Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Council of the Law Society of New South Wales v Truong (No 2) [2015] NSWCATOD 79 Hearing dates: 25 June 2015 Decision date: 03 August 2015 Jurisdiction: Occupational Division Before: M Chesterman, Principal Member R Dawson, Senior Member R Fitzgerald, General Member Decision: 1. The Respondent is reprimanded. 2. The Respondent is to pay the Applicant's costs as agreed or assessed. Catchwords: Solicitor– failure to comply with notice under s 660 of Legal Profession Act 2004 – penalty – costs Legislation Cited: Civil and Administrative Tribunal Act 2013 Legal Profession Act 2004 Legal Profession Uniform Law (NSW) No 16 a Cases Cited: Council of the Law Society of New South Wales v Gallego (No 3) [2015] NSWCATOD 37 Council of the Law Society of New South Wales v Hinde [2011] NSWADT 20 Council of the Law Society of New South Wales v Tsalidis (No 2) [2010] NSWADT 297 Council of the Law Society of New South Wales v Truong [2015] NSWCATOD 22 Council of the Law Society of New South Wales v Webb (No 2) [2012] NSWADT 233 Council of the Law Society of NSW v Beazley [2014] NSWCATOD 147 Council of the Law Society of NSW v Johnson [2013] NSWADT 19 Law Society of New South Wales v Carbone [2011] NSWADT 32 Veghelyi v Council of the Law Society of New South Wales, unreported, Supreme Court, Smart J, 6 September 1989 Xu v Council of the Law Society of NSW [2009] NSWCA 430 Category: Consequential orders (other than Costs) Parties: Council of the Law Society of New South Wales (Applicant) Albert-Edris Tri Dai Minh Truong (Respondent) Representation: Counsel: C Jackson (Respondent) Solicitors: C Groenewegen, Council of the Law Society of New South Wales (Applicant) Edrison Lawyers (Respondent) File Number(s): 1420308 Judgment Introduction 1. On 12 January 2015, we conducted the first hearing in these disciplinary proceedings brought by the Council of the Law Society of New South Wales ('the Law Society') against Albert-Edris Tri Dai Minh Truong ('the Solicitor'). 2. In its Application, the Law Society sought a finding of professional misconduct and orders that the Solicitor : 1. be reprimanded 2. if, at the time the Tribunal makes its orders the solicitor holds a practising certificate, the solicitor's practising certificate be suspended until such time as the solicitor complies with the section 660 Notice 3. if, at the time the Tribunal makes its orders the solicitor does not hold a practising certificate, no practising certificate be issued until such time as the solicitor complies with the section 660 Notice 4. pay the costs of the Applicant as agreed or assessed 5. be subject to any other order as the Tribunal deems appropriate. 1. The sole Ground of the Application was formulated as follows: Albert-Edris Truong is guilty of professional misconduct because without reasonable excuse, he failed to comply with a requirement under section 660 of the Legal Profession Act 2004. 1. So far as relevant, s 660 states that an Australian lawyer must comply with any requirement, contained in a notice served on him or her by an investigator, to produce any specified document and/or provide written information (verified if the requirement so indicates). The requirement must be notified in writing and must specify a reasonable time for compliance. Under s 676(3) and (4) of the Act, a lawyer who fails without reasonable excuse to comply with any such requirement is guilty of professional misconduct. 2. The notice in this case ('the Notice') was served on the Solicitor on 23 May 2013. It stipulated that information provided in compliance with its requirements should be verified. It also stated that to the extent that the Solicitor was unable to comply with its requirements, he was to provide a statutory declaration stating the reasons for his inability to comply. 3. The complaint by the Law Society ('the Complaint') on which these proceedings were based was made on 20 February 2014. The Solicitor received notification of it by letter dated 25 February 2014. The Society's resolution to refer these proceedings to the Tribunal was passed on 15 May 2014. The Solicitor received notification of this resolution by letter dated 27 May 2014. 4. On 31 March 2015, we delivered a decision (Council of the Law Society of New South Wales v Truong [2015] NSWCATOD 22 – hereafter 'the first decision') in which we held that the Solicitor had been guilty of professional misconduct on the sole Ground alleged by the Law Society in its Application. 5. On 25 June 2015, we conducted a second hearing for the purpose of determining (a) what order or orders by way of penalty, if any, we should make against the Solicitor under s 562 of the Legal Profession Act 2004 ('the Act'), and (b) the question of costs. At this hearing, Ms C Groenewegen appeared for the Law Society and Mr C Jackson of counsel for the Solicitor. No additional evidence was tendered. 6. At the conclusion of the hearing, we gave directions for the filing of supplementary submissions on the matter of costs. The Solicitor and the Law Society complied on 30 June and 2 July 2015 respectively. 7. It is convenient to add here that although this decision is being published after the commencement (on 1 July 2015) of the Legal Profession Uniform Law (NSW) No 16a, the legal principles to be applied are those in force before this commencement (see Sch 4, cl 26(1) and (2) of this Law). Relevant aspects of the first decision 1. In this decision at [86 – 89], we held that the time specified in the Notice for compliance (fourteen days after service) was reasonable in the circumstances. 2. Although we upheld the sole Ground of the Application, we rejected a number of the specific allegations made in the accompanying Particulars. At [31 – 34], we rejected two allegations of failure by the Solicitor to provide information required by the Notice. These allegations were made in paragraphs (hereafter 'P') 11(f) and (g) of the Particulars. We rejected them because the Notice did not require this information to be provided. At [42 – 46], we held that an allegation (in P11(a)) of failure to produce bank statements relating to all office and trust accounts of the Solicitor's firm during a specified period of time was substantiated in part only. The ground for this ruling was that the statements to which the Notice referred constituted a distinctly smaller group. At [48 – 54], we rejected an allegation (at P11(b)) of failure to produce documents described as 'confirmation letters'. Our reason was that the Notice did not require such documents to be produced. At [59 – 61], we rejected an allegation (at P11(c)) of failure to produce a particular file, on the grounds set out in those paragraphs. 3. In the first decision at [99], we summarised as follows the specific failures by the Solicitor to comply with the requirements of the Notice: 99… (i) he did not produce until 23 April 2014 the bank statements (relating to the 29 deposits listed in Question 16) that were required by paragraph A of Schedule 2 to the Notice; (ii) he omitted to produce on 6 June 2013 an attachment relating to a specified deposit, but after being notified of this omission in the Law Society's letter of 25 February 2014 he sent the attachment as an enclosure to his letter of 23 April 2014; (iii) he did not provide a statutory declaration regarding the two matter files relating to Zhi Yun Ma until 7 June 2013, one day after the date stipulated for compliance; (iv) he failed to verify the contents of the letter of 6 June 2013, which contain his answers to Question 16 in Schedule 1 of the Notice; and (v) he failed, until 18 July 2014, to comply with the requirement to verify the information falling within the scope of Question 16 that he provided to the Law Society in his letters of 23 and 30 April 2014. 1. Having ruled that the failures described in items (ii) and (iii) in this list were 'excusable', we held at [101] that there was no 'reasonable excuse' for those described in items (i), (iv) and (v). 2. At [102 – 103], we singled out (iv) as an important instance of non-compliance, for the following reasons: 102… we find that at the time when the Solicitor prepared and signed the letter of 6 June 2013 and the statutory declaration bearing the same date, he must be taken to have been conscious of the requirement of verification stated in the Notice. He decided, nevertheless, that while he would verify his answers to the first 15 questions in Schedule 1 to the Notice, he would leave unverified the answers to Question 16 that he furnished in the letter. He did not offer any explanation of this decision, either in documents filed in these proceedings, in other correspondence with the Law Society or in his submissions at the hearing. 103 As indicated earlier, Question 16 was of particular importance. It required information regarding the 29 deposits in the office account of the Law Practice with which Mr Napper's investigation was particularly concerned. The answers given by the Solicitor in the letter of 6 June 2013, although relatively brief, went a long way towards satisfying the requirements of the Question. For this reason, his failure to verify these answers is not a trivial matter… 1. After ruling at [104] that 'much the same reasoning' applied to item (v), except that the information to which it related was 'relatively insubstantial', we made the following observations about item (i) at [105]: 105… Paragraph A of Schedule 2 of the Notice expressly stipulated that [the Solicitor] should produce 'all such other records' (in addition to records in a number of categories already mentioned) that he 'held… in relation to' the 29 deposits into his office account. Any legal practitioner endeavouring conscientiously to comply with this stipulation could not fail to appreciate that if he or she possessed any bank statements in which any of these deposits were recorded, they should be included amongst the documents produced. The Solicitor's failure in this regard must be regarded as a significant breach of his duty to ascertain, to the best of his ability, what were the precise requirements of the Notice and to comply with them as best he could. 1. For the foregoing reasons, we concluded (at [106 – 107]) that the Solicitor had failed to comply with the Notice in a number of respects, that the sole Ground of the Application had therefore been made out, and that by virtue of s 676(4) of the Act a finding of professional misconduct must necessarily follow. The Law Society's submissions on penalty 1. In an Outline of Submissions filed before the second hearing in this case, Ms Groenewegen indicated that since the Notice was 'complied with in substance' on 18 July 2014, the Law Society no longer sought Orders 2 and 3 set out in the Application. It maintained that in the circumstances of the case, Order 1 – a reprimand – constituted a sufficient and appropriate penalty to be imposed on the Solicitor under s 562 of the Act. 2. Ms Groenewegen cited the following passage on the topic of penalties in cases involving breach of s 660, contained in a decision of the Administrative Decisions Tribunal ('the ADT'), Council of the Law Society of New South Wales v Tsalidis (No 2) [2010] NSWADT 297, at [46]: 46 More importantly, these decisions [i.e. six ADT decisions that the Tribunal had just listed] assisted the Tribunal in its consideration of the factors that should be taken into account in fixing the fine in this instance. The matters that appeared to the Tribunal to be relevant, were the following: (i) whether the Notice been answered at the time of the hearing; (ii) whether the practitioner had given an explanation for the failure to comply; (iii) the practitioner's financial circumstances; and (iv) whether this was a first offence. 1. Implicitly referring to this passage, Ms Groenewegen set out three reasons why in the present case the Law Society did not seek a fine in addition to a reprimand, even though it was well recognised that failure without reasonable excuse to comply with a notice under s 660 of the Act was a serious matter. These reasons were as follows: (a) the Notice had been complied with about five months before the first hearing; (b) the Solicitor had referred to various personal and professional problems as providing an explanation, though not an excuse, for his failures to comply; and (c) this was a 'first offence' on his part. 2. In her Outline of Submissions, Ms Groenewegen listed several other ADT decisions relating to failures by solicitors to comply with notices issued under s 660. She observed that in these cases 'a fine was imposed in circumstances where the conduct involved something more than the non-compliance with one notice'. 3. In her oral submissions at the second hearing, Ms Groenewegen drew our attention to the following well-established principles governing orders made by way of penalty against legal practitioners who have engaged in professional misconduct: (a) the function of such orders is protective and educative, not punitive; (b) their aims include promoting public confidence in the activities of the legal profession; and (c) they should be framed so as to protect the public against future misconduct by the respondent and by other legal practitioners. 4. In response to a submission by Mr Jackson that the Law Society need not have pursued these proceedings because the Solicitor had ultimately complied in substance with the Notice, Ms Groenewegen made the following points: (a) the Solicitor did not produce the requisite bank statements until a date (23 April 2014) nearly two months after he had been notified of the Complaint; and (b) he did not comply with the Society's express requirement to verify information previously provided by him until a date (18 July 2014) more than six weeks after the Society had advised him of its resolution to refer this matter to the Tribunal. The Solicitor's submissions on penalty 1. In an Outline of Submissions filed before the second hearing, Mr Jackson argued that in determining the question of penalty we should take into account certain mitigating features of the three instances of non-compliance with the Notice on which our finding of professional misconduct was based. 2. With regard to the failure to produce bank statements, he maintained, we should bear in mind these two considerations: (a) in contrast to various other forms of financial statement, bank statements were not expressly called for in the Notice; and (b) they were produced 'prior to the Law Society's filing of a complaint in these proceedings'. Mr Jackson acknowledged, however, that as we said in the first decision, the Solicitor 'should have been more diligent in ascertaining the precise requirements of the notice with respect to these records'. 3. As to the Solicitor's failure to verify the contents of his letter of 6 June 2013, Mr Jackson's submissions were as follows: (a) the Solicitor had been under the impression – though he now realised that this was wrong – that by 'incorporating' this letter into his statutory declaration of the same date, he had verified the contents of the letter; and (b) there was no evidence that anything stated in the letter was dishonest or inaccurate. 4. With respect to the Solicitor's failure to verify the information provided in his letters of 23 and 30 April 2014 to the Law Society, Mr Jackson relied on our observations in the first decision (at [104]) that this additional information was 'relatively insubstantial' and that 'some sort of explanation arises from the fact that the Law Society's letter requiring him to supply this information did not mention verification'. He also argued that the Solicitor's letter of 30 April 2014 merely repeated the information, already provided, that the Solicitor's father had lent him the sum involved in one of the bank deposits queried by the Law Society and enclosed a letter from his father confirming this fact. 5. In his Outline of Submissions, Mr Jackson argued further that the following aspects of the case operated in the Solicitor's favour: (i) by the end of April 2014, five months before proceedings were commenced in the Tribunal, the Notice had been complied with to the Law Society's satisfaction; (ii) two of our three findings of non-compliance without reasonable excuse related not to the provision of information but only to the failure to verify information that had been provided; (iii) there was 'significant compliance… within the 14 days allowed to respond, and substantial compliance one day later'; (iv) there was no allegation that the Solicitor failed to assist the Law Society in the investigation of a complaint; (v) he had given an explanation for his failure to comply; and (vi) this was a 'first offence'. 6. In concluding his arguments on penalty in his Outline of Submissions, Mr Jackson maintained that 'notwithstanding the serious finding of professional misconduct, it would be open for the Tribunal not to reprimand Mr Truong, and not to impose any other penalty'. 7. In his oral submissions, he amplified these arguments by advancing the following propositions: (a) it was apparent that only the 'bare runt' of the Law Society's case had been established; (b) a finding of professional misconduct, without any consequent penalty, would have a sufficient educational effect on the Solicitor and on other members of the legal profession; and (c) in light of the relative insignificance of the Solicitor's failures to comply with the Notice, members of the public might well consider that the Law Society should not have instituted these proceedings against him. Our conclusions on penalty 1. We will commence our discussion of this topic by quoting a passage, often cited in the present context, from the judgment of Smart J in Veghelyi v Council of the Law Society of New South Wales, unreported, Supreme Court, 6 September 1989:- It is important that solicitors respond promptly to the [Law] Society when it asks for a response to complaints which have been made. It will be an unusual and complex case when a delay of more than 14 days is acceptable and often the reply should be delivered within a shorter period such as 7-10 days. Replies to the Law Society in respect of complaints warrant a high priority. Such replies should be full and complete and deal directly with the complaints made. 1. These dicta relate not to notices under the predecessor to s 660 of the Act, but to less formal instances of correspondence from the Law Society when it is investigating a complaint against a solicitor. When a notice under s 660 of the Act has been served, the importance of according a 'high priority' to compliance and providing a 'full and complete' response is all the greater. Implicitly, the Act emphasises this by stating that in the absence of a 'reasonable excuse', failure to comply is professional misconduct. There is no leeway for the Tribunal to make the lesser finding of unsatisfactory professional conduct, even though this is available under s 498(1)(a) for numerous other contraventions of the Act. 2. The duty imposed on a legal practitioner to provide a 'full and complete' response to a notice under s 660 necessarily includes obligations to (a) ascertain precisely what the notice requires, in terms of providing verified information and/or producing documents, (b) act in accordance with those requirements to the extent that is feasible for the practitioner and (c) provide in verified form a statement indicating the extent of, and the reasons for, any failure to comply. It is not open to practitioners to claim that instances of non-compliance are excusable solely on the ground that they did not appreciate the full extent of what was required. 3. In the present case, the Solicitor could easily have realised, but apparently did not realise, that the financial statements that he was required to produce included a number of bank statements. Equally, he could easily have understood that asking readers of his statutory declaration of 6 June 2013 to 'see' or 'refer to' his letter of the same date did not amount to verification of the contents of the letter. If he had had any doubt on either of these matters, his obligation was to seek advice and/or consult appropriate legal sources. Fulfilment of this obligation would not have been arduous. 4. Taking these considerations are taken into account, we conclude that the conclusion regarding penalty for which Mr Jackson argued – namely that there should be no penalty even though we have made a finding of professional misconduct – does not accord with the policy underlying the relevant parts of both s 660 and s 676. 5. This conclusion is in line with the decisions made by the ADT or this Tribunal to which Ms Groenewegen referred in her Outline of Submissions. In all but one of them, a finding of professional misconduct, based wholly or at least in part on failure to comply with a notice under s 660, was followed by the imposition of both a reprimand and a fine. In the one exception to this pattern, Council of the Law Society of NSW v Johnson [2013] NSWADT 19, the reasons why only a fine was imposed were that the Law Society sought only this form of penalty and the respondent solicitor did not attend the hearing. In none of these decisions did the ADT or this Tribunal decide, after finding professional misconduct on the ground of non-compliance with a notice under s 660, that there should be no order by way of penalty. Mr Jackson did not cite any case where this occurred, and we are not aware of any. 6. We derive further assistance from passages in two of the decisions cited by Ms Groenewegen. 7. First, in Law Society of New South Wales v Carbone [2011] NSWADT 32 at [88 – 89], the ADT observed that while the respondent solicitor's breaches of s 660 could fairly be characterised as 'technical' (as Mr Jackson claimed to be the case in these proceedings), this did not mean that they were 'trivial'. The orders made on the grounds of non-compliance with a notice under s 660 and four instances of unsatisfactory professional conduct were a reprimand and a fine of $2,000. 8. In the second of these decisions, Council of the Law Society of NSW v Beazley [2014] NSWCATOD 147, the sole ground of the Law Society's application was failure by the respondent solicitor to comply with a notice under s 660. This notice was served on him on 14 May 2013. At [11], the Tribunal summarised as follows the extent of his non-compliance: 11 Whether there was full compliance with the Notice in August 2013, as the Solicitor asserts, or only in August this year, we were not required to determine in these proceedings. However the fact remains, as was conceded by his counsel, that the Solicitor failed to respond to the Notice within the 21 day period specified, and did not provide his substantive response until three months had passed. Prior to the issue of the Notice he had also failed to respond at all to the Law Society's correspondence for almost 5 months, without any explanation or justification. 1. The Tribunal held that he should be reprimanded and should pay a fine of $1,000. It described this amount as being at the 'lower end' of the appropriate range. Its explanation of these orders included the following passage at [21 – 22]: 21 Where the notice had not been answered by the time of the hearing, the cases show that an order suspending the practitioner's practising certificate and/or ordering that a further certificate not be issued until compliance, (as was initially sought by the Law Society in this matter), is the most appropriate order. Where there has been compliance, even though in some instances not until just before the commencement of the hearing, the usual order is that the practitioner receives both a public reprimand and a fine. 22 In this instance we can find no reason to depart from the usual order made in those circumstances - that is we intend to impose a fine as well as order that the Solicitor be reprimanded. We were influenced by the lengthy period that the Society's correspondence went unanswered without explanation before the Notice, in addition to the three months taken by the Solicitor to answer the Notice itself. 1. In the present case, the outcome sought by the Law Society differs from the 'usual order' in a manner favouring the Solicitor. It is that a reprimand, but not a fine, be imposed. The outcome sought in Mr Jackson's submissions – that there be no order at all by way of penalty – involves a distinctly more substantial departure from the 'usual order'. 2. We make the following observations on other submissions put to us by Mr Jackson. It is irrelevant that none of the information provided by the Solicitor in response to the Notice has been shown to be 'inaccurate' or 'dishonest'. The accuracy of this information and the question of the Solicitor's honesty in providing it are simply not in issue. We agree with Ms Groenewegen's response to Mr Jackson's submissions based on the dates on which (a) the Law Society made its complaint against the Solicitor and (b) it instituted these proceedings in the Tribunal. This response is outlined above at [23]. Finally, we reject the claim that the Society should not have instituted proceedings because members of the public would consider them unnecessary. On being satisfied of a reasonable likelihood that the Tribunal would make a finding of professional misconduct against the Solicitor on the ground of his evident non-compliance with the Notice, the Society had no choice in the matter. It was obliged by s 537(2) of the Act to institute proceedings. 3. For the foregoing reasons, we conclude that an order must be made against the Solicitor by way of penalty under s 562 of the Act and that this order should be a reprimand. The question of costs 1. Relevant provisions. In advancing its claim for a costs order against the Solicitor, the Law Society referred to cl 23(1), (6) and (7) of Sch 5 of the Civil and Administrative Tribunal Act 2013 ('the CAT Act'). These provisions state: (1) Despite section 60 of this Act, the Tribunal must make orders requiring an Australian Legal practitioner whom it has found to have engaged in unsatisfactory professional conduct or professional misconduct to pay costs (including costs of the Commissioner, a Council and the complainant), unless the Tribunal is satisfied that exceptional circumstances exist. (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 of the Legal Profession Act 2004. (7) An order for costs may specify the terms on which costs are to be paid. 1. Section 60 of the CAT Act is a general provision empowering the Tribunal to award costs 'only if it is satisfied that there are special circumstances warranting an award of costs'. Under subs (4)(a), the Tribunal may determine 'by whom and to what extent costs are to be paid'. Where no such 'special circumstances' exist, subs (1) provides that each party to Tribunal proceedings must pay the party's own costs. 2. The parties' submissions. Ms Groenewegen argued that in the present proceedings there was no evidence of 'exceptional circumstances' justifying departure from the mandatory rule stated in cl 23(1) of Sch 5 of the CAT Act, and that we were therefore bound to order the Solicitor to pay the Law Society's costs of these proceedings. She relied in particular on the fact that we had upheld the sole Ground of its Application, adding that 'exceptional circumstances' did not arise merely because we had rejected some of the allegations made in the accompanying Particulars. 3. Mr Jackson argued that a number of features of the proceedings, considered in combination, amounted to 'exceptional circumstances' and that there should therefore be no costs order against the Solicitor. He referred to the six matters, set out in his Outline of Submissions, that we have summarised above at [28]. He relied also on the following contentions: (a) the Notice was complied with well before the proceedings were instituted; (b) the 'bulk' of the Law Society's Application was dismissed; and (c) two of the alleged failures to comply were not clearly particularised. 4. In the alternative, Mr Jackson argued that any order made against the Solicitor should be for only part of the Law Society's costs. It should be expressed as an order for payment of a percentage of these costs, or of a fixed amount. 5. In his supplementary submissions on costs filed after the second hearing, Mr Jackson set out the following arguments based on the provisions that we have just quoted: (a) cl 23(6) authorises the Tribunal to fix the amount of the costs to be paid or to stipulate that they be assessed under Part 3.2 of the Act; (b) this subclause 'has nothing to say about the manner in which costs to be fixed, or what costs are to be assessed'; (c) subs (4)(a) of s 60, however, authorises the Tribunal to order that only part of a party's costs are to be paid; (d) there is no reason for treating this subsection in the CAT Act as inconsistent with cl 23(6) of Sch 5 of the same Act; and (d) for these reasons, 'the extent to which the costs of the entire proceedings should be visited upon the practitioner remain at the discretion of the Tribunal'. 6. This line of argument set out in Mr Jackson's supplementary submissions included the proposition that there was no 'policy reason' why 'special circumstances' (we take him to have meant 'exceptional circumstances') 'need be made out before a partial costs order may be made where there is a finding of professional misconduct'. Mr Jackson did not, however, seek to substantiate this proposition in any way. 7. In her supplementary submissions responding to those of Mr Jackson, Ms Groenewegen argued that the opening words of cl 23 (1) – 'Despite section 60 of this Act' – had to be given their 'ordinary meaning'. In consequence, cl 23(1) had to be treated as wholly independent from s 60. These two provisions, she maintained, 'stand alone and are mutually exclusive'. 8. She also acknowledged that under cl 23(1) the Tribunal was authorised to make a partial costs order and referred to two cases in which such an order had been made or given consideration. In both of them, the operating provision was the predecessor to cl 23(1): namely 566(1) of the Legal Profession Act 2004. 9. The first of these cases, Xu v Council of the Law Society of NSW [2009] NSWCA 430, was decided in the Court of Appeal on appeal from the ADT. There were three 'charges' (as Handley AJA described them) in the Law Society's application against the respondent solicitor. In the appeal, the Court set aside the ADT's finding of professional misconduct on one of them (the 'lien charge') and reduced to unsatisfactory professional conduct the ADT's finding of professional misconduct on the other two (the 'conveyancing charges'). At [61 – 63], Handley AJA (with whom Tobias and Basten JJA agreed) dealt as follows with the question of the costs of the ADT proceedings: 61 Section 566 requires the Tribunal to order a practitioner who has been found guilty of professional misconduct or unsatisfactory professional conduct to pay the costs of the moving party "unless [it] is satisfied that exceptional circumstances exist". The Tribunal was bound, in the light of its findings, to order the solicitor to pay the Law Society's costs. This Court must now re-exercise the power in the light of the revised findings that have been proposed. 62 The Society succeeded on two charges, but failed on one. The Tribunal conducted two back-to-back hearings, one for the conveyancing charges, and one for the lien charge, and each occupied about the same length of time. The dismissal of the lien charge carried a prima facie entitlement to an order for the costs of that charge in favour of the solicitor and the Law Society has a prima facie entitlement to an order for costs in its favour in respect of the charges on which it succeeded. 63 There is little point in having two separate costs assessments when the balance in favour of one party or the other is likely to be minimal, and out of all proportion to the costs of the assessment process. In my judgment these matters constituted exceptional circumstances and there should be no order as to the costs of the proceedings in the Tribunal. 1. In the second case cited by Ms Groenewegen, Council of the Law Society of New South Wales v Webb (No 2) [2012] NSWADT 233, the Law Society sought a finding of professional misconduct against the respondent solicitor and an order removing his name from the Roll. Its application set out seven grounds. At the commencement of the substantive hearing, the Law Society withdrew two of the grounds. The ADT dismissed four further grounds and made a finding of unsatisfactory professional conduct on the single remaining ground. Its orders by way of penalty were a reprimand and a fine of $1500. In the course of determining these orders, it referred to evidence from the respondent that he had been compelled to pay a substantial sum towards the costs of an investigation of his affairs that the Law Society had conducted and that he was in straitened financial circumstances. 2. In ruling on the Law Society's application for a costs order under s 566 of the Act, the ADT held as follows (at [48 – 53]): 48… we are bound to follow the approach adopted by the Court of Appeal in [Xu]. It is undoubtedly true that the costs of preparing for and conducting the trial in these proceedings would have been significantly less if the Law Society had not pressed, until the commencement of the trial, the two Grounds (1 and 4) that it abandoned and its claim that the Solicitor should be struck off. 49 As to the relevance of the Solicitor's financial situation and his liability to pay the costs of the investigation, we must point out first that in the authority on which Ms MacDougal relied, Law Society of NSW v Markovski [2009] NSWADT 92, the Tribunal did not mention, and did not appear to be aware of, the mandatory terms of section 566(1)… 50 In Council of the Law Society of New South Wales v Hinde [2011] NSWADT 20, the Tribunal did make a finding of 'exceptional circumstances' based chiefly on the poor financial circumstances of the respondent solicitor. It took account also of the fact that he was 82 years of age. It stated its reasons for its finding at [32 - 33]:- 32 The features of this case that support a finding of 'exceptional circumstances' are, as Mr Chegwidden argued, the advanced age of the Respondent and his straitened financial situation. The relevant aspects of his financial situation are these: (a) he has a very small regular income, taking the form of a state pension; (b) he has no assets of significant value; (c) due in particular to his age, he has no significant prospect of obtaining gainful employment; and (d) any costs order against him could only be satisfied by small instalment payments commencing on a future date and lasting over a significant period of time. 33 In the context of disciplinary proceedings such as these, we are satisfied that these constitute 'exceptional circumstances'. They fall within the phrase 'out of the ordinary course, or unusual, or special, or uncommon'…The hearing of disciplinary proceedings against a legal practitioner who is both as far past the normal age of retirement and as impoverished as the Respondent is indeed a most unusual phenomenon. 51 These are distinctly more straitened financial circumstances than those affecting the Solicitor, even allowing for his liability for the balance of the costs of the investigation. 52 We have found this a difficult question to resolve, but on balance we are satisfied that the requirement of 'exceptional circumstances' has been established, and a partial costs order is warranted, by virtue of the three considerations on which Ms MacDougal relied. The trial was longer than it need have been; the Solicitor remains liable to pay a very substantial sum towards the costs of the investigation of his practice; his financial circumstances are relatively poor. 53 We therefore order that the Solicitor is to pay 50% of the costs of the Law Society, as agreed or assessed. 1. In her supplementary submissions, Ms Groenewegen argued that in the present proceedings none of the relevant features of either Xu or Webb was present. She elaborated on this argument as follows: a. There was no abandonment, either late or at all, of grounds that had been unnecessarily prepared. The single ground pleaded was made out. b. There was no finding sought that was then lessened in severity. A finding of professional misconduct was sought and made. c. Whereas some particulars were not made out, enough serious particulars were made out for the Tribunal to safely make the findings sought. d. There was no conduct by the Applicant that unnecessarily lengthened the hearing. e. There is no evidence of the solicitor's ability or inability to pay costs. 1. Finally, Ms Groenewegen contested the claim by Mr Jackson that there was no policy reason why exceptional circumstances needed be made out before a partial costs order may be made following a finding of professional misconduct. She referred to the obligation imposed on the Law Society by s 537(2) of the Act to institute proceedings in the Tribunal if there is a reasonable likelihood of a finding of professional misconduct and argued that it was 'simply not fair' that the public should be required to bear the costs incurred because a legal practitioner had engaged in professional misconduct. 2. Discussion and conclusions. In our opinion, the Solicitor should pay the Law Society's costs of these proceedings, broadly for the reasons advanced by Ms Groenewegen. We take particular account of the list of matters, quoted above at [56], that she included in her supplementary submissions. 3. We make the following additional observations. None of the matters on which Mr Jackson principally relied (these are set out above at [28] and [47]) can be characterised as 'exceptional', nor can this label be applied to them when considered in conjunction. It is common, for instance, for the Law Society (or the NSW Bar Association for that matter) to fail to establish one or more specific matters alleged in a disciplinary application, while succeeding on the ground or grounds on which the application is based. Often, as in the present proceedings, the applicant's inclusion of specific matters which it fails to prove does not significantly lengthen the proceedings or add to their cost. Similarly, there is nothing exceptional about a legal practitioner who has failed to comply with a notice under s 660 taking steps to provide the required information or documents before proceedings have been instituted. It is noteworthy also that in the two ADT decisions cited above where 'exceptional circumstances' were held to have arisen the respondent solicitor was in a very difficult financial situation. There was no evidence to this effect in the present proceedings. 4. An issue of principle on which the parties were at odds was whether a partial costs order could be made under cl 23(1) in the absence of a finding of 'exceptional circumstances'. In Webb, the ADT implicitly held that such a finding was required. The same view is discernible in a more recent decision of this Tribunal, Council of the Law Society of New South Wales v Gallego (No 3) [2015] NSWCATOD 37 (see at [59 – 68]). As indicated above, this point did not receive detailed attention in the parties' submissions, except in so far as they canvassed the question whether the terms of s 60(4)(a) had some bearing on the interpretation to be given to cl 23(1). This was not, in our view, a particularly helpful line of inquiry. The significant question was not whether a partial costs order could be made under cl 23(1), but whether a finding of 'exceptional circumstances' was a necessary pre-requisite to such an order. 5. In this situation, we are not prepared to depart from the view implicitly held in Webb and Gallego that a finding of this nature is indeed a pre-requisite. We have decided against any such finding. Accordingly, the order that we make against the Solicitor is for payment of the whole of the Law Society's costs. 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: 03 August 2015