Council of the Law Society of the Australian Capital Territory v Giles
[2020] ACTSCFC 1
•21 April 2020
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
FULL COURT
Case Title: | Council of the Law Society of the Australian Capital Territory v Giles |
Citation: | [2020] ACTSCFC 1 |
Hearing Date: | 14 April 2020 |
DecisionDate: | 21 April 2020 |
Before: | Murrell CJ, Burns and Loukas-Karlsson JJ |
Decision: | The practitioner’s name is to be removed from the roll. |
Catchwords: | LEGAL PRACTITIONERS – Application to remove practitioner from the roll following ACAT recommendation – History of misconduct – Misappropriation of trust monies – Whether defendant is a fit and proper person to practise law – Practitioner’s name removed from local roll |
Legislation Cited: | Legal Practitioners Ordinance 1970 (repealed) Legal Profession Act 2006 (ACT) ss 223(1), 229, 425(3), 431(3) Legal Profession Regulation 2007 (ACT) regs 47, 62 |
Cases Cited: | Barristers Board v Darveniza [2000] QCA 253; 112 A Crim R 438 Briginshaw v Briginshaw (1930) 60 CLR 336 Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279 |
Parties: | The Council of the Law Society of the Australian Capital Territory (Plaintiff) Charles Filgate Giles (Defendant) |
Representation: | Counsel D Moujalli (Plaintiff) Self-represented (Defendant) |
| Solicitors McInnes Wilson (Plaintiff) Self-represented (Defendant) | |
File Number(s): | SC 462 of 2019 |
THE COURT
Introduction
The Council of the Law Society of the Australian Capital Territory (the Law Society) sought an order pursuant to s 431(3) of the Legal Profession Act 2006 (ACT) (LPA) that the defendant practitioner’s name be removed from the roll of legal practitioners. The ground for the application was that the Australian Capital Territory Civil and Administrative Tribunal (ACAT) had found that the practitioner was guilty of professional misconduct and had recommended that his name be removed from the local roll of practitioners.
On 31 May 2018, the Law Society filed an application for disciplinary action in ACAT.
The application alleged that the practitioner had acted for clients in two matters. In one (the Bankwest matter), he had received a large sum from a third party and had paid it into the trust account, recording it in the trust account ledger for the Bankwest matter. At that stage, the clients were not liable to pay the practitioner’s costs in the Bankwest matter. However, in relation to the second matter (the Rural Bank matter), costs were payable. On 9 September 2015, by a ledger entry, the practitioner transferred $295,644.45 from the Bankwest trust ledger to the Rural Bank trust ledger and then transferred the funds to his general office account, from which he took the costs payable in the Rural Bank matter.
The application in ACAT contained three charges. The practitioner conceded the two charges that alleged breaches of the LPA in relation to trust fund dealings: the transfer of funds between the trust ledger accounts in breach of reg 47 of the Legal Profession Regulation 2007 (ACT) (LPR) and the unauthorised transfer of $295,644.45 from the trust account to the practitioner’s office account in breach of s 223(1) of the LPA.
However, the practitioner contested the third charge, which alleged that the practitioner had dishonestly misappropriated the sum of $295,644.45 from his trust account. The practitioner disputed that he had acted dishonestly; he said that his actions had been honest but mistaken.
On 25 January 2019, ACAT found that that the charge of dishonestly misappropriating funds was made out and that the practitioner was guilty of professional misconduct: Council of the Law Society of the Australian Capital Territory v Legal Practitioner 201809 (Occupational Discipline) [2019] ACAT 11 (ACAT liability decision).
At the penalty hearing in ACAT, the practitioner contended that his name should not be removed from the roll of practitioners.
On 27 June 2019, ACAT made orders recommending that the practitioner’s name be removed from the local roll, cancelling his local practising certificate, and ordering him to pay the Law Society’s costs of the proceedings: Council of the Law Society of the Australian Capital Territory v LP 201809 (Charles Filgate Giles) (Occupational Regulation) [2019] ACAT 60 (ACAT penalty decision).
In this Court, the practitioner opposed the removal of his name from the roll. Instead, he proposed that he be suspended from practice for 12 months (during which time he would work as a law clerk) and then be entitled to a restricted practising certificate for two years, after which he would be entitled to apply for an unrestricted practising certificate. Alternatively, he sought a restricted practising certificate for three years, after which he could apply for an unrestricted practising certificate.
Legislation
Section 425(3) of the LPA sets out, in descending order of seriousness, the orders that may be made following a finding that the practitioner is guilty of professional misconduct or unsatisfactory professional conduct, including:
425ACAT orders—Australian legal practitioners
(3)The ACAT may make the following orders in relation to the Australian legal practitioner:
(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;
…
Section 431(3) of the LPA provides:
431Compliance with ACAT orders
(3)If the ACAT makes an order recommending that the name of an Australian legal practitioner who is a local lawyer be removed from the local roll—
(a) a copy of the order may be filed in the Supreme Court; and
(b) the Supreme Court may order the removal of the name from the roll.
Section 223(1) of the LPA provides that:
231Holding, disbursing and accounting for trust money
(1) A law practice must—
(a)hold trust money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received; and
(b)disburse the trust money only in accordance with a direction given by the person.
Section 229 of the LPA provides that a law practice may withdraw money for payment to the practice’s account for legal costs owing to the practice if any relevant provision of the LPA is complied with.
Regulation 47 of the LPR enables the transfer of trust money by journal entry from one trust ledger account to another trust ledger account where the law practice “is entitled to withdraw the money and pay it to the other trust account ledger account”.
Regulation 62 of the LPR prescribes the procedure for withdrawing trust money held in a general trust account for payment of legal costs owing to the practice by the person for whom the trust money is held. If there is a compliant costs agreement authorising the withdrawal, the practitioner must give prior notice or submit a prior request for payment: reg 62(3). Alternatively, withdrawal may occur if a bill has been submitted and a seven-day objection period has elapsed: reg 62(4).
History of practice and earlier misconduct
On 20 January 1975, the practitioner was admitted to legal practice in the ACT. For three years, he worked for the Commonwealth Crown Solicitor, undertaking trade practices work.
From 1978 to 1980, he practised as a partner in a small private practice, primarily in conveyancing and commercial law.
After a brief period working for a building society, between 1981 and 1985, he practised as a sole practitioner, undertaking conveyancing, commercial law and commercial litigation.
In 1983, the Law Society found irregularities in his trust account, cancelled his unrestricted practising certificate, and brought proceedings for removal of his name from the roll of practitioners.
On the fourth day of the hearing before the Full Court in February 1985, while still under cross-examination, the practitioner submitted to an order that his name be removed from the roll: Re Legal Practitioners Ordinance 1970; Ex parte Law Society of the Australian Capital Territory; Re Giles (1985) 51 ACTR 1.
The Full Court decision does not detail the charges against the practitioner. However, it appears from the later Full Court decision (see [23] below) that the charges related to a deficiency of trust monies in the practitioner’s trust account between May 1982 and June 1983 and the unauthorised withdrawal of trust monies. According to the practitioner himself (at [14] of his affidavit of 13 December 2019), he contravened provisions of the Legal Practitioners Ordinance 1970 by failing to undertake monthly reconciliations, failing to take out quarterly trial balances and allowing debit balances to arise, but he cleared the debit balances totalling $4,704.41 from personal funds and no client suffered a loss.
In his affidavit of 13 December 2019 at [15], the practitioner stated that, after he had lost his livelihood as a legal practitioner, his marriage broke up and he became bankrupt. Thereafter, until about 1996, he worked in fields other than the law, largely in the construction industry.
In 1988, the practitioner applied unsuccessfully for his name to be restored to the roll. In dismissing the application, the Full Court observed that the application must fail because the practitioner had “deliberately placed before the Court false evidence”: Re Legal Practitioners Ordinance 1970; Re the Application of Charles Filgate Giles to be admitted as a Barrister and Solicitor (ACT Supreme Court, Miles CJ, Kelly and Wilcox JJ, 12 October 1988) at 20.
In 1994, the Supreme Court refused a further application for readmission: Re Legal Practitioners Ordinance 1970; Re the Application of Charles Filgate Giles to be admitted as a Barrister and Solicitor (ACT Supreme Court, Miles CJ, Gallop and Sheppard JJ, 17 June 1994).
From 1996 to 2005, the practitioner worked as a law clerk.
In 2004, the practitioner earned the degree of Master of Laws (ANU).
In 2005, the practitioner applied successfully for readmission: Re Legal Practitioners Act 1970; Re an Application by Charles Filgate Giles [2005] ACTSC 128. In its reasons for judgment, the Full Court (at [16]) referred to an affidavit in which the practitioner had stated:
I am profoundly sorry for the suffering and hardship that my misconduct has caused so many good people. I cannot and will never allow myself to engage in such conduct again.
Between 2005 and 2011, the practitioner held a restricted practising certificate. He worked as an employed solicitor for the firm for which he had earlier worked as a law clerk.
In 2011, the practitioner was granted an unrestricted practising certificate.
In 2012, the practitioner established his own practice. He “applied a protocol of requiring clients written authority before trust funds were disbursed” (practitioner’s affidavit of 13 December 2019 at [25]).
In February 2014, the Law Society brought disciplinary proceedings in ACAT that alleged unauthorised trust account withdrawals by the practitioner and his principal in the period 2009 to 2011, when the practitioner was an employed lawyer. The practitioner admitted the offences.
In a position paper that he filed in ACAT for the purposes of the penalty hearing, the practitioner stated:
I have a rigid procedure in place that no funds are to be disbursed from the trust account, under any circumstances, unless they are first specifically authorised in writing by the client as well as by me.
On 27 March 2014, the practitioner submitted to a finding of professional misconduct. He was reprimanded, fined, and ordered to undertake education in trust accounting, as well as pay 50 per cent of the Law Society’s costs. He retained his right to practise: Re Council of the Law Society of the ACT v Tiirikainen and Giles (ACT Civil and Administrative Tribunal, Senior Member Chenoweth, 27 March 2014).
Between June 2012 and June 2017, the practitioner held an unrestricted practising certificate. He was the principal of a firm known as Charles Filgate Giles & Associates.
Facts related to the current matter
In 2014/2015, the practitioner acted for Mr and Mrs B (the clients), who were defendants in proceedings brought by the Rural Bank as a creditor in the Supreme Court of NSW (the Rural Bank matter, number 10035). The clients were sued as guarantors of their failed company Kennoss Pty Limited (K), to which receivers (and, later, liquidators) were appointed. Hennessy & Co acted for the Rural Bank.
At the same time, the practitioner acted for the same clients in another matter, which concerned the activities of the receivers who had been appointed to K by the creditor Bankwest (the Bankwest matter, numbers 10042 and 10043). In that matter, Norton Rose Fulbright (NRF) acted for the receivers and Bankwest.
In August 2014, the clients and the practitioner entered into separate costs agreements relating to the matters.
On 30 January 2015, NRF notified the practitioner that $371,603.04 would be paid into his trust account, being “surplus funds” from the proceeds of sale of properties owned by the clients and their company, K. On or about 3 February 2015, the monies were paid. After minor payments were deducted, the “surplus funds” were credited in the practitioner’s trust account in relation to the Bankwest matter.
On about 30 April 2015, the clients signed separate new costs agreements relating to the two matters, which, for practical purposes, were identical. The new agreements were designed to supersede the earlier costs agreements.
The costs agreement in relation to the Rural Bank matter referred to professional costs invoiced of $370,090.99 (at $600 per hour) plus disbursements of $38,014.82. The agreement stated that the practitioner would retrospectively amend his invoices to charge $500 an hour.
By each of the costs agreements, the practitioner was authorised to withdraw from the relevant trust account:
any amount owing for our professional costs [and/or disbursements] in this matter and for which we have given/sent you (a) an invoice, or (b) request for payment referring to the proposed withdrawal.
Each costs agreement allowed the clients to terminate the practitioner’s services at any time, but on the basis that he was entitled to be paid for work done and disbursements incurred up to that time.
On 6 May 2015, the practitioner emailed the clients, stating:
Further to our discussion today I confirm that it is my practice, as you have already experienced, of always requiring a written authority that directs and authorises any payment of monies to be made out of the trust account before any such payment is made.
However, please note that I do reserve my rights pursuant to Regulation 62(4) of Legal Professional Regulation 2007.
…
By August 2015, in the Rural Bank matter, the practitioner had issued invoices to the clients totalling $386,838.86 and a statement of account for the same sum. On 28 August 2015, the clients terminated the practitioner’s retainer in the Rural Bank matter and instructed a new solicitor, Mr PB. The costs in that matter became payable.
On 7 September 2015, the Supreme Court of NSW moderated the effect of an undertaking whereby the clients had agreed that they would not deal with certain assets, and granted the Rural Bank leave to issue a garnishee order against the practitioner, pending which the practitioner was ordered not to disburse trust moneys other than those the subject of his lien for costs, to any person other than the Rural Bank.
As the practitioner informed this Court, at that point he was confronted with an imminent garnishee order that threatened him with the loss of most of the monies in the trust account, leaving him with very substantial unpaid costs.
Early on the morning of 8 September 2015, the practitioner emailed the clients, seeking permission to transfer $68,875.85 from his trust account to Mr PB’s trust account. There was no request to pay any amount for the practitioner’s costs. The email asserted that the practitioner still held in trust the sum of $294,227.19 on behalf of the clients, over which he claimed a lien for unpaid costs in the Rural Bank matter. The clients authorised the payment into Mr PB’s trust account.
The practitioner then advised Hennessy & Co of the proposal. Hennessy & Co responded that the Rural Bank objected to the payment to Mr PB but not to the payment of costs that were payable to the practitioner. The practitioner wrote to Hennessy & Co advising them that he intended to disburse the sum of $294,227.19 held in trust to “general office account on account of my lien for unpaid costs”.
Later, on 8 September 2015, the practitioner met with the clients and sought their approval to access the Bankwest trust funds for the purpose of paying his costs in the Rural Bank matter. The clients did not approve the proposal.
Nevertheless, on 9 September 2015 the practitioner transferred by journal entry the sum of $295,644.45 from the trust ledger account for the Bankwest matter to the trust ledger account for the Rural Bank matter, noting the reason for the transfer as “payment per lien for part payment of fees”. Prior to the transfer, the trust account ledger for the Rural Bank matter had a nil balance. After the monies were transferred, payments totalling $295,644.45 were made from the trust account to the practitioner’s office account, returning the trust account ledger for the Rural Bank matter to a nil balance.
At 10:59 AM on 9 September 2015, the practitioner emailed Mr PB to advise that he had transferred the monies to discharge outstanding costs and disbursements.
From the trust account standing to the credit of the Rural Bank matter, the practitioner transferred the $295,644.45 to his office account. After paying $65,000 to counsel, he used the balance for personal and business expenses.
On 18 September 2015, the practitioner met with the clients, one of whom threatened the practitioner with legal action in relation to the transfer of trust monies.
On 22 September 2015, one of the clients emailed the practitioner expressing surprise that he had transferred the funds despite his earlier assurance that no funds would be withdrawn without the clients’ written authority.
After a problem was identified during an audit, by letters dated 25 and 31 May 2016, the practitioner reported to the Law Society that he may have breached the provisions of the LPA in relation to the transfer of $295,644.45 on 9 September 2015. In the letter of 25 May 2016, the practitioner said:
On 8 September 2015, I met with my clients and sought their approval for me to apply the part of the monies claimed by me pursuant to my lien ($295,664.45) to my unpaid costs and disbursements for [the Rural Bank matter]. No approval was provided.
However, in a letter of 31 May 2016, the practitioner stated that “[the clients had] not objected to the withdrawal of the trust money to pay costs and disbursements”: ACAT liability decision at [58].
On 30 May 2017, the practitioner entered a deed of release with the clients pursuant to which $130,000 was to be paid from the trust account to the practitioner in full and final settlement of all costs owed by the clients and $165,000 was to be paid from the trust account to the clients. These monies were paid.
In October 2016 to October 2017, Mr Clapham was appointed manager of the practitioner’s law practice.
In May 2019, the practitioner apologised to the clients for transferring the trust funds and then “applying them to your costs in [the Rural Bank matter]”.
ACAT liability decision
The practitioner submitted to ACAT that he had withdrawn $295,644.45 in the honest and reasonable belief that he was doing so legally. He asserted that his conduct was “not objectively dishonest by the standards of reasonable, honest people”. In an affidavit dated 20 August 2018, the practitioner stated:
My motivation for the journal transfer was that the clients owed me money for legal costs and disbursements, and I believed that the terms of the existing cost agreements entitled me to transfer the subject funds. This belief was based on the advice I sought from Mr Andrew Fernon, Mr Geoff Farland, Mr Chris Erskine SC, and my employed solicitor prior to performing the transactions.
However, ACAT found that the practitioner had repeatedly overstated the extent and nature of the advice that he had received from counsel regarding the propriety of the transaction of 9 September 2015: ACAT liability decision at [40] and [53].
Similarly, ACAT was not favourably impressed by the practitioner’s “dogged denial of the inadequacy of the time costing notes as a record of the 8 September 2015 meeting”: at [42]. ACAT found it troubling that, in cross-examination, the practitioner sought to raise exculpatory matters for the first time: at [43] and following. In these respects, ACAT rejected the practitioner’s evidence and observed that it reflected adversely on his credit: at [50] and [56].
In relation to the practitioner’s letter to the Law Society of 31 May 2016, ACAT found that the practitioner had stubbornly refused to recognise the inconsistency between the statement in the letter of 31 May 2016 and “the clearly expressed displeasure of his clients prior to that time”: at [60]. At [61], ACAT stated:
The Tribunal’s opinion is that the statement by the respondent in the letter of 31 May 2016 to the Law Society is clearly incorrect given the evidence referred to above. The letter was an important letter and the author was under a duty to provide accurate information and a matter which was of importance to sender and recipient. That the Tribunal has found it inaccurate against a background of the respondent’s stubborn denials reflect poorly on the credit of the respondent.
ACAT determined that the practitioner had been aware that he had no verbal or written authority from his clients to make the journal transfer and that he had not been entitled to do so: at [72]. Referring to answers given in cross-examination, at [73], ACAT said:
[T]hese answers are directly incompatible with the existence of an honestly held belief that the respondent’s costs agreements justified the journal transfer that he was proposing to do. The Tribunal infers from the material just referred to that, at the time of making the journal entry, the respondent you, knew that there was nothing which constituted an entitlement to undertake the journal transfer to be found in the costs agreements …
ACAT noted that, in relation to the grave charge of misappropriation, the Law Society was required to establish the allegation to the “Briginshaw standard” (Briginshaw v Briginshaw (1930) 60 CLR 336): at [65]–[66]. ACAT was comfortably satisfied that the practitioner “did not honestly hold the claimed belief that the costs agreements entitled the transfer to be made” and concluded that the transfer “was done dishonestly”: at [74]. ACAT rejected the practitioner’s claim that he had honestly believed that the transaction from trust account to office account had been authorised by the costs agreement: at [75].
Consequently, ACAT found that the misappropriation charge was established. At [77], ACAT continued:
Dishonesty having been found in the handling of trust funds in the circumstances established, the Tribunal is satisfied that conduct must be characterised as professional misconduct and such a finding is made.
ACAT’s repeated and unambiguous finding that the practitioner had acted dishonestly were not challenged. As explained in Law Society of the ACT v Powrie [2017] ACTSCFC 4; 12 ACTLR 184 (Powrie) at [62]–[63], such findings may be challenged by an appeal to an appeal Tribunal within ACAT or, with leave, to this Court.
Practitioner’s evidence and submissions to ACAT on penalty
In an affidavit dated 6 May 2019, the practitioner acknowledged that his conduct “was clearly dishonest by the objective standards of reasonable, honest people”: at [7]. He stated that he had reflected on his conduct, become self-aware and now had “purposeful, structured and very directed planning about [his] practice”: at [9]. He provided a lengthy explanation of how he had come to make an “egregious error of judgement”. The explanation involved the factual complexity and interconnectivity of the matters in which he had acted for the clients, his failure to properly communicate with the clients and the fact that he had “erroneously interpreted” the terms of the Rural Bank matter costs agreement: at [30]. At [42], he stated:
I genuinely believed that I was authorised to withdraw the trust monies because of the combination of the terms of my costs agreements in [the Rural Bank matter] and the invoice that I had sent to [the clients] on 18 August 2015.
The practitioner relied on affidavits from Mr Barnett, Mr Clapham, and Mr Senatore.
Mr Barnett, a former President of the Law Society, stated that he was prepared to continue to supervise the practitioner’s practice.
Mr Senatore, a business consultant who had reviewed management of the practitioner’s practice, said that proper controls and systems were in place and that the practitioner had engaged him for 12 months to assist him to implement Mr Senatore’s recommendations.
Mr Clapham had been appointed as manager of the practitioner’s practice for the period of 10 October 2016 to 10 October 2017 and had continued to manage the practitioner’s trust account for a period thereafter, becoming a mentor to the practitioner. He deposed to the fact that the practitioner had cooperated fully with him, appeared to be genuinely remorseful and had shown an understanding of past misconduct by improving his practices. He believed that there was no discernible risk of harm to the practitioner’s clients or the general public if the practitioner continued to practise as a lawyer.
In relation to the misappropriation, the practitioner relied on paragraphs [21]–[24], [55], [59]–[60] of his written submissions:
The respondent has deposed that he genuinely believe that he was authorised to withdraw the relevant money because of the combination of the terms of the costs agreement in matter number 10035 and the invoice that had been sent to the clients on 18 August 2015 … He has deposed to his embarrassment that he interpreted the costs agreement [in that way].
The respondent has deposed that in September 2015 he was blinded by his mindset where he continued to treat all the files that he had open for the clients as one matter …
On reflection, the respondent acknowledges that he was blinkered because of how careful he thought he had been to consider the requirements of the legislation and did not objectively consider the detailed process for the transfer of the relevant money …
As a result of the various steps undertaken by the respondent since delivery of the judgement, the respondent now acknowledges that his conduct was dishonest by the objective standards of reasonable, honest people. He has identified and explained the reason why he was unable to admit the misappropriation charge before, which demonstrates a developed self-awareness and insight about his conduct.
…
The respondent acknowledges that he did not prepare his evidence properly and ignored advice to obtain independent legal representation …
…
The respondent has deposed that as a result of the matters discussed with his clients in conference on 8 September 2015, he believed that his client fully understood that he was going to transfer the relevant money the next day without their written authority … With hindsight, the respondent acknowledged that he did not actually confirm his clients’ understanding of what was going to happen and why.
With the benefit of genuine reflection, the respondent has acknowledged that what he said to the clients in that conference was inconsistent with his earlier email of 6 May 2015 …
Although the practitioner conceded that he had made a serious error of judgment into which he had since gained insight, he did not concede that he had acted dishonestly; he maintained that his actions had reflected an honest but mistaken belief about his entitlement.
The practitioner submitted that an adequate response to his professional misconduct may be an order restricting his right to practice to that of an employee with conditions, a public reprimand, the period of suspension from practice, a fine and an order for costs.
ACAT penalty decision
ACAT reviewed the history of breaches by the practitioner and noted the associated assurances regarding future conduct. At [61] of the ACAT penalty decision, ACAT referred to the assurance that had been given in February 2014 that:
I have a rigid procedure in place that no funds are to be disbursed from the trust account, under any circumstances, unless they are first specifically authorised in writing by the client as well as by me.
ACAT observed that the practitioner’s case for avoiding removal was “based on his insight, contrition and remorse” and the fact that he had a professional structure in place to support him: at [72].
ACAT acknowledged that practitioner insight is a significant factor in penalty assessment but observed that, despite a finding of dishonesty, the practitioner continued to maintain that his actions were the product of an error of judgment and that “he had made the transfers under a mistaken belief honestly held”: at [73]. At [74], ACAT said:
We consider that his insight into the September 2015 transaction is minimal and as a consequence his declarations of remorse although probably genuinely held, must be regarded as transitory, being founded on an imperfect understanding of the basis of his transgression, and are “borne of present necessity and the inevitability of close scrutiny”.
At [75], ACAT opined:
The Tribunal agrees that one layer of protection for clients and the public would probably be established by the support proposed for future conduct of his practice. However unless, at the centre, the person who is actually and nominally conducting the practice is a fit and proper person to do so, then there can be no confidence that this is the case.
In relation to the practitioner’s good fame and character, ACAT referred to a history of placing false evidence before the Court and promising to do better: at [77]. ACAT noted that, in relation to the present matter, the practitioner had provided incorrect information to the Law Society and had given evidence that had been rejected as lacking credibility. In 2014, the practitioner had given an assurance to ACAT and, in relation to the present matter, he had given a written assurance to his clients: at [79].
ACAT described the practitioner’s appreciation of the significance of breached assurances to be “shallow and somewhat confused”: at [79].
At [80], ACAT concluded:
The view of the Tribunal is that the respondent is not of good fame and character and is not a fit and proper person to remain a practitioner of the Supreme Court of the Australian Capital Territory. It is further satisfied that condition is likely to be permanent having regard to all the evidence.
Consequently, ACAT recommended that the practitioner’s name be removed from the local roll.
Practitioner’s evidence in these proceedings
In addition to the material placed before ACAT, the practitioner relied on extensive affidavit evidence from clients, accountants, bookkeepers, solicitors, and barristers who knew him professionally, as well as friends and acquaintances.
Mr B (one of the clients affected by the misconduct) stated that he had known the practitioner for 20 years as an acquaintance, friend, and legal advisor. Notwithstanding the practitioner’s conduct in this matter, he felt no ill will towards the practitioner and continued to hold him in the highest regard as a good, honest, and decent person.
Mr Farland and Mr Fernon had been retained by the practitioner as barristers in Mr and Mrs B’s matter in 2015. Mr Fernon had been briefed by the practitioner in a variety of matters between 2000 and 2015. They said that they considered the practitioner to be honest and hard working. Prior to the ACAT hearing, Mr Fernon had provided a letter to the Law Society stating that he believed that the practitioner had been unaware that he had acted unlawfully and that the practitioner had not sought to deceive Mr and Mrs B.
Mr Di Bartolo stated that, when he had been the trust account auditor for the practitioner’s legal practice in 2016, he had identified that the trust monies had been transferred in the absence of a specific authorisation on file. When questioned, the practitioner had produced signed costs agreements and an outstanding invoice, indicating that he believed that that was all that was required. The practitioner had stated that the clients had been aware of the intention to transfer funds but had not consented. Mr Di Bartolo’s response that he would report the matter to the Law Society had prompted the practitioner to report it. In his dealings with the practitioner for more than 10 years, the practitioner had been open and honest and, once the matter was drawn to his attention, he had taken prompt action to correct any problem.
Ms Burkitt said that she had met the practitioner in 2013, when she had begun to manage the trust account for the firm where the practitioner was then employed as a managing clerk. To her observation, the practitioner had been well aware that there was a strict requirement to obtain a client’s written authority for transfers from a trust account to third parties and the practitioner had always complied with that requirement.
Mr Oliver said that he had known the practitioner since about 1980 and that, for a period, he had audited the practitioner’s trust account. Since 2006, he had had occasional social contact with the practitioner. He had found him to be honest and of good character.
Ms Slater has provided bookkeeping services in relation to the practitioner’s trust and general office accounts since 2015. She has found the practitioner to be honest and of good character and considers that he “would never have intentionally incorrectly transferred funds from the trust account on purpose” as he was “always very careful with transactions relating to his trust account”.
Ms Bossert is a forensic accountant who has been instructed by the practitioner since about 2009. She has found him to be genuine and honest, as has Mr Thomas, who has prepared economic loss reports for the practitioner’s practice since 2012.
Ms Lombard is an accountant who has known the practitioner since 2014 through a professional network and has engaged his services. She has always found him helpful and does not doubt his honesty and integrity in running a legal practice.
Mr Erskine SC stated that he had met the practitioner when instructed by him in the mid-1990s. In 2005, he had provided the practitioner with an affidavit in support of his application for restoration to the roll. Thereafter, he had been instructed by the practitioner in a number of matters. Although he has no direct knowledge of the practitioner’s handling of his trust account, in his extensive dealings with the practitioner he has found the practitioner to be honest, thorough and professional.
Mr Clynes, a barrister, said that the practitioner had briefed him on many matters and the practitioner had impressed him as having an excellent manner with clients and acting with probity and diligence.
Mr Martin is an experienced legal practitioner who has had numerous professional dealings with the practitioner and has found him to be courteous, professional, straightforward, and honest. Mr Jones, a solicitor who has obtained advice from the practitioner about matters and who has referred litigious matters to the practitioner, considers the practitioner to be honest, forthright, and knowledgeable. Mr Harris has known the practitioner since 2017 and has recommended clients to the practitioner. He trusts the practitioner’s professional judgment. Mr Dudderidge met the practitioner in 1998 and has been both a client and a colleague. He said that the practitioner has always been honest and of good character.
Mr O’Keefe has known the practitioner since 2005 and worked with him from 2005 to 2007. He regards him as a person of good character and has never known him to be dishonest in his dealings. Mr Jackson, who worked with the practitioner from 2012 to 2014, is a friend who has also instructed the practitioner. He considers the practitioner to be trustworthy and knowledgeable. Mr Perkins, a solicitor, has known the practitioner since 1999. They used to meet regularly and discuss work. The practitioner always conducted himself in a proper, forthright, and honest matter in their personal dealings. Ms Brown has known the practitioner in a personal and professional capacity and has always found him courteous, honest, and trustworthy.
Ms Grotte met the practitioner in 2013 when she instructed him to appear as junior counsel in a medical negligence case that lasted many years. She found that he acted diligently, promptly, and with care.
Ms Lay has known the practitioner since 2018. He supervised her legal practical experience component of the Graduate Diploma of Legal Practice and she found him to be a person of integrity and good character.
Mr Patrick, Mr Honkanen, Ms Bryant, Ms Burns, Mr Barnes, Ms Alcazar-Stevens, Ms Griffith, Mr Maunch, Mr Omari, and Mr Bennett have been clients of the practitioner in recent years and all have found him to be open, professional, honest and concerned for the welfare of others. Ms McLaren, another former client, describe the practitioner as a careful and proactive lawyer who had handled proceedings in a highly competent fashion, putting his client’s interests at the forefront.
Mr Synold, whose wife has been a client of the practitioner and Mr Tea, the practitioner’s business banking manager, made similar observations, as did Dr Champion, who has been engaged by the practitioner to provide medico-legal advice.
Ms Corvini, who has had a social relationship with the practitioner since about 1990, considers him to be trustworthy, dependable, honest, and supportive. Mr La Porte, Mr Landon-Smith, and Ms East have known the practitioner for decades through skiing. They have found him to be a friendly, sincere, hard-working, and knowledgeable person. Mr Franklin-Browne has known the practitioner since 2010 as a friend and rock-climbing partner. He has found the practitioner to be reliable and dependable.
Mr Meehan, the Director of St John’s Care and Emergency Relief, has engaged the practitioner in relation to a personal conveyance and has referred clients to the practitioner for pro bono advice. He has found the practitioner to be honest, diligent, and readily available to assist on a pro bono basis.
With the exception of Mr Erskine SC and possibly Mr Clynes, each of the above referees expressed their understanding that:
Mr Giles transferred the funds because, at the time of the transfer, he believed that the terms of his costs agreements and the invoice outstanding for approximately $386,000 gave him the required authority to make the transfer or and he so informed his clients of his intention.
The Practitioner’s evidence and submissions to the Court
The practitioner conceded that he had chosen his own interests over that of his clients: at [50] of his affidavit dated 13 December 2019.
At [51], he said:
I accept that my conduct was objectively dishonest by the ordinary standards of reasonable, honest people; particularly when looking at my breach of my self-affirmed practice, that I had earlier advised to my clients, that the trust funds would only be transferred with my clients specific written authority.
At [53] he said:
I realise I was not thinking clearly when I engaged in the transfer of funds and that I could have left them in trust and relied upon my general lien over the funds to resist the Rural Bank garnishee. Subject to the determination of priorities, I may not have needed to make the transfer …[I] failed to realise the importance of the terms of my costs agreements. I now realise my general lien did not authorise the transfer of the funds.
At [56], the practitioner acknowledged that his failure to make appropriate concessions in ACAT when cross-examined concerning the meeting with his clients on 8 September 2015 had “demonstrated a total lack of insight on my part as to the seriousness of not having conference of notes to record the terms of such a very important meeting” and that he should not have attempted to minimise his responsibility for failing to take notes. Similarly, he should have made appropriate concessions in relation to his clients’ instructions.
In relation to the reasons that this understanding had come so late, at [59] the practitioner said that his perception of himself as an honest person had “blinkered” him from seeing that his conduct was objectively dishonest. At [60](a), he referred to breaching his “self-made rule that I must never make a trust payment without the express written authority of my clients”.
At [46] of his affidavit, the practitioner submitted:
These disciplinary proceedings have taught me very hard lessons and have made me far more aware of my official responsibilities to my clients, and the Court.
The practitioner stated that he had studied many disciplinary decisions, which had greatly enhanced his knowledge of his high ethical duties required of an officer of the Court: at [49].
As to ACAT’s findings that he was not a credible witness, the practitioner noted that he had experienced difficulties with hearing some of the questions and now always wore hearing aids when attending court: at [68].
At [66], the practitioner said:
My trust error was a genuine mistake, a misunderstanding and lack of insight on my part.
The practitioner submitted that his name should not be removed from the roll and that an appropriate penalty was suspension for a period of 12 months (during which he could work as a law clerk), a restricted practising certificate for two years thereafter, and that he be entitled to an unrestricted practising certificate thereafter.
The submission was made on the following grounds:
(a)His 45 years of legal experience was valuable to the community and should not be lost.
(b)Since ACAT had ruled on liability, he had read widely and gained guidance from other practitioners concerning professional standards and his ethical stance had “significantly changed and hardened”. It was not necessary to strike him off because he had learned from his errors.
(c)The transaction had not been undertaken secretively.
(d)It had been an isolated transaction.
(e)When his “mistake was identified” he had “self-reported and repaid the money”.
(f)He had cooperated with the Law Society’s investigations and directions concerning his practice.
(g)Lay and practitioner referees had attested to his good fame and character.
(h)During the course of his practise, he had incurred debts of $511,000 and he needed to repay those debts. He had liquidated assets in order to do so. Other than working as a legal practitioner, he had very limited prospects of obtaining gainful employment.
General principles
The Court exercises a protective jurisdiction. Its role is to protect the public against future misconduct by the particular practitioner, to protect the public from similar kinds of misconduct by other practitioners by setting the standard of behaviour that is required of practitioners, and to maintain public confidence in the legal profession: Law Society of New South Wales v Walsh [1997] NSWCA 185 per Beazley JA at 40; Legal Profession Complaints Committee v Bower [2019] WASC 281 at [38].
Subjective features may be taken into account but cannot detract from the core purpose of public protection: The Council of the Law Society of the Australian Capital Territory v Davey [2019] ACTSCFC 2 at [22].
The Court cannot make findings inconsistent with necessary or essential findings made by ACAT: Powrie at [83]–[84]. Such findings include findings as to the practitioner’s state of mind or motive for relevant conduct: Powrie at [83]; Council of the Law Society of the ACT v Bandarage [2019] ACTSCFC 1 at [130] (Bandarage). They also include a finding that the practitioner’s conduct amounts to professional misconduct: Powrie at [83]; Bandarage at [130].
However, the Court is not bound to accept ACAT’s recommendation that the practitioner be removed from the roll; it must make its own independent determination of whether the practitioner’s conduct warrants removal.
The ultimate question is the same as that in disciplinary proceedings invoking the inherent jurisdiction of the Court, i.e. whether, given the conduct that has been proven, the practitioner is a fit and proper person to practise law: Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279 per Kitto J at 297–298; Powrie at [86]–[87], Bandarage at [112] and [138].
The importance of honesty and integrity when dealing with monies has been emphasised repeatedly: Council of the Law Society of New South Wales v Jafari [2020] NSWCA 53 is a recent example.
Honesty in relation to trust account funds is critical to the proper practise of law. A lawyer’s trust account has been described as “sacred”, and the importance of dealing strictly with trust monies has been emphasised repeatedly: Re a Practitioner [1941] SASR 48; Re a Practitioner (1982) 30 SASR 27 per King CJ at 30–31; Legal Services Commissioner v Rushford [2012] VSC 632; 38 VR 141 per Bell J at [39]. In Law Society of New South Wales v Bannister [1993] NSWCA 157 at 9, Sheller JA (with whom Gleeson CJ and Handley JA agreed) said:
The normal consequence of the misappropriation by a solicitor of the client’s money is that his name be removed from the roll.
In Law Society of the ACT v Elmarazey [2017] ACTSCFC 2 at [20], the Court said:
A legal practitioner who takes his or her client’s funds for his or her own benefit, and who demonstrates no remorse or understanding of the gravity of his or her misconduct, is prima facie not fit to remain on the roll.
(Citations omitted)
There may be an exception to this rule where a lawyer has not acted dishonestly in relation to the misuse of trust funds but, even in the absence of dishonesty, it is “borderline” as to whether a practitioner should be removed from the roll: The Council of the Law Society of NSW v Doherty [2010] NSWCA 177 at [63] and [71]; Legal Practitioners Complaints Committee v Edward [2007] WASC 287 at [77].
In Bandarage at [148]–[149], the Court said:
Removal from the roll is reserved for the most serious cases of wrong conduct, where the character and conduct of the practitioner is assessed to be inconsistent with the privileges of further practice; suspension may be adequate in those cases where a legal practitioner has fallen below proper standards, but not to the extent that would indicate that the practitioner lacks the necessary attributes of a person entrusted with the responsibilities of legal practice: Barristers Board v Darveniza [2000] QCA 253.
In general, removal is appropriate only where the underlying reason for disqualification is permanent, or at least of indefinite duration: New South Wales Bar Association v Cummins [2001] NSWCA 284; 52 NSWLR 279 at [25]–[27]; Council of the Law Society of New South Wales v Parente [2019] NSWCA 33 at [33]. In Parente at [34], Basten and Meagher JJA indicated that, where a practitioner has manifested a serious character flaw that would justify removal, it is for the practitioner to affirmatively satisfy the court that the unfitness was, or is, of limited duration.
Is the practitioner a fit and proper person to practise law?
This is the third occasion on which the practitioner has faced disciplinary action for misconduct in relation to trust monies. On the two prior occasions, he has been found guilty of professional misconduct involving breaches of professional standards in relation to trust monies.
In the present case, a very substantial sum was dishonestly misappropriated. The practitioner had use of the misappropriated funds between 9 September 2015 and 31 May 2016, when the funds were restored to the trust account. The practitioner did not restore the funds immediately after the clients expressed their displeasure with his conduct in September and October 2015 and did so only when the matter had come, or was about to come, to the attention of the Law Society.
The seriousness of the practitioner’s misconduct was aggravated because it occurred in breach of assurances that he had given to the Full Court in 2005, to ACAT in 2014, and to his clients in May 2015. The misconduct of September 2015 occurred not long after the assurances given to ACAT in 2014 and to the clients in May 2015.
The practitioner’s dishonesty was not confined to the two transactions on 9 September 2015. In addition, ACAT found that he had been dishonest in the way in which he had dealt with the Law Society in May 2016 and with ACAT during the hearing in 2018, when he gave evidence that lacked credibility in several important respects.
The Court takes into account the character evidence of the many witnesses who provided such evidence and accepts that such evidence may inform an assessment of whether the practitioner is a person of good character who is a fit and proper person to remain on the roll. However, in this case, the character referees other than Mr Erskine SC and possibly Mr Clynes provided an opinion as to the practitioner’s character based on a fundamental misapprehension. They had been informed that the conduct was the product of an honest but mistaken belief. They had not been informed that, at the time when the conduct occurred, the practitioner knew that it was dishonest. Indeed, the practitioner’s failure to disclose ACAT’s finding of dishonesty is yet another example of dishonest dealing.
In any event, character evidence may be of limited predictive value: Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 449. It is our view that, in this case, a far more reliable predictor of future behaviour is the practitioner’s past conduct. In the past, assertions of insight and good intention have not been reflected in the practitioner’s subsequent conduct.
During these proceedings, the practitioner both maintained that he had acquired new and profound insight and also maintained that his conduct was the result of an honest but mistaken belief about his entitlement under the costs agreements. It was only when he was well into oral submissions and was pressed by the bench that he conceded that he had known at the time of the misconduct that he was acting dishonestly. This extraordinarily belated acknowledgement of dishonesty can only reflect a fundamental lack of insight.
Having regard to the gravity of the practitioner’s misconduct, the history of similar misconduct, his breach of past assurances, the dishonesty manifested in other respects connected with the complaint, and the practitioner’s fundamental lack of insight, we are satisfied that the practitioner suffers from a seemingly permanent character flaw such that it will never be possible to be confident about the practitioner dealing properly with trust funds. We are well satisfied that he is permanently unfit to practise.
The Court orders that the practitioner’s name be removed from the roll.
| I certify that the preceding one hundred and thirty-three [133] numbered paragraphs are a true copy of the Reasons for Judgment of their Honours Chief Justice Murrell, Justice Burns and Justice Loukas-Karlsson. Associate: Date: |
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