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Barry Lane
6 September, 2006  
Mills Oakley's costly contempt

A letter from Mills Oakley threatening an invalid, old-aged pensioner with defamation led to a finding of contempt by the privileges committee of parliament. It was the last straw before the law firm was turfed-off the WorkCover Authority’s panel

imageMills Oakley’s chairman of partners, Stephen Moulton, could be forgiven for being a bit gushy in the spring of 2005.

In a bouncy little puff piece on the firm’s website, he declared that: “I can’t recall being this enthused about business for a long time!”

The firm had just taken on former Victorian Treasurer and Macquarie Bank heavyweight Alan Stockdale (pic) as a partner. Bearing in mind what horrible things the firm had endured since 1999 Steve’s confidence and enthusiasm “going forward”, as the movers and shakers say these days, was understandable.

It appears that things started to go off the rails with the arrival in April 1999 of Nick Petroulias, a former First Assistant Commissioner at the Australian Tax Office.

Nick was supposed to have been an expert on dodgy tax schemes at the ATO but it appears that the authorities thought that he’d got up to a few of his own before he left.

No doubt his arrival as a partner at Mills Oakley was regarded as a coup but, alas, he was out of the firm within 12 months in tears. After a lengthy investigation, he was charged with various offences but they were dropped in 2003.

Another charge of defrauding the Commonwealth proceeded to trial last year, but the 11-member jury was unable to reach a verdict. Petroulias is now applying to the NSW Court of Criminal Appeal to stay or quash the charge. If he’s unsuccessful it is likely the retrial will commence next February.

imageWhether it was an unhappy co-incidence or not, something strange occurred during Petroulias’ (pic) tenure at the firm. Between November 1999 and April 2000, things went a bit skew-whiff in the accounts department along the same lines as they did at Simon Parsons – see my earlier report.

Monies coming in from clients for the payment of barristers’ fees and other expenses found their way into Mills Oakley’s office account without first being paid into the trust account. Cheques were then drawn for the amounts owed but were “bench rested” somewhere in the office.

In all, there were 403 unpresented cheques of which 175, totalling $327,667.42, were for barristers’ fees or other disbursements.

It was reported in The Age of December 7, 2003 that counsel for the firm told the Bureau de Spank that Petrouilas’ arrival at the firm and a call from the firm’s banker to reduce its overdraft had created a “cash flow” problem.

Moulten’s response was simply to tell the firm’s accounts staff to delay payment of creditors, most of whom were barristers.

On October 31, 2003 Moulten and six of his partners were found guilty of misconduct and fined $10,000 each by the Bureau. The firm was fined $40,000 and ordered to pay the stipes costs of $17,760. The Bureau’s determination, but not its reasons, was published in the RPANews of March 2004.

imageMeanwhile, the Victorian Attorney General and Minister for WorkCover at the time, Rob Hulls (seen here), was upset that Mills Oakley was drawing substantial sums of money from the public purse and had, contrary to their contractual obligations with the state, forgotten to formally advise him of the penalties imposed by the Bureau de Spank.

Not only was the firm on a panel doing legal work for Hullsie’s department but it was also on a panel doing a heap of work for the Victorian WorkCover Authority.

Hullsie dropped the firm from the government’s panel but had to sit by idly steaming while the VWA refused to follow suit – see transcript of the Victorian Parliament’s Public Accounts and Estimates Committee on June 16, 2004 where Hullsie got a caning for not bringing the VWA to heel.

Meanwhile, capitalising on his experience with the Bureau in Victoria, Stephen Moulton, as a council member of the Mortgage Industry Association of Australia and a representative on its national legal and regulatory committee, was telling anyone who would listen what he thought the form of the proposed national scheme for the regulation of finance brokers should be.

Consumer protection should be the principal goal. For instance, in January 2005, he said in an article in Mortgage Professional Australia that:

“From my experience reviewing applications for membership of the Mortgage Industry Association of Australia, I feel that it is also crucial that any licensing criteria should include the proposal for a ‘fit and proper person’ requirement – as already exists in Western Australia. It is also important that any national licensing scheme be underpinned by appropriate probity checks, among other requirements.”

Of course, everyone loves probity sticklers.

Back at base, everything seemed to be settling down once again. The firm had set up an office in Sydney and, no doubt, business was coming in by the truck load now that Stockers and his team were on board and Little Johnnie had got his WorkChoices legislation through the parliament. The firm claims particular expertise in workplace relations.

However, in January of this year, trouble struck again. One of the firm’s senior associates in the corporate and financial services team, Janette Thompson, took instructions from a client to monster an old aged pensioner named John Cannard, 77, a resident in a caravan park in Reservoir owned by one Stephen Wellard.

Cannard, who suffers from Parkinson’s disease, prostate cancer, severe asthma and, not surprisingly, hypertension, had the temerity to complain to Michael Leighton, his local MP about conditions at the park. Leighton told the House on February 7:

“Summerhill is a caravan park in which long-term residents, mostly aged pensioners, live in relocatable homes. They purchase them for $120,000 to $170,000 but still pay about $300 a fortnight in rent.

“Issues requiring investigation include contracts, including consumers being denied the right to obtain legal advice; cutting services; charging excessive rents; excessive gas and electricity charges; a requirement to purchase maintenance through caravan park management; the unused part of the $10,000 up-front maintenance fee not being refunded; and cash-in-hand payments to the handyman to avoid tax.

“Residents are required to sell their units back to Wellard at a considerable loss. Wellard gives priority to selling his own units, and former residents can be required to pay ongoing rental fees of $300 per fortnight until their units are sold. Wellard gives false, low, written quotes. One prospective resident was given a written quote of $148,000 to purchase a unit. Wellard then told him it was for sale for $170,000. After the person threatened to call in his solicitor Wellard found him another unit for $128,000. That is why I have previously described Wellard as a rogue and scoundrel of the first order.”

Hansard also records that on February 22, 2005 MP Leighton got stuck into Wellard calling him a “bloated leech” and made sundry other hurtful references to his business practices.

Wellard wasn’t going to stand for that and instructed Thompson from Mills Oakley to send a salvo over Cannard’s bow to shut him up.

The letter (January 21), threatening the ailing pensioner with defamation, said:

“As you are aware, Mr Leighton has made numerous false and embarrassing allegations and name calling of Mr Wellard under the protection of Parliamentary privilege. He cannot be sued for defamation at this point because he has not dared to make those allegations outside of Parliament.

“You are not protected from Parliamentary privilege and can be sued for false and damaging allegations made about Mr Wellard which have the effect of besmirching his character and damaging his reputation.

“We request that you make an immediate and formal apology to Mr Wellard for your false allegations, and cease to make those allegations immediately. We hereby put you on notice that, should your false allegation be repeated in any media, or by Mr Leighton in Parliament, or by yourself or any other person, we will bring action against you to recover damages suffered by our client.”

imageJeanette’s letter got Leighton MP (pic) wriled and he complained to the Speaker of the House. He thought that Mills Oakley was trying to cramp his representational style.

The Legislative Assembly Privileges Committee picked up the complaint and ran with it. Subsequently, there was a finding that Mills Oakley was guilty of contempt of the parliament however, last month the committee decided to impose no penalty on the wretched law shop.

The committee records that Moulton wrote a letter of apology to Leighton. Jeanette no longer features on the firm’s web site so, like Nick Petroulias before her, we think she must have decamped.

The release of the committee’s finding of contempt was reported in The Age on July 23 and it appears that this further act of waywardness by Mills Oakley was just too much for the VWA.

On August 6, 2006 The Age said that the firm has had its instructions withdrawn by WorkCover, however the authority sensitively refused to confirm that the termination was related to the finding of contempt.

Notwithstanding the end of a long and lucrative relationship with the VWA there are no hard feelings by the firm. John Neruker, Mills Oakley’s chief executive, said they were “not sorry to have lost WorkCover’s business, as it was not a good fit with the firm’s strengths”.

It would be interesting to know if that sentiment will be universally shared by Peter White and the other three partners and staff in the firm’s accident compensation group.

It can safely be assumed that those eight firms remaining on the VWA’s panel of lawyers who share $21 million in fees will be breaking out the Bolly.

It’s also fascinating to speculate whether “new economy” types like finance brokers and caravan park owners will turn out to be more profitable clients for Mills Oakley than “old economy” cash cows like the VWA.


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