Legal Practitioner 202021 v Council of the Law Society of the Act (Occupational Discipline)
[2021] ACAT 74
•10 August 2021
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
LEGAL PRACTITIONER 202021 v COUNCIL OF THE LAW SOCIETY OF THE ACT (Occupational Discipline) [2021] ACAT 74
OR 21/2020
Catchwords: OCCUPATIONAL DISCIPLINE (LEGAL PRACTITIONERS) – delay in billing – whether a solicitor has an ethical obligation to issue a bill for legal costs within a reasonable time of providing legal services to a client – whether appropriate to characterise solicitor’s conduct as rendering a bill covering a period of 11 years – operation of limitation period in relation to a solicitors statutory right to recover legal costs for the reasonable value of legal service provided more than 6 years earlier – where the solicitor exercised a legal right to issue a bill for the reasonable legal costs of legal services provided on the clients’ instructions from time to time – whether the solicitor had an ethical obligation not to do so because of the passage of time – interpretation of rule 4.1.1 and 4.1.3 of the Solicitor’s Rules –whether solicitor’s conduct resulted in a breach of common law duty to treat clients fairly and good faith – whether rules of evidence apply to an appeal under section 416 of the Legal Profession Act – whether the ACAT has a discretion under section 8 of the ACAT Act to apply the rules of evidence in an appropriate application or category of applications – decision to sanction solicitor set aside and complaint dismissed
Legislation cited: Administrative Appeals Tribunal Act 1975 (Cth) s 33(1)(c)
ACT Civil and Administrative Tribunal Act 2008 s 8, 68
ACT Civil and Administrative Tribunal Legislation Amendment Act 2008 Schedule 1 amendment [1.387], [1.391]
Civil and Administrative Tribunal Act 2013 (NSW) s 38(2)
Legal Profession Act 2006 ss 262, 269, 271, 272(1), 279, 282(2), 289, 290, 291, 292, 293, 413, 416, 419, 420, 425, 434, 580
Legislation Act 2001 ss 4, 8, 13, 139(1)
Limitations Act 1985 s 11
Northern Territory Civil and Administrative Tribunal Act 2014 (NT) s 53(2)(b)
Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 28(3)(b)
State Administrative Tribunal Act 2004 (WA) s 32(2)(a)Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 98(1)(b)
Subordinate
Legislation cited: ACT Legal Profession (Solicitors) Conduct Rules 2015 rr 4.1.1, 4.1.3, 16
Legal Profession (Solicitors) Rules 2007 (repealed) rr 1.1, 1.2
Cases cited:Briginshaw v Briginshaw [1938] HCA 34
Byrne v Council of the Law Society of the ACT [2015] ACAT 19
Council of the Law Society of the ACT v Legal Practitioner 201822 (Alveer Singh) [2019] ACAT 27
Council of the Law Society of the ACT v Legal Practitioner 201907 (Darren Carden) [2019] ACAT 76
Council of the Law Society of the ACT v Legal Practitioner 201933 [2020] ACAT 54.
Council of the Law Society of the ACT v Legal Practitioner 202001 (OR 1/2020)
Donaghy v Law Society of NSW [2013] NSWCA 154
In the matter of Clara [2019] ACAT 46
Legal Practitioner LP 201901 (David Lander) v Council of the Law Society of the ACT
Legal Practitioner 201823 (Eunice Ryan) v Council of the Law Society of the ACT [2019] ACAT 97
Legal Practitioner ‘M’ v Council of the Law Society of the ACT [2013] ACAT 42
Legal Practitioner ‘M’ v Council of the Law Society of the ACT [2015] ACTSC 312
Macquarie International Health Clinic v Sydney SW Area Health Services [2010] NSWCA 268
Sarbandi v Sharif [2017] ACAT 57
T v Council of the Law Society of the ACT [2014] ACAT 42
Taylor v Owners – Strata Plan No 11564 [2014] HCA 9
List of
Texts/Papers cited: D. Pearce, Statutory Interpretation in Australia (LexisNexis Butterworths, 9th ed, 2019)
G. E. Dal Pont, Law of Costs (LexisNexis Butterworths, 2003)
J. D. Heydon, Cross on Evidence (LexisNexis Butterworths, 11th ed, 2017)
Macquarie Dictionary (8th ed, 2020)
Tribunal: Senior Member M. Orlov
Date of Orders: 10 August 2021
Date of Reasons for Decision: 10 August 2021
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) OR 21/2020
BETWEEN:
LEGAL PRACTITIONER LP202021
Applicant
AND:
COUNCIL OF THE LAW SOCIETY OF THE ACT
Respondent
TRIBUNAL:Senior Member M. Orlov
DATE:10 August 2021
ORDER
The Tribunal orders that:
1.For consistency with section 423A of the Legal Profession Act 2006, until further order no person shall publish the name or address of the legal practitioner in relation to this matter and they must be referred to as "Legal Practitioner 202021".
2.The decision under review made on 1 October 2020 is set aside and substituted by a decision to dismiss the complaint.
3.Public access to the Tribunal’s file is prohibited until further order.
………………………………..
Senior Member M. Orlov
Contents
ORDER
REASONS FOR DECISION
Introduction
The tribunal’s role in an appeal under s 416 of the LP Act
Do the rules of evidence apply to an appeal under s 416?
The evidence
Background
The solicitor’s statement as to the correct and preferable decision and orders
The Council’s notice of contention
The solicitor’s response to the Council’s notice of contention
The submissions at the hearing
The issues
Consideration
The solicitor’s entitlement to charge legal costs for miscellaneous work done at the clients’ request
The proper characterisation of the solicitor’s conduct
Whether the solicitor’s conduct breached rule 4.1.1
Whether the solicitor’s conduct breached rule 4.1.3
Whether the solicitor’s conduct breached the duty to treat the clients fairly and in good faith
The correct or preferable decision
REASONS FOR DECISION
Introduction
1.This is an appeal under section 416 of the Legal Profession Act 2006 (LP Act) against a decision by the respondent (the Council) that the applicant (the solicitor), to whom I will refer by the pseudonym, John Smith,[1] be issued with a public reprimand pursuant to section 413(2)(b) of the Act and pay a fine of $1,500 pursuant to section 413(3) of the Act.
[1] The pseudonym bears no similarity to the solicitor’s name
2.Section 413(1) applies where the Council:
(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); and
(c) is satisfied that the practitioner is generally competent and diligent; and
(d) is satisfied that the unsatisfactory professional conduct can be adequately dealt with under this section.
3.If the section applies, section 413(2) provides that the Council may, among other things, do all or any of the following:
(a) caution the Australian legal practitioner;
(b) publicly reprimand the Australian legal practitioner or, if there are special circumstances, privately reprimand the practitioner;
…
(e) impose a fine on the practitioner of a stated amount.
4.The maximum fine that can be imposed under section 413(2)(e) is $1,500.[2]
[2] Section 413(3)
5.After completing an investigation of a complaint against the solicitor by a former client, the Council was satisfied that the solicitor’s conduct of issuing an invoice to a client covering a period of 11 years constituted a failure to act in the best interests of the client in breach of rule 4.1.1 of the ACT Legal Profession (Solicitors) Conduct Rules 2015 (Solicitors Conduct Rules) and that there was a reasonable likelihood that the tribunal would find the solicitor guilty of unsatisfactory professional conduct as a result.
6.The solicitor’s case on appeal was that I should not be satisfied that there was any reasonable likelihood that the tribunal would find the solicitor guilty of unsatisfactory professional conduct, and that the complaint against him should be dismissed.
The tribunal’s role in an appeal under s 416 of the LP Act
7.An appeal under section 416 of the LP Act is a review of an administrative decision by the Council. [3] The tribunal hearing an appeal under section 416 stands in the shoes of the Council and is required to make the correct or preferable decision, based on the material available to the tribunal at the time of the hearing. The Council bears the onus to prove the conduct which is the subject of the complaint. The tribunal’s task is to decide whether it is reasonably likely that a differently constituted tribunal, hearing a complaint application by the Council against the solicitor under section 419 of the LP Act, would be reasonably likely to find the solicitor guilty of unsatisfactory professional conduct, but not professional misconduct. However, it is not the tribunal’s task to find whether the solicitor is, in fact, guilty of unsatisfactory professional conduct.[4]
[3] Legal Practitioner ‘M’ v Council of the Law Society of the ACT [2015] ACTSC 312 at [76]
[4] Legal Practitioner LP 201901 (David Lander) v Council of the Law Society of the ACT [2019] ACAT 57 at [8]-[16] citing Legal Practitioner ‘M’ v Council of the Law Society of the ACT [2015] ACTSC 312 at [76], [94], [105], [144]-[147] and Donaghy v Law Society of NSW [2013] NSWCA 154 at [16]
8.The distinction is real but, in some circumstances, can be elusive in its application. Nevertheless, as the tribunal observed in Legal Practitioner LP 201901 (David Lander) v Council of the Law Society of the ACT, the outcome is the product of the language of the statute and the tribunal is required to do its best to answer the correct question.[5] In that case, after noting that the test in Briginshaw v Briginshaw [1938] HCA 34 applies to the issue the tribunal must decide under section 416, the tribunal said:
Thus, this Tribunal has to be comfortably satisfied, on the balance of probabilities, that there is a reasonable likelihood that the ACAT would find the legal practitioner guilty of unsatisfactory professional conduct, without actually doing so.
[5] [2019] ACAT 57 at [13]
9.In effect, the tribunal, standing in the shoes of the Council, is required to predict the likely outcome of a complaint application by the Council against the solicitor under section 419 of the LP Act, on a test of reasonable likelihood.[6]
[6] Donaghy v Law Society of NSW [2013] NSWCA 154 at [16]
10.However, the tribunal has much wider and more significant powers on appeal under section 416, than the Council has under section 413(2). As the tribunal said in Legal Practitioner 201823 (Eunice Ryan) v Council of the Law Society of the ACT (Ryan):[7]
…Pursuant to section 416(3), it “may make any order it considers appropriate on the appeal”. Pursuant to section 416(4), the Tribunal “may make 1 or more of the orders mentioned in section 425(3)-(5)” which list all the powers available to the Tribunal in response to an application for disciplinary action including an order recommending that the name of the practitioner be removed from the local roll, an order that the practitioner’s local practising certificate be suspended and an order that the practitioner pay a fine of up to $10,000 consequent upon a finding of unsatisfactory professional conduct rather than the maximum of $1,500 that the Council can impose pursuant to section 413. [8]
[7] [2019] ACAT 97
[8] at [13]
11.The tribunal in Ryan observed that the tribunal’s powers under section 416 of the LP Act are in addition to the power under section 68 of the ACAT Act for the tribunal to confirm, vary or set aside the Council’s decision and, if the latter, to make a substitute decision or remit the matter to the Council for reconsideration.[9] I respectfully agree.
Do the rules of evidence apply to an appeal under s 416?
[9] at [14]
12.An important issue is whether the rules of evidence apply to the hearing of an appeal under section 416 of the LP Act. According to my research, the issue does not appear to have received detailed consideration in past decisions of the tribunal.
13.In Ryan, the tribunal decided that the rules of evidence do not apply:[10]
…The Tribunal is not bound to apply the rules of evidence when conducting an application for review of the decision made pursuant to section 413 of the Act, which is in Part 4.5 of the Act. The rules of evidence apply only in relation to an application for disciplinary action under Part 4.7 of the Act comprised of sections 419 – 435.
[10] Legal Practitioner 201823 (Eunice Ryan) v Council of the Law Society of the ACT [2019] ACAT 97 at [28]
14.In reaching that conclusion, the tribunal relied on section 420 of the LP Act, which states that the “ACAT is bound by the rules of evidence in hearing an application under this part” – namely, an application under Part 4.7 of the Act. Section 416 is in Part 4.5 of the Act and therefore section 420 does not apply.
15.The issue was considered in T v Council of the Law Society of the ACT (T),[11] an earlier decision to which the tribunal in Ryan was not taken. In T the tribunal said:[12]
41. Thus, it is possible for this Tribunal, if it found against a practitioner, to impose very harsh disciplinary penalties including making a recommendation that the practitioner’s name be removed from the local roll.
42. The Tribunal does not make such a recommendation lightly, and given the nature of the penalties it is entitled to impose, will only do so after thorough consideration. It is anomalous that, in an appeal such as the current matter involving contested facts, such outcomes could be made available by reference to evidence which would have been inadmissible had the proceedings been brought under part 4.7.
43. The tribunal is of the view that although these proceedings are brought pursuant to part 4.5 of the LP act, in light of the penalties it is entitled to impose pursuant to section 425(3) – (5) the proceedings should be approached as though they had been brought under part 4.7 of the LP act and that the better approach in this matter is that the rules of evidence should be applied
[11] [2014] ACAT 42
[12] at [41]-[42]
16.Thus, in T the tribunal decided the issue on the basis that the tribunal has a discretion whether to apply the rules of evidence in an appeal under section 416 of the LP Act, although the source of that discretion was not explained. As the tribunal’s jurisdiction is entirely statutory, the source of the discretion, if it exists, must be found in legislation relevant to the appeal – i.e., the ACAT Act or the LP Act.
17.It is convenient to consider the ACAT Act first.
18.Section 8 of the ACAT Act states “To remove any doubt, the tribunal need not comply with the rules of evidence applying in the ACT”.
19.It appears to me that the section has two possible meanings.
20.The first and generally accepted meaning, is that the tribunal is not bound by the rules of evidence. A variation on the theme is that the rules of evidence do not apply in the tribunal. The former reflects the prevailing view as to the effect of section 8 expressed in decisions of the tribunal. Thus, where section 8 says that the “tribunal need not comply with the rules of evidence”, the meaning has been understood as the same as if the section said, ‘the Tribunal is not bound by the rules of evidence’. The latter is the form of words appearing in similar provisions applicable to many tribunals established under Commonwealth, State and Territory legislation.[13]
[13] Administrative Appeals Tribunal Act 1975 (Cth) section 33(1)(c) (AAT); Civil and Administrative Tribunal Act 2013 (NSW) section 38(2) (NCAT); Victorian Civil and Administrative Tribunal Act 1998 (Vic) section 98(1)(b) (VCAT); Queensland Civil and Administrative Tribunal Act 2009 (Qld) section 28(3)(b); State Administrative Tribunal Act 2004 (WA) section 32(2)(a) (SAT); Northern Territory Civil and Administrative Tribunal Act 2014 (NT) section 53(2)(b) (NTCAT);
21.The principles that the ACAT applies in dealing with issues of ‘admissibility’ of evidence, where the rules of evidence do not apply, were summarised by President Neate in Sarbandi v Sharif.[14] It is not necessary to repeat them here. It is sufficient to say that the rules of evidence may provide guidance, sometimes strong guidance, whether information provided in oral or written form should be admitted as evidence in a particular matter.[15] On this approach, the tribunal does not have a discretion to apply the rules of evidence, except by analogy, and it would be an error of law for the tribunal to do otherwise.[16]
[14] [2017] ACAT 57 at [52]-[58]
[15] In the matter of Clara (Guardianship) [2019] ACAT 46 at [188]
[16] See also the discussion in J. D. Heydon, Cross on Evidence (LexisNexis Butterworths, 11th ed, 2017) at [1050]-[1070]
22.The second possible meaning is that, although the tribunal “need not” comply with the rules of evidence, in the sense that it is not bound to do so, it may choose to comply with all or some of the rules of evidence in an appropriate application or category of applications. The phrase “need not comply” suggests to me that the tribunal was intended to have a choice or discretion to do the opposite. The decision in T [17] appears to be an example of that approach, although the tribunal did not refer to section 8.
[17] T v Council of the Law Society of the ACT [2014] ACAT 42
23.A discretion arising under authorising legislation for a tribunal to apply all or some of the rules of evidence as it considers appropriate, as an exception to the generally applicable position that the tribunal is not bound by the rules of evidence, is not unprecedented. Section 98(1)(b) of the Victorian Civil and Administrative Tribunal Act 1998 provides that the VCAT “is not bound by the rules of evidence…except to the extent that it adopts those rules…”. Section 28(3)(b) of the Queensland Civil and Administrative Tribunal Act 2009 is to the same effect.
24.An examination of the legislative history of section 8 appears to provide support for the wider meaning I have suggested.
25.The ACT Civil and Administrative Tribunal Bill 2008, as presented, included clause 8 (later enacted as section 8) in the following form:
(1) To remove any doubt, the tribunal need not comply with the rules of evidence applying in the ACT.
(2) However, in exercising its functions, the tribunal must consider –
(a)the desirability of an approach consistent with the rules of evidence in the ACT; and
(b)whether it is practicable to comply with the Evidence Act 1995 (Cwlth) and still give effect to the objects and principles of this Act.
(3) The exercise of a function by the tribunal is not affected by a failure to comply with subsection (2).
26.The Explanatory Statement said about section 8:
The Tribunal is to seek after the substantial merits of the case in accordance with law, but in so doing is not to allow matters of a technical nature to subvert that goal.
These provisions have been designed to allow the tribunal flexibility. In many of the tribunal’s jurisdictions, litigants will be self-represented and unlikely to be concerned about the intricacies of the rules of evidence. In other jurisdictions, parties will be represented.
27.However, subsections (2) and (3) were removed by a government amendment. The Supplementary Explanatory Statement explained the reason for the change:
Subsection 8(1) provides that the tribunal need not comply with the rules of evidence under the Commonwealth Evidence Act 1995. It reflects the existing law applying to ACT tribunals (other than in relation to legal disciplinary matters, where the rules of evidence are expressly retained).
Subsection 8(2) was originally provided as a ‘signpost’ provision to the Tribunal, encouraging it to consider the desirability of an approach consistent with the rules of evidence in the ACT. The exercise of a function by the tribunal was not affected by a failure to comply with subsection (2).
On balance, following comments on the bill, while subsections (2) and (3) probably reflect ACT law, it would be better not to include these provisions in the Act as they may encourage parties to request the Tribunal to undertake such an analysis as a means of preserving appeal rights and facilitate technical legal challenges and appeals and the adoption of delaying tactics to parties so minded.
As there is already a considerable body of law dealing with the application by tribunals of rules of evidence, the government’s view is that this provides sufficient legal protection for parties – without the need for subsections 8(2) and (3).
28.As I read the Explanatory Statements, prior to the government’s amendment, it was intended that the tribunal need not comply with the rules of evidence, but may do so, as a matter of discretion, to the extent the tribunal considered appropriate in a particular application or category of applications. That may explain why the phrase “need not comply” was adopted instead of “is not bound by”. However, subsection 8(2) went further by requiring the tribunal to consider whether it was “desirable” and “practicable” to do so whenever it was “exercising its functions”. Potentially, that could require the tribunal to consider the matters under section 8(2) in virtually all applications made in the tribunal’s diverse jurisdictions. The risk that this could be manipulated to create opportunities to mount legal challenges and appeals and cause unnecessary delay, appears to have been the primary reason for removing subsections (2) and (3).
29.However, I do not detect, either in the decision to remove the subsections, or in anything said in the Supplementary Explanatory Statement, evidence of a legislative intention to depart from the original intention to invest the tribunal with a discretion to comply with all or some of the rules of evidence as it considers appropriate in a particular application or category of applications. It seems to me, the effect of removing the subsections was intended to do no more than to relieve the tribunal of the burden of possibly being required to consider whether the discretion should be exercised whenever the tribunal exercised its functions. If the legislature intended to do an ‘about face’ it might be expected to have done so simply by stating that ‘the tribunal is not bound by the rules of evidence’, a form of words that had an established and uncontroversial meaning.
30.Thus, as I see it, the interpretation of section 8 involves a constructional choice whether:
(a)the tribunal is not bound by the rules of evidence and has no discretion to apply the rules, except by analogy in accordance with settled principles; or
(b)the tribunal need not apply the rules of evidence but has a discretion to do so to the extent it considers appropriate in a particular application or category of applications.
31.Fortunately, I am not required to make that choice here. Should the issue arise in the future it will be necessary to consider which meaning should be preferred, applying the principles of interpretation in Chapter 14 of the Legislation Act 2001, and section 139 of that Act in particular.
32.It is sufficient for my purposes to assume without deciding that ACAT may have a discretion to apply all or some of the rules of evidence in an appropriate application or category of applications pursuant to section 8 of the ACAT Act.
33.It is nevertheless clear that section 8 cannot be a source of discretion for the tribunal to apply the rules of evidence in an appeal under section 416 of the LP Act. That is because section 434 of the LP Act states that section 8 of the ACAT Act does not apply in relation to a “proceeding under this Act”. An appeal under section 416 of the LP Act is a “proceeding under this Act” within the meaning of section 434.
34.The LP Act was amended in 2008 by the ACT Civil and Administrative Tribunal Legislation Amendment Act 2008, including by inserting a new section 416 and Part 4.7,[18] which included sections 420 and 434 in their present form. The Explanatory Statement sheds little light on the purpose of the amendments, except to say that provision is now made for the ACAT to review specified administrative decisions in the LP Act, which previously were brought before the Administrative Appeals Tribunal.
[18] amendment [1.391]
35.If section 8 of the ACAT Act does not apply and section 420 of the LP Act also does not apply (because an appeal under section 416 is not an application under Part 4.7) the question remains whether the tribunal is bound, or not bound, by the rules of evidence in an appeal under section 416 and, if so, why. The tribunal does not have inherent jurisdiction and therefore has no power to decide whether to apply, or disregard, the rules of evidence unless it is given that power by legislation. As section 416 appears to be the only possible source of power, the answer to the question must be found there.
36.When section 8 is read with section 416 of the LP Act, the result is a double negative – namely, the tribunal need not comply with the rules of evidence, but not in a proceeding under the LP Act.
37.As observed earlier, whether the tribunal is bound, or not bound, by the rules of evidence, or can choose to apply the rules of evidence even if it is not bound to do so, the source of the tribunal’s power to do any of those things must be found in legislation. By removing section 8 of the ACAT Act as a source of power to decide what evidence the tribunal may admit in proceedings under the LP Act, section 434 creates a void which can be filled only if the section is given a meaning that provides the tribunal with an alternative source of power in relation to matters of evidence. That approach to working out the meaning of the section is necessary to comply with the requirement in section 139(1) of the Legislation Act 2001 to prefer an interpretation that would best achieve the purpose of the Act.
38.Although a double negative may be a source of ambiguity, in this case I think the intended meaning is tolerably clear – i.e., the tribunal need not comply with the rules of evidence except in a proceeding under the LP Act. In other words, the tribunal is bound by the rules of evidence in hearing an appeal under section 416.
39.The following considerations, in my view, support that interpretation.
40.First, under section 413(1)(b) the Council must be satisfied that there is a reasonable likelihood that the practitioner will be found guilty by the tribunal of unsatisfactory professional conduct, but not professional misconduct. In Legal Practitioner M v The Council of the Law Society of the ACT, [19] Senior Member Lunney said “the task of the Council, and therefore the present Tribunal, is to weigh the strength of the evidence with the ultimate objective of assessing the probability of outcome”. As the tribunal is bound by the rules of evidence in an application under Part 4.7 of the Act, in undertaking that task the Council must, at the very least, consider whether there is, or is likely to be, admissible evidence to support such a finding. The tribunal, standing in the shoes of the Council for the purposes of an appeal, must do the same.
[19] [2013] ACAT 42
41.Second, in weighing the strength of the evidence with the ultimate objective of assessing the likelihood that the tribunal will find the practitioner guilty of unsatisfactory professional conduct, the Council, and the tribunal on appeal, must apply the principles set out in Briginshaw v Briginshaw [1983] HCA 34.[20]
[20] Legal Practitioner ‘M’ v Council of the Law Society of the ACT [2015] ACTSC 312 at [147]; Legal Practitioner LP 201901 (David Lander) v Council of the Law Society of the ACT [2019] ACAT 57 at [13]; Byrne v Council of the Law Society of the ACT [2015] ACAT 19 at [46]-[48]
42.In that context, it is useful to remind oneself of what the High Court said in Briginshaw. Latham CJ said that “The standard of proof…will naturally vary in accordance with the seriousness or importance of the issue.”[21] Rich J said, “The nature of the allegation requires…the careful weighing of testimony, the close examination of facts proved as a basis of inference and a comfortable satisfaction that the tribunal has reached both a correct and just conclusion”.[22] Dixon J said:[23]
…The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of the given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters “reasonable satisfaction” should not be produced by inexact proofs, indefinite testimony, or indirect references.
[21] [1938] HCA 34; (1938) 60 CLR 336 at 343
[22] ibid. at 350
[23] ibid. at 361
43.In my view the requisite state of satisfaction on the issue of ‘reasonable likelihood’ cannot be attained by the Council, and by the tribunal on appeal, if the evidence on which the assessment is made would not be admissible in an application under Part 4.7 of the Act.
44.Third, although the tribunal’s primary task on appeal is not to find whether the practitioner is guilty of unsatisfactory professional conduct, the extensive powers given to the tribunal by sections 416(3), 416(4) and 425(3) to (5) mean that the tribunal may decide not to limit its consideration on appeal to the issue whether there is a reasonable likelihood of a finding of guilt, and instead, subject to complying with the requirements of procedural fairness, may determine the issue of guilt as if an application had been made under Part 4.7 of the Act. As has been noted in other decisions of the tribunal, the outcome of an appeal under section 416 can result in the tribunal imposing “very harsh disciplinary penalties including making a recommendation that the practitioner’s name be removed from the local roll”.[24] The tribunal in T decided that, considering the penalties that could be imposed under section 425(3) to (5), the tribunal should apply the rules of evidence as a matter of discretion. While I respectfully disagree that the tribunal had any discretion in the matter for the reasons explained earlier, in my view, the matters that the tribunal considered in T provide a compelling reason why an interpretation of section 416 that requires the tribunal to comply with the rules of evidence should be preferred.
[24] T v Council of the Law Society of the ACT [2014] ACAT 41 at [41]-[43]; see also Legal Practitioner 201823 (Eunice Ryan) v Council of the Law Society of the ACT [2019] ACAT 97 at [13]
45.After some discussion, the parties agreed that the appeal should be conducted on that basis.[25]
The evidence
[25] Transcript of proceedings on 22 April 2021, page 2 line 30 – page 3 line 40
46.The evidence on the appeal comprised:
(a)witness statement of Mr Smith, dated 7 April 2021 (Exhibit A1);
(b)witness statement of Mr F, a legal practitioner, dated 21 April 2021 (Exhibit A2);
(c)bundle of supplementary Tribunal documents, filed on 26 March 2021 (Exhibit A3);
(d)originating application in the ACT Supreme Court, dated 22 April 2019 (Exhibit A4);
(e)Statement of Agreed Facts (Exhibit R1);
(f)affidavit of Ms D, affirmed on 19 April 2021 (Exhibit R2)
(g)affidavit of Mr D, affirmed on 21 April 2021 (Exhibit R3);
(h)bundle of Tribunal documents filed on 11 December 2020 (Exhibit R4).
47.All the evidence was tendered without objection. Mr Smith gave oral evidence and was cross-examined. Mr F, Ms D and Mr D were not required for cross-examination.
Background
48.Mr and Ms D are businesspeople and became clients of Mr Smith in about March 2005. Ms D is the granddaughter of former clients of Mr Smith’s firm, for whom he acted for many years until the grandfather’s death in 2016 and the grandmother’s death in 2019. Upon their death Mr Smith became a co-trustee with Ms D’s mother and aunt of a testamentary family trust he had established on instructions from the grandparents.[26] I will explain the relevance of those circumstances to this case later.
[26] Exhibit A1 paragraphs 1-4
49.On 15 May 2008, Mr Smith opened a security packet file on Mr and Ms D’s instructions to receive the certificate of title and contract of sale in respect of a recently completed transaction and, not long after, he prepared wills and enduring powers of attorney for his clients, which he lodged, together with a contract for sale of a property purchased jointly with another couple, in the security packet.
50.Mr Smith said that when he received instructions from Mr and Ms D to hold documents on their behalf, he told them he would bill for any advice provided or work of a miscellaneous nature the firm was asked to do on their behalf.[27] Mr and Ms D denied this in their affidavits but were not cross-examined.[28] Mr Smith maintained under cross-examination that he had given the abovementioned advice to Mr and Ms D[29] and that a file note of the conversation would have been placed on the file relating to the purchase in June 2008. The file, however, had been destroyed in the usual course.[30] When asked whether he could exclude the possibility that he was wrong, Mr Smith replied that, although “anything’s possible”, it was “[v]ery unlikely because my practice has been for 30 years, whenever I’m given documents by clients to have the discussion I’ve referred to.”[31]
[27] Exhibit R4 page 19
[28] Exhibit R2 paragraph 6; Exhibit R3 paragraph 2
[29] Transcript of proceedings on 22 April 2021, page 69 line 41 to page 71 line 14
[30] The evidence established that files were archived for 7 years and later destroyed [exhibit 4, page 31]
[31] Transcript of proceedings on 22 April 2021, page 70 line 35-37
51.Between 2005 and 2019, Mr Smith acted for Mr and Ms D, or one or other of them, in about ten property transactions. A new file was opened for each matter, work was done, and tax invoices were rendered and paid.
52.In 2012, Mr and Ms D requested that further documents be added to the security packet. Although the statement of agreed facts says this was the last request of that kind,[32] the evidence suggests otherwise.[33]
[32] Exhibit R1 paragraph 8
[33] See Exhibit A3 page 96 which shows that certificate of title for a property in Deakin was added on 15 September 2015 and permanently removed on Ms D’s instructions on 5 April 2016
53.From time to time in the following years, the firm wrote to Mr and Mrs D providing an updated list of documents held in the security packet, asking them to advise whether any documents should be destroyed or added to the packet and providing general advice in relation to updating their wills, confirming their instructions not to release their powers of attorney, and making recommendations to maintain an up-to-date capital gains tax register of investments and adequate life insurance.
54.From time to time, the clients instructed Mr Smith to provide advice or do other legal work of a miscellaneous nature.
55.On 24 January 2019, Mr Smith wrote to Mr and Ms D advising that upon documents being uplifted, or the security packet being closed, Mr Smith would charge for document storage and other specified services. These included writing to Mr and Ms D every three years prompting them to review an updated document register and advise whether any documents may be destroyed or needed to be amended in light of changing personal business circumstances; carrying out any instructions to receipt out or insert additional documents in the security packet; providing advice of a miscellaneous nature requested by Mr and Ms D over time; carrying out any other work or providing legal services on instructions where it may not be cost-effective to open a separate file; and carrying out other work in accordance with Mr and Ms D’s instructions. The letter concluded with the statement that “To confirm your continuing acceptance of our terms of engagement in this matter, please sign and date the attached copy of this letter and return it to our office”.[34]
[34] Exhibit A3 page 134-5
56.Having received no response to the letter, Mr Smith sent follow-up letters to Mr and Ms D on 12 March 2019[35] and 26 March 2019.[36] In the later letter Mr Smith invited Mr and Ms D to return a signed copy of the 24 January 2019 letter, or provide instructions to receipt out all the documents in the security packet, invoice them for any work carried out on the security packet and then close the security packet.
[35] Exhibit A3 page 136
[36] Exhibit A3 page 137
57.Despite Mr Smith having had a long professional association with several generations of the family, it appears that the relationship eventually soured. In March 2019, Mr Smith was removed and replaced as co-trustee of the testamentary family trust by Ms D’s mother and aunt purporting to act under a power given to them by the trust deed. The removal may have been a response by Mr Smith’s co-trustees to his request for an explanation for several possibly unauthorised financial transactions involving significant amounts of money that Mr Smith considered belonged, or should belong, to the trust.[37] In the particular circumstances surrounding his removal, Mr Smith considered it was appropriate to challenge the validity of his co-trustees’ actions.[38] On 12 April 2019, Mr Smith instructed a firm of solicitors (not his own) to commence proceedings in the ACT Supreme Court.[39] Counsel was instructed and an originating application was filed in the Supreme Court on 23 April 2019.[40]
[37] Exhibit A4, Grounds of application, paragraphs 1-7
[38] Exhibit A1paragraph 4
[39] Exhibit A2, paragraph 2
[40] Exhibit A4
58.Ms D emailed Mr Smith on 21 April 2019, advising that they no longer wished him to hold their documents and asked that he provide in writing the cost to receipt and return all the documents to them.[41] In circumstances where he had commenced proceedings relating to the trust, Ms D considered it was no longer appropriate that he should hold documents on her and her husband’s behalf.[42]
[41] Exhibit A3 page 138
[42] Exhibit R2 paragraph 10
59.Mr Smith replied to Ms D’s email on 6 May 2019, advising that an authority to release was required from Mr D as well because the security packet was held in joint names. He advised that the documents would be released upon receipt of the authority and payment of a tax invoice dated 6 May 2019 which was attached.[43]
[43] Exhibit R4 page 14
60.The tax invoice was for $711.29, comprising legal costs of $500, disbursements of $146.63 and GST. This was the first and only bill issued on the security packet file since it was opened. The bill was in a lump sum form and included the following particulars of the legal services:[44]
[44] Exhibit R4 page 10
Instructions to attend to miscellaneous matters on your behalf during the period July 2008 to date including:-
· recording documents into the Security Packet Document Register, preparing and forwarding Document Registers to client;
· telephone discussion with client on 18 July 2008 when you instructed us to release your title deed for your Curtin property to the Commonwealth Bank;
· preparing and forwarding our letter to client dated 18 July 2008 enclosing an authority to release the signature;
· preparing and delivering by hand to Manuka Branch our letter to the Commonwealth Bank of Australia enclosing original title deed for your Curtin property;
· preparing and forwarding our letters or copy documents to client dated 6 March 2012, 23 August 2012, 30 March 2016, 17 January 2019, 21 January 2019, 24 January 2019, 12 March 2019 and 26 March 2019;
· telephone conference with [Mr D] on 26 June 2014 regarding parties to a business promotion reneging on their contractual agreement;
· reading email from [Mrs D] dated 24 October 2016 and advising by telephone;
· reading email from [Ms Q] dated 15 June 2017 attaching an employment contract for [Mrs D], reading the employment agreement and advising [Ms Q] by telephone on 15 June 2017 in respect of that contract;
· telephone discussions with client on 18 July 2008, 26 April 2014, 30 March 2016, 31 March 2016, and 27 October 2016
· receipting all documents out of this Security Packet and handing those documents to clients in accordance with our instructions.
To our professional fees on a solicitor/client basis $750.00 inclusive of GST but reduced on the basis of payment in accordance with our usual terms to $550.00 inclusive of GST. [original emphasis]
61.The Pre-Billing Guide for the security packet file shows that unbilled WIP (work in progress) for the period 15 May 2008 to 8 April 2019 stood at $1,203.03 excluding GST.[45] Of that amount, $404.07 was for work done more than 6 years before the date of the invoice. The balance of $798.96 was for work done in the 5-year period commencing on 26 June 2014. I discuss the significance of this later. It is apparent, however, that Mr Smith significantly discounted his costs, although the extent to which he did so was not fully apparent from the invoice.[46]
[45] Exhibit A3 page 141-143
[46] Exhibit A3 page 146-151
62.Ms D wrote to Mr Smith about the invoice on 18 June 2019, querying the delay in charging for some work, whether some work was properly chargeable and the hourly rate at which the work was charged.[47] Ms D disputed the cost of legal services but accepted the disbursements. The following examples give the flavour of the letter:
…However, there are items contained in the invoice that are unrelated to our security packet and have never been disclosed or charged within a reasonable time in which they occurred.[48]
[In reference to work done in 2008] …According to your schedule this should have been billed at between $110 and $220 per hour. I noted that for these miscellaneous items you are charging $550 per hour…It is stated that records are usually destroyed within 7 years of a tax invoice, however you will note that this discussion took place 11 years ago. Well outside of a reasonable time to charge for such period…. At no point, 11 years ago, did you disclose that those actions would be charged for anytime in the future.[49]
[In reference to letters sent in 2019] The letter dated 24 January, 2019 were a direct duplicate of the letter dated 17 January 2019. The letters dated 12 March 2019 and 26 March 2019 were following up on the letter dated 24 January 2019. On what grounds should I pay for the direct duplicates of letters when there was hardly appropriate time in between letters to send and receive, read, acknowledge and act upon?... How do you cost for preparing and forwarding letters that have been previously written and simply a duplicate and re-posted?[50]
[In reference to the telephone conference with Mr D on 26 June 2014] Please clarify why this conversation was not disclosed as billable and billed in a reasonable period at the time of the conversation?[51]
[In reference to the advice by telephone to Ms D on 24 October 2014] Please clarify why this email conversation was not disclosed as billable and billed in a reasonable period at the time of the email?[52]
[In reference to the advice by telephone to Ms Q on 15 June 2017] Please clarify why this conversation was not disclosed as billable and billed to either [Ms Q] or [Ms D] in a reasonable period at the time of the email?[53]
[In reference to telephone discussions between 2008 and 2016] Please clarify the nature and duration of the telephone conversations… Please clarify why these conversations were not disclosed as billable and billed in a reasonable period after the time of the conversations?[54]
[47] Exhibit R4 page 6-9
[48] Exhibit R4 page 6
[49] Exhibit R4 page 7
[50] Exhibit R4 page 7
[51] Exhibit R4 page 7
[52] Exhibit R4 page 8
[53] Exhibit R4 page 8
[54] Exhibit R4 page 8
63.In conclusion, the letter stated:[55]
Your fees in 2008, vary between $110-$330 per hour. Should you have advised and charged me accordingly at the time of receiving those services I would have been liable for the fees at the receiving of those services. I would have been happy to pay for those services should you have disclosed and bill [sic] accordingly at the time. However, your tax invoice is billing for services up to 11 years ago at today’s rate of $550/hr. The charging of 11 years later at today’s hourly rate seems grossly unreasonable and unprofessional. [John], I am more than happy to pay for services we have utilised, albeit without notification of you charging for them at the time. I would agree to anything within 3 years plus the disbursements for releasing our security packet. I feel this is fair and reasonable under the circumstances that I was not advised at any time of these potential charges. It would be reasonable for me to pay those services at the rate in which was charged [sic] at the time of receiving those services.
…
I wish not to refer your unreasonable miscellaneous items contained within tax invoice #...to the Law Society for review by the professional standards committee. I am willing to negotiate a fair and reasonable review of this invoice to close the matter. On advice, I reject any attempt to charge for clarifying this invoice.
[55] Exhibit R4 page 8-9
64.There are obvious errors in the letter, not least the claim that services performed years earlier were being billed at the rate of $550 per hour. The bill cannot reasonably be read that way. Any legitimate doubt the clients might have had about that could have been resolved by a phone call if they had chosen to act reasonably as one might expect from a long-standing client of the firm. The fact that they escalated the matter by threatening to complain to the Law Society and then doing so, in my view says more about the clients’ unreasonable attitude than it does about Mr Smith’s conduct in rendering the bill. The only possible explanation for their behaviour that I can see is antagonism towards Mr Smith following his commencement of proceedings against Ms D’s mother and aunt. While the clients’ motive in bringing a complaint against Mr Smith is irrelevant to the issue whether his conduct breached relevant standards, to the extent that their evidence may be material to any contested issue of fact it must necessarily be viewed with considerable caution, particularly where a decision is called for on the papers.
65.Mr Smith commenced drafting a detailed response to Ms D’s letter, which he had not finalised before he went on leave.[56] His return to work coincided with Ms D filing a complaint with the Law Society on 5 July 2018.[57] Mr Smith provided a copy of his draft response to the Law Society during its investigation of the complaint.[58] The draft letter included an offer to withdraw the tax invoice and provide an itemised tax invoice for the miscellaneous advice work and other work carried out.
[56] Exhibit A1 paragraph 5
[57] Exhibit R4 page 1
[58] Exhibit R4 pages 19-24
66.In her complaint, Ms D stated:[59]
I requested my security packet and its contents to be released on 21 April 2019. My [and] my husband’s wills, POA, lease [and] an old contract for sale were contained in the Security Packet. The costs to retain, destroy or collect were outlined. However my solicitor has added $550 worth of “Miscellaneous Items” from the past 11 years to my invoice on request of releasing our security packet. At no point in the past 11 years did [Mr Smith] disclose those encounters would be charged for. I have many invoices that have been fully paid over this period and cannot understand why he is charging me now for claims from 2008 to 2017.
[59] Exhibit R4 page 4
67.The Law Society notified Mr Smith of the complaint by letter dated 19 July 2019.[60] The letter informed him of a preliminary decision to further assess and investigate whether there had been inappropriate and excessive charging of legal costs and a failure to act in good faith and sought his response in writing.
[60] Exhibit R4 page 16-18
68.Mr Smith responded by letter dated 14 August 2019:[61]
Mr and Ms [D] were orally advised at the time they instructed this firm to hold documents as part of this file that they would be billed for any advice provided or work of a miscellaneous nature that this firm was asked to carry out on their behalf.
At the time this advice was given there was no requirement to provide written Cost Disclosure.
Separately, one of Mr and Ms [D] instructed this firm to provide advice or attend to work of a miscellaneous nature inter alia on the following dates:
[61] Exhibit R4 page 19
69.The letter gave details of the instructions and included supporting documents as attachments. Mr Smith explained:[62]
(c) The matter has been a current file since 2008 and so far as the writer is aware he is under no legal obligation to interim bill such a long running current file.
In terms of the specific dates referred to in your letter I advise:[details followed]
…
However, in preparing the Tax Invoice I reviewed all advice provided or work carried out and: –
(i)chose not to charge some items of work on the file that were billable;
(ii)identified work which I considered not chargeable but referred to that work in the Tax Invoice to properly inform the clients of the totality of work carried out on the file; and
(iii)chose to discount the chargeable time by an amount I considered appropriate.
[62] Exhibit R4 page 20-21
70.There were further written communications between the Law Society and Mr Smith in connection with the investigation. It is not necessary to refer to them here. It is sufficient to record that Mr Smith gave a full and frank account of his dealings with Mrs and Ms D and explanation for his actions and cooperated fully with the Law Society’s investigation.
71.In a letter to the Law Society dated 29 June 2020, Mr Smith advised that although he maintained his entitlement to press for payment of the invoice, he did not intend to do so. However, quite properly, Mr Smith requested specifically that the Council not take that intention into account in its determination of the complaint.
72.The Council notified Mr Smith of its decision to issue him with a public reprimand and fine by letter dated 1 October 2020. [63]
[63] Exhibit R4 page 60
73.On the issue of unlawful charging of costs, the Council found:[64]
The invoice rendered on 6 May 2019 contains items which relate to provision of two distinct services by [Mr Smith] to [Mr and Ms D]. Items 1 and 10 relate to services rendered in respect of the security packet and items 2 to 9 relate to the provision of ‘miscellaneous services’.
The Council is satisfied that the items do not constitute overcharging. Rather, they are reflective of expenses that have been reasonably and necessarily incurred in the provision of legal services requested by Mr and Ms D.
Council is also satisfied that the items were charged at the applicable charge out rate. As such, these items do not constitute overcharging.
[64] Exhibit R4 page 68-69, paragraph 28-30
74.The Council found that a disbursement charge of $59 (excluding GST) for document storage amounted to unlawful charging in the absence of prior written agreement by the clients in accordance with rule 16. While the Council was satisfied that the solicitor had committed a technical breach of the rule, it considered that the breach did not warrant any further consideration or disciplinary response. It is not necessary to say anything more about that.
75.However, in relation to the conduct of issuing an invoice covering a period of 11 years, the Council said: [65]
Mr [Smith] in broad terms submitted that rendering a bill well after the event for incidental legal work is neither unlawful nor warranting of any disciplinary intervention. He further submitted that it is not efficient to render an invoice for a small amount each time work is performed. While the Council accepts that is the case, a difficulty with this practice, and especially where, as here, [Mr Smith] acknowledges that he has destroyed old files and earlier accounts, means that there is a risk of repetition in charging and no way to review the previous invoices. For that reason, the Council is of the view that the practice ought not be condoned.
On balance and in the absence as here, of primary documents, the Council is satisfied that the conduct of issuing an invoice covering a period of 11 years constitutes a failure to act in the best interests of the clients in breach of rule 4.1.1.
[65] Exhibit R4 page 70, paragraph 38, 39
76.The Council referred to the definition of unsatisfactory professional in section 386 of the LP Act:[66]
The statutory definition of unsatisfactory professional conduct set out in section 386 includes conduct that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent practitioner. It comprehends behaviour that is not so significant that it can be described as disgraceful but is, nevertheless, of a standard less than the standard that a member of the public is entitled to expect from a professional person.
[66] Exhibit R4 page 71, paragraph 41
77.The Council was satisfied that the breach of rule 4.1.1 constituted unsatisfactory professional conduct within the meaning of section 386 of the Act and that there was a reasonable likelihood that Mr Smith would be found guilty by the ACAT of unsatisfactory professional conduct only. As the Council was satisfied that Mr Smith was generally competent and diligent, the Council determined that it was appropriate to deal with the matter summarily under section 413 of the Act.[67]
The solicitor’s statement as to the correct and preferable decision and orders
[67] Exhibit R4 at page 71-72, paragraph 44, 52-53
78.The solicitor submitted that the Tribunal cannot be satisfied that there is a reasonable likelihood that the ACAT will find the solicitor guilty of unsatisfactory professional conduct because he failed to act in the best interests of the client, in breach of rule 4.1.1, by rendering an invoice covering a period of up to 11 years before the date of the invoice.
79.The primary reason given was that that rule 4.1.1 applies only where a legal solicitor “represents” the client in a matter. Rule 4.1.1 does not apply in this case because the solicitor dealt only with the clients and did not represent them “in relation to another party or in litigation”.[68]
[68] Applicant’s Statement of the Correct or Preferable Decision and Orders filed on 19 January 2021, paragraph 3
80.In the alternative, if the rule applies, the solicitor submitted the Tribunal cannot be satisfied that there is a reasonable likelihood that the ACAT will find that the solicitor failed to act in the best interests of the client, in breach of rule 4.1.1, in the following circumstances:
(a)The clients did not complain about the lateness of the invoice, other than in relation to their belief that work was charged for at current rates, rather than the rates that applied when the work was done.
(b)The solicitor charged for the work at rates that applied when the work was done, as the Council found.
(c)There is no general or legal ethical requirement for a solicitor to notify a client that the solicitor will charge for work done, other than as required by specific costs rules.
(d)Further, there is no general or legal ethical requirement for a solicitor to issue an invoice for work done at any time after the work is done.
(e)This is not a case where the clients expected to be invoiced at an earlier time and were disadvantaged because of the lateness of the invoice.
(f)It was reasonable for the solicitor to believe that the clients would not be disadvantaged, having acted for them and their broader family for some decades.
81.The solicitor contended that the proper order should be that the decision of the Council is set aside, and a substitute decision is made dismissing the complaint pursuant to section 412 of the LP Act.[69]
The Council’s notice of contention
[69] The orders the ACAT may make where it reviews a decision are set out in section 68(3) of the ACAT Act
82.Whilst supporting the correctness of the original decision, by a notice of contention filed on 15 March 2021, the Council contended that it was open for the Tribunal to find that the solicitor’s conduct amounted to a breach of the common law duty to treat his clients fairly and in good faith (the common law duty).
83.The Council submitted that breach of the common law duty was established by the following circumstances:
(a)The clients contended that Mr Smith never advised them that he would charge for miscellaneous work performed.
(b)The clients complained that some of the charges fell “well outside of a reasonable time to charge” and asked the solicitor to advise why certain charges were not “billed in a reasonable time” after the relevant email and conversation.
(c)Between 2008 and 2019, Mr Smith rendered at least 10 tax invoices to the clients in relation to other matters and therefore had both opportunity and a basis for rendering a charge.
(d)Mr Smith had earlier rendered a bill for $33 for an item inadvertently missed from a tax invoice. In those circumstances, it was reasonable for the clients to assume that the solicitor would render small bills if billable work was completed.
(e)Even if it is accepted that the solicitor advised the clients that he would render a bill in relation to the security packet file, no documents were lodged after 2012. Instead, Mr Smith’s tax invoice covered miscellaneous billable work that the clients were entitled to expect would be billed shortly after the work was done.
(f)The solicitor had destroyed old files and earlier accounts[70] creating a risk of repetition in charging and no way to review previous invoices unless they were retained by the clients.
(g)The clients had no record of the documents in question, or any independent recollection of the telephone calls, to enable them to challenge the charges.
[70] The Council did not suggest that Mr Smith had done anything improper by doing so. In a letter to the Council dated 30 October 2019 [exhibit R4 page 31] Mr Smith explained that each of the files had been archived for more than seven years and subsequently was destroyed.
84.The Council submitted that the correct and preferable decision in those circumstances remained for the Tribunal to conclude the complaint summarily pursuant to section 413 of the LP Act and impose the same sanctions as the Council had done – namely, publicly reprimand the solicitor and fine him the sum of $1,500.
The solicitor’s response to the Council’s notice of contention
85.The solicitor submitted that, in the absence of objective criteria, establishing what is a reasonable time within which costs must be billed necessarily was a subjective undertaking.[71] The solicitor noted that the clients’ primary concern about delay in billing did not relate to the delay as such, but rather to the ‘fact’ that they were being charged at current rates for historical matters. Further, the clients accepted liability to pay for the work and were willing to do so provided the appropriate rate was applied.[72]
[71] Submissions of the Applicant filed on 16 April 2021, paragraph 7
[72] Submissions of the Applicant filed on 16 April 2021, paragraph 8-9
86.Expanding on that theme, the solicitor submitted:[73]
The attempt to identify a period of time as a first step in determining whether there has been a breach of a practitioner’s ethical duty is misguided. The context and the circumstances in which the ethical duty is to be applied must first be understood as it is a general standard intended to apply across a wide variety of circumstances. Only then can the ethical significance of particular conduct be understood.
[73] Submissions of the Applicant filed on 16 April 2021, paragraph 13
87.In support of that submission, the solicitor relied on the following statement by Allsop P in Macquarie International Health Clinic v Sydney SW Area Health Services:[74]
The standard of fair dealing or reasonableness is to be applied recognising the different interests of the parties and the lack of necessity for parties to subordinates their own interests to those of the counterparty. That a normative standard is introduced is clear. That is what the commercial parties choose by the words. The normative standard of good faith will not call for the same acts of all contracting parties in all cases. The legal norm should not be confused with the factual question of its fulfilment or breach. The contractual and factual context is vital to understand what, in any case, is required to be done or not done to satisfy the normative standard.
[74] [2010] NSWCA 268 at [17]
88.The solicitor then sought to develop an ‘interests matrix’ relating to a solicitor’s duty to act fairly and in good faith in relation to billing a client for work done, the purpose of which was to enable one to see “how and where the interests of the parties fall, consistently with the desired balance expressed by the duty, enable[ing] objective judgements to be made on the question whether particular conduct fulfils or is in breach of the duty”.[75]
[75] Submissions of the Applicant filed on 16 April 2021, paragraph 19-20
‘fairly’ entails that
a.the practitioner will charge
i.at an agreed time (if any)
ii.at a time
1.which is convenient and economical for the practitioner
2.but not so frequently as to be inconvenient for the client
iii.in a manner that identifies the work done and which can be verified by the client/practitioner
b.the practitioner will not charge
i.an amount which is too much, either
1.overall, or
2. at any one time for the client to be able to manage without difficulty or stress/anxiety
ii.at a time which causes financial difficulty or stress/anxiety
iii.other than for
1.proper legal/legal support services
2.services requested
‘in good faith’ entails that
c.the practitioner has genuinely anticipated difficulties that the client may encounter as a result of receiving the invoice, and has allowed for them
d.the practitioner has proper records from which the invoice has been generated
e.in the event that the client has unanticipated difficulties the practitioner
i.is willing to listen to any concerns raised by the client
ii.is able and is willing to provide any explanation sought by the client
iii.is willing to agree to postponement, or a timetable for payment as appropriate
89.Applying that approach, the respondent emphasised that the clients had not said that they were disadvantaged, or in any way put out or inconvenienced by the rendering of the invoice and submitted:[76]
By reference to the interests matrix…it can be said that the applicant appears not to have done anything in breach of, but rather to have fulfilled (not perfectly but substantially), the duty. The evidence of the applicant was that he was not oblivious to the possibility of disadvantage, but felt that he knew the clients well enough that it would not be a concern in their case. The clients have not pointed to any disadvantage other than their belief that they have been charged at current rates – a mistaken belief, as the respondent acknowledges.
[76] Submissions of the Applicant filed on 16 April 2021, paragraph 23, 26
90.In conclusion, the solicitor submitted:[77]
11 years is a long period of time. Its length, however, is not of any significance unless it gives rise to material consequences which are indicative of unfairness or lack of good faith. Here, the applicant had reason to think he was acting fairly – he had maintained good records of the work done and the time involved, the invoiced amount was modest, and the clients were experienced business people for whom payment would not be a problem. And, in the event, the clients have not been disadvantaged. The respondent’s case against the applicant principally rests on subjective opinion as to what is a reasonable time in which a practitioner should render an invoice.
The submissions at the hearing
[77] Submissions of the Applicant filed on 16 April 2021, paragraph 30
91.The Council submitted that a solicitor has an ethical obligation to render a bill within a reasonable time, or reasonably promptly, after providing legal services to a client. The existence of the ‘rule’ does not depend on the terms of any contract between the solicitor and the client. Rather, it is an ethical ‘rule’ of general application having one of three possible sources. [78]
[78] Transcript of proceedings on 22 April 2021 at pages 26 line 43-46; page 94 line 13-36
92.First, the Council submitted that the requirement to bill within a reasonable time, or reasonably promptly after providing a service, arises from a solicitor’s ethical obligation under rule 4.1.1 to “act in the best interests of a client in any matter in which the solicitor represents the client”. Unreasonable delay in rendering a bill was said to be not ‘in the best interests of a client’ and therefore a breach of the rule.
93.Second, the Council submitted (for the first time at the hearing) that it was implicit that discharge of a solicitor’s ethical obligation under rule 4.1.3 to “deliver legal services, competently, diligently and as promptly as reasonably possible”, required that the solicitor should render a bill for the services within a reasonable time of performing the services, or reasonably promptly after doing so. [79]
[79] Transcript of proceedings on 22 April 2021 at pages 24 line 17 to page 26 line 46; page 39 line 36-47; page 45 line 37-45; page 52 line 10 to page 53 line 7
94.Third, the Council submitted that the ‘rule’ arises as an expression of a solicitor’s ethical duty at common law to treat the client fairly and in good faith.[80]
[80] Transcript of proceedings on 22 April 2021 at pages 19 line 6 to page 20 line 5
95.The rationale for the ‘rule’ was said to be that it is to a client’s benefit to achieve finality in a matter, and delay in rendering a bill may make it more difficult for the client to exercise a right to challenge the bill.[81]
[81] Transcript of proceedings on 22 April 2021 at page 38 line 29-45
96.The Council submitted that breach of the ‘rule’ does not depend on proof that the client has been disadvantaged, or on the size of the bill. The Council submitted that a breach of the ‘rule’ occurs whenever a solicitor fails to render a bill within a reasonable time, or reasonably promptly after providing a service, regardless whether the client is disadvantaged, and whether the amount involved is small.[82]
[82] Transcript of proceedings on 22 April 2021 at pages 22 line 13-36
97.The Council accepted that there had never been an instance where a solicitor had been found guilty of unsatisfactory professional conduct or professional misconduct for breach of such a ‘rule’ and, in that sense, the case against Mr Smith was “breaking new ground”.[83]
[83] Transcript of proceedings on 22 April 2021 at pages 21 line 13-25
98.The solicitor submitted that neither rule 4.1.1 nor 4.1.3 could apply as a matter of construction. The relevant source of a practitioner’s ethical obligations in billing a matter is the duty to treat a client fairly and in good faith, which:
…requires the practitioner to consider the interests of the client at the time they are preparing the bill and be satisfied for themselves that they are able to justify it both in terms of the content of the work done and the amounts involved, and that in rendering the bill at this particular time, this particular client will not be disadvantaged. [84]
[84] Transcript of proceedings on 22 April 2021 at page 54 line 41-45
99.However, this does not require the commercial interests of the practitioner to be subordinated to the interests of the client[85] in deciding whether the timing and amount of a bill is justified in the circumstances. The solicitor submitted that he had complied substantially with his ethical obligations, so expressed.
[85] Transcript of proceedings on 22 April 2021 at page 78 line 29 to page 79 line 15
100.I do not consider that there is any material difference between an obligation to do something within a reasonable time and an obligation to do something reasonably promptly. The Council did not suggest otherwise. I will confine my consideration to the question whether a solicitor is under an ethical obligation to bill within a reasonable time of providing legal services.
The issues
101.Before turning to consider issues of breach it is necessary to identify the features of the solicitor’s conduct that are relevant to the enquiry. The Council characterised the solicitor’s conduct as “issuing an invoice covering a period of 11 years”.[86] The gravamen of the complaint was that this amounted to a failure to render a bill within a reasonable time after providing legal services to his clients. A threshold issue is whether the Council characterised the solicitor’s conduct correctly. The factual issue cannot be considered in isolation from the statutory context in which the conduct occurred, which is provided by part 3.2 of the LP Act and section 11 of the Limitations Act 1985.
[86] Exhibit R4 page 70, paragraph 39
102.Whether, when and how much the solicitor was entitled to charge legal costs for miscellaneous work that he did at the clients’ request depends on part 3.2 of the LP Act. Whether the solicitor was entitled to charge for work done more than 6 years earlier depends on the operation of the limitation period in section 11 of the Limitations Act 1985.
103.Once the relevant factual and statutory context is identified, I must decide whether there is a reasonable likelihood that the tribunal would find that the solicitor’s conduct constitutes:
(a)a failure to act in the best interests of the clients in a matter in which the solicitor represents the clients, in breach of rule 4.1.1; or
(b)a failure to deliver legal services competently, diligently, and as promptly as reasonably possible, in breach of rule 4.1.3; or
(c)a failure to treat the clients fairly and in good faith in breach of the solicitor’s common law duty.
104.If any of (a), (b) or (c) is answered in the affirmative, I must decide whether there is a reasonable likelihood that the tribunal would find Mr Smith guilty of unsatisfactory professional conduct (but not professional misconduct) because of the breach. That necessarily involves examining the objective seriousness of the conduct.
105.If that question is answered in the affirmative, I must decide what sanction is appropriate, if any.
Consideration
The solicitor’s entitlement to charge legal costs for miscellaneous work done at the clients’ request
106.The security packet file was opened in June 2008 and, over the following several years, documents were deposited in or retrieved from the file in accordance with the clients’ instructions.[87]
[87] Exhibit A3 page 88
107.The clients alleged that when Mr Smith opened the file at their request, he did not inform them that he would charge for “miscellaneous legal advice”.[88] Mr Smith maintained that he had done so in accordance with his usual practice and gave evidence to that effect at the hearing.[89] However, the Council submitted that I should find that no oral advice was given.[90] Mr Smith presented as an experienced, honest, and credible witness. If the issue turned on his evidence alone, I would have no hesitation in finding that he gave such advice to the clients. They of course deny this but were not cross-examined. As Refschauge J observed in Legal Practitioner ‘M’,[91] the difficulties of resolving contested issues of fact on the papers are well known. Fortunately, it is not necessary for me to do so. The issue whether the clients were told that they would be charged for miscellaneous advice and that this would be done on the security packet file is a red herring, as I will explain.
[88] Exhibit R2 paragraph 6; exhibit R3 paragraph 2
[89] See paragraph 50
[90] Transcript of proceedings on 22 April 2021 page 17 line 3-7
[91] Legal Practitioner ‘M’ v Council of the Law Society of the ACT [2015] ACTSC 312 at [129]
108.Part 3.2 of the LP Act is concerned with costs disclosure and assessment. Section 262 states that the purpose of the part is:
(a) to provide for law practices to make disclosures to clients about legal costs;
(b) to regulate the making of costs agreements in relation to legal services, including conditional costs agreements;
(c) to regulate the billing of costs for legal services;
(d) to provide a mechanism for the assessment of legal costs and the setting aside of certain costs agreements.
109.Section 269 sets out what a solicitor must disclose to a client. It is not necessary to reproduce the whole section here. It is sufficient to note that a solicitor must disclose, among other things, the basis upon which legal costs will be worked out, the client’s right to request an itemised bill if the client receives a lump sum bill, details of the intervals (if any) at which the client will be billed and the client’s rights in the event of a dispute about legal costs.
110.Section 271 provides when and how disclosure must be made. Relevantly, disclosure must be made in writing before, or as soon as practicable after, the law practice is retained in the matter.
111.Where disclosure is required and is given, a client will be left in no doubt as to when and how they will be billed.
112.However, section 272(1)(a) does not require disclosure to be given where the total legal costs in a matter, excluding disbursements, are not likely to exceed $1,500 exclusive of GST. Mr Smith did not have to give disclosure to Mr and Ms D, either in June 2008 when the security packet file was opened or subsequently when they instructed him to provide advice and do miscellaneous work because the legal costs were never likely to exceed $1,500.
113.Disclosure also is not required if the client will not be required to pay the legal costs, or they will not otherwise be recovered by the law practice.[92] However, Mr and Ms D were commercial clients. Although Mr Smith had a long-standing professional relationship with Ms D’s grandparents and had acted for Mr and Ms D in about ten property transactions, there is no evidence to suggest that there were any grounds for Mr and Ms D to expect that they would not have to pay for all legal services they requested Mr Smith or his firm to provide, whether on an ad hoc basis or otherwise.
[92] Section 272(1)(f)
114.The Council accepted that it was not necessary for a solicitor, when approached to give professional advice on a matter, to inform the client that the solicitor proposes to charge for the advice.[93]
[93] Transcript of proceedings on 22 April 2021 at page 9 line 20-25
115.Section 279 states:
Subject to division 3.2.2…legal costs are recoverable –
(a) under a costs agreement made in accordance with division 3.2.5 or the corresponding provisions of a corresponding law; or
(b) if paragraph (a) does not apply – in accordance with an applicable scale of costs; or
(c) if neither paragraph (a) nor (b) applies – according to the fair and reasonable value of the legal services provided.
116.Mr Smith did not have a costs agreement with Mr and Ms D and there was no scale of costs applicable to the work the firm was asked to do. However, pursuant to section 279(c) of the Act, Mr Smith had a statutory entitlement to recover legal costs for the fair and reasonable value of the legal services he provided at the clients’ request.
117.Regardless whether legal costs are the subject of a costs agreement, pursuant to section 289 of the Act legal costs are not recoverable unless the client has been given a bill in accordance with section 290 and 291 and at least 30 days has expired since that happened. The bill must be in the form of a lump sum bill or itemised bill[94] and must be accompanied by a written statement of the client’s rights if there is a dispute in relation to the legal costs.[95] A client who is given a lump sum bill is entitled to ask for an itemised bill unless the bill is for an amount less than $1,500 (exclusive of GST and disbursements).[96]
[94] Section 290(1)
[95] Section 291(1)
[96] Section 292(1), (2), (10)
118.At common law, a solicitor’s retainer traditionally has been characterised as an entire contract. The solicitor was not entitled to bill for the work until the conclusion of the matter in which the solicitor was retained.[97] However, the common law position has been modified by statute. Section 293(1) now provides that a law practice may give a person an interim bill covering part only of the legal services the practice was retained to provide.
[97] G. E. Dal Pont, Law of Costs (LexisNexis Butterworths, 2003) at [3.44]
119.Mr Smith kept reasonably detailed records of work costed against the file, including records of the documents he was instructed to hold, copies of the documents, and copies of correspondence and file notes relating to miscellaneous instructions provided by the clients from time-to-time. The firm’s time costs records show how and when costs were incurred:
(a)Between May and July 2008, costs of $159.50 were recorded on the file.
(b)No work was done in 2009, 2010 or 2011.
(c)Between January 2012 and 23 August 2012 costs totalling $244.57 were recorded on the file. The work included security packet maintenance and communications with the clients by telephone, letter, and email, charged at GST exclusive rates of between $110 and $137.50 an hour, except for letters to the clients in March and August 2012, which were charged at $363.64 and $400 per hour respectively.
(d)As of 23 August 2012, the total time costs recorded on the file stood at $404.07 (excluding GST).
(e)No work was done in 2013.
(f)In June 2014, costs of $80 were recorded for a telephone conference in which advice was given about some issues relating to Mr D’s business,[98] charged at $400 per hour.
(g)In September 2015, costs of $75 were recorded for work done in adding a certificate of title for a property in Deakin to the security packet, charged at $250 per hour. [99]
(h)Between January and October 2016, costs totalling $362.50 were recorded on the file, of which $102.50 was for work done in January, $180 was for work done between 30 March and 6 April, and $80 was for work done between 24 and 27 October. This included security packet maintenance charged at $125 per hour, telephone conferences with the clients charged at $250 and $400 per hour, and communications with the clients by letter and email charged at hourly rates of $125, $170, $250, and $400, depending on who did the work.
(i)In July 2017, costs of $12.50 were recorded on the file for security packet maintenance and adding a document to the security packet, charged at $125 per hour. Curiously, although the evidence showed that on 15 June 2017 Mr Smith reviewed a 14-page employment contract and gave urgent advice by telephone in relation to the effect of restrictive covenants contained there and particulars of the work were included in the bill narrative, Mr Smith does not appear to have recorded his time costs against the file although clearly, he was entitled to do so.[100]
(j)Between October and December 2018, costs of $42 were recorded on the file for a letter to the client and security packet maintenance charged at $125 and $170 per hour.
(k)Between 17 January and 8 April 2019, costs of $227 were recorded on the file for security packet maintenance and various letters and emails to the clients charged at $125 and $170 per hour.
(l)As of 8 April 2019, the total legal costs recorded on the file were $1203.03 (excluding GST) of which $798.96 was for work done between June 2014 and April 2019 and $644 was for work done since the start of 2016.
[98] Exhibit A3 page 91-93
[99] Exhibit A3 page 96, 142
[100] Exhibit A3 pages 104-118, 142
120.Upon receiving instructions to close the file and return the client’s documents, Mr Smith issued a bill for legal costs of $500 (excluding GST) and disbursements. The bill was in the form of a lump sum bill and complied with the requirements of section 290 and 291 of the Act, including that it notified the clients of their right to have the costs assessed.[101] The bill narrative shows that the bill was intended to cover all work done in complying with the clients’ instructions in relation to the storage and retrieval of documents, maintenance of the file, the provision of advice and the performance of work of a miscellaneous nature since the file was opened in 2008
[101] Exhibit R4 pages 10-13
121.In preparing the bill Mr Smith said that he reviewed all the work done since the file was opened, chose not to charge for some work that was billable, [102] identified other work that he considered was not billable but included details of it in the narrative to inform the clients of the totality of the work done on the file, and discounted the professional costs charged to the clients.[103] Mr Smith’s evidence is consistent with the documentary evidence and I accept it as the truth.
[102] The Council did not pursue this issue in the cross-examination of Mr Smith, leaving open the possibility that billable work for which he decided not to charge was work done more than 6 years earlier.
[103] See paragraph 69
122.The Council found that the clients were not overcharged and that all the items included in the invoice reflected expenses necessarily and reasonably incurred in providing legal services requested by the clients.[104]
[104] See paragraph 73
123.In the absence of a costs agreement, a solicitor’s statutory right to receive payment for the fair and reasonable value of legal services provided in relation to a matter at a client’s request accrues as and when the services are provided, but is conditional on the client being given a bill that complies with sections 290 and 291 of the Act. Although the solicitor may interim bill such a matter, there is no statutory imperative for the solicitor to do so.
124.Section 11 of the Limitations Act 1985 provides that an action on any cause of action is not maintainable if the action is brought more than 6 years after the cause of action accrues. In my opinion, the limitation period for an action to enforce a solicitor’s statutory right under section 279(c) of the Act to recover legal costs for the fair and reasonable value of legal services provided at a client’s request, commences to run from the time at which the solicitor first becomes entitled to render a bill for the legal services. Thus, where a client instructs a solicitor from time to time to provide advice or other legal services of a miscellaneous nature in relation to discrete matters, the latest time at which the solicitor’s entitlement to render a bill will arise is at the completion of each discrete matter in accordance with the solicitor’s instructions.
125.Applying that reasoning to the present facts, in my opinion Mr Smith was not entitled to render a bill which included legal costs for advice provided or miscellaneous work done more than six years before the date of the bill – i.e. before 6 May 2013. Mr Smith apparently overlooked the operation of the limitation period in drawing the bill. There is no basis to think that he did so deliberately, and the Council did not submit otherwise. Different considerations would arise if he had. There can be no justification for a solicitor knowingly to render a bill to a client for legal costs to which the solicitor is not legally entitled because of the operation of the limitation period. However, that is not this case.
126.As found earlier, the total legal costs recorded on the file were $1203.03 (excluding GST) of which $404.07 was for work done more than 6 years before the date of the bill and the balance of $789.96 was for work done within 5 years of that date, most of which related to work done in the last 3 years. (This it is significant because the clients accepted that it was reasonable that they should pay for work done in the previous 3 years, although their views on that issue are not determinative).[105] The solicitor charged legal costs of $500 for all work done since 2008, although the extent to which that figure may include costs for work done more than 6 years earlier, if any, was not explored in cross examination and is impossible to determine on the evidence, which shows that in arriving at a final amount, the solicitor initially worked out a GST inclusive figure of $750 and then discounted it to $550.
[105] Exhibit R4 page 4
127.The Council found that all the work was reasonably necessary and that the solicitor’s costs were reasonable. Considering all the evidence, including the contents of the solicitor’s file, the solicitor’s costs records, the information the solicitor provided during the Law Society’s investigation, his explanation of how he determined an appropriate amount to charge, and the fact that legal costs for Mr Smith’s advice about the effect of restrictive covenants in Ms D’s employment contract in June 2017 were not recorded on the file but were chargeable,[106] I am satisfied that $500 was a reasonable amount to charge for the work Mr Smith and his firm did where the entitlement to recover legal costs was not statute barred. As no work was done in 2013, the period in question is work done since June 2014, noting that most of the costs were incurred in the 3 years prior to the date of the invoice.[107] There was no evidence to the contrary and the Council did not submit otherwise.
The proper characterisation of the solicitor’s conduct
[106] see paragraph 119(i), 125
[107] see paragraph 119
128.The conduct with which Mr Smith is charged is that he issued a bill covering a period of 11 years. Characterising the conduct in that way conflates two separate and distinct issues. The first relates to the work for which Mr Smith was entitled to render a bill. The second relates to his delay in rendering a bill. The Council focussed exclusively on the issue of delay[108] and, in doing so, fell into error.
[108] Transcript of proceedings on 22 April 2021, page 19 line 6-10
129.Mr Smith’s delay in rendering a bill for the legal costs of services provided more than 6 years before the date of the bill was not the relevant issue. The reason Mr Smith was not entitled to render a bill for such work was that his right to recover legal costs was statute barred. The relevant conduct that the Council should have considered was rendering a bill where the entitlement to recover legal costs was statute barred. Not only did the Council not give attention to this issue, but it also appears to have committed the same error as Mr Smith did in overlooking the operation of the limitation period in making its decision.
130.The fact that the Council did not consider the issue does not constrain the Tribunal from doing so, subject to complying with the requirements of procedural fairness. The operation of the limitation period and its relevance to the issues was raised and debated at the hearing before Mr Smith gave oral evidence and was cross-examined.[109] I am satisfied that the requirements of procedural fairness for both parties were satisfied and that it is appropriate for me to deal with the issue here.
[109] see e.g. transcript of proceedings on 22 April 2021, page 35 line 3-36, page 84 line 8 to page 85 line 27
131.If the total amount of legal costs billed to the clients could be explained or justified only on the basis that it must include an amount for legal costs for services provided at times for which Mr Smith was not lawfully entitled to recover legal costs because of the expiry of the limitation period, an issue would arise whether the conduct amounted to a breach of Mr Smith’s duty to treat the clients fairly and in good faith. The fact that the breach resulted from oversight rather than deliberate action would be relevant to whether there had been a failure to act in good faith, but would not necessarily excuse a breach of the duty to treat the client fairly, although it would be relevant to the objective seriousness of the conduct.
132.However, where I am satisfied that Mr Smith simply overlooked the operation of the limitation period, as the Council accepted,[110] the amount of legal costs he charged was reasonable for the services provided since June 2014 for which he was lawfully entitled to render a bill (subject to the issue of delay), and the Council did not cross-examine Mr Smith to establish what, if any, part of the legal costs was attributable to work done more than 6 years earlier, I do not consider that there is any reasonable likelihood that the tribunal would find Mr Smith guilty of unsatisfactory professional conduct based on a breach of the common law rule.
[110] transcript of proceedings on 22 April 2021, page 35 line 40 to page 36 line 34
133.The issue of delayed billing on which the Council founded its case therefore concerns only work done since June 2014.
134.The factual and statutory context in which the issue of delay must be considered includes:
(a)Since June 2014, the clients instructed Mr Smith from time to time to provide advice and do legal work of a miscellaneous kind in circumstances where they could expect that they would have to pay for the legal services.
(b)Mr Smith had a statutory entitlement to recover legal costs according to the fair and reasonable value of the legal services he provided, subject to giving the clients a bill that complied with section 290 and 291 of the Act.
(c)As the legal costs in question were never likely to exceed $1,500 (excluding GST), Mr Smith was not required to give disclosure, among other things, of the basis upon which costs would be worked out, or the intervals at which the clients would be billed.
(d)Mr Smith was entitled to render a bill for providing legal services required by the clients’ instructions as and when the services were completed, but was not under any legal obligation to do so.
(e)Mr Smith rendered a lump sum bill for his reasonable legal costs on 6 May 2019, which notified the clients of their right to have the costs assessed under part 3.2.7 of the Act.
(f)Mr Smith retained reasonably detailed records of the client’s instructions, the legal services he and his firm provided, and the costs charged to the file, including the time spent on each item of work, the identity of the person who did the work and the hourly rate at which the work was charged. If the clients wished to dispute the bill, records were available on which a costs assessment could proceed.
135.The Council does not dispute that in issuing a bill to the clients on 6 May 2019, Mr Smith was acting strictly within his legal rights. However, the Council says that by doing so Mr Smith breached his ethical obligation to bill for the legal services within a reasonable time after the legal services were provided.
136.To bring the issue into sharp focus, the conduct with which Mr Smith stands charged is that he exercised a legal right to issue a bill to clients for the reasonable legal costs of legal services provided on their instructions, in circumstances where he had an ethical obligation not to do so solely because of the passage of time since the legal services were provided.
Whether the solicitor’s conduct breached rule 4.1.1
137.Rule 4.1.1 states that a solicitor must “act in the best interests of a client in any matter in which the solicitor represents the client”.
138.In its written submissions the Council said that rule 4.1.1 imposes a duty on a solicitor to act in the best interests of a client in all matters where a solicitor “acts for” a client (in the sense of being retained by the client) and is not limited to litigious matters and matters involving another party.[111] This overlooks the importance of the words “in any matter in which the solicitor represents the client”. The Council equated a matter in which a solicitor “represents” the client with any matter in which a solicitor is retained by a client. That is not what rule 4.1.1 says and, in my opinion, it is not what the rule means.
[111] Respondent’s Submissions filed on 16 February 2021 paragraph 37, 45, 49
139.“Represent” can have a variety of meanings depending on the context. The Macquarie Dictionary gives two meaning that are apposite: [112]
3. to stand or act in the place of, as a substitute, proxy, or agent
4. to speak and act for by delegated authority
[112] Macquarie Dictionary (8th ed, 2020) page 1294
140.A solicitor who represents a client acts as the client’s representative. The Macquarie Dictionary gives the following meaning of “representative” which is relevant here:
11. an agent or deputy (a legal representative)
141.A solicitor may represent a client in a variety of circumstances. Litigation is an obvious example. A commercial transaction in which a solicitor acts for one or more parties to the transaction is another. Any matter in which the solicitor communicates with another person on behalf of the client is a further example. Examples can be multiplied.
142.The Council submitted that in previous decisions the tribunal has adopted an interpretation of rule 4.1.1 that is consistent with the Council’s view that the rule applies wherever a solicitor acts for a client, regardless whether the matter involves litigation or another party.
143.The first example cited was Council of the Law Society of the ACT v Legal Practitioner 201933.[113] That was a case where the solicitor received instructions to act for the vendors on the sale of a residential property. The complaint arose out of a sequence of events which commenced with the solicitor forwarding a confidential and privileged communication from his client seeking his advice, to the purchasers’ solicitor without instructions. This caused the purchasers to impose a condition that the vendors must carry out certain repairs to the property before settlement. The vendors sought to have settlement rescheduled from a Friday to the following Monday to give them time to finish the work. The solicitor advised the clients not to delay settlement and effectively gave them no choice in the matter. In doing so he failed to advise them that they were not compelled to settle on the appointed date. The settlement went ahead as scheduled and, by arrangement between the solicitors, $25,000 was retained in the agent’s trust account to cover the cost of the work to be undertaken by others. The vendors’ solicitor advised his clients that the matter was “taken out of your hands given your inability to comply with the contractual obligations”.[114]
[113] [2020] ACAT 54
[114] [2020] ACAT 54 at [17]
144.The charge relating to breach of rule 4.1.1 included the following particulars (which I have paraphrased): (a) contrary to the practitioner’s advice that he would not provide his clients with any further assistance, he approved all disbursements from the retention sum without recourse to the clients; (b) the practitioner sought to discontinue acting for his clients in circumstances where the retention sum needed to be properly administered; and (c) the practitioner approved the payment of invoices from the agent’s trust account without his clients’ instructions.
145.It is apparent that the charge relating to breach of rule 4.1.1 arose from the practitioner’s failure to act in his clients’ best interests in dealings with third parties on his clients’ behalf in relation to the matter. In my view, the decision does not support the Council’s argument.
146.The second example was Council of the Law Society of the ACT v Legal Practitioner 201822 (Alveer Singh).[115] That was a case where the practitioner failed to act in the best interests of his clients by issuing bills under the auspices of his new firm for work substantially performed at the firm of his previous employer. It appears that the practitioner dishonestly took several conveyancing files with him when he decided to go out on his own. The practitioner admitted that he had breached rule 4.1.1. In endorsing that view, the Tribunal said that the practitioner had failed to act in the best interest of his clients by placing them at risk of being billed for the same work by the former lawyer and his own firm, which “compromised the orderly and effective management and completion of the clients’ respective matters”.[116] It seems to me that such conduct involved a clear breach of the solicitor’s duty to treat his clients fairly and in good faith. However, the solicitor was not charged with breach of the common law duty. While the tribunal was satisfied that a breach of rule 4.1.1 was made out, there is no evidence that the tribunal considered whether the circumstances came within the meaning of “in any matter in which the solicitor represents the client” in rule 4.1.1. Whilst a conveyancing matter in which a solicitor acts for the vendor or purchaser is a “matter in which the solicitor represents the client” I am not persuaded that the circumstances giving rise to the charge (to the extent that they appear from the tribunal’s reasons) involved a failure to act in the best interests of the client, in the sense required by clause 4.1.1, rather than a breach of the duty to treat the client fairly and in good faith. The former is not necessarily equivalent to the latter. I will expand on this later.
[115] [2019] ACAT 27
[116] [2019] ACAT 27 at [36]
147.The third example was Council of the Law Society of the ACT v Legal Practitioner 202001 (OR 1/2020). Curiously, although the tribunal made orders on 26 October 2020, the decision does not appear to have been published. The charges arose out of work the solicitor did in relation to an estate planning matter. The charges conflated breach of rule 4.1.1 and breach of the common law duty to treat the clients fairly and in good faith.[117] The tribunal found that the solicitor had breached rule 4.1.1 and the common law duty by misrepresenting the work the solicitor did in drafting enduring powers of attorney,[118] charging excessively and failing to provide advice on important matters relevant to estate planning.[119] Whilst I agree that the conduct involved a breach of the common law duty, I respectfully disagree that the conduct could amount to a breach of rule 4.1.1, not least because there was no element of ‘representation’ involved in the work that the solicitor did. I accept that the decision is consistent with the interpretation of the rule for which the Council contends, however I note that the tribunal was not asked to consider the issue in the form in which it arises here and the reasons for decision do not explain how, as a matter of interpretation, rule 4.1.1. can apply in the circumstances.
[117] at [27], [38]
[118] at [37]
[119] at [55]-[56]
148.The final example was Council of the Law Society of the ACT v Legal Practitioner 201907 (Darren Carden).[120] That was a case involving rule 1.1 and 1.2 of the Legal Profession (Solicitors) Rules 2007 (repealed). The tribunal accepted that a breach of the rules occurred where a solicitor, acting for all three partners in a joint venture, failed to document the transaction properly, recognise the existence of a conflict, or provide adequate advice. The relevant rules stated:
[1.1] A practitioner should treat his or her client fairly and in good faith, giving due regard to the client’s position of dependence upon the practitioner, his or her special training and experience and the high degree of trust which a client is entitled to place in a practitioner.
[1.2] A practitioner must act honestly, fairly, and with competence and diligence in the service of a client, and should accept instructions, and a retainer to act for a client, only when the practitioner can reasonably expect to serve the client in that manner and attend to the work required with reasonable promptness.
[120] [2019] ACAT 76
149.The old rule 1.1 derives from the common law duty to treat the client fairly and in good faith. The old rule 1.2 does not use the same language as the new rule 4.1.1. Even if acting “honestly, fairly and competently” can be taken to mean the same thing as acting “in the best interests of the client”, which I doubt (accepting that there must inevitably be a degree of overlap in some circumstances) the field of operation of the old rule 1.2 is not limited by the words “in any matter in which the solicitor represents the client” or by any equivalent form of words. While the question whether rule 4.1.1 could apply did not arise, I venture to suggest that a solicitor retained to negotiate and draft terms for a client wishing to enter a joint venture with other persons, is retained in a matter in which the solicitor represents his client for the purposes of rule 4.1.1. I do not see any difference where the solicitor is retained to act for all parties to the proposed joint venture. The solicitor represents each of his clients in the matter, hence the potential for a conflict to arise as it did in that case.
150.I do not consider that any of the decisions on which the Council relied are of assistance in this case.
151.As a matter of construction, rule 4.1.1 is concerned only with a solicitor’s duty towards the client in a matter where the solicitor acts on behalf of a client in a representative capacity. That is what to “represent the client” means. It is self-evident that when a solicitor acts for a client in a representative capacity, the solicitor must act in the client’s best interest. Rule 4.1.1 enshrines that concept in plain language. The rule has no work to do where a solicitor bills a client for a matter in which the solicitor represents the client. There is no justification to read the rule as an expression of the common law duty to treat a client fairly and in good faith, which in my opinion is the relevant source of the solicitor’s obligations when billing a matter. Nor is there any justification to read rule 4.1.1 as if the words “in which the solicitor represents the client” are not present. The rule does not say that a solicitor must act in the best interest of a client in any matter, and rule read in its entirety does not bear that meaning.
152.The matters in relation to which the solicitor did miscellaneous work for the clients in this case involved providing them with advice (generally by telephone), communicating with them by telephone, letters, and emails, and maintaining the security packet.[121] The solicitor acted for them only in the sense that he was instructed to do those things, albeit informally, but none of the matters involved the solicitor acting for the clients in a representative capacity.
[121] Exhibit R4 pages 141-143
153.For these reasons I am comfortably satisfied that there is no reasonable likelihood that the tribunal would find Mr Smith guilty of unsatisfactory professional conduct based on a breach of rule 4.1.1.
Whether the solicitor’s conduct breached rule 4.1.3
154.Rule 4.1.3 provides that a solicitor must “deliver legal services competently, diligently and as promptly as reasonably possible”. Legal services means “work done, or business transacted, in the ordinary course of legal practice”.[122]
[122] Legal Profession (Solicitors) Conduct Rules 2015 Glossary of Terms
155.The Council submitted that to comply with the rule, it was implicit that a solicitor must render a bill for the services within a reasonable time of providing the services.[123]
[123] see paragraph 93
156.The Council did not explain how that result may obtain. It seems to me that there are two possible approaches to the problem. The first is to interpret the meaning of legal services to include rendering a bill for the legal costs of providing legal services. The second is to read or imply additional words into the rule. I will consider each in turn.
157.The Legal Profession (Solicitors) Conduct Rules 2015 is a subordinate law of the Territory made under section 580 of the LP Act.[124] The rules must be interpreted in accordance with common law principles of statutory interpretation and Chapter 14 of the Legislation Act 2001.[125] Thus the approach taken must comply with these principles.
[124] SL2015-2017
[125] Legislation Act 2001 sections 4, 8, 13
158.Is billing a legal service? I do not think billing a client is capable of being characterised as doing work for a client. However, it might be argued that billing is “business transacted in the ordinary course of legal practice”. However, I do not consider this to be the preferable meaning for the following reasons. Rule 4.1.3 is concerned with how a solicitor must “deliver legal services”. The ordinary meaning of services, in the context of a professional person delivering or providing services to a client, is “the performance of any duties or work for another” (my emphasis).[126] When regard is had to the definition of legal services it is apparent that legal services in the sense of “work done” means work done for the client in the ordinary course of legal practice. Legal services in the sense of “business transacted” in my view means business transacted for the client in the ordinary course of legal practice. Whilst billing is an integral part of the business of providing legal services to clients, in my opinion it is not a legal service for the purposes of rule 4.1.3.
[126] Macquarie Dictionary, (8th ed, 2020) page 1389, service – meaning 12
159.Can the result for which the Council contends be achieved by implying words into rule 4.1.3? The issue whether it is a legitimate technique of statutory interpretation to imply words into the text of a legislative instrument remains controversial. Aside from cases involving the correction of obvious printing or drafting errors, typically the issue will arise where the intentions of the legislative draughtsperson appear to have been fulfilled, but the text fails to give effect to the purpose or object of the legislation.[127] The principles that must be applied in deciding whether to imply additional words into legislation are now determined by the decision of the High Court in Taylor v Owners – Strata Plan No 11564,[128] where French CJ, Crennan and Bell J said at [37]-[38]:
Consistently with this Court’s rejection of the adoption of rigid rules in statutory construction … it should not be accepted that purposive construction may never allow of reading a provision as if it contained additional words (or omitted words) with the effect of expanding its field of operation. … [T]he question of whether a construction “reads up” a provision, giving it an extended operation, or “reads down” a provision, confining its operation, may be moot.
The question whether the court is justified in reading a statutory provision as if it contained additional words or omitted words involves a judgement of matters of degree. That judgement is readily answered in favour of addition or omission in the case of simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision … It is answered against a construction that fills “gaps disclosed in legislation”… or makes an insertion which is “too big, or too much at variance with the language in fact used by the legislature”.
[127] see the discussion in D. Pearce, Statutory Interpretation in Australia (LexisNexis Butterworths, 9th ed, 2019) [2.52] – [2.53]
[128] [2014] HCA 9
160.In my view, to the extent that the Council’s submission regarding the ‘implicit’ meaning of rule 4.1.3 requires words to be read into the rule, the submission should be rejected for two reasons. First, it does not identify any ‘gap’ in rule 4.1.3 that needs to be filled for the rule to achieve its evident purpose, which is to regulate the standard of legal services that a solicitor must deliver. Second, the words that would need to be inserted are ‘too much at variance with the language in fact used’ and, in effect, require the rule to be substantially rewritten.
161.For these reasons, I am comfortably satisfied that there is no reasonable likelihood that the tribunal would find Mr Smith guilty of unsatisfactory professional conduct based on a breach of rule 4.1.3.
Whether the solicitor’s conduct breached the duty to treat the clients fairly and in good faith
162.The Council submitted that a solicitor has an ethical obligation to render a bill within a reasonable time of providing legal services to a client. The ‘rule’ is an expression of a solicitor’s duty at common law to treat the client fairly and in good faith. The rationale for the ‘rule’ is said to be that it is to a client’s benefit to achieve finality in a matter, and delay in rendering a bill may make it more difficult for the client to exercise a right to challenge the bill although establishing breach of the rule does not depend on proof that the client has been disadvantaged in any way.[129]
[129] see paragraphs 94 - 97
163.No authority was cited for these propositions and as far as I am aware, the existence of such a ‘rule’ has not been recognised in a decision of this or any other tribunal, or in the decision of any court in Australia. As the Council acknowledged, the case against Mr Smith is “breaking new ground”.[130] However, having given careful thought to the issue I do not consider that there is any reason to venture down a path never trodden. I accept the solicitor’s submission that there may be circumstances where, applying the principles discussed by Allsop P in Macquarie International Health Clinic v Sydney SW Area Health Services,[131] delay in rendering a bill may amount to a failure to treat the client fairly and perhaps as a more remote possibility, as a failure to treat the client in good faith. However, I can see no basis to conclude that there is a generally applicable rule of ethics that a solicitor must give a client a bill for legal services within a reasonable time of providing the services, and that breach of the rule can be established without enquiring whether in the circumstances the conduct in question amounts to a failure to treat the client fairly and in good faith and without proof of the facts relevant to that enquiry, including whether the client has been, or is reasonably likely to be disadvantaged or otherwise suffer detriment by the alleged conduct. The rule that the Council seeks to characterise as an ‘expression’ of the common law duty assumes, without proof, that a failure to render a bill within a reasonable time must, of itself, amount to a failure to treat the client fairly and in good faith in every case without regard to individual circumstances. I accept the solicitor’s submission that the Council’s approach confuses the normative standard established by the requirement that a solicitor must treat the client fairly and in good faith, with the factual question whether a delay in rendering a bill has resulted in a breach of the standard in the circumstances of the case.
[130] see paragraph 96
[131] [2010] NSWCA 268 at [17] – see extract reproduced at paragraph 87
164.I disagree with the solicitor’s attempt to formulate a so-called ‘interests matrix’ (a form of decision tree analysis) as a tool to help determine whether a solicitor has complied with the duty to treat the client fairly and in good faith when rendering a bill.[132] There are an infinite variety of circumstances that may determine whether a solicitor has failed to treat a client fairly and in good faith in giving the client a bill. I do not think the issue of breach of the common law duty in the billing context is susceptible to analysis by reference to the kind of criteria the solicitor submitted should be applied. Nor do I think it necessary or useful to attempt to do so.
[132] see paragraph 88, 89, 98
165.It must be said at the outset that failing to treat a client fairly is not necessarily the same as failing to treat a client in good faith, although obviously there may be circumstances where conduct can amount to both. Although the hearing was conducted on the basis that Mr Smith was alleged to have failed to treat his clients fairly and in good faith, the Council did not address submissions to the lack of good faith ground. There was no evidence capable of supporting a charge that Mr Smith failed to act in good faith in rendering the impugned bill to the clients. Accordingly, I propose to deal with the alleged breach of the common law duty on the basis that the conduct is alleged to amount to a failure to treat the clients fairly.
166.I turn now to consider the circumstances upon which the Council relied to establish breach of the common law duty, which are identified earlier in these reasons.[133]
[133] see paragraph 132
167.The clients’ contention that Mr Smith never advised them that he would charge for miscellaneous work, even if true, is irrelevant because the clients’ liability to pay Mr Smith’s reasonable legal costs for the miscellaneous services he provided at their request did not depend on whether he told them that he would charge for the services.
168.The clients’ complaint that some of the charges fell well outside of a reasonable time to charge is not determinative. From whose perspective and by reference to what criteria is “reasonableness” to be judged in the present circumstances? I have explained earlier why delay is irrelevant to the issue whether there was improper charging of legal costs for work done more than 6 years earlier. The real issue is whether the delay in billing for work done since June 2014, where most of the costs were incurred in relation to work done in prior 3 years, was unfair to the clients and, if so, why. Whilst the clients’ views are not determinative, it is nevertheless significant that the clients accepted that it was reasonable that they should pay at least for work done in the previous 3 years.
169.The fact that Mr Smith rendered bills in other matters, including on one occasion for a small amount, is irrelevant. There was no issue that Mr Smith could not render invoices for miscellaneous work at earlier times, although as a general proposition he said that it was often uneconomic to do so. Neither Ms D nor Mr D gave evidence that Mr Smith’s delay in rendering a bill caused them to expect that they did not have to pay for legal services they had instructed Mr Smith to provide. Although the Council asserted that it was reasonable for the clients to assume that Mr Smith would render small bills if billable work was completed and that the clients were entitled to expect that they would be billed shortly after any work was done, neither Ms D nor Mr D gave evidence of having made such an assumption, or having held such an expectation.
170.The fact that Mr Smith had destroyed old files and earlier accounts (in the ordinary course after being archived for 7 years) is irrelevant to the issue of delay. The perceived risk that a repetition in charging may occur, without the ability for the solicitor or the clients to review previous invoices, is illusory once it is appreciated that a solicitor does not have a right to recover legal costs for miscellaneous legal services provided more than six years before the date of the bill because of the operation of the limitation period.
171.The issue that the Council needed to be address was why it was unfair to the clients that they should be billed for legal costs that Mr Smith was lawfully entitled to recover. In the final analysis, the only relevant circumstance to which the Council could point was that the clients had no documentary records or any independent recollection of telephone calls, to enable them to challenge the bill if they saw fit. However, this did not result in unfairness to them because Mr Smith kept reasonably detailed records that would have enabled him to answer any legitimate questions the clients may have about the work done or the basis of charging and would have provided an appropriate basis for his costs to be assessed if necessary.
172.Finally, the Council accepted that the clients had not been disadvantaged by Mr Smith’s conduct but submitted that proof of disadvantage was not necessary to establish breach of the common law duty. As the duty focuses on the conduct of a solicitor towards his or her client rather than on the effect of the conduct, I agree that a breach of duty can be established without proof of actual disadvantage or other detriment to the client. However, to show that a solicitor has failed to treat his or her client fairly, in my opinion it is necessary, as a minimum, to prove that the solicitor’s conduct was reasonably likely to disadvantage or otherwise cause detriment to the client. The Council failed to do so in this case.
173.For these reasons, I am comfortably satisfied that there is no reasonable likelihood that the tribunal would find Mr Smith guilty of unsatisfactory professional conduct based on a breach of the common law duty to treat a client fairly and in good faith.
The correct or preferable decision
174.In the circumstances, the correct or preferable decision is that the Council’s decision should be set aside and substituted by a decision to dismiss the complaint. I will make orders to that effect. It is appropriate also to make orders restricting disclosure of Mr Smith’s identity and access to the tribunal’s file.
175.As section 434 of the LP Act provides that section 48 of the ACAT Act does not apply to a proceeding under the LP Act, there is no power for the Tribunal to make any costs order in favour of Mr Smith.
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Senior Member M. Orlov
Date of hearing 22 April 2021 Counsel for the Appellant: Mr R. Arthur Solicitors for the Appellant: Mr A. Freer, KJB Law Solicitors for the Respondent: Mr J. Buxton
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