He v Aloe & Co Pty Ltd [2006] VSCA 235

He v Aloe & Co Pty Ltd [2006] VSCA 235 - VSCA 2006 case summary — Zoe

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1 The appellant, Daming He ("DH"), sued in the Magistrates' Court for $2026.50 plus costs and interest, for damage to his motor vehicle. The respondent ("AAC") was his solicitor. After three adjournments, the matter came on for hearing on 30 November 2001. Following negotiations, the case was settled for $1425, plus costs and disbursements agreed at $1716.

2 DH was very unhappy with the outcome. He was dissatisfied with the conduct of his lawyers, and believed he had been pressured into accepting inadequate compensation. He made a complaint against the barrister to the Legal Ombudsman, which was dismissed. Then in March 2003, he complained about AAC to Victorian Lawyers RPA Limited ("the Law Institute"). The Law Institute was unable to resolve the dispute and referred it to the Legal Profession Tribunal ("the Tribunal"). After a hearing on 10 March 2004, the Tribunal upheld a no-case submission on behalf of AAC and dismissed DH's claims. DH appealed to the Full Tribunal, which dismissed his appeal and ordered him to pay costs.

3 Under s.170(1) of the Legal Practice Act 1996 ("the 1996 Act"),[1] DH has an appeal as of right to this Court from the decision of the Full Tribunal, but only on a question of law. By notice of appeal dated 18 August 2004, DH set out at length his complaints about the procedure in the Tribunal and in the Full Tribunal. His principal complaint was that, both in the Tribunal and on appeal to the Full Tribunal, his allegations of misconduct by AAC had been ignored. The notice of appeal itemised 10 instances of alleged misconduct.

4 The appeal to this Court was due to be heard on 24 November 2005 but the hearing date was vacated after the Court decided that the draft notice of appeal did not comply with the applicable rules, set out in Order 4 of Chapter 2. Contrary to the requirements of rule 4.11(1), the draft notice did not identify questions of law in an appropriate way and did not set out concisely the grounds of appeal. Accordingly, the Court ordered that paragraphs 1-28 of the draft notice be struck out, but gave leave to DH to apply at a later date for leave to substitute appropriate paragraphs in the notice of appeal.

5 On 7 July 2006, the President and Eames JA gave DH leave to substitute paragraphs raising various questions of law, to which reference will be made. (For ease of reference, we now set out the background facts as described in the reasons for judgment granting that leave.)[2]

The Magistrates' Court proceeding

6 On 30 October 2000, DH was involved in a motor vehicle accident, in which his vehicle was damaged. The driver of the other vehicle was insured with AAMI Insurance ("AAMI"), which accepted liability. AAMI would not, however, pay the cost of repairing the vehicle, which was estimated at $4000. AAMI considered the car a "write off" and offered DH $800.

7 According to the statement of DH's case filed with the Tribunal ("the statement of case")[3], DH consulted AAC in about November 2000, following AAMI's offer. He met with a solicitor named Bakhaazi, who was employed by AAC. According to DH, Bakhaazi agreed that the firm would act for DH, and gave him the following assurances:

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14 Had DH been informed promptly - as he should have been - that the 21 May hearing had been adjourned, he would presumably have avoided having to take a day off from work on 21 May. In the events which happened, however, he was not advised of the adjournment until the morning of the hearing, by which time he had already taken leave for the day. One of DH's claims against AAC was for the earnings lost ($200) as a result.[5]

15 By letter dated 4 June 2001, AAMI's solicitors forwarded to AAC "our client's cheque for $650, made payable to your firm." According to DH, he was not told until much later that AAMI had made this payment to AAC for the costs of the adjournment on 21 May. What is rather more significant is that, no counsel's fee having been incurred for that day (no doubt because of the agreement in advance to adjourn the hearing), this sum of $650 was paid to AAC in respect of its own professional costs of the adjourned hearing. This is a matter to which reference will be made later in these reasons.

16 On the adjourned hearing date, 24 July 2001, counsel was briefed on behalf of DH but neither AAMI nor its representatives appeared at court. The case was again adjourned - this time to 21 September 2001 - and the court ordered the defendant (in effect, AAMI) to pay DH's costs of $744. This sum comprised counsel's fee of $544 and $200 representing DH's loss of earnings for that day, which on this occasion was claimed by AAC on his behalf. As on 21 May, DH had been obliged to take a day off work in order to be at court.

17 By letter dated 16 August 2001, AAMI's solicitors forwarded to AAC a cheque for $744 payable to the firm. Counsel's fees of $544 were subsequently paid but AAC at no time paid to DH the sum of $200 which, as mentioned, was payable to DH for his loss of earnings. Counsel's backsheet clearly identified the amount of $200 as being for "witness expenses (plaintiff)". The non-payment of the $200 formed the basis of another of DH's claims against AAC.[6]

18 In June 2001, AAMI's solicitors made a settlement offer of $1600 plus costs. A letter was drafted by AAC purporting to accept that offer, but DH was not satisfied with the offer, and the letter was not sent.[7]

19 On the next hearing date (21 September 2001), DH's loss assessor, Fanning, failed to attend at court. According to the account he later gave to the Victorian Bar, DH's barrister made "desperate telephone calls" to Bakhaazi and to Fanning.

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66 The question of law raised was whether the Full Tribunal made a jurisdictional error, that is, mistook its appeal jurisdiction, first by requiring DH to point to some error on the face of the Tribunal's reasons, as a pre-condition of the Full Tribunal embarking on a re-hearing; and secondly by purporting to limit the re-hearing to those matters in respect of which such error was shown. By way of contrast, when this Court hears an appeal from a decision of the County Court, (which is an appeal by way of re-hearing) the Court conducts a full re-hearing, examining all of the issues raised and all of the evidence given before the Court at first instance and, if necessary, receiving fresh evidence. Having done that - and not before - the Court of Appeal decides whether there is error in the decision below. If there is, the Court of Appeal can then exercise its "appellate powers" to make a different order in the proceeding.

67 In our view, the Tribunal did mistake its jurisdiction. DH was entitled to a re-hearing without preconditions. An appeal by way of re-hearing is a full re-hearing of the matters dealt with at first instance. The Full Tribunal was obliged to examine all of the evidence which was before the Tribunal and all of the claims for loss made by DH, and then decide for itself whether, on that evidence, the conclusions arrived at by the Tribunal were correct or not.

68 The decisions of the Full Tribunal relied on by counsel assisting should no longer be followed, as they are not correct in law. Contrary to what was said by the Full Tribunal in Nicholas O'Donohue & Co. v. Malook,[33] a person is entitled to have an appeal by way of re-hearing because he thinks the Tribunal was wrong. Of course, to succeed in the appeal he will need to show that the Tribunal at first instance was wrong, but it is not correct - as the Full Tribunal said in that case - that the appellant must first "show some error of law or something which vitiates the decision below". The appeal for which the statute provides is an appeal by way of re-hearing, not by way of judicial review for error of law.

69 Likewise, contrary to what was said by the Full Tribunal in Shulkes Ross and Kourlas,[34] the appellant can appeal on the ground that the Registrar concluded against him. As we have said, the appeal will succeed only if the appellant shows that the Registrar (constituting the Tribunal at first instance) fell into error in so concluding. But, in order to make good that proposition, the appellant is entitled to a re-hearing without preconditions.

Failure to address complaints of misconduct

70 The second question of law was whether the Full Tribunal fell into error in ruling that it had no jurisdiction to address the misconduct complaints. DH's question 10 asks:

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His question 13 raises the same point in a different way, namely, whether the refusal to deal with the misconduct allegations was a breach of natural justice.

71 In our view the Full Tribunal also fell into error here, in ruling that it had no jurisdiction to deal with the allegations of unsatisfactory conduct and misconduct raised by the complaint. As counsel assisting told the Full Tribunal, the allegations were not allegations of misconduct as such, but allegations of misconduct which DH said had given rise to loss.[35] (As we have seen, that is exactly how DH himself had put it in his Complaint Form). Accordingly, the allegations of misconduct had to be investigated, as they were at the heart of the "dispute" which had been referred to the Tribunal. That an investigation of the misconduct allegations was relevant and necessary was implicitly acknowledged by the Full Tribunal itself, in its statements that the Tribunal at first instance must be taken to have considered and rejected the allegations of misconduct.[36]

72 At one point, counsel assisting told the Full Tribunal that he had tried without success to explain to DH "the distinction between conduct and disputes". Presumably, this was a reference to the fact that disputes between clients and practitioners were dealt with by Division 1 of Part 5 of the 1996 Act, whereas complaints about practitioners' conduct were dealt with under Division 2 of the 1996 Act. Whereas a dispute was notified by a written request in accordance with s.123(1), a complaint about conduct was governed by s.140. Different procedures existed for dealing with a dispute on the one hand and a conduct complaint on the other.

73 As we have pointed out, this was not a conduct complaint as such. DH would be under a misapprehension if he thought now that he could pursue a misconduct complaint as such. What DH brought to the Tribunal, and was entitled to have investigated, was a dispute falling within Division 1 of Part 5, in which DH alleged that the conduct of the solicitor, which he characterised as misconduct, had caused him loss. What he alleged to be misconduct by the solicitor had therefore to be investigated if the Tribunal was to discharge its function according to law.

No case to answer

74 The further question of law was whether the Full Tribunal denied natural justice to DH by upholding the no-case ruling made by the Tribunal in relation to paragraphs (a), (b), (c) and (f) of the loss claim. There is a related question of statutory interpretation, as to whether, in view of the statutory duty of fairness imposed by s.407, and the requirement to act "according to the substantial merits of the case," Parliament can have intended that the Tribunal and the Full Tribunal should have power to entertain and uphold a no-case submission.

75 In our view, the Full Tribunal did fall into error in upholding the Tribunal's no-case ruling. It is unnecessary to decide whether the existence of an implied power in the Tribunal to entertain and uphold a no-case submission can be reconciled with the statutory duty of fairness imposed by s.407 and the requirement to act "according to the substantial merits of the case". Assuming that the implied power exists, it must be sparingly exercised by a tribunal hearing a complaint by an unrepresented person against a legal practitioner.

76 In our view, the decision of this Tribunal, upheld by the Full Tribunal, to entertain and uphold a no-case submission was not a decision reasonably open in the exercise of (what we assume for this purpose was) the discretion available to the Tribunal. There was material before the Tribunal warranting investigation and, in our view, this could not reasonably have been regarded as a case in which it was proper to entertain a no-case submission.

77 Self-evidently, in our view, a complaints jurisdiction such as this must be exercised in such a way as to maximise the prospect that, when the case is over, the complainant will feel that that he/she has been given a full and fair opportunity to ventilate the complaint. A ruling which denies the complainant the opportunity to question the legal practitioner, about the very matters which are at the heart of the complaint, is calculated to achieve exactly the opposite, and that is what occurred here. As a result of the upholding of the no-case submission, DH has been left with an understandable sense of injustice. For reasons he cannot understand, he was denied the opportunity to question AAC about the very matters which he alleged had caused him loss.

The "no jurisdiction" ruling

78 Question 3 is in the following terms:

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79 The question concerns DH's claim for $200 in lost wages, said to be attributable to the adjournment on 21 May 2001.[37] As noted earlier, DH was not told until the morning of the hearing that the case was to be adjourned, by which time it was too late for him to go to work. The adjournment was at the request of AAMI, which was ordered to pay $650 by way of costs thrown away. Unlike what occurred on the 24 July adjournment, AAC sought no order that AAMI pay DH's lost wages.

80 In the hearing before the Tribunal, counsel assisting submitted that the Tribunal had no jurisdiction to hear DH's claim in respect of the $200. Jurisdiction was lacking, he argued, because this particular claim had not been identified by DH in his Complaint Form. The Tribunal accepted this submission, and ruled that it had no jurisdiction. The Full Tribunal considered that there was no error in this ruling.

81 In our view, the Full Tribunal again erred in law in this respect. As counsel for AAC properly conceded before this Court, neither the Tribunal nor the Full Tribunal is a court of pleadings. But, even if proceedings before the Tribunal were conducted on the basis of pleadings, a complainant would inevitably be given leave to amend his or her statement of claim to add an additional particular of loss and damage of the kind in issue here.[38] As counsel for AAC also properly conceded, there could have been no prejudice to AAC as a result of DH being permitted to raise this additional loss claim at the hearing, or at least no prejudice which could not have been cured by an order for costs.

82 As we have already said, it is of the first importance that a consumer complaints tribunal should interpret, and exercise, its powers in such a way as to maximise the likelihood that a complainant will leave the tribunal feeling that his or her complaint has been fully and fairly investigated. The approach here adopted - of refusing to deal with one particular of loss, no different in kind from others which were being investigated - was once again calculated to produce precisely the opposite result. The ruling obviously, and understandably, contributed to DH's sense of injustice about the process.

The account for $650

83 The next question of law was whether the Full Tribunal acted on a false basis - that is, mistook the facts - when it concluded that DH was indebted to AAC in the sum of $650 such that, even if he succeeded in his claims in respect of 24 July and 21 September 2001, he could establish no loss.

84 At the beginning of his cross-examination of DH in the Tribunal, Mr Rice for AAC asked him about an account dated 7 June 2001 from AAC, addressed to DH, showing an amount of $650 payable for professional services. Mr Rice asked DH whether he received that account on 7 June. He answered:

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93 AAC was here conceding - more than 16 months after the Full Tribunal hearing - that the evidence Aloe had given to the Full Tribunal was false - mistakenly, rather than deliberately, false, but false nonetheless. Yet, as we have pointed out, it was this very evidence - and the submission advanced by Mr Rice that there was an outstanding debt of $650 - which was the foundation of the decision of the Full Tribunal to dismiss the claims.

94 In our view, this ground of appeal is also clearly made out. As we have noted, the false conclusion that DH was indebted to AAC for $650 was the foundation of the Full Tribunal's dismissal of his appeal. It is difficult to think of a clearer case for the setting aside of a tribunal decision on the basis that the facts were mistaken. This was no mere factual error. Unwittingly, the Tribunal made a fundamental mistake. It took into account an irrelevant matter.[44] This is not in any way to criticise the Tribunal. As we have said, the Full Tribunal decided the case on the basis put forward by AAC. But, in view of the concession later made by AAC - that Mr Aloe's evidence was false in this critical respect - the decision plainly cannot stand.

95 For the purposes of the appeal hearing, Mr Aloe has filed an affidavit seeking to explain how it came about that the false evidence was given. That is not a matter which we need to investigate. It is sufficient for the purposes of the appeal that the evidence was - and is conceded to have been - false. Nothing in what we have said should be taken as implying, or assuming, that the Tribunal was in any way knowingly misled, either by counsel for AAC or by Mr Aloe when he gave his evidence.

Fresh evidence

96 AAC made application for this Court to receive fresh evidence. The evidence relates to those parts of DH's claim for loss referable to his having had to give up days of annual leave in order to be at court. DH says that those unnecessary appearances were occasioned by the conduct of the solicitor, that he has lost the opportunity to enjoy his annual leave for those days, having had to take leave to be at court, and that he should be compensated. Mr Aloe filed an affidavit deposing to certain investigations he had made in recent months. His counsel sought to have this Court investigate those matters in order to be persuaded, so it was argued, that DH by his evidence had misled the Tribunal.

97 We declined to accede to that application. This being an appeal on a question of law, directed at the legal validity of the decision-making process before the Full Tribunal, we can see no basis for this Court receiving any fresh evidence of the kind adverted to. First, given the nature of an appeal on a question of law, the Court of Appeal has no role to consider the merits of the matter, that being precisely what a court dealing with questions of law cannot and does not do. Secondly, it would in any case be impossible for this Court to form any view on the merits in relation to the complainant's relevant claims for loss. Thirdly, this was a topic which was ventilated in the Tribunal and there is nothing to show that these investigations could not have been undertaken before the Tribunal hearing.

98 In the event, having taken instructions, counsel for AAC acknowledged that the course proposed would have involved the Court of Appeal sitting as if it were the Full Tribunal, with the powers of a tribunal of fact. He conceded that that would not be an appropriate course. For the reasons given, we share that view.

Conclusion

99 For these reasons, we uphold DH's appeal on each of the grounds discussed above. The decision of the Full Tribunal must be set aside and, in accordance with the applicable transitional provisions, the matter must now be remitted to the Victorian Civil and Administrative Tribunal for hearing and determination in accordance with law.[45]

100 We would re-affirm what was said by Maxwell P and Eames JA in their reasons for judgment dated 7 July 2006,[46] that the prospect of a re-hearing cannot be an attractive prospect for anyone involved, given that the complaint relates to events which occurred in 2001, and given the amount of time already given to these issues and the inevitable stress and anxiety for all concerned.

101 As foreshadowed in those reasons, the matter was referred to the Legal Services Commissioner by the Court. By letter dated 4 September 2006, the Commissioner advised that she had no jurisdiction to intervene in this matter, the process prescribed for dealing with the dispute having been completed before she took up office.

102 We urge the parties to consider once again the possibility of a negotiated settlement. Because of the Tribunal's errors of law, the dispute resolution process has failed and it must begin again. But it must surely be in the interests of both parties to avoid that adversarial course if at all possible.

103 Accordingly, the order of the Court is:

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