The Victorian Bar Incorporated v Molyneux [2006] VCAT 1417 | Case summary

The Victorian Bar Incorporated v Molyneux [2006] VCAT 1417 | Case summary | Zoe

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1 The Victorian Bar Incorporated ("the Bar"), pursuant to the provisions of section 151(1) of the Legal Practice Act 1996 ("the 1996 Act"), has brought before the Full Tribunal of the Legal Profession Tribunal a number of charges of misconduct against Ms Clarinda Eleanor Molyneux, Q.C. ("Molyneux") and Mr Andrew Richard Kirby ("Kirby") of counsel. The charges allege misconduct by wilful or reckless contravention of the Victorian Bar Rules of Conduct.

2 Dr Jessup, Q.C. with Mr J O'Bryan and Mr S Pitt of counsel appeared on behalf of the Bar. Mr J Rush, Q.C. with Ms R Doyle of counsel appeared on behalf of Molyneux, and Mr R Macaw, Q.C. with Mr P Cawthorn of counsel appeared on behalf of Kirby.

3 Counsel did not dispute that under the transitional provisions of the Legal Practice Act 2004 ("the 2004 Act"), which came into operation in December 2005, the 1996 Act applies to the charges brought both as to substance and procedure.

4 Molyneux and Kirby represented Ms Susan Reid and her son Michael Reid hereinafter referred to as "Reid" and "the Reids" respectively in litigation in their claim for their rightful share of Reid's parents' estates.

5 John Hubbard ("Hubbard") and Reid were brother and sister. Their father John Rickett Hubbard ("Hubbard senior") established the JRH Family Trust ("the trust") under which brother and sister were beneficiaries. Hubbard and Bruce Sundberg ("Sundberg") of the firm Hardham Dalton & Sundberg solicitors were the directors of the trustee company Hubbard Holdings Pty Ltd. ("Hubbard Holdings"). Sundberg was Hubbard senior's trusted solicitor. Further, Hubbard was an executor of both his father's and mother's wills. Brother and sister were beneficiaries under the trust and beneficiaries under the wills of their parents. It was their father's expressed wish that his children share equally in the assets of the trust and under the wills of their parents.

6 In 1997 Hubbard senior advanced in excess of $8 million to Hubbard Holdings on behalf of the trust. As at 30 June 1998 (ie four months prior to Hubbard senior's death) the beneficiaries' loan accounts of the trust indicated a loan to the trust from Hubbard senior in the sum of $9,163,577.00. The balance sheet of the trust as at 30 June 1998 indicated that the assets of the trust thus totalled $9 million.

7 On 7 November 1998 Hubbard senior died. By the terms of his will his residuary estate was to be divided into two equal parts; Hubbard's fund and Reid's fund.

8 In March 1999 the executors of Hubbard senior's estate (Hubbard and Sundberg) signed the financial accounts of Hubbard Holdings for the financial year ending 30 June 1998. The accounts were prepared by Ernst & Young and recorded an asset of Hubbard senior being his loan account standing to his credit in a sum in excess of $9 million.

9 Some time after March 1999 the accountants for the trust were changed from Ernst & Young to Davies French Ltd. They prepared a report for the financial year ended 30 June 1999 which did not include reference to Hubbard senior's loan to the trust.

10 In the report the "receivables" recorded an asset of the trust as being loans "to other persons" of $3,951,992.00. This was later discovered to be a company called Billingsby Pty Ltd ("Billingsby") which is a trustee for the Billingsby Estate Trust. The sole director of Billingsby is Hubbard's wife Anne Hubbard who is the beneficial owner of all the issued shares in Billingsby. Billingsby owns and operates a vineyard known as Kirwan Bridge Wines ("the vineyard") which is set up on land owned by Currawong Consultants Pty Ltd. ("Currawong Consultants") This company is the trustee of Hubbard's self managed superannuation fund.

11 In January 2002 Hubbard senior's wife, Minnie Isabel Hubbard, died.

12 Reid was not aware of the assets or value of the trust and the estates.

13 In an endeavour to ascertain the value and details of her inheritance, Reid in January 2002 engaged Marshalls & Dent Solicitors ("M & D") to act on her behalf. Ms Claire Jackman ("Jackman") of that firm handled Reid's case. Molyneux had previously acted on behalf of Reid in divorce proceedings and was engaged to act on Reid's behalf in relation to the estate matters. Mr David Batt of counsel was briefed as junior counsel and remained in that role until about February 2003 when, due to the absence of Mr Batt, Kirby was briefed as junior counsel to Molyneux.

14 What were described as "round table" conferences were held in February, March and April 2002 with Hubbard and Sundberg represented by Mr Michael Colbran, Q.C. and Reid represented by Molyneux and Jackman.

15 It was ascertained that in his lifetime Hubbard senior had lent to the trust something of the order of $8 million to $9 million.

16 After his father's death Hubbard as director of the trust, without security therefor and interest free, lent the greater part of the assets of the trust to Billingsby. That company owned and operated the vineyard situated at Nagambie. Hubbard's wife, stated to be estranged from her husband, resided on the vineyard and was beneficial owner of all the issued shares in Billingsby. The company was not a beneficiary under the trust. Further, it appeared the relationship between Reid and Hubbard's wife was of an acrimonious kind.

17 Further loans interest free and on an unsecured basis totalling about $2.5 million had been made by Hubbard from the trust to companies called Resin Coated Sands Pty Ltd and Caddy Investments Pty Ltd.

18 Reid had no prior knowledge of these loans or of the overall value of the trust and her father's estate at his death. Further, she was not aware of the value of her mother's estate. It was stated the overall value of both estates was about $24 million.

19 Hubbard senior's estate was primarily comprised of the money he had lent to the trust. Instead of the directors causing the trust to repay the loan made to it by Hubbard senior to Hubbard senior's estate and then paying half to Reid's fund and half to Hubbard's fund, that was not done and the money lent to Billingsby was effectively lost on the failure of the vineyard business.

20 During February, March and April 2002 the "round table" conferences referred to previously were held. No agreement was reached. Molyneux said she formed the view that Sundberg had left the transactions of the trust to Hubbard. Molyneux formed the view Sundberg was anxious for the matter to be resolved.

21 Hubbard was the registered proprietor of 1 Seymour Grove, Brighton.

22 Rather than set out in its entirety the remaining history of the matter, we summarise in point form the salient features of the remaining history and progress of the litigation and the proceedings before us.

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23 March 2002: Hubbard mortgaged 1 Seymour Grove, Brighton to secure a loan from ANZ Bank of $600,000.00 to Billingsby.

24 26 March 2002: The charge and guarantee were executed by Hubbard and Sundberg as directors of Hubbard Holdings. That document guaranteed a loan owed by Billingsby to Hubbard Holdings. (MC 2.1, ex. Q)

25 April 2002: Undertakings were provided by Hubbard and Sundberg as directors of Hubbard Holdings that they would not use current funds or assets of the trust and the estates. (MC 22.1, ex. Q)

Molyneux learnt that Sundberg was going overseas in early May 2002. Molyneux said in evidence before us that she had concerns about the progress of resolution in Sundberg's absence.

26 Late April 2002: Mr Colbran informed Molyneux he could take the matter of the resolution discussions no further as Hubbard had engaged other solicitors to act on his behalf.

27 27 April 2002: Mr Andrew Joseph ("Joseph") of Esandcee Pty trading as Strongman & Crouch Solicitors ("S & C") was instructed by Hubbard to act on his behalf. The terms of a written retainer provided bills payable on receipt by client; client, not S & C, liable for payment of counsel fees. (MC 5.1, Vol 2A)

Molyneux said in evidence before us that in light of the above she drew an affidavit as the basis of an application to seek the removal of Hubbard and Sundberg as executors of Hubbard senior's estate and to have them renounce their appointment as executors of Reid's mother's estate.

28 May 2002: Both Hubbard and Sundberg on their own motion and by consent were granted the relief sought on behalf of Reid. Mr Schlicht of counsel instructed by Joseph appeared on behalf of Hubbard and Sundberg. Molyneux appeared on behalf of Reid. Each party's costs were ordered to be paid on a solicitor/client basis from the estates. Mr Charles Brett was appointed administrator of both estates. (MC 2.1, Reid affidavit, 5 June 2003, paras 80-81, ex. Q)

Molyneux further stated in evidence before us that no resolution having been arrived at in relation to the distribution of the estates, she took it as an "ominous sign" that Sundberg, who had appeared responsive to Reid's cause, was departing, that Colbran was no longer engaged and that Hubbard had changed solicitors and engaged Joseph to act on his behalf.

29 By letter dated 14 May 2002 S & C advised M & D that the deed of charge and guarantee (MC 2.1, ex. Q) entered into by Hubbard and Sundberg on 26 March 2002 was null and void and unenforceable. (Respondents' folder of documents, tab 7, ex. 7)

Molyneux's reaction was to conclude "we're on the road to litigation".

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33 4 June 2002: Application made to Beach J. on behalf of Reid for a Mareva injunction over Hubbard's assets. Molyneux with Mr Batt of counsel appeared for Reid; Mr Ray Rosenberg ("Rosenberg") of counsel with Ms L Hannon ("Hannon"), of counsel instructed by S & C, appeared for Hubbard.

Rosenberg, instructed by Joseph, informed Beach J.: "There will be defences which will take serious issue with aspects of the Plaintiff's case - whether it will go all the way to exculpate the Defendant I don't know". (MC 9 ÷ Notes of Margaret Mary Leech - solicitor employed by M & D, ex. Z)

Mareva injunction granted restraining Hubbard: "by himself, his servants or agents or howsoever otherwise be restrained ... from assigning, transferring dealing with, encumbering, securing, disposing of or dissipating any interest in his in" ÷ certain properties and assets were specified including 1 Seymour Grove Brighton and the JRH Family Trust and its assets. (MC 2.1 SR16, ex. Q)

34 28 June 2002: Hubbard defence to 5682 signed by L Glick and Hannon of counsel filed by S & C.

35 Molyneux said in evidence before us that she concluded Hubbard had no intention of Reid getting her inheritance and that Hubbard had found a solicitor (ie Joseph) to support him in every effort he could make in furtherance of that objective.

36 5 August 2002: Jackman of M & D wrote to S & C and indicated Reid was prepared to accept $5.5 million inclusive of costs in settlement of the claim in 5682. That offer was not accepted and further correspondence was exchanged. It was proposed that a mediation be arranged. (MC 8.5, ex. Y)

37 September 2002: Rosenberg telephoned Molyneux and informed her that if Reid continued her claim Hubbard would inevitably go bankrupt. (Molyneux T, p666 L10-L31)

38 November 2002: Arrangements put in place for a mediation to be held 11 and 12 December 2002 before Mr A Kirkham, Q.C. as mediator.

39 4 December 2002: An application on summons was issued by S & C on behalf of Hubbard to vary the Mareva injunction. The application was supported by an affidavit of Joseph dated 22 November 2002 and an affidavit of Hubbard dated 3 December 2002. In that affidavit Hubbard stated the property at Seymour Grove was encumbered to the extent of about $600,000.00 by a first ranking mortgage in favour of ANZ Bank. This statement was contrary to the affidavit sworn by Hubbard on 3 June 2002 that Seymour Grove was unencumbered (para 32 hereof).

40 6 December 2002: The application for variation of the Mareva injunction was heard by Beach J.

Mr Schlicht, instructed by Joseph, appeared on behalf of Hubbard. Molyneux with Mr Batt appeared on behalf of Reid.

Mr Schlicht informed Beach J. that unless the Mareva injunction were varied Hubbard would no longer be able to retain S & C as his solicitors in action 5682. The hearing was part heard and adjourned to 17 December 2002. (MC 2.1, Reid affidavit, 5 June 2003, para 111, ex. Q) S.R.1.

The mediation set for 11 and 12 December with Mr Kirkham was cancelled pending resolution of the application to vary the Mareva injunction. (MC 5.8, Reid affidavit, 27 August 2003, para 30)

41 17 December 2002: Beach J. refused the application by Hubbard to vary the Mareva injunction. In his reasons Beach J. said Hubbard had been "guilty of reprehensible conduct" which could not be justified. His Honour said that Hubbard's statement in a previous affidavit to the affidavit sworn 3 December 2002 to the effect that he had not dealt with nor encumbered the Seymour Grove property was calculated to mislead the Court. Joseph was not in Court on 17 December 2002. (MC 2.1 SR21, ex. Q)

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42 18 December 2002: Joseph wrote to Hubbard and informed him: "Unfortunately under no circumstances are we prepared to provide further credit and we think that counsel are of the same mind. An effort must be made to reduce professional fees that are owed and any future fees must be fully secured by third party funds". (MC 10.3, ex. AB)

Throughout the period of engagement until shortly before he ceased to act in April 2003, Joseph exchanged correspondence with M & D in relation to fixing a date for mediation and seeking agreement on the costs associated therewith. The relationship between the two firms soured to the extent M & D threatened to refer S & C's conduct of the matter to the Legal Ombudsman.

43 7 January 2003: Joseph wrote to M & D: "Our client expects to be in a position to proceed with a mediation of these matters during February 2003". (MC 5.10, ex. V)

44 9 January 2003: M & D wrote to S & C that Reid consents to S & C arranging mediation on the basis Hubbard pays costs thereof to be reimbursed 50% thereof by Reid on the day of mediation. (MC 5.11, ex. V)

45 14 January 2003: $25,000.00 paid into S & C's trust account in name of McIntyre, a relative of Hubbard. S & C was at first unsure whether it had been paid to fund the cost of a mediation only or whether it could be applied towards costs generally. Only in about July 2003 did McIntyre give clear authority for it to be applied towards costs generally (see paragraph 74 below).

46 16 January 2003: S & C advised M & D that Mr Kirkham has been engaged as mediator for 12 and 13 March 2003. (MC 5.19, ex. V)

47 22 January 2003: S & C wrote to M & D seeking Reid's consent to release of monies held in trust on behalf of Currawong Consultants to pay mediator's fees. (MC 5.22, ex V)

48 28 January 2003: M & D (per Jackman) wrote to S & C refusing release of monies held on behalf of Currawong Consultants. They further stated their belief their clients consent to mediation had been obtained by Joseph in the knowledge Hubbard did not have funds to finance a mediation. M & D further stated their belief the steps involved in arranging a mediation were directed towards causing delay in the proceedings relating to 5682:

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136 In the presentation of the case before the Tribunal the Bar called no oral evidence and presented its case "on the documents". Molyneux gave sworn evidence and in the presentation of her case Jackman and Mr Ross Gillies, Q.C. were called as witnesses. Kirby in sworn evidence verified a lengthy witness statement he had prepared.

137 Mr Rush placed considerable emphasis on the evidence of Mr Gillies as well he might. Mr Gillies is highly respected as one of the most successful and experienced counsel at the Bar in relation to - in particular - common law litigation. Mr Gillies has extensive experience in the conduct of litigation in court.

138 We have been assisted by the evidence given by Mr Gillies in relation to the approach taken by barristers in assessing facts. He emphasised the necessity where appropriate for counsel to adopt a robust approach to the conduct of a case.

139 Further, we were assisted by his evidence in relation to drawing inferences from facts, the use thereof, and the examples he gave. He emphasised that where more than one inference was open, as is so often the case, a barrister is justified in adopting one without a requirement to cover the field.

140 Mr Gillies realised that his was a role of assisting the Tribunal, not deciding issues. Approach yes, decision no.

141 We appreciate that although Mr Gillies had been briefed in relation to the facts and the background material in two detailed letters of instruction, he had not been bombarded to the same extent as we were with literally hundreds of documents and lengthy detailed submissions, both on opening and in final submissions. Nor was he present during oral evidence of the other witnesses.

142 We appreciate it was probably only natural for an experienced common law lawyer to find it an irresistible impulse to venture, albeit, with poise and discretion, into our exclusive field of play.

143 Insofar as one may gain the impression some conclusions expressed by Mr Gillies could be at variance with our determination on some issues, we certainly arrive at such conclusions with great respect to Mr Gillies. We were assisted by the evidence given within the parameters of his expert role.

144 That having been said, it came as no surprise that Mr Gillies would form the view, from the material provided for his consideration, that experienced counsel would take a view that Hubbard had "ripped off his sister", provided a false statement to Beach J., professed to seek and yet put off mediation, and was a person of suspect credit at the least.

145 We have no doubt counsel, even of recent call, would make the most of such material in attack on Hubbard with particular reference to alleged attempts to delay or frustrate the hearing of 5682, hide his assets, pay his sister as little as possible, and place every obstacle in her path in pursuit of her rightful inheritance.

146 Mr Gillies said experienced counsel would appreciate the Reids had a strong case and it be open to form a view Hubbard's defence in 5682 was "not going to be troublesome".

147 Indeed, it appeared to be Mr Gillies' view that an experienced counsel in accordance with practice at the Bar would take the view the case against Hubbard by his sister in 5682 was overwhelming.

148 We can readily accept such matters; however, the issue is whether an experienced hard nosed commercial lawyer would be "infected by" a "disembarking of fleas" (as Mr Gillies put it) from Hubbard to Joseph.

149 Experienced barristers and solicitors are accustomed to act on behalf of, and in furtherance of, the interests of persons of little moral worth. They well know, indeed it is the practice at the Bar, to be alert to the risk of a "disembarking of fleas".

150 Joseph made strong denials of malpractice on his part. Hubbard denied collusion.

151 During the course of our deliberations, we have been mindful of the practices spoken of by Mr Gillies and his examples in elaboration thereof.

152 In arriving at our findings, we have certainly taken into account practice at the Bar. The Bar bears the onus of proof. In these proceedings it is not necessary for the Tribunal to be satisfied on the criminal standard beyond reasonable doubt. The Bar must prove its case on a balance of probabilities.

153 The charges brought against Molyneux and Kirby are serious, therefore in recognition of that fact in the application of the standard of proof, we have "raised the bar high".

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Mr Macaw submitted that paragraphs (b) and (c) of the rule lend support to the proposition that Rule 42 relates to an address to a jury on the evidence and not to the document submitted to Bryant CFM.

160 Counsels' written submissions to Bryant CFM contained references to and reliance upon matters that were not "in the evidence".

161 Mr Cawthorn lent support to his leader's submissions. Mr Cawthorn submitted that rules other than Rule 42 were appropriate to cover written submissions, for example Rules 34, 44, and in particular Rule 31.

162 Mr Cawthorn said it would require Rule 42 to be given an expansive meaning, such as that relied upon by Dr Jessup, to cover the written "Submissions on behalf of the Applicants" presented to Bryant CFM.

163 On behalf of Counsel it was submitted Rule 42 was not applicable to and did not cover the document submitted to Bryant CFM. As Mr Cawthorn put it "If there's an obvious lacuna, then the rules should be amended".

164 Dr Jessup submitted that neither in its terms nor in its setting (position in the rules) did Rule 42 warrant the restricted operation placed upon it by counsel for the practitioners. Dr Jessup submitted there was no warrant to confine the application of Rule 42 to oral submissions only nor to a jury trial.

165 Dr Jessup submitted there was nothing in the rule to suggest an oral address was more worthy than a written submission. Indeed, in the conduct of litigation these days, it is very common for written submissions to be relied on by courts and tribunals.

166 Dr Jessup stressed there is no distinction apparent from the rule itself and no distinction is necessary from the objects and scheme of the rules. Indeed, a reading of the rules from Rule 31 to Rule 42 supports an orderly progression of obligations placed on counsel up to and including Rule 42.

167 In the final analysis, we agree with the Bar's submission that the written document bearing the names of both Molyneux and Kirby, being "Submissions on behalf of Applicants" referred to hereafter, is a document of the kind within the provisions of Rule 42 as an "address on the evidence".

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177 Then followed a list of eight specified assets or classes of asset. The list included Hubbard's interest in the two estates.

178 The order did not restrain Hubbard in relation to all of his assets, only in relation to the assets specified. No doubt for that reason, the order did not exclude from its operation (or "carve out") the application of assets or funds for living expenses or for legal fees for the defence of the proceeding. Nevertheless, amongst Hubbard's assets there was no readily realisable asset which was not the subject of the order, except arguably the benefit of the two orders for costs, which we hereafter refer to as "the uncollected costs orders" (the parties before us having used that expression in the course of the hearing). We say that "arguably" the uncollected costs orders were not the subject of the Mareva order because it became apparent, during the hearing before Bryant CFM of the proceeding which is the subject of this charge, that the case was being conducted for Reid on the footing that the Mareva order did not affect Hubbard's right to collect the costs and apply them towards whatever debt he owed S & C, but S & C through Joseph was taking the stance that any dealing with the costs, or the right to costs, under the uncollected costs orders was restrained under the Mareva order; either approach was arguably correct.

179 The order contained the standard notice that a person served with the order or having notice of the order would be liable to penal sanction if that person disobeyed the order.

180 Of course, S & C was an agent of Hubbard for as long as S & C acted for him as his solicitor, and S & C had notice of the order.

181 The terms of the Mareva order were the basis for a contention that the only way in which a solicitor acting for Hubbard could arrange for payment of the solicitor's fees, after the order was made, in a way that did not result in Hubbard being in breach of the order by paying legal costs out of the assets affected by the order or result in the solicitor being in breach of the order by receiving the costs out of those assets, was for the solicitor to act on the basis that the fees sought would not have to be paid until the Mareva order no longer had operation, that is to say, until the Supreme Court proceeding had been heard and Hubbard had satisfied any judgment against him in it.

182 A written retainer agreement with S & C, signed by Hubbard and dated 30 April 2002, had been exhibited to an affidavit by Joseph sworn on 22 August 2003 and was part of the evidence available at the time of the opening. As one would expect, under the terms of that retainer S & C had the right to require payment of bills for fees as soon as those bills were rendered. One of the terms of the written retainer (clause 5 of "Terms of Engagement") was that Hubbard, not S & C, would be liable to pay counsel's fees, if S & C briefed counsel on his behalf.

183 Against that background, Molyneux came to make the allegation, in opening on 29 August 2003, which is a subject of this charge : that there had been a variation, by agreement between Hubbard and S & C, of the original retainer so that fees owing to S & C would not be payable until after the conclusion of the Supreme Court proceeding.

184 That allegation was not, however, the principal allegation made. It was put as an alternative to others, which in various ways contributed to one overall submission made to Bryant CFM : that it was not permissible for S & C to have caused a bankruptcy notice to be issued and served upon Hubbard at the times when it was issued and served. The submission was not clearly presented, but we think that counsel for Molyneux analysed it correctly in their written address to us concerning this charge, and what we now say about the submission reflects that analysis.

185 The overall submission had two branches to it, and each branch in turn had two sub-branches. At the outset we summarise them as follows : the bankruptcy notice should be set aside because:

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186 To support the first branch of the submission (numbered i above), Molyneux and Kirby had prepared a document which Molyneux described to Bryant CFM as an "aide memoire" and submitted to her Honour during the opening; its heading was "Pro forma trust account for John Hubbard prepared on the basis of Esandcee's evidence". The aide memoire later became exhibited to an affidavit of Joseph sworn on 1 September 2003 in the proceeding.

187 The evidence referred to in the heading of the aide memoire included an affidavit which Joseph had sworn on 22 November 2002 in the proceeding in which the Reids had applied successfully for an order setting aside the appointment of Mansell as Hubbard's controlling trustee. That affidavit was an exhibit to an affidavit of Reid sworn on 15 August 2003 in the proceeding which sought the order setting aside the bankruptcy notice. The aide memoire purported to be a summary of the evidence, in that affidavit of Joseph sworn on 22 November 2002 and in the affidavit of Joseph sworn on 22 August 2003 in opposition to the application for an order setting aside the bankruptcy notice, as to receipts into and payments out of S & C's trust account, as to the bills rendered by S & C to Hubbard, and as to payments out of S & C's trust account to S & C's office account in reduction of those bills.

188 Two of the sums paid into the trust account had been $25,000.00 by Marjorie McIntyre (McIntyre) and $4,000.00 by Vincent Caddy (Caddy). By the times that S & C had filed the County Court writ and obtained the default judgment, neither of those sums had been applied for Hubbard's benefit in reduction of what had been claimed by S & C, although by the time that the bankruptcy notice was issued the $25,000.00 from McIntyre had been applied for that purpose, and the bankruptcy notice had recorded it as a sum received in reduction of the judgment debt, so that the balance demanded in the bankruptcy notice was $54,293.80.

189 In the trust account there was another sum of $10,862.80 in the name of Currawong, the trustee of Hubbard's superannuation fund. That sum had never been applied in reduction of S & C's bills to Hubbard.

190 In the aide memoire, all those sums were nominally applied in reduction of S & C's bills to Hubbard. In the course of the hearing Joseph gave evidence that S & C had not so applied the McIntyre sum until he had obtained explicit instructions from her that the sum could be used to reduce Hubbard's indebtedness generally, that S & C had not so applied the Caddy sum because Caddy had never given those explicit instructions, and that S & C had not so applied the Currawong sum because he was uncertain whether it was affected by the Mareva order.

191 Joseph's affidavits had revealed that some of the money that S & C had received from Hubbard had been used to pay barristers' fees not to pay S & C itself. In the aide memoire those payments were treated as having been received by S & C for its own benefit, because under the terms of the written retainer S & C had no obligation to pay barristers on Hubbard's behalf.

192 The methodology employed in the aide memoire produced a calculation that the sum actually owing to S & C by Hubbard was (to the nearest hundred dollars) $17,700.00. In fact the aide memoire gave two different calculations. One was a balancing of debit amounts and credit amounts in the trust accounts with a result of a debit balance of $17,689.38. The other was a summary of bills rendered and barristers' fees rendered and payments made, with a result of a debit balance of $17,690.58. Why the two balances were slightly different was never made clear to us. Kirby in his evidence to us stated that $17,690.58 was the right figure. Throughout the hearing before Bryant CFM, however, Molyneux put forward $17,689.38 as the right figure.

193 The first branch of the submission - that the debt had never been more than $17,689.38 and that in the light of the uncollected costs orders Hubbard really owed nothing - emerges from the following passage on page 3 of the transcript of the hearing on 29 August 2003 : a passage which occurs immediately after Molyneux had listed the affidavit material on which her clients were relying:

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194 The first attempt to describe this submission - that "there is not a debtor-creditor relationship" - was not a very happy one. On any view, at some stage there had been such a relationship. By the end of the passage, however, it was clear enough that what was being said was that the debtor-creditor relationship no longer existed because no money was owed by Hubbard when the uncollected costs orders were taken into account in reduction of whatever had been owing, which was $17,689.38 at the most.

195 The second branch of the overall submission (numbered ii above) was that the issue and service of the bankruptcy notice was an abuse of process and that the notice should be set aside for that reasons. In turn, the abuse-of-process branch had two sub-branches to it. The first was that it was said to be an abuse of process to make, by a bankruptcy notice, a demand when, if the demanded payment were to be made and received, the payment would involve a recourse to assets in a way that breached the Mareva order. The second sub-branch was that the notice was an attempt to "extort" money, and that in bankruptcy law service of a notice in an attempt to extort money was an abuse of process. That second sub-branch will be considered when we deal with charges 10, 11 and 12 below.

196 The allegation that the retainer had been varied arose in the context of the first sub-branch of the "abuse-of-process" branch. It was put that for S & C to avoid a potential breach of the Mareva order it was necessary for the retainer with Hubbard to have become one that did not require him to have recourse to assets listed in the Mareva order in order to pay S & C's fees until the Mareva order ceased to have effect : for the retainer to have been varied so that when bills were rendered the obligation to pay them was deferred until a judgment in the Supreme Court proceeding had been satisfied. Under such a varied retainer, there would have been no due and payable debt at the times that the bankruptcy notice had been issued and served. The argument was that the only answer to the abuse-of-process allegation, in its first sub-branch, was for S & C to adopt the "variation of retainer" stance, but that stance was fatal to the bankruptcy notice too. That is why it is correct, we think, to classify the "variation of retainer" allegation as an alternative allegation, as counsel for Molyneux did.

197 What we have called the second branch of the submission commenced in a way that is shown in the following passages on pages 3 and 4 of the transcript of the hearing on 29 August 2003 (in which "the first matter" mentioned in the second sentence is the first branch, the "no debt" submission):

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201 Each of three states of affairs was put, in our judgment, as a possible explanation of how S & C could continue to be acting for a client who could not pay immediately because a Mareva order effectively prevented him from doing so. As the third of them was referred to as "another scenario", and the second was referred to as an alternative to the first, it seems to us that each of the three was being described by counsel as a "scenario", a possibility, not as something which actually happened or that counsel was saying she would prove had actually happened.

202 Of the various passages of transcript relied upon by the Bar to prove charge 1, the second sentence in the passage we have last quoted corresponds the most closely to the allegation which is specified in the charge. Rule 35, which counsel is charged with having contravened, is concerned with the opening of a fact. In putting forward the "deferred payment basis" scenario, counsel was putting it forward, in our judgment, not as a fact but as an illustration of how a conclusion might be reached, by "inference", as to how "the basis on which the second respondent would be paid was varied".

203 The facts which Molyneux opened, either by particularly mentioning them or by referring to filed affidavit material in which those facts were deposed to, were largely uncontentious. They included the Mareva order, the omission from that order of any "carve out" for legal costs, the description of Hubbard's assets, the written retainer, the details of payments into and out of S & C's trust account as set out in Joseph's affidavits, the dismissal of the application to vary the Mareva order, the fact that S & C continued to act for Hubbard after the Mareva order, the barristers' fees paid by S & C, the bills rendered by S & C to Hubbard, S & C's ceasing to act for Hubbard as from 28 April 2003, the County Court writ and the service of it, the default judgment, the bankruptcy notice and the service of it, and the refusal of S & C to agree to an extension of time for compliance with the notice. Other facts to prove the potential value to Hubbard of the uncollected costs orders were also available to be presented.

204 All those facts were available in aid of the overall submission and the two branches of it mentioned above, one sub-branch of which was the alternative submission that a variation of retainer could be inferred from those facts.

205 In charge 1 the variation alleged in opening was said to be to the effect that fees would not be payable by Hubbard "at all or until the conclusion of the Supreme Court proceedings". In our view Molyneux did not ever allege that the variation was to the effect that fees were not payable "at all". She did allege a conclusion, that the Court could reach by inference, that there had been a variation so that fees could not be payable until the conclusion of the Supreme Court proceeding.

206 During Molyneux's evidence in chief the Tribunal enquired whether she had been endeavouring to submit to Bryant CFM that the variation had been effected by an agreement that was to be implied from the terms of the Mareva order, which did not "carve out" a provision for payment of the costs of continuing to defend the Supreme Court proceeding, and from the fact that S & C continued to act for Hubbard nevertheless. She answered in the affirmative. When cross-examined as to whether the variation for which she had been contending was express or implied, she wavered between those alternatives before eventually returning to the position that she had been contending that the variation was implied. She said that she had not thought of the matter in those terms before she commenced the opening. Indeed we think it likely that she had never thought of the matter in those terms until she was cross-examined about it.

207 From the passage that we have quoted from the transcript of the opening it remains unclear whether what was being spoken of was an express variation of the retainer, or an implied variation, or a variation which might have been either express or implied. The second sentence in the passage we last quoted, commencing with the phrase "Alternatively they said," seems at first sight to postulate an express agreement. But Molyneux's evidence before us contained examples of her habit of expressing the effect or consequence of something that a person (especially Beach J.) had said or done by rendering it into direct speech of that person, when obviously that person did not actually say the words that she phrased as direct speech. The sentence that commences with the words "Alternatively they said" is consistent with that habit of expression. We doubt that in that sentence or elsewhere in her opening Molyneux had alleged that S & C and Hubbard had expressly agreed to a variation of the retainer to a "deferred payment basis".

208 The transcript of the opening reveals that on several occasions Molyneux expressed a desire to cross-examine Hubbard and Joseph in order to obtain evidence of the basis on which S & C had continued to act for Hubbard after the Mareva order had been made and after the attempt to vary it to so that there was a "carve out" provision for legal costs had failed.

209 Our conclusion is that when opening the issue of a variation of retainer Molyneux was suggesting that an inference might be drawn that there had been a variation to a "deferred payment basis", that the variation might turn out from evidence obtained during cross-examination to have been an express variation, and that if the evidence did not turn out in that way then at least the variation was to be implied from all the circumstances, especially the effect of the Mareva order upon Hubbard's assets, the absence of a "carve out" for legal costs, and the fact that S & C kept acting for Hubbard until April 2003 nevertheless.

210 To open the issue in that way, by a suggested inference, was not to open the variation as a fact, in our view, and so could not be a breach of Rule 35.

211 If, contrary to our view, to open a suggested inference was to open a fact, we consider that there were reasonable grounds for a belief that it was capable of support by evidence which would be available to be presented. Molyneux's evidence that she held that belief was not challenged.

212 The reasonable grounds were these. First, the terms of the Mareva order; it related to specified assets of Hubbard, and it did not "carve out" an excepted fund that would allow him to pay legal costs; so for Hubbard to use one of the specified assets to pay his solicitor would be a breach of the order and a contempt of court. Secondly, there was evidence that the specified assets amounted to all, or almost all, of his realisable assets, so that it was not practicable for him to pay a solicitor without resorting to a specified asset and thereby breaching the order. Thirdly, S & C continued to act for Hubbard in the defence of the Supreme Court proceeding after the Mareva order was made and after the attempt to vary it, to provide a "carve out", failed. Fourthly, there was authority for the proposition that a solicitor who knowingly permits a client to pay costs in breach of a Mareva order is in contempt of Court: Anglo Eastern Trust Ltd. v Kermanshanchi [2003] EHWC 3152, at para [11], which is set out in Biscoe, Mareva and Anton Piller Orders (2005), at pp 190-191. Fifthly, S & C had notice of the Mareva order. Finally, it was reasonable to assume that both solicitor and client would be anxious to ensure that the solicitor's costs were paid in a way that did not constitute a breach of a Mareva order, and a contempt of court, by either of them. These facts and circumstances were capable of giving rise to an implication of an agreement that the costs would not have to be paid until the Supreme Court case was completed and the Mareva order no longer affected the specified assets.

213 The argument always had large difficulties, both factual and legal. The largest single factual difficulty was the availability of funds from the uncollected costs orders. For other purposes Molyneux had been arguing that the right to costs under those orders was not affected by the Mareva order and that a recovery of those costs would have eliminated any debt to S & C. But as soon as one allows for there having been a substantial asset, free of the Mareva order, which could have been used to pay S & C's bills at any time, it becomes hard to see the need to imply a "deferred payment basis" variation of the retainer.

214 Large though the difficulties were, the proposition that the variation was to be implied was arguable, and so a belief that the facts and circumstances mentioned above gave rise to the implication was a belief held on reasonable grounds.

215 Charge 1 will be dismissed.

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218 The allegation central to charge 2 is the allegation made by Molyneux in opening that Hubbard was not indebted to S & C at the times when the bankruptcy notice was issued and served. It is clear that such an allegation was made during the opening.

219 Particulars of the charge given by the Bar overlap with some of the particulars given for charge 1 but additionally allege statements made by Molyneux on 18 August 2003, when she was making an application for an interlocutory order extending the time for compliance with the bankruptcy notice; upon that application, Bryant CFM made an interlocutory order extending the time until the determination of the proceeding, the final hearing of which began on 29 August 2003. During the hearing on 18 August 2003 Molyneux made two statements that Hubbard was "not a debtor". The only elaboration of either statement was an assertion that Hubbard was not insolvent. Obviously the question of solvency has nothing to do with the question of indebtedness and it is not surprising that on 29 August 2003 Molyneux did not attempt to link the two questions. So we regard the two statements made on 18 August 2003 as irrelevant to this charge.

220 Charge 2 puts it that the allegation made was that Hubbard was "not indebted" either as a result of "the variation referred to in Charge 1" or by reason of amounts paid by Hubbard or amounts which should have been credited to his account.

221 For reasons given above in relation to charge 1, the allegation of variation referred to therein did not constitute the opening of a fact and so was not capable of being a contravention of Rule 35; alternatively, if it did constitute the opening of a fact, there were reasonable grounds for a belief (which Molyneux held) that the allegation was capable of support by available evidence and so the making of the allegation was not a contravention of Rule 35.

222 There is an additional reason why the making of the allegation of variation of retainer does not come within the terms of charge 2. That allegation was never a constituent of any allegation that Hubbard was "not indebted". The allegation was only that because of the variation of the retainer to one of a "deferred payment basis" the debt was not due and payable and would not become due and payable until a judgment in the Supreme Court proceeding had been satisfied.

223 That leaves for consideration what Molyneux said in opening about why Hubbard did not owe any money to S & C and what evidence was available to support that proposition.

224 We have set out above the passage of the transcript on 29 August 2003 (on page 3) which recorded what Molyneux said in the course of handing the aide memoire to Bryant CFM. She said that it had been prepared on the evidence of "the primary documents provided to us by the second respondent [S & C]". In her evidence to us Molyneux described those "primary documents" as Joseph's affidavit of 22 November 2002, Joseph's affidavit of 22 August 2003, the written retainer, S & C's bills to Hubbard, and copies of S & C trust ledgers for Currawong, McIntyre and Caddy. That passage of the transcript shows that Molyneux went on to mention the uncollected costs orders, without elaborating on their significance, and concluded by saying that Hubbard did not owe S & C any money.

225 In her evidence to us Molyneux said, and we accept, that the only documents in her possession on the basis of which she prepared the aide memoire were those described in the last paragraph, and that at the time that she handed it to Bryant CFM she believed it to be correct. In fact it was not complete, and hence incorrect, because there were other relevant documents: trust account ledgers for Hubbard himself. Those were available to Molyneux's instructing solicitors because they had been provided by S & C in compliance with a notice to produce served upon S & C, as Hubbard's solicitors, on 5 December 2002 in relation to the impending hearing of Hubbard's application to the Supreme Court for an order varying the Mareva injunction, and they had been referred to in an affidavit of Reid sworn on 12 December 2002 and filed in that proceeding. In her evidence to us Molyneux said, and we accept, that she had forgotten that those copy ledgers had been produced to her instructing solicitors. She conceded that had the aide memoire taken account of entries in those ledgers, particularly entries that recorded payments to barristers, it would not have shown a final figure of $17,689.38 but would have shown a higher final figure.

226 With one apparent exception (and we do not understand the reason for that apparent exception) the aide memoire took no account of barristers' fees paid by S & C and treated moneys received into the trust account (whether used to pay barristers' fees or not) as having been received by S & C for payment of S & C's bills to Hubbard. Because of the terms of the written retainer that was an arguably correct way to treat the payment of barristers' fees. The moneys received into the trust account included the payments by McIntyre and Caddy. By the time that the document was prepared, it was correct to have applied the McIntyre payment in reduction of S & C's bills, because S & C had virtually done that in the bankruptcy notice. In the absence of any knowledge of a reason why the Caddy payment and the Currawong sum could not be treated in the same way, it was reasonable to treat them in the same way.

227 So we consider that there were reasonable grounds for Molyneux's belief, as at 29 August 2003, that the available evidence supported the method of calculation set out in the aide memoire which resulted in a final figure of $17,689.38.

228 The evidence relied upon for preparation of the aide memoire did not, on its own, support the proposition that Hubbard was not indebted to S & C at all. In support of that proposition, Molyneux also referred in opening to the uncollected costs orders.

229 In our view there were reasonable grounds for a belief, which we accept that Molyneux held at the time, that the value of those uncollected costs orders to Hubbard was approximately $50,000.00 and that that sum was readily available if he sought it. As we have stated above, Sundberg's claim for $44,788.00 in costs under the same two orders had not been controversial. The evidence before us was that there were assets of the two estates readily available for payment of the costs, and that Hubbard's costs would probably exceed Sundberg's.

230 Of course, the mere fact that Hubbard, if he chose to do so, could collect the costs and pay them to S & C to extinguish or reduce what he owed S & C, or could authorise S & C to collect the costs and apply them in reduction of its outstanding bills, would not justify an assertion that he did not owe S & C any money. Nor would it justify an assertion that the value of the right to costs under the uncollected costs orders could and should be set off against S & C's claim against Hubbard for fees. The right to costs was Hubbard's right, not S & C's.

231 In his evidence Kirby put forward a much more sophisticated rationale for a belief that the effect of the uncollected costs orders was to cancel out any claim by S & C against Hubbard for fees, and that rationale was developed by his junior counsel in his address in reply to the Bar's final address. It was this. S & C, while still Hubbard's solicitors, had not collected the costs and one could infer that S & C had not advised him that the costs should be collected. That was so even though, so far as it appeared from the evidence, S & C's bills included charges for work done in respect of the very matters for which Hubbard had become entitled to costs from the two estates. The failure to collect the costs or to advise that the costs could be collected was arguably a breach of a duty which S & C owed Hubbard and arguably gave rise to a claim by him against S & C for damages in an amount equivalent to the value of the right to the costs, ie approximately $50,000.00. Under Rule 13.14 of the County Court Rules, that claim for damages could have been relied upon by Hubbard as an arguable defence, in the County Court proceeding which S & C had commenced against him, by way of set off against S & C's claim. Had the defence by way of set off been relied upon and had the defence succeeded, in an amount greater than or equal to the amount to which S & C would otherwise have been entitled, there would have been judgment in Hubbard's favour and it would be true to say that he did not owe S & C any money. The effect of the Rules of Court in this regard is dealt with in Derham, The Law of Set Off, 3rd edition, para 2.64.

232 During the opening and during the rest of the Magistrates Court proceeding nothing like that rationale was ever articulated. It is not difficult to point to potential flaws in the rationale. For instance, any failure by S & C to collect costs or advise Hubbard about his right to the costs did not affect the existence of the right and so it would be difficult indeed to establish that Hubbard had suffered any loss which entitled him to claim damages and to use that claim as a set off.

233 Nevertheless, the existence of the rationale demonstrates, in our opinion, that there was a reasonable basis for the belief that the uncollected costs orders provided support for the allegation that Hubbard was not indebted to S & C.

234 There was no breach of Rule 35 in the manner alleged in charge 2.

235 Charge 2 will be dismissed.

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238 The charge is based upon the written final submissions, of mixed fact and law, that were filed with Bryant CFM after the hearing had concluded. The written final submissions bore the names of Molyneux and Kirby.

239 We have already given reasons for accepting the Bar's submission to us that those written final submissions constituted an "address on the evidence" within the meaning of Rule 42.

240 After Molyneux's opening on 29 August 2003 Joseph gave evidence. He verified the contents of his affidavit sworn on 23 August 2003. Molyneux commenced her cross-examination of him. In the course of the cross-examination, S & C produced copies of the pages of S & C's trust account ledger in the name of Hubbard. There was some cross-examination that dealt with the various trust account ledgers and why barristers' fees had been paid by S & C despite the terms of the written retainer. The proposition that there had been a variation of the retainer, so that S & C's fees did not have to be paid until the Mareva order had ceased to operate, was put to Joseph and he denied it. Before the hearing was adjourned, without the cross-examination having been completed, Joseph through S & C's counsel offered to swear and file a further affidavit which reconciled the figures in the trust account ledgers and showed how the amounts claimed in the County Court writ and in the bankruptcy notice had been calculated.

241 On 1 September 2003 Joseph swore, and S & C served upon Molyneux's instructing solicitors M & D, an affidavit with several exhibits. One of the exhibits was a series of schedules which set out in great detail how the sum of $75,000.00 claimed in the County Court writ had been calculated and demonstrated errors in some of the assumptions that had underlain the aide memoire.

242 When the hearing resumed on 11 September 2003 Molyneux's cross-examination of Joseph continued, after S & C's counsel had mentioned to Bryant CFM that there had been a further affidavit sworn but had not otherwise identified it or referred to any of its contents. Her Honour imposed a time limit on the cross-examination and called a halt to it when the time limit expired.

243 The cross-examination covered matters such as the alleged variation of retainer, the ledgers for the trust accounts in the name of Currawong and McIntyre respectively, the payment of barristers' fees and the uncollected costs orders.

244 Molyneux did not, however, cross-examine Joseph about the contents of the affidavit sworn on 1 September 2003 or the exhibits to it. She made occasional references to a "first affidavit" of his, which the context of the cross-examination showed were references to his affidavit sworn on 22 August 2003, and asked one question (on page 75 of the transcript of the proceedings on 11 September 2003) about what he had said, or had failed to say, in his "second affidavit" about whether he had decided that S & C should cease acting for Hubbard after the application for variation of the Mareva order had been dismissed.

245 Chronologically Joseph's affidavit of 1 September 2003 was the second of three affidavits he swore in the proceeding; the third was sworn on 9 September 2003 and in it he did little more than depose to service of the affidavit of 1 September 2003 and of an accompanying letter of the same date. We mention those matters because questions have arisen whether the second affidavit had been introduced into evidence and whether Bryant CFM was entitled to consider its contents.

246 In re-examination of Joseph S & C's counsel asked a question about the accuracy of "the detailed affidavit" that he had sworn, again without identifying it or referring to any of its contents. Her Honour interrupted and observed that Joseph had not been challenged upon it. It was obvious from that interruption that the affidavit of 1 September 2003 had been filed, that Bryant CFM was aware of its tenor, and that her Honour had concluded, correctly, that Molyneux had not challenged the accuracy of that affidavit.

247 On the following day, 12 September 2003, Molyneux cross-examined Hubbard and at the conclusion of the evidence Bryant CFM fixed a time table for the filing of written submissions by the parties.

248 Written final submissions subscribed by Molyneux and Kirby were filed on 16 September 2003. They comprised 37 pages containing some introductory points and then 163 numbered paragraphs. The bulk of the written final submissions dealt with matters that had nothing to do directly with a "no debt" allegation or with a "no presently due and payable debt" allegation. Paragraphs 42 to 77 (inclusive) appeared under a heading which asked rhetorically why Hubbard had refused to file a defence in the County Court proceeding when he had a defence, but even under that heading there were only occasional references to a disputed debt. In paragraph 61 there was an assertion that "the evidence supports a finding ... that there was no debt" without specifying the evidence or why it was said to support the finding. Paragraph 65 asserted that no moneys were owed by Hubbard to S & C, without elaboration. Paragraph 54 asserted that Hubbard had good defences to the County Court writ, without identifying what they were or why they were good, but did go on to make an apparent reference to the uncollected costs orders. Paragraph 66 asserted that there had been "an avenue available to recover costs", that there was $50,000.00 which could have been recovered from "the estates", and that had the costs been recovered Hubbard could have discharged in full his obligations to S & C. Sparing though those references were, they showed that the "no debt" defence had not been abandoned, and that the uncollected costs orders were relied upon as a basis for that defence.

249 In paragraph 108 there was an assertion that S & C had sued Hubbard for "a sum of $75,000.00 which was not due and payable to the solicitor". So far as we have been able to determine, this was the only explicit reference in the written submissions to a "not presently due and payable debt" defence, and the only thing that stood in the way of a conclusion that the "variation of retainer" argument had been abandoned.

250 Paragraph (c) of charge 3 includes an allegation that Molyneux suggested in the written final submissions that Hubbard was not indebted to S & C at all, either as the result of a variation of the retainer or by reason that amounts which should have been credited to Hubbard's account were equal to or exceeded any amount owing to S & C.

251 We accept that the "variation of retainer" argument was included in the written final submissions, although only very faintly. As we said in relation to charge 2, the argument was never, however, a constituent of the allegation that nothing was owing to S & C "at all". It amounted only to an allegation that there was no presently due and payable debt at the time that the County Court judgment was obtained or at the time that the bankruptcy notice was served. Moreover, for reasons that we have given when considering charge 1, there were reasonable grounds for the beliefs, which Molyneux held, that the evidence in the case provided a proper basis for the suggestion at least (by the end of the case) of an implied variation of the retainer and that the matters covered by the suggestion of an implied retainer were well founded.

252 It is clear that the written final submissions included the suggestion that amounts that were or should have been credited to Hubbard's account were equal to or exceeded any amount owing to S & C. In the opening the suggestion had been twofold : that the amount truly owing, after such credits, was much less than the $75,000.00 claimed by S & C in the County Court writ, and that moneys available under the uncollected costs orders were greater than whatever was owed. The second aspect of that suggestion - the uncollected costs orders - was clearly present in the written submissions. For reasons that we have given when considering charge 2, there were reasonable grounds for the beliefs, that Molyneux held, that the evidence provided a proper basis for the suggestion concerning the significance of the uncollected costs orders and that the matters covered by that suggestion were well founded.

253 What we have said so far about charge 3 has disposed of paragraph (c) of the charge : contravention of Rule 42 by the suggestion that Hubbard was not indebted to S & C at all : a "no debt" suggestion.

254 Paragraph (d) of charge 3 includes an allegation that Molyneux suggested in the written final submissions that Hubbard had not been indebted in the amount claimed by S & C, by reason that amounts paid by him or which should have been credited to his account had the effect of reducing the amount owing : a "part debt" suggestion.

255 On the final day of the hearing Dr Jessup, in the course of his final address on behalf of the Bar, made submissions as to what it would be appropriate for the Tribunal to do in relation to charge 3. In the course of those submissions he stated (the passage is on P 1791 of the transcript):

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256 We have found that "a no debt allegation" was indeed made in the written final submissions. We have found that Molyneux had reasonable grounds and a proper basis to make the allegation. As we have understood the Bar's submission, it follows that charge 3 should be dismissed without any consideration by us of paragraph (d) of charge 3.

257 For that reason, we find that the contravention of Rule 42 alleged in charge 3 did not occur and charge 3 will be dismissed.

258 Nevertheless, because what was involved in paragraph (d) of the charge was canvassed at length during the hearing, and in case it is thought that we should not have followed the course suggested by the Bar, we propose to state our views about paragraph (d) in any event.

259 Particulars of charge 3 given by the Bar specify numerous paragraphs of the written final submissions but the only paragraphs which appear to be applicable to paragraph (d) of the charge are paragraphs 33, 34, 35 and 110 of the written final submissions.

260 Paragraph 34 mentioned the aide memoire. Although the written final submissions did not say so, the aide memoire had set out calculations which, so Molyneux said in opening, purported to show that $17,689.38 at most was owing at the time that the County Court writ had been filed.

261 Paragraphs 33, 34 and 35 comprised part of a section of the written final submissions, between paragraphs 23 and 27 (inclusive), under a heading "Lack of procedural fairness". Paragraphs 23 to 29 (inclusive) had made complaints about the conduct of senior counsel for S & C during the hearing on 11 and 12 September 2003. Paragraphs 30 to 32 (inclusive) made complaints that written submissions by S & C had misrepresented what had happened during cross-examination of Joseph on 29 August 2003 about S & C's trust account and had falsely attributed to Molyneux's clients an allegation that S & C had misappropriated trust funds.

262 Paragraphs 33, 34 and 35, in which "JHH" meant Hubbard and "M & D" meant Molyneux's instructing solicitors M & D, were as follows:

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263 The point apparently being made in paragraph 33 was that at the time that cross-examination of Joseph began Molyneux did not have a copy of S & C's ledger for the trust account in Hubbard's name, and that that was the reason for the cross-examination as to S & C's trust account having proceeded in the way that it did on 29 August 2003.

264 The Bar's submission about the three paragraphs was that they misleadingly put to Bryant CFM that the final state of the relevant evidence, on the subject of the balance of Hubbard's account with S & C, was as shown in the aide memoire. That was misleading, the Bar submitted, because Joseph's affidavit of 1 September 2003 had effectively and in great detail refuted the methodology of and calculations set out in the aide memoire; no challenge to any of the contents of that affidavit had been made in cross-examination of Joseph on 11 September 2003.

265 Molyneux's explanation, in her evidence to us, of those three paragraphs was that they had been intended to convey that as the evidence stood at the time that the aide memoire had been handed to Bryant CFM the calculations in the aide memoire were apparently correct and that there had been nothing to suggest otherwise; they had not been intended to convey that by the end of the case the aide memoire still correctly reflected the state of accounts.

266 We do not think that the paragraphs were reasonably capable of being read in the way that Molyneux intended them to be read. In the first place, the phrase used at the beginning of paragraph 35 was "No evidence was led". Had paragraph 35 been something like "No evidence had by then been led by S & C in relation to the trust ledger of S & C" its accuracy would have been debatable but at least a reader would have been alerted to the intention to confine those paragraphs to the state of affairs as it was at the beginning of the hearing on 29 August 2003, even though the reader may have been puzzled why anything had been said about the aide memoire at all if the paragraphs were confined to that state of affairs. In the second place, we consider that other paragraphs in the written submissions (paragraphs 58, 60 and 110) implied that some of the methodology for the calculations set out in the aide memoire was still being relied upon to support a case that Hubbard had never owed $75,000.00.

267 Paragraph 58 stated that interest included in the default judgment had been calculated on $75,000.00 "when the sum was $35,864.08". Paragraph 60 commenced:

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273 How that figure had become $35,864.08 in paragraphs 58 and 60 is not clear.

274 The aide memoire had treated the third party funds, the Currawong funds and the cost consultant's fee in the way set out above.

275 Notwithstanding that Joseph's oral evidence and his affidavit of 1 September 2003 had demonstrated, without challenge, why it was wrong to treat the third party funds and the Currawong funds in that way, the written final submissions showed that Molyneux was persisting with the methodology of the aide memoire except that she was allowing that it was appropriate for S & C to have paid barristers' fees rather than having paid itself.

276 In its cross-examination of Molyneux, and in its final written address to us, the Bar put it that Molyneux had been suggesting in the written final submissions to Bryant CFM that at the end of the case the aide memoire correctly reflected the evidence that sum which had truly been owing as $17,689.38 at most. For the above reasons we do not think that what the Bar put is correct. What we think that paragraphs 33, 34 and 35 of the written final submissions would reasonably have been taken to mean, when read in the light of the other paragraphs we have mentioned, was that at the end of the case the methodology of the aide memoire established on the evidence that the amount owing to S & C had been $35,864.08 at most.

277 The statement (as we consider it was) that the evidence justified a conclusion that $35,000.00 (in round figures) was owing, not $75,000.00, was misleading. At the end of the case, Joseph's evidence, not having been challenged, swept away any inferences which might otherwise have supported the methodology of the aide memoire. In maintaining otherwise in her evidence before us, Molyneux took the stance that because Joseph's affidavit of 1 September 2003 had not been read formally into evidence it was not evidence which affected the validity of those inferences. In our view this stance is simply not maintainable, there having been no forthright objection by her on 11 or 12 September 2003 when it was obvious that the parties were proceeding on the footing that that affidavit was part of the relevant affidavit material and when any oversight of the technical requirement of formally tendering the affidavit might easily have been rectified. We agree with the Bar's submission that any overt attempt in the written final submissions to Bryant CFM to object to any reliance being placed upon that affidavit would, in high probability, have met with her Honour's response that it was too late to attempt to take the point.

278 It is fair to mention that the written final submissions in paragraph 14 had made a specific reference to the affidavit of 1 September 2003 and so there could not have been any intention to mislead Bryant CFM into thinking that the affidavit was not something that could be taken into consideration for the purposes of a judgment.

279 The vice of paragraphs 33, 34, 35 and 110 was, however, that they did, in the terms of paragraph (d) of charge 3, suggest that Hubbard was indebted to S & C in a sum of $35,000.00 approximately at most, not $75,000.00, by reason of amounts that ought to have been credited to his account, when, at the end of the evidence in the case, there were no reasonable grounds for a belief that the evidence provided a proper basis for the suggestion or that the matters covered by the suggestion were well founded.

280 So far as charge 3 is concerned, that is not the end of the matter. Molyneux is charged with having suggested that there had been "serious misconduct" on the part of S & C and/or Joseph by obtaining the County Court judgment and/or by causing the bankruptcy notice to be issued and served upon Hubbard, in the circumstances set out in the charge. Of the circumstances alleged to have been suggested, we have found that suggestion alleged in paragraph (c) was not made or, if made, was made when there were the requisite reasonable grounds for it, and that the suggestion alleged in paragraph (d) was made and that the requisite reasonable grounds were absent.

281 We accept that, in the manner that it was made, the suggestion that S & C acted as it did when there was no debt at all was a suggestion of serious misconduct. The suggestion was accompanied by an assertion, in paragraph 56 of the written final submissions, that the evidence of Hubbard and Joseph was "tailored" to lead the Court to believe that at the time S & C sued Hubbard had owed it monies, and by an assertion in paragraph 65 that the bankruptcy notice was a "sham" because no monies were owed by Hubbard to S & C. Molyneux in her evidence said that she accepted that the suggestion of "no debt" involved a suggestion of serious misconduct. We have found that there were reasonable grounds for a belief that there was a proper basis for the suggestion of "no debt".

282 We are not persuaded, however, that the suggestion that S & C acted as it did when it was owed less than the $75,000.00 which it claimed was a suggestion that S & C had engaged in serious misconduct. Had the suggestion explicitly been that Joseph had known full well that S & C was entitled to claim only $35,000.00 or so but had deliberately sued for and obtained payment for a higher amount and had then served a bankruptcy notice for a higher amount, no doubt it would have been a suggestion of serious misconduct. The suggestion actually made was consistent with a suggestion of no more than that Joseph had held a mistaken belief that S & C was not entitled to have had recourse to the third party funds and to the amount in the trust account in the name of Currawong. That is not a suggestion of serious misconduct, in our view.

283 In the result, the contravention of Rule 42 alleged in charge 3 did not occur.

284 Charge 3 will be dismissed.

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287 Charge 4 covers much the same ground as charge 3 had covered, with the difference that the rule alleged to have been contravened is Rule 31, not Rule 42, so there is no requirement, as there was in relation to charge 3, for the Bar to prove that the suggestion made by counsel was a suggestion of "serious misconduct" on the part of S & C and/or Joseph. What has to be proved instead is the failure to take the care required under the terms of Rule 31.

288 The particulars given by charge 4 are the same as those given for charge 3, so charge 4 also relates solely to the written final submissions that were filed.

289 As for paragraph (c) of charge 4, we repeat what we said in relation to the corresponding paragraph in charge 3. For the reasons there given we consider that, to the extent that the alleged suggestion was made in the written final submissions, Molyneux took care to ensure that it was reasonably justified by the material then available to her, for in our view it was so reasonably justified.

290 Rule 31 requires counsel also to take care that a decision made to make a suggestion against a person is appropriate for the robust advancement of the client's case on its merits. This requirement attracted comparatively little attention during the hearing, and no attention in relation to charge 4. While there was reasonable justification for Molyneux's suggestion of "no debt", there would be a basis for thinking that the accompanying assertions of "tailored" evidence and "sham", to which we referred above in our reasons concerning charge 3, went beyond what was appropriate for the robust advancement of the suggestion of "no debt". But there was more to the client's case than the "no debt" suggestion; the written final submissions concentrated heavily on the suggestions of collusion and collateral advantage with which later charges are concerned. The assertions we have mentioned served to form a bridge between the "no debt" suggestion and the other suggestions. So we do not think that those assertions should dominate a consideration of whether the "no debt" suggestion was advanced in a way that was more robust than was appropriate. It has not been shown that Molyneux did not take care in that regard.

291 That leaves paragraph (d) of charge 4, which corresponds to paragraph (d) of charge 3, that is to say, it alleges the making of a "part debt" suggestion (related to the aide memoire), whereas paragraph (c) had concerned a "no debt" suggestion.

292 We referred above to a passage of transcript (p. 1791) of the final address of Dr Jessup for the Bar in relation to charge 3. After he had made that particular submission the Tribunal enquired whether what he said held good for charge 4 also. He said that it did. We repeat the submission:

[221]

305 There is no issue the statements were made. We repeat that Dr Jessup informed us "We don't, in our submissions, contend that the barrister's beliefs in this case were other than what they have stated them to be to the Tribunal".

306 We accept that concession made on behalf of the Bar and turn to consider the issue of the existence of "reasonable grounds".

307 In May 2002 Reid and her son Michael James Reid (by his litigation guardian Susan Reid) by 5682 instituted proceedings against Hubbard as executor of the estate of Hubbard senior. Reid alleged Hubbard had in breach of his obligations as executor appropriated more than half the net value of the estate for his own use and benefit and depleted the net assets of the estate thereby depleting the amount due to Reid.

308 The plaintiffs sought compensation and an injunction restraining Hubbard from dissipating any of his assets. A number of assets were specified.

309 Molyneux and Kirby relied on a number of matters they regarded as reasonable grounds for the suggestion of collusion. We refer to some but not necessarily all such grounds. In the final analysis we are satisfied no ground standing on its own, or the combination of all grounds relied on, constitutes reasonable grounds for a belief of serious misconduct by Joseph.

310 On 28 June 2002 S & C instructed by Hubbard filed a very detailed defence to 5682 drawn by counsel. The defence denied the plaintiffs allegations that Hubbard had acted in breach of his duties and obligations to the estate. The defence stated Hubbard had acted honestly in discharge of his duties and obligations to the estate. Further, the defence asserted that Hubbard relied on his co-executor, Sundberg, to advise him and any default on his part was due to a failure of Sundberg to advise properly or at all.

311 In the written final submissions on behalf of the applicants (para 46), Molyneux and Kirby stated the steps taken by S & C to delay the trial of 5682 or avoid the proceedings going to trial at all included "filing a defence" to 5682.

312 The submission in support of the "no defence" suggestion is developed throughout the written final submissions:

[243]

322 Molyneux and Kirby attributed all blame to Hubbard and S & C for the failure of mediation to achieve a positive result. They maintain certain proposals for settlement by Hubbard were not capable of fulfilment and included proposals involving participation by third parties. Molyneux and Kirby believed the cancellation of mediations fixed for particular dates was motivated by the aim of Hubbard and S & C to delay and put off the hearing of 5682.

323 We have considered all matters relied on by Molyneux and Kirby on the issue of failed and postponed mediations and negotiations particularly during the time S & C acted for Hubbard.

324 We are unable to see any basis upon which a reasonable conclusion could be reached that the course of discussions for mediations supported a reasonable inference that Hubbard and S & C had agreed on a course of conduct or tactics to delay or postpone the hearing of 5682. Indeed on one view it could be said that as the date fixed for 5682 approached, Hubbard became very anxious to resolve outstanding issues with Reid.

325 We fail to see how the "on again - off again" progression towards variation or adjournment of dates proposed or fixed for mediations or discussions can form a basis for the conclusion reached by Molyneux and Kirby.

326 In the course of two personal letters from Hubbard to his sister, Hubbard affirmed his desire to settle issues and sought mediation.

327 On 20 April 2003 Hubbard wrote (Volume 3 MC 81) "I wish to settle on whatever terms you wish..." Could we please have a meeting to resolve this..."

328 On 6 September 2003 Hubbard wrote "I believe from our discussions we both wish to settle." "Obviously with the position I am now in, bankruptcy will generate further legal complications time delays and lost revenue. I am determined to do all possible to resolve this situation". "Susan please ring me so that we may try to resolve this matter as a matter of urgency" (Respondents documents, tab 12).

329 Based upon evidence given by Molyneux on the issue of mediation, Mr Rush submitted:

[247]

330 Extensive correspondence, at times acrimonious, was exchanged between M & D and S & C up until the time S & C ceased to act for Hubbard in 5682 (28 April 2003). Thereafter, during the time Isakow acted for Hubbard mediation discussions continued. Indeed, conferences were held when Isakow was acting.

331 The Bar in their submissions maintain that no adverse inference is open to be drawn against S & C in relation to the "on again - off again" mediations. The Bar point out that the mediation fixed for December 2002 was cancelled because once the application to vary the Mareva injunction was refused by Beach J., Hubbard could not afford the cost thereof. The said application had been made to seek to obtain funds for the mediation. The mediation fixed for March 2003 was cancelled by M & D not S & C.

332 It is to be noted by reference to paragraph 46(d) of the written final submissions of Molyneux and Kirby that S & C were no longer acting for Hubbard at the time referred to therein. We are satisfied the issue of negotiations and mediation does not constitute reasonable grounds for the belief formed by Molyneux and Kirby.

333 Molyneux and Kirby contrasted Hubbard's proposed desire for mediation with his failure to contest the sum claimed by S & C for unpaid costs, his failure to enter an appearance to the County Court writ issued against him by S & C, the fact judgment was entered against him for $77,946.44 plus $1,201.00 costs in default of appearance, and his failure to take steps to set aside that judgment.

334 The recitation of the above facts and reliance thereon does not in our view constitute reasonable grounds upon which to base an allegation of collusion between client and solicitor nor a belief thereof.

335 Molyneux and Kirby rely on what is stated to be the speed of, or the rapid progression of, proceedings issued by S & C against Hubbard. Some of the steps alleged are set out in paragraph 46 of their written final submissions. Molyneux and Kirby held the view Hubbard had no defence to 5682. The date for the hearing of 5682 approached:

24 June 2003: S & C issue County Court writ against Hubbard seeking recovery of $75,286.15 unpaid legal fees.

16 July 2003: Judgment in default of appearance by Hubbard was entered in favour of S & C in the sum claimed.

28 July 2003: Bankruptcy notice was issued by S & C against Hubbard in the sum of $54,293 being the judgment sum, reduced by $25,000, paid to S & C by McIntyre.

15 August 2003: M & D on behalf of Reid file application to set aside bankruptcy notice as an abuse of the process of the court.

336 To appreciate the above chronology of events it is appropriate to appreciate that between 8 May 2002 and 8 April 2003 S & C had written to Hubbard on about twenty occasions seeking payment of costs. On 27 June 2002 S & C wrote "The matter of your funding is now becoming critical".

337 S & C wrote:

15 November 2002:

[369]

397 It was further stated by Molyneux that counsel experienced in such matters described S & C's interpretation of the will as "nonsense".

398 Over the years conflict in relation to the proper interpretation of wills has been a fertile source of income to the profession. To place reliance on this matter in support of the suggestion S & C were in collusion with Hubbard does not in our view provide reasonable grounds for the belief held by counsel.

399 Mr Rush drew attention to the reliance placed by his client on the application made before Beach J. on behalf of Hubbard to vary the Mareva injunction.

400 That application was contested and dismissed by Beach J. We see no reason to view that other than as a legitimate step taken on behalf of Hubbard by S & C to address Hubbard's pressing financial problems. In our view, it does not support collusion.

401 Insofar as Molyneux and Kirby relied on the authority signed by Hubbard appointing Mansell as trustee under section 188 of the Bankruptcy Act 1966, we do not consider that in any way can be relied on in support of collusion, S & C having ceased to act in 5682 and made a written demand on Hubbard on 30 April 2003 for payment of $75,286 costs.

402 Molyneux and Kirby relied on S & C performing some legal work for Hubbard after 28 April 2003, i.e. the date they filed the Supreme Court notices of ceasing to act for Hubbard in 5682. Thereafter, Hubbard was represented in that action apparently by Best Hooper for a short period and then Isakow Lawyers.

403 It appears the nature of the work by S & C involved consideration of Reid's bill of costs and the taxing thereof pursuant to the order of Beach J. on 17 November 2002 and payment of fees due to Ms Antoinette Austin, specialist costs consultant, engaged on Hubbard's behalf by S & C during the time of their retainer.

404 Joseph made no secret of the fact he continued to act for Hubbard and in consideration of the allegation of variation of retainer we have addressed that matter. We mention it at this stage to state we do not find that matter constitutes a reasonable ground for Molyneux and Kirby's belief of collusion for a collateral purpose.

405 We have endeavoured to give careful consideration to what we perceive to have been the major points relied on by Molyneux and Kirby in their written final submissions in support of reasonable grounds for their suggestion of serious misconduct by S & C. Further, we have considered a number of other grounds relied on by Molyneux and Kirby in their written final submissions. We do not propose to specify same in detail.

406 Having applied the high standard of proof referred to previously, we are satisfied no ground, standing alone, amounts to a reasonable ground. Further, mindful of Mr Rush's submission in that regard, we have taken time to stand back from a consideration of individual grounds and view the grounds as one cumulative whole. We of course acknowledge counsel placed reliance on a circumstantial case.

407 We are satisfied a global view of all the facts relied on does not constitute reasonable ground. Indeed, we are satisfied no reasonable basis whatsoever existed in the evidence available to counsel at the time of drafting their written final submissions for the suggestion of serious misconduct by S & C or Joseph. We are satisfied a contravention of Rule 42 has been proved.

408 In our view the Bar has proved that neither singly nor collectively do such amount to reasonable grounds for the belief of counsel that the evidence provided a proper basis for the suggestion made by counsel and further the Bar has proved there were no reasonable grounds for counsels' belief that the matter covered by this particular suggestion of serious misconduct was well founded.

409 Further, this being a specialised tribunal performing a specific function in relation to the legal profession and the serious allegations having been made against a member of the profession, we feel it appropriate to say we consider no reasonable basis whatsoever existed for the allegations against Joseph. In our judgment, the allegations are without foundation.

410 In final submission on behalf of the Bar (paragraph 7.45) in relation to charge 7 it was submitted:

[492]

471 That form of words shows, in our view, that she was not opening, as a fact, that S & C had extorted money or had had a purpose of extorting money. What was being said, we think, was that facts might emerge from cross-examination (facts of which she was not aware and could not open) and might lead her Honour to a conclusion that there had been a purpose of extorting money and thus that the issue and service of a bankruptcy notice with such a purpose was an abuse of process.

472 The form of words used in the second passage quoted above was more direct. Considered in isolation, the words come closer to a direct allegation than the process embarked upon by S & C had been for the purpose of extorting money. We accept that a direct allegation of a purpose would be the opening of a fact. But the words in the second passage should not be considered in isolation. They were an attempt to reiterate what she had said earlier, when she had said that the results of cross-examination might lead Bryant CFM to a particular conclusion. They should be considered in that context. They did not amount to the opening of a fact.

473 Our conclusion, therefore, is that Molyneux did not open, as a fact, the allegation which is set out in paragraph (a) of charge 10.

474 Paragraph (b) of charge 10 is a charge that Molyneux, by alleging in opening that S & C and/or Joseph had caused the bankruptcy notice to be issued and served for the purpose of extorting money, thereby implied that S & C and/or Joseph had done so believing that S & C had no legitimate claim for the amount of the County Court judgment.

475 We do not think that the Bar has established that there was necessarily such an implication from the words used. Certainly there was an implication from those words that there was no money owed and so no claim which justified the judgment. But we refer to what we have said above, in relation to charges 1, 2, 3 and 4, about the ways in which the argument that the retainer had been varied and the argument based on the uncollected costs orders had been used to support the assertions that there had been no presently due and payable debt or no debt at all. Those assertions did not depend upon any additional allegation that Joseph did not believe that S & C had a legitimate claim. An allegation that the bankruptcy notice had been served with the purpose of extorting money would, in the circumstances in which Molyneux is said to have made it, necessarily require an allegation that S & C was not entitled to demand payment of the sum specified in the notice, but that allegation would not necessarily in turn require an allegation that Joseph did not believe that S & C had a legitimate claim to the sum demanded.

476 So we find that the allegation specified in paragraph (b) was not made, and that the allegation specified in paragraph (a), while made, was not opened as a fact.

477 If, contrary to our conclusion, the allegation specified in paragraph (a) was opened as a fact, we consider that there were no reasonable grounds for a belief that the allegation would be capable of support by the evidence which would be available to be presented.

478 The bankruptcy cases to which we were referred and in which the "extortion" argument has succeeded (including In re Majory and In re a Debtor cited above) were cases in which a creditor has attempted to compel the debtor to pay or do something which was additional to, or other than, payment of the debt. There is no case which would justify the use of the word "extort" when the allegation against the creditor is merely that the debt demanded in the bankruptcy notice was not owing.

479 In their final address to us, which was partly in writing, counsel for Molyneux, after submitting that Molyneux's opening had used the word "extortion" in the sense that it was an attempt to extract money from a recalcitrant debtor (Hubbard) whom S & C knew to be solvent, stated:

[509]

490 In those paragraphs "the applicants" meant the Reids.

491 "Extort" was used in each paragraph within inverted commas, to denote its use in bankruptcy cases to describe a particular kind of abuse of process. We refer to what we said in connection with charge 10, concerning that use of the term in bankruptcy cases. Counsel's use of "extort" in inverted commas, to denote that use in bankruptcy cases, softened the impact of the word.

492 These paragraphs showed, however, that "extort" was being used in a way that went beyond anything that the bankruptcy authorities might arguably justify. For the allegation was not of an extortion of Hubbard. It was an allegation of an extortion of the Reids.

493 The bankruptcy authorities that involve the use of "extort" or "extortion" deal with improper demands made of a debtor, and say nothing about demands made of a debtor with a view to compelling improperly a third party to pay.

494 Despite the inverted commas in the two paragraphs, the allegation of a purpose to extort from the Reids therefore became an allegation of extortion in an unqualified sense. It was an allegation of serious misconduct.

495 The shift in emphasis from extortion of Hubbard (a conclusion it was suggested in the opening that Bryant CFM might arrive at as a result of cross-examination) to extortion of the Reids (in the written final submissions) shows, we think, that paragraphs 2 and 4 of the final written submissions were really a variation upon the theme of collateral advantage which dominated the submissions: that the bankruptcy notice was served to achieve delay of the Supreme Court proceeding, to put pressure upon the Reids to settle the Supreme Court proceeding disadvantageously to themselves and to release Hubbard's assets from the scope of the Mareva injunction so that funds became available to pay S & C's bills. The earlier suggestion of extortion had become moulded to fit what had, at the end of the case, become a principal allegation of conduct designed to achieve a collateral advantage.

496 We accept that Molyneux believed that the evidence in the case provided a proper basis for the suggestion of serious misconduct made in those two paragraphs of the written final submissions and believed that the matters covered by the suggestion were well founded.

497 We consider, however, that there were no reasonable grounds for those beliefs. Because of the shift of emphasis so that the two paragraphs became a variation upon the theme of collateral advantage, the reasons we gave above in relation to charge 7 for concluding that there were no reasonable grounds for the belief that there was a proper basis for allegations of collusion or collateral advantage, are reasons too for concluding that there were no reasonable grounds for a belief that there was a proper basis for making what was, in the end, an indiscriminate allegation of extortion.

498 In particular, we consider that the comment made by counsel for S & C quoted in paragraph 4 of the written final submissions did not provide reasonable grounds for the belief in question. In the first place, nothing in the comment contained any suggestion that the Reids should pay anything. In the second place, the Bar's submission that the comment was only one as to the effect of the Mareva injunction, not as to any purpose behind the bankruptcy notice, is in our opinion plainly correct.

499 The allegation in paragraph (a) of charge 11 has been made out. As to paragraph (b), for the reasons we gave in relation to the corresponding paragraph (b) of charge 10 we consider that the allegation in paragraph (b) of charge 11 has not been made out. Because the allegation in paragraph (a) has been made out the Bar has proved the contravention of Rule 42 alleged in charge 11.

500 The Bar did not submit that the contravention was wilful or reckless. Molyneux swore that she adverted to the possibility that in making the allegation of extortion in the written final submissions she might be contravening the Bar Rules but, after discussing the matter with Kirby and Fraser, concluded that there would be no contravention and believed that there would be no contravention. We accept that evidence and find that the contravention was not wilful. On the issue of whether it was reckless, we note that there were errors of law which underlay her erroneous belief that the material at her disposal provided a proper basis for an "extortion" allegation and caused her to use that word when its use was quite inappropriate. There is a great difference between making errors of law and being reckless. On the basis of the evidence referred to earlier in this paragraph we find that the contravention was not reckless.

501 Under charge 11 we find Molyneux not guilty of misconduct, but we find that the contravention of Rule 42 alleged in charge 11, and established, constituted unsatisfactory conduct, in that there were no reasonable grounds that the evidence provided a proper basis for the suggestion of a purpose of extorting money. Molyneux is guilty of unsatisfactory conduct.

[627]

559 Mr Rush's submission, set out above, appeared to treat Molyneux as having made only proposition (c), and did not appear to grapple with the problem that at times she had put forward propositions (a) and (b) also.

560 The passages of transcript set out above also seem to reflect a second layer of confusion : a confusion between "a breach of the Mareva injunction" and the concept of an abuse of process. The Bar's submission, set out above, correctly pointed out the difference between a breach of an order and an abuse of process.

561 Nevertheless, the manner in which S & C attempted to compel immediate payment of bills for legal fees, arguably "in breach of the Mareva injunction", was by the service of a bankruptcy notice : potentially a precursor to a court process of an application for a sequestration order. Had Molyneux confined the "abuse of process" allegation to proposition (c), arguably there would have been a justification for the use of the expression.

562 But there was no justification for its use as part of proposition (a) or proposition (b). It is completely untenable to say that a solicitor abuses the processes of a court merely by continuing to act for a client after a Mareva injunction has been made against the client. And it is completely untenable to say that a solicitor abuses the processes of a court merely by rendering bills to that client.

563 We considered a resolution of the issue of interpretation of this case is assisted by a careful reading and appreciation of the particulars in relation thereto. Based upon statements made by Molyneux the allegation forming the basis of an alleged abuse of process is clearly spelt out.

564 In our view the Bar assessment of the facts and statement of the law applicable thereto is correct.

565 The question remains has the Bar proved Molyneux failed to take care to ensure that her decision to allege abuse of process by S&C was reasonably justified by the material available to her.

566 At P1079 L5 of the transcript, Molyneux was asked by Dr Jessup:

[638]

580 We have already said that it has not been necessary for us to determine whether the opening by Molyneux as senior counsel was also the opening by the junior counsel Kirby within the meaning of Rule 35 of the Rules of Conduct. The reason was that we had dismissed all charges against Molyneux which depended upon statements that she made during the opening, and so it followed that the corresponding charges against Kirby had to be dismissed.

581 Nevertheless, we think it is appropriate for us to say something about the relationship between a senior counsel and a junior counsel in a case, and about the particular role that Kirby had played as junior counsel in the Magistrates Court proceeding.

582 Kirby was admitted to practice on 11 April 1994 and signed the Bar Roll on 27 May 1999.

583 At the time relevant to the charges brought against him, he had only been at the Bar for about 4 years.

584 Kirby is charged with the same offences as Molyneux with the exception of the charge that relates to cross-examination (charge 9 Molyneux).

585 M & D briefed Kirby as junior counsel to Molyneux in February 2003. Kirby had never previously worked with Molyneux nor Jackman. Before these proceedings, no complaint had ever been made against him.

586 We accept Dr Jessup's observation (T 1796 L3) that in many ways the relationship between senior and junior counsel is "a unique relationship and a very special role".

587 It appears there is no decided case on that role. Such being the position, we propose to confine our attention to and decide this case on the facts.

588 The extent to which junior counsel is involved in the preparation for and presentation of a case in court can vary. Junior counsel may not be in attendance at every conference held by senior counsel with instructing solicitor or clients. Junior counsel may or may not necessarily be involved in research of authorities. Junior counsel may have no experience in the field in which senior counsel is acknowledge to be learned. Senior counsel may be briefed to be present at the hearing merely to argue one aspect of the case or cross-examine a particular witness or witnesses.

589 Junior counsel may be called upon to research a particular line of authority and perhaps argue that point. Junior counsel may have the task of preparing and presenting a particular aspect of the case. Junior counsel may be involved in conferring with witnesses during the running of the case, eg whilst senior counsel is on his or her feet.

590 The circumstances of involvement by junior counsel in the preparation for and presentation of a case in court are wide and varied. We believe we are on safe ground in saying the ultimate responsibility for the overall presentation of a case rests with senior counsel.

591 In their letter in reply to "the Murray letter" (Binder 3 Job 52 ex "A5") the solicitors for Molyneux and Kirby under sub-heading "Role of Counsel" stated:

[644]

594 Further, we consider, based upon the impressions we formed and the conclusions we drew in relation to the demeanour of counsel as witnesses that it is relevant to take into account the style of advocacy of Molyneux. There is no doubt she was passionately committed to the advancement of Reid's case, as she saw it, on the merits. We are satisfied that resulted at times in a blinkered vision of the facts and a somewhat rash approach to the drawing of inferences and statements made to the Bench.

595 In that regard it may very well be the case that Molyneux, whose practice lay principally in the Family Court, was not experienced in the conduct of litigation in the wider jurisdictions.

596 It was only a comparatively short time after S & C commenced to act for Hubbard that Jackman formed an unfavourable view of their conduct. On 28 January 2003 Jackman wrote to S & C: "We wish to know why this matter should not be referred to the Legal Ombudsman", and on 28 January 2003 Jackman stated to S & C her allegations referred to as "the conduct of your firm". This was the environment into which Kirby came as junior counsel.

597 On the occasions of the hearings relevant to these charges Kirby appeared as junior counsel to Molyneux although it does not appear he took an active role in either calling or cross-examining a witness. However, Kirby made it clear in both his witness statement and evidence before the Tribunal that he played an active role in preparation and pre-trial conferences. Kirby attended conferences with the client, discussed aspects of the case in running with Molyneux and Jackman and researched aspects of the case.

598 Dr Jessup submitted there was no "a priori" reason why Kirby should not be regarded as making the presentation of the case, that is, in opening before Bryant CFM.

599 We consider it relevant to take into account the matters we have mentioned previously. Further, the drawing of inferences from many facts on a circumstantial basis is not always free of difficulty and minds may differ.

600 In this case the Bar accepts Molyneux believed there was a basis for the suggestions or allegations put to Bryant CFM in her opening. Kirby likewise held similar beliefs. However in Kirby's case, despite his arguments in favour of such beliefs, we are not satisfied that at that stage of his career at the Bar and at the time the case was opened by Molyneux that he had the experience to properly assess the conclusions to be drawn from the facts outlined by him in his witness statement - in particular paragraph 267 thereof.

601 Molyneux and Jackman had well and truly formed their opinions and probably Kirby was influenced by that environment.

602 Further, from a reading of the transcripts of the proceedings and having had the opportunity of observing Molyneux's demeanour and loquaciousness in the witness box, we are satisfied that Kirby should not be held responsible for serious allegations made against S & C in the opening.

603 In our opinion as a general proposition Molyneux failed to take the care to be expected of a senior counsel and the degree care a junior counsel ought to have been able to rely on, in making the allegations against S & C in the opening.

604 Molyneux accepts, and rightly so, responsibility for the opening. It was her role to exercise proper forensic judgment for the statements made whilst on her feet. The fact Kirby believed in the accuracy of the propositions put in no way shifts responsibility from Molyneux to Kirby nor, in our judgment, would his belief render him vicariously liable for breach of the rules based on the format of expression adopted by Molyneux.

605 No script or written opening was prepared between Molyneux and Kirby as to how the application before Bryant CFM was to be opened and run. Kirby states this was consistent with the usual manner in which an application was prepared.

606 The actual form the opening took, the expressions used, and the answers made to questions from the Bench were attributable to Molyneux.

607 We note that a number of documents introduced into evidence before Bryant CFM were in fact drafted by Molyneux; for example, statement of claim, two Reid affidavits and the affidavit of Margaret Leech. It was Molyneux who elected to rely on the no debt-variation of agreement submission. It was Molyneux who drafted the greater part of the written final submissions on behalf of the Reids.

608 The above lend support for the strong impression we gained that Molyneux was in sole control of the presentation of the opening and the forensic judgments made whilst on her feet throughout the case.

The Victorian Bar Incorporated v Molyneux

At a glance

Court

Decision date

Before

Source

Judgment (645 paragraphs)

The Victorian Bar Incorporated v Molyneux (Legal Practice) [2006] VCAT 1417 (14 July 2006)

Parties

Cases Cited (2)