Datt v Law Society

High Court of Australia|1981-07-01|Before: Brennan JJ

The applicant is a solicitor who accepted instructions to act for both the vendor and the purchaser in a conveyancing transaction relating to a property at Kurrajong in New South Wales. Pursuant to s. 76 of the Legal Practitioners Act 1898 N.S.W. ("the Act") the Council of the Law Society of New South Wales referred for inquiry and investigation to the Statutory Committee certain questions relating to the conduct of the applicant in the transaction. It is not necessary for me to traverse in detail all the questions which were referred to the statutory committee or the events which occurred in relation to the transaction. It is enough for present purposes to say that difficulties arose and that the vendor withdrew his instructions. It was suggested that the applicant, notwithstanding the vendor's withdrawal of instructions, continued to act for the vendor and to settle the transaction, even though the vendor had purported to rescind the agreement for sale relating to the property. It was also suggested that he caused a memorandum of transfer relating to the property to be registered without the knowledge, consent or approval of the vendor and that he had at one time refused to settle the transaction except on the footing that he be authorized to deduct his costs from the proceeds of sale. The vendor claimed that the applicant's charges were excessive.

After a hearing which involved the calling of oral evidence the committee delivered a judgment in which it found that the applicant had delayed completion of the sale in order to secure to himself the payment of costs by the vendor, that he purported to act for the vendor after his instructions had been withdrawn, that he settled the transaction knowing that his instructions had been withdrawn, that he caused the memorandum of transfer to be registered without the knowledge, consent or approval of the vendor, and that he improperly refused to settle the transaction except on the footing that he was authorized by the vendor to deduct his costs from the proceeds of sale. However, the committee found that the applicant did not know that the vendor had purported to rescind the agreement for sale when he settled the transaction and that the costs which he charged were not gross, excessive and unreasonable. In the light of its specific conclusions the committee went on to say: "The Committee finds that the Solicitor's conduct was unprofessional but in all the circumstances falls short of being disgraceful and dishonourable and does not amount to professional misconduct." The committee went on to order that the applicant should be "severely reprimanded" and fined the sum of $1,000. The applicant was ordered to pay the costs of the Law Society taxed as between solicitor and client.

On appeal the Court of Appeal held that the statutory committee had no jurisdiction or power to impose a fine in the absence of a finding of professional misconduct. The members of the Court of Appeal were unanimous in thinking that the committee's jurisdiction to strike off, suspend or fine is conditioned on a finding by the committee of professional misconduct. However, the Court rejected the applicant's submission that the committee had no power to reprimand in the absence of a finding of professional misconduct. The Court appears to have accepted the following passage in the reasons of the committee: "Whilst the Committee is not unmindful of the general circumstances in which Mr Datt found himself and the rationalisation which he brought to bear on his conduct, the Committee finds that it should not be condoned by Solicitors of good repute and competency and is deserving of censure." The Court considered that a reprimand was justified and went on to excise the word "severely" from the reprimand in the order made by the statutory committee.

The applicant submits in support of his application for special leave to appeal that the statutory committee had no power to reprimand him in the absence of a finding that he was guilty of professional misconduct. The fate of this submission turns on the provisions of Pt X of the Act, especially s. 77.

The statutory committee, which consists of solicitors appointed by the Chief Justice of New South Wales, is established for the purpose of hearing charges of professional misconduct on the part of solicitors (s. 75). The Court or the Council of the Law Society of its own motion may refer to the statutory committee for inquiry, any question as to the professional misconduct of any solicitor which appears to the Court or to the Council to require investigation (s. 76 (1)). In addition the Council may refer any charge of professional misconduct against a solicitor made by a person feeling aggrieved to the statutory committee for inquiry (s. 76 (2)). The powers and privileges of the committee, on the conduct of an inquiry are set out in sub-ss. (3) to (6) inclusive of s. 76. Counsel and solicitors may be employed to assist the committee (s. 76 (3)) and to represent the solicitors summoned before the committee or a complainant (s. 76 (7)).

Section 77 (1) is of critical importance. At the time the conduct complained of took place it was in these terms:

Subject to the following provisions of this Part, every charge or question as to the professional misconduct of any solicitor referred to the Statutory Committee shall be heard by the Statutory Committee in accordance with the rules made under the authority of this Part, and the Statutory Committee shall, subject to such rules, upon every such hearing have power after hearing the case to make any such order as to striking off the roll or suspending from practice either conditionally or otherwise the solicitor to whom such hearing relates, or the imposing on him of a fine not exceeding one thousand dollars, or as to the payment by any part of the costs or otherwise in relation to the case as before the commencement of the Legal Practitioners (Amendment) Act, 1935, the Court would have had power to make in accordance with the authority and practice of the Court:

Provided that where the Statutory Committee is of the opinion that the conduct of the solicitor having regard to all the circumstances does not warrant the making of an order or the imposing of a penalty as aforesaid it may dismiss the charge or decline to make a finding of professional misconduct but may, if it considers the conduct of the solicitor warrants its doing so, make an order reprimanding the solicitor.

An appeal lies to the Supreme Court from any order of the statutory committee (s. 78).

Nothing in this Act contained shall prejudice, diminish, or affect the jurisdiction, powers and authorities which are exercisable by the Court over solicitors.

For present purposes the significant features of the first part of s. 77 (1) are: (1) it delimits the jurisdiction and powers of the statutory committee with respect to a charge or question of professional misconduct on the part of a solicitor; and (2) it mentions with some particularity the disciplinary orders usually made against errant solicitors but it makes no mention of a reprimand. Although the power to make disciplinary orders against a solicitor is not expressly conditioned on a finding by the committee that he has been guilty of professional misconduct, there can be no doubt that an exercise of the power is so conditioned. In a context in which the committee's jurisdiction is limited to inquiring into charges and questions of professional misconduct it is impossible to suppose that Parliament intended to arm the committee with a power to make disciplinary orders (including the power to strike off a solicitor) against a solicitor who is found not guilty of the professional misconduct alleged against him. It would be strange indeed if the committee were authorized to make disciplinary orders against solicitors in respect of conduct not amounting to professional misconduct when the committee's jurisdiction is confined to hearing charges or questions of professional misconduct.

Whether the first part of s. 77 (1) confers power on the Statutory Committee to impose a reprimand is not altogether clear. InIn re A Solicitor and the Legal Practitioners Act [8] Asprey J.A. doubted whether the words "or otherwise in relation to the case" went beyond the matter of costs, but he left the question open. It seems that Sugerman A.C.J. [9] was prepared to concede a larger content to the words. Later, the Court of Appeal in Wilson v. Law Society of New South Wales [10] , expressly rejected the limited interpretation tentatively suggested by Asprey J.A., observing that:

The words "or otherwise" where secondly appearing, in their context, appear to us to mean that, in addition to making the types of order expressly referred to, the Statutory Committee could make any order which the Court would have had the power to make in accordance with its authority and practice before the commencement of the amending legislation. The intention of the provision was to place the Statutory Committee, as regards the making of orders, in the same position as the Court at that time. I agree with the interpretation given by the Court of Appeal to the words in question. However, this interpretation leaves untouched my earlier conclusion that the first part of s. 77 (1) does not confer power on the statutory committee to make a disciplinary order against a solicitor who is not found to have committed professional misconduct. 1. [1971] 2 N.S.W.L.R. 113, at p. 118. 2. [1971] 2 N.S.W.L.R., at p. 115. 3. [1979] 2 N.S.W.L.R. 760, at p. 763.

Does the proviso to s. 77 (1) confer such power? That is the next question. The proviso was added by amendment in 1967. At the same time the main part was amended in a respect presently immaterial - by the substitution of "one thousand dollars" for "four thousand dollars" as the maximum amount of a fine. Neither the 1967 amendments nor the previous legislative history throw light on the question now under debate. It was suggested that the decision of this Court in Hally v. Queensland Law Society Inc. [11] might have prompted the inclusion of the proviso by making it clear that there was no power to punish for anything less than professional misconduct. The suggestion is speculative.

I return then to the words of the proviso. Their natural sense suggests that they are addressed to the case in which the committee thinks that the professional misconduct found against the solicitor does not warrant an order for striking off or for suspension or the imposition of a fine but may warrant a reprimand. If Parliament was directing its attention to the committee's lack of power to impose a reprimand for misconduct not amounting to professional misconduct it surely would have said so in plain terms. Instead, by referring to conduct which in the committee's opinion "having regard to all the circumstances does not warrant" the making of an order or the imposition of a penalty, it has chosen language which is appropriate to a case in which the punishments expressly stipulated in the sub-section do not fit the crime because they are too severe in relation to the professional misconduct committed by the solicitor.

The thrust of the proviso is to arm the committee with power to dismiss a charge or to decline to make a finding of professional misconduct and to reprimand a solicitor where it considers the circumstances appropriate. The assumption underlying the proviso is that the case is one in which on the evidence the charge is made out and professional misconduct is established - if it were otherwise there would be no point in empowering the committee to dismiss the charge or to decline to make a finding of professional misconduct.

The draftsman may have thought, contrary to the view which I take, that the first part of the sub-section did not authorize the committee to reprimand the solicitor and that the sub-section left the committee very little or no alternative but to make an order for striking off or suspension or for the imposition of a fine when the charge was made out and professional misconduct was found against the solicitor. The manner in which the proviso is expressed suggests that the draftsman may have believed that a reprimand was not an "order". But the effect of the proviso is to enable the committee to dismiss a charge or decline to make a finding of professional misconduct, notwithstanding that on the evidence professional misconduct is made out, and to reprimand the solicitor in such a case. Previously the committee's power to reprimand was restricted to the case in which the committee found the charge made out and found professional misconduct. So construed the proviso has a limited and sensible operation, one which certainly accords with the language in which it is expressed.

My acceptance of this construction necessarily leads to the conclusion that the committee and the Court of Appeal were in error in reprimanding the applicant. The finding that the applicant did not commit the professional misconduct was based on a want of evidence to establish that conduct, not on an opinion that the penalties mentioned in the first part of the sub-section were too severe, having regard to all the circumstances of the case.

Nothing I have said is to be taken as reflecting on the inherent jurisdiction of the Court which is preserved by s. 79 of the Act. We were informed that the Court of Appeal held in Prothonotary v. Jackson [12] ; that it has power to reprimand a solicitor for a serious professional indiscretion not amounting to professional misconduct. The correctness of that decision is not in debate in this case. However, it was conceded by the Law Society that in the present case the Court of Appeal did not attempt to exercise its inherent jurisdiction and merely exercised its appellate jurisdiction under s. 79. Quite plainly it was not open to the Court to exercise its inherent jurisdiction without commencing appropriate proceedings or perhaps giving appropriate notice to the applicant.

Supreme Court of N.S.W. (Court of Appeal); unreported; 17 December 1976.

It was submitted by the Law Society that this is not a case for special leave on the ground that disciplinary questions are generally left by this Court to the Supreme Court. Here however, an important question relating to the jurisdiction and powers of the statutory committee has arisen. For this reason it is a case which calls for the grant of special leave.

Accordingly I would grant special leave and allow the appeal.

The statutory committee's power to reprimand depends on it forming the opinion that the solicitor has been guilty of professional misconduct, even if it refrains from making a formal finding to that effect. The committee was in error in considering that it could fine and reprimand the appellant without forming the opinion. The Legal Practitioners Act 1898 N.S.W. s. 77 resembles the familiar provisions in the criminal laws that where a summary offence is proved, the court may, if the circumstances warrant, not proceed to a conviction, but may discharge the offender unconditionally or impose various conditions.

It would be very dangerous for such a committee to be able to adversely affect a person when contravention of the standard established by law had not been proved. If it were desired to provide for discipline in respect of conduct not amounting to professional misconduct, this should be framed in terms of some ascertainable standard.

The appellant's behaviour appears to have been in disregard of his former client's interests, and of the minimal standards which would be required of a solicitor, at least in places other than New South Wales. However, whether it amounted to professional misconduct and whether the statutory committee was in error in failing to make a finding of professional misconduct, were not in issue before us. It follows that this Court's order is not indorsement of any view that the appellant's conduct did not amount to professional misconduct deserving of reprimand or more severe punishment.

The circumstances and statutory provisions with which this application for special leave to appeal is concerned are set out in the reasons for judgment of my brother Mason and I do not need to repeat them.

The application raises a short but important point of construction concerning the disciplinary powers conferred on the statutory committee of the Law Society of New South Wales by s. 76 of the Legal Practitioners Act 1898 N.S.W., as amended.

I agree with the analysis of the provisions contained in the reasons of Mason J. That analysis compels the conclusion that the committee has no power to reprimand a solicitor against whom no finding of professional misconduct has been made. The proviso to sub-s. (1) of s. 77 of the Act seems to me to be concerned with a situation where professional misconduct has been established and to give the committee discretionary powers to deal with the solicitor charged by mitigating the consequences of the adverse finding where the circumstances warrant it. The words used appear to me to be plain and I cannot usefully add to the reasons given by Mason J. I agree with his conclusion that this is a case appropriate for special leave.

The applicant for special leave to appeal is a solicitor of the Supreme Court of New South Wales. Pursuant to s. 76 of the Legal Practitioners Act 1898 N.S.W., the Council of the Law Society of New South Wales referred to the Solicitors' Statutory Committee for enquiry certain questions as to the professional misconduct of the applicant. The statutory committee heard the matter and it came to the conclusion that the appellant's conduct "should not be condoned by solicitors of good repute and competency and is deserving of censure". The statutory committee found that the solicitor's conduct "was unprofessional but in all the circumstances falls short of being disgraceful and dishonourable and does not amount to professional misconduct".

The statutory committee, purporting to exercise powers conferred upon it by s. 77 of the Act, ordered that the applicant should be severely reprimanded and fined the sum of $1,000. He appealed against this order to the Court of Appeal Division of the Supreme Court of New South Wales which held that the power to impose a fine was conditioned upon a finding by the statutory committee of professional misconduct. In the absence of such a finding, the Court allowed the appeal in part, quashing so much of the order of the statutory committee as imposed the fine. The reprimand of the appellant was confirmed, though the adverb "severely" was excised. The present application is made with a view to procuring an order on appeal quashing the order of reprimand, on the ground that the statutory committee had no power to reprimand the applicant when it was of the view that there had been no professional misconduct committed by him.

Special leave to appeal should be granted. The case raises an important question of law, namely, the powers of the statutory committee to make a disciplinary order against a solicitor who is not found to be guilty of professional misconduct but whose conduct nevertheless would be thought by solicitors of good repute and competency to be deserving of censure, and the judgment under appeal gives an answer to the question different from the answer given by Asprey J.A. in In re A Solicitor and the Legal Practitioners Act [13] .

Professional misconduct is the only kind of conduct referred to in the several provisions of Pt X of the Act. By s. 75 (1), the statutory committee is created for the purpose of hearing charges of professional misconduct. By s. 76 (1) the Court and the Council of the Law Society are each authorized to refer to the statutory committee for inquiry any question as to the professional misconduct of a solicitor which appears to require investigation. By s. 76 (2), a charge of professional misconduct may be referred to the statutory committee. The powers of the statutory committee to whom a charge or question as to the professional misconduct of a solicitor has been referred are to be found in s. 77 (1):

(1) Subject to the following provisions of this Part, every charge or question as to the professional misconduct of any solicitor referred to the Statutory Committee shall be heard by the Statutory Committee in accordance with the rules made under the authority of this Part, and the Statutory Committee shall, subject to such rules, upon every such hearing have power after hearing the case to make any such order as to striking off the roll or suspending from practice either conditionally or otherwise the solicitor to whom such hearing relates, or the imposing on him of a fine not exceeding one thousand dollars, or as to the payment by any party of costs or otherwise in relation to the case as before the commencement of the Legal Practitioners (Amendment) Act, 1935, the Court would have had power to make in accordance with the authority and practice of the Court:

It is common ground that the disciplinary powers conferred by the first paragraph of this sub-section may be exercised only where professional misconduct is established. The difficulty arises under the proviso. The Court of Appeal was of the opinion that the powers therein referred to are available to the statutory committee where a case of professional misconduct is not made out, and that the power to reprimand was validly exercised in the present case. If that opinion be right, the proviso does not merely qualify the powers which the statutory committee may exercise where professional misconduct is established; it confers upon the statutory committee additional powers which may be exercised whether or not professional misconduct is established. Although the second paragraph is in form a proviso, it does not necessarily follow that it operates merely as a qualification upon the first paragraph. Its substance must be considered, but a paragraph which is expressed as a proviso is prima facie a qualification on what has gone before rather than an independent provision (Minister of State for the Army v. Dalziel [14] ; Commissioner of Stamp Duties (N.S.W.) v. Atwill [15] ).

(1944) 68 C.L.R. 261, at pp. 274-275. 2. (1972) 126 C.L.R. 665, at pp. 668-669; [1973] A.C. 558, at pp. 561-562.

The powers conferred by the second paragraph are conditioned upon the statutory committee being of the opinion "that the conduct of the solicitor having regard to all the circumstances does not warrant the making of an order or the imposing of a penalty as aforesaid". The opinion which enlivens those powers relates to conduct which may or may not warrant the exercise of the powers conferred by the first paragraph; that is, conduct which constitutes professional misconduct. There would be no discretion to exercise under the second paragraph if there were no professional misconduct, for professional misconduct alone may "warrant the making of an order or the imposing of a penalty as aforesaid".

But where professional misconduct is established, the second paragraph confers a discretion which may be exercised in favour of the solicitor if the statutory committee regards his conduct as insufficient to warrant the exercise of the powers conferred by the first paragraph. The statutory committee may "dismiss the charge or decline to make a finding of professional misconduct" even though the professional misconduct has in truth been established. Clearly enough, if it were not for the second paragraph it would not be within the competence of the statutory committee to dismiss a charge or to decline to make a finding of professional misconduct where professional misconduct is established. But under the second paragraph these results may ensue although they appear anomalous having regard to what is established by the evidence. Indeed, these results appear inconsistent with what is established by the evidence. Where the statutory committee decides to exercise its discretion in favour of the solicitor by dismissing the charge or declining to find professional misconduct, the second paragraph nevertheless empowers it to reprimand him. The power to reprimand does not stand isolated from the discretion to dismiss the charge or to decline to make a finding of professional misconduct. The phrase "but may" imports a dependency of the power to reprimand upon the exercise of the discretion.

It was argued that it would be otiose to grant a power to reprimand in a case where professional misconduct is established, for a power to reprimand is already to be found in the first paragraph, conferred by the words "or otherwise" where those words secondly appear. I do not doubt that the committee may reprimand under the first paragraph where it upholds the charge or finds professional misconduct. If the charge is dismissed or a finding of professional misconduct is not made because professional misconduct is not established, however, no power to reprimand could be exercised. The grant of a power to reprimand under the second paragraph makes it clear that that power may be exercised despite a dismissal of the charge or a declining to find professional misconduct, where either of those results is arrived at in the exercise of a discretion under that paragraph.

It follows that the second paragraph operates as a qualification upon the first; it is a proviso which operates only where professional misconduct is established. It does not confer power to make an order reprimanding a solicitor unless professional misconduct has been established and the statutory committee resolves to exercise the discretion conferred by the proviso. This construction gives rise to some inelegance in the findings to be made when the proviso operates. The statutory committee must be satisfied of the professional misconduct upon which its powers under s. 77 (1) are conditioned, but it must stop short of expressing that finding where it decides to decline to make the finding. In such a case, there is no reason why it should not record its finding that it has power to make an order under the first paragraph and declare that the solicitor's conduct in its opinion does not warrant the making of an order or the imposing of a penalty under that paragraph adding, in appropriate cases, a reprimand. It may be observed that the powers conferred upon the statutory committee by s. 77 (1) are more confined than those conferred upon the statutory committee in Queensland and considered by this Court in Hally v. The Queensland Law Society Inc. [23] .

Special leave to appeal should be granted, the appeal allowed and, in lieu of the order of the Court of Appeal confirming the order of reprimand, the order of reprimand imposed by the statutory committee should be quashed. The applicant should have an order for his costs here and in the Court of Appeal.

High Court of Australia Gibbs C.J. Mason, Murphy, Aickin and Brennan JJ. Datt v Law Society (NSW) [1981] HCA 44

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