Legal Services Commissioner v Galitsky (No.2) [2008] NSWADT 153

CITATION: Legal Services Commissioner v Galitsky (No.2) [2008] NSWADT 153

DIVISION: Legal Services Division

APPLICANT Legal Services Commissioner PARTIES: RESPONDENT Serge Galitsky

FILE NUMBER: 062022

HEARING DATES: On the papers

SUBMISSIONS CLOSED: 24 March 2008

DATE OF DECISION: 27 May 2008

BEFORE: McGuire J - ADCJ (Deputy President)

CATCHWORDS: Costs

MATTER FOR DECISION: Costs

LEGISLATION CITED : Legal Profession Act 1987 Legal Profession Act 2004

CASES CITED: N/A

APPLICANT S Lark, solicitor REPRESENTATION: RESPONDENT S Gulliver, solicitor

ORDERS: The Respondent's costs are to be paid from the Public Purpose Fund.

REASONS FOR DECISION 1 The Tribunal refers to its decision herein in which the factual background is outlined and the Applicant's allegations are particularised. 2 Following the dismissal of the application the Respondent seeks an order for costs from the Public Purpose Fund (The Fund) pursuant to section 566(3) of the Legal Profession Act 2004 (The Act), which relevantly provides: "566 Costs (1) … (2) … (3) The Tribunal may make orders requiring the payment of and Australian legal practitioner's costs from the Public Purpose Fund, but may do so only if satisfied that the practitioner did not engage in unsatisfactory professional conduct or professional misconduct and the Tribunal considers that special circumstances warrant the making of the orders. The Tribunal is to have regard to the length and complexity of the proceedings when making a determination under this subsection." 3 That application is opposed. 4 The power to award costs is discretionary, however, that discretion must be exercised subject to the terms of the section, which mandates that the Tribunal be satisfied: 1. That the Respondent did not engage in unsatisfactory of professional misconduct; and 2. That special circumstances exist warranting the making of such an order; and 3. That regard must be had to the length and complexity of the proceedings. 5 Clearly, this was a lengthy and complex matter. Voluminous exhibits were tendered and in particular consideration had to be given to the transcript of proceedings of a six day hearing, the judgments relating to the personal injury claims and the bills of costs, which gave rise to the complaints about the Respondent's conduct. 6 The Applicant has submitted the Tribunal did not find that the Respondent did not engage in unsatisfactory conduct or professional misconduct. 7 The basis for this submission was the Tribunal's finding that "there is no persuasive evidence before the Tribunal which could ground any finding of professional misconduct on the part of Mr Galitsky." 8 The Tribunal considers that in dismissing the Application in which, inter alia, an order was sought finding that the Respondent was guilty of professional misconduct, it did find that the practitioner did not engage in professional misconduct. It clearly indicated that the evidence available to it could not sustain the allegations. 9 The real issue to be determined on the application for costs is whether the Tribunal is satisfied that special circumstances exist. 10 It must be demonstrated that there is some feature in the conduct of the proceedings, which could constitute special circumstances warranting the making of an order for costs, which are to be paid not by the Applicant but from the Public Purpose Fund. 11 It will be seen from the Tribunal's decision that upon the receipt of Mr McIntyre's letter to the Legal Services Commission (LSC) of 22.12.2004, Mr Marks, the Legal Services Commissioner, initiated a complaint on 20 January 2005 and informed the Respondent of this on 31 January 2005. 12 At its highest, what that letter did was put the LSC on notice of a possible act of professional misconduct. Mr McIntyre specifically stated in that letter that he did not assess the solicitor/client bill of costs, but expressed his view that the solicitor and counsel had failed to properly apportion the amounts claimed, as they should have done. He went on to say: "I do not have sufficient information to determine whether or not the conduct was deliberate, but I am satisfied that there is sufficient information to require me to refer the matter to you pursuant to section 208Q of the Legal Profession Act 1987 and I do so." 13 His letter was the only matter drawn to the attention of the LSC. There had been no complaint by the clients and no other evidence of untoward conduct. Accordingly, that letter alone should not have been elevated to a "complaint" justifying the institution of proceedings by the filing of the application. 14 It should have been apparent that Mr McIntyre's letter alone would not justify the application and that no finding of professional misconduct could be expected without evidence to support the allegations in the application. 15 The Tribunal considers that prior to filing an application with the Administrative Decisions Tribunal, which sought a finding of professional misconduct, it would have been appropriate for the LSC to seek evidence to ground such application. 16 In the course of the proceedings before the Tribunal the Applicant relied upon Mr McIntyre's affidavit and the affidavit of Mr Stephen Anthony Mark, the Legal Services Commissioner, sworn 25 September 2006. 17 In paragraph 11 of his affidavit, Mr Mark referred to his having perused the transcripts and the other evidence. This occurred subsequent to his initiating the complaint. He wrote to the Practitioner inviting his submissions in relation to section 155 of the Act. Having received those submissions he determined "that there was a reasonable likelihood that Mr Galitsky would be found guilty of unsatisfactory professional conduct or professional misconduct." 18 Mr Mark's opinion, which was not supported by any evidence other than Mr McIntyre's letter, his reference to having considered the transcripts and the Respondent's responses to his letters, did not provide evidence in support of the allegations, which could possibly lead to a finding of professional misconduct. 19 The opinions of the Respondent's experts had been provided to the applicant and the issues raised by the Respondent were clearly articulated, yet they were not addressed. There was no suggestion that the applicant sought any opinions in response to those expressed by the respondents experts. 20 Indeed the only evidence before the Tribunal as to the reasonableness or propriety of the fees charged, was tendered by the Respondent. 21 Although the Applicant had been made fully aware of the Respondent's position with regard to the fees charged, and the basis of such charges it failed to obtain any evidence, expert or otherwise, to address the matters raised, and accordingly there was no expert evidence that the Respondent's charges were not fair and reasonable. 22 The Applicant relied heavily upon the proposition that the Tribunal could rely on its own experience with regard to the charging of fair and reasonable fees. 23 This would, in effect, have involved the Tribunal in adopting the role of a costs assessor without its possessing any expertise or experience in determining the quantum of fair and reasonable costs. It would have been well known to the LSC that the Tribunal would comprise an Acting Judge, a legal practitioner and a lay person, that is a non legal practitioner. Clearly the Tribunal could not have been expected to possess the necessary expertise to determine this question, bearing in mind that any adverse finding could have resulted in a determination that the respondent was guilty of professional misconduct and lead to grossly serious consequences for him. 24 This was not a simple matter of a party being overcharged by a practitioner. Obviously there are matters in which the Tribunal could have findings of gross and deliberate overcharging without expert evidence. To take an exaggerated example if the brief fee charged was $25,000.00 for each day of hearing, it would not have needed expert guidance. The major issue raised in the particulars to the application was that the Respondent failed to apportion costs common to the three matters. This necessitated a careful examination of matters of principal and appropriate practice. 25 The Applicant would have been well aware that circumstances giving rise to the concerns of Mr McIntyre as to apportionment, were virtually unique. No member of the Tribunal had any experience of the issues raised nor indeed any anecdotal "knowledge". 26 It must have been obvious that the question of apportionment, the basis of such apportionment and any rules of practice, were matters completely beyond the experience of the Tribunal members, yet no evidence or assistance was provided. Nor was there any evidence provided to support an essential element of the allegation, that is, that the overcharging was deliberate. 27 The respondents fees were in accordance with his costs agreement, which had been provided to the LSC. That there was no complaint made by the clients is not determinative, however, it would have been a relevant consideration if any such complaint had been accompanied by a claim that fees should have been X or that fees charged should have been apportioned on a particular basis. 28 Not only did the Applicant fail to provide expert evidence, it did not so much as tender material, which would demonstrate some precedent, some course of, accepted practice in a similar situation. 29 The dismissal of the application and the Respondent incurring the expense of resisting it are not special circumstances warranting the making of an order for costs. However, this was a matter of importance and public interest. The unique proposition that the Respondent fees should have been apportioned and the suggestion that the failure to do so reflected gross and deliberate overcharging, was deserving of a proper investigation. 30 There is all too frequent criticism of the profession in relation to legal fees and the costs of litigation. Some criticism is ill informed and simply unjustified, however, there can be no doubt that some practitioners grossly overcharge and abuse their privileged positions. It is entirely fitting that allegations of any such overcharges be investigated by the LSC and in the appropriate case, proceedings be instituted and vigorously prosecuted before a Tribunal. The standing of the profession must be maintained and the public protected against exploitation. The community is entitled to see that the impropriety involved in gross and deliberate overcharging, is dealt with by salutary sanctions. 31 It was incumbent upon the Applicant to investigate any suggested overcharging and present evidence in support of such a serious allegation as was levelled against the Respondent. The manner in which the Applicant proceeded in the application, as outlined herein, constitutes special circumstances justifying the making of an order for costs. Orders The Respondent's costs are to be paid from the Public Purpose Fund.