LEGAL PROFESSION COMPLAINTS COMMITTEE and SILVER
[2022] WASAT 8
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: LEGAL PROFESSION ACT 2008 (WA)
CITATION: LEGAL PROFESSION COMPLAINTS COMMITTEE and SILVER [2022] WASAT 8
MEMBER: JUDGE D R PARRY, DEPUTY PRESIDENT
MR D AITKEN, SENIOR MEMBER
MR R POVEY, MEMBER
HEARD: 13 AND 14 OCTOBER 2021 - CLOSING SUBMISSIONS FILED 11 NOVEMBER 2021, 13 DECEMBER 2021 AND 17 DECEMBER 2021
DELIVERED : 27 JANUARY 2022
FILE NO/S: VR 13 of 2020
BETWEEN: LEGAL PROFESSION COMPLAINTS COMMITTEE
Applicant
AND
CHAD STEVEN SILVER
Respondent
Catchwords:
Vocational regulation Legal practitioners Professional misconduct Unsatisfactory professional conduct Whether practitioner engaged in professional misconduct or unsatisfactory professional conduct by knowingly or recklessly making misleading and deceptive representation to solicitors acting for defendant in Magistrates Court proceedings that Magistrate made preliminary indemnity costs order that either defendant or solicitor conducting matter for defendant was to pay claimant's costs Whether practitioner engaged in professional misconduct or unsatisfactory professional conduct by commencing and maintaining application for indemnity costs against solicitor conducting matter for defendant without any reasonably basis to do so and in breach of r 6(2)(b) and/or r 6(2)(c) of Legal Profession Conduct Rules 2010 (WA)
Legislation:
Legal Profession Act 2008 (WA), s 402, s 403, s 428(1), s 438
Legal Profession Conduct Rules 2010 (WA), r 6(2)(b), r 6(2)(c), r 35(4), r 35(4)(c)
Magistrates Court (Civil Proceedings) Act 2004 (WA), s 25, s 25(10), s 25(11)
Result:
Findings of professional misconduct (ground 1) and unsatisfactory professional conduct (ground 2)
Category: B
Representation:
Counsel:
| Applicant | : | Mr P Yovich SC |
| Respondent | : | In Person |
Solicitors:
| Applicant | : | Law Complaints Officer |
| Respondent | : | Chad Silver & Associates |
Case(s) referred to in decision(s):
Kyle v Legal Practitioners' Complaints Committee [1999] WASCA 115; (1999) 21 WAR 56
Legal Profession Complaints Committee and Lawson [2021] WASAT 152
Vogt v Legal Practitioners Complaints Committee [2009] WASCA 202
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
The Legal Profession Complaints Committee (applicant or Committee) has referred this matter to the Tribunal, under s 428(1) of the Legal Profession Act 2008 (WA) (LP Act), alleging that Mr Chad Steven Silver (respondent or practitioner) engaged in professional misconduct in two respects. First, the Committee alleges that the practitioner engaged in professional misconduct by intentionally seeking to mislead and/or deceive a lawyer (Ms L) acting for the defendant in Magistrates Court proceedings and/or her firm, and therefore to induce them to pay the costs sought by him, by representing in correspondence that the Magistrate made preliminary indemnity costs orders that either the defendant or Ms L was to pay the claimant's costs, or alternatively, by being recklessly indifferent as to whether the representation was misleading and deceptive and as to whether Ms L and/or her firm would be misled and/or deceived by the representation and thereby induced to pay the costs sought by him. Secondly, the Committee alleges that the practitioner engaged in professional misconduct by commencing and maintaining an application for indemnity costs against Ms L in the Magistrates Court proceedings on behalf of his client pursuant to s 25 of the Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCP Act) without any reasonably basis to do so and in breach of r 6(2)(b) and/or r 6(2)(c) of the Legal Profession Conduct Rules 2010 (WA) (LPCR).
The two grounds of alleged professional misconduct are as follows:[1]
[1] Annexure A to Application dated 7 February 2020 (Exhibit 1) (original emphasis). In these reasons, we use the expressions defined in the grounds.
GROUND 1
That the practitioner, CHAD STEVEN SILVER (practitioner), on or about 15 and 16 May 2018 in the course of acting for his client, the claimant in Magistrates Court of Western Australia proceedings (client; proceedings) to recover unpaid wages and superannuation from a company (defendant), engaged in professional misconduct, within the meaning of sections 403 and 438 of the Legal Profession Act 2008 (WA) (LP Act) in that his conduct to a substantial degree fell short of the standard of professional conduct observed and approved by members of the profession of good repute and competence and would be reasonably regarded as disgraceful or dishonourable by practitioners of good repute and competence, by preparing and causing to be sent to the defendant's solicitors (firm) a letter dated 15 May 2018 which:
1.represented relevantly and in substance that at a hearing in the proceedings on 9 May 2018 (May Hearing) at which there was no attendance on behalf of the defendant by the firm, the Magistrate after having heard the practitioner's submissions as to the costs sought by the claimant, made preliminary indemnity costs orders that either the defendant or the solicitor employed by the firm with conduct of the matter (Ms L) was to pay the claimant's costs (Representation); and
2.on the basis of the Representation, sought payment from Ms L of $5,000 towards the claimant's costs,
in circumstances where:
(a)the Representation was misleading and deceptive in that no orders, preliminary or otherwise, as to costs were made by the Magistrate, nor did the Magistrate express any views as to costs and the issue of costs was reserved with liberty to apply;
(b)no notice had been given to Ms L and/or the firm that an application for indemnity costs against her [had] and/or it [sic] would be made and where no one from the firm was in attendance at the May Hearing (the firm having filed and served on the practitioner a notice of ceasing to act on 20 April 2018) and where judgment was entered;
(c)the practitioner knew that the Representation was misleading and deceptive;
(d)the practitioner intended Ms L and/or the firm to rely on and be misled and/or deceived by the Representation and therefore induced to pay the costs sought by him;
(e)alternatively, the practitioner was recklessly indifferent as to whether the Representation was misleading and deceptive and as to whether Ms L and/or the firm would be misled and/or deceived by the Representation and thereby induced to pay the costs sought by him,
and when on 16 May 2018 the practitioner provided to the firm a copy of the orders made by the Magistrate at the May Hearing, he failed to take any steps to correct, or provide an explanation for, making the misleading and deceptive Representation.
GROUND 2
That the practitioner between on about 10 July 2018 to on or about 31 July 2018 engaged in professional misconduct, within the meaning of sections 403 and 438 of the LP Act in that his conduct fell short to a substantial degree of the standard of professional conduct observed and approved by members of the profession of good repute and competence and would be reasonably regarded as disgraceful or dishonourable to practitioners of good repute and competence; alternatively, fell short to a substantial degree of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent legal practitioner, by commencing and maintaining an application for indemnity costs against Ms L in the proceedings on behalf of his client pursuant to section 25 of the Magistrates Court Civil Proceedings Act 2004 (WA) without any reasonable basis to do so and in breach of rules 6(2)(b) and/or 6(2)(c) of the Legal Profession Conduct Rules 2010.
As the Committee submits, '[t]he facts in this case are largely agreed' and '[t]he key objective facts underpinning the [Committee's] grounds are entirely agreed' in terms of a Statement of Agreed Facts dated 4 June 2021 (agreed facts), which we set out at [5] below.[2] As the Committee also submits, '[w]hat is chiefly in issue [is] the [practitioner's] state of mind at the critical times and how his conduct should be [characterised]'.[3]
[2] Applicant's outline of opening submissions dated 4 October 2021 (Committee's opening), para 3.
[3] Committee's opening, para 3.
After we set out the agreed facts and refer to the legal framework in respect of this matter, we will address each of the two grounds in turn. For the reasons set out below, we have determined that the practitioner engaged in professional misconduct in terms of ground 1 and engaged in unsatisfactory professional conduct in terms of ground 2.
Agreed facts
The parties agree as to the following facts and we make findings of fact accordingly[4]:[5]
[4] In relation to para 19.2 of the agreed facts, although the content and sequence of events in (a) (d) is correct, we note that initially (and prior to seeking a costs order against Ms L) the practitioner sought 'that costs be reserved but fixed in the sum of $3000'.
[5]Statement of Agreed Facts dated 4 June 2021 (Exhibit 3) (original emphasis). In these reasons, we use the expressions defined in the agreed facts.
1.The practitioner was admitted to legal practice in Western Australia on 5 June 2015.
2.At all material times the practitioner was:
2.1an Australian legal practitioner within the meaning of section 5(a) of the Legal Profession Act 2008 (WA) (LP Act); and
2.2since 5 October 2017 engaged in legal practice as a sole practitioner at Chad Silver & Associates.
3.On around 13 September 2017 the claimant commenced proceedings in the Magistrates Court of Western Australia (proceedings) seeking unpaid wages and superannuation in relation to his engagement at a restaurant owned by a company (defendant) between June 2016 and April 2017.
4.On around 21 September 2017 a firm of solicitors (the firm) was engaged to act for the defendant in the proceedings. At all material times an employed legal practitioner at the firm (Ms L) had conduct of the proceedings for the defendant.
5.On around 19 October 2017 the firm filed a Statement of Defence in the proceedings which contained a denial of any employment relationship between the claimant and the defendant.
6.At a hearing on 14 November 2017 orders were made in the proceedings (November Orders) including, relevantly, that:
6.1the claimant was to file and serve on the defendant a Form 35 and Form 36 affidavit containing a list of documents within 14 days;
6.2the defendant was to file and serve on the claimant a Form 35 and Form 36 affidavit containing a list of documents within a further 14 days (Order 2).
7.The claimant filed a Form 35 and 36 in accordance with the November Orders on around 27 November 2017 and served copies on the defendant on around 30 November 2017.
8.The defendant did not comply with Order 2 of the November Orders, as a result of which from on or about 14 December 2017 it was open to the claimant to apply for default judgment.
9.On around 19 February 2018 the claimant filed in the proceedings and served on the firm:
9.1a Form 23 application (February Application) seeking to:
a)join directors A and B (directors) of the defendant company as defendants to the proceedings (Order 1);
b)make director A solely liable to pay the wages sought "as he is the one who employed claimant as a manager in his restaurant";
c)seeking "justice and judgement [sic] in this case as defendant failed to launch (sic) the form 35 and 36 as ordered by court on 14 November 2017 Pre trial conference (sic)";
9.2an affidavit sworn by the claimant (Form 2) directed to the matters set out in paragraphs 9.1(a) and (b) above.
10.The February Application was listed for hearing on 28 March 2018.
11.On or around 22 March 2018:
11.1the firm filed and served on the claimant a response to the February Application (Response) which objected to the orders sought, and was supported by an affidavit from Ms L (Ms L's affidavit) which, amongst other matters, was directed towards opposing the application in Order 1 of the February Application to add the directors as defendants in the proceedings, and in which she deposed (at paragraph 6) that the defendant had a complete defence to the proceedings as outlined in the Statement of Defence but "for commercial reasons only, the Defendant elected not to file the Form 35 and 36";
11.2the practitioner emailed Ms L and told her that he would be acting for the claimant in the proceedings in the near future. He proposed to adjourn the 28 March 2018 hearing of the February Application to enable the parties to attempt to negotiate a settlement;
11.3the parties agreed to adjourn the hearing of the February Application to 11 April 2018 but were unable to agree a settlement of the matter.
12.At the hearing of the February Application on 11 April 2018 (April Hearing):
12.1the practitioner:
a)noted that the claimant had been self-represented at all points in time;
b)acknowledged to the Magistrate that, to the extent that the February Application sought to substitute the individual directors as defendants, it had not been adequately pleaded, was not supported by evidence and was not pressed, but that the matter may be looked at "down the track" and proposed that the February Application be stayed;
c)submitted that compliance by the defendant with Order 2 of the November Orders and a referral of the proceedings to mediation would "resolve all matters between the parties with minimal legal costs" and that the provision of discovery by the defendant would "assist the parties greatly";
12.2Ms L stated to the Magistrate, relevantly and in substance, that:
a)she understood the application before the Court was in relation only to the matter of the directors being substituted as the defendants, for which reason the firm was instructed to attend;
b)the defendant understood that if it did not defend the claim or comply with Order 2 of the November Orders default judgment could be entered against it;
c)the defendant did not wish to defend the claim for commercial reasons, but that Ms L was not in a position to consent to default judgment;
12.3the Magistrate made orders, relevantly, that the defendant comply with Order 2 of the November Orders within 14 days (that is, by 25 April 2018), that the parties confer regarding the resolution of the substantive application and that the matter be adjourned to a pre-trial conference on 9 May 2018;
12.4no orders were made as to costs.
13.On 12 April 2018 the practitioner wrote to Ms L offering to settle the proceedings on terms including the payment by the defendant to the claimant of $60,000. He also noted that the firm had not yet complied with Order 2 of the November Orders and suggested Ms L seek "suitable counsel in relation to the consequences" of a statement he alleged Ms L had made that her client had made a commercial decision and had instructed the firm not to comply with Order 2 of the November Orders.
14.On 20 April 2018 the firm:
14.1ceased acting for the defendant and filed a Form 59 Notice of Ceasing to Act (Notice) in the proceedings;
14.2by letter served a copy of the Notice on the practitioner and advised him, amongst other things but relevantly, that:
a)in December 2017 the defendant instructed the firm that it did not wish to take any further steps to defend the action and the firm provided advice to the client as to the consequences of that decision and sought instructions to cease to act but was instructed to remain on the record;
b)from 14 December 2017 when the time for compliance with Order 2 of the November Orders had expired, the claimant had been entitled to take any appropriate procedural steps;
c)as the February Application sought an order to add the directors as defendants to the proceedings, the firm had been instructed to oppose those orders;
d)the defendant was open to negotiation with the claimant to settle the dispute on "a global basis" and had requested the claimant provide a written settlement offer, but to date settlement negotiations had been unsuccessful;
e)at the April Hearing the practitioner did not pursue the orders sought in the February Application but instead applied for orders for compliance with Order 2 of the November Orders and for the matter to be listed for another pre-trial conference; and
f)at the April Hearing the practitioner had been at liberty to make an oral application for default judgment to be entered against the defendant and, while the firm did not have instructions to consent to default judgment (which Ms L stated to the Magistrate), it would not have opposed such an application but that the practitioner did not make any such application.
15.At a hearing on 9 May 2018 in the proceedings (May Hearing):
15.1where there was no appearance by the defendant, the practitioner applied for judgment in the amount of $62,460.30 and interest but discontinued the application for interest when it was identified by the Magistrate that no claim for interest was included in the claimant's prayer for relief;
15.2when asked by the Magistrate if he was seeking any other orders, the following exchange took place:
"Practitioner: I'm seeking that costs be reserved but fixed in the sum of $3,000, and I will explain the background to that order…
I was a bit concerned at my – with the last hearing. My learned friend indicated that her client instructed that they were not to comply with the court orders. Yet a practitioner stayed on record for a number of months and still did not comply with the court orders. That's was very concerning, when I heard those words, and I wrote to my learned friend, and she, in a letter, confirmed that:
The client instructed us that the company did not want to take any further steps to defend the action.
They provided their client advice in relation to the consequences of the decision. They sought instructions as to whether they should file a notice of ceasing to act, and they were instructed to stay on the record. So, for me, that would enact an improper behaviour, which possibly enact section 25 subsection (10), which is indemnity cost against the firm. So they failed to comply with an order and stayed on the record. Now, it is a very bizarre area of the law, and it's a very proper area of the law as well, insofar as a practitioner has an obligation to comply by the court orders and that…" [sic]
His Honour: Are you seeking a costs order against the practitioner?
Practitioner: I am indeed. I think there is ---
HisHonour: Well, I'm not going to make an order without ---
Practitioner: No.
HisHonour: Without them being heard on the application, Mr Silver.
Practitioner: There is – of course. There is a – under the Act, there is a obligation to make that proposal to writing in the other practitioner.
His Honour: Yes
Practitioner: So I'm simply going to seek that the costs be reserved.
His Honour: Yes.
Practitioner: I will write to the practitioner and put him [sic] on notice on such and see what we can resolve, but I was very concerned when I read that and when I heard that submission from my learned friends. So I would seek that costs be reserved but fixed in the sum of $3,000.
HisHonour: Well, what I'm going to do is reserve the question of costs. The claimant's costs ---
Practitioner: Thank you.
His Honour: ---- as against the defendant and/or the defendant's representative from time to time are reserved, with liberty to apply on 48 hours notice to an affected party. So I will reserve costs. If they can't be resolved ---
Practitioner: Thank you. That's suitable.
His Honour: --- Mr Silver, they can – you can relist an application on 48 hours notice to the other party.
…".
16.By letter dated 15 May 2018 the practitioner wrote to the firm (15 May letter). In that letter the practitioner set out excerpts from the transcript of the April Hearing, although he referred to that hearing as having occurred on 11 May 2018. The practitioner then referred to his concern that the firm was on record for several months and did not comply with Order 2 of the November Orders, and to correspondence between himself and Ms L in relation to that concern.
17.The practitioner then referred to the May Hearing, which he described as "the most recent hearing" of the proceedings, and stated that at the May Hearing:
"… the defendant failed to attend, and default judgement [sic] was entered. In relation to costs, we made the Magistrate aware of this issue and preliminary orders have been made along the lines of, that the defendant or the defendants (sic) lawyer is to pay the claimants (sic) costs. We are yet to receive the formal orders.".
18.The practitioner then referred to section 25(10) of the Magistrates Court Civil Proceedings Act 2004 (MCCPA), and said that:
18.1the relevant "omission" relied on in support of the costs under that subsection was Ms L's failure to:
a)comply with Order 2 of the November Orders whilst on record;
b)lodge a Notice of Ceasing to Act; and
c)lodge an updated Form 15 response in the proceedings;
18.2the costs incurred by the claimant as a result of Ms L's lack of compliance were $6,010;
18.3he requested that the sum of $5,000 be deposited into his practice trust account by 18 May 2018 "in full satisfaction of the costs issue arising from this matter."
19.The 15 May letter:
19.1represented that at the May Hearing the Magistrate had considered the issue of indemnity costs and made preliminary orders along the lines of "that the defendants or the defendants [sic] lawyer is to pay the claimants [sic] costs" in respect to which the practitioner was awaiting the formal orders in those terms (Representation), when the true position was that no orders, preliminary or otherwise, as to costs had been made and the Magistrate had not in any way considered the merits of the practitioner's submissions in relation to an application for costs and the question of costs had been reserved with liberty to apply; and
19.2on the basis of the Representation sought the payment of $5,000 in satisfaction of the "costs issue" (Costs Demand), even though, at the May Hearing:
a)the practitioner sought a costs order against Ms L;
b)the Magistrate expressly declined to make such an order without having heard from Ms L;
c)the practitioner then sought to have costs reserved, but fixed in the sum of $3,000; and
d)the Magistrate reserved costs.
20.The practitioner sent an email to the firm on 15 May 2018 at 11.01am, referring to the 15 May letter and saying "(we) look forwards (sic) to a prompt resolution of this issue if such is possible".
21.By email sent 16 May 2018 (16 May email) at 7.35pm the practitioner sent the firm a copy of the orders dated 9 May 2018 received from the Court (May Orders), with a covering email which stated only "Orders as attached".
22.The May Orders stated:
"1. There being no appearance of the Defendant and the Defendant having failed to comply with Order 1 made on the 11 April 2018 there shall be judgment for the Claimant against the Defendant in the sum of $62,460.30.
2. The Claimants (sic) costs as against the Defendant and/or the Defendants (sic) representative, from time to time, are reserved with liberty to apply or (sic) 48 hours notice to an effected (sic) party."
23.In sending the 16 May email the practitioner:
23.1did not take any steps to correct, bring to the attention of Ms L and/or the firm and/or provide an explanation as to the misleading and/or deceptive nature of the Representation made by him in the 15 May letter in the light of the terms of the May Orders; and
23.2further, did not withdraw the Costs Demand made by the practitioner on the basis of the Representation that Ms L pay the claimant's costs in the sum of $5,000.
24.By letter dated 18 May 2018 (18 May letter), a partner in the firm stated to the practitioner, amongst other things but relevantly, that:
24.1it had been open to the practitioner at the April Hearing to make an oral application for judgment for the claimant in default of compliance by the defendant of Order 2 of the November Orders, but that he had not;
24.2the practitioner had made the Representation to the firm, and had based the Costs Demand on the Representation which he knew or ought to have known was not accurate, and the order he claimed was made was not enforceable against Ms L or the firm; and
24.3the practitioner should withdraw the Costs Demand and the allegations of unethical conduct he had made against Ms L and issue an apology to Ms L.
25.By letter dated 19 May 2018 to the firm the practitioner:
25.1denied that he intentionally and knowingly misled the firm as to the May Orders on the basis that he "communicated the issue to you to the best of our ability in a manner that was appropriate. We indicated that we were not exactly sure of the wording of the orders and brought this to your attention in our previous letter. We provided you a copy of the court orders as soon as they arrived, which was within 24 hours, and corrected any misunderstanding you may have had as soon as practicable.";
25.2confirmed that he had raised section 25(10) MCCPA at the May Hearing and that the Magistrate had then "made preliminary orders. These orders are of course programming orders";
25.3denied that the Costs Demand was a "demand", but repeated it.
26.By letters dated 28 May 2018:
26.1the firm wrote to the practitioner stating that the Costs Demand was improper, restating the matters in the 18 May letter and seeking that the practitioner withdraw the Costs Demand and apologise to Ms L;
26.2the practitioner confirmed the provisions of section 25(10) MCCPA that he sought to rely on in an application for costs against Ms L and advised that, if the matter was not settled, he would apply for a costs order against Ms L in the amount of $6,000.
27.By letters dated 5 June 2018:
27.1the firm asked the practitioner, among other things:
a)to provide the firm with a copy of the transcript of the May Hearing;
b)to identify the acts or omissions of Ms L about which he was complaining; and
c)to explain how those acts or omissions had resulted in costs being unreasonably incurred or wasted for the purposes of section 25(10) MCCPA (Request);
27.2the practitioner responded by confirming his demand for costs from Ms L, representing that he was attempting to settle the question of costs without the need for a final order hearing on the basis that "costs remain an issue of joint liability between you and your former client". The practitioner also maintained that he had "provided [the firm] a copy of the Preliminary Orders of the Court as soon as practicable."
28.On 7 June 2018:
28.1by letter to the practitioner, the firm:
a)repeated the Request; and
b)stated that if the practitioner proceeded with the proposed costs application against Ms L, it would oppose the application and seek costs from the practitioner personally.
28.2by letter to the firm, the practitioner identified that the grounds on which he sought costs from Ms L were that:
a)the firm stayed on the record with the knowledge that the defendant had no intention of complying with the November Orders and did not wish to defend the matter and knowing that judgment could be entered;
b)the firm's decision to stay on the record was improper;
c)alternatively, if the firm was proposing to stay on the record, Ms L ought to have sought instructions to have judgment entered;
d)the practitioner claimed that "As a result of the above act and omission (sic), our client made an Application to enforce the order and costs were incurred. Alternatively put, had the order been complied with, or had judgement [sic] been entered at the earliest opportunity, there would have been no need for the Legal Costs to be incurred.",
where his reference to "an Application" in (d) was to the February Application listed to be heard at the April Hearing, when at the April Hearing the practitioner sought to adjourn the hearing of the February Application, did not seek any costs orders and did not make an application for default judgment.
29.By letter dated 11 June 2018 the practitioner advised that he would be seeking a costs order in terms that:
29.1Ms L repay to the defendant the whole or any part of any costs she had been paid by the defendant since 1 January 2018 and that such fees are to be paid to the claimant, in circumstances where the practitioner had not been retained by the claimant until, at the earliest, 22 March 2018; and
29.2Ms L pay to the defendant the whole or any part of any costs the defendant is ordered to pay to another party in the sum of $6,000 plus costs of the costs application.
30.By letter dated 14 June 2018 the practitioner provided to the firm draft submissions and materials which he proposed to lodge in support of an application for costs (draft Costs Submissions), which submissions sought orders that Ms L pay:
30.1$7,000 by way of the costs due by the defendant to the claimant, such funds to be paid directly to the claimant;
30.2an amount equal to the costs paid by the defendant to the firm from 1 January 2018 (other than disbursements) with such funds being paid to the claimant on account of the partial payment of the default judgement [sic]; and
30.3costs of the costs application of $2,500.
31.On around 10 July 2018 the practitioner prepared and caused to be filed in the proceedings a Form 2 affidavit dated 9 July 2018 (9 July Affidavit) and Claimant's Submissions in Relation to Costs dated 10 July 2018 (Costs Submissions). The Costs Submissions sought the orders identified in the draft Costs Submissions (set out in paragraphs 30.1, 30.2 and 30.3 above) and submitted in substance and effect, relevantly, that:
31.1Ms L stayed on the court record after 1 January 2018:
a)knowing that the defendant did not intend to comply with Order 2 of the November Orders, which he submitted represented a misuse of the privilege of being a lawyer;
b)knowing that the defendant did not wish to defend the proceedings and was content for judgment to be entered in favour of the claimant, and at no point prior to the April Hearing did she advise the practitioner that judgment could be entered (which breached her duty of candour to the Court and the claimant) or that the defendant was no longer disputing the main claim, which represented a breach of her duties to have matters dealt with efficiently by a court and to utilise independent judgement [sic];
31.2it was improper for Ms L to stay on the record knowing the client did not intend to comply with Order 2 of the November Orders, and for her not to seek to have judgment entered and/or not to seek to terminate the proceedings in circumstances where the client had instructed her not to comply with Order 2 of the November Orders and otherwise defend the action;
31.3as a result of Ms L's acts and omissions the claimant applied to enforce Order 2 of the November Order and costs were incurred, which if the defendant had complied with the November Orders or entered judgment at the earliest opportunity (which was submitted to be 1 January 2018), would not have been incurred.
32.Section 25(10) of the MCCPA provides that a number of orders may be made if a court is satisfied that, due to the acts or omissions of a legal practitioner, whether personally or through an employee or agent, costs have been incurred improperly or without reasonable cause, or costs have been wasted by undue delay or by any misconduct or default. This includes an order directing a legal practitioner to personally indemnify any party (other than the legal practitioner's client) against the whole or a part of the costs payable by the indemnified party (section 25(1)(f) MCCPA).
33.Prior to the practitioner commencing the Costs Application:
33.1the claimant had not incurred any legal costs prior to 22 March 2018 when he first instructed the practitioner;
33.2from around 14 December 2017, the claimant had been entitled to apply for default judgment but had not done so;
33.3Ms L did not engage in any conduct that in any way prevented the claimant from applying for default judgment;
33.4it was not the responsibility of the firm or Ms L to advise the claimant and, subsequently, the practitioner, how to prosecute the claim against their/her client (the defendant), including to seek default judgment;
33.5Ms L, with the defendant's permission, in her affidavit of 22 March 2018, and in her oral submissions at the April Hearing brought to the attention of the claimant, the practitioner and the Court that the defendant had not complied with and did not intend to comply with order 2 of the November Orders "for commercial reasons", did not intend to proceed with the defence of the proceedings and was concerned only with the orders sought in the February Application to join the directors as defendants in the proceedings;
33.6it was reasonable for Ms L to attend the April Hearing on behalf of the defendant to oppose the February Application which sought to join the individual directors as defendants;
33.7the practitioner was at liberty to apply for default judgment at the April Hearing, the fact of which was stated to the Court by Ms L (see paragraph 12.2(b) above) but did not do so, and any "wasted costs" incurred by the claimant after the April Hearing may be attributed to the practitioner's conduct in this respect;
33.8the practitioner had not set out in detail the costs he alleged were incurred "improperly or without reasonable cause" or the costs which he alleged had been "wasted by undue delay or by any misconduct or default" (within the meaning of section 25(10) MCCPA); and
33.9at the April Hearing the practitioner applied to adjourn the hearing of the February Application and did not seek any costs orders despite seeking, relevantly, an order for compliance with Order 2 of the November Orders, where the claimant had put the defendant to costs in respect to the orders sought in respect to the directors.
34.On about 10 July 2018 the practitioner filed and served the Costs Application, together with supporting submissions and affidavit.
35.On or about 26 July 2018 Ms L filed responsive submissions in relation to the Costs Application opposing the orders sought and seeking that the claimant pay the defendant's costs of the February Application and that the practitioner pay Ms L's costs of opposing the Costs Application on an indemnity basis.
36.The application for costs was listed for hearing on 1 August 2018.
37.On or about 31 July 2018 the practitioner applied to have the Costs Application vacated following discussion with the Committee's Rapid Resolution Team.
Legal framework
The applicable legal framework was recently set out by the Tribunal[6] in Legal Profession Complaints Committee and Lawson [2021] WASAT 152 at [6] [12] and [14] [19] as follows:[7]
[6] Judge Parry DP, Mr D Aitken SM and Dr E Marillier M.
[7] Footnotes omitted; original emphasis.
6.Section 438(1) of the LP Act confers jurisdiction on the Tribunal in this matter as follows:
The State Administrative Tribunal has jurisdiction to make a finding that an Australian legal practitioner has engaged in unsatisfactory professional conduct or professional misconduct.
7.The Committee bears the onus of proof in relation to each of the allegations of professional misconduct it makes against the practitioner. The civil standard of proof ('on a balance of probabilities') applies together with the Briginshaw approach, which requires clear and cogent evidence to be adduced by the Committee and for the Tribunal to feel an actual persuasion of the occurrence or existence of relevant facts before it can find the practitioner guilty of professional misconduct (or unsatisfactory professional conduct).
8.Section 402 and s 403 of the LP Act contain non-exhaustive definitions of the terms 'unsatisfactory professional conduct' and 'professional misconduct', respectively. Section 402 of the LP Act states as follows:
For the purposes of this Act –
unsatisfactory professional conduct includes 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.
9.Section 403 of the LP Act states as follows:
(1) For the purposes of this Act –
professional misconduct includes –
(a)unsatisfactory professional conduct of an Australian legal practitioner, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and
(b)conduct of an Australian legal practitioner whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice.
(2) For the purpose of finding that an Australian legal practitioner is not a fit and proper person to engage in legal practice as mentioned in subsection (1), regard may be had to the suitability matters that would be considered if the practitioner were an applicant for admission or for the grant or renewal of a local practising certificate.
10.As the statutory definitions of the terms 'professional misconduct' and 'unsatisfactory professional conduct' in s 403(1) and s 402 of the LP Act, respectively, are non-exhaustive definitions, conduct that constitutes 'unprofessional conduct' (sometimes expressed as 'professional misconduct', signifying more serious misconduct) at common law can constitute professional misconduct (or unsatisfactory professional conduct) under the LP Act.
11.The common law concept of unprofessional conduct was restated by Parker J in Kyle v Legal Practitioners' Complaints Committee [1999] WASCA 115; (1999) 21 WAR 56 at [61] (Ipp J at [1] and Steytler J at [22] agreeing) as follows:
… This Court has long accepted and applied, in this context, the understanding of the notion of unprofessional conduct which was expressed by the Full Court of the South Australian Supreme Court in Re a Practitioner of the Supreme Court [1927] SASR 58: see, eg, Re a Practitioner (unreported, Supreme Court, WA, Full Court, Library No 4989, 18 July 1983). It was usefully summarised (at 3) by the Full Court as conduct 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 first limb of this summary includes, but is not confined to, conduct which occurs in the course of legal practice. The other limb necessarily relates to conduct in the course of legal practice because of the reference to 'professional conduct'. While the words should not be taken as necessarily an exhaustive or codified statement, the essence of the notion of unprofessional conduct is usefully revealed in these decisions.
12.As the Tribunal said in Legal Profession Complaints Committee and Chang [2019] WASAT 67 at [137], the words 'disgraceful' and 'dishonourable', which are used in the first limb of the restatement of the common law concept of unprofessional conduct in Kyle v Legal Practitioners' Complaints Committee at [61], mean:
disgraceful … bringing or deserving disgrace; shameful; dishonourable; disreputable. …
dishonourable … 1. showing lack of honour; ignoble; base; disgraceful; shameful: a dishonourable act. 2. having no honour or good repute: a dishonourable man. …
…
14.Section 442 of the LP Act authorises the Tribunal to make an alternative finding that a person is 'guilty of unsatisfactory professional conduct', even though the referral of the matter by the Committee alleges 'professional misconduct'.
15.In Legal Profession Complaints Committee and Tang [2021] WASAT 117; (2021) 103 SR (WA) 249 at [10], the Tribunal said the following, which is equally apposite in relation to [the first ground] of alleged professional misconduct in this case:
Significantly, in terms of ground 1, as the Tribunal recognised in Legal Profession Complaints Committee and A Legal Practitioner [2013] WASAT 37; (2013) 84 SR (WA) 158 at [123] [124], a charge and finding of professional misconduct (or unsatisfactory professional conduct) against a lawyer does not need to be – and is often not – based on (a breach of) a particular written and prescribed legal or ethical rule, obligation or duty. Furthermore, as the Tribunal recognised there, professional misconduct includes a serious impropriety, whether proscribed or not, affecting a practitioner's character, which is indicative of a failure either to understand or to practise the precepts of honesty and fair dealing that are essential to the privilege and responsibilities of practising as a legal practitioner. As the Tribunal said in Legal Profession Complaints Committee and A Legal Practitioner at [123] [124]:
123Even in the absence of an express authority on point, we have no doubt such duty exists. As Rich J said in Kennedy v The Council of the Incorporated Law Institute of New South Wales (1939) 13 ALJR 563:
… a charge of misconduct as relating to a solicitor need not fall within any legal definition of wrong doing. It need not amount to an offence under the law. It was enough that it amounted to grave impropriety affecting his professional character and was indicative of a failure either to understand or to practise the precepts of honesty or fair dealing in relation to the courts, his clients or the public.
124Similarly, the High Court of Australia observed in Clyne v New South Wales Bar Association [1960] HCA 40; (1960) 104 CLR 186 at 200 that certain rules (or duties) which govern the conduct of legal practitioners, which their Honours described as 'fundamental' and contrasted with rules which are 'merely conventional in character':
… are, for the most part, not to be found in writing. It is not necessary that they should be reduced to writing, because they rest essentially on nothing more and nothing less than a generally accepted standard of common decency and common fairness.
16.As the Tribunal also said in Legal Profession Complaints Committee and Tang at [56]:
Honesty and integrity are essential characteristics for the privilege and responsibilities of legal practice. Fitness to practise law requires that a practitioner must command the personal confidence of his or her clients, fellow practitioners and judicial officers [Legal Profession Complaints Committee v Bachmann [2011] WASC 309 [46] (Martin CJ, EM Heenan J and Jenkins J)]. Put simply, if legal practitioners cannot be trusted to act and speak with honesty and integrity, the effective and efficient provision of legal services and administration of justice would be fundamentally undermined.
17.Because honesty and integrity are essential characteristics expected of a legal practitioner, the Supreme Court and the Tribunal have generally taken a very serious view when dealing with dishonesty by a practitioner.
18.When a legal practitioner provides information or makes a statement which is false or misleading, there are (at least) three categories of cases in which that conduct will constitute either professional misconduct or unsatisfactory professional conduct under the LP Act. The first category is where the practitioner knows that the information or statement is false or misleading. The second category is where the practitioner has a reckless disregard as to whether the information or statement is false or misleading. The third category is where the practitioner is negligent or careless in providing the information or making the statement. Because the first two categories will only apply if, assessed subjectively, the practitioner either is aware that the information or statement is false or misleading (and therefore knowingly makes the misrepresentation) or is wilfully indifferent as to the truth of the information or statement (and therefore recklessly makes the misrepresentation), in the absence of special circumstances, one would ordinarily expect a finding of either of these categories of conduct to be characterised as a substantial departure from the standard of conduct reasonably expected of a practitioner such as to constitute 'professional misconduct', rather than (merely) 'unsatisfactory professional conduct', within the taxonomy of the LP Act.
19.Ordinarily, in an adversarial context, such as vocational disciplinary proceedings, findings by the Tribunal as to a person's state of mind, for example, as to their knowledge or intention, will be a matter of inference from primary facts found by the Tribunal on the evidence.
The Committee contends that the practitioner's alleged conduct referred to in each of the grounds constitutes professional misconduct under s 403 and s 438 of the LP Act, because it falls within the second limb of the restatement of the common concept of unprofessional conduct in Kyle v Legal Practitioners' Complaints Committee [1999] WASCA 115; (1999) 21 WAR 56 at [61] ('conduct … that, to a substantial degree, fell short of the standard of professional conduct observed or approved by members of the [legal] profession of good repute and competence') and also because it falls within the first limb of the restatement of the common law concept of unprofessional conduct in Kyle v Legal Practitioners' Complaints Committee at [61] ('conduct that would be reasonably regarded as disgraceful or dishonourable by practitioners of good repute and competence'). In relation to ground 2, the Committee contends, further or alternatively, that the practitioner's alleged conduct constitutes professional misconduct, because it falls within para (a) of the definition of 'professional misconduct' in s 403(1) of the LP Act ('… a substantial … failure to reach or maintain a reasonable standard of competence and diligence [that a member of the public is entitled to expect of a reasonably competent … legal practitioner]').
As indicated earlier, ground 2 alleges that the practitioner commenced and maintained an application for indemnity costs against Ms L in the proceedings on behalf of his client pursuant to s 25 of the MCCP Act without any reasonable basis to do so and in breach of r 6(2)(b) and/or r 6(2)(c) of the LPCR. Section 25 of the MCCP Act states, in part, as follows:
(1)The Court may order a party to a case to pay the whole or a part of another party's costs in the case.
…
(10)If the Court is satisfied that due to the acts or omissions of a legal practitioner, whether personally or through an employee or agent —
(a)costs have been incurred improperly or without reasonable cause; or
(b)costs have been wasted by undue delay or by any misconduct or default,
the Court may order all or any of the following —
(c)the legal practitioner to be wholly or partially disentitled to costs from the legal practitioner's client;
(d)the legal practitioner to repay to the legal practitioner's client the whole or a part of any costs that the legal practitioner has been paid by the client for items other than disbursements;
(e)the legal practitioner to pay to the legal practitioner's client the whole or a part of any costs that the client is ordered to pay to another party;
(f)the legal practitioner personally to indemnify any party other than the legal practitioner's client against the whole or a part of the costs payable by the indemnified party.
(11)The Court must not make an order under subsection (10) unless it has informed the legal practitioner of the proposed order and allowed the legal practitioner to call evidence and make submissions in relation to the proposed order.
…
Rule 6(2) of the LPCR states, in part, as follows:
A practitioner must not engage in conduct, in the course of providing legal services or otherwise, which —
…
(b)may be prejudicial to, or diminish public confidence in, the administration of justice; or
(c)may bring the profession into disrepute.
Ground 1 – Knowingly or recklessly making a misleading and deceptive representation to Ms L and the firm
It is common ground (and we have found) that, in the 15 May letter, the practitioner represented that at the May Hearing the Magistrate had considered the issue of indemnity costs and made preliminary orders along the lines of 'that the defendant or the defendants [sic] lawyer is to pay the claimants [sic] costs' in respect to which the practitioner was awaiting the formal orders in those terms, when the true position was that no orders, preliminary or otherwise, as to costs had been made and the Magistrate had not in any way considered the merits of the practitioner's submissions in relation to an application for costs and the question of costs had been reserved with liberty to apply.[8] The paragraph of the 15 May letter in which the Representation was made by the practitioner is substantially set out at para 17 of the agreed facts. However, it is instructive to set out the 15 May letter in its entirety. The 15 May letter states as follows:[9]
[8] Agreed facts, para 19.1.
[9] Legal Profession Complaints Committee Book of Documents dated 12 April 2021 (Exhibit 4) (Committee's bundle), pages 51 55 (original emphasis).
The May Hearing took place before his Honour Magistrate Maughan. The relevant portion of the transcript of the May Hearing is substantially set out at para 15.2 of the agreed facts. However, to put that section into context, and given that the hearing took only about eight minutes and the transcript of the hearing comprises only about three pages, we set out the whole transcript:[10]
[10] Committee's bundle, pages 45 48 (original emphasis).
While the practitioner does not admit that the Representation was misleading and deceptive, as the Committee submits, 'it plainly was', because the May Orders (which are set out at para 22 of the agreed facts) 'were in no way' 'orders … along the lines of, that the defendant or the defendants [sic] lawyer is to pay the claimants [sic] costs', 'even in a "preliminary" sense'.[11] Rather, at the May Hearing, Magistrate Maughan reserved the question of costs against the defendant and/or the defendant's lawyer (as the practitioner expressly sought), with liberty to apply on 48 hours' notice.
[11] Applicant's closing submissions dated 11 November 2021 (Committee's submissions), para 3.
The practitioner gave evidence that 'I didn't know [the Representation] was inaccurate at the time'[12] and contends that he 'never intended to mislead or deceive [Ms L or] the firm …'.[13] However, for the reasons which follow, we are satisfied on a balance of probabilities and feel an actual persuasion on the evidence that the practitioner knew that the Representation was misleading and deceptive and he intended Ms L and the firm to rely on and be misled and deceived by the Representation and therefore induced to pay the costs sought by him in the 15 May letter. This is the only reasonable inference that is available on the evidence.
[12] ts 141, 14 October 2021.
[13] Respondent's Statement of Facts, Issues and Contentions dated 22 May 2020 (Exhibit 2), para 2.3.
First, the 15 May letter was the product of considerable work by the practitioner, detailed, and carefully drafted by him. As the practitioner conceded under crossexamination, he spent '[a] significant period of time' of 'at least two hours drafting that letter'.[14] The practitioner said that 'I actually recall doing several drafts of the same letter'[15] and he conceded that he was 'concerned to ensure that the letter was accurate'.[16] The letter is approximately four pages long, detailed in relation to matters occurring in the proceedings which the practitioner contended were relevant to costs in the proceedings, and quotes extensively and accurately from a number of items of correspondence, the transcript of the April Hearing, and relevant legislation. The sole and striking inaccuracy in the 15 May letter is the Representation.
[14] ts 129, 14 October 2021.
[15] ts 129, 14 October 2021.
[16] ts 132, 14 October 2021.
Secondly, the very purpose of the 15 May letter was to obtain payment of the practitioner's client's costs in the sum of $5,000 from Ms L and the Representation was central to achieving that objective. After stating, in the first sentence of the letter, that the practitioner was 'saddened that I must write such a letter', the practitioner then said 'We seek to advise you that we are seeking that [Ms L] pay our clients [sic] costs in the sum of $5000 inc GST'.[17] It is an agreed fact between the parties (and we have found) that 'on the basis of the Representation [the 15 May letter] sought the payment of $5,000 in satisfaction of the "costs issue" (Costs Demand) …'.[18] This is clear from the way in which the practitioner structured the 15 May letter, relevantly with the Representation coming immediately before the practitioner's reference to the statutory basis for an indemnity costs order in s 25(10) of the MCCP Act and the final section of the letter entitled 'Our Offer'[19] in which he said:[20]
Taking into account the Scale of Costs, we would kindly request that the sum of $5000 be deposited into our trust account by 18 May 2018 in full satisfaction of the costs issue arising from this matter.
[17] Committee's bundle, page 51.
[18] Agreed facts, para 19.2 (italicised and bolded emphasis original; underlined emphasis added).
[19] Committee's bundle, page 54.
[20] Committee's bundle, page 54.
Thirdly, the practitioner himself sought an order that costs of the proceedings be reserved (and fixed in the amount of $3,000) (although, between seeking that order twice, he indicated that he is 'indeed' 'seeking a costs order against the practitioner') and, as the Committee submits, the Magistrate 'said on three occasions in the space of less than 50 words that he reserved the question of costs'.[21] The practitioner did not (initially and ultimately) seek 'preliminary orders … along the lines of, that the defendant or the defendants [sic] lawyer is to pay the claimants [sic] costs'.
[21] Committee's opening, para 9.
Fourthly, as the practitioner conceded in crossexamination, he compiled a contemporaneous file note in respect of the May Hearing (file note).[22] The file note evidences that the practitioner knew that the Magistrate reserved costs. At the foot of page 1 of the file note, which appears to refer to the orders that the practitioner was proposing to seek at the May Hearing, he wrote 'Costs reserved'.[23] At the foot of the second page of the file note, which appears to record the outcome of the May Hearing, the practitioner wrote after 'Judgement' (sic) and '$62,460.30c' the words 'Costs reserved'.[24] The practitioner also conceded in crossexamination that when he wrote the 15 May letter (only six days after the May Hearing) he 'still had [his] file note'.[25]
[22] ts 106, 14 October 2021.
[23] Respondent's Book of Documents Full Index dated 20 September 2021 (practitioner's bundle), page 131 (legible copy).
[24] Practitioner's bundle, page 132 (legible copy).
[25] ts 141, 14 October 2021.
Fifthly, the practitioner conceded in crossexamination that, as at 9 May 2018, he knew that it meant to say 'costs are reserved', in particular that this expression 'means that no decision has been made about costs' and that '[i]t's different from an order that costs are awarded to one side or another'.[26]
[26] ts 104, 14 October 2021.
Sixthly, the practitioner knew during the May Hearing that he could not obtain costs orders, whether 'preliminary' or otherwise, 'along the lines of, that … the defendants [sic] lawyer is to pay the claimants [sic] costs' at that hearing. When the practitioner said to Magistrate Maughan that he is 'indeed' seeking a costs order against Ms L, his Honour said 'Well, I'm not going to make an order without … [Ms L] being heard on the application …'.[27] The practitioner then said the following:[28]
There is – of course. There is a – under the Act, there is an obligation to make that proposal to [sic] writing in [sic] the other practitioner.
[27] Committee's bundle, page 47.
[28] Committee's bundle, page 47.
While it appears that the practitioner misunderstood the requirement in s 25(11) of the MCCP Act, in that this provision does not explicitly require a practitioner seeking costs against another practitioner to 'make that proposal to [sic] writing in [sic] the other practitioner', but rather precludes the Magistrates Court from making a costs order under s 25(10) of the MCCP Act 'unless it has informed the legal practitioner of the proposed order and allowed the legal practitioner to call evidence and make submissions in relation to the proposed order', he correctly understood that he could not obtain a costs order, whether 'preliminary' or otherwise, 'along the lines of, that … the defendants [sic] lawyer is to pay the claimants [sic] costs' at the May Hearing.
Seventhly, we do not accept the practitioner's evidence that variously:
•'as soon as the [M]agistrate indicated that he was going to reserve costs, I almost – what would I say – mentally checked out'[29] and '[i]t was almost as if I had a concentration lapse at that point in time';[30]
•'I was confused with what the Magistrate was doing'[31] when his Honour said 'the claimant's costs … as against the defendant and/or the defendant's representative from time to time are reserved, with liberty to apply on 48 hours [sic] notice to an affected party. So I will reserve costs. If they can't be resolved … Mr Silver, they can – you can relist an application on 48 hours [sic] notice to the other party';[32] and
•'I missed what [the Magistrate] said' when he said these words.[33]
[29] ts 74, 13 October 2021.
[30] ts 75, 13 October 2021.
[31] ts 113, 14 October 2021.
[32] Committee's bundle, page 47.
[33] ts 114, 14 October 2021.
The transcript shows that the practitioner did not 'mentally check out' after Magistrate Maughan said that he was going to reserve costs, but rather engaged in a further discussion with the Magistrate, informing him that he will write to Ms L 'and put him [sic] of [sic] notice on [sic] such and see what we can resolve …', twice thanked the Magistrate after his Honour said that he will reserve costs, on the second occasion adding after 'thank you' the words 'That's suitable',[34] and, after the Magistrate said to the practitioner that he can relist an application for costs on 48 hours' notice to the other party, thanking the Magistrate 'for making yourself available for this mediation, had it occurred'.[35]
[34] Committee's bundle, page 47.
[35] Committee's bundle, page 47.
The practitioner was not 'confused' by and did not 'miss' what Magistrate Maughan said in terms of granting liberty to apply on 48 hours' notice to an affected party if costs could not be resolved between the parties. The practitioner conceded under crossexamination that he remembers that the Magistrate said the words 'liberty to apply'[36] and that:[37]
I – I sort of knew what [liberty to apply] meant [in May 2018]. It meant that I could have – they would have shortcut the application process was what – what I understood at the time.
[36] ts 142 143, 14 October 2021.
[37] ts 117, 14 October 2021. The practitioner also conceded in crossexamination that, prior to his admission as a legal practitioner in June 2015, he had been a lecturer and tutor in a course unit on civil procedure at Murdoch University Law School (ts 119, 14 October 2021).
Furthermore, the practitioner also did not ask for any clarification of the orders made by the Magistrate, said 'That's suitable' after his Honour announced that he will reserve costs and grant liberty to apply on 48 hours' notice to an affected party, and then, after the Magistrate confirmed that the practitioner could relist an application on 48 hours' notice to the other party, the practitioner thanked the Magistrate for making himself available for the listed mediation.
We also note that if (contrary to our finding) the practitioner was somehow 'confused' by or 'missed' what Magistrate Maughan said about granting liberty to apply on 48 hours' notice to an affected party, after his Honour said that he will reserve costs, that would not provide a reasonable basis for the practitioner honestly and mistakenly believing and asserting that 'preliminary orders have been made along the lines of, that the defendant or the defendants [sic] lawyer is to pay the claimants [sic] costs'.
Eighthly, we do not accept the practitioner's evidence and contention that:[38]
And given my uncertainty, I tried to put a disclaimer on my paragraph by using the words:
Orders have been made along the lines of –
to try to communicate to Mr [sic] [L] that I wasn't entirely certain of the orders being made. …
[38] ts 79, 13 October 2021.
For the reasons given earlier, we do not accept that the practitioner was under any uncertainty as to the orders made on 9 May 2018. Furthermore, we do not accept his characterisation that the words 'orders have been made along the lines of' amount to a 'disclaimer' showing that he did not intend to knowingly mislead Ms L and the firm. Rather than constituting a 'disclaimer' reflecting the practitioner's uncertainty as to what orders had been made at the May Hearing, the practitioner's words 'orders have been made along the lines of' reflect, as the Committee submits, 'that the [practitioner] deliberately chose a form of words that might help persuade Ms L to "settle" the matter by making the payment requested'.[39] As the Committee also submits, '[h]ad [the practitioner] told a "more obvious" lie – such as that an actual personal costs order had been made against Ms L, that would not have advanced his position … since the necessary preconditions for seeking such an order under s 25(11) of the [MCCP] Act had not been met, and he could have expected that Ms L would know it'.[40]
[39] Committee's submissions, para 18.
[40] Committee's submissions, para 17.
Finally, we note that the practitioner gave evidence that, during the week of the May Hearing, he 'was quite flat out', having 'actually had a court hearing in the morning that day with two clients, one of which was a challenging client',[41] as a result of which he was 'pretty exhausted',[42] and he had to attend a continuing professional development seminar between 10 and 12 May 2018. The practitioner submits that the making of the Representation involved 'an honest mistake'[43] and that 'the inference of honest mistake is open to the SAT due to the personal factors which had adverse effects on the practitioner's performance at the time, in combination with fatigue and a lack of experience'.[44]
[41] ts 75, 13 October 2021.
[42] ts 76, 13 October 2021.
[43] Practitioner's submissions, para 12.
[44] Practitioner's submissions, para 15.
For the reasons given at [14] [27] above, we find on a balance of probabilities and feel an actual persuasion that, even if the practitioner was busy and 'fatigued', and noting that he had (only) three years' experience in practice at the time he wrote the 15 May letter, the practitioner did not make the Representation as a result of an honest mistake, but rather that, by making the Representation, he knowingly sought to mislead and deceive Ms L and the firm and intended that Ms L and the firm rely on and be misled and deceived by the Representation and therefore induced to pay the costs sought by him in the letter. Moreover, as the Committee submits, 'tiredness, stress and inexperience do not stop a person from telling the truth, if that is the person's actual intention'.[45]
[45] Applicant's closing submissions in reply dated 17 December 2021 (Committee's reply submissions), para 10.
As the Court of Appeal said in Vogt v Legal Practitioners Complaints Committee [2009] WASCA 202 at [61], '[f]or a practitioner, in the course of his or her practice, intentionally to mislead anyone is a serious breach of the practitioner's professional duty'. Intentionally seeking to mislead a fellow practitioner in relation to court orders is plainly both conduct that would be reasonably regarded as disgraceful, that is bringing or deserving disgrace, shameful or disreputable, or dishonourable, that is showing lack of honour, ignoble, base and shameful, (within the first limb of the restatement of the common law concept of unprofessional conduct in Kyle v Legal Practitioners' Complaints Committee at [61]) and conduct 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 (within the second limb of the restatement of common law concept of unprofessional conduct in Kyle v Legal Practitioners' Complaints Committee at [61]). Moreover, the practitioner's conduct was grossly unfair to Ms L and the firm and involved serious dishonesty and therefore serious impropriety affecting his character, which is indicative of a failure either to understand or to practise the precepts of honesty and fair dealing that are essential to the privilege and responsibilities of legal practice.
Finally, in relation to ground 1, as the Committee submits, '[i]t may be accepted that Ms L and her firm were not misled about the actual orders made on 9 May [2018] for long, but that does not change the character of the Representation'.[46] The essence of the practitioner's misconduct in this case is that he knowingly sought to mislead Ms L and the firm, not that he actually misled them, and the fact that the practitioner provided the Magistrates Court orders to the firm the day after he sent the 15 May letter does not change the fact that, by the making of the Representation, the practitioner knowingly sought to mislead Ms L and the firm.
[46] Committee's opening, para 20.
It follows that the practitioner engaged in professional misconduct under the LP Act in terms of ground 1.
Ground 2 – Commencing and maintaining an application for indemnity costs against Ms L without any reasonable basis for doing so and in breach of r 6(2)(b) and/or r 6(2)(c) of the LPCR
The Committee contends that the indemnity costs application by the practitioner against Ms L, which was made on or about 10 July 2018 and ultimately withdrawn on 31 July 2018, was not reasonably arguable under s 25(10) of the MCCP Act, and that, by commencing and maintaining that application, the practitioner engaged in professional misconduct. In contrast, the practitioner contends that the costs application was reasonably arguable and that, in any case, his conduct does not constitute professional misconduct or unsatisfactory professional conduct.
For the reasons which follow, we have determined that the costs application was not reasonably arguable under s 25(10) of the MCCP Act and that the practitioner engaged in unsatisfactory professional conduct under the LP Act by commencing and maintaining that application without any reasonable basis to do so and in breach of r 6(2)(b) and r 6(2)(c) of the LPCR.
As indicated earlier, s 25(10) of the MCCP Act relevantly confers a discretion upon the Magistrates Court to order a legal practitioner personally to indemnify any party (other than the legal practitioner's client) against the whole or any part of the costs payable by the indemnified party:
If the Court is satisfied that due to the acts or omissions of a legal practitioner, whether personally or through an employee or agent —
(a)costs have been incurred improperly or without reasonable cause; or
(b)costs have been wasted by undue delay or by any misconduct or default[.]
However, the discretion to award costs did not arise in the circumstances of the proceedings, because there were no acts or omissions by Ms L which were improper or unreasonable, and no undue delay, misconduct or default by her, in the proceedings, and, in any case, the practitioner's client had not incurred any costs by reason of any relevant conduct of Ms L.
The practitioner said in his evidence that 'the justification [or basis] of the [indemnity costs] order [application]'[47] was para 4 of Ms L's letter to the practitioner dated 20 April 2018, which states as follows:[48]
4.[I]n December 2017 our client instructed us that the company did not wish to take any further steps to defend the action, and we provided our client with advice in relation to the consequences of this decision. Further, we sought instructions to file a Notice of Ceasing to Act in the Court, and we were specifically instructed to stay on the record[.]
[47] ts 190, 14 October 2021.
[48] Committee's bundle, page 39.
The practitioner's understanding of the basis of the costs application is apparent from the following evidence he gave under crossexamination:[49]
[49] ts 191 192, 14 October 2021.
All right. So the entirety of your claim for costs was based upon what [Ms L] said in paragraph 4 of her letter of 12 [sic 20] April?‑‑‑Largely, yes, yes.
What else?‑‑‑Well, it was the other material that she had provided to me and her other conduct throughout the matter, but the crux of the application, as you have put it, was to paragraph 4 of her letter.
And so the fact that those were her instructions in December 2017 obliged her to tell the other side to get default judgment, or to tell her client to consent to default judgment?‑‑‑Well, that is the dispute.
That is what you say she should have done?‑‑‑I say that she should have communicated her client's change in position to the court or to the other side as a courtesy, or as an obligation.
Despite the fact that it was privileged?‑‑‑Well, that's the dispute as to whether – I accept that that instruction was privileged, but if she had sought the instruction and her client told her that he was willing to enter judgment and had judgment entered ‑ ‑ ‑
Mr Silver?‑‑‑ ‑ ‑ ‑ that was ‑ ‑ ‑
‑ ‑ ‑ you still don't understand, do you, that not actively defending the claim is not the same as willing to have judgment entered, is it?‑‑‑I will get you to repeat that if you could?
Not actively defending the claim is not saying willing to have judgment entered?‑‑‑No, it's different.
Yes?‑‑‑Yes.
And she didn't say that in 2017 her client was willing to have judgment entered, did she?‑‑‑No, she didn't. She only told me that her client didn't wish to defend the matter in 2017.
Yes, and the client was perfectly at liberty to do nothing and see if the claim was prosecuted, wasn't it?‑‑‑The client was, yes.
And [Ms L] was perfectly at liberty, and perfectly able to see that happen too?‑‑‑That's the argument.
[Ms L] was not obliged to make the claimant prosecute its claim, was she?‑‑‑That's the argument.
All right?‑‑‑I'm sorry, we will have to disagree on that one.
The 'argument' that the practitioner referred to in the passage of crossexamination set out immediately above is misconceived. As a partner of the firm expressly pointed out to the practitioner in letters dated 18 May 2018[50] and 28 May 2018,[51] in each of which the firm requested the practitioner to withdraw the demand for costs and apologise to Ms L, in her conduct of the proceedings, Ms L acted in accordance with her ethical duties, in particular r 35(4) of the LPCR, which states as follows:[52]
If a client informs a practitioner that the client intends to disobey a court's order the practitioner —
(a)must advise the client against that course and warn the client of its dangers; and
(b)must not advise the client how to carry out or conceal that course; and
(c)must not inform the court or the opponent of the client's intention unless —
(i)the client has authorised the practitioner to do so beforehand; or
(ii)the practitioner believes on reasonable grounds that the client's intended conduct constitutes a threat to any person's safety.
[50] Committee's bundle, pages 60 63, especially at page 61.
[51] Committee's bundle, pages 66 67, especially at page 66.
[52] The firm set out r 35(4) of the LPCR in its letter to the practitioner dated 18 May 2018 and enclosed an extract of the whole of r 35 of the LPCR (Committee's bundle, page 61).
While in the passage of crossexamination set out at [38] above, the practitioner professed an understanding of the difference between a defendant not actively defending a claim, on the one hand, and consenting to judgment being entered against it, on the other hand, it is clear from this crossexamination (and from the practitioner's general position in relation to ground 2) that he does not truly appreciate this fundamental distinction.
Furthermore, the practitioner submits as follows:[53]
[53] Practitioner's submissions, para 43.
In considering Section 25(10):
(a)If [Ms L's] client told her that it didn't wish to defend the matter (on possibly two occasions) and judgement [sic] could be entered, did [Ms L] have an obligation to
i.Write to the Court and amend their client's case statement given her client did not intend to proceed with the matter?
ii.Advise her opponent as to the change in her client's legal position?
(b)If [Ms L] was instructed by her client that it did not wish to comply with Court orders but instructed her to stay on the Court record, was [Ms L] a party to the client's (in)action in this regard?
However, there is no evidence that the defendant told Ms L that 'judgement [sic] could be entered'. Indeed, the inference is overwhelmingly to the contrary, because, having sought instructions to file a Notice of Ceasing to Act, the firm was specifically instructed by the defendant to stay on the record. Furthermore, as indicated earlier, Ms L's conduct was in accordance with r 35(4) of the LPCR. Indeed, Ms L was specifically precluded by r 35(4)(c) from informing the Magistrate's Court or the practitioner of the defendant's intention to disobey the orders. Not only did Ms L not have an obligation to '[w]rite to the Court and amend their client's case statement given her client did not intend to proceed with the matter', but it would have been improper for her to have done so. The practitioner's question 'was [Ms L] a party to the client's (in)action in this regard?' reflects a fundamental misconception on his part about competent and ethical practice under r 35(4) of the LPCR. It was not improper for Ms L and the firm to remain on the record for the defendant, knowing that the defendant did not intend to comply with order 2 of the November Orders, when the firm had sought instructions to get off the record and their client instructed the firm to remain on the record.
Furthermore, Ms L had no legal or ethical obligation to seek to have judgment entered or to seek to have the proceedings terminated in circumstances where her client had instructed her that it did not wish to take any further steps to defend the action and for the firm to stay on the record. Indeed, she would have been in breach of her legal and ethical obligations to her client if she were to seek to have judgment entered or to seek to have the proceedings terminated without having obtained those instructions from her client. Moreover, Ms L acted entirely appropriately when, as stated at para 33.5 of the agreed facts:[54]
Ms L, with the defendant's permission, in her affidavit of 22 March 2018, and in her oral submissions at the April Hearing brought to the attention of the claimant, the practitioner and the Court that the defendant had not complied with and did not intend to comply with order 2 of the November Orders "for commercial reasons", did not intend to proceed with the defence of the proceedings and was concerned only with the orders sought in the February Application to join the directors as defendants in the proceedings[.]
[54] Emphasis added.
Ms L also obviously had no legal or ethical obligation to advise the claimant or the practitioner that default judgment could be applied for or to seek it. Indeed, as stated at para 33.4 of the agreed facts:
[I]t was not the responsibility of the firm or Ms L to advise the claimant and, subsequently, the practitioner, how to prosecute the claim against their/her client (the defendant), including to seek default judgment[.]
Furthermore, and in any case, the practitioner's client did not incur any legal costs for which Ms L could possibly have been responsible under the terms of s 25(10) of the MCCP Act. It is an agreed fact (and we have found) that the practitioner's client had not incurred any legal costs prior to 22 March 2018, when he first instructed the practitioner.[55] After the practitioner was instructed, the focus of the proceedings was the February Application that the claimant had filed on 19 February 2018, in particular his application to join two directors of the defendant company as defendants in the proceedings and to make one of the directors liable to pay the wages sought. The February Application was listed for hearing, initially on 28 March 2018, which hearing date the practitioner proposed to be adjourned and was vacated by consent, and then on 11 April 2018, and it an agreed fact (and we have found) that 'it was reasonable for Ms L to attend the April Hearing on behalf of the defendant to oppose the February Application which sought to join the individual directors as defendants'.[56] At the hearing on 11 April 2018, the practitioner said to Magistrate Maughan that the February Application had not been 'adequately pleaded' and so he proposed that it be 'stayed'.[57] It is also an agreed fact (and we have found) that 'the practitioner was at liberty to apply for default judgment at the April Hearing, the fact of which was stated to the Court by Ms L … but did not do so, and any "wasted costs" incurred by the claimant after the April Hearing may be attributed to the practitioner's conduct in this respect'.[58] Indeed, under crossexamination, the practitioner, in effect, conceded his own incompetence in failing to apply for default judgment at the hearing on 11 April 2018, at which, although the defendant did not consent to judgment being entered, had default judgment been sought, it would obviously have been granted, because Ms L stated in her affidavit sworn on 22 March 2018 that 'for commercial reasons only, the defendant elected not to file the form 35 and 36 [that is, not to comply with the outstanding orders]'[59] and said to the Magistrate that '[f]or commercial reasons we don't wish to defend this action',[60] to which his Honour replied 'Well, if you don't defend the action and don't comply with the orders, a judgment will be entered against you in default of compliance, [Ms L]',[61] and Ms L replied 'Yes. Our client understands that'.[62] The passage of crossexamination in which the practitioner, in effect, conceded his incompetence in failing to apply for default judgment at the hearing on 11 April 2018 is as follows:[63]
Nothing in [Ms L's] exchange with the [C]ourt said her client was happy for judgment to be entered or consented. Her express instructions were not to consent ‑ ‑ ‑?‑‑‑I did not ‑ ‑ ‑
‑ ‑ ‑ but not to oppose?‑‑‑That is what I now understand the position, yes.
And are you saying that in 2018 you did not understand what that meant?‑‑‑I didn't fully understand what that meant, no.
That you didn't know the difference between consenting to something and not opposing it?‑‑‑I had never had that expression before in a default judgment application.
And is it [Ms L's] fault that you were ignorant of that matter?‑‑‑No, it's not [Ms L's] fault at all.
And so [Ms L's] conduct on 11 April did not contribute, in any way, to the failure to enter default judgment, did it?‑‑‑Not her conduct on the 11th, no.
No. It was your ignorance that led you not to seek default judgment, wasn't it, Mr Silver?‑‑‑Yes.
[55] Agreed facts, para 33.1.
[56] Agreed facts, para 33.6.
[57] Committee's bundle, page 28. The February Application was in fact 'adjourned sine die with leave to relist on 48 hours [sic] [notice]' (Committee's bundle, page 34).
[58] Agreed facts, para 33.7.
[59] Committee's bundle, page 15.
[60] Committee's bundle, page 30.
[61] Committee's bundle, page 30.
[62] Committee's bundle, page 30.
[63] ts 188, 14 October 2021.
In his opening address, the practitioner said that the indemnity costs application was made 'with the instructions of his client'.[64] However, as the Committee submits, the fact that the practitioner had instructions to make the costs application is relevantly 'no excuse', because '[i]t is a practitioner's responsibility not to make untenable applications or arguments simply because his or her client asks him or her to do so'.[65]
[64] ts 15, 13 October 2021.
[65] Committee's submissions, para 43.
In his opening, the practitioner also said that the indemnity costs application was made 'after careful review of matters'.[66] Similarly, in his closing submissions, the practitioner submits that 'he took steps to carefully assess the matter' and he 'conducted a considerable review of the law'.[67] However, for the reasons given at [35] [45] above, as the Committee submits, 'if the [practitioner] did undertake a "careful review of matters" and still concluded that the Costs Application had merit, this reinforces his failure of competence'.[68]
[66] ts 15, 13 October 2021.
[67] Practitioner's submissions, para 45(a) and (b).
[68] Committee's submissions, para 44.
Finally, the practitioner submits that as part of '[taking] steps to carefully assess the matter', he sought 'external advice'.[69] In his statement of issues, facts and contentions, the practitioner contends that 'he took advice from Senior Counsel on the merits of the [indemnity costs] application prior to filing the submissions [in support]'.[70] In his evidenceinchief, the practitioner identified the 'Senior Counsel' he referred to as Mr Gregory McIntyre SC, but, although he did not withdraw or amend the contention referred to in the preceding sentence, the practitioner did not in fact give evidence to the effect that 'he took advice from Senior Counsel on the merits of the [indemnity costs] application prior to filing the submissions [in support]'. Rather, the practitioner gave the following evidenceinchief in relation to his discussion with Mr McIntyre:[71]
If I was asked whether I gave documents to Mr McIntyre, I would say, more likely than not, no because he had indicated that he only had a very short period of time to have a quick coffee chat with me. And I valued his time greatly. And I simply – it was a very brief chat about certain aspects that I wanted advice on. And I discussed with Mr McIntyre the matters that I saw pertinent at the time. I don't have a full recollection of what matters I asked him about, nor did – were the discussions highly focused on the complex area of cost applications.
It was more about whether the – what the practitioner did was right or wrong. …
[69] Practitioner's submissions, para 45(a).
[70] Exhibit 2, para 16.
[71] ts 94, 13 October 2021.
The Committee called Mr McIntyre to give evidence. Mr McIntyre is an independent witness and eminent Senior Counsel. We have no hesitation in accepting his evidence as truthful and credible.
At 6pm on 25 June 2018, the practitioner emailed Mr McIntyre as follows:[72]
[72] Practitioner's bundle, pages 270 271 (original emphasis).
…
Subject: Ethical Advice Sought
Dear Sir
I am dealing with a very difficult lawyer how [sic] keeps throwing misconduct allegations at me in order to have myself stop defending my client or the like.
Can I come by and seek your opinion later this week?
Kindest regards
Chad Silver
Lawyer
By an exchange of emails on 25 and 26 June 2018, Mr McIntyre and the practitioner agreed to meet at Petitions café at 12 pm on 27 June 2018.[73] Mr McIntyre gave evidence, which we accept, that he met with the practitioner for about half an hour at the café, they spent about 10 to 20 percent of the time discussing the 'ethical' issue about which the practitioner emailed Mr McIntyre at 6 pm on 25 June 2018, and they spent the remainder of the time discussing a brief that the practitioner proposed to send to Mr McIntyre. Mr McIntyre '[does] not presently have any recollection of being asked for, or providing, any advice in relation to an application for costs against [Ms L]'.[74] Furthermore, as Mr McIntyre said in evidence, 'I would have thought I might have recalled that, if my advice was sought on that topic, because I would be inclined to advise that considerable caution should be applied before taking such a step, because of the significant preconditions which must apply before such an application would have any prospect of success and that such a course should not be lightly pursued, bearing in mind general professional obligations, including courtesy towards other practitioners'.[75]
[73] Practitioner's bundle, pages 268 270.
[74] Witness statement summary for Gregory McIntyre SC dated October 2021 (Exhibit 6), para 13 and to the same effect, ts 26, 13 October 2021.
[75] Exhibit 6, para 13 and, to the same effect, ts 29, 13 October 2021.
We are satisfied on a balance of probabilities and feel an actual persuasion on the evidence of Mr McIntyre that the practitioner did not seek his advice in relation to the indemnity costs application against Ms L. Mr McIntyre has no recollection of being asked for such advice, and, for the reason he gave referred to in the preceding paragraph, it is likely that he would recall having been asked for such advice, if that had occurred. Our finding is also supported by the terms of the practitioner's email to Mr McIntyre at 6 pm on 25 June 2018, which, as indicated earlier, states its subject as 'Ethical Advice Sought' and requests Mr McIntyre's opinion in relation to 'a very difficult lawyer how [sic] keeps throwing misconduct allegations at me',[76] not in relation to the indemnity costs application against Ms L.
[76] The 'very difficult lawyer' was not Ms L, but a partner at the firm.
However, the evidence shows that the practitioner did seek advice in relation to the indemnity costs application against Ms L from two other lawyers, namely Mr Jim Riley and Ms Tina McAulay. In his closing submissions, the practitioner relies on 'seeking external advice' from these practitioners as supporting his submission that 'he took steps to carefully assess the matter'.[77] The practitioner emailed Mr Riley at 12.40 pm on 22 June 2018 and emailed Ms McAulay at 9.26 pm on 25 June 2018, in both cases attaching his proposed submissions in support of the costs application against Ms L and stating as follows:[78]
Crux of the matter is
•a practitioners [sic] client was ordered to file discovery.
•The client said that they did not want to defend the matter and comply with the orders.
•The practitioner failed to get instructions for judgement [sic] to be entered.
•The practitioner failed to get off the record.
•Costs have been incurred.
[77] Practitioner's submissions, para 45(a).
[78] Practitioner's bundle, page 250 (email to Mr Riley) and page 266 (email to Ms McAulay).
In his email to Mr Riley, the practitioner sought 'your opinion as to the merits of the attached proposition' (referring to his submissions) and in his email to Ms McAulay, the practitioner sought 'to use you as a sounding board as to the merits of the attached proposition' (again referring to his attached submissions). Mr Riley did not respond to the email. However, Ms McAulay responded at 10.54 pm on 25 June 2018, that is a little less than an hourandahalf after the practitioner emailed her his request for her to be 'a sounding board', as follows:[79]
…
Hi Chad
I can see your reasoning and logic in the submissions you have made. I'm guessing you have made that application because the defendant has no assets as well as the improper conduct of the lawyer on the other side.
I don't consider they were wrong in not getting instructions to consent to judgment, but I do consider the firm should have gotten off the record earlier.
I think your submissions are arguable and there is a reasonable chance they may convince a Magistrate. But again, it is worth asking a silk about them.
Otherwise, in practical respects, would it be worth discussing with [the firm] the prospects of settling the costs given they have not provided any substantive response to it? Also, it might avoid a potential complaint. Although, I agree that it does appear as though you are being bullied into changing your position.
I think it is beyond my capability and you really should seek the advice of senior counsel. But I'm grateful for your confidence.
…
[79] Practitioner's bundle, page 265.
Although Ms McAulay considered that the practitioner's submissions were 'arguable' and there was 'a reasonable chance they may convince a Magistrate', she qualified her opinion by advising the practitioner to obtain advice from Senior Counsel. Furthermore, and significantly, as the Committee submits, 'the advice [the practitioner] sought and obtained did not justify the Costs Application, because the key facts underpinning it were not properly conveyed to those practitioners whose advice he sought'.[80] The practitioner crossexamined Mr McIntyre in relation to the advice that Mr McIntyre would have given him in relation to the '[c]rux of the matter' identified in the five bullet points in his emails to Mr Riley and Ms McAulay set out at [53] above. Mr McIntyre gave evidence, which we accept, that 'the missing ingredient in that set of dot points is that [the firm] had told you that they had specific instructions not to get off the record'.[81] In reexamination, Mr McIntyre gave the following evidence, which we also accept:[82]
And it then has five dot points said to be – under the heading, Crux of the Matter is. Now, reading that set of dot points, as part of your evidence in response to Mr Silver's questions about this you said something to the effect that the missing ingredient in this list of dot points is that [the firm] had told you they had been instructed not to get off the record?‑‑‑Yes.
Now, that is not reflected in those dot points?‑‑‑That's right.
What effect does that have on the situation?‑‑‑Well, it changes it entirely. I mean, it would have been open for [the firm] to make an application to the court to get off the record contrary to the instructions. They could have said we no longer wish to act for you, but they would then have to apply to the court, certainly in the superior courts. I mean, I could be corrected in relation to the Magistrates Court, but certainly in the Supreme Court or the Federal Court you would need to file an application with supporting affidavit material.
And does that – does such an affidavit in those circumstances involve or permit the canvassing of privileged information?‑‑‑I think it probably would in that particular situation. I'm not – I can't say that I absolutely know the answer to that question.
All right. But suffice it to say, is it your evidence that by failing to make the point in that dot point – that the practitioner's client had not given them permission to get off the record – well, that changes the nature of the question?‑‑‑Yes. I mean, they've not only done that they've specifically instructed them to remain on the record.
[80] Committee's submissions, para 45.
[81] ts 43, 13 October 2021.
[82] ts 50, 13 October 2021.
Mr McIntyre was not called by the Committee as an expert witness. However, he is undoubtedly qualified to give expert evidence in relation to the ethical obligations of legal practitioners and applications for indemnity costs against legal practitioners based on alleged unethical or unreasonable behaviour, and he was, in effect, asked to do so by the practitioner (without objection from the Committee) when he gave the evidence in crossexamination referred to in the preceding paragraph, which was also the subject of the reexamination set out in the preceding paragraph. As an experienced Senior Counsel, we accept Mr McIntyre's expert evidence set out in the preceding paragraph. We find on the basis of this evidence that, in seeking advice from Mr Riley and Ms McAulay, the practitioner left out a critical aspect of the facts of the case, that is, that the firm had told him that they had specific instructions not to get off the record, and that this fact 'changes [the situation] entirely'.[83] The practitioner also failed to obtain Senior Counsel's advice, although he was advised to do so by a practitioner he approached. Consequently, the advice the practitioner sought and obtained did not provide a reasonable basis for the costs application against Ms L.
[83] ts 50, 13 October 2021.
It follows that the practitioner commenced and maintained an application for indemnity costs against Ms L in the proceedings without any reasonable basis to do so. The practitioner's failure to appreciate this, both at the time when he made the costs application and when he gave evidence and made his closing submissions in this proceeding, reflects incompetence.
Furthermore, as the Committee contends, commencing and maintaining a costs application against a fellow practitioner without any reasonable basis to do so 'had the potential to diminish public confidence in the administration of justice and … to bring the profession into disrepute', in breach of r 6(2)(b) and r 6(2)(c) of the LPCR, in that:[84]
[1][I]t could be inferred that the practitioner was not competent to practice [sic] as a legal practitioner;
[2][T]he practitioner caused the firm to waste time and resources in responding to the Costs Application, for which it could not be properly compensated by way of a costs order, which was oppressive and unfair, and also wasted the resources of the Court; [and]
[3][T]he commencement and … maintenance by the practitioner of the Costs Application which lacked a reasonable basis was likely to undermine public confidence in the legal profession and the administration of justice by giving rise to an apprehension that members of the legal profession are willing to engage in legal process in circumstances where it is not justified[.]
[84] Exhibit 1, para 36.
We find that the practitioner's conduct in terms of ground 2 constitutes unsatisfactory professional conduct under the LP Act in that it fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent legal practitioner. However, we are not satisfied that the practitioner's conduct in terms of ground 2 rises to the level of professional misconduct under the LP Act. In particular, given that the practitioner had only been in practice for about three years at the time, and given that he made an (albeit incompetent, because he failed to himself appreciate and left out a significant factual circumstance) effort to obtain advice from two fellow practitioners, we do not consider that the practitioner's conduct fell short to a substantial degree to the standard of professional conduct observed and approved by members of the profession of good repute and competence, or would be reasonably regarded as disgraceful or dishonourable by practitioners of good repute and competence, or fell short to a substantial degree of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent legal practitioner.
The Committee submits that 'the [practitioner's] conduct in continuing to press the Costs Application in increasing sums, including for costs incurred well after Ms L and her firm got off the record, takes the matter into the realm of professional misconduct'.[85] However, although the increase in the amount of costs sought, from $3,000 (at the May Hearing), to $5,000 (in the 15 May letter), to $7,000 (in the claimant's submissions in relation to costs filed on 10 July 2018), is not adequately explained, and although seeking costs from Ms L well after she and the firm got off the record in itself reflects incompetence, given the practitioner's level of experience and his (albeit incompetent) effort to obtain advice, we do not consider that the practitioner engaged in professional misconduct in terms of ground 2, but rather (only) in unsatisfactory professional conduct.
Findings of professional misconduct and unsatisfactory professional conduct
[85] Committee's submissions in reply, para 20.
For the reasons set out above, we make the following findings of professional misconduct and unsatisfactory professional conduct:
1.The practitioner, Chad Steven Silver (practitioner), on or about 15 and 16 May 2018 in the course of acting for his client, the claimant in Magistrates Court of Western Australia proceedings (claimant; proceedings) to recover unpaid wages and superannuation from a company (defendant), engaged in professional misconduct, within the meaning of s 403 and s 438 of the Legal Profession Act 2008 (WA) (LP Act), in that his conduct to a substantial degree fell short of the standard of professional conduct observed and approved by members of the profession of good repute and competence and would be reasonably regarded as disgraceful or dishonourable by practitioners of good repute and competence, by preparing and causing to be sent to the defendant's solicitors (firm) a letter dated 15 May 2018 which:
(a)represented relevantly and in substance that at a hearing in the proceedings on 9 May 2018 (May Hearing) at which there was no attendance on behalf of the defendant by the firm, the Magistrate after having heard the practitioner's submissions as to the costs sought by the claimant, made preliminary indemnity costs orders that either the defendant or the solicitor employed by the firm with conduct of the matter (Ms L) was to pay the claimant's costs (Representation); and
(b)on the basis of the Representation, sought payment from Ms L of $5,000 towards the claimant's costs,
in circumstances where:
(c)the Representation was misleading and deceptive in that no orders, preliminary or otherwise, as to costs were made by the Magistrate, nor did the Magistrate express any views as to costs and the issue of costs was reserved with liberty to apply;
(d)no notice had been given to Ms L and/or the firm that an application for indemnity costs against her had or would be made and where no one from the firm was in attendance at the May Hearing (the firm having filed and served on the practitioner a notice of ceasing to act on 20 April 2018) and where judgment was entered;
(e)the practitioner knew that the Representation was misleading and deceptive; and
(f)the practitioner intended Ms L and the firm to rely on and be misled and deceived by the Representation and therefore induced to pay the costs sought by him.
2.The practitioner between on about 10 July 2018 to on or about 31 July 2018 engaged in unsatisfactory professional conduct, within the meaning of s 402 and s 438 of the LP Act, in that his conduct fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent legal practitioner, by commencing and maintaining an application for indemnity costs against Ms L in the proceedings on behalf of his client pursuant to s 25 of the Magistrates Court Civil Proceedings Act 2004 (WA) without any reasonable basis to do so and in breach of r 6(2)(b) and r 6(2)(c) of the Legal Profession Conduct Rules 2010 (WA).
Programming orders in relation to the issues of penalty and costs
Having determined that the practitioner engaged in professional misconduct in terms of ground 1 and engaged in unsatisfactory professional conduct in terms of ground 2, the Tribunal must now determine the appropriate professional disciplinary consequence of that conduct and the Committee's application for a costs order.
We make the following programming orders:
1.By 18 February 2022 the applicant is to file and serve its submissions in relation to penalty and costs together with a schedule of the amount of costs and disbursements it seeks and supporting accounts.
2.By 11 March 2022 the respondent is to file and serve his submissions in relation to penalty and costs and any evidence, including character references, on which he relies.
3.By 14 March 2022 the applicant is to file and serve a statement of the names of the authors of any witness statements or character references filed in accordance with the preceding order who are required for crossexamination.
4.The matter is listed for a directions hearing in the President's list at 9.30 am on 15 March 2022 in order to list the issues of penalty and costs for determination on the documents or at a hearing.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
JUDGE D R PARRY, DEPUTY PRESIDENT
27 JANUARY 2022
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