Council of the Law Society of the Act v Legal Practitioner “WA” (Michael Wasef) (Occupational Discipline) - [2016] ACAT 39

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

COUNCIL OF THE LAW SOCIETY OF THE ACT v LEGAL PRACTITIONER “WA” (Michael Wasef) (Occupational Discipline) [2016] ACAT 39
OR 25 of 2015
Catchwords: OCCUPATIONAL DISCIPLINE –legal practitioner- misappropriation of trust funds – failure to comply with Rule 39.2 of the Legal Profession (Solicitors) Rules 2007 – recommendation for removal of name from roll - costs

Legislation: Legal Profession Act 2006 (ACT) s 425, 433
Legal Profession (Solicitors) Rules 2007 r 39

Cases Cited:Briginshaw v Briginshaw (1938) 6 CLR 336
Council of the Law Society of NSW v Maloney [2012] NSWADT 259

Council of the Law Society of NSW v Fitzsimons [2012] NSWADT 285

Tribunal: Senior Member C.G. Chenoweth (Presiding)
Senior Member M. Brennan

Date of Orders: 30 November 2015
Date of Reasons for Decision: 12 May 2016

AUSTRALIAN CAPITAL TERRITORY )

CIVIL AND ADMINISTRATIVE TRIBUNAL ) NO: OR 25/2015

RE:COUNCIL OF THE LAW SOCIETY OF THE ACT
Applicant

AND:LEGAL PRACTITIONER ‘WA’
Respondent

ORDERS
Tribunal: Mr C. Chenoweth – Senior Member
Ms M. Brennan – Senior Member

Date: 30 November 2015

The Tribunal orders that:

1.The applicant is granted leave to access all material produced under subpoena.
2.The Tribunal recommends that the name of the respondent be removed from the Supreme Court Roll.
3.The respondent is ordered to pay the applicant’s costs of this application on a party/party basis at the scale applicable to matters in the Supreme Court in an amount to be agreed, or failing agreement to be determined by the Tribunal.
4.Parties have liberty to seek relisting of matter for consideration of costs.
Ms L. K. Crebbin
General President on behalf of

the Tribunal

REASONS FOR DECISION

The applicant commenced proceedings against the practitioner in an application for disciplinary action dated 15 June 2015 after forming the view that the practitioner may have deliberately or alternatively recklessly, misappropriated trust moneys of $7,000.00 on or about 1 October 2014. Secondly, the applicant alleged the practitioner had breached Rule 39.2 of the Legal Profession (Solicitors) Rules 2007 (Solicitors Rules) in failing to provide the applicant with a full and accurate account of his dealing with monies paid by a client.[1]
[1] This decision was previously anonymised and cited as Council of the Law Society of the ACT v Legal Practitioner "WA" [2016] ACAT 39 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 sought orders including that the tribunal find that the practitioner had engaged in professional misconduct or alternatively unsatisfactory professional conduct. Alternative orders were further sought that the tribunal recommend that the practitioner’s name be removed from the local Roll or that his practising certificate be suspended for a period to be determined by the tribunal. The applicant also sought an order that the practitioner pay its costs.
In a response dated 29 July 2015 the practitioner admitted that he had recklessly misappropriated the trust funds. The practitioner denied he had breached Rule 39.2 of the Solicitors Rules.
As a result of receiving a submission from the practitioner’s former solicitors dated 28 October 2015 which included a statutory declaration made by the practitioner of the same date, the applicant further amended its application on
6 November 2015 to increase the alleged total of misappropriated trust funds to a sum in excess of $47,000.00. The applicant also refined the particulars of breach of Rule 39.2 to add that the practitioner had attempted to mislead, sought a finding that the practitioner was guilty of professional misconduct and that the tribunal should recommend that the practitioner’s name be removed from the local Roll.
In the letter dated 28 October 2015, the practitioner advised the applicant that he did not wish to participate in these proceedings and would consent to the orders sought by the applicant including the payment of the applicant’s legal costs.

Background

In March 2012, the practitioner began a legal practice through an incorporated entity, described by the parties as MWA, for which he was the sole legal practitioner director. On 1 July 2013 the practitioner sold MWA to entities known as RSK, which were managed by legal practitioners,

Messrs Satsia and Romano. After the sale, the practitioner was employed as a consultant. Significantly, it was a condition of the sale that from 1 July 2013, RSK was entitled to work in progress and all legal fees and disbursements from MWA’s files.
On 19 June 2014 Messrs Satsia and Romano made a complaint to the applicant alleging the practitioner had breached undertakings he had given prior to the sale of MWA. Ultimately, the complainants did not pursue these issues but made an additional complaint that the practitioner had misappropriated $7000 in legal fees on or about 1 October 2014 paid by a client of MWA’s. The complainants asserted that the $7000 should have been paid to RSK in accordance with its agreement with the practitioner.
In response to the complaint, the practitioner claimed that he had been directed by the complainants to request clients pay MWA, so the change in business ownership was not apparent and that it was understood that the practitioner would then provide the funds to RSK. The practitioner further responded that while he had mistakenly asked the client to pay $7000 into his personal account rather than into trust, he had not misappropriated the money because he had provided a cheque to RSK for $7000.
The complainants disputed this version of events and said they did not receive the cheque the practitioner claimed to have provided.
The applicant commenced proceedings in the tribunal particularising the alleged misappropriation of trust monies and also alleging that the practitioner had deliberately or recklessly misled the applicant in the explanation he provided regarding the $7000 payment.
As noted, after receiving a letter from practitioner’s former lawyers and a statutory declaration made by the practitioner, the applicant amended the application to increase the quantum of trust moneys allegedly misappropriated by the practitioner and to seek specific orders in relation to a finding of professional misconduct and a recommendation that the practitioner’s name be removed from the local Roll.
The hearing
The practitioner did not appear at the hearing on 30 November 2015. The tribunal was satisfied that the applicant and the tribunal registry had notified the practitioner of the hearing date. Further, the practitioner was telephoned prior to the hearing’s commencement and confirmed that he was aware of the hearing date and that he had nothing further to submit to the tribunal.
The tribunal heard detailed oral submissions from the applicant's counsel which supplemented her written submissions dated 30 November 2015.
The Law
“Professional misconduct” is defined in section 387 of the LP Act.

(1) In this Act:
“professional misconduct” includes—
(a) unsatisfactory professional conduct of an Australian legal practitioner, if the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and
(b) conduct of an Australian legal practitioner whether happening in connection with the practice of law or happening otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice.
(2) For finding that an Australian legal practitioner is not a fit and proper person to engage in legal practice as mentioned in subsection (1), regard may be had to the suitability matters that would be considered if the practitioner were an applicant for admission to the legal profession under this Act or for the grant or renewal of a local practising certificate.
Note: See also s389
The High Court case of Briginshaw v Briginshaw (1938) 6 CLR 336 requires that the tribunal be comfortably satisfied, having regard to the gravity of the matter, that the complaint has been made out. An allegation of professional misconduct is a serious matter for any practitioner and may result in a public record of that finding, a fine, conditions and in the most extreme cases, an application to the Supreme Court in relation to the standing of the practitioner.
There are numerous instances of legal practitioners’ names being removed from the roll due to findings which include misappropriation of trust funds. See for example, Council of the Law Society of NSW v Maloney [2012] NSWADT 259 and Council of the Law Society of NSW v Fitzsimons [2012] NSWADT 285.
The evidence
The applicant’s evidence includes affidavits from the complainants and former employees of the practitioner’s. The practitioner swore an affidavit dated
18 September 2015. Most compellingly, in a statutory declaration dated

28 October 2015, the practitioner stated: “Further, during the course of the prosecution of me by the Law Society of the Australian Capital Territory, certain other instances have come to my attention where I paid money into a practice account and then drew it out. These were monies to which I now accept I was not entitled pursuant to the deed of sale that I entered into with RSK on or about 1 July 2013.
The payments referred to in the previous two paragraphs amount to a total of approximately $40,000… I accept that these payments could found additional charges of professional misconduct and ground an application to have my practising certificate cancelled and my name is struck from the rolls. If such further complaint with respect to these amounts is made, I intend to plead guilty to those charges.
I do not propose to take any further steps in this application… I consent to having my practising certificate cancelled and having my name struck from the roll of solicitors."
The practitioner provided the applicant with a document detailing 20 instances of payments in addition to that particularised by the applicant where he had misappropriated funds owing to the complainant's companies. These payments totalled $40227. Interest was calculated at $5610.
Consideration of the evidence
The tribunal is comfortably satisfied that the particulars of the application are established and that the practitioner has engaged in professional misconduct. The tribunal commends the practitioner for alerting the applicant to the additional misappropriation of trust funds, for repaying the misappropriated monies with interest, described to be from the date he received the funds and for not opposing the orders sought in the application. However, his conduct is sufficiently serious to warrant a recommendation to the Supreme Court that his name be removed from the local roll. An order is therefore made pursuant to section 425(3)(a) of the LP Act as a consequence of the finding that the practitioner’s conduct as particularised in the further amended application dated 6 November 2015 constitutes professional misconduct.
At the time that the proceedings commenced, the practitioner was living in New South Wales. There was evidence that he had taken steps to establish a separate legal practice in New South Wales, independent from RSK. In its orders of 30 November 2015, the tribunal did not specifically order that the name of practitioner be removed from the New South Wales roll. It is not appropriate that the earlier orders be amended or added to, but the tribunal remains concerned about the prospect that there may be clients of a legal practice established by the practitioner in New South Wales who could be affected by the tribunal's decision. Such members of the public may need appropriate protection. The tribunal requests the solicitors for the applicant to bring the order and reasons for decision in this matter to the attention of the New South Wales Legal Services Commission and the New South Wales Law Society.
Costs
Pursuant to section 433 of the LP Act the practitioner is to pay the applicant’s costs of these proceedings as agreed, or if not agreed, costs will be fixed by the tribunal on the recommendation of the Registrar following an assessment of costs by the Registrar at the scale applicable for Supreme Court matters on a party/party basis. The application may be re-listed only for the purpose of fixing costs if not agreed.
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Senior Member C G Chenoweth Senior Member M Brennan