NSW Budget 2020 & Contingent Liabilities: HCA decision in Council of the Law Society of New South Wales v Levitt suggests hidden potential liabilities, and strategies designed to limit the Dept Of Justice’s $ 492 Million in contingent liabilities


JUNE 23, 2019 

by Ganesh Sahathevan

 

The recent decision of the High Court Of Australia in Council of the Law Society of New South Wales v Levitt  may be relevant to the issue of contingent ,possibly hidden liabilities in the books of the various departments of the Government of NSW.

Counsel for the Council of the Law Society Ms CA Webster SC said in submissions:

 

……the Council, either the Law Society Council or the Bar Council, or the Legal Services Commissioner, having adopted the summary procedure, it would only be if someone were to seek to take a matter – no, I withdraw that. There will not have been any possible consideration of the conduct amounting to professional misconduct if anyone is proposing to deal with the matter under section 540, so it must be a subset. But there are, in addition to the matters enumerated, as we say, subject to some very slight winnowing of the numbers over time since our reply was filed, some matters that had been put on hold pending the outcome of these proceedings.

We understand that there are……..matters on hold in the order of 66 matters but, as your Honour Justice Edelman said, that is only going to be the potential effect – a subset of all of the matters that we identify as potentially affected, because it is the way in which the 2004 Act was structured and we do not, and cannot, say that, subject to the way some matters have been applied in the Supreme Court, that the precise language has not been replicated in the 2015 Legal Profession Uniform Law.

 

The response to her submission was as follows:

GAGELER J: ( Counsel for the  respondent Brett Walker SC) , we do not need to hear from you, thank you.

We are not persuaded that the question of statutory construction sought to be agitated in this Court is of sufficient general importance to warrant the attention of the Court. Special leave to appeal is refused with costs..

The hearing commenced at 10:34 AM and was concluded at 10:47 AM 

The above suggests that the Council Of The Law Society ty, acting on behalf of the Legal Services Commissioner (a statutory body under the purview of the AG NSW) was prepared to  try its luck with an appeal for much was at stake ie some 66 other matters, the financial consequences of which remain unknown.

The Council and the Legal Services Commissioner comprise some of the most senior lawyers in this country;it is therefore hard to comprehend that they could not have known that their case was weak( in this case, very weak).

Legal principal and practice aside, the above does look like a case of a government funded entity taking on greater risks of loss so as to conceal liabilities and/or losses that have been kept off the books.

At $ 492 Million the Department of Justice has the second highest level of contingent liabilities.. It is only natural for departmental heads to want to limit any growth in that  figure,especially when one’s department has the second highest level of contingent liability.

Ii is therefore in the best interest of all taxpayers that the AG NSW and the departments under his purview be subject to a complete audit by the Audit Office NSW, to determine the extent of contingent and possibly hidden losses.

 

 

END

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