Dirua v Papua New Guinea Law Society [1996] PGNC 18; N1467 (19 July 1996)

Unreported National Court Decisions

N1467

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

OS 191 OF 1996
EMILY PANEYU DIRUA - PLAINTIFF
V
PAPUA NEW GUINEA LAW SOCIETY - DEFENDANT

Waigani

Sevua J
13 May 1996
19 July 1996

LAWYERS - Lawyers Act 1996 - Qualifications - Requirements for practising certificate - Requirement for report of an accountant - Requirement for insurance cover - Requirement for fee - Lawyers Act 1986, ss. 35, 42, 43 & Lawyers’ (Trust Account) Regulation 1990, s. 13.

LAWYERS - Lawyers Act 1996 - Application for practising certificate - Requirement for renewal - Whether the Council has discretionary power to waive any requirement for practising certificate - Refusal to renew certificate - Where application is refused - Application to Court - Power of Court discretionary - Lawyers Act 1986, ss. 44, 45.

Where the plaintiff was refused renewal of her practising certificate for failure to lodge report of accountant (or Trust Account Audit) for period 1 March, 1994 to 28 February, 1995.

Held

1. The Papua New Guinea Law Society has no power to waive any requirement for practising certificate under the Lawyers Act where an applicant has failed to comply with a requirement for practising certificate under the Act.

2. The refusal to renew the plaintiff’s practising certificate was within the discretionary power of the Council and in accordance with s. 44 (1) of the Lawyers Act.

3. In the circumstances of this case, the plaintiff’s application should be granted in the exercise of the Court’s discretion.

Counsel

J Aisa for Plaintiff/Applicant

G Garo for Defendant/Respondent

19 July 1996

SEVUA J: This is an application by the plaintiff seeking inter alia, an order that the Council of the PNG Law Society issue an unrestricted practising certificate to her for the year commencing 1st January and ending 31 December, 1996.

The plaintiff/applicant in this matter gained provisional admission as a lawyer on 18 November, 1988 followed by full admission on 6 September, 1990. Following her full admission, she was issued with a restricted practising certificate and practised as a lawyer with Simbu Provincial Government, Henao Lawyers and Namaliu Lawyers. In 1993, she went into partnership with Harold Ross Howard and the partnership practised under the firm name, ‘Howard & Dirua Lawyers’ which operated from the 1st floor, PNGBC, Waigani Drive. The partnership commenced on 16 June, 1993 and Harold Ross Howard was the managing partner holding 49 shares, while the plaintiff was the other partner, holding 51 shares. Under the deed of partnership which was signed by both partners, the managing partner was responsible for the day-to-day management of the firm. The plaintiff’s evidence is that, the managing partner was responsible for the management and finance of the firm which include signing of cheques and the care and custody of the firm’s accounting records. Despite the fact that the plaintiff was a partner, she did not have her signature on the firm’s accounts. The firm lasted for about 18 months, to December, 1994, when Harold Howard left the firm.

The partnership was formally dissolved on 18 February, 1995 when Mr Howard returned to Papua New Guinea in January that year to wind up the firm.

At about the same time that Mr Howard left the partnership, he had arranged with a Mr Flanagan Kevin, an accountant, to audit the books of the firm. The plaintiff was under the impression that Mr Flanagan Kevin was also an auditor and was able to prepare an audit for the firm’s trust account for the year ending 28 January, 1994. Since then the plaintiff has been advised by the Papua New Guinea Association of Accountants that Mr Flanagan Kevin’s Accountants Registration Certificate was not issued to him in 1995. Despite the plaintiff’s attempts to speak with Mr Flanagan Kevin, she has been unable to do so. Mr Flanagan Kevin could not be located and he could not be contacted and as a result, the plaintiff has not been successful in recovering the firm’s account books for the purpose of an audit.

On 26 March, 1996, the plaintiff wrote to the Accountants’ Registration Board and inquired about the location of Mr Flanagan Kevin. On 27 March, 1996, the plaintiff was advised by the Registrar of the Accountants’ Registration Board of Papua New Guinea that Mr Flanagan Kevin was no longer a registered public accountant as of 31 December, 1994. The Registrar further advised the plaintiff that Mr Flanagan Kevin had applied for renewal of registration in 1995, but his application had been rejected, and since then, the plaintiff has not been able to communicate with Mr Flanagan Kevin because his whereabouts are unknown to her.

It seems that both Mr Howard and the plaintiff have had unhappy differences in relation to their partnership and from the evidence of the plaintiff, there are certain matters which have resulted in dispute between the parties and which are the subject of litigation in proceedings WS 1021 of 1995. It is not necessary for the purpose of this application to dwelve in those issues. However, it is obvious from the plaintiff’s evidence that all the books of accounts for the firm, ‘Howard and Dirua Lawyers’ could not be located by the plaintiff and despite her numerous attempts to try to locate the former firm’s accountant, these attempts have proved fruitless and as a result, the plaintiff has not been able to recover the books of accounts for the purpose of compiling a trust account audit report.

Mr Howard did inform the plaintiff that Mr Flanagan Kevin could be contacted at Brown & Associates, however, when the plaintiff did contact that firm, she was advised that Mr Flanagan Kevin’s whereabouts was not known. A telephone number was supplied to the plaintiff by the Papua New Guinea Accountants Registration Board to contact Mr Flanagan Kevin, however, when the plaintiff called that number on numerous occasions, she kept on hearing a recorded message that the number had been changed. Up to the date this application was made, the plaintiff has been unable to recover the books of accounts of the firm for the purpose of compiling a trust account audit. It is quite interesting to note though that, the plaintiff was issued a practising certificate for the period 1 January, 1995 to 31 December, 1995, despite the fact that a trust account audit for the period 1 March, 1994 to 28 February, 1995 was not submitted to the defendant because of the problems the plaintiff had encountered, and which, I have already adverted to in this judgment.

At the beginning of this year, the plaintiff lodged an application with the defendant for the renewal of her practising certificate. She paid the required fees to the defendant and she also filed the necessary statutory declaration covering the period 1 January, 1994 to 28 February, 1995. She was verbally advised by telephone by a senior staff of the defendant that her application for a practising certificate has been refused by the Council of the defendant on the basis that there was no audit report for the firm covering the period 1 January, 1994 to 28 February, 1995. This refusal was confirmed by telephone on 4 April, 1996 by the President of the defendant, Mr Henao. Mr Henao then suggested to the plaintiff to make an application to this Court, since the defendant could not reverse its decision. The reason for the defendant’s refusal to renew the plaintiff’s practising certificate was that, she failed to submit an audit report of the firm’s trust account for the period 1 January, 1994 to 28 February, 1995. The plaintiff has therefore made this application to the Court to invoke its discretionary powers pursuant to s. 45 of the Lawyers’ Act, 1986. I consider it necessary to refer to certain provisions of the Lawyers’ Act, 1986 which set out the obligations of the lawyer/applicant and the Law Society.

Part IV of the Lawyers Act 1988 (the Act), deals with practising certificates. S. 35 (1) (b) provides that a person shall not practise as a lawyer unless he has signed the roll and is the holder of a current restricted or unrestricted practising certificate. Under s. 39, the Council may issue a certificate to an applicant who has signed the roll.

The certificate may either be a restricted certificate or an unrestricted certificate and must comply with the form in the rules and is valid for a period of one year. S. 42 makes it mandatory for the application to conform to the form in the rules and must be accompanied by any fee prescribed under the rules. Under s. 43, it is mandatory for the applicant to provide evidence of professional indemnity insurance. The Council may grant or refuse an application.

The Council’s decision under s. 44 (1) is open to review by the National Court at the suit of an applicant who has been refused a certificate pursuant to s. 45 of the Act. This is the basis for which the plaintiff, in the present case, has come to this Court. Subsection (1) provides that, an applicant who is refused an application for a practising certificate, may apply to the Court for:

(a) review of the decision by the Council to refuse his application.

Pursuant to ss. (2) the Court shall review the application to the Society and may (my underlining) either: (a) uphold the decision of the society to refuse the application; or, (b) order that the application be granted.

I consider that the form of s. 45 (2) that, “the Court...may...is couched in a language appropriate to the vesting of a discretionary power in the National Court”, and I hold that this Court has a discretion under s. 45 (2).

At this juncture, let me refer to the defendant’s counsel’s argument on the issue of review under s. 45. Mr Garo submitted that, “there is no provision in the Lawyers Act for this cause of action, ie, by way of originating summons and notice of motion. S. 45 deals with review of the council’s decisions. The orders sought in this action by originating summons are not orders that can be granted under s. 45. It is a provision for review only.” I had the impression that he was implying that the application before me should have proceeded by way of a review under Order 16 of the National Court Rules, however Mr Garo had not specifically say this. I consider that this argument is misconceived because the Act is silent as to the form and manner of review. To say that the applicant should have proceeded under Order 16 of the National Court Rules is outrageous because the Act does not say this. In any event, this issue has not been fully argued therefore it should be left to another tribunal at another time.

I note that in a similar case, (OS 285 of 1990, Nanei v PNG Law Society) before Hinchliffe J in 1991, the applicant had proceeded by way of originating summons and notice of motion like the present applicant. His Honour granted the order sought in that application. Mr Garo’s submission therefore in my view, has no merit.

Furthermore, s. 13 (3) of the Lawyers (Trust Account) Regulation 1990 makes it mandatory for an applicant for a practising certificate to provide a report of an accountant with his application to the Council. This is the provision which the plaintiff has not complied with and it is the same provision which the defendant had used to refuse the plaintiff a practising certificate.

In the light of these provisions, it is my view that the defendant acted properly and within it’s power under the Act. I must commend the defendant for the firm stance it took in this case because in my opinion, it has an obligation to ensure that the dignity and reputation of the legal profession in this country is maintained at all times. Whilst the defendant has a discretion to grant or refuse an application for a practising certificate pursuant to s. 44 (1) of the Act, I consider that it has no power of waiver. I hold that the Papua New Guinea Law Society has no power to waive any requirement for a practising certificate under the Lawyers Act where an applicant has failed to comply with a requirement for practising certificate under the Act. Unless and until the Act is amended, an applicant for a practising certificate who fails to meet a requirement for practising certificate would always be refused.

It is my view that, since the plaintiff had not submitted a report of an accountant, or what is commonly referred to as, a trust account audit report, the Council of the defendant’s refusal to renew the plaintiff’s practising certificate was within it’s discretionary power in accordance with s. 44 (1) of the Act. Whilst an applicant for a practising certificate has a right of review under s. 45 of the Act, I am of the view that each case must be decided on its own merits and factual situation by the Court.

However, whilst it is true that the plaintiff had failed to comply with the requirement to furnish a report of an accountant, pursuant to s. 13 (3) of the Lawyers (Trust Account) Regulation 1990, I consider that there was no intention on her part to ignore that requirement. I accept her evidence that the managing partner of her former firm had removed all the firm’s accounts and books of accounts following the dissolution of the firm.

I accept the plaintiff’s evidence that she had attempted to locate these records and the accountant whom she believed was responsible for preparing the audit. All her attempts have met with little success therefore in my view, it was a situation where the plaintiff really had no physical control over the former firm’s accounting records. Whilst it is quite strange to me that she was the major shareholder, but did not physically control the firm’s finance and accounting records, the reality of the situation is that she did not have control over these matters. Given that scenario, it is my view that the plaintiff could not be solely blamed for her predicaments. There are pending suits between her and her partner which involves some of these matters and I consider it quite unfair to blame her for what had transpired. It is therefore my judgment that, in the circumstances of this case, the Court’s discretion should be exercised in favour of the plaintiff.

Accordingly, upon review of the plaintiff’s application to the defendant, I consider that the plaintiff’s application should be granted in pursuance of s. 45 (2) (b) of the Act. I therefore order that the Council of the Papua New Guinea Law Society issue an Unrestricted Practising Certificate to the plaintiff for the year commencing 1 January, 1996. I make no order as to costs, so each party will meet its own costs. I further order that the time for settlement of this order be abridged to the date of this order.

Lawyer for Plaintiff: JF Aisa & Associates

Lawyer for Defendant: Henaos