New South Wales Supreme Court CITATION : LAW SOCIETY OF NEW SOUTH WALES v "B" [2000] NSWSC 405 revised - 18/05/2000 CURRENT JURISDICTION: Supreme Court FILE NUMBER(S) : SC 12766/98 HEARING DATE(S) : 8 May 2000 JUDGMENT DATE : 8 May 2000 PARTIES : Plaintiff: The Law Society of New South Wales Defendant: "B" JUDGMENT OF : Hulme J at 1 COUNSEL : Plaintiff: GC Lindsay SC Defendant: D Brezniak SOLICITORS : Plaintiff: Raymond John Collins Defendant: Maxwell & Co DECISION : See paragraphs 24-27 - 9 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION NO: 12766/98 Monday 8 May 2000 HULME J LAW SOCIETY OF NEW SOUTH WALES v "B" JUDGMENT 1 HIS HONOUR. On 23 March 2000 the council of the Law Society resolved "that the Practising Certificate of "B", solicitor be cancelled pursuant to section 37(1)(b) of the Legal Profession Act 1987. 2 On the 27 March 2000, "B" filed a notice of appeal from that decision together with a notice of motion seeking to stay the effect of the cancellation. 3 On that day I made consent orders including inter alia an order that the decision cancelling the Practising Certificate be stayed. That stay was continued on that day albeit on conditions up until today. 4 To understand the issues which arise in the appeal, a little background knowledge is required. On 18 November 1998 conditions were endorsed on the plaintiff's Practising Certificate as follows: "(i) The Cross Claimant will, at his cost, submit himself to the supervision of Derek Knight Budd ("Mr Budd"), Solicitor, and in such manner and to such extent as Mr Budd may, in his complete discretion, deem appropriate; (ii) The Cross Claimant, noting that Mr Budd is to report to the Cross Defendant on the then state of the Cross Claimant's Practise (on such basis as may be agreed between Mr Budd and the Cross Defendant or, at least, by the seventh day of each month after the making of these Orders) will expeditiously provide all necessary files and/or documentation which Mr Budd may call for and for the purpose of providing the said report(s)." 5 It is clear that the basis of the Law Society's decision was the view that "B" would not comply with the conditions which I have just recited. The primary basis for that view seems to me to have been that the solicitor failed to meet Mr Budd's costs of supervision. It seems clear that the Law Society itself has met one of Mr Budd's monthly accounts and that without some assurance of payment, Mr Budd was disinclined to continue his supervision. 6 Mr Budd seems to have embarked upon his inspections or supervision in December of 1998. He sent accounts monthly, or almost monthly, from then until the 5 August 1999. These had varied in amount between $00 and $790 and all seem to have been paid within no more than 6 weeks of being rendered. Accounts sent on 8 September, 29 October, and 14 December 1999 in amounts of $850, $650 and $850 were not paid and an account of 12 January 2000 in the sum of $850 was paid by the Law Society. 7 The first complaint recorded was in a facsimile transmission from "B"'s solicitor dated 17 March 2000. In that communication "B"'s solicitor was responding on "B"'s behalf to a letter from the Professional Standards Department of the Law Society advising of the fact of non payment and that on 23 March the council of the Law Society would be invited to consider cancelling "B"'s Practising Certificate on the grounds he had failed to comply with a condition. 8 Mr Maxwell's reply included the statement that he was instructed that his client and Mr Budd were in dispute as to the amounts of the fees that had been charged. That communication was obviously brought to Mr Budd's attention and he wrote to the Professional Standards Department confirming that he had never had any dispute with "B" in relation to his costs. When that communication was passed on to Mr Maxwell, together with some other correspondence, Mr Maxwell forwarded to the Professional Standards Department a copy letter from "B" addressed to Mr Derrick Budd and dated 16 February 2000 in which "B" had written inter alia: "I do not accept your charges as being reasonable and in the circumstances I require a bill of costs in taxable form together with a file for my perusal." 9 It should be mentioned also that according to Mr Budd he had had a conversation with "B" on 23 December in the course of which the following was said:- Mr Budd: "You presently owe me $2,350 for work done. I would appreciate payment." "B": "My practice has been reasonably remunerative in the past, but in recent times it has fallen away and my first priority is to look after myself, my wife and my children. I am not in a position to make any payment to you. Your accounts are in the pool for payment with my other debts." Mr Budd: "Under the Court's orders you are obliged to pay my costs." "B": "That makes no difference. I have had to put off a member of my clerical staff because of my financial situation. I am not in a position to pay your accounts at the moment." 10 This record of events suggests that there was no bona fide dispute on "B"'s part concerning Mr Budd's account and that the solicitor was refusing, or, at the very least, neglecting to adhere to the terms of the conditions imposed upon him. There was no cross-examination of Mr Budd on his affidavit although it is appropriate to mention that there was an agreement embodied in the consent short minutes of order dated 13 April 2000 to this effect. 11 "B" himself did not give evidence. It was stated from the Bar table that he was today at his father's funeral but no adjournment was sought. An adjournment had been sought last Thursday on somewhat different grounds which I then refused. 12 It should be mentioned that reliance has been placed on behalf of the solicitor on sections 175 and 182 of the Legal Profession Act on this topic of non payment of Mr Budd's accounts. Section 175 details obligations to disclose to clients bases of costs, specifying some matters which are to be disclosed. These include, as far as is presently relevant, the bases of client's costs and in subparagraphs (d) and (e), the client's right under division 6 in relation to a review of costs and the client's right under division 4 to receive a bill of costs. 13 Section 182 provides, as far as is presently relevant, that a solicitor who fails to make a disclosure in accordance with the division of which section 175 forms part: "... need not pay the costs of the legal services unless the costs have been assessed under Division 6." 14 It is submitted that "B" is a client of the solicitor within the meaning of the those sections and thus there is no present obligation to pay the amounts, the subject of Mr Budd's account. I would myself incline to the view that in the circumstances of the relationship between "B", Mr Budd and the Law Society, "B" was not Mr Budd's client within the meaning of the Legal Profession Act. But, even if that view be wrong, it seems to me that the appropriate inference to draw is that the solicitor has not submitted himself to Mr Budd's supervision at his, that is, "B"'s cost. 15 I think the appropriate inference which I should draw from the factual matters to which I have referred is that there is no bona fide dispute concerning Mr Budd's account and the solicitor has refused, or, at the very least, neglected to adhere to the first condition imposed on his certificate. 16 Although I do not need to rely on these matters, there is other evidence which argues in favour of the same conclusion. The solicitor went overseas for a period without, apparently, telling Mr Budd and remained away for an amount of time which was both significant and for a time indefinite. During the period of his absence, he was clearly not submitting himself to Mr Budd's supervision and although I do not for one moment suggest that the condition required the solicitor to be available for Mr Budd to contact every minute of every hour of every day, the duration of his absence leads to the conclusion that he was not adhering to the terms of the first condition. 17 Pointing in a similar direction is evidence from Ms Jean Sayer who on 13 November 1998 was appointed receiver of the "B" property within the meaning of part A of the Legal Profession Act. On 27 March this year she informed the solicitor she wished to examine records relevant to his business and access was then denied until, according to "B", he had spoken to his solicitor. She left a list of records she wished to have made available to her and later in the day "B"'s brother, who is a co-owner of the premises, sent a facsimile refusing Ms Sayer access to the premises. 18 A further affidavit of Ms Sayer of 13 April 2000 also indicates that "B" is declining to make documents available or, perhaps more precisely, is being obstructive in that area. Ms Sayer's evidence does not, of course, establish a breach of the condition requiring "B" to submit himself to the supervision of Mr Budd but provides supporting evidence for the view that is the course upon which "B" has embarked and his failure to pay Mr Budd is not on account of some genuine dispute concerning fees. 19 On that topic I should perhaps add that I would not be prepared to conclude that the first condition endorsed on "B"'s Practising Certificate required him to pay Mr Budd whatever sum of money Mr Budd may have chosen to charge. It is not the mere failure to pay Mr Budd's account upon which I rely for my conclusion that that condition has been breached. It is rather that failure combined with the circumstances surrounding it. For completeness I should add also that the rate or rates at which Mr Budd was to charge was the subject of a written agreement between "B" and Mr Budd some time in December 1998. The fact that it is headed, "Cost agreement between solicitor and client" does not alter the conclusion at which I have arrived that "B" was not Mr Budd's client. Section 38(b) of the Legal Profession Act under which the appeal against the Law Society's decision has been brought, provides in these circumstances the Court may make such order in the matter as it thinks fit. In judging what order should be made, there are a number of matters to which I should refer. 20 Firstly, there are disciplinary proceedings on foot between the Law Society and "B". The Information, which is complex and detailed, and "B"'s reply are before me and the Law Society has submitted the token content of that reply reflects adversely on "B". I have not found it necessary to consider in detail or to rely on at all that aspect of the case. 21 Another matter upon which the Law Society does rely is the fact on 10 April of this year consent orders were made requiring "B" to serve on the Law Society an affidavit dealing with documents which are or had been in his possession, custody our power, identifying those which fell into particular classes and producing some of those. That order followed upon a notice to produce requiring the production of some of those documents. It would seem that they had not been produced pursuant to the notice to produce and the affidavit has not been prepared nor the documents produced since the orders were made on 10 April and this, even though compliance on or before 28 April was required by the order of this Court. 22 There was read before me on this aspect of the case an affidavit of Mr Maxwell of 3 May 2000 and one of Mr Raymond John Collins of 4 May. In the documents annexed to Mr Maxwell's affidavit it is said that "B"'s father was ill and "B"'s time was taken up by that fact, this being suggested as a reason why or an explanation why the affidavit could not at any stage have been produced. However, Mr Collin's affidavit indicates that "B" had clearly some time to devote to attending to his obligations vis-a-vis a view of the Law Society and I remain unpersuaded today, as I was on 4 May when I refused the adjournment application, that "B" has a legitimate reason for not complying with the Court order made on 10 April. 23 In all the circumstances to which I have referred, apart from those which I have indicated I don't rely on, it seems to me that the appropriate order for me to make is to dismiss the appeal. In arriving at that conclusion, I take account of the importance to the administration of justice and of officers of the Court adhering to their obligations. 24 Accordingly the order I make is that the appeal in this matter be dismissed. 25 Under the slip rule I direct the amendment of the order of the Court filed on 19 April 2000 as follows: In paragraph 5(a) there should be substituted for the words "paragraphs 2 and 4 of these short minutes", the words, "paragraphs 1 and 2 of these orders" and in paragraph 2 of the notations appearing on page 3 of those orders, there should be substituted for the words "paragraphs 2 of these short minutes" the words "paragraph 1 of these orders". 26 I order the solicitor to pay the Law Society's costs including reserved costs. 27 I order that there be no publication of that part of my reasons referring to proceedings by the Law Society before the Administrative Decisions Tribunal without further order of the Court. Last Modified: 09/25/2000 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.