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[2021] VCAT 906
General information, not legal advice.
Victorian Civil and Administrative Tribunal
2021-08-12
Original judgment source is linked above.
Solicitor - disciplinary proceeding - one charge of professional misconduct by recklessly making false and misleading statements to the regulator - three charges of unsatisfactory professional conduct comprising a six-month delay in providing client documents to a former client, failing to make costs disclosure as to counsel's fees and invoicing for work done after the retainer ended - agreed findings and disposition - Legal Profession Uniform Law s 302.
Victorian Legal Services Commissioner v Defteros (Legal Practice) (Corrected)
1 In relation to charge 2, concerning a six-month delay by his practice in providing documents to a former client, Mr Defteros is found to have engaged in unsatisfactory professional conduct under s 296 of the Legal Profession Uniform Law (Uniform Law). He is reprimand and ordered to pay a fine of $1,000 to the Victorian Legal Services Board.
2 In relation to charge 3, concerning recklessly understating his personal involvement in a particular proceeding during the course of the VLSC's investigation, Mr Defteros is found guilty of professional misconduct under s 297(1)(a) of the Uniform Law. He is reprimand and ordered to pay a fine of $5,000 to the Victorian Legal Services Board.
3 In relation to charge 4, concerning a failure by his practice to provide to a client an estimate of the costs of briefing counsel, Mr Defteros is found to have engaged in unsatisfactory professional conduct under s 296 of the
Uniform Law. He is reprimand and ordered to pay a fine of $1,000 to the Victorian Legal Services Board.
In relation to charge 5, concerning invoicing a client for work done after the retainer had ended, Mr Defteros is found to have engaged in unsatisfactory professional conduct under s 296 of the Uniform Law. He is reprimand and ordered to pay a fine of $2,000 to the Victorian Legal Services Board.
Under s 303 of the Uniform Law Mr Defteros is to pay the VLSC's costs in the agreed sum of $18,800.
For respondent Dr K Hanscombe QC of counsel, Ms K Bowshell of counsel
1 This proceeding had its genesis in an investigation commenced by the applicant (VLSC) in February 2017 concerning an alleged conflict-of-interest. From May 2015 to April 2016, the firm Defteros Lawyers Pty Ltd (the practice) acted for a woman (the wife) in de-facto relationship proceedings under the Family Law Act 1975 (Cth). This was in circumstances where the firm had previously acted for the woman's partner (the husband) in an unrelated matter, and so, had knowledge about his personal circumstances.[1]
2 The solicitors for the husband wrote on 5 June 2015, and on a number of occasions thereafter, requesting that the practice cease to act for the wife. Those requests were refused. Ultimately, however, an order was made by a judge in the Federal Circuit Court of Australia (by consent) on 8 April 2016 that the practice be restrained from continuing to act for the wife, that it deliver to the husband's new solicitors all files it held relating to when it previously represented him, and that it pay the husband his costs of that application on an indemnity basis, fixed at $7,666.
3 An employee solicitor of the practice had the primary carriage of the de-facto relationship proceedings. However, the respondent, Mr Defteros, is and was the sole principal of the practice. Hence, he bears responsibility for its actions under s 34 and s 35 of the Legal Profession Uniform Law (the Uniform Law).[2]
4 Following a long process of investigation and negotiation, with delays contributed to by both parties, and also due to circumstances beyond their control, including the Covid-19 pandemic, the matter has now come to the Tribunal as a plea to four allegations. These are set out in an Amended Application for Order dated 25 August 2020. They do not include an allegation of acting where a conflict-of-interest exists.
5 The four allegations to which Mr Defteros pleads guilty, and the proposed agreed determinations in each case, are as follows:
Charge 3 - statutory professional misconduct - recklessly understating his personal involvement in the de-facto relationship matter during the course of the VLSC's investigation - a reprimand and fine of $5,000.
Charge 4 - unsatisfactory professional conduct - during the course of acting for the wife, providing cost disclosure on three occasions, but never providing an estimate of the costs of briefing counsel - a reprimand and a fine of $1,000.
Charge 5 - unsatisfactory professional conduct - invoicing the wife for work done after the retainer had ended (pursuant to the court order of 8 April 2016), including for work not properly billable in any event - reprimand and fine of $2,000.
6 Relevantly, under s 296 of the Uniform Law, unsatisfactory professional conduct is defined as conduct occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer. Under s 297(1)(a), such conduct will amount to professional misconduct where that failing is 'substantial'.
7 The parties had also agreed to an order that Mr Defteros would undertake further training in the areas of practice management and costs disclosure by undertaking the Practice Management Course at the Leo Cusson Centre for Law. However, he has already undertaken this course, and so that order is no longer necessary.
8 Further, the parties have agreed that Mr Defteros is to pay the VLSC's costs of the application, fixed in the amount of $18,800.
9 While an agreement reached between the parties is an important consideration, it is of course the Tribunal's responsibility to determine whether the sanction jointly proposed is appropriate, and its duty is to reject it if it is not so satisfied.[3]
10 In this instance, I am satisfied that the proposed outcome is appropriate, for the reasons set out below.
By contravening rule 14.1 of the [Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015] (the Uniform Rules) the respondent engaged in unsatisfactory professional conduct either within the meaning of section 296 of the Uniform Law by engaging in conduct in connection with the practice of law that fell short of the
competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner or, alternatively, within the meaning of section 298(b) of the Uniform Law.[4]
12 The husband had not paid his bill for the practice acting for him in the earlier matter, which concluded in November 2014. Hence, the practice was entitled to and did assert a lien over that file. But the bill was paid on 19 October 2015, and so the practice was required to hand over 'client documents' from the file to the husband at that point.
13 This obligation arises under Rule 14.1 of the Uniform Rules, which has the effect that upon completion of a matter a solicitor must ensure that the client is given any client documents as soon as reasonably possible when requested to do so, unless there is an effective lien.[5]
14 The file was first requested to be provided by letter of 1 September 2015. Then, after the bill was paid on 19 October 2015, that request was reiterated on 17 February, 7 March and 1 April 2016. Although the practice stated in a letter of 18 February 2016 that the file would be retrieved from archives, it was not provided until 7 April 2016, when it was sent by ordinary post to the husband's solicitors. This was the day before the order was made by the Federal Circuit Court for the delivery of the files, and that the practice was ordered to cease to act for the wife.
15 It is noted that the actual conduct was that of the employee solicitor, although as principal, Mr Defteros bore responsibility for it. Further, it is not alleged that there was any particular forensic advantage achieved in the litigation by the delay in handing over the file to the husband.
Professional misconduct within the meaning of section 297 of the Uniform Law by engaging in conduct in connection with the practice of law that fell short of the competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner and which was a substantial failing as:
(a) he made [a] false and misleading statement to the applicant during the course of the investigation about his involvement in the de-facto relationship matter; and/or
(b) further, he made the false and misleading statement recklessly.
In correspondence from the solicitors then representing Mr Defteros dated 20 June 2017, it was stated that his involvement in the de-facto relationship matter was limited to the following two instances:
18 In fact, Mr Defteros was involved in the conduct of the de facto proceedings in the following additional ways:
19 It is agreed that this false and misleading statement was made not intentionally, but recklessly, in that he set out the extent of his involvement from memory, without reviewing the file, and that memory was inaccurate.
Unsatisfactory professional conduct within the meaning of section 296 of the Uniform Law by engaging in conduct in connection with the practice of law that fell short of the competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner in that he engaged in conduct that contravene section 3.4.10(1) of the [Legal Profession Act 2004].
21 The practice gave costs disclosure to the wife on 3 June 2015 ($20,000 plus GST and disbursements), 24 July 2015 ($21,900 plus GST and disbursements) and 21 September 2015 ($40,000 plus GST and disbursements).
22 During the period of the retainer, counsel was briefed. Seven invoices were received from counsel, totalling $30,250. However, no disclosure at all was given in relation to counsel's fees. This was a breach of the practice's obligation under s 3.4.10(1) of the 2004 Act.
Unsatisfactory professional conduct within the meaning of section 296 of the Uniform Law by engaging in conduct in connection with the practice of law that fell short of the competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner by purporting after 8 April 2016 to perform work for [the wife] and seeking to bill her for that purported work.
24 After the retainer ceased on 8 April 2016, the practice sent four invoices to the wife, seeking a total of $5,054.80 for work done after that date. Relevantly:
some of the costs related to communications regarding the handover of the wife's file to her new lawyers.[7]
25 It is noted that in relation to the last two of the four invoices, the work purportedly billed for was all done by Mr Defteros personally.
26 On behalf of Mr Defteros it was noted that although the practice held funds on behalf of the wife in a controlled money account, it did not take any of those funds to pay its invoices. Indeed, in October 2017 it transferred those monies to the trust account of her new solicitor. The upshot is that the amounts sought for work done after 8 April 2016 was never recovered by the practice, and it is now accepted they were not recoverable, with those invoices having been cancelled.
27 In accordance with Mr Defteros' plea, and the material provided with the Amended Application for Order, I find each of the above four allegations proved against him.
28 I am satisfied that the conduct the subject of charges 2, 4 and 5 fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer. Hence I find that conduct constitutes unsatisfactory professional conduct.
29 Further, I am satisfied, given the vital importance of scrupulously and carefully responding to information requests by the regulator, that the conduct the subject of charge 3 involved a 'substantial' failure to reach a reasonable standard of competence and diligence. Hence it constitutes professional misconduct.
30 In relation to the failures to provide the file to the husband and to provide proper costs disclosure, it was noted in mitigation that while he bore responsibility for them, these actual omissions were those of a senior employee solicitor, which Mr Defteros did not have knowledge of at the time. Concerning all three findings of unsatisfactory professional conduct, it was submitted that Mr Defteros had 'taken responsibility for his conduct in entering pleas of guilty at a relatively early stage in the proceeding, and taken responsibility for his own rehabilitation in organising, paying for, and participating in a rigorous practice management course to ensure he will not repeat his past mistakes'. It was also submitted that this demonstrates there is little if any need for specific deterrence - or, indeed, general deterrence.
31 In relation to the finding of professional misconduct, it was noted that his misleading statement understating his involvement in the de-facto relationship matter were made recklessly, not intentionally. It was also said that absent this charge, the matter may well have been able to be dealt with
without a referral to the Tribunal, and that this process itself (which has continued for four and a half years) is a substantial deterrence against any future such carelessness. In this regard, the VLSC accepted that Mr Defteros has continued to engage in legal practice during this period, and demonstrated a fitness to practise.
Reference was also made to the adverse effect of disclosing the fact of these proceedings to 11 referees, each of whom are respected senior members of the profession, and with whom it is likely he will have future professional contact.
In terms of the references themselves, there are five from senior counsel, four from junior counsel, and one from a former employee solicitor. In general, they attest to Mr Defteros' diligence on behalf of clients, his competence in the area of criminal law, and also his integrity. The VLSC described them as 'impressive' and indicative of 'good character and fitness to engage in legal practice'.
The VLSC said that there have been two disciplinary orders made against Mr Defteros over the last 10 years. The first was dealt with by way of a consented to reprimand under s 4.4.13 of the 2004 Act, for conduct in 2013 and 2014 in connection with a dispute Mr Defteros had with a costs consultant.
The second was the 2018 matter of VLSC v Defteros[8]. This concerned a failure to provide costs disclosure to a third-party payer and a failure to ensure there was a proper basis for lodging a caveat. They were described by the Tribunal as being at the very low end of the spectrum of disciplinary offences.
I generally accept the above submissions made by both parties. In my view, however, there is a role for general deterrence in relation to all four charges - they are the type of conduct which undermines the reputation of the profession. While making the effort to return documents to a client upon the completion of a retainer, and providing a carefully prepared estimate of counsel's costs are tasks which can sometimes seem to be unrewarding, they are of very great importance from the client's point of view. Where clients who are ordinary members of the public are paying what are by general community standards, very substantial hourly rates, they are entitled to expect a high standard in relation to all aspects of the services provided by the practitioner.
In relation to charge 4, while the client might have had some idea about the fees being charged by the barrister briefed on her behalf, it is most unsatisfactory for a client not to receive the formal written disclosure of the counsel's fees estimated to be incurred. There is frequently a power and information imbalance between clients and their legal representatives. An estimate of the amount of fees likely to be incurred is a vital component of
the information a client needs to make strategic decisions and give informed instructions in the conduct of litigation.
Concerning charge 5, I was told that the mitigating factors of the wife's funds being retained in the controlled money account, rather than being taken by the firm for payment of its purported fees after 8 April 2016, and the ultimate transfer of those funds to her new solicitor led to the allegation being downgraded from one of professional misconduct to unsatisfactory professional conduct. Had it not been for those mitigating factors, a larger fine than $2,000 would have been appropriate.
General deterrence is also applicable in relation to the charges of recklessly providing false information to the VLSC, and purporting to invoice a client for services provided after the retainer had been completed. Both of these actions also self-evidently undermine the reputation of the profession. A message needs to be sent not only denouncing the purported invoicing for services provided after the completion of a retainer, but, more commonly relevant to general practice, reinforcing that there is no entitlement to bill for work done on matters connected with billing the client, and, in general, dealing with matters such as complaints and handovers.
Misleading the regulator is in a different category, as recognised by the finding of professional misconduct here. While this is an instance which is not as serious as in some other cases, it is important in all instances for practitioners to respond scrupulously and with great care to requests for information by the regulator, so as to enable it to carry out its functions to protect the public.
Notwithstanding that it was reckless rather than deliberate, this was a significant departure from the standard of conduct expected of a solicitor, especially one with the substantial experience which Mr Defteros had. There are of course examples where more serious misrepresentations were made (for example VLSC v Betty Zervas[9] where a fine of an effective amount of $8,500 was imposed, and VLSC v Waters[10] where a fine of $7,500 was imposed) but of course, the effect of the misrepresentation here was to indicate to the regulator that the extent of his own involvement in the conduct of a file which was handled unsatisfactorily in a number of ways, was less than it actually was.
Taking into account all of the above matters I am satisfied that the dispositions jointly proposed by the parties are appropriate in this case. Mr Defteros will receive a reprimand in relation to each of the four charges proved against him. This in itself carries a sting for any practitioner who values his or her good name, since it is a statement of denunciation which appears on his registration record, which is available for all to see.
The various fines take into account the insight and rehabilitation demonstrated by the plea of guilty (agreed to some time ago) and completion of the practice management course by Mr Defteros, while at the same time reflecting the need for general deterrence as described above.
In addition, Mr Defteros will bear a further financial burden, in that he is ordered to pay the VLSC's costs in the agreed amount of $18,800 (in accordance with s 303 of the Uniform Law).
[1] While it may not be strictly accurate, for the purposes of clarity and concision in this decision, I have used the terms 'wife' and 'husband' to refer to the clients for whom the practice acted when the events giving rise to this disciplinary proceeding occurred.
[2] And also under s 7.2.12 of the Legal Profession Act 2004 (the 2004 Act). The Uniform Law came into effect on 1 July 2015. Hence a small component of the conduct occurred under the 2004 Act. But it is dealt with here under the Uniform Law, pursuant to the applicable transitional provision - cl 27 to Schedule 4).
[3] Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482; VLSC v Hyatt [2018] VCAT 1498 at [24]- [25]; VLSC v Anderson [2021] VCAT 71 at [6].
[4] Section 298(b) of the Uniform Law relevantly provides that a contravention of the Uniform Rules is capable of constituting unsatisfactory professional conduct.
[5] The practice is not technically required to provide the whole of its file, only 'client documents' being documents to which the client is entitled. However, these will generally include all documents of substance in relation to the matter from the client's point of view.
[6] Amended Application for Order at [26].
[7] Amended Application for Order at [56].
Victorian Legal Services Commissioner
Defteros
(2015) 258 CLR 482