Kazas-Rogaris v Council of the Law Society of New South Wales

The Law Society's decision to administer a reprimand

1. In reprimanding Ms Kazas-Rogaris, the Law Society acted under section 540 of the LP Act. At the relevant time, this stated (so far as material):- 540 Summary conclusion of complaint procedure by caution, reprimand, compensation order or imposition of conditions (1) This section applies if: (a) either: (i) the Commissioner or a Council completes an investigation of a complaint against an Australian legal practitioner, or (ii) the report of an independent investigator is given to the Commissioner, and (b) the Commissioner or Council (as the case requires): (i) is satisfied that there is a reasonable likelihood that the practitioner would be found by the Tribunal to have engaged in unsatisfactory professional conduct (but not professional misconduct), and (ii) is satisfied that the practitioner is generally competent and diligent, and (iii) is satisfied that the taking of action under this section is justified having regard to all the circumstances of the case (including the seriousness of the conduct concerned) and to whether any other substantiated complaints have been made against the practitioner. (2) The Commissioner or Council may do any or all of the following:… (b) reprimand the practitioner… (4) If action is taken under subsection (2), no further action is to be taken under this Chapter with respect to the complaint. (5) If the Commissioner or Council decides to reprimand or make a compensation order against an Australian legal practitioner under this section, or that a condition be imposed on an Australian legal practitioner's practising certificate under this section, the practitioner may apply to the Tribunal for an administrative review under the Administrative Decisions Tribunal Act 1997 of the decision.
2. The Law Society based its decision to reprimand Ms Kazas-Rogaris under section 540(2)(b) on findings that in her capacity as the principal and sole director of an incorporated legal practice called KR Lawyers and Consultants Pty Ltd ('KR Lawyers'), she had contravened two statutory provisions regulating her conduct of a family law matter on behalf of a client called Michelle Youm. These were (i) section 41 of the Legal Aid Commission Act 1979 ('the LA Act'), which states that a legal practitioner must not recover costs in respect of work assigned by the Legal Aid Commission ('Legal Aid') except with this Commission's approval, and (ii) section 255 of the LP Act, which relates to the management of funds held in a trust account.

The Tribunal's decision to set aside the reprimand

1. In the principal decision at [10 - 11], the Tribunal gave the following explanation of the approach that it adopted in reviewing the Law Society's decision:- 10 As indicated in section 540(5) of the LP Act, these are proceedings for administrative review of the Law Society's decision, not an appeal against it. Accordingly, for reasons set out in the Court of Appeal's judgment in Donaghy v The Council of the Law Society of New South Wales [2013] NSWCA 154, the question that we must address when considering the first (and most significant) of the three matters listed in section 540(1)(b) of the LP Act is not whether the conduct that we find Ms Kazas-Rogaris to have engaged in, having regard to the material now before us, amounted to unsatisfactory professional conduct. Instead, it is whether we are satisfied that there is a reasonable likelihood that she would have been found by the ADT to have engaged in unsatisfactory professional conduct. 11 This is the outcome of the following aspects of the provisions of the ADT Act governing review proceedings: (a) section 63(1) states that our task is to 'decide what the correct and preferable decision is' having regard to the material now before us; (b) under section 63(2), we may, for this purpose, 'exercise all of the functions that are conferred or imposed by any relevant enactment' on the Law Society; and (c) under section 66(2), if any decision by us 'varies, or is to be in substitution for' the Law Society's decision (as is permitted by section 63(3)), our decision is taken to be the decision of the Law Society (other than for the purposes of a review under the ADT Act).
2. At [13 - 71], the Tribunal outlined the evidence that had been put before it. It is not proposed to repeat that outline here.
3. At [75 - 81], the Tribunal set out the parties' submissions on the question whether Ms Kazas-Rogaris, in recovering amounts by way of costs from Ms Youm, had contravened section 41 of the LA Act.
4. At [82 - 94], the Tribunal stated its conclusions on this question and on the question whether, having regard to these conclusions and to the other material before it, there was a reasonable likelihood that her recovery of these costs would have been found by the ADT to have amounted to unsatisfactory professional conduct.
5. With respect to the earlier of two grants of legal aid that the Commission made to KR Lawyers for work on behalf of Ms Youm, the Tribunal held that Ms Kazas-Rogaris's subsequent conduct in recovering costs from Ms Youm did not breach section 41. This ruling was based on a particular interpretation (explained at [83 - 84]) that it gave to certain phrases within section 41(1).
6. With respect to the later of these grants, the Tribunal's conclusion was that a breach might have occurred, but there was 'no definitive evidence'. It then stated as follows (at [90 - 94]):- 90… In such situations, we believe that we should (to put it broadly) give Ms Kazas-Rogaris the 'benefit of the doubt'. 91 The grounds for this belief are twofold. First, for reasons explained above at [10 - 11], our task includes determining (with reference to section 540(1)(b)(i) of the LP Act is concerned) whether there is a 'reasonable likelihood' that the ADT would have made a finding of unsatisfactory professional conduct against Ms Kazas-Rogaris. Secondly, if the ADT had in fact been called on to decide whether such a finding should be made, it would have been mindful of the established principle that in disciplinary proceedings before it alleging unsatisfactory professional conduct under the LP Act, the Law Society or other prosecuting authority bore the onus of proof. 92 We realise that in interpreting section 41(1) in the manner set out above we appear to be in disagreement with the approach taken by senior officers of Legal Aid. If having regard to this consideration and/or for any other reasons our interpretation of the subsection is incorrect, we would still not regard Ms Kazas-Rogaris as being at fault to the extent required to justify the finding required by section 540(1)(b)(i) of the LP Act. 93 Even if her view (with which we concur) as to the scope of application of the prohibition in section 41(1) to the circumstances of her case was incorrect, it was at least a reasonable one. Despite her repeated requests for advice from Mr Tudor [an officer in the employ of Legal Aid], the contrary view taken by Legal Aid was not explained to her until 19 March 2009. This was nearly six months after she had sent the itemised bill of costs to Ms Youm and sixteen days after she transferred the amount of these costs from the trust account to her office account. 94 On the assumption, therefore, that section 41 applied to the circumstances of this case to the extent maintained by Legal Aid, we would still not be satisfied that there was a reasonable likelihood that Ms Kazas-Rogaris would have been found by the ADT to have engaged in unsatisfactory professional conduct.
7. The Tribunal then dealt (at [97 - 111]) with the Law Society's claim that Ms Kazas-Rogaris had contravened section 255 of the LP Act by transferring funds from the trust account of KR Lawyers to this firm's office account in order to pay costs owed by Ms Youm. Ms Kazas-Rogaris's defence to this claim was based principally on provisions of the LP Act (section 261(1)(b)) and the Legal Profession Regulation 2005 (clause 88(4)) that authorise such transfers if certain conditions are satisfied.
8. With regard to a series of transfers that it called the 'earlier transfers', the Tribunal held (at [103]) that although due to an error by a clerk in her employ a breach of section 255 might have occurred, Ms Kazas-Rogaris had reasonable grounds for believing the transfers to have been permissible under these provisions. At [105], the Tribunal pointed out that as soon as she became aware that they might not have been permissible, she transferred the funds in question back to the firm's trust account. The Tribunal went on to state (at [106]) that for these reasons it was 'not satisfied' that on account of her conduct in making these transfers there is 'a reasonable likelihood that the ADT would have made a finding of unsatisfactory professional conduct against her'.
9. With regard to a single transfer that it called the 'later transfer', the Tribunal's conclusion (at [111]) was that it was authorised by section 261(1)(b) and clause 88(4). At [109], the Tribunal indicated that this conclusion followed from a 'strict reading' of these provisions that was at odds with an interpretation urged by counsel for the Law Society.

Relevant provisions regarding costs

1. The parties agreed that the question of costs in these proceedings was governed by a now-repealed provision, section 88, of the ADT Act. So far as relevant here, this section stated:- 88 Costs (1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section. (1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as:… (i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or… (iv) causing an adjournment… (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) any other matter that the Tribunal considers relevant. 2) The Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.

Ms Kazas-Rogaris's submissions regarding costs

1. The principal ground on which Mr Stanton based his client's claim for a costs order against the Law Society was such an order would be 'fair' under section 88(1A)(c) on account of the 'strength' of her case. He maintained that Ms Kazas-Rogaris had 'wholly succeeded in her claim for the relief sought in the proceedings', that she had been 'fully justified in requesting administrative review of the Law Society's decisions' and that 'no findings against her by the Law Society which were the subject of review in these proceedings were found to have been justified'.
2. With specific reference to the Law Society's claim that Ms Kazas-Rogaris had contravened section 41 of the LA Act, he submitted that there had been 'no reasonable basis' for such a claim. He relied on parts of the passage from the principal decision that is quoted above at [18].
3. As to the claim of contravention of section 255 of the LP Act, Mr Stanton relied on the Tribunal's dismissal of this claim and on the evidence that as soon as Ms Kazas-Rogaris became aware that the earlier transfers were disputed she transferred the relevant funds back into the trust account of KR Lawyers. It followed, he argued, that there was 'no reasonable likelihood of the ADT making findings of unsatisfactory professional conduct against her' on this ground.
4. In view of these matters, Mr Stanton contended, Ms Kazas-Rogaris 'would be unfairly disadvantaged if she were not able to recover her legal costs of these proceedings from the Respondent who unnecessarily put her though this whole process'. He added: 'This is particularly so having regard to the severity of receiving an official reprimand which was found not to have been justified in all of the circumstances.' He further submitted that even if she recovered her costs, she would still not be recompensed for the time that she had had to spend on account of her involvement with these proceedings or for 'the detrimental impact that this ordeal has unavoidably had on her small practice'.
5. At the conclusion of his submissions, Mr Stanton cited various ADT decisions on the interpretation of section 88. One of these was Dykes & Wildie v Heatherway Pty Ltd (No 2) (RLD) [2007] NSWADTAP 46, in which an award of a proportion of the successful party's costs was made under section 88. Mr Stanton submitted that following this example the Tribunal should consider making a partial order in Ms Kazas-Rogaris's favour if it was not satisfied that she should recover all her costs.

The Law Society's submissions regarding costs

1. Near the commencement of her submissions on behalf of the Law Society, Ms Foord quoted the following observations regarding section 88 contained in Batsen JA's judgment in AT v Commissioner of Police, NSW [2010] NSWCA 131 at [33]:- 33 That approach does not diminish the force of the general principle that each party should bear its own costs in the Tribunal, a principle applicable at both first instance and before the Appeal Panel. Although an order varying the general rule may be made "only if" the relevant criterion is satisfied in a particular way, there is a relatively low hurdle for an applicant seeking an order. The criterion of "fairness" will take into account the compensatory purpose of an award of costs, which will generally favour the successful party. The circumstances in which fairness may be identified are indicated by the specific attributes listed in sub-s (1A), but subject to the generality of paragraph (e), read in its context. Other considerations will no doubt include the nature of the jurisdiction of the Tribunal which is invoked and the objects identified in s 3(b)-(g) of the Tribunal Act.
2. With reference to the Law Society's claim of a contravention of section 41 of the LA Act, Ms Foord observed first that the evidence depicted 'a clear breakdown in communications' between Ms Kazas-Rogaris and Legal Aid. She placed emphasis on the fact that in the opinion of senior officers of Legal Aid this claim was soundly based. The Tribunal, she maintained, had based its contrary findings on its own interpretation of relevant provisions of the LA Act, as applied to the facts of the case.
3. A further submission by Ms Foord on this aspect of the case was that the Tribunal 'did not make any finding that the Respondent had, as then advised, erred in determining the matter based on the evidence then before it'. After observing that there was 'no definitive evidence' on certain matters, it had decided that Ms Kazas-Rogaris should 'have the benefit of the doubt'.
4. Ms Foord's submissions regarding the Tribunal's conclusion that no breach of section 255 of the LP Act had been established went little further than to summarise aspects of the Tribunal's reasoning.
5. For these reasons, Ms Foord submitted, there was 'no apparent suggestion by the Tribunal that either the Respondent had misdirected itself or had, in any other material respect, acted wrongly'. It was in fact 'arguable that based on the evidence then available to it, the Respondent would have been well entitled to form the view which it did and, accordingly, should not be subjected to any adverse costs order'.
6. A separate argument advanced by Ms Foord was that certain conduct by Ms Kazas-Rogaris after she had filed her application in the ADT fell within subparagraphs (i) and (iv) of paragraph (a) of section 88(1A) and therefore provided 'ample reason for the Tribunal not to award costs against the Respondent'. Ms Foord maintained that due to Ms Kazas-Rogaris's failures to comply with directions, her issuing of a summons to which the Law Society successfully objected and her seeking access to further material from the Law Society after both parties had filed their evidence, the case had had to be mentioned on six separate occasions. Ms Foord also referred to the fact that due to omissions on Ms Kazas-Rogaris's part the commencement of the hearing on 7 July 2014 had had to be adjourned from 10 a.m. until 1 p.m.
7. For these reasons, Ms Foord submitted, the appropriate order was that the parties should bear their own costs.

Discussion and conclusions

1. In the Tribunal's opinion, Ms Kazas-Rogaris has not made out her case for an award of costs, for the following reasons.
2. Under section 88 of the ADT Act, the prima facie presumption, stated in subsection (1), is that the parties should bear their own costs. The onus therefore lies on Ms Kazas-Rogaris to bring forward evidence justifying a finding that an order under subsection (1A) displacing this presumption would be 'fair'.
3. The principal ground on which she claimed that such an order would be 'fair' was that her case was a 'strong' one whereas, to quote from Mr Stanton's submissions, 'no findings against her by the Law Society which were the subject of review in these proceedings were found to have been justified'. She claimed that this brought her costs application within the scope of paragraph (c) of section 88(1A).
4. As Ms Foord submitted, however, if an argument framed in this way is to succeed, it must be shown that, in the light of the evidence that was available to the Law Society at the time when it made its decision to reprimand her, that decision was not justified. It is not enough to show that the Tribunal came to this conclusion after taking account (as it was required to do by section 63(1) of the ADT Act - see [11] above) of the evidence admitted at its hearing of the case. The evidence admitted at the hearing included material - notably an affidavit sworn by Ms Kazas-Rogaris herself - that was not in the hands of the Law Society when it decided, more than 15 months earlier, that she should be reprimanded.
5. For these reasons, a proposition already quoted from Ms Foord's submissions carries weight. It is that the Tribunal 'did not make any finding that the Respondent had, as then advised, erred in determining the matter based on the evidence then before it'.
6. There are three further reasons why the necessary difference between 'the relative strengths of the parties' cases' required to trigger the operation of section 88(1A)(c) has not been established.
7. The first of these is that the Tribunal did not rule out the possibility that Ms Kazas-Rogaris's conduct involved contraventions of section 41 of the LA Act and/or section 255 of the LP Act. With reference to section 41, it stated that the evidence was 'not definitive' and that she should have 'the benefit of the doubt'. With reference to section 255, its ruling was that although a breach may in fact have occurred, she had 'reasonable grounds for believing' that this was not the case.
8. Secondly, the Tribunal made it clear that to the extent that it dismissed the Law Society's claims of contravention of these sections, it did so on the basis of interpretations of them that might have been open to argument.
9. Thirdly, and most significantly, the Law Society, at the time when it decided to reprimand Ms Kazas-Rogaris, knew that in the view of senior officers of Legal Aid she had contravened section 41. It was less well placed than the Tribunal was to take account of arguments opposing this view.
10. Since Ms Kazas-Rogaris has failed to show that it would be 'fair', having regard to paragraph (c) of section 88(1A), to award costs in her favour, it is not necessary to rule on Ms Foord's opposing submission based on subparagraphs (i) and (iv). It is sufficient to say that in the absence of supporting evidence this submission does not carry significant weight.
11. For the foregoing reasons, the Applicant's application for an order that the Respondent pay her costs of these proceedings must be dismissed. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 February 2015