Legal Services Commissioner v Bechara (No 3)

[2009] NSWADT 313

CITATION:	Legal Services Commissioner v Bechara (No 3) [2009] NSWADT 313
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Legal Services Commissioner RESPONDENT Maria Bechara
FILE NUMBER:	062023
HEARING DATES:	1 December 2009
SUBMISSIONS CLOSED:	1 December 2009
DATE OF DECISION:	14 December 2009
BEFORE:	Haylen W - J (Deputy President); Barnes M - Judicial Member; O'Neill A - Non-Judicial Member
CATCHWORDS:	Professional misconduct - hearing regarding penalty - deliberate charging of grossly excessive costs - failure to apportion costs of joint hearing involving three clients - respondent practitioner consents to public reprimand and payment of applicant's costs - applicant seeks imposition of fine - factors place breach in lower end of range of fines - appropriate case in which to impose fine
LEGISLATION CITED:	Legal Profession Act¸ 1987 Legal Profession Act 2004, ss 566, 576(e), 577
CASES CITED:	Environment Protection Authority v Barnes [2006] NSWCCA 246 Legal Services Commissioner v Bechara [2009] NSWADT 145 New South Wales Bar Association v Meakes [2006] NSWCA 340 Nikolaidis v Legal Services Commissioner [2007] NSWCA 130 Veghelyi v The Law Society of New South Wales (unreported, NSWCA, 6 October 1995)
REPRESENTATION:	APPLICANT L Muston, solicitor RESPONDENT P Doyle Gray, barrister
ORDERS:	(1)The respondent practitioner, Ms Maria Bechara, is found guilty of professional misconduct (2)The respondent practitioner is publicly reprimanded (3)The respondent practitioner is fined the sum of $6,500.(4)The respondent practitioner is to pay the costs of the Legal Services Commissioner in a sum as agreed or, in the absence of agreement, as assessed.

REASONS FOR DECISION

1 In 18 June 2009, the Tribunal determined that the respondent practitioner, Ms Maria Bechara, was guilty of professional misconduct in relation to deliberately charging grossly excessive amounts of costs in relation to three common law damages cases that were heard at the same time in the District Court in 2001 (see Legal Services Commissioner v Bechara [2009] NSWADT 145). A costs assessor, acting pursuant to the provisions of s 208Q(1) of the Legal Profession Act¸1987 had referred to the Legal Services Commissioner the amount of costs that had been charged by the respondent practitioner in the three common law cases over six hearing days in the District Court. After a good deal of discussion with the respondent practitioner between March 2005 and March 2006, the Legal Services Commissioner filed an Application in the Tribunal seeking the following orders against the respondent:

- finding that the respondent is guilty of professional misconduct;

- an order that the respondent be fined;

- an order that the respondent be publicly reprimanded;

- an order that the respondent pay the costs of, and incidental to the filing and hearing of the Information.

2 Shortly described, the case against the respondent practitioner was that, during the six days of hearing in the District Court, each plaintiff had been charged for the whole of those six hearing days at the rate of $250 per hour. The Tribunal found that the effect of that rate of charging resulted in the respondent practitioner receiving fees for 18 hearing days when attendance was only required on six hearing days. It was further alleged that this level of charging was not in accord with the costs agreement with each plaintiff and indeed it was alleged that, on a proper construction of the costs agreement in each case, each plaintiff would be charged only in relation to work performed on their case and no other case. The act of deliberate over-charging was supported by the fact that the respondent practitioner had not apportioned the costs of attendance on each hearing day according to the work actually performed for each client on those days or alternatively, by apportioning the costs of the six days equally between the three clients.

3 In dealing with these allegations of professional misconduct, the Tribunal found that the respondent practitioner's costs agreement did not permit the full costs of each hearing day to be charged to each plaintiff and that in the particular circumstances of this litigation, there was an obligation upon the respondent practitioner to apportion the costs between the plaintiffs. The Tribunal found that the usual costing principle, whereby a practitioner could not charge more than once for each unit of work, applied to the hearing costs of these three cases. The Tribunal, having reached those findings after considering relevant authorities including Nikolaidis v Legal Services Commissioner [2007] NSWCA 130, concluded that the respondent practitioner was guilty of professional misconduct. This decision deals with the appropriate orders that should be made in consequence of that finding by the Tribunal.

4 In the substantive proceedings the respondent practitioner filed an affidavit, gave oral evidence and was extensively cross-examined. She had been admitted as a solicitor in December 1991 and had been employed as a solicitor between May 1992 and November 1994 when she commenced practice as a sole practitioner, having a general practice but mainly focusing on workers compensation and common law personal injury cases.

5 The respondent practitioner's evidence was that she had conducted hundreds of speculative common law cases and was unaware of any obligation, rule or authority that required her to apportion the costs of the hearing between parties when there was more than one plaintiff although she was aware of the concept of apportionment in party/party costs. She had no intention of over-charging her clients and had rendered her detailed bill of costs in order to ensure that she did not fall foul of what she understood to be the "indemnity principle", namely, that she could not seek a higher level of costs against the defendant than she proposed to recover from her own clients. It was her practice in conducting these speculative actions that the actual amount of costs ultimately recovered from the client depended upon her consideration of the level of damages received and a consideration of the party/party costs obtained after assessment. In these three cases, the plaintiffs' damages were modest and the fees and costs were significant. A number of charges were disputed by the defendant and the costs assessor had reduced a number of items charged, including allowing only one-third of the costs for each hearing day in each of the three cases.

6 In her oral evidence, the respondent practitioner said that she understood the complaint made against her was that she had not apportioned the costs of each hearing day between the three plaintiffs. She stated that, in her years of practice, she was unaware of any such obligation on a solicitor in her position to apportion hearing costs in that way. Apart from the contents of materials provided to her by the Legal Services Commissioner and a statement made in an expert report, she said she had not heard of such an obligation to apportion from any other source in the profession. In her view she was under no such obligation and at no stage did she have any intention to overcharge the plaintiffs. Apart from the 25 per cent lift specified in the costs agreement, the fact was that she would only receive profit costs if she won the case - such profit costs did not lead her to overcharge the plaintiffs. She had no intention of taking money from their "personal pockets" other than out of the proceeds of verdicts and costs orders. However, the respondent practitioner was aware that, in a party/party costs assessment, it was unlikely that she would be able to recover the full hearing costs for each plaintiff, that those costs would be likely to be apportioned and had so advised her clients. In fact, as earlier indicate, that course was adopted by the costs assessor who in each case allowed only one-third of the costs claimed in relation to each hearing day in the case of each plaintiff.

7 In order to deal with a serious dispute that had arisen between the respondent practitioner and the defendant in relation to party/party costs, the respondent practitioner had contacted her clients and had offered to significantly reduce her profit costs. The evidence demonstrated that there were significant reductions in the costs charged to each client such that, on a global approach to the costs actually charged, one client's costs were reduced by 14 per cent with the other two clients having their costs reduced by over 60 per cent leading the Tribunal to accept that, on this approach, there was actual gross over-charging in only one of the cases. The Tribunal pointed out, however, that it was bound by the decision of the Court of Appeal in Nikolaidis and that the act of over-charging was complete when the bill of costs was sent to each client. The Tribunal indicated that the actual costs received may nevertheless be of relevance when it came to consider what consequential orders should be made following a finding of professional misconduct. It was also to be noted that the actual reduction in each client's costs occurred prior to the matter being raised with the respondent practitioner by the Legal Services Commissioner.

8 In the present hearing to determine what consequential orders were appropriate in the circumstances of this case, it was submitted for the Legal Services Commissioner that the maximum fine that could be imposed was $50,000. It was further submitted that the circumstances of the present matter warranted a fine of $10.000. There had been some discussion between the parties and the respondent practitioner had consented to an order that she be publicly reprimanded. It was noted that, by virtue of s 576(e) and s 577 of the Legal Profession Act 2004, such a reprimand was a public action and would be published on the Legal Services Commissioner's register of disciplinary action. It had also been agreed that the respondent practitioner would pay the costs of the Legal Services Commissioner and although there had been some discussions as to the amount of those costs, no final figure had been determined. It was also pointed out that, pursuant to s 566 of the Act, the Tribunal was obliged to make orders requiring the practitioner to pay costs where that practitioner had been found to engage in professional misconduct. There was no evidence or submission that exceptional circumstances existed that would permit the Tribunal to adopt another course.

9 Counsel for the respondent practitioner confirmed that his client consented to a public reprimand and subject to the exclusion of an adjournment application sought by the Legal Services Commissioner, would pay the costs of the applicant. The only issue was whether or not it was appropriate in the circumstances of this case to impose a fine. In support of that approach, attention was drawn to the following matters:

(a) the events that led to this complaint being filed involved a highly unusual set of circumstances with three clients receiving personal injuries on different days at different locations on the same premises. Indeed, it should be noted that the suggestion that the three matters be heard at the same time came from the defendant and was not resisted by the plaintiffs. In recognition of these particular circumstances, the imposition of a fine over and above a public reprimand would constitute no additional deterrent;
(b) there were no profit costs received by the respondent practitioner. On the Tribunal's approach to the bill of costs rendered, the amounts actually received by the respondent practitioner after substantially reducing her costs meant that there was no over-charging at all and in the other case, the legal practitioner had reduced the fees by 14 per cent (when they should have been reduced by 66 per cent);
(c) the conduct of the respondent practitioner in the present matter was not as serious as the level of over-charging alleged in Nikolaidis and in New South Wales Bar Association v Meakes [2006] NSWCA 340. In Meakes, there was a serious level of overcharging with many opportunities being available for the practitioner to reduce those charges. It was accepted that in Meakes , at a very late stage, there was full repayment of the amount calculated as representing the over-charging but the different circumstances here were that, on the practitioner's calculations, no profit costs were received;
(d) documents published by the Law Society in December 2008 dealing with whether there was a requirement to apportion when attending on more than one client did not unambiguously comment on this area of the law. The article cited examples where apportionment might apply and older cases where two full fees would be allowed. It was accepted in that article that, where matters were consolidated and dealt with by the same court for more than one client, a costs assessor would not normally allow costs to be charged to each client for the same attendance but would require apportionment. It was submitted that the article indicated that there was uncertainty about the principle of apportionment prior to the Tribunal's Decision in this matter;
(e) the Law Society had also published the findings of the Tribunal in this particular matter. In its on-line version and in its hard copy version, the Sydney Morning Herald had published the fact that proceedings had been taken in the Tribunal against the respondent practitioner alleging over-charging and those articles contained a number of details relating to the case. Those articles demonstrated in various ways that the profession had now been advised of the position in relation to apportionment in the circumstances of the respondent practitioner's appearance for three plaintiffs in related actions, heard at the same time;
(f) these matters had occurred many years ago but there had been no evidence of unprofessional behaviour by the respondent practitioner in the intervening period. Further, at no stage had there been a complaint from the plaintiffs about the level of her charges. There was no evidence of a request for repayment of monies nor was there evidence of some more serious impact on these clients because of the costs sought. This position was said to be probably a reflection of the fact that the respondent practitioner had significantly reduced the costs that she actually recovered from the plaintiffs.

10 Counsel for the respondent practitioner also drew attention to the fact that discussions between the parties as to costs indicated that the respondent practitioner would be liable for costs within the range of $70,000 to $100,000. It was suggested that the size of the costs should temper the discretion as to the imposition of a fine and raise the issue as to whether there was any real and additional deterrent effect achieved by imposing a fine over and above the costs.

11 In dealing with these submissions, the Tribunal keeps firmly in mind the protective purpose of the disciplinary orders that need to be made in the particular circumstances of this case. In Veghelyi v The Law Society of New South Wales (unreported, NSWCA, 6 October 1995), Kirby P, in speaking about the nature of gross over-charging by a legal practitioner, said:

In deference to Mr Roberts' submissions, it is, I think, relevant to consider first the reason why gross over-charging, as such, may be held professional misconduct. The Court has traditionally and for centuries exercised control over "the excessive fees and other unnecessary demands" made by solicitors of the court: see, eg, Holdsworth's History of English Law, 2nd ed, Vol 6, 434; Vol 12, 56-62. Clients are, or may frequently be, in a vulnerable position vis-a-vis their solicitors; the presumption of undue influence is, I think, based at least in part upon the fact that when making decisions clients ordinarily or at least frequently place trust in their solicitors. They ordinarily are not in a position to know without investigation what work must be done and what charges are fair and reasonable; they ordinarily assume that the solicitor will make only such charges.

Solicitors are, on the other hand, informed, or in a position to inform themselves, of what work may be required and what are fair and reasonable charges. They are, in that sense, in a position of advantage and trust is placed in them. Clients are entitled to be protected against the abuse of such an advantage. It is, I am inclined to think, the fact that that advantage has been misused which may, in a particular case, warrant what the solicitor does being categorised as professional misconduct.

The Legal Services Commissioner also drew attention to the following passage in Meakes, per Basten JA at para [114] regarding the nature of orders made in disciplinary proceedings arising from the charging of grossly excessive costs:

First, the order reminds other members of the profession of the public interest in the maintenance of high professional standards.
Secondly and more specifically, it may give emphasis to the unacceptability of the kind of conduct involved in the disciplinary offence. Thirdly, by speaking to the public at large, it seeks to maintain confidence in the high standards of the profession.

12 In the present case, the Tribunal has made a finding of professional misconduct because of the grossly excessive fees charged by the respondent practitioner. After such a finding is made, the Tribunal would normally look to a higher range of penalties having regard to the protective nature of its orders, the need for specific deterrence and the need to deter others of like mind from acting in a similar way. Every case, however, has to be considered in relation to its own circumstances.

13 In the present case there are a number of mitigating circumstances. The respondent practitioner has been in practice and in sole practice for a number of years and has no prior record of disciplinary breaches. In her own experience there were only a few prior occasions when cases in which she instructed had been heard together and she had not encountered the problem of apportionment in those matters. In this case the joint hearing was not contemplated by the respondent practitioner but came at the suggestion of the defendant in the proceedings and was therefore not addressed in the original conditional costs agreement. While there was no ambiguity about the principle of apportionment and the respondent practitioner was aware of the operation of the principle in connection with party/party costs, there was some lack of precision about the circumstances in which apportionment would be necessary when there was a joint hearing of claims by clients instructed by the same solicitor. There was a lack of clear direction in professional journals and texts with much of the law being decided under very different costs regimes. There was nothing in the evidence to suggest that the respondent practitioner would again be likely to come into breach of professional costs obligations and the application of the apportionment principle. Indeed, it is unlikely that the joint hearing of cases involving a number of the respondent practitioner's clients will happen with any frequency in the future, if at all. In addition, the respondent practitioner has provided a character reference from counsel regularly briefed by her that speaks well of her commitment to the principles of the law, of her professional integrity and her commitment to the interests of her clients. The reference speaks of this breach as being "aberrant".

14 There are some matters, however, that do not advance the case for the respondent practitioner in seeking to mitigate the level of penalty to be imposed. Unlike in Meakes, there has been no restitution or repayment of costs obtained by the respondent practitioner in the one case where the Tribunal has found that there was actual gross over-charging. The evidence does not allow a conclusion to be drawn that the respondent practitioner did not receive any profit costs: further, the focus on "profit costs" tends to distract from the requirement to charge a fair and proper fee. It may be accepted that there is more than one way to calculate the effect of the discount actually allowed by the respondent practitioner but there has been no attempt by reference to any calculation propounded by the respondent practitioner that would stand as an indication to the Tribunal that the respondent practitioner has taken responsibility for her actions and has otherwise demonstrated contrition. Although the respondent practitioner gave evidence in the substantive proceedings, no evidence was placed before the Tribunal in the hearing on penalty to indicate what steps the respondent had taken to see that this problem did not arise again in relation to employed solicitors nor to indicate what she had done, if anything, by way of contacting the clients and making them aware of the findings of the Tribunal. Lastly, the respondent practitioner had numerous opportunities while in discussion with the Legal Services Commissioner to apportion the fees as suggested by the costs assessor but steadfastly refused to do so.

15 Although the respondent practitioner has consented to a public reprimand and has agreed to pay the costs of the Legal Services Commissioner, the Tribunal is of the view that, notwithstanding the mitigating circumstances identified, the gross over-charging of fees is such a serious matter that a fine, in the particular circumstances of this case, is nevertheless warranted. The Tribunal accepts that the fine should be at the lower end of the range and so determines to impose a fine of $6,500. In arriving at this level of fine, the Tribunal has taken into account the large amount of costs to be met by the respondent practitioner and has formed the view that, in this case, the level of costs are a relevant consideration in assessing the overall penalty to be imposed upon the respondent. There appeared to be some debate arising from the discussion in Meakes as to the appropriateness of such an approach but in another context, the Court of Criminal Appeal has expressed the view that the level of costs is a relevant consideration in setting the level of a fine. In the Environment Protection Authority v Barnes [2006] NSWCCA 246 Kirby J, speaking for the court, rejected a submission for the appellant that the penalty imposed was a miniscule proportion of the maximum penalty applicable, stating that the individual fines which totalled $4,500 were accompanied by a costs order of approximately $16,000 and that the costs "were an important aspect of the punishment of Mr Barnes". At para ]88], his Honour stated:

Returning to the penalty imposed upon Mr Barnes. As a matter of first impression, the fines imposed appeared unduly lenient, suggesting error. However, the fines were part only of the penalty. Mr Barnes was obliged to pay substantial costs. Her Honour made it clear that, but for that fact, the fines she would have imposed would have been much higher.

Although Barnes involved the imposition of a criminal penalty, there is, in principle, no reason to depart from that approach when dealing with the very serious issue of professional misconduct and the level of fines that might be imposed on practitioners.

16 There is one further matter that should be mentioned in concluding this Decision. The Tribunal's Decision in relation to the substantive allegations of grossly overcharging was delivered on 18 June 2009. The parties were left to discuss mutually convenient dates and to notify the Tribunal of a time when the submissions and evidence on penalty could be heard. There was an inordinate delay before that contact was made despite repeated requests by the Tribunal to be informed of progress in relation to hearing dates. Ultimately, to permit counsel to appear, (particularly Senior Counsel) an early December date was set for the further hearing - nearly six months after the substantive matter had been decided. Extraordinarily, at the December 2009 hearing, the respondent practitioner's case was not able to be completed and further time was required to conclude the matter. The Tribunal does not regard this period of delay as being acceptable. In future, if the parties are unable to agree on a timely relisting that is convenient to them, the Tribunal shall fix a date without regard to the convenience of the parties, particularly having regard to the need to establish the availability of Tribunal Members.

ORDERS:

17 Having regard to the matters considered above, the Tribunal makes the following orders:

(1)The respondent practitioner, Ms Maria Bechara, is found guilty of professional misconduct.
(2)The respondent practitioner is publicly reprimanded.
(3)The respondent practitioner is fined the sum of $6,500.
(4)The respondent practitioner is to pay the costs of the Legal Services Commissioner in a sum as agreed or, in the absence of agreement, as assessed.