1. It is necessary to recite the background facts that give rise to the laying of the charges. Most of the facts are admitted by the respondent in a notice of admitted facts.[1] In running, and by the conclusion of the hearing, the respondent conceded all of the facts alleged against her. She was prudent to do so.
2. Between about 25 October 2008 and 21 January 2009, the respondent acted as the legal practitioner for Mrs Carmelita Murray ('the client'). The respondent had been retained by the client to act in respect of a matrimonial dispute with the client's former husband.
3. The client's former husband was at all times material, the registered proprietor of a property situate at 46 Notre Dame Drive, Sunbury ('the property'). He was registered as the proprietor of that property on or about 6 May 2002[2]. The title search also shows that a caveat was lodged by the client over the property on or about 22 January 2009.
4. On 22 January 2009, the respondent lodged a caveat AG308939T over the property. It is the lodging of that caveat and, the refusal to withdraw it, that has led to the laying of charge 1 before the tribunal.
5. The client and her former husband were in dispute and that eventually led to proceedings being issued in the Federal Magistrates' Court with the client claiming a share in the property. It was in respect of that dispute that she engaged the respondent to act on her behalf.
6. On or about 25 October 2008, the client and the respondent entered into a form of a costs agreement in writing. That document is admitted.[3] Arguably, the costs agreement entered into between the respondent and the client was in breach of the provisions of the Legal Profession Act 2004. It provided for the respondent to charge her client:
   1. A cost of not more than 20% of the total amount of moneys/funds recovered is payable by the client to the legal practitioner for work done by the practitioner.[4]

A costs agreement that provides for the legal practitioner to charge fees by reference to an amount recovered is not permitted by the Legal Profession Act. [5] Whilst I draw attention to this matter, it is not the subject of any charge before the tribunal and plays no part in the ultimate decisions which I have to make. However, it is one of the facts observed from the whole totality of facts generally about this matter that leads me to the conclusion that the respondent has little understanding of the correct manner of legal practice by a legal practitioner.

1. The costs agreement provided that in the event that the client terminated the respondent's retainer before any matter was completed, then the respondent, as legal practitioner would be entitled to forward an itemised bill to the client for payment for work done by the practitioner, up until the date of the termination of the retainer.
2. Importantly, nowhere does the costs agreement make any express provision for the fees or costs being charged by the respondent, as legal practitioner, to be secured in any way. It does not make any provision anywhere for the respondent to secure her fees by lodging a caveat over any property owned by the client or any property over which she (the client) may claim a legal or equitable interest.
3. The client's husband had also retained a solicitor, one John Micallef, who, at first, acted on own his account and then merged his practice with Slater & Gordon, solicitors.
4. On 11 November 2008, there was apparently a mention or directions hearing of a proceeding between the client and her husband in the Federal Magistrates' Court. After that hearing, the respondent by chance met the client's former husband at or near the Flagstaff Station. She says, and I accept, that she was approached by the client's former husband and thereafter engaged in a conversation directly with him. The conversation included discussion in relation to the conduct of the matrimonial dispute in court and included discussion about settlement and settlement figures and generally how the dispute between the client and her former husband could be resolved. At the time of the discussions it is clear, and admitted, that the respondent knew that the husband was separately represented.
5. On or about 21 January 2009, the respondent and the client parted company. The respondent's retainer to act was terminated by the client. By letter forwarded by email to the client, the respondent purported to confirm an agreement that she would no longer act for the client[6]. Importantly, the respondent in her letter did not assert any right to lodge a caveat over the property.
6. On 21 or 22 January 2009, the client retained another legal practitioner to act on her behalf, one Jan Knight.
7. Also on 22 January 2009, the respondent lodged a caveat over the property. The caveat went into evidence.[7] In the caveat, the respondent claimed an estate or interest in the property as follows:

1. On the same day, the respondent wrote to the client's new solicitors, Knight & Associates. The letter also went into evidence.[8] The letter advised, inter alia, as follows:

We lodged a caveat on the husband's property as security for our costs and we notified the husband's solicitors John Micallef & Co about the caveat. We will of course remove the caveat as soon as we receive payment of our costs from your client. Enclosed is a copy caveat dealing for your records.

1. Also on 22 January 2009, even though the respondent was no longer acting, she wrote directly to the solicitor for the husband of the former client John Micallef. Again, even though the writing of this letter is not the subject of a formal charge, and forms no part in the decision I have reached, the letter reflects an attitude and conduct on the part of the respondent that is quite inappropriate and, in my view, bordering on being unprofessional. The letter said, inter alia:

We understand that Knight & Associates Barristers & Solicitors now act for the respondent wife and this matter is going to be settled out of court.

We strongly suggest that your client includes in the settlement agreement the payment of a separate cheque made payable to Fe Mercader in exchange for the withdrawal of caveat from us. We will advise the amount in due course.

1. On 24 January 2009, purporting to act in accordance with the costs agreement, the respondent rendered a bill to the client in the sum of $6,459 inclusive of GST. That bill, which is admitted by the respondent, includes recording of an attendance upon the client's former husband direct on 12 November 2008. The bill records that in the following terms:

12/11/08 Telephone call from Carmelita. Long discussions of the intention of the husband communicated to us to settle out of court and our advice to him to tell his solicitor concerning his offer whilst we seek instructions from Carmelita. Explained the positions of both parties and the benefits to both in settling out of court.

1. By letter dated 27 January 2009 from Knight & Co to the respondent[9] that firm advised her, inter alia, as follows:

As regards the caveat lodged by you, we note that you have no interest in the property, our client did not charge any interest she may have in the property to you, nor does she hold any interest pursuant to any constructive trust for your benefit.

As such, we believe the lodged caveat by you cannot be supported and should be withdrawn immediately.

Should you not withdraw the caveat and our client is in any way prejudiced, our client will look to you for compensation. We will also be advising our client to report your conduct to the Law Institute of Victoria.

1. The following day, on 28 January 2009, Mr Micallef responded on behalf of his client to the respondent in the following similar terms[10]:

We have obtained a copy of the caveat. The caveat shows the following:

1. it was not lodged until after your instructions had been withdrawn;
2. it lists the legal practitioner as having a Caveatable interest on an equitable basis;
3. neither the legal practitioner or the firm has a constructive trust and therefore the caveat is void.

We demand on behalf of the registered proprietor that the caveat be removed. If the caveat is not removed, we will refer the matter to the Law Institute of Victoria for determination.

1. Foolishly and regrettably, the respondent ignored the well reasoned arguments advanced by letter to her from her fellow practitioners. The letters could not have been clearer. On receipt of them the respondent should have sought out ethical advice either from the Law Institute of Victoria or a senior sensible fellow practitioner, as to her position. Instead she continued on unperturbed to maintain her position.
2. In response to the letter received from Knight & Associates, the respondent replied on 27 January 2009.[11] She said, inter alia, as follows:

In reply to your letter of today we reiterated that the caveat will be removed as soon as we receive payment for our costs. Your client agreed for us to exercise our discretion to put a caveat for security of our costs on the property of the husband. Your client is at liberty to take whatever action she wishes to pursue.

1. It can be seen that by that letter the respondent sought to argue that her former client had agreed, albeit not in writing, to the client giving the respondent an interest in the property.
2. What the respondent said to Knight & Associates on 27 January 2009 is similar to the position that she maintained before the tribunal. In evidence she said that the client had orally agreed to allow her an interest in any property that she (the client) might subsequently obtain. I reject the respondent's evidence on this issue. I find that, at no time did the respondent and her former client have any discussions about security for costs.
3. The notion that the respondent could have been given an interest in the property registered in the name of the former husband by her client is a legal nonsense. I reject the respondent's explanation of these matters.
4. Between 22 January 2009 and about 24 April 2009, the respondent continually refused to withdraw the caveat when asked to do so. She seems to have taken the view right through the early part of 2009 that she was entitled as a matter of law to lodge the caveat in the way she did. I reject any explanation that she gives. As I said earlier, I do not accept her evidence that she had any agreement with the client about securing her fees in any way. Had there been such an agreement one would expect it to be reflected in writing as a term of the fee agreement. As I say, there is no such term to be found in that document.
5. On 9 February 2009 John Micallef again wrote to the respondent.[12] He said:

We advise that our client has placed monies on trust to carry out a settlement. We note that the Wife's former solicitors are refusing to remove the caveat. That matter has been referred to the Ethics Committee for determination. We advise that settlement will not proceed unless the first and second caveats are removed pursuant to the orders we intend to proceed with our draft application attached. Affidavit material will be forwarded shortly.

1. It can be seen that the conduct of the respondent in lodging and refusing to remove her caveat was putting the clients of the other solicitors to needless expense and, it was preventing settlement of a matter otherwise easily settled.
2. On 13 February 2009, the former husband's legal representative lodged an application for removal of the respondent's caveat under s 89A of the Transfer of Land Act 1958. That application went into evidence.[13]
3. On or about 5 March 2009, the respondent received what is referred to as a 'lapsing notice' from the Registrar of Titles advising that the caveat would lapse on 15 April unless, before that time, the former husband abandoned his application or the respondent gave notice to the Registrar of Titles that proceedings were on foot in a court of competent jurisdiction to justify the caveat.
4. At no time up until 9 April 2009, were proceedings on foot in a court of competent jurisdiction to substantiate the respondent's caveat. I find that the respondent knew that to be the position.
5. Nonetheless, on 9 April 2009, the respondent replied to the Registrar of Titles advising that proceedings were on foot in a court of competent jurisdiction[14]. That was because she had received advice from the former husband's solicitor that she (the respondent) would be added as a party in proceedings in the Federal Magistrates' Court between the client and her former husband. Although that advice was given, it never transpired that the respondent was joined as a party to those proceedings.
6. On 15 April 2009 the respondent again wrote to John Micallef.[15] On this occasion she advised she would commence her own legal proceedings to recover her costs. She went on to threaten him personally with legal action. She said, inter alia:

Take notice that if you release the funds for settlement of the above matter to Mrs Murray without a separate cheque for payment of our costs taken from the wife's entitlement then we would suffer loss due to your negligence. Our loss will be recouped from your firm.

1. Again this letter reflects poor judgement on the part of the respondent. It is a silly letter. One that should never have been written by a professional person in her position. Mr Micallef owed no duty of care to the respondent. His duty was to his client.
2. By 24 April 2009, the respondent agreed with the solicitors acting for the client and the solicitors for the husband, to withdraw the caveat in exchange for the payment of her fees which were reduced to the sum of $2,000. She exchanged a withdrawal of the caveat upon receipt of a cheque for that amount. But even at this late stage she threatened legal action to recover her fees.[16] In fact, as it transpired, by agreeing to accept the sum of $2,000 in full settlement of an account for over $6,000, the respondent in the end appears to have totally capitulated. Before that however, she put the parties to needless costs and expense and delay.
3. It is this chronology of events which led to the client's new solicitor lodging a complaint against the respondent. The complaint was lodged with the Legal Services Commissioner who investigated the complaint and determined to lay the charges now before the tribunal.
4. On 7 September 2009, the applicant published the complaint received to the respondent. The letter publishing the complaint went into evidence.[17]
5. The respondent replied by letter dated 24 September 2009 to the applicant.[18]
6. In her letter of explanation, the respondent said:

She agreed for Fe Mercander to put a caveat on the property 46 Notre Dame Drive Sunbury to be lodged to protect Fe Mercander's legal costs if Fe Mercander deems it necessary. Ms Murray has interests in the above property and it is on the basis of Mrs Murray's interest and share in the property that the caveat was lodged when my legal services was terminated to protected the payment of my legal costs as agreed by the parties. There were forms of constructive trust that arise by way of common intention and agreement. A constructive trust is also an equitable remedy hence a constructive trust was the ground for the caveat which was of course accepted by the land titles office. It is normal practice among lawyers to put a caveat on the property on which the client has a claim and interest to protect legal costs of solicitors with the client's agreement.

1. In evidence before the tribunal, the respondent confirmed this explanation and reiterated her claim that she held an interest in the property at the time she lodged the caveat pursuant to a constructive trust. I reject entirely the respondent's explanation. There is no basis at law by which the respondent had any interest in the property over which she lodged a caveat. At best, all that her former client had was a claim on the property pursuant to the provisions of the Family Law Act. That claim was yet to be determined by the Federal Magistrates' Court. Ultimately of course it was compromised between the parties. I also reject that it is normal practice among lawyers to put caveats on properties absent some agreement in writing. Here, there was no agreement in writing.
2. Also in her letter of explanation, the respondent denied that she had delayed withdrawal of the caveat which she said was brought about by the 'neglect and failure' of the client's new solicitor. I reject that explanation. Any competent legal practitioner who had given any consideration to this matter would have realised that, at no stage, did the respondent have an interest in any property claimed in the caveat. The interest claimed by the respondent in the caveat was a legal nonsense. The respondent continued with her arguments in order to justify the caveat for some three months. In my view, the caveat was lodged by the respondent for purely selfish reasons. When her services were terminated abruptly by her former client, the respondent seemed determined to be paid. Her tactic seems to have been to cause as much trouble for the parties as possible so that the former client would eventually relent and pay her.
3. I find the respondent knew or ought to have known that the caveat she lodged would cause difficulties for both her former client and the husband of her former client. Those difficulties could only be resolved either by paying the respondent or by instituting further proceedings in a court of competent jurisdiction. The respondent was determined to use that position to her advantage. It was for this reason that she lodged the caveat and refused to withdraw it in the face of compelling evidence that she had no valid interest as she had claimed in the caveat.
4. I find that the timing of the lodging of the caveat, the invalid grounds claimed as the basis for lodging it, the refusal to withdraw it, and the stubborn insistence upon her position (including threats of other legal proceedings) are all matters that reflect very poorly upon the respondent and raise questions as to her suitability to engage in any form of legal practice on her own account unsupervised.
5. It is strongly arguable that when viewed in total, the respondent's conduct could amount to professional misconduct. But that is not the way the applicant puts his case. I must deal with the specific charges laid. It is only those charges that the respondent must answer. However, I agree with a submission by Mr. Harvey, who appeared as counsel for the applicant, that the respondent's conduct in relation to these charges falls towards the upper end of unsatisfactory professional conduct.
6. I intend to allow the respondent the opportunity to address my concerns about her fitness to practice alone and on her own account by further evidence.
7. The first charge brought against the respondent is in the following terms:

Unsatisfactory professional conduct within the meaning of section 4.4.2 of the Act in that the respondent's conduct fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian Legal Practitioner by lodging and/or refusing to withdraw a caveat over land where the respondent knew and/or ought to have known that she had no caveatable interest in the land and by providing information to the Registrar of Titles that the respondent ought to have known was false.

The particulars relied upon are those set out in paragraphs 3 to 8, paragraphs 12 to 18 and paragraphs 20 to 24 above.

1. As I have said earlier, I reject the respondent's explanation where she seeks to justify the interest that she claimed to have in the property. In my view any competent legal practitioner would know, or ought to know, that a person in the position of the respondent could not claim an equitable estate in fee simple in the property on the grounds of a constructive trust. The registered proprietor could not have held the property on trust for the respondent and her former client had no interest in the property at the time the caveat was lodged by her. Clearly, there were no ground for lodging the caveat.
2. Equally, there were no grounds for seeking to maintain the caveat after the legal practitioners for the former client and the registered proprietor pointed out there was no valid basis for the caveat. There were certainly no grounds for trying to justify the caveat after the Registrar of Titles was asked to intervene under s 89A of the Transfer of Land Act 1958.
3. I find charge 1 to have been proven.
4. Charge 2 laid by the applicant is in the following terms:

Unsatisfactory professional conduct within the meaning of section 4.4.4(a) of the Act, in that the respondent's conduct in dealing directly with the opponent's client in relation to a case for which the opponent was instructed, without the opponent's consent an contravened Rule 18.4.2 of the Professional Conduct and Practice Rules (2005).

18.4 A practitioner must not deal directly with the opponent's client in relation to the case for which the opponent is instructed unless:

18.4.2 the practitioner believes on reasonable grounds that:

(a) the circumstances are so urgent as to require the practitioner to do so; and

(b) the dealing would not be unfair to the opponent's client; or

18.4.3 the substance of the dealing is solely to enquire whether the person is represented and, if so, by whom.

1. In the hearing and, in her explanation given to the applicant, the respondent advanced the argument that it was necessary for her to speak with the client of another legal practitioner in the circumstances because the opportunity needed to be taken to secure a settlement having regard to the cost of proceedings in the Family Court. She tried to bring herself within rule 18.4.2(a).
2. In argument however, the respondent conceded that she was wrong to have spoken with the client of another solicitor in the circumstances. I find the second charge to have been proven. The circumstances existing at the time the respondent spoke with the client of her opponent did not give rise to any urgency such that she was required to speak to her client's former husband direct. I reject the respondent's explanation given in evidence and in her written explanation to the applicant. In my view the respondent's conduct in relation to charge 2 and her explanations both to the applicant in writing and in evidence before me reflects poorly on her as a practitioner and shows her to be lacking in judgment and with little or no understanding of even the basic principles of legal practice. Rule 18 is a basic rule. The purpose of it is fundamental to practice as a legal practitioner in this state. Yet the respondent only conceded she was wrong when submissions were nearly finished suggesting to me she has little insight into just how basic and fundamental the rule is.
3. I have read the letters of explanation given by the respondent to the Legal Services Commissioner of her conduct, all of which have gone into evidence. As I have indicated, the respondent took the opportunity to give sworn evidence before me and she was cross-examined by Mr Harvey of Counsel who appeared on behalf of the applicant. I have thus had the opportunity to read the respondent's written explanations and observe her giving evidence. I have formed the view that she has a poor grasp of the fundamental responsibilities of a legal practitioner. I also have concerns as to her level of competence judging by the way she dealt with the circumstances surrounding these charges.
4. At the time of the hearing, I indicated to the parties that I would be finding the charges proven. I asked both parties to make submissions about penalty. Mr Harvey, on behalf of the applicant, asked me to make orders against the respondent suspending her right to practise for at least six months and to order that she undertake various courses. The respondent, for her part, told me that she would welcome a reprimand and do any courses.
5. In addition, the applicant seeks an order for costs which presently exceed $12,400. That application is made pursuant to section 46D of Schedule 1 to the Victorian Civil and Administrative Tribunal Act 1998. That section compels the tribunal to order costs in favour of the applicant where charges laid by him are proven 'unless the Tribunal is satisfied that exceptional circumstances exist.'[19]
6. I have found both charges proven. As I said earlier I agree with submissions put by Mr Harvey that the respondent's conduct which gave rise to the charges is towards the upper end of the kind of charges that can be brought for unsatisfactory professional conduct.
7. In the circumstances, and out of fairness to the respondent, it is appropriate in my view that I first publish my reasons for finding the charges proven and invite further evidence and submissions from both the applicant and the respondent on the question of what penalty (if any) should be imposed by me. In particular I invite the respondent to call further evidence, if she wishes to do so, from any witnesses as to her level of competence and diligence and skills as a legal practitioner. When I have heard that evidence I will then determine what course of action to take.
8. I also invite submissions and evidence on the question of whether special circumstances exists here for not making a costs order in favour of the applicant.
9. In conclusion, before me, the respondent was unrepresented. That was unfortunate because she did not present well as a legal practitioner. She would do well to secure independent representation on her behalf when addressing the issue of penalty. Whether or not she does so is of course a matter entirely for her to decide.
10. The formal orders I will make are as follows:

1. Both charges of unsatisfactory professional conduct brought by the applicant against the respondent are found to have been proved.

2. Adjourn the further hearing of this matter until the 14th day of November 2011 at 10.00am for any further evidence and submissions which either party may wish to make on the issues of penalty and costs.

[5] Legal Profession Act 2004 s 3.4.29

[7] Tribunal Book at Tab 5. The caveat is stamped as having been lodged on 22 January 2009.