Mr Donaghy's Submisions
12Mr Donaghy made a number of submissions, some of fact, some of law, in support of his Application for Review. A number of these appeared not to come directly within the six grounds for review contained in his Application set out above, but the Law Society did not object, and we proceeded to consider them all. We will deal with them in the order they arise in relation to the chronology of events, rather than the order they are found in the Application for Review.
13Mr Donaghy argued that he was not obliged to speak personally with Ms Graycar about her fee note. He also submitted that she should have first submitted her fee note to assessment, rather than making a demand for payment, as she did on 30 November 2009.
14These submissions respond to both elements of the Law Society's determination that Mr Donaghy would be likely to have engaged in unsatisfactory conduct, namely that he failed to pay Ms Graycar's fees, and that he failed to communicate with her, in the period between July and November 2009.
15It is first appropriate to set out the relevant factual background in this period in greater detail than is contained in the Reasons supporting the Law Society's finding against him, as above in paragraph 2.
16On 17 July 2009 Ms Graycar issued her fee note in relation to the Court of Appeal hearing on 15 July 2009.The amount claimed was $11,687.50. Her cost disclosure document dated 24 June 2009, had estimated fees between $8,800 and $13,200. On 24 September she issued a reminder invoice. On 30 November Ms Graycar wrote to Mr Donaghy stating that unless her fees were paid within 7 days, she would refer the matter to the Legal Services Commissioner.
17There was no direct communication between Mr Donaghy and Ms Graycar during this period. However Ms Graycar's clerk telephoned Mr Donaghy's office on approximately seven occasions, between 29 September and 24 November 2009, seeking payment of the account. On each occasion she spoke to Mr Donaghy's legal associate, Ms Hodgson.
18Ms Graycar's account of those conversations, as set out in her letter of 30 November 2009, is that her clerk asked Ms Hodgson to have Mr Donaghy contact her in relation to the account, and that "Ms Hodgson repeatedly assured my clerk that she had informed you of her calls and apprised you of the situation".
19Mr Donaghy's account, as set out in his letter to the Law Society dated 20 March 2010, and repeated in his submissions to us, is that he believed that Ms Graycar and the Senior Counsel who appeared with her in the Appeal, had "generally displayed an unprofessional approach to the entire matter", and relevantly "it had been conveyed to Ms Graycar (and the senior counsel) that I would not be paying their tax invoices and that in the circumstances I did not consider them to be fair and reasonable for the work performed".
20We note that Mr Donaghy asserts that "it was conveyed to", Ms Graycar, presumably by Ms Hodgson to her clerk, that there was an issue with her fee note, but the evidence, such as it is, does not support this.
21There is nothing in Ms Graycar's letter to Mr Donaghy of 30 November which suggests that she had any inkling that he was unhappy with her contribution to the appeal. She says that in her clerk's conversations with Ms Hodgson, Ms Hodgson did no more than pass on the fact that she had called to Mr Donaghy. There is no suggestion of any feedback from Mr Donaghy being passed on to her clerk by Ms Hodgson or otherwise.
22Ms Hodgson was not called by Mr Donaghy to give evidence before the Tribunal, and there is nothing else in the document bundle suggesting that Ms Hodgson did in fact did convey any of Mr Donaghy's concerns to Ms Graycar's clerk. In the circumstances we must conclude that Ms Graycar's account of the contact between them in the period July - November 2009, is to be preferred.
23As a matter of general principle, Mr Donaghy's first submission that dialogue between counsel and instructing solicitor in relation to fees, does not always need to be conducted personally, is no doubt correct. In other words, this matter could have been progressed by discussions between Ms Graycar's clerk and Mr Donaghy's associate. However, as Ms Hodgson appears not have been given any authority to deal with the substantive issue, and did no more than inform her principal, Mr Donaghy, that Ms Graycar's clerk had called, that is not an answer to the allegation that he failed to communicate with Ms Graycar.
24Mr Donaghy's second submission, that Ms Graycar should have initiated the assessment process, also does not provide an answer to the allegation that he failed to pay her fees.
25S 350 of the LP Act provides that either the party proving the service, or the recipient, in this case, counsel or instructing solicitor, may apply for an assessment. However, Ms Graycar was not aware that there was any issue in relation to her fees, so she had no reason to make the application. Mr Donaghy may well have been unhappy with Ms Graycar's fee note, but he failed to convey that to Ms Graycar. In those circumstances, the onus was on him to refer the matter to assessment, if he did not intend to pay the fee note immediately on receipt.
26We also do not accept Mr Donaghy's submission that Ms Graycar should not have written to Mr Donaghy demanding payment of her fees, and threatening to refer the matter to the Legal Services Commissioner, as she did on 30 November. In our view, that letter, which evidences her frustration at not having received a response from Mr Donaghy for nearly five months, was an appropriate step for her to take in the circumstances.
27Mr Donaghy's next submission, which was set out in paragraph 5 of his Application for Review, was that the Law Society failed to take into account as a relevant consideration, the fact that he was prepared to mediate the dispute. He argued that the matter could have been resolved by agreement, rather proceeding as a disciplinary matter. This requires a consideration of the relevant facts after the receipt of Ms Graycar's letter of 30 November 2009.
28That letter informed Mr Donaghy that unless her fees were paid within seven days, she would refer the matter to the Legal Services Commissioner. In other words Mr Donaghy still had the opportunity, albeit belatedly, to inform Ms Graycar of his concerns about what he believed was her "unprofessional approach" to the appeal and to suggest a mediation or other process to resolve the matter. But he did not respond to that letter, and on 14 December 2009, Ms Graycar wrote to the Office of the Legal Services Commissioner.
29On 18 December, the Office of the Legal Services Commissioner referred the matter to the Law Society "for an attempt at resolution". The letter said that the matter had been assessed "a matter that should be capable of resolution, and one which does not raise serious conduct issues"
30On 5 January 2010, Ms Tomlinson, from the Law Society's Professional Standards Department, wrote to Mr Donaghy seeking a response to Ms Graycar's complaint within fourteen days. The letter also stated that the Law Society was happy to assist Mr Donaghy in a resolution process, and suggested an informal meeting with him and Ms Graycar in Ms Tomlinson's office.
31Thus the issue of the unpaid fees was still capable of being resolved amicably even at this stage. The letter concluded by stating that if such a resolution were not possible, the Law Society and the Legal Services Commissioner would be required to deal with the matter as a complaint. This should have left Mr Donaghy in no doubt that he needed to respond urgently to avoid the matter escalating.
32Again Mr Donaghy failed to address the matter adequately. On 27 January, he acknowledged the Law Society's letter and asked for a further fourteen days within in which to respond. He said in that letter that "correspondence from the Professional Standards Department of the Law Society is treated with the utmost seriousness by this office". The Law Society replied that day, agreeing to his request and giving him until 12 February to reply.
33No response was received by 12 February and on 2 March the Law Society wrote to him again stating that, absent a formal detailed response within a further 14 days, the matter would be upgraded to a formal complaint.
34Finally, on 20 March 2010, Mr Donaghy wrote to the Law Society with a relatively detailed account of the dispute as he saw it. He also indicated that he would be prepared to take up Ms Tomlinson's offer of an informal meeting with Ms Graycar. That letter was stamped as received by the Law Society on 22 March.
35Also on 22 March, the Law Society wrote to the Legal Services Commissioner informing him that the matter had upgraded to an investigation file. That letter did not refer to Mr Donaghy's letter, and appears to have been sent prior to the receipt of Mr Donaghy's letter that same day. In any event, Mr Donaghy's response was received more than a week after the last deadline nominated by the Law Society.
36The matter then proceeded as a complaint in the normal manner. Ms Graycar was given a copy of Mr Donaghy's letter of 20 March and asked whether she wished to make any submissions, and Mr Donaghy was asked whether he wished to make any further submissions. Ms Graycar responded promptly, confirming that she was not aware until she had been provided with this letter, that Mr Donaghy was unhappy with her contribution to the appeal. She also attached emails from her clerk and from Senior Counsel, with whom she was briefed, confirming that they too had not been made aware.
37Mr Donaghy took until 9 May, and only after a further letter from the Law Society referring him to its powers under s 660 of the LP Act, to inform the Law Society that his earlier letter should be treated as his formal response. He also took issue with Ms Graycar's response, which had by then been provided to him, because, amongst other matters, he said she did not expressly respond to his offer that he would be prepared to engage in an informal mediation.
38There was then a further letter from Ms Graycar to the Law Society dated 31 May 2009, responding to Mr Donaghy's letter of 9 May. This letter also did not refer directly to Mr Donaghy's request to participate in a mediation process.
39In the Law Society's Reasons supporting its findings against Mr Donaghy, there is no reference to his being prepared to mediate the dispute, so it reasonable to assume that the Law Society did not believe this consideration to be a relevant one.
40Having reviewed all the evidence in relation to this issue, the Tribunal has come to the same conclusion. Had Mr Donaghy proposed mediation on the receipt of Ms Graycar's letter of 30 November 2009, or at the latest, had he responded promptly to Ms Tomlinson's suggestion of a meeting, in her letter of 5 January, that may well have been a relevant matter for us to consider, assuming the offer had not been accepted by Ms Graycar.
41After the matter had been upgraded to a formal complaint, which may have been able to have been avoided if Mr Donaghy had responded promptly to the Law Society's correspondence, Mr Donaghy's belated request for a mediation is not a fact relevant to our determining this Application for Review. In particular, we do accept that by that time, in view of the events that had occurred, it was unreasonable of Ms Graycar not to engage in a face to face meeting with Mr Donaghy.
42We also note for completeness, s 517 of the LP Act, which provides that a Consumer Dispute that comprises or is involved in a complaint, may be the subject of a mediation. However, insofar as the complaint involves an issue of unsatisfactory professional conduct or professional misconduct, the complaint is to continue to be dealt with after or during the mediation or attempt at mediation.
43Mr Donaghy next submitted (paragraph 4 of his Application for Review), that the Law Society took into account an irrelevant consideration, namely the determination of the Cost Assessor, after Ms Graycar's fees had ultimately been assessed in May 2011.
44The events relevant to this submission are that Ms Graycar filed an application for assessment of her fees in November 2010. Mr Lancken was appointed the assessor. Both Mr Donaghy and Ms Graycar made submissions and she provided her electronic files. Mr Donaghy said that he should be obliged to pay no more than $3,625. In May 2011, Mr Lancken certified that all of Ms Graycar's fees were recoverable and ordered Mr Donaghy to pay the costs of the assessment. In his Reasons, he noted that the amount claimed was similar to the amount estimated in Ms Graycar's initial fee disclosure, which had been accepted by Mr Donaghy, and in any event was fair and reasonable.
45Mr Donaghy lodged a Review of Mr Lancken's determination in June 2011. Thereafter, according to Mr Donaghy's letter of 15 August 2011 to the Law Society, "there was discussion between the parties and the matter was settled between ourselves on terms not to be disclosed".
46A summary of these events is contained in the Reasons supporting the Law Society's decision, set out above in paragraph 2. It is reasonable to infer from this that the Law Society did take into account the fact that the assessment allowed all of Ms Graycar's fees, and that Mr Donaghy paid the account only after he had lodged a Review.
47In his correspondence with the Law Society after the assessment process had concluded, Mr Donaghy said that he took issue not only with the fact that Mr Lancken had certified that all of Ms Graycar's fees were recoverable, but also with a number of comments made by him in his Reasons.
48In particular, he said he found it "particularly objectionable that the cost assessor has determined that mediation would not have avoided the costs of this assessment and would only have increased them", because of, in the cost assessor's words, "the attitude the respondent demonstrated in this assessment".
49These comments do not appear in the Law Society's Reasons and there is nothing to suggest that they were a relevant consideration in the Law Society's decision making process. In any event we have not taken them into account in coming to our decision in this Application for Review.
50We have also not taken into account the fact that the Mr Donaghy sought to challenge Mr Lancken's decision, even if that may have been a matter of relevance to the Law Society. Mr Donaghy submits, and we accept, that he was entitled to take this step, and that at no time was he in default of any order to pay the fees, which in the end he paid voluntarily.
51However, we believe it to be of some relevance that the overall outcome of the assessment process was that Ms Graycar's fees were allowed in full, and we have taken that into account in coming to our decision.
52This requires us to say a little more about the nature of Mr Donaghy's objection to Ms Graycar's fees. The appeal to the Court of Appeal in which Ms Graycar was briefed with Senior Counsel, Ilvary Pty Limited v Moss & Ors [2009] NSWCA 207, was unsuccessful. It involved an attempt to argue in the Court of Appeal, a new point of law, which had not been relied on at first instance in the Consumer Trading and Tenancy Tribunal. There was an initial appeal to the Administrative Division of the Supreme Court, where the judge refused to allow the new point to be argued. The Court of Appeal came to the same conclusion. Ms Graycar does not appear to have been briefed in either the Tribunal proceedings or the initial appeal.
53Paragraph 25 of the Court of Appeal's decision said:
"An appellate court will only entertain a point of law raised before it for the first time if it arises on facts which have been found, or are not in dispute".
54Apart from his apparent general dissatisfaction with Ms Graycar's performance, paragraph 12 of his letter to the Law Society of 20 March 2010, contains his specific complaint. He believed that counsel should have advised him that a way to get the point argued before the Court of Appeal, was to approach the respondent to the appeal and to agree a set of facts.
55It is not the function of this Tribunal to determine whether the point of law had any prospects of success, but there seems to be at least two reasons why this criticism of Ms Graycar is unjustified. First, we can think of no reason why the respondent, if approached to agree a set of facts at that stage, would agree to do so. This might result in it being vulnerable to a new ground of attack from the appellant, which would be entirely against its interests in the litigation.
56Secondly, the Court of Appeal judgment goes on to find, at paragraphs 26-28, that the right of appeal from the Tribunal to the Supreme Court only extends to points raised before the Tribunal and this had not been. This, Handley JA describes as "an even greater difficulty" for the appellant than the absence of agreed facts before the Court.
57Finally, even assuming there was some merit in Mr Donaghy's argument, we fail to see that this provides a proper basis for not paying Ms Graycar's fees. Indeed, Mr Donaghy, in his submissions to the costs assessor in 2011, seems to have abandoned this ground, and only pursued the matter by challenging whether Ms Graycar had carried out the research referred to in her fee note, and by questioning its relevance or reasonableness. As noted above, the cost assessor allowed the fees in full.