Quinn v Law Institute of Victoria Limited [2007] VSCA 122

Court of Appeal (Vic)|2007-06-14|Before: MAXWELL P, CHERNOV and NETTLE JJA

LEGAL PRACTITIONERS - Disciplinary proceedings - Penalty for misconduct - Whether error in finding of grossly excessive legal costs - Whether breach of Trust Account Rules further disadvantaged client - Whether breach of Trust Account Rules separate instance of misconduct - Whether Tribunal failed to consider disposition short of suspension of practising certificate - Whether Tribunal failed to consider proffered undertaking as to future billing of clients - Whether Tribunal failed to consider Tsiaras principles - Whether fresh evidence admissible on appeal - R v Tsiaras [1996] VicRp 26; [1996] 1 VR 398; R v Verdins [2007] VSCA 102 applied - Legal Practice Act 1996 (Vic) - Appeal allowed.

1 The appellant ("Quinn") is a legal practitioner holding a full practising certificate. He was admitted to practise as a barrister and solicitor of the Supreme Court of Tasmania in 1976, and practised in that State until 1992. He was admitted to practise in Victoria in 1992. Since 2000 he has practised as a sole practitioner on his own account.

2 On 27 October 2005, Quinn pleaded guilty to two charges of misconduct and two charges of unsatisfactory conduct, those charges having been laid by the respondent ("the Institute") under s 137 of the Legal Practice Act 1996 (Vic). The first charge of misconduct concerned charging "grossly excessive legal costs"; the second concerned "wilful or reckless" contravention of the Trust Account Practice Rules ("Trust Account Rules") by applying trust money (on 47 occasions) towards payment of professional costs without furnishing the required details and statement of account to the client. On these two charges, the Full Tribunal of the Legal Profession Tribunal ordered that Quinn's practising certificate be suspended for a period of 12 months. On the counts of unsatisfactory conduct - which respectively concerned a trust account deficiency and the commencement of proceedings to recover costs from his client when not entitled to do so - Quinn was reprimanded.

3 This appeal concerns only the order suspending his practising certificate for 12 months. By order of this Court, made 22 December 2005, the suspension was stayed pending the hearing and determination of the appeal. The stay was granted upon an undertaking given by Quinn, to which further reference will be made.

4 In July 2001, Quinn first took instructions from a worker ("the client") in respect of a claim against the client's employer for worker's compensation and common law damages. The claim was issued out of the Supreme Court of Tasmania. By retainer agreement made 17 July 2001 between Quinn and the client, Quinn was authorised to charge professional fees at an hourly rate of $265.00.

5 On 25 November 2003, all aspects of the client's claims were settled, following a mediation, for the "all in" sum of $270,000.00. After payments to various statutory bodies were deducted, the sum of $219,876.85 was paid by the employer's solicitors to Quinn on behalf of the client.

6 It had been necessary for an application to be made on the client's behalf to extend the time for institution of the common law proceedings in Tasmania. That application was successful. Quinn charged the client the sum of $17,019.00 for costs in relation to the application for extension of time and the sum of $135,883.80 for costs in relation to the worker's compensation and common law proceedings, a total of $152,902.80.

7 Quinn disbursed the $219,876.85 held in trust in the following way:

(a) on or about 29 December 2003, he paid $20,000.00 to the client;

(b) between 17 November 2003 and 18 August 2004, he applied $98,252.90 to his own account, by 47 separate withdrawals, without rendering an account or informing the client; and

The client was unaware that Quinn was applying the trust money to payment of costs.

8 After payment of disbursements, the client received less than $45,000.00 of the settlement sum of $270,000.00. Despite retaining $9,092.70 in excess of the aggregate costs invoiced, Quinn in late September 2004 commenced legal proceedings in the Melbourne Magistrates' Court against the client, claiming $2,600.00 said to be the balance of his entitlement to legal costs. By letter dated 22 April 2004, the client complained to the Institute about Quinn's professional conduct.

9 The Institute asked Mr John Ahern, an experienced costs consultant, to review Quinn's file and the accounts rendered. In his written evidence before the Tribunal, which was not contested, Mr Ahern expressed the following opinion:

"3. In my opinion, the solicitor's method of costing purportedly in accordance with the agreement excessively increases his remuneration above what he is properly entitled to charge under the agreement. The solicitor, amongst other things, appears to have charged for each and every item of service separately instead of on the basis of cumulative time. In particular, it appears the solicitor has:

(a) charged an hourly fee of $275 per hour which exceeds the amount specified in the agreement;

(b) excessively recorded times throughout the bill of costs; and

(c) charged for services for work performed which a solicitor in the position of Mr Quinn would know or ought to know were unnecessary and would incur a greater expense for his client.

...

5. ... [I]n my opinion, the work properly chargeable by a reasonably competent solicitor in this matter ought not to have been more than $60,000 or at its very highest, the sum of $70,000, on a very generous basis."

10 Another experienced costs consultant, Ms Elizabeth Harris, was retained by Quinn to prepare a bill of costs based on the work recorded in his file. Ms Harris adopted the approach that, if a particular item of activity could not be verified, she did not include it in the bill of costs. Under cross-examination, Ms Harris acknowledged that she did not exclude any items on the basis that they constituted over-servicing. Her task was mechanical. She inspected the records of the work done and, once she had verified that the work had been done, simply applied the agreed hourly rate. On that basis, Ms Harris concluded that the work done, charged in accordance with the fee agreement, totalled $144,000.00.

11 After referring to the detailed bill of costs prepared by Ms Harris, the Tribunal expressed agreement with the submission made by senior counsel for the Institute, that the work charged for by Quinn was "over the top". The Tribunal said:

"In many instances ... we are satisfied the hours claimed and charges calculated thereon are an "overkill" for the nature of the work involved."

"the work chargeable by a reasonably competent solicitor in the client's matters ought not to have been more than $60,000 or at its very highest, the sum of $70,000, on a very generous basis."

On that basis, the Tribunal found, Quinn charged the client more than double what was reasonable.

12 In his grounds of appeal, Quinn attacks this finding, contending that the Tribunal -

(a) misdirected itself as to the effect of the evidence of Mr Ahern;

(b) erred in making any finding of the extent of the overcharging; and/or

13 Before the Tribunal, no concession was made on behalf of Quinn in relation to any specified quantum of overcharging. Indeed, his counsel submitted that the Tribunal was not in any position on the evidence to make a specific finding as to the extent of the overcharge. On the appeal, senior counsel for Quinn conceded, quite properly, that the only evidence of what was a reasonable charge in the circumstances was that of Mr Ahern. As Chernov JA pointed out, the task which Mr Ahern had undertaken was quite different from that which Ms Harris had undertaken. Nevertheless, it was contended for Quinn, both before the Tribunal and on this appeal, that allowance had to be made for the fact that Ms Harris had verified that work to the value of $144,000.00 had actually been done.

14 In my view, there is no substance in any of these grounds. The Tribunal was perfectly entitled to accept the unchallenged conclusion of Mr Ahern as to the upper limit of the reasonable costs for the provision of professional services in this matter. Indeed, as senior counsel for the Institute pointed out, in the absence of any other evidence as to what the reasonable costs were, it is difficult to see how the Tribunal could have come to any other conclusion.

15 Ms Harris' evidence did not address the question of reasonableness. Its significance for Quinn was in demonstrating that the overcharging was not the product of concoction.

16 As already noted, Quinn made 47 withdrawals from his trust account, transferring moneys to his own account in payment of costs. Complaint is made about the following passage in the Tribunal's reasons:

"The Act specifically provides that it is misconduct by a legal practitioner to charge a client grossly excessive legal costs. The legal practitioner admits the costs he charged the client were grossly excessive. Further, on 47 occasions he contravened the provisions of the Trust Rules. As a member of the lay community the client was at a decided disadvantage, viz a viz, the legal practitioner in relation to the assessment of costs appropriate in his case.

We find the legal practitioner abused the fiduciary duty he undoubtedly owed to the client to charge costs that were fair and reasonable and, in particular, not grossly excessive. Further, the overcharging was achieved by applying trust moneys towards payment of his costs without furnishing to the client the information required by the Trust Rules, which further disadvantaged the client and is a separate instance of misconduct." (emphasis added)

17 It was submitted for Quinn that there was no foundation for the finding that the application of trust moneys towards the payment of costs "further disadvantaged the client". It was further contended that the Tribunal had misdirected itself by treating the breach of the Trust Account Rules as both an aggravation of the conduct in charge 1 and a separate instance of misconduct.

18 In my opinion, this ground of appeal is also without substance. With respect, what the Tribunal said was plainly correct. The client was at a decided disadvantage viz a viz Quinn in relation to the assessment of costs and that disadvantage was, clearly, exacerbated by Quinn's failure to give his client the information required by the Trust Account Rules. Senior counsel for Quinn conceded as much in the course of argument.

19 The following grounds of appeal are advanced in relation to the penalty imposed:

(a) the suspension of the practising certificate for 12 months was manifestly excessive;

(b) the Tribunal failed to give any or any adequate consideration to alternative dispositions short of suspension;

(c) the Tribunal failed to address, or address adequately, Quinn's proffered undertaking in relation to the future billing of client matters, as an alternative means by which its stated objectives could be met.

20 I deal first with the issue of the undertaking. The Institute made no submissions to the Tribunal about what penalty should be imposed. This was part of an agreement reached between the Institute and Quinn, pursuant to which he pleaded guilty to the four charges. In the course of the hearing, however, the Tribunal enquired of senior counsel for the Institute what other course might be open to the Tribunal if it were to decide not to suspend Quinn's practising certificate.

21 Senior counsel first pointed out to the Tribunal that the conduct represented by charge 3 (the misapplication of trust money without the rendering of an account to the client) had been dealt with by an undertaking previously given to Hollingworth J on 19 April 2005. As to the overcharging, senior counsel told the Tribunal that it appeared to the Institute that the overcharging might "be as a result of the practitioner being overly zealous". Senior counsel suggested to the Tribunal that, if the practising certificate were not to be interfered with, the Tribunal might wish to impose a regime whereby bills of costs above a certain amount were independently assessed.

22 The transcript records that counsel for Quinn obtained instructions to offer an undertaking that, in any matter in which the bill of costs compiled by Quinn exceeded $20,000.00, the bill would be independently assessed by a recognised costs consultant before the account was rendered by Quinn to the client. Subsequently, so the transcript records, the Chairman of the Tribunal asked counsel whether, for the purposes of such a regime, it would be possible for Quinn's bills of costs to be assessed by the Institute's costing service. Counsel for Quinn told the Tribunal that this course would be appropriate. In the event, the Tribunal apparently decided not to pursue that course. Somewhat surprisingly, the Tribunal's reasons made no mention of that alternative course and, as a result, gave no explanation as to why it was not regarded as satisfactory.

23 An undertaking to the same effect was offered to this Court by senior counsel for Quinn on the application for a stay of the suspension order. The Court accepted the undertaking and granted the stay, saying:

"In our view it is appropriate that that undertaking be required as a condition of the grant of the stay. Not only does the giving of that undertaking ensure protection of the public, in a manner entirely consistent with the alternative submission advanced by the Institute to the Tribunal, but it will enable the parties to this appeal to observe - in the period between now and the hearing of the appeal - whether in fact such a monitoring regime is likely to achieve a better level of protection of the public than a suspension. Such a regime would, at the same time, avoid the unfortunate consequence which a suspension would seem likely to have, of effectively bringing Mr Quinn's practising career to an end."[1]

24 The Tribunal noted that the "very compelling" character evidence given by a number of reputable witnesses was to the effect that Quinn -

"was honest but had a tendency to be disorganised and inefficient".

The Tribunal was also informed, and accepted, that Quinn had been exposed to distressing personal and family strains, in particular in 2003, and suffered from major depressive episodes. As at the date of the Tribunal's hearing, he remained under medical treatment. Further reference will be made to this issue below.

25 The Tribunal's conclusions on penalty were expressed as follows:

"Our task does not involve punishment of the legal practitioner. Our task is to provide for the protection of the public, including deterrence of the legal practitioner and the profession generally from like conduct.

In that regard, we have considered a number of options, short of suspension from practice, that could achieve that result in this case.

...

Conscious of the necessity to place the barrier high before depriving a member of the profession of their practising certificate we have given all the circumstances of this case the most careful and repeated consideration.

In the final analysis, we are of the unanimous view that the misconduct to which the legal practitioner has pleaded guilty was so grave that the only course open to us in all the circumstances is to order that the legal practitioner's practising certificate be suspended for a period of 12 months in relation to charges 1 and 3 (as amended)."

26 It was submitted for Quinn that his personal circumstances, and the nature of the offending, did not warrant the finding that his misconduct was "so grave" that the only course open was suspension of his practising certificate. Suspension was unnecessary for the protection of the public, given that the overcharging was not the result of concoction or deception, but was the consequence of "personal failings of a man who was honest, not lacking in probity nor being in the least furtive in his activities". The submission went on:

"In fact the public would have been afforded greater protection had the undertakings been accepted as the decision under appeal allows for the appellant's unrestricted return to practice at the conclusion of the period of suspension."

27 For the Institute, it was submitted that the Tribunal was entitled to arrive at the conclusion which it did, having regard to the following matters:

(a) the charges of misconduct to which Quinn pleaded guilty were of the "utmost seriousness";

(b) violation of the relevant legislation and rules harms not only the particular client but the community as a whole, including the legal profession;

(d) the scale of Quinn's misconduct was at the higher end;

(e) the client was disadvantaged by his misconduct;

28 As noted earlier, the Tribunal defined its disciplinary function in these terms:

"Our task does not involve punishment of the legal practitioner. Our task is to provide for the protection of the public, including deterrence of the legal practitioner and the profession generally from like conduct."

29 That the Tribunal's disciplinary function is primarily protective was made clear by this Court in Hannebery v Legal Ombudsman.[2] The Court said:

" ... [T]he jurisdiction of the Tribunal to deal with - that is to discipline - a practitioner for misconduct, while it includes a power to punish, is to be regarded as very largely protective. Hence, although the Full Tribunal may impose a fine of up to $50,000, its concerns should ordinarily be not so much to punish as to protect members of the public against professional misconduct."[3]

30 Nevertheless, the phrase "not so much to punish as to protect" underlines the fact that the Tribunal's disciplinary orders are punitive as well as protective. The available sanctions are, by their nature, punitive, and the objectives of specific and general deterrence - which serve the protection of the public - depend upon the sanctions having punitive effect.

31 Critically for present purposes, however, the Tribunal's protective function is paramount. Thus, where there is a choice of sanctions, it is to be expected that the Tribunal will choose that sanction which maximises the protection of the public.

32 In my opinion, the Tribunal was here faced with just such a choice. Counsel for Quinn had offered the Tribunal an undertaking to have his bills of costs independently assessed. This undertaking was offered apparently without limit of duration. As Buchanan JA and I said when granting a stay of the suspension, the imposition of a continuing obligation of that kind would seem likely to afford considerably greater protection to the public than a period of suspension, unaccompanied by any requirement of training or further education, followed by a resumption of unsupervised practice. Put simply, compliance with the undertaking would ensure that there was no recurrence of the overcharging which occurred here.

33 As I have mentioned, the Tribunal's otherwise careful reasons for decision make no mention of the proffered undertaking.[4] The Tribunal said that it had considered other options short of suspension but in my view, because of the long-term protection which the undertaking offered the public, that course required separate consideration and evaluation.

34 The Tribunal having given no explanation for rejecting this alternative, I have concluded that its exercise of discretion miscarried. Quinn was entitled to know why the offer of an undertaking was unacceptable. His misconduct was very serious but - contrary to the Institute's submission - it was not "of the utmost seriousness". Overcharging by falsely claiming for work not done is much more serious than overcharging because excessive work has been done, as was the case here. With respect to the Tribunal, it is not apparent why Quinn's conduct was seen to be "so grave that the only course open" was suspension, particularly given the unchallenged evidence about his depressive illness.

35 The issue of mental illness gives rise to a second and separate ground of appellate intervention. Because the Tribunal's disciplinary jurisdiction is inescapably - indeed, intentionally - punitive, in the service of protecting the public, it is appropriate that the principles applicable in this Court to sentencing appeals should apply by analogy to appeals from disciplinary decisions of the Tribunal. The most obvious example is the approach to a submission that the penalty is manifestly excessive.[5]

36 Relevantly for present purposes, the analogy with sentencing means that the existence of any mental condition, either at the time of the offending or at the time of the Tribunal's hearing, or both, may be relevant in one or more of the various ways described by this Court in R v Tsiaras[6] and, more recently, in R v Verdins; R v Buckley; R v Vo.[7] In the present case, it seems to me, very real questions arose as to whether Quinn's history of depression reduced his culpability for the offending, and hence its gravity, and/or reduced the need for specific deterrence and/or made him an inappropriate vehicle for general deterrence. None of these questions was addressed by the Tribunal.

37 This Court was informed that Quinn's major depressive illness had deteriorated in the period following the Tribunal's decision to the point where, as from March 2006, he was unable to continue active practice and all of his files were transferred to other practitioners. The Court was provided with two sets of psychiatric reports. The first set of reports, from 2005, had been before the Tribunal; the second set, from 2006, confirmed the worsening of his condition. Senior counsel for Quinn asked the Court to treat this as fresh evidence, and to take it into account in the way described by the Court of Criminal Appeal in Eliasen v The Queen.[8] In that case (an appeal against sentence), the Court said:

" ... [T]his Court may, if it considers the case an appropriate one so to do, permit evidence of matters or events that have occurred since the date of the passing of the sentence upon an applicant to be placed before this Court with a view to this Court's reconsidering the matter in the light of that additional evidence. It must follow that, if the

Court does think that the additional evidence should lead to the imposition of a sentence different from that imposed by the judge, then even where the judge's sentencing discretion has not miscarried the case must be treated as one calling for appellate intervention."[9]

In R v WEF,[10] this Court confirmed that the basis for receiving such new evidence was that it demonstrated the true significance of facts in existence at the time of sentence.

38 In my opinion, fresh evidence of this kind should be receivable on the same basis on an appeal from the Tribunal's exercise of its disciplinary power. In the present case, I would admit the fresh evidence, which serves to underline the seriousness of the mental illness which had afflicted Quinn. The presence of the depressive condition meant that both specific and general deterrence had to be "sensibly moderated" in this case, and that the implications for Quinn's culpability had to be considered.[11]

39 For these reasons, I would allow the appeal and quash the decision of the Tribunal. In lieu thereof, I would order that, upon Quinn by his counsel providing the undertaking to which I have referred, there be no further order save as to costs.

40 I have had the advantage of reading the reasons for judgment of the learned President. I agree that, for the reasons given by him, putting aside the question of penalty, the challenges to the Tribunal's findings are without merit. In my view the Tribunal was entitled to come to the impugned findings and to regard the appellant's misconduct to which he pleaded guilty - particularly that which involved improper use of trust monies - as being of the "utmost seriousness". The misconduct involved, I think, abuse by the appellant of his position of trust and

privilege which he enjoyed as an officer of this Court. It also involved serious breaches of the legislation.

41 As to the penalty, given the Institute's attitude to the issues as described and the reasons of the President, and the other mitigating factors, I think that the suspension of the appellant's practising certificate for 12 months was, at least, very stern. Although the Tribunal's discretion on this issue is very wide, it must be exercised judicially which means that it was required to act in accordance with relevant principles and take into account all relevant matters and not those that are irrelevant. It is also the case that the Tribunal was obliged to explain in its decision the path of reasoning that it adopted in order to come to the impugned decision so that the parties and the appellate court could discern if the Tribunal relevantly erred. This requirement includes the obligation to make apparent what matters it took into account for the purpose of sentencing the appellant.

42 It is obvious enough that the appellant's proposed undertaking, of which the President speaks in para 22 of his reasons, was or should have been an important factor in the sentencing disposition given that, as the Tribunal acknowledged, its principal task was to protect members of the public from the consequences of the practitioner's misconduct. It was therefore incumbent on the Tribunal to explain in its reasons, however briefly, what relevance that mitigating factor had in the sentencing disposition. I consider that its failure to do so means that its reasons in this respect are inadequate. Consequently, its decision on penalty is vitiated and must be set aside.

43 It also means that the appellant must be re-sentenced. This Court is in as good a position as the Tribunal to dispose of the matter. In re-sentencing the appellant, I think it would be appropriate to take into account not only the mitigating factors that were before the Tribunal but also the material that was placed before us showing that the appellant's depressive illness has deteriorated following the Tribunal's decision to the point where, as from March 2006, he has been unable to continue active practice and all his files were transferred to other practitioners. In

the circumstances, bearing in mind that the appellant has already served a period of the suspension, and upon his giving the above undertaking, I would not impose a further penalty. Subject to hearing the parties, I would also order that the respondent pay the appellant's costs of the appeal, including any reserved costs.

44 I have had the advantage of reading in draft the reasons for judgment of the President.

45 I agree with his Honour that the Tribunal's failure to deal in its reasons with the undertaking offered on behalf of the appellant amounted to error of law. Like a number of comparable provisions, s 409 of the Legal Practice Act 1996 requires the Tribunal to provide reasons in relation to a matter before it. Plainly enough, the effect of the requirement is informed by the circumstances of each case. There are bound to be cases in which not much is required. But where, as here, the issue is whether a practitioner is to be suspended from practice or to be allowed to continue on the basis of undertakings, the Tribunal must explain whyever it chooses one course over the other.

46 In this case, the Tribunal stated in its reasons that it regarded the appellant's misconduct as so grave that the only course was to suspend him. In a sense that was an explanation of why suspension was chosen. But it is an inadequate explanation because it does not reveal the path of reasoning which led to that conclusion. It does not disclose whether the Tribunal considered that nothing short of suspension would provide the level of general deterrence that was needed, or whether the Tribunal considered that nothing short of suspension would provide the sort of specific deterrence that was needed, or whether it was a combination of both factors and maybe something else. Moreover and more importantly, inasmuch as the appellant offered an undertaking and requested the Tribunal to consider it as an alternative to suspension, he was entitled to know why in the opinion of the Tribunal the undertaking would not suffice. Yet, so far from disclosing the reasons, the subject is

47 That being so, the discretion which was reposed in the Tribunal is re-opened and falls to be exercised afresh. I agree with the President that in re-exercising that discretion it is open to take into account the additional evidence of the appellant's psychological condition which was tendered at the hearing of the appeal. Like his Honour, I regard it as evidence which demonstrates the true significance of facts in existence at the time the Tribunal made its decision. The Tribunal were told something of the appellant's psychological problems and that they had led to the Institute's receivership application.[12] This new evidence presents the problems in a light which is much more significant for relevant purposes.

48 I agree that the matter should be disposed of in the manner proposed by the President.

[1] Quinn v Law Institute of Victoria Ltd [2005] VSCA 326, [11] (Maxwell P and Buchanan JA).

[3] Ibid [22] (Tadgell JA with Phillips and Chernov JJA agreeing).

[4] See Legal Practice Act 1996 s 409.

[5] See Guss v Law Institute of Victoria Limited (formerly Victorian Lawyers RPA Ltd) [2006] VSCA 88, [28] (Maxwell P).

[10] [1998] 2 VR 385, 389 (Winneke P) citing R v Rostom [1996] VicRp 60; [1996] 2 VR 97, 99 (Charles JA).

[11] R v Verdins; R v Buckley; R v Vo [2007] VSCA 102, [17], [32] (Maxwell P, Buchanan & Vincent JJA).

Legal Practice Act 1996(Vic)

At a glance

Court

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Before

Source

Judgment (93 paragraphs)

Parties

Legislation Cited (2)