Legal Services Commissioner v McHenry & Anor

PROFESSIONS AND TRADES - LAWYERS - COMPLAINTS AND DISCIPLINE - DISCPLINARY PROCEEDINGS - QUEENSLAND - PROCEEDINGS IN TRIBUNALS - where the complainants are not parties to the disciplinary application - where s 656B of the Legal Profession Act 2007 (Qld) entitles complainants to appear at the hearing of a disciplinary application in relation to aspects of the hearing that relate to a request by the complainant for a compensation order - where s 43 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) permits parties to a proceeding to be represented by someone else in certain circumstances - whether the complainants should be joined as parties

PROFESSIONS AND TRADES - LAWYERS - COMPLAINTS AND DISCIPLINE - DISCIPLINARY PROCEEDINGS - QUEENSLAND - ORDERS - where the Tribunal found the respondent engaged in professional misconduct and unsatisfactory professional conduct - where s 462(1) of the Legal Profession Act 2007 (Qld) requires the Tribunal to make a costs order in favour of a complainant against a person found to have engaged in misconduct, unless the Tribunal is satisfied exceptional circumstances exist - whether compensation sought by complainant was in fact legal costs

Legal Profession Act 2007 (Qld) s 452, s 456, s 462, s 464, s 465, s 467, s 656B

Limitation of Actions Act 1974 (Qld) s 10(1)(a)

Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 28, s 39, s 41, s 42, s 43

Legal Services Commissioner v McHenry [2018] QCAT 417

A Chappell, solicitor for Taylor Street Community Legal Service & Seniors Legal and Support Service

A Chappell, solicitor for Taylor Street Community Legal Service & Seniors Legal and Support Service

[1] In respect of charges resulting from the complaint of Mr Gilbert Thornley, the Tribunal found that Mr David McHenry ('the respondent') engaged in unsatisfactory professional conduct. In respect of charges resulting from other complaints, the Tribunal found that the respondent engaged in professional misconduct.[1]

[2] Mr Thornley has given notice of an intention to seek a compensation order under ss 456(4), 464 and 465 of the Legal Profession Act 2007 (Qld) ('LP Act'). So have the complainants Jodie Harris and Bradley Pearce, Kelly Trevena, Carolyn Willis, Paul Lastavec, Dennis Stanley and Terry Orth. These reasons deal with questions of compensation (and in one case, costs). The notices will be referred to as compensation requests.

[3] The Tribunal made directions on 8 March 2019 to enable these questions to be determined. The applicant was excused from further participation in the proceedings. However, its legal officer, Ms M R Lester, attended at the hearing, and was, on occasion, invited to make submissions for the assistance of the Tribunal.

[4] The Tribunal was informed that Mr Stanley had died, and that a copy of the directions had been served on the executors of his estate. Nothing further has been heard from them. In those circumstances, it is not proposed to make a compensation order in his favour.

[5] The Tribunal was also informed that the respondent did not wish to participate further in the proceedings. It received submissions from Mr Lastavec, Ms Trevena, and Ms Willis. Some additional documents were submitted on behalf of Mr Thornley. The Tribunal also received submissions from Chris Trevor & Associates ('CTA'), a law practice with which the respondent was associated in ways identified in the earlier reasons.

[6] The power to make a compensation order is conferred on the Tribunal by s 456(1) and (4)(b). It is conditioned on the Tribunal being satisfied, after it has completed a hearing of a discipline application, that the respondent has engaged in unsatisfactory professional conduct or professional misconduct. The following provisions are relevant:

464 Meaning of compensation order

A compensation order is 1 or more of the following -

(a) an order that a law practice can not recover or must repay the whole or a stated part of the amount that the law practice charged a complainant for stated legal services;

(b) an order discharging a lien possessed by a law practice in relation to a stated document or class of documents;

(c) an order that a law practice carry out stated work for a stated person without a fee or for a stated fee;

(d) an order that a law practice pay to a complainant an amount by way of compensation for pecuniary loss suffered because of conduct that has been found to be -

(i) unsatisfactory professional conduct or professional misconduct of an Australian legal practitioner involved in the relevant practice; or

(ii) misconduct of a law practice employee in relation to the relevant practice.

465 Compensation order relating to pecuniary loss

(1) Unless the parties agree, a compensation order that is the type of order mentioned in section 464(d) must not be made unless the disciplinary body making the order is satisfied -

• (a) if there is a complainant in relation to the discipline application - that the complainant has suffered pecuniary loss because of the conduct concerned; and

• (b) that it is in the interests of justice that an order of that type be made.

(2) Also, a compensation order of the type mentioned in section 464(d) for a pecuniary loss for which the relevant complainant has received or is entitled to receive either of the following must not be made -

• (a) compensation under an order that has been made by a court;

• (b) compensation from the fidelity fund, or a fund of another jurisdiction under a corresponding law of that jurisdiction, if a claim for payment from the fidelity fund or other fund has been made or decided.

[7] An order identified in s 464(d) will be referred to in these reasons as a pecuniary loss order. Under s 466, the amount of compensation the subject of such an order may not exceed $7,500, unless both the complainant and the law practice consent to the order. Under s 467, the recovery of compensation does not affect any other remedy available to a complainant, but the amount must be taken into account in other proceedings relating to the same loss.

[8] There are a number of noteworthy features about these provisions. One is that a compensation order is one of a number of orders which the Tribunal might make on the completion of the hearing of a discipline application against an Australian legal practitioner; yet, unlike other orders that might be made, it is made against a legal practice, rather than the practitioner who is the respondent to the discipline application. Another is that a pecuniary loss order is limited to compensation for pecuniary loss. A third is that the loss must have been suffered because of the misconduct found by the Tribunal. Finally, the Tribunal must be satisfied that it is in the interests of justice to make "an order of that type". It should be noted that, after 1 July 2010, the respondent was a sole practitioner, practising under the name "Dave McHenry & Associates". Before that date, he practised in various capacities with CTA.

[9] In none of the matters to be considered in these reasons has there been any suggestion of consent by the respondent to an order that he pay an amount in excess of $7,500 by way of compensation. The same is true of CTA. There has also been no suggestion that s 465(2) applies.

[10] In view of the nature of one of the claims, mention should also be made of s 462 of the LP Act. It requires the Tribunal to make an order requiring a person found to have engaged in unsatisfactory professional conduct or professional misconduct to pay costs, including the costs of a complainant, unless the Tribunal is satisfied that exceptional circumstances exist.

[11] Before dealing with the individual compensation claims, it is necessary to consider the position of various persons and entities in relation to compensation matters.

Position and representation of complainants and CTA

[12] On these questions, the Tribunal has been considerably assisted by submissions from Mr Cohen, who represented the respondent in the earlier hearing. It has also received some helpful submissions from the Legal Services Commission. The Tribunal made orders in relation to some of these questions, for the reasons which follow.

[13] Under s 452 of the LP Act, proceedings before the Tribunal are commenced by an application ('the discipline application') made by the Legal Services Commissioner. The LP Act does not identify the parties to such an application. Subject to any modification found in an Act such as the LP Act, the Tribunal's practices and procedures are as provided for in the Queensland Civil and Administrative Tribunal Act 2009 (Qld) ('QCAT Act').[2] Section 39 of that Act identifies as parties to the proceeding the applicant, and a person in relation to whom a decision of the Tribunal is sought by the applicant; an intervener under s 41; a person joined as a party under s 42; and someone an Act such as the LP Act states is a party to the proceeding. Obviously, s 39 has the effect that the Commissioner and the respondent are parties to the discipline application.

[14] Section 42 of the QCAT Act includes the following:

• (1) The tribunal may make an order joining a person as a party to a proceeding if the tribunal considers that -

(a) the person should be bound by or have the benefit of a decision of the tribunal in the proceeding; or

(b) the person's interests may be affected by the proceeding; or

(c) for another reason, it is desirable that the person be joined as a party to the proceeding.

[15] As mentioned, s 456 of the LP Act provides that, on completion of the hearing of a discipline application, the Tribunal may make certain orders, including a compensation order.

[16] Section 656B of the LP Act provides as follows:

656B Entitlement to appear at hearing

The complainant for a discipline application before the tribunal is entitled to appear at the hearing of the application in relation to -

(a) those aspects of the hearing that relate to a request by the complainant for a compensation order; and

(b) other aspects of the hearing, but only if the tribunal gives leave to the complainant to appear in relation to them.

[17] The right conferred on a complainant by s 656B is limited, and somewhat unusual. The section, notably, does not make a complainant a party to the discipline application; accordingly, it does not satisfy s 39(e) of the QCAT Act. Nor does it give a complainant the status of an applicant for an order. Each complainant has the right to appear at any hearing of a discipline application, but only on those aspects of the hearing relating to a request for a compensation order. Although s 656B does not expressly permit a complainant to be heard or otherwise actively participate in the hearing,[3] that is the likely intent of the provision. There is no apparent purpose served by the provision if it were given a more limited meaning; and in most cases, the only person likely to advance a positive case in support of a compensation order is a complainant.

[18] It follows that none of the complainants requires leave to participate, to the extent provided in s 656B, in the hearing.

[19] Section 43 of the QCAT Act provides for the representation of a party by another person in certain circumstances. The Tribunal does not consider that the complainants are parties. No provision has been identified relating to the representation of complainants by some other person.

[20] Nevertheless, under s 28 of the QCAT Act, the procedure for a proceeding is at the discretion of the Tribunal, subject to the provisions of the QCAT Act, and in a discipline application, the LP Act. It is unlikely that the express provisions of the QCAT Act relating to the representation of parties were intended, impliedly, to limit the power of the Tribunal to permit a complainant to be represented at a hearing. Indeed, the provisions of s 462 of the LP Act relating to costs in favour of a complainant would suggest the contrary. The Tribunal therefore considers that it may permit a complainant to be represented at a hearing by another person.

[21] Section 43(2) of the QCAT Act authorises parties to a discipline application to be represented by another person. It is apparent from the balance of s 43 that this extends to representation by a lawyer. It would be consistent with this section generally to permit complainants to be legally represented. There being no reason not to follow this course in the present case, and there being no contrary submission, the Tribunal authorised Ms Alison Chappell to represent the compainants Paul Lastavec and Carolyn Willis.

[22] The Commissioner has not actively sought a compensation order against CTA. It would seem to follow that CTA is not a party to the application under s 39(b) of the QCAT Act. Nevertheless an order may be made under s 42(1) of that Act, making CTA a party. No other provision was identified, which would provide for the participation of CTA in the proceedings. Indeed, it would be a serious failure in the Tribunal's obligation to act fairly had it not given CTA the opportunity to participate.[4] Accordingly, the Tribunal made CTA a party to the discipline application.

[23] Mr Thornley's compensation request was filed on 5 February 2018. Attached to the compensation request was an affidavit of Mr Thornley sworn on 8 January 2018, which in turn confirmed the contents of an affidavit in this matter sworn on 11 December 2015. Both of these affidavits were relied upon by the applicant in relation to misconduct allegations against the respondent. Mr Thornley provided documents to the Tribunal on 25 March 2019 and 1 August 2019 (which included material also received on 31 July 2019); and a further handwritten document dated 20 August 2019 with some accompanying documentation. He provided a document received by the Tribunal on 17 October 2019, generally in the nature of a submission. In the December 2015 affidavit, Mr Thornley deposed to significant failures on the part of the respondent in the management of matrimonial proceedings which he conducted on behalf of Mr Thornley. It is useful to set out some matters of history, apparent from Mr Thornley's material.

[24] Mr Thornley married his former wife, Beverley, on 3 September 2006. They had commenced to cohabit some weeks before that. Mr Thornley was then 64 years of age, and Ms Thornley was then 57 years of age. At that time Mr Thornley owned a farm at Gin Gin, subject to a mortgage. The debt secured over the farm was $365,000. He also had an interest in a trust, which owned a fishing boat, the "Stella VII". Ms Thornley owned a house property in Bundaberg, apparently unencumbered. There were also some shares and a vacation club membership, paid for by Mr Thornley, and two motor vehicles. On Mr Thornley's evidence, Ms Thornley left him on 3 October 2007, taking the entire contents of the house on the farm, tools and equipment with an estimated value of $40,000, sheep with an estimated value of $5,000, seafood with an estimated value of $12,000, one of the motor vehicles, and $18,000 in cash. She also took various documents belonging to Mr Thornley.

[25] Mr Thornley consulted the respondent in relation to family law proceedings very shortly after Ms Thornley's departure. The respondent commenced proceedings in the Federal Magistrates Court.

[26] Early in the proceedings the respondent told Mr Thornley of a Court proposal to appoint a forensic accountant, at Mr Thornley's cost. Mr Thornley instructed the respondent to oppose the appointment but on 11 August 2008, in the absence of Mr Thornley, the respondent consented to an order appointing a forensic accountant at the respondent's cost, with the cost to be taken into account in the property settlement.

[27] In an affidavit sworn on 12 May 2010, Mr Thornley estimated the value of Ms Thornley's assets to be $422,000, the most significant being the property in Bundaberg; and stated that she had no liabilities. The net value of his assets was $204,160, taking into account the debt already mentioned. He was then in receipt of a pension.

[28] Early in the family law proceedings, Ms Thornley obtained an order that Mr Thornley's bank account be frozen, with the consequence, according to Mr Thornley, that he could not make repayments of the loan secured over the farm, nor meet liabilities in relation to the fishing boat. In an affidavit of 22 February 2010, Mr Thornley deposed that the boat and associated fishing rights had been sold at a substantial loss.

[29] On 2 February 2010, an order was made in the family law proceedings that Mr Thornley make further and better disclosure of certain financial documents. He exhibited part of the order to an affidavit filed in the current proceedings.

[30] The application for property settlement came on for hearing on 18 May 2010. At the court, the respondent informed Mr Thornley that he needed the services of a barrister. Mr Thornley was introduced to a barrister at the court. The hearing was then adjourned.

[31] Mr Thornley deposed that on 11 August 2010, the respondent consented to orders, including a further order for the appointment of the same forensic accountant, without obtaining instructions from Mr Thornley. He also deposed that he would have again objected to the order for the appointment of the accountant.

[32] A mediation was conducted in the family law proceedings on 17 November 2010. The respondent attended, but did not explain the proceedings or their possible outcome to Mr Thornley. Mr Thornley agreed that the farm should be sold, understanding that Ms Thornley would also be required to sell her property, to enable the matter to be settled. The respondent told Mr Thornley to wait outside the mediation room. A little later, the respondent returned with a document. He told Mr Thornley that he had agreed to the sale of the farm, and invited Mr Thornley to sign a document, which Mr Thornley did. The respondent did not invite Mr Thornley to read the document, nor did he explain its effect. An order was made by consent on 15 December 2010. It required Mr Thornley to sell the farm, with the net proceeds to be divided between Ms Thornley and himself, and the parties otherwise to retain the property in his or her possession. Unpaid costs orders in favour of Ms Thornley were discharged, though Mr Thornley remained liable for the costs of the accountant.

[33] The evidence of Mr Thornley was not challenged. It should generally be accepted.

[34] The documents provided by Mr Thornley included a document described as a financial claim calculation, prepared by Tightlines Accounting, provided to the Tribunal in March 2019. It lists assets taken by Ms Thornley on separation, and an amount representing 60% of the net value of Ms Thornley's property at Bundaberg. It includes an amount for interest for two of the three years when the matrimonial proceedings were pending. It claims a diminution in the value of unspecified property for lack of maintenance. It includes a claim for various fees and taxes. It also includes a claim for economic loss for 5 years, relating to the farm and the boat, and to what appears to be another boat, the "Atlantic Star", not elsewhere mentioned. It also includes claims for losses on the sale of both boats and the farm.

[35] At the hearing, Mr Thornley made oral submissions. He recounted aspects of the respondent's misconduct. He emphasised the responsibility of CTA for the respondent's conduct. He stated that his claim currently stood at $80,000, for the loss of his home and plant and equipment; but not for the livestock taken by his former wife. However, he also emphasised that he lost the Stella VII because of the respondent's failure to move promptly to defeat the claim of Mr Thornley's ex-wife, and to have the freezing order dissolved.

[36] It was submitted that CTA was not the relevant practice for a compensation order after 30 June 2010; and that a compensation order could only be made against it for misconduct of the respondent prior to 1 July 2010. Mr Thornley had not provided any basis for his calculations of loss, referring only to material disclosed during the investigation prior to the discipline application, and not made available to CTA. His claimed loss in relation to the matrimonial proceedings was a claim for the loss of a chance to recover money or property only. Mr Thornley did not provide any evidence to show that any actions of the respondent prior to 1 July 2010 caused any loss to him. His loss in relation to the matrimonial proceedings resulted from his abandonment of his claim, not from the actions of the respondent prior to 1 July 2010. There was insufficient evidence to establish that the barrister's fees referred to by Mr Thornley were incurred due to conduct of the respondent prior to 1 July 2010. Mr Thornley had failed to show that any loss he may have suffered was the result of conduct of the respondent prior to that date. Accordingly, he had failed to show that a pecuniary loss order should be made against CTA.

[37] At the hearing, CTA was provided with the material from Mr Thornley which it had not previously seen. It did not seek an adjournment.

Mr Thornley's claim against the respondent considered

[38] It is difficult to relate the sale of the Stella VII to any misconduct by the respondent. Mr Thornley, in his affidavit filed in these proceedings on 16 December 2016, swore that the Federal Magistrates Court had made an order freezing his bank accounts, as a result of which he was unable to access monies to pay the overdraft on an unidentified boat, and had to sell it "in a fire sale" for $350,000, resulting in a substantial loss and leaving the farm as his only asset. However, he also exhibited his affidavit sworn on 22 February 2010, in which he stated "major barrier reef rezoning" had the consequence that "the commercial fishing industry proved to no longer be a sustainable form of commercial trading". This was the explanation for the sale (by Milvonz Pty Ltd) of the Stella VII at a low price ($375,000, including fishing quotas), under a contract dated 2 January 2008. When this was drawn to Mr Thornley's attention during submissions, he repeated that the sale was the result of the freezing order. He did not give any explanation for the 2010 affidavit. He also said that the respondent should have acted promptly in January to have the order discharged. Given the date of the contract, prompt action at that time does not seem likely to have affected the sale. Mr Thornley stated in his affidavit of 16 December 2016 that the proceedings in the Federal Magistrates Court were commenced in early 2008. Attached to his compensation request is a document which appears to be a file copy of the application to the Federal Magistrates Court, dated 8 January 2008. Given the state of the evidence, the Tribunal is not prepared to find the sale of the vessel was caused by the respondent's misconduct.

[39] The evidence in the 2010 affidavit would also present difficulties for the claim for economic loss, related to this boat. There is no evidence explaining any loss claimed in relation to the Atlantic Star; nor for an asset simply identified as "Jabee". Nor is there any material sensibly relating the loss claimed for farming activities to the respondent's conduct. These matters do not provide a basis for a pecuniary loss order.

[40] The calculation refers to a sum of $8,000 for accounting fees. The reason for the payment of the fees has not been identified, and accordingly cannot be related to the respondent's misconduct. The same is true for the amounts claimed for barrister's fees and real estate fees. There are also claims for capital gains tax. It is difficult to see why there is any liability for such tax, when assets are said to be sold at a loss; and there is no attempt to show that they were the result of the respondent's misconduct. Again, compensation cannot be awarded in respect of these matters.

[41] Much of the balance of the claim relates to assets retained by Ms Thornley, and the fact that the proceedings did not result in Mr Thornley receiving a benefit by reference to Ms Thornley's Bundaberg property. No objection was taken to such a claim. It is clear that, if the respondent had explained the effect of the agreement reached at the mediation, Mr Thornley would not have consented to it. It resulted in his having to pay half of the net proceeds of the sale of the farm to Ms Thornley, without receiving any benefit by reference to the assets of Ms Thornley, or the property she took when she left the farm. The only evidence of a payment to her is a sum of $20,000, in the financial claim calculation. However, the material does not disclose when this payment was made; and whether it was a consequence of the settlement. It seems unlikely to represent one half of the net proceeds of the sale of the farm, sold, according to the calculation, for $350,000; and securing a debt which stood at $365,000 in May 2010, and which, on the material, could only have increased after that date.

[42] So far as can be seen from the material, as a result of the settlement Ms Thornley retained assets with a net value in excess of $400,000. Apart from the farm, Mr Thornley retained assets with a value of some $20,000; and would have remained liable to the lender for any deficiency on the sale of the farm. Given their relative financial positions at the commencement of the relationship, their relative ages, and the apparent contributions made during the course of their relationship, it seems highly likely that with proper advice, a significantly better result would have been achieved for Mr Thornley at the settlement conference, or if the matter proceeded to determination.

[43] One of the matters found to be misconduct by the respondent was his failure to advise Mr Thornley as to what an appropriate resolution of the family law proceeding might be. Had he done so at the mediation, he would not have advised Mr Thornley to sign the agreement. Any resulting financial loss was therefore suffered because of the misconduct. While it is difficult to determine the extent of the loss suffered by Mr Thornley as a result of this misconduct, the Tribunal is satisfied it exceeds the maximum amount of compensation which might be awarded. Given the loss and the circumstances in which it was suffered, and the absence of any reason for finding the contrary, the Tribunal is satisfied it is in the interests of justice to make a pecuniary loss order against the respondent.

[44] Accordingly, it is appropriate to order the respondent to pay $7,500 by way of compensation to Mr Thornley.

[45] The critical submission made by CTA is that Mr Thornley has not shown that any pecuniary loss he suffered as a result of the respondent's misconduct was suffered as a result of misconduct which occurred prior to 1 July 2010. The loss resulting from the agreement made at the mediation was the result of the respondent's misconduct in about November 2010. No order can be made against CTA for such loss.

[46] Those submissions should be accepted.

[47] With respect to other losses referred to in Mr Thornley's material, they were said either not to be established by the material, or were not shown to be causally related to the respondent's misconduct, particularly to his misconduct prior to 1 July 2010. Again, those submissions should be accepted.

[48] The Stella VII was sold when the respondent was with CTA. The Tribunal has already concluded that it cannot attribute this sale to the respondent's misconduct. Mr Thornley's attention was drawn to the fact that his claim otherwise related to the respondent's failure to pursue the matrimonial proceedings properly, and in particular, to the events associated with the mediation. He was unable to advance any argument to demonstrate that he lost the chance of a favourable outcome for the matrimonial proceedings while the respondent had some involvement with CTA. It has not been possible to identify evidence reliably establishing that Mr Thornley suffered pecuniary loss from the respondent's misconduct when involved with this legal practice.

[49] Accordingly, no compensation order will be made in favour of Mr Thornley against CTA.

[50] Mr Orth has claimed $4,925, which he paid to Shine Lawyers to recover money from Colonial Mutual. He also alleged he lost further money because of the difficulty in getting medical reports long after the reports were originally prepared.

[51] The Tribunal has found that the respondent failed, between August 2004 and June 2012, to take any step to progress Mr Orth's claim against Colonial Mutual. For much of this period, the respondent practised with CTA. CTA has made submissions in relation to the making of a compensation order against it. The compensation request did not particularise the services provided by Shine Lawyers; nor did it explain what actions or inactions of the respondent reasonably led to the requirement for the services; nor did it explain why the fees paid to Shine Lawyers constituted a loss, when fees would in any event have been incurred in recovering money from Colonial Mutual. CTA also submitted that the notice did not particularise what loss resulted from the respondent's false representations made before 1 July 2010. There is insufficient evidence to show that Mr Orth suffered loss as a result of the conduct of the respondent. CTA is not the relevant legal practice for the purposes of s 464(d)(ii) of the LP Act. It has not been shown that Mr Orth suffered loss by reason of the respondent's false representations to Shine Lawyers, or to the Queensland Law Society. CTA made other submissions about these representations, but it is unnecessary to refer to them.

[52] A compensation order of the type sought by Mr Orth can only be made for pecuniary loss. There is no proper material before the Tribunal to enable it to find that Mr Orth suffered pecuniary loss in obtaining the medical reports referred to. The same may be said in relation to the false representations to Shine Lawyers and the Queensland Law Society.

[53] It is clear from the material provided by Mr Orth, and the Tribunal's reasons and findings relating to the respondent's misconduct, that Mr Orth is relying on the respondent's delay in pursuing the claim against Colonial Mutual between 2004 and 2012. For most of that period he practised with CTA. If loss were established, it might be difficult to come to a conclusion whether the loss resulted only from the respondent's misconduct after 30 June 2010, or also from earlier misconduct. However, it is unnecessary to determine this question.

[54] It may be accepted that Mr Orth incurred fees to Shine Lawyers for pursuing his claim. There is a question whether these fees can be said to be a pecuniary loss suffered by Mr Orth as a result of the respondent's misconduct.

[55] The findings against the respondent in relation to Mr Orth were based on a statement of agreed facts. There has been no challenge to it in relation to Mr Orth's compensation claim. It records that the respondent issued an invoice to Shine Lawyers, then acting for Mr Orth, dated 21 September 2012. That invoice claimed $16,170 for legal fees from 2007 to 2012, both for the Colonial First matter, and for family law matters. There is no evidence that the invoice was paid, nor that payment is still pursued by the respondent. The pursuit of the Colonial Mutual matter would ordinarily mean that Mr Orth would have to pay legal fees, and it is not clear that he has had to pay more than he would have otherwise paid, as a consequence of his resort to Shine Lawyers (indeed, he said that Shine Lawyers said they had "gone light" on him). The material does not demonstrate that these fees represent a loss to Mr Orth.

[56] Since Mr Orth has not shown that he has suffered pecuniary loss as a result of the payment of fees to Shine Lawyers and no other loss has been advanced, no order for compensation can be made against the respondent, nor against CTA.

[57] As found in relation to the discipline application, Ms Trevena engaged the respondent to institute a family law proceeding for a property settlement in about April or May 2010, and after her divorce. Although he initially took some action for this purpose, he failed to institute proceedings, and made dishonest representations to the effect that he had instituted and progressed them. This conduct continued until 2015. Both the respondent's failure to pursue the proceedings and his dishonesty were found to amount to professional misconduct.

[58] In her compensation request Ms Trevena has given notice that she seeks a compensation order, on the basis that she has lost the opportunity to obtain a property settlement; for work done in relation to the proposed proceeding before the respondent was retained; for costs incurred in an attempt to recover monies from the respondent for his professional negligence; and for costs incurred in relation to her complaint to the applicant. Her compensation request is supported by written submissions which generally reflect the points made in it.

[59] It seems clear that Ms Trevena's claim for a property settlement had good chances of success. In a letter of 24 June 2011, the solicitors acting for her former husband offered a payment of $50,000 for her interest in the former matrimonial home (registered in her husband's name).[5] Ms Trevena has asserted in a statement made in support of her compensation request that, as a consequence of the respondent's conduct, she has lost the opportunity to obtain a property settlement from her former husband. The assertion is not challenged, and given the long period over which the respondent failed properly to pursue the claim, is likely to be true. It should be accepted. While the value of that loss cannot be quantified on the material before the Tribunal, it is easy to conclude that it exceeds the maximum amount of a compensation order.

[60] So far as Ms Trevena has referred to costs incurred for the work of solicitors before the respondent was retained, these are in truth allied to the loss of an order for a property settlement in favour of Ms Trevena. They do not provide any additional basis for a compensation order. Moreover, they were incurred before the respondent was engaged, and before his misconduct. It is difficult to see how they could be regarded as constituting pecuniary loss suffered because of the respondent's misconduct.

[61] Ms Trevena has also incurred fees of $885 in an attempt to pursue a claim against the respondent for professional negligence. Since she has already demonstrated a loss which exceeds the maximum amount of a compensation order, it is unnecessary to consider this aspect further.

[62] There is no reason to think that it would not be in the interests of justice to make a compensation order against the respondent in Ms Trevena's favour, in the sum of $7,500. Given the loss and the circumstances in which it was suffered, and the absence of any reason for finding the contrary, the Tribunal is satisfied it is in the interests of justice to make such an order.

[63] Ms Trevena has also incurred legal fees in relation to the making of her complaint. In support, she has provided a letter from the solicitors who assisted her, confirming that the costs of assistance in relation to the complaint were of $2,500 plus GST. Under s 462 of the LP Act, the Tribunal must make an order requiring the respondent to pay costs of a complainant, unless satisfied that exceptional circumstances exist. There has been no attempt to suggest that they do, nor to take issue with the making of an order in favour of Ms Trevena, nor with the amount claimed, despite this provision being drawn to the respondent's attention. Accordingly, the respondent will be ordered to pay Ms Trevena the sum of $2,750 for her costs in relation to the complaint.

[64] Because the respondent practised with CTA when Ms Trevena first engaged him, CTA was given the opportunity to make submissions in relation to Ms Trevena's claim. Its submissions pointed out that Ms Trevena first retained the respondent in May 2010, but the respondent left the firm on 30 June 2010, and thereafter the respondent acted for Ms Trevena independently of CTA. The twelve month period in which she could make a claim for a property settlement as of right expired on 29 August 2010. The respondent's misconduct did not occur while he was with CTA. It would be inappropriate to make a compensation order against it. CTA is prevented from making further submissions on this question due to a conflict of interest, as it now acts for Ms Trevena.

[65] Ms Trevena has not made any submissions in reply. The relevant conduct which was the subject of the charge that the respondent failed to maintain reasonable standards of competence and diligence related to the respondent's conduct between June 2011 and July 2015. That was the charge which the Tribunal found was established. It did not include conduct prior to 30 June 2010. At the hearing Ms Trevena indicated that she was not seeking compensation from CTA. No order will be made against it.

[66] In a statement provided in support of her compensation request, Ms Willis said that she had been employed by Quoin Island Resort Development Pty Ltd ('Quoin') from 1992 as manager of the resort. When the marriage of Mr and Mrs Mead, who were the owners and directors of Quoin, broke down in about 1997, Ms Willis was asked by Mr Mead to remain on as caretaker, which she did. Her wages were paid by Quoin from that time until 1 November 2007, when the management of the resort was taken over by the liquidators of Hypec Electronics Pty Ltd ('Hypec'), a company also associated with Mr and Mrs Mead. Early in 2008, Mr Mead told Ms Willis that she was owed money for wages and superannuation, which would be paid when the resort was sold. She then sought the respondent's assistance. On 28 May 2008, he wrote to Mr Mead, claiming an amount of $445,507.32 for unpaid wages and superannuation.

[67] The Tribunal has found that the respondent took no action to advance Ms Willis's claim between 2009 and 2015, apart from drafting a creditor's petition, but falsely made representations to Ms Willis that he had successfully conducted the claim, resulting in the recovery (likely to have been a reference to a judgment) in her favour of $172,000, and that he had taken steps to recover that amount from Mr Mead. His conduct was found to be professional misconduct. The conduct the subject of the finding was alleged, in the discipline application, to have occurred between 22 September 2009 and 17 June 2016.

[68] In her statement attached to her compensation request, Ms Willis has referred to the respondent's letter claiming $445,507.32, and his supporting calculation. She has also provided documents and a calculation which demonstrate that, even on the wages she was paid, there was a shortfall of $10,698 in the superannuation contributions paid by Quoin in the period from 1992 to November (the year is not stated, but it is probably 2007). On any view, most if not all of the shortfall relates to the period prior to when the resort was managed by the liquidators of Hypec. Quoin was deregistered on 24 July 2011.

[69] Given the time period over which the respondent's misconduct occurred, CTA was given the opportunity to make submissions in relation to Ms Willis's claim. Its first submission was filed on 15 July 2019. It contended that Ms Willis's claim for lost superannuation included the years 1992, 1997, 2000, 2007, and 2008; but Ms Willis had not provided any evidence of earnings in those years. Moreover, the limitations period fixed by s 10(1)(a) of the Limitation of Actions Act 1974 (Qld) ('Limitations Act') for claims for years prior to 2002 had expired by the time she consulted the respondent. For the claims still within time, by 30 June 2010 she had lost the chance to recover only $2,919 for part of the 2004 financial year; though she had not demonstrated that this amount was not paid. Ms Willis had not shown that the two superannuation accounts she had referred to were the only ones she had, and she had not given evidence of the balances, deposits, charges and transactions on these accounts. Moreover, the loss she claimed is only the loss of a chance to recover superannuation payments, not the full value of the payments claimed. In any event, it is not in the interests of justice that an order be made against CTA, it not being clear what conduct of the respondent caused any loss, and it not being clear when any loss arose. There is no allegation that the respondent made any false representation to Ms Willis before 30 June 2010.

[70] Ms Willis made submissions in response, filed on 9 August 2019. She referred to her earlier submissions, which noted that the Australian Tax Office ('ATO') did not investigate superannuation guarantee compliance issues which predate the investigation by more than 5 years. On that basis she had contended in the earlier submissions that the unpaid amount for the 5 years prior to when she first consulted the respondent was $8,837. In her submission of 9 August, she submitted that $6,940 was subject to the 5 year limitation period, by 30 June 2010. She noted that the balance of the Westpac superannuation account in 2004 (as at 26 July 2004) was $5,172, and said she had no knowledge of any payments after that time. Her claim is based on the respondent's records, and her own recollection. The respondent's misconduct commenced in September 2009, when he was involved in the practice of CTA. She submitted that, on the respondent's calculations set out in Attachment C to her compensation request, the difference between the amount she was paid and the amount she was entitled to receive was $23,111.56 for the 2003 and 2004 financial years; and this amount was lost as a result of the operation of the Limitations Act between October 2008 and 30 June 2010.

[71] In submissions filed on 21 August 2019, CTA contended that Ms Willis's compensation request was not based on the respondent's failure to institute legal proceedings within the limitations period. No misconduct was found prior to 21 September 2009. Her claim for lost wages (as against CTA) is therefore restricted to loss from the respondent's misconduct over a period of about 9 months; in effect, to wages due to her in the period from 21 September 2003 to 30 June 2004. Ms Willis has not provided evidence of her unpaid wages in this period; nor of her work hours; nor of the award; nor of the contract of employment. She herself said that she felt that the respondent's calculations in Attachment C had no real basis.

[72] Ms Willis gave evidence at the hearing, and was cross-examined. Her evidence included a statement that the respondent had told her that she was "a hundred percent" sure of recovering the amount of her claim.

[73] Ms Chappell told the Tribunal that some of the documents, as provided to the Tribunal, were not correctly identified. The letter of 6 October 2008 to the ATO was in fact part of Attachment C to the compensation request (though in the copy provided by the registry to the Tribunal, it appeared as part of Attachment B). The table headed, "GROUP CERTIFICATES PROVIDED" was also part of Attachment C. The documents in that attachment came from the respondent's file. The superannuation calculation in Attachment D was prepared by Ms Chappell, with information provided by Ms Willis. No objection was taken to the provision of this explanation of the material by Ms Chappell, and the documents themselves appear consistent with it. The Tribunal is prepared to act on Ms Chappell's explanation.

[74] Section 464 of the LP Act confers on the Tribunal a power to order a law practice to pay compensation to a complainant for pecuniary loss suffered because of the misconduct of a practitioner "involved in the relevant practice", or misconduct of a "law practice employee in relation to the relevant practice". The submissions from CTA of 21 August 2019 refer to the respondent as ceasing employment with CTA on 30 June 2010. It was an agreed fact between the applicant and the respondent, and the Tribunal previously found, that the respondent was the managing partner of CTA in the period immediately prior to 30 June 2010, having been an employed solicitor with that firm somewhat earlier. CTA has not led evidence to show that the position was as stated in its submission. It is likely that the submission was intended to convey that the respondent ceased to be the managing partner of CTA on 10 June 2010. These reasons proceed on the basis of the previous finding, though the result would be the same if the respondent were, in this period, employed by CTA.

[75] The language of s 464 rather strongly suggests that an order to pay compensation may be made against a law practice only for the misconduct of a practitioner which occurred while the practitioner is involved in the relevant practice. There has been no suggestion that the respondent had any involvement in CTA after 30 June 2010. It should be accepted therefore that an order would only be made against CTA for pecuniary loss suffered by Ms Willis before that date.

[76] Under s 464, an order for payment of compensation can only be made for pecuniary loss suffered because of conduct found by the Tribunal to be unsatisfactory professional conduct or professional misconduct. The Tribunal has found that the respondent's conduct from 21 September 2009 was such misconduct. A compensation order may not be made in respect of loss in which the respondent's conduct from that date played no part. Thus an order cannot be made in respect of a loss which had accrued by that date.

[77] Ms Willis's loss in relation to her wages claim is ultimately the result of the lapse of time, so that her claim became statute barred. More accurately, her claim was to enforce rights which accrued progressively over time, and which were lost progressively as a consequence of the statute. Rights which accrued prior to 21 September 2003 became statute barred on or before 21 September 2009. Therefore, a compensation order cannot be made in this case in respect of rights to wages which accrued prior to 21 September 2003.

[78] Rights which accrued after 30 June 2004 were not lost until after 30 June 2010. It has not been suggested on behalf of Ms Willis that the respondent's conduct prior to the later date played some causal role in any loss of rights after that date. It may therefore be accepted that compensation may not be awarded as against CTA for pecuniary loss suffered by reason of any later loss of rights. On that basis, compensation can only be awarded to Ms Willis, as against CTA, for the loss of any right to claim wages, where the loss occurred between 21 September 2009 and 30 June 2010; that is to say, for wages to which she became entitled between 21 September 2003 and 30 June 2004.

[79] Attachment A to Ms Willis's compensation request is a letter which she said was sent by the respondent to Mr Mead. Notwithstanding that Ms Willis has misstated the date of the letter, there is no reason not to accept this statement.

[80] Attachment C to the compensation request includes a memo from "David" to "Louise" dated 9 May 2008. It plainly relates to Ms Willis's claim for unpaid wages and superannuation contributions. It requested the addressee to establish wages payable to Ms Willis under wages awards from 1 July 1992 to 1 November 2007. It referred to group certificates on the file recording the monies paid to Ms Willis in this period. It stated that the only superannuation till then paid to Ms Willis was $5,172, said to be with Westpac; and $4,045.14, said to be with Colonial First State.

[81] The attachment then includes a document setting out calculations of wages and entitlements, less tax, from 1 July 1992 to 30 June 2008, for a person employed as a manager until 30 June 1994, and from then as a caretaker. Totals are then set out for the wages payable in these two capacities, which approximate the calculations. A deduction is then made of $211,371, described as the gross wages as per group certificates. The totals, the deduction (and its description), and the result correspond with figures set out in Attachment A. This document was described by Ms Willis as the respondent's calculation.

[82] Attachment D to the compensation request includes the document apparently based on group certificates provided to Ms Chappell. The total gross wages of $211,371 correspond to the gross wages earlier mentioned from Attachment C. It should be noted that the gross wages calculations which are based on the group certificates do not refer to the financial years 1997, 2000, 2007 and 2008. Attachment D also includes copies of group certificates and PAYG Payment Summaries for the financial years 1993-2006, excluding 1997 and 2000. So far as they can be read, they correspond to the typed document in Attachment D mentioned earlier.

[83] Attachment B to the compensation request includes what appears to be a copy of a letter from the respondent to the ATO dated 6 October 2008. It includes a statement that Ms Willis was owed considerable monies from her employment on Quoin Island "with an estimation from our perspective of $445,000-$450,000".

[84] As mentioned, the documents in Attachment C came from the respondent's file, which included documents from the period when he practised with CTA. The likely explanation for the documents is that Ms Willis provided the respondent with group certificates and instructions on her employment at some time prior to 9 May 2008; the respondent then sent the memo to Louise referred to earlier; he received calculations requested in that memo; and he then sent the letter dated 23 May 2008; and later the letter dated 6 October 2008.

[85] The table prepared by Ms Chappell sets out gross wages for the 1992 and subsequent financial years, up to 1 November 2008. For the 1992, 1997, 2000 and 2007 financial years, and the period 1 July to 1 November 2007, the amounts are said to be estimates as the actual information is no longer available. The gross wages otherwise correspond to the typed document in Attachment D. Where estimates have been provided, the total from the previous year has been replicated.

[86] In the Tribunal's opinion, the evidence is sufficient to establish that Ms Willis was employed by Quoin for a lengthy period, including specifically from 21 September 2003 to 1 November 2007. That is the effect of her statement, and it has support, to some extent, from group statements and the like. The contrary was not suggested to her in cross-examination.

[87] Mr Mead's statement to Ms Willis is sufficient to establish that she was not fully paid for her employment by Quoin. There is no reason to think that Attachment C does not correctly show wages payable under some industrial awards for a manager of a resort, or a caretaker. However, Ms Willis said that she felt that the respondent's calculation in Attachment C had no real basis. Assuming that the calculations in Attachment C identify rates from awards, it is not clear that those awards applied to Ms Willis's employment by Quoin. The Tribunal considers that it cannot act on the calculations based on the awards. It is therefore not possible to quantify any shortfall in the wages paid to Ms Willis in the period from 21 September 2003 to 1 November 2007. Accordingly, it is not possible to make an order for compensation for pecuniary loss as a result of underpaid wages in this period.

[88] The case has been argued on both sides on the basis that the only effective remedy available to Ms Willis in relation to unpaid superannuation contributions was to complain to the ATO, with the expectation that it would then pursue unpaid contributions; but not contributions due to be paid more than 5 years prior to the complaint. On that basis, a compensation order could be made against CTA and the respondent in relation to unpaid contributions for the period 21 September 2004 to 30 June 2005; and against the respondent for the further period to 1 November 2007. The material includes a letter from the respondent to the ATO relating to unpaid superannuation contributions, dated 8 October 2008. It was not suggested that this letter was sufficient to preserve the position for Ms Willis for contributions due in the 5 year period prior to this date. Moreover, there is no evidence of any response, raising some doubt that the letter was sent. As will appear, it is unnecessary to resolve this question.

[89] There is no evidence to demonstrate that, at any time after Ms Willis consulted the respondent, Quoin had the financial resources to meet any claim made by Ms Willis. The ASIC search indicates that its paid up capital was $4. There is no evidence that it had any other assets; though it did at times, as it was able to pay wages to Ms Willis for a number of years. However, the only information available as to its position after Ms Willis ceased to be employed by Quoin is her telephone conversation with Mr Mead early in 2008. It indicates that the ability of Quoin to make any payment to Ms Willis depended upon the successful sale of the resort. So far as can be seen from the material, the resort was owned by Hypec, and not by Quoin. In particular, the letter from the liquidator of Hypec to Ms Willis dated 31 July 2009 (Attachment F) refers to the granting of the island to Hypec in November 2007. There is nothing to indicate that from that time on, Quoin had any resources available to meet Ms Willis's claims. This conclusion would also have prevented the making of a compensation order, if the Tribunal had concluded that Ms Willis had demonstrated a quantifiable loss in relation to unpaid wages.

[90] In oral argument, reference was made to the letter from the Department of Education, Employment and Workplace Relations to the liquidator, dated 25 February 2008. Reliance was placed on a passage which referred to the General Employee Entitlements Redundancy Scheme, as identifying a remedy which could have been, but was not, fruitfully pursued by the respondent. That was not something previously raised, and it is difficult to see how it could be raised at this late stage, without notice to the respondent and without giving him, and CTA, an opportunity to deal with it. Indeed, notwithstanding the generality of the findings related to misconduct, they were not made with reference to this question. In any event, the letter indicates that the Scheme applies when employment is terminated as a result of the employer's insolvency. It would not apply to Ms Willis's employment with Quoin.

[91] The conclusions which have been reached in relation to the making of a compensation order in favour of Ms Willis and against CTA are also relevant to the making of such an order against the respondent.

[92] It follows that it has not been shown that the respondent's misconduct has resulted in pecuniary loss to Ms Willis. No order will therefore be made in her favour.

[93] Mr Lastavec has provided a statement in support of his notice of intention to seek a compensation order. In it, he said that he, his partner Maria Topic, and his son Steven entered into a partnership to undertake a subdivision of land. A company, Effective Security Pty Ltd (which was owned and controlled by Steven, but which held profits from a previous subdivision carried out by the partnership), was used to purchase land at 105 Stowe Road, Calliope, for $1 million. Effective Security paid half of the purchase price, and the balance was borrowed from the Bank of Queensland, secured by a mortgage over the property. After substantial progress had been made with the subdivision, Steven terminated the agreement and paid out the contractor who was apparently doing subdivision works. By this time, Mr Lastavec had paid $30,000 towards subdivision costs. Mr Lastavec consulted the respondent about the dispute at some point in 2010.

[94] The Tribunal has found that the respondent did some work on the matter in the period up to 1 June 2011, including commencing proceedings. He did little work thereafter, until a hearing in February 2015, which resulted in a grant of leave to proceed with the application, notwithstanding the delay. The respondent then prepared a draft order, but did no further work on the matter. He made false representations to the effect that he had successfully pursued the application. His conduct was found to amount to professional misconduct.

[95] Mr Lastavec's statement records that he retained other solicitors in relation to the application in 2017, including for an application for leave to proceed. His compensation request referred to the possible damage to his prospects of successfully pursuing the application as a result of the respondent's delay. It also referred to expenses incurred for the application heard in February 2015, originally an application for directions, which could not proceed because of the need for leave, amounting to $1,987.08; for travel costs incurred as a result of the respondent's false representation that the application had been successful, totalling $913.76; costs of $750 incurred for another solicitor to review the file in 2017; and the legal fees of $5,480 to consider a claim against the respondent, and to progress the file (including a further application for leave to proceed) in 2017. It also referred to the fact that, had the respondent acted appropriately, the sum of $30,000 paid by Mr Lastavec towards the costs of the subdivision would have been protected.

[96] Mr Lastavec's compensation request is supported by written submissions, generally consistent with the request, and some supporting documentation.

[97] Mr Lastavec's written submissions refer to some slightly different figures. The cost of the file review in 2017 was said to be $786.28, an amount supported by a tax invoice. The legal fees incurred later were said to amount to $5,480.12, by reference to some tax invoices. These amounts were confirmed in oral submissions. None of the figures advanced by Mr Lastavec was subject to any challenge. The amounts which appear in the submissions for these expenses should be accepted. Nor were the travel costs challenged. There is no reason not to accept them.

[98] It is unnecessary to consider whether Mr Lastavec has suffered financial loss because of the failure of the respondent to take steps to protect the sum of $30,000, or because of the impact of the delay on Mr Lastavec's prospects of success in the litigation involving his son. The other expenses exceed the maximum amount of compensation which can be the subject of an order. They are instances of pecuniary loss suffered by Mr Lastavec as a result of the misconduct. Given the loss and the circumstances in which it was suffered, and the absence of any reason for finding to the contrary, the Tribunal is satisfied it is in the interests of justice to make a pecuniary loss order. It is therefore proposed to order the respondent to pay Mr Lastavec the sum of $7,500 by way of compensation.

[99] Ms Harris and Mr Pearce sought further time to make submissions and provide material. Directions were made to enable this to happen. Accordingly the hearing of the discipline application will be further adjourned.

[100] The following orders are made:

1. No compensation order is made in favour of the complainant Dennis Stanley.
2. The first respondent is ordered to pay $7,500 by way of compensation to the complainant Gilbert Thornley.
3. No compensation order is made in favour of the complainant Terry Orth.
4. The first respondent is ordered to pay $7,500 by way of compensation to the complainant Kelly Trevena.
5. The first respondent is ordered to pay $2,750 to the complainant Kelly Trevena for costs.
6. No compensation order is made in favour of the complainant Carolyn Willis.
7. The first respondent is ordered to pay $7,500 by way of compensation to the complainant Paul Lastavec.
8. The application is otherwise adjourned to a date to be fixed.

[1] See Legal Services Commissioner v McHenry [2018] QCAT 417 ('the earlier reasons').

[2] See Queensland Civil and Administrative Tribunal Act 2009 (Qld) ss 6, 7 ('QCAT Act').

[3] Contrast Legal Profession Act 2007 (Qld) s 14(4) ('LP Act').

[5] This offer was made, notwithstanding that an application for an order for property settlement had not been made within the 12 month period permitted by s 44 of the Family Law Act 1975 (Cth), no doubt in view of the Court's power to grant leave to make an application after that time.