The Legal Services Commissioner v Nikolaidis (No.2)
[2004] NSWADT 248
•11/01/2004
Set aside by Appeal:
Set Aside by Appeal on 8 June 2007: Leon Nikolaidis v Legal Services Commissioner [2007] NSWCA 130
CITATION: The Legal Services Commissioner v Nikolaidis (No.2) [2004] NSWADT 248 DIVISION: Legal Services Division PARTIES: APPLICANT
The Legal Services Commissioner
RESPONDENT
Leon NikolaidisFILE NUMBER: 032022 HEARING DATES: 12/07/2004
13/07/2004
28/07/2004SUBMISSIONS CLOSED: 09/30/2004 DATE OF DECISION:
11/01/2004BEFORE: Brennan JWF - Judicial Member; Bishop C - Judicial Member; O'Neill A - Non Judicial Member APPLICATION: Professional Misconduct - fail to comply with cost assessor under s. 207 - Professional Misconduct - overcharge MATTER FOR DECISION: Principal matter LEGISLATION CITED: Legal Profession Act 1987 CASES CITED: Allinson v General Council of Medical Education & Registration 1894 1QBD 750
Evatt v Bar Association of New South Wales 1968 117 CCR 177
Ray v Newton 1913 1KB 249
Meux v Lloyd 2CBNS 409
Re Eyre 1 CBNS151
Veghelyi v Law Society of New South Wales 6 December 1995 unreported Court of Appeal
Re Veron ex parte Law Society of New South Wales 1966 1NSWR 511
The NSW Bar Association v Amor-Smith 2003 NSWADT 239REPRESENTATION: APPLICANT
M Hadley, barrister
RESPONDENT
J Chippindall, barristerORDERS: Finding - Professional misconduct.
1 By information filed in the Tribunal on 21 October 2003 the Legal Services Commissioner (“the Commissioner”) informed the Tribunal that as a result of the Commissioner’s investigation of a complaint made under Part 10 of the Legal Profession Act 1987 (“the Act”) against Mr Leon Nikolaidis (“the Practitioner”) a legal practitioner within the meaning of Section 128 of the Act, the Commissioner claimed that the Practitioner, while practising as a solicitor, was guilty of professional misconduct.
2 There were two grounds of complaint, namely:
The First Ground of Complaint:
(a) The Practitioner failed, without reasonable excuse, to comply with notices issued by a costs assessor under Section 207 of the Legal Profession Act 1987; and
(b) The conduct of the Practitioner involved the deliberate charging of grossly excessive amounts of costs.
3 On 24 August 2000 the Practitioner applied to the Supreme Court for the assessment of his costs for acting for a Mr Antoni. He had previously submitted to Mr Antoni a bill for the sum of $28,635.60 for work performed during the period 29 August 1994 to 26 May 2000.
4 On 31 October 2000 Mr Costs Assessor McNally (“the Costs Assessor”) in a letter headed “Costs Assessor’s Notice” wrote to the Practitioner advising that the application had been referred to him for assessment. The letter then proceeded to point out:
5 In conclusion, the Costs Assessor noted some specific charges in the bill and asked questions about four specific matters.
The Costs Assessor’s letter went on to detail various procedural matters relating to the assessment including:
“As provided by Section 207 of the Legal Profession Act (“the Act”) relevant documents may be required to be produced and further particulars may be required to be furnished.”
(a) That any submissions by the Practitioner pursuant to Section 208 of the Act should be made in writing not later than 16 November 2000 and that a copy be served on the Respondent;
(b) Except where there was a need for urgent communication or to prove service the Practitioner was to refrain from sending facsimile transmissions and “forward documentation by post or Document Exchange” [the emphasis is that of the Tribunal].
6 Section 207 of the Act is in the following terms:
7 The Practitioner replied to the letter of the Costs Assessor on 2 November 2000 and addressed each of those four questions.
“207 costs assessor may require documents or further particulars
(1) A costs assessor may, by notice in writing, require a person (including the applicant, the barrister or solicitor concerned, or any other barrister, solicitor or client) to produce any relevant documents of or held by the person in respect of the matter.
(2) The costs assessor may, by any such notice, require further particulars to be furnished by the applicant, barrister, solicitor, client or other person as to instructions given to, or work done by, the barrister or solicitor or any other legal practitioner in respect of the matter and as to the basis on which costs were ascertained.
(3) The costs assessor may require any such particulars to be verified by statutory declaration.
(2A) If the notice referred to in subsection (1) or (2) so directs, and if it is practicable for the person to whom the notice is given to comply with such a direction, the document or particulars required by the notice must be provided in electronic form in addition to, or instead of, in paper form (as the notice may specify).
(4) A notice under this section is to specify the period within which the notice is to be complied with.
(5) If a person fails, without reasonable excuse, to comply with a notice under this section, the costs assessor may decline to deal with the application or may continue to deal with the application on the basis of the information provided.
(6) A barrister or solicitor who fails, without reasonable excuse, to comply with a notice under this section is guilty of professional misconduct”.
8 On 28 November 2000 the Costs Assessor wrote again to the Practitioner enclosing two notices pursuant to Section 207(1) and 207(2).
9 The first notice issued under Section 207(1) addressed to the Practitioner drew the Practitioner’s attention to Section 207(6) and Section 208Q(2A) of the Act. Section 208Q(2A) is in the following terms:
10 This first notice required production of specified documents not later than 14 December 2000 at the Costs Assessor’s address in the Central Business District. The notice expressly indicated that production at the Document Exchange was not acceptable and the documents required were:
“208Q(2A): A costs assessor may refer any failure by a legal practitioner to comply with a notice issued under section 207, or with any other provision of this Part, to the Commissioner.”
11 The second notice was given in accordance with Section 207(2) of the Act and it also drew attention to the provisions of Section 207(6) and 208Q(2A). This second notice required nine (9) particulars to be provided not later than 14 December 2000 and specified that particulars in respect of items 2, 4, 5, 6, 7, 8 and 9 were to be in the form of a Statutory Declaration. These particulars were:
(a) The Practitioner’s file;
(b) Orders previously made by the New South Wales Court of Appeal;
(c) File copies of any disclosures made under specific sections of the Act;
(d) File copies of any Section 176 disclosures by any Solicitor retained by the Practitioner on behalf of the Respondent;
(e) Any documentation that the Practitioner considered to be a costs agreement within the meaning of the Act;
(f) Two specific invoices (one of which appears to have been produced by the Practitioner with his letter of 2 November 2000).
12 On 8 January 2001 the Costs Assessor wrote again to the Practitioner, which letter he indicated should be regarded as a notice given pursuant to Section 207. The letter required compliance with the notice dated 28 November 2000 pursuant to Section 207(2) of the Act by 15 January 2001. The letter further required the provision of a Statutory Declaration providing additional particulars in relation to an undertaking which the Practitioner advised on 2 December 2000 had been given by the client. Further particulars were also sought in relation to the Practitioner’s authority to engage a particular firm and for identification in relation to one particular charge and details of photocopies and facsimile transmissions. The Practitioner was again required to produce his file at the office of the Costs Assessor and not through the Document Exchange. The letter is quite clear as to the requirement of production at a specified address and it gave an extended date of 22 January 2001 for delivery of the file.
“1. Identify each item of work in the bill of costs by sequential numbering.
2. (a) If you consider you complied with the provisions of S.175, S.177(1) &(3) and S.178(3) of the Act
3. In respect of each item of work identify the person who did the work and provide details of the qualifications and work experience of each person.
(b) If so advise why you are of that opinion
(c) If there was no compliance with S.175, S.177(1) & (3) and S.178(3) of the Act advise why this was not done.
4. (a) Did you retain another practitioner?
5. What do you consider were the terms of your retainer?
(b) If so do you consider that practitioner complied with the provisions of S.176 and S.179 of the Act? If so advise why you are of that opinion.
6. The Respondent has queried the number of notices of motions. Advise why each notice of motion was necessary.
7. If your retainer was terminated advise
8. Have you received any monies on account of costs and disbursements? If so provide details of the monies received.
(a) When this occurred
(b) The reason for termination
9. (a) Was a complaint made to the Law Society of New South Wales?
(b) What was the ground relied upon to support the complaint made to the complaint
(c) What was the result of the complaint?”
13 On 19 January 2001 the Practitioner wrote in reply to the Costs Assessor. The Practitioner advised that a solicitor, Michael Zwar, who had the carriage of the matter, had left the office and had been on holidays. The Practitioner sought an extension of time to 2 February 2001 for the purpose of providing a response to the letter of 28 November 2000 (and also to the Respondent client’s objections).
14 On 30 January 2001 the Costs Assessor advised that if the particulars and documentation required were not provided by 2 February 2001 the Costs Assessor would proceed with referring the matter to the Commissioner. The Costs Assessor also requested identification and particulars in respect of which the Practitioner sought the assistance of Mr Zwar and enquired whether the Practitioner felt he was not required to comply with notices within the time stipulated because he was the Applicant on the assessment. Effectively the Practitioner received the extension of time he had sought to comply with the two S207 notices. The Tribunal finds that, irrespective of any issues as to time which might otherwise have been raised as to “reasonable excuse”, time for compliance with the notices to produce documents, including the Practitioner’s file, and to provide particulars could no longer be an issue after 2 February 2001 unless some extraordinary event arose between 19 January and 2 February 2001. There was no evidence of any such event.
15 On 6 February 2001 the Costs Assessor referred the matter to the Commissioner pursuant to Section 208Q(2A) and advised the Practitioner.
16 On 9 April 2001 the Costs Assessor wrote a reminder letter to the Commissioner in relation to his referral under Section 208Q(2A) and sent a copy to the Practitioner.
17 On 17 April 2001 the Practitioner replied to the Costs Assessor’s 9 April letter and sought a further seven day extension of time to provide further particulars as to the bill and the remaining objections to the bill. The letter also incorporated what was referred to as “an interim response to the three of the more complex general objections”.
18 On 23 April 2001 the Costs Assessor acknowledged the letter of 17 April. The Costs Assessor advised that he proposed to proceed with the Application and referred to the Section 207 Notice requiring production of the Practitioner’s file by 14 December 2002. The letter asserted “It appears you choose to disregard that notice.”
19 On 3 May 2001 the Practitioner again wrote to the Costs Assessor. The letter indicated that a Statutory Declaration from Mr Zwar would be forthcoming soon and then set out various submissions in support of the action which the Practitioner had taken on behalf of the client in relation to the determination of the costs of the client’s previous solicitors. The letter concluded “We remain willing to produce our files to you as you require.”
20 A Statutory Declaration of Michael Zwar sworn 8 May 2001 was forwarded to the Costs Assessor on the day of swearing.
21 On 14 May 2001 the Costs Assessor replied to the Practitioner. The letter addressed some issues raised by Mr Zwar’s Statutory Declaration. The Costs Assessor advised:
22 The letter also raised some issues in relation to the second complaint subsequently made to the Tribunal and indicated the Costs Assessor’s view that the costs charged should be referred to the Commissioner. The Costs Assessor invited submissions in response not later than 21 May and advised that he intended to proceed with the Application.
“I direct your attention to the fact that all my notices have been addressed to you and I expect responses from you. It appears most, if not all, the correspondence I have received from your firm you did not sign. I consider Mr Zwar’s Statutory Declaration of little assistance and I note notwithstanding my requirements you have not produced your files to me.”
23 On 16 May the Practitioner wrote again to the Costs Assessor with responses to the various paragraphs of the letter of 14 May 2001 and concluded “we await your further advices in this matter, particularly as to when and where you wish us to produce our file.”
24 On 25 May 2001 the Costs Assessor issued his Certificate as to determination of costs without the Practitioner’s file having been produced. Apart from one invoice, produced prior to 28 November 2000 none of the documents required under the Section 207(1) Notice were produced by the Practitioner to the Costs Assessor. In view of the extension of time sought by the Practitioner, clearly the deadline for production of those documents expired on 2 February 2001. Three months later, on 3 May, and again on 16 May, the Practitioner belatedly expressed a willingness to produce his file to the Costs Assessor, but this was not done. The Notice and the correspondence made it very clear that the obligation was on the Practitioner to produce the documents at the office of the Costs Assessor and this he failed to do.
25 The original Notice under Section 207(2) was addressed to the Practitioner personally and required him to provide a Statutory Declaration. There was no Statutory Declaration by the Practitioner up to the expiration of the extension of time that he sought, nor indeed at all. Some three months after the extension of time expired, a Declaration by Mr Michael Zwar a former Solicitor of the Practitioner’s firm, was lodged with the Costs Assessor but this clearly did not address the specific questions in the Notice from the Costs Assessor which have been set out above. The Practitioner advised the Costs Assessor on 3 May 2001 that Mr Zwar would provide “a Statutory Declaration in respect of the unanswered general objections raised by Mr Antoni” that is in answer to the objections to the Bill in the assessment application and not in answer to the S207(2) Notice.
26 The Practitioner responded on 1 June 2001 in relation to some issues and on 22 June 2001 the Costs Assessor replied briefly indicating that he considered himself functus and that he was not prepared to correspond further in relation to the matter.
27 The Practitioner filed an Affidavit sworn on 6 April 2004 in which he acknowledged receipt on 29 November 2000 of the two Notices under Section 207 of the Act and the subsequent correspondence of 8 January 2001, 19 January 2001 and 30 January 2001.
28 The Practitioner deposed some recollection of speaking with Mr Zwar in December 2000 but that Mr Zwar was unable to assist him during that month owing to pressure of work.
29 The Practitioner’s Affidavit indicates that he sought advice from his employed Solicitor, Lloyd Harris, some time after 6 February 2001 and the advice that he received is detailed in his Affidavit and constitutes the only evidence in that Affidavit which could be inferred as seeking to assert that there was some reasonable excuse for the Practitioner’s failure to comply with the two notices. The advice which the Practitioner quoted was as follows:
30 The conduct of the Practitioner, before and after he received the advice he quoted from Mr Harris, and his evidence before the Tribunal is not consistent with his acceptance of that advice or his adoption of it. The Practitioner acknowledged his understanding of the notices and their serious nature. The words of the section are clear and it is inconceivable that the Practitioner twenty years after admission to practice, firstly as a Barrister and then a Solicitor, could have accepted:
“(a) in his opinion, the notices issued by the costs assessor on 28 November 2000 were functus and that leaving aside whether there was any failure to comply with the notices, the notices did not give rise to a continuing obligation to comply;
(b) in his view, in order for there to be statutory compulsion [with the attendant protection that offers to a person producing], the costs assessor was required to issue a further notice;
(c) in this conversation he referred to his experience as an officer of the Commonwealth Director of Public Prosecutions with productions orders issued by the Judges of the Supreme Court of New South Wales under the Commonwealth Proceeds of Crime Act which would require production of the documents to a specified person at a specified time and place, that in the office of the Commonwealth DP the view was held that if there was non compliance or inadequate compliance then a further order was required to again subject the recipient of the obligation to produce; and
(d) any subsequent action by me in respect of the notices issued by Mr McNally at that time would not alter the fact of any non compliance that had occurred.”
31 The advice the Practitioner received in relation to the notices was clearly wrong and the conduct of the Practitioner between February 2001 and June 2001 is inconsistent with the Practitioner having accepted or acted upon that advice. The Practitioner had an obligation to comply with the notices and he chose not to raise any such perceived view that the notices having expired could not be subsequently answered, but rather to engage the Costs Assessor in argument and, indeed, in his letter of 16 May 2001 on a number of instances to ask the Costs Assessor for particulars, reasons or views.
(a) that there was no continuing obligation to comply with the S207 Notices after 14 December 2000;
(b) the Costs Assessor was required to issue a further notice(s) after 14 December 2000 to create an obligation to produce the documents;
(c) in effect that, once the deadline in the notice(s) expired, non-compliance had occurred, which ignores issues which may be relevant to establish “reasonable excuse” within the terms of the Section.
32 In his reply filed 23 December 2003 the Practitioner denied the first allegation and in answer to it raised the following matters:
“(a) the time specified in the notice to produce documents (“Notice to Produce”) to produce the relevant documents was unreasonable;
(b) it was unreasonable to require the Respondent to comply with the Notice to Produce in circumstances where:
(i) the Costs Assessor had also issued a notice to the Respondent to provide particulars (“Request for Particulars”), the validity of the issue of such notice not being admitted, which required, if the Respondent was to answer the Notice, that the Respondent have access to the documents the subject of the Notice to Produce;
(ii) the Respondent had been served with a notice of objection to the relevant bill of costs;
(iii) the Respondent was entitled to provide a full and detailed response to the objections which he had not done at the time of the issue of the Notice to Produce;
33 In cross-examination, the Practitioner said:
(c) the time specified in the Request for Particulars to provide the relevant particulars was unreasonable;
(iv) to properly answer the objections required that the Respondent have access to the documents the subject of the Notice to Produce;
(v) the Notice to Produce required production of documents that did not exist and/or were not in the possession of the Respondent; and
(vi) the Notice to Produce required production of a document already in the possession of the assessor at the time the said Notice was issued:
(d) it was unreasonable to require the Respondent to comply with the Request for Particulars in circumstances where the Costs Assessor had also issued a Notice to Produce requiring the Respondent to deliver up various documents, and the answering of the Request for Particulars required that the Respondent have access to the documents the subject of the Notice to Produce;
(e) Request for Particulars required the Respondent to provide ‘particulars’ not being, particulars as to matters specified in 207(2) of the Legal Profession Act 1987;
(f) by reason of the matters particularised in paragraphs (a) to (e), the issue of the said Notices by the assessor was invalid and ultra vires; and
(g) by reason of the matters particularised in paragraphs (a) to (f), the Respondent had reasonable excuse for failing to comply with the said Notices.”
34 He also said:
“At all relevant times after the bill was lodged, I believe the file was on my premises. The only delay that I had in producing the file was the need to have Michael Zwar review the file for the purposes of preparing responses to the objections.”
35 Subsequently the Practitioner was asked: “And you knew that not complying with such notices was a serious matter?”
When asked: “When you received the Notices from the assessor, you were in no doubt as to what they required?”
“At all times we were willing to produce the file and any delay in producing the file was only the result of the need to have Michael Zwar look at the file before he could assist in dealing with the responses.”
He replied: “Yes, I knew what they required, yes.”
36 The Practitioner conceded that his claim that the time for compliance with the Notices was unreasonable was never conveyed to the Costs Assessor. Indeed, the Practitioner stated that he expected to comply with the Notices by 14 December 2000. His evidence was that it was his decision that he would provide the particulars requested in one notice, answer the objections to the bill and provide the file to the Assessor all at the same time, that being after he had had the assistance of Mr Zwar. The Practitioner acknowledged that it would have been appropriate to, in effect, advise the Costs Assessor of his difficulties in complying with the two notices in December. In fact, he made no contact with the Costs Assessor until after he had been contacted again by the Costs Assessor on 8 January and he then wrote in reply on 19 January seeking the extension until 2 February 2001. The Practitioner conceded he should have written before the Costs Assessor wrote on 8 January. It was clear that the file was available and could have been delivered to the Costs Assessor before the Section 207(1) Notice expired. The Costs Assessor required the file to perform his duties but clearly an arrangement could readily have been made for the file to be delivered to the Costs Assessor for his purposes and subsequently, if he was not then finished, made available to the Practitioner on request for him to deal with the Section 207(2) Notice and the objections to the bill.
The Practitioner replied: “Without reasonable cause, I knew that was a serious matter.”
37 When it was put to the Practitioner that he could have delivered the file to the Costs Assessor and either borrowed it back or had access to it when he wished Mr Zwar to examine the file, the Practitioner answered:
38 From this answer, the Tribunal finds it clear that the Practitioner elected to ignore the S207(1) Notice until such time as the Practitioner considered it opportune for him to produce the file.
“The file would have been of no value to him without the information that he required to accompany the file. Alternatively, if he had the file, without that information, he may have formed a series of adverse views.”
39 The issue of such notices to a Practitioner creates important professional obligations, so if any duties relating to compliance were delegated, the Practitioner remains personally responsible and, if he neglects to monitor the day-to-day progress of compliance with the Notices, he does so at his own peril. The notices were not complied with before the Costs Assessor’s procedure was completed, almost six months after the notices were issued. The Practitioner’s claim in evidence in relation to the seriousness of such notices, already quoted, is simply not consistent with his actions and he appears to have been more inclined to defy or at least ignore the requirements of the Costs Assessor, rather than comply with those requests.
40 The Practitioner’s evidence was that Mr Zwar did attend the Practitioner’s office on one or more occasions in the latter part of January 2001. The Practitioner became aware shortly after 2 February that he had not received what he expected to receive from Michael Zwar and he understood that Mr Harris followed that issue up. He indicated that the day to day management of the file had been passed to Mr Harris and he had just assumed that Mr Harris had complied. The Practitioner was at this time a sole practitioner and the Notices were addressed to him personally and were his personal responsibility.
41 It is appropriate to address the answers raised by the Practitioner in his reply to the first complaint. On those issues the Tribunal finds:
42 Looking at the nine numbered paragraphs in the Notice of 28 November 2000:
(a) The time specified in the notices was extended by the Costs Assessor to the date requested by the Practitioner and was reasonable;
(b) It was quite proper and appropriate for the Costs Assessor to issue notices at the same time under both Sections 207(1) and 207(2) and this appears to be clearly envisaged by the Act.
(c) The Section 207(2) Notice sought compliance not later than 14 December 2000 and the Practitioner subsequently sought an extension of time to 2 February 2001 so that he had a period of a little over two (2) months to comply with the Notice. The Practitioner’s evidence was that he was able to take a holiday break during that period and by his request for an extension of time he clearly set out what he thought at the time was a reasonable period for him to comply. He wanted Mr Zwar’s help and Mr Zwar visited his office during January and nothing arose at that time to impede compliance. In the circumstances the time for compliance does not in the view of the Tribunal constitute “reasonable excuse” for non-compliance.
(i) Compliance with the Section 207(1) Notice was, it was admitted, readily available. There is no reason to suggest that access to the file would not have been made available if sought from the Costs Assessor. If before or after production of the files and documents the Practitioner had sought an arrangement for subsequent access to the documents for Mr Zwar to assist with responses then clearly a substantial issue of “reasonable excuse” would have arisen in what the Tribunal regards as the extraordinary event that subsequent access was refused by the Costs Assessor.
(ii) The objections by the client (Mr Antoni) to items in the bill of costs were a routine matter in the assessment process and there is no evidence in this matter that would justify non-compliance with either notice simply because objections had been raised.
(iii) The Tribunal accepts that it was appropriate for the Practitioner to provide full and detailed responses to the Respondent client’s objections which, indeed, appear to have been issued about the same time as the two notices. The fact that objections had been raised did not give the Practitioner “reasonable excuse” for failing to comply with the notices.
(iv) The Practitioner’s need to have access to documents could readily have been satisfied as already detailed and does not constitute “reasonable excuse”.
(v) The issue that documents referred to in the Notice did not exist and/or were not in the possession of the Practitioner was never raised by the Practitioner with the Costs Assessor, nor have such documents been identified. Clearly, the Practitioner could have satisfied the parts of the notice that related to documents that the Practitioner claims “did not exist and/or were not in the possession of the Practitioner” by a simple statement to that effect in response to the notice with, perhaps, in the case of documents in the later category, some advice as to where such documents might be obtained by the Costs Assessor whose powers are wide. It is, however, absolutely clear that the Practitioner’s file did exist, that at all relevant times it was in the Practitioner’s office and it was not over a period of some six months produced pursuant to the Notice.
(vi) It is clear that the Costs Assessor had been sent a copy of one of the documents referred to in the Section 207(1) Notice before that Notice was issued. There is no question of non-compliance with that part of the Notice but the fact that the Costs Assessor already had one document from his list does not make it unreasonable to expect the Practitioner to comply with the Notice.
(d) The suggestion that it was unreasonable for the second Notice to be issued where the first Notice required production of documents to which the Practitioner would need access in order to comply with the Section 207(2) Notice is a variation on the issue already dealt with in relation to the Notice of Objections. The Tribunal finds that this does not constitute in the circumstances of this matter “reasonable excuse”. The logistics of complying with all notices and matters were well within the Practitioner’s competence.
(e) Section 207(2) of the Act empowers a Costs Assessor by notice to a person including the Practitioner in this instance to furnish further particulars “as to instructions given to or, work done by” persons including the Practitioner or any other legal practitioner “in respect of the matter and as to the basis on which costs were ascertained”. [The emphasis is that of the Tribunal]
43 Insofar as the Section 207(2) Notice sought particulars authorised by that section, the Tribunal finds that this was a valid Notice with which the Practitioner was required to comply. The Tribunal holds that the insertion in the Notice of item 1. does not invalidate the Notice, and that it was reasonable that the Practitioner comply within the extension of time he sought to 2 February 2001 with the response to the remaining 8 questions seeking particulars.
(1) The numbering of items is not really a particular, although a courtesy that would no doubt have been of assistance to the Practitioner, the Respondent client and the Costs Assessor. Accordingly, non-compliance is not a breach of this section, as far as this item is concerned.
(2) Compliance with relevant sections of the Act in relation to costs goes to the basis on which costs were chargeable and would be ascertained. The Tribunal finds this particular was properly sought and required compliance.
(3) In written submissions the Respondent conceded that this was a ‘particular which should have been answered’ and the Tribunal agrees and so finds.
(4a) This was not referred to in the submissions of the Practitioner but is a relevant particular for the same reason that item 3 was relevant, that is the basis on which costs were ascertained.
(5) The relevance was conceded by the Practitioner but it was submitted that ‘it is too wide’. The evidence is clear that there were a lot of items under objection by the Respondent client. The question is a straightforward one and the Tribunal finds that it was a proper particular for the Costs Assessor to seek, and indeed a particular which the Practitioner was required to answer.
(6) The reason for each Notice of Motion is a proper particular for the Costs Assessor to ask to determine not only the instructions given but the basis on which costs were ascertained.
(7) In written submissions the Practitioner asserted “the retainer was never determined”. In the circumstances it is appropriate for these particulars to be supplied as it is essential where costs are being disputed for the Assessor to know whether work included in the bill was performed when the Practitioner was still retained.
(8) Particulars of moneys paid on account of costs and disbursements are relevant to determination of a costs assessment in the view of the Tribunal so that a certificate may indicate such balance (if any) as is payable. Indeed, in his letter of 16 May 2001 to the Costs Assessor, the Practitioner conceded:
(9) The relevance of the particulars in relation to the complaint to the Law Society was not referred to in the Practitioner’s written submissions. The Practitioner’s itemised bill of costs was annexed to the first Affidavit of Stephen Anthony Mark and that bill included a number of items relating to the complaint to the Law Society. The Tribunal finds that the particular was appropriate to enable the Assessor to consider the basis on which costs were ascertained so as to assess the Practitioner’s costs at a sum that was fair and reasonable.
“It is acknowledged that $1,000.00 was received on account of Mr Antoni as particularised on our Memorandum of Fees dated 28 August 1991. It’s non-inclusion in our Bill of Costs was a matter of oversight.”
44 The clear facts are that the Practitioner was capable of complying with the Section 207(1) Notice before 14 December 2000 and before 2 February 2001. He elected not to do so. The need for access to the file was not raised in the Solicitor’s letter of 19 January 2001. The Tribunal is comfortably satisfied that the Notice in relation to the production of documents including the file given by the Costs Assessor pursuant to Section 207(1) of the Act was a Notice with which the Practitioner failed to comply and that such failure was without reasonable excuse. Pursuant to the provisions of Section 207(6) that failure constitutes professional misconduct.
(a) Notwithstanding the submission of the Practitioner, the Tribunal finds on the basis of the terms of the Section on the matters already referred to that the issue of the Notices by the Assessor was not invalid and ultra vires. Finally, in response to the matters raised in the reply the Tribunal formally finds that, bearing in mind the factors and considerations already examined, the Practitioner did not have reasonable excuse for failing to comply with both Notices from the Costs Assessor issued under Section 207 of the Act.
45 Accordingly, in summary, the Tribunal finds the failure to comply with the two Notices referred to in the first Complaint established and further finds that there was no reasonable excuse for the Practitioner’s failure to comply. Accordingly, the complaint of professional misconduct is established in accordance with Section 207(6) of the Act.
The Second Ground of Complaint:
46 The second ground alleged professional misconduct on the ground that the conduct of the Practitioner involved deliberate charging of grossly excessive amounts of costs.
47 On 9 June 2000 the Practitioner submitted an itemised Bill of Costs to his client, Mr Antoni, for a total sum of $28,365.60 (“the disputed costs”).
48 The Practitioner’s Bill was submitted for assessment and on 25 May 2001 the Costs Assessor issued a Certificate as to the determination of costs pursuant to the Act by which he substituted for the disputed costs the sum of $3,306.70 as a fair and reasonable amount of costs to be paid to the Practitioner.
49 The Practitioner sought a review of the Costs Assessor’s determination and on 24 January 2002 the Review Panel issued a Certificate setting aside the Costs Assessor’s determination and substituting the sum of $5,820.60 for the amount previously determined by the Costs Assessor.
50 In his Affidavit of 6 April 2004, the Practitioner (who, by the year 2000, was a sole practitioner) deposed to the following:
51 In his Affidavit of 6 April 2004 the Practitioner also detailed his then current billing practice which may be summarised as follows:
(a) In June 2000 he instructed his employed solicitor, Tony Clark, whom he described as experienced and competent to prepare an itemised bill in the Antoni matter.
(b) The bill was prepared by Mr Clark and the Practitioner did not see the final bill or any draft of it before it was signed by Mr Clark and served.
(c) The bill should not have contained any costing for the preparation of the bill, nor should it have contained a charge for any work which was undertaken by the Practitioner’s firm which was not work undertaken to advance the interests of the client or incidental to advancing the client’s interests, notably the correspondence relating to the Practitioner’s claim of lien.
52 The Practitioner also deposed of action he had taken on the Antoni file on 7 March 2000 and then continued in paragraph 73:
(a) all solicitors and staff were required to complete daily time sheets of all work undertaken in respect of a file whether billable or non-billable;
(b) work recorded on time sheets was then entered into cental costing records of the practice, generally by secretarial staff;
(c) it was left to the person undertaking the work to record the time using the appropriate billable or non-billable code;
(d) since 1986 the general practice of the Practitioner’s firm was for accounts to be prepared by a senior secretary with reference to the file and the computerised costing records;
(e) “It is the responsibility of the solicitor then having carriage of the matter to review the draft Bill and costing records to ensure their accuracy, completeness and that the charges set out in the Bill are properly chargeable to the client and are fair and reasonable.”
53 The evidence does not suggest that Mr Clark had the knowledge of the Practitioner’s file for the period from 29 August 1994 to enable Mr Clark to discharge the responsibilities which the Practitioner chose to set out so expressly in his Affidavit of 6 April 2004. There can be no dispute that the responsibility for the bill was the responsibility of the Practitioner as a sole Practitioner.
“However, I note that the Antoni file does not describe any action being taken until 2 May 2000 by which time Tony Clark, a solicitor then in the employ of the firm, had assumed carriage of the matter.”
54 In his evidence before the Tribunal, the Practitioner said:
55 Mr Zwar who had handled the matter of Antoni for some years had ceased to be a Partner with the Practitioner in 1998, two years before the Bill was submitted to the client. The Practitioner agreed in his evidence that he was aware when the account was sent in June 2000 that Mr Antoni was dissatisfied in some way. The evidence was that he was aware that Mr Zwar had given the client an estimate of $17,000.00 for professional charges to undertake the work but that the level of the Bill did not give him great concern.
“There is no item of work on annexure R [the Bill of Costs in question] that is not recorded on our computerised printout and a solicitor in our office and my Partner had the day to day conduct of the matter. He recorded on a day by day or how often he worked on the file his time and the task that he undertook and I have never had any reason at any time to believe that anything that he has done, I still don’t, was inaccurate”
56 The Practitioner’s evidence was that he did not sign the Bill and he did not see it before it went out, although he conceded that normally he did see Bills before they were sent.
57 The Practitioner’s approach was clarified in further cross-examination :
58 In his letters of 17 April 2001, 3 May 2001 and 16 May 2001 sent to the Commissioner the Practitioner referred to a number of issues in relation to costs but nowhere in those letters or in the Statutory Declaration of Mr Zwar forwarded by the Practitioner to the Costs Assessor on 8 May 2001 is any mention made of items which the Practitioner concedes in his Affidavit on 6 April 2004 should not have been contained in the Bill. The issue of a charge for preparation of the Practitioner/client Bill of Costs was, indeed, raised by the Costs Assessor in his letter of 14 May 2001, but this was not conceded then or responded to by the Practitioner when he replied on a paragraph by paragraph basis on 16 May 2001.
Mr Hadley: “If the Bill correctly reflected the computerised time cost (as you call it), you assumed that the computerised work was necessary?”
Practitioner: “Yes, and that it was properly recorded, yes.”
Mr Hadley: “So, did you ever look behind the computerised time cost to consider what had actually been done and what had been achieved for the client in the case of Bills you signed?”
Practitioner: “In the case of matters which I had knowledge of and carriage of, I give that consideration. In matters of which I had no knowledge and have not had the carriage of, obviously I can’t give that consideration and I rely on what the computer records (sic) say. It’s the only thing I can rely on and what’s on the file………”
Mr Hadley: “And this matter was of the second category?”
Practitioner: “Yes, it was.”
59 In relation to the actions of the Costs Assessor, the relevant Sections are:
60 The Costs Assessor referred the costs issue to the Commissioner on 25 May 2001. The Tribunal is of the view that the Costs Assessor’s reasons are not relevant to the determination of the complaint but only relevant as a procedural part of the process leading to the this second complaint.
Section 208Q(2A) which reads as follows:
and Section 208Q(3):
“208Q(2A) A costs assessor may refer any failure by a legal practitioner to comply with a notice issued under section 207, or with any other provision of this Part, to the Commissioner.”
“208Q(3) Nothing in this section limits the matters which a costs assessor may refer to the Commissioner.”
61 The Review Panel increased the total costs and disbursements payable to $5,820.60 from the figure determined by the Costs Assessor of $3,306.70 but that substituted amount needs to be considered in the context of the total Bill to the client of $28,365.60.
62 The Review Panel, unlike the Costs Assessor had the advantage of the Practitioner having supplied to the Panel his file of papers. The Practitioner’s Bill of Costs provided hourly rates for the full period from 1994 to 2000:
63 The Panel allowed hourly rates as follows:
Partner $245.00
Employed Solicitor $200.00
Paralegal $125.00
Senior Secretary $84.00
64 and for work done from 1 January 1997:
Partner $160.00
Employed Solicitor $140.00
Paralegal $125.00
Secretary $84.00
65 The Panel also agreed with the Costs Assessor that it was not reasonable for the solicitor to carry out work relating to a claim of misconduct alleged against a prior solicitor of the client, nor for the making of charges relating to the Practitioner’s costs agreement, the provision of bills of costs to the client and the recovery of costs from the client.
Partner $200.00
Employed Solicitor $160.00
Paralegal $125.00
Secretary $84.00
66 The Tribunal considers it appropriate to deal separately with two critical aspects of the Complaint. The first issue is whether the amount of costs charged were “grossly excessive” and if that is established then there is the separate issue as to whether the conduct involved the “deliberate charging” of those costs.
67 In the course of the hearing the Practitioner sought to have admitted into evidence a report of Mr Terry Hardman, a Costs Consultant. The Practitioner sought to rely on that report in relation to the “grossly excessive” aspect of the second complaint. The Tribunal declined to admit that report into evidence and subsequently written reasons were published in relation to that decision.
68 In the Supreme Court the Practitioner sought a Stay of these proceedings in the Tribunal and leave to appeal from the Tribunal’s decision rejecting the tender of Mr Hardman’s report. The Supreme Court refused the Stay Application and on 30 September 2004, after hearing submissions from the parties the Tribunal determined that it was appropriate for it to proceed to publish its Reasons for Decision on the substantive issues.
69 Section 208K of the Act is in the following terms:
70 It is perhaps appropriate to put the question of gross overcharging into perspective by quoting from the decision of Priestley JA in Veghelyi v Law Society of New South Wales 6 December 1995 unreported Decision of the Court of Appeal and His Honour’s comments on the decision of the Legal Profession Disciplinary Tribunal:
“A costs assessor’s determination of an application is binding on all parties to the application and no appeal or other review lies in respect of the determination, except as provided by this Division.”
71 In Veghelyi it was argued that it was not enough for the Tribunal simply to compare the two sums. Priestley JA said on this issue:
“In the present instance, the Tribunal had also taken into account that the Appellant’s Bill had been costed by charging $120.00 per hour for his time but that it was denied by Mrs Phelps that she had had a discussion with the Appellant for charging of his fees at that rate. That left the position as being one where the Appellant was entitled to charge what was fair and reasonable, but no more. The result reached by the Taxing Officer must be taken as the equivalent of a ruling binding both the Appellant and Mrs Phelps that a fair and reasonable charge was $2,548.69. The Appellant had no authority to charge more than that and was not entitled to ask for more than that. It seems to me that the charge of $1,595.48 more than he was entitled to, when the amount he was entitled to charge was $2,548.69, is fairly described as a gross overcharge.”
72 In re Veron; ex parte Law Society of New South Wales 1966 1NSWR 511 the joint Judgment of the Court of Appeal at 516 stated:
“Counsel’s point that the disparity did not necessarily lead to a conclusion of overcharging is right. The extra element required is the evaluative Judgment of the Tribunal or Court, based on practical legal experience, which will be taken into account in deciding whether the difference amounts to gross overcharging.”
73 Subsequently at 517 their Honours cited with approval the opinion of Sir Thomas Lund in his book “Guide to Professional Conduct and Etiquette of Solicitors” in relation to the situation where a solicitor agrees with a client a fee which is substantially larger than the fee that would be allowed on Taxation.
“The Court does not sit as taxing officers dealing with individual items of costs. Nor is such an approach realistic in the present circumstances. We are guided by experience and a broad sense of what is reasonable and fair and not by any narrow approach to questions of mere overcharging”
74 This Tribunal is a specialist Tribunal and it is appropriate that it apply the professional experience of its members to the issue of considering whether the charges made by the Practitioner constitute gross overcharge in the same way as the Full Court in Veron [supra] brought its experience to bear on an issue of overcharging in that matter. While the Tribunal accepts the question of degree, the applicability of the facts of the case as referred to by Sir Thomas Lund [supra] this Tribunal has no difficulty in acknowledging that the proper costs of the Practitioner in this matter were $5,820.60 as determined by the Review Panel and that this determination was binding upon the Practitioner and that the costs charged by him to the client of $28,265.60 constituted gross overcharge.
“It is a question of degree and dependent upon the facts of the individual case. As in all questions of degree, cases may occur in which it is difficult to decide on which side of the border line they fall. The Court in these present proceedings is in no difficulty in deciding on which side of the line the solicitor’s conduct falls. [at 518] It is obvious to us that the evidence which we have heard that their conduct of proceedings displayed on the solicitor’s part no exercise of special skill, no special attention and no special exertions such as might sometimes be found to permit, without departure from proper professional standards of conduct, of the charging of fees higher than those allowed by the ordinary Scale.”
“Deliberate charging”:
75 The evidence before the Tribunal is that this Practitioner did not prepare the bill to the client in this matter and did not see it before it was sent to the client.
76 At the time the bill was sent to the client, the Practitioner was in sole practice and the bill was prepared by an employee. The Practitioner’s evidence was that the bill was issued by the employee in accordance with a procedure which the Practitioner had established. There is no question of the bill being other than validly issued and, in the Tribunal’s view, the Practitioner as employer of the solicitor who issued the bill is responsible for that bill.
77 In his Affidavit of 6 April 2004 the Practitioner deposes to instructing his employed solicitor, Tony Clark, to prepare the itemised bill. His evidence thereafter is that he appears to have had no regard for the content of the bill and the charges made, although under cross-examination he conceded that Mr Antoni’s case was going to be a contentious matter as he had terminated the retainer and made allegations about prior solicitors. Common sense would suggest that the practitioner put himself on notice that the Bill was a matter that called out for his own personal involvement or at least his supervision. Instead, the Practitioner elected to rely on his employee whose task was to prepare a Bill based on computer generated charges checked by reference to the file. There is no suggestion that this process involves any consideration of what are fair and reasonable charges for the work done or any of the matters that are applicable to that test. The employed solicitor who prepared the bill had only had carriage of the file for it appears, little more than a month before the bill was issued. Section 208 sets out factors to be taken into account by Costs Assessors in determining fair and reasonable charges and in the view of the Tribunal those are factors which the Practitioner should have applied when reviewing this Bill, before it was sent to the client. It would indeed have been proper for the Practitioner where he had not seen the bill before it was issued to review it subsequently. No such review ever appears to have occurred but in his Affidavits the Practitioner acknowledged that there were matters which should not have been charged for.
78 Having instructed his employee to send the Bill to the client, the Tribunal finds that it was incumbent upon the Practitioner, where he had failed to check the Bill before it was sent out, to at least do so promptly thereafter so that he could ensure that the Bill was in order as was his duty. If the Practitioner had reviewed the Bill and if he had then made an extremely large reduction in the charges so that they were ultimately more in line with the Panel’s assessment, the situation would no doubt have been personally embarrassing, but without the more severe consequence of his facing a complaint of the deliberate charging of grossly excessive amounts of costs.
79 In fact, the Practitioner adopted the Bill for he lodged it for assessment and then, although he did not personally sign correspondence to the Costs Assessor, he advised on 10 May 2001:
80 Accordingly, the Tribunal finds that the Practitioner, although not the original author of the Bill, at all relevant times adopted the Bill in the same way as if he were the author and that his course of conduct was deliberate.
“Previous correspondence to you has been prepared at my direction and under my supervision.”
Nature of Conduct:
81 The Tribunal having found that the charges of the Practitioner were grossly excessive amounts and that the charging was deliberate, the Tribunal now determines whether the conduct amounts to professional misconduct as alleged.
82 The definition of professional misconduct in the Act is a non-exclusive one. Section 127 reads as follows:
83 The conduct in this matter is conduct of the nature which at common law has long been applied to solicitors, barristers and, indeed, members of the medical profession. In Allinson v General Council of Medical Education and Registration 1894 1QBD750 Lopes L J said:
“(1) For the purposes of this Part ‘professional misconduct’ includes:
(a) unsatisfactory professional conduct, where the conduct is such that it involves a substantial or consistent failure to reach reasonable standards of competence and diligence, or
(b) conduct (whether consisting of an act or omission) occurring otherwise than in connection with the practice of law which, if established, would justify a finding that a legal practitioner is not of good fame and character or is not a fit and proper person to remain on the roll of legal practitioner, or
(c) conduct that is declared to be professional misconduct by any provision of this Act, or
(d) a contravention of a provision of this Act or the regulations being a contravention that is declared by the regulations to be professional misconduct”.
84 The test in Allinson has been quoted and applied to professional misconduct frequently in New South Wales (see for example re Veron 1966 1 NSWR 511. .
“If it is shown that a medical man, in the pursuit of his profession, has done something with regard to it which would be reasonably regarded as disgraceful or dishonourable by his professional brethren of good repute and competency then it is open to the General Medical Council to say that he has been guilty of infamous conduct in a professional respect.”
85 In The NSW Bar Association v Amor-Smith 2003 NSWADT 237 this Tribunal stated at 74:
86 In Veghelyi [supra] Mahoney JA stated:
“The principles stated in Veghelyi made it possible, in Mr Menzies’ submission, for the Tribunal to make a finding of professional misconduct without deciding whether the barrister was guilty of “dishonourable” or “disgraceful” conduct, as defined in well-known authorities on the common law meaning of professional misconduct such as Allinson v General Council of Medical Education and Registration [supra]. We are inclined to agree.”
87 The Tribunal finds that the extent of the overcharging in this matter is of such a degree that it clearly satisfies the tests of professional misconduct set out in Allinson as well as constituting professional misconduct consistent with the test applied by Mahoney JA in Veghelyi [supra].
“It is, in my opinion, settled for this Court that gross overcharging may of itself constitute professional misconduct. It was in earlier times sometimes suggested that gross overcharging did not justify a summary application against a solicitor for professional misconduct unless there was involved, as it was described, an element of ‘wilful fraud’. See Chitty’s Archibald Practice 12th Edition (1866) Volume 1 at 151, 13th Ed Vol. 1 at 154. The cases cited in support of the text were Meux v Lloyd 2CBNS 409 and Re Eyre 1CBNS 151 . It is not necessary to consider to what extent those cases in fact supported the principle referred to in the text. It is, in my opinion, now established that gross overcharging as such may constitute professional misconduct and that, on an application such as this, it is not necessary to prove in addition that the lawyer was guilty of fraud or the like:- see for example Ray v Newton 1913 1KB249 at 255. These principles, in my opinion, have been established by the Veron and Evatt cases. See Law Society of New South Wales v Veron 1966 84WN Part 1 NSW 136 and Evatt v Bar Association of New South Wales 1968 117CLR 177 . ”
88 Accordingly, the Tribunal formally finds the second complaint established and that the conduct complained of amounts to professional misconduct.
Resolution of proceedings:
89 At the conclusion of submissions on the substantive matter both Counsel indicated a wish to address on the question of penalty in the event that the Tribunal was satisfied that professional misconduct had been established. The matter is now adjourned to a date to be fixed for the purpose of further submissions.
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