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McCormick v Queensland Law Society Incorporated QCAT 380
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
McCormick v Queensland Law Society Incorporated  QCAT 380
matthew david mccormick
queensland law society incorporated
Occupational regulation matters
18 December 2019
On the papers
Justice Daubney, President
I will hear the parties as to the necessary orders to give effect to this decision.
PROFESSIONS AND TRADES – LAWYERS – PRACTISING CERTIFICATES – REFUSAL TO ISSUE – where the Queensland Law Society refused to renew the applicant’s practising certificate – where the applicant has applied for a review of that refusal – where the applicant has applied for a stay of that refusal pending determination of the review – where the applicant failed to comply with conditions imposed on his practising certificate – where the uncontested evidence is that the applicant has a specialised practice – where the clients of the incorporated legal practice would suffer prejudice were the stay not granted – where the effect on the legal practice were the stay not granted would likely be terminal – whether the stay is desirable having regard to the factors under s 22(4) of the Queensland Civil and Administrative Act 2009 and the conventional curial principles relating to stay applications
Legal Profession Act 2007, s 51
Queensland Civil and Administrative Tribunal Act 2009, s 20, s 22
King v Queensland Law Society Incorporated  QCAT 489
Legal Services Commissioner v Baker (No 1)  2 Qd R 107;  QCA 482
Legal Services Commissioner v Lawrence  QCAT 206
Legal Services Commissioner v Madden  QCA 52
K Mackenzie of Mackenzie Mitchell Solicitors
L Sheptooha instructed by Queensland Law Society, Incorporated
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)
REASONS FOR DECISION
- On 31 October 2019, the respondent Queensland Law Society Incorporated (“QLS”) determined that the applicant is not a fit and proper person to continue holding a solicitor’s practising certificate and, pursuant to s 51(1)(b) of the Legal Profession Act 2007 (“LPA”), refused to renew his practising certificate. The applicant was given notice of this, and the reasons for the decision, by an Information Notice dated 11 November 2019.
- The applicant has applied to this Tribunal for a review of that decision.
- The present application, filed on 20 November 2019, is for a stay of the QLS decision, which is a “reviewable decision” for the purposes of the QCAT Act. As was observed by Wilson J, by this stay application the applicant is seeking, in effect, an order that would allow him to continue in practice for the time being.
- Section 22 of the QCAT Act relevantly provides:
- (3)The tribunal may, on application of a party or on its own initiative, make an order staying the operation of a reviewable decision if a proceeding for the review of the decision has started under this Act.
- (4)The tribunal may make an order under subsection (3) only if it considers the order is desirable after having regard to the following –
- (a)the interests of any person whose interests may be affected by the making of the order or the order not being made;
- (b)any submission made to the tribunal by the decision-maker for the reviewable decision;
- (c)the public interest.
- Whilst regard must be had to these factors, it is also appropriate to consider the conventional curial principles relating to stay applications. In King v Queensland Law Society Incorporated, Wilson J said:
 Under s 22(3) of the Queensland Civil and Administrative Tribunal Act 2009 (‘QCAT Act’) the Tribunal may make an order staying the operation of a reviewable decision but only if it considers the order is desirable having regard to the interest of any person whose interests may be affected by making of the order; any submissions made to the Tribunal by the decision makers; and, the public interest.
 As the Honourable James Thomas AM QC has observed in this Tribunal, s 22(4) of the QCAT Act spells out three particular factors the Tribunal must consider before granting a stay but, in doing so, does not exclude the application of standard principles, procedures and tests to be applied in applications for stays. The matters to be considered under those tests will include the applicant’s prospects of success in the review proceedings, the effect of any stay on them, and whether irremediable harm might be suffered by the applicant if a stay is not granted.
 It has also been said, in the context of review proceedings of this kind, that the tests will also include whether a stay order is desirable and appropriate to secure the effectiveness of the review hearing, having regard to the interests of any persons who may be affected by it. The Administrative Appeals Tribunal Act 1975 uses the word ‘desirable’ in s 41(2) in a context said to require a ‘positive aspiration’, and requires that the public interest be weighed against the personal interest of the applicant.
 The Queensland Court of Appeal has observed that, in cases involving lawyers and their right to practice, the factors that would justify a stay must be such as to outweigh the public interest which is to be afforded ‘particular significance’. The Court also observed that an applicant must show a cogent reason for a stay, and cannot do so merely by showing that she would be unable to practice until (in this instance) her appeal is heard.
 Ms King’s application must also be considered within the statutory context of the LPA, the objects of which are to provide for the regulation of legal practice in Queensland in the interests of the administration of justice, and for the protection of consumers of the services of the legal profession and the public generally.
- The applicant was the sole legal practitioner director of the incorporated legal practice McCormick Group Pty Ltd trading as McCormicks Law.
- In 2018, it had been determined by the Executive Committee of the QLS that the applicant be issued only with a conditional principal practising certificate. The conditions were that he:
- (a)provide an outstanding external examination report of his firm’s trust account for the period which had ended on 31 March 2018 by 31 March 2019; and
- (b)undertake and successfully complete the QLS’ Remedial Ethics Course and Remedial Trust Accounting Course.
- When he applied for renewal of his practising certificate in 2019, the applicant had not complied with either of those conditions. Moreover, by the time his application came up for consideration:
- (a)his firm had not provided the QLS with the statutorily-required external examiner’s report relating to its trust account for the year ending 31 March 2019;
- (b)the respondent had failed to respond to correspondence from the QLS concerning certain answers contained in his practising certificate renewal form;
- (c)consequent upon an investigation by the QLS under s 263 of the LPA, the QLS received an investigator’s report which identified a number of respects in which the firm’s trust account records were not being satisfactorily maintained; and
- (d)on 15 August 2019, the Executive Committee of the QLS decided to appoint officers of the QLS as supervisors of the firm.
- The Information Notice set out at length the QLS Executive Committee’s reasons for finding that the applicant was not a fit and proper person to hold a practising certificate. These included reference to:
- (a)the breach of the conditions of the previous practising certificate;
- (b)the failure to submit external examiner reports;
- (c)the failure to communicate with the QLS in a timely way;
- (d)an assessment that, by reason of the nature and extent of non-compliance, the risk to the public in the applicant holding an unrestricted principal practising certificate was unacceptably high;
- (e)an assessment that the applicant’s non-compliance with conditions previously imposed led to the conclusion that it would not be appropriate to impose conditions on a practising certificate, including renewing the certificate as an employee rather than as a principal.
- As noted, the applicant has applied for a review of that decision. That will be conducted by way of a fresh hearing on the merits. The applicant has identified in the principal application a range of steps which have been taken and safeguards which have been put in place to ensure that his acknowledged past failings are rectified and not repeated. The QLS has conceded, for the purposes of the present stay application, that the applicant has an arguable case on the review. Whilst the existence of an arguable case is, for obvious reasons, a condition precedent to obtaining a stay, it is not of itself a sufficiently cogent reason to grant a stay.
- Having accepted the QLS concession as founding the condition precedent, I will refrain from speculating on the applicant’s overall prospects of success on the review and turn directly to the discretionary considerations.
- In an affidavit filed in support of the stay application, the applicant has deposed to details of his professional career, his personal life, and the difficulties he has encountered over recent years.
- Having originally been admitted as a solicitor in the Northern Territory in 2002, the applicant moved to Brisbane where he worked initially as an employed solicitor before becoming a partner in a well-established law firm from 2006 to 2012. In June 2012, he established McCormick Group Pty Ltd trading as McCormick’s Law as an incorporated legal practice of which he was sole director and legal practitioner director. He describes the firm as having a focus on representing clients in the entertainment industries, especially music and film. The client base is international, including advising on tours by international performers and management of music festivals.
- The applicant has never been the subject of an adverse finding in disciplinary proceedings. Nor has his practising certificate ever previously been suspended or cancelled, and renewal has never previously been refused. The firm is small, with one employed solicitor, a law student undertaking part-time work, and some administrative assistants. In September 2019, the respondent also engaged a business manager to focus on bookkeeping and regulatory compliance.
- The respondent describes the modest number of trust account transactions undertaken by the firm. He says that, in contrast with his previous firm, McCormicks Law made far less use of its trust account, which was used mainly for holding funds as a stakeholder, counsels’ fees, and funds paid in settlement of disputes. He says that in the trust accounting period ended 31 March 2019, there were 26 withdrawals and 11 deposits in the trust account. After April 2019, there were three withdrawals and one deposit in the trust account, and from 14 June 2019 there had been no transactions on the trust account. As at the time of swearing his affidavit, the balance of the trust account was just under $5,400, being money held for counsel’s fees in one matter and for an accountant’s fees in another matter.
- The applicant describes utilising an accounting software for the trust account bookkeeping. This was a “cloud based” software. When this was first used, the applicant’s wife was his practice manager. She managed the implementation of the software for trust accounting in the firm and created a manual for its operation. Statutory external examinations of the trust account were completed for the years ending on 31 March in every year from 2012 through to 2017. The applicant says that from time to time there were queries raised as to whether the particular software complied with the relevant regulatory requirements, but that any such queries were able to be satisfactorily answered.
- In his affidavit, the applicant deposes to significant marital difficulties which he experienced from November 2017. He and his wife separated in May 2018. He says that this had a detrimental effect on his attention to the management of his practice, which had previously been undertaken by his wife. Despite an attempted reconciliation, the marriage broke down irretrievably in May 2019.
- The applicant acknowledges that he failed to have the trust account external examiner’s report for the year ended 31 March 2018 completed. He said this fell in the middle of what he described as part 1 of the separation from his wife and that, in the emotional storm of that separation, he failed to attend to having the examination completed. He acknowledged the imposition by the QLS of the condition that the external examination report be completed by 31 March 2019, but said that having been granted this indulgence, he put the task aside and focused his attention on the pressing matters affecting his clients, his practice and his marriage.
- The applicant also explained the circumstances which led to him failing to successfully complete the Remedial Ethics Course and the Remedial Trust Accounting Course. In relation to the Trust Accounting Course, he says that he passed the workbook assessment component of that course, but did not pass the written examination. The pass mark for that examination was 80 per cent, and the mark he received was 74.55 per cent. He explained that the night before the examination he had very little sleep after receiving unpleasant communications from his wife over the course of the day. In addition, in the days leading up to the examination he had been conducting critical negotiations outside of usual business hours with parties based in the United States. He says he was overtired when he sat for the exam, and was stressed and anxious about matters not connected with the exam.
- In relation to the Remedial Ethics Course, the assessment for that was an assignment which was due in May 2019. This, according to the applicant, was the worst possible time for him in relation to the complete breakdown of his marriage and the fact that his then employed solicitor had taken leave and then resigned from the firm. On the morning the assignment was due, he requested an extension of time but was refused. He says that much of that day was then occupied fulfilling his commitments to clients. The applicant says that he intended to submit the assignment for consideration, notwithstanding that it would be late. However, on 10 June 2019, his car was broken into and the bag containing his notes, workbook and draft of the assignment was stolen. The theft was subsequently reported to his insurer and the police.
- The applicant also acknowledges that the external examiner’s report for the year ended 31 March 2019 was not lodged with the QLS. Again, he says that this coincided with the final and most tumultuous stage of his marriage breakdown. It was also exacerbated by the absence of his personal assistant. He frankly admits to not attending to arranging for that external examination.
- The applicant deposes to the investigation into his trust account commenced by the QLS, and acknowledges that the investigator identified areas of concern. He points out, however, that the investigation found no evidence, and made no suggestion, that trust account money had been misused.
- The applicant also deposes to the QLS appointing supervisors of the trust account, and correspondence from him to the QLS inquiring as to what steps he should take about the external examiner’s reports in light of the appointment of those supervisors. He says that, in fact, the supervisors have not been closely involved in the affairs of the practice because there have been no transactions on the trust account since their appointment.
- The applicant referred to his 2019 application for renewal, and concedes having given a mistaken answer in that application. He also says that the assertions in the Information Notice concerning his alleged failures to communicate with the QLS in a timely way have brought home to him the importance of prioritising correspondence received from the QLS.
- The applicant recounts what he describes as the “remedial action” which he has taken. Immediately upon service of the Information Notice, another director of McCormick Group Pty Ltd was appointed, and the applicant ceased to be a director. Shortly thereafter, Ms Alison Campbell, was appointed as the legal practitioner director, and the requisite notice was given to the QLS. The applicant says that, while Ms Campbell is an experienced legal practitioner director, she does not have specialised knowledge of the entertainment industry. He says: “Finding someone with my experience would be very difficult and probably unaffordable for the firm.”
- The applicant says that, with effect from 1 July 2019, he arranged for a new practice management software program to keep the trust account records and manage the affairs of the practice more generally. This software complies with the statutory and regulatory requirements for trust account bookkeeping. In addition, he appointed a firm of bookkeepers in August 2019. He says that the combined effect of the bookkeepers, the new software, the return to work of his personal assistant, and the attention of the newly appointed business manager has been to restore the administrative business of the firm to a proper footing.
- The applicant says that his personal life is now more settled and that he and his wife had committed to dealing amicably with the formal arrangements around their separation and divorce. He has also been regularly attending on a psychologist since October 2019.
- In relation to the practice itself, the applicant says that his main area of practice and expertise is “so specialised that it would be difficult to recruit and employ another person to do the same work”. He gives examples of the particular study and nature of work that he undertakes and says that without his hands-on involvement he expects the firm has no future in the medium term. He says the firm has about 100 active files, some of which are for long-term clients of whose affairs he has a deep understanding. He says that if these clients were required to find other legal representation, there would be substantial costs incurred. He also refers to two litigious matters on which proceedings are about to be commenced.
- The applicant also gives some detail of acting for a client who has invested a large amount of money in a touring music festival and for which negotiations are at what he describes as “a very delicate stage”.
- The applicant highlights particularly the specialised nature of his practice, saying:
 The number of firms in Australia with an established practice in entertainment law (rather than simply intellectual property) is relatively small. The nature of the business is that transactions usually involve multiple parties. A practical consequence for clients is that, when a dispute arises, conflicts of interest can make it exceptionally difficult to instruct an appropriately experienced firm. That difficulty is a regular feature of conversations with my clients and others in the entertainment industries. Accordingly, I fear that if my clients are obliged to seek other representation, many of them will be excluded by conflicts from obtaining representation at a high standard, and they will be left to deal with substandard lawyers who dabble in the area and who lack a good understanding of the industry and its cultures.
 If a stay of the decision is not granted, I fear that the clients of the firm will be disadvantaged. Whilst I acknowledge my responsibility for this situation having come about, I would ask that some account be taken of the interests of my clients in weighing the decision regarding a stay. It has not been said against me that my actions have caused any detriment to a client.
- The applicant also relies on an affidavit by Alison Jane Campbell, who was appointed as the legal practitioner director of the firm consequent upon receipt by the applicant of the Information Notice. Ms Campbell, who was admitted to practice as a solicitor in December 1998, holds an unrestricted principal’s practising certificate.
- Ms Campbell confirms that, since 15 November 2019, the applicant has not taken any active role in the conduct or management of the firm. Since she took up her post as legal practitioner director, the firm’s employed staff have been occupied mainly with administrative work. Any documentation associated with the provision of legal services is given to Ms Campbell for consideration before it leaves the firm.
- Ms Campbell says that on 29 November 2019 she appointed an independent audit service to complete the external examiner’s reports ended 31 March 2018 and 31 March 2019. The QLS was advised of that appointment, and Ms Campbell deposes to those reports being due to come from the audit service on Wednesday, 11 December 2019.
- Ms Campbell says:
 The immediate future of McCormick’s Law is directly connected to the applicant’s ability to have the decision made by the Queensland Law Society stayed until the outcome of the Tribunal’s review.
- She points out that the applicant was, at the time of his disqualification, the only solicitor employed in the practice, that the firm’s practice was mainly concerned with providing advice and representation to clients in the entertainment industries, and the applicant has highly specialised knowledge and many years of experience in that field. Ms Campbell says:
 Were the applicant unable to continue practising then the impact on McCormick’s Law would be catastrophic.
 There are not sufficient professional resources, nor the level of expertise in relation to some matters, currently present within McCormick’s Law to manage the care and control of the files previously conducted by the applicant.
 If the firm were to attempt to recruit a replacement for the applicant that would be, firstly, a matter of practical difficulty, given the applicant’s specialised skill and experience. Secondly, the financial position of the firm is inadequate to offer the remuneration a suitable candidate would expect.
 If the stay were not to be granted, and the applicant is not able to resume practising in the immediate future, then it will be necessary to begin making staff redundant and wind down or sell the business.
- Ms Campbell confirms that if a stay is granted, she is willing to remain as the legal practitioner director of the firm and supervise the applicant as an employee of the firm. She also confirms her willingness to abide by the following undertakings:
- that the applicant not be authorised to operate the trust account of the practice;
- that the applicant not be authorised to operate any of the bank accounts of the practice;
- that the external examination reports for the trust account of the practice for the accounting periods which ended on 31 March 2018 and 31 March 2019 be submitted to the QLS.
In particular it should be accepted that an applicant for a stay of a recommendation that his name be removed from the roll of Legal Practitioners should show a cogent reason for the stay, and he will not do so merely by showing that he will be unable to practice his profession until his appeal is heard and allowed. Every practitioner who is suspended from practice or whose name is removed from the roll suffers that prejudice but it is clearly not right that a stay is, or should be, granted as a matter of course. Something more must be shown than “prejudice” of this kind. The additional factors which would justify a stay must be such as outweigh the public interest in having unfit practitioners debarred from practice. That interest is to be afforded particular significance.
- There is an obvious public interest in ensuring that solicitors’ trust accounts are impeccably maintained. Part of that maintenance is regular external examination, and compliance with the statutory obligation to lodge reports of those external examinations is an important aspect of legal practice.
- Similarly, a solicitor who fails to comply with conditions on his or her practising certificate, and who fails to respond to correspondence from the regulatory body, puts himself or herself in a position of having their fitness to practice called into question. The important public interest rationale underlying that is obvious.
- The applicant points, however, to the remedial steps which he has taken and the interim ongoing regime under Ms Campbell (including the undertakings she has offered), to the highly specialised nature of this practice and the prejudice which would be suffered by his clients, and the likely terminal impact on the firm as providing sufficient cogent reason to outweigh the public interest concerns.
- Whilst it is clearly the case, as Chesterman J observed, that merely showing that he will be unable to practice is not, of itself, a sufficiently cogent reason, the seriousness of the prejudice caused to the applicant if he succeeds on the review but has been denied a stay is a very relevant consideration. Also very relevant are the interests of those who may be affected by the grant or refusal of a stay order, and this is expressly recognised in s 22(4)(a) of the QCAT Act.
- On the uncontested evidence, the applicant has a highly specialised practice which focuses on a very particular industry. In the absence of any evidence to the contrary, the Tribunal accepts that the applicant’s particular expertise in this area of practice is not easily replaceable.
- There is no suggestion that the applicant’s admitted defaults have in any way adversely affected any of his clients, nor is there any suggestion of dishonesty on his part. On the contrary, the evidence points to the likelihood of his clients being prejudiced by the withdrawal of his ongoing services. I also accept Ms Campbell’s assessment to the effect that if the practice continues to be denied the applicant’s services, it will need to be shut down in the immediate future.
- This case is quite different from the circumstances considered by Wilson J in King v Queensland Law Society. In that case, the QLS had suspended the solicitor’s practising certificate in circumstances which included:
- The Legal Services Commissioner had brought charges against the solicitor involving, amongst other things, allegations of trust account defalcation and mismanagement. The then Legal Practice Tribunal’s decision on the charges was reserved at the time the QLS suspended the practising certificate;
- The solicitor was the subject of bankruptcy orders at the suit of two different petitioners.
- In seeking a stay, the solicitor highlighted the significant number of clients, numerous of which had complex trials pending, whose interest would be prejudiced if she was not able to continue representing them. In her case, however, Wilson J considered that her concerns must be balanced against the public interest in circumstances that are not unique:
… in particular, where she practices in a region with a large number of other lawyers who, it might reasonably be expected, could take her files over with reasonable expedition. Her circumstances are no different from those of any practitioner in a large urban area, well served by her fellow professionals.
- Apart from the fact that the matters alleged against the solicitor in that case were objectively more serious than the defaults by the present applicant, the present case involves a specialised legal practice attending to matters and clients which, on the evidence, are not easily transferable to other practitioners.
- Legal Services Commissioner v Madden also involved circumstances which were objectively more serious than the present in that the Legal Practice Tribunal had found a solicitor guilty on various charges of professional misconduct and ordered that he be struck off. The solicitor appealed, and sought an interim stay of the striking off order.
- The solicitor was a sole practitioner in a country town. On the stay application, Fraser JA accepted the solicitor’s evidence that if the stay were not granted but his appeal successful he would have no clients because they would have gone to other firms, i.e. even if successful on appeal, he would permanently lose his practice. Fraser JA then accepted that, in those circumstances, the solicitor had demonstrated more than merely the prejudice that any practitioner suffers from striking off or suspension. His Honour had regard to the public interest considerations, particularly those flowing from the solicitor’s misconduct, but found that there were means to mitigate the prejudice to the public interest in the form of undertakings which would enable the solicitor’s firm to remain functioning while limiting his involvement in legal work for clients.
- No part of the QLS decision in the present case impugned the applicant’s honesty, competence or diligence in respect of his clients, and there is no suggestion that any of his clients were adversely affected as a consequence of the admitted defaults which underpinned the QLS decision. I am satisfied that, in the particular circumstances of this case, the applicant has demonstrated that, in terms of the effect on his particular clients and also his practice and the firm, the prejudice is more significant than that otherwise suffered by any practitioner who is struck off or suspended.
- The relevant public interest goes to the fitness and propriety of practitioners. In the present case, the only cause for concern in that regard relates to maintenance of the integrity of the firm’s trust account. I am satisfied that steps have been taken and will continue to be taken to mitigate any prejudice to the public interest. Not only have processes been taken to put the management of the trust account in order, the Tribunal has received undertakings from Ms Campbell which ameliorate the public interest concerns arising from the applicant’s past defaults.
- Accordingly, I am satisfied that, upon Ms Campbell’s undertakings, there ought be an order staying the QLS decision of 31 October 2019.
- I will hear the parties as to the necessary orders to give effect to this decision and for the future conduct of the principal review proceeding.
 King v Queensland Law Society Incorporated  QCAT 489 at .
  QCAT 489.
 Queensland Civil and Administrative Tribunal Act 2009, s 22(4).
 Deputy Commissioner Stewart v Kennedy  QCATA 254.
 Cook’s Construction v Stork Food Systems (Aust) Pty Ltd  2 Qd R 453.
 Re Griffiths Griff-Air Helicopters Pty Ltd v Civil Aviation Authority (1993) 31 ALD 380; Re Pelling and Secretary Department of Aviation (1984) 5 ALD 638.
 Legal Services Commissioner v Baker (No 1)  2 Qd R 107, 118 per Chesterman J.
 Legal Services Commissioner v Baker (No 1)  2 Qd R 107, 119 per Chesterman J.
 Legal Profession Act 2007, s 3(a).
 QCAT Act, s 20(2).
 Legal Services Commissioner v Baker (No 1)  2 Qd R 107 per Chesterman J at .
 Legal Services Commissioner v Madden  QCA 52 per Fraser JA at p 6.
  2 Qd R 107.
 At .
 Legal Services Commissioner v Lawrence  QCAT 206 at .
 Legal Services Commissioner v Madden  QCA 52 at p 7.
  QCAT 489.
 At .
  QCA 52.
- Published Case Name:
McCormick v Queensland Law Society Incorporated
- Shortened Case Name:
McCormick v Queensland Law Society Incorporated
 QCAT 380
18 Dec 2019