Legal Practitioners Complaints Committee and Lurie - [2008] WASAT 54

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: VOCATIONAL REGULATION

ACT: LEGAL PRACTICE ACT 2003 (WA)

CITATION: LEGAL PRACTITIONERS COMPLAINTS COMMITTEE and LURIE [2008] WASAT 54

MEMBER: JUDGE J CHANEY (DEPUTY PRESIDENT)
MS J TOOHEY (SENIOR MEMBER)
MS B HOLLAND (SESSIONAL MEMBER)

HEARD: 27 FEBRUARY 2008

DELIVERED : 7 MARCH 2008

FILE NO/S: VR 123 of 2007

BETWEEN: LEGAL PRACTITIONERS COMPLAINTS COMMITTEE
Applicant
AND
JEFFREY SOMAH LURIE
Respondent

Catchwords:

Legal practitioners Disciplinary proceedings Costs order against client made by reason of firm's failure to commence action Practitioner assuming conduct of file six months after costs order Whether practitioner sought to have client pay costs order Whether unprofessional conduct

Legislation:

Motor Vehicle (Third Party Insurance) Act 1943 (WA), s 29

Result:

Application dismissed

Category: B

Representation:

Counsel:

Applicant: Mr M Howard and Ms P Le Miere
Respondent: Mr DR Clyne

Solicitors:

Applicant: Law Complaints Officer
Respondent: Friedman Lurie Singh & D'Angelo

Case(s) referred to in decision(s):

Kyle v Legal Practitioners Complaints Committee (1999) 21 WAR 56

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The law firm Friedman Lurie Singh and D'Angelo were retained by a client to pursue a claim for personal injuries against the Insurance Commission of Western Australia. For approximately eight months, that claim was handled by a senior associate employed by the firm. During that time, the Insurance Commission wrote to the solicitors on five occasions calling for the client to commence an action for damages, failing which the Insurance Commission threatened to commence action to require the client to issue a writ. The solicitors did not commence an action, and the Insurance Commission brought its application to require the client to do so. That application was successful, and the client was ordered to pay the Insurance Commission's costs. The solicitors then issued a writ on behalf of the client.
The senior associate then left the firm. The file was then handled by a law clerk, under supervision of a partner, for approximately two months, before the law clerk also left the firm's employment. The supervising partner assumed conduct of the file. Shortly afterwards, the client complained to the firm about the lack of progress with her claim. Upon that complaint being made, another partner in the firm, Mr Jeffrey Lurie, was asked to take over the file's conduct. At that time, the Insurance Commission was pressing for payment of the costs order.
Mr Lurie promptly contacted the client and arranged an appointment to see her. He was aware that the client was concerned about the costs order that had been made, and wanted to discuss that issue, as well as finalisation of the claim generally. When he saw the client, Mr Lurie had not thoroughly reviewed the file, and was unaware of the reason that caused the Insurance Commission to make its application. He assumed that the client was liable for the costs, and his discussion with the client proceeded on that basis. He indicated that he would seek to progress the client's claim to a pre‑trial conference, and have questions of costs dealt with in the context of an overall settlement of the claim.
In the meantime, the client had complained to the Legal Practitioners Complaints Committee. The Complaints Committee wrote to Mr Lurie for his response to the complaint. Mr Lurie then reviewed the file closely and realised that the costs order had been made as a result of the firm's failure to commence an action in the face of the Insurance Commission threat. He responded to the Complaints Committee and indicated that the firm would pay the costs under the costs order.
Shortly afterwards, the client's claim was settled at a pre‑trial conference on terms acceptable to her. The firm met the amount of the costs order, and made no further charge to the client over and above the costs of the action paid by the Insurance Commission as part of the settlement.
The Complaints Committee referred the client's complaint to the Tribunal, and alleged that Mr Lurie was guilty of unprofessional conduct in seeking to have the client pay a costs order made against her when he knew or ought to have known that it was not proper to do so. The Tribunal examined the history of the firm's dealings with the client, and the events during the period between Mr Lurie assuming conduct of the file and his advice to the Complaints Committee that the firm would meet the payment of the costs order. It determined that Mr Lurie's conduct did not amount to "seeking to have the client pay the costs order" during that period, and that he was not guilty of the unprofessional conduct alleged against him. The Tribunal concluded that Mr Lurie should have more thoroughly reviewed the file for the purposes of advising the client in relation to the costs order but, in the circumstances of the case, that failure, whilst deserving of criticism, did not amount to unprofessional conduct.

The allegation against Mr Lurie

The Legal Practitioners Complaints Committee (the Complaints Committee) alleges that Jeffrey Somah Lurie was guilty of "unsatisfactory conduct by reason of his unprofessional conduct in that in January 2006, he sought to have a client pay a costs order made against her in an action where he knew or ought to have known that it was not proper to do so as his firm was responsible for the incurring of the costs and should have borne responsibility for their payment."
It is not in issue that Mr Lurie's firm, Friedman Lurie Singh and D'Angelo (FLSD), caused, by its failure to respond to correspondence, an order for costs to be made against their own client. Nor is it in issue that in the circumstances, it was not proper for the client to have to pay the costs, but that the firm should properly bear that responsibility. The issue for determination is whether, in the relatively brief period between Mr Lurie assuming conduct of the file, and his decision that the firm would meet the costs order, he acted unprofessionally by seeking to have the client pay the costs pursuant to the order.

Background

In January 2004, FLSD were retained by a young woman (S) who had been injured in a motor vehicle accident on 18 November 2003, to advise her in regard to a proposed action for damages against the Insurance Commission of WA (Insurance Commission) arising from the accident. S had lodged a claim with the Insurance Commission in November 2003.
Ms Rebecca Sorgiovanni was the solicitor at FLSD consulted by S. She assumed conduct of the matter.
On 2 February 2005, the Insurance Commission wrote to FLSD with an offer of settlement for S's claim. On 16 February 2005, the Insurance Commission wrote a follow‑up letter enquiring whether the offer was acceptable. It wrote again on 14 March 2005 noting that there had been no response to the two earlier letters.
The letter of 14 March 2005 advised that the Insurance Commission would wait a further 14 days after which, if no response was received, the matter would be referred to solicitors with instructions to commence "s 29 proceedings". The reference to s 29 proceedings was a reference to s 29(2) of the Motor Vehicle (Third Party Insurance) Act 1943 (WA) which enables the Insurance Commission to make an application to the court for an order requiring a person who has given notice of a claim to commence an action in the court within a specified time.
On 21 March 2005, Ms Sorgiovanni replied to the Insurance Commission advising that she would be on maternity leave on 27 April 2005, and requesting deferral of the s 29 proceedings until after her return from leave.
Ms Sorgiovanni apparently returned from leave earlier than anticipated, because on 20 April 2005, she responded to the Insurance Commission and advised that she was taking instructions in relation to the offer. She also sought clarification of how the offer was calculated.
On 26 April 2005, the Insurance Commission responded, declining to provide any further breakdown of the offer, and again threatening to commence s 29 proceedings if no formal response was received within 15 days.
On 5 May 2005, Ms Sorgiovanni wrote to the Insurance Commission, again requesting information as to the basis of the offer that had been made.
There was then an exchange of emails between Ms Sorgiovanni and the Insurance Commission between 5 May 2005 and 10 May 2005 in relation to the additional information being sought. On 10 May 2005, the Commission's officer again threatened to commence s 29 proceedings after a further 10 days.
On 7 June 2005, the State Solicitor's Officer (SSO), instructed by the Insurance Commission, wrote to FLSD advising that it was instructed to commence s 29 proceedings, and would do so unless S commenced proceedings within 14 days.
No action was commenced, and on 27 June 2005, the SSO issued an originating summons for an order under s 29. That application was served on 29 June 2005, personally on S as well as her solicitors, and was returnable on 18 July 2005 before a Judge in chambers. The court made an order for the commencement of proceedings, and made an order that S pay the Insurance Commission's costs of the application under s 29. On 22 July 2005, a writ was issued by FLSD on S's behalf.
On 26 August 2005, the SSO wrote to FLSD enclosing a bill of costs. On 2 September 2005, Ms Sorgiovanni wrote to S. The letter commences:
"As you are aware the defendant obtained an order of the court that you commence a court action within a specified period of time. The defendant is now seeking the costs of that application."
It would appear that, prior to 2 September 2005, S was unaware of the fact that a costs order had been made against her. The letter of 2 September 2005 proceeded to advise the client that she had three options: to agree costs; to dispute the costs through taxation; or to attempt to agree costs at a lower level and seek to defer payment until the conclusion of the claim. The letter recommended the last option, and for an offer of $1,500 to be made in response to the claim of approximately $2,600.
S rang Ms Sorgiovanni on receipt of that letter. She was understandably confused about what was going on. She asked for an explanation, but no clear explanation was provided.
On 30 September 2005, Ms Sorgiovanni sent an email to the SSO offering $1,500 for the costs payable on conclusion of the claim. A counter offer of $1,600 inclusive of disbursements was made by the SSO on 4 October 2005. The counter offer did not propose deferment of the costs to completion of the claims. On 10 October 2005, Ms Sorgiovanni wrote to S seeking her instructions in relation to that offer, and again suggesting that they request deferment of payment.
Shortly afterwards, Ms Sorgiovanni ceased employment with FLSD. She prepared a file note entitled "Solicitor's Case Summary". The note summarised various aspects of the file. It referred to the negotiations in relation to costs. Paragraph 4.3 of the case summary read as follows:
"I genuinely did not get the letter from SSO threatening the section 29 proceedings nor the letter asking us if we would accept service. I got them once it was too late and the client was served with the section 29 proceedings direct. I did check the dates received by our office but we seem to have received them here okay, I just didn't get them and I have no idea why. When I finally did get them they were all together in one day's mail. My only theory is that as [S] is a terribly common name, perhaps they were misdirected at the first instance."
The document concluded with an "action plan and strategy" which included to "try to negotiate deferred payment of the section 29 proceedings and consider a discount to client on conclusion to reflect our my/culpability in this."
The case summary note was dated 11 October 2005.
On 17 October 2005, Ms Sorgiovanni sent an email to Darnell Gant, an employee of FLSD who was to take over the conduct of the claim. The email asks Mr Gant to pursue the question of deferment of the payment to the conclusion of the claim. It records "I did tell her we can't guarantee they will agree and may stick to their gums [sic] re a payment arrangement, but we will try to persuade them."
On 2 November 2005, the SSO wrote seeking a response to the offer of $1,600. The following day, FLSD wrote to the SSO advising that S was prepared to fix costs at $1,600 only on the basis that the costs were deferred. On 22 November 2005, the SSO replied advising that they required payment of the costs forthwith. It is unclear whether FLSD did anything in response to that letter, but on 28 December 2005, SSO again wrote to the firm seeking a response to their letter of 22 November 2005, and threatening to take the matter further if nothing was heard within seven days.
It would appear that, just prior to Christmas 2005, Mr Gant had his employment with FLSD terminated summarily. That occurred as a result of advice being received from the Law Society of Queensland to the effect that Mr Gant was not suitable for employment in the legal profession. Mr Lurie said in evidence that it became apparent that "Mr Gant may not have been who he said he was".
The SSO letter of 28 December 2005 arrived at FLSD after Mr Gant had ceased employment and while Mr Singh, the partner supervising the file, and Mr Lurie were on leave. Mr Lurie returned from leave on 3 January 2006.
On 6 January 2006, S rang the firm and spoke to Mr Singh's secretary. She was unhappy with the lack of progress in her claim. She was told that Mr Gant had left the firm, and Mr Singh was handling the matter.
When Mr Singh returned from leave on 10 January 2006, he asked Mr Lurie to assume conduct of the file. Mr Singh told Mr Lurie that S had rung his secretary complaining about the firm's conduct in the matter and he asked Mr Lurie to contact S.
These proceedings are concerned with Mr Lurie's conduct after 10 January 2006. The conduct of Ms Sorgiovanni, Mr Gant and Mr Singh is not the subject of any allegation in these proceedings. None of those people gave evidence in the proceedings. S's evidence is, however, that, as of January 2006, she believed that she would have to meet the payment of costs ordered against her in the s 29 proceedings. We accept (and it was not contended otherwise by Mr Lurie) that that was what she believed, and the tenor of the correspondence from FLSD with her tends to reinforce that belief.
It is apparent that the service extended to S in relation to her claim was lamentably deficient. Anyone within the firm who was aware of the circumstances leading to the making of the s 29 order should have taken immediate steps to ensure that the firm accepted liability for the costs, and that their client was immediately told that she would not have to pay those costs.

Mr Lurie's conduct

Upon Mr Singh asking Mr Lurie, on 10 January 2006, to assist with the file, Mr Lurie immediately wrote to S. He advised her that Mr Gant had left the firm, and that he, Mr Lurie, was taking over the conduct of the claim. His letter continued:
"We note that costs have been agreed in the sum of $1,600 in relation to s 29 application and the Insurance Commission's solicitor has enquired as to how these costs can be paid.
Would you please contact our Mr Lurie any afternoon after 3pm to discuss the matter and also to arrange a suitable appointment so that we can review your file and discuss your claim with you."
Mr Lurie also wrote that day to SSO referring to the letter of 28 December 2005, advising that Mr Lurie was taking over the conduct of the matter and that instructions were being sought from the client. He observed that a pre‑trial conference would "in all probability be held within the near future" and sought confirmation that the Insurance Commission would "hold over payment" of the costs until settlement.
As well as writing to S, Mr Lurie rang her on 10 January 2006 and made an appointment to see her on 17 January 2006.
Mr Lurie said that he was particularly busy at the time because of the need to catch up with matters that had become urgent while the office was closed, and because there were still many people on leave from the office at that time. Accordingly, he said he merely looked at the SSO letter of 28 December 2005, but otherwise relied upon his discussion with Mr Singh as to the client's unhappiness, in determining the action to take immediately. He said his understanding was that the principal concern of the client was unhappiness with the way the claim had progressed, and the difficulty in communicating with the relevant person within the firm. Having made an appointment to see S on 17 January 2006, Mr Lurie put the file to one side, and did not review it again until shortly before that appointment. He then spent approximately 30 minutes reviewing the medical evidence and considering the state of the substantive proceedings. He said he did not read the correspondence section of the file which would have revealed the circumstances and events leading to the costs order being made in the s 29 proceedings.
Given that the question of payment of the costs order was a matter to be discussed with the client on 17 January 2006, we find it surprising that Mr Lurie did not familiarise himself with the circumstances leading to the costs order before seeing his client to discuss that very matter. Mr Lurie produced the file at the hearing. Although it was a reasonably substantial file, it was neatly divided into sections dealing with different aspects of the claim and its management. It would have been very simple, and involved relatively little time, to locate and read the correspondence surrounding the s 29 proceedings. However, Mr Lurie steadfastly maintained that he did not take that step, and in closing submissions, counsel for the Complaints Committee conceded that the evidence did not support a finding that Mr Lurie actually knew of the circumstances leading to the costs order. That concession was properly made in the light of the totality of Mr Lurie's evidence, and we find that Mr Lurie did not review the correspondence concerning the s 29 proceedings prior to meeting S on 17 January 2006.
At some point around that time, S wrote a letter of complaint to the Legal Practice Board. The letter is undated, but bears a receipt stamp of 17 January 2006. S was unsure whether she drafted that letter of complaint after or before her meeting with Mr Lurie that day. She eventually agreed that it must have been drafted prior to the meeting, and we find that it was. S said that she posted the complaint rather than hand delivered it, so it must have been written and posted before she saw Mr Lurie. The complaint refers to a number of concerns, including her confusion as to why a costs order had been made against her.
S and Mr Lurie gave different accounts of what occurred at the meeting of 17 January 2006. It is, however, common ground that they discussed the costs issue as well as a number of other concerns.
S said that the subject of why the $1,600 costs were payable was discussed, but that "I never quite understood his explanation". She said she at all times understood that she would have to pay that money and that at no time did Mr Lurie say that he or his firm would pay it. S said that Mr Lurie mentioned something about Ms Sorgiovanni not having completed something; that he didn't know why she had failed to do it. She confirmed that Mr Lurie said that he would try to defer payment of the costs until the claim was finalised. In cross‑examination she agreed that at no time did Mr Lurie actually say that she would have to pay the costs, but that was her clear impression when she left the meeting.
In his witness statement to the Tribunal, Mr Lurie said that S told him she did not understand why Ms Sorgiovanni had advised her she was liable to pay the costs. He said he gave her an explanation about how s 29 proceedings generally arise, but said that he did not know how the issue arose in her case. He said that he told S that he would review the file to find out what had happened and would report to her. He denied telling S that she would have to pay the s 29 costs. He said that he had no idea how the s 29 issue arose and needed to find out what had happened. He said that he recalled telling S that "after finding out, my firm may consider how we could assist her in payment of the costs". S, in her oral evidence, denied that he said anything that suggested anyone other than her might pay the costs, but said that he may have discussed "assisting her" in the context of deferring the costs and endeavouring to achieve a good settlement to offset the costs.

Mr Lurie made a file note of the meeting. In relation to the costs issue, the file note reads:
"I explained to her with regard to the s 29 costs. They bought an application for her to commence her claim when we weren't ready which led to further specialist evidence in, [sic] I indicated we could see what offers were made at the pre‑trial and see whether we could assist her in payment of the $1,600."
That file note is broadly consistent with S's evidence. The file note also identified the action which Mr Lurie was to attend to following the meeting. It did not mention reviewing the file to find out what happened in relation to the costs order. In that sense, it is inconsistent with Mr Lurie's evidence before the Tribunal.
We have already accepted Mr Lurie's evidence that prior to, or during, the meeting of 17 January 2006, he did not review the correspondence file to find out why the costs order was made. We accept, therefore, that the explanation he proffered to S concerning the cost order was based upon his general experience, rather than the specifics of her case. We also accept Mr Lurie's evidence that he considered that the priority was to finalise the substantive claim, and that he did not consider it necessary to investigate the cost issue further so long as the Insurance Commission was not pressing for payment. We accept that he decided that the whole question of costs could be dealt with in the context of the eventual settlement negotiations.
It is quite clear that, having not reviewed the file in detail, Mr Lurie was proceeding on an assumption that, costs order having been made against the client, the client was responsible for payment. We accept her evidence that she left the meeting under the impression that she was liable for the costs. Mr Laurie acknowledged that on occasion s 29 proceedings are instituted by reason of failure to take action by a solicitor rather than by reason of any omission on the part of the client. He simply did not address whether that might be the case in this instance.
On 18 January 2006, Mr Lurie wrote to SSO providing a further medical report that had been obtained in November 2005, seeking copies of certain discovered documents, and advising of instructions to enter the matter for pre‑trial conference. He also wrote to S confirming the meeting the previous day and confirming the action which he was pursuing.
On 25 January 2006, S sent an email to Mr Lurie. She drew his attention to an article in The West Australian newspaper concerning Mr Gant which, apparently, referred to criminal charges against him. Mr Lurie replied by email the same day, explaining that he was aware of the newspaper article but had been precluded from discussing the difficulties with Mr Gant for reasons which he explained. He also sought to reassure S that nothing done by Mr Gant prejudiced her claim, and indeed the medical evidence which Mr Gant had arranged had substantially assisted her case.
During the latter part of January 2006, the Complaints Committee had been seeking clarification from S as to certain aspects of her allegations. On 9 February 2006, the Complaints Committee wrote to Mr Lurie enclosing S's complaint and seeking his comment. On 16 February 2006, Mr Lurie responded in detail concerning the firm's conduct of the file. Mr Lurie said, and we accept, that receipt of the complaint caused him to review the file in detail, including the circumstances of the costs order. Upon reviewing the file, he immediately concluded that the client ought not be responsible for the s 29 proceedings, and in his detailed response of 16 February 2006, he said that the firm would be responsible for the payment of those costs. It would appear that that response was sent to S under cover of letter from the Complaints Committee dated 22 February 2006.
On 9 March 2006, the pre‑trial conference in relation to S's claim took place. The matter was settled for a significantly better figure than had originally been proposed by the Insurance Commission. An amount of costs payable by the Insurance Commission for S's legal costs of the action were agreed, and the $1,600 costs for the s 29 proceedings was deducted from that amount. FLSD accepted the agreed costs of the action as full settlement for its costs, so that S was not required to contribute anything towards her legal costs or the costs of the s 29 application.

Was Mr Lurie's conduct unprofessional?

The allegation against Mr Lurie is that he "sought to have a client pay a costs order" when he knew or ought to have known that it was not proper to do so. As previously noted, the allegation that he knew that it was not proper to do so was abandoned by the Complaints Committee following the evidence.
We agree with counsel for the respondent's contention that the evidence does not support a finding that Mr Lurie "sought" to have the client pay. It is quite apparent that, at the time of writing to the client on 10 January 2006 and meeting with her on 17 January 2006, Mr Lurie was proceeding on an assumption that the client was liable under the costs order. It is also clear that, before meeting with Mr Lurie, the client also thought that she was liable to pay the costs. Mr Lurie did nothing to disabuse S of that understanding. He did not, however, call on her to, or in any other way seek to have her pay the costs. Rather, he, in effect, put the question of payment of costs to one side to be reviewed in the context of the final settlement to be negotiated at the pre‑trial conference. It follows that the applicant has not established that Mr Lurie did what he is alleged to have done. The complaint is not made out for that reason.
We consider that Mr Lurie can be fairly criticised for failing to familiarise himself with the circumstances leading to the costs order prior to the meeting of 17 January 2006. We do not think that that criticism can be made of his actions on 10 January 2006. On that date, he acted promptly to contact the client with a view to dealing with her concerns. His priority was, obviously, to make speedy contact with the client, defer any action by the SSO as threatened in its letter of 28 December 2005, and then to deal with the client's concerns at the meeting on 17 January 2006.
Although we consider that Mr Lurie should have familiarised himself more with the file prior to seeing S on 17 January 2006, we do not consider that his failure to do so constituted unprofessional conduct as that expression is explained in Kyle v Legal Practitioners Complaints Committee (1999) 21 WAR 56 at 71-72. It is not conduct which, in our view, fell short, to a substantial degree of the standard of professional conduct observed and approved by members of the profession of good repute and competence.
That is because his failure to review the file concerned an aspect of the matter that had no immediate consequences for the client. He apparently concluded that questions of costs, including the liability in relation to the s 29 proceedings, were matters he would consider at a later time. Given the likelihood of a pre‑trial conference in the near future, his unanswered suggestion to the Insurance Commission that it hold over payment of the costs, and his workload at the time, his deferral of the question is not so serious an omission to amount to unprofessional conduct. Had Mr Lurie been aware of the circumstances leading to the s 29 costs order, and had he not promptly advised the client that the firm would meet that order, the position would be quite different.

The application to amend the complaint

In the course of closing submissions, and in response to the contention that the evidence did not support a finding that Mr Lurie "sought to have the client pay" the costs order, counsel for the Complaints Committee suggested that, if that submission were upheld, leave to amend the complaint should be granted. The proposed amendment sought to insert words into the complaint so that it read that "the practitioner was guilty of unsatisfactory conduct by reason of his unprofessional conduct in that in January 2006 he sought to have a client, or told her or led her to believe that she would have to, pay a costs order made against her in an action where he knew or ought to have known that it was not proper to do so as his firm was responsible for the incurring of the costs and should have borne responsibility for the payment of the same."
In our view, even if the amendment were made, the case against the practitioner would not be made out. Just as we have found that he did not seek to have S pay the costs order in the sense of making a request or demand to her, the evidence does not support that he told her that she would have to pay the costs order. The evidence is that, given his own assumption that she was liable for the costs, he did not disabuse her of that belief. Whether that might be construed as having "led her to believe she would have to pay" may be debatable. We do not consider it a fair characterisation of the practitioner's conduct. The substance of the practitioner's conduct is that, in the relatively short period between 10 January when he assumed conduct of the file, and 16 February 2006 when he responded to the Complaints Committee, he did not fully familiarise himself with the file. In circumstances where the question of payment of the costs order was apparently effectively deferred until the pre‑trial conference, that failure does not amount to unprofessional conduct.
The amendment would serve no purpose and the application to amend is therefore refused.

Conclusion

It follows that the complaint should be dismissed.

I certify that this and the preceding [60] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUDGE J CHANEY, DEPUTY PRESIDENT