Council of the Law Society of the Act v Legal Practitioner RN (Rhondda Nicholas) (Occupational Discipline)

[2017] ACAT 23

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

COUNCIL OF THE LAW SOCIETY OF THE ACT v LEGAL PRACTITIONER RN (Rhondda Nicholas) (Occupational Discipline) [2017] ACAT 23

OR 37/2015

Catchwords:   OCCUPATIONAL DISCIPLINE – legal profession – penalty – reprimand –Legal Profession Act 2006 section 425 – costs – grounds arising from discrete and unrelated complaints – extensive delay – exceptional circumstances – Legal Profession Act 2006 section 433

Legislation cited:     Legal Profession Act 2006 ss 213, 239, 399, 425, 433, 410, 411, 412, 413, 419, 448

Subordinate

Legislation cited:     Court Procedure Rules 2006 r 1751

Legal Profession Regulation 2007 r 62

Cases cited:               Briginshaw v Briginshaw (1938) 60 CLR 336

Council of The Law Society of the Australian Capital Territoryv A Legal Practitioner [2010] ACAT 26
Council of the Law Society of the ACT v Legal Practitioner B3 [2016] ACAT 130
Council of the Law Society of the ACT v Legal Practitioner P4 (No 2) [2015] ACAT 35
Council of the Law Society of the ACT v Legal Practitioner RH [2015] ACAT 40
Council of the Law Society of the ACT v Legal Practitioner RH [2015] ACAT 68
Council of the Law Society of the ACT v the Legal Practitioner (S) [2012] ACAT 29
Council of the Law Society of NSW v Truong (No2) [2015] NSWCATOD 79
Council of the Law Society of the Australian Capital Territory v Legal Practitioner W [2013] ACAT 1
Council of the New South Wales Bar Association v Butland [2009] NSWADT 177
Council of the New South Wales Bar Association v Fitzgibbon (no. 3) [2012] NSWADT 148

Law Society of New South Wales v Foreman (1994) 34 NSWLR 408
Legal Practitioner RH v Council of the Law Society of the ACT [2016] ACAT 94
Legal Practitioner M v The Council of the Law Society of the ACT [2015] ACTSC 312

Legal Services Commissioner v Baker [2006] QCA 145

Legal Services Commissioner v Reeve (No 2) [2016] QCAT 486

Tribunal:                  Senior Member B Meagher SC
  Member B Pearcy

Date of Orders:  7 April 2017

Date of Reasons for Decision:         7 April 2017

AUSTRALIAN CAPITAL TERRITORY          )

CIVIL & ADMINISTRATIVE TRIBUNAL     )          OR 37/2015

BETWEEN:

COUNCIL OF THE LAW SOCIETY OF THE ACT

Applicant

AND:

LEGAL PRACTITIONER RN

Respondent

TRIBUNAL: Senior Member B Meagher SC
  Member B Pearcy

DATE:7 April 2017

ORDER

The Tribunal orders that:

1. The respondent be publicly reprimanded pursuant to subsection 425(3)(e) of the Legal Profession Act 2006 (Legal Profession Act).

2. Pursuant to section 39 of the ACT Civil and Administrative Tribunal Act 2008 the publication of the reasons for decision and the name of the respondent in relation to these proceedings is prohibited until:

   (a)the appeal period has ended and no appeal has been made; or

   (b)any appeal has been decided against the person concerned.  

3. Pursuant to section 39 of the ACT Civil and Administrative Tribunal Act 2008 there is to be no access by a non-party to the record of the hearings in these proceedings, or to the Tribunal’s file for the proceedings, except by order of the Tribunal until:

   (a)the appeal period has ended and no appeal has been made; or

   (b)any appeal has been decided against the person concerned. 

4. The respondent pay 63% of the applicant's costs and disbursements in accordance with the Supreme Court scale on a party and party basis in accordance with rule 1751 of the Court Procedure Rules 2006 (ACT) pursuant to subsection 433(1) and (5) of the Legal Profession Act and in accordance with following procedure:

   (a)The parties should make an attempt to reach an agreement on costs within 28 days.

   (b)If agreement is not reached within 28 days, the applicant may file and serve a bill of costs using form 2.45 approved under the Court Procedure Rules 2006.

   (c)Within 14 days of service, the respondent is to file and serve a document setting out any objections she has to the bill of costs.

   (d)The bill of costs and the respondent's objections will be referred to the Registrar of the Tribunal for assessment.

   (e)The Registrar is to make a recommendation to the Tribunal

………………………………..

Senior Member B Meagher SC

Delivered for and on behalf of the Tribunal

REASONS FOR DECISION

Background

1. The Tribunal made orders on 8 November 2016 in this matter and the citation is [2016] ACAT 122. The Tribunal found that the practitioner had been guilty of unsatisfactory professional conduct in respect of three distinct complaints. The application for disciplinary action contained 17 grounds arising from five discrete complaints. The adverse findings resulted from seven grounds and the rest were either withdrawn or dismissed. Four of the seven grounds related to the way the practitioner dealt with monies received from clients that were found to be trust monies. The Tribunal found that these grounds should be dealt with together in accordance with the submissions of the applicant (the Council). It was found that for new clients of her online conveyancing firm, the practitioner for a period received the money that was paid when the client provided instructions online into her firm’s office account. It had been a matter of dispute between the parties as to whether this money was trust money or not. On the morning of the hearing the practitioner correctly conceded it was trust money. The amounts in each case were $350. After the practitioner became aware of a complaint made by an ex-employee of the firm, the practitioner changed her way of dealing with the money. She initially received it into trust and then within a short time-frame paid it into office and labelled it as a retainer in a tax invoice. The practitioner conceded on the morning of the hearing that this was not done in accordance with regulation 62 of the Legal Profession Regulation 2007 and accepted that the grounds alleged were correct.

2. It was submitted by the Council that this was professional misconduct. The practitioner submitted it was unsatisfactory professional conduct. The Tribunal found that it was unsatisfactory professional conduct.[1]

   [1] This decision was previously anonymised and cited as Council of the Law Society of the ACT v Legal Practitioner RN [2017] ACAT 23 pursuant to section 423A of the Legal Profession Act 2006. As the appeal period has ended, the practitioner has now been identified in the citation of this decision. The reasons for decision otherwise remain unchanged from the date of publication

3. The application was not limited by an end date for the conduct complained of in respect of the second trust ground. No evidence was led as to any change to that practice before the hearing in August 2016. The finding by the Tribunal was for a period up to the date of the application.

4. The second complaint for which there was an adverse finding related to the incompetent handling of a conveyance for a Mr AS. It was concluded that there were so many errors that there had to have been inadequate supervision by the practitioner of her staff who were handling the matter.

5. The third complaint concerned unfair dealing and inadequate handling of a conveyance for a Mr DK. The unfair dealing was the same as the conduct in the matter of Council of the Law Society v Legal Practitioner RH[2] (RH is the same person as RN). The inadequate handling stemmed from the practice of not treating the task of registering a discharge of mortgage and a transfer for a cash purchaser as part of the retainer. The Tribunal regarded these failures together as two sides to the same problem.

   [2] [2015] ACAT 40 and 68 and on Appeal [2016] ACAT 94

6. In respect of all the five complaints, the application contained several grounds alleging misconduct in a failure to be candid and in misleading the Council in its investigation of the complaints. This ground relating to the trust account matter was withdrawn on the morning of the hearing after the practitioner had conceded that she was wrong to dispute that the money was trust money or had been correctly disbursed. The Tribunal was not persuaded in accordance with the test in Briginshaw v Briginshaw (1938) 60 CLR 336 that the other grounds in relation to lack of candour or misleading conduct had been made out. Whilst there were one or two criticisms of the practitioner that seemed a bit weak, the main reason why these grounds failed was because the Tribunal accepted the practitioner as a witness of truth.

7. The Tribunal made directions for the provision of evidence and submissions in respect of penalty and costs.

Material filed by the practitioner

1. The practitioner filed two further affidavits of 9 December 2016 and 14 December 2016. They were read without objection or cross examination. She said at paragraph 2:

   the Tribunal made findings of unsatisfactory professional conduct in relation to 7 charges. 2 of those charges were matters that I conceded after receiving legal advice different to that previously provided to me on the eve of the proceedings on 21 August 2016. In relation to the other 5 findings I note that they were in relation to errors made by my staff most of which I had conceded were errors in my affidavit sworn on 12 July 2016.

2. She added in paragraph 3:

   As stated in my affidavit sworn on 12 July 2016, I am disappointed that despite the measures I had put in place to reduce human error in the conduct of conveyancing matters, some of my staff made errors. Those particular conveyances in which errors were made constituted less than 1 in a 1,000 of the conveyancing matters my firm has conducted over the 13 years it has been in practice. Nevertheless, I am always looking for ways to improve our online system and procedures so that errors are minimised”.

   And in paragraph 4:

   While my aim is always to have my staff make no errors I recognise that this is unrealistic given that staff are human beings and that some errors will take place from time to time.  I have expressed my regret in relation to any errors made by my staff directly to clients and I have always reimbursed clients if such errors resulted in any monetary loss to them. I have characterised my role in the practice as "chief complaints officer" so that I am aware immediately of any client dissatisfaction.

3. She outlines the demands on her in responding to the Council or its investigator and itemises the number of requests she has dealt with. She says she asked for guidance by the Council in respect of the trust issue four times but received none. She described an impact on her business resulting in a down turn in work and profits. She also explains how she dealt with the stress and had medical advice about it. She also has had substantial legal costs of over $200,000. About $44,000 of this related to the RH matter of which $14,000 was the amount she was ordered to pay to the Council for its costs.

4. She annexed character references from distinguished community figures one of whom was a qualified lawyer. Generally, those references demonstrate that the practitioner is held in high regard by these people. They are consistent with our observation of the practitioner. Whilst they had read our decision, the failings were described by two of the referees as:

   ...minor human errors involving procedures rather than ethics... they appear to be in the realm of human error and involve procedures rather than ethics since there is no suggestion that anyone was defrauded or money was misused... seven apparently minor technical grounds.

   The last referee also described her as:

   ...a rare jewel in the ACT's drearily provincial legal profession.

Material filed by the Council

1. The Council, as directed, filed an affidavit of Michael Phelps dated 13 February 2017 with information about costs. The total of the charges to the Council including those of the late Greg Walker[3] add up to $333,475. It does not include costs of the penalty hearing. It includes disbursements for expert reports of $15,370, fees for junior counsel including counsel who did not appear of about $80,000 and a smaller sum for senior counsel. There are also costs, which are not disclosed, for Mr Power, as investigator, but which the Council intends to recover under section 239 of the Legal Profession Act 2006 (the Act).

   [3] Mr Walker was the first lawyer instructed by the Council in respect of the complaints

2. The Council filed written submissions dated 14 February 2017 and the practitioner filed submissions dated 24 February 2017.

3. Mr Erskine SC, appearing for the practitioner, also relied on paragraphs in the practitioner’s affidavit of 12 July 2016 which after objection consisted of paragraph 50, which refers to legal advice from a previous barrister, not Mr Erskine SC, (and that previous barrister is now also an SC) that confirmed her mistaken belief that the money was trust money and correspondence seeking rulings from the Council. The first letter is dated 16 April 2012. In it she explains that she has changed her system so as to first pay the money into trust and then only transfer it after she has done some work. She also suggests in a further effort to resolve issues that the Council make a ruling under section 213. In a letter dated 30 April 2012 to Mr Walker she answers a number of Mr Walker’s questions about the system and says that she had counsel’s advice that it was not trust money but again asked for a ruling under section 213.[4] She said she had previously suggested it. She did so again by letters to Mr Phelps of 28 May 2014 and 19 September 2014.[5] Paragraph 54 was also sought to be read and it was agreed that the annexures being correspondence with the investigator Mr Power might be admitted. He also read paragraphs 55 and 56 which refer to the practitioner’s activity in legal education.

   [4]     The Council had after this decided to make an application to ACAT and had written to the practitioner in November 2012 to tell her. There was then some delay until Mr Phelps took over in 2014. At some point the Council reconsidered the decision to apply and sought a further investigation. It finally decided to proceed on 15 July 2015

   [5]     In the last letter she suggested a meeting with Mr Erskine rather than proceeding to again appoint an investigator. The correspondence with Mr Phelps followed a letter asking for an unequivocal answer to questions which seemed not to have been directly responded to. See later discussion.

4. A supplementary statement[6] from the referee, who was lawyer, was tendered. It explained further his legal experience.

   [6] Exhibit SR1

5. During the hearing the practitioner also gave some short oral evidence concerning her changed practice in respect of trust accounts and in respect of the information given to clients about registration of documents for cash purchasers since the RH matter was decided.

Submissions of the Council

1. The Council submitted that the penalties under section 425 of the Act, that are appropriate, are a public reprimand pursuant to section 425(3)(e), a fine of $3000 under section 425(5)(a), an order that the practitioner undertake and pass a trust account course approved by the Law Society of the ACT prior to 30 June 2017 (section 425(5)(b) and costs under s433(1)). The costs order suggested was that the practitioner pay the applicants costs calculated on a party/party basis in accordance with the Supreme Court scale in an amount as agreed or failing agreement in accordance with the following procedure:

   (a)The parties should make an attempt to reach an agreement on costs within 28 days.

   (b)If agreement is not reached within 28 days, the applicant may file and serve a bill of costs using form 2.45 approved under the Court Procedure Rules 2006 (ACT).

   (c)Within 14 days of service, the respondent is to file and serve a document setting out any objections she has to the bill of costs.

   (d)The bill of costs and the respondent's objections will be referred to the Registrar of the Tribunal for assessment.

   (e)The Registrar is to make a recommendation to the Tribunal

2. The practitioner had shown no insight or contrition in her affidavits.

3. The applicable principles as shown by the cases[7] required the Tribunal to consider several factors although the list was not exhaustive.

   [7]     Law Society of the Australian Capital Territory v the Legal Practitioner [2011] ACAT 57 at [32] - [33]; Council of the Law Society of the ACT v the Legal Practitioner (S) [2012] ACAT 29 at [3] -[5]; Council of the Law Society of the ACT v Legal Practitioner P4 (No 2) [2015] ACAT 35 at [12] -[21]

4. The factors were summarised as follows:

   (a)the nature of the circumstances surrounding the acts found to constitute the unsatisfactory professional conduct;

   (b)the insight demonstrated by the practitioner into the unsatisfactory nature of the conduct;

   (c)the attitude of the practitioner, especially whether she demonstrates any remorse or regret for the conduct;

   (d)subjective factors relied upon by the practitioner including any relevant character references and any hardship which the practitioner has already suffered as a consequence of their conduct;

   (e)the likelihood of a future recurrence of unsatisfactory conduct; and

   (f)any previous adverse findings in relation to the practitioner's professional conduct.

5. The Council added that these factors are to be addressed in light of the purpose of the proceedings which was the protection of the public, the maintenance of professional standards and the deterring of the practitioner from repeating and other practitioners from engaging in similar conduct.

6. The Council accepted that there were three separate categories of conduct found to be unsatisfactory and they arose from three of the five complaints made to the Council. In its submissions, the Council addressed each of these three matters by reference to the factors identified.

7. In respect of the trust matters it described the circumstances in a helpful manner as follows:

   Background to the breaches

14The Tribunal has generally accepted the way in which the Law Society submitted that the Practitioner conducted her practice: J

15[8] [17] - [31]. The Tribunal considered that there was disagreement only as to matters that were "irrelevant": J [18].

[8] J refers to the decision of the Tribunal

16While operating [her online conveyancing firm] the Practitioner adopted a practice of accepting $350 up­ front payments from clients upon signing up to (its) website. The client would complete an online application, an automatic 'fixed fee' price would be calculated and, upon registration and payment of the $350 fee, clients are issued with a tax invoice and granted access to (the firm’s) website: J [17]. [20] - [22]

17Upon issuing a final invoice, the $350 was credited towards the final amount payable by the client. Further, if work did not commence for some reason after the payment of the $350 fee (or work was only commenced in part), the client would be refunded the unused whole or part of the up-front fee: J [17). [20] - [22].

18The fee was originally described as a part-payment "of our fees and disbursements" (in the fee agreement), “part payment of professional costs and Disbursements" (in the tax invoice) and part payment towards our costs and disbursements" " (on the website).

19Despite the upfront payments constituting trust money, the Practitioner paid those amounts into her firm's general account rather than the trust account: J [23].

20When the Law Society first raised the complaint with the Practitioner in around November 2011, the Practitioner did not cease her practice of paying the moneys into her general account. Rather, the Practitioner made changes to the description of the $350 upfront fee on her website and her invoices describing the payment as a “retainer payment”: J [24] - [25]. Despite the change in the description, the Practitioner made no changes in substance as to what the payment was or how it was treated: J [30]

21When the Law Society persisted with its position that the upfront payments continued to constitute trust money, the Practitioner again changed her practice in April 2012. This time, the Practitioner started depositing the upfront payments into the trust account but, despite this, then transferred the amounts out of the trust account shortly afterwards - prior to a final bill being issued and without written directions from the client: J [31].

22Accordingly, in accordance with Grounds 1 and 2 of the Application the Tribunal has found that:

(a) in the period 1 January 2009 to mid-April 2012, the Practitioner breached s 222(1) of the Act by failing to deposit the upfront payments made by clients to [the firm’s] trust account (Ground 1). And

(b) in the period, mid-April 2012 to the commencement of these proceedings on 24 September 2015, the Practitioner breached ss 223(1), 229(1)(b) of the Act and reg. 62 of the Legal Profession Regulation 2007 (ACT) by transferring the upfront payments from trust to office otherwise than in accordance with those provisions (Ground 2)

1. The Council submitted that this was at the very upper end of the range of unsatisfactory professional conduct. It repeated the arguments previously put as to why the Tribunal should find that it was professional misconduct. They were set out in the Tribunal’s decision at [43]- [49]

2. The Council submitted that the excuse, that the practitioner had legal advice that her conduct of her trust account was correct, should be rejected as the instructions on which the advice was based and the advice itself had not been produced. The tribunal was therefore not able to assess these assertions.

3. The Council also submitted that the seeking of guidance from the Council was not a valid excuse. It submitted that there was no doubt that the Council had a view that the process was wrong and the practitioner knew this as demonstrated by her attempts to change her system.

4. The Council helpfully summarised the other two complaints that led to findings of unsatisfactory conduct as follows:

   Other breaches (Grounds 7, 9b and 13)

32The Tribunal also found 3 further breaches, which related to 2 particular conveyances.

33First, Grounds 7 and 9(b) concerned the Practitioner's firm's handling of a conveyance in relation to the purchase of a property in…, Queensland for [DK]: J [114) - [125]. Despite the Practitioner's retainer including a duty to have the title of the property registered at the Practitioner's expense: J [118], the Practitioner's firm “belatedly asked the client for the filing fee for the transfer, asked for the wrong money and then later again, arranged for the release to be lodged”: J [120]

34The Tribunal held that, as the Practitioner conceded on the first morning of the liability hearing, the actions amounted to a failure to treat the client fairly and in good faith as the cost of registration was included in her retainer with the client and, therefore, in the fixed fee that the client was quoted and had paid: J (118].

35Further, the Tribunal held that "[t]he delay, the lack of explanation, the mistakes and the overlooking of the mortgage are all indicative of incompetence” and was a departure from the usual standard: J [125]. The Tribunal did note, however, that such incompetence was not systematic and that the purchaser ultimately suffered no loss: J (125].

36Secondly, Ground 10 concerned the Practitioner's firm's handling of a conveyance in relation to the purchase of a strata-title property in Mortdale NSW for Mr [AS] J [135] - [157]. The Tribunal has found that, in the course of that conveyance:

a.no advice was provided on the contract within the cooling off period: J [138];

b.no strata title search was conducted: J [139];

c.various matters were not advised upon: J [140] - [144];

d.incorrect advice was provided as to the stamp duty payable: J (145]; and

e.despite no strata report being obtained, the client was nonetheless invoiced for the report: J [149].

37The Tribunal ultimately held that, while “as a general matter the [Practitioner] did attend to training and supervision and had triggers for staff to follow, for whatever reason the number of errors of such potential significance must ... lead to the conclusion that she is responsible for such errors”: J (156].

Insight and understanding and Remorse

1. The Council submitted that there was no insight or remorse expressed and quoted from her affidavit described above.

Subjective factors

1. The Council referred to the character references and hardship. It accepted that many of the referees were impressive in their fields but only one was a lawyer, and his experience was not made clear. At the hearing a further document was tendered that provided further information about that referee but it did not reveal that he was experienced in respect of trust account matters. This was seen as significant because the most serious of the matters related to trust accounts and although not said expressly a legal practitioner, who was familiar with the importance of trust accounts in practice would have been more persuasive. Further it was said to be disturbing that one referee described the breaches as being minor technical grounds. It was also submitted that the value of the references was of less weight because of the lack of insight or remorse.

2. The weight to be given to hardship should be qualified as the tone of the response suggests wrongdoing by the Council and no insight. Secondly the list of letters in her affidavit was in the main concerning matters where she was found to be culpable. Thirdly her assertion that she had fully cooperated should be considered by reference to the content of her responses in correspondence which were at best poorly expressed and required further investigation. Reference is made to the Tribunal’s findings to this effect at [133] and [208] - [209]

Further recurrence

1. Lack of insight and remorse were submitted to raise this as a matter of concern absent a proper sanction.

Disciplinary history

1. The earlier decision of RH was referred to. It was for the same conduct as in Ground 7. The events in RH occurred in 2014 but in this matter, they were in 2011.

2. Council submitted that a fine was needed because of the lack of contrition but that it should be small because of the amount of the costs. This was also the reason for suggesting a course in trust accounts.

Costs

1. In its written submissions, the Council merely submitted that there were no exceptional circumstances or reason for severance of the costs of individual grounds. Much more was said about costs in the oral argument.

Submissions of the practitioner

1. The practitioner agreed that the principles to be applied were as submitted by the Council.

2. She raised three matters that were said to require further consideration namely the age of proceedings, the delay in their commencement and the role of the Council under the Act.

Age of proceedings

1. The complaints occurred in May 2011 but proceedings were not commenced until September 2015 and heard in August 2016. It was submitted that the fact that so much time has gone by without further sustained complaint might lead to a conclusion that the conduct was not likely to be repeated. This was not about the age of the proceedings but the length of time since the conduct in question.

Delay

1. Extended stress can be surmised by the time involved. The trust matters arose from complaints in 2011 also. It should be mentioned that one of the other complaints arose from conduct in 2009.

The appropriate role of the Society

1. It was submitted that there were ways to protect the public other than applying to the Tribunal. This addresses the trust account matters. It is asserted that the Council adopted an immediate confrontational approach and it should not have. It is asserted that Council has contributed substantially to the expense delay and stress.

2. It is submitted that the Council had a discretion under sections 399, 411, 412, 413 and 419 of the Act not to apply to ACAT. No authority is cited. In oral argument reference was made to Legal Practitioner M v The Council of the Law Society of the ACT [2015] ACTSC 312 at [186]-[187].

3. Reference is made to the role of the Law Society in representing the legal profession generally and refers to its webpage which says:

   The Law Society exists to:
   -Represent, advance, and defend the interests of an independent legal profession in the ACT.

   -Protect the public interest in the ACT system of justice through the efficient regulation of the profession in accordance with the Legal Profession Act and the Society's Rules for Solicitors.

4. The practitioner submits that in carrying out that role the Society need not rely purely on its armoury of disciplinary proceedings.

5. It is stated that in dealing with the complaint concerning the trust account made in 2011, it took two appointments of an investigator and extensive correspondence with the practitioner before proceedings were eventually begun in September 2015. In November 2012, the practitioner was told by letter that the Council had decided to apply to ACAT but later had meetings with the practitioner and her counsel Mr Erskine SC and again appointed Mr Power to investigate before actually commencing proceedings.

6. It was submitted that the Council should have known that making an application to ACAT was not the appropriate course.

7. This is sought to be made good by asserting that the service was novel and there were unusual issues arising. The practitioner had given evidence of receiving assistance at the time she set up the service from Mr Chenoweth (a former member of the Council and former President of the Society and a senior solicitor with extensive conveyancing experience) and Mr Kidney who was the professional conduct officer with the Society at the time. This was before 2006. A problem identified was losing clients who had signed up and thus got information about the process leaving for other firms without telling her. This was the reason for an upfront fee. The comparison was made between a solicitor breaching trust obligations while carrying out a traditional conveyance and the practitioner who was conducting a new method of carrying out the role.

8. It is submitted that the Society should have issued a direction as the NSW Law Society had done and referred to in the Tribunal’s decision on liability at [44].

9. It also should have made a ruling or given guidance as was sought by the practitioner on four occasions. A ruling would be binding as it may be made under section 213 of the Act. If it had, then the practitioner would have treated the money as trust money and there would be no further breach and the public would be protected.

10. This submission was summarised as follows at [39] of the practitioners written submissions.

    Putting the matter precisely, the Practitioner submits that the Society’s conduct of the investigation was inappropriate in all the circumstances, and that action such as a ruling under s.213 and a general direction to practitioners would have been more appropriate:

a.       The Society knew that there were no defalcations from the trust account: it was being regularly reported on and audited in accordance with the Act, and no concerning problems were found. To that extent, the public was not at risk except in the hypothetical way referred to by the Tribunal in [49].

b.       The Society knew that this was a relatively novel practice in conducting all its business online, and that it was not surprising that issues had emerged in relation to the handling of monies that were not common in conventional legal practice;

c.       The Society should have known that online legal practice was a rapidly developing way of conducting legal practice; it had a responsibility to engage positively with the issues emerging from online practices, to assist the public who were, by all accounts, embracing this new method of consulting solicitors.

1. It was asserted that there had been a meeting with Mr Walker and Mr Power in 2013 explaining the system and two meetings with Mr Power in 2014 when he was given a USB stick with the information. It is asserted that even after all this the Council, in explaining the system to the Tribunal, made errors.

2. It is submitted that if the Tribunal agrees that there were better ways to handle the matter then the appropriate penalty might include a private reprimand or a caution. In considering this, the inordinate delay and unnecessary associated stress are relevant.

3. In respect of the trust account complaint it was submitted it was at the lower end of the spectrum for the reasons given by the Tribunal in concluding it was not professional misconduct.

4. Responding to the Council’s submissions it is submitted that the fact of legal advice was important as there was uncertainty and that whilst the attitude of the Council may have been clear, the lack of guidance left the practitioner without an indication of what would satisfy the Council.

5. It is said that insight can be inferred and need not be express.

6. It was fair for the practitioner to point out that the failings in the other two matters were by her staff and she had given evidence that she had made changes to reduce this risk. Her evidence about remedial action was indicative of insight.

7. The references should be given weight and the variety of the backgrounds of the referees showed a breadth of experience and respect for the practitioner.

8. In respect of the two conveyancing matters, it is submitted that the age of the complaints, the lack of further complaints and the evidence that the errors occurred at the time of staff upheaval lead to the conclusion that the public are not at risk stemming from these findings. It is submitted that there are new provisions in Victoria and NSW that might if applicable here have meant that she was not liable.

9. It was submitted that it would be appropriate not to impose a penalty, or if minded to do so to order a private reprimand or modest fine.

10. It was submitted that a similar approach should be taken with the trust account matters. This was because the Tribunal/s decision provides the guidance that the practitioner and the profession may need and the public are thus protected. In addition, reference was made to the earlier submissions about the way the matter was handled.

Costs

1. It was submitted that the costs must be reduced to reflect the large number of grounds that were not made out and that there were exceptional circumstances under section 433(1) of the Act.

2. It was submitted that the matters involving N1 and N2 and ST should be excised completely as the Council lost on these grounds and they arise from discrete complaints.

3. Next it is said that a considerable amount of time was spent on grounds concerning alleged lack of candour. It is said they too are discrete and should be severed.

4. In respect of the grounds that the practitioner lost, it is accepted that she must pay the costs unless there are exceptional circumstances.

5. It is submitted that to be exceptional the circumstances need not relate directly to the incurring of costs. No authority is cited. In oral argument, a passage in Legal Practitioner “M” v Council of the Law Society of the Australian Capital Territory [2015] ACTSC 312[9] was relied on.

   [9] Discussed later

6. The two conveyancing matters are exceptional because the unexplained delay in bringing proceedings was exceptional and if the Tribunal accedes to the submission that there should be no penalty then it was open for the Council to have used its asserted discretion under sections 412, 413 and 419 of the Act and not proceed or to have done so summarily.

7. In respect of the trust matters the various complaints made about the Council’s conduct and the delay are said to be exceptional. It is said that a ruling would have obviated the need for proceedings at all and that the expense of the investigations and the application would have been much less if proceedings were even needed.

8. Finally, a broad-brush approach was suggested as an alternative of 50%.

Consideration

1. It is incorrect to say that the Council has a discretion not to bring the application. In respect of the trust matters there was an investigation. Under section 410 of the Act it must take one of three steps.

Step 1: Dismiss the complaint under section 412

1. It can only do that if satisfied that (a) there is no reasonable likelihood that the practitioner will be found guilty by the ACAT of either unsatisfactory professional conduct or professional misconduct; or (b) it is in the public interest to dismiss the complaint. Obviously, the Council were not so satisfied. It would have been wrong if it was in respect of subclause (a).

2. It is not entirely clear what the submission was, but it seems to have been submitted that the Council ought to have been satisfied that it was in the public interest to dismiss the complaints relying on Legal Practitioner “M” v Council of the Law Society of the Australian Capital Territory [2015] ACTSC 312 at [187]. This was a very different case. There the complaint was that the practitioner had used foul language to another practitioner’s staff and thus was in breach of Rule 24 or a common law rule requiring courtesy in dealing with the public so as not to bring the profession into disrepute. The Council decided to administer a caution under section 413. This was inappropriate because there were contested assertions about what was said. The complainant appealed to ACAT and the appeal and a further internal ACAT appeal were dismissed. The question for ACAT was whether the Council was correct in concluding that there was reasonable likelihood that the practitioner would be found guilty by the ACAT of unsatisfactory professional conduct. Ultimately the Supreme Court thought that it ought not to have so concluded. It also found that it could not be said that there was no reasonable likelihood that the practitioner would be found guilty by the ACAT of unsatisfactory professional conduct. There was a gap in the legislation where based on the facts adduced in the initial ACAT hearing and the lack of explicit findings there must be a doubt about it. In these circumstances the judge said that if he had the power he would dismiss the complaint under section 412 as being in the public interest and in doing so thought the subjective matters affecting the practitioner were relevant. They were listed at [187] as follows:

   1. The passage of time since the facts the subject of the complaint were alleged to have occurred.

   2. The inevitable stress that this must have occasioned to the legal practitioner.

   3. The number of proceedings that the legal practitioner has had to conduct.

   4. The penalty was a caution of limited, but not insignificant, effect.

   5. The legal practitioner is responsible for her own costs of the proceedings before the Council, the ACAT and the Appeal Tribunal.

3. Here there is no doubt about what ACAT might do. The factors listed were looked at after the various proceedings had been heard not at the time the Council decided to apply to ACAT. The subjective factors are only relevant where the quality of the conduct was still not decided and the practitioner had been effectively punished in any event. The conduct complained of was much less serious than what was alleged here. Further the Council believed here that the trust account matters may well result in findings of professional misconduct and even section 413 was not open.

4. Nonetheless such considerations are relevant to an appropriate penalty and costs but do not support a proposition that the Council had a discretion or ought reasonably to have concluded it was in the public interest under section 412 to dismiss the complaint.

5. Where, as here, the application was brought and the practitioner was found guilty of unsatisfactory professional conduct it is hard to see how it could be argued that it was in the public interest to dismiss the complaint. The highest the practitioner’s submission could be put is that it would not be necessary to protect the public to apply to ACAT and it was in her interest that it was not done. In any event, it is not a discretion it is a statutory obligation which requires a state of mind to be reached by the Council before it can dismiss the complaint.

Step 2: section 413 Council dealing with the matter summarily

1. The Council might deal with the matter summarily under section 413 but only if it (a) completes an investigation of a complaint against the practitioner; and (b) is satisfied that there is a reasonable likelihood that the practitioner will be found guilty by the ACAT of unsatisfactory professional conduct (but not professional misconduct).[10] Here it was asserted that in respect of a number of the grounds the practitioner was guilty of professional misconduct.

Step 3: application to the Tribunal

[10] It also must be satisfied that the practitioner is generally competent and diligent and that no other material complaints have been made against the practitioner [and there had been].

1. Thus, the only alternative the Council had, was to bring the application under section 419. In so far as there were grounds where there was no investigation this may be done under section 411. The clear effect of these provisions is that the Council, without an investigation, can proceed in ACAT under section 419 or can have an investigation and must do one of three things under section 410 and must be satisfied of certain matters before it can proceed under section 412 or 413 and if not it must proceed under section 419.

2. In any event ACAT does not have the power under section 412 where the matter proceeds under section 419. In the Supreme Court matter, arguably the Court did have that power as it was an appeal from the Council’s decision.

Reprimands public or private

1. In Council of The Law Society of the Australian Capital Territoryv A Legal Practitioner [2010] ACAT 26 at [51] the tribunal identified the purpose served by disciplinary proceedings, the reasons why a suppression order was inappropriate and the reasons why a public not a private reprimand was appropriate in that case. It said:

   The main purpose served by disciplinary proceedings is the potential to protect members of the public from misconduct by lawyers (Council of Q’ld Law Society v Wakeling [2004] QCA 42 at 27 per de Jersey CJ). However, it is also maintaining public confidence in the profession, the administration of justice and the legal system (Council of NSW Bar Association v Einfeld (2009) NSWCA 255 BC 2009 07813 at [16] per the Court). A secondary aim of professional disciplinary proceedings is as a means to safeguard the reputation of the profession (Ziems v Prothonothary of the Supreme Court of NSW (1957) [1957] HCA 46; 97 CLR 279 at 286 per Dixon CJ) and setting an example to other lawyers (De Pardo v Legal Practitioners Complaints Committee (2000) 170 ALR 709 [2000] FCA 335 at [42] per French J).

It also said at [58]-[59]:

The claims of the competing interests must be strong to supplant the general rule that hearings must be in public. This is especially the case where the hearings relate to disciplinary proceedings against a legal practitioner, for such proceedings are protective in character. Additionally, the public should know how seriously a breach by a practitioner is viewed and, finally, other practitioners should be aware that the false witnessing of documents is professional misconduct. A reprimand “has the effect of identifying standards, the establishment and maintenance of which protects the public” (Prothonothary of the Supreme Court of New South Wales v Chapman (CA(NSW) 14 December 1992 unreported BC 9201419 per Cripps JA with whom Priestly and Clarke JJA concurred). A reprimand is a serious matter and “marks the disgrace of a member of an honourable profession inherent in [the] misconduct’: Law Society of New South Wales v Hinde [2005] NSW ADT 199 at [46] (see Riley’s “Solicitors Manual” para. 33,060). Section 425(e) of the LP Act permits a private reprimand of the respondent if there are special circumstances. The LP Act does not indicate what those special circumstances might be. The respondent’s claim to have his reprimand delivered privately is based on the possible loss of reputation and business in his practice. The Tribunal has earlier set out, in relation to the grant of a suppression order under the ACAT Act the reasons why a reprimand of a legal practitioner should be made publicly. The Tribunal stresses that a public reprimand should function as a warning to other practitioners not to offend in a similar way.

1. We agree with these remarks.

2. Any penalty must also act as a general and specific deterrent.[11]

   [11] Council of the New South Wales Bar Association v Butland [2009] NSWADT 177; Law Society of New South Wales v Foreman (1994) 34 NSWLR 408, 441; Council of the Law Society of the ACT v Legal Practitioner B3 [2016] ACAT 130 at [14] and [15]

3. There have been cases in the Tribunal where a private reprimand has been ordered where it was by consent and there had been an agreed statement of facts and a long and faultless prior career. Even then there is a practical problem as section 448 of the Act requires a public register recording the matter and naming the practitioner. This has led to it being refused as discussed in Council of the Law Society of the Australian Capital Territory v Legal Practitioner W [2013] ACAT 1. It is no longer an option in NSW and was reserved for conduct at the low end of the range of unsatisfactory professional conduct. Undoubtedly any penalty will impact on the practitioner adversely but that will happen because of our findings and the requirements of section 448.

4. Whilst there are clearly subjective factors that would persuade us not to consider any harsher penalty a reprimand is at the lowest end of the orders under section 425(3). There is scope under section 425(5) for a fine and for remedial orders.

5. As there has been considerable argument about the relevant factors which are correctly stated by the Council in its submissions we will address each point.

The trust account matters

1. We accept that the online business required some steps to be taken to secure payment for costs and disbursements and the ephemeral nature of online activity presented special challenges. It is a problem in conventional practice to secure security for costs and this is usually met by obtaining a sum to be paid into a trust account pending completion or some other agreed milestone that would trigger an entitlement to payment. Here it would be important to obtain the money and have an agreement for a trigger for an entitlement for costs. It would still be necessary to comply with regulation 62 but that does not seem to be any more difficult than in a conventional matter. One further problem is that the client may decide to go elsewhere and not tell the firm. Again, the agreement could specify that on registration the firm would be entitled to charge a fee of no more than $350, whether or not the matter proceeded further if nothing further was heard from the client for a stated period, but a cooling off period of that stated period was provided. If the client changed its mind and said so in that period, the money would be refunded. The agreement might also provide for interim billing.

2. We do not suggest this is the only way that might happen but we are not persuaded that the online aspect of the conveyance was so novel that it was difficult to overcome the practical problems referred to in the submissions.

3. We accept that the practitioner had legal advice that she believed supported her position. We agree with the Council that we cannot know what instructions were given to her legal advisers or what the advisers said but we have generally accepted the practitioner as a witness of truth and she must have had that belief as it is hard to understand why she would not have agreed with the Council in the beginning. Further Mr Erskine SC was involved in a meeting with Mr Walker and Mr Power in 2013 and we can infer that she had legal advice at least by then.

4. Compliance with trust account regulations is regarded as not negotiable by the profession. We referred to the strictness of this requirement evident from the authorities in our decision that it was unsatisfactory professional conduct. We were persuaded that in this case, as opposed to most cases, it was not professional misconduct but the Council was justified in considering that we might well decide that it was professional misconduct. The referees do not demonstrate any insight into the seriousness of these requirements and they do not have the background that would enable them to do so. Whilst the references given are impressive generally, the reason why it is helpful to have one from a senior respected practitioner is that the very test for what is professional misconduct at common law turns on the opinion of respected fellow practitioners. We note that in the RH matter much weight was given to a reference from David Harper AM, a former Master of the Supreme Court and President of the ACT Law Society. We do not have the benefit of a reference from him that considers these matters. Counsel for the practitioner had submitted that the conduct was unsatisfactory professional conduct. The dangers of not complying are not hypothetical as was suggested. The public is entitled to expect that trust monies will be handled meticulously. The conduct here was not motivated by any improper intention but it persisted for an extended period when it was clear that it was regarded as unacceptable by the Council. It is true that a ruling or guidance may have assisted the practitioner in changing her practice in a practical way but that is not an excuse for continuing to reject the arguments of the Council until the morning of the hearing.

5. The approach taken to the penalty hearing by the practitioner through her counsel does not demonstrate any contrition or recognition of the extent of the seriousness of the matters. We are sure that, whatever the arguments put on her behalf, she has the circumstances seared into her consciousness and we understand the temptations of adversarial litigation to seek to fight back. We think that it is necessary to ensure that the seriousness is clear and that there is no recurrence. We also think it is necessary to demonstrate to the public and the profession that such conduct is to be deprecated.

6. The arguments, based on delay and lack of assistance from the Council, do not in our opinion provide any justification or excuse for adopting the system in the first place and not fixing it once the complaint was communicated. There has been considerable delay. Some of it would have been caused by the death of Mr Walker. Some may have been caused by the death of Mr Power. Some was caused by the argumentative responses received from the practitioner as referred to in our decision about lack of candour. Some was caused by the Council prematurely deciding to apply to ACAT in 2012 and then changing its mind and obtaining not one but two investigations. It is certainly true to classify some of the later correspondence as confrontational but it is not apparent to us that there was such a confrontational approach from Mr Walker in the beginning. It is by no means certain that if the Council had given guidance that the practitioner would have changed her practice. Clearly a ruling would have demanded it and we assume the practitioner would have complied with a ruling. We do not see the absence of a ruling as justifying the continued practice.

7. We accept that the practitioner has suffered considerable stress which has been extended by the delay.

8. We accept that the practitioner has suffered financial loss because of these proceedings being brought, a downturn in business and costs of defending these proceedings and the RH matter.

9. It seems to us taking all these factors into account that a minimum penalty for the trust account matters is a public reprimand.

10. Before leaving the trust account matters, during the hearing it became apparent that no evidence had been given about the changed practice in respect of the trust account since the date of the application or since our decision on liability. To that end the practitioner gave oral evidence and was cross examined. She said that she had a new cost agreement and web page information that made it clear that the initial payment would be paid into trust and that on receipt of advice about the contract in the case of a purchaser or preparation of the contract in respect of a sale, the money would be payable for that work and it would then be transferred from trust to office. The agreement was tendered and marked as RS2. It refers to regulation 62 (3) this regulation provides

    (3)   The law practice may withdraw the trust money—
     (a)   if—
    (i)   the money is withdrawn in accordance with a costs agreement that complies with the legislation under which it is made and that authorises the withdrawal; or
     (ii)   the money is withdrawn in accordance with instructions that have been received by the practice and that authorise the withdrawal; or
    (iii)   the money is owed to the practice by way of reimbursement of money already paid by the practice on behalf of the person; and
     (b)   if, before effecting the withdrawal, the practice gives or sends to the person—
    (i)   a request for payment, referring to the proposed withdrawal; or

    (ii)   a written notice of withdrawal.

11. Her evidence was that on registration, a tax invoice was sent but it referred to a retainer not to the doing of the work contemplated. It was submitted by the Council that regulation 62(3)(b) was not being complied with. Based on the evidence we heard this seems right. Counsel for the practitioner asked for and was given liberty to provide further information about the current practice and any changes to it that would make it clear that the regulation was being complied with or that it will be if not already.

12. We do not think it would be desirable to allow this ongoing situation to remain unaddressed or be the subject of even more proceedings. If the matter is attended to so that it is clear that the Act and regulations are being complied with then we take that into account in finalising our orders.[12]

    [12] See later where new material is addressed

13. The Council asked that a fine of a small sum of $3000 be added for this and Ground 9b. The aim of a fine in addition to a reprimand would be to reinforce the same objects of a public reprimand. We do not disagree with the submission by the Council but feel that because of the size of the costs it is not necessary and would impose a greater hardship on the practitioner. We will need to deal separately with the costs issue but it is likely to be extremely onerous and arguably disproportionately so. The Council agreed that there is ample authority for this approach and had itself reduced what might otherwise be the size of a fine for that reason.

14. The Council also sought that there be an order that the practitioner undertake and pass a trusts course. We are not persuaded that this is necessary. Such courses are aimed at persons with no background in trust accounts. The practitioner has been in private practice for many years. Apart from this problem, she has had no other complaints and her understanding of the correct position may have been in part because of wrong legal advice. The correct positon is now unambiguous.

Grounds 7 and 9b matters involving DK

1. Ground 9b was the same ground that arose in the RH matter. It predated it. It involved unfairness not just lack of diligence. The Tribunal was not aware of this matter when it decided the RH matter. It may have contemplated that there could have been earlier incidents. The Tribunal there accepted that the practice had changed. At the hearing the practitioner gave oral evidence of the change. It involved spelling out that the registration was not included in the price, and if a cash purchase, there would be a small additional fee if that client wanted the practitioner to attend to registration otherwise the client would have to do it. She has since filed an affidavit about it.[13]

   [13] See later discussion

2. This would overcome any misleading or unfairness. It does not avoid the risk of something going wrong as happened for Mr DK leading to Ground 7. It would be better practice if the client was told that in the event of a cash purchase the practitioner would attend to registration but it would involve additional disbursements and a small cost of $x. The disbursements would normally be paid by a mortgagee and taken from the advance and the mortgagee also normally takes a sum for attending. The client could be given the option of doing it himself but should be advised that it was preferable that the practitioner attend to it. We will not formally order anything about that but suggest that the practitioner take this on board and consider adapting her practice accordingly.

3. The lack of fairness is more than a technical breach and by itself would also be deserving of a public reprimand. The factors that led the Tribunal not to do so in RH are not all present here.

4. Further in respect of Grounds 7 and 10 the practitioner seems to see it as a fault of employees and thus less serious. The reason for there being an adverse finding in the AS matter was the extraordinary number of mistakes all well below the appropriate standard of care. The expert witness Mr James fairly inferred that so many errors went beyond being let down by employees and laid the blame at the principal of the practice. There is a degree of minimisation of this problem and the problem involving DK.

5. We accept however that there is no reason to think these problems of due diligence and competence will persist and there is no evidence that any new complaints have arisen since 2011 apart from the RH matter.

6. Even if one of the instances of unsatisfactory conduct was not, by itself, sufficiently serious to warrant a public reprimand when combined they do and we so order.

Costs

1. The first problem that arises here is how to construe section 433(1). The practitioner argued that each unsuccessful ground may be excised. Mr Erskine SC made the powerful point that the costs order should not depend on how the Council chose to combine separate and discrete grounds in the one application. Thus, it would have been open for the Council to proceed in respect of the complaint of N1 and N2 and/or of ST in a separate application and there would be no adverse costs order.

2. The Council argued that there were many cases that said that failing on some grounds was not an exceptional circumstance and the applicant was not deprived of costs just because it did not win on all grounds. In Legal Services Commissioner v Baker [2006] QCA 145 at [56] (Baker) it was held that it referred to costs of the proceedings and there was to be no excision unless there were exceptional circumstances and there were not even though the practitioner had been successful in respect of some of the grounds. The grounds joined in the application related to a number of different clients. It is likely the grounds arose from separate complaints.

3. Were it not for this case, a more satisfactory construction might be reached by looking at the whole of Part 4. It is clear that the provisions hinge on there being a complaint. Each provision then deals with what is to happen and relates to a complaint. It might be thought that s433 in turn relates to the conclusions in relation to a complaint and not to the whole of proceedings where more than one complaint is dealt with. In Baker, the grounds although relating to different clients were of a similar type namely charging money for costs when there was no entitlement to do so. It can be seen that it would be a sensible course for the Council (or Commissioner) in such a case to join them all together as the ultimate finding and penalty might be affected by considering them globally or as increasing the seriousness of the conduct. In this case the complaints are all different and each have a different set of facts to consider.

4. We were told that the RH matter was the subject of a separate application largely due to historical reasons. Mr Walker had been instructed in the matters in this case and Mr Phelps took them over and elected to treat them as one set of matters and separate from the RH matter in which he had been instructed directly.

1. We were also referred to Council of the Law Society of NSW v Truong (No2) [2015] NSWCATOD 79 (Truong) and Legal Services Commissioner v Reeve (No 2) [2016] QCAT 486 (Reeve).

2. In Truong, the practitioner was found guilty in respect of the one ground alleged but many of the particulars were not made out. The tribunal held that the Council should be entitled to all its costs unless there were exceptional circumstances and losing on some particulars was not exceptional. In Reeve, there was a discussion about what might be exceptional circumstances. The Tribunal said referring to section 462(1) (the equivalent of section 433):

   [17] As to orders with respect to costs in disciplinary proceedings, each case turns upon its own facts. There is no hard and fast rule.

   [18] The Tribunal must make an order requiring the practitioner found to have engaged in prescribed conduct to pay costs unless the Tribunal is satisfied exceptional circumstances exist.^[17]

   [19] The criterion adopted in section 462(1) is whether the practitioner has been found to have engaged in prescribed conduct.^[18]

   [20] The words used in section 462(1) LPA allow little discretion to the Tribunal. The wording is not designed to confer or preserve any broad discretion over costs commonly found in statutory provisions conferring power to award costs.^[19]

   [21] The fact that a practitioner succeeds on some charges but fails on others does not amount to exceptional circumstances.^[20]

   [22] Whether “exceptional circumstances” exist depends upon the facts of each case.

   [23] As to when “exceptional circumstances” might arise, Fryberg J^[21] referred to the passage from R v Kelly (Edward)^[22] where Lord Bingham of Cornhill CJ had to construe the term in a statutory context and said:

   “we must construe ‘exceptional’ as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered.”

   [24] When the charge against the practitioner is dismissed, section 462(4) LPA provides that the Tribunal may make an order requiring the Commissioner to pay costs but may only do so if it satisfied that the practitioner has not engaged in prescribed conduct and in addition the Tribunal considers that special circumstances warrant the making of the order.

   [25] The statutory provision assumes that ordinarily, notwithstanding the success of the respondent, the Commissioner will not be ordered to pay costs. This no doubt recognises with the public interest which motivates the Commissioner in approaching the Tribunal.^[23]

   [26] In this context, “special circumstances” means just that. They must be special.^[24]

   [27] The mere fact that a disciplinary application fails, or that a particular factual allegation is not sustained, cannot alone establish “special circumstances”. The general rule is that the practitioner found not guilty is not entitled to costs.^[25]

   [28] However, if a charge has no substantial prospects of success, and that conclusion reasonably ought to have been appreciated by the Commissioner, “special circumstances” may arise. (footnotes omitted)

3. It would be an exceptional circumstance if there was no reasonable chance of success. This does not apply to the unsuccessful grounds in this case.

4. The powers in section 433(5) and (6) were not thought to warrant apportionment in Baker at [55]. We were referred to a NSW tribunal case where apportionment was allowed but no analysis was undertaken justifying this.[14]

   [14] Council of the New South Wales Bar Association v Fitzgibbon (no. 3) [2012] NSWADT 148

5. We think a more satisfactory way of construing section 433(1) is to do so by reference to the costs involved in each complaint and not the whole proceedings. However, Baker is a decision of a State Court of Appeal. The proposition that the section must be read as referring to proceedings in respect of a particular complaint was not argued. In Baker and it may be distinguished in relation to whether there are exceptional circumstances. It is difficult to say that Baker is clearly wrong as it is a construction that is consistent with the language.

6. However, it does seem to us that the amount of costs is exceedingly high and appears disproportionate. Whist it is not unreasonable for five discrete matters to be joined in the one application, all the cases, where there was consideration of what was not exceptional, were either cases arising from the one complaint or from separate complaints where there was a unifying theme. Here exceptionally the complaints were all discrete. Further, exceptionally the RH matter was the subject of separate proceedings. The practitioner conceded ground 9b because of it. The practitioner has been required to pay $14000[15] to the Council in the RH matter. If the RH matter was joined in this matter or the DK complaint was joined in the RH matter, there would be a lesser total to pay.

   [15] Her estimate

7. Undoubtedly there was doubling up because of the need for a change of solicitors and there may well have been extra costs caused by the delay. This is hard to quantify but it is the experience of every practitioner that here will be a redoing of old work where time has elapsed between the key events in a matter.

8. It is attractive to accede to the suggestions of counsel to allow a percentage of costs. However, it should be borne in mind that a substantial component of the total is the amount of disbursements and they covered grounds that were successful and grounds that were not. They may not be necessarily in the same proportions as the costs component.

9. The other consideration is that grounds, alleging the lack of candour, were unsuccessful. However, we do not find that there was no reasonable prospect of winning them and there is no reason to disallow costs in respect of those grounds where they arise from a successful main ground. On the other hand, if it be legitimate to disallow costs of the losing complaints that would include all grounds attributable to them.

10. It seems to us that there are exceptional circumstances. As explained in Reeve “each case turns upon its own facts” and “To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered.” Additionally, the factors referred to by Refshauge J in respect of the public interest in section 412[16] are factors in this case.

    [16] Legal Practitioner “M” v Council of the Law Society of the Australian Capital Territory [2015] ACTSC 312 at [187]

11. We had agreed with the Council that it was required to act as it did in bringing the application and the lack of guidance or rulings does not alter that role. However it was clear that the practitioner had invited a ruling under section 213 at an early time and repeated the suggestion three times. No explanation as to why this was not done has been given. A lot of costs may have been avoided if it had. Mr Erskine SC describes the Council’s approach as confrontational. This is not necessarily a fair description but the Council may have been more responsive so as to ensure that the practice stopped immediately. It would not have avoided the need for proceedings but it may have significantly reduced the need to do the amount of investigation that did occur. Although not put directly, an answer to this is that the practitioner’s explanation of the system was still uncertain and she did not give unequivocal answers when asked so that the ruling may have been hard to express. It may be that this absence of a ruling could be described as exceptional circumstances but it is not clearly so. In this respect the Registrar may take it into account when deciding whether a particular item should allowed as fair and reasonable and we have not included it as a factor in considering whether there are exceptional circumstances and if so what apportionment should be made.

12. In respect of what is fair and reasonable an objection might also be made to the unusual step of sending the draft application, which it then intended to make to the practitioner and asking her to comment before filing it (and then alleging a further ground of lack of candour based on the answers). That is a matter for the Registrar and there may be argument about it.

13. The matters in combination with each other that add up to exceptional circumstances are:

    (a)There were 17 grounds of which only seven were successful.

    (b)The grounds were attributable to five separate complaints which all had different facts and no obvious uniform theme.

    (c)The grounds relating to two of the complaints were wholly unsuccessful.

    (d)If those two complaints had been dealt with separately there would be no adverse costs orders in respect of them.

    (e)The delay, from the time of the complaints and the conduct to which they refer[17] , and the associated stress and consequential losses suffered by the practitioner is extraordinary. This is the case no matter whose fault it may be, if anyone’s.

    (f)The amount of costs on a solicitor client basis is extremely high and seems disproportionate and does not include the costs of the investigation or the further costs of the penalty and costs hearing. By way of contrast the party and party costs in the RH matter were $14000.

    (g)There has been a doubling up of costs in having to defend both the RH matter and the DK matter in separate proceedings.

    (h)As admitted during the oral hearing there had been a decision to apply to ACAT in late 2012 but that was later seen as premature and not one but two investigations then occurred.

    [17] From 2011 in all matters other than the ST matter where the conduct was in 2009

14. Therefore, we hold that we may apportion the costs.

15. In this respect, we agree with the Council that the trust matter would have taken up much of the time and costs and even after it was conceded it took up an amount of hearing time.

16. If a percentage is based on excising the unsuccessful complaints the proportion is 60%, if each complaint is treated as equal. If the trust matter was said to be 30% and the others were equal, the amount excised might be 35%. However, this attempt at a mathematical approach does not reflect the other factors. To some extent, the amount that would be allowed by the Registrar will reflect any unfair and unreasonable doubling up caused by delay or by changes of mind and inefficient handling of the matters including amending the application.

17. The respective positions in terms of percentages were 50% or south of 50% by the practitioner and 75% by the Council. The Council seemed to have second thoughts about following a percentage approach and it must be a matter of impression. Neither party gave attention to how disbursements might be affected. Some of the considerations above would be usually matters for a taxing officer in deciding what the total should be to which the percentage should apply.

18. Taking all those matters into account it seems to us that a fair amount is 63% of costs on the Supreme Court scale on a party and party basis in accordance with rule 1751 of the Court Procedure Rules 2006. The proposed procedure suggested by the Council is sensible and we will adopt that wording in the order.

19. Disbursements are substantial and a significant part of the total. We had understood that the percentage approach advocated would be in respect of the total bill. Here there are significant counsel fees which would be apportioned in the same way as the legal costs. There are fees for the expert witnesses. The grounds that they addressed resulted in a 50% success rate. There are other fees that relate to the whole matter and it seems fair to apportion them in the same manner as costs generally. Whilst there is an argument that the apportionment of disbursements might be more in favour of the practitioner, it will not make a substantial difference and it is not a strong argument as it is only one of the circumstances that we have considered. We are conscious also of the reason for the way section 433 is drafted and the need to protect the Council when embarking on a public duty. Thus the percentage applies to costs and disbursements.

20. It is noted that section 433(6) provides for the terms on which the sum is to be paid. As the amount is not yet known the practitioner would not know on what terms she may be able to pay the amount. There is available a capacity to seek an order for payment by instalments in due course if need be but we hope that any such issues can be sorted out between the parties. In any event, no application has been made or supporting evidence provided dealing with this.

Subsequent evidence and submissions

1. Since the hearing and in accordance with directions that we made the practitioner has filed two affidavits explaining what she had done in respect of trust payments since. It also refers to the evidence about the cash purchaser paying more for registration.

2. The Council has filed submissions about this. It correctly says that up until the last change regulation 62 was still not being complied with. It seems to accept that it now is. It says that what follows from that is that there should be a public reprimand and it reinforces the need for a trust course. We have already decided that a public reprimand should be ordered but agree that this reinforces the need for such an order. Whilst we might consider a remedial order that was useful we are still not persuaded that this is called for.

3. The Council also found fault with the costs agreement. As we understood the criticism, the work being done did not justify the amount of the fee and was confusing for this reason. Firstly we do not accept the assertion that the amount does not justify the fee. Whilst there is a limit to relying on matters that are not in evidence, in the absence of evidence to the contrary, it seems about an average hourly rate of a senior practitioner. In any event the amount charged is a matter between the client and the practitioner. The Council queries whether it complies because it assumes that there may be a refund if the work is not enough to warrant the amount of the retainer. As it points out the refund clause is now gone. The agreement must be that the fee will be the amount of the retainer and it is not refundable. The other change is that the tax invoice is sent at that time not on receipt of the money. It is not stated but it must assume that the tax invoice is for the work of preparing the contract or advising on it and not for a retainer. That would seem to us to now comply.

4. There was a criticism about the language addressed to cash purchasers as the warning does not state what the amount is. This is said to vary from the practitioner’s oral evidence. We do not think it does as the amount had been $50 in the DK case and that was a number given as an illustration. What the actual charge is will increase with time and market forces will determine the amount.

5. It was pointed out that the practitioner seems to have recently increased the amount of the initial payment, but the paper work and her evidence have not caught up with this change. This is an obvious mistake and not a deliberate error and no doubt will be addressed.

6. Since writing these reasons and after the time allowed for further submissions, a further submission in reply was received by the Tribunal on 31 March 2017. In the submission it is said that there would be procedural unfairness if the new matters asserted by the Council were not addressed. Having read the new submissions ,they are consistent with the conclusions already reached by us and they do not change the view we had already reached

7. The Law Society has an admirable practice of providing mentoring by senior practitioners to its members where needed. It is hoped that, if there are any further uncertainties for the practitioner, she may be able to access such assistance in the future. Thus our orders have taken into account the subsequent changes and the continued non-compliance until the most recent change. We have understood from the Council’s submissions that the most recent change now satisfies regulation 62.

8. Finally, we have referred to the RH matter throughout the reasons. The register kept by the Law Society under section 448 of the Act has details of the first order made by the Tribunal in the RH matter with the practitioner’s full name and the date of the order. It is thus possible to identify the practitioner contrary to section 423A of the Act. For this reason the Tribunal also makes a temporary suppression order that will cease when:

   (c)the appeal period has ended and no appeal has been made; or

   (d)any appeal has been decided against the person concerned. 

   In the meantime the Tribunal will provide a copy of these reasons and the orders to the parties and will not otherwise publish it.

9. The orders we make are as follows:

   1The respondent be publicly reprimanded pursuant to subsection 425(3)(e) of the Legal Profession Act 2006 (Legal Profession Act).

   2Pursuant to section 39 of the ACT Civil and Administrative Tribunal Act 2008 the publication of the reasons for decision and the name of the respondent in relation to these proceedings is prohibited until:

   (a)     the appeal period has ended and no appeal has been made; or

   (b)     any appeal has been decided against the person concerned.  

   3Pursuant to section 39 of the ACT Civil and Administrative Tribunal Act 2008 there is to be no access by a non-party to the record of the hearings in these proceedings, or to the Tribunal’s file for the proceedings, except by order of the Tribunal until:

   (a)     the appeal period has ended and no appeal has been made; or

   (b)     any appeal has been decided against the person concerned. 

   4The respondent pay 63% of the applicant's costs and disbursements in accordance with the Supreme Court scale on a party and party basis in accordance with rule 1751 of the Court Procedure Rules 2006 (ACT) pursuant to subsection 433(1) and (5) of the Legal Profession Act and in accordance with following procedure:

   (a)     The parties should make an attempt to reach an agreement on costs within 28 days.

   (b)     If agreement is not reached within 28 days, the applicant may file and serve a bill of costs using form 2.45 approved under the Court Procedure Rules 2006.

   (c)     Within 14 days of service, the respondent is to file and serve a document setting out any objections she has to the bill of costs.

   (d)     The bill of costs and the respondent's objections will be referred to the Registrar of the Tribunal for assessment.

   (e)     The Registrar is to make a recommendation to the Tribunal

   ………………………………..

   Senior Member B Meagher SC

   Delivered for and on behalf of the Tribunal

HEARING DETAILS

FILE NUMBER:	OR 37/2015
PARTIES, APPLICANT:	Council of the Law Society of the ACT
PARTIES, RESPONDENT:	Legal Practitioner RN
COUNSEL APPEARING, APPLICANT	Mr Beaumont SC, Mr Kalyk
COUNSEL APPEARING, RESPONDENT	Mr Erskine SC
SOLICITORS FOR APPLICANT	Phelps Reid Lawyers
SOLICITORS FOR RESPONDENT	Snedden Hall & Gallop
TRIBUNAL MEMBERS:	Senior Member B Meagher SC, Member B Pearcy
DATES OF HEARING:	28 February 2017