CITATION: New South Wales Bar Association v 'LG' [2005] NSWADT 180 DIVISION: Legal Services Division APPLICANT PARTIES: Council of the New South Wales Bar Association RESPONDENT 'LG' FILE NUMBER: 032029 HEARING DATES: 1/07/2005 SUBMISSIONS CLOSED: 08/01/2005 DATE OF DECISION: 08/08/2005 BEFORE: Officer D QC - Judicial Member; Norton S SC - Judicial Member; Dyster B - Non Judicial Member APPLICATION: Application to withdraw proceedings MATTER FOR DECISION: Principal matter Administrative Decisions Tribunal Act 1997 Credit (Home Finance Contracts) Act 1984 LEGISLATION CITED : Credit Act 1984 Fair Trading Tribunal Act 1998 Legal Profession Act 1987 Law Society of New South Wales v Carver [2004] NSW ADT 275 CASES CITED: Morlend Finance Corporation (Vic) Pty Limited v Levine (1089) ASC 55/710 New South Wales Bar Association v 'de Robilliard' [2004] NSW ADT 45 New South Wales Bar Association v 'LI' [2005] NSW ADT 15 APPLICANT REPRESENTATION: P Brereton, barrister RESPONDENT In person ORDERS: Proceedings dismissed Reasons for Decision 1 On 18 December 2003 the Council of the New South Wales Bar Association ("the Bar Association") filed an Information in which it claimed that the respondent, while practising as a barrister, was guilty of unsatisfactory professional conduct. 2 The conduct complained of was twofold: (a) that the respondent had failed to consider and advise generally and in respect of any defence to a claim to a part of the proceeds of sale of a certain property (the first complaint); and (b) that the respondent had failed to exercise proper care and consideration in his advice regarding the commencement of proceedings in the Fair Trading Tribunal (the second complaint). 3 Prior to the filing of the said Information, and on 17 July 2003, the Council of the Bar Association had sought the respondent's agreement to the paying of compensation to his former client to the value of legal fees paid by the client to the respondent (up to the sum of $10,000) and that he consent to a reprimand pursuant to s.155(3)(a) of the Legal Profession Act 1987. The respondent disputed the amount of compensation sought by the client and disputed the extent of the conduct complained of. The respondent did not pay the compensation as sought or consent to the reprimand. Accordingly, the proceedings were commenced. Background 4 The respondent's client's mother was once the sole proprietor of an unencumbered house on land at Moss Vale. In about 1993 she was asked by a relative by marriage and his business partner to lend them $100,000 for a limited period to be raised on security of a mortgage over the Moss Vale property. The client's mother, because of her age, could not borrow the sum from a bank and accordingly, the client arranged to borrow that sum to purchase the Moss Vale property from his mother, who then on-lent the proceeds as requested. 5 In August 1993 the client became registered as proprietor of the Moss Vale property and gave a first mortgage to the ANZ Bank. The finance broker who assisted in obtaining the finance was a Mr Michael Moloney. 6 In April 1996 a cousin of the client acquired a timber motor cruiser for $15,000 by means of a finance lease from a private finance company, Lake Achilles Pty Limited, of which Mr Moloney was the principal. The client guaranteed his cousin's finance lease obligations and gave a second mortgage over the Moss Vale property to Lake Achilles by way of security. The client appears also to have been liable as co-principal debtor under the finance lease and the cousin seems also to have cross-guaranteed the client's obligations under the mortgage. 7 The client said that at no time was he aware that he was executing a mortgage to Lake Achilles. The client's cousin fell behind with the weekly payments under the finance lease. In April 1998 Lake Achilles repossessed the boat. 8 The borrowers from the client's mother were supposed to pay the mortgage instalments to the ANZ but defaulted. The Bank was threatening a mortgagee sale. The client consulted a solicitor. 9 Lake Achilles had sued the client's cousin and the client in common law proceedings which commenced on 18 June 1999. On 13 September 1999, in the absence of the defendants default judgment was entered in favour of Lake Achilles against the client and the cousin for possession and debt. 10 The client retained a solicitor to advise and represent him in relation to the Lake Achilles matter and the respondent was briefed to advise generally, to confer, to draft and settle originating process and to appear. 11 On 24 October 1999 the respondent gave advice to the solicitor about the commencement of Supreme Court proceedings to restrain the sale of the Moss Vale property. No advice was given to set aside the default judgment of 13 September 1999. On the advice of the solicitor and the respondent, an equity suit was commenced against Lake Achilles, seeking to set aside the mortgage of the Moss Vale property and restrain the exercise by Lake Achilles of its asserted right to possession and power of sale. 12 On 4 November Lake Achilles had exchanged contracts for the sale of the Moss Vale property as a mortgagee in possession and some arrangements were reached permitting the sale to be completed, the first mortgagee to be paid and the balance of the proceeds of sale to be held in trust to abide the determination of the client's attempt to prevent Lake Achilles from taking the same in part payment of the judgment debt. 13 The respondent appeared on the first return of the summons on 8 November 1999. An adjournment was sought to permit the client an opportunity to show why Lake Achilles should be prevented from taking the balance of the proceeds of sale of the Moss Vale property, the adjourned date being 15 November 1999. 14 The respondent agrees that he was briefed to appear on that date but did not appear when the matter was called. The Bar Association, after investigation, makes no complaint about that. The solicitor's application for further time was refused. Simos J refused an interlocutory injunction to restrain disposition by Lake Achilles of the balance of the proceeds of sale. He was prepared to assume that there was a serious question to be tried but was not satisfied that the balance of convenience favoured an interlocutory injunction. 15 The respondent, instead of pursuing the equity suit, advised the client to pursue his claims against Lake Achilles before the Fair Trading Tribunal alleging, inter alia, non-compliance with the Credit Act 1984. These proceedings were commenced on 28 February 2000. The client represented himself when the proceedings first came before the Tribunal. Written submissions by Mr Ireland QC were handed up on behalf of Lake Achilles to the effect that the Tribunal did not have jurisdiction to hear the matter; firstly, because of the meaning of the Credit (Home Finance Contracts) Act 1984 and secondly, because the client's liability had been established by judgment in the Supreme Court from which there had been no appeal. The Tribunal adjourned the proceedings and directed that the client provide written submissions on the question of whether or not the Tribunal had jurisdiction. 16 On 11 August 2000 the Tribunal dismissed the proceedings on the ground provided in s.22(7) of the Fair Trading Tribunal Act 1998, namely that at the time of the client's application to the Tribunal an issue arising under the application was the subject of a dispute in the Supreme Court and accordingly, the Tribunal did not have jurisdiction to hear and determine the issue. Claim for Compensation 17 The client says that he paid the solicitor substantial amounts of money, part of which he understands was for the respondent's fees. The client said that his failure in the Supreme Court suit and his proceedings before the Fair Trading Tribunal resulted in wastage of legal fees he had paid, loss of the motor cruiser, loss of $35,000 plus out of the proceeds of sale of the Moss Vale property, failure of his business and his being sued by his creditors. The client attributes these failures to poor representation and advice by the solicitor and the respondent and in his complaint he stated that he hoped to receive financial compensation of up to $10,000. Bar Council's Consideration 2003 18 Prior to its resolution of 17 July 2003 (see paragraphs 1-3 above) the Council of the Bar Association considered a report of 14 July 2003. The report concluded that the first complaint had been made out, primarily on the basis that no explanation had been offered by the respondent as to why no application was made to set aside the judgment in favour of Lake Achilles, nor how the equity suit could have succeeded if the earlier judgment could not be set aside and why certain matters later considered by the respondent as decisive were not taken into consideration before and against commencement of the equity suit. The report concluded that no competent counsel could have ignored the effect of the default judgment or permitted it to remain unchallenged in advising or acting in relation to the claim sought to be made in the equity proceedings. The default judgment, while it stood, was such an obvious source of an impediment that unless it were set aside the equity proceedings would have had, at the very least, real difficulties in succeeding because of arguments asserting res judicata or estoppel or abuse of process. So concluded the report. 19 In relation to the second complaint the said report concluded that the proceedings in relation to the Fair Trading Tribunal were hopeless because in Morlend Finance Corporation (Vic) Pty Limited v Levine (1089) ASC 55/710, O'Bryan J held that, because Supreme Court proceedings had been instituted claiming similar relief, later proceedings begun in the Victorian Tribunal were incompetent. It was noted that Lake Achilles had successfully relied on O'Bryan J's decision in having the Tribunal proceedings dismissed for want of jurisdiction by reason of the equity proceedings. Bar Council's Reconsideration 20 Following the commencement of these proceedings, a reconsideration by the Council of the Bar Association, and those advising it, of the second complaint against the respondent concluded that that complaint was misconceived and the decision to institute proceedings in relation to it was based on an erroneous understanding of the underlying facts, which error had been contained in the report to the Bar Council dated 14 July 2003. The error arose because there are two decisions of Morlend Finance Corporation (Vic) Pty Limited v Levine, one by O'Bryan J, which was addressed by Mr Ireland QC in submissions to the Fair Trading Tribunal, and a copy of the decision attached to those submissions. A later decision by Tadgell J was erroneously cited by the respondent's instructing solicitor in submissions to the Tribunal. The reference to the Morlend decision was supplied to the solicitor by the respondent. The respondent was referring to the decision of Tadgell J, not O'Bryan J, and he took the view that that decision supported the proposition that in certain circumstances the proceedings in the Supreme Court would not stand in the way of proceedings in the Fair Trading Tribunal. That was a view that was reasonably open to him. The decision of Tadgell J could have been helpful to the client's case and if the respondent had been briefed to appear before the Tribunal on 11 August 2002 it is reasonable to suppose that the correct Morlend decision would have been brought to the attention of the Tribunal, in which case most of Mr Ireland QC's written submission could have become irrelevant and the decision of the Tribunal may have been different. 21 In those circumstances, on 8 September 2004 the Council of the Bar Association resolved to instruct its solicitors to file an application in the present proceedings to withdraw the Information against the respondent on the basis that the respondent be reprimanded in relation to the first ground of the Information and that he would pay compensation as sought by the client, to the value of the legal fees paid by the client to the respondent for the Supreme Court equity proceedings. 22 The respondent consented to that course of action on the basis that the fees paid to him in respect of the equity proceedings amounted to $2,000. The client and subsequently 23 On 23 September 2003 the solicitors for the Bar Association wrote to the client, advising that the Bar Association was not able to prosecute his claim for compensation in the Tribunal and that he should gather such evidence as he could to support the claim with a view to putting it before the Tribunal if he wished to pursue it. Further advice and assistance was contained in the letter. 24 On 31 October those solicitors again wrote to the client requesting documentary evidence in support of his claim for compensation. 25 On 11 November the said solicitors had a telephone conversation with the client in which the client advised that he had made no payments to the respondent and that all payments had been made to the solicitor. He said that he had receipts for some, although some had been paid in cash, and while the documents were strewn all over, he would see what he could put together. No documents have been forthcoming. 26 On 12 February 2004 the solicitors wrote to the client, informing him of the date listed for a directions hearing and again requesting further information in relation to his claim for compensation. 27 On 20 September 2004 the solicitors wrote to the client advising that the Bar Association had instructed them to withdraw the Information on the basis that the respondent had consented to a reprimand on the first complaint, and to pay compensation to the value of the legal fees paid by the client to the respondent in relation to the equity proceedings. 28 By letter of 25 November 2004, from the solicitors for the Bar Association, the client received a summary of the Bar Association's then position in relation to the two complaints before the Tribunal and the proposed $2,000 compensation. Reasons were provided as to why the Bar Association adopted that position. 29 By a letter dated 29 November 2004 the client responded to the said correspondence, asserting that the amount of compensation he was likely to receive did not stand to reason. Various arguments were put forward in support of that proposition. He further asserted: "I lost my entire home because we presented with no defence". The Bar Association was accused, in substance, of rapping the respondent over the knuckles and further not providing adequate compensation for all the client's loss. 30 On 2 December 2004 the Council of the Bar Association further considered the matter and resolved that the second complaint be dismissed pursuant to s.155A of the Legal Profession Act 1987 on the basis that the Council was satisfied that it was in the public interest for the complaint to be dismissed. As stated above, this involved a consideration of the two decisions in Morlend Finance Corporation and a conclusion that there was some support in the decision of Tadgell J for the argument that the proceedings should not have been dismissed under s.22(7) of the Fair Trading Tribunal Act 1998. The Council of the Bar Association considered that it followed that there was no sound basis to conclude that the respondent had failed to exercise proper care and consideration in his advice regarding the commencement of those proceedings. 31 On 2 December 2004 the Council further resolved that the Bar Association withdraw the Information in relation to the first complaint and that it apply to the Tribunal to dismiss the proceedings, subject to the respondent paying $2,000 compensation to the client and the respondent being reprimanded by the Bar Association in respect of that complaint. 32 The said sum of compensation was the amount which the respondent agreed he had received in respect of the Supreme Court proceedings. The Bar Association's investigations had been unable to establish with certainty what amounts had been paid, partly because sums of money had been paid by the client to the solicitor, who in turn had paid the respondent, and it was not possible to obtain information from the solicitor, who had been struck off. Further, the client had been unable or unwilling to provide documentation in support of the claim for compensation. Further, the respondent's records were completely inadequate to enable him to say with any certainty or reliability exactly what fees he charged or what payments he had received in respect of the client's matters. This appears, in part, to have been caused by accidental damage to his computer and consequential loss of accounting records. 33 The resolution of the Council of the Bar Association in relation to compensation was based upon the proposition that, in all the circumstances, it was highly unlikely that it could ever be established that the respondent was paid more than $2,000 (and inferentially, that no other loss could be causally linked to the complained of conduct). 34 By letter dated 22 December 2004 the client was advised of the Bar Council's resolution of 2 December 2004. He was advised that the Bar Association had formed the view that the only realistic compensation payable by the respondent was $2,000 for the reasons set out in the attached final report to the Council of the Bar Association, and that his complaint about the loss of his home could not realistically be compensated for as part of the complaint process. The client was further advised, if he wished, to seek independent legal advice and that if he wished to be heard before the Tribunal on whether the Tribunal should exercise its discretion to permit the Information to be withdrawn and dismiss the proceedings, he should write to the Tribunal seeking that opportunity. He was advised of the provisions of s.158 of the Legal Profession Act 1987 which gave the client a right to apply in writing to the Legal Services Commission for a review of the decision by the Council to dismiss the complaint concerning the Fair Trading Tribunal proceedings. 35 The respondent consented to the procedure set out in the said resolution of the Council of the Bar Association. 36 The client was forwarded a copy of the latest affidavits relied upon by the Bar Association and he has been advised of the date and time of directions hearings. He has not attended. The client was advised in writing of the time, date and place of the final hearing. He did not attend that hearing. 37 At that hearing the Tribunal was advised that on 1 July 2005 the respondent, consistently with the resolution of 2 December 2004, had been reprimanded in respect of the complaint by the client, that the respondent had failed properly to consider and advise generally and in respect of any defence or cross-claim to Lake Achilles' claim to part of the proceeds of sale of the Moss Vale property. 38 The Tribunal was further advised that the respondent had, on that day, handed to the Bar Association a cheque for $2,000, payable to the client, being the amount of compensation referred to in the said resolution of 2 December 2004. 39 The Tribunal was further advised that inquiries revealed that no application had been made to the Legal Services Commission for review, as referred to in paragraph 34 above. 40 The Bar Council sought that the second complaint be dismissed under s.155A of the Legal Profession Act 1987. It sought that under s.73(5)(g) of the Administrative Decisions Tribunal Act 1997 the Bar Association withdraw the Information in respect of the first complaint and that the proceedings be dismissed. Submissions on the appropriateness of those orders were received from counsel for the Bar Association and from the respondent. Conclusion 41 Section 155A, subsections (1) and (3) of the Legal Profession Act 1987 provide: " 155A Dismissal of complaints if in public interest (1) The Commissioner or the Council may dismiss a complaint, whether before, during or after the investigation of the complaint, if satisfied that it is in the public interest to do so. ... (3) If proceedings with respect to a dismissed complaint have been instituted in the Tribunal by the Commissioner or Council, the Tribunal may, on the application of the Commissioner or Council, dismiss the proceedings." 42 The Council of the Bar Association, on 2 December 2004, dismissed the second complaint pursuant to the said section on the basis that the Council, upon reconsideration and further investigation, was satisfied that there was no sound basis to conclude that the respondent was guilty of the conduct complained of in the second complaint, and that it was in the public interest for that complaint to be dismissed. Details of the further investigation and consideration are set out above. 43 The Tribunal considers that, in all the circumstances, the Council's conclusion concerning the respondent's conduct as secondly complained of was appropriate and that in respect of that conduct the proceedings against the respondent ought to be dismissed. 44 Section 73 of the Administrative Decisions Tribunal Act 1997 sets out various provisions concerning the procedure of the Tribunal and empowers the Tribunal in relation to various matters. Section 73(5)(g) provides: " 73 Procedure of the Tribunal generally ... (5) The Tribunal: ... (g) may dismiss at any stage any proceedings before it if the applicant withdraws the application to which the proceedings relate, and ..." 45 In New South Wales Bar Association v "LI" (2005) NSWADT 15, the Tribunal considered a submission that s.73(5)(g) gave the Council of the Bar Association a "right" to withdraw an Information. The Tribunal considered various provisions of the Legal Profession Act, including the objects of Pt 10, and considered s.73(5)(g) and concluded that the Legal Profession Act 1987 did not give the Council a right to withdraw an Information after proceedings had been instituted in the Tribunal, and the Council did not otherwise have a right to withdraw such an Information. Accordingly, the Tribunal was of the view that the Bar Association was not entitled to withdraw the Information. The Tribunal noted that full details of the agreement there reached between the Bar Association and the then respondent and the reasons why that agreement had been reached had not been made known to the Tribunal and it was, accordingly, unable to express a view as to whether the agreement was appropriate. In those circumstances, had the Bar Association sought the Tribunal's exercise of discretion under s.73(5)(g) the Tribunal would not have exercised its discretion to dismiss the proceedings. 46 In Law Society of New South Wales v Carver (2004) NSWADT 275 the Tribunal considered s.73(5)(g) and the discretion which was vested in the Tribunal to dismiss the proceedings under that section. The Tribunal pointed out that the public interest must loom large in the exercise of that discretion and that by seeking the dismissal of the Information under s.73(5)(g) the Law Society was, by implication, seeking to withdraw the application to which the proceedings related. 47 In the present case, the Bar Association does not assert that it is entitled to withdraw the Information as of right but seeks to persuade the Tribunal to exercise its discretion to permit that course of conduct and to dismiss the Information under s.73(5)(g) of the Administrative Decisions Tribunal Act 1997. 48 In support of that application, it is submitted that had there not been the misunderstanding, referred to above, in respect of the second complaint, then that complaint would not have been laid and the subject proceedings would not have been commenced at all because the respondent would have agreed to a reprimand under s.155(3)(a) of the Legal Profession Act 1987 and would have agreed to the payment of compensation to the client in the sum of $2,000 as now proposed. This was how the Bar Association, in July 2003, intended to deal with the matter and the reason the respondent did not concur in that course of action was because of the inclusion of the second complaint, which the Bar Association now agrees was misconceived. Accordingly, it is submitted that the course of conduct now proposed for dealing with the remaining complaint is that which would have been followed and the respondent ought not now be subjected to a regime of discipline above that which would, but for the misunderstanding, have been followed initially. 49 It is further submitted that had that procedure been followed, then in all the circumstances it would have been an appropriate way to deal with the one remaining complaint. It is submitted that it was only after the proceedings had been implemented that the flaw in the consideration of the second complaint was discovered and that once that complaint fell away, it put a totally different light on the respondent's conduct and that such a reprimand under s.155, and the payment of compensation, was an appropriate response to that complaint. 50 It was further submitted that the client has been kept fully informed of the progress of the proceedings and the course of conduct proposed by the Bar Association, yet has not taken the opportunity to attend the hearing to put any submissions to the Tribunal in opposition to the orders proposed by the Bar Association. 51 While the Tribunal considers that this submission has some weight, it is nevertheless fully mindful of the correspondence written by the client, which considers that the course of action proposed by the Bar Association is inappropriate, both as to compensation and as to the reprimand. 52 As to the proposed compensation, the client has been given an opportunity, on numerous occasions, to produce documentation as to the fees paid by him to the solicitor. Such documentation, assuming it to exist, has not been produced. It seems clear that no information can be obtained from the solicitor as to the fees, such solicitor having been struck off. Further, for the reasons set out above, it appears that the respondent's records are now inadequate to enable him to say with certainty exactly what fees he received. While this is no doubt an unsatisfactory situation, nevertheless, in the Tribunal's opinion, in reality it seems clear that the client would have no realistic prospect of establishing that the respondent received any more than the admitted $2,000 in respect of the equity proceedings. Further, even leaving aside the $10,000 limit on compensation which may be ordered under the Act, there would seem to be no causal relationship between the conduct the subject of the complaint and the wider losses complained of by the client. If, contrary to this view, such a causal relationship did exist, then the client would still be entitled to commence civil proceedings for the recovery of any such loss. In the circumstances, and on the information before it, the Tribunal is of the opinion that the sum of $2,000 is an appropriate sum for compensation and that the client would, had he sought to do so, have no realistic prospect of establishing before this Tribunal, any right to a greater sum. 53 The client's complaint about the inadequacy of the reprimand, in the Tribunal's opinion, does not adequately focus upon the conduct the subject of the complaint but rather ranges over many of the misfortunes which the client has suffered in relation to the above transactions. Focusing upon the conduct the subject of the first complaint, the Tribunal is of the opinion that the client's criticism of a reprimand for that conduct is not justified and that the reprimand which has been administered is an appropriate response by the Council of the Bar Association to that conduct. 54 It was also submitted that it was relevant to the Tribunal's exercise of discretion that in the Council of the Bar Association's letter to the client of 22 December 2004 the client's attention was expressly drawn to s.158 of the Legal Profession Act 1987 which gave the client a right to apply to the Legal Services Commissioner for a review of the decision by the Council of the Bar Association to dismiss the complaint concerning the Fair Trading Tribunal proceedings and that such an application for review had to be made with two months after that decision was notified to him. The Tribunal has been advised by counsel for the Bar Association that enquiries have revealed that the client has not made any such application to the Legal Services Commissioner. 55 It was submitted that in the circumstances all the client's legitimate interests in the complaint had been taken into account and that the proposed course of action was appropriate, and that there was no matter of legitimate public interest that was left unsatisfied by the Tribunal exercising its discretion under s.73(5)(g). The Tribunal agrees with this submission. 56 In all the circumstances, and for the above reasons, the Tribunal is of the opinion that this is an appropriate case for it to exercise its discretion under s.73(5)(g) and to dismiss the proceedings and the Tribunal so orders. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.