Council of the Law Society of NSW v Lo (No 2) - [2012] NSWADT 159

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation: Council of the Law Society of NSW v Lo (No 2) [2012] NSWADT 159
Decision date: 08 August 2012
Jurisdiction: Legal Services Division
Before: G. Mullane, Judicial Member
M Riordan,Judicial Member
C Bennett,Non-Judicial Member
Decision:
1. The Respondent's Interlocutory Application filed on 14 May 2012 is refused and dismissed.
2. The name of the Respondent is to be removed from the roll of solicitors; and
3.The Respondent must pay the costs of the Law Society of and incidental to the proceedings as agreed or as assessed.

Catchwords: Solicitor - Discipline - Professional Misconduct - Grounds for Striking Off - Failure to comply with Sections 253, 254, 255, 256 and 260 of the Legal Profession Act 2004 - Mislead Investigator - False Declaration in Practising Certificate Application - Breach of Undertaking to fellow Practitioner - Attempt to Settle sale on notice Discharge of Mortgage forged - Unethical Conduct
Legislation Cited: Legal Profession Act 2004
Administrative Decisions Tribunal Rules 1998; Corporations Act (Cth) 2001 ss127-129
Cases Cited: R v De Simoni (1981) 147 CLR 383
Ebner v Official Trustee in Bankruptcy [2000] HCA 63
Webb v R [1994] HCA 30
Commissioner of Corrective Services v Government and Related Employees' Tribunal & Ors [2004] NSW C A 291;
Smith v NSW Bar Association (1992) 176 CLR 256
Law Society V Dennis (1981) 7 Fam LR 417
Law Society of NSW v Hooper [2005] NSW ADT 174
Kylsilver Pty Ltd -v- One Australia Pty Ltd [2001] NSWSC 226
Miro -v- Fu Pty Ltd [2003] NSWSC 1009
Commonwealth Bank of Australia -v- Hilellis & Ors [2009] NSWDC 9 (13 February 2009) Prothonatory of the Supreme Court of NSW v P [2003]NSWCA 320 at 14
Law Society of NSW v Walsh [1997] NSWCA 185 per Beazley JA at p.40 point 3.4; Law Society of NSW v McKenzie [2003] NSWADT 92
Texts Cited: None
Category: Principal judgment
Parties: The Council of the Law Society of NSW (Applicant)
Kevin Lo (Respondent)
Representation: Counsel
RF Sutherland SC (Applicant)
M Castle (Respondent)
L W Pierotti (Applicant)
Verekers Lawyers (Respondent)

File Number(s): 102022

REASONS FOR DECISION

LEGAL SERVICES DIVISION

G Mullane - Judicial Member, M Riordan - Judicial Member, and C Bennett - Non-Judicial Member

INTRODUCTION

The Orders that the Applicant sought in the original Application filed on 1 September 2010 were:

(1) That the Legal Practitioner's current Practising Certificate be cancelled and for a period of five (5) years from the date of again holding a Practising Certificate ["the period'] any Practising Certificate issued to the Legal Practitioner be restricted so as to entitle him to practise only as an employee.

(2) During the period the Solicitor is not permitted to be a Director or Shareholder of an incorporated legal practice.

(3) That the Legal Practitioner undertake in person [and not on-line], at his own expense, and complete within six (6) months of the date of these Orders [or within such further time as may be agreed to by the Society or directed by the Tribunal], any such course as may be conducted by the College of Law in Trust and Office Accounting as part of the "Exemptee" stream, or such other course or courses as may be agreed to by the Society or directed by the Tribunal and sit for any applicable examination(s) at the conclusion of the said course or courses and, in any event, achieve a pass mark [or better] generally required by the College of Law for the said course(s).

(4) That the Legal Practitioner pay the costs of the Society.

(5) Such order as to the Tribunal seems fit.

On 13 February 2012 we delivered our findings and Reasons in relation to eight grounds relied upon by the Law Society of NSW. We found the Respondent guilty of professional misconduct in relation to each of those grounds. The details of those grounds are set out in those Reasons.

We stated in paragraph 169 of the reasons that we had formed a view that the orders proposed by the Applicant "might not be sufficient to protect the public and the reputation of the profession" and stated "We conclude that we should consider whether the Respondent is not a fit and proper person to be engaged in law practice and should be removed from the roll."

The Professional Conduct Committee of the Applicant Law Society then reconsidered its position and decided to seek an Order in these proceedings that the Respondent be removed from the Roll.

When the Reasons were delivered on 13 February 2012 the orders included orders that the Applicant file and serve by 17 February any further evidence or submissions on the issue of what orders should be made and the Respondent file by 28 February any further evidence or submissions on that issue. The Applicant filed and served its submissions on 17 February 2012 in accordance with the Orders. In those submissions it notified the Tribunal and the Respondent that given the findings as to professional misconduct, it seeks an order for the Respondent to be removed from the roll.

On 28 February 2012, the last day allowed for the Respondent to file any further evidence or submissions, an Affidavit was filed by the Solicitor for the Respondent. Among other things it testified that instructions were not received from the Respondent until 22 February 2012 after the Respondent had a conference on 21 February 2012 with Ms Castle, Counsel who had appeared for the Respondent so far in the hearing, and also Mr Robert Sutherland, SC. That conference was for the purpose of advice regarding further evidence that should be "collected and submission which should be made" in this second stage of the hearing.

In the Affidavit the Solicitor said that he was to "take steps with a view to the possibility of obtaining and tendering" a report from Madeline O'Reilly, the treating Psychologist for the Respondent, an expert report from a Psychiatrist as to his mental state during the events which were the subjects of the proceedings and investigation, and (evidence by) "a senior legal practitioner, who is I am instructed, prepared to employ or supervise the Respondent". His Solicitor said that he was instructed to also retain Mr Sutherland SC to settle further submissions and, if there is to be a further hearing, to appear on that hearing. The Solicitor swore in the Affidavit, "It is not possible for those steps to be completed by 28 February 2012".

By letter to the Registrar of the Tribunal dated 28 February 2012, the Solicitors for the Respondent requested the matter be listed "for further directions on an urgent basis to allow the Respondent to make application for an extension of time to file further submissions and evidence". The panel decided not to list the matter for directions, but to make directions and list the matter for conclusion of the hearing. Orders were made to the following effect:

(1) The Respondent's request for the matter to be relisted for directions is declined;

(2) The time allowed in the Order for the Respondent to file any further evidence on the issue of what Orders should be made is extended to Friday, 23 March 2012;

(3) The Registrar is to list the matter for a further one (1) day hearing (for cross-examination of the three proposed witnesses for the Respondent and any further submissions) on the first suitable date after 23 March 2012 ;

(4) The Solicitor for the Law Society must notify the Tribunal and the Respondent's Solicitor by 27 March 2012 as to which, if any, of the three proposed witnesses are required to attend for cross-examination.

Those Orders were notified to the parties by the Registry on 7 March. The date for the final stage of the hearing was fixed as 26 April and the parties were notified.

A report dated 3 April by Mr Tim Watson-Munro, a Consultant Forensic Psychologist was filed on behalf of the Respondent on 5 April 2012. It was accompanied by a letter from the Respondent's Solicitor advising that no Affidavit would be filed by Madeline O'Reilly or by "a senior legal practitioner" prepared to employ or supervise the Respondent.

On 20 April nineteen character references were filed on behalf of the respondent, two of which were not admitted into evidence as they were not signed. The others became Exhibit "3" despite objection by the applicant that they were unsworn and despite the fact that the Applicant had given notice that all the persons who had given character references were required for cross examination, but only 2 were available . The hearing continued on 26 April, 2012. A copy of the letter of 1 March 2012 from the Respondent's lawyers to Mr Tim Watson-Munro giving him instructions became Exhibit "6" and a report from Ms Madeline O'Reilly dated 25 May 2011 was tendered and became Exhibit "5".

Of the character referees only Mr Ng and Mr Trembath were cross-examined, as despite notice from the Applicant, no others were available. Mr Watson-Munro was also cross examined.

At 3pm that afternoon after the evidence had been completed Mr Sutherland SC, announced that he had not been briefed with a transcript of 24 June 2011, which was the last day of the first stage of the hearing and for a little under an hour that day members of the panel asked questions of the Respondent.

Orders were made for the Registrar to make a copy of the transcript of 24 June 2011 available to each of the parties, for the Respondent to file and serve any additional submissions by 7 May and for the Applicant to file and serve any submissions in reply by 14 May.

The Respondent's submissions were filed on 8 May. They included submissions that the tribunal members should disqualify themselves on the basis of apprehended bias or prejudgment arising from the questioning of the Respondent by members of the tribunal on 24 June 2011. On 14 May the respondent's solicitors filed an Interlocutory Application seeking that we disqualify ourselves "from further hearing any aspect of the proceedings on the basis of apprehended bias".

The Interlocutory Application was accompanied by a letter from the Respondent's solicitors. It stated that the application had been addressed in the submissions filed on 8 May and "We are instructed that our client is content to rely upon those written submissions and does not wish to be further heard or for there to be a hearing and oral addresses in relation to that application".

On 18 May the Law Society filed a Reply to the Interlocutory Application submitting to any order of the Tribunal, save as to costs.

THE RESPONDENT'S CASE FOR US TO DISQUALIFY OURSELVES

The submissions on behalf of the Respondent filed on 8 May 2012 refer first to the Tribunal taking an approach which transgressed the principles articulated in the criminal jurisdiction in "De Simoni (1987) 147 CLR 383". The correct reference is "R v De Simoni (1981) 147 CLR 383". It deals with the situation where, in sentencing a criminal offender, the Trial Judge was made aware of injuries occasioned to the victim by the criminal conduct which would have supported a more serious charge, and allowed that to influence the sentence imposed on the offender.

The role of the Tribunal in relation to a disciplinary application under the Legal Profession Act 2004 is quite different to the role of a court trying a criminal offence. Section 555(1) of the Act allows the Tribunal to vary the disciplinary application on the application of the applicant or on its own motion, so as to omit allegations or to include additional allegations, "if satisfied that it is reasonable to do so having regard to all the circumstances".

Indeed, Subsection 555(4) provides that the inclusion of an additional allegation is not precluded by any or all of the following grounds:

a) The additional allegation has not been the subject of a complaint,

b) The additional allegation has not been the subject of an investigation,

c) The alleged conduct concerned occurred more than three (3) years ago.

Subsection 562(6) permits the Tribunal to find that a person has engaged in professional misconduct, even though the complaint or application alleged only unsatisfactory professional conduct. Section 562 provides that where the Tribunal is satisfied that a practitioner has engaged in unsatisfactory professional conduct or professional misconduct, the Tribunal may make such orders as it thinks fit, "including any one or more of the orders specified" in the Section. The Tribunal has a wide discretion as to the orders it will make, and is not limited by the orders proposed by any party.

Fairness, of course, would require that the Tribunal give the respondent ample notice, for example, if it considers there is a possibility of a finding of professional misconduct where the allegation in the application is merely of unsatisfactory professional conduct. Similarly, fairness would require the Tribunal to give adequate notice to the respondent if it considers that, depending on the evidence and the testing of the evidence, the appropriate orders might be more serious sanctions than those sought by the applicant in the application.

This was an application comprising eight (8) Grounds each of which the Applicant alleged might be held to be professional misconduct.

The principles articulated in R v De Simoni (1981) 141 CLR 383 are not directly applicable in this jurisdiction, but the general principle that the hearing should be fair to the respondent does apply.

The submissions on behalf of the Respondent that the Tribunal Members should disqualify themselves for apprehended bias because of the questions they asked of the Respondent on 24 June 2011 are in the following terms:

10. The questioning of the solicitor by the Tribunal members on 24 June 2011 needs to be viewed against the background that the sale of units 9 and 11/66-70 Baltimore St, Belfield, which had proceeded to settlement on 25 September 2006, had occurred

with the utilisation of documents of discharge which were in fact forged. Inquiries regarding those conveyances had been carried out by Mr Leo Gore, investigator for the Law Society, and were included in his report to the Law Society.

11. It is highly significant that no complaint was referred to this Tribunal by the Law Society with respect to the respondent solicitor's conduct in relation to them.

12. Rather, the only referral in relation to the units at 66-70 Baltimore St, Belfield, related to the "attempted" settlement of unit 8 on 3 November 2006. The solicitor contended that he had attended the settlement rooms on that occasion with a contingent

intention to settle, namely if his client attended with an original discharge. He set out, in his various declarations and evidence, that Mr Boutros, the property developer, had advised him that the second mortgagee had been paid.

13. As has previously been submitted, the actions which have been found by the Tribunal to have been carried out by the respondent solicitor in this regard fell short, as a matter of law, from constituting an attempt. It was submitted on behalf of the

respondent that it constituted, at best, acts preparatory to settlement. That submission has been rejected and the facts have been held by the Tribunal to constitute, at law, an attempt.

14. Against the background of that relevant complaint, and the dispute between the parties in the hearing as to whether or not an attempt had in fact occurred, the cross-examination of 24 June 2011 then occurred. At T2 on 24.06.11 the Chairman pursued questioning as to whether or not the solicitor thought that he had been provided with a valid discharge of a mortgage with respect to Lot 9. It was positively put to him that he had reason to be suspicious (T3) and similar questioning was pursued with respect to Lot 11.

15. The solicitor's response that there had been earlier settlements of units with respect to the same mortgagee and that he had simply acted on the witnessed signature of the sole director of the mortgagee company was not pursued.

16. The solicitor was cross-examined as to his understanding of how documents should be executed on behalf of a company and. his response at T4 in which he made reference to s127 of the Corporations Act and the circumstance in which a witness might evidence the signature of a director remained unchallenged. Rather, notwithstanding his evidence that the director had signed earlier discharges (reference to which will be made later in these submissions) it was put to him that the absence of anything stating the capacity of the person signing would be a "warning bell" and that the solicitor would be put on notice that there was a problem with the document: T5.

17. The Respondent's response that it was his "oversight" was met with the derisory response: "No. It's more than oversight, isn't it?"

18. Not only was the respondent solicitor not the subject of any complaint before the Tribunal that he had wilfully or knowingly utilised a forged document, but his response to the questioning - which went far beyond any legitimate or relevant notion of credit was peremptorily dismissed.

19. In fact, an overview of the evidence and material tendered with relation to what might be generically referred to as the "Boutros properties" reveals that there had, in fact, been a number of discharges from Eurofund, the second mortgagee, months earlier.

20. Following the above comments from Tribunal Member Riordan, the Chairman then pursued further cross-examination which was effectively designed to establish that the respondent solicitor ought to have been alerted to the suspicious nature of the

discharges of mortgage on another basis. It was put to the respondent (T6-7) that the writing was "almost primitive" and that it did not seem to be 'the flowing writing of someone who's working in an office for a finance company". The solicitor was cross-examined about not noticing the writing of the dates which seemed to the Chairman to be "almost childlike". Such opinions are outside the scope of any complaint before the Tribunal and were not the subject of any relevant evidence.

21. The solicitor was then further cross-examined in relation to what was asserted to have been effectively an ethical requirement to contact the firm of accountants who had been designated by the first mortgagee to be receivers with respect to various nominated properties. The solicitor's explanation that he had been dealing directly with the first mortgagee Suncorp and that in those circumstances he did not think that he needed to communicate directly with the receivers appears to have been dealt with with derisory dismissal. His explanation that Suncorp was fully paid out with respect to their mortgages over the two relevant properties and that they had provided a discharge of mortgage with respect to each would appear to have been ignored by the Tribunal in pursuing suggested "unethical" and "improper" conduct which had never been the subject of any complaint nor of any particularisation or specific evidence going to that issue in the proceedings.

22. The well-founded objection and interruption to the questioning by counsel for the respondent was wrongly rejected (T12). The question of fitness was not at large and the explanation for conduct which was being pursued was not "within the grounds of

the complaint':

23. A reasonable observer might well apprehend that the Tribunal might not bring an impartial mind to the determination of the complaints which were in fact before it: Michael Wilson & Partners Limited v Nicholls [2011] HCA 48.

24. The concerted attack on the solicitor's conduct with respect to the two earlier conveyances continued with the proposition (T13) that the settlement sheet was "misleading" in describing the arrangement between the vendor and purchaser whereby $95,000 was not payable at settlement as a ''rebate': An hypothesis that if the document was given to either of the mortgagees, that they would be led to think that the vendor had sold the property for $325,000 was further pursued, notwithstanding the fact of the evidence being that the mortgagees had not been provided with the document, nor had it been intended that they be provided with the document. Questioning continued on the invalid assumption that there was a different price on the purchaser's contract as contrasted with the vendor's contract and whether or not the solicitor was somehow thereby a party to the potential misrepresentation of the sale price by the vendor to a mortgagee.

25. The unchallenged evidence of the solicitor was always that the first mortgagee had been paid out with respect to the individual properties to its satisfaction.

26. The flavour of a possible fraud on the purchaser's Bank was thereafter further pursued notwithstanding the complete absence of any such allegation in the complaints before the Tribunal.

27. It is respectfully submitted that a fair reading of the totality of the cross-examination on 24 June 2011 indicates an exceeding of proper jurisdiction, a flavour of prejudgment and would evoke a reasonable apprehension of bias in the mind of an objective observer.

28. In the above circumstances, taken jointly and severally, the Tribunal should recuse itself from further proceeding in the present matters.

APPREHENDED BIAS - RELEVANT LAW

The test to be applied for a Court is whether "a fair-minded lay observer might reasonably apprehend that the Judge might not bring an impartial mind to the resolution of the question" (Ebner v Official Trustee in Bankruptcy [2000] HCA 63 at 344 and 350 per Gleeson CJ, McHugh Gummow and Hayne JJ). A "fair-minded lay observer" must be informed.

In Webb v R [1994] HCA 30 Deane J held (at 73):

"If the test of a reasonable apprehension on the part of a fair-minded observer with knowledge of the material objective facts fell to be applied by reference only to those facts that were apparent at the time, there would be much to be said for the view that the real likelihood or real danger test should be retained to be applied in cases where some of the damaging material facts - whether prior, contemporaneous or subsequent - as ascertained by the Appellant Court were not known at the time of the proceedings. In my view, however, the material objective facts are not so confined for the purposes of the test. The fair-minded observer is a hypothetical figure. While the question is not settled by any decision of the Court, it appears to be that the knowledge to be attributed to him or her is a broad knowledge of the material objective facts as ascertained by the Appellant Court as distinct from a detailed knowledge of the law or knowledge of the character or ability of the Members of the relevant Court."

There are special considerations that can affect the application of the principle to specialist tribunals such as this Tribunal. In Commissioner of Corrective Services v Government and Related Employees' Tribunal & Ors [2004] NSW C A 291, Giles JA (with whom Sheller and Ipp JJA agreed) said:

22 In determining whether a decision-maker is disqualified by reason of an appearance of bias the question is whether a fair-minded lay observer might reasonably apprehend that the decision-maker might not bring an impartial and unprejudiced mind to the resolution of the question he or she is required to decide: Livesey v New South Wales Bar Association [19831 HCA 17; (1983) 151 CLR 288 at 293-4; Ebner v Official Trustee [2000] HCA 63; (7000) 205 CLR 337 at[21; Re Refugee Review Tribunal; ex parte H[20011 HCA 28; (2001) 75 ALJR 982 at [271.

23 The nature of the tribunal and the proceedings must, however, be taken into account. In Re Finance Sector Union of Australia; ex parte Illaton Pty Ltd [1992] HCA 30; (1992) 66 ALJR 583 at 583 it was said that "the precise practical requirements of [the Livesey] principle vary from case to case. They will be influenced by the nature, function and composition of the particular tribunal". Speaking of the Australian Industrial Relations Commission, it was said at 583-4 -

"The nature of industrial relations in this country makes it inevitable, that in a particular industry, the leading employer and employee organisations, and their officers, will be frequently involved in dispute with one another. Obviously the functioning of the Commission requires that its members participate in the determination of matters in circumstances where they have a familiarity with the industry in which the particular dispute arises, with the context of that dispute and, inevitably, with facts relevant to the dispute and with one or more of the parties to the dispute. In that regard, it has long been recognised that, in most cases, that familiarity is an advantage rather than a disqualifying factor."

24 Again, in Re Polites; ex parte Hoyts Corporation Pty Ltd [1991] HCA 25; (1991) 173 CLR 78 it was said at 86-7 that -

" ... the test in Livesey cannot be pressed too far when the qualifications for membership of the tribunal are such that the members are likely to have some prior knowledge of the circumstances which give rise to the issues for determination or to have formed an attitude about the way in which such issues should be determined or the tribunal's power's exercised. Qualification for membership cannot disqualify a member from sitting."

25 And again, the system of judicial appointment from senior practitioners means that there will often have been past professional association between a judge and counsel or solicitors appearing in proceedings, or even a party. Mere past association will generally not be held to give rise to a reasonable apprehension of bias, although it is a question of degree: see Re Polites; ex parte Hoyts Corporation Pty Ltd at 91 and other cases collected in Aussie Airlines Ply Ltd v Australian Airline Ply Ltd (1996) 135 ALR 753 at 759-61. In Raybos Australia Ply Ltd v Teetran Corp Ply Ltd (1986) 6 NSWLR 272 at 276 it was said that public knowledge and acceptance of such past professional association was "built into the legal system".

This panel of the Legal Services Division of the Administrative Decisions Tribunal specialises in disciplinary hearings in relation to solicitors. The questioning of the Respondent on 24 June 2011 by panel members occurred in that context and in the context of what had preceded it in the hearing. There could be no apprehension of bias that was reasonable if those matters were not taken into account.

RELEVANT BACKGROUND TO THE QUESTIONS ASKED BY THE TRIBUNAL MEMBERS ON 24 June 2011

1. General

These proceedings were commenced by the Application for original decision filed on 1 September 2010, which particularised the Law Society complaints. There had been considerable correspondence between the Law Society and the Respondent from 2006 onwards when the Law Society was investigating complaints leading to the commencement of the proceedings.

At directions hearings on 6 October 2010, 3 November 2010, 1 December 2010, and 2 March 2011 the Respondent was ordered to file a Reply and any Affidavits on which he proposed to rely. The hearing date was fixed on 2 February 2011 although the Respondent had still filed no Reply and no affidavit. He filed an affidavit on 11 March, but no Reply disputing any of the allegations in the Application. The hearing was listed for 30 March 2011. On that day Ms Castle of Counsel appeared for and with the Respondent. Still no Reply had been filed by the Respondent disputing any of the allegations in the Application.

Rule 33 of the Administrative Decisions Tribunal Rules 1998 requires the Respondent who intends to appear at the hearing of an Application to file a Reply and requires that the Reply traverse each allegation in the Application with which the Respondent takes issue and states in summary form any material facts and circumstances on which the Respondent relies. Subrule 33(3) provides that if a respondent fails to lodge a Reply that complies with those requirements within twenty-one (21) days from the day on which the Application and any supporting Affidavits are served, or such further time as the Tribunal allows, the Respondent may not lead evidence on the hearing of the Application unless the Tribunal grants leave to do so.

The Rule was drawn to the attention of the Respondent and his Counsel. Ms Castle informed the Tribunal that the Respondent was contesting the Orders sought and wanted an adjournment till 15 April 2012. She said that he would serve his Reply by Monday, 5 April. When asked, Ms Castle said there was "no explanation" for the failure to file a Reply.

On the morning of 30 March 2011 the Tribunal adjourned to give the Respondent an hour to prepare a Reply. When the Tribunal resumed, his Counsel informed the Tribunal that although the Reply was incomplete, the Respondent had changed his position and did not oppose the orders sought by the Law Society. But then, when Counsel related the precise position of the Respondent in relation to the Grounds in the Application, it was clear that he was disputing some of the allegations and not agreeing to the Orders sought by the Law Society. His Counsel informed the Tribunal then that he: "doesn't oppose the orders sought, but seeks to put explanations to the Tribunal. He wants the opportunity to put on a Reply."

At that stage the Tribunal considered the allegations very serious. Member Riordan informed the parties that even if the parties signed a Consent Instrument, because of the seriousness of the allegations we would not be prepared to make orders without a hearing. None of the Law Society witnesses were required for cross-examination. It was decided to proceed with the evidence-in-chief for the Law Society.

Mr Pierotti for the Law Society, drew the attention of the Tribunal to the decision of the Full Bench of the High Court in Smith v NSW Bar Association (1992) 176 CLR 256. He said that if the Tribunal was minded to consider making findings (presumably "grounds") that the Society had not put to it, then the Solicitor ought to be put on notice regarding that. He also said that if the Tribunal was minded to consider making different orders to those proposed by the Law Society, notice should be given to the Respondent.

At that stage on behalf of the tribunal members, who had read the law society affidavits and the affidavit of the Respondent, I informed the Respondent and his Counsel that it was open to the Tribunal to make orders more serious than those sought by the Law Society, depending upon the findings ultimately made in relation to the Complaint. That occurred prior to the luncheon adjournment at 1.20pm.

The Tribunal resumed at 2.05pm and at that time the proceedings were adjourned to Friday, 15 April 2012 at 10am and an Order was made for the Respondent to file and serve any Reply no later than 4pm on Monday, 4 April, 2012. Mr Pierotti was concerned about the possibility of late service of any further Affidavit relied on by the Respondent. The Respondent had filed only one Affidavit, being his Affidavit of 11 March 2011.

The hearing continued on 15 April 2011. The Respondent had filed a Reply on 4 April. He filed no further affidavit. Mr Pierotti expressed concern that the reply did not comply with the Rules in that it did not traverse all of the matters in the Application that the Respondent disputed. Ms Castle assured us that it did. Mr Pierotti's cross examination of the Respondent did not conclude till after 4.00 pm. Ms Castle informed us that she needed about an hour for re-examination. The first of the available dates that suited the parties was 24 June 2011.

When the Tribunal resumed on 24 June the members of the tribunal asked questions of the Respondent from 10.12am till about 11.10 am. The following material under numbered headings sets out the state of the Respondent's evidence and evidence in the Applicant's case he did not dispute on some issues prior to the questions by the tribunal members on 24 June.

2. Circumstances of False Declaration, Failure to operate a Trust Account, Putting Trust monies into an Account Other Than a Trust Account and Dealing with Trust Monies Contrary to the Requirements of the Act.

The following facts are asserted by the Respondent under oath in his Affidavit of 11 March 2011 or asserted in his letter of 3 September 2008 to the Professional Standards Department of the Law Society of NSW:

The Respondent was admitted as a legal practitioner on 4 June 1999.
He has practiced continuously since then, until 20 February 2002, as an employee of a firm and then as a sole practitioner from February 2002.
From February 2002 in his work as a sole practitioner he undertook conveyancing and other work for his clients.
But he did not open a Trust Account.
When he made his Declaration on his Application of 10 May 2006 for a Practising Certificate for 2006/2007, in answer to the question, "Have you received, held or disbursed any Trust money?", he answered, "No". This answer was false.
At the time he completed the Declaration, he had been a practicing solicitor for almost seven years.
Before his admission he qualified with Bachelor Degrees in Arts and Law and a Diploma in Legal Practice.
He said his employer law practice "had a separate Account Department which dealt with all the accounting aspects including a Trust Account, so that I did not personally deal with the Trust Account aspects."
In his sole practice, he dealt with trust moneys, but referred to it as "transit moneys".
From February 2002 to November 2005 he had no separate account for trust monies. On 16 November 2005, nearly four years after he commenced his sole practice, he opened an account which he called a "controlled moneys" account and used that for some trust monies received and some he deposited to his office account. He called trust money "transit money" or "controlled money".
He said in his letter to the Law Society, "I admit I misjudged the situation" and

"I was mistaken in my belief when I declared in my Application for a Practising Certificated [sic] during the period 1 April 2005 and 31 March 2006, that the transit moneys account I had is not a trust account. I mislabelled the account as it actually function [sic] more like a Trust Account, as I later learned from Mr Gore who also told me that it was inappropriate to deposit all of my client's trust money into this one controlled money account, as only specific client's money could be deposited into one controlled moneys account. I accept I was mistaken and apologise unreservedly to the Law Society for my mistake."

"I then carefully read the report of Mr Gore, I accept that I misjudged the situation regarding the handling of clients' moneys. In hindsight, I should have started to operate a proper trust account once the circumstances warranted it."
"This is the first time I have ever endeavoured to handle trust funds. In hindsight, I should have attended some account-keeping courses or engaged a professional accountant to assist me in this regard. However, the stress and pressures of my sole practice overtook all of my working hours (and most of my personal hours) to the extent that I over-looked this. I accept this should not be an excuse as I am a sole practitioner."
In essence the Respondent said that he did not know that the funds belonging to his clients he received for purchases and sales of real estate were trust moneys.
The Respondent did not dispute that (as in the evidence in the Law Society's case) between 16 November 2005 and 24 March 2006 he deposited 6 amounts of trust money into the "Controlled Monies Account" which totalled $302,300.00 and between 4 October 2005 and 21 April 2006 he deposited 7 amounts of trust money into his office account, which totalled $2,272,334.19.

3. Instructions to Act for Vendors

The Respondent said that the registered owners of Units 8, 9 and 11 at 66-70 [B Street] were Khazen Boutros, the cousin of Mr Boutros, and Antionette Boutros, the wife of Mr Boutros. However, his evidence did not refer to having any correspondence or meetings with, or receiving any instructions from, either of the registered owners of the properties in relation to the sale of the properties.

He referred only to instructions from Mr Boutros and, for example, referred to Mr Boutros instructing the Respondent "to act on his behalf to sell two units, 9 and 11", and referred to "his mortgage", and, "Mr Boutros' mortgage facility". He did not say that the registered owners held the properties in trust for Mr Boutros or describe any other interest Mr Boutros had in the properties.

Similarly, the registered owners of the property at 192 [B Road] were Mr Boutros and his wife, but the Respondent did not say that he ever obtained any instructions from Mrs Boutros for the sale or met her, consulted her or communicated with her.

4. Contracts, Prices, Deposits, Loans & Rebates.

The Respondent has degrees in Arts and Law and a Graduate Diploma in Legal Practice, presumably obtained before he was admitted to practice on 4 June 1999. He had been in practice for approximately seven years when he encountered situations where significant "rebates" were being allowed by Mr Boutros in respect of sales of real estate. He had been practicing as a sole practitioner for more than four years. His practice since he began sole practice included considerable conveyancing work.

The Courts have been disapproving of "rebates" such as Mr Boutros allowed and particularly of solicitors being involved. In Law Society V Dennis (1981) 7 Fam LR 417 the Court of Appeal said that participation by a solicitor in a dishonest scheme to induce a building society to lend to clients by misrepresenting the amounts the clients subscribed was "inconsistent with the integrity demanded of a practising solicitor". That decision was followed in Law Society of NSW v Hooper [2005] NSW ADT 174 where a solicitor knowingly misrepresented the purchase price to a purchaser client's lending bank. It was held that was not only professional misconduct. It demonstrated that the solicitor was not a fit and proper person to remain on the roll. In Kylsilver Pty Ltd -v- One Australia Pty Ltd [2001] NSWSC 226 the developer inflated the sale prices of each block in a subdivision by $10,000.00 to deceive lenders and included in the Contract a provision for a rebate of $10,000.00 on settlement. Hamilton J described such conduct as "conduct which cannot be characterised as worthy".

In Miro -v- Fu Pty Ltd [2003] NSWSC 1009, the price for a property on the front page of the contract was $450,000.00. A Special Condition of the contract provided that no deposit was payable and on settlement the vendor would allow the purchaser a rebate of $100,000.00 off the sale price so that the balance payable on settlement was $350,000.00. Windeyer J said (at [2003] NSWSC [15]):

"I have said before and say again that this type of clause is quite improper. It can be inserted for no purpose other than to mislead persons such as lending authorities and purchasers of other units in that development. In my view it is likely that solicitors who purposely prepare contracts with contradictory clauses such as this may be guilty of professional misconduct. It is more serious when the solicitor is a party to the contract as vendor. Unreal stated consideration for reduction, although that is not the case here, does not improve the position. Instructions of clients cannot excuse such conduct."

A more recent decision of Commonwealth Bank of Australia -v- Hilellis & Ors [2009] NSWDC 9 (13 February 2009) was the decision of Levy DCJ. The facts involved a sale in which the contract price was $550,000 with a 10% deposit payable. The Purchasers provided a cheque for the deposit, but it was not banked and was returned to the Purchasers at their request because there were insufficient funds to cover the cheque. On settlement the Vendors accepted $440,000.00 and said that they were trusting the Purchasers to pay the rest later. The Purchasers disappeared without making any mortgage payments to the Commonwealth Bank who had provided a mortgage loan of $440,000.00 to finance the purchase.

The grant of the mortgage loan was conditional upon the Bank being provided a completed front page of the executed sale Contract, as the copy provided to the Bank already was incomplete. The Agent nominated on the Contract was not acting on the sale. It had been the letting agent for the property.

The Purchasers' finance adviser referred the Purchasers to the solicitors who then acted for Purchasers on the Purchase. Those solicitors were known to the Vendors. The finance adviser also referred the Purchasers to the Bank to make a loan application and introduced them to an employee of the Bank who was known to him. He also witnessed the Purchasers' signatures on the Mortgage documents.

The Vendors were the grandparents of the finance adviser and also their son was the person in control of the mortgage brokering practice which employed the finance adviser. The Solicitor who acted for the Purchasers was also acting for the Vendors. His office was located in the same building as the mortgage brokerage.

From the moneys received by the Vendors on settlement, a brokerage fee of 2% of $440,000.00 plus 10% GST was paid to the mortgage brokerage in respect of the loan obtained by the purchasers. It was established at the hearing that the value of the property was significantly less than $440,000.00. After the default by the purchasers the Bank undertook a mortgagee sale.

The Court took into account as part of the misrepresentations the false representation that there was a deposit of $55,000.00 to be paid. The solicitor who acted for the vendors and the purchasers was not a defendant in the proceedings. The Court said:

"In his oral evidence [the solicitor who acted for the Purchasers and Vendors] acknowledged that, with hindsight, he recognised that there were a number of unusual aspects of the transaction. He agreed that with hindsight these features ought to have alerted him to the fact that something was not quite right with the transaction. He excused his oversight by saying at the time his office was short-staffed, he was over-burdened with work, and he was not in good health."

The Court found that there had been a fraud by the Purchasers on the Bank. It was held that the purchase price of $550,000.00 was "fictitious". The finance broker and the Vendors were all held to be complicit in the false representations that the price was $550,000.00 and that the value of the property was $550,000.00. The Bank was held to have relied on such false representations and there was a verdict in favour of the Bank against the finance broker and the Vendors for $121,804.54 plus costs.

On 21 June 2006 the Respondent received faxes from a firm of solicitors acting for the Purchaser of Unit 8, 9 and 11 at [B Street] "from the Vendor, Mr Charlie Boutros". The purchase price for each sale was said by the Purchaser's Solicitors to be $420,000 with a deposit of $21,000. The solicitors requested the "first page" of each Contract. These were supplied and each showed the purchase price as $420,000 and the deposit as $21,000.

Subsequently, the Respondent received the front pages of each Contract signed by Mr Boutros (as Vendor) and the Purchaser, but with the purchase price hand-written as "Three hundred and twenty-five thousand dollars" and the deposit as "One thousand dollars". The deposit was in each case payable to the Agent, "True Realty" of Parramatta. The Respondent did not prepare any of those documents and was not privy to the exchange. The contract front pages executed were on the form of the 2000 edition of the Law Society Contract, whereas the contract front pages the Respondent submitted were on the form of the 2005 edition.

Mr Boutros instructed the Respondent later regarding unit 9, however, 'that he and the purchaser had privately agreed between themselves that the vendor would loan the purchaser $95,000, which was adjusted in the settlement figures so that the amount due on settlement was $325,460.66". There was no mention of any documentation of the "loan" (or any advice to Mr Boutros about any need to document the loan), and the contract price of $325,000 on the contract the Respondent had was not altered. In the settlement figures faxed by the Respondent to the purchaser's solicitors on 19 September and revised figures faxed on 25 September 2006 the figure of $95,000 deducted from the amount otherwise payable by the purchaser was described "Vendor allows rebate" and there was no mention of a loan. The settlement figures showed that no deposit had been paid and no cheque was to be drawn in favour of the agent. The Transfer showed the consideration as $420,000.

An identical procedure followed in relation to unit 11, again without loan documentation, without advice as to any need to document the loan, without changing the price in the contract held by the Respondent, and describing the $95,000 in the settlement figures faxed by the Respondent to the purchaser's solicitors on 19 September and revised figures faxed on 25 September as "Vendor allows rebate" with no mention of a loan. The settlement figures showed that no deposit had been paid and no cheque was to be drawn in favour of the agent. The transfer showed the consideration as $420,000.

An identical procedure followed in relation to the sale of unit 8, again without loan documentation, without advice about documenting the loan, without changing the price in the contract held by the Respondent, and describing the $95,000 in the settlement figures faxed by the Respondent to the purchaser's solicitors on 2 November as "Vendor allows rebate" with no mention of a loan. The settlement figures showed that no deposit had been paid and no cheque was to be drawn in favour of the agent. The transfer showed the consideration as $420,000.

5. Circumstances About the Sale of 192 [B Road].

According to the Respondent's evidence before the tribunal members asked him questions on 24 June:

The Contract for Sale was originally prepared by Mr Greg Smith, solicitor, on instructions from Mr Boutros.
Subsequently Mr Boutros instructed the Respondent to act for the sale.
On 7 June 2006 there was an offer to purchase the property for $470,000.00 but this purchase did not proceed.
On 23 June 2006 there was a second offer to purchase the property by a different party at a proposed price of $495,000.00.
In about early July 2006 Mr Boutros informed the Respondent that he had another Purchaser at a price of $635.000.00 and they had already reached an agreement that the Purchaser would not have to pay a deposit of $63,500 on exchange.
Mr Boutros signed the Contract himself and dated it 10 July 2006 before he brought it to the Respondent's office and instructed him to act on the matter.
Mr Boutros instructed the Respondent that the Agent he had employed was Ashfield Partners, as specified on the Contract.
The Purchaser was referred to the Respondent by Ashfield Partners and on about 10 July 2006 the Purchaser attended at the office of the Respondent. He informed the Respondent that he was the current tenant of the property and wanted the Respondent to act for him as well.
Although the Contract provided for payment of $63,500 as a deposit, both the Vendor and the Purchaser told the Respondent that no deposit had been paid.
The Respondent then acted for the Purchaser and the vendor and exchanged Contracts on 22 July 2006.
Settlement was scheduled for 20 October 2006. On 19 October, Mr Boutros came to the Respondent's office and gave instructions that he was giving a rebate of $140,000.00 to the purchaser, so that the purchase price would be $495,000.00 instead of $635,000.00.
He also instructed the Respondent's secretary that the purchaser had already paid the deposit of $63,500.00, which was part of the rebate and the balance was $76,500.00.
Mr Boutros dictated settlement figures to the Respondent's secretary. They showed that there was no deposit paid and the Vendor gave a "rebate" of $140,000.00 in reduction of the amount payable to $495,760.33.

6. Circumstances about the Discharge Documents for the Eurofund Mortgage Secured Over Units 9 and 11 [B St]

According to the Respondent's evidence, particularly his affidavit of 11 March 2010:

Mr Boutros had instructed the Respondent in April 2006 to act on the sales of the units.
Mr Boutros told the Respondent details of the first mortgage and mortgagee, but did not disclose to the Respondent the second mortgage.
Nearly 5 months later on 5 September 2006 the Respondent discovered from a title search that there was a second mortgage to Eurofund (Australia) Pty Ltd ("Eurofund").
When The Respondent asked Mr Boutros for details of Eurofund, Mr Boutros told him that he had fully repaid the mortgage. When asked where the Discharge document was, Mr Boutros said, "I will bring it to you when you need it". (The two references to "it" suggested there was one Discharge of the mortgage in respect of both units.)
Subsequently each of The Respondent and his secretary telephoned Mr Boutros several times asking for "more information about Eurofund, including their contact details", but Mr Boutros did not provide any such details. Subsequently Mr Boutros came to The Respondent's office and "He re-assured me that he had discharged the mortgage to Eurofund and instructed me that he would provide the Discharge document at settlement."
Mr Boutros provided The Respondent with a copy of a letter from WKA Legal, the Solicitors for Eurofund, to Greg Smith, the solicitor Mr Boutros said had been acting for Mr Boutros regarding the discharge of the Eurofund mortgage debt.The letter is dated 21 July 2006 and states:

"We refer to your letter of 18 July 2006 addressed to Eurofund (Australia) Pty Ltd. Our client denies that your clients have any entitlement whatsoever to damages against our client.

"Dispute [sic] your assertions and contentions. Our client was and is entitled to refuse to release its securities or any part thereof unless the debt thereby secured was repaid in accordance with its terms.

"Notwithstanding our clients [sic] above rights, our client accommodated your client by entering into the Deed of Agreement which it did on 27 April 2006.

"We note your client has complied in part with the Deed, but is in breach by failing to make the final payment under the Deed on or before 27 June 2006.

"In consequence thereof our client has exercised its rights under the Deed and has lodged further Caveats on your client's properties and entered Default Judgment against your clients in accordance and in the amount specified in the Deed.

"Could you please immediately advise when your client proposes to discharge their obligations pursuant to the Deed?

"In the meantime, please note we are waiting on instructions from our client in relation to enforcing its rights under the Deed which it may do without further reference to you or your clients."

Mr Boutros also produced a copy of the front page of a Contract for the proposed sale of Lot 10 in the same block of units showing Mr Greg Smith as the Solicitor. The sale had not proceeded. Mr Boutros told The Respondent that he may ask him to act in that sale in the future.
The Respondent declared in his Declaration: "Having seen the correspondence and Mr Smith and WKA Legal and the contract, I accepted Mr Boutros' instructions that Mr Smith had in fact handled and resolved the Discharge of Mortgage with Eurofund".
(The letter indicated that at 21 July the mortgage debt had not been fully paid, the mortgagor was in default, and Eurofund had no intention of providing a discharge.)
Settlement was arranged for the sale of both Units for 26 September 2006. It was not until "around midday" of that day that Mr Boutros attended the office of the Respondent and provided two Discharge of Mortgage documents; one each for Lots 9 and 11.
Copies of the documents were annexed to his affidavit.
They are both dated 26 September 2006. Each of them is signed by an individual and witnessed by an individual. Neither of the documents purports to have been executed by any Director or other person with authority to sign the discharges on behalf of the company Eurofund. They are not executed under seal or in accordance with section 127 of the Corporations Act 2001 (Cth). They did not purport to be validly executed by Eurofund. (see ss127 -129).
The respondent did not allege that he made any enquiry to ascertain whether the person who signed the discharge had any authority to do so.
The name of the witness to each document is "George Koovosis". On the discharge for Lot 9, his address appears to be 16 Grose Street, Parramatta, and on the Discharge for Lot 11, his address appears to be 18 Grose Street, Parramatta.
In his affidavit The Respondent testified, "The two documents were duly executed and witnessed ... I did not have any reason to suspect that these two documents given to me by Mr Boutros were in any way forged or not genuine".

The discharge documents Mr Boutros supplied the Respondent for Lots 9 and 11 at B Street were not executed under seal by Eurofund. Subsection 127(2) of the Corporations Act 2001 provides that a company may execute a document without using the common seal if it is signed by 2 directors or a director and the company secretary, or, if the company is a proprietary company that has a sole director who is also the sole company secretary, that director.

Eurofund is a proprietary company. The discharges for Lots 9 and 11 were executed by only one person and did not purport that that person was a director or a secretary of the company, or that the company had only one director or secretary. The signature was witnessed by a George Koovosis, who certified that the mortgagee (Eurofund (Australia) Pty Ltd) "with whom I am personally acquainted or as to whose identity I am otherwise satisfied, signed this discharge of mortgage in my presence".

The purported execution of the discharges of the mortgage for lots 9 and 11 did not satisfy section 127 and did not make sense. On the face of it they were invalid and suspicious.

7. Circumstances About Misleading Galilee Solicitors

One of the Grounds alleged that the Solicitor, "having become aware of the true purchase price of 192 [B Road] misled Galilee Solicitors (the solicitors for the incoming mortgagee bank) by:

a) not correcting the contents of his letter to Galilee Solicitors of 10 August 2006 therein enclosing a copy of the front page of the Contract for the Sale showing the Purchase Price of $635,000.00"

In his Affidavit of 11 March 2011 and his statutory declaration of 21 November 2006 provided to the law Society the Respondent's said that:

On 8 August 2006 he received correspondence from Galilee Solicitors, acting for the Purchasers' incoming mortgagee bank, requesting, among other things, a copy of the front page of the Contract and a copy of the transfer.
On 10 August 2006 he sent to Galilee Solicitors by fax a copy of the front page of the Contract and a copy of the transfer, both showing the sale price to be $635,000.00.
On 28 September 2006, Galilee Solicitors wrote to the Respondent advising him that the National Australia Bank had approved a loan of $571,500.00 and the net proceeds available for the settlement would be $558,626.61 after deducting certain mortgage related fees.
About 17 October 2006 he received a facsimile from Galilee Solicitors confirming that the amount available for settlement from the incoming mortgagee bank, was $558,626.61.
On 19 October 2006, the day before the sale was settled, Mr Boutros instructed him that he had now allowed to the Purchaser a rebate in the amount of $140,000.00, which, he said, included the 10% deposit of $63,500.00, which he said had been paid to him direct by the Purchaser.
He did not know about the reduction in the price until then.
If a deposit was paid then there was a rebate of $76,500.00, but the settlement figures which were then prepared in the Respondent' office on instructions from Mr Boutros, showed no deposit having been paid and showed an item "Vendor allows rebate $140,000.00" as a reduction in the amount payable.
According to the settlement sheet, the purchase price had been reduced to $495,000.00.
At no time after provision of a copy of the front of the Contract, showing the price as $635,000.00 to Galilee Solicitors, did the Respondent notify Galilee Solicitors that the price had been reduced.
At the time of settlement on 20 October 2006 the Respondent knew that $558,626.61, the net amount being advanced by the incoming mortgagee National Australia Bank, was more than the purchase price, even if the deposit had been paid to Mr Boutros and the rebate was only $76,500.00.
The Respondent knew before settlement that if the true purchase price was $495,000.00, that was $76,500.00 less than the gross amount being advanced to the purchasers by the incoming mortgagee bank.

8. Circumstances of Failure to Honour Undertaking to Pay $60,000.00

The following facts are alleged by the Respondent in his Affidavit of 11 March 2011:

On the sale of 192 [B Road] there was a second mortgagee,
Mr Vassilis who would not agree to withdraw his Caveat unless he was paid $60,000.00 in part payment of his debt secured on the property.
There were negotiations and by letter dated 5 October 2006 to Nicopolous & Associates, the solicitors for Mr Vassilis, the Respondent stated: "We confirm that upon receiving a Withdrawal of Caveat on the [B Road] property from your office, our office shall at settlement draw a cheque to the amount of $60,000.00 (sixty thousand dollars) in favour of your client, Mr Michael Vassilis".
The letter enclosed an Authority of the Vendors authorising the giving of the Undertaking, and the Undertaking in a separate document.
In his letter of 3 September 2008 the Respondent told the Law Society:

"At the time when the Undertaking was provided to Nicopolous & Associates, I understood from the Contract that the sale price of the property at 192 to be $635,000.00 and the Contract has been assessed and stamped to the value of $635,000.00 by the Office of State Revenue. Based on previous correspondence from the Discharged Mortgage at St George advising the final pay out figures, I believed there would be sufficient funds remaining from the sale and settlement of 192 to repay the $60,000.00 in accordance with the Undertaking. I was also aware from the sale of previous units of Lots 9 and 11 of the[ B Street] properties that there was surplus moneys after those conveyances. This further led me to believe that there would be sufficient funds from the sale of 192 to honour the Undertaking. I therefore gave the Undertaking to Nicopolous & Associates in good faith truly believing that the promise can [sic] be kept."

He also said:

"I can, however, categorically state that at the time of giving the undertaking, I had absolutely no knowledge that the sale of the property would only yield $495,000.00 on settlement. I only found out about this when Mr Boutros decided to unilaterally give a rebate of $140,000.00 to the Purchaser, which came to light the day before the settlement, 19 October 2006."

He also said elsewhere in the same letter to the Law Society:

"The settlement of 192 [B Road] was scheduled for 20 October 2006 ... I have [sic] no knowledge prior the 19 October 2006 that at the eleventh hour things would change in the way it did and the nett proceed [sic] available from the sale and settlement could only yield $495,00.00 i.e. under last minute instruction from Mr Boutros to give an allowance to the Purchases [sic]. As at 19 October 2006 I truly believed that the property was sold at the contract price of $635,000.00. Also, there is no provision made in the contract for any such allowance, to make me think otherwise at an earlier time."

The Respondent also said in a letter to the Law Society:

"Mr Boutros' actions resulted in a chain of events which placed me in a compromised position: I have made an Undertaking to Mr Vassilis (ie Nicopolous & Associates) that his debt would be sufficiently covered by the sale on the original contract price; and I also had to arrange for some $31,000.00 from Mr Boutros' funds from a previous sale from the Controlled Moneys Account to be paid to St George to cover the shortfall - otherwise the sale would have been completely aborted. I would not deliberately state a falsehood to a fellow legal practitioner under any circumstance."

The Respondent did not allege that at any time he notified Nicopolous & Associates that the settlement, if it proceeded, would not provide sufficient funds for him to pay the $60,000.00. He did not give evidence that he confronted Mr Boutros about the issue or informed him that he was not willing to facilitate any settlement if the funds available would be insufficient to meet the undertaking.

He did not offer any evidence that he took any step to return the withdrawal of caveat or withdraw his undertaking.
The Respondent facilitated the settlement knowing that he would not honour his undertaking if he did so.

9. Circumstances of the Attempted Settlement of the Sale of Unit 8 [B St].

The Respondent's version of events:

As a result of what happened in relation to the discharge to the second mortgage for Lots 9 and 11, he expected that Mr Boutros would provide him with a discharge document in respect of the Eurofund mortgage as regards lot 8.
In the lead up to settlement his secretary contacted Mr Boutros requesting the discharge document. Settlement was arranged for 3 November 2006.
On 2 November 2006, the day before the settlement, Mr Boutros had still not provided the discharge promised. "I received a call on my mobile in my office from a male person identifying himself only as 'Warwick' and he said he acted for Eurofund. 'Warwick' told me that his client has not given authority for the discharge of the mortgage for Lots 9 and 11 of [ B St]. I was quite shocked by his remarks and I could not comprehend what he was saying. As I did not know where he was from, I asked him to put it in writing to me."
Later that day at about 4.52pm the Respondent received a fax from WKA Legal, the same firm of solicitors who had written the letter of 21 July 2006 to Mr Greg Smith, which Mr Boutros had given to the Respondent the previous month.
The letter from WKA Legal, a copy of which is Annexure "R" to the Declaration, states:

"We act for Eurofund and are advised that your clients have sold Unit 8 [B St], and settlement of the sale has been booked for 3pm on Friday, 3 November 2006.

"At no time have we or our client been approached by anyone on behalf of your clients to advise us of the settlement or sought to make appropriate arrangements for the provision by our client of a discharge of its Mortgage over the property.

"We note that you client has sold Lots 9 and 11 [ B St] and at the settlement of those sales forged Discharges of our client's Mortgages over those Titles were provided presumably to the Purchasers. In other words, those sales proceeded without our client's knowledge or consent.

"We put you and your client on notice that our client has not authorised or executed any Discharge of Mortgage in respect to Lot 9 [sic] [B St], that is due to settle on 3 November 2006. If you and your client attempt to settle the matter with a Discharge of Mortgage that is not expressly (in writing) authorised by us, then our client will hold you and your clients liable in damages.

"Could you please advise us as soon a possible of your client's proposal in relation to discharging our client's mortgage in its entirety.

"Could you please also confirm that the settlement booked for the sale on 3 November 2006 has been cancelled."

The Respondent did not raise any allegation that he telephoned or otherwise responded to WKA Legal after he received the telephone call from "Warwick" on 2 November 2006 or after he received the faxed letter from WKA Legal.
He knew from the correspondence previously provided to him by Mr Boutros that WKA Legal had been acting for Eurofund.
The Respondent immediately called Mr Boutros, who again re-assured him that he did not owe Eurofund any money, and said that he had already paid them "an amount totalling $800,000.00", and:

"George [surname indistinct] at Parramatta have lent me money to pay off Eurofund. And Eurofund have given George all the Discharge of Mortgage documents. Actually, I don't think I owe them any more money. In fact they are now bankrupt and it is under the control of an Administrator. They don't have any right to make as Mortgagees. If you don't believe me, check for yourself."

Mr Boutros' statement, "Actually, I don't think I owe them any more money" is not consistent with the Respondent's evidence of Mr Boutros' prior unequivocal statements that he had paid all that was owed to Eurofund and he would provide the discharge.
The Respondent knew that although Mr Boutros had known for some time that Eurofund had been placed in Administration, this was the first time he had told the Respondent.
At around 5.30pm Mr Boutros came to the Respondent's office. He was there for about 15 minutes and again assured the Respondent that the company was "bankrupt and don't exist anymore".
The Respondent had his secretary conduct a search on the internet about Eurofund and obtained a 2 page print out which indicated that Eurofund was under external administration since at least August 2005 when Mr Wily and Mr Hurst were appointed Administrators.
The Respondent knew that neither of the discharges he had received for units 9 and 11 from Mr Boutros on 26 September 2006 purported to be executed by the Administrators of Eurofund or either of them.
Mr Boutros purported to then telephone a person, he referred to as "George", and said, "George, you've got all the mortgage discharge documents from Eurofund, right? I need to get it from you. Cause my Solicitor wants it for the settlement ... Ah, so your solicitor has got it? ... They have organised, already arranged the Discharge of Mortgage? ...."
When the Respondent asked Mr Boutros whether the Discharge of Mortgage had been lodged at the LPI already or whether it was still being held at the Solicitor's office, Mr Boutros said on the telephone, "George, I'll come and see you".
Mr Boutros left and returned later at around 12 pm producing a three page document headed "External Administration. Appointment as External Administrator."
The document purported to be from the Australian Securities & Investment Commission and stated that Andrew Hugh Jenner Wiley and David Anthony Hurst had been appointed as Administrators of Eurofund on 19 August 2005.
Mr Boutros at the same time provided the Respondent with a bundle of documents which included a document that was a faxed document purporting to be a copy of a discharge of the Eurofund mortgage as regards Lot 8.
The Discharge of Mortgage document in respect of Lot 8 did not purport to have been executed by the Administrators or either of them. It purported to have been executed under Section 127 of the Corporations Act 2001 by a person Jerry Kekatos, as "Sole Director/Secretary" of the company.
The Respondent knew that the discharges for units 9 and 11 dated 26 September 2006 had not been executed by that person.
Because the purported Discharge of Mortgage was a faxed copy, not an original, the Respondent told Mr Boutros that it could not be used for the settlement and he needed to have the original. He asked Mr Boutros to bring it to his office by 1pm on 3 November at the latest. He also said, "Otherwise you have to take it to the City and meet me at the place of the settlement. Call me on my mobile when you get to the city." Mr Boutros agreed to get the original.
There is no evidence that the Respondent carried out any search of the company or took any other step to confirm whether a person called Jerry Kekatos was in fact the sole director and secretary of Eurofund.
The Respondent considered when he went to the settlement appointment on 3 November 2006 that the discharge documents Mr Boutros provided for units 9 and 11 were valid discharges and the original of the facsimile document Mr Boutros had given him was a valid discharge of the Eurofund Mortgage as regards unit 8.
Before he went to the settlement appointment he drafted a letter addressed to WKA Legal at its facsimile address responding to the letter from that firm. He said in that letter:

"You advised that you act for Eurofund in the above matter. We are at a lost [sic] as to your claim as the Solicitor for Eurofund (Australia). We were advised that on [sic] Administrator has been appointed to take control of the company. Please provide the proper Authority to confirm your capacity to act for Eurofund. Upon receipt of same we will obtain further instruction from our client and respond as appropriate."

But he did not send that facsimile to WKA Legal. He went to the settlement appointment.
The Respondent continued with the settlement arrangements and attended the settlement without further questioning the validity of the Discharge of Mortgage that he asked his client to provide. The settlement was aborted when Mr Warwick Keay, the solicitor from WKA Legal arrived and intervened.

The discharge for Lot 8 was signed by a single person on behalf of the company whose "office held" is stated below his signature to be "Sole Director/Secretary".

The combined effect of sections 128 and 129 of the Corporations Act 2001 is that generally, where a document in dealings with another party purports to be executed by a company, if it is not executed under seal but the execution complies with section 127, the other party is entitled to assume that the requirements of the company constitution and the provisions of the Corporations Act 2001 that apply to the company "as replaceable rules" have been complied with. Subsections 129(2), (3), and (4) also provide for the other party to be able to make other assumptions as to office bearers being duly appointed, having authority to exercise customary powers and duties of such office bearers of similar companies and proper performance of duties.

The Respondent knew before he attended the appointment for settlement of the sale of lot 8 that Receivers had been appointed to Eurofund before those discharges had been executed, and the discharges did not purport to be executed by or with authority of any receiver.

There is also another problem with the discharge for Lot 8 in that the assumptions as to a director or secretary being duly appointed and having authority are available only if the director or secretary appears, from information that is available to the public from ASIC to hold such office in the company, or the company has held that person out to hold such office. There is no evidence Eurofund held out the signatory to the discharge for Lot 8 to be the sole director or sole secretary of the company. Nor did the Respondent have any information from ASIC that there was a sole director/secretary. On the contrary, the Respondent's searches disclosed that the company was in receivership and therefore the receivers had any relevant authority.

In subsection 128(4) there is an exception that also applies to the discharge for Lot 8, a copy of which was provided to the Respondent by Mr Boutros. The Subsection provides:

(4) A person is not entitled to make an assumption in section 129 if at the time of the dealing they knew or suspected that the assumption was incorrect.

The Respondent and Mr Boutros knew before the settlement that receivers had been appointed to Eurofund. Receivership is not consistent with any director or secretary having authority to execute a discharge. That was sufficient for the Respondent and his clients to suspect that no director/secretary had authority to execute the discharge of mortgage for Lot 8. The Respondent and the clients were therefore not entitled to make the presumptions under section 129 in relation to the discharge document for lot 8.

10. Events After the Sale of Unit 8 Was Aborted

According to the Respondent's Affidavit of 11 March 2011:

After the settlement was aborted he spoke to Mr Boutros a week later and Mr Boutros asked if the Discharge of Mortgage for all his properties could be "lodged" before organising another settlement for the sale.
The Respondent told him:

"That is if you have got the original and proper document. We also have to contact the first mortgagee, Suncorp to produce the Certificate of Title for the purpose of registering the Discharge ..."

Mr Boutros asked the Respondent to contact Suncorp "for this".
The Respondent said:

"Given what had transpired on 2 and 3 November, I did not proceed to contact Suncorp".

In that or a later phone call Mr Boutros also told the Respondent, "That he has engaged another firm of solicitors,[ B & K], to deal with Eurofund regarding the money he owes them".
On the face of it, the Respondent then knew that not all of the debt to Eurofund had been paid, and that Mr Boutros had lied to him repeatedly when he said it had.
On or about 8 or 9 November a Solicitor from [B & K] visited The Respondent asking for documents relating to Lot 8, and the Respondent gave him copies of documents on the file.
In about the second week of December 2006, the Respondent accepted instructions from Mr Boutros to act on the sale of a property at Croydon and commenced that work. The work he performed included the exchange of Contracts with the purchaser.
As at 20 November 2006 he believed that when he did the conveyancing work for Mr Boutros, he:

"acted in good faith in executing my duties as his Solicitor",

and,

"I was satisfied that I had been provided with genuine Discharge of Mortgage documents by Mr Boutros for the first two settlements (Lots 9 and 11 of 66-70 Baltimore Street, Belfield, NSW) and believed I acted properly in completing these settlements on 26 September 2006."

11. The Respondent's Reply Filed 4 April 2011

In his Reply, responses of the Respondent to the various Grounds alleged against him were as follows:

(1) Ground D: False Declaration in Application for Renewal of Practising Certificate

"He now fully appreciates, as he deposes in his Affidavit of 11 March 2011 that his standards fell below the standard expected of Legal Practitioners in NSW and he accepts the need for supervision and further training in accordance with the orders sought by the Law Society

(2) Ground C: Failure to Comply with Sections 253, 254, 255, 256 and 260 of the Legal Profession Act 2004 (Conduct of a Trust account and dealings with Trust Money. Also misleading Trust Account Investigator.)

The Respondent admits that he mislead the Investigator by remaining silent about having closed a trust account.

The Respondent now admits that in respect of the closure of the Controlled Money Account he withdrew money for costs and disbursements without complying with the relevant procedures.

The Respondent concedes that his conduct fell below the conduct that is required of him and deeply regrets his actions.

(3) Ground B: The Respondent said that he was "unable to honour his undertaking to Messrs Nicopolous & Associates and that he allowed his duties to his client to conflict in an unacceptable manner with his undertaking. He now appreciates that he acted in a manner which fell below the standards which are expected on him."

The Respondent "denies he knowingly mislead Galilee Solicitors". He said that when Mr Boutros told him he had agreed with the Purchaser that he did not have to pay the 10% deposit, he was concerned about the Purchaser's ability to pay the deposit and obtained a Statutory Declaration from the Purchaser's father about the funds being available. He said he understood the instructions to mean that no deposit was required to be paid at exchange; not that no deposit would ever be paid.

He said, "The word 'deposit' on the front page of the Contract refers to the deposit which is owing, not to whether the deposit has been paid at the time of exchange."

He said the words "Acting for self" was shown in the Contract as regards the Purchaser because he had declined to act for both parties and Mr Boutros and had told him that he would rather he act for the Purchasers. But following exchange he said Mr Boutros again asked him to act for him as well, and he agreed. He said he did not believe he was under an obligation to inform Galilee that the 10% deposit had not been paid and he understood that it would ultimately be paid. He said his subsequent instructions were that "it had been paid".

(4) Re: Attempting to settle the sale of a property when he was on notice that the Discharge of the Mortgage of Eurofund was unauthorised or a forgery.

The Respondent denied this allegation. He did not deny being on notice that the Discharge was unauthorised or a forgery, but he stated, "The Respondent undertook acts preparatory to settlement but made no attempt to actually effect settlement", and, "He now appreciates that he should have declined to attend the planned settlement and that his conduct fell below the standard expected of the Legal Profession in NSW."

12. Oral evidence of the Respondent on 15 April 2011 in cross-examination by Mr Pierotti

The Respondent was a most unimpressive witness. He was repeatedly evasive, despite cautions from the chairperson. He repeatedly volunteered unresponsive material. He gave inconsistent evidence on some issues.

When he was asked about the telephone call from the solicitor for Eurofund on 2 November 2006, he said, "I was quite shocked by what he said". He avoided questions about the actual conversation. He said he could not remember. He said, "My mental flexibility is not good."

He was asked about what he had to allow him to complete the settlement on 3 November when he discovered that the Discharge produced by Mr Boutros was a faxed copy and he said, "Nothing". When he was asked whether he had any documentation or payout figure calculated, his answer was not responsive. He was asked when he notified Eurofund of the settlement arrangements or asked for a discharge figure, he avoided the question and volunteered unresponsive material.

After protracted cross-examination, he conceded that the letter from the solicitors for Eurofund to the solicitor Greg Smith that Mr Boutros provided him made no reference to Unit 8 and was dated well before Unit 8 was sold. But he said he was relying on that letter to conclude that Mr Boutros had instructed Mr Smith on the sale of Unit 8.

He was asked when on the 2 November he had read Mr Kay's letter, "Did you not form a view, 'This has gone off'?", and he answered, "I want answers from Mr Boutros." When he was asked what questions he wanted answered, he said, "What is happening with the discharge of mortgage?" He was then asked, "Didn't you want to ask him about the allegations of forgeries?", and he replied, "I did. He said, 'There's nothing wrong with these Discharges'." In answer to further questions, he said that he was very concerned about the allegations by Mr Kay that the Discharges for Units 9 and 11 were forgeries. He said, "I didn't sincerely believe that what Mr Kay was saying was true. I thought he was lying."

He was asked, "Did you say, 'I'll check with the Administrator'?", and he replied, "No. It didn't cross my mind because things were very tight." He said that if Mr Boutros had provided an original Discharge, and it was not challenged at the settlement, he would have settled. It was put to him that the reason he attended the settlement appointment was in expectation of Mr Boutros providing a Discharge at settlement and the matter being settled. He avoided the question and when it was repeated, he then said, "I don't know. I don't know whether I would or would not settle." When he was asked why he went to the settlement appointment, he avoided the question. When it was repeated, he said, "I would go and see what would happen." He said that settlement was one possibility.

Later when it was put to him that if Mr Boutros had arrived at the settlement and provided him with the original discharge and no-one from Eurofund had arrived, he would have settled. He avoided the question. It was repeated and he answered, "I would not have settled." When asked, "Why not?", he said, "Because at that time there were too many issues. I don't even know what I should or shouldn't do."

It was then put to him that he was making up his answers. He avoided the question. When he was asked why then he went to the settlement if he would not have settled, he answered, "I always go to settlement because there are many parties that come to settle." When he was asked, "Why did you not then say, 'It's all off', and cancel the settlement appointment?", and he answered, "It would not be appropriate to cancel it because Mr Boutros said he was still coming with the document - an original of the Discharge."

"He has now matured and stated that he has insight to the importance of regular mentoring and to this end, should he be allowed to continue in practice, it is his intention to surrender his Unrestricted Practising Certificate, sell his practice and to work as an employee or consultant and not as a sole practitioner, with regular mentoring and supervision with a more experienced practitioner. He stated that he would also benefit from supportive counselling in the context of his continuing anxiety and depression."

Mr Watson-Munro answered some questions from the Tribunal. When asked about the Respondent's fitness to practice now, he said that it has been a significant period of time since the relevant conduct occurred. He said the Respondent has an anxiety disorder and depression and other problems which are treatable. He suggested that the Respondent could "practice with a caveat that he be supervised." When it was put to him that the Respondent is currently not taking any medication, he conceded that that indicates that he is not currently having any treatment. He said he recommends that the Respondent resume treatment with his Psychologist. He said that he had not seen the Respondent since 31 March. He said he needs to have medication prescribed by his general practitioner and it is Mr Watson-Munro's view that "he needs anti-depressants". He said: "He also needs psychotherapy, mentoring and supportive counselling." He said that his low self-esteem needs to be treated by social skills training and learning to communicate. He said: "Being a lawyer is much caught-up in his sense of self - loosing his status as a solicitor would exacerbate his problems". He suggested that the Respondent would need mentoring by a group and that working with a group and being involved in work together would help him.

When Mr Watson-Munro was asked how serious he considers the Respondent is about the issue of suicide, he said: "He thinks about it. He has no plan. I don't think he has thought out how." But he also said he would be concerned that suicide would become more of live issue for the Respondent if he ceased to be a solicitor.

Mr Watson-Munro's attention was directed to the Respondent's problems of fatigue, lack of drive and intellectual impairment. He was asked how the Tribunal could be satisfied he is fit to be a solicitor. In his response Mr Watson-Munro said: "His anxiety intrudes on his planning and thinking. He's a hard worker. There would be the caveat of supervision, and he would also be having treatment."

THE RESPONDENT'S CASE AS TO WHAT ORDERS SHOULD BE MADE

In the written Submissions of Senior Counsel and Junior Counsel for the Respondent it is argued that the proper outcome "would be a restriction on the unlimited right to practise, together with a supervisory and educative regime".

It is submitted that: "This conduct and these omissions from years ago ought not warrant the removal of the Respondent from the Roll as being presently 'permanently unfit'." For the Respondent the point is made that the Grounds are "isolated conduct confined to one particular client during a period of time which is now approaching some 6 years in antiquity". It is also submitted that: "The conduct variously the subject of complaints 5, 6 7 and 8 before the Tribunal all relate to the narrow chronological period between about August and November 2006".

It is submitted that the Tribunal should accept the Respondent's evidence that he is "basically a very trusting person", most of his clients have been "decent, everyday people", and, "usually very proper and upright". "Mr Boutros is the one and only clients [sic] that I've ever encountered who is totally beyond my comprehension and at the time I had only been in practice on my own for about 4 years. I have never had any other dealings with clients like Mr Boutros prior to this matter."

These submissions in support of the Respondent's proposals raise the following further points:

The Respondent has given evidence of having conducted something in the order of 1,000 conveyancing matters, but there have been no subsequent complaints.
The passage of time is significant in relation to the appropriate orders. It is submitted that in once sense the delay has amounted to an "extra-curial punishment" because of the profound effects on the Solicitor psychologically "and his ability to progress professionally".
The Respondent has come to "a proper realisation and understanding of the wrongfulness" of his actions and that is an important matter as to contrition and also future fitness to practice.
The professional observations and evidence from Mr Tim Watson-Munro.
Nineteen character references relied on by the Respondent, including two from lawyers, six from medical practitioners and 11 from persons in other diverse professions.
The Respondent completed a full day of Mandatory Continuing Legal Education seminars with respect to Trust Accounts conducted by the Law Society in 2007-2008 and has enrolled in the College of Law's Legal Practice Management Course to be held on 1-3 June 2012.
The Respondent has presented a number of Law Week public seminars on behalf of the Law Society and separately for Anglicare, including a seminar on Wills, Powers of Attorney and Public Guardians for a group of elderly carers with adult children with disabilities in Bankstown.
The Respondent has contributed to society in a general sense by participation in the door-knock appeal on behalf of the Royal Blind Society and giving presentations to the Chinese Catholic Youth Group on careers in the law.
There is "a clear willingness and intention" of the Respondent to undertake appropriate psychological treatment and re-educative programs". And,
The Respondent accepts the necessary requirement that he be employed and under supervision and is willing to submit broadly in accordance with the original recommendations of the Law Society.

THE APPLICANT'S CASE AS TO THE ORDERS TO BE MADE

The Law Society submits that the findings prima facie raise the need for the Tribunal to consider a protective order.

The Applicant objects to the Respondent relying upon his Affidavit of 8 May 2012 filed after the applicant's submissions were filed on 17 February 2012 and the hearing had been completed on 26 April 2012. We accept that submission. There has been no application by the Respondent to reopen.

It was submitted that the character evidence to carry weight, not only must it address what the Practitioner has done, but it should be written in an awareness of the complete facts going to that misconduct. The Law Society relies upon the dicta of Young CJ in EQ in Prothonatory of the Supreme Court of NSW v P [2003]NSWCA 320 at 14:

"It was pleasing to see that in contrast with many cases of this type each of the character referees appears to have been made fully aware of all the relevant facts and circumstances of the Opponent's offence."

It is submitted that Mr Ng's evidence will be of little weight, nor will the reference of Mr Mark Toohey, who did not disclose what he had been told about the findings of the Tribunal, and only said that the Respondent "has explained to me the general circumstances of the matter". It was also submitted that Mr Trembath, although he may have read the Tribunal judgment, lacked legal experience and was unable to fully appreciate the findings against the Respondent.

It was submitted that, "Simply to suggest that the conduct was, in the scheme of things, as it were, an isolated set of circumstances, one in a thousand, is not an appropriate consideration.", and, "Similarly, to suggest that because there has been a passage of time since the events and that such passage should carry favour with the Tribunal, is to look past the facts of the matter."

It was also submitted:

"It is as a result of what transpired during the course of the hearing and the Tribunal's findings which caused the Applicant to review the appropriateness of the orders earlier sought. Specifically, the Tribunal will have been concerned with the Respondent's responses to questions as to his conduct in the matters complained of, and, critically, his professed understanding of that conduct. To now suggest that the time which has passed between the conduct complained of and the hearing should be a relevant consideration lacks, with respect, merit - the question is of whether the Respondent is now a fit and proper person to remain on the Role - this is not an issue of 'extra-curial punishment' for, unlike the Criminal Law, there is no element of punishment in the Tribunal's determination."

It was also submitted that whatever personal and detrimental effect the proceedings may have had on the Respondent would bear little, if any, weight on the Tribunal's consideration. "The function of the Tribunal, it has been repeatedly said, is protective [and consistently educative] of the public and the profession", (e.g. Law Society of NSW v Walsh [1997] NSWCA 185 per Beazley JA at p.40 point 3.4).

The submission of the Law Society is that the Respondent's misconduct was not a result of some medical condition. Nor is there evidence that the condition has been dealt with, or will be dealt with after some appropriate treatment. It was submitted:

"What was telling about Mr Watson-Munro's evidence was that although the Respondent had, for example, 'matured', Mr Watson-Munro was not able, so far as was evidence to the Applicant, to identify any understanding which the Respondent may have had as to his earlier found misconduct - bearing in mind that Mr Watson-Munro had only commenced seeing the Respondent on 2 March 2012."

It was submitted that although Mr Watson-Munro had stated in his report that the Respondent "has reached a point where he recognises his wrong-doing and has a more comprehensive understanding of the concerns of the Law Society", when questioned as to what the Respondent may have said to him on this last point, Mr Watson-Munro talked of the fact that the Respondent was a workaholic, lacked insight, needed supervision and training etc, but never really dealt with what had allowed him to come to this conclusion. He was asked again to deal with this aspect of the report when cross-examined, but then referred to the Respondent's need for treatment.

It was submitted for the Applicant that the Tribunal would not be assisted by the evidence of Mr Watson-Munro in understanding the Respondent's conduct and any subsequent understanding by him of his wrong-doing.

CONCLUSIONS

We find the Respondent's evidence very unreliable. His evidence on the following matters (some of which he contradicted) was false:

172.1 When he qualified for admission as a solicitor and subsequently in qualifying to have an unqualified practising certificate and practice as a sole practitioner, he did not study the topic of trust moneys and trust accounts.

172.2 He did not know on 10 May 2006 when he completed the application for renewal of his practising certificate that funds he had been receiving and disbursing (including funds for or from the purchase or sale of real estate by clients) were trust monies and he was required to have and use a general trust account for those monies.

172.3 He did not understand Mr Gore, the trust account inspector who carried out an inspection of his practice in November 2006, to have advised him at that time that he was breaching the legislated requirements for trust monies.

172.4 That he understood that Mr Gore endorsed his continuing use of the "controlled monies account".

172.5 After the trust account inspector, Mr Gore, visited him and investigated his practice in November 2006, until he received Mr Gore's report in September 2007, he still did not know that he was legally required to have and use a trust account for such monies, which he was continuing to receive and disburse.

172.6 Even after he received Mr Gore's report in September 2007, until at least November 2008 when the Trust Account Investigator, Mr Napper, carried out an investigation of his practice, the did not believe that funds received on account for costs and disbursements (before any account was rendered) were trust monies.

172.7 As at 15 April 2011 he continued to believe that his continuing dealings with trust monies up to September 2007 were not "wilful" and he believed they were not knowingly in breach of the legal requirements for him to have and use a general trust account for such monies.

172.8 As at 15 April 2011 and prior to that, he believed that trust money did not include money paid by a client on account for costs and disbursements.

172.9 He did not know when his Reply was filed on 4 April 2011 and subsequently when it was not amended, that his conduct in relation to the undertaking of 5 October 2006 to Nicopoulos and Associates to pay the $60,000 after settlement of the sale amounted to breaching the undertaking. (The respondent did not admit that he breached his undertaking. He responded to that ground in his Reply: "The Respondent agrees that he was unable to honour his undertaking to Ms Nicopoulos & Associates and that he allowed his duties to his client to conflict in an unacceptable manner with his undertaking. He now appreciates that he acted in a manner which fell below the standards which are expected of him.")

172.10 That in relation to the breach of his undertaking to Nicopoulos & Associates and his failure to inform Galillee Solicitors that the sale price of 192 [B Road] had been reduced from $635,000 to $495,000, he did not find out about the reduction until 19 October 2006. (He wrote to the outgoing first mortgagee of units 9 and 11, Suncorp Metway Ltd, on 19 September 2006 before he gave the undertaking of 5 October 2006 and in that letter said that the sale of 192 [B Rd] would realise $470,000.00. Also in his letters of 10 October 2006 to Nicopoulos & Associates and his letter of 13 October 2006 to the outgoing first mortgagee of 192 [B Rd], St George Bank, the Respondent said that the property was sold for $495,000.00. His statements to the Law Society in his letter of 3 September 2008 and in evidence in these proceedings that he did not know about the price being reduced to $495,000 before 19 October 2006 were false.)

172.11 That when he went to the settlement appointment for the sale of unit 8 he did not intend to settle the sale with the discharge to be provided by Mr Boutros.

Ground 1 was that in his application to the Law Society of 10 May 2006 for a practising certificate for 2006/2007 the Respondent falsely stated that he had not received, held or disbursed any trust money in the year ending 31 March 2006. That was false and he knew it was false. He had dealt with substantial trust moneys through his office account and also another account. He had not established and used a trust account, which he knew he was required to do by law. In 2005 and 2006 he even wrote on the top of some receipts "Kevin Lo Trust Account".

Mr Watson Munro reported :

"He has expressed a strong desire to have continual professional development particularly In relation to the operation of trust fund monies and stated that he no longer accepts money from clients to be placed in his own account until they are ready to be drawn down."

It is concerning that this paragraph with evidence of the Respondent and other evidence indicates he proposes to still have no trust account, but to place trust funds into another account for short periods, much the same as when he called trust money "transit money". It is also noted that although the Respondent expressed enthusiasm to pursue education about trust money and trust accounts, when the hearing concluded he had not since Mr Gore's investigation in November 2006 attended a single course or seminar other than courses to satisfy the requirements for Mandatory Continuing Legal Education.

Ground 1 is an instance of dishonesty in providing information he was required by law to provide to the Law Society in his application for a practising certificate. His intention was to mislead the Law Society.

Ground 2 was that he failed to comply with the requirements of sections 253, 254, 255, 256 and 260 of the Act regarding trust money. This non compliance continued after the inspection by Mr Gore in November 2006 (when we are comfortably satisfied that he was told of his non compliance), after he received the report of Mr Glare in September 2007 and even until just 4 days before the visit of the investigator, by Mr Napper, on 24 November 2008, when on 20 November he withdrew trust moneys received on account for costs and disbursements.

We do not accept that he was as ignorant of the requirements of the Act in relation to trust money and trust accounts as he has suggested. He had studied such matters. He studied Trust Accounts for the Diploma of Legal Practice and to qualify for an unconditional practising certificate permitting him to practise as a sole practitioner from 2002. He was working as an articled clerk (1997-1999) and then as an employed solicitor (1999- 2002) for a total of 5 years in a firm that specialised in Workers Compensation, associated Common Law claims, and conveyancing.

Workers Compensation and any associated workers' common law claims involve settlement amounts and verdict amounts being paid by other parties to the law practice for the clients on whose behalf the claims were raised. Such amounts are trust moneys. Funds for purchases and from sales in conveyancing matters are received from purchasers and received on behalf of vendors in conveyancing matters.

It would be part of his job to account to the clients for the trust money, do settlement figures and request funds for purchases, and make requests for cheques to be drawn from trust moneys for payments to clients, to vendors, to outgoing mortgagees and to others. Where he received trust funds on behalf of a client, if it were by cheque payable to the law practice he would have to instruct the accounts section to issue a trust receipt and deposit the cheque to the trust account. If it were a payment for costs already billed he would have to request the accounts section to issue an office account receipt and deposit into the office account. He would also be aware of the preparation of bills and the transfer of money from trust to pay or part pay costs already billed. He would also be aware of the need to instruct the accounts section to pay disbursements from the trust account where the client had already provided money for that purpose. Over the period he worked in the practice (1997- 2002), he would have become aware of the way trust moneys were handled in his matters, and, in all likelihood, generally how they were handled in the practice.

These breaches of trust account requirements of the Legal Profession Act involved substantial sums and were serious breaches. The breaches occurred in calendar years 2005, 2006, 2007 and 2008. The conduct involved criminal offences under the following sections with the maximum penalties indicated:

Section 253-failure to maintain general trust account 100 penalty units

Section 254- requirement to deposit certain trust money

in a trust account 100 penalty units

Section 255- requirement to hold trust money in trust account

exclusively for the person on whose behalf it is received 50 penalty units

Section 256 - requirement to deposit controlled money in

account specified in written direction 50 penalty units

Section 260- prohibition on mixing trust money with other money 100 penalty units

Ground 3 is that he misled the investigator, Mr Napper, on 24 November 2008 by remaining silent and by not telling him that he had closed that account. He knew that Mr Napper thought the account was still open. Mr Napper informed him he could not take the money for costs unless he first rendered bills and otherwise complied with the requirements of the Act and Regulations. It is clear that the reason he misled Mr Napper and did not tell him that he had already withdrawn the money and closed the account 4 days earlier, was that he hadn't rendered any bills for the $44,885.93 of trust money he had taken.

This is another instance of dishonesty and is serious because it involves misleading a trust account inspector to conceal breaches of the requirements of section 255 (requirement to disburse trust account money only in accordance with a direction from the person on whose behalf it is held, a court order or as authorised by law). The total of the amounts involved is substantial.

Ground 4 is that on 20 November 2008 he withdrew $44,885.93 of trust money for costs and disbursements without complying with the relevant procedures or requirements of the Act. The Respondent took the balance of the trust monies he held, which were funds paid by clients on account for costs. He did that without rendering bills for any of the costs. He told Mr Napper it was "my money".

Subsection 255(1) requires that trust money be held exclusively for the person on whose behalf it is received and be disbursed only in accordance with a direction by that person. Subsection 255(2) provides that subsection (1) is subject to a court order or as authorised by law. Section 261 sets out the circumstances where trust money can be used to pay costs. It requires among other things that there be an account given for the costs and provisions of the regulations complied with before any trust money can be applied to pay costs.

In the hearing the Respondent demonstrated that despite these proceedings and the time he has had to understand the grounds and the relevant law, he is not aware of these provisions of the Act and does not recognise that funds paid on account for costs not yet billed are trust moneys.

Ground 5 and 6 are that he misled Galillee Solicitors (the solicitors for the incoming mortgagee) by not informing them that the purchase price had been reduced from $635,000 and by providing them with settlement figures that did not disclose the change.

The Respondent denied that his conduct was misleading and said it never occurred to him that it was. He falsely alleged that he did not know that the price had been reduced till 19 October 2006. But in fact he knew at least a month before then (per his letter of 19 September 2006 to Suncorp Metway). He had at least a month to consider the situation, obtain advice from the Law Society or another solicitor, and decide to do what was ethical and honest. But he chose not to.

We are comfortably satisfied that even in his evidence on 24 June 2011 he really didn't recognise that failure to inform Galillee Solicitors of the change was misleading, unethical or dishonest .

A solicitor can mislead by omission as well as by statement. An omission to correct a previous statement or to disclose a relevant fact can be just as misleading and damaging as a false statement. We endorse the dicta in the decision of this tribunal in Law Society of NSW v McKenzie [2003] NSWADT 92 at par 15:

"The proposition that knowingly, and in some cases negligently, to mislead another legal practitioner with respect to a matter significantly relevant to professional business is serious professional misconduct needs no judicial authority. Such conduct undermines one of the foundations of trust that the community has to be able to place in legal practitioners, namely, that what one practitioner says to another in the furtherance of practice can be accepted without question as having been made both truthfully and carefully. It is analogous with, the duty of a legal practitioner to avoid misleading a court, or with the duty to adhere to an undertaking given to another practitioner in the course of legal practice. We could wax eloquent about the consequences of legal practitioners being permitted with impunity to mislead other practitioners but such elementary and fundamental matters do not require to be elaborated, especially to the audience by whom these reasons may be read."

Ground 7 is his failure to honour the undertaking to Nicopoulos & Associates that in consideration of the client of Nicopoulos & Associates providing a Withdrawal of Caveat so that settlement could occur, the Respondent would from the sale proceeds pay $60,000.00 after settlement to Nicopoulos & Associates for their client. The Withdrawal of Caveat was provided, settlement occurred, but the Respondent did not pay the money.

The undertaking was given on 5 October 2006, but the Respondent already knew that the price had been reduced to $495,000.00 and knew that that after payment of the amount required by the first mortgagee he would not have sufficient funds to honour his undertaking and in fact would have very little money from the sale. Mr Boutros also required him to release other funds he was holding for the clients.

The Respondent knew well before settlement that if he proceeded with the settlement, he would not have sufficient funds to meet his undertaking. But he still proceeded with the settlement and did not inform Nicopoulos & Associates or their client before settlement that if he proceeded with the settlement he would not be able to pay the $60,000.

In these proceedings and in earlier statements to the Law Society the Respondent falsely said that he did not know of the reduction in the purchase price till the day before settlement. In fact he knew for at least a month before settlement. (His letter of 19 September 2006 to Suncorp Metway Ltd establishes this.) He had plenty of time to obtain advice from the Law Society or another practitioner, to carefully consider the situation, to recognise his ethical obligations, and to honour them.

He had the option of telling his client that if he was not going to have the funds to honour the undertaking, he could not facilitate the settlement. Once he knew he wouldn't have the funds, he could have returned the Withdrawal of Caveat to Nicopoulos & Associates and notified them of withdrawal of his undertaking.

In his cross examination the Respondent still sought to blame Mr Boutros for his breach of the undertaking. He appeared to still have no real understanding that other avenues were open to him, such as informing Mr Boutros that he would have to withdraw the undertaking if he was not going to hold from settlement sufficient funds to pay the $60,000 and/or returning the Withdrawal of Caveat to Nicopoulos & Associates and informing them that circumstances had changed and he had to withdraw the undertaking.

He did not do any of these things. He proceeded with the settlement thereby misleading Nicopoulos & Associates and their client and also being an instrument of a fraud on that client.

Despite Mr Watson-Munro's opinion that the Respondent is "insightful" and "understanding" about why this and the other grounds have been found to be professional misconduct, we consider that even now he has no real insight or understanding about why he as a solicitor is responsible for the breach of his undertaking and why it is regarded as serious professional misconduct.

Ground 8 was the attempt to settle the sale of unit 8 using a discharge document that he was on notice would be a forgery. We found that he did believe when he went to the settlement appointment that if he was provided with a Discharge of Mortgage by Mr Boutros, it probably would be a forgery, but that he intended to settle the sale with it. But we found that if we were wrong about him believing the Discharge would be a forgery, then he didn't care whether the Discharge was a forgery or valid or invalid. His conduct was incompetent, dishonest and unethical and the outcome if he had settled could have been that he had allowed himself to be an instrument of fraud against the mortgagee and/or the purchaser.

The Respondent's general practitioner, Dr Duncan Chang, referred him for counselling/treatment by Ms Madeline O'Reilly in April 2011 or earlier. There is no evidence that the Respondent continued the treatment in the 10 months after the report of Ms O'Reilly of 25 May 2011. When Mr Watson-Munro saw the Respondent in March 2012, despite the Respondent still suffering from serious depression and anxiety and "emotional stress" and expressing "suicidal ideation which I suspect is reflected in his deep shame concerning his current circumstances", he was not taking medication and not having counselling or psychotherapy. There was no evidence from the Respondent's general practitioner.

The Respondent told Mr Watson-Munro in March 2011 that he wanted to have professional supervision, mentoring and supportive counselling. Mr Watson-Munro recommended in his report of 3 April 2012 that the Respondent have psychotherapy, mentoring, supportive counselling, social skills training and communication lessons. But when the hearing concluded on 26 April 2012, there was no evidence of any arrangement to implement any of the steps the Respondent spoke of, or any of the recommendations of Mr Watson-Munro.

The respondent is not a member of a Regional Law Society. He has not sought assistance through the Law Society scheme that provides senior solicitors to mentor solicitors who request it. He has not sought out other practising solicitors for advice or guidance.

The report of Ms O'Reilly and evidence of Mr Watson-Munro does not acknowledge, or provide explanations for, numerous instances of dishonesty by the Respondent in the findings as to the grounds, in his letters and Statutory Declarations to the Law Society since November 2006 and also in his affidavit and other evidence in these proceedings. Nor does it explain the level of incompetence and lack of diligence demonstrated in relation to transactions concerning the grounds.

The Respondent has had serious mental health problems since childhood, including poor self esteem, depression, stress and anxiety. It is clear that the investigations and these proceedings have aggravated those problems. But in relation to the grounds, there is no evidence that attributes to these problems his failures to recognise ethical requirements, his dishonesty, his incompetence in the areas of trust money, execution of documents by companies, and searches of ASIC records (particularly once there was a doubt about the authenticity of the discharge for unit 8).

Similarly, his health problems do not explain his ongoing acceptance of instructions from Mr Boutros despite the problematic aspects of Mr Boutros' work, including lack of direct contact with the female owners, changes of contract prices, false nomination of an agent in a contract, non payment of deposits, non disclosure of a second mortgagee, failure to answer requests for contact information for the second mortgagee, undocumented changes in purchase prices, and undocumented loans to purchasers.

In December 2006 the Respondent accepted instructions from Mr Boutros on the sale of another property. That was despite his knowledge of the following matters from acting from Mr Boutros previously:

the discharges that Mr Boutros provided or proposed for units 9,11 and 8 were all forgeries;

Mr Boutros lied to him repeatedly about having paid Eurofund and about the discharges;

Mr Boutros had deceived him about other matters and withheld material information from him;

The history of rebates, "deposits", and inconsistencies between documentation and settlement figures; and

He was already the subject of complaints and Law Society investigations in relation to previous work for Mr Boutros.

Even in evidence he gave to the Tribunal on oath on 15 April 2011 and 24 June 2011, the Respondent failed to demonstrate true insight, understanding or acceptance that his conduct constituted professional misconduct, the reasons why it did, and the gravity of his misconduct.

From Ms O'Reilly' report it appears that the Respondent told her there had been "a 5 year long inquiry into his legal practice". These proceedings did not commence till September 2010 and much delay has been occasioned in the proceedings by the Respondent's failure to comply with directions and to manage his case properly.

The investigation of complaints commenced with Mr Gore's first visit in November 2006 and his report was completed 2 months later. There was then protracted correspondence between the Law Society and the Respondent by which the Society requested additional information. The Respondent repeatedly delayed in providing information or sought additional time. Meanwhile another complaint was referred to the Society by the Legal Services Commissioner in December 2006. The law Society then made repeated requests of the Respondent for additional information. Again the Respondent delayed. The law Society served a Notice under Section 660 of the Legal Profession Act 2004 on 6 September 2007 requiring him to provide information previously requested.

In July 2007 the Society made its first resolution to commence disciplinary proceedings. There was a delay because of other complaints received by the Society and requests to the Respondent for further information and submissions regarding those. Further letters were sent to the Respondent advising of further complaints being proposed to be the subject of disciplinary proceedings and inviting submissions from him.

Then Mr Napper conducted his trust account inspection on 24 November 2008 and reported on 17 February 2009 on matters arising. Again there was correspondence from the Law Society to the Respondent for further information and submissions from him. On 5 March 2009, 21 May 2009, and 16 July 2009 the Law Society resolved to add further grounds to the disciplinary proceedings. On 17 December 2009 the Law Society dismissed another complaint and decided to call on the Respondent in respect of 3 others inviting him to make any submissions as to why they should not be the subject of disciplinary proceedings. On 4 March 2010 the Society resolved to include those in the proposed proceedings.

The reports of Mr Watson-Munro and Ms O'Reilly do not take into account or acknowledge issues of continuing dishonesty by the Respondent in his evidence and also his inability to demonstrate in his evidence recognition and understanding of what was wrong with his behaviour in 2002 to 2008. That inability continues even with his experience of the law Society's dealings with him, the advice of the investigators, his experience of these proceedings, the benefit of legal representation by counsel in making his submissions to the law Society of 24 August 2009 and in these proceedings since at least 30 March 2011, and the considerable period he has had to come to such recognition.

We find that the Respondent by his professional misconduct in 2002 - 2008 demonstrated serious deficiencies in terms of competence, ethics, diligence and integrity. The evidence establishes that those deficiencies continue.

He has been practising full time for about 13 years. We have no confidence that he would overcome those difficulties through even a period of 5 years working as an employed solicitor and completion of further education and mentoring as proposed for him. He has demonstrated no enthusiasm in the time he has been a solicitor, and especially since 2006, for undertaking mentoring, professional education or participating in collegiate education events through membership of a regional law society.

We are not persuaded that a practitioner who has been in practice for about 13 years should be regarded as a fit and proper person to practice if the protection of the public requires that his practice for the next 5 years be subject to the conditions that he proposes. Even though so far as we are aware there have been no further instances of professional misconduct since 2008, we are more than satisfied that the public and the reputation of the profession need to be protected from the Respondent continuing to practice. There is also a need to demonstrate guidance to other members of the profession as to the consequences that can arise from conduct such as the grounds in this matter.

It has been established that the Respondent is not a fit and proper person to engage in legal practice. His name should be removed from the roll.

COSTS

The Law Society seeks an order that the Respondent pay its costs of and incidental to the proceedings. Section 566 provides that in such proceedings where the Tribunal finds professional misconduct proven, the practitioner should be ordered to pay the Law Society's costs unless exceptional circumstances exist. We find there are no exceptional circumstances. There will be an order that the Respondent pay the costs of the Law Society.

Decision last updated: 08 August 2012

Medium Neutral Citation:	Council of the Law Society of NSW v Lo (No 2) [2012] NSWADT 159
Decision date:	08 August 2012
Jurisdiction:	Legal Services Division
Before:	G. Mullane, Judicial Member M Riordan,Judicial Member C Bennett,Non-Judicial Member
Decision:	1. The Respondent's Interlocutory Application filed on 14 May 2012 is refused and dismissed. 2. The name of the Respondent is to be removed from the roll of solicitors; and 3.The Respondent must pay the costs of the Law Society of and incidental to the proceedings as agreed or as assessed.
Catchwords:	Solicitor - Discipline - Professional Misconduct - Grounds for Striking Off - Failure to comply with Sections 253, 254, 255, 256 and 260 of the Legal Profession Act 2004 - Mislead Investigator - False Declaration in Practising Certificate Application - Breach of Undertaking to fellow Practitioner - Attempt to Settle sale on notice Discharge of Mortgage forged - Unethical Conduct
Legislation Cited:	Legal Profession Act 2004 Administrative Decisions Tribunal Rules 1998; Corporations Act (Cth) 2001 ss127-129
Cases Cited:	R v De Simoni (1981) 147 CLR 383 Ebner v Official Trustee in Bankruptcy [2000] HCA 63 Webb v R [1994] HCA 30 Commissioner of Corrective Services v Government and Related Employees' Tribunal & Ors [2004] NSW C A 291; Smith v NSW Bar Association (1992) 176 CLR 256 Law Society V Dennis (1981) 7 Fam LR 417 Law Society of NSW v Hooper [2005] NSW ADT 174 Kylsilver Pty Ltd -v- One Australia Pty Ltd [2001] NSWSC 226 Miro -v- Fu Pty Ltd [2003] NSWSC 1009 Commonwealth Bank of Australia -v- Hilellis & Ors [2009] NSWDC 9 (13 February 2009) Prothonatory of the Supreme Court of NSW v P [2003]NSWCA 320 at 14 Law Society of NSW v Walsh [1997] NSWCA 185 per Beazley JA at p.40 point 3.4; Law Society of NSW v McKenzie [2003] NSWADT 92
Texts Cited:	None
Category:	Principal judgment
Parties:	The Council of the Law Society of NSW (Applicant) Kevin Lo (Respondent)
Representation:	Counsel RF Sutherland SC (Applicant) M Castle (Respondent) L W Pierotti (Applicant) Verekers Lawyers (Respondent)
File Number(s):	102022