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  • {solid} Appeal Determined (QCA)

Leneham v Legal Services Commissioner

 

[2018] QCA 133

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Leneham v Legal Services Commissioner [2018] QCA 133

PARTIES:

RUSSELL JAMES LENEHAM
(appellant)
v
LEGAL SERVICES COMMISSIONER
(respondent)

FILE NO/S:

Appeal No 10189 of 2016

QCATA No 11 of 2014

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal – Further Orders

ORIGINATING COURT:

Queensland Civil and Administrative Tribunal at Brisbane – [2016] QCAT 314

DELIVERED ON:

22 June 2018

DELIVERED AT:

Brisbane

HEARING DATE:

Heard on the papers

JUDGES:

Philippides and McMurdo JJA and Boddice J

ORDERS:

  1. The application to adduce further evidence be refused.
  2. The respondent pay the appellant’s costs of the appeal, to be assessed upon the standard basis.

CATCHWORDS:

APPEAL AND NEW TRIAL – PROCEDURE – QUEENSLAND – POWERS OF COURT – COSTS – where the appellant was the subject of six counts under the Legal Profession Act 2007 (Qld) – where the Queensland Civil and Administrative Tribunal dismissed all counts except for one count of failing to provide an updated costs disclosure pursuant to s 315 of the Legal Profession Act 2007 (Qld) – where the appellant successfully had the decision of the Queensland Civil and Administrative Tribunal overturned by the Court of Appeal which found the appellant had not breached s 315 of the Legal Profession Act 2007 (Qld) – where the appellant seeks costs both before the Queensland Civil and Administrative Tribunal and the Court of Appeal on the indemnity basis – whether the appellant should be awarded costs and if so whether costs should be awarded on the indemnity basis

Legal Profession Act 2007 (Qld), s 462(1), s 462(4)

Di Carlo v Dubois & Ors [2002] QCA 225, cited

Legal Services Commissioner v Atkins [2009] QLPT 3, cited

Legal Services Commissioner v Bone [2013] QCAT 550, cited

Legal Services Commissioner v Sing (No 2) [2007] QLPT 5, cited

Leneham v Legal Services Commissioner [2017] QCA 137, cited

COUNSEL:

A Morris QC for the appellant

M D Nicolson for the respondent

SOLICITORS:

Quinn & Scattini Lawyers for the appellant

Legal Services Commission for the respondent

PHILIPPIDES JA:

Background

  1. The appellant was charged with six counts brought by the respondent pursuant to the Legal Profession Act 2007 (Qld) (the Act) as follows:
  • Count 1 – Failure to make cost disclosures in breach of the s 308 of the Act.
  • Count 2 – Failure to provide an updated costs disclosure in breach of s 315 of the Act.
  • Counts 3 and 4 – Charging excessive costs.
  • Count 5 – Failure to reasonably supervise.
  • Count 6 – Failure to comply with a court ordered costs assessment order.
  1. On 8 September 2016, the Queensland Civil and Administrative Tribunal (the Tribunal) dismissed all counts except for count 2.  In respect of that count, the Tribunal found the appellant’s conduct to be unsatisfactory professional conduct and ordered that the questions of sanction and costs be dealt with on the papers.[1]
  2. The appellant successfully appealed against the Tribunal’s decision in relation to count 2.[2]  This Court ordered that the Tribunal’s finding on that charge be set aside and that that charge be dismissed.  Written submissions were provided by both parties on the matter of costs.
  3. The appellant seeks his costs of the hearing before the Tribunal on all counts and before this Court on count 2 on the indemnity basis.  In advancing his submissions, the appellant contended that the question of costs in the hearing before the Tribunal was “at large”, given that no decision in relation to costs had yet been made by the Tribunal.  Further, any decision which had been made by it would be vitiated by the setting aside of the Tribunal’s order in relation to count 2.  Further, it was submitted that, even if the Tribunal was not strictly speaking functus officio, this Court ought to determine the question of costs, as it was in as good a position as the Tribunal to do so.  To this end, the appellant sought to adduce further evidence going to the issue of costs.  It was submitted that the purpose of doing so was to demonstrate that the case advanced by the respondent, to the extent that it was characterised as “misconceived” and “unsustainable” by the Tribunal[3] on all bar count 2 and so characterised by this Court in relation to count 2, was not the result of mere misunderstanding, inadvertence, misapprehension, carelessness or neglect but rather of conduct constituting a reckless dereliction on the part of the respondent and its legal representatives.
  4. The material sought to be adduced concerned a report, dated 18 July 2016,[4] prepared by the Queensland Law Society for the respondent, concerning the investigation of a disciplinary complaint against the legal practitioner employed by the respondent who had carriage of the proceeding relating to count 1.  Also sought to be adduced were four letters, each dated 24 May 2017,[5] signed by the respondent as to his satisfaction that there was a reasonable likelihood of a finding of either unsatisfactory professional conduct or professional misconduct in respect of that practitioner and another practitioner in respect of complaints made against them.  These documents post-dated the hearing in the Tribunal and the appeal.  It was said these documents amounted to admissions against interest by the respondent.
  5. As the appellant accepted, the documents only concerned count 1 (which was abandoned in the course of the proceedings before the Tribunal) and count 6 (which was dismissed by the Tribunal) and do not directly touch on count 2, which was the sole focus of the appeal before this Court.  It was submitted that, if the Court was to deal with the costs at first instance, the asserted admissions were relevant to the costs in respect of those counts.
  6. The respondent submitted that this Court should decline the appellant’s request to entertain a costs order, other than in relation to count 2.  The respondent contended that the costs of the appeal should follow the event and that it should pay the appellant’s costs of the appeal on the standard basis.  As to the costs of the proceedings before the Tribunal (other than count 2), the respondent submitted that this Court is not seized of those matters and the Tribunal has not made a costs decision in respect of those charges.
  7. For the reasons stated below, the application to adduce further evidence is refused.

The costs of the appeal before this Court

  1. Although the appeal to this Court proceeds as a rehearing,[6] this Court’s powers in relation to the making of a costs order is not restricted to those of the Tribunal.  The Tribunal, being a “disciplinary body” as defined in sch 2 of the Act, may only make an order requiring the Commissioner to pay costs pursuant to s 462(2) of the Act if satisfied of two preliminary matters.  The first is that the practitioner “has not engaged in prescribed conduct”, which is clearly satisfied where the practitioner has been found not guilty of a disciplinary charge, but it may also be satisfied in circumstances in which a charge has been brought, but withdrawn, since, in the absence of a charge, there would generally not be a basis for satisfaction of that precondition.[7]  The second matter is satisfaction of “special circumstances”, given the reference to “exceptional” circumstances in s 462(1) of the Act, which suggests circumstances that involve a lower threshold than those that are exceptional.[8]  Special circumstances may be shown where the Commissioner, properly advised, ought to have realised that there was no real prospect of establishing the charge.[9]
  2. This Court, not being a “disciplinary body” for the purposes of the Act, may make such costs orders as it considers appropriate in accordance with its usual costs jurisdiction.
  3. It is not disputed that the costs of the appeal should follow the event.  What is in dispute is whether those costs should be on the indemnity basis.
  4. The categories in which the discretion to award costs may be exercised are not closed.[10]  The wellknown principles set out in authorities such as Colgate-Palmolive Company v Cussons Pty Ltd[11] do not define or limit the ambit of the discretion.[12]  As was observed by Basten JA in Chaina v Alvaro Homes Pty Ltd,[13] the general rule remains that costs should be assessed on a party and party basis and the standard to be applied in awarding indemnity costs ought not “be allowed to diminish to the extent that an unsuccessful party will be at risk of an order for costs assessed on an indemnity basis, absent some blameworthy conduct on its part”.  Some relevant delinquency on the part of the unsuccessful party or unreasonable conduct is demonstrated, that may warrant an order for indemnity costs.[14]  As stated in LPD Holdings (Aust) Pty Ltd v Phillips, Hickey and Toigo:[15]

“Whilst the awarding of costs on an indemnity basis will always ultimately depend upon the exercise of a discretion in the particular circumstances of each individual case, the justification for an award of indemnity costs continues to require some special or unusual feature of the particular case.”

  1. Special circumstances warranting indemnity costs may be demonstrated where a proceeding has been commenced or continued in circumstances where the applicant, properly advised, should have known that he or she had no chance of success.[16]
  2. In the circumstances of the present case, count 2 alleged contravention of s 315 of the Act by the appellant, where the obligation imposed by s 315 was imposed on a “law practice” only.  The grounds of appeal were twofold:
    1. The Tribunal erred in finding that under s 316(7) of the Act the appellant was “involved” in a failure by the law practice to comply with s 315, as the Tribunal also erred in finding a breach by the law practice of s 315 without paying due regard to the words “become aware” as they occur in s 315.
    2. The Tribunal erred in finding Charge 2 to have been established on the basis that the appellant was “involved” in a failure by the law practice to comply with s 315, where Charge 2 consisted of a charge under s 315 not s 316 of the Act.
  3. A majority (Philippides JA and Boddice J) allowed[17] the appeal and set aside the charge on the basis that the error contended for in ground 2 of the notice of appeal was made out.  The majority held, moreover, that the charge as formulated, alleging as it did a contravention by the appellant of s 315, was misconceived.  A different approach was taken by McMurdo JA.[18]  His Honour held that the Tribunal was able to consider the charge by reference to s 316, although the charge was one alleging only a contravention of s 315.[19]  McMurdo JA then proceeded to determine the appeal on the basis of the issue raised in ground 1 of the notice of appeal concerning the meaning of “becomes aware”.
  4. In allowing the appeal on ground 2, I held that:[20]

… insofar as Charge 2 was to be construed as alleging a contravention by the appellant of s 315, it was misconceived.  No such finding was made, nor was it able to be made, as no obligation was imposed on the appellant under s 315.  That the charge alleged was one that was not capable of being made out is a sufficient basis for allowing the appeal and setting aside the order made as to Charge 2.”

  1. In agreeing with the above, Boddice J likewise stated “Charge 2, as formulated and particularised at the hearing, was not capable of being made out.  The Tribunal erred in determining the charge by reframing its content”.[21]
  2. The majority also observed that the respondent was put on notice as to the fundamental defects in the charge, but chose not to seek any amendment to that charge.[22]
  3. The majority rejected a submission by the respondent that, if the charge were found to be defective for the purposes of ground 2, the appropriate course was to allow the appeal but order a rehearing so that the defect in the charge could be cured by way of a reformulation of the charge.  In that regard, I stated:[23]

“The appellant has already been subjected to a hearing, which was treated by the Tribunal as if s 316(7) had been properly charged, and went into evidence as to his lack of awareness that there had been a substantial change in the estimate of fees up to the mediation.  Not only was that evidence not challenged, but that failure was the subject of a Browne and Dunn[24] submission made against the respondent.”

  1. Boddice J expressed his agreement as follows:[25]

“I also agree with Philippides JA that there should not be any re-hearing of Charge 2.  The appellant gave unchallenged evidence.  There was no proper basis for that evidence to be rejected by the Tribunal.  That being so, even a properly laid and formulated charge was bound to fail and should have been dismissed.”

  1. It has been observed, in the context of the Tribunal’s jurisdiction to award costs against the Commissioner where special circumstances warrant it under s 462(2) of the Act, that it is appropriate to recognise the public interest which motivates the Commissioner in approaching the Tribunal.[26]  That public interest is also a relevant consideration for present purposes although this Court is not constrained by s 462(2) of the Act.  However, just as that consideration does not immunise the respondent from a costs order in an appropriate case by the Tribunal under s 462(2) of the Act, neither does it immunise the respondent from an indemnity costs order by this Court in an appropriate case.  Indeed, the disciplinary nature of the proceedings that the respondent may bring places a heavy responsibility on the respondent not to burden a practitioner with a charge in respect of which, properly advised, it ought to have known could not be made out in law or fact and where it has been alerted to that matter.
  2. In my view, in this case, properly advised, the respondent should have been aware that Charge 2 had no prospect of success, because the charge was bad on its face, but independently of that, because the uncontradicted affidavit evidence given by the appellant meant that, irrespective of the approach taken as to the construction of the expression “became aware” in s 315, there was no possible foundation for a finding of a breach of s 315 of the Act.  On the reasoning of the majority, the meaning to be attributed to the phrase “becomes aware” in s 315 of the Act which was the subject of ground 1 was obiter dicta.
  3. The present case is unusual, because the respondent was alerted to the defect in the charge at first instance and provided no particulars of a relevant “involvement” for the purpose of s 316(7).  Moreover, no challenge was mounted by the respondent to the appellant’s affidavit evidence concerning his lack of knowledge and involvement and, without such a challenge, the charge under s 316(7), even if properly formulated, was doomed to fail.
  4. I am mindful that this was not a case where it could be said that reasonable minds could not differ on the approach taken to ground 2.  There was, in addition, no complaint of impropriety in the conduct of the appeal before this Court.  With some hesitation, I would order that the respondent pay the appellant’s costs of the appeal on a standard basis including costs of the hearing before the Tribunal.

The costs of the hearing before the Tribunal

  1. The appeal before this Court only concerned count 2.  The Tribunal is not functus officio as to the other counts (one being withdrawn on day 1 of the hearing, the other four being dismissed as mentioned) and expressly reserved the question of costs, seeking further submissions.  In those circumstances, the question of costs as to those counts is before the Tribunal and not one for this Court.  Nor is there any need to remit those matters of costs as they are currently before the Tribunal.  It is proper that the issue of the costs of the proceedings before the Tribunal be determined by it.
  2. There was no dispute that the costs relating to the hearing before the Tribunal on count 2 should be considered by this Court.  For the same reasons as given in relation to the costs of the appeal, it is appropriate to order that those costs be paid by the respondent on the indemnity basis.

The application to adduce evidence

  1. It is apparent that the evidence sought to be adduced was not relevant to the determination of the issue of costs of count 2 either at first instance or on the appeal.  Nor is the material of any other relevance, given the view expressed as to the inappropriateness of considering any other questions of costs.

Orders

  1. The orders I would make are:
    1. The application to adduce further evidence is refused.
    2. The respondent pay the appellant’s cost of the appeal, including costs of the hearing before the Tribunal in so far as they relate to count 2, on a standard basis.
  2. McMURDO JA:  In my opinion, the order which this Court should make is that the respondent pay to the appellant his costs of the appeal, to be assessed upon the standard basis.  I would make no order as to the costs of the proceeding in the Tribunal, because in the circumstances of this case, the Tribunal is better placed to decide whether there should be an order, and if so what order, for the costs of the proceeding before it.
  3. As to the costs of the appeal, the only question is whether, as the appellant submits, they should be assessed upon the indemnity basis.  For such an order to be made, there must be some evidence of unreasonable conduct on the part of the party against whom the order is sought.[27]  And there is the further consideration here that it is the public interest which motivates the Commissioner in bringing proceedings before the Tribunal and, in this Court, in defending a finding by the Tribunal of misconduct by a practitioner.[28]
  4. Clause 52 of Practice Direction 3 of 2013 provides that parties wishing to make submissions on costs must do so in their written outlines of argument and/or orally at the hearing, unless leave is given to make submissions or further submissions on costs after the hearing.  When this Court decided the appeal, it directed the parties to provide written submissions on costs.  That direction did not expressly limit the length of the submissions, but clause 52(4) required that the submissions not exceed two A4 pages unless otherwise ordered by the Court, a judge of appeal or a registrar.  Counsel for the appellant saw fit to present some 40 pages of written submissions on costs.  I am unaware of any approval for that course.  Most of those submissions addressed the conduct of lawyers representing the Commissioner before the Tribunal.  Those submissions relied upon evidence which counsel for the appellant sought to put before this Court.  None of that evidence is said to be relevant to the conduct of the case in this Court and to whether costs of this appeal should be awarded upon an indemnity basis.  Indeed, at page 39 of his written submissions, Mr Morris QC writes that:

“Any criticism of the LSC’s conduct of the proceedings before QCAT does not extend to the conduct by the LSC of proceedings before the Court of Appeal.  On the contrary, it is appropriate to acknowledge that proceedings in this Court have been conducted on behalf of the LSC with absolute propriety[.]”

  1. Although this Court was unanimous as to the outcome of the appeal, my reasons differed from those of Philippides JA and Boddice J.  Their Honours considered that the charge was bad on its face, that is to say that it did not allege conduct by which a finding of professional misconduct could have been made.  My view was that the charge was not bad on its face, but that it should have been dismissed on the unchallenged evidence of the appellant, and upon the proper construction of s 315 of the Legal Profession Act 2007 (Qld).[29]  The difference of opinion within the Court confirms my view that the respondent’s case in this Court was not obviously flawed and unarguable.  Moreover, the question of the proper interpretation of s 315 had not been the subject of any previous judgment.  The Commissioner’s case here was unsuccessful, but not unreasonable, and there is no basis for ordering costs upon the indemnity basis.
  2. The appellant seeks also an order that his costs in the hearing before the Tribunal be paid by the Commissioner, again on the indemnity basis.  The Commissioner submits that the Tribunal should decide the question of what order for costs, if any, should be made in the proceeding before it, including such costs of the proceeding before the Tribunal in relation to count 2.  I do not wish to add to the Tribunal’s burden by leaving to it a question which this Court has jurisdiction to decide.  However, the circumstances of the present case are unusual.  As I have said, the appellant wishes to rely upon what is said to have been the serious misconduct of the Commissioner’s case before the Tribunal, in relation to charges other than that with which the appeal was concerned.  The Tribunal is better placed to decide the merit of those allegations, which amount to a case of an abuse of the process of the Tribunal.  It should be noted that the Tribunal has not yet decided any question of the costs of the hearing before it, so that this Court has not been asked to disturb an order for costs which the Tribunal has made.  It should be for the Tribunal, acting according to s 462 of the Legal Profession Act, to decide the question of the costs of the proceedings before it, including the subject charge.
  3. Consequently, I would order that the respondent pay the appellant’s costs of the appeal, to be assessed upon the standard basis, and that the application to adduce further evidence be refused.
  4. BODDICE J:  I have had the considerable advantage of reading the separate reasons for judgment of Philippides JA and McMurdo JA.
  5. I agree that the application to adduce further evidence should be refused and that the respondent should pay the appellant’s costs of the appeal, to be assessed on the standard basis.
  6. In respect of the appellant’s costs in the hearing before the Tribunal, I agree with McMurdo JA.  There is a specific legislative regime for the awarding of costs before the Tribunal.  In exercising that power, the Tribunal should have the opportunity to consider all relevant matters.  A separate order of this court in respect of the costs of one charge before the Tribunal may unnecessarily complicate that costs determination by the Tribunal.
  7. I agree with the orders proposed by McMurdo JA.

Footnotes

[1] Legal Services Commissioner v Leneham [2016] QCAT 314.

[2] Leneham v Legal Services Commissioner [2017] QCA 137.

[3] Legal Services Commissioner v Leneham [2016] QCAT 314 at [36], [102].

[4]  Attachment A to the appellant’s outline.

[5]  Attachments B, C, D and E to the appellant’s outline.

[6]  See s 468(2) of the Act.

[7] Legal Services Commissioner v Bone [2013] QCAT 550.

[8] Legal Services Commissioner v Bone [2013] QCAT 550.

[9] Legal Services Commissioner v Atkins [2009] QLPT 10.

[10] Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 187; see also Di Carlo v Dubois [2002] QCA 225 at [37]; LPD Holdings (Aust) Pty Ltd v Phillips, Hickey and Toigo [2013] QCA 305 at [21].

[11]  (1993) 46 FCR 225 at 232-234.

[12] Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199 at [26].

[13]  [2008] NSWCA 353 at [113].

[14] Oshlack v Richmond River Council (1998) 193 CLR 72 at 89-90 per Gaudron and Gummow JJ.  See also Botany Municipal Council v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412 at 415.  Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616; see also Di Carlo v Dubois [2002] QCA 225 at [38].

[15]  [2013] QCA 305 at [22] per Boddice J (the other members of the Court agreeing).

[16] Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401 per Woodward J.

[17] Leneham v Legal Services Commissioner [2017] QCA 137 at [46] per Philippides JA; and at [78] per Boddice J.

[18] Leneham v Legal Services Commissioner [2017] QCA 137 at [58] per McMurdo JA.

[19] Leneham v Legal Services Commissioner [2017] QCA 137 at [58] per McMurdo JA.

[20] Leneham v Legal Services Commissioner [2017] QCA 137 at [28] per Philippides JA.

[21] Leneham v Legal Services Commissioner [2017] QCA 137 at [73] per Boddice J.

[22] Leneham v Legal Services Commissioner [2017] QCA 137 at [30] per Philippides JA; and at [74] per Boddice J.

[23] Leneham v Legal Services Commissioner [2017] QCA 137 at [34] per Philippides JA.

[24]  (1893) 6 R 67.

[25] Leneham v Legal Services Commissioner [2017] QCA 137 at [75] per Boddice J.

[26] Legal Services Commissioner v Sing (No 2) [2007] QLPT 5.

[27] Di Carlo v Dubois & Ors [2002] QCA 225 at [36] – [40] citing Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616; Johnston v Herrod [2012] QCA 361 at [10] citing White Industries (Qld) Pty Ltd v Flower & Hart (1998) 156 ALR 169 at 236; [1998] FCA 806.

[28] Legal Services Commissioner v Sing (No 2) [2007] QLPT 5 at 2 per de Jersey CJ.

[29]  Boddice J agreeing with that construction of s 315: Leneham v Legal Services Commissioner [2017] QCA 137 at [77].

Close

Editorial Notes

  • Published Case Name:

    Leneham v Legal Services Commissioner

  • Shortened Case Name:

    Leneham v Legal Services Commissioner

  • MNC:

    [2018] QCA 133

  • Court:

    QCA

  • Judge(s):

    Philippides JA, McMurdo JA, Boddice J

  • Date:

    22 Jun 2018

Litigation History

Event Citation or File Date Notes
Primary Judgment [2016] QCAT 314 08 Sep 2016 Charges 1, 3, 4, 5, 6 dismissed; charge 2 upheld and conduct found to be unsatisfactory professional conduct: Thomas J and Members Anderson and Steinberg.
Notice of Appeal Filed File Number: Appeal 10189/16 06 Oct 2016 -
Appeal Determined (QCA) [2017] QCA 137 20 Jun 2017 Appeal allowed; charge 2 dismissed: Philippides and McMurdo JJA and Boddice J.
Appeal Determined (QCA) [2018] QCA 133 22 Jun 2018 Application to adduce further evidence refused; respondent pay appellant's costs: McMurdo JA and Boddice J (Philippides JA dissenting in part).

Appeal Status

{solid} Appeal Determined (QCA)