Law Institute of Victoria v Brott (Legal Practice) [2008] VCAT 1998

1. Pursuant to s 160 (1)(c)(iii) of the Legal Practice Act 1996 (the 1996 Act) Issac Alexander Brott's practising certificate is cancelled effective from 4 October 2008.
2. Pursuant to s 160 (1)(c)(vii) of the 1996 Act Issac Alexander Brott may not apply for a practising certificate before 4 July 2009.
3. The Respondent is to pay the Applicant's legal costs, including all reserved costs, of each of proceeding J11/2005, J15/2005 and J16/2005 to be taxed on Scale D of the County Court Rules in default of agreement.

1. Isaac Alexander Brott has been a legal practitioner for over thirty years. In proceedings J11/2005, J15/2005 and J16/2005 he is charged with misconduct and unsatisfactory conduct within the meaning of s 137 of the Legal Practice Act 1996 (Vic) (the 1996 Act).
2. At the start of the substantive hearing in respect of J15/2005 counsel for Mr Brott informed the Tribunal that the parties had reached an agreement in respect of all three proceedings. As part of that agreement Mr Brott 'pleaded guilty' to:
   • charge 25 (unsatisfactory conduct) in the further amended charges filed on 4 September 2008 in J11/2005;
   • charges 1 (misconduct) and 4 (unsatisfactory conduct) in J15/2005; and
   • charge 8 (unsatisfactory conduct) in the further amended charges filed on 4 September 2008 in J16/2005.
3. The factual bases for these charges, as set out in the particulars relating to each charge, are also admitted.
4. Given Mr Brott's admissions we find him guilty of the charges specified in paragraph 2.
5. Mr Brott has also agreed to pay the Law Institute of Victoria's legal costs, including all reserved costs in each of the proceedings. In default of agreement such costs are to be taxed on County Court scale D.
6. The parties have also agreed that the 'appropriate penalty' in respect of these matters is an order cancelling Mr Brott's practising certificate, effective from 4 October 2008, and an order that he may not apply for a practising certificate before 4 April 2009.
7. The central issue for determination is whether the penalty proposed by the parties is appropriate. Before turning to that issue we set out the circumstances relating to each of the charges to which Mr Brott has been found guilty.

1. Mr Brott has admitted to the contravention of various provisions of the 1996 Act (namely ss 182(2)(e)(i); 182(2)(e)(ii) and 188(1)(a)) and the Trust Account Practice Rules (the Rules) (namely rules 15, 16(5), 17(7), 19, 21(5) and 26). These provisions relate to a legal practitioner's obligations with respect to clients' money and in particular the operation and maintenance of trust accounts.
2. The conduct giving rise to the breaches spanned the period August 2001 to November 2003. Seven categories of breaches are admitted:

• failing to record the purpose for which trust money was received in six transactions totalling $38,275[1];
• six instances of failing to attach and retain the original cancelled trust account receipts[2];
• 19 instances of failing to issue trust account receipts in respect of trust money received, totalling in excess of $150,000[3]; and
• Failing to retain a bank duplicate deposit slip recording details of $20,000 deposited into his trust account on 19 June 2002[4].

• one instance of failing to record on the cheque butt the name of the person receiving the benefit of a payment of $5159 from his trust account[5];
• 9 instances of failing to record on the cheque butt the purpose for which the payment was made (total sum: $223,818.36)[6];
• four instances failing to record on the cheque butt either the name of the person receiving the benefit or the purpose for which the payment was made (total sum: $161,392)[7].

• a failure to record particulars sufficient to identify the matter in respect of which trust money was received in respect of some 19 ledger accounts[8];
• a failure to record sufficient details of each receipt payment and trust transfer in some 15 ledger accounts[9].

• failure to reconcile four trust account ledgers (total amount $2130) to the trust account journal balance as at 30 September 2003[10].

• having deficiencies in his trust account totalling $36,642.03 without reasonable excuse (of which all but $1680 was restored as at 18 December 2003)[11].

• failure to mention a Register of Interests in circumstances where:
  • − Mr Brott is and at all relevant times was the sole director, secretary and a shareholder of Melibee No 2 Pty Ltd; a director and shareholder of Spitfire Nominees Pty Ltd and a director and shareholder of Danemark Pty Ltd[12];
  • − Mr Brott's spouse, Natalie Maree McAra is and at all relevant times was a shareholder of Melibee No 2 Pty Ltd; a director, the secretary and a shareholder of Spitfire Nominees Pty Ltd; a director and shareholder of Ambyvale Pty Ltd; the sole director and secretary of Farley Bay Pty Ltd; the sole director, secretary and shareholder of Lomark Pty Ltd; and a director, the secretary and a shareholder of Danemark Pty Ltd[13].

• 5 instances of failing to keep accurate records in a manner that enabled them to be conveniently and properly audited[14].

1. As a consequence of the breaches identified Mr Brott has been found guilty of unsatisfactory conduct.
2. We note that the breaches identified are of a relatively minor nature and that the identified deficiencies were restored. We are also conscious of the fact that for part of the period over which the breaches occurred Mr Brott was adversely affected by the fact that one of his children had a serious illness.
3. Of themselves the admitted breaches would only warrant the imposition of a sanction at the lower end of the options specified in s 159.

1. Mr Brott has admitted to a charge of unsatisfactory conduct in that he permitted or assisted an unqualified person (Xavier David Holden) to engage in legal practice in Victoria.
2. At all relevant times Mr Holden was not:
   • admitted to legal practice;
   • the holder of a practising certificate; or
   • entitled to engage in legal practice in Victoria.
3. Mr Holden also has a criminal record. On 18 December 1998 he was convicted of trafficking in heroin and was subsequently sentenced to 4½ years imprisonment with a non parole period of 2½ years. Mr Holden's subsequent appeal against his conviction and sentence was dismissed.
4. Mr Holden operated a business, known as UCI Consulting, from premises on the 3rd floor of 493-495 Little Bourke Street. Mr Brott was the lessor of these premises and the rent was paid by UCI Consulting. Mr Holden had access to the 2nd floor of the building, from which Mr Brott carried on his legal practice.
5. Mr Brott provided Mr Holden with a business card which suggested that he was a legal practitioner employed by Issac Brott & Co. A facsimile of the card appears below:[15]

1. Mr Brott engaged Mr Holden to perform duties in his legal practice from about the start of 2001 until early in 2003.
2. In 2001 and 2002 Mr Holden regularly used letterhead containing a symbol the same or very similar to the logo used on the letterhead of Issac Brott & Co. and containing the correct address for the offices of Issac Brott & Co., namely level 2, 493-495 Little Bourke Street. In some instances the letterhead contained Mr Brott's telephone details and in others it also contained telephone numbers for Mr Holden. On occasion the letterhead used included Mr Brott's email address.
3. Mr Brott permitted or assisted Mr Holden in his use of this letterhead.
4. Mr Brott admits that he permitted or assisted Mr Holden to engage in legal practice in respect of five specific matters.
5. The extent of Mr Brott's involvement in these matters varied but included:
   • engaging Mr Holden to perform tasks for Issac Brott & Co. without adequate supervision;
   • permitting or assisting Mr Holden to use a letterhead containing a symbol the same or very similar to the logo used on the letterhead of Issac Brott & Co.;
   • signing letters prepared by Mr Holden;
   • passing on to Mr Holden correspondence sent to Issac Brott & Co. and addressed to the 2nd floor of the building;
   • receiving letters from Victoria Legal Aid (VLA) containing Mr Holden's name and details but not telling VLA that Mr Holden was not a legal practitioner and was not employed by Issac Brott & Co.;
   • permitting or assisting Mr Holden to deposit funds received from the VLA into the legal practice's trust account and then paying UCI Consulting, out of that trust account, a sum identical to the sums received from the VLA; and
   • paying counsel fees, in respect of one of these matters, out of the legal practice's trust account.
6. Section 324(1) of the 1996 Act provides that a legal practitioner must not 'permit or assist a person who is not admitted to legal practice in Victoria (other than an interstate practitioner) to engage in legal practice in Victoria'. A contravention of s 324(1) is a contempt of the Supreme Court (s 324(2)).
7. The admitted breaches are serious and would normally result in a finding of misconduct. But, as part of the parties' agreement, the charges in respect of this matter have been amended and as a consequence Mr Brott has been found guilty of unsatisfactory conduct. In our view the admitted breaches are at the higher end of unsatisfactory conduct.

1. Mr Brott has admitted to common law misconduct and to unsatisfactory conduct arising from his dealings with a former client, Schaja Ruschinek (Schaja). Schaja's son, Ben, was also a client of Mr Brott's. The essence of the misconduct is that Mr Brott:
   • failed to separate work done and fees billed in respect of Schaja from work done and fees billed in respect of Ben in circumstances where the interests of Ben and Schaja were not identical;
   • applied trust money belonging to Schaja to pay legal costs and disbursements for the benefit of Ben;
   • received instructions from Ben alone in respect of the affairs of Schaja rather than from Ben and Eva (Schaja's daughter) jointly in circumstances where he knew that Schaja had executed an enduring power of attorney in favour of Ben and Eva jointly; and
   • failed to provide material and remit funds requested by Mr Papaleo who had been appointed as the administrator of Schaja's estate.
2. An aggravating circumstance in respect of these breaches is that Mr Brott knew, or ought to have known, that Schaja lacked the mental capacity to provide competent instructions.
3. We now turn to consider some of these matters in further detail.
4. Schaja was born in Poland on 29 November 1919. Schaja married and had two children, Eva Devora Trainor (now known as Eva Richards) ('Eva') and Berck Ruschinek (also known as Ben Ruschinek) ('Ben'). On 6 December 2000 Schaja executed an enduring power of attorney in favour of Eva and Ben jointly.
5. Schaja's wife, Andzia, died on 22 April 2002. After Andzia's death Schaja moved in with Ben and his wife, Chana Ruschinek.
6. Ben and Eva were in dispute as to the management of Schaja's affairs.
7. On 17 June 2002 Eva applied to the Tribunal for the appointment of a guardian and administrator in relation to Schaja's affairs. On 17 March 2003 the Tribunal (Senior Member Scott) made orders that, among other things:
   • - the enduring power of attorney be revoked;
   • - the Public Advocate be appointed limited guardian of Schaja;
   • - Mr Papaleo of Judge & Papaleo, solicitors, be appointed administrator of the estate of Schaja;
   • - the administrator shall immediately appoint a certified practising accountant to audit the estate of Schaja;
   • - the application by the Public Advocate for an order restraining Brott from continuing to act for any party in the proceeding be adjourned; and
   • - Eva and Ben make available to the auditor all documents in their possession or power relevant to Schaja's estate[16].
8. On 21 March 2003 Mr Brott sent a facsimile message to Mr Papaleo stating that he acted on behalf of Ben and Chana Ruschinek and requested information about the procedure to be followed by Mr Papaleo in his role as administrator including an inquiry as to whether Ben was able to issue cheques for outstanding accounts relating to the support of Schaja[17]. Mr Papaleo responded by letter the same day, in which he:
   • - requested that all accounts in relation to Schaja be sent to Papaleo without delay;
   • - stated that it was inappropriate for Ben to sign cheques on Schaja's account as the enduring power of attorney had been revoked and accordingly there was no legal basis for him to be signing cheques or making decisions of any kind to do with the legal affairs of his father; and
   • - requested that Ben forward to Papaleo all bank documents in relation to Schaja[18].
9. By letter to Mr Brott dated 8 April 2003 Mr Papaleo asked Mr Brott to deliver to him by 11 April 2003:
   • - all files and documents held on behalf of Schaja;
   • - a record of fees paid by Schaja or on his behalf;
   • - any funds that the legal practitioner held on trust on behalf of Schaja; and
   • - a copy of Mr Brott's trust ledger relating to Schaja[19].
10. By letter to Mr Papaleo dated 11 April 2003 Mr Brott enclosed a copy of his trust ledger and said, among other things:
    • - he acted for Ben and Chana Ruschinek
    • - he had been acting on behalf of Schaja
    • - he had no documents that were exclusive to Schaja
    • - the commonality of the file in respect Schaja, Ben and Chana Ruschinek created a privilege, but that he would permit Papaleo to inspect the file; and
    • - no fees received or held in trust were exclusively referable to Schaja[20].
11. Mr Papaleo replied to this correspondence by letter dated 29 April 2003 in which, among other things, he sought information as to the source of funds received into Brott's trust account and fees deducted from Schaja's trust account. He also requested that Brott forward him the sum of $4375, being funds paid from trust after Papaleo's appointment as administrator and without Papaleo's authorisation and again requested that Brott provide all files and documents relating to Schaja[21].
12. On 6 May 2003 Mr Brott replied to Mr Papaleo's correspondence of 29 April 2003 stating, among other things, that:
    • - monies received by Mr Brott and counsel were received from Ben and Chana Ruschinek, where they sourced their money was not Brott's concern and that the money was for work done for Schaja, Ben and Chana Ruschinek;
    • - the fees referable to Schaja cannot be severed from the fees referable to Ben and Chana Ruschinek[22].
13. Mr Brott did not provide any documents or remit any funds.
14. Mr Brott has admitted to a charge of common law misconduct in that between May 2002 and about November 2003 he engaged in conduct which would reasonably be regarded by legal practitioners of good repute and competence as disgraceful and dishonourable by:
    • (a) applying $30,000.00 trust money belonging to Schaja Ruschinek to pay legal costs and disbursements in whole or in part for the benefit of Ben Ruschinek when the legal practitioner was aware that:
      • (i) Schaja Ruschinek did not have the capacity to consent to his funds being so applied; and
      • (ii) Ben Ruschinek did not have the unilateral power to make decisions about the affairs of Schaja Ruschinek as Schaja Ruschinek had executed an enduring power of attorney in favour of Eva Ruschinek and Ben Ruschinek jointly;
    • (b) receiving instructions solely from Ben Ruschinek, rather than from Ben Ruschinek and Eva Ruschinek jointly, in respect of the affairs of Schaja Ruschinek when he was aware that Schaja Ruschinek had executed an enduring power of attorney in favour of Eva Ruschinek and Ben Ruschinek jointly;
    • (c) failing to separate work done and fees billed in respect of Schaja Ruschinek from work done and fees billed in respect of Ben Ruschinek in circumstances in which the interests of Ben Ruschinek and Schaja Ruschinek were not identical;
    • (d) failing to maintain separate ledgers in respect of Schaja Ruschinek and Ben Ruschinek;
    • (e) failing to provide material that was requested by Mr Papaleo as the appointed administrator of the estate of Schaja Ruschinek under an order of the Tribunal; and
    • (f) failing to remit funds paid into the legal practitioner's trust account from cheques drawn on Schaja Ruschinek's account to Mr Luigi Adrian Papaleo as the appointed administrator of the estate of Schaja Ruschinek.
15. Mr Brott also admits a charge of unsatisfactory conduct in that, between 22 May 2002 and 26 August 2003 he contravened section 182(2)(e)(ii) of the 1996 Act by failing to keep accurate records in a manner that enables them to be conveniently and properly audited in the matter of Schaja Ruschinek.

1. The Tribunal's powers to discipline legal practitioners for misconduct are primarily protective[23]. But its disciplinary orders are punitive as well as protective, as Maxwell P observed in Quinn v Law Institute of Victoria Limited (Quinn):

"The available sanctions are, by their nature, punitive, and the objectives of specific and general deterrence - which serve the protection of the public - depend upon the sanctions having punitive effect."[24]

1. His Honour went on to say that in circumstances where the Tribunal's protective function is paramount it is to be expected that the Tribunal will choose that sanction which maximises the protection of the public. Quinn's case was concerned with alleged overcharging and the choice before the Tribunal was between a period of suspension and a proffered undertaking to have bills of costs independently assessed. The Court of Appeal held that the latter sanction afforded a greater likelihood of protection of the public.
2. His Honour also said that because the Tribunal's disciplinary jurisdiction is punitive, in the service of protecting the public, the principles applicable to sentencing apply by analogy.
3. In sentencing generally it is necessary to balance just punishment; specific and general deterrence; denunciation; the protection of the community; and rehabilitation.[25]
4. Specific deterrence is directed at the particular offender. The concept of general deterrence of others by the punishment of an offender is that an understanding that an offence is followed by substantial adverse consequences will prevent others from committing the offence.
5. The analogy with sentencing also means that the existence of any mental condition, either at the time of the offending or at the time of the Tribunal's hearing, or both, may be relevant to the question of disposition.[26]
6. Section 160 of the 1996 Act provides that if the Tribunal finds a legal practitioner guilty of misconduct it may (relevantly in the context of this case) do one or more of the following:
   • impose a fine not exceeding $50, 000;
   • suspend the practitioner's practising certificate for a specified period;
   • cancel the practitioner's practising certificate;
   • refer the practitioner to the Supreme Court with or without a recommendation that the practitioner's name be struck off the roll of practitioners;
   • make an order specifying a period during which the practitioner may not apply for a practising certificate or for a practising certificate with particular conditions; and
   • make any other order the Tribunal thinks fit.
7. Section 159 sets out the penalties which may be imposed if the Tribunal finds a legal practitioner guilty of unsatisfactory conduct. These options are also available in circumstances where the Tribunal finds a legal practitioner guilty of misconduct (see s. 160(i)(a)), and include:
   • impose a fine not exceeding $1000
   • an order reprimanding the practitioner;
   • an order that the practitioner undertake a specified course of education; and
   • an order varying the conditions of the practitioner's practising certificate or imposing further conditions or restrictions on the certificate.
8. Mr Brott has been found guilty of one charge of misconduct and three charges of unsatisfactory conduct. The parties have agreed that a global approach to penalty should be adopted and that one sanction should be imposed in respect of all of these matters. This course is said to be appropriate having regard to the fact that the conduct in all three matters was largely contemporaneous and are instances where Mr Brott failed to meet the proper standard of conduct required of a legal practitioner.
9. The global approach proposed is inconsistent with the approach to sentencing in criminal matters. In such cases each offence is given a sentence appropriate to the wrongdoing and the overall wrongdoing is reflected by total or, more often, partial cumulation, having regard to proportionality and totality[27].
10. We accept that in this instance there is a sense of unreality in imposing separate penalties in respect of each count of unsatisfactory conduct. The penalty options in respect of unsatisfactory conduct do not include the suspension or cancellation of a practitioner's practising certificate. But for the agreement of the parties we would have reprimanded Mr Brott in respect of each instance of unsatisfactory conduct and, in addition, order that he pay a fine of $800 in respect of J16/2005 (as it is at the higher end of unsatisfactory conduct). There seems little point in reprimanding Mr Brott and imposing a modest fine in circumstances where we have been asked to cancel his practising certificate.
11. In the circumstances, we are content to deal with these matters in the global manner proposed by the parties. A consequence of this approach is that the appropriate penalty in respect of the finding of misconduct determines any sanction imposed. This is so because the penalties for misconduct are more severe than the penalties for unsatisfactory conduct. The findings of unsatisfactory conduct will be relevant in the context of our consideration of Mr Brott's previous disciplinary findings.
12. As we indicated earlier, the parties have agreed that the appropriate penalty in respect of these matters is the cancellation of Mr Brott's practising certificate, effective from 4 October 2008, and an order that he may not apply for a practising certificate before 4 April 2009.
13. When the agreement was first tendered, on Thursday 4 September, we informed the parties that while the Tribunal would place significant weight on the agreement of the parties, we were not bound to adopt the penalty proposed. Ultimately the question of the appropriate penalty in a particular case is a matter for the Tribunal. We also indicated that we would be assisted by submissions from the parties on the appropriateness of the penalty proposed. The proceedings were then adjourned until 8 September and on that day counsel for both parties made submissions in support of the penalty proposed. Before turning to those submissions we propose to deal with the weight to be accorded to the parties' agreement with respect to penalty.
14. The impact of a plea bargain on the sentencing discretion in criminal proceedings was considered by the High Court in Malvaso v R in which their Honours Mason CJ; Brennan J; and Gaudron J observed:

"The Court's sentencing discretion is to be exercised in the public interest; it cannot be fettered by a plea bargaining agreement."[28]

1. In the matters before us no party demurred from the proposition that the Tribunal was not bound to apply the parties' agreement with respect to penalty. The question is: in what circumstances would the Tribunal depart from the parties' agreement?
2. A general principle of judicial restraint in the scrutiny of proposed settlements was enunciated early in the history of the Trade Practices Act. This approach was extended to the submission of agreed pecuniary penalties. In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission, Burchett and Kiefel JJ observed in their joint judgment:

"There is an important public policy involved. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the Australian Competition and Consumer Commission to turn to other areas of the economy that await their attention. At the same time, a negotiated resolution in the instant case may be expected to include measures designed to promote, for the future, vigorous competition in the particular market concerned. These beneficial consequences would be jeopardised if corporations were to conclude that proper settlements were clouded by unpredictable risks. A proper figure is one within the permissible range in all the circumstances. The court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case."[29]

1. In proceedings in respect of civil penalties there is now a well established line of authority in support of the proposition that where a regulatory body and a respondent have reached a negotiated settlement and the penalty proposed is, broadly speaking, within the 'permissible range' (having regard to all the circumstances) the court (or in this case the Tribunal) should not depart from the agreed sanction[30]. We propose to adopt the same approach to the matters before us. The question then becomes whether the sanction proposed is within the permissible range.
2. The nature and gravity of the misconduct is central to the process of determining an appropriate sanction. The principle of proportionality - which operates in criminal sentencing - is also applicable. The sanction imposed should never exceed that which can be justified as appropriate or proportionate to the gravity of the misconduct.

1. We have already set out the nature of Mr Brott's misconduct in respect of matter J15/2005. In our view Mr Brott's conduct amounts to a serious breach of fiduciary duty. The misconduct is attended by a significant aggravating factor. Schaja, now deceased, was an elderly, vulnerable man. Mr Brott knew, or ought to have known, that Schaja lacked the mental capacity to provide competent instructions[31].
2. When reviewed by Dr Hecht, a consultant psychogeriatrician, in May 2002, Schaja had a mini-mental score of 3/30. Dr Hecht expressed the opinion that Schaja showed evidence of advanced dementia, probably due to Alzheimer's disease, and did not have testamentary capacity; was not capable of managing his financial affairs and; was not capable of making informed decisions about his future care. Dr Hecht made the following observations following his interview with Schaja:

"At interview, Mr Schaja Ruschinek was relaxed and cooperative. He spoke English, but the interpreter was required from time to time in order to clarify information and to ensure that Mr Ruschinek had understood what was required of him.

He was aware that his wife had passed away, but was unsure of the date and could not recall where she had died.

He could give very little personal information. He knew that he had been born in Poland, but was unsure of his current whereabouts. He could not give his age, initially suggesting that he was in his twenties and then revising this to his fifties. He had only a vague recollection of his experiences during the Holocaust and was unsure where he had married. When asked about his family, he tended to confuse generational issues by mixing up information about his siblings, his children and his grandchildren.

He denied any knowledge of having previously made out a will. He had no working knowledge of his current estate. When asked to whom he would leave his estate, he said "I have no-one to leave it to". He believed that his current assets were what he carried in his wallet. He had seven $50 dollar notes in his wallet. When asked to count out the money, he identified the $50 dollar notes as 5 dollar notes and then added them up to a total of 25 dollars."[32]

1. Schaja lacked the capacity to protect his own interests and Mr Brott failed in his duty towards him.
2. We are unable to determine how much of the $30,000 of Schaja's trust money was applied by Mr Brott for Ben's benefit. But it is admitted that at least part of it was.
3. Counsel for Mr Brott acknowledged that he should have been put on notice and realised that there was a capacity for a conflict between Ben and Schaja's interests. It was submitted that the process was flawed but it was done with the objective of keeping Schaja in Ben's home. It appears that part of the $30,000 was expended to this end; to pay Ben's costs in respect of the VCAT proceedings. We are not persuaded that any of this ameliorates the extent of Mr Brott's misconduct. It misses the fundamental point - Schaja's lack of capacity. It simply cannot be assumed that Schaja shared Ben's desire that he continue to reside in Ben's home.
4. Consistent with the assessment of counsel for the Law Institute, this was a breach towards the worse end of misconduct.
5. We now turn to deal with the other factors which are said to be relevant in this case, namely: the previous disciplinary findings; the plea; the extent of Mr Brott's remorse; Mr Brott's mental health; the losses suffered by Mr Brott and others; and the impact of a sanction on Mr Brott and his family.

1. Mr Brott has had a number of disciplinary findings against him, as summarised below.

Misconduct as defined by s 15(1)(a) Legal Profession Practice Act 1958 (1958 Act), wilful or reckless breach of Rule 6 Solicitor's (Professional Conduct and Practice) Rules

Misconduct as defined by s 15(1)(a) of the 1958 Act, wilful or reckless breach of Rule 6 Solicitor's (Professional Conduct and Practice) Rules

Misconduct as defined by s 15(1)(a) of the 1958 Act, wilful or reckless breach of Rule 6 Solicitor's (Professional Conduct and Practice) Rules

Misconduct as defined by s 15(1)(h) of the 1958 Act

Reprimand, fine of 10 penalty units and the Law Institute's costs

Admonished and ordered to pay the Law Institute's costs

Unsatisfactory conduct as defined by s 137 of the 1996 Act

Unsatisfactory conduct as defined by s 137 of the 1996 Act

1. In these proceedings Mr Brott has pleaded guilty to three counts of unsatisfactory conduct in addition to the finding of misconduct with which we are presently concerned.
2. These disciplinary findings, over an extended period, speak of Mr Brott's indifference to professional standards and support the imposition of a substantial penalty in aid of specific deterrence.

1. The fact that Mr Brott has admitted these charges is a substantial mitigating factor in his favour. It is important that such admissions be encouraged. While the plea was made on the morning of the commencement of the substantive hearing in matter J15/2005 it is important to note that no date had yet been set for the hearing of the other two matters. Absent the agreement of the parties' it is likely that the hearing of these three matters would have taken some weeks.
2. Mr Brott's admissions have resulted in a significant saving of public resources and have spared the relevant witnesses the inconvenience of attending the Tribunal to give evidence. It is appropriate that these matters be taken into account, despite the fact that we are not persuaded that Mr Brott's plea is indicative of remorse[33].

1. The presence of remorse can operate to significantly reduce the sanction which would otherwise be imposed.
2. Remorse may be evidenced by a plea of guilty; but we are not persuaded that this is such a case. The agreement which led to the resolution of the three matters before us resulted in a significant downgrading of some of the original charges and the abandonment of others. We are not persuaded that it was motivated by genuine remorse or contrition on the part of Mr Brott. Indeed it was not put on Mr Brott's behalf that remorse was a mitigating consideration in this case.
3. Counsel for the Law Institute submitted that Mr Brott's attitude to the present charges had been recalcitrant and he has acted in a manner that was inconsistent with him recognising or understanding that his conduct was dishonourable and disgraceful. In this context counsel relied on the fact that Mr Brott had made two attempts to challenge the jurisdiction of the Tribunal to hear and determine these charges.
4. We are not persuaded that Mr Brott's jurisdictional challenges are relevant to our determination of an appropriate penalty in respect of these matters. But, nor are we persuaded, on the material before us, that Mr Brott recognises and understands the error of his ways. These matters are relevant to our assessment of the appropriate penalty.
5. As Tadgell JA observed in Patrick Anthony Hannebery v Legal Ombudsman:

"The nature and purpose of disciplinary proceedings before the Tribunal being as they are it follows that, in deciding on the appropriate penalty to award following a finding of misconduct, the Tribunal is not only entitled but obliged to take into account any failure by the practitioner 'to understand the error of his ways': New South Wales Bar Association v Evatt [1968] HCA 20; (1968) 117 CLR 177 at 184. Reasoning of that kind was applied to a practitioner's failure to appreciate that his impugned conduct was wrong when he claimed to be ignorant of his duty when using client's money: Law Society of New South Wales v Moulton [1981] 2 NSWLR 736. As Beazley JA observed in Law Society of New South Wales v Walsh (unreported CA (NSW) 15 December 1997) "Whilst a practitioner's expressed intention not to re-offend is relevant to mitigation it will have little weight unless accompanied by an understanding of the wrongfulness of the conduct which was the subject of the disciplinary charge."

The reasons [of the Tribunal below] indicate to my mind no more than that, in fixing the penalty of cancellation of the appellant's practising certificate, and specifying the period during which he should be disentitled to apply for another, the majority took account of his failure to acknowledge and understand the significance of his dereliction of professional duty. This, in the circumstances, was an entirely appropriate consideration, disclosing no error of principle."[34]

1. Mr Brott's lack of remorse and insight into his wrongdoing is relevant to our assessment of an appropriate penalty and we have taken these matters into account.
2. The extent of Mr Brott's contrition and insight into his wrongdoing will also be relevant in the context of a future application for a practising certificate.

1. A legal practitioner's mental condition at the relevant time may significantly reduce his moral culpability for the offending conduct, as distinct from his legal responsibility for it, such that denunciation is not a particularly relevant sentencing objective.
2. There may also be the need for 'sensible moderation' of general deterrence because an offender may not be an appropriate medium for making an example to others[35].
3. In R v Verdins the Court of Appeal held that impaired mental functioning, whether temporary or permanent ('the condition') is relevant to sentencing in at least the following six ways:

"1. The condition may reduce the moral culpability of the offending conduct, as distinct from the offender's legal responsibility. Where that is so, the condition affects the punishment that is just in all the circumstances; and denunciation is less likely to be a relevant sentencing objective.

1. The condition may have a bearing on the kind of sentence that is imposed and the conditions in which it should be served.
2. Whether general deterrence should be moderated or eliminated as a sentencing consideration depends upon the nature and severity of the symptoms exhibited by the offender, and the effect of the condition on the mental capacity of the offender, whether at the time of the offending or at the date of sentence or both.
3. Whether specific deterrence should be moderated or eliminated as a sentencing consideration likewise depends upon the nature and severity of the symptoms of the condition as exhibited by the offender, and the effect of the condition on the mental capacity of the offender, whether at the time of the offending or at the date of the sentence or both.
4. The existence of the condition at the date of sentencing (or its foreseeable recurrence) may mean that a given sentence will weigh more heavily on the offender than it would on a person in normal health.
5. Where there is a serious risk of imprisonment having a significant adverse effect on the offender's mental health, this will be a factor tending to mitigate punishment.[36]"
6. On behalf of Mr Brott it was put that from time to time he suffers from thyroid toxicosis and has been troubled by anxiety and depression 'over a number of years'. His anxiety and depression is said to have arisen from an incident in April 1990 when he was mugged, robbed and stabbed some 19 times. Mr Brott was in and out of hospital for a period of about two months as a result of the injuries he sustained. He was badly concussed and lost the use of his right hand for a period of time. He is currently taking medication for anxiety and depression.
7. In 2000 one of Mr Brott's children was diagnosed with a form of brain cancer. In October 2000 she had an operation to remove a tumour and then underwent 12 months of chemotherapy and radiography. Mr Brott is said to have been 'very badly affected' by his daughter's illness and says that he came close to a breakdown at that time.
8. While the Tribunal is not bound by the rules of evidence and in an appropriate case may treat uncontested bar table statements as evidence[37], the material put on behalf of Mr Brott lacks the requisite particularity to be accorded significant weight in mitigation. There is no medical evidence to indicate the severity or duration of Mr Brott's anxiety or depression, or the impact of sanctions on his mental state. Nor is there evidence which would enable us to conclude that Mr Brott's compromised mental state reduced his moral culpability for the offending conduct.
9. While we do not doubt that his daughter's illness adversely affected Mr Brott, the misconduct with which we are presently concerned took place between May 2002 and November 2003, some time after the completion of his daughter's treatment.

1. It is apparent that at least some part of the $30,000 belonging to Schaja, which was paid to Mr Brott's firm and to barristers, was paid for Ben's benefit.
2. Counsel for the Law Institute invited us to infer that if not the whole amount then the vast majority of these funds were not expended for the benefit of Schaja.
3. We are not persuaded that we should draw such an inference. There is simply insufficient evidence upon which such an inference could be drawn.
4. No loss is alleged to be suffered by others in matters J11 or J16.
5. Nor is it submitted that Mr Brott has suffered any loss as a result of his misconduct, other than the costs he has incurred in defending the proceedings. In fact it may be said he has benefited from his misconduct by being paid his legal costs from the funds of a person who lacked the capacity to request legal services or provide instructions.

1. Mr Brott has four young children (twins aged 12 years, and one child aged 8 years and one 9 years of age) and his family responsibilities are advanced as a mitigating factor.
2. Cancelling a legal practitioner's practising certificate will usually cause hardship to others, particularly those who are dependent on the practitioner in some way. But unless it can be demonstrated that a sanction will impose some exceptional or unusual level of hardship it ought not be given any significant weight as a mitigating consideration. In this context it is relevant to note that the Tribunal's powers to discipline legal practitioners are primarily protective.
3. In this case there is simply no evidence as to the extent of the hardship that will be visited on Mr Brott's family as a consequence of an order cancelling his practising certificate and specifying a period within which he may not apply for a practising certificate. Accordingly we propose to give this issue no weight in our consideration of an appropriate penalty.
4. The parties also rely on the impact of the sanction proposed on Mr Brott's practice and the quantum of costs he will have to pay in respect of these matters.
5. We accept that because Mr Brott is a sole practitioner the cancellation of his practising certificate will have a more significant disruption to his practice than would be the case if he were in a partnership or engaged as an employee solicitor. We have taken this into account in our determination of an appropriate sanction, but it is not a substantial mitigating factor as no attempt has been made to quantify the impact on Mr Brott's practice.
6. The quantum of costs Mr Brott will have to pay in respect of these matters was described by counsel for the Law Institute as 'very, very substantial'. We accept that this is so and have taken that matter into account.

1. Given the nature of the misconduct and the fact that it is attended by a significant aggravating factor (Schaja was an elderly, vulnerable man) it is appropriate that an order be made cancelling Mr Brott's practising certificate. In reaching this conclusion we have had regard to all the mitigating factors set out earlier. Cancellation rather than suspension is the appropriate course.
2. If Mr Brott's practising certificate were only suspended he could automatically practise at the expiration of the period of suspension[38]. In light of the seriousness of the matters now admitted by Mr Brott the protection of the public requires that his fitness to practice be assessed by the responsible body before he resumes practice. The observations of Justice Eames in Victorian Lawyers RPA Ltd v Vodicka are apposite:

"Whether he does so apply, whether he is successful, and whether, if successful, he is granted only a restricted right of practice, are all matters which must be evaluated by the relevant bodies at that time. A successful resistance, before me, of a strike off order does not mean that he must succeed, or succeed without restrictions, or without terms, in the event that he does make such an application for a practising certificate. The question will be, as Cockburn CJ identified it in Re Pike, whether the Tribunal was then perfectly satisfied that the penalties suffered 'had had the salutary effect of awakening him to a higher sense of honour and of principle'." [39]

1. The parties propose that we order that Mr Brott may not apply for a practising certificate for a period of six months after the date of cancellation. In our view the six months' period proposed is manifestly inadequate.
2. The misconduct in question was a serious breach of fiduciary duty. Schaja was an elderly, vulnerable man and Mr Brott knew, or ought to have known that he lacked the mental capacity to give competent instructions. Mr Brott has also been the subject of a number of other disciplinary findings, over an extended period. Specific deterrence supports the imposition of a substantial penalty as does Mr Brott's lack of remorse and insight into his wrongdoing.
3. We are not persuaded that either Mr Brott's health or the impact that the cancellation of his practising certificate will have on his family, are mitigating factors.
4. The fact that Mr Brott has admitted these charges is a substantial mitigating factor in his favour.
5. The impact of the proposed sanction on Mr Brott's practice and his agreement to pay the Institute's costs in respect of these matters are also mitigating factors and we have taken them into account.
6. We have accorded significant weight to the parties' agreement with respect to penalty but, having regard to all the circumstances, acceptance of that agreement would result in a penalty outside the permissible range.
7. We propose to order that Mr Brott may not apply for a practising certificate for a period of nine months after the date of cancellation. But for Mr Brott's admissions and the parties' agreement this period would have been substantially longer.

[1] Particular 4 to the Further Amended Notice of Charges

[14] Ibid Particulars 26, 28, 30, 32 and 34

[15] Annexure 1 to Further Amended Notice of Charges in Matter J16 of 2005

[23] Hanneberry v Legal Ombudsman [1998] VSCA 142

[24] [2007] VSCA 122 (14 June 2007) at [30]

[25] R v Mooney, per Young CJ unreported, Supreme Court of Victoria Full Court, 21 June 1978, cited in R v Anderson [1981] VicRp 17; [1981] VR 155; R v Tsiaras [1996] VicRp 26; [1996] 1 VR 398; and R v Verdins [2007] VSCA 102 (23 May 2007); s 5 Sentencing Act 1991

[26] Quinn op cit at [36]; R v Verdins [2007] VSCA 102 (23 May 2007) at [32]

[27] R v Izzard [2003] VSCA 152; (2003) 7 VR 480 at [20] - [23]

[28] [1989] HCA 58; (1989) 168 CLR 227 at 233

[29] [1996] FCA 1134; (1996) 141 ALR 640 at 644

[30] Australian Competition and Consumer Commission v Real Estate Institute of Western Australia (1999) 161 ALR 79; Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd [2002] FCA 619; Australian Securities and Investments Commission v Vizard [2005] FCA 1037

[31] The Tribunal was told that after Mr Papaleo's administration ceased a Yiddish-speaking legal practitioner had been able to obtain competent instructions from Schaja as to his living arrangements but no evidence was advanced in support of this proposition, and it stands in stark contrast to the particulars in support of the charges which Mr Brott has admitted.

[32] Annexure 9 to the Particulars of the charges in Matter J15/2005

[33] R v Morton [1986] VicRp 82; [1986] VR 863 at 867

[34] [1998] VSCA 142 at [22]- [23] per Tadgell JA with whom Phillips and Chernov JJA agreed

[35] R v Yaldiz [1998] 2 VR 376 at 381 per Batt JA (with whom Winneke ACJ and Hampel AJA agreed; cited with approval in R v Verdins, op cit at [17]

[36] [2007] VSCA 102 (23 May 2007) at [32]

[37] R v Commonwealth Conciliation and Arbitration Commission; Ex parte The Melbourne and Metropolitan Tramways Board [1965] HCA 50; (1965) 113 CLR 228 at 243 and 252 per Barwick CJ and Menzies J respectively.

[38] S 2.4.23 of the Legal Profession Act 2004

[39] [2000] VSC 272 at [42]