Legal Services Commissioner v Horak (Legal Practice) [2009] VCAT 894

1. The Tribunal finds the respondent guilty of professional misconduct as defined by s.4.4.4(a) of the Legal Profession Act 2004, in that he contravened s.4.4.11(1)(a) & (b) of the Act by failing to comply with requirements made by the Legal Services Commissioner that he provide a full written explanation of his conduct in relation to the subject matter of a complaint lodged with the Commissioner, and that he provide his trust account ledger and file in relation to the same matter.
2. The respondent is to provide a full explanation of his conduct in relation to the subject matter of the complaint to the Legal Services Commissioner by 1 June 2009.
3. The respondent is to provide to the Legal Services Commissioner by 1 June 2009 a copy of his trust account ledger relating to the complainant Leonard Crosswell.
4. The Legal Services Commissioner may inspect at the office of the respondent, by mutual arrangement or upon giving three days notice in writing to the respondent, the file or files compiled by the respondent in relation to the complainant Leonard Crosswell.
5. The respondent is to pay a fine of $1,000.00 to the Legal Services Board by 10 July 2009.
6. The respondent is to pay to the Legal Services Commissioner by 10 July 2009 her costs of this application, fixed by the Tribunal at $2,000.00.

Ms P. Antonov of the office of the Legal Services Commissioner.

1. Mr. Horak, a legal practitioner, is charged by the Legal Services Commissioner with professional misconduct in that he failed to provide to the Commissioner a full written explanation of his conduct, and to produce documents, when required to do so.

1. On 6 December 2007, the Commissioner received a complaint dated 29 November 2007 from Mr. Leonard Crosswell. The complaint concerned the manner in which Mr. Horak acted for Mr. Crosswell in a patent matter.
2. Because of the decision of the Court of Appeal on 16 May 2008 in Byrne v Marles & Law Institute of Victoria Limited [2008] VSCA 78, to the effect that the Commissioner must give a practitioner the opportunity to make a submission as to whether a complaint should be treated as a disciplinary complaint, the Commissioner wrote to Mr. Horak on 29 May 2008 giving him an opportunity to make such a submission. The letter enclosed a copy of the complaint made by Mr. Crosswell. Mr. Horak made a submission on 3 July 2008 that the complaint should not be dealt with as a disciplinary complaint, but on 11 September 2008 the Commissioner advised Mr. Horak that she had decided otherwise.
3. Having decided to deal with the complaint as a disciplinary complaint, the Commissioner was obliged to investigate the complaint: s.4.4.7(1) Legal Profession Act 2004. In her letter of 11 September 2008, the Commissioner informed Mr. Horak that she had referred the investigation of the complaint to the Law Institute of Victoria.
4. As part of its investigation, the Law Institute had power to require Mr. Horak to provide a full written explanation of his conduct in relation to the subject matter of the complaint, and to produce documents: s.4.4.11(1)(a) & (b). The Law Institute wrote to Mr. Horak on 26 September 2008 and 15 October 2008 making formal requests under s. s.4.4.11(1)(a) that Mr. Horak provide a written explanation of his conduct within 16 days. The first letter enclosed another copy of the complaint.
5. When he gave evidence, Mr. Horak acknowledged that he received the letters of 26 September 2008 and 15 October 2008.
6. On 8 December 2008, the Law Institute referred the complaint back to the Legal Services Commissioner.
7. On 9 December 2008 and 8 January 2009, the Commissioner wrote letters to Mr. Horak making formal requests under s. s.4.4.11(1)(b) that Mr. Horak provide to the Commissioner his trust account ledger and his file relating to Mr. Crosswell's matter. Both letters were returned unclaimed by Australia Post.
8. Evidence was given by Ms Cara O'Shanessy of the office of the Legal Services Commissioner. Ms O'Shanassy said that she telephoned Mr. Horak and informed him that the letters sent to him on 9 December 2008 and 8 January 2009 had been returned by Australia Post. She said that Mr. Horak asked her to re-send the letters. Ms O'Shanassy then said that she wrote a letter to Mr. Horak on 29 January 2009, enclosing a copy of the letter of 9 December 2009, and requiring compliance with the requirements made in that letter within 16 days. Mr. Horak acknowledged that he received the letter of 29 January 2009.
9. As at the date of this hearing, Mr. Horak has not provided an explanation of his conduct, or produced his trust account ledger and his file.
10. Mr. Horak submitted that no case had been made out by the Legal Services Commissioner. He said that he had provided an explanation of his conduct in his submission of 3 July 2008 that the Commissioner should not deal with the complaint as a disciplinary complaint. I reject that submission for two reasons.
11. The first reason is that the request for an explanation, and the request to produce documents, were made after Mr. Horak made his submission that the complaint should not be dealt with as a disciplinary complaint. The second reason is that the letter of 26 September 2008 from the Law Institute to Mr. Horak contained the following paragraph:

'I also note that the written submissions dated 3 July 2008 which you provided to the Legal Services Commissioner address some of the substantive issues raised in the complaint. Please confirm whether you wish to rely on those written submissions as part of your full written explanation. If so, I would in the ordinary course provide a copy to the complainant for his comments. However, it would be inappropriate that the whole of that letter be provided in that you make reference to another client's affairs. Accordingly, you may wish to incorporate parts of that letter in a fresh letter as your full explanation. Please let me have your response within sixteen (16) days from the date of this letter.'

1. Ms O'Shanassy gave evidence that Mr. Horak did not at any time ask the Law Institute or the Commissioner to treat his earlier submission as part of a full written explanation of his conduct. Mr. Horak did not contend otherwise. In any case, the earlier submission did not provide a full explanation of Mr. Horak's conduct.
2. I ruled that a case had been made out. I then invited Mr. Horak to give evidence.

1. Mr. Horak gave evidence, but he avoided giving evidence relevant to the charge. In re-examination he said that he was "under pressure", that he had been "seriously ill", and that "It slipped under the radar". He did not explain the nature or effect of his illness.

UNSATISFACTORY PROFESSIONAL CONDUCT OR PROFESSIONAL MISCONDUCT ?

1. Having heard the evidence of Mr. Horak, I found that Mr. Horak contravened s.4.4.11(a) & (b) of the Act by failing to provide an explanation of his conduct, and by failing to provide his trust account ledger and his file.
2. A contravention of the Act is capable of constituting unsatisfactory professional conduct or professional misconduct: s.4.4.4. Mr. Horak submitted that the contravention amounted to unsatisfactory professional conduct rather than professional misconduct.
3. Until the commencement of the Legal Profession Act 2004 on 12 December 2005, the statutory distinction between misconduct and lesser disciplinary offences was that statutory misconduct needed to be "wilful or reckless" and lesser offences did not need to be "wilful or reckless": see the respective definitions of "misconduct" and "unsatisfactory conduct" in s.137 of the 1996 Act. That most helpful distinction was not retained in the 2004 Act, which applies to the present case.
4. Whether conduct of the kind described in s.4.4.4(a) of the 2004 Act, namely the contravention of a provision in the Act, amounts to professional misconduct or unsatisfactory professional conduct depends upon the seriousness of the conduct. I have made decisions to that effect in a number of cases, such as Legal Services Commissioner v Spaulding [2008] VCAT 318 @ [13]. The seriousness of the conduct will depend in turn upon all relevant factors brought to the attention of the Tribunal, and to the manner in which similar factors have been treated in previous cases.
5. Mr. Horak first received a copy of the complaint when he received the letter of 29 May 2008 from the Legal Services Commissioner. He received another copy of the complaint with the letter of 26 September 2008 from the Law Institute of Victoria. He has yet to comply with the request contained in that letter that he provide an explanation of his conduct. His continuing failure to respond, now of seven months duration, is to be compared with the 16 days allowed by the Law Institute, and the minimum period of 14 days required by s.4.4.11(5) of the Act.
6. A formal request for production of documents was not received by Mr. Horak until he received the Commissioner's letter of 29 January 2009. That letter gave Mr. Horak 16 days to produce the documents, but three months later they have not been produced.
7. The evidence of Mr. Horak that he was under pressure and seriously ill might have justified delays of a few weeks, but not delays of the duration evident in this case.
8. I find that Mr. Horak contravened s.4.4.11(1)(a) & (b) of the Legal Profession Act 2004 by failing to provide to the Legal Services Commissioner a full written explanation of his conduct when required to do so, and by failing to provide documents to the Commissioner when required to do so, and that the contravention was sufficiently serious as to amount to professional misconduct.

1. A person who lodges a complaint about a practitioner is entitled to a prompt response. The Commissioner is unlikely to have knowledge of the subject matter of the complaint, other than the information set out in the complaint. The Act therefore empowers the Commissioner to seek an explanation from the practitioner. This power has been entrusted to the Commissioner and her predecessors for many years, and almost all practitioners are well aware of its existence.
2. Furthermore it would be unfair, and a denial of procedural fairness, if the Commissioner took action against a practitioner without giving the practitioner an opportunity to explain. A failure to provide a full explanation, and a failure to produce documents, hinders the investigation being carried out by the Commissioner and, in turn, causes delay in dealing with the complaint.
3. Mr. Horak stated that his accountant is overseas for a month, and that he cannot obtain access to his trust account ledgers. He also said that his file is extensive, and that he needs access to the file in order to comply with orders made by the Federal Court in proceedings between himself and Mr. Crosswell. The orders made in the present proceedings take those factors into account.