Bechara v Legal Services Commissioner

Bechara v Legal Services Commissioner - [2010] NSWCA 369 - NSWCA 2010 case summary — Zoe

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A Goninan & Co v Atlas Steels [2003] NSWSC 956 Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 6) (1996) 64 FCR 79 Bechara v Kobeissi [2005] NSWSC 192 Boguslawski & Anor v Gdynia Amerkya Linie (No. 2) [1951] 2 KB 328 Carter v Newcastle Wallsend Coal Co (1909) 9 SR (NSW) 474 Centennial Coal Company Ltd v Xstrata Coal Pty Ltd (2009) 76 NSWLR 129, 146-7 Clyne v NSW Bar Association [1960] HCA 40; (1960) 104 CLR 186 Council of the NSW Bar Association v Meakes [2006] NSWCA 340 Credit Connect v Carney; Credit Connect v Smit [2010] NSWSC 910 Hoshott v Council of the Law Society of New South Wales (Supreme Court of NSW, Meagher, Sheller and Stein JJA, 17 December 1997, Unreported) Howes v Law Society of the Australian Capital Territory (Supreme Court of ACT, Gallop ACJ, Higgins and Crispin JJ, 23 July 1998, Unreported) In re Metropolitan Coal Consumers' Association (Grieb's Case) (1890) 45 Ch D 606 International Financial Society v Smith (1896) 22 VLR 114 Law Society of New South Wales v Foreman (1991) 24 NSWLR 238 Law Society of New South Wales v Moulton [1981] 2 NSWLR 736 Law Society of NSW v Harvey [1976] 2 NSWLR 154 Legal Services Commissioner v Bechara (No 2) [2009] NSWADT 145 Legal Services Commissioner v Bechara (No 3)) [2009] NSWADT 313 Legal Services Commissioner v Bechara [2008] NSWADT 215 CASES CITED: Legal Services Commissioner v Nikolaidis (No 3) [2005] NSWADT 200 Malouf v Jezairy [2003] NSWSC 762 Maria Bechara v Mohamed Kobeissi (26 March 2007, Unreported) Meade v Queensland Ambulance Service [1996] QSC 62 Murray v Legal Services Commissioner [1999] NSWCA 70; (1999) 46 NSWLR 224 New South Wales Bar Assn v Livesey [1982] 2 NSWLR 231 NSW Bar Association v Cummins [2001] NSWCA 284, O'Reilly v Law Society of New South Wales (1988) 24 NSWLR 204 Oppenshaw v Whitehead; Mucklow v Whitehead (1854) 9 Exch 304; (1854) 156 ER 163 Pester; Leslie v Hydro-Electric Corporation (1997) 7 Tas R 233 Prentice v Cummins [2002] FCA 1503; (2002) 124 FCR 67 Price v Clinton [1906] 2 Ch 487 R v Hore; Ex parte Brisbane City Council [1969] Qd R 75 Re Veron; Ex parte Law Society of New South Wales (1966) 84 WN (Pt 1) NSW 136 Evatt v Bar Association of New South Wales (1968) 117 CLR 177 Re Walker; Ex parte Kemp (1887) 3 WN (NSW) 123 Su v So, Verekers Lawyers v So [2010] NSWCA 119 Tucker v Graham (1869) 8 SCR (NSW) 341 Veghelyi v Council of the Law Society of New South Wales (New South Wales Court of Appeal, Kirby P, Mahoney and Priestley JJA, 6 October 1995) Wade v Licardy (1993) 33 NSWLR 1 Ziems v Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279

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TUESDAY 21 DECEMBER 2010 BECHARA v LEGAL SERVICES COMMISSIONER Judgment 1 McCOLL JA: I agree with McClellan CJ at CL. 2 YOUNG JA: I have read in draft the reasons of McClellan CJ at CL and I agree that the appeal should be dismissed for the reasons he gives. 3 The core matter involved in this appeal is how far a solicitor who acts in substantially identical cases heard together (or one after the other) can justify charging each client for the total number of hours spent by the instructing solicitor in court or associated attendances. 4 I agree with what McClellan CJ at CL says in paras [138] and [139] that where a solicitor is retained to act for multiple clients whose proceedings are heard together with evidence in one being evidence in the other (regardless of whether the proceedings are formally consolidated), and the clients are charged on a time-costed basis, there must be an apportionment of time spent on matters common to two or more of the proceedings. One unit of time cannot be charged more than once. 5 I also agree that the precise mechanism of apportionment will depend on the circumstances of the case. There will be some cases where there are some special features of a particular client's case that are absent from the others such as where it is sought to be shown that the negligence affected the clients in different ways so that damages need to be established by different evidence in each case. There the apportionment would need to factor in some broad brush approach to the time devoted to each client with the balance shared equally. In other cases, an equal apportionment would be appropriate. However as his Honour notes, in all cases, the apportionment must pay due regard to the principle that one unit of time may not be charged more than once. 6 Although some confusion could have been caused by reference to the relatively few and ancient authorities in this area of the law, it would seem to me that, as his Honour has demonstrated and the evidence before the Tribunal supported, solicitors of good repute would not charge each client for the full amount of time spent as this appellant has deliberately done. 7 After the draft was prepared, the appellant referred us to Centennial Coal Company Ltd v Xstrata Coal Pty Ltd (2009) 76 NSWLR 129, 146-7. I must confess I did not find any assistance from that case. 8 McCLELLAN CJ at CL: This appeal is concerned with the conduct of a legal practitioner who acted for more than one client in proceedings in the District Cout. The Administrative Decisions Tribunal found that the appellant had charged grossly excessive amounts of professional costs. She was found guilty of professional misconduct, reprimanded and fined. She claims that the Tribunal made a number of errors of law and seeks to have the Tribunal's orders set aside.

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19 On 20 January 2005, the Commissioner initiated a complaint pursuant to s 134(2) of the LPA 1987 alleging that the appellant had "deliberately charged grossly excessive amounts of costs". The Commissioner's complaint was amended on 8 March 2005 to include the following particulars: "1. The solicitor simultaneously conducted three personal injury actions on behalf of three members of the same family … against the same Defendant. Although the accidents giving rise to the injuries did not occur at the same time, all three matters were heard together before His Honour Judge Walmsley for seven days commencing on 13 November 2001. 2. The solicitor failed to apportion costs common to the three matters." 20 On the same day, the Commissioner wrote to the appellant and, inter alia, invited her to respond "generally to the allegation that you have deliberately charged grossly excessive amounts of costs." 21 The appellant responded by letter dated 25 February 2005. In that letter she contended that the circumstances of each matter were different, each matter was conducted separately up until the time of the hearing and accordingly her costs agreement entitled her to charge a separate fee for each matter. She insisted that nothing in her costs agreements required an apportionment of costs. Notwithstanding this, she said that she had contacted the clients advising them that she was prepared to accept a reduction in the firm's costs and disbursements. 22 The appellant complained about the course adopted by the Commissioner. Adopting a similar view to that which had apparently been taken by Mr Galitsky, she wrote: "(a) Your letter enclosed a 'Record of Decision' to initiate complaints based on the letter from Costs Assessor Mr John Eric McIntyre dated 22 December, 2004. I note that you did not seek my response to the letter prior to initiating your own complaint. (b) I note you have failed to provide proper particulars of your complaint, as you are required to do by Section 137 of the Legal Profession Act 1987. Instead you have annexed to Mr McIntyre's, [sic] which makes some general complaint. (c) Mr McIntyre considered there was basis under Section 208Q of the Legal Profession Act 1987 to refer this matter to you. You have decided to proceed under Section 134 of the same Act, and to rely on Section 136. You have not furnished me with any particulars, which are required by Section 136. Instead, you request that I 'respond generally to the allegation.' Am I to understand that you embrace Mr McIntyre's conclusions? Do you make the same 'allegations?' (d) I note that McIntyre states (page 2): 'I do not have sufficient information to determine whether or not the conduct was deliberate, but I am satisfied that there is sufficient information to require me to refer the matter to you pursuant to Section 208Q of the Legal Profession Act 1987 and I do so.' It would seem that Mr McIntyre was of the view that both Counsel and Solicitor were somehow obliged to apportion the costs over the three matters. Indeed he says (page 1): '…both the Solicitor and Counsel have failed to properly apportion the amounts claimed over the three matters when that clearly should have been done.' Mr McIntyre has formed the view as to the conduct of both Solicitor and Client and attributed a 'failure' to perform an apportionment that was 'clearly' obligatory. I am left to second guess whether you embrace each facet of this complaint. I consider this inherently unfair."

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23 The Commissioner responded by letter dated 8 March 2005 in the following terms: "(a) It is not my practice to seek a Practitioner's response to a section 208Q referral before making a complaint based on the referral and there is no requirement that I do so. (b) I believe the basis of Mr McIntyre's referral, and my complaint based on it, is clear, namely that you failed to apportion costs common to the three matters. For the sake of clarity, the complaint and relevant particulars are as follows: Complaint The solicitor in the matters of Fatemah Hussein v New South Wales Land & Housing Commission, Toufika Hussein v New South Wales Land & Housing Commission and Mohamed Hussein v New South Wales Land & Housing Commission deliberately charged grossly excessive amounts of costs. Particulars 1. The solicitor simultaneously conducted three personal injury actions on behalf of three members of the same family, being Fatemah Hussein, Mohamed Hussein and Toufika Hussein, against the same Defendant. Although the accidents giving rise to the injuries did not occur at the same time, all three matters were heard together before His Honour Judge Walmsley for seven days commencing on 13 November 2001. 2. The solicitor failed to apportion costs common to the three matters. … 8. Whilst there appears to be no authority directly on the point, I do not see that there can be any doubt that work undertaken in respect of all three matters, such as attendance on hearing, must be apportioned as between the three matters so that each one of your clients is charged only for that proportion relating to their claim. It may well be that it is difficult to divide up the work done so as to ascertain that portion done in relation to one particular matter. If that is the case, then a simple division into thirds may be appropriate. The difficulty in apportioning costs does not mean that costs should not be apportioned, and each client charged the full costs for the work done. Moreover, there may be an issue of overservicing amounting to overcharging along the lines of the recent decision in New South Wales Bar Association v Amor-Smith [2003] NSWADT 239 if work which in reality relates to all three matters has in fact been divided up and done separately for each matter and charged separately to each client. 9. The fact that the solicitor/client bills were prepared by an employed solicitor does not exculpate you from responsibility for the bills. You as employer of the solicitor who issued the bills are responsible for the bill - see The Legal Services Commissioner v Nikolaidis (No 2) [2004] NSWADT 248 at paragraph 76."

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24 The appellant responded on 18 April 2005, adopting an aggressive stance. She wrote, inter alia: "No sensible particulars were provided in the initial determination and in light of the amended complaint it is necessary to further canvas the inadequacy of particulars of that complaint. However the present particulars in respect of the amended complaint still are inadequate. The charge is serious: you provide no indication of how my conduct is 'deliberate' (an issue on which McIntyre reserved, see page 2 of his referral), nor of how the 'overcharging' is said to be 'gross.' Each of these matters begs the question, but your correspondence is silent on every issue. It is not for me to formulate requests, but for you, in fulfilment of your statutory duty, to formulate the proper complaint. I reserve my right to take appropriate proceedings with regard to this complaint. I do not know whether your comments in paragraph lettering (b) is meant to constitute particulars of my alleged misconduct or merely argument. I have set out my position about my costs with respect to each member of the Hussein family in my letter to you of 25 February, 2005. At no stage have you indicated what quantum was appropriate to charge in this case. At no stage have you indicated the proper basis of apportionment. I respectfully suggest the entire tenor of your comment is one of conclusion. You have prejudged the issue and you are promoting your own theory of the law, or what you believe the law should be. I have charged fees in accordance with my Costs Agreement. I note no allegation is raised with regard to my disclosed fee rate. Accordingly, I deny that any of my costs constitute overcharging, 'gross' or otherwise. I note your concession there appears to be no authority directly on the 'point' regarding the alleged requirement of apportionment. Notwithstanding this you continue with the assertion that you 'do not see there can be any doubt about the requirement for apportionment.' The proposition you so confidentially propound is not free from doubt on the contrary your view is not followed in practice adopted by Counsel or to my understanding by solicitors. I respectfully submit that your subjective view, or indeed an unsupported assertion, that a rule requiring apportionment exists, can neither provide a proper criterion for judging a practitioner's conduct nor constitute a particular instance of breach. I do not know whether your complaint includes 'overservicing.' The final sentence elliptically states 'there may be ' such an issue . If so, proper particulars are not provided). If no such complaint is made, these remarks are otiose. What you raise would seem an irrelevant consideration which has affected your decision making. It appears to me that your entire treatment of the referral and the process of formulating the complaint, betrays an attitude of invincible bias. The substance of your complaint is that of overcharging, yet you have not told me what the proper costs should be in each case. In the course of your letter you invite me to reduce my costs, without any indication of the appropriate basis of charging, rate(s) of costs, hourly rate etc or indeed the proper basis of charge. I note your response of 'noted' to paragraph numbered 4 in my correspondence to you of 25 February, 2005. Do you intend to initiate a similar complaint against Mr McIntyre who has charged a separate fee in each matter? As to paragraph numbered 9 of your correspondence, I accept that I am responsible for the bills. Please find enclosed as requested a copy of the Judgment of His Honour Judge Walmsley delivered on 8 April, 2002. I, like Mr Galitsky, decline to respond in open correspondence, to your enquiry as to whether I would be prepared to reduce my costs. Also, like Mr Galitsky, I believe it is impossible for you to further conduct a proper enquiry and accordingly I invite you to withdraw or dismiss your complaint."

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25 The Commissioner continued to investigate the matter and obtained the transcript of the original proceedings. On 15 March 2006 he wrote to the appellant saying: "Against this background, my preliminary view is that costs of the hearing should either have been divided so as to charge each Plaintiff for that part of the hearing relating to their claim, and/or apportioned so as to charge each Plaintiff a proportion of the total costs of the hearing. I note in the party/party costs assessment, the Costs Assessor apportioned costs of the hearing so as to allow each Plaintiff to recover one-third. You charged each Plaintiff the total costs of the hearing. I believe this may constitute conduct involving the deliberate charging of grossly excessive amounts of costs, which is declared by the Act to be professional misconduct. You deny you have deliberately charged grossly excessive amounts of costs. Whilst you have agreed to accept a reduction in costs and disbursements, you state this was always your intention and was not the result of my complaint. The reduction does not appear to be based on any division or apportionment of costs. I draw your attention to the following provisions of the Legal Profession Act 1987, which apply to this complaint by virtue of clause 16 to Schedule 9 to the Legal Profession Act 2004: 155 Decision after investigation of complaint (1) After a Council or the Commissioner has completed an investigation into a complaint against a legal practitioner, the complaint is to be dealt with in accordance with this section. (2) The Council or the Commissioner must institute proceedings in the Tribunal with respect to the complaint against the legal practitioner if satisfied that there is a reasonable likelihood that the legal practitioner will be found guilty by the Tribunal of unsatisfactory professional conduct or professional misconduct. (3) However, if the Council or the Commissioner is satisfied that there is a reasonable likelihood that the legal practitioner will be found guilty by the Tribunal of unsatisfactory professional conduct (but not professional misconduct), the Council or the Commissioner may instead: (a) reprimand the legal practitioner, or (b) dismiss the complaint if satisfied that the legal practitioner is generally competent and diligent and that no other material complaints have been made against the legal practitioner. (4) The Council or the Commissioner is to dismiss the complaint against the legal practitioner if satisfied that there is no reasonable likelihood that the legal practitioner will be found guilty by the Tribunal of either unsatisfactory professional conduct or professional misconduct. (5) If a Council or the Commissioner decides to dismiss a complaint or to reprimand a legal practitioner under subsection (3) and the complainant requested a compensation order in connection with the complaint, the Council or the Commissioner may require the payment of compensation by the legal practitioner or the successful mediation of the consumer dispute before the decision takes effect. (6) If a Council or the Commissioner decides to reprimand a legal practitioner under this section and the practitioner does not consent to the reprimand, the practitioner may appeal to the Tribunal against the decision. Section 171N applies to an appeal under this subsection. I must now determine if I am satisfied that there is sufficient evidence to create a reasonable likelihood of a finding of unsatisfactory professional conduct or professional misconduct should the matter be brought before the Legal Services Division of the Administrative Decisions Tribunal. Accordingly, I seek your submissions in relation to that determination. I ask that you address specifically whether the conduct outlined above amounts to professional misconduct or unsatisfactory professional conduct and, in the event that your submissions address a finding of unsatisfactory professional conduct, I invite you to address specifically the appropriate course of action under subsections 3 and 5 of section 155 above. You are welcome to provide any comments you may have generally about the matter. I look forward to receiving your response as soon as possible and at the latest, within 28 days. If your response is not received within that period I will proceed to make my determination on the basis of the material already to hand."

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26 The appellant says, and her evidence was not challenged, that she did not receive this letter and as a consequence did not respond to it. 27 In late June 2005 the appellant notified the Commissioner that she had offered to substantially reduce her fees. The Commissioner had previously invited the appellant to reduce her hearing costs to the amounts allowed by Mr McIntyre but she declined to do so. 28 On 3 July 2006, the Commissioner determined that he was satisfied that there was a reasonable likelihood that the Legal Services Division of the Administrative Decisions Tribunal ("the Tribunal") would find the appellant guilty of professional misconduct or unsatisfactory professional conduct. The Commissioner's "Reasons for Decision" were as follows: " Complaint 1 1. The practitioner simultaneously conducted three personal injury actions on behalf of three members of the same family, being Fatemah Hussein, Mohammed Hussein and Toufika Hussein, against the same Defendant. Although the accidents giving rise to the injuries did not occur at the same time, all three matters were heard together before his Honour Judge Walmsley for seven days commencing on 13 November 2001 and it was agreed that evidence in each would be evidence in the others. 2. The practitioner failed to apportion costs common to the three matters. 3. The practitioner charged each client the total costs of the hearing rather than dividing costs of the hearing so as to charge each client for that part of the hearing relating to their claim and/or apportioning such costs so as to charge each client a proportion of the total costs of the hearing. At s 155(2), the Legal Profession Act 1987 states that where I am satisfied there is a reasonable likelihood that a legal practitioner will be found guilty of professional misconduct or unsatisfactory professional conduct. I must institute Tribunal proceedings. Given the factors outlined in paragraphs above, I consider there is a reasonable likelihood the Practitioner will be found guilty of professional misconduct or unsatisfactory professional conduct and accordingly resolve to refer the Practitioner to the Tribunal."

[27]

By her statutory obligation pursuant to section 208A of the Legal Profession Act 1987 to charge only for work actually performed for each client and to charge only a fair and reasonable fee to each of her clients for that work. 20. In charging each client the full amount quoted in her costs agreement, the Respondent was in breach of: The terms of her costs agreements in that she failed to apportion the time spent in Court by her junior solicitor with the result that each client was charged for time spent exclusively on matters relating to the other clients. She clearly stated in each costs agreement that she would charge only for work performed for the recipient of the costs agreement; Her obligation at law (see Law Society of NSW v Andrew Brian Fegent (judgment delivered on 24 April 1989); Veghelyi v The Law Society of New South Wales (Unreported, Court of Appeal , 6 October 1995 at [3] at page 4) at pages 4 - 5) to only charge for work actually performed by her for each individual client. Breach of that obligation resulted in each client being charged for time spent in court on matters exclusively relating to the other clients; Her obligation at law to charge each client only a fair and reasonable fee for services performed by her: see Veghelyi at 5, 8 and 9. Her breach is three-fold: firstly, charging each client for time spent in court on matters exclusively relating to the other clients; secondly, charging a fee of $750 per hour for each hour spent in court in circumstances where a significant number of those hours did not relate to all 3 clients; and thirdly, charging $750 per hour without reference to the nature of the actual work undertaken by the junior solicitor during each hour. Her obligation under section 208A of the Legal Profession Act 1987 to charge only for work actually performed for each client and to charge only a fair and reasonable fee to each of her clients for that work. Her breach is three-fold; firstly, charging each client for time spent in court on matters exclusively relating to the other clients; secondly, charging a fee of $750 per hour for each hour spent in court in circumstances where a significant number of those hours did not relate to all 3 clients; and, thirdly, charging $750 per hour without reference to the nature of the actual work undertaken by the junior solicitor during each hour. 21. Alternatively, in the circumstances, the Respondent, in order to meet her obligations both under her costs agreements, at law and pursuant to the Legal Profession Act 1987 should have apportioned her costs equally amongst the clients. Apportionment in the circumstances would, most likely, have resulted in a fair and reasonable fee being charged to each client, and a measure of justice and fairness achieved between the Respondent and the clients."

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31 At around the same time the further particulars were supplied, the Commissioner indicated that he intended to rely upon a report prepared by Ms Michelle Castle, an expert in legal costing issues ("the Castle report"). Ms Castle stated in her report that although she was not aware of any relevant authority, the general principle emerging from cost assessments was that a lawyer could not charge the same unit of time more than once. She said that an experienced cost assessor would have apportioned the costs of the hearing by reference to the time actually spent on each client's case, or more likely, by apportioning the time equally amongst the clients. 32 The information in the Castle report was obtained at some time after 20 August 2007 and did not form part of the Commissioner's original application to the Tribunal. The Tribunal ordered the Commissioner to make an interlocutory application for leave to rely upon the Castle report. Leave was granted on 4 August 2008 (Legal Services Commissioner v Bechara [2008] NSWADT 215 ("the interlocutory decision"). The interlocutory decision is the subject of Ground 7 of this appeal. 33 The matter was heard by the Tribunal in February 2009. Judgment was handed down on 18 June 2009 (Legal Services Commissioner v Bechara (No 2) [2009] NSWADT 145) ("the liability decision"). The liability decision is lengthy, reflecting in part the manner in which the proceedings were conducted and the issues raised. The Tribunal concluded that the appellant was guilty of professional misconduct being not "mere overcharging, an error of judgment or an example of the excessive view of her own worth." By charging the full costs to each client for each of the six hearing days, the Tribunal concluded, the appellant "deliberately charged grossly excessive fees". The Tribunal found that the appellant was guilty of professional misconduct. The Tribunal determined the appellant's penalty separately (Legal Services Commissioner v Bechara (No 3)) [2009] NSWADT 313) ("the penalty decision"). 34 The appellant gave evidence before the Tribunal. She denied ever intending to overcharge her clients. She stated that when she sent the solicitor/client bills to her clients, she did not intend that the clients would be obliged to pay the amounts set out therein because what she truly intended to charge them depended on the amount received on assessment of party/party costs. 35 When cross-examined, the appellant accepted that one of the reasons for agreeing to the defendant's proposal that the matters be heard together was the likely time and cost savings. She agreed that she charged each client the full amount of the time that was spent in court. She denied that she sought to bill the maximum amount which she thought she could "get away with". She maintained that she honestly believed that, given that the three matters were separate, she was entitled to charge each client separately for her presence at the hearing. She denied that she deliberately decided not to ascertain the time spent in court that was particularly referable to each client as against the time spent on matters common to all three clients. She disagreed with the suggestion that, in view of the terms of the costs agreements, she knew that she could only actually charge for time spent on work actually undertaken for the particular client. In response to the assertion that she sent the solicitor/client bills "with full knowledge that there had been no assessment made as to whether all of that time was spent on behalf of all three clients", the appellant stated that she disagreed with the words "full knowledge" but accepted that no assessment had been made. 36 The appellant admitted that in her response to the defendant's Notices of Objections, she had conceded that the costs of the hearing days should be apportioned as between the related proceedings, however she maintained that she made this concession in order to facilitate settlement of the party/party costs issue. Legislative framework

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[51] The words 'professional misconduct' are broad and general words. Their meaning may vary from one context to another. Their interpretation involves what is often referred to as an 'ambiguity', although I prefer to describe this kind of difficulty for an interpreter as one of 'inexplicitness' rather than 'ambiguity': see Repatriation Commission v Vietnam Veterans' Association of Australia NSW Branch Inc (2000) 48 NSWLR 548 at 577 [116]." 43 His Honour's observations echo the High Court's previous discussion in Clyne v NSW Bar Association [1960] HCA 40; (1960) 104 CLR 186 at 200: "The rules which govern the conduct of members of a body of professional men, such as the Bar of New South Wales, may (though there is, of course, no logical dichotomy) be divided roughly into two classes. In the one class stand those rules which are mainly conventional in character. To say this is not to deny their importance from the point of view of the client. But they are designed primarily to regulate the conduct of members of the profession in their relations with one another. Many of these rules are reduced to writing, and they are from time to time interpreted, and perhaps modified to fit specific cases, by resolutions of the governing body of the profession. Examples of this class in the case of the Bar are the rule which forbids advertising, the rules with regard to retainers, the rule that one of Her Majesty's counsel must not appear without a junior. A breach of any of these rules is treated seriously, but would not warrant disbarment - at least unless it were shown to be part of a deliberate and persisent (sic) system of conduct. Rules of the other class are not merely conventional in character. They are fundamental. They are, for the most part, not to be found in writing. It is not necessary that they should be reduced to writing, because they rest essentially on nothing more and nothing less than a generally accepted standard of common decency and common fairness. …"

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44 As Clyne made plain, there are no fixed categories of professional misconduct. Much depends on whether the conduct falls outside "generally accepted standard[s] of common decency and common fairness". Previous examples of professional misconduct have included wilfully misleading the court (New South Wales Bar Assn v Livesey [1982] 2 NSWLR 231); removing documents in contravention of a court order (Howes v Law Society of the Australian Capital Territory (Supreme Court of ACT, Gallop ACJ, Higgins and Crispin JJ, 23 July 1998, Unreported); permitting conflicts of interest to arise (Law Society of New South Wales v Moulton [1981] 2 NSWLR 736); failing to account for money received (Re Walker; Ex parte Kemp (1887) 3 WN (NSW) 123); misleading a client (Hoshott v Council of the Law Society of New South Wales (Supreme Court of NSW, Meagher, Sheller and Stein JJA, 17 December 1997, Unreported); gross neglect and delay (Legal Practitioners Conduct Board v Hay [2001] SASC 322; (2001) 83 SASR 454); failing to adequately supervise an unqualified clerk (Law Society of New South Wales v Foreman (1991) 24 NSWLR 238); breaching an undertaking given to another lawyer (Wade v Licardy (1993) 33 NSWLR 1); and, in certain situations, criminal and/or personal misconduct (Ziems v Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279). 45 The present appeal must be determined having regard to section 208Q of the LPA 1987, which provides that deliberate charging of grossly excessive costs constitutes professional misconduct (see also Re Veron; Ex parte Law Society of New South Wales (1966) 84 WN (Pt 1) NSW 136 at 144 (and authorities cited therein); Evatt v Bar Association of New South Wales (1968) 117 CLR 177; Veghelyi v The Law Society of New South Wales (NSW Court of Appeal, Kirby P, Mahoney and Priestley JJA, 6 October 1995, Unreported)). Mahoney J in Veghelyi explained why that is so (at 9 - 11): "The Court has traditionally and for centuries exercised control over 'the excessive fees and other unnecessary demands' made by solicitors of the court: see, eg, Holdsworth's History of English Law, 2nd ed, Vol 6, 434; Vol 12, 56-62. Clients are, or may frequently be, in a vulnerable position vis-a-vis their solicitors; the presumption of undue influence is, I think, based at least in part upon the fact that when making decisions clients ordinarily or at least frequently place trust in their solicitors. They ordinarily are not in a position to know without investigation what work must be done and what charges are fair and reasonable; they ordinarily assume that the solicitor will make only such charges. Solicitors are, on the other hand, informed, or in a position to inform themselves, of what work may be required and what are fair and reasonable charges. They are, in that sense, in a position of advantage and trust is placed in them. Clients are entitled to be protected against the abuse of such an advantage. It is, I am inclined to think, the fact that that advantage has been misused which may, in a particular case, warrant what the solicitor does being categorised as professional misconduct." 46 His Honour went on to discuss the circumstances in which charges may be considered "excessive". His Honour explained (at 9 - 12): "A solicitor's entitlement to remuneration is conventionally stated in terms of what is fair and reasonable in the circumstances: see Re Stuart; Ex parte Cathcart (1893) 2 QB 201; Clare v Joseph (1907) 2 KB 369 at 372, 376, 378; New South Wales Crime Commission v Fleming (1991) 24 NSWLR 116 at 121-123, 127-128, 142-144. Where charges are so far beyond that as to be grossly disproportionate, professional misconduct may be involved. This is so in England and in Australia; a somewhat similar principle appears to have been adopted in the United States of America notwithstanding the different attitude taken in that country to lawyers' costs: see generally American Bar Association Model Rules of Professional Conduct, in particular R1.5 which provides 'a lawyer's fee shall be reasonable ...' and R8.4 which states that violation (or attempted violation) of any rule constitutes "professional misconduct". For a discussion of these rules, see G Hazard, Jr and WW Hodes, The Law of Lawyering, 2nd ed, 1990, Vol 1, and S Gillers and RD Simon, Jr, Regulation of Lawyers: Statutes and Standards, 1991. A principle stated in such terms is, of course, inherently indeterminative. But I do not think that it is possible to formulate the principle in terms which are more specific. The determination of what in a particular case is fair and reasonable will require consideration of various factors. S208G of the Legal Profession Act 1987 provides: '208G. In assessing what is a fair and reasonable amount of costs, a costs assessor may have regard to any or all of the following matters: (a) the skill, labour and responsibility displayed on the part of the barrister or solicitor responsible for the matter; (b) the complexity, novelty or difficulty of the matter;

[58]

60 The essence of the appellant's complaint was that there was no basis for concluding that the clients had not been billed fair and reasonable amounts, let alone that they had been charged grossly excessive amounts. Mr McIntyre did not assess the solicitor/client bills. Nor, according to the appellant, could he have assessed those bills. Section 208C of the LPA 1987 specifies the circumstances in which a costs assessor must decline to assess a bill of costs. Before s 208C can apply, there must be a costs agreement that complies with Div 3 of the LPA 1987 (s 208C(1)(a)). Section 208C does not apply where the cost assessor determines that the costs agreement is unjust under s 208D. The Commissioner did not allege that the costs agreements were non-compliant or unjust. Accordingly, it was submitted that s 208C of the LPA 1987 applied with the effect that Mr McIntyre would have been obliged to decline to assess the solicitor/client bills. 61 The Tribunal determined that a costs assessor was not shut out from assessing the solicitor/client bills by s 208C(1) and could have dealt with any dispute about apportionment under s 208C(2). It also found that there was room for the operation of s 208D. The appellant submitted that these conclusions ran contrary to authority (Malouf v Jezairy [2003] NSWSC 762; Bechara v Kobeissi [2005] NSWSC 192; Maria Bechara v Mohamed Kobeissi (26 March 2007, Unreported). It was said that the Tribunal was in error in distinguishing or rejecting those decisions. 62 According to the appellant, the only person who could have assessed the solicitor/client bills was the Commissioner: s 153 of the LPA 1987. However, the Commissioner did not apply for an assessment under this section. 63 The fairness and reasonableness of costs charged were to be determined by assessing the solicitor/client bills on a solicitor/client basis. Unless the solicitor/client bills were assessed, it was not possible to determine whether the clients had been billed fair and reasonable amounts or, if they had not, whether they had been charged grossly excessive costs. 64 The appellant submitted that the party/party assessments could not be relied on to suggest that the solicitor/client bills charged grossly excessive costs. The statutory regime for the assessment of party/party costs is fundamentally different to that which governs solicitor/client costs assessments. In a solicitor/client assessment, the rates specified in the costs agreement are applied (s 208C(2)). In a party/party assessment, the assessor is prevented from applying the terms of a costs agreement in determining the fair and reasonable costs (LPA 1987 s 208H(2)).

[61]

Ground 7 72 Ground 7 is expressed in the following terms: Ground 7 The Tribunal erred in law in admitting the report and evidence of Ms Castle as expert evidence and in relying on same to support its finding that the Appellant deliberately charged grossly excessive fees in the Hussein matters. 73 This ground of appeal concerns the interlocutory decision, the effect of which was to allow the Commissioner to rely on the Castle report. 74 It is necessary to appreciate the background against which the Castle report was admitted. The disciplinary proceedings were originally brought against both the appellant and Mr Galitsky. The basis of the allegation was the same in both matters. The Commissioner relied on the affidavit of Mr McIntyre. The matters were listed for hearing with the appellant's matter proceeding first. At an early stage in the appellant's hearing, the Tribunal formed the view that the original particulars were "grossly inadequate". The Tribunal criticised Mr McIntyre's affidavit on the basis that it failed to explain why the fees charged were grossly excessive, to what extent, or by what amount. The Tribunal observed that the public interest in proper ventilation of the relevant issues necessitated the provision of further and better particulars. The appellant's hearing was adjourned to allow for the provision of those particulars. 75 In the meantime, the Tribunal heard the Galitsky matter. In that matter there was extensive argument about the quality of Mr McIntyre's evidence. The Tribunal concluded that his evidence did not qualify as expert opinion and that the opinions he did express lacked proper foundation. The Tribunal determined that the Commissioner had failed to establish a basis for a finding of professional misconduct. The proceedings against Mr Galitsky were dismissed. 76 The Commissioner filed further particulars and, not surprisingly in the circumstances, sought leave to rely on the Castle report. The interlocutory decision of the Tribunal reads, in part: "13 … While the Tribunal did not contemplate that anything more than additional particulars would be supplied by the Legal Services Commissioner, the circumstances altered dramatically a few days after the adjournment of Ms Bechara's case when the associated case of Mr Galitsky was listed for hearing. In those proceedings, it became clear during the course of argument that there was a serious issue about the adequacy of Mr McIntyre's evidence, and whether it could be properly regarded as providing an expert opinion that was relevant to the matters to be decided by the Tribunal. At this point the reality for the Legal Services Commissioner was that, not only were further particulars required, but consideration would have to be given to the adequacy of Mr McIntyre's evidence in Ms Bechara's case, having regard to the similarity of the issue, even though there may well have been differences in the professional legal services provided by the two legal practitioners. It could hardly be surprising that in such circumstances, the Legal Services Commissioner not only supplied further particulars but also applied for leave to rely on the affidavit and report of Ms Castle, thus placing the particulars within the framework of alleged obligations owed by Ms Bechara in seeking to recover appropriate fees for the work performed during the six day hearing in the District Court. … 15 In this very matter, the Tribunal expressed the view that there was a public interest, extending beyond the immediate parties, that required the proper ventilation of the issues raised. That aspect of the public interest suggests that the issues should be properly ventilated unless there is some significant prejudice to the Respondent solicitor that fairness and justice would dictate that the new report should not be received. No such circumstances exist in the present case. The new report is relatively short and concise and refers to well-established obligations of legal practitioners. The report does not raise a new issue for determination by the Tribunal and the substance of the case remains unaltered. … 18 … The issue raised by the Legal Services Commissioner appears not to be the subject of a ruling by the Tribunal or a Court: it is a point of some interest to the legal profession and the course proposed by the Applicant appears to be the only way in which the real merits of the issue can be litigated. The need for the new evidence is explained by reference to the issues raised in the Galitsky proceedings. …" 77 Ms Castle was engaged by the Commissioner to provide an independent expert report in relation to legal costing issues. Her report responds to the following four questions: "1. "Are you aware of any decisions and/or guidelines applicable to the issue whether in circumstances such as those under consideration a solicitor has an obligation to: a) Apportion costs between the clients equally;

[63]

78 The appellant did not dispute Ms Castle's qualifications but submitted that the Castle report should not have been admitted for a number of reasons. First, insofar as it addressed practices of costs assessors rather than the law which they are bound to apply, the report was said to be irrelevant. In the appellant's view, evidence about costs assessors' practice of disregarding s 208C of the LPA 1987 could not be admissible. The practice of costs assessors was simply not relevant to the construction of clause 3 of the costs agreements. 79 Second, the report expressed opinions about matters of domestic law in circumstances where those opinions would determine the outcome of the proceedings. This was said to be prohibited by the rule in Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 6) (1996) 64 FCR 79 per Lindgren J at 83; see also Prentice v Cummins [2002] FCA 1503; (2002) 124 FCR 67 per Sackville J at 85. In Allstate, Lindgren J observed that evidence of opinion as to the application of a particular law was inadmissible because, inter alia, it would abdicate the judicial function (at 83). In Prentice, Sackville J cited Cross on Evidence as authority for the rule that "domestic law is not a matter for proof or disproof" (at 85). 80 The Castle report was also said to be defective because it overlooked the fact that the appellant's solicitor/client bills could not have been assessed. 81 It was further submitted that the conclusions proffered by Ms Castle were contrary to law. The appellant submitted that the law could be summarised as follows: "a. If a contract, properly interpreted, allows concurrent charging to multiple clients of work which bears the character of services concurrently to each of them, there is no room for a 'guideline' or principle of assessing practice to refuse it. If a contract, properly interpreted, requires such work to be apportioned, that is a matter of interpreting and applying the contract to extant facts. It does not require or proceed from any additional principle or guideline of costs assessment practice. b. If a contract in the form of a costs agreement applies, there is no room for any set of 'directions' or 'guidelines' to apply other than the law of contract itself. c. If the costs agreements, properly interpreted and applied, allowed full charge and recovery from each client, then an assessor would have been bound to assess accordingly (i.e. on a solicitor and client basis). If the costs agreements properly interpreted and applied allowed a full charge to each client but single recovery for a particular service provided to them in common, the full amount would still be properly billable to each and assessable accordingly, with the clients potentially enjoying rights of contribution and subrogation inter se. If the costs agreements properly interpreted and applied somehow required a fractional apportionment, that would have to be reflected in the assessment." 82 By way of response to the evidence contained in the Castle report, the appellant relied on the affidavit of Mr Mark Brabazon, a barrister and formerly a costs assessor under the LPA 1987. Mr Brabazon had appeared and advised in a number of costs disputes and appeals and had presented numerous papers on the topic of legal costing. The Commissioner submitted that in the Tribunal's view, it was Mr Brabazon and not Ms Castle who was expressing opinions on matters of domestic law. 83 The Commissioner took issue with the appellant's submissions, claiming that they repeated much of the content of Mr Brabazon's affidavit, whose opinions had been rejected by the Tribunal.

[64]

84 In the Commissioner's view, there was no question as to the admissibility of the Castle report. The Tribunal had specifically requested from the Commissioner further particulars regarding the approach of costs assessors. In the circumstances, the relevance of the Castle report could not be doubted. 85 The Tribunal was satisfied that the appellant's objections to the Castle report should be rejected. The Tribunal remarked as follows: "42 … Ms Castle had clearly set out the basis upon which she had expressed her opinion and to the extent that the operation of certain provisions of the 1987 Act might be stated, such statements represented the basis upon which her opinion was formed and were open to be overturned by the [appellant] as was any other assumed basis from which an opinion was formed." 86 The Tribunal continued: "57 … Disciplinary issues involving costs and allegations of overcharging by legal practitioners is a notoriously difficult area and besides its own experience as a specialist Tribunal, the Tribunal is entitled to the benefit of any opinion, including expert evidence properly brought forward that deals with the practice of, inter alia, costs assessing." Determination 87 I have carefully reviewed the contents of the Castle report. In my view it was properly admitted. 88 Ms Castle's evidence was that the solicitor's obligation to apportion emerged from a general principle which, in her expert opinion, was routinely applied by costs assessors. That principle was that "a lawyer cannot charge the same unit of time more than once." The Commissioner's case was premised on the existence of an obligation to apportion. The appellant maintained throughout the proceedings that no such obligation existed. In the absence of any previous decisions directly on point, it was incumbent upon the Commissioner to identify the source of the alleged obligation to apportion. The Castle report identified a "general principle" as the source of that obligation. It stated that the obligation belongs to the solicitor, but where a bill of costs fails to make proper apportionment, a costs assessor will disallow those costs that exceed the apportioned value of the fees. Whether or not that principle was capable of being expressed more particularly, the evidence was undoubtedly relevant. It was for the appellant to expose its deficiencies if she could. 89 Some of Ms Castle's responses do concern matters of domestic law. For instance, in explaining the approach of an experienced costs assessor, Ms Castle discussed the effect of ss 208A and 208B of the LPA 1987. She remarked that: "The view taken by costs assessors is that sections 208A and B provide an overriding statutory requirement that operates independently of any costs agreement, that a solicitor only be allowed on assessment such costs as are 'fair and reasonable'." 90 To my mind, Ms Castle was entitled to give that evidence. Her opinions about the operation of the relevant provisions merely reflect the practice of costs assessors and, in particular, the method by which they would assess the appellant's solicitor/client bills. The Castle report did not abdicate the function of the Tribunal. Although it was relevant to the issue of overcharging to understand the approach of costs assessors, her view was not determinative of the proceedings. 91 The appellant's claim that the Castle report was defective because no assessment of the solicitor/client bills could have occurred has already been dealt with in relation to grounds 4 - 6 of this appeal (see above at [63]). 92 The appellant's complaint that Ms Castle's opinions were contrary to law affords no basis for an objection to its admission. The appellant was entitled to, and did (through the evidence of Mr Brabazon) outline what in her view was the correct approach to assessment. 93 I would reject this ground of appeal. 94 Grounds 8 and 9 95 Grounds 8 and 9 are expressed in the following terms: Ground 8 The Tribunal erred in law in failing to find that the Respondent was strictly bound by the particulars contained in the Application for Original Decision and in permitting the respondent's case to be enlarged by the Further Particulars Pursuant to Order of the Tribunal …. Ground 9 The Tribunal exceeded its jurisdiction in making the findings and orders appealed against in reliance upon the Further Particulars. 96 The original particulars are set out above at [29]. Those particulars essentially claimed that the hearing costs should have been apportioned but were not. The Tribunal described the particulars as "grossly inadequate" and ordered the Commissioner to particularise the complaint more fully by identifying how, to what extent, and by what amount the charges were grossly excessive. This step was taken so that that the matter would be properly ventilated in the public interest (interlocutory decision at [11]). The further particulars were supplied and the relevant particulars are set out above at para [35]. 97 In her response to the further particulars, the appellant contended, inter alia, that the further particulars went beyond the scope of the original application. On the first day of the hearing, the Tribunal heard submissions on the topic. The appellant maintained her objection to the further particulars. However, the Tribunal did not rule on the objection. Appellant's submissions 98 The appellant submitted that the further particulars impermissibly extended the parameters of the application. The particulars contained an allegation, which had not been made previously, that the appellant was in breach of her costs agreements in failing to apportion her costs. It was submitted that the Commissioner was strictly bound by the original particulars (Nikolaidis at 167) and that the Tribunal lacked jurisdiction to deal with the new complaint: s 167(1) of the LPA 1987. 99 Sections 167(1) and (2) of the LPA 1987 provide as follows: 167 Institution of proceedings and hearings

[69]

Determination 103 In my view these grounds of appeal must fail. The further particulars did not charge a new offence or even a new ground of complaint. They simply specified various bases upon which the apportionment obligation could be said to arise, one of which was breach of contract. The fundamental allegation was that the appellant deliberately charged her clients grossly excessive costs. The further particulars explained how that conclusion was arrived at. In recognition of the fact that the original particulars were modest and that there was a public interest in fully ventilated proceedings, the Tribunal invited the Commissioner to explain how, to what extent, and by what amount the charges were grossly excessive. The further particulars complained of squarely address the first of those three matters. To my mind the allegation of contractual breach in no way enlarged the original complaint. It simply particularised it. 104 As my remarks in relation to grounds 1 - 3 of this appeal make plain, I am in no doubt that the appellant was made sufficiently aware of the case against her and was not unduly prejudiced by the supply of further particulars. 105 Grounds 8 and 9 of this appeal should be dismissed. Grounds 10 - 13 106 Grounds 10 - 13 are expressed as follows: Ground 10 The Tribunal erred in law in finding that upon the proper construction of clause 3 of each of the costs agreements the Respondent was not entitled to charge each of her clients the full amount as provided by the agreement for attendance for each of the clients at the hearing of their cases by the District Court. Ground 11 The Tribunal erred in law in finding that where the costs were incurred for more than one client during any hour of attendance then the costs of that hour had to be apportioned so that each client paid for the work actually performed for their case or, where appropriate, the time would be simply equally shared between them. Ground 12 The Tribunal erred in law in finding that the Appellant was in error in proceeding on the basis that the costs agreement for each client did not require her to apportion the costs of the hearing and was in error to the extent that she asserted the costs agreement actually permitted her to charge each client separately for the whole of the hearing time. Ground 13 The Tribunal erred in law in construing the costs agreements in a manner that was never argued by the Respondent, nor put to the parties by the Tribunal for submissions, namely that it was unnecessary to imply the word 'exclusively' into the special circumstances of the case. Appellant's submissions 107 The appellant's primary submission was that she had no obligation to apportion the hearing costs amongst the clients. Although the Castle report stated that apportionment was the regular practice of cost assessors, that statement was unsupported by common law or statutory authority. It arguably ran contrary to an article written by Ms Marina Wilson, a solicitor in the Law Society's Costs Unit, entitled "Attending on More Than One Client: Whether there is a Requirement to Apportion" (2008) 46 Law Society Journal 44. The article commenced with the observation that a question had recently been raised as to the propriety of charging "each client for an attendance in the same court in separate matters." The author continued: "On a time-costing basis, if a practitioner charges a client for actual time spent for travel, for example, plus the time in court for the client, in accordance with the costs agreement with the client, the charge would prima facie be fair and reasonable. Costs authors Roger Quick and David Garnsworthy have followed a train of precedents to conclude that 'where two plaintiffs represented by the same solicitor bring two separate actions against the same defendant, and the actions are not consolidated nor one treated as a test case decisive of the other, each plaintiff is prima facie entitled, if successful, to have her or his own action treated as distinct from the other, except as to work which is required to be done only once for the two cases …' The authors were following the judgments in Oppenshaw v Whitehead; Mucklow v Whitehead (1854) 9 EX 384, which was applied in Tucker v Graham (1869) 8 SCR (NSW) 341; International Financial Society v Smith (1896) 22 VLR 114; and Boguslawski Anor v Gdynia Ameryka Linie (No. 2) [1951] 2 KB 328 ( Quick on Costs, LBC, para 4.3380). Oppenshaw made an exception where 'with respect to such matters as may be required to be done but once for both causes, such as subpoenaing a witness, making a journey, or the like, of course the charges must be divided according to the discretion of the Master …'. … The court applied the same principle in Carter v Newcastle Wallsend Coal Co (1909) 9 SR (NSW) 474 where two actions were brought by different plaintiffs against the same defendant. It was held that counsel was entitled to a refresher on each brief for each day of the trial as if the two actions had been tried separately, and the solicitor was allowed an amount for attendances for each case separately. … Obviously, where the matters are consolidated and dealt with by the same court for more than one client, a costs assessor would normally not allow costs to be charged for the same attendance, but would require the costs to be apportioned." 108 The decision of the Supreme Court of NSW in Carter v Newcastle Wallsend Coal Co (1909) 9 SR (NSW) 474 was also cited as support for the view that the appellant was entitled to charge each client for each hour spent at the hearing. It was said that Carter proved Mr McIntyre "either wrong or very likely to be wrong" in requiring an apportionment of the appellant's costs. The appellant submitted: "Aside from her contractual entitlement to charge as she did, the [appellant's] position would have accorded with her common law entitlement (were it not displaced by the statutory scheme), whereas the [Commissioner's] apportionment theory conflicts with the common law."

[78]

121 There are some older decisions which require consideration, although their antiquity, particularly having regard to the modern but much criticised practice of time charging, must be borne in mind. Oppenshaw v Whitehead; Mucklow v Whitehead (1854) 9 Exch 304; (1854) 156 ER 163 was an English decision of the Court of Exchequer. The same solicitor acted for two plaintiffs in separate actions against one defendant. Both briefs contained the same sets of pleadings and statements of facts. The matters were heard together and the plaintiffs were successful. The taxing master disallowed the costs of drawing two briefs given that the matters were so similar and the same solicitor acted for both plaintiffs. Pollock CB reversed the taxing master's decision, remarking as follows (at [386] - [388]): "We therefore think that, where the business has been actually done, the Master ought not to take into consideration that the same attorney was employed by two or more plaintiffs, unless indeed there has been a consolidation of the actions. With respect to such matters as may be required to be done but once for both causes, such as subpoenaing a witness, making a journey, or the like, of course the charges must be divided according to the discretion of the Master, exercised under the 'Directions to the Taxing Masters.' But in matters of this description, where the business is actually done in both causes, we think that, whether the causes are tried at the same time or at a subsequent assize, the attorney is entitled to the same charges as if two different attorneys had been employed. If any advantage therefore accrues to an attorney who is employed by two plaintiffs, he ought to have the benefit of that confidence which is placed in him." 122 Oppenshaw was not concerned with fees charged in accordance with a time-costed arrangement. However, it confirms that there is an obligation to apportion costs for work which is done only once but in the interests of each client. That is of course the situation in the present case. 123 Tucker v Graham (1869) 8 SCR (NSW) 341 and International Financial Society v Smith (1896) 22 VLR 114, both of which were cited in Ms Wilson's article, also predated the advent of time charging and can be distinguished on that basis. In any event, the proceedings in Smith were not heard together. 124 In re Metropolitan Coal Consumers' Association (Grieb's Case) (1890) 45 Ch D 606 concerned scale fees and may be distinguished from the present case. However, the decision provides support for the Commissioner's position. In Grieb's Case, the same solicitor represented two plaintiffs in separate and independent actions against a single defendant. The proceedings were described as being "for the same object, and supported mainly by the same evidence" although there was no order or agreement that the result in one proceeding would govern that of the other. The plaintiffs were successful. The headnote to the reported decision captures the relevant principle (at 606): "[T]he Plaintiff in each case is entitled, on the taxation of his costs of his action, to have his own action treated as entirely distinct from and independent of the other, and to have the same allowances as if the two actions had been conducted by separate solicitors and counsel, except as regards attendances or other matters which were or ought to have been done at one and the same time in both cases ." (emphasis added)

[81]

128 In my opinion, Carter does not assist the appellant. The decision does not provide any general principle. Rather, Simpson ACJ expressed the view that the taxing officer's opinion should be respected, the Court not being persuaded that the amount allowed for attendance in respect of each client was such that the taxing officer was acting outside his authority in allowing the full scale fee for each day. The position is different when the method of charging is by time costing. Time costing assumes that a fee will be charged for the time spent on the particular client's affairs. The issue is whether, when the solicitor is engaged on the affairs of more than one client at the same time, he or she may charge the fee for each which would be charged if engaged exclusively on that client's affairs. 129 In Boguslawski & Anor v Gdynia Amerkya Linie (No. 2) [1951] 2 KB 328 two Polish seamen brought proceedings against a Polish shipowner. A similar action was brought by another Polish seaman against the same defendant. The same solicitor acted for all three plaintiffs. The actions were neither consolidated nor heard together, but there was agreement that evidence in one case concerning Polish law and related questions of fact would be deemed to be evidence in the others. The plaintiffs were successful. On taxation of costs, the defendants argued that the brief fee and the costs associated with calling witnesses should have been apportioned between the three actions. The taxing master declined to apportion the costs. It was held that the agreement to treat evidence in one case as evidence in the other afforded no basis for apportionment. According to Somerville J, there must either be a consolidation of actions or an agreement that the result of the first case would govern the others. 130 In the course of his reasons, Somerville J doubted the principle in Oppenshaw. His Honour observed (at 333): "It was suggested that there are one or two dicta in the cases which suggest that in some circumstances a solicitor can require payment twice over for his work. When I say twice over, of course, there may be many cases where work done on one case is of some assistance in another, but that is not the type of case we are considering. In cases like this no doubt the efforts made in one case make it necessary for very much less evidence to be taken in the others. It was suggested that the plaintiffs might be entitled to recover in the second action exactly as if they had never made the efforts and recovered the costs in the first case, in respect of matters common to both. We have not to decide that today. If that is the consequence of our decision, then I think it is a matter which might well be looked into; but I doubt whether that result does follow from our decision ." (emphasis added)

[84]

135 Hore was followed in Meade v Queensland Ambulance Service [1996] QSC 62. After extracting the remarks of Hoare J in Hore (above at [126]) White J observed: "It seems clear as a consequence of the approach in Hore that it is not necessary that the actions or applications be consolidated or that one is run as a test case before apportionment can occur. Hore reflects that in a practical rather than a formal sense there be no double charging." 136 More recently, in Pester; Leslie v Hydro-Electric Corporation (1997) 7 Tas R 233, Zeeman J of the Full Court of the Tasmanian Supreme Court observed (at 263 - 264): "To the extent that it was suggested that the attorney might be paid twice over for the same work, Oppenshaw v Whitehead has been doubted (Boguslawski and Another v Gdynia Ameryka Linie (No 2) [1951] 2 KB 328, per Denning LJ) and should not be followed. Nevertheless, that case also is authority for the proposition that where costs have been incurred in common defence of two or more actions it is appropriate to leave the question of apportionment to the taxing officer and for the taxing officer to divide such costs between the various actions (see also R v Hore, ex parte Brisbane City Council [1969] Qd R 75 at 89; In re Metropolitan Coal Consumers' Association (1890) 45 Ch D 606 at 611). That is the proper approach in the present case." 137 The discussion in Quick on Costs (Lawbook Company, 1996) summarises the position as follows (at [4.3380]): "Where two plaintiffs represented by the same solicitor bring two separate actions against the same defendant, and the actions are not consolidated nor one treated as a test case decisive of the other, each plaintiff is prima facie entitled, if successful, to have her or his own action treated as distinct from the other, except as to work which was required to be done only once for the two cases, the costs of such work being divided between the two . … There will, however, be circumstances where the way of dealing with separate actions or appeals closely approximates to consolidation although there is no order for consolidation. The idea of close approximation to consolidation was described in Boguslawski [1951] 2 KB 328 at 333 as a difficult one and there has not been a uniform practice of apportionment in Australia. The need to ensure economy in the administration of justice does, however, require that where proceedings are heard together, they deal with substantially the same issues and parties are represented by the same solicitor or the same solicitor and counsel that consideration be given to apportionment even if there is no formal order for consolidation ." (emphasis added)

[86]

140 These principles are consistent with a solicitor's fiduciary duty. That duty requires the solicitor to act in the best interests of the client and, in particular, to avoid conflicts between the client's interests and those of the solicitor (Law Society of NSW v Harvey [1976] 2 NSWLR 154; O'Reilly v Law Society of New South Wales (1988) 24 NSWLR 204). The mere fact that one legal service may be of benefit to two clients does not entitle that unit to be charged twice. If a solicitor can apply the benefit of his or her work to two clients, he or she should do - indeed must do so - without any expectation of double recovery. If there are additional demands imposed on the practitioner as a result of his or her simultaneous handling of multiple related matters they could, in my view, compensate for by placing an appropriate uplift on costs common to all matters. That uplift would in most cases of attending court to instruct be modest. 141 In my view, none of the authorities relied on by the appellant support her conduct. Nor do I take Ms Wilson's article to sanction unapportioned charging of hearing fees in circumstances where matters are heard together with evidence in one being evidence in the other. In fact, a subsequent article by Ms Wilson entitled "Apportioning Costs when Acting for More Than One Client" (2009) 47 Law Society Journal 30 (which reviews the Tribunal's decision in the present matter) commences with the opinion: "Even if it is difficult to allocate costs among clients in an intermingled case, a serious effort at apportionment is required." 142 In light of the Court's qualification in Grieb's Case, it can hardly be contended that the appellant's attendance at court to collect judgment warranted payment three times over. That work fell squarely within the description of "attendances … which were or ought to have been done at one and the same time in both cases." In my view, the same can be said of the solicitor's attendance at court during much of the six-day trial. When evidence relevant to all three proceedings was being given, the solicitor was (or ought to have been) instructing counsel "at one and the same time" in all three matters because the same evidence would address the same particular in each proceeding. Accordingly, applying the qualification in Grieb's Case to the present case, the appellant was not entitled to charge each client as though different solicitors had been engaged in each matter, that is to say, without any apportionment of common costs. The charges which the solicitor made were grossly in excess of the charges which were appropriate in the circumstances.

[87]

Ground 14 144 Ground 14 is expressed in the following terms: Ground 14 The Tribunal erred in law in finding that the Appellant's act in sending to each of her clients the practitioner/client bill of costs completed the act of overcharging in the special circumstances of the case. 145 It will be remembered that the appellant sent the solicitor/client bills to her clients between March and June 2003. There was no complaint from the clients in relation to the fees. She was served with the defendant's Notices of Objections on 8 December 2003. On 17 January 2005, a number of days before she first received notice of the Commissioner's complaint, she offered to reduce her fees by proportions of 14-15%, 65% and 62% respectively in the event that settlement of the party/party costs could be negotiated in amounts significantly below the party/party bills. That was the second time she had offered to reduce her fees, the first offer occurring on 25 August 2003. 146 This ground of appeal complains that the Tribunal wrongly excluded from consideration the appellant's conduct after she sent the solicitor/client bills. It was said that her offer to reduce her fees on 17 January 2005 bore on her intentions at the time she sent the solicitor/client bills in 2003. 147 The Tribunal made the following observations at [103]: "…Calculations for the [appellant] were carried out on the basis that, as there were no challenges to the other costs charged by the practitioner, if account was taken of the total actually paid to her and how that figure was significantly lower than the figure appearing in the bill of costs, then it had to be apparent that very little was paid by reference to the six-day hearing. It was accepted that calculation was theoretical and that in making concessions and compromising her costs, the [appellant] did not reduce her costs on a line-by-line basis or item-by-item basis but took a global approach. The calculations submitted on behalf of the [Commissioner] established that, in the matter of Toufika Hussein, the [appellant] had been paid just under 86 per cent of her professional costs as stated in the bill of costs, that in relation to Mohamed Hussein the [appellant] had been paid just under 35 per cent of her professional costs as stated in the bill of costs and that in relation to Fatemah Hussein, the [appellant] had been paid just under 38 per cent of her professional costs as stated in the bill of costs. … On this approach, in two of the three cases the [appellant] actually obtained what Ms Castle and Mr McIntyre would regard as a fair and reasonable fee after apportionment, while in the other case there has been a 14 per cent reduction in the fee when on a proper apportionment there should have been a sixty-six per cent reduction." 148 The Tribunal regarded itself as bound by the remarks of McColl JA in the matter of Nikolaidis at [166] (Hodgson JA agreeing: see [90]). Those remarks were to the effect that sending a bill constitutes the final step in the sequence of overcharging. In the Tribunal's view, to consider the appellant's subsequent conduct (her offers to reduce her costs) would be contrary to authority (liability decision at [106]). Subsequent conduct, if relevant at all, went only to the matter of penalty.

[88]

Appellant's submissions 149 It was submitted that, if the appellant's subsequent conduct was considered, at least two of the three clients were not overcharged. Although accepting that the Tribunal was bound by the Court of Appeal's decision in Nikolaidis, the appellant disputed that that case stood as authority for the proposition that sending the bill completes the act of overcharging. It was said that: "To the extent that Nikolaidis decided anything in relation to an act of overcharging, any such decision was confined to the facts of the case before the Court. What is said to constitute an act of overcharging is a matter of fact to be decided having regard to all the circumstances of the case, including in particular events subsequent to the sending of a bill of costs to a client. The benefit of hindsight is a valuable tool that should not be readily discarded." 150 The appellant sought to distinguish Nikolaidis on the basis that in that case a demand for payment within 21 days was made, following which time the practitioner would seek to have the bills assessed before seeking to enforce the bill. In the present case no such demand was made. 151 In the appellant's view, Nikolaidis required an intention on the part of the solicitor to charge, and for the clients to pay, the relevant amounts specified in the bills. The appellant lacked that intention. Her evidence was that she only sent the solicitor/client bills to comply with the indemnity principle with respect to the assessment of the party/party bills. She sent the solicitor/client bills to her clients "by way of service" and was not actually calling for payment. She stated in her evidence before the Tribunal that "what I intended to charge depended on ultimately what we got for party party costs." Her position was thus that she never intended to charge her clients the amounts specified in the solicitor/client bills unless they were allowed in full on party/party assessment. She intended to await the result of the negotiations or assessments of the party/party costs before calling for payment. 152 The Tribunal left unexplained the appellant's true intention at the time of sending the bills. According to the appellant if she had intended to overcharge her clients, she would not have offered to reduce her fees. The submission continued: "She would have relied on her solicitor/client bills and taken all subsequent moneys received from the Defendant in part satisfaction of them. None of the Husseins would have received anything and all of them would have remained indebted for the unpaid balance of the solicitor/client costs. Yet without any notice of the complaint the appellant put money in their pocket by reducing her costs. There is no rational explanation for the costs reductions except the truth of her evidence." 153 It was further submitted that the clients "must have been aware from the terms of the contemporaneous correspondence" that at the time of sending the bills the appellant did not intend that they would be paid. 154 The Commissioner's analysis of the time actually spent on each case was, according to the appellant, seriously problematic. It: "was an invitation to the Tribunal, which it accepted, to use the document as part of a process of hindsight reasoning which assumed that at the commencement of and during the course of the hearings of the 3 cases the instructing solicitor would or should have known that there would necessarily be a clear demarcation between significant parts of the evidence in each of the cases so that large tracts of evidence could or would not be relevant on any basis to the other cases. … It is artificial in the circumstances of the 3 cases to say, as the Tribunal effectively did, that it would have been a simple matter for the instructing solicitor to have made an accurate on the run apportionment of evidence relevant to all cases on the one hand and evidence relevant to each specific case on the other (4 separate and distinct bodies of evidence). This is beyond a solicitor's ordinary function when instructing in multiparty hearings."

[89]

Commissioner's submissions 155 The Commissioner maintained that the remarks of McColl JA in Nikolaidis applied to the present case. In Nikolaidis, the Tribunal remarked as follows (Legal Services Commissioner v Nikolaidis (No 3) [2005] NSWADT 200 at [147]): "if there is gross overcharging … the overcharging occurs when the bill is rendered unless of course moneys are charged at paid or appropriated without a proper bill in which event the date of overcharging is appropriately advanced." 156 In the present case the solicitor/client bills bore the standard notations that moneys in trust would be transferred towards payment of the bills after 30 days if no objections were made within that time. 157 The appellant conceded in cross-examination that there was nothing in the solicitor/client bills nor in the letters accompanying the bills that would have informed the clients that she did not intend to charge her clients the total costs as shown in the bills. 158 She pursued the charges in the party/party bills in the course of assessment and responded to the defendant's objections. Her letters to the clients between 6 June 2003 and 25 August 2003 consistently mentioned the likely gap between solicitor/client and party/party costs. The submission reads: "The appellant's assertions that she had throughout intended to vary (reduce) her charges depending on what was ultimately received for party/party costs cannot alter the fact that she rendered itemised solicitor client bills of costs containing the duplicated hearing charges, which also appeared in the party/party bills and in her letters dated 25 August 2003 offered a reduction of the then outstanding solicitor/client amounts (still in excess of the party/party bills) if there was a compromise of party/party costs." 159 The Commissioner emphasised that her offers to reduce her fees were not unqualified. They were made without prejudice to her rights on an application for assessment, and were expressly stated to depend on the items claimed in the party/party bills. 160 As to the appellant's criticism of the Commissioner's use of hindsight reasoning, the Commissioner observed that the solicitor/client and party/party bills could only ever have been prepared with the benefit of hindsight. The case against the appellant did not complain that the appellant failed to accurately predict her charges; it complained that the bills should have reflected the work actually undertaken for each client.

[92]

Ground 15 168 Ground 15 is expressed as follows: Ground 15 The Tribunal erred in law in finding that the element of deliberateness with respect to charging grossly excessive amounts of costs had been made out. 169 This ground of appeal repeats much of the content of Ground 14. The Tribunal's conclusions in relation to deliberateness read in part as follows (liability decision at [95] - [97]): "[95] In determining what was intended by the [appellant] it is relevant that the detailed bill of costs forwarded to the clients contained the statement that, unless objection was made within 30 days, any monies held in trust would be applied to satisfy what was clearly intended to be conveyed as an obligation on the Hussein family to pay the amounts set out in the detailed bill of costs … The difficulty for the [appellant] and her evidence as to her usual practice about reducing costs in these speculative common law actions where verdicts were obtained for the plaintiffs was her other evidence that she was mindful of the 'indemnity principle' and the need to demonstrate to the costs assessor that she was, indeed, intending to seek these costs from her clients. It appears to have been open to the [appellant] to have rendered a detailed bill of costs and to have made a provision either that she would seek from her client no more than what was allowed on a party/party costs assessment or, having knowledge of the modest size of the verdicts, to make a provision that she would seek no more than what was allowed on party/party costs assessment plus a nominated amount resulting from her assessment of the verdicts obtained. Such a step may have been more indicative of what she described as her 'usual practice', but no such stipulation was made in the bill of costs. It follows from the [appellant's] 'usual practice' in solicitor/client costs that, if her costs (of the costs of the hearing days) were not challenged on a party/party basis or were not subjected to assessment, then she would have received the full costs of the hearing days from each client. The [appellant's] usual practice, therefore, provides no support for the submission that she never intended to be paid the amounts in the bill of costs, especially as the [appellant] was mindful of avoiding being in breach of the indemnity principle. [96] … The Tribunal is of the view that the deliberate act of overcharging is made out, firstly by reference to the terms of the costs agreements, secondly, by reference to the amount of the charges, and thirdly, by the operation of the general principle that a unit of time can only be charged once by a legal practitioner. The [appellant] acknowledged that, in each case, the costs agreement with each client allowed her to charge only for the work performed for that client. During the hearing there was substantial debate as to whether the word 'exclusively' should be implied in the costs agreement so that it was to be read as enabling the [appellant] to charge only for the work 'exclusively' performed for each client. The Tribunal does not find it necessary to imply the word 'exclusively' in each agreement but from the terms of the costs agreement itself and the [appellant's] evidence about her costs agreement with these three clients, it is apparent that they were to be charged only for work relating to their own matter. [97] … What is obvious is that these three cases were heard together, with some savings and occupied a total of six days. The fact is that the [appellant] attended court through a junior solicitor for six days and in reality charged for 18 hearing days. She did that deliberately, knowing that was the effect of the detailed bills of costs served on each of the clients and in so doing must have been aware that such a claim was a deliberate charging of grossly excessive amounts of costs." Appellant's submissions 170 The appellant submitted that the Tribunal erred in concluding that because her usual practice (of deciding what she would charge her clients after the party/party costs had been determined) was not specified in the solicitor/client bills, it could not be relied on to support her claim that she did not intend to charge the clients the amounts specified in the solicitor/client bills. 171 The appellant criticised as unclear the Tribunal's conclusion that alone, the appellant's intention to charge each client $250 per hour for each hearing day "may not necessarily establish that it was her intention to seek … what she knew to be grossly excessive amounts of costs."

[93]

172 It was submitted that the Tribunal erred in the following ways: 1. It wrongly construed clause 3 of the costs agreements. 2. There was no evidence that the appellant knew of and deliberately acted in contravention of the operation of the general principle that a unit of time can only be charged once by a legal practitioner. 3. There were three separate cases with different issues on liability and damages. Accordingly the finding that the appellant attended for 6 days and in reality charged for 18 days is a misdescription. Such a finding could only be correct if Ms Castle's 'general practice' applied, the appellant knew of and intentionally acted in contravention of it, and the Tribunal's construction of clause 3 was correct. Even if the first and third matters were applicable, there is no evidence capable of supporting the second matter. 4. Even if Carter is no longer good law, it was at least reasonable for the appellant to believe that she was entitled to charge as she did because it was a reasonably arguable view of the law. She was not alone in believing that she could charge as she did [Law Society Journal article cited]. A reasonably arguable view of the law is incompatible with a deliberate intention to overcharge ( D'Alessandro v Legal Practitioners Complaints Committee (1995) WAR 198 at 233G; Nikolaidis per McColl JA at [179]). 5. Finally, there was no evidence that the appellant knew that the effect of sending the solicitor/client bills was that she was deliberately charging 18 hearing days for a six-day hearing. Commissioner's submissions 173 In relation to the Tribunal's construction of clause 3 of the costs agreements, the Commissioner maintained that the Tribunal's findings on apportionment were not based solely on Ms Castle's evidence but drew support from the principle recognised at common law and under statute to charge costs that are fair and reasonable (Veghelhi; s 208A of the LPA 1987). 174 The appellant was cross-examined as to the absence of any statement in her bills that she did not intend to charge the amounts shown. There was no need to put to her that she knew of and deliberately acted in breach of a general principle that a solicitor cannot charge a unit of time more than once. The fundamental issue was whether the charges were grossly excessive.

[99]

186 The parties are in dispute about the sum recovered by the appellant in respect to Toufika Hussein's matter. The appellant submitted that on any view of the evidence, she retained no "profit costs" in relation to Toufika Hussein's hearing charges. 187 The Tribunal's analysis appears at [103] of the liability decision: "Calculations for the [appellant] were carried out on the basis that, as there were no challenges to the other costs charged by the practitioner, if account was taken of the total actually paid to her and how that figure was significantly lower than the figure appearing in the bill of costs, then it had to be apparent that very little was paid by reference to the six-day hearing. It was accepted that calculation was theoretical and that in making concessions and compromising her costs, the [appellant] did not reduce her costs on a line-by-line basis or item-by-item basis but took a global approach. The calculations submitted on behalf of the [Commissioner] established that, in the matter of Toufika Hussein, the [appellant] had been paid just under 86 per cent of her professional costs as stated in the bill of costs … For the purposes of this exercise, as the [appellant] took a global approach to reducing her solicitor/client costs, it is appropriate to take the same approach in attempting to establish what charges were actually made for the six-day hearing. On that global approach, in broad terms, there was a reduction of 14 or 15 per cent for those days in relation to Toufika Hussein … when there should have been a sixty-six per cent reduction." 188 At [14] of the penalty decision the Tribunal found that the evidence did not support the appellant's claim that she received no profit costs from Toufika Hussein's hearing. 189 The appellant submitted that this finding was manifestly erroneous. She complained that the Tribunal appeared to have "notionally disallowed two-thirds of the disbursements and GST referable to Toufika Hussein's case" and that this was an error. 190 The appellant and the Commissioner have each provided their own costs summaries. Notwithstanding that analysis of those summaries is made difficult by the fact that the parties have taken different approaches to the calculation of costs, I will endeavour to capture as accurately as possible the parties' respective calculations.

[124]

219 The appellant argued that she believed that the Law Society's pro forma costs agreement (which she used in the present case) entitled her to charge the full hearing costs to each client. The appellant criticised the Tribunal for making the "erroneous assumption" that the pro forma agreement did not provide this entitlement. The submission reads as follows: "The Tribunal appears to have assumed, on no basis of evidence, that the fact that the Hussein matters ended up in a joint hearing and the Solicitor had little experience of joint hearings meant she could not have believed she was entitled to send the Solicitor and client bills in the form she did. These assumptions proceed on the footing that the Tribunal's construction of clause 3 is correct and the Solicitor must have known, in the sense of having a conscious awareness, that this was its correct construction at the time she sent the bills. Assuming the Tribunal's construction of clause 3 is correct, the finding as to the Solicitor's belief of its correctness was not open unless the alternative hypothesis that she genuinely but mistakenly believed in the construction she put on it had been eliminated to the Briginshaw standard. For that to be so the Tribunal necessarily had to find, expressly, that clause 3 in its terms was so unambiguous that, in the context of the whole of the evidence, the Solicitor could not have understood it in the way she said she did. There is no such finding, nor any basis for one." 220 I have already determined that the Tribunal's finding as to the appellant's intentions was correct. 221 The appellant argued that the following remarks of the Tribunal were incompatible with a finding of guilt for professional misconduct: "While there was no ambiguity about the principle of apportionment and the [appellant] was aware of the operation of the principle in connection with party/party costs, there was some lack of precision about the circumstances in which apportionment would be necessary when there was a joint hearing of claims by clients instructed by the same Solicitor. There is a lack of clear direction in professional journals and texts with much of the law being decided under very different cost regimes." (penalty decision at [13]) 222 The Commissioner argued that these remarks were not inconsistent with a finding of professional misconduct. The Tribunal determined at [106] of the liability decision that even if regard was had to the appellant's subsequent conduct, "the Tribunal would conclude that professional misconduct occurred at some point." It acknowledged, correctly, that subsequent conduct would be relevant to the penalty to be imposed.

At a glance

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Judgment (127 paragraphs)

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Legislation Cited (3)

Cases Cited (27)

Cited By (24)