Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Council of the Law Society of NSW v McGuire (No 3) [2012] NSWADT 118 Hearing dates: 6 June 2012 Decision date: 18 June 2012 Jurisdiction: Legal Services Division Before: The Hon Justice Haylen (Deputy President) N Isenberg, Judicial Member C Bennett, Non-Judicial member Decision: (1) Pursuant to the provisions of s 566(3) of the Legal Profession Act 2004, the Tribunal finds that special circumstances exist such as to warrant the Tribunal granting the respondent practitioner an order for the costs of and incidental to his defence of the allegation of professional misconduct brought by the Law Society of New South Wales. (2) The costs of and incidental to the respondent practitioner's defence of the allegations shall be paid from the Public Purpose Fund referred to in s 566 (3) of the Act. (3) The costs of the respondent practitioner are to be assessed by a costs assessor, subject to the following terms: (i) costs should include costs of and incidental to the proceedings; costs are to include the costs associated with the interlocutory hearing conducted on 25 March 2011; (ii) professional legal costs and disbursements should be allowed; (iii) the allowable expenses should include reasonable travel expenses incurred by the respondent in appearing before the Tribunal or in furtherance of the preparation of his case with lawyers instructed to act for him; (iv) the out-of-pocket expenses of the respondent reasonably incurred in defending these proceedings should be allowed but not including the payment of the "personal time" involved calculated by reference to rates for a senior lawyer; (v) the allowance of any lost opportunity costs able to be demonstrated by the respondent practitioner caused during the personal time he expended on the preparation of his case. Legislation Cited: Legal Profession Act 1987 Legal Profession Act 2004 Cases Cited: Atlas Corp Pty Ltd v Kalyk [2011] NSWCA 10 Council of the Law Society of New South Wales v McGuire (No 2) [2012] NSWADT 63 Council of the Law Society of New South Wales v McGuire [2011] NSWADT 133 Council of the New South Wales Bar Association v Osei (No 3) [2009] NSWADT 196 New South Wales Bar Association v Tedeschi (No 3) [2003] NSWADT 174 Category: Costs Parties: Council of the Law Society of New South Wales (Applicant) Ben McGuire (Respondent) Representation: Counsel C Webster (Applicant) Council of the Law Society of NSW (Applicant) B McGuire (Respondent in person) File Number(s): 102020 REASONS FOR DECISION 1This is the third decision of the Tribunal arising from an application made by the Council of the Law Society of New South Wales (" the Law Society") alleging that Mr Ben McGuire was guilty of professional misconduct in that he practised law contrary to the terms of his Practising Certificate. The first decision of the Tribunal (Council of the Law Society of New South Wales v McGuire [2011] NSWADT 133), although arising out of numerous challenges made by Mr McGuire to the validity of the investigation process undertaken by the Law Society, ultimately was determined by the Tribunal making directions permitting Mr McGuire to seek further and better particulars of the breach alleged by the applicant Law Society. The second decision (Council of the Law Society of New South Wales v McGuire (No 2) [2012] NSWADT 63) determined that Mr McGuire was not guilty of professional misconduct and had not practised law contrary to the terms of his Practising Certificate. The Law Society resists the present application by Mr McGuire for his costs. 2The rather complex background against which Mr McGuire came to be charged with professional misconduct is set out in some detail in the first two decisions of the Tribunal. For present purposes it is sufficient to record that Mr McGuire, in his personal capacity, had been assisting members of his family in connection with various disputes and pieces of litigation arising from his mother's separation from her de facto partner, Mr Brennan. The allegation of professional misconduct arose in circumstances where Mr McGuire forwarded a letter of demand directly to his de facto father seeking the repayment of money owed to Mr McGuire's uncle, Mr Kaufline. The alleged offending words in this letter of demand, used by Mr McGuire, were: I act for Wayne Kaufline. ... If this amount is not received by ... I am instructed to commence legal proceedings for the recovery of the loan plus interest and costs without further notice to you. Mr Brennan subsequently lodged a complaint alleging that Mr McGuire was acting as a solicitor in sending this letter of demand. 3Throughout the investigation of this matter conducted by the Law Society Mr McGuire repeatedly requested the Law Society to indicate to him and to specify how the use of those words could amount to him practising law and doing so contrary to the terms of his Practising Certificate. At all relevant times Mr McGuire was the holder of an unrestricted corporate Practising Certificate and as a holder of such a Certificate he was entitled to engage in legal practice as a solicitor in the course of employment by a corporation (other than an incorporated legal practice) or a non-lawyer entity. At all relevant times Mr McGuire was employed by Virgin Management Asia Pacific Pty Ltd and/or was engaged by his own company, Solus Lupus Pty Ltd. 4In February 2009, during the course of the investigation, Mr McGuire had written to the Law Society and amongst other things, indicated that he was operating in his personal capacity when writing the letter and was not engaged in legal practice but rather he had been authorised by Mr Kaufline in his personal capacity and as a family member to seek the recovery of money from Mr Brennan. During the course of the interlocutory proceedings in March 2011 Mr McGuire stated that at the time he was assisting Mr Kaufline he had taken the precaution of obtaining a Power of Attorney to enable him to so act. It was suggested that because of his move to London for employment purposes he had not yet been able to locate that document amongst the items he had in storage. There was also evidence that Mr McGuire had prepared a number of documents for family members often in an attempt to settle various aspects of the family dispute: his mother had also created a Power of Attorney in favour of Mr McGuire in relation to other aspects of the ongoing family dispute with Mr Brennan. 5By the time the substantive hearing was listed Mr McGuire was able to produce a copy of the Power of Attorney and an affidavit from Mr Kaufline indicating the circumstances in which the Power of Attorney had been granted to Mr McGuire as part of the process of recovering the debt owed by Mr Brennan. The evidence before the Tribunal on the substantive proceedings was that, at all times, Mr McGuire had acted in his own capacity to assist a family member in relation to a family dispute: no fees had been charged for legal services, there was no fees agreement for such a payment and he had filed no legal process in which he held himself out as practising law. Mr Kaufline's evidence was that he had no intention of using Mr McGuire as a lawyer and Mr McGuire had not acted in that capacity for him. The Tribunal concluded that, in those circumstances, the allegation could not be made out and that in so acting, Mr McGuire was not guilty of professional misconduct. 6Against that background Mr McGuire seeks his costs. The Law Society opposes the awarding of costs and argues that if any costs order is made, Mr McGuire should not be granted costs for the interlocutory application and should not be permitted to claim professional costs for the time he personally spent in preparing his responses to the Law Society and his defence of the allegation of professional misconduct in the Tribunal. 7In written submissions Mr McGuire submitted an estimate of his costs, together with costs for independent legal advisors and disbursements (including return flights from overseas to Australia on two occasions and a claim for the time Mr McGuire personally spent in dealing with the allegations). Mr McGuire sought that the personal time thus claimed should be calculated at the hourly rate of $550, being the rate appropriate for a senior lawyer. CONSIDERATION 8The Tribunal accepts that in dealing with an application for costs its deliberations are governed by the provisions of s 566 of the Legal Profession Act 2004 ("the Act"). In the present matter the following sub-sections of s 566 are relevant: (3) The Tribunal may make orders requiring payment of an 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 misconduct 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. ... (6) The Tribunal may fix the amount of costs itself or order that the amount of costs be assessed by a costs assessor under Part 3.2. (7) An order for costs may specify the terms on which costs must be paid. 9The Tribunal also accepts that in applying s 566 (3) what is required is that the distinguishing circumstances must be of such significance (and thus special) that the Tribunal considers warrant an order being made for the payment of costs (see Council of New South Wales Bar Association v Tedeschi (No 3) [2003] NSWADT 174 at [46], dealing with similar provisions under s 171E(2) of the Legal Profession Act 1987, adopted in Council of the New South Wales Bar Association v Osei (No 3) [2009] NSWADT 196). The distinguishing features do not have to be exceptional. 10The Tribunal regards the following matters as satisfying the requirement for "special circumstances" appearing in s 566(3) of the Act. Those circumstances are: (i) by relying on a statement of the acts of the practitioner and the terms he used in the letter of demand there was an inadequacy in the particulars supplied to Mr McGuire to explain to him how the use of those words constituted practising law contrary to the terms of his Practising Certificate. In its interlocutory decision the Tribunal pointed out that Mr McGuire was not to be left to "guess" what was the case against him: he was entitled to be informed of the "issues involved", the "whole substance", "all the relevant details", "the entirety" or "the full extent " of the allegations against him. This inadequacy of the particulars led Mr McGuire to steadfastly resist the determination of the case until he was provided with proper particulars and reasons for the determination of the Law Society to refer the matter to the Tribunal; (ii) the charge of professional misconduct on the facts known to the Law Society was highly unlikely to be sustained. As referred to by the Tribunal in its substantive decision, the letter of demand alone, unattended by a demand for the payment of fees or an arrangement for the payment of fees and/or the filing of legal process as a practitioner, should have alerted the Law Society to the fact that a finding of professional misconduct would be almost impossible to sustain in the absence of other evidence inculpating the respondent practitioner; (ii) the failure of the Law Society to reconsider its position after the respondent disclosed that he had acted in accordance with a Power of Attorney obtained from his uncle, having always indicated to the Law Society that he was only assisting family members in a family dispute. In February 2009, Mr McGuire denied being engaged in legal practice and informed the Law Society that he was operating in his personal capacity having been authorised by Mr Kaufline as such and as a family member to seek the recovery of money from Mr Brennan. There appears to have been no investigation of this statement, particularly by enquiring of Mr Kaufline the circumstances and terms upon which Mr McGuire had authority to write the letter of demand. In this regard it is likely that any enquiry of Mr Kaufline would have led to the disclosure of the Power of Attorney: the terms of that document should have ended any further investigation; (iii) the rejection of numerous attempts by Mr McGuire to have the matter mediated, especially in light of the Tribunal's strong recommendation to that effect following the interlocutory hearing where the Tribunal highlighted the potential deficiencies in the particulars and provided an opportunity to Mr McGuire to obtain particulars that would explain how sending the letter in the terms used amounted to practising law contrary to the terms of his Practising Certificate and thus, amounting to Professional Misconduct; (iv) the fact that the Law Society proceeded with the hearing after the Power of Attorney was produced by Mr McGuire together with the evidence of Mr Kaufline. Those documents were not challenged at the substantive hearing and no submissions of substance were made as to the consequences of that evidence. Those consequences should have been immediately obvious to the Law Society; and, (v) the application raised an unusual point concerning the practice of law and did so against a complex background of family disputation that was relevant in assessing the context in which the letter of demand was written by the practitioner. 11Having determined that there are special circumstances that warrant the making of a costs order in favour of Mr McGuire, the Tribunal wishes to avoid a prolonged costs assessment exercise. Having regard to the indication of costs sought to be recovered by Mr McGuire the Tribunal concludes that it is not appropriate to undertake the assessment of costs itself. The Tribunal therefore proposes, pursuant to s 566(6), that the costs be assessed by a costs assessor pursuant to the provisions of Pt 3.2 of the Act. However, the Tribunal also proposes to specify the terms on which such costs are to be paid, pursuant to the provisions of s 566(7). The assessment of costs should, therefore, proceed on the following basis: (i) costs should include costs of and incidental to the proceedings; costs are to include the costs associated with the interlocutory hearing conducted on 25 March 2011; (ii) professional legal costs and disbursements should be allowed; (iii) the allowable expenses should include reasonable travel expenses incurred by the respondent in appearing before the Tribunal and in furtherance of the preparation of his case, including preparation with lawyers instructed to act for him; (iv) the out-of-pocket expenses of the respondent reasonably incurred in defending these proceedings should be allowed but not including the payment of the "personal time" involved calculated by reference to rates for a senior lawyer; (v) allowing any "lost opportunity" costs able to be demonstrated by the respondent practitioner caused during the personal time he expended on the preparation of his case (applying Atlas Corp Pty Ltd v Kalyk [2011] NSWCA 10) . ORDERS 12Having regard to the foregoing matters, the Tribunal makes the following orders: (1) Pursuant to the provisions of s 566(3) of the Legal Profession Act 2004, the Tribunal finds that special circumstances exist such as to warrant the Tribunal granting the respondent practitioner an order for the costs of and incidental to his defence of the allegation of professional misconduct brought by the Law Society of New South Wales. (2) The costs of and incidental to the respondent practitioner's defence of the allegations shall be paid from the Public Purpose Fund referred to in s 566 (3) of the Act. (3) The costs of the respondent practitioner are to be assessed by a costs assessor, subject to the following terms: (i) costs should include costs of and incidental to the proceedings; costs are to include the costs associated with the interlocutory hearing conducted on 25 March 2011; (ii) professional legal costs and disbursements should be allowed; (iii) the allowable expenses should include reasonable travel expenses incurred by the respondent in appearing before the Tribunal or in furtherance of the preparation of his case with lawyers instructed to act for him; (iv) the out-of-pocket expenses of the respondent reasonably incurred in defending these proceedings should be allowed but not including the payment of the "personal time" involved calculated by reference to rates for a senior lawyer; (v) the allowance of any lost opportunity costs able to be demonstrated by the respondent practitioner caused during the personal time he expended on the preparation of his case. ********** 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. Decision last updated: 18 June 2012