Plaintiff v Defendants

1 This proceeding came on for hearing yesterday and was commenced by way of a notice of appeal dated 23 October 2013 and a summons dated 30 October 2013. These applications were supported by the affidavits of Lewis James Spaulding sworn 30 October 2013 and 6 November 2013 and the exhibits thereto.

2 The proceeding was commenced in this way as a result of a misapprehension as to the procedure which governs appeals to the Supreme Court on questions of law under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ("the VCAT Act"). All parties requested that the application for leave to appeal under s 148(2) of the VCAT Act be heard by a Judge in view of the high level of urgency and importance of the application.

3 I acceded to this request and heard full argument from all parties as to whether leave to appeal from the decision of the Tribunal made by Member Butcher on 25 September 2013 in VCAT proceedings J103/2013 and J163/2013 should be granted.

4 In order to regularise the position to better accord with the requirements of Order 4 of Chapter 2 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic), the plaintiff, Lewis James Spaulding, has today issued an originating motion and seeks leave to amend his summons dated 30 October 2013 to seek leave of the court to appeal under s 148 of the VCAT Act.

5 I will first make orders giving the plaintiff leave to amend its summons dated 30 October 2013 to the form of the amended summons on originating motion filed today on 8 November 2013. I will order that the time for service of the amended summons be abridged to today.

6 In addition, I will give the plaintiff leave to bring the application for leave to appeal before the Judge sitting in the Practice Court rather than before an Associate Justice.

7 An affidavit of Ned Roche sworn 7 November 2013 has been filed overnight. This affidavit exhibits the paper and recommendations placed before the Legal Services Board ("the Board") on 13 September 2012 concerning Lachlan Car Brokers Pty Ltd, trading as Top Choice Motors.

8 Objection in writing has been taken to paragraph 5 of this affidavit insofar as it goes to the legal status or effect of the proceedings before the Board. This is a matter for the court and I uphold the objection to paragraph 5 insofar as it deals with legal matters.

9 An amended proposed Notice of Appeal has been filed overnight. This raises two questions of law and four grounds of appeal.

10 The plaintiff makes application for a stay of the orders of the Tribunal made on 25 September 2013. It is clear that the result of the stay application is dependent on the success of the application for leave to appeal.

11 Mr Wilson QC, who appeared with Mr Randall of counsel for the plaintiff, made written and oral submissions in support of the applications of the plaintiff. Mr Snow of counsel appeared for the defendants and, apart from supporting the need for urgent resolution of the applications, opposed both the application for leave and the application for a stay.

12 Mr Roche, solicitor for the Board, was also heard, mainly to assist the court in relation to the proceedings of the Board on 13 September 2012 and in relation to the Magistrates' Court proceedings to which I will refer.

14 On 24 April 2013, the Law Institute of Victoria ("the Institute") provided the plaintiff with an information notice. The notice listed numerous matters as a consequence of which the Institute had concluded that the plaintiff was not a fit and proper person to hold a local practising certificate under the Legal Profession Act 2004 (Vic) ("the Legal Profession Act"). The notice required the plaintiff to make application to VCAT by 25 May 2013 if he desired to seek review of the Institute's decision.

15 On 24 May 2013, the plaintiff made an application for review to VCAT concerning the information notice.

16 On 5 July 2013, consent directions were made by Senior Member Smithers of the Tribunal.

17 Following service by the Institute of its material, the plaintiff, by counsel, consented to an order to serve all witness statements and other material to be relied on by 9 September 2013. The matter was set down by consent for a fiveday hearing on 28 October 2013.

18 On 16 August 2013, the Legal Services Commissioner ("the Commissioner") made application for an order in respect of the plaintiff under Division 4 of Part 4.4 of the Legal Profession Act. The allegations in the Commissioner's application traversed some of the same ground addressed in the information memorandum. There were five charges; three relating to what is described as the Oakley matter and two relating to the Day matter.

19 Following a directions hearing before Member Butcher on 25 September 2013, the time for compliance with various directions was extended and the two proceedings set down for a fiveday hearing from 25 November 2013. I have the benefit of the transcript of the proceedings before Member Butcher on 25 September 2013.

20 In the meantime, on 30 July 2013 the Board issued a proceeding against the plaintiff in the Magistrates' Court of Victoria at Melbourne, No. D12253025, claiming in effect, a refund of $17,820 plus interest, which had been paid out of the fidelity fund by the Board.

21 This proceeding related to clients of the plaintiff's firm, namely Lachlan Oakley and Lachlan Car Brokers Pty Ltd. This is one of the matters which is dealt with in the Commissioner's application to VCAT.

22 The plaintiff has filed a notice of defence in the Magistrates' Court proceedings and has joined his former clients, Lachlan Oakley and Lachlan Car Brokers Pty Ltd, as third parties in the Magistrates' Court proceeding.

23 The plaintiff seeks leave to appeal to the Supreme Court of Victoria against the whole of the determination and orders made and given by Member Butcher on 25 September 2013. The plaintiff now relies on two questions of law and four grounds of appeal as set out in his amended proposed notice of appeal. The two questions relate to the Magistrates' Court proceeding. The plaintiff contends that the Tribunal erred when it held that the Magistrates' Court proceeding should not have precedence over the Tribunal proceedings. He alleges that the Magistrates' Court proceeding was predicated on the proposition that a default was constituted by an act or omission that involves dishonesty in the form of an alleged fraudulent dealing with trust property and, accordingly, should have been equated with a criminal proceeding.

24 There are three points that immediately stand to be made. The first is that the orders made by Member Butcher on 25 September 2013 are all of an interlocutory character. Mr Wilson QC did not contend otherwise. None of the orders were final orders. Four of the directions given on this day have already been superseded or vacated by the order of 1 November 2013.

25 The second point is that the orders made were simply further extensions of time of orders made by consent of the parties on 5 July 2013. There was no change in the substantive content of the consent orders but additional time was allowed for compliance with orders 4 to 7 inclusive, while the final hearing was deferred from the earlier agreed date of 28 October 2013 by almost a month to 25 November 2013. While in the meantime five charges had been preferred against the plaintiff by the Commissioner, the charges all arose out of matters, and in relation to clients, already listed in the information notice. The changes largely duplicated the subject matter of the information notice relating to the matters of Oakley and Day.

26 The third point is that all of the orders made by the Tribunal were directions and of a discretionary character. They were directions of the type very commonly made by courts and the tribunal.

27 In order to attract leave to appeal, the plaintiff must satisfy the requirements set out in Secretary to the Department of Premier and Cabinet v Hulls.[2] He must also say why it is appropriate to grant leave to appeal from an interlocutory decision as to which see Niemann v Electronic Industries Ltd[3] and later cases.

28 The principles set out in Hulls were summarised by Warren CJ, with whom Chernov JA and Bell AJA agreed, in Myers v Medical Practitioners' Board,[4] and again more recently in Naim v Medical Board of Australia,[5] in the following terms:[6]

• whether leave is granted or not must always depend upon the justice of the particular case;
• if leave is to be granted, the applicant must at least identify a question of law (as distinct from a question of fact) which is important to the substantive appeal's succeeding or failing;
• the applicant need not establish an error below - that is for the appeal itself. Rather, the applicant will be required to show that there is a real or significant argument to be put that error exists
• although not essential, the applicant may identify a question of law that is of general or public importance. This will weigh in favour of granting leave;
• once a question of law has been identified which bears directly upon the relief which will be sought in the appeal, and once it has been shown that there is sufficient doubt attending that question to justify the grant of leave to appeal, leave will ordinarily be granted if the order below is a final order or final in its effect; and
• where the order sought to be appealed is an interim order, there may be reasons bearing on the justice done to both parties for not granting leave to appeal, for example, where granting leave to appeal will result in an unnecessary interruption to the substantive proceedings.

29 In my view, the plaintiff has not demonstrated that the requirements for leave to appeal have been satisfied. I am not satisfied that the justice of the case leads to the grant of leave. I am not satisfied that the plaintiff has shown that there is any real or substantial argument to be put that there is error on the part of the Tribunal. The Magistrates' Court proceeding is a civil proceeding by way of complaint seeking recovery of an amount paid by the fidelity fund. Under s 3.6.19 of the Legal Profession Act, the Board is subrogated to the rights and remedies of the claimant against any person in relation to the default to which the claim relates. It is, in substance, a small civil claim as if the client was suing the solicitor to recover funds the client should have been paid. It solely relates to one matter. No other party is involved, save that the plaintiff has joined his own clients by a third party notice.

30 In his written and oral submissions, Mr Wilson QC submitted that VCAT had no authority or jurisdiction to determine one of the two central issues in relation to the alleged defalcation or deficiency in the plaintiff's trust account. He argued that there was a determination by the Board that the money in question was trust money. He referred to s 3.3.4(1), (2) and (6) of the Legal Profession Act. He submitted that VCAT was not a court under s 3.3.4(6) of the Legal Profession Act and could not review a determination of the Board under that provision. However, I accept that the Board has in fact made no determination as to the status of money under s 3.3.4 as emerges from the facts set out in the affidavit of Ned Roche sworn 7 November 2013. What the Board has done, as the recommendations before it at its meeting of 13 September 2012 make clear, is act under s 3.6.14 of the Legal Profession Act. As a result, the concerns expressed by Mr Wilson QC on behalf of the plaintiff as to the inability of VCAT to review a determination made by the Board under s 3.3.4(2) do not arise. I am satisfied that there is no real or substantial argument to be put on behalf of the plaintiff in this respect.

31 While it is true that the claims made on behalf of the Board in the complaint filed in the Magistrates' Court of Victoria involve allegations of breaches of fiduciary duty, breaches of trust and allegations of failure to account to the client for trust money, similar allegations are made in charges 1 and 4 of the charges brought by the Commissioner, particularly in paragraphs 9 through to 13 of the application made to the Tribunal by the Commissioner. These all stand to be resolved by the Tribunal on the facts put in evidence before it.

32 It is selfevident that the matters before the Tribunal are of public importance, not least to the clients of the plaintiff's continuing law practice, but also to the wider community. I was informed that the plaintiff presently has ten continuing matters, mainly of a litigious character, including matters in the Family Court and the Magistrates' Court. The VCAT proceedings are clearly much more important to the plaintiff, himself, than the Magistrates' Court proceeding involving, as they do, his future capacity to practice and the risk of the suspension of his practising certificate, and the imposition of fines or other penalties under the Legal Profession Act. There is every reason why the VCAT proceeding should be heard first and prior to what is essentially a civil proceeding involving a claim for $17,820 in the Magistrates' Court. Both proceedings involve proof on the Briginshaw basis or as may be determined by the Magistrates' Court under s 140(2) of the Evidence Act 2008 (Vic). This issue is, however, of little or any significance in the determination of this application.

33 A second factor is that the applicant has had ample time to prepare for the VCAT hearing on 25 November 2013. The VCAT proceedings were commenced first and have been the subject of consent directions and later extensions of time for the completion of interlocutory steps prior to the final hearing. By contrast, the Magistrates' Court proceeding is far from being ready for hearing and will not in all likelihood be heard prior to February 2014 or later, which estimates were contested by the parties. Deferment of the VCAT proceedings would involve a substantial delay, probably to mid or late 2014 after the Magistrates' Court proceeding had been completed and decided and would be most undesirable in the public interest. There is also the possibility of an appeal from the decision of the magistrate to this court which would result in further delay.

34 An important factor is whether any prejudice will be caused having regard to the order of proceedings that will result from Member Butcher's order. Given that renewal of the applicant's practising certificate is at stake and that he is charged with a number of legal practice offences, it is highly desirable that these proceedings not be adversely affected by way of possible inconsistent result by the civil proceedings in the Magistrates' Court.

35 As I have said, the VCAT proceedings are clearly the more important and significant from the point of view of all of the parties and in the public interest. I am not satisfied that there will be any prejudice if the VCAT proceedings are heard first.

36 I am not satisfied that there is any real or substantial argument to be put that error exists as is claimed in the questions and grounds of the proposed notice of appeal.

37 Whilst there have been delays by the Institute in the provision of it witness statements and material, I am nonetheless satisfied that there has been more than ample opportunity for the plaintiff to be ready for the VCAT hearing. All that the Tribunal can do or, indeed, any court, is provide the plaintiff with a reasonable opportunity to be heard. It cannot require that he take advantage of the opportunities to prepare that he is afforded by the directions of Tribunal. The plaintiff can not make any complaint or criticism if he is given opportunities to prepare but, ostrichlike, puts his head in the sand or fails to prepare for an important hearing.

38 There is an air of unreality about the arguments of prejudice or disadvantage put on behalf of the plaintiff. The plaintiff is not the man in the street. He is an officer of the Court and an experienced solicitor with a litigation practice. He, of all people, is well placed to prepare and be ready for the hearing of the VCAT proceedings. It is hard to see why he should be given any leniency if he does not do so. He is not required to provide a witness statement. No witness that he wished to call was identified and, indeed, if there are any at all. No unavailability or difficulty was mentioned in this respect. The plaintiff has retained junior counsel, very experienced in the jurisdiction, since the proceeding began, and now a very experienced senior counsel.

39 I am not satisfied that there is any real or substantial question that the Tribunal has failed to afford procedural fairness or has provided the plaintiff with insufficient time to be ready. The information notice is detailed and is dated as far back as 24 April 2013. It gives full information to the plaintiff. The later proceedings do no more than replicate or put in different ways, and with different levels of seriousness, what are essentially the same allegations concerning the same matters and the same clients.

40 On 25 September 2013, Member Butcher gave his reasons for decision. He accepted Mr Snow's argument that this matter should not be delayed. He held that there is an imperative that the matter be dealt with with as much expedition as possible having regard to the nature of the matter. He said to Mr Spaulding that he qualified that statement by saying that he should have proper opportunity to present his case. The timetable that the member calculated was, in his estimation, sufficient to give the plaintiff that opportunity.

41 Later, Member Butcher added that he could not take into account the possible outcome of the Magistrates' Court case, the date for which has not been made. Now, in November 2013, the date of the Magistrates' Court hearing is still not determined.

42 Whilst it is possible to vacate the pre-conference date in the Magistrates' Court proceeding, or seek other arrangements to advance the hearing date for those proceedings, the facts are that the Magistrates' Court proceeding is well behind the VCAT proceedings and are vastly less important to the community at large and to the plaintiff. As Member Butcher pointed out to the plaintiff, if he is successful in the VCAT proceedings, there may be no need for him to contest the Magistrates' Court proceedings. Those proceedings may take a new direction.

43 As to general or public importance, it was not suggested, and I do not find, that the proposed amended notice of appeal raises any issue of general or public importance. Mr Wilson QC was not heard to contend otherwise.

44 If leave to appeal were to be granted, there would be fragmentation of the VCAT proceedings which are listed for final hearing on 25 November 2013. In my view, it is very undesirable in the public interest, and in the plaintiff's own interest as a legal practitioner whose licence is under threat, that there be any fragmentation of the proceedings against him.

45 Mr Snow referred to Hulls.[7] I adopt what was said by the Court of Appeal in that decision and by the Full Court of the Supreme Court of New South Wales in Re Will of Gilbert.[8] As in those cases, it is most undesirable that discretionary interlocutory directions made by the Tribunal in effect be transferred to this court under the guise of supposed questions of law. This is not what Parliament intended when it gave the Tribunal jurisdiction under the Legal Profession Act. Rather, it is appropriate that the VCAT proceeding should go ahead as presently listed. As I have said, it is unlikely that the Magistrates' Court proceedings will come on until some time in 2014. It is clearly sensible for the VCAT proceedings not to be fragmented, but to be fully and promptly heard and determined. It would not be just or fair to the complainants, to the plaintiff or to the public interest for those proceedings to be delayed for a substantial time.

46 The order of proceedings before VCAT, and as to whether the charges brought by the Commissioner or the registration proceedings go first, is a matter for the VCAT presiding member to determine on 25 November 2013 after hearing from the parties. This is as it should be.

47 In the circumstances, I am not satisfied that leave to appeal should be granted. I will order that the originating motion and the amended summons on originating motion be dismissed, including the application for leave to appeal and the application for a stay.

49 I will order that the plaintiff pay the Institute's and the Commissioner's costs of the originating motion, amended summons on originating motion and summons dated 30 October 2013, including the applications for leave to appeal and for a stay.

[1] Transcript of oral reasons given on 8 November 2013.

[2] [1999] VSCA 117; [1999] 3 VR 331.

[3] [1978] VicRp 44; [1978] VR 431, 4412.

[4] [2007] VSCA 163; (2007) 18 VR 48.

[5] [2013] VSCA 205.

[6] [2007] VSCA 163; (2007) 18 VR 48, 55-6 [28] (footnotes omitted).

[7] [1999] VSCA 117; [1999] 3 VR 331, 336 [14].

[8] [1946] NSWStRp 24; (1946) 46 SR (NSW) 318, 323.