Victorian Civil and Administrative Tribunal|2016-01-12|Before: Zammit J

The applicant (the VLSC)[1] has brought two charges of unsatisfactory professional conduct against Mr McDonald, a solicitor, under the Legal Profession Act 2004 (the Act). The applicant alleged that in two letters, written on 30 August 2011 and 2 September 2011, in making certain allegations against an opposing solicitor, Mr McDonald had breached Rule 21 of the Professional Conduct and Practice Rules 2005 (Rules), namely:

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

(a) accusations that Mr Catanese was 'fundamentally dishonest' and 'telling lies'; and

(b) statements that Mr Catanese had engaged in 'deliberate and calculated' dishonesty.

Mr McDonald accused Mr Catanese of lying about the contents of a telephone conversation he had had with Mr McDonald on 24 August 2011. In particular, Mr McDonald accused Mr Catanese of stating in that telephone conversation that there was no scope for any negotiation, and that there would be no offers of settlement made, but subsequently denying that he had said this.

The two charges of unsatisfactory professional conduct against Mr McDonald, are as follows:

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

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

The Court analysed the decision in Lander and found that the principles set out in that case apply to any and all comments that are made by a legal practitioner.[5] In Lander, a solicitor had been found guilty of unsatisfactory professional conduct by the ACT Legal Practitioners Disciplinary Tribunal. It found the practitioner had breached Rule 25 of the Legal Profession (Solicitors) Rules 2006 (ACT).[6] The solicitor appealed. The Full Court of the ACT Supreme Court overturned the Tribunal's decision.
The solicitor in Lander had written to the Department of Education and Training in strong terms, criticising its 'long history of failing to communicate at all or to communicate substantively and honestly'. He said 'this has been documented in hundreds of cases and shows no sign of improvement'. He also said that officers of the agency had been 'rude, unhelpful, obsessive and compulsive in relation to their own ego and their own self-importance and otherwise unresponsive'.
Zammit J noted that in its decision in Lander, the Full Court of the Supreme Court of the ACT relied on the High Court's emphasis on free speech in Clyne v New South Wales Bar Association[7]:

The last thing we would wish to do would be to say anything which might be thought to curtail this freedom of speech, which public policy demands. Cases will constantly arise in which it is not merely the right but the duty of counsel to speak out fearlessly, to denounce some person or the conduct of some person, and to use such strong terms as seem to him in his discretion to be appropriate to the occasion.

It is apparent from the judgment in Lander that the Court was concerned not to unduly constrain a solicitor's right to free speech and, more importantly, to adequately draw a line between those circumstances in which comments should be judged in accordance with r 25 and those circumstances in which they should not. In drawing such a distinction, the Court focused on a lawyer's duty to fearlessly speak out and denounce the conduct of others in such strong terms as seem appropriate in his or her discretion. The privilege was held not to apply in relation to comments that were 'extraneous to the matters legitimately being pursued', as was the case in Karageorge. [8] In this respect, the Court went on to say that 'it seems to us that that principle in no way diminishes the right, indeed the duty, of a solicitor to represent his or her client's interests forthrightly and without fear or favour.'[9]

After analysing the decision in Lander, Zammit J held that the approach which VCAT should adopt in this matter is as follows:

As set out in Lander, the first question that must be addressed is whether the comments were made in the legitimate pursuit of the client's matter. If not, then r 21 is applied to determine whether the practitioner is guilty of the charges. If so, then the 'reasonable basis' test[10] must be applied to determine whether the practitioner is guilty of the charges. In either case, the principles laid out in Lander must be applied in reaching a decision.[11]

Her Honour noted that some allegations may contain a mixture of extraneous and non-extraneous comments.[12][13]
The Court found that this Tribunal's decision of 18 November 2013 incorrectly distinguished Lander on the basis that it did not apply in relation to comments made in connection with another practitioner about that practitioner's conduct. The Court said that Lander does apply, although it may be that more courtesy is required when dealing with other practitioners as opposed to third parties.[14]
The Court held that the Tribunal wrongly applied the test outlined in Rule 21 without first considering the applicability of that test, derived from Lander. It should have determined whether Mr McDonald's comments were made in the legitimate pursuit of his client's matter or whether they were extraneous to his client's interests, so as to determine the applicability of the 'reasonable basis' test outlined in Lander.
Her honour stated that one possibility which should have been considered in the Tribunal decision, but was not, was whether Mr McDonald's conduct was 'ineffective advocacy' which was nevertheless still done in the legitimate pursuit of his client's matter.[15]
On remittal, written submissions were received from the VLSC, from Mr McDonald, and from the VLSC in reply. Mr McDonald sought leave to make oral submissions as well, and this was granted. A hearing was conducted on 26 November 2015.

CIRCUMSTANCES IN WHICH THE ALLEGED CONDUCT OCCURRED

The circumstances in which the alleged conduct occurred are set out in the initial decision of 18 November 2013, at paragraphs 11-24:

[11] Mr McDonald was instructed to act for an employee of MS Australia who had been made redundant. On Friday 19 August 2011, Mr McDonald sent a letter of demand to MS Australia stating that his client would execute a deed of release and not issue proceedings against MS Australia if he was paid in the amount of $25,000.00 as a bona fide redundancy payment in addition to payments already made. This letter put a range of factual and legal matters on behalf of the former employee to support the contention that he was entitled to additional redundancy or other payments. It was expressed to be a calderbank offer open for acceptance until 5.00 pm on 23 August 2011.

[12] On Wednesday 24 August 2011, Lander and Rogers sent a response to Mr McDonald, on behalf of MS Australia. The letter was signed on behalf of the firm by Mr Catanese, a lawyer at Lander and Rogers. It also bore the name of Mr Daniel Proietto, the supervising partner. This letter stated that the employee had been paid all entitlements owing to him. It also responded to the matters raised in the 19 August 2011 letter from Mr McDonald relating to taxation of wages paid, the estimate which had earlier been given of severance payment, notice of termination and the amount of severance payment, redeployment and the Fair Work Act 2009, and the Australian Consumer Law. The letter concluded:

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

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

[14] Mr McDonald's version of the conversation was reflected in his letter of 24 August 2011 to Lander and Rogers which stated:

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

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

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

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

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

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

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

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

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

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

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

[16] There was then a telephone conversation on Friday 26 August 2011 involving Mr McDonald, Mr Catanese and Mr Proietto. Mr Catanese gave evidence that he took a note of this conversation. It was attached to his witness statement. During the conversation, each of Mr McDonald and Mr Proietto put to the other their different versions of the telephone conversation on 24 August 2011. They then proceeded to discuss the claim. Each of Mr Proietto and Mr McDonald made some statements generally in support of their own clients' positions. Mr Proietto said the $25,000 proposal was extreme, given that it amounted to a year's pay being sought from a charitable organisation, that others had also been made redundant and that he did not know what the claim was. Mr McDonald said MS Australia had to realise it was not above the law, that there were two or three claims that could be brought and that he wanted to receive a counter offer. The call ended with Mr Proietto saying he will seek instructions on the offer made by Mr McDonald and revert.

[17] On Monday 29 August 2011, Lander and Rogers sent a letter offering a gross amount of $500.00 in full and final settlement. This was open for acceptance until 4.00 pm on 1 September 2011. The letter was without prejudice save as to costs. It stated it may be produced on any future question of costs or any matter arising under the Civil Procedure Act 2010 or any other similar legislation. The letter was from Mr Catanese and Mr Proietto. Their names and titles appeared at the foot of the text.

[18] In response, Mr McDonald sent a letter dated Tuesday 30 August 2011 addressed to Mr Catanese and Mr Proietto. This is the subject of Charge 1. It stated:

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

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

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

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

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

Your letter is highly unprofessional, defamatory and outrageous.

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

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

[20] This letter was signed by Mr Proietto, and also bore [the] name of Mr Derek Humphrey-Smith, the Managing Partner of the Work Place Relations and Safety Group of Lander and Rogers.

[21] On 30 August 2011 there was a telephone conversation between Mr Derek Humphrey-Smith and Mr McDonald. Mr Humphrey-Smith told Mr McDonald that the statements in the letter of 30 August 2011 were defamatory and entirely unacceptable. He urged Mr McDonald to withdraw his letter, failing which the matter would be referred to the LSC.

[22] On Friday 2 September 2011, the same two authors sent a follow-up letter to Mr McDonald. This attached a draft complaint from Mr Catanese to the LSC. It stated that Mr Catanese intended to file the complaint if Lander and Rogers did not receive correspondence from Mr McDonald unconditionally withdrawing his letter of 30 August 2011.

[23] In reply, on 2 September 2011, Mr McDonald sent a letter addressed to Mr Derek Humphrey-Smith. This is the subject of Charge 2.[16] It stated:

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

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

He lied about the contents of the telephone conversation.
He tried to misrepresent the contents of the telephone conversation to his employer in his later correspondence with this firm because he knew full well that he had done the wrong thing by refusing to participate in genuine negotiations when it would have been appropriate to do so.
He attempted to malign me in his discussions with you and others and apparently continued to do so. Apparently this is an attempt to prevent action being taken by your firm against him which would otherwise be necessary. According to you the matter would need to be dealt with by the partners of the firm given the allegations which I made against him in my letter of 30 August 2011.
I have not demanded that your firm take disciplinary proceedings against Mr Catanese because that is a matter for you as his employer but I would be very disappointed if you attempted to support his dishonesty and implement[17] yourself in his conduct.

[24] On Monday 5 September 2011, Lander and Rogers sent a letter signed by Mr Derek Humphrey-Smith to the LSC enclosing Mr Catanese's complaint about the conduct of Mr McDonald.

FINDINGS MADE BY THE TRIBUNAL FOLLOWING THE HEARING IN 2013

The Tribunal at first instance heard oral evidence from Ms Maggie McNamara (Manager of Complaints and Investigations at the LSC), Mr Catanese and Mr McDonald.
The following relevant findings were made:
- Mr McDonald had no contemporaneous notes of the telephone conversation with Mr Catanese on 24 August 2011 (at paragraph 42).
- Mr Catanese did not fabricate his version of the contents of the 24 August 2011 telephone conversation (at paragraph 44).
- 'Weighing up the evidence however, I find it cannot be concluded with sufficient confidence (on the applicable Briginshaw standard) what precisely was said in the telephone conversation. Certainly, I cannot conclude that Mr Catanese was lying. Indeed the relevant factors lean more in favour of Mr Catanese's version. With some hesitation, I conclude that I cannot be sufficiently satisfied that Mr Catanese's version is the correct one.' (at paragraph 46)
- 'In the course of a conversation where the two opposing solicitors were having their first discussion about a new claim, where they had never spoken to each other before, and each was focussing on their own clients' position, it is quite conceivable that they could take different meanings out of the conversation. There is not necessarily a big difference between words which might convey, on the one hand, 'no offers will be made', and, on the other, 'without proper particulars, no offers will be made'.' (at paragraph 47)
- As a result of the telephone conversation with Mr Prioretto on 26 August 2011, Mr McDonald become aware that it was possible to seek to negotiate with Lander and Rogers on behalf of his client. So no interest of his client's would be served by continuing to argue what had now become a moot point. (at paragraph 52)
- The Tribunal rejected the contention that Mr McDonald was the subject of a uniquely aggressive attack, quite unlike anything which would take place from time to time in conducting practice as a plaintiff law firm, which required the response he gave. (at paragraph 56)

The parties agreed that the task for the Tribunal following the remittal is as follows. First, to determine whether the letters[18] were written by Mr McDonald in the legitimate pursuit of his client's matter. If not, then Rule 21 is to be applied to determine whether Mr McDonald is guilty of the charges. Notwithstanding that there is some overlap between the matters to be considered in relation to these two questions, it is important to deal with them as two separate steps.
If the letters were written in the legitimate pursuit of the client's matter, the Tribunal then needs to consider whether there was a 'reasonable basis' for the allegations made by Mr McDonald in the two letters.

The VLSC submitted that the comments were not made in the legitimate pursuit of the client's matter. Secondly, it submitted that if they were, there was no reasonable basis for them. These contentions were made by reference to a number of findings made by the Tribunal at first instance.
The VLSC noted that the allegations against Mr McDonald here are of unsatisfactory professional conduct (as was the case in Lander) not professional misconduct (as was the case in the case of Karageorge and Clyne).

Comprehensive written submissions were filed on behalf of Mr McDonald. These were expanded upon orally. Without seeking to restate them exhaustively, the following contentions were made:
- 'Extraneous' in the present context is to be considered in the sense of the passages complained of being 'entirely unrelated' to the substance of the client's matter.
- The facts in the Karageorge and Clyne[19] cases inform what is meant by 'extraneous' for the purposes of the Lander test. In Karageorge, the extraneous comments 'involved the solicitor referring to fellow practitioners as a 'fucking Arab' and a 'fucking Jew'.[20] Also, in the appeal decision Zammit J offered an example of extraneous comments being 'a letter of demand alleging a breach of contract and finish[ing] by calling the other party a "dirty rotten crook"' - the latter being extraneous to the advancement of the client's matter.[21]
- In contrast to these examples, Mr McDonald's comments were directly relevant to attempts to negotiate a settlement for his client. Those negotiations ultimately led to a settlement 15 times the original offer of $500 made on 29 August 2011. Nor were they gratuitously offensive in the Karageorge sense.
- It was contended '... it can never be extraneous to the conduct of negotiations to call in question the honesty of an assertion made by an opposite party to the negotiations. It may not be effective as a matter of advocacy but, however it is done, it is relevant to the negotiations.'
- Mr McDonald's fate before the Court was inextricably linked to that of his client. That is, in defending himself against allegations made by Lander & Rogers, he was also defending his client's interests. It was contended that Mr Catanese was 'setting him up' for an adverse costs order to be made.
- The Tribunal was not able to make a finding as to whether Mr McDonald's or Mr Catanese's interpretation of the 24 August 2011 telephone conversation was correct. In those circumstances, it is not now open for the Tribunal to conclude that Mr McDonald's assertion that Mr Catanese said there was no scope for negotiation, was a lie on Mr McDonald's part. It is appropriate to consider the matter on the basis of an assumption that Mr McDonald's version is correct. The Tribunal should put itself in the shoes of Mr McDonald as a sole practitioner practising largely in the area of employment law, whose good name is vitally important, who believes that he has been, in effect, falsely accused of dishonesty in contending that Mr Catanese had said there would be no scope for negotiation.
- Both the letters by Mr McDonald were aimed at furthering the strategic interests of Mr McDonald's client. In this regard, the submissions referred to the Tribunal's statement at [57] of the initial decision that

Looking at the correspondence and sequence of events overall, it is apparent Mr McDonald over-reacted. The two firms of solicitors were obviously engaged in a robust exchange of assertions, designed to further the strategic interests of their respective clients.

Even the evidence of Ms McNamara for the LSC only went so far as to state that the letters had 'the potential to threaten [the] client's best interests'. This was not responsive to the test required to be applied, namely, to consider whether the comments were 'extraneous'.
The distinction between the comments made by Mr McDonald against Mr Catanese on the one hand, and against the firm on the other, is illusory
Comments seeking to expose dishonesty of an employee solicitor are not only in the interests of the immediate client, but also future clients involved in litigation against Lander & Rogers and (more generally) the functioning of the legal system.

A key factor in the decision of Zammit J was Her Honour's finding that the Tribunal failed to consider what it was required to by the Lander decision, namely, whether it was the case that Mr McDonald's conduct was merely ineffective advocacy, but still in the legitimate pursuit of his client's matter. The Court said:

[37] The respondent submitted that the Senior Member did find that Mr McDonald's conduct was extraneous to the legitimate pursuit of his client's matter. Having closely examined the Senior Member's reasons, I cannot conclude that this is the case. The primary reason for this is that the Senior Member failed to consider the possibility that Mr McDonald's conduct was merely ineffective advocacy, as required by Lander. In fact, looking at the wording of the relevant passages in the Reasons, it is entirely possible that, had the Senior Member turned his mind to this issue, he would have concluded that Mr McDonald's conduct was merely an ineffective but legitimate attempt to advance his client's matter. In particular, the Senior Member said:

In the circumstances, it should have been apparent to Mr McDonald when he received a letter of Thursday 25 August 2011, that no purpose would be served by continuing to make the emphatic assertion Mr Catanese was lying, in circumstances where Mr McDonald was aware that he had no conclusive proof of this. It was always going to be his word against Mr Catanese's.

Second, as a result of the telephone conversation with Mr Proietto the next day, Mr McDonald had also become aware that it was possible to seek to negotiate with Lander and Rogers on behalf of his client. So no interest of his client's would be served by continuing to argue what had now become a moot point.[22]

[38] Looking at this reasoning, it is apparent that the Senior Member was describing what would have been an optimal or preferred course of action, more effectively furthering the client's interests. As set out by the Full Court in Lander, this is not the test for whether conduct is in the legitimate pursuit of a client's matter.

[39] In addition, throughout the Reasons, the Senior Member uses language that implies that he considered that there was an appropriate response in the circumstances, but that Mr McDonald's comments went too far. He described Mr McDonald's letters as 'intemperate' and an 'over-reaction', saying that the response was 'extravagant' and 'written in anger'. Again, a finding that Mr McDonald's comments went beyond what would have been considered an appropriate response in the circumstances does not constitute a finding that the comments were extraneous in the Karageorge sense. Indeed, the contention that such a finding was made is undermined by the following passage in the Reasons:

Looking at the correspondence and sequence of events overall, it is apparent Mr McDonald over-reacted. The two firms of solicitors were obviously involved in a robust exchange of assertions, designed to further the strategic interests of their respective clients.[23]

[40] On this basis, I am of the view that the Senior Member failed to make a finding of fact that Mr McDonald's comments were extraneous to the legitimate pursuit of his client's matter. This resulted in an error of law in that he failed to properly apply the test in Lander, instead looking only at whether the comments were in breach of r 21. [24]

Accordingly, it is necessary for the Tribunal to consider whether Mr McDonald, in writing the two letters in question, was making 'an ineffective but legitimate attempt to advance his client's matter'.
Further guidance was given to the Tribunal by paragraph [28] of Her Honour's decision:

[28] In Karageorge, the relevant comments involved a solicitor referring to fellow practitioners as a 'fucking Arab' and a 'fucking Jew'. It seems trite to observe that not all cases will be so clear cut. As such, it will fall to the courts to determine in the circumstances of each case whether the relevant comments are sufficiently extraneous to fall outside the scope of the privilege. However, that is not to say that some allegations may not contain a mixture of extraneous and non-extraneous comments. For example, if a solicitor were to write a letter of demand alleging a breach of contract and finished by calling the other party a 'dirty rotten crook', there is no doubt that such a statement would be extraneous in the Karageorge sense. This would be so even if there was a reasonable basis for the allegation of breach of contract.

Turning to the decision in Lander, the statements by the solicitor the subject of the charge in that case could be said to have been made in pursuit of his client's interests (in terms of progressing his application for invalidity retirement) albeit not necessarily in the most effective manner. Mr Lander was seeking that his client's claim be progressed, and was complaining that it had not been.[25] The Court found that while the Department had taken certain steps to progress the client's claim, it had not advised Mr Lander of these. And so its conduct 'could have no other consequence than to provoke the solicitor into writing under the influence of a belief that his client's claim was being contemptuously ignored'.[26] So Mr Lander's comments had a close connection with the actual subject matter of the dispute and could be said to be aimed at achieving a result for his client.
Also, the statements in Lander were directed towards the Department of Education and Training and its staff generally rather than focussing specifically on a particular named individual.
In Clyne, the practitioner had engaged in conduct described in Lander, as follows:

[he] had launched an extravagant and highly defamatory attack on a solicitor accusing [him] of fraud, perjury and blackmail. It was apparently done for the purpose of persuading the solicitor to cease acting for a lady who was then pursuing divorce proceedings against Mr Clyne's client. It was apparent the accusations against the solicitor were baseless ...[27]

The decisions in Clyne and Karageorge on the one hand (where the practitioner was found guilty) and Lander on the other (where the practitioner was found not guilty) illustrate how the question whether in making disparaging statements, a practitioner was in fact acting in the legitimate pursuit of his client's case - even if in a clumsy or ineffective or sub-optimal way - was approached in three different factual situations.

The starting point for consideration of Mr McDonald's comments is the privilege enjoyed by solicitors to speak out fearlessly, where necessary in the interests of their clients. A lawyer may have a duty to denounce a person or the conduct of a person, and to use such strong terms as seem to the solicitor to be appropriate to the occasion. This derives from the right to free speech. This privilege should not be unduly constrained. It is an essential component of our system of law.
The privilege does not apply, however, to the extent comments are made not in the legitimate pursuit of the client's matter. The privilege is not to be abused.[28] The Tribunal is required to consider whether the comments Mr McDonald made were 'sufficiently extraneous' to fall outside the scope of the privilege.[29]
Clearly, the statements the subject of the present charges were made in the course of correspondence relating to Mr McDonald's client's matter. To that extent there is obviously a connection. It was not contended, however, and it could not be the case, that this fact alone is sufficient for the first limb of Lander to be satisfied.
As noted, some allegations may contain a mixture of extraneous and non-extraneous comments. The third and fourth paragraphs of the 30 August 2011 letter were not extraneous. The question to be answered in relation to charge 1 is whether the comments in the second paragraph were extraneous.
Mr McDonald suggested the conduct of Lander & Rogers was 'setting him up' for a costs order to be made against himself and/or his client - so the allegations he made in the two letters served a purpose in pursuing his client's interest in avoiding that outcome.
It was, however, never satisfactorily explained how any 'setting up' for an adverse costs order could have been a consequence of Lander & Rogers' communications to Mr McDonald at the point when the 30 August 2011 letter, and the 2 September 2011 letter, were written. No realistic scenario was proffered as to how it served his client's interests, or might be thought by Mr McDonald to serve his client's interests, to accuse Mr Catanese of being fundamentally dishonest, in the circumstances which pertained as at 30 August 2011.
Mr McDonald was very concerned about the possibility of an application for costs being made against himself, and, apparently, his client, on the basis of alleged breach of his overarching obligations under the Civil Procedure Act 2010, or his obligations under the Fair Work Act 2009. Although not fully articulated, it appears this was on the basis that if he commenced proceedings, and it was later alleged these had no reasonable prospect of success (in terms of s 376 of the Fair Work Act, which Mr McDonald referred to) he and/or his client could potentially be subject to an adverse costs order. Mr McDonald was apparently arguing that he needed to make the allegations in order to put himself in a position to defend such a potential costs claim. That is, to enable him to contend that he had commenced proceedings in the light of the employer's refusal to negotiate - because Mr Catanese had told him on the telephone on 24 August 2011 that there would be no negotiations.
The difficulty with this contention is that at the time when the first of the two letters was written, 30 August 2011, it was apparent to Mr McDonald that negotiations were possible, and indeed, had commenced. And of course, proceedings were not then issued (and never were issued).
In my view, the sequence in which events occurred is significant. Whatever Mr McDonald believed Mr Catanese might or might not have said in the telephone conversation on Wednesday 24 August 2011, he was clearly told by letter the following day, Thursday 25 August 2011, that Lander & Rogers' position was that he had not said the things Mr McDonald had accused him of saying. In particular, that he had not said that there would be no scope for negotiation.
Further, the next day after that, Friday 26 August 2011, a partner of Lander & Rogers reiterated that denial in a telephone conversation with Mr McDonald, and he and Mr McDonald then proceeded to discuss the merits of the claim. In other words, they conducted negotiations.
Thus, Mr McDonald had been told five days before he sent his 30 August 2011 letter, and again four days before, that the interpretation he put on the 24 August 2011 telephone conversation was rejected, and that negotiations could be conducted - as in fact they were.
The offer of $500 made by Lander & Rogers the following Monday 29 August 2011 was a continuation of the negotiations between the parties.
In these circumstances, Mr McDonald was aware, by the time he sent his 30 August 2011 letter, that Lander & Rogers were negotiating, and in fact that an offer (albeit a very small one at that stage) had been made.
In my view there is no sufficient basis on which the Tribunal can conclude that Mr McDonald's actions in writing the second paragraph of the 30 August 2011 letter and the 2 September 2011 letter could be said to have been taken, or could be thought to have been taken, in pursuit of his client's interests in avoiding an adverse costs order.
Turning to the content of the letters, the statements the subject of the charges are not directed towards the disputed employment issue. Rather, they are a strong personal attack on Mr Catanese. There can be few if any more serious allegations to make against a lawyer in his or her professional capacity than that they are 'fundamentally dishonest'.
Mr McDonald clearly believed Mr Catanese had stated on the telephone that there would be no negotiations, but then dishonestly stated in writing that he had not said that on the telephone.
One can understand this would make a practitioner such as Mr McDonald angry. One can also understand that if he perceived that by its subsequent actions, the opposing firm was covering up for the lie of its solicitor, that would also make him angry.
But the question is whether Mr McDonald was acting in the legitimate pursuit of his client's interests at the time he wrote the letters.
The following evidence given by Mr McDonald is relevant to this question. He said that the 30 September 2011 letter was for the purpose of 'defend[ing] my client and myself', and that it 'was an issue between him and myself, it was not an issue between my client and the other party. The offer may have been between the parties, but my issue was how I'd been treated by Mr Catanese'. This is significant. It supports the conclusion that the allegations in question, made in the circumstances and at the times they were, related to Mr McDonald's personal position, vis a vis Mr Catanese, rather than his client's. [30]
It was submitted that Mr McDonald's personal interests were aligned with his client's, such that these comments were part of the legitimate pursuit of his client's case. But this submission is undermined by the absence of any evidence that Mr McDonald's client had approved these letters before they were sent. As Zammit J noted, although not determinative, this is a relevant factor to take into account.[31]
Also, I do not agree that it could be thought necessary to protect his client's interests by protecting his own reputation in the circumstances. While Mr McDonald gave evidence that 'a failure to ... respond in defence of reputation would be harmful to my client and myself',[32] no basis for this conclusion was demonstrated. In any event, I do not accept that the course of the correspondence up to 30 August 2011 was such as to make it necessary for Mr McDonald to act to protect his reputation.
It was also submitted that Mr McDonald's comments furthered his client's interests by 'ensuring' that the negotiations were done with the candour and clarity required of modern practitioners. In my view, the comments did not serve, and could not be thought to serve, the purpose of making the negotiations candid and clear. As described above, any differences or confusion about whether Lander & Rogers' client was prepared to negotiate had already been clarified.
I disagree with the submission for Mr McDonald that the statement at paragraph [57] of the initial VCAT decision quoted above referring to the 'robust exchange of assertions designed to further the strategic interests of their respective clients' indicated that the comments the subject of the charges were made in the legitimate pursuit of the client's matter. In its context, the quoted statement was referring to the assertions made by both parties in their robust correspondence relating to the employee's claim, including Lander & Rogers' response to the suggestion that Mr Catenese had said there was no scope for negotiation. This was, in effect, being contrasted with Mr McDonald's allegations subsequently in the two letters in question, which were of a different nature, being a personal attack on Mr Catanese.
It is apparent from the Supreme Court's decision that the Court did not regard the inclusion of the above referred to passage at paragraph [57] of the initial decision as answering the question whether the letters were written in the legitimate pursuit of the client's interests.[33] That matter remains to be determined on remittal.
The privilege associated with the right of free speech and the duty to speak out on behalf of a client should not be narrowly confined, lest the right be undermined. The question in this case should be approached on the basis that the privilege applies if some discernable purpose on behalf of the client is being sought to be pursued, even if in a less than optimally effective manner. However, the above analysis of the factors relevant to the question of whether in making the allegations the subject of the charges of unsatisfactory professional conduct, Mr McDonald was acting in the legitimate pursuit of his client's matter, does not support his contention that he was.
In my view, the situation here is relevantly akin to the 'dirty rotten crook' example given by Zammit J. In the circumstances of this case, at the time the comments in the second paragraph of the letter of 30 August 2011 were made, they constituted an abuse of the privilege Mr McDonald enjoys as a solicitor. As such they did not merely comprise 'ineffective advocacy' in the course of pursuing his client's case. At the time they were written, they served no purpose other than disparaging Mr Catanese. His comments comprised statements relating to Mr Catanese's character and his career. As such, they were sufficiently extraneous to fall outside the scope of the privilege.
I conclude that the allegations made by Mr McDonald in this case fall on the opposite side of the line to those in Lander. There, the complaint was made against the Department generally. It related to the alleged continuation of obstructive conduct by the Department which the solicitor said had occurred over many prior cases to the detriment of clients. There was a strong connection with the client's matter. The Department's failure to advise the solicitor of steps it had actually taken could have had no other consequence than to convey to the solicitor that his client's claim was being contemptuously ignored.[34] Here, in contrast, no convincing basis has been articulated as to how the making of the allegations by Mr McDonald could have been thought to serve his client's interests. Here, the allegations were particularly pointed, serious and personal, alleging that Mr Catanese was 'fundamentally dishonest'. No evidence was led that his client approved them.
The same analysis applies, with greater force, to the second set of comments, made in the letter of 2 September 2011. That letter was wholly devoted to the issue McDonald was pursuing against Mr Catanese personally.
The letter repeated the allegations from the second paragraph of the letter three days earlier that Mr Catanese had lied. It alleged the firm, or partners of the firm, had become involved and/or implicated themselves in Mr Catanese's dishonesty. It indirectly accused them of blackmail. Having diverted away from the path of pursuing his client's matter in the second paragraph of his letter of 30 August 2011, Mr McDonald continued further down that separate path in his letter of 2 September 2011.
Several other arguments were put on behalf of Mr McDonald which I do not agree with.
A further submission was made that because the dispute between the parties ultimately settled for a sum more than 15 times greater than the $500 offered on 29 August 2011, it follows that the second paragraph of the 30 August 2011 letter, and the 2 September 2011 letter, were relevant to the achievement of this outcome. Looking at the communications between the parties overall, however, it appears that the settlement was achieved in spite of Mr McDonald's conduct in making the allegations the subject of the two charges, rather than that they contributed to the achievement of settlement.
Finally, the submission that 'it can never be extraneous to the conduct of negotiations to call in question the honesty of an assertion made by an opposite party to the negotiations' is too broad, in my view. The scope of that proposition must be limited in accordance with the scope of the privilege. Also, Mr McDonald's evidence was to the effect that the issue was between him and Mr Catanese, rather than that he was making the allegations in order to protect the functioning of the legal system generally.
I also refer to the VLSC's submission that the allegations against Mr McDonald here are of unsatisfactory professional conduct, not professional misconduct, as was the case in Karageorge and Clyne. It is true that the scheme of the Act is that unsatisfactory professional conduct is a less serious charge than professional misconduct. Conduct could amount to unsatisfactory professional conduct without constituting professional misconduct. But the question to be determined under the first limb of Lander, is not affected by whether the charge is unsatisfactory professional conduct, or under professional misconduct. That is however relevant to penalty.
Thus on analysis under the first limb of the test in Lander I find that the allegations made by Mr McDonald in the two letters the subject of the charges were not made in the legitimate pursuit of his client's matter.

WAS RULE 21 BREACHED?

Hence it is appropriate to proceed to consider whether Rule 21 has been breached. That is, whether in making the allegations, Mr McDonald had failed to ensure that his communications with another practitioner were courteous, and that he avoided offensive or provocative language or conduct.
Conclusions on this question were expressed in paragraphs [51] - [69] of the initial decision. The conclusions on that question were not part of the analysis by the Court which found errors of law in the Tribunal's initial decision.
To the extent those paragraphs express conclusions on whether Rule 21 was breached, they are adopted for the purposes of this decision. Those paragraphs stated as follows:

[51] In the circumstances, it should have been apparent to Mr McDonald when he received a letter of Thursday 25 August 2011, that no purpose would be served by continuing to make the emphatic assertion Mr Catanese was lying, in circumstances where Mr McDonald was aware that he had no conclusive proof of this. It was always going to be his word against Mr Catanese's.

[52] Second, as a result of the telephone conversation with Mr Proietto the next day, Mr McDonald had also become aware that it was possible to seek to negotiate with Lander and Rogers on behalf of his client. So no interest of his client's would be served by continuing to argue what had now become a moot point.

[53] Third, Mr McDonald should have considered the possibility that he was mistaken in his belief that Mr Catanese had lied. He should have considered the possibility that there was a misunderstanding or that he had misinterpreted what Mr Catanese had said, especially considering he did not take notes of the actual words spoken.

[54] Mr McDonald's case was that the overall effect of all the communications he had received from Lander and Rogers up to 30 August 2011 constituted a serious threat to his practice and reputation, such that he was justified in making the assertions he did in his letter that day.

[55] I disagree. In my view, even accepting that Mr McDonald's earnest belief in his own version of the phone conversation, his reaction was so extravagant as to breach Rule 21.

[56] I reject his contention that he was the subject of a uniquely aggressive attack, quite unlike anything which would take place from time to time in conducting practice as a plaintiff law firm, which required the response he gave.

[57] Looking at the correspondence and sequence of events overall, it is apparent Mr McDonald over-reacted. The two firms of solicitors were obviously involved in a robust exchange of assertions, designed to further the strategic interests of their respective clients. In all the circumstances, I do not regard the content of the letters from Lander and Rogers of 24 and 25 August as being as unjustified or outrageous, as Mr McDonald contended. The references to misrepresentation of the matters discussed in the telephone conversation and the 24 August 2011 letter from Mr McDonald being likely to mislead a Court or Tribunal if produced at a later date, were not an unreasonable statement of their position. These were expressed in contingent terms, not as absolutes. Similarly, the word 'vexatious' in the 24 August 2011 letter from Lander and Rogers was softened by the word 'potentially'. Also, at this stage it was merely suggested, rather than demanded, that Mr McDonald withdraw his letter of 24 August 2011.

[58] Lander and Rogers' response indicates its perception that it was responding to an unparticularised ambit claim. It was also nervous of what the implications might be of the reference which Mr McDonald had made to duties under the Civil Procedure Act 2010. Mr Catanese said that Mr McDonald had commenced the telephone conversation on 24 August 2011 by saying that he was calling in respect of the Civil Procedure Act. Mr Catanese said he had never before or since had a telephone conversation which commenced in that unusual way. Practitioners are subject to an overarching obligation to use reasonable endeavours to resolve civil disputes.[35] More onerous duties were imposed on solicitors under this legislation as originally enacted, but it was agreed at the hearing that these had been revoked by the newly elected Government prior to August 2011.

[59] There is an incongruity in the fact that Mr McDonald had a conversation with Mr Proietto on 26 August 2011 during which this issue was ventilated, and yet after a further four days to reflect, Mr McDonald sent the letter of 30 August 2011 in such intemperate terms. After hearing Mr McDonald's evidence and submissions, it appears the most likely explanation for this is that the comments about Mr Catanese were written in anger, following receipt of the $500 offer the day before. Indeed, the offensive statements about Mr Catanese were contained in the same short letter of 30 August 2011 as Mr McDonald's rejection of the offer as not genuine, not meeting the requirements of the Civil Procedure Act and demonstrating a lack of good faith.

[60] Mr McDonald said the fact that this offer was made demonstrated that he had been 'set up': He said the offer was made in order to prove him wrong in his assertion that Mr Catanese had stated that there would be no negotiations.

[61] This explanation seems unlikely. It was not specifically put to Mr Catanese. It assumes that the reason Lander and Rogers responded with a very low offer was to protect its solicitor, and that Landers subjugated its client's interests to protect its solicitor. This is a serious suggestion to make.

[61] The more likely scenario, which is consistent with the correspondence, is that the $500 offer was a response to what was perceived to be a claim not supported at that stage by any particulars which could justify an offer of any real substance.

[63] In any event, even if he was provoked, Mr McDonald's letter of 30 August 2011 constituted an unnecessarily offensive and personal attack on Mr Catanese. Even on the basis that Mr McDonald firmly believed Mr Catanese had made the statement a attributed to him by Mr McDonald, to write a letter stating that a solicitor he had never dealt with before was 'fundamentally dishonest' and had started off 'at an early stage of his career telling lies' arising out of a conversation the content of which was he had known for five days was contested, and which objectively, he knew could not be proved, was discourteous, offensive and provocative. The letter of 30 August 2011 purports to make a damming judgment about the character of a solicitor, with whom Mr McDonald has had only minimal contact.

[64] Mr McDonald complained that after he sent the 30 August 2011 letter, Lander and Rogers then responded over-aggressively to him. In his evidence, referring to Lander and Rogers' response after that, Mr McDonald said in his evidence 'all hell broke out'. However, it was Mr McDonald who had inflamed the situation by sending his intemperate letter of 30 August 2011.

[65] Mr McDonald compounded the matter further by repeating and expanding his allegations that Mr Catanese had engaged in deliberate and calculated dishonesty in his letter of 2 September 2011.

[66] I certainly do not accept Mr McDonald's suggestions that his two letters were a 'measured and temperate' response and that he was seeking not to escalate the situation.

[67] Mr McDonald's submissions relating to Lander and Rogers' conduct somehow being an attempt to protect its stream of Government law work, and the sending of a fax so that Mr McDonald's office staff could see it are no more than speculative allegations without any evidence to support them.

[68] The reference to the pro bono work done by Mr McDonald is not relevant. The fact that Mr Catanese has not brought defamation proceedings against Mr McDonald's is also irrelevant. Disciplinary proceedings under the Act are brought by the LSC for the purpose of protecting the public and the reputation of the legal profession. It is trite that any civil remedies which parties might have are quite separate to disciplinary proceedings, which can only be brought by the LSC.

[69] I also reject Mr McDonald's assertions which sought to paint himself as the battling underdog, being bullied by the big firms, as a justification for his intemperate response.

The conclusion reached on the question of whether Rule 21 was breached was:

[71] To persist with such allegations in the circumstances of this case ─ where the question was whether Mr Catanese had lied to him in a telephone conversation, where the outcome of the alleged lie would have no bearing on the matter between their respective clients ─ was provocative, because nothing could come of this except trouble. And it was offensive, because of the seriousness of the allegation that the solicitor was 'fundamentally dishonest'. Then, four days later, even after he had time to reflect, Mr McDonald repeated his provocative and offensive assertions, and broadened them. This conduct has the potential to undermine the integrity and reputation of the profession. It undermines co-operation between practitioners which is important to promote the efficient operation of the justice system, and the conduct of legal business.

Accordingly, I find that Rule 21 has been breached.
Having reached this conclusion in applying the first limb in Lander, it is not necessary to proceed to consider the 'reasonable basis' test propounded by the second limb.
I find the two charges proved. This matter is to be listed for a further hearing to determine the sanctions which should be imposed as a result of this decision.

[1] Following the coming into force of the Legal Profession Uniform Law (Victoria) on 1 July 2015, the functions of the Legal Services Commissioner (LSC) were assumed by the VLSC. In this decision, reference is made to the LSC or the VLSC as appropriate, depending on the context.

[2] Legal Services Commissioner v McDonald [2013] VCAT 1943 per Smithers SM (the 'initial decision').

[3] McDonald v Legal Services Commissioner [2015] VSC 237.

[4] (2009) ACTSC 117 per Higgins CJ, Gray and Refshauge JJ.

[6] Zammit J said that for all intents and purposes Rule 25 was identical to Rule 21 of the Rules. The only difference is that Rule 21 refers to maintaining 'the integrity and reputation of the legal profession' whereas Rule 25 simply referred to maintaining; 'the integrity of the legal profession'.

[7] [1960] HCA 40; (1960) 104 CLR 186; 200 - 1 Dixon CJ, McTiernan, Fullager, Menzies and Windeyer JJ.

[8] Decision of the Solicitor's Statutory Committee in Law Society of New South Wales re Constantine Karageorge, 15 July 1987.

[10] That is, whether there was a 'reasonable basis' for the allegation- [2015] VSC 237 at [26].

[13] In its decision, the Supreme Court used each of the expressions 'allegations', 'comments' and 'statements' to describe the things said by Mr McDonald in the two letters the subject of the charges. This decision does the same.

[16] Save that the first 17 words of the letter, and the third of the four sub-paragraphs were not included as particulars to Charge 2 (This footnote added in this decision.)

[17] Mr McDonald said in evidence that the word he meant to use here was 'involve' (Transcript, page 177, line 29). Later, he said it was 'implicate' (Transcript, page 189, line 4). The difference is of no significance.

[18] In this decision, references to the 'two letters' or 'the letters' are, unless the context indicates to the contrary, references to those parts of the letters which are the subject of the charges, namely, the second paragraph of the 30 August 2011 letter, and the whole of the 2 September 2011 letter, save for the first 17 words, and the third sub-paragraph.

[22] [2013] VCAT 1943 at [51]- [52] (emphasis added by Zammit J).

[23] Ibid [57] (emphasis added by Zammit J).

[25] It is also noted that in Lander, there was a letter from the client indicating that he believed that but for Mr Lander's representation of him in such a pro-active and fearless manner, his case would still be in a state of limbo (2009) ACTSC 117 per Higgins CJ, Gray and Refshauge JJ at [17].

[26] (2009) ACTSC 117 per Higgins CJ, Gray and Refshauge JJ at [50].

[28] Clyne v New South Wales Bar Association [2015] VSC 237 at [200].

[30] Transcript, page 169, lines 2 - 4. This evidence was given in response to a question which referred to the 30 August 2011 letter, but in its context, it logically applies to both letters.

[33] [2015] VSC 237 at [36], [40], [54(a)].

[34] See also paragraphs [8], [28] and [29] above.

Victorian Legal Services Commissioner v McDonald (Legal Practice) [2016] VCAT 21 (12 January 2016)

Victorian Legal Services Commissioner v McDonald

At a glance

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Judgment (131 paragraphs)

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Cases Cited (2)

Victorian Legal Services Commissioner v McDonald (Legal Practice) [2016] VCAT 21 (12 January 2016)