Professional Misconduct Finding against Barrister Making Baseless Allegations of Fraud

Allegations of fraud against a party or witness ought not be made lightly, or indiscriminately, by counsel. A clear and considered properly arguable foundation – accompanied by informed instructions – for same ought exist.

The Queensland Barristers’ Rules – contained in the Barristers Rule 2011 (Qld) –  provide by rule 64:

A barrister must not allege any matter of fact amounting to criminality, fraud or other serious misconduct against any person unless the barrister believes on reasonable grounds that:

(a) available material by which the allegation could be supported provides a proper basis for it, and

(b) the client wishes the allegation to be made, after having been advised of the seriousness of the allegation and of the possible consequences for the client and the case if it not made out.

Rule 65 of the Victorian Legal Profession Uniform Conduct (Barristers) Rules 2015 (the Rules) is to the same effect.

In Sandbach v Victorian Legal Services Commissioner [2024] VSCA 143 (27 June 2024), Mr Alan Sandbach, formerly a barrister admitted to practice in the state of Victoria, was granted leave to appeal a decision of the Victorian Civil and Administrative Tribunal (VCAT) in relation to a charge of professional misconduct for breach of rule 65 of the Rules but had his appeal dismissed by the Victorian Court of Appeal.

The charge arose out of submissions made by Mr Sandbach over the course of several hearings in 2016 in the Costs Court before a Victorian Supreme Court judicial registrar. 

Mr Sandbach made and repeated claims that an opposing counsel relied on a false document, an invoice dated 15 February 2016 (the 15 February invoice), prepared by solicitors for clients seeking taxation of a bill of costs. 

To summarise some background to the proceedings in the Costs Court, in early 2012, Mathieson Nominees approached AJH and asked it to act for the liquidators of Sprint Homes Pty Ltd (in liq) (‘Sprint Homes’) in relation to public examinations of various individuals related to the affairs of Sprint Homes.  AJH agreed to do so and entered into a costs’ agreement with the liquidators and Mathieson Nominees who was funding the public examinations.  AJH rendered bills to Mathieson Nominees for work performed and Mathieson Nominees paid the bills in full.  Mr Sergey Sizenko (the Complainant) is a legal practitioner whose firm (Victorian Legal Cost Assessors) was instructed by Mathieson Nominees and one of its directors, Ian Mathieson (collectively, the Mathieson parties) to seek a review of the costs claimed in the AJH bills.  As a result, the Complainant issued a summons for taxation against AJH on behalf of the Mathieson parties.  After the summons was filed, AJH raised questions as to whether the ‘indemnity principle’, which allows for the recovery of costs which the relevant party is liable to pay its solicitors (including where the costs have not actually been paid) prevented the recovery of the full amount of the taxable bill of costs by the Mathieson parties.  In short, AJH submitted that the Mathieson parties had no liability to pay the Complainant the costs, the subject of the summons.

The February invoice was issued by the Complainant for $320,000 plus GST and contained some matters that one would not ordinarily find on a solicitor’s invoice including that, after the date and invoice number, there was a heading “Ship via” with no corresponding entry and on the next two lines were the headings “Bill to” and “Ship to”.

Mr Sandbach was briefed to appear on behalf of AJH and submitted in substance that counsel for the Mathieson parties had engaged in unethical conduct because he undertook work without having received a backsheet and also, particularly in relation to the 15 February invoice, that, amongst other things, it was “plainly a false invoice” and “a fraud” and “on no view could this bill be a genuine bill in accordance with any form of retainer.”

The judicial registrar expressed scepticism about the basis upon which the applicant was putting the allegations against counsel and cautioned Mr Sandbach about continuing to press the submission.  The Mathieson parties were ordered to file an affidavit deposing to their liability to pay the February invoice.  An affidavit was filed on behalf of Mathieson Nominees which deposed to the facts that the Complainant refrained from billing for his work for several years and told the Mathieson parties that he did not expect the 15 February invoice to be paid immediately and that he was prepared to wait for payment.

At the next appearance the applicant criticised aspects of the affidavit and was warned about making allegations without any basis.

The Complainant formally complained to the Victorian Legal Services Commissioner (VLSC) about fraud allegations having been made, there was an investigation and the VLSC made application to VCAT for determination.

The VLSC relied upon a breach of rule 65 of the Rules as constituting professional misconduct within the meaning of ss 297(1)(a) and 298(b) of the Legal Profession Uniform Law (the Uniform Law).

Section 297(1)(a) of the Uniform Law states that ‘professional misconduct’ includes unsatisfactory professional conduct of a lawyer, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence or diligence.

Section 298(b) of the Uniform Law provides that conduct consisting of a contravention of the Uniform Rules is capable of constituting unsatisfactory professional conduct or professional misconduct.

In closing submissions Mr Sandbach contended there was a reasonable basis for him to allege the 15 February invoice was a fraudulent and false document including because it was “more than irregular, it was a nullity.”

The charge of professional misconduct was heard by Justice Quigley, the then President of VCAT in November 2022 who found it was contrary to any reasonable interpretation of the relevant facts to conclude that the Complainant falsified the 15 February invoice to prove his retainer with the Mathieson parties and thus his entitlement to legal fees.  Her Honour did not accept the applicant’s contentions that a fraud allegation was supported by, amongst other things, the inclusion of references to “freight and shipping” on the 15 February invoice as the invoice had been created using MYOB software which contains pre-existing invoice templates for freight and shipping and the invoice did not record amounts against those items.

Her Honour ultimately concluded that the applicant was guilty of professional misconduct under ss 297(1)(a) and 298(b) of the Uniform Law and, as a result, concluded that the applicant be reprimanded pursuant to s 299(1)(b) of the Uniform Law and be prohibited from applying for a practicing certificate under s 303(1)(j) of the Uniform Law for a total of 12 months commencing on 16 April 2023.

Justice Quigley held that in pressing the fraud allegation Mr Sandbach was “grasping at straws” and put “his client’s desires before his dignity as a legal practitioner and before his paramount duty to the court”.

Mr Sandbach appealed from the decision of Justice Quigley to the Victorian Court of Appeal on 12 separate grounds, only 3 of which proceeded with a grant of leave and were ultimately dismissed.

Two of the grounds for which leave was granted allege the primary Judge misstated the barrister’s submissions, misapplied the correct legal test for breach of the rule and asked the wrong legal question.

The Court of Appeal considered at [102] of the decision that: “while the ultimate issue for VCAT was whether the applicant believed on reasonable grounds the material provided a proper basis for the fraud allegations, it was implicit and/or inherent in the submissions of the applicant (who appeared for himself before VCAT) that the 15 February invoice was a fraudulent and false document and that he believed it to be so.”

The third ground to receive leave contended that there was no evidence by which Justice Quigley could find Mr Sandbach had made the allegation of fraud without instructions and without consulting his client about the possible consequences once the allegation was made.

The Court of Appeal found that there were two elements that had to be established in order to make out this ground: that the client was aware and was advised and that the client still wished the fraud allegation to be made.

In Mr Sandbach’s circumstances, the Court of Appeal concluded it was open to the primary Judge to infer that the client was aware and had been advised as to the consequences of fraud allegations being made.

Mr Sandbach’s grounds of appeal included grounds in relation to the penalty imposed.

Despite Mr Sandbach’s submission that he had an ‘hitherto unblemished record of ethical conduct in the course of his practice’ and that the judge’s finding of guilty ‘reflects a departure from a long record of ethical conduct in practice’, Mr Sandback had in fact been involved in 2 previous proceedings that related to conduct.

The Court of Appeal referred at [213] to the “[f]irst, in 2003, the applicant successfully appealed against a decision of the Victorian Legal Profession Tribunal (VLPT) which found the applicant guilty of unsatisfactory conduct charges brought by the Victorian Bar, arising from the applicant’s use of the word ‘untruths’ in characterising a fellow barrister’s submissions across two hearings during a proceeding in October 2001.  In the appeal reasons, Victorian Bar Inc v Sandbach, the VLPT found that the applicant’s language constituted ‘sledging’ rather than a breach of r 82 of the Rules of the Bar that were in force at the time.”

And at [214] of the decision the Court of Appeal referred to the “[s]econd, in 2018, the Victorian Bar Council determined that the applicant was not a fit and proper person to hold a practising certificate.  As a result, the Bar Council cancelled the applicant’s practising certificate effective 31 December 2018 and disqualified him from applying for a further practising certificate for four years from that date.”  The Bar Council’s determination was based on the applicant’s conduct in respect of his tax affairs, which encompassed certain tax-related conduct, the applicant’s conduct in court proceedings relating to his tax affairs and his conduct appearing before a Council Committee hearing.

The Court of Appeal referred at [227] to the primary Judge’s conclusion that the applicant’s lack of insight and remorse was a primary aggravating factor in the penalty exercise, particularly given his 35 years’ experience in the profession, and relied on the following matters in that regard:

(a) the applicant’s demonstrated lack of insight and remorse and inability to rehabilitate or otherwise curtail his behaviour following warnings;

(b) the applicant offered no apology to the Complainant, the Tribunal or the legal profession;

(c) the applicant’s inability to comprehend the unethical nature of the conduct; and

(d) the fact that it was the third occasion the applicant had been before the Tribunal (or its predecessor in relation to matters of professional conduct.

The Court of Appeal recorded at [229] that the primary Judge acknowledged that there is nothing inherently wrong with robust advocacy but took the view that by making the fraud allegations the ‘line had been crossed by the [applicant].’

It was determined that the grounds of appeal in relation to penalty had no real prospect of success and therefore no leave was granted.  The Court of Appeal found at [266] that there was no doubt the matters raised in relation to prior conduct were relevant to penalty and at [268] that the primary judge had not mischaracterised the applicant’s submissions by failing to distinguish between unblemished or exemplary behaviour in the course of practice (which excluded tax-related conduct) as opposed to work-related conduct more generally.  This is because the applicant’s ‘tax affairs and bankruptcy’ are not distinct from, or irrelevant to, the applicant’s professional conduct.

The appeal was dismissed resulting in Mr Sandbach being banned from applying for a practicing certificate for 12 months commencing on 16 April 2023 (being the time at which the prior prohibition on the applicant obtaining a practicing certificate was to cease).

A link to the full decision is here.

Review of the VCAT decision may also be found in Hearsay 91:Misconduct Finding Against Barrister Making Unfounded Fraud Allegation About Deponent’s Evidence