Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Law Society of New South Wales v McCartney [2017] NSWCATOD 130 Hearing dates: 12 July 2017 Date of orders: 25 August 2017 Decision date: 25 August 2017 Jurisdiction: Occupational Division Before: S Westgarth, Deputy President N Matkovich, Senior Member J Schwager, General Member Decision: (1) The respondent is reprimanded; (2) The respondent shall pay the applicant a fine of $2,500.00 payable within two months of the date of this order; and (3) The respondent will pay the applicant's costs as agreed or assessed Catchwords: Unsatisfactory professional conduct – Professional misconduct Legislation Cited: Civil and Administrative Tribunal Act 2013 Legal Profession Act 2004 Legal Profession Uniform Law Application Act 2014 Legal Profession Uniform Law Application Amendment Act 2015 Cases Cited: Allinson v General Council of Medical Education and Registration [1894] 1 QB 750 Council Of The New South Wales Bar Association V Sahade [2007] NSWCA 145 Fraser v Council of the Law Society of New South Wales [1992] NSWCA 72 Law Society of New South Wales v Shad [2002] NSWADT 236 Law Society of New South Wales v Walsh [1997] NSWCA 185 Xu v Council of the Law Society of NSW [2009] NSWCA 430 Category: Principal judgment Parties: Council of the Law Society of New South Wales (Applicant) Duncan Grant McCartney (Respondent) Representation: Counsel: Mr Pierotti (Applicant) Solicitors: Mr McCartney (Respondent)(self-represented) File Number(s): 2016/00378806 reasons for decision Background 1. These proceedings were commenced on 19 October 2016 when the applicant filed an Application for Disciplinary Findings and Orders dated 17 October 2016. We will refer to the parties as the applicant and the respondent (referring to the solicitor). 2. The applicant sought the following orders: 1. That the solicitor be reprimanded; 2. That the solicitor be fined; 3. That the solicitor pay the Law Society's costs; and 4. Such further and other order as the Tribunal sees fit. 1. The applicant sought a finding from the Tribunal that the respondent is guilty of professional misconduct on the grounds that the respondent had "executed a Withdrawal of Caveat that was registered over 1 [Street name] Bexley NSW without instructions to do so". 2. The Application contained the following particulars of the grounds of the complaint: Particulars of Grounds of Complaint In these particulars: The Solicitor means Grant Duncan McCartney Mr McWeeney means Eamon Gabriel McWeeney Ms McWeeney means Sharon Elizabeth McWeeney 1. The Solicitor acted for Mr & Mrs Michael and Ellen Smullen. 2. Mr Smullen was taking a re- transfer of his trustee in bankruptcy's share in a property at [Address], Bexley (Folio Identifier [number]) (the property) and with his wife was then selling the property to MV Asset Australia Pty Ltd. 3. As at 1 June 2012 the property was encumbered by way of Caveat in favour of Mr McWeeney. Mr McWeeney was asserting a caveatable interest against the property in an amount in excess of $360,000.00. 4. As at 1 June 2012 the property was the subject of family law proceedings between Mr McWeeney and Ms McWeeney. Mr & Mrs McWeeney had divorced on 19 January 2010. 5. On 1 June 2012 the property was transferred. The first Transfer permitted the trustee in Bankruptcy of Mr Michael Smullen, Mr Andrew Wiley, to transfer the whole of Mr Smullen's interest in the Property (being 50%) back to Mr Smullen for nil consideration. The second Transfer, permitted Mr Smullen and his wife Mrs. Ellen Smullen to transfer the entirety of the property to a third party, MV Asset Australia Pty Ltd. 6. Mr McWeeney had never met, spoken with or instructed the Solicitor in relation to any matter and did not instruct the Solicitor to register a Withdrawal of Caveat on the property or any other property. 7. The Solicitor's only instructions in respect of the withdrawal of the caveat had come from Ms McWeeney, who is also the daughter of Mr & Mrs Michael and Ellen Smullen. Those instructions had come on 1 June 2012 when, prior to settlement, Ms McWeeney provided to the Solicitor, by facsimile, a copy of a Withdrawal of Caveat purportedly signed by Mr McWeeney. 8. The Solicitor was unable to obtain the original Withdrawal of Caveat from Ms McWeeney but did obtain from her authority for him to sign the Withdrawal of Caveat on the basis of the facsimile document. The Withdrawal of Caveat was required to complete the Transfers. 9. On settlement the Solicitor received a cheque in the sum of $30,000 which was provided by his clients, Mr & Mrs Smullen. 10. Mr McWeeney did not receive the said sum of $30,000.00. The cheque was not made payable to the Mr McWeeney but to S.E. McWeeney (being Sharon Elizabeth McWeeney – Ms McWeeney). Respondent's Reply 1. The respondent filed a Reply to Application for Disciplinary Findings and Orders (dated 6 February 2017) on 20 February 2017. The substance of the Reply is as follows: REPLY I reply to each of the grounds set out in the application as follows: 1. The respondent admits paragraph 1. 2. The respondent admits to paragraph 2. 3. The respondent admits to paragraph 3 but says he was not aware at the relevant time that Mr McWeeney was continuing to assert a caveatable interest against the property. 4. The respondent does not admit paragraph 4. Particulars He was not aware as at 1 June 2012 that the property was the subject of family law proceedings between Mr McWeeney and Ms McWeeney and the respondent was not aware that Mr and Mrs McWeeney had divorced on 19 January 2010. 5. The respondent admits paragraph 5. 6. The respondent admits paragraph 6. 7. The respondent admits paragraph 7. 8. The respondent admits paragraph 8. 9. The respondent admits paragraph 9. 10. The respondent does not admit paragraph 10 in so far as having knowledge that Mr McWeeney did not receive the sum of $30,000 but admits that the cheque was made out to S E McWeeney. Applicant's Evidence 1. The applicant relied upon the affidavit of Anne-Marie Foord dated 17 October 2016 (Exhibit A). 2. There was no objection to the tender of Ms Foord's affidavit and she was not required for cross-examination. Respondent's Evidence 1. The respondent relied upon his affidavit dated 10 February 2017 (Exhibit 1). He also relied upon the following letters: 1. Letter from Broad Beach Investments Pty Ltd signed by Don Amos and undated (Exhibit 2); 2. Letter from Kevin Jacobsen OAM dated 10 July 2017 (Exhibit 3); 3. Letter from Malcolm Ayoub dated 10 July 2017 (Exhibit 4); and 4. Letter from Group Marketing International Pty Limited signed by Charles Paterson dated 7 July 2017 (Exhibit 5). 1. Mr Pierotti had no objection to the respondent's affidavit but submitted that Exhibits 2 to 5 should be given limited weight because the authors of those letters do not state that they had been made aware of the alleged conduct which is the subject of these proceedings. 2. In addition, the respondent handed up written submissions and Mr Pierotti objected to some paragraphs of those submissions upon the basis that they contained reference to facts for which there was no evidence. The respondent's submissions are dated 12 July 2017. The portions which are the subject of Mr Pierotti's objections are: 1. Page 1 – the second last and third last paragraphs on that page; and 2. Page 2 – the fourth last and third last paragraphs on that page. The fourth last paragraph commences "He regularly" and the third last commences "The Respondent and his partner...". 1. We did not rule on the objections at the hearing. We have decided to allow the paragraphs on the basis that they contain evidence of facts within the respondent's knowledge. However, in our view, the facts concerned are of no relevance to the matters we have to decide. 2. The respondent was cross-examined on aspects of his affidavit by the Tribunal but was not cross-examined by Mr Pierotti. The respondent stated that although he recognised that the caveator was Mr McWeeney, he was instructed by his clients to draw a cheque in respect of what he understood to be the value of the caveatable interest ($30,000.00) in favour of Ms McWeeney and that he did not think to request an authority from Mr McWeeney to draw the cheque in favour of Ms McWeeney. Applicant's Submissions 1. The applicant submitted that all relevant facts asserted by the applicant have been admitted by the respondent. The only facts disputed by the respondent are the following: 1. In paragraph 3 of the Application the applicant contends that Mr McWeeney was asserting a caveatable interest against the property in an amount in excess of $360,000.00. The respondent states that he was not aware at the relevant time that Mr McWeeney was continuing to assert a caveatable interest against the property; 2. In paragraph 4 of the Application the applicant contends that as at 1 June 2012 the property was the subject of family law proceedings between Mr McWeeney and Ms McWeeney and that Mr and Mrs McWeeney had divorced on 19 January 2010. The respondent's reply states that he does not admit paragraph 4 and that he was not aware, as at 1 June 2012, that the property was the subject of family law proceedings between Mr and Mrs McWeeney or that they had divorced on 19 January 2010; and 3. In paragraph 10 of the Application the applicant contends that Mr McWeeney did not receive the sum of $30,000.00 following settlement. In the Reply, the respondent does not admit that he had knowledge that Mr McWeeney did not receive the sum of $30,000.00 but admitted that the cheque was made out to S E McWeeney. 1. The applicant submitted that the conduct which has been described in the Application and admitted to in the Reply constitutes professional misconduct by the respondent. The applicant notes that the respondent states that he was misled and that he did not behave dishonestly. The respondent relied upon Ms McWeeney as the source of his authority to sign the withdrawal of caveat. The applicant accepts that the respondent was not dishonest but states that dishonesty is not a necessary ingredient for a finding of professional misconduct. 2. The applicant's submission is that the conduct of the respondent is of the kind referred to in the decision in Allinson v General Council of Medical Education and Registration [1894] 1 QB 750 in which Lopes LJ referred to conduct which would be reasonably regarded as disgraceful or dishonourable by professional brethren of good repute and competency. The applicant submitted that the respondent's conduct was disgraceful or dishonourable in that he took action which had the effect of denying the interest in a property of a third party. He had identified the issue (namely the requirement for a withdrawal of caveat) but what is in issue is the way he handled that requirement. 3. The applicant submitted that the respondent's conduct could not be described as technical, nor negligent. The veracity and/or extent of Mr McWeeney's interest in the property was not known to the respondent, but he took action which voided Mr McWeeney's entitlements. He signed a withdrawal without speaking to Mr McWeeney. He relied only upon a facsimile forwarded by Mrs McWeeney. That conduct was a fundamental error. 4. The applicant referred to the decision in Xu v Council of the Law Society of NSW [2009] NSWCA 430. That case concerned a solicitor who handled a conveyance. The husband had forged the wife's signature. The Court of Appeal analysed the requirements of s 497 and 498 of the Legal Profession Act 2004 (LP Act) and found that the conduct was not professional misconduct. The applicant submitted that the Tribunal is not confined to an analysis of those sections of the LP Act. Rather, it can determine that the conduct was professional misconduct by reference to common law principles as articulated in the Allinson case. The applicant seeks to distinguish the Xu case from the facts in this case. 5. The applicant submitted that the Tribunal ought have regard to the principles set out in Law Society of New South Wales v Walsh [1997] NSWCA 185 in which statements have been made to the effect that the Tribunal's orders must act as a mark of the profession's disapproval of the conduct and as a deterrent to the profession generally. 6. The applicant submitted that the Tribunal should find the respondent guilty of professional misconduct and that a fine in the region of $2,500.00 to $5,000.00 should be imposed. Respondent's Submissions 1. The respondent filed written submissions which may be summarised in these terms: 1. The conduct complained of is of a serious nature but does not amount to professional misconduct. It does not involve dishonesty, fraud or misappropriation; 2. The respondent states that he "makes no excuse for his failure of judgement in executing the withdrawal of caveat complained of. He accepts that it is conduct that falls short of the standards of competence and diligence that a member of the public is entitled to expect. There were no extenuating circumstances and accepts unreservedly that although he may have been conned, that is no excuse"; 3. The respondent has been in practice since 2001 in New South Wales and was first admitted as a practitioner in New Zealand in 1981. No disciplinary findings have been made against the respondent during these periods; and 4. The respondent also relies upon the four references identified above as Exhibits 2, 3, 4 and 5. Each of the references states that the respondent is a solicitor in whom the authors repose their trust. They value the respondent's professional advice and state that he is ethical and fair minded as well as being competent, professional and tenacious. 1. At the hearing the respondent made the following additional submissions: 1. The Allinson case lacks relevance because it has been superseded by subsequent case law. Xu's case is the most relevant case. For conduct to constitute professional misconduct, it must be substantial or consistent. That was not the case here. Rather, the respondent was "groomed or conned"; 2. The respondent acknowledges that he was "seriously at fault"; and 3. The respondent submitted that the order imposing a public reprimand is a sufficient humiliation. The facts do not justify a finding of professional misconduct. In addition, he submitted that he was a fit and proper person to continue to practise as a solicitor; and 4. In response to the criticisms made by Mr Pierotti that the references did not contain an acknowledgement that the referees were aware of the facts behind these proceedings, the respondent said that he had told each of the referees of the relevant facts; Consideration 1. The applicant proceeds under the LP Act. The LP Act was repealed as from 1 July 2015 by the Legal Profession Uniform Law Application Act 2014 (the Application Act). Schedule 2 of the Legal Profession Uniform Law Application Amendment Act 2015 (Uniform Law Amendment Act) made a range of amendments from 1 July 2015 reflecting the commencement of the Application Act from 1 July 2015. Clause 26 of Sch 4 of the Uniform Law Amendment Act contains transitional provisions. The effect of those provisions is that a complaint or investigation that had begun but had not been completed before 1 July 2015 is to continue to be dealt with in accordance with the provisions of the LP Act. The complaint giving rise to these proceedings commenced before 1 July 2015 (see the affidavit of AM Foord – Exhibit A) and accordingly the provisions of the LP Act apply. 2. The main issue in this case is whether the respondent's conduct constitutes "professional misconduct" as the applicant contends or whether the respondent's conduct constitutes "unsatisfactory professional conduct" as the respondent concedes. 3. Sections 496, 497 and 498 of the LP Act are relevant. They provide: 496 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. 497 Professional misconduct (1) For the purposes of this Act: professional misconduct includes: (a) unsatisfactory professional conduct of an Australian legal practitioner, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence, and (b) conduct of an Australian legal practitioner whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice. (2) For finding that an Australian legal practitioner is not a fit and proper person to engage in legal practice as mentioned in subsection (1), regard may be had to the matters that would be considered under section 25 or 42 if the practitioner were an applicant for admission to the legal profession under this Act or for the grant or renewal of a local practising certificate and any other relevant matters. 498 Conduct capable of being unsatisfactory professional conduct or professional misconduct (1) Without limiting section 496 or 497, the following conduct is capable of being unsatisfactory professional conduct or professional misconduct: (a) conduct consisting of a contravention of this Act, the regulations or the legal profession rules, (b) charging of excessive legal costs in connection with the practice of law, (c) conduct in respect of which there is a conviction for: (i) a serious offence, or (ii) a tax offence, or (iii) an offence involving dishonesty, (d) conduct of an Australian legal practitioner as or in becoming an insolvent under administration, (e) conduct of an Australian legal practitioner in becoming disqualified from managing or being involved in the management of any corporation under the Corporations Act 2001 of the Commonwealth, (f) conduct consisting of a failure to comply with the requirements of a notice under this Act or the regulations (other than an information notice), (g) conduct of an Australian legal practitioner in failing to comply with an order of the Disciplinary Tribunal made under this Act or an order of a corresponding disciplinary body made under a corresponding law (including but not limited to a failure to pay wholly or partly a fine imposed under this Act or a corresponding law), (h) conduct of an Australian legal practitioner in failing to comply with a compensation order made under this Act or a corresponding law. (2) Conduct of a person consisting of a contravention referred to in subsection (1) (a) is capable of being unsatisfactory professional conduct or professional misconduct whether or not the person is convicted of an offence in relation to the contravention. 1. The statutory definitions are inclusive ones and in our view, the applicant is able to turn to the common law for further guidance as to conduct constituting professional misconduct. In The Council Of The New South Wales Bar Association V Sahade [2007] NSWCA 145 Basten JA said that the language described in the Allinson case had been adopted in Australia in relation to both medical and legal practitioners (see pars 54 and 55). 2. We were not taken to any cases where the facts may be considered analogous to the facts in these proceedings, other than the Xu case which we will refer to subsequently in these reasons. However, the following cases appear to us to have some relevance to this matter, if only to point out some distinguishing features: 1. Fraser v Council of the Law Society of New South Wales [1992] NSWCA 72. This case concerned a solicitor who falsely swore a certificate stating that he had explained mortgage documents to mortgagors when in fact he had not done so. The certificate was intended to be relied upon by the proposed mortgagee. The solicitor was found to have been guilty of professional misconduct. In that case, the solicitor knew the certificate to be false. However, in the case of the respondent in these proceedings, there is no evidence that the respondent knew that the instructions to sign the withdrawal of caveat had been given without the authority of the caveator; and 2. In Law Society of New South Wales v Shad [2002] NSWADT 236, the Tribunal came to a similar conclusion as in the Fraser case. In that case, the Tribunal quoted an earlier case in which the Tribunal had stated that practitioners who falsely witness any document will be dealt with seriously by the Tribunal. Again, the respondent in the present proceedings is in a different position in that there is no evidence that he knew that his authority had been falsely given. 1. The distinction between those cases and the present case is perhaps a reason why the applicant did not make reference to them in its submissions. 2. As stated above, the applicant drew to the attention of the Tribunal the case of Xu. That case confirmed that the provisions of the LP Act expand the "bases of disciplinary action from the general law principles which were restricted to cases of disgraceful or dishonourable conduct in a professional respect, so as to cover "unsatisfactory professional conduct" which is defined by statute to include conduct "occurring in connection with the practise 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" (Basten JA at par 4). His Honour stated that the LP Act now also provides a statutory definition of professional misconduct. His Honour described the issue in that case as turning on the distinction between conduct which is merely a failure to reach or maintain a reasonable standard of competence or diligence and conduct which involves a "substantial" or "consistent" failure of that kind. 3. The facts in the Xu case be briefly described as follows: 1. The solicitor acted on a conveyancing transaction for a purchaser, the contract had been signed by two purchasers and he provided a certificate that he had witnessed both signatures. One of the purchasers had claimed that her signature was a forgery and she repudiated the contract. The Tribunal found that the conduct of the solicitor in failing to witness the wife's signature and signing a certificate conveyed representations to the vendor and the vendor's solicitors which were false; 2. The solicitor admitted that he had signed the certificate but stated that he had been careless and not read the certificate. He admitted that he had not seen the wife sign the contract; 3. The Court of Appeal agreed with the Tribunal that the solicitor's certificate constituted a representation that the wife was also a purchaser and after having been properly advised had unknowingly waived her right to a cooling off period otherwise available; and 4. The Court of Appeal stated that the findings of the Tribunal "do not establish a "substantial", let alone "a consistent" failure to reach or maintain a reasonable standard of competence and diligence. However that conduct was within the definition of unsatisfactory professional conduct in s 496". The Court of Appeal described the solicitor's conduct as being "momentary and isolated". The Court of Appeal substituted the Tribunal's finding of professional misconduct for a finding of unsatisfactory professional conduct. The Court of Appeal also described the solicitor's conveyancing work as "incredibly sloppy" and that his "signing of the ... certificate was irresponsible". 1. In our view, the respondent's conduct more aptly fits within the description of unsatisfactory professional conduct as described in s 496 of the LP Act rather than professional misconduct as described in s 497. The respondent's conduct fell 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. 2. In our view, the respondent's conduct cannot be described as a "consistent" failure to reach or maintain a reasonable standard of competence and diligence. The conduct was isolated to one transaction and involved a single signature as well as a failure to have regard to whether money should be collected on settlement in favour of the caveator. 3. The applicant did not rely on the alternative limb of s 497, namely that the conduct constituted a "substantial" failure to reach or maintain a reasonable standard of competence and diligence. On the basis of what was said in the Xu case, we are of the view that the respondent's conduct did not constitute professional misconduct under s 497. The respondent's conduct was, like Mr Xu, incredibly sloppy and fell well 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, but it did not, in our view, constitute professional misconduct. 4. In addition, we do not accept the applicant's contention that the respondent's conduct constituted professional misconduct in the Allinson sense. The respondent does not deserve to be described as disgraceful or dishonourable. 5. Section 562 of the LP Act provides that if after it has completed a hearing in relation to a complaint against an Australian legal practitioner, the Tribunal is satisfied that the practitioner has engaged in unsatisfactory professional conduct or professional misconduct, the Tribunal may make such orders as it thinks fit, including one or more of the orders specified in s 562. Those orders include an order reprimanding the practitioner as well as an order imposing a fine. We agree with the applicant's contentions that the respondent should be reprimanded and that a fine should be imposed. We note that s 562(8) provides that if the Tribunal makes an order reprimanding the practitioner, the Tribunal is to publish the order and a statement of its reasons for making the order. 6. The applicant submitted that the amount of the fine is entirely a matter for the Tribunal. The applicant's additional submission was that a fine in the order of $2,500.00 to $5,000.00 would be consistent with other cases. We note that in the Xu case, the fine for the relevant conduct was $1,500.00. However, that case involved conduct which occurred in 2003, whereas in the present case, the relevant conduct occurred in 2012. 7. It is generally accepted that in making orders of the kind proposed (namely a reprimand and a fine) and other types of orders in proceedings of this kind, the role of the Tribunal is protective rather than punitive (see Law Society of New South Wales v Walsh [1997] NSWCA 185). In addition, in the Walsh case, it was said that any penalty should contain an element of general deterrence for the purposes of publically marking the seriousness of the conduct in question. It is relevant to take into account the effect that the order will have upon the understanding in the profession and amongst the public of the standard of behaviour required of solicitors. In this case, the interest of the caveator was disregarded. Such conduct carries with it the possibility that the role of solicitors in the maintenance of a reliable system of conveyancing is jeopardised. In all of the circumstances, we think that a fine of $2,500.00 is appropriate. We note that the caveator has foreshadowed making a claim for compensation against the respondent. That is a matter which is not the subject of these proceedings. 8. Having found that the respondent engaged in unsatisfactory professional conduct, the Tribunal is obliged to order that the respondent pay the applicant's costs (see cl 23 of Sch 5 of the Civil and Administrative Tribunal Act 2013) unless exceptional circumstances exist. None have been suggested by the respondent. Orders 1. The Tribunal finds that the respondent's conduct constitutes unsatisfactory professional conduct and the Tribunal makes the following orders: 1. The respondent is reprimanded; 2. The respondent shall pay the applicant a fine of $2,500.00 payable within two months of the date of this order; and 3. The respondent will pay the applicant's costs as agreed or assessed ******** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 August 2017