Legal Services Commissioner v Manz [2019] QCAT 147

Unsatisfactory professional conduct includes conduct of an Australian legal practitioner happening in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.

[29] Section 419 of the same Act provides that professional misconduct includes:

unsatisfactory professional conduct of an Australian legal practitioner, if the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence.

1. Because these definitions are inclusive, and because these expressions were in common use before the LP Act was enacted, common law tests for the assessment of such conduct remain relevant. In Adamson v Queensland Law Society Inc,[5] Thomas J said, with respect to professional misconduct, "the test to be applied is whether the conduct violates or falls short of, to a substantial degree, the standard of professional conduct observed or approved by members of the profession of good repute and competency."[6] Such conduct has also been described as conduct that would reasonably be regarded as disgraceful or dishonourable by the lawyer's professional colleagues of good repute and competency.[7]

[31] While it is not inappropriate to characterise the respondent's conduct as a "one off event", it has some features which should be noted. The conduct persisted over some time. It began with the respondent initiating a course of events intended to provide a false reason for the assignment. No doubt, in providing that reason, he intended that it be accepted and acted upon by the body corporate and its solicitor as the true reason, when the respondent knew that not to be the case. He later communicated that reason to the solicitor handling the matter while the respondent was on leave. It is apparent from the communication that he then appreciated that the solicitor was likely to relate the reason for the assignment to the solicitor for the body corporate. There is no suggestion that at any time the respondent attempted to correct the misrepresentation.

1. The parties referred to two cases. They were Legal Services Commissioner v Bevan[8] and Legal Services Commissioner v Gould.[9]
2. In Bevan, it was common ground that the respondent's conduct in stating to the Court that his client's absence was due to a medical condition, when he had in fact advised the client not to remain at the Court, constituted professional misconduct. In Gould, the respondent was found guilty of professional misconduct because he had misled his client and the Queensland Law Society. He was said to have been reckless in doing so, at least with respect to one of the communications.[10] Neither case provides any real assistance in the present case.
3. There is some limited analogy between the conduct of the respondent in the present case, and one matter dealt with in Re Wheeler.[11] One of the charges alleged a false representation by the appellant-solicitor, in response to a request as to the disposition of funds paid into his trust account. Assertions in the response were factually untrue, to the knowledge of the respondent. The Court also inferred that the response was designed to discourage further enquiry.[12] Dowsett J, sitting as a member of the Full Court of the Supreme Court of this State, had "no difficulty in concluding that to write such a letter to a fellow practitioner enquiring as to the whereabouts of funds paid to the appellant by a client of the enquiring solicitor was professional misconduct".[13]

[35] However, what is really called for is an assessment of the conduct of the respondent, in the light of the statutory and common law definitions previously referred to. Factual analogies are of only limited assistance.

[36] Notwithstanding the matters advanced on behalf of the respondent, his conduct should be characterised as professional misconduct. While it may not fall comfortably within the definition in s 419 of the LP Act, it nevertheless fell short, to a substantial degree, of the standard of professional conduct approved by members of the profession of good repute and competency, and would reasonably be regarded as dishonourable.

[37] It should be noted at the outset that, as mentioned, the respondent has co-operated fully with the investigation carried out on behalf of the Legal Services Commission in this matter. Moreover, the respondent received no personal benefit from his misconduct, other than the receipt of professional fees for the provision of legal services.

[38] The applicant submitted that the respondent should be publicly reprimanded, ordered to pay a fine of $5,000, required to undertake ethics training, and be ordered to pay the applicant's costs of the application, to be assessed on the standard basis.

[39] For the respondent it was submitted that these orders were appropriate. Reference was made to the respondent's cooperation in the applicant's investigations and in this proceeding; his acceptance of responsibility for the conduct of the other solicitor with his firm; and his admission of fault and expression of regret.

[40] The respondent provided an affidavit which recorded his professional history and the absence of any previous conduct complaint. He described the matter as stressful. He said that the clients were at a real risk of losing their business, and becoming bankrupt. He also expressed remorse. He has taken steps to be more aware of his professional obligations, and to ensure that his staff are also conscious of them. He described stress which he has suffered as a result of the charge; and difficulties which he and the law practice would encounter if he were suspended from practice. He has also provided references from other partners in the law practice, and a practitioner in another practice, as to his general good character and professional conduct.

1. The respondent also contended that the Tribunal should not depart from the position taken by both parties in relation to the orders to be made. Reliance was placed on NW Frozen Foods v Australian Competition and Consumer Commission,[14] Commonwealth v Director, Fair Work Building Industry Inspectorate & Ors[15] (CFMEU case), and Legal Services Commissioner v XBV.[16]
2. In NW Frozen Foods, the Court upheld an appeal against a pecuniary penalty order imposed under s 76 of the Trade Practices Act 1974 (Cth) which was more than the penalty jointly proposed by the parties. It said:[17]

Because the fixing of the quantum of a penalty cannot be an exact science, the Court, in such a case, does not ask whether it would without the aid of the parties have arrived at the precise figure they have proposed, but whether their proposal can be accepted as fixing an appropriate amount.

1. It also said that a proper amount was "one within the permissible range in all the circumstances"; and continued:[18]

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.

1. Emphasis was placed on the fact that the penalty was a civil penalty. Reference was also made to the following statement by French J in Trade Practices Commission v CSR Ltd[19] (CSR case):

The principal, and I think the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by a contravener and by others who might be tempted to contravene the Act.

1. The justification for the position taken in NW Frozen Foods was the important public policy involved, identified by reference to the burden placed on courts by "very lengthy and complex litigation"; and the resultant freeing up of Commission officers "to turn to other areas of the economy that await their attention".[20]
2. The Court also pointed out that effects on the market, and other economic effects, will generally be among the most significant matters to be considered as relevant; and noted the assistance courts were likely to obtain from views put forward by the Commission or by economists called on behalf of the parties.[21]
3. The Court also noted, after a review of earlier decisions:[22]

There are, of course, limits to the approach accepted in these cases. The Court should not leave room for any impression of weakness in its resolve to impose penalties sufficient to ensure the deterrence, not only of the parties actually before it, but also others who might be tempted to think that contravention would pay, and detection lead merely to a compliance program in the future.

1. In the CFMEU case, the High Court generally endorsed the approach taken in NW Frozen Foods, and in a later decision of the Full Court of the Federal Court, Minister for Industry, Tourism, and Resources v Mobil Oil Australia Pty Ltd[23] (Mobil Oil). The reasons of five members of the Court set out observations based on Mobil Oil, described as being "(b)y way of explication".[24] They included the observation that a court determining a civil penalty may begin with an independent assessment of the appropriate range of penalties and then compare it with the proposed penalty. Another observation included the following:[25]

...the court is not bound by the figure suggested by the parties. Rather, the court has to satisfy itself that the submitted penalty is appropriate while acknowledging that, uninformed by the agreed penalty submission, the court might have selected a slightly different figure....

1. The plurality also observed that the regulator should explain to the court the process of reasoning that justifies the discounted penalty. Subsequently, they stated:[26]

Subject to the court being sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and, for the reasons identified in Allied Mills,[27] highly desirable in practice for the court to accept the parties' proposal and therefore impose the proposed penalty.

1. The plurality's analysis and conclusions drew heavily on the fact that a civil penalty regime is one which seeks to achieve compliance with a statutory regime by deterring non-complying conduct, without the stigma of a criminal conviction.[28] They repeated[29] a passage from the judgment of French J in the CSR case, which includes the passage set out earlier in these reasons.
2. The plurality also stated that it was to be expected that a regulator of a statutory regime would be in a position to provide the court with "informed submissions as to the effects of contravention on the industry and the level of penalty necessary to achieve compliance", but continued:[30]

That being said, the submissions of a regulator will be considered on their merits in the same way as the submissions of a respondent and subject to being supported by findings of fact based upon evidence, agreement or concession.

1. There are a number of reasons to doubt the applicability of the principles developed in relation to civil penalty regimes to a discipline application under the LP Act. The Tribunal's jurisdiction bears some analogy with the inherent jurisdiction of the Supreme Court in relation to the control and discipline of lawyers, which continues to exist.[31] The Tribunal's jurisdiction may be regarded as an adjunct to the Court's jurisdiction. The jurisdiction exists to protect members of the public from misconduct by lawyers.[32] Its orders are not penal. Moreover they extend beyond orders only intended to deter departure from a statutory regime. It may recommend the removal of a practitioner's name from the roll. Such an order will often carry considerable stigma. It may also order that a practitioner's practising certificate be suspended; and make orders which have the effect of controlling the manner in which a practitioner engages in legal practice. Some of the conduct which it must consider is undoubtedly criminal conduct. Cases are typically not lengthy; and do not raise the complexities for a court which is found in a consideration of the effect of certain conduct in a market place.
2. In any event, as has been noted, the plurality in the High Court has stated that the approach applies subject to two matters. One is that the Tribunal is "sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences".[33] That is not the present case. The parties are not completely in agreement about the matter, the applicant contending that the conduct should be characterised as professional misconduct, while the respondent contended that the conduct should be characterised as unsatisfactory professional conduct. The distinction between unsatisfactory professional conduct and professional misconduct is one the legislature considered to be of sufficient importance to warrant statutory recognition.

[54] More significantly, it is apparent that the agreement was struck at a time when the parties had also agreed that the respondent did not engage in dishonest conduct. The agreement therefore did not address the conduct as found by the Tribunal.

1. Established dishonesty on the part of a member of the profession is a matter which requires careful consideration, and usually a serious sanction. As Professor Dal Pont has pointed out,[34] honesty on the part of legal practitioners is fundamental to both public and curial confidence in the legal profession. In Law Society of New South Wales v Foreman,[35] Mahoney JA emphasised the importance of honesty to fellow practitioners and the court. His Honour quoted a passage from the judgment of Isaacs J in Incorporated Law Institute of New South Wales v Meagher[36] which included the statement, "Fitness (to practise law) includes honesty as well as knowledge and propriety".[37] He later said, "A solicitor should be able to place reliance upon the word of another and to accept his undertaking that he will do what he promises...".[38]
2. In Attorney-General v Bax,[39] Pincus JA observed:

It is not, in my opinion, every proved act of dishonesty on the part of a practitioner which justifies a substantial penalty; dishonesty, like other forms of behaviour, has grades of seriousness.

Those practitioners minded to engage in or institute, in the course of their professional work, dishonest means designed to deprive people of their legal rights must appreciate that doing so is risky, from the point of view of professional discipline and sometimes that of the criminal law. At least where, as here, the dishonesty concerns a substantial rather than a trivial matter, and where, as here, it is not a casual act but carried on over a period of time, it is my view that such conduct is likely to indicate unfitness to practise at the time at which it is engaged in; whether it does so will depend on all the circumstances.

[58] In Wheeler, false responses to enquiries from another solicitor led to two findings of professional misconduct, which were among the matters on which an order for suspension from practice for three years was based.

1. On the question of orders, in addition to Bevan and Gould, the applicant referred to Legal Services Commissioner v Bussa[41] and Legal Services Commissioner v Smith.[42] As previously mentioned, in Gould the respondent was alleged to have engaged in misleading conduct, but there was no allegation of dishonesty. In determining what orders should be made, the Tribunal described the respondent's conduct as "not being completely candid in communications both with the client and the Queensland Law Society".[43]
2. In Bevan there was no allegation of dishonesty either; and the Tribunal recorded that the veracity of the respondent's explanation for his client's absence from the hearing was not the subject of evidence. It appears that the finding of misleading conduct arose from the respondent's failure to disclose that his client had been at the Court earlier on the day of the hearing, and he had advised her to leave.[44] The Tribunal found that the misleading was intentional, but said, "This does not mean, however, that the respondent desired or wished to mislead the Court" [45] (emphasis in original). It also said, "If it were established, however, that the account advanced by the respondent relating to the medical condition of Ms Ross was contrived to mislead the Court, more severe penalties would be required". [46] The Tribunal also noted that the conduct was not designed to acquire a benefit for the respondent or his client, or otherwise to prejudice the legal rights of the opposing party.[47] Moreover, the conduct was not protracted, and did not involve others in the deception.

[61] The charges in Smith involved neglect and delay, not dishonesty or misleading conduct. Bussa also involved a failure to pursue a matter competently and diligently, as well as failure to respond to notices under the LP Act. Again there was no allegation of misleading conduct or dishonesty. These cases are of only limited assistance.

[62] The respondent's conduct is significantly less serious than that considered in Bax. Although there are analogies with Wheeler, other charges were involved as well.

1. In Legal Services Commissioner v Voll,[48] the practitioner had given a false account of the absence of his clients from a hearing in the Queensland Building Tribunal. He was also found guilty of neglect and incompetence. The false account was given when the respondent was in a state of panic and anxiety.[49] He had "substantially refined his practice since".[50] There was no personal benefit to him, but his conduct potentially caused a serious loss to his clients. He had been uncooperative in the investigation, and some of his evidence had been rejected (with a recommendation that this be the subject of a separate investigation). A penalty of $20,000 was imposed, and he was publicly reprimanded. His appeal against these orders was unsuccessful.
2. The penalty in Voll was struck with reference to Legal Services Commissioner v Mullins.[51] In that case, a barrister representing a party at a mediation relied on calculations of future loss based on life expectation assumptions which, at the time of the mediation, were no longer sound, as his client had been diagnosed with cancer. The barrister did not disclaim the assumptions. He was found to have intentionally deceived his opponent and his opponent's client. The case settled, but the other party took steps to recover the settlement sum, resulting in a further settlement on confidential terms. Prior to the mediation, the barrister undertook his own research, and sought the advice of senior counsel, on his ethical obligations; but posed the wrong questions. He was publicly reprimanded, and a penalty of $20,000 was imposed.

[65] In the present case, there is a degree of deliberation and protractedness not present in Voll. Nor did the present respondent make any attempt to identify his ethical obligations. Although the respondent has deposed to the real risk of substantial loss to his clients had he disclosed the true reason for the assignment, it has not been submitted in the proceedings as heard between the applicant and the respondent[52] that the respondent's conduct deprived the body corporate of an opportunity for significant financial gain. Nevertheless it is apparent from the respondent's affidavit that there was a significant likelihood that the body corporate would have had the right to terminate the agreements with Limrock, had the respondent given the true reason for the proposed assignment. Whether the other party to the mediation in Mullins ultimately suffered financial loss is unclear. In neither Mullins nor Voll did the practitioner involve others in the dishonest conduct.

[66] There has been no suggestion of any similar conduct by the respondent on any other occasion; nor have findings been previously made against him by a disciplinary body. The respondent's conduct, while serious, is not amongst the most serious examples of dishonesty by a member of the legal profession. It appears to have been the product of his failure to find a means of dealing with a situation of some difficulty without resorting to dishonesty. There is no reason to think that the respondent could not, with some care and greater attention to ethical standards, avoid similar conduct in the future. His affidavit indicates that he has taken steps to achieve this. In the circumstances, it is proposed to order the respondent to pay a penalty of $30,000. This amount broadly reflects the penalty in Voll and Mullins, with some allowance for inflation over time, and the fact that there are some aspects of the respondent's conduct which are more serious than in those cases, particularly his initiation of a course of dishonest conduct, which continued over a period of time, and involved others.

[67] The respondent's conduct also warrants a public reprimand. Given the passage of time, and the steps taken by the respondent to maintain ethical standards, there does not seem to be any utility in requiring the respondent to undergo ethics training.

[68] There has been no opposition to an order for costs in the applicant's favour.

[69] The following orders are made:

1. The respondent is publicly reprimanded;

2. The respondent is ordered to pay a penalty of $30,000;

3. The respondent is to pay the applicant's costs of the application to be assessed on the standard basis.

[70] A Notice of intention to seek compensation order was filed in the Tribunal by Atrium Resort CTS 4043 on 14 July 2017. Accordingly, it is further ordered that:-

1. Atrium Resort CTS 4043 shall advise the Tribunal and the respondent as to whether it wishes to pursue its notice of intention to seek compensation order within 14 days of the publication of this decision;
2. If Atrium Resort CTS 4043 advises that it wishes to pursue a compensation order, then the matter will be listed for directions on a date to be advised by the Tribunal.

1. [1] Both from the language used in the application and by reference to Belmont Finance Corporation Pty Ltd v Williams Furniture Ltd & Ors [1979] Ch 250 at 268, where it was said that the facts alleged may sufficiently demonstrate that dishonesty is allegedly involved; cited with approval in Legal Services Commissioner v Madden (No 2) [2008] QCA 301 at [54].
2. [2] See, for example, Hornsby Information Centre Pty Ltd v Sydney Building Information Centre Ltd [1978] HCA 11; (1978) 140 CLR 216, 228; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191, 197. The situation is usually different when the conduct is a representation as to the representor's state of mind.
3. [3] Outline of submissions on behalf of the Legal Services Commissioner, filed 12 July 2017, at [46].
4. [4] Outline of Submissions on behalf of the Respondent, filed 28 July 2017, at [8].
5. [5] [1990] 1 Qd R 498.
6. [6] At 507.
7. [7] See Allinson v General Council of Medical Education and Registration [1894] 1 QB 750; and the discussion in Dal Pont, Lawyers' Professional Responsibility (6th ed) LawBook Co 2017 at [23.85].
8. [8] [2015] QCAT 290.
9. [9] [2016] QCAT 533.
10. [10] See Gould at [48] to [51].
11. [11] [1992] 2 Qd R 690.
12. [12] See Wheeler at 701-702.
13. [13] Wheeler at 702.
14. [14] (1996) 71 FCR 285; [1996] FCA 1134.
15. [15] (2015) 258 CLR 482; [2015] HCA 46.
16. [16] [2018] QCAT 332.
17. [17] NW Frozen Foods at p 290-291.
18. [18] At p 291.
19. [19] [1991] ATPR 52,135 at 52,152.
20. [20] NW Frozen Foods at p 290.
21. [21] At p 291.
22. [22] At p 294-295.
23. [23] [2004] FCAFC 72; [2004] ATPR 41-993.
24. [24] CFMEU case at [32].
25. [25] Ibid.
26. [26] Ibid [58].
27. [27] Trade Practices Commission v Allied Mills (No 5) [1981] FCA 156; (1981) 60 FLR 38 at 41-42; [1981] FCA 156; 37 ALR 256 at 259 per Sheppard J.
28. [28] See the CFMEU case at [16]-[24]
29. [29] At [55].
30. [30] At [60]-[61].
31. [31] See s 13 of the LP Act.
32. [32] Dal Pont, Lawyers' Professional Responsibility, at [23.25].
33. [33] CFMEU case at [58].
34. [34] At para [23-100], text at n 125.
35. [35] (1994) 34 NSWLR 408.
36. [36] [1909] HCA 87; (1909) 9 CLR 655.
37. [37] At 681-682; see Foreman at 442-443.
38. [38] Foreman at 445.
39. [39] [1999] 2 Qd R 9, 20.
40. [40] At 22.
41. [41] [2011] QCAT 388.
42. [42] [2014] QCAT 518.
43. [43] At [80].
44. [44] See Bevan at [7].
45. [45] At [15].
46. [46] At [19].
47. [47] At [20].
48. [48] [2008] QCA 293.
49. [49] At [48].
50. [50] Referring to the findings of the Legal Practice Tribunal at [30], which findings were not disturbed by the Court of Appeal, see [53].
51. [51] [2006] LPT 12.

[52] The body corporate has given notice of an intention to seek compensation, but that matter has not yet been the subject of a hearing.