Recent NCAT decisions involving solicitors.
The Council of the Law Society of New South Wales v FZK [2023] NSWCATOD 154
Decision published: 27 October 2023
On 27 October 2023, the New South Wales Civil and Administrative Tribunal (Tribunal) published its decision in disciplinary proceedings that the Council of the Law Society of New South Wales (Council) had commenced against a solicitor assigned the pseudonym FZK.
The Council’s application for disciplinary findings and orders (Application) alleged that FZK had engaged in professional misconduct by procuring the false attestations of two witnesses to a will of a late testator.
The Tribunal found FZK guilty of professional misconduct on the basis alleged and made orders:
- reprimanding FZK; and
- requiring FZK to:
- undertake further education in the form of a legal ethics course;
- pay a fine in the sum of $5,000; and
- pay the Council’s costs of the proceedings.
The Tribunal held:
“[8] We have had regard to the affidavit material lodged by the parties that was tendered at the hearing before us. Having done so, we are satisfied that the conduct occurred, as agreed between the parties. It undoubtedly meets the threshold of amounting to unsatisfactory professional conduct, defined in s 296 of the Uniform Law as “conduct of a lawyer occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.” We then need to consider whether it also meets the definition of professional misconduct.
[9] Whilst each case falls to be determined on its own facts and merits, we have had regard to previous determinations of the Tribunal and the Supreme Court, as authoritative statements of the Court bind us and one objective of the Tribunal is to ensure that its decisions are consistent: Civil and Administrative Act 2013 (NSW) (‘NCAT Act’), s 3(e). Having done so, it is apparent that not every isolated failure of a solicitor to only witness a signature where they observed the document being signed will constitute professional misconduct, as opposed to unsatisfactory professional conduct: Xu v Council of the Law Society of NSW [2009] NSWCA 430; NSW Legal Services Commissioner v Zou [2021] NSWCATOD 139. However, we consider the conduct of the Solicitor to be objectively a more serious and substantial breach of his ethical obligations than that considered in those decisions because the Solicitor knew the conduct was wrong and it involved procuring others to assist, despite that knowledge.
[10] Furthermore, as we raised earlier, there are issues particular to the preparation and execution of wills (and enduring
appointments of guardians and attorneys) that make it particularly important that all necessary care and attention is paid to those tasks. Failure to do so, and to ensure that all the stringent requirements as to execution and witnessing are met, can render the document invalid. It is also the case, due to the very nature of a will, that any defect may not be discovered until it is too late for the testator to remedy it, meaning that their solemn wishes as to the distribution of their estate may not be carried out, at least without the complex, uncertain and potentially expensive process of engaging in proceedings in the Supreme Court to have the informal will admitted to probate. That risk should have been obvious to the Solicitor, which also adds to the seriousness of the conduct. The conduct was unsatisfactory professional conduct that constitutes a substantial failure to maintain a reasonable standard of competence and diligence.
[11] A finding that the conduct constituted professional misconduct is warranted.”
Council of the Law Society of New South Wales v Ip [2023] NSWCATOD 157
Decision published: 30 October 2023
On 30 October 2023, the New South Wales Civil and Administrative Tribunal (Tribunal) published its decision in proceedings that the Council of the Law Society of New South Wales (Council) had commenced against Eric Shu-Wah Ip, who was not a lawyer, and who was a director and shareholder of the law practice known as Onward Legal.
The Council sought an order, pursuant to section 119(1) of the Legal Profession Uniform Law (NSW) (Uniform Law), rendering Mr Ip a disqualified person for the purposes of the Uniform Law indefinitely. The Council sought that order based based on the following allegations:
- Mr Ip caused transactions to be made which constituted a breach of trust by Onward Legal and contraventions of sections 138, 139, 145 and 146 of the Uniform Law.
- The above conduct rendered Mr Ip:
- not a fit and proper person to employed or paid in connection with the practice of law or to be involved in the management of a law practice; and
- guilty of conduct that, if he were an Australian legal practitioner, would have constituted unsatisfactory professional conduct or professional misconduct.
The Tribunal made orders disqualifying Mr Ip indefinitely under section 119(1) of the Uniform Law.
The Tribunal held:
“[41] Mr Ip’s conduct was both a substantial and a consistent failure to maintain a reasonable standard of competence and diligence that the public is entitled to expect of a reasonably competent lawyer in conduct occurring in connection with the practice of the law (see ss 296 and 297(1)(a) of the Uniform Law). The importance of a law practice complying with its obligations with respect to trust funds was described by Ipp JA (Tobias JA and Stein AJA agreeing) in Barwick v Council of the Law Society of New South Wales [2004] NSWCA 32 at [118] in the following way:
118 …The trust and confidence which clients place in their solicitors are a basic element of the administration of justice in this country. Violations by legal practitioners of trust accounts betray that trust and harm public confidence in the legal system. This explains the sacrosanct nature of trust accounts and the acute concern that courts have when practitioners, in breach of their fiduciary obligations, misuse trust moneys for their own benefit …
[42] It was conceded that Mr Ip’s conduct showed that he was not a fit and proper person to be employed or paid in connection with the practice of law or to be involved in the management of a law practice. The Court of Appeal said, in relation to s 297(1)(b) of the Uniform Law, in Council of the New South Wales Bar Association v EFA [2021] NSWCA 339 at [158]:
- …As the judgment of Kitto J in Ziems demonstrates, the issue of fitness encompasses more than mere conduct. The “fit and proper person” test is directed to character, which may be determined by conduct alone, but which may also take into account other circumstances.
[43] Mr Ip’s dealings with the trust money were dealings to further his own financial interest. In putting trust money at risk, Mr Ip prioritised his own financial interests over the interests of the clients of Onward Legal in circumstances where his ethical duties to the clients were in conflict with that conduct. His conduct, in context, shows that his character is such that he is not a fit and proper person to be employed or paid in connection with the practice of law or to be involved in the management of a law practice.
[44] Had Mr Ip been a legal practitioner, his conduct would have amounted to both unsatisfactory professional conduct and professional misconduct.
[45] We acknowledge that Mr Ip conceded the facts and the characterisation of his conduct at the earliest opportunity. We acknowledge that he agreed to the orders sought by the Council. Prior to the matters the subject of the Application, Mr Ip had been a lay associate for 10 years. We acknowledge that Mr Ip co-operated with the investigation, assisted with the preparation of the Agreed Statement of Facts and has unreservedly accepted responsibility for his conduct.
[46] We take into account the seriousness of Mr Ip’s conduct. We take into account the need to maintain public confidence in the legal practices of New South Wales. We bear in mind the need to denounce Mr Ip’s conduct for the purpose of the deterrence of others involved in legal practice, whether as a lay associate or as a solicitor, from behaving in a like manner.
[47] In all of the circumstances, an indefinite disqualification of Mr Ip under s 119(1) of the Uniform Law is appropriate.”
Council of the Law Society of New South Wales v Downey [2023] NSWCATOD 162
Decision published: 10 November 2023
On 10 November 2023, the New South Wales Civil and Administrative Tribunal (Tribunal) published its decision in disciplinary proceedings that the Council of the Law Society of New South Wales (Council) had commenced against David Kelvin Downey who was the principal of the law practice, Downeys Lawyers Pty Ltd.
The Council’s application for disciplinary findings and orders sought a finding that Mr Downey engaged in professional misconduct for failing to comply with an undertaking that he provided to Mr Phillip Walton (Mr Walton) on 3 May 2021 (Undertaking). Mr Walton was the solicitor acting on behalf of the purchasers regarding the sale of a property in relation to which Mr Downey acted for the Vendor. The Undertaking required Mr Downey to deliver an original signed lease to Mr Walton by a specified date. Mr Walton did not receive the original signed lease.
The Tribunal found Mr Downey guilty of professional misconduct on the basis alleged and made disciplinary orders:
- reprimanding Mr Downey.
- requiring Mr Downey to pay a fine in the sum of $3,000.
- requiring Mr Downey to pay the costs of the proceedings of the Council.
The Tribunal held:
“[15] As set out in the Agreed Statement of Facts, Mr Downey concedes that his conduct amounts to professional misconduct. In his submissions, Mr Downey said, in response to a submission of the Council’s, that he did not contend that his conduct was affected by any absence of authority or instructions. Mr Downey also made it clear, again in response to a submission of the Council’s, that he did not contend that the Complainant should have “prevailed on a third party to fulfil the Respondent’s Undertaking”. We accept Mr Downey’s submissions on those points. However, we note that a submission was made in Mr Downey’s written submission that his ability to comply with his undertaking was out of his control. A solicitor must not give an undertaking in circumstances where its fulfilment will be out of their control.
[16] The nature of an undertaking given by a solicitor was described in Law Society of New South Wales v Waterhouse [2002] NSWADT 204 at [13]:
13 A solicitor’s undertaking gives rise to a personal obligation of the solicitor. It is not an obligation undertaken on behalf of clients. The recipient of the undertaking is entitled to assume that the solicitor has taken all steps necessary to ensure that he will be in position to comply with the undertaking when the time arrives to do so.
[17] The critical importance of undertakings being reliable was explained in Vincent Cofini [1994] NSWLST 25:
Undertakings are given by legal practitioners for the specific purpose of enabling legal activities to be carried out. Other persons rely upon those undertakings. The undertakings are personal to the legal practitioner and bind that practitioner, not as a matter of contract but as a matter of professional conduct and comity, and will be enforced by the Courts because legal practitioners are officers of the Court and because without enforcement undertakings would be worthless, persons and Courts would be unable to rely on the word of a legal practitioner and this aspect of legal practice, that demands compliance for legal efficiency, would collapse.
[18] Undertakings must not be given by legal practitioners lightly or casually. An undertaking should only be given in circumstances where the legal practitioner is sure that they will be able to fulfil the obligation created by the undertaking. In the Court of Appeal in Western Australia, in Legal Profession Complaints Committee v Detata [2012] WASCA 214 at [50], [52]-[54] Martin CJ said:
50 Undertakings by legal practitioners are a common feature of commercial and property transactions in which legal practitioners are engaged. In some cases, a party might complete a transaction before all relevant conditions are satisfied in reliance upon an undertaking by a practitioner to the effect that he or she will cause a particular condition to be satisfied. In this context, the proffer and acceptance of undertakings by legal practitioners improves the efficiency and expedition of commercial and property transactions and thereby serves to lubricate the wheels of commerce, trade and finance: see Rubik Financial Ltd v Herskope [2010] WASC 343; In the Matter of a Solicitor ‘L’ (Unreported, VSC, LPA 3 of 1989, 17 – 21 June 1989).
…
52 The proffer of an undertaking binding upon a legal practitioner and his or her firm can be expected to enhance the reliability of the undertaking, and thereby the prospect that it will be accepted and relied upon by the party to whom it is proffered. In this way, the proffer of an undertaking binding upon a legal practitioner enhances the achievement of the various purposes to which I have referred, and thereby enhances the public interest. It is therefore vital that legal practitioners perform their undertakings, regardless of whether the undertaking was proffered in error or oversight, irrespective of any change in circumstances, no matter how radical, and irrespective of any hardship to the legal practitioner concerned …
53 Further, it is vital for the maintenance of public confidence in the integrity of the legal profession and its practitioners, and for the maintenance of the confidence which practitioners have in dealing with each other, that performance of their undertakings be enforced: see (Rubik Financial Ltd).
54 For these reasons, the obligation of a legal practitioner to perform his or her undertaking is a solemn obligation of the utmost importance. Failure to perform that obligation will generally be regarded as professional misconduct, and depending on the circumstances, will often be regarded as serious professional misconduct.
[19] In Council of the Law Society of New South Wales v Powell [2019] NSWCATOD 24, the Tribunal said, at [20]:
20 In determining whether to make the orders sought by the parties we must consider, for ourselves, whether it is appropriate to characterise the admitted misconduct of the respondent as professional misconduct. We observe firstly, as is well known, that the legal profession is an honourable one and legal practitioners are expected by the community, by fellow practitioners, and by the relevant regulatory authorities to behave honourably always. It is an everyday occurrence in all areas where lawyers practice that legal practitioners provide undertakings to fellow practitioners and to a wide range of commercial and statutory entities both on their own behalf and on behalf of clients. Other legal practitioners and commercial and statutory entities rely upon compliance with those undertakings in their everyday activities. Such reliance is integral to the efficient and effective functioning of a whole range of activities within our community. It is essential that undertakings given by legal practitioners be genuinely provided and that they be honoured. It is for these reasons that prima facie, a breach by a legal practitioner of an undertaking, whether given during legal practice or not, will arguably constitute a most serious matter, and may, in relevant circumstances, adversely impact upon the integrity of the profession in the eyes of the public.
[20] Mr Downey has conceded that his breach of his undertaking given on 3 May 2021 to Mr Walton to provide the original lease to him within 7 days of settlement amounts to professional misconduct. We agree. The settlement took place in reliance on the undertaking. Mr Walton did not receive the original lease within 7 days of settlement, and, inexplicably, according to paragraph 13 of the Agreed Statement of Facts, still has not received the original lease.
[21] Mr Downey’s breach of his undertaking is professional misconduct under s 297(1)(a) of the Uniform Law because it constitutes a substantial failure to maintain a reasonable standard of competence and diligence.”
Council of the Law Society of New South Wales v Buckley [2023] NSWCATOD 180
Decision published: 7 December 2023
On 7 December 2023, the New South Wales Civil and Administrative Tribunal (Tribunal) published its decision in interlocutory proceedings commenced as part of disciplinary proceedings that the Council had commenced against Mr Nathan Buckley.
On 12 November 2021, the Council resolved (Suspension Resolution) to suspend Mr Buckley’s practising certificate until 30 June 2022 pursuant to section 82(1)(d) of the Legal Professional Uniform Law (NSW) (Uniform Law).
On 9 December 2021, Mr Buckley commenced proceedings in the Supreme Court of New South Wales (Supreme Court) seeking a judicial review of the Suspension Resolution. On 24 March 2022, the Supreme Court dismissed Mr Buckley’s application (Buckley v Council of the Law Society of New South Wales [2022] NSWSC 328).
On 2 May 2023, the Council commenced disciplinary proceedings in the Tribunal against Mr Buckley (Buckley Application) including on the basis of the alleged conduct which formed the basis for the Suspension Resolution. Mr Buckley sought a finding that, based on the principles of res judicata, issue estoppel and/or Anshun estoppel and the Tribunal has no jurisdiction to hear and determine grounds in the Buckley Application which relate to conduct that was the subject of the Supreme Court proceedings (Jurisdiction Application).
The Tribunal made orders dismissing the Jurisdiction Application.
With respect to Mr Buckley’s res judicata argument, the Tribunal held:
“[36] Focussing on the substance of the two sets of proceedings rather than the form, it is evident that the proceedings are not of a substantially equivalent nature. They are of an entirely different nature from each other. The only commonality is that some of the relevant facts or allegations are the same. That is not sufficient for the operation of res judicata.
[37] The Application before the Tribunal is not affected by res judicata (or cause of action estoppel).”
With respect to Mr Buckley’s issue estoppel argument, the Tribunal held:
“[41] …The Supreme Court, in the Supreme Court judgment, determined that the decision of the Council to suspend Mr Buckley’s practising certificate was not affected by the jurisdictional errors pressed by Mr Buckley, and dismissed Mr Buckley’s amended summons. The Tribunal, in determining the Application, will make findings of fact with respect to the conduct alleged against Mr Buckley, and will determine whether or not that conduct is properly characterised as professional misconduct or unprofessional conduct under the Uniform Law, and, if so, what disciplinary orders are appropriate in all of the circumstances. Mr Buckley argued that “the issues of fact and the conduct” underlying the Supreme Court proceedings were “disposed of once and for all” by the Supreme Court decision. This, plainly, is not so, and Ward CJ in Eq made it clear that no issues of fact with respect to the conduct could be decided in the Supreme Court proceedings …
[42] The Application in the Tribunal is not affected by issue estoppel.”
With respect to Mr Buckley’s Anshun estoppel argument, the Tribunal held:
“[45] Mr Buckley submitted that the principles in Anshun had the effect that the Council “should have brought forward its entire case at the time in which it issued the Suspension”.
[46] There is nothing in the principles in Anshun that speaks to the relative timing for the taking of action by the Council under Chapter 3, s 82(1)(d), and under Chapter 5 of the Uniform Law.
[47] In order for there to be Anshun estoppel in relation to the Application, the Council would have to be relying on a defence in the action in the Tribunal which was so relevant to the subject matter of the Supreme Court proceedings that it would have been unreasonable for the Council not to have relied upon it in those proceedings. However, the Council is the applicant in the Tribunal, so it is not in a position where the raising of a defence by it can arise. Mr Buckley is the respondent.
[48] It is clear from both the scheme of the Uniform Law and the Supreme Court judgment that the Council could not have sought factual findings in the Supreme Court proceedings in relation to the allegations regarding Mr Buckley’s conduct which are set out in Grounds 1 to 4 and 6 to 9 in the Application. As I have said, Ward CJ in Eq made that clear in the Supreme Court judgment (see [27], above). Mr Buckley asserts in the ‘preliminary issues’, 1.d, (see [10], above) that the Supreme Court proceedings “dealt with the question of whether the Respondent was unable to fulfil the inherent requirements of an Australian legal practitioner”. However, that was not an issue which fell to be decided in the Supreme Court proceedings.
[49] The Application is not affected by Anshun estoppel.”
With respect to Mr Buckley’s argument that the Tribunal has no jurisdiction to hear and determine grounds in the Buckley Application which relate to conduct that was the subject of the Supreme Court proceedings, the Tribunal held:
“[53] As I have indicated above, the Uniform Law provides for the Council to be the decision maker in relation to s 82 of the Uniform Law, and for the Tribunal to be the decision maker in relation to orders sought under s 301, which is in Chapter 5, part 5.4, Division 3 of the Uniform Law …
[54] Section 97 of the Uniform Law makes it abundantly clear that a matter which has been subject to action under s 82, which is in Chapter 3 Part 3.5 may subsequently also be dealt with under Chapter 5.
[55] Mr Buckley asserted … that the suspension of his practising certificate by the Council “had the same disciplinary effect as an order otherwise made under s 302(1)(h)” of the Uniform Law. This submission finds no support in the Uniform Law, which clearly sets out two separate and different processes, with different decision makers, and provides, in s 97, that both processes may take place, either at overlapping times, or at successive times, with the action under Chapter 5 being the second process.
[56] The operation of s 97 of the Uniform Law alone is a sufficient reason to reject the preliminary issues raised by Mr Buckley.”
Council of the Law Society of New South Wales v Malakhov [2023] NSWCATOD 182
Decision published: 13 December 2023
On 13 December 2023, the New South Wales Civil and Administrative Tribunal (Tribunal) published its decision in disciplinary proceedings that the Council of the Law Society of New South Wales (Council) commenced against Mr Vadym Malakhov.
Mr Malakhov was a solicitor, who was retained by a husband in the context of a dispute between the husband and the husband’s wife. The Council sought a finding that Mr Malakhov is guilty of professional misconduct on the following grounds:
- Mr Malakhov breached rule 34.1.1 of the Legal Profession Uniform Law Solicitors’ Conduct Rules (Conduct Rules) or otherwise, in the course of representing a client, made a statement which grossly exceeded the legitimate assertion of the rights or entitlements of his client, and which did intimidate the wife or further or alternatively reasonably would have intimidated a person in the position of the wife.
- Mr Malakhov breached rule 5.1.2 of the Conduct Rules or otherwise engaged in conduct in the course of practice, which was likely to a material degree to bring the profession into disrepute.
The Tribunal found Mr Malakhov guilty of professional misconduct on the bases alleged and made disciplinary orders:
- reprimanding Mr Malakhov; and
- requiring Mr Malakhov to:
- pay a fine in the sum of $2,500.
- undertake further education in the form of a legal ethics course; and
- pay the Council’s costs of the proceedings.
The Tribunal held:
“[18] We accept, and it is conceded by Mr Malakhov, that the conduct set out in the particulars to Ground One was a breach of rule 34.1.1 of the Conduct Rules in that his statement to the wife that “We reserve the right to charge you with assault” grossly exceeded the legitimate assertion of the rights or entitlements of the husband and also intimidated the wife. The statement constituted a threat. The conduct overstated the husband’s capacity to bring about charges in the context of a domestic violence dispute. It clearly had potential to instil fear into the wife and to influence her decisions about her participation in the legal proceedings.
[19] We accept, and it is conceded by Mr Malakhov, that the conduct set out in the particulars to Ground Two was a breach of rule 5.1.2 of the Conduct Rules. His statement “You know if he is convicted his partner visa will be removed and you will be a single mum raising three kids on your own” was a wholly unacceptable and inappropriate statement to make to a wife who is on the threshold of proceedings involving allegations that her husband has committed acts of domestic violence against her. It clearly had the potential to interfere with the wife’s decisions about her participation in the legal proceedings. In fact, the proceedings did not proceed on 10 January 2019 on account of Mr Malakhov’s conduct. The statement made by Mr Malakhov is not a statement that should ever be made by a legal practitioner in Mr Malakhov’s position, and it was likely to a material degree to bring the profession into disrepute.”
