New South Wales Bar Association v Meakes [2006] NSWADT 67

Set aside by Appeal : Set aside by Appeal on 6/12/2006: NSW Bar Association v Meakes [2006] NSWCA 340

CITATION: New South Wales Bar Association v Meakes [2006] NSWADT 67

DIVISION: Legal Services Division

APPLICANT PARTIES: The Council of the New South Wales Bar Association RESPONDENT Timothy Meakes

FILE NUMBER: 052017

HEARING DATES: 14/09/2005

SUBMISSIONS CLOSED: 09/14/2005

DATE OF DECISION: 03/08/2006

BEFORE: Karpin A - ADCJ (Deputy President); Norton S SC - Judicial Member; Taksa L - Non Judicial Member

CATCHWORDS: Unsatisfactory Professional Conduct - failure to provide costs disclosure - Unsatisfactory Professional Conduct - overcharge

MATTER FOR DECISION: Principal matter

LEGISLATION CITED : Legal Profession Act 1987

APPLICANT M T McCulloch, barrister REPRESENTATION: RESPONDENT L M Morris, barrister

ORDERS: 1. The Respondent is guilty of unsatisfactory professional conduct; 2. The Respondent is publicly reprimanded; 3. The Respondent to pay the costs of the Informant of an incidental to this application, as agreed or assessed.

REASONS FOR DECISION 1 By information filed in the Tribunal on 3 June 2005, the Council of the New South Wales Bar Association ('the Informant") informed the Tribunal of a complaint made under Part 10 of the Legal Profession Act 1987, against Timonthy Meakes ("the Respondent"), which the Informant claims constitutes professional misconduct, or, alternatively, unsatisfactory professional conduct. The grounds of complaint: 2 A. In acting as barrister for Mr. J. Chitty, in the matter of Chitty v. Opat Coating Pty. Limited, the Respondent overcharged with respect to the provision of legal services itemised in his memoranda of fees dated 4 December 2000. Particulars: The particulars outline 6 occasions between 6 November 2000 and 4 December 2000 upon which the Respondent rendered memoranda of fees alleged to be in an amount excessive for the work performed. 3 B. The Respondent did not provide a fee agreement or a fees disclosure as required by Part 11 of the Legal Profession Act, 1987 (NSW). The Informant sought the following Orders: That the Respondent be found guilty of Professional Misconduct In the Alternative, that the Respondent be found guilty of Unsatisfactory Professional Conduct. Orders pursuant to section 171 of the Legal Profession Act as deemed appropriate by the Tribunal, including the imposition of a fine. That the decision of the Tribunal be published. That the Respondent pay the Informant's costs. Reply 4 By his Reply filed 30 June 2005, the Respondent: Admitted that the total fees charged in his Memorandum of Fees dated 4 December 2002 were excessive. Admitted that he did not provide a "specific fee agreement" respecting his retainer. Denied that he was guilty of professional misconduct. Did not challenge a finding that he was guilty of unsatisfactory professional conduct. Consented to an order to pay the Informant's costs on the application. Background 5 The Respondent has been a barrister for 21 years. The Informant concedes that he has not otherwise come under adverse notice. 6 In May 1997 J. Chitty suffered injuries as a result of lifting a 20 litre paint drum in the course of his employment with Opat Holdings Pty. Ltd. ("Opat"). 7 On 7 June 1999 Chitty's solicitor delivered a brief to the Respondent. Thereafter the Respondent acted as counsel for Chitty in a personal injury action conducted in the District Court. 8 On the day prior to an arbitration hearing, the action was settled on terms that Chitty would receive $160,000 inclusive of costs and clear of Workers Compensation payments. 9 On 4 December 2000 the Respondent submitted 2 Memoranda of Fees totalling $25,891.00 (inclusive of a 25% uplift and GST). He received full payment on or about 22 December 2000. 10 On 6 March 2001, Chitty's Local Member wrote to the Legal Services Commissioner on behalf of Chitty, complaining about overcharging by both the Respondent and his instructing solicitor. The Legal Services Commissioner forwarded that complaint to the Bar Council on 19 March 2001. 11 On 25 April 2001 the Deputy Director Professional Conduct Committee, wrote to the Respondent requesting that he have his costs assessed by a court appointed assessor. 12 The Respondent engaged Mr. John Mann, solicitor, who on 21 January 2002 made a cost assessment application in the Supreme Court. In due course a resolution was negotiated between Mr. Mann for the Respondent and the legal representatives of Chitty, resulting in the Respondent refunding the sum of $ 12,500.00 and paying an additional sum of $2,500.00 representing the costs of Chitty's solicitors arising from the assessment process. Chitty withdrew his complaint against the Respondent on 21 November 2002. The Respondent also paid Mr. Mann's costs of $6,500. The Supreme Court cost assessment did not proceed. 13 On 23 February 2003 the Bar Council resolved to reject the withdrawal of the complaint and make a complaint pursuant to section 134(2) of the Legal Profession Act 1987 . It is unnecessary to set out the body of that resolution as on 10 April 2003 the Bar Council rescinded that resolution; noted the withdrawal of the original complaint; noted its powers pursuant to section 140(5) of the Act, and resolved to make a complaint against the Respondent alleging that he was guilty of unsatisfactory professional conduct or professional misconduct in that by his two memoranda of fees dated 4 December 2000, the Respondent overcharged and/or over serviced for his legal services; and that he failed to provide a costs disclosure as required by Part 11 of the Legal Profession Act 1987. The balance of the resolution does not arise for consideration in these proceedings. 14 On 19 May 2005, the Council, having considered the complaint made against the Respondent, resolved to refer the present complaints to the Tribunal Overcharging: 15 The Respondent concedes that he overcharged Chitty. He acknowledged that when he made a substantial refund in November 2002 of $12,500 and paid $2,500 to Chitty's solicitors for their costs on the assessment 16 The Respondent concedes that having failed to provide a costs disclosure, he was not entitled to charge the 25% uplift on his fees pursuant to section 187 Legal Profession Act 1987. 17 The Respondent accepts the findings in the Expert Report dated 21 February 2005, prepared by Michael Robinson, barrister. Mr. Robinson has been in practice at the bar since 1963, practising primarily in the common law/personal injury jurisdictions. He has 10 years experience as a Supreme Court Costs Assessor. Mr. Robinson dealt with each item contained in the 2 memoranda of fees. In his opinion the rates chargeable by an ordinarily competent barrister practising in the area of personal injuries relating to industrial matters of the nature of Chitty's circumstances, should not exceed $375.00 per hour, and a daily rate of no more than $3,000.00. 18 Based upon those figures, Mr. Robinson concluded that the amount that should have been charged was $12,937.50. The Respondent does not dispute that finding. The Respondent gave an undertaking through his counsel that he will refund to Chitty any amount in excess of that sum which he has previously retained pursuant to the negotiated agreement. 19 The Informant relied upon the affidavit evidence of the solicitor for the Council of the New South Wales Bar Association, Rosemary McDougall sworn 5 July 2005; the affidavit of Phillip Selth sworn 3 June 2005; and the expert report of Michael Robinson, together with a quantity of documentary evidence. 20 The Informant conceded that the Respondent is a practitioner of many years standing and that there are no prior or subsequent allegations of misconduct. 21 Having regard to the admissions made by the Respondent and the concessions made by the Informant, the issues for the Tribunal are the characterization of the admitted overcharging, namely was it gross overcharging; if the Tribunal finds that the Respondent engaged in gross overcharging, does that justify a finding of professional misconduct. If the Tribunal were to find that the Respondent is guilty of professional misconduct, is the appropriate penalty an order that his name be removed from the roll of legal practitioners, or some other order pursuant to s.171C Legal Profession Act 1987. 22 The Informant does not seek an order that the Respondent's name be removed from the roll of legal practitioners, but, pursuant to s. 171C, such orders as the Tribunal thinks fit. 23 The Informant relied upon a number of decisions on the issue of overcharging. In a decision handed down by the Disciplinary Tribunal on 24 April 1989 the Tribunal held that the correct approach to allegations of grossly excessive charges, is for the Tribunal to consider what would be regarded as fair charges by experienced and competent solicitors. 24 Having regard to the report of Mr. Robinson and the admissions made by the Respondent, the Tribunal is satisfied that the Respondent is guilty of overcharging. 25 Mr. Robinson determined that the total fees that would have been reasonable in the circumstances (inclusive of GST) would be $14,231.25, rather than the amount charged of $25,891 (inclusive of GST). That results in an overcharge of a little less than 82% 26 The next issue is whether that overcharging should properly be characterized as "gross overcharging". 27 Mr. Robinson's report contains an example of the excessive fee claims by the respondent, being a claim for work carried out on 27 and 28 September 1999, incurring a charged of $4,425, for perusing briefed material and drafting a memorandum of advice together with pleadings. Mr. Robinson noted that the brief did not contain any new material; the advice was one page in length, and the pleadings were straightforward. In the opinion of Mr. Robinson a reasonable charge would have been $1,125, representing an overcharge of $3,300. 28 The first memorandum of fees details attendances between 7 June 1999 and 10 February 2000. The total fees charged on that memorandum are $11, 756.00 inclusive of 25% "uplift". Thus the fees with uplift subtracted total $9,405.00 with an uplift of $2,351.00. The second Memorandum covers attendances between 6 November and December 2000 resulting in total fees charged of $14,135.00 including an uplift factor of 25% assessed at $2,570.00. The first memorandum does not include GST, the second one includes 10% GST in the sum of $1,285.00. 29 The totals of both memoranda which were dated 4 December 2000 are, accordingly: Total fees charged $19,675.00; total uplift charged $4921.00 GST $1,285.00 - $25,891. 30 Those figures are to be considered in the context of Mr. Robinson's report which arrives at a total fee of $12,935.50 excluding any allowance for uplift, and excluding GST. When GST is taken into account, an amount of $14,231.25 is arrived at. Those calculations, in broad terms, allow for an hourly rate of $375.00 and $3,000.00 per day, as opposed to the fees of $425.00 per hour and $3,475.00 per days as charged by the Respondent. 31 The percentage of overcharge was the subject of submissions as to the manner in which the Tribunal should calculate that percentage. . The Informant argued that the overcharge should be calculated taking into account the quantum of reasonable fees as assessed by Mr. Robinson, and disallowing any increase by way of an uplift entitlement, resulting in an overcharge of approximately 82%. 32 It was argued on behalf of the Respondent that in calculating the percentage of overcharge, the Tribunal should allow the uplift, which, it was argued, was disallowed only because the Respondent failed to provide the necessary costs information, and not because the Respondent could not justify the uplift having regard to the work he carried out. 33 It was further argued on behalf of the Respondent, that the Tribunal should take account of Mr. Robinson's comment in his report, that a variation between costs assessors might permit an additional 10% over and above the charges he has allowed in his assessment of what was reasonable. 34 It was submitted that if those two factors are taken into account, the amount of the overcharge is reduced to approximately 30%. 35 The Tribunal is not persuaded that a proper calculation of the percentage overcharge should exclude the 25% uplift. The Respondent was clearly not entitled to add that percentage to his fees. 36 The Tribunal acknowledges the reality of the small variations in assessments by costs assessors, and is prepared to make an allowance in favour of the Respondent of 10% on the base fees adopted in Mr. Robinson's fee assessment. Adopting that calculation, in round figures, the Respondent overcharged by approximately 66%. 37 The Informant relies upon the following authorities to support its contention that the Tribunal should find that this level of overcharging constitutes "gross overcharging". 38 Law Society of New South Wales v. Veghelyi [1991] 7 LPDR 13 an overcharge of approximately 60% over and above the amount assessed by the taxing officer, was found by the Tribunal to constitute "gross overcharging" in the circumstances. That decision was upheld by the NSW Court of Appeal (BC950549 at 19). 39 Law Society of New South Wales v. Chase 21 December 1989. The Tribunal determined that overcharging in the region of 40% constituted "gross Overcharging". And in Law Society of New South Wales re Andrew Brian Fegent 24 April 1989, The Disciplinary Tribunal determined that 50% excess constituted gross overcharging. 40 The Respondent was not entitled to charge the 25% uplift, and any assessment of whether or not his charges constituted gross overcharging should have no regard to whether or not, he would have been entitled to the 25% uplift had he complied with the provisions of the Legal Profession Act 1987 and Barristers Rules in that regard. The issue is whether a legal practitioner of good repute and competency would have charged the fees rendered by the Respondent. The answer to that must be in the negative, even allowing that assessment on the basis of a 66% overcharge. 41 The Tribunal is satisfied that the amount of the overcharge in this case and in these circumstances, represents gross overcharging. 42 The next issue falling for determination is whether a gross overcharge in this percentage amount, must necessarily be found to constitute professional misconduct. 43 Section 127 of the Legal Profession Act 1987 provides: Professional misconduct and unsatisfactory professional conduct (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 (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. (2) For the purposes of this Part: unsatisfactory professional conduct includes conduct (whether consisting of an act or omission) occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent legal practitioner. 44 The definition does not provide an exclusive categorization of those matters that may be found to be professional misconduct or unsatisfactory professional conduct. The Informant relies upon a number of decided cases as a guide to determine whether the Respondent should be found guilty of Professional misconduct or only of unsatisfactory professional conduct. 45 Principally the Informant relies upon the decision of the New South Wales Court of Appeal in Veghelyi v. The Law Society of New South Wales unreported 6 October 1995 (BC95-549), where Mahoney J. said: "It is, in my opinion, now established, that gross overcharging as such may constitute professional misconduct and that, … it is not necessary to prove in addition that the lawyer was guilty of fraud or the like". 46 His Honour cited with approval the decisions in Re Veron; Ex Parte law Society of New South Wales (1966) 84 WN (Pt1) (NSW) 136, and Evatt v. New South Wales Bar Association (1968) 117 CLR 177, noting that where charges are found to be grossly disproportionate, professional misconduct may be involved. In particular, his Honour noted that gross overcharging was likely to constitute professional misconduct if the client the subject of the overcharging is found to be vulnerable. 47 The Tribunal accepts that the majority of non corporate clients of legal practitioners are likely to be in a vulnerable position vis a vis their legal representatives. There is nothing in the material before the Tribunal which would lead to a finding that the client in this case was more vulnerable than the general class of inexperienced lay clients. He, nonetheless, can be classed as vulnerable on the basis that he was a lay client and one who had not had the assistance of information regarding the fees that might be rendered in his case. 48 The Tribunal is satisfied that the client was a vulnerable client to the limited extent referred to and that the quantum of overcharging should be characterized as gross overcharging. The Tribunal has not had the assistance of evidence from the Respondent that may have given some insight into the mode he adopted in arriving at the fees rendered. 49 Gross overcharging may constitute professional misconduct. However, a finding of gross overcharging, even to the degree found here, must be viewed in the light of the circumstances of the particular complaint. That requires an assessment of the extent to which, in all the circumstances, the overcharging falls short of fair and reasonable conduct on the part of the practitioner. A finding of gross overcharging per se, does not necessarily lead to a finding of professional misconduct. 50 The Tribunal has had regard to the material tendered on behalf of the Respondent, and, in particular, to the conduct of the Respondent after the initial complaint was brought to his attention. 51 On 27 August the Respondent's solicitors wrote to the Bar Association referring to correspondence that had passed between them in the preceding 2 years. The letter pointed out that, in the opinion of the Respondent, the case he conducted for Chitty was one of "considerable complexity and difficulty", and one in which, in his opinion, it would have been justifiable to retain senior counsel, and that in carrying out all the work without benefit of senior counsel, there had been a considerable saving of cost to Chitty. The Respondent denied that there had been any "over servicing". Whilst acknowledging the failure to provide a Costs Disclosure Statement, the Respondent sought to excuse the omission on the basis of his long standing professional relationship with his instructing solicitor in the proceedings. 52 On 30 August 2004, solicitors for the Respondent wrote to the Bar Association, advising that the Respondent conceded that in some respects his fees were excessive, and referring to the restitution he made to Chitty in 2002. The Respondent acknowledged that his behaviour may constitute unsatisfactory professional conduct, and tendered his apologies for his conduct. The Respondent acknowledged his failure to provide the client with a Costs Disclosure Statement. The Informant refers to this letter as a qualified admission of guilt. 53 At hearing the Respondent, through his counsel, conceded that his charges represented an overcharge. On the advice of his counsel, he did not give evidence before the Tribunal. Through his counsel he gave an undertaking that within 28 days of the hearing date, he would pay to Chitty the difference between Mr. Robinson's assessed proper fee and the amount the Respondent retained as his fee following the negotiated settlement in 2002. He also undertook to pay interest on that sum at the appropriate Court rate. That offer was originally made by letter dated 12 September 2005. 54 Whilst the failure of the Respondent to give evidence attracted adverse criticism from counsel for the Informant, the Tribunal is not persuaded that in the circumstances of this matter, and having regard to the admissions made by the Respondent, and the steps taken by him to reimburse Chitty, his decision not to give evidence, based on his counsel's advice, warrants adverse criticism from the Tribunal. 55 This complaint first came to light in March 2001. The Respondent early took steps to deal with the complaint in a responsible manner. He made restitution on the basis of an agreed settlement pursuant to which Chitty withdrew his complaint. The Respondent met the costs of that settlement process. 56 The Respondent tendered references from senior members of the profession, attesting to his competence, hard work and conscientiousness as counsel. Each of the referees is aware of the complaints brought against the Respondent. They regard his behaviour in this matter as out of character for the Respondent. There is also reference to the distress caused to the Respondent by this complaint, and his concern about the damage done to his professional reputation. The referees have known the Respondent on a professional basis for all or most of his career at the bar, now extending over 21 years. 57 Having regard to the totality of the circumstances of this matter, and to the Respondent's lengthy period in the profession without prior or subsequent blemish, the Tribunal is persuaded that despite the high percentage overcharge, the Respondent should be found guilty of unsatisfactory professional conduct rather than professional misconduct. 58 It is not in dispute that the Respondent had not complied with s.176 or 177 Legal Profession Act 1987 which provide: 176 Obligation to disclose basis of costs to instructing practitioner (1) A barrister or solicitor who is retained on behalf of a client by another barrister or solicitor must disclose to that other barrister or solicitor in accordance with this Division the basis of the costs of legal services to be provided to the client by the barrister or solicitor. (2) The following matters are to be disclosed to the other barrister or solicitor: (a) the amount of the costs, if known, (b) if the amount of the costs is not known, the basis of calculating the costs, (c) the billing arrangements, (d) any other matter required to be disclosed by the regulations. 177 Obligation to disclose estimated costs (1) A barrister or solicitor must disclose to a client in accordance with this Division an estimate of the likely amount of the costs of legal services to be provided to the client by the barrister or solicitor, if the amount of the costs is not disclosed under section 175. (2) A barrister or solicitor who is retained on behalf of a client by another barrister or solicitor must disclose to that other barrister or solicitor in accordance with this Division an estimate of the likely amount of the costs of legal services to be provided to the client by the barrister or solicitor, if the amount of the costs is not disclosed under section 176. (3) A barrister or solicitor who has disclosed to a person an estimate of the likely amount of the costs of legal services is to disclose to that person any significant increase in that estimate. 59 Section 180 provides that a disclosure need not be made where it would not be reasonable to be required to do so. Whilst sections 182 and 183 provide that failure to comply with sections 176 or 177 does not itself constitute a breach of the Legal Profession Act 1987, such conduct may, nonetheless, be adjudged unsatisfactory professional conduct, or professional misconduct. 60 Rule 114(1) of the Barristers Rules provides that it would not be reasonable for a barrister to be required to make disclosure under sections 176 or 177 Legal Profession Act 1987 where the barrister has provided the instructing solicitor with a written statement indicating the basis upon which fees will be rendered, and that statement is current; and the barrister charges in accordance with that statement. 61 The Respondent concedes that he had not complied with the provisions of the Act, and, accordingly was not entitled to charge an uplift of 25%, pursuant to section 186. 62 Having regard to the evidence and the Respondent's admissions, the Tribunal finds that the Respondent failed to provide a disclosure of his fees as was required. The Tribunal finds that failure to constitute unsatisfactory professional conduct. 63 The Informant pressed the Tribunal to find the Respondent guilty of Professional Misconduct in relation to the overcharge complaint. Despite the quantum of the overcharge, the Tribunal has determined that, viewed in the light of the Respondent's excellent professional character; the steps he took to remedy the situation; the admissions he has made as to the impropriety of his conduct; and the fact that this is a single instance of overcharging; the fees were rendered after completion of the matter, and paid from settlement monies which included costs and disbursements, the appropriate characterization of his conduct leads to a finding that he be found guilty of unsatisfactory professional conduct. 64 The Informant seeks orders from the Tribunal pursuant to the provisions of section 171C(1). The Tribunal has considered the imposition of a fine as sought by the Informant. The Respondent has been substantially punished through the costs he has met firstly in arriving at a negotiated settlement with Chitty; secondly in relation to the costs involved in Mr. Robinson's report. He will now be required to meet both the costs of the Informant, and his own professional costs. The Tribunal is satisfied that the Respondent is genuinely contrite and regrets his conduct. The Tribunal sees no efficacy in imposing a fine upon the Respondent. 65 The Tribunal has considered whether the reprimand sought by the Informant pursuant to section 171C(1)(e), should be a public reprimand as sought by the Informant, or a private one as sought by the Respondent. The Tribunal is not satisfied that special circumstances have been demonstrated such as would entitle the Respondent to a private reprimand. The Tribunal proposes to publicly reprimand the Respondent pursuant to section 171C(1)(e). 66 The orders of the Tribunal are: (1) That the Respondent be found guilty of unsatisfactory professional conduct in respect of the two grounds of complaint in the information. (2) That the Respondent be publicly reprimanded. (3) That the Respondent pay the costs of the Informant of and incidental to this application as agreed or assessed. 67 The Decision of the Tribunal will be published in accordance with the practice of the Tribunal.