Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Kazas-Rogaris v Council of the Law Society of New South Wales [2014] NSWCATOD 115 Hearing dates: 7 July 2014 Decision date: 15 October 2014 Jurisdiction: Occupational Division Before: M Chesterman, Principal Member M Riordan, Senior Member E Hayes, General Member Decision: 1. The decision of the Respondent, made on 21 March 2013, to reprimand the Applicant is set aside. 2. Any application for costs by the Applicant must be filed and served, with supporting submissions, within 21 days. The Respondent is to file and serve its submissions within a further 21 days. The question of costs will then be decided 'on the papers', pursuant to section 76 of the Administrative Decisions Tribunal Act 1997, unless we consider that a hearing is required. Catchwords: Reprimand of solicitor under section 540 of Legal Profession Act 2004 - application for review - alleged breaches of section 261 of this Act and of section 41 of the Legal Aid Commission Act 1979. Legislation Cited: Administrative Decisions Tribunal Act 1997 Civil and Administrative Tribunal Act 2013 Cases Cited: Donaghy v The Council of the Law Society of New South Wales [2013] NSWCA 154 Category: Principal judgment Parties: Anne Kazas-Rogaris (Applicant) Council of the Law Society of New South Wales (Respondent) Representation: G Stanton (Applicant) S Barnes (Respondent) A-M Foord (Respondent) File Number(s): 132006 reasons for decision Introduction 1This decision relates to an application by a solicitor, Anne Kazas-Rogaris, for review of a decision by the Respondent, the Council of the Law Society of New South Wales ('the Law Society'), to reprimand her pursuant to section 540 of the Legal Profession Act 2004 ('the LP Act'). 2This decision was reached by the Professional Conduct Committee of the Law Society on 21 March 2013. It was based on a complaint that Michelle Hyun Ja Youm, who was then a client of Ms Kazas-Rogaris, had made to the Legal Services Commissioner on 20 March 2009. The Committee's resolution was in the following terms:- 1. The Committee is satisfied that: (i) there is a reasonable likelihood Anne Kazas-Rogaris ("the legal practitioner") would be found by the Tribunal to have engaged in unsatisfactory professional conduct; and (ii) the legal practitioner is generally competent and diligent; and (iii) the taking of action is justified having regard to all the circumstances of the case (including the seriousness of the conduct concerned) and to whether any other substantiated complaints have been made against the legal practitioner. 2. The Committee hereby reprimands the legal practitioner. (Section 540(1) and (2)(b) of the Legal Profession Act, 2004). Reasons for decision 1. Breach of Section 255 of the Legal Profession Act, 2004 The Committee finds evidence supporting a breach of Section 255 of the Legal Profession Act, 2004 (the Act). Funds held by way of matrimonial property settlement between October 2007 and December 2007 were transferred in circumstances where the solicitor had not established that the transfers were in accordance with directions expressly given by the complainant. On 26 February 2009, the solicitor disbursed funds remaining in trust for the complainant in payment of an account rendered in September/October 2008. At this time, the liability of the complainant to pay the account, in part or at all, was under investigation by Legal Aid NSW. The solicitor knew that the complainant disputed the solicitor's entitlement to appropriate the monies in payment of the account. The solicitor nevertheless failed to inform the complainant and seek authorisation prior to effecting the transfer. Legal Aid NSW did not finalise its decision in relation to the solicitor's entitlement to charge costs until about May 2009. 2. Breach of Section 41 of the Legal Aid Commission Act, 1979. Legal Aid NSW has made a determination that, in all the circumstances, no costs were to be rendered by the solicitor to the complainant for her children and matrimonial property matters for the period 15 September 2006 to 22 January 2007. There was a grant of aid for this period for the complainant which covered 5 hours of negotiations and a conference. The extent of the work performed exceeded the hours prescribed by the grant but the grant covered the field in these matters until it was extended or finalised. The solicitor was bound by the Legal Aid legislation and policies and unable to charge for the work. There is no evidence that the grant was formally finalised prior to 22 January 2007 by way of appropriate disclosures to the complainant with a costs agreement or costs notice. The evidence in relation to when it was finalised is unclear but the Committee relies on the finding by Legal Aid NSW that 22 January 2007 is the relevant date and that the complainant did not instruct the solicitor to apply for an extension of legal aid thereafter. The solicitor breached Section 41 of the Legal Aid Commission Act, 1979. 3For present purposes, the relevant parts of section 540 of the LP Act, pursuant to which the Committee passed this resolution, are as follows:- 540 Summary conclusion of complaint procedure by caution, reprimand, compensation order or imposition of conditions (1) This section applies if: (a) either: (i) the Commissioner or a Council completes an investigation of a complaint against an Australian legal practitioner, or (ii) the report of an independent investigator is given to the Commissioner, and (b) the Commissioner or Council (as the case requires): (i) is 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), and (ii) is satisfied that the practitioner is generally competent and diligent, and (iii) is satisfied that the taking of action under this section is justified having regard to all the circumstances of the case (including the seriousness of the conduct concerned) and to whether any other substantiated complaints have been made against the practitioner. (2) The Commissioner or Council may do any or all of the following: (a) caution the practitioner, (b) reprimand the practitioner, (c) make a compensation order under Part 4.9 if the complainant requested a compensation order in respect of the complaint, (d) determine that a specified condition be imposed on the practitioner's practising certificate. (4) If action is taken under subsection (2), no further action is to be taken under this Chapter with respect to the complaint. (5) If the Commissioner or Council decides to reprimand or make a compensation order against an Australian legal practitioner under this section, or that a condition be imposed on an Australian legal practitioner's practising certificate under this section, the practitioner may apply to the Tribunal for an administrative review under the Administrative Decisions Review Act 1997 of the decision. 4In a letter dated 27 March 2013, the Law Society notified Ms Kazas-Rogaris of the decision set out in the Committee's resolution. On 1 May 2013, she applied to the Administrative Decisions Tribunal ('the ADT') for a review of this decision. In her application, she set out these reasons for seeking a review: 'The findings of breaches resulting in reprimand are not supported by the evidence and are bad in law.' 5On 3 June 2013, the Law Society filed documents relating to its decision in accordance with section 58 of the Administrative Decisions Tribunal Act 1997 ('the ADT Act'). This was the statute then governing applications for review. 6On 11 October 2013, Ms Kazas-Rogaris filed an affidavit that she had sworn on 11 October 2013 and an affidavit sworn on the same day by Lena Pace. At all material times, Ms Kazas-Rogaris has been the principal and sole director of an incorporated legal practice called KR Lawyers and Consultants Pty Ltd ('KR Lawyers'). Ms Pace stated that since September 2006 she had worked for this legal practice on a contract basis. 7On 1 January 2014, the ADT was abolished and its functions were taken over by the Civil and Administrative Tribunal of New South Wales ('NCAT'). These proceedings thereupon became 'unheard proceedings' as defined in clause 6(1) of Schedule 1 of the Civil and Administrative Tribunal Act 2013. Clauses 7(1) and 7(3)(b) of this Schedule stipulate that such proceedings are to be heard by NCAT but determined as if that Act had not been enacted. 8On 4 February 2014, the Law Society filed an affidavit sworn on an unspecified date in that month by Mary Whitehead. Ms Whitehead is a solicitor and the Director of the Grants Division of Legal Aid NSW ('Legal Aid'). 9The hearing of the application for review took place before us on 7 July 2014. Mr Stanton of counsel appeared for Ms Kazas-Rogaris and Mr Barnes of counsel for the Law Society. Ms Kazas-Rogaris attended and was cross-examined. 10As indicated in section 540(5) of the LP Act, these are proceedings for administrative review of the Law Society's decision, not an appeal against it. Accordingly, for reasons set out in the Court of Appeal's judgment in Donaghy v The Council of the Law Society of New South Wales [2013] NSWCA 154, the question that we must address when considering the first (and most significant) of the three matters listed in section 540(1)(b) of the LP Act is not whether the conduct that we find Ms Kazas-Rogaris to have engaged in, having regard to the material now before us, amounted to unsatisfactory professional conduct. Instead, it is whether we are satisfied that there is a reasonable likelihood that she would have been found by the ADT to have engaged in unsatisfactory professional conduct. 11This is the outcome of the following aspects of the provisions of the ADT Act governing review proceedings: (a) section 63(1) states that our task is to 'decide what the correct and preferable decision is' having regard to the material now before us; (b) under section 63(2), we may, for this purpose, 'exercise all of the functions that are conferred or imposed by any relevant enactment' on the Law Society; and (c) under section 66(2), if any decision by us 'varies, or is to be in substitution for' the Law Society's decision (as is permitted by section 63(3)), our decision is taken to be the decision of the Law Society (other than for the purposes of a review under the ADT Act). 12In our judgment, the correct and preferable decision is that the Law Society's decision, including the reprimand administered to Ms Kazaris-Rogas, should be set aside, for the reasons that follow. Outline of evidence 13On 19 September 2006, Simone Green, a solicitor employed by KR Lawyers and supervised by Ms Kazas-Rogaris, lodged an electronic application for legal aid for Ms Youm, the complainant, to institute family law proceedings against her husband, Sung-Soo Kim, in the Federal Magistrates Court. The application stated that the proceedings for which legal aid was sought would concern both the children of the marriage and property, comprising a jointly-owned matrimonial home and land of which her husband was a co-owner. 14In paragraph 29, under the heading 'What matters does this application concern?', the completed application stated as follows:- Principal matter Matter Group CHILDREN Matter Type Live With Matter 2 Matter Group [PROPERTY] Matter Type Property Settlement Married 15In paragraph FC2, under the heading 'Please advise what orders you are seeking and how you fit in within the legal aid property guidelines', the application stated:- WIFE IS SEEKING 75% OF THE PROPERTY. SHE CANNOT SELL THE MARITAL HOME BECAUSE SHE HAS JOINT TENANCY WITH THE HUSBAND... SHE CANNOT RAISE THE MONEY FOR LEGAL FEES FOR A PROPERTY SETTLEMENT. 16In an email message on 12 October 2006, responding to a request transmitted two days earlier, Ms Green advised Shane Neagle, an employee of Legal Aid, as to the property orders being sought by Ms Youm and the submissions that she would make under sections 75(2) and 79 of the Family Law Act 1975 (Cth). 17In letters dated 13 October 2006, Legal Aid notified Ms Youm and Layla Doumit (another solicitor employed by KR Lawyers and supervised by Ms Kazas-Rogaris) that Ms Youm's application for legal aid had been granted. Ms Doumit was named as the assigned practitioner. The letter to her was sent to her at KR Lawyers. 18In these letters, the grant, which henceforth we will call 'the first grant', was stated to be effective from 19 September 2006. The text of each letter had the following heading:- Legal Matter: PROPERTY SETTLEMENT MARRIED Court: Parramatta Federal Circuit Court LEGAL AID GRANTED 19Under the heading 'Approved Matters - work covered by the grant', the following passage appeared:- Aid is granted for representation in the Federal Magistrates Court to the conclusion of the directions stage (Stage 2(ab)). This stage includes, but is not limited to: - taking instructions for the application and affidavit - preparing documents - obtaining short service, if required - court attendance. 20The letters also contained the following statements relating to the scope of the grant:- Please note: This grant is for property only... This refusal (sic) relates to the children's matters. 21Both letters contained statements to the effect that KR Lawyers were not permitted to charge Ms Youm or 'any related person' for 'legal work done on or after 19 September 2006'. They also indicated that an application could be lodged subsequently for extension of the aid being granted. Extensions to grants already made are permitted by section 38(1)(b) of the Legal Aid Commission Act 1979 ('the LA Act'). 22In her affidavit, Ms Kazas-Rogaris testified that according to her belief the application lodged by Ms Green had been refused. During cross-examination, she said that Ms Green had indicated this in a file note and in a statement made to her before leaving KR Lawyers. She added that Legal Aid's action in notifying Ms Doumit, not Ms Green, that legal aid had been granted was 'confusing'. 23In this context, Ms Kazas-Rogaris also stated in cross-examination that she believed the file on Ms Youm's matter to have been incomplete and poorly kept. 24An email message sent by Ms Green to Mr Neagle on 27 October 2006 contained the following passage:- As discussed with you today we require a grant to assist Ms Youm in a round table conference with the other party and his solicitor. We anticipate we will require 4 hours to deal with both property and children's issues. There is a good possibility we may be able to resolve all issues given the opportunity... 25This message went on to request 'a grant for the barrister who has agreed to help preside over the conference'. 26Mr Neagle replied on the same day that Legal Aid would allow '5 hours for you to negotiate the matter' but would not allow for the barrister's attendance. 27In an email message to Ms Doumit on 21 December 2006, Legal Aid indicated that as 'extension 1' to the earlier grant to Ms Youm, legal aid was granted 'for 5 hours negotiations aimed at resolving the matter by way of consent orders'. The matters covered by this grant ('the second grant') were described as 'Children - Living arrangements for child, Property settlement' and the grant was stated to be effective as from 27 October 2006. The message confirmed that the grant was 'to cover your negotiations and conference in this matter' and contained an apology for Legal Aid's delay in confirming the grant. 28On 22 January 2007, Ms Green sent an invoice to Legal Aid for KR Lawyers' fees relating to the 'round table conference'. The invoice was expressly stated to apply to 'Extension 1' of the first grant. In response to questions asked on Legal Aid's pro forma invoice, Ms Green stated as follows: (a) the proceedings were not concluded; (b) further claims for payment would not, however, be 'required against this pro forma'; (c) this was not the final account for the case; (d) the 'outcome' of the matter was that agreement on 'children's issues' was reached 'at the time' (meaning, it would seem, at the time of the conference); (e) the parties, however, had 'changed their minds' subsequently; and (f) the 'property issue' was not settled, and would 'proceed to litigation'. 29A letter dated 9 March 2007 from Ms Green to Ms Youm outlined the state of negotiations that she was conducting on property and children's issues with Mr Kim's solicitors. This letter included the following passage:- Please provide instructions on the above [meaning the negotiations on property issues], it may be that litigation in this instance cannot be avoided. In relation to the children's issue, we no longer have a grant of legal aid to represent you. Aid was limited to the conference to draw up consent orders. We have assisted you in this manner beyond the limits of grant of aid but are unable to represent you further in court if you do not settle the children's issues. 30On or about 15 March 2007, Ms Green completed a file note of a telephone conversation that she had with Ms Youm on that day. This note included the following sentence: 'I explained that we no longer have a grant of legal aid to represent her for the children's matter and that our grant of aid extended only to the conference.' It also recorded that Ms Youm appeared not to have received correspondence that Ms Green had posted to her, with the following comments added: 'I checked the address with the client. Apparently it is correct so I am not sure what is happening to her mail'. 31At some time before her departure from KR Lawyers in late April 2007, Ms Green, following instructions from Ms Kazas-Rogaris, sent a costs agreement to Ms Youm. It stated that KR Lawyers, in carrying out Ms Youm's instructions, would do the following work: 'Complete Family Court Action in relation (1) Residence/Contact and (2) Property Settlement'. It quoted an hourly rate of $200. It did not contain a clause whereby Ms Youm would authorise KR Lawyers to withdraw amounts from funds held by them in trust for her in order to pay their costs and disbursements. 32On Ms Green's departure, Ms Doumit took carriage of Ms Youm's matter. On 2 August 2007, being the day after Ms Doumit also left, it passed into Ms Kazas-Rogaris's hands. 33According to Ms Kazas-Rogaris's file note of a telephone conversation with Ms Youm on 23 August 2007, she said that if Ms Youm took proceedings against her husband (apparently referring to the dispute over the children), 'the costs would increase substantially'. Ms Youm advised that the matrimonial home was being sold and agreed that the net proceeds should be transferred into KR Lawyers' trust account. 34On 24 September 2007, the sale of the matrimonial home was settled and the proceeds deposited into this account. 35A file note made by Ms Kazas-Rogaris of a telephone conversation that she had with Ms Youm on the same day included the following passage:- T/C with Michelle Youm advised her that she no longer has a Legal Aid Grant and needs to pay for her legal services. I advised that she will be billed according to Cost Agreement. She stated she has not signed cost agreement. I advised it did not matter as she continued to instruct us. She agreed to pay $200 per hour. I advised Ms Youm that tax invoices will be sent to her and she has time to review them. If she does not respond or has no dispute with the costs we will deduct our professional costs and disbursements from trust. She agreed. I advised that we will forward tax invoices to her shortly. 36In a letter dated 25 March 2009 to Ms Katherine Hawes, who was Acting Manager, Professional Practice Branch, at Legal Aid, Ms Kazas-Rogaris stated that this conversation occurred on the 26th, not the 24th, of September 2007. She also stated that a letter was sent to Ms Youm on 26 September confirming the conversation. She did not, however, mention this letter in her affidavit and no copy of any letter answering this description was annexed to the affidavit. 37Ms Kazas-Rogaris's account of these conversations with Ms Youm on 23 August and 24 (or 26) September 2007 was not challenged in cross-examination. 38Between October and December 2007, Ms Pace issued invoices for KR Lawyers' costs and disbursements to Ms Youm and sent them to her at the address recorded in the firm's database. 39During this period, Ms Kazas-Rogaris withdrew funds from the firm's trust account to pay the amounts shown on the invoices. She had received no notification from Ms Youm of any dispute regarding these costs. 40During February 2008, Gavin Connor, an Investigator appointed by the Law Society, inspected the trust account records of KR Lawyers. He queried the charging of Ms Youm, on the ground that she was a legally aided client. He said that Ms Youm had told him this, and had also claimed that she had never received a costs agreement and was disputing some of the costs. 41On 14 February 2008, Ms Pace informed Ms Kazas-Rogaris that she had relied on KR Lawyers' database in ascertaining Ms Youm's address. Ms Kazas-Rogaris replied that this address was incorrect and that Ms Pace should have checked the file. Ms Kazas-Rogaris then asked whether the invoices sent out by Ms Pace included the costs of the 'legal aid conference'. When Ms Pace replied that these costs had been included, Ms Kazas-Rogaris said that she had given instructions that they should be omitted. 42The evidence of these events was furnished in the affidavit of Ms Pace. She was not required for cross-examination. 43On 15 February 2008, Ms Kazas-Rogaris transferred back to the firm's trust account the total amount of the invoices sent to Ms Youm. According to her affidavit, she did this 'pending verification from legal aid and further clarification of our costs from an independent costs assessor'. At the request of the Professional Standards Committee, she also arranged, pursuant to an undertaking that she gave, for an external examiner to provide quarterly reports (at her expense) on the trust account to the Law Society over a period of two years. 44Between September 2007 and May 2008, Ms Kazas-Rogaris met Ms Youm on a number of occasions. At one of these meetings, held on 27 December 2007, she filled out an application for victim's compensation on Ms Youm's behalf, to be sent to the Victims Compensation Tribunal. There was, she maintained, 'no discussion about her costs'. 45On 25 May 2008, consent orders were filed in the Family Court at Parramatta settling the outstanding matters between Ms Youm and her husband. 46Early in June 2008, Ms Kazas-Rogaris and Ms Youm corresponded by telephone and by emails, chiefly on the subject of costs. 47According to Ms Kazas-Rogaris's affidavit, the position taken by her was that her firm's costs should be assessed by an independent assessor and that until this was done Ms Youm should not be required to pay anything. She did indeed state this in an email dated 9 June 2008. But in an email sent on 4 June she had written that although she was sending an invoice for costs charged at $200 per hour, she would change the rate to $150, in line with a statement she had made to Ms Youm on the telephone. (In her affidavit, Ms Kazas-Rogaris described this document as a 'draft' memorandum of costs only.) In an earlier email to her on the same day. Ms Youm had indicated that she was in fact awaiting a bill of costs. 48An email sent by Ms Kazas-Rogaris to Ms Youm on 5 June 2008 included the following passage:- Further please speak to Peter Tutor (sic) Senior Family Law Solicitor regarding your legal aid funding. I advise that funding was initially granted for Property in the Federal Magistrates Court. We never pursued that path. Also that was prior to the selling of your home and the consequent funds in our trust account. As it now stands you are not entitled to Legal Aid. 49In several emails sent to Ms Kazas-Rogaris during this period, Ms Youm insisted that $70,648.90, being the whole of her share of the net proceeds of the sale of the matrimonial home, should be placed in a specified controlled money account. 50Ms Kazas-Rogaris's initial response was to maintain that this money should be managed by another solicitor. She then agreed to transfer $60,000 from the trust account to the account nominated by Ms Youm, while insisting that until the matter of costs was settled, she would retain the balance of $10,648.90 in her firm's trust account. 51According to Ms Kazas-Rogaris's affidavit, Ms Youm collected a cheque for $60,000 from KR Lawyers' office on 6 June 2008 and agreed that the balance of $10,648.90 could remain in the trust account until the costs payable by her were assessed. 52The 'Peter Tutor' to whom Ms Kazas-Rogaris referred in her email of 5 June 2008 was in fact Peter Tudor, who was employed by Legal Aid as a Senior Family Law Solicitor. On 9 June 2008, Ms Youm sent an email to Mr Tudor attaching the 'payment invoice' that KR Lawyers sent to her. She claimed that she had never received any tax invoices from this firm, that she was still entitled to legal aid in both the property and the children's matters and that she had 'no doubt' that KR Lawyers were claiming payments of legal aid funds. 53On 11 June 2008, pursuant to Ms Kazas-Rogaris's instructions, an employee of KR Lawyers (Ms Margiotta) sent a letter to Mr Tudor requesting his advice as to 'whether Mrs Youm is currently obtaining legal aid in relation to her property settlement'. 54This letter commenced by referring to the second grant, indicating that it provided funds for 'an allocation of 5 hours negotiation aimed at resolving the matter'. It stated that in response to an inquiry by Ms Kazas-Rogaris on 29 April 2008, Legal Aid had advised that this grant was to be used for the children's matter only, not for the property matter. The letter then stated: 'In relation to the property matter there was a grant to initiate proceedings in the Federal Magistrates Court. We have not claimed this as we did not proceed with the matter in the Federal Magistrates Court.' It then advised as to the sale of the matrimonial home and the settlement of all matters via consent orders, adding that because of the funds received from the sale KR Lawyers had not applied for further legal aid. The letter also referred to Ms Youm's claim that she should not pay any costs because she was legally aided. 55On 26 August 2008, having received no reply from Mr Tudor, Ms Kazas-Rogaris sent him an email requesting his reply at his earliest convenience. In this email she made the observation, which she confirmed during her cross-examination, that the file on Ms Youm's matter had been 'poorly kept'. 56On 1 and 2 September 2008, there was an email exchange between Ms Kazas-Rogaris and Ms Youm in which each of them expressed concern at the delay on Legal Aid's part in responding to their respective inquiries. 57On 2 September 2008, Ms Kazas-Rogaris sent an email to Mr Tudor, to which she attached an itemised costs account for Ms Youm's matters that had been prepared by Marriotts Legal Costers Pty Ltd. She declared herself to be 'amazed' at having learned that Ms Youm had previously sent her 'draft' memorandum of costs to him, since she had 'specifically' told Ms Youm that the costs were to be assessed by an independent assessor and that no costs needed to be paid until this was done. She reiterated that in her opinion Ms Youm was not entitled to legal aid, on account of having 'personal funds' from which legal costs could be paid. 58On 22 September 2008, KR Lawyers sent this itemised costs account to Ms Youm by express post. The covering letter advised that the costs had been assessed by Marriotts Legal Costers Pty Ltd in accordance with the Family Law Rules 2004, and that a copy of the account had been sent to Mr Tudor. It also stated as follows: 'We note that the grant you received from Legal Aid was never claimed by our firm. The only payment we have received from Legal Aid is for the Legal Aid conference.' 59The costs account spanned the period from 15 September 2006 to 10 June 2008. The legal services itemised between 15 September 2006 and 22 January 2007 (for reasons shortly to be explained, this period is of primary significance) related to Ms Youm's disputes with her husband regarding both their children and their property, and also to the implications of an Apprehended Violence Order that she had obtained against him on 25 August 2006. 60So far as the property was concerned, the role undertaken by KR Lawyers was that of representing her in negotiations with her husband's solicitors aimed at achieving a settlement. These negotiations commenced on 23 October 2006 and were still in train on 22 January 2007. None of the itemised services rendered between 15 September 2006 and 22 January 2007 related to the institution of legal proceedings on Ms Youm's behalf, either in the Federal Magistrates Court or in any other court. 61On 26 February 2009, KR Lawyers deducted from the funds held in trust for Ms Youm the amount of the costs and disbursements set out in the assessed bill of costs. 62In a letter dated 3 March 2009, KR Lawyers advised Ms Youm that they had taken this step, pursuant to section 261(1)(b) of the LP Act and regulation 88(4) of the Legal Profession Regulation 2005 ('the LP Regulation'). These provisions are reproduced below. 63In this letter, KR Lawyers also confirmed that this bill had been sent to her on 22 September 2008, adding that they had sent a second copy on 15 October 2008 'as you had changed addresses just in case you did not receive the previous letter'. They noted that they had not received any objection to the assessment from her or any request to have it reviewed. They restated the reasons why they had had the costs assessed and why they considered her not to be entitled to legal aid. In this connection, they referred to a telephone conversation between her and Ms Kazas-Rogaris on 21 (sic) September 2007, during which Ms Kazas-Rogaris explained to her that because she then had funds available she could not obtain legal aid and she agreed (according to the letter) that she was liable to pay their legal costs from any funds held on her behalf in their trust account. 64During cross-examination, Ms Kazas-Rogaris testified that before sending this letter and accompanying costs account, she had asked the Law Society about the legality of doing so. When asked why she had not mentioned this in her affidavit or in any correspondence with the Society regarding Ms Youm's complaint against her, she replied that she did not believe this to be 'necessary' and that it did not fall within the scope of the answers required by the Law Society's questions to her. When Mr Barnes put it to her that she had 'made up' this claim on the day of the hearing, she denied it. 65It would appear that Mr Tudor never replied to Ms Kazas-Rogaris's requests for advice on these matters. On 19 March 2009, however, Ms Hawes (who was, as stated above, Acting Manager, Professional Practice Branch, at Legal Aid) advised her by letter that, after reviewing the itemised account that had been sent to Ms Youm, Legal Aid had determined that KR Lawyers had breached section 41 of the LA Act (which is reproduced below) 'for the period 15 September 2006 until 22 January 2007', and were therefore unable to charge Ms Youm privately for any work or disbursements relating to her family law matter during this period. Ms Hawes then asked Ms Kazas-Rogaris to amend the firm's account, deducting all claims relating to this period. She next referred to Ms Green's statement, accompanying the firm's invoice dated 22 January 2007, that this was not the final account to be submitted and that the proceedings were not concluded. She pointed out that since no subsequent application for legal aid had ever been made, the question whether Ms Youm should pay costs incurred after 22 January 2007 would depend on whether she instructed KR Lawyers to apply for an extension of legal aid funding. The letter concluded by requesting on or before 3 April 2009 a 'detailed explanation' of whether the firm had been so instructed. 66On 20 March 2009, Ms Hawes sent a copy of this letter to Ms Youm. On the same day, Ms Youm lodged her complaint with the Legal Services Commissioner. 67In a letter dated 25 March 2009, Ms Kazas-Rogaris replied at length to Ms Hawes' letter. For present purposes, it is sufficient to indicate that this reply repeated the grounds, summarised above, on which she had previously maintained that her firm was entitled to charge Ms Youm for all services rendered in connection with her family law matter except the conference held on 3 November 2006. She placed significant emphasis on her claim that Ms Youm, being prospectively entitled as from early 2007 to receive a significant sum from the property settlement, would not have been entitled to further legal aid. She stated also that she did not know whether her employed solicitor received instructions from Ms Youm to apply for such aid, adding that in the file notes there was no indication of any such instructions. Towards the end of the letter, she observed that Ms Youm had sent her an email on 4 June 2008 requesting an invoice for costs, and added: 'If she did in fact believe that she was legally aided it is beyond my understanding as to why she would request for an invoice to be sent to her.' 68In cross-examination, Ms Kazas-Rogaris said that before she sent this letter of 25 March 2009, she discussed the subject-matter of it with Ms Hawes in a telephone conversation. When asked why this was not mentioned in her letter, she answered that she had drafted it before this discussion took place. 69On 27 March 2009, and again on 26 May 2009, Ms Hawes sent a copy of this letter to Ms Youm. In identical covering letters, she stated as follows:- After perusing the correspondence from KR Lawyers, Legal Aid NSW notes that due to your change in circumstances you did not instruct KR Lawyers to submit an extension for Legal Aid funding. That being the case, Legal Aid NSW has determined that KR Lawyers are in a position to charge you privately for work undertaken in accordance with your instructions from the conclusion of the grant being 22 January 2007. Legal Aid NSW still maintains that you should not be charged privately for work undertaken between the periods of 15 September 2006 until 22 January 2007. 70Ms Hawes sent a copy of each of these covering letters to Ms Kazas-Rogaris. 71It is convenient here to quote a passage from Ms Whitehead's affidavit, on which the Law Society relied. It will be recalled that at the time of swearing this affidavit Ms Whitehead was the Director of the Grants Division of Legal Aid. At paragraph 2, she stated:- Until such time as the grant of legal aid is concluded or terminated, the legal practitioner's client remains a legally assisted person for the purpose of the Legal Aid Commission Act, 1979 and that person's legal practitioner is not entitled to charge for work carried out in respect of the matter the subject of the grant other than in accordance with the provisions of section 41 of the said Act. 72Further correspondence entered into between Ms Kazas-Rogaris, Ms Youm and the Law Society during the Society's investigation of Ms Youm's complaint need not be described here. 73As indicated above at [2], the Law Society's decision to reprimand Ms Kazas-Rogaris was based on its findings that she had contravened section 255 of the LP Act on two separate occasions (between October and December 2007 and on 26 February 2009) and had also contravened section 41 of the LA Act. It is convenient to begin our discussion of these findings with an investigation of the third of them. Whether section 41 of the LA Act was contravened 74Legislation. For the purposes of this discussion, sections 38(1) and 41 of the Legal Aid Commission Act 1979 should be quoted:- 38 Variation of grant of legal aid (1) The grant of legal aid to a person may, at any time, be varied by the Commission so as to: (a) terminate the provision of the legal aid, (b) alter the nature or extent of the legal aid, (c) make the provision of the legal aid subject to a condition or an additional condition (including a condition of the kind referred to in section 36 (1) (a)), or (d) alter a condition (including a condition of the kind referred to in section 36 (1) (a)) to which the provision of the legal aid is subject. 41 Demand for or receipt of certain payments prohibited (1) Despite any Act or law to the contrary, a private legal practitioner is not entitled to charge or recover from a legally assisted person any amount: (a) by way of costs in respect of work assigned by the Commission to the private legal practitioner on behalf of that person, or (b) by way of disbursements incurred on behalf of that person in connection with that work, except with the approval of the Commission. (2) A provision of any agreement (whether in writing or not and whether entered into before or after the commencement of this section): (a) under which the operation of this section is excluded, modified or restricted, or (b) which has the effect of excluding, modifying or restricting the operation of this section, is void. 75The parties' submissions. In relatively brief submissions on this aspect of the case, Mr Stanton argued that if Ms Kazas-Rogaris's interpretation of the first grant of legal aid was correct, she had not contravened section 41 of the LA Act. Ms Kazas-Rogaris had maintained that this was a grant to initiate proceedings in the Federal Magistrates Court. It followed, Mr Stanton maintained, that no breach had occurred because KR Lawyers did not proceed with the matter in this Court. 76As an alternative to this argument, Mr Stanton submitted that this grant was formulated in a 'confused and convoluted' way. Accordingly, Ms Kazas-Rogaris's conduct in acting on an interpretation that she had adopted in good faith could not provide grounds for a finding of unsatisfactory professional conduct. 77Mr Stanton also submitted that Ms Kazas-Rogaris could not be held at fault for failing to seek clarification of the first grant because at the times when she sent bills of costs to Ms Youm she did not know of its existence. She was only aware of the second grant, which was expressly limited to the costs of a 'round table conference'. It was clear that, contrary to the position adopted by both Legal Aid and the Law Society, this grant did not relate to the whole of the period between 15 September 2006 and 22 January 2007. 78Mr Barnes argued that 'at the very least' Ms Kazas-Rogaris's conduct in billing Ms Youm for the work done by KR Lawyers in relation to property matters between 23 October 2006 and 22 January 2007 was a 'clear breach' of section 41. In support of this argument, he referred to the answers given by Ms Green to questions 29 and FC2 of the application for the first grant (see paragraphs [14 and [15] above) and to the use of the term 'property settlement' in the heading of the letters of 13 October 2006 notifying Ms Doumit and Ms Youm that the application had been granted (see [18]). 79A copy of the itemised bill of costs that Ms Kazas-Rogaris sent to Ms Youm on 22 September 2008 formed part of the material filed by the Law Society under section 58 of the ADT Act. Within this bill, Mr Barnes identified items 21-53, relating to the period between 23 October 2006 and 22 January 2007, as items which 'at the very least' were covered by the first grant and should therefore not have been included in the bill. 80Mr Barnes also maintained that by virtue of the second grant, relating to the planned conference aimed at settling both the property and the children's matters, KR Lawyers were forbidden by section 41 to charge Ms Youm for any work done by them with respect to the children. They should, he said, have obtained authorisation to do this from Legal Aid or sought to withdraw from representation. Citing paragraph 2 of Ms Whitehead's affidavit, which is reproduced above at [70], he claimed that 'this was the way in which Legal Aid worked'. 81With reference to both grants of legal aid, Mr Barnes relied also on the statements by Ms Green, appearing on the invoice that she sent to Legal Aid on 22 January 2007, that the proceedings between Ms Youm and her husband had not concluded and that the 'property issue' would 'proceed to litigation'. 82Discussion and conclusions. In our judgment, Mr Stanton's primary argument should be accepted, for the following reasons. 83Under section 41(1) of the LA Act, the costs that a private legal practitioner is not entitled to charge or recover from a legally assisted person is defined as amounts: '(a) by way of costs in respect of work assigned by the Commission to the private legal practitioner on behalf of that person' and '(b) by way of disbursements incurred on behalf of that person in connection with that work', except with the approval of the Commission (emphasis added). 84The subsection expressly draws attention to the 'work' that has been 'assigned' by the grant to the relevant legal practitioner. The prohibition against the recovery of costs or disbursements by the practitioner only applies to costs and disbursements incurred in respect of, or in connection with, that 'work'. 85As is clearly indicated in the passages within the first grant quoted above at [19] and [20], this grant covered property matters only and was 'for representation in the Federal Magistrates Court to the conclusion of the directions stage'. This was 'the work assigned by the Commission' to Ms Doumit, the nominated legal practitioner. Although the heading of each of the letters to Ms Doumit and Ms Youm notifying them of the grant used the phrase 'Property settlement married' (see [18]), it also specified a court - the Parramatta Federal Circuit Court. 86We do not see how legal 'work' defined in this way could be regarded as including the representation of the aided party in negotiations designed to achieve a settlement of her property dispute with her husband, in circumstances where these negotiations took place without any step being taken by or on behalf of the nominated legal practitioner towards initiating the court proceedings on her behalf that were envisaged in the grant of aid. 87We have examined items 21-53 in the itemised bill of costs issued on 22 September 2008 and are satisfied that none of them describes 'work' of the type 'assigned' to Ms Doumit by the first grant, having regard to our interpretation of the terms of this grant. As we said at [60], 'none of the itemised services rendered between 15 September 2006 and 22 January 2007 related to the institution of legal proceedings on Ms Youm's behalf, either in the Federal Magistrates Court or in any other court'. 88When the second grant is examined in the same light, the outcome, in our opinion, is that (a) the 'work' that it 'assigned' to Ms Doumit comprised only the representation of Ms Youm at the proposed conference and (b) the prohibition in section 41 on charging costs applied to this 'work' only. 89The evidence does not establish clearly whether or not the work for which costs were charged in items 21-53 of the bill of 22 September 2008 included any of the work, relating to the proposed conference, that was assigned to Ms Doumit by the second grant. The two final paragraphs of Ms Pace's affidavit - to which Mr Barnes did not refer in his submissions - suggested that the invoices sent out by her late in 2007 may have included the costs of this work. But in the itemised bill dated 22 September 2008 no costs were claimed for any work done between 28 October 2006 and 17 November 2006. Ms Kazas-Rogaris, in her letter of 25 March 2009 to Ms Hawes (see [67]) stated that the conference was held on 3 November 2006. 90On this question, as on another that we shall mention shortly, there is no definitive evidence. In such situations, we believe that we should (to put it broadly) give Ms Kazas-Rogaris the 'benefit of the doubt'. 91The grounds for this belief are twofold. First, for reasons explained above at [10 - 11], our task includes determining (with reference to section 540(1)(b)(i) of the LP Act is concerned) whether there is a 'reasonable likelihood' that the ADT would have made a finding of unsatisfactory professional conduct against Ms Kazas-Rogaris. Secondly, if the ADT had in fact been called on to decide whether such a finding should be made, it would have been mindful of the established principle that in disciplinary proceedings before it alleging unsatisfactory professional conduct under the LP Act, the Law Society or other prosecuting authority bore the onus of proof. 92We realise that in interpreting section 41(1) in the manner set out above we appear to be in disagreement with the approach taken by senior officers of Legal Aid. If having regard to this consideration and/or for any other reasons our interpretation of the subsection is incorrect, we would still not regard Ms Kazas-Rogaris as being at fault to the extent required to justify the finding required by section 540(1)(b)(i) of the LP Act. 93Even if her view (with which we concur) as to the scope of application of the prohibition in section 41(1) to the circumstances of her case was incorrect, it was at least a reasonable one. Despite her repeated requests for advice from Mr Tudor, the contrary view taken by Legal Aid was not explained to her until 19 March 2009. This was nearly six months after she had sent the itemised bill of costs to Ms Youm and sixteen days after she transferred the amount of these costs from the trust account to her office account. 94On the assumption, therefore, that section 41 applied to the circumstances of this case to the extent maintained by Legal Aid, we would still not be satisfied that there was a reasonable likelihood that Ms Kazas-Rogaris would have been found by the ADT to have engaged in unsatisfactory professional conduct. Whether section 255 of the LP Act was contravened 95Two separate instances of contravention of section 255 were cited in the resolution of the Professional Conduct Committee. They involved Ms Kazas-Rogaris's withdrawals of money from funds held in trust for Ms Youm during the period from October to December 2007, and her subsequent withdrawal on 26 February 2009, in order to pay costs and disbursements claimed by her. We will call these instances of transferring funds from KR Lawyers' trust account to their office account 'the earlier transfers' and 'the later transfer' respectively. 96Legislation. The provisions of importance in this context are sections 255 and 261 of the LP Act and clause 88 of the LP Regulation. So far as relevant, these state:- 255 Holding, disbursing and accounting for trust money (1) A law practice must: (a) hold trust money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received, and (b) disburse the trust money only in accordance with a direction given by the person. 261 Dealing with trust money: legal costs and unclaimed money (1) A law practice may do any of the following, in relation to trust money held in a general trust account or controlled money account of the practice for a person:... (b) withdraw money for payment to the practice's account for legal costs owing to the practice if the relevant procedures or requirements prescribed by this Act and the regulations are complied with,... (2) Subsection (1) applies despite any other provision of this Part but has effect subject to Part 3.2 (Costs disclosure and assessment). 88 Withdrawing trust money for legal costs-section 261 (1) (b) of the Act (1) This clause prescribes, for the purposes of section 261 (1) (b) of the Act, the procedure for the withdrawal of trust money held in a general trust account or controlled money account of a law practice for payment of legal costs owing to the practice by the person for whom the trust money was paid into the account. (2) The trust money may be withdrawn in accordance with the procedure set out in either subclause (3) or (4). (3) The law practice may withdraw the trust money: (a) if: (i) the money is withdrawn in accordance with a costs agreement that complies with the legislation under which it is made and that authorises the withdrawal, or (ii) the money is withdrawn in accordance with instructions that have been received by the practice and that authorise the withdrawal, or (iii) the money is owed to the practice by way of reimbursement of money already paid by the practice on behalf of the person, and (b) if, before effecting the withdrawal, the practice gives or sends to the person a request for payment, referring to the proposed withdrawal. (4) The law practice may withdraw the trust money: (a) if the practice has given the person a bill relating to the money, and (b) if: (i) the person has not objected to withdrawal of the money within 7 days after being given the bill, or (ii) the person has objected within 7 days after being given the bill but has not applied for a review of the legal costs under the Act within 60 days after being given the bill, or (iii) the money otherwise becomes legally payable. (5) Instructions mentioned in subclause (3) (a) (ii): (a) if given in writing, must be kept as a permanent record, or (b) if not given in writing, must be confirmed in writing either before, or not later than 5 working days after, the law practice effects the withdrawal and a copy must be kept as a permanent record. 97The parties' submissions. Mr Stanton argued that in the case of all of the transfers Ms Kazas-Rogaris complied with the conditions stipulated in section 261(1)(b) and clause 88(4). 98In the alternative (as we understood his submissions), he maintained that if in the case of the earlier transfers Ms Kazas-Rogaris could not rely on these provisions because the invoices were sent by Ms Pace to an incorrect address, she should still not be regarded as culpable. The reason for this was that as soon as she became aware of this mistake by Ms Pace she transferred the funds that had been withdrawn from the trust account back into this account. 99With regard to both the earlier transfers and the later one, Mr Barnes argued that section 255 was infringed because they all contravened section 41 of the LA Act. 100He argued also that Ms Kazas-Rogaris did not have any authority from Ms Youm to make the earlier transfers. He pointed out that Ms Youm claimed never to have received the tax invoices on which these transfers were based. He also acknowledged, however, that it was to Ms Kazas-Rogaris's credit that she put the amounts transferred back into the trust account when Mr Connor queried her entitlement to them. 101Mr Barnes' additional submission regarding the later transfer was that, even if it did not involve contravention of section 41 of the LA Act, the fact that Ms Kazas-Rogaris knew of Ms Youm's claim not to be liable for any costs by virtue of this provision was sufficient to prevent her invoking section 261 of the LP Act as a defence to liability under section 255. 102Discussion and conclusions. In so far as Mr Barnes's argument in this context was based on the proposition that the transfers of funds effected by Ms Kazas-Rogaris involved breaches of section 41 of the LA Act, it must be rejected. We have held that the evidence does not establish any such breaches. 103In our opinion, the available evidence, when carefully examined, gives rise to the following conclusions. First, Ms Kazas-Rogaris had reasonable grounds for believing that the earlier transfers were permissible under section 261(1)(b) of the LP Act and clause 88(4) of the LP Regulation. Secondly, the later transfer was in fact permissible under these provisions. 104So far as Ms Kazas-Rogaris was aware, Ms Pace sent to Ms Youm the bills of costs on which the earlier transfers were based. The evidence does not disclose any objection by Ms Youm. Indeed, Ms Kazas-Rogaris gave uncontradicted evidence that on 24 September 2007 Ms Youm agreed during a telephone conversation with her that she could make withdrawals from funds held in trust to pay her costs (see [35] and [37]). By virtue of the onus of proof borne by the Law Society in disciplinary proceedings (see above at [91]), it must be assumed in Ms Kazas-Rogaris's favour that the transfers were not made until more than seven days (as stipulated in subclause (4)(b)(i)) after the date when Ms Youm would have received the bills if they had been sent to the correct address. 105To put the matter shortly, Ms Kazas-Rogaris could reasonably have believed that the requirements of clause 88(4) had been satisfied. Her evidence that she did not know of Ms Pace's error until 14 February 2008 was not challenged. It was in fact on the next day that she remitted to the trust account the amounts that had been transferred. 106By virtue of these considerations, we are not satisfied that on account of Ms Kazas-Rogaris's conduct in making the earlier transfers there is a reasonable likelihood that the ADT would have made a finding of unsatisfactory professional conduct against her. 107As Mr Barnes emphasised, the evidence clearly showed that at the time when she made the second transfer Ms Kazas-Rogaris knew that Ms Youm objected to paying any of the costs involved, on the ground that she was a legally aided client. For this reason alone, he said, Ms Kazas-Rogaris's conduct in making this transfer constituted a breach of section 255. 108We agree that at the relevant time this was the stance adopted by Ms Youm and communicated to Ms Kazas-Rogaris. This was the case even though during June 2008 Ms Youm appeared to have accepted some degree of liability to pay costs (see [47] above). 109On a strict reading of section 261(1)(b) and clause 88(4), however, we do not believe that the conclusion urged by Mr Barnes follows from Ms Kazas-Rogaris's awareness of Ms Youm's objection. Even if Ms Youm should be taken to have objected within seven days of receiving the itemised account sent to her on 22 September 2008 (cf subclause (4)(b)(i) of clause 88 of the LP Regulation), she did not apply for a review of the costs being charged within 60 days (cf subclause (4)(b)(ii)). After this was pointed out to her in Ms Kazas-Rogaris's letter to her dated 3 March 2009 (see [62 - 63]), she did not contest it. 110The terms of the latter subclause, in particular, suggest that the primary concern of clause 88 is to give to clients an opportunity to object to the amount of any costs of being charged. The clause, read with section 261(1)(b), does not appear to prohibit withdrawals from trust funds when the client has claimed not to be liable to pay any costs at all, but this claim is not justified. 111We have concluded that the ground on which Ms Youm made a claim of this nature has not been made out. It follows, in our judgment, that what we have called the later transfer was authorised under section 261(i)(b) of the LP Act and clause 88(4) of the LP Regulation and that it did not involve any breach of section 255. Conclusion 112For the foregoing reasons, we are not satisfied, having regard to the material before us, that there is a reasonable likelihood that the Applicant, Ms Kazas-Rogaris, would have been found by the Administrative Decisions Tribunal to have engaged in unsatisfactory professional conduct. 113The decision of the Respondent, made on 21 March 2013, to reprimand the Applicant is therefore set aside. 114Pursuant to a request by the Law Society, we make the following direction regarding the costs of these proceedings. Any application for costs by the Applicant must be filed and served, with supporting submissions, within 21 days. The Respondent is to file and serve its submissions within a further 21 days. The question of costs will then be decided 'on the papers', pursuant to section 76 of the ADT Act, unless we consider that a hearing is required. 115In conclusion, we wish to draw attention to an aspect of section 540 that we regard as unsatisfactory. In its present form, it can produce the outcome that a legal practitioner is reprimanded (or is subjected to one or more of the other lesser penalties listed in subsection (2)) even though it has not been affirmatively shown that he or she engaged in unsatisfactory professional conduct. The lower threshold set out in subsection (1) - that of a 'reasonable likelihood' of such a finding - applies both when the Legal Services Commissioner or a Council chooses to invoke the section and when administrative review of an adverse decision is sought by the legal practitioner concerned. By contrast, if the matter proceeds by way of a disciplinary application to NCAT (which is now the relevant tribunal), an order by way of penalty will only be made if unsatisfactory professional conduct is proved to NCAT's satisfaction. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 15 October 2014