Council of the Law Society of New South Wales v Harrison (No 2)
[2012] NSWADT 103
•29 May 2012
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Council of the Law Society of New South Wales v Harrison (No 2) [2012] NSWADT 103 Hearing dates: 19 March 2012 Decision date: 29 May 2012 Jurisdiction: Legal Services Division Before: M Chesterman, Deputy President
S Hale, Judicial Member
J Tingle, Non-judicial MemberDecision: 1. The Respondent is guilty of professional misconduct.
2. The name of the Respondent is to be removed from the Local Roll.
3. Within 21 days of the date of this decision, the Applicant is to file and serve any application regarding the costs of these proceedings that it wishes to make, with supporting submissions. Any submissions in reply by the Respondent must be filed and served within a further 21 days. The matter will then be determined 'on the papers', pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.
4. The claim by the Complainants against the Respondent for compensation is set down for directions at 10 a.m. on 6 June 2012, unless before that date the Complainants advise the Registry that they do not wish to proceed with this claim.
Catchwords: Solicitor - professional misconduct - misappropriation - failure to account - wilful breaches of provisions relating to trust accounts - unethical conduct - fitness to practise Legislation Cited: Administrative Decisions Tribunal Act 1997
Civil Liability Act 2002
Legal Profession Act 1987
Legal Profession Act 2004
Workplace Injury and Workers Compensation Act 1998Cases Cited: Allinson v General Council of Medical Education and Registration [1894] 1 QB 750
Council of the Law Society of New South Wales v Harrison [2010] NSWADT 201
Law Society of New South Wales v Vaughan (No 2) [2011] NSWADT 260
New South Wales Bar Association v Hamman [1999] NSWCA 404
Prothonotary v P [2003] NSWCA 320Category: Principal judgment Parties: Council of the Law Society of New South Wales (Applicant)
Adrian Gregory Harrison (Respondent)
Terence Baxter (First Complainant)
Pamela Baxter (Second Complainant)Representation: Counsel
C Webster (Applicant)
I Lloyd QC (Respondent)
R J Collins (Applicant)
Pagano Burlovich Lawyers (Respondent)
File Number(s): 082030
decision
Procedural history
(M CHESTERMAN (DEPUTY PRESIDENT), S HALE (JUDICIAL MEMBER), J TINGLE (NON-JUDICIAL MEMBER): In a Disciplinary Application ('the Application'), filed on 2 December 2008, the Council of the Law Society of New South Wales ('the Law Society') claimed that the Respondent (hereafter 'the Solicitor'), while practising as a solicitor, was guilty of professional misconduct 'as set out in the following allegation (sic)'. There followed six Grounds, set out under the subheading 'Professional Misconduct'. These are reproduced below.
In the Application, the Law Society sought orders as follows against the Solicitor: (a) removal of his name from the Roll of Local Lawyers; (b) payment of the Law Society's costs of the proceedings; and (c) such further and (sic) other orders as the Tribunal deemed appropriate.
Particulars of the allegations of professional misconduct were supplied in a schedule to the Application. They were in three sections, each headed by the name or names of one or more former clients of the Solicitor. The first section, headed 'Terrence and Pamela Baxter', contained 32 numbered paragraphs. The second section, headed 'Frank Tuffy', contained 6 paragraphs. The third section, headed 'Barrie French', contained 15 paragraphs.
In each of these three sections of the Particulars, an account was given of dealings between the Solicitor and the identified client or clients in the course of a retainer to provide legal services. In this sense, three separate 'matters' made up the content of the Particulars.
On 2 December 2008, the Law Society also filed affidavits as follows:-
1. An affidavit sworn by its solicitor, Mr Raymond Collins, on 25 November 2008.
2. An affidavit sworn on 17 October 2008 by Ms Jean Sayer, to which were annexed two reports prepared by her, dated 6 June 2005 and 18 December 2006 respectively. She had prepared these reports in the capacity of an Investigator appointed to investigate the affairs of the Solicitor practising under the name of Harrison's The Lawyers Pty Ltd, of which he was the sole director.
3. An affidavit sworn on 18 June 2007 by Mr Terrence Baxter.
4. An affidavit sworn on 18 June 2007 by Ms Pamela Baxter.
On 2 March 2009, the Solicitor filed a Reply to the Application, in which he stated that he opposed the orders sought by the Law Society. On 30 March 2009, he filed a short affidavit, sworn by him on 27 March 2009, briefly responding to the matters alleged against him and providing some information about his former corporate practice and his current situation.
The Law Society filed further affidavits as follows:-
1. A second affidavit by Mr Collins, sworn on 12 March 2009.
2. An affidavit sworn on 17 March 2009 by Mr Gary Napper, to which was annexed a report that he had prepared as an Investigator of the Solicitor's corporate practice.
3. An affidavit sworn on 9 September 2009 by Mr Alexander Reetov, who had formerly been employed as a solicitor in this practice.
On 20 May 2010, the Solicitor filed an Amended Reply. This document differed substantially from the Reply. In it, he denied all the allegations made against him in the Application and set out his response to each paragraph of the Particulars.
On 26 May 2010, the Law Society filed an Amended Application. It differed from the Application only in amending one of the paragraphs of the Particulars.
On 2 June 2010, the Solicitor filed an affidavit responding in some detail to the matters alleged against him. On 7 July, he filed a second Amended Reply, in which he again denied all the allegations made against him.
Three successive days in July 2010 were allocated for the hearing of the Application. But at the commencement of the hearing before us on 12 July, we were advised that the parties sought an adjournment because there was a prospect that they would agree on draft consent orders, which would be submitted to us for our consideration. We were advised that this process might take up two days, particularly because an application for consent orders requires the approval and participation of the Legal Services Commissioner. We accordingly adjourned the hearing to 14 July.
Before the hearing commenced on 14 July 2010, the Law Society served a Further Amended Application bearing that date on the Solicitor.
At the resumption of the hearing on this day, we were advised that the parties had not agreed on consent orders. Instead, Ms McIntosh of counsel, appearing for the Solicitor, applied orally for an order that the Amended Application be summarily dismissed under section 73(5)(g)(ii) of the Administrative Decisions Tribunal Act 1997 ('the ADT Act'). The ground that she advanced was that the Amended Application was 'fundamentally flawed', being in such a form as to deny procedural fairness to her client.
The basis of this submission by Ms McIntosh was that the Amended Application did not identify, with respect to each of the six allegations of professional misconduct, the 'matter' or 'matters' (using this term in the sense outlined above at [4]) to which the allegation related. It followed, she said, that the Solicitor had not been properly informed of the case that he had to meet.
Ms Webster of counsel, appearing for the Law Society, then handed up a copy of the Further Amended Application and applied for leave to file it. This document differed from the Amended Application chiefly through the addition of some brief passages identifying, with respect to each of the six allegations, the 'matter' or 'matters' to which the allegation related.
Having perused this document, we stated that we would deal with the Law Society's application for leave to file it before addressing the Solicitor's application for the proceedings to be dismissed. Ms McIntosh stated that this application for leave was opposed.
At the request of counsel for both parties, we gave directions for the filing of written submissions relating to the Law Society's application for leave and the costs associated with it. We also indicated, without opposition from counsel, that we would determine the application 'on the papers', pursuant to section 76 of the ADT Act. We then adjourned the hearing pending the delivery of this decision.
On 13 August 2010, we delivered a decision (Council of the Law Society of New South Wales v Harrison [2010] NSWADT 201), in which the orders made included the following:-
1. Leave is granted to the Applicant to file the Further Amended Application for Original Decision dated 14 July 2010 and handed up at the hearing on 14 July 2010.
2. The costs of this application for leave are reserved.
During the ensuing months, the matter was listed for directions on a number of occasions, for the purposes of scheduling a substantive hearing. Throughout this period, the Solicitor indicated through his legal representatives that he wished to defend the Application. Delays occurred because the Solicitor's health was poor, to the extent that his medical practitioners certified that he was not fit to withstand the stress of a defended hearing, and because new legal representatives instructed by him were not immediately available. During this period, two further affidavits sworn by Mr Peter Mitchell, whom the Solicitor had previously instructed in the proceedings, were filed in the Solicitor's case.
The matter was listed for a substantive hearing on 19, 20, 21 and 22 March 2012. Shortly before the scheduled commencement, however, the Registry received advice from his legal representatives that he no longer intended to defend the proceedings.
On the first day of the hearing, we were advised as follows by his counsel, Mr Lloyd QC: (a) he did not seek to defend the case brought against him; (b) he would not tender any evidence or seek to cross-examine the Law Society's witnesses; (c) the only evidentiary material on which he sought to rely would be that contained in correspondence annexed to the affidavits filed by the Society; (d) he would 'leave it to the Tribunal' to make findings on the evidence adduced by the Society; and (e) on the question of costs - notably, the costs associated with the Law Society's application for leave to file a Further Amended Application - he would wish to make submissions in due course.
Ms Webster, who appeared as counsel for the Law Society, then tendered unopposed the seven affidavits listed above at [5] and [7], together with copies of four short documents supplementing its evidence in the Baxter matter. She also handed up a document headed 'Society's Outline Chronology', in which the significant events in each of the three matters (Baxter, Tuffy and French) were linked to passages in the evidence.
After Ms Webster had addressed us relatively briefly and Mr Lloyd had made a few concluding comments, we stated that we would reserve our decision.
The Further Amended Application
The six Grounds on which the Law Society alleged professional misconduct by the Solicitor were set out in the Further Amended Application as follows:-
1. Wilful breach of Section 61 of the Legal Profession Act, 1987. [with respect to Baxter, Tuffy and French]
2. Wilful breach of Section 62 of the Legal Profession Act, 1987. [with respect to Baxter]
3. Misappropriation of monies. [with respect to Baxter and French]
4. Unethical conduct:-
a. having clients sign authorities and thereafter backdating those authorities
b. having clients sign authorities and thereafter inserting amounts and making additions to those authorities.
[with respect to Baxter]
5. Failure to account for settlement proceeds of the client's workers compensation claim. [with respect to French]
6. Charging and appropriating funds for solicitor/client costs contrary to the provisions of Section 116 of the Workplace Injury Management and Workers Compensation Act, 1998. [with respect to French]
Under the same heading, the following statement also appeared:-
[All complaints the subject of Grounds 1 to 6 were referred to the Tribunal by resolution of theProfessional Conduct Committee on 13 November 2008 (see Collins pp 190-192)]
The Particulars set out in the Further Amended Application were as follows:-
AMENDED PARTICULARS RE ADRIAN GREGORY HARRISON
"the Solicitor" means Adrian Gregory Harrison
"Mr Baxter" means Terrence Carrington Baxter
"Mrs Baxter" means Pamela Dorothy Baxter
"Pilteam" means Pilteam Pty. Limited
"Mr Tuffy" means Frank Tuffy
TERRENCE AND PAMELA BAXTER
GROUNDS:
1. Wilful breach of Section 61 of Legal Profession Act, 1987.
3. Misappropriation.
4. Unethical conduct:-
a. having clients sign authorities and thereafter backdating those authorities
b. by the Society (sic) having clients sign authorities and thereafter inserting amounts and making additions to those authorities).
(complaints made by the Society 31 August 2005 - Collins p22)
2. Wilful breach of Section 62 of Legal Profession Act, 1987
(complaint made by the Society 31 Ausust 2005 - Collins p22 and 3 August 2006 -Collins p77)
1. Mr Brett Carrington Baxter was the son of Mr & Mrs Baxter. He died on 14 December 2002.
2. At the date of Brett Baxter's death he was a Naval officer stationed in Cairns, Queensland.
3. In or about March 2003 Mr & Mrs Baxter instructed the Solicitor to act for them in respect of a possible claim against the Australian Navy in relation to Brett Baxter's death (the Navy matter). Mr & Mrs Baxter also instructed the Solicitor to claim their late son's entitlement to superannuation with the Australian Navy (the super matter).
4. On 26 June 2003 Mr & Mrs Baxter entered into a Fees Disclosure and Costs Agreement. A further Retainer Agreement was entered into on 12 December 2003.
5. On a number of occasions Mr & Mrs Baxter informed the Solicitor that they did not want legal costs to exceed $10,000.
6. On or about 30 June 2003 Mr & Mrs Baxter paid the sum of $2,000 to the Solicitor. In accordance with the Costs Agreement, this sum was to be deposited into the Solicitor's trust account. However, $1,727.88 was credited to the Solicitor's General Account in respect of the Navy matter and $272.12 was credited to the Solicitor's General Account in respect of the superannuation matter.
7. By letter dated 30 April 2004 (which appears to be a typing error) from Military Super, the Solicitor was informed that a total sum of $271,481.60 was standing to the credit of the late Brett Baxter at his death and would soon be forwarded to the Solicitor.
8. On 8 December 2003 the sum of $271,481.60 comprised of two cheques received by the Solicitor from Military Super ["the super moneys"] was deposited to the solicitor's trust account.
9. The deposit was split into three amounts described in the trust account records as:
On account of costs and disbursements $6,421.74
Settlement of Matter $200,000.00
On account of costs and disbursements $65,059.86
$271,481.60
10. None of the monies received were on account of costs and disbursements.
11. Trust ledger account entries relating to the super matter show receipt of those moneys and their disbursement as follows:
Pass Sheet Date
15.12.03 Reserve Bank of Australia 6,421.74 8.12.03
15.12.03 Reserve Bank of Australia 200,000.00 8.12.03
15.12.03 Reserve Bank of Australia 65,059.86 8.12.03
$271,481.60
Disbursed as follows:-
15.12.03 Harrisons The Lawyers General Account
- costs & disbursements 71,481.60 11.12.03
31.12.03 Pilteam Pty Limited
- investment 100,000.00 22.12.03
29.1.04 Corser Sheldon Gordon
- Property Exchange (Hervey Bay) 92,000.00 21.1.04
29.4.04 Pamela Baxter
- Balance of funds on Trust 8,000.00 Unpresented $271,481.60
12. The dates on the column on the left above shows the date of the entries in the trust ledger account and the dates on the column on the right show the date of the presentation of the cheques drawn as shown in the Bank Statements of the trust account.
13. The cheque dated 15 December 2003 in the sum of $71,481.60 was drawn from the Solicitor's trust account and made payable to the firm's general account. The cheque was said to be on account of costs and disbursements. The Bank Statement shows the cheque as having been presented on 11 December 2003. Mr & Mrs Baxter did not ever receive any bill in respect of this sum.
14. Prior to a deposit of the sum of $72,396.60 [which deposit included the cheque referred to in paragraph 13 above], the firm's general account which had an overdraft limit of $50,000.00 was overdrawn in the sum of $46,832.88.
15. Mr & Mrs Baxter did not authorize the Solicitor to make the payments to Pilteam and Corser Sheldon Gordon referred to in paragraph 11 above. At the time that the payments were made, Mr & Mrs Baxter had not yet been informed by the Solicitor of the receipt of the super moneys or any moneys at all.
16. The Solicitor did not inform Mr & Mrs Baxter of the receipt of the super moneys until some time in the middle of January 2004. The Solicitor informed Mr & Mrs Baxter that the sum of $200,000.00 had been received and not the correct amount.
17. Mr Brett Carrington Baxter died intestate and, accordingly, the Public Trustee of Queensland was, on 13 April 2003, appointed by the Supreme Court of Queensland to administer his estate.
18. Pilteam is a company controlled by the Solicitor and whose Directors and equal shareholders are the Solicitor and his wife. The Solicitor is also the Company Secretary. The Company is the Trustee of the Hamat Discretionary Trust.
19. The sum of $100,000.00 drawn on 22 December 2003 was deposited into Pilteam's bank account and funded cheques totaling $30,000.00 drawn by Pilteam and deposited to the Solicitor's general account when the general account was overdrawn.
20. By letter dated 5 February 2004 the Solicitor wrote separately to both Mr & Mrs Baxter. He confirmed with Mr & Mrs Baxter that the sum of $100,000.00 had been advanced on 29 January 2004 to Pilteam at an interest rate of 9%, and re-payable on 9 March 2004.
21. The $100,000.00 was not repaid on 9 March 2004.
22. Cheques [dated 15 March 2004] in the sum of $907.40 drawn in favour of Mr Baxter and $986.40 in favour of Mrs Baxter and both drawn on the Solicitor's general account were dishonoured.
23. The sum of $92,000.00 was withdrawn from the trust account and presented on 21 January 2004. The cheque was used in payment of the deposit on the purchase of a property known as 40 Watson Street, Pialba, Hervey Bay - the purchaser of the property was Pilteam as trustee for the Hamat Discretionary Trust.
24. In late March 2004 Mr Baxter telephoned COMM Super and was advised that the total of the super moneys paid to the Solicitor was $271,481.60 and not, as advised to him by the Solicitor in January 2004, $200,000.00.
25. Following the receipt of the advices referred to in paragraph 24 above, Mr & Mrs Baxter met with the Solicitor and conveyed to him the substance of the said conversation. Upon demand by Mr and Mrs Baxter for the balance of the super moneys the Solicitor indicated that he had received three cheques from COMM
Super.
26. The Solicitor did not return to Mr & Mrs Baxter the sum of, at least, $61,481-60 [$71,481.60 less $10,000 for costs].
27. Some one week after the meeting referred to in paragraph 25 above, Mr Baxter telephoned the Solicitor and requested that the total of the super moneys be returned to he (sic) and his wife. The Solicitor did not return the super moneys to Mr & Mrs Baxter.
28. On or about 26 April 2004 the Solicitor provided to Mr & Mrs Baxter a Deed of Guarantee and an Acknowledgement in respect of the sum of $100,000.00 which was said to have been advanced to Pilteam and a Mortgage for the sum of $92,000.00 also said to have been advanced to Pilteam. The Solicitor also provided to Mr & Mrs Baxter a copy of his trust ledger.
29. On 27 April 2004 Mr & Mrs Baxter terminated the Solicitor's instructions and again sought the payment of the super moneys.
30. In January 2004, at a meeting with the Solicitor, Mr & Mrs Baxter signed several authorities which were blank or, at least, did not have any handwritten notations.
31. Authorities dated 11 December 2003:
(i) The authority is signed by Mr Baxter and authorizes the Solicitor to draw the sum of $71,481.60 in full payment of his account and $100,000 in favour of Mr Baxter in full payment of his share of the balance of the super moneys.
(ii) The Solicitor, in his handwriting has added a further authority therein authorizing the drawing of a trust account cheque in the sum of $92,000.00 to Corser Sheldon Gordon Solicitors. [see paragraph 11 above]
(iii) The authority is signed by Mrs Baxter and authorizes the Solicitor to draw the sum of $71,487.60 in full payment of his account and $100,000 in favour of Mrs Baxter in full payment of her share of the balance of the super moneys.
(iv) The Solicitor, in his handwriting has added a further authority therein authorizing the drawing of a trust account cheque in the sum of $100,000.00 to Pilteam Pty Ltd [see paragraph 11 above]
32. Neither Mr or Mrs Baxter received the bill of costs for $71,481.60 and had always instructed the Solicitor that costs should not exceed $10,000.00.
FRANK TUFFY
GROUND:
1. Wilful breach of Section 61of Legal Profession Act, 1987.
(complaint made by the Society 31 August 2005 - Collins p221)
1. The Solicitor acted for Mr Tuffy in an asbestos related common law claim in the Dust Diseases Tribunal ("the proceedings").
2. As a result of the proceedings the sum of $125,000.00 was received by the Solicitor said to be on account of costs and disbursements and deposited into his trust account on 4 March 2004.
3. On 4 March 2004 the sum of $60.075.11 was paid to Mr Tuffy.
4. On 4 March 2004 the sum of $64,924.89 was drawn from the trust account on account of costs and disbursements and deposited to the Solicitor's general account. The bill of costs issued by the Solicitor indicates that this figure is comprised of $49,600 in costs and $15,304.89 in disbursements.
5. On 5 March 2004 the client authorized the payment of costs and disbursements.
6. Up to 11 June 2004, the following disbursements [referred to in the bill of costs in paragraph 4 above] had not been paid:
(i) Prudence Consulting Occupational
Therapy Report $1,897.50
(ii) Mr James de Berg of Counsel $3,080.00
(iii) Mr Jim Gracie of Counsel $4,537.50
BARRIE FRENCH
GROUNDS:
5. Failure to account for settlement proceeds of the client's workers compensation claim.
(complaint made by Mr French in August 2005 - Collins p115ff)
1. Wilful breach of Section 61 of Legal Profession Act, 1987.
(complaint made by the Society 31 May 2007 - Collins p136)
3. Misappropriation.
6. Charging and appropriating funds for solicitor/client costs contrary to the provisions of Section 116 of the Workplace Injury Management & Workers Compensation Act, 1998.
(complaints made by the Society 13 December 2007 - Collins p145)
1. On 1 August 200 Barrie French also known as Barrie Dyson and Barrie Schlyman ("Mr French") suffered a work injury and a firm of solicitors commenced proceedings in the Workers Compensation Court on his behalf.
2. In about April 2002 the solicitor's firm Harrisons The Lawyers ("Harrisons") took over the matter on behalf of Mr French and an employed solicitor had carriage of it. It was allocated Matter No. 2010327 by Harrisons.
3. On 2 April 2003 the matter was listed for hearing but it settled without a hearing. There was an Award pursuant to section 66 and 67 in favour of Mr French of $20,000.00 together with his Section 60 expenses up to $3,000.00 and his solicitor's costs.
4. On 7 May 2003 the sum of $18.000 [being the Award of $20,000.00 less the amount of $2,000.00 paid to the Health Insurance Commission] received by Harrisons was deposited to its Trust Account. The sum of $18,000.00 was comprised of two cheques, one for $9,250.00 and the other for $8,750.00 and although the cheques were drawn payable to Mr French they were deposited to the Trust Account as he was in prison.
5. On 5 June 2003 Mr French signed the following documents:
a. "Acknowledgement of receipt" dated 5 June 2003
b. "Authority to receive and release funds held in trust" dated 5 June 2003 which authorised Harrisons to release the sum of $1,000.00 to Dianne Allison
c. "Authority to receive and release funds held in trust" dated 5 June 2003 which authorised Harrisons to release the sum of $9,538.79 to Harrisons
d. "Authority to receive and release funds held in trust" dated 5 June 2003, which authorised Harrisons to release monies to "a named person with my written authority to receive it."
6. On 6 June 2003 a cheque was drawn on the trust account in the sum of $10,538.79 recorded in the trust ledger as payable to Barrie Dyson but detailed as "on account of costs and disbursements." This cheque was deposited into the office account.
7. Produced to the Receiver were two Tax Invoices for fees relating to Mr French's Workers Compensation Claim [matter No. 2100327] namely:-
Tax Invoice dated 30 June 2002 $2,017.40
Account Tax Invoice dated 6 June 2003 $8,559.66
8. The details on the first bill show that it relates in the main to proceedings against Mr French taken by Centrelink and by the DPP and not to his Workers Compensation Claim. This first bill is for profit costs only whilst that relating to the Workers Compensation Claim in the sum of $8,559.66 is made up of profit costs [$6,534.08] and disbursements.
9. On 11 July 2003 Harrisons submitted their party/party Bill of Costs to the Solicitors [including an amount due to the former solicitors who acted for Mr French] for the Workers Compensation Insurer.
10. On 26 August 2003 the party/party costs of $11.618 received by Harrisons was deposited to the Office Account from which outstanding disbursements in the sum of $4,177.80 were paid. Accordingly the amount due for profit costs was $7,640.20.
11. Although only entitled to party/party costs the total amount drawn by the solicitor for costs and disbursements was as follows:-
6.6.03 Ex settlement moneys $10,538.79
26.8.03 Party/party costs pursuant to Award $11,818.00
7.11.03 Health Insurance Commission refund $988.40
$23,345.19
Less: Disbursements paid $4,177.80
$19,167.39
12. On the basis that $988.40 was applied to Criminal matters involving Mr French and if this sum is deducted from the sum of $19.167.39 the solicitor received profit costs of $18,178.99 whereas he was only entitled to the aforementioned $7,640.20.
The excess drawn was thus $10,538.79.
13. The Receiver did not sight any authority by Mr French with respect to the sum of $988.40 being applied towards costs in the criminal matters.
14. On 1 October 2003 a refund cheque in the sum of $988.40 was deposited to the Trust Account following its receipt from the Health Insurance Commission. On 7 November 2003 this sum was transferred to the office account of Harrisons and said to be on account of costs and disbursements. The Receiver was unable to find any form of accounting in relation to the receipt and disbursement of this sum or a Tax Invoice for the sum of $988.40 or giving credit for that sum.
15. On 25 February 2004 the balance held in trust namely $7,461.21 following demands by Centrelink was paid to it.
The Solicitor was admitted on 5 July 1996 and held a practising certificate until it was cancelled by resolution of the Law Society on 17 June 2004. As is alleged in the Application, all of the conduct on his part described in these Particulars occurred while he was practising as a solicitor.
Relevant statutory provisions
As indicated in these Particulars, the relevant conduct of the Solicitor occurred before 1 October 2005, the date of commencement of the Legal Profession Act 2004 ('the LP Act 2004'). Some of the complaints from which these proceedings originate were made before this date and some after. The proceedings were instituted after this date. By virtue of clauses 16 and 17 of Schedule 9 to this Act, the proceedings are therefore governed by Chapter 4 and other relevant provisions of the LP Act 2004. But the Tribunal may not make any determination or order of a disciplinary nature against the Solicitor that is 'more onerous' than could have been made under the statute that preceded and was repealed by this Act, namely, the Legal Profession Act 1987 ('the LP Act 1987').
Some of the allegations made against the Solicitor related to his handling of funds that were or should have been in his trust account. In ascertaining his obligations regarding his trust account during the period before the commencement of the LP Act 2004, we must have regard, as the Application indicated, to relevant provisions of the LP Act 1987.
For present purposes, the relevant provisions of this Act are as follows:-
61 Money received by solicitor on behalf of another
(1) A solicitor who, in the course of practising as a solicitor in this State, receives money on behalf of another person:
(a) must pay the money, within the time prescribed by the regulations, into a general trust account in New South Wales at an approved financial institution and must hold the money in accordance with the regulations relating to trust money, or
(b)..., or
(c)....
(2) In any of those three cases, the solicitor must hold the money exclusively for, and must disburse the money in accordance with the directions of, the person on whose behalf it is held.
(3) This section:...
(b) does not prevent a solicitor from withdrawing or receiving, from trust money or controlled money:
(i) reimbursement for disbursements paid by the solicitor, or
(ii) money for disbursements to be paid by the solicitor, or
(iii) money due, or to accrue due, to the solicitor for costs,
so long as the procedure prescribed by the regulations is followed...
(8) It is professional misconduct for a solicitor to wilfully contravene subsection (1) or (2).
62 Keeping of accounts
(1) A solicitor shall keep:
(a) in the case of trust money (within the meaning of section 61)-accounting records...
that disclose at all times the true position in relation to money received by the solicitor on behalf of another person...
(4) A wilful contravention of subsection (1), (2) or (3) is professional misconduct.
The following provisions within sections 497 and 498 of the LP Act 2004 are also relevant:-
497 Professional misconduct
(1) For the purposes of this Act:
professional misconduct includes:...
(b) conduct of an Australian legal practitioner whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice.
498 Conduct capable of being unsatisfactory professional conduct or professional misconduct
(1) Without limiting section 496 or 497, the following conduct is capable of being unsatisfactory professional conduct or professional misconduct:
(a) conduct consisting of a contravention of this Act, the regulations or the legal profession rules...
With reference to the French matter, subsections (1), (4) and (5) of section 116 of the Workplace Injury and Workers Compensation Act 1998 should also be quoted :-
116 Solicitor/client costs in compensation proceedings
(1) The legal representative or agent of a person claiming compensation under this Act is not entitled:
(a) to recover from the person any costs in respect of the claim, or
(b) to claim a lien in respect of those costs on, or deduct those costs from, the sum awarded, ordered or agreed as compensation,
unless those costs are awarded by the Compensation Court.
(4) This section prevails to the extent of any inconsistency with Part 3.2 of the Legal Profession Act 2004.
(5) A person must not:
(a) claim a lien that the person is not entitled to claim because of subsection (1), or
(b) deduct costs from a sum awarded, ordered or agreed as compensation that the person is not entitled to deduct because of subsection (1).
Maximum penalty: 50 penalty units.
Discussion and conclusions
Ms Webster argued that the Solicitor's conduct with regard to each of the three matters described in the Particulars amounted to professional misconduct and that the proper course for the Tribunal was to order that his name be removed from the Roll.
It was his behaviour in the Baxter matter, she maintained, that most clearly called for these orders. This included misappropriation of substantial amounts, coupled with other dishonest conduct. Out of a total sum of $271,481.60 received into his trust account to be held in trust for Mr and Mrs Baxter, he had made an undisclosed and unauthorised withdrawal of $71,481.60 on account of his costs. Without authorisation or due notification, he had also transferred a further amount of $192,000 into investments in which he was personally interested. In order to depict these transactions as legitimate and duly authorised, he had altered written authorities that Mr and Mrs Baxter signed subsequently, by backdating them and inserting additional material, including amounts of money.
Ms Webster suggested that the Solicitor's misconduct in each of the matters of Tuffy and French, while serious, would not in itself warrant removal of his name from the Roll. In the Tuffy matter, he had failed to pay three disbursements, totalling $9,515.00, out of funds received into his trust account for this purpose. In the French matter, he had misappropriated the sum of $10,538.79 by transferring it out of his trust account into his office account as costs due to him on the settlement of his client's workers compensation claim, even though he was prohibited by statute to recover any amount other than the figure paid to him by the solicitors for the opposing party.
Mr Lloyd drew to our attention correspondence in the evidence indicating that on or about 27 June 2005 the Solicitor sent cheques to Mr and Mrs Baxter for the sums totalling $192,000 that he had transferred without their consent to Pilteam. Mr Lloyd maintained that the Solicitor had therefore repaid all that he had owed to them.
We have reviewed the evidence adduced by the Law Society, paying particular attention to the documents identified in the useful Chronology that Ms Webster handed up. Having regard to the fact that this evidence is uncontested, we find that it sufficiently establishes the allegations made and particularised in the Further Amended Application, including the breaches, as pleaded, of sections 61 and 62 of the LP Act 1987 and section 116 of the Workplace Injury and Workers Compensation Act 1998.
We have no hesitation in concluding that the Solicitor's conduct in the Baxter matter would 'reasonably be regarded as disgraceful and dishonourable by professional brethren of good repute and competency' (to quote from Mason P's judgment in New South Wales Bar Association v Hamman [1999] NSWCA 404 at [21], citing Allinson v General Council of Medical Education and Registration [1894] 1 QB 750). It therefore manifestly amounted to professional misconduct at common law.
A particularly compelling factor supporting this conclusion is that the Solicitor's conduct in misappropriating funds received by him on trust for Mr and Mrs Baxter and endeavouring to cover up what he had done by altering documents that they had signed occurred while to his knowledge they were in a state of deep distress following the death of their son.
We find in addition that his behaviour in the Baxter matter amounted to professional misconduct under section 497(1)(b) of the LP Act 2004 and that, in so far as it involved wilful breaches of the sections 61 and 62 of the LP Act 1987, it was professional misconduct under section 498(1)(a) of the 2004 Act.
In the Tuffy and French matters, the Solicitor's wilful breaches of section 61 of the LP Act 1987 would have amounted to professional misconduct under that Act (see sections 61(8)). In our judgment, the same characterisation should apply under the 2004 Act. In the French matter, there is the additional consideration that the Solicitor's conduct involved both misappropriation and the contravention of a separate statute specifically prohibiting the payment, purportedly on account of costs, that he made in his own favour.
These instances of professional misconduct, including conduct that we have held to be 'disgraceful and dishonourable', show that at the time when he engaged in it he was not a fit and proper person to remain on the Roll. A considerable period of time - nearly seven years - has elapsed since then. A major cause of the delay in the hearing of this matter is however that in correspondence with the Law Society following the making of the various complaints against him he has persisted in denying liability. Indeed, in circumstances outlined at the commencement of these reasons, he maintained his denial of liability until shortly before the substantive hearing. Although he decided ultimately not to defend the proceedings, he has not tendered any evidence or advanced any submission suggesting that he recognises the wrongfulness of his past misconduct and is sorry for it, or that he might now be a fit and proper person to practise law.
For these reasons, 'the probability' now (to quote a criterion stated by Young CJ in Eq in Prothonotary v P [2003] NSWCA 320 at [17(2)]), is that he is 'permanently unfit to practise'.
We therefore order, pursuant to section 562(2)(a) of the LP Act 2004, that the name of the Solicitor is to be removed from the Local Roll.
Costs
Under section 566(1) of the LP Act 2004, the Tribunal is required to order that a respondent in disciplinary proceedings who has been found guilty of professional misconduct must pay the costs of the applicant unless 'exceptional circumstances' exist. Mr Lloyd submitted, without opposition from Ms Webster, that because the question whether the Law Society should have leave to file the Further Amended Application required an adjournment of the proceedings and a decision by us based on written submissions, there might be 'exceptional circumstances' that could call for departure from the normal rule stated in section 566.
In our decision on this matter, Council of the Law Society of New South Wales v Harrison [2010] NSWADT 201, we reserved the question of costs, recognising that the costs of that part of the proceedings could not be determined until completion of the substantive hearing: see the decision at [77 - 85].
We accordingly direct that the question of the costs of these proceedings be determined according to the following procedure. Within 21 days of the date of this decision, the Law Society is to file and serve any application for costs that it wishes to make, with supporting submissions. Any submissions in reply by the Solicitor must be filed and served within a further 21 days. The matter will then be determined 'on the papers', pursuant to section 76 of the ADT Act.
Claim for compensation
In a letter to the Registry dated 22 March 2012, the complainants Terrence Baxter and Pamela Baxter stated that they wished to make a claim for compensation against the Solicitor for the harm suffered by them on account of his conduct in acting for them in the manner described above. Their letter indicated that the types of harm that they had in mind were the stress, anxiety and mental pain that they had suffered on account of this conduct and the time that they had been compelled to devote to pursuing their complaint against him.
Part 4.9 of the LP Act 2004 contains provisions (sections 570 to 575) entitling complainants to 'request' compensation for 'loss' suffered by them because of the conduct to which the complaint related.
We feel bound to make two preliminary observations regarding this claim by Mr and Mrs Baxter.
First, subsection (3) of section 570 indicates that a request for compensation may be made in the complaint, or by notice in writing to the Legal Services Commissioner or the 'relevant Council' (in this case, the Council of the Law Society'). Subsection (5) states: 'Such a request may only be made within 6 years after the conduct that caused the loss is alleged to have occurred'. If Mr and Mrs Baxter's letter of 22 March 2012 constitutes their first communication of their wish to claim compensation, subsection (5) would appear to constitute a bar to their claim, because the events about which they complained occurred in 2003 and 2004. But it may be that on an earlier date, within the time limit prescribed by subsection (5), they gave due notice to the Commissioner or the Law Society.
Secondly, subsection (1) of section 570 of the LP Act 2004 uses the term 'loss' to define the type of harm for which a complainant may claim compensation. (This term is repeated in other provisions within Part 4.9: for example, sections 571(1), 572(1) and 575.) In section 495, 'loss' is defined, for the purposes of Chapter 4 of the Act, to mean 'loss of a pecuniary nature', excluding 'non-economic loss within the meaning of the Civil Liability Act 2002'. In section 3 of the latter Act, 'non-economic loss' is defined to mean any one or more of a number of categories of loss including 'pain and suffering'.
In a recent decision of the Tribunal, Council of the Law Society of New South Wales v Vaughan (No 2) [2011] NSWADT 260, these matters were the subject of discussion at paragraphs [36] - [55].
It would seem that, in view of this definition of 'loss', the principal types of harm that Mr and Mrs Baxter described in their letter to the Registry might fall outside the scope of the provisions for compensation that they seek to invoke.
On the cover sheet of this decision we have ordered that this matter of the claim by Mr and Mrs Baxter against the Solicitor for compensation should be set down for directions at 10 a.m. on 6 June 2012. But if in view of the considerations just outlined, or for any other reason, they determine that they do not wish to pursue their claim, they should notify the Registry as soon as they conveniently can after receiving this decision. If they do so before 6 June 2012, the directions hearing will be vacated.
If these directions proceed, the matters dealt with should include the question (if it needs to be resolved) whether leave should be granted by the Tribunal under section 570(4) of the LP Act 2004.
In accordance with normal practice, the Law Society is excused from attendance at these directions.
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Decision last updated: 29 May 2012
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