Council of the Law Society of NSW v Sheehan - [2012] NSWADT 100

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation: Council of the Law Society of NSW v Sheehan [2012] NSWADT 100
Hearing dates: 25 July 2011; 17 October 2011.
Decision date: 24 May 2012
Jurisdiction: Legal Services Division
Before: D Patten, Deputy President
M Riordan, Judicial Member
Professor R Fitzgerald, Non Judicial Member
Decision:
1.The Respondent is guilty of professional misconduct on each of the 15 grounds alleged.
2.The Respondent's name is to be removed from the Roll of Local Lawyers.
3.The Respondent is to pay the Applicant's costs of and incidental to this Application, as agreed or assessed.

Catchwords: Solicitor - Professional Misconduct - Failure to comply with Orders and Directions - Failure to file proper Reply - Failure to adduce any evidence in reply to Application - Whether Solicitor was given a reasonable opportunity to defend Application - Apprehended bias
Legislation Cited: Legal Profession Act 1987
Legal Profession Act 2004
Cases Cited: Prothonotary of the Supreme Court of New South Wales v Nikolaidis [2010] NSWCA 73.
Dupal v Law Society of New South Wales [1990] NSWCA 56.
Law Society of New South Wales v Jones (Unreported - 24 July 1978).
Allinson v General Council of HYPERLINK " \o "Powered by Text-Enhance" Medical Education and Registration (1894) 1 QB 750.
Briginshaw v Briginshaw (1938) 60 CLR 336.
In re Hodgekiss [1962] SR (NSW) 340.
Director of Public Prosecutions v Ozacka - 68 NSWLR 325, at p 328.
Sullivan v Department of Transport - (1978) 20 ALR 323.
Re Veron; Ex parte Law Society of New South Wales (1966) 84 WN(NSW) (Pt 1) 136.
Stewart v Strevens [1976] 2 NSWLR 321.
Law Society of New South Wales v Jones (unreported - 29 July 1978).
Law Society of New South Wales v Carvan (unreported - 14 May 1981 - BC8111397).
Bolster v Law Society of New South Wales (unreported - 20 September 1982 BC8211696).
Veghelyi v Law Society of New South Wales (Unreported - 8 February 1995 BC9505459).
Law Society of New South Wales v Bannister (1983) 4 LPDR 24.
Walter v Council of Queensland Law Society Inc (1988) 62 ALJR 153 at 157.
Smith v New South Wales Bar Association (1992) 176 CLR 256 at 270).
Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 441-442.
Council of the Law Society of New South Wales v Clapin (No 2) [2011] NSWADT 246.
Category: Principal judgment
Parties: Council of the Law Society of NSW (Applicant)
Marshall Sheehan (Respondent)
Representation: Counsel
Ms C Webster (Applicant)
Mr Taylor 25 & 26 July 2011 (Respondent)
Law Society of NSW (Applicant)
M Sheehan (Respondent in person) (17 October 2011)

File Number(s): 102028

reasons for decision

Background

On 27 October 2010 the Council of the Law Society of New South Wales ("the Law Society") filed an Application under the Legal Profession Act 2004 ("the LPA 2004") alleging that the Respondent, Marshall Norman Sheehan ("the Solicitor") was guilty of professional misconduct on 15 grounds that related to 11 separate matters. It filed extensive particulars comprising 231 paragraphs in total and sought orders that the Solicitor's name be removed from the Roll of Local Lawyers that that he pay its costs of and incidental to these proceedings.

While this matter was initially listed for hearing on 25 July 2011 and 26 July 2011, it had a lengthy prior history and it was listed for Directions on numerous occasions. However, the Solicitor failed to comply with any of the orders made, which are summarised below:

(1) 1 December 2010 - The Solicitor failed to appear;

(2) 2 February 2011 - The Solicitor participated by telephone. Deputy President Haylen ordered that he file and serve a Reply and any Affidavit evidence that he intended to rely upon within 21 days.

(3) 6 April 2011 - The Solicitor participated by telephone. Deputy President Haylen noted that the solicitor had not complied with the previous orders. The Solicitor stated that he had referred the matter to LawCover. Deputy President Haylen ordered the Solicitor to file and serve his Reply and any Affidavit evidence that he intended to rely upon within 21 days and further ordered that if he received advice from LawCover that was contrary to the filing of Affidavits, he was required to also file and serve an Affidavit to that effect by 4 April 2011.

(4) 4 May 2011 - The Solicitor participated by telephone. Haylen J noted that he had not filed any documents, although the Solicitor stated that he would be filing documents. Haylen J vacated his previous orders and directed that the Solicitor file and serve his Affidavit and Reply by 20 May 2011 and that if LawCover's advice was contrary to Affidavits, he was to file and serve an Affidavit to that effect by 20 May 2011.

(5) 1 June 2011 - The Solicitor participated by Telephone and stated that he would post his Reply to the Registry that day. The matter was listed for further Directions on 6 July 2011, to confirm the hearing dates of 25 and 26 July 2011; and

(6) On 6 July 2011 the Solicitor attended by telephone. Judicial Member Wright made the following orders:

(a) "The Respondent to file and serve any Applications to vacate the hearing dates on 25 and 26 July 2011 and to stay these proceedings on or before 18 July 2011 such Applications to be accompanied by any affidavits in support;

(b) The Respondent to file and serve any affidavits in the substantive proceedings on or before 18 July 2011;

(d) Any such Applications be listed for hearing on 25 July 2011 at 10am.

(e) The Transcript of today be produced as soon as possible with a view to its being available for the hearing on 25 July 2011."

The Registry received the Solicitor's Reply on 5 July 2011, although it did not comply with the Rules. The Reply denied each of the grounds of complaint and, in relation to grounds 1 and 6, it asserted:

"This Complaints (sic) is the subject to an Order made by Justice Devine in the Supreme Court of New South Wales on 24 August 2004 restraining the Law Council of New South Wales from dealing with this matter until further Order of the Supreme Court."

The Law Society denied that the Supreme Court of New South Wales had issued any injunction that prevented it from pursuing its application or this Tribunal from determining it and ultimately the Solicitor conceded that there was no injunction.

Hearing on 25 July 2011 & 26 July 2011

At the hearing on 25 July 2011, the Solicitor had not filed a Reply that complied with the Rules or any Affidavit evidence and while he briefed Mr Taylor of Counsel to appear, he did so only with instructions to make an application for an adjournment.

Mr Taylor informed the Tribunal that he had not been briefed with any of the Affidavits filed by the Law Society. He sought to rely upon an Affidavit that the Solicitor had sworn that day, in which the Solicitor deposed (relevantly):

"12 To properly assess whether the matters referred to by the Law Society are in fact particulars which disclose and particularize with the necessary precision the basis of the allegation made against me will involve the review of a multitude of transactions conducted over a period of four years beginning eight years ago and ending six years ago. This is a task that will require a considerable period of time to undertake.

13 Further to determine whether further and better particulars of the allegation made by the Law Society will require a similar task to be undertaken."

He stated that his files relating to his dealings with the Taylor family had been in storage "since April 2006" and that he had not examined those files in any detail since 2004. He asserted that his account records and financial documents were produced under Subpoena to the Family Court of Australia and that he did not know if the Court still held them, but subsequently asserted that they were "held in storage". He alleged that he had not seen Ms Sayers' report since August 2004, although we note that a copy was served upon him by the Law Society in December 2010, and that in order to respond to the matters contained in her report he would have to appoint an appropriately qualified accountant. He also alleged that he had not had access to the documents needed to respond to the Law Society's Affidavit evidence since "at least April 2006", although we again note that copies of the documents were served upon him in December 2010. Finally, he asserted that he had not had the opportunity to peruse the "1390 pages of documents with the affidavits and other material" that the Law Society had served upon him. He concluded:

"I do not know what, or if it has any relevance to the matters complained of. It will take a very considerable time for me to ascertain the relevance of this material to the matters complained of..."

In other words, the Solicitor had done nothing to prepare for the hearing.

The Solicitor also made certain allegations against the Victoria Police, which are not relevant to the matters before us and upon which we make no comment. However, the Solicitor did state that the charges that he faced under the Legal Profession Act (Victoria) were struck out in the Melbourne Magistrates Court on 11 March 2011. Nevertheless, he alleged that "it had only been in the past few weeks" that he had an opportunity to assess the documents that were served upon him and to appraise himself of "...the magnitude, complexity and difficulty of the task involved in meeting these allegations". He asserted that the Law Society had "...devoted enormous amount of time and resources to prepare their material. They have taken eight years to do so." He concluded:

"...I am unable to assess how long that it will take me to prepare my defence, but the volume of the material suggests to me that it will be some months before this matter is ready for hearing."

After hearing submissions from both parties' legal representatives, we encouraged the parties to attempt to reach an agreement regarding the Timetable to be set for the further conduct of the matter. However, the parties were unable to reach agreement and we made the following orders:

(1) The Respondent's legal representative file and serve a Notice of Representation by a Legal practitioner, stating an address for service and telephone number in New South Wales, by 5 pm on 27 July 2011;

(2) The Respondent serve any request for further and better particulars on or before 8 August 2011;

(3) The Applicant answer any request for further and better particulars sought by the Respondent by 22 August 2011;

(4) The Respondent file and serve an amended Reply (complying with Rule 27) on or before 7 October 2011;

(5) The Respondent file and serve any affidavit he intends to rely upon on or before 7 October 2011;

(6) The Applicant file and serve any affidavits in reply on or before 13 October 2011;

(7) The matter be listed for a 5-day Hearing commencing on Monday, 17 October 2011 to Friday, 21 October 2011 at 10:00am;

(8) The matter be listed for a further Directions hearing on Thursday, 13 October 2011 at 9:30am to confirm readiness for the hearing

(9) Liberty reserved to the parties to apply on three days' notice to the Tribunal and the other party."

The Tribunal's records indicate that on 27 July 2011 the Registrar issued a Notice of this Decision to the parties and that a copy was served upon the Solicitor at his post office box address in Wodonga, Victoria (the address for service indicated in his Reply). However, he failed to comply with any of the directions made.

On 14 October 2011, the Solicitor sent a letter addressed to Deputy President Patten by way of facsimile transmission, under cover of which he served a copy of his letter to the Law Society of that date. While this was marked as being sent by facsimile transmission, the Solicitor did not provide any evidence that this had been successfully sent to the Law Society.

We note that in his letter to the Law Society dated 14 October 2011, the Solicitor alleged that his Solicitor Mr Derek Norquay was "overseas and will not return until late next week." He also alleged that he had not "prior to this morning" been aware of communications between the Law Society and Mr Norquay on 13 October 2011 and he "requested" the Law Society's consent to vacating the hearing on 17 October 2011.

In support of his request for another adjournment, the Solicitor asserted that he had been in dispute with the Law Institute of Victoria concerning its decision to not issue him with a practising certificate in the 2010/11 year. He felt that this was based largely on allegations that were made against him "by disgruntled members of the Victoria Police", which were dismissed, and that Consent Orders were signed on 12 October 2011. He stated:

"As I am a Victorian practitioner the resolution of those matters necessarily took precedence over the ADT proceedings, as, had they not resolved on favourable terms, to me, then my participation in the ADT proceeding would have been otiose. They have occupied my full attention."

He also stated that he was without Senior Counsel, as the Senior Counsel that he had briefed "...placed conditions on his appearance that I could not meet, in the time permitted." He expressed the view that in July 2011 we had "... arbitrarily imposed a timetable that was ill considered and bound not to be met given the volume of the material to be prepared and the time delays involved".

However, the Solicitor also asserted that on 26 September 2011 he sent a Summons to the Supreme Court of New South Wales by priority post, in which he sought declaratory relief and orders against the Law Society and the Tribunal "arising from the conduct of a purported hearing by the Tribunal on the 24 February 2010." He stated:

"the (sic) criminal charges laid against me by Victoria police had caused a delay in bringing this application, however their dismissal now permits me to seek redress for the atrocious and unjust manner the Tribunal conducted that hearing

Clearly it would not be in the interests of justice for the ADT to conduct a hearing into the conduct of a solicitor when that solicitor is a plaintiff in a suit that he has commenced against the Tribunal based on allegations of judicial misconduct and failure to act in accordance with the rules of natural justice and wherein the solicitor also seeks orders that impose a financial penalty on the Tribunal. A clear perception of bias arises and the proper administration of justice requires that the proceeding be adjourned."

He further stated that on 28 September 2011 The Supreme Court of Victoria issued Writs "... for service on the Taylor's (sic), and your Society, seeking damages for defamation arising from allegations by the Taylor's (sic) and the Society that I dishonestly and fraudently (sic) failed to account to the Taylor's (sic) for monies that I held on trust for the Estate of the late Sara Taylor." He alleged:

"... The commencement of these proceedings was delayed by the criminal allegations made against me It would be inimical to the proper administration of justice should your society continue with these matters before the ADT

Further and as a consequence of the commencement of these proceedings all maters raised by the Society and or the Taylor's (sic) concerning and relating to my dealing with monies held on account of the estate of the late Sara Taylor are sub judice (sic) and cannot be raised before the Tribunal at this time

As you are aware the matters which your society raises with the ADT are of very long standing and involve matters which occurred as long ago as 1987 in the Taylor matter and five years or more in other matters. I have practised throughout most of this period and there is in fact no public interest matter arising. I do not intend to resume private practise prior to May 2012, if at all, as I am awaiting the result of an employment opportunity overseas..."

The Society did not consent to the adjournment and the Solicitor was notified that the hearing would proceed as listed on 17 October 2011.

Relevant Legislation

Section 61 of the 1987 Act provides (relevantly):

61 Money received by solicitor on behalf of another

(1) A solicitor who, in the course of practising as a solicitor in this State, receives money on behalf of another person:

(a) must pay the money, within the time prescribed by the regulations, into a general trust account in New South Wales at an approved financial institution and must hold the money in accordance with the regulations relating to trust money, or

(b) if the person on whose behalf the money is received directs that it be paid or delivered to a third party free of the solicitor's control, must ensure that the money is paid or delivered:

(i) before the end of the next working day or, if that is not practicable, as soon as practicable after the next working day, or

(ii) no later than the day allowed by the solicitor's authority or instructions (if that day is later than the day allowed under subparagraph (i)), or

(c) if the person on whose behalf the money is received directs that it be paid otherwise than into a general trust account or to a third party, must pay the money as directed and (if the money is to be held under the direct or indirect control of the solicitor) must hold the money in accordance with the regulations relating to controlled money.

(2) In any of those three cases, the solicitor must hold the money exclusively for, and must disburse the money in accordance with the directions of, the person on whose behalf it is held.

(3) This section:...

(b) does not prevent a solicitor from withdrawing or receiving, from trust money or controlled money:

(i) reimbursement for disbursements paid by the solicitor, or

(ii) money for disbursements to be paid by the solicitor, or

(iii) money due, or to accrue due, to the solicitor for costs,

so long as the procedure prescribed by the regulations is followed...

(f) does not affect an authority that a solicitor has and that, apart from this section, is irrevocable.

(8) It is professional misconduct for a solicitor to wilfully contravene subsection (1) or (2)..."

Hearing on 17 October 2011

The matter was called at 10am on 17 October 2011. Ms Webster of Counsel appeared for the Law Society but there was no appearance by or on behalf of the Solicitor. Deputy President Patten stated:

"I will record the letter. I should record that this matter was listed for hearing on 25 July last for two days.

Ultimately Mr Sheehan appeared and following debate the Tribunal granted him an adjournment in the sense that it set aside the hearing date and made a number of directions for the future progress of the proceedings, including a direction that the matter be listed for hearing today with a five day estimate and that the matter be listed for further directions on 13 October, that is last Thursday at 9:30am to confirm the readiness for the hearing.

I presided at the proceedings last Thursday when Ms Webster of counsel who also appears today appeared for the applicant. There was no appearance for the Solicitor. Ms Webster said that there had been no recent contact with the Solicitor and that he had not complied with direction two of the orders made on 26 July, nor had he filed and served any evidence. In that circumstance I confirmed today's hearing.

Subsequently I was informed that Mr Sheehan had telephoned the Tribunal in the belief, perhaps a correct one, that he had arranged with an officer of the Tribunal that the directions hearing on Thursday could be conducted by telephone. It was obviously inappropriate for me to return Mr Sheehan's call as by that time Ms Webster and her solicitor had left the building.

However, I requested an officer of the Tribunal to telephone Mr Sheehan and to indicate that the hearing today had been confirmed and that if he wanted to make any further contribution he would need to do so in writing and subsequently a copy of a letter dated 14 October was received, it being a copy of a letter which Mr Sheehan purportedly had sent to the Law Society. It is unnecessary for me to make any further comment at this stage about the contents of the letter but he was informed by an officer of the Administrative Decisions Tribunal that he would need to be present today.

It is now after 10:05am and he has not appeared. However, a few minutes ago, shortly before 10am, I was informed by a member of the staff of the Tribunal that Mr Sheehan had telephoned her and said that he had been travelling from Albury since 2am. His present position was not stated (but) that he would be in before this Tribunal, as soon as he could but he needed first (to attend) the Court of Appeal to collect some unidentified documents. I asked the officer to telephone Mr Sheehan for the purpose of informing him that his attendance here at 10am was expected. When she sought to do this she found that his telephone was ringing to a recorded message. That's the present state of the situation."

Ms Webster tendered an Affidavit sworn by Louis Pierotti on 17 October 2011, who deposed to matters that raised on behalf of the Law Society at the most-recent Directions hearing and he annexed numerous letters, including letters between the Law Society and Mr Norquay (who had filed a Notice of Representation on behalf of the Solicitor). He stated that extensive attempts had been made to notify the Solicitor of the Tribunal's Orders, including faxes that were successfully transmitted, as well as emails that were sent and telephone messages that were left for both the Solicitor and Mr Norquay.

The Tribunal delivered the following ex-Tempore decision:

"Yes. Ms Webster who appears for the Law Society, Applicant in these proceedings, apart from reading the affidavit of Mr Pierotti of 17 October 2011 which reviews the history of these proceedings and also the recent occurrences so far as they affect the Law Society, has also very fairly referred us to a number of authorities concerning the exercise of a discretion to grant adjournments, assuming that that is what Mr Sheehan, if he were here, would seek.

He has not appeared as I have earlier indicated and the Tribunal has not had the benefit of any Affidavits from him. The only relevant information is that contained in his letter to the Law Society of 14 October 2011. Much of what is said in that letter was advanced to us on 25 July when we vacated the hearing date.

The new matter referred to, that is the fact that he very recently commenced proceedings apparently both in the Supreme Court of New South Wales and the Supreme Court of Victoria, seem to me to be highly irrelevant to the exercise of our functions which is for the protection of the community.

Accordingly, and I repeat, in the absence of Mr Sheehan, in any event, we see no reason why the hearing should be adjourned and we direct that it proceed."

The Tribunal admitted the Law Society's evidence without objection and Ms Webster formally opened the Law Society's case. The Solicitor had still not appeared when she concluded this and she then commenced her closing Submissions. However, these were interrupted at 11:34am when the Solicitor walked into the hearing room and sought to appear on his own behalf.

The Tribunal informed the Solicitor that in his absence we had treated his letter to the Law Society dated 14 October 2011 as further application for an adjournment and that we had refused it. The Solicitor then stated that he had an Affidavit, but we informed him that we had heard the evidence.

The Solicitor complained about this and stated that he had issued a Writ in the Supreme Court of Victoria against Clive William Downie Taylor, Sally Rodda Taylor, Tomas Taylor and the Law Society and he asserted that as a consequence all trust account transactions that he conducted between 2002 and 2005 (when the Taylor matter settled) were in issue and were subject to examination by the Supreme Court of Victoria. He alleged:

"... the examination of those is sub judice (sic). They are matters to be considered at a pending hearing by the Supreme Court of Victoria and any interference of that may well be contempt of Court."

We informed the Solicitor that the Victorian proceedings do not concern us as we are charged with protecting the people of New South Wales, but the Solicitor argued that we should be concerned with them as "... if you're examining trust account records relating to this suit, well you may well be in a situation where you're seen as interfering in pending proceedings." He alleged that we would be "making findings with regard to trust account records as between himself and the Law Society and the Taylors" and that the Taylors are "the complainants" in the Application before us. We confirmed that the Law Society is the only Applicant before us, but the Solicitor then asserted that it was a named Defendant to his Victorian Writ. He sought to tender his Affidavit, which he had not served on the Law Society.

We perused the Solicitor's Affidavit and noted that it largely regurgitated the matters raised on his behalf in July 2011. We noted that it was also silent as to whether he had made any attempt to comply with the Tribunal's orders, to which the Solicitor replied that he "...had not been able to comply" as "he had been ...involved in dealings and proceedings with the Law Institute of Victoria". He asserted that he had not received a copy of the Tribunal's orders in July 2011, although this was contradicted by the Tribunal's records and the Solicitor's letter to the Law Society dated 14 October 2011. However, he ultimately conceded that he had not made any attempt to comply with July 2011 Orders, but alleged that this was "... because advice was given that these matters should not proceed whilst there were proceedings on foot in the Supreme Court of Victoria". However, we note that these were not "on foot" in July 2011 and that the Solicitor commenced them in September 2011. We rejected the tender of the Affidavit.

The Solicitor then stated that he did not appear at 10am because he was in the Registry of the Court of Appeal filing an Appeal against the decision of the Tribunal in proceedings that were concluded in 2010. He alleged that this gave rise to an apprehension of bias against him by this Tribunal, as it was now a party to his Appeal and it was "... prosecuting or hearing other matters at the same time." He did not dispute that the previous Tribunal was differently constituted. He concluded:

"Well I just find it's appalling that after 30 years in practice, when I'm assisting the Court by going to the Registry of the Court of Criminal Appeal to ensure the Court's fully informed, that the decision is made in my absence. I'm not in a position to proceed. I mean justice requires that I be allowed to prepare a defence."

After further debate, the Tribunal delivered the following ex-tempore decision:

"As I've earlier indicated at 11:40 this morning Mr Sheehan appeared in person and again sought the adjournment which we had in fact dealt with on the basis of his letter last Thursday and refused earlier today before we heard the evidence adduced in the Applicant's case.

In support of his application in person for an adjournment Mr Sheehan relied upon his Affidavit of 17 October which provided no new material beyond that which was before us in July last other than his statement that on 28 September 2011 he'd commenced proceedings in the Supreme Court of Victoria seeking damages for defamation against members of the Taylor family, they being persons referred to in the Law Society's material. The existence of the proceedings in the Supreme Court of Victoria seems to have nothing whatsoever to do with the case before us nor to provide any reason for adjournment of it.

The other new matter is that Mr Sheehan handed up a Summons which he had filed in the Supreme Court this morning which has its first return date on 7 November whereby he seeks a declaration that proceedings before this Tribunal on 24 February 2010 in matter 092007 are null and void. He also seeks an order that the Tribunal be restrained from hearing all matters brought by the present applicant in matter 1002028 which is the matter which is for hearing before us today. How Mr Sheehan could possibly become entitled to such relief is not apparent to us.

The authorities referred to us include the recent decision of Mr Justice Rothman in the Supreme Court in Director of Public Prosecutions v Ozacka which is reported at 68 NSWLR 325. At page 328 paragraph 13 of the Judgment his Honour quotes from the decision of the Full Court of the Federal Court in Sullivan v Department of Transport, which is reported at (1978) 20 ALR 323, and he quotes the passage at 343 from the Judgment of Mr Justice Stein with whom Mr Justice Fisher agreed. The passage deals with the availability of a refusal to grant an adjournment as constituting a failure to give a party to the proceedings the opportunity of adequately presenting his case and the passage quoted by Justice Rothman concludes with this paragraph:

"In this regard, however, it is important to remember that the relevant duty of the Tribunal is to ensure that a party is given a reasonable opportunity to present his case. Neither the Act nor the Common Law imposes upon the Tribunal the impossible task of ensuring that a party takes the best advantage of the opportunity to which he is entitled."

In this case, in my opinion, Mr Sheehan has been given abundant opportunity which he has not taken to meet the allegations against him by the Law Society.

The case was fixed with his consent for a two day hearing in July. He sought an adjournment of that case on the morning of the hearing on grounds that he would suffer prejudice, he was in effect not prepared and he had no counsel retained to adequately represent him.

Detailed directions were then given, the adjournment having been granted, and the hearing was fixed for five days to commence today. Virtually none of the directions made have been complied with and, in particular, Mr Sheehan has not as directed filed an amended Reply nor has be filed any evidence.

In my opinion, the reasons which he has proffered today for seeking yet another adjournment disclose no proper basis for us to do so. In my view he has had ample opportunity to prepare his case for hearing. He has not been deprived of the opportunity which the cases require that he be given and he has not made out any basis for us to grant him a further adjournment.

In the circumstances, therefore, we adhere to the decision given earlier today that the application for an adjournment is refused and the matter should proceed.

The matter has proceeded to the extent that the whole of the applicant's case has been presented and Miss Webster, when we adjourned, was in the course of making her closing submissions and we will call upon her to continue those submissions at 2 o'clock. Although in fairness to Mr Sheehan he should be given an opportunity to respond to them..."

At 2pm, before Counsel for the Law Society resumed her closing submissions, the Solicitor informed us that he had received a message to the effect that he was required to appear "in VCAT", in Melbourne, the next day "in order to give the undertakings to the Court" and that he would have to leave immediately to travel to Melbourne. He then left the room.

After Ms Webster concluded her submissions we gave the Solicitor leave to file and serve his Submissions within a period of 28 days of the Transcript becoming available. However, the Tribunal's records indicate that he failed to apply for a copy of the transcript leading to him being given an extension of time. They were ultimately received on 5 March 2012.

The Grounds of the Application

The Application set out 15 separate grounds of complaint, namely: Transferring costs without authority; Failure to render accounts; Making unlawful/unauthorised drawings from trust funds; Wilfully breaching s.61 of the LPA 1987 (3 separate grounds); Preferring his own interests to those of his clients; Deliberately charging grossly excessive amounts of costs; Attempting to mislead the Council of the Law Society in relation to the provision of 11 outline Bills of Costs dated between 22 January 2003 and 13 June 2003; Failing to account for the balance of monies held in the trust account; Attempting to mislead a client; Misleading or attempting to mislead another legal practitioner (2 separate grounds); Misleading or attempting to mislead the Law Institute of Victoria ("LIV") in his letter to it dated 7 November 2005 and Attempting to mislead the Law Society in a letter to it dated 20 October 2005.

The Grounds of the Application are extensively particularised (231 paragraphs in total). Although the solicitor did not formally dispute any of the particulars, it is necessary to discuss them in some detail.

File 33301 - Complaint by Sally Taylor

Ground 1 - Transferring costs without authority.

Ground 2 - Failure to render accounts.

File 34303 - Complaint by Sally Taylor on behalf of Tomas & Clive Taylor

Ground 3 - Making unlawful/unauthorised drawings from trust funds.

File 34068 - Complaints by Law Society made 16.9.04 arising from the report of Miss Jean Sayer

Ground 4 - The Solicitor wilfully breached s61 of the LPA 1987 for periods between 8 August 2003 and 25 August 2004.

Ground 5 - The Solicitor preferred his own interests to those of his clients.

File 35026 - Complaint by the Legal Services Commissioner re gross overcharging concerning the Estate of the Late Sara Taylor

Ground 6 - In the matter of Sara Alexandra Taylor v Gilchrist, Lowe and the Greater Murray Health Service, the Solicitor deliberately charged grossly excessive amounts of costs.

File 35470 - Complaint by Law Society

Ground 7 - Attempting to mislead the Council of the Law Society in relation to the provision of 11 outline Bills of Costs dated between 22 January 2003 and 13 June 2003 in that in letters from the respondent to the Society dated 2 September 2004, 15 July 2005 and 26 October 2005 the Solicitor denied that those bills had originated in his office and had been forwarded by him to the Society by facsimile at about 16.40 pm on 18 November 2003.

The Particulars set out a background to Grounds 1 to 7 (inclusive), which is summarised as follows:

The Taylor Matters

In 1995 the Solicitor was instructed to act for the late Sara Alexandra Taylor, daughter of Sally Taylor, in a medical negligence claim. In 1999 proceedings were commenced in the Supreme Court against two doctors and the Area Health Service in relation to their alleged negligent treatment of an injury that Sara suffered in 1987. On 31 October 2002 they were settled in principle for $2,500,000 plus party/party costs (as agreed or assessed). In a letter to Sara dated 31 October 2002 the Solicitor stated (in part):

"With regard to costs as I indicated to you prior to the mediation last December solicitor's costs alone at that time where (sic) (approximately) ninety thousand dollars ($90,000.00) that is exclusive of barristers fees and other disbursements such as travel expenses, medical report expenses and the like.

If the trial runs at a hearing I anticipate that it will be running at a cost to you of approximately twenty thousand dollars ($20,000.00) per day. As you may be aware the costs agreement between us was entered into in 1996 you will not be liable to pay GST on the cost. There have been some variations in the terms of the agreement as our hourly rate has increased to overcome inflation and like costs and presently stands at three hundred dollars ($300.00) per hour... It is more than likely that your legal costs and disbursements will be in excess of two hundred and fifty thousand dollars ($250,000.00)."

On 3 November 2002, the Solicitor attended a conference with senior and junior counsel, Sara Taylor and Sally Taylor to discuss and finalise the terms of settlement. At that time he prepared a handwritten will for Sara, in which she appointed Sally Taylor as her Executrix and left the whole of her estate to Tomas Taylor and Clive Taylor (her brothers). However, only the Solicitor witnessed the will (and it was therefore informal).

The Solicitor's final bill of costs dated 19 January 2004 contained an entry for 23 November 2002, for an attendance on Sara "explaining settlement case $400 to $600 plus". On 23 November 2002 and 18 December 2002 Sara signed authorities to the Solicitor authorising him to deduct his costs and disbursements from monies held in trust. The latter authority referred to his costs as "recorded in your bill of costs dated 18 December 2002". However, no bill bearing that date was provided to Sara Taylor or Sally Taylor at that conference or at any later time.

Terms of Settlement were filed in the Supreme Court in December 2002 and on 20 January 2003, the Solicitor received part payment of the settlement monies in the sum of $1,683,261.07. He paid it into a trust account that he opened that day with Westpac.

No formal will was prepared before Sara Taylor died on 21 January 2003. The Solicitor was notified of her death that day and on 22 January 2003 (the next day) he withdrew the following amounts from the trust account:

(1) $150,000.00 payable to Marshall Sheehan & Associates

(2) $37,900.00 payable to Wagga Prestige - part payment for the purchase of a car by Sally Taylor for Sara (arranged before her death)

However, after Sara's death, the Defendants sought leave to appeal against the Terms of Settlement to the Court of Appeal, the costs of care over Sara's lifetime being a substantial part of the settlement sum. On 3 February 2003 the Supreme Court ordered that the proceedings should, until further notice, continue in the absence of a person representing the plaintiff's estate and that any document that would otherwise be required to be served on the plaintiff should be served on the Solicitor's firm. That same day, the Solicitor received a further part payment of settlement monies ($500,000), which he deposited into the trust account.

On 4 February 2003 a conference was held between the Solicitor, Sally Taylor, Tomas Taylor and Clive Taylor, at which:

(1) A Deed of Family Arrangement drafted by the Solicitor was signed by the Taylors whereby Sally Taylor was vested with a one third interest in Sara's estate;

(2) Sally Taylor and Clive Taylor signed an authority (which was dated 5 February 2003) authorising the Solicitor to deduct monies from trust in favour of the Solicitor;

(3) Tomas Taylor left the meeting before the authorities were signed and on or about 5 February 2003 he signed an identical authority.

During that meeting, the Solicitor informed the Taylors that senior counsel would receive about $150,000.00, that junior counsel would receive about $100,000 and that there was likely to be about three million (dollars) to be split between them. On 5 February 2003, he transferred sums of $333,333.33 from the Trust account to each of the Taylors.

On 26 February 2003 the Solicitor faxed a notice of intention to apply for Probate to the local newspapers, but he took no further steps to apply for Probate in respect of the informal Will or Letters of Administration.

On 14 April 2003 Sally Taylor wrote to the Solicitor stating in part:

"I am writing to formally request information that you have previously failed to produce.

Would you please forward to me the schedule of fees, amounts already in your trust account and amounts expected to be paid when costs are accounted from and what those costs are in relation to?..."

The Solicitor wrote to Sally Taylor on 16 April 2003 stating:

"I refer to your letter of the 14th April 2003. With regard to the final paragraph, I am unaware of any information that I have failed to produce.

There has been a significant delay in preparing bills of costs because we had to obtain advice from the Australian Taxation Office as to whether or not the bill was subject to GST... The bill of costs which was explained to Sara and yourself in January last year (sic) can now be drawn without GST being applicable to the majority of it and will be forwarded to you within the next week or so..."

On 5 June 2003 Sally Taylor signed an authority to the Health Insurance Commission ("HIC") authorising it to release all monies to the Solicitor and the Solicitor forwarded this to HIC by letter dated 11 June 2003. On 23 June 2003 he received the sum of $242,825.95 from HIC, representing the balance of settlement proceeds after deduction of monies owed to it. Settlement monies received by the Solicitor to that date totalled $2,426,087.02.

By letter dated 30 June 2003 (Sally Taylor states that she received this on 17 July 2003), the Solicitor forwarded a trust account statement addressed to "Estate Sara Taylor", which showed withdrawals from trust up to 30 June 2003 that left a credit balance of $648,223.41 in the trust ledger.

On 17 July 2003 Mr Sofiak, trust account inspector, finalised an inspection of the Solicitor's trust account. He reviewed the trust ledger and file for Taylor Estate matter and was unable to locate any bills in relation to Sara Taylor's matter in the file. He asked the Solicitor for them and the Solicitor was unable to locate them, but he produced the authority dated 18 December 2002 as evidence that the bills had been given to Sara Taylor.

By a letter dated 22 July 2003 to the Solicitor, Sally Taylor sought copies of tax invoices to support the withdrawals that he had made. On 24 July 2003 Sheekey Williams wrote to the Solicitor advising him that they had been retained to act for Sally Taylor and they enclosed a signed Authority for him to transfer the file held in relation to Sara's Estate to Sheekey Williams.

By a letter to Sheekey Williams dated 8 August 2003 the Solicitor stated:

"....With regard to various matters relating to Sarah (sic) Taylor as we have advised you in our telephone conversations we are yet to complete the Revised Solicitor Client Bill of Costs...

We are using our best endeavours to revise the bill and provide a copy too.

In the meantime, we claim a "Fruits of Litigation" a lain (sic) pursuant to Sara's acknowledgement and authority over funds correctly held in our Trust Account awaiting Disbursement.

Pursuant to Sara's authority and the authority of Mrs Taylor any further Costs and Disbursements will be drawn from those funds and the balance will be remitted to you."

On 18 August 2003 Sally Taylor lodged a complaint against the Solicitor with the Legal Services Commissioner (see: Ground 1). Further, on 20 August 2003 Sally Taylor, her son Tomas Taylor and his wife Sophia Taylor attended the Solicitor's office in Albury. Tomas and Sophia Taylor saw the Solicitor's employee, Jenna Hayes, print the following from the computer:

(1) A one line tax invoice dated 30 June 2003 for $483,754.74; and

(2) A bill entitled "Draft Memorandum of Fees" dated 11 July 2003 for $112,577.41 including GST of $10,234.31. This was an itemised bill with no disbursements.

In their letter to the Solicitor dated 3 September 2003 Sheekey Williams stated in part "please provide us with a copy of your final draft bill before any further monies are removed from trust."

On 7 September 2003 the Solicitor's trust records were forwarded to the Federal Magistrates Court in Melbourne in answer to an Enforcement Summons issued by his former wife in the Family Court of Australia in Melbourne on 7 August 2003 (requiring production of financial documents including his Firm's bank deposit books, passbooks and trust account records).

In a letter to the Solicitor dated 9 September 2003, Sheekey Williams asked the Solicitor to send the original informal Will to them by registered post. They stated in part:

"In relation to monies held in trust, please note that you are specifically instructed (by the executor) not to deduct any further monies until you receive written instructions to that effect from the executor."

In his letter to the Law Society dated 7 November 2003 in relation to those documents, the Solicitor stated in part that "the draft of (sic) Memorandum of Fees provided by you today is an illegally obtained document."

In a further letter to the Law Society dated 10 November 2003, the Solicitor stated (note: Solicitor's emphasis):

"The so called Draft Memorandum of Fees is a document that is not my document. I have not previously seen (sic)...

It is not a document that I have caused to be produced nor is it a document that I have authorised to be provided to Mrs Taylor nor is it a document which forms the basis of an accounting for fees due in the matter... In fact this document is not relevant to the accounting for fees due in the late Sara Taylor's matter at all."

In November 2003 the Solicitor produced his trust account records to his Melbourne solicitors, including bank statements, cheque butts and other trust records. These were made available to his former wife's solicitors between November 2003 and February/April 2004.

By letters to the Solicitor dated 4 November 2003 and 11 November 2003 the Law Society asked him to provide copies of the bills to support the withdrawals from the trust account shown in the trust account statement issued to Sally Taylor dated 30 June 2003. He responded by letter dated 11 November 2003 that he had advised Sara Taylor and Sally Taylor that "...the final costs figure could be somewhere in the vicinity of $600,000 to $800,000 of which perhaps 60% to 80% could be recovered from the defendants." He restated this in his further letters to the Law Society dated 12 November 2003 and 19 December 2003 and in a letter to Sheekey Williams dated 18 December 2003. However, Sally Taylor denied that the Solicitor ever mentioned these figures and both Tomas and Clive Taylor denied that he quoted costs of that amount to them at the conference on 4 February 2003.

In his letter to the Law Society dated 17 November 2003, the Solicitor stated that he enclosed copies of interim bills that had been rendered to the estate (although he did not enclose copies). He stated in part:

"...The interim rendering of interim bills is authorised by Sara in the various costs disclosure agreements which she has been provided with and which she has signed. The rendering of interim bills have been authorised by the beneficiaries of the Estate subject to Sara Taylor's death."

The next day (18 November 2003) the Solicitor faxed to the Law Society under cover of a handwritten fax cover sheet (which records a time received of 16:40) eleven (11) one page interim bills/tax invoices headed "Memorandum of Fees" as follows:

(1) 22 January 2003 $150,000.00

(2) 13 February 2003 $1,013.12

(3) 28 March 2003 $11,000.00

(4) 4 April 2003 $20,000.00

(5) 14 April 2003 $50,000.00

(6) 30 April 2003 $100,000.00

(7) 6 May 2003 $20,000.00

(8) 23 May 2003 $30,000.00

(9) 5 June 2003 $10,000.00

(10) 6 June 2003 $50,000.00

(11) 13 June 2003 $15,000.00

On 9 December 2003, Sally Taylor wrote to the Law Society advising that she had applied to have the Solicitor's costs assessed based on the trust account statement and the draft bill as she had not received any bills from the Solicitor. However, she did not proceed with that application. In any event, the Law Society sent her letter to the Solicitor by letter dated 23 December 2003. It drew the Solicitor's attention to s.61 of the LPA 1987 and clauses 45 and 78 of the 2002 Regulation and stated in part:

"It does not appear to me that you have as yet supplied evidence that you have complied with these procedures. Your further explanation and production of supporting evidence in this regard would be appreciated. Please provide a full explanation regarding what basis you state that you have complied with the procedures prescribed in Clause 78(2)."

On 17 February 2012 the Solicitor faxed a "copy of final Bill of Costs" to the Law Society and stated in part "Subject to minor alterations this bill will be forwarded in hard copy via mail." The total costs and disbursements in the Bill were $687,398.48. The bill did not include counsel's fees.

On 27 February 2004 the Solicitor's former wife issued a Subpoena for Production against the Solicitor requiring production on 9 March 2004 of all of his financial records including his trust records. On 28 February 2004 the Solicitor faxed to the Law Society further portions of the bill relating to "skill care and responsibility." The total costs and disbursements in this Bill were $1,209,447.45 ("the final bill of costs"), and included an amount for "disbursements paid by plaintiff" of $385,157.50.

On 1 March 2004 Clive Taylor and Tomas Taylor received a final itemised bill of costs from the Solicitor dated 19 January 2004, including work done up to 16 February 2004, totalling $1,209,447.45, calculated as follows:

Professional costs due to the Solicitor's Firm $328,633.99

Including Care, Skill & Responsibility plus 80% $262,907.12

$659,431.92

Disbursements paid by the Solicitor $67,890.74

Plus 25% Premium $164,857.95

Total fees due to the Solicitor's Firm $824,289.95

Disbursements paid by plaintiff $385,157.50

Total costs of Action $1,209,447.45

By letters to the Law Society dated 2 March 2004 and 8 March 2004, Sally Taylor and Tomas Taylor respectively queried various items in the final bill. By a letter to the Solicitor dated 9 March 2004 and faxed to him on 10 March 2004, the Law Society:

(1) Requested that he "confirm in writing on or before 12 March 2004 that there have been no further drawings on the trust account in this matter since July 2003";

(2) Forwarded copies of the letters from the Taylors dated 2 March 2004 and 8 March 2004.

The Solicitor acknowledged receipt of these letters by way of a fax to the Law Society dated 10 March 2004. He asserted that the matters raised in the letters were "...matters for assessment."

The Solicitor wrote to Tomas Taylor on 12 March 2004 and noted:

"... you have been writing to Mr Scammell, costs assessor... You claim that there are matters which are included a number of times in bills of costs. Could you please fax me a copy of those pages on which you say things are included in the bills of costs on a number of occasions so that if there (sic) is indeed the fact, the situation can be rectified."

In a further letter to the Solicitor dated 15 March 2004, the Law Society again asked him to confirm in writing by close of business the next day that there had been no further drawings in the trust account. However, on 7 April 2004 the Solicitor withdrew $55,000 for costs, and he made further withdrawals for costs thereafter.

On 4 June 2004 the Solicitor's accountant forwarded an adverse Accountant's Report for the period to 31 March 2004 to the Law Society's Chief Trust Account Inspector. This noted several breaches relating to the handling of trust monies and on 17 June 2004 the Law Society appointed Jean Sayer ("the Investigator") as Investigator to investigate the Solicitor's affairs.

In his Statutory Declaration dated 23 June 2004 responding to a Section 152 Notice issued by the Law Society, the Solicitor declared that at the conference on 4 February 2003 he indicated to Tomas Taylor that "I expected costs to be in the vicinity of $600,000 to $800,000 plus disbursements and he could expect to receive 60% to 80% of that amount back on assessment..."

On 30 July 2004 Sally Taylor received a Grant of Probate in relation to Sara's informal Will.

The Investigator prepared a report dated 11 August 2004 ("the Investigator's report"). The Investigator's report noted that as at 2 July 2004, the total amount of costs transferred from the trust account to pay the Solicitor's costs (excluding fees of counsel and other disbursements) was $835,513.12. However, between 22 January 2003 and 9 July 2004 multiple cheques payable to the Solicitors Firm and with respect to disbursements including counsel's fees had been drawn and debited to the account. These totalled $1,130,609.94, of which $855.513.12 was paid to the Solicitor's Firm and a total of $275,096.82 was paid for other disbursements.

The Solicitor made a number of written submissions to the Law Society in relation to the Investigator's report. However, as a result of that report the Council of the Law Society resolved on 24 August 2004 to cancel his practising certificate and to refuse his application for a practising certificate for the year ending 30 June 2005. He then applied to the Supreme Court and orders were made on 24 August 2004 staying the cancellation. On 25 August 2004 he rectified the deficiency in the trust account ($6,138.00).

On 21 December 2004, the Court of Appeal dismissed the Defendant's Application for Leave to Appeal in respect of the terms of settlement in Sara's matter. On 10 February 2005 Sally Taylor filed an Application for Assessment of the Solicitor's final bill of costs dated 19 January 2004.

In a letter to the Law Society dated 15 July 2005, the Solicitor provided a further response to Jean Sayer's report. He stated:

"With regard to the matters raised by Mrs Sayer concerning complaints made by Mrs Sally Taylor and annexures "H12", an examination of those documents, which I have never seen before were provided to me as annexures in Ms Sayer's report reveals, that they were forwarded by facsimile to Ms Monica Thorman of Professional Standards on the 18th November, 2003 at 16:40 hours.

I can only assume that these documents were among the draft document purloined from my staff member by Mrs Sally Taylor on the 20th August 2003.

Mrs Monica Thorman has never disclosed to me that she had those documents in her possession, notwithstanding my answer to request for particulars, she implies that she was provided with the documents by myself. I have never supplied these documents to anyone."

The Law Society replied to that letter on 26 July 2005 and stated in part:

"The annexures "H12" in Miss Jean Sayer's report dated 11 August 2004 were forwarded to the Society under cover of a 12 page facsimile from Marshall Sheehan & Associates to the Society on 18 November 2003. A copy of that facsimile is enclosed."

By letter dated 11 August 2005, the Solicitor advised the Law Society that he had ceased practice in NSW and had closed his trust account in NSW and was now practising in Victoria.

On 20 and 21 September 2005, Mr Sofiak carried out a final trust account inspection of the solicitor's practice. He produced a report dated 21 September 2005, which revealed debit balances in some matters.

By letter dated 26 October 2005 the Solicitor replied to the Law Society's letter dated 26 July 2005 and stated in part:

"In examination of the facsimile it discloses that a fax coversheet, for what appears to be my handwriting with a facsimile header detailing that the coversheet, was sent to Professional Standards at 16:40 on the 18 November 2003.

It is unusual that the fax cover sheet does not identify the fax page as having been sent from my facsimile machine which identifies my practise (sic) as the source of all the documents on all facsimiles sent from my office...

I provided the interim memorandum of fees, pursuant to the actual fees agreement between Sara Taylor and myself to Mr Collins [the Manager of the Professional Standards Department] in 2003. The documents annexed to Miss Sayer's report are not the interim bills of costs I provided to Mr Collins.

As I have indicated before, I have not previously seen these documents.

Facsimile header notes on the documents identical to these documents contained in Miss Sayer's report suggest that they may have been provided to the Law Society by Tomas Taylor or his wife.

As I have previously stated, the documents have not been drawn with my knowledge or consent and they have certainly not been provided to Mrs Taylor or any member of her family as interim bills, the base (sic) upon which the funds were drawn from my trust account.

I enclose herewith charge cover sheets and similar court documents from the Deniliquin Local Court. These documents show that I was absent from Albury at Deniliquin Local Court on the 18th November, 2003 representing clients, who on that day, were committed to prison for a period of months and then released on having the conviction annulled on my application.

...

It is not possible for me to travel to Albury (sic) to Deniliquin and attend Court hearings for clients and be able to return by 16:41 hours.

It is at lease (sic) a 3 hour trip from Albury to Deniliquin and when I attend Court at Deniliquin, I leave Albury before 7:00am and usually return after 7:00pm.

I therefore was not in a position personally to forward the alleged interim bills of costs to the Law Society nor did I do so. I did not authorise the provision of those documents to the Law Society nor did I know of their existence.

They were provided to the Law Society by a personal (sic) unknown to me without my knowledge or authority.

The document show (sic) glaring inaccuracies on their face and are not documents I relied upon to transfer fees from my trust account to my general account in the matter of Sara Taylor. In these circumstances they cannot be relied upon as a basis for the allegation that I did not deliver a bill of costs to Sara Taylor and her mother on the 18th December, 2003 particularly in the circumstances where Sara Taylor and her mother signed receipts for the initial bills of costs. I have provided these receipts to you."

By a letter dated 7 November 2005, the Law Society responded to the Solicitor's letter dated 26 October 2005. It stated (relevantly):

The fax cover sheet of 18 November 2003 has the same fax header as a facsimile received from your office on 17 November 2003. A copy of that facsimile is enclosed.
No interim bills were enclosed with the facsimile dated 17 November 2003 from Marshall Sheehan & Associates to the Law Society.
You have advised in your letter dated 26 October 2005 that on 18 November 2003 you were at Deniliquin Local Court representing clients who, on that day, were committed to prison for a period of months and then released on having the conviction annulled upon your application. The copies of court papers which you have provided appear to indicate that those matters were listed for mention only on 18 November 2003 and that annulment applications occurred on an earlier date.
I had a telephone conversation with you at approximately 4:30 pm on 18 November 2003 in which you advised me that you had transferred monies pursuant to some interim bills which you were faxing to the Society "now".
The only interim bills the Society has received from you are those enclosed with the 12 page facsimile dated 18 November 2003 from Marshall Sheehan & Associates to the Law Society. Those interim bills were annexures "H12" in Miss Jean Sayer's report dated 11 August 2004.
You state that the interim bills of costs which were provided to the Society under cover of the facsimile dated 18 November 2003 and which were annexures "H12" in Miss Jean Sayer's report dated 11 August 2004 "are not the interim bills of costs I provided to Mr Collins". Please provide a copy of the interim bills you say you provided to Mr Collins and particulars of the date when you say that those interim bills were provided to Mr Collins and how they were provided to Mr Collins.

The Solicitor was also asked to make any further comment in relation to these matters by 18 November 2005.

The Law Society alleges that the Solicitors denials of having sent the outline bills and the extracts of his letters dated 2 September 2004, 15 July 2005 and 26 October 2005 were an attempt to mislead it (Ground 7).

On 15 December 2005 the Costs Assessor issued a Certificate of Determination as to the solicitor/client costs charged by the Solicitor to the estate of Sara. The Solicitor's costs including disbursements were assessed at $584,159.52. In total $1,209,447.40 had been charged by the Solicitor. The Solicitor was required to repay $637,382.35 to the estate, including the fee of $12,094.47 for the application. The Costs Assessor also referred the Solicitor's conduct in grossly overcharging the Estate to the Legal Services Commissioner of NSW as a result of which the Commissioner initiated a complaint that was then referred to the Law Society for Investigation (see: Ground 6).

On 27 January 2006 the Solicitor lodged an Application for Review of the Assessor's determination with the Supreme Court. On 29 May 2006, a Costs Review Panel issued a Certificate of Determination upholding the determination of the Costs Assessor.

On 21 June 2006, Sally Taylor obtained a Certificate of Judgment in the District Court against the Solicitor for the sum of $637,382.35. On 12 September 2006 the Solicitor filed a Debtor's Petition and was made bankrupt.

On 22 June 2007 the Solicitor filed a Summons seeking orders that the Certificate of Determination of the Costs Assessor issued on 15 September 2005 be set aside and that the Certificate of Determination of the Costs Review Panel issued on 29 May 2006 be set aside. However, on 17 July 2007 the Summons was dismissed by the Court as there had been no appearance by any party.

Matters arising from the Report of the Investigator dated 11 August 2004 - Grounds 4 and 5

In addition to matters set out above, it is noted that there were numerous deficiencies in the Solicitor's trust account between 8 August 2003 and 4 June 2004 and from 15 June 2004 to 25 August 2004 and that the debit balances related to numerous clients. While these were particularised in detail, we do not intend to report them in this decision.

File 34857 - Complaints by Brian & Sandra Sullivan on behalf of Dion Sullivan & File 37146 - Complaints by Law Society made 22.1.09

Ground 8 - The Solicitor wilfully breached s.61 of the LPA 1987 in that he deducted $1,500 from moneys held in trust on behalf of Dion Sullivan on about 2 July 2005 without authority.

Ground 9 - The Solicitor failed to account in that he failed to refund to Dion Sullivan the balance of monies held in the trust account.

Ground 10 - The Solicitor misled or attempted to mislead Dion Sullivan in his letter dated 1 July 2005.

In about December 2004 Gerard McCarthy, solicitor was consulted about a respective claim by Dion Sullivan against an Insurer, RACV, regarding RACV having declined Dion Sullivan's claim for loss under a policy of insurance in which Dion Sullivan alleged his motor vehicle was stolen from his place of employment at Cobham in Victoria by person/s unknown, the insurer considering that there was no genuine theft of the motor vehicle. Mr McCarthy referred Dion Sullivan and his parents, Brian and Sandra Sullivan to the Solicitor.

The Solicitor met with the Sullivans on/about 31 January 2005 and advised them that RACV would most likely back down as soon as it received a Statement of Claim and that it would cost about $200.50 to file a claim and a maximum cost of $5,000 for a full Court case.

On 11 February 2005 the Solicitor wrote to Dion Sullivan enclosing a Costs Agreement in relation to "recover your losses from RACV Insurance incurred by you as a consequence of RACV refusing to indemnify you..." In the Costs Agreement, he estimated his fees to be "5,000 and disbursements $100". In relation to "Billing Arrangements" the Agreement provided inter alia:

"We will send you a bill periodically, while the work is in progress, and when the work is completed.

We will ask you to deposit an amount in our Trust Account equivalent to the estimate of costs to be incurred in the conduct of these matters prior to any work being commenced.

An authority will be provided to you to authorise the drawing of money in a specific sum from our trust account for our costs".

In that letter he requested that $5,100 be deposited into his trust account and stated:

"We will bill you regularly, as provided by the Agreement, and this will enable you to monitor your legal costs as they are incurred. The fees will be deducted from the monies deposited into the trust account upon receipt of a signed authority from yourselves authorising us to do so."

On 18 February 2005 Dion Sullivan signed the Costs Agreement and sent it to the Solicitor together with a bank cheque for $5,100.

On 1 March 2005 the Solicitor faxed a letter, Complaint/Statement of Claim and an updated Interim Memorandum of Fees for an amount of $3,885 and an Authority to Dion Sullivan for approval and signature. That day Dion Sullivan sent a fax to the Solicitor's firm amending some of the details in the Statement of Claim and enclosed a signed Authority dated 1 March 2005 to deduct $3,885 from the trust account on account of costs and fees, of which $3,685 was due to the Solicitor for costs and $200.50 was for a filing fee for the Magistrates Court - Melbourne.

On 2 March 2005 the trust account ledger shows that $3,885 was drawn from trust for costs and that on 2 March 2005 a further sum of $200.50 was drawn from trust to pay the filing fee. That day the Solicitor's firm sent an Amended Complaint/Statement of Claim to Dion Sullivan and the Magistrates Court at Melbourne for filing with a trust account cheque for the filing fee. However, the Magistrates Court rejected the document as it did not comply with various requirements and the Solicitor returned them for refiling on 8 March 2005. On 16 March 2005 the Court again rejected the documents as, under to a Rule change the Solicitor advised Brian Sullivan that an address for service within 10 kilometres of the Magistrates Court at Melbourne was required, and he instructed Melbourne agents to attend to this.

On 7 June 2005 Dion Sullivan and Brian Sullivan wrote to the Solicitor, requesting proof and copies of all proceedings to date, statement and balance of the trust account and date and number of Court lodgement.

On 20 June 2005 the Solicitor sent a further amended Complaint/Statement of Claim to the Melbourne agents for filing in the Magistrates Court at Melbourne. They were then advised that the matter had to be filed in the Registry at Dandenong Magistrates Court. On 27 June 2005 the Melbourne agents advised the Solicitor of this by letter and that they had sent the documents to the Court for filing.

On 1 July 2005 the Solicitor had a telephone conversation with Brian Sullivan, during which he asked for a further amount of $1,650 for costs and said that there was a balance of $3,000 in the trust account. Brian Sullivan informed him that Dion Sullivan would not sign any authority to deduct monies from the trust account until he sought advice from Mr McCarthy. That day he wrote to Dion Sullivan, enclosing a further undated interim account for $1,650 including the costs of the Melbourne agents, and stated (relevantly):

"We refer to our telephone conversation this morning. We confirm that our Melbourne agents ascertain (sic) that this matter has been transferred, without notice to the parties, to the Magistrates Court at Dandenong.

This is most surprising as we wish to have the matter dealt with in Melbourne so that the RACV Legal Section could deal with the matter.

This might explain the delay in filing the matter, as it was originally filed in Melbourne on the 2nd March 2005.

We enclose herewith out interim Memorandum of Fees and your authority to deduct costs for the payment of our Melbourne Agent.

For the type (sic) of writing at this time, you have a balance of $3,000 in our trust account. A trust account statement will follow by mail.

The RACV insurance will file their defence and the matter will be listed for a pre-hearing conference at the Dandenong Magistrates Court and the defence was served on the 30th June 2005 as we understand it.

We anticipate that there will be a pre-hearing conference in four to five weeks which will see the end of the matter..."

However, Dion Sullivan did not sign or return the authority dated 1 July 2005 or otherwise authorise the Solicitor to transfer costs of $1,650 as per the undated account. Nevertheless, on 2 July 2005 the Solicitor transferred the sum of $1,500 from trust on account of his costs, leaving a debit balance of $485.50 in the trust ledger. This remained at the time of Mr Sofiak's inspection on 20 September 2005.

On 9 August 2005 the Solicitor wrote to Dion Sullivan, advising that a pre-trial conference had been convened at Dandenong Magistrates Court on 7 September 2005 and asking whether he wished the Solicitor to attend this. He stated that his estimated costs for attendance at the conference were $3,000 plus accommodation which will be estimated at about $250.00". He also stated that if Mr Sullivan wished Counsel to appear on his behalf it "...may represent a substantial saving".

On 18 August 2005 Dion Sullivan and Brian Sullivan sent a facsimile to the Solicitor, requesting a trust account statement "as promised". They sent a further facsimile to the Solicitor on 30 August 2005, stating:

"As it is only a week until Court Day, I would appreciate the address and phone number of my representative...

As requested on many occasions the Trust Account Statement has not been forwarded to me. Please fax today."

On 31 August 2005 the Solicitor replied to Dion Sullivan as follows:

"...The Court has changed the pre-hearing conference to the 14th September, 2005 at 2:15pm at the Dandenong Magistrates Court.

We enclose herewith a Notice of Pre-hearing conference received by our Melbourne agents.

Mr Joseph Sala of Counsel will be briefed to appear on your behalf at the pre-hearing conference. His fees for attending the pre-conference hearing will be $800.00.

Could you please deposit that sum in either Gerard McCarthy's trust account or in the trust account operated by Mr Sala's clerk.

In addition, we have received a request for particulars from RACV's solicitors which we will be required to answer.

Could you please make an appointment to see Mr Sheehan to answer these particulars.

You may be aware that Mr Sheehan has closed his practise (sic) in New South Wales and is now practising at 119 Hume Street, Wodonga Victoria. Contact details, i.e. postal box, telephone, facsimile, email all remain the same.

As a consequence of closing the New South Wales practice, Mr Sheehan is currently engaged in finalising trust account matters and is forwarding trust account statements to all clients in the New South Wales practise (sic). You will receive your Trust Account Statement in the next few days."

However, the Notice of Pre-Hearing Conference stated that the conference was at Melbourne Magistrates Court and not at Dandenong Magistrates Court.

On 6 September 2005 Dion Sullivan wrote to the Solicitor terminating his instructions and requesting his file. On 8 September 2005 the Solicitor wrote to Mr Sullivan enclosing an invoice from the Melbourne agents and requesting a cheque made out to them for $553.30. He stated that he would release the file when he received that cheque. On 8 September 2005 Mr Sullivan faxed the Solicitor an authority for that sum to be paid from monies held in trust.

On 12 September 2005 the Solicitor sent a fax to the Magistrates Court advising that his instructions had been withdrawn and that he would not be appearing on 14 September 2005. He also sent a facsimile to Ms Annette Kaitinis, a Melbourne barrister whom Dion Sullivan had instructed, advising her of the time and date of the conference and enclosing the request for further and better particulars filed by the defendant's solicitors on 1 August 2005.

On 23 September 2005 the Solicitor sent a facsimile to his Melbourne agents advising them that he had spoken to Mr Sullivan and that Mr Sullivan was remitting the sum of $553.30 to them today by post.

On 12 October 2005 Dion Sullivan sent another fax to the Solicitor asking for the trust account statement. That day the Solicitor's office faxed a response to Brian Sullivan stating relevantly:

"...We have closed our trust account and have been inspected by a Trust Account Inspector and it is in complete order.

Funds are being returned to Dion Sullivan and he will receive them in the mail together with a complete trust account statement.

There are fees outstanding and due and the file will not be handed to Dion Sullivan until those fees are paid in full..."

On 13 October 2005 he sent a fax to John Curtain & Associates stating relevantly:

"...The situation with regard to Mr Dion Sullivan is that monies which were held in trust are to be reimbursed to him as we have closed our trust account in preparation to our decision to practise (sic) in New South Wales. Indeed, I propose to cease practise as a solicitor in the near future.

...There has been a delay in processing the remission of funds to Mr Dion Sullivan and the matter has been attended to. However, there are fees outstanding to our Melbourne Agents... in the sum of $754.60.

I have advised Mr Dion Sullivan that I will deal directly with you with regard to this matter and upon payment of outstanding fees to (the Melbourne agents) this matter will be remitted to you together with a trust account statements (sic) and funds remitted to Dion Sullivan..."

On/about 14 October 2005 Mr & Mrs Sullivan, on behalf of Dion Sullivan, lodged identical complaints against the Solicitor with the Legal Ombudsman of Victoria and the Legal Services Commissioner in New South Wales.

On 20 October 2005 the Solicitor wrote to Mr Sofiak, stating relevantly:

"I enclose herewith copies of the cheques forwarded to ... Mr Sullivan in refund of moneys held in trust at the time it was closed. I will provide you with a statement of account when the cheques are drawn upon.

...funds are being returned to Dion Sullivan and he will receive them in the mail together with a complete trust account statement."

He attached a copy of a cheque for $435.50 that had been drawn payable to "Deon Sullivan". However, neither the Sullivans nor John Curtain & Associates received the cheque.

On 24 October 2005 John Curtain & Associates sent a facsimile to the Solicitor, advising that he was instructed that the Melbourne agents were owed $553.30 and not $754.60 and that there were sufficient funds held in trust to cover that account, that payment from trust had been authorised and he urgently requested the files for the hearing on 30 November 2005.

On 28 October 2005 the Solicitor sent a letter to John Curtain & Associates, enclosing a memorandum of fees due to the Melbourne agents "and correspondence indicating that the amount is $754.60". He also enclosed a trust account statement and a general account cheque for $285.50 and stated that he had closed his trust account "some days ago". He also asserted that Mr Sullivan was also "indebted to us in the sum of $435.50." He stated:

"...May we suggest that to expedite the transfer of the file, your client will electronically remit funds to (the Melbourne agents) and to ourselves and upon receipt of the same, we will cause the file to remitted to you immediately.'

However, on 7 November 2005 the cheque in favour of Dion Sullivan, which was drawn by "Majmeg Holdings Pty Limited ITF Valmar Investment Trust" for $285.50 was dishonoured. That same day, the Solicitor forwarded to the Law Institute of Victoria a reply to the complaint made by Mr & Mrs Sullivan. He stated in part:

"My trust account was maintained in New South Wales and was subject to a satisfactory inspection prior to it being closed."

On 15 November 2005 the Law Institute of Victoria wrote to the Solicitor stating relevantly:

"It appears what remains of Mr Sullivan's complaint is that he says he has not received a trust account statement, and that your firm has outstanding funds in trust due to him.

Can you please let me have your version of events in writing within 14 days.

In the meantime I have forwarded your response of 8 November 2005 to Mr and Mrs Sullivan for comment."

On 17 October 2005 John Curtain & Associates sent a fax to the Solicitor seeking an itemised bill of costs and stating that they required the file urgently for the hearing on 30 November 2005. He replied by fax dated 22 November 2005, apologising for the dishonouring of the cheque "due to an administrative oversight" and also stated relevantly:

"We enclose our bank cheque in the sum of $285.00.

That money represents a repayment to your client of an accredited amount due to him when we closed our trust account.

The Law Institute of Victoria has dealt with your client's father's ridiculous allegations... In fact, your client's father's complaints have been dismissed.

The file will be handed to you when (the Melbourne agents) fees have been paid."

However, no cheque was enclosed with that letter and no other amount was received by the Sullivans or John Curtain & Associates.

In 2006 Dion Sullivan lodged an Application for Costs Assessment in NSW and the Solicitor's file was delivered to the Costs Assessor on 15 March 2006. It was later returned to the Solicitor. On 21 March 2006 Mr Peter Scammell, Costs Assessor, issued a Certificate of Determination of Costs in the matter and stated that fair and reasonable costs were $2,621. He directed that an amount of $2,479 was due to be repaid to Dion Sullivan under the assessment.

On 31 March 2006 John Curtain & Associates sent a facsimile to the Solicitor demanding payment of the amount of $2,479 within 7 days. However, the Solicitor did not refund any of the overcharge and neither the Sullivans nor John Curtain & Associates received either the original file or a copy of the file from the Solicitor.

File 34918 - Complaint by Law Society made 1.12.05 re Sofiak report 21.09.05

Ground 11 - The Solicitor wilfully breached s.61 of the LPA 1987 in that:

(1) There were debit balances in the Trust Account in respect of the following matters:

(a) "Brooks Nominees P/L F & F" Cards 1 and 2, Account Number 000022;

(b) "Romeo, Jeff" Card and Account Number not specified;

(d) "Sullivan, Dion" Card 1 Account Number not specified.

(2) He took funds from trust on account of costs in the matter of "Brooks Nominees P/L F & F"

(a) Without complying with Part 11 of the LPA 1987 and clause 45 of the 2002 Regulation.

(b) When the general account was in debit immediately before presentation of the trust account cheque.

During the period concerned drawings on the Trust Account required the knowledge and authority of the Solicitor as no delegation under clause 86 of the 2002 Regulation had been made with respect to the trust account and the Solicitor was the only person with authority to sign cheques on the trust account. Drawings were made from the Trust Account (as particularised previously) when the general account was in debit immediately before presentation of the trust account cheque. In the matter of "Brooks Nominees P/L F & F", multiple drawings on account of costs were made, on occasions days apart, as shown in the trust ledger. The proceeds of drawings from trust were deposited into the Solicitor's general account.

File 36970 - Complaints by Law Society made on 16.10.08

Ground 12 - The Solicitor misled or attempted to mislead John Curtain & Associates in his letter to that firm dated 28 October 2005.

In addition to matters set out above, the following statements in the trust account statement that was enclosed with that letter were misleading:

(1) The trust account statement showed a debit balance of $285.50. However, this was misleading as the Solicitor knew, as a result of the Trust Account Inspector's report dated 21 September 2005 that the debit balance was at least $435.50.

(2) The entry in the trust account statement showing a debit of $3,685 on 2 March 2005 was not correct. This was misleading as it did not reflect the entry in the trust ledger that on 2 March 2005, costs of $3,885 had been debited to the ledger.

Ground 13 - The Solicitor misled or attempted to mislead the Law Institute of Victoria in his letter to the Law Institute of Victoria dated 7 November 2005.

In addition to the matters discussed previously, the Solicitor's statement in his Reply forwarded on 7 November 2005 and 8 November 2005, that his trust account in New South Wales was subject of a satisfactory inspection prior to it being closed, was misleading. He had received the Trust Account Inspector's report dated 21 September 2005, which showed a debit balance of $485.50 in the Dion Sullivan matter and debit balances in other matters. He provided a response to the Trust Account Department on 20 October 2005 in relation to those debit balances.

File 36958 - Complaints by Law Society made on 2.10.08

Ground 14 - The Solicitor attempted to mislead the Law Society in his letter to the Law Society dated 20 October 2005.

In addition to matters discussed above, the inclusion of a copy of a cheque in favour of "Deon Sullivan" in the sum of $435 and the statement that in the letter dated 20 October 2005:

"The furtherest which a court can go is to regulate its procedures to avoid unnecessary delay, to do what can be done to achieve fairness in a trial and to prevent the abuse of its process";

and at paragraph 23 His Honour acknowledges that there is a power to stay proceedings which has a dual purpose to "prevent an abuse of process or the prosecution of a criminal proceeding in a manner which will result in a trial which is unfair when judged by reference to accepted standards of justice". His Honour also goes further in his judgment to discuss the concept of "an abuse of process" and states (at paragraph 25) that the

"course of judicial innovation is facilitated when the old rubric is expressed in terms which defy exhaustive definition. "Abuse of process" is such a term. As remedies to suppress an abuse of process are designed to eliminate injustice, it seems a short step to say that the carrying on of proceedings amounts to an abuse of process when prejudice to one party is caused by delay on the part of the other. And if that amounts to an abuse of process, the remedy of permanent stay may seem to be appropriate";

and at paragraph 26:

"However understandable the granting of a permanent stay causing prejudice might be, the remedy cannot be supported unless it would truly be an abuse of process to try the case".

c) Deane J at paragraph 3 said:

"Once a court is seized of criminal proceedings, it has control of them. In the absence of applicable statutory provision, that control includes the power - either inherent or implied - to ensure that the court's process is not abused by the proceedings being made an instrument of unfair oppression".

And, importantly, at paragraph 7 His Honour said:

"The power of a court to stay proceedings in a case of unreasonable delay is not confined to the case where the effect of the delay is that any subsequent trial must necessarily be an unfair one. Circumstances can arise in which such delay produces a situation in which any continuation of the proceedings would, of itself, be so unfairly and unjustifiably oppressive that it would constitute an abuse of the court's process. Multiple prosecutions arising out of the one set of events but separated by many years or a renewed charge brought years after the dismissal of earlier proceedings for want of prosecution could, in a case where the relevant material had been available to the prosecution from the outset and depending upon the particular facts, provide examples. Where such circumstances exist, the power of a court to prevent abuse of its process extends to the making of an order that proceedings be permanently stayed".

d) And finally, Gaudron J said at paragraph 5:

"Subject to any limitation or restriction to be found in statute, a court necessarily has power (whether that power is identified as inherent power or a power necessarily to be implied from relevant statutory provisions) to control its own process and proceedings".

At paragraph 7:

"The power of the court to control its own process and proceedings is such that its exercise is not restricted to defined and closed categories, but may be exercised as and when the administration of justice demands".

And, finally, at paragraph 9:

"The above general considerations lead me to think that, at least in civil proceedings, the power to grant a permanent stay should be seen as a power which is exercisable if the administration of justice so demands, and not one the exercise of which depends on any nice distinction between notions of unfairness or injustice, on the one hand, and an abuse of process, on the other hand".

In our view the Solicitor has failed to discharge the evidentiary onus that he bears and we are not satisfied that the current proceedings are doomed to failure and/or that they are an abuse of process. There is no basis for permanently staying the proceedings and we decline to do so.

After considering all of the evidence in this matter, the Tribunal is satisfied that the allegations against the Solicitor have been proved to the standard stated by Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 (at pp 361 - 362) and in accordance with Section 140 of the Evidence Act. In our opinion it follows from this finding that the Solicitor has been guilty of professional misconduct.

Considerations as to Penalty

The broad and well-established principle that the 'primary object' of disciplinary proceedings against a legal practitioner 'is to protect members of the public from professional misconduct' was stated by the High Court of Australia in Walter v Council of Queensland Law Society Inc (1988) 62 ALJR 153 at 157 (per by Mason CJ and Wilson, Deane, Toohey and Gaudron JJ).

Further, in Smith v New South Wales Bar Association (1992) 176 CLR 256 at 270), Justice Deane stated that 'disciplinary proceedings against a legal practitioner are primarily directed towards the protection of the public and not the punishment of the legal practitioner'.

This principle was restated by Mahoney JA in Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 441-442:

"What, then, are the purposes of the orders to be made and the considerations to be taken into account? It has frequently been said that disciplinary procedures and the orders made in the course of them are directed not to the punishment of the solicitor but to the protection of the public. This, of course, is true. The protection of the public has been described as, for example, the primary purpose or a primary object of such proceedings: Walter v Council of Queensland Law Society Inc (1988) 62 ALJR 153 at 157E; 77 ALR 228 at 235; Smith v New South Wales Bar Association (1992) 176 CLR 256 at 270 per Deane J; or one of the primary objects of the proceedings and the orders made: see Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 251. In the relevant sense, the protection of the public is in my opinion not confined to the protection of the public against further default by the solicitor in question. It extends also to the protection of the public against similar defaults by other solicitors and has, in this sense, the purpose of publicly marking the seriousness of what the instant solicitor has done."

In Allinson v General Council of Medical Education and Registration [1894] QBD 750 at 768 Lopes LJ approached the definition of the term "infamous conduct" as follows terms:

"Then I come to the question of 'infamous conduct in a professional respect,' and, in my opinion, if there was any evidence on which the council could reasonably have come to the conclusion to which they did come, their decision is final. If, on the other hand, there was no evidence upon which they could reasonably arrive at that conclusion, then their decision can be reviewed by this Court. It is important to consider what is meant by 'infamous conduct in a professional respect.' The Master of the Rolls has adopted a definition which, with his assistance and that of my brother Davey, I prepared. I will read it again: 'If it is shown that a medical man, in the pursuit of his profession, has done something with regard to it which would be reasonably regarded as disgraceful or dishonourable by his professional brethren of good repute and competency,' then it is open to the General Medical Council to say that he has been guilty of 'infamous conduct in a professional respect.'"

Further, in re Hodgekiss [1962] SR (NSW) 340 at 351 Hardie J said:

"No definition of the phrase 'professional misconduct' is contained in the Act; its meaning accordingly has to be ascertained from case law. In Myers v Elman [1940] AC 282 Viscount Maugham adverted, briefly and by way of obiter dictum, to the jurisdiction to strike off the rolls or to suspend a solicitor 'on the ground of professional misconduct, words which have been properly defined as conduct which would reasonably be regarded as disgraceful or dishonourable by solicitors of good repute and competency.'"

His Honour was considering the 1898 Act, but we regard his comments as being relevant to both the 1987 and 2004 Acts.

These proceedings are being conducted under the Legal Profession Act 2004, the Solicitor's conduct is governed by the 1987 Act. However, the orders made cannot be more onerous than those that could be made under the 1987 Act. We note that the orders sought in the Application are available under both Acts.

Based on the evidence before us, we have formed the view that the Solicitor's conduct would properly be regarded as 'disgraceful and dishonourable' by reputable members of the legal profession and therefore amounted to professional misconduct at common law.

In addition, we are satisfied that he also:

Breached statutory requirements relating to the management of his trust account and particularly that he breached section 61 of the Legal Profession Act 1987 (3 counts);
He preferred his Preferring his own interests to those of his clients;
He deliberately charged grossly excessive amounts of costs;
He attempted to mislead the Council of the Law Society in relation to the provision of 11 outline Bills of Costs dated between 22 January 2003 and 13 June 2003;
He failed to account for the balance of monies held in the trust account;
He attempted to mislead a client;
He misled or attempted to mislead another legal practitioner (2 counts);
He misled or attempted to mislead the Law Institute of Victoria in his letter to it dated 7 November 2005; and
He attempted to mislead the Law Society in a letter to it dated 20 October 2005.

In Stewart v Strevens, a ruling of particular significance for the current matter is that a solicitor has no implied authority from a client to withdraw funds of the client held in a trust account, for the purposes of paying the solicitor's costs and/or disbursements. Helsham J determined that the statutory predecessor of section 61(2) of the 1987 Act required a solicitor to hold such funds 'exclusively for' the client and to disburse them according to the client's directions. He also ruled that provisions relating to solicitors' liens for costs (now to be found in section 61(3)(c) and (d) and section 61(4)) did not confer authority to withdraw funds in order to pay costs or disbursements.

We further note that in Law Society of New South Wales v Jones , Street CJ, with whom Reynolds and Samuels JJA concurred, expressed the following statement of principle:

"Reliability and integrity in the handling of trust funds are fundamental prerequisites in determining whether an individual is a fit and proper person to be entrusted with the responsibilities belonging to a solicitor. Members of the public, many of them wholly inexperienced and unskilled in matters of business or of law, inevitably must put great faith and trust in the honesty of solicitors in the handling of moneys on their behalf. The Court must ensure that this trust is not misplaced."

We also refer to the decision of the Court of Appeal in Dupal v Law Society of New South Wales [1990] NSWCA 56. In that case, the Legal Profession Disciplinary Tribunal found that the Solicitor had misappropriated funds entrusted to him by his sister and had wilfully contravened Section 61 of the 1987 Act. By majority, it ordered that his name be removed from the Roll. The Solicitor appealed, but the Court of Appeal confirmed both the Tribunal's findings regarding his conduct and its order that he should be struck off. Kirby P stated:

The result is that in both of the cases complained of, the Society has shown misuse by the appellant of the moneys received by him on behalf of other persons. What follows? The answer to that question takes me back to the observations with which I began these reasons. Such a finding ordinarily requires removal from the roll. The research of neither counsel before the Court could produce a single case in which, following a finding of misappropriation of trust funds or wilful contravention of s41(1) of the Act [this was the equivalent to section 255(1) of the LP Act 2004], the Court had not proceeded to remove the name of the practitioner concerned from the roll of practitioners. Properly, after judgment was reserved, counsel for the Law Society, following further enquiries, drew to the notice of the Court a decision of the Solicitor's Statutory Committee in the case of Colin Water Peck, unreported, 23 April 1981....

I regard the decision in Peck, which is not a decision of this Court, as wholly exceptional. True, each case must depend upon its unique facts. But for the reasons which I have stated, the normal consequence of the misuse of entrusted funds by a solicitor, and a finding of wilful breaches of the statutory prohibition in that regard, is removal of the name of the solicitor from the roll. There is no reason why that consequence should not follow in the present case. To the extent that Peck suggests otherwise, I dissent from its holding.

Handley JA held (at p 12):

This Court would be departing from a long course of authority if it were to allow the appeal and substitute a period of suspension for the order of the Tribunal removing the appellant from the roll. Counsel were not able to refer us to any case where a solicitor found guilty of misappropriation or wilful contraventions of s61(1) has not been struck off the roll. Any decision to the contrary would signal to the profession and the community that this Court was no longer insisting on solicitors maintaining the highest standards of personal honesty and integrity in their dealings with clients and the public and in the handling of monies entrusted to their charge. The maintenance of those standards and the public interest require, in my judgment, that this appeal be dismissed. It is well established that the jurisdiction being exercised in this case is not penal but disciplinary and that it must be exercised for the benefit of the public. Sympathy for the appellant and for the tragedy that he has brought on himself and his family by his inability to live up to the high standards which this Court and the profession demand of solicitors cannot be allowed to deflect this Court from doing its duty.

We note that Re Veron; Ex parte Law Society of New South Wales stands for the general proposition that the charging of excessive costs by a solicitor may amount to professional misconduct at common law. This proposition was further elaborated by the Court of Appeal in Veghelyi v Law Society of New South Wales. Mahoney JA stated (BC9505459 at pp 7 - 9):

It is, in my opinion, settled for this Court that gross over-charging may of itself constitute professional misconduct. It was in earlier times sometimes suggested that gross over-charging did not justify a summary application against a solicitor for professional misconduct unless there was involved, as it was described, an element of "wilful fraud"... It is, in my opinion, now established that gross over-charging as such may constitute professional misconduct and that, on an application such as this, it is not necessary to prove in addition that the lawyer was guilty of fraud or the like: see, eg, Ray v Newton (1913) 1 KB 249 at 255. These principles, in my opinion, have been established by the Veron and the Evatt cases: see Law Society of New South Wales v Veron (1966) 84 WN (Pt 1) (NSW) 136; and Evatt v Bar Association of New South Wales (1968) 117 CLR 177; 67 (NSW) 236....

In deference to Mr Roberts' submissions, it is, I think, relevant to consider first the reason why gross over-charging, as such, may be held professional misconduct. The Court has traditionally and for centuries exercised control over "the excessive fees and other unnecessary demands" made by solicitors of the court: see, eg, Holdsworth's History of English Law, 2nd ed, Vol 6, 434; Vol 12, 56-62. Clients are, or may frequently be, in a vulnerable position vis-a-vis their solicitors; the presumption of undue influence is, I think, based at least in part upon the fact that when making decisions clients ordinarily or at least frequently place trust in their solicitors. They ordinarily are not in a position to know without investigation what work must be done and what charges are fair and reasonable; they ordinarily assume that the solicitor will make only such charges.

Solicitors are, on the other hand, informed, or in a position to inform themselves, of what work may be required and what are fair and reasonable charges. They are, in that sense, in a position of advantage and trust is placed in them. Clients are entitled to be protected against the abuse of such an advantage. It is, I am inclined to think, the fact that that advantage has been misused which may, in a particular case, warrant what the solicitor does being categorised as professional misconduct.

We regard Justice Mahoney's comments as being of particular relevance to the matter before us.

In Prothonotary of the Supreme Court of New South Wales v Nikolaidis [2010] NSWCA 73, the Court of Appeal granted declarations to the effect that the solicitor was guilty of professional misconduct and that he was not a fit and proper person to remain on the Roll of Local Lawyers. It therefore ordered that his name be removed from the Roll. In its joint judgment at [22], the Court (Allsop P, McColl and Young JJA) described the relevant conduct of the Solicitor in the following terms:

'[he] engaged in a deliberate and planned course of action involving third parties to deceive a costs assessor appointed by the Supreme Court in order to advance his position against a former client.' At [23], it pointed out that this conduct occurred over ten years earlier and asked: 'Should the Court take into account the effluxion of time?'

In partial answer to this question, the Court stated as follows at [25]:

25 In circumstances where the respondent chooses not to come forward to assist by giving evidence in the disciplinary proceeding, the failure to provide an exculpatory statement or explanation means that inferences from proved facts can be drawn more safely because the defendant has failed to give any explanation of matters peculiarly within his knowledge: Azzopardi v The Queen [2001] HCA 25; 205 CLR 50; Weissensteiner v The Queen[1993] HCA 65; 178 CLR 217; [ Council of the New South Wales Bar Association v Power [2008] NSWCA 135 at 463-467 [20]-[29]; and Council of the New South Wales Bar Association v Einfeld [2009] NSWCA 255 at [23]]. Similarly, in the context of assessing whether reformation may or may not have occurred, in circumstances where the respondent does not give evidence, it is difficult to see how it can be concluded that the reflection upon the underlying character of the respondent by the commission of a planned offence of dishonesty does not reflect on him over ten years later.

We also refer to the decision of the Tribunal in Council of the Law Society of New South Wales v Clapin (No 2) [2011] NSWADT 246. In that matter the Solicitor decided not to give any evidence in relation to the matters before the Tribunal. The Tribunal held:

58 In these proceedings, the impact of the Solicitor's decision not to testify also has two distinct aspects.

59 First, because he 'failed to give any explanation of matters peculiarly within his knowledge', we were bound in the principal decision to put to one side the possibility that presumptively improper conduct on his part could and in fact should have been characterised as innocent. We could not conclude, for example, that his overcharging for costs in any or all of the seven of the matters outlined in the Particulars was attributable to honest and excusable errors committed by him or by members of the staff of his firm.

60 Secondly, there is now insufficient evidentiary material before us to support a finding that 'reformation' may have occurred since the period, ending about four years ago, during which the misconduct of the Solicitor occurred. As Mr Stitt pointed out, the Solicitor has not given any evidence to demonstrate that he genuinely understands the reasons why his actions amounted to professional misconduct, or that he regrets it and wishes to apologise for it. Although, as Mr Lynch contended (see [35] above) he might have co-operated with the investigations of his practice, we do not discern any admission of professional misconduct, or of alleged matters that would clearly constitute misconduct, in the Reply that he initially filed. It was only in his Amended Reply that he admitted overcharging or that some of his breaches of trust account requirements were wilful.

While we are cognisant of the fact that the Solicitor did not decide not to testify in these proceedings, the fact remains that he nevertheless failed to present any evidence or to give any explanation of matters that are peculiarly within his knowledge'. As a consequence, we are bound to put to one side the possibility that presumptively improper conduct on his part could and in fact should have been characterised as innocent. We cannot conclude, for example, that his overcharging for costs or the other matters outlined in the Particulars were attributable to honest and excusable errors committed by him. We must therefore conclude that his conduct was wilful.

There is no evidence before us to support a finding that any 'reformation' may have occurred since the period in which the misconduct occurred. Further, there is no evidence that demonstrates that the Solicitor genuinely understands the reasons why his actions amounted to professional misconduct, or that he regrets it and wishes to apologise for it. There is also no evidence that the Solicitor understands his professional and ethical obligations to either the Law Society or other legal practitioners. On the contrary, his repeated breaches of orders made by this Tribunal strongly auger against such a finding.

For these reasons, we have formed the view that the Solicitor is not a fit and proper person to remain on the Roll of Local Lawyers and that he should be struck off.

Orders

We order that:

(1) The Solicitor's name be removed from the Roll of Local Lawyers; and

(2) The Solicitor should pay the Law Society's costs of and incidental to this Application, as agreed or assessed.

**********

Decision last updated: 24 May 2012

Medium Neutral Citation:	Council of the Law Society of NSW v Sheehan [2012] NSWADT 100
Hearing dates:	25 July 2011; 17 October 2011.
Decision date:	24 May 2012
Jurisdiction:	Legal Services Division
Before:	D Patten, Deputy President M Riordan, Judicial Member Professor R Fitzgerald, Non Judicial Member
Decision:	1.The Respondent is guilty of professional misconduct on each of the 15 grounds alleged. 2.The Respondent's name is to be removed from the Roll of Local Lawyers. 3.The Respondent is to pay the Applicant's costs of and incidental to this Application, as agreed or assessed.
Catchwords:	Solicitor - Professional Misconduct - Failure to comply with Orders and Directions - Failure to file proper Reply - Failure to adduce any evidence in reply to Application - Whether Solicitor was given a reasonable opportunity to defend Application - Apprehended bias
Legislation Cited:	Legal Profession Act 1987 Legal Profession Act 2004
Cases Cited:	Prothonotary of the Supreme Court of New South Wales v Nikolaidis [2010] NSWCA 73. Dupal v Law Society of New South Wales [1990] NSWCA 56. Law Society of New South Wales v Jones (Unreported - 24 July 1978). Allinson v General Council of HYPERLINK " \o "Powered by Text-Enhance" Medical Education and Registration (1894) 1 QB 750. Briginshaw v Briginshaw (1938) 60 CLR 336. In re Hodgekiss [1962] SR (NSW) 340. Director of Public Prosecutions v Ozacka - 68 NSWLR 325, at p 328. Sullivan v Department of Transport - (1978) 20 ALR 323. Re Veron; Ex parte Law Society of New South Wales (1966) 84 WN(NSW) (Pt 1) 136. Stewart v Strevens [1976] 2 NSWLR 321. Law Society of New South Wales v Jones (unreported - 29 July 1978). Law Society of New South Wales v Carvan (unreported - 14 May 1981 - BC8111397). Bolster v Law Society of New South Wales (unreported - 20 September 1982 BC8211696). Veghelyi v Law Society of New South Wales (Unreported - 8 February 1995 BC9505459). Law Society of New South Wales v Bannister (1983) 4 LPDR 24. Walter v Council of Queensland Law Society Inc (1988) 62 ALJR 153 at 157. Smith v New South Wales Bar Association (1992) 176 CLR 256 at 270). Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 441-442. Council of the Law Society of New South Wales v Clapin (No 2) [2011] NSWADT 246.
Category:	Principal judgment
Parties:	Council of the Law Society of NSW (Applicant) Marshall Sheehan (Respondent)
Representation:	Counsel Ms C Webster (Applicant) Mr Taylor 25 & 26 July 2011 (Respondent) Law Society of NSW (Applicant) M Sheehan (Respondent in person) (17 October 2011)
File Number(s):	102028