Guss v Law Institute of Victoria Ltd

1 On 10 September 2004, the Full Tribunal of the Legal Profession Tribunal ("the Tribunal"), after a hearing over eight days, found the appellant ("Guss") guilty of misconduct at common law. As the Tribunal noted in its reasons for decision on penalty, misconduct in a professional capacity has been defined consistently as conduct which would be reasonably regarded as disgraceful or dishonourable by "fellow professionals" of good repute and competency.[1]

2 At the relevant time, Guss was acting as solicitor for his wife, Sandra Guss, who was the plaintiff in an action in the Supreme Court before Ashley, J. The Tribunal found that Guss failed to discover a document relevant to the issues to be determined in that proceeding, namely a copy survey plan ("the plan") which he had received from one Ian Muir ("Muir") before the commencement of the hearing. The Tribunal found that Guss's failure to discover the plan was an intentional and deliberate action, and not a matter of mere ignorance, inadvertence or carelessness.

3 On 25 November 2004, the Tribunal handed down its decision on penalty, and made the following orders:

1. Pursuant to the provisions of s 160(1)(c)(iii) of the Legal Practice Act 1996 ("the Act"), Guss's practising certificate be cancelled.

2. Pursuant to the provisions of s 160(1)(c)(vii) of the Act, Guss not be able to apply for a practising certificate before 1 December 2007.

3. Guss pay to the respondent (**"LIV"; "**the Law Institute") costs of the proceeding in the sum of $51,477.

4 By notice of appeal dated 23 December 2004, Guss appealed to this Court pursuant to s.170(1) of the Act against the judgment and orders of the Tribunal, both as to guilt and as to penalty. The appeal is on a question of law only. By summons dated 15 February 2005, Guss applied for a stay of the Tribunal's orders pending the hearing of the appeal. That application was heard by Ormiston and Buchanan, JJ.A. on 25 February 2005. The stay application was refused.

The original litigation

5 The salient features of the substantive litigation were set out in the particulars of charge filed by the respondent and were not in dispute. Sandra Guss had sued Geelong Building Society (in liq.) for damages. The basis of the claim was that, in selling a particular property as mortgagee, the defendant building society had breached the duty which it owed to the plaintiff (and to Guss) as the then registered proprietors and mortgagors of the property. The breach of duty was said to be constituted in part by the defendant's decision to sell the property as one lot, rather than as two separate lots. A matter relevant to this issue was whether the house on the property encroached across the boundary between the two lots. If it did, then it was arguably better to sell the property as a whole, as the defendant had done.

6 On 12 January 2001, three weeks before the trial was due to commence, Guss engaged Muir (who was a licensed surveyor) to provide advice on the question of encroachment, with a view to his being called as an expert witness on the plaintiff's behalf. On 31 January 2001, Muir sent Guss a facsimile attaching what was described by Muir (in the cover sheet) as "a copy of the survey plan". The plan in question was described as a "re-establishment survey plan". It had been prepared by licensed surveyors. In his evidence to the Tribunal, Muir said he had telephoned Guss that day to advise that he had just received a copy of the plan, and that he would fax it through. The cover sheet from Muir contained the following relevant statement:

"On the top right corner of sheet 4 there is an offset of 0.50 metres shown between the paling fence and the title boundary. This may have led to other people believing the house protruded over the central title boundary."

7 Guss, as solicitor for the plaintiff, did not make discovery of the plan. On the first day of the hearing, counsel for the plaintiff opened the case, stating that there was no survey plan in existence. Guss was present as instructing solicitor but took no step to correct what was in fact a false statement.

The Tribunal's findings

8 In its full, clear reasons for decision, the Tribunal set out the following finding:

(a) the plan was discoverable;

(b) at the time he received the fax communication from Muir, Guss "well knew" that the plan was what Muir said it was, namely, "survey plans of the subject property";

(c) Guss "well knew" that the plan was discoverable and required to be disclosed to the defendant;

(d) particularly with his knowledge of the property, Guss knew that the plan showed encroachment of the building on the property across the boundary between the two lots;

(e) at no time before 12 February 2001, when Guss was cross-examined about the plans, did Guss show the plan to his counsel;

(f) in failing to discover the plans before the commencement of the action, Guss acted of his own volition.

9 As noted earlier, the Tribunal found that the decision not to discover the plans was deliberate. The Tribunal further found that Guss acted deliberately in deciding not to produce the plans to his counsel prior to the commencement of the hearing, and in deciding to remain silent when his counsel informed Ashley, J. that there was no survey plan in existence.

10 Although the grounds of appeal set out in the notice of appeal are extensive, in his outline of submission and in argument in this Court Guss limited himself to four matters, as follows:

1. In determining that the plan was discoverable, the Tribunal erred in treating as evidence the finding by Ashley, J. in the Supreme Court proceeding that the plan was discoverable.

2. Even if the plan was discoverable, it was privileged from production.

3. The finding that Guss had not informed the plaintiff's counsel of the existence of the plan -

"was against the evidence and the weight of the evidence, and unsupported thereby, particularly the evidence of Muir, and should be regarded as unsafe".

4. The penalty imposed was excessive.

11 I deal with these grounds in turn.

The plans were discoverable

12 The first ground of attack is misconceived. In deciding the question of discoverability, the Tribunal did not rely on the finding to that effect made by Ashley, J. On the contrary, the Tribunal arrived at its own decision.

13 The reasons of the Tribunal contain a full and careful consideration of the applicable principles, and of the relevant facts, leading to the Tribunal's conclusion which was expressed as follows:

"We have had the advantage of sighting in its entirety the facsimile received by Guss from Muir ... and in particular the detail on the facsimile plans. We have no hesitation whatsoever in finding that detail, if disclosed, must inevitably have led both parties to the litigation to 'a train of inquiry'.

... We have no hesitation whatsoever in finding, with the greatest respect, that the finding by his Honour [that the plans were discoverable] was so obviously correct, indeed in our view the only conclusion open, that any attempt to challenge that finding must fail."

14 The reference to "a train of inquiry" was a reference to the well-known statement by Brett, L.J. in Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Co,[2] set out in the Tribunal's reasons. The reference to a challenge to his Honour's finding was a reference to the complaint by LIV that, in defending himself against the charge, Guss was mounting a collateral attack on the finding by Ashley, J. It is clear beyond doubt, in my view, that in expressing its concurrence with his Honour's finding the Tribunal was doing so having decided the matter for itself. Moreover, the Tribunal's conclusion was clearly right, for the reasons which the Tribunal gave.

Legal professional privilege

15 Guss submits that both the cover sheet from Muir and the copy of the plan forwarded by facsimile were the subject of legal professional privilege. He relies on the following statement from Brennan, C.J. in Commissioner, Australian Federal Police v Propend Finance Pty Ltd,[3] that -

"Authority and principle thus combine to establish that prima facie copies of non-privileged documents are privileged if the copies are brought into existence solely for the purpose of obtaining or giving legal advice or solely for use in litigation that is pending, intended or reasonably apprehended."[4]

Guss contends that Muir brought the copy plans into existence for the purpose of "obtaining or giving legal advice or solely for use in litigation".

16 The misconduct with which Guss was charged, and which was found proved, was constituted by his failure to make discovery of the documents. Discovery and production are, of course, separate steps. Privilege, if it exists, is relevant only to production. It does not affect the obligation to make discovery. The obligation which Guss breached was the obligation to make discovery of relevant documents, that is, to disclose that they were in the plaintiff's possession or control. This he failed to do. Whether a claim for privilege against production of the documents might have been sustained is a quite separate question.

17 Guss gave evidence before the Tribunal at some length. At no stage did he suggest that his failure to disclose the existence of the documents was to be explained by his having made (on his client's behalf) a claim for privilege against production. On the contrary, he told the Tribunal on several occasions in the course of his evidence that he had formed the view that the documents were not discoverable.

18 Thus, he was asked early in his evidence-in-chief why he had not prepared a supplementary affidavit of documents in which he specified that he had the plan. He answered as follows:

"Following my discussion with [counsel for the plaintiff] I didn't believe it was a discoverable document. ... [Counsel] advised me that it had no probative value and I can't remember the specific words that were used but the essence of the discussion or the advice, if you can call it that, was that it didn't advance anything, it didn't have any probative value and it needn't be discovered."[5]

19 Under cross-examination, he was asked what his own view was - independent of the advice he claimed to have had from counsel - about whether the plan was discoverable. His answer was as follows:

"I didn't believe that it was discoverable. ... [T]he fax had been provided by our own witness and it was part of the machinations of our preparation of the case, also that when I considered it and had spoken to Mr. Muir and what [counsel] had said to me, that we didn't know who the author was, we didn't know its date, we didn't know what it was and I just formed the view that it was not discoverable on - for all of those reasons."[6]

Towards the end of the cross-examination, Guss reaffirmed his earlier answer about his own view:

"... [W]hatever view [counsel] may have formed, I certainly formed the view that it wasn't a discoverable document for the reasons I have already given in evidence."[7]

20 Following the conclusion of the hearing in this Court, Guss provided the Court with a copy of the outline of submissions filed with the Tribunal on his behalf, together with extracts of the transcript of the final submissions made to the Tribunal by his counsel. There is no reference in the outline of submissions to any claim of privilege. The largest section of the outline is headed "Was the document discoverable at all?" It opens with the following passage:

"This was an untitled, undated, plan which bore no details of its authorship. In the circumstances was it unreasonable for the practitioner to show it to his counsel for the purposes of ascertaining its significance if any?

We would submit 'no', and it is submitted that viewed in that light it is hardly surprising that the practitioner did not consider that it was discoverable..."

In oral submissions, Guss's counsel argued that -

"[A]n undated, unsigned, unauthored document obtained from one's own expert is not discoverable."

21 Unlike the written outline, however, the oral submissions did refer to the possibility that the documents were privileged, in the following terms:

"However, if the documents were privileged, ... then it's hard to understand how they were discoverable. ... I would have thought if they're privileged, and the claim is upheld as it seemed to have been on many occasions by Mr Justice Ashley, then the document probably wasn't discoverable in any event."

Once again, this argument appears to have been directed at establishing that the documents (the cover sheet and the plan) were not discoverable at all. Plainly enough, the basis of the submission was wrong in law. As I have already said, the question whether the documents attracted legal professional privilege had no bearing on their discoverability. Indeed, the question of privilege would not arise unless it had first been established that the documents were discoverable.

22 In pressing his privilege argument in this Court, Guss invited the Court to find that, on a proper reading of his evidence before the Tribunal, the reason he gave the Tribunal for not having disclosed the existence of the documents was his belief that they were covered by legal professional privilege. As I have indicated, the transcript of his evidence before the Tribunal shows no such thing. He told the Tribunal that he had formed the view - reliant, he said, in part on the advice of counsel - that the documents were not discoverable at all. His explanations of the non-disclosure of the documents made no mention of a claim of privilege.

23 As Guss pointed out in argument, there were references during the Tribunal hearing to parts of the transcript of the original proceeding, at the point in that proceeding where the existence of the plan was disclosed by Guss. It appears that a claim for privilege was then made in respect of the fax cover sheet from Muir, but that no such claim was made in respect of the critical document, being the plan itself. The suggestion that the copy plan in Guss's possession may itself have been privileged appears to have been asserted for the first time on this appeal.

24 For the reasons already given, it is unnecessary to decide whether a claim for privilege in respect of the copy plan might have succeeded. Suffice it to say that, even if a claim had been made, compliance with the Supreme Court Rules (r.29.04(a) and (b)) would have obliged Guss as solicitor for the plaintiff to "identify" and "describe" the document in respect of which privilege was claimed. Even wording as brief as "copy plan" would have been sufficient to alert the defendant to the likely existence of an original plan.[8]

Guss acting on his own volition

25 As noted, Guss attacks as "unsafe" the finding that he acted on his own in deciding not to discover the plans and did not, as he claimed, rely on advice from counsel in that regard.

26 In my opinion, the Law Institute is correct in submitting that the contentions advanced by Guss - that these findings of fact were "against the evidence and the weight of the evidence" or were "unsafe" - do not raise a question of law. A question of law would only arise if it were said that there was no evidence to support the findings of fact.[9] Guss has not made his submission in those terms, probably because such a submission would have been quite untenable. There was very clear evidence from the plaintiff's counsel - on which the Tribunal was entitled to act - that he had not known of the existence of the plan until Guss was cross-examined about them in court on 12 February 2001.

Penalty

27 Both in the notice of appeal and in his outline of submissions, Guss contended that the penalty which the Tribunal imposed was excessive. This is not, however, an appeal by way of rehearing. It is, as I have already pointed out, an appeal on a question of law only (s 170(1)). Accordingly, this Court could only interfere with the Tribunal's penalty decision if Guss established that the decision was vitiated by error of law.

28 As with sentencing in the criminal law, the Tribunal's decision on penalty was made in the exercise of its discretion. Accordingly, the decision falls to be examined by reference to the well-known principles stated in House v The King.[10] Guss points to no specific error of law, such as a failure to take into account a relevant consideration. He accepted in argument that his attack on the penalty as being excessive could only succeed if he showed that the penalty was manifestly excessive, that is, obviously outside the range of penalties reasonably open to the Tribunal, so as to demonstrate that the penalty discretion had not been properly exercised.

29 Guss contends that the penalty can be seen to be manifestly excessive when regard is had to the following matters:

(a) his age - he was 66 at the time and is now 68, such that cancellation of his practising certificate for three years would be "the equivalent of a life sentence";

(b) the fact that he has been in practice, with a full practising certificate, continuously from 1 March 1962, a period of over 42 years as at the date of the Tribunal's order;

(c) the fact that no prior infringement of the Act was alleged against him;

(d) the fact that his wife was, at the time of the Tribunal's decision, terminally ill with cancer. (She died on 15 September 2005);

(e) the fact that the legal practice was his only source of income;

(f) the content of the five testimonials submitted to the Tribunal; and

(g) the need for parity with sentences imposed on other practitioners for contraventions of the Act.

30 The Tribunal published separate reasons for its decision on penalty. Once again, the reasons are admirably clear and comprehensive. The Tribunal noted the respective submissions of the Law Institute (that Guss's practising certificate should be cancelled for a period of two to three years) and of counsel for Guss (that a reprimand would be an appropriate penalty).

31 The Tribunal's reasons refer expressly to each of the matters listed in paragraphs (a) - (f) above. It is plain that these matters were all considered.

32 I turn to the issue of parity with penalties imposed in other cases. At the request of the Court, the Law Institute has since the hearing supplied copies of decisions of the Tribunal (and its predecessors) in some 21 cases, spanning the period February 1992 - September 2005. In each case, the disciplinary tribunal cancelled the practitioner's practising certificate. The periods of cancellation ranged from three years to seven years. A three year cancellation was imposed in seven of the 21 cases. In eight others, the period of cancellation was five years.

33 The assistance to be derived from these decisions is, necessarily, limited. With one exception, the cases did not involve misconduct comparable to that in which Guss was found to have engaged. They concerned conduct ranging from trust account breaches to misuse of clients' funds, gross inattention to clients' matters and practising without a practising certificate. All that can be said of those decisions is that they make it quite clear that the disciplinary tribunal has consistently shown itself ready to impose substantial periods of cancellation - three years and upwards - for what it regards as serious misconduct.

34 The only case which bears any real similarity to the present is one which was decided in December 2002. The misconduct was constituted by misleading the Court. The practitioner had included in a Magistrates' Court Complaint a claim for extras of $1500 when he knew that no such extra costs had been, or were likely to be, incurred. The practitioner was found guilty of misconduct and his practising certificate was cancelled for a period of three years. As with the present case, this was a single instance of misconduct, involving a breach of the practitioner's paramount duty not to mislead the court.

35 Against that background, it does not seem surprising that the Law Institute, as the body responsible for regulatory supervision of the profession, submitted to the Tribunal that an appropriate penalty in the present case would be cancellation of Guss's practising certificate for a period of two to three years. That submission no doubt reflected both the extensive experience of the Law Institute in disciplinary proceedings against practitioners and its assessment, based on that experience, of the relative seriousness of the misconduct in question.

36 The Tribunal concluded that this was indeed a very serious instance of misconduct. It is instructive to set out the full passage from the Tribunal's reasons:

"Mr Crafti [counsel for Guss] contrasted this case to one where a practitioner destroyed relevant records or documents. He stressed the facsimile plans were not created by Guss and came into his possession as a result of appropriate enquiry and research, a course open to all parties and not exclusive to Guss.

It is true Guss did not destroy the facsimile plans received from Mr Muir, however, in that regard it appears Mr Justice Ashley was not provided with page six thereof. Page six was of assistance to us in our evaluation and interpretation of the facsimile plans. Be that as it may, we are unable to attach weight to Mr Crafti's submission. The issue is failure to discover or disclose. The fact is the facsimile plans were and remained in the possession of Guss and not disclosed.

There is really no necessity for us to state the obvious. It is asserted in the interests of justice that full disclosure be made of all documents related to the issues in the case.

In that regard, it is relevant that a solicitor is an officer of the Supreme Court with a duty not to obstruct the interests of justice."

"We are mindful of the fact our primary function is the protection of the public. In that regard it is relevant to take into account the protection of the Court, the public and members of the profession against similar unprofessional actions that have the capacity to undermine the administration of justice. Deterrence is a relevant consideration.

It has truly been said that honesty as well as knowledge and ability are essential ingredients to be a member of and practise in an honourable profession.

...

We consider it appropriate for the Full Tribunal to express its strong disapproval of the conduct of Guss. His conduct was intentional and deliberate. His involvement of [counsel] was reprehensible. His attitude throughout the proceedings gave a clear indication of lack of remorse."

38 Reference should also be made to the Tribunal's conclusion that Guss -

"was not frank and honest in his evidence to the Tribunal, and his defence was unmeritorious in that it in part relied upon an attempted involvement of counsel."

39 It is difficult to overstate the importance to the administration of justice of the paramount duty of a legal practitioner not to mislead the court. Where there is any conflict, or risk of conflict, between that duty and what the practitioner perceives to be his/her duty to the client, the duty to the court must always prevail. Nowhere is the risk of conflict more likely to arise than in relation to the obligation to make discovery. Discovery is, of course, the obligation of the client, but the client inevitably depends upon the advice of the legal practitioner as to what is, and what is not, discoverable and as to the availability of any claim for privilege. As Giles, A.J.A. said in Law Society of New South Wales v Foreman[11] -

"It is of the greatest importance in the conduct of the profession of a solicitor, and never more so than in relation to litigation where the court relies upon the solicitor in matters such as discovery of documents, that other legal practitioners should be able to accept without question the honesty of their colleagues and the court should be able to accept without question the honesty of its officers."

40 For a practitioner to do what Guss has been found to have done - knowingly to withhold a relevant document and to stand silent while counsel engaged on behalf of his client made in open court what he (Guss) alone knew to be a false statement about the non-existence of such a document - is rightly to be viewed as very serious conduct. As counsel for the Law Institute submitted to the Tribunal, the conduct found proved went to the heart of the administration of justice.

41 Guss relied on the decision of the Full Federal Court in Chamberlain v Law Society of the Australian Capital Territory.[12] In that case, the Full Court, by majority, concluded that suspension from practice was a penalty disproportionate to the gravity of the particular offence, and ordered that a reprimand be substituted. In my opinion, the decision is of no relevance to the present case. It concerned conduct of a quite different kind, which occurred in the course of the practitioner's dealings with a fellow practitioner. No question arose of any breach of the practitioner's paramount duty to the Court.

42 That the misconduct by Guss occurred towards the end of a long and otherwise blameless career is a significant mitigating factor. At the same time, the more experienced a practitioner is, the more acutely aware he/she should be of the vital importance of strict compliance with discovery obligations.

43 I am not persuaded that the penalty imposed was manifestly excessive. In my view, the penalty imposed was within the range open to the Tribunal in its exercise of discretion.

The order for costs

44 The Institute sought an order that Guss pay its costs of the eight-day hearing. The Institute sought costs in the sum of $92,447.90, of which $76,103.50 related to the fees of senior and junior counsel. Under s 162(2) of the Act, the costs were "in the discretion of the Tribunal". The Tribunal accepted a submission by counsel for Guss that the County Court scale, rather than the Supreme Court scale, was appropriate in view of "the lack of complexity of the facts in issue".

45 Guss submitted that the professional costs sought by the Law Institute appeared to include an element of "profit". Whether that was so or not, the Tribunal's decision to award the Institute the sum of $10,000 as "a fair and reasonable global figure" is unimpeachable as an exercise of discretion.

46 Counsel for Guss submitted to the Tribunal that no costs should be allowed for senior counsel. The Tribunal accepted that -

"the question of encroachment, and in particular the state of mind of Guss in relation thereto and [the] requirement of disclosure, did not constitute a 'complex case'. We agree the overall presentation of the case on behalf of LIV was made more complex, and quite unnecessarily so, by the allegations in paragraphs 14-25 of the Particulars. Litigation of those allegations did lengthen the proceedings."

47 In the event, however, the Tribunal accepted that it had been reasonable for the Institute to anticipate a submission to the Tribunal that the case advanced on behalf of Guss -

"constituted a collateral attack on the decision and judgment of Ashley, J. and contravened the 'Anshun principle'. ...This is an area of law not free of complexity and difficulty and was a proper circumstance to be considered by LIV in deciding to brief senior counsel."

48 In this Court, senior counsel for the Institute did not contest the Tribunal's statement about the "lack of complexity of the facts in issue". He conceded that there was nothing about the facts in issue on the misconduct charge which warranted the engagement of senior counsel. At the same time, he maintained, the

Tribunal was right in its conclusion that the engagement of senior counsel was warranted having regard to the anticipated "collateral attack" argument.

49 Accepting that this was so, I am - with respect to the Tribunal - quite unable to see how the requirement for senior counsel to deal with that particular argument could have justified an order that Guss pay the costs of senior counsel's presence for the balance of the hearing. In my view, the "collateral attack" argument was quite discrete, and could quite adequately have been dealt with by arranging for senior counsel to be present for that part of the hearing - surely no more than a day - required to be devoted to that argument.

50 In my opinion, in ordering that Guss pay the costs of senior counsel for the entire hearing over eight days, when it was quite unnecessary for senior counsel to be present for more than one day, the Tribunal fell into error. Accordingly, I would allow the appeal on the question of costs to this extent, that Guss should be ordered to pay for senior counsel for one day only of hearing, rather than eight. The effect of this will be to reduce the costs order by $21,000. In lieu of the Tribunal's costs order, it should be ordered that Guss -

"pay to LIV its costs of and incidental to these proceedings fixed in the sum of $30,477.00".

[1] Atkinson v. General Council of Medical Education and Registration [1894] Q.B. 750; Re a Solicitor ex parte The Law Society [1912] K.B. 302; Myers v. Elman [1940] A.C. 282; Re a Solicitor [1960] VicRp 96; [1960] V.R. 617.

[2] [1882] 11 QBD 55 at 63; see also Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341 at 345.

[3] (1997) 188 CLR 501.

[4] At 509.

[5] T254.

[6] T390-1.

[7] T399.

[8] See Propend (supra) at 509-10.

[9] Fidgeon v William Abbott & Associates [2003] VSCA 5.

[10] [1936] HCA 40; (1936) 55 CLR 499 at 505.

[11] (1994) 34 NSWLR 408 at 471-2.

[12] [1993] FCA 527; (1993) 118 ALR 54.