The Queensland Civil and Administrative Tribunal in Legal Services Commissioner v Healy [2025] QCAT 171 found that sole practitioner and principal of John Healy & Co, Mr Healy, had engaged in unsatisfactory professional conduct when he breached an undertaking given to a legal practitioner for a party on the opposing side of court proceedings.
Mr Healy was retained by a client to act in a property settlement where de facto partners executed a binding financial agreement pursuant to the Family Law Act 1975 providing for the transfer of the de facto partners’ interest in two properties from one to the other.
Mr Healy was provided with executed transfer documents for the transfer of the other party’s interest in the properties and undertook to only use the transfer documents for “stamping purposes, pending settlement”.
The legal practitioner for the opposing party withdrew the authorisation given to Mr Healy after he used the transfer documents to unilaterally effect the transfer of the property.
Mr Healy was charged with breach of his undertaking and with failure to act with competence and diligence. The Tribunal considered whether his conduct amounted to professional misconduct or whether he was guilty of unsatisfactory professional conduct.
The Commissioner submitted it was open to the Tribunal to make a finding that Mr Healy knew his conduct would breach the undertaking. The Tribunal, however, found that the pleaded charges did not make any allegation about Mr Healy’s state of mind at the time of the alleged conduct and it was not put to him in cross-examination that he had knowledge that his alleged conduct would breach the undertaking
Justice Peter Davis, sitting with 2 other members of QCAT, found in relation to the two charges as follows:
[68] I accept that Mr Healy was doing his best to give truthful evidence before me. I also accept that he was always attempting to fulfil his retainer with John to the best of his ability.
[69] I find that in so doing he acted as he honestly thought that he should, but was badly mistaken. He understood his authority to deal with the transfer documents as being non-revokable. That was wrong. He thought that he was authorised to deal with the transfer documents provided Jane had, in his opinion, no option but to complete her obligations pursuant to clause 2 of the BFA. That was wrong, as was his understanding of the construction of clauses 3, 4 and 5, although that was understandable, given the typographical error in those clauses.
[70] Further, I find that had Mr Healy realised that he had no authority to deal with the transfer and that to proceed to settle the transaction would constitute a breach of his professional undertaking, he would not have proceeded to use the documents in the way that he did.
[71] I find that Mr Healy dealt with the transfer documents contrary to the undertaking, firstly, because he misunderstood the true construction of the BFA. He thought that clause 5 operated so that once John paid the money due to Jane, clause 4 had no operation. A proper detailed analysis of the contract shows that not to be its proper construction.
[72] Having misunderstood the true construction of the BFA, Mr Healy became sidetracked on a wrong issue. He believed that the real issue was whether Jane had a right to rescind the BFA. He thought that as she had no right of rescission and no right to pursue the alternative path of clause 4, he was entitled to use the transfer documents for settlement. He was wrong about that, but I find that his belief was genuinely held.
Charge 2
[73] As previously explained, charge 2 is just a different categorisation of the conduct alleged in charge 1. It follows that it must be found, given what I have already said, that taking the actions to unilaterally effect settlement was conduct which fell short of a standard of competence and diligence expected of a reasonably competent legal practitioner. However, in assessing the gravamen of charge 2 it must be recognised that Mr Healy was labouring under the mistaken beliefs that I have already identified in relation to charge 1.
The Tribunal referred at [76] to a decision of Martin CJ:
[76] As Martin CJ observed in Legal Profession Complaints Committee v Detata:
“48 The importance of legal practitioners performing their undertakings cannot be overstated. The practice of giving, and relying upon, undertakings given by legal practitioners is widespread and serves an important public purpose. The circumstances in which undertakings are given and relied upon are many and varied. In some cases an undertaking will be proffered and received as a substitute for strict or timely performance of an obligation, perhaps arising under a contract or under a statutory provision. In other cases, the undertaking might be given in order to provide a form of security to the person to whom it is proffered – for example, an undertaking that an executed document will be held in escrow until certain conditions are met, or that legal proceedings will not be instituted if certain conditions are met, or that funds or other property will be retained by the practitioner until certain conditions are met. In all of these circumstances, the usual effect of the proffer and acceptance of the undertaking will be to obviate the need to commence or to continue legal proceedings. This serves the public interest by preserving the limited resources of the parties and the courts.
49 Undertakings will often be proffered and received in the course of legal proceedings – for example, in relation to interlocutory procedures. The provision of undertakings in those circumstances serves the public interest by reducing or averting interlocutory disputes.
50 Undertakings by legal practitioners are a common feature of commercial and property transactions in which legal practitioners are engaged. In some cases, a party might complete a transaction before all relevant conditions are satisfied in reliance upon an undertaking by a practitioner to the effect that he or she will cause a particular condition to be satisfied. In this context, the proffer and acceptance of undertakings by legal practitioners improves the efficiency and expedition of commercial and property transactions and thereby serves to lubricate the wheels of commerce, trade and finance: see Rubik Financial Ltd v Herskope [2010] WASC 343; In the Matter of a Solicitor ‘L’ (Unreported, VSC, LPA 3 of 1989, 17 – 21 June 1989).
51 Undertakings can only serve these purposes and thereby further the public interest if they are accepted and relied upon. In some circumstances, a practitioner may proffer an undertaking in terms which makes it clear that the undertaking is only that of the client and not the practitioner. In such a case, the obligation of performance will fall upon the client, not the practitioner. However, this is not such a case. In this case, the undertaking was expressly and unequivocally given in terms which bound both Mr Detata’s client, Mr Detata and the firm by which he was employed.
52 The proffer of an undertaking binding upon a legal practitioner and his or her firm can be expected to enhance the reliability of the undertaking, and thereby the prospect that it will be accepted and relied upon by the party to whom it is proffered. In this way, the proffer of an undertaking binding upon a legal practitioner enhances the achievement of the various purposes to which I have referred, and thereby enhances the public interest. It is therefore vital that legal practitioners perform their undertakings, regardless of whether the undertaking was proffered in error or oversight, irrespective of any change in circumstances, no matter how radical, and irrespective of any hardship to the legal practitioner concerned (see Bhanabhai v Auckland District Law Society [2009] NZHC 415 [59] – [64] (Priestley, Heath and Winkelmann JJ).
53 Further, it is vital for the maintenance of public confidence in the integrity of the legal profession and its practitioners, and for the maintenance of the confidence which practitioners have in dealing with each other, that performance of their undertakings be enforced: see (Rubik Financial Ltd).
54 For these reasons, the obligation of a legal practitioner to perform his or her undertaking is a solemn obligation of the utmost importance. Failure to perform that obligation will generally be regarded as professional misconduct, and depending on the circumstances, will often be regarded as serious professional misconduct.”
[77] The present case shows that even a simple property transaction could not be completed without the giving of an undertaking so that the transfer documents could be stamped.
[78] As undertakings are a fundamental feature of practice it is imperative that the solemnity of solicitors’ undertakings is preserved. Otherwise, confidence in undertakings will be eroded with inevitable adverse consequences for the ability of solicitors to effectively conduct their clients’ legal affairs.
[79] It is for this reason that a breach of an undertaking will usually amount to professional misconduct, although, ultimately, that judgement must be made upon consideration of all the relevant circumstances.
A link to the full case is here.
