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VCAT gives expansive interpretation to civil complaint dispute resolution jurisdiction

February 28th, 2016 · No Comments

Updated post: The decision is under appeal: Champion v Rohrt [2016] VSCA 64.

Original post: VCAT has taken a most expansive approach to its jurisdiction to rule on civil disputes involving lawyers in Rohrt v Champion [2015] VCAT 1875. The liquidator of a company served a notice on a solicitor under the Corporations Law, 2001 to deliver up documents in his possession relating to the affairs of the company in liquidation.  The solicitor did not respond, so the liquidator lodged a complaint with the Legal Services Commissioner.  Presumably, this could have been characterised as a disciplinary complaint, but whether it was so characterised or not, it was certainly characterised as a civil complaint.  To the extent that it was characterised as a disciplinary complaint, only the Commissioner would have standing to launch a prosecution in VCAT, so we can disregard that possibility as a possible source of jurisdiction, and VCAT expressly did so (at [31]).

What is interesting is that the Commissioner, and subsequently VCAT (since VCAT’s jurisdiction was squarely challenged by the solicitor) must have found that the complaint seeking delivery up of the papers demanded by the notice was a dispute between a person and the solicitor arising out of, or in relation to, the provision of legal services by the solicitor to that person.  See [31]. Since the Applicant was the liquidator, and not the company in liquidation which was the solicitor’s former client, presumably VCAT must have found that the solicitor provided legal services to the liquidator, or that the person with the dispute arising out of the provision of legal services need not be the person to whom the services were provided.  In fact, VCAT found that the solicitor’s argument that VCAT did not have the jurisdiction which the liquidator was seeking to invoke was so untenable as to warrant an order that he pay indemnity costs notwithstanding the presumption in such proceedings that there be no order as to costs at all. When the Commissioner was unable to resolve what he obviously characterised as a civil dispute by alternative dispute resolution, he gave the parties their ticket to refer it to VCAT, and that is what the liquidator did, perhaps because he had heard that VCAT was fast, fair, cheap, the rules of evidence including the Evidence Act 2008 don’t apply, the Civil Procedure Act 2010 has no application, the traditional procedures of the courts don’t apply, and the likelihood of an adverse costs order is less.  In fact, the referral of a civil dispute to VCAT is unusual in that s. 4.2.13 of the Legal Profession Act 2004 says no fees are payable to VCAT to lodge the application.

The solicitor argued that VCAT did not have the jurisdiction which the liquidator had purported to invoke.  Judge Jenkins, VCAT’s Vice-President, ordered indemnity costs against the solicitor on the basis that he had demonstrated a willful disregard for clearly established law.  Her Honour reasoned, in relation to her Tribunal’s jurisdiction as follows:

’42 The Respondent also submitted that the Tribunal had no jurisdiction to consider compliance with a Notice issued under the Corporations Law, for which the Supreme Court was the appropriate forum.

43 In my view, the s 530B Notice is merely the mechanism by which a liquidator, now standing in the shoes of the company, is authorised to demand recovery of the company’s documents. In this instance, the Respondent, as a legal practitioner, continues to be subject to the Legal Profession Act 2004, pursuant to which civil disputes may be determined by the Tribunal.

44 For all of the above reasons, I agree that the position maintained by the Respondent was misconceived and without a tenable basis in fact or law.’

The Tribunal’s relevant jurisdiction stemmed from Division 4 of Part 4.3 of the Legal Profession Act 2004, which allowed either the complainant to a civil complaint or the respondent lawyer to refer to VCAT a civil dispute the subject of the complaint which the Commissioner has certified his inability to resolve by negotiation.

‘Civil disputes’ were defined by s. 4.2.2(2): disputes about legal costs, pecuniary loss claims arising from an act or omission of the practitioner, or ‘any other genuine dispute between a person and a [lawyer] arising out of, or in relation to, the provision of legal services to the person by the [lawyer].’

The liquidator sought compensation pursuant to the remedies provision within Division 4 of Part 4.3 which allows VCAT to order the lawyer to pay compensation to the complainant of up to $25,000.  That claim, apparently first made at the hearing, was in respect of:

‘the detriment and loss to the creditors of the company in liquidation by reason that the costs incurred reduces and diminishes the return to the creditors. Furthermore, the time delay has frustrated the time for a return to creditors and has frustrated and hindered the liquidator to carry out its statutory functions for which he was appointed.’

Judge Jenkins dismissed that application on the basis that compensation was available only to compensate the complainant liquidator and not the creditors of the company in liquidation.  Other than this claim for compensation, the relief sought in VCAT was not for payment of money at all, but for delivery up of documents.  It must, therefore, have been an ‘other genuine dispute’.

Where it gets interesting is that Judge Jenkins must have decided, though the question is not expressly treated in her reasons which are set out above, that the dispute was between ‘a person and [the lawyer] arising out of, or in relation to, the provision of legal services to the person by [the lawyer]’ (see s. 4.2.2(2)(c)).

Hat tip to Anastasia Smietenka of the Victorian Bar whose Commbar blogpost alerted me to this decision.

See also:

Tags: Legal Profession Act · Legal Services Commissioner · VCAT