Stephen Warne on professional negligence, regulation and discipline around the world

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The extended duration of the un-renewed practising certificate

October 8th, 2015 · No Comments

Under the Legal Profession Act 2004, if a lawyer applied for renewal of their practising certificate prior to the expiry of the old one, but a decision was not made before the old one runs out, the certificate is extended until either it is renewed or a decision to refuse renewal is finally determined by the exhaustion of all rights of review of that decision.  No one has ever really known what that meant.  There is a statutory review procedure in VCAT and then there are appeals all the way to the High Court.  Are the appeals from the review ‘a right of review of the decision’?  The Supreme Court has now determined that the certificate endures (if not earlier cancelled or suspended by the stipes) until the end of the High Court appeal.

The question arose in Batrouney v Forster (No 2) [2015] VSC 541, handed down by Justice Robson yesterday (see paras [167] – [193]).  It represents a further embarrassment for the Legal Services Board appointed receivers of David Forster’s practice, Hollows Lawyers, with a savage series of costs orders against the receivers in Mr Forster’s favour.  That followed findings that the receivers’ proceedings were in part misconceived, and that they breached more than one provision of the Civil Procedure Act 2010. The question was at what point did Mr Forster cease to hold a practising certificate and so cease to be entitled to claim costs of acting for himself under the Cachia v Hanes (1994) 179 CLR 403 at 411–413 exception to the rule that self-represented litigants are not entitled to costs for work done by themselves.

The question is a matter of significance to practitioners who get themselves fairly deep into trouble.  It means that those whose practising certificates are not renewed may continue to practice and earn income to put towards the legal costs of challenging that decision, and it also means that such practitioners may brief counsel directly in circumstances where, by virtue of Bar rules about direct access, they might not otherwise be able to.  And of course, it also means that if successful in such proceedings, they will get a costs indemnity against the time spent running their litigation.

Mr Forster is a man with his back to the wall, the subject of an avalanche of litigation brought by professional regulators.  Until recently, he had been singularly unsuccessful and much chastised.  It is probably fair to say that some people in the administration of justice, including the profession, would see him as a pariah.  It ought therefore be of some comfort to those responsible for the justice system that this result has obtained.  It suggests that the cab rank principle is alive and well, that judges are capable of dealing with each case impartially on its merits and according to law without being unduly influenced by past cases, and that the State will not protect itself where the law requires that it be dealt with.

→ No CommentsMore articles on: Civil Procedure Act 2010 (Vic) · Civil Procedure Acts · Ethics · Legal Profession Act · litigation ethics · Non-party costs orders · Party party costs · Practising certificates · Professional regulation · Proportionality · regulators' duties

Admissibility of material relevant to penalty at the liability stage

October 7th, 2015 · No Comments

In my experience, the Legal Services Commissioner generally assumes that material relevant to penalty is inadmissible at the liability stage.  So, for example, the Commissioner applied recently for leave to re-cross-examine a practitioner in a disciplinary hearing, after the close of evidence, in order to adduce evidence relevant to penalty by reference to ‘disciplinary priors’, even though the practitioner did not propose to give further evidence.

I knew there was some case which said that under legislation cognate with the Legal Profession Act 2004 there is, in law, just one hearing, but it is one of those many authorities which, despite this blog, got away from me, never to be found again.  But now I have stumbled across it again, and here it is, from Puryer v Legal Services Commissioner [2012] QCA 300, a unanimous decision: [Read more →]

→ No CommentsMore articles on: Discipline · Evidence · Legal Profession Act · Legal Services Commissioner · procedure · prosecutors' duties

Direct and vicarious liability of bodies corporate for conduct of natural persons

September 22nd, 2015 · No Comments

A woman sued a Melbourne school for injuries and distress occasioned by its headmistress’s sexual abuse of her as a girl.  Represented by Lennon Mazzeo solicitors’ Nick Mazzeo, Dyson Hore-Lacy QC and David Seeman, she obtained judgment from Justice Rush of the Supreme Court of Victoria for $1.25 million, a substantial proportion of which was for exemplary damages.  The exemplary damages were awarded in part because as soon as persons at or associated with the highest levels of governance at the school decided there was substance to complaints of abuse by the headmistress, they arranged and paid for her to fly most hastily to Israel on a one-way ticket instead of reporting the claims to the police and allowing local justice to take its course.

Justice Rush provided an instructive summary about when a body corporate itself may be said to have acted through a person and when it is only vicariously liable for the actions of a person acting, for example, as the company’s employee.  It is set out below.  The application of that law to the facts followed at paras [95] to [118], and resulted in a finding that the school had sexually abused the girl.  See Erlich v Leifer [2015] VSC 499. [Read more →]

→ No CommentsMore articles on: Negligence · Sex and drugs · Sex with clients

Courts must do the best they can to quantify loss even where the evidence is less than ideal

September 10th, 2015 · No Comments

It is not a new proposition, but it is often glossed over by defendants, just like the thoroughly orthodox proposition that legal causation does not require that a wrong be the sole, predominant, or proximate cause of the damage.  The proposition is that where the court is satisfied that a wrong has caused actual loss of some sort, difficulties in working out what the value of the loss is in money terms cannot defeat the remedy of damages.  The judge must do the best he or she can, even if the evidence is sparse and unsatisfactory.

In a rather wonderful case about the negligent destruction by an RSPCA officer of a herd of cattle which went for 12 years and 68 days of trial, the Court of Appeal has pithily restated the proposition in reasons for dismissing RSPCA’s application for leave to appeal.  The judgment is RSPCA (Victoria) v Holdsworth [2015] VSCA 243.  Subject to further appeal, it looks like the RSPCA or its insurer will have to cough up the judgment of more than one million dollars.  Costs don’t bear thinking about.

The relevant part of the proposed appeal was from a finding of Judge Bowman that had the RSPCA not slaughtered the animals, their owners would have set up a business of selling the bulls’  semen and made a profit from it.  The RSPCA said this was ‘pie in the sky’ and there was no credible evidence that this was in fact the plan or that it could have succeeded.  Certainly, no attempt had been made to set up the business before the RSPA’s lethal destruction of the unarmed furry animals.

The Chief Justice and Justices of Appeal Hansen and Beach said: [Read more →]

→ No CommentsMore articles on: Causation · Negligence

Wilson Security Guard says Wilson Security was waterboarding refugees on Nauru

August 28th, 2015 · No Comments

I expressed my disgust in this post that the CIA set up secret dungeons in, for example, the outskirts of Bangkok, and then tortured people to death in joint ventures with dictators, lied about it, liaised with Hollywood in the making of a propaganda movie suggesting (falsely) that Bin Laden’s extra-judicial execution was possible only because of intelligence tortured out of people, and then determinedly undermined the US Senate’s Select Committee on Intelligence investigation, the great majority of whose report remains censored.

There was an excellent ‘4 Corners’ last week about America’s torture programme, which all lawyers in Australia should watch (it’s available here for a limited time).  It features extensive interviews with the CIA’s lawyer John Rizzo, who travelled to several of these illegal dungeons at the ‘black sites’ and reassured CIA operatives that the torture they were engaged in was perfectly legal.  If there is a question which it should be a cinch for any lawyer to answer otherwise than unequivocally negatively, it is ‘Is waterboarding torture?’ (The late Christopher Hitchens’s brilliant ‘Vanity Fair’ essay on the topic is here.  He tried it. But, as he pointed out in this television interview, the US already had a position on the question, having several times sought the death penalty for the waterboarding of American troops).  It also discloses the enormous amounts of money paid to two psychologists who shambolically masterminded the torture (Shame!). One also gets to see and hear the Senate Committee’s Dianne Feinstein, the Democrat and former Mayor of San Francisco (pictured) who was at the forefront of her Committee’s dogedness in uncovering the truth about the CIA’s torture, its incompetence, and its uselesness.  I was so pleased to hear that, like me, she walked out of Zero Dark Thirty during its opening torture scenes.

Now an apparently thoroughly respectable Australian named John Nicholls who used to work in the concentration camp up on Nauru has given evidence to an Australian Senate enquiry into abuses on Nauru that Wilson Security Guards employed by the government tortured refugees by waterboarding them.  [Read more →]

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All-new High Court to hear advocates’ immunity appeal

August 25th, 2015 · No Comments

The plurality judgment in the last decision of the High Court squarely about the advocates’ immunity was written by Chief Justice Gleeson and Justices Gummow, Hayne and Heydon JJ.  They have now retired from the Court.  As have the other judges who constituted the Court in D’Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1, Justices McHugh, Kirby and Callinan.  Now, a Court constituted by a selection of the current justices (Chief Justice French and Justices Kiefel, Bell, Gageler, Keane, Nettle and Gordon) will hear an appeal from the New South Wales Court of Appeal’s decision in Jackson Lalic Lawyers Pty Ltd v Attwells [2014] NSWCA 335 (trial judge’s decision here, and special leave application transcript here: the application was heard by Justices Bell, Gageler and Gordon, and the appellant’s counsel was R. D. Newell), and the appeal seems set to be heard in November.  Lawyers allegedly negligently settled litigation, were sued for damages, and successfully invoked advocates’ immunity.

I have been thinking about these questions for a long time and many times as a lawyer representing solicitors and barristers, called on the immunity successfully.  I published the concisely titled ‘Compromise of litigation and lawyers’ liability: Forensic immunity, litigation estoppels, the rule against collateral attack, confidentiality and the modified duty of care’ in 2002 at 10 Torts Law Journal 167 and would be happy to provide a copy upon request.  I was also in the High Court for argument of D’Orta-Ekenaike’s Case as one of the barrister respondent’s instructing solicitors.  I might even pop up to Canberra to watch the argument in this latest case.

It was third time lucky for a leave application in this kind of case, after the Court declined special leave in Young v Hones [2015] HCASL 73 (6 May 2015, Bell and Gageler JJ) and Nikolidis v Satouris [2015] HCASL 117 (4 August 2015, Nettle and Gordon JJ (‘Given the procedural history of those initial proceedings, including that the applicants agreed to settle those proceedings, the present case does not provide an appropriate vehicle for reconsidering [the immunity]’).

In the Court of Appeal, Chief Justice Bathurst, with whom Justices of Appeal Meagher and Ward agreed, reversed the decision of Harrison J.  The trial judge was quite frank: he said in a cri de cœur which met with little sympathy on appeal:

‘Notwithstanding all of the above, there remain at least two related matters that in my opinion are particularly troubling in this case, and which directly intersect with the way in which I am able to dispose of this application. The first matter is the apparent or potential strength of the plaintiffs’ allegations that the defendants have been negligent. As I have already commented, the plaintiffs would have been substantially better off if they had simply not defended the proceedings. The predicament that the judgment created for them is difficult to explain but even more difficult to understand. It is also difficult not to have a sense of unease about the possibility that an egregious error may go without the prospect of a remedy.’

Even if the immunity is not abolished, the decision has the potential to radically re-write the immunity landscape.  The other thing it will do is promote discussion of the immunity, see good people marshalling the increasingly excellent arguments in favour of its abolition, and provide the possibility (again) for legislative amendment or abolition.

What has happened since D’Orta-Ekenaike’s Case?  My (admittedly somewhat) Victorian-centric thinking suggests the following: [Read more →]

→ No CommentsMore articles on: Advocates' Immunity · Barristers' immunity · Out of court settlements · Professional fees and disbursements · The suit for fees · Wasted costs

Transitional arrangements for costs provisions of Legal Profession Uniform Law

June 21st, 2015 · No Comments

Update: The position of the post-1 July 2015 briefed barrister briefed by a solicitor retained pre-1 July 2015 is not as clear as I suggested below.  So now it’s me who’s arguably been disseminating misinformation: my apologies.  But it seems to me that there has plainly been a drafting error.  Certain that I knew what the intention of the transitional provision was, I overlooked what the actual words of cl. 18(2) say:

‘If a law practice [read ‘barrister’] is retained by another law practice [read ‘solicitor’] on behalf of another client [read, I would suggest, ‘a client’] on or after [1 July 2015] in relation to a matter in which the other law practice [read ‘solicitor’] was retained by the client before [1 July 2015]—

(a)  Part 4.3 of this Law does not apply in respect of the other law practice [as drafted, this must be a reference to the solicitor, and this is the error] in relation to that matter; and

(b)  in that case the provisions of the old legislation relating to legal costs … continue to apply.’

As drafted, there is no point to the provision.  It is otiose in the context of cl. 18(1), which is said to be subject to sub-clause (2).  It is beyond doubt in my mind that what was intended was a provision cognate with the similar provision in the Legal Profession Act 2004, which is as follows:

‘(2)     Part 3.4 of this Act does not apply in respect of a law practice that is retained by another law practice on behalf of a client on or after the commencement day in relation to a matter in which the other law practice was retained by the client before the commencement day and in that case Part 4 of the old Act continues to apply.’

If the transitional provision as enacted is given its literal meaning, which given the apparent absence of ambiguity might require sophisticated argument to avoid, then the absurd situation will arise where one part of the legal team is regulated by one Act and the other by another.  This may well be a situation where the provision is read to mean something other than what it plainly seems to say in order to avoid an absurd result which parliament could not be taken to have intended.  Nevertheless, the answer should lie in retrospective amendment, and I believe that this problem will now be raised urgently at the highest levels, so I will keep you posted.

Original post: Misinformation about the transitional provisions for the new law regulating legal practice set to commence on 1 July 2015 is circulating around the Bar.  Most people seem to understand that the question of whether the Legal Profession Act 2004 continues to have operation to a solicitor’s retainer after its repeal or whether the Legal Profession Uniform Law applies is answered by working out when instructions were first taken in ‘the matter’.  (Let me digress for a moment. What a ‘matter’ is is not defined in the new Law (or the old Act), and remains a mystery to the world of costs law, although some guidance may be found in Darkinjung Local Aboriginal Land Council v Darkinjung Pty Ltd [2010] NSWSC 132.  It is not clear that ‘matter’ and ‘retainer’ are co-extensive, and nor is it clear that a ‘matter’ is equivalent in scope to the scope of a ‘costs agreement’ which is applicable: that, I think we can say with some confidence.  Generally, parties may agree as between themselves on what a statute is to be taken to mean.  Those who take a sophisticated approach to handling costs disclosures under the new Law are likely to reduce the scope of their risk by carefully defining what a ‘matter’ is.  More about that anon, perhaps, but the broader the retainer the more difficult the task of estimating total legal fees, and if the ‘matter’ in respect of which disclosure must be given may be attenuated by agreement, that would seem sensible from the lawyer’s point of view.  Clients ought resist such an approach and actually ask what they want to know (e.g. how much might this litigation you’re proposing for me cost if the other side appeals all the way to the High Court and things go as pear shaped as can be imagined, and what are my chances of getting out of it without having to pay the other side’s costs at different points along the way?).)

What seems not to be appreciated is that which law applies to a barrister’s brief by a solicitor (as opposed to a direct access brief) depends on which law applies to the solicitor’s retainer.  So a solicitor first instructed in relation to a matter prior to 1 July 2015 will continue to be governed by the old Act, and a barrister first briefed by that solicitor in that matter (or re-briefed in it for that matter) after 1 July 2015 will continue to be bound by the old Act too.  The transitional provision is cl. 18 of Schedule 4 to the Legal Profession Uniform Law Application Act 2014 and sub-clause (2), apposite to barristers, is set out at the end of the post. [Read more →]

→ No CommentsMore articles on: Costs agreements · costs disclosure defaults · Professional fees and disbursements · Taxations

A case about a bipolar lawyer

June 15th, 2015 · No Comments

My practice has had me thinking a lot recently about the professional discipline of the mentally ill.  The legal profession has caught up with the medical profession by coming up with good policies which make clear that where mental illness can be managed in such a way as to protect clients and others to whom lawyers owe duties, managed practice by the mentally ill should be encouraged and supported.  For example, see the Legal Services Board’s policy.  The Board’s CEO, the Legal Services Commissioner Michael McGarvie, has been talking about the policy in recent weeks, and so has a Federal Court judge been talking about his own long standing clinical depression.  This post looks at what might be a sad case of a mentally ill lawyer who defended himself, and got me thinking about how mental illness is treated when it emerges in the course of investigation of disciplinary complaints.

If mental illness is not relevant to the test for professional misconduct, as the Commissioner argues and at least one text asserts, I wonder whether the Commissioner should be given a discretion not to prosecute where he finds it reasonably likely that VCAT would make a finding of professional misconduct, but the practitioner does not presently hold a practising certificate and their conduct is at least in part explained by mental illness. [Read more →]

→ No CommentsMore articles on: Discipline · Legal Services Commissioner · mental illness · Practising certificates

VCAT’s President’s extra-judicial views on Barbaro in VCAT disciplinary hearings

June 10th, 2015 · No Comments

In my last post, I briefly surveyed VCAT’s approach to the Barbaro principle in disciplinary proceedings against solicitors.  I just came across a presentation given by the Supreme Court’s Justice Garde, VCAT’s President which touches on this issue.  The presentation is titled ‘Alternative Dispute Resolution – Can it work for Administrative Law?’. It was given on 26 February 2014, and is linked to here.  The relevant part is: [Read more →]

→ No CommentsMore articles on: Discipline · procedure · prosecutors' duties · VCAT

Submissions on penalty in regulatory proceedings like ASIC and disciplinary prosecutions

June 8th, 2015 · No Comments

The Federal Court has given a landmark decision about regulatory prosecutions.  In federal jurisdictions and state jurisdictions which follow the new decision, professional disciplinarians like ASIC and Legal Services Commissioners will no longer be able to enter into plea bargains in the expectation that the court or tribunal hearing them will rubber stamp the agreed outcomes so long as they are ‘within the permissible range’ of penalties.  But nor will disciplinary prosecutors be able to submit what the appropriate penalty ought to be.  Rather, they will be limited to making submissions about the appropriate sentencing principles, and about similar outcomes in similar cases.

The powerful judgment is at odds with a paragraph of dicta in a recent decision of the Victorian Court of Appeal in that it applies the High Court’s decision in Barbaro, a criminal case, to the quasi-criminal realm.  How the case plays out in Victoria remains to be worked out, but if this case goes to the High Court (and both sides have filed special leave applications), all that may change. Certainly the settlement of proceedings by regulators just got more complicated.

There seems to be a discrepancy about fundamental norms of government between the dicta of our Court of Appeal and the ratio of the Federal Court’s decision.  Once that gets resolved, however, each piece of legislation setting up the regulatory regime must be construed against the backdrop of those fundamental norms, and might give rise to different outcomes.  The Federal Court approached the task of working out how Barbaro applies in regulatory prosecutions in an orthodox fashion, i.e. by a process of statutory construction based on a close textual analysis of the legislative scheme as a whole.

The Chief Justice of the Federal Court allocated three judges to hear a preliminary question in the regulatory prosecution at first instance, in which the parties had already agreed on a proposed outcome, the result of a settlement (or, if you will, a plea bargain).  The proceeding was brought against the CFMEU and the judgment’s aim was apparently to sort out once and for all if, and how, the High Court’s decision in Barbaro is to apply in proceedings for a penalty.  The mouthful of a case is reported as Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union [2015] FCAFC 59, but seems set to be called ‘the CFMEU Case’.

It’s quite a judgment: indignant, keen to cut cant, and argued from first principles in relation to the place of the courts in civil society.  It is a further step in the demolition of the nonsense about disciplinary proceedings being sui generis, fundamentally distinct from criminal prosecutions, and (oh, spare me!) protective and not punitive in a way which means the protection of those against whom punishment is sought need not be extended.  The   punishment of citizens is, and must be seen to be, a job for the courts (except where parliament has expressly provided otherwise); where the State is seeking to punish citizens the label applied to the proceedings is a distraction; and in such cases, the Courts having been tasked with ascertaining the appropriate penalty, they must do so conscientiously themselves, however convenient it might be for them, for regulators, and for the regulated, to cede that task to a regulator which is part of the machinery of the executive arm of government, and to pay lip service to the inquiry conducted by the Court into the appropriateness of a deal done behind closed doors.  So said the Court.

The indignation extends to the many judges and other decision makers who have convinced themselves post-Barbaro that the decision does not apply  to them, often on the basis that criminal proceedings are special and proceedings for a penalty are civil proceedings and nothing like criminal prosecutions.  Distinguishing Barbaro away has been de jour. [Read more →]

→ No CommentsMore articles on: Criminal liability · Discipline · Legal Services Commissioner · Legal writing · Out of court settlements · procedure · Professional regulation · prosecutors' duties · regulators' duties · Rule of law