Law Society of New South Wales v Oliveri (No.2)

[2008] NSWADT 157

CITATION:	Law Society of New South Wales v Oliveri (No.2) [2008] NSWADT 157
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Council of the Law Society of New South Wales RESPONDENT Emanueli Oliveri
FILE NUMBER:	062026
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	11 April 2008
DATE OF DECISION:	29 May 2008
BEFORE:	Molloy GB - Judicial Member; Riordan M - Judicial Member; Fitzgerald R - Non Judicial Member
CATCHWORDS:	Costs
MATTER FOR DECISION:	Costs
LEGISLATION CITED:	Legal Profession Act 1987 Legal Profession Act 2004
CASES CITED:	Law Society v Oliveri [2007] NSWADT 246
REPRESENTATION:	COMPENSATION CLAIMANT M Gallego, solicitor RESPONDENT D T Kell, barrister
ORDERS:	1. The claim for costs by the compensation claimant is dismissed 2. No order as to costs.

REASONS FOR DECISION

Background

1 On 10 October 2007 this Tribunal decided (Law Society v Oliveri [2007] NSWADT 246) that Mr Oliveri, the legal practitioner, should be cautioned, that there be no order for costs in relation to the Application filed by the Law Society, and that the practitioner pay the compensation claimant $1,290.00.

2 There is no need to refer to the detailed reasoning behind the caution administered to the practitioner. However, putting it shortly, the practitioner appropriated to himself the sum of $1,290.00 on account of costs in circumstances where the practitioner was not entitled so to do but thought that he could so appropriate.

3 The Tribunal, at [57] formed the opinion that the practitioner’s “conduct fell below the standard reasonably expected of a practitioner such as to constitute unsatisfactory professional conduct” in all the circumstances.

4 The compensation claimant, who is now the Applicant for relief, the subject of this Decision, applied to the Tribunal for a compensation order in $2,580.00. For the reasons set out in the original Decision (at [63]) that sum was not the correct sum but was rather “double the amount that (the compensation claimant) could reasonably claim”, simply because the compensation claimant’s entitlement was only one-half of the amount appropriated. Having regard to the unchallenged evidence the Tribunal ordered the practitioner to pay the compensation claimant the correct amount of $1,290.00 by way of a compensation order.

5 At [66] the Tribunal reserved the question of the compensation claimant’s claim for interest and her claim for the costs of her compensation application.

Current Position

6 The Tribunal has been informed that the question of interest has been resolved such that the only matter now before the Tribunal is the application by the compensation claimant for costs.

Costs Application

7 The compensation claimant is a Ms Suzanne Rankin Suttor (“Suttor”). It was she who, together with a Mr K C Grizonic (“Grizonic”), owned certain moneys ($12,234.97) which were placed into a controlled money account held in the joint names of the solicitors for Grizonic and Suttor, the signatory to which was the legal practitioner solely. It was never in issue that the said joint moneys were owned equally by Grizonic and Suttor.

8 What happened was that the legal practitioner paid to himself his legal costs in relation to that discrete matter ($2,580.00), thus leaving a balance of $9,654.87, then paid to Grizonic one-half of that sum in $4,827.49 and to Suttor (through her lawyers) the other $4,827.49. We respectfully agree (but subject to the qualification below (at [27])) with the submissions made on behalf of Suttor that the $4,827.49 was clearly her money and her entitlement thereto “was absolutely clear and never seriously questioned by anyone”.

9 The problem was the $2,580.00. The legal practitioner appropriated the whole of that amount towards his costs of acting for Grizonic. There was no argument that his costs of so acting were properly payable to the practitioner. The problem was that one-half of the $12,234.97 was owned by Suttor and there was, as the Tribunal found, no agreement between Suttor and Grizonic, or their respective solicitors, that Suttor’s share should be charged with or used to pay any part of the costs of Grizonic due to the practitioner. It therefore followed that the practitioner had taken $1,290.00 which was Suttor’s money and appropriated that money towards the costs owed to him by Grizonic.

10 Suttor says that she was entitled to file with this Tribunal a Compensation Application because, unarguably, the practitioner had taken $1,290.00 of her money.

Complications

11 Nothing is ever as it initially seems. The facts are set out in the original Decision. The facts are not in dispute in relation to this costs application.

12 It is important to observe that the Legal Profession Act 1987 and the Legal Profession Act 2004 make it plain that this Tribunal cannot make a compensation order unless and until it has found the legal practitioner had “engaged in unsatisfactory professional conduct or professional misconduct in relation to a complaint …” (Section 573 of the 2004 Act). So, it is a pre-requisite to the making of a compensation order that there be an adverse finding against the practitioner in one of the categories mentioned.

13 The practice of the Tribunal is that a compensation claimant may not be heard on the compensation claim until the Tribunal has made a finding against the practitioner under Section 573. There is good reason for this: the principal proceedings are generally between either the Law Society or the Legal Services Commissioner on the one hand and the practitioner on the other relating to asserted professional misconduct or unsatisfactory professional conduct. Thus it follows that the proper parties to the principal determination do not include the compensation claimant but rather the Society or the Commissioner in order to found proper jurisdiction under Section 573(1).

14 This means, of course, that the compensation claimant is not only not a party to the principal proceedings but may, and probably will be, a witness in those proceedings. And, as one’s experience shows, a mere witness, although sworn to and in fact telling the truth, may not necessarily cover all the factors that that witness would cover had he/she been a claimant.

15 For that reason the Tribunal, at two direction hearings, permitted the compensation claimant Suttor to file and serve any additional affidavit material that she wished in support of her claim for interest and costs. The purpose of those directions was to enable Suttor to put before the Tribunal factual information that may not have been before it in relation to the principal matter (example, additional factual material from Suttor and/or her solicitor (who also gave evidence before the Tribunal in the principal matter)). This was important because the Tribunal made certain findings in the principal matter, as between the parties thereto, that Suttor may have wished to dispute, traverse or add to and which, as between Suttor and the practitioner, may have cast a different hue upon the facts relating to the jointly-held money.

16 Suttor did not file any additional material. The result is that the Tribunal is left with the findings that it made on the principal matter and which are now relied upon by the practitioner in resisting Suttor’s costs application.

Quantum

17 Before proceeding to an analysis of whether or not a costs order should be made the lawyers for Suttor have put before the Tribunal details of quantum and how that quantum is calculated. It is not an “itemised bill of costs” but rather a summary of such an itemised bill by way of dates and attendances, but without detail.

18 The quantum is not inconsiderable. There is no suggestion that the solicitor for Suttor has not done the work as asserted; but quantum is certainly an issue. The Tribunal has formed the opinion that if it were minded to make a costs order in favour of Suttor it would not proceed to assessment but rather would require Suttor to bring in a proper bill of costs for assessment before a costs assessor in the usual way.

Findings of the Tribunal

19 In its 2007 Decision the Tribunal made a number of important findings, none of which are traversed by Suttor.

20 Firstly, at [39], the Tribunal said this:

“(Suttor’s solicitor) called upon the practitioner to “immediately” “either reimburse the Controlled Moneys Account with the amount of $2,580.00 or alternatively, we request that a cheque for that amount be issued to us in favour of our client within 24 hours”. Although she (Suttor’s solicitor) suggested that the $2,580.00 be put back into the controlled moneys account, the request for $2,580.00 to be paid to Suttor was clearly wrong. There was no evidence of the practitioner’s reply to this letter save that the practitioner asserted a prior conversation on 25 May 2005 in or to the effect: “Let’s refund the money and I will not disburse any of it until we agree on the costs issue” and a further telephone conversation on or about 6 June 2006 which he “again stated that the parties should reach return the withdrawn moneys to the account pending further agreement on distribution or application to the court”. Similarly, Suttor complained to the Law Society 13 October 2005 stating that so far as she was concerned “Mr Oliveri has stolen $2,580.00 of my money””.
21 Secondly, at [41] the Tribunal said this:
“The practitioner gave lengthy evidence regarding his state of mind when he deducted his client’s costs. His view is eloquently and clearly set out in his detailed letter to the Law Society 15 July 2005. It is appropriate to firstly observe that there is nothing in that detailed letter that would demonstrate a clear authority or direction from Suttor. His argument was the he was entitled to draw the costs “on the basis of my instructions” but if the instructions of Suttor did “not allow me to deduct those costs then (Suttor should) return the cheque and I will refund all the moneys taken on this end and continue to hold the full amount pending determination by the court on the question of costs”. He says that he had a further conversation with (Suttor’s solicitor) in June 2005 to the effect that “It could all be reversed … let’s refund the money and I will not disburse any of it until we agree on the cost issue … I have come to these sorts of agreements with other firms when it was clear that costs were incurred by one party on behalf of others”. He then went on to state that the deduction of costs was “on the assumption that there would naturally be agreement for the deduction of costs …” and that “it follows that no moneys at all should be disbursed from the account and that accordingly all moneys should be reimbursed”.
22 At [42] the Tribunal referred to a further statement by the practitioner as follows:
“Accordingly either the parties agree to the status quo, or all money should be returned to the account pending agreement or a decision from the Court. This course would put the parties back to the position that they were in before any moneys were disbursed”.
23 Later, at [60]-[61] the Tribunal said this:
“60. It is important to observe that the practitioner offered, very early in the piece, to refund the costs, return the moneys held by Grizonic and submitted to (Suttor’s solicitor) that Suttor should return the moneys paid out to her, thereby returning all the controlled moneys that had been paid out to the same controlled moneys account and then leaving it up to the Court to decide how those controlled moneys should be disbursed. We confess we are at a loss to understand why it was that Suttor refused that offer. We recognise, as was the evidence, that the proceedings between Suttor and Grozonic were acrimonious but, that having been said, the logical and rational course of action that should have been adopted by all parties was, in the case of this dispute, and in the fact of the clear offer made by the practitioner, all moneys should have been returned to the controlled moneys account to await, either a quite specific clear agreement by the parties, alternatively an order to be made by the Court.

61. We agree entirely with the submission made by leading counsel for the practitioner in or to the effect that had that course of action been adopted then the proceedings in this Tribunal would not have been brought, the matter could have been resolved to everyone’s satisfaction in a logical and rational way, without everybody getting “steamed up” about what was in reality a very minor breach of Section 61 which could have been rectified with a little goodwill and common sense by all parties”.

24 The Tribunal went on to observe (at [62]), that “only serious matters should be brought to this Tribunal. This was not one of them. The disputant parties could have easily resolved their differences in the manner suggested by the practitioner and with which we approve”.

25 These are important findings/observations. It is against that background and those findings that Suttor applies for costs and it is on those findings/ observations that the practitioner submits that this Tribunal should not make an order for costs in Suttor’s favour rather there should be “no order as to costs”.

Compensation Applicant’s Submissions

26 Suttor, through her lawyers, made detailed Written Submissions. The important submissions were as follows:

a) “The Tribunal accepted that the practitioner had, after he had taken his costs without authority, offered to effectively refund those costs, by “returning” them to the Controlled Moneys account, where they should have been in the first place, but only on the basis that (Suttor) “refund” the sum of $4,827.49, her entitlement to which was absolutely clear and never seriously questioned by anyone. It is submitted that this is not an offer which (Suttor) should have accepted”.

b) The Tribunal has ordered the practitioner to refund $1,290.00 to (Suttor), which he has since done, but only after the Tribunal found against him and ordered him to repay the money. It is submitted that the practitioner should have refunded this money in the first place, and certainly not later than 27 May 2005 when (Suttor’s) then solicitor “wrote a fairly stiff and robust letter to the practitioner”.”

c) “In summary then, (Suttor) was entitled to bring the action that she did and she was successful. No reasonable settlement offer was made by the practitioner, and costs should follow the event”.

27 Pausing at this point and in relation to submission itemised (a) above, this Tribunal is of the opinion that that submission does not take into account the plain and obvious fact that the quantum of costs deducted by the practitioner was not an agreed sum such that if the practitioner was entitled to his costs those costs either had to be agreed, alternatively assessed; and (presumably) any assessment would only take place consequent upon a costs order being made by the Court in favour of the practitioner’s client Grizonic. So it therefore cannot be said with confidence that Suttor’s entitlement to the $4,827.49 “was absolutely clear” simply because, upon an assessment (had the Court been minded to have made such an order) the totality of Grizonic’s costs may have been more than $2,580.00 – one will never know – such that Suttor’s entitlement may or may not have been more or less than nett $4,827.49. In our view this submission fails to take into account that the costs as deducted by the practitioner were not assessed, neither agreed, and might well have been more (or even less) than the $2,580.00 appropriated by him.

Practitioner’s Submissions

28 Basically, the practitioner through his counsel relied upon the findings of the Tribunal: “The findings within the Tribunal’s Decision provide a compelling basis for refusing to make an order for costs in favour of Ms Suttor”.

29 The submissions range across the various paragraphs of the Tribunal’s 2007 decision; they observe that “in making the costs order that it did on 10 October 2007 the Tribunal has, implicitly and necessarily, already found that the requisite “exceptional circumstances” exist for not making a costs order against the practitioner. The identical findings and circumstances, set out in the Decision at [60] and [61] … provide reason as to why a costs order should not be (and properly could not be) made against the practitioner in favour of Ms Suttor”.

30 There are other portions of the submissions that deal with quantum and, for the reasons set out above, this Tribunal would not be of a mind in any event to make a quantum finding but rather leave that to a costs assessor.

Tribunal’s Reasoning

31 This is not an easy matter. It is for that reason that we have been to more than considerable trouble to set out the facts and circumstances in detail. There are certainly arguments either way.

32 The Tribunal has considerable sympathy with Suttor’s submissions set out at [26] at sub-paragraph (b) above. It is not entirely clear to this Tribunal why it was that the practitioner did not refund to Suttor the $1,290.00. Even if one accepts that the offer made by the practitioner to put all the moneys back and start again was a reasonable offer (and we have no hesitation in confirming that finding) the plain fact is that the practitioner, when confronted with the complaint by Suttor to the Legal Services Commissioner, and referred to the Law Society, should have simply, and immediately, recognised that his appropriation of costs as against Suttor’s share of the jointly-owned controlled moneys, was wrong and that the $1,290.00 should have been refunded to Suttor. Why it was that the practitioner delayed in making that refund until after the Tribunal made the order requiring him to make that refund, is not explained; equally, why it was that the practitioner did not make any payment on account of lost interest to Ms Suttor until after the Tribunal’s 2007 Orders is equally not explained. It was, after all, a fairly small amount of money and commonsense and a calm reasoned approach would have encouraged, one would have thought, the practitioner to make the refund and get on with his life.

33 So, on the one hand, we have the failure of the practitioner to make the refund until so ordered by this Tribunal, the failure to pay interest thereon until after having made that payment, and on the other hand the findings that the Tribunal made in the 2007 Decision at paragraphs [39], [41], [60] and [61] all quoted above.

34 Suttor relies upon Legal Profession Act 2004, Section 566 which relevantly provides as follows:

“566(1) The Tribunal must make orders requiring an Australian legal practitioner whom it has found to have engaged in unsatisfactory professional conduct … to pay costs, unless the Tribunal is satisfied that exceptional circumstances exist.”

She submitted through her solicitor that: “at least in relation to her claim, there are no such exceptional circumstances as would justify her to be deprived of her costs”. We would respectfully disagree. The exceptional circumstances are to be found in the conduct of Suttor in rejecting the very reasonable offer of the practitioner in or to the effect that all the controlled moneys should be returned to the controlled moneys account and there to await agreement by the parties, alternatively a decision by the Court, on whether or not the practitioner’s costs should be paid therefrom. Once one accepts that starting point and the reasoning of the Tribunal at [60] – [61] of the 2007 Decision, then it can be seen, and clearly seen, that the proceedings against the practitioner would, and should, never have been commenced because the parties would have adopted a practical commonsense approach to the problem, the moneys would have been returned (quite properly in our view) and the matter dealt with in the appropriate way thereafter.

35 Put another way, Suttor is the author of her own misfortune. Although it might be said that if Suttor was “entitled to return of the moneys, then she was entitled to take action to recover the moneys, and, having been successful entitled to recover the costs of this action” and that she was “entitled to bring the action that she did and she was successful … (and that) costs should follow the event”, there was in fact “a reasonable settlement offer” made by the practitioner even before a complaint was made to the Commissioner and subsequently to the Law Society and if the “reasonable settlement offer” had been accepted by Suttor then, quite clearly, the matter would not have proceeded further. These, we find, constitute “exceptional circumstances”.

36 We are inclined to the view that there should be no order for costs made in favour of Suttor. Similarly, we are inclined to the view that there should be no order for costs in relation to this application – the practitioner should have promptly refunded the $1,290.00 plus interest and that, again, would have put an end to Suttor’s claim for compensation.

37 It seems to us, on an exercise of discretion, there were serious faults on both sides and in the circumstances there should be no order as to costs.

Orders

1. The claim for costs by the compensation claimant is dismissed

2. No order as to costs.