Court of Appeal wreaks havoc with most current Legal Services Commissioner investigations

Update, 2 September 2010: Just noticed this and thought to store it away here as potentially interesting: http://jade.barnet.com.au/Jade.html#article=229752.

Update, 7 August 2010: The saga continues.  See this post.

Update, 17 June 2008: The Age has caught up with this story. It’s a funny old article. Weirdest is this comment ‘A prominent senior counsel said the system was unfair, and any complaint should be forwarded immediately to the subject of the complaint.’ In my experience, the Commissioner does almost invariably send the complaint immediately to the solicitor, and that’s not what the case was about anyway.

Original post: In Byrne v Marles [2008] VSCA 78, the Court of Appeal has thrown a very lean cat amongst some very fat pigeons in a decision which may invalidate all current investigations of the Legal Services Commissioner unless it is overturned on appeal or remedial legislation is passed with retrospective effect (which was the response after the great delegation debacle). The Court found that the Commissioner’s referral to the Law Institute for investigation of what she characterised as a disciplinary complaint was ‘invalid’. In following her absolutely standard practice, the Court said the Commissioner had failed to give natural justice to the solicitor by deciding to characterise the complaint as a disciplinary rather than civil complaint and by deciding not to dismiss it summarily without investigation, without allowing the solicitor to be heard in relation to those preliminary decisions. Anyone — complainant or lawyer — who has a current complaint which is not heading in the desired direction should seek advice from a lawyer with expertise in relation to the professional discipline of lawyers. It is conceivable that the decision may provide options for those against whom professional discipline prosecutions have succeeded under the Legal Profession Act, 2004. Given that the Commissioner never, in my experience, invites discussion about the preliminary questions of whether to dismiss the complaint before commencing an investigation, or on the proper characterisation of the complaint, it seems likely that most of the Commissioner’s decisions to investigate complaints will be ‘invalid’.

As I have sometimes said, Justice Gillard was one of my favourite judges, and Byrne v Law Institute of Victoria is one of my favourite bits of his Honour’s legal writing: see ‘Justice Gillard gives the Law Institute a Bloody Belting‘. Mr Byrne has been slaying regulators again, this time prevailing over the Bureau de Spank in the Court of Appeal in Byrne v Marles [2008] VSCA 78 after failing at first instance before Justice Kaye (see Byrne v Marles [2007] VSC 63). In the case Justice Gillard heard, Mr Byrne sought judicial review of the Law Institute’s finding that a complaint against him had been made out (even though the Institute decided to take no further action). He succeeded, Justice Gillard holding that the Law Institute’s decision was so unreasonable that no decision maker could reasonably have arrived at it.

The facts were that a man briefly retained Mr Byrne, whom I will refer to as ‘the solicitor’. Then he terminated the retainer in favour of another firm. The new firm asked for the solicitor’s file. He declined, saying that he was drawing a bill of costs and maintained a lien over the file in respect of the as yet unbilled fees. No one suggested there was anything wrong with the assertion of the lien. The new firm asked for a copy of the costs agreement. When the solicitor did not produce it, the new firm threatened to complain to the Law Institute (a misconceived threat, since the Law Institute no longer has any role in receiving complaints against lawyers). That got the solicitor’s goat. He obviously considered the threat to be an improper bullying tactic, and demanded to know what exactly he would be doing wrong by not acceding to a request by a client for a copy of the solicitor’s part of the contract between them in circumstances where the client seemed to have lost his part. The solicitor’s correspondence was relatively temperate, but one of his missives said

‘Please don’t misunderstand us, there is nothing wrong with your threat, it is just your inability to follow up which bother us [sic], because hollow threats come at a price.We neglected other work we had to reply to you in the apparently idle time-frame you set, but it appears we’ve only given in to a bully; you had no complaint to make and the deadline you set amounted to nothing.’

The decision does not suggest that the solicitor was under any duty to provide a copy of the costs agreement on demand, but Nettle J said at [61] that

‘the [solicitor’s] alleged conduct in repeatedly ignoring [the new firm’s] apparently reasonable requests for a copy of the fee agreement, coupled with the [solicitor’s] references to idle threats and bullying, were rude and in context sufficiently discourteous, offensive and provocative as to be capable of contravening Rule 21’

in the sense that the Commissioner’s characterisation of the allegations as amounting to a breach of that rule could not be said to be so unreasonable that no reasonable decision maker could have arrived at that characterisation. So, his Honour said, it could not be said that the characterisation of the complaint as a disciplinary complaint was completly and utterly obviously wrong, since breach of a conduct rule is capable of amounting to professional misconduct or unsatisfactory professional conduct. Rule 21 said at the relevant time:

‘A practitioner, in all of the practitioner’s dealings with other practitioners, must take all reasonable care to maintain the integrity and reputation of the legal profession by ensuring that the practitioner’s communications are courteous and that the practitioner avoids offensive or provocative language or conduct.’

The new firm’s complaint had said the solicitor’s conduct ‘has been unprofessional and obstructive, especially considering his knowledge of the client’s poor grasp of English.There has been one verbal request and four written requests for the fee agreement, all of which have failed to produce the document, or a reasonable response’.

The Commissioner simply provided to the solicitor a copy of the complaint, advised that she had characterised it as a disciplinary complaint (as opposed to a civil complaint), and that she was referring it to the Law Institute for investigation. The Institute was then to report back to her to enable her to make a decision. The characterisation of the complaint as a disciplinary complaint meant that the Commissioner could exercise the extraordinary powers of compulsion at her disposal in disciplinary complaint investigations (but which are not available in settlement attempts of civil disputes). It meant that the end result might be a disciplinary prosecution by her rather than a civil action by the client. It meant that if the complaint were made out, the options for the disposition of any further disciplinary complaint made within the next 5 years would be less beneficial for the solicitor. Nettle JA said at [71]:

‘No doubt a decision by the Commissioner to treat a complaint as a disciplinary complaint and to investigate it as such or to refer it for investigation by the Institute enlivens the investigative powers of the Commissioner and the Institute, including powers to compel the production of documents and explanations. In that limited sense it may be said that such a decision is one which satisfies a condition precedent to the exercise of power which may in turn affect rights or otherwise give rise to legal consequences. But that is not sufficient to attract certiorari. It does not necessarily follow from the Commissioner’s decision to investigate or refer that compulsive powers will be invoked. It is conceivable that an examination [sic.] could be carried out without any reference to the subject of the complaint or alternatively by means of interview without any compulsion.’

But that did not leave the solicitor without a remedy. The solicitor had a right to be heard on the characterisation of the complaint, and as to whether the Commissioner should summarily dismiss the purported complaint before investigating it. Nettle JA said:

‘[85] … because the Commissioner is compelled by s 4.2.8 of the [Legal Profession Act, 2004] to give notice of the complaint to the solicitor as soon as practicable after receipt, and to make a preliminary decision whether to dismiss the complaint summarily before going further with the investigation, it appears to me that the statute evinces an intention that the Commissioner should give notice of a complaint to the solicitor more or less immediately after receipt, and then take into account anything about the complaint which the solicitor may wish to submit, before determining whether to dismiss the complaint summarily or to go on to investigate it further or to refer it to the Institute for investigation. Otherwise, why provide, as s 4.2.8 so clearly does provide, that the Commissioner must notify the solicitor of the complaint as soon as practicable after receipt?’

[86] … the Commissioner has an independent obligation under s 4.2.10 to determine whether a complaint is to be dismissed summarily or not proceeded with further.If so, there is practical merit in providing the solicitor with an opportunity to make a submission or adduce facts to the Commissioner before the Commissioner determines that the complaint is a disciplinary complaint which needs be investigated.The right to be heard at that stage affords the solicitor an opportunity to head off the complaint in limine, by persuading the Commissioner not to treat it as a disciplinary complaint or to dismiss it or not proceed with it under s 4.2.10.And such a right to be heard is essentially different to any which the solicitor may later be accorded by the Institute or the Board.

[87] In the result, it appears to me as a matter of statutory construction that the structure and operation Part 4.2 imply an expectation that the Commissioner will give the solicitor a right to be heard at the outset before making the preliminary decision for which s 4.2.10 provides.

[89] … The content of natural justice is variable according to the circumstances of the case and, in the ordinary case, it should not require much more than the Commissioner inviting the solicitor to respond to the complaint and specifying a relatively short period of time (perhaps no more than a week after giving notice) in which any such response should be provided.In other kinds of cases, for example in cases of real urgency, or where the giving of notice would likely lead to the destruction of evidence or something of that nature, the content of natural justice might be reduced;in some cases perhaps even to the point of effectively abrogating it altogether.All in all, there should be few cases in which there is much of a problem.’

See also:

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5 Replies to “Court of Appeal wreaks havoc with most current Legal Services Commissioner investigations”

  1. Cont
    She has lost her thriving practice, lost her practising certificate and now being penniless has recently been dragged thro the STD.
    To add insult to injury the tribunal allowed the prosecutor to withhold further material and refused disclosure and cross examine their witness who she had alleged had acted in bad faith in spite of the tribunal having already seen that the material they had improperly withheld would exonerate her.
    If anyone read these judgement there is an allegation that there was a cash shortage of £41,250 and that she had made Round sum transfers of £475000 form the client trust account to her practice account.
    These allegations were unsustainable, since the £1,250 represented an interim bill for services rendered which the LS costs draughtsman without examining the client file felt was too much, and the £475000 transfers were all on the back of bill delivered to client for work already done.

  2. Cont
    She has lost her thriving practice, lost her practising certificate and now being penniless has recently been dragged thro the STD.
    To add insult to injury the tribunal allowed the prosecutor to withhold further material and refused disclosure and cross examine their witness who she had alleged had acted in bad faith in spite of the tribunal having already seen that the material they had improperly withheld would exonerate her.
    If anyone read these judgement there is an allegation that there was a cash shortage of £41,250 and that she had made Round sum transfers of £475000 form the client trust account to her practice account.
    These allegations were unsustainable, since the £1,250 represented an interim bill for services rendered which the LS costs draughtsman without examining the client file felt was too much, and the £475000 transfers were all on the back of bill delivered to client for work already done.

  3. It appears that the Victorian Parliament did not intend what Nettle JA thought it did. Parliament was fairly quick to pass the Professional Standards and Legal Profession Acts Amendment Act 2008 (no. 81/2008), section 23 of which inserted the following new subsections into the Legal Profession Act 2004:

    4.2.8(3)Nothing in this section requires the Commissioner to give the law practice or Australian legal practitioner an opportunity to be heard or make a submission to the Commissioner before the Commissioner determines how the complaint is to be dealt with.

    4.2.10(3)The Commissioner is not required to give a complainant, a law practice or an Australian legal practitioner an opportunity to be heard or make a submission to the Commissioner before determining whether or not to dismiss a complaint under this section.

  4. Though the victory may well be Pyrrhic. Having declared that the practitioner ought be given an opportunity to make a submission or adduce facts to the Commissioner before she decides to determine that it is a disciplinary complaint that ought be investigated (see [86] and [90]), Nettle JA and the Court say at [93]):

    “I would add for the avoidance of doubt, however, that such a declaration is made without prejudice to the ability of the Commissioner to deal further with the complaint, after affording the appellant a right to be heard, in the exercise of her discretion.”

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