Council of the Law Society of the Act v The Legal Practitioner E
[2013] ACAT 7
•30 January 2013
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
COUNCIL OF THE LAW SOCIETY OF THE ACT v THE LEGAL PRACTITIONER E (Mamdouh Elmaraazey) (Occupational Regulation) [2013] ACAT 7
LP 8 of 2010
Catchwords: OCCUPATIONAL REGULATION – legal profession - professional misconduct – Briginshaw standard: “comfortable satisfaction” as to allegations – not holding trust money in trust account – failure to issue trust account receipts or statements – unauthorised dealings in trust money: causing deficiency in trust account - relationship with client – borrowing from client – failure to release former client’s documents and files to new solicitor
List of legislation: Legal Profession Act 2006, ss. 222, 223, 226A, 229, 230,
386, 387, 389, 419, 420 and 425Legislation Act 2001, s. 104
List of Regulations: Legal Profession (Solicitors) Regulation 2007, reg. 38, 57, 62
Legal Profession (Solicitors) Rules 2007, rule 1.1, 6.2, 10.1
List of cases: Allinson v. General Council of Medical Education and Registration [1894] 1 QB 750
Briginshaw v Briginshaw (1938) 60 CLR 336
Council of the Law Society of New South Wales v Fitzsimons [2012] NSWADT 242
In the matter of the application of William Dudley Kavanagh to be admitted as a Barrister and Solicitor of the Supreme Court of the Australian Capital Territory [1995] ACTSC 175
Re Mayes [1974] 1 NSWLR 19
Terence John Chamberlain v the Law Society of the Australian Capital Territory [1993] FCA 527; (1993) 43 FCR 148
The Council of the ACT Law Society & Legal Practitioner (Occupational Discipline) [2010] ACAT 73
List of Texts/Papers: Dal Pont, G.E, Riley Solicitors Manual 2005
Tribunal: Mr J. Gallop, AM QC RFD Senior Member (Presiding)
Ms J. Lennard, Senior Member
Mr G. Wright, Member
Date of Orders: 24 January 2013
Date of Reasons for Decision: 30 January 2013AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) LP 8 of 2010
BETWEEN:
COUNCIL OF THE LAW SOCIETY OF THE ACT
Applicant
AND:
THE LEGAL PRACTITIONER ‘E’
Respondent
TRIBUNAL: Mr J. Gallop, AM QC RFD Senior Member (Presiding)
Ms J. Lennard, Senior Member
Mr G. Wright, Member
DATE: 24 January 2013
The tribunal is satisfied that the respondent is guilty of professional misconduct in respect of grounds 2.1, 2.2, 2.3, 4, 5.2, 5.3, 5.4, 6, 7, 7A, 8, 9, 10, 11, 12, 13, 16, 17 of the Second Further Amended Application dated 6 December 2011
ORDER
Pursuant to the Legal Profession Act 2006 (ACT), the tribunal makes the following orders:
1. The tribunal recommends that the name of the respondent be removed from the local roll.
2. That the practitioner be publicly reprimanded.
3. The respondent is to pay the costs of the Council of the Law Society of the ACT relating to the Second Further Amended Application dated 6 December 2011 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 in accordance with the procedure set out below.
Procedure to determine costs: The parties should make an attempt to reach agreement on costs. If agreement is not reached within 28 days, the applicant may file and serve a Bill of Costs using Form 2.45 approved under the Court Procedures Rules. The respondent is to file and serve a document setting out any objections he has to the Bill within 14 days of its service. The Bill and the respondent’s objections will be referred to a registrar of the tribunal for assessment. The registrar is to make a recommendation to the tribunal concerning the amount that should be paid by the respondent.
Sgd J. Gallop, Senior Member,
Presiding Member for and on behalf of the members of the Tribunal
REASONS FOR DECISION
The application
1. In August 2010 the Council of the Law Society of the Australian Capital Territory (the applicant) filed an application with the tribunal seeking disciplinary action in relation to the respondent legal practitioner pursuant to section 419 of the Legal Profession Act 2006 (the Act). After extensive procedural steps which are not necessary to detail here, the matter proceeded to hearing on the basis of a “Second Further Amended Application” filed by the applicant at the start of the hearing on 6 December 2011. The amended application sought orders to the following effect:
a) A declaration that the practitioner has been guilty of professional misconduct.
b) An order recommending that the name of the practitioner be removed from the local roll.
c) Alternatively, an order that any practising certificate held by the practitioner be cancelled or suspended for such period as might be determined by the tribunal.
d) Alternatively, an order that a fine be imposed on the practitioner in such amount as might be determined by the tribunal.
e) Such further or other relief pursuant to Section 425 of the (Legal Profession) Act as the nature of the case might require.
f) An order that the costs of the Society be taxed as between solicitor and client and paid by the practitioner.
2. The amended application alleges that the practitioner has by his conduct breached sections 222, 223, 226A, 229(1)(b) and the 230 of the Act as well as regulations 38, 57, 62 of the Legal Profession (Solicitors) Regulation 2007 (the Regulation) and rules 1.1, 6.2, 10.1 of the Legal Profession (Solicitors) Rules 2007 (the Rules).
Background
3. The practitioner was at all material times an Australian legal practitioner practising in the ACT in a sole practice and the holder of an unrestricted practising certificate.
4. These proceedings relate to information given to the applicant by three people who had engaged the practitioner to provide them with legal services (the complainants).
5. The practitioner provided legal services to FB in relation to a domestic relationship property dispute.
6. SS engaged the practitioner in relation to three matters: an action in relation to her rights and obligations under the Family Law Act 1975, an action relating to defamation and an action against her previous solicitor.
7. BB engaged the practitioner to represent and provide advice to her brother, MB, in relation to criminal charges. BB’s brother was at all material times a client of the practitioner.
8. Each complainant was in a contractual relationship with the practitioner pursuant to which they agreed to pay him for legal services rendered. In relation to FB and SS invoices, where they were produced, were addressed to them. In relation to BB invoices, where they were produced, were sometimes addressed to MB but mostly to both BB and MB.
9. The information given by each complainant had common themes:
a) demands by the practitioner for regular cash payments;
b) a failure by the practitioner to give receipts for those payments;
c) a failure by the practitioner to render invoices for his legal work.
10. Each complainant said that they received very few invoices (or none, in the case of SS) from the practitioner, notwithstanding that they paid considerable amounts to him for legal work said to be done over a number of years.
11. In relation to each complainant, the applicant also says that there were:
a) failures by the practitioner to deposit money paid by the clients into his trust account;
b) failures to issue trust account receipts to the clients and
c) transfers of money from the trust account to the practitioner as payment for legal fees without the necessary invoices to and/or appropriate authorities from the clients.
12. In addition, the applicant alleges that the practitioner borrowed money from FB and SS and misappropriated funds from monies held in trust for them, to himself. The applicant also alleged that the practitioner failed to issue trust account statements even though transactions were made subsequent to the last statement issued.
13. The application was considered by the tribunal in a hearing that lasted several days. Each complainant gave evidence as did an expert called by the applicant and the practitioner. Many documents were admitted into evidence including affidavits made by the witnesses and various financial, business and telephone records.
The evidence and the test to be applied
14. Much of the evidence in this case is conflicting. The practitioner simply denies that he asked for and received cash payments from the complainants; he denies that he borrowed money from clients and he alleges that he had acted upon instructions in paying out money from his trust account (albeit that he produced no written instructions or authority to do so.
15. Allegations of serious wrongdoing must be examined in the context of the entirety of evidence put before the tribunal. The allegations of wrongdoing must be established to the reasonable satisfaction of the tribunal. The appropriate test to be applied is that articulated in Briginshaw v Briginshaw (1938) 60 CLR 336. Starke J stated:
[t]he truth is that civil causes may, not must, be decided on a balance of probabilities. If the proof brings no strength of conviction to the mind of the tribunal or, what is much the same thing, does not satisfy the tribunal beyond reasonable doubt of the truth of the fact alleged, especially in the case of serious allegations such as adultery or fraud or crime, then the allegation remains unproved…
16. Dixon CJ stated:
when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency. Thus, Mellish L.J. says: "No doubt the court is bound to see that a case of fraud is clearly proved, but on the question at what time the persons who have been guilty of that fraud commenced it, the court is to draw reasonable inferences from their conduct" (Panama and South Pacific Telegraph Co. v. India Rubber, Gutta Percha, and Telegraph Works Co.). [Emphasis added]
The forensic accounting evidence
17. The applicant’s accounting expert, Mr Bruce Glanville, analysed the general office account and trust account records of the practitioner, so far as they were available. Where necessary, Mr Glanville reconstructed the accounts and provided summaries for the benefit of the tribunal. In general terms, Mr Glanville was able to identify:
a) prima facie instances of trust money not being deposited to the trust account of the practitioner; and
b) prima facie instances of payments made to the general account from the trust account on account of legal fees, where no invoice had been produced.
18. Mr Glanville also analysed other business records and bank and credit card statements held by the practitioner (both personally and for his practice) and by his wife. Mr Glanville's analysis identified that in the period under review:
a) credit card balances were generally at the limit of credit provided by the bank. The credit facilities appeared to be under pressure in each case;
b) the rent for the premises from which the practitioner conducted his practice was paid irregularly and not in amounts specifically related to the monthly rental;
c) prima facie an amount of $205,726 greater than the amount shown in Business Activity Statements lodged with the Australian Tax Office was banked to the general account of the practitioner’s business;
d) prima facie an amount $203,527 greater than the amount declared in the income tax returns of the practitioner was banked to the general account of the practitioner’s business; and
e) a significant number and quantum of cash deposits into the business and personal accounts of the practitioner and his wife between 1 January 2007 and 30 June 2010 were not declared as income and were unable to be matched to any particular source shown in the records. Mr Glanville's summary of the unmatched cash deposits for each relevant year from1 January 2007 to 30 June 2010 was marked by the tribunal as Exhibit F. The unmatched deposits totalled almost $250,000.
Financial position of the practitioner
19. FB and SS gave evidence that the practitioner asked them for, and that they agreed to lend him, significant amounts of cash.
20. FB gave evidence that she lent the practitioner $10,000 on 19 March 2009 and that he asked her for a further loan of $10,000 in late August/early September 2009, which she refused. SS gave evidence that she lent the practitioner $6,000 on 6 January 2009.
21. The practitioner denied each of these allegations. He also denied in oral evidence that he was struggling financially at these three times in 2009, but his bank and credit card statements and those of his wife, show otherwise.
22. Mr Glanville’s analysis shows that the professional and personal finances of the practitioner were under strain. Further, an examination of mortgage accounts, credit card accounts and savings accounts of the practitioner and his wife reveal that the practitioner was unable to service loans and credit cards at the relevant time: five credit cards with a total credit limit of $39,000 were at, or over, the credit limit and were subject to late payment fees and high interest charges; the mortgage records show missed or late loan repayments.
The credibility of the applicant’s witnesses
23. Each complainant gave clear and largely unchallenged or unshaken evidence. FB's evidence was entirely unshaken in cross-examination. BB’s evidence was entirely unshaken in cross-examination. Each of these was a credible witness; they impressed as giving thoughtful and truthful answers in relation to the incidents. The practitioner attempted to undermine SS's credibility. ACAT formed the impression that her evidence was both truthful and credible. SS was evidently distressed when giving evidence, but, in the view of the tribunal, gave truthful evidence to the best of her ability concerning incidents and events that occurred several years ago and that were often personally embarrassing and distressing for her.
24. The subsidiary witnesses called by the applicant were also believable. Their evidence was consistent with and often corroborated the evidence of the complainants in important respects.
The credibility of the practitioner
25. The practitioner consistently denied the obvious and asserted the implausible. He was often evasive or resorted to obfuscation when confronted with objective evidence which contradicted his version of events. At times, the evidence of the practitioner was farcical. His evidence should not be accepted in many important areas. He was not able to give clear or convincing evidence about, or explanations for, his conduct on several crucial issues. In general, the evidence before the tribunal revealed a legal practitioner whose record keeping and accounting practices were unprofessional, haphazard and often retrospective.
26. In general, the practitioner exhibited an unsatisfactory attitude towards these proceedings. He said in cross-examination that he had not taken the time to re-read any of the affidavits that he had sworn in August and November 2011. He did not appear to appreciate the serious nature of the complaints made against him and did not give considered answers to questions.
27. The practitioner was not a witness of credit. His strong denial of a romantic affair with SS in his affidavit evidence and in cross examination was not accepted by the tribunal: the evidence of SS, corroborated as it is by phone and text message records, was accepted. His evidence was not clear or direct.
28. When taken together, the practitioner’s responses to the original complaints and the evidence given by him in affidavits and orally, provide no credible explanation for the many events that called for explanation or clarification. Under cross-examination he was evasive and tended to obfuscation. His answers revealed that he had little appreciation of his duty to his clients or of his obligations in relation to trust moneys received.
The grounds of complaint
The practitioner failed to deposit into his trust account an amount totalling approximately $3000 received from his client, FB prior to December 2007. (Grounds 1, 3 and 5.1)
29. FB stated in her original complaint that she had given the practitioner $1000 each fortnight and, in her affidavit sworn on 22 September 2011, that between late October and early December 2007 she had made three payments of $1000 each in cash to the practitioner. She stated that the practitioner had given her cash receipts for these three payments, but that she could not locate them. Later, FB contradicted her evidence and stated that she began to pay by bank cheque because the practitioner had not given her receipts. There was no supporting evidence for her claims. The practitioner denied that he had ever received these payments.
30. The tribunal cannot be reasonably satisfied that FB made three payments of $1000 cash to the practitioner. The evidence of FB, while consistent with the evidence of the other complainants, is not, by itself, sufficient to establish on the balance of probabilities that at the commencement of the retainer she paid the practitioner as alleged.
The practitioner withdrew amounts totalling $12,746 from his trust account in excess of costs billed to July 2008. (Grounds 2.1 & 5.4)
31. The report of Mr Glanville identifies a total of $12,746 withdrawn from trust by the practitioner as legal fees in relation to FB’s matter for which there is no corresponding invoice.
32. The tribunal cross referenced the report of Mr Glanville with the solicitor’s trust account statements produced by the Commonwealth Bank, the invoices produced by FB and the reconstruction of the practitioner’s trust account. The practitioner’s trust account records are poor, nevertheless, they reveal that on at least two occasions the practitioner invoiced FB for payment of an amount claimed as a disbursement, and, FB paid those invoices; the practitioner also withdrew that amount from his trust account: that is, the records show that the practitioner both received money pursuant to the invoice levied and withdrew the equivalent amount from funds already in trust.
33. A comparison of the amounts paid from trust to the practitioner’s general business account revealed that the amounts transferred from trust did not always correspond to the invoices produced by the practitioner: on more than one occasion the practitioner paid monies from trust in excess of the total amount invoiced.
34. In cross examination, the practitioner conceded that he paid an amount of $18,040 for counsel’s fees from monies already held in trust and invoiced the client a further $18,040 for counsel’s fees. There was no evidence that the practitioner took steps to investigate or correct this double counting.
35. Having examined and cross referenced the evidence before the tribunal, the tribunal is satisfied that the practitioner withdrew amounts totalling $12,746 from his trust account in excess of invoices produced. In breach of section 223 of the Act the practitioner failed to hold trust money exclusively for the person on whose behalf that money was received and failed to disburse trust money in accordance with the directions of his client. As a result of double payment and, especially as a result of failing to maintain proper accounts and therefore failing to correct the double payment, the practitioner, in breach of section 230 of the Act, caused deficiencies in his trust account and failed to properly account to FB for the amount of $12,746 .
The practitioner made a payment from FB’s trust account money of $3,500 to SS on 28 April 2009 when this payment was not authorised by his client FB. (Grounds 2.2 & 5.2)
36. SS gave evidence that on or about 6 January 2009 she lent the practitioner an amount of $6,000. On or about 28 April 2009, she telephoned the practitioner and asked him to repay the money. Later that day the practitioner drove his car to SS’s place of work and telephoned her. She went outside to see him. The practitioner threw a cheque out of the window of the car. SS gave evidence that when she picked it up and looked at it; she noticed that it was a trust cheque.
37. The practitioner’s trust account statement shows that a cheque in the amount of $3,500 was drawn on 28 April 2009. The tribunal received evidence of the cheque butt upon which the practitioner had written “S.. S.. as instructed by F.. B.. – $3500”.
38. In his own evidence, the practitioner admitted that he drew a cheque in favour of SS in the amount of $3,500 from his trust account. He identified that the $3,500 was paid from money he held in trust on behalf of FB. His evidence was that he had written the cheque to SS on the instructions of FB. In his affidavit response to the original complaint he stated “on 28 April 2009 FB telephoned me and requested that I write a cheque for $5,000 to SS. She then changed her mind for 3,500 which I did”.
39. The practitioner produced no written authority by FB to pay this amount from monies held in trust on her account. He produced in evidence a copy of what he said was a contemporaneous file note stating that FB telephoned him and asked him to write the cheque for SS.
40. Both SS and FB gave evidence to the contrary. Telephone records for the practitioner’s and FB’s office and mobile telephones do not show any call made by FB to the practitioner on 28 April 2009. The records of the practitioner’s mobile phone show that he called SS three times on 28 April 2009. The evidence establishes that he wrote a cheque for $3,500 to SS, from FB’s trust account monies. The evidence of both FB and SS is accepted by the tribunal. The tribunal is satisfied that the practitioner had no instructions or authority from FB to pay the amount of $3,500 from money held on her behalf to SS.
41. ACAT is not satisfied that the file note produced by the practitioner is a contemporaneous record of events. ACAT accepts the evidence of SS that the cheque was written to partly repay a loan made by her to the practitioner. ACAT accepts the evidence of FB that she had no conversation with him in relation to payment of any money by her to SS. She did not instruct the practitioner to make the payment, nor did she in any way authorise the payment.
42. This ground is established. The tribunal is satisfied that the practitioner breached section 223(1) of the Act because he failed to hold trust money in the trust account of his practice exclusively for the person (FB) on whose behalf that money was received. He breached section 230 of the Act by causing deficiencies in his trust account.
On 31 August 2009 the practitioner transferred an amount of $10,000 from his trust account money held on behalf of FB to his office account without the authority of his client. (Grounds 2.3 & 5.3)
43. The evidence establishes that on 31 August 2009 the practitioner transferred an amount of $10,000 from trust account monies held on behalf of FB to his office account. This is conceded by the practitioner.
44. The practitioner alleges that FB attended his office and said that she urgently needed money. After some discussion it was agreed that he would transfer $10,000 from the trust account to his office account, withdraw that amount in cash and give it to her. He further alleges that on 2 September 2009, FB attended his office and took the $10,000 cash. The practitioner produced what were said to be contemporaneous file notes supporting his evidence. ACAT does not accept that the file notes were a contemporaneous record of events.
45. During cross examination, the practitioner agreed that he transferred $10,000 from FB’s trust account monies to his office account and that he had no written authority or receipt from FB to support his assertion that she requested and received the money. He acknowledged that he had not made any entry on his trust account ledger in relation to the payment until 11 September 2009. He acknowledged that the entry in the trust account ledger misrepresented the facts because it stated that the payee of the cheque was FB, when in fact the payee was his office account.
46. FB gave evidence that she lent the practitioner $10,000 in March 2009 and that on or about 2 September 2009 he asked to borrow a further $10,000 from her. She refused to make the second requested loan. She said that she knew nothing of the $10,000 withdrawal from her trust account on around 2 September 2009 until it was drawn to her attention by Ms Jean Sayer who prepared a report for the applicant. In cross examination FB rejected the suggestion that she asked the practitioner for cash and that she had been handed $10,000 cash by the practitioner on or about 2 September 2009.
47. Records for FB’s home phone and mobile phone show that she made no call to either of the practitioner’s phone numbers on either 31 August or 2 September 2009.
48. Records for mortgage accounts, credit card accounts and savings accounts of the practitioner and his wife for the period March to August 2009 show that the practitioner was under extreme financial stress at the time the $10,000 was removed from FB’s trust monies.
49. The evidence given by the practitioner in relation to this ground is unsatisfactory. At best, it reveals a cavalier and careless approach to his obligations in relation to trust accounts, a very poor understanding of his obligation to his clients, and no real understanding of the requirements to properly and truthfully account for moneys held on trust.
50. The evidence of the practitioner is not accepted by the tribunal: none of the independent evidence supports his version of events, his oral evidence was unconvincing and there is a reasonable basis for suspecting that his file notes were generated post complaint. The tribunal finds the practitioner’s evidence in relation to this ground to be untruthful.
51. The tribunal is satisfied that the practitioner failed to hold trust money in the trust account of his practice exclusively for the person on whose behalf that money was received and failed to disburse that money in accordance with the direction of the client in breach of section 223 of the Act.
52. The tribunal is further satisfied that the practitioner caused deficiencies in his trust account and failed to account to his client, FB for the amount of $10,000 paid from trust without direction or authority in breach of section 230 of the Act.
In breach of Section 229(1)(b) of the Act and regulation 62 of the Regulation the practitioner withdrew from his trust account after 22 February 2008 amounts totalling $47,278 for legal costs without giving his client FB written notice of the withdrawal or a tax invoice. (Ground 4)
53. In relation to this ground the tribunal had the following:
a) a reconstruction of the client’s trust account prepared by Mr Glanville;
b) ten invoices produced by the practitioner and addressed to the client – the practitioner stated in his affidavit that these were the only invoices provided to the client. The last of these invoices is dated 30 November 2008; and
c) a comparison made by the tribunal of the invoices produced by the practitioner and the withdrawals from the trust account that were identified as being for payment of legal fees owed by the client.
54. The practitioner’s evidence painted a picture of a legal practice conducted in a haphazard way: he had no support staff or secretary, all bills, correspondence and filing were attended to by him. He said that he was not proficient at typing and that he often did not mark correspondence as sent or received.
55. A comparison of the invoices produced by the practitioner and withdrawals from the trust account recorded as relating to the payment of fees owed, shows that the amount of the invoice and the withdrawal from the trust account matched on only one occasion. The tribunal identified five separate occasions between December 2007 and November 2008 on which the amount transferred by the practitioner from trust monies on account of legal fees owed exceeded the total of the invoices rendered. The tribunal also notes that the practitioner made payments from trust monies after his retainer ended and the practitioner offered no explanation for those payments. In general, the evidence indicates a pattern of conduct consistent with the practitioner withdrawing money as he needed it, rather than as he generated invoices for legal work performed.
56. ACAT has been unable to identify amounts totalling $47,278 as set out in Ground 4. The applicant said that the amounts withdrawn from the trust account by the practitioner for legal costs after 22 February 2008 for which no notice of withdrawal was given, nor a tax invoice rendered, was detailed on page 2 of Attachment 7 of a report in relation to FB. ACAT assumes this refers to a report by Miss Sayer. ACAT had before it in Mr Glanville’s report, a reconstructed trust ledger for FB: this report has been used to identify payments totalling $33,215.
57. It is difficult to extract exact amounts from the evidence presented: the applicant’s evidence is based on reports from Miss Sayer and Mr Glanville. Much of Mr Glanville’s report is based on reconstructions. In addition, analysis of the records is complicated by the poor record-keeping of, and double payments made to, the practitioner.
58. Despite the difficulties identified above the tribunal is satisfied that the practitioner withdrew $33,215 from his trust account for legal costs without giving the client FB either a tax invoice, or written notice of the relevant withdrawal in breach of section 229 (1) (b) of the Act and regulation 62 of the Regulation.
In breach of rule 10.1 of the Rules on 10 March 2009 the practitioner borrowed the sum of $10,000 from his client FB. (Ground 6)
59. In her original complaint FB said ...in March 2009 he asked me if he could borrow $10,000 off me. He wrote a cheque from trust for $15,000 [drawing on funds held in trust on behalf of FB] which I put into my account on 10 March 2009 and waited for it to clear and then withdrew $10,000 on 10 March and gave it to him in cash. He said he would have it paid back to me in 3 months. She repeated the allegation in her affidavit of 22 September 2011.
60. FB’s daughter, C, gave similar evidence. Although C could not precisely identify the date of the transactions, she said that she had been with her mother when an amount of $10,000 was withdrawn from the bank and that she had seen her mother deliver the money to the practitioner. She said that her mother told her the money was for the practitioner and that it would be paid back.
61. Both FB and her daughter were cross-examined. Each was unshaken as to the key fact that on or about 19 March 2009, FB withdrew $10,000.00 in cash and handed it to the Practitioner. C showed some confusion about the timing of the transaction, however was clear in her evidence that her mother had lent $10,000 to the practitioner.
62. The practitioner denies the loan, without any explanation. He did not deny the payment of the cheque of $15,000.00, but gave an explanation about it which related to FB “having trouble” with C. This was not established by any evidence.
63. An examination of the records of the mortgage accounts, credit card and savings accounts of the practitioner and his wife reveal that the practitioner was under extreme financial stress in March 2009.
64. SS, also a client of the practitioner, gave evidence that the practitioner borrowed money from her which he had failed to repay in full.
65. Taking into account the above evidence and particularly noting: the corresponding accounts given by FB and her daughter, and the practitioner’s financial circumstances, the tribunal is comfortably satisfied that the practitioner did borrow $10,000 from his client FB on or about 10 March 2009 in breach of rule 10.1 of the Rules.
In breach of rule 6.2 of the Rules the practitioner failed to release all documents and files to Ray Swift Moutrage and Associates, FB’s new solicitors following the termination of the practitioner’s retainer. (Ground 7). In breach of regulation 57 of the Regulation the practitioner failed to issue trust account statement in respect of the disbursement of monies held in his trust account beyond June 30 2008. (Ground 7A)
66. The ACAT has before it copies of:
a) an authority signed by FB on 31 March 2010 directing the practitioner to release her file to Ray Swift Moutrage;
b) letters written to the practitioner by Ray Swift Moutrage requesting the files on 31 March 2010; 12 April 2010; 13 April 2010; and 28 April 2010. The letters requested the practitioner to release trust monies being held in FB’s account and the following documents: itemised accounts; trust account and office account receipts; evidence of monies deposited with the practitioner’s firm; evidence of monies withdrawn from the trust account by the firm; a copy of the trust account ledger; and all documents and files relating to FB’s matter. The first of the letters included the authority for the release of the material.
c) replies to the letters by the practitioner dated 9 April and 12 April 2010. In these brief replies the practitioner states that FB must pay for photocopying the files. The letters did not address the issue of return of monies in the trust account, nor did the practitioner reply to the final 2 letters addressed to him by Ray Swift Moutrage.
67. In his oral evidence, the practitioner said that he was ‘implicitly’ exercising a lien over the files. He gave no explanation of the basis on which he believed he was able to exercise a lien. The last account rendered to FB was dated November 2008. It had been paid. There was no basis for the practitioner to claim a lien over the files where the matter had been completed, a final invoice issued more than 12 months previously and no accounting made to the client in relation to monies held in trust. The replies from the practitioner were trite, and appear to be no more than a delaying tactic.
68. On the basis of the above evidence, the tribunal is comfortably satisfied that the practitioner failed to release documents and files to FB’s new solicitors in breach of rule 6.2 of the Rules. The tribunal is also comfortably satisfied that the practitioner failed to issue a trust account statement in respect of the disbursement of monies held in his trust account after 30 June 2008 in breach of regulation 57 of the Regulation.
In breach of Section 222 of the Act, the practitioner failed to deposit into his trust account amounts totalling $18,605 received by his law practice from BB on behalf the practitioner’s client MB. (Ground 8)
69. The tribunal had before it the following evidence:
a) the report of Mr Bruce Glanville;
b) the reconstructed trust statement prepared by Mr Glanville;
c) the affidavit and oral evidence of BB and MB in which both gave evidence of demands made by the practitioner for payment in cash;
d) diary notes and phone records as well as bank statements; and
e) the affidavit and oral evidence of the practitioner.
70. As well as examining that evidence the tribunal took into account the following: the evidence of all three of the complainants that they had been required to pay regular amounts of cash to the practitioner and that they were not given regular invoices for work done or receipts for amounts paid; the financial position of the practitioner and the many unmatched deposits into the personal bank accounts of the practitioner and his wife.
71. The tribunal’s examination of the invoices provided by the practitioner, the evidence of payments provided by the complainant and the reports prepared by Mr Glanville, show no correspondence between the amounts paid to him and the invoices that he rendered.
72. There is a huge discrepancy between the total amount BB says she has paid ($90,649.40) and the total of all the invoices before the tribunal ($46,231.80). The difference between the amount BB says she paid and the total amount on invoices BB says she and/or MB received ($24,412.00) is even larger. The difference could not be solely due to any inaccurate recollection by BB; such a difference can only be the result of deliberate falsification of the facts. The tribunal accepted BB as a witness of credit, who would not so falsify the facts.
73. The tribunal is comfortably satisfied that, in breach of section 222 of the Act, the practitioner failed to deposit into his trust account amounts totalling approximately $18,605 received by him from BB.
In breach of section 223 of the Act, the practitioner failed to hold money deposited into his trust account exclusively for the person on whose behalf it was received and disbursed that money in breach of the direction given by the client. (Ground 9)
74. BB gave evidence that she paid an amount of $26,000 into the practitioner’s trust account on 1 July 2008. BB intended that the money should be used for the payment of $20,000 to Counsel for fees and was specifically for “the trial” involving her brother. She was definite in this belief and not shaken from it in cross examination. Both her brothers corroborated that the money was paid to the practitioner for Counsel’s fees. Mr Purnell SC deposed to a meeting that he had with BB at which she repeated her understanding that she had paid $20,000 to the practitioner for Counsel’s fees.
75. The reconstructed trust ledger and the reports prepared by Mr Glanville show that the whole of the $26,000 was used for purposes other than the trial. The reconstructed trust ledger shows that most of the $26,000 was drawn for the practitioner’s legal fees alone. The practitioner submitted that BB had misunderstood the significance of the money being paid into trust. The tribunal does not accept his submission.
76. On the evidence before it the tribunal is comfortably satisfied that BB paid more than $80,000 to the practitioner. Of that amount, $26,000 was specifically paid into his trust account for fees relating to her brother’s trial – that is $20,000 for Counsel’s fees and $6000 for the practitioner’s fees. The practitioner withdrew the amount from trust without rendering appropriate invoices and without obtaining the proper authority from BB.
77. The tribunal is satisfied that the practitioner breached section 223 of the Act by failing to hold money deposited in his trust account exclusively for the person on whose behalf it was received and by disbursing that money in breach of the direction given by the client and without authority for the manner in which it was disbursed.
78. The applicant also alleges under this ground that the practitioner withdrew amounts totalling $16,880 from trust on account of invoices rendered, when in truth such withdrawals were not supported by the invoices because BB had already made cash payments to the practitioner in satisfaction of the invoices. The practitioner has withdrawn amounts of $1000 from trust on 5 July 2008 purportedly on account of GST owed to Mr Purnell SC when in truth BB had already satisfied that liability by a cash payment made to the practitioner in December 2007.
79. The evidence before the tribunal was that the practitioner made constant requests to BB for cash payments, that cash payments were made to him by BB, that the practitioner did not issue receipts for the cash payments and that the practitioner withdrew amounts from trust that were not referred to in corresponding invoices. Once again, the evidence of the practitioner in relation to these allegations is contradictory and reveals a failure by the practitioner to keep proper accounts, or to meet his obligations in relation to the trust money of his clients.
80. The tribunal accepts BB’s evidence that she made cash payments to the practitioner. Her evidence is corroborated by bank statements, diary records and her brothers’ evidence. The practitioner deposed that he had provided all records relating to BB accounts, yet he produced no receipts for the payments made either in cash or from his trust account. Further, the practitioner did not provide any appropriate authority for the withdrawals he made from the trust monies held for BB’s matters. The practitioner has not accounted to BB for moneys paid into trust, withdrawn from trust or remaining in trust when his retainer came to an end.
81. On the evidence before it the tribunal is satisfied that the practitioner breached section 223 of the Act by failing to hold money deposited into his trust account exclusively for the person on whose behalf it was received and by failing to disburse that money according to the direction given by the client.
In breach of section 230 of the Act, the practitioner failed to account to his client MB, for the sums of $26,000 paid on 1 July 2008, $5805 paid on 16 July 2007, $5800 paid on 30 June 2008, and additional amounts totalling $17,880 paid in cash to the practitioner by BB. (Ground 10)
In breach of regulation 38 of the Regulation, the practitioner failed to issue a receipt for trust moneys received by the practitioner for his client, MB. (Ground 11)
In breach of regulation 57 of the Regulation, the practitioner failed to issue trust account statements beyond 26 October 2008 in respect of the disbursement of the amounts of $26,000 paid to the practitioner on 1 July 2008 and $5000 on 1 July 2009. (Ground 12)
In breach of regulation 62 of the Regulation the practitioner withdrew trust money in payment of legal costs for which no tax invoice had been issued to his client MB and no authority had been given to withdraw the monies. (Ground 13)
82. In addition to the evidence considered in relation to Grounds 8 and 9, the tribunal notes that the practitioner produced no trust account statement beyond 26th of October 2008. The practitioner failed to offer any explanation for the unmatched deposits identified by Mr Glanville, haphazard and irregular invoices and receipts, the absence of correspondence between the amounts deposited, the amounts paid by BB, the amounts invoiced and the amounts withdrawn from his trust account. The totality of the evidence leaves the tribunal more than comfortably satisfied that the practitioner demanded and received cash payments, failed to issue receipts for the cash payments, failed to deposit the cash payments into his trust account, failed to produce adequate and accurate invoices and failed to account to his client for the money is paid into trust.
83. The tribunal is satisfied that Grounds 10, 11, 12 and 13 have been established by the applicant.
In breach of section 222 of the Act, the practitioner failed to deposit into his trust account any of the amounts of $6,000 or the weekly payments of $1,000 (with the apparent exception of $1000 on 5 October 2008) and then $500.00 received from his client, SS. (Ground 16)
In breach of regulation 38 of the Regulation the practitioner failed to issue a receipt for the said payments, being trust monies received by the Practitioner, to his client, SS. (Ground 17)
84. On or about 27 March 2007, SS and her ex-husband (J) instructed the practitioner to act for J in an appeal. The practitioner briefed Dr Doug Hassall of Counsel to appear in the appeal.
85. SS says that from around 9 April 2007 until 25 June 2008, she paid the practitioner $1000 a week in cash. In addition, at around 27 March 2007, the practitioner required SS to pay him $6000 in cash so that he could obtain an opinion from Dr Hassall, a copy of the transcript of a Court decision and cover other disbursements including photocopying. On and from 9 July 2008, SS paid the practitioner the lesser sum of $500 a week until December 2008. By that time SS had made cash payments to the practitioner in the order of $75,000.
86. It is alleged that the practitioner failed to deposit the sums received from SS (with the apparent exception of $1000 on 5 October 2008) into his trust account or to account to her for the funds; the practitioner failed to issue receipts for the payments and or to issue any invoices to SS in relation to the work undertaken for her.
87. SS deposed in her affidavit and said when giving oral evidence, that she paid weekly cash payments of one thousand dollars to the practitioner for over twelve months. This was based on an estimate by the practitioner that SS’s matter would cost in excess of $50,000. SS gave evidence that she worked two jobs and borrowed money from her daughter and her father to fund the payments.
88. SS adhered to her evidence in cross-examination and was not shaken. She conceded that she had not properly or completely disclosed her income in a financial statement prepared for court proceedings. She stated, and the tribunal accepts, that the practitioner assisted her with the completion of her financial statement, and encouraged her to not disclose the fact that she was paying him $1000 a week in cash.
89. SS gave evidence that she maintained handwritten records of the dates and the amounts paid to the practitioner on small pieces of paper. SS provided the tribunal with the originals of handwritten documents in which she recorded the weekly payments made to the practitioner. SS’s schedule of the cash payments made by her to the practitioner from April 2007 to December 2008 total approximately $56,000, reflecting an average weekly payment of $650. The tribunal had the following documents:
a) A fax from SS to her ex-husband, J dated 16 May 2007 that relevantly reads, in part: [The practitioner] will only re-consider acting for you if money is now placed in trust. I have been paying him $1000 p.w. I earn $600 pw and have had to take a second job to earn the balance of the $1,000. Dr Hassall and [the practitioner] know and understand this and had accepted the money.
b) File note by the practitioner dated 15/6/07 which was headed SS/M, where the practitioner notes: tell him SS can not pay any more. You need to find the money she will not pay any more [emphasis is added]. This stands in stark contrast to the practitioner’s affidavit and oral evidence that SS had never paid him.
c) Fax from SS to J dated 2.7.07: …because I have put every cent I have earned this year into the case I will not even have enough money to rent something.
d) Fax from J to the practitioner dated 3.07.07: I do not understand your reference to payment by me to you or to Dr Hassell in respect of this appeal. As was made clear during our meeting in Canberra with S and Dr Hassell prior to your engagement and in the subsequent telephone conference with Dr Hassell, you have both been aware that the appeal was to be funded by S, by whatever means she had discussed with you. She has advised me that she has paid you a large amount of money for this purpose. You will need to raise this aspect of payment with her. ACAT notes that the practitioner responded to this letter but did not raise the issue of fees in his response.
e) Letters sent by fax to J and copied to SS on 20 and 23 July 2007 by the practitioner threatening to withdraw unless there are ‘sufficient funds’ in the trust account. The letters do not say what would be ‘sufficient’.
f) Fax from J to the practitioner dated 31 July 2007: I acknowledge that S is paying you, and that is the agreement which was made with you...
90. It would appear from the totality of this evidence that it was common ground between J and the practitioner that SS had agreed to fund the matter and was doing so.
91. SS deposed that in about March 2007, the practitioner asked her to pay $6000 upfront so he could get an opinion from Dr Hassall. She made the payment from which $3000 was ultimately paid to Dr Hassall for a written opinion. The contemporaneous handwritten records of payments kept by SS show entries for 27 March 2007 as follows:
Dr Hassall $3000
Transcript $1500
Photocopy cash [practitioner] $500
Filing fee appeal $1500 (9/4)
92. The practitioner denied that $6000 was paid by SS towards Dr Hassall's fees. He deposed that the amount was paid "to the best of my recollection" to meet the costs of Supreme Court proceedings in which SS and J were the defendants to an action for the possession of their property. The practitioner provided no documentation to corroborate his ‘recollection’.
93. The practitioner provided details of a total of $8000 paid by SS for fees and unspecified amounts towards some disbursements. He states that he represented SS in 4 matters including conducting 2 cases in superior courts, one as an appellant and one as a defendant. Both were civil matters. Counsel was briefed for each matter.
94. The tribunal notes that in his affidavit sworn on 9 November 2011 at paragraph 2, the practitioner states to the best of his recollection SS paid him $6000 towards the Supreme Court action. In the same affidavit at paragraph 3, he states that SS never paid him an amount of $6000.
95. The tribunal is persuaded that the practitioner was paid. He has asserted that he would withdraw from proceedings unless paid. He also stated that he does not work for nothing. We note that he continued the matters and did not withdraw. It is more likely than not, that SS was making payments on a regular basis to the practitioner. The practitioner did not record the payments, give receipts or keep a trust record of the payments.
96. SS's evidence concerning the payment by her of $6000 to the practitioner for counsel's fees and other disbursements is credible and reliable. The tribunal finds that the money was trust money which ought to have been, but was not, deposited by the practitioner into his trust account to be held on behalf of SS.
97. ACAT is comfortably satisfied that the practitioner received regular cash payments, including a payment of $6000, from SS during the period from March 2007 to December 2008 and that in breach of section 222 of the Act and regulation 38 of the Regulation, the practitioner failed to deposit those monies into his trust account and failed to issue receipts to SS.
The practitioner, in breach of his obligation under rule 1.1 of the Rules to treat his client fairly and in good faith, having due regard to the client’s position of dependence on the practitioner, and the high degree of trust which a client is entitled to place in a practitioner, instead exploited his client’s dependence on the practitioner by threatening to cease to act for her unless she continued to conduct a sexual relationship with him (Ground 18)
98. The applicant alleged in its application that:
a) at some stage during the retainer, while the practitioner and SS were and remained in a sexual relationship, around August /September 2007, SS told the practitioner that she wished to end their sexual relationship and the practitioner responded by saying that, if she did so, he would no longer act for J in the Full Federal Court appeal.
b) by reason of her dependency on the practitioner, her vulnerability and her inability to fund an alternative lawyer to begin looking at the appeal again from the start, SS remained in a sexual relationship with the practitioner notwithstanding her desire to terminate the relationship.
99. In her original letter to the applicant of 10 March 2010, SS wrote:
[The practitioner] began to act for me in 2006. I was separated at the time and a bankrupt. [The practitioner] commenced a relationship with me. I questioned him twice about whether he was married and he assured me he was not. The relationship commenced.
I discovered he was married in 2007. I ended the relationship but the court matters were so complicated that I could not afford to discontinue my services with him. At this time I worked in a second job to be able to afford to pay the legal fees.
100. In her affidavit sworn on 16 September 2011 SS deposed:
In early August 2005 he asked me to lunch with him in Manuka and I went. We thereafter commenced an intimate, romantic and sexual relationship.
…
On and off, I continued my sexual relationship with [the practitioner]. I ordinarily saw him in his office on Sundays or at other times. In addition, he sometimes stayed over with me at my house. I also from time to time went away with him on the weekends. On occasions when he had cases in Sydney, I accompanied him and stayed with him in Sydney.
However, at around the time, as I recall in August or September 2007, that he was representing my husband on my and my husband’s joint instructions in the Full Federal Court appeal, I told him words to the effect: “I don’t want to see you anymore. This relationship is over.” He said to me words to the effect: “if you don’t continue the relationship, I won’t act for you anymore. I will file a Notice of Withdrawal tomorrow”.
I felt vulnerable and entirely dependent on [the practitioner]. Although I did not wish to do so, I continued the sexual relationship as I saw it as the only way of trying to save my former house (or part of it) which I had lost. I also continued to make the weekly cash payments until around December 2008. …
Also at around December 2008 I terminated my relationship with [the practitioner]. [The practitioner] continued to pursue it through text messages but I continued to make excuses, so as to avoid him.
101. The evidence before the tribunal included a transcript of text messages SS had received from the practitioner and that she had saved on her mobile phone. The text messages were sent by the practitioner from 21 September 2009 to 15 March 2010; the latter date is well after the date on which SS states she attempted to end the relationship. The text messages are romantic in nature and include mention of dinner dates and statements to the effect that the practitioner loves SS.
102. The messages corroborate SS’s claims that she and the practitioner were in an intimate, romantic and sexual relationship.
103. In his affidavit of November 2011, the practitioner denies that he had a sexual relationship with SS.
104. The practitioner again denied the affair on oath in his oral evidence. The text messages were admitted into evidence without qualification or objection, following the inspection of SS’s phone by the practitioner’s legal representatives. The practitioner did not comment upon, or offer any explanation of the content or context of these text messages.
105. On the evidence before it the tribunal is satisfied that SS and the practitioner were in a romantic and sexual relationship. However, there is insufficient evidence for the tribunal to find that it is more likely than not that the practitioner unduly influenced or forced SS into continuing the relationship. Ground 18 is not made out.
CONCLUSIONS
Conclusion: the finding of professional misconduct
106. The Act gives the tribunal power to make orders for the discipline of legal practitioners where the tribunal is satisfied that a practitioner is guilty of either unsatisfactory professional conduct or professional misconduct. Those terms are defined in sections 386 and 387 respectively of the Act. The definitions are inclusive definitions. They elucidate or add to the relevant common law rather than replace it.
107. 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. Section 389 of the Act contains a list of conduct that is capable of being unsatisfactory professional conduct or professional misconduct: paragraph (a) provides that conduct consisting of a contravention of the Act can be professional misconduct.
108. The common law definition of professional misconduct is drawn from a test formulated in the English medical profession case of Allinson v. General Council of Medical Education and Registration [1894] 1 QB 750 at 763.5-7. In summary, the test provides 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 recognized as applying to Australian legal practitioners in a long line of authorities.
109. In Council of the Law Society of New South Wales v Fitzsimons [2012] NSWADT 242 (23 November 2012), the tribunal, at paragraph 70, noted there are no fixed categories of professional misconduct. Much depends on whether the conduct falls outside "generally accepted standard[s] of common decency and common fairness." Previous examples of professional misconduct have included wilfully misleading the court (New South Wales Bar Association v Livesey [1982] 2 NSWLR 231); removing documents in contravention of a court order (Howes v Law Society of the ACT (Supreme Court of ACT, Gallop ACJ, Higgins and Crispin JJ, 23 July 1998, Unreported); permitting conflicts of interest to arise (Law Society of NSW v Moulton [1981] 2 NSWLR 736); failing to account for money received ( Re Walker; Ex pane Kemp (1887) 3 WN (NSW) 123); misleading a client (Hoshott v Council of the Law Society of NSW (Supreme Court of NSW, Meagher, Sheller and Stein JJA, 17 December 1997, Unreported); gross neglect and delay (Legal Practitioners Conduct Board v Hay [2001] SASC 322; (2001) 83 SASR 454); failing to adequately supervise an unqualified clerk (Law Society of NSW v Foreman (1991) 24 NSWLR 238); breaching an undertaking given to another lawyer (Wade v Ll.Gardy (1993) 33 NSWLR 1); and, in certain situations, criminal and/or personal misconduct (Ziems v Prothonotary of the Supreme Court of NSW[1957] HCA 46; [1957] HCA 46; (1957) 97 CLR 279).
110. ‘Disgraceful’ or ‘dishonourable’ behaviour requires more than mere negligence, however, behaviour that is grossly negligent or reckless may constitute misconduct.
111. The statutory definition of unsatisfactory professional conduct set out in section 386 of the Act, 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. It comprehends behaviour that is not so significant that it can be described as disgraceful, but is, nevertheless, of a standard less than the standard that a member of the public is entitled to expect from a professional person. It is described in Riley Solicitors Manual in this way: 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.
112. Section 104 of the Legislation Act 2001 provides that a reference to an Act includes a reference to any statutory instruments made, or in force, under the Act. For the purposes of the Act, this includes the Legal Profession (Solicitors) Rules 2007. Thus, a contravention of rule 10 which prohibits a practitioner from borrowing money from a person who is currently a client of the practitioner may constitute either unsatisfactory professional conduct or professional misconduct.
113. The Act gives the tribunal a broad discretion to make disciplinary orders according to the designation and seriousness of the conduct that is established by the evidence. The tribunal is not able to inform itself about the relevant evidence as it thinks fit. Section 420 of the Act provides that the rules of evidence apply to disciplinary actions against legal practitioners.
114. The applicant bears the onus of proof on the balance of probabilities. A line of authorities establish that the standard of proof as described in Briginshaw v Briginshaw is appropriate for disciplinary proceedings because of the potential serious consequences for a practitioner who is found guilty of misconduct.
115. The tribunal taking into account the definition of professional misconduct as set out in section 387 of the Act, and at common law, finds the practitioner guilty of professional misconduct.
116. The tribunal concludes that the conduct of the practitioner in failing to keep proper trust account records, that the conduct of the practitioner in paying money from his trust account to himself without the proper and appropriate written authority was a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence.
117. The tribunal further finds that the practitioner’s conduct in demanding and receiving cash payments, failing to issue receipts for those cash payments, failing to deposit those payments into trust, failing to produce appropriate and proper invoices, paying amounts to himself from trust in excess of invoices rendered is conduct that would reasonably be regarded as disgraceful or dishonourable by professional colleagues who are of good repute and competency.
118. The tribunal also finds that the practitioner’s approach to the original complaints and his conduct during the hearing would justify a finding that the practitioner is not a fit and proper person to engage in legal practice. ACAT notes that this is the second occasion on which the applicant has prosecuted the practitioner.
119. The tribunal finds that the conduct of taking amounts of money from the trust account of clients and paying it to himself, which amounts to theft from clients; the practitioner’s clear lack of understanding of his obligations in relation to trust accounting; his lack of credit and his cavalier attitude towards the conduct of the proceedings, results in the practitioner not being a fit and proper person to engage in legal practice and ought to be taken into account in relation to any future application to the legal profession for the granting of a practising certificate.
120. The tribunal makes no finding on the question of whether the practitioner has failed to properly declare his income to the Australian Taxation Office. The applicant may wish to refer the forensic accounting evidence to the appropriate authorities.
121. The applicant may also wish to refer the question of money taken from trust without authority and paid to the practitioner to the relevant police authorities.
Conclusion: the sanctions to be imposed
122. Section 425 of the Act provides that if ACAT is satisfied that the practitioner is guilty of professional misconduct, ACAT may make any or all of the orders set out in paragraph 3. Section 425 (3) contains the following range of orders:
a) an order recommending that the name of the practitioner be removed from the local roll;
b) an order that the practitioner's local practising certificate be suspended for a stated period or cancelled;
c) an order that a local practising certificate not be granted to the practitioner before the end of a stated period;
d) an order that—
i) stated conditions be imposed on the practitioner's practising certificate granted or to be granted under this Act; and
ii) the conditions be imposed for a stated period; and
iii) states the time (if any) after which the practitioner may apply to the ACAT for the conditions to be amended or removed;
e) an order publicly reprimanding the practitioner or, if there are special circumstances, privately reprimanding the practitioner.
123. A reading of the whole of the Act indicates that its purpose is, broadly speaking, to control and regulate in the public interest the exercise of the privileges and the undertaking of the responsibilities attached to the carrying out within the ACT of the professional practice of a barrister and solicitor.
124. A number of common themes underlie the complaints brought by each of the complainants in these proceedings, and these are relevant to the sanction to be imposed because common themes go to the serious, substantial and consistent failure by the legal practitioner to conduct his practice in a manner consistent with appropriate diligence and competence. Each of the complainants was in a position of financial vulnerability; each gave evidence of having to incur debt and obtain loans from banks and family or friends to meet the financial commitment of the payment of the practitioner’s legal fees over a period of years. Each complainant gave evidence that the practitioner required regular and large cash payments to be made to him, often otherwise than pursuant to invoices; and each of the complainants gave evidence that the practitioner did not issue receipts for most of the cash payments received. Each of the complainants gave evidence that they had received very few if any invoices from the practitioner; and SS gave evidence that she had never received a receipt or an invoice from the practitioner.
125. The forensic accounting evidence showed a haphazard and irregular approach to general office accounting and trust accounting. In his own evidence the practitioner admitted to having double counted an amount of $18,400 to be paid for counsel fees, but provided no explanation of any attempt to correct the accounts.
126. The conduct of the practitioner evidences a deliberate plan to collect cash from his clients in order to avoid payment of tax on the true income received. The conduct of the practitioner also evidences instances of large amounts of cash with no identified source being deposited into his personal and family accounts.
127. The legal practitioner has, in breach of the Rules, borrowed money from his clients and failed to repay the amounts borrowed.
128. The practitioner denied in his affidavits and in sworn oral evidence any romantic affair with his client SS. The transcript of the text messages sent by the practitioner to SS was admitted into evidence without qualification or objection following the inspection of SS’s phone by the practitioner’s legal representatives. The transcript is incontrovertible evidence of a romantic affair between the practitioner and SS.
129. In relation to the complaint made by FB, the practitioner produced in his affidavit of 10 August 2011, handwritten notes by him which he described as file notes on which he relied to substantiate his assertion that if FB had authorised payments of $3500 and $10,000 from her trust monies. The file notes are not supported by the ancillary evidence such as phone records. The practitioner did not produce these file notes in response to the original complaints, nor did he advert to them in his responses. If they were contemporaneous file notes and therefore existed at the time of the original complaints, the practitioner has failed in his duty of full and frank disclosure to the applicant. On this issue the practitioner gave oral evidence which contradicted his affidavit.
130. In general, the practitioner conducted his practice in an unsatisfactory manner, which would reasonably be regarded as disgraceful or dishonourable by professional colleagues who are of good repute and competency.
131. This is the second occasion on which the practitioner has faced the tribunal in relation to his professional conduct. On 7 September 2009 the practitioner was found guilty of professional misconduct by this tribunal and as a consequence received a public reprimand and had his unrestricted practising certificate suspended for a period of twelve months.
132. In determining what sanction, if any, is to be imposed upon the practitioner the tribunal must consider the seriousness of the conduct, the need to protect the public from such conduct, and, whether the conduct of the practitioner would tend to bring the legal profession into disrepute.
133. Conduct of such a nature tends to bring the legal profession into disrepute in a general sense. That is a bad thing for which the appellant must bear appropriate blame. The public interest requires the prevention of such conduct. Therefore it is appropriate for the tribunal to recommend that the practitioner’s name be removed from the local roll.
.............………………………………..
Ms L. Crebbin, General President
for and on behalf of the members of the Tribunal
PUBLICATION DETAILS
FILE NO: LP 8 of 2010
APPLICANT: THE COUNCIL OF THE LAW SOCIETY OF THE ACT
PRACTITIONER: THE LEGAL PRACTITIONER “E”
COUNSEL
APPLICANT: Mr N. Beaumont & Ms T. Dinh
PRACTITIONER: Mr J. Burnside, AO QC
SOLICITORS:
APPLICANT: Phelps Reid, Lawyers
PRACTITIONER: Capital Lawyers
TRIBUNAL: Mr J. Gallop AM QC RFD, Senior Member (Presiding)
Ms J. Lennard, Senior Member
Mr G. Wright, Member
DATE/S OF HEARING: 23 September 2011, 5 – 9 December 2011, 23 February 2012
PLACE: CANBERRA
DATE/S OF ORDER: 24 January 2013 PLACE: CANBERRA
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