New South Wales Bar Association v Evatt [1968] HCA 20; (1968) 117 CLR 177 (3 May 1968)

HIGH COURT OF AUSTRALIA

NEW SOUTH WALES BAR ASSOCIATION v. EVATT [1968] HCA 20; (1968) 117 CLR 177

Legal Practitioners

High Court of Australia
Barwick C.J.(1), Kitto(1), Taylor(1), Menzies(1) and Owen(1) JJ.

CATCHWORDS

Legal Practitioners - Barristers - Professional misconduct - Barrister actively assisting in systematic charging of excessive fees by solicitors - Excessive fees charged for own services - Disbarment - Nature of power of Court to order - Protective not punitive.

HEARING

Sydney, 1968, March 18-20;
Melbourne, 1968, May 3. 3:5:1968
APPEAL AND CROSS-APPEAL from the Supreme Court of New South Wales.

DECISION

May 3.
THE COURT delivered the following written judgment:-
The Supreme Court of New South Wales has found that the respondent, a barrister in that

"he between 1st February 1963 and 30th August 1965
knowingly was a party to, actively assisted in, and facilitated,
a systematic course of action whereby two solicitors charged
extortionate and grossly excessive sums as costs to lay clients,
and further that acting as aforesaid he charged fees as counsel
which were excessive and which he knew would be paid in part
from the amounts so charged by the solicitors".

Upon this finding the Court ordered his suspension as a barrister for a period of two years. (at p178)

2. The New South Wales Bar Association, which made the complaint against the respondent, has appealed to this Court against the order for suspension, claiming that the misconduct found against the respondent rendered him unfit to remain upon the roll of barristers and required that he should have been disbarred. The respondent has cross-appealed against the finding of professional misconduct made against him. (at p179)

3. Before this Court there was no issue whether the two solicitors referred to, namely H. A. P. Veron and B. R. Miles, had engaged in a systematic course of action in charging extortionate and grossly excessive sums as costs to lay clients. The decisions of the Supreme Court reported in Re Veron; Ex parte Law Society of N.S.W. (1966) 84 WN (Pt 1) (NSW) 136 demonstrate that they despoiled their clients by taking both party and party costs, and, up to nearly one half of the verdicts, as so-called solicitor and client costs, in simple running-down, or industrial accident cases - which were settled on terms that there should be judgment for the plaintiff for an amount not disclosed, except to the Court, and costs. Two instances taken from the evidence before us on this appeal will suffice. In one case investigated in these proceedings, a judgment for 3,000 pounds and costs - assessed at 455 pounds - yielded the plaintiff, Godlevsky, after the repayment of 1,182 pounds received by way of worker's compensation, the sum of 850 pounds, while the solicitor, Miles, took 1,422 pounds, making in all 1,877 pounds from which to pay disbursements, including counsel's fees, and to satisfy his own dishonest demands. In another such case, which unfortunately is fairly representative, a verdict for 2,000 pounds and costs yielded the client, Whitton, 1,000 pounds after the repayment of 22 pounds worker's compensation, and yielded the solicitor, Veron, 977 pounds plus party and party costs of 305 pounds. (at p179)

4. We are here concerned with eighteen cases, nine in which the respondent was briefed by Veron, and nine when the respondent was briefed by Miles, over a period from March 1963 to June 1965. (at p179)

5. If, as the Supreme Court found, the respondent knowingly assisted in and facilitated the disgraceful conduct of the two solicitors, his professional misconduct is obvious. Furthermore, if the respondent, again as the Supreme Court found, knowingly shared in the proceeds of such extortionate charges made by his solicitors by charging and being paid excessive fees out of what the solicitors took from their clients, there is no need to restate what constitutes professional misconduct on the part of a barrister, to discover whether or not the respondent's conduct deserved that description. Only too clearly it did. The first and main problem is, therefore, to determine whether the findings which the Supreme Court made against the respondent were correct. (at p179)

6. The case that the respondent did assist the solicitors in their nefarious practices is based upon proof of a course of conduct showing that the respondent, rather than the solicitors, managed the litigation, and that in the course of doing so he did, by his own conduct, prefer the solicitors' greed to the clients' interests. In particular: (1) from time to time, he advised clients to accept settlements on the basis that the net sum to be received by the client out of the verdict would leave for the solicitor a sum, by way of so-called solicitor and client costs, which was of the order already indicated; and (2) from time to time, he took from plaintiffs authorities, to and for the solicitor concerned, to retain from the verdict the amount which the solicitor subsequently took as solicitor and client costs. The respondent did not deny, either, advising clients to settle on the footing that their verdicts would be reduced by large fees in addition to party and party costs, or, the taking of authorities from clients, to be given to the solicitors, covering the taking of such fees as solicitor and client costs. His justification was that he considered that the amount which a solicitor might charge his client was a matter for arrangement between the solicitor and the client, with which the respondent, as the barrister in the case, was in no way concerned. As a general proposition, it would be difficult to maintain this stand in circumstances such as those here disclosed, but it is not on that ground that the attempted justification fails. Here the respondent did, in the course of his practice, actively concern himself in the matter of costs between the solicitor and the client both by advising clients to settle on terms permitting the taking of extortionate charges by the solicitor, and in actually providing the solicitors with authorities prepared and witnessed in counsel's chambers which were intended to afford the solicitors some justification for doing what they intended to do in the way of deducting so-called solicitor and client costs. Two instances will serve to illustrate the part played by the respondent from time to time and, so that nothing can be said to turn upon any question of credibility, it is to be observed that what is now to be set out is based upon the respondent's own account of what took place. (at p180)

7. In the case of Juroczko v. Connell the respondent was briefed alone for the plaintiff by Miles. He had received from counsel for the defendant an offer of settlement, namely 1,500 pounds and costs. He ascertained from the solicitor's clerk that Miles wanted 750 pounds as solicitor and client costs. He ascertained from the plaintiff that she wanted 1,000 pounds clear to herself. He admits that he asked the plaintiff whether she would be prepared to take 850 pounds clear rather than 1,000 pounds clear, and concedes that some lower figure may earlier have been put to her - Mrs. Juroczko says the figures of 750 pounds, 800 pounsa and 850 pounds were all put to her by the respondent. The plaintiff, however, insisted upon 1,000 pounds clear, and an impasse between client and solicitor having been reached, in which the case would have to be fought and, seemingly, the respondent would have to return his brief, he requested the solicitor "to review the deductions from the verdict", and the solicitor, upon this request, abated his demand from 750 pounds to 500 pounds. Thereupon the respondent obtained from his client the following authority addressed to the solicitor:

"I hereby authorize and instruct you to settle my Supreme
Court action for 1,500 pounds.
I understand that from this amount there will be deducted
all outstanding hospital and medical expenses. I further
understand that all legal costs incurred on my behalf will not
be allowed against the defendant but nonetheless I agree to
pay these sums which are for counsels' fees, doctors' fees,
investigator's fees and other solicitor and client costs on the
condition that same do not exceed 500 pounds.
This settlement is made on the clear understanding that I
shall receive 1,000 pounds clear to myself after all deductions."

This authority the respondent put into the hands of Miles knowing that he would take 500 pounds from the verdict in addition to party and party costs. In the event Miles took that sum in addition to party and party costs of 294 pounds. (at p181)

8. In the case of Hume v. Middleton the respondent was briefed by Veron with Mr. C. R. Evatt Q.C. for the plaintiff. It was a claim for compensation by the widow and children of a man who had died as the result of an accident. When this case was settled the respondent knew, as he admitted, that the solicitor had in a number of previous cases deducted from verdicts for his clients substantial sums by way of solicitor and client costs. The action was begun, and in the course of the hearing the plaintiff, as the respondent advised, agreed to settle, and the respondent prepared the following document, addressed to his instructing solicitor, for his client's signature:

"I hereby authorize and instruct you to settle my Supreme
Court action pursuant to the Compensation to Relatives Act
for the sum of 14,500 pounds.
I understand that from this amount there will be deducted
all payments made to me or on my behalf or to my children
or on their behalf pursuant to the provisions of the Workers'
Compensation Act. I also realize that there will be deducted
all outstanding hospital and medical expenses in relation to
my late husband's treatment.
I further realize that all legal costs incurred on my behalf
will not be allowed against the defendant, but nonetheless I
agree to pay these sums which are for counsels' fees,
photographer's
fees, investigator's fees and other solicitor and client
costs on the condition that same do not exceed 1,100 pounds.
This settlement is made on the clear understanding that I
and my children will receive 8,250 pounds clear after all deductions."

This document went from the respondent's chambers to the instructing solicitor. The respondent says he knew that the settlement was on the basis that 1,100 pounds would be deducted by the solicitor from the plaintiff's verdict for solicitor and client costs. The verdict of 14,500 pounds, less worker's compensation payments of 5,028pounds 13s., was approved and apportioned by the court. Pursuant to that apportionment, 2,250 pounds was paid into court for the benefit of three infant children of the deceased. Mrs. Hume received 6,000 pounds approximately. This, therefore, is a case where the respondent arranged a settlement and armed his solicitor with an authority to do as he did, i.e., to take from his client's share of the verdict a sum of 1,100 pounds for solicitor and client costs in addition to party and party costs which were eventually taxed and allowed at 375pounds 11s. (at p182)

9. Looking at the whole of the litigation there can be no doubt that the Supreme Court correctly found that the respondent was knowingly a party to, actively assisted in, and facilitated, a course of action whereby Miles and Veron charged extortionate and grossly excessive sums to their clients. (at p182)

10. The Court, however, went further and found that the respondent himself "charged fees which we find were beyond recognized standards and were unjustified as professional fees and were . . . excessive in the circumstances". The examination, made before us, of the fees charged by the respondent satisfies us that this finding of the Supreme Court is unchallengeable. It is also plain that the respondent knew both that the fees which he charged would not be allowed in full upon taxation, or, upon the assessment of costs as between party and party, and, that to the extent to which they were not so allowed, they would be paid by the solicitors out of the sums deducted from the verdicts as so-called solicitor and client costs. This too the Supreme Court found. The respondent, therefore, not only assisted the solicitors in grave malpractice, but did so, knowing that their malpractice would provide the source of part of his own excessive fees. (at p182)

11. Counsel for the respondent did point to certain inaccuracies in the judgment of the Supreme Court, but such mistakes as there may be are only as to matters of detail which do not detract from the strength of that judgment. Counsel also contended that in making its findings the Supreme Court resolved conflicts between the respondent and such of his erstwhile clients who swore affidavits in the proceedings, and, did so adversely to the respondent, upon a basis which was not fair to the respondent, e.g., by imputing to the respondent denials which he did not make and using such denials as a measure of credibility. In particular it was contended that the Court incorrectly imputed to the respondent denials that he was aware of the deductions out of the verdicts intended to be made and in fact made by the solicitors, whereas it was pointed out that it was only in six cases out of eighteen that the respondent made such a denial. A close examination of the judgment, however, gives no ground for thinking that any such misapprehension really contributed to the Court's conclusions. The case made against the respondent did not depend upon disputed evidence although, it is true, there were differing accounts of the extent to which some clients were informed of the gross amounts of the consent judgments and of the solicitor's right to party and party costs. There was however an overwhelming case, including the respondent's own evidence, for finding as the Court did. No ground whatever has been shown for interfering with the finding of the Supreme Court that the respondent was guilty of professional misconduct and the cross appeal must be dismissed. (at p183)

12. The Supreme Court was, however, in error in not appreciating that its findings of misconduct demonstrated the unfitness of the respondent to be a barrister, and compelled the conclusion that he should be disbarred. The facts proved and found demonstrated unfitness to be a member of the Bar - not some isolated or passing departure from proper professional standards amounting to something less than proved unfitness. The Court did regard certain matters as extenuating circumstances but none of them really bears upon the vital issue, viz. whether the findings of misconduct, which were made, proved the unfitness of the respondent to be a barrister. The Supreme Court thought, moreover, that as the exercise of its disciplinary powers was, to some extent, a punishment for wrongdoing, mercy might be shown towards a young man who had not understood the error of his ways. The power of the Court to discipline a barrister is, however, entirely protective, and, notwithstanding that its exercise may involve a great deprivation to the person disciplined, there is no element of punishment involved. This has already been pointed out by this Court in Clyne v. N.S.W. Bar Association [1960] HCA 40; [1960] HCA 40; (1960) 104 CLR 186, at pp 201, 202 . The respondent's failure to understand the error of his ways of itself demonstrates his unfitness to belong to a profession where, in practice, the client must depend upon the standards as well as the skill of his professional adviser. (at p184)

13. Accordingly, the Supreme Court was, clearly, in error in deciding to suspend the respondent from practice rather than to disbar him, and it is the duty of this Court to correct that error. The appeal must therefore be allowed. (at p184)

ORDER

Appeal allowed with costs. Cross-appeal dismissed with costs. So much of the order of the Supreme Court as ordered that the respondent be suspended from practice set aside and in lieu thereof order that the respondent's name be removed from the roll of barristers of the Supreme Court of New South Wales.