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  • Unreported Judgment

Legal Services Commissioner v Reeve

 

[2016] QCAT 209

CITATION:

Legal Services Commissioner v Reeve [2016] QCAT 209

PARTIES:

Legal Services Commissioner

(Applicant)

 

v

 

Christopher Parker Reeve

(Respondent)

APPLICATION NUMBER:

OCR267-13

MATTER TYPE:

Occupational regulation matters

HEARING DATE:

17 December 2015

HEARD AT:

Brisbane

DECISION OF:

Justice DG Thomas

Assisted by:

Ms Megan Mahon, Legal panel member

Dr Margaret Steinberg, Lay panel member

DELIVERED ON:

21 July 2016

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. The respondent is publicly reprimanded.
  2. The respondent is to pay a fine in the sum of $1,500.00 within 30 days from the date of this order.
  3. Mr Smith is to file submissions, by reference to sections 464 and 465 of the Legal Profession Act 2007 (Qld) as to the basis upon which he is entitled to a Compensation Order with respect to the sum of $2,337.50 plus interest from 3 April 2009. Such submissions are to be made, by:

4:00pm on 22 August 2016.

  1. The respondent is to file submissions in reply, by:

4:00pm on 19 September 2016.

  1. The applicant is to make any submissions he wishes to make with respect to costs, by:

4:00pm on 11 August 2016.

  1. The respondent is to make any submissions in response with respect to the appropriate order for costs, by:

4:00pm on 1 September 2016.

CATCHWORDS:

PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – PROFESSIONAL MISCONDUCT AND UNSATISFACTORY PROFESSIONAL CONDUCT – TRUST MONEY – where the respondent was charged with incorrectly disbursing trust monies pursuant to s 249 of the Legal Profession Act 2007 (Qld) and misleading his client as to the basis he was receiving funds into trust – where the main evidence relied upon was uncontested affidavits – whether the respondent’s conduct amounts to unsatisfactory professional conduct or professional misconduct – nature of appropriate sanction

Legal Profession Act 2007 (Qld) ss 249, 418, 419, 420(1), 464(d)(i), 465

Briginshaw v Briginshaw (1938) 60 CLR 336

Clancy v Prince [2001] NSWSC 85

GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631

APPEARANCES and REPRESENTATION:

APPLICANT:

A.D. Scott instructed by the Legal Services Commissioner

RESPONDENT:

J.P. Mould QC instructed by Mr Reeve

REASONS FOR DECISION

  1. [1]
    The Commissioner alleges that the following charges constitute professional misconduct and/or unsatisfactory professional conduct.
  2. [2]
    Charge 1 – dealing with trust money contrary to s 249 Legal Profession Act 2007 (Qld) (‘The Act’).
  • On 3 April 2009, Mr Reeve disbursed trust monies contrary to s 249 of the Act.
  1. [3]
    Charge 2 – misleading conduct
  • Between 2 April 2009, and 20 April 2009, Mr Reeve misled Mr Paul Smith about the basis upon which he was receiving funds into trust.

Background

  1. [4]
    The parties have filed an agreed statement of facts.
  2. [5]
    Affidavits have also been sworn and filed. Those affidavits are:
    1. a)Affidavit of David Arthur Wythes sworn 22 April 2014.
    2. b)Affidavit of Paul William Smith sworn 5 May 2014.
    3. c)Affidavit of Christopher Parker Reeve sworn 5 June 2014.
  3. [6]
    Despite the fact that the affidavits were filed and the contents of the affidavits were central to the issues, which arise in this discipline application, witnesses were not called and none were cross-examined.
  4. [7]
    The following is a listing of the facts from each of the affidavits and the statement of agreed facts. In circumstances where the information was not tested or challenged, in the absence of internal inconsistency, the facts of the affidavits must stand. 
  5. [8]
    In some areas, the affidavits do not squarely address important conversations in any level of detail. Because the evidence is by way of affidavit, prepared in conjunction with the legal advisors, it can be assumed that no additional evidence is available and it would be inappropriate to infer any additional information.
  6. [9]
    Mr Reeve acted on behalf of Ms Stephen in relation to a purchase of a residential property from Mr Smith.[1]
  7. [10]
    With a letter dated 10 March 2009, Mr Reeve sent a building report and quotations to Mr Smith. He stated that Ms Stephen proposed a reduction of the purchase price in the amount of $4,675.00 to reflect work which was required.[2]
  8. [11]
    Mr Smith did not agree to the proposed reduction.[3]
  9. [12]
    Mr Smith instructed the contractor to undertake the required work and notified Mr Reeve of this fact by way of letter dated 27 March 2009.[4]
  10. [13]
    By letter dated 30 March 2009, Mr Reeve told Mr Smith that he was required to pay the cost of the repairs ($4,675.00) failing which that sum would be withheld on settlement.[5]
  11. [14]
    On 30 March, Mr Smith responded saying he had not agreed that the whole of the internal of the unit should be rendered, that he had already instructed the contractor to remedy the problem and so he denied any request to withdraw any money on settlement.[6]
  12. [15]
    Mr Smith then spoke with his agent, Mr Wythes, telling him that he would pay half the cost of further rendering even though he did not think he should have to pay this.[7]
  13. [16]
    Mr Smith agreed to this only to hasten settlement as he and Mr Wythes believed that the required works had already been completed.[8]
  14. [17]
    Mr Smith and Mr Wythes discussed that Mr Smith would only agree to pay one half of the rendering works on the basis that the money was held in trust until the works were completed.[9]
  15. [18]
    On 31 March, Mr Reeve sent a facsimile to Mr Smith enclosing a settlement statement. The facsimile included the following:

“Your agent then said you were willing to pay half of the lower quote which our client rejected. The agent then said you would pay for repair of the affected areas to which our client agreed.

Our client therefore considers you are bound by your word and this agreement and requires Noosa Rendering’s quote to be paid by or withheld at settlement”.[10]

  1. [19]
    Mr Reeve says that the agent was Trish Wythes, Mr Smith’s stepmother.  Mr Reeve says, “the conversation involved an unconditional agreement by Mr Smith to pay for one half of the costs of the rendering works. It was a price reduction of $2,337.50. The agreement was relayed to me by telephone by my client on 31 March 2009.  It was confirmed in my facsimile transmission of 31 March 2009.”[11]
  2. [20]
    However, the settlement statement included the sum of $4,675.00 to be paid to the contractor. The statement did not reflect the figure of $2,337.50 nor did the text of the facsimile.  Mr Smith had not agreed for this to occur.[12]
  3. [21]
    Having spoken with Mr Smith and discussed that Mr Smith would only agree to pay one half of the rendering works on the basis that the money was held in trust until the works were completed, on 2 April 2009 Mr Wythes rang Mr Reeve’s office and spoke to Michelle advising her of this decision.[13]
  4. [22]
    On 2 April, Mr Smith sent an email to Mr Reeve disputing the amount of $4,675.00 being paid to the contractor but otherwise agreeing to the settlement figures, which had been outlined in the settlement statement forwarded by Mr Reeve on 31 March.[14]
  5. [23]
    By letter dated 2 April 2009, Mr Reeve says:

“Further to your agent’s advices to our client that you offered to pay one half of the Noosa Renderings quotation of $4,675.00 (or $2,337.50) our client accepts that offer and we therefore calculate the break-up of settlement figures as follows:

Noosa Rendering        $2,337.50

Commonwealth Bank of Australia for c/a Paul W Smith  $135,827.00

Paul W Smith         $27,085.83

          $165,250.33

Please confirm your agreement”.[15]

  1. [24]
    By letter emailed at approximately 4:18pm on 2 April, Mr Smith responded:

“I refer to your letter dated 2 April 2009 concerning the above. 

I agreed to pay half of Noosa Renderings quotation of $4,675.00 (i.e. $2,337.50).  This money ($2,337.50) is to be withheld at settlement in trust until the full quotation works are completed and will only then be made payable to Noosa Rendering.”[16]

  1. [25]
    Mr Reeve telephoned Ms Wythes on 2 or 3 April 2009, and said to her “that my client’s funds would be paid into our trust account pending receipt of her instructions whether to pay Noosa Rendering or not.”[17] He observes that this was not because of any agreed joint retention or otherwise.[18]  Mr Reeve has no diary notes of the conversations but recalls he telephoned Ms Wythes on 2 April to advise the sale had not settled and on 3 April to advise it had settled.  This was his standard practice with real estate agents.[19]
  2. [26]
    At approximately 10:46am on 3 April, Mr Smith provided settlement figures (by email) to Mr Reeve which included the line “less Noosa Rendering (held in trust) $2,337.50”.[20]
  3. [27]
    Mr Reeve did not challenge, dispute or agree to the proposals outlined in Mr Smith’s letters of 2 and 3 April 2009, upon which Mr Smith provided funds for the rendering works.[21] As Mr Smith puts it, Mr Reeve did not dispute the settlement figures as provided by his settlement statement or refuse to hold the money in trust on the basis suggested by Mr Smith.[22]
  4. [28]
    By letter dated 3 April to the bank Mr Reeve provided the following instructions:[23]

We refer to the above mentioned purchase and request that you provide the following amended bank cheques as settlement:

Chris Reeve & Co trust account     $ 2,337.50

Commonwealth Bank of Australia c/a Paul W Smith  $136,177.00

Paul W Smith       $ 26,735.83

$165,250.33

  1. [29]
    The settlement took place on 3 April 2009, when a bank cheque in the sum of $2,337.50 made payable to “Chris Reeve & Co Trust Account” was paid into Mr Reeve’s trust account.[24]
  2. [30]
    On 3 April 2009, Mr Reeve paid from his trust account his professional fees in the amount of $1,650.61 for his client’s conveyance and the balance amount of $1,836.89 by cheque to his client.[25]
  3. [31]
    Mr Reeve swears that the sum of $2,337.50 was, as indicated in his facsimile transmission dated 31 March 2009, to be paid to Noosa Rendering or withheld at settlement. Mr Reeve swears that he chose the latter and that the funds were paid directly from his client’s bank to his trust account “not on trust for Mr Smith, but in accordance with the only agreement between the parties namely, that of 31 March 2009 in which Mr Smith unconditionally agreed to pay for half of the costs of the rendering works”.[26]
  4. [32]
    Mr Reeve swears that:

“The funds were withheld at settlement and put into my trust account because I had not at that stage received my client’s instructions whether to pay any renders directly or simply refund the monies to her.  My client had prior to 2 April 2009 indicated she was not happy with Noosa rendering being paid the funds.  In those circumstances I could not have deposited the funds anywhere else”.[27]

  1. [33]
    Mr Reeve says that, “putting my client’s funds into my trust account pending instructions is a standard conveyancing practice for all law firms of which I am aware.”[28]
  2. [34]
    He continues, “not only would both Mr and Ms Wythes have known of this practice, both being very experienced real estate agents.”[29] In that context, Mr Reeve refers to the discussions he had with Ms Wythes on 2 and 3 April 2009 when he said that the monies would be paid into his trust account.
  3. [35]
    Mr Reeve says that he did not ever represent to anyone that he was depositing his client’s funds on account of a trust for Mr Smith and had no intention to be trustee for Mr Smith and never regarded himself as a trustee.[30]
  4. [36]
    By letter dated 15 April 2009, Mr Smith requested a trust account receipt for $2,337.50 held over from settlement.  In the letter, he confirmed “as per my agreement and letter dated 2 April 2009 this money is only to be released to Noosa Rendering once the full quotation works ‘i.e. $4,675 are completed.’”  He requested that he be informed when the total works were completed before the money was released to Noosa Rendering.[31]
  5. [37]
    By way of letter dated 20 April 2009, Mr Reeve provided a trust account receipt dated 3 April, to Mr Smith in the amount of $2,337.50. The covering letter refers to enclosing a trust account receipt “for your share of the rendering repairs as requested”.[32]
  6. [38]
    Mr Reeve forwarded Mr Smith’s letter dated 15 April 2009 to his client, seeking instructions.[33]
  7. [39]
    On 6 August 2009, Mr Smith wrote to Mr Reeve acknowledging receipt of the trust receipt. Mr Smith also noted that he had not been advised whether the works had been completed, but he was aware the works had not been completed and requesting that the works be completed within the next 90 days failing which the monies in trust be returned to him.[34]
  8. [40]
    On 18 August 2009, Mr Reeve forwarded Mr Smith’s letter to his client and sought her instructions “as to when the rendering is to be done”.[35]
  9. [41]
    By email dated 13 November 2009, Mr Smith requested that Mr Reeve release the amount of $2,337.50 held in his trust account to Mr Smith as the works had not been carried out.[36]
  10. [42]
    By letter of 16 November 2009, Mr Reeve responded to Mr Smith as follows:

“Further to your previous letters and now your emailed letter of 13 November 2009 we respectfully advise you that you are mistaken as to the refundability of the reduction in the purchase price, made to compensate our client for the fact that there were building defects, and also to the fact that there was no timeframe for our client to attend to the repairs.

As our client is living in the unit it is inconvenient for her to have those repairs carried out at this time, and she is free to leave it until such time as is convenient.

In any event no amount will be refunded to you, and we therefore request that you cease your hectoring letters, and also advise that no further correspondence will be entered into”.[37]

  1. [43]
    Mr Wythes wrote to Mr Reeve on 29 November enquiring about the status of the monies.[38]
  2. [44]
    On 29 November 2009 Mr Reeve wrote to Mr Wythes in the following terms:

“Further to Julie’s son Paul’s previous correspondence and your letter of 29 November 2011 he is mistaken regarding the payment of $2,337.50 to our trust account. This was an agreed adjustment for the unit’s building deficiencies.  Our client was and is not under any obligation to pay out these monies or have the rectification work done then or since or at any given time.  We also did not undertake to hold these monies in our trust account.  Our client was thereby compensated for the building defects and may attend to the same at her leisure, or on resale the price will significantly reflect those defects.

We are instructed to not enter into any further correspondence”.[39]

  1. [45]
    After the Commissioner commenced investigations, Mr Reeve forwarded correspondence to the Commissioner which included the following:

“You will note from the file that Mr Smith was quite demanding and adamant, and we advised our client that it was better to “go with the flow” and for us to receive the funds into our trust account, to draw there from towards our costs and outlays, and to refund the balance to our client.  At no stage did we verbally or in writing give an undertaking to retain those funds in our trust account.  We considered and still consider that those funds belonged to our client and she was entitled to receive the same”.

Discussion

Charge 1

  1. [46]
    Section 249 of the Act provides as follows:

249 Holding, disbursing and accounting for trust money

  1. (1)
    A law practice must—
  1. (a)
    hold trust money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received; and
  1. (b)
    disburse the trust money only under a direction given by the person.
  1. [47]
    The Commissioner asserts that Mr Reeve disbursed trust monies contrary to the requirements of s 249 of the Act.
  2. [48]
    If Mr Reeve contravened s 249 of the Act, his conduct is capable of constituting unsatisfactory professional conduct or professional misconduct.[40]
  3. [49]
    In short, the Commissioner asserts the circumstances support a finding that there was an agreement between the purchaser and the vendor that:
    1. a)The vendor would pay half of the cost of the works by the contractor;
    2. b)The vendor would pay half those monies at settlement to the respondent; and
    3. c)The respondent was to hold the monies in his trust account until the works were complete.[41]
  4. [50]
    The Commissioner submits that there can be no doubt the purchaser and the vendor agreed as to the vendor paying half of the costs at settlement. The vendor indicated, for his part, that the agreement was conditional upon the monies being held by Mr Reeve in trust until the works were completed.
  5. [51]
    Whilst there was no express communication in acceptance, the Commissioner asserts that whether agreement comes into existence “must be objectively ascertained … in light of the surrounding circumstances”.[42]
  6. [52]
    The Commissioner points to the fact that the offeree (the purchaser) took the benefit of the offer and Mr Reeve did not indicate the purchaser’s disagreement. This was in circumstances where the settlement figures communicated by Mr Reeve had indicated that the monies were to be “held in trust”.[43] 
  7. [53]
    In oral submissions, the Commissioner asserted that the monies were held by Mr Reeve on a Quistclose trust. The Commissioner asserts that, in the circumstances, the monies were to be held for a specified purpose.
  8. [54]
    Of course, the terms of the agreement, and any trusts which might have applied with respect to the settlement funds, depend entirely upon the status and effect of the arrangements between the parties.
  9. [55]
    In this case, there was a written agreement for purchase and sale and, leading up to settlement, there were various discussions concerning adjustments which were necessary as a result of defects which were revealed in a building report.
  10. [56]
    It is very difficult to determine the nature of the arrangements which were concluded between the parties when no evidence is available from the purchaser or the vendors agent who took part in crucial discussions and the evidence contained in the affidavits which were filed was in the briefest of terms, and none was tested.
  11. [57]
    Mr Reeve asserted that the vendor could not subject the trust money to any conditions, nor impose any power over it, unless there was some agreement to do so.[44]
  12. [58]
    Mr Reeve identifies that the only agreement between the parties relating to the disposition of the sum of $2,337.50 was concluded well prior to the settlement in Mr Reeve’s facsimile transmission of 31 March 2009.[45]
  13. [59]
    Mr Reeve asserts that the letter of 2 April 2009, in which Mr Smith referred to the money being withheld until the works were complete, was no more than a further offer purporting to vary an agreement which was concluded beforehand (on 31 March 2009).[46]
  14. [60]
    Mr Reeve asserts that the vendor acknowledged a clear and early understanding that Mr Reeve’s instructions were to withdraw monies from the trust account on settlement.[47] The submissions do not identify the factors which lead to this conclusion. 
  15. [61]
    Mr Reeve asserts that the offer was not accepted by conduct and silence would not ordinarily bind an offeree.[48] He asserts that there was no conduct unequivocally referable to acceptance such that an intention to accept may reasonably be inferred.[49]
  16. [62]
    Finally, Mr Reeve asserts that there was no consideration to support any agreement arising from the further offer made by the vendor.[50]
  17. [63]
    For current purposes, it is not necessary to come to a final conclusion about what was to happen, between the vendor and the purchaser, as to the final disposition of the money in question.  What must be determined is whether, in accepting the money, Mr Reeve was subject to the terms of any trust and whether those terms were not adhered to when he disbursed monies on 3 April. 
  18. [64]
    There is no evidence from the purchaser or the vendors agent who participated in discussions about the contractors expenses. The evidence from Mr Reeve is vague. He concedes that he took no diary notes and is not even sure which day the particular conversation, on which he placed reliance, took place.
  19. [65]
    From the evidence which is available, the Tribunal finds as follows:
    1. a)
      Initially, the purchaser insisted that the vendor pay for the entire cost of repairs. There was a threat to withhold the sum from settlement.[51]
    2. b)
      The vendor rejected this demand and denied the request to withdraw any money from settlement.[52]
    3. c)
      By 31 March there had, apparently, been a discussion between the purchaser and the vendors agent (there is no evidence from either of these people). A letter dated 31 March was sent by Mr Reeve. The settlement statement with that letter seems to suggest the full sum would be deducted, as it refers to a figure of $4,675.00. The text of the letter also contains no reference to the sum of $2,337.50.
    4. d)
      The vendor responded accepting the settlement figures except for the figure of $4,675.00 attributed to Noosa Rendering.
    5. e)
      Mr Reeve responded on the same day (2 April) referring to an offer to pay one half of the contractors quotation, accepting the offer, providing a new break up of settlement figures and concluding “please confirm your agreement”.
    6. f)
      Mr Smith responded confirming his agreement on the basis that the amount “be withheld at settlement in trust until the full quotation works are completed and will only then be made available to Noosa Rendering”.
    7. g)
      Just prior to settlement the following day Mr Smith wrote to Mr Reeve confirming the settlement figures and including the reference to “less Noosa Rendering (held in trust) $2,337.50.”
    8. h)
      Mr Reeve then (by letter of 3 April following the letter from the vendor) directed the Commonwealth Bank to amend the bank cheques to be provided at settlement to include Chris Reeve and Co Trust Account $2,337.50.
    9. i)
      There was no further discussion of the matter at settlement, which proceeded, with the tendering of the cheques outlined in the letter from Mr Reeve to the Commonwealth Bank.
  20. [66]
    Mr Reeve refers to a discussion he had with Ms Wythes who was the agent of the vendor (and also his stepmother).  This conversation is referred to in an affidavit by Mr Reeve, which bears the notation “this pleading was settled by Mr Mould of counsel”.[53]
  21. [67]
    In submissions, Mr Mould referred to these discussions as evidencing an indication to the vendor that the funds would not be held on the basis required by the vendor but would rather be disbursed as instructed by the purchaser. 
  22. [68]
    The record of the discussions is very vague. Mr Reeve acknowledges that he took no diary note of the conversations and is not sure on which of the days the relevant discussion took place.  In terms of content, the record outlined in the affidavit is not precise or clear and is unsatisfactory.  It simply records that the money would be paid into the trust account pending receipt of a client’s instructions whether to pay Noosa Rendering or not. This communication is not inconsistent with the notion that the monies would be paid into trust pending completion of the works.  There was certainly no clear indication that, in the purchaser’s view, the funds belonged to the purchaser.  Given the communication from Mr Smith, if that position were to be communicated it would be expected that a reasonably competent solicitor would do so in a very clear fashion.  Mr Reeve did not do this.
  23. [69]
    For the purpose of these disciplinary proceedings, it is not necessary for the Tribunal to endeavour to resolve whatever disagreement there might be between the vendor and purchaser over what would ultimately have been the disposition of the sum of $2,337.50. It is noted that no proceedings have been commenced in relation to this.
  24. [70]
    Based on the documents available the Tribunal finds it was not clear that there was any resolution of the matter by 31 March (concluding with Mr Reeve sending the letter). The Tribunal finds that the basis on which the settlement funds were to be dealt with was as outlined in the letter of 2 April and statement of 3 April so that the monies were to be held by Mr Reeve until the full repair works were completed and only then could they be disbursed to Noosa Rendering.
  25. [71]
    By disbursing the funds on 3 April in payment of fees and to the purchaser Mr Reeve disbursed the trust monies contrary to the requirements of s 249 of the Act.
  26. [72]
    Mr Reeve’s conduct is capable of constituting unsatisfactory professional conduct or professional misconduct.[54]
  27. [73]
    Unsatisfactory professional conduct includes conduct which falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.[55]  Professional misconduct includes unsatisfactory professional conduct if the conduct involves a substantial or consistent failure to reach or keep a reasonable standard of competence and diligence.[56] 
  28. [74]
    In this case, Mr Reeve has pointed out that many of the discussions were happening at the last minute (before settlement) and it was clear he was not directly involved.
  29. [75]
    In a conveyancing transaction, where monies are paid, but must be held pending adjustments due other events occurring, members of the general public must be able to have confidence that monies paid into a trust account will be dealt with in accordance with the basis on which the moneys are paid.  This must be so regardless of the party for whom the legal practitioner who holds the monies in trust is acting. 
  30. [76]
    Because the legal practitioner takes on duties as trustee, the legal practitioner, acting prudently and to the standard of competence and diligence a member of the public is entitled to expect, must ensure that the terms on which the monies are held and able to be disbursed, are fully understood by all parties (including the practitioner). Mr Reeve did not do this. 
  31. [77]
    Mr Reeve’s conduct fell short of that standard and is, at the least, unsatisfactory professional conduct.
  32. [78]
    In the circumstances, whilst the conduct of Mr Reeve fell short of the standard required, it did not do so in a substantial or consistent way, and so should be regarded as unsatisfactory professional conduct and not professional misconduct.

Charge 2

  1. [79]
    The Commissioner asserts that Mr Reeve misled the vendor about the basis upon which he was receiving funds in trust.
  2. [80]
    In the particulars of charge 2 in the Application for Referral – Disciplinary Proceedings the Commissioner refers to a letter dated 17 January 2012 sent by Mr Reeve to Mr Wythes in which Mr Reeve states:

“in reply to your letter, we deny that we “we were too busy” but did say that all the arrangements including cheque variations were happening at the last moment, noting that Paul’s letter was dated 2 April 2009, the day before settlement.  At no stage did we agree to the funds being retained in our Trust Account. After contacting our client to obtain instructions in reply to Paul’s letter of 2 April 2009 she instructed that the funds would not be retained in our trust account as she had not agreed to that, and further stated that the adjustment on settlement of the amount of $2,337.50 represented a compromised adjustment to the purchase price in compensation for the building defects. That amount therefore belongs to our client to deal with as she saw fit”.[57]

  1. [81]
    The Commissioner asserts that at no time prior to receiving the funds in his trust account did the respondent advise the vendor of the instructions reflected in the letter of 17 January 2012.
  2. [82]
    The Commissioner further refers to additional communications from Mr Reeve to the Commissioner dated 30 April 2012, in which Mr Reeve says:

“You’ll note from the file that Mr Smith was quite demanding and adamant, and we advised our client that it was better to go “with the flow”, and for us to receive the funds into our trust account, to draw thereon towards our costs and outlays, and to refund the balance to our client”.[58]

  1. [83]
    The Commissioner concludes, based on the contents of this letter, that the funds were received with the intention of not complying with Mr Smith’s direction.[59]
  2. [84]
    The Commissioner submits that a representation is capable of being found not only in some positive statement but also in conduct intended to convey a particular impression which is false or where a statement is literally true but because it does not tell the whole truth, gives a false impression.[60]
  3. [85]
    The Commissioner asserts that the conduct by Mr Reeve conveyed a false impression that his client had, prior to settlement, agreed that the monies for the contractor would be held on trust until the works were complete.[61]
  4. [86]
    Mr Reeve submits that mere silence is not itself a misrepresentation, especially where there is no legal or equitable duty to speak.[62] 
  5. [87]
    Mr Reeve asserts that the parties were negotiating at arm’s length and it was not the case that they stood in a fiduciary relation with each other nor was there any relevant statutory duty.[63]
  6. [88]
    In relation to the reliance by the Commissioner on the letter of 17 January 2012, Mr Reeve submits that, at the time of the settlement, he did not have instructions. Therefore, placing his client’s funds into his trust account was, as he suggested, standard conveyancing practice for all firms of which he was aware in those circumstances.
  7. [89]
    The Commissioner relies upon the letter of 30 April 2012 in suggesting that the reference to going “with the flow” would give rise to a finding that he received the funds “with the intention” of not complying with Mr Smith’s direction. Mr Mould, appearing on behalf of Mr Reeve, submitted at the hearing that his client had not been tested on what was meant by this. However, he speculated that the reference could certainly mean, “if we go with the flow and it’s the flow created by the facts that I referred to on 31 March that the funds are either to be paid to Noosa Rendering or to be withheld at settlement”.[64]
  8. [90]
    Mr Mould continued, “the flow is simply that the parties had reached an agreement. As far as my client was concerned, he was enforcing it on behalf of his client to do so”.[65] Putting it another way Mr Mould said the phrase meant, “go with the flow to the settlement, pursuant to the agreement that was reached as far as my client was concerned on 31 March.”[66]
  9. [91]
    In relation to proof of the allegations, the Tribunal must be satisfied on the basis of the degree of satisfaction outlined in the case of Briginshaw v Briginshaw.[67]  Dixon J observed at 361:

“the truth is that, when the law requires the proof of any fact, the Tribunal must feel an actual persuasion of its occurrence or existence before it can be found.  It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality… “reasonable satisfaction” should not be produced by in exact proofs, indefinite testimony or indirect inferences.”

  1. [92]
    According to the discipline application, the Commissioner’s contentions in relation to charge 2 are particularised by reference specifically to the letters of 17 January 2012, and 30 April 2012. 
  2. [93]
    The Commissioner did not take the course of cross-examining Mr Reeve about those statements. This could easily have occurred and any ambiguity would have been resolved in that process.
  3. [94]
    The degree of satisfaction outlined in Briginshaw requires a high level of proof. The case to be answered by the practitioner is defined by the discipline application, which must fully and adequately set out the charges. 
  4. [95]
    In this case, Mr Reeve has sworn that he did not have instructions at the time the settlement took place – hence his depositing the funds into his trust account. He was not tested about this evidence. The letter of 17 January 2012 does not indicate when the relevant instructions were provided. It simply says that the instructions were obtained in reply to the letter of 2 April 2009. It is not evidence that these instructions were known prior to the receiving of funds at the settlement.
  5. [96]
    Similarly, the way in which the matters are put in the letter of 30 April 2012, lends itself to more than one possible interpretation as to what was intended. 
  6. [97]
    One interpretation, consistent with the evidence given by Mr Reeve around the views he took concerning the letter of 31 March would not lead to the conclusion that he was intending to do other than comply with the terms of the arrangements, as he understood them to be. 
  7. [98]
    He may have been in error about his understanding and this may have arisen as a result of the fact that many of the events were happening “at the last moment” and without reference to him (he was not a party to some of the discussions). 
  8. [99]
    In the circumstances, the Tribunal concludes that the second charge is not made out.

Sanction

  1. [100]
    The Tribunal has found that the conduct of Mr Reeve in relation to the trust funds amounted to unsatisfactory professional conduct.
  2. [101]
    On a finding that a practitioner has engaged in unsatisfactory professional conduct the Tribunal may make any order it thinks fit including one or more of the orders stated in s 456 of the Act. 
  3. [102]
    The Commissioner submitted the appropriate order should be that the practitioner be subject to a public reprimand and that a “small fine” be imposed.
  4. [103]
    Mr Reeve’s written submissions were that no sanction be imposed. At the hearing Mr Mould indicated that, were unsatisfactory conduct to be found, any sanction should be limited to a small fine with no public reprimand on the basis that such a reprimand would have a grave impact on his client.  Mr Mould referred to matters such as the momentary nature of the conduct, the lack of prior offences and the number of years Mr Reeve has been a solicitor.  Mr Mould submitted that the disgrace and humiliation that would be incurred by Mr Reeve would not be commensurate with the gravity of the conduct involved.[68]
  5. [104]
    It is well established that the purpose of any sanction is not to punish the practitioner but to protect the public. 
  6. [105]
    In this case, it is important that the public can have confidence in the way in which trust monies are dealt with by solicitors.  This is particularly so in the context of conveyancing transactions where, frequently, monies must be held on trust to be dealt with in accordance with the arrangements between the parties.
  7. [106]
    An element of protection of the public is to deter other legal practitioners from being involved in similar conduct.  Because of the importance of the obligations concerning the handling of trust monies, this element of deterrence is very important and of significance.
  8. [107]
    The imposition of a public reprimand and a fine are central to the objective of general deterrence.
  9. [108]
    In the circumstances, recognising the need to protect the public, and because of the need to deter other practitioners, the Tribunal is of the view that Mr Reeve ought be publicly reprimanded and that a fine in the sum of $1,500 be imposed.

Orders

  1. [109]
    The Tribunal orders the following:
    1. a)The respondent is publicly reprimanded
    2. b)The respondent is to pay a fine in the sum of $1,500.00 within 30 days from the date of this order

Notice of Intention to Seek Compensation Order

  1. [110]
    A Notice of Intention to Seek Compensation Order has been filed by Mr Smith. 
  2. [111]
    Mr Smith refers to his affidavit sworn on 5 May 2014 and indicates that “compensation sought is $2,337.50 plus interest from 3 April 2009”.
  3. [112]
    Compensation Orders are dealt with in part 4.10 of the Act. 
  4. [113]
    For present purposes, a Compensation Order includes an order that a law practice pay to a complainant an amount by way of compensation for pecuniary loss suffered because of conduct that has been found to be unsatisfactory professional conduct of an Australian legal practitioner involved in the relevant practice.[69] 
  5. [114]
    For Compensation Orders of that type (where pecuniary loss suffered) unless the parties agree, a Compensation Order must not be made unless the Tribunal is satisfied:
    1. a)The complainant has suffered pecuniary loss because of the conduct concerned; and
    2. b)It is in the interests of justice that an order of this type be made.[70]
  6. [115]
    Until the time when the Tribunal makes findings in relation to the conduct, it is, of course, not possible for the complainant and the respondent law practice to make submissions which deal specifically with the requirements of sections 464 and 465 of the Legal Profession Act 2007 (Qld).
  7. [116]
    To enable the Tribunal to consider the Notice of Intention to Seek Compensation the Tribunal will allow the complainant and Mr Reeve to make submissions as to the entitlement of Mr Smith to a Compensation Order. 
  8. [117]
    The Tribunal orders that:
    1. a)Mr Smith is to file submissions, by reference to sections 464 and 465 of the Legal Profession Act 2007 (Qld) as to the basis upon which he is entitled to a Compensation Order with respect to the sum of $2,337.50 plus interest from 3 April 2009. Such submissions are to be made, by:

4:00pm on 22 August 2016.

  1. b)The respondent is to file submissions in reply, by:

4:00pm on 19 September 2016.

  1. [118]
    Mr Smith and Mr Reeve have leave to approach the Tribunal if further time is required.

Costs

  1. [119]
    Upon a finding of unsatisfactory professional conduct, the Tribunal must make an order requiring the practitioner to pay costs unless the Tribunal is satisfied exceptional circumstances exist. 
  2. [120]
    The parties will be given an opportunity to make submissions regarding costs in light of the findings, which have been made by the Tribunal.
  3. [121]
    The applicant is to make any submissions he wishes to make with respect to costs, by:

4:00pm on 11 August 2016.

  1. [122]
    The respondent is to make any submissions in response with respect to the appropriate order for costs, by:

4:00pm on 1 September 2016.

Footnotes

[1]  Statement of agreed facts, filed 1 May 2014, paragraph 4(c).

[2]  Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 6.

[3]  Ibid, paragraph 7.

[4]  Ibid, paragraph 8.

[5]  Statement of agreed facts, filed 1 May 2014, paragraph 5; Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 9.

[6]  Statement of agreed facts, filed 1 May 2014, paragraph 6, Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 10.

[7]  Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 11.

[8]  Affidavit of David Arthur Wythes, sworn 22 April 2014, paragraph 7

[9]  Ibid, paragraph 8.

[10]  Statement of agreed facts, filed 1 May 2014, paragraph 7; Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 12.

[11]  Affidavit of Christopher Parker Reeve, sworn 5 June 2014, paragraph 3.

[12]  Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 12.

[13]  Affidavit of David Arthur Wythes, sworn 22 April 2014, paragraph 8.

[14]  Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 13.

[15]  Statement of agreed facts, filed 1 May 2014, paragraph 8; Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 14.

[16]  Statement of agreed facts, filed 1 May 2014, paragraph 9, Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 15.

[17]  Affidavit of Christopher Parker Reeve sworn 5 June 2014 paragraph 7.

[18]  Ibid.

[19]  Ibid.

[20]  Statement of agreed facts, filed 1 May 2014, paragraph 10; Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 16.

[21]  Statement of agreed facts, filed 1 May 2014, paragraph 11.

[22]  Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 17.

[23]  Statement of agreed facts, filed 1 May 2014, paragraph 12.

[24]  Ibid, paragraph 13.

[25]  Ibid, paragraph 14.

[26]  Affidavit of Christopher Parker Reeve, sworn 5 June 2014, paragraph 5.

[27]  Ibid, paragraph 6.

[28]  Ibid, paragraph 7.

[29]  Ibid.

[30]  Ibid, paragraph 8.

[31]  Statement of agreed facts, filed 1 May 2014, paragraph 15; Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 19.

[32]  Statement of agreed facts, filed 1 May 2014, paragraph 16; Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 20.

[33]  Statement of agreed facts, filed 1 May 2014, paragraph 17.

[34]  Ibid, paragraph 18; Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 21.

[35]  Statement of agreed facts, filed 1 May 2014, paragraph 19.

[36]  Ibid, paragraph 20; Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 22.

[37]  Statement of agreed facts, filed 1 May 2014, paragraph 21; Affidavit of Paul William Smith, sworn 5 May 2014, paragraph 23.

[38] Affidavit of David Arthur Wythes, sworn 22 April 2014, paragraph 11.

[39]  Ibid, paragraph 12.

[40] Legal Profession Act 2007 (Qld) s 420(1).

[41]  Submissions of behalf of the applicant, filed 6 July 2015, paragraph 11.

[42]  Ibid, paragraph 13; GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631 at 634 per McHugh JA.

[43]  Submissions of behalf of the applicant, filed 6 July 2015, paragraph 15.

[44]  Submissions of behalf of the respondent, filed 29 July 2015, paragraph 4.

[45]  Ibid, paragraph 6.

[46]  Ibid, paragraph 7.

[47]  Ibid.

[48]  Ibid paragraph 9.

[49]  Ibid.

[50]  Submissions on behalf of the respondent, filed 29 July 2015, paragraph 12.

[51]  Statement of agreed facts, filed 1 May 2014, paragraph 5.

[52]  Ibid, paragraph 6.

[53]  Affidavit of Christopher Parker Reeve, sworn 5 June 2014, page 4.

[54] Legal Profession Act 2007 (Qld) s 420(1).

[55]  Ibid, s 418.

[56]  Ibid, s 419.

[57]  Application for referral – disciplinary proceedings, filed 23 October 2013, paragraph 2.2.

[58]  Ibid, paragraph 2.4.

[59]  Ibid, paragraph 5.

[60]  Submissions on behalf of the applicant, filed 26 June 2015, paragraph 19; Clancy v Prince [2001] NSWSC 85 at [61] (2)(v) per Santow J.

[61]  Submissions on behalf of the applicant, filed 6 July 2015, paragraph 20.

[62]  Submissions on behalf of the respondent, filed 29 July 2015, paragraph 15.

[63]  Ibid, paragraph 16.

[64]  Transcript of proceedings, 17 December 2015, page 1-39, lines 29 to 33.

[65]  Ibid, page 1-39, lines 41 to 44.

[66]  Ibid, page 1-40, lines 27 to 28.

[67]  (1938) 60 CLR 336.

[68]  Transcript of proceeding, 17 December 2015, page 1-51 lines 11 to 18.

[69] Legal Profession Act 2007 (Qld) s 464(d)(i).

[70]  Ibid, s 465.

Close

Editorial Notes

  • Published Case Name:

    Legal Services Commissioner v Reeve

  • Shortened Case Name:

    Legal Services Commissioner v Reeve

  • MNC:

    [2016] QCAT 209

  • Court:

    QCAT

  • Judge(s):

    Thomas J

  • Date:

    21 Jul 2016

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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