Shane Leslie Stone v Graham Hiley and Ors as members of the Ethics Committee and Law Society of NT [1992] NTSC 52; 108 FLR 332

anything done by the Law Society in its disposal of the complaint. .... 51B. APPEAL (1) Subject to sub-section (2), a right of appeal to the Supreme Court shall lie against a finding, admonishment or fine confirmed by the Complaints Committee under section 49A(2)(a) or 50(4A)(a), or a finding recorded, admonishment or reprimand administered or order made by the Complaints Committee in the exercise or purported exercise of its powers or the performance or purported performance of its functions under this Act." THE COMPLAINT AND ETHICS COMMITTEE FINDINGS 9. Mr Liddle had made a number of complaints concerning Mr Stone's conduct, but in the end result, after a hearing before the first three defendants, only one was found to have any substance. That was that Mr Stone misused his position as an ex-solicitor for Mr Liddle at a Country Liberal Party ("CLP") Central Council meeting held on 25 October 1989 by producing Mr Liddle's matrimonial file at the meeting. Mr Liddle had been endorsed as a candidate for the CLP for the next election to the House of Representatives. Certain matters had arisen which caused the party to convene a meeting for the purpose of considering those matters and the affect, if any, which they might have upon Mr Liddle's candidature. Mr Stone, the then President of the party, had received instructions as an agent on behalf of Melbourne solicitors acting for Mr Liddle to attend to certain matters concerning his matrimonial affairs. Those affairs were one of the matters to be considered and in the words of the Ethics Committee: "Liddle assured Stone that the matrimonial problems had been resolved and he agreed with Stone's suggestion that he should get his wife or her solicitors to write a letter to Stone to that effect". The professional relationship between Stone and Liddle was terminated at about that time. 10. On 23 October 1989, two days before the meeting, Mr Stone wrote two letters to Mr Liddle seeking his authority for otherwise confidential information to be made available to the members of the party at the meeting. In one of those letters appear the following two paragraphs: "The fact that difficulties (matrimonial) had arisen was well known to real estate agents and solicitors in Alice Springs as you consistently ignored my advice (all of which is documented) to attend to the matter without delay. In the event that you intend to raise a matrimonial matter at the meeting of the Central Council I seek your permission to make the file available to delegates. I would be more than happy for delegates to judge for themselves the background to your matrimonial matter and to put on the record copies of correspondence from your wife's two solicitors". 11. This extract was set out in the reasons of the Committee, with emphasis to show that the decision as to whether the file was to go to the meeting was Mr Liddle's. 12. The meeting was held on 25 October. Mr Stone had taken Mr Liddle's matrimonial file to the meeting and placed it on the front table amongst a bundle of other files and papers. In the view of the Ethics Committee he did not have Mr Liddle's express authority to take the file to the meeting and went on to find that it was "wrong and improper for Stone to have taken the file to the meeting without first having obtained the authority of Liddle to do so". Mr Liddle did not authorise the disclosure of anything on the file at the meeting and it is not shown that anything was in fact disclosed. It was the presence of the file itself which caused the complaint and the Ethics Committee's concern. The Committee found that "The presence of the file put Liddle under undue and unfair pressure", at the meeting. 13. The plaintiff complains that the Committee did not afford him an adequate opportunity to put his views as to the use which might be made of the extracts from his letter to Mr Liddle set out above. This is not a case where the committee made use of material unknown to the plaintiff, the letter had been written by him and it was placed in evidence at the hearing. He referred to it in his evidence. Asked questions by counsel for Mr Liddle and one of the members of the committee, he acknowledged that Mr Liddle had not requested him to bring the file to the meeting, but sought to justify his actions saying he thought he would be open to a "very grave charge" if he had brought only a letter from the file; he might be open to an allegation that he was being selective. The committee rejected submissions based upon that evidence for reasons which it gave. 14. What was objected to is the following passage in the committee's report, which finds its place amongst the discussion concerning the taking of the matrimonial file to the meeting: "That Stone felt under pressure to inform the meeting of the true situation if such question arose (and for that reason he actually prepared in advance a written authority for Liddle to sign) was only due to his clear conflict of interest - on the one hand a duty of confidentiality as Liddle's (ex) solicitor, and on the other hand, a desire to enable full discussion at the meeting of Liddle's fitness as a candidate in his capacity as President of the CLP." 15. That does not appear to be an observation arising so much from the letter written by the plaintiff to Mr Liddle of 23 October. It is, rather, based upon the uncontroverted facts that the plaintiff had acted as Mr Liddle's solicitor in relation to his matrimonial affairs, that he was President of the CLP, that Mr Liddle was an endorsed candidate for a forthcoming election and that there were concerns as to his fitness as a candidate arising partly from stories circulating concerning those affairs. There was no finding that the conflict of interest was in any way blameworthy in itself. What was criticised was the course followed by the plaintiff in that situation. He took the solicitor's file to the political party meeting without the authority of the client. That was the substance of the complaint. The plaintiff was not "left in the dark as to the risk of the finding being made" (R v Deputy Industrial Injuries Commissioner; Ex parte Moore (1965) 1 QB 456 at 488, 490). It can not be necessary to give notice of any tentative adverse conclusion where the subject matter has been flagged as an issue, in the presence of the affected person, during the course of the inquiry, and particularly if questions have been directed to the matter by counsel or members of the tribunal (per Wilcox J in Bond v ABT (1988) 84 ALR 646 at 664). It explains the pressure on the plaintiff, but does no more than form part of the reasoning to the conclusion that it was unprofessional conduct for the plaintiff to have taken the file to the meeting. The pressure and its causes were acknowledged, but could not be used as justification for the conduct. 16. The Committee concluded: "1. Stone's conduct the subject of complaint 3(a) was unprofessional conduct, the complaint has substance and the complaint has been proved. The Law Society can deal

with Stone under section 47(1)(c) or 47(1)(ba). 2. In so conducting himself he failed to "give undivided fidelity to his client's interest unaffected by" his own interests or those of the CLP, or by his perception of the CLP's interests. This was in breach of Professional Conduct Rule 9A.1 contained within the part concerning "conflict of interests". It is irrelevant that the retainer had ceased - he still had a continuing obligation of fidelity. 3. This conduct was wilful and his failure to adhere to PCR 9A.1 was with reckless disregard to Liddle's interests as a client. We consider then that he is guilty of professional misconduct via section 45(1)(a)(ii). 4. The Law Society can, if it agrees with the above conclusion, lay a charge via section 47(1)(d). PENALTY Assuming no "priors" we do not consider it appropriate to interfere with Stone's rights to practise or necessary to refer the matter to the Legal Practitioners Complaints Committee. On the other hand the misconduct was in our view too serious to warrant admonition. We would recommend a fine of $1,000." PROFESSIONAL MISCONDUCT AND PENALTY 17. Returning to the Act, it will be noted that in s. 45 there is a definition of "professional misconduct" which includes a legal practitioner's contravention of any rules relating to the professional conduct of legal practitioners made by the Law Society and approved by the Chief Justice (called the professional conduct rules) where the contravention or failure was wilful or reckless. After the hearing in this matter the plaintiff and fourth defendant reinstated the matter for further submissions in the light of the following agreed facts:

The professional conduct rules were adopted by the Law Society in about 1985.
The Law Society has made enquiries and is unable to establish whether they were ever approved by the Chief Justice prior to May 1992.
At all relevant times Mr Stone was a member of the Law Society.
Looking at the conclusions of the Ethics Committee, it appears to have proceeded in the following manner:
(a) It first found that the complaint which it upheld was "unprofessional conduct" (paragraph 1). It had directed its mind to what was said by Fox, Blackburn and Woodward JJ in Attorney-General : re A Barrister and Solicitor (1972) 20 FLR 234 at 242 - 243: "In our view unprofessional conduct is not necessarily limited to conduct which is disgraceful or dishonourable and in the ordinary sense of those terms it includes, we think, conduct which may reasonably be held to violate or fall short of, to a substantial degree, the standard of professional conduct observed or approved of by members of the profession of good repute and competency". (b) Unprofessional conduct may or may not amount to professional misconduct. In this case it did, being in breach of what was then considered to be the operative rules (paragraph 2) and further in being wilful or reckless (paragraph 3). The finding of professional misconduct was expressly related to a breach of the purported rules arising from the same circumstances giving rise to the finding of unprofessional conduct. (c) Notwithstanding that the conduct complained of amounted to unprofessional conduct and professional misconduct, it was not necessary in all the circumstances for the matter to be referred to the Legal Practitioners Complaints Committee (paragraph 4), but a fine of $1,000 would be appropriate (Penalty). In recommending the fine the committee was paying regard to the provisions of s. 47(1)(c).

Leaving aside for the present other matters which have been raised, s. 47 enables the Law Society to decide whether proven unprofessional conduct amounts as well to professional misconduct. If it finds that it does not then it has the discretions as to penalty set out in s. 47(1)(a) - (c) inclusive. However, a finding of professional misconduct does not deprive the Society of the opportunity to exercise those discretions in respect of that misconduct. There is nothing in the above recited provisions of the Act which calls for an interpretation limiting the exercise of those options to a finding of unprofessional conduct simpliciter. As with unprofessional conduct the circumstances giving rise to a finding of professional misconduct will vary in gravity, and there is no reason to hold that the legislation does not enable the Society to deal with less serious examples of professional misconduct in the same way as it is able to deal with unprofessional conduct which does not amount to professional misconduct. In relation to a finding of professional misconduct, however, there is a further option open to the Society, that is, to lay charges before the Complaints Committee. That Committee's jurisdiction in relation to penalty is more extensive than that of the Society. It is up to the Society. If it finds professional misconduct proved it may elect to penalise the breach within the limits of its powers or lay a charge before the Committee. In this case it chose the former course. JURISDICTION OF ETHICS COMMITTEE 21. The Society's powers of delegation are in s. 47A. They do not extend to the power to admonish, fine and lay charges before the Complaints Committee. There is no specific instrument of delegation from the Society to the first three defendants in evidence in respect of the complaints made by Mr Liddle. The Society may also engage persons to assist it in carrying out its functions (s. 47(1)(e)). 22. Having first sought and obtained the plaintiff's comments on Mr Liddle's complaints, steps were taken with a view to investigating the complaints. There is evidence of a letter written by the Executive Officer of the Society to each of the first three defendants on 22 November 1989, referring to their appointment as Chairman and members "of an Ethics Committee Hearing ...". On 23 November the Executive Officer wrote to the plaintiff confirming those appointments and the date and place of the hearing. On the day prior to that fixed for the hearing, solicitors for the plaintiff write to the Executive Officer seeking clarification of the procedures which had been followed to date in conducting the investigations of the complaint including: "1. Is the Committee appointed to investigate this complaint appointed pursuant to s. 47A i.e. the delegated powers provision". Further specific requests were made for particulars relating to compliance with the Ethics Committee By-Laws. Those By-laws are in evidence. They are entitled as having been made pursuant to Clause 16 of the Constitution and Rules of the Society, but neither of those documents was in evidence. However, it is not objected that the by-laws were ultra vires. Relevantly the by-laws provide for preliminary consideration of complaints by the Executive Officer and President of the Society, and where they are of the opinion that a prima facie case is made out, the President may summon a meeting of the Ethics Committee. Provision is made for the conduct of a hearing including power in the Chairman of the Ethics Committee to appoint some person to investigate any matter which is the subject of a complaint or which is incidental to a complaint and to report to him either before, at, or after the hearing of the complaint (By-law 9). By-law 12 obliges the Committee, after hearing all the evidence and receiving all the reports which are to be made available to it, to deliver its decision to the Council of the Society, which is to consider the same and take whatever further action it considers necessary. 23. No reply was made to the letter requesting particulars prior to the commencement of the hearing at which time the Chairman, in opening remarks said: "... this committee's powers and functions, as set out - by-law 12 -our real function is, really, just an investigatory function - that is to hear the evidence, make findings and make recommendations, and then those findings and recommendations go to the Law Society Council, and it is entirely up to the Law Society Council as to what it does, so, theoretically it could totally ignore our findings and recommendations, or it could implement them or whatever." He then referred to the letter seeking clarification and counsel for the plaintiff then said: "You have already identified point 1 in what you have said Mr Chairman, so we do not need to take that any further." Whatever may have been the plaintiff's concerns as to appointment of the committee pursuant to s. 47A seem to have been alleviated. Nevertheless before the Court counsel pursued the matter further on the basis that there was no evidence of a relevant delegation. All that is required is an instrument in writing by which the Society delegates any of its powers and functions (with certain immaterial exceptions). The by-laws are such an instrument. It is not a requirement that any such delegation be signed by any person. The powers of the Executive Officer, President and members appointed to comprise an Ethics Committee include powers to consider and investigate complaints. If, as was contended, certain of the by-laws infringe against the prohibition against sub-delegation, it is immaterial to this case since there is no evidence that any such power was exercised. On the face of the evidence available the committee was acting as delegate of the Society pursuant to s. 47A. The plaintiff has not shown to the contrary. FAILURE OF SOCIETY TO AFFORD NATURAL JUSTICE 24. (a) The merits of the complaint There is no evidence as to what was before the Society, other than the report of the Ethics Committee, when it resolved to accept the report and adopt the recommendations. It proceeded immediately to impose the fine of $1,000 pursuant to Neither the plaintiff nor any person acting on his behalf was at the meeting. There is no evidence that he was invited nor that he was given any opportunity to otherwise comment to the Society on any of the contents of the report. 25. The report of the Ethics Committee to the Law Society was detailed, reasoned and in writing. It reviewed the oral and other evidence given upon the hearing before it. It is not suggested, and ought not to be inferred, that the officers of the Law Society present at the meeting did not give consideration to whether their conclusions should agree with those of the members of the Ethics Committee, only one of whom was present out of six. 26. There is nothing to distinguish this aspect of the case from that which was considered in Taylor v Public Service Board ; For the reason given there was a delegation of the Society's powers to investigate a complaint. The Committee was not merely assisting it. Its investigation necessarily involved a judgment as to whether any complaint was made out (it found that some were not) and the Society could accept or adopt any such finding without having made a finding upon a hearing of the evidence. There is no reason why it should not receive recommendations as to penalty, but a decision in that regard must be its own since that power may not be delegated. This type of case is distinguishable from a case where there is no power of delegation whatsoever such as Jeffs v New Zealand Dairy Production and Marketing Board (1967) 1 AC 551, and there may simply be an appointment of a person to receive evidence and submissions as a matter of procedure. 27. The flexible rules of natural justice must bend to the will of the legislature. The scheme for investigating complaints against legal practitioners does not require that the Law Society itself, through its office bearers, investigate and make findings. Those tasks may be delegated, and if that is done the practitioner is not entitled to be heard again before the Society as to the merits of the complaint. (F.A.I. Insurance v Winneke ; , Brennan J at 417). A finding by a delegate that a complaint is proved is a finding of the Society for the purpose of enabling it to proceed to consider what penalty, if any, should be imposed or what further action should be taken. 28. (b) Penalty The plaintiff was not heard at all in relation to penalty. The Society had a wide variety of options open to it in light of the Committee's findings on the merits (see , and the plaintiff had no opportunity to make any relevant submission or call any relevant evidence in that regard. There is no modern authority supporting the proposition put forward by Lord Atkinson in Weinberger v Inglis at 631, that upon a person being found guilty of some charge he has no right whatever to be heard on penalty. To the contrary, for example, see Hall v NSW Trotting Club Ltd at 382 and 391, Malone v Marr at 900. 29. The nature and degree of a penalty imposed on a professional person in relation to a proven complaint concerning his professional conduct, may well have a bearing on that person's professional reputation. The Society failed to render natural justice to the plaintiff in respect of penalty. Its decision on penalty is severable from the findings in relation to the complaints and has no effect upon those findings. CONCLUSION 30. Two errors have been demonstrated in relation to the proceedings upon Mr Liddle's complaints concerning the plaintiff. 31. First, findings were made as to a breach of the professional conduct rules which by definition amounted to professional misconduct. Specific reliance was placed upon those roles by counsel for Mr Liddle before the Committee and by the Committee in its findings. Whether the conduct complained of amounted to professional misconduct without reference to the rules is not to the point. A finding of professional misconduct in those circumstances may well require other evidence and consideration of issues going beyond that which might suffice in relation to a particular rule or rules said to have been infringed. Whether the result would have been any different if the complaint had been made by reference to general standards of professional conduct as opposed to the formulated standards is not for me to decide. The Committee proceeded upon a wrong basis, innocently no doubt. It did not occur to anyone to enquire as to whether the rules relied upon conformed to the Act. 32. Second, for the reasons already given, it is clear that the plaintiff was denied natural justice on the question of penalty and the fine can not be allowed to stand. 33. No reason has been demonstrated to cause the Court to interfere with the findings that the plaintiff was guilty of unprofessional conduct in taking Mr Liddle's file to the meeting. DISCRETION AS TO RELIEF 34. Reference has already been made to the appeal provisions (s. 49). Close examination of those provisions shows that in the circumstances of this case the plaintiff could not agitate before the Complaints Committee the issues which he raised here and obtain appropriate relief. The appeal is limited to: (a) "a finding recorded by the Society under s. 7(1)(ba)", that is, a finding that a complaint is proved but in circumstances where no further action is justified, beyond recording the finding. (b) "an admonishment or fine imposed by the Law Society under s. 47(1)(c):, but not expressly against the finding that the complaint is proved. 35. However, it is implicit that the finding on the merits is open to challenge given that the appeal is to be by way of rehearing of the complaint (s. 49A(1)), and upon the rehearing the Complaints Committee may confirm or quash a finding. Upon the hearing of an appeal that Committee has extensive powers to procure evidence (s. 51). 36. This is not the type of case where the obligations to allow a person, who may be adversely affected by the decision of an authority, to be heard in accordance with the rules of natural justice have been set aside by the legislature and a right to appeal given upon the hearing of which those obligations may be fulfilled. In such a case a court may decline to give relief by way of prerogative remedy or the like (Twist v Randwick Municipal Council ; , Gardner v TIO (Supreme Court of the Northern Territory, Gray J, unreported, 27 June 1991)). Here the obligation to comply with the rules of natural justice upon consideration of a complaint relating to professional conduct, and what should happen if the complaint is found proven, have not been displaced. It is for breach in the observance of those rules that these proceedings are brought. The Complaints Committee is not a court of law and notwithstanding its powers associated with the rehearing of a complaint it is not part of its function to consider the issues raised in this matter. The legislature has not ousted the jurisdiction of this court in a case where the Law Society has not adhered to the rules of natural justice. ORDERS 37. I will hear counsel further upon the following proposed orders:

Declaration that the finding of professional misconduct by the first, second and third defendants as accepted by the fourth defendant was invalid and is void.
That the finding referred to in (1) be quashed.
Declaration that the decision to impose a penalty of $1000 upon the plaintiff by the fourth defendant was invalid and is void.
That the matter be remitted to the fourth defendant for further consideration in the light of these orders.

At a glance

Court

Decision date

Before

Source

Judgment (6 paragraphs)

Shane Leslie Stone v Graham Hiley and Ors as members of the Ethics Committee and Law Society of NT [1992] NTSC 52; 108 FLR 332 (29 July 1992)

Parties

Legislation Cited (2)

Cases Cited (10)