AB v Cornall

[1994] HCATrans 112

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
              Melbourne     No M70 of 1994

B e t w e e n -

AB (a Solicitor)

Applicant

and

ROBERT CORNALL (in his capacity
  as Secretary of the Law Institute
  of Victoria)

Respondent

Second Respondent
  Application for special leave to
  appeal

MASON CJ
DAWSON J

TOOHEY J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON TUESDAY, 6 DECEMBER 1994, AT 9.33 AM

Copyright in the High Court of Australia

MR P.J. O’CALLAGHAN, QC:   If the Court pleases, I appear with my learned friend, MR J.D. HAMMOND, for the applicant.  (instructed by Kirby & Co)

MR F.H. CALLAWAY, QC:   May it please the Court, I appear with my learned friend, MR A.J. PARNELL, for the respondent.  (instructed by J.A. Barravecchio, Law Institute of Victoria)

MASON CJ:   Yes, Mr O’Callaghan.

MR O’CALLAGHAN:   If the Court pleases.  The principle which the Appeal Division failed to apply in this case was that which protects the reputation of a solicitor subject to the investigative processes of section 38Q of the Legal Profession Practice Act.  The cases which establish that we have referred to in our summary of argument and I do not propose to go to that, save to refer also to the recent decision of this Court in Cannellis, 124 ALR 513, and the passage of Your Honour the Chief Justice at page 523 line 30 which says:

It is, of course, possible that the Commissioner may ultimately proceed to form conclusions or make comments which are adverse or unfavourable to one or both of the first respondents and that such conclusions or comments may adversely affect reputation.  As we have mentioned, the Solicitor‑General has acknowledged that it would then be incumbent on the Commissioner to accord natural justice.  Reputation is an interest which attracts the protection of the rules of natural justice -

That is a continuation of the line of authority Kioa, Annetts and Ainsworth, and the case of Rees v Crane - does the Court have the authorised reports of Rees v Crane now?  We provided the All England Reports, I believe the respondent provided the authorised reports.

MASON CJ:   I have got the Weekly Law Reports.

MR O’CALLAGHAN:   The passages that I wanted to refer to were - if I can link them up - I am sorry, perhaps if I can just go ahead.  What Lord Slynn, reading the decision of the Privy Council, said:

It is clear from the English and Commonwealth decisions which have been cited that there are many situation in which natural justice does not require that a person must be told of the complaints made against him and given a chance to answer them at the particular stage in question.  Essential features leading the courts to this conclusion have included the fact that the investigation is purely preliminary, that there will be a full chance adequately to deal with the complaints later, that the making of the inquiry without observing the audi alteram partem maxim is justified by urgency or administrative necessity, that no penalty or serious damage to reputation is inflicted by proceeding to the next stage without such preliminary notice, that the statutory scheme properly construed excludes such a right to know and to reply at the earlier stage.

And the Court said that:

Plainly in the present case there would have been an opportunity for the respondent to answer the complaint at a later stage before the tribunal and before the Judicial Committee.  That is a pointer in favour of the general practice but it is not conclusive.  Section 137 which sets up the three‑tier process is silent as to the procedure to be followed at each stage and as a matter of interpretation is not to be construed as necessarily excluding a right to be informed and heard at the first stage.  On the contrary its silence on procedures in the absence of other factors indicates, or at least leaves open the possibility, that there may well be circumstances in which fairness requires that the party whose case is to be referred should be told and given a chance to comment.  It is not a priori sufficient to say, as the appellants in effect do, that it is accepted that the rules of natural justice apply to the procedure as a whole but they do not have to be followed in any individual stage.  The question remains whether fairness requires that the audi alteram partem rule be applied at the commission stage.

And, I mention to the Court that the test that the court was there considering was a prima facie test.

TOOHEY J:   Do any of these cases take you as far as you need to go here, Mr O’Callaghan, that is, where it is only necessary that the Secretary form an opinion that there appears to have been misconduct or a breach of standards?

MR O’CALLAGHAN:   Yes, Your Honour, we say that even if that were the test, that is if he only had to be satisfied to that degree, none the less, we say, the rules of procedural fairness apply, and we rely upon Rees v Crane as authority for that proposition, but we do of course say, Your Honour, that the court was in error in so ruling that that was the standard.  We say that the standard is a degree of satisfaction, no different in effect to what was the previous degree of satisfaction in the 1984 Act that the solicitor is of the opinion that the solicitor has been guilty of misconduct.  We say there has been no change in the statutory provision, even though the Full Court have so interpreted it but alternatively, we say, that if the test is only of a prima facie level none the less procedural fairness must apply if, in consequence of a reference, the reputation of the solicitor will be damaged or may be damaged.

MASON CJ:   But this falls shorts of a prima facie case requirement, does it not?  All that is required is that the Secretary form the opinion that there appears to have been - - -

MR O’CALLAGHAN:   Yes.

MASON CJ:   That does not amount to a prima facie case does it?

MR O’CALLAGHAN:   In our submission, Your Honour, it does.  The words “the opinion that there appears to be misconduct or a standards breach” is a phrase which, we say, is no different to the phrase which preceded it, “if the Secretary is of opinion that the solicitor is guilty of misconduct”.  That was the words in the preceding section 28(4) and, we say, that without clear words to convey that there was to be a change in the standards applicable that the issue here is whether the present legislation requires the same standard, namely, that the solicitor is subject to the opinion of the Secretary that he is guilty of misconduct.

The other passages that I refer to in Rees v Crane is that:

The consideration of these factors and their Lordships’ conclusion on them are not based specifically on the nature of the judicial function or the fact that the respondent is a judge.  A similar approach would apply mutatis mutandis to other persons who could rely on the same considerations.  But a judge, though by no means uniquely, is in a particularly vulnerable position both for the present and for the future if suspicion of the kind referred to is raised without foundation.  Fairness, if it can be achieved without interference with the due administration of the courts, requires that the person complained of should know at an early stage what is alleged so that, if he has an answer, he can give it.

And, analogously, with that situation, here the solicitor was in much the same position as the judge in Rees v Crane, the subject of investigation.  The investigation went a certain length;  the Secretary then went away and got opinions from three other persons, two cost consultants and a solicitor in another firm - in fact a competing firm with the subject solicitors - and they each gave the opinion to the Secretary that the fees were excessive, not grossly excessive but excessive.  Now, without any reference of that process to the solicitor the Secretary then formed the opinion and, indeed, in the letter, as appears in the case book, the letter of information to the solicitor was that he found that he was guilty of gross overcharging.

Now, that is where, we say, that it is a classic situation of a denial of the right to be heard.  The respondent in its submission says there was an opportunity to be heard.  We say that whatever the earlier opportunities to be heard, in the sense of conveying by correspondence the views of the solicitor, the later stage was a complete denial of the right to be heard and even if you are being given an adequate opportunity at one stage, if you are not given an adequate or any opportunity at a vital stage of the receipt of information unknown to the subject of the investigation then, we submit, this is a clearest case of the denial of procedural fairness.

TOOHEY J:   Is that the particular complaint in the present case, that the Secretary failed to make available to the applicant the opinion of the three cost consultants?

MR O’CALLAGHAN:   That is the essential complaint, yes, Your Honour.  Had that been done a whole range of options were open by way of making available comment or answer but, in effect, for a court to go off the bench, consult other persons, reach a decision and come back and say, “We have decided A, B and C ‑ ‑ ‑

DAWSON J:   That is putting it too high, Mr O’Callaghan.  It is not a court it is just an officer who has to decide the disposition of this matter for it to be determined.

MR O’CALLAGHAN:   Well, Your Honour, he is a very important officer and he has to make a decision which, we say, is one which the mere making of and the transmission of has a drastic effect upon the reputation of the person concerned and, therefore, it is ‑ ‑ ‑

DAWSON J:   It may, temporarily, perhaps but if your client were to succeed before the registrar he would be vindicated completely.

MR O’CALLAGHAN:   Your Honour, a reputation once damaged, in our submission, cannot be recovered, even by what Your Honour says the vindication by the subsequent hearing and we submit that that is what is the major error of the Appeal Division, that it failed to pay regard to the proposition that if, at an early stage of an entire process which, albeit guarantees procedural fairness at the end, there is a denial of natural justice in the early stage and the reputation of the subject person is thereby affected - - -

DAWSON J:   That is so with any charge.  I mean, you cannot avoid that.  If that is essentially what the Secretary is doing, merely deciding to charge the solicitor with the offence of overcharging, refer it to the registrar to hear the matter.

MR O’CALLAGHAN:   Your Honour, the point must be, we say, that if procedural fairness does apply, it was denied.  There can be no suggestion, we submit, from the Appeal Division that that was other than the case.  The question is why should it be construed that the Secretary is free to deny procedural fairness to a solicitor when, clearly, in the 1989 preceding Act required him to afford it.

DAWSON J:   Because he is merely setting in motion the machinery which will decide the matter. 

MR O’CALLAGHAN:   The publication to the Attorney‑General, the publication to each of the other members of the Law Institute Council, all of whom see bracketed in the sheet of information that AB has been charged with gross overcharging, professional misconduct, is a step in the destruction of a solicitor’s reputation which, we say, analogously and strictly analogously with Rees v Crane, is something that the courts should and would protect. 

As I say, there are two fundamental errors, in our respectful submission.  Firstly, that the courts hold that procedural fairness does not apply.  There are decisions of the Appeal Division in Hercules, the comments of His Honour Mr Justice Marks and Mr Justice Fullagar that natural justice does apply to the Secretary, or the requirement to afford natural justice does apply to the Secretary, and in a recent decision of the MBA, in which the decision, particularly of Mr Justice Eames, held that reputation is to be protected.  This was a case of people being put on to a black list and circulated.

Now, the other matter that I want to go to and go to quickly is the third issue and that is that the applicant was denied procedural fairness in the Full Court in the Appeal Division, and that was done by the Appeal Division finding that evidence which had been adduced by the solicitor was wrongly taken into account by His Honour the trial judge, and that this in fact formed the basis for the Appeal Division to find vitiated the trial judge’s decision.  As appears from the material in the application book at page 194, the uncontested affidavit of Miss Macken says that:

I say that while I was present in Court:

(a)  at the trial, Counsel for the Secretary at no time objected to the reception by the trial Judge of any of the Applicant’s evidence;

(b)  at the hearing of the appeal before the Appeal Division, Counsel for the Secretary did not make any objection to, nor make any submissions in respect of, the reception by the trial Judge or by the Appeal Division of the Applicant’s evidence before the trial judge;

(c)  at the hearing of the appeal, at no time did any member of the Appeal Division raise the issue or make any comment in respect of the reception by the trial Judge of the evidence of the Applicant or of its admissibility.

In fact, as appears at pages 166 to 169 of the application book, the court held that His Honour was in error in looking at that evidence and, we say, that was the clearest denial of natural justice, ironically put, because it was never raised in argument, never raised by the court, and therefore never had the opportunity of being dealt with.

TOOHEY J:   Where does the Appeal Division say that the trial judge was in error in looking at the evidence as opposed to making findings of fact upon the material?

MR O’CALLAGHAN:   Page 166, Your Honour, line 4:

Many of the problems which led to the trial judge forming his conclusion as to various disputed matters arose from the manner in which the respondent presented his evidence to the Judge. 

And at the foot of the page:

There is, however, no basis for saying that this material in this form was before the Secretary or his delegate in the course of his investigations, nor was there anything to suggest that that version had been put explicitly and in detail to the complainant. 

At page 168 at line 24:

In due course these matters may be established, but in determining whether the appellant’s opinion and decision should be set aside it is not ordinarily appropriate for a trial Judge to have regard to evidence which was not fully before the person whose administrative decision is under review, certainly where it can only be by accepting that evidence that a conclusion that relevant matters were not taken into consideration or that the conclusion was unreasonable could be justified.  In our opinion, therefore, however relevant the matters may have been (which we have doubted} the trial Judge was not entitled to reach the factual conclusion set out above.  In turn the conclusions thus reached vitiate the finding that there was a failure to take into account an allegedly relevant fact -

and, there was, of course, no ground of appeal.  It was not argued below before the trial judge that this was a basis for attack.  It was not made the ground of appeal by the appellant to the Appeal Division, and it was not mentioned in argument.  It was only mentioned, for the first time, in the reasons for judgment  ‑ ‑ ‑

TOOHEY J:   But your argument, Mr O’Callaghan, comes very close to suggesting that the Secretary really should conduct some sort of inquiry, really in the form of a hearing, and reach the sort of conclusions that the registrar might be invited to reach.

MR O’CALLAGHAN:   Your Honour, how he does it is a matter for him, no doubt.  It must have been the same for the preceding Secretary when resources were perhaps less than they are now.  How one does it is a matter for him, but whether it be called a hearing or whatever there has to be a degree of satisfaction that there has been misconduct or a standards breach because he had to form that opinion that there appears to be which, we say, is synonymous with having the opinion that the solicitor is guilty. 

It is, in our submission, a small price to pay to ensure that there will have to be some investigative process and, if you like, hearing processes in order to protect the good name of a solicitor.  It is, we say, a vital issue of public importance that the preservation

of the legal professions’ integrity and confidence be preserved, and unless there is these safeguards attending the exercise by the Secretary of his powers, the position is the opposite of what Rees v Crane applied to a judge and said that, mutatis mutandis, the principles apply to other persons.

In this case all that was required was the simple expedient of saying that, “I have now consulted with three other persons and they say that your fees are excessive, what do you say about that?”  Had that occurred there could be no complaint.  That, if I might say, Your Honour Justice Toohey, answers, I would respectfully submit, Your Honour’s question as to the necessity to conduct some sort of a hearing.  That is an exemplification of all that was required in this case.  If the Court pleases.

MASON CJ:   The Court need not trouble you, Mr Callaway. 

The Court is of the view that there is no sufficient reason to doubt the correctness of the decision of the Appeal Division.  The application for special leave will, accordingly, be refused.

MR CALLAWAY:  If the Court pleases, we ask for costs.

MASON CJ:   You do not oppose that, Mr O’Callaghan?

MR O’CALLAGHAN:   No, Your Honour.

MASON CJ:   The application is refused with costs.

AT 9.54 AM THE MATTER WAS ADJOURNED SINE DIE