Council of the Law Society of the Act v Legal Practitioner
[2022] ACTSC 129
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Council of the Law Society of the ACT v Legal Practitioner 202021 |
Citation: | [2022] ACTSC 129 |
Hearing Date: | 26 May 2022 |
DecisionDate: | 1 June 2022 |
Before: | Mossop J |
Decision: | See [111] |
Catchwords: | PROFESSIONS AND TRADES – LEGAL PRACTITIONER – Appeal from a decision of a single member of the ACT Civil and Administrative Tribunal – appeal against decision overturning summary action against a legal practitioner under s 413 of the Legal Profession Act 2006 (ACT) – construction of solicitor’s duties to clients – where the ACAT erred in construing the duty in r 4.1.1 of the Legal Profession (Solicitors) Conduct Rules 2015 (ACT) to “act in the best interests of a client in any matter in which the solicitor represents the client” as limited to matters where a solicitor represents a client in relation to third parties – where tribunal erred in finding the duty in r 4.1.3 to “deliver legal services competently, diligently and as promptly as reasonably possible” had no work to do in relation to billing – where tribunal erred in concluding that the practitioner was precluded by s 11 of the Limitation Act 1985 (ACT) from rendering a bill for work done more than six years ago – appellant did not establish error in the tribunal’s conclusions that there was no reasonable likelihood that the tribunal would find the practitioner guilty of unsatisfactory professional conduct – appeal dismissed |
Legislation Cited: | ACT Civil and Administrative Tribunal Act 2008 (ACT), ss 79, 83 Australian Solicitors Conduct Rules 2012 (QLD), r 4.1.1 South Australian Legal Practitioners Conduct Rules 2011 (SA), r 4.1.1 |
Cases Cited: | Breen v Williams (1996) 186 CLR 71 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Ryan v Vizovitis [2017] ACTCA 3 |
Texts Cited: | Explanatory Statement, Legal Profession (Solicitors) Conduct Rules 2015 (ACT) Law Council of Australia, Australian Solicitors Conduct Rules 2011 (at June 2011) |
Parties: | Council of the Law Society of the ACT ( Appellant) Legal Practitioner 202021 ( Respondent) |
Representation: | Counsel D Moujalli ( Appellant) R Arthur ( Respondent) |
| Solicitors McInnes Wilson ( Appellant) KJB Law ( Respondent) | |
File Number: | SCA 39 of 2021 |
Decision under appeal: | Court/Tribunal: ACT Civil and Administrative Tribunal Before: Senior Member Orlov Date of Decision: 10 August 2021 Case Title: Legal Practitioner 202021 v Council of the Law Society of the ACT (Occupational Discipline) Citation: [2021] ACAT 74 |
MOSSOP J:
Introduction
These proceedings involve an appeal from a decision of the Australian Capital Territory Civil and Administrative Tribunal (ACAT) which has been removed from the Appeal Tribunal of the ACAT to this court. The decision of the ACAT was given on 10 August 2021. The order under s 83 of the ACT Civil and Administrative Tribunal Act 2008 (ACT) (ACAT Act) removing the appeal from that decision into this court was made on 1 November 2021.
The proceedings in the ACAT were an appeal from a decision of the Council of the Law Society of the Australian Capital Territory. Following a complaint from clients (referred to by the ACAT as Mr and Ms D), the Council found that a legal practitioner had failed to act in the best interests of his clients in breach of r 4.1.1 of the Legal Profession (Solicitors) Conduct Rules 2015 (ACT) (Solicitors Conduct Rules), by issuing an invoice for $711.29 for work done on a file over the previous 11 years with no interim invoices. The Council had dealt with the matter pursuant to s 413 of the Legal Profession Act 2006 (ACT) (LP Act), publicly reprimanded the legal practitioner and imposed a fine upon him of $1500.
The practitioner appealed to the ACAT pursuant to s 416 of the LP Act, which provides that an Australian legal practitioner complained about may appeal a decision to take action under s 413 in relation to that practitioner.
The ACAT set aside the Council’s decision and dismissed the complaint: see Legal Practitioner 202021 v Council of the Law Society of the ACT (Occupational Discipline) [2021] ACAT 74 (ACAT Reasons). It is from this decision that the Council now appeals.
The proceedings in the ACAT were proceedings brought by the respondent, a legal practitioner. He was referred to as “Legal Practitioner 202021” in the ACAT, for consistency with s 423A of the LP Act which restricts disclosing the identity of practitioners subject to disciplinary proceedings brought to the ACAT by the relevant council for an Australian legal practitioner.
In these reasons, the Council will be referred to as the appellant and the legal practitioner as the respondent.
Procedural history
Complaint
The legal practitioner was first retained by Mr and Ms D in about March 2005. On 15 May 2008, he opened a file referred to as the “security packet file” on instructions from Mr and Ms D. The file was opened to receive the certificate of title and a contract of sale in respect of a matter which had been completed and invoiced on 23 April 2008.
Between May and July 2008, the legal practitioner prepared wills and enduring powers of attorney for Mr and Ms D. In July 2008, these documents along with the certificate of title and contract of sale were lodged in the file.
There was a dispute as to whether the practitioner advised the clients orally that he would bill for any advice provided or miscellaneous work that he was asked to carry out on their behalf and when that bill was to be provided. The ACAT reasons noted that Mr and Ms D claimed they were not informed that the practitioner would bill for this work, whereas the legal practitioner claims he would have advised the clients upon opening the file: ACAT Reasons at [50]. This issue will be returned to later in these reasons.
Between 2005 and 2019, the practitioner had opened and rendered invoices on 10 other files for the clients.
Further documents were added to the “security packet file” in 2012 and then again in 2015. A document was removed from the security packet file in 2016 in order to facilitate a property transaction.
Following the making of the Solicitors Conduct Rules in 2015 which introduced r 16, prohibiting a solicitor charging for the storage of documents or their retrieval unless there was an agreement in writing to such charge being made, the respondent wrote in January 2019 to Mr and Ms D seeking their agreement to such charges.
The practitioner sent follow-up letters on 12 and 26 March 2019. The last of these letters referred to the absence of any response to the earlier communications and indicated that Mr and Ms D should either sign the copy of the earlier letter or “alternatively instruct us to receipt out all documents in this Security Packet to you, invoice you for any work carried out on this Security Packet and then close the Packet”. On 21 April 2019, Ms D requested that the practitioner release the contents of the file and asked to be given the cost to “receipt out” and return all documents to them.
By reply email on 6 May 2019, the practitioner advised that as the file was held in joint names, Mr D also needed to provide an authority to release the documents. With that letter, he sent an invoice for $711.29, which included professional fees of $500, disbursements of $146.63 and GST of $64.66. Ms D wrote to the practitioner complaining about the invoice on 18 June 2019. Although the letter of complaint contemplated that there may be some negotiation over the fees, Ms D did not wait for a response to her letter. Instead, on 20 June 2019, Ms D signed a complaint to the Law Society which was received on 5 July 2019.
The practitioner was notified of the complaint by letter dated 19 July 2019, which informed him of a preliminary decision to further assess and investigate whether there had been inappropriate and excessive charging of legal costs and a failure to act in good faith.
Following an investigation, the appellant made a decision and issued a statement of reasons in relation to its decision on 30 September 2020. The appellant found that there had been a breach of r 16 as a result of charging some $59 excluding GST for file retention but characterised this as a “technical breach” which did not warrant any disciplinary response. The appellant determined that “issuing an invoice covering a period of 11 years constitutes a failure to act in the best interests of the clients in breach of r 4.1.1”.
Under s 413 of the LP Act, the Council may take action if the Council considers that there is a reasonable likelihood that the practitioner would be found guilty by the ACAT of unsatisfactory professional conduct but not professional misconduct and is satisfied that the practitioner is generally competent and diligent and is further satisfied that the unsatisfactory professional conduct can be adequately dealt with under s 413 of the Act. The Council, pursuant to s 413(2), exercised its authority to publicly reprimand the practitioner and to fine him $1500.
Appeal
The legal practitioner filed an appeal with the ACAT on 29 October 2020 against the appellant’s decision, pursuant to s 416 of the LP Act, which provides that an Australian legal practitioner complained about may appeal to ACAT against a decision to take action in relation to that practitioner.
The reasons for applying for a review were:
Review of the decision is justified because:
In pronouncing the ruling on which the Council based its decision – that the conduct of issuing an invoice covering 11 years constitutes a failure to act in the best interests of the client in breach of rule 4.1.1;
The Council purported to apply a standard not applicable to the circumstances of the case; and
The Council applied a general rule without regard to the particular merits of the case, in particular that the client was not likely to be disadvantaged by the lapse of time, and was not so disadvantaged in fact.
The Law Society filed a Notice of Contention seeking to support the decision on the basis that the conduct involved a breach of the legal practitioner’s common law duty to act fairly and in good faith.
The hearing took place on 22 April 2021. The Tribunal member dealt with the matter as a hearing de novo.
ACAT Decision
On 10 August 2021, the Tribunal ordered that the decision under review of 1 October 2020 be set aside and substituted by a decision to dismiss the complaint.
The solicitor’s entitlement to charge legal costs for miscellaneous work done at the clients’ request
The Tribunal considered that the question of the legal practitioner’s entitlement to charge costs for miscellaneous work done turned not on whether the clients were told that they were to be charged, but could be resolved by reference to s 279 of the LP Act. That provision provides a statutory right to recover legal costs either in accordance to a costs agreement, a scale of costs, or where neither applies, according to the fair and reasonable value of legal services provided.
The ability to recover costs pursuant to s 279 is conditional upon a bill being given that complies with form requirements in ss 290 and 291 of the LP Act by virtue of s 289, and at least 30 days having expired since that bill being issued . Section 290(1) requires that the bill be in the form of a lump sum or itemised bill and be accompanied by a written statement of the client’s rights if there is a dispute in relation to the legal costs. Clients may request an itemised rather than lump sum bill if the bill is for an amount over $1500: s 292(1), (2), (10). The Tribunal considered that these requirements had been complied with: ACAT Reasons at [120], affirming the Council’s finding that the clients were not overcharged: at [122].
The Tribunal outlined that the common law position, that a solicitor was not entitled to bill for work until the conclusion of the matter in which the solicitor was retained, was displaced by s 293(1) of the LP Act which provides that clients may be issued interim bills, but noted there was no statutory imperative to issue such bills: at [123].
However, the Tribunal concluded that s 11 of the Limitation Act 1985 (ACT), which provides that action on any cause of action is not maintainable if the action is brought more than 6 years after the cause of action accrues, had the effect that the practitioner was not entitled to render a bill which included costs for more than six years before the date of the bill, in this instance before 6 May 2013: ACAT Reasons at [124].
The Tribunal considered that the relevant conduct the Council should have considered was not a delay in rendering a bill, but rendering a bill where the entitlement to recover legal costs was statute barred. It was satisfied that the amount charged was a reasonable amount for the work done within the six-year period from 6 May 2013: ACAT Reasons at [127], [132] and that there was no reasonable likelihood the Tribunal would find the practitioner guilty of unsatisfactory conduct based on a breach of the common law duty to treat clients fairly and in good faith: at [132].
Whether the solicitor’s conduct breached r 4.1.1 of the Solicitors Conduct Rules
Rule 4.1.1 states that a solicitor must “act in the best interests of a client in any matter in which the solicitor represents the client”.
The Council contended that this duty was imposed in all matters where a solicitor acts pursuant to a retainer with a client. The Tribunal considered some past decisions of the ACAT on the interpretation of the rule, and construed the rule as not applying in every case where the solicitor acts for a client but only in those cases where the solicitor “represents” the client in the sense of being a substitute, proxy, agent or delegate of the client. The Tribunal interpreted the rule as having no work to do where a solicitor bills a client for a matter where the solicitor acted for, but did not “represent” the client: ACAT Reasons at [138]-[151]. The Tribunal considered that the common law duty to treat a client fairly and in good faith was the relevant source of the solicitor’s obligations when billing in a matter. Further, the Tribunal found that none of the miscellaneous work done by the respondent and billed for in this case had involved him acting in a representative capacity: at [153]. The conclusion reached by the Tribunal was that there was “no reasonable likelihood that the Tribunal would find [the respondent] guilty of unsatisfactory professional conduct based on a breach of rule 4.1.1”: at [153].
Whether the solicitor’s conduct breached r 4.1.3 of the Solicitors Conduct Rules
Rule 4.1.3 provides that a solicitor must “deliver legal services competently, diligently and as promptly as reasonably possible”, where “legal services” means “work done, or business transacted, in the ordinary course of legal practice”: Solicitors Conduct Rules, Glossary of Terms. The Council contended that the rule implicitly required solicitors to render a bill within a reasonable time of providing the services: ACAT Reasons at [155]. The Tribunal concluded that billing was not a legal service and that there was no necessity to read words into the rule to encompass billing: at [158]-[160]. The conclusion reached by the Tribunal was that there was “no reasonable likelihood that the Tribunal would find [the respondent] guilty of unsatisfactory professional conduct based on a breach of rule 4.1.3”.
Whether the solicitor’s conduct breached the duty to treat the clients fairly and in good faith
The Council submitted to the ACAT that a solicitor has an ethical obligation to render a bill within a reasonable time of providing legal services to a client as part of the common law duty to treat clients fairly and in good faith. The Council further submitted that the rationale for this obligation is that it is to a client’s benefit to achieve finality in a matter and delay in rendering a bill may make it more difficult for a client to exercise a right to challenge the bill.
The Tribunal accepted the legal practitioner’s submission that, considering the principles discussed by Allsop P in Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268; 383 ALR 577 at [17], delay in rendering a bill may amount to a failure to treat the client fairly, or a failure to treat the client in good faith. However, the Tribunal continued (at [163]):
However, I can see no basis to conclude that there is a generally applicable rule of ethics that a solicitor must give a client a bill for legal services within a reasonable time of providing the services, and that breach of the rule can be established without enquiring whether in the circumstances the conduct in question amounts to a failure to treat the client fairly and in good faith and without proof of the facts relevant to that enquiry, including whether the client has been, or is reasonably likely to be disadvantaged or otherwise suffer detriment by the alleged conduct. The rule that the Council seeks to characterise as an ‘expression’ of the common law duty assumes, without proof, that a failure to render a bill within a reasonable time must, of itself, amount to a failure to treat the client fairly and in good faith in every case without regard to individual circumstances. I accept the solicitor’s submission that the Council’s approach confuses the normative standard established by the requirement that a solicitor must treat the client fairly and in good faith, with the factual question whether a delay in rendering a bill has resulted in a breach of the standard in the circumstances of the case.
The ACAT addressed the circumstances relied upon by the Council to establish a breach of the common law duty and concluded that:
(a)In relation to the contention that the practitioner did not advise the clients, this matter was irrelevant because the clients’ liability to pay did not depend on whether he told them he would charge for services: ACAT Reasons at [167].
(b)The clients’ complaint that charges fell well outside of a reasonable time was not determinative, particularly in circumstances where they accepted it was reasonable that they should pay for work done in the previous three years, and where most of the costs were incurred in relation to work done in the previous three years: at [168].
(c)The fact the practitioner had rendered bills in other matters including on one occasion for a small amount was irrelevant, and there was no evidence that this induced the clients to have an expectation that they would be billed shortly after any work was done: at [169].
(d)That the practitioner had destroyed old files and earlier accounts in the ordinary course after being archived for seven years was irrelevant to the issue of delay, because of the operation of the six-year limitation period: at [170].
(e)Because the practitioner kept reasonably detailed records that would have enabled him to answer questions the clients may have about the work done or the basis for charging, the fact that the clients had no documentary records or independent recollection of telephone calls about the billing did not result in unfairness: at [171].
(f)The Council accepted the clients had not been disadvantaged, and that the practitioner’s conduct was not reasonably likely to disadvantage or otherwise cause detriment to the client: at [172].
The conclusion reached by the Tribunal was that there was “no reasonable likelihood that the Tribunal would find [the respondent] guilty of unsatisfactory professional conduct based on a breach of the common law duty to treat a client fairly and in good faith”: [173].
Appeal and removal
On 7 September 2021, the appellant filed an Application for Appeal from the Tribunal’s decision with the ACAT under s 79 of the ACAT Act, which permits appeals from certain decisions of the Tribunal on a question of fact or law. In the normal course, the appeal would have been heard by the ACAT Appeal Tribunal. However, upon the application of the appellant, the appeal was removed into this court pursuant to s 83 of the ACAT Act.
Grounds of appeal and Notice of Contention
The grounds of appeal are as follows:
1.The Tribunal erred in characterising the question of delay in issuing the invoice dated 6 May 2019 (Invoice) as relating only to work done since June 2014 in circumstances where:
(a)the Invoice expressly stated that it related to work done “during the period July 2008 to date”;
(b)the practitioner gave evidence that the Invoice related to work which “covered some 11 years”; and
(c)the effect of section 11 of the Limitation Act 1985 (ACT) was not to extinguish any right to recover fees which may be subject to a 6 year limitation period but to avail the clients with an option of pleading a limitation defence to a claim.
2.The Tribunal erred in determining that the practitioner was not entitled to render a bill which included costs for legal services completed more than 6 years before the date of the bill in circumstances where the effect of section 11 of the Limitation Act 1985 (ACT) was not to extinguish any right to recover fees which may be subject to a 6 year limitation period but to avail the clients with the option of pleading a limitation defence to a claim.
3.The Tribunal erred in determining that the 6 year limitation period stipulated in section 11 of the Limitation Act 1985 (ACT) commenced to run from the “completion of each discrete matter” in circumstances where all work recorded in the invoice was the subject of a single retainer and the Invoice was the only invoice issued pursuant to the retainer.
4.The Tribunal erred in construing rule 4.1.1 of the Legal Profession (Solicitors) Conduct Rules 2015 as not being applicable to all instances where a solicitor does work on behalf of a client but only applying where a solicitor acts in a “representative capacity”.
5.The Tribunal erred in failing to treat the issuing of an invoice as part of the delivering of legal services for the purposes of rule 4.1.3 of the Legal Profession (Solicitors) Conduct Rules 2015 in circumstances where legal services were being provided for a fee and not on a pro bono basis.
6.The Tribunal erred in not finding that the practitioner failed to treat the clients fairly in breach of the practitioner’s common law duty in circumstances where the Invoice claimed fees for work performed up to 11 years prior to the issue of the Invoice and section 293(1) of the Legal Profession Act 2006 (ACT) permitted the practitioner to issue interim invoices for part only of the work performed pursuant to the retainer.
(Footnotes omitted.)
The respondent was granted leave at the hearing to file a Notice of Contention. That Notice of Contention was as follows:
1.With respect to Grounds 1, 2, 3, and 6 of the Notice of Appeal to the extent that the Tribunal has incorrectly characterised the extent of the delay:
a. the nature of the work undertaken more than 6 years before the invoice was issued and the Respondent’s records of that work was such that the additional time would not render the Respondent’s conduct as reasonably likely to cause detriment to the clients for the purposes of the Tribunal’s findings at Reasons [171]-[172]; and
b. in any event the Appellant concedes that the clients were not disadvantaged even in respect of the 11 year period (Reasons [172]).
2.With respect to Ground 4 of the Notice of Appeal to the extent that Rule 4.1.1 applies:
a. determining whether the Respondent acted in the best interests of the clients must include consideration of disadvantage or detriment to the clients such as to render the solicitors conduct as reasonably likely to cause detriment to the clients, and it was not; and
b. in any event the Appellant concedes that the clients were not disadvantaged even in respect of the 11 year period (Reasons [172]).
3.With respect to Ground 5 to the extent that Rule 4.1.3 applies:
a. there is no obligation on a solicitor to render interim bill invoices;
b. what is reasonable promptness in rendering of an invoice must involve consideration of the commercial convenience of the solicitor and any relative disadvantages or detriment to the clients;
c. so considered, the conduct of the Respondent did not breach the rule; and
d. in any event the Appellant concedes that the clients were not disadvantaged even in respect of the 11 year period (At reasons [172]).
The task of the Tribunal under s 416 is one which has some complexities because of the terms of s 413. These complexities are explained in Legal Practitioner “M” v Council of the Law Society of the Australian Capital Territory [2015] ACTSC 312 at [145]-[152] and Legal Practitioner LP 201901 (David Lander) v Council of the Law Society of the ACT [2019] ACAT 57 at [8]-[13]. Those complexities are compounded by the limitation upon appeals under s 79 of the ACAT Act to “a question of fact or law”. In this case there was no significant dispute as to what had occurred. The significant issues were as to certain questions of law and the appropriate characterisation of the facts against the relevant legal standards. Having determined the questions of law raised by the Notice of Appeal, both parties submitted that this Court should attempt to finally resolve the issues in the proceedings and raised no barrier arising from the terms of s 79 of the ACAT Act to the court doing so.
Grounds 1, 2 and 3
Submissions
Both parties’ submissions grouped appeal grounds 1-3 together as grounds that dealt with the proper characterisation of the delay period.
The appellant submitted that the Tribunal made a number of errors in characterising the question of delay as being confined to work done since June 2014, noting that the invoice expressly stated it was for the work done “during the period July 2008 to date” . Although it was common ground that the respondent discounted his fees, the appellant contended there was no basis for suggesting that the respondent had discounted fees relating to work performed prior to June 2014, as there was no evidence on this matter. The appellant submitted that the Tribunal erred in suggesting that the absence of cross‑examination on the work charged for meant the invoice could be taken at other than its face value as claiming payment for work done since 2008.
The appellant submitted that the Tribunal did not cite any authority or provide any reasons for the proposition that the limitation period for the recovery of legal costs commences to run “from the completion of each discrete matter in accordance with the solicitor’s instructions”. Further, it submitted that the Tribunal erred in considering the Limitation Act could have any application to the issuing of a bill, based on statements from the High Court in The Commonwealth vVerwayen (1990) 170 CLR 394 that a limitation period does not go to the existence of jurisdiction to hear and determine a matter, but rather operates as a defence to the action. Therefore, the limitation period would not bar the respondent’s right to claim payment for work done more than six years earlier.
The respondent accepted the appellant’s submissions that the Limitation Act provided a defence to a client who was billed for matters outside the limitation period but did not prevent the respondent from issuing a bill. He thereby accepted that the Tribunal had erred in holding otherwise.
The respondent submitted that the appellant’s assertion that the Tribunal characterised the relevant conduct of the respondent as the delay in issuing the invoice only in respect of work done within the limitation period is not a fair representation of the Tribunal’s reasoning that the charges were not made out. Rather, the respondent highlighted the Tribunal’s consideration of the respondent’s conduct, including that:
(a)the respondent kept reasonably detailed records of work costed against the file;
(b)the respondent would have been in a position to answer any legitimate questions the client may have had about the work done or the basis of the charges; and
(c)the clients were not disadvantaged and the respondent could not be said to have acted unfairly towards them.
The respondent submitted there was no reason to think that the Tribunal’s finding in relation to the quality of the records kept did not apply to the records of work done outside the limitation period, and that the Tribunal did not fail to consider the respondent’s conduct over the whole 11-year period.
In his written submissions, the respondent also relied on the matters set out in the Notice of Contention.
Decision
The Tribunal erred in reaching the conclusion that the respondent was precluded by the statute of limitations from sending a bill for work done outside the limitation period. That is for the reasons asserted by the appellant and conceded by the respondent, namely, that the Limitation Act is a matter which may provide a defence to a claim for fees but it but does not remove any entitlement on the part of the respondent to send a bill in relation to those fees. Therefore, the Tribunal was wrong in assessing the conduct of the solicitor on that basis. In particular, it was an error to assess the claims made by the appellant on the basis that its claim “concerns only work done since June 2014”: ACAT Reasons at [133]. This is sufficient to dispose of grounds 1 and 2. In light of the conclusion reached in relation to these grounds, it is not necessary to go on to determine ground 3 which would require determination of precisely when the six-year limitation period referred to in s 11 of the Limitation Act commenced to run.
Ground 4
Relevant rules
Rules 3 and 4 of the Solicitors Conduct Rules provide:
3 PARAMOUNT DUTY TO THE COURT AND THE ADMINISTRATION OF JUSTICE
3.1 A solicitor’s duty to the court and the administration of justice is paramount and prevails to the extent of inconsistency with any other duty.
4 OTHER FUNDAMENTAL ETHICAL DUTIES
4.1 A solicitor must also:
4.1.1 act in the best interests of a client in any matter in which the solicitor represents the client;
4.1.2 be honest and courteous in all dealings in the course of legal practice;
4.1.3 deliver legal services competently, diligently and as promptly as reasonably possible;
4.1.4 avoid any compromise to their integrity and professional independence; and
4.1.5 comply with these Rules and the law.
Submissions
The appellant contended that there was no authority in this or other jurisdictions supporting the construction of r 4.1.1 of the Solicitors Conduct Rules adopted by the Tribunal, namely, that its application is limited to circumstances in which the solicitor represented the client in dealings with third parties. The appellant noted that the rule has analogues in other Australian jurisdictions which were in the same terms: Legal Profession Uniform Law Australian Solicitors Conduct Rules 2015 (NSW), r 4.1.1; Legal Profession Uniform Law Australian Solicitors Conduct Rules 2015 (Vic), r 4.1.1; Australian Solicitors Conduct Rules 2012 (Qld), r 4.1.1; South Australian Legal Practitioners Conduct Rules 2011 (SA), r 4.1.1; Legal Profession (Solicitors Conduct) Rules 2020 (Tas), r 8(a). However, the appellant noted that the Western Australian rule, r 6(1)(a) of the Legal Profession Conduct Rules 2010 (WA) states that a practitioner must “act in the best interests of a client in any matter where the practitioner acts for the client” (emphasis added), rather than “represents the client”. No explanatory material relating to the making of the Western Australian rule was provided that might explain the departure from the otherwise uniform adoption of the language used in the Australian Solicitors’ Conduct Rules 2011 prepared by the Law Council of Australia. The appellant submitted that the question on appeal was whether the use of the word "represents" as opposed to “acts for” materially affects the operation of the rule.
The appellant submitted that the construction by the Tribunal was contrary to other decisions of ACAT and that of Tribunals in other jurisdictions, although none of these involved specific consideration of the issue as to the meaning of “represents” raised in these proceedings.
The appellant first submitted that the rule does not refer to a solicitor acting in a representative capacity and the words “represents the client” are capable of encompassing acting on behalf of a client. The appellant pointed to the references to the representative character of the fiduciary relationship discussed in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96-97 and Breen v Williams (1996) 186 CLR 71 at 93.
Second, it submitted that the rule is described in the heading to r 4 as one of the “other fundamental ethical duties”. Having regard to that context and the comprehensive nature of the other obligations in r 4.1 it submitted that there is no reason why the obligation in r 4.1.1 should only apply when acting in a representative capacity.
Third, it submitted that to read r 4.1.1 in the restricted manner that the Tribunal did would preclude the operation of the rule in many significant situations in which a solicitor provided advice to a client. It emphasised the centrality of such advice to the practice of law citing Cornall v Nagle [1995] 2 VR 188 at 208.
Fourth, the appellant contended the construction of r 4.1.1 adopted by the Tribunal would give rise to significant uncertainty as to when a solicitor started acting in a representative capacity. It provided as an example advice given in relation to prospective litigation where the solicitor was not yet dealing with the third parties that might be involved in the litigation.
Fifth, it submitted that there would also be significant uncertainty in determining which conduct was covered by r 4.1.1. In the context of litigation there would be uncertainty as to whether advice provided to the client as distinct from dealings with third parties would be covered by the duty. Similar examples were provided in relation to estates and property transactions.
The respondent submitted that the use of the expression “in any matter in which” the solicitor represents the client, connotes a distinction between such matters and other matters where a solicitor acts for a client but does not “represent” the client in relation to any third parties.
The respondent contended that the application of the ordinary meaning of represent, accepted by the Tribunal as:
(a)to stand or act in the place of, as a substitute proxy or agent
(b)to speak and act for by delegated authority
was reinforced by the fact that the word and its derivatives are used consistently through the Solicitors Conduct Rules.
The respondent contended that r 2 makes clear that the rules are not an exhaustive statement of standards expected of solicitors, and that confining r 4.1.1 to matters in which a solicitor acts in a representative capacity does not leave a gap, because the work of that rule is to ensure that clients’ interests are preferred over the interests of other parties to whom the client is opposed in litigation or in contractual transactions. Specific provisions in relation to conflicts of interest in matters not involving “representation” exist in rr 10-12.
In relation to the previous decisions of the ACAT, the respondent submitted that findings that a solicitor has not acted in the best interests of a client have been made without any analysis of the content of that expression.
He submitted that it is only when the interests of a client are considered in relation to other interests that a normative application of the duty is possible. He therefore submitted that the rule should not be interpreted so as to create a universal obligation to act in the best interests of the client in the abstract but instead a duty which existed only by reference to other competing interests.
Further, the respondent contended that the appellant’s application of the rule would only be workable if the client’s interests are assessed in relation to an appropriate reference point – in this case, the cost efficiency to the respondent of issuing a single invoice. However, in this case the clients were not disadvantaged, so there is little reason why issuing the single invoice would not be in the interests of the clients.
Ground 2 of the Notice of Contention also contends that to the extent that r 4.1.1 applies, determining whether the respondent acted in the best interests of the clients must include consideration of disadvantage or detriment to the clients such that the solicitor’s conduct would be reasonably likely to cause detriment; and reiterated that the appellant had conceded that the clients were not disadvantaged even in respect of the 11-year period.
Decision
The interpretation adopted by the Tribunal and contended for by the respondent has the merit that it appropriately reflects the distinct language used in the rule. That is, it gives specific meaning to the word “represents”. The context in which it appears is significant in that elsewhere in the rules both the word “act” and the word “represent” are used, suggesting that the drafter recognised a distinction: rr 12.1, 17.1.
However, when regard is had to other aspects of the context in which the expression appears and its purpose, the expression should be treated as applying in a way which is not limited to circumstances where the solicitor represents the client in relation to dealings with third parties.
First, the context in which the provision appears is significant. It is plainly to be read in the context of r 3 which is headed “Paramount Duty to the Court and the Administration of Justice”. Rule 4 then identifies “Other Fundamental Ethical Duties”. The balance of r 4.1 each include duties which are general in nature and are not confined to matters where the solicitor is acting in a representative capacity.
Second, so far as the purpose of the expression “in any matter in which the solicitor represents the client” is concerned, the respondent submitted that this was designed to confine the scope of the duty to matters in which the solicitor acted in a representative capacity. However, it can also be understood as having a different purpose, that is, to confine the scope of the duty to circumstances in which the solicitor is acting on behalf of the client and avoid the unmanageably broad duty that would exist if the rule did not include those words. Plainly it was not intended that the duty extend to the whole of a solicitor’s practice or to matters outside the legal practice. The existence of this alternative reason for the inclusion of the language tends to reduce the significance that might otherwise be attributed to its inclusion.
Third, the expression “matter” is defined in the Glossary of Terms at the end of the Solicitors Conduct Rules as follows:
“matter” means any legal service the subject of an engagement or required to be provided by the solicitor or the solicitor’s law practice to fulfil an engagement and include services provided for:
(a) a case;
(b)a dealing between parties that may affect, create or be related to a right, entitlement or interest in property of any kind; or
(c) advice on the law.
Thus, the reference to “matter” includes matters which do not involve any third parties. It is not limited to a “matter” in the sense of a justiciable controversy. If it had been, then this would have supported the interpretation contended for by the respondent. That the scope of the defined term “matter” is so broad and clearly include matters in which the client is not “represented” in the sense contended for by the respondent, tends to support the appellant’s interpretation of the rule.
Fourth, some imprecision in the language used is not to be unexpected in circumstances where the drafting of the rule reflects a model provision into which a variety of minds may well have contributed, as distinct from an instrument in relation to which it can be inferred that there was a single drafter or confined group of drafters. As the explanatory statement makes clear, the rules were based upon the draft national conduct rules prepared by the Law Council of Australia which themselves appears to have been an elaboration of the Australian Solicitors Conduct Rules 2011 developed by the Law Council of Australia in 2011: Explanatory Statement, Legal Profession (Solicitors) Conduct Rules 2015 (ACT) at 1.
For these reasons, the rule should not be read as limited to circumstances in which the solicitor represents the client vis-à-vis third parties and the Tribunal erred in adopting the confined interpretation of r 4.1.1 that it did.
My tentative view is that the rule operates where there is a competing interest (of the solicitor or some other entity) and it compels the solicitor, when acting for the client, to act in the best interest of the client. That provides a meaningful and significant duty upon the solicitor. It is to be preferred to a more uncertain duty which is not defined by reference to competing interests but instead would require the solicitor to “do what is best” for the client. That would mean that the solicitor would be in breach of a “fundamental ethical duty” if the solicitor adopted a second-best means of promoting the client’s interests. The appellant did not identify any pedigree for such a duty.
For reasons which will be given below, it is not essential to determine in this case whether the obligation in r 4.1.1 can only apply where there are conflicting interests which provide a reference point or whether, as the appellant appeared to contend, it involved a more abstract and generalised duty. That is because whether the rule depends either upon there being some conflicting interest or upon an abstract assessment of what was in the client’s’ best interests, the appellant has not established a breach of the rule.
On any view, that general rule in r 4.1.1 cannot be interpreted as operating so as to prevent a solicitor for billing for work done so long as that is done fairly and in good faith.
The focus of the appellant’s submissions was on the delay in billing. The ACAT found that:
(a)the appellant accepted that the clients had not been disadvantaged by the respondent’s conduct: ACAT Reasons [172]; and
(b)the respondent had not proved that the conduct was reasonably likely to disadvantage or otherwise cause detriment to the clients: ACAT Reasons [172].
Having regard to the nature of the work done and the records that were available in relation to that work, no different conclusion can be reached when regard is had to the 11-year period as distinct from the six-year period that was the focus of the ACAT’s consideration.
If the rule only operated in circumstances where there was a conflict between the interests of the client and another competing interest, the appellant has not established a breach of the rule in circumstances where:
(a)the legal practitioner was entitled to charge for the work done;
(b)the bill was sent in good faith;
(c)there was no overcharging for the services provided; and
(d)the delay in billing was not reasonably likely to cause detriment to the client and there was, in fact, no detriment to the client.
If the duty in r 4.1.1 was a more abstract one not defined by reference to any conflict of interest, the appellant has not established a breach of the rule in circumstances where, in addition to the matters referred to above, there was no evidence as to whether in this case it was more favourable to the client to have received numerous small bills proximate to the doing of the work or a deferral of billing until the end of the relationship.
On this ground, while the appellant has established an error of law on the part of the Tribunal, it has not established that the conclusion reached by the Tribunal at [153] was wrong.
Ground 5
Submissions
Rule 4.1.3 is set out above at [47]. The Tribunal held that the rule did not apply to billing: see [30] above.
The appellant submitted that the Tribunal erred in construing the definition of legal services in the Solicitors Conduct Rules as if it read “business transacted for the client in the ordinary course of legal practice”, rather than “work done, or business transacted, in the ordinary course of legal practice”. It referred to the statement by Bell J in Russells v McCardel [2014] VSC 287 at [10] of “the modern conception” that “clients are not just clients but also consumers” and “lawyers are not just professionals but also suppliers of legal services”. It contended that the billing for legal services is an essential aspect of this conception of the modern client-lawyer relationship. The appellant also made reference to the statement of Sweeney J in Keith Hercules & Sons v Steedman (1987) 17 FCR 290 at 293 in relation to a provision containing the words “business transacted”, “if general words are used, one should not shrink from applying their ordinary and natural meaning”.
The respondent contended that the rules themselves draw a distinction between the business transacted as part of the legal services and the billing for those services. Reference was made to rr 9.1.2, 12.2, 13.1, 34.2, 37.1, 40.1.
He submitted that the work done was the subject of a single retainer which, absent statutory permission to bill on an interim basis, would require a solicitor to invoice the client only after the work was completed as was done in this case.
To the extent that it was necessary, the respondent relied upon ground 3 in the Notice of Contention.
Decision
Rule 4.1.3 is in general terms. The expression “legal services” is defined in the Glossary of Terms at the end of the rules as follows:
“legal services” means work done, or business transacted, in the ordinary course of legal practice.
Having regard to the general terms of the definition, it is not possible to say that r 4.1.3 has no application to the sending of bills to a client. The billing relationship with the client would be considered to be part of the ordinary course of legal practice. The language of the provision is, having regard to the definition, apt to cover matters ancillary to the core aspects of the provision of legal services, including the financial relationship with the client. So far as the fundamental ethical command in this rule is concerned, it is to do things promptly. There is not a sufficient basis in the language of the provision to dissect out from it the financial relationship with the client.
The specific provisions of the Solicitors Conduct Rules referred to by the respondent set out at [80] above refer to legal services but do not draw a clear distinction between the provision of legal services and the financial relationship with the client.
However, interpreting r 4.1.3 in a manner which includes the billing of the client only goes part of the way to resolving the issue in the present case. There is no doubt that the substantive services provided were provided promptly. Indeed, the respondent appears to have been particularly responsive to oral ad hoc requests for advice and promptly responded to the clients. If there is a problem with the respondent’s failure to send the bill it was not because it involved a failure to deliver legal services as “promptly as reasonably possible”. Rather it was the sending of any bill or billing for work in circumstances which, having regard to the passage of time, was unfair to the client. It is not appropriate to read into r 4.1.3 a fixed obligation to send a bill, or interim bill, promptly if that is divorced from the other circumstances of the case and, in particular, the question of fairness to the client.
On this ground, the appellant has established an error of law on the part of the Tribunal, but it has not established that the conclusion reached by the Tribunal at [161] was wrong.
Ground 6
Submissions
The appellant referred to the recognition by courts that solicitors have a duty to treat their clients fairly: Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 at 171; Ryan v Vizovitis [2017] ACTCA 3 at [124].
The appellant contended that the Tribunal erred in considering that the respondent had not treated the clients unfairly in issuing the invoice, because he placed the clients at a disadvantage if they wished to challenge the invoice, as with the passage of such a period of time recollections will have faded and documents will have been lost. It pointed to the corrosive effect of delay referred to in a different context in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551.
The respondent submitted that the Tribunal correctly approached the application of the duty to act fairly and in good faith, and that the Tribunal properly considered the concern expressed by the appellant about the effect of the passage of time. The Tribunal was satisfied that the conduct was not likely to disadvantage or otherwise cause detriment, because the respondent kept reasonably detailed records that would have enabled him to answer any legitimate questions about the work done or the basis of charging.
Decision
The Tribunal wrongly addressed the alleged breach of the duty to act fairly and in good faith on the basis that only the charges within six years of the bill were relevant. In that sense, the answer to the question of law raised in grounds 1-3 means that the issue raised by ground 6 needs to be reconsidered.
If the issue raised by ground 6 was considered alone then it is not obviously a “question of fact” or “a question of law”. So long as questions of fact and questions of law describe the universe of matters which may be addressed by the Tribunal, then it might be characterised as a mixed question of fact and law. However, what is really in issue is the normative question which involves an exercise of judgment about the required standard of conduct of a solicitor in particular circumstances where neither the facts nor the law are in contest.
Either because it is a matter which directly flows from the error the subject of the earlier grounds, or because it is itself a mixed question of fact and law susceptible to determination, both parties advanced their contentions on the subject matter of ground 6 and neither party contended that there was a limitation on the court finally resolving this question.
In the present case, the Tribunal reached the correct conclusion even though it did so based upon the erroneous contention that the solicitor was not entitled to charge for any work done outside the limitation period.
The appellant had submitted that as an expression of the solicitor’s ethical duty at common law to treat the client fairly and in good faith, there was a rule which required the solicitor to render a bill for the services within a reasonable time. The Tribunal recorded the submission that was made as follows (ACAT Reasons at [96]):
The Council submitted that breach of the ‘rule’ does not depend on proof that the client has been disadvantaged, or on the size of the bill. The Council submitted that a breach of the ’rule’ occurs whenever a solicitor fails to render a bill within a reasonable time, or reasonably promptly after providing a service, regardless whether the client is disadvantaged, and whether the amount involved is small.
(Footnotes omitted.)
The Tribunal rejected that there was such a distinct ethical obligation to render a bill within a reasonable time in circumstances where there was no authority for such a distinct rule in the Tribunal or any other Tribunal or court in Australia. There is no challenge to that conclusion in this appeal. The Tribunal found that it was necessary to enquire whether, in the circumstances, the conduct in question amounted to a failure to treat the client fairly and in good faith. In doing so it was necessary to enquire whether the client had been or was reasonably likely to be disadvantaged or otherwise suffer detriment as a result of the conduct.
Plainly in many if not most cases, the failure to send a bill within a reasonable time will involve a failure to treat the client fairly and in good faith. Clients are generally entitled to expect that at least at the conclusion of their matter, they will be billed in a reasonably prompt way. This allows the client to know its liability, arrange its affairs so that it may satisfy the liability or contest the liability if that is the appropriate course. Further, a failure or refusal to do so may well involve a breach of specific obligations in the Solicitors Conduct Rules, most notably the three components of r 4.1.3: competence, diligence and promptness.
However, in the rather unusual circumstances of the present case, the appellant did not establish that the failure to bill involved a breach of the obligation to treat the client fairly and in good faith. This involves examination of a number of matters which the Tribunal considered and some which were not expressly considered in this part of its reasons.
Background: The Tribunal found that Mr and Ms D were businesspeople and had become clients of the respondent in 2005. Ms D is the granddaughter of former clients of the respondent for whom he had acted for many years up until the grandfather’s death in 2016 and the grandmother’s death in 2019. Upon their deaths, the respondent became a co-trustee, with Ms D’s mother and aunt, of a testamentary trust that he had established on instructions from the grandparents: ACAT Reasons at [48]. Shortly prior to the request to return the documents in the security packet, the relationship between the respondent and Ms D’s family had soured. The respondent had been removed and replaced as co-trustee of the testamentary family trust. The respondent was concerned that the removal may have been as a result of his request for an explanation of several possibly unauthorised financial transactions involving significant amounts of money that the respondent considered belonged or should belong to the trust. For that reason, in April 2019 he had commenced proceedings in the ACT Supreme Court relating to the affairs of the trust. It had been in that context that Ms D considered that it was no longer appropriate that he should hold documents on her and her husband’s behalf: ACAT Reasons at [57]-[58]. It is notable that the letter disputing the fees charged which was dated 18 June 2019, was followed by the complaint to the Law Society signed on 20 June 2019. There was therefore never any opportunity to explain, discuss or negotiate in relation to the practitioner’s invoice.
The Tribunal pointed out that the letter of complaint contained a number of errors, in particular the assertion that services performed years earlier were being billed at the rate of $550 per hour. The Tribunal said at [64]:
The bill cannot reasonably be read that way. Any legitimate doubt the clients might have had about that could have been resolved by a phone call if they had chosen to act reasonably as one might expect from a long-standing client of the firm. The fact that they escalated the matter by threatening to complain to the Law Society and then doing so, in my view says more about the clients’ unreasonable attitude than it does about [the respondent’s] conduct in rendering the bill. The only possible explanation for their behaviour that I can see is antagonism towards [the respondent] following his commencement of proceedings against Ms D’s mother and aunt.
The respondent’s state of mind: The respondent’s evidence was that although he was aware that the bill covered an 11-year period, he thought it was appropriate to send the invoice because he had reduced the amount charged to a figure which he was confident covered the work that could clearly be justified and:
I knew from the long-term relationship that I had with the [clients] that the amount involved would not cause them any financial hardship, that, as with any previous invoice that I had sent them, they had the commercial confidence to query any part of if they wish to do so and that I would be in a position to answer any such queries.
He said that he was not aware of any circumstances that made him think that the clients could be disadvantaged or prejudiced.
Were the clients told? The Tribunal did not consider that it needed to resolve the issue of whether or not the clients had been told that they would be billed for the work the subject of the invoice. The Tribunal considered that the clients’ liability did not depend upon them being told. It therefore did not determine the conflict between the evidence of the clients who said they had not been told that the respondent would charge for maintaining the safe custody packet or for miscellaneous legal advice and the evidence of the respondent. However, whether or not the clients have been treated fairly is influenced by what they were told about being charged even if the statute permitted recovery of fees in the absence of a fee agreement.
The affidavits of Mr and Ms D deposed to the fact that they had not been told in 2008 that they would be charged for maintaining the safe custody packet or for miscellaneous advice. The respondent did not address this issue in his affidavit but was cross-examined about it and said that Mr and Ms D were orally advised at the time they instructed the firm to hold documents that they would be billed for any advice provided or work of the miscellaneous nature that the firm was asked to carry out on their behalf. While he had no specific recollection of the conversation with the clients, he indicated that it was his practice for 30 years whenever he was given documents by clients to have a discussion about those issues.
Having regard to the fact that Mr and Ms D were not cross-examined on their affidavits, it is not possible to reach the conclusion that their evidence should be rejected. It is therefore necessary to proceed on the basis that the clients were not told of the fees for maintaining the storage packet or for miscellaneous work. That is a significant, but relatively confined, finding.
What did the clients expect? Given the absence of cross examination, it was never explored with Mr and Ms D what their understanding was about payment for work done which was directly relevant to the storage of the documents such as the addition of new documents or the production of documents to financial institutions. That included correspondence with the clients by letter in 2008, correspondence with the Commonwealth Bank in 2008 and correspondence about the contents of the security packet on two occasions in 2012 as well as in 2016. Further, there was no evidence given by Mr and Ms D about their understanding in relation to payment for the various items of miscellaneous advice that were documented in the respondents file. In particular, there was no evidence that they thought that this advice was being provided without charge. There was an assertion in the complaint that various items of the miscellaneous work were “not disclosed as billable” but there was no assertion either in that complaint or in evidence that the client considered that this advice was being given on a pro bono basis or upon some other basis. Neither of the clients had given evidence that the respondent’s delay in rendering a bill caused them to expect that they did not have to pay for legal services that they had instructed the respondent to provide.
Was there prejudice due to the destruction of files? The Tribunal held that the destruction of old files and earlier accounts after seven years was irrelevant because the respondent was limited to the last six years. As pointed out in relation to grounds 1‑3, that was incorrect. However, the theoretical difficulty that might arise in such circumstances was not manifested in the present case where the evidence disclosed in some detail the nature of the work done in that earlier period between 2008 and 2014 which was closely related to the maintenance of the security packet and none of the potential difficulties arising from delay in fact would arise. So far as the period from 2014 was concerned, the records maintained by the legal practitioner were detailed enough to permit him to answer any questions which the client might reasonably have had. They included file notes relating to occasions when legal advice on miscellaneous matters was given. While it may be presumed in the absence of evidence that, for the reasons articulated in Brisbane South Regional Health Authority v Taylor delay is prejudicial, in the circumstances of this case the detail of the records that were available and the nature of the dealings were such that no prejudice existed.
The Tribunal concluded that while it might be possible to establish a breach of the duty in circumstances where it was not established that there had been actual disadvantage or detriment to the client, it was necessary to show that the solicitor’s conduct was reasonably likely to disadvantage or otherwise cause detriment to the client. It concluded that the appellant had failed to do so in this case. There is no reason to interfere with that conclusion.
Although the appellant has established that the Tribunal’s conclusion in relation to the respondent’s common law duty was affected by the error established in relation to grounds 1-3, it has not been established that the ultimate conclusion reached at [173] of the Tribunal’s decision was wrong.
Conclusion
While the appellant has been successful in establishing a number of errors on the part of the Tribunal, the relevant conclusions reached by the Tribunal were the correct ones. The appeal must therefore be dismissed.
Order
The order of the Court is: The appeal is dismissed.
| I certify that the preceding one-hundred and eleven [111] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop Associate: Date: 1 July 2022 |
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