Council of the Law Society of New South Wales v Somerfield

[2008] NSWADT 235

CITATION:	Council of the Law Society of New South Wales v Somerfield [2008] NSWADT 235
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Council of the Law Society of New South Wales RESPONDENT David Ward Somerfield
FILE NUMBER:	072044
HEARING DATES:	1 August 2008
SUBMISSIONS CLOSED:	1 August 2008
DATE OF DECISION:	22 August 2008
BEFORE:	Haylen W - J (Deputy President); Barnes M - Judicial Member; Bennett C - Non Judicial Member
MATTER FOR DECISION:	Principal Matter
LEGISLATION CITED:	Legal Profession Act 1987 Legal Profession Act 2004 Superannuation Guarantee Charge Act 1992 (Cth)
REPRESENTATION:	APPLICANT P Boyd, solicitor RESPONDENT T Williams, solicitor M Muston, solicitor
ORDERS:	Following orders made by consent: 1. The solicitor David Ward Somerfield pay a fine of $5,000 payable within one month of the date of these Orders 2. The solicitor David Ward Somerfield will be publicly reprimanded 3. David Ward Somerfield is to pay the costs of the Council of the Law Society of New South Wales in these proceedings agreed in the sum of $5,000.00 payable within three months of the date of these Orders 4. David Ward Somerfield within six months (or such other period as may be approved by the Manager of the Professional Standards Department, or the Tribunal) to undertake and successfully complete with a pass mark of not less than 75% a Trust Account course conducted by the College of law or (if such course is discontinued or otherwise becomes unavailable) complete such other course conducted by another body as approved by the manager of the Professional Standards Department by the Tribunal 5. In default of compliance with Orders, 1, 3 and 4 the solicitor's practising certificate be immediately suspended until he complies with the Orders 6. Liberty to apply on seven (7) days' notice to either party.

REASONS FOR DECISION

1 In December 2007, the Council of the Law Society of New South Wales ("the Law Society") filed in the Tribunal an Application for Original Decision alleging David Ward Somerfield, while practising as a solicitor, was guilty of professional misconduct. The grounds upon which professional misconduct were claimed were as follows: the solicitor acted without instructions by acting on a motion to extend time; the solicitor failed to advise his client of developments; the solicitor failed to honour an undertaking; the solicitor failed to pay an employee's superannuation entitlements; the solicitor failed to pay employees superannuation entitlements; the solicitor wilfully breached s 61 of the Legal Professional Act, 1987; and, the solicitor acted without instructions. Detailed particulars of each alleged breach were supplied. The Application sought the following orders: the name of the solicitor be removed from the Roll of Local Lawyers; that the solicitor pay the Applicant's costs of the proceedings; and, such further or other orders the Tribunal deems appropriate.

2 The Application was supported by an Affidavit sworn by Raymond John Collins, the solicitor for the Law Society. That Affidavit annexed a large number of documents in support of the allegation of professional misconduct. The respondent practitioner, Mr Somerfield, filed an Affidavit setting out his practice history and personal circumstances and sought to explain the financial difficulties that he had encountered.

3 At the commencement of the hearing of the Application, it was announced that the matter had been resolved between the Law Society and the respondent practitioner and leave was granted to file in the Tribunal an Instrument of Consent drawn pursuant to the provisions of s 564 of the Legal Profession Act 2004. That document indicated the respondent practitioner, the Applicant Law Society and the Legal Services Commissioner, by reference to the Agreed Facts setting out the respondent practitioner's professional misconduct, consented to Orders in the following terms:

1. The solicitor David Ward Somerfield pay a fine of $5,000 payable within one month of the date of these Orders.

2. The solicitor David Ward Somerfield will be publicly reprimanded.

3. David Ward Somerfield is to pay the costs of the Council of the Law Society of New South Wales in these proceedings agreed in the sum of $5,000.00 payable within three months of the date of these Orders.

4. David Ward Somerfield within six months (or such other period as may be approved by the Manager of the Professional Standards Department, or the Tribunal) to undertake and successfully complete with a pass mark of not less than 75% a Trust Account course conducted by the College of law or (if such course is discontinued or otherwise becomes unavailable) complete such other course conducted by another body as approved by the manager of the Professional Standards Department by the Tribunal.

5. In default of compliance with Orders, 1, 3 and 4 the solicitor's practising certificate be immediately suspended until he complies with the Orders.

6. Liberty to apply on seven (7) days' notice to either party.

The particulars of the Agreed Facts appears as an annexure to this Decision. It should be noted that six of the original particulars were pressed but the allegation that the respondent practitioner had acted without instructions was withdrawn.

4 The Tribunal adjourned to consider the terms of the Agreed Facts and to consider the appropriateness of the proposed Consent Orders. On resumption of the hearing, the parties clarified the position of Mr Somerfield as an undischarged bankrupt and the means by which he was to meet the payment of the fine and the Law Society's costs. Mr Somerfield was able to meet those payments by way of assistance from a family member and by some contributions on his own account. The Tribunal also raised the terms of Order 4 and the capacity for the period of six months and the nature of the course to be undertaken to be altered other than by order of the Tribunal and was satisfied with the parties' agreement that if any amendment was to be made in relation to the terms of Order 4, the Tribunal would be notified before any such amendment was determined.

5 In considering the proposed orders and the Agreed Facts, the Tribunal also had before it the affidavit of Mr Collins and the affidavit of the respondent practitioner, both affidavits having been formally read in the proceedings. Having considered the affidavits and the terms of the Consent Orders and Agreed Facts, the Tribunal determined that it was not necessary to continue to conduct a full hearing of the complaint. The Orders proposed by the parties were made by the Tribunal, together with the announcement that a formal Decision would issue in due course.

6 The Tribunal gave consideration to the particulars of the alleged professional misconduct and noted the terms of the respondent practitioner's affidavit. Importantly, that material and the Agreed Facts indicate that there was no dishonesty involved in the several incidents particularised and that the failure to pay contributions under the Superannuation Guarantee Charge Act 1992 arose from Mr Somerfield's lack of financial resources flowing from the poor financial performance of his practice. He had undertaken to pay the superannuation contributions, and intended to do so, but ultimately did not have the financial resources to meet his undertaking. The other two matters disclose an intention to act in the interests of clients but demonstrate a lack of adherence to professional standards in doing so. Having regard to the nature of the matters accepted by the respondent practitioner as constituting professional misconduct, the Tribunal is satisfied that the fine and the undertaking of a Trust Account course of study (together with the payment of costs), represents an appropriate and proper conclusion to the matter and that the Orders, in combination, provide protection of the public and operate as a deterrent against such behaviour. The Tribunal finds that the conduct of David Ward Somerfield as set out in the Particulars of Agreed Facts amounts to professional misconduct and by consent, the following Orders are made:

1. The solicitor David Ward Somerfield pay a fine of $5,000 payable within one month of the date of these Orders.

2. The solicitor David Ward Somerfield will be publicly reprimanded.

3. David Ward Somerfield is to pay the costs of the Council of the Law Society of New South Wales in these proceedings agreed in the sum of $5,000.00 payable within three months of the date of these Orders.

4. David Ward Somerfield within six months (or such other period as may be approved by the Manager of the Professional Standards Department or the Tribunal) to undertake and successfully complete with a pass mark of not less than 75% a Trust Account course conducted by the College of law or (if such course is discontinued or otherwise becomes unavailable) complete such other course conducted by another body as approved by the manager of the Professional Standards Department by the Tribunal.

5. In default of compliance with Orders, 1, 3 and 4 the solicitor's practising certificate be immediately suspended until he complies with the Orders.

6. Liberty to apply on seven (7) days' notice to either party.

ANNEXURE

PARTICULARS OF AGREED FACTS

Re: DAVID WARD SOMERFIELD

In respect of the following ground of complaint, the solicitor engaged in professional misconduct:

Complaints

1. The Solicitor acted without instructions by acting on a motion to extend time

2. The solicitor failed to advise his client of developments

3. The solicitor failed to honour an undertaking

4. The solicitor failed to pay an employee’s superannuation entitlement

5. The solicitor failed to pay employees superannuation entitlements

6. The solicitor wilfully breached Section 61 of the Legal Profession Act,1987

7. [withdrawn]

Particulars

“Solicitor” means David Ward Somerfield

Complaint by James Jordan on behalf of George Sfakianakis

1. Acting without instructions – acting on motion to extend time for appeal

2. Failure to advise complainant of developments – filing motion to extend time

1. On 9 January 2003 Georgios Sfakianakas (“Mr Sfakianakas”) was driving his motor vehicle when it was involved in a collision with another vehicle owned by a Ms Fardouly whereby damage was caused to her vehicle.

2. As a result of the collision proceedings were commenced against Mr Sfakianakas by Ms Fardouly in the Parramatta Local Court (“the proceedings”).

3. On 22 July 2003 Mr Sfakianakas instructed the solicitor to act for him in place of another firm to whom he had previously furnished instructions.

4. On 14 August 2003 although listed for hearing on that day the proceedings were adjourned until 16 October 2003 with an Order for costs being made in favour of Ms Fardouly.

5. On 16 October 2003 an Arbitrator heard the proceedings. At the hearing Mr Sfakianakas’ cross-claim was abandoned.

6. On 21 November 2003 the Arbitrator gave an Award in favour of Ms Fardouly.

7. On 24 November 2003 the solicitor received the Award.

8. In December 2003 the solicitor received instructions from Mr Sfakianakas to “appeal” the Arbitrator’s Award.

9. The solicitor did not lodge an “Application for Re-Hearing of Arbitrated Action” within 28 days as required, the filing fee therefore not having been provided or paid by Mr Sfakianakis.

10. On 8 April 2004 the solicitor swore an Affidavit in support of a Notice of Motion for an extension of time for a re-hearing of the Arbitration.

11. On 8 April 2004 the solicitor filed the documents referred to in the previous paragraph with the Parramatta Local Court. The solicitor did not advise Mr Sfakianakas that he had done so.

12. On 14 May 2004 at Parramatta Local Court the Notice of Motion was refused.

13. On 31 May 2004 the solicitor met Mr Sfakianakas at his office. At this meeting the solicitor, inter alia, informed Mr Sfakianakis that:-

i. Without instructions he had filed a Motion to extend time for re- hearing which had been refused.

ii. He (Mr Sfakianakis) had not been advised the Motion had been filed

14. On 16 March 2005, in response to a Notice issued to him pursuant to Section 152 of the Legal Profession Act, 1987, the solicitor swore a Statutory Declaration in which he said:-
7. I did inform Mr Sfakianakis of the fact that the application was not lodged in time. I also informed him that the court had refused our application for an extension. I did not so inform Mr Sfakianakis however until after the application for an extension of time had been heard and proved to be unsuccessful.

9. I did not receive specific instructions from Mr Sfakianakas to make the application. I took the necessary steps at my own initiative and without cost to Mr Sfakianakis as I took the view that he had been let down by the failure of counsel to provide and serve the statement of claim.

Complaint by Biljana Maric

1. Failure to honour undertaking

2. Failure to pay employee’s superannuation entitlement

1. On 15 June 2004 the solicitor advised Biljana Maric (“Ms Maric”) by letter that her employment would be terminated effective from 30 June 2004.

2. Ms Maric was employed by the solicitor as a Paralegal from 26 August 2002.

3. On 24 June 2004 Ms Maric sent a letter to the solicitor which said in part:-

As previously discussed with you, there is an outstanding amount towards my superannuation entitlements. I have contacted Law Industry Superannuation Trust to enquire whether any superannuation contributions have been made on my behalf for the period from 26.08.2002 to date. I was advised that no payment have been received by GH Healey & Co Ashfield towards my superannuation entitlements.

Would you kindly deposit the sum of $5,539.25 into my superannuation trust as per details provided above by 30 June 2004.

4. On 17 March 2005 Ms Maric sent a further letter to the solicitor which said in part:-
I refer to my letter dated 24 June 2004. A copy of that letter is attached.

I again enclose the details of my superannuation fund as follows;

…

Would you kindly deposit the sum of $5,539.25 into my superannuation trust fund.

5. On 24 March 2005 the solicitor sent a letter to Ms Maric which said in part:-
I refer to your recent letters demanding payment in full of your superannuation entitlements as my employee.

…

However, I recognise and agree that this does not relieve me of the legal obligation to pay your superannuation entitlements. I confirm that I undertake to pay the amount in full in one (1) month of today.

However, I also confirm that I am advised that such arrears may only be paid to the ATO Superannuation Guarantee Scheme, not to the particular Fund… .

6. The solicitor failed to comply with his undertaking of 24 March 2005.

7. Ms Maric forwarded a letter of complaint to the Legal Services Commissioner which was received on 18 October 2005. Ms Maric’s complaint was out of time for the period from 28 August 2002 until 17 October 2002.

8. The solicitor failed to pay superannuation entitlements due on behalf of Ms Maric pursuant to the Superannuation Guarantee Charge Act, 1992 commencing from 18 October 2002 until 30 June 2004.

9. The failure to pay was due to the solicitor’s financial incapacity at the time and even though he intended to honour the undertaking he was unable to raise the funds to do so.

Complaint by Law Society re employees superannuation

1. Failure to pay employees superannuation entitlement for period prior to 6 April 2003

2. Failure to pay employees superannuation entitlement for period after 6 April 2003

1. On 9 December 2005 the solicitor presented a Debtor’s Petition pursuant to Section 55 of the Bankruptcy Act, 1966.

2. On 4 January 2006 the solicitor handed to the Society a copy of his Statement of Affairs signed by him on 30 November 2005. Paragraph 40 disclosed the following amounts as due to the Australian Taxation Office, the nature of the debt being shown as “Superannuation G’tee Default Assessment”:

30/6/03	$26,644
30/6/04	$24,600
30/6/05	$3,310

3. By letters to the Society dated 2 June 2006 and 19 January 2007 the solicitor furnished details of unpaid superannuation for various employees for the financial year ending 30 June 2002 until the quarter ending 31 December 2006.

4. Commencing on 10 December 2004 the Australian Taxation Office (“the Office”) sent to the solicitor a Notice styled “Superannuation Guarantee Default Assessment” following the solicitor’s failure to lodge a superannuation guarantee statement with the Office for any eligible employees and the Office continued to send a number of such Notices to the solicitor.

5. The solicitor failed to pay superannuation entitlements due on behalf of a total of 25 employees pursuant to the Superannuation Guarantee Charge Act, 1992 for the period commencing from 1 July 2002 until 31 December 2006.

6. The failure to pay was due to the solicitor’s financial incapacity at the time.

Law Society complaint re Peter Sekers/Denning Real Estate Pty Ltd

1. Wilful breach of S.61 of the Legal Profession Act, 1987

1. In about September 2001 the firm GH Healey & Co – Bondi (“GHH-B”) received instructions from Peter Sekers (“Mr Sekers”) on behalf of the company Denning Real Estate Pty Ltd (“Denning”) with respect to a claim by Denning in the District Court. At the time Katarina Muc (“Ms Muc”) was the sole principal of the firm

2. In late 2001/early 2002 conduct of the Denning proceedings was taken over by the solicitor’s practice known as G H Healey & Co – Chatswood (“GGH-C”). Day to day carriage was in the hands of an employed solicitor, a Paul Watts.

3. On 11 March 2002 Mr Sekers paid GHH-C the sum of $5,000 and on 13 March 2002 the sum of $30,000. The money received was paid into the firm’s trust account

4. On 25 March 2002 Paul Watts forwarded to Mr Sekers a Trust Account Statement showing the balance held by Denning with GHH-C as $22,157.50.

5. In April 2002 the files were transferred from GGH-C to Esther Simons of Queens Park and later to Warwick Keay & Associates.

6. On 1 April 2002 counsel’s fees due to Peter Russell in the sum of $1,694.00 were paid from the firm’s trust account.

7. On 15 April 2002 Paul Watts forwarded to Mr Sekers a letter with an authority o pay Counsel’s fees and requested him to sign the authority and return it by facsimile transmission. This Mr Sekers did and on that day a further cheque in the sum of $1,936.00 was drawn in favour of Peter Russell on the firm’s trust account.

8. On 6 May 2002 Mr Sekers sent by facsimile transmission a letter to Greg Healey consultant “GH Healey & Associates” which concluded:-

I request immediate refund on the basis of the 25 March 2002 statement.
9. On 8 May 2002 Paul Watts sent a memo to Ms Muc at GHH-B which said in part:-
Since I sent you the file on 1 May 2002 I’ve spoken to Mr Sekers who assures me there is no money owing to Bondi or to the city as he has paid all accounts…Unless there is money owed to the Bondi or city practices, please expedite payment to Mr Sekers of the balance of monies held in the Chatswood trust account. I attach a cheque requisition for that purpose, leaving blank the amount for the cheque…
10. On 22 May 2002 the solicitor sent a further memo to Ms Muc which said in part:-
... I then telephoned Paul Watts who said that he gave you the file notes etc from the period that the matter was held at Bondi amounting to “Margaret McCue’s work file”… According to Helder he did not prepare a bill (on your instructions) before the file went to Chatswood. The continued retention of this client’s funds after instructions were withdrawn, is causing me some embarrassment if not apprehension. Unless I see a copy of a tax invoice, I have no right to retain his funds any longer .
11. On 23 May 2002 Mr Sekers again sent a letter by facsimile transmission to Greg Healey, “GH Healey & Associates” requesting the return of the sum of $20,463.50.

12. On 28 May 2002 the solicitor forwarded a letter to Mr Sekers which said in part:-

Monies sought by you are held in the practice’s Trust Account in respect of fees and disbursements for this practice, and other solicitors, and barristers, who did work for you.

Whilst we do not wish to retain surplus funds, we do wish to ensure that all such fees an disbursements are attended to. The writer will co-ordinate any payments which are properly due to other solicitors and barristers who did work for you so that any “surplus” can be paid to you.

…

We say this as it is the writer’s understanding that there are monies outstanding to this practice (GH Healey & Co. – Chatswood) and that contrary towhat you indicated to Mr Healey you were advised;

1. There are fees of probably substantially more, but certainly no less than $15,000.00, (without disbursements) due to G H Healey & Co.- Bondi.

2. There are fees due for Mr Costa’s time.of a tax invoice, I have no right to retain his funds any longer.

The writer will,

a. Make contact with Warwick Keay & Associates to request return of your file for a seven (7) day period.

b. Ensure the costing process is attended to as promptly as possible, once the file is received.

13. On 30 June 2002 Paul Watts left the firm GHH-C.

14. On 31 July 2002 $58.40 was deducted from the firm’s trust account for a Company search leaving a balance of $18,469.10.

15. On 16 January 2003 the solicitor wrote to Ms Muc indicating that he proposed writing to Warwick Keay & Associates requesting that they return the Denning file to Ms Muc in order that she could complete the costing and forward an Invoice to him for payment subject to Mr Seker’s authority.

16. On 16 January 2003 the solicitor wrote to Warwick Keay & Associates requesting the return of the file in order that Ms Muc could prepare a bill and make a claim on the moneys held in trust.

17. On 31 January 2003 the solicitor wrote to Ms Muc advising he had spoken to Warwick Keay who disputed the solicitor’s entitlement to maintain a lien for unbilled costs and disbursements.

18. On 31 January 2003 the solicitor drew a cheque in favour of Denning for the amount held namely $18,469.10. On 31 July 2003 the cheque was reversed. Prior thereto the solicitor anticipated obtaining a release from Ms Muc but was unable to so.

19. On 18 February 2003 Ms Muc commenced Local Court proceedings against the solicitor, Denning and Mr Sekers. The solicitor was not made aware of the proceedings at the time and filed no appearance or other document.

20. On 12 May 2003 there was no appearance by or on behalf of Ms Muc at the Call-Over in the Local Court. The Registrar struck the matter out.

21. On 27 May 2003 Solicitors for Denning and Mr Sekers wrote to Ms Muc and the solicitor advising of the outcome of the Call-Over on 12 May 2003. The letter intended for the solicitor was addressed to “Messrs GH Healey & Co” and sent by facsimile transmission to the number for “GH Healey & Co – Sydney law practice”, that being the number for Ms Muc, but not for the solicitor.

The solicitor says he did not receive the letter.
22. On 30 June 2004 the solicitor ceased practising as GHH-C.

23. On 5 August 2004 the solicitor sent a memo to Ms Muc which said in part:-

I note that $18,469.19 remains in this firm’s trust account, but there are no costs outstanding to this firm.

…

As I understand it, you claim entitlement in the nature of a “Solicitor’s lien” over these funds to secure payment of those costs and disbursements. I recall giving you the file last year in the City. If you have since rendered an account to the client, kindly provide me with a copy.

In any event, before these funds are transferred to your firm’s trust account, I confirm my earlier request for a client’s Authority to comply with the trust account regulations.

24. On 27 January 2005 the solicitor transferred the balance held in the GHH-C trust account ($18,469.10) to the account styled ‘David Somerfield & Co Trust Account’.

25. On 11 May 2005 the solicitor sent a memo to Ms Muc advising his intention to return the moneys held in trust to Mr Sekers.

26. On 6 June 2005 Ms Muc commenced further proceedings in the Local Court against the solicitor, Denning and Mr Sekers.

27. On 15 June 2005 the solicitor attempted to pay the funds into Court by forwarding a letter to the Local Court with a cheque drawn on the trust account of David Somerfield & Co in the sum of $18,469.10 together with a Statement of Confession of Claim which said:-

I, the first defendant in this action hereby confess that the sum of $18,469.10 and interest in the sum of $... (if appropriate) being (part of) the amount claimed by the plaintiff, and due to the plaintiff from the second and/or third defendants in full satisfaction of the plaintiff’s claim.
The solicitor did not appreciate that the Court had no facilities to hold the money or that the filing of the Statement of Confession would entitle Ms Muc to judgment.

28. On 28 June 2005 the Registrar of the Local Court sent a letter to the solicitor returning to him the cheque in the sum of $18,469.10.

29. On 13 July 2005 judgment was entered against the solicitor in the Local Court.

30. On 1 August 2005 the solicitor drew a cheque drawn on the trust account of David Somerfield & Co in the sum of $18,469.10 in favour of “K Muc t/as GHH & Co – Bondi”.