Council of the Law Society of New South Wales v Fitzsimons (No 2)
[2013] NSWADT 126
•05 June 2013
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Council of the Law Society of New South Wales v Fitzsimons (No 2) [2013] NSWADT 126 Hearing dates: 23 April 2012, 24 July 2012 & 4 July 2012 Decision date: 05 June 2013 Jurisdiction: Legal Services Division Before: M Riordan, Judicial Member
J Pheils, Judicial Member
Professor R Fitzgerald, Non-Judicial MemberDecision: 1.The Respondent's name be removed from the Roll of Local Lawyers; and
2.The Respondent to pay the Applicant's costs of and incidental to this Application, as agreed or assessed
Catchwords: Solicitor Disciplinary Application - Professional Misconduct - Misappropriation - Misleading/attempting to Mislead - making false Statutory Declaration - Failure to report an act of dishonesty or irregularities in relation to trust monies to the Law Society - Breach of fiduciary duty - Borrowing from clients - Consequential Orders - Costs Legislation Cited: Legal Profession Act, 2004 Cases Cited: Council of the Law Society of NSW v Fitzsimons [2012] NSWADT 242;
Law Society of New South Wales v O'Donnell [2010] NSWADT 130;
Law Society of New South Wales v Bannister [(1983) 4 LPDR 24 at 28];
Law Society of New South Wales v Walsh [unreported decision in December 1997];
Harvey v The Law Society of New South Wales [(1975) 49 ALJR 362 at 364];
Ex Parte Macaulay [(1930) 30 SR NSW) 193, at 193-4];
Dupal v Law Society of New South Wales (unreported, 26 April 1990);
Law Society of New South Wales v Jones (unreported, 27 July 1978);
Council of the Law Society of New South Wales v Pizzinga [2012] NSWADT 211;
Ziems v Prothonotary of the Supreme Court of NSW [1957] HCA 46; (1957) 97 CLR 279;
A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1; (2004) 216 CLR at [15];
Stanoevski v The Council of the Law Society of New South Wales [BC200803419];
Prothonotary of the Supreme Court of New South Wales v Livanes [2012] NSWCA 325 ("Livanes") at [34 to 36];
Ex parte Tzinolis; Re The Medical Practitioners Act (1966) 67 SR (NSW) 448 at (475);
Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630 (at 637);
Dawson v Law Society of New South Wales (New South Wales Court of Appeal, unreported, 21 December 1989, at 6-7);
Prothonotary v Fitzsimons [2012] NSWSC 260;
Council of the Law Society of NSW v Christopher Fitzsimons [2012] NSWADT 285;
Council of the Law Society of NSW v Leslie [2013] NSWADT 81;
Council of the Law Society of NSW and Lundy [2013] NSWADT 105 ;
Legal Services Commissioner v Tsalidis & Council of the Law Society of NSW v Tsalidis [2013] NSWADT 101;
Legal Services Commissioner v Angelovski [2013] NSWADT 93;
Council of Law Society of NSW v Butt [2012] NSWADT 47;
Law Society of NSW v Lo [2012] NSWADT 21; Council of Law Society of NSW v Kim [2012] NSWADT 45;
Council of the Bar Association of NSW v Asuzu (No. 2) [2012] NSWADT 104;
Council of the Law Society of NSW v Pu [2012] NSWADT 168;
Council of the Law Society of NSW v Galloway [2012] NSWADT 176;
Council of the Law Society of NSW v Ekes [2012] NSWADT 266;
Council of the Law Society of NSW v Aouad [2012] NSWADT 267;
Council of the Law Society of NSW v Xenos [2012] NSWADT 283;
Mitry v Council of the NSW Bar Association 2001 NSWCA 273;
A Solicitor v Council of the NSW Law Society [2004] HCA 1;
Council of the Law Society of NSW v Nicholls [2012] NSWADT 22;
Law Society of New South Wales v Davidson [2007] NSWADT 264;
Re Robb & Anor (1996) 134 FLR 294;
Council of the Law Society of New South Wales v Clapin [2011] NSWADT 83 (at [206 - 208]);
Law Society of New South Wales v McCarthy [2003] NSWADT 198;
Walter v Council of Queensland Law Society Inc. (1988) 62 ALJR 153 at 157;
Smith v New South Wales Bar Association (1992) 176 CLR 256 at 270);
Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 441-442;
Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 251;
Council of the Law Society if NSW v Doherty [2010] NSWCA 177;Category: Consequential orders Parties: Council of the Law Society of New South Wales - Applicant Representation: Council of the Law Society of NSW (Applicant)
Lyons and Lyons (Respondent)
File Number(s): 092018
reasons for decision
Background
This decision relates to the orders to be made by way of penalty and to the question of costs, following findings of professional misconduct and unsatisfactory conduct that we have made against the Respondent solicitor, Maria Angela Fitzsimons, in disciplinary proceedings instituted against her by the Council of the Law Society of New South Wales ('the Law Society').
These proceedings stemmed from an Application filed by the Law Society on 15 July 2009 under the Legal Profession Act 2004 ("the LPA 2004") alleging that the Respondent, Maria Angela Fitzsimons ("the Solicitor") was guilty of professional misconduct on 7 grounds. However, it proceeded on only 3 of those grounds, namely that she misappropriated trust monies; she misled or attempted to mislead the Law Society; and she made a false Statutory Declaration.
We have determined following hearings that were conducted on 23 April 2012, 24 July 2012 and 4 July 2012, that the Solicitor was guilty of professional misconduct in relation to all three (3) of these grounds. Our findings to this effect are set out in our principal decision - Council of the Law Society of NSW v Fitzsimons [2012] NSWADT 242, which was published on 23 November 2012.
When the Tribunal has made one or more findings of professional misconduct and/or unsatisfactory professional conduct, the provision governing consequential orders by way of penalty is section 562 of the Legal Profession Act 2004 ('the Act').
The matter was listed for Directions on 6 December 2012, at which the Solicitor appeared for and with Mr Walsh and Ms Groenewegen appeared for the Law Society. Mr Walsh sought leave to file and serve a medical report from Dr Nielssen (the Solicitor's treating psychiatrist) on the basis that it was relevant to the issues to be considered in relation to the final orders. Leave was so granted. However, both legal representatives requested the Tribunal to determine the issue of consequential orders on the basis of written submissions without conducting a further oral hearing. The Tribunal set a Timetable, which required the Solicitor to file and serve any further evidence by 21 January 2013 and the Law Society to file and serve any evidence in reply by 11 February 2013. The parties were directed to file and serve their written submissions by 25 February 2013 and the Tribunal's determination regarding consequential orders was reserved.
The Solicitor filed a medical report from Dr Nielssen dated 8 January 2013, but she did not file any written submissions in accordance with the Timetable. Rather, on 7 January 2013 the Solicitor notified the Tribunal that she had filed a Notice of Intention to Appeal against its Principal Decision, which indicated that she intended to commence appeal proceedings on or before 23 February 2013. On 22 February 2013 her new Solicitor, Mr Lyons, served a copy of the Notice of Appeal on the Tribunal.
The Law Society elected not to file any evidence in reply to Dr Nielssen's report and it filed its written submissions on 14 February 2013. The Solicitor filed her written Submissions on 8 April 2013 together with fresh evidence comprised as follows:
(1) Medical reports of Dr Peter Lam dated 1 March 2003 and 7 November 2012;
(2) Medical reports of Dr Stuart Phillips dated 14 April 2009, 10 December 2009, 20 June 2010 and 11 April 2012;
(3) Medical reports of Dr Olaf Nielssen dated 26 March 2012, 7 May 2012 and 8 January 2013;
(4) Medical report of Dr Ung Eng Khean dated 28 May 2008 (relating to Louisa Fitzsimons);
(5) Medical reports of Dr Clive Allcock dated 19 March 2007 and 27 May 2008;
(6) Testimonial of Patsy Rowe;
(7) Affidavit of John Denis Maguire (Solicitor);
(8) Testimonial of James Lyons (Solicitor) re: Judge Syme's District Court Trial of Mr Fitzsimons 17 December 2010);
(9) Testimonial of Dominique Eva Gribusa (Barrister) re: Judge Syme's District Court Trial of Mr Fitzsimons 17 December 2010); and
(10) Testimonial of Louisa Danielle Roberts re: Judge Syme's District Court Trial of Mr Fitzsimons 17 December 2010).
As this evidence exceeded the single medical report of Dr Nielssen that was foreshadowed by Mr Walsh and as the Solicitor's Appeal against the Tribunal's Principal Decision had not yet been determined by the Court of Appeal and the Law Society had advised the Tribunal that it had filed a Notice of Motion seeking to have the Appeal struck out as being incompetent, the Tribunal listed the matter for further directions on 13 May 2013.
At the Directions hearing on 13 May 2013, Ms Groenewegen appeared for the Law Society and Mr Lyons appeared for the Solicitor. Ms Groenewegen stated that the Court of Appeal had dismissed the Law Society's Notice of Motion and that the Solicitor's appeal against the principal decision remained active and pending. Mr Lyons informed the Tribunal that the Solicitor wished to have the issue of consequential orders determined based on the written submissions and evidence that had been filed and that her Appeal 'may not proceed'.
The Tribunal noted the unusual scenario, which appeared to be unprecedented, of a party litigating an Appeal against a principal decision before the determination of consequential orders had been made while pressing for the determination of consequential orders before the Appeal against the principal decision has been determined by the Court of Appeal. We noted that this complicated the determination of the issue of the consequential orders.
Ms Groenewegen stated that the Law Society did not wish to respond to the Solicitor's submissions. In order to determine whether any further oral hearing was required to test the Solicitor's fresh evidence, the Tribunal directed the parties to discuss what fresh evidence would be admitted by consent and to advise the Registry of any agreement reached by close of business on 17 May 2013. They were also directed to file and serve a list of Authorities that they wished the Tribunal to consider in the event that the matter was to proceed to determination on the papers.
On 15 May 2013, Ms Groenewegen advised the Tribunal in writing that the parties had agreed that the medical reports of Dr Khean and Dr Allcock, as well as the Testimonials of James Lyons, Dominique Gribusa and Louisa Roberts were to be excluded and that the Law Society did not take any objection to the remaining documents being admitted into evidence in the Solicitor's case in relation to the determination of consequential orders. Accordingly, the Tribunal admits into evidence the following further evidence in the Solicitor's case and reads it accordingly:
(1) Medical reports of Dr Stuart Phillips dated 14 April 2009, 10 December 2009, 20 June 2010 and 11 April 2012;
(2) Medical reports of Dr Olaf Nielssen dated 26 March 2012, 7 May 2012 and 8 January 2013;
(3) Testimonial of Patsy Rowe;
(4) Affidavit of John Denis Maguire (Solicitor);
(5) Testimonial of Jeremy Rhodes (Solicitor);
The present decision on penalties and costs should be read in conjunction with our earlier decision. We will not repeat what we said in that decision except to the extent necessary to explain the conclusions that we now reach.
Our findings of professional misconduct
We have previously determined that the Solicitor engaged in professional misconduct as she:
(1) Misappropriating the sum of $603,097.47 (on 2 December 2005);
(2) Misled or attempted to mislead the Law Society, in that she:
(a) intended to mislead the Law Society in relation to her husband's whereabouts in November 2005; and
(b) subsequently misled the Law Society by making conflicting statements between December 2005 and 14 September 2007; and
(3) Swore a false Statutory Declaration on 19 September 2007.
Further Evidence
Dr Peter Lam, orthopaedic and ankle surgeon, issued reports dated 1 March 2003 and 7 November 2012. The former comprises an operation report concerning repair of a left posterior tibial tendon rupture and the latter relates to the proposed removal of a lesion on the left foot and correction of a hammer toe condition affecting her right second toe. These do not appear to be relevant to our current determination.
Dr Stuart Phillips, general practitioner, has provided reports that 4 April 2009, 10 December 2009 and 11 April 2012. The first comprises a referral to a psychologist, in which he described the Solicitor as being 'a Solicitor and wife of a Solicitor who has Bipolar Affective Disorder and Alcohol and Gambling addictions and who had previously been disbarred because he defrauded his trust account in his law practice'. He reported a history that the Solicitor 'consequently was taken down with him (her husband) although she had no idea that anything was wrong' and that she had 'suffered a great deal of loss as a result of this and continues to be pursued by the Law Society and the Federal Police.' He diagnosed Post Traumatic Stress Disorder ('PTSD') and a major depressive disorder with anxiety and noted that 'she carries a great deal of anger' towards her husband. However, he did not treat the Solicitor at the time of the events that were the subject of the grounds of the Application.
Dr Phillips' second report is addressed to "The Presiding Judge, District Court of New South Wales". This mostly reported on an incident that occurred at Sydney Airport on 13 December 2008, when the Solicitor's husband was arrested by State and Federal Police when they were about to board a flight to Singapore. He reported that the Solicitor felt 'considerably emotionally overwhelmed' following this incident and that he prescribed medication including antidepressants and medication for panic attacks and he referred her to a psychologist for counselling. He described slow progress in terms of her mental health since then and noted that the Solicitor reported suffering panic attacks at Airports, which is exacerbated by seeing uniformed Police Officers. He felt that this was consistent with a diagnosis of PTSD. He also diagnosed high levels of stress, anxiety and depression with hyper vigilance, all of which were compounded by the diagnosis of breast cancer in June 2009, for which she underwent 2 surgical procedures in November 2009. We note that the matters described in this report post-date the events that were the subject of the grounds of the Application.
In his report dated 20 June 2010, Dr Phillips opined that he had treated the Solicitor since 9 February 2009 and that she had been suffering from PTSD 'since learning that her husband had defrauded the trust account of their law firm' and that this had been compounded by a series of problems in her professional life and private life 'almost entirely due to her husband's actions'. He stated:
Mara has consequently had some impairment of judgment and decision making since the onset of her illness and during the whole course of the year of 2008 she was not in a position to make important decisions both personally, financially or professionally.
In light of this I am of the opinion that it was against her better judgment that she signed a Deed of Release and Consent Order exonerating the bank from any liabilities to her. This lack of judgment and decision making was entirely in keeping with her ability at that time to make sound decisions due to the stresses that she had been subjected to and the nature of PTSD and the consequent impulses to avoid all confrontation and any complication in her life.
In his report dated 11 April 2013, Dr Phillips further opined that the Solicitor's mental health:
'...has continued to be a problem for her and this is largely due to a vexatious action on part of the Law Society of NSW to have her struck off the register. Maria is fighting this action but on top of her problems with breast cancer, her husband being jailed for fraud and having to deal with his mental health problems including Bipolar Affective Disorder and having to take a case against her bank for wrongful action which is still pending, it is somewhat of a miracle that Maria has managed to remain of sound mind... Maria's present mental health problems are dominated by a high anxiety state and this will not be easily alleviated until her two court cases are resolved one way or the other...
We note that the Solicitor did not tender any of Dr Phillips' reports prior to the principal decision being made and that she did not defend the Application on the basis that she suffered impaired judgment and/or capacity to make decisions at the time that the events that are the subject of the grounds of the Application occurred or that subsequently she was not in a position to make important decisions both personally, financially or professionally', as now opined by Dr Phillips (in relation to the whole of 2008). In any event, his opinion that the proceedings against the Solicitor are 'vexatious' conflicts with the tribunal's previous findings.
Dr Nielssen, treating psychiatrist, issued reports dated 26 March 2012, 7 May 2012 and 8 January 2013. However, the Solicitor did not seek to tender these reports into evidence during the hearing of the matter. On 26 March 2012 he reported that he initially treated the Solicitor on 10 June 2012, although we believe this to be a typographical error and that the date should read '2011', and stated:
She described a syndrome of depression that stemmed from the effect of her husband's bipolar mood disorder, alcohol abuse and pathological gambling, intractable legal proceedings and surgery for breast cancer. She reported the full syndrome of major depression, with loss of pleasure from life, fatigue, insomnia, withdrawal from company, weight loss, anxiety and loss of confidence in the future...
He also reported that the Solicitor responded well to medication, but that continued problems with her husband and ongoing litigation prevented her from making a complete recovery.
On 7 May 2012 Dr Nielssen reported that the Solicitor had suffered a relapse of her depressive illness:
'... in part triggered by the effects of continuing legal proceedings and the hearing of her case in the Administrative Decisions Tribunal and reviewing documents that reminded her of her many losses, and the cessation of antidepressant medication some months ago."
However, Dr Nielssen's most-recent report included a far more extensive prior history of psychological issues, including symptoms of depression during 2004 that coincided with the Solicitor's sister being diagnosed with leukaemia and after her sister's death in early 2005. He noted that the Solicitor's distress was increased by her concern that her husband, who was the executor of her sister's will, had taken money from her estate to pay his gambling debts. He reported:
She reported seeing a psychiatrist in Southport, Dr William Rowe, in December 2005, because she was concerned that her husband would commit suicide. She said that she saw Dr Rowe again in June or July of 2006, which was again mainly about her husband's condition.... She said that it (sic) was not diagnosed with depression and commenced on treatment until she consulted with another general practitioner in Cairns, Dr Stuart Phillips, in early 2009.
... Based on the history elicited from Mrs Fitzsimons, the information in the report of Dr Phillips and the observations made over a series of interview (sic), I believe Ms Fitzsimons has a major depressive illness that is in partial remission... Factors contributing to the development of that illness include the circumstances of her marriage, her sister's terminal illness, her own health problems and her involvement in intractable legal proceedings... Given the chronic nature of severe depressive illnesses, and the presence of factors contributing to her developing depression, I believe that Ms Fitzsimons was affected by symptoms of depression in December 2005, and that the presence of symptoms of major depressive illness affected her decision making at around that time.
Patsy Rowe provided a Testimonial in support of the Solicitor dated 17 April 2012. We note that this pre-dates the principal decision in this matter and that she expressed views that are contrary to our findings. In particular, she stated:
...I know that these legal matters have gone on now for many years and that am (sic) aware that Maria is before the Tribunal in relation to complaints that she borrowed from a client and she misappropriated trust monies. I do not believe this for one moment. This is totally out of character and such wrongdoing is not only foreign to her, but goes against all the principles she has lived and worked by all her life.
If Maria ever resumes practice (and I sincerely hope she does) I would be back as a client in a matter of hours. Furthermore, I'd be delighted to recommend her to any friends or colleagues who were in need of a first class solicitor.
No subsequent Testimonial from Ms Rowe has been tendered by the Solicitor and there is no evidence before us that Ms Rowe has been informed of the principal decision and/or whether she maintains her support for the Solicitor in the light of those findings.
The Solicitor also relies upon an Affidavit of John Denis Maguire, Solicitor, sworn on 23 April 2012. He deposed that he had known the Solicitor for approximately 40 years and stated that he had found her to be honest and reliable in both her private life and professionally and that he regarded her as a competent, effective and diligent Solicitor and a person of integrity. He stated:
...I have no doubt, if afforded the opportunity, will replicate those skills and qualities in the future... It is my belief that, to the extent that, in the past, Mrs Fitzsimons may have been overborne or manipulated by Mr Fitzsimons, the prospect of that reoccurring in the future is non-existent... In the event of these proceedings resulting in Mrs Fitzsimons being free to return to practice, I will be pleased to welcome and accept her as a respected colleague.
Mr Maguire's Testimonial pre-dates the principal decision and we note that while he stated that he had read the Application and certain other documents, including the Affidavit of Raymond Collins and certain correspondence between Mr Walsh and the Law Society during 2009 and 2012, there is no evidence before us that he has read the principal decision and/or whether he maintains his views and support for the Solicitor in the light of the findings that have been made.
Submissions
Law Society's Submissions
The Law Society stated that the role of the Tribunal is protective, educative and non-punitive. It relied upon the decision in Law Society of New South Wales v O'Donnell [2010] NSWADT 130 ('O'Donnell'), in which the Tribunal discussed the relevant authorities as follows:
21 In Law Society of New South Wales v Bannister [(1983) 4 LPDR 24 at 28], Sheller JA stated:
"When the jurisdiction of the Tribunal is invoked under Part 10 ... of the Act to conduct a hearing into a complaint of professional misconduct by a legal practitioner, the primary consideration is to protect the public by preventing a person unfit to practice from holding himself or herself out to the public as a legal practitioner in whom members of the public might repose confidence. The Tribunal must also act so as to deter the offender in the future and any other practitioner minded to behave in like manner. In the case of a Solicitor these elements together or separately may call from the removal of the Solicitor's name from the roll or the imposition of a substantial fine."
22 Thus, the Tribunal's function is both protective and consistently educative, "publicly marking the seriousness of what the instant Solicitor has done."
23 In Law Society of New South Wales v Walsh [unreported decision in December 1997] it was said that the Court's duty to protect the public is not confined to the protection of the public against further misconduct by the particular practitioner who is the subject of disciplinary proceedings. It extends to protecting the public from similar defaults by other practitioners. Therefore it is relevant to consider the effect that the orders to be made by the Tribunal will have upon the understanding of the profession and the public regarding the standard of behaviour expected from Solicitors.
24 In Harvey v The Law Society of New South Wales [(1975) 49 ALJR 362 at 364], the Court held:
"The function of a Court called upon to consider an application to remove the name of a practitioner from a roll of practitioners is to examine the material proffered to it in order to determine whether that material establishes that the Solicitor has failed, by action or inaction, to maintain in his conduct the standards required of him as a member of the profession. The Court's duty is to ensure that those standards of the profession are fully maintained particularly in relation to the proper relationship of practitioner with practitioner, practitioner with the Court and the practitioner with the members of the public, who find need to use the services of the profession. It is no part of that function to punish the Solicitor whose conduct the Court finds to be in breach of those professional standards."
25 In Ex Parte Macaulay [(1930) 30 SR NSW) 193, at 193-4], Street CJ stated:
"Unless the Court insists on a high standard of conduct on the part of Solicitors - unless the Court punishes severely every lapse from the proper standard - the public will never be properly guarded and the profession will never retain the respect which it to have in the community."
In relation to the misuse of trust monies, the Law Society relied upon the decision of the Court of Appeal in Dupal v Law Society of New South Wales (unreported, 26 April 1990) ('Dupal'), in which Kirby P stated:
"... (the) normal consequence of the misuse of entrusted funds by a Solicitor, and a finding of wilful breaches of the statutory prohibition in that regard, is the removal of the name of the Solicitor from the roll."
Further in Dupal, where Handley JA stated:
"This Court would be departing from a long course of authority if it were to allow the Appeal and substitute a period of suspension for the order of the Tribunal removing the appellant from the roll. Counsel were not able to refer me to any case where a Solicitor found guilty of misappropriation of wilful contravention of Section 61(1) has not been struck off the roll. Any decision to the contrary would signal to the profession and the community that this Court was no longer insisting on Solicitors maintaining the highest standards of personal honesty and integrity in their dealings with client and the public and in the handling of monies entrusted to their charge."
Further, Kirby P stated:
"A case of wilful misuse of the funds of others ...
In this sense, the response of the Court to the facts as found by Handley JA (which I also accept) necessarily expresses and reflects the standards which the Court requires of legal practitioners in this State. In an appeal such as the present, the Court disposes of the case before it by reference to criteria of general application. These should be clear and simple. They should be such as to leave no doubt in the mind of a practitioner in financial difficulties, exposed to the temptation of using without clear authority the funds of another, the consequences that will flow for the right to practise when such misuse of funds is discovered."
In the Court of Appeal's decision in Law Society of New South Wales v Jones (unreported, 27 July 1978), Street CJ stated:
Reliability and integrity in the handling of trust funds are fundamental prerequisites in determining whether an individual is a fit and proper person to be entrusted with the responsibilities belonging to a Solicitor. Members of the public, many of them wholly inexperienced and unskilled in matters of business or law inevitably must put great faith and trust in the honesty of solicitors in the handling of money on their behalf. The Court must ensure that this trust is not misplaced.
The Law Society also relied upon the decision of the decision in Council of the Law Society of New South Wales v Pizzinga [2012] NSWADT 211 ('Pizzinga') (at paragraph 65), in which the Tribunal stated:
... the authorities establish that in the 'ordinary case', where a solicitor has been found to have been guilty of misappropriation, the result is an order for striking off the roll absent exceptional circumstances.
In relation to the making of a protective order, the Law Society relied upon the decision of Kitto J in Ziems v Prothonotary of the Supreme Court of NSW [1957] HCA 46; (1957) 97 CLR 279 ('Ziems') and the decision of Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ in A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1; (2004) 216 CLR at [15]:
Where an order for the removal from the Roll is contemplated, the ultimate issue is whether the practitioner is shown not to be a fit and proper person to be a legal practitioner of the Supreme Court upon whose roll the practitioner's name presently appears.
In addition the Law Society relied upon the following decisions:
(1) The Court of Appeal in Stanoevski v The Council of the Law Society of New South Wales [BC200803419] ('Stanoevski') at [54]. It submitted that this is authority for the proposition that removal from the Roll is appropriate only when a legal practitioner is unfit to practice and suspension for a particular period is not appropriate; and
(2) The decision of McColl JA, with whom Campbell and Meagher JJA agreed, in Prothonotary of the Supreme Court of New South Wales v Livanes [2012] NSWCA 325 ("Livanes") at [34 to 36] as follows:
... the question whether the opponent is a fit and proper person to remain on the Roll of local layers must be determined at the time of hearing. The same is true of the question of 'good fame and character': Ex parte Tzinolis; Re The Medical Practitioners Act (1966) 67 SR (NSW) 448 at (475) per Holmes JA.
(3) As to whether historic misconduct demonstrates present unfitness or absence of good fame and character, Walsh JA (with whom Wallace P agreed) said in Ex Parte Tzinolis; Re The Medical Practitioners Act (1966) 67 SR (NSW) 448 at (461) ('Tzinolis');
Reformation of character and behaviour can doubtless occur but their occurrence is not the usual but the exceptional thing. One cannot assume that a change has occurred merely because some years have gone by and it is not proved that anything of a discreditable kind has occurred. If a man has exhibited serious deficiencies in his standards of conduct and his attitudes, it must require clear proof to show that some years later he has established himself as a different man.
(4) Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630 (at 637) per Gleeson CJ, Meagher and Handley JJA, which cited Walsh JA's remarks in 'Tzinolis' with approval; and
(5) Dawson v Law Society of New South Wales (New South Wales Court of Appeal, unreported, 21 December 1989, at 6-7) Mahoney JA said:
Repentance is relevant, at least in the ordinary case, because it assists the conclusion that the applicant has left his previous standards or values and adopted more appropriate ones. Without that, his conduct in the future is unlikely to be acceptable.
The Law Society argued that ground 1 comprised 'an ordinary case of misappropriation' within the meaning of the decisions in 'Dupal', 'Doherty' and 'Pizzinga' and that the Solicitor cannot point to any claim of right or a genuine belief (even an irrationally held one) that she was entitled to use the trust monies and she did not present any evidence of 'exceptional circumstances'. Rather, she continued to deny the allegation of misappropriation. Ground 3 involved making a false statutory declaration as to the denial of the misappropriation and Ground 2 involved misleading the Law Society. The gravity of the Solicitor's misconduct was further increased by the absence of frankness, candour and honesty.
The Law Society noted in relation to Ground 2, that the Solicitor invited the Tribunal to accept that she found herself in extremely difficult personal circumstances and 'a very difficult human dilemma' (see transcript page 67 at line 16) and that she asserted that she was caught in the competing roles of Solicitor, Wife and Mother and that her conduct could not be separated from the context in which it occurred (see transcript from page 66 line 40 to page 68 line 39). In this regard, it submitted that in the roles as Wife and Mother the Solicitor was driven by her emotional ties to her family to the extent that she allowed the protection of her family to blind her to her basic duties as a Solicitor [see: Judgment para 45]. It referred to the Solicitor's evidence [at Transcript page 94 line 25], namely:
Officer of the Court - well, I didn't consider, I suppose at the time. I was just more interested in my husband.
It also referred to her Submission [at Transcript page 97 line 3]:
... you can't divorce her state of mind from the fact that she's a human being and a mother and a wife... that's just such an artificial distinction...
The Law Society argued that this led to the Solicitor to prefer her own interests and those of her family to those of the clients who were properly entitled to the trust funds and that she breached her duties as a Solicitor when she committed these defalcations. It submitted that the Solicitor either lacked the most elementary knowledge and understanding of her duty as a solicitor or else she chose to disregard it because a client's money provided a convenient source of finance at a time when the circumstances of her husband and herself were dire.
In relation to Dr Nielssen's opinion dated 8 January 2013, that the Solicitor's symptoms of major depressive illness in December 2005 affected her decision making 'at around that time', the Law Society submitted that if that diagnosis was capable of mitigating her act of misappropriation in December 2005 in some way, it could not account for her lack of frankness, honesty and candour in swearing her Affidavit in January 2012 or in giving her evidence in April 2012 or in making submissions at the hearing in June 2012. It also argued that if the Solicitor relied upon Dr Nielssen's opinion to demonstrate some permanent deficit in her capacity to make decisions as a result of chronic depression, then she is unfit to practice by virtue of that impairment and that even if her decision making was only temporarily impaired 'around December 2005', her subsequent conduct suggests that her character is so bereft of frankness, candour and honesty that she is still unfit to practice.
In this regard, we note that Dr Nielssen restricted his opinion regarding the Solicitor's capacity to make decisions to the period 'around December 2005' and that there is no evidence of a continuing or permanent deficit before us. However, it must be said that there no medical evidence before us that addresses or in any way explains the conduct that was the subject of grounds 2 and 3 of the Application.
The Law Society also called upon the Tribunal:
'...to protect the reputation of the women of the profession particularly from an inaccurate public and peer perception that:
(a) Their roles as solicitors are or may be in competition with their roles as wives and mothers; and
(b) Lesser standards are required of and expected from them because they choose to work in the profession whilst supporting a family unit.
The Tribunal should be unimpressed by the Solicitor's claims that she then trusted her husband and did whatever he told her to do: see Transcript page 122 (at) line 46:
I don't - you know, I don't know what was thrust in front of me. I don't - I don't even remember signing anything.
The more a case based on lack of independent thought and judgment is pressed in her defence [to the point where the Solicitor lost regard to the elementary but critically important obligations of a solicitor and person in a position of trust in relation to clients] the more her case establishes that she had such a lack of appreciation of her duty as a solicitor that she was unfit to be such.
To allow the Solicitor any concession for her chosen conduct in the circumstances in which she found herself would, in essence, be to regard the pressures of being a wife and mother as an 'exceptional circumstance' within the meaning of "Doherty'. The effect of this would be to undermine the role of women in the legal profession.'
The Tribunal rejects the submission its role is 'to protect the reputation of women within the legal profession'. We do not regard the categorisation of conduct as being a gender issue and we do not believe that the established case law supports a proposition that the criteria applicable to the categorisation of conduct committed by legal practitioners should vary based upon the gender of the practitioner.
The Law Society noted the Solicitor's admission that being frank and honest is the touchstone of the legal profession and argued that during the period from 2005 and 2005 she was not sufficiently frank and honest. However, as regards her current fitness to practice, it noted that the Solicitor continues to deny the misappropriation. It submitted that she has no current appreciation of her duties as a Solicitor. In this regard, it relied her description of her understanding and realisation as to the conduct alleged against her, namely:
All I can say is that at today's date I am a fit and proper person to practise I think, that this is all behind me now. I think that I would never trust my husband again. [Transcript page 137 lines 26 to 34]
It submitted that this answer demonstrates that the Solicitor does not fully understand the scale of her misconduct, as follows:
...She has not admitted misappropriation or making a false Statutory Declaration; she has not taken responsibility for that conduct; she has shown no remorse by way of an apology and she has shown no repentance by way of attempting to pay back the monies she misappropriated.
Her answer that this 'is all behind her now', simply highlights the fact that Mrs Fitzsimons shifts responsibility for her conduct to the personal exigencies in which she found herself and her perceived 'hounding' by the Law Society, rather than being a product of her own behavioural choices. It may also mean that in leaving 'it all behind her now' she has psychologically 'moved on', notwithstanding that she has failed to confront and address her unacceptable conduct. She offers no recognition of the fact that in order to save her family from financial ruin and her husband from exposure to investigation by the Law Society she committed serious breaches of her duty as a Solicitor...
The Law Society also argued that the Solicitor's evidence that she had not misled the Law Society in relation to her husband's alleged neuroma and crucial illness, because that was what she believed when she gave those explanations, demonstrated that she lacked the ability to distinguish between subjective belief and objective fact. It submitted that members of the public are entitled to expect that their legal practitioner:
- can distinguish between subjective belief and objective fact;
- is competent in applying their knowledge, skills and experience when engaging in legal practice;
- can exercise independent thought and judgment;
- is cognisant of and properly assumes the role of fiduciary (sic) to their client; and
- acts ethically with honestly and integrity at all times.
However, the Solicitor has not demonstrated any ability to live up to these 'reasonable expectations'.
The Law Society submitted that by applying the decision in 'Livanes' and the authorities cited in that decision to the current matter, the Solicitor has done nothing to demonstrate that she is a different person to the one who exhibited serious deficiencies in her conduct and there is no evidence to show that she has established herself as a different person. Similarly, there is no evidence of repentance or regret on her part and there is no evidence on which the Tribunal can find that she has left her previous standards and values involving dishonesty and adopted more appropriate standards.
Accordingly, the Law Society argued that the Solicitor is currently unfit to practice law and that she is permanently unfit to practice law, in accordance with the decision in 'Stanoevski'. It therefore pressed the removal of her name from the Roll of Local Lawyers pursuant to Section 562(2)(a) of the 2004 Act. It also sought an order for costs on the basis that no exceptional circumstances had been made out by the Solicitor.
Solicitor's Submissions
Two separate documents headed "Respondent's Submissions on Penalty" have been filed on behalf of the Solicitor, one dated 7 April 2013 and the other dated 16 April 2013. While both were signed by her Solicitor, Mr Lyons, it appears that the latter version incorporates the previous version and includes further submissions and arguments and our discussion therefore relates to the later Submissions.
While the only authorities that are referred to the Submissions are Ziems and Prothonotary v (Christopher) Fitzsimons [2012] NSWSC 260, we note that on 17 May 2013 the Solicitor filed a list of 15 further Authorities, which primarily comprise decisions of the Tribunal in which findings of professional misconduct were made and the legal practitioner was not struck off the Roll. However, she did not file any further Submissions addressing how any of these authorities are relevant to the current matter or whether the factual scenarios found in those matters is analogous to the current matter. Accordingly, her List of Authorities Relative to Penalty does not assist us in the determination of consequential orders to be made in this matter. However, we will discuss these Authorities later in this decision.
We note that most of the Solicitor's Submissions address the impact that the events that brought her before the Tribunal have had upon her. For example:
Christopher & Maria Fitzsimons' joint income ranged between $300,000 and $500,000 annually. By 2006 there was nothing left and all the assets built up with a life time work (sic) and frugality was gone because of Christopher's illness. A fairly shattering revelation to be confronted with when you are considering retirement and spending time with the children and grandchildren, but here Maria now stands before this Tribunal cap in hand saying at the age of 70
I can't retire - I have nothing - everything has been destroyed - I must work - please let me work as an employed Solicitor until my health gives out or I can no longer continue to work as a Solicitor.
And further:
The Toll on Maria's life and health has been catastrophic. In a twinkle Maria has gone from a moderately financially independent person to a pensioner with no assets, no future, reliant on the old age welfare scheme and the support of her children and all because of the actions of her husband and the finding of her complicity in his action.
However, this is not a punitive jurisdiction and the fact that the Solicitor has suffered adverse financial consequences as a result of the events upon which the Tribunal's findings are based is not relevant to the issue of whether or not a protective order should be made.
We further note that the Solicitor's submissions are based on the premise that it was her husband, Christopher Fitzsimons, who misappropriated the relevant trust monies. She stated that she relies upon the decision of the Supreme Court of NSW in Prothonotary v Fitzsimons [2012] NSWSC 260, as follows:
Tab 19 is the judgment of His Honour Justice Adams in the Prothonotary's summons for Mr Fitzsimons' name to be removed from the roll of local practitioners. His Honour declined to make the striking off order. Mr Fitzsimons' misappropriation was money, the property of the Estate of Phillipson. When the bank negotiated the cheque Mr Fitzsimons used the money to pay the beneficiaries in the Estate of Haylen, being money that he had earlier misappropriated. At pages 10 and 11 of the judgment his Honour addresses the misappropriations in the estates.
However, the Solicitor was not a party to those proceedings and no issue estoppel arises from Adams J's decision. This Tribunal determined that the Solicitor misappropriated the trust monies and rejected Mr Fitzsimons' evidence that he had done so. Based on our findings, the Solicitor's submission that she was 'merely complicit' in her husband's action is misconceived and does not assist her cause, but this may be explained on the basis that she has appealed against the Tribunal's findings and that she does not wish to compromise her appeal (which has not yet been determined). While the Solicitor has not accepted the findings of professional misconduct and has not accepted responsibility for that misconduct or expressed remorse for it, in view of the unusual circumstances that exist at the present time we do not regard it as reasonable to criticise her in relation to these matters.
We also note that in making her submissions, the Solicitor did not refer to or discuss the findings made in the decision of the Tribunal in Council of the Law Society of NSW v Christopher Fitzsimons [2012] NSWADT 285 (decision dated 11 September 2012). The grounds of that Application alleged (relevantly) that Mr Fitzsimons:
(2) ... Misled the Supreme Court in the matter of Prothonotary of the Supreme Court of New South Wales v Christopher Ronald Fitzsimons Supreme Court of NSW matter number 265686/2010 reported at [2012] NSWSC 260 ["the Prothonotary's proceedings"];
(3) Swore an affidavit on 28 January 2012 in the matter of Council of the Law Society of New South Wales v Maria Angela Fitzsimons Administrative Decisions Tribunal Legal Services Division matter number 090218 ["M A Fitzsimons proceedings"] which the Lawyer knew or ought to have known was false;
(4) Swore an affidavit on 27 May 2012 in the M A Fitzsimons proceedings which the Lawyer knew or ought to have known was false;
(5) Misled or attempted to misled the Administrative Decisions Tribunal in evidence given under oath in the M A Fitzsimons proceedings on 24 April 2012;
(6) Swore an affidavit on 13 June 2012 in the matter of Council of the Law Society of New South Wales v Christopher Ronald Fitzsimons Administrative Decisions Tribunal Legal Services Division matter number 090217 ["C R Fitzsimons proceedings"] which the Lawyer knew or ought to have known was false;
(7) Swore an affidavit made on 17 February 2006 in the matter of The Law Society of New South Wales v Christopher Ronald Fitzsimons Supreme Court Proceedings matter number 16024 of 2005 ["the Receivership Proceedings"] which the Lawyer knew or ought to have known was false.
We note that the Tribunal determined (relevantly):
- In relation to the Prothonotary's proceedings:
219 In circumstances where the character of the Respondent was being tested for the purposes of establishing whether he was fit and proper to remain on the Local Roll, a claim that his gambling addiction was over-come by mustering will-power was misleading. Adams J in his Judgment at paragraph 55 held: "... He [the Respondent] mustered the will-power to stop gambling."
220 The conclusion is that the Respondent extensively mislead (sic) Adams J. That conduct could reasonably be regarded as disgraceful and dishonourable by professional brethren of good repute and competency and so amounts to professional misconduct.
Further, in relation to Mr Fitzsimons' evidence in the current matter, the Tribunal found (relevantly) that he swore an Affidavit on 28 January 2012, in which he asserted that he committed the misappropriation and that this was false and he knew it to be false when the Affidavit was sworn and that he intended by that evidence to mislead the Tribunal in the current proceedings. It determined that this conduct could reasonably be regarded as disgraceful and dishonourable by professional brethren of good repute and competency and so amounts to professional misconduct. It also found that he swore a further Affidavit on 27 May 2012 that contained false statements of fact and that in swearing this Affidavit he attempted to mislead the Tribunal. It found that this also amounted to professional misconduct at common law.
In referring to the Tribunal's findings in the Christopher Fitzsimons matter we note that the Solicitor was not a party to those proceedings and therefore no issue estoppel arises from those findings. However, we do note the Solicitor's failure to refer to the findings made against her husband in relation to the evidence that forms the basis of her current submissions.
The Solicitor also took issue with the Tribunal's finding that she misappropriated the trust monies on the basis that Ms Sayer opined in her reports dated 9 April 2006, in July 2006 and in October 2006 that Mr Fitzsimons had committed the misappropriation. She complained that the Law Society did not call Ms Sayer to explain 'this discrepancy'. While we regard this 'complaint' as being a matter for consideration by the Court of Appeal, we observe that Ms Sayer's opinions were based upon the evidence that was available to her when she prepared her reports and that she did not have the benefit of hearing and considering the totality of the evidence that was subsequently presented to the Tribunal in this matter.
The Solicitor stated that she relies upon the principles expressed in the decision of Fullagar J in 'Ziems', as follows:
2. In a case of this kind it is essential, in my opinion, to begin by defining the ground on which an order of disbarment is to be made. It is stated in general terms by saying that the person in question is not a fit and proper person to be permitted to practise at the Bar. The next question is - at what facts is it proper to look in order to see whether that conclusion is established? The answer must surely be that we must look at every fact which can throw any light on that question. But, descending to particularity, is it the conviction that is the vital thing, unchallengeable and conclusive of the ultimate issue? Or must we look beyond the conviction, and endeavour to ascertain, as best we can on the material before us, the facts and circumstances of the particular case? To my mind, there can be only one answer to these questions. The conviction is not irrelevant: it is admissible prima facie evidence bearing on the ultimate issue, and may be regarded as carrying a degree of disgrace itself. But, in the first place, its weight may be seriously affected by circumstances attending it, and it must be permissible to look at the conduct of the trial. And, in the second place, it is on what the man did that the case must ultimately be decided, and we are bound to ascertain, so far as we can on the material available, the real facts of the case. It is only when we have done this that we can be in a position to characterise the conduct in question, and to see whether we are really justified in saying that a man is disqualified from practising his profession. I would only add that there is one thing that we manifestly cannot do. We cannot look behind the conviction to the extent of saying that there is much evidence that the appellant was driving his car in a state of intoxication, and refuse to look any further behind it. (at p288)
On that basis, the Solicitor made the following submissions in relation to "Penalty":
For the personal factors stated above there is no doubt Maria Fitzsimons has suffered physically and mentally. The protective duties of the Tribunal are unquestionably for the protection of the public and the maintenance of high ethical standards of the practising profession. On the scale of gravity the finding of this Tribunal should not in my respectful submission warrant a striking off order. I respectfully submit that this matter be dealt with by reprimand, given her tragic circumstances. Maria Fitzsimons has been well and truly punished and it is unnecessary for this Tribunal to inflict any further suffering or penalty. The humiliation of the events will remain with Maria for the rest of her life. There are layers and layers of penalty - it doesn't stop with this Tribunal's findings and the imposition of a penalty. At the end of the day the most important value a person has is often about what other people think of them and the loss of the purity of their integrity that becomes paramount. Our integrity in our own mind's eye is our most prized possession and it hurts when others think poorly of us. As a former Premier of New South Wales said "mud sticks".
Maria Fitzsimons wants to return to practice. At 70 years of age Maria has limited time available to do so. Maria wishes to practice as an employee and not on her own account and obviously without a trust account. Evidence from her family and friends attest to her unblemished good fame and character.
Maria has suffered catastrophic misfortunes and indignities as a consequence of her husband's actions. With respect it is submitted that Maria has suffered enough. Maria was forced out of legal practice by her husband's conduct. Using an analogy from the practice of criminal law, Maria has been 'on remand and held in custody for 8 years'.
Without wishing to usurp the Tribunal's authority to determine the appropriate penalty, it is respectfully submitted that Maria has already served her sentence. Regardless of the Tribunals' determination as to penalty, Maria's punishment will continue until the day she dies. It never ceases.
Other penalty and punishments will continue to operate making her an outcast by innuendo, whispers and distain in the public arena. Nevertheless the heaviest judgment and burden is Maria's self-criticism and self-loathing, which will continue to bubble and simmer forever, plus the loss of her most precious jewel and noblest gift from God, namely the loss of her integrity...
Mrs Fitzsimons wishes to apply to the Queensland Law Society for a Volunteer's Practising Certificate, to enable her to undertake Community and Charity work...
In relation to these submissions, we note that Fullagar J wrote the dissenting opinion in 'Ziems' and that the leading judgment and statement as to the applicable test to be applied by the Court when dealing with a legal practitioner before is that of Kitto J (at p297-8), as follows:
"(t)he issue is whether the Appellant is shown not to be a fit and proper person to be a member of the Bar of New South Wales. It is not capable of more precise statement. The answer must depend upon one's conception of the minimum standards demanded by a due recognition of the peculiar position and functions of a practitioner."
We now refer to the Solicitor's List of Authorities Relative to Penalty (filed 17 May 2013), which cited the following cases as supporting a decision against making a protective order:
1. Council of the Law Society of NSW v Leslie [2013] NSWADT 81
2. Council of the Law Society of NSW and Lundy [2013] NSWADT
105
3. Legal Services Commissioner v Tsalidis [2013] NSWADT 101 & Council of the Law Society of NSW v Tsalidis [2013]
4. Legal Services Commissioner v Angelovski [2013] NSWADT 93
5 Council of Law Society of NSW v Butt [2012] NSWADT 47
6 Law Society of NSW v Lo [2012] NSWADT 21
7 Council of Law Society of NSW v Kim [2012] NSWADT 45
8 Council of the Bar Association of NSW v Asuzu (No. 2) [2012]
NSWADT 104
9 Council of the Law Society of NSW v Pu [2012] NSWADT 168
10 Council of the Law Society of NSW v Galloway [2012] NSWADT 176
11 Council of the Law Society of NSW v Ekes [2012] NSWADT 266
12 Council of the Law Society of NSW v Aouad [2012] NSWADT 267
13. Council of the Law Society of NSW v Xenos [2012] NSWADT
283
14. Mitry v Council of the NSW Bar Association 2001 NSWCA 273
15. A Solicitor v Council of the NSW Law Society [2004] HCA 1
In our view, the decision in Council of the Law Society of NSW v Leslie is clearly distinguishable from the current matter on its facts and do not regard this as being relevant to the determination of whether or not a protective order should be made.
We also regard the decision in Council of the Law Society of NSW v Lundy as being distinguishable from the current matter on its facts. In that matter the Tribunal stated:
14 In a frank admission at paragraph 8 of his Affidavit the Solicitor states, 'I made false declarations by untruthfully ticking a box claiming that I did not have a trust account for the years 2006, 2007 and 2008. I did this because I had not kept proper accounting records and was embarrassed at the thought of my poor bookkeeping being examined.'
15 In addition to his Affidavit evidence, the Respondent made an oral statement to the Tribunal expressing his deep regret at the conduct complained of. The Tribunal was left in no doubt that the expressions of contrition were genuine.
There is, of course, no expression of regret or remorse by the Solicitor at the current time. However, in view of the current unusual circumstances discussed previously in this decision, we do not regard this omission as a basis for making a protective order.
In relation to the decision in Council of the Law Society of NSW v Xenos, we note that while the Tribunal made a finding of misappropriation against the Solicitor, the facts on which that finding was based differ significantly from the current matter. The Tribunal held (relevantly):
...
20 We are also satisfied that the Solicitor contravened the numerous statutory provisions referred to in the Agreed Statement (sections 256, 260, 261, 262, 264 and 279 of the Act; clauses 69 and 88 of the Legal Profession Regulation 2005) in the ways identified in this Statement. It is not necessary to reproduce any of these provisions, as the Statement sufficiently indicates the nature of the requirements relevantly imposed by them.
21 Having regard to common usage, to the considerations spelt out in the passage in Council of the Law Society of NSW v Nicholls [2012] NSWADT 22 mentioned above and to the authorities cited in that passage, we agree with Ms Webster that an allegation of misappropriation against a legal practitioner does not necessarily connote dishonesty on the part of the practitioner. We would observe, however, that this term may often be interpreted by a respondent practitioner, by the Tribunal or by a third party as involving dishonesty. For this reason, an applicant in disciplinary proceedings such as these should bear in mind the danger of alleging misappropriation without also indicating what form of culpability is alleged against the respondent - i.e., whether it be outright dishonesty, mere inadvertence or some intermediate degree of fault. If no such indication is given, the respondent may well be entitled to maintain that the case being brought against him or her has not been defined with sufficient precision.
22 In the present proceedings, we are satisfied that the two acts of the Solicitor claimed to amount to misappropriation - i.e. those described in paragraphs 33 and 37 of the Agreed Statement - did merit this label. As Ms Webster made clear, neither of them was alleged to involve dishonesty on the Solicitor's part.
23 At first sight, the conduct described in paragraph 37 - i.e., the Solicitor's transfer into his office account of an amount of $7,500 held in trust for Mr Kamper, at a time when this amount was due to be paid by him to Mr Todd of counsel - might seem to involve no more than deferral by him of the discharge of his obligation to pay a debt. But a passage in the Tribunal's decision in Law Society of New South Wales v Davidson [2007] NSWADT 264 is useful in demonstrating that unjustified delay by a solicitor in paying counsel's fees from funds received for that purpose constitutes a breach of a fiduciary duty to the client. In consequence, the transfer of such funds into the solicitor's office account, for the benefit of the solicitor, can properly be characterised as misappropriation of them.
24 The relevant passage in Davidson (paragraphs [123] to [130]) is as follows:-
123 The second complaint against the solicitor is one of unethical conduct relating to the failure to pay third parties within a reasonable time. The solicitor is charged with unethical conduct in relation to late payment of disbursements in the nature of fees due to third parties...
124 At all relevant times the solicitor was a sole practitioner with employed staff. He operated a Trust Account in respect of which he was the sole signatory...
125 In Re Robb & Anor (1996) 134 FLR 294, the Supreme Court of the ACT, noting that wilful or persistent failure to pay counsel's fees could amount to professional misconduct, said:
The point is that the delay in paying counsel to be attributed to the solicitors in the present case stems from their assumption that moneys in their office account, received on trust for the client and transferred to the office account for the very purpose of paying counsel, were not affected by their fiduciary duties to the client and were their moneys to pay counsel fees when they chose and that any delay was simply a matter between counsel and themselves.
That assumption was totally unjustified. On the contrary, every day of delay in paying counsel from the time of transferring the moneys from the trust account to the office account, was a day in which the solicitors were in breach of their fiduciary duty to the client.
126 The solicitor's evidence on this issue was that it was his "policy" not to pay disbursements until the client had paid the whole amount due on a tax invoice.
127 The solicitor's view of the matter was that:
"If an invoice has been rendered to the client, the client pays your invoice,...I've always believed you can pay that money to your office account and then you have the obligation to pay the disbursements that are included in that invoice."
"The disbursements are incurred by me solely. I have the liability to pay them whether the client pays me or not... the money can be banked to the office account and then the disbursements are paid within a reasonable time..."
128 The Tribunal does not agree that the solicitor's "policy" accords with his obligations as a solicitor to deal with moneys received from a client in accordance with the relevant legislation.
129 The Tribunal does not accept that the solicitor was entitled to act upon his "policy" of withholding payment of outstanding disbursements until such time as his client had paid the whole amount of a Tax Invoice. The obligation to pay such sums arose upon the solicitor being put in funds by the client for that purpose.
130 As was held in Re Robb, where a solicitor holds clients funds for the purpose of paying counsel and other persons, and transfers those funds to an office account, any delay in so paying the moneys amounts to professional misconduct, for during the period of delay the solicitor is treating clients' funds as the solicitor's own money.
25 We agree with the contention of the Law Society, which the Solicitor did not oppose, that the matters claimed to amount to professional misconduct (see Grounds (i) - (vi), under headings A, B and C, and paragraphs 3 to 50 of the Agreed Statement) did indeed warrant this characterisation.
26 Most of these matters took the form of breaches of statutory provisions relating to the maintenance of trust accounts and the withdrawal of funds from such accounts in order to pay costs. Under section 498(1)(a) of the Act, any such breaches are 'capable of being... professional misconduct'.
27 The conduct amounting to misappropriation described in paragraph 33 of the Agreed Statement - i.e., withdrawing funds from a trust account in order to pay costs - has been held more than once to amount to professional misconduct. The decision in Council of the Law Society of New South Wales v Clapin [2011] NSWADT 83 (see at [206 - 208]) provides an example.
28 The conduct amounting to misappropriation described in paragraph 35 of the Agreed Statement - i.e., payment of a solicitor's own costs in lieu of counsel's fees, using funds furnished for the latter purpose - has also been held to amount to professional misconduct. As the extract quoted above demonstrates, this was the case in Law Society of New South Wales v Davidson [2007] NSWADT 264. A further example is provided by Law Society of New South Wales v McCarthy [2003] NSWADT 198. Here the facts on which the Tribunal based its finding of professional misconduct were summarised as follows at [2 - 3]:-
2 The conduct in question involves one transaction. The following facts are not disputed. In 1999 the practitioner was practising as a solicitor, but (as is permitted) did not operate a trust account. He received a payment in settlement of a client's case which related to costs and disbursements incurred by him on the client's behalf. The amount of the payment was $4200, of which it was said by the practitioner and not disputed, that $3000 was in respect of counsel's fees and $1200 was in respect of his costs. A cheque for $4200 was drawn in favour of the practitioner. It was deposited into the practitioner's personal account on 24 June 1999.
3 The matter of non-payment of counsel's fees was drawn to the attention of the Law Society by the client on 8 March 2000. Counsel's fees were paid on 28 June 2000.
In our view the decisions in the matters of Legal Services Commissioner v Tsalidis; Council of the Law Society of NSW v Tsalidis; Legal Services Commissioner Angelovski; Council of Law Society of NSW v Butt; Law Society of NSW v Lo; Council of Law Society of NSW v Kim; Council of the Bar Association of NSW v Asuzu (No. 2); Council of the Law Society of NSW v Pu; Council of the Law Society of NSW v Galloway; Council of the Law Society of NSW v Ekes; Council of the Law Society of NSW v Aouad; and Mitry v Council of the NSW Bar Association, are clearly distinguishable from the current matter on their facts and they are not relevant to the issue of whether a protective order is appropriate. The decision of the High Court of Australia in A Solicitor v Council of the NSW Law Society was discussed in relation to the Law Society's Submissions.
Considerations as to Penalty
The broad and well-established principle that the 'primary object' of disciplinary proceedings against a legal practitioner 'is to protect members of the public from professional misconduct' was stated by the High Court of Australia in Walter v Council of Queensland Law Society Inc. (1988) 62 ALJR 153 at 157 (per by Mason CJ and Wilson, Deane, Toohey and Gaudron JJ).
Further, in Smith v New South Wales Bar Association (1992) 176 CLR 256 at 270), Justice Deane stated that 'disciplinary proceedings against a legal practitioner are primarily directed towards the protection of the public and not the punishment of the legal practitioner'.
This principle was restated by Mahoney JA in Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 441-442:
"What, then, are the purposes of the orders to be made and the considerations to be taken into account? It has frequently been said that disciplinary procedures and the orders made in the course of them are directed not to the punishment of the solicitor but to the protection of the public. This, of course, is true. The protection of the public has been described as, for example, the primary purpose or a primary object of such proceedings: Walter v Council of Queensland Law Society Inc (1988) 62 ALJR 153 at 157E; 77 ALR 228 at 235; Smith v New South Wales Bar Association (1992) 176 CLR 256 at 270 per Deane J; or one of the primary objects of the proceedings and the orders made: see Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 251. In the relevant sense, the protection of the public is in my opinion not confined to the protection of the public against further default by the solicitor in question. It extends also to the protection of the public against similar defaults by other solicitors and has, in this sense, the purpose of publicly marking the seriousness of what the instant solicitor has done."
We further note that in Law Society of New South Wales v Jones, Street CJ, with whom Reynolds and Samuels JJA concurred, expressed the following statement of principle:
"Reliability and integrity in the handling of trust funds are fundamental prerequisites in determining whether an individual is a fit and proper person to be entrusted with the responsibilities belonging to a solicitor. Members of the public, many of them wholly inexperienced and unskilled in matters of business or of law, inevitably must put great faith and trust in the honesty of solicitors in the handling of moneys on their behalf. The Court must ensure that this trust is not misplaced."
We also refer to the decision of the Court of Appeal in Dupal, in which the Solicitor was found to have misappropriated trust funds and the Court of Appeal confirmed both the Tribunal's findings regarding his conduct and its order that he should be struck off. Kirby P stated:
The result is that in both of the cases complained of, the Society has shown misuse by the appellant of the moneys received by him on behalf of other persons. What follows? The answer to that question takes me back to the observations with which I began these reasons. Such a finding ordinarily requires removal from the roll. The research of neither counsel before the Court could produce a single case in which, following a finding of misappropriation of trust funds or wilful contravention of s41(1) of the Act [this was the equivalent to section 255(1) of the LP Act 2004], the Court had not proceeded to remove the name of the practitioner concerned from the roll of practitioners. Properly, after judgment was reserved, counsel for the Law Society, following further enquiries, drew to the notice of the Court a decision of the Solicitor's Statutory Committee in the case of Colin Water Peck, unreported, 23 April 1981....
I regard the decision in Peck, which is not a decision of this Court, as wholly exceptional. True, each case must depend upon its unique facts. But for the reasons which I have stated, the normal consequence of the misuse of entrusted funds by a solicitor, and a finding of wilful breaches of the statutory prohibition in that regard, is removal of the name of the solicitor from the roll. There is no reason why that consequence should not follow in the present case. To the extent that Peck suggests otherwise, I dissent from its holding.
Handley JA held (at p 12):
This Court would be departing from a long course of authority if it were to allow the appeal and substitute a period of suspension for the order of the Tribunal removing the appellant from the roll. Counsel were not able to refer us to any case where a solicitor found guilty of misappropriation or wilful contraventions of s61(1) has not been struck off the roll. Any decision to the contrary would signal to the profession and the community that this Court was no longer insisting on solicitors maintaining the highest standards of personal honesty and integrity in their dealings with clients and the public and in the handling of monies entrusted to their charge. The maintenance of those standards and the public interest require, in my judgment, that this appeal be dismissed. It is well established that the jurisdiction being exercised in this case is not penal but disciplinary and that it must be exercised for the benefit of the public. Sympathy for the appellant and for the tragedy that he has brought on himself and his family by his inability to live up to the high standards which this Court and the profession demand of solicitors cannot be allowed to deflect this Court from doing its duty.
While we have considerable sympathy for the Solicitor's personal circumstances, which she has described in considerable detail in her Submissions, we nevertheless note that that her current circumstances largely result from the consequences of her misconduct and our sympathy for her circumstances alone is not sufficient to prevent the Tribunal from discharging its primary duty to protect the public.
While we adopt the views expressed by Kirby P and Handley JA in Dupal, for the reasons discussed above we do not feel it appropriate to rely upon the absence of any evidence that the Solicitor regrets or expresses remorse or contrition regarding the misconduct found against her or that she has taken any steps to reform her character since those findings were made. However, we are concerned that there is no evidence that the Solicitor currently understands her professional and ethical obligations to either the Law Society or other legal practitioners and the explanations that she has offered in her Submissions do not, in our view, support a finding that she is fit to practice as a legal practitioner.
Accordingly, we have formed the view that the Solicitor is not a fit and proper person to remain on the Roll of Local Lawyers and that the protection of the public warrants that her name should be removed from the Roll.
Orders
We order that:
(1) The Solicitor's name be removed from the Roll of Local Lawyers; and
(2) The Solicitor should pay the Law Society's costs of and incidental to this Application, as agreed or assessed.
**********
Decision last updated: 05 June 2013
0
11
1