Council of the Law Society of NSW v Xu

[2009] NSWADT 67

Set aside by Appeal:

CITATION:	Council of the Law Society of NSW v Xu [2009] NSWADT 67
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Council of the Law Society of New South Wales RESPONDENT Chang Yuan Xu
FILE NUMBER:	072028
HEARING DATES:	4-8 August 2008
SUBMISSIONS CLOSED:	7 November 2008
DATE OF DECISION:	30 March 2009
BEFORE:	Greenwood J - Judicial Member; Riordan M - Judicial Member; Hayes E - Non-Judicial Member
CATCHWORDS:	Solicitor – Disciplinary application –professional misconduct, failure to witness signatures, retention of documents
LEGISLATION CITED:	Legal Profession Act 2004
CASES CITED:	Law Society of NSW v Beverly [2008] NSWADT 252 Re City Equitable Fire Insurance Co Limited (1925) CH407 Sheffield v Eden (1878) 10 ChD 291 Vallant Hooker & Partners v Proceedings Commissioner [2001] 2 NZLR 357
REPRESENTATION:	APPLICANT P Boyd, solicitor RESPONDENT K Traill, barrister A Kumar, solicitor
ORDERS:	1. That the Solicitor pay a fine in the sum of $3,000.00 2.That the Solicitor be publicly reprimanded 3.That the Solicitor pay the Law Society’s costs in all matters as agreed or assessed.

1 In August 2007 , the Council of the Law Society of New South Wales (“ the Law Society”) filed in the Tribunal an Application for Original Decision seeking disciplinary action under the S551 of the Legal Profession Act 2004 ( “ the Act”) be taken against the solicitor Chang Yuan Xu. The orders sought by the Law Society were :.

1.That the Solicitor pay a fine.

2.That the Solicitor be publicly reprimanded.

3.That the Solicitor pay the Society’s costs of the proceedings.

4.Such other and other orders as the Tribunal deems appropriate

2 The solicitor appeared and was represented. Both the Law Society and the Solicitor had come to an arrangement, after directions were made on an application, to hear the two complaints as separate matters on the grounds of procedural fairness and because different interpreters were required for different Chinese language dialects. Both sets of complaints were heard by the same Tribunal members and as separate matters.

3 The Law Society’s application was brought pursuant to Section 551 of the Act provides

Commencement of Proceedings:

1)Proceedings may be commenced in the Tribunal with respect to the whole or part of a complaint against an Australian legal practitioner by an application ( a disciplinary application) made by the Commissioner or a Council in accordance with this Chapter and containing one or more allegations of unsatisfactory professional conduct or professional misconduct .

2)An allegation in the disciplinary application must relate to the subject matter of the complaint but need not be an allegation made in the original complaint or have been the subject of separate or further investigation under this chapter

4 The Law Society brought its case for professional misconduct against the Solicitor on three grounds:

1. The Solicitor held out that he had witnessed the signature of Jian Juan Liu on the contract for the purchase of Unit 21 ,109-123 O’Riordan Street Mascot, when he had not.

2. The Solicitor knowingly provided a false S66W certificate dated 6th November 2003.

3. The Solicitor improperly imposed a lien .

5 The grounds upon which the Law Society relies arose out of two sets of complaints

in two matters conducted by the Solicitor.

6 Matter of Zhang and Liu ( First Complaint)

a)Ground 1 of the first complaint – The solicitor holding out that he had witnessed the signature of Jian Juan Liu on the contract of purchase when he had not witnessed the signature.

b)Ground 2 of the first complaint-. The Solicitor knowingly provided a false S66W certificate dated 6th November 2003.

7 Matter of Zhang and Liu

The facts of the matter are as follows:

a)On 15th October 2003, the Solicitor received instructions from Rong Zhang to act on his behalf in the purchase of a property at Unit 21, 109-123 O’Riordan Street, Mascot.

b)On 6th November 2003 the Solicitor forwarded a letter on behalf of the purchasers, Rong Zhang and Jian Juan Liu to Robert Wehbe and Partners as Solicitors for the Vendors which said, in part, “we refer to the abovementioned matter and enclose the contract signed by purchaser by way of exchange on the basis that your letters have a return contract signed by the Vendor to complete the exchange. We also enclose a Section 66W certificate and a copy of the Deposit Bond”.

c)On page 1 of the contract, enclosed with the letter to Robert Wehbe and Partners, appeared the signatures of two persons described as the purchasers. Appearing on the line beneath these signatures is the signature of the Solicitor, immediately below which appears the word “Witness”.

d)The Section 66W Certificate enclosed with the letter dated 6th November 2003 and signed by the Solicitor provided, in part:

‘CERTIFICATE

I CHANG YUAN ZU, of LAWSIDE LAWYERS

Certify as follows:

(a)…

(b)I am giving this certificate in accordance with S66W of the Conveyancing Act 1919 with reference to a contract for the sale of Property

21/109-123 O’Riordan Street Mascot NSW
from Ralang SAAB Pty Limited to Rong Zhang & Jian Juan Liu in order that there is no cooling off period in relation to that contract

(c)…

(d)I have explained to

(i)the effect of the contract for the purchase of that property;

(ii)the nature of this certificate;

(iii)the effect of giving this certificate to the vendor’.

8 The Solicitor received a contract and instructions from a Mr Zhang only in relation to a Contract of Sale.

9 The Solicitor had a conference with Mr Zhang and apparently went through the contract of sale with him in or about the 14th or 15th October 2003. At this meeting the Real Estate Agent, Mr Xue also attended. The contract was uplifted from the solicitors office by Mr Zhang .

10 Some time later, Mr Zhang returned to the Solicitor’s office and delivered the contract of sale to the Solicitor’s secretary, called “Icy”. The Solicitor gave evidence that he heard the client Mr Zhang speak to his secretary when the contract was returned and the client said to his secretary words to the effect of “ My wife also want to purchase the property and I want to put his name on it and he signed the contract .” The name put on it “,” yeah , she signed the contract”.

11 The Solicitor readily acknowledged that he had not added the name to the contract and he had not witnessed Ms Liu’s signature. In evidence given by the Solicitor, he acknowledged that the Section 66W certificate was signed by him without reading the document or filling in any names on the contract .

12 The Solicitor’s Secretary issued the contract and the Section 66W certificate to the Vendor’s Solicitors, Robert Wehbe and Partners. The Vendor’s Solicitors issued a letter of confirmation that contracts had exchanged on 11th November 2003.

13 The matter came to the notice of the Law Society on complaint by Ms Liu when she wished to rescind the contract and escape a loan agreement. Other evidence was tendered as to loan documentation and indentity documents which had been tampered with. Further evidence was also tendered by Jian Juan Liu that she was overseas from 5th October 2003 to 20th November 2003, the precise time during which the matter and documents were being prepared and processed and that as the second purchaser named in the contract and S66W certificate, she was not actually in Australia to sign the contract and the signature represented was not hers.

14 The Solicitor’s response to the Law Society case and evidence tendered by him principally went to his view that the he was the victim of a fraud and tampering with the contract, including the insertion of the female purchasers name, was by the Mr Zhang or some other person. The solicitor throughout the hearing of the matter conducted his case on the basis that he sought to prove he was not dishonest. In doing so, he failed to concede the Law Society’s grounds, that once he heard the client’s conversation with his secretary, which he deposed to in evidence and had known all along , that there was a obligation on him firstly to correct the contract , so that he was not representing that he had witnessed two purchasers signatures and secondly to check documents and correspondence before they left his office, thirdly that he had a professional obligation not to sign a S66W certificate representing he had given legal advice to the two purchasers , when he had only advised the male purchaser.

This preoccupation by the Solicitor in seeking to show he did not tamper with the documents and was not therefore dishonest, did not assist him in the presentation of defending the case brought before the Tribunal .

15 The Tribunal was made aware and the Law Society was clear that its investigation of the matter had indicated to the Tribunal and the Solicitor, that the solicitor himself was not involved in any fraud or act of deliberate dishonesty involving the actual tampering with the loan documents or the actual adding of the female purchaser’s name to the contract. Therefore his dishonesty was not a matter for the Tribunal to consider .

16 The Law Society contended that the S66W certificate was false as the Solicitor, at the time of the exchange, had not met the female purchaser, had not provided that purchaser with legal advice and had not witnessed her signature. Nor did he have instructions to act for her. It is the Law Society’s case, that once the solicitor was on notice that a new purchaser had arisen , the solicitor did not take the prudent steps to ensure the contract and the S66 W certificate, as legal documents, were in truth a correct and legal representation of what they purported to be .

17 It was not until and during cross examination of the Solicitor on the 6th August 2008 that he gave to the effect as follows:

“I was careless. I was careless. I did not read it. I did not check. I sign. It’s my mistake.”
Later under cross-examination, the Solicitor said:

“Yes, I signed it. ….. It’s wrong. It’s my mistake. I should have got instructions from the client so it’s clear. I’m very sorry.”

When the Solicitor was asked:

“But you never explained it to Ms Liu, did you?”

The Solicitor answered:

“No”.

18 On this basis, the Law Society submitted that the Solicitor did knowingly sign a S66W certificate which was incorrect.

19 On the first and second grounds in the matter, the Law Society raises this complaint of Professional Misconduct on the basis of wilful neglect or default, citing the decision in “Re City Equitable Fire Insurance Co Limited (1925) CH407” where the phrase wilful neglect or default’ was held to require proof that the relevant person ‘knows he is committing or intends to commit a breach of his duty, or is recklessly careless in the sense of not caring whether his act or omission is or is not a breach of duty’. The Society submits that the Solicitor was clearly reckless as he should have applied his mind as to what he was certifying before he signed the S66W certificate. The Society further states that the Solicitor knowingly did so without ever having received instructions from the second purchaser , Jian Juan Liu. The Law Society submits that it was a breach of the Solicitor’s duty that he did not truthfully certify that as far as the second purchaser was concerned, she would have no cooling-off period pursuant to the contract which he was alleging when exchanging contracts as per his letter dated 6th November 2003 to the Vendor’s Solicitor.

20 The Law Society also relied on the recent case of Council of the Law Society of New South Wales vs Beverly (208) NSWADT252, where Haylen J. and Others concluded, at paragraph 17 –

“17 Having considered all the material, the Tribunal is satisfied that Mr Beverly’s conduct constitutes professional misconduct. Our attention was drawn to earlier Decisions of the Tribunal and its predecessors where it had been determined that the making of false statements, and in particular witnessing signatures in the absence of the signatories where the attestation stated that the signatures were witnessed in the presence of the solicitor witness, have been held to be professional misconduct. The solicitor’s role in this process is highly significant, with parties and Courts relying upon such attestations. While there was an attempt to categorise Mr Beverly’s action as a result of doing a good client a favour, it must be stated that his action strikes at the very core of the role of a solicitor and his conduct would be regarded within the profession as disgraceful and dishonourable.”

(Beverly’s case )

21 The Tribunal finds that the conduct of Solicitor in the carriage of this matter , which

is clearly a case of failing to witness signatures and then the consequent signing of the S66W certificate which holds out to the vendor recipient a certain status of the purchasers and upon which the vendor is entitled to rely, is professional misconduct. In this case the solicitor does not attempt to explain his behaviour by saying it was an attempt to do a client a favour, but that he failed to rectify a mistake of which he had knowledge and the significance of which he does not comprehend, until it is conceded in cross examination in these proceedings. This Tribunal reinforces the position in Beverly’s case that a solicitors role in witnessing important documents and documents which carry and are intended to have legal effect is a process which requires the Solicitor as witness, to exercise due care, accuracy and responsibility to ensure:

1) That the solicitor ensures he or she knows the identity of the signatory

2) That the solicitor is asked by the signatory to witness

3) That the solicitor is present and sees the person actually sign

4) That the solicitor attends to any additional legal requirement which is consequent upon the witnessing .

Witnessing is an important legal function which cannot be regarded as a mere matter of convenience or perfunctory action. It is an action upon which others and the courts seek to rely.

22 In this matter, the Solicitor did not appear to fully comprehend the nature of his behaviour, having focused on his own view which he perceived to be an issue as to dishonesty.

In considering the Beverly case and the need to protect confidence in the profession, the Tribunal is satisfied that an appropriate fine amounting to the sum of $2,500.00, should be imposed in this matter . In this case, the Solicitor was in fact on notice that a female purchaser had been added to the contract of sale and she had not instructed him to act for her.

23 The matter of Angie Ning ( Second Complaint)

Ground 3. The Solicitor improperly imposed a lien.

By an Application for Original Decision filed on 20 August 2007, The Council of the Law Society of New South Wales (the Law Society) sought the following Orders:

1.That the Solicitor pay a fine.

2. That the Solicitor be publicly reprimanded.

3.That the Solicitor pay the Society’s costs of the proceedings.

4.Such other and other orders as the Tribunal deems appropriate.

24 The Law Society in its application , alleged that while practising as a Solicitor, the Respondent was guilty of professional misconduct, namely that the Solicitor improperly imposed a lien.

25 The facts relating to this complaint, and which are accepted by both parties are :

“1.The Solicitor received instructions from Jing (Angie) Ning (“Ms Ning”) at Mulawa Correctional Centre, Silverwater and appeared on her behalf at the Burwood Local Court on 11 May 2004.

2.On 24 May 2004 Ms Ning’s matter again came before the Burwood Local Court. An application for bail made on her behalf was unsuccessful.

3.In June 2004 Ms Ning terminated the Solicitor’s instructions and instructed Greenfield Lawyers (“Greenfield”) to act on her behalf.

4.On 8 June 2004 Greenfield sent a letter to the solicitor with an authority from Ms Ning requesting that Ms Ning’s file be transferred to them.

5.On 8 June 2004 the solicitor sent a letter to Greenfield which said in part:-

“We … are happy to release the file upon payment of our costs incurred for work done. Upon such time, we shall exercise a lien over the file.”

6.On 9 June 2004 Greenfield sent a letter to the solicitor which said in part:-

“We confirm that we now represent Ms Ning in the above matter.

We understand that you are exercising a lien over Ms Ning’s documents as she has outstanding legal costs owed to you. However, we would like (sic) highlight that you can only exercise a lien over documents prepared for the purposes of your representation of Ms Ning. We also refer you to Section 9A(1)(d) of the Passport Act 1938 (Cth) which states that it is an offence to keep in possession another’s passport.

Accordingly, you are not entitled to retain Ms Ning’s passport and we hereby request its immediate release.”

7As at 9 June 2004 the Solicitor continued to retain Ms Ning’s passport and Ms Ning did not exercise her right to bail.

8On 15 June 2004 the Solicitor sent a letter to Greenfield which said in part:-

“We advise that in the current circumstances the passport was or is part of the file in the subject proceedings, in particular, it will be used in bail applications at the court.

We refuse your request of its immediate release, unless your office provides an undertaking to this office in respect of our costs.

In order to settle the matter as soon as possible, we agree to reduce our costs to $1,600 inclusive of GST.”

26 On 18 June 2004 Greenfield sent a letter to the Solicitor which said in part:-

“Herein enclosed is a cheque to the value of $1,600 for the above matter. Accordingly, please send us Ms Ning’s passport and other relevant documents.”

27 On 23 June 2004 bail was granted by the Burwood Local Court to Ms Ning, provided she surrendered her passport.

28 On or about 24 June 2004 the Solicitor released Ms Ning’s passport.

29 The Solicitor essentially set out his case in response to the Law Society’s third ground of its complaint as follows :

1.The Respondent denies that he improperly imposed a lien. Alternatively, Greenfield Lawyers merely asserted that the firm was instructed by Ms Ning and no evidence such as a written authority as required by Rule 29.2 of the Solicitors’ Rules was ever produced to the Respondent. In those circumstances the release of the passport and any other documents would be improper without this express authority required by the Rules. The Respondent was within his normal right pursuant to the Rule to await production of an appropriate authority whether or not lien was claimed at the time. Greenfield Lawyers failed at any time to direct the Respondent to produce passport or any other document directly to the Burwood Local Court registry in absence of the relevant authority.

2.The Respondent denies that the firm improperly imposed a lien for unpaid fees by retaining the papers. The lien was exercised on the file. Up to 07 June 2004 the former client was satisfied with the services rendered and wrote to the applicant (sic) to thank him for the services rendered.

3.The Respondent previously instructed counsel to apply for bail on behalf of Ms Ning. Ms Ning was denied bail when represented by Counsel for serious offences. The Respondent was never made aware that bail had been granted to the Client by Burwood Local Court on 9 June 2004 (as stated in paragraph 7 of the Society’s particulars) and that Ms Ning was required to produce her passport to the Court for her release from custody as per the bail granted. At no time did Ms Ning’s new solicitors bring this to the attention of the Respondent.

4.It is unclear from the Society’s particulars what the improper lien is. The Respondent exercised a lien over all of the file which was proper in the circumstances.

5. A lien in effect is security for payment. No particular item was specifically held to enforce it as security for costs but was held with all other papers ready to be released to the complainant’s new solicitors; and in respect of the passport itself, the Respondent in the correspondence on 15 June 2004 clearly indicated that “circumstances the passport was or is part of the file”. Any attempt to assert a lien over the passport would be ineffectual both legally and in practical terms. There can not be an attempt to do a legally ineffectual act. It is unclear what the improper lien is and the charge is misconceived upon consideration of all the facts and circumstances.

6. The practitioner from Greenfield Lawyers failed to provide the Respondent with a written authority as to the instructions from Ms Ning as to the law firm’s authority to take over the files as required by the Rules (sic) 29.2 of the Solicitors’ Rules. The Respondent was within his rights to hold documents pending clear written instruction that Greenfield Lawyers had been instructed.

7. Greenfield Lawyers simply asserted that the firm was instructed by the former client. No written authority as required by Rule 29.2 of the Solicitors’ Rules was ever produced to the Respondent for such assertion including the release of passport.

8.The Respondent was within his right pursuant to the Rule to await production of appropriate authority whether or not lien was claimed in the period. Greenfield Lawyers failed at any time to direct the Respondent to produce passport or any other document directly to the Burwood Local Court registry (the Respondent’s office being 15 – 20 metres from the Court Registry) in the absence of the relevant authority.”

30 The Tribunal heard evidence from the Complainant, Jing Ning ( the Solicitor’s former client) on 7 August 2008. She gave evidence with assistance from a Mandarin speaking interpreter. She referred to her Affidavit sworn 16 February 2008 and filed in these proceedings (Exhibit 5). She identified an error in 5 thereof and stated that she was granted bail by the Burwood Local Court on 24 June 2004. She further stated that her letter to the Society dated 4 April 2006 (Exhibit 9) also contained a typographical error and that the date “24 June 2005”should read “24 June 2004”.

31 In cross-examination, Ms Ning stated that her new Solicitor, Ms Phee, helped her to prepare her complaint to the Legal Services Commissioner, although she signed it. She said that when she made her complaint she had access to her Court file, although the dates referred to in the complaint were “from her memory”. She agreed that on 23 June 2004 her new solicitor and a barrister made an application for bail and bail was granted on conditions that included that she surrender her passport.

32 Ms Ning was cross-examined at length regarding her understanding of the process of obtaining bail and the reason why she was not released from Mulawa Correctional Centre until 24 June 2004. Her evidence, and more importantly the Tribunal’s understanding of it, was complicated by factors including translation issues and the fact that questions that were phrased in the negative were frequently put to her. The need to clarify her answers and to continually instruct the Interpreter to translate and not to enter into conversation with the witness, made extended the hearing time. Ms Ning agreed that while she was granted bail on 23 June 2004 she was not actually released from Mulawa until 24 June 2004 because her father, Yah Ning could deposit the sum of $25,000 as security. She stated that she did not know why bail was refused on 24 May 2004. The following exchange occurred:

“Q.And on 6 June again Mr Xu came out to see you in Mulawa?

A.I can’t remember exactly the date when he came to Mulawa to meet me, but I know the reason he meet me for that time is he knew I change another solicitor. Then he came to see me to let me know I shouldn’t do that… Yeah. I can’t remember exactly the date when Mr Xu came to see me, but I know the reason he came to see me is because he knew I change another solicitor instead of him…”

33 Ms Ning stated that she wrote a letter dated 7 June 2004, which she thought she gave to her new solicitor to give to the Solicitor. She was shown that letter (Exhibit 3 at page 30) and read this in Mandarin. The interpreter then translated this into English as follows:

“Thank you for your help for this period of time, but I afraid I have to change my solicitor because of all kinds of reasons to ensure my case will be resolved.

I wish you can transfer all the documents related to my case to my current solicitor Monica Hoang-Sa Tran.

Thank you.

(Signature of Jing Ning)”

34 Ms Ning also stated that she only had the receipt to show the date that they gave money to the Respondent in order to get her passport back and that she had no direct knowledge of the date on which her solicitors received it. She said that she was shown this document by her solicitor and agreed that this said - “On this day we received a passport” and that this was on the same day as the receipt of the money.

35 Ms Ning stated that she made a complaint to the Legal Services Commissioner on 10 August 2005 (see: Exhibit 3, pages 5 – 8, at page 8). This was written by her solicitor upon her instructions, in which she stated (in part):

“… I had to spend extra time in gaol....At the end my friend paid him $1600.00 to send my passport back so I could get out of gaol…”

36 In cross examination, and after being shown the file from Burwood Local Court, and the terms of the bail Ms Ning agreed that her new solicitors could not make an application for bail on 9 June 2004 because they did not have her passport. The Tribunal therefore questioned Ms Ning as to her understanding of the process of getting bail as at 9 June 2004. She replied:

“From my understanding, I need to have a person who can bail me out and I also need a sum of security and also I’m required, if I am granted with bail, I have to comply with all the conditions. That’s my understanding…

What I’m understanding, during that time my father has agreed to bail me out and he also agreed to pay the security and I’m sure, if I can be granted with the bail, I’m going to comply with all the conditions required…”

37 Ms Ning advised she had no knowledge of the police brief procedure and eventually conceded that she could not be released until her father deposited $25,000 and that he did not agree to do so until 24 June 2004 and that this was why she spent an extra night in custody. She was shown an Application in relation to Bail that was made by letter by her new Solicitors, Greenfield Lawyers, dated 21 June 2004 and stamped by Burwood Court as being listed at 10am on 23 June 2004, which indicated that they were making an application because they had now received “a partial brief of evidence”.

38 Ms Ning gave evidence that she had received the return of her costs paid to the Solicitor in the sum of $1,600, which she had paid 21 June 2004, although she did not receive this in 2004.

39 Ms Ning admitted that she gave the Respondent her passport because he told her that he needed it to do the bail application and that she did not give it to him for any other reason.

Respondent Solicitor’s Evidence

40 The Solicitor gave evidence and a Mandarin Speaking Interpreter was also affirmed to assist him. The Respondent advised the Tribunal through his representative that he preferred to give evidence without the interpreter and he proceeded to do so. The need to clarify questions and answers also extended the hearing time.

41 The Solicitor stated that he attended Burwood Local Court on 24 May 2004 and instructed Mr Gwozdecky of Counsel to make a Bail Application on behalf of Ms Ning before Magistrate Cloran. Bail was refused because the Prosecution opposed it and the police brief had not been served and the Magistrate ordered that this be served by 9 June 2004. The defendant in those proceedings Ms Ning, was detained on charges for threats with menace and unlawful detainment to procure money .

42 The Respondent stated that on 8 June 2004 he received a letter from Greenfield Solicitors, saying that they were not instructed in relation to the matter. He supplied them with the police documents that he had received, but he had not yet received the full brief of evidence. He sent these documents by fax (see: page 46 of Annexure 1). However, when he acted for Ms Ning, she did not have anyone acceptable to provide surety. The following exchange occurred:

A.Yeah. My recollection is between 18 June and 21 June, within the three days, because the female solicitor got a matter in Burwood Local Court. So she finish her case at lunchtime, came to my office and gave me letter and personal cheque, so I release the file straight away. I don’t remember exact date.

Q.So recollection is she produced the letter of 18 June and a cheque and hand delivered it to you and you released the file with the passport; is that correct?

A.Yes.

…

Q.And one final question, at the time you held onto your file containing the passport, did you hold a honest belief that you had a right to impose a lien over your file until the fees had been paid?

A.Could you say that again.

Q.Did you hold an honest belief that you had a right to impose a solicitor’s lien over your file until your fees had been paid?

A.Yes.”

43 In response to a question from the Tribunal, the Solicitor gave evidence that he could not remember whether he still held that belief today. His non-response caused the Tribunal significant concern and the Interpreter was directed to translate the question for the Solicitor and the Solicitor was further directed to respond in Mandarin to the Interpreter. Eventually, the Solicitor stated that, at the time, he believed that the passport was a part of the documents and that he still held that view today.

44 In response to specific questioning by his Counsel, the Solicitor stated that if Ms Ning had been granted bail on a condition that she surrender her passport while he had possession of it, he would have presented it to the Court and that he would have presented it to the Commonwealth if it had requested it.

45 In cross-examination, the Solicitor was shown his letter to the Society dated 26 July 2006 (see: Page 50 Exhibit 3) and in response he stated:

“I recall that a cheque in the sum of $1600 was paid to this office and the passport was handed over to the Solicitor from Greenfield Lawyers on the date of the bail application.”

46 The Solicitor then recanted and stated that this was wrong and that his recollection is wrong and he did not know the date of the later bail application. He said that when he wrote that letter to the Society, he did not have access to the Court Record and that he wrote the letter from his recollection some two years after the event and that his recollection is wrong because he did not know the date of the second bail application. In response to questions from the Tribunal, the Solicitor said:

“I didn’t check those documents and I should… I tell you the truth. What I say I did not check. I just receive the letter, make the reply… I don’t know when the original document sent to the Law Society, but anyway I’ve got a company (copy).”

47 Also, in response to the Tribunal’s questions, the Solicitor stated that he did not look at any accounting records or receipt books before he wrote that letter to the Society. He also stated that he was given the passport because he asked for it as he had to make the bail application and that he had advised Ms Ning, that in order to make the bail application, he needed her passport and that she gave it to him care of a friend for that purpose. She did not tell him that he could hold onto her passport for safekeeping and it was his understanding, during the period that she instructed him as her solicitor, that he was holding her passport for the sole purpose of making a bail application to the Court.

48 The Tribunal questioned the Solicitor about his failure to return the passport when requested, as follows:

“Q.Okay. And you’ve also given evidence that you regarded that document, the passport, as part of your file.

A.Yes.

Q.When you received the authority from Ms Ning asking you to hand over all of the relevant papers from her file to her new solicitor, why did not hand over the passport because your evidence is that you regarded it as part of the file?

A.I just faxed to them the fact sheets, give the facts. I keep the other documents.

Q.But your evidence to the Tribunal and your letters to the Law Society and in your affidavits has been that you regarded Ms Ning’s passport as being a part of your file?

A.Yeah, part of my file, yes.

Q.So then if it’s part of your file and you hold it for a specific purpose and you are directed to hand over documents from your file, why did you not hand it over when you were asked to do so?

A...(not transcribable).

Q.(to Interpreter) Would you please translate that, Madam Translator?

A.Interpreter: I’m not sure. Could you please repeat the question again?

…

Q.Your evidence is that - … you regarded Ms Ning’s passport as being a part of your file?

A.Yes. Yes.

Q.Okay. And you received an authority from Ms Ning asking you to release your file and the relevant documents in your file to her new solicitors?

A.Yes.

Q.So why did you not release the passport to Ms Ning’s solicitors as part of that file?

A.Interpreter: “There were also many other documents.

Q.Right. Your evidence, your evidence at all times, in your letters, in your affidavits and what you’ve said to the Tribunal, is that you regarded her passport as being a part of your file?

A.Yes.

Q.Relating to her Court matter.

A.Yes.

Q.You were directed, authorised and directed by Ms Ning to release those documents to her new solicitors, weren’t you?

A.Yes.

Q.And you didn’t do it, did you?

A.No.

Q.No. Why did you not do it?

A.I just didn’t .. (not transcribable) .. get paid.”

49 The Society submitted that at common law a Solicitor has a “general” or “retaining” lien, with respect to property of his client’s received by him in the course of his professional employment. It permits the solicitor to withhold possession of the documents or other papers from the client or former client and that the relevant qualification is that the property must be that of the client: Sheffield v Eden (1878) 10 ChD 291.

50 The Society submitted that an Australian passport is the property of the Commonwealth: Section 6A of the Passports Act 1938 (Cth). It referred to the decision of the High Court of New Zealand in Vallant Hooker & Partners v Proceedings Commissioner [2001] 2 NZLR 357, which the position of a solicitor holding a client’s passport was considered in the context of a discrimination claim. The Court considered retention of a client’s passport by the firm under a solicitor’s lien to secure payment of fees due. In that matter, the work done by the firm for the client required the firm to hold the client’s passport, which was stated to be the property of the Government of India. The Court referred to section 33 of the Passports Act 1992 (NZ) in relation to New Zealand passports. That section provides:

“(1)All New Zealand travel documents issued by or on behalf of the Government of New Zealand, whether before or after the commencement of this Act, shall be the property of the Government of New Zealand.

(2) The right in a New Zealand travel document conferred on the Government of New Zealand by sub-section (1) of the section shall not be defeated or affected by any security, pledge, deposit or encumbrance given made or accepted in respect of the New Zealand travel document by the holder or any other person.

(3)No holder or other person shall give, make, or accept as a security, pledge or deposit, or otherwise encumber a New Zealand travel document issued by or on behalf of the Government of New Zealand, and any term of an agreement which would otherwise have that effect shall be void.”

51 The Society stated that at [28] the Court stated (in obiter) that clearly Section 33 of the Passports Act (NZ) prevented a solicitor from claiming a lien over a New Zealand passport, although the Act did not apply to non-New Zealand passports. The court referred to an endorsement on the client’s Indian passport to the effect that the passport was the property of the Government of India. It was doubted that a firm could exercise a lien over any passport, as the law would not grant a lien over an asset not the property of the client: see [29] – [31].

52 It submitted that Section 6A of the Passports Act 1938 (and section 54 of the present Australian Passports Act 2005 (Cth)) similarly provide that an Australian passport remains always the property of the Commonwealth (see: Exhibit 3, part Annexure M, p44). The 1938 Act was in force at the time of the events in the current complaint.

53 Section 9A(1)(d) of the Passports Act 1938 (Exhibit 3, part Annexure “M”, p45) provides that a person who has in his or her possession or under his or her control an Australian Passport that was not issued to him or her is guilty of an offence. However, this does not apply if the person has a reasonable excuse (Section 9A(2)).

54 The Tribunal accepts the Law Society’s argument as to the status of the passport once Ms Ning sought to uplift it from her file as follows:

a) the Solicitor by his own evidence accepts that he was given Ms Ning’s passport for the purpose of the bail application made on 24 May 2004 (see: Transcript 7 August 2008 at page 56). This evidence makes it clear that the only purpose for him holding the passport was to make the bail application and this is further corroberated by, Ms Ning’s evidence that this was the only reason why she gave her passport to the Respondent (See: Transcript 7 August 2008 at page 40).

b)the Solicitor could have a reasonable excuse for holding the passport for the purposes of making the bail application but that there was no longer a reasonable excuse once his instructions were withdrawn by Ms Ning, as he would no longer be making an application for bail on her behalf. The passport was given to the solicitor for one specific purpose and not as security for costs, not withstanding the Solicitor regarded the passport as being part of Ms Ning’s file.The Solicitor confirmed his view in various correspondence that he was exercising a lien, when seeking to be paid.

55 Additional evidence adduced by the Law Society indicates the Solicitor was contradictory in his representations in seeking to defend and change his stance on the status of the passport during the Law Society’s investigations. Examples of this are :

a) By letter dated 28 June 2007 (Exhibit 3, Annexure Y, pp 70 – 71) the solicitor says :

……………….

“5. … constituted the papers of the client in her matter. The passport was not

specifically held to enforce security for costs but was held with all other papers ready to be released to the complainant’s new solicitors, the correspondence of 15 June 2004 clearly indicating that “circumstances the passport was or is part of the file”.

The reference is to the client’s file. There was no “attempt made to assert a lien over the complainant’s passport” as alleged by the Society. …”

Further in paragraph 7 of that letter, the Solicitor states that it was not expressly communicated to him “that the passport was required for the purposes of imminent bail application.”

b) In the Solicitors affidavit sworn in December 2007 (Exhibit L), he stated that he never had an intention that a lien would apply to the client’s passport, but said it was not practical to release the passport to the client at that time. He also said in paragraph 12 of that affidavit that any lien was purely over his file. However, those

statements were contradicted in his letter dated 15 June 2004, in which he expressly refused to release the passport, despite his attention having been drawn to Section 9A(1)(d) of the Passports Act in the fax dated 9 June 2004 to which he was replying (see: Exhibit L, Annexure “C” & part Annexure “M” at page 48).

c) The Solicitors letter dated 9th June 2004, in response to the letter from Greenfield Lawyers dated 9 June 2004, states he did not release the passport, whilst maintaining the lien which he contended in respect of the balance of the file.

d) The Solicitor provided evidence in cross examination that he released some material from his file by facsimile to Greenfield Lawyers, but not the passport.

56 The Law Society submits that the Respondent’s conduct constitutes professional misconduct; either under Section 497(1)(a) of the Legal Profession Act 2004, as involving a substantial of consistent failure to reach or maintain a reasonable standard of competence and diligence; alternatively at common law, that is, conduct which would reasonably be regarded as disgraceful or dishonourable by professional colleagues of good repute and competency (the test described in Allinson v General Council of Medical Education and Registration [1894] 1 KB 750).

Respondent’s Submissions

57 The Respondent filed written Submissions on 7 November 2008. These were based on reliance on :

Solicitors rules 29 which provide:

“29.1 Where a practitioner’s retainer is terminated before the completion of the client’s business to which it relates, and the client instructs another practitioner to take over the conduct of the client’s business, the following rules shall apply, subject to any orders which may be made by the Supreme Court in respect of the delivery of documents pursuant to Section 728 of the Legal Profession Act 2004.

…

29.3 If the client has terminated the first practitioner’s retainer, the first practitioner may retain possession of the documents until the practitioner’s costs are paid, or their payment to the practitioner is satisfactorily secured.

29.4 If the first practitioner has terminated the retainer and the client’s documents are essential to the defence or prosecution of proceedings which are continuing before a Court, the practitioner must surrender possession of the documents to the client, upon the terms prescribed in Rule 8.4.2 or to the second practitioner, if so directed by the client, and provided that the second practitioner -

29.4.1 holds the documents subject to the first practitioner’s lien, if that is practicable, and ensures the first practitioner’s costs are satisfactorily secured, or

29.4.2 enters into an agreement with the client and the first practitioner to procure payment of the first practitioner’s costs upon completion of the relevant proceedings.

29.5 A practitioner who receives a client’s documents from another practitioner pursuant to an agreement between the client and both practitioners, providing that the practitioner receiving the documents will pay the first practitioner’s costs from money recovered on the client’s behalf in respect of the business or proceedings to which the documents relate, must do all things which are reasonably practicable on the practitioner’s part to ensure compliance with the agreement.”

b) That the solicitor initially had a reasonable excuse to hold the passport for the purpose of the bail application on 24th May 2004 and thereafter. The solicitor then considered the passport became part of this file. The solicitor did not obtain a lien over the passport as opposed to the Commonwealth.

c)That Section 9A of the Passports Act does not apply. A solicitor’s right to retain documents on behalf of the client cannot ever constitute a (sic) improper use as he did not have it in his possession for anything other than providing it to a Court for a bail undertaking. Therefore the solicitor would have a reasonable excuse pursuant to Section 9A(2) in having a passport in his possession for the use of a bail application. Once a retainer is revoked if a passport becomes part of the files then a solicitor has a reasonable excuse for having the passport in his possession.”

d)The Solicitor did not ay any time claim title over the Commonwealth (the passport always being the property of the Commonwealth).

e)That Greenfield Lawyers did not initially request the passport for an imminent bail application, because Ms Ning’s matter was only listed for mention only on the 9th June, 2004, there was no bail application on that date and there could not have been because the Police brief was not available. Further that Ms Ning had claimed she was in custody for longer, based on the absence of her passport :
“ That is incorrect, the Law Society based their whole complaint upon her allegation without checking the Court file. The initial complaint was premised on an erroneous assumption of facts.”

f)The Tribunal heard evidence from the solicitor that he held a genuine belief that he was entitled to regard the passport as part of this file.

g)There is no professional misconduct or unsatisfactory conduct by simply holding the passport and that the allegation that the complaint in ground 3 of holding a lien over the passport is not capable of being made out.

h)That the Solicitor’s conduct did not cause any detriment to Ms Ning and did not satisfy the definition of “substantial” for the purposes of the Allinson Test. Ms Ning did not spend one day in custody due to his actions and his conduct was not “a consistent failure”. The Solicitor held a reasonable belief that he was entitled to maintain a lien over the file until he was paid pursuant to the Solicitor’s Rules, a belief that he still holds. In the alternative, he submits that if the Tribunal is satisfied that he did in fact hold an improper lien over the passport, then it is open to the Tribunal to find that he did at all times hold an honest and reasonable belief he was entitled to do so and he acted under a mistake of law as there is no direct authority on the issue of whether or not a solicitor can retain a lien over a passport in Australia and the solicitor’s mistake at law is understandable.

i)That the Law Society’s complaint should be dismissed.

58 The evidence before the Tribunal and accepted is, the Solicitor knew that Ms Ning had made an unsuccessful bail application on 24 May 2004 and that the matter was adjourned to 9 June 2004. He was also aware that the passport had been provided to him for the purpose of making that earlier bail application. The Solicitor knew that his instructions had been terminated and there was no reason for him to suppose that the new solicitors would not similarly require the passport, which they expressly requested on 9 June 2004, for the purpose of the further bail application to be made by Ms Ning. The other significant evidence before the Tribunal is that Ms Ning’s incarceration was extended, because of procedural matters such as the Police brief not being ready and the condition that Mr Ning’s father had also delayed in he payment of the surety, namely $25,000.00 and those matters were not due to the Solicitor’s behaviour.

59 The Tribunal is satisfied on the evidence that Ms Ning caused her passport to be provided to the Respondent for the sole purpose of his making an application for bail on her behalf and that she arranged for the passport to be provided to the Solicitor because he told her that he needed it in order to make the application and that this was the sole purpose for which he was authorised by Ms Ning to hold her passport. Ms Ning did not provide her passport to the Solicitor as security for her legal costs or as part of any terms of engagement agreed to between the solicitor and client to extend the condition of holding it for the client. Further, the passport was not brought into existence by any legal work by the Solicitor.

60 While the Tribunal is satisfied that the Solicitor had a reasonable excuse (for the purposes of Section 9A(2) of the Passports Act) for holding Ms Ning’s passport until 8 June 2004, the Commonwealth legislation dictates that a passport remains the property of the Commonwealth. Despite the evidence placed before the Tribunal as to the contradictory views held by the Solicitor as to the status of the passport being a specific document charged or as an unspecific document which was part of the overall file, in cross examination and as per his submissions, the Solicitor has conceded that a passport document cannot be the subject of a lien, as opposed to the Commonwealth’s interest or title in the document. In the current matter, we are not required to make any determination regarding that particular submission as Respondent’s evidence supports a finding that he exercised a lien over the file and his evidence is that the passport formed a part of his file and indeed that he felt that he had a reasonable excuse to hold the passport after 8 June 2004, because he “… then considered that the passport became a part of this file.”

61 The Tribunal finds that the passport which the Solicitor was holding after it was requested by the client for a bail application , regardless 6A and 9A of the Passports Act, and with reference to the contemporaneous correspondence issued by the Solicitor to Greenfield Lawyers, was by performance and his actions, clearly an assertion of a lien over the passport .

62 The Tribunal is satisfied to the requisite standard that the Solicitor improperly exercised a lien over Ms Ning’s passport after he received the fax letter from Greenfield Lawyers dated 8 June 2004. That letter advised him that his instructions had been terminated and it served him with his former client’s authority that requested and directed him to release her file to Greenfield Lawyers.

63 The Respondent’s immediate response was to expressly and in writing assert a lien over his file pending the payment of costs which he asserted were incurred for work done on behalf of Ms Ning. He did not, as he stated in his oral evidence, inform Greenfield Lawyers that he was prepared to produce the passport to the Court if it granted Ms Ning bail or to produce it to the Commonwealth (if it requested it) Greenfields Lawyers by letter dated 9 June 2004, identified the defective nature of the lien claimed over a passport as a document not created by the Solicitor:

“We understand that you are exercising a lien over Ms Ning’s documents as she has outstanding legal costs owed to you. However, we would like (sic) highlight that you can only exercise a lien over documents prepared for the purposes of your representation of Ms Ning. We also refer you to Section 9A(1)(d) of the Passport Act 1938 (Cth) which states that it is an offence to keep in possession another’s passport.

Accordingly, you are not entitled to retain Ms Ning’s passport and we hereby request its immediate release.”

64 The Solicitor nevertheless continued his conduct and did not release the passport. There is no evidence before the Tribunal that he considered the meaning and operation of Section 9A of the Passports Act at that time. If he did, he failed to mention it in his response to Greenfield Lawyers dated 15 June 2004, in which he stated in part:

“We advise that in the current circumstances the passport was or is part of the file in the subject proceedings, in particular, it will be used in bail applications at the court.

We refuse your request of its immediate release, unless your office provides an undertaking to this office in respect of our costs.

In order to settle the matter as soon as possible, we agree to reduce our costs to $1,600 inclusive of GST.”

65 The evidence indicates that the Respondent did not release the passport to Greenfield Lawyers until 21 June 2004, some 13 clear days after Ms Ning withdrew his instructions and further the Tribunal does not accept the contention that the passport being located in the clients file, by implication makes it part of the file over which the lien rights attach , like some kind of legal virus .

66 The Tribunal rejects the Solicitors submission that Section 9A of the Passports Act does not apply and that - “A solicitor’s right to retain documents on behalf of the client cannot ever constitute a (sic) improper use as he did not have it in his possession for anything other than providing it to a Court for a bail undertaking.” We further reject his argument that he had a reasonable excuse (under Section 9A(2)) “… in holding the passport for the use of a bail application” and/or that “Once a retainer is revoked if a passport becomes part of the files then a solicitor has a reasonable excuse for having the passport in his possession.” The fact remains that the Respondent’s instructions were withdrawn on 8 June 2004. Therefore, as at 8 June 2004, he was aware and ought reasonably to have been aware, that he was not instructed to make any further bail application on behalf of Ms Ning. Consequently, he did not have a “reasonable excuse” for holding the passport after 8 June 2004 for that purpose and we find accordingly.

67 In our view, it is irrelevant that the Respondent now asserts more than four (4) years after the event, that he would have produced the passport to the Court if Ms Ning had been granted bail. The fact is that he did not communicate this to Greenfield Lawyers at any time prior to 21 June 2004 and he did not release the passport until his claim for costs was satisfied.

68 The Solicitor submits that as the Court’s record indicates that Ms Ning’s matter was listed for mention only on 9 June 2004 and that no bail application “was imminent” and that he cannot be criticised for not providing the passport the next day (9 June 2004) “as he did not know if there was an imminent bail application.” The Tribunal disagrees and rejects that submission. For the reasons discussed previously in this decision, the Respondent was not entitled to hold the passport after 8 June 2004 and he is rightly to be castigated for claiming a lien over it and for failing to produce the passport to Greenfield Lawyers until 21 June 2004.

69 The Respondent argued that he did not attempt to hinder the new solicitors in any way and that “at no time did his actions cause any detriment to Ms Ning despite what she thought and her complaint to the Legal Services Commissioner is based on a misapprehension of the facts.” The evidence before the Tribunal indicates that Ms Ning was confused regarding certain matters, including whether or not a bail application was to be made on her behalf on 9 June 2004 and, by extension, whether the Respondent’s failure to release her passport to Greenfield Lawyers in accordance with her authority and direction, had any detrimental effect on her release from custody. Ms Ning was aware that the surety money by her father also had to be paid as part of the conditions of release and the Tribunal was not provided with any evidence about that part of the compliance, although judicial notice can be taken that the arrangement of the sum of $25,000.00 would in the ordinary course take some time to organise. In addition the Tribunal has evidence that Greenfield Lawyers wrote to Burwood Local Court on 21 June 2004 (the date on which they obtained the passport from the Respondent) and that they requested that Ms Ning’s matter be listed for review of bail as they had received a partial brief of evidence. This would seem to indicate that the Police Brief was not complete as at 21st June 2004 , and by implication it was not complete as at 9 June 2004 and that is a matter which also would have affected the success or otherwise of a bail application .We agree with the Respondent’s submission in relation to this issue that there is no detrimental effect of the Solicitors actions for the client .

70 The Solicitor’s submissions are contradictory in that :

a) he submits that he held a genuine belief that he was entitled to regard the passport as part of this file and he gave evidence that he remained of that view as at 7 August 2008 and that he did not engage in professional misconduct or unsatisfactory conduct

because of that belief by simply holding the passport.

b) he submits, he could not legally assert a lien over the passport, yet despite being informed of Section 9A of the Passports Act by Greenfield Lawyers on 9 June 2004, he nevertheless, by conduct and in correspondence, asserted a lien over the passport –

as being part of his file.

71 We are satisfied that the passport was not a document that was created for or otherwise came into existence for the purposes of Ms Ning’s criminal matter, and that by operation of Commonwealth Legislation it could not properly be the subject of a solicitor’s lien. We are satisfied to the required standard that the Respondent’s assertion of a lien over the passport was improper in the circumstances.

72 After consideration of all the material the Tribunal finds that the Respondent’s conduct constitutes professional misconduct pursuant to Section 497(1)(a) of the Legal Profession Act 2004, as it involved a substantial failure to reach or maintain a reasonable standard of competence and diligence expected of a Legal Practitioner. The Tribunal specifically rejects the Solicitor’s submission that his view that his conduct was not “a consistent failure” and that he did “at all times hold an honest and reasonable belief he was entitled to do so and he acted under a mistake of law.” With respect to the Solicitor, ignorance of the law is no defence and applying the test described in Allinson v General Council of Medical Education and Registration [1894] 1 KB 750), the Tribunal is satisfied that he engaged in conduct which would reasonably be regarded as disgraceful or dishonourable by professional colleagues of good repute and competency .

73 The Tribunal views the Solicitor’s actions, which continued despite having been expressly informed of the provisions of Commonwealth legislation on 9 June 2004, constitutes conduct that would be reasonably regarded as disgraceful or dishonourable by professional colleagues of good repute and competency. In this regard, we are concerned at the Solicitor’s evidence that he continues to hold the view that the passport was a part of his file as at 7 August 2008. This suggests that he may repeat the conduct in question if he were faced with a similar scenario today. However, we note that the Society is not seeking a protective order, although we are not constrained by the orders sought in the Application. Based on the evidence before the Tribunal, the fact that the Solicitor co-operated with the Law Society during its investigations, that there is no evidence of dishonesty adduced such as to raise a question as to character, we are satisfied that the Solicitor can be trusted to act according to law in the future, particularly when it is made clear to him by this Tribunal. On that basis we are satisfied that he is not permanently unfit to practise as a Solicitor and that the protection of the public does not require that a protective order be made.

74 The Tribunal does not condone the Solicitor’s actions and he is properly held up before his peers for castigation as a part of his punishment in all complaints. However, given that the misconduct was both a failure to witness ( in the first and second grounds of the complaint )and conduct aimed at securing payment of costs, we also feel that a fine is appropriate in the sum of $500.00 in this matter .The Tribunal takes into consideration that the solicitor refunded to Ms Ning all his costs of $1,600.00, as a matter mitigating the imposition of a larger fine in this matter.

75 The Tribunal makes the following orders applicable to both matters :

1. That the Respondent pay a total fine for all matters of $3,000.00

2. That the Respondent be publicly reprimanded

3. That the Respondent pay the Society’s costs of all of the proceedings, as agreed or assessed.