Law Society of New South Wales v Bouzanis
[2006] NSWADT 55
•02/22/2006
CITATION: Law Society of New South Wales v Bouzanis [2006] NSWADT 55 DIVISION: Legal Services Division PARTIES: APPLICANT
Council of the Law Society of New South Wales
RESPONDENT
Peter BouzanisFILE NUMBER: 052020 HEARING DATES: 18/11/2005 SUBMISSIONS CLOSED: 11/18/2005
DATE OF DECISION:
02/22/2006BEFORE: Vass CB -Judicial Member at 1; Bishop C - Judicial Member at 1; Dyster B - Non Judicial Member at 26 CATCHWORDS: Professional Misconduct - fail to make superannuation payments MATTER FOR DECISION: Principal matter LEGISLATION CITED: Legal Profession Act 1987
Legal Profession Act 2004
Superannuation Guarantee Charge Act 1992 (Cth)CASES CITED: Allinson v General Council of Medical Education and Registration [1840] 1QB 750
Kennedy v The Council of the Incorporated Law Institute of New South Wales (1939) 13 ALJ 563
Law Society of New South Wales v Bannister (1993) 4 LPDR 24
Law Society of New South Wales v Harvey [1976] 2 NSWLR 154
New South Wales Bar Association v Cummins 52 NSWLR 279REPRESENTATION: APPLICANT
RESPONDENT
L Pierotti, Solicitor
A Colefax, SCORDERS: 1. The Solicitor is publicly reprimanded; 2. The Solicitor pay a fine of $10,000.00; 3. The Solicitor pay the costs of the Society as agreed or assessed
1 The Council of the Law Society of New South Wales (the Society) filed an Information in the Tribunal on 9 June 2005 alleging that the solicitor Peter Bouzanis (the Solicitor), was guilty of professional misconduct in that he failed to make superannuation payments in respect of Robert Apps whilst he was the employee of the Solicitor.
2 The particulars of the complaint as set out in schedule 1 to the Information, are:
- a) The Solicitor employed Mr Robert Apps between 21 March 2000 and 13 August 2003.
b) By letter dated 13 August 2003 from Mr Apps to the Solicitor, Mr Apps requested advice as to what employer superannuation contributions had been made by the Solicitor. The Solicitor did not respond to Mr Apps’ correspondence.
c) By letter dated 23 September 2003, Messrs Saunders and Standen, Solicitors, on behalf of Mr Apps again requested payment of the outstanding employer superannuation contributions in respect of Mr Apps by 3 October 2003. The principal amount of payments outstanding was $9,532.51.
d) By facsimile transmission dated 1 October 2003 the Solicitor advised that he was taking advice from his firm’s accountant and sought a short indulgence.
e) By letter dated 3 October 2003 Messrs Saunders and Standen, on behalf of Mr Apps, made a complaint with respect to Mr Bouzanis’ failure to pay Mr Apps’ employer superannuation contributions.
f) On or about 27 January 2004 the Solicitor advised a Trust Account Inspector that he had not yet paid the employer superannuation contributions in respect of Mr Apps but would do so in the then next few weeks. The Solicitor conceded that he had required the funds for other purposes.
g) Under cover of a letter dated 12 March 2004 the Solicitor forwarded the sum of $9,532.51 to Mr Apps’ Superannuation Fund.
3 The Society relied upon an Affidavit of Raymond John Collins sworn on 1 June 2005 which had annexed to it the various letters referred to in the particulars and the report of Trust Account Inspector Mr F A House relating to an interview with the Solicitor on 27 January 2004. In that report it is stated that the Solicitor did not dispute Mr Apps’ claim and he was then asked by Mr House:
- “Why, if the claim is undisputed, have you not paid it?”
- “Well, I have needed the money for other things but I intend to pay him in the next few weeks.”
4 The Solicitor was represented at the Hearing by Mr Colefax SC and the Affidavit of Mr Collins was tendered without any objection.
5 The requirement for the Solicitor to make superannuation payments on behalf of his employee Mr Apps, was a statutory obligation and his failure to meet that obligation continued for the period between 21 March 2000 and 12 March 2004. The latter date the Tribunal notes is 7 months after Mr Apps ceased his employment with the Solicitor. Also, it is the fact that the Solicitor made the payment with the letter dated 12 March 2004, only after he received correspondence from solicitors acting for Mr Apps and the intervention of the Society.
6 The Society notes that the Legal Profession Act 2004 commenced on 1 October 2005. However, these proceedings were current before the Tribunal at 1 October 2005. Clause 15 of schedule 9 to the Legal Profession Act 2004 Savings, Transitional and Other Provisions provides:
- “Pending Complaints before Tribunal:
(1) this clause applies to a complaint that was made under the old Act and in respect of which proceedings instituted under the old Act in the Tribunal were pending immediately before the commencement day.
(2) the complaint is to be dealt with as if this Act had not been enacted.
7 The Solicitor in his Reply dated 5 July 2005 admitted the allegations in the Information and the particulars and sought only to be heard in relation to the quantum of any fine that this Tribunal may consider imposing should the Tribunal find that the Solicitor is guilty of professional misconduct.
8 The Tribunal after considering the evidence and the admissions made by the Solicitor in his Reply finds that each of the particulars set out in paragraph 2 above proved.
9 The substantial question for determination of the Tribunal is whether the conduct of the Solicitor in failing to pay superannuation on behalf of Mr Apps amounts to professional misconduct.
10 Professional misconduct is defined in Section 127(1) of the Act relevantly as follows:
- “1. For the purposes of this Part, professional misconduct includes:
(a) Unsatisfactory professional conduct, where the conduct is such that it involves a substantial or consistent failure to reach reasonable standards of competence and diligence, or
(b) conduct (whether consisting of an act or omission) occurring otherwise than in connection with the practice of law which, if established, would justify a finding that a legal practitioner is not of good fame and character or is not a fit and proper person to remain on the roll of legal practitioners; or
(b1) …
(c) conduct that is declared to be professional misconduct by any provision of this Act, or
(d) a contravention of a provision of this Act or the regulations, being a contravention that is declared by the regulations to be professional misconduct.
…”
11 The Society submitted that the definition of professional misconduct was for all intents and purposes open ended but then said that it is not contended that the conduct, the subject of this inquiry, falls within the terms of Sections 127(1)(b) of the Act. The Society went on however to refer the Tribunal to a number of decisions to support the submission that it was only necessary to link the relationship between the misconduct and the practice of law as all that was required for the conduct to be professional misconduct.
12 The Society in its submissions commenced by referring the Tribunal to the well known decision in Allinson –v- General Council of Medical Education and Registration [[1840] 1QB 750] which defines what is meant by “Professional Misconduct”. In his Judgment, Lopes LJ said that such conduct would be something done by a person in pursuit of his profession:
- “Which would be reasonably regarded as disgraceful or dishonourable by his professional brethren of good repute and competency”.
13 The High Court in Kennedy –v- The Council of the Incorporated Law Institute of New South Wales [(1939) 13 ALJ 563 (per Rich J)] put it thus:-
- “…a charge of misconduct as relating to a solicitor need not fall within any legal definition of wrong doing . It need not amount to an offence under the law. It was enough that it amounted to grave impropriety affecting his professional character and was indicative of a failure either to understand or to practise the precepts of honesty or fair dealing in relating to the courts, his clients or the public. The particular transaction the subject of the charge must be judged as a whole and the conclusion whether it betokened unfitness to be held out by the court as a member of a profession in whom confidence could be placed, or on the other hand, although a lapse from propriety, was not inconsistent with general professional fitness and habitual adherence to moral standards, was to be reached by a general survey of the whole transaction.”
14 The Tribunal was also referred to the Judgment of the Court delivered by Street CJ in Law Society of New South Wales –v- Harvey. The Court said:
- “There cannot be any doubt that the duty of a solicitor to his client is paramount and that he must not prefer his or the interest of another to that of his client…an appreciation of that duty depends, not upon some technical instruction but upon understanding and applying the ordinary concepts of fair dealing between honourable men.”
15 The cases above referred to all relate to a solicitors responsibilities in dealing with his clients or the Court. The Society’s submission is that as a result of the decisions of the New South Wales Supreme Court in New South Wales Bar Association –v- Cummins the manner in which the Solicitor conducts his professional practice and the failure of the solicitor to carry out his fiscal responsibilities can and should in this inquiry warrant a finding that the Solicitor is guilty of Professional Misconduct. In New South Wales Bar Association –v- Cummins [reported 52 NSWLR 279] the Chief Justice [with whose reasons and Judgment the other members of the Court agreed], dealt with conduct arising from the non payment of taxes. It is submitted that some of His Honour’s comments are directly applicable to the present case. He said [references are to the paragraph numbers in the unreported Judgment]:
- “18 As Mason P said in Hamman:
“[85] I emphatically dispute the proposition that defrauding ‘the Revenue’ for personal gain is of lesser seriousness than defrauding a client, a member of the public or a corporation. The demonstrated unfitness to be trusted in serious matters is identical. Each category of ‘victim’ is a juristic person whose rights to receive property are protected by law, including the criminal law in the case of dishonest interception. ‘The Revenue’ may not have a human face, but neither does a corporation. But behind each (in the final analysis) are human faces who are ultimately worse off in consequences of fraud. Dishonest non-disclosure of income also increases the burden on taxpayers generally because rates of tax inevitably reflect effective collection levels. That explains why there is no legal or moral distinction between defrauding an individual and defrauding ‘the Revenue’.
19. Honesty and integrity are important in so many spheres of conduct. However, in some spheres significant public interests are involved in the conduct of particular persons and the state regulates and restricts those who are entitled to engage in those activities and acquire the privileges associated with a particular status. The legal profession has long required the highest standards of integrity.
20. There are four interrelated interests involved. Clients must feel secure in confiding their secrets and entrusting their most personal affairs to lawyers. Fellow practitioners must be able to depend implicitly on the word and the behaviour of their colleagues. The judiciary must have confidence in those who appear before the courts. The public must have confidence in the legal profession by reason of the central role the profession plays in the administration of justice. Many aspects of the administration of justice depend on the trust by the judiciary and/or the public in the performance of professional obligations by professional people.”
16 His Honour went on to consider what was meant by the expression “professional misconduct” and he said at 56:
- “There is authority in favour of extending the terminology ‘professional misconduct’ to acts not occurring directly in the course of professional practice. That is not to say that any form of personal conduct may be regarded as professional misconduct. The authorities appear to me to suggest two kinds of relationships that justify applying the terminology in this broader way. First, acts may be sufficiently closely connected with actual practice, albeit not occurring in the course of such practice. Secondly, conduct outside the course of practice may manifest the presence or absence of qualities which are incompatible with, or essential for, the conduct of practice. In this second case, the terminology of ‘professional misconduct’ overlaps with and, usually it is not necessary to distinguish it from, the terminology of ‘good fame and character’ or ‘fit and proper person’.”
17 It is the view of this Tribunal that His Honour’s Judgment does support the submission that the relationship between the conduct and the practice of law is all that was required to link any misconduct to the description “professional misconduct”.
18 The Tribunal finds that the failure by the Solicitor to make superannuation payments on behalf of his employee Mr Apps, during the course of his employment which was between 21 March 2000 and 13 August 2003, and the further finding that the superannuation payment was only made behalf of Mr Apps after the solicitor received correspondence from solicitors representing Mr Apps to be a sufficiently serious abrogation of his fiscal responsibilities in the practise of law to warrant a finding by this Tribunal that the Solicitor is guilty of professional misconduct.
19 The Solicitor gave evidence before the Tribunal concerning his financial situation. In particular, he produced a creditors petition issued in the Federal Magistrates Court on behalf of the Deputy Commissioner of Taxation. He stated in evidence that he owed the Taxation Department approximately $260,000.00 and that he was endeavouring to borrow funds upon the security of his parent’s home.
20 The consequence of this finding of professional misconduct against the Solicitor is that the Tribunal has to determine what penalty, if any, should be imposed. In the Law Society of NSW –v- Bannister (1993) 4 LPDR 24 at 28 per Shellar JA said on the question of penalty:
- “The exercise of the power to remove from the Roll, to suspend or fine a solicitor is directed to protecting the public by ensuring that those unfit to practice do not continue to hold themselves out as fit to practice, and that high standards are maintained. The maintenance of such standards involves deterring the offender from repeating the offence and deterring others who might be tempted to offend.”
21 The Solicitor is now aged 45 and has been a solicitor since 1983. He has been in private practice since approximately 1987 and the type of work that he undertook until recent times was essentially personal injury cases. His practice was badly affected by changes to legislation between 2001 and the present time, and his income dropped dramatically. As a result in the drop of his income, he has found himself to be in considerable debt.
22 Three reference letters were tendered to the Tribunal as evidence of his integrity, honesty and competence. One of the letters is from a solicitor. Another of the letters is from a Barrister, and the third letter is from an Accountant. The letters are impressive and the Tribunal accepts that the Solicitor is a person of good character and carries out his duties as a solicitor competently and conscienously. The Tribunal accepts as does the Society, that the solicitor is genuinely contrite and no question arrises as to the necessity of a protective order such as striking the solicitor off the Role or suspending his right to practice.
23 The Society also submitted that the finding of professional misconduct against the Solicitor is in itself a weighty penalty and in that regard, referred the Tribunal to a decision of the Legal Profession Disciplinary Tribunal in the matter of Janine Michelle Bellamy which was a case where the Tribunal having made the finding of professional misconduct said that the penalty in itself a weighty penalty and did not impose a fine.
24 The Tribunal however considers that in this matter, it must make an order fining the Solicitor so as to deter the Solicitor in the future and deter any other practitioner minded to behave in like matter.
25 What has been ordered accords with the findings made and penalties sought by the Society. This decision ought not to be regarded in any way as a precedent for the type of findings and penalty typically to be made in similar complaint proceedings. The Tribunal refers again to the remarks of Mason Pin Hamman set out in paragraph 15 above. A systematic failure to comply with Revenue responsibilities could in an appropriate case, warrant a significantly more severe penalty than has been ordered by this Tribunal. In fact it is our view that the Law Society may have significantly underestimated the seriousness of the events giving rise to these proceedings. The decision of this Tribunal is a majority decision.
REASONS FOR DISSENTING DECISION – B Dyster, Non Judicial Member
26 Paragraphs 1 to 18 of my colleagues' majority Decision give a clear account of the matter brought before the Tribunal. Mr Robert Apps had been employed in the practice of Mr Peter Bouzanis between 21 March 2000 and 13 August 2003. After leaving Mr Bouzanis' employ Mr Apps found that Mr Bouzanis had made no payments at all into Mr Apps' superannuation account, in breach of a statutory requirement. (The Law Society failed to identify the statute; we must assume that it dealt with superannuation guarantee charges. ) A complaint was made on Mr Apps' behalf to the Professional Standards Department of the Law Society. The Society argued before the Tribunal that the complaint was sustained by evidence. The respondent, in sworn evidence led by his own counsel, agreed that he had commited the offence. The Tribunal agreed with the Law Society that the respondent's behavior was disgraceful.
27 My dissent from my colleagues' Decision arises from my judgement that the Law Society mistook the nature of the respondent's offence, underestimated its gravity, and presented the Tribunal with an inadequate set of recommended Orders. The Tribunal ended its hearing prematurely. Proceedings should have been adjourned with a direction to the Law Society to consider again its Information. If the Society were then to amend its Information, Submissions and recommended Orders, natural justice and procedural fairness would require that the Tribunal must convene with a fresh panel, and the respondent be afforded time to mount a fresh defence.
28 Mr L. Pierotti, representing the Law Society, informed the Tribunal that this matter was entering new territory for the Society and for the Tribunal. Mr Pierotti said in opening: “The case turns on a question, and to my knowledge before this Tribunal has not been an issue before, whether or not a practitioner who fails in his fiscal duties associated with the practice of law is or is not guilty of professional misconduct.” (transcript, p.2, ll.2-6 ) In closing Mr Pierotti said: “In some respects Mr Bouzanis carries the weight of the profession because as far as I am aware this is the first one that's come before the Tribunal or its predecessors, so it's a little bit of a litmus test in your view because I can't come to you and say that there's been this court matter, to use the colloquial term the freight is.” (transcript, p.26, ll.40-45)
29 Mr Pierotti's words show that the Law Society was feeling its way and admitted that it could call on no experience for its own guidance or the Tribunal's. The Society seemed to be asking the Tribunal to make the running, and must surely have been receptive to direction from the Tribunal. As a precedent is being set it is incumbent on the Tribunal to be clear about what is, and is not, at issue.
30 The Law Society's uncertainty is reflected in the fact that it presented New South Wales Bar Association v. Cummins 52 NSWLR 279 as a relevant authority. The majority Decision in this matter [ Bouzanis ] in its paragraph 15 reprints three paragraphs ( 18, 19 and 20 ) from the judgment in Cummins that were quoted in the Law Society's submission to the Tribunal. Paragraph 18 of Cummins consists of an extract from Mason P in Hamman, which disputes “the proposition that defrauding 'the Revenue' for personal gain is of lesser seriousness than defrauding a client, a member of the public or a corporation. The demonstrated unfitness to be trusted in serious matters is identical. Each category of 'victim' is a juristic person whose rights to receive property are protected by law, including the criminal law in the case of dishonest interception.” Mr Bouzanis' offence has nothing to do with defrauding 'the Revenue', so Cummins' case is not relevant. Mr Bouzanis defrauded his employee, Mr Apps, 'a juristic person' quite distinct from 'the Revenue'. The 'dishonest interception' withheld money, systematically, from Mr Apps' account in Tower Australia Superannuation Limited. The judgment from Cummins' case is a red herring, and a sign of the Law Society's confusion.
31 There is a lesson, however, that can be drawn from the way Spigelman CJ and his colleagues structured the argument in Cummins. Paragraphs 19 and 20 of their judgment deal with honesty, integrity and trust. They are not, here, qualities to be assessed subjectively. The placement of paragraph 18 immediately before 19 and 20 demonstrates that Cummins' professional disgrace follows directly from his palpable fraud. It is the material act of fraud that defines the extinction of honest, integrity and trust. The judgment in Cummins raises fraud against the Revenue to equality with fraud against other juristic persons. To quote Mason P again, “The demonstrated unfitness to be trusted in serious matters is identical.”
32 The Law Society also presented for the Tribunal's consideration paragraph 56 of the Cummins judgment, which is cited in paragraph 16 of the majority Decision in this matter [Bouzanis]. My colleagues draw from it in their paragraph 17 the sensible conclusion “that the relationship between the conduct and the practice of law is all that was required to link any misconduct to the description of professional misconduct.” But Cummins at 56 is a discussion of “acts not occurring directly in the course of professional practice.” Mr Apps was employed directly by Mr Bouzanis' practice. His superannuation entitlements derived from his work completely within the practice. The citation by the Law Society of Cummins, as if Mr Bouzanis' relationship with Mr Apps might be construed as (at least partly) extra-professional, is another instance of the Society's confusion about the kind of offence involved.
33 The Law Society failed to identify, let alone quote from, the statute Mr Bouzanis breached. Is this the Superannuation Guarantee Charge Act 1992, no. 93, 1992, and its successors? This lack of specificity goes to the heart of the Society's confusion about the kind of offence, and its unreadiness and haste in bringing the case before the Tribunal. The failure to identify the Act hampered the Tribunal in its deliberations. Indeed, unwittingly but demonstrably, it mislead the Tribunal.
34 Three testimonials of character were presented to the Tribunal. I would not mention them, except that they are given weight in paragraph 22 of the majority Decision. One of the letters says, a view essentially expressed in the other two: “I have been made aware of the matters before this Court and I find this to be entirely out of character.” The Law Society lodged with the Tribunal a report made by one of its inspectors, Mr F.A. House, dated 13 February 2004, in which Mr House wrote that he could confirm “that compulsory superannuation payments in respect of Mr Apps' employment had not been made as required… I suspect that this applies to all of the firm's employees, five or six in number.” The respondent, in sworn evidence before the Tribunal, said that Mr House's suspicion was justified, and that the number of employees whose entitlements he had failed to pay exceeded Mr House's estimate (transcript,p.6,l.46 to p.7, l.24, and p.18,l.4 to p.19, l.27 ) To amend the observation already quoted from one of the submitted testimonials: “I have been made aware of the matters before this Court and I find this to be entirely in character.” This is no reflection on the authors of the letters of reference. The letters are testimonies of friendship and esteem, and reveal that Mr Bouzanis' dealings with these peers have been happy and trustworthy. The point at issue is Mr Bouzanis' dealings with employees. The authors of the testimonials did not have before them evidence that was available to the Tribunal.
35 Hearings of the Tribunal are often adjourned. The Tribunal can ask the Law Society or the Bar Association to go away and document its contentions more completely, or to rethink its submissions. If the reconsideration of Information, Submissions and requested Orders means that the Tribunal must start again, with a new panel out of natural justice and procedural fairness, so be it. I am strengthened in this opinion by the observations in Spencer Bower, Turner and Handley, The Doctrine of Res Judicata ( Butterworths, London, 3rd edition, 1996 ), p. 20 at 35 and 36, where relevant cases are also cited :
- “Dismissal for want of prosecution: 35 A judgment or order for dismissing proceedings for want of prosecution is an interlocutory and not a final order. It does not involve any decision on the merits of the case, and does not give rise to a res judicata. A paintiff whose action has been dismissed for want of prosecution can therefore bring a second action for the same cause and prosecute it to judgment, unless the second action, for exceptional reasons, is an abuse of process.
Withdrawal of summons: 36 On the same principle the withdrawal of a summons by the complainant in a court of summary jurisdiction because he has not complied, or recognises that he cannot comply, with some statutory formality or condition, or with some rule of evidence, does not result in an adjudication, and prima facie is not a bar to a fresh summons. The same result follows when a summons is withdrawn to allow a graver allegation to be substituted. It was formerly thought that if the withdrawal was intended to put an end to proceedings, it could be set up as a bar; but it is now clear that this is not so.”
36 The Tribunal therefore orders:
- 1. The Solicitor is publicly reprimanded.
2. The Solicitor pay a fine of $10,000.00.
3. The Solicitor pay the costs of the Society as agreed or assessed.
9
2
3