The Legal Services Tribunal of New South Wales CITATION : Leon Nikolaidis [1998] NSWLST 5 PARTIES : Leon Nikolaidis FILE NUMBER(S) : of 1997 CORAM: Ms S. Hale - Ms S Carr-Gregg - Mr R Gietzelt CATCHWORDS: :- Professional Misconduct - Failure to comply with notices issued pursuant to s. 207 of the Legal Profession Act 1987 LEGISLATION CITED: Legal Profession Act 1987 CASES CITED: DATES OF HEARING: Tuesday 26 May, 1998 DATE OF JUDGMENT: 07/30/1998 LEGAL REPRESENTATIVES: Mr. M. Lynch Mr. D. Bennett QC JUDGMENT: [Note: An appeal to the Court of Appeal, in the matter of Nikolaidis was filed on 27 August 1998 and has to date not been heard or determined.] The Complaint This complaint is brought by the Legal Services Commissioner (the Commissioner) against the Solicitor pursuant to S.155 of the Legal Profession Act, 1987 (the Act) The allegation is that the Solicitor is guilty of professional misconduct within the meaning of S 207(6) of the Act. S.207 of the Act provides: 1. A costs assessor may, by notice in writing, require the applicant or any barrister, solicitor or client concerned to produce any relevant documents of or held by the person in respect of the matter 2. The costs assessor may require, by any such notice, further particulars to be furnished by the applicant, barrister, solicitor or client as to instructions given to, or work done by the barrister or solicitor or any other legal practitioner in respect of the matter 3. The costs assessor may require any such particulars to be verified by statutory declaration 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: (a) the costs assessor may decline to deal with the application; or (b) the costs assessor may deal with the failure in accordance with the rules of the Supreme Court 6. A barrister or solicitor who fails, without reasonable excuse, to comply with a notice under this section is guilty of professional misconduct. The Solicitor's reply The Solicitor denied that he had failed without reasonable excuse to comply with notices issued pursuant to s. 207 of the Act. The events and circumstances to which the complaint relates On 9 August, 1996 a client of the Solicitor applied to the Supreme Court for an assessment of costs charged by the Solicitor. On 13 September, 1996 the costs assessment was referred to Mr. George Buckworth, a cost assessor appointed by the Court (the Assessor). On 20 September, 1996, the Assessor issued a Notice to the Solicitor requiring information to be supplied by 4 October, 1996 (the first notice) It is common ground that at this time the Solicitor was overseas and remained overseas until 8 October, and in his absence a reply was sent from his firm to the Court advising a bill of costs would be prepared within two weeks. On 27 September 1996 a further notice was issued by the Assessor requiring all further correspondence in relation to the costs assessment to be sent directly to the Assessor and requesting compliance with the original notice by 11 October, 1996 (the second notice). On 22 October, 1996 and 31 October, 1996 further notices were issued by the Assessor requiring compliance with the original notice (the third and fourth notices) In the latter notice the Assessor flags a reference to the Commissioner pursuant to S. 208Q(3) which sub-section gives an assessor a broad power to refer a file to the Commissioner. After investigation by the Commissioner he must institute proceedings in the Tribunal pursuant to S. 155 of the Act if satisfied that there is a reasonable likelihood that the solicitor will be found guilty of the alleged conduct. On 1 November, 1996 the Solicitor sent a letter to the Assessor stating that an itemised bill of costs would be delivered to the Assessor by 8 November, 1996. It should be noted at this point that the original Notice issued by the Assessor sought information other than an itemised bill of costs although the Notice did anticipate that an itemised bill mostly likely would be required. However at that time, the Assessor was seeking from the Solicitor copies of time sheets, advice and documents showing compliance with the disclosure regulations, correspondence with the client relating to costs and the Solicitor's comments on matters raised by his client as regards his bill. On 13 November, 1996 the Solicitor arranged for the itemised bill of costs to be lodged at the Supreme Court, however, the evidence of the relevant Court Officer is that it was never received by the Court nor did the Assessor receive a copy of it. On 15 November, 1996 the Assessor issued a further Notice to the Solicitor inviting him to give reasons why the matter should not be referred to the Commissioner due to the lack of compliance with the Notices by the Solicitor and undertakings given by the Solicitor to deliver an itemised bill of costs to the Assessor. (This Notice is not relied on by the Commissioner.) On 25 November, 1996 the Assessor issued a further Notice to the Solicitor requesting his files so they could be sent to the Commissioner (the fifth notice). On 6 December, 1996 the Assessor referred the matter to the Commissioner who then commenced an investigation. At the same time, the Assessor sought to continue to perform his functions under the Act and issued a further Notice to the Solicitor on 13 March,1997 requiring production of files and seeking confirmation from the Solicitor that he had served an itemised bill upon his client (the sixth notice). On 17 March, 1997 the Solicitor wrote to the Assessor alleging bias and requesting the Assessor to return the assessment to the Supreme Court. The Assessor rejected the allegation of bias and once again requested compliance with the Notices. (When it subsequently became clear that the Assessor could become a witness in the case, he withdrew from the role of assessing the costs). Between March,1997 and September, 1997 the Commissioner corresponded with the Solicitor and on 17 September, 1997 referred the matter to this Tribunal. As at that date, the Solicitor had not supplied documents sought in the original Notice nor had the Solicitor chosen to respond to the Commissioner when he wrote to him on 27 May, 1997 seeking his response as to why the matter should not be referred to this tribunal. In June, 1997, the Commissioner telephoned the Solicitor and a general discussion took place about the complaint and an invitation was issued to the Solicitor to provide evidence of his concerns of the Assessor's alleged bias which the Commissioner would take into account in considering whether the Solicitor had a reasonable excuse. The Commissioner did not receive any evidence or information from the Solicitor in this regard. During the period that the Notices were served, the Solicitor made two phone calls to the Assessor both on the 9 October, 1996 and those phone calls are worthy of mention in that they appear to have set the tone of relations between the Solicitor and the Assessor. One of the Notices sent by the Assessor to the Solicitor did not bear a postage stamp and Australia Post, being vigilant, imposed a charge of $1.45 and requested that it be paid. It is not clear from the evidence how the Assessor received the notice to pay the $1.45 but on his version, he believed the Solicitor was seeking reimbursement from him of $1.45 and the conversations of 9 October, 1996 revolved around who should pay whom the postage and were terse to say the least. Strangely, in neither of these phone conversations, did either the Solicitor or the Assessor touch on the matters at the heart of this complaint. It is common ground that the Solicitor had a reasonable excuse for not complying with the first notice which he did not become aware of until his return from overseas on 8 October, 1996. By then the second notice had also been received by the Solicitor who gave evidence that he then had a conversation with his secretary to the effect of "You had better keep contact with the Costs Assessor and let him know how you are travelling in preparing the bill and obtain from him any necessary extensions of time because we have a lot on our plate between now and Christmas and we will have to seriously prioritise some of the work." Thereafter, a series of alleged phone calls were made by the Solicitor's secretary on 30 September, 1996, 30 October, 1996, 5 November, 1996, 27 November, 1996, 5 February, 1997 and 12 February, 1997 the basic thrust of the phone calls to seek extensions of time to prepare the itemised bill of costs and to ask how the assessment was progressing. All but two of these phone conversations are denied by the Assessor. The evidence shows that the Solicitor proceeded throughout this saga on the assumption that an itemised bill of costs would be sufficient to comply with the notices. When asked by Counsel for the Commissioner that it was not up to him to decide what to provide and what not to provide to the Assessor the Solicitor responded that he understood that. Counsel then asked (Transcript 49) "You never said to Mr. Buckworth in writing or over the phone, 'Look will you be satisfied if I give you an itemised bill and don't worry about the other documents you sought?' You never said anything like that to him?" The Solicitor responded "No". To be fair to the Solicitor, it seems that he believed that the itemised bill of costs would be more than sufficient in answering the information sought by the Assessor and Counsel for the Solicitor submitted that this could be viewed as a reasonable excuse. This aspect is important because on one view of the matter, there was never going to be compliance with the notices in the strict sense of the word and the extensions that were allegedly sought by the Solicitor's secretary were never going to change that fact as they related to the preparation of the itemised bill of costs and the progress of the assessment. The matter of the phone conversations was the subject of much cross examination and there is a clear conflict between the evidence of the Assessor and the evidence of the Solicitor's secretary in this regard. For his part, the Assessor concedes two telephone conversations only, the first being on 26 November, 1996 when he was informed that the itemised bill of costs had been lodged with the Court and the second one being on 5 February 1997 when an enquiry was made as to how the matter was progressing and the Assessor advised that the file had been sent to the Commissioner. The Assessor gave evidence that it was his practice not to engage in phone calls about cost assessment matters but rather to request a letter. He produced a brief file note which was in shorthand form but which appeared to record what correspondence and phone calls he had made in the matter including the two phone calls above. As regards the conversation on the 26 November, 1996, the Secretary's evidence was that this conversation took place on 27 November, 1996 but that was denied by the Assessor who was very clearly of the view it took place on 26 November, 1996. Another of the alleged phone calls to the Assessor took place on 5 November, 1996 which apparently was Melbourne Cup Day and the Assessor gave evidence that he had accompanied his daughter to a Melbourne Cup breakfast on that day having left home at 7.45 am and not returning until late in the day. The evidence given by the secretary of the alleged phone conversations with the Assessor indicated a particular use of the expression "very well then" by the Assessor, an expression which he denied he used. Also her evidence was that on several occasions the Assessor indicated he did not have the file with him and on one occasion "that he would get back to her" That is also denied by the Assessor who stated categorically that his files were immediately available in his study at home which is where his centre of operations was at the time. The Solicitor was questioned as to his understanding of his Secretary's file notes of the phone conversations and in response said (transcript 59)"In my mind, they illustrated an acknowledgment by Mr. Buckworth that what he wanted would be provided but some days late and also acknowledged or provided to me an acknowledgment that there was no issue or no concern about the lateness." When asked by Counsel "When a few short days later you saw another notice reminding you of the risk of professional misconduct, you must have had some concern that your initial impression that he would have no objection to a further delay may have been incorrect, would you agree with that?" The Solicitor responded "I'm not sure that I formed that view. I formed the view there might have been a misunderstanding" When further asked whether he was concerned that he was getting contrary messages he responded, "I think I passed that concern on to my secretary and asked her to speak to Mr. Buckworth, if there was a problem to bring it to my attention." There is an inconsistency in the evidence between the Solicitor and his Secretary as to when the preparation of the itemised bill of costs commenced. The Secretary's evidence was that at the time the Solicitor left for overseas on 20 September, 1996 she was working on the itemised bill of costs whereas the Solicitor's evidence was that he was not aware of the letter from the Supreme Court until after his return from overseas. The evidence also suggests that the Solicitor relied heavily on his Secretary during this period as he was involved in major litigation at that time and that (transcript 60) "it was a low priority because we didn't, we couldn't complete it within time without prejudicing or deferring other work that we were doing for clients." Determination The relevant legislation imposes on Solicitors an obligation to comply with notices issued by an assessor. The Parliament, in its wisdom, attached a heavy penalty for non-compliance, the rationale for this presumably being that for costs assessments to be done properly, expeditiously and appropriately for the benefit of both solicitors and their clients, it is vital that the independent costs assessors receive the information to which they are entitled to enable them to fulfil their function. It was put to the Tribunal firstly on behalf of the Solicitor that this was a case where there was no suggestion that the Solicitor owed money to the client and therefore the only person to suffer as a result of the delay was the Solicitor, therefore strict compliance with time limits was not necessary. The Tribunal rejects this submission. The Act does not distinguish between solicitor beneficiaries or client beneficiaries in costs assessments. The Act says that assessments are to be conducted in a certain way, and they should be, otherwise the system would be in chaos. The more difficult submission which Counsel made on behalf of the Solicitor related to the "reasonable excuse" defence. From the outset, the Solicitor took a particular view that an itemised bill of costs would at the very least substantially comply with the Notices It was not suggested that the Solicitor could not comply with the Notices nor was it ever suggested that the Notices themselves were unreasonable in what they sought. In the circumstances, were the Solicitor's actions unreasonable? The assessment process is akin to a form of discovery and in this case the Assessor formed a view about what information he needed to "discover" in order for him to perform the exercise which he was required to perform. He sought (and continued to seek) material which was contemporaneous material, for instance, time sheets which would have provided, assuming their integrity, some independent assistance in assessing whether the fees claimed were appropriately claimed or not. Unfortunately, the Solicitor formed his own view of what was necessary to be provided and whilst it could be said that might not have been unreasonable at the very beginning, the Tribunal is of the view that as the matter progressed, the Solicitor's conduct became unreasonable. That is to say, the Solicitor received the Notice, it was an enforceable Notice, he did not take any steps to set aside the Notice or to ask the author of the Notice to vary its terms because of some good reason. It is difficult to understand why the Solicitor chose not to take heed of the fact that something was amiss when Notices continued to issue with most serious consequences. It is even more difficult to understand why he did not contact the Assessor to clear up any misunderstanding. Had he done so, events might have been very different. The fact that the Solicitor relied upon the alleged phone calls to the Assessor does not provide him with a reasonable excuse in these circumstances and the Tribunal therefore does not accept that he has satisfied the test of reasonable excuse. Accordingly, the Tribunal finds the Solicitor guilty of professional misconduct within the meaning of S. 207(6) of the Act. In terms of penalty, plainly this is not a case of the gravest kind of misconduct and therefore does not fall within that reprehensible sort of conduct which makes a solicitor unfit to practise. The Solicitor has already paid a high price by having to appear in this Tribunal with the resulting costs that flow from such an appearance. The Tribunal therefore makes the following orders: 1. That the Solicitor be publicly reprimanded. 2. That the Solicitor pay the Commissioner's costs 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.