Castle v Standards Committee no.3
[2013] NZHC 2289
•15 August 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-003695 [2013] NZHC 2289
UNDER The Judicature Amendment Act AND
The Lawyers and Conveyancers Act 2006
Part 7AND
The Lawyers and Conveyancers Act (Lawyers Complaints Service and Standards Committees) Regulations 2008
BETWEEN
EION MALCOLM JAMES CASTLES Applicant
AND
STANDARDS COMMITTEE NO.3
First DefendantAND
LEGAL COMPLAINTS REVIEW OFFICER
Second Defendant
Hearing: 15 August 2013 Appearances:
B Keene QC and R Butler for Applicant
RJ Katz QC for First Defendant
W Fotherby for Second DefendantJudgment:
15 August 2013
Reasons:
4 September 2013
JUDGMENT OF WOOLFORD J
This judgment was delivered by me on Wednesday, 4 September 2013 at 11.00 am pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Counsel: B Keene QC, Auckland
RJ Katz QC, Bankside Chambers, Auckland
Meredith Connell (W Fotherby), Auckland
Crown Law Office (D Harris), Wellington
CASTLES v STANDARDS COMMITTEE NO.3 & ANOR [2013] NZHC 2289 [15 August 2013]
Introduction
[1] The applicant, Eion Malcolm James Castles, is a lawyer facing charges before the Lawyers and Conveyancers Disciplinary Tribunal (Tribunal) relating to fees charged by his firm to Alan Graham Wilson and Raewyn Alaine Wilson, totalling in excess of $1 million over a three year period. The Tribunal hearing started on 18 July 2013. On 19 July 2013, it was adjourned, part heard, to 18 August
2013.
[2] On 6 August 2013, Mr Castles filed judicial review proceedings in the High Court at Auckland against the Auckland Standards Committee No.3 (Standards Committee), which determined that the complaint by Mr and Mrs Wilson should be considered by the Tribunal and against the Legal Complaints Review Officer (LCRO) who confirmed the decision of the Standards Committee to place the complaint before the Tribunal. The statement of claim seeks a declaration that the determinations of the Standards Committee dated 10 November 2011 and 28 June
2012, were ultra vires, unlawful, unreasonable and in breach of the rules of natural justice. The statement of claim also seeks a declaration that the confirmation by the LCRO, dated 18 October 2012, of the determinations of the Standards Committee, was ultra vires, unlawful and unreasonable and in breach of the rules of natural justice.
[3] By notice of application, also dated 6 August 2013, Mr Castles sought an order in the nature of interim relief that the Tribunal hearing (due to recommence on
18 August 2013) be stayed pending the hearing of his application for judicial review in this Court. The application for interim relief came before me as Duty Judge at
10.00 am on 14 August 2013. I heard the application as a matter of urgency at 9.00 am on 15 August 2013.
[4] Mr Castles filed two affidavits sworn by himself in support of the application for interim relief. In addition, he filed an affidavit from Maureen Heather Farrell, a former accountant employed by his firm and from his former counsel, William Antony Holden. In response, the Standards Committee filed a notice of opposition to the application for interim relief and affidavits from Mr and Mrs Wilson, Warren
George Croft Templeton and Grant Donald Richard Shand, the cost assessors appointed by the New Zealand Law Society (Law Society) and Mark Andrew Treleaven, the National Prosecutions Manager for the Law Society. The LCRO abided the decision of the Court, as did the Tribunal. I heard extensive oral submissions from both Mr Keene QC for Mr Castles and Mr Katz QC for the Standards Committee. At the conclusion of the hearing at 5.00 pm, I dismissed the application for interim relief indicating that my reasons would follow in due course. These are my reasons.
Chronology
[5] A brief chronology is as follows:
23 November 2009 Letter of complaint by Mr and Mrs Wilson to Law Society.
15 July 2010
Mr Templeton and Mr Shand authorised by Standards Committee to undertake an assessment of the fees, the subject of complaint by Mr and Mrs Wilson.
15 December 2010
Meeting between Mr Templeton and Mr Shand, Mr Castles and his firm’s accountant and Mr and Mrs Wilson and Mr Don Tate.
3 May 2011
Report by Mr Templeton and Mr Shand.
(First report)16 September 2011
Counsel for Mr Castles (Mr Holden) files submissions with
Standards Committee raising jurisdictional issues.10 November 2011
Determination by Standards Committee that the complaint should be considered by the Tribunal.
(First determination)
21 December 2011
Mr Castles appeals to LCRO against first determination of Standards Committee on grounds which include jurisdictional issues.
17 April 2012
Review hearing before LCRO.
18 April 2012
Review hearing adjourned to enable Standards Committee to seek further report from Mr Templeton and Mr Shand.
22 May 2012
Supplementary report by Mr Templeton and Mr Shand.
(Second report)
30 May 2012 LCRO directs Standards Committee to reconsider reports by Mr Templeton and Mr Shand and advise whether it confirmed the first determination or sought to vary the determination in any way.
8 June 2012
Standards Committee meeting.
28 June 2012
Further determination by Standards Committee that the complaint should be considered by the Tribunal. (Second determination)
28 September 2012
Review hearing before LCRO resumed.
18 October 2012
LCRO confirms decision of Standards Committee.
19 December 2012
Charges by Standards Committee laid with Tribunal.
15 January 2013
Mr Castles files affirmative defences to charges.
7 February 2013
Tribunal teleconference – 5 day hearing scheduled for 15
April 2013. Timetable orders made.25 March 2013
Tribunal teleconference. Fixture date confirmed. Variation to timetable orders.
8 April 2013
Counsel for Mr Castles (Mr Holden) advises Tribunal that he is no longer acting for Mr Castles. Mr Castles applies for adjournment of Tribunal hearing.
9 April 2013
Tribunal teleconference. Hearing on 15 April 2013 vacated. Mr Castles advised of likely new date in first week of June to which he agrees. Further timetable orders made.
1 May 2013
Extension granted by Tribunal to allow filing of bundle of documents by Mr Castles by 6 June 2013. Mr Castles directed to notify Tribunal of identity of new counsel.
28 May 2013
Application made for adjournment of hearing scheduled for
4 June 2013 on grounds that new counsel (Mr Mullins) only instructed on 27 May 2013 and of ill health of Mr Castles.
6 June 2013
Tribunal adjourns hearing on 6 June 2013. Hearing date confirmed for full week beginning 15 July 2013.
25 June 2013
Counsel for Mr Castles (Mr Mullins) retires.
circa 1 July 2013
Mr Keene QC accepts instructions to act for Mr Castles.
July 2013 Tribunal teleconference. Agreed that hearing on 15 July
2013 would be deferred until 18 and 19 July 2013 with limited evidence to be heard.
18 July 2013
Tribunal hearing commences. Application to strike out affirmative defences granted. Counsel for Mr Castles (Mr Keene QC) advises Tribunal that he has instructions to seek judicial review and also to seek adjournment of the Tribunal hearing. Tribunal declines adjournment request. Limited evidence heard.
19 July 2013
Tribunal hearing adjourned until 18 August 2013.
6 August 2013
High Court proceedings filed.
14 August 2013
First call of application for interim relief.
15 August 2013
Hearing of application for interim relief. Interim relief refused.
Grounds of Review
[6] As noted above, Mr Castles challenges two determinations of the Standards
Committee and one decision of the LCRO. These decisions were made 21 months,
14 months and 10 months ago. The complaints made by Mr Castles fall into two broad categories.
[7] Firstly, Mr Castles submits that the Standards Committee failed to have regard to the disciplinary standard under the now repealed Law Practitioners Act
1982 (LPA), which he says covers all the bills rendered by him except for four bills rendered on or after 1 August 2008, when the Lawyers and Conveyancers Act 2006 (LCA) came into force. The earlier disciplinary standard required gross or dishonest overcharging. It also required that each bill rendered prior to 1 August 2008, be examined against that standard as, unless there were indications of such overcharging, there was no jurisdiction for the Standards Committee to deal with that bill. It is said to be wrong to look at the totality of the fees charged if each individual bill could be justified.
[8] Secondly, Mr Castles submits that the Standards Committee failed to make a finding that special circumstances existed in terms of reg 29 of the Lawyers and
Conveyancers Act (Lawyers: Complaints Service and Standards Committees) Regulations 2008 (LCA Regulations) to enable it to deal with a complaint concerning a bill of costs rendered more than two years prior to the complaint. He submits the Standards Committee should have found special circumstances before referring the complaint to Mr Templeton and Mr Shand, and making its first determination. The Standards Committee only made a retrospective finding that special circumstances existed in its second determination. Reg 29 required a finding to be made before dealing in any way with the complaint.
Interim Relief
[9] The application for interim relief is made under s 8(1) of the Judicature
Amendment Act 1972, which provides:
(1) Subject to subsection (2) of this section, at any time before the final determination of an application for review, and on the application of any party, the Court may, if in its opinion it is necessary to do so for the purpose of preserving the position of the applicant, make an interim order for all or any of the following purposes:
(a) Prohibiting any respondent to the application for review from taking any further action that is or would be consequential on the exercise of the statutory power:
(b) Prohibiting or staying any proceedings, civil or criminal, in connection with any matter to which the application for review relates:
(c) Declaring any licence that has been revoked or suspended in the exercise of the statutory power, or that will expire by effluxion of time before the final determination of the application for review, to continue and, where necessary, to be deemed to have continued in force.
[10] I start with the statutory threshold of the necessity to preserve the position of the applicant, Mr Castles. Then I will consider a range of discretionary factors which includes the strength or weakness of the claim, the statutory framework, the public interest and the private and public repercussions of granting relief.
[11] Looking first at the statutory threshold of the necessity to preserve his position, Mr Castles is currently facing charges before the Tribunal. The Tribunal hearing has commenced. Two days of hearing have been completed. At least five
more days are scheduled. Mr Keene QC submits that Mr Castles’ position has in some way been changed because on the first day of hearing, the Tribunal struck out Mr Castles’ affirmative defences. The two affirmative defences were initially framed as follows:
1.[Mr Castles]...says that the...Tribunal does not have jurisdiction to hear the charges as the conduct of [Mr Castles] could not have been the subject of proceedings of a disciplinary nature under the Law Practitioners Act 1982.
2.In the alternative to the first affirmative defence the...Tribunal does not have jurisdiction to hear charges that relate to bills of costs rendered by [Mr Castles’ firm] more than two years prior to the date of the complaint.
[12] The Standards Committee had filed a reply to the affirmative defences. It submitted that the defences were not available to Mr Castles as they were precluded by issue estoppel, res judicata or were an abuse of process. In essence, it submitted that Mr Castles was seeking to relitigate before the Tribunal the very same issues he unsuccessfully raised before the LCRO.
[13] It seems to have been accepted in argument before the Tribunal on the first day of hearing that the affirmative defences required the Tribunal to either review or sit on appeal against the decision of the LCRO. Because it was clearly not sitting on review or on appeal, the Tribunal struck out the affirmative defences, noting that Mr Castles had ample opportunity to seek judicial review over a very lengthy period.
[14] Although the affirmative defences were both characterised as jurisdictional issues, I do see some difference between them. The first to my mind is not really a jurisdictional issue but relates to the disciplinary standard which should be applied to bills of costs rendered at a time when the LPA was in force. I apprehend Mr Castles’ submission is that the Standards Committee did not follow the appropriate procedure to analyse monthly bills of account, nor did it apply the appropriate standard when it determined that the complaint by Mr and Mrs Wilson in its entirety should be placed before the Tribunal. Now that the Tribunal is seized of the matter, it is my view that the Tribunal is required to give consideration to the appropriate procedure and standard which should be applied to bills of costs rendered prior to 1 August 2008, regardless of the approach adopted by the Standards Committee.
[15] The second affirmative defence is to my mind properly a jurisdictional issue. The Standards Committee has determined that there were special circumstances to enable it to deal with complaints relating to bills of costs which were rendered more than two years prior to the complaint. This decision, although criticised by the LCRO, was upheld by him. I am of the view that the Tribunal is not able to revisit the finding of special circumstances and it was necessary therefore for Mr Castles to seek redress by way of an application for judicial review to the High Court. He has now done so but his application is extraordinarily late.
[16] Recognising that there may have been a measure of confusion in the way that the so called jurisdictional issues were addressed before the Tribunal, Mr Katz gave two undertakings to the Court as follows:
(a) If no interim orders are made and the hearing continues next week, the Standards Committee will not raise any objection to Mr Castles contending on the facts and in accordance with the case law that the disciplinary standard under s 351(1) of the LCA had not been met.
(b)The Standards Committee will not raise any objection to Mr Castles arguing on any appeal from the Tribunal or on any judicial review of the Tribunal that reg 29 was engaged before the Standards Committee and was breached.
[17] Section 351(1) of the LCA is a transitional provision, which provides that if a lawyer is alleged to have been guilty of conduct in respect of which proceedings of a disciplinary nature could have been commenced under the LPA, a complaint about that conduct may be made, after the commencement of s 351, to the Complaints Service.
[18] The first issue, namely the procedure and the disciplinary standard to be applied under the LPA, has always been a live issue and the first undertaking given by Mr Katz QC ensures that Mr Castles will be able to argue it before the Tribunal. His position is therefore preserved.
[19] The second issue, whether or not there were special circumstances, was decided in the Standards Committee’s second determination on 28 June 2012. That is the current position and has been for 14 months. An interim order restraining the Tribunal from recommencing the hearing will not have any effect on Mr Castles’ position. He has always had the right to challenge the finding of special circumstances by way of judicial review. He has now done so.
[20] Mr Castles will therefore be able to have his day in Court when the application for judicial review is heard and determined. He will also have the right to appeal any adverse finding of the Tribunal. Any appeal can be heard with the application for judicial review. His legal position will not be irrevocably damaged if the Tribunal hearing proceeds next week.
[21] I am therefore of the view that the statutory threshold of the necessity to
preserve Mr Castles’ position has not been met in the present case.
[22] I am confirmed in my decision to refuse interim relief by a consideration of discretionary factors. In the time available, I did not have the opportunity to consider in depth the strength or weakness of Mr Castles’ claim. Although the first defendant’s notice of opposition asserts that there is no substantive merit to Mr Castles’ claim, I am prepared to accept that there is a serious question to be tried.
[23] As to the first issue, Mr Castles submits that the cost assessors appointed by the Law Society failed to follow the advice given to them by the Law Society in its letter dated 15 July 2010. The letter stated in part:
Please bear in mind that all complaints regarding bills issued before 1
August 2008 are subject to the provisions of section 351(1) of the Lawyers and Conveyancers Act 2006. This section provides that complaints about conduct before that date may be made only where there was concern about conduct of sufficient gravity to warrant the making of a charge under one of the categories in section 106(3) of the Law Practitioners Act 1982, namely misconduct, conduct unbecoming or negligence or incompetence of such a degree or so frequent as to reflect on the practitioner’s fitness to practice. In the context of costs complaints this means gross or dishonest overcharging. Each bill will need to be examined with this in mind and unless there are indications of such overcharging present, there will be no jurisdiction to deal with it.
Mr Castles submits that the cost assessors instead asked themselves the question of what they thought would be a reasonable fee which they then answered. It was however the wrong question. On the other hand, the Standards Committee submits that the approach of the cost assessors was entirely appropriate as it was necessary to stand back and make an overall assessment of the fees. If the fees were not fair and reasonable then the question to be answered was whether they were grossly excessive. That was the correct test under the LPA.
[24] As to the second issue, much turns on the meaning of the words “must not deal with the complaint” in reg 29. Mr Castles submits that reg 29 prohibits any substantive enquiry and certainly prohibits any reference to costs assessors unless and until a finding of special circumstances has been made. On the other hand, the Standards Committee submits that the word “deal” is more narrow and only precludes formal action under s 152 of the LCA unless and until such a finding has been made. The Standards Committee submits that a substantive enquiry is necessary before they can ascertain whether or not there are special circumstances.
[25] As to the statutory framework, I accept the submissions of the Standards Committee that the LCA is a consumer orientated statute designed to protect members of the public as consumers of legal services. Lawyers are required to co- operate with enquiries, investigations and disciplinary processes. It is expected that a lawyer will engage fully in the process and put evidence before the Tribunal. The statutory framework cannot be equated with criminal proceedings. Of fundamental importance is that both the Standards Committee and the Tribunal must act expeditiously. It is a summary process.
[26] I am of the view that in this case the public interest clearly favours refusal of the application for interim relief. This is because of delays to date in having the complaint heard and determined and the likely further substantial delays if the Tribunal was not able to complete the hearing before Mr Castles’ application for judicial review was itself heard and determined. After the LCRO’s decision dated 18
October 2012, the Standards Committee waited for two months before filing the charges with the Tribunal. This delay gave Mr Castles the opportunity to challenge the LCRO’s decision. He chose not to make an application for judicial review at that
time. Even after the charges were filed with the Tribunal, Mr Castles waited another seven months before announcing his intention to challenge the Standards Committee’s determination and the LCRO’s decision by way of application for judicial review. If Mr Castles had filed an application immediately after the LCRO’s decision on 18 October 2012, it is likely that it could have been heard and determined prior to the commencement of the Tribunal hearing on 18 July 2013.
[27] I note also that only four of the eight charges faced by Mr Castles relate to the level of fees charged by his firm. The remaining charges relate to, among other things, allegations of failing to properly advise Mr and Mrs Wilson, pursuing strategies that were neither effective nor in the best interests of Mr and Mrs Wilson, carrying out unnecessary or non cost effective work, pressuring Mr and Mrs Wilson to pay outstanding invoices, breaching the confidence and privilege of Mr and Mrs Wilson and inappropriately pressuring Mr and Mrs Wilson’s brother-in-law to obtain further funding for the legal fees charged by Mr Castles’ firm. These four charges can be seen to be independent of the question of the level of the fees charged. They are largely unaffected by the application for judicial review. By themselves, counsel agreed that they would require at least two hearing days. I am of the view however that it would not be practical to sever these charges and hear them separately. The fact that half of the charges are largely unaffected by the application is another public interest factor in favour of proceeding with the hearing before the Tribunal.
[28] As to the private and public repercussions of granting relief, Mr Castles submits that if the Tribunal hearing continues there will be a considerable waste of cost and effort of the parties and the Tribunal itself, if the application for judicial review is ultimately successful. On the other hand, the Standards Committee submits that the time that has already been expended and the costs involved and incurred to date mean that the vast bulk of the work has already been committed to and expense incurred. I accept, at least for the Standards Committee, that the preparatory work for the hearing is largely complete. Two days of hearing have already been held. While Mr Castles’ preparatory work will not be as advanced as that of the Standards Committee, that appears largely to have been caused by his instruction of Mr Keene QC as his counsel only at the beginning of July. Mr Keene QC’s preparation will also, to some extent, duplicate that of earlier counsel. Such
preparation will not, however, in my view, be wasted. Half the charges are largely unaffected by the application for judicial review. Preparation for the Tribunal hearing will also assist in the preparation of the evidence required for the application for judicial review itself.
[29] There is also considerable difficulty in rescheduling Tribunal hearings at short notice. The Tribunal has members drawn from throughout the country, all of whom have busy schedules, which will be disrupted if the hearing is once again adjourned.
[30] Finally, stepping back and looking at the overall justice of the case, I am of the view that the disciplinary process should be allowed to proceed to its imminent conclusion. The initial complaint was made in November 2009. There have been numerous steps along the way and now three and a half years later, it should be finalised. While Mr Castles will face the extra cost of the imminent hearing, that cost has to be weighed up against the far larger costs if the current process was halted and then had to be restarted at a much later date. Mr Castles retains his legal rights to challenge the various steps by way of an application for judicial review. He will also have a right of appeal should the Tribunal make an adverse finding against him. It is for all the above reasons that I dismissed Mr Castles’ application for interim relief. The application should now go to a case management conference for timetable orders to be made to progress it to a hearing.
……………………………….
Woolford J
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