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Appeal by practitioner dismissed – conflict of interest

The recent case of Staffa v Legal Profession Complaints Committee [2022] WASCA 831 emphasised the consequences a practitioner may face when there is a failure to identify and deal with a clear conflict of interest.

Background

In December 2020, the State Administrative Tribunal of Western Australia directed a report to the Supreme Court with a recommendation that Mr Staffa’s name be removed from the roll of practitioners. This recommendation followed disciplinary proceedings brought by the Legal Profession Complaints Committee, where Mr Staffa was found to have engaged in professional misconduct and unsatisfactory misconduct (read a discussion of this case).

Mr Staffa sought leave to appeal on six grounds, four of which related to the findings of professional misconduct, and two of which related to the tribunal’s decision to report to the Full Bench. Five grounds of the appeal were found to have no merit, and the other was dismissed. The tribunal’s findings were upheld and the recommendation to the Supreme Court remained materially unchanged.

Issues considered

Grounds of appeal 1

It was challenged that the tribunal was in error to conclude Mr Staffa acted for his client (the company) at the time he advised the other client (W), and further, that he did not have the informed consent of both. There was no error found in that, at the time of advising W, Mr Staffa was still acting for the company; the fact that Mr Staffa only dealt with, and acted in the interests of W during that period did not negate the existence of his conflict of duty.2

As the court pointed out, Mr Staffa had less than two weeks earlier advised the company on the same matter and it was clear he should have declined to provide any advice to W in relation to his rights against the company. His retainer with the company remained in place.

Mr Staffa relied on what was described as a “long standing conflict” between interests of the company and W, such that he had their informed consent to act. However, as the tribunal correctly found, the circumstances of those years previous were entirely different from, and could in no way be understood to extend to circumstances at present.

At paragraph [114], the court noted:

It does not, or at least it should not, take a prescribed rule of conduct to recognise that to advise W in those circumstances was redolent of disloyalty and conflict of duty.”3

Grounds of appeal 2 and 2A

Mr Staffa’s submissions of appeal 2 and 2A challenged that he was guilty of professional misconduct, by knowingly advising W to transfer money from the company’s bank account to a personal account in anticipation of W’s entitlements upon the termination of employment.

Mr Staffa focused primarily on the absence of any relevant rule in the Legal Profession Conduct Rules 2010 (WA) proscribing that conduct, however, the court found him to misunderstand the very nature of lawyers’ professional and ethical duties. The court accepted that he acted negligently in this regard, instead of acting knowingly.

Grounds of appeal 3

The conclusion that Mr Staffa was guilty of professional misconduct in knowingly misleading the Committee was also challenged. Despite Mr Staffa’s protestation to the contrary, it was evinced Mr Staffa “knew that his statement to the Committee was false and … he intended to mislead the Committee”.4

Grounds of appeal 4

Mr Staffa also raised there was denial of procedural fairness in the tribunal’s penalty reasons, by reliance on Mr Staffa’s submission dated 22 September 2020. In the appeal, the respondent accepted the tribunal ought to have given notice of intention to rely on those submissions. However, in the circumstances, any breach of procedural fairness was immaterial as it did not deprive Mr Staffa of a successful outcome.

Grounds of appeal 5

It was submitted that the outcomes were characterised to ‘punish’ Mr Staffa, rather than protect the public. The court noted that personal and general deterrence necessarily import the need for misconduct to have consequences. The need for Mr Staffa to suffer a ‘consequence’ for his misconduct, in context, was a recognition that the protection of the public in the discipline of legal practitioners requires that there be consequences for wrongdoing, so standards may be maintained.5

Conclusion

Orders were made to the effect that;
(a) the appellant had leave to amend the grounds of appeal by adding the new ground of appeal 2A
(b) leave to appeal was granted
(c) the appeals were allowed to vary the orders of the tribunal to delete the words “the Practitioner knew that”
(d) otherwise the appeals were dismissed.

The Full Bench will determine whether to accept the tribunal’s recommendation, having regard to the circumstances existing at the time they hear a motion that Mr Staffa’s name be removed from the roll of practitioners.

Key takeaways

This case demonstrates the importance of identifying any potential risks associated when acting for parties whose interests are adverse, and holds as a reminder for the need for regular conflict checks, particularly with long-standing clients. Although circumstances of conflicts are mostly less significant than those which Mr Staffa failed to acknowledge, the consequences can be just as severe.

Sarah Millar is a law clerk at Queensland Law Society Ethics and Practice Centre. This article has been approved by Grace van Baarle, Solicitor and Manager, QLS Ethics and Practice Centre.

Footnotes
1 [2022] WASCA 83.
2 Ibid [118].
3 Ibid [114].
4 Ibid [158].
5 Ibid [194].

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