The Australian Professional Liability Blog Self-represented solicitor guilty of misconduct for breaching a rule expressed to regulate conduct when acting for a client

The Australian Professional Liability Blog via google.com 29 May (2 days ago) The Australian Professional Liability Blog Self-represented solicitor guilty of misconduct for breaching a rule expressed to regulate conduct when acting for a client Posted: 28 May 2014 05:45 PM PDT A Western Australian disciplinary case, Legal Profession Complaints Committee v CSA [2014] WASAT 57 is interesting in a number of ways. A criminal lawyer was the manager of a strata corporation. She owned two units and the complainant the third. The complainant affixed an airconditioner to a wall which impeded on a common area. She sought legal advice. Her lawyers wrote a letter of demand to the complainant and charged a few thousand dollars. The complainant did not fix the problem within the 14 days demanded, so the lawyer sued in the Magistrates’ Court. The case was settled on the basis that the airconditioner would be relocated and the lawyer withdrew the proceeding without seeking costs. When the complainant sold the third unit, the lawyer demanded that the complainant pay her the few thousand dollars her lawyers had charged her for the advice and the letter of demand. She did so by a letter of demand drafted for her by another lawyer, though the involvement of this second lawyer only emerged at the disciplinary hearing. When the complainant did not pay up, she sued for them in her personal capacity. The suit was found to have no legal foundation, but the lawyer said that she mistakenly thought that it did have a legal foundation, and that civil proceedings were not her thing. The case says: 1. The suit was an abuse of process because there was no legal foundation for suing for the recovery of ‘pre-litigation’ legal costs. 2. The lawyer’s conduct in threatening to bring and then bringing a suit which was an abuse of process was common law misconduct but was also a breach of a rule which prohibited lawyers from claiming on behalf of a client costs in a letter of demand for recovery of a debt because she was acting for herself in writing the letter (even though no legal letterhead or reference to her status as a lawyer was involved). 3. There is no defence of honest and reasonable mistake in professional discipline. 4. It is inappropriate for a disciplinary tribunal to make what the prosecutors described as ‘an incidental finding of dishonesty’ in relation to statements made during the investigation in respect of which no charge had been laid in the disciplinary proceeding. Any such allegation ought to be the subject of a separate process (though the Tribunal then went ahead and found that the allegation was not made out on the Briginshaw standard anyway). The conduct rule the lawyer was found to have breached, r. 18(1), said: ‘A practitioner must not, in a letter of demand for debt written on behalf of a client to another person, claim costs from the other person unless the client has a right to recover those costs.’ The disciplinary tribunal found that the rule had been breached because, when she wrote a letter of demand on her personal letterhead for payment of what she considered to be a debt owing to her personally and unconnected with her practice, she wrote that letter on behalf of a client. Who was the client? She was! This must have come as a surprise to the solicitor, but I suppose the upside is that she can sue herself for negligence and recover the damages from her professional indemnity insurer. WASAT’s reasoning was: ’58 Although the practitioner was acting in a personal capacity, both in issuing the letter of demand and in commencing and prosecuting the Magistrates Court proceeding, she was, in effect, her own ‘client’ for the purposes of these rules. For reasons set out earlier, the practitioner attempted to further her matter against Mr A and Ms A by ‘unfair … means’ (contrary to r 16(1) of the Conduct Rules; the Committee does not allege that the means were ‘dishonest’). For reasons set out earlier, in her letter of demand dated 8 December 2011, the practitioner claimed costs from Mr A and Ms A when she had no right to recover those costs (contrary to r 18(1) of the Conduct Rules). Moreover, in our view, the fundamental intent of r 16(1) and r 18(1) of the Conduct Rules is to ensure that lawyers act fairly and appropriately in relation to legal matters and proceedings in which they are involved. In our view, it would be contrary to the intent of the Conduct Rules for a lawyer to be subject to the stated ethical requirements when acting for another person, but not when acting for themselves. Indeed, as the Tribunal observed in [Legal Profession Complaints Committee and A Legal Practitioner [2013] WASAT 37]] at [28]: “The case is all the stronger when it is the practitioner’s own case which he [or she] is seeking to advance by such means.” The case cited as authority for that proposition is another decision of WASAT presided over by a Deputy President, Judge Parry, who also presided over the tribunal in this case, and cites no authority in support. The lawyer argued that though she now recognised that the case she commenced against the complainant seeking legal costs she paid for the drafting of a letter of demand to the complainant was misconceived, she honestly believed that it had a proper legal foundation at the time she demanded that the complainant pay her those costs. In fact, she said, the letter of demand had been drafted by another lawyer. But the Committee said there is no defence of ‘honest and reasonable mistake’. Neither party drew the Committee’s attention, it would seem, to Legal Services Commissioner v RMB [2010] VCAT 51, the subject of this blog post. Finally, the Tribunal very appropriately declined to make findings about conduct of the practitioner in the course of the investigation which was not the subject of a charge: ‘Committee’s application for an ‘incidental’ finding of dishonesty 88 The Committee requested an ‘incidental’ finding that the practitioner sought to deliberately mislead it in correspondence which she wrote in relation to the investigation of Mr A’s complaint. The practitioner said in correspondence that the letter of demand dated 8 December 2011 to Mr A and Ms A was ‘drafted by another lawyer’ and ‘prepared after advice’. When the Committee asked the practitioner to provide a copy of the ‘advice’, the practitioner said that it was contained in the penultimate paragraph of the letter from BPC to Mr A and Ms A dated 17 February 2011. 89 In her first witness statement in this proceeding, the practitioner said on two occasions, that she wrote the letter of demand and that she considered the penultimate paragraph of the letter from BPC to Mr A and Ms A to be ‘advice’. However, as noted earlier, in cross ­examination, the practitioner said that the letter of demand was drafted by a lawyer from ‘minor assistance that is offered through Legal Aid’ (T:57.8; 25.03.14). The practitioner maintained that, although the letter of demand was drafted by another lawyer, she wrote it. 90 In our view, it would be inappropriate to determine, as an ‘incidental’ finding in this proceeding, that the practitioner sought to mislead the Committee in its investigation. Such an allegation is a serious and substantive allegation of professional misconduct in its own right. In fairness to the practitioner, if it is alleged that she sought to mislead the Committee in its investigation, then that allegation should be made in a substantive application to the Tribunal which the practitioner can respond to. 91 However, and in any case, we are not comfortably satisfied, in according with the Briginshaw approach, that the practitioner sought to mislead the Committee by her statement in correspondence that the letter of demand was ‘drafted by another lawyer’ and ‘prepared after advice’. The practitioner’s evidence to the Tribunal was that the letter was in fact ‘drafted’ by a lawyer from the ‘minor assistance’ facility but ‘written’ by her. This is generally consistent with her statements in her correspondence with the Committee. It appears that, having obtained a ‘draft’ of the letter from a lawyer at the ‘minor assistance’ facility of Legal Aid, the practitioner then typed it, signed it and sent it to Mr A and Ms A. In that sense, she ‘wrote’ the letter of demand, even though it was ‘drafted’ by another lawyer. Although the penultimate paragraph of [her first lawyers' letter of demand] is not ‘advice’ that the practitioner had a legal entitlement to demand payment of $2,022 from Mr A and Ms A or that she had an arguable cause of action so as to commence and prosecute proceedings for payment of that amount by them, we do not feel an actual persuasion on the evidence that the practitioner sought to deliberately mislead the Committee into thinking that she had any other ‘advice’ beyond the penultimate paragraph in [her first lawyers' letter of demand].’ By the way, the bit about suing herself was a joke.

Latest on whether barrister-litigants can recover legal fees for their own work: DOBREE V HOFFMAN ABOLISHED - WHAT ABOUT BARRISTERS?

The Australian Professional Liability Blog via google.com 05:15 (5 hours ago) to me The Australian Professional Liability Blog Latest on whether barrister-litigants can recover legal fees for their own work Posted: 07 May 2014 05:33 PM PDT The award of costs is by way of an indemnity — usually only a partial indemnity — against out of pocket expenses and the cost of legal services reasonably incurred in litigation. Except in no-costs jurisdictions, everyone can usually recover their out of pocket expenses, but only those who incur a liability for fees charged by lawyers can claim costs other than for out of pocket expenses. Because solicitors are so special, though, where they act for themselves, they can recover costs other than out of pocket expenses even though there is nothing but their own effort for the indemnity to indemnify against. Whether barristers in the same situation can avail themselves of the same exception to the general rule seems not to be entirely clear. The question arose in Ada Evans Chambers P/L v Santisi [2014] NSWSC 538. A Magistrate had allowed a barrister to avail himself of the exception. The Supreme Court considered that the question of whether barristers are entitled to costs of acting for themselves was an important one, but declined to grant leave to appeal the Magistrate’s decision in this regard because the dispute was an inappropriate vehicle for the determination of that question. Very interestingly to my mind, a principal reason for not granting leave was that the costs of arguing it were disproportionate to the amount in issue in the case. Nevertheless, the Court gathered together the authorities on the question: ’23. The Magistrate’s finding as to Mr Santisi’s role is set out in the reasons above. His Honour’s consideration of the law that applied was set out in a separate note of reasons that was provided to the parties on 18 December 2013. His Honour set out in the note (which I admitted and marked Exhibit C) his reasons for considering that there was no basis to exclude barristers from the exception that applies to solicitors who act for themselves. The note of reasons concluded as follows: My view is that the authorities are very clear that there is an exception to the rule against self-represented litigants recovering fees for acting for themselves. It is an exception which relies on the fact that (in times gone by only solicitors, but now counsel as well) their fees can be quantified, and that if they were not permitted to recover such fees they would simply retain another lawyer and recover them that way. To read the rule as applying to counsel is not so much to “extend it”, as Mr. Freeman argues, but to recognize its underlying rationale as applying to any variety of lawyer, whether counsel and solicitor. With respect, I disagree with the inter-State decisions cited by Mr. Freeman. Those cases seem to me to be more in the nature of passing remarks cautioning against extending the rule to counsel, and with great respect, not to be at all well-based. It was on this basis that the costs order was made. The Chambers argued before me that this was erroneous in law, or that it involved a mixed question of fact and law. Mr Freeman submitted that it was erroneous for costs to be allowed for barristers appearing in their own causes, although he accepted that there was an exception for solicitors. Mr Burchett relied on the decision of Bergin J in Farkas v Northcity Financial Services Pty Limited [2006] NSWSC 1036, in which the question arose whether a litigant was entitled to interest on costs that related to work he performed as junior counsel in the case. The Costs Assessor had already determined that the litigant was entitled to such fees, as appears from the following reasons given by the Costs Assessor which are extracted in the judgment: “The litigant in this matter is a barrister and it is submitted that much of the work undertaken by the litigant was work undertaken by a solicitor and therefore offends some of the New South Wales Barrister’s Rules. It is fair to say that the distinction between barristers and solicitors in this day is considerably less than before, and indeed it is acceptable, although unusual, for barristers to accept a brief direct from the public without the intervention of a solicitor. Both barristers and solicitors are legal practitioners under the Act. It is the style under which they seek to practice under different practice rules which sets them apart. I have carefully considered the submissions from the Costs Applicant and the Costs Respondent on this aspect of the assessment. I have determined that the Costs Applicant is entitled to costs for the work undertaken by him as a junior counsel.” Although Bergin J was only required to decide whether interest under s 101 of the Civil Procedure Act ought be awarded, and not whether it was appropriate that such costs be allowed at all, it appears from her Honour’s judgment that her Honour accepted the appropriateness of the Costs Assessor’s decision to allow the costs of a barrister who appeared in his own cause. The relevant cases on recoverability of costs by a legal practitioner were summarised by Basten JA in Wang v Farkas [2014] NSWCA 29. However, that case turned on the construction of the Criminal Procedure Act 1986 (NSW) which, by s 215 conferred power to order “professional costs”, which was defined to mean “costs . . . relating to professional expenses and disbursements”, and was held to exclude the valuation of time devoted by a litigant, even if a legal practitioner, to his or her own legal proceedings. Mr Burchett relied on the cases referred to above, as well as Soia v Bennett [2014] WASCA 27, which summarised the law in various jurisdictions in Australia. Mr Freeman relied on Winn v Garland Hawthorn Brahe [2007] VSC 360 in which Kaye J was not prepared to extend the Chorley exception to barrister’s fees. Mr Freeman also relied on Murphy v Legal Services Commissioner (No. 2) [2013] QSC 253, in which Daubney J was not prepared to extend the ambit of the Chorley exception (named after London Scottish Benefit Society v Chorley, Crawford & Chester (1984) 13 QBD 872) to barristers in the absence of clear authority. In the instant case, the Magistrate was referred to relevant authority having heard full argument on the question. His Honour considered it to be material that there were solicitors on the record, as his reasons disclose. I consider that, at best, the question that arises is one of mixed law and fact. It also concerns costs and therefore leave is required on two bases. In my view, leave, if sought, ought not be granted in the instant case to argue this ground. This is not to say that the question whether a legal practitioner who is a barrister is entitled to costs when also a litigant is not an important one. However, I consider that it was open to the Magistrate to exercise his discretion to allow the costs associated with the work Mr Santisi did. The distinction between solicitors and barristers has become less important in circumstances where all legal practitioners are admitted as such. Furthermore I do not consider that, even given the importance of the point, it would be desirable for it to be determined by this Court in the instant case where the costs of so doing are already grossly disproportionate to the amount originally in issue in the proceedings.’

HOW LONG DO YOU HAVE TO SEEK TAXATION OF YOUR BILL OF COSTS?

The Australian Professional Liability Blog Inbox x The Australian Professional Liability Blog via google.com 05:04 (6 hours ago) to me The Australian Professional Liability Blog How long do you have to seek taxation? Posted: 05 May 2014 06:53 PM PDT I blogged about one case which touched on the question of how long one has in which to seek taxation (Viscariello v Oakley Thompson [2012] VSC 351) here. In a subsequent decision last year, the Supreme Court of Victoria’s Justice McMillan decided a case by reference to two competing constructions of s. 3.4.38(5) which sets out the time limits for seeking taxation as between solicitor and own client (or directly engaged barrister and own client). Her Honour decided it is (still) the first to occur of the three events referred to in the 12 month time limit which is determinative of the deadline, despite the removal in 2007 of words in the earlier version of that provision which put that question beyond doubt. The three events are (i) the giving of a bill; (ii) the requesting of payment; and (iii) an unrequested payment. Her Honour rejected the client’s contention that each time a bill is given, or a copy provided, a new 12 month limit commences. Otherwise (I observe), each letter of demand would give the client a further 12 months in which to seek taxation, a result at odds with the Civil Procedure Act’s overarching purpose. Dal Pont’s Law of Costs (3rd ed, 2013) asserts simply that time begins to run either when the bill is given or the request for payment is made, citing Viscariello. The citation to Justice McMillan’s decision is [2013] VSC 696. Now I must argue the appeal to the Court of Appeal, and that is where you come in. I have Professor Dal Pont, the Costs Judge (Justice McMillan dismissed an appeal from the Costs Judge) and two other Supreme Court judges (Ferguson and McMillan JJ) on my side, but I want more. I am looking for other authorities on the question of the interpretation of this and like provisions (such as ss. 3.4.39(3), and 3.4.40(3)) and ACT’s s. 294A(5), NSW’s s. 350(4), NT’s s. 332(5), Qld’s s. 335(5), Tas’s s. 319(5), and WA’s s. 295(6)). I am of course engaged in the desultory task of interrogating Austlii and Jade Barnet in this regard, but often enough there are unpublished Supreme Court authorities of Taxing Masters and the like tucked away in the collections of the learned readership of this little newsletter, and if you are willing to share them, I will be delighted.

Preliminary discovery and the need to have an adequate factual foundation before pleading fraud

The Australian Professional Liability Blog via google.com 05:04 (11 hours ago) to me The Australian Professional Liability Blog Preliminary discovery and the need to have an adequate factual foundation before pleading fraud Posted: 30 Apr 2014 06:24 PM PDT As you will probably be sick by now of hearing, I suspect that the law relating to the need to have an adequate factual foundation before pleading fraud will be resorted to more frequently given the new prominence given to it by s. 18(d) of the Civil Procedure Act 2010, the Court of Appeal’s admonition to inferior courts as to the need to consider these matters of their own motion, and the new (or at least newly prominent) remedies for breaches of overarching obligations such as that referred to in s. 18(d). The new prominence of these laws may make applications for preliminary discovery more frequent, though I must confess it remains a mystery to me why so few preliminary discovery applications are made in general. It may also make courts more inclined to grant such orders. In Pioneer Energy Holdings v Seth [2014] NSWSC 492, McDougall J granted preliminary discovery under a rule not dissimilar to Victoria’s SCR 32.05 to a prospective plaintiff from prospective defendants to a suit claiming damages for fraud, making reference (at [66]) to s. s 347 of the Legal Profession Act 2004 (NSW). Section 347 has some of the characteristics of s. 18(d), albeit only in relation to damages claims. His Honour said, in the course of an ex tempore judgment: ’32. I turn to the essence of the defendants’ opposition, which as I have said is that the plaintiffs (on the defendants’ view of the world) have sufficient information to decide whether to commence proceedings. In assessing this submission, it is necessary to bear in mind that the question is not just, ‘do the plaintiffs know enough to suggest that they may have a cause of action?’ Demonstration that they may have a cause of action is one of the elements that enlivens the discretion under the rule. But the question that is relevant is whether the plaintiffs have sufficient information to enable them to commence proceedings in respect of the suggested cause of action. (It seems to me that there is no material distinction between the Rules’ expression “claims for relief” and the more common expression “cause of action”.) Clearly enough, the decision whether or not to commence proceedings requires consideration of whether there is in fact an available cause of action, or claim for relief. But it goes further than that. Even leaving aside the case of fraud, what is required is some analysis of the facts overall, to see if there may be available defences, and to attempt to make some assessment of the strength of those defences. A construction of the rule which said that a prospective plaintiff was not entitled to get anything over and above documents necessary to show the existence of a cause of action would, in my view, be unduly restrictive. Further, there is clear authority in support of the proposition that the statutory test directs attention not only to the cause of action but also, as I have said, to the assessment of the availability and strength of defences. McColl JA made this clear in Hatfield at [51]. In this case, it is necessary to bear in mind that what the plaintiffs are contemplating is an allegation of fraud, or of intentional (and effectively fraudulent) statutory misleading or deceptive conduct. That is a very serious matter. The courts have stressed consistently the necessity of parties and their lawyers, who wish to make such serious allegations, satisfying themselves that there is a proper basis for making them. Again, the satisfaction of that duty goes beyond looking at material that might justify making the allegation. In an appropriate case, it would require assessment of material that might suggest that in fact, despite a somewhat malodorous pile of facts or documents, there is in reality no fraud at all. Thus, in the present case, it may well be that there is some obvious (or even difficult to perceive) innocent and non-fraudulent reason to suggest that the apparent disparity between the sub-contract amounts and the amounts in the head contract, have a harmless explanation. That is to say, it may be that there is some explanation of the possible disparities that is entirely inconsistent with the existence of fraud. Particularly when the relevant facts are to a large extent within the knowledge of the defendants, I do not think that it can be said to be outside the purview of r 5.3(1) for plaintiffs who are contemplating making the serious allegation of fraud to wish to satisfy themselves, so far as an application for preliminary discovery might help them to do, that there is no innocent explanation. Essentially similar observations apply in respect of the funding representation. Again, if the plaintiff’s suspicions prove to be well founded, the funding representations could be thought to have been made when they were not intended to be carried out, and when in fact Mr Seth and others intended to fund the project (to the extent that Blue Oil was required to do) through the excessive and unauthorised profits that, the plaintiffs suspect, it may have garnered under the construction agreement. In that sense, the two are tied together. That is enough reason to reject the first (and principal) reason given by the defendants in opposition to the application.’