LEGAL PROFESSION COMPLAINTS COMMITTEE and O'HALLORAN - [2011] WASAT 95

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: VOCATIONAL REGULATION

ACT: LEGAL PROFESSION ACT 2008 (WA)

CITATION: LEGAL PROFESSION COMPLAINTS COMMITTEE and O'HALLORAN [2011] WASAT 95

MEMBER: JUSTICE J A CHANEY (PRESIDENT)
JUDGE R MACKNAY QC (SUPPLEMENTARY DEPUTY PRESIDENT)
MS K KEMP (SESSIONAL MEMBER)

HEARD: 28, 29, 30 AND 31 MARCH 2011
1 APRIL 2011 AND 4 APRIL 2011

DELIVERED : 28 JUNE 2011

FILE NO/S: VR 35 of 2009
VR 36 of 2009
VR 37 of 2009
VR 38 of 2009
VR 39 of 2009

BETWEEN: LEGAL PROFESSION COMPLAINTS COMMITTEE
Applicant
AND
PAUL JOHN O'HALLORAN
Respondent

Catchwords:

Legal practitioners - Allegations of professional misconduct - Failures to pay employee superannuation - Entry into costs agreements - Whether contrary to legislative restrictions on legal costs - Whether charges grossly excessive - Failure to provide itemised account - Delay

Legislation:

Legal Practice Act 2003 (WA), s 230, s 231(3)
Legal Practitioners (Effect on Costs of a New Tax System) (Goods and Services) Determination 2080
Legal Practitioners (Supreme Court) (Contentious Business) Determination 1996
Legal Practitioners (Supreme Court) (Contentious Business) Determination 1999
Legal Practitioners (Supreme Court) (Contentious Business) Determination 2002
Legal Practitioners (Supreme Court) (Contentious Business) Determination 2004
Legal Practitioners Act 1893 (WA), s 34A, s 34A(b), s 58W, s 58W(5), s 65, s 75
Legal Profession Act 2008 (WA), s 402, s 403, s 607, s 607(4)(b), s 622
Mortor Vehicle (Third Party Insurance) Act 1943, s 27A, s 27A(2), s 27A(3)
Superannuation Guarantee (Administration) Act 1992 (Cth), s 33, s 33(1)
Workers Compensation and Rehabilitation Act 1981 (WA), s 84ZL

Result:

Findings of professional misconduct and unsatisfactory professional conduct made

Category: B

Representation:

Counsel:

Applicant: Ms PE Cahill SC and Mr JM Healy
Respondent: Mr GMG McIntyre SC

Solicitors:

Applicant: Law Complaints Officer
Respondent: Smyth & Thomas

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

Challen v Paul O'Halloran & Associates [2008] WASC 169
Council of the Law Society (NSW) v Koffel [2010] NSWADT 149
D'Alessandro and D'Angelo v Bouloudas (1994) 10 WAR 191
Law Society of New South Wales v Bouzanis [2006] NSWADT 55
Law Society of New South Wales v Vosnakis [2007] NSWADT 42
Legal Practitioners Complaints Committee and Pillay [2006] WASAT 309
Mijatovic v Legal Practitioners Complaints Committee [2008] WASCA 115
New South Wales Bar Association v Cummins (2001) 52 NSWLR 279
New South Wales Bar Association v Somosi [2001] NSWCA 285
New South Wales Bar Association v Stevens [2003] NSWCA 261
New South Wales Bar Association v Young [2003] NSWCA 228

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The Legal Profession Complaints Committee made a number of allegations of professional misconduct against a practitioner, Mr Paul O'Halloran. One of the allegations concerned failure to comply with obligations in relation to employee superannuation. The others concerned entry into costs agreements contrary to applicable legislation, excessive charging and sundry other matters.
The Practitioner admitted the failures in relation to superannuation but sought to explain that they occurred by reason of failures in his administrative systems or changes in administrative personnel. The Tribunal concluded that, although the initial failures might be overlooked on that basis, the scale of ongoing failures could not be justified, and amounted to professional misconduct.
In relation to the costs matters, the Tribunal considered the terms of the costs agreements that were the subject of complaint. It concluded that the entry into costs agreements in those terms contravened the statutory provisions applicable to work of the relevant type. It also concluded that the charges raised by Mr O'Halloran were grossly excessive and included charges which were improperly made.
Finally, the Tribunal found a number of the sundry other allegations made against Mr O'Hallorgan were established.
The proceedings against Mr O'Halloran were adjourned to a directions hearing to program the determination of the question of penalty.

Introduction

The Legal Profession Complaints Committee (Complaints Committee) brought five separate applications for disciplinary action against a solicitor, Mr Paul O'Halloran. Four of the matters concerned issues related to costs, although one of those also included allegations of undue delay. The fifth matter concerned allegations of failures by the practitioner to comply with his fiscal obligations arising from the requirements of the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGA Act) as it applied at the relevant time.
The practitioner denied any unprofessional conduct.
Because of the substantial overlap of issues in relation to the four matters concerning costs, those matters were heard together with a direction that evidence in each matter was, to the extent relevant, evidence in all other matters. Although the matter concerning superannuation (VR 35 of 2009) involved allegations of a different character, the parties were content for that matter to be dealt with at the same hearing.

The applicable legislation

The conduct the subject of the various applications spanned a period from 1999 through to 2007. During that time, the legislation regulating the legal profession twice changed. Up until 1 January 2004, the Legal Practitioners Act 1893 (WA) (1893 Act) applied. Thereafter, the Legal Practice Act 2003 (WA) (2003 Act) applied. The 2003 Act was repealed by the Legal Profession Act 2008 (WA) (2008 Act) which commenced operation on 1 March 2009, after all of the alleged conduct by the practitioner in relation to these proceedings had occurred.
In Mijatovic v Legal Practitioners Complaints Committee [2008] WASCA 115, Beech AJA (with whom the other members of the Court agreed) explained the transitional position applicable under the 2003 Act as follows at [161]:
(a)The new Disciplinary Tribunal had (and, consequently, the State Administrative Tribunal has) jurisdiction under s 185 of the 2003 Act in respect of conduct occurring before or after 1 January 2004.
(b)In exercising that jurisdiction, the Tribunal must act consistently with the presumption against interpreting statutes as retrospectively altering substantive rights and obligations.
(c)In so acting, the Tribunal could deal with conduct occurring prior to 1 January 2004 as unsatisfactory conduct only if it were conduct of a species which rendered the practitioner liable to sanction under the 1893 Act (ie, illegal conduct, unprofessional conduct, or undue delay or neglect in the practice of the law) and then impose sanctions only to the extent permitted under the 1893 Act.
Each of these applications was commenced on 26 February 2009, before the date of the commencement of the 2008 Act. The application of the 2008 Act to conduct occurring, and disciplinary actions taken, before 1 March 2009, is dealt with in s 607 and s 622 of the 2008 Act. The effect of those provisions was summarised by the Full Bench of the Supreme Court in Legal Practitioners Complaints Committee v Camp [2010] WASC 188 at [6] - [7] where the Court said:
The overall effect of these provisions may be summarised as follows:
(a)disciplinary proceedings commenced under the 1893 Act or the 2003 Act against a practitioner are continued under the 2008 Act, s 607(2) - Legal Practitioners Complaints Committee v Segler [2009] WASAT 205 [30];
(b)the rights and entitlements of the practitioner and of the applicant arising from a reference commenced under the 1893 Act or the 2003 Act are continued under the 2008 Act - s 607(2); and Segler [30]; and
(c)in the event of any inconsistency between the rights and entitlements of the practitioner or of the applicant in relation to the
references under the 1893 Act or the 2003 Act, and the provisions in the 2008 Act, the provisions of the 2008 Act prevail - s 607(2)(b) and s 607(3).
In short, the effect of s 607 and s 622(2) of the 2008 Act is to treat the findings made against the respondent by the SAT which established contraventions of the 1893 Act or the 2003 Act as constituting contraventions of the 2008 Act. The 2008 Act therefore recognises the validity of findings made against a practitioner under the 1893 Act or the 2003 Act by treating them as constituting a contravention of the 2008 Act itself and, subject to its terms, directing that further proceedings relating to those matters shall be dealt with and regulated by the 2008 Act.
The Complaints Committee's position, which was not contested by the practitioner, was that the practitioner's liability under the 2008 Act is coextensive with his liability under the relevant Act in force at the time the conduct was engaged in. Accordingly, the Complaints Committee sought, and the Tribunal made, a direction pursuant to s 607(4)(b) that the applications be dealt with under the provisions of the 2008 Act. It may well be that the effect of s 607 and s 622 of the 2008 Act renders it unnecessary to exercise a discretion under s 607(4)(b) but we do not need to deal with that question.

VR 35 of 2009 -The superannuation matter

The allegations

The Complaints Committee alleges that, on twenty one occasions, Mr O'Halloran failed to make, or to cause to be made, the required superannuation contributions in relation to certain specified employees. In the alternative, it alleges that he failed to lodge, or cause to be lodged, superannuation guarantee statements in relation to those contributions as required by s 33 of the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGAA). Full particulars of the alleged failures are set out in a table below (at [15]).
To understand the allegations in relation to the nonpayment of superannuation, it is necessary to outline the requirements of the relevant legislation. Those requirements were not in issue in the proceedings, and were helpfully set out in the Complaints Committee's submissions in VR 35 of 2009 at [6] - [13] which read as follows:
6.Under the SGAA and the Superannuation Guarantee Charge Act 1992 (Cth) (SGCA), as then in force, from 1 July 2003 until 13 December 2005, the employer's obligations concerning contributing to an employee's superannuation were as set out in paragraphs 7 to 12 below.
7.In respect of each quarter ending on the following dates an employer was obliged to contribute a specified amount to an employee's superannuation fund by at least the following dates:
Quarter ended           Last date contributions due
30 September              28 October in the next quarter
31 December              28 January in the next quarter
31 March                   28 April in the next quarter
30 June   28 July in the next quarter
8.Where an employer failed to contribute to an employee's superannuation fund in respect of any quarter by the date set out in paragraph 7 above then:
(a)that employer had a superannuation guarantee shortfall in respect of that quarter; and
(b)such a superannuation guarantee shortfall was calculated in accordance with section 17 of the SGAA.
9.Pursuant to subsection 33(1) of the SGAA, an employer who had a superannuation guarantee shortfall for a quarter had to lodge a superannuation guarantee statement with the Commissioner of Taxation:
(a)for a quarter beginning on 1 January, by 14 May in the next quarter;
(b)for a quarter beginning on 1 April, by 14 August in the next quarter;
(c)for a quarter beginning on 1 July, by 14 November in the next quarter;
(d)for a quarter beginning on 1 October, by 14 February in the next quarter.
10.Where there was such a superannuation guarantee shortfall:
(a)a charge in that amount was imposed on the employer pursuant to sections 5 and 6 of the SGCA; and
(b)that charge was payable by the employer pursuant to section 16 of the SGAA.
11.The superannuation guarantee charge payable by the employer was payable on the lodging of such a superannuation guarantee statement.
12.Where the employer failed to lodge a superannuation guarantee statement as required by the SGAA, the Commissioner of Taxation had to issue a default assessment of the employer's superannuation guarantee shortfall for that quarter under section 36 of the SGAA, before the employer would be liable to pay the superannuation guarantee charge in respect of the superannuation guarantee shortfall.
Legislation - 14 December 2005 onwards
13.Under the SGAA and the SGCA, as then in force, from 14 December 2005 onwards, relevantly an employer's obligations concerning contributing to an employee's superannuation were the same as set out in paragraphs 7 to 12 above, except that pursuant to subsection 33(1) of the SGAA an employer who had a superannuation guarantee shortfall for a quarter had to lodge a superannuation guarantee statement with the Commissioner for Taxation:
(a)for a quarter ending on 31 March, by 28 May in the next quarter;
(b)for a quarter ending on 30 June, by 28 August in the next quarter;
(c)for a quarter ending on 30 September, by 28 November in the next quarter;
(d)for a quarter ending on 31 December, by 28 February in the next quarter.
The failures by the practitioner to meet the obligations either to pay superannuation contributions in relation to the specific employees, or to provide a superannuation guarantee statement in fault of those payments, were conveniently identified in a table to the Complaints Committee's submissions. Save for the practitioner's denial in relation to the third complaint concerning a Ms T Mola, the practitioner admitted the breaches set out in that table. The Complaints Committee did not press the third complaint concerning Ms Mola. The breaches are summarised as follows:

SUMMARY OF BREACHES

No.	Individual	Alleged Breach	Due Date	Actual Date	Amount*	Days Late	Note
1	Radich	Super contributions Quarter 4 2003	28.01.04	20.02.04	$182.68	22
1	Radich	Superannuation Guarantee Statement	16.02.04	Never
2	Fort	Super contributions Quarter 4 2003	28.01.04	20.02.04	$216.69	22
2	Fort	Superannuation Guarantee Statement	16.02.04	Never
3.	Mola	Not pursued
4	Watson	Super contributions Quarter 1 2005	28.04.05	19.08.05	$215.22	112
		Super contributions Quarter 2 2005	28.07.05	19.08.05	$84.63	21
		Superannuation Guarantee Statement	16.05.05 & 15.08.05	Never
5	Violaris	Super contributions Quarter 3 2005	28.10.04	14.12.05	$423.90	46
5	Violaris	Superannuation Guarantee Statement	14.11.05	Never
6	McNab	Super contributions Quarter 3 2005	28.10.05	14.12.05	$407.74	46
6	McNab	Superannuation Guarantee Statement	14.11.05	Never
7	V Fubbs	Super contributions Quarter 3 2005	28.10.05	14.12.05	$360.90	46
7	V Fubbs	Superannuation Guarantee Statement	14.11.05	Never
8	Claire Gibbs	Super contributions Quarter 1 2006	28.04.06	02.06.06	$341.12	34
8	Claire Gibbs	Superannuation Guarantee Statement	29.05.06	Never
9	Cherry Gibbs	Super contributions Quarter 4 2005	28.01.06	02.06.06	$689.31	124
		Super contributions Quarter 1 2006	28.04.06	02.06.06	$995.67	34
		Superannuation Guarantee Statements	28.02.06 & 29.05.06	Never
10	K Fubbs	Super contributions Quarter 4 2005	28.01.06	02.06.06	$244.24	124
	K Fubbs	Super contributions Quarter 1 2006	28.04.06	02.06.06	$384.68	34
	Superannuation Guarantee Statement	28.02.06 & 29.05.06	Never
11	Byers	Super contributions Quarter 4 2005	28.01.06	02.06.06	$626.65	124
		Super contributions Quarter 1 2006	28.04.06	02.06.06	$854.64	34
		Superannuation Guarantee Statement	28.02.06 & 29.05.06	Never	$626.65
12	Parrela	Super contributions Quarter 4 2005	28.01.06	02.06.06	$561.09	124
		Super contributions Quarter 1 2006	28.04.06	02.06.06	$812.59	34
		Superannuation Guarantee Statement	28.02.06 & 29.05.06	Never
13	Schmidt	Super contributions Quarter 4 2005	28.01.06	02.06.06	$376.01	124	B
		Super contributions Quarter 1 2006	28.04.06	02.06.06	$774.54	34	B
		Superannuation Guarantee Statement	28.02.06 & 29.05.06	Never
14	Creek (nee Staszewski)	Super contributions Quarter 4 2005	28.01.06	02.06.06	$657.99	124
		Super contributions Quarter 1 2006	28.04.06	02.06.06	$1,233.90	34
		Superannuation Guarantee Statement	28.02.06 & 29.05.06	Never
15	Romeo (nee Figliomeni)	Super contributions Quarter 1 2006	28.04.06	06.06.06	$446.74	38
15	Romeo (nee Figliomeni)	Superannuation Guarantee Statement	29.05.06	Never
16	Martin	Super contributions Quarter 3 2005	28.10.05	22.06.06	$176.93	236
		Super contributions Quarter 4 2005	28.01.06	22.06.06	$884.63	144
		Super contributions Quarter 1 2006	28.04.06	22.06.06	$1,377.24	54
		Superannuation Guarantee Statement	14.11.05 & 28.02.06 & 29.05.06	Never
17	Parrella, Byers, K Fubbs, Romeo, Lam, Holland, Dueckershoff, Martin, Read	Super contributions Quarter 3 2006	28.10.06	Unknown	$5,603.80
17		Superannuation Guarantee Statement	28.11.06	08.02.08
18	Parella, Staszewski, Byers, K Fubbs, Lam, Holland, Bradford, Dang, Willcock, Bennett, Kang, Martin, Read, Taylor	Super contributions Quarter 4 2006	28.01.07	Unknown	$8,104.85
18		Superannuation Guarantee Statement	28.02.07	08.02.08
19	Parella, Byers, K Fubbs, Dang, Bennet, Kang, Ebert, Staszewski, Terrill, Worroll	Super contributions Quarter 1 2007	28.04.07	Unknown	$4,837.07
19		Superannuation Guarantee Statement	28.05.07	08.02.08
20	Parella, Paik, Claude	Super contributions Quarter 2 2007	28.07.07	Unknown	$2,115.61
20	Parella, Paik, Claude	Superannuation Guarantee Statement	28.08.07	08.02.08
21	Parrella, VA Fubbs, Ebert, Byers, K Fubbs, Staszewski, Worroll Claude	Super contributions Quarter 3 2007	28.10.07	Unknown	$5,483.28
21		Superannuation Guarantee Statement	28.11.07	08.02.08

Notes:
* These amounts are taken from the Legal Practitioners Complaints Committee grounds.
B - Mr O'Halloran contends that this payment was made on 6 June 2006.

The context of the failures to pay superannuation in relation to Mr O'Halloran's practice was illustrated in a further table contained in the Complaints Committee's submissions. That table, which is set out below, shows the number of employees in respect of whom payments were not made in time, as against the total number of employees of the practice.

Quarter*	No. of Employees in Practice	No. of Employees in Practice who had Unpaid Super	Percentage of Employees in Practice who had Unpaid Super on Due Date of Payment of that Quarter
2003 Quarter 4 (Complaints 1 & 2)	14	1	7%
2004 Quarter 4 (Complaint 3)	8	1	13%
2005 Quarter 1 (Complaints 4)	12	1	8%
2005 Quarter 2 (Complaints 4)	10	1	10%
2005 Quarter 3 (Complaints 5, 6, 7, 16)	11	3	27%
2005 Quarter 4 (Complaints 9, 10, 11, 12, 13, 14, 16)	12	5	42%
2006 Quarter 1 (Complaints 8, 10, 11, 12, 13, 14, 15, 16)	9	6	67%
2006 Quarter 3 (Complaints 12, 13, 17)	10	9	90%
2006 Quarter 4 (Complaint 18)	15	12	80%
2007 Quarter 1 (Complaint 19)	12	10	83%
2007 Quarter 2 (Complaint 20)	11	3	27%
2007 Quarter 3 (Complaint 21)	10	8	80%

* Note: in the above table the Quarter refers to the end date of the quarter in which the employee was employed by the practice pursuant to which the obligation to pay superannuation arose (i.e. typically, the quarter prior to the quarter in which the breach occurred).

The practitioner's response

The practitioner summarised his answer to the superannuation allegations in para 1.3 of his response filed 10 January 2011, the truth of which he attested to when he gave his evidence. That paragraph read:
By way of explanation as to the circumstances in which the failure to comply with the Superannuation Guarantee Act 1992 (Cth) arose and contention, the Practitioner says -
(a)the Practitioner was working part time in his practice from 2002 to November 2006, which includes the relevant period, for a number of reasons including:
(i)the illness of his parents, who were living in the United Kingdom, resulting in the death of both his parents in August/September 2005;
(ii)the Practitioner's requirement to travel overseas to attend to affairs connected with the illness and death of his parents;
(iii)the Practitioner was engaged in a political campaign to assist injured workers.
(b)the Practitioner delegated tasks such as the payment of superannuation contributions to his bookkeeper at the time, who was employed by him for the period from 2001 to 9 June 2006, whom he reasonably believed, based on the evidence she had provided in the course of recruiting her, to be an experienced bookkeeper familiar with the legal requirements of the tasks delegated to her;
(c)the Practitioner was not made aware by his bookkeeper that the relevant superannuation contributions had not been made on time;
(d)the Practitioner was, therefore, unaware that the guarantee statements had to be lodged with the ATO;
(e)from hindsight the Practitioner is able to speculate that a possible explanation for the non-compliance by the book-keeper with the statutory requirements was the book-keeper's lack of knowledge or understanding of the strictness of the statutory time limits imposed by the law in relation to the payment of superannuation contributions, a lack of knowledge or understanding which was not known to the Practitioner;
(f)the Practitioner did substantially comply with the superannuation obligations, after some delay on his part and/or on the part of his bookkeeper at the time;
(g)the prejudice to the employee was insufficient so as to constitute unprofessional conduct on the part of the Practitioner;
(h)the conduct or extent of any neglect by the Practitioner was, in all the circumstances, insufficient to constitute unsatisfactory conduct or unprofessional conduct.
In Mr O'Halloran's witness statement in relation to the superannuation matter he elaborated on the matters raised in para 1.3 of his response. In relation to the question of delegation of responsibility for staff superannuation, Mr O'Halloran said at para 11 of his statement:
The following senior practitioners and bookkeepers were assigned to deal with staff superannuation during the following periods:
(a)Paul Haynes (Senior Practitioner) and Linda Gibbs (Bookkeeper) during the period of approximately 5 years to June 2006;
(b)Paul Haynes and Jodie Lam (Bookkeeper) between the period June 2006 and August 2006;
(c)Andrew Read and Jodie Lam between August 2006 and November 2006;
(d)Paul O'Halloran and Anna Willcock (trainer bookkeeper) between November and December 2006;
(e)Paul O'Halloran and Sally Kang (bookkeeper) between December 2006 and 7 March 2007;
(f)Paul O'Halloran and Andrea Creek (Bookkeeper) between 7 March 2007 and 12 December 2007;
(g)Paul O'Halloran and Cherise Ebert between December 2007 and 18 June 2008;
(h)Paul O'Halloran and Katie Fubbs (Bookkeeper) between June 2008 and now;
(i)Paul O'Halloran, Katie Fubbs and Rosemary Mascarenas from 3 September 2008 to current.
Mr O'Halloran said that, on a couple of occasions, Ms Linda Gibbs raised with him the issue of superannuation not being paid on time and that he responded by directing her to ensure that superannuation was to be paid promptly and kept up to date. He said that after Ms Gibbs left his employment in mid 2006, he had difficulty in obtaining a competent replacement bookkeeper. Mr O'Halloran said that when he engaged Ms Creek, who had previously worked for him, in March 2007, Ms Creek established that superannuation had not been paid on time and reported that fact to him. He said that Ms Creek was then charged with the task of urgently bringing the staff superannuation up to date and liaising with the Australian Taxation Office (ATO) for that purpose. Ms Creek became pregnant and was unable to complete the task and a senior staff member, Ms Ebert, was assigned the duty of bringing superannuation up to date. Mr O'Halloran said that 'During this audit period the Australian Taxation Office instructed me not to pay any superannuation until their audit had been completed so as not to frustrate their enquires, which took some months'. He said that after the ATO audited the superannuation files, it was revealed that there was approximately $32,000 in superannuation outstanding. That liability was subsequently paid over a period of some months, pursuant to an arrangement made with the ATO. He said that since that time, he has paid all his superannuation in a timely way.

Findings in relation to the superannuation allegation

The Complaints Committee submits that, on its face, an analysis of the practitioner's failure to comply with his superannuation obligations evidences a serious abrogation of fiscal responsibilities sufficient to warrant characterisation as unprofessional conduct. In making that submission, the Complaints Committee accepts a conclusion reached in the New South Wales Administrative Disputes Tribunal in Council of the Law Society (NSW) v Koffel [2010] NSWADT 149 (Koffel) at [48] where it was said:
… [T]he mere fact of a failure to pay superannuation guarantee contributions on time does not, of itself, constitute professional misconduct. It is the circumstances surrounding the failure, the consequences of the failure, and the actions subsequently taken by the solicitor, that determine whether the conduct constitutes professional misconduct.
We agree with that approach to the characterisation of the conduct. In order to apply that approach, it is necessary to consider the evidence as to the circumstances of the breaches, and in particular Mr O'Halloran's evidence on this issue.
We did not find Mr O'Halloran's evidence, either in its written form, or orally at the hearing, to be reliable. His evidence was replete with speculation and inconsistencies. By way of example, in his response in VR 35, which he swore to be true, he proffered 'likely explanations' and gave an account of what were 'probably' the events which occurred. To be fair, the response recited that more detailed explanations or recollections were not possible given the passage of time. That acknowledgement undermines, however, the weight which we are prepared to give to Mr O'Halloran's speculations as to what might have brought about the breaches of his obligations to pay superannuation.
Mr O'Halloran's oral evidence in relation to his failure to pay superannuation was at times inconsistent with the position set out in his response. At times it was also inconsistent with the evidence of other witnesses. For example, he maintained that, at different times, each of Mr Haynes and Ms Fubbs undertook responsibility to deal with staff superannuation. Both Mr Haynes and Ms Fubbs gave evidence at the hearing. When asked about their involvement with superannuation, each denied any responsibility in relation to it, save that Mr Haynes said that from time to time, being a signatory to the practice's general account, he signed cheques paying superannuation.
As mentioned above, Mr O'Halloran said that, during the period of the audit by the ATO, the ATO instructed him 'not to pay any superannuation until their audit had been completed so as not to frustrate their enquiries, which took some months'.
When requested by the Complaints Committee to produce documents to support those assertions, Mr O'Halloran produced a letter dated 23 January 2008 from the ATO to him, marked to the attention of Ms Ebert, which referred to a telephone conversation on 22 January 2008 concerning unpaid superannuation for the period between 1 July 2006 and 30 September 2007. In that letter, the ATO said:
Please note that if you have missed the due dates for payment, any superannuation guarantee shortfall should be paid directly to the tax office as part of the SGC. DO NOT make these payments to a superannuation fund after the cut off dates as these will not be counted in reducing your liability for the relevant periods.
The suggestion by Mr O'Halloran that the failure to pay superannuation after Ms Creek discovered that superannuation payments had not been made (which would appear to have been some time after 7 March 2007) was because of a directive by the ATO, does not accord with the documentary evidence which suggests that a directive more or less to that effect was not made until 23 January 2008. By then there had been continued substantial failures to pay superannuation throughout 2007, and nothing appears to have been done about the breaches of superannuation obligations dating back to the last quarter of 2005.
It can be noted that the advice in the ATO letter of 23 January 2008 was not that superannuation contributions should not be paid as they fall due, but rather that payments not paid by the due dates in the past should be made directly to the tax office rather than individual employee superannuation funds.
We also note that the suggestion that non-compliance was brought about by a directive of the ATO was not relied upon in Mr O'Halloran's response to the complaints which was filed in January 2011. We find therefore that the failure during 2007 to comply with the SGA Act did not result from any directive by the ATO. Mr O'Halloran's evidence in that respect illustrates a tendency to seize upon anything which he considered might excuse his conduct, and demonstrates the unreliability of his evidence generally.
It is common ground that Mr O'Halloran failed to make the payments referred to in the table above, and in that manner breached his obligations under the SGA Act. The case put against the practitioner is that there was systemic failure on his part to comply with his fiscal requirements, or that he abrogated those responsibilities. There is no evidence which is capable of supporting a conclusion that Mr O'Halloran deliberately set about avoiding payment of superannuation. The evidence does suggest, and we find, that he failed to give adequate attention to the question of compliance with his superannuation obligations.
Unlike some of the cases to which we were referred concerning solicitiors' failures to pay superannuation obligations, there is no suggestion in the evidence in this case that Mr O'Halloran was unable to meet his financial obligations.
Ultimately, he paid the full amount of his obligations, albeit by an arrangement with the ATO for payment over a period of some months.
We accept that the involvement of the ATO was brought about after Mr O'Halloran's bookkeeper contacted the ATO at his request, a proposition not challenged in cross-examination.
On the other hand, there is no cogent evidence of any contact with the ATO prior to Ms Ebert's telephone conversation with the ATO on 22 January 2008. We do not accept Mr O'Halloran's evidence that Ms Creek had earlier notified the ATO of the breaches. If she had, it might be expected that the ATO would have taken action to arrange an audit much earlier. There is no explanation as to why, if Ms Creek had been in contact with the ATO during 2007, payments were not then made as they fell due.
The finding that, at least in January 2008, Mr O'Halloran caused contact to be made with the ATO, suggests that the breaches of the SGA Act did not occur by reason of a positive intention on Mr O'Halloran's part to avoid his fiscal responsibilities. Rather, they occurred due to his failure adequately to address compliance with the superannuation obligations, and to put in place an adequate system to ensure compliance.
Mr O'Halloran's evidence is that, on at least two or three occasions during the period that Ms Gibbs was his bookkeeper (up until June 2006) she drew his attention to the issue of failure to pay superannuation on time. His response, he said, was to make it clear that superannuation must be paid promptly and kept up to date. The table above shows that significant non-compliance began to occur from the third quarter of 2005 onwards. Having been alerted to non-compliance by Ms Gibbs, Mr O'Halloran should have been vigilant to ensure that the non-compliance ceased, and that payments were left up to date. We find that Mr O'Halloran responded inadequately to the advice that payments had not been made on time.

Do the failures amount to professional misconduct?

In Legal Practitioners Complaints Committee and Pillay [2006] WASAT 309, the Tribunal reviewed a number of decisions concerning legal practitioners who had failed to lodge taxation returns. Reference was made to New South Wales Bar Association v Cummins (2001) 52 NSWLR 279 (Cummins), a case involving a failure by a barrister to lodge tax returns or pay tax for 38 years. In that case, Spigelman CJ said, at [66] that the preparation and filing of tax returns is closely related to the earning of income, and therefore, the link between the practitioner's failure and his profession was 'sufficiently close' to justify a finding of professional misconduct. That link is clearly present in Mr O'Halloran's failure to meet the superannuation obligations arising from his practice.
Reference was also made to the decisions in New South Wales Bar Association v Somosi [2001] NSWCA 285 and New South Wales Bar Association v Young [2003] NSWCA 228 where the New South Wales Court of Appeal found that the legal practitioners concerned were not fit and proper persons to remain on the roll of legal practitioners. In the latter, Meagher JA observed and held, at [9]:
… [T]he essential facts of the case … are, quite simply, that for years and years Mr Young failed to file income tax returns when he knew he should have. Deliberately to ignore one's obligations in this manner bespeaks a lack of integrity, particularly if one is not ignorant of the consequence, and a lack of integrity justifies removal of Mr Young's name from the roll. …
A similar conclusion was reached in New South Wales Bar Association v Stevens[2003] NSWCA 261
These cases, of course, involved egregious and wilful conduct by the practitioners concerned. They dealt mainly with the question of whether the practitioners were fit and proper to remain on the roll of practitioners, rather than characterisation of the conduct. The cases recognise, however, that noncompliance with statutory taxation obligations, particularly where the obligations arise in the context of legal practice, may sound in disciplinary action.
The question of non-payment of superannuation has been dealt with in a number of cases in the Administrative Decisions Tribunal of New South Wales.
In Law Society of New South Wales v Bouzanis [2006] NSWADT 55, the Tribunal considered a failure by a solicitor to pay employee superannuation between March 2000 and March 2004. The employee had ceased employment in August 2003. The solicitor made payment of the outstanding superannuation in March 2004, but only after receiving correspondence from the solicitors for the employee and the intervention of the Law Society of New South Wales. The definition of professional misconduct under the relevant NSW legislation was substantially the same as the definition of professional misconduct in s 403 of the 2008 Act. The Tribunal concluded that the failure by the solicitor to make superannuation payments until correspondence was received from solicitors representing the employee, represented a sufficiently serious abrogation of his fiscal responsibility in the practice of law to warrant a finding of professional misconduct (at [18]).
In Law Society of New South Wales v Vosnakis [2007] NSWADT 42, the Tribunal concluded that a failure by a solicitor to pay superannuation entitlements between August 1996 and April 2004 (except for the 1997/98 year) in relation to one employee, and over a nine year period in respect of another employee, amounted to professional misconduct.
The decision in Koffel involved a solicitor whose practice encountered financial difficulties as a result of the collapse of a major corporate client. The solicitor's practice was placed in administration in July 2007. Its creditors were the ATO for PAYG tax and superannuation charges, and another external creditor. A deed of company arrangement was entered, in which the solicitor gave a personal guarantee to pay the creditors. The personal guarantees by the solicitor were effectively based on trust, since the solicitor was unable to offer any security for his undertakings. The solicitor made significant payments to the administrator so that, by the date of the hearing, all outstanding payments of superannuation had been made. The superannuation liability under the deed amounted to $123,998.97. It was accepted that the solicitor was aware that the superannuation payments were outstanding, but had not paid them because he had inadequate funds to do so, and was seeking to trade out of the financial difficulty caused by the failure by the firm's principal client to pay its fees.
The Tribunal in Koffel noted the distinction between the facts before it, and the facts in the decision in Cummins to which it had been referred. It noted that the solicitor had acknowledged that he had responsibility to make sure all superannuation guarantee payments were made, and did not set out to avoid those obligations. At [42] the Tribunal concluded:
It cannot be said in the case now before the Tribunal that the conduct of the solicitor Koffel involved 'a sufficient serious abrogation of his fiscal responsibilities in the practice of law' or 'a systematic failure to comply with Revenue responsibilities'. Rather, the opposite. The solicitor's evidence, which was clear and unchallenged, was that once the matter had been drawn to his attention he did what he believed he could reasonably do in all the financial circumstances to meet his revenue responsibilities, thus demonstrating conduct in a professional (and personal) sense a committment [sic] to pay the outstanding debts including the superannuation payments. Certainly, the solicitor, as principal solicitor, should have kept a more careful eye on his office/general account, his income and expenditure and his statutory obligations, especially in circumstances where there was a substantial decline in income. However, when the issue of outstanding superannuation came to his attention he directed his mind to it and dealt with it. The Tribunal concludes that the solicitor's conduct was that he accepted his fiscal/revenue responsibilities.
The Tribunal dismissed the application against Mr Koffel on the basis that the practitioner had done all he reasonably could do to ultimately discharge his statutory obligations to pay the superannuation levies in respect of his employees.
Mr O'Halloran's failure to pay superannuation was in the nature of omission and inadequate oversight and systems, rather than wilful abrogation of his responsibilities. The difficulty for Mr O'Halloran is the extended period of time over which there was substantial non-compliance, that is, from mid 2005 until September 2007. Although Mr O'Halloran professes to have been unaware of the level of noncompliance, his evidence is that from time to time noncompliance was drawn to his attention. He failed then to have sufficient regard to his obligations.
Complaints 1 (Radich), 2 (Fort) and 4 (Watson) involve failures in relation to one employee in the relevant quarter and involve relatively short delays before payment was made. We would not consider that those delays, which were most likely initially the responsibility of a bookkeeper, should be treated as unprofessional conduct on Mr O'Halloran's part.

In the third quarter of 2005, there were four delayed payments out of a total complement of 11 employees. Payment in respect of three of those employees was made 46 days after the due date. From that point on the position worsened significantly. Given that payments the subject of complaint 5 (Violaris), 6 (McNab) and 7 (V Fubbs) were made within 46 days, and represented the beginning of the problems emerging in relation to the nonpayment of superannuation, it is reasonable to conclude that those nonpayments did not demonstrate an indifference to Mr O'Halloran's taxation obligations. They represent however, the emergence of a problem that required careful attention. In those circumstances, unprofessional conduct is not, in our view, demonstrated in relation to complaints 5, 6 and 7.
The position changed thereafter, however. Having remedied the failures in quarter 3 2005, Mr O'Halloran should have been vigilant to ensure that no further noncompliance occurred. He was not, and the position deteriorated to the point where up to 90% of employees' superannuation was not paid. Against a background of earlier problems with timely payment, the extent of failures after that time demonstrates, in our view, an indifference to his taxation and superannuation obligations. The failures had assumed substantial proportions, and we find the failures in relation to complaints 8 through to 21 do amount to professional misconduct.

VR 37 of 2009 - Pizzata

The Pizzata costs agreement

The complaints against Mr O'Halloran concerning his client, Ms Elizabeth Pizatta, substantially arise from the entry into a costs agreement, and the charges made under that costs agreement in relation to representation on claims for damages arising out of two motor vehicle accidents in which Ms Pizatta was involved.
The costs agreement signed by Ms Pizatta on 1 April 1999 read as follows:
I confirm that I have agreed to the following terms and conditions upon which PAUL O'HALLORAN will act for me in this or any other matter:
(a)$270 per hour for all time spent on my file including interviews, court appearance, incoming and outgoing telephone calls, perusing documents, drawing documents, travelling and waiting time, file reviews, conferences, etc.;
(b)Minimum charge of one tenth of an hour for time spent on the above matters and clerical for non-professional time;
(c)Minimum charge of two tenths of an hour per page (or part thereof) for outgoing correspondence, court documents, statements, proof etc;
(d)$130.00 per hour for all clerical and non-professional time spent for such things as collating and photocopying, outside deliveries and attendances; incoming and outgoing telephone conversations, messages, file notes, etc. (but excluding the making of appointments for me to see Paul O'Halloran or his staff).
(e)5% increase in charge rate per annum;
(f)5% interest on unpaid fees per annum;
(g)15% interest per annum on outlays incurred by Paul O'Halloran.
(h)I am responsible for payment of medical, Barrister and other expenses necessarily incurred and I shall fully and promptly pay Paul O'Halloran for such expenses upon demand, whether or not I win my case.
(i)Paul O'Halloran is authorised to deduct monies from his Trust Account for fees and disbursements at any time;
(j)I confirm that you have advised me that I may seek independent legal advice before signing this agreement.
(k)I confirm that Paul O'Halloran also reserves the right to charge me pursuant to the provisions of the Fourth Schedule of the Supreme Court Rules (as amended from time to time) in lieu of the above rates.
Instructions were initially taken to represent Ms Pizatta in relation to her claim for damages arising from a motor vehicle accident on 31 January 1999. That claim proceeded through to a listing for trial, and the matter was set down to be heard for three days commencing 1 May 2002. However, shortly prior to the trial, Ms Pizzata was involved in a second accident. For that reason, the trial dates in relation to the first accident were vacated.
Eventually, Ms Pizzata's claims were settled for an amount of $50,000 plus costs to be taxed if not agreed. The costs were subsequently taxed on a party/party basis and allowed at $11,089.31 inclusive of disbursements.
Mr O'Halloran rendered fees to Ms Pizzata in the total amount of $36,271.55 made up as follows:
a)$27,368.16 for professional fees (excluding GST);
b)$2,384.51 being GST on professional fees;
c)$2,495.20 for disbursements (including GST);
d)3,051.82 being fee increases and interest on unpaid fees;
e)$971.86 for interest on disbursements.

The complaints relating to Pizzata

Against that general background, the Complaints Committee makes the following complaints against Mr O'Halloran in relation to Ms Pizzata:
COMPLAINT A
The practitioner, PAUL JOHN O'HALLORAN, was guilty of unsatisfactory conduct by unprofessional conduct in that on or about 1 April 1999, he entered into a written agreement with Elizabeth Pizzata, a client, (the 'Pizzata Costs Agreement') which purported to allow him to charge Ms Pizzata above that allowed by the Motor Vehicle (Third Party Insurance) Act 1943 (WA) (the MV (TPI) Act) and, the Legal Practitioners (Supreme Court) Contentious Business Determination 1996 (the 'Legal Practitioners Determination 1996'), - for legal costs the subject of that Act and Determination and/or the terms of which were unreasonable. In particular, the Pizzata Costs Agreement purported to allow the practitioner to charge Ms Pizzata:
(i)for secretarial or administrative work: see clauses (b) and, or, (d) of the Pizzata Costs Agreement;
(ii)unreasonable minimum charges for certain tasks irrespective of the time taken to perform the task: see clauses (b) and (c) of the Pizzata Costs Agreement;
(iii)a 5% increase in 'charge rate' per annum;
(iv)5% interest on unpaid fees per annum: see clause (f) of the Pizzata Costs Agreement; and
(v)15% interest per annum on outlays incurred by the practitioner, being an amount in excess of that allowed pursuant to section 75 of the Legal Practitioners Act 1893: see clause (g) of the Pizzata Costs Agreement;
(vi)pursuant to the provisions of the 'Fourth Schedule of the Supreme Court Rules': see Clause (k) of the Pizzata Costs Agreement.
COMPLAINT B
The practitioner was guilty of unsatisfactory conduct by unprofessional conduct on or about each of 29 October 2003, 20 January 2004 and 3 February 2004 by charging Ms Pizzata fees for representation arising out of two motor vehicle accidents, or causing her to be charged the fees, and receiving payments in respect of the same, where the fees:
(i) were grossly excessive; and, or
(ii) included charges which were not properly able to be
charged.
COMPLAINT C
The practitioner was guilty of unsatisfactory conduct by unprofessional conduct in that, on various dates in 2001, 2002 and 2003, he applied trust moneys which he held for the benefit of Ms Pizzata towards disbursements without complying with section 34A(b) of the Legal Practitioners Act 1893 (WA) (the 'LPA 1983')
A fourth complaint of acting without instructions from Ms Pizzata in relation to costs was not pursued by the Complaints Committee.

The practitioner's response

Mr O'Halloran denies that the Pizzata costs agreement allowed him to receive any greater reward than was provided for in the relevant determinations. He says that the charge for 'clerical and nonprofessional time' allowed for in the Pizzata costs agreement at cl (b) and cl (d) did not allow, and was not interpreted as allowing, charges for purely secretarial or administrative work forming part of the practitioner's overheads, but rather allowed for charging for fees involved in the pursuit of the client's matter. He contends that his method of charging by reference to specified minimums was a reasonable approach to charging of time spent and was consistent with professional standards. He further contends that the charging of interest on unpaid fees and outlays does not represent a reward for work undertaken but rather 'as an imposition of interest payable on money due and owing'. He contends that those charges are not matters addressed by s 27A(2) of the Motor Vehicle (Third Part Insurance) Act 1943 (WA) (MV (TPI) Act).

The MV (TPI) Act - s 27A

At the relevant time, s 27A(2) of the MV (TPI) Act provided:
An agreement is not to be made for a legal practitioner to receive, for appearing for or acting on behalf of a person in an action to which this section applies, any greater reward than is provided for by a determination in force under section 58W of the Legal Practitioners Act 1983.
Section 27A(3) provided that an agreement made contrary to the section is void and any money paid under such an agreement is recoverable by the person who has paid it.
Section 58W of the 1893 Act provides that the Legal Cost Committee may make determinations regulating the remuneration of practitioners in respect of, amongst other things, contentious business carried out by them for the purposes of proceedings before the District Court, or before a review officer or compensation magistrates court within the meaning of the Workers Compensation and Rehabilitation Act 1981 (WA) (WCR Act).
On 1 April 1999, when Mr O'Halloran's retainer from Ms Pizzata commenced, the applicable cost determination under s 58W of the 1893 Act was the Legal Practitioners (Supreme Court) (Contentious Business) Determination 1996 (1996 Determination). That Determination provided for a maximum hourly rate for a senior practitioner of $270, and a maximum hourly rate for a clerk/paralegal of $130.
On 1 July 1999 the Legal Practitioners (Supreme Court) (Contentious Business) Determination 1999 (1999 Determination) came into effect. The hourly rates for a senior practitioner and a clerk/paralegal remained unchanged from those permitted by the 1996 Determination.
From 15 September 2000 until 31 March 2002, the Legal Practitioners (Effect on Costs of a New Tax System) (Goods and Services Tax) Determination 2008 was in effect. That permitted a practitioner, whose charges were limited by specified earlier determinations (including the 1999 Determination), to add on to their charges an amount 'no more than is necessary to offset the consequences' of the introduction of the GST.
From 1 April 2002 until 30 June 2004, the Legal Practitioners (Supreme Court) (Contentious Business) Determination2002 applied. The rate chargeable by a senior practitioner inclusive of GST became $313 per hour, and for a clerk or paralegal, $151 per hour.
From 1 July 2004, the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2004 came into force. That Determination permitted a senior practitioner to charge an hourly rate inclusive of GST, of $341, and a clerk or paralegal, an hourly rate of $165 inclusive of GST.

The practitioner's system of charging

Central to the consideration of the complaint by Ms Pizzata, as well as the other complaints concerning charges, is the operation of the costs agreement and the unusual system for charging undertaken in Mr O'Halloran's practice. It is necessary to outline that system of charging.
Work in progress (WIP) on each matter was recorded on a computerised system which could be viewed and printed in a document described as a 'matter prebilling guide' (WIP record). As can be observed, clause (b) of the Pizzata costs agreement provided for a minimum charge of 1/10 of an hour for time spent on the matters referred to in clause (a). Clause (c) provided for a minimum charge of 2/10 of an hour per page (or part thereof) for 'outgoing correspondence, court documents, statements, proof etc'. The firm's practice was that upon receipt of a document, such as a letter, an entry of not less than 1/10 of an hour was recorded as WIP. It is not clear precisely who caused that entry to be made in each case. It is apparent that Mr O'Halloran, and Mr Haynes, a senior solicitor working with Mr O'Halloran at the relevant time, maintained time sheets. It would appear that, on some occasions, they would open incoming correspondence, and then either record their time for perusal of that correspondence, or cause a member of the administrative staff to record that time. On other occasions, it would appear that administrative or clerical staff who may open the mail might make a time entry for perusal. Mr O'Halloran explained that the firm's practice was that each incoming document would have a time for reading or perusal recorded on the basis that time spent reading that document would only ever be recorded once, notwithstanding that it may be necessary during the life of the file, for a practitioner or paralegal to reread the particular document from time to time. The time shown on the WIP records was not, therefore, necessarily a reflection of the time actually spent reading the document on the day it was received, but was an estimate of a reasonable charge having regard to the possibility that the document may be perused a number of times during the life of the file.
A similar approach was taken in respect to outgoing correspondence, provision for which was made in clause (c) of the costs agreement. That clause provided for a charge of a minimum of 2/10 of an hour for each page of outgoing correspondence or other documents. It appears that the entry into the WIP records of outgoing correspondence was undertaken by administrative staff based upon the length of the particular item of correspondence. That charge, Mr O'Halloran explained, was designed to cover the professional time in preparation of the particular document and amending and settling drafts. In the case of documents prepared by a clerk, Mr O'Halloran said that either he or Mr Haynes would go through documents drafted by clerks, make amendments and crosscheck against the file, have the document retyped and then review it again. Mr O'Halloran said that the charge of 2/10 of an hour per page was intended to be a genuine preestimate of the time spent.
Mr O'Halloran acknowledged that in some cases, the full one or two unit charge for ingoing or outgoing correspondence should not have been made for very simple and short documents, but contended that, by a system of 'swings and merry-go-rounds' the overall charges to clients were not unreasonable.
In addition to the mechanical recording of time for incoming or outgoing correspondence, it is apparent that the solicitors and clerks within the firm maintained their own time sheets recording time spent on attendances on the client or at conferences or attending to matters on the file. The identification of precise work done by individuals from the WIP records is made difficult by the fact that the reference code 'POH' was both Mr O'Halloran's reference in relation to work which he undertook, but was also used as the 'generic entry for the firm'. Thus, work shown in the WIP records under Mr O'Halloran's name did not, in fact, in many cases refer to work with which he had any personal involvement. Mr O'Halloran explained that the policy at the time was that the perusal and drawing of more standard form documents were charged in the 'generic' name of the firm rather than the practitioner with conduct of the file.

Complaint A (i) Secretarial or administrative work

It was not in dispute that, in applying the relevant costs determination, a practitioner is not entitled to include any charge at an hourly rate for merely clerical, secretarial or administrative work carried out by a clerk, which properly formed part of the overheads of the practitioner's practice - see D'Alessandro and D'Angelo v Bouloudas (1994) 10 WAR 191 (Bouloudas) at 220. The Complaints Committee argues that clause (d) of the Pizzata costs agreement permits the charging for purely secretarial or administrative work, and is thus a charge not permissible under the relevant determinations. The Complaints Committee also contends that clause (b) fails to distinguish between secretarial or administrative work on the one hand, and paralegal work on the other.
Mr O'Halloran acknowledged that clause (d) of the Pizatta costs agreement did reserve to him the ability to charge for purely clerical tasks, such as collating and photocopying. He said, however, that the form of costs agreement had been prepared prior to the Bouloudas decision, but had not been amended to take account of that decision. Notwithstanding that, Mr O'Halloran said that, as a matter of fact, charges for purely clerical tasks were not made under the agreement.
The prohibition in s 27A of the MV (TPI) Act is against the making of an agreement to receive greater reward than is provided for in the relevant determination. To the extent that the Pizzata costs agreement permitted the recovery of remuneration not recoverable under the relevant determinations, the agreement contravened s 27A. In his closing submissions, counsel for Mr O'Halloran conceded that Mr O'Halloran had recorded some work, in arriving at the rewards sought, which included some amounts referable to clerical work. That acknowledgment was rightly made. At least some work of a purely administrative nature, such as file notes or telephone calls made by clerical or administrative staff within Mr O'Halloran's office, were recorded as chargeable and were included in the charges raised. The Pizzata costs agreement permitted those costs to be made.
We find that by entering the Pizzata costs agreement containing clause (b) and clause (d), Mr O'Halloran acted in breach of s 27A of the MV (TPI) Act.

(ii) Unreasonable minimum charges

The second aspect in respect of which the Complaints Committee alleges that Mr O'Halloran agreed to charges beyond those permitted by the relevant determination, or were unreasonable, were the minimum charges provided for in clause (b) and clause (c) of the Pizzata costs agreement. At the outset of the hearing, counsel for the Complaints Committee advised that the complaint in relation to clause (b) was not simply charging by reference to six minute units. The Complaints Committee acknowledged that there is a standard practice within the legal profession of charging by reference to six minute units. The Complaints Committee's objection is that the effect of applying a minimum charge of 1/10 of an hour for any activity regardless of the time actually spent on that activity has the effect of enabling recovery at an hourly rate in excess of the rate permitted by the relevant determination. The Complaints Committee submitted, however, that there is no general practice within the profession of charging a minimum of 2/10 of an hour per page for correspondence and that the charges on that basis were themselves unreasonable, and had the effect of increasing the effective hourly charge rate beyond the maximum permissible under the relevant determination.
Mr O'Halloran's response on this issue was that the setting of a minimum charge of 2/10 of an hour per page (or part thereof), for outgoing correspondence, court documents, statements and proof is not unreasonable when accounting for the fact that it includes professional time taken in considering the content of the document, dictating or otherwise drafting the documents, checking the document in its engrossed form, correcting any errors in typing, checking any amended form of the document, signing it and authorising its dispatch.
In his witness statement regarding Pizatta, Mr O'Halloran said:
At the time of rendering the work it was the practice adopted by my firm to have some standardised charges which were usually two units of six minutes time for drawing each page of the letters in general terms, which was thought to benefit the client and be an accurate time of all time spent in composing those letters, dictating those letters, typing those letters, reading the initial draft, redrafting and amending the draft letter, rereading the settled draft, checking the final form of the letter and signing the same. All this takes time and is not separately charged for in our office, but forms part of the charge even though that usually is less than the totality of all the time actually spent dealing with the separate components of a letter.

In his oral evidence at the hearing, Mr O'Halloran said that, in relation to incoming correspondence, his practice was to charge one unit of time for the first two pages, and two units of time if the letter was three, four or five pages. It is difficult to reconcile that evidence with the WIP record. That is partly because of a difficulty in matching the WIP records with the contents of the client files so as to identify the documents referred to in the WIP records. It is apparent that the minimum charge of one unit was regularly applied in relation to reading incoming correspondence and documents. A random review of documents on file reveals that there are a large number of very short letters for which the standard one unit charge for reading was applied. Reading those letters takes a matter of seconds. By way of an extreme example, on 7 February 2002, the charge of one unit of time for a senior solicitor was charged for reading an invoice from a psychiatrist. The invoice comprised one line. On 7 March 2002, the WIP records show a charge of one unit for reading a letter from the other party's solicitor. That would appear to be a letter dated 6 March 2002 which reads:
We refer to a telephone discussion between Barbara and Fay Parrella on 5 March 2003.
We confirm an informal conference has now been arranged for Wednesday 26 March 2003 at 2.30 pm to be held at your offices.
We look forward to seeing you then.
There are numerous examples of correspondence of that nature on the client files. A charge of a unit of senior solicitor's time in relation to correspondence of that nature, repeated many times over the life of the file must inevitably have lead to a remuneration at an hourly rate greater than that permitted by the relevant determinations. The same effect arises from the minimum charge of two units per page for outgoing documents. A random selection of documents from the file demonstrates that the provision for a minimum charge resulted in excessive charges for correspondence on a regular basis. By way of example, the WIP records record four units of senior solicitor time on 26 November 2002 for writing a letter to Dr Ismail asking for a report. The records show a further record on the same day, of four units of senior solicitor time writing a letter to Dr Mendelson seeking a report. Apart from short introductory paragraphs, the letters, which are approximately one and a half pages in length, are identical. The letters list the matters to be covered in the report. They are standard requests, and the letter appears to be, in substance, a standard letter. Even allowing for consideration of the file for the purpose of deciding to whom the letter should be addressed, and tailoring the introductory paragraphs, it is not possible to justify a charge for 48 minutes of time to generate, settle and dispatch those letters.
A further example is a letter on the Pizzata file to Dr Harper dated 17 July 2002. That letter encloses a cheque as prepayment for a medical report fee. It consists of two sentences. For that, a charge of two units of senior practitioner time, that is $56.90, was recorded in the WIP record.
The examples of brief routine correspondence attracting charges of that nature are common in the file. The files demonstrate that the provision in the agreement which permitted the charging of two units of time per page for correspondence inevitably led to a charge at an effective hourly rate significantly in excess of the permissible hourly rate under the relevant determination. Because of their capacity to significantly inflate the overall hourly charges beyond those permitted by the relevant determination, and given their cumulative effect on the overall charges to the client, the minimum two unit charge per page in relation to outgoing correspondence was, in our view, unreasonable.

(iii) 5% increase in charge rate per annum

A 5% increase in charge rate per annum was provided for in clause (e) of the Pizzata costs agreement. That was so notwithstanding that the hourly rates specified in the agreement represented the maximum hourly rates permissible under the 1996 Determination. That Determination had come into force on 1 February 1997, and had thus applied for over two years during which the maximum hourly rate remained unchanged. An increase of 5% per annum on the maximum hourly rate chargeable under the Determination was clearly impermissible unless a new determination raising the hourly rate came into effect. As it happened, the 1999 Determination left rates at the same level with no increase.
It follows that the agreement permitting Mr O'Halloran to charge a 5% increase per annum on his hourly rate amounted to an agreement to receive remuneration in excess of that permitted by the relevant determination. It thus amounted to a breach of s 27A of the MV (TPI) Act.
When Mr O'Halloran rendered his principal account to Ms Pizzata on 27 October 2003, he included an amount of $3,051.82 which was described as follows:
Plus fee increases and interest on unpaid fees as per costs
agreement being 5% per annum being $6,766.18
but say as reduced $3, 051.82
Mr O'Halloran acknowledged that the clause permitting a 5% increase in hourly rates had the potential to result in a charge in excess of that permitted under the relevant determination. He said, however, that he never intended it to have that operation. It may be that Mr O'Halloran did not put his mind to the consequences of applying an increase to the hourly rate recorded, but he nevertheless brought to account an increase in his charges in reliance upon clauses (e) and (f) of his costs agreement. Although the precise calculation of the amount eventually charged is not clear, given that WIP was recorded at the maximum permissible hourly rate, the additional charges necessarily caused Mr O'Halloran's account to exceed that which was permissible under the relevant determination.

(iv) 5% interest on unpaid fees per annum

The Pizatta costs agreement permitted Mr O'Halloran to charge '5% interest on unpaid fees per annum' (clause (f)). That provision constituted part of the basis upon which the sum of $3,051.82 was added to the account rendered on 27 October 2003. Clearly, that 'interest' component did not relate to outstanding invoices, but was based on a calculation of interest on unbilled time. Mr O'Halloran explained his understanding of the costs agreement as being that 'it entitled me to charge 5% interest at the conclusion of the matter in lieu of invoicing on a periodical basis and accruing an interest entitlement in that way'. In his response to the Pizzata allegations at para A(f), Mr O'Halloran said:
clause (f) of the costs agreement is reasonably to be interpreted as having the meaning of authorising the practitioner to make a calculation at the end of each year of time spent by his practice on behalf of the client at the hourly rate agreed and to add 5% per annum to that amount for so long as it remained unpaid, as an amount agreed to be due and owing.
In his response to the Complaints Committee's contentions, Mr O'Halloran contended that:
Interest charged per annum on 'unbilled time' or unpaid fees as contained in clause (f) of the Pizzata Cost Agreement is not a matter within the subject matter of a determination of the remuneration of legal practitioners, as the term 'remuneration' as defined by s 58W of the Legal Practitioners Act 1893 or s 210 of the Legal Practice Act 2003, but a matter relating to money due and owing and so may be a matter for agreement between the practitioner and the client.
That submission by the practitioner overlooks the fact that no money is due and owing by a client to a legal practitioner until such time as the practitioner renders an account (s 65: 1893 Act; s 230: 2003 Act). Until an account is rendered, the client has no knowledge of the amount to be charged, and thus no opportunity to pay fees so as to avoid interest running. Given the client's ignorance of this amount, it cannot be said, as Mr O'Halloran said in para A(f) of his response, that his unbilled time was 'an amount agreed to be due and owing'.
The requirement to pay interest, effectively on an unbilled time, was, in substance, a method by which the hourly rate ultimately charged to the client for services performed sometime earlier, was increased. Where, as in the Pizzata case, the hourly rate specified in the costs agreement represented the maximum permissible under the costs determination, the provision enabling interest to be charged on unbilled time had the effect of permitting charges in excess of the amount permissible under the relevant determinations.

(v) 15% interest per annum on outlays

The Pizatta costs agreement provided for 15% per annum on disbursements incurred by Mr O'Halloran. The applicable costs determinations did not provide for the charging of interest in any amount on outlays incurred by a practitioner. However, s 75 of the 1893 Act provided that:
A practitioner shall be entitled to charge interest on all moneys disbursed in connection with litigious or other business, at the rate from time to time allowed on judgment debts.
At the relevant time the amount chargeable on judgment debts was 6%.
The Complaints Committee assert that a charge of 15% per annum in interest on outlays was not permitted by the relevant determinations, or was unreasonable.
Mr O'Halloran contends that interest on outlays is not a matter within the subject matter of the relevant determinations of remuneration, as the term 'remuneration' does not include payments relating to money due and owing and thus may be a matter for agreement between the practitioner and the client. Mr O'Halloran further contends that the charge was not prohibited by s 75 of the 1893 Act.
We do not accept the practitioner's contention. Section 58W of the 1893 Act enables the Legal Costs Committee to make determinations regulating the remuneration of practitioners. By s 58W(5) 'remuneration' is defined to include 'the reimbursement of expenses properly incurred in the course of, or in connection with, business carried out by a practitioner for a client'. Section 27A of the MV (TIP) Act prohibits an agreement for a legal practitioner to receive 'any greater reward than is provided for by a determination in force under s 58W' of the 1893 Act in relation to actions for damages arising from motor vehicle accidents. It may be that s 75 of the 1893 Act provided a separate statutory entitlement to interest at the rate allowed on judgment debts to be charged in relation to disbursements. To the extent, however, that the practitioner entered into an agreement to pay interest at a higher rate than provided for in the statutory entitlement under s 75 of 1893 Act, it was an agreement for greater reward than was permitted under the relevant determination, and was not justified by s 75 of the 1893 Act.
The practitioner, in his oral evidence, suggested that the rate of 15% approximated the rate of interest which he incurred in relation to his overdraft at the relevant time, and thus asserted that the provision did no more than enable him to recover his true out of pocket expenses. That may be so, but that does not mean that the practitioner was entitled to make that charge. If he chose to carry outgoings in relation to the client's matter, he had a statutory entitlement to charge interest at a specified rate, but otherwise any interest costs he incurred comprised an overhead of his business not recoverable from the client.

(vi) Charges pursuant to the Fourth Schedule of the Supreme Court rules

This aspect of Complaint A was not pursued by the Complaints Committee and need not be dealt with further.

Did entry into the Pizzata costs agreement constitute unprofessional conduct?

At the time of entry into the Pizzata costs agreement, the 1893 Act rendered a legal practitioner liable to disciplinary action where the practitioner had been guilty of, amongst other things, unprofessional conduct. The first allegation in relation to the Pizzata matter is that the practitioner was guilty of 'unsatisfactory conduct by unprofessional conduct'. The expression 'unsatisfactory conduct' comes from the 2003 Act. Unsatisfactory conduct was defined under the 2003 Act to include unprofessional conduct.
Unprofessional conduct, used in both the 1893 Act and the 2003 Act, had the meaning explained in Kyle v Legal Practitioners Complaints Committee [1999] 21 WAR 56 at [72] where Parker J described unprofessional conduct as:
[C]onduct that would be reasonably regarded as disgraceful or dishonourable by practitioners of good repute and competence, or that, to a substantial degree, fell short of the standard of professional conduct observed or approved by members of the profession of good repute and competence.
The 2008 Act introduced the expressions 'unsatisfactory professional conduct' and 'professional misconduct'. Those terms are defined in s 402 and s 403 of the 2008 Act. 'Unsatisfactory professional conduct' is defined to include:
Conduct of an Australian legal practitioner occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.
'Professional misconduct' includes, relevantly, unsatisfactorily professional conduct where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence or diligence. Undoubtedly, conduct which met the description of unprofessional conduct under the 1893 Act or the 2003 Act constitutes either unsatisfactory professional conduct or professional misconduct for the purposes of the 2008 Act.
The proper approach to characterisation of Mr O'Halloran's conduct in relation to the entry into the Pizzata costs agreement in 1999 is to ascertain whether that conduct amounted to unprofessional conduct for the purposes of the 1893 Act and, if so, to then ascribe a character of either unsatisfactory professional conduct or professional misconduct based upon the degree to which the conduct departed from the appropriate standards.
We have concluded that the Pizzata costs agreement offended s 27A of the MV (TPI) Act in four respects, being those identified in paras (i) to (iv) of Complaint A. We have also concluded that the minimum charges provided for in cl (c) of the Pizzata costs agreement permitted unreasonable charges to be made.
It does not necessarily follow that the making of a costs agreement which is construed to offend the MV (TPI) Act or to permit unreasonable charges to be made, or indeed the making of charges under such an agreement, constitutes unprofessional conduct. In D'Alessandro v Legal Committee (1995) 15 WAR 198 at [209 210] (D'Alessandro) Ipp J (with whom Pidgeon and Frankland JJ agreed) said:
The standards applied under the court's duty to monitor the taxation of bills of costs and costs agreements, and the court's duty to supervise the disciplining of legal practitioners are not necessarily the same and do not serve identical purposes. A fee that a solicitor may seek to charge by way of a bill of costs may, upon taxation, be found to be unreasonable and therefore subject to appropriate reduction. It does not, however, necessarily follow that the fees so charged by the bill of costs are so excessive as to constitute a breach of ethics. The test for determining whether excessive or unreasonable overcharging constitutes professional misconduct would generally be more stringent than that which is applied when determining whether the amount claimed under a bill of costs or under a s 59(1) costs agreement should be reduced, or whether the costs agreement should be cancelled. What is lawful may not necessarily be ethical, and, indeed, what is unethical, may not necessarily be unlawful.
Whether or not the entry into the agreement constitutes conduct 'unbefitting a solicitor', it is 'a question of degree and dependent upon the facts of the individual case', in Re Veron; Ex parte Law Society (NSW) (1966) 84 WN (Pt 1) (NSW) 136 at [144].
Section 27A of the MV (TPI) Act was inserted by an amendment in 1994. It had thus been in place for five years prior to the entry into the Pizzata costs agreement. Mr O'Halloran's practice consisted substantially of claims for personal injuries, no doubt principally arising from motor vehicle accidents and work injuries. He was well aware of the statutory limitation on costs.
Mr O'Halloran said that he believed, in 1999, and indeed still believes, that the Pizzata costs agreement did not offend s 27A of the MV (TPI) Act. The hourly rate specified in clause (a) of the Pizzata costs agreement was an hourly rate permitted (albeit the maximum) under the relevant determination. The charge by 1/10ths of an hour was, he says, and the Complaints Committee accepts, a common method of charging within the legal profession. The provisions in clauses (f) and (g) were considered by him to be permissible methods of recovering his cost of, in effect, extending credit to the client through the course of the matter. In those circumstances, entry into an agreement containing those provisions might fall short of unprofessional conduct, albeit that we have concluded that clauses (f) and (g) were not permissible.
In our view, however, clauses (c) and (e) and clause (d), insofar as it permitted recovery for purely administrative tasks, cannot be so easily explained or justified. Given the nature of the practice, and, as the files demonstrate, the extensive amount of routine correspondence, clause (c), in particular, has an obvious capacity to enable recovery of costs at an effective hourly rate well in excess of the maximum permissible rate under the determination. That situation was aggravated by the capacity to add a 5% per annum increase in charge rates. The entry into those aspects of the agreement so clearly enabled recovery of costs in excess of the appropriate determination that they cannot be justified. We have found the charge under clause (c) to be unreasonable. The entry into the agreement containing those terms, in breach of the statutory limitation on costs, fell short of the standard of professional conduct observed by members of the profession of good repute and competence, and did so to a substantial degree. In our view, Complaint A is made out, and the practitioner is guilty of professional misconduct in the manner alleged in Complaint A.

Complaint B charging a grossly excessive amount or improper charges

The expert evidence

As already noted, Ms Pizzata's claim in relation to both accidents was ultimately settled for an amount of $50,000 plus costs to be taxed if not agreed. Fees charged to Ms Pizzata in total amounted to $36,271.55. Costs were taxed on a party/party basis and allowed at $11,089.31. It can immediately be seen that the total costs are disproportionate to the amount recovered. Mr O'Halloran contends that Ms Pizzata's claim was worth substantially more than the figure for which she settled, so the costs seem more disproportionate than they would if measured against the value of her claim.
In all of the matters concerning complaints about excessive charges, each of the Complaints Committee and Mr O'Halloran engaged legal costs experts to review the files for the purpose of assessing reasonable charges. In relation to each costs matter, the Complaints Committee relied on the evidence of Mr Stewart Forbes. In relation to the Pizzata matter, Mr O'Halloran relied upon the opinions of Mr David Lang, and Mr Marco Tedeschi.
Before moving to the evidence of the experts, it is necessary to recount the events surrounding the taxation of costs.
The major bill was sent to Ms Pizzata with a letter dated 29 October 2003. Mr O'Halloran caused the sum of $34,899 to be paid from his trust account from the monies held on behalf of Ms Pizzata to pay his account.

In some of those cases (for example Law Society of New South Wales v Vosnakis [2007] NSWADT 42 (Vosnakis) and The Council of the Law Society of New South Wales v Adams [2011] NSWADT 177 (Adams) ) the practitioners concerned were struck off from the roll of practitioners. In others (for example Law Society of New South Wales v Bouzanis [2006] NSWADT 55 (Bouzanis) and The Council of the Law Society of New South Wales v Somerfield [2008] NSWADT 235 (Somerfield)) the practitioners concerned were reprimanded and fined $10,000 and $5,000 respectively. In others, for example Law Society of New South Wales v Gillroy [2010] NSWADT 232 (Gillroy) and The Council of the Law Society of New South Wales v Dalla [2011] NSWADT 130, the practitioners were publically reprimanded, and in Gillroy, one practitioner was obliged to undertake practice management and ethics courses and submit to a mentoring programme in respect of his practice.
The different circumstances in each case explain the differences in outcome. The appropriate penalty in any given case will always depend upon its particular circumstances.
We accept, as does the Complaints Committee, that the relevant findings in relation to the superannuation matter, which are set out above, do not put this case into the category of cases such as Vosnakis and Adams, and accordingly do not support a report being made to the Supreme Court with a recommendation that the practitioner's name be removed from the roll. Nor do we consider that the circumstances of this case are such as to warrant an order for suspension from practice.
Bouzanis, which appears to have been the first case considered by the New South Wales Administrative Decisions Tribunal, involved a finding that the practitioner had intentionally failed to pay superannuation in relation to a single employee because he had required the funds for other purposes. It therefore involved a finding of a level of intent not present in Mr O'Halloran's case.
Somerfield did not involve any dishonesty. The failure by the practitioner was brought about by a lack of financial resources and he intended ultimately to pay the superannuation contributions. The failure to pay superannuation had occurred over a four year period and involved multiple employees. In that sense, it is similar to the present case. The fine of $5,000 was imposed not only for the breach of the superannuation contributions, but also in relation to several other findings of professional misconduct.

Penalty on superannuation matter

At [49] of the Tribunal's reasons, the Tribunal expressed the conclusion that Mr O'Halloran's failures to meet his superannuation obligations over an extended period of time demonstrated an indifference to his taxation and superannuation obligations. His failures assumed substantial proportions. In our view, a public reprimand, without more, would not adequately reflect the seriousness of the findings in relation to the superannuation matter. It is appropriate that a fine be imposed in addition to a public reprimand.
We are mindful of the very substantial costs which the practitioner will be ordered to pay in relation to these proceedings and of the overall effect of the penalties to be imposed in relation to the other matters, the subject of the Tribunal's reasons. Having regard to those matters, and to the comparative penalties in the New South Wales cases referred to, we consider that, in addition to a public reprimand, Mr O'Halloran should pay a fine of $2,500 to the Legal Practice Board in relation to the superannuation matter.

The costs matters

The parties were agreed that, save for the compensation order sought in respect of VR 37 of 2009 (the Pizzata matter), it is appropriate to deal with the question of penalty for each of VR 36 of 2009 (the Lovett matter), VR 38 of 2009 (the D'Agui matter), VR 39 of 2009 (the Challen matter) and the Pizzata matter (which together we will refer to as the costs matters) on a global basis so far as penalty is concerned.
In relation to the costs matters, the Complaints Committee seeks an order pursuant to s 439(a) of the LP Act that the practitioner's local practising certificate be suspended for a period of 18 months to commence 30 days from the date of the Tribunal's order. In relation to the Pizzata matter, the Complaints Committee seeks a compensation order pursuant to s 441(c) and s 448 of the LP Act requiring a practitioner to pay Ms Pizzata the sum of $15,000.
The practitioner does not contest the making of a compensation order in the sum sought by the Complaints Committee in relation to the Pizzata matter. We agree that a compensation order is appropriate to reimburse Ms Pizzata for the excessive costs that she was called upon to pay. In respect of each of the other matters, the costs actually paid by the clients (as distinct from the amounts charged) were either determined after taxation or were not pursued by the practitioner.
The practitioner contends that Complaints A and B in each of the Pizzata, Challen and D'Agui matters should be treated as one complaint for the purposes of imposing a single fine in each case not exceeding the statutory maximum. In relation to the finding, in the Pizzata matter, of unsatisfactory professional conduct by reason of a failure to comply with s 34A(b) of the Legal Practitioners Act 1893 (WA), the practitioner submits that the appropriate order is a reprimand. He makes the same submission in relation to the finding in the D'Agui matter of unsatisfactory professional conduct by failing to comply with a Registrar's direction. Mr O'Halloran also submits that the appropriate order is for a reprimand in relation to all of the findings in the Lovett matter.

Consideration as to suspension

The principal issue between the parties in relation to penalty in relation to the costs matters is whether or not a period of suspension from practice should be ordered.
The parties have drawn our attention to a number of decisions concerning penalties imposed on legal practitioners in relation to findings of overcharging.
In Re Veron; Ex parte Law Society (NSW) [1966] 84 WN (Pt 1) (NSW) 136, the practitioner was struck off following findings of some 65 instances of overcharging clients in respect of personal injury actions. The overcharging was found to be deliberate and there were related charges proved against the practitioner involving dishonesty or fraud in respect to the practitioner's dealings with his clients and their money.
The court noted that the charges were not only grossly excessive, but were also arbitrary when compared with the work actually done.
Practitioners were also struck off in the decisions in Veghelyi v The Law Society of New South Wales (Unreported, Supreme Court of New South Wales Court of Appeal, 6 October 1995) (Veghelyi) and New South Wales Bar Association v Amor-Smith [2003] NSWADT 239 (Amor-Smith). In Veghelyi, the practitioner was found guilty of grossly overcharging in 11 matters. He was also found guilty of wilful breaches of the Legal Profession Act 1898 (NSW) concerning the handling of client monies, including the payment of costs from trusts without authority. In Amor-Smith, the overcharging related to a single retainer, but involved charges which the Tribunal found to have been nearly five times a reasonable and fair amount for the services provided. The practitioner had aggressively pursued recovery of his fees notwithstanding his appreciation of the excessive nature of the charges.
In Re A Legal Practitioner of the Supreme Court of Western Australia (Unreported, WASC, Library No 970032, 12 February 1997) (BC 9700434), the Full Court suspended a Practitioner for five years following findings of six separate instances of overcharging in respect of personal injuries matters. The disciplinary Tribunal, which had transmitted a report to the Full Bench, had concluded that the overcharging had arisen from the system of practice adopted by the practitioner over a long period of time and that the practitioner had been substantially motivated by self-interest. The Full Court noted a history of prior complaints about the practitioner.
In NSW Bar Association v Evatt [1968] 117 CLR 177, a barrister was found to have knowingly assisted and facilitated a systemic course of action by two solicitors (including Mr Veron, the subject of proceedings referred to above). Mr Evatt was found to have knowingly shared in the proceeds of the extortionate charges by charging and being paid excessive fees, and the High Court concluded that the findings demonstrated the practitioner was unfit to be a barrister and ordered that he be disbarred.
In Law Society of Australian Capital Territory and Roche [2002] ACTSC 104, the practitioners were found guilty of systemic overcharging of personal injuries clients through the use of a standard form costs agreement that imposed a standard hourly rate for all fee earners, regardless of whether or not they were legally qualified, standard charges for disbursements, and entitled the practitioners to charge an uplift of up to 30% of their professional fees for 'care, skill and consideration'. The solicitors' conduct was described as 'extortionate' [67] and as 'an exercise in calculated greed' [89]. A period of 18 months suspension from practice was imposed. The Court regarded as a significant mitigatory factor that the practitioners offered to (and were subsequently ordered) to make substantial payment to establish a compensation for the benefit of their clients who had entered into the standard costs agreement.
Those decisions demonstrate the very serious view taken by the courts or other disciplinary authorities in relation to significant overcharging by legal practitioners.
A decision in which suspension was not ordered is NSW Bar Association v Meakes [2006] NSWCA 340. The disciplinary Tribunal in that matter had imposed a public reprimand, having concluded that the practitioner was guilty of gross overcharging by charging a client in excess of 66% more than a reasonable fee and had characterised that conduct as unsatisfactory professional conduct. The Court of Appeal disagreed with that characterisation, and concluded that the gross overcharging amounted to professional misconduct. Tobias JA said at [85] that 'At its highest, the respondent's conduct was dishonest; at its lowest, it was highly irresponsible'. The Court of Appeal declined, however, to alter the penalty imposed by the Tribunal given that six and a half years had passed since the conduct occurred, the finding of professional misconduct would seriously reflect on the practitioner's reputation, a refund had been made to the client, and the practitioner would pay the costs of the appeal.
There are a number of features of the findings of overcharging made against Mr O'Halloran which raise serious concerns.
The first is that the overcharging arose by what appears to have been a systemic practice of entering costs agreement which the Tribunal concluded would inevitably result in charges being made in a way which overstated time spent on a matter and exceeded statutory limitations.
The second concern is the extent of the overcharging. In the Pizzata matter, the charges were in the vicinity of three times what the Tribunal concluded were reasonable charges. In the D'Agui matter, the Tribunal did not precisely identify the amount of the reasonable charges, but it can be confidently said that Mr O'Halloran's charges were somewhere around 200% of reasonable charges. In the Challen matter, the charges were in excess of 200% of a reasonable charge. In the Lovett matter, the Tribunal concluded that the charges made represented a charge of slightly in excess of 130% of a reasonable charge.
The third concern is that the costs agreements entered into by the practitioner were found by the Tribunal to be contrary to law in a context where the practitioner was experienced in the field and well aware of the statutory limitations on costs which applied to his practice.
Fourthly, the practice was sustained over a period of approximately five years from 1999 until 2004. This is not, therefore, a case of a single occasion of overcharging.
The practitioner relies on a number of submissions by way of mitigation.
Firstly it is submitted that the practitioner has changed his costing methods to address the deficiencies in his practice which were revealed in these proceedings. He ceased using the form of costs agreement used in the Pizzata, Challlen and D'Agui matters some time prior to 2006. This, it is suggested, demonstrates insight into the nature of his conduct.
Secondly, it is submitted that Mr O'Halloran's personal circumstances at the time of the conduct contributed to the offending conduct, but those circumstances no longer pertain. The circumstances identified are that he was working only part time between 2002 and 2006 because he was engaged in a political campaign to protect the rights of workers compensation claimants, was providing support to an injured persons action group, was spending more time with his terminally ill father in England (from September 2003) and assisting his wife with the care of their four children. The death of both of his parents within a short time in 2005 caused him distress and distracted him from his practice, and attention to detail within it.
Thirdly, it is submitted that the passage of time since the offending conduct diminishes the public interest in suspending the practitioner.
Fourthly, it is not in issue that Mr O'Halloran has not been the subject of any previous findings of unprofessional conduct.
Fifthly, it is said that Mr O'Halloran has been the subject of publicity in relation to the findings against him both in the West Australian newspaper and within the profession at a Law Society seminar.
Sixthly, the Tribunal is urged to have regard to certain statements contained in witness statements filed in the proceedings attesting to Mr O'Halloran's character, and in particular as to his honesty and integrity.
Finally, it is submitted that the imposition of a period of suspension would have a devastating effect on Mr O'Halloran's financial position and that of his family.

Penalty on the findings of overcharging

As already observed, there are several considerations that lead to the conclusion that the findings against Mr O'Halloran are of serious misconduct.
We do not accept the practitioner's submission that the fact he has changed his practice in relation to charges demonstrates insight into the nature of his conduct. The hearing of these matters took place in 2011. The practitioner gave lengthy evidence during which he strived to justify his unjustifiable approach to charging. He demonstrated no insight whatsoever. The fact that he has made changes to his method of costing following a series of complaints against him is hardly surprising.
The conduct spanned a much longer period than the period in which the personal stresses in his life are said to have influenced his practice. We do not consider that those factors should significantly affect the disposition of this case.
The mitigating effect of the passage of time might be greater in the presence of insight into the unacceptable nature of the practitioner's conduct. Resolution of these proceedings has, at least in part, been delayed by the practitioner's refusal to accept any significant wrongdoing.
We accept that the question of penalty should be approached on the basis that the practitioner has been in practice for approximately 30 years without any adverse findings against him.
It is no doubt damaging to Mr O'Halloran's professional reputation, and a source of considerable embarrassment to him, that the outcome of these proceedings has been the subject of publicity. That is an inevitable result of disciplinary proceedings which, as observed above, fulfil a function of warning to the profession and notice to the public. Publicity in the ordinary course does not significantly affect the appropriate penalty to be imposed.
The comments in witness statements as to Mr O'Halloran's general good character lose much of their force as a result of the evidence from the makers of those statements that the original draft statements were prepared by Mr O'Halloran himself. Those aspects of the statements were deleted at the hearing. We place little weight on them for the purposes of penalty.
We are mindful that suspension from practice is likely to have a very serious impact on the practitioner's financial position. We are also mindful that fulfilment of the public interest in the imposition of disciplinary penalties is the principal objective.
In our view, the seriousness of the findings of overcharging warrants the imposition of a period of suspension from practice. Overcharging of clients who are, despite all the safeguards designed to inform them of rights in relation to costs, vulnerable by reason of their unequal bargaining position, seriously damages the reputation and standing of the legal profession. It demonstrates a disregard for the important and privileged role that an independent legal profession plays in our society. It needs to be dealt with seriously.
We consider that, in relation to the findings of overcharging in relation to the costs matters, there should be an order that the practitioner be suspended from practice for a period of six months, to commence 30 days from publication of these orders. We do not consider that a period of 18 months, as suggested by the Complaints Committee, is necessary in the circumstances of this case. Given that the practitioner has been practising for 30 years, that he has no other convictions and that six months suspension will deprive him of substantial income, we consider that six months suspension adequately meets the objectives of disciplinary penalties.

Pizzata - non-compliance with s 34A of the Legal Practitioners Act 1983 (WA)

As was found in the Tribunal's reasons, the failure resulted from a failure to understand the requirements of the section. There was no question of misuse of funds. A reprimand is the appropriate outcome.

D'Agui - failure to comply with Registrar's direction

A failure of this kind might ordinarily attract, at least, a substantial fine. In the context of the other matters we have considered in these proceedings, especially having regard to our conclusion that the findings in relation to the costs matters should attract a suspension and having regard to the costs to be paid, we consider that this finding against the practitioner also calls for a reprimand, rather than a fine. The Complaints Committee did not seek any greater penalty in relation to this finding.

Lovett - delay and failure to provide an itemised account

The same observations can be made in relation to these findings as we have made in relation to the failure to comply with the Registrar's direction in the D'Agui matter, save that, depending on the particular circumstances, the latter might generally be thought to be more serious. For the same reasons, therefore, the practitioner should be reprimanded in relation to these findings.

Costs

The practitioner did not oppose the making of an order that he pay the Complaints Committee's costs fixed at $133,998. That sum is made up of disbursements, principally counsel fees (which have been discounted). We are satisfied that the costs claimed are reasonable, and the order sought by the Complaints Committee should be made.

Orders

1.In relation to VR 35 of 2009, the respondent must pay to the Legal Practice Board of Western Australia a fine in the sum of $2,500 and the practitioner is publically reprimanded.
2.In relation to the findings, in matters VR 37 of 2009, VR 38 of 2009 and VR 39 of 2009 of professional misconduct by entering into the respective costs agreements and charging fees which were grossly excessive, and in relation to the finding in matter VR 36 of 2009 of professional misconduct by charging fees which were grossly excessive, the practitioner is suspended from practice for a period of six months to commence 30 days from the date of these orders.

3.In relation to the finding in matter VR 36 of 2009 of unsatisfactory professional conduct by failing to progress his client's claim, the practitioner is publicly reprimanded.
4.In relation to the finding in matter VR 36 of 2009 of unsatisfactory professional conduct by failing to provide an itemisation of his invoice, the practitioner is publicly reprimanded.
5.In relation to the finding in matter VR 37 of 2009 for failure to comply with s 34A(b) of the Legal Practitioners Act 1893 (WA) the practitioner is publicly reprimanded.
6.In relation to matter VR 37 of 2009, the practitioner is ordered, pursuant to s 441(c) and s 448 of the Legal Profession Act 2008 (WA), to pay compensation to Ms Elizabeth Pizzata in the sum of $15,000.
7.In relation to the finding in matter VR 38 of 2009 of unsatisfactory professional conduct by failing to comply with the direction of a Registrar of the Supreme Court, the practitioner is publicly reprimanded.
8.The practitioner is to pay the applicant's costs fixed at $133,998.

I certify that this and the preceding [59] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE J A CHANEY, PRESIDENT