Legal Services Commissioner v Graham
[2014] QCAT 223
| CITATION: | Legal Services Commissioner v Graham [2014] QCAT 223 |
| PARTIES: | Legal Services Commissioner (Applicant) |
| v | |
| Michael Anthony Graham (Respondent) |
| APPLICATION NUMBER: | OCR253-11 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Justice Alan Wilson, President |
| DELIVERED ON: | 22 May 2014 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. That the respondent is to pay the Commissioner’s costs of and incidental to the disciplinary proceedings, including the costs reserved in the Tribunal’s decision of 7 December 2012, as agreed or assessed on the standard basis on the Supreme Court scales. |
| CATCHWORDS: | PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – PROFESSIONAL MISCONDUCT AND UNSATISFACTORY PROFESSIONAL CONDUCT – SOLICITOR’S COSTS – where the respondent is an Australian legal practitioner – where the respondent was engaged in costs assessment work – where the Tribunal found that two of the three charges that went to a hearing constituted unsatisfactory professional conduct and the costs for that decision were reserved – where the parties have exchanged submissions addressing these reserved costs as well as costs for two further charges which had earlier been struck out by the Tribunal – where the respondent in submissions accepts liability for costs in respect of the charges that were heard – where the respondent submits that the two charges that were struck out gave rise to ‘exceptional circumstances’ under the Legal Profession Act 2007 (Qld) s 462(1) that allow the Tribunal to make an order other than that the respondent should pay the Commissioner’s costs – where the respondent alternatively submits that those struck out charges constitute ‘special circumstances’ under s 462(4) that allow the Tribunal to order that the Commissioner pay the respondent’s costs – whether the Commissioner should pay the respondent’s costs for those struck out charges Legal Profession Act 2007 (Qld) ss 418, 419, 462, Schedule 2 Baker v Legal Services Commissioner [2006] QCA 145, cited |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers, pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
Mr Graham has a business as a legal costs assessor. He is also an Australian lawyer. The Commissioner brought disciplinary proceedings against him in the course of which it was necessary for the Tribunal to decide whether, in his work as a costs assessor, he was exposed to proceedings of that kind and could be the subject of orders by the Tribunal under the Legal Profession Act 2007 (Qld) (LPA).
The Tribunal decided those questions in the affirmative: Legal Services Commissioner v Graham [2013] QCAT 552 and ordered, on certain charges, that Mr Graham be publically reprimanded and that he pay a fine of $1,500. The Tribunal also ordered, in its judgment of 16 October 2013, that the parties file and exchange written submissions on costs, and they have done so.[1]
[1]Although my term as QCAT President has expired, the disciplinary proceedings and costs in respect of them involved the hearing of the proceeding which I am empowered, under the QCATAct, to finish: s 194A.
There are, also, other costs issues to be decided. Originally five charges were brought against Mr Graham. Two – charges four and five – were struck out under an earlier order of the tribunal: Legal Services Commissioner v Graham [2012] QCAT 617 and the costs of that proceeding were reserved. The parties’ written submissions address that issue too.
As I understand the submissions from Mr Graham’s legal representatives, he accepts that a costs order against him cannot be resisted in respect of the three charges which went to a hearing, of which two were the subject of the eventual disciplinary orders. That is unsurprising in light of s 462(1) of the LPA, which provides that a disciplinary body must make an order requiring a person who has been found to have engaged in prescribed conduct to pay costs unless exceptional circumstances exist.
It is submitted for Mr Graham, however, that the Commissioner ought to pay his costs of the fourth and fifth charges. He relies on s 462(4), which gives a disciplinary body a discretion to make an order requiring the Commissioner to pay costs, but only if it is satisfied that the lawyer has not engaged in prescribed conduct, and the Tribunal considers that special circumstances warrant the making of the order. It is argued for Mr Graham, in the alternative, that the fourth and fifth charges and their dismissal are exceptional circumstances under s 462(1)).
The Commissioner contends that the circumstances are neither special nor exceptional. It does not appear, from written submissions filed on behalf of the Commissioner, that he seeks his costs in respect of charges four and five. He does, however, resist any order that he pay them.
Consideration of these terms – special and exceptional – will properly involve the circumstances surrounding the charges – and, here, the dismissal of two of them. As the Chief Justice observed in Legal Services Commissioner v Sing (No 2) [2007] LPT 5, the phrase special circumstances must mean that the circumstances themselves will be categorised as special before costs will be ordered against the Commissioner.
In March 2010 a law firm retained Mr Graham to prepare a costs statement for costs recoverable by one of its clients under an order of the Supreme Court. The terms of the retainer were set out in a letter from Mr Graham to the solicitors and included his estimate that the costs statement would be prepared within approximately two months or 8-10 weeks from commencement of the work.
Two days later he sent the solicitors a tax invoice for $28,600 with a request for payment direct to his bank account and advice that, once the payment was received, he would contact the solicitors to make arrangements to attend at their office and begin preparation of the costs statement. That sum was paid into his bank account the next day. He did not, however, provide the costs statement within the period set out in his letter and eventually the solicitors terminated his retainer almost eight months later, at the end of October 2010.
After further discussions between Mr Graham and the lawyers the agreement was, later, reinstated with new terms under which the costs statement was to be provided by him by 24 December 2010, or a sliding scale of refunds would apply at various dates thereafter – 18 January and 31 January 2011. Mr Graham did not provide the costs statement by any of those dates, nor make any of the agreed refunds. The solicitors then cancelled the second retainer on 31 January 2011.
Despite the cancellation Mr Graham did not refund any part of his fee of $28,600 and in May 2011 the solicitors began recovery proceedings against him in the Magistrates Court. That action was settled in September 2011 by a payment by Mr Graham to the solicitors of $44,528.66, by way of instalments. Full repayment was effected by the end of January 2012.
The Commissioner originally brought five charges against Mr Graham, two of them in the alternative. The first alleged misconduct associated with his failure to deliver the costs statement within a reasonable time, despite receiving the payment. The second alleged that he wrongly failed to comply with his undertaking to refund the money in accordance with the terms of the second, reinstated agreement. The third charge, in the alternative, was that he failed to abide by that agreement to make refunds if he did not provide the costs statement by the dates nominated in it.
These three charges went to a hearing before the Tribunal in which it was forcefully argued for Mr Graham that, in entering into an engagement to prepare a costs statement, he was not exposed to disciplinary proceedings of this kind because he was not engaging in legal practice or providing legal services within the meaning of those terms as they are defined in the LPA,[2] or that his alleged misconduct happened ‘in connection with the practice of law’.[3]
[2]Schedule 2.
[3]Section 418.
The Tribunal rejected those contentions and concluded, after a lengthy analysis of the legislation and the nature of the work of cost assessors, that Mr Graham was amenable to disciplinary proceedings and that the first and third charges were proven. The second charge, involving an alleged ‘undertaking’, was not upheld because that word has a particular meaning in ordinary legal practice which did not, in the circumstances, apply to the agreements between Mr Graham and the solicitors.
The fourth charge, previously struck out, involved an allegation that Mr Graham ought to have deposited the payment made to him by the solicitors into a trust account. The fifth, also struck out, alleged that his receipt of those monies and alleged application of them to his own use involved unsatisfactory professional conduct or professional misconduct.
After a compulsory conference between the parties in the Tribunal, when all five charges were on foot, preliminary legal points were identified and the parties were directed to file submissions. The points the Tribunal directed the parties to address were whether the work for which Mr Graham was engaged by the solicitors amounted to the conduct of legal practice by him, and whether the monies paid to him by the solicitors constituted trust money.
In its submissions on those points the Commissioner conceded the latter point and also conceded that, in accepting an engagement to prepare a costs statement, Mr Graham did not ‘engage in legal practice’ as that term is defined in Sch 2 of the LPA. The Commissioner then sought leave to withdraw those charges.
Both party’s submissions also addressed, at some length, the question of whether Mr Graham’s work as a costs assessor was work undertaken ‘in connection with the practice of law’ and might, therefore, give rise to a charge of unsatisfactory professional conduct or professional misconduct under ss 418 or 419. In its reasons,[4] the Tribunal concluded that those matters should be argued before a fully constituted tribunal, rather than as a preliminary point; and that is what occurred in the final proceedings which determined charges one, two and three.[5]
[4][2012] QCAT 617.
[5][2013] QCAT 552.
The Tribunal considered s 462(4) in its recent decision in Legal Services Commissioner v Bone [2013] QCAT 550 in which, of eight charges originally bought against the practitioner, six did not proceed to a hearing before the Tribunal and the other two were dismissed. The Tribunal concluded that, in the circumstances arising there, it could consider a costs order in the practitioner’s favour and, after examining those circumstances, ordered those costs in respect of some of the charges. That costs order has recently been the subject of an appeal which has been heard but not, at the time of writing, determined.
The Tribunal chose, in Bone, to respectfully follow a decision in which Byrne SJA, presiding in this jurisdiction, had to consider an application for costs in a case in which the practitioner originally faced six charges. He admitted one, and five were contested. At the eventual hearing one of them was withdrawn and the Tribunal dismissed the remaining four[6]. In dismissing the practitioner’s application for costs in respect of the charges against him of which he was acquitted, his Honour said that the ’… general rule is that a practitioner found not guilty is not entitled to costs’ but, also, that if a charge had no substantial prospect of success, and that ought reasonably to have been appreciated by the Commissioner, then special circumstances might arise.[7]
[6]Legal Services Commissioner v Atkins [2009] LPT 10.
[7]Ibid [80]-[81].
Byrne SJA then went on, in that case, to consider the information available to the Commissioner when the charges were laid and said that the special circumstances which might warrant a costs order in that case included the fact that ‘… at various times before the hearing, the Commissioner, appropriately advised, should have recognised there was no reasonable likelihood of success on the failed charges’.[8]
[8]Ibid [89].
The Commissioner also contends here that, because some charges against Mr Graham have been proven, he has engaged in prescribed conduct and, therefore, the Tribunal cannot make an order: s 462(4)(a). It is unnecessary to decide that question because, for the reasons which follow, the Tribunal was not persuaded that the fourth and fifth charges can fairly be categorised as involving special circumstances.
As the two decisions of this Tribunal in this matter show, the questions confronting the Commissioner, the practitioner and the Tribunal were novel. The Tribunal’s reasons in its first decision, [2012] QCAT 617, also show that the matter was vigorously contested by the practitioner and his legal representatives. At the earlier compulsory conference which led to that hearing, the parties properly focused on the issues surrounding charges four and five and, ultimately, they were determined. It is also material that, when those charges were struck out, the Commissioner had already sought leave to withdraw them.
As the Chief Justice observed in Sing, the statutory provision assumes that ordinarily, even if the respondent succeeds in achieving, in effect, an acquittal in disciplinary proceedings, the Commissioner will not usually be ordered to pay costs, and ‘that no doubt recognises the public interest which motivates the Commissioner in approaching the Tribunal’.[9] It cannot be said that the original charges brought by the Commissioner were so patently ill-advised, or manifestly unarguable or unsustainable, as to be capable of categorisation as having, in the words of Byrne SJA, ‘no reasonable likelihood of success’.[10] When that circumstance is added to the Commissioner’s realistic indication of his withdrawal of the fourth and fifth charges, the circumstances here should not be categorised as special and, therefore, attract an order in Mr Graham’s favour.
[9][2007] LPT 5 at 2.
[10]Legal Services Commissioner v Atkins [2009] LPT 5 at [89].
As mentioned earlier it is argued for him, in the alternative, that costs in respect of the fourth and fifth charges involve exceptional circumstances under s 462(1).
In its ordinary meaning, exceptional circumstances must involve a higher threshold than special circumstances. As has previously been held in this Tribunal, exceptional means, in this legislation, a circumstance which is not regularly, nor routinely, nor normally encountered but, rather, out of the ordinary course or unusual or special or uncommon.[11]
[11]R v Kelly [2000] QB 198 at [208], cited in Legal Services Commissioner v Scott (No 2) [2009] LPT 9.
The question was considered in Legal Services Commissioner v Baker,[12] which originally involved 18 charges of which seven where withdrawn at the commencement of the hearing, one was substituted, and four were amended. Ultimately the practitioner was found to have engaged in prescribed conduct in respect of eight charges, and four were not made out. The practitioner sought an apportionment of costs, first on the ground that the Commissioner had failed to prove a number of the specific charges and, secondly, on the basis of an argument that the Commissioner was aware before the hearing that the charges ultimately withdrawn or found not proven were likely to fail. The Tribunal held, however, that the withdrawal, amendment and ultimate failure of the majority of the Commissioner’s charges did not amount to ‘exceptional circumstances’ and that finding was confirmed by the Court of Appeal.[13]
[12][2005] LPT 2.
[13]Baker v Legal Services Commissioner [2006] QCA 145.
A different conclusion was reached in Legal Services Commissioner v Scott (No 2), but that case involved, as in Bone, the late withdrawal and amendment of charges in circumstances where, Fryberg J concluded, the ‘… change of tack on the part of the Commissioner of the nature and magnitude as occurred in this case is an extraordinary event …’.[14] He went on to order that the practitioner need only pay that portion of the Commissioner’s costs incurred in relation to the charges which were proven.
[14][2009] LPT 9 at [21].
Here, however, having two of five charges struck out as misconceived in circumstances where the Commissioner sought leave to withdraw them following discussion of the issues at the compulsory conference cannot reasonably be described as an exceptional circumstance of that kind. As the Commissioner submits, a situation where an applicant reconsiders charges after discussions with the respondent and then seeks to withdraw them and is subsequently given leave to do so (or the charges themselves are struck out without opposition) is one which is regularly, or routinely or normally, encountered by the courts.
Nor can it be said that the effect of the striking out of the charges affected Mr Graham’s case in the same manner as occurred in Baker or Scott. The charges which were removed were relatively minor and those which proceeded were, plainly, more serious and important.
Nor, finally, can it be said that having some issues determined in a preliminary proceeding is an event so rare or unprecedented so as to amount to exceptional circumstances.
For these reasons the Tribunal is persuaded that there are no exceptional circumstances here and s 462(1) should have its ordinary affect. It will be ordered, then, that the respondent pay the Commissioner’s costs of and incidental to the disciplinary proceedings, including the costs reserved in the Tribunal’s decision of 7 December 2012, as agreed or failing agreement as assessed on the standard basis. For the sake of clarity because these proceedings are, by statute, heard and determined by a Supreme Court Judge (and the proceedings themselves were, before the QCAT Act, heard and determined in the Supreme Court), assessment should be on the Supreme Court scales.
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