Ethics and - Gordon & Jackson

ETHICS & PROFESSIONAL RESPONSIBILITY
GOULBURN VALLEY LAWYERS ASSOCIATION
25 SEPTEMBER 2012
The Importance of Being Ethical as a Lawyer
What can go wrong if you aren’t Ethical?
The Importance of Being Ethical as a Lawyer
All lawyers need to complete a certain number of CPD 1 points. These can
cover a range of issues related to our practise. But ethics is mandatory.
Given the attention given to this aspect of our practise it should be at the
front of mind in all our actions. But for some practitioners this does not
seem to be the case. In particular experienced practitioners often forget or
ignore ethical issues in their practise and then fall foul of complaints to
and/or prosecution by the Legal Services Commissioner (“LSC”).
What is ethics?
“Ethics is not definable, is not implementable, because it is not
conscious, it involves not only our thinking, but also our feeling.”
Valdemar W. Setzer
Or the definition that seems to be followed by some practitioners
“Ethics are so annoying. I avoid them on principle”.
Darby Conley, Get Fuzzy Comic, 08-15-07
I agree with Setzer, if it feels wrong it probably is, and the feeling should
be heeded and steps taken before it becomes a problem for your practise.
• The terms “legal ethics” and “professional responsibility” are used
more or less synonymously.
• Legal ethics is concerned with having a critical understanding of the
legal profession, its structures, its roles and responsibilities, the roles
and responsibilities of lawyers in their provision of professional services
and requires participants to examine what the legal profession does
and compare it with what it, and they, ought to do.
• How these legal ethics are applied by individual legal practitioners is
often influenced by their personal values or moralities and the
situations they find themselves in which may conflict both with the rules
or their own personal values of morality and philosophy.
1 Continuing Professional Development
1

Professional Responsibility
The Rules
As a regulated profession we have rules we are required to abide by.
Legal ethics requires us to know the disciplinary rules regulating our legal
profession. Some rules are statute based with punitive sanctions like the
Legal Profession Act 2004 (“the Act”) (Amended 2/5/2012)
Some rules have been drawn up or endorsed by professional bodies like
the Law Institute of Victoria (“LIV”) (Professional Conduct and Practice
Rules 2005) (“the Rules”) and the Victorian Bar (“the Bar”) (Victorian Bar
Practice Rules) (the Bar Rules”). In addition we now also have to keep
the Civil Procedure Act 2010 in mind.
Some sections of the Rules relevant to all lawyers are:
• 2.4.27 Holder of local practising certificate—show cause event
• 3.4.11 How and when must disclosure be made to a client?
• 4.4.2 Unsatisfactory professional conduct
These 3 are reproduced as a Schedule to this paper but there are, of
course, many more. We all need to become familiar with the Act. If
unsure when acting for a client, check the Act and the relevant Rules, or
seek advice from your regulatory body (LIV or the Bar) before committing
yourself to a step which could see you fall foul of the Legal Services
Commissioner, and join the ranks of those appearing before VCAT.
The Act currently consists of some 620 pages dealing with issues of how
lawyers are admitted to practise, remain in practise, and what issues or
behaviour can cause them to have their practising certificates cancelled,
suspended, (in other words “lose their ticket”) facing fines and paying the
costs of the Legal Services Commissioner to bring them to the Tribunal.
The Act empowers the Legal Services Commissioner, (“the
Commissioner”) currently Mr Michael McGarvie, and his staff to handle
complaints from the public, the profession 2 and even the judiciary. 3
To put the following statistics into perspective according to the Legal
Services Board’s (“LSB”) website states that there are currently 16,727
practitioners registered in Victoria. In 2010-11 1,263 new practitioners
were admitted, an increase of 6%. 56% of the legal profession were male
2 Legal Services Commissioner v D'Alessandro (Legal Practice) [2009] VCAT 1129 (2 July 2009)
3 Legal Services Commissioner v Griffin (Legal Practice) [2010] VCAT 484 (21 April 2010)
Oldham v Law Institute of Victoria (Legal Practice) VCAT 571 (30 May 2012).
2

and 44% female. Of these 16,7272, 15,000 are located in the city or
suburbs and 1,200 in the country. The remaining 441 are located either
overseas or interstate. In 2010 the Commissioner received 2200 some
complaints. Most of these were resolved with 10 practitioners being
referred to VCAT for findings of professional misconduct. In 2011 there
were 15, in 2012 to date I have counted 19 reported on the Legal Services
Board’s (“LSB”) website, most heard in VCAT but 4 were heard by the
Supreme Court. In reviewing the reported cases the breadth of the
complaints made to the LSB is surprising, but by far the greatest number
related to a failure by lawyers to communicate. Initially with their clients
and once a complaint had been lodged, a failure to respond to the
Commissioner’s request for information in relation to a complaint. In most
cases these were later resolved. Where they couldn’t be resolved, the
lawyer often faces a reprimand as well as a fine as well as meeting the
Commissioner’s costs of bringing the action.
How do you prevent a Complaint?
Communication
Communicate with all parties but especially your client. The dilemma all
legal practitioners face is cost. Every time we communicate with our client
it costs them. Most non-lawyers are not aware of lawyers’ responsibilities,
even when it is spelt out to them in disclosure letters. For some the only
communication that seems to make an impact is the dollar figure on the bill
they receive, whether it is large or small.
Despite this, we cannot be cowed into failing to advise clients of costs
consequences of various actions, incurring further costs in seeking their
instructions in the face of changed circumstances and advising of the likely
outcomes of continuing the current action. We need to do this even when
we think they will confirm our current instructions.
When dealing with a new client you need to set the pattern of behaviour
from the outset and refer back to this initial advice, if need be, as the
relationship continues. The client needs to be aware that you are not
allowed to act without their instructions, in fact are prohibited from doing so
either by legislation or professional regulations. Regrettably this need for
communication adds to the client’s costs. Conversely, a client who is
continually contacting you for advice needs to be aware that all those
phone calls, emails, are going to generate costs they are liable for.
Situations where there is no time to draft and provide a Costs Disclosure
Letter or Agreement are rare. Verbal advice of costs with verbal
acceptance can cover an emergency or rush situation, but should always
be immediately followed up by confirming written documentation. This
needs to be done not only to meet your obligations under the law, but you
may well be relying on it in a costs fight, even if you win the case.
3

Even where all these steps have been undertaken, lawyers still need to be
aware of how their costs are viewed. If the matter is litigious and proceeds
to a hearing, although the client may be successful in winning their case, if
their judgment is wiped out by your costs it will be a hollow victory. Rarely
does “it’s the principle that’s important” last to judgment.
In some areas, like Family Provision claims against Estates, costs of the
applicant have generally been borne by the Estate of the deceased.
However, recently courts have been reluctant to award what they consider
to be excessive costs and in some cases have either refused costs 4 or
capped them. 5
Currently the Law Reform Commission is reviewing the legislation and
cases in relation to costs. Practitioners in this area will be aware of the
courts already limiting costs in small estates by disallowing affidavits prior
to Mediation.
In addition you need to ensure you keep good, legible, dated file notes.
Some complaints don’t come in for some time and trying to remember
what you told someone five years back is almost impossible. 6 Not keeping
file notes is considered unprofessional by the courts. Emails can be
stored electronically and .pdf copies of relevant documents are worth
storing especially with the reducing cost computer disk space.
Ensure your instructions are current
Barristers are familiar with being told on the day of trial that “the matter has
settled”. In the euphoria of settling a difficult case the lawyer may have
forgotten to communicate this fact to Counsel. The client will not be happy
to be paying Counsel’s fees when they consider the matter done and
dusted.
However a worse scenario is for a solicitor to continue to act in a
proceeding and advising his opponent that the client had refused their
offer to settle. Quite by accident his opponent discovered the Plaintiff had
died some days before so would have been unable to give those
instructions.
I can only imagine the judge’s reaction and attitude to the lawyers for the
plaintiff. A case on point is listed in this paper.
4 Re Carn-Moerth-v-Moerth and another;Moerth-v-Mac Bean (No 2) [2011] VSC 275,
Gardiner AsJ Related [2011] VSC 176.
5 Cangia v Cangia (No 2) 5 [2008] VSC 556
6 Bale v Mills [2011] NSWCA 226, Allsop P, Giles JA and Tobia AJA para 15 and 17.
4

What can go wrong if you are not ethical
Listed below is a summary of some recent cases giving examples of the
type of complaints the Commissioner deals with. These are grouped
according to type of behaviour rather than in strict chronological order.
Breaches of Practising Regulations
Purporting to witness a signature in the absence of the relevant
person
Legal Services Commissioner v Comito (Legal Practice) [2011] VCAT
497 (24 March 2011)
Reprimanded, fined $10,000, pay LSC’s costs $5,519.
Legal Services Commission v Lamplugh (Legal Practice) [2012] VCAT
279 (5 March 2012).
Practitioner witnessing signature on guarantee in absence relevant
person
Legal Services Commissioner v Turner (Legal Practice) [2007] VCAT
1986 (24 October 2007)
Reprimanded, fined $5,000 and pay LSC’s costs.
Legal Services Commissioner v Jackson (Legal Practice) [2012] VCAT
272 (2 April 2012)
Forged his wife’s signature on an application to ASIC and on 6 tax
refund cheques deposited in the parties’ joint bank account.
Pleaded guilty, was ordered to pay $3,552.90 in LSC’s costs.
Charging for retrieval of stored documents where client not advised
in advance
Legal Services Commissioner v Rose (No. 2) (Legal Practice) [2007]
VCAT 2465 (17 December 2007)
Paid LSC’s costs $6,714.00
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Failing to deliver up file to client when demanded
Legal Services Commissioner v Nixon (Legal Practice) [2007] VCAT
1695 (31 July 2007)
Reprimanded, fined $1,000 on 2 charges, and LSC’s costs $1,750.
Failure to hold current practising certificate
Legal Services Commissioner v Owens (Legal Practice) [2010] VCAT
1686 (14 October 2010)
Lawyer suffering from depression, 8 charges were proved, lawyer
was ordered not to apply for practising certificate for 5 years.
Taking a commission without authority
Legal Services Commissioner v Hession (Legal Practice) [2010]
VCAT 1687 (5 October 2010)
Lawyer transferred $109,000 in unauthorised commission as
Executor of an Estate.
Fined $30,000, LSC’s costs $38,161.50, and ordered to attend a
course on Wills and Estates management.
Competency as a lawyer
Failure to reach or maintain reasonable standard of competence
and acting in conflict of interest
Legal Services Commissioner v McNamara (Legal Practice) [2011]
VCAT 1228 (1 July 2011)
Lawyer gave advice to Executor and beneficiary widow, suspected of
suffering from dementia. Conflict of interest and acting beyond his
expertise and knowledge.
Charges proved. Adjourned to further hearing 11 August 2011.
Failing to complete work promptly and communicate with client
Legal Services Commissioner v Morgan (Legal Practice) [2010]
VCAT 1814 (22 October 2010)
Found guilty of 6 charges of unsatisfactory professional conduct and
to use his best endeavours to complete legal work. Not to apply for
Practising Certificate October 2011 (12 months), pay LSC’s costs.
6

Conflict of Interest
Failure to avoid conflict of interest and disclose interest in a
transaction
Legal Services Commissioner v Francis (Legal Practice) [2006] VCAT
690 (13 April 2006)
2 Charges found, 2 fines $30,000 and $17,500, LSC’s costs to be
taxed.
Acting in conflict of interest in a property matter
Legal Services Commissioner v Harle (Legal Practice) [2008] VCAT
2301 (21 October 2008)
Practising Certificate cancelled for 3 years, pay LSC’s costs.
Failure to get client to sign Form 2 acknowledgement of solicitor’s
interest in the company loaning money to the client.
Legal Services Commissioner v Johnston (Legal Practice) [2011]
VCAT 1366 (11 July 2011)
Reprimanded, fined and ordered to pay LSC’s costs.
Failing to keep business interests and legal practice separate
involving misappropriation of client’s funds.
Legal Services Commissioner v Brereton (Legal Practice) [2008]
VCAT 2073 (7 October 2008)
Practising certificate cancelled, not able to apply till 2013, or for
practising certificate to deal with Trust Money till 2018, ordered to pay
LSC’s costs of $145,000.
Failure to disclose costs
Failure to provide a Costs Agreement
Legal Services Commissioner v Nowicki (Legal Practice) [2011]
VCAT 1003 (24 May 2011)
Reprimand, fined $15,000 and LSC’s costs.
7

Failure to communicate with client and confirm instructions
Legal Services Commissioner v Brott (Legal Practice) [2011] VCAT
110 (7 February 2011)
The Tribunal found 4 charges proved of instituting proceedings
without seeking client instructions. The lawyer was referred to be
struck off the roll of practitioners and ordered not to re-apply for a
practising certificate till 2019, 8 years.
Failing to communicate properly with clients regarding
proceeding
Legal Services Commissioner & Ors v Jayakody (Legal Practice)
[2008] VCAT 2075 (7 October 2008)
Reprimand, $3,000 fine and pay LSC’s costs.
Misleading a client regarding a VOCAT application
Legal Services Commissioner v Horsley (Legal Practice) [2011]
VCAT 875 (27 April 2011)
Reprimand, fine and pay LSC’s costs.
Failing to advise clients
Honesty
Legal Services Commissioner v Cassidy (Legal Practice) [2009]
VCAT 2647 (8 December 2009)
Reprimand, fine and pay LSC’s costs of $15,891.63.
Forging a medical certificate (previous complaints)
Theft
Legal Services Commissioner v Johal (Legal Practice) [2011] VCAT
1390 (14 April 2011)
Reprimand, fined $3,500 and to pay LSC’s costs on County Court D
Scale.
Mr Ali Abou-Eid pleaded guilty to 2 counts of obtaining property by
deception, was sentenced to 24 months imprisonment. Application
made pursuant to 2.4.42 of the LPA to remove his name from the
Roll. AsJ Zammitt made the Orders on 16 February 2012.
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R v Andre di Cioccio [2012] VSC 28 24 February 2012, Macauley J
Mr di Cioccio found guilty of misappropriating $2.6M, $691,000 money
entrusted to him by his clients.
Sentenced to 7 ½ years imprisonment. Compensation orders made
in favour of the LSB for claims made on the Fidelity Fund in the sum
of $172,492.35.
R v Tansey [2012] VSC 221 (31 May 2012), Almond J
Found guilty of 25 charges of theft totalling $1.9M stolen from clients
between 1999 and 2004. Court ordered compensation to be paid to
the Fidelity Fund of $318,047 in respect of claims made by Tansey’s
clients. Tansey sentenced to 4 years imprisonment.
Defrauding the State Revenue Office
Legal Services Commissioner v Szental (Legal Practice) [2007]
VCAT 1835 (2 October 2007)
Solicitor attempted to defraud SRO, repaid monies, pleaded guilty to
criminal charges, inherited money, made donations to charity,
Practising Certificate cancelled till 2013.
Plagiarism in an application for Masters
Legal Services Commissioner v Keough (Legal Practice) [2010]
VCAT 108 (3 February 2010)
Solicitor pleaded guilty to plagiarism in obtaining a Master of Health
and Medical Law. Practising Certificate cancelled and solicitor not to
reapply before October 2010. Pay LSC’s costs.
Falsifying resume
Legal Services Commissioner v Spicehandler (Legal Practice) [2012]
VCAT 630 (14 May 2012)
Three charges of professional misconduct for denying he had been
charged with an offence, omitting details of his employment history,
falsifying details of employment and engaging in legal practice
without a valid practising certificate. His dishonest conduct was
found inconsistent with a lawyer’s duty to act honestly and his
“blatant, breathtaking lies”.
Reprimand and unable to obtain a practising certificate until 2017,
ordered to pay LSC’s costs of $5,935.90.
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False Statutory Declarations
Solicitor Jonathan Wong was reprimanded on 2 charges of
misconduct at common law from submitting two false Statutory
Declarations to the Migration Agents Registration Authority (the
MARA).
Wong was fined $15,000 and ordered to pay LSC’s costs of
$12,000.
Litigation complaints/Breaches of Duties to the Court
Failing to discover relevant documents
Legal Services Commissioner v Piva (Legal Practice) [2009] VCAT
1981 (25 September 2009)
Solicitor knowingly withheld document when giving discovery to the
Supreme Court, document held information against solicitor’s case.
Practising Certificate cancelled, solicitor not to reapply before
September 2011, pay LSC’s costs.
Failure to comply with duties to Court
Legal Services Commissioner v Shulsinger (Legal Practice) [2010]
VCAT 1497 (9 September 2010)
Solicitor reprimanded for neglecting to comply with duties owed to the
Family Court. Three charges of professional misconduct fined
$5,000, $1,000 and $1,000 respectively and $36,000 LSC’s costs.
Legal Services Commission v Cantwell (Legal Practice) [2012] VCAT
890 (23 April 2012).
Solicitor found guilty of 4 charges of professional misconduct in
misrepresenting to the County Court that his client in a serious
criminal matter was ready to proceed to trial, that a barrister had been
briefed to appear for the client and that funding was in place for the
trial.
Cantwell’s practising certificate was cancelled and he was banned for
re-applying before 29 March 2013 and ordered to pay the LSC’s
costs of $10,000.
10

Tax Issues
Failure to file tax returns for 13 years, practitioner bankrupted
Legal Services Commissioner v Long (Legal Practice) [2011] VCAT
1164 (10 June 2011)
Lawyer pleaded guilty to charge of professional misconduct, returns
filed following action by ATO, now meeting revenue obligations.
Good character otherwise, Practising Certificate suspended for 4
months. Fined and paid LSC’s costs $12,000.
Failure to Lodge Tax Returns and GST Returns
Legal Services Commissioner v Moore (Legal Practice) [2010] VCAT
742 (1 June 2010)
Reprimanded, fined $50,000 and paid LSC’s costs.
NB: There were a number of other cases in 2012 so it appears that
tax responsibility appears to be an ongoing issue for some
practitioners.
Trust monies
Failing to deposit trust monies within required period
Legal Services Commissioner v McCristal (Legal Practice) [2011]
VCAT 231 (10 February 2011)
Fined $25,000 and ordered to attend course on Trust account
management and pay LSC’s costs.
Failure to manage office and trust monies
Legal Services Commissioner v Peacock (Legal Practice) [2008]
VCAT 983 (2 June 2008)
Practitioner failed to supervise his legal practice – another party
utilised his office account to misappropriate monies from third parties.
Practising Certificate downgraded to employee certificate, required to
attend practise management course, reprimanded with costs.
Legal Services Commissioner v Coldham & Ors (Legal Practice)
[2012] VCAT 74 (19 January 2012).
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Three lawyers failed to present 216 cheques totalling $300K between
2004 to 2007 for moneys owed to barristers and expert witnesses.
The cheques were deliberately withheld in order to reduce the level of
debt in the law practice’s overdraft account.
All 3 pleaded guilty but the Tribunal ruled that “dispositions falling
short of cancellation or suspension of practising certificates have
proven inadequate as to general deterrence.” Citing McCristal and
Quinn. 7
Practising certificates suspended for 9 months and ordered to pay the
LSC’s costs of $16K.
Unqualified practice and receipt of trust monies
Legal Services Commissioner v Rallis (Legal Practice) [2009] VCAT
1445 (23 July 2009)
Practitioner pleaded guilty to two counts of misconduct, unqualified
practice and unqualified receipt of trust money. Practising Certificate
cancelled, may not apply till 2014, monies to be repaid and LSC’s
costs of $25,000.
Legal Services Commission v M McAuley [2012] VCAT 159 (23
January 2012)
Practitioner received trust monies without holding the appropriate
authorisation to do so, failed to act on her client’s instructions and
failed to respond to request for information from the LSC.
Obtained $5,500 to obtain a second opinion from senior counsel in
relation to quantum of damages likely regarding a personal injuries
claim. She failed to seek this opinion and without authorisation
applied the money to an outstanding account incurred by the client’s
family for an unrelated matter.
Ms McAuley was reprimanded, fined $8,000 and ordered to pay the
LSC’s costs of $14,532.20.
Legal Services Commissioner v S Dhanapala VCAT 23 May 2012.
In partnership Dhanapala received $101K in trust monies while
neither party held a practising certificate authorising them to receive
trust monies. Dhanapala co-signed cheques but was considered
naïve rather than wilful.
Reprimanded and ordered to pay LSC’s costs $4,000.
7 Quinn v Law Institute of Victoria [2007] VSCA 122;
Legal Services Commission v McCristal (Legal Practice) [2011] VCAT 23 (10 February 2011).
12

Undertakings
Failing to take steps to be released from an undertaking he was
unable to complete and acceding to his client’s request to disburse
trust funds contrary to his undertaking
Legal Services Commissioner v D'Alessandro (Legal Practice) [2009]
VCAT 1129 (2 July 2009)
Reprimanded, fined $4,000 and LSC’s costs $3,357.60.
Failure to honour undertaking within reasonable time
Legal Services Commissioner v Sapountzis (Legal Practice) [2010]
VCAT 1124 (24 June 2010)
Reprimanded and LSC’s costs $5,000.
NON-LEGAL PRACTICE
Carrying on business of an estate agent without the required
license.
Noone v Mericka & Ors [2012] VSC 101 (27 March 2012) Sifris J
Action by Director of Consumer Affairs Victoria. Lawyer contravened
Estate Agents Act 1980 (Vic) and Fair Trading Act 1999 (Vic) by
carrying on the business of a real estate agent without the required
license. Activities went beyond the exemption in Section 5(2)(e) of the
Estate Agents Act 1980 (Vic).
Dishonesty of Non-legal employee
Law firm employee found guilty in the Magistrates Court of two charges
of commencing employment in a law practice without having first
informed his prospective employee of his previous relevant prior
convictions. Law firm was not aware of his prior convictions. A law
firm can employ an individual with prior convictions but must get the
Board’s prior permission. Rules of integrity extend beyond licensed
lawyers to “lay associates”. (August 2012 unreported).
Convicted and fined $2,000. Ordered to pay the LSC’s costs $5,000.
13

THE COST OF FAILING TO ACT ETHICALLY OR
PROFESSIONALLY
RECENT CASES IN THE COURTS:
ENSURE YOU HAVE INSTRUCTIONS
In the aftermath of Black Saturday 2009, a number of class actions were
spawned, including one against a power company with a claim that the
proximity of power lines to vegetation had caused a fire.
In Matthews v SPI Pty Ltd 8 the group proceedings were prepared by an
articled clerk who was obviously under pressure and lacking in
supervision. Mr Keane had merely registered his interest on the firm’s
website. No proper instructions were taken or advice given regarding
likely costs consequences against Mr Keane as a representative plaintiff if
he was unsuccessful The fact that writ incorrectly named defendants and
included an allegation of damage from a fire some 200 kms north of Mr
Keane’s property also demonstrated the lack of preparation.
After the matter had been issued and underway for some months, the firm
discovered their representative plaintiff had not given instructions to make
a claim or be a representative plaintiff. Even after realising this, it was
some months before the firm took corrective action and informed the court
and the defendant.
The castigation of the law firm by the judge, not to mention the costs
consequences both for the firm’s loss of revenue and having to pay the
defendant’s costs was considerable. No quarter was given. The judge
commented that group proceedings are now called “lawyer driven
litigation” 9 .
The defendant argued that allowing the proceeding to remain on foot,
notwithstanding a replacement representative plaintiff had been found and
her substitution ratified, that the court should exercise its authority to strike
out the claim as an abuse of process. The court determined that
practitioners must be made aware that issuing proceedings without the
authority of a client is misconduct. The court decided not to exercise its
authority to deal with the behaviour as contempt of court, but decided to
refer the lawyer’s conduct in issuing and maintaining the proceeding to the
Legal Services Commissioner.
One of the reasons the court took this action was it considered striking out
the application would be more punitive against the replacement
representative plaintiff, and the group she represented rather than the
8 Matthews v SPI Electricity Pty Ltd; SPI Electricity P/L v Utility Services Corporation Limited & Ors
(Ruling No 1) [2011] VSC 1676 10 May 2011, Forrest J at 120.
9 Kirby v Centro Properties Ltd [2008] FCA 1505, Finkelstein J.
14

lawyers responsible. As the interest on any damages granted to the
plaintiff flow from the date the proceeding was commenced. Striking out
the pleading would have penalised the plaintiffs and the group she
represented with a loss of some 27 months interest. However, the court
restricted the plaintiff’s right to interest to commence from the date the
representative plaintiff was substituted in July 2010, thus giving the plaintiff
a benefit of some 9 months interest.
Matthews v SPI Pty Ltd stands out because it relates to Black Saturday
and the number of plaintiffs affected, but, as we have seen above, similar
breaches by lawyers have occurred in less public arenas.
Oldham v Law Institute of Victoria (Legal Practice) [2012] VCAT 571 (30
May 2012).
Solicitor reported by Justice Forrest, LSC took action in VCAT for
professional misconduct for issuing and maintaining legal proceedings in
relation to two separate bushfire class actions without obtaining the
appropriate authority or instructions from the nominated clients.
This case again highlights the dangers of lawyers undertaking legal work
in areas of law where their knowledge or experience is limited.
Practising Certificate restricted for 2 years to the areas of building law,
construction law, property law and owners corporation law. Ordered to
pay $30,000 towards the costs of the proceeding.
CONFLICT OF INTEREST – SOLICITOR/EXECUTOR
In Walker v D’Alessandro (2010) VSC 15, Forrest J found that the claim by
the solicitor, appointed Executor under the Will of Ivy Rosalind Mary
Pump, to the beneficiaries for a 3% commission, in addition to his costs for
applying for Probate was made without full disclosure and advising the
beneficiaries to seek legal advice so that they could give informed
consent.
Court ordered that the agreement by the beneficiaries to the payment of
3% commission was unenforceable.
In Re Estate of Zsuzanna Gray 2010 VSC 173, Daly AsJ followed Walker
v D’Alessandro. Estate of $885,000, fees charged for work on Probate
some $22,000, which were assessed by the Law Institute as reasonable
but did not take into account his “pains and trouble” as provided for in the
deceased’s Will.
Solicitor working in an atmosphere of suspicion and distrust, sought
$35,000 commission, or 3.5% of corpus, such payment to include $22,000
costs of the Probate and some $4,500 for assessment of those costs.
Court only allowed $22,000 and $4,500 as sufficient for his “pains and
trouble”.
15

COMPETENCY IN PLEADINGS
In some cases the courts themselves have punished a lack of competency
and expertise of legal practitioners by way of refusal to accept what it
considers sub-standard pleadings.
Gunns Limited v Marr [2005] VSC 251, Bongiorno J. At a Directions
Hearing of the Matter, the Plaintiffs applied to file an amended Statement
of Claim some 360 pages long with 528 paragraphs against some 20
defendants. The Claim was filed in lieu of late Particulars of Claim,
however the court, in dismissing the Statement of Claim, stated that “the
function of a statement of claim is to set out with sufficient clarity the case
which the defendant must meet”, limit generality of the allegations and to
limit and define the issues to be tried. Bongiorno J found that the crossreferencing
of paragraphs failed to assist and in fact “often renders the
original paragraph at best ambiguous and at worst misleading”. The
pleadings were described as prolix and that the “Court will not tolerate
laxity of pleadings or deficiency of particulars to the disadvantage of those
against whom the proceeding is brought”.
His Honour went on to say that a new statement of claim should be
accompanied by a detailed table of contents or index, a glossary of every
term or phrase used in it which requires definition, and it should employ a
uniform method of referring to the parties.
Murphy v Council of the Municipality of Strathfield [2012] NSWSC 85
(17 February 2012), Schmidt J
Recent case relying on Gunns. Pleading struck out, amended pleadings
to be filed in proper form.
COMPETENCY IN ADVICE GIVEN
As in Gunns v Marr above, competency of legal practitioners is not
restricted to pleadings. Where advice is sought clients will not be
backward in seeking recompense where they consider the advice has
been bad, or at best insufficient.
In Austrust Ltd v Astley & Ors (1999) 197 CLR 1, the High Court
considered an appeal by Austrust against a Full Court ruling of the South
Australian Supreme Court.
The case involved a company seeking advice regarding changing its
business practice from managing Trusts in relation to deceased estates,
settlements, “conventional trusts” managed pursuant to non-trading trusts
with some property management trusts, to the field of commercial trading
trusts.
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The company sought advice from Astley who was a highly experienced
legal practitioner in the area of commercial and corporate law. Astley was
asked to advise on a Trust Deed in relation to setting up an intensive
piggery, which involved conducting a business and trading in livestock.
Astley’s advice was given in relation to compliance with the relevant
Companies Code and regulations. He did not provide advice on the
potential legal implications of Austrust acting as trustee of a trading trust,
notwithstanding he knew it was a new type of business for Austrust.
Although the Deed allowed the Trustees to borrow money and provided
that the Trustees would not be personally liable, Astley did not advise that
this clause would protect Austrust from any claims by potential lenders.
Austrust proceeded with the transactions and borrowed, as trustee, an
amount, the repayment of which was secured by mortgages over the
property. When it became apparent that the trust might have to be wound
up and its assets insufficient to meet liabilities, Austrust found that it had
become liable for losses that exceeded the amount available from the trust
property. Astley’s advice had failed to deal with the trustee company’s
liability to creditors of the trust nor recommend a provision in the
documents to confine its liability to creditors to the amount it was entitled
to be indemnified from the trust assets.
After making its way through the South Australian courts, the High Court
ruled that Astley was liable for damages against him both in tort,
notwithstanding contributory negligence of Austrust, as well as in breach of
contract.
Keddie & Ors v Stacks/Goudkamp P/L [2012] NSWCA 254 (17 August
2012)
Appeal by solicitor firm appealing against Court order of costs against firm.
Appeal dismissed, cross-appeal upheld with indemnity costs confirm.
Unnecessary costs – Costs incurred without reasonable cause in
circumstances where legal practitioner responsible for costs unnecessarily
incurred. Civil Procedure Act 2005 s99.
17

MEDIATION
ETHICS AND PROFESSIONAL RESPONSIBILITY
Mediation is now an accepted part of the dispute resolution process and
ordered by all the Courts. Thus many matters litigators are involved in never
run all the way to trial. However, this does not mean that the same rules don’t
apply.
A different type of justice
“It should be stressed that mediation is not an inferior type of justice. It is
a different type of justice. All studies of dispute resolution show that
people greatly value quick resolution of disputes and the opportunity to
put their case in the presence of a neutral person. Mediation satisfies
both these requirements”
Former Chief Justice Supreme Court John Harber Phillips (16 Aug
1995)
What should you expect in the conduct of a Mediation
Mediation agreement
Mediator
Confidentiality
Courtesy
Pleasant surroundings
Informal atmosphere
Opportunity to find out what is really in dispute
Opening statements/Issues determined/Parties time apart
Outcome:
o Settlement all parties can live with
o Settlement Agreement (written and signed)
o Settlement Agreement that ensures compliance by all parties;
o OR
o issues in dispute limited.
o NOT
o An opportunity to find the weaknesses in your opponent’s case.
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Does the standard of ethics change from that of court?
No – the same ethical rules apply.
The informality of mediation can assist in resolving the real issues in dispute,
but is not intended to be a reason to relax your usual professional standards.
The fact that mediations are cloaked in confidentiality should not allow
lawyers to engage in allegations or assertions which cannot be sustained, in
particular denigration of the justice system to urge clients to settle.
The Rules referred to above still bind lawyers, except when acting as
mediator. The same requirements apply, to act honestly, fairly, with
competence and diligence in the service of the client and not to engage in
conduct which is either discreditable to the lawyer, prejudicial to the
administration of justice or likely to diminish public confidence in the legal
profession or bring it into disrepute.
Relevant LIV Rules
18.1 A practitioner must not knowingly make a false statement to the
opponent in relation to the case (including its compromise)
18.2 A practitioner must take all necessary steps to correct any false
statement unknowingly made by the practitioner to the opponent
as soon as possible after the practitioner becomes aware that
the statement was false.
18.3 A practitioner does not make a false statement to the opponent
simply by failing to correct an error on any matter stated to the
practitioner by the opponent.
18.4 A practitioner must not deal directly with the opponent’s client in
relation to the case for which the opponent is instructed unless:
18.4.1 the opponent has previously consented;……
21 A practitioner, in all of the practitioner’s dealings with other
practitioners, must take all reasonable care to maintain the
integrity and reputation of the legal profession by ensuring that
the practitioner’s communications are courteous and that the
practitioner avoids offensive or provocative language or conduct.
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Issues which can arise in Mediation
Extremely aggressive advocacy and bargaining
Hiding strengths of other case and weaknesses of own case
Not alerting other side to existence of documents which would
assist them
Claiming “final offer” when it is not & other posturing
As in dealing with the courts, at a court appointed mediation you may not
keep secret an error that you know the other side may be relying on to their
detriment and to your client’s advantage.
Authority to settle – courts commonly make orders that persons with authority
to settle should attend the mediation. Ignoring such an order, or concealing
the fact that the responsible person either does not attend the mediation or
does not have the requisite authority offends the rules and probably amounts
to contempt of court.
For many clients attending a mediation is as emotional as appearing in court,
often they are not prepared for what is happening or likely to happen. Apart
from the opening statement and discussion, the rest of the mediation is
between the key parties and their willingness to concede points or position.
Whilst settlement is to be encouraged and clients made aware of costs
consequences in proceeding to the next step in litigation, neither should they
be harassed either by their own legal representatives or the other side’s.
A settlement at mediation has to be settling, not unsettling.
Conclusion
In conclusion I think our position as lawyers to deal ethically and
professionally can be summed up with the following cases:
In Clyne v NSW Bar Association (1960) 104 CLR 186 at 200, the court ruled
that “An advocate owes a duty to his client. He must advance and protect the
client’s interest to the best of his skill and diligence.”
Acting for clients is a privilege and carries with it responsibilities to always act
ethically in all areas of the work and in ensuring that we are competent to
perform the task we have been called upon to do.
Lydia Kinda
Douglas Menzies Chambers
25 September 2012
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S. 2.4.27(2)(a)
amended by
No. 12/2007
s. 16(3).
Schedule A
Legal Profession Act 2004
2.4.27 Holder of local practising certificate—show cause event
(1) This section applies to a show cause event that happens in relation to
the holder of a local practising certificate.
(2) The holder must provide to the Board both of the following—
(a) within 7 days after the happening of the event—notice, in the form
approved by the Board, that the event happened;
(b) within 28 days after the happening of the event—a written
statement explaining why, despite the show cause event, the
person considers himself or herself to be a fit and proper person to
hold a local practising certificate.
3.4.11 How and when must disclosure be made to a client?
(1) Disclosure under section 3.4.9 must be made in writing before, or as
soon as practicable after, the law practice is retained in the matter.
If the legal practitioner fails to disclose costs as required by the legislation,
then :
(4) The reaching of a decision referred to in subsection (3)(the decision not
to disclose costs) otherwise than on reasonable grounds is capable of
constituting unsatisfactory professional conduct or professional
misconduct on the part of the principal.
Unsatisfactory conduct – what is it?
4.4.2 Unsatisfactory professional conduct
For the purposes of this Act—
unsatisfactory professional conduct includes conduct of an Australian
legal practitioner 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 Australian legal practitioner.
Legal Services Board
6.2.3 Objectives
The objectives of the Board are—
(a) to ensure the effective regulation of the legal profession and the
maintenance of professional standards;
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(b) to address the concerns of clients of law practices and legal
practitioners through the regulatory system and provide for the
protection of consumers of legal services;
(c) to ensure the adequate management of trust accounts;
(d) to ensure that the Victorian system is at the forefront of regulation
of legal practitioners.
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