Legal Services Commissioner v Graham
[2013] QCAT 552
| CITATION: | Legal Services Commissioner v Graham [2013] QCAT 552 |
| PARTIES: | Legal Services Commissioner (Applicant) |
| v | |
| Michael Anthony Graham (Respondent) |
| APPLICATION NUMBER: | OCR253-11 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | 16 August 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Justice Alan Wilson, President Assisted by: Mr Geoffrey Sinclair Dr Margaret Steinberg AM |
| DELIVERED ON: | 16 October 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The respondent is to be publicly reprimanded. 2. The respondent is to pay a pecuniary penalty to the applicant in the sum of $1,500, within 30 days. 3. The parties are to file and exchange written submissions on costs, by 4:00 pm on 15 November 2013. |
| CATCHWORDS: | PROFESSIONS AND TRADES – COST ASSESSORS – COMPLAINTS AND DISCIPLINE – PROFESSIONAL MISCONDUCT OR UNSATISFACTORY PROFESSIONAL CONDUCT – NEGLECT AND DELAY – where the respondent was instructed by a law firm to prepare a costs statement for its client – where the retainer included a period in which the respondent agreed to complete the statement – where the respondent was paid but did not provide the costs statement within the period set out in the retainer – where the retainer was terminated, but then reinstated with new terms – where the respondent did not provide the costs agreement by any of the new dates – where the retainer was, again, terminated – where the firm commenced proceedings against the respondent in the Magistrates Court – where the applicant charged the respondent with failure to maintain reasonable standards of competence and diligence in relation to preparation of cost statement; failure to comply with an undertaking; and, in the alternative, failure to abide by the agreement with the instructing firm – where the respondent contends that accepting instructions to prepare a costs statement was not engaging in legal practice – where the applicant submits the respondent’s conduct was ‘in connection with the practice of law’ within the meaning of ss 418 and 419 of the Legal Profession Act 2007 (Qld) – whether the respondent’s conduct should be categorised as professional misconduct or unsatisfactory professional conduct – where the respondent has one previous adverse finding by a disciplinary body – where the applicant seeks a public reprimand, a pecuniary penalty and costs – whether those orders are appropriate in the circumstances Legal Profession Act 2007 (Qld) ss 6, 418, 419, Schedule 2 Legal Profession (Solicitors) Rule 2007 (Qld) r 22.1 Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 115 ALR 1, cited |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Ms S Lane of counsel, instructed by the Legal Services Commission. |
| RESPONDENT: | Mr B Cohen, solicitor of Bartley Cohen. |
REASONS FOR DECISION
The rules governing practice and procedure in Queensland Courts, the Uniform Civil Procedure Rules 1999 (Qld) (UCPR), contain procedure for the assessment of legal costs.[1] Integral to that system are persons called costs assessors who may be appointed by the courts to calculate costs.[2]
[1]See Chapter 17A of the UCPR.
[2]Ibid r 715.
A person wishing to be appointed as a costs assessor must apply to the Court and establish that they are eligible.[3] To qualify, they must establish that they are an Australian lawyer with at least five years experience in either the practice of law or the assessment of costs, or both, and that they are ‘… a fit and proper person to assess costs’.[4]
[3]Ibid Chapter 17A, Part 5.
[4]Ibid r 743J.
It is the principal registrar who decides whether or not a person should be appointed,[5] but an applicant who believes he or she has been wrongly refused appointment may appeal the registrar’s decision to a single Judge of the Supreme Court.[6]
[5]Ibid r 743L.
[6]Ibid r 743L(3).
The appointment is for an indefinite period and can be brought to an end at the costs assessor’s request,[7] or at the principle registrar’s discretion.[8]
[7]Ibid r 743P.
[8]Ibid r 743Q.
It is inescapable that costs assessors are, under the UCPR, an integral part of the dispute resolution system of Queensland Courts.
The interesting question that arises in these disciplinary proceedings is whether or not Mr Graham is, as a consequence of alleged misconduct in the course of his work as a costs assessor, exposed to disciplinary proceedings, and any sanction or penalty if that misconduct is proved, under the Legal Profession Act 2007 (Qld) (LPA).
Mr Graham is, in fact, an Australian legal practitioner[9] and, also, a costs assessor appointed under the UCPR. He has practised as an assessor for some years and, at relevant times, was the principal of the legal costs consultancy firm called Grahamcosts.
[9]As that term is defined in s 6 of the LPA.
The parties signed and filed an Agreed Statement of Facts. In March 2010 a law firm retained Mr Graham to prepare a costs statement for costs recoverable by one of its clients pursuant to an order of the Supreme Court. The terms of the retainer were set out in a letter from Mr Graham to the solicitors dated 1 March 2010 and included his estimate that the costs statement ‘… could be prepared within a period of approximately two months or 8 to 10 weeks from commencement of the work’.
Two days later Mr Graham sent the solicitors a tax invoice for $28,600 with a request for payment of that amount direct to his bank account and advice that, once payment was received, he would contact the solicitors to make arrangements to attend at their office and begin preparation of the costs statement. One day later the amount was paid into his bank account.
He did not, however, provide the costs statement within the period set out in his letter and, eventually, the solicitors terminated his retainer on 29 October 2010.
It was then, however, reinstated with new terms under which the cost statement was to be provided 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 cost statement by any of those dates, nor make any of the agreed refunds.
The retainer was again cancelled by the solicitors on 31 January 2011. Mr Graham refunded no part of the fee of $28,600 which had been held by him, by that time, for almost a year. In May 2011 the solicitors began proceedings against him in the Magistrates Court for its recovery, damages and interest. In September 2011 that action was settled by Mr Graham’s payment to the solicitors of $44,528.66, by way of instalments. Full repayment had been affected by 23 January 2012.
The Commissioner originally brought five charges against him, two being in the alternative. The first alleged misconduct associated with Mr Graham’s failure to deliver a cost statement within a reasonable time after early March 2010, despite receiving the payment of $28,600.
The second alleged that he wrongly failed to comply with his undertaking to refund the money in accordance with the terms of the agreement after it was reinstated in November 2010; in the alternative, the third charge is that he failed to abide by the agreement to refund money if he did not provide the cost statement by the dates nominated in that second agreement.
The fourth charge involved an allegation that he breached a provision of the LPA by failing to deposit the sum of $28,600 into a general trust account although it was, allegedly, trust money. The final, fifth charge alleged that he applied the amount of $28,600 to his own use, when he had no entitlement to do so.
By the time the matter came on for hearing before the Tribunal on 16 August 2013 the third charge had been dropped by the Commissioner and the fourth and fifth charges had been struck out pursuant to an order made by the Tribunal on 7 December 2012. In reasons published on that date, the Tribunal upheld Mr Graham’s application to strike out those charges. By the time of that earlier decision the Commissioner had conceded that the funds received by Mr Graham were not ‘trust money’ under s 237(1) of the LPA because they had not been received by him in circumstances where he ‘… engage(d) in legal practice’, a term defined in Schedule 2 to the LPA.
Notwithstanding that last concession the Commissioner continued, however, to argue that Mr Graham was exposed to disciplinary proceedings under the LPA because his alleged misconduct happened '… in connection with the practice of law’ – a phrase used in the definition of unsatisfactory professional conduct in s 418 of the LPA.
In the alternative, it was argued that he was an Australian legal practitioner and the alleged misconduct happened ‘… otherwise than in connection with the practice of law’ and might, therefore, qualify as professional misconduct under s 419.
The matter was comprehensively argued in written and oral submissions to the Tribunal.
The first remaining charge, charge 1, alleges a failure to maintain reasonable standards of competence and diligence in relation to the preparation of the cost statement. Charges 2 and 3, which are in the alternative, allege firstly misconduct associated with the failure to comply with an undertaking given to the solicitors or, in the alternative, a failure to abide by the agreement with them.
The Commissioner alleges that the misconduct was conduct ‘… happening in connection with the practice of law’. The phrase appears in both s 418, relating to unsatisfactory professional conduct, and s 419, relating to the more serious level of offending, professional misconduct. (The respondent argues that the charges cannot properly be brought in the alternative – that question is discussed later.)
Under the definition in s 418 unsatisfactory professional conduct includes:
[C]onduct of an Australian legal practitioner happening 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. (emphasis added)
Section 419 relevantly defines professional misconduct as:
[C]onduct of an Australian legal practitioner, whether happening in connection with the practice of law or happening 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. (emphasis added)
Mr Graham concedes that he was an Australian legal practitioner. The Commissioner argues that the phrase happening in connection with the practice of law should receive a broad but commonsense construction. Section 418, he submits, does not speak of conduct ‘in the practice of law’ or ‘in providing legal services’ or, even, ‘when practising law’ and should be construed in a way which includes misconduct by a legal practitioner doing costs assessment work.
The phrase in connection with had been said to be of wide import and capable of describing a spectrum of relationships ranging from the direct and immediate, to the tenuous and remote.[10] As a Canadian Judge observed, one of the generally accepted meanings of connection is ‘relation between things one of which is bound up with or involved in another’ or ‘having to do with’.[11]
[10]Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 115 ALR 1 at 2; Director of Public Prosecutions (WA) v White [2010] WASCA 47 at [32].
[11]Re Nanaimo Community Hotel Ltd [1944] 4 DLR 638 at 639.
Hence, the Commissioner submits, while there is a distinction between lawyers and costs assessors in some legislation, there is no bar to lawyers being costs assessors or conducting costs assessment work. While legal qualifications are not a mandatory requirement for costs assessors, the absence of any requirement of that kind should not, the Commissioner contends, sever the obvious connection between cost assessment work, and the practice of law.
The Commissioner also points to the use of the in the definition rather than, for example, a personal pronoun like her. The plain words of the section, it is said, point to a connection between Mr Graham’s conduct and the practice of law in a general sense.
Next, the Commissioner contends that Mr Graham’s misconduct, involving substantial neglect, delay or a failure to complete work in a timely manner is sufficiently serious to amount to professional misconduct. The Commissioner points to decisions like Legal Services Commissioner v Petschler[12] in which a practitioner was found to be guilty of professional misconduct after he had taken no material steps in a client’s case for a period of five years, and Legal Services Commissioner v Bussa[13] in which the lawyer failed to materially progress his client’s personal injuries claim for aggregate periods totalling five years.
[12][2009] LPT 024.
[13][2005] LPT 005.
Mr Graham’s misconduct involved, it is alleged, delay in the resolution of the substantive proceedings brought by the client for whom the solicitor acted for a further two years, compelled the client to commence further proceedings to recover the fees paid under the retainer, and prolonged the client’s inconvenience and stress.
The second (or, in the alternative, third) charges turn upon allegations involving the breach of an undertaking (or if, as Mr Graham contends, no undertaking was given, then a breach of the agreement to refund monies if he failed to provide the costs statements by dates nominated under the revived agreement reached in November 2010).
It is clear that Mr Graham, by an email from him dated 2 November 2010, accepted the reinstatement of his retainer on the basis outlined by the solicitors in their email to him of 1 November 2010. While Mr Graham’s email was not sent in the course of customary legal practice and may not, therefore, be described as an undertaking by a legal practitioner in the usual sense[14] his acceptance of the new, reinstated retainer cannot be construed as anything other than a contractual promise by one legal practitioner to another that work would be completed by given dates or refunds would be paid by those dates. Again, this is said to be sufficiently serious to constitute professional misconduct.
[14]See, eg, r 22.1 of the Legal Profession (Solicitors) Rule 2007 (Qld).
In oral submissions counsel for the Commissioner also contended that if this costs assessment had been court ordered, there could be little doubt that a costs assessor who is also an Australian lawyer would be amenable to discipline in respect of his performance of the costs assessment.
For Mr Graham it was argued that in accepting an engagement to prepare a costs statement he was not engaging in legal practice or the provision of legal services within the meaning of those terms as they are defined in Schedule 2 to the LPA. The phrase engage in legal practice is limited to, it was argued, the actual practice of law and legal services means work done, or business transacted, in the ordinary course of legal practice. Section 418, it is said, should not be broadly interpreted, but in a way which accords with the ordinary grammatical meaning of the words, within their statutory context.[15]
[15]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-384.
It is said for Mr Graham that the phrase happening in connection with the practice of law in s 418 connotes, in context, three things: conduct of a legal practitioner, happening in the connection with the practice of law, which falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent legal practitioner. The third element sets the standard requiring that the conduct be measured against that of an competent legal practitioner. The conduct will only be unsatisfactory professional conduct, it is said, if it falls short of that standard. Where the impugned conduct is not the conduct of a legal practitioner, doing something as a legal practitioner in connection with the practice of law, it will not fall within the section.
Then, it is argued that the first charge could not amount to professional misconduct in terms of s 419, because it is couched in terms that are only referrable to an alleged failure, using the actual words of s 418: ‘… to maintain reasonable standards of competence and diligence’, and does not contain any allegation, even in the alternative, that the conduct involved a substantial or consistent failure, or would justify a finding that the respondent is not a fit and proper person to practice – the terms used in s 419.
Reliance for that submission is placed upon the decision of the Court of Appeal in Legal Services Commissioner v Madden[16] in which it was held[17] that the Tribunal’s jurisdiction was confined by reference to the particular allegations made by the Commissioner in the discipline application.[18]
[16](2009) 1 Qd R 149.
[17]Holmes JA, Fraser JA and White J.
[18]Legal Services Commissioner v Madden (2009) 1 Qd R 149 at [72], [76], and [83].
Madden is a case in which, the Commissioner submitted, the Court of Appeal considered the question whether the disciplinary tribunal could find deceit or dishonesty where that had not been specifically pleaded. In that case the Tribunal had wished to do so on the basis of inferences it drew from the facts. A finding of professional misconduct is not, however, an inference drawn from facts; rather, it is a finding made by the Tribunal in deciding whether the proper characterisation of the misconduct appropriately sits within s 418, or the more serious s 419.
Here, charge 1 begins with a general allegation that Mr Graham failed to maintain reasonable standards of competence and diligence in relation to the preparation of the costs statement, but that phrase appears in both s 418, relating to unsatisfactory professional conduct and, also, s 419(1)(a) which, on its face, refers to an aggravated form of unsatisfactory professional conduct, if that conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence.
As the discipline application is drawn, all the charges are particularised under an introductory paragraph which alleges, in respect of each, that (together, or individually), they constitute unsatisfactory professional conduct and/or professional misconduct. The decision in Madden does not inhibit the Tribunal’s power, as a disciplinary body, to address allegations in a discipline application in a way which informs its decision whether the practitioner was guilty of an offence under s 418, or s 419.[19] Indeed, the Court in Madden said that the Tribunal’s power to make a particular order was not conditioned upon that order being claimed expressly in the discipline application.[20]
[19]Ibid [93].
[20]Ibid [96] – [98].
That the Tribunal retains a discretion of this kind regardless of the phrasing of the discipline application is, also, made clear in s 456(7) of the LPA which permits a finding of unsatisfactory professional conduct even if the charge only alleges professional misconduct. In short, there is nothing inherently wrong in an alternative plea, in charge 1, under both provisions.
In any event it is said for Mr Graham that his conduct, referrable to the first charge, does not amount to either.
In their submissions the parties referred to NSW Bar Association v Osei (No 2)[21], a decision which considered a phrase in the NSW provision similar to ‘in connection with the practice of law’ in s 418. The case concerned a practising barrister who was also a registered migration agent, and the alleged misconduct occurred while the barrister was appearing as a migration agent and as advisor to an applicant before the Refugee Review Tribunal. A disciplinary tribunal found that, under the relevant provisions of the Migration Act 1958 (Cth) barristers were prohibited from appearing in the RRT (in their capacity as lawyers) and the misconduct could only be categorised as that of a registered migration agent. For that reason, it was found that the legal disciplinary provisions of the NSW legislation did not apply.
[21][2008] NSWADT 324.
The distinguishing factor here is that, under the relevant legislation, lawyers are not barred from being costs assessors, or conducting costs assessment work. Indeed, as noted earlier, under UCPR r 743J a person appointed as a costs assessor must be admitted as a legal practitioner, although not required to hold a practising certificate.
As to the second charge[22] it is submitted that, once it is accepted by the Commissioner (as it has been) that the agreement was not made in the course of legal practice no ‘undertaking’ of the kind ordinarily accepted as an integral part of legal practice can be found.
[22]Which was amended to allege an implied undertaking or agreement to provide the costs statement.
Certainly, the word has a particular meaning under r 22.1 of the Solicitors Rule 2007 and, the respondent also contends, the transaction between the solicitors and Mr Graham should properly be categorised as an agreement and not an undertaking given ‘… in the course of the solicitor’s practice’.
As to the alternative allegation in charge 3, involving an alleged breach of an implied agreement, Mr Graham accepts there was an agreement and that he did breach it by not providing the costs statement or the refunds on the agreed dates. Again, however, it is said that this did not occur in the course of legal practice and could not, therefore, amount to an offence falling within either ss 418 or 419.
In reply it was said for the Commissioner that although Mr Graham was not undertaking a court ordered costs assessment he was, materially, an Australian lawyer practising as a costs assessor and doing exactly the same work he would have done had he been conducting a court ordered assessment. He was dealing with Australian lawyers. He did so in the context of civil litigation. According to the plain words in s 418, it is submitted, this was work done in connection with the practice of law.
The questions presented to the Tribunal are novel. The matter has not, it appears, been addressed or considered.
Costs assessors are appointed by, and subject to, the supervision of the Court. As observed earlier, it is inescapable that they are, under the UCPR, an integral part of the dispute resolution system provided by the Courts. While costs remain an important element in that system and, usually, ‘follow the event’[23], they may be described as a necessary, indeed vital, adjunct to it.
[23]See General rule about costs at r 681 of the UCPR.
The UCPR also contain, in Chapter 17A, a number of provisions indicating that the work of costs assessment will involve or attract elements bearing a marked similarity to aspects of traditional legal work, including dispute resolution. Under r 715 an assessor may be invested with the power to administer oaths and examine witnesses, give directions, and order the production of documents. Rule 717 empowers them to refer questions arising in an assessment to the Court. Under r 721 they are given a broad discretion to assess costs with reference to matters including questions of principle, the nature and importance of the proceeding, the interests of the parties and the general conduct and cost of the proceeding. Parties can, under r 738, require costs assessors to give written reasons for decisions contained in costs certificates.
Mr Graham is an Australian legal practitioner and he was doing the work of assessing costs which were recoverable by the client of the solicitor who retained him pursuant to an order of the Supreme Court.
It is, in the Tribunal’s view, compelling that the work he was performing was within the contemplation of the phrase ‘… happening in connection with the practice of law’ as that phrase is used in the relevant provisions: ss 418 and 419(1)(b).
The Tribunal is not, however, persuaded that the second agreement between the solicitors and Mr Graham involved an ‘undertaking’ within the meaning of that term as it is usually and particularly used in the context of ordinary legal practice. Rather, it is more properly defined as a term of the agreement between Mr Graham and the solicitors and falls, properly, within the alternative charge 3 and not charge 2.
The question then arises whether Mr Graham’s delay, or his failure to abide by the agreement, should be categorised as misconduct under either ss 418 or 419.
The initial delay was about eight months but that followed Mr Graham’s representation that the work was likely to take 8-10 weeks. In August 2010 the solicitors apparently accepted Mr Graham’s explanation that the delay to that point had been occasioned by personal problems. The actual delay, discounted for the 8-10 weeks originally allowed, is much shorter than that which arose in Petschler and Bussa but occurred, the evidence shows, in circumstances which caused the solicitors’ client inconvenience and distress and compelled them, ultimately, to commence and prosecute further litigation against Mr Graham.
Mr Graham’s representations, which lead to the subsequent reinstatement of the agreement and then his subsequent, continued failure to perform the new terms of that second agreement constitute circumstances of aggravation. Further, Mr Graham never provided a costs statement and, again, the delay was aggravated by the need for the client’s to commence proceedings against him and, ultimately, recover the monies they had paid him not far short of two years after his original retainer.
Those events are disturbing and inexcusable. While the delay was not of the order of the lapses which occurred in Bussa and Petschler and does not fall to be categorised within the terms used in s 419 (‘substantial’ or ‘consistent’ or such as to ‘justify a finding that practitioner is not a fit and proper person’) it constitutes conduct which, under the definition in s 418, 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.
As to charge 3, the failure or refusal to pay the refunds agreed at the intervals set by the second agreement at the end of 2010, and the aggravating behaviour which obliged the solicitors’ client to bring legal proceedings before, ultimately, receiving the refund to which the client was always entitled in light of Mr Graham’s long failure to provide the costs statement is misconduct which is, also, properly categorised as falling within the definition in s 418 – unsatisfactory professional conduct.
As to sanction, Mr Graham was admitted as a solicitor in 1990. He is now 46. He has one previous adverse finding by a disciplinary body: in March 1997 when he pleaded guilty before the Queensland Law Society Statutory Committee to one charge of forging a document, and one of uttering a false document. The charges arose from his conduct in forging the signature of a partner, at the firm at which he was employed, on a sales receipt for alcohol which he purchased without his firms’ knowledge or authority. This was found to amount to professional misconduct, and he was censured.
The Commissioner relies upon Petschler and Bussa as cases suggesting an appropriate penalty would involve a public reprimand, a fine and payment of costs. The Commissioner concedes that Mr Graham has made admissions in respect of the facts alleged in the discipline application and that his misconduct was not calculated, or deliberate. The Tribunal accepts that a public reprimand is necessary, and appropriate.
For Mr Graham it is contended that, in his case, no issue of general deterrence arises and no pecuniary penalty should be imposed. Mr Graham chose to contest the charges primarily on the ground that he, as a costs assessor, was not exposed to discipline under the LPA and could not be censured. Any penalty here must incorporate an appropriate deterrent to legal practitioners and, in particular, costs assessors in the performance of work which is integrally bound up with the legal system, the conduct of the legal practitioners operating within it, and the effective and efficient dispensation of justice to ensure they meet professional obligations.
That said, on any view, Mr Graham’s misconduct is not so serious as that which occurred in Bussa. In Petschler the practitioner had no adverse disciplinary history, and cooperated with the Commissioner in bringing the disciplinary proceedings to a speedy and efficient conclusion. He was fined $2,000. Parity suggests an appropriate penalty here is in a lesser sum, of $1,500. It is appropriate that that sum is paid within 30 days.
The Commissioner also seeks costs, to which he is ordinarily entitled under s 462 of the LPA. Mr Graham seeks his costs, however, in respect of the proceedings under which charges 4 and 5 were eventually struck out. Costs can be awarded against the Commissioner if there are ‘special circumstances’ under s 462(4) of the LPA and in Legal Services Commissioner v Atkins[24] it was said that circumstances falling within that definition might arise where a charge has no substantial prospect of success, and that fact should reasonably have been appreciated by the Commissioner. As the earlier decision and the Reasons for it show,[25] the matter initially went to a compulsory conference before a Senior Member of QCAT whereafter the parties were directed to file submissions on whether the fourth and fifth charges should be placed within that category.
[24][2009] LPT 10.
[25]Legal Services Commissioner v Graham [2012] QCAT 617.
The order made after the compulsory conference on 29 May 2012 required submissions which were somewhat different from those addressed in the subsequent Reasons or the actual striking out of charges 4 and 5, and the order made then reserved the costs of determination of the preliminary points. The Commissioner’s submissions do not address Mr Graham’s claim for costs rising out of those earlier proceedings and he should have the opportunity to do so.
As to both claims for costs then, the parties are ordered to file and exchange submissions by 4:00 pm on 15 November 2013.
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