Doherty v The Law Society of New South Wales

[2003] NSWSC 105

CITATION:	Doherty v The Law Society of New South Wales [2003] NSWSC 105 revised - 03/03/2003
HEARING DATE(S):	17-19 February 2003
JUDGMENT DATE:	28 February 2003
JURISDICTION:	Common Law
JUDGMENT OF:	Studdert J
DECISION:	See para 99
CATCHWORDS:	Legal practitioners - appeal against resolution of Law Society refusing application for practising certificate - whether certificate should, if granted, be conditional, and if so upon what conditions.
LEGISLATION CITED:	Legal Profession Act ss 37, 38B, 61, 62, 134, 139, 140, 171C
CASES CITED:	New South Wales Bar Association v Murphy (2002) 55 NSWLR 23
PARTIES :	Peter Doherty (Plaintiff) The Law Society of New South Wales ACN 000 000 699 (First Defendant) Andrew Stuart Brown (Second Defendant)
FILE NUMBER(S):	SC 13117/02
COUNSEL:	I.M. Wales SC (Plaintiff) R.I. Bellamy (Defendants)
SOLICITORS:	Stewart Cuddy & Mockler (Plaintiff) Raymond John Collins (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

STUDDERT J

Friday 28 February 2003

13117/02 PETER DOHERTY v THE LAW SOCIETY OF NEW SOUTH WALES ACN 000 000 699 & ANOR

JUDGMENT

1 HIS HONOUR: The plaintiff, Peter Doherty, is a solicitor by profession and as at 2 August 2002 he was carrying on practice at addresses at Belgrave Street, Kogarah and 182 Forest Road, Hurstville. On 2 August 2002 the Law Society resolved:

“1. That the Practising Certificate of Peter Doherty be cancelled pursuant to Section 37(1)(f) of the Legal Profession Act, 1987.
2. The Council, having cancelled the Practising Certificate of Peter Doherty, by virtue of the provisions of Section 114B of the Legal Profession Act appoints Andrew Stuart Brown Manager of the practice of Peter Doherty, Solicitor, at a remuneration equal to the cost of his employment at the Society.”

2 Section 37(1)(f) of the Legal Profession Act 1987 empowers the Law Society to cancel a practising certificate where the holder of such certificate has contravened a provision of the Act, and the Law Society determined that there had been such a contravention by the plaintiff. Subsequently, on 22 August 2002, the Society further resolved that the plaintiff’s application for a practising certificate for the year beginning 1 July 2002 should be refused. That resolution again was based upon s 37(1)(f) of the Legal Profession Act.

3 Following those resolutions, the plaintiff, by amended summons filed in this court, seeks these orders:

“1. The decisions of the First Defendant of 2 and 22 August 2002 pursuant to Section 37(1)(f) of the Legal Profession Act 1987 cancelling the practising certificate of the Plaintiff and refusing to issue a practising certificate to the Plaintiff be set aside.
2. The First Defendant issue to the Plaintiff a practising certificate entitling him to practice on his own account.
3. The First Defendant terminate the appointment of the Second Defendant as Manager of the Plaintiff’s practice Lloyd Lancaster.
4. The First Defendant pay the costs of this summons.
5. Such further orders as to this Honourable Court seem fit.”

4 The proceedings before this Court are expressed under s 38B(1) as being proceedings by way of appeal, but s 38B(2) empowers the Court to “make such order in the matter as it thinks fit.” It is common ground that these proceedings are not an appeal in the strict sense but are in the nature of a hearing de novo: see Veghelyi v Council of the Law Society of New South Wales (1989) 17 NSWLR 669.

5 Section 62 of the Legal Profession Act requires that a solicitor keep appropriate records in relation to trust money:

“62 Keeping of accounts

(1) A solicitor shall keep:

(a) in the case of trust money (within the meaning of section 61)—accounting records, or

(b) in the case of money other than trust money—such accounting records or other records (if any) as may be required by the regulations,

that disclose at all times the true position in relation to money received by the solicitor on behalf of another person.

(2) The accounting records referred to in subsection (1) shall be kept in a manner that enables them to be conveniently and properly audited.

(3) Without limiting the generality of subsection (2), the accounting records referred to in subsection (1) shall, if the regulations so require, be kept in such manner as the regulations prescribe.

(4) A wilful contravention of subsection (1), (2) or (3) is professional misconduct.”

6 It is the contention of the Law Society that the plaintiff failed to comply with the requirements of the above section and this failure triggered the resolutions of the Society abovementioned.

7 The Law Society resists the relief sought in the amended summons.

8 The plaintiff conceded in his affidavit filed in support of the relief sought in the amended summons that he did not keep records that complied with the requirements of the statute from June 2001 onwards. He has sought to explain the circumstances giving rise to this non-compliance in the affidavit sworn by him on 15 November 2002. In that affidavit he has outlined events that occurred within his practice, not seeking to justify his failure to comply with his obligations but seeking to explain how the non-compliance occurred (see para 22 of his affidavit).

The professional career of the plaintiff

9 It is important to consider the plaintiff’s professional career, and in this respect I accept the unchallenged evidence as to these matters which I shall now record, drawing on the plaintiff’s affidavit.

10 The plaintiff was born on 19 August 1953 so that he is presently forty-nine years of age. He is a married man with two children. His career in the law follows a career as a high school teacher. From 1990 to 1996 the plaintiff pursued his legal studies through the Legal Profession Admission Board and was admitted to practise as a legal practitioner in August 1997.

11 Following his admission the plaintiff was employed for a short time by a sole practitioner in the firm known as Finn Cruickshank and Associates. He then found employment with a firm known as Delaney Dimarco from July 1997 until September 1999. He undertook a practice management course at the College of Law and passed a trust account exam at that College before being granted an unrestricted practising certificate on 13 September 1999. Following this grant he formed the firm Lloyd Lancaster, starting that practice at the address at Kogarah earlier set out. Five months later, in February 2000, he began to practice also at the Hurstville address which I mentioned earlier.

Staff difficulties at Lloyd Lancaster

12 The plaintiff employed a secretary for each office and that was the position up to June 2000. In the next twelve months he employed a para-legal as well and by August 2002 he employed two other solicitors and a conveyancer. By then three secretaries were engaged.

13 It is evident that the plaintiff had difficulties in keeping staff. This was a problem that affected both offices. The secretary he employed at the outset also acted as bookkeeper, attending to the keeping of trust account records. That secretary resigned in June 2001 on short notice to take up a position elsewhere. Her departure was critical, and I accept for present purposes that the trust account records, which were computerised from the outset, were satisfactory up to the time of the departure of that secretary. Beyond her departure, plainly, proper records were not again kept before the Law Society passed the resolutions referred to in paras 1 and 2 above.

14 When the plaintiff’s secretary resigned in June 2001, the other employees sought wage increases which the plaintiff was not prepared to give, so they also resigned.

15 The plaintiff engaged another solicitor in July 2001 but said that he had difficulty in engaging legal secretaries. The solicitor engaged in July 2001 was dismissed in January 2002 and the remaining staff then employed resigned at the same time. Once again, for the second time in six months, the plaintiff had no staff. Through an agency the plaintiff succeeded in engaging a solicitor, two secretaries and a conveyancer, but the plaintiff had difficulty in finding a bookkeeper until Ms Terry was engaged at the end of March 2002.

16 The plaintiff’s evidence was that he was unable to maintain the computerised trust account records himself and, indeed, at no time did he play a “hands on” role in the maintenance of the statutory records.

17 Ms Terry attended at the plaintiff’s office at Kogarah on thirty days between 3 April and 15 July 2002, but in that time did not succeed in completing the task of bringing the trust records into a satisfactory state. On the plaintiff’s case this failure occurred notwithstanding repeated assurances from Ms Terry that success was about to be achieved. On the other hand, according to Ms Terry her failure was despite her best endeavours and was due in part to inadequacy of available records, the plaintiff’s failure to supply necessary instructions and information, and failures in the computer system. Moreover, the available computer had to be shared by Ms Terry and members of the plaintiff’s staff.

18 On 15 July 2002 Ms Terry arrived at the plaintiff’s offices and found there a note from the plaintiff requiring finality of her task that very day or, failing completion, a written summary of what was still to be done. Ms Terry did not see the plaintiff on that date but through the plaintiff’s secretary sought payment of what was outstanding for her services, and when the plaintiff’s secretary relayed to Ms Terry that the plaintiff declined this request for payment, Ms Terry ceased work. There are now proceedings pending in the District Court in which Ms Terry is claiming an amount of $3614 for unpaid accounts. The plaintiff is resisting that claim on the basis that Ms Terry did not do what she had been engaged to do and there is a cross claim for $150,000 in respect of alleged negligence, breach of contract and injurious falsehood.

19 Mr Kitt is a chartered accounted whose services the plaintiff engaged in November 2002. By that time irregularities had been identified by the Law Society in the trust account for the plaintiff’s practice. Mr Kitt had access to such records as were held by then in the offices of the Law Society and Mr Kitt was one of the authors of a joint report following a conference of experts ordered by the court pursuant to Pt 36 r 13CA. I shall return to that report presently. Mr Kitt’s evidence was to the effect that he performed the following work (T 117-118): the basic trust account cash book records were written up for both Hurstville and Kogarah for the period from April 2001 to July 2002 and the records were reconciled. Mr Kitt worked on the trust account receipts, bank deposit books, bank deposit statements and cheque butts.

20 Mr Kitt was able to achieve his objective within thirty to thirty-five hours. He said he did “ninety-nine percent” of that work without assistance from the plaintiff. Mr Kitt said he was not assisted in his task by the working papers he saw and which he attributed to Ms Terry. The evidence does not permit me to determine whether Mr Kitt saw all Ms Terry’s working papers, nor does his evidence enable me to determine whether Ms Terry’s labours were misdirected or whether Ms Terry proceeded with her work in a competent or an incompetent fashion. Nor am I able to determine whether, and if so to what extent, Ms Terry was frustrated by a lack of cooperation by the plaintiff. These issues are issues requiring much closer attention than was given in evidence adduced before this Court and such as will doubtless be closely addressed in the District Court.

21 The evidence does satisfy me that Ms Terry worked on the plaintiff’s records for thirty days between 3 April 2002 and 15 July 2002 and that the plaintiff paid her for her services a total of $7100. I am further satisfied that when Ms Terry finished her labours on 15 July 2002 there were still no proper trust account records.

Trust accounts deficiencies

22 Following the resolutions of the Law Society on 2 August 2002, Mr Brown and a representative of Deloitte Touche Tohmatsu (“Deloitte”) collected the plaintiff’s trust account books and records, such as they were, and they were taken to Deloitte’s Sydney office. Mr Brown instructed Deloitte to reconstruct the trust records for the plaintiff’s two offices using 31 March 2002 as the base date from which to start the reconstruction. A report from Deloitte was received by Mr Brown dated 17 September 2002. That report was written by Mr Lombe of Deloitte and disclosed a total deficiency from the Kogarah and Hurstville branches of $9938.90.

23 The plaintiff challenged Deloitte’s conclusion and Mr Brown obtained the sum of $9938.90 by way of draw down from the Public Purpose Fund and this was banked to the plaintiff’s trust accounts. Mr Brown deposed in his affidavit of 14 February 2003 that since that deposit he has received a number of authorities which allowed him to deduct monies from ledgers of certain of the plaintiff’s former clients to pay costs. In consequence of those deductions, Mr Brown was able to repay to the fund $5580. This left the sum of $4358.90 still to be refunded.

24 After Mr Kitt had carried out his task earlier described, the order for the appointment of a joint conference of experts was made and Mr Lombe and Mr Kitt convened in consequence of that order on 10 February 2003. Happily they were able to agree on the content of their report dated 10 February 2003 (Exhibit A). They agreed that the trust debit balance for the Kogarah trust account as at 31 July 2002 was $3913 and that the trust debit balance for the Hurstville trust account was $5528. These deficiencies totalled $9441 and the authors of the report agreed that the plaintiff should deposit that sum to the two trust accounts to rectify those deficiencies.

25 The joint report went on to express reasons for the identified deficiencies and I accept those reasons as being correct. I do not find that the deficiencies occurred by reason of the plaintiff’s dishonesty, and, indeed, it is not suggested by the authors of the joint report that the plaintiff had acted dishonestly. The deficiencies arose because proper trust records were not kept and there was a failure by the plaintiff to exercise due care in his actions taken concerning those trust accounts. For example, one deficiency arose because a cheque was banked to the Hurstville account for $5000. There was a record of the deposit but there was no record of the fact that the cheque was subsequently dishonoured. Fees were then drawn without regard to the fact that the cheque had been dishonoured. There were several instances of the plaintiff duplicating drawings for his fees. There was one instance that a receipt of funds was duplicated, the receipt being posted to both the Kogarah account and the Hurstville account and this resulted in fees being drawn twice. On another occasion when fees were paid twice, this duplication was the consequence of the failure to record the initial payment in the trust records.

26 I do not propose to record all the identified deficiencies. The report, Exhibit A, clearly and concisely records the explanations for those various deficiencies.

27 The experts agreed that trust records were kept in the period from 1 July 2001 to 25 March 2002 but the records during that period had not been accurately maintained and various bookkeeping errors resulted in trust debit balances. Further, there was agreement between Mr Lombe and Mr Kitt that the plaintiff failed to maintain any trust records for the months of April, May, June and July 2002. Hence the experts were of the opinion that the plaintiff was in breach of s 61(2) of the Legal Profession Act, 1987 in the disbursement of trust funds and that the plaintiff was also in breach of s 62 of the Legal Profession Act in failing to keep required accounting records during that same period. I find those breaches to have occurred.

Consideration of the appropriate orders

28 What are the appropriate orders to make on the amended summons? The first order sought would serve no useful purpose even if the Law Society’s decisions were considered inappropriate. Mr Wales conceded that this was so and he did not pursue his claim for such an order. It is unnecessary therefore to address that matter. Nor did Mr Wales pursue his application for order 3. This brings me to the claim for order 2, which is pursued.

29 Before identifying the competing stands taken by the plaintiff on the one hand and by the Law Society on the other hand, I observe that this is not, in my opinion, a case in which the evidence presently before the Court calls for me to conclude that the plaintiff should not be allowed at this point of time to be allowed to practice at all. I consider he should now be granted a certificate. The Law Society does not contend otherwise. The issue which this hearing has posed is whether the practising certificate should be unconditional, and, if not, what conditions should be imposed.

30 The plaintiff pursues his claim for an order for the issue of a practising certificate entitling him to practise on his own account. The Law Society opposes that claim but does not oppose the making of an order for the issue of a restricted form of certificate. Mr Collins, who is the manager of the Professional Standards Committee of the Law Society, swore an affidavit on 14 February 2003 defining precisely the Law Society’s attitude to this application. Whilst opposing an order that the Society should issue the plaintiff with a practising certificate entitling him to practise on his own account as a sole practitioner or partner, the Society does not oppose the issue of a practising certificate entitling the plaintiff to practise as an employed solicitor subject to these conditions:

“The Plaintiff will not, for a period of two years, hold a Practising Certificate entitling him to practise other than as an employed Solicitor and during that two year period or prior to being granted a Practising Certificate entitling him to practice as a sole practitioner or partner (whichever be the later) he will undertake and successfully complete the following courses conducted by the College of Law:
(a) Trust account Law and Practice in which the Plaintiff should achieve a mark of 75% or greater; and
(b) Professional Responsibility (being part of the College of Law’s Practical Legal training Course).”

31 In his affidavit and in his oral evidence, Mr Collins explained the reasons for the opposition of the Law Society to the form of certificate which the plaintiff now seeks. In such evidence there is to be found a comprehensive expression of the Law Society’s reasons for their attitude and those reasons demand the close consideration of the Court.

32 Mr Collins identified these matters:

(i) given the plaintiff’s exhibited deficiencies in the past in the management of his trust accounts and associated record keeping, it would not be appropriate for the plaintiff to be permitted at present to operate a trust account;

(ii) there continue to exist financial deficiencies which the plaintiff has not made up;

(iii) the plaintiff has failed to comply with undertakings in the past;

(iv) his overall conduct evidenced that the plaintiff does not have the necessary skills and knowledge to conduct a practice.

(See para 37 of Mr Collins’ affidavit.)

33 Before considering those reasons for the opposition to the relief sought by the plaintiff, I propose to address para 28 of Mr Collins’ affidavit. There Mr Collins stated that the Council of the Society has initiated complaints against the plaintiff asserting wilful breach by the plaintiff of s 62 of the Legal Profession Act, wilful breach of s 61 of that Act and breach of his undertakings given to the Society.

34 Those complaints, if pursued, are complaints made under s 134 of the Legal Profession Act, a section found in Pt 10 of the statute. That part prescribes the procedure to be followed upon a complaint. It is unnecessary here to record closely the provisions to be followed after a complaint has been made under s 134. There is provision for summary dismissal of a complaint under s 139, and a complaint may be withdrawn under s 140. Division 5 provides for the investigation of complaints and for dismissal in certain circumstances before, during or after investigation. Division 7 provides for the institution of proceedings in the Administrative Decisions Tribunal with respect to a complaint against a legal practitioner. Those proceedings may be commenced by information laid by the Council (be it the Law Society or the Bar Council) or by the Legal Services Commissioner. If there is a hearing before that tribunal, the tribunal has defined and wide ranging powers, including the power in an appropriate case to make an order that a legal practitioner be removed from the roll of legal practitioners (s 171C(a)) and also to make an order cancelling a practising certificate (s 171C(b)).

35 The application presently before this Court does not enliven the provisions of Pt 10 of the Legal Profession Act. It is important that I have regard to the precise nature of the proceedings before me. They are, in short, proceedings under Pt 3 and not under Pt 10. I remind myself of what Spigelman CJ said in New South Wales Bar Association v Murphy (2002) 55 NSWLR 23 at 25 and 26 in identifying the various ways available to address unacceptable conduct of practitioners:

“The present case is concerned with the cancellation of practising certificates for which Pt 3 of the Legal Profession Act 1987 (‘the Act’) provides. There are two other mechanisms for determining the consequences of conduct of the character presently under consideration. The second mechanism is the application of the procedures for which Pt 10 of the Act provides, culminating in a possible order made by the Administrative Decisions Tribunal for removal of a legal practitioner's name from the roll of legal practitioners or an order cancelling a practising certificate, pursuant to s171C of the Act. The third mechanism is a determination by the Court, in the exercise of its inherent jurisdiction, to remove a practitioner from the roll of legal practitioners, a jurisdiction confirmed by s171M of the Act…

Parliament has made detailed provision for proceedings and hearings on issues of fitness and propriety in Pt 10. Part 3 as it relates to practising certificates should not be regarded as some kind of simpler alternative designed to serve the same purposes. The legislative history of the requirement for practising certificates suggests that proceedings under Pt 3 perform a narrower range of functions.”

36 I respectfully adopt the above analysis, for the purposes of this case.

37 If the complaints initiated by the Council of the Law Society eventuate in proceedings before the Tribunal, the Tribunal will determine what course it should then take depending on the substance of the one or more of the complaints being established. Mr Wales indicated that proceedings in the Tribunal, assuming the complaints on foot lead to proceedings there, would probably be heard within the next twelve months. However it is not for me to seek to determine the outcome of any such proceedings which, if they take place, will be determined on evidence to be placed before the Tribunal.

38 My task is to determine whether the plaintiff’s certificate to practise should be in the terms sought by the plaintiff or whether any certificate to issue should be restricted, and if so, how. Of course, I must have due regard to all the evidence that has been introduced on the hearing of this summons and I must have due regard to the interests of the plaintiff. Of major importance however, is the need to protect the public.

39 I propose now to consider those reasons advanced by the Law Society through the evidence of Mr Collins (para 32 above) and the submissions of Mr Bellamy as to why the form of certificate the plaintiff seeks should not be granted.

(i) The deficiencies in the plaintiff’s management of his trust accounts

40 Notwithstanding that the plaintiff appreciated a developing problem in relation to the state of his trust accounts after his first bookkeeper left him, Ms Terry’s services were not engaged until the end of March 2002. The requisite statutory records were not being properly maintained before Ms Terry’s services were engaged, nor indeed was this situation rectified before the Law Society took the action which it took on 2 August 2002. The plaintiff agreed in cross examination that whilst he appreciated his problem in relation to the trust accounts in June 2001 he did not turn his mind to notifying the trust account section of the Law Society of his difficulties prior to the attendance of Mr Partridge, a trust account inspector for the Law Society, at the Hurstville office on 25 March 2002. That attendance was prompted by a complaint in relation to a client whose affairs involved a trust ledger.

41 According to the plaintiff, the reason for his failure to notify the Society of his difficulties was his optimism that the problem would be quickly rectified. In cross examination the plaintiff responded to the following questions with the following answers (T 25-26):

“Q. Don't you see it as a problem, that for a period of some nine months, you were in breach of s 62 of the Legal Profession Act, and that yet you felt it appropriate not to tell anyone, in any position of authority, about the problem?
A. Look, in retrospect, yes, perhaps I should have alerted the trust department. You know, I don't [resile] from the fact that the problems should have been in order. Now, I operated on the belief that I would be able to be in a position to rectify those trust accounts. At all times this was my belief, that I would be able to achieve that.

Q. In retrospect do you believe that the optimism that you had was misplaced?
A. Well, I obviously didn't achieve the goal that I set out to achieve, but it certainly wasn't, I don't believe anyway, a matter of me putting my head in the sand. I was, right up until even the week before the trust inspector came to the premises, I was trying to rectify the problem.”

42 The plaintiff’s explanation for the admitted breaches of s 62 of the Legal Profession Act after he lost his first bookkeeper in June 2001 and his account of efforts to restore order can be summarised thus:

(a) No member of his staff became capable of using the computerised account system that had been installed when the plaintiff began practise. The only person ever employed by the plaintiff who was competent to operate, and who did satisfactorily operate, the computer system was the bookkeeper whose departure precipitated the crisis. The plaintiff himself was never competent to operate the computer programme.

(b) After the resignation of his first bookkeeper the plaintiff sought a bookkeeper by newspaper advertisements, by approach to “numerous other legal practitioners” and by approach to the Law Society, but was unsuccessful in his search. One bookkeeper who was engaged soon resigned. According to the plaintiff, the reason for this resignation was that she was frustrated with the problems experienced with the computer trust programme.

(c) Ms Terry was engaged shortly after Mr Partridge’s visit and according to the plaintiff she made “numerous representations that she would have the trust accounts in order” (para 21 of the plaintiff’s affidavit). The plaintiff said the apparent lack of progress prompted his ultimatum to Ms Terry on 15 July 2002. As I remarked in final submissions, it seems to me extraordinary, having regard to how concerned the plaintiff was at the delay in Ms Terry completing her task, that his final demand to her should have been relayed by a note rather by personal expression in a meeting with Ms Terry. Be that as it may, after Ms Terry left the plaintiff had nobody to replace her up to 2 August 2002 when the Law Society passed its resolutions. In cross examination the plaintiff added to his affidavit evidence (T 26):


“Q. Mr Doherty, I suggest that your affidavit identifies a series of serious difficulties encountered by you throughout 2001, which precluded your trust accounts being kept in proper order. Do you agree?
A. There are a number of factors that caused my difficulty, but the principal - there were two principal factors that related to the trust accounts. One was continuing computer problems with the software package, and the fact that I was trying to network between two offices. The second was the recruitment of a competent legal bookkeeper. At the time I thought I required a legal bookkeeper, who was conversant with the regulations of the trust department, and I just wasn't able to locate one, despite my best efforts.

Q. And every day that passed, where you didn't have a bookkeeper, you knew that your trust account records weren't being kept in proper order?
A. That's right.

Q. The difficulties that you had locating a bookkeeper, were, as far as you were concerned, quite extraordinary?
A. Well, I was surprised and alarmed that I couldn't recruit the appropriate personnel.”

Then, at T27:

“BELAMY: Q. Did you ever put your own hand to trying?
A. Perhaps in retrospect I could have tackled things a little bit better. By that I mean that the way to go was with a computer based accounting system, because that enabled you to programme figures with your general accounts and things like that, which is very time consuming, with a longhand method. Perhaps my faith in that method was misplaced, but at the time I thought it was valuable to pursue doing the accounts by computer, and I had continuing problems with the computer package.”

(d) The plaintiff did attempt to keep handwritten ledgers on individual files in the absence of a competent bookkeeper but obviously that system was deficient and trial monthly balances were not kept. The deficiencies in his recording permitted the deficiencies which the experts agreed upon in Exhibit A.

43 Mr Bellamy submitted that the plaintiff’s affidavit was unsatisfactory insofar as it contained so many assertions that were general rather than specific. That criticism is directed, at least in part, to the evidence referred to in (a), (b) and (c) above. Whilst there is some substance in that criticism, nevertheless the cross examination did not seek to explore closely what was expressed generally. For example, the plaintiff was not cross examined as to the detail of the representations the plaintiff claimed Ms Terry gave. I do not make that observation by way of criticism as to the manner in which Mr Bellamy conducted his cross examination of the plaintiff or by way of criticism of his able presentation of the defendant’s case, but, having reflected on the plaintiff’s evidence, I accept as established the matters summarised in (a), (b), (c) and (d) above.

44 Of course the acceptance of the plaintiff’s evidence as thus summarised above does not excuse what occurred after June 2001. However, it does present an explanation as to the circumstances in which there was a failure to continue with the requisite record keeping. Whether the plaintiff has learned from his past experiences is a matter I will address later.

(ii) The failure of the plaintiff to make up the trust account deficiencies revealed in Deloitte’s report and later in the joint report compiled by Mr Lombe and Mr Kitt

45 On 19 September 2002 Mr Brown, in his capacity as the manager appointed to the plaintiff’s practice, wrote to Mr T.A. Williams, then acting for the plaintiff, referring to the Deloitte report that identified the claimed deficiency in the trust accounts and calling on the plaintiff to forward a cheque in favour of Lloyd Lancaster Trust Account in the sum of $9938.90. Mr Brown pointed out in that letter that the trust account would remain frozen until such time as those funds were received. The plaintiff did not then make any payment in response to that call.

46 The plaintiff did not accept the correctness of the Deloitte report, although the joint report, Exhibit A, came up with a joint opinion as to a similar discrepancy. That joint report however was only completed on 10 February 2003. The plaintiff’s response to the initial demand of Mr Brown was to provide a list of monies owing to him for work previously done, which, according to his evidence, came to an amount of $13,000. In cross examination the plaintiff gave the following evidence (T 52):

“Q. What you believe, as I understand it, I suggest to you, is that you have been in a position from time to time since the investigation of your trust account records to produce authorities from clients who have money on trust and for those moneys to be used to correct deficiencies in the trust bank account. Correct?
A. When I received a copy of the Deloittes reports I gave a preliminary response and attached to that was a list of moneys owed to me for work previously done. Some of that work has been done 12, 18 months prior and the money was still in the trust account and I think the sum came to some $13,000. I identified those funds and Mr Brown has refused to utilise those funds.
Q. Before a solicitor can utilise client funds held on trust on account of costs, the usual course is for a bill of costs to be provided to the client?
A. And they were provided to the Law Society.
Q. After a period of time those moneys can be utilised by the solicitor – taken from the trust account?
A. That’s right, yes.
Q. You understand that a report has been prepared by your accountants, Mr Kitt and Mr Lombe, in these proceedings?
A. That’s right.
Q. And those accountants came to a position concerning the deficits in the trust account?
A. Yes, that’s right.
Q. While it is the case from time to time you have been able to provide authorities for moneys due to you to be transferred to make good part of that deficiency, an issue remains as to whether all those authorities should or could be accepted?
A. Yesterday was the first time one of the authorities was questioned. In all that time – if that was a concern of the Law Society, I would say that should have been put to me earlier and I could have rectified it. I say a lot of the authorities are not needed in any case but if that’s the position of the Law Society I could have complied with that and, indeed, I have in the short time available.
Q. I suggest the better and more appropriate course in view of the fact the trust accounts came into the state of disarray while you were in charge of the practice that you should have put you hand in your own pocket to make good the deficit and then to have had the question of authorities resolved later. Don’t you think that would have been a more honourable course?
A. Look, that money was out of my pocket. It was duly owed to me. Now to suggest any other course – I don’t necessarily think is any disrespect to the way I proceeded. The money was there, I identified it, it could have been utilised. The Law Society chose not to…”

47 As I noted earlier, in his affidavit sworn 14 February 2003 Mr Brown deposed that he had recently received a number of authorities allowing him to deduct monies from the ledgers of certain clients in payment of professional costs and in reliance upon those authorities he repaid the Fund the sum of $5580.

48 It was the plaintiff’s contention that there were further amounts that it was proper to withdraw from the trust ledger accounts and that further payments could be made to the Fund. This was because of further authorisations from clients to permit of this. In cross examination Mr Brown said (T 110-111):

“Q. There may well be additional funds within the trust account which can be used to make good the remaining deficiency?
A. There may well be.
Q. And your investigations of that particular aspect are not concluded?
A. No, and I have to say I am not making any particular investigations in that regard at all. I am waiting for the authorities to come in. I have no view as to whether any moneys may or may not be owed to the office account by the trust account.
Q. You say that funds received on account of costs have been applied to the costs of the managership?
A. Yes.
Q. Have you given Mr Doherty any account in respect of those funds?
A. No, not at this stage.
Q. When do you expect that to happen?
A. I expect within the next month or so. Usually by now I would be in a position to do but we had some authorities which came through only this month and the way the accounting is done in the Law Society you have to wait until the end of the month to find out what has gone in and what has gone out. All things being equal, I believe early in March.”

49 Counsel were seeking to reach agreement during the hearing as to what, if anything, was required to satisfy the remaining discrepancies, but counsel were unable to reach agreement before the hearing concluded. Counsel were afforded the opportunity of sending to my chambers a joint memorandum as to the extent of any discrepancy and they did so. A memorandum dated 24 February 2003 signed by counsel was in terms following:

“The plaintiff and the first defendant agree that on 21 February 2003 the solicitors for the plaintiff caused to be delivered to Mr Andrew Brown a cheque for $3,839.00 in favour of the first defendant for the purpose of eliminating all presently known ledger debits in the Lloyd Lancaster trust account.”

50 It would have been commendable for the plaintiff to have responded to Mr Brown’s demand on 19 September 2002 by forwarding his cheque for the amount of the discrepancy then lodged, and to have thus allowed for immediate repayment to the Fund of the amount paid out from the Fund. Had the plaintiff so acted this would have evidenced an unequivocal appreciation of his responsibility for the shortcomings of his record keeping. Plainly, a subsequent adjustment could have been made when Mr Brown’s investigations were completed.

51 On the other hand, I accept that it was the plaintiff’s understanding in September 2002 that there was not a deficiency in the amount for which Mr Brown contended and that the plaintiff wanted the opportunity of a further exploration of the issue as to the extent of any deficiency. I accept that the plaintiff did not have access to his records between the time of Mr Brown’s appointment and the time he commenced the present proceedings. The plaintiff engaged Mr Kitt in November 2002. Acting on Mr Kitt’s analysis, the plaintiff’s solicitors wrote to Mr Collins on 16 January 2003 (Exhibit PWK 4 to Mr Kitt’s affidavit).

52 The position was that the plaintiff’s solicitors, and later his counsel, were trying to reach agreement as to how much the plaintiff owed to the trust accounts and agreement was not reached until 21 February 2003, when the plaintiff’s solicitors made the payment necessary to eliminate the remaining deficiency.

53 In all the circumstances, I consider it was understandable for the plaintiff not to have met Mr Brown’s demand in September 2002, and I do not conclude that the plaintiff’s failure to pay the full amount of the draw from the Fund at that time would warrant the refusal of the issue of an unrestricted practising certificate.

(iii) The failure of the plaintiff to comply with past undertakings

54 On 25 March 2002 Mr Partridge attended on the plaintiff, and the plaintiff was informed that Mr Partridge would recommend the appointment of a manager for the plaintiff’s practice unless trust account records were brought up to date by 2 April 2002. Subsequently, on 26 March 2002, the plaintiff spoke to Mr Collins indicating that Ms Terry had been engaged but that she could not start work until after 2 April 2002. I accept that, as recorded in Exhibit D to his affidavit, acting on an undertaking given by the plaintiff that he would not withdrew funds from either trust account with one defined exception, Mr Collins extended the time for bringing the trust account records up to date until 5 April 2002 when the matter was to be reviewed. The plaintiff was required to contact Mr Collins on 5 April to report progress and Mr Collins would then consider the possibility of a further extension.

55 I am also satisfied by the evidence of Mr Collins that the plaintiff did not report as required on 5 April and, further, no satisfactory explanation for that failure was provided by the plaintiff in his evidence before this Court. By letter dated 8 April 2002 Mr Collins reminded the plaintiff of his default and gave the plaintiff until 12 April 2002 to complete his records and accounting. Otherwise, the plaintiff was told, action would be taken for the continued breaches of s 62 of the Legal Profession Act.

56 On 10 April the plaintiff responded, offering another undertaking, which was recorded in the letter written by the plaintiff to Mr Collins, which letter evidenced a further extension of time given to the plaintiff:

“(a) the plaintiff is to advise Mr Collins by 4.00 pm on Friday 12 April 2002 as to the status of the completion of the financial records of the trust accounts;

(b) the completion of the writing of the records would be substantially completed by that time; and

(c) the plaintiff would be able to notify Mr Collins of the precise date that the writing of the records would be completed.”

57 The above undertaking was expressed as “a personal undertaking to the President of the Law Society”.

58 On 12 April 2002 the plaintiff wrote to Mr Collins advising that the Kogarah trust account had been entered on to the computer, save for the identification of one deposit entry. So far as the Hurstville trust account was concerned, the plaintiff wrote:

“We are processing these accounts and should be finalised by 19 April 2002.”

59 Following written advice from the plaintiff on 1 May 2002 that the state of the records had not been fully rectified, Mr Collins gave a further extension until 10 May 2002. He wrote:

“Following a discussion between the Chief Trust Account Inspector and Ms Terry, your Bookkeeper, I am prepared to release you from your undertaking so as to permit your use of the Kogarah Trust Account subject to the following conditions:
1. You immediately make good all debit balances and place such funds into the appropriate Trust Ledger Accounts as to ensure that any debit balance is made good.
2. You advise the Chief Trust Account Inspector (Mr John Mitchell 9926 0336) by 4pm on Friday, 10 May 2002 that your Trust Account records are all up to date and correct and forward to him a certificate from your Bookkeeper that your Trust Account records are all up to date, balanced and that no debit balances exist. You should also forward to the Chief Trust Account Inspector the Bank Reconciliation for the Hurstville Trust Account.”

60 The deadline of 10 May 2002 was not met and on 15 May 2002 the plaintiff wrote to the Law Society advising that “a bookkeeper (presumably a reference to Ms Terry) will be attending the premises next Monday, 20 May 2002 to finalise the accounts.”

61 On 21 May 2002 the plaintiff wrote again to the Law Society advising that in relation to the Hurstville records any outstanding differences would be finalised on 22 May 2002. This prompted Mr Collins to write to the plaintiff on 22 May:

“I am prepared to release you from your undertaking without your Trust Account records being completely finalised provided:
1. You agree that by 10 June 2002 all of the records of your Trust Account will be up to date as at 31 May 2002, balanced and available for immediate inspection; and
2. That all Trust Account records for the 12 months to 31 May 2002 (including bank reconciliations as at 31 May 2002) are available for inspection by a Trust Account Inspector at 9.00am on 10 June 2002; and
3. That you will be available on 10 June 2002 at your Kogarah office to assist the Trust Account Inspector in completing his inspection in accordance with the Legal Profession Act, 1987 and Regulations.
In the event of your failing to comply with these requirements, this may lead to the appointment of a Manager to your practice.
Please provide me with your written acceptance of the above. Thereafter you are released from your undertaking.”

62 Unhappily, of course, the deadline of 10 June 2002 was not met either nor had the plaintiff completed his task before the patience of Mr Collins was exhausted and the Council passed its resolutions on 2 August 2002.

63 The plaintiff in his evidence endeavoured to explain why proper records were not kept after the departure of his first bookkeeper and why the requisite records had not been completed prior to the resolutions of the Council earlier set out. The plaintiff was cross examined about the failure to comply with the undertakings abovementioned. The plaintiff was cross examined about the personal undertaking given to the President of the Law Society. He said the time restraint for the purposes of that undertaking was imposed by the Law Society but he agreed to it and he acknowledges, and indeed could hardly have done otherwise, that the undertaking was not met. He acknowledged that the Law Society gave him several extensions, and I accept from the evidence I have shortly reviewed that this was indeed the case. Mr Collins exercised much patience and consideration.

64 The plaintiff was asked this question (T 48):

“Q. When you gave a personal undertaking to the President of the Law Society on 11 April 2002 did you have a belief that you would be able to advise as to the status of the completion of the financial records by 12 April 2002?
A. I sought the advice of a bookkeeper. She assured me she would have these things in order and based on that advice I gave the undertaking believing that that would be the case.”

65 And then (T 49):

“Q. Firstly, by 11 April 2002 Ms Terry had spent three days in your office, is that correct?
A. That would be, yes, that’s probably correct.
Q. I suggest to you there was no reasonable likelihood by then that the records would be in a completed state any time soon?
OBJECTION
HIS HONOUR: Q. Did you really believe she would be reporting to you-
A. That’s the advice she gave me then, that’s the advice I acted upon.”

66 There can be no doubt, either as to the significance of an undertaking given by a solicitor of the Court to the President of the Law Society, nor indeed as to the importance of compliance with such an undertaking.

67 The plaintiff has endeavoured to explain the non compliance by reason of being influenced in giving the undertakings by assurances by Ms Terry which proved to be inaccurate. I considered earlier the conflict between the plaintiff and Ms Terry which is presented on the evidence and by reference to the submissions of counsel in this case. I am unable to determine that conflict and I do not know, because this has not been explored, precisely what the plaintiff claims Ms Terry told him by way of assurances or precisely when. Nor do I know what Ms Terry’s responses would be to detailed evidence if given by the plaintiff as to the terms of any such assurances. These matters may be explored in the District Court proceedings referred to earlier and would certainly have to be explored in any proceedings under Pt 10 for the alleged failure to comply with undertakings. However, I do not consider that I can or should express any detailed findings for the purposes of the application presently before me.

68 What is clear is that there were undertakings given and these undertakings were given by the plaintiff. It is also clear that he failed to comply with them. However the consequences of such failure are better addressed in the likely proceedings under Pt 10, when it is to be anticipated that the relevant evidence will be more extensive. Moreover, if the Tribunal makes findings adverse to the plaintiff it will have available to it the wide range of options under s 171C, not all of which are available in proceedings under Pt 3.

(iv) The concern of the Society that the plaintiff’s conduct evidenced lack of the necessary skills and knowledge to conduct a practice

69 In para 37 of his affidavit Mr Collins expressed the opinion that the plaintiff by his conduct had evidenced that he did not have the necessary skills and knowledge to conduct a sole practice.

70 It was Mr Collins’ opinion that it would be extraordinarily difficult to conduct a general practice such as the plaintiff previously conducted without maintaining a trust account. The plaintiff does not challenge that (T 78). Mr Collins did not consider it would be appropriate for the plaintiff to conduct a sole practice without a trust account, and I do not understand Mr Wales to challenge that opinion. In any event, I do not consider that it would be appropriate for the plaintiff to be allowed at this time to return to sole practice without operating a trust account.

71 In voicing his concern (and presumably that of the Law Society) as to the plaintiff lacking the necessary skills and knowledge to conduct sole practice, Mr Collins gave evidence in response to cross examination (after Mr Wales took him to the plaintiff’s evidence as to the procedures of a manual trust account system) in the following passage (T 85-87):

“Q. Indeed, you heard, can I suggest, Mr Doherty give in the witness box an account of trust account bookkeeping in much the same terms as I have put to you?
A. Yes.
Q. You suggested to his Honour that that account was in some respects deficient?
A. Yes.
Q. In what respects?
A. I didn’t mean deficient in the sense of bookkeeping deficiency. It is the solicitor’s responsibility to ensure that the records are kept current and are capable of being in compliance with section 62 of the regulation. I meant it didn’t cover in itself the necessary attitudes and actions of a solicitor in respect of section 61. What was described was an account process and not the activities and knowledge of the operation of a trust account, how the funds are applied, received, and the operation in that nature other than the purely mechanical operation.
Q. Is this what you are saying, and please if I have misunderstood you put me right, are you saying in his account of how to operate a trust account Mr Doherty was accurate but you are not satisfied he has the right attitude towards that task as to persuade you if he was back in practice he would in fact write up those records accurately and within the time limits that the Regulations provide?
A. That, and knowledge of the operation of the trust account, because there are other attitudinal problems. These were referred to this morning by his Honour in relation to the total transfer of funds – fail to issue receipt, fail to receipt payments. It was my concern originally I am talking about and that is why I was happy to extend as much leniency as I could to Mr Doherty to get the documents done. Once it was evidenced it was not going to get done properly, I had to then ask the council to move. It would have been preferable not to have done that.
Q. Would it be fair to say your prime concern at the moment is that although Mr Doherty can give an accurate account of what is required to keep a trust account, you are not satisfied he has learnt the appropriate lesson from what happened to him and therefore you are not satisfied, if let back in to practise, he would maintain proper and timely trust account records?
A. Yes, that’s part of my concern, yes.
Q. Can you indicate what the rest of the concern is?
A. Yes, I am very much concerned and I have expressed this in various ways, that Mr Doherty gave the President of the Law Society and myself undertakings which he did not comply with and it is for that reason that in my report I have suggested that not only should Mr Doherty undertake a trust course and achieve at a level of higher than 50 percent, but also to attend and obtain a satisfactory pass in Ethics. That is the reason why I have suggested the professional responsibility course, not the Trust component of that course but the Ethics component of that course.
Q. So your prime concerns are firstly, that he has not learnt the lesson so far as trust accounting is concerned and, secondly, there is some more fundamental evidence by his non-compliance with undertakings and they are the matters of concern to you?
A. Yes, they are the matters of concern to me and I should say not only my concern but the Council in reaching its determination.”

72 It emerges from the above cross examination that the principal concerns of the Society should the plaintiff be allowed to return to sole practice, are these:

(i) that he would not keep proper records;

(ii) that he did not keep the undertakings that he gave and to which I earlier referred.

73 These concerns must be carefully considered and weighed by this Court along with all the grounds expressed for the Society’s attitude on this summons.

74 However, it is the responsibility of this Court to decide under what conditions the plaintiff ought to be permitted to return to practise, paying due regard to the fundamental importance of the protection of the public.

75 It is nevertheless also necessary to give appropriate consideration to the interests of the plaintiff who wishes to return to sole practice. As I wrote earlier, I do not find the plaintiff acted dishonestly and it has not been suggested otherwise. There is no evidence that any client of the plaintiff has been dissatisfied with the way in which the plaintiff attended to his professional responsibilities. True it is that Mr Partridge first investigated the condition of the plaintiff’s records because of a complaint about a particular matter in which the plaintiff had instructions to act, but the evidence does not disclose that that particular complaint was substantiated.

76 The limited conditional certificate proposed by Mr Collins would restrict the plaintiff’s right to practise for two years and would require him to revisit the College of Law to undertake again studies in trust account law and practise, achieving a mark of no less than seventy-five percent, as well as studies in professional responsibility. The evidence does not disclose the earliest date upon which the plaintiff could be accommodated in either of those courses but Mr Collins gave evidence that if this Court made an order for the issue of a certificate such as Mr Collins proposed, the College would have no difficulty finding a place for the plaintiff. I am prepared to assume that this would be the case.

77 Plainly the suggested certificate would very much limit the plaintiff’s opportunity to resume employment as a solicitor, and there would no doubt be many potential employers who would be discouraged from employing the plaintiff if holding such a certificate, when being made aware of the background to its issue.

78 Having reflected on the evidence and the competing submissions, I have decided that it is not necessary for the protection of the public that a practising certificate for the plaintiff be accompanied by the conditions for which the Law Society contends.

79 It is importance that I bear in mind the circumstances in which the default in keeping the necessary records first occurred and thereafter continued. Earlier I referred to the difficulties which the plaintiff had in keeping staff in the period he was in practise on his own behalf, and in this regard I am mindful of the affidavits of legal practitioners introduced by the plaintiff:

(a) Mr Hancock, solicitor, swore an affidavit on 11 February 2003. Mr Hancock carries on practise as a solicitor at Hurstville and he has known the plaintiff since 1996. He has had professional dealings with the plaintiff since then. Mr Hancock’s assessment was that the plaintiff’s office was “disorganised” and the plaintiff had told Mr Hancock that he “experienced difficulty employing good staff.” Nevertheless, it was Mr Hancock’s opinion that the plaintiff had a sound understanding of the law and that he was a competent legal practitioner. Mr Hancock thought well enough of the plaintiff to have offered him a position in his firm before the plaintiff started practise as Lloyd Lancaster.

(b) Mr Baran is a barrister who swore an affidavit in this matter on 11 February 2003. Mr Baran has known the plaintiff professionally since the plaintiff was first employed by Delaney Dimarco. Mr Baran was briefed by the plaintiff from that time and whilst he practised as Lloyd Lancaster. Whilst Mr Baran regarded the plaintiff as “an enthusiastic, dedicated and devoted solicitor” he deposed in para 10 of his affidavit:

“I believe it is fair to say that Peter is a solicitor who does require the assistance of staff and counsel and has difficulty in sole practise without support. I am also of the view that Peter’s problems appear to have arisen as a result of poor administration and lack of staff support rather than any deficiency in his ability to practise such as dishonesty or other nefarious conduct.”
Paragraph 12 of his affidavit reads:
“I found that over the years Peter has accepted advice and prepared matters in a reasonably competent fashion.”

And paragraph 15 reads:

“I believe that once Peter is able to sort out his affairs and run his practice in a more efficient administrative fashion, paying closer regard to the strict requirements of account keeping and trust accounting, he would be in a position to resume practice and I would have no hesitation in accepting briefs from Peter in the future, entrusting clients to him and working with him in the future on matters within his expertise.”

(c) Mr Lee carries on practise as a solicitor at Hurstville. In his affidavit sworn 10 February 2003 he deposed that he met the plaintiff in a professional capacity whilst the plaintiff was employed at Delaney Dimarco and he had professional dealings with the plaintiff in that employment and subsequently when the plaintiff practised as Lloyd Lancaster. Mr Lee deposed (para 4(b), (c), (d) and (e)):

“(b) Since he commenced private practice, I was aware that he experienced difficulties in hiring qualified and suitable staff to assist him in the conduct of two practices.
I do not believe that Mr Doherty employed competent and suitable staff at both offices and, as a result, his diligence in attending to matters was affected. Although older in years when he first commenced sole practice, he had not had a lot of prior experience in running a small business.
(c) Because we both worked in a regional community, I am able to say that his fame and reputation was of a high order and, I have seen nor heard about any defects in characters which I believe has always been exemplary.
(d) In all my dealings with him, both professionally and on a non professional basis, I have always found Peter to be pleasant, courteous and a very likeable person. I would have no difficulty or embarrassment in the future in the event that the Court or the Society renews or issues a practising certificate to him having professional dealings with him or any firm of which he is principal.
(e) I believe that Mr Doherty’s difficulties in practice stem from the fact he had limited experience in running a small business.”

80 None of the above deponents was required for cross examination and I accept that the assessment of each of these witnesses was genuinely held.

81 I am satisfied that the plaintiff’s problems with staff contributed to the difficulties he experienced in his practice. Whether, and if so to what extent, the plaintiff was to blame for those staff problems, I am unable to determine. In any event, it seems to me that the plaintiff tried to build up his practice too quickly and with inadequate resources.

82 Moreover, he was unquestionably unwise to rely solely upon a computer system for the maintenance of trust records, particularly when he was totally dependent upon one member of staff in such maintenance. This was the background to his failure to keep the requisite trust records.

83 I should add in this regard that the plaintiff was distracted from his professional undertakings by serious injuries sustained by his wife after she was struck by a truck in September 2001.

84 I consider it more probable than not that the plaintiff has learnt from his past experiences. The plaintiff has certainly suffered financially, having been unable to practise since 2 August 2002, and he has had a significant period of time in which to reflect upon why he found himself in difficulties and why he was unable to extract himself from those difficulties.

85 I am satisfied that the plaintiff now appreciates the folly of complete reliance upon a computerised system of keeping required records of account and the total dependence upon a bookkeeper to keep such records. The plaintiff acknowledged in evidence that in light of his experience he should have had “a hard copy manual system” (T 57). The plaintiff went on in evidence to explain how that hard copy system would operate in practise (T 57-59). I do not propose to record that evidence here but it did not reveal any lack of understanding as to what was required in the implementation of and the keeping of a satisfactory manual system. Nor did the later cross examination of the plaintiff expose any such lack of understanding. I am satisfied that if the plaintiff was permitted to return to sole practice he would now implement a system of manual record keeping.

86 The plaintiff voiced a willingness to submit to ongoing supervision of his trust account records by the Law Society and to submit to the Society each month copies of records maintained, including a copy of the trial balance (T 60). The plaintiff was then asked this question and gave this answer (T 61):

“Q. With the benefit of hindsight what do you say to his Honour about the wisdom of having an accounting system which you yourself cannot operate and in respect of which you depend upon the expertise of one member of staff?
A. It has proved fatal in this case but certainly I would strongly advise against that course of action.”

87 I accept that response as being sincerely made.

88 I am satisfied on the balance of probabilities that if the plaintiff is allowed to return to practise as a sole practitioner he will adopt a system of manual record keeping, and I am further satisfied by his evidence that he is willing to submit to a routine of monthly supervision of his records.

89 The imposition of a condition that he do so is, to my mind, important. Is it feasible? The evidence of Mr Collins satisfies me that it is. I refer to the transcript (T 89-90):

“Q. Imagine this scenario – Mr Doherty is allowed to practice and every month within 21 days of the end of each month Mr Doherty provides to the trust account section of the Society and to your section, the Professional Standards, copies of his trial balance, his cash book and his journal?
A. And his pass sheets, the bank pass sheets.
Q. The fact that a trial balance does balance is a very strong indication that all is well with the trust account bookkeeping?
A. Yes.
Q. And the 21 days from the end of the month is the time that the regulations prescribe as the maximum time for the preparation of the trial balance, is that correct?
A. Yes.
Q. If Mr Doherty sent to the Society, as I described, those documents within 21 days from the end of each month and if those documents were satisfactory in the sense they were properly kept and a trial balance was balanced, there would be very sound evidence in front of the Society that the trust accounts were in a proper state?
A. Yes, and there are some solicitors who are subject to that exact regime.
HIS HONOUR: Q. How long would it take for the Society to examine that on a monthly basis?
A. If it balances, probably a quarter of an hour.
Q. Are there a lot of people subject to this regime?
A. No, not very many but there are, I have placed solicitors on that exact regime.
WALES: Q. Imagine this, a practice which had something like no more than one dozen cheques and one dozen receipts in the course of a month and there are only about 24 at the maximum cash book entries.
A. Yes.
Q. And that would be one page of the cash book?
A. Yes.
Q. The trial page is normally one to two pages long, the client balances?
A. Yes.
Q. The reconciliation, that is the bank adjustment and the comparison of the bank account is the total of the trust balances is usually just a note on the bottom of one of those pages of the document?
A. It is not a very difficult document to draw.
Q. We are talking about three to six pages of documents which, if all balances, can be properly kept within a matter of minutes?
A. Just a matter of making sure the calculations and the additions are right. That is where the time would be. I would not do that myself, though, that would be a trust account inspector’s responsibility.”

90 Mr Collins’ evidence above recorded satisfies me as to the practicability of such a regime if put in place.

91 Mr Collins went on to explain why he did not propose such a regime for the plaintiff (T 90):

“Q. You deliberately refrained from such a recommendation in this case, did you?
A. Yes, I did.
Q. Why was that?
A. I personally did not think Mr Doherty would be able to keep such an arrangement because of the prior history and, of course, not only the prior history in relation to the keeping of the trust accounts, but also the prior history of the failure to comply with the responsibilities. It is not just that he did not do the work, he even gave me undertakings to contact me on certain days but he did not. It was not only the work I was worried about at that stage.”

92 I have concluded that if the plaintiff is granted a certificate such as would permit him to be a sole practitioner, the imposition of a requirement that he submit his records, including a trial balance, for screening by the Law Society each month, would afford adequate protection to the public.

93 I do not lightly dismiss Mr Collins’ reservations as to whether the plaintiff would comply with conditions as to the monthly presentation of relevant records. Those reservations are understandable having regard to the plaintiff’s failure in the past to comply with time limits. However, I have concluded on the balance of probabilities that the plaintiff has learned sufficiently from his past experiences.

94 In the event that the plaintiff fails to comply with the condition for monthly inspection, it would be open to the Law Society to act under s 37(1)(b) of the Legal Profession Act and upon such default to cancel the plaintiff’s certificate. Section 37(1)(b) empowers the Council of the Society to cancel a practising certificate if the holder “has, in the opinion of the Council, failed to comply with a condition attached to the certificate.” That provision empowers the Council to act without prior reference to the court.

95 In all the circumstances of this case, I have decided that it is appropriate to order the issue of a certificate imposing the above considered regime of monthly supervision.

96 I have decided that the conditions I will shortly express should remain in place for two years, subject, of course, to any further order of this court that may be made within that period and subject also to any order that may be made by the Administrative Decisions Tribunal within the next two years under s 171C of the Legal Profession Act.

97 The plaintiff must appreciate the absolute necessity for strict and punctual compliance with the conditions I intend now to express and order to be attached to his practising certificate. He must further appreciate the probable consequences of any default. He ought not to expect any application for extension of the time restraint I intend to set in respect of the periodic submission of his trust account records, including the trial balances, to be favourably received. On the contrary, he should anticipate any default will expose him to the loss of the conditional practising certificate the subject of the orders I am about to make.

98 I consider that the plaintiff should pay the costs of the regime of scrutiny of his records and I will impose a requirement that he do so as a condition to accompany the certificate to be issued.

Formal orders

99 1. That the plaintiff be issued with a Practising Certificate to be expressed as subject to the following conditions:

(i) that the plaintiff within twenty-one days after the end of each calendar month is to provide to the Trust Account section of the defendant and to the Manager of the Professional Standards Department of the defendant for scrutiny a copy of his trial balance statement disclosing each account in his trust ledger effective as at the end of such month to which that trial balance relates, together with copies of those trust account records upon which such trial balance statement has been prepared;
(ii) that the plaintiff is to pay the reasonable costs of the defendant of the scrutiny by its Trust Account section of the monthly records required to be submitted by the plaintiff by condition (i);


2. That the conditions expressed in Order 1 are to apply to any practising certificate held by the plaintiff during a period of two years from today subject to any further order that may be made by this court within that period or any order that may be made within that period by the Administrative Decisions Tribunal under s 171C of the Legal Profession Act ;

3. That costs of the summons be reserved;

4. Liberty to apply within the next fourteen days as to the manner of expression of Orders 1 and 2.

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Last Modified: 03/03/2003