SPB v Law Institute of Victoria  VSC 509 (Gillard J, 12 December 2005) s. 151(3)(c)
Solicitors who read the back pages of the RPA News (dubbed the “sports pages”) well know the schadenfreude associated with the decisions of professional regulators. Rarely does one have such an enhanced opportunity for guilty pleasure in the public excoriation of a regulator as in this decision, however. His Honour railed especially about the adverse finding made on the papers without interviewing the former client or having her confirm her allegations by statutory declaration.
SPB is a solicitor and is the only person I know of to have sought administrative law judicial review of a decision of Professional Standards under Order 55 of the Supreme Court Rules. He succeeded, even though the interference with his rights was a decision by the Law Institute to take no further action against him. It was the half-way house attitude evinced by the regulator which he objected to. The Law Institute professed to be reasonably satisfied that the Legal Profession Tribunal would find him guilty of unsatisfactory conduct (an opinion they published only to the complainant, his solicitor, and the Legal Ombudsman, and which would never end up in the sports pages, in Austlii as a VCAT decision, on the now-defunct Legal Profession Tribunal’s website, in the Institute’s annual review or anywhere else (subject to the complainant keeping his mouth shut, and therein perhaps lay the problem).
It is right though that regulators should be held accountable for their findings of fact because a regulator looking for an easy way out of a difficult investigation unlikely to be challenged by either side, might well be tempted to make a fuzzy finding of unsatisfactory conduct and then exercise its discretion to take no further action. Further, such a finding has another effect not noted by Justice Gillard, namely that it counts as a “substantiated complaint” such that in the one-strike and you’re out regime under s. 151(3)(c), the discretion to take no further action the next time a complaint is substantiated within the ensuing 5 years is not open to the Law Institute, and prosecution must follow: Styant-Brown v Legal Ombudsman  VSC 164
The solicitor had been the subject of a complaint brought by the new solicitor of a lady he may or may not have been retained by — that was the issue. He was said to have commenced proceedings on the last available date under a limitation period which expired within days of the decision which was the subject of the complaint. There is authority to the effect that a solicitor who does not institute proceedings to protect a client’s interest is guilty of negligence even in the absence of instructions to do so, so it would be odd if to do so amounted to unsatisfactory conduct. Justice Gillard’s decision is about as bad as it gets for a regulator, whose conduct failed the nearly-impossible-to-make-out Wednesbury unreasonable test, and whose decision making was found to be “flawed” , based on an “extremely irrational or illogical fact finding process”, which was “unfair in all the circumstances” and “a breach of natural justice” . The process “paid lip service to evidence placed before the Law Institute by [the solicitor].” It was based on “pure conjecture” , “contrary to law”. In fact, “There was no way [the General Manager] could logically and rationally possibly come to [the conclusion that the solicitor ‘did not have instructions to undertake any of the work he undertook’] on the evidence. Indeed the preponderance of evidence pointed the other way”; the decision was “manifestly wrong” .
Justice Gillard made the following observations:
- “the [complaint] letter was written in the context of a stand off over a lien claimed in respect of costs. Sometimes pressure is brought to bear on a solicitor claiming a costs lien by stating that his or her conduct will be reported to the Law Institute. It behoves the Law Institute to carefully gather all the facts before deciding to investigate any complaint. It of course does have the power to dismiss an unjustified complaint [s. 144(1)].”
- The solicitor’s letter had merely referred to “certain irregularities concerning [the client’s] previous solicitor”. The letter “states ‘details of irregularities’ calling for investigation. It does not use the word ‘complaint’. The latter is not defined in the Act, but in context concerns a complaint about ‘the conduct of a legal practitioner.’ [s. 138(1)] … Whether the letter was a complaint in my view should have been considered. It is trite to observe that the statutory obligation resting on the Law Institute is to investigate a complaint within the meaning of the Act. [s. 146(1) and s. 146(2)]. It is not authorised to investigate irregularities which do not amount to a complaint within the meaning of the Act.”
After two weeks’ investigation comprised of an exchange of correspondence, the complaint handler, Mary Sealy, referred the matter for decision to the General Manager of Professional Standards. They decided that there was a reasonable likelihood that the Legal Profession Tribunal would find “you/your firm” guilty of unsatisfactory conduct but decided to take no further action. They could do so in the case of unsatisfactory conduct but would be compelled to prosecute if they formed the same belief in relation to misconduct. And they could do so only in the case of also being satisfied that the solicitor was “generally competent and diligent” and that he had not been the subject of any “substantiated complaint” (not “substantial complaint” as appeared in their decision letter) about conduct within the last 5 years.
The solicitor is probably the first solicitor ever to have mounted any challenge to a decision of the Law Institute to take no further action, though certainly not the first to have been infuriated by a perceived poorly reasoned decision calculated to give the complainant something (the making out of the complaint) and the solicitor something (no further action, no caution, no reprimand, and no publication of the conclusion).
The Law Institute did not contend that it was not a tribunal amenable of administrative law review. Justice Gillard concluded:
“The Law Institute is a body charged with the statutory obligation to investigate a complaint and is required after completion to deal with the matter in accordance with s 151 of the Act. In making a decision and giving effect to it the Law Institute may make a finding which is adverse to a solicitor and may affect his reputation. In my opinion the Law Institute in these circumstances is amenable to the Common Law Prerogative Writ jurisdiction of this Court”.
Justice Gillard described the process for the investigation of complaints:
- the first step is to determine whether a complaint is a justifiable one and if not dismiss it under s. 141 (“the initial filtering process; see Prasad v General Medical Council  1 WLR 1695 at 1700″);
- if it comes to the conclusion that it is not an unjustified complaint then the Law Institute is bound to investigate the complaint under s. 146;
- “By reason of s. 149, the Law Institute has the power to require the plaintiff to provide information and documents. It had the power to require the [solicitor] to provide a full written explanation of his conduct. It was also entitled to demand of him to verify any explanation, information or documents by statutory declaration or some other method. It had the power to require another legal practitioner to provide information. A requirement calling upon the plaintiff to provide information required the plaintiff to comply within 14 days. He was not permitted to refuse to comply on the grounds of legal professional privilege or confidence, or indeed, on the ground of self-incrimination. Section 140 dealt with the form of the complaint, and not only must the Law Institute give assistance to a person formulating a complaint, but it was authorised to require a complainant to give further details of the complaint and if necessary to verify it by a statutory declaration or some other form of proof.”
- “when a complaint is made which is not dismissed as being without substance, and the statutory investigation is performed, the investigation comes to an end and then the next step takes place, namely a decision is made”.
- Before that, however, the Institute should summarise its tentative findings and give the solicitor a chance to respond (Murray v Legal Services Commissioner (1999) 46 NSWLR 244).
His Honour described the process of investigation of this so-called complaint:
“the decision was made on information provided by the complainant’s new solicitor Mr Clothier and by the [solicitor]. There was no face to face meeting between Mrs Sealy and the [solicitor]. Correspondence passed between the [solicitor] and the Law Institute. [He] was required to to provide information which he did. The information included his file. Mrs Sealy did not have contact with the client, nor did she obtain any statement from her. … [The solicitor] was not told of the facts found on the investigation prior to the decision being made. He was not given the opportunity prior to the decision being made to make any submissions in relation to the findings and what the Law Institute should do, in making a decision under s 151.”
Justice Gillard savaged affidavits of Mary Sealy and Paul Bean of the Law Institute for being in part irrelevant and argumentative. He described as “most unwise” the correspondence between the Institute and the solicitor after the Institute made its decision.
He noted that Mary Sealy had in fact failed to enclose half of the complaint when she purported to publish it under cover of a letter to the solicitor. When the solicitor later asked for a copy, Mary Sealy refused to give it to him, saying it was irrelevant and she had not taken it into account, but Justice Gillard noted that it made much more acute the very threshold issue he had suggested needed early consideration, namely whether there was a complaint, for it said “I am not making a complaint…, I just think he needs help”. His Honour noted that two issues were said to be the subject of the complaint but were never made the subject of any decision (failure to comply with the costs disclosure rules, and an issue about a signature on a statutory declaration).
The complaint was that the solicitor had accepted instructions to act for the putative client in a migration matter through the agency of the client’s migration agent. It was this that the Law Institute considered to have amounted to unsatisfactory conduct, whereas it is hard to see that there is anything very much wrong with it at all, though there have been problems in the past where solicitors take instructions against the interests of their crash ‘n bash victims and in the interests of repairer agents and the solicitors themselves which no doubt pressed upon the Law Institute’s minds. They are quite different cases with a deceptively similar common characterstic. They are cases of receiving instructions from an agent coupled with (i) a conflict between interest and duty in the purported agent, (ii) a conflict between self-interest of the solicitor and duty to the client, (iii) instructions to institute proceedings prima facie not in the interests of the purported client, (iv) a decided lack of enthusiasm for actually involving the client in the proceedings. By contrast, this was a case where the proceedings instituted were to protect the client, whose rights to stay in Australia seem to have depended on the institution of the proceedings in question for review of the Migration Review Tribunal’s decision, proceedings which were ultimately pursued by the complainant, and which succeeded. Justice Gillard observed:
“It is trite to observe that a person can be authorised on behalf of another, to create a contract between a principal, that is, the client, and a solicitor.”
His Honour was critical of the taking of the decision on the papers when it was open to Mrs Sealy to interview the complainant and indeed to have her verify her complaint (if her analysis was that there was in fact a complaint) by a statutory declaration. He said, in quashing the Law Institute’s decision:
“62 The investigation was carried out and the findings were made, on the papers. The investigator had the allegations made by Mr Clothier apparently on the instructions of the client and a conclusionary assertion … that his client had never contracted with the plaintiff. On the other hand, throughout it was the contention, clear on the face of the documents, that the plaintiff was retained through an agent namely the migration agent to file the application in the Federal Court.64 … There was no direct evidence from [the] client on this question.
65 In my view steps should have been taken by the Law Institute to obtain a statement from the client concerning the events leading to the filing of a Federal Court application …
66 It is trite to observe that to decide a dispute of fact on the papers is a near impossibility. If on a true analysis of all the facts there is a substantial dispute as to whether or not the [solicitor] had a retainer with the client, that dispute could not in the circumstances be resolved by merely looking at the documents and the information that they reveal. The end result would be pure speculation…
68 There is authority in this state highlighting the difficulties involved in seeking to resolve disputed questions of fact on the papers. See Humphries v Poljak and Petkovski v Galletti. As observed by Southwell and Teague JJ in the latter case, it may be wrong to reject a party’s version when it was untested by cross-examination. However, as their Honours observed each case must depend upon its own facts. Further, Deane and Gaudron JJ in Z.P. v P.S. held that in the circumstances of that case, it was an error of principle to decide a matter on the papers when there were issues that had to be investigated and decided. See also the observations of Brennan and Dawson JJ. See generally the observations of Brooking JA in Palmer Tube Mills v Semi. The failure to give a party an opportunity to test another party’s version may in the circumstances be a breach of the rules of procedural fairness.
69 The procedure adopted by the Law Institute in dealing with the alleged complaint involved a finding being made which was made on the papers and which was pure conjecture.” (footnotes omitted)
He ended with these words:
“94 … If it is decided to look at these alleged irregularities, in my view it is vital first to determine whether a complaint concerning the conduct of the plaintiff is actually being made. In determining that question in my view it is necessary to obtain a statement from the client. And more importantly to determine whether or not she wishes to make a complaint within the meaning of the Act.95 Secondly the complaint should be properly formulated so there is no doubt what the plaintiff has to respond to. Thirdly if a complaint is made it should be investigated by a person other than the investigator who investigated the one the subject of this proceeding.
96 Finally all the information which is to be considered in performing the investigation should be made available to the plaintiff. By reason of this proceeding he has been given further information in the form of two letters written by Mr Clothier. Both raise some queries about the complaint and whether there was a retainer.”
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