Attorney-General v Kowalski (No 4) - [2015] SASC 155

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ATTORNEY-GENERAL v KOWALSKI (NO 4)
[2015] SASC 155
Judgment of The Honourable Justice Blue
1 October 2015
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - GENERALLY
On 28 January 2014, the Court made orders prohibiting Mr Kowalski instituting new proceedings without permission of the Court and staying existing proceedings subject to a number of exceptions in respect of proceedings not proved to have been instituted without reasonable ground.
One of the proceedings that had been alleged by the Attorney-General to be vexatious was a charge laid by Mr Kowalski in the Legal Practitioners Disciplinary Tribunal against Mr Cole and Mr Sim in July 2005 of failure to deal with trust money in accordance with Mr Kowalski’s directions. The Attorney-General failed to prove that this proceeding was instituted without reasonable ground. However, by oversight that proceeding was omitted from the list of proceedings exempted from the stay order.
Mr Kowalski applies to vary the stay order to add the charge to the list of exempt proceedings. The application is opposed by the practitioners on the ground that the charge is doomed to fail because a Magistrate subsequently decided in July 2007 that the money was not trust money.
Held:
1.       Prima facie the error in the Court’s order made on 28 January 2014 should be corrected under rule 242 of the Supreme Court Civil Rules 2006 (at [20]).
2.       The Magistrate’s decision does not give rise to an issue estoppel that is binding in disciplinary proceedings before the Tribunal (at [23]-[25]).
3.       The order made on 28 January 2014 is varied to add the charge to the list of exempt proceedings (at [32]).
Supreme Court Act 1935 (SA) s 39, referred to.
Attorney-General v Kowalski [2014] SASC 1; Kowalski v Cole and Sim [2015] SASC 154, discussed.
R v Storey (1987) 140 CLR 364; Rogers v The Queen (1994) 181 CLR 251, considered.

ATTORNEY-GENERAL v KOWALSKI (NO 4)
[2015] SASC 155
BLUE J:

I previously made an order under section 39 of the Supreme Court Act 1935 (SA) prohibiting Kasimir Kowalski from instituting further proceedings and staying certain existing proceedings without permission of the Court.[1]
[1] Attorney-General v Kowalski[2014] SASC 1.
Mr Kowalski seeks a direction that a charge he laid in July 2005 in the Legal Practitioners Disciplinary Tribunal against Russell John Cole and William Andrew Sim is not the subject of my stay order or alternatively a variation of the stay order or permission to prosecute the charge.
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).
On 30 March 1992, the Firm issued an invoice to Mr Kowalski for $18,634.66.
In August 1992, Mr Kowalski and Mitsubishi agreed to settle all disputes in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] SASC 155
Decision Date: 1 October 2015

CaseChat Overview and Summary

In the case of Attorney-General v Kowalski (No 4), the central dispute revolves around a disciplinary charge Mr Kowalski filed against Russell John Cole and William Andrew Sim, partners in the law firm RJ Cole & Partners. The charge, laid in July 2005 in the Legal Practitioners Disciplinary Tribunal, pertains to the alleged unprofessional conduct by Cole and Sim in not releasing $9,118.45 held in their trust account to Mr Kowalski. The respondents opposed Mr Kowalski's application for a variation of the stay order or permission to prosecute the charge. The primary legal issue before the court was whether the doctrine of issue estoppel, as derived from a previous decision in another matter, could be applied to preclude the Disciplinary Tribunal from considering the disciplinary charge against Cole and Sim. The court also had to determine if the respondents' failure to comply with a client's request could be considered unprofessional conduct if the solicitors were later vindicated in court.

The court's reasoning centred on the applicability of issue estoppel in disciplinary proceedings. The court held that issue estoppel does not apply to disciplinary proceedings as they are more akin to criminal proceedings, which do not determine the civil rights of the parties. This reasoning was supported by various judicial precedents and the nature of disciplinary proceedings under the Legal Practitioners Act 1981 (SA). Additionally, the court rejected the contention that a failure to comply with a client's request could not be considered unprofessional conduct if the solicitors were later vindicated in court. The court found that the respondents did not provide a substantive argument on the merits of whether the $9,118.45 was trust money or belonged to them absolutely. Instead, they relied on the doctrine of issue estoppel, which the court had already ruled inapplicable to the proceedings. The court concluded that the Disciplinary Tribunal was not bound by the previous decision and was entitled to form its own view on the issues raised in the disciplinary charge.

Orders

Orders of the court

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Background

Background to the litigation

Mr Kowalski seeks a direction that a charge he laid in July 2005 in the Legal Practitioners Disciplinary Tribunal against Russell John Cole and William Andrew Sim is not the subject of my stay order or alternatively a variation of the stay order or permission to prosecute the charge.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). On 30 March 1992, the Firm issued an invoice to Mr Kowalski for $18,634.66. 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 had rendered invoices to Mr Kowalski totaling $19,118.45 and transferred $19,118.45 of those trust monies to its general account in payment of those invoices. 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 1996, RJ Cole & Partners lodged in this Court an application to tax a bill of costs for acting for Mr Kowalski (1563 of 1996). By consent, the taxation was deferred pending an action in the District Court by Mr Kowalski against RJ Cole & Partners for professional negligence, which action was ultimately dismissed in March 2002. 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.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Given that my order did not reflect my reasons for judgment, the order should be varied to correct the error under rule 242 of the Supreme Court Civil Rules 2006 (SA) unless there is some other reason not to do so.The judgment of Mr Ward SM Mr Cole and Mr Sim oppose the order sought by Mr Kowalski. They rely on the judgment of Mr Ward SM given on 16 July 2007 in their action against the Kowalskis in which Mr Ward SM made a declaration that the sum of $9,118.45 held in their trust account was not trust monies and that they were entitled to those monies. The first contention put by Mr Cole and Mr Sim is that Mr Ward SM’s judgment gives rise to an issue estoppel that the sum of $9,118.45 belonged to them and they could not therefore be guilty of unprofessional or unsatisfactory conduct by not paying it to the Kowalskis or otherwise. I reject that contention. The doctrine of issue estoppel does not apply to criminal proceedings.[3] Disciplinary proceedings under the Legal Practitioners Act 1981 (SA) are sui generis but are more akin to criminal proceedings than civil proceedings. They do not determine the civil rights of the parties. The Tribunal or the Court exercises jurisdiction in the public interest and not in the interest of the parties. The same rationale why issue estoppel does not apply in criminal proceedings applies to disciplinary proceedings.[3] R v Storey (1978) 140 CLR 364 at 371-374 per Barwick CJ, 379-389 per Gibbs J and 440-401 per Mason J; Rogers The Queen (1994) 181 CLR 251 at 254-255 per Mason CJ and 278 per Deane and Gaudron JJ. In hearing and determining the July 2005 charge, the Tribunal would not be bound by Mr Ward SM’s decision and would be obliged to form its own views as to the issues. The alternative contention by Mr Cole and Mr Sim is that a failure by a solicitor to comply with a request by a client is incapable of being unprofessional or unsatisfactory conduct if ultimately the solicitor is vindicated by a finding of a court in contested proceedings that the solicitor was not obliged to comply with the request. I reject the alternative contention. It relies implicitly upon issue estoppel arising from Mr Ward SM’s decision. Leaving aside their reliance on the judgment of Mr Ward SM, Mr Cole and Mr Sim do not put a contention based on the underlying merits of the proposition that the sum of $9,118.45 held in their trust account was not trust money but belonged to them absolutely. For the reasons given in Attorney-General v Kowalski[4] and in my concurrent judgment in Attorney-General v Kowalski(No 3),[5] there is a strong argument that the money was trust money. In the recent matter of Kowalski v Cole and Sim,[6] the Tribunal concluded that the money took on the mantle of trust money when it was paid by Mr Cole and Mr Sim into their trust account.[4] [2014] SASC 1 at [1326]-[1327]. [5] [2015] SASC 154 at [26]. [6] Legal Practitioners Disciplinary Tribunal, unreported, 5 August 2015 at [103]. The merits of the charge

Ratio Decidendi

Legal Principle Established

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