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Leneham v Legal Services Commissioner[2017] QCA 137

Leneham v Legal Services Commissioner[2017] QCA 137

SUPREME COURT OF QUEENSLAND

CITATION:

Leneham v Legal Services Commissioner [2017] QCA 137

PARTIES:

RUSSELL JAMES LENEHAM

(appellant)

v

LEGAL SERVICES COMMISSIONER

(respondent)

FILE NO/S:

Appeal No 10189 of 2016

QCAT No 11 of 2014

DIVISION:

Court of Appeal

PROCEEDING:

Disciplinary Proceedings

ORIGINATING COURT:

Queensland Civil and Administrative Tribunal at Brisbane – [2016] QCAT 314

DELIVERED ON:

20 June 2017

DELIVERED AT:

Brisbane

HEARING DATE:

6 March 2017

JUDGES:

Philippides and McMurdo JJA and Boddice J

Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS:

  1. The appeal is allowed.
  2. The order of the Tribunal dated 8 September 2016 upholding Charge 2 and finding the conduct of the appellant to be unsatisfactory professional conduct is set aside.
  3. Charge 2 is dismissed.
  4. The parties are to provide submissions as to costs within fourteen (14) days.

CATCHWORDS:

PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – DISCIPLINARY PROCEEDINGS – QUEENSLAND – APPEALS – where the respondent filed a Discipline Application alleging six charges under the Legal Profession Act 2007 (Qld) (the Act) – where Charge 2 alleged a failure by the appellant to disclose in writing as soon as practicable a substantial change in the range of fees to be charged for work performed, contrary to s 315 of the Act – whether s 315 of the Act could apply to the appellant – whether Charge 2 could be determined as if it were one brought under s 316 of the Act – whether a rehearing which would allow amendment of Charge 2 would result in injustice

Legal Profession Act 2007 (Qld), s 7, s 308, s 315, s 316, s 468, s 701

Legal Services Commissioner v Leneham [2016] QCAT 314, related

COUNSEL:

A J H Morris QC for the appellant

M D Nicolson for the respondent

SOLICITORS:

Quinn & Scattini for the appellant

Legal Services Commission for the respondent

PHILIPPIDES JA:

Background

  1. On 17 January 2014, the respondent filed a Discipline Application against the appellant in the Queensland Civil and Administrative Tribunal (the Tribunal) under s 452 of the Legal Profession Act 2007 (Qld) (the Act), which alleged six charges against the appellant under the Act, that constituted professional misconduct or unsatisfactory professional conduct.  The conduct arose out of the law practice, Quinn & Scattini, being retained by the complainant, Sherry Jewell (the complainant), with respect to a Supreme Court action under Pt 4 of the Succession Act 1981 (Qld).  The conduct the subject of the charges comprised failure to make costs disclosures in contravention of s 308 of the Act (Charge 1), failure to provide an updated costs disclosure in contravention of s 315 of the Act (Charge 2), charging excessive costs (Charges 3 and 4), failure to reasonably supervise Michael Seymour (Charge 5) and failure to comply with a Court ordered cost assessment order[1] (Charge 6).
  2. All charges included as particulars of the charge that the appellant was an Australian legal practitioner as defined by s 6(1) of the Act, was engaged in legal practice as a solicitor at Quinn & Scattini and had carriage of the complainant’s Supreme Court action, first as a senior associate in 2008 and then as a partner from 16 April 2010.[2]
  3. On 8 September 2016, the Tribunal delivered its decision,[3] dismissing all charges except for Charge 2.  Consequently, this appeal[4] relates only to the Tribunal’s finding that that charge was established.  Charge 2 read as follows:

Charge 2 – Failure to Update Costs Disclosure

That between 27 May 2010 and 16 December 2010, the [appellant] failed to disclose in writing to the complainant as soon as reasonably practicable a substantial change in the range of fees to be charged for work performed in bringing an action under Part 4 of the Succession Act, contrary to s 315 of the Act.”

  1. The particulars of Charge 2 alleged:

“2.1 The particular in 1.1 to 1.4 above are repeated and relied upon.

2.2 Two invoices were sent by Quinn & Scattini to Sherry Jewell for work performed for estate litigation in the action. Those invoices were sent on 15 December and 16 December 2010. The two invoices totalled $62,123.88.

2.3 The upper range of the cost estimate made on 27 May 2010 was $30,000.00.

2.4 As the [appellant] did not make further disclosure in writing as soon as reasonably practicable, the [appellant] failed to disclose a substantial change in the fees to be charged.”

The grounds of appeal

  1. The appellant raised two grounds of appeal:

    1. The Tribunal erred in finding that under s 316(7) of the Act the appellant was “involved” in a failure by the law practice to comply with s 315, as the Tribunal also erred in finding a breach by the law practice of s 315 without paying due regard to the words “become aware” as they occur in s 315.

    2. The Tribunal erred in finding Charge 2 to have been established on the basis that the appellant was “involved” in a failure by the law practice to comply with s 315, where Charge 2 consisted of a charge under s 315 not s 316 of the Act.

Relevant legislation

  1. Division 3 of Pt 3.4 of the Act imposes obligations to make various disclosures on a law practice.  Section 308 of the Act imposes the following obligation of disclosure on a law practice:

“A law practice must disclose to a client under this division—

  1.  an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs; …”
  1. Section 315 of the Act provides an ongoing obligation of disclosure as follows:

“A law practice must, in writing, disclose to a client any substantial change to anything included in a disclosure already made under this division as soon as is reasonably practicable after the law practice becomes aware of that change.”

  1. Section 316(7) of the Act extends liability to an “Australian legal practitioner” for a law practice’s non-compliance, by providing:

“Failure by a law practice to comply with this division is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner, or Australian-registered foreign lawyer, involved in the failure.”

  1. “Law practice” is relevantly defined in Schedule 2 of the Act as:

law practice

  1.  otherwise means—
  1.  an Australian legal practitioner who is a sole practitioner; or
  1.  a law firm; or
  1.  an incorporated legal practice; or
  1.  a multi-disciplinary partnership.
  1. Schedule 2 defined “law firm” as meaning:

“a partnership consisting only of —

  1.  Australian legal practitioners; or
  1.  1 or more Australian legal practitioners and 1 or more Australian-registered foreign lawyers.”

The Tribunal’s factual findings

  1. The Tribunal made the following factual findings in respect of Quinn & Scattini’s engagement by the complainant to perform legal work in relation to a claim under the Succession Act 1981 (Qld).[5]  The complainant largely dealt with an employed solicitor, Mr Michael Seymour, and with the appellant as the “responsible partner”[6] who had been involved in the complainant’s case from about 2008 onwards and was still corresponding with the complainant in December 2010.[7]  During the relevant time, the appellant allowed himself to be held out as a partner, including to the complainant.[8]  There was a chain of correspondence between Quinn & Scattini and the complainant that referred to the appellant as a partner.[9]  It included a letter dated 17 June 2010, from Quinn & Scattini to the complainant enclosing a new draft retainer agreement, with a photograph of the appellant, “labelling” him as a partner.[10]  The appellant held a principal practicing certificate, which while not necessarily identifying a salaried partner as a principal, may be an indication that that was substantially the position.[11]  Whatever the internal arrangements were, the communications with the complainant were a holding out of the appellant as a partner and must have been done with the appellant’s approval.[12]
  2. From 2008 to 2010, the appellant was the “team leader” above Mr Seymour, who, as an employed solicitor, had the day-to-day conduct of the complainant’s case.[13]  Mr Seymour was subject to “regular reviews” by the appellant and they met on a regular basis for that purpose; the appellant undertook file reviews and could override Mr Seymour.[14]  Mr Seymour drafted the relevant bills of costs and submitted them to the appellant for his signature as they required a partner’s approval.  The appellant was responsible for checking Mr Seymour’s draft bills of costs.[15]
  3. In May 2010, the appellant had signed a costs agreement and costs disclosure to replace similar documents given to the complainant in October 2008.[16]  That disclosure gave an estimate of $25,000 to $30,000 (if the matter ended at mediation).  Thereafter, the appellant left it to Mr Seymour to check that the estimate was up to date.[17]  The appellant did not look into the question of the complainant’s rising costs until the new estimate was considered in preparation for a mediation on 1 December 2010, on which day, an updated estimate of costs was given to the complainant by the appellant.  Until that time, Quinn & Scattini had taken no steps to make any further costs disclosure.  The account was for $62,123.88, substantially different from the estimates in the earlier cost disclosure as to the estimate if the matter ended at mediation.[18]
  4. The Tribunal found that:[19]

“As a result of [the appellant’s] role in the law practice, and particularly the regular file reviews, he had knowledge of the progress of matters and of the extent of the work which was being undertaken on matters in which he was the team leader in the law practice. In the context of those regular reviews, he had direct access to, and was aware of, information and factors which led to the substantial changes from the disclosure made by the law practice to the complainant. This information was available before the days leading up to the mediation.”

The Tribunal’s consideration and determination of Charge 2

  1. The Tribunal referred to the appellant’s contention that Charge 2 was to be read as one of contravention of s 315 and that the charge against him should fail as the only obligation imposed by s 315 was on the “law practice” and not a principal or employee.[20]  The appellant’s argument was that there had been no failure by him to comply with s 315.[21]  The appellant contended that only if s 315 had included the words “legal practitioner” (rather than law practice) and included the words “or could (with the benefit of hindsight) have become aware” would he have breached s 315.[22]  The appellant further argued that there had been no contravention of s 315 at all; consequently, s 316 had no application.[23]
  2. The Tribunal noted that, at the hearing, the appellant adopted a somewhat different approach referring to s 701(1), which provides, subject to some exceptions, that if a law practice contravenes any provision of the Act, each principal of the practice is taken to have contravened the same provision.  It was contended that by virtue of s 701, a law practice’s contravention of s 315 had the effect that the liability of each “principal” of the law practice for that breach was essentially one of strict liability.[24]  However, it was contended that the appellant could not be regarded as a “principal” of a law practice, as s 701 of the Act applied only when the practitioner was “actually” a principal, that is a partner, as opposed to one held out as a partner.  Thus, the description of the appellant as a salaried partner and his being held out as a partner did not result in his assuming the “strict liability” of a “principal” under s 701 as he was not a principal of the law practice.[25]  The respondent on the other hand argued that a Partnership Agreement did not need to be in writing, the appellant was a holder of a Principal Level Practising Certificate at the relevant time[26] and, having been held out as a partner of the firm, was caught by s 7(4)(b) of the Act which provided that:

“A principal, of a law practice, is an Australian legal practitioner who is—

  1.  a partner in the law practice if the law practice is a law firm …”
  1. As to the application of s 316, actual awareness was essential to the application of extended liability under s 316(7) and, absent such awareness, there could be no contravention of that provision.[27]  The appellant’s case was that s 316 operated to extend liability only if the lawyer in question had relevantly “become aware” of the substantial change to anything included in the disclosure already made and that required “actual knowledge” of the substantial change in the fee estimate.[28]  The Tribunal observed, that underlying that submission was the proposition that to place employees, with a position of any seniority within a firm, under the same sort of absolute liability that was imposed upon the firm’s “principals”, could not have been intended and was not the manner in which the Act operated.[29]
  2. The Tribunal proceeded on the basis that the structure of the Act was that:[30]
  1. s 315 defined the primary obligation of disclosure required of a “law practice”;
  2. s 701 extended the disclosure obligation to all “principals” by providing that a contravention by the law practice was capable of constituting unsatisfactory professional conduct or professional misconduct by the principal; and
  3. s 316 extended the disclosure obligation to all “Australian lawyers” by providing that a contravention by the law practice was capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any Australian lawyer involved in the contravention.
  1. The Tribunal did not find it necessary to make any finding as to the application of s 701; notwithstanding the finding that the appellant had been held out as partner of the law firm, it did not determine whether under that provision as a “principal” included a person held out as partner.  This was because of the approach taken to the interaction of s 315 with s 316(7) and the conclusion that the latter provision was engaged.[31]
  2. The Tribunal had regard to the definition of “law practice” for the purposes of s 315, which it held relevantly meant “a law firm, which, in turn means a partnership consisting of only Australian legal practitioners”.[32]  Recognising that the obligation imposed by s 315 was imposed on the “law practice”, it found that s 315 had been contravened by the legal practice of Quinn & Scattini by “failing to make any disclosure regarding changes in the cost estimate until the day of the mediation”.[33]
  3. On the basis that s 315 had been contravened, the Tribunal accepted the appellant’s submission that, in general terms, “employees, with a position of any seniority within a firm, would not be under the same sort of liability that is imposed upon the firm’s principals” as correct.  However, it considered that “the balance is struck by virtue of the requirement that the lawyer (the non-principal) must be ‘involved in the failure’ in order for section 316(7) of the Act to apply”.  The Tribunal made the following findings in respect of the extended liability of an Australian legal practitioner under s 316:[34]
  1. “The failure by the practice to disclose upon becoming aware, may constitute unsatisfactory professional conduct or professional misconduct of the Australian Lawyer (who is not a principal) only if the individual is ‘involved in the failure’.”
  2. The focus of section 316(7) was thus whether the lawyer “is ‘involved in the failure’, which was ‘the operative test’”.
  3. Section 316(7) contained “no reference to actual knowledge and such a requirement should not be read into the words used”.
  1. The Tribunal determined that the factual findings it had made demonstrated that the appellant was not only “involved” in the contravention of s 315, but was “very centrally involved” in the law practice’s noncompliance with that provision.[35]  It made that determination pursuant to s 316(7) on the basis that the appellant:[36]

“… was aware of the existence of the costs disclosures in 2008 and 2010 (having executed the 2010 agreement on behalf of the legal practice), had a regular and significant role in reviewing the conduct of files (which must have meant that he was aware of the extent of the work being undertaken in a matter) and was involved in costing and billing files having the final authority within the law practice to alter the quantum of fees rendered to the client. [The appellant] was the person held out as a partner of the law practice and as a partner who had authority to alter and sign off on all bills. In the retainer agreements which included the costs disclosures, he was the nominated person to contact regarding cost issues.”

  1. Having found that s 316(7) applied to the appellant, the Tribunal turned to consider whether the conduct by the appellant constituted unsatisfactory professional conduct or professional misconduct.[37]  It took the view that the appellant’s conduct amounted to “unsatisfactory professional conduct”, that is, conduct that fell short of the standard of competence and diligence referred to in s 418 of the Act and that Charge 2 had been established.[38]  That conduct concerned:[39]

“The role (as described in these reasons) which [the appellant] accepted as a salaried partner, including his responsibilities on an ongoing and regular basis in reviewing files and reviewing and approving billing, was central to the non-compliance by the law practice with the requirements of section 315 of the Act. By virtue of his role, he had knowledge, and was aware, on a continuing basis of the progress of matters for which he was the team leader and so was aware of the factors which led to the substantial changes from the costs disclosure made by the law practice. He took no steps to ensure that the law practice disclosed to the complainant the substantial change to the costs disclosure as soon as practicable as is required by section 315 of the Act.”

Ground 2

  1. It is convenient to deal firstly with ground 2 of the appeal.  As mentioned, that ground contends that the Tribunal erred in finding Charge 2 to have been established on the basis that the appellant was “involved”, for the purposes of s 316(7), in a failure by the law practice to comply with s 315, where Charge 2 consisted of a charge under s 315 not s 316.

Section 315 could not apply to the appellant

  1. There can be no question, as the appellant correctly submitted, that Charge 2, as formulated, concerned a charge of contravention by the appellant of s 315.  As the appellant further submitted, although the Tribunal found that Charge 2 had been established, it did not find that the appellant had breached s 315, and it could not, in any event, have so found, since s 315 applied only to a “law practice”, which the appellant was not.
  2. The difficulty raised by the appellant as to the manner in which Charge 2 was framed is not able to be overcome by referring to the appellant’s acceptance, recorded by the Tribunal in its reasons, that “the conduct of an individual solicitor” (whether a partner, principal or employee) could amount to professional misconduct or unsatisfactory professional misconduct “arising out of non-compliance” with s 315 of the Act.[40]  That concession is not to be understood as a concession that an employed solicitor may be directly liable under s 315 for a contravention of that provision, but rather an acceptance that the finding of misconduct under s 316(7) may arise out of a noncompliance by a legal practice with s 315.  Likewise, the appellant’s counsel’s acceptance, also recorded in the Tribunal’s reasons,[41] that at a theoretical level the appellant was “within the range of people subject to the obligation” under s 315 is to be understood as a reference to the extended liability under s 316(7) for contravention of s 315.  Those concessions did not cut across the primary contention that s 315 itself only applied to a “law practice”, which the appellant was not.
  3. I note that the appellant questioned the Tribunal’s reference to the evidence of Mr Seymour as to the appellant’s status as a “partner”,[42] observing that it was unclear what reliance the Tribunal placed on that evidence in terms of s 315.  It was submitted that the Tribunal did not refer to other evidence that the appellant was not held out as more than a salaried partner.  However, the Tribunal’s failure to refer to that evidence may be considered in the context that it did not find it necessary to consider the extended liability of a “principal” partner under s 701; it made no finding that the law practice’s contravention of s 315 resulted in the appellant thereby being liable as a “principal” of the legal practice.
  4. Accordingly, insofar as Charge 2 was to be construed as alleging a contravention by the appellant of s 315, it was misconceived.  No such finding was made, nor was it able to be made, as no obligation was imposed on the appellant under s 315.  That the charge alleged was one that was not capable of being made out is a sufficient basis for allowing the appeal and setting aside the order made as to Charge 2.

The determination of Charge 2 as if it were one brought under s 316

  1. In my view, it is no answer to argue that, whatever the deficiencies in the formulation of the charge, they were overcome in this case by the manner in which the Tribunal approached the charge; that is, as if it alleged a contravention of s 316(7) by the appellant.
  2. It is pertinent to note that it was accepted by all at first instance that, as a matter of law, the case had to be brought within the actual terms of the charges to be made out.  The appellant’s counsel alerted the respondent to the failure to properly draw the charges but no amendment was made.  Moreover, there is no merit in the respondent’s argument (made rather faintly before this Court) that there was no requirement in pursuing a charge under s 316(7) to specify that provision as a part of the formulation of the charge.  The submission relied on the terminology in the heading of s 316, which refers to “the effect of failure to disclose”.  The heading simply provides no support for that argument.  Indeed, the serious consequences that potentially flow from a finding pursuant to s 316(7) militate against such an approach.
  3. Furthermore, that conduct the subject of a disciplinary action charge must come within one of the categories of conduct capable of constituting unsatisfactory or professional misconduct highlights the importance of the formulation of the charge.  Where the alleged conduct is founded on contravention of a “relevant law” pursuant to s 420, that law must be identified with precision in the charge.  Accordingly, the liability of each partner as a principal under s 701 for a law practice’s failure to make disclosure follows from a contravention of s 315 as the “relevant law”.  The position is different in respect of a practitioner who is not a “principal” of a law practice.  In such a case, the law practice’s contravention of s 315 is only “capable of constituting unsatisfactory professional conduct or professional misconduct on the part of” the practitioner pursuant to s 316(7) because of an alleged involvement in the failure.  Section 316(7) thus provides for an additional category of conduct capable of constituting unsatisfactory professional or professional misconduct in respect of a law practice’s failure to comply with the disclosure obligations under Div 3 of Pt 3.4.
  4. Additionally, while in another case a defect in the formulation of the charge might not result in an injustice, that was not the case here.  The erroneous formulation of the charge as one of a contravention of s 315 and the consequent lack of relevant particulars of the appellant’s “involvement” in the contravention of s 315 for the purposes of s 316(7) meant that the appellant was not properly informed of the case against him.  Although counsel for the appellant did not suggest that, had the case been particularised as one under s 316(7), the appellant’s case would have been conducted differently, it was asserted that proper particularisation would have made clear the identification of the conduct said to amount to the relevant involvement.  I accept that submission.  Had that “involvement”, which the Tribunal accepted as the operative test, been alleged in the charge, it would have brought to the fore the identification of the appellant’s acts or omissions alleged as involvement and the nature of “awareness” alleged.
  5. The respondent contended that if it were accepted that there was a fundamental defect in the charge in failing to allege a contravention of s 316(7), the appropriate course was to allow the appeal, but order a rehearing in which case the defect could be cured by way of amendment of the charge on the rehearing.  In my view, that is not an appropriate course in the circumstances of this case.
  6. The appellant has already been subjected to a hearing, which was treated by the Tribunal as if s 316(7) had been properly charged, and went into evidence as to his lack of awareness that there had been a substantial change in the estimate of fees up to the mediation.  Not only was that evidence not challenged, but that failure was the subject of a Browne and Dunn[43] submission made against the respondent.
  7. In that regard, it is useful to set out the following evidence.  The uncontradicted affidavit evidence of the appellant was that he “was not aware, at any time prior to the mediation, that there had been a substantial change from the estimates contained in the disclosure accompanying the costs agreement”.[44]  The appellant also gave the following oral evidence:

“Very well?---But the moment that I became aware that there was a difference between the estimate that had been given in 2008 and the costs to which – the amount to which the costs had accrued was on the morning of the mediation, on 1st of December 2010. I don’t recall whether it was John Jewell or Sherry Jewell who drew that to my attention, but it was one or both of them that - - -

That was after you’d given the estimate and they - all right?---Exactly. They said – I gave the estimate and they said oh, the - something to the effect of well, that’s much more than we were told in the costs agreement. And it was that - that exact moment - I recall it - that I became aware that there was a difference between those. And it’s - it’s never a nice feeling to realise that you’ve - you’ve - you’ve got an estimate wrong, but this was two years after the event of - - -

Thank you?--- - - - that estimate having been given.

Yes?---And I hadn’t had conduct of the file.”

  1. The respondent’s counsel put it to the appellant in cross-examination that Mr Seymour did not make the appellant aware of the state of the costs:

“And at no stage did you - do you say, did Seymour alert you to the fact that the costs would exceed $30,000?---That is correct.”

  1. The appellant also gave the following evidence in re-examination:

“Right. Prior to the 30th of November or the 1st of December 2010, do you recall if you’d had any file reviews with Mr Seymour?---Yes, several.

All right?---They’re recorded in the file.

Yes. And during any of those file reviews, was there discussion about the value of work-in-progress or - - -?---No.

- - - the costing situation?---No. The - the reviews were about the progress of the matter.

Right. Was there anything else whatsoever to alert you, before the 30th of November, to the fact that the costs estimate was no longer valid?---No.”

  1. The above extracted evidence was the only evidence regarding the appellant’s awareness of the actual costs being at variance with the estimate.  The Tribunal did not state that it rejected any of that evidence.  There was evidence that in May 2010 Mr Seymour forwarded a costs agreement (which was a reissue of the 2008 costs agreement that Mr Seymour had been unable to locate).  There was also evidence that the bills for the complainant’s file were prepared by Mr Seymour and were never altered by the appellant.
  2. There were differing submissions as to what “becoming aware” meant for the purposes of s 315 and whether it required actual awareness.  The appellant argued that, in order to be liable pursuant to s 316(7) as a person “involved” in a s 315 contravention (in effect as a participant) proof of the matters constituting a contravention under s 315 was presumed.  That argument was the basis of ground 1 of the appeal.  It was submitted that the language of s 315 in referring to “becomes aware” rather than “ought to have become aware” connoted and required actual awareness of the relevant facts.
  3. Although raised in terms of ground 1, for the purposes of ground 2 of the appeal, the challenge centred not on the finding that the law practice of Quinn & Scattini had contravened s 315, but rather that that provision had been breached by the appellant.  Senior counsel for the appellant accepted that a law practice was mulcted with the knowledge of an employee as an agent of the practice and, in that regard, that the law practice was “mulcted with the knowledge of Mr Seymour as the solicitor having the day-to-day conduct of the file” as its employee.  Senior counsel’s point was that the appellant, as an employee, could not be mulcted with the knowledge of another employee; the knowledge of Mr Seymour could only be imputed to the law practice, which at the relevant time was Michael Quinn practicing as Quinn & Scattini (that is as a sole practitioner).
  4. On the view I have taken to ground 2, a determination of ground 1 is not necessary for the disposition of this appeal, nor is it necessary to determine the meaning of “becomes aware” in s 315 and whether, as McMurdo JA has interpreted the word “aware”, it is synonymous with “actually knows”.  I note that a consideration of s 701(1) may be relevant in determining the meaning of the words “becomes aware”.  Section 701(1) specifies circumstances where a contravention by a law practice will not be taken to be a contravention by a particular partner.  Such circumstances include where the partner establishes that the provision was contravened without his or her “knowledge, actual, imputed or constructive”.  This provision might be seen to suggest a wider reach for the term “becomes aware” in s 315 beyond actual awareness or knowledge.  In that regard, I also note that, by virtue of s 701(1), a partner is not liable where it is established that the practice’s contravention occurs in circumstances where the partner is not in a position to influence the conduct of the practice in relation to the contravention, or where, although in such a position, has used all diligence to prevent the contravention.  It should also be observed, in this context, that the presumption that the principal is imputed with the knowledge of the agent has been accepted as resulting in the principal having actual rather than constructive knowledge.[45]  Where such imputed knowledge is understood as a form of actual knowledge, even on the view that actual knowledge is required by s 315, the concerns raised by the Tribunal that it “cannot be the case that practitioners could defeat legislation clearly designed to protect their clients by failing to keep abreast of rising costs”[46] would be addressed.
  5. Additionally, the issues raised in ground 1 do not require determination in my view because, even on the approach taken by the Tribunal that “becomes aware” did not require actual knowledge, the evidence did not support the inferences made by the Tribunal concerning the appellant’s state of awareness.  The Tribunal’s findings as to the appellant’s role were critical to its finding of “involvement” by him in the s 315 contravention by the law practice.  These inferences were that the appellant, being aware of the existence of the costs disclosures in 2008 and 2010, was involved in costing and billing files, having the final authority within the law practice to alter the quantum of fees rendered to the client, and was the person held out as a partner of the law practice and as a partner who had authority to alter and sign off on all bills and the nominated person in the retainer agreements (which included the costs disclosures) to contact regarding cost issues.  Importantly, the Tribunal also found that the appellant’s role, including having a regular and significant role in reviewing the conduct of files, “which must have meant that he was aware of the extent of the work being undertaken in a matter”.
  6. The Tribunal also made findings as to the appellant’s role as follows:
  1. Firstly, the role (as described in these reasons) “accepted by the appellant as a salaried partner, including his responsibilities on an ongoing and regular basis in reviewing files and reviewing and approving billing, was central to the non-compliance by the law practice” with s 315.
  2. Secondly, by “virtue of that role, he had knowledge, and was aware, on a continuing basis of the progress of matters for which he was the team leader and so was aware of the factors which led to the substantial changes from the costs disclosure made by the law practice”.
  3. Thirdly, he took “no steps to ensure that the law practice disclosed to the complainant the substantial change to the costs disclosure as soon as practicable” as required by s 315.
  1. The Tribunal made no adverse finding against the appellant’s credit.  Rather the Tribunal drew inferences as to his awareness that were inconsistent with the uncontested evidence.  In particular, the Tribunal drew inferences as to the appellant’s awareness of “factors”, in circumstances where it was not put to the appellant that, as the Tribunal found, “by virtue of his role he had knowledge and was aware of factors which led to the substantial change to the costs disclosure”.
  2. The conclusion that, because of the appellant’s role, he “must have been aware” of the extent of the work (and implicitly) that there was a substantial difference between the costs estimate and the actual costs to mediation, and that he was aware of factors which led to that substantial difference was not available on the evidence.  A rehearing which would allow amendment of the charge and further evidence to be adduced would result in injustice and should not be ordered.

Orders

  1. The orders I would make are:

    1. The appeal is allowed.

    2. The order of the Tribunal dated 8 September 2016 upholding Charge 2 and finding the conduct of the appellant to be unsatisfactory professional conduct is set aside.

    3. Charge 2 is dismissed.

    4. The parties are to provide submissions as to costs within fourteen (14) days.

  2. McMURDO JA:  I agree with the orders proposed by Philippides JA although for somewhat different reasons.
  3. This was a proceeding brought under s 452 of the Legal Profession Act 2007 (Qld) (the LPA).  It was a proceeding to have the appellant disciplined by the Queensland Civil and Administrative Tribunal (the Tribunal) for certain conduct.  The disciplinary powers of the Tribunal are as set out in s 456 of the LPA.  The grounds for the exercise of those powers are as stated in s 456(1) as follows:

“If, after the tribunal has completed a hearing of a discipline application in relation to a complaint or an investigation matter against an Australian legal practitioner, the tribunal is satisfied that the practitioner has engaged in unsatisfactory professional conduct or professional misconduct, the tribunal may make any order as it thinks fit, including any 1 or more of the orders stated in this section.”

  1. Consequently, the Commissioner had to prove that the appellant had engaged in conduct that was unsatisfactory professional conduct or professional misconduct.  The former is defined by s 418 as follows:

“Unsatisfactory professional conduct includes conduct of an Australian legal practitioner happening in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.”

Professional misconduct is relevantly defined by s 419 as follows:

“(1) Professional misconduct includes-

  1. (a)
  2. (b)
    conduct of an Australian legal practitioner, whether happening in connection with the practice of law or happening otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice.”
  1. Section 420 describes the types of conduct capable of constituting unsatisfactory professional conduct or professional misconduct.  Conduct in contravention of a “relevant law”, a term defined to include the LPA,[47] is such conduct.
  2. Consistently with these provisions, in the application to the Tribunal, the ultimate finding which was sought was that the appellant was guilty of professional misconduct and/or unsatisfactory professional conduct.  That allegation was particularised in the form of several charges.  The subject charge, which was the only one proved to the Tribunal’s satisfaction, was expressed, as it had to be, by reference to a contravention of a relevant law.  That law was s 315 of the LPA.
  3. Section 315 provides as follows:

“A law practice must, in writing, disclose to a client any substantial change to anything included in a disclosure already made under this division as soon as is reasonably practicable after the law practice becomes aware of that change.

  1. The term “law practice” is relevantly defined to mean:[48]

“(i) an Australian legal practitioner who is a sole practitioner; or

  1.  a law firm; or
  1.  an incorporated legal practice; or
  1.  a multi-disciplinary partnership.”
  1. The term “law firm” is defined to mean a partnership of a relevant kind.  Consequently, except in the case of a sole practitioner, an individual cannot constitute a law practice as that term is defined.  A legal practitioner (who is not a sole practitioner) can be a party to a contravention of s 315 only by the operation of another provision of the LPA.  One such provision is s 701, by which each principal of the practice is taken to have contravened a relevant law in the same way that the practice had contravened that law.[49]  Another such provision is s 316 which relevantly provides:

“(7) Failure by a law practice to comply with this division is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner, or Australian-registered foreign lawyer, involved in the failure.”

  1. The relevant charge was in these terms:

“2 That between 27 May 2010 and 16 December 2010, [the appellant] failed to disclose in writing to the complainant as soon as reasonably practicable a substantial change in the range of fees to be charged for work performed in bringing an action under Part 4 of the Succession Act contrary to section 315 of the Act.”

  1. This charge and the particulars of it made no reference to s 701 or s 316.  But as to s 701, there was no allegation that the appellant had been a principal; instead, it was alleged that he had been “at all material times … engaged in legal practice as a solicitor by Quinn & Scattini, a legal practice …”  That allegation was inconsistent with the appellant having been a principal.  The LPA[50] defined a “principal” of a law practice, if it was a law firm, to be each “partner in the law practice”.  The Tribunal found that the appellant had allowed himself to be held out as a partner.  But it made no finding that, in truth, he was a partner.  Nor did the Tribunal find that as a person held out to be a partner, the appellant was a principal.
  2. Consequently, it was only by the operation of s 316 that the appellant could have been disciplined as a party to the alleged contravention of s 315.  That was recognised by the Tribunal in concluding that charge 2 was proved upon the basis that the appellant had been a practitioner “involved in the failure” by the legal practice to make the disclosure which s 315 had required.
  3. One of the appellant’s grounds of appeal is that the Tribunal should not have had regard to s 316 because, it is said, this was a charge alleging only a contravention of s 315.  It is true, as I have already noted, that neither the charge nor its particulars referred to s 316.  It is also true that a similar argument was made to the Tribunal.  However, the argument is unpersuasive, because s 315 and s 316(2) do not provide alternative and self contained bases for a finding of professional misconduct or unsatisfactory professional conduct.  Instead, a contravention of s 315 could be the basis of a finding of such conduct only by the operation of s 316.  Consequently, the appellant was fairly on notice that this was the case which he had to meet.  In the hearing in this Court, his counsel conceded that his case would not have been conducted differently had the charge and its particulars specifically referred to s 316.
  4. To prove this charge, the Commissioner first had to prove the alleged contravention of s 315.  That required the proof of a substantial change in the estimate of the legal costs which had been disclosed to the complainant in May 2010.  About that, there was no issue: the costs had grown to more than double the amount of the original estimate.  It also required proof that the law practice had become aware of that change.  And it required proof of the time at which, or by which, that awareness had commenced.
  5. The Commissioner’s case was that the appellant had become aware of the change and that his awareness constituted the law practice’s awareness.[51]  The Tribunal did not consider whether the law practice’s awareness came from the awareness of another individual, in particular Mr Seymour, who was an employed solicitor who worked on the matter under the appellant’s supervision.
  6. The Tribunal found that “The legal practice contravened section 315 of the Act by failing to make any disclosure regarding changes in the cost estimate until the day of the mediation.”[52]  That finding is challenged by ground 1 of the Notice of Appeal which is as follows:

“The tribunal erred in finding, under s. 316(7) of the Legal Profession Act, that the [appellant] was involved in a failure by the law practice to comply with s 315, as the tribunal also erred in finding a breach (by the law practice) of s 315 without paying due regard to the words "becomes aware" as they occur in s 315.”

In this Court the appellant argues that there was no evidence from which there could have been any finding that the law practice became aware of the change, at any time prior to the mediation.[53]  It is argued here that “the Commissioner adduced absolutely no evidence regarding the law practice’s awareness or Mr Seymour’s awareness.”[54]  In the appellant’s submissions to the Tribunal, it was acknowledged that it would have been “appropriate and desirable” for the law practice to have given an updated estimate of the costs “during the period when the [present appellant] did not have the conduct of the file for more than 2 years.”  But that submission continued:

“But that is not the same as saying that the requirements of s 315 had been breached, and it is far from saying that those requirements had been breached by the [present appellant].”[55]

  1. The word “aware” in s 315 is unambiguous.  It is, in this context, synonymous with “actually knows”.  Nothing in the text, context or purpose of s 315 indicates that instead it means “should be aware”.  The awareness is the state of mind which triggers the obligation, under s 315, to make further disclosure as soon as reasonably practicably from the time of that awareness.  The provision does not require the disclosure of that which is unknown.
  2. The purpose of s 315 would not be defeated or compromised by giving “aware” its ordinary meaning.  The obligation of initial disclosure, as prescribed by s 308 of the LPA, is to provide (relevantly) “an estimate of the total legal costs if reasonably practicable.”[56]  That estimate must be a genuine one.  But the duty under s 308 is fulfilled although the estimate is inaccurate or incomplete, because s 308 does not require the estimate to be a reasonable one.  Similarly, s 315 imposes a standard of honesty, not reasonableness.  That standard should not be imposed in the absence of its express prescription, especially having regard to the serious disciplinary consequences from a contravention.[57]
  3. The meaning of “aware” in s 315 is unaffected by s 701.  By that provision, each principal of a law practice is taken to have contravened a provision of the LPA, when that provision is contravened by the law practice, unless the principal proves the existence of certain circumstances, one of which is that the principal had no “actual, imputed or constructive” knowledge of the contravention.  There is no tension between that provision and s 315 as, in my view, it should be interpreted.  If anything, the express extension of the meaning of “knowledge” in s 301, when compared with the absence of such an extension to the meaning of “aware” in s 315, could be considered as a further indicator of the correct interpretation of s 315 which I have described.
  4. As the appellant’s argument in this Court accepted, an awareness by the appellant could have constituted an awareness by the law practice.  Although the appellant was not a member of the firm which conducted the practice, he was a practitioner with a responsibility for this matter which could make his state of mind that of the practice.  The questions then were whether, and if so when, the appellant was aware of that which would trigger the obligation of further disclosure under s 315.
  5. In that respect, the Tribunal made these findings:[58]

[29] As a result of Mr Leneham’s role in the law practice, and particularly the regular file reviews, he had knowledge of the progress of matters and of the extent of the work which was being undertaken on matters in which he was the team leader in the law practice.  In the context of those regular reviews, he had direct access to, and was aware of, information and factors which led to the substantial changes from the disclosure made by the law practice to the complainant.  This information was available before the days leading up to the mediation.

[75] By virtue of his role, he had knowledge, and was aware, on a continuing basis of the progress of matters for which he was the team leader and so was aware of the factors which led to the substantial changes from the costs disclosure made by the law practice.  He took no steps to ensure that the law practice disclosed to the complainant the substantial change to the costs disclosure as soon as practicable as is required by section 315 of the Act.”

  1. In those passages, the Tribunal did not go so far as to find that the appellant had become aware that the original estimate of fees was inaccurate.  And in those passages, the Tribunal made no finding as to when it was that the appellant was first aware of that “information” and those “factors” or “matters”.
  2. Without a finding about when the appellant had become aware of the change from the original estimate, the Tribunal could not assess whether there had been a failure to make further disclosure “as soon as reasonably practicable”.
  3. In another part of the reasons, the Tribunal did make a finding as to the timing of the appellant’s awareness, in these terms:[59]

“After May 2010, Mr Leneham did not look into the question of the complainant’s rising costs until the new costs estimate was considered in preparation for the mediation.”

On that finding, the appellant had not become aware of the “rising costs” until immediately before the mediation.  As the Tribunal found, an updated estimate was given on the day of the mediation.  It follows that the facts found by the Tribunal did not provide a basis for a conclusion that there was a contravention of s 315.

  1. In finding that the appellant had not looked into the question of the rising costs until preparing for the mediation, the Tribunal acted upon the appellant’s evidence within his affidavit.  The appellant’s evidence in this respect was unchallenged.  More generally, his evidence as to his awareness, or more particularly unawareness, of relevant matters was not challenged, as Philippides JA has detailed in her judgment.  Consequently, the Tribunal concluded that the legal practice had contravened s 315, without finding that any relevant person, more specifically the appellant, had the requisite state of mind at a point in time which made the practice’s further disclosure one which was too late.  In essence, the Tribunal concluded that there was a contravention of s 315 upon the basis of an awareness which the appellant should have had, but did not have, at an earlier time.  That was a legal error.
  2. Absent a contravention of s 315, this charge could not be proved.  The question arose under s 316(7), because there had been no proven “failure” in which the appellant could have been involved.  It is therefore unnecessary for this Court to decide whether the Tribunal was correct in holding that a practitioner could be “involved in the failure” under s 316(7) without knowing of the facts constituting the elements of the contravention of s 315.  But it may be noted that the Tribunal’s interpretation of s 316(7) was, in part at least, a result of its interpretation of “aware” in s 315.  Once it is recognised that “aware” means “actually knows” in s 315, the Tribunal’s interpretation of s 316(7) is more difficult to accept.
  3. The decision of the Tribunal must be set aside.  I agree with Philippides JA that there should not be a rehearing: upon the evidence of the appellant, which was unchallenged and apparently accepted, this charge should have been dismissed.
  4. BODDICE J:  I agree with Philippides JA that Charge 2, as formulated and particularised at the hearing, was not capable of being made out.  The Tribunal erred in determining the charge by reframing its content.
  5. The respondent having brought the charge, the appellant was entitled to have it determined in accordance with its formulation and particularisation.  The respondent was put on notice by the appellant as to its fundamental defects.  The respondent chose not to seek any amendment to that charge.
  6. I also agree with Philippides JA that there should not be any re-hearing of Charge 2.  The appellant gave unchallenged evidence.  There was no proper basis for that evidence to be rejected by the Tribunal.  That being so, even a properly laid and formulated charge was bound to fail and should have been dismissed.
  7. These conclusions render it unnecessary to determine ground 1 of the appeal.  However, as the meaning of “becomes aware” in s 315 was the subject of argument on appeal and is considered by Philippides JA and McMurdo JA I shall state my conclusions in relation to the meaning of those words.
  8. Like McMurdo JA, I find the word “aware” in s 315 unambiguous.  I agree with McMurdo JA’s interpretation of “aware” in s 315.
  9. I agree with the orders proposed by Philippides JA.

Footnotes

[1] That order was obtained against Michael Quinn, practising as Quinn & Scattini: AB at 36, 38.

[2] See Particulars 1.1–1.4 of charge 1.

[3] Legal Services Commissioner v Leneham [2016] QCAT 314.

[4] The appeal is by way of rehearing on the evidence given in the matter before the Tribunal pursuant to s 468 of the Act.

[5] Leneham at [10]-[34].

[6] Leneham at [12].

[7] Leneham at [12].  The reasons referred to 2012 instead of 2010 but that was clearly a slip: see the affidavit of Ms Sherry Jewell dated 15 August 2014.

[8] Leneham at [13]. In June 2011, Quinn & Scattini was incorporated and thereafter the former “partners”, including the appellant were listed as “directors”: Leneham at [19].

[9] Leneham at [15]-[18].

[10] Leneham at [18].

[11] Leneham at [21].

[12] Leneham at [20].

[13] Leneham at [22].

[14] Leneham at [23].

[15] Leneham at [24]-[25], [27].

[16] Leneham at [28].

[17] Leneham at [30].

[18] Leneham at [31]-[34].

[19] Leneham at [29] (emphasis added).

[20] Leneham at [41], [44].

[21] Leneham at [46].

[22] Leneham at [47].

[23] Leneham at [46].

[24] Leneham at [49].

[25] Leneham at [49]-[52].

[26] Leneham at [53].

[27] Leneham at [59].

[28] Leneham at [56].

[29] Leneham at [57].

[30] Leneham at [60].

[31] Leneham at [70].

[32] Leneham at [40].

[33] Leneham at [43].

[34] Leneham at [61]-[68].

[35] Leneham at [69]-[70].

[36] Leneham at [69] (emphasis added).

[37] Leneham at [72].

[38] Leneham at [76]-[78].

[39] Leneham at [75] (emphasis added).

[40] Leneham at [54].

[41] Leneham at [58].

[42] Leneham at [14].

[43] (1893) 6 R 67.

[44] Appellant’s affidavit dated 8 December 2014 at [40].

[45] Vane v Vane (1873) 8 Ch App 383 at 399; Ford Extractions Pty Ltd v Do Carmo [1981] 2 NSWLR 253 at266.  As stated in Pickersgill v Tsokalas [2009] SASC 357 at [90], the basis for the presumption may be that a principal should not have the advantage of what his or her agent knows without also having the disadvantage of it.  See also GE Dal Pont’s Law of Agency, 3rd ed at 557, where it is observed that the presumption may be justified as an incentive for principals to design and implement effective systems through which agents handle and report information.

[46] Leneham at [66].

[47] Schedule 2 of the LPA.

[48] Ibid.

[49] Save in certain circumstances which need not be set out here.

[50] s 7(4).

[51] See, e.g.: Written Submissions of the Legal Services Commissioner to the Tribunal, paragraphs 18 and 31-33.

[52] [2016] QCAT 314 at [43].

[53] Appellant’s outline of submissions para 10(b).

[54] Appellant’s outline of submissions para 21.

[55] Appellant’s written submissions to the Tribunal para 120.

[56] LPA s 308(1)(c).

[57] Beckwith v The Queen (1976) 135 CLR 569, 576.

[58] Legal Services Commissioner v Leneham [2016] QCAT 314 at [29], [75].

[59] Ibid at [31].

Close

Editorial Notes

  • Published Case Name:

    Leneham v Legal Services Commissioner

  • Shortened Case Name:

    Leneham v Legal Services Commissioner

  • MNC:

    [2017] QCA 137

  • Court:

    QCA

  • Judge(s):

    Philippides JA, McMurdo JA, Boddice J

  • Date:

    20 Jun 2017

  • White Star Case:

    Yes

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2016] QCAT 31408 Sep 2016Charges 1, 3, 4, 5, 6 dismissed; charge 2 upheld and conduct found to be unsatisfactory professional conduct: Thomas J and Members Anderson and Steinberg.
Notice of Appeal FiledFile Number: Appeal 10189/1606 Oct 2016-
Appeal Determined (QCA)[2017] QCA 13720 Jun 2017Appeal allowed; charge 2 dismissed: Philippides and McMurdo JJA and Boddice J.
Appeal Determined (QCA)[2018] QCA 13322 Jun 2018Application to adduce further evidence refused; respondent pay appellant's costs: McMurdo JA and Boddice J (Philippides JA dissenting in part).

Appeal Status

Appeal Determined (QCA)

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