Queensland lawyer fined $30,000
A Queensland-based practitioner has been reprimanded and ordered to pay a penalty of $30,000 for professional misconduct.
In its application in the Queensland Civil and Administrative Tribunal, the Legal Services Commissioner outlined that Matthew Kenneth Manz had as clients two natural persons and a company, which had the contract for the provision of caretaking and letting agent services of a resort.
The company and one of the natural persons were convicted of offenses of dishonesty, and — since their letting agent licences were revoked — Mr Manz prepared a Deed of Assignment to operate the letting business to the third client, which required the agreement of the resort’s body corporate.
The body corporate manager’s lawyer sought an assurance that the assignment was not an attempt to defeat creditors, which caused Mr Manz to ask the clients “he would like to avoid telling the body corporate the reason for the assignment, and asking whether there was some ‘accounting/income distribution reason that your accountant can come up with as a reason for the assignment’”.
He responded to the body corporate lawyer, saying the assignment was not an attempt to defeat creditors, and when pressed on the purpose for the proposed assignment, he — following correspondence with the clients — replied to the body corporate’s lawyer saying, “Our clients have been advised by their accountant that the assignment will be advantageous to them from a tax perspective, hence the assignment request”.
The application went on to assert that, while Mr Manz was on leave, a solicitor from his firm queried the purpose behind the assignment, to which he replied it “was for tax purposes” and that, in accordance with instructions, “the firm was not to disclose the clients’ licensing and other issues to the body corporate”. On that same day, the employed solicitor wrote to the body corporate’s lawyer to state that “the client had received some structuring advice from their accountant, and as part of that advice, it was believed that the Deed of Assignment would provide taxation benefits”.
The application made a number of allegations “based on these facts”, including that Mr Manz had “failed to be honest in all dealings in the course of the legal practice”, that he was “instrumental in orchestrating ‘the accounting reason’”, that he provided the accounting reason as the purpose for the proposed assignment and that he provided that reason to the employed solicitor who then reconfirmed it.
In its deliberations, the tribunal mused that Mr Manz “knew that the real reason why his clients wanted to assign the management rights was the difficulty arising from the cancellation of the letting licences of two of them, and the resulting jeopardy to the company’s business. He then set about finding another reason for the assignment to be communicated to the body corporate’s lawyer”.
“He then communicated the accounting reason to the body corporate’s lawyer as the reason why the assignment was sought and caused the employed solicitor to confirm it. It should be added that there is no evidentiary basis for finding that no tax advantage would result to the clients from the assignment,” it continued.
On the question of how to categorise the conduct, the LSC submitted Mr Manz was guilty of professional misconduct, as he has “deliberately misled the other party, while he argued it was unsatisfactory professional conduct, in light of it being “a one-off event… motivated by desire to protect his client’s interests and not for personal gain”.
The tribunal found, ultimately, that it was professional misconduct, as it “fell short, to a substantial degree, of the standard of professional conduct approved by members of the profession of good repute and competency and would reasonably be regarded as dishonourable”.
In making its orders, the tribunal noted that Mr Manz had co-operated fully with the investigation and had received no personal benefit from his misconduct other than the receipt of professional fees for the provision of legal services.
The LSC argued that he should be publicly reprimanded, fined $5,000 and ordered to undertake ethics training, which Mr Manz submitted would be an appropriate order.
His conduct, while not being among the most serious examples of dishonesty by members of the legal profession, appears to have been the product of his failure to find a means of dealing with a situation “of some difficulty without resorting to dishonesty”, the tribunal mused.
“There is no reason to think that [he] could not, with some care and greater attention to ethical standards, avoid similar conduct in the future. In the circumstances, it is proposed to order [him] to pay a penalty of $30,000,” the tribunal held.
The quantum of the penalty was determined, it noted, given that “there are some aspects of [his] conduct which are more serious than in [previous cases involving legal professionals], particularly his initiation of a course of dishonest conduct, which continued over a period of time, and involved others”.
Mr Manz was also reprimanded and ordered to pay the LSC’s costs.