Council of the Law Society of New South Wales v Levitt

NCAT Occupational|2017-07-05|Before: Wilson J

Introduction

These reasons deal with an oral application made on behalf of Stewart Alan Levitt ("the solicitor") on 5 July 2017 for costs of disciplinary proceedings commenced by the Council of the Law Society of New South Wales ("the Council") in the Tribunal on 24 November 2016.
The costs application was opposed by the Council on 5 July 2017. I granted the Council leave to file written submissions in opposition to the costs order sought. Submissions were received by the Tribunal on 1 August 2017.
Although the Council's submissions canvass the basis on which the proceedings should be dismissed, I note that an order was made on 5 July 2017 dismissing the proceedings for want of jurisdiction in the Tribunal.
The parties submitted that the statutory basis for the cost order sought is s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) ("the CAT Act").
The solicitor submits that, as a result of the orders made by Wilson J in the Supreme Court of NSW, there are "special" circumstances that enliven the power of the Tribunal to make a costs order. Her Honour found the decision of the Council to commence the disciplinary proceedings should be quashed, and restrained it from taking further steps in the proceedings based on its resolutions recorded in letters dated 2 and 3 June 2017.
For the reasons that follow, I have determined that the Council should pay the solicitor's costs of the proceedings as agreed, or failing agreement, as assessed under the provisions of the Legal Profession Uniform Law Application Act 2014 (NSW).

The application for Judicial Review

To understand the context of this costs application, it is appropriate that I refer briefly to Wilson J's decision in the judicial review proceedings. Her Honour dealt with the two complaints before the Council (the complaint by a member of the NSW Bar, Marcus Jacobs QC, and a complaint by a Queensland barrister, Mr Garlick). Her Honour found, in each instance, the Council, in determining it was reasonably likely the Tribunal would find the solicitor had engaged in unsatisfactory professional conduct or professional misconduct under s 537, had failed to first consider under s 537(2) of the Legal Profession Act 2004 (NSW) (repealed) ("the LP Act"). Her Honour determined that s 537(2) required consideration of whether s 540 of LP Act should apply. If s 540 applied, then the Council could deal with the matter summarily without referring the matter to the Tribunal.
Her Honour further found that the Council had failed to give adequate, or any reasons for why s 540 did not apply, and that it failed to explain "whether and why, on those facts, there was a reasonable likelihood that the plaintiff would be found by the Tribunal to have engaged in professional misconduct".
As a result of her findings, Wilson J made orders quashing the decisions of the Council made on 2 and 3 June 2016, and restrained the Council from taking any further step in the proceedings based on those resolutions.
As there was no valid resolution of the Council to institute proceedings in the Tribunal, on 5 July 2017, I made an order dismissing the disciplinary proceedings for want of jurisdiction and reserved my decision in respect of costs of the proceedings under s 60 of the CAT Act pending receipt of submissions from the Council.

Costs - relevant legislation and principles

As noted above, both parties addressed the question of costs on the basis that the relevant provision is s 60 of the CAT Act.
Section 60 provides as follows: (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be awarded by the Tribunal, the Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (5) In this section:"costs" includes: (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
The authorities on costs under s 60(2) are summarised in Gaynor v Burns [2015] NSWCATAP 150 [16] - [19] as follows: The words "special circumstances" appear in a number of legislative provisions, and have been subject of discussion and comment in respect of the relevant legislation under consideration in each case (see Cabal v United Mexican States [2000] FCA 7) and in this Tribunal (see CPD Holdings Pty Ltd t/a The Bathroom Exchange v Baguley [2015] NSWCATAP 21; Megerditchain v Kurmond Homes Pty Ltd [2014] NSWCATAP 120). The Macquarie Dictionary defines "special" as follows: (1) Of a distinct or particular character. … (6) Distinguished or different from what is ordinary or usual: special circumstances. The drafting of s 60(1) evinces the intent of the legislature that generally each party to proceedings in the Tribunal shall be responsible for their own costs. Departure from s 60 (1) may occur but only if the Tribunal finds, there are "special circumstances" warranting it to do so. In determining whether there are special circumstances the Tribunal may, in a structured exercise of discretion, have regard to the criteria in s 60 (3) (a) - (g). In Cripps v G & M Dawson [2006] NSWCA 81 Santow JA considered the words "special circumstances" as they appeared in s 88 (1) of the Administrative Decisions Tribunal Act 1997 (NSW) (repealed). That provision enabled the Tribunal to award costs in relating to proceedings before it only if it was satisfied there were "special circumstances warranting an award of costs". Santow JA set out the Tribunal's statement of relevant principle at [18] - [19] of its reasons and concluded that the Tribunal had erred in its application of those principles in failing to find "special circumstances" explaining at [60] 60 It is not necessary to determine whether in the circumstances the appellant committed equitable fraud. In my view it suffices that the conduct of Cripps and Jones, in relying upon their status as the registered proprietors of the freehold and the doctrine of indefeasibility of title to wrongly deny registration and consequently assignment of the lease, so acted as by their conduct to give rise to special circumstances; that is, circumstances that were clearly out of the ordinary and grossly unreasonable so far as the respondent tenant was concerned. On the one hand, the Tribunal correctly concluded that the respondent, through no fault of its own, has been placed in the situation where it has been forced to pursue this litigation. Yet it still failed to find special circumstances. With respect, I consider that the Tribunal was in error in failing to conclude that special circumstances here applied. For this purpose, it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional. While a finding of "serious unfairness" is not prerequisite to determining that there are special circumstances, it is nonetheless a highly relevant consideration. [our emphasis]
As noted in Gaynor above, s 60(2) requires the Tribunal to exercise a structured exercise of discretion. It is not in doubt when exercising a power to award costs, a discretionary power, the Tribunal must act judicially (see Oshlack v Richmond River City Council (1998) 193 CLR 72; [1998] HCA 11).
It is also not in doubt that the section requires not only a finding of special circumstances, but that those circumstances warrant the making of an order for costs.

The solicitor's submissions

The solicitor's submissions note that the decision of the Supreme Court found the statutory basis for commencing proceedings in the Tribunal was not enlivened.
The submissions further note that in Exhibit "B" the Council was invited to consent to the dismissal of the proceedings, but refused to do so. The submissions go on to submit that "the reality is that the applicant acted beyond power in commencing these proceedings, and there never has been a statutory basis for their commencement. That problem cannot be remedied retrospectively or by a later resolution". The submissions explain, that even if the assertion that the proceedings cannot be subject of an amendment is incorrect, "these proceedings should not be allowed to remain on foot indefinitely pending valid resolutions which may or may not be made".
In support of his application for costs, the solicitor's submissions note because there was never a tenable basis for the Council's application, the solicitor has incurred costs he never should have incurred. The submissions go on to note that the Council's action in bringing the proceedings led to the solicitor having to approach the Supreme Court for relief, that the Council was on notice of those proceedings from 15 June 2016 (see Exhibit "C") and "could have taken immediate steps to end these proceedings at any point in time from then. It chose not do so, leaving the respondent to incur costs for a further twelve months".

The Council's submissions

The submissions filed on behalf of the Council argue that "notwithstanding the orders made by the Supreme Court effectively depriving the Tribunal of jurisdiction … this does not constitute 'special circumstances' ". It is further asserted that "[s]successful challenges brought by respondents to the jurisdiction of the Tribunal to hear a case brought before it are not altogether uncommon".
The submissions go on to note that the Supreme Court proceedings succeeded "based on a view taken by the Court on a point of statutory construction". On this basis it is asserted that when the proceedings were commenced in the Tribunal it cannot be said they were "misconceived" or untenable" or "lacking in substance". This submission is made on the basis that "[t]he substantive (conduct) issues have not been tested".
The submissions at [12] assert: To persuade the Tribunal that a costs order in his favour is warranted because the proceedings were untenable or lacking in substance, the respondent would at least need to address the Tribunal as to the deficiencies in the Law Society's arguments that it made in the Supreme Court. He has not done so. The Law Society advanced an arguable case before the Supreme Court in defence of its resolutions, including the question of the correct interpretation of s 537(2) of the Legal Profession Act 2004. The fact that the Supreme Court judge preferred the respondent's argument does not warrant a finding that the commencement of the proceedings in the Tribunal was misconceived or that the proceedings were always bound to fail.
The submissions go on to challenge the solicitor's submission that it was necessary for him to go to the Supreme Court for judicial review, and say that he could have challenged the Tribunal's jurisdiction as "part of his defence in these proceedings".
The submissions take issue with the solicitor's submissions that the Council could, by its action, have bought the proceedings to an end prior to the Supreme Court determination of the judicial review application. It is noted that the Supreme Court has made a costs order in the solicitor's favour.

Discussion and conclusions

I first turn to consider whether this matter give rise to special circumstances which require consideration of a departure from the usual rule that each party pays that party's costs of the proceedings.
I am satisfied that the most relevant provisions of s 60(2) in determining whether there are special circumstances are s 60(2)(e) and (g). Although Ms Groenewegen in her email to the solicitors proposed that the proceedings should remain in abeyance while the Council reconsidered the defects in its determination which led to the proceedings in the Tribunal, that position was not advanced before me on 5 July 2017. In any event, I did not find on 5 July 2017 that the proposal in the email was one with merit.
I accept the solicitor's submission that, even if the Council re-considers the complainant's evidence, including a consideration of whether s 540 should apply, affords the solicitor a proper opportunity to respond to its consideration, and gives adequate reasons for its decision, it cannot cure the defect in the proceedings which were before the Tribunal. Those proceedings were commenced without a lawful basis to do so. That fact enlivens both s 60(2)(e) and (g). In my view, it is a defect which cannot be retrospectively cured. If a proper resolution is made by the Council under s 537 of the LP Act at some time in the future, that resolution, if lawfully made, can ground fresh proceedings.
Even if I am wrong about the proceedings commenced on 24 November 2016 being able to be cured by an amendment, I am satisfied that it would be contrary to s 36 of the CAT Act to permit the proceedings to be stood over (or as Ms Groenewegen put it remain "in abeyance") for an indefinite period, particularly in circumstances where a new determination of the Council may be to proceed under s 540, of the LPA rather than by way of application to the Tribunal.
Secondly, I reject the submission that it was necessary for the solicitor to advance "the deficiencies in the Law Society's arguments that it made in the Supreme Court" for a costs order to be made. It appears to me that argument seeks to cavil with Wilson J's decision. The deficiencies in the Council's decision are cogently explained in her Honour's reasons. The solicitor's action in seeking judicial review was successful, and led to the dismissal of the application.
I am satisfied the fact that the proceedings in the Tribunal were brought without jurisdiction to do so for the two principal reasons enunciated by Wilson J constitutes a special circumstance. The Council's submissions focus on the statutory construction point to negate a submission the proceedings were misconceived. They do not address the fact her Honour found the Council did not provide adequate reasons for its determination under s 537. I am further satisfied that the fact the solicitor was put to the expense of appearances in the Tribunal and preparing and lodging a detailed Reply to an application brought to the Tribunal which was without jurisdiction warrants the making of a costs order. The binging of an unlawful application is not, as asserted in the Council's submissions, a "not uncommon" circumstance in the Legal Services List.
In determining whether to make the costs order sought I have also taken into account that if the Council had adopted the proposed consent orders submitted to it on 3 July 2017 (Exhibit "B") the costs incurred on 5 July 2017 would be been avoided.

orders 1. The Council of the Law Society of New South Wales shall pay the costs of Stewart Alan Levitt of and incidental to these proceedings as agreed and failing agreement as assessed under the Legal Profession Uniform Law Application Act 2014 (NSW).

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 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: 18 August 2017

Legal Profession Act 2004(NSW)

Administrative Decisions Tribunal Act 1997(NSW)

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