Council of the Law Society of NSW v Hughes
[2013] NSWADT 224
•17 September 2013
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Council of the Law Society of NSW v Hughes [2013] NSWADT 224 Hearing dates: 17 September 2013 Decision date: 17 September 2013 Jurisdiction: Legal Services Division Before: M Chesterman, Deputy President
M Riordan, Judicial Member
S Hayes, Non-judicial MemberDecision: 1.Order under section 18(2) of the Legal Profession Act 2004 prohibiting any law practice from employing or paying the Respondent in connection with the legal practice engaged in by the law practice, without approval under section 17.
2.Order for Respondent to pay Applicant's costs under section 20(3) Legal Profession Act 2004. In the alternative, we order costs to be paid under section 88(1A)(e) of the Administrative Decisions Tribunal Act 1997.
Catchwords: Order prohibiting any law practice from employing Respondent - grounds for order - costs Legislation Cited: Administrative Decisions Tribunal Act 1997
Legal Profession Act 2004Category: Principal judgment Parties: Council of the Law Society of New South Wales (Applicant)
Margaret Ellen Hughes (Respondent)Representation: C Groenewegen (Applicant)
No appearance (Respondent)
File Number(s): 132004
reasons for decision
Procedural history
On 26 February 2013, the Council of the Law Society of New South Wales ('the Law Society') filed an Application for Original Decision ('the Application') in the Tribunal, naming Margaret Ellen Hughes as the Respondent.
The Application sought the following orders:-
1. An order pursuant to section 18(2) of the Legal Profession Act 2004 prohibiting any law practice from employing or paying the Respondent in connection with the legal practice engaged in by the law practice, without approval under section 17.
2. An order pursuant to section 20(3) of the Act that the Respondent pay the Applicant's costs of these proceedings.
3. Such further or other orders as the Tribunal deems fit.
The Grounds for the Application were as follows:-
1. The Respondent is not a fit and proper person to be employed or paid in connection with any legal practice; and/or
2. The Respondent has been guilty of conduct that, if the person were an Australian legal practitioner, would have constituted unsatisfactory professional conduct or professional misconduct.
The Particulars provided for these Grounds described in some detail the alleged conduct of the Respondent on which the Application was based. A summary of their contents and relevant extracts appear below.
On 26 February 2013, the Law Society also filed affidavits sworn by the following deponents: Anne-Marie Foord (the Manager of the Professional Standards Department of the Law Society), Cora Groenewegen (a solicitor employed in this Department) and John Mitchell (the Chief Trust Account Investigator and Supervisor employed by the Law Society).
Exhibited to Mr Mitchell's affidavit were two bound volumes. These contained three reports that he had prepared on the affairs of an incorporated law practice (North Coast Prime Law Pty Ltd, trading as North Coast Prime Law) of which the Respondent had been a director, together with copies of a number of other documents relating to the matters alleged in the Particulars.
On 4 March 2013, the Respondent was personally served with copies of the Application, these three affidavits, the two volumes exhibited to Mr Mitchell's affidavit and a letter from the Law Society to her dated 26 February 2013. Service was effected at an address in rural New South Wales which appears to be her place of residence.
The Respondent did not appear at directions hearing held on 3 April, 5 June and 7 August 2013. In letters to the Registrar dated 25 March, 20 May and 21 June 2013, she stated amongst other things that she wished to raise a number of matters in her defence. In the first of these letters, she indicated that for a number of reasons (including her own ill health) it would not be possible for her to attend at the Tribunal, either in person or by telephone.
At the directions hearing on 7 August 2013, the date of hearing of the Application was confirmed as 17 September 2013. In a letter sent by express post to the Respondent on 7 August 2013, Ms Groenewegen notified her of this date.
On 3 September 2013, the Registry received from the Respondent an undated and unsworn document headed 'Reply'. This contained a number of specific allegations responding to the matters alleged in the Application. She also stated in it that her conduct was 'totally wrong' and that on account of her age and ill health she had 'no intention of working again'.
The hearing of the Application took place before us on the scheduled date, 17 September 2013. Ms Groenewegen appeared for the Law Society. There was no appearance by or on behalf of the Respondent.
At the commencement of the hearing, we admitted as evidence an affidavit attesting to the service of the Application and accompanying documents on the Respondent and a copy of Ms Groenewegen's letter to her dated 7 August 2013.
On the basis of this evidence, we found that the Respondent had received proper notice of the proceedings and of the date of the hearing. We accordingly ruled that the hearing of the Application could and should proceed in the absence of the Respondent.
We then admitted the three affidavits filed on 26 February 2013 by the Law Society and an affidavit sworn on 12 September 2013 by Anne Siddons. Ms Siddons is employed by the Law Society as the Manager of the Fidelity Fund.
Having heard submissions from Ms Groenewegen, we determined that we could and should, without further delay, make orders in terms of Orders 1 and 2 set out in the Application. We indicated that we would publish reasons for these orders at a later date.
Our orders
The orders that we made at the conclusion of the hearing on 17 September 2013 were in these terms:-
1. Order under section 18(2) of the Legal Profession Act 2004 prohibiting any law practice from employing or paying the Respondent in connection with the legal practice engaged in by the law practice, without approval under section 17.
2. Order for Respondent to pay Applicant's costs under section 20(3) Legal Profession Act 2004. In the alternative, we order costs to be paid under section 88(1A)(e) of the Administrative Decisions Tribunal Act 1997.
On the same day, the Registry sent to both parties a Notice of Decision containing these orders.
We will now outline the reasons on which they are based.
Relevant statutory provisions
The provisions of the Legal Profession Act 2004 ('the LP Act') to which we referred in our orders state, so far as relevant:-
17 Associates who are disqualified or convicted persons
(1) A law practice must not have a lay associate whom any principal or legal practitioner associate of the law practice knows to be:
(a) a disqualified person...
unless the associate is approved by the relevant authority under subsection (3).
(3) The relevant authority to approve a person for the purposes of subsection (1) is:...
(b) in the case of a disqualified person who is an associate of a solicitor-the Law Society Council...
(6) A disqualified person, or a person convicted of a serious offence, must not seek to become a lay associate of a law practice unless the person first informs the law practice of the disqualification or conviction.
(9) In this section:
lay associate of a law practice has the same meaning as in section 7 (Terms relating to associates and principals of law practices)...
18 Prohibition on employment of certain lay associates
(1) This section applies to a person who is not an Australian legal practitioner and who is or was a lay associate of a law practice that:
(a) engages in legal practice principally in this jurisdiction, or
(b) employs or employed the person to work principally in this jurisdiction,
and so applies whether or not the law practice subsequently ceased to exist or engage in legal practice principally in this jurisdiction...
(2) On application by a Council, the Tribunal may make an order prohibiting (without approval under section 17 (Associates who are disqualified or convicted persons)) any law practice from employing or paying in connection with the legal practice engaged in by the law practice a specified person to whom this section applies, if:
(a) the Tribunal is satisfied that the person is not a fit and proper person to be employed or paid in connection with that legal practice, or
(b) the Tribunal is satisfied that the person has been guilty of conduct that, if the person were an Australian legal practitioner, would have constituted unsatisfactory professional conduct or professional misconduct.
(3) An order under this section may apply to a specified law practice or specified class of law practices or may apply to law practices generally.
(4) An order under this section may be revoked by the Tribunal on application by a Council or the person against whom the order was made.
20 Proceedings on prohibition orders
(2) On making an order under this Division, or on determining an application for approval under section 17 (Associates who are disqualified or convicted persons), the Tribunal may make orders for costs.
(3) An order for costs:
(a) may be for a specified amount or an unspecified amount, and
(b) if for an unspecified amount, may specify the basis on which the amount is to be determined, and
(c) may specify the terms on which costs must be paid.
In section 7 of the LP Act, the term 'lay associate of a law practice is defined so as to include 'an employee of, or person paid in connection with, the law practice who is not an Australian legal practitioner'.
In section 4 of this Act, a 'disqualified person' is defined so as to include 'a person who is the subject of an order under this Act or a corresponding law prohibiting a law practice from employing or paying the person in connection with the relevant practice'.
Section 88 of the Administrative Decisions Tribunal Act 1997, to which we also referred, states so far as relevant:-
88 Costs
(1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section.
(1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following:...
(d) the nature and complexity of the proceedings,
(e) any other matter that the Tribunal considers relevant.
(3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs.
The Particulars set out in the Application
Under the heading 'Definitions', the opening paragraphs of the Particulars were as follows:-
The Respondent is Margaret Ellen Hughes who:
- was born on 29 September 1935 and is approximately 77 years old
- from 1 July 2004 to 8 September 2009 was a director of an incorporated legal practice known as Stacks/Nambucca Pty Ltd which operated the law firm known as Stacks Nambucca ['S/N']
- was appointed secretary of S/N on 4 January 2005
- from 9 September 2009 to 27 September 2010 was a director of North Coast Prime Law Pty Ltd ACN 108 888 295 which operated the law firm known as North Coast Prime Law ['NCPL']
- worked as the office manager for S/N and NCPL ['the Law Practice']
- on 22 January 2013 was not bankrupt
The Law Practice
On 29 April 2004 S/N was incorporated as a legal practice
On 8 September 2009 S/N changed its name to NCPL. At all material times in relation to NCPL the:
- registered office and principal place of practice was at 18 Bowra Street, Nambucca Heads NSW 2448
- directors were the Respondent appointed 1 July 2004 and Shane Michael Maloney, solicitor director, appointed 4 January 2005
- secretary was the Respondent, appointed 4 January 2005
- shareholders were Katherine Anne Cook [granddaughter of the Respondent], Whitewater Investments Pty Ltd, Shane Michael Maloney and his wife Ruth Maloney
The Solicitor is Shane Michael Maloney whose name was removed from the roll of local lawyers on 24 August 2012: see Council of the Law Society of NSW v Maloney [2012] NSWADT 259
Whitewater Investments Pty Ltd ACN 000608800 ['Whitewater Investments'] was, on 22 January 2013, a registered Australian Proprietary Company incorporated on 26 January 1968. It is the Respondent's family company. At all material times in relation to Whitewater Investments the:
- registered office was at Suite 2, 18 Bowra Street, Nambucca Heads NSW 2448
- directors were Stephanie Anne Tait (nee Donnelly) ['Tait], daughter of the Respondent, DOB 19 September 1961 or 1963, from 5 March 1993 to 28 April 2011; Margaret Jane Cook ['Cook'], daughter of the Respondent, DOB 27 October 1953 from 3 March 1993 to 1 July 2008; the Respondent from 31 August 2003 to 1 July 2008; Kirrily Joy Fry, DOB 25 July 1978 from 1 July 2008 to 1 June 2010. The current directors are the Respondent re-appointed 1 June 2010 and Francis Donnelly, husband of the Respondent, DOB 14 December 1229 appointed 28 April 2011
- secretary was Tait, appointed 5 March 1993
- shareholders were Cook and the Respondent. After 1 July 2008 the only shareholder was Tait
Offices of the Law Practice were situated at:
- 18 Bowra Street Nambucca Heads NSW 2448
- 95 West High Street Coffs Harbour NSW 2450
- Shop 1 Morris Arcade Bowra Street Urunga NSW 2455
- 23 Cooper Street Macksville NSW 2447
Staff at the offices included:
- The Respondent, Office Manager, responsible for accounts, wages, based at Nambucca Heads office
- Patricia Hughes, the Respondent's sister, Bookkeeper, Nambucca Heads office
- Katherine Cook, the Respondent's granddaughter, Nambucca Heads office
- Kirrily Joy Fry, Licensed Conveyancer, Nambucca Heads office
- Lisa Waddell, Licensed Conveyancer, Urunga office
Following a list of the relevant bank accounts of the Law Practice (which need not be reproduced here), the Particulars then set out the following allegations:-
Method of misapplication of trust funds at the Law Practice
1. The Respondent procured, organised and accepted Trust Account cheques drawn in favour of Whitewater Investments or other entities associated with her and colluded in the falsification of trust ledgers to conceal the transactions.
2. On instructions from either or both the Respondent and the Solicitor, an employee of the Law Practice:
a. Photocopied an original blank trust account cheque onto a page ['Page 1']. The original blank trust account cheque was retained;
b. On Page 1, completed in handwriting the details of the photocopied cheque with the date, name of the client or beneficiary or other party legally entitled to the proceeds of the cheque ['the Authorised Payee'] and with the amount to be paid on presentation of the 'cheque';
c. Photocopied Page 1 with the hand written alterations. This new photocopy was 'Page 2';
d. Stapled page 2 to the back of the relevant trust ledger. What appeared was a photocopy of a completed but unsigned trust account cheque to the Authorised Payee;
e. Entered details of the photocopied unsigned trust account cheque to the Authorised Payee on Page 2 into the Kalamazoo accounting records under carbon copy. Hence the entry when completed was recorded in copied handwriting as per the Kalamazoo System Specifications;
f. Completed the original blank trust account cheque with details of the payee ['the Unauthorised Payee'] in accordance with instructions issued by the Respondent. These cheques were signed by the Solicitor...
From now on, we will refer to this strategy for concealing the true identity of recipients of funds from the trust account of the Law Practice ('the Trust Account') as the 'false cheque strategy'.
The Particulars then described conduct of the Respondent, in her role as office manager and a director of the Law Practice, relating to seven matters in which different clients retained the Law Practice to act for them.
In each of these matters, the Law Practice received funds from its client or clients, or from a third party in circumstances where it was obliged to hold the funds on trust for the client(s). In one matter (Doyle), in which the client was a vendor of property, the Law Practice received the deposit from the purchaser. In another (Lord), it received a cheque in settlement of a claim for compensation for injuries that its client had sustained in a motor vehicle accident. In each of the remaining five matters (Burke, Chaloner, Blom, Tomlinson and Sexton), the executor(s) of a deceased estate instructed the Law Practice to obtain probate of the will and distribute the net estate to the beneficiaries.
With reference to each of these seven matters that involved receipt by the Law Practice of funds to be held and dealt with for the benefit of clients, the Particulars alleged misappropriation by the Respondent and participation by her in one or more breaches of statutory requirements relating to the management of funds by law practices. In some instances, these breaches involved use of the false cheque strategy.
The Particulars also alleged that the Respondent, in two matters falling outside the scope of her employment by the Law Practice, forged signatures of a member of her family. In one of them (Lyneham/Cook), she forged signatures of her daughter Margaret Cook on documents effecting dealings in land. In the other (Lyneham/Tait), she forged the signature of her daughter Stephanie Tait on a document of this nature. The transactions were concealed from Ms Cook and Ms Tait respectively.
Allegations established by the evidence
We will now set out, with reference to each of these nine matters, the allegations of significance that we find to have been established by the evidence and the statutory provisions or common law duties that the Respondent contravened.
We find that the Respondent was a 'lay associate' of the Law Practice in accordance with the definition in section 7 of the LP Act and that she is a person within the range described in section 18(1).
In reaching our conclusions regarding the seven matters involving clients of the Law Practice, we take into account the following matters. The Solicitor was the only person authorised to sign cheques drawn on the Trust Account. But the Respondent, as the office manager of the Law Practice, was the sole signatory of its tax account ('the Tax Account') and was responsible for documentation of all of its financial transactions. In addition, she was a director of the Law Practice and Whitewater Investments Pty Ltd ('Whitewater') was her family company.
Except in relation to certain admissions, identified below, we have not accorded the status of evidence to the statements made by the Respondent in her Reply, even though Ms Groenewegen indicated that the Law Society would not object to our doing so. In proceedings of a disciplinary nature such as these, any denial by the respondent of allegations made against him or her should not be given significant weight unless it is supported by verified evidence. In the ensuing discussion, we do however summarise some of the claims made in the Reply.
Doyle. The Law Practice acted for Ronald Doyle in the sale of land owned by him. On or about 8 July 2009, the Respondent placed, or caused to be placed, a deposit of $21,500 received from the purchaser into the Tax Account, thereby increasing the amount held in that account to $21,814.73. Between 17 July and 4 August 2009, she signed three cash cheques disbursing about $17,000 from it.
By virtue of requirements imposed by sections 254 and 255 of the LP Act, the Law Practice should have banked this deposit in the Trust Account, held for the benefit of Mr Doyle and either paid it to him or disbursed it in accordance with his instructions. We find that the Respondent participated in contraventions of these provisions.
In our judgment, the evidence does not substantiate a further allegation of misappropriation by the Respondent of funds belonging to Mr Doyle, taking the form of a transfer of funds totalling $11,000 from the Tax Account to Whitewater.
Lord. Kathryn Lord retained the Law Practice to act for her in claiming damages for personal injuries sustained by her in a motor vehicle accident. On 23 October 2009, Allianz Australia Insurance Ltd sent to the Law Practice a cheque for $54,051.67 in settlement of this claim. On the same day, this cheque was deposited in the Tax Account, thereby increasing the amount held in that account to $54,500.49. Between 30 October and 30 November 2009, the Respondent signed four cash cheques disbursing a total sum of $54,000 from it.
We find that on account of these matters the Respondent participated in contraventions of section 254 and 255 of the Act.
In her Reply, the Respondent claimed that the Solicitor authorised the deposit of the settlement cheque into the Tax Account and that Whitewater did not benefit from the funds transferred to it because 'in the end everything went back into the law practice'. The former claim, if true, would not excuse her participation in the transaction. The latter implies that some or all of the three cash cheques that she signed were in fact presented to the bank by Whitewater, her family company, and that this company received some or all of the disbursed amount of about $54,000.
We set out below the circumstances in which Ms Lord, on 19 January 2010, received from the Law Practice a payment of $32,864.67, representing the amount of the settlement cheque less $21,187.00 on account of costs and disbursements.
Burke. Under the will of Freda Burke, who died on 31 July 2009, each of her eight surviving children was entitled to receive a distribution of $41,404.90. She appointed two of them as executors of her will. They retained the Law Practice to obtain probate and distribute the net estate. The funds of the estate were paid into the Trust Account.
On 23 March 2010, amounts of $28,500 and $26,500 were paid by trust account cheques to Whitewater and the Law Practice respectively.
Each of these payments was debited to the estate. The executors did not authorise any of them. The false cheque strategy was used, with the result that the trust ledger for the estate recorded each payment as a partial distribution to a beneficiary.
We find that the Respondent participated in misappropriation of the amounts paid to Whitewater and the Law Practice, and in contraventions of sections 255 and 264 of the Act. The latter section requires law practices to keep in permanent form trust records that disclose the true position in relation to trust money received on behalf of any person.
In her Reply, the Respondent claimed that neither Whitewater, her family nor she herself benefited from the funds transferred to Whitewater, because they were used to pay wages and other outgoings on behalf of the Law Practice. This claim, if true, would provide no excuse for her participation in the misappropriation. She added that she 'should have pulled the plug on these transactions'.
We set out below the circumstances in which the deficit in the trust funds of the Burke estate caused by these misappropriations was rectified in part.
Chaloner. Under the will of Esme Chaloner, who died on 17 March 2009, her two children were the executors and the residuary beneficiaries. They retained the Law Practice to obtain probate and distribute the net estate. A portion of the funds of the estate was paid into the Trust Account.
On 10 September 2009, amounts of $931.60 and $54,868.40 were paid by trust account cheques to the Office of State Revenue and to Remerra Pty Ltd respectively. On 28 April 2010, a further amount of $22,100 was paid by trust account cheque to Whitewater.
Each of these three payments was debited to the estate. The executors did not authorise any of them. Because the false cheque strategy was used, the trust ledger for the estate recorded the payment to Whitewater as a partial distribution to a beneficiary.
With regard to the payment to Whitewater, we find that the Respondent engaged in misappropriation and participated in a contravention of section 264 of the Act. With regard to each of the three payments, we find that she participated in a contravention of section 255.
Ms Siddons testified that the Fidelity Fund has paid $291,429.62 (inclusive of interest) to the Chaloner estate on account of deficiencies attributable to conduct of the Solicitor, the Respondent and other employees of the Law Practice. It can be assumed that the Respondent's actions that we have just described contributed to this outcome.
Once again, the Respondent claimed in her Reply that the funds transferred to Whitewater conferred no benefit on that company because they were used to pay wages and other outgoings on behalf of the Law Practice. Once again, this claim, if true, would provide no excuse for what she did.
Blom. The Solicitor was the executor of the will of Joan Doreen Blom, who died on 21 February 2009. Some assets of the estate were paid into the Trust Account. During May 2010, the proceeds of the sale of certain land belonging to the estate were deposited into the Tax Account and the General Office Account No 2 of the Law Practice ('the Office Account'). Towards the end of this month, an amount of at least $176,750.00 was lent out of these proceeds of sale to Whitewater.
In addition, between May and July 2010, thirteen amounts totalling $335,777.60 were transferred by trust account cheque from the funds held in the Trust Account to recipients who were not beneficiaries and who had no entitlement to the amounts paid to them. In all but one of these payments, the false cheque strategy was used, with the result that the trust ledger for the estate recorded each payment as a partial distribution to a beneficiary.
The recipients of two of these cheques, each of which was for the amount of $27,498.15, were beneficiaries under the will of Freda Burke. To this extent, these payments rectified the deficiency in the funds of the Burke estate for which the Respondent was in part responsible.
Ms Siddons testified that the Fidelity Fund has paid $579,595.95 (inclusive of interest) to the Blom estate on account of deficiencies attributable to conduct of the Solicitor, the Respondent and other employees of the Law Practice. It can be assumed that the Respondent's actions that we have just described contributed to this outcome.
With regard to the deposit of estate funds into the Tax Account, we find that the Respondent participated in a contravention of section 254 of the Act. With regard to the payment to Whitewater, we find that she engaged in misappropriation and participated in a contravention of section 255. With regard to each of the thirteen payments out of the Trust Account, we find that she participated in contraventions of section 255 and 264.
The Respondent claimed in her Reply that the loan to Whitewater would have been repaid in full if a franchised business that she had been conducting had not been compelled to cease operating. This occurred, she said, as a consequence of unspecified action taken by the Law Society. Once again, her claim, if true, would provide no excuse for what she did.
Tomlinson. Under the will of Veronica Tomlinson, who died on 28 September 2009, two of her children were appointed as executors. They retained the Law Practice to obtain probate and distribute the net estate. The assets of her estate were paid into the Trust Account.
On 1 September 2010, amounts totalling $59,417.00 were paid by four trust account cheques to the Robson & Oliver Trust Account, Nambucca Shire Council, the Tax Account and the Office Account respectively. The first of these payments was for arrears of rent owing on office premises occupied by the Law Practice. The second was for a fee charged by the Council for the approval of a development of a property owned jointly by Whitewater and the Respondent's husband.
Each of the four payments was debited to the estate. The executors did not authorise any of them. Because the false cheque strategy was used, the trust ledger for the estate recorded each payment as a partial distribution to a beneficiary.
With regard to each of these payments (of which one benefited Whitewater and her husband and the other three benefited the Law Practice), we find that she engaged in misappropriation and participated in contraventions of sections 255 and section 264 of the Act.
The Respondent claimed in her Reply that the payment to Nambucca Shire Council was made by way of a loan to her husband that would in due course be repaid. She claimed also that the reason why repayment had not already taken place was that all her family's funds, along with those of Whitewater, had been transferred to the Law Practice to meet its wages and other outgoings. These claims, if true, would provide no excuse for what she did.
Sexton. Under the will of James Sexton, who died on 17 June 2009, his nephew was appointed as executor. The executor retained the Law Practice to obtain probate and distribute the net estate. The funds of the estate were paid into the Trust Account.
On 13 January 2010, the amount of $105,000 was paid by trust account cheque to Whitewater. On the same day, Whitewater used part of this money to pay to Ms Lord the amount ($32,864.67) then owing to her (see [37 - 40] above]).
This payment to Whitewater was debited to the estate. The executor did not authorise it. Because the false cheque strategy was used, the trust ledger for the estate recorded it as a partial distribution to a beneficiary.
With regard to the payment to Whitewater, we find that the Respondent engaged in misappropriation and participated in contraventions of sections 255 and 264 of the Act.
The Respondent claimed in her Reply that this loan to Whitewater had been repaid to the Sexton estate. In fact, the deficit in the funds held on behalf of the estate was rectified by unauthorised transfers from the Chaloner estate and from another estate being administered by the Law Practice.
The Respondent claimed also that the loan to Whitewater conferred no benefit on that company because the amount lent was used to pay wages and other outgoings on behalf of the Law Practice. This claim, if true, would provide no excuse for what she did.
We turn now to the two transactions, conducted outside the scope of the Law Practice, in which the Law Society alleged that the Respondent committed forgery.
Lyneham/Cook. Between 1999 and 2008, Edward and Lynette Lyneham entered into agreements, prepared by the Respondent, whereby they lent money to her, to Whitewater or to another person known to her.
On 24 October 2005, Stephanie Tait (who is a daughter of the Respondent and was a director of Whitewater) and the Respondent (as secretary) executed on behalf of Whitewater a transfer of land owned by it to Mary Cook (another daughter of the Respondent). Ms Cook was an intellectually handicapped person.
The Law Society alleged that the Respondent forged Ms Cook's signature on the transfer, under the words 'signature of transferee'.
On the same day, 24 October 2005, Mr and Ms Lyneham granted a loan of $40,000 on the security of a mortgage of this land.
The Law Society alleged also that the Respondent forged Ms Cook's signature on the mortgage document and retained the loan of $40,000 for her own purposes.
The fact that these two signatures were forged is clearly demonstrated by comparing them with two seemingly genuine signatures of Ms Cook appearing on earlier documents relating to the same land. Both of these earlier signatures were provided by Ms Cook in her capacity, at the time, as a director of Whitewater. One of the documents was a transfer, dated 7 June 1996, whereby Whitewater purchased the land from the Respondent's husband. The other was a mortgage of the land by Whitewater to the National Australia Bank, dated 24 September 1996.
In her Reply, the Respondent stated: 'It was well known in the office and particularly with... [a] Licensed Conveyancer who carried out the work for my family and myself, that I signed on behalf of Jane Cook.' We interpret this as an admission of the forgeries alleged by the Law Society.
She stated also that she always intended to repay the loan of $40,000. We treat this as an admission that she retained this sum.
We find accordingly that the Respondent forged the two signatures and retained for her own benefit the amount of $40,000 lent by Mr and Ms Lyneham.
Lyneham/Tait. On or about 1 February 2010, Mr and Ms Lyneham agreed to lend $60,000 to Ms Tait on the security of a mortgage of land owned by her.
The Law Society alleged that the Respondent forged Ms Tait's signature as mortgagor in two places on the mortgage documents, received a cheque for $60,000 from Mr Lyneham and retained this sum for her own purposes.
The fact that these signatures were forged is clearly demonstrated by comparing them with a seemingly genuine signature of Ms Tait appearing on Whitewater's transfer of land to Ms Cook dated 24 October 2005 (to which we have just referred).
In her Reply, the Respondent stated that she 'signed documents' relating to this loan and claimed that she intended to repay the loan to Mr and Ms Lyneham. We treat these statements as admissions by her.
We find accordingly that the Respondent forged the two signatures and retained for her own benefit the amount of $60,000 lent by Mr and Ms Lyneham.
Conclusions
In the light of the above findings, we have no hesitation in concluding that each of the separate criteria stated in section 18(2) of the LP Act for an order under that provision has been met. We are satisfied that the Respondent is not a fit and proper person to be employed or paid in connection with any legal practice. We are satisfied also that she has been guilty of conduct that, if she were an Australian legal practitioner, would have constituted professional misconduct.
Because her misconduct was serious and took place over a significant period, it is entirely appropriate that the order made under section 18 of the Act should prohibit the employment of her by 'law practices generally' (as section 18(3) permits).
On this basis, we made Order 1 as set out on the cover sheet of this decision.
Order 2, relating to costs, is founded on the following reasoning.
Subsections (2) and (3) of section 20 provide for costs orders to be made in proceedings such as these, but do not state any criteria to be applied by the Tribunal. This question is instead governed by section 88 of the ADT Act. Subsection (3) of this section renders it applicable.
In deciding that the Respondent should pay the Applicant's costs, we endorse the following submission put to us at the hearing by Ms Groenewegen. The fact that the Respondent's misconduct has made these proceedings necessary to protect the public interest is a matter that we may and should take into consideration under subsection (1A)(e) of section 88. Having regard to this factor and to the nature of the proceedings (a relevant matter under subsection (1A)(d)), it is 'fair' that the Respondent should bear the costs associated with them rather than that these costs should be borne by the public purse.
Decision last updated: 11 October 2013
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