Conveyancing fracas and thunderous emails lead to misconduct proceedings … Gadens’ partner complains to VLSC … Strike-out refused by VCAT … Nick Bonyhady reports
In six emails sent in late 2016 while he was acting for a couple who were purchasing a home, Croydon conveyancer Peter Mericka described Gadens’ conduct in the matter as a “scam” and wrote that “you can easily see the blackmail analogy arising from such conduct”.
Mericka was aggrieved that Gadens, acting for a bank, had asked him to procure property certificates including a certificate of currency of insurance when his flat fee retainer did not include those services.
After Gadens partner Craig Green complained to the VLSC, the commissioner brought proceedings against Mericka alleging that he had acted in a manner likely to bring the profession into disrepute.
In support of his unsuccessful strike out application before VCAT Senior Member Jonathan Smithers, Mericka substantially relied on the High Court’s decision in Clyne. There, the court found that “the duty of counsel to speak out fearlessly” should be protected so long as “the privilege, and the power of doing harm which it confers” are not abused.
In his decision, Smithers found that while the Clyne defence may apply, it was not sufficiently certain to warrant striking out the proceedings. In particular, Smithers noted that there were questions about whether Mericka honestly believed the claims he was making and if he was acting in his clients’ best interests.
Mericka and Green have clashed before. In 2007, as chairman at the Queensland law shop MacGillivrays, which has since merged with Gadens, Green made his first complaint to the VLSC against Mericka alleging that he had “acted in an aggressive and unprofessional manner” by raising the prospect of criminal wrongdoing at MacGillivrays because the firm had asked Mericka to acquire property certificates – just as Gadens did.
The VLSC declined to act on that complaint.
“Although you claim that the practitioner acted in an aggressive and unprofessional manner, the practitioner has provided an explanation regarding the circumstances leading to the complaint, involving a request from an employee of your law practice for certificates when arguably there was no entitlement to make such a request.”
Mericka’s questions about the VLSC’s different approach to the 2007 and present complaints received a curt response from the commissioner.
“The complaints are not identical and do not relate to the same conduct, as the current complaint relates to specific conduct between 11 October 2016 – 14 October 2016. This conduct has not previously been investigated and could not have been investigated in 2007.”
That explanation satisfied Smithers.
It is not the first time that Mericka has offended the stipes. In 2015 he was reprimanded by VCAT for embarking on a “crusade” against Victorian Supreme Court Justice Michael Sifris. Mericka had written to the Chief Justice of Victoria alleging that Justice Sifris had engaged in “corrupt conduct” without any evidence.
Justice Sifris had handed down a decision in 2012 which held that Mericka could not continue to act as a real estate agent without a license. Mericka later apologised.
Victorian Legal Services Commissioner v Mericka
1. On October 11, 2016 at 11:11am the respondent caused an email to be sent to Mr Green which contained the following:
“Furthermore, if the mortgagee’s customer is being put at risk of a delayed settlement because your office has not obtained all documents, certificates etc. required to complete and settle the loan transaction, then it is also arguable that there is an element of misleading a [sic] deceptive conduct involved. (Perhaps the customer is being misled and deceived by the mortgagee when the mortgagee implies that it will settle the loan on settlement day. Perhaps the mortgagee is being misled and deceived by your office if you cannot fulfil the role the mortgagee is paying you for without the customer being required to engage a legal practitioner to assist them to, as you put it, ‘navigate’ through the process you have established …
… I do believe that the possibility of misleading and deceptive conduct is a live issue in cases such as this, and must be addressed promptly.”
2. On October 11, 2016 at 2:05pm the respondent caused an email to be sent to Mr Dimakis (with Mr Green copied in) which contained the following:
“Please forward to me a copy of the request you have received from Gadens.
I raised the issue of misleading and deceptive conduct with Gadens this morning, when I was advised that settlement may be delayed if the bank customer is unable to ‘navigate’ the processes set up by Gadens and the lender without engaging a lawyer to assist them …
… In other words, who is to pay my costs for providing these certificates to bank’s lawyers, and why can’t the bank’s lawyers attend to this themselves when they are being paid a fee for doing so by the bank?
If the customer is being kept in the dark about this, then the issue of misleading and deceptive conduct looms large.”
3. On October 11, 2016 at 3:26pm the respondent caused an email to be sent to Mr Green with the following comments:
“As you will appreciate, the issues I have raised concerning misleading and deceptive conduct and the forcible ‘outsourcing’ or delegation of bank responsibilities onto lawyers/conveyancers is a serious industry-wide problem.
It is compounded with the move to electronic conveyancing, as we have seen some banks using the PEXA communications facility to make improper demands, based on the old acceptance of such procedure as being somehow normal. By way of example, we had a bank demand that we should arrange for the guarantor of the customer’s loan to sign a discharge authority, because the bank manager failed to obtain the guarantor’s signature when the client attended at the bank to arrange the discharge. This demand was made with the threat that settlement would be delayed unless we did as instructed, with the further implication that the client would be falsely told that any delay would be our fault.
I am sure that you can easily see the blackmail analogy arising from such conduct.
Please let me have your views on what I have put to you, as I do wish to pursue the problem through various forums, including the PEXA online community (i.e. the PEXA blog).”
4. On October 12, 2016 at 8:31am the respondent caused an email to be sent to Mr Green which contained the following:
“The issues I am raising are not confined to any particular matter. Rather they relate to all future contact between our law firm and yours.
I really did not expect that you would want to acknowledge that a procedure that has become commonplace in the conveyancing industry actually amounts to misleading a (sic) deceptive conduct, as doing so would certainly upset your firm’s income stream and require your staff to retain those responsibilities that are currently pushed on to lawyers/conveyancers.
I do wish to confirm however, that we are adopting an office policy of no longer allowing Gadens or banks represented by Gadens to engage in misleading a (sic) deceptive conduct of the type I have complained about …
… To this end, I advise that your firm must not advise clients of this firm:
as such advice amounts to a form of misleading and deceptive conduct, and our clients will be so advised.
Furthermore, your firm is not entitled to request our contact details from any client unless such request also indicated that contact with us is limited to the booking of settlement, providing information regarding availability of funds and finalising cheque details. Initial communications with our office MUST include confirmation that our client consents to your making direct contact with us.
Any unsolicited/unauthorised correspondence from your office will be forwarded to our client with advice based on the dot-points above, and that the matter should be taken up with the mortgagee.
If you have any objection to the above please state that objection and the legal basis for same, failing which we will assume that you understand and accept our position on the matter.”
5. On October 13, 2016 at 3:05pm the respondent caused an email to be sent to Mr Scott-Hayward, copying in Mr Green, which contained the following:
“As a consequence of the bullying manner in which your firm has attempted to turn my clients against me, I advise I will provide you with whatever documents you require … to prevent further harassment from the loan broker and others at your behest.
I draw your attention to Section 39 of Schedule 1 of the Legal Profession Uniform Law Application Act 2014, which states as follows:
A telephone conversation with my distressed client indicated that your firm has been deliberately misinforming my client regarding her supposed ‘obligations’ to provide you with documents and certificates that are easily procured by your firm, and implying that my firm is not properly protecting her interests when we refuse to undertake tasks that are the responsibility of your firm.
Your modus operandi is obvious from a reading of your letter of 10 October 2016.
Initially the client is threatened with settlement delay:
‘The following information has not been provided to us and must be delivered to use before the transaction can settle.’Having created apprehension for the client, you then make the following demand:
“Please promptly provide that information”.However, as Mr Green made clear in his communication with me, you are well aware that the client will not have the wherewithal to fulfull your demand.
Accordingly, you then advise the client to use their lawyer to provide the documents etc. to you:
“In addition to the above, please attend to the matters described below and if you have solicitors acting for you, you may arrange for your solicitors to provide this information.”The letter is exposed as a ploy however, when one considers that it is not addressed to the client at all, but to the lawyers. Thus, the only way the client can become aware that they are required to acquiesce to your unfair and improper demands is when their own lawyer must, at the client’s cost, handle your correspondence and explain the situation to the client.
If your letter were sent direct to the client in the first instance (it was only sent to the client as part of the harassment component of the modus operandi), the client would properly understand that their own bank is requiring them to go shopping for certificates and searches, and at the client’s expense – something that must be disclosed up-front in the credit contract, but never is.
If the client were to contact your office and ask about engaging us to attend to your demands, we would advise that we are entitled to charge costs and to recover disbursements from the client, in which case the client may opt to deal directly with you – something that you would find time consuming and which would probably generate complaints against your client, the bank as the client complains about having to do the work of the bank staff.
By addressing your correspondence to us, but pretending to be advising our client, you recruit us to assist you in imposing your demands upon our client.
The undue influence compenent [sic] is introduced when either the lawyer or the client objects to the improper demands. In this case, I personally objected to your conduct and advised that I was introducing a procedure by which I would prevent your ploy from causing problem for me or my clients.
When I indicated that I would not allow your firm to bully me into submission, I discovered that your had gone behind my back, and made direct contact with my client. This direct contact was not for the legitimate purpose of obtaining information or documents in my client’s possession, but for the sole purpose of harassing, frustrating and worrying my client, so that she would turn on me for not properly conducting her conveyancing transaction.
As a consequence of your misconduct, I have had to confirm to my client that her contract with the bank for finance and her contract with vendor for the purchase of real estate are two separate matters, and that your conduct amounts to professional misconduct and the use of undue influence.
Nonetheless, the damage you have caused is such that I have no choice now but to acquiesce to your demands and to purchase certificates etc. and deliver them to you in order to avoid your making good your threat to delay settlement.
I advise that your conduct will now be the subject of a formal complaint, unless you can offer a reasonable explanation for same.
6. On October 14, 2016 at 4:26am the respondent caused an email to be sent to Mr Green and Mr Scott-Hayward with the following comments:
“Given Gadens’ refusal to back away from its improper conduct, I advise that I will be referring this modus operandi as ‘The Gadens Scam’ and making it clear that your office refuses to correct it, preferring a profits-before-people approach.
I confirm that, when I put this complaint to senior management of Gadens, to two different partners, I received a ‘three monkeys’ response.
Thank you Craig and Grant for your assistance in my investigation of this scam.”