Jurisdiction: SUPREME COURT OF WESTERN AUSTRALIA Citation No: [2007] WASCA 8
Court: FULL BENCH
Case No: FUL:145/2004 Heard: 10 & 11 OCTOBER 2006
Coram: STEYTLER P
WHEELER JA
MURRAY J
Delivered: 2007-01-10
No of Pages: 33 Judgment Part: 1 of 1
Result: Appeal dismissed
Category: B
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On Appeal from: Jurisdiction: LEGAL PRACTITIONERS DISCIPLINARY TRIBUNAL
Coram: THE HON B ROWLAND QC (CHAIR), MR B J SINGLETON QC, MS A M LISCIA, MRS V RIVALLAND (COMMUNITY REPRESENTATIVE)
File Number: R 14A-D of 2003, R 15A-C of 2003, R 24A B & D of 2003, R 27 & 28 of 2003
Parties: ANDREW CECIL THORPE
LEGAL PRACTITIONERS COMPLAINTS COMMITTEE
Catchwords: Turns on own facts
Legislation: Legal Practitioners Act 1893 (WA), s 28D(4), s 34A, s 62
Legal Practitioners Disciplinary Tribunal Rules 1993(WA), r 7
Case References: Briginshaw v Briginshaw (1938) 60 CLR 336
Coe v New South Wales Bar Association [2000] NSWCA 13
Council of Queensland Law Society Inc v Roche [2004] 2 Qd R 574
De Pardo v Legal Practitioners Complaints Committee [2003] WASCA 274
Edward v Legal Practitioners Complaints Committee [2006] WASCA 194
Poulet Frais Pty Ltd v The Silver Fox Co Ltd (as trustee for the Baker Family Trust) (2005) 220 ALR 211
A Solicitor v Council of the Law Society of New South Wales (2004) 216 CLR 253
Allesch v Maunz (2000) 203 CLR 172
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424
D'Allesandro v Legal Practitioners Complaints Committee (1995) 15 WAR 198
Minister for Immigration and Multicultural Affairs v Jia (2001) 205 CLR 507
Re Veron; Ex parte Law Society of New South Wales [1996] 1 NSWLR 511
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Last Updated: 2007-03-16
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : FULL BENCH
CITATION : THORPE -v- LEGAL PRACTITIONERS COMPLAINTS COMMITTEE [2007] WASCA 8
CORAM : STEYTLER P
WHEELER JA
MURRAY J
HEARD : 10 & 11 OCTOBER 2006
DELIVERED : 10 JANUARY 2007
FILE NO/S : FUL 145 of 2004
BETWEEN : ANDREW CECIL THORPE
Appellant
AND
LEGAL PRACTITIONERS COMPLAINTS COMMITTEE
Respondent
ON APPEAL FROM:
Jurisdiction : LEGAL PRACTITIONERS DISCIPLINARY TRIBUNAL
Coram : THE HON B ROWLAND QC (CHAIR)
MR B J SINGLETON QC
MS A M LISCIA
MRS V RIVALLAND (COMMUNITY REPRESENTATIVE)
File No : R 14A-D of 2003, R 15A-C of 2003, R 24A B & D of 2003, R 27 & 28 of 2003
(Page 2)
Catchwords:
Turns on own facts
Legislation:
Legal Practitioners Act 1893 (WA), s 28D(4), s 34A, s 62
Legal Practitioners Disciplinary Tribunal Rules 1993(WA), r 7
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
Appellant : Mr S A Shirrefs SC & Mr G R Dean
Respondent : Mr C G Colvin SC & Mr P A Tottle
Solicitors:
Appellant : Dean & Rowick
Respondent : Tottle Partners
Case(s) referred to in judgment(s):
Briginshaw v Briginshaw (1938) 60 CLR 336
Coe v New South Wales Bar Association [2000] NSWCA 13
Council of Queensland Law Society Inc v Roche [2004] 2 Qd R 574
De Pardo v Legal Practitioners Complaints Committee [2003] WASCA 274
Edward v Legal Practitioners Complaints Committee [2006] WASCA 194
Poulet Frais Pty Ltd v The Silver Fox Co Ltd (as trustee for the Baker Family Trust) (2005) 220 ALR 211
(Page 3)
Case(s) also cited:
A Solicitor v Council of the Law Society of New South Wales (2004) 216 CLR 253
Allesch v Maunz (2000) 203 CLR 172
Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424
D'Allesandro v Legal Practitioners Complaints Committee (1995) 15 WAR 198
Minister for Immigration and Multicultural Affairs v Jia (2001) 205 CLR 507
Re Veron; Ex parte Law Society of New South Wales [1996] 1 NSWLR 511
(Page 4)
1 STEYTLER P: I agree with Wheeler JA.
2 WHEELER JA: This is an appeal from decisions of the Legal Practitioners Disciplinary Tribunal ("Disciplinary Tribunal" or "Tribunal") in relation to a number of references concerning the practitioner Mr Thorpe, pursuant to s 29A of the Legal Practitioners Act 1893 (WA) ("the Act").
Background to the References
3 Mr Thorpe ("the practitioner") was the subject of 12 references instituted by the Legal Practitioners Complaints Committee alleging unprofessional conduct. Three were dismissed and nine were upheld. They all relate, broadly, to events in which he was involved concerning the Arthur River Roadhouse and involving two clients, Mr B and Mrs S. Mr B had been, at the relevant time, the manager of the roadhouse and a director of Prudential Holdings Pty Ltd ("Prudential"), which was the proprietor of the roadhouse. Mrs S was the mother of a friend of Mr Thorpe's wife. In 1985, Mrs S had sought advice from Mr Thorpe concerning the estate of her recently deceased father.
4 Mr Thorpe had worked as a real estate salesman and property manager prior to his admission as a solicitor. He had been admitted in December of 1984, and Mrs S had first consulted him in the following year. He was, at that stage, an employed solicitor. He dealt with the executor of Mrs S's father's estate, arranging for the sale of a Sydney residence.
5 He commenced practice on his own account as A C Thorpe & Co in November 1987, and, over the course of 1988, received something over $170,000 on behalf of Mrs S from the estate. A portion of that money was invested in a portfolio recommended by Integral Financial Planners, who had been consulted by Mr Thorpe about the investment of Mrs S's money. In 1989, he instructed a real estate agency to look for a suitable property investment for Mrs S.
6 In January 1990, Mr Thorpe commenced a practice, Duckham Thorpe, with Mr Duckham. They were, it appears, the only two partners in the practice.
7 During 1990, a further portion of Mrs S's money was invested in real property, being medical consulting rooms in Victoria Park. Some of the purchase price was paid by way of a loan secured by a mortgage over the property. It was leased, and Mr Thorpe managed the property on behalf
(Page 5)
of Mrs S. Mr Thorpe mortgaged that property to Westpac in May 1992 to secure the sum of $35,000, and then arranged for its sale in June of 1992. He rendered an account to Mrs S for $6220 in respect of work related to that property in June of 1992.
8 In August 1991, Mr B instructed Duckham Thorpe (dealing with Mr Thorpe only, it appears) to act for Prudential in retaking possession of the Arthur River Roadhouse from a defaulting purchaser of the business and of the freehold. It is common ground that he told Mr Thorpe that he had no money, that his then solicitors had given him the wrong advice, and that his attempts to retake possession had to that date failed. Duckham Thorpe agreed to act for Prudential and to advance moneys to it. Prudential executed a mortgage in favour of Mr Duckham and Mr Thorpe to secure legal costs and moneys to be advanced by Duckham Thorpe from time to time for a term of six months. The mortgage was at an interest rate of 24 per cent, compounding monthly. At about this time, Mr Duckham and Mr Thorpe advanced Mr B $10,000, secured by that mortgage, to purchase stock once possession of the roadhouse had been taken. Mr Thorpe then arranged for Mr B to retake possession of the roadhouse.
9 In 1991, funds were advanced from Mrs S's money in connection with the roadhouse. Further advances were made through to January 1993, and the total sum appears to have been of the order of $97,000. The identity of the person or persons to whom the moneys were advanced is in dispute. One of the references (14B) alleges that Mr Thorpe was guilty of unprofessional conduct by improperly permitting Mrs S to lend to him, or alternatively to Mr Duckham and to Mr Thorpe, that amount, and doing so on an unsecured basis and without any agreed terms as to interest and repayment. That reference further alleges that the moneys were on-lent to Prudential, by either Mr Thorpe or Mr Thorpe and Mr Duckham, on security of a mortgage granted by Prudential in favour of the practitioner and Mr Duckham. Mr Thorpe, however, asserts that he received those sums in his capacity as Mrs S's attorney and trustee, and in that capacity advanced them to Prudential on her behalf. I return to that issue later.
10 A variety of payments of interest were made pursuant to the mortgage by Prudential, and these were, in late 1991 and early 1992, deposited to the Duckham Thorpe Trust Account for the credit of Mrs S. By February through to April of 1992, however, the repayment date had passed without any payment, no further interest payments were made, and Mr Thorpe's requests for payment of interest and principal by Prudential were ignored. Mr B had, by this time, telephoned Mr Thorpe and advised
(Page 6)
him that he had given possession of the roadhouse to Mr B's children and that Mr B had left the premises.
11 In April of 1992, Mr B again contacted Mr Thorpe, advising him of certain concerns about the state of the roadhouse. Duckham Thorpe issued a notice of demand under the mortgage for advances amounting to a little over $44,000 plus interest, and entered as mortgagees in possession of the roadhouse under the terms of the mortgage. They then commenced to run the business, installing Mr B as manager. During the time when Duckham Thorpe were mortgagees in possession, about $58,000 of the total of approximately $97,000 was advanced from Mrs S's funds. They were used to run the roadhouse.
12 In May 1993, Duckham Thorpe paid out a mortgage of the roadhouse to the Commonwealth Bank in the sum of approximately $97,000 and received an assignment of that mortgage from that bank. In April 1993, the roadhouse was sold on a terms contract providing for Duckham Thorpe, as mortgagees in possession, to finance the purchase to the extent of $300,000 at 11.5 per cent interest. The purchaser provided collateral security by way of an equitable mortgage over property in Carnarvon. In May 1993, Duckham Thorpe rendered an account for costs in relation to the sale of the roadhouse in the sum of $14,250. Possession of the roadhouse was given to the purchaser in the same month.
13 In August of 1993, Duckham and Thorpe ceased to practise in partnership and Mr Thorpe commenced practice again on his own account. In December of 1993, Duckham and Thorpe arranged a mortgage of the roadhouse to Prudential, receiving $150,000 which, together with the terms payments received from the purchaser of the roadhouse, was used to repay the sum of $97,700.45 plus interest advanced by Mr Duckham and Mr Thorpe in order to pay out the mortgage to the Commonwealth Bank. The sums received in December 1993 were also used to pay sums of approximately $11,000, being the balance of legal fees owing to Duckham Thorpe and a further sum of over $35,000, being described as a "legal cost" to Duckham Thorpe. The mortgage to Duckham Thorpe over the roadhouse was, at that time, discharged.
14 Further payments from the purchaser of the roadhouse were received pursuant to the terms contract between 1993 and 1996 by Duckham and Thorpe, and final settlement under that contract occurred in early 1996.
(Page 7)
15 When the final settlement of the roadhouse sale occurred, two amounts were shown as owing to Mrs S, in a statement provided by the practitioner to her, which statement was apparently intended to cover the period 30 June 1995 to 30 June 1997. One amount under the heading "Current Assets" was for $60,634, described as "Prudential Holdings Pty Ltd (in recovery)". A further amount of $45,000 was secured by a mortgage over a property in Bassendean. That was apparently a mortgage which the person entitled to ownership of that property had given in order to secure costs due to Mr Thorpe in relation to a matter unrelated to any of these transactions. The mortgage was not able to be registered because the property was not at that time in the name of that other client.
16 Through a complex series of transactions, the Bassendean property mortgage was subsequently replaced with another mortgage over a property in Maylands, being a property purchased by another person for the purpose of undertaking a development with the practitioner.
17 Following that series of transactions, it does seem, as the Tribunal found, that there was approximately a $105,000 shortfall when the roadhouse sales were completed, that all others whose funds had been contributed to mortgages over the roadhouse had been paid out, but that Mrs S had not.
18 The statements provided to Mrs S, which were in evidence before the Tribunal, are very difficult to understand, and cannot readily be married up with events in the chronology, to the extent that there is an agreed chronology. By way of example, I note that the statement dated 30 June 1995 shows a mortgage on the Arthur River Roadhouse with principal and interest owing as at 30 June 1995 in a sum exceeding $134,000. After deducting from that and the other assets of Mrs S (totalling a little over $139,000) moneys said to have been advanced by Duckham Thorpe and costs not billed, there is what is described as a "nett [sic] position (approximately)" of $112,235.67. In the statement dated 30 June 1997, two years later, there is an "opening balance" of $112,235.67, and an entry for notional interest of $11,223.57. Calculation reveals that that sum is 5 per cent simple interest applied to the opening balance. It is not clear why the interest was calculated only on the net position as at 30 June 1995, rather than on the balance outstanding on the loan from time to time. Nor is it clear where the figure of 5 per cent simple interest comes from.
19 In a statement as at 31 December 1998, there is no reference to any mortgage, but the major asset is said to be a "loan at 6 per cent on one
(Page 8)
month call" of $100,000. What transaction this is referable to does not appear, although the appellant's chronology, in an entry which is not agreed, asserts that he had, at some date prior to 31 December 1998, arranged for $100,000 of Mrs S's funds "to be treated as secured" over the property in Maylands. There is also an entry for a "residual debt" in relation to Prudential of a little over $8000.
20 A variety of statements issued to Mrs S dated February and November 2000 show a "loan balance" of $97,485, together with the "residual debt" to Prudential. A covering letter dated 30 November 2000, which apparently accompanied what was entitled a "statement to 30 September 2000", contained the note that "the loan principle [sic] is repayable on three months notice". There is no reference in the covering letter to any interest. It is not possible to discern how a loan of $100,000 at 6 per cent on one month's call becomes an amount of a little over $97,000 on three months' notice with the position in relation to interest on that loan being a mystery.
21 I mention these matters because they are an illustration of the opaque nature of the practitioner's records. This lack of clarity in the records was not supplemented by evidence from the practitioner, save for certain evidence which I shortly discuss. That, in part, explains why it is that the Tribunal appears to have made findings having a level of generality, rather than detailed findings about particular transactions occurring in a particular way on particular dates.
22 The evidence which the appellant did give, was given before these references were formulated and was given to the Legal Practitioners Complaints Committee ("Complaints Committee"). The evidence came about as a result of correspondence from 2001 through to 2002, between the Law Complaints Officer and the practitioner, concerning his dealings with Prudential and with Mr B. That correspondence did not relate to Mrs S. Those inquiries, and the responses to them, caused the Complaints Committee to issue a summons to give evidence to Mr Thorpe on 16 September 2002. That summons required him to attend and to answer such questions as the Complaints Committee might think fit, touching on four issues. Those issues were:
(1) Whether there was a possible conflict of interest in taking a mortgage over the roadhouse to secure Duckham Thorpe's legal costs;
(2) whether the practitioner had grossly overcharged Prudential for legal services rendered to that company;
(Page 9)
(3) whether the practitioner had complied with s 34A of the Legal Practitioners Act 1893 (WA) ("the Act") in relation to amounts paid out of his trust account in respect of costs incurred in relation to Prudential; and
(4) whether funds held in trust for Prudential had been improperly applied.
23 The practitioner was examined pursuant to the summons on 25 September 2002. His evidence was that he had a conversation with Mr B in relation to Mr B's attempts to retake possession of the roadhouse, that Mr B asked if Mr Thorpe could lend him some money, as Mr B had none, and that he told Mr B that "Duckham Thorpe were prepared from their own and various other resources to advance sufficient moneys" to permit Mr B to get back into the premises and to fund a variety of steps that would be necessary. He later explained in his evidence that certain trust account ledger cards which he was shown, which had the name "Prudential" on the top of them, were not intended to signify that the money referred to on those ledgers was Prudential's money, but that the moneys were that of Mr Duckham and Mr Thorpe as mortgagees in possession. He said there was an obligation to account to Prudential for them "at the end of the dealing".
24 Following the September 2002 examination, and before the hearing resumed, the Law Complaints Officer wrote to Mr Thorpe, asking for his advice in relation to a number of matters. One was that he "provide a list of the persons or companies from whom you and/or Mr Duckham borrowed money" in respect of the subject matter of the inquiry, that being, of course, the dealings in relation to the Arthur River Roadhouse. In response to that request, the practitioner advised, on 6 January 2003, that one of those persons was Mrs S, from whom he said he had borrowed "various amounts" from 1992.
25 He then gave evidence on 3 April 2003. That evidence was consistent with what he had said at the earlier hearing and with his written response to the Complaints Officer. He was adamant that Mrs S was not owed anything by Prudential, and that, although there was in existence a document which suggested that she was owed money by Prudential, he produced that only so that Mr B would appreciate "that there was a third party to whom Duckham and Thorpe owed money". He repeated, on numerous occasions, in the face of cross-examination designed to clarify that precise issue, that the mortgage was a mortgage in the name of Duckham Thorpe and that it was Duckham Thorpe, and not Mrs S, to whom Prudential owed the moneys. More precisely, he said that
(Page 10)
Duckham and Thorpe, as mortgagees in possession, were owed money by Prudential, and that any statements which appeared to show a debt to Mrs S merely indicated the original source of the moneys. He said that Mrs S's moneys were advanced to Duckham and Thorpe, but that he had no recollection of any documents being prepared to record that transaction.
26 He conceded that Mrs S did not receive any security either from the practitioner or from Prudential, or from anyone else, for the moneys which she had loaned to the practitioner and to Mr Duckham. Once Duckham and Thorpe became mortgagees in possession, he said the procedure was that Duckham and Thorpe, as mortgagees in possession, incurred various liabilities; those liabilities were paid by cheques drawn on the Duckham Thorpe Trust Account and debited to a trust ledger in the name of Mrs S.
27 All of the evidence I have described above was placed before the Disciplinary Tribunal, which was able to receive it in relation to these references. Section 28D(4) of the Act, which was in operation at the relevant time, provided that the Disciplinary Tribunal was not bound by the rules of evidence, but could inform itself in any manner it considered just.
28 Against that background, I turn to the individual references and the grounds of appeal in respect of each of them. They fall into two main groups. One group deals with Mrs S and the other with Mr B and Prudential.
References concerning Mrs S
Reference 14B
29 This reference was in the following terms:
"1. improperly permitting his client … , to lend to him alternatively to Bruce William Duckham ('Duckham') and himself not less than $97,152.14 during the period 30 August 1991 to 13 January 1993 on an unsecured basis and without any agreed terms as to interest and repayment;
2. preferring his personal interests to those of the client by permitting the client to lend to him, alternatively to Duckham and himself, on an unsecured basis, and the
(Page 11)
practitioner, alternatively the practitioner and Duckham, on-lending those funds to Prudential Holdings Pty Ltd ('Prudential Holdings') upon the security of registered mortgage E680896 granted by Prudential Holdings in favour of the practitioner and Duckham, without the client's actual knowledge or consent and without informing the client of the opportunity for her to advance funds to Prudential Holdings on a secured basis."
30 Save for the reference to the particular sum of money, par 1 reflected the practitioner's evidence to the Complaints Committee.
31 The particulars to par 2 of this reference alleged that, between August 1991 and January 1993, Mr Thorpe permitted Mrs S to lend to him, alternatively to Duckham and himself, not less than $97,152.14; that the amounts were then on-lent by Thorpe, or alternatively Thorpe and Duckham, to Prudential upon the security of a registered mortgage; that Mr Thorpe did not advise Mrs S that she should obtain independent legal advice concerning the transaction, or that the loan was a personal loan without security; that no documents were prepared by Mr Thorpe recording the terms of any of the loans; that there were no agreed terms as to interest or repayment; and that at no time did Mr Thorpe inform Mrs S that he had made the loans to himself, or alternatively to Duckham and himself. These particulars largely reflect Mr Thorpe's evidence to the Complaints Committee.
32 In its reasons, the Tribunal set out a general history of events in chronological sequence at pages 2 through to 5 inclusive. It then turned to deal with each reference. In relation to this reference, its findings were as follows:
"The gist of Reference R14B is that Mr Thorpe arranged that Mrs S would lend to him up to $100,000.00 on an unsecured basis and the funds were then on lent to Prudential Holdings on a secured basis. In the end, the Practitioner in his Answer seems to accept that position although, as indicated, it now appears to be inconsistent with what he was saying earlier to the Complaints Committee and to his statements to Mrs S indicating that outstanding money on the sale of the Roadhouse was a debt due to her by Prudential Holdings.
However, it is quite clear from the correspondence we have seen and from the way in which the monies were dealt with by
(Page 12)
the Practitioner that the Practitioner was simply using Mrs S as a banker for whatever arrangement he and his partner had with Prudential Holdings. In the event we believe that the item No. 2 in this Reference is established. Even if that is not so, then clearly item No. 1 is established. It was improper in all the circumstances as we have found them to be for Mrs S to be permitted to lend monies to the Practitioner and his partner, without any security, terms and most importantly, without any understanding of what was to occur. Mrs S was certainly never told the true situation which in either case also disclosed a gross undisclosed conflict of interest."
33 It is fair to say that the Tribunal's reasons are, overall, not entirely satisfactory. They are expressed, generally, in conclusionary terms, and do not identify with any particularity the transactions upon which the Tribunal relied, or the documents or oral evidence proving those transactions. This flaw is cured only in part by the general survey of the history of the transactions which introduces the reasons. However, it must be said also that the gist of many of the references could be proved largely by relying upon the practitioner's own evidence to the Complaints Committee. His written Answers to the various references consisted largely of bare assertions, and his case before the Tribunal was not conducted in a way which attempted to explain the fragmentary and unclear documentary record. The Tribunal may well have had difficulty in understanding (as I do) precisely what the practitioner sought to put in issue.
34 It is desirable to note also at this point, that the written submissions in support of the grounds of appeal are, in almost every case, obscure. Many assertions are made in a very general fashion and without any reference to evidence or other materials upon which reliance is placed to support those general assertions. An example of this difficulty is par 1 of the submissions, relating to reference 14B, in which it is submitted that, on all the evidence, it was not open to the Tribunal to be satisfied that Mrs S's moneys were lent to the appellant, or to the appellant and Mr Duckham. The submission continues: "Reliance is placed on inter alia the appellant's Answer to this Reference, the documentary evidence and [Mrs S's] evidence." The "documentary evidence" in the green appeal books runs to over 600 pages, and while portions of it were touched on during the oral submissions relating to this ground, it is not possible to glean from any of the appellant's submissions a coherent picture of precisely what evidence it is which the appellant submits made it
(Page 13)
impossible for the Tribunal to be satisfied that Mrs S's moneys were dealt with in the manner described.
35 While this appeal is by way of "rehearing", that does not mean that an appellate court simply recanvasses the whole trial. Its function is to correct error, and the grounds of appeal should specify the error: Poulet Frais Pty Ltd v The Silver Fox Co Ltd (as trustee for the Baker Family Trust) (2005) 220 ALR 211 at [45]. These grounds, by and large, do not, and the submissions often add little.
36 The course I propose to take in relation to this reference, and in relation to the others, is therefore as follows. In relation to those grounds in respect of which the appellant's oral submissions make it clear that there is one or more significant issue(s), or piece(s) of evidence on which the appellant relies, I propose to deal with those significant issues, or pieces of evidence. Otherwise, having regard to the evidence and informed by the submissions of the appellant and the respondent, I will simply form a view in each case concerning whether it was open to the Tribunal to be satisfied in respect of the particular reference in question.
37 In relation to reference 14B, the appellant's counsel before us made it clear that the principal thrust of this ground was that the Tribunal erred in reaching the conclusion that Mr Thorpe in his Answer appeared to accept the allegation, and that it was the appellant's case that that error "infected" the entirety of the Tribunal's findings. It is very difficult to see how the Tribunal could have considered that the practitioner's Answer accepted the allegation. The Answer makes it clear that it is the practitioner's contention that he received the various sums not for himself, but in his capacity as Mrs S's attorney and trustee, and that the advances were to be regarded as advances by her not to himself, but to Prudential.
38 It may be that the Tribunal was referring to par 10.4 and par 14 of the practitioner's Answer, which refer to advances of Mrs S's money "to Prudential, and also to the Practitioner and Duckham in their capacities as mortgagees in possession" (my emphasis). It will be remembered that the greater part of the sum advanced was advanced during the time when the practitioner and Duckham were mortgagees in possession, so that to that extent the practitioner was accepting that the moneys had been advanced to him.
39 The Answer also admits that Duckham and Thorpe held a registered second mortgage over the roadhouse, although he asserts that he and Duckham were obliged to exercise their powers under the mortgage for
(Page 14)
the benefit of Mrs S, at least to the extent of her investments. The Answer describes Mrs S as a "proprietor in equity" of the mortgage. Even if Mrs S held an equitable security, as the Answer suggests, that is a less satisfactory security than the clear and simple one of the holder of a legal mortgage. The Answer also acknowledges that the transactions were "not at all times documented in a manner consistent with the arrangement outlined herein", which appears to be an acceptance of at least some degree of lack of documentation of the loan.
40 However, whatever one makes of the practitioner's Answer, it is clear that it does not accept the entirety of the allegation in the reference. Further, the Tribunal's finding in the whole of the sentence commencing "In the end," and concluding "by Prudential Holdings" simply makes no sense. That is because "that position" referred to, whatever its precise meaning, is said by the Tribunal to be apparently inconsistent with what the practitioner said earlier to the Complaints Committee and inconsistent with his statements to Mrs S indicating that the money was a debt due to her by Prudential. These two latter things - that is, the practitioner's earlier evidence to the Complaints Committee and his statements to Mrs S - are inconsistent with each other, so that they cannot both be inconsistent with the practitioner's Answer. The appellant has made out the proposition that the Tribunal has erred in the sentence I have referred to, although the precise nature of the error is not clear, since the finding itself is not clear.
41 However, it does not seem to me that the error complained of flows through to infect the following paragraph of the Tribunal's reasons. The introductory word "However" in that following paragraph is, it seems to me, intended to indicate that, whatever the practitioner's final position, the Tribunal had formed a particular view based on correspondence it had seen and upon the history of dealing with the moneys by the practitioner. It is necessary therefore to consider whether the Tribunal was able to reach that view on the evidence before it.
42 A further substantial aspect of the appellant's contentions in this connection appears to be that the Tribunal placed undue weight on the appellant's previous evidence to the Complaints Committee, and insufficient weight on his Answer. As I noted earlier, his previous evidence to the Complaints Committee, given on oath and at a time when the issue had been squarely raised with him in writing so that he would have an opportunity to consider it, was very firmly to the effect that Mrs S's moneys were lent to Duckham and Thorpe and were on-lent by
(Page 15)
them to Prudential. That evidence was, as I have noted, maintained and repeated in the face of cross-examination directed to the particular issue.
43 The Answer is a document required by the Legal Practitioners Disciplinary Tribunal Rules 1993 (WA), r 7. That rule requires a practitioner, within 14 days of service of a reference, to make a "frank and full answer" and to verify it by statutory declaration. This Answer was verified by statutory declaration.
44 However, although he did file an Answer, the appellant gave no evidence at the hearing of these references. The Tribunal advised the appellant's counsel at the hearing of the reference that the Tribunal had recently, following a Court of Appeal decision from New South Wales, been highly critical of a practitioner for not going into evidence in circumstances of an inquiry of this kind. He was warned that there could be a difficulty in asking the Tribunal to draw inferences about matters which could well be explained by evidence from the practitioner. The question of the weight to be given to the practitioner's Answer was canvassed by the Tribunal with his counsel, who submitted (correctly, in my view) that the Tribunal should give it whatever weight it regarded as appropriate, and that the fact that the practitioner had not given evidence would go to the weight to be accorded to the Answer.
45 The case to which the Tribunal was referring appears to be Coe v New South Wales Bar Association [2000] NSWCA 13. The facts of that case were somewhat different from the present. The practitioner there had sworn an affidavit in Family Court proceedings, which affidavit was plainly inaccurate, and significantly and substantially so. The question determined by the Legal Services Tribunal was whether the affidavit had been sworn falsely, and knowingly so. The practitioner did not give evidence, although the Tribunal offered him the opportunity to do so on more than one occasion. The Tribunal took the view that, in circumstances where a prima facie case against a legal practitioner has been presented, and where the practitioner wished the Tribunal to accept an explanation as to how the conduct came about, the practitioner had an obligation to meet the situation by explanation on oath. The New South Wales Court of Appeal agreed that the Tribunal was entitled to form the view which it had, and to reason in the way that it had.
46 In the present case, there were certainly circumstances calling for an explanation from the practitioner. Leaving aside the confusing nature of the documentary record, there was the practitioner's own unambiguous evidence on oath on the former occasion. The Answer filed by the
(Page 16)
practitioner did not attempt to suggest how the practitioner could conceivably have reached the views which he had expressed on the earlier occasion, or what, if anything, had caused him to change his mind.
47 In submissions, it was put to the Tribunal that it was quite understandable that, as the earlier hearing was concerned with the practitioner's dealings with Mr B, he might well not have considered sufficiently the nature of his dealings with Mrs S at that time, and that his memory might have been refreshed by more detailed consideration and reference to documents since then. However, that was, in my view, not an explanation which was capable of being proffered from the bar table. If there was an explanation for the inconsistency, it was plainly a matter within the practitioner's knowledge, and it was a matter for him to explain on oath. In my view, the Tribunal would have been justified in placing very significant weight upon the practitioner's earlier evidence.
48 The appellant also complains of the Tribunal's finding that the practitioner was "simply using Mrs S as a banker". There was evidence, however, which the Tribunal accepted, that substantial amounts of moneys received from the roadhouse by the practitioner and paid into his trust account were used to meet expenses of his own, which included his American Express account. That could only have been done if those moneys were his, rather than moneys of Mrs S. The correspondence does indicate that it seems to have been the practitioner's view that he could deal with Mrs S's funds in whatever manner was most convenient to him. A memorandum dated 25 August 1992 to his partner, Mr Duckham, concerning the roadhouse discusses the fact that the roadhouse was currently offered for sale. It includes the following passages:
"The difficulty at the moment that we as mortgagees would be selling the premises for the benefit of Prudential Holdings notwithstanding that they owe us well in excess of $100,000. What we would prefer to do is, if an offer comes in, then prior to accepting it, either we, as mortgagees or our client (Mrs S) buy the whole operation ... ."
49 It is clear that, although the money originally came from Mrs S, the practitioner at that stage regarded it as a debt owed by Prudential to himself and Duckham. It further appears to be the case that he regards it as only a matter of convenience whether the purchase is made by himself and Duckham or by Mrs S. In the same memorandum, there also appears the following:
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"Mrs S has in her own account the sum of $15,000 which in extreme emergency may be drawn upon for the odd thousand. If [Mr B] asks for it you should interrogate him thoroughly as to why it is needed. It would only be in the most exceptional circumstances that we advance further monies on that Roadhouse."
50 It seems to me that the conclusion that the practitioner was using Mrs S as a banker was clearly open, having regard to the way in which moneys were advanced from time to time, the lack of any documentation, the varying ways in which the transaction was described from time to time, and the revealing attitude displayed in documents such as the memorandum to which I have referred.
51 Finally, some complaint seems to have been made about the Tribunal's finding that Mrs S lent money to the practitioner without security "without any understanding of what was to occur". It is pointed out that Mrs S, in her evidence, had said that she understood that the money was to be invested in the Arthur River Roadhouse and that Mr Thorpe thought that that was a good investment. This limb of the argument, in my view, completely misses the point of the reference. It is not suggested that Mrs S was unaware that moneys would be invested in the roadhouse. Rather, what she did not understand was that she was lending to the person who purported to advise her, that she was lending to him without security, that he was secured, and that (as appears later) the investment was a risky one.
52 In my view, it was open to the Tribunal to find this reference made out.
Reference 14D
53 This reference is concerned with a particular aspect of the appellant's conduct concerning what it was that he told - or did not tell - Mrs S, in relation to the provision of her money for the roadhouse. It alleges that he falsely represented to her that he had made advances on her behalf to Prudential, when he well knew that those advances had, in fact, been made to himself, or alternatively to himself and Duckham. The significance of the representation in the context of the practitioner's dealings with Mrs S was that, by representing to her that the debt was due from Prudential rather than from himself, he postponed repayment by leading Mrs S to understand that some form of "recovery" proceedings against Prudential were required before she could obtain the moneys. The
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submissions in relation to this reference largely repeat those in relation to reference 14B, and therefore must fail for the same reasons.
54 There are, however, two additional matters raised in relation to this ground. One is that the Tribunal misunderstood the reference, in that the gist of it was that the practitioner had represented that he had made advances to Prudential, while the Tribunal treated it as an allegation that he failed to inform Mrs S that he and Duckham were responsible for repaying the moneys. There is, in my view, a distinction without a difference raised by this submission. It is the usual, though not the universal, position that the borrower of money is responsible for repaying it. The representations made in this case were, it is clear from the proceedings before the Tribunal, alleged to be representations that moneys had been advanced to Prudential and therefore that Prudential was responsible for repaying them. The accounts and correspondence to which the Tribunal referred did, as the Tribunal put it, represent that Mrs S's moneys "were invested directly in the Roadhouse to be repaid by Prudential Holdings". Implicit in the nomination of Prudential as the debtor was the representation that the money had been lent to that entity.
55 It was also submitted, although, in my view rather faintly, that it was not open to the Tribunal to conclude that the correspondence and accounts contained false representations. Rather, it was submitted that the appellant himself was "unclear as to the legal effect" of the dealings in which he engaged. It was, in my view, open for the Tribunal to draw an inference of falsity from the contrast between the appellant's evidence before the Complaints Committee and the format of the documents which it examined. The appellant did not give evidence to explain his state of mind at all.
Reference 14C
56 This reference read as follows:
"1. [The practitioner] charged professional costs and disbursements to his client … without informing the client of the imposition of those charges;
2. applied moneys held upon trust for the client to the payment of his professional costs and disbursements without having caused a bill of costs to be served upon the client showing that trust moneys had been applied by the practitioner in payment of those costs and
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disbursements, or without otherwise informing the client of the application of those moneys for that purpose.
Particulars
(a) By a power of attorney dated 12 September 1988 the client appointed the practitioner her attorney …
(b) The practitioner caused the following amounts to be applied from moneys held by him upon trust for the client to the payment of his costs and disbursements on or about the dates specified below:
[Eight amounts are specified]
(c) The practitioner did not inform the client of the imposition of the costs and disbursements particularised in paragraph (b) prior to 12 September 1995.
(d) The practitioner did not cause a bill of costs showing that the moneys held by the practitioner upon trust for the client had been applied by the practitioner in payment of the amounts particularised in paragraph (b), or any bill of costs, to be served upon the client in relation to each of the amounts there particularised."
57 The appellant's submissions in relation to reference 14C contain four elements. First, it is alleged that the Tribunal erred in finding the practitioner guilty of the whole of the conduct alleged in the reference when item 1 did not disclose conduct additional to the conduct alleged in item 2. It is correct, I think, to characterise the reference as being directed at broadly the whole of a course of conduct. The allegations are, of course, distinct, in that item 1 is directed to charging of professional costs and disbursements without informing the client (ie, apparently without informing the client at all), while item 2 is more particularly focused upon the application of moneys without either rendering a bill of costs, or otherwise informing the client of the detail of the application of the moneys. It seems to have been clearly understood from the course of proceedings before the Tribunal that the two limbs of the reference were concerned with different ways of particularising the same conduct.
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58 Second, it is alleged the Tribunal erred in finding that the practitioner had admitted all but par (c) of the particulars to item 2, when "in Paragraph 5 of his Answer the Practitioner expressly denied the allegation set out in paragraph (d) ...". This submission depends upon a particular construction of the practitioner's Answer. He did not expressly deny par (d). Rather, he expressly admitted pars (a) and (b) of item 2, denied par (c), and expressly said nothing whatever about par (d). However, it is true that in his Answer he denied applying moneys held on trust without having caused a bill of costs to be served upon Mrs S. The denial is a general one, rather than a denial directed to the particulars of the item in par (b), which items are the concern of par (d).
59 It is, however, correct to assert that the practitioner did not expressly admit par (d) so that the Tribunal's characterisation of his Answer was, to that extent, incorrect. In my view, however, nothing turns upon the error, since it is clear from the remainder of the reasons that the Tribunal's conclusion was based not upon a characterisation of the appellant's Answer, but upon its understanding of the thrust of the appellant's submissions, which were to the effect that he did both render invoices and send them to Mrs S. That was a matter which the Tribunal considered to be in dispute, and which it determined by reference to the evidence.
60 Third, it is asserted that the Tribunal erred in fact and law in finding that "there has always been a clear obligation on a Practitioner to account to a client before deducting monies held on trust for that client for the payment of legal fees". I would accept that the proposition, in the sweeping way in which it was put by the Tribunal, is an overstatement. However, nothing turns on it for present purposes, since there clearly always has been an obligation to account for the deduction of moneys held on trust. The issue in this reference really was whether the practitioner had accounted at all, and the Tribunal found that he had not.
61 Fourth, and most importantly, the appellant submits that the Tribunal erred as a matter of fact in finding that the practitioner had not rendered bills of costs as particularised. It was submitted that Mrs S's responses to questions about whether she had received documents setting out charges for legal fees were, at best, equivocal, and that her memory should not be regarded as particularly reliable, given that she was being questioned about events between 11 and 15 years before. Further, the practitioner had, in his Answer, said that he had served accounts on the client prior to drawing moneys from trust and had produced a number of copy accounts. In those circumstances, it was alleged, in effect, that it was not open to the Tribunal to find that there was nothing to indicate that an account had
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been sent at or about the time the fees were deducted from moneys held in trust.
62 However, while I accept that Mrs S's answers read on the transcript as being equivocal, it is obvious that questions of demeanour in such a case would be of particular importance. To take but one example, Mrs S was asked about an account dated 30 June 1988. A document which was said to have been a file copy of that account was shown to her. She was asked if she recollected getting such a document and said she did not. She was further asked, "But it could have come out under a letterhead at some stage?", and her answer was, "Possibly, but I don't remember it". There are many different ways of uttering the word "possibly". At one extreme, a witness may be understood as indicating that there is a real or significant possibility that an event occurred as suggested, while at the other there will be no more than the acknowledgement of a very cautious witness that, as the common saying has it, "anything is possible" (but with the implication that the witness considers that the event did not occur). It is for the tribunal of fact, having regard to the witness's tone and demeanour and the context in which the answer is given, to determine both what the witness intended to convey, and the truthfulness and accuracy of the witness. The Tribunal clearly understood the evidence of Mrs S as being to the effect that she did not receive any account for legal fees in relation to the management of her finances by Mr Thorpe, and they accepted that evidence as accurate. It was open to them to do so.
63 Finally, in connection with this last submission, I should note that the appellant's submissions in relation to this ground contain the assertion that Mrs S "acknowledged" that she received the account dated 30 June 1988. The evidence to which I have referred makes it clear that she did not.
References 24A and 24B
64 These references are related. They concern relatively small amounts of money which the appellant finally repaid in July of 2003. The background alleged was that Mrs S had, on 12 February 2001, revoked a power of attorney which she had previously granted in respect of funds entrusted to the appellant by her. It was alleged that the appellant knew that Mrs S wanted repayment of all funds invested by him and that she requested an account from him in respect of those funds. There were a number of requests by Mrs S, including one by letter dated 10 July 2002, in which she asked the appellant to make payment of all moneys due to her.
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65 In various documents in which he purportedly complied with this request, the appellant represented a sum of $8334.78 as being a "residual debt" from Prudential, and a sum of $12,000 was represented as an allowance "for taxation liability and contingencies". It is not in dispute that the appellant had been preparing Mrs S's taxation returns for a number of years.
66 In relation to the sum described as "residual debt", the appellant in his Answer asserted that it was a debt owing in relation to moneys advanced by Mrs S to Prudential, and to the appellant and Duckham. That assertion was, of course, tied in with his characterisation of the dealings in relation to Prudential in the earlier references already discussed. He also asserts that he informed Mrs S "as to what was happening" in relation to that sum, and that she made no further request for payment. The Answer does not expressly deal with the question of whether the appellant knew that Mrs S had required repayment of all moneys due to her but, in its reference to there being "no further request", implicitly acknowledges that there had been at least one such request. The appellant's submissions in relation to the "residual debt" essentially echo the contentions in the Answer.
67 In her evidence, Mrs S indicated that she had required repayment at the suggestion of those who were at that time advising her in her financial affairs, that she was not clear about what the "residual debt" represented (which is hardly surprising), and that she did make no "further request" for repayment of that sum. However, in circumstances where the sum was part of money borrowed by the practitioner and Duckham, and where Mrs S had required its repayment, it is hardly an answer to an allegation of unprofessional conduct to assert that, the practitioner having explained in misleading terms "what was happening" in relation to the money, the client made no further request for repayment. It was his duty to repay and he did not, for some considerable time.
68 Reference 24B concerns the sum of $12,000, which, as I have noted, was shown in an account sent to Mrs S as an allowance for taxation and contingencies. It was, in fact, a sum extended by way of vendor finance to the purchaser of the property in Maylands. The transaction involving that property was a complex one. In the end, it appears that the settlement of the sale of the property proceeded on or about 15 July 2002. Nevertheless, on 18 August 2002, the proposed settlement statement provided by the practitioner to Mrs S showed $12,000 as "retained" as an allowance for taxation liability and contingencies. The narrow issue in relation to this reference essentially revolves around the proposition that
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the appellant submits that he did not represent, by providing the settlement statement, that he was holding the money in cash; rather, it was submitted that the "investment" of $12,000 by way of vendor finance was a prudent and sensible way of making an appropriate allowance for taxation and other contingencies. A letter dated 22 August 2002 purported to confirm that the balance of moneys "will be distributed once your taxation affairs are finalised".
69 It appears to me that the Tribunal was entirely correct in its assessment that the correspondence and the settlement statement both did give, and was intended to give, the distinct impression that the $12,000 was actually held in trust for Mrs S.
70 It is also contended, in relation to this reference, that the Tribunal erred in finding that the purchaser of the property was related to the practitioner. One of the purchasers of the property had the same surname as the appellant, but there was no notice to him, and apparently no submission before the Tribunal, that an inference of relationship should be drawn. I accept that it was not open in those circumstances for the Tribunal to find as a fact that the purchaser was related to the appellant. However, the reference does not depend upon there having been any such relationship, and the finding does not appear to form part of the Tribunal's reasons for finding the reference proven, as opposed to being a passing observation. Any finding of relationship could well influence the Tribunal's view as to the seriousness of the unprofessional conduct, but that is a different question from the question of whether unprofessional conduct was made out.
Reference 28
71 This reference has three limbs. The first is that the appellant failed to properly account for the investment proceeds of the moneys paid by Mrs S. That first allegation, in turn, asserts that no accounting was provided from 13 January 1988 to 25 July 1995, that accounts provided after 25 July 1995 were inadequate in certain particulars, and finally that no detailed accounts were provided in the period 30 September 2000 to 30 June 2003. The second limb of the reference asserts that the practitioner borrowed money as trustee "without the informed consent or proper authority" of Mrs S. The third is that he failed to properly and prudently invest the trust moneys.
72 The appellant submits that the Tribunal, in effect, made no finding in relation to the questions of failure to account or informed consent. Although the Tribunal does, in its reasons in relation to this reference,
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find that it is clear that Mrs S "had no idea of the amounts or the nature of the investment", I would accept that there is no clear finding in relation either to unprofessional conduct consisting of failure to account, or unprofessional conduct relating to a failure to obtain informed consent.
73 The Tribunal did find this reference proved in relation to the failure to properly and prudently invest trust moneys. The thrust of its finding is, in my view, contained in the passage in which it is concluded that:
" ... the client's money used to prop up Prudential Holdings was simply not secured and was an entirely ill advised and improvident investment. The fact that Mrs S was prepared to leave matters in the hands of a Practitioner without being concerned to know the detail, surely in our view cast even greater duties of obligation on a solicitor who clearly had the trust of the client, which was that he would act properly and in accordance with the usual duties of a Trustee.
In this case, the Practitioner failed in his obligations in this regard ... ."
74 Because the finding was only in relation to the third limb of the reference, I deal only with the grounds of appeal and submissions which concern that third limb. I do not think it is necessary to deal at length with the assertion that the Tribunal erred in failing to specify the relevant duties of a trustee. It is clear that the Tribunal had in mind such fundamental obligations as the exercise of reasonable diligence and prudence, and keeping proper accounts: see Jacobs' Law of Trust in Australia, 6th ed, ch 17 (esp. at [1713], [1718]).
75 Information about what the appellant knew about the roadhouse business, and about the inquiries which he made before investing in it moneys which he had borrowed from Mrs S, come primarily from the evidence of the appellant to the Complaints Committee, and from some of his own documents which were prepared as funds were injected from time to time.
76 The finding that the roadhouse itself was an imprudent and improper investment is one which leaps from the pages of that evidence. I deal with that matter in a moment. It does not seem to me that any other finding could conceivably have been open to the Tribunal. The appellant, of course, points out that, in the end, the Tribunal's finding was not that money had been directly lent to Prudential, but that it had been lent to the
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appellant himself. There is no direct evidence about the practitioner's financial position.
77 However, the money which the appellant borrowed from Mrs S was borrowed on an unsecured basis by him in order that it could be invested by him in a precarious venture. There is nothing in the materials to suggest either that the appellant had made provision from his own resources to ensure that he was able to repay Mrs S if that venture should fail, or that he was in a position to do so. The complex series of transactions in which he engaged in an effort to "recover" the roadhouse moneys, before Mrs S was finally repaid, rather suggests the contrary.
78 Turning to the roadhouse itself, it is clear that when the appellant first met Mr B and they discussed the roadhouse, Mr B said that he had no money and was "looking down the barrel of losing both the business and the freehold". It was clear that the appellant was effectively his last resort. The appellant said that he "looked at what likely equity there was in the premises" for the protection of both Prudential and Duckham Thorpe (not, it may be noted, the protection of Mrs S), but that in doing so he took Mr B's word "for what he thought the business was worth". At this time, the appellant hardly knew Mr B. There is no suggestion that the appellant had any particular expertise himself in relation to the value of the roadhouse business, and it is plain that he caused no independent inquiry to be made.
79 In 1993, when the appellant and Mr Duckham were "minding the roadhouse", the roadhouse was running at a loss. Nevertheless, substantial further funds, including the funds of Mrs S, were injected into it.
80 When the appellant and Duckham took possession as mortgagees in possession, they had originally intended to sell the property, but did not do so immediately because "the premises were in a shocking state and the business had to be got up and running". It was during the time that the appellant and Duckham were mortgagees in possession that the majority of the funds were obtained from Mrs S.
81 By January 1993, the position had been reached where $1600 of Mrs S's funds had been deposited in the roadhouse account to cover overdrawings. They were described by the appellant in a letter to Mr B as "almost her last monies". It was plain from that letter that the roadhouse was in a very precarious financial position, and the funds were deposited in order to ensure that cheques were not dishonoured.
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82 It is, in my view, beyond argument that both the initial investment in the roadhouse and the injection of further funds as the position deteriorated were imprudent investments. Borrowing money from Mrs S on an unsecured basis in order that the appellant could inject them into a business of that kind was inconsistent with the most basic duties of a trustee.
References concerning Mr B
Reference 15A
83 References 15A - 15C deal with the appellant's dealings with Mr B and with Prudential. Reference 15A alleges unprofessional conduct in that the appellant placed himself in a position of conflict of interest and duty in agreeing, together with Duckham, to take a mortgage over the assets of Prudential to secure, inter alia, legal costs proposed to be charged by the practitioner and repayment of advances proposed to be made by the practitioner and Duckham to Prudential, without having obtained Prudential's fully informed consent. The reference alleges that, prior to the grant of the mortgage, the practitioner failed to advise Prudential to seek independent legal advice regarding the grant and terms of the mortgage, failed to advise Prudential of the conflict of interest and duty and failed to obtain the fully informed consent of Prudential to that conflict.
84 The appellant, in his Answer to the reference, made essentially two points. First, he claimed that it was his usual procedure to obtain a letter of engagement which would have included specific advice relating to the desirability of independent legal advice. He purports in his Answer to recall that such a document was, in fact, prepared. Further, he asserted that, in any event, as a matter of practicality, Mr B was an experienced commercial person, that the conflict was self-evident and that, because of the urgent need for legal services and for funding for Prudential, it would have been impracticable and possibly not financially feasible for Mr B, on behalf of Prudential, to have obtained independent advice.
85 The Tribunal accepted Mr B's evidence that he was not told to seek legal advice. It did so apparently for a number of reasons. First, that was his evidence. Second, it was clearly the case that he did not seek independent advice. Third, the practitioner's earlier evidence at the hearing before the Complaints Committee was that he could not remember whether he advised Mr B to seek independent advice. That was not entirely consistent with his Answer to the reference, and he did not give evidence to explain the difference. Finally, although the appellant's
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counsel submitted to the Tribunal that the "usual procedure" would have indicated that there would have been a letter of engagement referring to the desirability of independent legal advice, no such document had been located. That appears to me to be a finding which was open to the Tribunal. Although the appellant's counsel submitted, in effect, that insufficient weight had been given to the appellant's assertion in his Answer that he believed there had been a letter of engagement containing the relevant advice, and gave insufficient weight to the evidence which reflected adversely on Mr B's character and credibility, these were both matters of weight. The Tribunal was clearly aware that, as it said, Mr B's "business arrangements and ethics are not particularly edifying".
86 It was further submitted that, even if advice concerning the existence of the conflict and the desirability of independent legal advice was not given, it did not amount to unprofessional conduct in the circumstances, essentially for the reasons outlined in the appellant's Answer. The appellant refers also in this connection to s 62 of the Act, which provides that a practitioner may take security from a client, or any other person, for future services, fees, charges or disbursements. However, the fact that it was possible, or even likely, that Mr B would choose not to seek independent advice, does not have the result that the failure to give it was not professional misconduct. The "gravamen of the ethical breach" was the failure to advise Mr B that he should seek it: see Council of Queensland Law Society Inc v Roche [2004] 2 Qd R 574 at [12] and [13].
87 I should note that even the appellant in his evidence conceded that there "might have been a problem" so far as the mortgage was concerned. It is difficult to see how there could be any other view, given that Mr B had told the appellant, in effect, that he was desperate and that the interest rate was 24 per cent, which is high even by the standards of the day. In any event, as the respondent points out, the risks about which Mr B should have been warned materialised, in the sense that the initial loan under the mortgage of around $44,000 led, over time, to significantly greater liabilities. The proceeds of sale of the roadhouse, of over $300,000, ultimately resulted in no return to Mr B, despite the mortgage having been for a much smaller amount.
88 Finally, I should note the submission that the Tribunal took into account irrelevant considerations - namely, the fees charged to Prudential and the state of the appellant's accounts. They are not directly relevant, and the Tribunal did not explain precisely why it referred to those matters. However, they do shed light on the clear potential for conflict of interest
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which existed. It was, as the Tribunal noted, difficult to assess what the fees charged to Prudential were for, and the appellant's books of account do not shed much light on that question. Once Mr B had entered into the mortgage arrangement with the appellant, however, there was obviously a practical difficulty for him in doing anything which might impair that relationship, such as requiring proper accounts or seeking independent advice concerning the appellant's fees.
Reference 15B
89 This reference alleges that the appellant was guilty of unprofessional conduct in charging grossly excessive fees for the period April 1992 to March 1996. The fees charged were a total of not less than some $62,000. The practitioner's Answer identified an amount of work, which he claimed justified the fees. He also claimed that there was a written agreement made on or about 13 August 1991, which justified those amounts, although no such agreement was ever produced.
90 The appellant's Answer further asserted that a substantial portion of the sum related to work done by the appellant and, to a lesser extent, Mr Duckham, in their capacities as mortgagees in possession. So far as the mortgagees in possession work was concerned, it should be noted, however, that Mr B and his children were running the roadhouse on a day-to-day basis, and that the mortgage was discharged on 23 December 1993; it is therefore not clear how the appellant and Duckham were able to charge as mortgagees in possession thereafter. It should further be noted that a proportion of the work described in the Answer as justifying the fees was not legal work.
91 The ground of appeal in relation to this matter simply asserts that there was no evidence to support the finding that the practitioner had charged grossly excessive amounts. It is true that the state of the appellant's records was such that it was not possible to ascertain with any precision what it was that the appellant had done in relation to any of the amounts charged as fees. As the Tribunal noted, documents discovered on the appellant's file, and supported by statements of account and sums received, cannot be reconciled with what is available from the appellant's books of account. There were no detailed accounts produced in relation to any of the sums claimed.
92 The Tribunal expressly noted that the onus was on the Complaints Committee to establish on the balance of probabilities (referring in this context to Briginshaw v Briginshaw (1938) 60 CLR 336) that there had been grossly excessive fees charged. The Tribunal noted, and apparently
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accepted, the submission from counsel for the Complaints Committee that the sums charged equated to some 294 hours of professional time at the rate of $235 per hour, that being the rate generally applicable pursuant to item 9 of the schedule to the Solicitors' Remuneration Order 1991 at the time. The Tribunal noted that the appellant had failed to take the opportunity to explain the apparent absence of proper management of trust moneys and proper accounting, in a situation where "the evidence produced to the Tribunal demands an explanation to [sic] the many discrepancies that are established on the evidence". The Tribunal also took the view that, having regard to the relevant scale, the appellant's remuneration "could not ... total anything even remotely approaching the total figure charged".
93 It is not a reversal of the onus of proof, as the appellant asserts, for the Tribunal to have taken the view that the state of the practitioner's accounts, and the absence of any apparent explanation for the way in which the fees had been arrived at, was such as to demand an explanation, and therefore to consider that an adverse inference might be drawn against the appellant from his failure to provide such an explanation. So far as the total amount of the fees was concerned, the Tribunal is, of course, a body which is entitled to rely upon its own expertise. That is one of the principal reasons for the establishment of a disciplinary body consisting largely of persons with experience in the profession in question. The expertise of the former Legal Practice Board, and the weight to be given to its views in relation to excessive charging, were discussed in De Pardo v Legal Practitioners Complaints Committee [2003] WASCA 274 at [8] - [23]. Those observations are, in my view, equally applicable to the Tribunal.
94 The Tribunal correctly expressed the onus of proof, and there was material available to it which left it open to the Tribunal to find that that onus had been discharged by the Complaints Committee.
Reference 15C
95 This reference alleged a failure to account for the disposition of the proceeds of the realisation of the assets of Prudential. It is asserted in the reference that, between August 1993 and April 1996, the appellant deposited moneys into his trust account, which included part of the proceeds of sale of the assets of Prudential. It is asserted that, between August 1993 and May 1996, the appellant drew moneys from the trust ledger account titled "Prudential" for his own use.
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96 The appellant asserts that that ledger was actually a ledger of himself and Duckham as mortgagees in possession, not a ledger detailing sums deposited in trust for Prudential, but does accept that there was a duty to account to Prudential. He paid a significant number of personal expenses, including his credit card bill, from those sums.
97 The reference also alleges that, throughout 1994 to 1996, the appellant prepared and forwarded statements of account to Prudential which were inconsistent with one another, and which failed to explain adequately the debts claimed by the appellant, or the appellant and Duckham, and failed to explain adequately the amounts received by the appellant and Duckham from the sale of the assets and the disposition of those amounts. Further particulars were provided, which asserted that it was impossible to ascertain from the statements and documents annexed to the reference precisely what receipts there were in respect of the sale proceeds, and what payments were made out of the realisation of those assets in respect of costs, in respect of repayments of moneys allegedly due to the appellant, and in respect of repayments of sums allegedly due to third parties. It is asserted that it is also impossible to ascertain from those documents the basis upon which payments were made to various third parties identified in the bundle.
98 The appellant admitted certain particulars of the reference, including, as I have noted, the assertion that funds were withdrawn from the Prudential ledger for his private purposes. Otherwise, in relation to the particulars, the appellant's Answer asserted that "the Practitioner's position is that any discrepancies are not so substantial as to constitute professional misconduct", and he went on to explain particular discrepancies alleged to exist between certain of the statements of account. The Answer does not deal at all with the assertion that it was, in effect, impossible to ascertain what sums had been received, and why payments had been made, save that it asserts that the documents in the bundle (which were, as I have noted, alleged not to provide this detail) had been provided to Mr B and that Mr B "took no issue" with them. The appellant asserted that he was "now unable to give informed explanations" in relation to those matters.
99 The Tribunal's reasons were brief in relation to this reference. It is difficult, however, to see how it could not have found the reference proved in the light of the documents supplied to it, and the appellant's "explanation" for them. It was, in effect, conceded that it was not clear from those documents how the proceeds of the sale of the roadhouse had been disposed of. As the respondent put it to us, there is no basis in them upon which it can be determined how Prudential went from a position
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where it owned the roadhouse and owed about $100,000 to the Commonwealth Bank, to a position where the roadhouse was sold, with Duckham Thorpe receiving approximately $320,000 and Prudential receiving nothing. The gist of the appellant's Answer to the reference appears to be that he thought the documents he provided were all right at the time, and that he is now not able to provide further detail. It has, then, been established that the appellant did not properly account at the time and that it is now apparently impossible for him to do so. Whatever the appellant's belief, it is difficult to see a fundamental failure to account of this kind as being anything other than unprofessional conduct.
Ground 10 - Report to Full Court
100 Ground 10 of the appeal alleges that the Tribunal was in error in concluding that it was an appropriate case for a report to the Full Court. The submissions in support of the ground essentially repeat and assert that the Tribunal gave insufficient weight to a variety of factors. Those factors were the age of the complaints, and the apparent unlikelihood of repetition, having regard to the fact that the appellant was not engaged in similar work, was not practising on his own account, and was not handling client moneys. It is also asserted that the Tribunal placed insufficient weight on evidence from other practitioners of the appellant's honesty, integrity and professional capacity, and, in particular, placed insufficient weight upon evidence of his remorse. It is further submitted that the Tribunal erred in concluding that the appellant had not been helpful during the course of the enquiry.
101 The short answer to this ground is that it is an error to assume that the Tribunal may only report to the Full Court where it is of the view that it is appropriate, in all the circumstances, that the practitioner's name be struck from the roll, or that the practitioner otherwise be punished in a way which is not available to the Disciplinary Tribunal. That issue was canvassed in Edward v Legal Practitioners Complaints Committee [2006] WASCA 194. Although that case concerned s 185 of the Legal Practitioners Act 2003 (WA), the conclusions expressed in it appear to me to apply equally to s 29A of the Act, which was in generally similar terms.
102 In the present case, the Tribunal clearly took the view that the appellant's conduct was grave and that view was open to it. It referred to the matters of mitigation, and appeared to accept that they were, indeed, mitigating. It will be for the Court, in dealing with the report, to form its own view about the existence and weight of any mitigatory factors and to
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form its own view as to whether the appellant should be struck from the roll.
Costs
103 Finally, it is asserted in ground 11 of the grounds of appeal that the Tribunal erred in ordering the appellant to pay the costs of the Complaints Committee, "without taking into consideration that the Practitioner had successfully defended three references; some of the particulars in other references had not been made out; and a fourth reference had been withdrawn by the Complaints Committee at the commencement of the hearing". The submission is that the costs "at the least ... should have reflected the proportions in which the matter succeeded".
104 The Tribunal clearly had a discretion in relation to the award of costs. The usual principles in relation to interfering with the exercise of such a discretion apply. The whole of the appellant's argument in relation to this issue appears to be simply that the Tribunal did not express any reasons for the order it made in relation to costs. It is not clear that it was asked to exercise its discretion in any particular way. We were not taken to any submissions made to the Tribunal about the issue of apportionment of costs. If it was not suggested to the Tribunal that costs should not simply follow the ultimate event, then there would appear to be no basis for reconsidering the Tribunal's decision.
105 However, for present purposes, I am prepared to assume that the Tribunal was asked to exercise its discretion so as to apportion costs.
106 The appellant's submission simply comes down to the proposition that, where the appellant was successful in relation to some references and unsuccessful in relation to others, costs should be awarded so as to reflect the proportion between his successes and his failures. That submission does not take any account of issues such as the amount of time taken by the references in relation to which the practitioner was successful, as opposed to those in relation to which he was not successful, and whether there would have been any real saving in time, had the references in relation to which the appellant was successful been omitted entirely from the Tribunal's consideration.
107 The respondent's submission was that the references that were not upheld were of "limited evidentiary compass", relating to co-operation with the Tribunal answers and responses. It does not appear to me that they were matters in relation to which there was any substantial distinct amount of costs which could have been attributed, so as to justify an
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apportionment. The only issue which could perhaps be characterised in that way was reference 14A, which related to the failure of the appellant to register a transfer of mortgage. However, the various transactions involving the Maylands property were matters which it would have been necessary for the Tribunal to have before it, in any event. It was, in my view, open to the Tribunal to take the view that there should be no apportionment.
Conclusion
108 I would dismiss the appeal.
109 MURRAY J: I agree with Wheeler JA that the appeal should be dismissed. I have nothing to add to her Honour's comprehensive reasons.
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