The lawyer did not update the clients on developments in a property matter
A lawyer has been fined $2,500 by a standards committee after she neglected to update clients on the developments in a property-related matter and acted without instructions.
The lawyer, who was given the pseudonym Ms H, had been engaged by clients Mr J and Ms K as legal representation in relation to an agreement to sell a property owned by Ms K. Mr J and Ms K sought to purchase another property together, a transaction that hinged on the clients being able to secure finance; under Mr J and Ms K’s finance agreement, the proceeds from the sale of Ms K’s property would be used to discharge the new property’s mortgage.
The sale and purchase had been arranged to settle on the same day. However, the buyer of Ms K’s property did not pay the required deposit on the agreed date; Ms H was not aware of this and did not proactively seek to confirm that the payment was made. The real estate agent informed Ms H of the nonpayment a week after the deadline.
Mr J and Ms K had to confirm the fulfillment of the finance condition for their property purchase, and while Ms H took instructions, she did not inform the clients of the deposit issue. She told the seller’s solicitors that Mr J and Ms K waived the finance condition.
The following day, the deposit was still unpaid, and Ms K was informed of this in a phone call. Ms H told the seller’s solicitors that the sale and purchase agreement was unconditional; subsequently, she tried to resolve the issues personally by attempting to secure another buyer.
She also engaged a private investigator to locate the original buyer and sent a notice of demand for the deposit’s payment as well as a notice of the agreement’s cancellation due to the deposit being unpaid. Per her file, Ms H had received no instructions to conduct any of the preceding actions.
Even though the sale had fallen through, Mr J and Ms K were still bound to complete their property purchase. Thus, they sought compensation from Ms H, and a settlement was agreed upon outside of the complaints process.
The standards committee determined that Ms H failed to monitor the deposit’s payment. Moreover, after she had been made aware of the situation she failed to comprehensively check the buyer’s financial situation and identify risks that could affect her clients. Thus, Ms H violated rule 3 of the Lawyers and Conveyancers (Conduct and Client Care) Rules 2008 (RCCC) and displayed unsatisfactory conduct.
Ms H also breached RCCC rule 7 when she did not notify her clients of the deposit’s nonpayment even though she had been communicating with them that same day. Ms H claimed that she thought the nonpayment was not necessarily a cause for concern and had wanted to investigate before informing Mr J and Ms K.
However, the committee pointed out that the deposit had been key to Mr J and Ms K’s property purchase; thus, Mr H should have informed them of the issue promptly.
Ms H also violated RCCC rules when she independently issued notices of demand and contract cancellation to the buyer of Ms K’s property. Ms H said the instructions came from “authorised representatives” as Ms K was unwell; however, there was no record of such instructions, and Ms K said she was not so ill that she could not have given instruction.
The committee found that Ms H also breached RCCC rule 5.11 by not telling clients to seek independent advice if they are alerted to a potential claim against them. Ms H alleged she did not know of claims filed against her by clients; however, the committee knew Ms H had taken significant actions to fix the issues that had arisen from the deposit’s nonpayment; thus, she knew her conduct was a matter of concern.
Nonetheless, Ms H continued to display what the committee said was a “concerning lack of insight” into her behaviour and a lack of awareness that her actions had been inappropriate. In addition to the $2,500 fine, the committee ordered her to pay $1,000 in costs.
