Doherty v The Law Society of New South Wales

LEGISLATION CITED: Legal Profession Act 2004 Supreme Court Act 1970

Doherty v The Law Society of New South Wales [2008] NSWCA 269 CASES CITED: Re Brady (1896) 17 LR (NSW) 312 Re Macaulay (1926) 43 WN 90 Exparte Urquhart (1906) 23 WN 214

Peter John Doherty (Appellant) PARTIES: The Law Society of New South Wales (First Respondent) Raymond Collins (Second Respondent)

COUNSEL: M J Cranitch SC; A D Campbell (Appellant) G C Lyndsay SC; S G Barnes (First Respondent)

SOLICITORS: B J Murphy Angelovski & Associates (Appellant) Louis Perotti (First and Second Respondent)

LOWER COURT DATE OF DECISION: 29/08/2008, 11/09/2008

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40325/08 SC 13562/08

IPP JA BASTEN JA HANDLEY AJA

11 DECEMBER 2008 Peter John DOHERTY v THE LAW SOCIETY OF NEW SOUTH WALES & ANOR Extempore Judgment 1 IPP JA: On 19 June 2008 the first respondent (the Law Society) passed a resolution under s 548 of the Legal Profession Act 2004 suspending the practising certificate of the appellant (Mr Doherty). It also passed a resolution under s 623 of the Act appointing a manager to Mr Doherty's practice. The Law Society had formed the opinion that Mr Doherty had breached s 255 of the Act by appropriating trust funds to his own use - that opinion was the basis for the resolutions in question.

2 Mr Doherty appealed to the Supreme Court under s 549 of the Act against the Law Society's decisions to suspend his practising certificate and appoint a manager to the practice. James J dismissed Mr Doherty's appeal. Mr Doherty then appealed to this Court against his Honour's decision.

3 On 20 October 2008 Mr Doherty applied to McColl JA, sitting alone, for various orders, including an order that, pending the hearing of the appeal from James J, Mr Doherty be permitted to practise as a lay associate in the law practice of his former firm. That practice was being carried on by another person with the Law Society's permission. The Law Society accepted that such an order might "in theory" be made, but opposed the relief sought. Her Honour, however, granted Mr Doherty's application and made the order.

4 Today, when the appeal against the decision of James J was called for hearing, Mr Lindsay SC, who together with Mr Barnes appeared for the Law Society, informed the court that the appeal had been settled and handed up short minutes of orders. The short minutes were signed by Mr Doherty, personally, and Mr Lindsay SC, as counsel for the Law Society.

5 The first two paragraphs of the short minutes record various undertakings by Mr Doherty to the Law Society and the Court. Paragraph 3 of the short minutes reads:

"Upon the undertakings noted in paragraphs 1 and 2 of these Short Minutes,

a. that, subject to any further order of the Court, the hearing of the appeal be adjourned to a date to be fixed after the determination of the Tribunal proceedings.

b. that the appeal be listed for mention before the Registrar at …..a.m./p.m. on ……………2009 or such other time as the Registrar might for that purpose appoint.

c. that, subject to any further order of the Court, Order 3 of the Orders made by McColl JA on 20 October 2008 (reproduced in Reasons for Judgment published as [2008] NSWCA 269 at [40]) be confirmed." 6 Paragraphs 4 and 5 of the short minutes deal with costs and liberty to apply.

7 Both Mr Lindsay SC, together with Mr Barnes and Mr Cranitch SC, who together with Mr Campbell, appeared for the appellant, asked that the short minutes be made an order of the Court.

8 In exchanges between counsel and the bench an issue arose as to whether McColl JA had indeed had the power to make an order that Mr Doherty be permitted to practise as a lay associate, and whether this court had that power.

9 As Mr Doherty had been suspended from practice, he was a "disqualified person" as defined by s 4(1) of the Act. Section 17(1) provides that a law practice must not have a lay associate who is a disqualified person unless the associate is approved by "the relevant authority" under subsection (3). The relevant authority under subsection (3) is the Law Society Council.

10 At the time of the hearing before McColl JA, the Law Society Council had not approved the employment of Mr Doherty as a lay associate.

11 Section 549 of the Act governed the appeal to James J. Section 549(1) provides that a person may appeal to the Supreme Court against a decision of the Council to suspend a practising certificate. Section 549(2) provides that the Supreme Court may make any order it considers appropriate on the appeal. The appeal from James J to this Court is governed by s 75A of the Supreme Court Act 1970.

12 The decision made by the Law Society not to approve of Mr Doherty working as a lay associate was an administrative decision. I accept that whether McColl JA had the power to make her own decision on this issue, and substitute that for the one the Law Society made is, with respect, open to question.

13 In my opinion, however, the same difficulty does not arise in regard to this Court's power to make an order in terms of paragraph 3(c) of the short minutes. Mr Lindsay SC has ostensible authority to act for the Law Society. The fact that he signed the short minutes denotes that the Law Society assents to them. Accordingly, it is to be inferred that the Law Society approves of what is therein stated. In other words, it is to be inferred that the Law Society, in effect, approves of Mr Doherty working as a lay associate in the terms recorded in paragraph 3(c). It follows that the Court is merely confirming by order that which the Law Society approves.

14 By paragraph 3(a)) the appeal is to be adjourned to a date to be fixed after the determination of the Tribunal proceedings relating to the complaints that allege that Mr Doherty misused trust monies. Mr Lindsay SC explained that this was agreed on so as to ensure that there would be practical means available to control compliance with the terms of the short minutes. I accept that this is a reasonable step to take in the circumstances.

15 I propose that the short minutes be made an order of this Court. 16 BASTEN JA: I am not satisfied that the Court has power to make an order granting approval to a law practice to have a lay associate. Secondly, if the Court has such power I would not, as a matter of discretion, make such an order. In my view the appeal should be dismissed with costs. If the appeal were to remain on foot, I would order the removal of the manager. I publish my reasons as follows: 17 There are proceedings pending in this Court (brought by way of appeal from a judge in the Common Law Division) challenging a decision of the Law Society Council suspending the appellant's practising certificate. 18 A complaint of misconduct having been made against the appellant, the Council resolved on 19 June 2008 to exercise its powers under s 548 of the Legal Profession Act 2004 (NSW) ("the Act") and, owing to the seriousness of the conduct in respect of which the complaint had been made, suspend the appellant's practising certificate. At the same meeting, it passed a further resolution appointing a manager of the plaintiff's practice. The appellant sought to challenge both resolutions and joined both the Law Society and the manager. The manager should not have been joined to the proceedings and should be dismissed from the appeal, if it is to remain on foot. 19 Section 549 of the Act provides that a person may appeal against a decision of a Council to suspend a local practising certificate. That power the appellant invoked by summons filed on 23 June 2008. The appeal was heard by James J. On 29 August 2008 his Honour delivered judgment and, with some further reasons delivered on 11 September 2008, dismissed the appeal. 20 A notice of appeal having been filed, an application was made to expedite the hearing of the appeal and to "stay" the suspension of the practising certificate. That motion came before McColl JA on 20 October 2008: Doherty v The Law Society of New South Wales [2008] NSWCA 269. Her Honour made orders, of which the following remains pertinent: "3. Pending the hearing of the appeal permit the applicant to practice as a lay associate in the law practice of Mr Mario Piperides, being Lloyd Lancaster Lawyers." 21 The appeal was listed for 11 December 2008. When the matter was called, counsel for the Law Society indicated that an agreement had been reached between the parties and handed up short minutes of orders. The short minutes noted undertakings given by the appellant. In addition, it sought that this Court adjourn the hearing of the appeal to a date after the determination of the principal proceedings, which are disciplinary proceedings in the Legal Services Division of the Administrative Decisions Tribunal. Further, the Court was invited to order that "order 3 of the orders made by McColl JA on 20 October 2008 … be confirmed". 22 The undertakings given by the appellant include an undertaking not to engage in legal practice or represent or advertise that he is entitled to engage in legal practice. The challenge to the suspension of his practising certificate would, in the light of the undertaking, appear to be otiose. Why the appeal is to remain on foot was not adequately explained by either party. It should be dismissed, and the appellant should pay the costs of the appeal, as proposed in one of the undertakings. 23 If the appeal is to remain on foot, I would not make an order in the form of that made by McColl JA on 20 October 2008. First, I do not think the Court has power to make such an order; secondly, it is inappropriate in the circumstances. 24 In respect of power, the parties apparently rely upon the provision in s 549(2) that the Court may "make any order it considers appropriate on the appeal", being the appeal from an order suspending a practising certificate. In my view that power is limited to making orders with respect to the decision of the Law Society Council which is the subject of the appeal. (It is not necessary to consider for this purpose whether an order suspending a certificate can properly be "stayed".) 25 The order made by McColl JA was to the same effect as an approval which might have been given by the Law Society Council for a "disqualified person" to work as "a lay associate" in a law practice: s 17(1). The appellant is a "disqualified person" for the purposes of that provision, his practising certificate having been suspended: see s 4(1) disqualified person, (b). Such a decision constitutes waiver of a prohibition contained in s 17(1), which is permitted by approval of a "relevant authority" as defined in s 17(3). 26 The scheme in relation to practising certificates is entirely statutory. In the present case, the only authority with power to approve a dispensation from the prohibition in s 17(1) is the Law Society Council. I would not accept that such a power is conferred on the Court in circumstances where it is hearing an appeal from the suspension of a practising certificate, under s 549. 27 Reference was also made in the course of the discussion as to the possible reliance on the inherent jurisdiction and powers of the Court, which are recognised in s 590 and are not affected by anything in Ch 4 of the Act. I am not satisfied that the inherent jurisdiction extends to the exercise of power under s 17(1) of the Act. 28 Accordingly, I am not satisfied, in the short time available to consider this matter, which came on without notice, that the Court has power to make an order of the kind proposed. 29 Furthermore, it is not an order which I would make in the exercise of the Court's discretion in the present circumstances. 30 In the course of her Honour's reasons, McColl JA noted that following the judgment of James J, a request had been made to the Law Society Council for approval under s 17(1), in order to permit the appellant to work as a lay associate with the law practice. Her Honour noted the outcome of that application at [29]: "On 17 October 2008 the applicant's solicitors were advised that the Law Society Council had considered Mr Piperides' request and had resolved to refuse it. The reasons given were that having regard to the Council's role in the protection of the public and the legal profession, it was not satisfied that the applicant understood the seriousness of his conduct which led to the suspension of his practising certificate on 19 June 2008. In all the circumstances the Council was not satisfied that allowing the applicant 'to again be associated with the practice of law, even in a limited capacity, would not pose a continuing danger to both the public and the profession.'" 31 At [37] her Honour stated: "The proposal, as I now understand it, is not that the applicant be permitted to work as a legal practitioner, whether as a principal or an employee, but rather that he be permitted to work as a lay associate in the firm he formerly owned. That would involve duties of a clerical nature, he would not have access to a trust account or, as I understand the proposal, to any clients' monies. The Law Society accepted that this order could be made in theory. It did not identify any particular danger which might arise from permitting the applicant to engage in work as a lay associate." 32 Her Honour concluded that it was appropriate to make an order permitting the applicant to undertake such work pending the hearing of the appeal. 33 It is curious that the Law Society comes before the Court supporting consent orders, inviting the Court to make or "confirm" an order which the Law Society Council, on the only occasion on which it appears to have considered the matter, refused to make. If the Law Society Council were minded to grant such approval, it would not be necessary for the Court to do so. Because the Court is being asked to do so, it may be inferred that the Law Society Council is not minded to change the position it took when refusing the request on 17 October. 34 The reasons given, and set out by McColl JA in the passage at [29] quoted above, are substantial. It is not appropriate for this Court, which has heard no evidence about the matter, to take a contradictory position on a matter involving the public interest, merely because counsel instructed by the Law Society now asks the Court to make the order. Accordingly, as a matter of discretion, I would not support the making of such an order, even if satisfied that the Court had power to do so. 35 As this is a minority view, it is not necessary to consider what the next step should be with respect to the appeal. The suspension of the practising certificate will cease to operate, at the latest, when the subject matter of the complaint is finally dealt with by the Tribunal: s 548(3). The proposal to adjourn the appeal until a date after the suspension will cease to have effect is an exercise in futility. One must infer that the purpose of such a proposal was extraneous to the proper determination of the appeal. 36 HANDLEY AJA: I agree with Ipp JA. However, I would add for myself that in my opinion section 549 (2) of the Legal Profession Act enables the Supreme Court to make orders such as those made by McColl JA. Her Honour could also make an interlocutory order suspending or staying the suspension imposed by the Law Society that was confirmed by James J. The appellant would then have ceased to be disqualified, and she could have imposed conditions which would have permitted him to work as a lay associate. This is, in substance, what McColl JA did. 37 This view is strengthened by s 590 of the Act which preserves the inherent jurisdiction of the court over its solicitors and former solicitors, as officers and former officers of the court. Orders of the general nature made by McColl JA were made by this Court's predecessor in Re Brady (1896) 17 LR (NSW) 312; Exparte Urquhart (1906) 23 WN 214; and Re Macaulay (1926) 43 WN 90. Subject to the above, I agree with Ipp JA.

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