The Council of the Law Society v Grubisa

Findings of fact

1. These proceedings and the Federal Court proceedings make various assertions about the conduct of the Solicitor. It is common ground that there is one area of overlap between the two proceedings.
2. The MWC Package was a suite of products which, it is asserted, gave customers advice on how to arrange their financial affairs to provide complete protection from creditors. This has been referred to in the submissions as the making of the "Vestey Trust Representation".
3. Relevantly, in these proceedings the Law Society says in Ground 6 (a): The Respondent [the Solicitor] ... made a misleading and deceptive representation that the MWC Package, once put in place, is effective in preventing creditors from obtaining access to customers' assets.
4. The Solicitor does not admit that the representation was made.
5. Relevantly, the ACCC asserts in the Federal Court proceedings: The Vestey Trust Representation was false or misleading because the Transaction Documents do not provide a participant's assets with the asserted protection from creditors.
6. The Solicitor and MWC deny that the Vestey Trust Representation is an accurate representation of what would be conveyed to a reasonable recipient.

The submissions

1. The Solicitor says that the same issues of fact and law arise in each of the proceedings. To allow this Ground to be determined afresh would amount to an abuse of process. Further, relitigation of whether the Solicitor engaged in misleading or deceptive conduct could well bring the administration of justice into disrepute, if, for example, the Federal Court found that the Solicitor did engage in misleading or deceptive conduct, but the Tribunal found that the Solicitor did not. Such conflicting outcomes over the same issue would be corrosive to public faith in the administration of justice. The appropriate course, it was submitted, would be to stay this matter until the issue has been decided by the Federal Court.
2. The Solicitor's initial written submissions on the Application relied on the principles of res judicata and issue estoppel. The Law Society's submissions responded to those submissions.
3. However, the Solicitor filed submissions in reply in which she asserted that it would be an abuse of process if the Application was not granted. At the hearing before me, the Solicitor agreed that she had in effect abandoned her initial submissions, but then said that the concepts were related.
4. The Solicitor submitted that the separate proceedings could give rise to inconsistent findings. It was therefore appropriate that the Federal Court proceedings be determined before the proceedings in this Tribunal.

What Order is being sought?

1. The interlocutory Application initially sought an Order for Ground 6 to be struck out.
2. However, in an amended Application (the filing of which was not opposed) the Solicitor sought an Order for the proceedings to be adjourned pending determination of the Federal Court proceedings. The section of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) pursuant to which the Application was made was not identified.
3. The Law Society submitted that the Solicitor must be making the Application either pursuant to ss 38(1) or 51 of the NCAT Act which provide: 38 PROCEDURE OF TRIBUNAL GENERALLY (1) The Tribunal may determine its own procedure in relation to any matter for which this Act or the procedural rules do not otherwise make provision. 51 ADJOURNMENT OF PROCEEDINGS The Tribunal may adjourn proceedings to any time and place (including for the purpose of enabling the parties to negotiate a settlement).
4. It is common ground however that I have the jurisdiction to make an Order of the nature sought by the Solicitor. The discretion to make such an Order must be exercised judicially (Bentran Pty Ltd v Sabbarton [2014] NSWCATAP 37 at [9]).

Exercise of the Discretion

1. In determining whether to make the Order sought by the Solicitor I take into account my previous findings and the following matters.
2. Only the Solicitor is a party to both of the proceedings. The moving parties to each of the proceedings are not the same, and it was not suggested that one was the privy of the other.
3. Ground 6 (b) and the other 12 Grounds of the Law Society's Application do not overlap with the matters in issue in the Federal Court proceedings.
4. The proceedings in the two jurisdictions are of a fundamentally different nature. Ground 6 (a) of the Application in this Tribunal is directed at the Solicitor acting in her capacity as a lawyer and sole principal of DGI Lawyers while the relief sought by the ACCC against the Solicitor is by reason of her involvement in MWC's alleged contraventions as its sole director and CEO. As submitted by the Law Society, its proceedings are directed, consistently with the objectives of the Uniform Law, to regulating the conduct of legal practitioners in the interests of protection of the public at large and this is not a purpose, nor a possible result, of the Federal Court proceedings.
5. The most relevant precedent relied on by the parties is Alexakis v Health Care Complaints Commission [2021] NSWCA 217 where the NSW Court of Appeal upheld a decision not to stay disciplinary proceedings involving a medical practitioner and held that the following matters were relevant to the exercise of the discretion: 1. There needs to be a common substratum of facts underlying part of each proceeding (at [2]). 2. Regard must be had to the conferral on the Tribunal of broad powers to determine its own procedures and the material upon which it will act (at [11]). 3. There is no general requirement that disciplinary proceedings be stayed pending the hearing of other proceedings relating to the same subject matter (at [12]). 4. In that case, as in this case, the overlap was quite limited (at [13]). 5. It is entirely plausible that different inferences may be based on common primary facts (at [15]). 6. There is no basis in law for the Law Society (in this case) to be bound by factual findings made by a judge in proceedings to which it was not (and could not be) a party (at [15]). This is discussed further at [24].
6. One relevant issue in determining whether there has been an abuse of process is"…if a person stands by and waits to see the outcome of a case in which he has a distinct interest without making himself a party, he is be bound by the result and is not allowed to re-open the issue in another piece of litigation" (Ann Street Mezzanine Pty Ltd (in liq) v Beck [2009] FCA 333 at [33]). The Solicitor submitted that the Law Society could apply for leave to intervene or be heard in the Federal Court proceedings. The Law Society says that there is no legal basis on which it would be entitled to make such an application. The Solicitor, in reply, did not provide such an authority. I do not accept the submission.
7. The Solicitor also submitted that if the adjournment was granted, the Federal Court may determine that the issue is a disciplinary matter and remit it to the Tribunal as the appropriate forum to determine the issue. The Law Society says that it was not aware of any legislation which would permit the Federal Court to remit the issue to this Tribunal. The Solicitor, in reply, did not explain how this could occur. I do not accept the submission.
8. The Solicitor submitted that, if a temporary stay was granted, the Tribunal would determine the disciplinary Application with the benefit of the findings already made by the Federal Court. The Law Society submitted that the Evidence Act 1995 (NSW) (Evidence Act) applies in these proceedings by operation of NCAT Act, Sch 5, cl 20 which provides that: Despite s 38 of the NCAT Act, the Tribunal is to observe the rules of evidence in proceedings in exercise of a Division function for the purposes of the Legal Profession Uniform Law (NSW) … concerning a question of professional misconduct. The Solicitor did not dispute that the Evidence Act applies to these proceedings. The Law Society relied on s 91 of the Evidence Act to submit that any judgment of the Federal Court would be inadmissible in the proceedings in this Tribunal as proof of the existence of facts in issue including what representations were made, who those representations were made to, and whether those representations were misleading or deceptive. Section 91 of the Evidence Act provides: Evidence of the decision, or of a finding of fact, in an Australian or overseas proceeding is not admissible to prove the existence of a fact that was in issue in that proceeding. The Solicitor says in that s 91 does not apply because s 93(c) of the Evidence Act says: 93 SAVINGS This Part does not affect the operation of … (c) the law relating to res judicata or issue estoppel. I accept the submission made by the Law Society that the effect of these two sections is that a finding of fact in the Federal Court proceedings will not be admissible in the proceedings in this Tribunal, and that s 93 will only apply when an application is made in this Tribunal (after there has been a finding in the Federal Court proceedings) for a remedy relying on the principles of res judicata or issue estoppel. I decline to find that, if a temporary stay was granted, this Tribunal would determine the disciplinary Application with the benefit of the findings already made by the Federal Court.
9. The Federal Court proceedings are listed for hearing from 18 to 22 March 2024. However, it is not possible to assess when they will be finally determined bearing in mind that the judgment may be reserved and then there is the possibility of an appeal. Both the NCAT Act and the Uniform Law impose obligations on this Tribunal in relation to the conduct of proceedings. The objects of the NCAT Act in s 3 require this Tribunal: 1. To resolve the real issues in proceedings justly, quickly, cheaply and with as little formality as possible, and 2. To ensure that the decisions of the Tribunal are timely, fair, consistent and of a high quality. The guiding principle set out in s 36(1) of the NCAT Act is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. The aim of proportionality, in s 36(4) of the NCAT Act, is to facilitate the resolution of the issues between the parties in such a way that the cost of the parties and the Tribunal is proportionate to the importance and complexity of the subject matter of the proceedings. Two objectives of the Uniform Law are to ensure "lawyers are competent and maintain high ethical and professional standards in the provision of legal services" and to enhance "the protection of clients of law practices and the protection of the public generally" (s 3). I am satisfied that these objectives and principles would not be served by a temporary stay of the Law Society's application for an indeterminate and potentially lengthy period in circumstances where the Law Society makes very serious allegations as to professional misconduct, including, inter alia, that the Solicitor acted in circumstances involving a conflict of interest, represented that MWC was entitled to engage in legal practice when it was an unqualified entity, failed to provide legal services competently, made misleading submissions to the Law Society in relation to its investigations, and was involved in the creation of false documents and the provision of false information to a fellow solicitor.

Determination

1. I am satisfied that it would not be in the interests of justice to grant the Solicitor's Application for a temporary stay or adjournment of these proceedings.
2. The Application for Miscellaneous Matters filed on 18 September 2023 is refused.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 February 2024