Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 48, 82

Legal Profession Act 2006 ss 6, 433, 434

Legislation Act 2001 Dictionary

Cases cited: Appellants v Council of the Law Society of the ACT & Anor [2011] ACTSC 133

Council of the Law Society of the ACT v Legal Practitioner 201904 (Shamim Alam) [2020] ACAT 3

Council of the Law Society of the ACT v Legal Practitioner 201920 [2020] ACAT 31

Council of the Law Society of the ACT v LP 201714 [2018] ACAT 101

Council of the Law Society of the Australian Capital Territory v Davey [2019] ACTSCFC 2

Council of the Law Society of the Australian Capital Territory v LP 201920 [2021] ACAT 16

Council of the Law Society of NSW v Hinde [2011] NSWADT 20

Council of the Law Society of NSW v Webb (No 2) [2012] NSWADT 212

Council of the Law Society v Ginges [2016] NSWCATOD 7

Council of the NSW Bar Association v Miller (No 2) [2012] NSWADT 129

Department of Community Services v SM and MM [2008] NSWDC 68

Energy Resources of Australia Ltd v Commissioner of Taxation [2003] FCA 26

Hunter Development Brokerage Pty Ltd v Cessnock City Council (No.12) [2006] NSWCA 292

Legal Practitioner 'S' (Steven Gavanga) v Council of the Law Society of the ACT [2018] ACAT 12

Legal Profession Complaints Committee v Bower [2019] WASC 281

Legal Services Commissioner v Reeve (No 2) [2016] QCAT 486

Plaintiff M174/2016 v The Minister for Immigration and Border Protection [2018] HCA 16

R v Kelly (Edward) [1999] UKHL 4; [2000] 1 QB 198

Xu v Council of the Law Society of NSW [2009] NSWCA 430

List of

Texts/Papers cited: Lexis Nexis Halsbury's Laws of Australia (online)

Medlow, Sharon, Norm Kelk and Ian Hickie 'Depression and the Law: Experiences of Australian Barristers and Solicitors'[2011] SydLawRw 31; , (2011) 33(4) Sydney Law Review 771

COUNCIL OF THE LAW SOCIETY OF THE AUSTRALIAN CAPITAL TERRITORY

1. There be no order as to the parties' costs of the appeal.

1. On 6 May 2020, a Senior Member of the ACT Civil and Administrative Tribunal (Original Tribunal) delivered his decision (Original decision) in relation to disciplinary proceedings by the Council of the Law Society of the ACT (Council) against an ACT legal practitioner (practitioner).[1] The Original Tribunal decided, in essence, that the practitioner had engaged in professional misconduct and that he be publicly reprimanded, that he pay most of the Council's legal costs, and that a local practising certificate not be granted to the practitioner before 30 June 2025 unless certain specified conditions were satisfied.[2] Detailed orders were made giving effect that decision.

2. The Council appealed against the Original decision. The Council sought orders to the effect that the Appeal Tribunal recommend that the name of the practitioner be removed from the roll of legal practitioners and the practitioner pay the Council's costs of the appeal.

3. On 11 March 2021, the Tribunal as presently constituted (Appeal Tribunal) dismissed the appeal (Appeal decision) and invited the parties to make submissions in writing as to whether any other orders, including orders as to costs, should be made.[3] The Council sought an order that the practitioner pay its costs of the appeal, or alternatively that there be no order as to costs. The practitioner sought an order that the Council pay his costs of the appeal, or that there be no order as to costs. The practitioner also sought a review of the costs order in the Original Tribunal, under which he was to pay the Council's legal costs at the rate of 90% of solicitor-client costs and disbursements in full.

4. The Council and the practitioner each made detailed written submissions about what orders the Appeal Tribunal could and should make in relation to costs of the appeal. In brief summary, the Council argued that section 434 of the Legal Profession Act 2006 (LP Act) applies; that the section requires that the Council receive its costs of the appeal unless there were exceptional circumstances (section 433(1)); and that there were no exceptional circumstances. In the alternative, each party should bear its own costs. The Council argued that section 433(3) provides that the Council could only be ordered to pay costs if the practitioner was not guilty of misconduct and special circumstances justify this. Therefore, no such order can be made in this case.

5. The practitioner argued that, because of the conduct of the appeal by the Council, none of its grounds of appeal were upheld, that the LP Act is silent on the issue of costs in an appeal, costs should follow the event, and he should have an order for costs against the Council. If not, there should be no order for costs because there were exceptional circumstances under section 433(1). As noted, he also argued that the order of the Original Tribunal in relation to costs should be reviewed because of the exceptional circumstances.

6. Section 48 of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) provides that generally parties bear their own costs in proceedings before the Tribunal. But section 434 of the LP Act provides that section 48 of the ACAT Act does not apply in relation to proceedings under the LP Act. Section 434 applies to appeal proceedings in LP Act matters, though this is an awkward fit since the preconditions in the relevant subsections 433(1) and (3) apply in original proceedings, not in appeal proceedings.

7. On this basis, section 433(1) of the LP Act applies to the appeal proceedings. It provides that, if the ACAT finds an Australian legal practitioner guilty of professional misconduct, the ACAT must order the practitioner to pay costs of the Council unless the ACAT is satisfied that exceptional circumstances exist. The Original Tribunal found that the practitioner was guilty of misconduct and there was no appeal from this decision.

8. However, the Appeal Tribunal is satisfied that there are three exceptional circumstances which support no order for costs in the appeal. First, the further financial hardship that the practitioner would suffer from a costs order. Second, the likely further adverse effect on the practitioner's mental health. Third, the fact that the Council sought a costs order even though it had been wholly unsuccessful in the appeal.

9. The Appeal Tribunal cannot order that the Council pay the practitioner's costs because the practitioner was guilty of professional misconduct and because of the operation of section 433(3). The Appeal Tribunal does not think there is a basis for disturbing the costs order in the Original Tribunal.

10. The Appeal Tribunal therefore orders that there be no order as to the parties' costs of the appeal.

11. The Council's submissions had eight main components. First, section 48 of the ACAT Act does not apply to appeals such as this. Under that section, the general rule is that parties to an application bear their own costs unless the ACAT Act or another Territory law otherwise provides. Section 434 of the LP Act provides that section 48 of the ACAT Act does not apply to proceedings under the LP Act. The Council submitted that, by reason of section 434, section 48 of the ACAT Act does not apply.[4]

12. Second, section 433(1) of the LP Act deals with costs orders by the Tribunal where the Tribunal finds a legal practitioner guilty of professional misconduct. It mandates that an order for costs follows a finding of professional misconduct unless the Tribunal is satisfied that exceptional circumstances exist. The usual principle that costs will follow the cause does not apply in the disciplinary jurisdiction.

13. Third, although there are no express legislative provisions dealing with the question of costs arising from an appeal in cases such as this, the Council submitted that there is a sufficiently clear statutory basis for empowering the Appeal Tribunal to consider the question of costs. In doing so, the Appeal Tribunal must have regard to section 433 of the LP Act.[5]

14. Fourth, despite having been unsuccessful on appeal, the Council sought an order for costs on the basis that, in summary:

(a) The practitioner's conduct was of the most serious nature and both the Original Tribunal and the Appeal Tribunal made several references to the gravity of his misleading and untruthful conduct.

(b) The scheme of the ACAT Act allows for an appeal as of right and the Council, on the very reasonable basis that it considered that the Original decision was infected by both leniency (hence not providing sufficient public protection in the particular circumstances of this case) and material error, exercised that appeal right.

(c) The length and degree of analysis undertaken by the Appeal Tribunal reflected the innate merit in the grounds contended for by the Council.

(d) In circumstances where the Council discharges its statutory obligations for the protection of the public, and in this discretionary arena where views may differ, the Council considered it appropriate to appeal so as to obtain the benefit of further members of the Tribunal considering the very important question concerning the practitioner's fitness to practise. Accordingly, it appealed as of right and for a justifiable reason.

(e) Issues arose in the Original decision and the Appeal decision about what was generally described as the LP 12 matter, an earlier disciplinary matter concerning the practitioner, [6] and in particular comments by the ACT Court of Appeal concerning a judicial review application in those proceedings.[7] Despite the "commentary by the Appeal Tribunal" regarding these issues,[8] the Appeal Tribunal should accord significant weight to the comments from the Court of Appeal.

(f) Regardless of whether the Council may have contributed to the delay in the LP 12 matter, the practitioner and those advising him engaged in non-cooperative strategies and interlocutory proceedings without merit of the type identified by the Court of Appeal. That behaviour or attitude to the investigatory and prosecutorial undertakings by the Council were evident, although to a lesser extent, in this case.

(g) There was proper justification for arguing in the appeal whether the practitioner's mental health supported the sanction imposed by the Original Tribunal or whether, combined with other evidence, it required a sanction of removal from the roll.

15. Fifth, the Council submitted that there are no 'exceptional circumstances' in this case that would preclude an order under section 433(1) that the practitioner pay costs of the Council. In particular the Council submitted:

(a) The test is directed to the circumstances of bringing the proceedings and the conduct of the proceedings.[9]

(b) A decision about whether there are 'exceptional circumstances' involves the application of facts to a legal criterion, not the exercise of a discretion.[10]

(c) 'Exceptional circumstances' are circumstances that are "out of the ordinary, or unusual, or special, or uncommon".[11]

(d) The cases in which the existence of 'exceptional circumstances' has been considered have concluded that 'exceptional circumstances' may arise only in cases of old age, impecuniosity or inability to procure employment,[12] and that not even bankruptcy alone will constitute exceptional circumstances for this purpose,[13] thereby reflecting that the primary reason is the practitioner's permanent inability to pay.

(e) In relation to hardship which might be caused by a costs order (which is a relevant consideration), it is not uncommon that by the time a costs order is imposed at the conclusion of disciplinary proceedings the practitioner is already in a weakened financial state as a result of the complaint and consequent investigation of proceedings.[14]

(f) There is no evidence in this case that a costs order against the practitioner would be likely to result in exceptional financial hardship. In Council of the Law Society v Ginges,[15] the local tribunal ordered that the practitioner pay full costs as he had presented no evidence of his financial circumstances to justify exceptional circumstances.

(g) In another case, the Appeal Tribunal held that the case was exceptional because the toll on the practitioner was exceptional and out of all proportion to the practitioner's misdeeds.[16] However, that decision is distinguishable on the facts because the ultimate finding by the Appeal Tribunal in that case was one of unsatisfactory professional conduct only, whereas the Original Tribunal had found the practitioner guilty of professional misconduct, and no order was made by the Appeal Tribunal as to the costs of the appeal.

16. Sixth, the Council submitted that section 433(2) and (3) of the LP Act do not apply because there was an adverse finding against the practitioner which was made by the Original Tribunal and was not disturbed by the Appeal Tribunal. Therefore, the power to determine costs must be limited to section 433(1) of the LP Act and the Appeal Tribunal has no power to consider "special circumstances" referred to in section 433(3). To do so would require the Appeal Tribunal to artificially proceed by analogy and equate no material error having been identified (on the appeal) with no adverse finding (hypothetically) having been made by the Original Tribunal thereby enlivening a consideration of section 433(3).

17. Seventh, the Council submitted that, even if they could be considered, no 'special circumstances' exist here such as to favour the practitioner. Rather, those special circumstances which do exist strongly favour an order for costs to the Council having regard to section 433(1) of the LP Act and the absence of any exceptional circumstances of the type identified in the cases to which the Council referred.

18. Eighth, in the alternative, the Council submitted that if the Appeal Tribunal is against it on its submission that an order for costs in its favour be made, the Appeal Tribunal should order that each party bears their own costs.

19. The practitioner's submissions had six main components. First, although the penalty imposed by the Original Tribunal was "on the harsh side", the Council lodged an appeal. In seeking a harsher penalty in these proceedings by reference to, or as a result of, the way in which the separate LP 12 proceedings were run, the Council acted "vindictively" with the aim of "punishing" him by seeking the ultimate penalty of removal from the roll of practitioners.[17] That approach goes beyond the function of the Council to administer justice and protect the consumers of the services of the legal profession and the public generally.[18]

20. Second, none of the Council's grounds of appeal was upheld by this Appeal Tribunal and hence the appeal failed in its entirety.[19]

21. Third, the LP Act is silent on the issue of costs of an appeal within the Tribunal in disciplinary matters. Had the legislature intended that section 433 of the LP Act apply to such appeal proceedings, it would have included a subsection stating that. It did not. The Supreme Court of the ACT has not given detailed consideration to the issue of appeal costs. However, in Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society the ACT[20] (S's case), a differently constituted appeal Tribunal stated, in essence, that:

(a) although the continued application of section 433 in relation to costs would be important for an appeal conducted as a new application under section 82 of the ACAT Act, in other ways the application of section 433 to appeal costs seemed to be an "awkward fit"[21] as the preconditions in subsections (1), (2) and (3) necessarily occur in original proceedings rather than appeal proceedings;[22] and

(b) although it is arguable that "proceeding" in section 434 applies to the initial application and hearing and to the appeal process, it is also clear that they are two different processes, and the Appeal Tribunal was not persuaded that the appeal proceedings were necessarily to be considered to be the same proceedings as those instituted under the LP Act.[23]

22. The practitioner submitted that if the appeal might be considered to be proceedings "pursuant to" or "by virtue of" the ACAT Act which provides for the initiation of an appeal, as well as "in pursuance of" or "for the purposes" of the LP Act,[24] there is no reason why section 48 of the ACAT Act cannot be applied.

23. Fourth, he submitted, because the Council failed to obtain an order for the removal of his name from the roll of practitioners in the proceedings before the Original Tribunal and on appeal before the Appeal Tribunal, it should be required to meet the costs of the successful party. The Council should not be able to do what it did with impunity as to the costs consequences. The notion that costs follow the event is a cornerstone of legal proceedings. Therefore, this Appeal Tribunal ought to exercise discretion to award costs against the Council for the appeal.

24. Fifth, in the alternative, the practitioner submitted that, if he is wrong on the interpretation of the legislation, the Appeal Tribunal should make no orders as to costs of the appeal. In particular he submitted that, in the event that section 433 of the LP Act does apply to an appeal and section 48 of the ACAT Act does not apply by reason of section 434 of the LP Act, there must be 'exceptional circumstances' before there can be any order other than that the Council should have its costs on the appeal.

25. The practitioner submitted that what constitutes 'exceptional circumstances' turned upon the facts in each case.[25] "To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered".[26]

26. In his submission, 'exceptional circumstances' exist in this case because:

(a) the Council failed in its attempt before the Original Tribunal to have his name removed from the roll of legal practitioners and sought to "have another go" on appeal;

(b) none of the five grounds of appeal was successful;

(c) in deciding to appeal the Original Decision, the Council was motivated to punish the practitioner on account of the way LP 12 was conducted and the Appeal Tribunal found the Council's submissions to be "inappropriate and unfair";[27]

(d) the practitioner was suffering from untreated clinical depression at the time of his offending by reason of the circumstances surrounding the LP 12 proceedings, which were a stressor on him which got worse as the LP 12 matter progressed, and all the acts of professional misconduct occurred near events in the LP 12 proceedings. If there was any poor decision-making by the practitioner in relation to the LP 12 proceedings, his mental health may well have played a role in that;[28]

(e) there was a significant delay in the LP 12 proceedings and the Council contributed to that delay. In any case, no matter whose fault it might have been, the delay in LP 12, which hung over the practitioner for six years and the associated stress and consequential losses suffered by him had been "extraordinary";

(f) the practitioner had never sought to excuse his conduct on the basis of mental illness but the facts are admitted by him after the mediation and, as a matter of compromise and in a gesture to show good faith, he voluntarily withdrew his application to renew his practising certificate at the time. The Council could have proceeded to negotiate appropriate sanctions had it not been for the "now demonstrated motivation to punish" the practitioner "by seeking harsher penalty" on account of LP 12. A lot of costs were incurred which could have been saved;

(g) the practitioner has suffered significant financial hardship as a consequence of paying for representation by counsel at the mediation and the initial hearing before the Original Tribunal and then to appear at and defend the appeal. The practitioner has incurred significant costs which he did not have previously and is paying them off;

(h) the practitioner could not find work for almost three months after he lost his job and had to accept whatever employment he could find to ease his "financial difficulties." In addition, despite the financial difficulty he was in, in August 2020 he had to pay the Council's "very significant" costs in LP 12 in the sum of $355,000. He is now in "total financial ruin" and whatever income he derives from his current employment is "barely enough to support my family and meet my mortgage repayments"; and

(i) the episode associated with LP 12 and the present proceedings have also come at other reputational and emotional costs which have "virtually destroyed" him. He contended that, despite his best efforts to tackle his depression and regain his mental health, "I will never be employable again in the legal industry".

27. In his submission, although the Council must do its duty irrespective of the personal toll it might have on a practitioner, the toll in this case has been exceptional and out of all proportion to the practitioner's offending considering the circumstances. The matters listed above, in combination with each other, add up to exceptional circumstances. Consequently, a fair outcome would be to make no order as to costs of the appeal.

28. Sixth, having concluded his written submissions in relation to costs on the appeal, the practitioner focused on the order for costs in the Original proceedings, which order was agreed upon by the parties at the time of the hearing. The practitioner submitted that, if appeals are considered part of the disciplinary proceedings under the LP Act and the appeal cost forms part of the costs of the disciplinary proceedings, it seemed open to him to query the basis on which the costs order had been made, particularly given the observations made by the Appeal Tribunal at paragraphs [254] and [255] of the reasons for the Appeal decision. His focus was on the statements of the Appeal Tribunal that criticised the Council's suggestions that the practitioner be harshly punished in these proceedings because of the approach he took to the LP 12 proceedings.

29. As we understand his submission, the practitioner is contending that he would not have agreed to pay 90% of the Council's costs on an indemnity basis in the proceedings before the Original Tribunal had he known what he knows now. He reiterated that the Council was unsuccessful before the Original Tribunal in securing his removal from the roll. Rather, the Original Tribunal ordered a lesser (but nonetheless significant) penalty.

30. The practitioner submitted that the agreed portion of the payment of legal costs on an indemnity basis should be reviewed by the Appeal Tribunal in light of the exceptional circumstances of his case. In particular he referred to:

(a) his affidavit dated 17 February 2020 in which the relevant circumstances were set out in detail;

(b) the fact that this matter has been hanging over his head for four years;

(c) the finding by the Appeal Tribunal that he was suffering from a mental health issue which explained the "misdeeds" on his part, and that his mental health issue was partly contributed to by the Council in the delay in LP 12; and

(d) the fact that the hardship matters referenced here were not mentioned to the Original Tribunal due to the agreement reached (but, he submitted, should be considered by the Appeal Tribunal).

31. The three issues to be resolved by the Appeal Tribunal in this case concerning costs are:

(a) whether the Appeal Tribunal has power to make an order for costs in relation to the appeal;

(b) if the Appeal Tribunal has power to make an order for costs, whether such an order should be made; and

(c) whether the Appeal Tribunal can and should review and make orders in relation to the costs order made by the Original Tribunal.

434 Application of ACT Civil and Administrative Tribunal Act

The following provisions of the ACT Civil and Administrative Tribunal Act 2008 do not apply in relation to a proceeding under this Act:

(a) section 8 (Rules of evidence);

(b) section 48 (Costs of proceedings);

(c) division 6.2 (Powers and decisions in applications for occupational discipline).

33. It is clear from section 434(b) that section 48 of the ACAT Act does not apply in relation to a proceeding under the LP Act. Accordingly, if the appeal in this case was 'a proceeding under' the LP Act, the Appeal Tribunal should not proceed on the basis that the parties generally bear their own costs under section 48 except as set out there.

34. It is not obvious from section 434 whether the appeal was 'a proceeding under' the LP Act or the ACAT Act.

35. In S's case, a differently constituted appeal Tribunal carefully considered this costs issue in relation to an appeal in which it had set aside a finding of professional misconduct and replaced it with a finding of unsatisfactory professional conduct.[29] Having reviewed the few decisions in relation to this issue, that appeal Tribunal concluded that:

(a) the term 'ACAT' as appearing in section 433 of the LP Act described the appeal Tribunal as well as the Tribunal appealed from;[30]

(b) although it is arguable that the word 'proceeding' applies to both the initial application and hearing, and the appeal process, it is clear that they are two different processes and that the appeal proceeding is not necessarily to be considered to be the same proceeding as instituted under the LP Act;[31]

(c) having regard to the expansive and inclusive definition given to the word 'under' by the Dictionary to the Legislation Act 2001 and the cases,[32] the appeal proceeding can be considered a proceeding 'under' both the ACAT Act and the LP Act;[33]

(d) consequently, section 48 of the ACAT Act does not apply by reason of section 434 of the LP Act and section 433 of the LP Act applies to an appeal such as the one in that case when determining the costs of the appeal;

(e) for there to be any order other than that the Council should have its costs on the appeal, there must be 'exceptional circumstances';[34] and

(f) there is no power to award costs to the practitioner where the appeal Tribunal is satisfied that the practitioner is guilty of professional misconduct.[35]

36. As the appeal Tribunal in S's case observed correctly, whatever consistency and coherence might be given by interpreting 'a proceeding under this Act' to include appeal proceedings in the ACAT, the application of section 433 to appeal costs could be seen as an awkward fit because the preconditions in subsections (1), (2) and (3) necessarily occur in original proceedings rather than appeal proceedings.[36] That issue having been explored in some detail in at least two recent decisions of the ACAT, it might be appropriate for the legislature to consider whether section 434 of the LP Act should be amended to make clear the intended scope of its operation.

37. In the meantime, and for the purpose of deciding whether to make a costs order in this case, we are content to follow the statutory interpretation adopted by the appeal Tribunal in S's case.

38. It follows that if section 48 of the ACAT Act does not apply, any power to make an order for costs in relation to the appeal must be found in section 433 of the LP Act.

(1) If the ACAT finds an Australian legal practitioner guilty of unsatisfactory professional conduct or professional misconduct, the ACAT must order the practitioner to pay costs (including costs of the relevant council and the complainant), unless the ACAT is satisfied that exceptional circumstances exist.

_(2) Even if the ACAT does not find an Australian legal practitioner guilty of unsatisfactory professional conduct or professional misconduct, the ACAT may order the practitioner to pay costs (including costs of the relevant council and the complainant), if satisfied that - _

(a) the only or main reason why the proceeding was started in the ACAT was a failure of the practitioner to cooperate with a council; or

(b) there is some other reason justifying the making of an order in the particular circumstances.

(3) The ACAT may make orders requiring the relevant council for an Australian legal practitioner to pay costs, but may do so only if satisfied that the practitioner is not guilty of unsatisfactory professional conduct or professional misconduct and the ACAT considers that special circumstances justify the making of the orders.

(4) The ACAT may make orders requiring an Australian legal practitioner in relation to whom a proceeding is pending before the ACAT to pay costs on a interlocutory or interim basis.

Note Alternatively, the ACAT might order that costs be payable from a particular fund (eg a statutory interest account) in these circumstances.

(a) may be for a stated amount; or

(b) may be for an unstated amount but must state the basis on which the amount is to be decided.

(6) An order for costs may state the terms on which costs must be paid.

40. The Original Tribunal found that the practitioner had engaged in professional misconduct. That finding was not challenged or set aside on appeal. Consequently, section 433(2) and (3) cannot apply in this case. As the appeal proceeding is not pending, section 433(4) does not apply.

41. This leaves section 433(1) as the relevant provision. It is useful to say a few things about this provision before applying it in this case. First, where there is the power to award costs, the usual principle is that costs 'follow the event', that is, the unsuccessful litigant is ordered to pay the costs of the successful litigant. It has been said that the 'costs follow the event' principle is "based upon questions of perceived fairness as between litigants." In such a regime, to deny costs to a successful party is to deny justice. (The principal alternative is a 'no costs' regime which is likely to reflect a policy of encouraging the use of particular tribunals or courts for dispute resolution, see for example section 48 of the ACAT Act).[37]

42. There are some circumstances where the successful party may not receive some, or all of their costs. But where there is a costs regime, the court or tribunal will go even further and order a successful litigant to pay some or all of the unsuccessful litigant's costs only in an exceptional case. Examples of exceptional cases include where the conduct of the successful party brought about, or caused the continuance of, the proceedings, or raised issues or made allegations unreasonably.[38]

43. Section 433 sits within these general principles, and needs to be interpreted in light of them.[39] Section 433(1) seeks to adjust them to some extent, by strengthening the obligation of the practitioner to pay costs where they are found guilty of professional misconduct (section 433(1)). Section 433(2) is a more fundamental change to the general principles, which significantly weakens the right of the practitioner to receive costs where they have been found not guilty, though this is still linked to the principles discussed in paragraph [42]. The policy of the provisions has been said to be that the profession or the public generally should not have to bear costs of proceedings correctly brought for the protection of the public, and that the Council should not be deterred from carrying out its onerous task by fear of a costs burden.[40]

44. Although the section is structured as a mandatory requirement, it is subject to 'exceptional circumstances'. That term is not defined. It therefore takes its ordinary meaning of "forming an exception or unusual instance; unusual; extraordinary". 'Extraordinary' in turn means "beyond what is ordinary; out of the regular or established order."[41] It is a term often used in law. In Plaintiff M174/2016 v The Minister for Immigration and Border Protection Gageler, Keane and Nettle JJ observed:

Quite what will amount to exceptional circumstances is inherently incapable of exhaustive statement. The word "exceptional", in such a context, is not a term of art but "an ordinary, familiar English adjective": "[t]o be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered".[42]

This in effect confirmed earlier decisions, including in relation to section 433 and similar provisions.[43] Whether there are exceptional circumstances depends on the facts of the case, and all the relevant circumstances surrounding it.[44] It is not correct, therefore, that the categories and examples of exceptional circumstances have been closed by previous decisions and their particular facts.[45]

45. Section 433(1) states that ACAT must make the order unless there are exceptional circumstances, but in practice it will not do so unless costs are requested by the Council. The Council can make its own assessment of whether there are exceptional circumstances.

Should an order for costs of the appeal be made?

46. Therefore, if the Appeal Tribunal is to make an order for costs in relation to the appeal, it can only do so in accordance with section 433(1) of the LP Act. As already noted, the Original Tribunal found the practitioner guilty of professional misconduct. There was no appeal against that finding. Accordingly, the Appeal Tribunal "must" order the practitioner to pay the Council's costs unless we are satisfied that "exceptional circumstances exist."

47. Earlier in these reasons for decision we summarised the submissions of each party in relation to whether "exceptional circumstances exist". There is no need to repeat those passages.

48. In our view there are three factors which give rise to such extraordinary circumstances in this case.

49. First, despite the submission by the Council that there was no evidence that a costs order would be likely to result in exceptional financial hardship for the practitioner, we are satisfied that the material before the Original Tribunal and the Appeal Tribunal (as summarised in the practitioner's submissions) demonstrates that the practitioner has suffered and continues to suffer significant financial hardship and difficulty in finding employment sufficient to pay his debts and support his family, and that he has few, if any, prospects of resuming a successful legal practice.

50. As the Original Tribunal observed, in relation to the LP 12 matter, the practitioner was out of pocket more than half a million dollars over a dispute about less than $5,000.[46] The Original Tribunal also noted that the practitioner would be ordered to pay the costs in this matter and "that will add to this problem. His means of paying relies on his capacity to earn income".[47]

51. We acknowledge that much of the financial hardship being experienced by the practitioner is a consequence of the LP12 proceedings rather than this case. However, as the reasons of the Appeal Tribunal illustrate, the somewhat unusual context in which this case arose provides links at key dates or periods between the LP 12 proceedings and the professional misconduct of the practitioner. Those unusual linkages do not of themselves provide the "exceptional circumstances" necessary to dislodge the usual operation of section 433(1). But they should not be disregarded.

52. The orders made in the present case by the Original Tribunal, and upheld by the Appeal Tribunal, significantly limit the income earning capacity of the practitioner in relation to the profession in which he has practised for many years. The impact of that limitation on him is compounded by the size of the amount which he owes to the Council in relation to the present proceedings (about which we make some observations later in these reasons for decision) as well the amount he owes the Council as a result of orders made in those other proceedings.

53. We accept that the law sets the bar quite high but we are satisfied that a costs order on this appeal would result in (or compound) exceptional financial hardship for the practitioner.

54. Second, the practitioner has mental health issues. The practitioner did not argue that his mental health prevented a finding of professional misconduct. Indeed he agreed he was guilty of professional misconduct. However, the Original Tribunal found that his mental illness explained his actions, though it did not excuse them.[48] The Original Tribunal noted that Professor Stevens made a diagnosis that the practitioner had a "major depressive disorder with moderate to severe symptoms (single episode)," and Professor Stevens stated in oral evidence that when he saw the practitioner he was "very stressed ... [he] gave him a diagnosis of depression ... speaking figuratively - 9 out of 10 on a stress scale."[49] Significant stressors noted by Professor Stevens, the practitioner and his colleague were litigation, including adverse costs orders. The practitioner himself gave evidence that the LP 12 proceedings, which included costs orders, devastated him and his family. The evidence was that his condition could be treated and Professor Stevens stated that the problems which the practitioner had with dealing with stress "will need to be addressed in a hopefully medical and psychological way rather than punitive legal actions". He recommended treatment options, and these were generally adopted in the orders of the Original Tribunal.[50]

55. In our view, this evidence supports a finding that a costs order in relation to the appeal could have an adverse effect on the practitioner's mental health. In our view, the practitioner's mental health issues, the fact that these can be treated, but that litigation and costs orders can be a stressor for them, contribute to the exceptional circumstances in this case. These factors are not regular, or routine, or normally encountered. They are not unique, or unprecedented, or very rare, indeed instances of depression are disproportionately high in lawyers.[51] But this is not necessary to amount to an exceptional circumstance. In our view, the Council, and this Tribunal, have an obligation not to further adversely affect the practitioner's mental health without good reason. As a costs order against the practitioner in the appeal will do nothing to protect the public, we cannot see there is a good reason for it (see paragraph [65] below).

56. Third, as noted, the Council was wholly unsuccessful in its appeal. Notwithstanding this, the Council has asked for the practitioner to pay all its costs of the appeal. In our view this is also an exceptional circumstance, particularly in light of the general principles in relation to costs set out above. Where there is a costs regime, generally costs follow the event. On that basis, the Council would pay the practitioner's costs. The making of an order in favour of a wholly unsuccessful party is only done in an exceptional case, such as where the successful party brought about, or caused the continuance of, the proceedings, or raised issues or made allegations unreasonably (see paragraph [42] above). This is not the case here. As noted, these principles are based on general concepts of fairness and justice in litigation. Section 433 adjusts the usual costs regime to some extent. But this does not support removing all the usual concepts of fairness and justice in relation to this issue. In our view, the fact that the appellant Council still asks for a costs order where the practitioner was wholly successful in rebutting the appeal is an exceptional circumstance. It is not regular, or routine, or normally encountered.

57. In our view, the result of an appeal can be taken into account in deciding whether there are exceptional circumstances. The result of the appeal was taken into account by the appeal Tribunal in S's case.[52] Indeed, in that case the Council sought only 50% of its costs in the appeal given the practitioner's success, though no order was made reflecting the existence of exceptional circumstances. There are other cases supporting a conclusion that the result can be an exceptional circumstance, including from the Court of Appeal in NSW.[53] It is an approach taken in other similar legal regimes.[54]

58. For these reasons we think that it is a further exceptional circumstance that the Council was wholly unsuccessful in its appeal, and notwithstanding this it has asked for the respondent to pay its costs of the appeal.

Arguments that no exceptional circumstances exist

59. In its submissions the Council set out a number of bases as to why it sought an order for costs and should obtain such an order in the appeal, in effect arguing there were no exceptional circumstances for the purposes of section 433(1) (summarised at paragraph [14] above).

60. First, it said that the relevant conduct of the practitioner was serious.[55] That is correct, and this warranted the bringing of the proceedings. We are not satisfied it warrants a costs order where there are exceptional circumstances, in this case a wholly unsuccessful appeal by the Council in circumstances where is the practitioner experiences financial hardship and mental health issues.

61. Second, it said that the Council had a right to appeal.[56] That is also true, but that also does not warrant a costs order in a wholly unsuccessful appeal and where there are other exceptional circumstances.

62. Third, it said that although the appeal failed, the length and degree of analysis undertaken by the Appeal Tribunal reflected the "innate merit in the grounds".[57] The Council raised five broad grounds of appeal, and 23 specific grounds, which the Appeal Tribunal was obliged to consider. That accounted for the length and degree of analysis in the Appeal decision. The Council also argued that the fact that the appeal was unsuccessful does not reflect adversely on the merit of the grounds pleaded. We do not understand this submission. We have no doubt that the Council thought that the grounds had innate merit. But we did not agree. We do not think that the fact that an appellant thinks that their grounds of appeal have innate merit is a basis for awarding costs in their favour where the appellant is in fact wholly unsuccessful.

63. As discussed in the Appeal decision, the Appeal Tribunal did not think it appropriate or fair to increase the penalty of the practitioner on the basis that in earlier, unrelated, proceedings (the LP 12 proceedings[58]) he and his legal team had been criticised by a court for their conduct of part of those proceedings.[59]

64. Fourth, as to costs of the appeal, the Council appears to argue that those comments in part of the LP 12 proceedings should now be taken into account in deciding whether to award costs in favour of the Council in the appeal in which it was wholly unsuccessful.[60] We again think that this would be inappropriate and unfair for similar reasons.

65. Fifth, the Council states that the inappropriate "behaviour or attitude [of the practitioner] to the investigatory and prosecutory undertakings by the Council, although to a lesser extent [than in the LP 12 proceedings], were evident in this case".[61] The Council made no reference to any evidence in support of its apparent position that the practitioner behaved inappropriately, nor any legal or ethical basis for this. For that reason alone it cannot be accepted. But further, the Original decision provides no basis for such a claim. Further again in the Original proceedings the practitioner agreed, and was ordered, to pay the Council's legal costs at the rate of 90% of solicitor-client costs and disbursements in full. If there was any such conduct in those proceedings, he has already paid for it. We note that this is a concession the practitioner now regrets, as discussed below, in light no doubt of the Council's subsequent conduct. In this Appeal, we think there is no basis for a finding that the practitioner acted inappropriately.

66. Sixth, the Council says that it was discharging its statutory obligations for the protection of the public in bringing the appeal. We can see that it thought this was the case. But the awarding of costs in favour of the Council when it has been wholly unsuccessful in the appeal will do nothing to protect the public. It will simply add to the destruction of the practitioner for no good reason.

67. Seventh, the Council suggested that not only were there no exceptional circumstances to support a denial of a costs order in its favour under section 433(1) (first proposition), but rather the special circumstances strongly favour a costs order in its favour (second proposition).[62] We do not think the first proposition is correct, for the reasons given above. We do not think there is any basis for the second proposition. In this regard we note that if the general law applied and costs usually followed the event, the Council would likely be ordered to pay the costs of the practitioner in the appeal. We think it very unlikely that under the general law the Council would obtain an order that the practitioner pay its costs in the appeal.

68. Having considered the approach taken in the ACT and other jurisdictions by the Tribunal and other courts and tribunals, we are satisfied that the requirements of 'exceptional circumstances' exist in this case. On that basis the Appeal Tribunal will make no order as to the costs of the appeal proceedings.

Should orders be made about the costs of the original proceeding?

69. As noted earlier, the practitioner has invited the Appeal Tribunal to review (and, presumably, vary or set aside) the order for costs as agreed by the parties in relation to the proceedings before the Original Tribunal. In summary, he submitted that the costs order should be reviewed by the Appeal Tribunal in light of the exceptional circumstances of his case.

70. The matter was not raised in submissions on the appeal to the Appeal Tribunal.

71. The practitioner's application is unusual, but not unique. In S's case, the appeal Tribunal reviewed an order for costs made by the original Tribunal in circumstances where the original order contained an error (a slip that was readily rectified) and the appeal Tribunal found that the conduct in issue should have been characterised as unsatisfactory professional conduct rather than (as the original Tribunal decided) professional misconduct. The appeal Tribunal found that it was open to the practitioner in that case to query the basis on which the costs order had been made, particularly given the practitioner's offer of settlement.[63]

72. We are willing to proceed on the basis that this Appeal Tribunal has power to decide the matter raised by the practitioner. The issue is whether the Appeal Tribunal should make any orders in relation to order 2 made by the Original Tribunal that:

The practitioner is to pay the Council's legal costs at the rate of 90% of solicitor-client costs and disbursements in full with such costs to be agreed or assessed.

73. As the appeal Tribunal in S's case noted, section 433(1) was triggered whether the conduct was characterised as professional misconduct or unsatisfactory professional conduct. The critical issue was whether there were exceptional circumstances which would warrant an order for costs not being made. At the original hearing in that case, there was a significant submission based on hardship suffered by the practitioner, and reference to substantial delay in the disciplinary action and proceedings. The practitioner did not identify any particular error in the original Tribunal's determination, but made general submissions that exceptional circumstances did exist and that it would be harsh and unfair in the extreme to impose upon the practitioner the full costs of the hearing in the original Tribunal.[64]

74. A critical factor in that case was that the original Tribunal was assessing the situation on the basis that the conduct was professional misconduct and the appeal Tribunal was not.[65] The appeal Tribunal concluded that the impact of the proceedings on the practitioner was substantial and out of all proportion to the nature of the complaint. That had an extremely negative impact on him economically by the loss of employability and costs incurred in defending the matter. There had been a heavy emotional toll.[66] However, the appeal Tribunal concluded that impacts of that kind are not unexpected consequences of disciplinary proceedings, and it was not convinced that they were exceptional. Nor was there adequate material that entitled the appeal Tribunal to assess any reduced sum of costs in a principled way. Accordingly, the appeal Tribunal did not alter the costs order made by the original Tribunal (other than to correct a clerical error).[67]

75. The facts in the present proceedings are different in significant respects from S's case. For example, the Appeal Tribunal has not decided that the Original Tribunal was wrong in either the finding of professional misconduct or the sanction which it ordered. However, as in S's case, the implications of the outcome on the practitioner were financially, professionally and personally substantial.

76. Even in the circumstances of S's case the appeal Tribunal did not alter the costs order made by the original Tribunal. The same outcome is appropriate here, although some of the reasons for reaching that conclusion are different.

77. The practitioner's application is rejected because:

(a) The Original Tribunal was obliged by section 433(1) of the LP Act to order the practitioner to pay the Council's costs unless the Original Tribunal was satisfied that exceptional circumstances exist.

(b) The Original Tribunal did not find that exceptional circumstances existed (but was clearly aware of the financial strain on the practitioner of the present and earlier proceedings).

(c) The Appeal Tribunal is not in a position to review any agreement reached between the practitioner and the Council that hardship matters not be mentioned to the Original Tribunal.

(d) Order 2 made by the Original Tribunal was not for all the Council's costs.

(e) The practitioner had the benefit of legal advice when deciding whether to agree to the costs order in relation to the original proceedings, rather than await the outcome of the hearing.

78. For the reasons set out above, the Appeal Tribunal makes no order in relation to the parties' costs of the appeal.

[1] Council of the Law Society of the ACT v Legal Practitioner 201920 [2020] ACAT 31 (Original decision)

[2] This decision was previously anonymised and cited as Council of The Law Society of The Australian Capital Territory v LP 201920 (No. 2) (Appeal) [2021] ACAT 51 pursuant to section 423A of the Legal Profession Act 2006. As the appeal period has ended, the practitioner has now been identified in the citation of this decision. The reasons for decision otherwise remain unchanged from the date of publication.

[3] Council of the Law Society of the Australian Capital Territory v LP 201920 [2021] ACAT 16 (Appeal decision)

[4] See Legal Practitioner 'S' (Steven Gavanga) v Council of the Law Society of the ACT [2018] ACAT 12

[5] See Legal Practitioner 'S' (Steven Gavanga) v Council of the Law Society of the ACT [2018] ACAT 12

[6] Appeal decision at [37]-[38] and [237]

[7] Summarised at [206] of the Appeal decision

[8] Appeal decision at [202]-[212] and [251]-[258]

[9] Council of the Law Society of the ACT v Legal Practitioner 201904 (Shamim Alam) [2020] ACAT 3 at [19]

[10] See Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [20]

[11] Council of the Law Society of NSW v Hinde [2011] NSWADT 20 at [19]

[12] See Council of the Law Society of NSW v Hinde [2011] NSWADT 20 at [32]- [33] where exceptional circumstances were found due to the age of the practitioner, straitened financial circumstances, minimal assets, receipt of a small state pension, no chance of securing gainful employment and that any order would need to be paid by small instalments over a significant period. We note that it is clear that the tribunal is not saying that these are the only possible exceptional circumstances. See also Council of the Law Society of NSW v Webb (No 2) [2012] NSWADT 233 at [37]- [53] where the exceptional circumstances that were evidenced by the financial burden imposed by any order lead to an order to pay 50% of costs only.

[13] Council of the NSW Bar Association v Miller (No 2) [2012] NSWADT 129 at [44]

[14] Council of the Law Society of the ACT v LP 201714 [2018] ACAT 101 at [83]- [89]

[15] [2016] NSWCATOD 7

[16] See Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [51]- [52]

[17] Respondent's costs submissions, 1 April 2021, page 1

[18] Legal Profession Act 2006 section 6(a). See Council of the Law Society of the Australian Capital Territory v Davey [2019] ACTSCFC 2, Legal Profession Complaints Committee v Bower [2019] WASC 281 at [38]

[19] See Appeal decision at [10]-[13], [296], and [331]

[20] [2018] ACAT 12

[21] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [38]

[22] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [38]

[23] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [36]

[24] See Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [43]

[25] Legal Services Commissioner v Reeve (No 2) [2016] QCAT 486 at [23]

[26] Plaintiff M174/2016 v The Minister for Immigration and Border Protection [2018] HCA 16

[27] Appeal decision at [254] and [255]

[28] See Appeal decision at [218], [219] and [256]

[29] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [1]

[30] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [32]

[31] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [36]

[32] See Energy Resources of Australia Ltd v Commissioner of Taxation [2003] FCA 26 at [37] and cases cited there

[33] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [40]- [44]

[34] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [45]

[35] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [45]

[36] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [38]

[37] Hunter Development Brokerage Pty Ltd v Cessnock City Council (No.12) [2006] NSWCA 292 at [50], Basten JA; Lexis Nexis, Halsbury's Laws of Australia, [325-9420] on 'Discretion to award costs'

[38] Lexis Nexis, Halsbury's Laws of Australia, [325-9440] on 'Where successful party ordered to pay costs'

[39] We think the approach set out in this paragraph is consistent with the comments of Refshauge J at [144] in Appellants v Council of the Law Society of the ACT & Anor [2011] ACTSC 133.

[40] Lexis Nexis, Halsbury's Laws of Australia, [250-7320] on 'Costs in disciplinary proceedings'; Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [18]

[42] Plaintiff M174/2016 v The Minister for Immigration and Border Protection [2018] HCA 16 at [30]

[43] R v Kelly (Edward) [1999] UKHL 4; [2000] 1 QB 198 at 208; Legal Services Commissioner v Reeve (No.2) [2016] QCAT 486 at [23]; Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [21]

[44] Legal Services Commissioner v Reeve (No.2) [2016] QCAT 486 at [17]- [28]; Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [20]- [21]

[45] Contrary to the appellant's submissions on costs at [13]

[46] Original decision at [59], see also [82] and [98]

[47] Original decision at [82], see also [133], [181] and order 2

[49] Report of Professor Stevens at AB 291-299, especially 291; transcript of proceedings on 26 February 2020 pages 47-48, AB 120-121; Original decision at [103]-[119] and [168]-[171]

[50] Original decision at [70], [95], [104], [108] and [170]-[171] and order 5; Appeal decision at [173], [213]-[219] and [222]

[51] Medlow, Sharon, Norm Kelk and Ian Hickie 'Depression and the Law: Experiences of Australian Barristers and Solicitors'[2011] SydLawRw 31; , (2011) 33(4) Sydney Law Review 771

[52] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [51]

[53] Xu v Council of the Law Society of NSW [2009] NSWCA 430 at [61]- [63], Handley JA, Tobias JA at [1] and Basten JA at [2] agreeing, where the appeal court made no order for costs in relation to the original tribunal hearing because the practitioner was in part successful in the appeal. In the appeal the practitioner obtained a costs order against the Council (at [64] and order 1).

[54] For example Department of Community Services v SM and MM [2008] NSWDC 68, where the Court made a costs order against an unsuccessful appellant under legislation which provided that the Court cannot make an order for costs in care proceedings unless there are exceptional circumstances that justify it in doing so.

[55] Appellant's submissions on costs at [18]-[19] and [24]

[56] Appellant's submissions on costs at [20]

[57] Appellant's submissions on costs at [21]

[58] Appeal decision at [37]-[38] and [237]

[59] Appeal decision at [202]-[212] and [251]-[258]

[60] Appellant's submissions on costs at [25]

[61] Appellant's submissions on costs at [25]

[62] Appellant's submissions on costs at [32]

[63] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [1]- [3], [9]-[26]; see also Xu v Council of the Law Society of NSW [2009] NSWCA 430 at [61]- [63]

[64] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [12] and [15]

[65] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [20]

[66] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [22] and [23]

[67] Legal Practitioner 'S' (Steven Gavagna) v Council of the Law Society of the ACT [2018] ACAT 12 at [24]- [26]