Professions and Trades - Lawyers - Misconduct, unfitness and discipline - Disciplinary proceedings - Statutory proceedings - Tasmania - Professional misconduct - Unprofessional conduct - What constitutes - Breaches of Rules of Practice 1994 - Lack of candour - Neglect and delay - Failure to supervise employees - Overcharging - Other matters.

Law Society of Tasmania v Turner [2001] TASSC 129; (2001) 11 Tas R 1; A Legal Practitioner v The Law Society of Tasmania [2005] TASSC 28; (2005) 13 Tas R 448; Dickens v Law Society A42/1981, followed.

Legal Profession Act 1993 (Tas), ss56, 76(1), 80 and 81.

Rules of Practice 1994 (Tas), rr10, 36, 37, 40, 58.

Judgment Number: [2007] TASSC 30

THE LAW SOCIETY OF TASMANIA v JANET MARGARET SCOTT

1 This is an application by the Law Society of Tasmania ("the applicant") pursuant to the Legal Profession Act 1993 ("the Act"), s80, for the Court to determine a complaint against a legal practitioner, Janet Margaret Scott ("the respondent"). The Court may dismiss the application or make one or more of the orders specified in the Act, s76(1). A "complaint" is defined by the Act to mean a complaint against a practitioner relating to the professional misconduct or unprofessional conduct of that practitioner.

2 The complaint has been made by the applicant in the context of numerous client complaints made against the respondent in respect of her conduct in 2004. The issue in this matter is not whether the matters which gave rise to those client complaints have been substantiated, but whether the conduct of the respondent amounted to professional misconduct or unprofessional conduct, and what the appropriate order should be in respect of the conduct so found. That the respondent is guilty of, at the very least, unprofessional conduct is not disputed by her counsel. What is in dispute is that the conduct could be categorised as professional misconduct and that, in any event, the conduct of the respondent should warrant an order striking her name from the roll.

3 The evidence before the Court consisted of a statement of agreed facts and a number of affidavits read by the applicant. The applicant categorised the conduct of the respondent under the following headings, namely breaches of the Rules of Practice 1994 ("the Rules"), lack of candour, neglect and/or delay, failure to supervise employees, overcharging and general matters.

4 The respondent was admitted to practice in the Northern Territory on 4 November 1990 and in Tasmania on 7 February 1994. Between 10 May 2003 and 25 June 2004 she practised on her own account in Tasmania under the firm name "Janet Scott and Associates". While they were not part of the statement of agreed facts nor any affidavit read, some facts were asserted from the bar table by counsel for the respondent without objection by counsel for the applicant. These were that:

- the respondent had practised in Queensland for a period I infer between admission in the Northern Territory and returning to Tasmania for family reasons in 2002;

- her practice between 1991 and 2003 was largely criminal and family law; and

- at some time in 2003/2004, the respondent saw an opportunity to capitalise on the property market and decided to expand into the area of conveyancing, advertising fixed fees for sales and purchases.

5 During the period she practiced on her own account, the respondent employed a Ms Amanda Kumala as a clerk or assistant to undertake conveyancing work in her practice. It was accepted that the respondent had a duty to supervise Ms Kumala to ensure her work was of a standard commensurate with the respondent's duty to any clients. Between February and October 2004 the respondent acted for a number of parties in conveyancing transactions. Several of those parties made complaints to the applicant about the manner in which the respondent dealt with them and their business and it is those complaints which have resulted in the application now before the Court.

6 The Rules, rr10(1) and (2), 36, 37(1)(a), 40(1) and 58 relevantly provide:

"10 (1) A practitioner must do his or her best to complete a client's business -

(2) A practitioner must inform a client of all significant developments in that client's matter unless the client has instructed otherwise."

"36 A firm, within 10 days of the end of each month, must -

(b) reconcile the bank statement balance to the cash book balance; and

(c) reconcile the list of trust ledger account balances to the cash book balances; and

(d) record details of those balances and reconciliations as a permanent record."

"37 (1) A firm must not withdraw money from a trust bank account for or on behalf of a client unless -

(a) money amounting to at least the amount withdrawn is held in that account at the time of that withdrawal -

(i) in the trust bank account to the credit of that client; or

(ii) in the possession of the firm for payment into the trust bank account to the credit of that client; or

(iii) in the trust bank account identifiable by details recorded in the trust ledger account as being money to which that client is entitled;"

"40 (1) A firm must not withdraw any money in excess of $100 from a client's account in the trust ledger account except -

(a) with an authorization in writing from the client; or

(b) in accordance with an account, bill of costs, letter, statement or memorandum posted to the client within a reasonable time to the client's last known address."

"58 A firm must keep each book of account or accounting record required to be maintained under this Part -

(b) for a period of not less than 10 years after the date of the last entry in that book or record."

7 During the period in 2004 in which the subject matter of the complaint arose, the respondent acted for a number of different parties in relation to sales and purchases of real estate. In relation to some of these transactions, she:

(a) failed to advise a client of a significant development in their matter by failing to tell them that the period within which they were to confirm finance had not been extended as requested and that there would be an early settlement ("the Slade/Heaton matter"); (r10)

(b) withdrew an amount in excess of $100 from a client's account in the trust ledger without authorisation and without a statement of account having been supplied. The amount was relatively small but was an amount the respondent had represented to the client would not be required to be expended ("the Mars matter"); (r40)

(c ) failed to provide a client with a settlement statement prior to settlement as promised and failed to provide one for almost 2½ months after settlement ("the Wallace matter"); (r10)

(d) failed to make necessary arrangements to ensure that settlement of a transaction occurred on time resulting in a delayed settlement and costs being incurred by the client for storage and interest ("the Winzar matter"); (r10)

(e) failed to complete a purchase on time and failed to stamp and register the transfer of title in a timely manner ("the Forward matter"); (r10)

(f) overdrew her trust account in respect of a client's purchase by an amount of approximately $7,300 in circumstances where she had not obtained the correct amount from the client ("the Hope matter"); (r37)

(g) committed accounting breaches in that she failed to keep books of account in good order, which resulted in the trust account needing to be reconstructed by accountants, failed to balance her cash book, failed to reconcile bank balances with cash book balances and failed to reconcile the trust account balances with cash book balances and record those details within 10 days of the end of each month in the year ended 30 June 2004 (r36).

8 The respondent exhibited a lack of candour in her dealings with her clients in that she:

(a) in the Forward matter represented to the client that transfer documents were with the Land Titles Office when they were not; and

(b) represented that a client had deposited monies directly to her trust account when that had not occurred ("the D'Arcy matter").

9 The respondent failed to do a number of things in respect of client matters which should have been done in the proper conduct of her practice in that she:

(a) in the Slade/Heaton and Mars matters failed on a number of occasions to return telephone calls and reply to emails;

(b) in matters involving clients by the names of Galvin, Wass and Berry/Malor, failed to respond to telephone calls and emails;

(c ) failed to undertake relevant searches in the Slade/Heaton matter;

(d) failed to follow instructions in the Slade/Heaton matter in that she failed to obtain an extension of time to obtain finance when asked to do so;

(e) failed to follow instructions in the Wallace matter in that she failed, despite repeated requests to do so, to provide a settlement statement;

(f) failed to obtain instructions in the Slade/Heaton matter before confirming an early settlement;

(g) failed to obtain instructions in the D'Arcy matter before depositing in her trust account a bank cheque provided by the client payable to the Commissioner of Taxes for stamp duty;

(h) failed to advise a client, Galvin, about material appearing in a council certificate which had a significant effect on the client's transaction;

(i) failed to provide settlement statements as promised in the Mars, Wallace and Galvin matters;

(j) failed to lodge a transfer for assessment of duty in the D'Arcy matter which resulted in a penalty being incurred;

(k) failed to ensure that rates were paid to the local council by a vendor to clients Elliott and Glassock resulting in a loss to those clients; and

(l) failed to advise clients Berry/Malor about a construction on a right of way on land being purchased in respect of which advice had been sought.

10 The respondent had employed a Ms Kumala to assist with conveyancing work. Ms Kumala dealt with the Slade/Heaton matter. It was apparent from the manner in which Ms Kumala dealt with that matter that she had little understanding of principles applicable in conveyancing matters and the obligations of purchasers. The respondent had a duty to her clients to ensure that any employees were aware of such matters, were competent to handle the transactions they were dealing with and, in any event, were supervised. The respondent failed to do any of these things.

11 The respondent advertised fixed fee conveyancing. In the advertisements the respondent held out that sales and purchases would be dealt with for an identified fee. The advertisement made no reference to that fee being exclusive of GST. The respondent consistently charged clients GST in addition to the fixed fee when they responded to her advertisement.

12 The applicant identified a number of other matters relevant to the respondent's conduct of her practice which were clearly matters to be considered in determining the nature of her conduct. These were:

(a) in the Elliott/Glassock matter, the respondent miscalculated the settlement figures deducting only $10,000 for a deposit and not $17,500 as paid and failed to ensure rates were paid. She then failed to take any, or any adequate, steps to rectify the problem over a number of months. The clients suffered a loss;

(b) in the Hope matter, the respondent also acted for the vendor. In doing so she divulged to the vendor confidential information about Ms Hope's financial position;

(c ) in the Hope matter, on discovering she had overdrawn her trust account to a significant degree, the respondent borrowed money from a friend to make good the shortfall;

(d) the respondent failed to co-operate at all times with Mr Kimber, an officer appointed by the Court to manage her practice; and

(e) the respondent verbally abused clients who complained.

13 The terms "professional misconduct" and "unprofessional conduct" are defined in the Act, s56, in the following terms:

"'professional misconduct' includes conduct on the part of a practitioner which results in -

(i) any provision of this Act or any regulations, rules or by-laws made under this Act; or

(ii) any terms and conditions imposed under this Part; or

(e) consistent or substantial failure to reach reasonable standards of competence and diligence;"

(a) professional conduct that falls short of a standard of conduct that a member of the public is entitled to expect of a practitioner of good repute and competency; and

(b) conduct of a kind referred to in paragraphs (c), (d) and (e) of the definition of 'professional misconduct' but of a lesser degree of seriousness."

14 In Law Society of Tasmania v Turner [2001] TASSC 129; (2001) 11 Tas R 1 at 16, Crawford J said in relation to the above definitions "But the definitions are inclusive, not exclusive." He went on, at 17, to say:

"Apart from the statute's inclusionary meanings, professional misconduct consists in behaviour on the part of a legal practitioner which would reasonably be regarded as disgraceful or dishonourable by legal practitioners of good repute and competency. In re a Solicitor [1912] 1 KB 302 at 311, 312; Grahame v Attorney-General of Fiji [1936] 2 All ER 992 at 1002; Myers v Elman [1940] AC 282 at 288, 289; Re Thom; ex parte the Prothonotary (1962) 80 WN (NSW) 968 at 969; Re Veron; ex parte Law Society of New South Wales (1966) 84 WN (Pt1) (NSW) 136 at 143; In re Three Solicitors [1949] VicLawRp 13; [1949] VLR 72 at 73; Re a Solicitor [1960] VicRp 96; [1960] VR 617 at 620. That definition or test has been accepted in unreported decisions of this Court which concerned complaints made under the Legal Practitioners Act 1959."

"In Re R, A Practitioner of the Supreme Court [1927] SASR 58 at 60, 61, the Supreme Court, in banco, regarded the expression 'unprofessional conduct' as wider than 'professional misconduct'. The court said that whereas 'professional misconduct' when undefined by statute, referred to anything done by a practitioner, in the pursuit of his or her profession, that would reasonably be regarded as disgraceful or dishonourable by his professional brethren of good repute and competency, 'unprofessional conduct' was not necessarily limited to conduct which was 'disgraceful or dishonourable', in the ordinary sense of those terms. It included, in the court's view, conduct which might reasonably be held to violate, or to fall short of, to a substantial degree, the standard of professional conduct observed or approved of by members of the profession of good repute and competency. That view was approved by the Western Australian Full Court in Fordham v Legal Practitioners' Complaints Committee (1997) 18 WAR 467."

"In a general sense, professional misconduct should be regarded in this State as a more grave form of misconduct than unprofessional conduct. There may well be an overlap and the same conduct might in some cases amount to both of those things."

15 In A Legal Practitioner v The Law Society of Tasmania [2005] TASSC 28; (2005) 13 Tas R 448, Underwood J (as he then was) also considered these definitions. He said at 453 - 454:

"Counsel for the appellant conceded that there had been serious neglect and delay. He submitted, however, that such neglect and delay fell within the definition of unprofessional conduct and did not amount to professional misconduct. The drafting of the definition of unprofessional conduct is not helpful. It required the Tribunal to determine whether the 'serious neglect and undue delay' of the practitioner was of a 'lesser degree of seriousness' than the 'serious neglect and undue delay'. The definition is entirely circular. However, the Court is obliged to give some meaning to the legislative enactment; see Scott v Moses (1957) 75 WN (NSW) 101. It is necessary to take a commonsense approach to a complaint that there has been conduct by a practitioner that resulted in serious neglect and/or undue delay. The conduct must be evaluated to determine its degree of seriousness. Such an evaluation should proceed upon the basis articulated by Crawford J in Law Society v Turner [2001] TASSC 129; (2001) 11 Tas R 1 at par51:

'In a general sense, professional misconduct should be regarded in this State as a more grave form of misconduct than unprofessional conduct. There may well be an overlap and the same conduct might in some cases amount to both of those things.'

As his honour said in the same case, the statutory definitions of professional misconduct and unprofessional conduct are inclusionary and therefore the common law definitions of professional misconduct and unprofessional conduct apply in addition to the statutory definitions. In In re R, A Practitioner of the Supreme Court [1927] SASR 58, the Full Court of South Australia, at 61, said that unprofessional conduct included 'conduct which may reasonably be held to violate, or to fall short of, to a substantial degree, the standard of professional conduct observed or approved of by members of the profession of good repute and competency', while professional misconduct is something that has been done by the practitioner 'which would be reasonably regarded as disgraceful or dishonourable by his professional brethren of good repute and competency'.

Neglect and delay can be of short duration, but with resultant serious adverse consequences. It may be of short duration but with no, or few, adverse serious consequences. It may be isolated conduct and out of character, or it may form part of a general pattern of neglect and delay. It may relate to a substantial matter or a minor matter. It may or may not have taken place as a result of unusual circumstances in which the practitioner found himself or herself. The permutations are virtually endless. The Tribunal's task is to evaluate the serious neglect and/or delay to determine whether it is professional misconduct or unprofessional conduct. Such evaluation must be qualitative and quantitative and like all evaluations, must have a standard or standards against which the qualitative and quantitative measurements are made. That standard can only be that set by the common law, namely, the conduct observed or approved of by members of the legal profession of good repute and competency. The statutory definition makes all serious neglect or undue delay unprofessional conduct, but it will only become the more serious professional misconduct if it is so bad that practitioners of good repute and competency would reasonably consider that it had reached the stage where it could be described as disgraceful or dishonourable. I can see no other reasonable basis for construing the two definitions of serious neglect or undue delay."

16 By definition, any conduct of the respondent which amounted to breaches of the Rules was professional misconduct. I am satisfied having regard to the admitted conduct of the respondent that she did breach the Rules in a number of ways. She did not do her best to complete her clients' business in a competent manner and within a reasonable time. She did not inform clients of significant developments in their matters. She breached accounting rules. The other conduct upon which the applicant relied was potentially capable of being categorised as either professional misconduct or unprofessional conduct.

17 All the conduct occurred over a period of about six months in 2004. It was not a case which involved an isolated incident, but one involving a series of similar incidents. The respondent's management of conveyancing transactions demonstrated that she did not understand the importance of time constraints in conveyancing transactions, that she was either unaware of the Rules or disregarded them, and that she had little, or no, understanding of the level of disclosure and honesty required in dealings with clients. She made promises (advertisement for fixed fee conveyancing and advice in a letter that she would provide a settlement statement prior to settlement) which she ignored more than once, and when taken to task by clients about these matters, she became abusive. As counsel for the respondent pointed out, there are probably few practitioners who have not been short with a difficult client during the course of their practice. However, the respondent's behaviour went beyond that.

18 She also misled clients about the status of their matters, presumably in an effort to stop them complaining. She failed to properly supervise her employee, Ms Kumala. The letter sent by Ms Kumala to the solicitors for the vendors in the Slade/Heaton matter demonstrated a complete lack of understanding of conveyancing practice. To compound the problem, the letter was written without proper instructions.

19 There is no suggestion of criminal conduct. There is no suggestion the respondent's conduct was for personal gain in the sense she dealt with clients as she did to make a personal gain. As a consequence of some of her actions, clients have obtained civil judgments against her for losses they suffered. I was given no information as to whether the respondent had the capacity to meet those judgments. The respondent's actions have, in general terms, resulted in only a modest financial loss for clients and it appears from Mr Joyce's affidavit that a number of outstanding problems clients had have now been fixed either by him, or by him in conjunction with the respondent. I have no doubt, having regard to the nature of the legal work the respondent purported to carry out and the problems she caused, that her clients suffered considerable anguish while their matters remained unresolved.

20 There was no explanation provided as to why the conduct occurred, save that in respect of some, the respondent had been overwhelmed with business as a result of her advertising. The respondent had an obligation as a practitioner to ensure that if she advertised and obtained significant business as a result, she was competent to deal with it, and retained and supervised competent staff to assist her. In the absence of her taking those steps, she should not have accepted the work.

21 Again, without objection by counsel for the applicant, the Court was told from the bar table that the respondent had never been the subject of disciplinary proceedings before and that the extent of what might be described as prior wrongdoing extended to two complaints from clients to the Law Society in Queensland when the respondent practised in that State, both of which were resolved informally. The Court was not provided with detail about the nature of the complaints.

22 The inference which can be drawn from the facts before the Court is that the respondent's conduct flowed from a complete lack of experience in conveyancing matters and a lack of willingness to ensure that she gained that experience before embarking on the practice she did. By her actions the respondent demonstrated a willingness to disregard the Rules and mislead her clients when she felt it expedient.

23 While the matters complained of are unacceptable behaviour on the part of any competent practitioner, they are, in my view, the product of the circumstances the respondent created and then found herself in, and not necessarily an indication of an inherent lack of fitness as a practitioner. This view is supported by what can be perceived as a lack of relevant history over several years of practice.

24 The finding required as a consequence of admitted breaches of the Rules and the operation of the definition of professional misconduct is that the respondent is guilty of professional misconduct. However, I am not persuaded that, were the respondent's conduct to have been dealt with absent the breaches of the Rules, it could reasonably be regarded by other members of the profession of good repute and competency as disgraceful and dishonourable. I am, however, satisfied that the respondent's conduct fell short, to a significant degree, of the standards such practitioners would expect. I am satisfied in the circumstances that the respondent's conduct, other than the breaches of the Rules, amounted to unprofessional conduct.

25 The question which arises is, what order is appropriate in view of the findings made? The Act, s76, allows the Court a wide range of options which may be tailored to the respondent's situation. The most extreme of those options, in my view, is an order removing the respondent's name from the roll. The issue to be determined is, is the respondent a fit and proper person to be held out to the public as a practitioner? The answer to that question, insofar as an unsupervised conveyancing practice is concerned, is undoubtedly no. However, the question must be asked in the context of practice generally. The respondent has clearly demonstrated deficiencies in the management of a firm's accounts and has also demonstrated deficiencies in her dealings with clients which might not necessarily be confined to conveyancing work. I mention her lack of candour and delay.

26 As counsel for the applicant submitted, the powers given to the Court to discipline a practitioner are protective in character. In Dickens v Law Society A42/1981, Cosgrove J said at 15 and 16:

"There is high authority for the proposition that the powers given to the Disciplinary Committee to discipline a practitioner are entirely protective in character and no element of punishment is involved. (See Ziems v Prothonotary of the Supreme Court of New South Wales [1957] HCA 46; (1957) 97 CLR 279 at 286 per Dixon CJ; Clyne v The New South Wales Bar Association [1960] HCA 40; (1960-61) 104 CLR, 186 at 201-2; The New South Wales Bar Association v Evatt [1968] HCA 20; (1968) 117 CLR, 177 at 183-4; and Ex Parte Attorney-General for the Commonwealth; Re a Barrister and Solicitor (1972) 20 FLR, 234 at 244). But to say that is merely to say that the powers are to be exercised for the purpose of, and in a manner seen to be likely to achieve, the maintenance of that high standard of conduct within the profession which will continue its good reputation, and so protect, not only the future of the profession, but also protect its clients from harm. With this object in mind, the Committee is required to look to the future. Even if the practitioner's misconduct be relatively slight, he may yet be struck off, if his capacities and attitude have been revealed to be such that his continuance in practice constitutes a threat to the profession. On the other hand, conduct which is itself more grave in nature, may not warrant striking off, if it is seen as a temporary and explicable departure from the practitioner's own high standards. The Committee's task is to uphold the dignity and standards of the profession. To enable them to do so, they have been given powers to fine, to order payment of costs, to suspend, and to strike off. The exercise of any of these powers inevitably involves a deprivation of one kind or another to the practitioner. But the deprivation is merely part of the exercise of the discipline of the profession. There is in it no retributive element, no intention to express outrage, as there sometimes is in sentences for crime. The order which the Committee is called upon to make is that order which, in its opinion, is necessary, and no more than is necessary, to maintain professional discipline and high standards of conduct. It is not entirely incorrect to describe such an order as punishment, and that term is often used (see in Re Daley [1907] HCA 32; (1908) 5 CLR, 193; Southern Law Society v Westbrook [1910] HCA 31; (1910) 10 CLR, 609; Mellifont v Queensland Law Society Inc (1981) QSR 17 at 28 per Andrews J, and In re Moseley (1925) 25 SR(NSW) 174 at 178). But it is punishment of a special kind, for a special purpose."

27 The public, in my view, would be protected from a repeat of the conduct which gave rise to these proceedings were the respondent, if she wished to resume any form of conveyancing practice:

- required, before doing so, to undergo some form of training in conveyancing practice and procedure, and a course of training in the maintenance of proper books of account for a legal practice, and demonstrate to the applicant her competence in both areas; and

- thereafter be permitted to resume such practice, but restricted to practice only as an employed practitioner for a period of two years.

In the event the respondent does not seek to resume practice in the area of conveyancing, she should, in any event, be required to undertake training in the maintenance of books of account for a legal practice, and demonstrate to the Society her competence in that area and thereafter be permitted to practice otherwise, but restricted to practice as an employed practitioner for a period of two years.

28 I have not formulated precise orders. Because I have no information about what sort of training or course might be available and whether the conditions I propose are workable, I will hear counsel as to the precise terms of orders to give effect to the matters raised in the preceding paragraph.

29 At the commencement of the hearing I directed that the respondent's name not be published pending the completion of the hearing. The Act, s80, provides that an application such as the present one is to be heard in open court unless the Court otherwise orders. In my view, it is important for the public to know that where complaints are made against practitioners by professional bodies, they are properly pursued and dealt with by either the disciplinary tribunal or this Court. The public is also entitled to know that if a practitioner has been found guilty of unprofessional conduct or professional misconduct, what the disciplinary authority has done to protect their interests. I will, in the circumstances, not continue any prohibition on publication of the respondent's name nor impose any restriction on publication of my reasons and the orders made.