GROUND 1 FAILURE TO PAY THE FEES OF Ms REG GRAYCAR
15On 24 June 2009, the barrister wrote to the Applicant solicitor confirming receipt of the Applicant's instructions to advise and appear in an appeal in the Court of Appeal set down for hearing on 15 July 2009. The letter included a fee disclosure and costs agreement. Counsel estimated her total fees to be between $8,800.00 and $13,200.00 inclusive of GST.
16She set out the basis of her charges, being $250.00 plus GST per hour: "for preparation, drafting, opinions and conferences, including telephone conferences and travel and waiting time, and for short court appearances, including directions hearing". She said: "I will charge in 15 minute units", and, "For any appearance in court I will charge for a minimum of 1 hour".
17She said that for the final the hearing she would charge $2,200.00 (including GST) for a day and also for days in which she spent 8 hours or more in preparation for the hearing or in preparation of advice/opinion work. There were various other statements as to the basis of her fees.
18She also stated in the letter:
"Acceptance of this offer to enter a cost agreement in terms of this letter may be written or by your conduct in requesting that I undertake work in this matter by giving me further instructions in this matter subsequent to your receipt of this letter."
19The Applicant continued to instruct Ms Graycar in the matter as Junior Counsel to Mr S Bell of counsel and thereby entered into a costs agreement with Ms Graycar (LP Act s.322(3) & (4)).
20Rule 32 of the Revised Professional Conduct Rules, 1995 of the Law Society of NSW, is relevant to the Complaint regarding non-payment of Counsel's fees. It applied and provided at all relevant times:
"32. Contracting for services
"A practitioner who deals with a third party on behalf of a client for the purpose of obtaining some service in respect of the client's business, must inform the third party when the service is requested, that the practitioner will accept personal liability for payment of the fees to be charged for the service or, if the practitioner is not to accept personal liability, the practitioner must inform the third party of the arrangements intended to be made for
payment of the fees."
21At no time prior to receipt of Ms Graycar's bill did the Applicant inform her that he would not be personally responsible for her fees or inform her of some other arrangement for her fees to be paid.
22The appeal was heard on 15 July 2009.
23Ms Graycar advised the Law Society by letter of 6 April 2010 that (among other matters) the day after the hearing the Applicant telephoned her and discussed the matter and asked her to provide him with copies of cases of abuse of process which she had researched at his request and which she had discussed with him in conference the day before the hearing. She said:
"At no time in that telephone conversation of 16 July 2009 did he convey any sense of dissatisfaction in my work. I have not heard from him nor had any message from him (conveyed via my clerk) since 16 July 2009."
24The Applicant does not dispute that.
25On 17 July 2009 Ms Graycar rendered her itemised bill for a total of $11,687.50 to the Applicant. By 24 September 2009 no part of the bill had been paid and Ms Graycar had received no communication from the Applicant. She therefore rendered a copy of the bill headed, "Tax Invoice Reminder" to the Applicant.
26The Applicant did not pay any part of the bill. The limitation period for any application by the Applicant for Ms Graycar's costs to be assessed is 60 days after the bill is given (LP Act S 351(3)). The Applicant made no application for assessment of the costs.
27On 30 November 2009 Ms Graycar wrote to the Applicant and stated in her letter:
"FINAL PAYMENT NOTICE: INVOICE NO 155
After months of futile attempts at contacting you, this letter will serve as formal notice to you that you are in default of your obligation to pay me the sum of $11,687.3O which has been due since 17 July 2009 and overdue since 16 August 2009.
This matter involved extensive use of my time for both court and conferences. I undertook research, reviewed authorities and generally assisted in the preparation for hearing of the matter,
all subject to a clear costs agreement dated 24 June 2009. It seems quite extraordinary that you would ignore my requests for payment and indeed all my attempts to discuss the matter with you. I am disappointed in the extreme to be writing in this fashion.
I remind you that I sent you invoices dated 17July 2009 and 24 September 2009 and my clerk spoke to your associate Tracey Hodgson on an almost daily basis for several weeks asking you to contact her in relation to the account. I should further add that Ms Hodgson repeatedly assured my clerk that she had informed you of her calls and apprised you of the situation. Yet at no time did you do her the courtesy of returning her call.
I consider your conduct to be not only discourteous but unprofessional and it is for this reason that while I consider it regrettable to do so, I have no alternative but to contact the Office of the Legal Services Commissioner in connection with this matter and inform that office of your failure to honour the agreement we made and your failure to respond to repeated attempts to discuss the matter with you.
I will therefore expect full and final settlement of this account within 7 days of the date of this letter (by no later than close of business on Monday 7 December) or I will have no alternative available to me but to report your conduct to the OLSC.
Please contact my clerk Sarah Wyles on 8226 2301 for direct deposit bank details."
28The Applicant did not respond to that letter or the issues raised. On 14 December 2009 Ms Graycar made a complaint to the Legal Services Commissioner regarding the Applicant's failure to pay any part of her bill.
29On 18 December 2009, the Legal Services Commissioner referred the papers to the Law Society of NSW for its attention. The Law Society on 5 January 2010 sent the Applicant a copy of the Complaint of 14 December 2009 by Counsel to the Legal Services Commissioner and asked the Applicant to provide a written response within 14 days. The Applicant did not reply to the letter until he wrote on 27 January 2010 in the following terms:
"I refer to your letter to me of 5 January 2010.
Please be advised that I have just returned to work today after the Australia Day weekend and your letter has come to my attention.
I note you were seeking a response within 14 days of your letter which I cannot now meet.
Correspondence from the Professional Standards Department of the Law Society is treated with the utmost seriousness by this office.
I seek an extension of a further 14 days to enable me to place before you my considered response in this matter."
30The letter of 27 January was sent by facsimile and the Law Society responded by facsimile that day allowing an extension of time till Friday, 12 February 2010 for the Applicant's response. But by 2 March 2010 the Applicant had not responded.
31The Law Society then wrote to the Applicant and in the course of that letter said:
"Absent your formal written response being received by the Law Society within 14 days of the date of this letter, providing a detailed response to the outstanding issues, this matter will be upgraded to the status of a formal complaint for investigation, pursuant to the provisions of Chapter 4 of the Legal Profession Act 2004."
32The Applicant did not respond to the Law Society within 14 days of the letter of 2 March 2010. He responded by letter dated 20 March 2010 and sent by facsimile. In that letter he admitted he had briefed Ms Graycar in June 2009, that her fee agreement was forwarded to him on 29 June 2009, and that her bill was issued on 17 July 2009. He did not deny that he had paid none of her fees.
33He said, however:
"It is incorrect to say that this firm has not responded to Ms Graycar's telephone calls or letters", because, "as Ms Graycar concedes in her correspondence there have been repeated telephone conversations between her clerk and this firm through my associate Ms Hodgson."
There is no evidence from his associate as to the content of any such telephone conversations. He attached a copy of the decision of the Court of Appeal in the proceedings in which Ms Graycar appeared with Mr S Bell. That document establishes that the appeal was dismissed on the basis that it sought to raise a new point of law that was not a question of law decided by the Tribunal from which the appeal arose. The Appeal was dismissed with costs.
34He raised in his letter that at a conference on 7 July 2009, 8 days before the hearing, Mr Bell and Ms Graycar both advised that: "the Appeal was hopeless". He said he had not paid the fees of Mr Bell and Ms Graycar because he considered that they had been "lax" and "I did not consider them to be fair and reasonable for the work performed". It appears that that related to what he considered to be an approach of seeking to have the Respondent to the Appeal agree to a set of agreed facts "which would have enabled a proper basis for the Appeal to be conducted". He relied upon paras 23-25 of the Judgment in that regard, but that does not appear to suggest that the Appeal could have succeeded at all, even with agreed facts, because the legal issue raised by the appeal was one that was not determined by the Tribunal.
35He also said:
"If Ms Graycar wishes to pursue her fees then she would be well aware of her options to bring proceedings if she was confident of success however [sic] I do advise that I would vigorously contest such proceedings on the grounds of breach of contract and professional negligence."
36He indicated that he would be prepared to meet with Ms Graycar informally at his office (in Lismore) "to endeavour to reach satisfactory resolution to this matter." Ms Graycar's chambers are in Sydney.
37The Applicant in his letter to the Law Society of 20 March 2010, alleged:
"It has been conveyed to Ms Graycar and Mr Bell 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."
38Mr Graycar in her letter to the Law Society of 6 April 2010, denied that she had been told that she would not be paid. She also produced copies of e-mails from her to Mr Bell, and from him to her in reply. When asked whether the Applicant had ever told Mr Bell he was not happy with the work that Mr Bell had performed, or had ever told Mr Bell that he would not pay his bill, Mr Bell's reply was: "No & No. He did not reply either to calls or e-mails."
39On 9 April 2010 the Law Society wrote to the Applicant and told him that the matter had been up-graded to a formal complaint for investigation. It advised:
"The conduct issues that appear to arise from the Complaint are as follows:
1) failure to pay the Complainant's fees;
2) failure to communicate.
Please advise if wish your response of 20 March 2010 to be treated as your formal written response to the Complaint."
40By 6 May 2010 the Applicant had not replied to that letter. He had not provided any further submissions. The Law Society Professional Standards Solicitor wrote to him on 6 May 2010, noting that he had not replied. It advised him:
"Absent your formal written response within fourteen (14) days of the date of this letter, appropriately answering the matters set out in the letter of 9 April 2010, a Notice pursuant to the provisions of s.660 of the Legal Profession Act, 2004, will issue against you without further notice. Your attention is directed to the provisions of Section 660(3) of the Legal Profession Act, 2004, ("the Act") which provides you must comply with the provisions of the Notice. (Maximum penalty: 50 penalty units).
Your attention is directed to the provisions of Section 676(4) of the Act which provides that an Australian lawyer you (pursuant to s676(3)), without reasonable excuse, falls to comply with a requirement under section 660 or who (pursuant to s676(2) misleads an Investigator or the Law Society Council Is guilty of professional misconduct.
Your attention Is also directed to Section 672(5) of the Act which provides that the Law Society Council may suspend your practising certificate while a failure to comply with the requirements of a s660 Notice continues."
41The response of the Applicant is dated 9 May. He said in that letter he wished his response of 20 March 2010 to be treated as his formal written Response in this matter. He also in that letter raised: "Ms Graycar's failure to respond" to points he had raised in his letter of 20 March, and said:
"I make it quite clear at point 14 of my abovementioned correspondence that the basis for my dissatisfaction with her work performance was her failure to properly discharge her duties as evidenced by the Court of Appeal's comments in their decision."
42In that letter the Respondent also said:
"I note that the Law Society is forwarding correspondence to my street address. Please note that correspondence should be forwarded to my PO box as Australia Post has the unfortunate habit of placing mail addressed to my street address on the stairs at the front of the building whereby I am reliant upon persons entering the building to deliver mail to my office and as such the reliability of receiving mail addressed in this fashion is questionable.
"I did not receive your letter addressed to me dated 2 March 2010 referred to in your chronology advising that if no response was received by me to your letter dated 27 January 2010, that this matter would be up-graded to the status of a formal Complaint for investigation."
43Assuming that it is correct that he did not receive the letter of 2 March 2010, he was aware by the letter of 27 January that he had an extension of time to 12 February to respond to the Complaint, but he did not respond until 20 March 2010.
44The Professional Conduct Committee of the Law Society considered the complaints at a meeting on 3 February 2011 and recommended that the Applicant be informed of the issues involved in the complaints and the opinion of the Committee, subject to any submissions, was that it should resolve that it is satisfied there is a reasonable likelihood that the legal practitioner would be found by the Tribunal "to have engaged in professional misconduct and unsatisfactory professional conduct", and that proceedings be instituted in the Tribunal with respect to the Complaint pursuant to sec 537(2) of the Legal Profession Act 2004. It also advised that the Committee's opinion was that, subject to any submissions, appropriate orders to be sought would be:
(1)public reprimand;
(2)a fine of $1,000.00; and
(3)the legal practitioner to pay the costs of and incidental to the proceedings before the Tribunal.
45The resolution provided for the Applicant to be notified that consideration of the Complaint would be placed on the agenda of the Professional Conduct Committee as soon as possible after the expiration of 14 days from the date of the letter notifying the Applicant.
46The letter was dated 9 February 2011. The Applicant did not respond to the Committee's proposals. Fourteen days after the Law Society letter the Applicant wrote to the Law Society and said:
"So that I can prepare detailed submissions to be placed before the Committee, I'd be grateful if you would provide me with copies of the material the Committee relied upon in making its finding."
47On 24 November 2010 Ms Graycar had lodged an Application with the Supreme Court for the costs in her bill to be assessed. Nineteen months had passed since the Applicant had received Ms Graycar's bill, but despite his alleged objections to her costs he had made no application for assessment of her costs.
48In the costs assessment the Applicant did not file his "Notice of Objections" until at least 28 February 2011. It raised 8 separate objections to the bill. He sought to have the costs reduced from $11,687.50 to $3,625.00. He did not pay $3,625 or any other amount.
49The Applicant wrote again to the Professional Standards Department of the Law Society on 16 March 2011 with various more detailed objections to Ms Graycar's bill, and requested that the Professional Standards Committee not refer the matter to the Administrative Decisions Tribunal. That letter was sent by facsimile on 16 March 2011. The Professional Standards Department replied on 21 March that the matter came before the Professional Conduct Committee on 17 March and the Committee resolved that consideration of the matter await finalisation of the costs assessment process.
50The costs assessor completed the assessment of Ms Graycar's costs on 9 May 2011 and that day he signed a Certificate of Determination of Costs assessing the costs at the full amount claimed by Ms Graycar and a Certificate of Determination of the Costs of the Costs Assessment requiring the Applicant solicitor to pay the Supreme Court $732.88 for the filing fees paid on the application by Ms Graycar and the costs of the assessor.
51According to the requirements of the LP Act (ss 368 & 369), those certificates would have been sent with the assessor's reasons to the Manager, Costs Assessment, who would then send copies to the parties.
52The total amount payable by the Applicant, Mr Donaghy, in the Certificates issued by the Costs Assessor on 9 May 2011 was $12,420.38. In addition, if the Certificate of Determination of Costs had already been registered with a court, interest would be payable under the court rules.
53Ms Graycar provided the Law Society with a copy of the Certificates from the Costs Assessor. Six weeks after the decision of the costs assessor, on 20 June 2011 the Applicant filed an Application for Review of the decision of the costs assessor and the reasons. The time limit for such an application is 30 days after the Certificates are sent to the parties (LP Act s373(1)). It appears the Application for Review was probably filed out of time.
54The Applicant told the Law Society that his Application for Review of the determination of the costs assessor was withdrawn on 24 June 2011 after the parties had reached agreement "on terms not to be disclosed". It appears that the Applicant made a payment to Ms Graycar, in all likelihood in the period 21-24 June 2011, 23 months after he received her bill and not until more than 6 weeks after her costs were assessed.
55As the Application for the Review was withdrawn, the applicant remained liable for the costs of the assessment. There is no evidence that the costs assessment was set aside, or that Ms Graycar compromised her entitlement under the costs assessment, or that the amount he paid to Ms Graycar was not the full amount of her costs, which the Applicant was liable to pay under the costs assessment.
56The Law Society wrote again to the Applicant on 15 August 2011 enclosing a copy of the Certificate of Determination of Costs of 9 May 2011 and inviting any comments he wished to make on that within 14 days. The letter also advised that the Professional Conduct Committee was likely to further consider the matter at its meeting on 1 September 2011. It stated: "If I do not hear from you I will contact you again when the result of the Committee's deliberations are known."
57The same day the Applicant wrote to the Law Society advising that "the matter was settled between ourselves on terms not to be disclosed" and that his Application for Review was withdrawn.
58On 29 August (14 days after the Law Society letter of 15 August) the Respondent replied to that letter. He sent his reply by facsimile. He made criticisms of the reasons given by the Costs Assessor.
59By letter dated 2 September 2011 the Law Society notified the Applicant of its decision to reprimand the Applicant under s.540 of the LP Act for failure to pay a third party and failure to communicate, which the Professional Conduct Committee was satisfied:
"There is a reasonable likelihood Geoffrey James Donaghy ("the legal practitioner") would be found by the Tribunal to have engaged in unsatisfactory professional conduct."
60The Applicant has not provided any evidence or submission that his client did not provide him with the funds to pay Ms Graycar's fees or that the client delayed in providing those funds, or that the client instructed him not to pay Ms Graycar's fees.
61The costs agreement created a contractual obligation of the Applicant to pay Ms Graycar's fees. In addition it is well established that he had a professional obligation to pay those fees (e.g. Re: Robb (1996) 134FLR 294; and Council of the Law Society of NSW v Beazley [2012] NSWADT153 at para 69).
62It has also been established that "wilful or persistent refusal to pay Counsel's fees can amount to professional misconduct on the part of a solicitor" (Re: Robb (1996) 134FLR294 at page 310; Law Society v McCarthy (2003) NSWADT 58 at para 43; and Council of the Law Society of NSW v Beazley [2012] NSWADT 153).
63However, our research does not reveal any decision where a single failure to pay counsel, even where the funds were provided by the client and misappropriated by the solicitor, has been held of itself to constitute professional misconduct, although together with misappropriation, it clearly would be professional misconduct.
64In Law Society of NSW v Davidson [2007] NSWADT 264, the solicitor delayed for periods of 1 - 4 months the payment of barrister's fees and consultant's fees for a total of 6 different people. The Tribunal found that the delays were: "Not a mere matter of oversight or misapprehension as to the solicitor's obligation to pay those disbursements". It found that the delays were deliberate. It found that he: "Failed to pay third parties within a reasonable time". It held: "... persistent delay in the payment of moneys due to third parties constitutes professional misconduct". It held that the solicitor was guilty of professional misconduct in relation to the delayed payment of each of the 6 persons.
65In Council of the Law Society of NSW v Beazley [2012] NSWADT153, in the particular circumstances of the failure of Mr Beazley to pay barrister's fees, the Tribunal held that his conduct was neither professional misconduct nor unsatisfactory professional misconduct. The solicitor there had not signed the costs agreement for an appeal. He had sent it to the client for signing.
66In this case, the period between the rendering of the bill to the solicitor and the payment of the bill is more than 23 months. That is quite an extraordinary delay. It was also in the context where he was receiving frequent reminders from the barrister or her clerk for nearly 4 months after the bill was rendered. There was even a delay of some weeks after he had the result of the assessment. The whole of the delay was deliberate.
67However, the Tribunal is not satisfied that if the non payment of Ms Graycar's fees alleged was proved in disciplinary proceedings in the Tribunal, there is a reasonable likelihood that the failure to pay Ms Graycar would of itself be held to constitute professional misconduct. This Tribunal is satisfied that there is a reasonable likelihood that the failure to pay Ms Graycar would be found by the Tribunal in such proceedings to be in unsatisfactory professional conduct.