Council of the Law Society of New South Wales v Harrison (No 3)
[2012] NSWADT 202
•03 October 2012
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Council of the Law Society of New South Wales v Harrison (No 3) [2012] NSWADT 202 Hearing dates: On the papers Decision date: 03 October 2012 Jurisdiction: Legal Services Division Before: M Chesterman, Deputy President Decision: The Respondent is to pay the Applicant's costs of and incidental to these proceedings, as agreed or assessed under Part 3.2 of the Legal Profession Act 2004, except for the costs of and incidental to the Applicant's application for leave to file the Further Amended Application for Original Decision dated 14 July 2010.
Catchwords: Solicitor - professional misconduct - costs Legislation Cited: Administrative Decisions Tribunal Act 1997
Legal Profession Act 2004
Legal Profession Act 2004 (Qld)Cases Cited: Council of the Law Society of New South Wales v Harrison [2010] NSWADT 201
Council of the Law Society of New South Wales v Harrison (No 2) [2012] NSWADT 103
Legal Services Commissioner v O'Connor (No 2) [2006] LPT 2Texts Cited: Riley, Solicitors Manual (Butterworths, Loose-Leaf) Category: Costs Parties: Council of the Law Society of New South Wales (Applicant)
Adrian Gregory Harrison (Respondent)Representation: C Webster (Applicant)
R J Collins (Applicant)
Pagano Burlovich Lawyers (Respondent)
File Number(s): 082030
decision
Relevant procedural history
This is a decision on the costs relating to an Application for Original Decision ('the Application') that has been heard and determined.
Because the only issue to be decided is that of costs, the Tribunal is constituted by a Deputy President sitting alone, pursuant to section 24A(2)(b) of the Administrative Decisions Tribunal Act 1997 ('the ADT Act').
The Application was filed on 2 December 2008 by the Council of the Law Society of New South Wales ('the Law Society'). The Society claimed that the Respondent (hereafter 'the Solicitor'), while practising as a solicitor, was guilty of professional misconduct on six Grounds. The orders that it sought against the Solicitor were: (a) removal of his name from the Roll of Local Lawyers; (b) payment of the Law Society's costs of the proceedings; and (c) such further and (sic) other orders as the Tribunal deemed appropriate.
Particulars of the allegations of professional misconduct were supplied in a schedule to the Application. They were in three sections, each headed by the name or names of one or more former clients of the Solicitor. In each of these three sections of the Particulars, an account was given of dealings between the Solicitor and the identified client or clients in the course of a retainer to provide legal services. In this sense, three separate 'matters' made up the contents of the Particulars.
On 2 March 2009, the Solicitor filed a Reply to the Application, in which he stated that he opposed the orders sought by the Law Society. On 30 March 2009, he filed a short affidavit, sworn by him on 27 March 2009, briefly responding to the matters alleged against him and providing some information about his former corporate practice and his current situation.
Between 12 March and 9 September 2009, the Law Society filed further evidence.
On 20 May 2010, the Solicitor filed an Amended Reply. This document differed substantially from the Reply. In it, he denied all the allegations made against him in the Application and set out his response to each paragraph of the Particulars.
On 26 May 2010, the Law Society filed an Amended Application for Original Decision ('the Amended Application'). It differed from the Application only in amending one of the paragraphs of the Particulars.
On 2 June 2010, the Solicitor filed an affidavit responding in some detail to the matters alleged against him. On 7 July, he filed a second Amended Reply, in which he again denied all the allegations made against him.
Three successive days in July 2010 were allocated for the hearing of the Application. But at the commencement of the hearing before us on 12 July, the Tribunal was advised that the parties sought an adjournment of two days because there was a prospect that they would agree on draft consent orders, which would be submitted to the Tribunal for consideration. The Tribunal accordingly adjourned the hearing to 14 July 2010.
Before the hearing commenced on that day, the Law Society served on the Solicitor a copy of a Further Amended Application for Original Decision ('the Further Amended Application') dated 14 July 2010.
At the resumption of the hearing on this day, the Tribunal was advised that the parties had not agreed on consent orders. Instead, Ms McIntosh of counsel, appearing for the Solicitor, applied orally for an order that the Amended Application be summarily dismissed under section 73(5)(g)(ii) of the ADT Act. The ground that she advanced was that the Amended Application was 'fundamentally flawed', being in such a form as to deny procedural fairness to her client.
The basis of this submission by Ms McIntosh was that the Amended Application did not identify, with respect to each of the six allegations of professional misconduct, the 'matter' or 'matters' (using this term in the sense outlined above at [4]) to which the allegation related. It followed, she said, that the Solicitor had not been properly informed of the case that he had to meet.
Ms Webster of counsel, appearing for the Law Society, then handed up a copy of the Further Amended Application and applied for leave to file it. This document differed from the Amended Application chiefly through the addition of some brief passages identifying, with respect to each of the six allegations, the 'matter' or 'matters' to which the allegation related. Ms McIntosh indicated that this application for leave was opposed.
The Tribunal determined that it should deal with the Law Society's application before addressing the Solicitor's application for the proceedings to be dismissed.
At the request of counsel for both parties, the Tribunal then gave directions for the filing of written submissions relating to the Law Society's application for leave and the costs associated with it. It indicated, without opposition from counsel, that it would determine the application 'on the papers', pursuant to section 76 of the ADT Act. It then adjourned the hearing pending the delivery of this decision.
On 21 June 2010, the Law Society filed a formal application for leave to file the Further Amended Application.
The submissions filed in accordance with the Tribunal's directions included arguments on the costs of the Law Society's application for leave. The position taken by the Law Society was that these costs should be reserved. Ms McIntosh submitted that irrespective of the outcome of the application, the Solicitor should have an order for his costs relating to it, to be paid forthwith on an indemnity basis.
On 13 August 2010, the Tribunal delivered its decision on these matters (Council of the Law Society of New South Wales v Harrison [2010] NSWADT 201 - hereafter 'the Tribunal's first decision'). The principal Orders that it made were as follows:-
1. Leave is granted to the Applicant to file the Further Amended Application for Original Decision dated 14 July 2010 and handed up at the hearing on 14 July 2010.
2. The costs of this application for leave are reserved.
For the purposes of the present determination regarding costs, the following passages in the Tribunal's first decision, forming part of its reasons for granting Order 1, are important:-
51 In our judgment, the Application in its original form did not depict with sufficient precision and clarity the case being brought against the Solicitor, for the specific reason advanced by Ms McIntosh. Standing alone, it did not express how each of the six allegations of professional misconduct related to the various 'matters' outlined in the Particulars. The task of discerning this relationship was left to be performed by the Solicitor...
59 The need to state clearly in a disciplinary application which allegations of professional misconduct or unsatisfactory professional conduct are applicable to specific sections of the accompanying particulars - or, to express it in another way, which parts of the particulars are put forward as the basis for each allegation - was in fact spelt out by the Tribunal in [Law Society of NSW v Orford (No 2) [2008] NSWADT 221] in the following extracts from the decision...
60 For these reasons, we endorse Ms McIntosh's claim that the Application, in its original form, was defective. It was indeed clearly so, and the defects in it should have been remedied before it was filed, particularly since the date of filing was later (and not very much later) than the date (12 August 2008) on which the decision in Orford was delivered.
61 The course taken by the Solicitor did not, however, include any measure designed to draw to the Law Society's attention these defects in the Application or the difficulties that he faced in preparing a Reply to it. He chose, in fact, to file a Reply, then to file an amended Reply with very different content, then to claim, after the hearing had commenced and more than 18 months after the Application had been filed and served, that he had not been properly informed of the case being brought against him...
65 We do not go so far as to say that the Solicitor, as soon as he discerned the defects in the Application, was under a legal duty to try to remedy them by drawing attention to them in a request for further and better particulars. But by delaying as he did before making any mention of them and, indeed, filing two markedly different versions of a Reply, he must be taken to have implied that he understood the case being made against him. He therefore bears a significant degree of responsibility for the delay and the cost associated with the Law Society's late application for leave to amend.
72... the Solicitor, for reasons explained above at [61 - 65], bears a significant degree of responsibility for the delay and the cost associated with the Law Society's application for leave to amend. By seeking further and better particulars of the Application in its original form, or by indicating in correspondence with the Law Society that because the Application was ambiguous he could not plead to it, the Solicitor could have contributed to ensuring that the hearing of the case was ready to proceed on the scheduled days. Instead of taking steps such as these, he filed both a Reply and a very different Amended Reply, and he did not put forward his argument that the Application was defective until after the hearing had commenced.
In deciding that Order 2 was appropriate, the Tribunal held (at [84]) that the Solicitor's application for costs was ruled out by the terms of the relevant provision (section 566) of the LP Act. It pointed out that by virtue of section 566(3) it had no power to make a costs order in favour of a legal practitioner against whom disciplinary proceedings had been brought under the Act unless it had determined that the respondent had not engaged in unsatisfactory professional conduct or professional misconduct. This 'express condition', it said, had not been fulfilled. Earlier in its decision (at [79]), it observed that section 566(4) might have provided a basis for a costs order in favour of the Law Society, but that the Society had not sought any order under this provision.
The Further Amended Application was then listed for a four-day substantive hearing commencing on 19 March 2012. Shortly before this date, however, the Registry received advice from the Solicitor's legal representatives that he no longer intended to defend the proceedings. At the hearing, which occupied one day only, the Tribunal admitted the evidence tendered by the Law Society and heard submissions from the legal representatives of both parties.
In a reserved decision delivered on 29 May 2012 (Council of the Law Society of New South Wales v Harrison (No 2) [2012] NSWADT 103 - 'the Tribunal's second decision'), the Tribunal found that the allegations contained in the Further Amended Application were substantiated by the evidence and that by virtue of this finding the Solicitor had engaged in professional misconduct, both at common law and under various provisions of the Legal Profession Act 2004 ('the LP Act').
The Tribunal further ordered, pursuant to section 562(2)(a) of this Act, that the name of the Solicitor should be removed from the Local Roll.
On 19 June 2012, pursuant to directions given by the Tribunal in its second decision, the Law Society filed an application, with supporting submissions, for an order that the Solicitor pay its costs of the proceedings. On 20 July 2012, the Solicitor filed submissions in reply (having previously transmitted them by fax on 11 July).
As was foreshadowed in the Tribunal's second decision, this matter of costs is being decided 'on the papers' under section 76 of the ADT Act.
The parties' submissions
For present purposes, the relevant provisions within section 566 of the LP Act are subsections (1) and (6). They state:-
(1) The Tribunal must make orders requiring an Australian legal practitioner whom it has found to have engaged in unsatisfactory professional conduct or professional misconduct to pay costs (including costs of the Commissioner, a Council and the complainant), unless the Tribunal is satisfied that exceptional circumstances exist.
(6) The Tribunal may fix the amount of costs itself or order that the amount of costs be assessed by a costs assessor under Part 3.2.
In her submissions on behalf of the Law Society, Ms Webster implicitly acknowledged that the circumstances in which the Society sought leave to file the Further Amended Application, necessitating adjournment of the first scheduled hearing and the filing of written submissions by both parties, might be regarded as 'exceptional' within the meaning of the final phrase in subsection (1) of section 566 and might therefore require departure from the general rule stated in the subsection. She argued however that rulings to this effect should not be made, referring to two features of the application for leave.
The first matter to which she adverted was that the amendments for which leave was sought did not involve any substantive change to the Particulars, but merely the addition of material indicating which the six claimed Grounds of professional misconduct were applicable to each of the three 'matters' described in the Particulars.
Secondly, she relied on the passages quoted above from paragraphs [61], [65] and [72] of the Tribunal's first decision, in which, she said, the Tribunal had 'placed significant weight on the conduct of the defence in the proceedings by the respondent'.
Ms Webster suggested that in the apparent absence of any Tribunal decisions as to the meaning of the phrase 'exceptional circumstances', guidance could be obtained from a passage in the judgment of Campbell JA in Yacoub v Pilkington (Australia) Ltd [2007] NSWCA 290 at [66], even though the phrase in that case was used in a different statutory context. The passage in question (with the omission of some of the authorities cited) is as follows:-
66 In San v Rumble (No 2) [2007] NSWCA 259 at [59]-[69], I gave consideration to the expression "exceptional circumstances" in a different statutory context to the present. Without repeating that discussion in full, I shall state such of the conclusions as seem to me applicable in the construction of rule 31.18(4).
(a) Exceptional circumstances are out of the ordinary course or unusual, or special, or uncommon. They need not be unique, or unprecedented, or very rare, but they cannot be circumstances that are regularly, routinely or normally encountered:...
(b) Exceptional circumstances can exist not only by reference to quantitative matters concerning relative frequency of occurrence, but also by reference to qualitative factors:...
(c) Exceptional circumstances can include a single exceptional matter, a combination of exceptional factors, or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional:...
(d) In deciding whether circumstances are exceptional within the meaning of a particular statutory provision, one must keep in mind the rationale of that particular statutory provision:...
(e) Beyond these general guidelines, whether exceptional circumstances exist depends upon a careful consideration of the facts of the individual case:...
Ms Webster also referred to certain decisions relating to the meaning of 'special circumstances' in now-repealed provisions regarding costs within the predecessor to the LP Act and within the ADT Act.
Her primary submission was that the Tribunal should order the Respondent to pay all the Law Society's costs of these proceedings, including the costs reserved in the Tribunal's first decision, as agreed or assessed under Part 3.2 of the LP Act. In the alternative, she submitted that the Tribunal's order should cover all of the Society's costs except for the costs of and incidental to its application for leave to file the Further Amended Application.
The brief submissions filed by Pagano Burlovich Lawyers on behalf of the Solicitor argued in favour of the order that the Law Society had proposed as an alternative. It was submitted that, having regard to the Tribunal's criticisms of the Law Society's Application as originally framed, the Solicitor should not have to bear the Society's costs of its application for leave. Specific reference was made to paragraph [51] (quoted above) of the Tribunal's first decision.
Discussion and conclusions
Contrary to an observation in Ms Webster's submissions, some past decisions of the Tribunal have dealt with the phrase 'exceptional circumstances' in section 266(1) of the LP Act. References to three such decisions are to be found in Riley, Solicitors Manual (Butterworths, Loose-Leaf) at paragraph [34,180].
While none of these authorities provides useful guidance as to the situation in the present proceedings, a decision of the Legal Practice Tribunal of Queensland, to which Riley refers in this paragraph, is of considerable assistance. In Legal Services Commissioner v O'Connor (No 2) [2006] LPT 2, the Queensland Tribunal, having previously found that the respondent practitioner had engaged in unsatisfactory professional conduct as defined in the Legal Profession Act 2004 (Qld), went on to consider to the question of costs. The relevant passage in its decision (paragraphs [13] to [24]) is as follows:-
[13] Section 286(1) of the Act provides:
"A disciplinary body must make an order requiring a person whom it has found guilty to pay costs, including costs of the commissioner and the complainant, unless the disciplinary body is satisfied exceptional circumstances exist."
[14] It was submitted on behalf of the Commissioner that there are no exceptional circumstances in this case justifying an order other than the usual order for costs in favour of the Commissioner.
[15] The respondent has submitted that there should be no order as to costs on the basis that exceptional circumstances exist. Counsel for the respondent has listed eleven separate matters to support the submission that exceptional circumstances exist.
Many of those matters, however, relate to factors relied on by the respondent in mitigation of penalty, such as that the respondent did not deliberately intend to breach a professional obligation or the previous unblemished professional record of the respondent. Those sorts of matters do not assist in establishing exceptional circumstances for the making of an order which departs from the usual order for costs of the disciplinary proceeding where a practitioner has been found guilty.
[16] The respondent also relies on the manner in which the Commissioner conducted the proceeding against the respondent as raising exceptional circumstances for the purpose of s 286(1) of the Act. They can be summarised as:
(a) the Commissioner did not formulate the final terms of the charge until the morning of the hearing and, in particular, did not articulate the terms of the professional obligation that was breached by the respondent until the hearing;
(b) the Commissioner did not proceed with the charge as originally formulated and particularised in the application;
(c) it was not until the commencement of the hearing of the application that the Commissioner abandoned the position that he had adopted from 22 July 2005 that was reflected in the particulars of the charge until the amendment made at the hearing that a complaint pursuant to the Act was protected by absolute privilege pursuant to s 11 of the Defamation Act 1889; nd
(d) a substantial part of the respondent's written submissions filed prior to the hearing of the application dealt with the issue of whether a complaint under the Act attracted absolute privilege and were wasted.
[17] The history of the formulation and particularisation of the charge against the respondent is set out in paragraphs 20 to 26 of the reasons. The respondent relies on the observations which I made in paragraph 26 of the reasons including that the
Commissioner had no prospects of discharging the burden of proving the serious allegation that was made in the charge as originally framed.
[18] The Commissioner fulfils an important public role under the Act in investigating complaints, making decisions on whether to dismiss them or to commence proceedings before a disciplinary body in relation to the complaint and prosecuting such proceedings. It is a matter of fairness, however, to the practitioner who is the subject of the complaint that the Commissioner formulates the charge against the practitioner with precision and gives careful consideration to the matters raised by the practitioner in the practitioner's response that is usually provided to the Commissioner at an early stage of the investigation of the complaint.
[19] The charge which the respondent ultimately had to meet at the hearing of this application was different both in the terms and the particulars of the charge and the gravity of the offence than the charge that was set out in the application that commenced this proceeding. This resulted in the Commissioner incurring costs that were wasted and caused the respondent to incur costs that were wasted. That is sufficient to establish the exceptional circumstances which enable a departure from the usual order provided for in s 286(1) of the Act.
[20] In determining what is the appropriate order that should be made for costs, it remains relevant that the prima facie position is that, if there is a finding of guilty against the practitioner, the practitioner should pay the costs of the Commissioner.
[21] The exceptional circumstances that exist should be recognised by reducing the extent of the Commissioner's costs which can be recovered against the respondent. I have therefore concluded that the respondent should pay two-thirds of the
Commissioner's costs of the proceeding to be assessed on the standard basis.
The applicability of this decision to the facts of the present case is obvious. The decision provides good support for the conclusion that the Tribunal would in any event have been inclined to reach. Although the Solicitor's delay in notifying the Law Society of the defects in the Application as originally framed contributed significantly to the necessity for adjourning the first scheduled hearing of the matter, the defects themselves were caused by the Law Society's failure to articulate properly the case that it was bringing against the Solicitor.
As the Queensland Tribunal held, circumstances such as these are 'exceptional'. They provide a sound basis for declining to order the Solicitor to pay all of the Law Society's costs.
For the foregoing reasons, the Tribunal's order is that the Respondent is to pay the Applicant's costs of and incidental to these proceedings, as agreed or assessed under Part 3.2 of the LP Act, except for the costs of and incidental to the Applicant's application for leave to file the Further Amended Application dated 14 July 2010.
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Decision last updated: 03 October 2012
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