Edwards v Flynn

[2013] NSWADT 206

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation:

Edwards v Flynn [2013] NSWADT 206

Hearing dates:

On the papers

Decision date:

19 September 2013

Jurisdiction:

Legal Services Division

Before:

D Fairlie, Judicial Member
M Riordan, Judicial Member
J Butlin, Non-Judicial Member

Decision:

1.The Respondent to pay to the Ms Edwards the sum of $8,120.11 by way of compensation.

2.The balance of the Application for Compensation is dismissed.

3.No order as to costs.

Catchwords:

Solicitor Disciplinary Application - Claim for Compensation

Legislation Cited:

Legal Profession Act, 2004
Workers Compensation (General) Amendment (Costs in Compensation Matters) Regulation 2003

Cases Cited:

Council of the Law Society of NSW v Flynn [2013] NSWADT 70
Council of the New South Wales Bar Association v Fitzgibbon (No. 4) [2012] NSWADT 145
Director of Public Prosecutions v Ozacka 68 NSWLR 325, at 328
Sullivan v Department of Transport (1978) 20 ALR 323, at 343

Category:

Consequential orders

Parties:

Julie Edwards (Compensation Claimant)
Mark Joseph Flynn (Respondent)

Representation:

J Edwards (Applicant in person)
M Flynn (Respondent in person)

File Number(s):

122005

reasons for decision

Background

1. This is the second decision to be delivered by the Tribunal in relation to the proceedings against the Respondent Mark Joseph Flynn ("the Solicitor") and it relates to a claim for compensation made by the Compensation Claimant, Ms Julie Edwards, against the Solicitor.

1. On 3 April 2013 the Tribunal handed down its decision in Council of the Law Society of New South Wales v Flynn [2013] NSWADT 70. That decision related to five (5) matters that were brought against the Solicitor. However, the current decision relates solely to matter no. 122005 in which the Tribunal held as follows:

94 This complaint is limited to an allegation that the Solicitor failed to provide his client, Ms Edwards, with a written costs disclosure. In his Reply the Solicitor initially denied the allegation, but at the hearing he conceded that there was no written costs disclosure.

95 Nevertheless in his evidence before the Tribunal the Solicitor maintained that he did at least discuss his costs with Ms Edwards at the time of a Review Conference in the proceedings in September 2006. Ms Edwards denied this, and as the Law Society pointed out there is no reference to costs in his subsequent correspondence with his client.

96 In his submissions, the Solicitor also asserted that this failure was due to an oversight on his part and that before the claim was concluded he did make a written disclosure. He clarified this as meaning that he disclosed his costs in the Authority to Settle and Deduct Form that he had Ms Edwards sign at the conclusion of the matter. None of these matters, in our opinion, answers the complaint.

97 The Solicitor's concession at the hearing means that the complaint is established. In our view, this constitutes unsatisfactory professional conduct.

1. The Application for original decision filed on 7 March 2012, indicated that Ms Julie Edwards ('Ms Edwards") would seek against the Solicitor an order that he pay her "compensation details of which are to be provided". However, that claim was not particularised in the Application.

1. The Tribunal notes that at the commencement of the hearing, counsel appearing for the Law Society indicated that the current claim for compensation would be dealt with at the conclusion of the substantive proceedings. Ms Edwards was not called by the Law Society to give evidence during the substantive proceedings. She did not file any evidence with respect to the compensation claim until after the Tribunal's decision had been published, although she first wrote to the Tribunal in November 2011.

1. We are satisfied that at all relevant times, the Solicitor was aware that a claim for compensation under the Legal Profession Act 2004 ("the 2004 Act") was being made against him by Ms Edwards and was generally aware of the nature and extent of the claim. There is no evidence before us that he requested particulars of the claim for compensation from Ms Edwards at any time.

1. Following the publication of the Tribunal's decision, we set a Timetable, which required that:

a.Ms Edwards file submissions in support of her application for a compensation order by 24 May 2013;

b.The Solicitor file submissions in reply by 21 June 2013;

c.The Law Society of NSW be notified of the claim and be invited to file submissions by 21 June 2013; and

d.The claim be determined by the Tribunal on the papers and without the need for the parties to attend in person.

The Law Society subsequently notified the Tribunal that it would not take any further part in the matter.

1. On 20 May 2013 the Tribunal received a letter from Ms Edwards, in which she particularised her claim for compensation against the solicitor. We regard this letter as being in the nature of an Application for Compensation.

1. Ms Edwards stated that she received a settlement of $37,500 in respect of her Victim's Compensation claim against MGW Hotels Pty Limited T/as Victoria Point Tavern & Ors, such settlement being "inclusive of costs". She complained that the Solicitor deducted the following sums from the settlement:

(1) An "excess" of $10,000;

(2) Costs and disbursements of $16,502.80;

(3) A charge of $5,367.31 rendered by Centrelink;

(4) $1,000 by way of unspecified miscalculations.

She complained that the Solicitor had 'taken more than 50% of my total compensation claim' and that she received only $6,502.80 of the original settlement sum.

1. To date, the Solicitor has not filed any Submissions in respect of the claim for compensation. However, on 27 August 2013 the Tribunal received a letter from him that bears the date '10 August 2013', in which he sought an extension of time in order to file submissions '...due to my current medical incapacity as certified in medical certificate of Dr Peter Winstanely, orthopaedic surgeon, a copy of which is enclosed.' He also asserted that he would not be in a position to deal with the claim for compensation '...until such time as I receive from the Manager of the practice a full and complete copy of the file of Ms Julie Edwards which do date I have not received'.

1. We refer firstly to the medical certificate of Dr Winstanely, which is dated 24 July 2013. This indicates that the Solicitor is suffering from '...right total knee replacement 30.8.13' and that he would be 'unfit for duty until 20/10/13'. The certificate also states that 'he' (which we interpret as meaning the Solicitor) states that the incapacity commenced on 24/7/13'.

1. While we regard the certificate as being evidence of an incapacity for work that would commence on 30 August 2013, when the Solicitor was presumably to undergo a total right knee replacement, we do not accept that this condition has rendered him medically unfit to comply with the direction that he file and serve submissions by 21 June 2013. In addition, the history of the principal application evidences that the Solicitor was generally non-compliant with the Tribunal's directions and we note that it was necessary to abort a hearing date in circumstances where, having failed to secure an adjournment for non-medical reasons, the Solicitor faxed to the Registry on the eve of the hearing date a medical certificate that certified him unfit to attend.

1. In any event, we note that the Solicitor has not filed any evidence that supports a finding that he has requested a copy of the file relating to Ms Edwards' matter from the Manager and/or when he made that request. Further, we note that the Solicitor defended the disciplinary proceedings against him without seeking any order for the production of the relevant file from the Manager and that all documents relevant to Ms Edwards' complaint and the Law Society's investigation of it were annexed to Ms Foord's Affidavits. These were served upon the Solicitor and in the absence of any evidence that supports a finding that not all documents relevant to the current claim for compensation were annexed to Ms Foord's Affidavits, we reject the Solicitor's submission that he will not be able to deal with it until he has received a copy of the file from the Manager.

1. In relation to this request for a further extension of time, we refer to the decision of Rothman J in the Supreme Court of New South Wales in Director of Public Prosecutions v Ozacka (68 NSWLR 325). At page 328 paragraph 13 of the Judgment his Honour quotes from the decision of the Full Court of the Federal Court in Sullivan v Department of Transport, which is reported at (1978) 20 ALR 323, and he quotes the passage at 343 from the Judgment of Stein J with whom Fisher J agreed. The passage deals with the availability of a refusal to grant an adjournment (which we regard as being analogous to the granting of an extension of time) as constituting a failure to give a party to the proceedings the opportunity of adequately presenting his case and the passage quoted by Justice Rothman concludes with this paragraph:

"In this regard, however, it is important to remember that the relevant duty of the Tribunal is to ensure that a party is given a reasonable opportunity to present his case. Neither the Act nor the Common Law imposes upon the Tribunal the impossible task of ensuring that a party takes the best advantage of the opportunity to which he is entitled."

1. In the current matter, our view is that the Solicitor has been given abundant opportunity to meet the claim for compensation that has been made against him by Ms Edwards, which he has not taken, and that the reasons that he proffered in his letter dated 10 August 2013 (which was not received by the Tribunal until 27 August 2013) for seeking a further extension of time do not disclose any proper basis for us to do so. In our view, he has not been deprived of the opportunity that the case law requires that he be given. His request for a further extension of time to file submissions is refused and we have decided that the interests of justice require us to determine the claim for compensation based on the documents and evidence that we have received.

1. Further, the Solicitor has not identified any prejudice that has flowed from the manner in which this claim for compensation has proceeded or any prejudice that would flow from the granting of leave to Ms Edwards under section 570(4) of the 2004 Act. We therefore grant leave to Ms Edwards to rely upon her letter received on 20 May 2013 as an Application for Compensation, to the extent that such leave may be necessary.

Relevant Legislation

1. The following provisions of the 2004 Act apply to the current Application for Compensation:

317 - Effect of failure to disclose

(1) Postponement of payment of legal costs until assessed

If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed, the client or associated third party payer (as the case may be) need not pay the legal costs unless they have been assessed under Division 11.

(2) Bar on recovering proceedings until legal costs assessed

A law practice that does not disclose to a client or an associated third party payer anything required by this Division to be disclosed may not maintain proceedings against the client or associated third party payer (as the case may be) for the recovery of legal costs unless the costs have been assessed under Division 11.

(3) Setting costs agreement aside

If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed and the client or associated third party payer has entered into a costs agreement with the law practice, the client or associated third party payer may also apply under section 328 for the costs agreement to be set aside.

...

(7) Non-disclosure capable of constituting unsatisfactory professional conduct or professional misconduct

Failure by a law practice to comply with this Division is capable of being unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner or Australian-registered foreign lawyer involved in the failure.

495 Definitions

In this Chapter:

"Compensation order" means an order under Part 4.9 (Compensation).

"Complaint" means a complaint under this Chapter.

"Conduct" means conduct whether consisting of an act or omission.

"Loss" means loss of a pecuniary nature, but does not include non-economic loss within the meaning of the Civil Liability Act 2002.

Section 566(1)

(1) The Tribunal must make orders requiring an Australian legal practitioner whom it has found to have engaged in unsatisfactory professional conduct or professional misconduct to pay costs (including costs of the Commissioner, a Council and the complainant), unless the Tribunal is satisfied that exceptional circumstances exist.

Section 566(5)

(5) The Tribunal may make orders requiring a person to pay costs (including, as appropriate, the costs of the Commissioner, a Council, the complainant and the Australian legal practitioner against whom the complaint was made), if satisfied that:

(a) the person, whether before or during the proceedings, failed to produce or delayed in producing any document required or requested to be produced, and

(b) the failure or delay contributed to delay in commencing, conducting or concluding the proceedings in such a way as to warrant the making of the orders.

570 Request by complainant for compensation order

(1) A complainant may request a compensation order in respect of loss suffered by:

(a) the complainant, or

(b) another person who is a client of the law practice to which the Australian legal practitioner concerned belongs,

(or both) because of the conduct the subject of the complaint. The complainant, or other person, suffering the loss is referred to in this Part as an "aggrieved person".

2) A complainant who makes such a request must describe the loss suffered by the aggrieved person and the relevant circumstances.

(3) Such a request may be made in the complaint. The request may also be made, by notice in writing to the Commissioner or the relevant Council, at any time after the making and before the disposal of the complaint.

571 Compensation orders

(1) A compensation order is an order, made in respect of a complaint against an Australian legal practitioner, to compensate the aggrieved person for loss suffered because of conduct that is the subject of the complaint.

(2) A compensation order consists of one or more of the following...:

(a) an order that the practitioner cannot recover or must repay the whole or a specified part of the amount charged to the aggrieved person by the practitioner in respect of specified legal services, ...

(c) an order that the practitioner pay to the aggrieved person, by way of monetary compensation for the loss, a specified amount.

(3) A compensation order under subsection (2) (a) preventing recovery of an amount is effective even if proceedings to recover the amount (or any part of it) have been commenced by or on behalf of the practitioner.

(4) A compensation order under subsection (2) (a) requiring repayment of an amount is effective even if a court has ordered payment of the amount (or an amount of which it is part) in proceedings brought by or on behalf of the practitioner.

572 Prerequisites to making of compensation orders

(1) Unless the complainant and the Australian legal practitioner concerned agree, a compensation order is not to be made unless the person or body making it is satisfied:

(a) that the aggrieved person has suffered loss because of the conduct concerned, and

(b) that it is in the interests of justice that the order be made.

(2) A compensation order is not to be made in respect of any loss for which the aggrieved person has received or is entitled to receive:

(a) compensation received or receivable under an order that has been made by a court, or

(b) compensation paid or payable from a Fidelity Fund of any jurisdiction, where a relevant claim for payment from the Fund has been made or determined.

573 Making of compensation orders

(1) If the Tribunal has found that an Australian legal practitioner has engaged in unsatisfactory professional conduct or professional misconduct in relation to a complaint, the Tribunal may:

(a) make a compensation order, or

(b) refer the matter to the Commissioner for the making of a compensation order.

...

(7) A compensation order may specify the person to whom monetary compensation is payable, whether to the aggrieved person or to another person on behalf of the aggrieved person.

575 Other remedies not affected

The recovery of compensation awarded under this Part does not affect any other remedy available to an aggrieved person, but any compensation so awarded is to be taken into account in any other proceedings by or on behalf of the aggrieved person in respect of the same loss.

What is the scope of the "loss" for which compensation is payable?

1. This issue was considered by the Tribunal in Council of the New South Wales Bar Association v Fitzgibbon (No. 4) [2012] NSWADT 145. It held:

45 Given that a compensation order is an order "to compensate ... for loss suffered because of conduct that is the subject of the complaint" and it can consist of an order under section 571(2)(a) "that the practitioner cannot recover or must repay the whole or a specified part of the amount charged to the aggrieved person by the practitioner in respect of specified legal services", it must follow that the amount so charged is a "loss" for the purposes of these provisions.

46 Section 571(2)(c) deals with monetary compensation for loss other than amounts charged by way of fees for legal services and subsection (5) places a monetary limit on the amount of that loss."

1. Section 572 of the 2004 Act provides that an order for compensation should not be made unless the Tribunal is satisfied that the Complainant has suffered loss because of the conduct concerned and that it is in the interests of justice that the order be made. It is therefore necessary to determine what "loss" Ms Edwards has suffered as a result of the unsatisfactory professional conduct that was found against the Solicitor.

1. In the current matter the Solicitor was found guilty of unsatisfactory professional conduct as a result of his failure to provide Ms Edwards with a written costs disclosure. While the Solicitor asserted that he had discussed the issue of costs with Ms Edwards at the time of a review conference in her proceedings in September 2006, she denied this and the Law Society pointed out that the Solicitor failed to refer to the issue of his costs in any subsequent correspondence with her. We found that the Solicitor's first disclosure regarding his costs and disbursements was made in the "Authority to Settle and Deduct" document that Ms Edwards signed at the Solicitor's request at the conclusion of the claim for victim's compensation.

1. Accordingly, Ms Edwards is entitled to compensation only for loss suffered as a result of the Solicitor's failure to provide her with a written costs disclosure. In this regard, we note that the figures that she set out in her Application received on 20 May 2013 do not tally and that, while she alleges that she was left with only $6,502.80 after deductions totalling $27,502.80 were made from her settlement of $37,500, if those deductions were made then the balance would have been $4,629.89 and not $6,502.80, as she alleges.

1. It is possible that Ms Edwards' confusion may be explained on the basis that she relies upon a document described as a "Statement of Trust Account", which the Solicitor issued on his letterhead on 29 September 2009. This 'statement' commences on 25 September 2009 and indicates an initial receipt of $8,382.69 from the defendant's solicitors for "costs and disbursements". This appears to us to be an amount in payment of a claim for party/party costs. The statement also indicates that on 25 September 2009 the sum of $1,879.89 was paid to Ms Edwards as "settlement proceeds", leaving a credit balance of $6,502.80. This was then paid to the Solicitor as "costs and disbursements". This is clearly a supplementary trust account statement, but no prior statement has been submitted by Ms Edwards to the Tribunal and none is annexed to Ms Foord's Affidavits.

1. The Irrevocable Authority to Settle and Deduct, which Ms Edwards signed but did not date, indicates that her victim's compensation claim was resolved for a total of $37,500, inclusive of costs, and that from this the Solicitor deducted a total of $26,502.80 for costs and disbursements and that this included an "excess" $10,000. It also indicates an estimated charge payable to the Health Insurance Commission of $1,644.15 and stated that the charge to be rendered by Centrelink was "TBA (to be advised)".

1. Based on this document, we are comfortably satisfied that Ms Edwards was notified by the Solicitor at the time that she instructed him to resolve her claim for compensation, that she was liable to pay a charge to the Health Insurance Commission that was estimated at $1,644.15.

1. We take judicial notice that charges of that nature arise under the provisions of the Health Care and Other Services (Compensation) Act 1995 (C'th). Accordingly, the deduction of that charge from the settlement is not a loss resulting from the unsatisfactory professional conduct. While the amount of this charge is not expressly claimed in the Application for Compensation, to the extent that Ms Edwards seeks to claim it from the Solicitor, that claim is dismissed.

1. Similarly, in relation to the Centrelink charge that is the subject of the compensation claim, we note that Ms Edwards alleges that this was rendered in respect of 'economical loss, which there was no economical loss'. However, there is no evidence before us that supports this allegation.

1. We take judicial notice of the fact that Centrelink is empowered to render charges under Section 23(1) of the Disability Services Act 1986 (C'th), which provides:

Recovery of costs of rehabilitation programs borne by the Commonwealth

(1) In this section:

"compensation" , in relation to a person who has undertaken, or is undertaking, a rehabilitation program, means any payment by way of compensation or damages, or that is, in the opinion of the Secretary, in the nature of compensation or damages, in respect of the disability by reason of which the rehabilitation program has been or is being provided, but does not include a payment for which the person has made contributions or a payment made under a law, or a provision of a law, of the Commonwealth, or a State or Territory, being a law or provision prescribed for the purposes of this definition.

1. There is no evidence before us as to how this charge was calculated. However, as Ms Edwards pursued a claim for personal injuries under a Victims Compensation Scheme, it seems likely that she received 'compensation' from the Commonwealth as defined in Section 23(1) (above) after suffering the injuries that were the subject of that claim.

1. As that charge was rendered by the Commonwealth, Ms Edwards was obligated to repay it from the verdict or proceeds of settlement of her claim. As a result, the deduction of the charge of $5,637.31 in favour of Centrelink does not result from the Solicitor's unsatisfactory professional conduct and we dismiss this aspect of the claim for compensation.

1. In relation to the complaint concerning the 'excess' of $10,000 that was deducted from the gross settlement sum of $37,500, we note that the evidence in the matter indicates that the defendant company (in the Victims Compensation proceedings) went into liquidation.

1. As a result, the excess of $10,000 that would be payable by the defendant company, could not be recovered and the balance of $27,500 was paid by its insurer. As the consequences of the defendant going into liquidation do not result from the Solicitor's unsatisfactory professional conduct, we dismiss this aspect of the claim for compensation.

1. As regards the claim for $1,000 in respect of alleged 'miscalculation' by the Solicitor, we find that there is no evidence before us that indicates how this claim is calculated and supports a finding that it represents a loss that Ms Edwards suffered as a result of the Solicitor's unsatisfactory professional conduct. That claim is also dismissed.

1. In the current matter, the Solicitor was found guilty of unsatisfactory professional conduct under Section 317(7) of the 2004 Act and the evidence indicates that he deducted his costs and disbursements from the settlement monies contrary to Section 317(1), which provides:

'If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed, the client or associated third party payer (as the case may be) need not pay the legal costs unless they have been assessed under Division 11.'

1. Ms Edwards did not seek to have the Solicitor's costs and disbursements assessed. In our view, this may be explained on the basis that she was not informed of her rights regarding assessment at any time before the solicitor deducted his costs and disbursements from the settlement proceeds.

1. In the absence of a Certificate of Assessment of Costs it is not possible for us to accurately quantify the loss that Ms Edwards has suffered as a result of this unsatisfactory professional conduct. However, we regard it as extremely unlikely that properly assessed costs would have been less than the total of party/party costs that were received from the defendant's solicitors.

1. On that basis, we determine that the Solicitor should pay to Ms Edwards the sum of $8,120.11 by way of compensation, representing the difference between $16,502.80 (the total costs and disbursements that he deducted from the settlement monies) and $8,382.69 (the party/party costs recovered from the defendant)

Costs of this Application

1. The Application for Compensation does not seek an order that the Solicitor pay Ms Edwards' costs of the Application and her written submissions do not seek to include such a claim.

1. There is no evidence before us that proves that Ms Edwards has incurred any costs in relation to her claim for compensation and for that reason, we are satisfied that it is not necessary to make any order for payment of costs against the Solicitor.

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Decision last updated: 19 September 2013