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Queensland Judgments

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Legal Services Commissioner v Sheehy  
Unreported Citation: [2018] QCA 151
EDITOR'S NOTE

In this case, which concerned disciplinary action taken against a solicitor for her conduct of a conveyancing matter, the Court of Appeal considered the principles which apply where A and B jointly agree to sell land to C, and C refuses to perform. The question which arose was whether A was entitled to continue with the contract, notwithstanding that B had purported to terminate on account of C’s breach. The Court of Appeal, applying the principles in Lion White Lead Ltd v Rogers (1918) 25 CLR 533, held that the answer to this question was “no”, and that the solicitor who acted for A had engaged in unsatisfactory professional conduct by taking steps to complete the contract over the objection of B.

Philippides and McMurdo JJA and Douglas J

29 June 2018

This matter arose in the context of disciplinary action taken against the respondent, a legal practitioner, in respect of her conduct of a conveyancing matter. [2]. The Queensland Civil and Administrative Tribunal dismissed the application. [2]. The Legal Services Commissioner appealed. [2].

The respondent acted for Mrs Brander, who was one of two sellers under a contract of sale of land. [3]. The other seller was Mrs Brander’s former husband, Mr Brander. [3]. Settlement of the contract was adjourned until 13 February 2009. [11]. On 13 February 2009, the solicitor for the buyer advised the respondent and the solicitor for Mr Brander that the buyer was not in a position to settle on that day and requested an extension until 17 February 2009. [13].

The respondent advised that her client, Mrs Brander, would agree to the extension. [13]. However, Mr Brander did not agree to the extension. [14]. On 17 February 2009, the solicitor for Mr Brander wrote to the solicitor for the buyer terminating the contract upon the basis that the buyer had not settled on 13 February. [16]. A copy of this correspondence was also sent to the respondent. [16].

On the same day, the respondent wrote to the solicitor for the buyer, copying in the solicitor for Mr Brander, noting the purported termination by Mr Brander. [18]. In this letter, the respondent also stated, noting the buyer was ready, willing, and able to settle the contract, that her firm was willing to accept the balance of the purchase monies to be paid into its trust account. [18]. The balance of the purchase price was transferred to the respondent’s trust account that afternoon. [19]. Mr Brander maintained that he had terminated the contract, and when transfer documents were lodged with the Queensland Land Registry, his solicitor lodged a caveat on the property. [21]. The transfer was never registered, the balance of the purchase monies repaid to the buyer, and the lots eventually resold under a different contract. [22].

For the purposes of the disciplinary action against the respondent, a question was whether the contract could be terminated at the election of one, but not both, of the sellers. [26]. McMurdo JA, with whom Philippides JA and Douglas J agreed, referred to Lion White Lead Ltd v Rogers (1918) 25 CLR 533, in which Isaacs and Rich JJ distinguished between a termination of a contract on the basis of a renunciation and a termination for actual breach. [27]–[28]. In a case where A and B jointly agree with C, and before the time for performance arrives C renounces the contract, neither A nor B may terminate the contract without the concurrence of the other. [28]. However, if C commits an actual breach going to the root of the bargain, the contract might be terminated by the unilateral act of A or B. [28]. Either party has the right to refuse to proceed further, notwithstanding the other is content to waive their rights and proceed. [27]–[28].

Applying this to the present case, McMurdo JA explained that when the time for performance arrived and the buyer was unwilling to settle, Mr Brander was entitled to say “I will not proceed further. There is nothing to compel me”. [31]. Mr Brander therefore was able to terminate the contract upon the basis of the buyer’s failure to settle, and this termination was valid and effective. [32].

The substance of the disciplinary action was that the respondent had engaged in unsatisfactory professional conduct in proceeding with the contract for the sale of land when she knew or ought to have known that Mr Brander had terminated the contract or not consented to settlement. [33], [40]. The Tribunal had dismissed the application against the respondent. On appeal, the Court of Appeal held that the Tribunal had fallen into error in not considering s 418 of the Legal Profession Act 2007, which defines unsatisfactory professional misconduct, and by proceeding on an incorrect analysis of the transaction. [42]–[44].

The respondent also argued that there was no unsatisfactory professional conduct in not knowing of the principles from Lion White. [49]. However, this misunderstood the appellant’s case, which was that the respondent “went ahead without a consideration of the legal position between the parties which would be expected of a reasonably competent legal practitioner”. [49]. She conducted no research, and simply went ahead, without first warning the solicitor for Mr Brander, in the belief that the interests of her own client would be best served by doing so.  [49]–[50].

The Court of Appeal held that a reasonably competent legal practitioner would have known or ascertained that she was not entitled to take steps to complete the contract over the objection of Mr Brander. [51]. The appeal was allowed, the decision of the Tribunal set aside, and a declaration made that the respondent had engaged in unsatisfactory professional conduct. [52]. The respondent was also publicly reprimanded and ordered to pay a $1,000 penalty. [52].

J English