Legal Services Commissioner v Hannant
[2017] QCAT 147
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- Unreported Judgment
- Legal Services Commissioner v Hannant[2017] QCAT 147
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Legal Services Commissioner v Hannant[2017] QCAT 147
Legal Services Commissioner v Hannant[2017] QCAT 147
CITATION: | Legal Services Commissioner v Hannant [2017] QCAT 147 |
PARTIES: | Legal Services Commissioner (Applicant) v Laura Hannant (Respondent) |
APPLICATION NUMBER: | OCR045-14 |
MATTER TYPE: | Occupational regulation matters |
HEARING DATE: | On the papers |
HEARD AT: | Brisbane |
DECISION OF: | Justice DG Thomas, President Assisted by: Mrs Joanne Collins, legal panel member Ms Julie Cork, lay panel member |
DELIVERED ON: | 22 May 2017 |
DELIVERED AT: | Brisbane |
ORDERS MADE: |
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CATCHWORDS: | PROFESSIONS AND TRADES – LAWYERS – COMPLAINTS AND DISCIPLINE – DISCIPLINARY PROCEEDINGS – PROFESSIONAL MISCONDUCT AND UNSATISFACTORY PROFESSIONAL CONDUCT – OTHER MATTERS Legal Profession Act 2007 (Qld), ss 308, 309, 316, 319, 341, 464 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 32 Legal Services Commissioner v Hannant [2016] QCAT 030 |
APPEARANCES: |
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This matter was heard and determined on the papers pursuant to section 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’).
REASONS FOR DECISION
- [1]The Commissioner brought disciplinary proceedings containing four charges.
- [2]Before the hearing, three of the charges were withdrawn, with the remaining charge being that the practitioner failed to make proper costs disclosure to her client, Lisa Macumber.
- [3]As to the one remaining charge, the Tribunal concluded that the conduct of the practitioner amounted to unsatisfactory professional conduct.[1]
- [4]A “Notice of Intention to Seek Compensation Order” was filed by Ms Macumber. This was based upon the 4 charges which were, at the time, brought against the practitioner.
- [5]The Tribunal allowed the parties the opportunity to make further submissions based upon the outcome of the disciplinary proceedings (including the withdrawal of the 3 charges).
- [6]The claimant submits:
- The conclusion of the Tribunal that Ms Hannant failed to provide a costs disclosure to the complainant supports the fact that the complainant was denied the “basic right” to make an informed decision about using, or choosing to continue to use, Ms Hannant’s services, particularly in regards to costs.
- The costs figure of $2,500, referred to in the reasons, was not discussed between Ms Macumber and Ms Hannant. The reasons were only mentioned in the course of the complainant’s submissions to the Legal Services Commission, where the complainant asserts she said she would have ceased Ms Hannant’s services if she had any idea that the services were amounting to that figure ($2,500) or beyond.
- Ms Hannant advised the complainant that it should not cost more than $1,200 to $1,400 plus court lodgement fee of $80.
- As the complainant became concerned that the costs may be mounting, the complainant acted reasonably in attempting to obtain an invoice from Ms Hannant on several occasions. When Ms Hannant did not provide any updated assessment beyond the original $1,200 to $1,400, the complainant believed it was fair for her to conclude at the time that the costs were not in excess of that figure.
- The claimant wishes to be compensated for all monies Ms Hannant has received, including direct transfer payments and money held in trust. That figure is in the sum of $11,347.21.
- The complainant has suffered a great deal of financial stress and anxiety since instructing Ms Hannant and has suffered great emotional stress, as the complainant was unable to put that particular period of her life behind her.
- [7]The respondent submits:
- Section 316(1) Legal Profession Act 2007 (Qld) (‘LPA’) provides that “if a law practice does not disclose to a client….anything required by this division to be disclosed, the client…need not pay the legal costs unless they have been assessed under Division 7”;
- Section 316 LPA is permissive in that it uses the words “need not pay”. It is not framed so as to prohibit payment or invalidate payment of costs already made.
- Section 316(1) LPA does not, as a matter of construction, require a refund of legal costs paid. It remains a question for the Tribunal as to what, if any, costs paid by a client in circumstances of incomplete disclosure should be refunded by way of a compensation order.
- The Tribunal should have regard to section 319(1)(c) LPA, which allows for recovery of legal costs according to the fair and reasonable value of the services provided.
- Regard should be had to the criteria outlined in section 341(2) LPA.
- The respondent submits the following factors are relevant:
- Whilst the respondent acknowledges she did not comply with sections 308 & 309 LPA, costs were discussed and the respondent genuinely believed that her client had a costs agreement.
- The retainer was on foot for around 8 months and the respondent received and acted upon a number of instructions, during that time, provided by her client.
- The work did possess elements of complexity and difficulty, and the respondent was required to negotiate extensively with the solicitors for her client’s former husband, to gain consent to the orders. An added complexity was the fact that the orders require the involvement of a third party, namely her client’s mother.
- The matter was finalised and the property transfer of the matrimonial home was made. The outcome was good for the client and was the outcome that the respondent had been retained to achieve. There was no criticism by the client about the substance or quality of the work at the time.
- The respondent was required to employ not only her general legal skills but also technical skills specific to the family and property law arena, which the respondent acquired during her time as a legal practitioner.
- The invoice reflected a fair and reasonable amount for the legal costs considering the work performed on the client’s behalf.
Disposition
- [8]Section 464 LPA, which is contained in the part of the LPA which deals with complaints and discipline, defines a compensation order as including an order that a law practice cannot recover or must repay the whole or a stated part of the amount that the law practice charged the complainant for stated legal services.[2]
- [9]The claim for compensation order must be made by reference to the charge, and the findings of the Tribunal.
- [10]In this case, the remaining charge related to the failure to make proper disclosure. In determining the appropriate order to make pursuant to section 464 LPA, is necessary to consider the provisions of, and rights available under, the LPA.
- [11]Section 316 LPA provides that if a law practice does not disclose to a client the matters required by the LPA to be disclosed, the client need not pay the legal costs unless they have been assessed under Division 7.
- [12]As the practitioner submits, the words “need not pay” are used. That is a sensible provision in that some clients might decide to pay even if disclosure were not made.
- [13]Pursuant to section 316(2) LPA, a law practice that does not disclose as required, may not maintain proceedings against the client for the recovery of legal costs unless the costs have been assessed under Division 7.
- [14]In circumstances of non-disclosure, the client may also apply for an order that the costs agreement be set aside.[3] It is not suggested that such an application was made in this case.
- [15]If the law practice does not make appropriate disclosure, on an assessment of the relevant legal costs, the amount of the costs may be reduced by an amount considered by the costs assessor to be proportionate to the seriousness of the failure to disclose.[4]
- [16]Finally, failure to make disclosure is capable of constituting unsatisfactory professional conduct or professional misconduct.[5] Of course, in that respect, disciplinary proceedings were commenced and sanctions imposed in this case.
- [17]Under section 316 LPA, the claimant could have sought assessment under Division 7 and, had that assessment taken place, and the level of legal costs determined, an adjustment may have been necessary between the respondent and the claimant.
- [18]As to any costs which have not been paid, the law practice could not have instituted proceedings, or made any claim with respect to those costs, unless the costs had been assessed under Division 7 and the appropriate amount determined.
- [19]Division 7, when dealing with criteria for assessment,[6] requires that the costs assessor consider:
- Whether or not it was reasonable to carry out the work to which the legal costs relate;
- Whether or not the work was carried out in a reasonable way; and
- The fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that section 340 applies to any disputed costs.
- [20]Section 340 LPA deals with circumstances under which costs can be assessed by reference to the rates set out in the retainer agreement.
- [21]In this case, the disciplinary charge which was the subject of the decision of the Tribunal, did not involve any suggestion that it was unreasonable to carry out the work, or that the work was not carried out in a reasonable way, or that the costs were excessive.
- [22]
- [23]In those circumstances, it is not possible to conclude, with adequate certainty, that the assessment would have resulted in a figure which was substantially less than that which was charged.
- [24]There is, however, one further matter. Section 316(2) LPA prescribes that the law practice cannot maintain proceedings against a client for recovery of legal costs unless the costs have been assessed. The law practice did not take any steps to assess the costs.
- [25]It has been conceded that the law practice holds monies in trust with respect to the transaction. The sum of money held is $3,503.83.
- [26]By virtue of the dispute between the parties, it is clear that the client has not authorised the law firm to make use of those funds in trust, in payment of fees. The monies belong to the client, subject of course to any argument concerning the entitlement of the law firm to take those funds in payment with respect to fees owing.
- [27]From the submissions which have been made by each side, it seems to be the case that, in calculating the fees paid to the respondent, the sum of $3,503.83 has been taken into account as monies paid.
- [28]Where the law firm has not sought to have the costs assessed under Division 7, the law firm cannot maintain a claim with respect to the fees and so has no claim with respect to the monies held in trust, which are the client’s monies. These monies should be paid to the claimant.
- [29]In those circumstances, by way of a compensation order, the Tribunal orders that the respondent refund to the complainant, the sum of $3,503.83 being monies held, for the benefit of the client, in the trust account of Steadfast Lawyers.