Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Donaghy v The Council of The Law Society of New South Wales [2013] NSWCA 154 Hearing dates: 10 April 2013 Decision date: 06 June 2013 Before: Beazley P at [1]; Meagher JA at [1]; Emmett JA at [1] Decision: (1) Appeal allowed. (2) Set aside the orders made by the Administrative Decisions Tribunal on 17 August 2012. (3) Appellant's application for review be remitted to the Administrative Decisions Tribunal for further hearing and determination. (4) Respondent pay the appellant's costs of the appeal. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: ADMINISTRATIVE LAW - complaint concerning conduct of legal practitioner - Law Society Council reprimanded practitioner with respect to conduct, on the basis that there was "a reasonable likelihood that the practitioner would be found by the [Administrative Decisions] Tribunal to have engaged in unsatisfactory professional conduct" - practitioner appealed to Administrative Decisions Tribunal under s 540(5) of Legal Profession Act 2004 - whether ADT misdirected itself in concluding that the practitioner's conduct amounted to unsatisfactory professional conduct and in failing to address whether there was a reasonable likelihood that it would so conclude - whether ADT denied practitioner procedural fairness by taking into account conduct which was not the subject of original complaint - decision and orders of ADT set aside Legislation Cited: Administrative Decisions Tribunal Act 1997, ss 63, 66 Legal Profession Act 1987, s 171F Legal Profession Act 2004, Ch 3 Div 11, ss 350, 537, 540, 602, 729 Supreme Court Act 1970, s 75A Cases Cited: Carson v Legal Services Commissioner [2000] NSWCA 308 Donaghy v Council of The Law Society of NSW (No 2) [2012] NSWADT 170 Murray v Legal Services Commissioner [1999] NSWCA 70; 46 NSWLR 224 Walsh v NSW Law Society [1999] HCA 33; 198 CLR 73 Category: Principal judgment Parties: Geoffrey James Donaghy (Appellant) Professional Conduct Committee of the Law Society of New South Wales (Respondent) Representation: Counsel: J J Priestley (Appellant) Ms C A Webster SC (Respondent) Solicitors: G J Donaghy & Company (Appellant) Anne-Marie Foord of Law Society of NSW (Respondent) File Number(s): 2012/286974 Decision under appeal Citation: Donaghy v Council of the Law Society of NSW (No 2) [2012] NSWADT 170 Date of Decision: 2012-08-17 00:00:00 Before: D Fairlie, Judicial Member S Hale, Judicial Member E Hayes, Non-Judicial Member File Number(s): 112029 Judgment 1THE COURT: This is an appeal from a decision of the Administrative Decisions Tribunal (Tribunal): Donaghy v Council of The Law Society of NSW (No 2) [2012] NSWADT 170. It is brought under s 729A of the Legal Profession Act 2004 (the LP Act) and is an appeal by way of re-hearing to which s 75A of the Supreme Court Act 1970 applies. It is not an appeal by way of a de novo hearing: cf s 171F(4) of the Legal Profession Act 1987, the effect of which was considered in Walsh v NSW Law Society [1999] HCA 33; 198 CLR 73. 2The decision of the Tribunal was made on the review of a decision of the Law Society Council to reprimand the appellant solicitor. The Council's decision to reprimand followed a complaint concerning conduct of the appellant made by a barrister who had been briefed by the appellant. The initial complaint was made in December 2009 to the Office of the Legal Services Commissioner. That complaint was then referred to the Council. There followed correspondence between the Council and the appellant and the barrister. By letter dated 9 February 2011 the Council sought submissions from the appellant as to why proceedings should not be instituted against him with respect to the complaint pursuant to s 537(2) of the LP Act. That letter described the conduct which was the subject of the complaint as: "Failure to pay third party." "Failure to communicate." 3Following receipt of further submissions from the appellant and complainant, a Professional Conduct Committee of the Council considered and determined the complaint. On 1 September 2011 it resolved that it was satisfied that "there is a reasonable likelihood [the appellant] would be found by the Tribunal to have engaged in unsatisfactory professional conduct" and also as to each of the matters in s 540(1)(b)(ii) and (iii). The conduct which was the subject of that resolution was described as: "● Failure to pay third party. ● Failure to communicate." Being satisfied as to those matters, the Committee resolved to reprimand the appellant under s 540(2)(b). 4That decision was communicated to the appellant by letter dated 2 September 2011. That letter included short reasons for the decision. Those reasons recorded that the third party was a barrister briefed by the appellant. A fee note issued on 17 July 2009 in respect of work undertaken in accordance with that brief was not paid until about 24 June 2011. The appellant did not communicate with the barrister concerning her fees, the amount of which fell within an earlier fee disclosure estimate. The period during which there was a failure to communicate and the subject matter in respect of which it was said communication should have occurred were not recorded in those reasons. 5The appellant's application to the Tribunal for a review of the Council's decision was made under s 540(5). On 17 August 2012, the Tribunal made the following orders by way of determination of that application: "(1) Our decision is that we dismiss Mr Donaghy's Application for review and confirm the orders made by the Law Society on 1 September 2011. (2) We therefore order that Geoffrey James Donaghy be reprimanded." 6The appellant submits that the Tribunal made a number of errors in undertaking its review and making its determination. In his amended outline of written submissions prepared in advance of the hearing of the appeal to this Court, those asserted errors were described as follows: "a. The Tribunal exceeded its jurisdiction by exercising its powers pursuant to its original jurisdiction instead of its review jurisdiction (the no jurisdiction argument ... is covered by Appeal grounds 1, 4 and 5) and b. In doing so the Tribunal denied the Appellant procedural fairness (the procedural fairness argument is covered by Appeal grounds 2 and 3)." 7The essence of the appellant's argument, as developed in that written submission, was encapsulated in paragraph 7: "It is submitted that the Tribunal, having found that the reasons for the Society's decision included irrelevant and perhaps inappropriate matters ... , had no choice but to quash the decision of the Society. However, it is apparent that the Tribunal, notwithstanding their belief the reasons of the Society were fundamentally flawed, then proceeded to deal with the matter of its own motion without giving notice to the appellant or providing the appellant with an opportunity to call evidence. The result of the Tribunal's approach was that it was acting outside of its jurisdiction and as a result the appellant was denied procedural fairness." 8That submission misconceived the nature of the review undertaken by the Tribunal and was not pressed in oral argument before this Court. Section 63(1) of the Administrative Decisions Tribunal Act 1997 (the ADT Act) requires that when determining a review of a "reviewable decision", the Tribunal is to "decide what the correct and preferable decision is having regard to the material then before it". That material includes "any relevant factual material". The nature of that review does not require that the Tribunal address whether the relevant administrator's decision involved error or was manifestly unsupportable. It is a review on the merits to be determined on the material before the Tribunal. 9In argument before this Court, Mr Jonathon Priestley, who appeared for the appellant, focused on the Tribunal's finding that the appellant had engaged in unsatisfactory professional conduct and its separate order that he be reprimanded. As developed in oral argument, the appellant's submissions were that in exercising its review function the Tribunal had addressed the wrong question and taken into account conduct which was not the subject of the complaint before the Council or the decision being reviewed. Those errors, it was submitted, were manifest in the finding made by the Tribunal as to unsatisfactory professional conduct and in the second of the orders it made. In oral argument, the appellant abandoned ground of appeal 4 which related to the operation of s 602 of the LP Act. 10In our view, for the reasons which follow, the appeal must be upheld, the orders made by the Tribunal set aside and the application for review remitted to the Tribunal for redetermination. 11The decision of the Council to reprimand the appellant under s 540(2)(b) required that the Council first be satisfied that "there is a reasonable likelihood that the practitioner would be found by the Tribunal to have engaged in unsatisfactory professional conduct (but not professional misconduct)". The Tribunal noted that this was one of the three matters of which the Council was required to be satisfied before it could exercise any power to reprimand: at [4]. 12Accordingly, an element of the decision which the Tribunal was required to address was whether, in its view, there was such a reasonable likelihood. 13At [58] of its reasons, the Tribunal set out its findings of fact: "[58] We have therefore come to the view from the material before us and after considering Mr Donaghy's submissions, that he delayed unreasonably in paying [the barrister's] fees, and that he failed to communicate with her between July 2009 and March 2010. As noted above, in reaching this conclusion, we did not consider relevant all the material that the Law Society appeared to have taken into account in coming to its decision. However we are satisfied from the evidence that we have considered, that these matters have been established." 14The Tribunal then formulated the question which it proposed to consider, as follows: "[59] The next question is whether these findings amount to unsatisfactory professional misconduct or were conduct capable of being unsatisfactory professional conduct on the part of the solicitor. Mr Donaghy's position (in paragraphs 1 and 2 of his Application for Review), was that they did not." 15Following a discussion which addresses the appellant's conduct and whether it involved or constituted unsatisfactory professional conduct, the Tribunal concluded: "[75] Each matter of course depends on its facts. Using the language in Beazley's case, this matter might also be considered close to the border, but ultimately we are satisfied that it falls on the other side. Here Mr Donaghy's unreasonable failure to pay [the barrister] for two years, together with his failure to communicate with her for nine months, and his misconceptions about the assessment process, amount in our view to unsatisfactory professional conduct." [our emphasis]. The reference to "the assessment process" appears to be a reference to the costs assessment process provided for under Division 11 of Chapter 3 of the LP Act. 16The requirement in s 540(1) that the Council be satisfied that "there is a reasonable likelihood that the practitioner would be found by the Tribunal to have engaged in unsatisfactory professional conduct" has been held to require that the Council predict or forecast the outcome of a hearing before the Tribunal "on a test of reasonable likelihood": Murray v Legal Services Commissioner [1999] NSWCA 70; 46 NSWLR 224 at [88]; Carson v Legal Services Commissioner [2000] NSWCA 308 at [43]. That test does not require satisfaction that the practitioner has engaged in such conduct. It requires satisfaction that there is a "reasonable likelihood" of that outcome following a hearing before the Tribunal. That composite expression describes a chance or prospect of that happening which is real and not fanciful or remote. The adjective "reasonable" is a measure of the "likelihood" and a descriptor of its characteristic as soundly based. It is not necessary in this case to explore more closely the meaning which that expression conveys. 17Neither of the alternative formulations of the question which the Tribunal posed for itself (at [59]) accurately reflects the terms of s 540(1)(b)(i). The first addresses whether the practitioner engaged in unsatisfactory professional conduct. The second focuses on the capacity of the conduct to found such a conclusion without involving any assessment or prediction as to whether there was a reasonable likelihood of such a conclusion by the Tribunal following a hearing before it. 18The Law Society Council made two responses to the appellant's submission that the Tribunal had misdirected itself as to the question it was required to consider. First, it submitted that the second formulation of the question in [59] was in substance the same as that to be addressed under s 540(1)(b)(i). Secondly, it submitted that the Tribunal was to be understood in [59] as saying that if the findings which it made amounted to unsatisfactory professional conduct, or were capable of being such conduct, then there was a reasonable likelihood that the practitioner would be found to have engaged in unsatisfactory professional conduct. 19There are several difficulties with these submissions. As to the first, the question which the Tribunal ultimately answered, and made a finding about, was whether the appellant's conduct amounted to unsatisfactory professional conduct. The Tribunal did not in terms address its second formulation of the relevant question, which, in any event did not accurately state the effect of the statutory provision. As to the second submission, the Tribunal did not approach the question on the basis that if it was satisfied that the appellant had engaged in unsatisfactory professional conduct, it could equally be satisfied as to the existence of a reasonable likelihood that it would so conclude. Instead, it addressed the wrong question and made a finding, by way of conclusion, which it was not required to make. 20In making that finding the Tribunal also took into account conduct of the appellant which it described (at [75]) as the appellant's "misconceptions about the assessment process". As we have noted above, that reference appears to be to the costs assessment process provided for in the LP Act. The "misconceptions" referred to are not clearly identified in the Tribunal's decision. They could be a reference to the appellant's belief reflected in submissions to the Tribunal (referred to at [24]) that the barrister should have initiated the costs assessment process. The Tribunal appears to have considered that as the appellant did not intend to pay the barrister's fees, he should have initiated that process himself because he was able to do so under s 350 and the barrister had no reason to do so as she was unaware of any issue in relation to her fees. 21It is unnecessary to pursue this inquiry because the fact that the appellant may have laboured under this or some other misconception, and acted accordingly, did not form part of the conduct which was alleged to have been unsatisfactory and was the subject of the Council's decision. It was therefore conduct outside the scope of the Tribunal's review function. In taking it into account the Tribunal exceeded its jurisdiction. In doing so it dealt with a matter which the appellant was given no opportunity to address, either by way of evidence or submission. To that extent the Tribunal also denied the appellant procedural fairness. 22It follows that the Tribunal's decision must be set aside. Considered separately, and assuming no other error on the part of the Tribunal, Order 2 also should be set aside. Under s 63(3) of the ADT Act, in determining a review application, the Tribunal may affirm or vary or set aside the reviewable decision and make a decision in substitution for it. Section 66(2) provides that if the Tribunal's decision varies, or is made in substitution for, an administrator's decision, it is taken to be the decision of the administrator and to take effect accordingly. By Order 1, the Tribunal confirmed the orders made by the Law Society Council on 1 September 2011. That involved affirming the Council's decision, which included that the appellant be reprimanded. In those circumstances there was no good reason for the Tribunal to make any further order reprimanding the appellant. 23For these reasons, the orders of the Court are: (1)Appeal allowed. (2)Set aside the orders made by the Administrative Decisions Tribunal on 17 August 2012. (3)Appellant's application for review be remitted to the Administrative Decisions Tribunal for further hearing and determination. (4)Respondent pay the appellant's costs of the appeal. ********** 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: 06 June 2013