Balzola v Council of the Law Society of New South Wales

On 20 July 2017 the Council of the Law Society of New South Wales resolved as follows:

By summons filed 27 July 2017 the plaintiff sought the following relief:

By a notice of motion filed the same day the plaintiff sought orders for a stay of the Suspension Decision and the Manager Decision as defined in the summons. The matter came before Lonergan J as a matter of urgency on 27 July 2017 where the following notation and orders were made by consent:

On 4 August 2017 the matter came before Fagan J because of a dispute between the parties about which of the parties should be required to file their evidence first. Justice Fagan made orders in that regard. In the course of so doing his Honour said this:

Unfortunately, no hearing date was obtained on 8 September 2017 or thereafter. Rather, the matter was adjourned by consent from time to time with some further directions being given about evidence. No explanation was offered for that when the present notice of motion came for hearing before me.

On 15 May 2018 leave was given by the Registrar to file the present notice of motion. That was a notice of motion filed 18 May 2018 by the plaintiff which sought the following declaration:

The issue on that notice of motion is a narrow one. It concerns the effect of the stay ordered by Lonergan J in relation to the suspension of the practising certificate pursuant to s 77 of the Legal Profession Uniform Law (NSW) No 16a (the Law).

Section 77 provides:

The plaintiff submitted that, pursuant to s 77(2) the suspension of the plaintiff’s practising certificate has expired because no further decision has been made under Pt 3.5 of the Law and 56 days has expired after the notice was given to the plaintiff of the suspension. The Law Society submitted that the effect of the stay was not only that the suspension of the practising certificate ceased to be in force during the period of the stay but also that the 56 day period referred to in sub-s (2)(b) did not run. It was common ground that no further decision has been made by the Law Society under Pt 3.5.

The scheme of Pt 3.5 of the Law provides for two circumstances where the Law Society can, relevantly, suspend a solicitor’s practising certificate. Under s 77 a practising certificate can be suspended immediately where the Law Society considers it is necessary in the public interest to do so. That suspension is a temporary one which lasts either for a period of 56 days or until the Law Society informs the practitioner of its decision under Pt 3.5, either to lift the suspension or to impose a suspension for a specified period of time under s 82, whichever is earlier.

The second source of power for the Law Society to suspend a practising certificate is under s 82 on a ground referred to in that section. Sections 82-84 provide:

It may be observed that there are different requirements for procedural fairness depending upon whether a suspension is imposed under s 77 or s 82. Under s 82, notice must be given under s 83, and the Law Society must consider any response made by the solicitor before imposing the suspension. On the other hand, where a suspension is imposed under s 77, the suspension may be imposed without notice being given, but if the solicitor makes written representations about the suspension the Law Society must consider those representations. Sections 77 and 78 when read together suggest that in some cases notice might be given by the Law Society before a suspension is imposed, but in others the representations will be made after the suspension is imposed, with the Law Society being able to revoke or vary or lift the suspension whether in response to those representations or not.

Section 100 gives a right of appeal concerning practising certificates. That section relevantly provides:

In my opinion, the plaintiff is correct in its submission that the stay granted does not have the effect of extending the 56 day period referred to in s 77(2). My reasons are as follows.

First, the terms of the stay referred only to the decision of the Council of the Law Society on 20 July 2017 to suspend the practising certificate pursuant to s 77. No stay was sought, and none was ordered, to prevent the Law Society considering whether to start, continue or complete any action under Pt 3.5 which might result in a further suspension or other decision under s 82.

Secondly, the power of suspension given under s 77 is distinct from a suspension which might be imposed under s 82. Section 77 gave a power which had to be exercised in accordance with s 77(1). There were two conditions. The first was that the Law Society had to be considering whether to start, continue or complete some action under Pt 3.5 in relation to a practising certificate. The second condition was that the Law Society had to consider it necessary in the public interest to vary or suspend the certificate immediately. The Law Society could do that without first giving notice of its intention to do so to the holder of the practising certificate. That was to be contrasted with a suspension under s 82 which could not be imposed until the notice had been given under s 83, and the Law Society had taken into account any response by the solicitor. The suspension under s 77 could only operate for a maximum of 56 days. The suspension under s 82 operates for the time specified in s 82(3), but may operate until the determination of a tribunal after a hearing on the merits of the complaint which led to the suspension.

Thirdly, nothing in Pt 3.5 suggests that any stay of a s 77 suspension would bring about an enlargement of the period in which a more final decision needs to be made under s 82. There is, for example, no power in the Act for an extension to be granted to the Law Society in respect of the periods specified in s 77(2). The only references to a stay in Pt 3.5 appear in ss 79(2) and 100(4). Section 79(2) provides:

Relevantly, s 100(4) says:

The Law Society submitted that the stay operated in the way set out in s 79(2), that is, that it resulted in the suspension not having effect. I accept that submission. It should be noted, however, that s 79(2) makes clear that it is only the stay, suspension or cancellation that does not have effect during the period of the stay; nothing else is said to be affected.

The Law Society then submitted that part of “the effect of the … suspension” referred to in s 100(4) was that s 77(2)(b) had no continuing operation. This was because s 77(2) provided a balance between any punitive effect of the suspension and the need for public protection. It was the time limit which provided that balance. Hence, the Law Society submitted, where the plaintiff was no longer suspended because of the stay, there was no balance to be struck.

Even if s 77(2) strikes a balance as submitted, nothing in the stay order or the Law provides any basis for the Law Society not proceeding to consider and take further action under Pt 3.5 if it was so minded. Whilst the need for the balance is removed by the stay, that cannot operate effectively to extend the statutory period for the interim arrangement to come to an end. It would be necessary for the plaintiff to seek an injunction to prevent the Law Society taking any steps towards a decision under s 82 if there were grounds to do so. The Law Society is still free to take action under s 82, but it may no longer suspend the plaintiff’s practising certificate whilst it is in the process of taking that course.

Section 100(4), like s 79(2), is directed to the refusal, variation, suspension or cancellation itself and not to any other matters including the obligation in s 77(1) that enables an immediate suspension to be imposed; namely, the consideration by the Law Society of whether to start, continue or complete action under Pt 3.5. The obligation on the Law Society to be “considering” is not an effect of the suspension; it was the pre-requisite to the suspension.

The Law Society pointed to what Barrett AJA said in Russo v Legal Services Commissioner [2016] NSWCA 95 when speaking of a stay. Justice Barrett said at [8]:

The Law Society submitted that the issue raised by Mr Ward’s report that led to the resolution could be determined in the present proceedings to avoid a multiplicity of proceedings. Whilst accepting that this is a desirable outcome, it does not assist in the determination of the issue.

In any event, if the Law Society proceeds to impose a second and more final suspension under s 82, it will be that suspension which will be the operative one. At that point there would be limited utility in challenging the temporary suspension imposed under s 77. If there was to be a challenge to the s 77 suspension it would need to be made and determined before the s 82 suspension came into effect. It seems likely that the issue on such a challenge would focus on whether the Law Society had any basis for its decision (perhaps to head off a s 82 suspension before it was imposed)(Berger v Council of the Law Society of NSW [2013] NSWSC 1080 at [18]), whether the public interest warranted an immediate suspension (Berger at [20]), and, perhaps, a challenge on the basis of the limited obligation on the part of the Law Society to accord procedural fairness in the light of the terms of s 77.

Since the 56 day period has expired without any action under s 82, the temporary suspension under s 77 has lapsed. The plaintiff is entitled to the declaration sought.

Senior counsel for the Law Society said that, in the light of the stay granted, the Law Society did nothing towards making any decision in relation to s 82. This was because the Law Society is a model litigant and did not want to do anything which might lead to an approach by the plaintiff to the Court asserting an abuse of process whilst the stay was in place. I accept that the Law Society acted in good faith in that regard.

It is nevertheless unfortunate that so much time has elapsed since the stay was put in place and the 56 day period expired. No explanation has been offered, as I have said, about why steps were not taken more promptly to have the proceedings brought on for hearing. Justice Fagan urged expedition. Notwithstanding his remarks on 4 August 2017 the plaintiff did not seek a hearing date when the proceedings were before the Registrar on 8 September. Rather, the proceedings were adjourned by consent a number of times with the result that the principal relief sought in the proceedings has become, as a result of the effluxion of time, largely otiose.

In those circumstances, there should be no order as to the costs of the motion to the intent that each party should pay his and its own costs.

Accordingly,