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  • Appeal Determined (QCA)

Legal Services Commissioner v Leneham

 

[2016] QCAT 314

CITATION:

Legal Services Commissioner v Leneham [2016] QCAT 314

PARTIES:

Legal Services Commissioner

(Applicant)

v

Russell James Leneham

(Respondent)

APPLICATION NUMBER:

OCR011-14

MATTER TYPE:

Occupational regulation matters

HEARING DATE:

8 and 9 September 2015

HEARD AT:

Brisbane

DECISION OF:

Justice DG Thomas, President

Assisted by:

Scott Anderson, Legal Panel Member

Dr Margaret Steimberg AM, Lay Panel Member

DELIVERED ON:

8 September 2016

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. Charges 1, 3, 4, 5 and 6 are dismissed.
  1. Charge 2 is upheld, and the conduct of the respondent is found to be unsatisfactory professional conduct.
  1. The LSC is to file in the Tribunal and serve any submissions he wishes to make in relation to sanction and costs, by:

4:00pm on 22 September 2016.

  1. The respondent is to file in the Tribunal and serve any submissions he wishes to make in relation to sanction and costs, by:

4:00pm on 6 October 2016.

  1. The question of sanction and costs will be dealt with on the papers unless either party requests an oral hearing by 13 October 2016.

CATCHWORDS:

PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – DISCIPLINARY PROCEEDINGS – PROFESSIONAL MISCONDUCT OR UNSATISFACTORY PROFESSIONAL CONDUCT – SOLICITOR’S COSTS – where the respondent was charged with failing to make costs disclosure, charging excessive legal costs and failing to supervise – where the respondent claims he isn’t a “partner” of the law firm and so cannot be charged for the issuing of the bill and the costs applicable – where the applicant argues that the respondent was a salaried partner and was held out as a partner of the practice – whether a salaried partner comes within the ambit of the Legal Profession Act 2007 (Qld) for the purpose of discipline – whether the respondent failed to update costs disclosure to the complainant where there was a substantial change – whether the respondent’s conduct amounts to unsatisfactory professional conduct or professional misconduct

Legal Profession Act 2007 (Qld) ss 308, 456(2)(e), 462(4), 462(7), 462(8)

Queensland Civil and Administrative Tribunal Act 2009 (Qld) ss 103, 104

Succession Act 1981 (Qld) Part 4

Uniform Civil Procedure Rules 1999 (Qld) rr 743A, 743L

Berger v Council of the Law Society of NSW [2013] NSWSC 1080

Brown  v Maurice Blackburn Cashman [2013] VSCA 122

Burrell Solicitors Pty Ltd & Anor v Reavill Farm Pty Ltd & Ors [2016] NSWSC 303

Cook v Downie (1944) 50 Argus LR 341

Council of the Queensland Law Society v Roche [2004] 2 Qd R 574

De Pardo v Legal Practitioners Complaints Committee (1999) 170 ALR 709

Fagenblatt v FGT Custodians Pty Ltd [2004] VSC 196

Jeffrey Thomas & Partners v Jackson [2001] VSC 490

Legal Profession Complaints Committee v O’Halloran [2013] WASC 430

Lynch v Stiff (1943) 68 CLR 428

M Young Legal Associates Ltd v Zahid [2006] 1 WLR 2562

Nationwide Building Society v Lewis [1998] 2 WLR 915

NSW Bar Association v Meakes [2006] NSWCA 340

Old v McInnes and Hodgkinson [2011] NSWCA

Power v Hammond [2005] VSC 2

Re Veron; ex parte Law Society (NSW) (1966) 84 WN (NSW) Pt 1 136; [1966] 1 NSWR 511

Scroope v Legal Services Commissioner [2013] NSWCA 178

Stekel v Ellice [1973] 1 WLR 198

Veghelyi v Law Society of NSW [1995] NSWCA 483

Vision Eye Institute Ltd & Anor v Kitchen & Anor [2014] QSC 260

APPEARANCES and REPRESENTATION:

 

APPLICANT:

Westin, N.B. instructed by the Legal Services Commissioner

RESPONDENT:

Morris, A. QC instructed by Quinn & Scattini Lawyers

REASONS FOR DECISION

  1. [2]
    This is an application by the Legal Services Commissioner (‘LSC’), under the Legal Profession Act 2007 (Qld) (‘The Act’) for disciplinary orders against the respondent solicitor, Russell James Leneham.

Charges

  1. [3]
    The charges are as follows:

Charge 1 - Failure to make costs disclosure

  1. [4]
    That between 30 June 2008 and 26 May 2010, Mr Leneham contrary to section 308 of the Act failed to make costs disclosure in writing to Sherry Jewell (‘the complainant’) as soon as practicable after the law practice of Quinn & Scattini was retained in an action under Part 4 of the Succession Act 1981 (Qld).

Charge 2 – Failure to update costs disclosure

  1. [5]
    That between 27 May 2010 and 16 December 2010, the respondent failed to disclose in writing to the complainant as soon as reasonably practicable a substantial change of fees to be charged for work performed in bringing an action under Part 4 of the Succession Act 1981 (Qld), contrary to section 315 of the Act.

Charge 3 – Charging excessive costs

  1. [6]
    That on 15 December 2010, the respondent charged the complainant excessive legal costs in connection with the practice of law.

Charge 4 – charging excessive costs

  1. [7]
    That on 16 December 2010, the respondent charged the complainant excessive legal costs in connection with the practice of law.

Charge 5 – Failure to supervise

  1. [8]
    That between 14 December 2010 and 16 December 2010, the respondent[1] failed to exercise reasonable supervision over Michael Seymour, a solicitor engaged in the provision of legal services.

Charge 6 – Failure to comply with a court order

  1. [9]
    That the respondent failed to refund the complainant legal costs as required by a court-ordered cost assessment.

Background

  1. [10]
    Substantial affidavit evidence was filed by both parties to the proceeding and the following witnesses were cross-examined: Jon Davis Kent, Sherry Jewell, Marek Janusz Reardon, Kylie Maree Astley, Michael Charles Seymour, Alec Dean, Mr Leneham and Stephen Kenneth Hartwell.
  1. [11]
    The Tribunal’s findings are set out in this section.
  1. [12]
    Mr Leneham was involved in the complainant’s case from 2008 onwards,[2] and he was still corresponding with her in December 2012. The complainant largely dealt with an employee solicitor, Michael Seymour,[3] and Mr Leneham was the “responsible partner”.[4]
  1. [13]
    During the relevant time, Mr Leneham allowed himself to be held out as a partner of the law practice, both to employees and those who dealt with the law practice. This included the complainant.
  1. [14]
    Mr Seymour, declined an invitation to say that Mr Leneham was not really a partner:

“Q (Mr Morris): Now, when Mr Leneham became a salaried partner, you understood that he hadn’t become a principal of the firm, that he wasn’t an owner of the partnership or practice?

A:  Look, I – at that time, I was aware he had become a partner on the letterhead. I didn’t have any knowledge of what the arrangement was between him and the other partners, so – but I understood that we just considered Russell had been made a partner”.[5]

  1. [15]
    A chain of correspondence between Quinn & Scattini and its client (the complainant) is significant.[6] On 31 July 2009, the respondent wrote to the complainant about a rise in professional rates and signed his letter: “Russell Leneham, Partner, Quinn & Scattini”.
  1. [16]
    On 17 February 2010, Quinn & Scattini wrote to the complainant, on letterhead bearing this information: “Partners”, followed by four names, including those of Mr Quinn and Mr Leneham.
  1. [17]
    Further communications, on materially identical letterheads, were sent to the complainant on 8 April 2010, 13 April 2010, 21 April 2010, 25 May 2010, 24 May 2010, 17 June 2010, 8 July 2010, 28 July 2010, 30 July 2010, 20 September 2010, 21 September 2010, 14 October 2010, 5 November 2010 and 17 December 2010.
  1. [18]
    On 17 June 2010, Quinn & Scattini wrote to the complainant, enclosing the draft of a new retainer agreement. That document included a photograph of Mr Leneham, labelled “Partner”.
  1. [19]
    In June 2011, the firm of Quinn & Scattini was incorporated,[7] and thereafter the former “partners” (including Mr Leneham) were listed as “directors”.[8]
  1. [20]
    Quinn & Scattini’s course of communications with the complainant, is a well sustained exercise in holding Mr Leneham out as a partner, whatever the precise internal arrangements may have been. This must have been done with the approval of Mr Leneham.
  1. [21]
    Mr Leneham held a principal practising certificate[9] which, according to his counsel, means that he was “certified by law ... to do those things which only a principal can do”.[10] While the holding of such a certificate may not necessarily identify a salaried partner as a principal, it may be one indication that this is substantially the position.[11]
  1. [22]
    From 2008 to 2010, Mr Leneham was the “team leader” of Michael Seymour, an employee solicitor who had the day to day conduct of the complainant’s case.[12]
  1. [23]
    Mr Seymour’s work was subject to “regular reviews”,[13] by Mr Leneham and Mr Seymour and Mr Leneham met on a regular basis for this purpose. Mr Leneham undertook file reviews[14] and could override Mr Seymour.[15]
  1. [24]
    Mr Seymour drafted the relevant bills of costs[16] and submitted them to Mr Leneham for the latter’s signature;[17] as all such bills required a partner’s approval.[18]
  1. [25]
    Mr Leneham’s responsibility included to check Seymour’s draft bills of costs.[19]
  1. [26]
    Mr Leneham was “quite forthright in instructing Mr Seymour as to the amounts to be charged”.[20]
  1. [27]
    According to Mr Seymour:

“While I was employed by Quinn & Scattini Lawyers, I was required to prepare draft invoices for my matters and send them to the responsible partner or director for approval or adjustment. ... In matters where Russell Leneham was the responsible partner, he had to approve each invoice before it was sent out.[21] He “would come to [my office at] Cleveland on a number of occasions, and that’s when we went through the files I was conducting”. [22]

  1. [28]
    In May 2010, Mr Leneham signed a costs agreement and costs disclosure to replace similar documents given to the complainant in October 2008.[23]
  1. [29]
    As a result of Mr Leneham’s role in the law practice, and particularly the regular file reviews, he had knowledge of the progress of matters and of the extent of the work which was being undertaken on matters in which he was the team leader in the law practice. In the context of those regular reviews, he had direct access to, and was aware of, information and factors which led to the substantial changes from the disclosure made by the law practice to the complainant. This information was available before the days leading up to the mediation.
  1. [30]
    The 2010 disclosure estimated that if the matter ended at mediation, costs would be between $25,000.00 and $30,000.00, and if it went to trial, they would be between $75,000.00 and $90,000.00.[24] (The nett value of the estate was $269,277.09[25]) Mr Leneham signed the 2010 agreement and disclosure without ensuring that the estimates were up to date.[26] He left that to Mr Seymour,[27] without checking Mr Seymour’s figures.[28]
  1. [31]
    After May 2010, Mr Leneham did not look into the question of the complainant’s rising costs until the new costs estimate was considered in preparation for the mediation.[29]
  1. [32]
    Mr Leneham gave the complainant an updated estimate of costs on the day of the mediation on 1 December 2010.[30]
  1. [33]
    Until that time, the legal practice took no steps to make any costs disclosure to the complainant.
  1. [34]
    The account rendered was for the sum of $62, 123.88. Therefore, there was a substantial difference between the estimates in the costs disclosure ($25,000.00 to $30,000.00) and the fees rendered to the complainant.

Charge 1 – Failing to make a costs agreement between June 2008 and 26 May 2010.

  1. [35]
    This charge was withdrawn at the hearing, after evidence from the LSC’s witnesses, Sherry Jewell, Marek Janusz Reardon and Kylie Marie Astley, had been completed.
  1. [36]
    This charge was unsustainable, and should not have been brought against the Respondent. In evidence is a costs disclosure signed by the complainant on 8 October 2008, and by Quinn & Scattini five days later.[31] The complainant confirms that she received it.[32]
  1. [37]
    The LSC provided no adequate explanation for the Charge having been brought. It was conceded that the LSC would have received the 2008 document with Quinn & Scattini’s file.[33]

Charge 2 - Failure to update costs disclosure

  1. [38]
    The allegation is that, between 27 May and 16 December 2010, Mr Leneham failed to make a timely disclosure of a substantial change of fees, contrary to section 315 of the Act.
  2. [39]
    Section 315 of the Act, headed “Ongoing obligation to advise”, provides:

“A law practice must, in writing, disclose to a client any substantial change to anything included in a disclosure already made under this division as soon as is reasonably practicable after the law practice becomes aware of that change.”

  1. [40]
    For present purposes, “law practice” means a law firm, which, in turn, means a partnership consisting only of Australian legal practitioners.[34]
  1. [41]
    The respondent submits that the charge be read as a charge of contravening section 315 of the Act.[35]
  1. [42]
    It was not contested that the fees rendered were substantially more than the estimate. That was in fact, the case.
  1. [43]
    The legal practice contravened section 315 of the Act by failing to make any disclosure regarding changes in the cost estimate until the day of the mediation.
  1. [44]
    In his written submissions the respondent submitted that the charge should fail as the only obligation imposed by section 315 of the Act is on the law practice and not a principal or employee.[36]
  1. [45]
    In responding to the applicants written submissions, the respondent agrees that it would have been appropriate and desirable for the law practice to have given an updated estimate of costs, during the period when the respondent did not have the direct conduct of the file.[37]
  1. [46]
    The respondent submits that section 316 of the Act had no application as there was no failure by him to comply with section 315 of the Act.[38]
  1. [47]
    The respondent says that had section 315 of the Act included the words “legal practitioner” instead of “law practice” and included the words “or could (with the benefit of hindsight) have become aware” then he would have breached the section.[39]
  1. [48]
    At the hearing the respondent adopted a different approach in some respects.
  1. [49]
    At the hearing, the respondent submitted that liability of a principal for a breach of section 315 of the Act by the law practice essentially is a strict liability.[40] The respondent referred to section 701 of the Act. Under that section, subject to some exceptions, if a law practice contravenes any provision of the Act, each principal of the practice is taken to have contravened the same provision.[41]
  1. [50]
    The respondent submits that he could not be regarded as a principal of the law practice.
  1. [51]
    The respondent submits that as a matter of law, he is not a partner. He says that he had no interest in the partnership and is not someone within the meaning of the Partnership Act 1891 (Qld) who had gone into business with others with a view to a mutual profit.[42]
  1. [52]
    The respondent submits that section 701 of the Act only applies when the practitioner is actually the principal, and so the description of Mr Leneham a salaried partner and his being held out as a partner does not mean that he assumes the “strict liability” as a principal under section 701 of the Act, as he was not a principal of the law practice.
  1. [53]
    On the other hand, the applicant submits that the respondent was held out as a partner of the firm, and is caught by section 7 of the Act.[43] Further, the applicant submits that the partnership agreement need not be in writing, but might be oral.[44] The applicant also refers to the holding of a Principal Level Practising Certificate.
  1. [54]
    The respondent accepts, as is the case, that the conduct of an individual solicitor – whether a partner, principle or an employee – can amount to professional misconduct or unsatisfactory professional conduct arising out of non-compliance with section 315 of the Act.[45] In making this submission, the respondent refers to section 316(7) of the Act which relevantly provides:

“failure by a law practice to comply with this division is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner…involved in the failure”.

  1. [55]
    He submits that the same responsibilities are not cast upon an employee, as would be cast on a principal, who might be subject to a finding because of section 316 of the Act.
     
  2. [56]
    The respondent submits that section 316 of the Act will only operate if the lawyer “becomes aware” and that this requires actual knowledge of the substantial change to anything included in the disclosure already made.
  3. [57]
    Underlying the respondent’s submission is the proposition that to place employees, with a position of any seniority within a firm, under the same sort of absolute liability that is imposed upon the firm’s principals, could not have been intended and is not the manner in which the Act operates.[46]
  4. [58]
    At the theoretical level, the respondent agrees that he is within the range of people subject to obligation under section 315 of the Act.[47]
  1. [59]
    The respondent submits that the contravention of the law practice under section 315 the Act cannot lead to a finding of unsatisfactory professional conduct or professional misconduct against him under section 316(7) of  the Act as he did tell the client of the increase in fees once he actually became aware – actual awareness being essential before section 316(7) of the Act can apply.
  1. [60]
    Relevant to the current charge, the structure of the Act is as follows:
  1. In section 315, to define the primary obligation of disclosure of a law practice.
  1. In section 701, to extend the disclosure obligation to all principals by providing that a contravention of a law practice is capable of constituting unsatisfactory professional conduct or professional misconduct.
  1. In section 316, to extend the disclosure obligation to all Australian lawyers by providing that a contravention of a law practice is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any Australian lawyer involved in the contravention.
  1. [61]
    The requirement to disclose to a client any substantial change to anything included in a disclosure already made under the division, as soon as is reasonably practicable after becoming aware of that change, is imposed on the law practice.
  1. [62]
    The failure by the practice to disclose upon becoming aware, may constitute unsatisfactory professional conduct or professional misconduct of the Australian Lawyer (who is not a principal) only if the individual is “involved in the failure”.
  1. [63]
    Because section 316 of the Act uses the word ‘may’, a precise finding against a lawyer does not flow immediately from a contravention of section 315 of the Act. The position will depend all the circumstances of each case. The level and extent of involvement by the lawyer will be very relevant to this question.
  1. [64]
    In general terms, the respondent’s submission that employees, with a position of any seniority within a firm, would not be under the same sort of liability that is imposed upon the firm’s principals, is correct. However the balance is struck by virtue of the requirement that the lawyer (the non- principal) must be ‘involved in the failure’ in order for section 316(7) of the Act to apply.
  1. [65]
    There is no reference to actual knowledge and such a requirement should not be read into the words used.
  1. [66]
    It cannot be the case that practitioners could defeat legislation clearly designed to protect their clients by failing to keep abreast of rising costs. Indeed, it is a main object of the Act to “provide for the regulation of legal practice ... for the protection of consumers of the services of the legal profession and the public generally.”[48]
  1. [67]
    The duty to keep a client informed of costs and other significant aspects of a case is not a novelty created by section 315 of the Act. That provision is simply an application or reinforcement of a solicitor’s contractual and fiduciary duty to provide clients with reasonable, up to date estimates of the likely costs of their proceedings.[49]
  1. [68]
    The focus of section 316(7) the Act is whether the Lawyer is “involved in the failure”. That is the operative test.
  1. [69]
    The findings set out in “the Background” section of these reasons demonstrate that Mr Leneham was aware of the existence of the costs disclosures in 2008 and 2010 (having executed the 2010 agreement on behalf of the legal practice), had a regular and significant role in reviewing the conduct of files (which must have meant that he was aware of the extent of the work being undertaken in a matter) and was involved in costing and billing files having the final authority within the law practice to alter the quantum of fees rendered to the client. Mr Leneham was the person held out as a partner of the law practice and as a partner who had authority to alter and sign off on all bills. In the retainer agreements which included the costs disclosures, he was the nominated person to contact regarding cost issues.
  1. [70]
    In the circumstances Mr Leneham was very centrally involved in the failure of the law practice to comply with section 315 the Act. Section 316(7) of the Act applies in the circumstances. Given the application of section 316(7) of the Act, it is not necessary for the Tribunal to make any findings about the application of section 701 of the Act.
  1. [71]
    Being a practitioner of considerable experience it is surprising that Mr Leneham accepted a title as partner (even as salaried partner) and allowed himself to be held out in this way without apparently understanding the position in which he was being placed. Acting prudently, practitioners in the position in which he found himself should take steps to clarify their position. 
  1. [72]
    With the application of section 316(7) the Act, the non-compliance with the requirements of section 315 of the Act may constitute unsatisfactory professional conduct or professional misconduct on the part of Mr Leneham.
  1. [73]
    Unsatisfactory professional conduct is defined in section 418 of the Act to include conduct that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.
  2. [74]
    Professional misconduct is defined by section 419 of the Act as unsatisfactory professional conduct which involves a substantial or consistent failure to reach or keep a reasonable standard of competence and diligence.[50]
  3. [75]
    The role (as described in these reasons) which Mr Leneham accepted as a salaried partner, including his responsibilities on an ongoing and regular basis in reviewing files and reviewing and approving billing, was central to the non-compliance by the law practice with the requirements of section 315 of the Act. By virtue of his role, he had knowledge, and was aware, on a continuing basis of the progress of matters for which he was the team leader and so was aware of the factors which led to the substantial changes from the costs disclosure made by the law practice. He took no steps to ensure that the law practice disclosed to the complainant the substantial change to the costs disclosure as soon as practicable as is required by section 315 of the Act.
  1. [76]
    The Tribunal is satisfied that the conduct of the respondent fell below the standard of competence and diligence that the member of the public is entitled to expect that reasonably competence Australian legal practitioner.
  1. [77]
    The Tribunal finds that Charge 2 has been established.
  1. [78]
    In this case, the respondents conduct is not repeated and was not deliberate. The Tribunal finds that the conduct of the respondent amounted to unsatisfactory professional conduct[51] in the circumstances.

Charges 3 and 4 – Excessive and gross overcharging

  1. [79]
    It is convenient to consider charges 3 and 4 conjointly.
  1. [80]
    On the complainant’s application, the Magistrates Court at Ipswich ordered an assessment[52] of her bills amounting to $62,123.88. On 16 April 2012, the appointed assessor, Mr Graham Robinson, recommended a reduction of $3,811.16,[53] or some 6.2% of the original figure. If account is taken of an upward adjustment of $599.17,[54] the excess would be reduced to about 5.2 percent. A refund of the excess was offered but never accepted.[55]
  1. [81]
    The decision to allege gross overcharging was influenced, perhaps, by the figure of $85,000.00 foreshadowed by Mr Leneham on 1 December 2010.

Applicant’s expert

  1. [82]
    An expert witness for the applicant is Mr Marek Reardon. Mr Reardon was admitted as a solicitor in 1995, and in August 2011 he became a court-approved costs assessor.[56] In his report of 21 June 2013,[57] Mr Reardon concludes[58] that a reasonable range of costs in a case of the present kind is between $16,500.00 to $33,000.00, and more probably between $16,500.00 and $24,750.00.
  1. [83]
    Mr Reardon has no difficulty with Quinn & Scattini’s hourly rates.[59]
  1. [84]
    In forming his opinion, Mr Reardon conceded that he did not have access to Quinn & Scattini’s complete file, particularly the solicitor’s file notes.[60] That, he says, was a “disadvantage”,[61] and he would not normally make an assessment without that information.[62] Indeed, it would be “incredibly difficult” to offer an opinion about the reasonableness of a bill without looking at the complete file,[63] but, in offering his opinion, he was “doing the best with what he had”. After all, it enabled him to “formulate some view as to what was appropriate in the circumstances”.[64]
  1. [85]
    His method was to estimate how many hours he believed a usual matter would take to complete, multiply it by the average hourly rate and then double the resultant figure to derive the range.[65] This approach was inexact and led to a very wide range which was of little assistance.

Respondent’s expert

  1. [86]
    The respondent’s expert is Mr Hartwell. Mr Hartwell has specialised in costs assessment since November 1990. He was appointed a costs assessor to the Solicitors’ Complaints Tribunal in 2007, and a costs assessor for Queensland courts in December 2007. Further details of his publications, educational activities and professional experience are detailed in his report.[66]
  1. [87]
    The Hartwell report is based on a review of Quinn & Scattini’s file.[67] It criticises the Reardon report, compiled without access to that record, as “guesswork or an estimation based on experience”. “Clearly, the most effective way to [assess costs] is to have access to the file and look at the work that was actually done”.[68] Mr Hartwell points out that Mr Reardon, “makes no reference to the actual work done or the instructions given. Presumably he cannot do so as he does not have access to the solicitors’ full file ... [A]bsent a detailed analysis of the law practice’s actual file I would suggest that it was impossible to opine as to what the reasonable fees were.”[69]
  1. [88]
    In Mr Hartwell’s opinion the respondent’s bills were reasonable.[70] The hourly charges were “within the market range”.[71] However, Mr Hartwell adds that he did not embark on an item by item check, because he was not asked to do so.[72]

Consideration

  1. [89]
    An appropriate point of departure is that the excess in this case, from a taxing master’s viewpoint, was significantly less than 10 percent. It was said that there was some difficulty in obtaining instructions from the client which involved additional costs.[73] The amount secured on mediation was substantially higher than the complainant would have received under the default provisions of intestacy law – a relevant consideration, according to Mr Hartwell.[74]
  1. [90]
    As French J (as he then was) observed in De Pardo v Legal Practitioners Complaints Committee[75]:

“There is a very clear difference in kind between the assessment by the taxing officer of a court ... and the assessment by a disciplinary tribunal of whether there has been gross overcharging amounting to unprofessional conduct.”

  1. [91]
    A disciplinary Tribunal dealing with a charge of gross overcharging is not functioning as a taxing master. It should apply “a broad sense of what is reasonable and fair, and not [a] narrow approach to mere questions of overcharging”.[76] Not all overcharging will amount to professional misconduct; “calculated greed” is another matter.[77] Even charges that exceed indemnity costs may not be unprofessional.[78]
  1. [92]
    “If a practitioner claims a fee on a reasonably arguable, but wrong basis, it could hardly be said that his or her ... charging is to be characterised as in any way unprofessional. That would ... be contrary to common sense.”[79]
  1. [93]
    For present purposes, the issue is not whether the charges are excessive, but whether they are grossly excessive.[80] Are they “exorbitant and well outside those charged by any reasonable practitioner”?[81] Would they be properly “understood to be disgraceful or dishonourable in professional eyes”?[82] Supervision of professional conduct should not be carried to the point of “zealotry”.[83]
  1. [94]
    It is instructive to compare this case with others. In Re Veron; ex parte Law Society (NSW)[84] the respondent solicitor, Paul Veron, charged fees in 65 such cases that were about 5 times greater than a reasonable fee. He was struck off the roll of practitioners.
  1. [95]
    In Scroope v Legal Services Commissioner[85] the practitioner charged $558,000.00 when a proper fee was $343,000.00, an overcharge of 63 percent. The excess in NSW Bar Association v Meakes[86] was 82 percent. A Perth practitioner, in five of his cases, overcharged by 47 percent, 39 percent, 104 percent, 130 percent and 125 percent.[87] In Veghelyi v Law Society of NSW[88] the respondent charged $1,304.00 when the proper scale fee was $173.00, and $4,143.00 when a fair and reasonable amount was $2,548.00. The Queensland case of Roche[89] involved a bill for $620,000.00, when indemnity costs were agreed at $240,000.00.
  1. [96]
    In light of those figures, Mr Hartwells’ evidence and the principles in the authorities, on its face an excess of five to six percent is not so gross, or in the words of counsel, so “over the top”[90] as to constitute misconduct “indicative of a failure to understand or to practice the precepts of honesty and fair dealing”.[91]
  1. [97]
    The Tribunal prefers the evidence of Mr Hartwell over that of Mr Reardon. Even Mr Reardon acknowledges the weakness of his not having reviewed the file saying it would be difficult to offer an opinion without looking at the complete file. That is clearly the case. The Tribunal concludes and finds that respondent did not charge the complaint excessive fees in connection with the practice of the law.
  1. [98]
    Therefore, charges 3 and 4 are not made out.

Charge 5: Failure to supervise in December 2010

  1. [99]
    By way of alternative to Charges 3 and 4 the LSC alleges that Mr Leneham failed to exercise reasonable supervision over Mr Seymour with respect to the bills in question, issued on 14 December and 16 December 2010, respectively. Consequently, it is said, the complainant was charged grossly excessive costs.
  1. [100]
    It seems the thrust of this charge is that Mr Leneham, by act or omission, allowed Seymour to prepare bills that were professionally improper. The authorities do not support a proposition that professional impropriety occurs whenever a bill is reduced on taxation or independent assessment. Indeed, the reduction of a prospective bill for $85,000.00 was voluntarily reduced to about $62,000.00, followed by an offer to refund the amount deducted by Robinson, suggest that the respondent had a beneficial influence upon his subordinate. As we have held, the costs that were actually charged were not excessive. There was no failure of supervision in December 2010.
  1. [101]
    Charge 5 is dismissed.

Charge 6: Failure to comply with a Magistrates Court order

  1. [102]
    This charge is misconceived. The order, such as it was, was directed to Mr Quinn, not Mr Leneham. Further, it was not an order for payment but an order for an independent assessment. Any order for payment depended upon another application to the court, which was never made.
  1. [103]
    Charge 6 is dismissed.

Sanction and Costs

  1. [104]
    The parties requested that upon finding as to the characterisation of conduct, they be allowed to make submissions regarding sanction and costs orders.
  1. [105]
    The LSC is to file in the Tribunal and serve any submissions he wishes to make in relation to sanction and costs, by:

4:00pm on 22 September 2016.

  1. [106]
    The respondent is to file in the Tribunal and serve any submissions he wishes to make in relation to sanction and costs, by:

4:00pm on 6 October 2016.

  1. [107]
    If either party requires additional time the party should approach the Tribunal in writing, including the other side in any correspondence.
  1. [108]
    The question of sanction and costs will be dealt with on the papers unless either party requests an oral hearing by 13 October 2016.

Orders

  1. [109]
    The Orders of the Tribunal are as follows:
  1. Charges 1, 3, 4, 5 and 6 are dismissed.
  1. Charge 2 is upheld, and the conduct of the respondent is found to be unsatisfactory professional conduct.
  1. The LSC is to file in the Tribunal and serve any submissions he wishes to make in relation to sanction and costs, by:

4:00pm on 22 September 2016.

  1. The respondent is to file in the Tribunal and serve any submissions he wishes to make in relation to sanction and costs, by:

4:00pm on 6 October 2016.

  1. The question of sanction and costs will be dealt with on the papers unless either party requests an oral hearing by 13 October 2016.

Footnotes

[1] As a partner in Quinn & Scattini Lawyers (see particular 5.5 of this charge).

[2] Ibid, page 2-12 line 24.

[3] Ibid page 2-11 lines 30-32.

[4] Affidavit of Michael Charles Seymour filed 1 April 2014 on behalf of the applicant, paragraph 6.

[5] Transcript 1-47 lines 5-10.

[6] Annexed as exhibit KA 1 to the affidavit of Kylie Maree Astley filed 20 August 2014 on behalf of the applicant.

[7] Affidavit of Russell James Leneham filed 10 December 2014, paragraph 15.

[8] As in letters from Mr Leneham to the LSC dated 10 and 18 September 2012.

[9] Transcript page 2-37 line 13.

[10] Ibid page 2-40 lines 19-21.

[11] M Young Legal Associates Ltd v Zahid [2006] 1 WLR 2562, referred to above.

[12] Ibid, page 2-11, lines 30-32, 35, 38.

[13] Ibid page 1-45 line 38.

[14] Ibid, page 2-14 lines 4-5.

[15] Ibid, page 2-14 lines 19-21.

[16] Ibid page 1-48 line 19.

[17] Ibid page 1-47 line 31.

[18] Ibid page 1-47 line 43.

[19] Ibid page 2-11 lines 43-44, 46.

[20] Ibid, page 2-12 lines 4-5.

[21] Affidavit of Michael Charles Seymour filed 1 April 2014 paragraphs 5-6.

[22] Transcript page 1-45 lines 42-44; 1-46 lines 4-20.

[23] Ibid page 2-12 line 45.

[24] Costs Disclosure (Estate Administration – Deferred Fees) 27 May 2010 item 6.

[25] Affidavit of Stephen Kenneth Hartwell filed 18 July 2015, annexed report page 11.

[26] Transcript page 2-15 lines 12-13, 21-22.

[27] Ibid page 2-15 lines 2-16 lines 4, 17-18, lines 35-36.

[28] Ibid page 2-16 line 4.

[29] Affidavit of Russell James Leneham filed 10 December 2014, page 6, paragraph 41.

[30] Ibid, paragraph 44.

[31] Affidavit of Kylie Maree Astley filed 20 August 2014, exhibit KA 1, page 542.

[32] Transcript page 1-17 line 32.

[33] Ibid page 1-32 line 23.

[34] Legal Profession Act 2007 (Qld) sch 2, definitions (so far as now material) of “law practice” and “law firm” respectively.

[35] Transcript page 2-36 lines 10-12.

[36] Submissions on behalf of the respondent, filed 27 March 2015, paragraphs 7, 11, 12 and 13.

[37] Ibid, paragraph 120.

[38] Ibid, paragraph 112.

[39] Ibid, paragraphs 117 and 118.

[40] Transcript page 2-37 line 3.

[41] Legal Profession Act 2007 (Qld) s 107(1).

[42] Transcript page 2-39 lines 14-17.

[43] Ibid, page 2-66 lines 38-40.

[44] Ibid, page 2-67 lines 38, 39.

[45] Ibid, page 2-36 lines 19-21.

[46] Ibid, page 2-42 lines 18-20.

[47] Ibid, page 2-36 lines 28-29

[48] Legal Profession Act 2007 (Qld) s 3(a).

[49] Burrell Solicitors Pty Ltd & Anor v Reavill Farm Pty Ltd & Ors [2016] NSWSC 303 at [45].

[50] Legal Profession Act 2007 (Qld) s 419(1)(a).

[51] Legal Profession Act 2007 (Qld) s 418.

[52] Uniform Civil Procedure Rules 1999 (Qld) r 743A.

[53] Certificate of costs assessor Robinson, annexure JK1 to affidavit of Jon Davis Kent sworn 20 November 2013.

[54] Letter Leneham to Kent 10 July 2012, exhibit JK4 to affidavit of Jon Davis Kent; Transcript page 2-4 lines 21-25.

[55] Transcript page 2-5 line 20, 2-9 line 5, 2-5 line 25.

[56] Uniform Civil Procedure Rules 1999 (Qld) r 743L.

[57] Affidavit of Marek Janusz Michael Reardon filed 20 August 2014, annexure MR1.

[58] Reardon report page 26.

[59] Transcript page 1-25 line 5.

[60] Ibid page 1-25 lines 43-44; 1-26 line 15.

[61] Ibid page 1-26 line 27.

[62] Ibid page 1-27 line 8.

[63] Ibid page 1—27 line 15. 

[64] Ibid page 1-27 lines 19-21.

[65] Ibid page 1-19 lines 1-5.

[66] Hartwell report 13 July 2015 page 52, exhibit SH`1 to affidavit of Stephen Kenneth Hartwell, filed 16 July 2015.

[67] Ibid page 56 item 20(d).

[68] Transcript page 2-34 lines 24-28 (Hartwell).

[69] Hartwell report page 78 paragraph [59].

[70] Transcript 2-32 lines 5-6; 2-32 lines 12-13; 2-34 line 32.

[71] Costs Report of Stephen Kenneth Hartwell dated 13 July 2015 paragraph [61].

[72] Hartwell report page 55 paragraph [19].

[73] Transcript 1-46 line 40, 1-46 line 47 (Seymour).

[74] Ibid 2-20 lines 4ff; 2-21 lines 8-15 (Hartwell); 2-31 lines 36-46 (Hartwell).

[75] (1999) 170 ALR 709 at [46].

[76] Re Veron; ex parte Law Society (NSW) (1966) 84 WN (NSW) Pt 1 136 at 142.

[77] The Law Society of the ACT v Roche & Anor (2002) 171 FLR 138 at [89]. See also Council of the Queensland Law Society Incorporated v Roche [2004] 2 Qd R 574 at 589 per de Jersey CJ; “arrant greed”.

[78] Ibid at 581.

[79] Ibid.

[80] D’Alessandro v Legal Practitioners Complaints Committee (1995) 15 WAR 198 at 223. Leave to appeal to High Court refused: 9 August 1996; Nikolaidis v Legal Services Commissioner [2007] NSWCA 130 at [56] per Beazley JA: “so excessive as to warrant being characterised as ‘gross’”.

[81] Council of the Queensland Law Society Incorporated v Roche [2004] 2 Qd R 574 at 591 per McMurdo P.

[82] NSW Bar Association v Meakes [2006] NSWCA 340 at [118] per Basten JA.

[83] Power v Hammond [2005] VSC 2 at [44], [46] per Harper J.

[84] (1966) 84 WN (NSW) Pt 1 136; [1966] 1 NSWR 511.

[85] [2013] NSWCA 178.

[86] [2006] NSWCA 340.

[87] Legal Profession Complaints Committee v O’Halloran [2013] WASC 430.

[88] [1995] NSWCA 483.

[89] Council of the Queensland Law Society v Roche [2004] 2 Qd R 574.

[90] Transcript page 1-55 line 21.

[91] Kennedy v Council of the Incorporated Law Society of NSW (1939) 13 ALJR 563 at 563.

Close

Editorial Notes

  • Published Case Name:

    Legal Services Commissioner v Leneham

  • Shortened Case Name:

    Legal Services Commissioner v Leneham

  • MNC:

    [2016] QCAT 314

  • Court:

    QCAT

  • Judge(s):

    Thomas P

  • Date:

    08 Sep 2016

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2016] QCAT 31408 Sep 2016Charges 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 FiledFile Number: Appeal 10189/1606 Oct 2016-
Appeal Determined (QCA)[2017] QCA 13720 Jun 2017Appeal allowed; charge 2 dismissed: Philippides and McMurdo JJA and Boddice J.
Appeal Determined (QCA)[2018] QCA 13322 Jun 2018Application to adduce further evidence refused; respondent pay appellant's costs: McMurdo JA and Boddice J (Philippides JA dissenting in part).

Appeal Status

Appeal Determined (QCA)
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