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ESSENTIAL

PROFESSIONAL

CONDUCT:

LEGALETHICS

CP

Cavendish

Publishing

(Australia)

Pty Limited

Sydney • London

Titles in the series:

Essential Administrative Law

Essential Australian Law

Essential Company Law

Essential Constitutional Law

Essential Contract Law

Essential Criminal Law

Essential Equity and Trusts

Essential Evidence

Essential Family Law

Essential International Trade Law

Essential Management Law

Essential Professional Conduct: Legal Accounting

Essential Professional Conduct: Legal Ethics

Essential Tort Law

ESSENTIAL

PROFESSIONAL

CONDUCT:

LEGALETHICS

Geoff Monahan, BA, LLB, LLM

Associate Professor, Faculty of Law,

University of Technology, Sydney

General Editor

Professor David Barker

Dean of the Faculty of Law,

University of Technology, Sydney

CP

Cavendish

Publishing

(Australia)

Pty Limited

Sydney • London

First published 2001 by Cavendish Publishing (Australia) Pty Limited,

3/303 Barrenjoey Road, Newport, New South Wales 2106

Telephone: (02) 9999 2777 Facsimile: (02) 9999 3688

Email: [email protected]

Cavendish Publishing Limited, The Glass House, Wharton Street,

London WC1X 9PX, United Kingdom

Telephone: +44 (0)20 7278 8000 Facsimile: +44 (0)20 7278 8080

Email: [email protected]

Website: www.cavendishpublishing.com

© Monahan, G 2001

All rights reserved. Except as permitted under the Copyright Act 1968

(Cth), no part of this publication may be reproduced or transmitted in

any form or by any means, electronic or mechanical, photocopying,

recording or otherwise, without the prior permission of the publisher

and copyright owner.

Any person who infringes the above in relation to this publication

may be liable to criminal prosecution and civil claims for damages.

National Library of Australia Cataloguing in Publication Data

Monahan, Geoff

Essential professional conduct: legal ethics

1 Lawyers – Discipline 2 Legal ethics 3 Practice of law

I Title (Series: Essential series)

174.3

ISBN 1 876213 05 1

Printed and bound in Great Britain

Preface

This book is intended as a revision aid for students studying degree or

diploma courses in law and practical legal training. As space is limited,

the book only covers the broad topic areas referred to in the ‘Priestley 11’

prescription for ‘Professional Conduct’, with the exception of trust

accounting (which is covered in the companion Cavendish text Essential

Professional Conduct: Legal Accounting, 2001, by Bronwyn Olliffe).

The term ‘ethics’ appears to mean different things to different people.

There appears to be no agreed definition or meaning, certainly in the

legal context. One common theme is ‘morality’ – but what is morality?

How many times have you heard a fictitious television lawyer

comment: ‘well, it may not be ethical, but it is certainly legal!’ Clearly,

there lies a blurring between the legal, ethical, moral and the commercial

responsibilities of the modern day legal practitioner.

The law is stated as it was on 1 February 2001.

While the book makes references to the relevant State and Territory

legislation and practice rules, it specifically refers to the practice rules in

New South Wales and the Australian Capital Territory (based upon the

Law Council of Australia’s Model Rules of Professional Conduct and

Practice) and the Advocacy Rules incorporated into the Practice Rules in

New South Wales and the Australian Capital Territory (and based upon

the New South Wales Barristers’ Rules as adopted by the Australian Bar

Association, and the Bar Associations in Queensland and the Australian

Capital Territory). The quotations at the commencement of some

chapters are mainly from the Model practice rules. Given the growth in

the interstate and international practice of law, it is hoped that all States

and Territories will move towards basic uniform practice rules in the

near future.

The cases referred to in this book include references to the following

courts:

Australian courts:

(HC) High Court of Australia

(Fed) Federal Court of Australia

(Fam) Family Court of Australia

v

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ESSENTIAL PROFESSIONAL CONDUCT: LEGAL ETHICS

(NSW) Supreme Court of New South Wales

(Vic) Supreme Court of Victoria

(Qld) Supreme Court of Queensland

(SA) Supreme Court of South Australia

(WA) Supreme Court of Western Australia

New Zealand courts:

(NZ) High Court of New Zealand

United Kingdom courts:

(PC) Privy Council

(HL) House of Lords

(CA) Court of Appeal

(KB) King’s Bench Division

(QB) Queen’s Bench Division

(Ch) Chancery Division

My thanks to Sharon Hunter-Taylor and David Hipsley for their

comments. I would also like to thank John O’Shannassy for his

assistance in the research for this book. This book is dedicated to my

godsons Paul and Nicholas.

Enjoy your studies in Professional Conduct.

Geoff Monahan

February 2001

Contents

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

Table of Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

1 The Legal Profession and Admission to Practice 1

2 Duty to the Law 11

3 Duty to the Court 19

4 Retainers and Liens 39

5 Competence, Care and Accountability 49

6 Confidentiality, Good Faith and Avoiding Conflicts 67

7 Relations with Third Parties 97

8 Relations with Other Lawyers 109

9 Discipline 117

Index 133

vii

Table of Cases

Allinson v General Council of Medical Education

and Registration [1894] 1 QB 750 120

Ambard v AG for Trinidad and Tobago [1936] AC 322 12

Anton Piller KG v Manufacturing Processes Ltd

[1976] 1 Ch 55 33

Arthur JS Hall and Co (A Firm) v Simmons

[2000] 3 WLR 873 16, 59

Australian Federal Police v Propend Finance

Pty Ltd (1997) 188 CLR 501 72, 78

B, In Re (A Solicitor) [1986] VR 695 128

Baker v Campbell (1983) 153 CLR 52 73, 76

Barwick v Law Society of NSW (2000) 169 ALR 236 118

Benecke v National Australia Bank

(1993) unreported, 22 April, NSWCA 70

Beneficial Finance Corporation Ltd v Karavas

(1991) 23 NSWLR 256 101

Brickhill v Cook [1984] 3 NSWLR 396 54

Brinks Mat Ltd v Elcome [1988] 1 WLR 1350 33

Broughton v Broughton (1855) 43 ER 831 92

Borland v Yates Property Corporation

Pty Ltd (1999) 167 ALR 575 54–55, 57

Caldwell v Treloar and Others (1982) 30 SASR 202 43

Carver v Legal Profession Disciplinary Tribunal

(1991) unreported, 27 September, NSWCA 113

Chamberlain v Law Society of the ACT

(1993) 118 ALR 54 129

Clyne v NSW Bar Association (1960) 104 CLR 186 121, 123

Commissioner for Australian Federal Police

v Propend Finance Pty Ltd (1997) 188 CLR 501 72, 76

Davis, In Re (1947) 75 CLR 409 3

Demetrios v Gikas Dry Cleaning Industries Ltd

(1991) 22 NSWLR 561 102

ix

Dew v Richardson (1999) unreported,

18 August, Qld SC 40

D and J Constructions Pty Ltd v Head

(1987) 8 NSWLR 118 89

Esso Australia Resources Ltd v Commissioner

of Taxation (1999) 167 ALR 117 73, 76–78

Flower and Hart (A Firm) v White Industries

(Qld) Pty Ltd (1999) 156 ALR 169 21–22

Fraser v Council of the Law Society of NSW

(1992) unreported, 23 August, NSWCA 101

Gagliano and Gagliano (1989) FLC 92–012 88

Giannarelli v Wraith (1988) 165 CLR 543 56

Goldberg v Ng (1995) 185 CLR 83 70–71

Grant v Downs (1976) 135 CLR 674 74–77

Griffith v Evans [1953] 1 WLR 1424 39–40

Guardian Royal Exchange Assurance of

New Zealand v Stuart [1985] 1 NZLR 596 75

Hardware Services v Primac Association Ltd

[1988] 1 Qd R 393 63

Hawkins v Clayton (1988) 164 CLR 534 60–61

Hedley Byrne and Co Ltd v Heller and

Partners [1964] AC 464 56

Hill v Van Erp (1997) 188 CLR 159 62

Johnson v Buttress (1936) 56 CLR 113 90

Keefe v Marks [1989] 16 NSWLR 713 58

Kennedy v Council of the Incorporated

Law Institute of NSW (1939) 13 ALJR 563 12, 30, 120

Kleinwort Benson Australia v Armitage

(1989) unreported, 26 April, NSW SC 51, 53

Law Society of NSW v Foreman (1994) 34 NSWLR 408 124–126

Law Society of NSW v Harvey [1976] 2 NSWLR 154 68, 80–83, 93

Law Society of NSW v Moulton [1981] 2 NSWLR 736 50

Lenehan, ex p (1947) 77 CLR 403 3

Leary v Federal Commissioner of Taxation

(1980) 32 ALR 221 14

Lillicrap v Nader and Son [1993] 1 WLR 94 69

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ESSENTIAL PROFESSIONAL CONDUCT: LEGAL ETHICS

McIndoe v Parbery (1994) Australian Torts Rep 81–290 52

McMillan and McMillan (2000) FLC 93–048 88–89

Malleson Stephen Jacques v KPMG Peat Marwick

(1990) 4 WAR 357 89–90

Mann v Carnell (1999) 167 ALR 86 70–71, 79

Marten v Royal College of Veterinary Surgeons

Disciplinary Committee [1966] 1 QB 1 98

McInnes v R (1979) 143 CLR 575 45

Meek v Fleming [1961] 2 QB 366 31–32

Mercer v Graves (1872) LR 7 QB 499 47

Midland Bank Trust Co Ltd v Hett [1979] Ch 384 51, 54, 64

Monro v Thomas (1985) unreported,

2 September, Qld SC 40

Montague Mining Pty Ltd v Gore and Others, trading

as Clayton Utz (1999) ANZ Conveyancing Rep 52

Moseley, In Re (1925) 25 SR (NSW) 174 129

Myers v Elman [1940] AC 282 25

Nickelby Pty Ltd v Holden (1994) unreported,

31 March, NSW SC 104–105

NSW Bar Association v Evatt (1968) 117 CLR 177 125

O’Donovan v Forsyth (1987) 76 ALR 97 14

O’Reilly v Law Society of NSW

(1988) 9 NSWLR 204 82–83, 119

Patience, ex p (1940) 40 SR (NSW) 96 47

R v Cox and Railton (1884) 14 QBD 153 72

R v Dietrich (1992) 177 CLR 292 45

Re A Barrister (1920) 37 WN (NSW) 271 100

Re A Solicitor [1960] VR 617 117

Re B [1981] 2 NSWLR 372 2, 7, 11

Re Cooke (1889) 5 TLR 407 20

Re Meter Cabs Ltd [1911] 2 Ch 557 47

Re Thom (1918) 18 SR (NSW) 70 25–26

Re Weare [1893] 2 QB 439 12

Rees v Sinclair [1988] 1 NZLR 180 57

Ridehalgh v Horsefield [1994] 3 WLR 463 59

Rondel v Worsely [1969] 1 AC 191 16, 56

Russo v Dupree (1989) unreported,

3 February, NSW SC 116

xi

TABLE OF CASES

Saif Ali v Sydney Mitchell and Co

[1980] AC 198 22, 51

Shannon, In the Will of [1977] 1 NSWLR 210 92–93

Southern Law Society v Westbrook

(1910) 10 CLR 609 119

Sparnon v Apand Pty Ltd (1996) 138 ALR 735 76

Summerville v Walsh (1998) unreported,

26 February, NSWCA 62

The Prothonotary of the Supreme Court of NSW

v Jai Ram (1989) unreported, 11 May, NSWCA 126

Tombling v Universal Bulbs Co Ltd [1951] 2 TLR 289 22

Tyrell v Bank of London (1862) 11 ER 934 93

Unioil International Pty Ltd v Deloitte Touche

Tohmatsu (1997) 17 WAR 98 90

Vulic v Bilinksy [1983] 2 NSWLR 412 52

Wade v Licardy (1993) 33 NSWLR 1 103–104, 106

Waugh v British Railways Board [1980] AC 521 75

Weaver v Law Society of NSW (1979) 142 CLR 20 126

Webster v Yates Property Corporation Pty Ltd

(1999) 167 ALR 575 54

Weiss v Barker Gosling (1993) FLC 92–399 42

Wentworth v NSW Bar Association (1992) 176 CLR 239 2

Weston v CCC Courts Administrator [1977] QB 32 99

Whitehorn v R (1983) 152 CLR 657 35, 39

WFM Motors Pty Ltd v Maydwell (1994) unreported,

7 March, NSW SC 48

Yates Property Corporation Pty Ltd v Borland

(1997) 145 ALR 161 54–55

Yates Property Corporation Pty Ltd v Borland

(1998) 157 ALR 30 53–55, 57

Ziems v The Prothonotary of the Supreme Court

of NSW (1957) 97 CLR 279 12–13, 119,

121, 128

xii

ESSENTIAL PROFESSIONAL CONDUCT: LEGAL ETHICS

1 The Legal Profession and

Admission to Practice

Inherent jurisdiction of courts

The State and Territory Supreme Courts retain an inherent jurisdiction

to admit individuals as legal practitioners. This inherent jurisdiction

also extends to removal of individuals as legal practitioners (often

referred to as being ‘struck off the rolls’). Legal practitioners wishing

to practise in a federal court must also apply for admission to the High

Court of Australia. Applications for admission were traditionally

made by way of formal application to the court, although in modern

times this function has been delegated to administrative boards.

The 1990s witnessed the adoption of uniform admission standards,

mutual recognition of professional qualifications and, more recently,

national practising certificates: see (NSW) Legal Profession Act 1987

Part 3B; (Vic) Legal Practice Act 1996 Part 2A; (SA) Legal Practitioners

Act 1981 Part 3A; (ACT) Legal Practitioners Act 1970 Part XVA.

Uniform admission rules

All States and Territories have now implemented (with some local

variations, and not formally in Western Australia) the ‘uniform

admission rules’ drafted by the Consultative Committee of State and

Territory Law Admitting Authorities (also known as the Priestley

Committee).

1

You should be familiar with the following areas:

• inherent jurisdiction of Supreme Courts to admit or remove

individuals as legal practitioners

• uniform admission rules and mutual recognition

• structure of the legal profession

• legal practice rules

An applicant for admission must provide evidence to the relevant

State or Territory admitting authority that he or she has successfully

completed:

• a recognised academic course (either a degree in law or similar

award) from an accredited institution; and

• the practical requirements either by undertaking ‘articles of

clerkship’ (if applicable) or a course of practical legal training from

an accredited institution.

Apart from prescribing the necessary academic and practical

requirements, the uniform admission rules confirm the common law

requirement that applicants seeking admission must be of good fame

and character and otherwise fit and proper persons to be admitted as

a legal practitioner. In the case of Wentworth v NSW Bar Association

(1992) (HC) the High Court (per Deane, Dawson, Toohey and Gaudron

JJ; Brennan J agreeing) stated that a court, when considering an

application for admission:

… must ensure, as far as possible, that the public is protected from

those who are not properly qualified, and to use the language of

s 4(2) of the [(NSW) Legal Profession Act 1987], from those who

are not ‘suitable for admission’.

Moreover, according to Moffitt P in the case of Re B (1981) (NSW), this

consideration extends to whether the character of the applicant:

… is such that he can be trusted to perform his duty … including

that performed when what he does is unlikely to be the subject of

scrutiny. Reputation is also a relevant factor because the

effectiveness of the law depends materially upon the confidence

of the public in the due administration of it. That confidence is less

if those who administer the law, whether judges, barristers or

solicitors, lack a reputation for integrity and that they will uphold

and observe the law.

In Re B (1981) (NSW), the applicant for admission had been previously

convicted of various offences related to her political activism. In

addition, there was evidence that the applicant had been a party to a

bogus bail agreement where she pledged the money of a prisoner

pretending it to be her own. Despite representations from the

applicant that her attitudes had changed since her convictions, the

New South Wales Court of Appeal (per Moffitt P, Reynolds JA and

Helsham CJ in Eq) refused her admission. In his judgment, Reynolds

JA stated that it was:

2

ESSENTIAL PROFESSIONAL CONDUCT: LEGAL ETHICS