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Legal Services Commissioner v Douglas[2015] QCAT 210

Legal Services Commissioner v Douglas[2015] QCAT 210

CITATION:

Legal Services Commissioner v Douglas [2015] QCAT 210

PARTIES:

Legal Services Commissioner

(Applicant/Appellant)

 

v

 

Robert Gary Douglas

(Respondent)

APPLICATION NUMBER:

OCR241-12

MATTER TYPE:

Occupational regulation matters

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Justice DG Thomas

Assisted by:

Mr Scott Anderson (Legal Panel Member)

Ms Julie Cork (Lay Panel Member)

DELIVERED ON:

9 June 2015

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. That the Respondent be publically reprimanded.
  2. That the Respondent pay the Applicant’s costs fixed at $2500.00
  3. The application for a costs order against the Respondent’s solicitor, Mr Benjamin Cohen, is dismissed.

CATCHWORDS:

PROFESSIONS AND TRADES – LAWYERS – DUTIES AND LIABILITIES – SOLICITOR AND CLIENT – CONFLICT OF INTEREST   – ACTING FOR OPPOSING CLIENTS – ADVISING CLIENT – where the Respondent deal directly with the client of another legal practitioner – where the Respondent acted on behalf of both parties in respect of matrimonial dispute – where the Respondent did not obtain client’s consent in writing – whether the Respondent’s conduct was unsatisfactory professional conduct

PROFESSIONS AND TRADES – LAWYERS – DUTIES AND LIABILITIES – LIABILITIES FOR COSTS OF PROCEEDINGS – where the Applicant alleges that the Respondent’s solicitor unnecessarily disadvantaged the Applicant – whether the Respondent’s solicitor liable to pay compensation to the Applicant under s 103 of the Queensland Civil and Administrative Tribunal Act 2009.

Legal Profession Act 2007 (Qld) ss 418, 419, 456, 462,

Queensland Civil and Administrative Tribunal Act 2009 (Qld) ss 32, 103, 104

Edwards v Edwards [1958] 2 All ER 179

Legal Services Commissioner v McCarthy [2010] LPC 004

Legal Services Commissioner v Taylor [2010] LPC 003

Re Bendeich (No 2) (1994) 53 FCR 422

APPEARANCES and REPRESENTATION (if any):

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’).

REASONS FOR DECISION

Charges

  1. [1]
    The  Legal Services Commissioner alleges that the following conduct constitutes unsatisfactory professional conduct:

Charge one – communicate directly with client of another legal practitioner

  1. [2]
    On 25 September 2006, Mr Robert Douglas communicated directly with the client of another legal practitioner.

Charge two – failed to maintain reasonable standards of competence and diligence

  1. [3]
    Between 12 February 2007 and 6 July 2007, Mr Douglas failed to maintain reasonable standards of competence and diligence in relation to property settlement and parenting arrangement matters in which he acted for his client, Mr Roger Dean.

Background

  1. [4]
    Mr Douglas represented Mr Roger Dean in respect of property settlement and parenting arrangement matters between Mr Dean and his wife, Mrs Nicole Dean.
  2. [5]
    At the relevant time, Mrs Dean was represented by the law practice Freedom Family Law.
  3. [6]
    On 25 September 2006, Mr Douglas communicated with Mrs Dean directly by telephone to obtain her authority for the release of a sum of money from Mr Douglas’ trust account to Mr Dean.
  4. [7]
    Mr Douglas communicated with Mrs Dean in circumstances where:
    1. he was not aware of nor had experienced any difficulty communicating with her legal practitioners;
    2. he had not given her legal practitioners notice of his intention to communicate directly with Mrs Dean; and
    3. the circumstances were not so urgent as to require him to communicate directly.
  5. [8]
    On a date between 12 February 2007 and 25 April 2007, Mr Douglas spoke with Mr Dean and advised him that:
    1. he could act as the solicitor for Mrs Dean in an application for Consent Orders and file documentation with the court;
    2. he would do so only in so far as the parties were not in dispute and, should the parties reach an impasse on any point, he would withdraw as solicitor for Mrs Dean; and
    3. it did not disadvantage Mr Dean for him to so act.
  6. [9]
    Based upon that advice, Mr Dean gave his consent to Mr Douglas to act for Mrs Dean.
  7. [10]
    Mr Douglas did not obtain confirmation in writing from Mr Dean of the advice given, Mr Dean’s understanding of the advice, or Mr Dean’s consent to Mr Douglas acting for Mrs Dean. 
  8. [11]
    It is alleged by the Legal Services Commissioner that:
    1. Mr Douglas’ conduct in approaching Mrs Dean, in the circumstances outlined, amounted to unsatisfactory professional conduct; and
    2. Mr Douglas failed to maintain reasonable standards of competence and diligence in acting for Mr Dean, in that he failed to confirm in writing Mr Dean’s consent to his acting for both parties. 

Discussion

  1. [12]
    Section 418 of the Legal Profession Act 2007 (Qld) (‘Legal Profession Act’) defines “unsatisfactory professional conduct” as including “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”.
  2. [13]
    The conduct alleged in Charge 1 is contrary to Rule 4 of the Solicitors Handbook (current at the time of the conduct).
  3. [14]
    In relation to acting for both parties in the matrimonial proceedings, the Legal Services Commissioner asserts that Mr Douglas’ failure to obtain confirmation in writing led to the position in which neither Mr Douglas nor his client had any certainty as to what actually had been agreed between them.
  4. [15]
    On behalf of Mr Douglas, it is submitted that:
  • He did discuss the conflict with Mr Dean and obtained his approval, but acknowledges it was an error of judgment not to confirm the arrangements in writing.[1]
  • Mr Douglas thought he was assisting both parties by making the application and finalising the outstanding matters. His (mistaken) understanding, at the time, was that the application was required to be made by the applicant in the proceedings, which was Mrs Dean.  He had very limited family law experience, and this is the reason he misunderstood the position.  Mrs Dean was no longer represented by solicitors so, in order to achieve finality in the interests of both parties (as Mr Douglas saw it), he decided to go on the record as Mrs Dean’s solicitor for the purpose of filing the application and obtaining the Consent Orders.[2]
  • He did so without making any charge to either party and solely for the purpose of formalising an agreement, rather than seeking to advantage either party over the other.[3]
  • Mr Douglas acted in circumstances where it was his understanding that the parties were no longer in dispute but had a common interest in finalisation of outstanding matters by obtaining appropriate Court orders.[4]
  1. [16]
    Legal practitioners must avoid a position of conflict of interest.  It is fundamental to the relationship between a legal practitioner and the client that the client is able to rely upon, and trust, the advice given by the legal practitioner, in the knowledge that the legal practitioner will be acting only in the best interests of the client and in no other conflicting interest.
  2. [17]
    Despite the factors outlined on behalf of Mr Douglas, it was essential that the details of any arrangements between Mr Douglas and Mr Dean were clearly spelt out so that there could be no confusion, and the relationship of trust which existed between Mr Douglas and Mr Dean was not put at risk.
  3. [18]
    In the circumstances, the conduct of Mr Douglas fell 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. 
  4. [19]
    It is noted that Mr Douglas accepts that his conduct, with respect to each of the charges, did amount to unsatisfactory professional conduct. 
  5. [20]
    However, because of the particular circumstances of this case, it is clear that the conduct did not involve a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence, and so does not fall within the definition of professional misconduct in s 419 of the Legal Profession Act.

Penalty

  1. [21]
    Upon a finding that a legal practitioner has engaged in unsatisfactory professional conduct, the Tribunal may make any order it thinks fit, including one or more of the possible orders outlined in s 456 of the Legal Profession Act.
  2. [22]
    It is well established that disciplinary penalties are not imposed as punishment of the legal practitioner but, rather, to protect the interests of the community and the maintenance of proper professional standards.
  3. [23]
    In this context, the deterrent effect of any fine which is imposed has significance.
  4. [24]
    The Legal Services Commissioner has referred to the cases of Legal Services Commissioner v McCarthy[5] and Legal Services Commissioner v Taylor.[6]
  5. [25]
    In the case of McCarthy, the practitioner acted for both parties in a conveyance without obtaining the written consent of either party.  After a conflict arose, the practitioner continued to act for one party.  A finding of unsatisfactory professional conduct was made, with the practitioner being ordered to pay a fine in the amount of $1,500 and with a public reprimand being administered.
  6. [26]
    In the case of Taylor, the practitioner acted for both parties in a conveyance, by agreement between the parties.  When a dispute arose, the practitioner withdrew from acting for both parties, although admitted that he may have withdrawn earlier.  It was found that the practitioner’s conduct amounted to unsatisfactory professional conduct and a public reprimand was administered, with no fine being imposed.
  7. [27]
    The Commissioner submits that Mr Douglas should be publicly reprimanded and should be ordered to pay a penalty of $1,500.
  8. [28]
    On behalf of Mr Douglas, it is submitted that his conduct more closely resembles that of the practitioner in Taylor’s case, because Mr Taylor acted with consent but without written acknowledgement.  In Taylor’s case, the Tribunal had regard to the fact that the lack of written acknowledgement was a “technical breach”, that the practitioner cooperated with the applicant, and that there had been no previous disciplinary findings in not imposing a pecuniary penalty.  Furthermore, Mr Taylor had been admitted for a period of more than 14 years (so was more experienced than Mr Douglas), and an actual conflict arose so that it was necessary to cease to act for the parties.
  9. [29]
    It is further submitted that in McCarthy’s case consent was not obtained, being a more serious departure from the required standard than that of Mr Douglas. 
  10. [30]
    On behalf of Mr Douglas it is also submitted that there is no question of the protection of the public or general deterrence.  As to personal deterrence, Mr Douglas has been the subject of the Legal Services Commissioner’s investigation for a number of years and has learnt from the experience.  Mr Douglas has fully cooperated with the Legal Services Commission and promptly admitted his errors and that his conduct amounted to unsatisfactory professional conduct. 
  11. [31]
    In all circumstances, and given the particular background to this case, it is ordered that Mr Douglas be publicly reprimanded but that no pecuniary penalty be imposed.

Costs

  1. [32]
    There is some complexity to the question of costs because of disagreements between the legal representatives in this matter.  This is unfortunate. The disagreement which arose in relation to the costs orders has been of equal prominence in the submissions to that of the categorisation of the conduct and appropriate penalty. 
  2. [33]
    The position with respect to costs, and the ability of the Tribunal to order costs, is contained in s 462 of the Legal Profession Act.
  3. [34]
    The premise is that a costs order is to be made in favour of the Legal Services Commissioner where a practitioner is found to have engaged in unsatisfactory professional conduct or professional misconduct, unless the Tribunal is satisfied that exceptional circumstances exist.[7]
  4. [35]
    The only circumstances in which an order requiring the Legal Services Commissioner to pay costs can be made is in circumstances where the legal practitioner has not engaged in the prescribed conduct, and special circumstances warrant the making of the order.[8]
  5. [36]
    The only other circumstances in which the Tribunal, exercising its jurisdiction in relation to a disciplinary application, may award costs are those circumstances outlined in ss 103 and 104 of the QCAT Act.
  6. [37]
    Section 104 deals with costs against intervening parties and is not relevant in this case. Section 103 deals with costs against representatives in the interests of justice.
  7. [38]
    Section 103 provides that, if the Tribunal considers a representative of a party is responsible for unnecessarily disadvantaging another party to the proceeding, the Tribunal may make a costs order requiring the representative to pay a stated amount to the other party as compensation for the unnecessary costs.

The issue between the legal representatives arose around the withdrawal of one charge and an allegation with respect to another charge.  There was an initial agreement between the representatives in relation to this withdrawal. 

  1. [39]
    In urging that exceptional circumstances existed (under s 462(1) of the Legal Profession Act), submissions on behalf of Mr Douglas are as follows:
  • The Legal Services Commissioner persisted with an allegation of breach of fiduciary duty without identifying how the breach was committed, and then belatedly withdrew that application without explanation. In those circumstances, the Legal Services Commissioner ought not to recover its costs of an allegation which it ought to have appreciated had no substantial prospects of success.
  • Charge 2 was advanced and then belatedly withdrawn, with an inaccurate explanation for its withdrawal being provided.  Reference is made to an agreement between the parties and an email exchange was exhibited to the submissions in relation to that agreement.
  • The application should properly have been made to the Committee, not to the Tribunal, as the conduct could not properly have been categorised as professional misconduct.
  1. [40]
    In those circumstances, Mr Douglas submitted that the appropriate order be no order as to costs.
  2. [41]
    The Legal Services Commissioner responded as follows:
  • The submissions on behalf of Mr Douglas revealed an email exchange which would ordinarily be considered a “without prejudice” communication. 
  • The affidavit of Ms Lane, filed on 10 October 2013, revealed that Mr Douglas’ solicitor had failed to appraise the Tribunal of the full extent of the communications between the parties. This arose in circumstances where the conditions of the proposed agreement had not been complied with, so the agreement was “void when the respondent failed to admit charge 3”.
  • The explanation provided by the Legal Services Commission was true and the Legal Services Commissioner rejected any suggestion that it had put inaccurate information before the Tribunal.
  1. [42]
    Regarding the submissions as to “exceptional circumstances”, the Legal Services Commissioner submitted the following:
  • Particular 3.6(a) was only withdrawn when it became obvious the complainant could not give evidence. The Legal Services Commissioner did not consider this particular had no prospects of success. 
  • With respect to Charge 2, the Legal Services Commissioner intended to proceed with the charge after the agreement had fallen through, until it became evident that the complainant would not give evidence. 
  • As to the question of where the discipline application should have been bought at its highest, Charge 2 was an allegation of dishonest conduct which, if proved, could have supported a finding of professional misconduct.  On that basis, the application was quite properly bought in the Tribunal.
  1. [43]
    The Legal Services Commissioner  subsequently sought an order for costs against the respondent’s solicitor, Mr Benjamin Cohen, personally for the cost of responding to:
  • the respondent’s submission that paragraph 3 was inaccurate; and
  • those parts of the submissions as to costs which flowed from the allegation concerning paragraph 3.
  1. [44]
    The Legal Services Commissioner relied upon s 103 of the QCAT Act in asserting that the Mr Cohen was “responsible for unnecessarily disadvantaging another party for the proceedings”.
  2. [45]
    The Legal Services Commissioner also submitted that the allegation by Mr Cohen was vexatious and ought never to have been made.
  3. [46]
    In response, submissions were filed on behalf of both Mr Douglas and also Mr Cohen. 
  4. [47]
    Submissions on behalf of Mr Douglas were made in reply to the Legal Services Commissioner’s submissions concerning costs regarding Mr Douglas. These are as follows:
  • As to the “very late withdrawal” of particular 3.6(a), the Legal Services Commissioner had not sought to justify the allegation concerning breach of fiduciary duty by Mr Douglas.  There was nothing outlined in Charge 3 from which any conclusion of breach of fiduciary duty could be reached, and so particular 3.6(a) could never have been made out.
  • In relation to whether proceedings should properly have been bought in the Tribunal rather than the Committee, there was no allegation in Charge 2 which asserted dishonest conduct.  There was no allegation of dishonesty or any allegation from which dishonesty might have been inferred.
  1. [48]
    Therefore, Mr Douglas submitted that an appropriate order in relation to costs was there be no order as to costs.
  2. [49]
    Separate submissions were filed on behalf of Mr Cohen. 
  3. [50]
    Mr Cohen submitted:
  • The jurisdiction conferred by s 103 of the QCAT Act is very similar (relevantly identical) to the inherent jurisdiction of the Supreme Court to make personal costs orders against legal representatives.
  • In order to exercise the jurisdiction in s 103, the Tribunal must consider that a representative of a party, rather than the party, is responsible for unnecessarily disadvantaging another party to the proceeding, as mentioned in s 102(3)(a).
  • The allegation that Mr Cohen vexatiously conducted the proceeding[9] or attempted to deceive the Tribunal[10] is unfounded. Arguably, it was the applicant who failed to inform the Tribunal of the complete picture regarding the circumstances that lead to the amendment of the charges.
  • The jurisdiction to award costs against a lawyer personally is to be “exercised sparingly” and after “anxious scrutiny”.[11] It is reserved for cases of “professional misconduct or gross, as opposed to mere, negligence”.[12]
  • The jurisdiction is compensatory.

Discussion

  1. [51]
    To summarise, as to costs, the position is that:
  • The Legal Services Commissioner seeks an order for costs against Mr Douglas, either fixed in the amount of $2,500.00 or as assessed.
  • Mr Douglas submits that there be no order as to costs because exceptional circumstances exist. 
  • The Legal Services Commissioner seeks an order as to costs against Mr Cohen for the costs of responding to Mr Douglas’ submission that paragraph 3 of the Commissioner’s submissions were inaccurate, and those parts of the costs submissions made by Mr Douglas that followed from this allegation.
  • Mr Cohen seeks an order that the Legal Services Commissioner pay Mr Cohen’s costs of and incidental to the application against him for a personal costs order, to be assessed on an indemnity basis.
  1. [52]
    In order to determine what orders are possible with respect to costs, reference must be made to s 462 of the Legal Profession Act.
  2. [53]
    There is jurisdiction to make:
  • the costs order sought by the Legal Services Commissioner pursuant to s 462(1) of the Legal Profession Act.
  • the costs order sought by Mr Douglas, provided exceptional circumstances exist, pursuant to s 462(1) of the Legal Profession Act.
  • the costs order sought by the Legal Services Commissioner against Mr Cohen, pursuant to s 103(1) of the QCAT Act.
  1. [54]
    Mr Cohen has sought an order  against the Legal Services Commissioner to make payment of his costs on an indemnity basis.
  2. [55]
    The jurisdiction of the Tribunal is defined by the statute. As previously observed, the possible orders for costs against the Legal Services Commissioner are limited.  Section 462(4) of the Legal Profession Act provides that the Tribunal may make an order requiring the Legal Services Commissioner to pay costs, but only if satisfied that the legal practitioner has not engaged in unsatisfactory professional conduct or professional misconduct, and special circumstances warrant the making of the order.
  3. [56]
    In the current circumstances, the Tribunal cannot be satisfied (because it is not the case) that Mr Douglas has not engaged in unsatisfactory professional conduct.  Therefore, a costs order against the Legal Services Commissioner is not available.
  4. [57]
    As to the costs order sought against Mr Cohen pursuant to s 103 of the QCAT Act, such cost orders are only made in the most extreme cases. As has been described, the jurisdiction is exercised sparingly and only after anxious scrutiny.[13]
  5. [58]
    In seeking the order, the Legal Services Commissioner refers to the circumstances, contemplated by s 103, when the Tribunal considers a representative of a party “is responsible for unnecessarily disadvantaging another party to the proceedings” but does not particularise the conduct which is said to have led to that conclusion.
  6. [59]
    The Legal Services Commissioner also submits that the conduct of Mr Cohen was “vexatious and ought never to have been made”.  In saying this, it is submitted that affidavit evidence demonstrates that Mr Cohen was aware, or should have been aware, of the full extent of the negotiations between the parties at the time he filed the respondent’s submissions.
  7. [60]
    The negotiations regarding the pleadings depended upon certain admissions being made by the respondent. Those conditions were not satisfied (at least initially). The subsequent change in position by the applicant meant that the respondent’s compliance may have been fulfilled (after the event). The implications of all these matters in the context of the submissions being made by each party, left open different views which could be taken, specifically in relation to the question of costs.
  8. [61]
    Each practitioner was entitled (and bound) to accurately and actively put the case in its best light to the advantage of their respective clients.
  9. [62]
    There was room for argument, as is evidenced by the very lengthy submissions which have been filed.
  10. [63]
    In those circumstances, it cannot be said that Mr Cohen acted in a vexatious way or that his actions were responsible for unnecessarily disadvantaging the Legal Services Commissioner in the proceedings.  This is particularly so given the very high threshold which is applied when considering costs orders against legal representatives.
  11. [64]
    Therefore, the application made by the Legal Services Commissioner for a costs order against Mr Cohen is dismissed.
  12. [65]
    Finally, there are the submissions concerning the costs orders between the parties.
  13. [66]
    The starting point is that the Legal Services Commissioner is entitled to costs unless exceptional circumstances apply.  As has been identified, exceptional circumstances have included where charges are brought which have no substantial prospect of success and that ought to reasonably have been appreciated by the Commissioner.[14]
  14. [67]
    Whether that can be said about Charge 2, it cannot be said about Charges 1 and 3 where findings have been made that the conduct amounted to unsatisfactory professional conduct and, indeed, this was conceded by Mr Douglas.
  15. [68]
    Under those circumstances, there can be no argument that exceptional circumstances applied.  It seems unlikely that any extra costs were incurred by including Charge 2 in circumstances where much of the work would have been undertaken in gathering common information necessary for the 3 charges and then compiling the 3 charges.
  16. [69]
    In circumstances where conflict of interest was being asserted, it was not unreasonable for the proceedings to be brought in the
    Tribunal, which has jurisdiction to deal with all possible outcomes.
  17. [70]
    Therefore, it is ordered that the respondent pay the applicant’s costs fixed at $2500.00 (which, I note, will necessarily exclude all those costs associated with submissions after the Legal Services Commissioner’s submissions dated 26 July 2013 and submissions on behalf of Mr Douglas dated 12 September 2013).

Footnotes

[1]Respondent’s submissions filed 12 September 2013, paragraph 10 and 13.

[2]Ibid.

[3]Ibid.

[4]Ibid, paragraph 11 and 13.

[5][2010] LPC 004.

[6][2010] LPC 003.

[7]Legal Profession Act 2007 (Qld) s 462(1).

[8]Legal Profession Act 2007 (Qld) s 462(4).

[9]QCAT Act s 48(1)(f).

[10]QCAT Act s 48(1)(e).

[11]Edwards v Edwards [1958] 2 All ER 179 at 186-187.

[12]Re Bendeich (No 2) (1994) 53 FCR 422 at 427 per Drummond J.

[13]Edwards v Edwards [1958] 2 All ER 179.

[14]Legal Services Commissioner v Atkins [2009] LPT 10 at 81 per Byrne SJA.

Close

Editorial Notes

  • Published Case Name:

    Legal Services Commissioner v Robert Gary Douglas

  • Shortened Case Name:

    Legal Services Commissioner v Douglas

  • MNC:

    [2015] QCAT 210

  • Court:

    QCAT

  • Judge(s):

    Thomas J

  • Date:

    09 Jun 2015

Appeal Status

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

Cases Cited

Case NameFull CitationFrequency
Edwards v Edwards [1958] 2 All ER 179
3 citations
Jump To
Cite 1 - [1958] 2 All ER 179
Cite 2 - [1958] 2 All ER 179
Cite 3 - [1958] 2 All ER 179
Legal Services Commissioner v Atkins [2009] LPT 10
1 citation
Jump To
Cite 1 - [2009] LPT 10
Legal Services Commissioner v McCarthy [2010] LPC 4
2 citations
Jump To
Cite 1 - [2010] LPC 4
Cite 2 - [2010] LPC 4
Legal Services Commissioner v Taylor [2010] LPC 3
2 citations
Jump To
Cite 1 - [2010] LPC 3
Cite 2 - [2010] LPC 3
Re Bendeich (No 2) (1994) 53 FCR 422
2 citations
Jump To
Cite 1 - (1994) 53 FCR 422
Cite 2 - (1994) 53 FCR 422

Cases Citing

Case NameFull CitationFrequency
Legal Services Commissioner v Douglas [2016] QCAT 1193 citations
1

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