On 21 February 2017, in Victorian Legal Services commissioner v Logan (Legal Practice), the Victorian Civil and Administrative Tribunal delivered a decision regarding obligations that solicitors have towards their client and their client’s insureds. Whilst this decision canvasses two separate complaints this article only discusses one of the complaints and the findings by the VCAT. This decision is an important one, reiterating the position that the legal profession holds in the community, the public’s perception of the profession and the protection required for members of the public.
Ms Larisa Menhennet had a motor vehicle accident with another vehicle driven by Ms Jaeger. At the time of the collision, both Ms Menhennet and Ms Jaeger held comprehensive motor vehicle insurance with RACV Insurance (RACV). Ms Menhennet lodged a claim with RACV in respect to the accident and, pursuant her policy, she was allowed to choose a repairer. On the recommendation of RACV, Ms Menhennet chose Montague Body Repairs (Montague) as RACV advised that Montague offered a courtesy hire car. Ms Menhennet contacted Montague and arranged a replacement vehicle.
Ms Menhennet took her vehicle to Montague and was asked to sign two forms, an express legal engagement form (the Menhennet authority) and a hire car rental form from Onyx Car Rentals. No legal advice or other explanation was given to Ms Menhennet prior to her signing the Menhennet authority or the Menhennet hire car agreement. Copies of the agreements were not provided and the agreements did not provide the Firm with any proper instructions or basis to act for Ms Menhennet. No instructions were sought nor was any advice given to Ms Menhennet pursuant to the obligations under the Civil Procedure Act 2010 (VIC).
Ms Menhennet received a letter from the law firm at which Nicholas Logan was the sole practitioner, stating that the Firm was acting on her behalf to recover the damages from the accident. The Firm sent a letter of demand to RACV for the cost of repairs, assessment report and hire car and stated that the Firm was acting for Ms Menhennet.
Montague had also sent Ms Menhenent an email advising that if she decided to cancel the claim with the Firm there would not be any charge on her behalf, that all costs would be covered, and that the costs of the Hire car and the work completed would be charged to RACV direct.
Ms Menhennet telephoned (and emailed) the Firm advising that she was revoking the authority to act on her behalf. The Firm subsequently sent a letter to Ms Menhennet and RACV confirming that they were no longer acting for Ms Menhennet. RACV also sent a letter to the Firm acknowledging that the Firm was no longer acting for Ms Menhennet.
Ms Mehennet also sent an email to RACV advising that the claim through the Firm had been withdrawn. Ms Menhennet collected her vehicle from Montague upon it being repaired and RACV paid Montague for the costs of repair.
The Firm sent a letter to RACV and advised of the hire car costs sought. RACV responded advising that they had spoken to Ms Menhennet who confirmed that the Firm did not have authority to act on her behalf.
The Firm emailed Montague asking it to call and try to resolve the conflict with Ms Menhennet and the Firm’s authority to act. Subsequently, the Firm sent two further emails to RACV requesting that the claim be reviewed and that they had been advised by Ms Menhennet that she did want them to act to recover the cost of the hire car only.
A further email was sent by the Firm referring to previous correspondence and advising that proceedings would be commenced if the hire car costs were not paid. RACV made an offer to the Firm for $555.20. The Firm responded stating that they did not have instructions to accept the Offer and made a counter offer for $1,200.00 and repeated this Offer a further 4 times. The Firm wrote to RACV advising they had instructions commence proceedings even though Ms Menhennet had not been contacted in approximately 6 months. Proceedings were commenced in Ms Menhennet’s name in the amount of $1,747.73 for hire car costs without Ms Menhennet knowledge. Ms Menhennet received a phone call from RACV informing her that the Firm had issued legal proceedings in her name against Ms Jaeger. A defence was subsequently filed and it was set down for a settlement conference.
The Firm subsequently wrote to Russell Kennedy, who were acting for the Defendant on the instructions of RACV and advised that they hold instructions to finalise the claim for $1,200.00.
Ms Menhennet instructed Hall & Wilcox to put the Firm on notice of Ms Menhennet’s denial of authority and explain how they acted for Ms Menhennet. No response was received by Hall & Wilcox. Hall & Wilcox wrote to the Firm again and to Nicholas Logan direct, but again no response was received.
The Firm then wrote to Russell Kennedy with an oral settlement offer indicating they wished to resolve the matter. This Offer was again made without instructions from Ms Menhennet, and after the Firm was informed by Hall & Wilcox that they did not have authority to act.
Hall & Wilcox filed a notice of change of solicitor on instructions from Ms Menhennet and wrote to the Firm advising them and informing the Firm that application for costs was going to be made against the Firm or the Respondent.
The Firm wrote to Russell Kennedy and their lack of authority to act and posited that their client had instructed them to act on a subrogated basis. Consent orders were made by the Firm in which the Firm was to pay the costs of the plaintiff (i.e. Ms Menhennet) and the proceedings were struck out. The Firm did not communicate with Ms Menhennet at all after the Letter of 25 June 2012, yet continued to purport to act on her behalf and indicate to other parties they had instructions from Ms Menhennet.
An investigation was conducted and a complaint was sent to Mr Nicholas Logan, the respondent, on 18 September 2013. No response was received and a follow up letter was sent on 14 October 2013.
The Commissioner called Mr Gary Keisoglu at the Firm in which he advised the commissioner that the hire car matter continued and that it was only the repair matter which was cancelled by Ms Menhennet. However, Mr Keisoglu accepted fault for issuing proceedings in Ms Menhennet’s name without instructions.
Despite the above, no response was received from the Respondent. Consequently, the Commissioner sent a final letter and then the Respondent was referred to VCAT for breach of s.4.4.11 of the Legal Profession Act 2004.
The Respondent confirmed that proceedings were issued by the Firm without instructions from Ms Menhennet as they were of the belief that the file was closed off the system in the first instance from those emails referred to by the complainant. Further, they defended the misconduct on the basis that the Firm’s internal procedures were not appropriately managed and that the staff member acting on the hire car claim had no reason to believe that instructions had been withdrawn by Ms Menhennet. The Respondent accepted full responsibility and stated that the costs of the proceedings were paid by the car rental firm.
The complaint and the investigation into the Firm’s conduct continued and a notice of decision was issued on 17 July 2015. Further, in a separate complaint, , the Commissioner wrote to the Respondent on 3 December 2015, with a Notice of Decision in relation to a complaint issued by Mr Hannah Helmy. This is discussed in further detail in the VCAT decision.
The Legal Profession Act 2004 outlines the obligations of all legal practitioners relating to professional misconduct and unsatisfactory professional conduct. The Victorian legal Services Commissioner submitted that the actions of the Respondent were very serious and that the issuing of proceedings in the circumstances admitted by the Respondent had been recognised as professional misconduct at common law in a number of cases. Judge Jenkins agreed and found the misconduct of the Respondent to be very serious bearing in mind that the Respondent’s conduct had been dealt with the regulator before. Judge Jenkins found that the Respondent’s conduct and previous disciplinary findings amounted to a contempt for the regulator in wilfully breaching his Undertaking to confirm instructions in writing; communicate directly with clients; and communicate directly with clients in respect to making or accepting offers of settlements.
Judge Jenkins reiterating the gravity of the Respondent’s conduct by stating:
“In the circumstances of this case, specific deterrence is of some significance, but general deterrence is of greater significance. The conduct of some lawyers acting on referrals or instructions received from crash repairers and/or middlemen is a matter of concern to the community. When that conduct is found to be deficient, this reinforces a negative view of the profession, and undermines the reputation of the profession. The cases of Battley and Hession are examples of this.”
Judge Jenkins found that the public was entitled to the protection provided in the regulatory regime and when misconduct is apparent, a prompt and effective response was necessary. The Respondent’s practicing certificate was cancelled and the Respondent was ineligible to obtain a new local practicing certificate for a period of 2 years after cancellation.