The Council of the Law Society of New South Wales v Hammond
[2010] NSWADT 244
•14 October 2010
CITATION: The Council of the Law Society of New South Wales v. Hammond [2010] NSWADT 244 DIVISION: Legal Services Division PARTIES: APPLICANT
RESPONDENT
The Council of the Law Society of New South Wales
Frank Douglas HammondFILE NUMBER: 102010 HEARING DATES: 15 September 2010 SUBMISSIONS CLOSED: 15 September 2010
DATE OF DECISION:
14 October 2010BEFORE: Molloy G - Judicial Member; Isenberg N - Judicial Member; Tingle J - Non-Judicial Member CATCHWORDS: Failure to account – s.61 and Workers Compensation s.116 - preparation of a will – acting as a legal practitioner LEGISLATION CITED: Legal Profession Act 1987
Legal Profession Act 2004
Workplace Injury Management and Workers Compensation Act 1998CASES CITED: Council of the NSW Bar Association v. Davison [2006] NSWSC 65
Council of the Law Society of NSW v. Layton [2008] NSWSC 606
Hook v. Simpsons [1999] NSWSC 667
Konstandopoulos v. Giammaria [2004] NSWSC 1010
Larsen v. Vile [1999] NSWCA 397
Law Institute of Victoria v. Maric [2006] VSC 361
Law Society of NSW v. Seymour [1999] NSWCA 117
Legal Practice Board v. Ferguson [2006] WASC 250,Public Trustee v. AM Hoipo Pty Limited [1999] NSWCA 466
Sanderson ex parte Law Institute of Victoria (1927) VLR 394 Selossie v. Whitten [1997] NSWSC 335
Smits v. Buckworth [1997] NSWSC 422
Tan v. National Australia Bank Ltd [2008] NSWCA 198
Trustees Executors and Agency Co Ltd v. Reilly [1941] VLR110
Wilson v. State Rail Authority of NSW [2010] NSWCA 198REPRESENTATION: APPLICANT
RESPONDENT
A Matalani, solicitor
In personORDERS: 1.The Respondent pay a fine of $3,000.00
2.The Respondent is publicly reprimanded
3.Should it be considered that a Practicing Certificate be issued to the Respondent the issuing authority is encouraged to consider, as a pre-requisite, attendance by the Respondent and satisfactory completion of suitable courses in:
a)practice management;
b)trust accounting; and
c)ethics.
4.The Respondent pay the costs of the Law Society as assessed or agreed.
REASONS FOR DECISION
Background
1 The Respondent is a solicitor who was admitted to practice on 8 October 1998. From 8 December 2000 to 1 October 2005 the Respondent was the sole principal of the law practice known as F D Hammond & Associates, which firm practised in Plumpton.
2 On 1 October 2005 the Respondent’s Practising Certificate was automatically suspended in accordance with Legal Profession Act 1987 (“LP Act 1987”) s.38FH. A manager of his law practice was appointed on 4 October 2005.
3 On 4 February 2006 the Respondent’s Practising Certificate was further automatically suspended in accordance with Legal Profession Act 2004 (“LP Act 2004”) s.70 and the Respondent has not been re-issued with a Practising Certificate since, and continues to be suspended from practice.
4 The Law Society asserts that on various occasions during the time the Respondent held a Practising Certificate he failed to account to his client Mr S (“S”) in relation to certain funds provided by S to the Respondent and placed in the Respondent’s trust account in relation to a claim, or an anticipated claim, to be made by S for workers compensation [we have anonymised the name of the client because of the need to refer to the client’s private medical issues]; and also asserts that after the suspension of the Respondent’s Practising Certificate the Respondent acted as a legal practitioner in preparing a Will on 20 December 2006.
5 The Law Society seeks orders from this Tribunal that the Respondent be fined, reprimanded and pay the costs of the Law Society.
The Pleadings
6 The pleadings are fairly unremarkable. The Law Society asserted that the Respondent acted for S in certain proceedings which were “finalised by way of settlement”. S subsequently retained the Respondent “to obtain advice in relation to a workers compensation claim”. The pleadings then asserted:
1. On 8 March 2004 S provided the Respondent with $20.000.00 (which the Respondent placed into his trust account) and for which S received a trust account receipt. S and the Respondent signed a costs agreement relating to the workers compensation “matter” on 25 October 2004. (The terms of this costs agreement we shall return to later in this decision).
2. The Respondent paid certain moneys in respect of medical and medico-legal aspects (in total $2,080.00) made payments to himself on account of costs and disbursements in total $12,100.00; paid briefed counsel $1,100.00 and paid a doctor $880.00; and after the appointment of the manager the balance of $3,800.00 was reimbursed. In those circumstances it is asserted that the Respondent has “failed to account” to S “for the remaining sum of $14,120.00” (the $40.00 discrepancy being an incorrect recording of $440.00 as opposed to $400.00 in both the trust records and the Respondent’s tax invoice to S).
3. Thus it is asserted that the payment of costs, disbursements, the fees of counsel and the payment to a medical practitioner, in total $14,120.00, constituted a failure to account having regard to the terms of the Workplace Injury Management and Workers Compensation Act 1998 (the “WIM Act”) s.116.
4. The Respondent wrote to S “on the letterhead of (his) law practice” on 15 May 2007 asserting a right to cancel “your previous bill” and to charge S “for all previous work not billed” – thus it was asserted that the Respondent had held himself out to be a legal practitioner.
5. In addition he acted for a person on 20 December 2006 and charged this person $110.00 for the preparation of a Will.
7 The Respondent, by his Second Amended Reply, basically agreed with the assertions made by the Law Society, save that the $20,000.00 paid by S and placed into the Respondent’s trust account was paid in contemplation of commencing possible workers compensation proceedings (and thus he asserted was not caught by the WIM Act s.116; but, and in strange and curious contradiction, the Respondent, although agreeing with the terms of the costs agreement, asserted that the moneys “would be reimbursed if a workers compensation claim actually proceeded to be filed”. We shall refer to this later.
8 With respect to writing to S “on the letterhead of the law practice” the Respondent “agreed” with this (an odd admission having regard to the arguments advanced at the hearing) and asserted that he had no intention to act as a solicitor but was only acting in his “personal capacity seeking to bring in moneys to (his) bankrupt estate by obtaining a copy of the file and rendering a new bill”. Again, we shall deal with this aspect later in this decision.
9 Finally, the Respondent denied that in acting in relation to the Will he was practising law without holding a Practising Certificate.
The Will
10 It is convenient to deal with this issue first, simply because the primary argument that was agitated before the Tribunal related to the workers compensation issues.
11 In its filed Application the Law Society did not assert that the Respondent prepared a will; rather, the assertion was that on 20 December 2006 the Respondent issued an “Official Receipt” from the office account of the law practice in $110.00 (incl GST) which receipt indicated that the fee was for “C & D – 1 Will” and also identified a (legal) file number, 254. The Law Society also asserted that “a will dated 20 December 2006 has been witnessed by the (Respondent)” – this assertion really does not take the matter any further unless it can be established that in so witnessing the will the Respondent signed his name followed by the word “solicitor” or “legal practitioner”, thus holding himself out as a legal practitioner entitled to practice. That assertion was not made; neither could it be, simply because the last page of the will was in evidence and that showed that the Respondent signed as one of the witnesses, giving his occupation as “clerk”.
12 The “Official Receipt” was also in evidence. It demonstrates a receipt of $110.00 incl. GST on account of “C & D – 1 Will”; bearing date 20/12/06; showing “file No. 254 (Miscellaneous Account)”; styled “Official Receipt – Office Account”; with, on the left, a picture/drawing of a set of scales; and in the name “F D Hammond & Associates” with address, telephone and facsimile number, but no reference to the firm being a firm of solicitors/legal practitioners.
13 There was no complaint by the testator. The complaint is by the Law Society arising out of its investigations.
14 The Respondent, in addition to filing his Second Amended Reply, also filed a sworn affidavit and gave oral evidence. In relation to the will he admitted that he prepared the will. That is, he drew and engrossed the will, presumably in accordance with the instructions that he had received from the testator. In his affidavit he asserted that it was a “standard will, husband to wife then to children”; that it was the same as any will kit and on which “no legal advice would have been necessary”; he stated that he “never gave any legal advice whatsoever in the matter and only did a standard will for which I had the necessary experience”; that the testator knew that the Respondent was not a solicitor; that the testator wanted him also to do a Power of Attorney but was advised that the Respondent was “not licensed to do so”; admitted that he issued the receipt in $110.00 but submitted that this “in itself indicates that I was not charging for “legal” advice as the normal charge was $265.00”; and re-asserted that he had not given any legal advice.
15 The difficulty with all that evidence was, as the Respondent readily admitted in his oral evidence, was that he had prepared the will. It must follow that he obtained “instructions” (to use common legal parlance) from the testator to prepare a will leaving his Estate to his wife and, if she predeceased him, then to his children. It is well known that the drawing and engrossment of documents for a fee is carrying out legal work as part of a legal practice.
16 Legal Profession Act 2004 s.14(1) provides “a person must not engage in legal practice in this jurisdiction unless the person is an Australian legal practitioner”. The phrase “engage in legal practice” is defined as “includes practise law”, (not a very helpful description). The phrase “Australian legal practitioner” is defined (relevantly) as being “an Australian lawyer who holds a current local practising certificate …”. Consequently, in order for the Respondent to be not found “guilty” he would need to demonstrate that he held, at the relevant time, a current Practising Certificate (he did not) and that his conduct (as described above) was not engaging in legal practice. Absent authority we would have been of the very clear opinion that the preparation/engrossment of a will was engaging in legal practice.
17 The issue was addressed by Hall J in Council of the NSW Bar Association v. Davison [2006] NSWSC 65 where His Honour observed at [35] that there was “no definition in the Legal Profession Act 1987 or in the Legal Profession Act 2004 of this key phrase. It is essential that its meaning and scope be determined, at least to the extent that it is necessary for the purpose of evaluating the facts in the present proceedings”. His Honour went on to consider the actual facts before him involving the defendant, the relevant Barrister’s Rules, noted at [38] that in general terms the work of a barrister in relation to litigation may be taken to have included (inter alia) “providing advice on legal rights or entitlements”; and “undertaking work associated with the drafting of submissions for use in proceedings”. In addition, at [39] His Honour considered the work generally of a barrister (whether litigious or not), and formed the opinion that such work may embrace (inter alia) “advice work”; and “the drafting of documents …”. Furthermore at [40], and “again in general terms”, His Honour noted that “the work of a barrister may impact upon or affect persons or entities including … clients …”.
18 In Law Institute of Victoria v. Maric [2006] VSC 361 Osborn J had occasion to look at the words “engage in legal practice” within the meaning of the phrase in the Victorian Legal Practice Act 1996 s.314(1). His Honour observed at [28] that “the concept of engaging in legal practice is not defined by the Practice Act, nor by the Profession Act (the relevant legislation in Victoria)”. His Honour quoted at [29] from the explanatory memorandum which accompanied the introduction of the Bill in the Victorian Parliament where it was stated: “Note: The concept of “engaging in legal practice” is used throughout the Bill, this concept is the same as “acting or practising as a legal practitioner” and other similar phrases used in other jurisdictions and is intended to invoke the common law learning on what defines the practice of a lawyer”. His Honour then reviewed a number of authorities, observed at [42] that “a person would not engage in legal practice if advice is given which, although relating to legal requirements, is truly incidental to another occupation” and ultimately, on the particular facts before him, concluded that the giving of legal advice in the particular circumstances did not offend the legislation.
19 In Re: Sanderson ex parte Law Institute of Victoria (1927) VLR 394 at 297 the Court said:
“If a person does a thing usually done by a solicitor and does it in such a way as to lead to the reasonable inference that he is a solicitor – if he combines professing to be a solicitor with action usually taken by a solicitor – I think he then does act as a solicitor”.
This statement was quoted with approval by the Court of Appeal in Law Society of NSW v. Seymour [1999] NSWCA 117 and adopted by Hislop J in Council of the Law Society of NSW v. Layton [2008] NSWSC 606.
20 Guidance can also be obtained from a short analysis of prohibited conduct under LP Act 1987. Some of this conduct is set out in ss.48B, 48C and 48D which, together may be summarised as follows: a person (not including a licensed conveyancer) must not act as a legal practitioner unless the person holds a current practising certificate; and must not falsely pretend to be qualified to act as a legal practitioner. Then one turns to s.48E which prohibits (s.48E(2)) a person from, directly or indirectly doing any general legal work .. for a fee unless the person is (a legal practitioner)”. The phrase “general legal work” means “the work involved in drawing, filing up or preparing an instrument or other document that (relevantly) is a will or other testamentary instrument …”.
21 Putting all of the above together and having regard to the affidavit and oral evidence of the Respondent, the real issue debated before the Tribunal was not so much the issuance of the “Official Receipt” but rather the conduct of the Respondent in accepting instructions from the testator, drawing and engrossing the will. The “Official Receipt” only lends credence/corroboration to the conclusion that we have clearly reached: the conduct of the Respondent was engagement by him in legal practice. He, personally, may not have regarded it as such; and he may well have told the testator that he was not a legal practitioner; but all of that (in our opinion) does not alter the plain fact that he engaged in legal practice in the circumstances we have outlined.
22 The conduct of the Respondent was somewhat different from that of the defendant in Legal Practice Board v. Ferguson [2006] WASC 250, a decision of Martin CJ and to which we were referred by the Law Society. In that case the defendant actually carried on a business of writing wills and, although the Respondent in the case before us made a charge of $110.00, it could not be reasonably said that he was conducting a “business”, but rather on the evidence this was an unusual, one might say “one-off”, occasion.
The Workers Compensation Matter
23 We have set out above the pleadings of the Law Society and the Second Amended Reply of the Respondent. We have noted the contradiction (as we see it) between what is said to be a defence (ie that the costs as transferred from trust to the Respondent were not costs caught by the WIM Act s.116, but rather costs made “in contemplation of commencing possible workers compensation proceedings”; then the Respondent pleads that those costs “would be reimbursed if a workers compensation claim actually proceeded to be filed”, an admission which seems to us to be an admission that the costs as taken by him from trust were in fact costs as governed by s.116).
24 However, that was not the way the case was conducted before us. Both parties addressed the issue in this fashion: was the $20,000.00 paid by S into the Respondent’s trust account money paid to determine whether there was in fact a workers compensation claim, or was the money caught by s.116 of the WIM Act.
25 In order to address this issue it is necessary firstly, to set out the terms of the relevant workers compensation legislation; and secondly, and later in this decision, to address the actual bills of costs said to have been rendered by the Respondent and to address the issues raised by the Law Society in relation to LP Act 1987 s.61. If the Respondent is in breach of the WIM Act s.116 then there would be a failure to account to S for the $14,120.00.
26 WIM Act Section 116 is in the following terms:
“116(1) The legal representative or agent of a person claiming compensation under this Act is not entitled:
a) to recover from the person any costs in respect of the claim, or,
b) to claim a lien in respect of those costs on, or deduct those costs from, the sum awarded, ordered or agreed as compensation, unless those costs are awarded by the Compensation Court.
(2) (Not relevant)
(3) Any sum so awarded is subject to assessment in accordance with Division 11 Part 3.2 of the Legal Profession Act 2004.
(4) (Not relevant)
(5) (Not relevant)
(6) A person who has paid an amount in respect of costs to another person that the other person was not entitled to recover because of sub-section (1) is entitled to recover the amount paid as a debt in a court of competent jurisdiction or by proceeding in the compensation court.
(7) A reference in this section to a claim includes a reference to a prospective claim (whether or note the claim is ever actually made).”
27 WIM Act s.4 defines “claim” meaning a “claim for compensation or work injury damages that a person has made or is entitled to make” (our italics). Perhaps also relevant is the definition of “claimant” as meaning “a person who makes or is entitled to make a claim” (our italics).
28 It is not necessary for us to examine how it is that a claimant can mean a person who is entitled to make a claim being a claim for compensation … that a person has made or is entitled to make (!) – suffice it to say that the intent (in our view) is clear.
29 The Law Society relied heavily upon the words in italics above “or is entitled to make” as supporting the proposition that the $20,000.00 was paid by S as a claimant because he was a person “entitled to make” a claim for compensation for work injury damages, and did in fact make such a claim and was successful.
30 The evidence demonstrates that S, in August 1989, was involved in a motor vehicle accident during the course of his employment. While in hospital receiving treatment he received a blood transfusion which caused him to contract the Hepatitis C virus. The Respondent was instructed to act for him in relation to a claim in the Supreme Court of NSW against the relevant hospital and the Red Cross in respect to the contraction of the Hepatitis C virus. That claim was resolved in December 2003 by way of a settlement.
31 S had also previously made a claim for workers compensation with regard to the injuries received by him as a result of the motor vehicle accident. That workers compensation claim was settled by way of a lump sum on 23 February 1994. The Respondent was not instructed by S in relation to that compensation claim.
32 In late 2003 S instructed the Respondent to obtain advice in relation to an additional or further claim in respect of workers compensation arising out of the motor vehicle accident that occurred in 1989 following a deterioration of his condition after the lump sum settlement in 1994.
33 The Respondent requested S to pay him $20,000.00 – S did so and the Respondent issued a trust account receipt on 8 March 2004 in the following relevant terms:
“$20,000.00 on account of costs and disbursements to be incurred – fresh proceedings”.
34 It is difficult to say precisely what subsequently happened. The relevant file was not in evidence. But doing the best that we can it would seem that the following took place:
1. In the Trial Balance for 30 April 2004 the $20,000.00 was entered as “S – General Litigation – Bland” and this appellation is continued in some subsequent Trial Balance Sheets.
2. In the Trust Account Cash Payments Book for July 2004 the $20,000.00 is shown to have been transferred to a “new trust account” in relation to the S matter (thus supporting the conclusion that it was in fact a new matter and not a continuation of the previous common law settled matter).
3. The appellation changed in August 2004 from “S – General Litigation – Bland” to “S – Miscellaneous”. (nothing appears to hang on this).
4. On 28 October 2004 the Cash Payments Book shows that $2,200.00 was transferred to the Respondent’s Office Account by way of “payment of interim costs”. Those costs were set out in a “Memorandum of costs and disbursements” addressed to S, dated 28 October 2004, titled “Your General and WC File” and (relevantly) was in the following terms:
To our costs of acting for you in relation to your negligence and WC matter and as agreed … $2,200.00 … less amount received by you on 28.10.04 (transferred from trust) $2,200.00”; with a balance owing at “Nil”.
The relevance of these details will became apparent later in this decision.
5. On 28 October 2004 the Respondent paid $1,100.00 to R J Taylor of counsel. This is an important payment and the details we shall set out later in this decision.
6. The Trial Balance for October 2004 shows a nett trust balance of $16,700.00.
7. The Cash Payments Book for December 2004 shows a payment made to a Dr James on 13 December 2004 for a medical report in $440.00. It would seem that the entry should have been $400.00. Thus, due to the incorrect entry, the Trial Balance for December 2004 shows a credit of $16,260.00 instead of $16,300.00. This error was continued during the life of the trust account.
8. The Cash Payments Book for February 2005 shows a payment to the Respondent (by way of trust transfer) on account of “Costs and Disbursements Bill No. 2” dated 18 February 2005 in $5,500.00. This Bill was in the following terms:
“To our costs for acting for you in relation to your negligence and WC matter and as agreed … $5,500.00 less amount received by you on 24.02.05 (transferred from trust) $5,500.00; with a balance owing at “Nil”.
9. Thus the Trial Balance for February 2005 shows a nett credit of $10,760.00 (correctly $10,800.00).
10. On 28 April 2005 the Respondent paid a Dr Pillener $880.00. In his Invoice to S 30 June 2005 this is said to be “report fees”. That payment reduced the available trust credit to $9,880.00 (correctly $9,920.00).
11. On 29 June 2005 the Respondent transferred from trust to office on account of “costs and disbursements” $4,400.00. This was posted to the Trust Cash Payment Book on 30 June 2005. It was “supported” by a tax invoice addressed to S dated 30 June 2005 in the following terms:
“To our costs as per our memorandum of costs and disbursements dated 29 June 2005 and transferred to our general account on 30.06.05 … $4,400.00; less amount paid by you on 30.06.05 (transferred from trust) … $4,400.00; with a balance owing at “Nil”.
It will be readily seen that this “bill” is dated 30 June 2005; asserts a transfer from trust on 30 June 2005; yet the Cash Payments Book shows the transfer as having been made 29 June 2005. The entry in the Cash Payments Book is clearly correct and is supported by the trust account cheque butt, which is dated 29 June 2005.
12. This left a balance in trust of $5,480.00 (correctly $5,520.00). From this the Respondent made a payment on 26 August 2005 on account of a MRI in $800.00 and a payment 29 August 2005 for a medico-legal report in $777.00 (leaving a credit balance of $3,903.00 – correctly $3,943.00); then a further payment for a medico-legal report on 2 September 2005 in $103.00 (the cheque butt states “balance of report fee”); thus leaving a balance of $3,800.00 (correctly $3,840.00); and that balance of $3,800.00 was refunded to S upon the appointment of the manager to the Respondent’s trust account.
35 Pausing here, if we may: if the amount paid to Dr James was really $400.00, and not $440.00 as posted, then it would seem that the trust account should show a nett credit in reality of $3,840.00.
36 There is an assertion made on behalf of S that in November 2005 the Respondent gave S a cheque for $400.00 so that S “could attend to payment of a report fee from his treating general practitioner”; the cheque was dishonoured and the Respondent ultimately gave S $400.00 cash “to pay for the relevant report fee”. There is absolutely no admissible evidence to that effect and, even if true, what it all would mean in the context of the arguments advanced is a mystery. We have disregarded this aspect.
37 It is unfortunate that the evidence in these proceedings is sparse, to put it at its highest. There was sworn evidence given by the Respondent, both in writing and orally; there was sworn evidence given by S (who was not called for cross-examination); and there was sworn evidence given by Mr Taylor of counsel (who was also not called for cross-examination). However, the evidence of S is almost non-existent in regard to the actual instructions that he gave to the Respondent on and after 2003, after he had settled his negligence claim and the original workers compensation claim. This evidence, lacking specificity, does not fill us with confidence in dealing with the issues as argued by the Respondent under the WIM Act s.116. S says that he “approached” the Respondent “in relation to acting on my behalf in a workers compensation claim”. Later, at page 4 of his affidavit, he says: “When (the Respondent) accepted to run my workers’ compensation matter, he indicated that he had no funds to run the matter and demanded $20,000.00 which I gave him … I cannot recall the exact conversation but I do recall that he also told me that he may seek further amounts for this matter”. He stated that it was “(i)ncorrect to say that no workers compensation matter had commenced as it commenced the day I entered the hospital and, although there was a long period of inaction, (the) matter was also active”.
38 We are unable to divine from those words the precise instructions that S gave to the Respondent. More importantly, we are unable to accept the statement that the workers compensation matter “had commenced”, when it clearly had not. There was, as we have observed, a previous workers compensation claim which had been resolved, but the matter upon which the Respondent was consulted was not with respect to that claim but rather in respect of a further workers compensation claim “following a deterioration of (S’s condition) after the settlement (of the first claim) occurred in 1994”. Unfortunately, we were not provided with any material, nor copies of any documents, from which we could conclude that the Respondent had in fact commenced a workers compensation claim on behalf of S. The best that we can find is a statement made by the new solicitors for S in their letter 2 November 2006 where they state: “We subsequently took over Mr S’s workers compensation matter which was resolved by way of agreement on 11 October 2006.” Whether the new solicitors actually commenced proceedings we simply do not know, but we have assumed as much. Whatever be the situation, it is plain that the Respondent did not commence the new proceedings.
39 Again, not only is it not clear precisely what instructions S gave to the Respondent but it is also not clear, or even remotely clear, what the Respondent actually did for S. His file was not in evidence. Whatever may have been the precise steps taken by the Respondent, what is plain is that the motor vehicle accident occurred in August 1989. S consulted the Respondent relating, not to the workers compensation claim, about which there is precious little evidence and about which the Tribunal knew almost nothing, but rather in relation to the common law claim relating to the Hepatitis C infection. It is also plain that S “had (previously) engaged a number of solicitors and barristers” and that “none of these firms or barristers had ever (been) paid for their work … (and that S) … had a great deal of difficulty in engaging a firm to finalise his case”. This conclusion is clearly reached from looking at the affidavit of the Respondent, paragraph 1.4, and is not traversed by S in his affidavit. It was also made plain by the Respondent in oral evidence. It is also clear that the Respondent did a very good job by S in his common law case – it was apparently “settled” with what was then asserted to be the largest pay-out of any similar claim.
Instructions to Investigate
40 We propose under this heading to address the contention of the Respondent that S’s instructions were limited to investigating whether or not he had a workers compensation claim, and not to commence any such claim, such that the Respondent submitted that, his instructions, being so confined, he was not caught by the restrictive legal costs provisions of the WIM Act.
41 The Respondent says that he told S that he “may also have a workers compensation claim” but that “would involve much research”. This statement is also not traversed by S in his affidavit; but even if we are wrong about that, S says, by way of traversal./explanation: “I cannot remember Mr Taylor’s (the Respondent’s ?) exact words but I do recall him mentioning that he was not seeking any further workers compensation matters, as only he or the solicitors were paid under the Act”. In our view, and having regard to the conduct of the matter, this is clearly a nonsense, simply because the Respondent did in fact accept, at the very least, instructions from S to investigate whether or not S had a workers compensation claim. These are important observations and findings on the rather sparse material that is before the Tribunal.
42 What is plain, however, is that the Respondent briefed Mr Taylor of counsel. It is regrettable that the actual brief was not before us. What we do have, however, is Mr Taylor’s Advice. In Mr Taylor’s affidavit, paragraph 5, he agrees “that several volumes of material were provided by (the) Respondent for me to peruse and review before advising whether a claim for workers compensation benefits was available and, if so, how that claim should be pursued”.
43 The Advice was before the Tribunal. It is dated 15 September 2004. There is no need for us to trawl through the Advice in detail. It reviews the usual aspects of a claim (date of birth, marriage, employment, earnings, date of accident and so on); notes that S “has not been able to return to work at any time and to any extent since the injury of September 1989”; notes the receipt of workers compensation benefits; notes the termination of those payments in 1993 or 1994; notes receipt of “a pension or social security benefits”; notes the Hepatitis C problems; notes a consent award dated 23 February 1994 when S was “paid lump sum compensation” and sets out the calculation of that lump sum compensation; notes that “no awards were entered in respect of permanent brain damage and in respect of losses in the left-leg below the knee, right-leg below the knee, right-arm below the elbow and left-arm at or above or below the elbow, all in respect of the pelvis neck”; notes that it appeared that the proceedings in the compensation court did include a claim for weekly compensation but that claim was “stood over generally with liberty to restore”; notes that “none of (S’s) treatment expenses in respect of his orthopaedic or Hepatitis condition have been paid or reimbursed by the compensation insurer for at least the last ten years”; notes that there is an apparent deterioration of S’s condition, that “his pain levels have increased and his mobility has decreased as has his range of movement”; notes that his abilities to “engage in activities around the home and outside of the home have also reduced …”; refers to possible treatment to “assist his Chronic Hepatitis C Condition” with chemotherapy with significant side effects or complete liver transplant again with significant side effects and potential death”; reviews various alternate treatments and the cost thereof; notes that it appears that S had “not commuted or redeemed his weekly compensation entitlements or his entitlement to treatment expenses and … has remained … incapacitate for his pre-injury work or any work reasonably available to him …”.
44 Counsel also makes these telling observations:-
“Further, if, as appears to be the case, his physical condition has worsened, he may be entitled to pursue a claim for additional lump sum benefits in respect of increased loss of use of both legs, right-arm and increased impairment of his back. If he is able to establish increased loss of use and impairment, he may also be entitled to increased compensation for pain and suffering.
Although no awards were entered in favour of (S) in respect of his pelvis or neck in 1994, I note that no awards were entered in favour of the Respondent (the employer) for those parts. Accordingly, if (S) is able to establish that he currently has impairment of the neck or impairment of the pelvis in addition to impairment to the back, right-arm or left or right-legs, he may also be entitled to claim those additional impairments.
It is entirely possible that the pelvic impairment is not able to be assessed separately to impairment of the back of loss of function of the legs but that is really a medical question and not one I can answer”.
45 Counsel then goes on to observe:
“For reasons which escape me, it appears that no claim was ever made for additional benefits pursuant to Section 66 for loss of function of sexual organs or severe bodily disfigurement. As I understand it (S’s) sex life is virtually non-existent as a result of the effects of his injuries and he does have significant and extensive surgical scarring”.
46 Mr Taylor then referred to a possible claim “for arrears of weekly compensation for (S) and his dependent spouse”; then referred to a possibility of establishing that S “has continuing and on-going incapacity” and referred to a possible entitlement to lost probable earnings; and a combination of arrears of future entitlements which would “have to be a fairly substantial sum”.
47 He notes (or rather assumes) that the settlement against the Red Cross was “only in respect of contraction of Hepatitis C and the effects of that condition”. He observes that S’s orthopaedic injuries do not form part of that settlement; then refers to the Workers Compensation Act 1987, s.151Z, in detail, then to the Amended Statement of Particulars filed in the Supreme Court proceedings; notes that that document “does claim economic loss as a consequence of the effects of Chronic Hepatitis C”; notes that in his opinion the effect of s.151Z is that S had “recovered common law damages in respect of the Hepatitis condition and injury and to the extent that condition has been caused by his work injury (ie treatment received for the work injury) he would no longer appear to have any workers compensation benefits relevant to that condition”; but notes that S instructed him that as far as S was aware “no compensation was paid to him solely in respect of” that condition; such that at all relevant times (S) “had a concurrent injury and incapacity, being the orthopaedic injuries and (S) believes compensation was primarily, if not totally, paid for that condition”.
48 Then, Mr Taylor expresses the following opinion:
“As a consequence of recovered damages from the blood bank in relation to the Hepatitis C condition, I am of the view that (S) cannot, now, pursue any further claim against his employer or its workers compensation insurer, for workers compensation benefits in respect of the same condition or injury, ie Hepatitis C, and cannot claim from the employer or its workers compensation Insurer any treatment expenses for that condition.
However, I am also of the view that (S), by virtue of the specific nature of the common law proceedings which were brought and the specific nature of the injury on which the proceedings were based, ie Hepatitis C, he has not lost his right to pursue and recover workers compensation benefits in respect of his orthopaedic and associated injuries and the consequences of those injuries in respect of incapacity and impairment”.
49 The Advice goes on to make a number of quite specific recommendations including up-to-date medico/legal orthopaedic assessment, an opinion relating to sustained permanent impairment of (his) pelvis, permanent functional loss of use of sexual organs and severe disfigurement” without regard to the effects of the Hepatitis C condition; a further report from the treating general practitioner in various specific details; a medical report “on incapacity for work at relevant times”; and then expresses the view that S has retained his rights to claim treatment expenses in respect of orthopaedic physical injuries. He then notes that “if, as appears to be the case (S) does require some degree of domestic assistance as a result of his orthopaedic injuries on his own he may be entitled to claim such domestic assistance pursuant to Section 60AA of the Workers Compensation Act 1987”, and gives some specific advice relating to that; notes possible “increase degenerative changes”; refers to further compensation entitlements arising from the Hepatitis infection (and refers to ss.59 and 60) and then, at paragraph 12, observes: “when and if proceedings are commenced in the workers compensation commission …”. Clearly, and whatever may have been the opinion of S, briefed counsel was of the opinion that proceedings had not been commenced.
50 We have been to some trouble and detail to set out some of what we regard as important aspects of the Advice 15 September 2004. Clearly the terms of that Advice indicate firstly, that no workers compensation proceedings had been commenced at that point; secondly, that there were considerable and significant hurdles for S to overcome having regard to the initial workers compensation proceedings and the common law negligence proceedings against the Red Cross. It cannot be the case that the Advice was provided for the purposes of commencing workers compensation proceedings, but rather it was for the purposes of determining whether or not there was a claim; noting that in various aspects there was no claim at all; observing that S had “not lost his right to pursue and recover workers compensation benefits”, but what those benefits were, and how they were to be calculated (if at all), could only be determined by considerable further research which would inevitably require the payment of considerable medico/legal fees and the incurring of more than considerable legal costs. Whichever way one looks at the situation, the Advice was detailed, sought to cover-the-field, and was predicated on the basis that firstly, no proceedings had been commenced and, secondly, the nature and content of any further proceedings would significantly depend on what evidentiary material was available having regard, in particular, to what the medico/legal experts said and bearing in mind the rather detailed antecedents.
51 In the opinion of this Tribunal it could not be said that at the time of provision of this Advice 15 September 2004 S was a person who had made a claim for compensation or work injury damages, or was a person who was entitled to make such a claim. His entitlement to make a claim depended considerably on the medico/legal expert evidence and the legal hurdles having regard to the previous proceedings and the terms of the various settlements. For example, whether S would have a claim for domestic assistance pursuant to s.60AA would require expert evidence by a medical specialist and the treating general practitioner (as advised by counsel); thus, it could not be said in relation to a claim for domestic assistance that S was “entitled to make” a claim for compensation or work injury damages unless and until he received that medico/legal expert evidence supporting such a claim – without it, there was no supportable claim and therefore he was not “entitled to make” a claim. Put another way, if there was no supporting medico/legal expert evidence then there was simply no provable claim.
52 It is worthwhile pausing at this point of our analysis by referring to part of the scheme in the WIM Act. There is no need for us to deal with the sections of that Act in detail; suffice it to say that s.254(1) provides that, absent special circumstances, “neither compensation or work injury damages is recoverable by an injured worker unless notice of the injury is given to the employer as soon as possible after the injury happened and before the worker had voluntarily left the employment at which the worker was at the time of the injury”. “Injury” is defined (s.4) as meaning “a personal injury arising out of or in the course of employment …”. S.255 provides that a notice of injury must state (inter alia) the cause of the injury and the date on which the injury happened, and must be given to the employer, who is required (s.256) to keep a register of injuries. S.260 makes detailed provision on how a claim (ie “a claim for compensation for work injury damages”) is to be made. The Act also makes detailed provisions on how the employer, or the Insurer, is to act, makes provisions for an injury management plan and so on. There is no doubt that s.260 envisages that a claim may not be made as required by the relevant guidelines and may yet constitute a “claim” simply because the section must be read as being able to operate in certain situations where there are no claim made so as to promote the objective of the WIM Act, ie to ensure compensation for work related injuries. See Tan v. National Australia Bank Ltd [2008] NSWCA 198 at [31, 38-42], based upon the absolute requirement in s.9(1) of the Workers Compensation Act 1987 which requires that “a worker who has received an injury … shall receive compensation from the workers employer …”.
53 Thus it can be readily seen that in order to mount a claim, or even give a notice of injury, one needs to know what is the injury for which compensation is being claimed. So, in the case of a claim for domestic assistance, such a claim could not be properly made unless it was supported by appropriate medico/legal expert evidence - otherwise, how would the claimant be able to prove, or even assert, a requirement for domestic assistance? Courts and Commissions do not make compensatory orders willy-nilly, but rather on evidence. So, in the case before the Tribunal, counsel is advising that “if, as appears to be the case, (S) does require some degree of domestic assistance, as a result of his orthopaedic injuries on their own, he may be entitled to claim such domestic assistance pursuant to s.60AA … (the) requirements of that Section will need to be fulfilled in terms of medical determination of a need for the assistance before the assistance can be claimed. That is probably something that can be dealt with by (a medico-legal expert) and by (S’s) general practitioner”. (our italics). This advice demonstrates clearly that S did not, at the date of the advice, have a claim for domestic assistance, neither was he a person entitled to make such a claim; but rather it was a probable claim dependent upon obtaining appropriate expert evidence.
54 Mr Taylor of counsel provided sworn affidavit evidence and was not cross examined. However, some portions of his affidavit are relevant to this particular issue. At paragraph 3 he states that the Respondent “made it clear that, having completed a claim for damages … S wanted to investigate and, if possible, pursue a claim for additional workers compensation benefits ...”. At paragraph 5 he noted that “several volumes of material were provided by (the Respondent) for me to peruse and review before advising whether a claim for workers compensation was available and, if so how that claim should be pursued” (our italics).
55 Although he does not say as much in his affidavit, in his letter to the new solicitors for S 7 March 2008 Mr Taylor asserts that he was instructed initially by the Respondent “to advise and appear in the matter” and the he was “also instructed, in due course, to appear in any contemplated claim on behalf of Mr S”.
56 We were not referred to any authority on what is meant by the phrase “or is entitled to make” in respect of a claim for compensation. We have not been able to find any authority. We have formed the clear view, however, that a person who is “entitled to make” a claim can only be a person who, upon an analysis of the facts and the available medico/legal expert evidence, can properly mount a claim – to merely assert a claim does not make a person “entitled to make” a claim. The gravamen of the formal Advice of Mr Taylor of counsel was directed, and clearly directed, to ascertaining whether or not there were grounds for making a claim, what type of claim could be made and whether there was any evidence to support the types of claims mooted by counsel. In our opinion, therefore, the actions taken by the Respondent, and the actions taken by counsel, were investigatory only. To that limited extent we agree with the Respondent’s submissions.
57 However, the problems that confront the Respondent are not solved by the above conclusion. The material before the Tribunal does not demonstrate, even to the slightest degree, what work was done by the Respondent that would fall within the parameters of what we have just decided. It is thus necessary to address the complaint by the Law Society that the Respondent was in breach of WIM Act s.116.
WIM Act Section 116
58 The Law Society complains that the Respondent in taking out moneys from the $20,000.00 deposited by S into his trust account, was in breach of s.116. We are not sure whether the complaint also incorporates the request to S to deposit the $20,000.00 into trust.
59 The terms of s.116 we have set out above at [26], coupled with [27].
60 The Law Society asserts that the Respondent was not entitled to transfer from trust to office, any sum held by him on account of S in relation to “the compensation matter”, any such transfer being the recovery from S of “any costs in respect of the claim” and therefore in breach of s.116(1)(a). Curiously, no party saw fit to make any submissions to us in respect of s.116(7); similarly, no party saw fit to make any submissions relating to the payment to counsel.
61 The thrust of the workers compensation legislation is to give to a worker an absolute entitlement to recover compensation for work injury damages. It also requires a legal representative for such a worker not to recover his/her costs from the worker, nor to recover such costs from any compensation or sum awarded, nor to claim a lien over such sums, but rather only to recover his/her costs from the self-insured employer or the insurer (as the case may be) and only after the Court has made the appropriate order and a bill of costs has been assessed and certified or the quantum of costs has been agreed. So, a legal representative practising in the workers compensation jurisdiction is severely limited in respect of the costs he/she can recover. It is truly an odd legislative provision because, on the arguments advanced before us (but not, as we see it, supported by the current law – as to which see [76-79] below), it could well result in a legal representative paying out moneys from his/her own pocket for medico/legal reports (for example) and then having an assessor discount that cost, thus leaving the legal representative out of pocket. This would be a very odd result.
62 And how this would affect briefed counsel is not entirely clear to us: clearly the contract is between counsel and the instructing solicitor; but it would seem an extraordinary proposition (as was advanced to us on the evidence) to suggest that the fees of counsel are not equally so limited under s.116(1)(a); otherwise, counsel’s fees as may be reduced upon assessment and the disallowed difference would have to be borne personally by the instructing solicitor – again, this would be a most odd result. It may be that on a strict interpretation of s.116(1)(a) the recovery of counsel’s fees is not against the person making the claim, but rather against the legal practitioner instructing counsel. Clearly, in the case before us, and as we shall set out below, briefed counsel in this matter thought clearly that the obligation to pay his fees rested upon the Respondent, whether or not the Respondent was entitled to recover those fees upon an assessment at the conclusion of any compensation case.
63 Although no party saw fit to address us on s.116(7), which we have set out above, and notwithstanding the conclusion that we have formed to the effect that, at least as at the date of Mr Taylor’s formal Advice on 15 September 2004, there was no claim that S was “entitled to make”, the plain fact is that s.116(7) covers that issue because the prohibition in sub-section (1)(a) “includes a reference to a prospective claim (whether or not the claim is ever actually made)”.
64 Thus it must follow that whatever work was done by the Respondent and by briefed counsel that work was in relation to a prospective claim and thus the legal representative was not entitled to recover from his/her client any costs in respect of that prospective claim. This is so notwithstanding the opening words of sub-section (1) defining the client of the legal representative as “a person claiming compensation” even though that person did not, at the relevant time, or even thereafter, actually claim compensation.
65 In our view the prohibition in s.116(1)(a), coupled with sub-section (7), makes it absolutely plain that the Respondent was not at any time entitled to transfer moneys from his trust account to his office account in the matter of S.
66 This view is supported by a number of decisions. There is no need to refer to them all, but we do make reference to a few, even though no party made reference to any decisions on this aspect.
67 Firstly, reference can be made to Public Trustee v. AM Hoipo Pty Limited [1999] NSWCA 466 at [36] where the Court said:
“In short, the entire scheme of the costs provisions of the Workplace Injury Management and Workers Compensation Act recognises that the employer will be liable for costs of a claim for compensation, regardless of whether an applicant commences proceedings or not, unless the claim is determined to have been made or brought frivolously or vexatiously.”
68 Mann CJ in Trustees Executors and Agency Co Ltd v. Reilly [1941] VLR110 at 111 said:
“The words “in respect of” are difficult of definition, but they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject-matters to which the words refer”.
This is relevant because s.116(1)(a) prohibits the recovery of costs “in respect of” the claim or prospective claim and, although it is clear that, as with all words and expressions the meaning to be given to “in respect of” depends on the context in which the expression is used, it is plain in workers compensation matters that the words should be given the widest possible interpretation, particularly bearing in mind sub-section (7).
69 In Konstandopoulos v. Giammaria [2004] NSWSC 1010 the Court made these relevant observations relating to s.116:
“[11] The intent of this section is … to ensure that costs which are not party and party costs recoverable from the other side are not payable by the applicant for compensation unless pursuant to an award of the court. The normal procedure is for the costs as assessed or agreed to be paid by the insurer to the applicant’s solicitor. No additional costs can be recovered from the client in the absence of orders.
[12] It is generally the case that a court cannot order payment of costs to a non-party. (In the particular case before that court the Compensation Court did not order that costs be payable to the solicitors).
[14] I can see no basis for holding the costs the property of (the solicitors). The right of the solicitors is to have their costs paid out of a fund which results from the fruits of their labour, often called “a so-called lien” …. If, however, as a result of legal proceedings in which the solicitor is acting for the client, the client obtains a judgment or an award or compromise for the payment of money, although the solicitor requires no common law title to his client’s right to receive the money or to any part of that right, he acquires the right to have his costs paid out of the money, which is analogous to the right which would be created by equitable assignment of a corresponding part of the money by the client to the solicitor. That is to say, the solicitor has an equitable right to pay his costs out of the money.”
The Court in that case held that the solicitor, having been responsible for obtaining the costs order, was entitled to an equitable charge over the property comprised in the order for costs, being the amount of the assessed costs. So, in the case before the Tribunal, what should have happened is the Respondent should have either applied to the Compensation Court for an order that the employer, or Insurer, pay the costs that he incurred; alternatively, the new solicitors for S should have incorporated into their bill of costs the work done by the Respondent, such that the assessor could have assessed those costs and there would be an apportionment between the Respondent and the new solicitors; alternatively, and perhaps more appropriately having regard to our observations at [76-79] below, an agreement regarding apportionment should have been reached.
70 There is an interesting detailed discussion about statutory construction in Wilson v. State Rail Authority of NSW [2010] NSWCA 198 at [12-14]. In interpreting s.116 this Tribunal has borne carefully in mind the words in those various paragraphs of Wilson and is of the view that its interpretation of s.116 as it applies to the facts of the matter now before the Tribunal is consistent with the observations of the Court of Appeal in Wilson.
71 We are therefore clearly satisfied that the Respondent was in breach of WIM Act s.116.
Failure to Account
72 It must follow from the breach of s.116 that the Respondent was not entitled to transfer to his own account moneys paid by S into his trust account . There is thus a failure to account in relation to those moneys. There is also a failure to account with regard to the fees paid to counsel and the fees paid to Dr Pillemer for the reasons that we set out above.
Counsel’s Fees
73 It will be remembered that counsel was paid from the moneys in trust the sum of $1,100.00. The Law Society complains that, as part of the failure to account, the sum is to be included. We agree, for the reasons stated above; and also for the reasons stated in [76-79] below.
74 However, and also for the reasons stated above, we initially found the whole system quite odd. Mr Taylor, in his affidavit, indicates clearly that he “would render fee notes for the work performed, as the work was performed, and that (the Respondent) would have to pay those fees himself … that not all of the fees … would be recoverable from the workers compensation insurer as part of the party/party costs, which (the Respondent) would be able to recover at the conclusion of the claim”. At paragraph 12 Mr Taylor confirms that he “would issue fee notes for work done by me … after each aspect the work was completed … (that he) did expect and anticipate that (the Respondent) would pay my fees, as rendered, within a reasonable period … (that he) did not expect … that I would have to wait until the matter was concluded for (the Respondent) to pay my fees … (but that he had a special agreement with the Respondent that he would pay counsel’s fees as and when rendered even though “all of the fees” would not be recoverable”.
75 He made it plain that “the standard, and then usual, arrangement was that (counsel) and the solicitor would only be paid on the successful conclusion of the claim and after costs had been recovered from the insurer. This was the arrangement he reached with the new solicitor for S but “because of the complexity of the claim I did not expect that (the new solicitor) would be able to recover for all (counsel’s fees) from the insurer”. Thus, somehow counsel expected the new solicitor to put his hand into his pocket and pay the shortfall.
76 However, the position seems to us, from our researches, entirely different at law from that asserted by the parties. It seems to us that the issue of legal costs is covered by Workers Compensation Regulation 2003, Schedule 6, titled “Maximum costs – compensation matters”.
77 This Schedule sets out in detail the parameters of costs that are payable for “workers compensation claims that are resolved before proceedings are commenced … (and) disputes that are resolved after proceedings are commenced …” (s. 1(1)). S.1(2) talks about resolution of claims; and the fee schedule prescribes, in detail, the maximum costs recoverable.
78 There is no need for us to trawl through the very detailed provisions of Schedule 6. Suffice it to say, so it seems to us, that the recovery of legal costs by a legal practitioner in the workers compensation arena is prescribed and proscribed by this Schedule – thus, a legal practitioner is totally governed by Schedule 6 and WIM Act s.116 in the recovery of his/her legal costs, the Schedule detailing maximum lump sums, which sums include the fees of any briefed counsel.
79 Thus it must follow, if we are correct in our analysis, that the fees of counsel are included in the lump sums scheduled and, in addition, the maximum that could ever be recovered by the Respondent was (were) the amount(s) specified in the Schedule. The practitioner may have a lien/equitable charge upon those costs (although whether there is a lien/equitable charge is problematic having regard to the Schedule) but on no account could the Respondent have sought money on account and on no account could he have legally transferred from those moneys sums from trust to office to satisfy his legal costs which, in any event, are not payable by the client but only payable under Schedule 6.
Breaches of Section 61
80 The relevant legislation in force at the time of the various trust transfers was Legal Profession Act 1987 (“LP Act”). The relevant section is s.61. The breach as asserted by the Law Society is that of s.61(3)(b). The breach as asserted arises out of a consideration of two sub-sections of 61 as follows:
“61(2) In the case of (the payment into trust) the solicitor must hold the money exclusively for, and must disburse the money in accordance with, the directions of the person on whose behalf it is held.
(3) This section:
a) (Not relevant)
b) does not prevent a solicitor from withdrawing or receiving, from trust money or controlled money:
(i) reimbursement for disbursements paid by the solicitor; or
(ii) money for disbursements to be paid by the solicitor, or
(iii) money due, or to accrue due, to the solicitor for costs,
so long as the procedure prescribed by the regulations is followed …”.
81 The thrust of these oft quoted sub-sections is that the Respondent is obligated to hold the trust money of S exclusively for him, pay it out only in accordance with his directions, but can withdraw money for costs if the Respondent follows the relevant regulations.
82 The relevant regulation is Legal Profession Regulation 2002, s.78. There is no need to quote the whole of this regulation; but it does require, in sub-section (2), a disclosure of the “costs of legal services” (except in certain circumstances) and it also does require, in sub-section (2)(a), the solicitor to deliver “to the person a bill of costs in accordance with Part 11 of the (LP Act) and the person has authorised the withdrawal or receipt …”.
83 The evidence before the Tribunal demonstrates that the Respondent had entered into a costs agreement with S on 25 October 2004. There is no criticism of the terms of the costs agreement itself; but rather as to its interpretation. The relevant clauses of the Costs Agreement were as follows:-
“1. To represent you in relation to my compensation matter.
2. We will charge you at the rate of $280.00 per hour (plus GST) and may incur expenses on your behalf which we will ask you to pay. These will include:
Miscellaneous summary disbursements such as photocopying and may later include filing and service fees for Court document and/or barristers fees.
soon as you are invoiced.
3. We will, from time to time, request that you place money in trust for our fees and invoice you at regular intervals as the costs are incurred and your authorise us to draw on these trust moneys as
Initially, you authorise us to accept settlement moneys to be paid directly to our trust account and to pay ourselves from this money immediately after sending you a reasonable invoice.
10. If, in the proceedings in which this agreement relates, an order is made requiring another party to pay your costs of these proceedings, that order will not affect your liability to pay our costs and expenses under this agreement, but the amount recovered (if any) may be applied towards satisfaction of our charges and expenses …”.
84 It is plain from the above that the costs agreement bore no relationship at all to workers compensation proceedings and entitlements. The reasons for this we have set out above. Clearly, as the Respondent admitted orally, he used a standard form of Agreement when he should have tailored the form to a workers compensation matter. He attempted to explain paragraph [1] as meaning, or understood by both himself and his client, as covering his costs to determine whether there was in fact a workers compensation claim; but that is clearly a nonsense having regard to our findings and our opinion on statutory construction as we have been at pains to set out above. There is, as we accept, an obligation on a legal practitioner to enter into a costs agreement with his/her client in most circumstances. However, the agreement needs to be tailored to suit the purposes, and not simply plucked off a standard form on the computer. Indeed, we opine that care needs to be taken in drafting costs agreements so that, in particular, the client is not misled as to the nature and scope of the instructions, the charges and the other entitlements of the legal practitioner. There is nothing particularly unusual or remarkable about that observation. This Costs Agreement did not meet any of the usual and proper requirements for a workers compensation matter, even for a preliminary assessment as argued by the Respondent.
85 In any event, the Costs Agreement is basically irrelevant to the matters agitated before the Tribunal. The real issue is the terms of the various Memoranda 28 October 2004 (two of the same date, 24 February 2005 (again two of the same date), and 30 June 2005 (again two of the same date). These we have set out in detail above: see [34.4, 34.8 and 34.11]. In each case the bills are what can be described as “one liners”. They do not set out with any detail or particularity, or in even the remotest detail, the work done by the Respondent. In his evidence before us he made no attempt to explain what he did in order to justify the various charges, the file was not put before us and we simply do not know what work was done in order to justify the charges.
86 Regulation 78 requires a bill of costs to be delivered in accordance with Part 11, and the client to authorise the withdrawal or receipt. A bill of costs is not a one or two line bill. There is no need for us to analyse the various requirements of the regulations – suffice it to say that a bill of costs requires an itemised bill in sufficient particularity to enable it to be assessed. No authority was quoted to us, but if authority is required for that observation, we refer to Selossie v. Whitten [1997] NSWSC 335; and perhaps more importantly Smits v. Buckworth [1997] NSWSC 422. Reference should also be made to Larsen v. Vile [1999] NSWCA 397 and Hook v. Simpsons [1999] NSWSC 667 at [15-22].
87 So, the short answer to the question posed to us is: there has been a breach, and a clear breach, of s.61. This conclusion is underlined by the evidence of S in or to the effect that he “was not aware of how more than $14,000.00 of my initial $20,000.00 was expended. It was never explained to (him) verbally or otherwise. It only became apparent after lodging a complaint with the Law Society against (the Respondent).” In response to this the Respondent stated:
“1.21 In regard to accounting to Mr S for moneys disbursed, Mr S was well aware of our agreement and was well aware of how much moneys were left in trust. I have given Mr S the originals of all receipts of costs and disbursements. However, I do admit that I did make one fundamental mistake – I did not render a fully itemised bill of costs and disbursements. The intention was always to reimburse Mr S for any moneys expended once it was known that Mr S had a winnable case”.
This is a curious statement by the Respondent. It is plain that one or two line bills of costs are not “bills of costs”; there is not the slightest evidence that would demonstrate, with any sort of precision, precisely what work the Respondent carried out for Mr S; and why he would wish to reimburse S once it was known that he had a winnable case is not entirely clear – but, in any event, it does demonstrate that the Respondent was clearly aware of the workers compensation prohibitions with regard to costs and clearly understood that the costs that he was transferring from trust to office would be included in a claim for costs at a final hearing. Thus it must follow that there has been a clear breach of WIM Act s.116, even though the Respondent may not have fully appreciated that, it being his belief that all he was being asked to do at the relevant stages was to investigate the matter to see whether there would be a claim, but his admission that the costs would have been included in a costs order ultimately made in workers compensation proceedings makes it plain that he understood how s.116 operated, even if he did not understand its precise terms; and there has been a clear breach of LPA Act 1987, s.61.
88 The Respondent stated, both orally and in writing, that he has offered “on a number of occasions” to pay S the $14,120.00 on a “without prejudice” basis but never received a response to this offer. S’s evidence is that the Respondent did approach him with offers of settlement but that he “felt that it was inappropriate to discuss any negotiations outside the investigative body” and that he held no confidence as to the
Respondent’s “ability to carry out any arrangements”. The Presiding Member of this Tribunal wishes to record that on more than one occasion during hearings he has expressed the view that matters like this, involving money, ought to be resolved as between the legal practitioner and the complainant. There is, in his view, an obligation on the Law Society to facilitate that commercial resolution such that the only issue that would remain to be decided by the Tribunal would be professional issues in circumstances where the practitioner would be able to plead that the monetary aspects have been resolved with the client.
The Letterhead
89 The final issue for determination by the Tribunal is the complaint that on 15 May 2007 the Respondent wrote to S “on the letterhead of the law practice” advising that he wished to cancel his previous bill and to charge S “for all previous work not billed”; that he wished to be provided with the Hepatitis C file “so that I can redo your previous bill”. This letter was written at a time when the Respondent did not hold a practicing certificate.
90 We have reviewed the evidence and are of the opinion that the letterhead as used by the Respondent was not the letterhead of his former law practice. He did in fact continue to use the name of the law practice (as he was entitled so to do) but he did not include the word “solicitors”, any reference to the former firm’s document exchange box; nor reference to the limited liability under the Solicitors Scheme.
91 The Law Society submitted that the use of the “old” letterhead with the various deletions that we have identified added weight to the content of the letter in its terms such that the Tribunal could conclude that the Respondent was practicing without a practicing certificate by the use of the letterhead and the content of the letter. We are, with respect, unable to reach that conclusion. There is nothing particularly unusual about the letterhead as used – it is a quite normal letterhead which one would expect to be used by any number of businesses. It is true that the Respondent includes his post-nominals “BA, MPA, LLB” and his old ABN, but there is nothing in that that would result in an adverse finding on this ground. There is no law requires a person not to use his/her post-nominals, and the ABN continues in respect of the business name. This claim must fail; but the content of the letter only underlines our view that the Respondent, as at the date of the letter, failed to understand how the workers compensation milieu operates.
Summary
92 The Tribunal is clearly of the opinion that the Respondent, in the circumstances we have set out above, breached s.116 WIM Act; breached s.61 LP Act 1987; and failed to account to his client for $14,120.00. The Tribunal is also of the opinion that the Respondent engaged in legal practice in respect of the acceptance of instructions and drawing and engrossing the will, but that this was an isolated breach.
93 The Tribunal accepts that the Respondent has endeavoured to re-pay to his former client the amount in question, which efforts have not been assisted but rather rejected. The Tribunal bears that in mind. Although the Respondent is a bankrupt the Tribunal was informed that the payment would be made by the Respondent’s wife and we have no reason to doubt that. But the failure to account is not the failure to re-pay the money but rather the failure to provide a proper accounting as required by law for the moneys transferred from trust to office. This failure to account is compounded by the clear breach of WIM Act s.116, and LP Act 1987 s.61.
94 There is a paucity of evidence before the Tribunal as to the antecedents of the Respondent. Suffice it to say that there are only two matters, being the matters now before the Tribunal, that have come to the attention of the Tribunal since the Respondent was admitted to practice on 9 October 1998 and during the course of his practice as a sole practitioner from 8 December 2000 to 1 October 2005. The Tribunal concludes that, as must be the case, absent complaints, the Respondent’s professional conduct was not something with which his clients found fault. Indeed, one might also say that on the scarce evidence that the Tribunal has the Respondent acted quite properly and professionally in obtaining a substantial common law award for S and also in moving forward with a possible further workers compensation claim. The Tribunal has also borne those matters in mind in framing dispositive orders.
95 The Law Society seeks an order that the Respondent be reprimanded and fined. We respectfully agree with the making of orders along those lines; but are also of the view that should the Law Society, or the Supreme Court, believe it is appropriate at some time in the future to issue to the Respondent a Practicing Certificate, whether limited or otherwise, the Respondent should be required, as a prerequisite, to attend and successfully complete an appropriate course in trust account/practice management matters and in ethics, and the Tribunal has incorporated this in its Orders.
96 The Tribunal is of the opinion that the Respondent should be fined the sum of $3,000.00. This, in our opinion, is a suitable fine in all the circumstances, having regard to all the facts and the clear offer made by the Respondent to re-fund to the client the amount paid to him in breach of s.116 and s.61.
Orders:
1. The Respondent pay a fine of $3,000.00.
2. The Respondent is publicly reprimanded.
3. Should it be considered that a Practicing Certificate be issued to the Respondent the issuing authority is encouraged to consider, as a pre-requisite, attendance by the Respondent and satisfactory completion of suitable courses in:
a) practice management;
b) trust accounting; and
c) ethics.
4. The Respondent pay the costs of the Law Society as assessed or agreed.
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