Law Institute of Victoria v Brott

Law Institute of Victoria v Brott - [2008] VCAT 1998 - VCAT 2008 case summary — Zoe

[17]

Mr Brott engaged Mr Holden to perform duties in his legal practice from about the start of 2001 until early in 2003.
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.
Mr Brott permitted or assisted Mr Holden in his use of this letterhead.
Mr Brott admits that he permitted or assisted Mr Holden to engage in legal practice in respect of five specific matters.
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.
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)).
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.

[18]

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.
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.
We now turn to consider some of these matters in further detail.
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.
Schaja's wife, Andzia, died on 22 April 2002. After Andzia's death Schaja moved in with Ben and his wife, Chana Ruschinek.
Ben and Eva were in dispute as to the management of Schaja's affairs.
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].
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].
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].
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].
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].
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].
Mr Brott did not provide any documents or remit any funds.
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.
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.

[21]

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.
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.
In sentencing generally it is necessary to balance just punishment; specific and general deterrence; denunciation; the protection of the community; and rehabilitation.[25]
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.
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]
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.
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.
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.
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].
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.
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.
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.
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.
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:

[49]

The condition may have a bearing on the kind of sentence that is imposed and the conditions in which it should be served.
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.
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.
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.
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]"
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.
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.
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.
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.

At a glance

Court

Decision date

Source

Judgment (74 paragraphs)

Law Institute of Victoria v Brott (Legal Practice) [2008] VCAT 1998 (18 September 2008)

Parties

Legislation Cited (4)

Cases Cited (6)