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Cases Cited: DPP for the ACT v The Honourable Acting Justice Brian Martin [2014] ACTSC 104; 286 FLR 120 Hill v The Council of the Law Society of the ACT [2019] ACTSC 79 Legal Practitioner v The Law Society of the Australian Capital Territory [2018] ACTSC 29; 330 FLR 234 Legal Services Board v Forster [2011] VSC 456 Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 R v Lee [2016] ACTCA 69 Wiest v DPP (1988) 23 FCR 472 Tuite v AAT (1993) 40 FCR 483

Parties: Alan Richard Hill (Appellant) The Council of the Law Society of the ACT (Respondent)

Representation: Counsel WDB Buckland (Appellant) D Moujalli (Respondent) Solicitors Nelson & Co (Appellant) McInnes Wilson Lawyers (Respondent)

File Number: ACTCA 15 of 2019

Decision under appeal: Court: Supreme Court of the ACT Before: Burns J Date of Decision: 27 March 2019 Case Title: Hill v The Council of the Law Society of the ACT Citation: [2019] ACTSC 79

THE COURT

1. The factual background of this appeal is of narrow compass. It is convenient to adopt the description contained in the judgement of the primary judge which is the subject of the appeal: see Hill v The Council of the Law Society of the ACT [2019] ACTSC 79 at [1] – [3], [7] and [9]. It is as follows:

The plaintiff is a legal practitioner who practises in the Australian Capital Territory. On or about 27 March 2017 he informed the defendant, the Council of the Law Society of the ACT, that a substantial amount of money had been transferred into his trust account and erroneously allocated to the wrong client’s ledger. There was no suggestion of any dishonesty in this error. The plaintiff’s law practice had a history of trust account irregularities, none suggestive of dishonesty. On or about 18 April 2017 the defendant resolved to appoint a trust account supervisor to the plaintiff’s practice under s 481 of the Legal Profession Act 2006 (ACT) (LPA). On or about 21 April 2017 the plaintiff was given a copy of the instrument of the appointment of Mr Bruce Glanville, a chartered accountant, as the trust account supervisor (the supervisor). On or about 26 May 2017 the supervisor reported to the defendant, identifying continuing issues related to the operation of the plaintiff’s trust account that were of concern to the defendant. As a result, the defendant resolved to appoint a manager for the defendant’s practice pursuant to s 487 of the LPA. On 30 May 2017 the plaintiff was given notice of the appointment of Mr Aunter Mussa Hijazi as the manager, and was given a copy of the manager’s instrument of appointment. The term of the appointment was stated to expire at 5 pm on 1 December 2017. … On 11 July 2017 the defendant amended its instrument of appointment of the manager for the plaintiff’s law practice, correcting the period of appointment by stating that the term of the appointment expired at 5 pm on 30 May 2018, and advising the plaintiff of his right to appeal against the appointment of the manager under s 514 of the LPA. This amended instrument was sent to the plaintiff, through his solicitors, on 12 July 2017. … On 25 May 2018 the defendant’s solicitors wrote to the plaintiff claiming a total of 1 $155,144.00 for fees paid to the supervisor and manager until the end of April 2018 (the disputed debt). The plaintiff has disputed his liability to pay this, or any, amount to the defendant for the fees paid to the supervisor or the manager.

2. His Honour noted that in claiming the fees paid to the interveners the respondent relied upon s 517 of the Legal Profession Act 2006 (ACT) (LPA). It provides:

517 Fees, legal costs and expenses of external intervener (1) An external intervener for a law practice is entitled to be paid, in accordance with the intervener’s appointment – (a) fees by way of remuneration; and (b) the legal costs and expenses incurred in relation to the external intervention. (2) An account of the external intervener for fees, costs and expenses may be assessed on the relevant council’s application. (3) The fees, costs and expenses are payable by and recoverable from the law practice. (4) Fees, costs and expenses not paid to the external intervener by the law practice are payable from the fidelity fund. (5) The relevant council may recover any unpaid fees, costs and expenses from the law practice. (6) Fees, costs and expenses paid by or recovered from the law practice after they have been paid from the fidelity fund are to be paid to the fund.

3. The above sequence of events did not go without challenge on the part of the appellant. On 6 June 2017, he commenced an appeal against the decision to appoint a manager in this Court pursuant to s 514 of the LPA. An issue arose in that appeal as to whether the appeal was a strict appeal, a rehearing or an appeal de novo. On 23 February 2018, Burns J held that the appeal was an appeal de novo: see Legal Practitioner v The Law Society of the Australian Capital Territory [2018] ACTSC 29; 330 FLR 234. On 28 February 2018, the appellant consented to an order dismissing his s 514 appeal, with costs.

Proceedings at first instance

4. On 24 August 2018 the appellant filed an Originating Application seeking review of the decisions:

(1) of 19 April 2017 to appoint the supervisor;

(2) of 29 May 2017 to appoint the manager; and,

(3) of 11 July 2017 to issue an amended instrument of appointment of the manager.

5. That Application was filed out of time and the appellant subsequently applied for an extension of the time in which to file the initiating process.

6. The Originating Application was amended on 20 September 2018 (we will refer to the amended Application as the OA). The OA named as defendant the respondent to this appeal (the Council). On 28 September 2018, the Council filed an Application in

1 Subsequently, on 11 July 2018 the Law Society wrote a further letter claiming the final amount of $166,379. Proceeding seeking the summary dismissal of the OA. The ground of that application was, effectively, that the appellant had exhausted his right to challenge the decisions by his s 514 appeal.

7. The substantive claim, the appellant’s application for an extension of time and the Council’s Application in Proceeding, were listed for hearing before the primary judge on 1 February 2019. In the course of the hearing, the appellant abandoned a number of the grounds for relief which had been pleaded in his OA. The remaining issues were described by his Honour as follows (at [13]):

(a) Did the instrument of appointment of the supervisor comply with the provisions of s 481 of the LPA? (b) Did the instrument of appointment of the manager dated 30 May 2019 comply with the provisions of s 487 of the LPA? (c) Did the amended instrument of appointment of the manager dated 11 July 2017 comply with the provisions of s 487 of the LPA?

8. His Honour noted at [16] of his reasons for decision that the issues to be considered in the extension of time application included an assessment of the merits of the OA. The other relevant matter in that application was the appellant’s explanation for the delay in bringing his application for relief.

Appointment of a supervisor

9. The power of appointment is contained in ch 5 of the LPA. The purpose of the chapter is set out in s 474 in the following terms:

474 Purpose – ch 5 (1) The purpose of this chapter is to ensure that an appropriate range of options is available for intervention in the business and professional affairs of law practices and Australian-registered foreign lawyers for the purpose of protecting the interests of – (a) the general public; and (b) clients; and (c) lawyers, including the owners and employees of law practices, so far as their interests are not inconsistent with the interests of the general public and clients. (2) It is intended that interventions happen consistently with – (a) similar interventions in other jurisdictions, especially if a law practice operates in the ACT and 1 or more jurisdictions; and (b) other provisions of this Act.

10. The actual power of appointment is governed by s 481 of the LPA, which provides as follows:

481 Appointment of supervisor (1) This section applies if the law society council decides to appoint a supervisor of trust money of a law practice. (2) The law society council may appoint a person as supervisor of trust money Note 1 For the making of appointments (including acting appointments) see the Legislation Act, pt 19.3. Note 2 In particular, a person may be appointed for a particular provision of a law (see Legislation Act, s 7(3)) and an appointment may be made by naming a person or nominating the occupant of a position (see s 207). (3) The appointee must be either - (a) an Australian legal practitioner who holds an unrestricted practicing certificate; or (b) a person holding accounting qualifications with experience in law practice trust accounts. (4) The appointee may (but need not) be an employee of the law society. (5) The appointment must – (a) identify the law practice and the supervisor; and (b) indicate that the external intervention is by way of appointment of a supervisor of trust money; and (c) state the term of the appointment; and (d) state any conditions imposed by the law society council when the appointment is made; and (e) state any fees payable by way of remuneration to the supervisor specifically for carrying out the supervisor’s duties in relation to the external intervention; and Note Par (e) is intended to exclude remuneration payable generally, eg as an employee of the law society. (f) provide for the legal costs and the expenses that may be incurred by the supervisor in relation to the external intervention. (6) The appointment may state any reporting requirements to be observed by the supervisor.

11. Section 482 is also important here. It provides:

482 Notice of appointment of supervisor (1) As soon as possible after a supervisor of trust money is appointed for a law practice, the law society council must give written notice of the appointment to – (a) the practice; and (b) anyone else authorised to operate any trust account of the practice; and (c) any external examiner appointed to examine the practice’s trust records; and (d) the ADI with which any trust account of the practice is kept; and (e) anyone whom the council believes, on reasonable grounds, should be given notice of the appointment. (2) The notice must – (a) identify the law practice and the supervisor; and (b) indicate that the external intervention is by way of appointment of a supervisor of trust money; and (c) state the term of the appointment and (d) state any reporting requirements to be observed by the supervisor; and (e) state any conditions imposed by the law society council when the appointment was made; and (f) include a statement that the law practice may appeal against the appointment of the supervisor made under section 514; and (g) contain or be accompanied by any other information or material prescribed by regulation.

12. The primary judge set out at [18] of his reasons the relevant part of the instrument of appointment:

The Supervisor’s remuneration for carrying out his duties in relation to the external intervention will be at the rate per hour plus GST as agreed between the Supervisor and the Law Society. The supervisor is also entitled to payment of reasonable disbursements and out-of-pocket expenses. The Supervisor will from time to time report to the Council of the Law Society for payment of the costs and expenses that may be incurred by the Supervisor in relation to the external intervention.

13. The argument advanced by the appellant (who was the plaintiff before his Honour) was that contrary to s 481 of the LPA the instrument did not state the fees payable to the supervisor, nor did it make provision for the supervisor’s legal costs.

14. In relation to the first of these submissions, his Honour concluded (at [24]):

What is conspicuously absent from the requirements of s 482(2) is a requirement that the notice contain information about fees payable by way of remuneration to the supervisor for carrying out their duties. This is consistent with a legislative intention that the instrument of appointment primarily governs the relationship between the supervisor and the law society. When, in addition to this fact, it is acknowledged that at the time of making the appointment the law society, in circumstances where fees are to be payable to the supervisor, will not ordinarily be able to state with any degree of specificity the quantum of those fees, the interpretation of s 481(5)(e) which best achieves the purposes of the Act, and gives the provision a sensible meaning, is that it requires no more than that the instrument state whether fees are payable to the supervisor with regard to him or her undertaking their functions as a supervisor. The instrument of appointment dated 20 April 2017 clearly sets out that fees will be payable to the supervisor at a rate agreed between the supervisor and the law society. In my view, this instrument complied with the requirements of s 481(5)(e) of the LPA.

15. As to the second argument relating to legal costs, his Honour said (at [26]):

The instrument of 20 April 2017 appointing Mr Glanville as the supervisor provides that he is entitled to be paid “reasonable disbursements and out-of-pocket expenses” as well as his remuneration. The usual meaning of the word “disbursement” is “money expended”: Macquarie Dictionary (Pan Macmillan, 6th ed, 2013), 423. The instrument therefore provides for reimbursement to Mr Glanville of money reasonably expended by him in the course of executing his function as a supervisor. I see no reason why this should not include legal costs. It follows that the instrument of appointment did provide for legal costs and expenses as required by s 481(5)(f) of the LPA.

16. The primary judge went on to say that in the event he was wrong as to his interpretation of sub-ss 481(5)(e) and (f) he would, in the exercise of his discretion, not have made the declaration sought by the appellant. His Honour said (at [32]):

For an abundance of caution, I will state that even if I am wrong in my principal conclusion that no error was involved in the appointment of the supervisor, I would nevertheless have rejected the plaintiff’s claim for relief on discretionary grounds. For the reasons I have given, any such error did not invalidate the appointment of the supervisor, or any actions taken by the supervisor pursuant to the appointment. I can see no reason why it would be appropriate to relieve the plaintiff of his obligation to reimburse the law society for the costs it incurred in validly appointing a supervisor simply because an error which did not affect the validity of the appointment may have occurred.

17. The reasons his Honour gave for concluding that there was no invalidity were based on the decision of Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355, at [91]; and, s 201 of the Legislation Act 2001 (ACT) (LA). In essence, his Honour held that the terms and context of s 481 indicated that the Legislature did not intend that any defect in the appointment of a supervisor in the nature alleged by the appellant should invalidate the appointment of the supervisor, or any acts done under the appointment.

Appointment of a manager

18. The statutory provision for the appointment is s 487 of the LPA. It states:

487 Appointment of manager (1) This section applies if the relevant council decides to appoint a manager for law practice. (2) The relevant council may appoint a person as manager. Note 1 For the making of appointments (including acting appointments), see the Legislation Act, pt 19.3. Note 2 In particular, a person may be appointed for a particular provision of a law (see Legislation Act, s 7(3)) and an appointment may be made by naming a person or nominating the occupant of a position (see s 207). (3) The appointee must be an Australian legal practitioner who holds an unrestricted practicing certificate, and may (but need not) be an employee of the law society. (4) However, for the appointment of a manager for the law practice of a barrister, the appointee may (but need not) be an employee of the bar association and need not be an Australian lawyer or holder of an Australian practicing certificate. (5) The appointment must – (a) identify the law practice and the manager; and (b) indicate that the external intervention is by way of appointment of a manager; and (c) state the term of the appointment; and (d) state any conditions imposed by the relevant council when the appointment is made; and (e) state any fees payable by way of remuneration to the manager specifically for carrying out his or her duties in relation to the external intervention; and Note Par (e) is intended to exclude remuneration payable generally, eg as an employee of the law society or bar association. (f) provide for the legal costs and expenses that may be incurred by the manager in relation to the external intervention. (6) The appointment may state any reporting requirements to be observed by the manager.

19. Again the provision requiring notice of the appointment to be given is important. Section 488 of the LPA provides:

488 Notice of appointment (1) As soon as possible after a manager is appointed for a law practice, the relevant council must give written notice of the appointment to - (a) the practice; and (b) anyone else authorised to operate any trust account of the practice; and (c) any external examiner appointed to examine the practice’s trust records; and (d) the ADI with which any trust account of the practice is kept; and (e) any legal practitioner associate of the practice named under subsection (2)(f); and (f) anyone whom the council believes, on reasonable grounds, should be given notice of the appointment. (2) The notice must – (a) identify the law practice and the manager; and (b) indicate that the external intervention is by way of appointment of a manager; and (c) state the term of employment; and (d) state any reporting requirements to be observed by the manager; and (e) state any conditions imposed by the relevant council when the appointment was made; and (f) name any legal practitioner associate of the practice who must not participate in the affairs of the practice except under the direct supervision of the manager; and (g) include a statement that the law practice may appeal against the appointment of the manager under s 514; and (h) contain or be accompanied by any other information or material prescribed by regulation.

20. His Honour pointed out that the relevant parts of sub-s 487(5) are effectively identical with those of s 481.

21. The relevant part of the instrument of appointment stated as follows:

The Manager’s remuneration for carrying out his duties in relation to the external intervention will be at the rate agreed between the Law Society and the Manager. The Manager is also entitled to payment of reasonable disbursements and out of pocket expenses.

22. His Honour noted that, as with the appointment of a supervisor, the LPA did not require the notice to be given to the solicitor by the Council to include information about the remuneration payable to the manager. He saw no reason to interpret sub-s 487(5)(e) differently from sub-s 481(5)(e) and concluded therefore, for the same reasons he had given in relation to the latter, that there was no error in the appointment as alleged by the appellant.

23. His Honour went on to say that if he was wrong in relation to his interpretation of the section he would have rejected the claim for declaratory relief for the same reasons he gave in relation to the s 481 issue.

Amended appointment of manager

24. The amendment made by the instrument made on 11 July 2017 is underlined in the following extract:

The Manager’s remuneration for carrying out his duties in relation to the external intervention will be at the rate agreed between the Law Society and the Manager particulars of which can be obtained by request.

25. His Honour found no error in the making of this instrument for the same reasons he reached that conclusion in relation to the other appointments. He would also have refused declaratory relief for the reasons summarised at [16] and [17] above.

Delay

26. The relevant chronology outlined by the primary judge at [42]-[44] of his reasons is as follows:

Appointment Date Received Time for s 514 Time for AD(JR) Time for by Appellant Appeal Application Prerog. Relief Supervisor 21 Apr 2017 7 days from 28 days from 60 days from receipt receipt decision Manager 30 May 2017 7 days from 28 days from 60 days from receipt receipt decision Manager - 12 Jul 2017 7 days from 28 days from 60 days from amended receipt receipt decision

27. As his Honour noted, on any basis, the originating process was brought well out of time. He saw the extent of the delay as significant (see [45]).

28. The appellant submitted to his Honour that he had not been put on notice that the Council would seek to recover fees payable to the external interveners from him until March 2018 and that any consideration of delay should commence from that time. His Honour rejected that submission. He said at [45]-[46]:

…The plaintiff received copies of each of the instruments either on the day it was executed or within a few days thereafter. Each instrument clearly made provision for payment to the external intervener. In his affidavit sworn 24 August 2018 and read in this proceeding the plaintiff did not suggest that he was unaware of the statutory right, found in s 517 of the LPA, allowing the defendant to recover these fees from him. In any event, the notice pursuant to s 482 of the LPA from the law society to the plaintiff advised him: You should also note that the [LPA] directs the Law Society to pay the fees, costs and expenses of the Supervisor from the Fidelity Fund. All fees, costs and expenses paid to the Supervisor by the Law Society are recoverable from the law practice. In other words, the Law Society is empowered to recover the fees, costs and expenses of the Supervisor from Hill & Rummery. In due course we will advise you of those costs. A similar statement is made in the notice under s 488 of the LPA advising the plaintiff of the appointment of Mr Hijazi as manager.

29. The primary judge noted (at [47]) that the only relevant change in circumstances between the expiry of the relevant limitation periods and the commencement of proceedings was the quantification of the intervener fees and the demand for payment. In relation to that he said:

…Having taken no action to challenge the appointment of Mr Glanville, having withdrawn his appeal against the appointment of Mr Hijazi (in which his present arguments concerning that appointment could have been raised), the plaintiff allowed the law society to incur expenses which had to be paid by it from its Fidelity Fund, but now, after receiving the “bill”, seeks to argue that he should not have to pay anything. This conduct on the part of the plaintiff is simply unconscionable. The plaintiff should not be aided by an extension of time to bring these proceedings.

30. His Honour also rejected the submission that some, at least, of the delay could be explained by the appellant’s dispute with the Law Society in relation to his practicing certificate. His Honour pointed out that there was no evidence provided to explain why the appellant’s lawyers could not have commenced proceedings, either by way of appeal or for judicial review at a time proximate to the relevant decisions.

31. The primary judge concluded (at [49]):

I am not satisfied that the delay in commencing the present proceeding has been adequately addressed. I am also satisfied that the defendant has suffered prejudice by reason of the delay, being its continued accrual of fees payable to the external interveners. Finally, I am satisfied that the proceeding is without legal merit. I decline to grant the plaintiff the necessary extensions of time to commence the proceeding.

Orders of the primary judge

32. In the light of his conclusion, as to the substance of the appellant’s application for review and as to whether time should be extended, his Honour declined to address the Council’s Application in Proceeding. He made the following orders:

(a) the application for an extension of time to commence this proceeding is refused;

(b) the defendant’s application is dismissed, with no order as to costs;

(c) the present proceeding is dismissed; and,

(d) unless either party seeks a different order within 14 days of publication of these reasons, the plaintiff is to pay the costs of the proceeding as agreed or assessed.

Appeal proceedings

33. The appellant in his Notice of Appeal dated 11 April 2019 appeals from orders (a), (c) and (d) made by the primary judge. The grounds of the appeal are stated as follows:

34. The learned primary judge erred by construing sub-section 481(5)(e) of the Legal Profession Act 2006 (the LPA), including by holding that the sub-section only required that an instrument of appointment state whether fees were payable to a supervisor rather than holding that the sub-section required that an instrument of appointment state the fees which were payable or a mechanism for working out such fees. 2. The learned primary judge erred in construing sub-section 481(5)(e) of the LPA by failing, contrary to Project Blue Sky, to consider the statutory context of that sub-section, including but not limited to section 517 of the LPE. 3. The learned primary judge erred in holding that the Glanville Instrument (as that term is defined in the Amended Originating Application) complied with the requirement in sub-section 481(5)(e) of the LPA. 4. The learned primary judge erred in concluding that the defendant’s/respondent’s decision to appoint a supervisor involved no error. 5. The learned primary judge erred in holding that he would have rejected the plaintiff’s/appellant’s claim for relief on discretionary grounds “simply because an error which did not affect the validity of the appointment may have occurred.” 6. The learned primary judge erred in concluding and/or holding that invalidity was a necessary prerequisite for the exercise of discretion to grant of the relief sought, and in so doing erred in determining that he would have refused relief on discretionary grounds. 7. The learned primary judge erred in applying his reasoning and conclusions in relation to sub-section 481(5)(e) to sub-section 487(5)(e) of the LPA, given the errors in his Honour’s construction of sub-section 481(5)(e) disclosed above. 8. The learned primary judge erred in concluding that either the First or Second Hijazi Instrument (as those terms are defined in the Amended Originating Application) complied with the requirement in sub-section 487(5)(e) and did not contain or involve an error of law. 9. The learned primary judge erred in declining to extend the time within which plaintiff’s appellant’s could bring the Amended Originating Application. 10. The learned primary judge erred in failing to determine whether the relief sought in Prayer 5A required an extension of time and should have determined that an extension of time was not required for the granting of that relief. 11. The learned primary judge erred in failing to consider and/or provide reasons for rejecting the plaintiff’s/appellant’s submissions regarding the nature and scope of the declaratory relief sought in Prayer 5A.

35. In response to the Notice of Appeal, the Council has filed an Amended Notice of Contention, and a Notice of Cross-Appeal. The former identifies the following questions said to have been decided incorrectly by the primary judge:

36. The Respondent contends that the following questions of fact or law were incorrectly decided by Justice Burns in the order appealed from: a. Assuming but not conceding that the learned primary Judge erred by holding that s 481(5)(e) of the Legal Profession Act 2006 (ACT) (the LP Act) requires only that an instrument of appointment is to state whether fees are payable to a supervisor with regard to him or her undertaking his or her functions as a supervisor, the Respondent contends that s 481(5)(e) of the LP Act, properly construed, required or permits the relevant instrument to be cast in broad terms such that a reference to ‘the rate agreed between the Law Society and [the supervisor]’, or works to that effect, in the instrument of appointment complies with the requirements of the LP Act. b. Assuming but not conceding that the learned primary judge erred by holding that s 487(5)(e) of the LP Act requires that an instrument of appointment is to state whether fees are payable to a manager with regard to him or her undertaking his or her functions as a manager, the Respondent contends that s 487(5)(e) of the LP Act, properly construed, requires or permits such that a reference to “the rate agreed between the Law Society and [the manager]”, or words to that effect, in the instrument of appointment complies with the requirements of the LP Act. c. In addition to declining relief on discretionary grounds as stated in paragraphs [32], [38] and [40] due to the absence of invalidity in the appointments of the supervisor and manager, the learned primary judge’s conclusion in this respect is also supported by the delay in seeking judicial review and the existence of a specific statutory provision providing an appeal avenue for the decisions in respect of which judicial review is sought. 2. The Respondent otherwise relies on the matters that it put to the learned primary Judge.

37. The Notice of Cross Appeal appeals from order (b). The grounds of that appeal are:

4a. The learned primary judge erred by not considering the Respondent’s Application in Proceeding dated 28 September 2018 (the Application in Proceeding). 4b. The learned primary judge should have dismissed the proceeding on all or any of the grounds set out in the Application in Proceeding. Submissions of the Appellant

36. The appellant argues that the interpretation of sub-ss 481(5)(e) and 487(5)(e) that best achieves the purpose of ch 5 of the LPA when read as a whole is that which requires the instrument of appointment to state what monies will be paid to the intervener for his/her services. Such a statement could take the form of a “fixed rate” or a rate per hour or day.

37. The interpretation for which the appellant contends is said to be supported by the following:

(1) The text itself. The appellant points out that the words of the paragraphs make no reference to “whether” fees are payable, contrary to the interpretation adopted by the primary judge. This is said to accord with the contents of s 517. The paragraphs require certainty and specificity in relation to the fees. Indeed, the words “in accordance with the intervener’s appointment” in sub-s 517(1) have the effect that a failure to sufficiently specify the basis for the calculation of the fees in the instrument of appointment must have the consequence that the intervener is not entitled to be paid, at least pursuant to the statute.

(2) The context in which the paragraphs appear. The appellant says that reference to sub-ss 481(4), 487(3) and the notes to sub-para (5)(e) in both sections indicates the need for the instrument to exclude the payment of fees where the intervener is an employee of the Law Society. It follows that in a case where fees are to be payable they should be stated specifically. Moreover, reference is made again to s 517. It is argued that the instrument is not only the source of the intervener’s entitlement to payment, but also the terms of that payment. The respondent has the right to apply for assessment of the fees which must be in accordance with the terms set out in the instrument. It is of particular importance that the instrument set out those terms given the liability of the solicitor to pay the fees while having no right to have them assessed.

(3) The purpose of the powers of appointment as set out in s 474. The appellant acknowledges that the protection of the public and clients is paramount. That protection, it is said, is achieved by the powers of appointment contained in pts 5.3 and 5.4. Once the relevant intervener has been appointed the primary purpose of these provisions is achieved. At that point the interpretation of ss 481 and 487 which protect the interests of the lawyer is to be preferred, so long as it does not detract from that primary purpose. The interpretation contended for would not detract from that purpose and would:

(i) enable the lawyer to estimate the likely cost of the intervention, and make provision for that cost;

(ii) enable the lawyer to make an informed decision about appealing against the appointment decision, particularly given that the lawyer has no right to have the fees assessed under s 517; and,

(iii) be appropriate given the “coercive” nature of the appointment, and that the lawyer has no right to be heard in relation to the appointment decision.

38. The appellant accepts that if he fails in his statutory interpretation argument his appeal must fail. However, if he succeeds in that argument it becomes necessary to deal with the alternative bases on which the primary judge found against the appellant. They are:

(1) His Honour’s conclusion as to the exercise of discretion if he had accepted the appellant’s interpretation (see [16] above);

(2) His Honour’s rejection of the application to extend time (see [29] above); and,

(3) His Honour’s failure to address the appellant’s reliance on the inherent jurisdiction of the Court for declaratory relief.

39. In relation to [38](1), the appellant says that the primary judge, at paragraph [32] of his reasons for decision, made it clear that he saw the invalidity of the appointments as, effectively, a prerequisite for the relief sought. That conclusion is, it is submitted, wrong as a matter of law.

40. In relation to the extension in time issue the appellant, in addition to his submission as to the correct interpretation of ss 481 and 487, points to:

(1) the failure of his Honour to address the different tests required by the Administrative Decisions (Judicial Review) Act 1989 (ACT) (ADJR) and the Court Procedure Rules 2006 (ACT) (CPR) – the latter requiring the applicant to demonstrate “special circumstances”; and (2) the finding of unconscionability on the part of the appellant (see [29] above). It is said that the appellant was given no notice that such a finding might be made. In the circumstances, that amounted to a breach of procedural fairness. Moreover, it is argued that such a finding was not open in any event. The fact is that the respondent had foreshadowed debt recovery action by letter dated 5 June 2018. It was, therefore, inevitable that the dispute would have resulted in proceedings in the Court. It followed that the commencement of proceedings by the appellant was reasonable, and not “simply unconscionable”.

41. As to the inherent jurisdiction point the appellant says that he submitted to the primary judge that there was no need for an extension of time insofar as he sought in prayer for relief 5A of his Amended Originating Application a declaration that he was not indebted to the Law Society in relation to the fees of the interveners. His Honour failed to deal with that argument.

Submissions of the Council

42. The Council analyses the appeal as raising five issues. They are:

(1) The correct interpretation of sub-ss 481(5)(e) and 487(5)(e);

(2) The declining of declaratory relief if the appellant had been successful as to (1);

(3) The asserted failure of the primary judge to decide the claim for declaratory relief in the inherent jurisdiction of the Court;

(4) The rejection of the application to extend time; and,

(5) The asserted failure of the primary judge to determine whether an extension of time was required for the claim for declaratory relief in the inherent jurisdiction of the Court.

43. In relation to the interpretation issue the Council submits that it is the central question which arises in the appeal. If it is decided against the appellant there is no need to deal with the other arguments, or the Cross-Appeal.

44. The Council submits that the primary judge’s conclusion as to the interpretation of the paragraphs is correct for the following reasons:

(1) The word “any” should be given as wide a construction as possible. It connotes generality rather than specificity. It is apt to indicate whether fees are payable as opposed to the requirement to state the amount payable or the rate at which they should be paid.

(2) Section 479 of the LPA, which sets out the circumstances in which an intervener might be appointed, includes circumstances justifying an urgent appointment. It would generally be impossible for the Council to state the exact fees payable at the time of the appointment because it would have no knowledge of the extent of the services which would be required of the intervener (and see [20] of his Honour’s reasons).

(3) Further to (2), it would not be possible for the Council to know at the time of appointment the number of hours or days on which the intervener will be engaged in the execution of his/her function. It follows that there would be no sensible purpose in stating the hourly or daily rate of remuneration. That reality demonstrates the fallacy in the argument of the appellant summarised at [37](3)(i) above.

(4) The instrument of appointment is to be contrasted with the document by which notice of the appointment must be given to the relevant lawyer. The requirements for the latter are set out in sub-ss 482(2) and 488(2). Crucially, they do not include information about the fees payable to the intervener. In that context it would make no sense for paragraphs 481(5)(e) and 487(5)(e) to require specification of the fees (by rates or otherwise).

(5) The primary judge was correct in his analysis. The possible appointment of an employee of the Law Society whose engagement as an intervener would not involve extra cost over his/her salary provided a logical and reasonable basis for the interpretation his Honour adopted.

45. The Council further submitted that even if it the appellant was correct as to the interpretation point, the instruments of appointment here had each sufficiently identified a mechanism by which the fees might be calculated. This submission was made in support of its Notice of Contention.

46. As to the refusal of a declaration on discretionary grounds the Council submits that a fair reading of the primary judge’s reasons at [29]-[32] discloses that his Honour did not consider invalidity as a pre-requisite for the granting of relief. Rather, his Honour considered the absence of invalidity together with the technical nature of the asserted error, the right of appeal under s 514 and the delay in bringing the proceedings. Having regard to the width of the discretion no error is apparent from the conclusion expressed by the primary judge.

47. The Council says in relation to issue (3) that the assertion of the appellant is simply wrong. Reference to paragraph [30] of his Honour’s reasons establishes that he did decide the question of whether a declaration should be made exercising the inherent jurisdiction of the Court. His Honour would have declined to make a declaration on that basis for the same reasons referred to in [46] above.

48. In relation to the extension of time issue the Council notes that the times in which applications should have been commenced under the ADJR expired on 19 May 2017, 27 June 2017 and 9 August 2017 by reference to the three decisions summarised in the table in [26] above. The times for prerogative relief proceedings expired on 20 June 2017, 31 July 2017 and 11 September 2017 respectively. As noted above, the initial Originating Application was not filed until 24 August 2018.

49. In considering the application to extend time the primary judge examined the length of the delay (at [45] of his reasons), the explanation for it ([45]-[48]), prejudice to the respondent ([49]) and the substantive merits ([49]). His Honour’s approach was consistent with authority: see for example DPP for the ACT v The Honourable Acting Justice Brian Martin [2014] ACTSC 104; 286 FLR 120 at [153]-[160] (DPP v Martin).

50. Moreover, the Council submits, each of the arguments of the appellant on this issue are without merit:

(1) The assertion that the primary judge’s discretion necessarily miscarried if his interpretation of sub-ss 481(5)(e) and 487(5)(e) was incorrect as it overlooked the compelling nature of the absence of a satisfactory explanation for the delay and the prejudice suffered by the Council.

(2) As to the argument based on there being a real difference between the tests under ADJR and CPR, the Council points to the comments in DPP v Martin at [153] and [157] to support the proposition that the exercise to be carried out in each case is identical – that is, to assess “whether it is in the interests of justice to grant the extension”.

(3) The reference to the conduct of the appellant as “unconscionable” occurred in the context of his Honour’s discussion of the extent of the delay and the prejudice suffered by the Council in circumstances where the appellant was made aware soon after each appointment in the s 482 notices that he was liable for the cost of the interveners, and where from as early as June 2017 he had lawyers acting on his behalf. The lack of any satisfactory explanation for the delay in combination with the above justified the primary judge’s adverse view of the appellant’s conduct. Given those circumstances there was no basis in the asserted failure to accord procedural fairness.

(4) The appellant’s reliance on the 5 June 2018 letter from the Law Society’s solicitor misses the point. The appellant was on express notice (contained in the s 482 and 488 letters) that the respondent would be seeking to recover the cost of the interveners from him. He had the option of challenging the appointments before the bulk of the cost was incurred. He failed to do that. It cannot be reasonable for a lawyer in those circumstances to leave it until the full cost of the interveners has been incurred and then seek to raise an alleged defect in the appointments which would allow him to avoid his liability for that cost.

51. Finally, in relation to the fifth issue the Council says that there was no need for his Honour to specifically consider the extension in time question in relation to the declaratory relief sought under the inherent jurisdiction because he had already indicated that he would, if required to consider the claim for relief, have rejected it on discretionary grounds: see [46]-[47] above.

52. The Council submits that the Cross-Appeal only arises if the appellant succeeds in his submissions to this Court. In that event this Court should consider the appeal rights which the appellant had (and indeed exercised in part) under s 514 of the LPA. By reference to authorities such as Wiest v DPP (1988) 23 FCR 472 at 490 and Tuite v AAT (1993) 40 FCR 483 at 484 the Council says that the appellant’s OA should have been dismissed as an abuse of process.

Appellant’s submissions in reply

53. The appellant says that, contrary to the submission of the Council, the breadth of the word “any” supports his interpretation. In order for “any” fees to be payable they must be specified in the instrument of appointment.

54. He acknowledges that occasions might arise where an urgent appointment is required. If the estimate of fees in the instrument requires revision this could be done under sub-ss 480(3) and (5) or 510 of the LPA. For the subsections of s 480 see paragraph [65] below. Section 510 provides:

510 Conditions on appointment of supervisor or manager (1) An appointment of an supervisor or manager for a legal practice is subject to – (a) any conditions imposed by the relevant council; and (b) any conditions imposed by regulation. (2) The relevant council may impose conditions – (a) when the appointment is made; or (b) during the terms of the appointment. (3) The relevant council may revoke or amend conditions imposed under subsection (2).

55. The appellant takes issue with the extent of the difficulties in specifying the fees payable to an intervener relied upon by the Council, and say that in any event those difficulties do not support the interpretation advanced by the Council.

56. As to the issue of the appointment of employees of the Law Society the appellant submits that that possibility in fact supports the need to specify the fees payable to an independent service provider.

57. The appellant rejects the argument that the references in the instruments to the fees being as agreed between the intervener and the Law Society complied with the Act. They provided no means of working out the fees by reference to the instruments themselves.

58. In relation to the discretionary rejection of declaratory relief the appellant takes issue with the Council’s characterisation of His Honour’s reasoning. It is submitted that the decision of the primary judge cannot be now supported by discretionary considerations which he did not take into account.

59. The appellant argues that the extension of time issues and those raised by the Cross- Appeal are inextricably bound to the outcome on the substantive merits. If the appellant succeeds on the statutory interpretation argument then this Court should reconsider whether it would be appropriate to grant declaratory relief. That in turn would permit the Court to adopt the appellant’s arguments as to the extension of time, particularly in relation to prayer for relief 5A.

Consideration

60. The primary issue raised by this appeal is the correct interpretation of sub-ss 481(5)(e) and 487(5)(e) of the LPA. In R v Lee [2016] ACTCA 69 the Court (Murrell CJ, Refshauge and Rangiah JJ) said at [18] – [22]:

As this Court recently noted in Parkinson v Alexander [2016] ACTSCFC 1; 11 ACTLR 190, statutory interpretation requires the Court to take a textual and purposive approach: Project Blue Sky Inc v ABA [1998] HCA 28; 194 CLR 355. Section 138 of the Legislation Act provides that: working out the meaning of an Act means— (a) resolving an ambiguous or obscure provision of the Act; or (b) confirming or displacing the apparent meaning of the Act; or (c) finding the meaning of the Act when its apparent meaning leads to a result that is manifestly absurd or is unreasonable; or (d) finding the meaning of the Act in any other case. Section 139(1) of the Legislation Act 2001 (ACT) (Legislation Act) provides that “[i]n working out the meaning of an Act, the interpretation that would best achieve the purpose of the Act is to be preferred to any other interpretation.” Section 140 of the Legislation Act provides that, “[i]n working out the meaning of an Act, the provisions of the Act must be read in the context of the Act as a whole”. Section 141 of the Legislation Act provides that, in working out the meaning of an Act, material not forming part of the Act may be considered.

61. Section 127(1) of the LA provides that a note does not form part of the Act. However (as the primary judge pointed out at [22] of his reasons) s 142, table 142 item 1, column 2 allows a note to be used in working out the meaning of an Act.

62. The overall purposes of the LPA are set out in s 6:

6 Purposes of Act The purposes of this Act are as follows: (a) to provide for the regulation of legal practice in the ACT in the interests of the administration of justice and for the protection of consumers of the services of the legal profession and the public generally; (b) to facilitate the regulation of legal practice on a national basis across State and Territory borders.

63. The protective nature of the regulation of the profession imposed by the Act is emphasised by ch 5. The specific purposes of that chapter are set out in s 474 (see [9] above). As is correctly acknowledged by the appellant, the protection of the interests of the general public and clients is the primary purpose of the scheme of intervention introduced by the chapter. The protection of the interests of lawyers must take a second place where there is any inconsistency with that primary purpose.

64. In that context it is important to keep in mind the circumstances justifying the imposition of external intervention in the running of a legal practice. They are set out in s 479 in the following terms:

479 Circumstances justifying external intervention External intervention may take place in relation to a law practice in any of the following circumstances: (a) If a legal practitioner associate involved in the practice – (i) has died; or (ii) stops being an Australian legal practitioner; or (iii) has become an insolvent under administration; or (iv) is in prison; (b) For a firm – if the partnership has been wound up or dissolved; (c) For an incorporated legal practice – if the corporation concerned – (i) stops being an incorporated legal practice; or (ii) is being or has been wound up; or (iii) has been deregistered or dissolved; (d) In any case – if the relevant council believes, on reasonable ground, that the practice or an associate of the practice – (i) is not dealing adequately with trust money or trust property or is not properly attending to the affairs of trust money or trust property or the affairs of the practice; or (ii) has committed a serious irregularity, or a serious irregularity has happened, in relation to trust money or trust property or the affairs of the practice; or (iii) has failed properly to account in a timely way to anyone for trust money or trust property received by the practice for or on behalf of the person; or (iv) has failed properly to make a payment of trust money or a transfer of trust property when required to make the payment or transfer by a person entitled to the money or property or entitled to give a direction for payment or transfer; or (v) is in breach of a regulation or the legal profession rules with the result that the record-keeping for the practice’s trust account is inadequate; or (vi) has been or is likely to be convicted of an offence relating to trust money or trust property; or (vii) is the subject of a complaint relating to trust money or trust property received by the practice; or (viii) has failed to comply with any requirement of an investigator or external examiner appointed under this Act; or (ix) has stopped engaging in legal practice without making provision for properly dealing with trust money or trust property received by the practice or for properly winding up the affairs of the practice; (e) If any other proper cause exists in relation to the practice.

65. It is apparent that the conditions for the appointment of an intervener are serious matters which might be expected to create a real risk that the affairs of clients entrusted to the practice and/or client trust moneys might not be properly managed. The power for the relevant Council to appoint an intervener is then set out in s 480:

480 Decision about external intervention (1) This section applies if the relevant council becomes aware that 1 or more of the circumstances mentioned in section 479 exist in relation to a law practice and decides that external intervention is justified, having regard to the interests of the clients of the practice and to other matters that it considers appropriate. (2) The relevant council may decide – (a) For a law practice other than the law practice of a barrister – to appoint a supervisor for the law practice, if the relevant council is of the opinion – (i) that external intervention is required because of issues relating to the practice’s trust accounts; and (ii) that it is not appropriate that the provision of legal services by the practice be wound up and ended because of those issues; or (b) To appoint a manager for the law practice, if the relevant council is of the opinion – (i) that external intervention is required because of issues relating to the practice’s trust records; or (ii) that the appointment is necessary to protect the interests of clients in relation to trust money or trust property; or (iii) that, for this to happen, there is a need for an independent person to be appointed to take over professional and operational responsibility for the practice; or (c) For a law practice other than the law practice of a barrister – to apply to the Supreme Court under section 494 for the appointment of a receiver for the law practice, if the relevant council is of the opinion – (i) that the appointment is necessary to protect the interests of the clients in relation to trust money or trust property; or (ii) that it may be appropriate that the provision of legal services by the practice be wound up and ended. (3) The relevant council may, from time to time, make further decisions in relation to the law practice and for that purpose may revoke a previous decision with effect from a date or event stated by the council. (4) If the relevant council decides to revoke a decision to apply to the Supreme Court for the appointment of the receiver, the council must apply to the court for the revocation of the appointment. (5) A further decision may be made under subsection (3) – (a) Whether or not there has been any change in the circumstances in consequences of which the original decision was made; and (b) Whether or not any further circumstances have come into existence in relation to the law practice after the original decision was made. (6) An appointment of a supervisor or manager for a law practice may be made in relation to the law practice generally or may be limited in any way the relevant council considers appropriate, including, for example, to matters in relation to a particular legal practitioner associate or to matters in relation to a particular position or a particular subject matter. Note An example is part of the Act, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, 2 126 and s 132).

66. The provisions for the relevant Council to make the appointment and the giving of notice to various persons that the appointment has been made are set out above (at [11] and [19]). However, it is necessary to advert to the powers and functions conferred upon relevant interveners under the Act. These are set out in ss 484 and 490:

484 Role of supervisor of trust money (1) A supervisor for a law practice has the powers and duties of the practice in relation to trust money of the practice, including powers – (a) to receive trust money entrusted to the practice; and (b) to open and close trust accounts. (2) For the purpose of exercising powers or duties under subsection (1), the supervisor may do any or all of the following: (a) enter and remain on premises used by the law practice for or in relation to its engaging in legal practice; (b) require the practice, an associate or former associate of the practice, or anyone else who has, or has had, control of the documents relating to trust money received by the practice, to give the supervisor either or both of the following: (i) access to the files and documents the supervisor reasonably requires; (ii) information relating to the trust money the supervisor reasonably requires; (c) operate equipment or facilities on the premises, or to require anyone of the premises to operate equipment or facilities on the premises, for a purpose relevant to the supervisor’s appointment; (d) take possession of any relevant material and keep it for as long as may be necessary; (e) secure any relevant material found on the premises against interference, if the material cannot be conveniently removed; (f) take possession of any computer equipment or computer program reasonable required for a purpose relevant to the supervisor’s appointment. (3) If the supervisor takes anything from the premises, the supervisor must issue a receipt for the thing and – (a) if the occupier or a person apparently responsible to the occupier is present at or near the premises – give it to the occupier or person; or (b) otherwise to leave it at the premises in an envelope addressed to the occupier. Note If a form is approved under the Court Procedure Act 2004, s 8 for a receipt, that form must be used. (4) If the supervisor refused access to the premises or the premises are unoccupied, the supervisor may use whatever appropriate force is reasonable and necessary to enter the premises and may be accompanied by a police officer to assist entry. (5) This section applies to trust money held by the practice before the supervisor is appointed, as well as to trust money received afterwards. (6) The supervisor does not have a role in the management of the affairs of the law practice except as far as the affairs relate to a trust account of the practice. … 490 Role of manager (1) A manager for a law practice may carry on the practice and may do everything that the practice or a legal practitioner associate of the practice might lawfully have done, including, for example, the following: (a) transacting any urgent business of the practice; (b) transacting, with the approval of any or all of the existing clients of the practice, any business on their behalf, including – (i) stating, continuing, defending or settling any proceeding; and (ii) receiving, retaining and disposing of property; (c) accepting instructions from new clients and transacting any business on their behalf, including – (i) starting, continuing, defending or settling any proceeding; and (ii) receiving, retaining and disposing of regulated property; (d) charging and recovering legal costs, including legal costs for work in progress at the time of the manager’s appointment; (e) entering into, executing or performing any agreement; (f) dealing with trust money in accordance with this Act; Note This Act is defined in the dictionary. (g) Winding up the affairs of the practice. Note An example is part of the Act, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132). (2) For the purpose of exercising powers under subsection (1), the manager may do any or all of the following: (a) enter and remain on premises used by the law practice for or in relation to its engaging in legal practice; (b) require the practice, an associate or former associate of the practice, or anyone else who has, or has had, control of client files and associated documents (including documents relating to trust money received by the practice), to give the manager either or both of the following: (i) access to the files and documents the manager reasonably requires; (ii) information relating to client matters the manager reasonably requires; (c) operate equipment or facilities on the premises, or to require anyone on the premises to operate equipment or facilities on the premises, for a purpose relevant to the manager’s appointment; (d) take possession of any relevant material and keep it for as long as may be necessary; (e) secure any relevant material found on the premises against interference, if the material cannot be conveniently removed; (f) take possession of any computer equipment or computer program reasonably required for a purpose relevant to the manager’s appointment. (3) If the manager takes anything from the premises, the manager must issue a receipt for the thing and – (a) if the occupier or a person apparently responsible to the occupier is present at or near the premises – give it to the occupier or person; (b) otherwise, leave it at the premises in an envelope addressed to the occupier. (4) If the manager is refused access to the premises or the premises are unoccupied, the manager may use whatever appropriate force is reasonable and necessary to enter the premises and may be accompanied by a police officer to assist entry.

67. The power of interveners to take over and control a law practice or parts of it emphasises the extraordinary nature of an appointment. It is also apparent that there is an escalation in the degree of intervention permitted in the appointment of a manager. The function of the supervisor is limited to control over the trust account of the practice, whereas in an appropriate case the manager may wholly take over the conduct of the practice.

68. There is a further level of intervention comprehended by ch 5. That is the appointment of a receiver for a law practice. Part 5.5 of the LPA provides for such appointments. It is not necessary to set out the Part in detail, however the following should be noted:

(1) the Council must apply to the Supreme Court for the appointment of a receiver;

(2) the Court may hear the application without notice to the law practice;

(3) the receiver may be an employee of the Law Society;

(4) the subsection requiring the specification of the terms of the appointment (s 494(9)) includes a paragraph in identical terms to sub-ss 481(5)(e) and 487(5)(e); and

(5) The subsection requiring notice of the appointment to contain certain information (sub-s 495(2) omits any reference to the fees payable to the receiver).

69. Part 5.6 contains provisions of general application to the appointment of interveners. It starts with s 510 (see [54] above). Section 511 deals with conditions which might be imposed on receivers. Section 512 states that an act of the intervener is taken to be an act of the practice for relevant purposes. Section 514 provides for appeals against an appointment. Section 515 allows persons affected by an intervention to seek directions from the Supreme Court. It provides:

515 Directions of Supreme Court about external intervention (1) This section applies if a supervisor, manager or receiver is appointed for a law practice. (2) On application by – (a) the supervisor, manager or receiver; or (b) a principal of the practice; or (c) anyone affected by external intervention;

the Supreme Court may give directions in relation to anything affecting the intervention or the intervener’s functions under this Act.

70. Section 516 provides for sanctions on authorised deposit-taking institutions (ADIs) which fail to comply with certain requirements for co-operation with interveners.

71. Section 517 is set out in [2] above. There can be no doubt that it is the intention of the legislature that the cost of an intervention is to be borne by the relevant law practice the subject of the appointment. The focus of the appellant’s argument is on the words “entitled to be paid, in accordance with the intervener’s appointment...”. We will return to this below.

72. Sections 518 and 519 deal with reporting obligations and confidentiality respectively.

73. Section 519A again emphasises the degree to which an intervention will override the ordinary rights of the law practice. It states that an obligation imposed under Part 5.6 to provide an intervener with access to documents or information will prevail over any lien which the practice might have had over a particular document. Moreover, a failure to comply with that requirement may be unsatisfactory professional conduct or professional misconduct and may lead to a suspension of a practitioner’s practising certificate while the non-compliance continues.

74. Section 519B imposes a criminal sanction on a person who knowingly, and without reasonable excuse, “obstructs, hinders, intimidates or resists” an intervener in the exercise of his/her functions under the Act. Section 520 provides protection against civil liability for the professional bodies and interveners carrying out their functions under the chapter or acting in the reasonable belief that they are carrying out such functions.

75. It is apparent from the above summary that the step of appointing an intervener is a very serious one with potentially disastrous consequences for a subject law practice. Not only might it involve the loss of control of the practice it might also result in the practice having to bear a very heavy cost burden, particularly if a manager or receiver is appointed for an extended period. It might be expected that principals or other legally trained persons running law firms will be fully aware of these consequences.

76. It is important to note that the LPA reflected the attempt of the various Australian jurisdictions to introduce uniform legislation for the regulation of the legal profession. This process culminated in the National Legal Profession Model Regulations. The Australian Capital Territory, New South Wales, Victoria, Queensland and the Northern Territory enacted legislation reflecting the Model Regulations.

77. The issue of the fees payable to an intervener was examined by Emerton J in Legal Services Board v Forster [2011] VSC 456 (Forster). In that matter, the Supreme Court of Victoria had appointed receivers pursuant to the equivalent of s 494 of the LPA (which was s 5.5.1 of the Legal Profession Act 2004 (Vic) (LPA (Vic)) – sub-s (6)(d) provided that the instrument appointing the receiver must:

5.5.1 Appointment of receiver …

(6) The instrument of appointment must - (d) specify any fees payable by way of remuneration to the receiver specifically for carrying out his or her duties in relation to external intervention; and Note Paragraph (d) is intended to exclude remuneration payable generally, eg as an employee of the Board.

78. Order 8 in relation to the remuneration of the receivers was:

The fees payable by way of remuneration to the Receiver shall be at the hourly rates set out in the affidavit of Noel Batrouney sworn on 12 April 2010.

79. Her Honour noted at [6] that the affidavit of Mr Batrouney set out the differing hourly rates of the partners and employees (of various categories) of the legal firm of which the receivers were partners. At [7] Her Honour said:

By reason of s 5.6.7(1) of the Act, which provides that an external intervener is entitled to be paid, in accordance with the instrument of appointment, fees by way of remuneration, the receivers have a statutory right to be paid fees at the hourly rates set out in the affidavit of Mr Batrouney.

80. Section 5.6.7 of the LPA (Vic) was in almost identical terms to s 517 of the LPA.

81. Mr Forster sought a direction that the receivers submit accounts to the Court and the defendant on a monthly basis, and also a full account of their work to that time pursuant to sub-r 39.07(2) of the Victorian Supreme Court (General Civil Procedure) Rules 2005 (Vic). That rule required the submission of accounts by Court appointed receivers and permitted relevant parties to object by notice in writing. The Court was empowered to examine and rule upon such objections.

82. Her Honour considered at [10] that the rule had to be considered in the light of the specific statutory provisions governing the appointment of the receivers. After setting out in some detail the submissions of the parties her Honour said (at [23]-[26]):

In my view, whether O 39 applies or could apply (in whole or in part) to receivers appointed under the Act, and what powers the court has to give directions about the remuneration of receivers and their reporting or accounting obligations generally, must depend on a close reading of the Act. Ultimately, it is a question of what is permitted by the Act. The Board’s submissions were directed to precisely this question. The Board submitted that the Act, and in particular s 5.6.7, lays down a code in respect of fees, costs and expenses of a receiver appointed pursuant to the Act. As a result, a legal practitioner has no right to make, and the court no jurisdiction to consider, an application for review of assessment of a receiver’s fees or the costs of expenses of a receivership under O 39. The Board submitted that s 5.6.7 of the Act must be construed so as to exclude this kind of review of receiver’s costs contemplated by clauses (4), (5) and (6) of r 39.07, particularly having regard to: (a) the development and operation s 5.6.7(2) of the Act in the context of national uniform legislation known as the Legal Profession – Model Laws Project; and (b) the removal of provisions governing conveyancing practices from the Act and their insertion into the Conveyancing Act 2006 (Vic). In relation to the first point, the Board described the following legislative context: (a) Section 5.6.7(2) of the Act reflects clause 5.6.8(2) of the National Legal Professional Model Regulations (the ‘Model Regulations’), which is a Core Uniform provision. Clause 5.6.8(2) provides: An account of the external intervener for fees, costs and expenses may, on the application of the [appropriate authority], be taxed or assessed. (b) Under the Legal Profession Practice Act 1958 (Vic) and the Legal Practice Act 1996 (Vic), there was no provision in Victoria for a legal practitioner to seek review by the court of the expenses or remuneration of a receiver or external intervener appointed to the legal practitioner’s practice. Only the Board or the Law Institute of Victoria (as the case may have been), or the receiver, had a right to apply to the Court for a determination about the receivers’ remuneration. (c) New South Wales, Queensland, the Australian Capital Territory and the Northern Territory have enacted legislation implementing the Model Regulations. In none of Queensland, the ACT or the Northern Territory did the predecessor statute regulating the conduct of lawyers contain a provision which entitled a legal practitioner to dispute the costs of a receiver appointed to his or her law practice. Thus, in Queensland, the ACT and the Northern Territory, and in Victoria, the position of the legal practitioner has not altered with the enactment of the Model Regulations. (d) However, the legislative history of New South Wales is different. The Legal Profession Act 1987 (NSW) provided that the New South Wales Supreme Court could, on the application of the relevant solicitor, re-open any agreement made by the Law Society Council for the remuneration of the receiver and determine the amount to be paid. It would also relieve the relevant solicitor from payment of any amount in excess of that determined by the court to be fairly payable and/or the receiver is to repay the excess. (e) Such provisions are absent from the current New South Wales legislation based on the Model Regulations, the Legal Profession Act 2004 (NSW). The relevant provisions are substantially the same as those in the Act. [Omitting footnotes.]

83. After considering the NSW legislation and the provisions of the Conveyancers Act 2006 (Vic), Emerton J concluded that neither constituted an impediment to the Supreme Court of Victoria considering an application by a legal practitioner in respect of the costs of a receivership under the LPA (Vic). It is true that her Honour saw the fact that the receivers were appointed by the Court as an important support for the proposition that the Court must have the power to supervise the receivership costs. However, her Honour also found support in the terms of the LPA (Vic) itself. Her Honour concluded (ss 5.6.7(2) and 5.6.5 of the LPA (Vic) being identical in substance with ss 517(2) and 515 of the LPA respectively) at [40]-[41] and [43]:

Section 5.6.7(2) of the Act must also be considered. Section 5.6.7(2) confers on the Board a discretion to cause the fees, costs and expenses of a receiver to be reviewed or assessed. In my view, the existence of this provision evinces an intention that the primary responsibility for keeping a check on the fees, costs and expenses of an external intervener rest with the Board. However, that is not inconsistent with the Court’s exercise of its supervisory powers in respect of the arrangements that it has put in place for the receivership, including for the remuneration of the receiver. There would need to be a clear expression of intention by the legislature to exclude such a power. The fees, costs and expenses of the receiver are matters with which the Court is concerned from the inception of the receivership. At the very least, the Court must have power to make orders in respect of the arrangements it has put in place for the conduct of the receivership. I see no reason why that could not occur on the application of the legal practitioner whose law practice has been placed in receivership. That person is either “a principal of the practice” or a person “affected by the external intervention” for the purposes of the Court’s directions power in s 5.6.5 of the Act. … In my view, therefore, it is open to Mr Foster to apply to the Court for orders directed to ensuring that the receivers’ fees, costs and expenses are charged in accordance with the instrument of appointment. It is implicit in the orders made by the court constituting the instrument of appointment that the receivers’ fees, costs and expenses be reasonable. Whether the Court will carry out a review in any given case will involve the exercise of discretion. The relevant discretionary factors are to be considered below. [Omitting footnotes.]

84. In our view the language of s 517(1) is crucial to the correct interpretation of sub-ss 481(5)(e) and 487(5)(e). Emerton J was correct in her comment in Forster at [7] (see [79] above), although of course her Honour was not considering the precise issue which has arisen here. The scheme imposing liability for the costs of intervention on the legal practice depends for its operation on there having been, at the time of the appointment of the intervener, a statement of the basis on which the fees would be calculated. That should be either contained, or sufficiently referenced, in the instrument of appointment for supervisors and managers. In that context we do not agree with the primary judge that sub-ss 481(5)(e) and 487(5)(e) only required that the instrument of appointment state whether fees would be payable to the intervener. We accept the submission made for the appellant that s 517 requires a degree of certainty, at least as to the basis on which the fees of the intervener will be calculated.

85. We do not accept that the fact that on some occasions there may be an urgent need to appoint an intervener militates against the instrument of appointment setting out enough information to allow an objective conclusion to be drawn as to the basis on which fees will be payable. In every case in which the Council is deciding whether to appoint an intervener it must be possible at the outset for the fees arrangement to be agreed. It is difficult to accept that if a particular individual is unwilling to act as an intervener for a fee which is reasonable in all the circumstances another qualified person could not be found on short notice who was willing to perform the role on that basis.

86. It is true that ss 482 and 488 of the LPA do not require that specific notice be given to the legal practice of the fees as stated in the instrument of appointment. However, that does not alter the requirement implicit in the relationship between s 517 and sub-ss 481(5)(e) and 487(5)(e) for the basis for any assessment of fees to be made certain at the time of appointment.

87. It follows from the conclusion at [84] that, in our view, his Honour, the primary judge, erred in his interpretation of the paragraphs of the LPA in question. However, that is not the end of the matter. The Council, by its Amended Notice of Contention says that if the interpretation of the primary judge is found by this Court to be erroneous the words contained in each instrument of appointment (i.e. “… the rate agreed between the Law Society and [the Intervener]”) complied, in any event, with the requirements of sub-ss 481(5)(e) and 487(5)(e).

88. Contrary to the submission of the appellant, we accept that the words contained in each instrument of appointment (see [12], [21] and [24] above) were, on their face, sufficient to comply with the requirements of sub-ss 481(5)(e) and 487(5)(e). They imply that there was at the time each instrument was made an existing agreement between the Law Society and the intervener as to the hourly rate at which the intervention services were to be provided. We do not accept that the statement in each instrument that the remuneration “will be at the rate per hour…as agreed” suggests that the agreement is to be made in the future. Rather, it suggests that the payment of the remuneration is to be made at some future time, but that that payment will be at the rate already agreed.

89. No evidence was tendered to suggest that such an agreement did not exist at the relevant time. In light of the interpretation of sub-ss 481(5)(e) and 487(5)(e) that we favour, at the hearing before the primary judge the onus was on the appellant to establish that the mechanism for fee assessment apparent on the face of the instruments was defective because in fact there was no agreement between the Law Society and the relevant intervener.

90. In the course of submissions at the hearing of the appeal the appellant submitted that sub-ss 481(5)(d) and 487(5)(d), in the context of s 517, have the effect that the agreement as to the rate of fees must be in place at the time of the appointment. It would not be sufficient if, for example, the instrument stated that the rate of fees would be as agreed from time to time in the future. The Council contests that proposition. It submits that so long as the mechanism is identified for allowing the fees to be worked out under s 517 it should not matter if the agreement as to the rate was varied from time to time during the relevant intervention.

91. We do not accept the Council’s submission. In our view the combination of the requirement to “state any fees” with the words in sub-s 517(1) linking the entitlement to be paid to the appointment of the intervener requires a greater degree of certainty than that which accompany a rate which could be varied between the parties at any time. As the appellant submitted, the relevant Council may under sub-s 480(3) make further decisions in relation to a law practice, including, as occurred here with the second appointment of Mr Hijazi, a further appointment effectively amending the terms of a previous appointment. The need for a new rate of fees could thus be met by a further appointment referring to the variation or new agreement as to the fee rate, as the case might be.

92. The appellant also argued that sub-s 510(3) might allow a Council to amend a rate of fees as a “condition” of an appointment. We do not accept that submission. Each of sub-ss 481(5)(d) and 487(5)(d) allows the specification of conditions at the time of the appointment. It is a distinct subject matter to the fees issue dealt with in sub-s 5(e). Sub-section 510(2) permits the imposition of conditions both at the time the intervener is appointed and otherwise during the term of the appointment. The former relates to the conditions referred to in sub-ss 481(5)(d) and 487(5)(d). The conditions referred to in s 510 maintain the distinction apparent in ss 481 and 487. Those conditions do not include the rates or terms of fees stated pursuant to sub-ss 481(5)(e) and 487(5)(e).

93. A further issue raised in the course of argument at the hearing of the appeal related to the fact that in each instrument of appointment the relevant rate was as agreed between the intervener and the Law Society. The appellant submitted that the language of the statute required that any such agreement be made between the Council and the intervener.

94. It is important to note that the Law Society of the ACT is corporate entity owing its current existence to s 576 of the LPA. The Council of the Law Society is not a legal entity, although it is given functions and powers under the LPA, including standing to bring proceedings in relation to certain matters arising under the Act: see sub-s 577(1). In that context it is not clear that the Council would have the power to enter into a fee agreement with an intervener, although it might be argued that such a power was implicit in the power to appoint. Be that as it may, in our view there is no impediment in sub-ss 481(5)(e) or 487(5)(e) to the agreement as to the rate of fees for an intervener being made with the entity of which the Council is part, namely the Law Society. This conclusion is supported by the fact that fees of an intervener which are not paid by the law practice must be paid from the Fidelity Fund: see sub-s 517(4). That fund is the responsibility of the Law Society: ss 320-326. It also makes sense that a commercial agreement which might be enforceable independently of the statute is made the corporation, and not its controlling organ. Conclusion

95. Both parties submitted that if this Court upheld the primary judge’s interpretation of sub-ss 481(5)(e) and 487(5)(e) then the appeal could not succeed on the ancillary grounds, and there was no need to consider the cross-appeal. Although we have differed from his Honour, the difference is not significant in the overall context of the appellant’s claim for relief at first instance. That claim depended on the proposition that each of the three instruments of appointment failed to comply with sub-ss 481(5)(e) and 487(5)(e) as applicable. The result of our interpretation of sub-ss 481(5)(e) and 487(5)(e) is that on the evidence the appellant failed to demonstrate non-compliance.

96. It follows that it is not necessary for this Court to consider the arguments on the exercise of the discretion as to declaratory relief, or those as to the need for or granting of extension of time. The appeal must be dismissed. We also dismiss the cross-appeal.

Order of the Court

97. The orders of the Court are:

(1) The appeal and the cross-appeal are dismissed.

(2) The appellant is to pay the respondents costs of the appeal and the cross-appeal.

(3) Order 2 is stayed for a period of 14 days to allow any party seeking a different order to advise the Court accordingly.

I certify that the preceding ninety-seven [97] numbered paragraphs are a true copy of the Reasons for Judgment of Mossop J, Loukas- Karlsson J & Crowe AJ.

Associate:

Date: