Corporations Act 2001 (Cth)

Industrial Relations Act 1979 (WA)

Interpretation Act 1984 (WA)

Legal Practice Act 2003 (WA)

Legal Practitioners Act 1893 (WA)

Cornall v Nagle [1995] VicRp 50; [1995] 2 VR 188

Legal Practice Board v Adams [2001] WASC 78

Legal Practice Board v Taylor [2005] WASC 242

1 EM HEENAN J: The motion before the court is that the respondent, Raymond Walter Clohessy, should be punished for contempt of court in that, not being a duly certificated legal practitioner, he did, during the period from about October to November 2003 or thereabouts, at Perth directly or indirectly:

(a) sue out or commence and carry on proceedings in the Supreme Court of Western Australia, being an application by originating process, namely proceeding number COR 353 of 2003 between Anthony Sebastian Paterniti as plaintiff and Catering Concepts Australia Pty Ltd, (administrators appointed) as the first defendant, and John Osborn, director, second defendant, proceedings referred to as "the action";

(b) alternatively to subpar (a) that he performed, carried out or engaged in work in connection with the administration of law in obtaining and acting on instructions from Anthony Sebastian Paterniti to sue out, commence or carry on the action in this Court; and

(c) in the course of carrying out those instructions or in the alternative referred to in subpar (a), he did draw or prepare or cause to be drawn or prepared writings relating to or dealing with or affecting proceedings at law, namely:

(1) a document dated 29 October 2003 entitled Originating Process, being action number COR353 of 2003 between Mr Paterniti as plaintiff, Catering Concepts Australia Pty Ltd (administrators appointed) as first defendant and John Osborn, director second defendant;

(2) an affidavit of Anthony Sebastian Paterniti sworn 28 October 2003;

(3) a document entitled "Notice of Appearance" dated 7 November 2003; and

(4) an undated document entitled "Matters In Issue".

2 This motion alleging contempt was instituted under the provisions of the Legal Practitioners Act 1893 (WA) as then applying. It relied on s 81 of the 1893 Act, alleging contraventions of s 76 and/or s 77 of that Act. On 1 January 2001 the Legal Practitioners Act was repealed and replaced by the Legal Practice Act 2003 (WA). That later Act contains comparable provisions and, by s 250, renders a breach of the provisions of the new Act a contempt of this Court. The present motion is now continued under s 250 of the new Act, relying upon s 37(1) of the Interpretation Act 1984 (WA) for the proposition that liability still attaches to the respondent for breaches of the earlier Act. I accept that submission and note that it has not been contested.

3 After hearing earlier submissions before me this morning and after an adjournment to allow him to consider the position, Mr Clohessy has pleaded guilty to this charge, given his solemn assurance that he will never repeat this conduct. He has set out to make an explanation of how he came to be in this position. It is necessary, therefore, for me to say something about the background.

4 Although it is not stated in any of the affidavits, it is common ground that at all material times Mr Clohessy was a registered industrial agent under s 112A of the Industrial Relations Act 1979 (WA) and had, during the course of a long career as a trade union representative, acted as an industrial adviser or agent for many trade unionists and other workers seeking advice, assistance or representation in relation to industrial matters pending or likely to be pending in the Industrial Relations Commission or in any of the other courts or tribunals constituted under the Industrial Relations Act 1979 (WA).

5 It was in the course of his role as an industrial agent that he began acting for Mr Paterniti. Mr Anthony Sebastian Paterniti was a former employee of the company Catering Concepts Australia Pty Ltd. In circumstances which have not been fully set out in the proceedings but the precise details of which are not relevant, Mr Paterniti was discharged by his employer in circumstances which led him, on the advice of Mr Clohessy, to believe that he had an entitlement to further monetary payments for salary in lieu of notice, for redundancy entitlements after 24 years of service, for superannuation benefits, for a motor vehicle provision and for other emoluments.

6 As a result of Mr Paterniti's approach, Mr Clohessy, in the role as a director and agent of Union Industrial Advisory Services of Wembley Downs, which I take to be a business which he has been conducting, entered into correspondence with Catering Concepts Australia Pty Ltd, demanding compensation or payments of alleged entitlements from the former employer. When the initial correspondence did not lead to any satisfactory solution, Mr Clohessy recommended that proceedings should be instituted in the Industrial Commission and by July 2003, an application had been filed in the Industrial Relations Commission under s 24 of the Industrial Relations Act making a claim for payments for redundancy, payment in lieu of notice and superannuation.

7 While that claim was pending, and on a date which is not directly material, administrators were appointed of the former employer under the provisions of the Corporations Act 2001 (Cth). The effect of the appointment of administrators was to stay all proceedings pending in any court or tribunal against the company under administration and to require any claimant to substantiate his or her claim by lodging a proof of debt with the administrator.

8 Again purporting to act as an industrial agent, Mr Clohessy communicated on Mr Paterniti's behalf with the appointed administrator or joint administrators of Catering Concepts Pty Ltd, putting forward a claim for compensation comparable to the claim which had been initiated in the Industrial Relations Commission. Those initiatives were also unproductive. A proof of debt was filed with the administrators but was rejected.

9 At that point Mr Clohessy, still acting or purporting to act as an industrial agent, took steps to activate and prosecute the pending claim for remuneration and other entitlements before the Industrial Relations Commission, but in the course of an appearance before the Commission, he was informed by one of the Commissioners that the stay of proceedings effected by the Corporations Act consequent upon the appointment of administrators meant that the proceedings could not be pursued unless leave to continue the proceedings were granted upon an application made to a court of competent jurisdiction under the Corporations Act.

10 It was at this point that Mr Clohessy then recommended to Mr Paterniti that an application should be made to the Supreme Court for leave to proceed with the application then pending before, but stayed, the Industrial Relations Commission. As a consequence of the acceptance of that recommendation, Mr Clohessy prepared the document entitled "An Originating Process", lodged it in this Court, supported by an affidavit from Mr Paterniti.

11 That is the document dated 29 October 2003 and it is an application pursuant to s 440D(1)(a) of the Corporations Act for leave to proceed in the Industrial Relations Commission against the administrators. There is also some subsidiary relief sought which it is not necessary to describe.

12 That application came on for hearing, whether as a substantive hearing or as a directions hearing does not matter, before a Master of this Court when Mr Clohessy sought to appear. On being questioned by the Master about his role and his qualifications to appear, the learned Master refused to deal with the application on the basis that Mr Clohessy was not authorised to appear in this Court for the applicant.

13 After that, attempts were made to refer the matter to solicitors for Mr Paterniti and later, after other intervening events which need not be examined, the proceedings against the company for leave to proceed were eventually discontinued or dismissed with orders for costs being made against Mr Paterniti.

14 It is in respect of the preparation of the documents for the application to this Court under the Corporations Act, which I have just described, that the motion for contempt is confined. There was initially an attempt by Mr Clohessy to justify his actions by submitting that he was advising or acting in relation to an "industrial matter" and was justified in doing so under the provisions of s 112A of the Industrial Relations Act. That submission has, in my view very wisely, been abandoned and a plea of guilty entered which accepts that this stage of the proceedings relating to the Corporations Act application was not authorised under s 112A. Looking at s 112A, the authority permitted to an industrial agent is confined to appearing as an agent under s 31, s 81E or s 91 of the Industrial Relations Act or to providing advice or other services in relation to industrial matters which, in the particular context I regard as being related solely to matters pending in, or likely to arise in eventual proceedings, before the Industrial Relations Commission.

15 I do not accept any of the submissions which imply that actions in connection with "industrial matters", even if that extension could be accepted to apply to these dealings with the administrators, which I very much doubt, extend to proceedings in the Supreme Court or in other courts under this legislation.

16 It therefore follows that Mr Clohessy's admission of this offence is well justified and, although made late in the proceedings, I think, should be taken into account as a commendable recognition, even if belated, of the real limitations on the role of industrial agent.

17 It is necessary for me to give consideration to the sanction which should be imposed by this Court in the light of this proved and admitted breach of the Act which constitutes a contempt of this Court. I accept that the prime consideration in these circumstances is the protection of the public in order to ensure that if a member of the public enlists for reward some person to give advice in respect of legal matters or if he or she engages some person to prepare documents, or to represent them in proceedings before this Court, the person who may give that advice, conduct that representation, or prepare the documents is legally qualified.

18 This is an important public protection, first of all, because of the need to ensure that appropriate levels of skill, responsibility and experience are brought to bear when giving the advice or preparing documents or entering any appearance, but there is a second and equally important reason to insist on strict compliance with these obligations. It is that persons who appear before this Court as legal practitioners are officers of this Court, are subject to the control, direction and discipline of this Court, and of the professional bodies established under the Legal Practice Act, and they carry a series of long established ethical and fiduciary obligations accompanied by a regime of financial and insurance cover protection designed to cater for those occasional episodes, hopefully rare, where some professional negligence or other misconduct causes loss to the client.

19 In this case it is evident that charges were made and paid for services rendered by Mr Clohessy to Mr Paterniti. There is in evidence a series of six payments by cheque made by Mr Paterniti to Mr Clohessy during the period June 2003 to November 2003 totalling some $3090.85 which, in a general way, are all connected with Mr Paterniti's claim for remuneration from his former employer.

20 However, Mr Clohessy makes the point that only a relatively small proportion of these payments can, in any way, be connected with the institution of proceedings in this Court under the Corporations Act because many of the other payments are obviously in relation to proceedings in connection with the application to the Industrial Relations Commission.

21 I accept that that is the case but the clear demarcation which Mr Clohessy asserts in this regard is by no means as apparent as his submissions suggest. Various of the payments appear to include fees for advice in connection with, or in relation to, correspondence to the administrators of the company against which the claim was made and in connection with the proof of debt. It seems very doubtful whether those actions relate to the authorised activities of an industrial agent. Whether they do or not need not be decided on this occasion because there has not been any allegation in the motion for contempt that those activities, as distinct from advice in connection with the motion for leave to proceed against a company under administration, are in breach of the Act. I must therefore confine myself to charges which demonstrably have been made, or paid, in connection with the proceedings in this Court.

22 There are perhaps three such payments in that category. There is one invoice for $280 in June 2003 which was satisfied by a discounted payment of $200. There is another invoice on 15 November 2003 for $174.35, representing disbursements in the nature of service fees from a process server in connection with the service of the originating process in the Supreme Court proceedings. I accept that that was not remuneration sought or paid directly to Mr Clohessy but it was a claim for expenditure associated with the unauthorised activity. The third payment is an amount of $766.50 discounted from $936.50 in an invoice of 29 October 2003 paid by Mr Paterniti in November 2003. Mr Clohessy submits that only a portion of that payment should be regarded as being in connection with the proceedings under the Corporations Act in this Court.

23 Looking at the invoice of 29 October 2003, which is Annexure "WSM27" to the affidavit of Ms Wendy Sara Meggison sworn 14 July 2005, the constituents of the amount charged are as follows:

"Attendance G. Stubbs, 23.9.2003 2 hours

Commissioner S Kenner 2 hours

Preparation and filing

Supreme Court Application 3 hours

Correspondence 7 items outward 4 inward 4-1/2 hours

11-1/2 hours x $80 $920.00

Transcript 2.9.2003 16.50

$936.50

...

If paid within 7 days, please remit $766.50 ... "

24 Mr Clohessy's point is that it is only the three hours for preparation and filing in connection with the Supreme Court application that results in a charge in contravention of the Act and that, therefore, only $240 has been improperly charged. I am not prepared to accept that submission in its entirety. The correspondence inward and outward would appear to include, at least in part, advice in connection with the Supreme Court application, and it seems therefore that a larger part, maybe not all that much larger, charge than $240 is involved. The service fees are another component. It seems to me that it is proper, in considering the penalty which must be imposed, to ensure that no overall financial advantage has been derived by the respondent from the result of this unauthorised conduct, and in addition that a sanction in the nature of a financial penalty is also imposed.

25 In relation to other factors concerning this contravention of the Legal Practitioners Act, I am satisfied that, to a large extent, Mr Clohessy's actions were inspired by good faith and a desire to assist a union member who was thought genuinely to be in difficult financial circumstances because of his retrenchment. I also accept that his actions in advising with respect to, and initiating, a claim under the Industrial Relations Act was within the scope of his permitted authority under s 112A as a registered industrial agent.

26 However, in going beyond that activity and certainly in instituting proceedings in this Court Mr Clohessy's conduct was unauthorised no matter how well intentioned. That, in the end, it was unsuccessful and the application was dismissed with costs against Mr Paterniti is a factor which points to the potential hazards of initiating complicated legal proceedings by persons who are not fully acquainted with a knowledge of the full range of the law.

27 I consider, therefore, that to ensure that no financial advantage has been derived and to demonstrate, not just to Mr Clohessy, but to the public at large the importance of complying with these prohibitions, that a fine of $1000 for the contempt should be imposed.

28 As to the costs of these proceedings, I accept that Mr Clohessy must pay the Legal Practice Board's costs of the application to be taxed but I make no special orders in relation to the taxation of those costs, nor will I contemplate any increase upon the limits prescribed by the relevant scale of costs. I will leave the question of the determination of the quantum of those costs to the taxing master.

29 The result therefore is that a conviction for contempt of court, as alleged, is imposed. Mr Clohessy is fined the sum of $1000 and he is ordered to pay the costs of the Legal Practice Board to be taxed.