Roulstone v New South Wales Bar Association

1. [1]

   The Plaintiff appeals under s 108 of the Legal Profession Act 2004 (NSW) from the deemed refusal of the NSW Bar Association to grant him a practising certificate. Pending the final hearing of the Summons he seeks an interim order that he be granted a practising certificate as a barrister for the balance of the present practising year ending 30 June 2015.

Background

1. [2]

   The background to the present proceedings is summarised by Beech-Jones J in Barakat v The Law Society of New South Wales [2014] NSWSC 773 at [14]-[29].

2. [3]

   The Plaintiff had been a partner at Keddies. Commencing in May 2010 claims were made by about 100 former clients of Keddies alleging overcharging when Keddies had acted for them. In October 2010 the partners of Keddies entered into an agreement with Slater & Gordon which involved the sale of shares in Keddies Insurance Law Specialists Pty Limited to Slater & Gordon. Thereafter the Plaintiff worked for Slater & Gordon until 19 June 2012.

3. [4]

   On 9 August 2012 the Plaintiff was made bankrupt on his own petition. That appears to have arisen partly because of the extent of the claims made against him and the other partners of Keddies, and partly as a result of a capital gains tax assessment from the sale of the shares in Keddies Insurance to Slater & Gordon. Subsequently, a composition proposed by the Plaintiff with his creditors was accepted and on 12 November 2013 the Plaintiff’s bankruptcy was annulled.

4. [5]

   In the meantime, consequential upon his bankruptcy, the Law Society called on the Plaintiff to make submissions as to why he was a fit and proper person to hold a practising certificate. After receipt of those submissions the Law Society decided that he was not a fit and proper person to hold his 2012/2013 practising certificate. This was because of some transactions disposing of part of the sale money he received and because of what it considered his inadequate explanations in relation to the sale money and those transactions. It suspended the certificate.

5. [6]

   The Plaintiff applied for a review of that decision of the Law Society to the Administrative Decisions Tribunal. However, that review was only heard and decided in May 2013: Roulstone v Law Society of NSW [2013] NSWADT 272. The relevant practising certificate expired on 30 June 2013 in any event.

6. [7]

   The Plaintiff applied for a practising certificate from the Law Society for the following practising year but the Law Society refused to issue such a certificate. The Plaintiff (together with another former partner of Keddies in a similar position to the Plaintiff) appealed to this Court against that refusal. Those proceedings were heard and determined by Beech-Jones J with the result that the appeal was allowed and the Law Society’s decision to refuse a practising certificate was set aside: Barakat.

7. [8]

   The only issue determined in those proceedings concerned various transactions entered into by the Plaintiff prior to his bankruptcy. Beech-Jones J held that the Plaintiff did not act dishonestly in relation to those transactions and that his conduct in implementing the impugned transactions along with some aspects of the subsequent dealings with his trustee in bankruptcy were not such as to persuade his Honour that he was unfit to hold a practising certificate.

8. [9]

   The Plaintiff applied for and was granted a practising certificate from the Law Society for the current practising year, 2014/2015.

9. [10]

   On 24 June 2014 the Plaintiff made application to the Bar Association for a practising certificate to enable him to practice as a barrister. In his application the Plaintiff disclosed that he had previously been refused a practising certificate, that he had been bankrupt and that complaints had been lodged against him as a legal practitioner.

10. [11]

    Senior Council for the Bar Association identified three sets of issues that had arisen over the last few years in relation to the Plaintiff. One set concerned the Plaintiff’s bankruptcy. That issue, as he acknowledged, was dealt with by Beech-Jones J.

11. [12]

    The second set of issues concerned allegations of overcharging. Those matters were dealt with by the Legal Services Commissioner. The third issue concerned allegations of contempt of court that related to complaints made to the Legal Services Commissioner. The contempt matter has not been finalised, and it is that matter on which the Bar Association relies in maintaining that the Plaintiff has not discharged his onus of demonstrating that he is a fit and proper person to hold a practising certificate.

12. [13]

    There was no dispute in that regard that the matter was to be determined having regard to s 48(3) of the Act which provides:

13. [14]

    Although the Plaintiff currently holds a local practising certificate from the Law Society it was not contended by the Plaintiff that what was being sought was a renewal where a different onus would apply under s 48(4). The parties agreed that the issue to be determined by the appeal under s 108 was whether on the material before the Court the Plaintiff had satisfied the onus of demonstrating that he was a fit and proper person to hold a practising certificate. However, this was not the final hearing and what was sought was an interim order, said to be an order in the form of an interlocutory mandatory injunction.

14. [15]

    The main basis of opposition to the making of the interim order sought was the asserted failure of the Plaintiff to make a full and frank disclosure of matters associated with the contempt proceedings. It is necessary, therefore, to set out in detail the information that was provided.

The Plaintiff’s disclosure

1. [16]

   The Plaintiff said the following in a statutory declaration attached to his application for the practising certificate:

2. [17]

   On 7 July 2014 the Bar Council issued a show cause notice under s 68(2) of the Act. The show cause event was said to be “the presentation of a debtor’s petition by you on 9 August 2012”. The Bar Council, on the same date, issued a notice under s 660(1) of the Act for the production of a number of documents relating to the Plaintiff’s bankruptcy as well as:

3. [18]

   On 16 July 2014 the Plaintiff provided all but the documents referred to in A9. Those documents were provided on 18 July 2014. In that letter of 18 July 2014 the Plaintiff said this in relation to the contempt claim:

4. [19]

   On 8 August 2014 the Bar Association issued another notice under s 660(1) of the Act asking a number of questions. The Plaintiff provided a statutory declaration answering those questions on 19 August 2014. The questions and answers are these:

5. [20]

   It is not clear thereafter what transpired in the Bar Association. However, on 23 October 2014 the Bar Council resolved that it was unable to complete its investigation and make a determination under s 68(3) of the Act in respect of the show cause event notified by the Plaintiffs before 7 November 2014. That date represented the required period for the purposes of s 68(5) of the Act.

6. [21]

   Section 48(13) of the Act provides:

7. [22]

   The deemed refusal occurred on 24 September 2014. Section 108 of the Act gives a right of appeal to a person who is dissatisfied with a decision to refuse a local practising certificate. Such an appeal ought to have been brought within 28 days of 24 September 2014: r 50.3 Uniform Civil Procedure Rules 2005 (NSW). The Bar Association does not argue that an extension of time should not be granted under sub-r (1)(c).

The test for an interim order

1. [23]

   An issue arose concerning the approach the Court should take when considering whether to make an interim order for the grant of a practising certificate as the Plaintiff seeks. The Plaintiff submitted that the matter was analogous to the grant of an interlocutory mandatory injunction. Reference was made to Business World Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 to suggest that there is no difference in principle for how such an injunction should be approached from any other interlocutory injunction. Such an approach would require the Plaintiff to establish that there is a serious question to be tried and that the balance of convenience favoured the granting of an injunction. For the expression “a serious question to be tried” to be meaningful in the present context, the Plaintiff would need to show some likelihood that the contempt charge would not result in him being found not to be a fit and proper person to hold a practising certificate.

2. [24]

   I do not find that a helpful approach in the context of s 48(3) and s 108 of the Act. The parties agree that the onus is on the Plaintiff under s 48(3) even for the obtaining of an interim order. They also agree that the Court must make the determination that the Bar Council was required to make.

3. [25]

   I consider, therefore, that the correct approach where an interim order is sought is to examine all of the evidence before the Court and to determine if the Plaintiff has discharged the onus imposed by s 48(3). The result that the Court reaches on an interlocutory application may differ from the result at the final hearing by reason of the extent of the evidence that will be available at the final hearing from cross-examination and otherwise. In addition, the Court will be required to make findings of credit based on all of that evidence.

4. [26]

   If that approach is correct, issues concerning the balance of convenience are not of any particular relevance. The Plaintiff relied upon an affidavit where he detailed various expenses he has incurred and will continue to incur as a result of his decision to practice at the bar. Two things can be said about those matters. The first is that they would have been incurred in any event and not simply as a result of the refusal of the grant of a practising certificate. Secondly, it was the Plaintiff’s risk to incur those various expenses prior to being assured of obtaining a practising certificate at this stage.

The contempt proceedings

1. [27]

   It is now necessary to say something about the contempt charge. On 22 November 2011, in proceedings commenced by some former clients of Keddies, the Plaintiff and two of his partners provided an undertaking to the Court in these terms:

2. [28]

   Thereafter, on 24 November 2011, Adams J ordered an injunction in these terms:

3. [29]

   The Plaintiffs asserted that the three named defendants in those proceedings, including the present Plaintiff, breached the undertaking and the injunction. By a Notice of Motion filed 8 December 2011 in those proceedings the Plaintiff sought that the Plaintiff and others be punished for that contempt.

4. [30]

   The Statement of Charge filed 13 December 2011 contained the following factual particulars of the contempt:

5. [31]

   Mr Li swore an affidavit in support of the Motion for contempt where he said that he spoke to Helena Li on 29 November 2011 in response to a telephone message from her. She asked if he wanted to settle his claim with Keddies and he said that he would if they paid him $80,000. The next day he received a call from Helena asking him to come to Margiotta’s office. Later that day he went to the office of Margiotta’s where he spoke to Naushad Husaini whom he knew as a solicitor who had represented Mr Li at Keddies. Mr Husaini asked him to sign some documents which he did, and Mr Husaini then said that Keddies would pay him $80,000 clear in his hand.

6. [32]

   The following day, 1 December 2011, he received a call from Helena who told him she had a cheque which she would bring around that morning. At about midday she gave him a cheque for $80,000 which was a Keddies cheque signed by the Plaintiff.

7. [33]

   Those proceedings were listed before Adams J on 29 May 2013. Debate took place between Mr Stitt QC for the plaintiff in those proceedings and his Honour concerning the contempt Motion. Both Mr Stitt and his Honour thought that the appropriate course was for the contempt Motion to be refrred to the Prothonotary for his consideration. At the conclusion of the debate his Honour said this:

8. [34]

   On 6 January 2015 the solicitors acting for the Bar Association wrote to the Prothonotary asking him to advise on the current status of the contempt charge against the Plaintiff. The Prothonotary replied on 7 January 2015 in an email saying this:

9. [35]

   The position is, therefore, that the contempt proceedings are effectively in limbo. The Motion for contempt was filed in December 2011, there was supposedly a reference of the contempt proceedings to the Prothonotary in May 2013 and thereafter nothing has happened. It is not clear whether new contempt proceedings are to be commenced by the Prothonotary and, if so, whether the material already filed will be adopted by him. It does not seem likely even on an optimistic view that the contempt proceedings will be heard before the second half of 2015 after the present practising year.

10. [36]

    In one sense, that is irrelevant to the present determination except that the Court has a discretion under s 108(2), particularly where what is sought is an interim order, whether it makes an order and what that order should be. For example, the Plaintiff might discharge the onus under s 48(3) on the evidence that is before the Court on an interim basis but an order may be refused as a matter of discretion if there was likely to be an imminent or early determination of the contempt proceedings.

11. [37]

    The Defendant submitted that the Plaintiff has chosen not to make a candid disclosure of matters concerned in the contempt charge and that there are a number of questions which arise, principally from the Statement of Charge and the affidavits filed on behalf of the plaintiffs bringing the contempt charge. It was noted that the present Plaintiff has not yet filed his evidence in answer to the evidence served by those bringing the contempt charge. It appears that the occasion had not arrived for the Plaintiff to do so and he had been advised not to serve that evidence until he was required to do so. The Defendant submitted in that regard that although a person the subject of the contempt charge might wish to exercise a right of silence, consequences may flow from that silence because the lack of evidence might mean that the onus under s 48(3) had not been discharged.

12. [38]

    The Plaintiff pointed to the practising certificate that he currently holds from the Law Society as demonstrating his fitness and propriety. However, that practising certificate was granted following Beech-Jones J’s determination of fitness and propriety where only the issues touching the Plaintiff’s bankruptcy were canvassed. The issue with which this application is concerned is the contempt charge. At best for the Plaintiff, his existing practising certificate demonstrates that, subject to determining the present issue, he is a fit and proper person to hold a certificate.

Fitness and propriety

1. [39]

   In my opinion, on the basis of the material before me on the present application, and noting that no person was cross-examined, the Plaintiff has discharged the onus on him under s 48(3) of showing that he is a fit and proper person to hold the practising certificate. My reasons are as follows.

2. [40]

   First, in the statutory declaration attached to his application the Plaintiff made reference to the claim of contempt, that there was a request that it be referred to the Prothonotary and that nothing further had been heard since that time. The Plaintiff said that he had not answered the charge but if requested would do so with a full and complete defence. There does not seem to be any evidence that the Plaintiff knew at that time that the Bar Association’s concern was with the contempt charge. Indeed, the evidence suggests that that was not the principal concern of the Bar Association. The s 68(2) notice suggested that the Bar Association’s principal concern at that time was a show cause event being the presentation of the Plaintiff’s debtor’s petition. Additionally, the s 660 notice dated 7 July 2014 principally sought matters to do with that petition, although in one question it also identified the claim of contempt as a matter in respect of which documents were to be produced.

3. [41]

   Secondly, on receipt of the s 660 notice the Plaintiff set out in greater detail matters concerned with the contempt charge that I have reproduced at [18] above.

4. [42]

   Senior Counsel for the Bar Association was critical of this account by the Plaintiff because the Plaintiff said that he received a call from Mr Husaini on 12 October 2011 with regard to Mr Li wanting to settle the claim against Keddies. That date certainly did not accord with what appeared in the Statement of Charge, nor in Mr Li’s affidavit. However, assuming the Plaintiff is telling the truth about the call from Mr Husaini, there is no necessary inconsistency about Mr Husaini having rung and said those matters to the Plaintiff despite not having had the authority from Mr Li to do so. The Plaintiff was not cross-examined on this application and I have no basis for inferring that what he said in that letter to the Bar Association was not true.

5. [43]

   Thirdly, and in any event, that summary of the contempt matter appears to have led the Bar Association to issue another s 660 notice asking the Plaintiff some very direct questions about any involvement he had in relation to the settlement with Mr Li. Those questions and answers appear at [19] above. The answers given by the Plaintiff are clear and unqualified. They were given in a statutory declaration. Again, there is nothing to justify an inference that the answers are untrue.

6. [44]

   Although the evidence given by Mr Li raises questions about the involvement of Helena Li and Mr Husaini, why they acted as they did and at whose behest (if anyone’s at all), the Plaintiff denied on oath that he communicated or instructed or procured anybody to communicate with the persons identified. He admitted to drawing the cheque for $80,000 in favour of Mr Li which he said was to complete the settlement of Mr Li’s matter against Keddies. At the time Mr Husaini and Mr Li say (and the Statement of Charge reflects this) that Mr Husaini was a solicitor at Margiotta’s acting for Mr Li. Additionally, the Plaintiff swore that at the time he drew the cheque he was aware of the undertaking and the injunction that have been referred to.

7. [45]

   It can reasonably be inferred that the matters about which the Bar Association asked questions in that s 660 notice were the matters that concerned it. It does not seem reasonable to assert that because certain matters remain unresolved it should be inferred the Plaintiff has some knowledge about those matters, particularly given his answers on oath to the s 660 notice.

8. [46]

   Fourthly, it is obvious sometimes that candour has not been demonstrated by an applicant in the Plaintiff’s position because it can reasonably be inferred that particular matters must be within the knowledge of the applicant and have not been explained. It is not apparent to me that the unresolved questions arising out of the Li settlement are within the Plaintiff’s knowledge. I accept that after cross-examination of the Plaintiff the position may change but I must determine the interim application, as the parties acknowledge, on the basis of the evidence before me and reasonable inferences that can be drawn from that evidence.

9. [47]

   A suggestion that the Plaintiff might be exercising, to a greater or lesser extent, a right of silence with the consequence that he has failed to discharge the onus, should be rejected. The material provided by the Plaintiff gives no suggestion of the adoption of any such right. The contempt matter was mentioned briefly in application of 24 June 2014 but when it became clear that it was the principal object of the Bar Association’s concern, the Plaintiff provided greater detail and subsequently frankly answered all the questions directed to him.

Balance of convenience and discretion

1. [48]

   One consideration in relation to the grant of an interlocutory mandatory injunction that might be thought relevant to the present application is the risk of injustice if it is granted rather than withheld. This was a matter discussed by Hoffmann J in Films Rover International Ltd v Cannon Films Sales Ltd [1986] 3 All ER 772 at 780-1 which was adopted by Gummow J in Business World Computers at 502-503. Hoffmann J said, for example:

2. [49]

   In the present case, the Bar Association identifies the risk of injustice as being the effect an interim order will have on the protection of the public where there is an unresolved issue concerning the Plaintiff’s fitness and propriety. Two things should be said about that. First, it is speculation at the present time that there is any unresolved matter. There is certainly a possibility that the position surrounding the payment to Mr Li may be better clarified at a final hearing but there is no certainty of that. Helena Li and Mr Husaini could doubtless shed more light on the matter but any such elucidation is not currently available.

3. [50]

   The fact that the Bar Association did not seek any further information from the Plaintiff that it thought might be relevant after he provided sworn answers to the questions in the second s 660 notice might tend to suggest that there is nothing further relevant that can be clarified, at least by the Plaintiff. In saying that, I do not cast any doubt on the principle that an applicant for a practising certificate must make a full and complete disclosure of relevant matters. However, as I have said, it is not apparent from what has been provided by the Plaintiff that there might be more to be provided by him.

4. [51]

   Secondly, the interim order is for the grant of a practising certificate for the present practice year, that is, to 30 June 2014. The Plaintiff will be required to apply again for a practising certificate for the following year. Moreover, if information comes to the Bar Association that constitutes a ground under s 60 of the Act, the Bar Association may suspend or cancel the practising certificate that is to be granted to the Plaintiff.

5. [52]

   This matter of the protection of the public is relevant to any discretion the Court has to refuse an interim order notwithstanding a finding of fitness and propriety on the present evidence. I noted earlier that an order might be refused if the contempt matter was to be determined within a short period of time. That is not the case. That is the fault of neither the Bar Association nor the Plaintiff.

6. [53]

   The Bar Association submitted that a delay until such determination was not unreasonable, particularly having regard to the delay in the Plaintiff commencing these proceedings. They could have been commenced by the end of September. That should be taken into account on any balance of convenience argument.

7. [54]

   The delay in commencing the proceedings seems to have come about as a result of the referral of the show cause investigation to the Legal Services Commissioner under s 68 without regard to the effect of s 48(13) of the Act – see annexures “B”, “C”, “D” and “E” to the affidavit of the Plaintiff sworn 5 December 2014. I do not consider that this delay is relevant to the question of whether an interim order should now be made. It was a relatively short period. In any event the determination of the show cause matter was unresolved in that period.

8. [55]

   It does seem to me that it would be unfair to the Plaintiff to withhold an order simply because matters surrounding the contempt are likely to be better clarified at the hearing of the contempt charge or the final hearing in the present matter in circumstances where (a) there is likely to be a delay for most or all of the present practising year in either matter being finalised, and (b) I cannot infer on the present evidence that the Plaintiff is likely to be able to add much if anything to what he has hitherto disclosed.

9. [56]

   Bearing in mind also the matters in [49] above, I do not consider that the matter of the protection of the public is significant in this case to result in a refusal of an order.

Conclusion

1. [57]

   I make the following order: