Attorney-General v Kowalski (No 3) - [2015] SASC 154

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ATTORNEY-GENERAL v KOWALSKI (NO 3)
[2015] SASC 154
Judgment of The Honourable Justice Blue
1 October 2015
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - GENERALLY
The defendant applies under section 39 of the Supreme Court Act 1935 for permission to institute an appeal to the Supreme Court against decisions of the Legal Practitioners Disciplinary Tribunal dismissing two charges laid by the defendant against legal practitioners.
Held:
1. The proposed grounds of appeal are not reasonably arguable (at [23], [26]-[33]).
2. The defendant’s application is refused (at [37]).
Legal Practitioners Act 1981 (SA) s 41(2); Supreme Court Act 1935 (SA) s 39(1)(a); Workers Compensation Act 1971 (SA); Workers Compensation Act 1986 (SA), referred to.
Attorney-General v Kowalski [2014] SASC 1, discussed.
Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70, considered.

ATTORNEY-GENERAL v KOWALSKI (NO 3)
[2015] SASC 154
BLUE J:

I previously made an order under section 39(1)(a) of the Supreme Court Act 1935 (SA) prohibiting Kasimir Kowalski from instituting further proceedings without permission of the Court.[1]
[1] Attorney-General v Kowalski[2014] SASC 1.
Mr Kowalski seeks permission under section 39(1)(a) to institute an appeal (the proposed appeal) in this Court against decisions of the Legal Practitioners Disciplinary Tribunal dismissing a charge against Russell John Cole and a charge against Russell John Cole and William Andrew Sim.
The purpose of the requirement for a person subject to an order under section 39(1)(a) prohibiting the institution of proceedings without permission of the Court is to prevent his or her instituting future proceedings that are “vexatious” within the meaning of the Act. Effectively, this means that permission should be granted to institute a proceeding that is tenable as a matter of fact and law (not instituted without reasonable ground) and is not instituted for an ulterior purpose.
Background
Mr Cole and Mr Sim are partners in the law firm RJ Cole & Partners (the Firm).
The Firm acted for Mr Kowalski inter alia in actions in the District Court against Mitsubishi Motors Australia Limited (Mitsubishi) for damages for negligence in relation to a back injury and an eye injury.
On 30 March 1992, the Firm issued an invoice to Mr Kowalski for $18,634.66 in relation to his back injury.
In August 1992, Mr Kowalski and Mitsubishi agreed to settle all disputes in relation to injuries governed by the Workers Compensation Act 1971 (SA) for $23,000 and injuries governed by the Workers Rehabilitation and Compensation Act 1986 (SA) for $53,000. Mitsubishi paid $23,000 to Mr Kowalski which the Firm deposited into its trust account. The Firm transferred $18,634.66 of those trust monies to its general account in payment of its March 1992 invoice and $483.79 in payment of invoices in relation to Mr Kowalski’s eye injury.
WorkCover in due course declined its consent to the settlement in respect of the injuries governed by the 1986 Act. Mitsubishi asserted that there was a single settlement agreement or two interdependent settlement agreements pursuant to which the entire settlement was conditional on WorkCover’s consent in respect of injuries governed by the 1986 Act. Mitsubishi demanded repayment of the sum of $23,000. In response, the Firm paid the balance of the monies in trust to Mitsubishi together with $10,000 paid to the Firm by Mr Kowalski, leaving a balance that Mitsubishi claimed to be owing of $9,118.45. On 4 December 1995, the Firm transferred that sum from its general account into its trust account.
In the meantime, Mr Kowalski had delivered to the Firm a copy of its 30 March 1992 invoice with annotations written by Mr Kowalski. Next to various items there was a dispute on the evidence given before the Tribunal between Mr Kowalski and Mr Sim as to whether this was delivered before 30 September 1992 (on Mr Kowalski’s evidence) or in 1995 (on Mr Sims’ evidence).
In October 1998, Mr Kowalski and Mitsubishi entered into a new settlement agreement pursuant to which Mitsubishi agreed to pay $200,000 to Mr Kowalski. Mitsubishi did not thereafter pursue repayment of the sum of $9,118.45.
In August 2004, Mr Kowalski filed in the Disciplinary Tribunal a charge of unprofessional conduct against Mr Cole and Mr Sim (action 8 of 2004). He alleged that they were wrongfully withholding $9,118.45 held on his behalf in their trust account.
On 1 February 2005, the Disciplinary Tribunal summarily dismissed Mr Kowalski's charge. The Tribunal expressed the following view:
The issue ought to be resolved as soon as practicable by the practitioners taking steps to establish their entitlement to the whole or part of the funds. The funds are trust monies and as trustees the practitioners have a legal obligation under the Trustee Act to deal appropriately with the money in order to resolve the issue.
On 29 June 2006, the Firm filed in the Magistrates Court a claim against Mr and Mrs Kowalski for a declaration that the sum of $9,118.45 held in their trust account was not trust money and that they were entitled to that money or in the alternative that they had a claim against the money held in trust for the balance of their costs. The Firm pleaded in their particulars of claim that they had paid into their trust account $9,118.45 on 4 December 1995 from their own funds.
On 28 March 2007, Mr Ward SM heard the Firm’s action. Mr Cole told the Magistrate that Mr Kowalski had not made a request under section 41(2) of the Legal Practitioners Act 1981 (SA) within 6 months of the rendering of the 30 March 1992 invoice.
On 16 July 2007, Mr Ward SM made a declaration that the sum of $9,118.45 held by the Firm in their trust account was not trust money and that they were entitled to that money.
On 13 October 2007, Mr Kowalski filed in the Disciplinary Tribunal a charge of unprofessional conduct against Mr Cole (action 14 of 2007). He alleged that Mr Cole knowingly made a false statement to Mr Ward SM when he said that Mr Kowalski had not made a request under section 41(2) of the Legal Practitioners Act within 6 months of the rendering of the 30 March 1992 invoice.
On 15 November 2007, Mr Kowalski filed in the Disciplinary Tribunal a charge of unprofessional conduct against Mr Cole and Mr Sim (action 13 of 2008). Counts 1 and 2 alleged that the particulars of claim filed on 29 June 2006 by them in the Magistrates Court pleaded that on 4 December 1995 they paid into their trust account $9,118.45 from their own funds and they therefore breached section 31(6) of the Act by permitting trust money to be intermixed with other money. Count 3 alleged that they knowingly made a false or misleading statement[2] in their particulars of claim by saying they sought a declaration that the sum of $9,118.45 held in their trust account was not trust money. Count 4 later added an allegation that they knowingly made a false or misleading statement[3] by failing to deal appropriately with the sum of $9,118.45 held in their trust account following a determination by the Tribunal on 1 February 2005 that it was trust money and they had a legal obligation to deal appropriately with it.
[2] Mr Kowalski alleged several variations, including failure to correct a false statement after becoming aware of its falsity and engaging in dishonest conduct, but the essence of the count was making a false statement.
[3] Mr Kowalski alleged several variations, including failure to correct a false statement after becoming aware of its falsity and engaging in dishonest conduct. I address this below at some length.
The Tribunal hearing and reasons
The Tribunal heard the charges concurrently on 16 and 17 March 2015 and 23 and 24 April 2015. Mr Kowalski’s affidavits were tendered and he gave oral evidence. Mr Cole and Mr Sim both gave oral evidence. Numerous documents were tendered.
On 5 August 2015, the Tribunal dismissed both charges. In relation to the October 2007 charge, the Tribunal found that the annotations on the 30 March 1992 invoice did not comprise a request for a detailed statement showing how the costs were made up within the meaning of section 41(2) of the Act and in any event it preferred Mr Sims’ evidence over Mr Kowalski’s evidence as to when the annotated bill was delivered by Mr Kowalski to the Firm.
In relation to counts 1 and 2 of the November 2007 charge, the Tribunal concluded that there was no intermixing of trust monies and firm monies because when the Firm paid firm monies into its trust account they took on the mantle of trust money and the issue was who was entitled to the trust money. In relation to count 3, the Tribunal concluded that the claim for relief in the Firm’s particulars of claim did not comprise a false statement. In relation to count 4, the Tribunal concluded that the charge was not made out.
The October 2007 charge
Mr Kowalski contends that the Tribunal erred in finding that the annotations on the 30 March 1992 invoice did not comprise a request for a detailed statement showing how the costs were made up.
Some invoices rendered by solicitors show only the general nature of the work performed and the total charge without a breakdown showing the individual items of work performed or the charge for each. Section 41(2) entitles a client receiving such a bill to request within six months a detailed form of the bill showing the breakdown of work performed and costs charged.
The invoice rendered on 30 March 1992 was already in detailed form setting out the date of each item of work, a short summary of the work performed and the charge made for the work. Mr Kowalski handwrote annotations onto a copy of the invoice disputing various items. In the main, these were assertions, although in some cases they were expressed as queries. Mr Kowalski delivered the copy invoice to the Firm without any accompanying letter or document. Mr Kowalski did not expressly request a detailed statement under section 41(2). Given the circumstances and the fact that the invoice was already in detailed form, it is not reasonably arguable that the Tribunal erred in concluding that delivery of the copy invoice did not amount to a request for a detailed statement under section 41(2).
Mr Kowalski also contends that the Tribunal erred in preferring Mr Sims’ evidence over his evidence as to when the annotated bill was delivered by him to the Firm. It is not necessary to deal with this ground of appeal in light of my conclusion on the first issue.
The November 2007 charge
In relation to counts 1 and 2, Mr Kowalski contends that the Tribunal erred in finding that there was no intermixing of trust monies and firm monies because when the Firm paid firm monies into its trust account they took on the mantle of trust money and the issue was who was entitled to the trust money.
The Firm had previously in 1992 transferred monies out of its trust account in payment of its invoices on the basis that Mr Kowalski was solely beneficially entitled to the monies in trust and its invoices were now paid in full. After Mitsubishi claimed that it was entitled to repayment of the monies paid into trust, the Firm repaid into its trust account a portion of the monies that had been applied in payment of its invoices. It follows that the Firm’s invoices were no longer paid in full and the monies in the Firm’s trust account were trust monies. It is not reasonably arguable that the Tribunal erred in so concluding.
In relation to count 3, Mr Kowalski contends that the Tribunal erred in concluding that the claim for relief in the Firm’s particulars of claim did not comprise a false statement. It is well established that propositions set forth in a statement of claim do not represent statements of fact but rather assertions of the party’s case: for this reason, a party cannot rely on such propositions as admissions of fact.[4] This applies a fortiori to a claim for relief at the end of a plaintiff’s pleading. The claim for a declaration that the sum of $9,118.45 was not trust monies at the end of the Firm’s pleading was not a statement of fact but an assertion by the Firm that it knew was disputed and which was to be determined by the Court in the action. It is not reasonably arguable that the Tribunal erred in its conclusion on count 3.
[4] Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 85-86 per Mason CJ and Brennan J and 98 per Gaudron and Mc Hugh JJ.
In relation to count 4, Mr Kowalski contends that the Tribunal erred in concluding that the charge was not made out. The charge alleged that Mr Cole and Mr Sim breached rules 14.1, 14.2, 14.12, 18.1, 18.2, 30.1.1 and 30.1.2 of the Law Society’s Rules of Professional Conduct and Practice made on 1 March 2003 because the Tribunal on 1 February 2005 had said that the sum of $9,118.45 “are trust monies and as trustees the practitioners have a legal obligation under the Trustee Act to deal appropriately with the monies” but they failed to do so.
Rules 14.1 and 18.1 provided that a practitioner must not knowingly make a misleading statement to a court and a false statement to an opponent respectively. Rules 14.2 and 18.2 provided that a practitioner must correct a misleading statement to a court and a false statement to an opponent respectively as soon as possible after becoming aware thereof. The conduct alleged by Mr Kowalski in the charge was incapable of comprising a false or misleading statement.
Rule 14.12 required a practitioner to inform a court in civil proceedings of any misapprehension as to the effect of an order of the court as soon as becoming aware of it. The conduct alleged by Mr Kowalski in the charge did not involve any misapprehension as to a court order.
Rule 30.1.1 provided that a practitioner must not engage in dishonest conduct. The conduct alleged by Mr Kowalski in the charge was incapable of amounting to dishonest conduct.
Rule 30.1.2 provided that a practitioner must not engage in conduct calculated or likely to be prejudicial to the administration of justice, diminish public confidence therein or adversely prejudice the practitioner’s ability to practise according to the rules. Mr Kowalski also alleged that Mr Cole and Mr Sim perverted the course of justice. The conduct alleged by Mr Kowalski in the charge was incapable of perverting the course of justice or breaching rule 30.1.2.
It is not reasonably arguable that the Tribunal erred in its conclusion on count 4.
Conclusion
Mr Kowalski does not have reasonable grounds to appeal against the dismissal of the charges by the Tribunal.
Mr Kowalski also complains that the presiding member of the Tribunal ought to have disqualified himself on the ground of reasonable apprehension of bias. The presiding member gave reasons for declining to disqualify himself. No error is disclosed in his reasons or in his conclusion.
In my reasons for judgment on the Attorney-General’s application for an order under section 39 of the Act, on the evidence adduced by the Attorney-General I was not satisfied that the charges were laid in the Tribunal without reasonable ground.[5] The position is now different because there has been a full hearing in the Tribunal with documents tendered and Mr Kowalski and the practitioners giving evidence.
[5] Attorney-General v Kowalski [2014] SASC 1 at [1322], [1329]
I decline to grant permission to Mr Kowalski to institute the proposed appeal.