Gersten v Law Society of NSW

[2004] HCATrans 69

[2004] HCATrans 069

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S132 of 2003

B e t w e e n -

JOSEPH MORRIS GERSTEN

Applicant

and

THE LAW SOCIETY OF NEW SOUTH WALES

Respondent

Application for special leave to appeal

CALLINAN J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 MARCH 2004, AT 12.10 PM

Copyright in the High Court of Australia

MR P.L. BRERETON, SC:   May it please the Court, I appear for the applicant with my learned friend, MS P.A. CONWAY.  (instructed by Oliveri Attorneys) 

MR J.E. GRIFFITHS, SC:   If the Court pleases, I appear with my learned friend, MR N.J. BEAUMONT, for the respondent.  (instructed by Raymond John Collins) 

CALLINAN J:   Mr Brereton, this is a matter concerning costs only, is it not?

MR BRERETON:   It is, your Honour.

CALLINAN J:   You would need a very, very strong basis to persuade the Court that we should ‑ ‑ ‑

MR BRERETON:   I accept that, your Honour.

CALLINAN J:   It is discretionary and it is costs only.  No matter of principle. 

HEYDON J:   Highly unusual facts.

MR BRERETON:   I understand all of that, your Honour, and I accept that I have to undertake the task of showing that this is an exceptional case.  Even before your Honour met me with that welcome, my opening remarks were going to be that there are two reasons why, in this case, the immediate reaction that a question of costs alone might be an unpromising candidate for special leave should not prevail.  Those two reasons, of equal importance, are, first, the great injustice of the result in the individual case, and, secondly, the precedential impact which this decision of the Court of Appeal will have generally on the ability of a practitioner who finds himself or herself in the unhappy situation of being disbarred or suspended in any overseas jurisdiction whatsoever – not just Florida, but Zimbabwe or Iran or North Korea ‑ ‑ ‑

CALLINAN J:   It does not happen very often.

MR BRERETON:   It does not, but with the growing scope of international legal practice, particularly with firms of solicitors that have international offices dotted around the world, likely to become more and more practical and more and more prevalent ‑ ‑ ‑

CALLINAN J:   But, as Justice Heydon said to you, these were very special facts.  Even if you say that there may be disbarments overseas, there are not going to be too many of this kind, I would not have thought.

MR BRERETON:   Let me cut to the chase and take your Honours to what makes this not confined to its special facts.  The costs judgment of the Court of Appeal is at page 241 of the book.  Essentially, the Court of Appeal advanced two reasons for not disturbing the trial judge’s decision.  Pausing there, the injustice, the almost monstrous injustice, is this.  This man ultimately succeeds in gaining the precise relief which he sought at the outset to gain, after having been opposed for 16 days in doing so and having to appeal.  The trial judge, in dismissing the application, naturally makes an order for costs against him.  The Court of Appeal reverses the substantive decision but does not disturb the costs order, leaving him not only to bear his own costs, but also to pay the Law Society’s costs of vindicating his own reputation and professional standing. 

The Court of Appeal gave essentially two reasons for that, at page 242.  The first reason, which is summarised in paragraph 6, is what was said to be an analogy with the rule in reinstatement cases, that a practitioner who has been disbarred and applies for reinstatement pays the costs of the professional association of unsuccessfully opposing the application for reinstatement.  The court concluded by saying:

the analogy with applications for re‑admission is sufficiently close to make the normal order for costs in re‑admission cases relevant in the present context.

That is not limited to the present case.  That is a statement of principle, and that will no doubt be relied upon in every one of these cases that comes before the courts in the future.

The second ground was, I accept, peculiar to the present case but, with respect, quite misconceived.  That is summarised in paragraphs 7, 8 and 9 – essentially, that the case was protracted by what the Court of Appeal described as “false issues”.  I will come back to show why they were not at all false issues, in a moment.  Those were the two reasons that were advanced.  Each of them, in my submission, was wrong, and the first of them was plainly one of wider application than to the present case.

Can I show, first of all, why that first reason should be regarded as at least arguably wrong for present purposes.  In a reinstatement application, a disbarred practitioner has to displace a finding of probable permanent unfitness inherent in the original decision to remove him or her from the roll.  In a reinstatement application, it is a legitimate view that the costs of the application for reinstatement themselves are occasioned by the practitioner’s original misconduct.  In a reinstatement application, the applicant for reinstatement has a real choice as to whether to make any such application or not. 

In contradistinction to that, in this type of application, there has been no local finding of unfitness and no presumption of unfitness to displace; the application is occasioned by the automatic operation of the rule, not by any previously established misconduct; and, because of the automatic operation of the rule, unless an otherwise order is obtained, the practitioner has no practical choice but to make an application.  He or she is compelled to make an application to resist or to avoid automatic suspension under the rule. 

For those reasons, in my submission, the Court of Appeal was wrong to think that the rule in reinstatement cases was applicable, or was – to adopt the way my learned friends would put it – a relevant consideration.  If that error is not rectified now, that will persist in every future case which is brought under this rule and the Law Society will no doubt, in every future case brought under this rule, say, “You have to pay our costs”.  That will impose a massive financial obstacle and deterrent to practitioners, perfectly fit and proper to practise in this jurisdiction, to make an application to keep their ticket here because of some misconceived foreign action.  So that is the point of principle.

HEYDON J:   The trouble with that is, though, that what Mr Justice Handley said was:

sufficiently close to make the normal order for costs in re‑admission cases relevant in the present context.

It sounds rather tied to this particular case, rather than every case covered by the rule.

MR BRERETON:   With respect not, your Honour, because, if we go to the beginning of paragraph 6, his Honour is addressing the submission made to the Court of Appeal that the analogy was inappropriate.  His Honour accepts that “The analogy is not complete” and the reasons why it was or was not complete or appropriate were reasons of general application, not depending on the facts of the case.  When his Honour referred to the “”present context”, his Honour was referring to the context of Part 65A, rule 1, not the context of the facts of the case.  The context was the context of this type of application, not the facts of the case. 

Now, that, I readily accept, cannot be said for the second reason that was advanced by the Court of Appeal.  As to that, of course, if the decision miscarried for one reason, that is enough to reopen it.  But as to the second reason, first, on any application under this rule it will invariably be necessary to examine the facts underlying the foreign disciplinary order so as to judge the relevance of the foreign disciplinary order for local fitness to practice. 

Ultimately, page 236, paragraph 59, Mr Gersten succeeded because he was able to establish that his relevant misconduct, an unpurged, prolonged and deliberate contempt of a Florida court, in failing to answer questions in a State Attorney’s Office investigation which he was ordered to answer, was without significance for his local fitness, for two reasons there stated by Mr Justice Handley, first, that it occurred:  

in extraordinary circumstances, entirely local in character –

that is, to Florida –

which are not likely to occur in New South Wales –

and, secondly, because of his: 

genuine and rational belief that the investigation by the State Attorney’s Office and his proposed interrogation were being conducted in bad faith to damage him for political reasons.

To make out those grounds, which is the basis of his ultimate success, Mr Gersten had to adduce evidence of what the extraordinary circumstances were, and their context, and he had to adduce evidence of the facts, matters and circumstances which underpinned his belief, ultimately found to be genuine and rational.  The Court of Appeal even summarised those facts and circumstances at page 224 and following. 

Now, bear in mind that those facts and circumstances amounted to a conspiracy theory on a large scale involving persons in high office – the Florida State Attorney’s Office, Janet Reno, President Clinton’s Attorney‑General, the FBI – against whom, at first sight, such allegations would be regarded as preposterous.  The normal reaction to a man who comes and says, “The State Attorney’s Office, the FBI and President Clinton’s Attorney are trying to frame me for political reasons” would be the riposte from a psychiatrist, “Have you stopped taking your pills?”  That is what Mr Gersten had to dispel to succeed in this case and to prove that his conduct in Florida was of no local significance.  That is what he ultimately succeeded in dispelling in the Court of Appeal. 

To do so, he could not just assert that he had a genuine belief that he was being persecuted.  He had to prove the facts, matters and circumstances which underpinned that belief, to show that the belief was not that of a deluded man.  That meant he had to adduce detailed evidence of all these events in Florida which led to his suspension and which gave rise to his belief.

It is true that he used the evidence so adduced at trial to found three submissions, and these can be seen at page 131 of the application book, paragraph 370 of the trial judge’s judgment, that he did not commit certain offences relating to drugs and sex which had been alleged against him; secondly, that the SAO was in fact “conducting an investigation in bad faith for the purpose of harming him”; and, thirdly, that he honestly believed on reasonable grounds that that was so. 

The so‑called “false issues” were those in 370 and 371.  The issue in 370 underpinned the issue in 372.  It was fundamental to proving that the investigation was being conducted in bad faith for him to show that he had not committed the crimes in the first place.  He had to assert that he had not committed the crimes to show that he was being investigated in bad faith.  At 371, that, too, underpinned the submission in 372.  He had to prove the facts on which he relied for contending that he believed on reasonable grounds that the investigation was a bad faith one, in order to prove that he had a genuine and reasonable belief to that effect. 

So the submissions in 7 and 8, the so‑called false issues, directly underpinned the submission in 9, which is the submission on which he ultimately succeeded and which explained and was adopted as the grounds for his ultimate success in the Court of Appeal.  Critically, the trial judge accepted, although in moderated terms, the submission numbered 9, saying that there were some grounds for his belief.  The Court of Appeal went further and said that the belief was genuine and rational.  To prove that, he had to adduce the evidence, which he did, on issues 7 and 8, the so‑called false issues. 

Somewhat in terrorem the Law Society says that that will involve a review of volumes of evidence.  With respect, that is not so.  The issue can be determined essentially on the judgments of Justice James and of the Court of Appeal.  The trial judge exhaustively reviews the evidence on all of the issues, the so‑called false issues and the real issues.  It does not require a detailed review of volumes of appeal books to appreciate that evidence adduced as to whether Mr Gersten was at the crack house, and whether the investigation was a bad faith one, was relevant to establish that he had a bona fide and a reasonable belief that he was the victim of a bad faith investigation and that the Court of Appeal was wrong to categorise that evidence, in its costs judgment, as relating to false issues.

For those two reasons, then, both the reasons advanced by the Court of Appeal for, on its face, an extraordinary decision of leaving Mr Gersten

to pay not only his own costs, but the Law Society’s costs, of a three week trial in which he ought to have prevailed are wrong.  The injustice of that includes the consequence that the inevitable consequence for Mr Gersten is bankruptcy, whereupon he will have to show cause to his professional association, the very Law Society that has been agitating his unfitness in these proceedings and will then be his judgment creditor, as to why, on account of his bankruptcy, his practising certificate should not be cancelled. 

The idea that a man who comes before a court, not because he wants to, but because the automatic effect of a rule compels him to, can succeed but be saddled with an enormous bill of costs for the other party’s unsuccessful opposition to his application flies in the face of the substantive justice of how costs orders should be used.  The circumstances of this case, exceptional as they are, in my submission, are such as to warrant a grant of special leave, notwithstanding that only a question of costs is involved.

CALLINAN J:   Thank you, Mr Brereton.  No need for us to hear you, Mr Griffiths. 

By this application, the applicant seeks special leave to appeal against an order for costs made against him in his successful appeal to the Court of Appeal.  Even though the analogy drawn by the Court of Appeal between these proceedings and applications for readmission may be an imperfect one, the drawing of it here does not warrant a grant of special leave.  The judgment of the Court of Appeal was a discretionary one.  It related to a matter of the regulation of the New South Wales legal profession.  There were many factors to which the Court of Appeal had regard in exercising that discretion.  The weight to be given to each of the matters was uniquely for the Court of Appeal.  The facts of the case were themselves unique.  For these reasons, the application should be refused with costs.  We will adjourn briefly to reconvene. 

AT 12.28 PM THE MATTER WAS CONCLUDED