Legal Profession Board of Tasmania v DEF - [2015] TASSC 40

[2015] TASSC 40

COURT: SUPREME COURT OF TASMANIA

CITATION: Legal Profession Board of Tasmania v DEF [2015] TASSC 40

PARTIES:  LEGAL PROFESSION BOARD OF TASMANIA
  v
  DEF

FILE NO:  734/2014
DELIVERED ON:  27 August 2015
DELIVERED AT:  Hobart
HEARING DATE:  2 February 2015
JUDGMENT OF:  Wood J

CATCHWORDS:

Professions and Trades – Lawyers – Complaints and discipline – Disciplinary proceedings – Tasmania – Meaning of "costs of the Board" – Whether includes sitting fees of Tribunal members.

Legal Profession Act 1997 (Tas), s 481.
Cachia v Hanes (1994) 179 CLR 403, considered.
Aust Dig Professions and Trades [1274]

REPRESENTATION:

Counsel:
             Appellant:  C Gunson
             Respondent:  T Cox
Solicitors:
             Appellant:  Gunson Williams

Judgment Number: [2015] TASSC 40
Number of paragraphs: 33

Serial No 40/2015
File No 734/2014

THE LEGAL PROFESSION BOARD OF TASMANIA v DEF

REASONS FOR JUDGMENT WOOD J

27 August 2015

The Legal Profession Board of Tasmania has appealed a costs order made by the Disciplinary Tribunal on 11 August 2014. Disciplinary proceedings brought by the Board against an Australian legal practitioner and heard by the Tribunal resulted in a finding of unsatisfactory professional conduct. The Tribunal made an order that the practitioner pay the Board's cost in the sum of $8,000. The Board had argued before the Tribunal that a costs order should include $2,012, relating to sitting fees payable to the members of the Tribunal hearing the proceedings. The Tribunal declined to include such an amount in the costs order. The Board has appealed the decision on the ground that the "Tribunal erred in law by failing to order that the respondent pay the costs of the Tribunal incurred by the applicant". The key point for the appellant is that, in light of the terms of the Legal Profession Act 2007 ("the Act") and the Board's statutory obligation to meet the expenses of the Tribunal, the sitting fees of the Tribunal should have been covered by the costs order.
A brief history of the proceedings before the Tribunal is as follows:
·     On 27 May 2010, a complaint was made against a legal practitioner. The complaint concerned conduct in August or September 2007.
·     The Board investigated the complaint and made an application for its hearing and determination by the Tribunal. The application was signed by the Chairman and dated 14 December 2011. The matters of complaint were said to amount to professional misconduct and unsatisfactory professional conduct.
·     On 20 February 2014, the Tribunal, constituted by Chairman Mr A J Denehey and members, Mr N R Readett and Mr M Kitchell, heard the application. (Later, in its reasons, the Tribunal noted that it was regrettable that the hearing of the complaint had been so delayed.)
· The Tribunal published its reasons for decision on 24 April 2014. An aspect of the complaint was established, but the more serious aspects were not. The Tribunal found that conduct of the practitioner was "unsatisfactory professional conduct" within the meaning of s 420 of the Act. It was found that no aspect of the practitioner's conduct was intentionally misleading and that his actions resulted from inadvertence. There was no harm occasioned by his conduct and, in the Tribunal's view, "the practitioner's conduct is at the lowest end of the categories of conduct which might fall within the definition of unsatisfactory professional conduct".
·     The Tribunal gave the parties an opportunity to be heard as to the appropriate outcome and the issue of costs. Subsequently, in argument before the Tribunal, it was said by the Board that its costs in total were between $15,000 and $16,000. It was argued that the costs payable by the practitioner should include remuneration payable to the members of the Tribunal.
·     On 11 August 2014, the Tribunal delivered its reasons as to consequential orders. An order was made admonishing the practitioner. As to costs, it was ordered by the Tribunal that the practitioner should pay costs of $8,000, being a portion (60%) of the Board's costs and being an amount which did not include the Tribunal's sitting fees of $2,012.

The statutory power to order costs

The costs order was made pursuant to s 481(1) of the Act. The interpretation of this section is pivotal to the appeal, and it provides:
"481 Cost orders of Tribunal
(1)     The Tribunal must make orders requiring an Australian legal practitioner whom it has found guilty of unsatisfactory professional conduct or professional misconduct to pay costs (including costs of the Board and the complainant), unless the Tribunal is satisfied that exceptional circumstances exist.
…
(5)     An order for costs –
(a)     may be for a specified amount; or
(b)may be for an unspecified amount but must specify the basis on which the amount is to be determined.
(6)     An order for costs may specify the terms on which costs must be paid.
(7)     The Tribunal may make an order directing that costs be taxed in accordance with the Supreme Court Rules 2000."

The Tribunal's decision as to costs

As noted, the Tribunal was constituted by three members. Chairman Mr Denehey delivered his own reasons as to the outcome and costs. The terms of s 481(1) were noted. Mr Denehey stated that, in his view, remuneration payable to the members of the Tribunal does not form part of the "costs of the Board" within the contemplation of s 481(1).
Tribunal members Mr Kitchell and Mr Readett delivered joint reasons. The members set out some of the arguments as to costs, but did not decide whether the Tribunal had power to order that the practitioner pay the sitting costs of the Tribunal. It was said that, "Even if the Tribunal had power to order that the practitioner pay the sitting costs of the Tribunal, it is not, at least in the circumstances of this matter, persuaded that it would be appropriate to do so". The joint reasons went on to note: "The Tribunal is a statutory body with obligations which extend beyond merely resolving and determining disputes between the parties before it. The Tribunal is not satisfied, in the circumstances of this matter, that it would be appropriate to require the practitioner to pay any or all of the costs of the Tribunal itself".

Submissions

On appeal, the appellant relied on the statutory scheme and provisions which stipulate that the Board is responsible for the funding of the Tribunal. It was submitted that the effect of these provisions is to render the Board responsible for the payment of the expenses of the Tribunal in the performance of its functions or the exercise of its powers concerning the hearing and determination of matters referred to it. Therefore, in s 481, the "costs of the Board" include the sitting fees of Tribunal members, because no other mechanism exists for the payment of Tribunal members outside of being funded by the Board.
It was submitted that the sitting fees of Tribunal members are akin to a disbursement (Re Remnant (1849) 11 Beav 603; [1849] 50 ER 949 at 953), properly and necessarily incurred by the Board in the prosecution of complaints before the Tribunal. It was noted that the term "legal costs" is defined in s 4(1) of the Act to include disbursements.
The arguments for the respondent relied on the ordinary meaning of costs as "party and party costs". It was submitted that, given the context and the terms of s 481, this ordinary meaning applied. It was argued that the sitting fees of Tribunal members were not akin to a disbursement; if Parliament had intended to include Tribunal sitting fees, there would have been express provision in the Act. In arguing that the conventional meaning of "costs" applies, the respondent pointed to the linkage with the Supreme Court Rules 2000, in that s 481(7) of the Act provides that the Tribunal can make an order that costs be taxed in accordance with those Rules.
The respondent relied on policy considerations in support of his argument. It was submitted that it is undesirable for the remuneration of an adjudicator to be payable by one or other of the parties to a controversy. It was said that the independence of the Tribunal would be brought into question.

Discussion

The question is what is meant by the term "costs" in s 481(1) of the Act. This is a question of statutory construction and involves consideration of the language of the section, the context, including the subject matter, and the Act as a whole (Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69]-[71] and Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27 at [47]). The term "costs" in the context of orders for costs has an ordinary and accepted meaning, and the question is whether there are indications in the Act that a different meaning was intended. The consequences of construing the term as urged by the appellant will also be considered.
The term "costs" is not defined in the Act. Ordinarily, the term "costs", in the context of a power to make an order for costs, is treated by the courts as referring to "party and party costs". The term "costs" when used in this context is understood in the law as referring to "the amount which the person to whom the order is directed must pay to some party to the litigation as partial indemnity for the professional legal fees and expenses incurred by that party in the course of the litigation": Re JJT (1998) 195 CLR 184 per Hayne J at 219, citing Cachia v Hanes (1994) 179 CLR 403 at 410-411 per Mason CJ, Brennan, Deane, Dawson and McHugh JJ at 410.
"Costs", in this sense, encompasses only the amount payable for professional services rendered by a qualified lawyer in the litigation. There could be no suggestion that the funding of the Tribunal could amount to such professional legal fees and expenses. The term "costs" usually includes disbursements, provided that those relate to the proceeding in which the costs order is made. Disbursements are money paid on behalf of a client to a third party that can properly be included in the lawyer's bill of costs. The classic definition of a disbursement is that of Lord Langdale MR in Re Remnant (1849) 11 Beav 603, at 613:
"… those payments only, which are made in pursuance of the professional duty undertaken by the solicitor, and which he is bound to perform, or which are sanctioned as professional payments, by the general and established custom and practice of the profession, ought to be entered or allowed as professional disbursements in the bill of costs."
I cannot see that payments made by the Board in funding the remuneration of the Tribunal members remotely qualify as disbursements falling within the ordinary meaning of "costs". Such remuneration could not be seen as payable in pursuance of the professional duty undertaken by the Board's solicitor, or payments customarily accepted by the profession as professional payments or akin to such payments.
The ordinary and conventional meaning of "costs" is generally applied by the courts in considering a court's statutory power to order costs, unless there is an indication that Parliament intended a contrary meaning. In Bank of New South Wales v Withers (1981) 35 ALR 21 at 25-26, Sheppard J adopted this approach and, absent such an indication, held that a statutory power to award "costs" did not cover expenses incurred in collecting documents required by a subpoena to be produced. See also Wenkart v Pantzer (2010) 269 ALR 641 at [144]-[147], Dal Pont, Law of Costs, 3^rd ed, 2013 [1.7]. The appellant contends that it is evident from the statutory scheme that the term "costs" was intended to have a more expansive meaning, and was intended to extend to expenses incurred by the Board associated with the proceedings at hand. Undoubtedly, the meaning of terms may be coloured by their statutory context. I turn to consider whether there are any statutory indications that the word "costs" in s 481 is employed in anything other than its ordinary sense. It is necessary to traverse the Act and consider the statutory scheme.
As noted, the term "costs" is not defined in the Act but the term "legal costs" is defined as follows:
"legal costs means amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services, including disbursements but not including interest; … ."
The definition of "legal costs" is not confined to the context of orders made by the Tribunal with respect to costs. It is nonetheless worth noting that, like the ordinary meaning of "costs", it relates to the amounts that a person is liable to pay a "law practice for the provision of legal services". This definition does not suggest that Parliament intended that the conventional meaning of "costs" should not apply in s 481.
The terms of s 481 do not reveal an indication that the usual meaning of "costs" was not intended. The terms of subs (7), providing the Tribunal with a discretion to make an order that the costs be taxed in accordance with the Supreme Court Rules, suggests that "costs" in the conventional sense was intended.
I look now to the broader statutory scheme relied upon by the appellant. The Board is created by the Act to undertake a number of functions. The Board is responsible for receiving and investigating complaints about a legal practitioner: s 427. The Board has power to summarily dismiss a complaint: s 433. The Board has power to hear complaints in relation to "unsatisfactory professional conduct" (defined in s 420) and, with respect to such complaints, make wide ranging determinations. The Board may make application to the Tribunal or Supreme Court to hear and determine the matter where it is believed that the conduct, the subject of complaint, amounts to "professional misconduct" (defined in s 421): s 450.
If the Board considers that the complaint may not be sufficiently serious to warrant a hearing, it has power to deal with the matter according to s 456 of the Act. The Board has broad ranging power to dismiss complaints.
The Tribunal's role is to hear and determine any matter referred to it in an application under Pt 4.7: s 615(1). In essence, the Act operates so that the Tribunal will deal with more serious complaints alleging professional misconduct. Hearings before the Tribunal are instituted by an application which may be brought by any person, including the Board: s 464(1). If the Tribunal considers that the matter relates to unsatisfactory professional conduct, or is not sufficiently serious to warrant a hearing by the Tribunal, then the Tribunal may refer the application to the Board to be heard and determined: s 466(7)(b).
It can be seen that the Board and the Tribunal are distinct statutory entities with defined functions and responsibilities. The Board has other responsibilities beyond progressing complaints concerning legal practitioners. A summary of its functions is found in s 591:

"591 Functions of Board
The Board has the following functions:
(a) to maintain the Register;
(b) to monitor the standard and provision of legal professional services;
(c)to receive, investigate and determine complaints made under Chapter 4 and, as necessary, refer complaints to the Tribunal or Supreme Court for hearing and determination;
(d)to approve terms and conditions of professional indemnity insurance policies provided to law practices;

(e) to advise the profession on appropriate standards of conduct;
(f) to monitor and identify trends and issues that emerge within the legal profession;
(g) to approve courses of continuing legal education;
(h) to advise the Minister on any matters relating to this Act;
(i) such other functions as may be imposed by this or any other Act;
(j)to conduct education programs relating to client-lawyer relationships for members of the public;

(k) such other functions as may be prescribed."

The provisions regarding the arrangements for meeting the expenses of the Board and the Tribunal are relied upon by the appellant. The Solicitors' Guarantee Fund is to be applied by the Solicitors' Trust for a number of purposes, including the purpose of paying "the costs of the Board and Tribunal in relation to the performance or exercise of the Board's and Tribunal's functions or powers as approved by the Minister under s 359": s 358(2)(b).
Section 359(2) provides that the Board has responsibility for submitting to the Minister an application for funding each year including:
"(b) the payment or discharge of the expenses, charges and obligations of the Board in the performance of its functions or the exercise of its powers; and
(c) the payment of the expenses of the Tribunal in the performance of its functions or the exercise of its powers; and
(d) payment of any remuneration to members and employees of the Board; … ."
It is interesting to see that there is no reference to "remuneration" of the Tribunal members or employees. By contrast, par (d) makes provision regarding remuneration of members and employees of the Board. It is useful to consider whether there are provisions elsewhere in the Act referring to "remuneration" of Tribunal members.
Clause 5 of Sch 6 makes provision for the remuneration of Tribunal members in the following terms:
"5    Remuneration of members
(1)      A member is entitled to be paid such remuneration and allowances as the Minister determines.
(2)      A member who is a State Service employee or State Service officer is not entitled to remuneration or allowances under subclause (1) except with the approval of the Minister administering the State Service Act 2000.
(3)      A member holds office on such conditions in relation to matters not provided for by this Act as are specified in the member's instrument of appointment."
The Act does not provide that the Board is to pay for the remuneration of the Tribunal members. Whether that occurs in practice is not to the point. It seems that the Act envisages that remuneration of Tribunal members is to be dealt with outside the framework of the Act. It is feasible that it was expected that the Tribunal members may claim directly for their remuneration from the appropriate funding body.
Further to these provisions there are mechanical provisions relating to the funds of the Board. Section 598 provides that the Board is authorised to keep such ADI (bank) accounts as it considers necessary and must pay its funds to the credit of such accounts. It can be seen that the Tribunal is not authorised to hold a bank account. Section 598(3) provides for how the funds of the Board are to be applied in terms that are in line with s 359. In particular, s 598(3)(c) provides that funds of the Board are to be applied "in payment of the expenses incurred by the Tribunal in the performance of its functions or the exercise of its powers". Again, there is no mention of remuneration of Tribunal members and employees, and the reference is to the "expenses incurred by the Tribunal". Section 598(3)(e) provides that the funds of the Board are to be applied "in payment of any remuneration payable to the Board". It can be seen from the terms of the Act that there is a distinction drawn between expenses and remuneration, cl 5 referring to remuneration. This distinction suggests that expenses is a term that does not encompass remuneration.
It is debateable whether, given the distinction drawn between "remuneration" and "expenses" in the Act, there was a statutory intention that the Board would meet the remuneration of Tribunal members. Even if it was intended that the Board should pay for remuneration of the Tribunal members, it is arguably not correct to say that the Board itself bears that expense in a real sense. According to the funding model in the Act, the Board pays the expenses of the Tribunal but then applies for funding from the Guarantee Fund so that it is fully reimbursed. Aside from these points, the more significant difficulty for the appellant is that it is plain that the expenses of the Tribunal are paid for by the Board not in its capacity as a party before the Tribunal, but in a different capacity altogether.

The weakness in the appellant's argument is that it relies on provisions concerning the Board's functions in a context dealing with wholly unrelated matters. Clearly, the Board has a function to perform in applying its funds pursuant to s 598(3)(c) in payment of the expenses of the Tribunal. However, as stated by the respondent in written submissions: "it is another thing to say that by reason of that statutory obligation any payments made by the Board to or on behalf of the Tribunal are recoverable in disciplinary proceedings as 'costs of the Board'". This function arises in a different part of the Act, noting that the Board's functions are much more wide ranging than its role in hearings conducted before the Tribunal. The appellant's argument conflates the function of the Board as the body responsible for the Tribunal's funding with an entirely different function of the Board as a party to proceedings before the Tribunal.
In conclusion, the statutory scheme and these statutory provisions relied upon by the appellant do not widen the meaning of the word "costs". They enlarge the functions of the Board, but do not shed light on the meaning of "costs" in s 481.
Parliament undoubtedly has power to make a provision which would have the effect contended for and require the Tribunal to make a costs order which includes the sitting fees of the Tribunal members. The statutory scheme does not suggest that was intended. If what was intended was that the Tribunal could make an order which would have the effect of compelling payment of the sitting fees of its presiding members, I would expect that would be said expressly. It is an unusual consequence and a surprising one for a tribunal to be required or have power to make an order which, under the guise of requiring the costs of a party to be paid, would have the effect of remunerating the membership of the decision-making body. The making of such a costs order is a matter in which the Tribunal members have an apparent financial interest, and it may seem to the parties that there is a tension with the fundamental tenet of our legal system of neutrality. Of course, a financial interest in the order is not real as the Tribunal members will have their sitting fees paid regardless of any order for costs. However, a consequence of the appellant's construction involves some undermining of the appearance of impartiality. Appearances in this respect are important and, in the absence of an express provision, it is unlikely such a consequence was intended.
There are other difficulties or unpalatable consequences flowing from the construction of s 481 sought by the appellant. There will be an arbitrary effect. Some Tribunal members may not be remunerated because of their status as public servants (cl 5 of Sch 6), another may offer his or her services for free. Further, it is unpalatable that the parties should have a financial interest in how the Tribunal is constituted. If Parliament had intended sitting fees should be paid, it is expected that Parliament would have been prescriptive as to the quantum and nature of payment to ensure uniformity and avoid such consequences.

Conclusion

In conclusion, I find there are no sound indications that Parliament intended that the word "costs" should have a meaning other than its conventional meaning. The statutory scheme relied upon, and the funding model set out in the Act, do not provide any support for such an indication. Indeed, as outlined above, there are considerations which weigh against an interpretation of "costs" in s 481 of the Act as including remuneration of the Tribunal. In my view the ordinary meaning of "costs" applies and I can see no error in the approach of the Tribunal. The appellant's argument fails and pursuant to s 485(2)(a) of the Act, the order of the Tribunal is confirmed.