The Queensland Civil and Administrative Tribunal has ordered a rethink of a fine proposed for a practitioner who acted for both parties in a conveyancing transaction more than six years ago.
In the decision delivered last Friday, Judicial Member Duncan McMeekin KC said the tribunal had “serious concerns” about the adequacy of the $5000 fine agreed to by the Legal Services Commissioner (LSC) and the errant solicitor, ordering the parties to make submissions on the suitability of the sanction in light of his reasons.
Member McMeekin said the tribunal was satisfied that the two charges brought by the LSC were established, and that the conduct should be characterised as unsatisfactory professional conduct, but took issue with the agreed sanction of a public reprimand and a fine of $5000.
Charge 1 alleged that between 1 November 2019 and 10 March 2020, the practitioner failed to ensure that he and his law practice avoided a conflict of interest in acting for the buyer and the seller in a conveyancing transaction.
Charge 2 alleged that between 17 December 2019 and 18 December 2019, the practitioner failed to advise his client in relation to the consequences of going unconditional with respect to the contract.
The practitioner, who was admitted in 2003, was director of a conveyancing firm from 2019 to 2021. Queensland Law Society cancelled his practising certificate in 2022.
The practitioner filed a response disputing the charges but did not file any sworn evidence.
The contract in question listed the firm as acting on behalf of both the buyer and the seller. Contacts listed were paralegals who were supervised by the practitioner at the firm but were not legally qualified.
There was no evidence of whether the details, including the identity of the “solicitors”, were inserted before or after the buyer signed the contract.
Member McMeekin said email correspondence on 19 December 2019 between the two paralegals “completely misrepresents” the firm’s position.
“The various references – ‘We have received’, ‘from the seller’s solicitors’, ‘my clients’, and ‘your clients’ all imply that the seller is represented by a solicitor in the transaction independent of (the buyer’s) solicitor,” he said.
“That impression was reinforced by the phrase ‘I hereby invoke the sunset clause’ stating that the writer of the email, on its face the seller’s solicitor not the client, has made the decision to invoke the so damaging clause, as it turns out, for (the buyer).”
A client agreement was not sent to the buyer until almost three months after the firm had begun to act for her.
The buyer could not secure finance and was not in a position to settle by the required date. She sought to negotiate a new contract but was unsuccessful. The seller’s new solicitors demanded damages, with the now-failed buyer settling by agreeing to pay more than $8,400. She incurred more than $3,300 in legal costs.
On Charge 1, the practitioner claimed he did disclose his position as acting for both parties – which he called “dual representation” – albeit belatedly, in January 2020.
He argued that the buyer impliedly consented to his acting for both sides because she did not demur from his continuing to act.
He also submitted that the conflict was only potential because no actual conflict arose until the buyer failed to secure finance, and hence, his disclosure was timely.
“We appreciate that these arguments are now abandoned, but the fact that an experienced solicitor should make such assertions at all requires that there be a refutation. Each of those points was fundamentally wrong,” Member McMeekin said.
He referred to Rules 4, 7 and 11 of the Australian Solicitors’ Conduct Rules 2012.
He said the practitioner’s first point was factually wrong, because there was no evidence of the firm advising the buyer that it acted for both parties, or of the buyer realising that it did.
As to the second point, the giving of “informed consent” in the rule would rarely, if ever, be implied, he said.
“The notion of fully informed consent having been given here is absurd,” he said.
“Indeed, (the practitioner) explained, apparently thinking it to be in some way exonerative, that (the firm) ‘acted administratively, with paralegals handling routine tasks’ (which is not at all accurate as they were not so limited given the advice provided by them) and his ‘direct involvement was minimal’.”
As to the third point, the conflicting interests of the two parties were patent at the time of contract, Member McMeekin said.
“Once the sunset clause was invoked, (the practitioner) was in a serious and obvious position of conflict,” he said.
The practitioner showed “wrong-headed thinking”, he said.
On Charge 2, Member McMeekin said it was well recognised that a solicitor was obliged to advise the client as to the meaning and intent of a contract and the potential risks.
“(The practitioner) failed to proffer any advice to (the buyer) prior to or during the period the contract was in place,” he said.
“And while his secretary informed (the buyer) that she exposed herself to damages if she waived the conditions and if should she not obtain finance, there was no warning of the fact that the damages could well be in the tens of thousands of dollars.”
He said the practitioner showed “a lack of any appreciation of his ethical and fiduciary responsibilities in conveyancing transactions”.
“As the Commissioner stresses – to be fully advised of the obligations and legal consequences of a contract and actions taken under that contract, and to be legally protected in those processes, is the main reason parties to contracts engage solicitors,” he said.
As to sanction, Member McMeekin said the tribunal had a “significant concern about the level of the fine agreed”.
He said the practitioner submitted, and the LSC accepted, that his co-operation in preparing the agreed sanction showed insight into his offending and was to his credit.
He said while the tribunal acknowledged that co-operation, the practitioner’s response “showed very little insight or remorse” and that he “apparently needed advice from others to reach this point”.
The concerns were that the conduct was far more serious than in like cases, the conduct resulted in significant harm to the client, and that general deterrence rather than personal deterrence was of major importance, given that the practitioner did not intend to practise again.
“The judgment here is directed to solicitors who are minded to conduct conveyancing practices where the solicitors do not in reality offer a legal service by providing timely advice and guidance to their clients but leave the file to their ‘paralegals’,” Member McMeekin said.“They might well see the fine proposed as simply being the cost of doing business.“We are told here that the professional costs to (the client) were disclosed as $1,272.73 – if typical, then acquiring four such clients would result in there being no real loss.”
He said the public reprimand element of the sanction was significant.
“It involves public shaming which most practitioners would wish to avoid, and which does send a message to the profession and the community generally,” he said.
“We are conscious too that, as will be seen, (the practitioner) will have a costs order imposed against him and so some further monetary discouragement of such conduct.
“Nonetheless we hold serious concerns as to the level of the fine proposed.”
The parties were given 14 days to make submissions, and the practitioner was ordered to pay the LSC’s costs.
Read the case here.
Share this article