.
20 The Practitioner advised Mr Cook, by email dated 9 January 2009, 4.35 pm (Exhibit 1, page 73) that the sum of $190,000 had been received by the Firm and deposited into the Firm's Trust Account.
21 The Practitioner further advised Mr Cook by email dated 12 January 2009, 10.20 am (Exhibit 1, page 88) that:
(a) the Firm had formally undertaken not to release any of the trust account money 'absent any agreement from' Mr Faulds;
(b) that the trust account money was being held 'pending the issue of payment of monies' to Mr Faulds; and
(c) that the trust account money 'will not be leaving' the firm's trust account without Mr Faulds' agreement.
(a) set the amount of restitution for the purposes of sentencing Mr Demiroski at $75,000; and
(b) adjourned the sentencing hearing to 22 January 2009 to permit Mr Demiroski to make payment of $75,000 to Mr Faulds.
23 By email dated 14 January 2009, at 12:01 pm, (Exhibit 1, page 118) Mr Demiroski directed the Practitioner to transfer the sum of $75,000 to Mr Faulds and 'then the balance, less your fees to date, directly to the account of Mrs Demiroski in the following account .... '. Mrs Demiroski, in an email dated 14 January 2009 at 1.04 pm (Exhibit 1, page 121) confirmed those instructions.
24 By an email dated 14 January 2009, at 1.55 pm, (Exhibit 1, pages 122 123) the Practitioner wrote to Mr Cook to the effect that:
(a) 'given that Judge Wisbey has now made a court order in this matter' he intended to make payment of $75,000 by bank cheque to Mr Cook on Friday, 16 January 2009;
(b) he was authorised by Mrs Demiroski to disburse the $75,000 from the trust account money;
(c) he asked Mr Cook to '[p]lease confirm that this is satisfactory to you'.
25 In reply, by an email dated 14 January 2009, at 2.24 pm, (Exhibit 1, page 124) Mr Cook stated to the Practitioner that:
(a) no orders had been made other than to adjourn the sentencing hearing;
(b) the sentencing judge had set the sum of $75,000.00 as restitution for the purposes of sentencing only;
(c) the sentencing judge had indicated that determining the balance of Mr Demiroski' s civil liability would be a matter for the commercial lawyers;
(d) that the $75,000 could be paid by electronic transfer or cheque; and
(e) discussions concerning balance of Mr Demiroski's civil liability to Mr Faulds should resume.
26 In the meantime, Mr Demiroski was continuing to press the Practitioner for payment to Mrs Demiroski of the balance of the Trust Account money.
27 By email dated 14 January 2009, at 3.02 pm, (Exhibit 1, page 129) the Practitioner wrote to Mr Andrews and Mr Demiroski to the effect that:
(a) by the First Letter he had undertaken not to release the money except 'after agreement or Court Order';
(b) no court order had been made;
(c) in the absence of a court order, the Practitioner was 'concerned' about releasing any money from trust other than the $75,000; and
(d) he enquired of Mr Andrews as to whether a court order as to restitution had been made.
28 The Practitioner sent a further email dated 14 January 2009, at 3.19 pm, (Exhibit 1, page 134) to Mr Demiroski to the effect that until a formal order was made, he was 'reluctant' to forward any money from the trust account other than the $75,000 and on 15 January 2009 the Practitioner authorised the preparation of a bank cheque in the amount of $75,000 from the trust account money. This left a balance of $115,000 in trust.
29 Mrs Demiroski telephoned the Practitioner on 20 January 2009, reminding the Practitioner that he did not act for her and that the $115,000 held by the Firm should be returned to her (Exhibit 1, page 148).
30 At the sentencing hearing on 22 January 2009, at 9.30 am, Mr Andrews sought, and the sentencing judge made, a reparation order that Mr Demiroski pay to Mr Faulds the sum of $75,000. A cheque for this amount was handed to Mr Faulds at the hearing. At that hearing, the sentencing judge noted that the reparation order would not bar further action in respect of Mr Demiroski's civil liability to Mr Faulds, but that the amount of the reparation order would be taken into account in any assessment of Mr Faulds' damages (Exhibit 1, page 154).
31 On 22 January 2009, Mrs Demiroski once again requested the balance of the trust account money (being $115,000 together with interest) be returned by bank cheque (Exhibit 1, page 158) and followed that with a letter dated 23 January 2009, claiming from the trust account money two cheques totalling $15,000 (Exhibit 1, page 160).
32 On 23 January 2009, the Practitioner made a file note (Exhibit 1, page 161) to the effect that by reason of:
(a) the reparation order made by the sentencing judge on 22 January 2009;
(b) Mr Cook's consent to payment of the reparation order from the trust account money;
(c) Mrs Demiroski's demand for the $15,000 referred to at [31] and
(d) Mr Demiroski's agreement that the $15,000 be paid to Mrs Demiroski;
the $115,000.00 plus interest held by the Firm in trust could be paid to Mrs Demiroski.
33 The Practitioner on the same day authorised the preparation of two bank cheques totalling $15,000 to be drawn from the trust account money, leaving a balance of $100,000 of the trust account money in trust. On 29 January 2009, the Practitioner authorised the payment to Mrs Demiroski of the balance of the trust account money, being $100,340.58 ($340.58 of which reflected interest earned on the trust account money). The Practitioner did not notify Mr Faulds, Mr Cook or Mendelawitz Morton of this payment or seek their agreement to the release of further money from the trust account money.
34 By letter dated 30 January 2009, (Exhibit 1, page 175), Mr Cook wrote to the Practitioner concerning resolution of the remaining issues and sought confirmation that the Practitioner continued to act for Mr Demiroski.
35 By letter dated 26 February 2009, (Exhibit 1, page 190) the Practitioner wrote to Mr Cook to the effect that he no longer acted for Mr Demiroski in relation to any matters.
36 The Committee submits that the Practitioner's authorisation of the payment of $115,340.58 to Mrs Demiroski on 23 and 29 January 2009, (being the sum of the amounts referred to at [34] was made either:
(a) in the knowledge that Mr Faulds and Mendelawitz Morton had relied on the representations in the course of correspondence between 8 December 2008 and 14 January 2009 to the effect that the Practitioner would not release the trust account money without Mr Faulds or Mendelawitz Morton's knowledge; and
(b) in the knowledge that it was in breach of the undertaking given in the First Letter;
or alternatively,
(c) in reckless disregard as to whether Mr Faulds and Mendelawitz Morton had relied on the representations in course of correspondence between 8 December 2008 and 14 January 2009 to the effect that the Practitioner would not release the trust account money without Mr Faulds or Mendelawitz Morton's knowledge; and
(d) in reckless disregard as to whether it was in breach of the undertaking given in the First Letter.
37 The Committee further submits that the Practitioner's emails of 9 and 12 January 2009 referred to at [20] and [21] above (Exhibit 1, page 73 and page 88) to Mr Cook conveyed the meaning that, because the trust account money was held in the Trust Account for the express purpose of meeting any liability of Mr Demiroski to Mr Faulds, that should the Practitioner be requested by Mrs Demiroski to release any of the trust account money he would not do so without at least notification to Mr Faulds.
38 The Committee concludes that the Practitioner's conduct in authorising of the payment of $115,340.58 to Mrs Demiroski in the circumstances described above is conduct:
(a) that would reasonably be regarded as disgraceful or dishonourable by practitioners of good repute and competence; and
(b) involves a substantial failure to reach a reasonable standard of competence and diligence.
39 In the Practitioner's written submissions, the Practitioner submits that the undertaking given in the First Letter was in terms not clearly stated and in any event the parties never reached agreement on its terms.
40 The Practitioner further submits that he thought that the undertaking meant he had to keep the trust account money in the Trust Account to pay a reparation order made by the sentencing judge. The Practitioner says that the undertaking was proffered by the Practitioner to gain a concession from Mr Faulds namely confirmation that Mr Faulds was, in reliance upon it, prepared to concede to the sentencing judge that appropriate arrangements for restitution to him had been made or were in hand, but for no other purpose. However, the Practitioner says that the undertaking was not accepted and no concession at all was made by Mr Faulds. As at 14 January 2009, he says, no undertaking was validly in place and on that day the Practitioner, correctly in the Practitioner's view, changed his approach and simply offered to pay the reparation amount of $75,000 by cheque. On that morning the sentencing judge had indicated for the first time a willingness to accept $75,000 as the appropriate amount of Mr Faulds' loss.
41 The Practitioner concedes that he either believed he had or was concerned that he had given an undertaking to hold money on trust pending either an agreement to release that money or a reparation order being made by the sentencing judge. That was why he insisted upon Mr Andrews seeking a reparation order. Once the reparation order was made and the money paid from the Trust Account to satisfy that order, the Practitioner believed he had complied with his undertaking. This was despite the Practitioner's view that, for the reasons set out above, the Practitioner was actually under no obligation to honour any proffered undertaking.
42 The Practitioner submits that there is and can be no basis in fact or law for the contentions at [36]. Not only did the Practitioner not believe that his undertaking went any further than that stated above, the Practitioner says that it is self evident from Mr Cook's letters during the period in question that neither he nor Mr Faulds ever accepted or relied upon anything put forward by the Practitioner.
43 The Practitioner also submits that there is no basis in fact or law for the contention at [38].
44 Therefore in answer to the applicant's application, the Practitioner submits that he:
(a) did not know that Mr Faulds or Mendelawitz Morton had relied on the representations;
(b) did not act in the knowledge that his actions were in breach of any undertaking;
(c) did not act in reckless disregard of either Mr Faulds or Mendelawitz Morton's position or of any undertaking;
(d) at all times acted honestly and in good faith.
45 In oral submissions at the hearing of this proceeding, the Practitioner through counsel conceded that an undertaking had in fact been given (T: [9], [23.3.11]) and that the issue before the Tribunal was, simply, what did the Practitioner understand was the undertaking that he had given at the time when he paid out the balance of the trust account money to Mrs Demiroski (T: [5], [23.3.11]).
46 Counsel also put that question another way did the Practitioner dishonestly pay out the trust account money, knowing when he paid out that money that he was breaching his undertaking?
47 The Tribunal is of the view that it is not necessary to show that the Practitioner acted dishonestly when he paid out the balance of the trust account money. All that it is necessary to show is that the Practitioner, either deliberately or recklessly, paid out that money when he knew, or should have known, that he had given an undertaking not to do so.
48 This is consistent with a finding by the Disciplinary Committee of the Law Society of the Australian Capital Territory of misconduct by a solicitor who breached an undertaking given to a firm of solicitors, that breach having arisen through forgetfulness of the fact that the undertaking had been given. That finding was upheld by the Supreme Court of the Australian Capital Territory: Keppie v Law Society of the Australian Capital Territory (1983) 62 ACTR 9
49 There is no doubt that the Practitioner was aware that he had given his undertaking (see, for example T: [34], 23.3.11) and he knew of its importance.
50 When the Practitioner gave his undertaking, he was also aware that compliance with it would require the cooperation of Mrs Demiroski who was not a party to the undertaking and whose cooperation could not be guaranteed by the Practitioner. He therefore knew that if Mrs Demiroski demanded the return of that money while the undertaking was in place, he would be in an extremely difficult position. It follows that he knew or ought to have known that in these circumstances the undertaking would need to be carefully drafted.
51 The Practitioner repeatedly stated in his evidence that when he released the balance of the funds in the Trust Account to Mrs Demiroski, he did so on the basis that he believed that his undertaking had been complied with (see, for example T: [33], [23.3.11]). He said that when he gave the undertaking he intended that the 'Court Order' to which he referred in his undertaking was in fact the restitution order made by the sentencing judge in the sum of $75,000 (see, for example T: [33], [23.3.11]).
52 Be that as it may, there was more to the Practitioner's undertaking. He expressly undertook, in both the First Letter and the Second Letter, and confirmed by his email to Mr Cook of 12 January 2009 (Exhibit 1, page 88), not to release any funds from the Trust Account without the consent of Mr Cook's client.
53 In any event, it would not have been an unreasonable assumption on the part of Mr Cook that the reference to the 'Court Order' was in fact a reference to a court order which might be obtained by Mrs Demiroski in the event that the Practitioner refused her request to repay the Trust Account money to her. As has been previously mentioned, Mrs Demiroski was not a party to the undertaking and it would have been appropriate and expected of the Practitioner to include in his undertaking some words in anticipation of a withdrawal of cooperation by Mrs Demiroski.
54 The Practitioner may have convinced himself at some point that his undertaking meant something other than what it said. He stated in his evidence, when asked whether he had formally undertaken not to release any money from the Trust Account absent agreement between Mrs Demiroski and Mr Faulds, that:
That is in the letter, but my understanding was different.
(T: [34], [23.3.11]).
That undertaking the form of words does not express my understanding of the undertaking.
(T: [36], [23.3.11]).
56 However, there is no reasonable basis upon which the Practitioner could have come to the view that his undertaking meant anything other than what it said. The terms of the Practitioner's undertaking were clear, unambiguous and on any objective view could only have been understood by the recipient as an assurance that all of the relevant money held in the Trust Account was to be available for the satisfaction of a liability claim (which Mr Faulds at some stage alleged exceeded $150,000) and would remain there until Mrs Demiroski and Mr Faulds agreed to its release.
57 It is always implicit that such an undertaking might be varied by a Court order, but a Court order in that context could only be a Court order obtained by Mrs Demiroski, the owner of the money. The restitution order, whilst no doubt a Court order, dealt only with the amount of $75,000 and there was no Court order made in respect of the balance of the funds.
58 If there was any doubt in the Practitioner's mind as to what undertaking he had given, it would have been a simple matter for the Practitioner to raise the issue with Mr Cook, probably in the email dated 14 January 2009 (Exhibit 1, pages 122 123) when the Practitioner sought the authority of Mr Cook to withdraw $75,000 from the Trust Account money and pay it to Mr Faulds. A further sentence in that email to the effect that the Practitioner considered that his undertaking was now satisfied and that he proposed paying out the balance of the money to Mrs Demiroski would have been all that was necessary. Mr Cook could then either do nothing or take whatever steps he considered appropriate to protect whatever interest his client had in that money.
59 Instead, the Practitioner on 23 January 2009 made a file note (Exhibit 1, page 161) which counsel for the Practitioner described as 'a very earnest attempt to ensure that what he was doing was proper'. It was, in the words of counsel for the Practitioner, an analysis of the undertaking that the Practitioner had given, his actions to date and his decision to release the balance of the money to Mrs Demiroski.
60 The Tribunal in fact considers this file note to be indicative of the fact that the Practitioner had very real concerns about releasing the balance of the money to Mrs Demiroski and was conscious that his actions may be challenged at some later date.
61 When asked why he did not inform Mr Cook of his intentions, (T: [57], [23.3.11]) the Practitioner replied:
The undertaking had been complied with. It was not necessary.
62 However, the Practitioner appeared to have a great deal of difficulty with this question and took a noticeable amount of time to answer it.
63 We find that the Practitioner's authorisation of the payment of $115,340.58 to Mrs Demiroski on 23 and 29 January 2009 respectively was made when the Practitioner knew or ought to have known that it was in breach of the undertaking given to Mr Cook and that this failure was deliberate or reckless and not attended by a reasonable explanation.
64 Undertakings such as the one given by the Practitioner are important in the practise of law and if they are not taken seriously then they become worthless. Mr Cook accepted that undertaking and the breach of it by the Practitioner then resulted in Mr Cook having to explain to his client why that money was no longer available, and more importantly, why Mr Cook had not taken other steps to ensure that whatever civil liability remained outstanding, there would be sufficient funds available to meet it. Mr Cook's answer, of course, has to be that he relied on the Practitioner's undertaking.
65 The Law Society of Western Australia Professional Conduct Rules (July 2008 Revision) (Professional Conduct Rules) were in place when the Practitioner's conduct in question took place. Rule 26 of the Professional Conduct Rules provides as follows:
A practitioner must honour any personal undertaking given by the Practitioner when acting professionally for a client whether the undertaking is to the client, a third person or a Court.
66 As the preamble to the Professional Conduct Rules states, quoting Parker J in Quigley (A Practitioner) v The Legal Practitioners Complaints Committee [2003] WASCA 228, while the Professional Conduct Rules are not in the nature of legislative prescription or standard of conduct, they are to be regarded as a guide to what is considered by the legal profession in Western Australia to be proper behaviour.
67 The Tribunal therefore considers that the Committee has made out its contention that the Practitioner's conduct would reasonably be regarded as disgraceful or dishonourable by practitioners of good repute and competence. This amounts to professional misconduct within the meaning of that expression in the LP Act, for the reasons set out in Legal Profession Complaints Committee and Caine [ 2010] WASAT 178 at [12] and following. The Tribunal therefore makes a finding of professional misconduct against the Practitioner.
I certify that this and the preceding [67] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
ACT : LEGAL PROFESSION ACT 2008 (WA)
CITATION : LEGAL PROFESSION COMPLAINTS COMMITTEE and DETATA [2011] WASAT 91 (S)
BETWEEN : LEGAL PROFESSION COMPLAINTS COMMITTEE
Legal practitioner - Professional misconduct - Penalty
Practitioner reprimanded and his entitlement to practise is limited to work done under the supervision of a practitioner of no less than 5 years standing
Legal Practitioners Complaints Committee and Benari [2005] WASAT 213 (S)
Legal Profession Complaints Committee and Caine [2010] WASAT 178 (S)
Legal Profession Complaints Committee and Detata [2011] WASAT 91
1 Under the Legal Profession Act 2008 (WA) (LP Act), the Legal Profession Complaints Committee (Committee) alleged that Mr Detata had engaged in professional misconduct in that he provided an undertaking to another practitioner not to release certain money from his firm's trust account without the agreement in particular of the other practitioner's client. Mr Detata had paid some of the money to the other practitioner's client but then released the balance of the money to its owner without the knowledge and consent of the other practitioner and in the absence of any agreement between the owner of the money and the other practitioner's client.
2 In a reserved decision delivered on 21 June 2011 the Tribunal made a finding that the Practitioner had engaged in professional misconduct; see Legal Profession Complaints Committee and Detata [2011] WASAT 91
3 The parties then made submissions concerning the appropriate disciplinary outcome and the question of costs.
4 The applicable principles are well settled and not in dispute between the parties. The object of disciplinary proceedings is the protection of the public and the maintenance of proper standards in the legal profession rather than punishment. The effective administration of justice depends on the honesty and reliability of practitioners. The penalty should act as a deterrent but should also reassure the public that professional misconduct on the part of practitioners will not be tolerated.
5 The Committee's submissions included that the breach of the undertaking was particularly serious in that:
(a) the undertaking given by the Practitioner was confirmed and reiterated by him on a number of occasions and was expressly described as providing 'security' to the other practitioner's client;
(b) the undertaking involved a substantial sum of money in relation to which there was a genuine claim by the other practitioner's client;
(c) the release of the money was effectively irreparable;
(d) the breach of the undertaking was a positive act rather than one forgotten or overlooked, as the Practitioner was aware that the breach might be challenged and yet took no steps to alert the other practitioner; and
(e) the Practitioner has at no time acknowledged or even apparently considered the possibility that his actions were wrong.
6 The Committee submits that suspension of the Practitioner's local practising certificate, at least for a short period, is warranted and, if not, a fine at the upper end of the range would be an appropriate penalty.
7 The Practitioner was admitted to practice in 1990 and has not until now been the subject of any disciplinary proceedings.
8 The Practitioner himself asserts that although he must accept the decision of the Tribunal he does not agree with the Tribunal's finding and says that he did not act deliberately or recklessly.
9 The Practitioner through his Counsel submitted that his conduct in the circumstances amounted to no more than negligence and that the references filed on behalf of the Practitioner show that he is practising in a competent and professional manner.
10 The references filed, including a reference from the Practitioner's current employers, do attest to the competence and integrity of the Practitioner in the experience of the referees who are fellow practitioners.
11 The Tribunal notes the previous good record of the Practitioner, that there is no evidence that the Practitioner gained personally from his conduct, and that for the purpose of considering penalty it is appropriate to presume that he recklessly, rather than deliberately and knowingly, breached his undertaking.
12 However, because the Practitioner does not acknowledge any professional misconduct, the Tribunal must determine a penalty that ensures that the conduct which the Tribunal has found to be at least reckless is not repeated. That penalty should also go at least some way to ensuring that the Practitioner obtains a satisfactory appreciation of his obligations so that in future the public, other practitioners and the courts can place their trust in his conduct.
13 The Practitioner must appreciate that the meaning he gives to any undertaking he makes in the course of his professional practice must be the meaning the words used ordinarily have and not some contrary meaning he subjectively wishes to put on them. Where there is doubt about such meaning, he should have liaised with the recipient and, if the matter still cannot be agreed, taken the opinion of more senior counsel.
14 An order for restitution in criminal proceedings for the purposes of sentencing only (especially where the sentencing Judge expressly leaves the balance of the civil liability claim to be determined by commercial lawyers) was plainly no foundation for breaching that limb of the undertaking given in civil proceedings which was expressed to be subject to court order.
15 It is critical to the administration of justice that practitioners can be relied upon to do what they say they are going to do.
16 Of course, the consequences of the Tribunal's finding of professional misconduct against the Practitioner are going to impact on the Practitioner's future and will also bring home to the Practitioner the seriousness of his misconduct. The Tribunal also considers that it is appropriate to take account of the Practitioner's personal circumstances. The Tribunal has formed the view that a period of suspension or a fine (particularly in light of the Tribunal's decision as to costs below) would cause the Practitioner unnecessary hardship.
17 In the circumstances the Tribunal has determined that the Practitioner should be reprimanded and should undertake 24 months' practice employed by and under supervision of a practitioner approved by the Legal Practice Board and who has no less than five years postadmission experience.
18 Notwithstanding the general position set out in s 87(1) of the State Administrative Tribunal Act 2004 (WA), where disciplinary proceedings have been commenced in the public interest by a vocational regulatory body and the vocational regulatory body has been successful in the prosecution of those proceedings, ordinarily the affected person will be ordered to contribute to the costs of the proceedings which are incurred by the vocational regulatory body; see Legal Practitioners Complaints Committee and Benari [2005] WASAT 213 (S) at [25] (Benari); Legal Profession Complaints Committee and Caine [2010] WASAT 178 (S) at [18] [22].
19 The contribution the affected person should be required to make lies in the discretion of the Tribunal, having regard to all the circumstances of the case. Special matters may be taken into account to determine what is a fair and reasonable costs order; see Benari at [26] [29].
20 Having considered the submissions of the applicant and respondent and taking account of the range of issues and time spent in these proceedings, the Tribunal finds that the respondent should be ordered to pay a sum of $10,000.00 being a substantial contribution to the costs incurred by the applicant.
21 The Tribunal therefore makes the following final orders in these proceedings:
The Practitioner is not permitted to practise law other than in the employment of and supervised by a practitioner approved by the Legal Practice Board and who has no less than five years postadmission experience.
I certify that this and the preceding [21] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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Keppie
Law Society of the Australian Capital Territory