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Applicant Seeks Stay of Order Refusing Legal Practice

Zita v Victorian Legal Services Board (Legal Practice) [2022] VCAT 174 (15 February 2022)

The respondent made a decision to refuse to issue a practising certificate, and prohibit the applicant from applying for a practising certificate for four years, after serious findings were made about the applicant’s conduct by the judge of the Supreme Court of Victoria in connection with class action proceedings.  Mr Zita sought a stay of the decision deposing that his ‘income from Portfolio Law makes a substantial financial contribution to his family.  The Court, in deciding whether or not the stay should be granted, relied upon relevant jurisprudence. 

Facts:

Mr Anthony Zita, a solicitor, has been a practising lawyer for some 35 years and, for most of that time, has operated a general suburban legal practice in Preston under the name Portfolio Law.  In 2014, Portfolio Law became the solicitor on record for a class action brought by a group of debenture holders (of which a Mr Laurence Bolitho was the lead plaintiff) against Banksia Securities Ltd (BSL), taking over from Elliott Legal, a firm which was owned and controlled by Mr Mark Elliott.  Ferguson JA had found that the firm had a conflict of interest in circumstances where Mr Elliott was also the joint owner of Australian Funding Partners Pty Ltd (AFP), the funder of the class action.  Mr Norman O’Bryan (then a QC) was restrained from continuing to act in the class action because his wife was the other joint owner of AFP.

In 2017, the class action was settled (with court approval) for $64 million and AFP then applied to the court to approve its funding commission of $12.8 million (plus GST), as well as legal costs and disbursements of $4.75 million (plus GST), to be paid from the settlement.  The Court of Appeal remitted consideration of that application to the Supreme Court of Victoria, where it came on before John Dixon J. Mr Peter Jopling AM, QC acted as contradictor to the remitter application.  When Mr Zita applied to the Board for renewal of his practising certificate for the 2019/2020 practising year, he disclosed that there is a matter current before the Supreme Court that is ongoing where I act for the plaintiff in a proceeding which has settled.  The contradictor set out allegations of dishonesty, misleading conduct and unsatisfactory professional conduct and misconduct.

The contradictor’s case was that AFP was disentitled from recovering any amount (including in respect of legal costs) by reason of dishonesty and misconduct on the part of AFP, Mr O’Bryan, Mr Symons, Mr Zita and his firm, Portfolio Law.  Mr Zita made further applications for renewal of his practising certificate on 30 June 2020.  Since no decision in relation to his application(s) to renew his practising certificate was (or were) received within 90 days of his application(s), Mr Zita held an accrued entitlement, under sections 100(1) and 464(3) of the Uniform Law, to seek review of a ‘constructive decision’ taken to have been made refusing to renew his practising certificate.  John Dixon J dealt with the application and the allegations raised by the contradictor.   His Honour dismissed AFP’s application.

Mr Zita sought a stay under section 50(3) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act) of a decision made by a delegate of the Victorian Legal Services Board (Board) on 28 January 2022 refusing to renew his practising certificate and prohibiting him from applying for any practising certificate until 1 January 2026 (Decision).  Once the Decision is operative, Mr Zita will become a ‘disqualified person’ prohibited from providing legal services and, as the sole principal and owner of two incorporated legal practices, would be required to resign and appoint an alternative principal and transfer the shares in those practices to someone who is not disqualified.  The Board does not consent to the stay, although it did consent to an interim stay until seven days after the provision of these Reasons.  

Issue:

Whether or not stay should be granted. 

Applicable law:

Victorian Civil and Administrative Tribunal Act 1998 (Vic), s 50(3) - provides that the Tribunal may make an order staying the operation of a decision that is the subject of a proceeding for review. 

Bolitho v Banksia Securities Limited (No 4) [2014] VSC 582  - where Ferguson JA had found that the firm had a conflict of interest in circumstances where Mr Elliott was also the joint owner of Australian Funding Partners Pty Ltd (AFP), the founder of the class action.

Bell and Eager v Liquor Licensing Victoria & Swapnil [2000] VCAT 214 - established the considerations relating to the grant of a stay.

Knight v Victorian Legal Services Board [2022] VCAT 87  - accepted the considerations in the grant of stay and applied by the Tribunal in the context of applications to stay decisions refusing to renew a practising certificate.

Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue [2011] HCA 41 - settled that there is no jurisdictional impediment to a court of a state undertaking merits review. 

Arulanantham v Medical Board of Australia [2012] VCAT 124 - where it was observed that the most important consideration is a concern to grant stays where to fail to do so would render nugatory the right of review because irreparable damage has been done by the operation of the first instance decision before the review can be completed and that damage cannot be undone even if the applicant succeeds.

Piesse v Medical Board of Australia [2017] VCAT 1615 - referenced by the Tribunal which went on to accept that: ‘the Uniform Law is similarly protective in its purpose and the same principles apply to cases involving legal practitioners, where the decision maker is concerned that permitting the practitioner to remain in practice, even in the short term, poses a risk of harm to the public’, with harm to be considered in the context of ‘clients, ... employees of the law practice, ... other practitioners, or ... the administration of justice more broadly. 

Shvetsova v Medical Board of Australia (Stay) [2018] VCAT 867 - where there was evidence which suggested Mr Knight had a practice of ‘briefing out’, and the finding that he was not a ‘one-man solicitor advocate practice’, such that he ‘need not lose his practice’. 

KVL v Secretary to the Department of Justice [2013] VCAT 100 - provides that the Tribunal has the power to make orders subject to conditions, including (but not limited to) a condition that a person give an undertaking to the Tribunal. 

Analysis:

Mr Zita deposes that his ‘income from Portfolio Law makes a substantial financial contribution to [his] family’s day to day living expenses and the overall family finances and pays [their] mortgage’.  His family includes himself, his wife, three children who are ‘substantially financially dependent’ on him and his wife, as well as two elderly parents who he and his sister look after.  Mr Warne contended that the failure to grant a stay would cause ‘irreparable damage’ to Mr Zita because, once the Final Decision becomes operative, as a ‘disqualified person’, he would be unable to engage in legal practice; be a director or officer of Portfolio Law; share in the profits of Portfolio Law; or consult or do anything as a ‘lay associate’ of Portfolio Law, even if a new director was installed (or a manager appointed by the Board).

Portfolio Law handles substantial aspects of its litigation matters (rather than briefing it all out), including providing advice, drafting routine pleadings, engaging with and obtaining witness statements from third parties, preparing discovery, conducting informal negotiations and settlement discussions, and appearing at (some) directions hearings.  Portfolio Law has a considerable client base and, although the practice has a number of employees, Mr Zita’s evidence suggests that a large component of the practice depends on his long standing relationships with those clients.  The failure to grant a stay would render any review proceeding nugatory and/or involve irremediable prejudice to Mr Zita, a consideration that also weighs strongly in favour of the grant of a stay.

Conclusion:

The Tribunal reserves its decision in relation to the application for a stay of the decision of the respondent made on 28 January 2022 (Decision) until the hearing and determination of this proceeding (Stay Application).  The Tribunal stays the Decision until:

(a) 5:00pm on the day which is seven days after the Tribunal delivers its orders and reasons in relation to the Stay Application; or

(b) further order.

Upon the applicant providing a written undertaking to the Tribunal and the respondent substantially in the form annexed to the Reasons, the Tribunal stays the Decision until the earlier of:

(a) any order being made by the Supreme Court of Victoria removing the applicant from the roll of practitioners or to suspend or otherwise prevent the applicant from practising;

(b) the hearing and determination of this proceeding; or

(c) further order.

The Tribunal has scheduled an administrative mention on 1 March 2022.  The parties must write to the Tribunal (preferably jointly) as to the further conduct of this proceeding, including whether the proceeding should be stayed pending any decision in the show cause proceedings in the Supreme Court of Victoria relating to the applicant.

 

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