Victorian Civil and Administrative Tribunal|2013-11-18

Legal Services Commissioner v McDonald (Legal Practice) [2013] VCAT 1943 (18 November 2013)

Legal Profession Act 2004 - alleged unsatisfactory professional conduct - practitioner sent two letters to opposing solicitor accusing him of being 'fundamentally dishonest' and 'telling lies' - alleged breach of Rule 21 of Professional Conduct and Practice Rules 2005.

The respondent is found guilty of two charges of unsatisfactory professional conduct.
The matter is to be listed for a further hearing on the question of the sanctions which should be imposed as a result of this decision.

Mr McDonald is the only principal of a small law firm in the city. In August 2011, he was acting as solicitor for an employee who had been made redundant. Lander and Rogers were the solicitors for the employer. Mr David Catanese was the solicitor at that firm who had the carriage of that matter. In the course of correspondence with Lander and Rogers, Mr McDonald sent a letter dated 30 August 2011 accusing Mr Catanese of being 'fundamentally dishonest' and 'telling lies'. When asked to withdraw these statements, he refused. In a further letter dated 2 September 2011 Mr McDonald said 'I stand rigidly by all the statements that I actually made about Mr Catanese'. He said indeed, he would repeat them, and went on to say that he had engaged in 'deliberate and calculated' dishonesty: Mr Catanese had lied about the contents of the telephone conversation he had had with Mr McDonald on 24 August 2011.
The essence of the disagreement was that Mr McDonald said in a letter that Mr Catanese had confirmed on the phone that 'there would be no scope for discussion nor any proposal for a settlement'. Mr Catanese's version was that he had explicitly said he was not saying there was no scope for discussion between the parties.
Mr Catanese lodged a complaint with the Legal Services Commissioner (LSC). Mr McDonald responded to the LSC by repeating his statements that Mr Catanese had been dishonest. Mr McDonald said he was responding to allegations and threats which Lander and Rogers had made against him. He said they had accused him of sending a letter which misrepresented what Mr Catanese had said during the telephone conversation. He said he was responding to threats of adverse consequences under the Civil Procedure Act 2010, and in terms of costs.
The LSC first wrote to Mr McDonald about the complaint on 14 March 2012. Correspondence ensued between the LSC, Mr McDonald and Lander and Rogers. On 29 October 2012, the LSC wrote to Mr McDonald stating it was considering bringing a charge against him under the Legal Profession Act 2004 (the Act) for breach of Rule 21 of the Professional Conduct and Practice Rules 2005 (Rules). This states:

A practitioner, in all the practitioner's dealings with other practitioners, must take all reasonable care to maintain the integrity and reputation of the legal profession by ensuring that the practitioner's communications are courteous and that the practitioner avoids offensive or provocative language or conduct.

A number of further letters from Mr McDonald did not persuade the LSC that it should not proceed with disciplinary action, and on 15 March 2013, it commenced this proceeding.
The LSC has brought two charges of unsatisfactory professional conduct against Mr McDonald, one in relation to each of his two letters:

Unsatisfactory professional conduct within the meaning of s.4.4.4(a) of the Act, in that by sending the 30 August letter, you contravened Rule 21 of the Professional Conduct and Practice Rules 2005 by failing to take all reasonable care to maintain the integrity and reputation of the legal profession by failing to ensure that his [sic] communications with other practitioners were courteous and/or by avoiding offensive or provocative language or conduct.

Unsatisfactory professional conduct within the meaning of s.4.4.4(a) of the Act, in that by sending the 2 September letter, you contravened Rule 21 of the Professional Conduct and Practice Rules 2005 by failing to take all reasonable care to maintain the integrity and reputation of the legal profession by failing to ensure that his [sic] communications with other practitioners were courteous and/or by avoiding offensive or provocative language or conduct.

Section 4.4.4(a) of the Act has the effect that conduct constituting a contravention of the Rules is capable of constituting unsatisfactory professional conduct or professional misconduct.
Mr McDonald agreed that the two letters were sent (as well as the other correspondence attached to the LSC's Application to VCAT). But he contested the allegations that the two letters constitute unsatisfactory professional conduct, given the surrounding circumstances.
At the beginning of the hearing, Mr McDonald made an application that I disqualify myself on the basis of having read the complaint lodged by Mr Catanese to the LSC (which was included in the materials filed by the LSC). This he said contained untrue and prejudicial material against him. I ruled that the fact that I had read the material in the complaint did not constitute a basis for me to disqualify myself; to the extent there was irrelevant prejudicial material in the complaint, it would not be taken into account. Further, a fair minded lay observer would not conclude that I would not bring an impartial and unprejudiced mind to the resolution of the issues in this case.[1] Accordingly the matter proceeded.

Two witness statements were filed by Ms Maggie McNamara (Manager of Complaints and Investigations at the LSC), one by Mr Catanese and two Mr McDonald. All three gave oral evidence.

CIRCUMSTANCES IN WHICH THE ALLEGED CONDUCT OCCURRED

Mr McDonald was instructed to act for an employee of MS Australia who had been made redundant. On Friday 19 August 2011, Mr McDonald sent a letter of demand to MS Australia stating that his client would execute a deed of release and not issue proceedings against MS Australia if he was paid in the amount of $25,000.00 as a bona fide redundancy payment in addition to payments already made. This letter put a range of factual and legal matters on behalf of the former employee to support the contention that he was entitled to additional redundancy or other payments. It was expressed to be a calderbank offer open for acceptance until 5.00 pm on 23 August 2011.
On Wednesday 24 August 2011, Lander and Rogers sent a response to Mr McDonald, on behalf of MS Australia. The letter was signed on behalf of the firm by Mr Catanese, a lawyer at Lander and Rogers. It also bore the name of Mr Daniel Proietto, the supervising partner. This letter stated that the employee had been paid all entitlements owing to him. It also responded to the matters raised in the 19 August 2011 letter from Mr McDonald relating to taxation of wages paid, the estimate which had earlier been given of severance payment, notice of termination and the amount of severance payment, redeployment and the Fair Work Act 2009, and the Australian Consumer Law. The letter concluded:

Based on the matters discussed above, any proceedings commenced by your client against MSL in respect of the termination of his employment would be premature, without any prospects of success and, potentially, vexatious. This letter may be produced on any future question of costs.

Next, on the same day, 24 August 2011, there was a telephone conservation between Mr McDonald and Mr Catanese. The two had never spoken before. This was the conversation which gave rise to the dispute between the parties. Mr Catanese attached his contemporaneous file note of this conversation to his witness statement. In his evidence, he said he started writing it during the telephone conversation, and completed it after, in accordance with his usual practice. Relevantly, Mr Catanese's version of the conversation was that Mr McDonald had commenced by saying that he was calling to confirm obligations under the Civil Procedure Act 2010, or words to that effect. He had said to Mr McDonald that he had not put a genuine position on behalf of his client; there was no particularisation of $25,000.00 damages sought. Mr Catanese said that he told Mr McDonald he was not saying there was nothing to discuss, and later that he stressed he was not saying there was no potential for resolution.
Mr McDonald's version of the conversation was reflected in his letter of 24 August 2011 to Lander and Rogers which stated:

We refer to our discussions with Mr Catanese as Mr Proietto was not available at the time the telephone call was made.

We point out that we have not received any open response to our correspondence. It was the purpose of Mr McDonald's telephone call today to see whether or not there was any scope for negotiation of a settlement in accordance with the Civil Procedure Act 2010. Mr Catanese confirmed that there was no scope for discussion nor any proposal for a settlement.

In those circumstances it will be necessary for our client to issue legal proceedings. Although this was raised by Mr McDonald, Mr Catanese confirmed that there would no offers of settlement.

We will take instructions from our client and expect to commence legal proceedings as soon as practicable.

Lander and Rogers replied by letter dated Thursday 25 August 2011 stating:

We refer to the above matter, your telephone conversation with David Catanese on 24 August 2011 (telephone conversation) and your letter to us dated 24 August 2011 (your letter).

We are very concerned that your letter misrepresents the matters discussed during the telephone conversation.

In the telephone conversation, Mr Catanese stated, and reiterated, that we do not consider that there is no potential to resolve this matter prior to the commencement of proceedings.

You state in your letter that Mr Catanese 'confirmed that there was no scope for discussion nor any proposal for a settlement' and 'confirmed that there would no offers of settlement'. Mr Catanese did not confirm any of these things.

We suggest that you withdraw your letter as, if produced at a later date, it is likely to mislead a court or tribunal.

This letter may be produced on any future question of costs or any matter arising under the Civil Procedure Act 2010 (Vic) or any other similar legislation.

There was then a telephone conversation on Friday 26 August 2011 involving Mr McDonald, Mr Catanese and Mr Proietto. Mr Catanese gave evidence that he took a note of this conversation. It was attached to his witness statement. During the conversation, each of Mr McDonald and Mr Proietto put to the other their different versions of the telephone conversation on 24 August 2011. They then proceeded to discuss the claim. Each of Mr Proietto and Mr McDonald made some statements generally in support of their own clients' positions. Mr Proietto said the $25,000 proposal was extreme, given that it amounted to a year's pay being sought from a charitable organisation, that others had also been made redundant and that he did not know what the claim was. Mr McDonald said MS Australia had to realise it was not above the law, that there were two or three claims that could be brought and that he wanted to receive a counter offer. The call ended with Mr Proietto saying he will seek instructions on the offer made by Mr McDonald and revert.
On Monday 29 August 2011, Lander and Rogers sent a letter offering a gross amount of $500.00 in full and final settlement. This was open for acceptance until 4.00 pm on 1 September 2011. The letter was without prejudice save as to costs. It stated it may be produced on any future question of costs or any matter arising under the Civil Procedure Act 2010 or any other similar legislation. The letter was from Mr Catanese and Mr Proietto. Their names and titles appeared at the foot of the text.
In response, Mr McDonald sent a letter dated Tuesday 30 August 2011 addressed to Mr Catanese and Mr Proietto. This is the subject of Charge 1. It stated:

We refer to the letters of 25 August 2011 and 29 August 2011.

It is unpleasant to describe Mr Catanese as fundamentally dishonest, and it is a slur on Mr Catanese's career as a lawyer that he starts off at any early stage of his career telling lies. It is fundamental to the smooth operation of the legal system that people act with integrity and honesty and Mr Catanese should be counselled to do this.

Your letter of 29 August 2011 contains an offer of $500 gross which is not a genuine offer of settlement and does not meet the requirements of the Civil Procedure Act. If it were produced for [sic] the question of costs as your indicate, it would demonstrate that there is a lack of good faith being displayed in the correspondence.

Should you wish to engage in meaningful negotiations please let us have a more sensible offer within 24 hours.

The same day, 30 August 2011, a letter was sent from Lander and Rogers to Mr McDonald stating, relevantly:

Your letter is highly unprofessional, defamatory and outrageous.

There is absolutely no basis for your allegation that Mr Catanese is 'fundamentally dishonest' or that he has told 'lies'.

Unless you unconditionally withdraw your letter by 12.00 noon today, your letter will be referred to the Legal Services Commissioner without further notice.

This letter was signed by Mr Proietto, and also bore name of Mr Derek Humphrey-Smith, the Managing Partner of the Work Place Relations and Safety Group of Lander and Rogers.
On 30 August 2011 there was a telephone conversation between Mr Derek Humphrey-Smith and Mr McDonald. Mr Humphrey-Smith told Mr McDonald that the statements in the letter of 30 August 2011 were defamatory and entirely unacceptable. He urged Mr McDonald to withdraw his letter, failing which the matter would be referred to the LSC.
On Friday 2 September 2011, the same two authors sent a follow-up letter to Mr McDonald. This attached a draft complaint from Mr Catanese to the LSC. It stated that Mr Catanese intended to file the complaint if Lander and Rogers did not receive correspondence from Mr McDonald unconditionally withdrawing his letter of 30 August 2011.
In reply, on 2 September 2011, Mr McDonald sent a letter addressed to Mr Derek Humphrey-Smith. This is the subject of Charge 2. It stated:

I refer to your earlier letter today. As indicated in my telephone conversation with you on Tuesday I stand rigidly by all the statements that I actually made about Mr Catanese. I have not bothered to read the document entitled Draft Complaint or any of the attachments which I presume is a lot of self-serving nonsense following your unsuccessful and misguided attempt to extricate Mr Catanese from the problem he had created for himself. I welcome any independent inquiry into this matter and will not be bullied or blackmailed by you or anyone else and that has been my position throughout my career.

Indeed I will repeat the statement that Mr Catanese was dishonest. The dishonesty was deliberate and calculated:

He lied about the contents of the telephone conversation.
He tried to misrepresent the contents of the telephone conversation to his employer in his later correspondence with this firm because he knew full well that he had done the wrong thing by refusing to participate in genuine negotiations when it would have been appropriate to do so.
He attempted to malign me in his discussions with you and others and apparently continued to do so. Apparently this is an attempt to prevent action being taken by your firm against him which would otherwise be necessary. According to you the matter would need to be dealt with by the partners of the firm given the allegations which I made against him in my letter of 30 August 2011.
I have not demanded that your firm take disciplinary proceedings against Mr Catanese because that is a matter for you as his employer but I would be very disappointed if you attempted to support his dishonesty and implement[2] your self in his conduct.
On Monday 5 September 2011, Lander and Rogers sent a letter signed by Mr Derek Humphrey-Smith to the LSC enclosing Mr Catanese's complaint about the conduct of Mr McDonald.

There was a difference between the parties as to what the inquiry was that the Tribunal needed to make in order to determine the charges put against Mr McDonald. The LSC's position was that it was not necessary to determine whose version of the 24 August 2011 telephone conversation was correct. It said that even accepting Mr McDonald's version, Rule 21 was breached. This is explained by Ms McNamara's second witness statement dated 2 October 2013.
Ms McNamara's second witness statement included the following:
1. There is a dispute as to what was said in the 24 August conversation. The two competing recollections are (essentially) whether Mr Catanese said:

(a) that there would be no offers made to Mr McDonald's client (Mr McDonald's version); or

(b) there could not be any offers made to Mr McDonald's client in the meantime as his client's claim was unparticularised (Mr Catanese's version).

In the meeting [with Mr McDonald on 21 September 2012] I said to Mr McDonald, words to the effect of:

(a) the Commissioner was considering the complaint on the basis that the Commissioner could not determine [what] was said in the 24 August conversation; and

(b) it was on that basis that the Commissioner would consider the complaint on the version of the 24 August conversation most favourable to Mr McDonald, that his version of it was true.

In the telephone call [with Mr McDonald on 1 July 2013], I said that the Commissioner's position was that he was not saying that Mr McDonald was lying about what was said in the 24 August conversation, but that the Commissioner puts his case on the basis that the Commissioner accepted Mr McDonald's version of that conversation. I went on to say that if Mr McDonald puts this in issue by cross-examining Mr Catanese that Mr McDonald was in danger of the Tribunal finding that Mr Catanese's version of the conversation was in fact correct.
What I was attempting to explain to Mr McDonald in the telephone call was the effect of paragraphs 9 and 10 of the Application for Order, which alleges the 24 August conversation and the dispute as to what was said, but takes it no further.
It was and is the Commissioner's position in this proceeding that, irrespective of which practitioner's version of the 24 August conversation is correct, it was wrong for Mr McDonald to send the 30 August letter and the 2 September letter (as those terms are defined in the Application for Order).
This is the same point that was made in the Commissioner's letter to Mr McDonald dated 29 October 2012 (annexure 7 to the Application for Order).
The LSC's 'Murray'[3] letter of 29 October 2012, referred to in paragraph 12 of Ms McNamara's second witness statement, relevantly said:

In this instance, I am unable to determine whose account of your telephone conversation with the complainant is accurate. As you are the party accused of a breach, I have worked under the assumption that your recollection and version of events is correct, and you had a right to correct the complainant's description of your telephone conversation. Nevertheless, I am still inclined to think that you have breached Rule 21. It appears to me that you escalated the matter with your imprudent language in a way which undermines the reputation of the legal profession and which has the potential to threaten your client's best interests.

In response to Ms McNamara's second witness statement, Mr McDonald filed a second witness statement dated 8 October 2013. This largely comprised submissions. At paragraph 3 it stated 'in respect of each letter I have asserted that I was justified in sending the letters because Mr Catanese was telling lies'.
Mr McDonald did not accept the factual basis on which the LSC brought the two charges. This was apparent from the correspondence and witness statements, and the way in which Mr McDonald conducted the hearing.
Given that Mr McDonald did put in issue whose version of the conversation was correct, I have considered that question.

The case put by Mr McDonald was to the effect that he was justified in sending the two letters accusing Mr Catanese of lying, because he was lying. From the day of the telephone conversation on 24 August 2011, right up to the end of the hearing, Mr McDonald's emphatic position was that Mr Catanese had lied in that conversation. His position was that he could not be in breach of Rule 21, because otherwise, no lawyer would ever be allowed to accuse another of being dishonest, even where that is the case, or is believed by the lawyer to be the case.
Also, his own integrity was being challenged in a way that had serious potential repercussions for his reputation and his practice. Further, Lander and Rogers was bullying him and seeking to humiliate him. In all the circumstances his responses were justified, indeed measured, and not offensive or provocative, under Rule 21.

Mr McDonald relied on the decision of David Lander v Council of Law Society of the Australian Capital Territory[4]. In that case, a solicitor was acting for a teacher seeking medical retirement on the basis of total incapacity for work. Believing the relevant Department was dragging its feet, and in the light of other experiences with other clients, the solicitor wrote a highly critical letter to the Department. Amongst other things, it stated that the Department had a long history of failing to communicate substantively and honestly, or at all, that officers were rude and unhelpful, that the Department had engaged in malpractice and maladministration for years and it bore grudges against people who engaged lawyers.
The solicitor, Mr Lander, was found guilty of unsatisfactory professional conduct by the ACT Law Society. He was found to have breached a rule in very similar terms to Rule 21. This finding was overturned on appeal to the Full Court of the Supreme Court of the ACT.
The Court said:

[53] If the criticisms the solicitor leveled at the Department were true or, at least, fair comment as understood in defamation law, it could not be misconduct or unsatisfactory conduct to draw them to the attention of the relevant officers of the Department and its Minister. That is not an issue which those considering the statements should have to concern themselves. The fact that it was perceived as discourteous and offensive, even provocative, to parties to whom it is directed, is beside the point. In contrast with Karageorge (supra) the terms of the solicitor's complaint were not, if the allegations were soundly based, gratuitously insulting or offensive [emphasis added].

[56] Of course, the fact that Rule 25 requires that practitioners ensure courtesy and the avoidance of offensive or provocative language does not of itself make an apparent non-compliance unsatisfactory professional conduct. To make it so, however, it is not sufficient that the client did not specifically instruct the solicitor to make those comments. The question is whether the solicitor had a reasonable basis for them. He said there was. That was not a contention that was examined.

[58] In our view, the real issue was not that the solicitor made the comments complained of in the course of correspondence concerning his client's claim, but whether the accusations and criticisms he made were false or without foundation, to his knowledge. If that were to be made out, then the finding of unsatisfactory professional conduct should be upheld. However, it seems to me that particular issue was not addressed by the Tribunal.

Mr McDonald argued that his responses to Lander and Rogers were all 'soundly based', in accordance with paragraph [53] of the Lander decision. He argued that given no evidence was led that his assertions about Mr Catanese were untrue, it was not shown the test applied in Lander of 'soundly based' has not been satisfied.

From the material attached to the LSC's application (including extensive correspondence from Mr McDonald), his witness statement, evidence, cross-examination of Ms McNamara and Mr Catanese and submissions, the following further contentions were made by Mr McDonald:
- The letter of 25 August 2011 from Lander and Rogers was accusing him of misrepresentation. This is a grave allegation.
- That letter of 25 August 2011 also contended that his letter of the day before, if later produced, was likely to mislead a Court or Tribunal. This was a very serious threat against Mr McDonald, especially when it was followed up by the statement that the letter may be produced on any future question of costs or any matter arising under the Civil Procedure Act 2010 or any similar legislation. Mr McDonald was subject to the most offensive and dishonest attack on him personally which he had ever experienced in almost 35 years of legal practice.
- This threat was heightened by the fact that in its response to his initial letter of demand of $25,000, Lander and Rogers had said not only that proceedings would be premature and without any prospects of success, but also that they were, potentially, vexatious. That is also a serious allegation to make. The fact that the claim settled for $7,500 indicated that this allegation was wrong.
- In his submissions and evidence, Mr McDonald also referred to the provisions of s 376 and 401 of the Fair Work Act 2009 which he said enabled costs to be ordered against a lawyer who had encouraged a client to bring an action which, among other things, had no reasonable prospect for success. He said large firms representing employers typically used these provisions as a threat against him when he was acting for employees.
- He said Mr Catanese's letter of 25 August 2011 went far beyond the typically aggressive response he encountered from firms acting for employers. It was an attempt to attack his reputation and capacity to practise.
- Not only would withdrawal of the words he attributed to Mr Catanese paint him as 'the bad guy' on the record, but it would also be impossible. You cannot 'withdraw' correspondence between solicitors once it has been sent, even by mutual agreement.
- Mr McDonald said his response of 30 August 2011 was 'measured' because he did not want to create a dispute between practitioners which was unhelpful, and could be detrimental to the interests of clients. His 30 August 2011 letter was not sent to Mr Catanese's managing partner. (It was sent to Mr Catanese and Mr Proietto, a partner of Lander and Rogers. Here, Mr McDonald was referring to the fact that he did not address the letter to Mr Derek Humphrey-Smith, the more senior partner.)
- Mr McDonald submitted that Lander and Rogers was protecting Mr Catanese in order to protect its stream of legal work from the Government. Mr McDonald said he had discovered that Mr Catanese was an ex-Government lawyer, and Mr McDonald said he had little doubt that Mr Catanese had been recruited to Lander and Rogers by reason of the contacts he may have in Government. This was why they wanted to protect him, and not to take internal disciplinary action against him.
- The $500 settlement offer on 29 August 2011 was an attempt to prove that the statement Mr McDonald attributed to Mr Catanese in his letter of 24 August 2011 was false - this was an attempt to 'cover his tracks' and make him [Mr McDonald] look dishonest. He was being 'set up' by Mr Catanese.
- Mr Derek Humphrey-Smith sought to bully him into withdrawing his 30 August 2011 letter. Mr McDonald saw the threat of a complaint to the LSC as nothing short of blackmail.
- The Lander and Rogers letter of 30 August 2011 was sent by fax to Mr McDonald's office, where his staff could see it. This was an attempt to embarrass and intimidate him.
- Mr Catanese has hidden behind one of Victoria's largest law firms and utilised the LSC to attack him, rather than bringing defamation proceedings against him.
- Mr McDonald has on a number of occasions been called upon by Courts to assist the Court on a pro bono basis when a Commissioner or Magistrate is not being sufficiently assisted by a counsel. He gave details of one such matter.

The true content of the telephone conversation on 24 August 2011

I turn first to the question put in issue by Mr McDonald of whose version of the telephone conversation is correct. While the LSC's position was that it was not necessary to consider this question, given that Mr McDonald had put it in issue, Mr Scotter made submissions on it. He submitted that there were good reasons to prefer Mr Catanese's version.
First he said Mr Catanese produced a contemporaneous file note, which supported his version, but Mr Mc Donald did not. On this point Mr McDonald had said in a letter to the LSC of 26 April 2012 that the conversation had been:

...recorded not only in my letter back to [Mr Catanese] but by my assistant who was writing notes at my desk during the conversation.

Thus Mr McDonald relied on his letter of 24 August 2011 itself, as a close to contemporaneous record of the conversation. He said in evidence that he dictated it immediately after the conversation. However, he did not produce any direct file note by him of the conversation. In these circumstances, I assume there was no such note. Given the potentially fine differences in language which could have given rise to the parties' differing positions, Mr Catanese's genuinely contemporaneous file is the better evidence.

Mr McDonald said during his evidence that Mr Catanese's file note of the 24 August 2011 telephone conversation did not refer to particulars of his client's claim being requested by Lander and Rogers. That is incorrect. The note included the statements by Mr Catanese 'no particularisation of $25K sought' and 'no quantification of damage suffered or payments sought'.
Also, the effect of Mr McDonald's letter of 26 April 2012 was to indicate that on and from that date, that he relied on a note by his assistant which he contended comprised a record of the 24 August 2011 conversation. In his final submissions, Mr Scotter pointed to the fact that this alleged contemporaneous note was not produced to the Tribunal. Nor was there any evidence given by the assistant who took it. He said in these circumstances, an inference arises in favour of Mr Catanese's version.
In response to this point being made by Mr Scotter in his final submissions, Mr McDonald said his assistant's note did not record what Mr Catanese said. Hence, contrary to the assertion Mr McDonald made on and from 26 April 2012, his assistant's note did not provide support for his case.
Second, Mr Scotter contrasted the demeanour of the two witnesses: Mr Catanese was measured and thoughtful, while Mr McDonald's demeanour indicated an absolutely fixed view, not admitting any possibility of there being a misunderstanding. In my view, this point is of significance, in terms of how Mr McDonald actually responded to events (see below). However, having a fixed view might be said to support Mr McDonald's version of the 24 August 2011 telephone conversation, in that it demonstrates a fervently held belief.
Third, Mr Scotter submitted that it was inherently more likely that in a conversation of this type, there would be a misunderstanding, or a non-meeting of the minds, rather than a point blank refusal to negotiate. I accept with that proposition. Nothing I observed of Mr Cantanese while giving his evidence raised a contrary suggestion. Mr McDonald contended during his evidence that Mr Catanese fabricated the contents of the telephone conversation. I accept Mr Catanese's evidence, which was, as submitted, measured and thoughtful. There is no proof of that contention and I reject it.
Mr McDonald also emphasised on numerous occasions that Mr Catanese had never denied to him that he had told lies. It was clear from Mr Catanese's evidence, however, that he stuck to his version of 24 August 2011 telephone conversation. It was also clear from his evidence that he does not accept Mr McDonald's contention that he lied.
Weighing up the evidence however, I find it cannot be concluded with sufficient confidence (on the applicable Briginshaw standard) what precisely was said in the telephone conversation. Certainly, I cannot conclude that Mr Catanese was lying. Indeed the relevant factors lean more in favour of Mr Catanese's version. With some hesitation, I conclude that I cannot be sufficiently satisfied that Mr Catanese's version is the correct one.
In the course of a conversation where the two opposing solicitors were having their first discussion about a new claim, where they had never spoken to each other before, and each was focussing on their own clients' position, it is quite conceivable that they could take different meanings out of the conversation. There is not necessarily a big difference between words which might convey, on the one hand, 'no offers will be made', and, on the other, 'without proper particulars, no offers will be made'.

Was Rule 21 breached?

That does not resolve the matter, however. Rule 21 requires an analysis of the circumstances surrounding the impugned conduct. While Mr McDonald personally had a firm belief in his version of what was said in the telephone conversation, it is necessary to inquire what constitutes a response which complies with Rule 21 (and what response does not) in all the circumstances.
These were as follows: It had been made clear to Mr McDonald by the letter of Thursday 25 August 2011 (the day after the Wednesday 24 August 2011 phone conversation) that there was a disagreement as to what had been said. The day after that (Friday 26 August 2011) there was a telephone conversation during which this was reiterated to Mr McDonald, and he and Mr Proietto went on to discuss his client's claim. The following Monday, an offer was sent by Lander and Rogers. The next day, Tuesday 30 August 2011, in rejecting that offer as not being genuine, Mr McDonald wrote the letter which is the subject of charge 1.
In response to that, he received a letter from Lander and Rogers the same day demanding he withdraw his statement about Mr Catanese. This was followed up on Friday 2 September by another letter, and a telephone call from Mr Humphrey-Smith. Then on that day Mr McDonald wrote the letter the subject of charge 2.
In the circumstances, it should have been apparent to Mr McDonald when he received a letter of Thursday 25 August 2011, that no purpose would be served by continuing to make the emphatic assertion Mr Catanese was lying, in circumstances where Mr McDonald was aware that he had no conclusive proof of this. It was always going to be his word against Mr Catanese's.
Second, as a result of the telephone conversation with Mr Proietto the next day, Mr McDonald had also become aware that it was possible to seek to negotiate with Lander and Rogers on behalf of his client. So no interest of his client's would be served by continuing to argue what had now become a moot point.
Third, Mr McDonald should have considered the possibility that he was mistaken in his belief that Mr Catanese had lied. He should have considered the possibility that there was a misunderstanding or that he had misinterpreted what Mr Catanese had said, especially considering he did not take notes of the actual words spoken.
Mr McDonald's case was that the overall effect of all the communications he had received from Lander and Rogers up to 30 August 2011 constituted a serious threat to his practice and reputation, such that he was justified in making the assertions he did in his letter that day.
I disagree. In my view, even accepting that Mr McDonald's earnest belief in his own version of the phone conversation, his reaction was so extravagant as to breach Rule 21.
I reject his contention that he was the subject of a uniquely aggressive attack, quite unlike anything which would take place from time to time in conducting practice as a plaintiff law firm, which required the response he gave.
Looking at the correspondence and sequence of events overall, it is apparent Mr McDonald over-reacted. The two firms of solicitors were obviously involved in a robust exchange of assertions, designed to further the strategic interests of their respective clients. In all the circumstances, I do not regard the content of the letters from Lander and Rogers of 24 and 25 August as being as unjustified or outrageous, as Mr McDonald contended. The references to misrepresentation of the matters discussed in the telephone conversation and the 24 August 2011 letter from Mr McDonald being likely to mislead a Court or Tribunal if produced at a later date, were not an unreasonable statement of their position. These were expressed in contingent terms, not as absolutes. Similarly, the word 'vexatious' in the 24 August 2011 letter from Lander and Rogers was softened by the word 'potentially'. Also, at this stage it was merely suggested, rather than demanded, that Mr McDonald withdraw his letter of 24 August 2011.
Lander and Rogers' response indicates its perception that it was responding to an unparticularised ambit claim. It was also nervous of what the implications might be of the reference which Mr McDonald had made to duties under the Civil Procedure Act 2010. Mr Catanese said that Mr McDonald had commenced the telephone conversation on 24 August 2011 by saying that he was calling in respect of the Civil Procedure Act. Mr Catanese said he had never before or since had a telephone conversation which commenced in that unusual way. Practitioners are subject to an overarching obligation to use reasonable endeavours to resolve civil disputes.[5] More onerous duties were imposed on solicitors under this legislation as originally enacted, but it was agreed at the hearing that these had been revoked by the newly elected Government prior to August 2011.
There is an incongruity in the fact that Mr McDonald had a conversation with Mr Proietto on 26 August 2011 during which this issue was ventilated, and yet after a further four days to reflect, Mr McDonald sent the letter of 30 August 2011 in such intemperate terms. After hearing Mr McDonald's evidence and submissions, it appears the most likely explanation for this is that the comments about Mr Catanese were written in anger, following receipt of the $500 offer the day before. Indeed, the offensive statements about Mr Catanese were contained in the same short letter of 30 August 2011 as Mr McDonald's rejection of the offer as not genuine, not meeting the requirements of the Civil Procedure Act and demonstrating a lack of good faith.
Mr McDonald said the fact that this offer was made demonstrated that he had been 'set up': He said the offer was made in order to prove him wrong in his assertion that Mr Catanese had stated that there would be no negotiations.
This explanation seems unlikely. It was not specifically put to Mr Catanese. It assumes that the reason Lander and Rogers responded with a very low offer was to protect its solicitor, and that Landers subjugated its client's interests to protect its solicitor. This is a serious suggestion to make.
The more likely scenario, which is consistent with the correspondence, is that the $500 offer was a response to what was perceived to be a claim not supported at that stage by any particulars which could justify an offer of any real substance.
In any event, even if he was provoked, Mr McDonald's letter of 30 August 2011 constituted an unnecessarily offensive and personal attack on Mr Catanese. Even on the basis that Mr McDonald firmly believed Mr Catanese had made the statement a attributed to him by Mr McDonald, to write a letter stating that a solicitor he had never dealt with before was 'fundamentally dishonest' and had started off 'at an early stage of his career telling lies' arising out of a conversation the content of which was he had known for five days was contested, and which objectively, he knew could not be proved, was discourteous, offensive and provocative. The letter of 30 August 2011 purports to make a damming judgment about the character of a solicitor, with whom Mr McDonald has had only minimal contact.
Mr McDonald complained that after he sent the 30 August 2011 letter, Lander and Rogers then responded over-aggressively to him. In his evidence, referring to Lander and Rogers' response after that, Mr McDonald said in his evidence 'all hell broke out'. However, it was Mr McDonald who had inflamed the situation by sending his intemperate letter of 30 August 2011.
Mr McDonald compounded the matter further by repeating and expanding his allegations that Mr Catanese had engaged in deliberate and calculated dishonesty in his letter of 2 September 2011.
I certainly do not accept Mr McDonald's suggestions that his two letters were a 'measured and temperate' response and that he was seeking not to escalate the situation.
Mr McDonald's submissions relating to Lander and Rogers' conduct somehow being an attempt to protect its stream of Government law work, and the sending of a fax so that Mr McDonald's office staff could see it are no more than speculative allegations without any evidence to support them.
The reference to the pro bono work done by Mr McDonald is not relevant. The fact that Mr Catanese has not brought defamation proceedings against Mr McDonald's is also irrelevant. Disciplinary proceedings under the Act are brought by the LSC for the purpose of protecting the public and the reputation of the legal profession. It is trite that any civil remedies which parties might have are quite separate to disciplinary proceedings, which can only be brought by the LSC.
I also reject Mr McDonald's assertions which sought to paint himself as the battling underdog, being bullied by the big firms, as a justification for his intemperate response.
The present circumstances are different to those in the case of Lander, relied upon by Mr McDonald. Here, no apparent interest of Mr McDonald's client was being served by the making of the assertions about Mr Catanese. These were letters to another practitioner relating to that practitioner's conduct, not the client's. This distinction was recognised by the Court in Lander.[6]
It is not sufficient in this case for Mr McDonald to say that his assertions are to be regarded as 'soundly based' because they were not proved to be wrong. Here, they were inherently incapable of conclusive proof ─ it was his word against Mr Catanese's. To persist with such allegations in the circumstances of this case ─ where the question was whether Mr Catanese had lied to him in a telephone conversation, where the outcome of the alleged lie would have no bearing on the matter between their respective clients ─ was provocative, because nothing could come of this except trouble. And it was offensive, because of the seriousness of the allegation that the solicitor was 'fundamentally dishonest'. Then, four days later, even after he had time to reflect, Mr McDonald repeated his provocative and offensive assertions, and broadened them. This conduct has the potential to undermine the integrity and reputation of the profession. It undermines co-operation between practitioners which is important to promote the efficient operation of the justice system, and the conduct of legal business.

For the above reasons, I find the two charged against Mr McDonald proved.

[1] AJH Lawyers Pty Ltd v Careri [2011] VSCA 425; (2011) 43 VR 236; Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488.

[2] Mr McDonald said in evidence that the word he meant to use here was 'implicate'.

[3] A letter giving her a final opportunity to respond before a decision is made as to whether disciplinary charges will be brought.

[4] [2009] ACTSC 117. As far as I am aware, the similarity in names between that case and this is coincidental.

Legal Services Commissioner v McDonald

At a glance

Court

Decision date

Source

Judgment (69 paragraphs)

Legal Services Commissioner v McDonald (Legal Practice) [2013] VCAT 1943 (18 November 2013)

Parties

Legislation Cited (1)

Cases Cited (2)