A Brisbane sole practitioner has been found to have engaged in unsatisfactory professional conduct after he breached an undertaking given to an opposing party in a family law matter.
Everton Hills lawyer John Francis Healy was charged by the Legal Services Commission (LSC) with breaching the undertaking, and in doing so, failing to act with competence and diligence, in relation to the 2021 matter involving a Binding Financial Agreement (BFA).
The 27-page judgment delivered in the Queensland Civil and Administrative Tribunal in Brisbane on Wednesday describes how Mr Healy had acted for “John” in a de facto property settlement, in which the BFA provided for the transfer by “Jane” of her interest in two properties to John by September 30.
Mr Healy was provided with executed transfer documents for the transfer of Jane’s interest in the two properties, and undertook to only use the documents for “stamping purposes, pending settlement”.
When he then used the documents to effect the transfer, without consent from Jane, her legal representatives lodged a complaint with LSC.
The LSC pointed out that by November, when settlement had been delayed, Mr Healy was aware that John was in breach of the BFA; that Jane was considering exercising an option under the BFA to sell the properties; that Jane’s legal representatives were investigating setting aside the BFA; and that he had been expressly asked by Jane’s former and new legal representatives not to deal with the transfers.
When Jane’s new legal representatives had written to Mr Healy seeking confirmation that he would not deal with the transfers, Mr Healy had replied by querying whether this was an attempt by Jane to repudiate the BFA and saying “we do not undertake not to deal with the transfers”.
Justice Davis said the LSC’s case was that the undertaking only allowed Mr Healy to use the documents for “settlement” where he was entitled to proceed to settlement, and he was not entitled to proceed without Jane’s consent.
He said he accepted Mr Healy “was always attempting to fulfil his retainer with John to the best of his ability”.
“I find that in so doing he acted as he honestly thought that he should, but was badly mistaken. He understood his authority to deal with the transfer documents as being non-revokable. That was wrong,” he said.
“I find that Mr Healy dealt with the transfer documents contrary to the undertaking, firstly, because he misunderstood the true construction of the BFA …Mr Healy became sidetracked on a wrong issue.
“He believed that the real issue was whether Jane had a right to rescind the BFA. He thought that as she had no right of rescission and no right to pursue the alternative path of clause 4 (property sale by default), he was entitled to use the transfer documents for settlement.
“He was wrong about that, but I find that his belief was genuinely held.”
Justice Davis said the present case showed that even a simple property transaction could not be completed without the giving of an undertaking so that the transfer documents could be stamped.
“As undertakings are a fundamental feature of practice it is imperative that the solemnity of solicitors’ undertakings is preserved,” he said.
“Otherwise, confidence in undertakings will be eroded with inevitable adverse consequences for the ability of solicitors to effectively conduct their clients’ legal affairs.
“It is for this reason that a breach of an undertaking will usually amount to professional misconduct, although, ultimately, that judgment must be made upon consideration of all the relevant circumstances.”
He said Mr Healy did not proceed to settlement knowing and understanding that to do so would breach the undertaking.
“In those circumstances, charge 1 should be categorised as unsatisfactory professional conduct even though his error of judgement was serious.”
He said charge 2 was “really just a different categorisation of the same conduct and logically should also be categorised as unsatisfactory professional conduct”.
The parties were ordered to file submissions on sanction and costs.
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