[2018] ACTSC 27

ADMINISTRATIVE LAW - Judicial Review Legislation - Prerogative Writs and Orders - Application for judicial review of proceedings - application for prerogative and declarative relief - whether the plaintiff could lawfully be found guilty of the charges - whether ACAT constructively failed to exercise its jurisdiction

ACT Civil and Administrative Tribunal Act 2008 (ACT)

Legal Profession Act 2006 (ACT) s 223

Workers Compensation Act 1951 (ACT) ss 79 and 80

Workers Compensation Regulation 2002 (ACT) reg 57

Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564

Brereton v Legal Services Commissioner [2010] VSC 378

Council of the Law Society of New South Wales v Doherty [2010] NSWCCA 177

Electricity Generation Corp v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640

Hot Holdings Pty Ltd v Creasy [1996] HCA 44; 134 CLR 469

Kirk v Industrial Relations Commission (NSW) [2010] HCA 1; 239 CLR 531

Lethlean v The Queen (1995) 83 A Crim R 197

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; 256 CLR 104

Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4

WO v Director of Public Prosecutions (DPP) [2009] NSWCA 370

The Council of the Law Society of the ACT (First Defendant)

Mr N J Beaumont SC and Ms R Withana (First Defendant)

1. This is an application for judicial review. An Originating Application seeking, amongst other things, a stay of proceedings was filed on 4 August 2017. The matter before me today is based on a Further Amended Originating Application filed on 24 November 2017.

2. The plaintiff is a solicitor who is the subject of disciplinary action in the ACT Civil and Administrative Tribunal ('ACAT'). The proceedings were instituted by the Council of the Law Society of the ACT ('the Law Society') and have not yet been finalised.

3. In effect, the Law Society is the first defendant. ACAT is the second defendant but has submitted to the decision of the Court. I will refer to the first defendant as 'the defendant'.

4. The Law Society's original application before ACAT was filed on 20 July 2016 but later amended. The relevant application is the Further Amended Application (the 'FAA') filed at ACAT on 7 March 2017. In this application, the following charges, in summary form, were made against the plaintiff:

(i) Entering into a contingency fees agreement (Charge 1);

(ii) Disbursing trust money in breach of a client's direction (Charge 2);

(iii) Disbursing trust money in breach of a client's direction (Charge 2A);

(iv) Misappropriating $5,096.78 from a trust account (Charge 3); and

(v) Misappropriating $5,096.78 from a trust account (Charge 3A).

5. Charges 2, 2A, 3 and 3A allege a breach of s 223 of the Legal Profession Act 2006 (ACT) ('the LPA'). They all relate to the same body of money. Without making any concession, the defendant acknowledged that the number of charges laid may not have been necessary.

6. The hearing before ACAT commenced on 2 March 2017. At the conclusion of the Law Society's case, an application was made to dismiss the charges because there was "no case to answer". Argument seems to have occurred on 2 and 3 March 2017. Written submissions followed.

7. On 7 July 2017, ACAT dismissed Charge 1 and listed the remaining charges for directions. It is the refusal to dismiss all of the charges that has given rise to the application for judicial review.

8. ACAT explained the approach it took in its written "Reasons for Decision". Notwithstanding this title, one of the submissions advanced by the Law Society is that ACAT did not make a decision susceptible to judicial review. I will return to that argument below.

9. The plaintiff's application is supported by an affidavit. The exhibits to the affidavit were collectively marked as Exhibit A.

10. The application for relief by way of a declaration and orders in the nature of prerogative writs is said to be made pursuant to s 34B of the Supreme Court Act 1933 (ACT), which is in the following terms:

S 34B Habeas corpus and prerogative orders

(1) The Supreme Court has power to grant any relief by way of a habeas corpus order or prerogative order.

(2) In this section:

habeas corpus order means an order the relief under which is in the nature of, and to the same effect as, relief by way of a writ of habeas corpus.

prerogative order means an order the relief under which is in the nature of, and to the same effect as, relief by way of -

(a) a writ of mandamus, prohibition or certiorari; or

(b) an information in the nature of quo warranto.

11. In addition, the plaintiff relies on the inherent jurisdiction of the court. The plaintiff seeks a declaration that he could not lawfully be found guilty of the four remaining charges, an order quashing the part of the decision handed down by ACAT concerning those charges, and an order remitting the proceedings to ACAT to determine the no case submissions according to law. In other words, the plaintiff seeks orders that will ultimately lead to the dismissal of the charges by ACAT.

12. Both parties provided helpful written submissions and supplemented those submissions orally. I am grateful to both parties for the care and detail in which the submissions were presented. I do not intend to repeat that detail here but rather to set out, in summary form, the nature of the competing arguments.

13. In relation to the issue of jurisdiction, the plaintiff submitted that the purposes of s 32 and s 34B of the Supreme Court Act 1933 (ACT) include quashing errors of a jurisdictional nature and finally quelling controversies. The plaintiff relied on this passage from Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564 at 581 - 582:

It is now accepted that superior courts have inherent power to grant declaratory relief. It is a discretionary power which "[i]t is neither possible or desirable to fetter... by laying down rules as to the manner of its exercise". However, it is confined by the considerations which mark out the boundaries of judicial power. Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The person seeking relief must have a "real interest" and relief will not be granted if the question "is purely hypothetical", if relief is "claimed in relation to circumstances that [have] not occurred and might never happen" or if "the Court's declaration will produce no foreseeable consequences for the parties". [citations omitted]

14. I was also referred to this passage from Kirk v Industrial Relations Commission (NSW) [2010] HCA 1; 239 CLR 531 at 580 - 581:

The supervisory jurisdiction of the Supreme Courts was at federation, and remains, the mechanism for the determination and the enforcement of the limits on the exercise of State executive and judicial power by persons and bodies other than the Supreme Court. That supervisory role of the Supreme Courts exercised through the grant of prohibition, certiorari and mandamus (and habeas corpus) was, and is, a defining characteristic of those courts. And because, "with such exceptions and subject to such regulations as the Parliament prescribes", s 73 of the Constitution gives this Court appellate jurisdiction to hear and determine appeals from all judgments, decrees, orders and sentences of the Supreme Courts, the exercise of that supervisory jurisdiction is ultimately subject to the superintendence of this Court as the "Federal Supreme Court" in which s 71 of the Constitution vests the judicial power of the Commonwealth.

There is but one common law of Australia. The supervisory jurisdiction exercised by the State Supreme Courts by the grant of prerogative relief or orders in the nature of that relief is governed in fundamental respects by principles established as part of the common law of Australia. That is, the supervisory jurisdiction exercised by the State Supreme Courts is exercised according to principles that in the end are set by this Court. To deprive a State Supreme Court of its supervisory jurisdiction enforcing the limits on the exercise of State executive and judicial power by persons and bodies other than that Court would be to create islands of power immune from supervision and restraint. It would permit what Jaffe described as the development of "distorted positions". And as already demonstrated, it would remove from the relevant State Supreme Court one of its defining characteristics.

15. Very recently, in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4, their Honours Kiefel CJ, Bell, Keane, Nettle and Gordon JJ noted at [27] - [31]:

The jurisdiction of the Supreme Court of New South Wales to make an order in the nature of certiorari is an aspect of its jurisdiction as "the superior court of record" in that State. The jurisdiction by judgment or order, not by writ.

The function of an order in the nature of certiorari is to remove the legal consequences, or purported legal consequences, of an exercise or purported exercise of power which has, at the date of the order, a discernible or apparent legal effect upon rights.

The principal basis for making such an order is jurisdictional error, thus enforcing the limits of a decision-maker's functions and powers. The jurisdiction of a State Supreme Court to review an exercise or purported exercise of power for jurisdictional error, and to grant relief in the nature of certiorari (and prohibition and mandamus) where jurisdictional error is found, serves to enforce the limits of State executive and judicial power. In that sense, it may aptly be described as a "supervisory jurisdiction". As was explained in Kirk v Industrial Court (NSW), that supervisory jurisdiction was and is a defining characteristic of the State Supreme Courts.

Unlike the supervisory jurisdiction enforcing the limits of executive and judicial power, the jurisdiction of a Supreme Court to review, and to make an order in the nature of certiorari, for error of law on the face of the record is not part of the defining characteristics of the State Supreme Courts. This jurisdiction may be ousted by statute.

In Craig v South Australia, this Court rejected what was described as an "expansive" approach to certiorari which conceived of the "record" of an inferior court as including both the reasons for decision and the transcript of proceedings, holding that, in the absence of statutory provision to the contrary, the record did not ordinarily include the reasons for decision. After the decision in Craig, the Supreme Court Act was amended to declare in s 69(3) that the jurisdiction of the Supreme Court to grant any relief or remedy in the nature of a writ of certiorari includes jurisdiction to quash the ultimate determination of a court or tribunal if that determination has been made on the basis of an error of law that appears on the face of the record of the proceedings. The Supreme Court Act was also amended to provide in s 69(4) that "the face of the record" includes the reasons expressed by the court or tribunal for its ultimate determination.

16. The defendant submitted that the plaintiff's claim for relief should fail because ACAT's ruling is not an order or decision. It was argued that the ruling did not fall into the two categories of order or decision described in Hot Holdings Pty Ltd v Creasy [1996] HCA 44; 185 CLR 149. These categories were described by the majority at 161:

...but they neither directly determine, or of their own force affect, rights nor does the reporting of particular conclusions satisfy some condition precedent to the exercise of power which will in turn affect rights or otherwise give rise to legal consequences.

17. The defendant then submitted that relief in the form of certiorari was not available in the circumstances of this case. I was taken to the decision of Basten JA in WO v Director of Public Prosecutions (DPP) [2009] NSWCA 370 at [8] - [10]:

There is a close analogy, in relation to judicial proceedings, between the concept of a judgment or order, which affects the rights of a party, and the limits of the power of review which would engage relief in the nature of certiorari. The limits of certiorari in this respect are themselves unclear, but the cases broadly fall within three categories:

(a) administrative determinations which are final in the sense that there is nothing left for the administrator to do, but which do not directly affect legal rights or interests of an individual;

(b) administrative determinations which constitute a pre-condition to action affecting a legal right or interest; and

(c) a judicial ruling which affects legal rights or interests.

The cases in relation to the first two categories are helpfully discussed by Aronson, Dyer and Groves in Judicial Review of Administrative Action (4th ed, 2009, Lawbook Co) at pp 820 - 825.

Where courts have been asked to intervene in the exercise of a supervisory jurisdiction, before a trial court or tribunal has made an order determinative of rights, the usual course will be to seek prohibition, rather than certiorari, on the basis that there will be nothing at that stage capable of being set aside or quashed.

18. The defendant relied on Lethlean v The Queen (1995) 83 A Crim R 197 to submit that no decision had been made and accordingly there was nothing to be "set aside or quashed".

19. I disagree with the defendant's submission on the question of initial jurisdiction. In my view, the Tribunal's decision cannot be distinguished from an order refusing an application and directing the matter to proceed. The right of the plaintiff to have his case terminated or otherwise is a natural consequence of the decision made by the Tribunal. In my view, the Tribunal had commenced on a judicial exercise, namely deciding the application of 'no case to answer', and then made a ruling which affected LP 12's "legal rights or interests". This is graphically illustrated by the Tribunal's decision in respect of Charge 1, which plainly affected LP 12's legal interests. Dealing with Charge 1 in one way and the other charges in another way does not affect the characterisation of the decision about the respective charges.

20. I think the more important issue is whether there was any error in the decision made by the Tribunal and, if there was, whether that error justifies intervention in the manner requested by the plaintiff.

21. Before looking at the specific complaints, I think it necessary to record some matters of background. In 2009, the complainant engaged a law firm, CD Lawyers, to represent him in three separate proceedings. The first was a workers compensation claim, arising from injuries alleged to have arisen from the nature and conditions of his employment. The second was a modified common law action arising from a motor vehicle accident. The third was another workers compensation claim, also arising from the motor vehicle accident, because it had occurred in circumstances that classified it as a journey claim.

22. On 9 February 2009, the complainant entered into a Conditional Costs Agreement with CD Lawyers. In October 2010, the complainant withdrew his instructions from CD Lawyers and retained the firm DK Lawyers. The plaintiff is the principal of DK Lawyers and the person with whom the complainant generally dealt. In short compass, the plaintiff and the complainant agreed that the costs agreement would apply to DK Lawyers.

23. On 27 June 2011, a settlement conference took place, which ended in the resolution of the three claims. The nature and conditions claim was settled for $10,000 plus $12,000 in costs. The journey claim was settled for the nominal sum of $1. The motor vehicle accident claim was settled for $330,000, inclusive of costs, workers compensation payments and any other statutory deductions (such as Medicare and Social Security receipts).

24. Following the settlement conference, there were discussions about costs. These discussions resulted in the complainant executing a document entitled "Settlement Instructions" on 5 July 2011. The important part of this document is in the following terms:

You have advised me that my legal costs for the two matters that I have now settled will be approximately $47,000 which includes all disbursements paid, counsel fees, your fees, and [CD Lawyers]' fees. I authorise you to deduct that sum from the settlement monies but withhold the portion for [CD Lawyers]' fees in your trust account pending a satisfactory resolution of my dispute with [CD Lawyers] in relation to their fees. I authorise you to negotiate with [CD Lawyers] on my behalf with a view to reaching an agreement to pay a lesser sum for their fees.

25. It is plain from the Settlement Instructions that the $47,000 related to all three claims.

26. DK Lawyers was able to achieve some reduction in the fees owing to CD. On 15 July 2011, the complainant spoke to another lawyer at DK Lawyers, Mr X, because the plaintiff was not available. The complainant told Mr X that he remained unhappy with the amount of costs that he was paying and wished his fees to be "reduced by at least $5,000". Mr X responded: "we will limit the total legal costs, including [CD Lawyers]' costs, inclusive of GST, to $42,000".

27. On 18 July 2011, DK Lawyers made an application in the Magistrates Court for the registration of the agreements that had been reached in respect of the workers compensation claims.

28. On 19 July 2011, Mr X wrote to the complainant, apparently confirming the telephone conversation on 15 July 2011 and another conversation on 19 July 2011. A file note of the latter conversation can be found in Folder 2 at page 38.

29. The terms of the letter of 19 July 2011 are significant and I will return to them below. The letter is in Folder 1 at page 75.

30. On about 12 August 2011, the complainant met with the plaintiff at his office in Canberra. The following conversation occurred (Folder 1, page 60, [30]):

The plaintiff: Will you agree to $47,000? If you do not some funds will have to come from my pocket and my partnership agreement will be affected.

Complainant: I do not agree to reinstate the $47,000 in costs. I will pay $42,000.

Your partnership being affected does not involve me. That is your business and not mine.

31. As will be seen below, the defendant relies on this conversation as evidence from which an inference of dishonesty can be drawn against the plaintiff.

32. On 23 August 2011, the Transport Accident Commission of Victoria ('TAC'), the insurer in the motor vehicle claim, sent to DK Lawyers the sum of $225,246 which was deposited into the firm's Trust Account. The amount was the result of the deduction of workers compensation payments, Centrelink benefits and the Medicare charge from the settlement sum of $330,000.

33. On 24 August 2011, DK Lawyers sent the complainant $180,000, leaving $45,246 in the Trust Account. On 30 August 2011, DK Lawyers transferred $22,378.14 from the Trust Account to its General Account. This was on account of costs payable to DK Lawyers.

34. A total of $3,478.64 was then paid from the Trust Account to two medical practitioners for their fees incurred in preparation of the litigation. A further $4,840 was paid to the barrister who had been retained on behalf of the complainant. Following the above payments, $14,549.22 remained in the Trust Account.

35. On 6 September 2011, DK Lawyers deposited $12,000 into the Trust Account which it had received from the solicitors acting for the respondent in the workers compensation claims pursuant to the agreement that had previously been reached. On 9 September 2011, a further $10,000 went into the Trust Account, being the amount of compensation agreed to in respect of the journey claim.

36. On 14 September 2011, DK Lawyers withdrew $16,400 from the Trust Account and sent it to CD Lawyers, being the agreed upon amount for the fees owing to it by the complainant.

37. On that date, DK Lawyers also sent, from the Trust Account, the sum of $20,149.22 to the complainant. This payment reduced to '0' the monies held in the Trust Account on behalf of the complainant. The effect of the various payments was that $47,096.78 had been paid out of the Trust Account in respect of costs, including the costs paid to CD Lawyers.

38. When the complainant noticed that this amount exceeded the $42,000 that he had understood would be the total amount of costs, he complained to the defendant in October 2011.

39. On 21 October 2011, DK Lawyers agreed with the complainant to settle the outstanding dispute between them by the payment of $3,000 (Folder 2, page 23). This therefore left the amount in dispute at a little over $2,000. I raised this issue with counsel for the defendant. He said, appropriately, that the amount in issue was less important than the "sacrosanct" rules regarding trust accounts. I agree with this observation but the small amount at stake, especially against the background of the time and no doubt very large amount of costs that have been expended, is a valid consideration in the exercise of a discretion.

40. The defendant took action against the plaintiff by filing an Application for Disciplinary Action in ACAT on 20 July 2016.

41. As already noted, the remaining charges are all said to arise from a breach of s 223 of the LPA. This section states:

S 223 Holding, disbursing and accounting for trust money

(1) A law practice must -

• (a) hold trust money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received; and
• (b) disburse the trust money only in accordance with a direction given by the person.

(2) Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law.

42. Turning now to the specific complaints made by the plaintiff, it is necessary to distinguish between the first two charges (2 and 2A), which relate to the disbursing of funds, and the latter two charges (3 and 3A), which concern misappropriation. I will deal with the two sets of charges separately. I note, however, that if the plaintiff's argument in respect of Charges 2 and 2A was successful, that success would automatically flow to Charges 3 and 3A.

43. The plaintiff submitted that, acting in accordance with the law, the Tribunal should have decided that the defendant had not led any evidence which could justify findings in accordance with [34], [35] and [36] of the FAA.

44. The first point made by the plaintiff arises from the terms of the letter dated 19 July 2011. The letter states:

Dear [complainant],

Your Matter

I refer to our telephone conversations on 15 and 19 July 2011.

I understand that your motor vehicle accident claim settled on 27 June 2011 for $330,000 inclusive of:

1. all amounts paid to you (that is all worker's compensation benefits paid to you, which need to be repaid);
2. all amounts payable by you (that is any amounts to be reimbursed to medicare or health care providers for health services you have received but not yet paid for); and
3. your legal costs and disbursements.

I refer to [the plaintiff's] correspondence for details of 1 and 2 above.

In relation to 3, I have offered, and you have agreed, to pay $42,000 in total for all legal costs and disbursements.

That means that from $330,00, $42,000 only will be deducted for payment of your legal costs and disbursements.

Please contact me urgently with any query regarding this letter, otherwise [the plaintiff] returns on Thursday, 21 July 2011 and you should contact him from that date.

Yours faithfully,

[Mr X]

45. The plaintiff pointed out that the letter does not relate to the workers compensation claims and, in particular, does not include within its scope the nature and conditions claim that was settled for $10,000 plus $12,000 in costs. The plaintiff said it is plain that the letter is only concerned with the motor accident claim that was settled for $330,000. The plaintiff then submitted that the letter records an agreement that costs in respect of this claim are limited to $42,000.

46. If, therefore, $47,096.78 was deducted, it does not offend the agreement stated in the letter because any amount in excess of $42,000, provided it does not exceed $12,000, will fall within the scope of the extra costs available from the workers compensation agreement.

47. The defendant's response was that this interpretation simply does not reflect the agreement that was in place. The defendant said that the relevant agreement is the oral agreement that was made on 15 July 2011, as set out at [25] of the complainant's affidavit (Folder 1, page 59). It is useful to set out the words used by Senior Counsel because they gave rise to a specific submission from the plaintiff. Mr Beaumont said the following:

MR BEAUMONT... I know I've taken your Honour to this already but the short point is on the first page there is a reference to both matters, the motor vehicle 330 and the workers comp 10 and 12,000 plus costs, and the second page, and again I'll strive to avoid repetition of the points already made, penultimate paragraph, the figure of 47 is referable on any view to both matters. So to use the language of the authorities, the origin and context and commercial purpose of the subsequent agreement can only be understood and indeed has its genesis in, to use the language of the authorities, [the complainant's] authority in the settlement instruction to permit 47. The conversation cannot be understood without that context, and indeed that's the very genesis of it, to use the language of the authorities.

So the tribunal has rightly had regard to that in determining the meaning of the oral agreement confirmed in writing. Then in (b) there are telephone conversations on which an agreement - now, I've taken your Honour, I believe I'm right in saying, to the affidavit of [the complainant] below where he deposes to those telephone conversations and, if your Honour will pardon me, that is in tab 5 of folder 1 which we've been using, your Honour. So just to remind your Honour, tab 5 is the affidavit of [the complainant] and the conversations that have been referred to by the tribunal are set out in paragraph 24 and 25 of his affidavit.

HIS HONOUR: I'll just [have] another read of those.

MR BEAUMONT: Certainly, your Honour.

HIS HONOUR: Okay.

MR BEAUMONT: That, on our case, is the agreement. The letter confirms it, that's the agreement.

48. The defendant was stating, in terms, that the final agreement relating to costs, and therefore the agreement which the plaintiff breached, was derived from the oral conversation on 15 July 2011 and in particular the words:

We will limit the total legal costs, including [CD Lawyers'] costs, inclusive of GST, to $42,000.

49. The plaintiff submitted that I could not have regard to this conversation because of the effect of the parol evidence rule. I will return to that aspect below. More importantly, Mr Beaumont's statement gave rise to a complaint about the manner in which the defendant was formulating its case.

50. It was submitted that Mr Beaumont, in identifying the agreement, had made an "election" as to the nature of the agreement upon which the charges were based. The argument then continued that if the agreement was restricted to the conversation of 15 July 2011 and, in particular, to the words said by Mr X, then the evidence that was before the Tribunal could not have proved the charge.

51. It was submitted that "costs in total" could not be read as including disbursements. If, therefore, disbursements were not included in the $42,000 and the payments that exceeded the $42,000 were for disbursements, there could not have been any breach of the agreement.

52. If that was the case, I should exercise my powers under s 32 of the Supreme Court Act 1933 (ACT) to bring proceedings to a close.

53. Mr Beaumont responded that he had not made any election. He simply answered a question from me in which he identified the agreement in terms which did not contradict [33] to [36] of the FAA.

54. Mr Beaumont pointed out that he had factored the file note into his description of the agreement. The file note states:

42,000 in costs and disbursements [CD Lawyers] and [DK Lawyers].

55. I think the 'accusation' that Mr Beaumont had made an election was unfounded. As I understood it, he was endeavouring to inform me in plain terms precisely what the defendant's allegation was as to the nature of the agreement that gave rise to the breach.

56. Mr Beaumont's clarity does, however, give rise to some problems about the presentation of the defendant's case in ACAT, particularly against the background of [33] to [36] of the FAA.

57. The plaintiff submitted that there were potentially three different agreements that might have been the agreement referred to at [36] of the FAA, which states:

Accordingly, pursuant to the agreement between [the complainant] and [Mr X], [the complainant] was only liable to pay the sum of $42,000 for all costs and disbursements (inclusive of [CD Lawyers]' costs) (which by reason of paragraph 27 above he was not in any event liable to pay).

(a) An agreement arising from [33], that the complainant was advised its costs would be reduced by $5,000.

(b) An agreement based on the 15 July 2011 conversation that total legal costs would be limited to $42,000. There is also a 'sub-issue' to this agreement as to whether "costs" includes disbursements.

(c) An agreement derived from the 19 July 2011 letter that the complainant would pay "$42,000 in total for legal costs and disbursements, inclusive of [CD Lawyers]' costs.

59. It is possible to read the three above agreements as being consistent with each other, provided effect is given to the defendant's interpretation of the letter of 19 July 2011. The letter makes no mention of the workers compensation proceedings, which must be implied into it for it to be consistent with the conversation on 15 July.

60. The plaintiff submitted that if the agreement was as reflected in the letter then the parol evidence rule did not permit examination of the conversation to understand the meaning of the letter. The plaintiff submitted that the letter was in plain terms and it plainly did not refer to the workers compensation proceedings. Accordingly, there was $12,000 in costs still available for distribution.

61. In general terms, I disagree with the plaintiff regarding the application of the parol evidence rule. The point was not taken before the Tribunal and, therefore, it could not have made any mistake concerning the application of the rule. In fact, the plaintiff's submissions before the Tribunal were to the contrary. Leaving aside the various authorities quoted, the plaintiff's submissions before the Tribunal stated:

The principles of contractual construction not in dispute...From these cases [it] is clear that the construction and interpretation of written contracts is to be undertaken by an examination of the text of the document in the context of the surrounding circumstances known to the parties, including the purpose and object of the transaction and by assessing how a reasonable person would have understood the language in that context (Folder 1, page 25, [18]).

62. I agree with the above statement of law. Further, the terms of the letter specifically incorporate the conversation of 15 July 2011. This approach is consistent with Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; 256 CLR 104 and Electricity Generation Corp v Woodside Energy Ltd [2014] HCA 7; 251 CLR 640.

63. The problem does not, however, lie in the application of legal principle. It lies in whether or not ACAT dealt with the matter in a manner consistent with the case that the defendant says exists against the plaintiff.

The parties have pressed competing interpretations on the agreement confirmed in the letter of 19 July 2011. The applicant in paragraph 33 of the FAA refers to total costs, and the respondent in the submissions filed on 27 March refers to costs and disbursements of the motor vehicle claim. However, on the threshold issue of whether there is evidence which could establish the charge, it is the Tribunal's view that the evidence referred to above, if accepted, could establish either of the charges 2 or 2A on the basis that the 19 July 2011 agreement related to total costs and disbursements together with the outgoing firm's costs. The respondent's submissions relating to the entitlement to pay out the costs as at the 30 August 2011 is controversial because of interpretation of the letter of 19 July 2011 and the contingent outstanding costs at the time. Submissions by the respondent and answered by the applicant relating to the status of the workers' compensation costs including analysis of NSW authorities are controversial issues of law. These issues should, if pressed, be dealt with at an eventual hearing. Depending on the determination of those issues the evidence would support a finding that either of the two charges is made out.

65. It is immediately apparent from the above passage that ACAT has proceeded on the basis that the letter of 19 July 2011 is a confirmation of the oral agreement made on 15 July 2011 and is, in itself, a statement of the agreement. This is not a correct reflection of the agreement as relied upon by the defendant and as clearly stated in this Court to be comprised only of the oral agreement made on 15 July 2011.

66. It is difficult to know whether the error identified above was a product of a misunderstanding by ACAT or was derived from the manner in which the respective parties put their cases. Nevertheless, ACAT made its decision on the assumption of the defendant pursuing a different case to that which it clarified before me.

67. Does the error matter? In my view, it does matter because of the fundamental proposition that a person facing serious allegations is entitled to be dealt with in accordance with the precise detail of the allegations. The nature of the contract between the solicitor and the client goes to the very essence of the allegations made against the solicitor.

68. The whole of the allegations made might be seen as turning on the interpretation of the agreement. Obviously the agreement, whether it be the oral agreement of 15 July 2011 or the letter of 19 July 2011, or a combination of both, is open to interpretative dispute. This includes the meaning of "costs" (whether disbursements are included) and the proceedings which are encompassed (whether the motor vehicle claim and the workers compensation claims are being treated together or separately).

69. While dealing with [47], there is another complaint made by the plaintiff which I should deal with. The Tribunal correctly identified the "controversial issues" arising from the Workers Compensation Act 1951 (ACT) and the Workers Compensation Regulation 2002 (ACT), but then continued:

...depending on the determination of those issues the evidence could support a finding that either of the two charges is made out.

70. In other words, the Tribunal, purportedly deciding if there was a case to answer, has deferred that decision to a later point when the workers compensation issues were decided.

71. The plaintiff submitted that the Tribunal was obliged to decide the no case to answer application when it was made. The Tribunal should have dealt with the workers compensation issue before determining the no case to answer application.

72. I agree with the plaintiff's submission as a matter of principle. I think the proper response to the application of no case to answer should have included a decision about the validity of the workers compensation issue. However, taken on its own, this error would not have dictated my decision. This is because I agree with the defendant's submissions on the resolution of that issue. Therefore, if ACAT had reached the same decision as I have it would not have made any difference to the plaintiff's application before it.

73. Although perhaps not necessary, I think I should explain in brief terms my conclusion about the workers compensation issue. The starting point is the terms of s 223(1) of the LPA. It was submitted that the words in the section "deposited in a general trust account of the practice exclusively for the person on whose behalf it is received" mean that the $12,000 that went into the Trust Account for the cost of the workers compensation proceeding should be treated differently to the other monies deposited into that account.

74. This approach arose from an interpretation of subsection (2), which exempts the $12,000 from the effect of subsection (1) because it was "subject to an order of a court". The relevant court was the Magistrates Court, which had recorded and registered the workers compensation settlement agreement and, in doing so, effectively converted the agreement into an order of a court. Accordingly, the $12,000 did not fall within the description of "trust money" in s 223(1).

75. It is necessary to look at ss 79 and 80 of the Workers Compensation Act 1951 (ACT) and also at Regulation 57 of the Workers Compensation Regulation 2002 (ACT).

76. Section 79 states:

(1) If the worker agrees to receive an amount of compensation under section 51 (Compensation for permanent injuries generally) for a loss or under section 137 (How worker may commute rights) for the commutation of a right, a party to the agreement may apply to the Magistrates Court for registration of the agreement.

(2) The Magistrates Court may refuse to register the agreement if the court considers that the agreement is inaccurate or that the agreed amount of compensation is manifestly inadequate.

(3) The Magistrates Court must refuse to register the agreement unless satisfied that the worker received independent legal advice about the agreement before entering into it.

(4) However, subsection (3) does not apply to an agreement of a worker to receive an amount of compensation under section 51 (Compensation for permanent injuries generally) for an imminently fatal asbestos-related disease.

(5) An agreement may deal with the payment of costs.

77. Section 80 states:

(1) A worker with a registered agreement in relation to a loss or the commutation of a right is not entitled to receive any additional compensation for the loss or commutation of the right under an award of the Magistrates Court.

(2) However, the Magistrates Court may award additional compensation if satisfied that -

(a) the agreement was obtained by fraud or undue influence; or

(b) the agreed amount of compensation was manifestly inadequate.

(3) This section does not limit an award of additional compensation for a further loss suffered after the loss to which the agreement relates.

78. Regulation 57 states:

(1) The successful party to an arbitration or related proceeding is entitled to be indemnified for party and party costs (including reasonable disbursements) by the unsuccessful party, unless the Magistrates Court or a committee otherwise orders.

(2) However, the Magistrates Court or committee must not award the costs of, or incidental to, an arbitration or related proceeding (including reasonable disbursements) against someone claiming compensation honestly in the arbitration or proceeding.

(3) The costs of, and incidental to, an arbitration or related proceeding are payable at 2/3 of the scale of costs prescribed by the rules applying to a civil proceeding in the Supreme Court, unless the Magistrates Court or committee otherwise orders.

(4) Costs must be taxed, unless the parties otherwise agree.

79. There is nothing in either s 79 or s 80 that refers to the contents of a registered agreement becoming orders of the court. The sections provide a 'safety' mechanism to protect a worker against manifestly inadequate agreements and to ensure there is a properly recorded version of the agreement.

80. The importance of Regulation 57 is that it refers to the costs being an indemnity to the worker in respect of any costs that he or she has incurred in retaining legal assistance. In other words, the costs are the worker's funds to allow him or her to pay a legal representative. They are not funds going directly to the solicitor, although this may occur as a practical means of their payment.

81. Having differed from the plaintiff's argument, it is important that I nevertheless acknowledge that even though ACAT may have reached the same decision that I have, it should have made the decision before disposing of the plaintiff's application.

82. The defendant submitted that even if I did identify error I should not, as a matter of discretion, interfere. I agree that I have a discretion but in my view that discretion should be exercised in favour of the plaintiff. As I have already observed, these proceedings are almost entirely about the terms of an alleged agreement about costs. Therefore, what constitutes the agreement is of fundamental importance to the entire proceedings. The identification of an error must have significant consequences.

83. I have already found that I have jurisdiction to intervene. Without in any way cavilling with the defendant's observation about the sacrosanct principles relating to trust accounts, I think the history of this matter, including the unnecessary duplication of charges, the small amount of money involved (ultimately perhaps as little as $2000), the resolution of the dispute between the complainant and LP 12 (by the agreement made on 21 November 2011) and the disproportionate amount of time and costs that have already been expended, compels me to bring the proceedings to finality.

84. In addition, although there was obviously a good deal of correspondence between the parties following the making of the complaint, it does seem an inordinately long time before proceedings at ACAT were commenced.

85. The quest for finality is made possible by s 32 of the Supreme Court Act 1933 (ACT). Section 32 states:

(1) In the exercise of its jurisdiction under this Act in relation to proceedings in the court, the court shall, so far as practicable, ensure that -

• (a) all the matters in issue between the parties to the proceedings are finally determined; and
• (b) all multiplicity of legal proceedings concerning those matters is avoided.

(2) For subsection (1), the court may grant legal or equitable relief absolutely or conditionally.

86. The plaintiff submitted that I should first make a declaration "that on the evidence as it stands in the Proceedings the plaintiff could not lawfully be found guilty of the charges numbered 2, 2A, 3 and 3A of the Further Amended Application..."

87. A declaration in these terms might not be seen as consistent with my finding which is more concerned with the identity of the contract than the evidence led by the defendant.

88. However it is axiomatic to state that if the terms of the contract have not been identified there could not have been evidence sufficient to establish whatever the contract may have been. Accordingly, I have decided that the declaration and subsequent orders suggested by the plaintiff are appropriate.

89. It is not necessary for me to resolve the dispute concerning these charges. However, in case I am wrong in the approach that I have taken thus far, I make the following comments.

90. Charges 3 and 3A relate to the alleged misappropriation of $5,096.78 from the Trust Account. It was conceded by the defendant that, although the alleged offences would also constitute a breach of s 223, proof of "misappropriation" requires something more than the unauthorised removal of funds from the Trust Account. The defendant put the matter in this way:

...Firstly, we agree that you need more for a misappropriation and we agree that if you plead misappropriation you need to have evidence that the person subjectively intended to do an act, which by objective standards, was dishonest, and even that is just a paraphrase.

91. Although perhaps a "paraphrase", the description is sound. In Brereton v Legal Services Commissioner [2010] VSC 378, Bell J stated at [47] - [56]:

A term like misappropriation can have a particular meaning depending on the context. In the present case, the term was used in charge 5 by which the commissioner alleged that Mr Brereton, a practising lawyer, had committed misconduct at common law in that he had "misappropriated trust moneys". Misappropriation has been used here to describe the legal character of conduct which, because it had that character, allegedly constituted misconduct at common law. The term is not used here in any special sense. No statutory definition of the term applies. Thus "misappropriated" here refers to what would be misappropriation according to the ordinary meaning of that word.

The ordinary meaning of "misappropriate" is to "appropriate to wrong uses; chiefly, to apply dishonestly to one's own use (money belonging to another)". Likewise, "misappropriation" is appropriation to wrong uses.

The legal dictionaries define "misappropriation" consistently with that ordinary meaning. According to Jowitt's Dictionary of English Law, misappropriation is:

the misdemeanour which is committed by a banker, factor, agent, trustee, etc, who fraudulently deals with money, goods, securities, etc, entrusted to him, or by a director or public officer of a corporation or company who fraudulently misapplies any of its property.

In Stroud's Judicial Dictionary of Words and Phrases, "misappropriate" is defined to mean "the wrongful conversion of or dealing with anything by the person to whom it was entrusted".

It follows that the word "misappropriation" in its ordinary sense involves a mental element. Misappropriation is dishonestly misapplying property, including money, held on behalf of another. In the criminal context, misappropriation by and to the trustee personally is not a crime at common law because the trustee already has the property; but it is conduct which, but for that, would be theft. It is "stealing" in another guise because it is wrongful appropriation by the trustee of property being held for another.

Because dishonesty is a mental element of misappropriation in its common law sense, it is necessary to consider what dishonesty means, remembering here we will be doing so in a civil context. The Court of Appeal examined what dishonesty meant in that context in Harle v Legal Practitioners Liability Committee. At issue was whether a solicitor was entitled to indemnity under an insurance policy which did not cover the "dishonesty or fraudulent act or omission of any insured".

As to the meaning of "dishonesty", Chernov JA (Callaway and Buchanan JJA agreeing) held:

It seems clear enough that where, as here, dishonesty is not used in a special sense in relation to statutory offences, it is not a term of art and is to be given its ordinary meaning. It embraces deliberate conduct which is considered to be dishonest by the standard of ordinary decent people, or, put another way, the ordinary standards of reasonable and honest people. Whether particular conduct amounts to dishonesty involves the consideration of the mental state - the knowledge, belief or intention - of the person whose conduct is impugned.

While an allegation of dishonesty requires consideration of the person's mental state, in neither the criminal nor the civil context is it necessary to establish that the person subjectively knew or believed that the actions concerned were dishonest. What must be established is that the person subjectively intended to do the acts which are said to be objectively dishonest by the ordinary standards of reasonable and honest people. Thus the course to be adopted in determining whether conduct is dishonest was explained by Toohey and Gaudron JJ in Peters v R as follows:

In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest ... If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that that is to be decided by the standards of ordinary, decent people.

The steps involved in this formulation are: (1) identify the knowledge, belief or intent which is said to render the acts dishonest; (2) determine whether the accused (or defendant in the civil context) subjectively had that knowledge, belief or intent; and (3) determine whether, on that account, the acts were objectively dishonest according to the standards of ordinary and decent (that is reasonable and honest) people.

When applying these principles in a civil case, the civil standard of proof on the balance of probabilities applies. Of course, where the allegation in a civil case is of misappropriation, a high standard of probability is required, due to the gravity of the allegation. In a criminal case, the criminal standard of proof beyond reasonable doubt applies.

This approach to identifying whether alleged conduct was dishonest was applied by the Court of Appeal in the civil insurance context in Harle v Legal Practitioners Liability Committee and by Layton J in the Supreme Court of South Australia in the lawyers' disciplinary context in Legal Practitioners Conduct Board v Jones.

92. The plaintiff's submission was that ACAT did not have any evidence of the mental element of dishonesty that is required to prove misappropriation. Specifically, there was no evidence of:

...deliberate conduct which is considered to be dishonest by the standard of ordinary decent people, or, put another way, the ordinary standards of reasonable and honest people...

93. The defendant's response was to refer to the taking of the money in excess of $42,000 together with an inference drawn from the conversation between the complainant and the plaintiff, as set out in [30] above. It was submitted that, following this conversation, the plaintiff would have been in no doubt that he did not have permission to deduct more than $42,000 and therefore any subsequent deduction in excess of this amount must have been deliberate and dishonest.

94. In Council of the Law Society of New South Wales v Doherty [2010] NSWCA 177, Young JA, in a matter concerning a disciplinary sanction imposed on a solicitor by the New South Wales' Administrative Decisions Tribunal, stated at [41]:

There was discussion both before the tribunal and before us as to the width of the word "misappropriation". The base meaning of the word is "wrongful conversion". It must be noted that in most cases of appropriation of the property of another, claim of right is a good defence and to establish a claim of right, all the accused need show is that he or she had an honest belief in the claim and not also that that belief was based on logic or reason.

95. The plaintiff has not yet given evidence before ACAT. It may well be that if he did he would say that he had an honest belief in his right to withdraw an amount in excess of $42,000. However, considering that the decision being made by ACAT was whether or not there was enough evidence to continue the matter, it is my view that the evidence arising from the conversation between the complainant and the plaintiff on 12 August 2011 together with the evidence of the actual withdrawal, was enough to establish a case to answer.

96. Assuming that I had not decided that the contract had not been properly identified, and therefore but for my overall decision, I would have decided, in respect of Charges 3 and 3A, that my assessment of the evidence against the plaintiff on the misappropriation charges was not strong and there is certainly an unnecessary duplication. Nevertheless, I could not have concluded that there was no case to answer.

(a) A declaration that on the evidence as it stands in the proceedings, the plaintiff could not lawfully be found guilty of the charges numbered 2, 2A, 3 and 3A of the Further Amended Application, dated 7 March 2017 filed by the First Defendant in the ACT Civil and Administrative Tribunal.

(b) An order quashing the part of the decision handed down by the second defendant in the proceedings on 7 July 2017 that relates to the charges numbered 2, 2A, 3 and 3A of the Further Amended Application dated 7 March 2017, filed by the First Defendant in the ACT Civil and Administrative Tribunal.

(c) An order remitting the proceedings to the second defendant to determine the plaintiff's no case to answer submission in respect of charges 2, 2A, 3 and 3A according to law.

(d) The first defendant is to pay the plaintiff's costs of this application.

98. I am prepared to hear submissions in relation to the above costs order.

I certify that the preceding ninety-eight [98] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Elkaim.