Council of the Law Society of New South Wales v Davidson

NCAT Occupational|2020-05-01|Before: Legislation Amendment J

Introduction

By a decision published on 3 July 2019, the Tribunal found the Respondent solicitor guilty of professional misconduct and of unsatisfactory professional conduct (Council of the Law Society of New South Wales v Davidson [2019] NSWCATOD 105). This decision deals with the issue of the appropriate orders to be made consequent upon the findings of professional misconduct and of unsatisfactory professional conduct. We will refer to our earlier decision as the Liability Decision. The application is governed by the Legal Profession Uniform Law (NSW) (Uniform Law).

The Liability Decision

A summary of the findings made in the Liability Decision is as follows: 1. The Respondent used the sum of $430 provided as a filing fee for other purposes and that her conduct in that regard was objectively dishonest according to the standards of ordinary and decent people. 2. The solicitor drew a cheque on her trust account in sum of $430 using money held in trust for one client to pay the filing fee in respect of another client. We found that the solicitor's conduct was objectively dishonest and constituted misappropriation. 3. In respect of a sum of $10,000 we found that the solicitor had misappropriated that amount by paying it into her personal account in circumstances where that account was subsequently overdrawn. We found her conduct to have been objectively dishonest applying the standards of reasonable and honest people. 4. The solicitor took the sum of $6,000 from her trust account held for one client and used that money to pay the filing fee in respect of another client. Again, we found the conduct to have been objectively dishonest. 5. In respect of the sum of $1,500 credited to the solicitor's personal account, that sum was used for purposes other than the payment of the filing fee for which it was intended. We found that the solicitor had misappropriated that sum. 6. We found that the solicitor had failed to keep certain trust account records and that that failure constituted unsatisfactory professional conduct. 7. We found that the solicitor had failed to comply with s 370 of the Uniform Law as alleged in ground 3.1 of the Applicant's application. 8. We also found that the solicitor had intermixed trust money in breach of s 146 of the Uniform Law and noted that the solicitor admitted this ground. We found this conduct to constitute professional misconduct. 9. In the context of considering allegations that the solicitor failed to comply with the requirement to hold trust money exclusively for the person on whose behalf it is received and the requirement to not cause a deficiency in any trust account, we concluded that the solicitor had a misconception of what is trust money and that the solicitor's actions in the handling of trust money based upon that misconception was so fundamental that it demonstrates a significant level of ignorance of the elementary obligations of the solicitor who takes money on trust from clients.

Stage 2

Following publication of the Liability Decision, there was a lengthy delay for reasons which we will explain subsequently. However, as stated, the proceedings are now before us for the purpose of considering what consequential orders should flow from our earlier findings made in the Liability Decision. The evidence tendered in relation to this part of the proceedings (conveniently referred to as stage 2) is also set out later in this decision.
In June 2019, the Tribunal published the decision reported as Council of the Law Society of New South Wales v DXW [2019] NSWCATOD 101. That decision held that the Law Society lacked jurisdiction to prosecute the solicitor in that case by reason of a lack of delegated authority from the Legal Services Commissioner. These proceedings were then the subject of an exchange of submissions between the parties as to whether the Applicant's application should be discontinued for the same reasons as those determined in the DXW decision and as to whether the Respondent should have the benefit of a costs order in her favour. Before that matter was resolved, legislation was passed which received assent in November 2019: see Justice Legislation Amendment Act (no 2) 2019. The effect of that legislation was to affirm that the Law Society has and had appropriate authority. As a consequence, these proceedings were the subject of further directions so as to enable the parties to be heard on the question of appropriate consequential orders following the orders made in the Liability Decision. By reason of the matters concerning the Law Society's authority found in the DXW decision, the Respondent incurred some costs which the Law Society has conceded it ought to pay. This is recognised in the cost orders that we propose to make and which are set out later in this decision.

The Evidence

The Applicant tendered the following affidavit in support of its application that the Respondent's name should be removed from the Roll of Solicitors: 1. The affidavit of Anthony James Lean dated 11 March 2020 marked as Exhibit A. The Law Society did not read paragraph 3(b) of that affidavit or Annexure B.
The Respondent tendered and relied upon the following affidavits: 1. the affidavit of the Respondent dated 5 February 2020 (Exhibit 1); 2. the affidavit of Prudence Ann Kirby dated 25 February 2020 (Exhibit 2A); 3. the affidavit of Prudence Ann Kirby dated 26 February 2020 (Exhibit 2B); 4. the affidavit of Maria Elena Ang (Exhibit 3); 5. the affidavit of Louise Ann Arminak dated 19 February 2020 (Exhibit 4); 6. the affidavit of Ian Churchill Latham dated 11 February 2020 (Exhibit 5); 7. the affidavit of the Respondent dated 1 May 2020 (Exhibit 6);
There were no objections to the tender of the above affidavits and neither side sought to cross-examine any of the deponents.

Submissions of the Applicant

The Applicant's submissions may be summarised as follows: 1. The appropriate order to be made by the Tribunal consequent on its findings of professional misconduct and unsatisfactory professional conduct is a recommendation that the Respondent's name be removed from the Roll pursuant to s 302(1)(f) of the Uniform Law. 2. When an order for removal from the Roll is contemplated, the ultimate issue is whether the practitioner is shown not to be a fit and proper person to be an officer of the Supreme Court upon whose Roll the local lawyer's name appears. Where the Tribunal is asked to make an order recommending that the name of the lawyer be removed from a roll kept by a Supreme Court under the Uniform Law the same standard ought to be applied. 3. Disciplinary proceedings are concerned with the protection of the public (Law Society of New South Wales v Walsh [1997] NSWCA 185). The Applicant referred to a number of statements made by Beazley JA in that case, including that the protective nature of the jurisdiction calls for the removal of a practitioner's name from the Roll where the practitioner has been found not to be of good fame and character, subject to considerations which would compel the Tribunal to impose a lesser penalty. 4. The Tribunal should not make an order for removal unless persuaded of the Respondent's "probable permanent unfitness" (see Law Society v Mattila (No 2) [2018] NSWCATOD 9 at [41]-[43]) for practice. The proper order to make would usually be one of suspension or fine instead of removal unless persuaded that the Respondent is probably permanently unfit (see New South Wales Bar Association v Cummins (2001) F52 NSWLR 279 at [26]). 5. The question for the Tribunal is present fitness i.e. whether it can be satisfied now that the Respondent is a person who may properly be held out to the public as a fit and proper person to be entrusted with the duties and responsibilities of a solicitor. 6. Here, the Respondent misappropriated a sum aggregating to $15,225 (not being a single amount but rather being the aggregate after taking into account five instances of misappropriation). The Respondent also failed to keep trust account records in breach of s 147(2) of the Uniform Law, failed to comply with the request under s 370 of the Uniform Law and provided false and/or misleading documents and information to an external examiner. The Respondent also breached certain rules concerning keeping trust account records and intermixed trust money with other money in breach of s 146 and breached ss 138 and 148 of the Uniform Law. These sections concern the holding, disbursing and accounting of trust money and the requirement not to cause a deficiency in a trust account. 7. The Respondent was admitted on 3 April 1998 and up until December 2012 was employed as a lawyer in government roles. The Respondent was also registered as a migration agent in the period 26 June 2013 until the suspension of her registration on 9 August 2018. 8. Although the Respondent had only been practising as a sole practitioner for a short time at the time she engaged in the misconduct, the Respondent had been admitted for 17 years as a solicitor and in the period April 1998 to December 2012 practised continually. 9. The Respondent's misconduct cannot be excused or explained by reason of ill-health. The medical report of Dr Kirby does not establish that the Respondent's cognition was affected at the time of her misconduct. Dr Kirby speculates that the side-effects of chemotherapy, combined with the Respondent's physical recovery from surgery and associated anaesthetic, may have affected the Respondent's cognition. 10. The Respondent consulted Dr Kirby three times in the period 21 December 2015 to 14 July 2016 and Dr Kirby speculated that the reasons for the Respondent's consultations may evince that the Respondent "may not have functioned optimally". 11. The purpose of the Respondent's three consultations with Dr Kirby between September 2015 and July 2016 do not support a finding or inference that the Respondent was experiencing difficulties with cognitive functioning. One visit was to obtain a letter stating her diagnosis to be given to the Respondent's credit card provider. The second concerned a request for Dr Kirby to complete a form for the Respondent's income protection insurance policy. The third consultation concerned a request for a letter of support from Dr Kirby in relation to a Visa extension application by the Respondent's nephew. These consultations were unrelated to the Respondent's cognition and only peripherally related to her medical condition. 12. The Respondent has provided three affidavits (Exhibits 3, 4 and 5) attesting to her good character, two of which are made by legally qualified persons. In circumstances where the misconduct is more serious and especially where it involves repeated dishonesty, character evidence carries far less weight (Law Society of New South Wales v Foreman (No 2) (1994) 34 NSWLR 408 at 448-449). 13. Character evidence from a person who is not legally qualified (such as Ms Ang) should be afforded less weight than one who is legally qualified and suitably experienced. The reason is that only lawyers have the requisite knowledge of legal practice and therefore can properly make an assessment as to the Respondent's professional dealings. 14. Reliability and integrity in the handling of trust funds are fundamental prerequisites in determining whether an individual is a fit and proper person to be entrusted with the responsibilities belonging to a solicitor. The normal consequence of the misuse of entrusted funds by a solicitor and a finding of wilful breaches of the statutory prohibition in that regard is removal of the name of the solicitor from the Roll. Cases where an order for removal has not been made include where the conduct was admitted and brought to the attention of the Law Society by the solicitor or where the solicitor remained employed and adduced evidence of his or her trustworthiness notwithstanding the misappropriation from the partner of the firm at which he or she was employed. There are other examples which are not relevant to this Respondent. 15. The Tribunal had found that the Respondent failed to comply with a request under s 370 of the Uniform Law and provided false and/or misleading documents and information. The provision of such documents to an external examiner demonstrates a lack of candour on the part of the Respondent. 16. Exhibit 6 in which the Respondent records disagreement with some aspects of the Liability Decision is reflective of the lack of insight of the Respondent and forms a basis for the Tribunal to have serious concerns as to the fitness of the Respondent to practice.

Respondent's Submissions

The following summarises the Respondent's submissions: 1. The Respondent submitted that her name should not be removed from the Roll as she is not permanently unfit to practice. Her misconduct was relatively isolated misconduct, concerned a relatively small amount of money (all of which was repaid) and concerned, not a pursuit of personal enrichment at the expense of the client, but a misguided "juggling" of her nascent practice. 2. The Respondent's misconduct occurred at a unique time in her life where a number of factors combined. She misunderstood her trust account obligations and the role of the trust inspector. She was starting practice as a sole practitioner despite never having dealt with trust funds before. She was dealing with serious effects of chemotherapy and the psychological Impact of a diagnosis of bowel cancer. The Respondent is 64 years of age and otherwise had an unblemished career as a government lawyer. She expresses genuine remorse and appreciation of the wrongfulness of her conduct. She has been suspended from practice since 15 December 2016. 3. Seen in context, the Tribunal would be satisfied that the conduct, the subject of the Tribunal's findings, is not reflective of a broader failing in character, would not occur again, and is not indicative of any permanent unfitness to practice. 4. Care must be taken with the Applicant's submission that removal from the Roll is the normal consequence that follows from the misuse of funds or that a consequence, other than removal from the Roll, was the result of unusual or special facts in the cases relied upon by the Applicant. 5. There are numerous cases where on the particular facts a practitioner's name has not been removed from the Roll despite deliberate misappropriation. The Respondent's counsel referred to the following cases: 6. Law Society of New South Wales v McNamara [2007] NSWADT 162 7. Law Society of New South Wales v Doherty (No 2) [2009] NSWADT 296 8. Council of the Law Society of New South Wales v Nasr [2015] NSWCATOD 70 9. Council of the Law Society of New South Wales v Thadsanamorthy [2019] NSWCATOD 96 10. Barry John Penfold [1997] NSWLST 23 11. Law Society of New South Wales v English [2011] NSWADT 39 12. In the present case, the Respondent's name should not be removed from the Roll on the basis that she is not permanently unfit to practice as a solicitor. This is particularly due to the nature and seriousness of the misconduct, her remorse and insight into the misconduct, her disciplinary record and what has occurred in the four and a half year period between the misconduct and the penalty hearing and her good character. 13. There are a number of reasons why the proven misappropriation does not provide a sound basis to infer that the Respondent is permanently unfit to practice. First, she had a misconception about what trust funds were. She considered that the only trust funds she ever received were the funds not earmarked for a particular purpose. She had no prior experience in dealing with trust funds. In the circumstances the misappropriation reflects less seriously on the character of the Respondent. The Tribunal did not find that the Respondent acted in a way that she knew was dishonest according to the standards of reasonable people. The misappropriation may be seen as an isolated lack of judgment as opposed to an ongoing and calculated course of dishonest conduct. The conduct occurred between September and December 2015. This case is more akin to the Penfold and/or Thadsamanorthy cases and is less serious than the McNamara case. 14. At the time of the relevant misappropriations, the Respondent had only just commenced practice as a sole practitioner and had never before used a trust account. At the time the misappropriations occurred, the Respondent had serious health issues. These had a profound effect on her: see her affidavit dated 5 February 2020 (Exhibit 1). In the months before the relevant incidents, the Respondent underwent chemotherapy. Dr Kirby's affidavit (Exhibit 2A) refers to known side-effects of recovery from surgery, anaesthetics and the psychological effects of being diagnosed with bowel cancer. Dr Kirby's evidence was that these matters may have affected the Respondent's cognition, significantly reduced her powers of concentration and executive functioning and may have meant that she may have been considerably slower in learning new information. Dr Kirby saw the Respondent in September 2015 and formed the view that she was only fit to work 50% of her usual hours due to the side-effects of her treatment, one of which was profound fatigue. 15. The Respondent did not use trust funds for her own personal purposes, or with any intention to permanently deprive clients of their funds. The funds were used effectively to juggle the obligations of the Respondent's nascent practice. 16. The failure to keep adequate records which constituted unsatisfactory professional conduct does not justify a conclusion in support of permanent unfitness. The failure to provide records does not justify a conclusion of permanent unfitness. At the time of the trust inspection, the Respondent had extant health issues and did not fully appreciate the powers of the trust inspector. 17. The Respondent has genuine remorse and insight into the misconduct. In her affidavit she has expressed wholehearted acceptance of the Tribunal's findings. 18. In respect of the Respondent's affidavit marked Exhibit 6, the Respondent records her acceptance that her conduct was wrong. The affidavit stated that she accepted a large majority of the findings made by the Tribunal but there remained areas where the Tribunal found against her that she did not agree with. In essence, she acknowledged that her conduct constituted professional misconduct but objected to any finding that she was dishonest. 19. The Respondent put forward submissions concerning her good character. First, she noted that none of the clients in the matters the subject of the proceedings have lodged any complaints. Secondly, the Respondent has tendered references from a number of witnesses. One is from an experienced barrister who has known the Respondent for at least 25 years and deposed that he considered the conduct, the subject of these proceedings, to be out of character. He attested to her remorsefulness and her strong sense of social justice and commitment to her community. Another reference was from an experienced solicitor who has known the Respondent for over 12 years. Her evidence was that she found the Respondent to be competent, ethical, honest and caring.

Applicant's Submissions in Reply

The Applicant's submissions and reply may be summarised as follows: 1. The Applicant relied upon the decision in Dupal v Law Society of New South Wales [1990] NSWCA 56 at [28] where Kirby P stated that the normal consequence of the misuse of entrusted funds by a solicitor and a finding of wilful breaches of the statutory prohibition in that regard is removal of the name of the solicitor from the roll. 2. Contrary to the Respondent's submissions, the Tribunal did in fact find that the Respondent had used funds for her own personal purposes. The submissions cite examples where funds were paid into the Respondent's office or personal account. 3. The fact that the misappropriations may have concerned relatively small amounts does not mean that a severe sanction is not available: see Council of Law Society of New South Wales v Terepo (No 2) [2019] NSWCATOD 60 where the Tribunal recommended the removal of Ms Terapo's name from the roll following a finding that she had misappropriated $850.

Consideration

For reasons which we will explain we are not of the view that the Respondent's proven misconduct is such as to demonstrate that she is permanently unfit to practice. However, we find that the Respondent is presently unfit to hold an unrestricted practising certificate and that the appropriate order is to permit her to continue to practice on a restricted basis. We will explain our reasons and our order in the following paragraphs.
We accept the force of the Respondent's submissions that her misconduct was relatively isolated, concerned relatively small amounts of money (all of which was repaid) and concerned, not the pursuit of personal enrichment at the expense of clients, but a fundamental misconception of her obligations with respect to holding and applying trust funds.
Although the findings of misconduct are extremely serious and are of the kind that might usually result in an order recommending the solicitor's removal from the roll, in this case there are other circumstances that need to be taken into account.
The first is that the solicitor had been in practice for approximately 14 years as a government lawyer before embarking upon the establishment of her own practice. Her record prior to the events which are the subject of these proceedings, does not disclose any blemishes. She had had no prior experience in the operation of a trust account.
In order to better understand the circumstances which the Respondent faced during the period in which the professional misconduct and the unsatisfactory professional conduct occurred it is helpful to set out the following brief chronology of uncontested facts: 1. May 2014 - the Respondent was diagnosed with bowel cancer. 2. June-August 2014 - the Respondent underwent chemotherapy and radiation. 3. September 2014 - the Respondent underwent surgery. 4. January 2015 - the Respondent underwent further surgery. 5. February-July 2015 - the Respondent had further chemotherapy. 6. March 2015 - the Respondent commenced her legal practice. 7. September 2015-December 2015 - the period in which the professional misconduct and unsatisfactory professional conduct occurred. 8. September 2015 - the Respondent saw Dr Kirby who has written that at that time the Respondent was in the doctor's opinion only fit to work 50% of her usual hours and was experiencing profound fatigue. 9. December 2015 - the Respondent saw Dr Kirby who has stated that at that time in the doctor's opinion the Respondent remained fit for only 50% of her usual hours due to the profound fatigue persisting.
The evidence from Dr Kirby is clear that at the time of the misconduct the Respondent had serious health issues. We accept the evidence of Dr Kirby (Exhibit 2A) that the side-effects of chemotherapy, combined with the physical recovery of a surgical procedure and its associated anaesthetic may have affected the Respondent's cognition. Dr Kirby's opinion states that this may have been exacerbated by the psychological impact of receiving the diagnosis of metastatic bowel cancer, resulting in the possibility of significantly reduced powers of concentration and reduced "executive functioning". Dr Kirby opines that the Respondent may have been considerably slower at learning new information. Dr Kirby states that she saw the Respondent on 21 September 2015 and that she formed the opinion that the Respondent was only fit to work 50% of her usual hours and that the side-effects of her treatment included profound fatigue.
The Applicant's counsel pointed out that Dr Kirby's opinion only stated that the Respondent "may" have been affected in the matter outlined. We do not read the opinion as merely stating that Dr Kirby is expressing a mere possibility, but rather in our view, the use of the word "may" is intended to convey the meaning that, in Dr Kirby's opinion, the adverse consequences described in respect of the Respondent were in the doctor's opinion having an effect on the Respondent. We also note that the Respondent saw Dr Kirby in December 2015 and that Dr Kirby expressed the opinion that the Respondent remained fit for only 50% of her usual hours due to the side-effects of her treatment, the "profound fatigue persisting". Our interpretation of Dr Kirby's opinion is confirmed in paragraph (v) of her report where she states that the Respondent was adversely affected by her diagnosis and its treatment. Dr Kirby's report went on to say that she "cannot give an opinion as to whether the physical and emotional aspects of Mrs Davidson's diagnosis and treatment caused her conduct; it would be reasonable to purport that she was not functioning optimally over the relevant period". We do not regard Dr Kirby as engaging in mere speculation that there may have been some causal link between the Respondent's health issues and her misconduct. Rather, we interpret Dr Kirby to be saying that, in her opinion, it would be reasonable to conclude that the Respondent was not functioning as she normally would.
The Respondent's health issues go some of the way to explaining her conduct in managing the trust money she received. The funds were not placed in the trust account and funds for one client were used for the purposes of another client. However, it is relevant that there is no evidence that the Respondent intended to permanently deprive clients of their funds and clients did not lose their funds.
It is also relevant, in our view, that the Respondent has had four and a half years to reflect upon and learn from her conduct because, for the majority of that period, she has been suspended from practice.
We accept that the Respondent now understands that her conduct was wrong and is deeply remorseful. She says as much in her affidavit dated 5 February 2020 (Exhibit 1). This is repeated in her affidavit of 1 May 2020 (Exhibit 6). The Applicant's counsel submitted that Exhibit 6 demonstrated a lack of insight by the Respondent. This is because the affidavit states that the Respondent accepts "a large majority of the findings by the Tribunal" but there are "areas where the Tribunal found against me that I do not agree with". These areas were identified in an attachment to the affidavit. Those areas appear to concern findings that we made to the effect that the Respondent's conduct was objectively dishonest by the standards of ordinary and decent people. However the Respondent's affidavit also states that she understands that her conduct was wrong.
The character references provided on behalf the Respondent are relevant in assisting us to come to the conclusion that we ought not to be satisfied that the Respondent is permanently unfit to practice. The affidavit of Ian Latham (Exhibit 4), a barrister of in excess of 20 years standing, is significant. He has known the Respondent socially for at least 25 years. He attested to the fact that the Respondent is deeply remorseful and he states that he finds it difficult to reconcile the findings of dishonesty with the person that he knows. He describes the Respondent as having a strong sense of social justice and a person who is strongly committed to and involved in her community. The elements of dishonesty were, in his view, entirely out of character. The affidavit of Louise Arminak (Exhibit 4) is also persuasive. She is a solicitor of in excess of 20 years standing and has known the Respondent for over 12 years. At one time she and the Respondent worked for the same employer. She describes the Respondent as being ethical and honest. She attests to the Respondent being deeply remorseful about her conduct. Although the affidavit of Maria Ang (Exhibit 3) is from a non-lawyer (and therefore a person who may not be familiar with the obligations of lawyers, particularly those who have a trust account) she has nevertheless worked in community legal centres and has some knowledge of the requirements of legal practice. She has known the Respondent for more than 25 years and deposes that she has always held the Respondent in the highest regard for her honesty, integrity and fairness.
Having regard to the matters referred to in the above paragraphs (namely, the Respondent's prior good record, her ill health during the relevant period, her fundamental misconception as to what constituted trust monies and her otherwise good character as attested to by the above-named referees) we are of the opinion that we are not able to be satisfied that the Respondent is permanently unfit to practice. Accordingly, we decline to make a recommendation that her name be removed from the roll. Nevertheless, the Respondent's professional misconduct and unsatisfactory professional conduct, the need to protect the public and the need to make a statement of deterrence leads us to the conclusion that whilst the Respondent should not be made the subject of a recommendation for her removal from the roll, nevertheless, she must not be permitted to practice on an unrestricted basis with a trust account. The appropriate order, in the circumstances, is that the Respondent be permitted to practice on a restricted basis, namely as an employee and have no authority to handle trust money.
Subject to costs, which we will deal with below, the order we propose to make is that: 1. The Respondent be issued with a restricted Practising Certificate by which she is permitted only to practice as an employee of a law practice or as a government or corporate lawyer and on the further condition that the Respondent have no authority to operate a trust account.

Costs

With respect to costs the Applicant proposes the following order: 1. The Respondent is to pay the Society's costs as agreed or assessed. The Tribunal notes that the costs order in favour of the Applicant is made on the understanding that the Society will have due regard to the costs incurred by the Respondent of and incidental to the jurisdictional matters arising from the decision of Council of the Law Society of New South Wales v DXW [2019] NSWCATOD 101 for the purpose of agreeing or assessing its costs.
However, the Respondent proposes the following costs order: 1. Save for any offset is provided for in order 2, the Respondent pay the Applicant's costs of the proceedings as agreed or assessed with the exception of the Applicant's costs incurred during the period from 25 June 2019 until 29 November 2019 which costs are to be borne by the Applicant. 2. The Applicant pay the Respondent's costs thrown away as a result of the issue arising from the case of Council of the Law Society of New South Wales v DXW [2019] NSWCATOD 101 incurred during the period 25 June 2019 being the date of the DXW decision to 29 November 2019 (being the date seven days after the date of assent to the Justice Legislation Amendment Act (No 2) 2019) as agreed or assessed and these costs are to be offset against any liability to pay the Applicant's costs in order 1.
At the hearing the parties did not specifically address us on costs with the exception that each proposed orders to the effect described in the above two paragraphs. We made directions for the parties to file written submissions in support of their respective positions. We also requested the submissions to address the question of whether costs could be determined by us "on the papers" and thus dispense with the need for a further hearing on the question of costs. Both parties submitted that it would be appropriate for the Tribunal to decide costs on the papers. We are satisfied that we are able to determine the costs issue without the necessity of the hearing and we propose to make an order to that effect.
The submissions of the Applicant may be summarised as follows: 1. The Tribunal's jurisdiction to award costs is limited by statute - relevantly cl 23 of the Sch 5 to the Civil and Administrative Tribunal Act 2013 (NCAT Act) and s 303 of the Uniform Law. These provisions displace s 60 of the NCAT Act (see Council of the New South Wales Bar Association v Nagle (No 2) [2018] NSWCATOD 154). 2. The Tribunal has found the Respondent guilty of unsatisfactory professional conduct and professional misconduct. Consequently, the Tribunal must make orders requiring the Respondent to pay the Applicant's costs unless the Tribunal is satisfied that exceptional circumstances exist: see cl 23(1) of Sch 5 NCAT Act and s 303(1) Uniform Law. We note that the substance of cl 23 and s 303 are the same and we will only make reference to the provisions of cl 23. 3. Due to the Tribunal's findings of unsatisfactory professional conduct and professional misconduct, the Tribunal does not have jurisdiction to make a costs order in favour of the Respondent. The Tribunal may make orders requiring payment of a Respondent lawyer's costs only if satisfied that the lawyer did not engage in unsatisfactory professional conduct or professional misconduct and the Tribunal considers that special circumstances warrant the making of the orders: cl 23(3). 4. Even if the Tribunal was satisfied that such exceptional circumstances existed for the purpose of cl 23(1), it would only operate to deprive the Applicant of its costs but could not result in a cost order in favour of the Respondent. 5. No power has been conferred on the Tribunal to permit the cost of one party to be offset against the costs of another party. 6. The Applicant has conceded in open inter partes correspondence and in its submissions that some allowance will need to be made for any costs properly expended by the Respondent as a result of the additional requirements arising from the Tribunal's decision in DXW.
The Respondent's submissions on costs may be summarised as follows: 1. The Tribunal has power to order costs either under s 60 of the NCAT Act or by reason of the Justice Legislation Amendment Act (No 2) 2019 (NSW) (the Amending Act). Alternatively, the Tribunal has power to award costs necessarily implied from the Tribunal's specific grant of power. 2. The Applicant has already conceded that the Respondent is entitled to an award of costs in submissions dated 10 October 2019. 3. The Amending Act must be considered in light of the established principle that legislation should only be construed to operate retrospectively to the extent that it is so expressed in clear words, given that Parliament does not ordinarily implement retrospective legislation and particularly does not ordinarily intend to do so to the extent that it would take away an existing right or obligation. It is clear that Parliament did not intend by the Amending Act to retrospectively remove the power of the Tribunal to award to a party the costs thrown away as result of the DXW case, not least in circumstances where the Applicant had considered such costs should be paid. 4. Cl 1.16(8)(b) of the Amending Act makes the position clear. While the Amending Act provides that the 2015 delegation to the Applicant is taken to be validly made retrospectively and that accordingly acts taken in the course of the proceedings are validated prospectively, cl 1.16(8)(b) provides that: "(8) to avoid doubt - … (b) any decision as to costs made in respect of terminated proceedings is not affected by this clause regardless of whether proceedings are recommenced." 1. The clause quoted above evidences the Parliament's view that the powers to award costs in any such proceedings was maintained. The clause evidences the assumption that the Tribunal would have the power to make an order for costs and that the Amending Act did not ever affect such a power. The acceptance that the Tribunal has the power to award costs in a terminated proceeding must necessarily accept that the Tribunal has the power to award costs in relation to a proceeding that is not terminated because it is the very same power. The Parliament would have used clear words to the extent that it sought to remove a person's accrued right to a costs order in their favour in proceedings. The result is that the Tribunal has the power to order the Applicant to pay the Respondent's costs thrown away as a result of the Applicant's conduct. 2. Even if the Tribunal does not have the power to order costs the Applicant is either estopped or precluded from taking any objection to such an order being made in the circumstances. The Applicant represented that it had jurisdiction to commence proceedings, and did not indicate to the Respondent during the period from June 2019 to 28 October 2019 that any further steps in the proceedings should be put on hold while Parliament considered implementing an Amending Act to correct the DXW issue and thereby represented or implied during that period that there was no such retrospective legislation being contemplated. In reliance, the Respondent incurred significant costs and it would be unconscientious or unjust to permit the Applicant to depart from the representations conveyed by it.

Consideration with Respect to Costs

We are of the view that for the reasons submitted by the Applicant we are unable to make an order that the Applicant pay the Respondent's costs thrown away as a consequence of the matters arising from the DXW decision. Our reasons follow.
We are in agreement with the Nagle decision that s 60 of the NCAT Act is displaced by the provisions of cl 23 Sch 5 of the NCAT Act. Specifically, we agree with Nagle to the effect that cl 23 (and s 303) provided a distinct and discrete code concerning costs orders in proceedings before the Tribunal where the Uniform Law applies.
The consequence of the passing of the Amending Act was to validate, including retrospectively, the delegation of functions to the Applicant (see cl 23(1) and (2)). Further, cl 23(4) validated proceedings that had been commenced by an authorised delegate, such as the Applicant. Clause 23(4) also validated any order of the Tribunal made during the relevant period.
It is our view that the consequence of the terms of the Amending Act is that the proceedings commenced by the Applicant against the Respondent are validated. That, in turn, in our view, has the consequence that the provisions of cl 23 of the NCAT Act (and s 303 of the Uniform Law) set out the framework for the Tribunal's power to award costs.
The Respondent has relied in her submissions upon the terms of cl 23(8). The Respondent referred to that clause as cl 16(8) which was its designation under the Amending Act before insertion into the Uniform Law. Cl 23(8) provides that any decision as to costs made in respect of terminated proceedings is not affected by this clause, regardless of whether proceedings are recommenced. In our view that provision had the limited effect of leaving in place costs orders already made. In other words, the intention of that subclause was to state that the Amending Act did not render invalid or otherwise affect decisions as to costs already made. The clause is not relevant to these proceedings as these proceedings do not involve a costs order made prior to the passing of the Amending Act. Nor do we agree with the Respondent's submission that this subclause evinces an intention by Parliament to not remove a person's accrued right to costs. We have a contrary view. In our view, cl 23(8)(b) evinces an intention by Parliament to remove accrued rights to costs other than an accrued right which exists by reason of an existing cost order made prior to the Amending Act. Accordingly, we are bound by cl 23 (and s 303). In our view, the effect of cl 23 in the circumstances of this matter is as follows: 1. Because of the finding of unsatisfactory professional conduct and professional misconduct we must make orders requiring the Respondent to pay costs (cl 23(1)) unless we satisfied that exceptional circumstances exist. 2. The specific power given in cl 23(3) permitting the Tribunal to make orders requiring payment of a Respondent's costs is not relevant because it only applies if the lawyer has not been found to have engaged in unsatisfactory professional conduct or professional misconduct.
Accordingly, we are of the opinion that the orders proposed by the Respondent are orders for which we have no jurisdiction to make. Conversely, we are of the opinion that the orders proposed by the Applicant are within jurisdiction and are appropriate in the circumstances.

Conclusion

The orders of the Tribunal are as follows: 1. The Respondent is to be issued with a restricted practising certificate by which she is permitted only to practice as an employee of a law practice or as a government or corporate lawyer and on the further condition that the Respondent has no authority to operate a trust account. 2. In respect of costs, the Tribunal determines that a hearing on costs is dispensed with and costs are to be determined on the papers. 3. The Respondent is to pay the Applicant's costs as agreed or assessed. 4. The Tribunal notes that the costs order in favour of the Applicant is made on the understanding that the Applicant will have due regard to the costs incurred by the Respondent of and incidental to the jurisdictional matters arising from the decision of Council of the Law Society of New South Wales v DXW [2019] NSWCATOD 101 for the purpose of agreeing or assessing its costs.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar

Amendments 22 July 2020 - Order 1 amendment to text DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 July 2020

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