Council of the Law Society of New South Wales v Kekatos

NCAT Occupational|2021-11-10

Introduction

On 2 July 2021 our reasons for decision in Council of the Law Society of New South Wales v Kekatos [2021] NSWCATOD 90 were published (the Liability Decision). We found Mr Kekatos guilty of unsatisfactory professional conduct. The proceedings were stood over for further hearing on the penalty to be imposed as a consequence of our finding.
The penalty proceedings were heard on 10 November 2021. Before the hearing date we had received written submissions from the parties. Counsel for the parties made further oral submissions at the hearing.
These reasons should be read in conjunction with the Liability Decision. The evidence in the Liability Decision is also to be treated as evidence in these proceedings.

The Liability Decision

The Law Society alleged that Mr Kekatos had intentionally misled New South Wales Land and Property Information (LPI) in seeking the removal of caveats AH 153770 and AH 153818. It said that this conduct constituted professional misconduct. When it commenced the proceedings the Law Society had recommended the removal of Mr Kekatos' name from the Roll, but in an amended Application, sought orders that Mr Kekatos be reprimanded, that he pay a substantial fine and that he pay costs. In his Reply Mr Kekatos had admitted that his representations to the LPI were inaccurate and potentially misleading, but not deliberately so. He accepted that a finding by the Tribunal of unsatisfactory professional misconduct was appropriate.

The Law Society's submissions on penalty

The Law Society accepted that it was no longer appropriate that Mr Kekatos pay a substantial, or any fine as he had not been found guilty of professional misconduct. However it remained appropriate that he receive a reprimand. The Law Society drew the Tribunal's attention to paragraph [70] in the Liability Decision where the Tribunal had found that Mr Kekatos had acted in an incredibly sloppy manner and that this conduct fell short of the standard of competence and diligence expected from a reasonably competent lawyer. It submitted that a reprimand would promote public confidence in the integrity of the legal profession by: 1. publicly demarcating the Tribunal's disapproval of Mr Kekatos' conduct; and 2. deterring Mr Kekatos and other solicitors from engaging in similar conduct in the future.
The Law Society said that it remained appropriate that Mr Kekatos pay the Law Society's costs. It relied on section 303(1) of the Legal Profession Uniform Law (NSW) (Uniform Law). That section provides relevantly that where the Tribunal has found a respondent lawyer to have engaged in unsatisfactory professional conduct (or professional misconduct), the Tribunal must make orders requiring the lawyer to pay the Law Society's costs unless exceptional circumstances exist. It submitted that there were no exceptional circumstances to warrant the Tribunal making any order other than an order requiring Mr Kekatos to pay the Law Society's costs.
The Law Society submitted that a finding by the Tribunal of unsatisfactory professional conduct in circumstances where it had sought a finding of professional misconduct, did not constitute exceptional circumstances. The Tribunal was referred to a number of decisions where cost orders had been made in similar circumstances. These were Council of the Law Society of New South Wales v Diaz [2021] NSWCATOD 9, Council of the Law Society of New South Wales v Soszyn [2019] NSWCATOD 73 and Council of the Law Society of New South Wales v Thornton [2020] NSWCATOD 103
Clause 23(1) in Schedule 5 of the Civil and Administrative Tribunal Act 2013 (NSW) (CAT Act) also deals with the Tribunal's powers to make costs orders against respondent lawyers when adverse conduct findings have been made. The Law Society said that there are no material differences between that clause and section 303(1) of the Uniform Law and that the Tribunal was entitled to make a costs order under either clause 23(1) or section 303(1) or under both provisions.

Mr Kekatos' submissions on penalty

Mr Kekatos confirmed his acceptance of a reprimand. In relation to costs, he submitted through his counsel that the issue should be determined under the Uniform Law and not under the CAT Act. He said that it was unlikely that the provisions apply concurrently because they are not in terms "congruent" and because the Uniform Law came into operation after schedule 5 to the CAT Act, clause 23 should be construed as applying only to disciplinary proceedings not commenced under the Uniform Law.
He also submitted through his counsel that there were exceptional circumstances which justified the Tribunal not making a cost order in favour of the Law Society. He said that the Law Society should not have commenced these proceedings in the Tribunal as there was no evidence supporting a finding of professional misconduct on the basis that Mr Kekatos had intended to mislead the LPI, and that this was confirmed by our findings in the Liability Decision. Counsel said that burdening Mr Kekatos with a costs order after a "wholly unsuccessful'' application was so patently unfair as to amount to exceptional circumstances.
He said that the material exhibited to the affidavit of Mr Lean, the Law Society's Director, Legal Regulation confirmed that there was no relevant evidence. Mr Kekatos, in his correspondence with the Law Society had admitted that he had made a mistake and had conceded that his communication with the LPI was potentially, but not deliberately, misleading. There was no evidence to the contrary.
Also during the course of its investigation, his counsel said that the Law Society had declined to provide particulars of the "issues" of professional misconduct said to be involved in the complaint and had not identified any factual basis for rejecting Mr Kekatos' explanation that he had made an innocent mistake.
In those circumstances, counsel submitted that the Law Society should have dealt with the matter under section 299 of the Uniform Law as the complaint was capable only of supporting a finding of unsatisfactory professional conduct. That section provides, relevantly, that the Law Society may find that a solicitor has engaged in unsatisfactory professional conduct and reprimand that solicitor without instituting disciplinary proceedings in this Tribunal. When the Law Society takes action against a solicitor under section 299 of the Uniform Law it is not empowered to make a costs order against that solicitor.
Lastly, in relation to the costs of 10 November 2021 when the parties made their oral submissions, counsel submitted that the Law Society should pay Mr Kekatos' costs. He said that if the Law Society had not sought its costs, the hearing on 10 November would not have been necessary.
In support of these submissions Mr Kekatos' counsel referred us to Xu v Counsel of the Law Society of NSW [2009] NSWCA 430 which we had already referred to in the Liability Decision. In that decision the Administrative Decisions Tribunal had found the solicitor guilty of professional misconduct on three grounds. The Court of Appeal dismissed one complaint, and in relation to the other two found the solicitor guilty of unsatisfactory professional conduct rather than professional misconduct. Handley JA said that the dismissed charge carried a prima facie entitlement for the costs of that charge in favour of the solicitor. The Law Society retained its prima facie entitlement to costs in relation to the other two charges notwithstanding the lesser finding on unsatisfactory conduct only. In those circumstances the court set off each cost entitlement and made no order as to costs. We were also referred to Council of the Law Society of New South Wales v Webb (No 2) [2012] NSWADT 233, where the Tribunal had considered what constituted exceptional circumstances. The decisions in both Xu and Webb involved a consideration of the costs provision in section 566 of the Legal Profession Act 2004 (NSW) (LPA) then in force.

The Law Society's submissions in reply

The Law Society noted that although Mr Kekatos had accepted error on his part during the course of the investigation, he had not expressly accepted that this constituted unsatisfactory professional conduct. This concession was only made in his Reply filed in these proceedings on 2 December 2020. Likewise Mr Kekatos had not accepted that it was appropriate that he receive a reprimand until after these disciplinary proceedings had been commenced.
In relation to the Law Society's investigation, we were referred to the resolution of its Professional Conduct Committee (PCC) on 19 May 2019 in the exhibit to Mr Lean's affidavit. This resolution closed the PCC's investigation into two of the complaints (including the complaint formulated by the original complainant Mr Dimitriou), and in relation to the other, that is, the charge of misleading the LPI, it resolved that Mr Kekatos be informed that: subject to any submissions (from Mr Kekatos), it should resolve to initiate and prosecute proceedings as it is the Committee's opinion that the alleged conduct may amount to Professional Misconduct. In the Law Society's submission, as at 19 May 2019, the PCC had not yet concluded that Mr Kekatos' conduct amounted to professional misconduct nor had it decided to commence proceedings in the Tribunal. It invited Mr Kekatos to make further submissions as to why his conduct did not amount to professional misconduct, which the PCC was required to consider at a further meeting. Mr Kekatos did not make any further submissions to the PCC and on 20 February 2020 the PCC considered the matter again and resolved to institute proceedings in the Tribunal.
The Law Society's counsel also referred the Tribunal to NSW Legal Services Commissioner v Zou [2021] NSWCATOD 139 published after the Law Society had filed its written submissions in these proceedings. The conduct of the respondent solicitor in those proceedings was found to constitute unsatisfactory professional conduct but not professional misconduct as alleged. Before the institution of proceedings the Solicitor had accepted that a finding of unsatisfactory professional conduct was appropriate. She submitted that she should not be required to pay costs as the matter could have been dealt with by the Legal Services Commissioner under section 299 of the Uniform Law and that this constituted exceptional circumstances. The Tribunal did not accept that argument. It did not regard those circumstances to be exceptional or even unusual. There was a real question to be tried having regard to the conflicting position of the parties and the public interest.

Reprimand

We agree that it is appropriate that Mr Kekatos should receive a reprimand. As the Law Society submitted, the issuing of a public reprimand not only demonstrates our disapprobation of Mr Kekatos' conduct, but it is also intended to deter him and other members of the profession from acting in a similar manner. Solicitors, in their dealings with third parties, especially when those parties are public entities such as the LPI, must be very careful to ensure that they do not inadvertently make misleading representations. As we had found in the Liability Decision, Mr Kekatos in his communication with the LPI on 19 January 2016, failed to meet the standard of competence or diligence expected of a reasonably competent solicitor.

The applicable costs regime

In relation to whether we should apply the cost provisions in the Uniform Law or in the CAT Act (or both), the argument put forward by Mr Kekatos' counsel that we should proceed only under the Uniform Law has merit. However as we did not receive detailed submissions from either party on the issue we do not consider that we should express a decided view in these reasons. The costs order that we make below will be made under the provisions in the Uniform Law, but it also could have been made under the relevant provisions in the CAT Act.

Are there exceptional circumstances?

Section 300 of the Uniform Law sets out the matters that the Law Society must consider when initiating disciplinary proceedings in the Tribunal. The Section provides that: 1. The designated local regulatory authority may initiate and prosecute proceedings against a respondent lawyer in the designated tribunal if the designated local regulatory authority is of the opinion that - 1. the alleged conduct may amount to unsatisfactory professional conduct that would more appropriately be dealt with by the designated tribunal; or 2. the alleged conduct may amount to professional misconduct. 1. As soon as practicable after deciding to initiate proceedings under this section, the designated local authority must give the complainant and the respondent to the complaint written notice of the decision.
The Law Society conducted its investigation into the complaint against Mr Kekatos between June 2016 and February 2020. It received written responses from him on 9 August 2016, 6 August 2018 and 5 September 2018 in which he said that he had not intended to mislead and that "an error" had occurred in the drafting of his caveat removal request to the LPI. On 19 May 2019 the PCC formed a preliminary view, subject further submissions from him, that his conduct may have amounted to professional misconduct. We accept the Law Society's submission that at that date it had not formed a final view that Mr Kekatos' conduct amounted to professional misconduct. It only reached that position on 20 February 2020 when the PCC resolved to commence these proceedings. We need to consider the evidence available to the Law Society in February 2020 to determine whether the Law Society was entitled to form the opinion that Mr Kekatos' conduct may have amounted to professional misconduct.
The PCC's resolution of 20 February 2020 alleged that Mr Kekatos had misled the LPI by representing that the orders made by Justice Darke on 7 August 2015 referred to the two caveats that Mr Kekatos wished to have removed, when in fact the orders referred to other caveats. There were detailed Reasons for Decision annexed to that resolution. Paragraph 42 of those Reasons for Decision states: Despite the Solicitor's submissions that the statement was not intended to mislead the LPI, it seems unlikely that the Solicitor made an innocent mistake or was confused when he completed the Second Request (the First Request was the telephone conversation between Mr Kekatos and an officer of the LPI in June 2015 to which we referred at paragraph [20] in the Liability Decision). There are a number of reasons for this: (a) First, the words he used about the orders made, and the caveats to which the related, were specific and clear. (b) Second, the Solicitor had called the LPI that same day and discussed the fact the 7 August Orders applied to Other Caveats with a legal officer. (c) Third, the Solicitor had within the last year represented his client in two matters about removing the Other Caveats. He either would, or should have known only those caveats with regard to the Other Property had been ordered to be removed. (d) Fourth, the Solicitor's contention that the Caveats could have been removed by a further application to the Court without opposition does not excuse the Solicitor from the obligation to either make that application or correctly describe the orders as attached to the Second Request.
Paragraphs 48-50 of the Reasons for Decision then sets out that: 48 The Committee is therefore satisfied that the alleged conduct may amount to professional misconduct as opposed to unsatisfactory professional conduct. 49 The Committee has considered the section 299 of the Legal Profession Uniform Law and the solicitor's responses to the complaint including that no exculpatory material was provided in response to the Tribunal letters in relation to the above alleged conduct and the orders to be sought. 50 The Committee has concluded, in relation to the above alleged conduct, that it is not satisfied that the taking of action under section 299 of the Legal Profession Uniform Law is justified having regard to all the circumstances of the case (including the seriousness of the alleged conduct concerned and the exculpatory material).
In our view the material in these Reasons for Decision, and in particular the matters contained in paragraph 42 which we have set out above, supports the conclusion that there was evidence on which the PCC was able to form an opinion that Mr Kekatos' conduct may have amounted to professional misconduct. Also under the Uniform Law the Law Society is no longer required to show that it has considered whether the complaint could be dealt with under section 299 before resolving to commence Tribunal proceedings. This contrasts with the position under sections 537(2) and 540 in the LPA - see Council of the Law Society of New South Wales v Levitt [2018] NSWCA 247. Nevertheless the PCC did consider this alternative, but rejected it for the reasons set out in paragraphs 48-50 of its Reasons for Decision.
We are also of the view that the Law Society was not obliged to provide Mr Kekatos with what his counsel submitted were particulars of the issues of misconduct arising from the terms of the PCC's preliminary resolution of 19 May 2019 and that this gave rise to any issue of procedural unfairness. The background to this submission was that the reasons supporting the PCC's resolution of 19 May 2019, (but not the resolution itself), made reference to "the element of dishonesty" arising in the complaint. Mr Kekatos declined to make further submissions responding to the complaint until particulars were provided on this issue. The Law Society did not provide further particulars, Mr Kekatos then sought a review of the Law Society's 19 May 2019 resolution from the NSW Legal Services Commissioner. On 20 August 2019, the Commissioner declined to conduct a review. In his letter to Mr Kekatos dated 20 August 2019, the Commissioner said: "I do not consider that there is a requirement for me or the Society to provide a respondent lawyer with a preliminary view that…a finding of professional misconduct may be made and action taken pursuant to section 300 LUPL. Or if such a preliminary view is expressed, then I do not consider there is a requirement for detailed reasons to be included". At the least from the receipt of the Commissioner's letter dated 20 August 2019, Mr Kekatos could have taken up the Law Society's invitation to make further submissions but he did not do so.
Further we do not consider the fact that this Tribunal ultimately determined that Mr Kekatos' conduct amounted only to unsatisfactory professional conduct, impugns the Law Society's decision to commence these proceedings alleging professional misconduct. We were not comfortably satisfied that there was persuasive evidence that Mr Kekatos had intentionally misled the LPI or that he had acted recklessly. However we did not accept all of Mr Kekatos' submissions - see paragraph [58] in the Liability Decision. Our finding does not mean that the Law Society should have formed the opinion before resolving to commence these proceedings that there was no prospect that the Tribunal might find that Mr Kekatos' conduct amounted to professional misconduct.
Lastly, under section 300(1)(a) of the Uniform Law, the Law Society is entitled to commence proceedings in the Tribunal where it has formed the opinion that the relevant conduct may amount to unsatisfactory professional conduct only, but that the matter would more appropriately be dealt with by the Tribunal. Even if the Law Society had formed the view that the conduct amounted to unsatisfactory professional conduct only, it may nevertheless have commenced these proceedings. As far as we ascertain this subsection has not been the subject of consideration in other Tribunal decisions. Relevant factors that, in our opinion may make it more appropriate to commence proceedings in these circumstances include that Tribunal disciplinary proceedings are open to the public (clause 22 in Schedule 5 of the CAT Act), and that the rules of evidence apply (clause 20 in Schedule 5). In relation to the latter point, as we noted in the Liability Decision, we found Mr Kekatos' affidavit evidence including his responses when cross examined, to be helpful when reaching our conclusion that he had not intended to mislead the LPI.
The decision in Xu referred by Mr Kekatos' counsel, did not assist us. In Xu one of the grounds for the application was dismissed entirely. That is not the case in these proceedings. Mr Kekatos does not have a prima facie entitlement to a cost order in his favour which might give rise to a set off, as was the case in Xu. Further the Court of Appeal found that the "downgrading" of the other grounds from findings of professional misconduct to unsatisfactory professional conduct, did not disentitle the Law Society to its costs in relation to those grounds. The decision in Xu appears consistent with the other authorities to which were referred by counsel for the Law Society where costs orders had been made in favour of the Law Society or the Legal Services Commissioner after a finding of unsatisfactory conduct, but not professional misconduct had been made.
We were also referred by Mr Kekatos' counsel to the decision in Webb. The Tribunal there held that there were exceptional circumstances which warranted the solicitor paying only 50% of the Law Society's costs. Those circumstances were that the Society had failed to establish the majority of its grounds of complaint, the solicitor's very small income, his lack of assets of significant value and his age which meant he had no significant prospect of obtaining gainful employment. None of these features are present in the current proceedings.
The recent decision in Zou comes closest to the circumstances of the current proceedings. Whilst that decision and the others to which we were referred, to a large extent turn on their own facts, the common element between the submissions in Zou and Mr Kekatos' submissions is that the relevant authority could have dealt with the complaints under section 299 of the Uniform Law and should not have commenced proceedings in the Tribunal. That proposition was rejected in Zou even though the solicitor there had accepted that a finding of unsatisfactory conduct was warranted before the Tribunal proceedings had been commenced. As we have noted above, in his communications with the Law Society during the course of its investigation, Mr Kekatos had not expressly made this concession.
Having reviewed all this material, we have come to the view that the Law Society conducted its investigation and came to its decision to refer Mr Kekatos to the Tribunal in an entirely orthodox manner and consistent with its obligations under the Uniform Law. We do not accept the proposition that there was no evidence available to it at the time of referral upon which it could have formed the opinion that Mr Kekatos' conduct may have amounted to professional misconduct. It follows that Mr Kekatos has not demonstrated that there are any exceptional circumstances which would disentitle the Law Society to a costs order in its favour.

Is Mr Kekatos entitled to his costs of 10 November 2021?

Having come to this conclusion, the argument that Mr Kekatos is entitled to have his costs of 10 November 2021 paid by the Law Society does not need to be considered further. However even if we had found that there were exceptional circumstances, we could not have ordered the Law Society to pay any part of Mr Kekatos' costs. Section 303(2) of the Uniform Law provides relevantly that this Tribunal may make orders requiring the Law Society to pay the costs of a respondent lawyer but may do so: "only if satisfied the lawyer concerned is not guilty of unsatisfactory professional conduct or professional misconduct and the designated tribunal considers that special circumstances warrant the making of the orders". Clause 23 (3) in Schedule 5 to the CAT Act is in similar terms. Our finding in the Liability Decision that Mr Kekatos' conduct amounted to unsatisfactory professional conduct precludes this outcome.

Orders

We make the following orders: 1. The Respondent is reprimanded; 2. The Respondent is to pay the Applicant's costs as agreed or assessed

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 13 December 2021 - Typographical error. "Representation" the name "Madigan" changed to "Maddigan" 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: 13 December 2021

Legal Profession Act 2004(NSW)

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Judgment (12 paragraphs)

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