Council of the Law Society of the Act v Legal Practitioner 201714 (Moon Young Kim) (Occupational Discipline)
[2018] ACAT 63
•18 June 2018
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
COUNCIL OF THE LAW SOCIETY OF THE ACT v LEGAL PRACTITIONER 201714 (Moon Young Kim) (Occupational Discipline) [2018] ACAT 63
OR 14/2017
Catchwords: OCCUPATIONAL DISCIPLINE – legal practitioners – employed solicitor obligation to deposit moneys in trust account – misappropriation – test for dishonesty – is subjective dishonesty necessary – conduct as evidence of consciousness of guilt
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 s 54
Legal Profession Act 2006 ss 9, 217, 218, 222, 386, 387, 419,420, 425
Legal Profession Act 1987(NSW) (repealed) ss 61, 62
Legal Profession Act2004 (NSW) (repealed) ss 4, 254
Cases cited:Allinson v GeneralCouncil of Medical Education and Registration [1894] 1 QB 750
Briginshaw v Briginshaw (1930) 60 CLR 336
Chamberlain v ACT Law Society [1993] FCA 527
Council of the Law Society of the ACT v LP 8 [2016] ACAT 140
Council of the Law Society of NSW v Coombes [2015] NSWCATOD 108
Council of the Law Society of NSW v Fitzsimons [2012] NSWADT 242
Council of the Law Society of NSW v Greenstein [2015] NSWCATOD 122
Council of the Law Society of NSW v Nicholls [2012] NSWADT 222
Council of the Law Society of NSW v Ross [2013] NSWADT 106
Council of the Law Society of NSW v Simpson [2011] NSWADT 242
Edwards v The Queen (1993) 178 CLR 193
Jones v Dunkel (1959) 101 CLR 298
Law Society of NSW v Berger (No 1) [2017] NSWCATOD 137
Law Society of NSW v Gill [2004] NSWADT 180Law Society of NSW v Goold [2001] NSWADT 171
Law Society of NSW v McNamara [2007] NSWADT 162
Law Society of NSW v Moulton (1981) 2 NSWLR 736
Law Society of NSW v Shehadie [2016] NSWCATOD 46
Legal Practitioner v Council of the Law Society of the ACT [2014] ACTSC 13
Legal Practitioners Conduct Board v Jones [2010] SASCFC 51
Legal Services Commission v Brereton [2011] VSCA 241
Pollard v R (2011) 31 VR 416
List of
Texts/Papers cited: Dal Pont, Rileys Solicitors Manual, 2005
Macquarie International English Dictionary, Pan Mc Millan, Sydney, 2004
Palmer, A., Guilt and the Consciousness of Guilt: the use of Lies, Flight and Other ‘Guilty Behaviour’ in the Investigation and Prosecution of Crime. Melbourne University Law Review Vol 21
Tribunal: Senior Member E Ferguson
Date of Orders: 18 June 2018
Date of Reasons for Decision: 18 June 2018
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) OR 14/2017
BETWEEN:
COUNCIL OF THE LAW SOCIETY OF THE ACT
Applicant
AND:
LEGAL PRACTITIONER 201714
Respondent
TRIBUNAL: Senior Member E Ferguson
DATE:18 June 2018
ORDER
The Tribunal finds that:
The respondent dishonestly misappropriated trust monies in breach of the common law, and that conduct constitutes professional misconduct at common law.
The charge that the respondent is in breach of section 222 of the Legal Profession Act 2006 is not made out.
The Tribunal orders that:
Any submission that the applicant wishes to make on the appropriate penalty and costs as a consequence of the finding at paragraph 1 above, together with a list of relevant authorities, is to be filed in the tribunal and served on the other party by 9 July 2018.
Any submission that the respondent wishes to make on the appropriate penalty and costs as a consequence of the finding at paragraph 1 above, together with a list of relevant authorities, is to be filed in the tribunal and served on the other party by 19 July 2018.
The Tribunal gives notice to the parties pursuant to section 54(1) of the ACT Civil and Administrative Tribunal Act 2008 that the Tribunal is minded to determine any penalty in this matter as a result of finding 1 above, without a further hearing. In view of the circumstances of this application the Tribunal gives notice that if the parties wish to make representations about the proposal that the matter should proceed without further hearing, those representations must be filed in the tribunal within 14 days of the date of this order.
………………………………..
Senior Member E Ferguson
REASONS FOR DECISION
The background
On 28 September 2017 the applicant filed an ‘Application for Disciplinary Action’ against the named legal practitioner[1] (the respondent) pursuant to section 419 of the Legal Profession Act 2006 (the Act).
[1] This decision was previously anonymised and cited as Council of the Law Society of the Australian Capital Territory v LP 201714 [2018] ACAT 63 pursuant to section 423A of the Legal Profession Act 2006. As the appeal period has ended, the practitioner has now been identified in the citation of this decision. The reasons for decision otherwise remain unchanged from the date of publication.
The applicant seeks a finding pursuant to section 425(1) of the Act that the respondent is guilty of professional misconduct, or alternatively, unsatisfactory professional conduct. The applicant alleges that the respondent has breached section 222 of the Act and misappropriated trust moneys in breach of the common law. Full particulars of the grounds are set out below.
In her response filed 12 December 2017 the respondent accepts most of the facts alleged in the application. She also accepts both that she breached section 222 and that breach constitutes unsatisfactory professional conduct. She contests the charge of misappropriation.
Both parties filed submissions in relation to characterisation of the conduct.
The hearing before me on 5 February 2018 was limited to determination of the charges and characterisation of any misconduct found. The applicant was represented by Mr Buxton and the respondent represented herself. After hearing the parties’ submissions and oral evidence I reserved my decision.
In this decision a reference to the ‘tribunal’ or ‘ACAT’ refers to the ACT Civil and Administrative Tribunal generally and a reference to the ‘Tribunal’ or the first person refers to the member who heard this matter.
The evidence admitted comprised the affidavit of Robert Reis, Professional Standards Director of the Law Society of the ACT, sworn 12 October 2017 and the respondent’s affidavit sworn 11 December 2017.
Copies of the following documents are annexed to Mr Reis’ affidavit:
(a)Documents from the complainant’s file in relation to the matter described as the ‘conveyancing matter’ in these proceedings.
(b)Note from the applicant’s file in relation to investigation of the complaint which gave rise to these proceedings (the complaint).
(c)Correspondence between the applicant (and its solicitors) and the respondent in relation to the complaint.
(d)Correspondence between the complainant and the respondent in relation to the complaint.
(e)Correspondence between the complainant and the applicant in relation to the complaint, including a forwarded email from a student placed with the firm regarding the conveyancing matter.
Mr Reis was not cross-examined and there were no objections to his affidavit.
The respondent was cross-examined under oath.
The facts
The following facts are agreed.
At all material times the respondent held a restricted practising certificate and was an employee solicitor of a law firm operating in the ACT (the firm).
The respondent worked for the firm for two periods:
(a)From January 2015 to mid 2015- before moving to Melbourne for about six months where she worked as a solicitor.
(b)From January 2016 to February 2017.
On 27 February 2017 the principal of the firm terminated the respondent’s employment and made a written complaint to the Law Society that the respondent had accepted cash for her own use from a client of the firm (the MVA client) in relation to a motor vehicle accident matter.
On 28 February 2017, whilst attending the Law Society to surrender her practising certificate, the respondent disclosed a separate incident in which she accepted payment from a client (the conveyancing client) for her own use.
Conveyancing client
On or about 12 July 2016 the respondent received instructions from the conveyancing client, who was also a personal friend of hers, to prepare a contract of sale of his unit in the ACT and otherwise act for him in the sale.
The respondent opened a file and undertook the conveyance under the auspices of the firm.
On 26 July 2016 the respondent issued a disbursements only invoice to the client for $602.15 including GST. The principal of the firm issued an office receipt for that sum on 2 August 2016.
The respondent caused the contracts for sale to be exchanged on 16 September 2016.
On 3 August 2016 instructed a “placement student” at the firm to electronically close and archive the file. The file was actually closed on the firm’s system 16 September 2016, after which the respondent continued to do work on it.
The respondent instructed the same student to attend settlement on or about 14 October 2016.
In or around October 2016 the client paid the respondent $700.
The respondent did not deposit the $700 into the firm’s trust account, and instead retained it for her own use.
The MVA client
On or around 1 December 2016:
(a)the MVA client instructed the respondent to act on her behalf in relation to a dispute with her insurance company regarding a motor vehicle accident;
(b)the client attended a conference with the respondent at the offices of the firm; and
(c)the respondent received $330 cash from the client and wrote a receipt on the final page of the firm’s receipt book (receipt number 50), for what was described as “first consultation on MVA plus correspondence on MVA plus correspondence with the Insurance company on the excess fee”, notwithstanding that the next receipt in page order was #35.
The respondent performed the work for the client under the auspices of the firm.
The respondent did not deposit the $330 into the firm’s trust account, and instead retained it for her own use.
Particulars of charges
The applicant contends that the respondent in not depositing monies referred to at paragraphs 23 and 26 above into the firm’s trust account both [2]:
(a)breached section 222 of the Act; and
(b)misappropriated trust moneys in breach of the common law either on the basis that:
(i) she did so dishonestly with the knowledge and belief that she should have deposited the funds into the firms’ trust account, and therefore constitutes misappropriation of trust moneys in breach of the common law; and/or
(ii) regardless of her knowledge and belief at the time, consciously intended to appropriate the respective funds for her own use or benefit as distinct from the firm’s benefit, whether or not she knew such to be dishonest or not, and such conduct is objectively dishonest by the ordinary standards of reasonable people.
The issues
[2] Application filed 28 September 2017 at [23]-[24]
The respondent admits in her response that her failure to deposit funds received from the clients into the firm’s trust account breached section 222 of the Act.
At the hearing, Mr Buxton properly drew my attention to the question of whether section 222 applies to employed solicitors such as the respondent. He argued that it could, but out of fairness also put the counter argument.
I am required to satisfy myself under section 425(1) whether the impugned conduct constitutes either unprofessional conduct or professional misconduct. In the process I must consider whether each ground of the application is established rather than simply rely upon the respondent’s admission of the first ground, which may be based on a flawed understanding of section 222.
The issues in relation to each charge are:
(a)Has the applicant established to the relevant standard the grounds of misconduct alleged?
(b)If so, how should that misconduct be characterised?
The first ground – section 222 breach
The threshold issue is whether section 222 applies to employed solicitors. If it does not then the respondent, who was an employed solicitor at all relevant times, cannot have breached it.
Section 222 relevantly provides:
(1) As soon as practicable after receiving trust money, a law practice must deposit the money in a general trust account of the practice kept in the ACT.
(6) If a law practice that is an Australian legal practitioner who is a sole practitioner, or an incorporated legal practice, contravenes subsection (1),…… the practitioner or practice commits an offence.
(7) If a law practice that is a law firm, or a multidisciplinary partnership, contravenes subsection (1),…., each principal of the practice kept in the ACT commits an offence.
Note For this part, a reference to a law practice includes the principals of the law practice (see s 218 (Liability of principals of law practices under pt 3.1)).
The dictionary defines a ‘law practice’ for the purposes of the Act as:
(i) an Australian legal practitioner who is a sole practitioner; or
(ii) a law firm; or
(iii) a multidisciplinary partnership; or
(iv) an incorporated legal practice; and
Section 218(2) provides:
A reference in this part to a law practice includes a reference to the principals of the law practice.
Under section 217 certain obligations of a law practice, including payment of trust money into a trust account,[3] may be discharged by a “legal practitioner associate of obligations of a law practice.”
[3] Section 217(1)(c)
An associate is defined to include an employed solicitor.[4]
[4] Section 9
Although I accept that the respondent was at the relevant times an associate for the purpose of section 217 that section simply permits an associate to discharge the obligations in relation to trust funds on behalf of the practice. It does not impose any obligation upon them to do so.
Mr Buxton conceded that:
…in fairness, section 222, which is the obligation to place trust money into a general account, seems to fall only onto a law practice and not onto an employee.
Nevertheless he argued that it was open to the Tribunal to find that the respondent’s conduct amounted to a breach of section 222. Although he could point to no ACT decisions in which section 222 was applied to an employed solicitor he referred the Tribunal to the following two New South Wales decisions of which he said:
One is helpful but not definitive and the other is less so, but they relate to matters where there were charges against the employee solicitors of the NSW equivalent of our section 222.
The first case was the Law Society of NSW v Gill [2004] NSWADT 180 in which the practitioner was charged with misappropriating $1.8 million. The misappropriation occurred first in his capacity as a principal of a law practice and later as an employee. The Law Society in its application alleged the respondent was in breach of sections 61 and 62 of the Legal Profession Act 1987 (since superseded) but at the hearing only pressed the charges in relation to the respondent’s conduct while principal of a firm and as a sole practitioner. The Tribunal found the statutory breaches proved. Mr Buxton submitted the section referred to was equivalent to our section 222. However since the charge against the practitioner in his capacity as an employed solicitor was not considered by the tribunal it is of no assistance in this case.
In the later case of Law Society of NSW v McNamara [2007] NSWADT 162 the respondent was an employed solicitor who kept money he received from clients for himself rather than depositing it in the firm’s trust account. The application set out two grounds for a finding of professional misconduct. Firstly, misappropriation of trust monies and secondly, misleading the partners of the firm which employed him.
In its application against Mr McNamara the Law Society set out the provisions of section 254 of the Legal Profession Act2004[5] which replaced section 61 of the previous Act relied on in Gill, but did not charge him with a breach of that section.
[5] Legal Profession Uniform Law Application Act 2014, which applies the Legal Profession Uniform Law modeled by Victoria, has since superseded this Act
Mr Buxton submitted that section 254 is also equivalent to our section 222. I note that section 254 specifically imposed an obligation to deposit trust moneys on ‘law practices’. ‘Law practices’ under the 2004 NSW Act[6] were defined in a similar way to the definition in the current ACT Act and I agree that section 254 is equivalent to our section 222 for the purposes of these proceedings.
[6] At section 4
Mr Buxton drew my attention to the NSW tribunal’s finding at 27 (emphasis added):
The Tribunal is satisfied that this conduct, as admitted by the Solicitor, accords with the allegations stated and particularised in the application. In a number of transactions, the Solicitor failed to account for monies received from or for the benefit of a client, willfully breached the requirements of the Act and misappropriated trust monies…
In my view McNamara is not persuasive authority for the proposition that an employed solicitor can breach an equivalent provision to section 222 (the section) for the following reasons:
(a)Breach of the section was not one of the grounds of the application.
(b)The relevance of the section to the decision, although not explicitly addressed by the Tribunal, seems limited to its function of prescribing how trust monies are to be dealt with.
(c)There is nothing in the decision to suggest that either party or the tribunal turned their mind to whether the section imposed an obligation on employed solicitors.
The decision simply supports the uncontentious proposition that trust moneys must be deposited in a law practice’s trust account and not kept by the solicitor who receives them for their own use.[7] The Tribunal found that Mr McNamara’s failure to do so amounted to misappropriation at common law.
[7] McNamara at [13]
I prefer the counter position that section 222 does not apply to employees based on the natural construction of that section in the context of the Act.
Accordingly I find the respondent has not breached section 222.
Issue 2 Misappropriation-liability
The test
The parties agree in their submissions that for common law misappropriation to be established it must be shown that the wrongful appropriation was done dishonestly.[8]
[8] Respondent’s submission on characterisation page 2
The respondent qualified her agreement by observing that there is authority for the proposition that, at least in occupational discipline matters, misappropriation may not always require dishonesty.
It may be sufficient that the appropriation is otherwise wrongful, for example reckless. The respondent cited the decision on appeal from the first instance decision in Brereton the Victorian Court of Appeal.[9] Tate J (with whom Nettle and Ashley JJ agreed) said at [69][10]:
However, and with great respect to the trial judge, it is unclear whether dishonesty is a necessary element of misappropriation in the common law sense. In my opinion, there is room for doubt whether dishonesty is always an integral element of a charge of misappropriation within a professional disciplinary context.
[9] Legal Services Commissioner v Brereton [2011] VSCA 241
[10] Her Honour, Tate J cited Legal Practitioners Conduct Board v Jones [2010] SASCFC 51
In these proceedings the issue of honesty is central to the application. The applicant relies upon dishonesty as an element of the charge of misappropriation and the respondent defends the charge on the grounds that she acted honestly.
The applicant submitted that it is not necessary to establish that the respondent knew at the time that what she was doing was dishonest, that is that the conduct was subjectively dishonest. It is sufficient to establish that the applicant committed intentional acts which would be regarded as dishonest by the ordinary standards of reasonable and honest people, that is that the conduct was objectively dishonest.
The respondent argues that it is not settled law that objective dishonesty is enough to establish misappropriation.[11]
The case law
[11] Referred to Law Society of NSW v Berger (No. 1) [2017] NSWCATOD 137 at [249]-[250]
In my opinion the weight of authority supports the applicant’s submission that the law was accurately summarised by the tribunal in Law Society of New South Wales v Shehadie (Shehadie) as follows[12]:
It is accepted that the legal meaning of misappropriation carries the connotation of a wrongful, dishonest use. Further in disciplinary proceedings of the present kind, it is accepted that the prosecutor must show that the respondent knowingly engaged in the conduct of concern, and that the conduct was dishonest. There has been a debate as to whether the prosecutor must show that the respondent knew that the conduct in which he or she intentionally engaged in was dishonest, or is it enough to show that regardless of his or her belief in that regard, it would be regarded as dishonest, viewed objectively.
[12] [2016] NSWCATOD 46
The Tribunal in Shehadie adopted the following three step formulation to determine misappropriation articulated by Bell J at first instance in Brereton v Legal Services Commissioner at [54]:[13]
(1) identify the knowledge, belief or intent which is said to render the acts dishonest;
(2) determine whether the accused [respondent in this case] subjectively had that knowledge, belief or intent; and
(3) determine whether, on that account, the acts were objectively dishonest according to the standards of ordinary and decent (that is reasonable and honest) people.[14]
[13] [2010] VSC 378
[14] Shehadie quoting Bell J in Brereton at 54
Bell J observed in relation to the first limb of the test at [53]:
While an allegation of dishonesty requires consideration of the person’s mental state, in neither the criminal nor the civil law is it necessary to establish that a person subjectively knew or believed that the actions concerned were dishonest. What must be established is that the person subjectively intended to do the acts which are said to be objectively dishonest by the ordinary standards of reasonable and honest people.[15]
[15] Law Society of New South Wales v Simpson [2011] NSWADT 242 at [50] and Council of the Law Society v Fitzsimons [2012] NSWADT 242 at [74]
In the NSW case of Law Society v Berger[16] the Tribunal made the obiter observation at [253] that in various decisions of this Tribunal and its predecessor, (the Administrative Decisions Tribunal) misappropriation has repeatedly been found without requiring proof that the practitioner knew the conduct was dishonest.[17]
Burden and standard of proof
[16] Law Society of NSW v Berger (No 1)[2017] NSWCATOD 137
[17] Citing following examples: Council of the Law Society of NSW v Nicholls [2012] NSWADT 222; Council of the Law Society of NSW v Ross [2013] NSWADT 106 at [41]-[68]; Council of the Law Society of NSW v Greenstein [2015] NSWCATOD 122 at [26]-[32]; Council of the Law Society of NSW v Coombes [2015] NSWCATOD 108 at [36]-[43] Law Society of NSW v Shehadie [2016] NSWCATOD 46 at [34]-[39] and [60]-[63]
Section 420 of the Act provides that the Tribunal is bound by the rules of evidence in hearing an application. The applicant bears the onus of proving its case on the balance of probabilities.
Because disciplinary proceedings may have serious consequences for a practitioner the applicant must establish the alleged misconduct on the higher civil standard of proof applied by the High Court in the seminal case of Brigishaw v Briginshaw (1930) 60 CLR 336.
That standard was succinctly expressed in the Council of the Law Society v The Legal Practitioner [2010] ACAT 2 at [12]:
Rich J’s test of comfortable satisfaction provides a succinct description of the standard to be applied in such cases. Proof beyond reasonable doubt is not required; but the standard requires more than a mere balancing of the scales. The evidence must be weighed, according to the gravity of the facts to be proved, to the extent that a conclusion is reached about those facts with a feeling of comfortable satisfaction that it is just and correct.
Objective Dishonesty
The applicant contends that:
(a)in relation to the conveyancing file, the respondent had knowledge that she completed the conveyance under the auspices of the firm;
(b)in relation to the motor vehicle accident file, the respondent had knowledge that she would complete the work under the auspices of the firm;
(c)the respondent did not discuss accepting the sums with the principal of the firm and completed the final page of the receipt book (as distinct from sequentially the next page) in relation to the $330 sum;
(d)the respondent intended to accept the sums of $700 and $330 for her own use; and
such conduct is either subjectively dishonest or would be regarded as dishonest by the ordinary standards of reasonable and honest people.
The respondent does not dispute that the assistance was in fact provided under the auspices of the firm.
However, she argues that even if the objective dishonesty test relied upon by the applicant is accepted the first limb of that test is not satisfied on the evidence. That is the applicant has failed to prove that the respondent knew, intended or believed at the time she was doing the work under the auspices of the firm.
The respondent gave evidence to the effect that she naïvely thought she was acting for both clients, with whom she had a personal connection, on a “private basis” rather than under the auspices of the firm for the following reasons:
(a)The respondent believed private arrangements with clients were permissible within the firm because the principal sometimes authorised work without payment for her own family and friends and had, on at least one occasion, given the respondent part of the fees paid by a client in acknowledgement of the respondent having attracted the client’s business to the firm.
(b)The conveyancing client was a close friend of the respondent. She agreed to act for him in the sale of his property and charge only for disbursements through the firm as a favour.
(c)According to her affidavit the respondent was surprised when the conveyancing client offered her money. She said that it was only after performing the work that he offered her $700 as a gift as an expression of gratitude for her assistance. She told him she would be happy to accept a family photograph from him instead but, at his insistence, she took the cash.
(d)The motor vehicle client contacted the respondent directly after being referred by a mutual friend. The respondent took her on as a private client because of their personal connection and sympathy for her situation and only charged the standard fee for an initial consultation to act on an ongoing basis.
I do not accept the respondent’s contention that she did not expect her friend to offer her money after she completed the conveyance as it is at odds with her letter to the Law Society of 16 April 2017[18] in which:
(a)she admits that prior to doing any work she and her friend agreed that he would pay the firm for disbursements and pay her whatever he and his wife considered suitable in exchange for her work;
(b)she makes no mention of attempting to decline the cash offered by her friend; and
(c)it is apparent that the amount paid by the conveyancing client was identical to the amount another friend had earlier told the respondent he paid a solicitor for a similar private arrangement.
[18] Annexure ‘K’ to the affidavit of Robert Reis sworn 12 October 2017 at pages 91-92
I am comfortably satisfied that the respondent and her friend struck a deal that he would pay her, rather than the firm, for her professional services in the conveyance.
The phrase under the auspices of somebody or something is defined by the Macquarie International English Dictionary[19] to mean:
With the help or support of a person or organisation.
[19] Published in Australia by Pan McMillan, Sydney, 2004
I reject as implausible the applicant’s contention that she naïvely thought at the time she was acting for the clients in her personal capacity rather than under the auspices of the firm for the following reasons:
(a)She conducted the consultation with the motor vehicle client and performed work on both files during work hours at the offices of the firm.
(b)For the duration of the conveyancing matter the respondent used the firm’s letterhead and is identified on documents as solicitor with carriage of the matter on behalf of the firm.
(c)She deposited the disbursement funds into the firm’s account and caused a receipt to be issued to the conveyancing client on behalf of the firm.
(d)She asked a student placed with firm to attend settlement for the client.
I am comfortably satisfied on the basis of logical appeal that the respondent was aware at the time that she was acting under the auspices of the firm.
It is not disputed when the respondent accepted the sums of $330 and $700 client she intended, without informing her employer, to keep it for her own use rather than depositing it into the firm’s trust account.
I am comfortably satisfied that the respondent intended to keep payments from clients for work performed under the auspices of the firm; and that such conduct would be regarded as dishonest by the ordinary standards of reasonable and honest people.
Subjective dishonesty
Although it is not necessary for the purposes of establishing misappropriation to consider whether the respondent’s conduct was also subjectively dishonest I will do so because it is relevant to the issue of characterisation.
The applicant argued that not only were the respondent’s actions objectively wrong it could also be reasonably inferred from the following circumstances that the respondent knew they were wrong at the time:
(a)She had strong financial motives for depriving the practice of legal fees and appropriating them for herself.
(b)She expressly acknowledged in correspondence with the Law Society that her behaviour was dishonest.
(c)She attempted to conceal the transactions from her employer.
Motivation
In the immediate aftermath of the complaint the respondent told the Law Society[20] and the complainant, her former employer[21] that she accepted the money for two reasons. Firstly, to obtain money to cover personal expenses she could not otherwise meet, in particular travel costs to visit her mother overseas. Secondly, to help the two clients with whom she had a particular affinity.
[20] Email to Robert Reis dated 28 February 2017 Annexure ‘C’ to the affidavit of Robert Reis sworn 12 October 2017 at page 11
[21] Letter to complainant attached to email from complainant to Law Society dated 1 March 2017 Annexure ‘D’ to the affidavit of Robert Reis sworn 12 October 2017 at page 13
In her letter to her former employer the respondent emphasised her financial motivation, saying that she thought it was ok to keep the money, “However the most important at that time, I was desperate to save monies to buy flight tickets to see my mom.”
However, later in her formal response to the Law Society on 16 April 2016 she said:
I will be lying if I dispute the fact that I needed money, at that time. In fact we always needed money, however the money was not the cause for my lapse of judgement. Had it been because for the money, I would not have jeopardised my own career for only $1,030.00.
At the hearing the respondent told the Tribunal that she was highly stressed and afraid when she admitted financial motives and only did so in an attempt and alleviate her predicament,
I didn’t know what I was thinking. I thought I had to provide my justification as to my behaviour just to get out of the situation.
The balance of evidence supports a finding that the respondent’s conduct was motivated by a strong desire to alleviate chronic financial stress. It seems likely that she was also motivated, as she claims, by a desire to help her friends and community.[22] However, motive is not enough to comfortably satisfy me that she deliberately engaged in dishonest conduct.
Admissions
[22] The respondent in her letter to the applicant’s solicitor dated 13 July 2017 Annexure ‘M’ to Robert Reis’ affidavit at page 99- “I simply thought that I was helping those people I love by privately assisting them. By assisting them privately, I thought they would appreciate and acknowledge me, and honestly I thought that I was looking after their interests.”
In her email to Mr Reis of 28 February 2017 the respondent said that her behaviour was “dishonest” and apologised.[23] She then went on to say she had only realised that morning her behaviour was wrong after researching solicitors’ ethical obligations.
[23] Annexure marked “C” to Robert Reis’ affidavit at page 11
I am not convinced the respondent’s concession taken in context of the letter is inconsistent with her stated position that she only realised her conduct was wrong with the benefit of hindsight.
Concealment as evidence of guilt- the law
It is well established in the criminal law that the Crown can rely on the accused’s post-offence conduct as circumstantial evidence of consciousness of guilt whether in the form of a lie[24] or other concealment[25]. Logically the same principle applies to those civil cases in which the state of mind of the respondent is a relevant consideration. For example in Jones v Dunkel (1959) 101 CLR 298 a party’s failure to lead evidence may lead to an inference that the evidence would not have assisted that party’s case.[26]
[24] Edwards v The Queen (1993) 178 CLR 193
[25] see Pollard v R (2011) 31 VR 416, where the evidence of the accused hiding his mobile phone was admitted on this basis
[26] Palmer, A., Guilt and the Consciousness of Guilt: the use of Lies, Flight and Other ‘Guilty Behaviour’ in the Investigation and Prosecution of Crime. Melbourne University Law Review Vol 21 pages 95 to 149
In order to safely infer guilt from conduct the answer to all the following questions must be yes[27]:
(a)Was the conduct in question either a deliberate untruth or deliberate concealment of the truth?
(b)Is the matter concealed a circumstance or event material to the offence?
(c)Was the circumstance or event concealed because the defendant knew that the truth of the matter would implicate them in the commission of the offence?
Attempts to conceal
[27] See Edwards v The Queen in considering direction to jury at first instance
The applicant submits the following conduct by the respondent, which is not disputed, was intended to conceal the true nature of the transactions from her employer and is evidence from which consciousness of guilt can be inferred:
(a)Issuing the MV client with receipt for the cash payment from the last page of the firm’s receipt book.
(b)Causing the conveyancing file to be electronically closed but continuing to work on it under the auspices of the firm.
(c)Misleading the placement student with regard to her ongoing involvement in the conveyancing matter.
(d)Failing to consult with the principal.
The conveyancing file
In her letter to the Law Society of 16 July 2017 the respondent described how in May 2016 another friend told her that he paid a solicitor a discounted rate for acting for him in a private capacity in the sale of his home. The respondent says she recalled thinking at the time:
Although I was listening to .., I was not 100% sure whether or not solicitors are ethically allowed to do private work, if so, how.[28]
[28] Respondent’s letter to Law Society 16 July 2017 at page 91
Despite her doubts within months the respondent accepted work on similar terms from the conveyancing client. The respondent offered no explanation as to why, if she had previously doubted the propriety of such arrangements, she did not seek the guidance of her employer before taking on private work for her friend, especially as she described her employer as a close friend and mentor.
In the absence of a plausible innocent explanation I am comfortably satisfied that she did not consult her employer as she wanted the arrangement with her friend to remain secret because she thought it was not acceptable.
The respondent asked the student to attend settlement on 14 October 2016 “as a favour” to the conveyancing client but failed to disclose she always intended to attend settlement herself but was unexpectedly unable to do so. She admits the statement was deliberately untruthful.
The respondent explained her behaviour as follows[29]:
I guess I did not want to appear unreasonable or too personal towards my friend in front of [the student] by asking him to attend my friend’s settlement without any convincing reason because I have advised [the student] that the file was already closed. Therefore I said to [the student] with a bit of disgruntle that we are doing a favour to [the client] by attending to his settlement.
[29] Respondent’s letter to applicant’s solicitor dated 13 July 2017 page 99
I am comfortably satisfied for the following reasons that the respondent misled the student on the day of settlement because she knew her arrangement with the conveyancing client was not acceptable:
(a)She admits she made the statement because she did not want the student to know that she continued to act for the client after the file was closed; and
(b)I find the respondent’s explanation for the lie implausible and inconsistent with her position that she thought there was nothing wrong or unusual about her arrangement with the client. Surely if such an arrangement was accepted practice within the firm she would suffer no embarrassment by being honest.
The motor vehicle client
In her letter to the Law Society of 16 April 2017 the respondent admits she was initially unsure whether she could act in a private capacity for the motor vehicle client. While the client was away from the office for the purpose of withdrawing cash for the first consultation the respondent says she was hesitant and confused,
Firstly, I was not sure if I could take the matter privately so that I can reduce professional costs. Secondly, I was not emotionally willing to charge the lady for a full professional fee for further work that I have to do for her. Thirdly, I was also afraid that if I ask [the principal] that we may just charge her for the first consultation only, she may think that I am biased towards …… people, and further confront me with having to meet my monthly target.[30]
[30] Letter from respondent to Robert Reis of the Law Society dated 16 April 2017 at page 90
The respondent told the Law Society that she did not use the next receipt in the book because:
When I was writing the lady the receipt for the first consultation fee of $330, I was still unsure whether I can take the matter privately for the lady, and if so, how. That was why I took the very last page of the receipt book to earn some time to think it over.[31]
[31] Transcript of proceedings 5 February 2018 page 22
Even on the respondent’s own account of events, this was the second occasion within six months when, despite having doubts, she accepted money from clients for her own use without consulting her employer. It is implausible that she thought she was permitted in the circumstances to make her own decision to accept money for herself from a client.
I am comfortably satisfied that the respondent used the last page of the receipt book and did not consult the principal about accepting money from the client in order to hide the transaction from her employer.
I am comfortably satisfied on the evidence that the respondent took calculated steps to conceal both transactions from her employer and colleague and she did so because she knew it was not permissible to keep the money for herself in the circumstances. Therefore her conduct, as well as being objectively dishonest, is also subjectively dishonest.
The respondent was not authorised to appropriate the moneys for her own use and she did so dishonestly therefore the ground of misappropriation at common law is proven.
Issue 3- Characterisation
The law
Under section 425 of the Act the Tribunal may make orders to discipline a practitioner if satisfied that the practitioner has engaged in unsatisfactory professional conduct or professional misconduct.
The definition of unsatisfactory professional conduct set out in section 386 includes conduct that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent practitioner.
Unsatisfactory professional conduct is described in Riley’s Solicitors Manual[32] as:
These standards are not to be determined by reference to lawyers who are without fault, but of the reasonably competent lawyer. As such, the standard of reasonableness invoked by the definition aims to distinguish between conduct that falls within a tolerable range of human error and bad professional work which falls below reasonable standards of competence and diligence.
[32]Dal Pont, G.E Riley’s Solicitors Manual 2005 at [33,040.10]
Professional misconduct is defined in section 387 as including unsatisfactory professional conduct that involves a substantial or consistent failure to reach or to maintain a reasonable standard of competence and diligence. It also includes conduct that justifies a finding that the practitioner is not a fit and proper person to engage in legal practice.
In Legal Practitioner v Council of the Law Society of the ACT [2014] ACTSC 13 at [307] Justice Refshauge noted that the definitions of unsatisfactory professional conduct and professional misconduct are inclusive ones and so common law definitions are not necessarily excluded unless they conflict with the statutory definitions. At [77] His Honour referred to Allinson v General Council of Medical Education and Registration [1894] 1 QB 750 at 763-7 where it was noted that a professional engages in professional misconduct if his or her behaviour would reasonably be regarded as disgraceful or dishonourable by professional colleagues who are of good repute and competency. The test has been recognised as applying to Australian legal practitioners in numerous decisions, including Chamberlain v ACT Law Society [1993] FCA 527 at 58-9.[33]
Analysis
[33] CLSACT v LP 8 [2016] ACAT 140 Senior Member Brennan at 10-13
The applicant submits that each of the charges, if proved, constitutes professional misconduct (or, alternatively, unsatisfactory professional conduct). The respondent contends that each of the charges if proved only constitutes unsatisfactory professional conduct.
The parties agree that misappropriation does not automatically constitute professional misconduct and it depends on the circumstances of each case.
The parties identified a number of considerations relevant to characterisation of the respondent’s conduct which I have summarised as follows:
(a)Was the conduct dishonest?
(b)Was it for personal gain?
(c)Was it premeditated?
(d)Was it isolated incident or part of a pattern of behaviour?
(e)Did another person suffer potential or realised harm as a result?
I have already rejected the respondent’s claim that she acted under the genuine but mistaken belief that her conduct was acceptable. I found that the respondent’s conduct was subjectively dishonest and strongly, although not solely, motivated by financial gain.
I am comfortably satisfied that the misappropriation was premeditated in both cases because:
(a)The respondent agreed to act for the conveyancing client on the basis that he pay her directly before she undertook any work for him.
(b)The respondent’s behaviour in relation to the motor vehicle client was made after careful deliberation. She admitted in her letter to the Law Society that she used the receipt from the back of the book to give herself time to consider what to do with the payment.
The respondent worked for the firm for a total of approximately 18 months over two periods. The misappropriation occurred during the last half of the second period. The misappropriation of trust moneys received from two clients during what is a relatively short period of employment cannot be dismissed as an isolated lapse.
The applicant cited the example of Law Society v Goold[34] in which an employed solicitor misappropriated $1,500 that he received from a client on account of costs due to the law practice. The Tribunal found that a single instance of misappropriation was professional misconduct.
[34] [2001] NSWADT 171
I agree with the applicant’s submission that the misappropriation denied both the respondent’s principal of payment for legal services and the client’s lawful release and discharge from responsibility for payment of the firm’s fees.
The clients were also potentially disadvantaged by the secrecy in which the respondent, a relatively junior employed solicitor, conducted their matters. As a consequence they were not afforded the protection usually provided by the principal of a firm supervising an employed solicitor’s work.
The risks to clients were not realised but as Hope JA (Reynolds JA agreeing) in Law Society of NSW v Moulton[35] observed, If the acts or omissions of a solicitor constitute professional misconduct, they do so at the time when they occur.
[35] (1981) 2 NSWLR 736, 740B
For the same reason the respondent’s co-operation in the investigation although deserving credit, is irrelevant to how the misappropriation is characterised. However it may be relevant to penalty.
Conclusion
Having found the respondent dishonestly misappropriated trust monies in breach of the common law. I further find that her conduct in doing so constitutes professional misconduct at common law because it would reasonably be regarded as disgraceful or dishonourable by professional colleagues who are of good repute and competency for the reason set out above.
The parties agreed at the hearing that in the circumstances it was appropriate for the Tribunal to determine the issues of penalty and costs on the papers without proceeding to hearing. Accordingly in my orders I have invited written submissions on these issues and given the parties the required notice under section 54 of the ACT Civil and Administrative Tribunal Act 2008.
………………………………..
Senior Member E Ferguson
HEARING DETAILS
FILE NUMBER: | OR 14/2017 |
PARTIES, APPLICANT: | Council of the Law Society for the ACT |
PARTIES, RESPONDENT: | Legal Practitioner 201714 |
COUNSEL APPEARING, APPLICANT | N/A |
COUNSEL APPEARING, RESPONDENT | N/A |
SOLICITORS FOR APPLICANT | McGuiness Wilson Lawyers |
SOLICITORS FOR RESPONDENT | N/A |
TRIBUNAL MEMBERS: | Senior Member E Ferguson |
DATES OF HEARING: | 5 February 2018 |
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