4. Req PE Ch 6 Article Ethics Lawyers and Justice LAWS1230 journaldownloadAu cases nsw Nswca 2013 178 PDF

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4. Req PE Ch 6 Article Ethics Lawyers and Justice LAWS1230 journaldownloadAu cases nsw Nswca 2013 178...

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Court of Appeal New South Wales Case Title:

Scroope v Legal Services Commissioner

Medium Neutral Citation:

[2013] NSWCA 178

Hearing Date(s):

19 April 2013

Decision Date:

17 June 2013

Before:

Bathurst CJ at [1]; Beazley P at [2]; Hoeben JA at [55]

Decision: 1. Appeal allowed; 2. Set aside orders (1) and (3) made by the Tribunal; 3. Order that the conduct of the legal practitioner, Philip Scroope, in the preparation of the narrative bill of costs resulting in the charging of Ms Meng of grossly excessive costs, constitutes unsatisfactory professional conduct within the meaning of the Legal Profession Act 2004; 4. The practitioner, Philip Scroope, is fined the sum of $2,000. That sum is to be paid within 28 days of the date of this decision; 5. Order that the respondent pay the appellant's costs of the appeal. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords:

PROFESSIONS AND TRADES - lawyers complaints and discipline - Legal Profession Act -1-

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2004, ss 496 and 497 - whether role in the preparation of a bill that overcharged a client constituted unsatisfactory professional conduct or professional misconduct Legislation Cited:

Legal Profession Act 2004 Supreme Court Act 1970

Cases Cited:

D'Alessandro v Legal Practitioners Complaint Committee (1995) 15 WAR 198 De Pardo v Legal Practitioners Complaints Committee & Anor [2000] FCA 335; 170 ALR 709 Kennedy v Council of Incorporated Law Institute of New South Wales (1939) 13 ALJ 563 Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 Re R (A Practitioner of the Supreme Court) [1927] SASR 58 The Law Society of the Australian Capital Territory v Lardner [1998] ACTSC 24 Veghelyi v The Law Society of New South Wales [1995] NSWCA 483

Category:

Principal judgment

Parties:

Philip Scroope (Appellant) Legal Services Commissioner (Respondent)

Representation - Counsel:

Counsel: T Lynch (Appellant) C Webster SC; P Maddigan (Respondent)

- Solicitors:

Solicitors: T A Williams (Appellant) Office of the Legal Services Commissioner (Respondent)

File Number(s):

CA 2012/190511

Decision Under Appeal - Before:

Haylen J, Deputy President; N Isenburg, Judicial Member; C Bennett, Non-Judicial Member

- Date of Decision:

04 June 2012

- Citation:

Legal Services Commissioner v Scroope [2012] NSWADT 107 -2-

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- Court File Number(s):

092010

HEADNOTE [This headnote is not to be read as part of the judgment] The appellant, a legal practitioner employed by the legal practice Keddies, was found guilty of professional misconduct within the meaning of the Legal Profession Act 2004 by the Administrative Decisions Tribunal, Legal Services Division. This finding was based on the appellant's conduct in the preparation of a narrative bill of costs resulting in the charging of a client grossly excessive costs.

The appellant appealed against the finding of professional misconduct and the fine imposed against him. The sole issue on the appeal was whether the Tribunal erred in making a finding of professional misconduct against the appellant. Held per Beazley P allowing the appeal (Bathurst CJ and Hoeben JA agreeing)

The appellant's conduct constituted unsatisfactory professional conduct and not professional misconduct: [49], [51].

The conduct admitted to by the appellant and the appellant's failure to realise that some entries on the narrative bill were inappropriate and warranted further consideration required a finding of unsatisfactory professional conduct within the meaning of the Legal Profession Act, s 496: [49].

In circumstances where the appellant was not responsible for Keddies' failure to have a system in place to facilitate the accurate rendering of bills, -3-

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the appellant's conduct did not constitute professional misconduct: [50][51].

JUDGMENT 1

BATHURST CJ: I agree with Beazley P.

2

BEAZLEY P: On 4 June 2012, the Administrative Decisions Tribunal (the Tribunal) constituted by Haylen J (Deputy President), N Isenburg (Judicial Member) and C Bennett (Non-Judicial Member), held that the appellant, Philip Scroope, a legal practitioner employed by the legal practice Keddies, was guilty of professional misconduct within the meaning of the Legal Profession Act 2004. This finding was based on the appellant's conduct in the preparation of a narrative bill of costs resulting in the charging of a client grossly excessive costs. The Tribunal ordered that the appellant be reprimanded, that he be fined in the sum of $5,000 and that he pay the costs of the Legal Services Commissioner.

3

The appellant has appealed against the finding of professional misconduct made against him and against the fine imposed. The appellant does not contend that a finding of unsatisfactory professional conduct should not be made and does not appeal against the order that he be reprimanded. The sole issue on the appeal, therefore, was whether the Tribunal erred in making a finding of professional misconduct against the appellant.

4

The appeal to this Court is brought pursuant to the Legal Profession Act, s 729A(1). Pursuant to s 729A(2), the Supreme Court Act 1970, s 75A applies to an appeal under s 729A. The appeal is thus by way of rehearing. Pursuant to s 75A, the Court has the same powers and duties -4-

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of the body from which the appeal is brought: s 75A(6); and may make any finding or assessment, give any judgment, make any order or give any direction which ought to have been given or made, or which the nature of the case requires: s 75A(10). Claim in the Tribunal 5

The proceedings in the Tribunal were conducted on the basis of a Second Amended Application for Original Decision and an agreed statement of facts. The second amended application sought a finding, in the alternative, of either professional misconduct, or unsatisfactory professional conduct.

6

The Legal Services Commissioner advanced three grounds in support of the findings sought in the application. In ground 1, the Legal Services Commissioner alleged that the appellant, in the preparation of a narrative bill, permitted a client, Ms Shang Ying Meng, to be charged grossly excessive amounts of costs. The particulars of the grossly excessive costs were that Ms Meng was charged for: (a) excessive amounts of work performed; (b) amounts representing work in excess of the work performed; (c) work that was not performed; and (d) work undertaken and for time spent on her file which included steps that were excessive and unnecessary. The appellant admitted this ground.

7

Ground 2 alleged over-servicing. The particulars to that charge were: (a) that work was undertaken, and charged for, by persons of inappropriate seniority or qualification; and (b) unnecessary work was undertaken. The appellant admitted that the bill rendered by the legal practice, known as Keddies, charged for work which was undertaken by persons of inappropriate seniority or qualification, and charged for unnecessary work undertaken.

8

Ground 3 alleged that the narrative bill misrepresented costs in the following respects: (a) the narrative bill contained charges in excess of -5-

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time spent and for work which was not done; (b) the narrative contained duplicated charges for work performed in relation to two matters for Ms Meng's family in which Keddies was acting; and (c) the narrative bill contained charges at professional rates, apparently for the appellant as the fee earner, for work performed by others, which work was also separately invoiced to Ms Meng by way of disbursements. The appellant admitted ground 3.

9

The Legal Services Commissioner did not allege that the appellant had personally overcharged the client, or had personally duplicated costs so as to be guilty of overservicing. Rather, the allegation was that the overcharging, overservicing and duplications occurred at the instance of others who had carried out work in the matter. In the way the matter was presented to the Tribunal, the essential allegation against the appellant was that in the preparation of the narrative bill, he permitted the client to be charged grossly excessive fees. The Legal Services Commissioner submitted to the Tribunal that the appellant's conduct constituted unsatisfactory professional conduct.

10

The appellant conceded to the Tribunal that the narrative bill contained "mistakes, errors and duplications" in the costs charged and the disbursements recorded: Tribunal reasons, at [56]. The appellant acknowledged to the Tribunal that he should have paid closer attention to the narrative bill and ensured that it was accurate, although his evidence was that the accuracy of the bill was never part of his responsibility: Tribunal reasons, at [77].

11

In his defence, however, the appellant submitted that although he was a personal injury accredited specialist: (i) he was no more than an employed solicitor; (ii) he had no control over the computerised costing system adopted by Keddies; (iii) he had only a rudimentary knowledge of the computer system; (iv) he received little assistance in understanding it; (v) when the computerised system was introduced, a costing clerk only was -6-

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employed to assist with the new system; (vi) he had no knowledge of the capacity of other solicitors and employees to enter cost items on the computer system using his initials; (vii) he had adopted the usual practice of having a narrative bill prepared by his secretary in accordance with the firm's practice; (viii) he had no reason to believe that any entries were inaccurate; (ix) he had informed Mr Keddie, a partner in the firm, of the professional fees outstanding prior to the settlement conference; and (x) Mr Keddie had regarded the fees as reasonable having regard to the nature of the case: Tribunal reasons, at [77]. Relevant legislation 12

The Legal Profession Act, Ch 4 provides for "Complaints and discipline" of legal practitioners. The purposes of the Chapter include the promotion and enforcement of the professional standards, competence and honesty of the legal profession: s 494(1)(b); and the provision of a means of redress for complaints about lawyers: s 494(1)(c).

13

Unsatisfactory professional conduct is defined in s 496 to include: "... conduct of an Australian legal practitioner occurring in connection with the practice of law 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."

14

Professional misconduct is defined in s 497(1) as including: "(a) unsatisfactory professional conduct of an Australian legal practitioner, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence, and (b) conduct of an Australian legal practitioner whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice."

-7-

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15

Without limiting ss 496 and 497, s 498 specifies certain conduct that is capable of constituting unsatisfactory professional conduct or professional misconduct, including: "(b) charging of excessive legal costs in connection with the practice of law"

Tribunal's consideration of the case law 16

The Tribunal, at [76], after a review of a number of authorities, considered that the following propositions emerged:

(1) Unsatisfactory professional conduct was not limited to conduct that was "disgraceful or dishonourable": see Re R - A Practitioner of the Supreme Court [1927] SASR 58 at 60. Unsatisfactory professional conduct included conduct that may reasonably be held to violate or to fall short, to a substantial degree, of the standard of professional conduct observed or approved by members of the profession of good repute and competency: De Pardo v Legal Practitioners Complaints Committee & Anor [2000] FCA 335; 170 ALR 709 at [41]. (2) Disciplinary proceedings and consequential orders made in such proceedings were not for the punishment of the practitioner, but for the protection of the public: De Pardo at [42]; Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 441.

(3) The inquiry into what amounts to grossly excessive costs "would ordinarily involve, first, a determination of what, in the particular circumstances, would be a reasonable sum to charge ": D'Alessandro v Legal Practitioners Complaint Committee (1995) 15 WAR 198 at 214 per Ipp J (Pidgeon and Franklyn JJ agreeing). A charge of overcharging depended significantly upon the degree and frequency of the overcharging: The Law Society of the Australian Capital Territory v Lardner [1998] ACTSC 24 at [104]. -8-

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(4) Gross overcharging may constitute professional misconduct. In this regard, it was not necessary that fraud be proved against the legal practitioner: Veghelyi v The Law Society of New South Wales [1995] NSWCA 483.

(5) Professional misconduct "amounted to grave impropriety affecting [a legal practitioner's] professional character and was indicative of a failure either to understand or to practise the precepts of honesty or fair dealing in relation to the courts, his clients or the public": Kennedy v Council of Incorporated Law Institute of New South Wales (1939) 13 ALJ 563 at 563 per Rich J. 17

These propositions are well established and do not need further elaboration in this judgment. This is particularly so in circumstances where the question in issue is whether the appellant's conduct constituted professional misconduct or unsatisfactory professional conduct, which involves an evaluation of the appellant's conduct underlying the particulars of the charge brought against him. In this case, the underlying conduct was, in essential respects, admitted. There was no dispute that there was gross overcharging, a misrepresentation of certain matters in the narrative bill and the overservicing of the client.

The Tribunal's reasons 18

The Tribunal, at [77]-[78], posed the question for determination as being the characterisation of the appellant's conduct in relation to the gross overcharging in the narrative bill that contained "mistakes, errors and duplications in the costs charged and the disbursements".

19

The Tribunal had earlier, at [70], noted the submission that Keddies' computer costs system lacked any chain of authority or any chain of responsibility to ensure that the costing record was accurate and had "an -9-

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enormous potential to do an injustice to clients". The Tribunal concluded, at [70], that it could not find that the appellant "was embarking on any kind of cynical exercise of overcharging 'in the loose sense'". 20

The Tribunal also noted, at [74], that the Legal Services Commissioner accepted that Mr Keddie, as the appellant's managing partner and the supervisor of the client's file, in a "technical sense" charged the fees that were grossly excessive. However, the Tribunal did not accept that an employed solicitor could never be found to have charged excessive or grossly excessive fees. This proposition was not challenged, nor could it be. Whether or not a particular solicitor is personally responsible for charging excessive fees will depend upon the facts and circumstances of each case.

21

At [78]-[84], the Tribunal compared the appellant's arguments as against those that had been advanced on behalf of Mr Keddie.

22

The Tribunal, at [84], summarised the appellant's case as being that the overcharging was mostly due to the firm's computerised accounting system in respect of which he had limited knowledge, no real training and no understanding of the capacity of other persons to make entries under his name. Mr Keddie's case was that although he had overall responsibility for what had occurred in the client's matter, including the overcharging, he lacked any personal involvement in or knowledge of the matter. In this regard, Mr Keddie had argued that he was entitled to rely upon the appellant to prepare an accurate bill of costs in circumstances where the appellant, an accredited specialist in the relevant area of law, had the day to day conduct of the matter. This caused the Tribunal to observe: "... By proceeding on the limited basis of a Statement of Agreed Facts and having no affidavit or oral evidence from Mr Keddie or [the costs consultant], the Tribunal is left in the unsatisfactory position of not being able to examine closely the assertions about the firm's system for recording costs and the level of responsibility within the firm expected of an accredited specialist with

- 10 -

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supervision of a matter, the role of the costs consultant and the use that might be made of the accounts department."

23

The Tribunal's expressed concern, however, has to be considered in light of the circumstances that the case brought against the appellant was limited and that it was accepted that the computing costs system was inadequate. The inadequacies of the system were recorded by the Tribunal, at [69] and [70]. Mr Keddie had also conceded the inadequacies of the system, as the Tribunal noted, at [83]. In particular, Mr Keddie had admitted that the firm's "costing system allowed errors that could not easily be picked up".

24

The Tribunal, at [89], noted the appellant's concession that the client, in a bill of $558,000 for professional costs, had been overcharged in the sum of $215,000 in respect of those professional costs, and that this level of overcharging was " grossly excessive". The Tribunal also noted the appellant's admission of overcharging and overservicing, in the sense described at [6]-[8] above, that work had been undertaken by persons of inappropriat...