Law Society of New South Wales v Kennedy

[2007] NSWADT 59

CITATION:	Law Society of New South Wales v Kennedy [2007] NSWADT 59
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Council of the Law Society of New South Wales RESPONDENT Paul Herbert Kennedy
FILE NUMBER:	062007
HEARING DATES:	11 December 2006, 29 & 31 January 2007
SUBMISSIONS CLOSED:	31 January 2007
DATE OF DECISION:	15 March 2007
BEFORE:	McGuire J - ADCJ (Deputy President); Hale S - Judicial Member; Bubniuk L - Non Judicial Member
CATCHWORDS:	Solicitor – Disciplinary application
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Legal Profession Act 1987 Legal Profession Act 2004
CASES CITED:	Briginshaw-v-Briginshaw (1938) 60 CLR 336 Council of the Law Society of New South Wales-v-Kennedy [1996] NSWLST 20
REPRESENTATION:	APPLICANT S Barnes, barrister RESPONDENT In person
ORDERS:	1. That the name of the Solicitor be removed from the Roll of Legal Practitioners; 2. That the Solicitor pay the Law Society’s costs of these proceedings as agreed or assessed.

Introduction.

1 On 22 February 2006 the Law Society of New South Wales (the Applicant) filed a Disciplinary Application in the Tribunal alleging that Paul Herbert Kennedy (the Solicitor) was guilty of professional misconduct in that:

1. The Solicitor breached Rule 12 of the Revised Conduct and Practice Rules dealing with borrowing transactions.

2. The Solicitor was:

i. Negligent in failing to secure registration of the second mortgage.

ii. Engaged in unethical conduct by breaching the rule against borrowing from a client.

iii. Negligent in failing to seek consent of the first mortgagee.

3. The Solicitor acted in a conflict of interest and preferred his own interests to those of his client Lillian May Cooke.

2 The particulars provided of the alleged misconduct are:

Paul Herbert Kennedy [‘the Solicitor’] is the sole Director and Shareholder of MTB Enterprises Pty Limited [‘MTB’].

MTB had a leasehold interest in a property at 2 Small Street Willoughby known as The Incinerator, which is owned by the Council of the Municipality of Willoughby.

On 8 November 1999, MTB granted to Dennis Michael Staunton and Bruce Lochart Thompson a first mortgage over the lease securing the sum of $1,000,000 [‘the first mortgage’]. The first mortgage was due for repayment on 8 November 2001. However, by 8 September 2001 MTB was in default under the first mortgage.

Gail Cooke [‘Cooke’] and her partner, John Bennett [‘Bennett’], operate a company known as Lafeven Pty Limited [‘Lafeven’].

On or about 26 February 2002, Cooke instructed the Solicitor to prepare documentation appointing her Attorney under Power for her Mother, Lillian May Cooke. Cooke further instructed the Solicitor to act in relation to the sale of property owned by Lillian May Cooke known as 410 The Horsley Drive Fairfield [‘the Fairfield property’] which was unencumbered.

In about March 2002 Cooke and Bennett decided to purchase, through Lafeven, a development site at Corniche Avenue, Church Point [‘the Church Point property’] for $1,850,000. They intended to use the proceeds of sale of the Fairfield property to finance the purchase of the Church Point property.

Cooke and Bennett did not have access to deposit and development monies required between exchange and settlement of the Church point property and arranged a loan of $200,000 from Designamite Pty Limited to be secured over the Fairfield property [‘the Designamite mortgage’].

The Solicitor acted for Lillian May Cooke on the Designamite mortgage. The term of the mortgage was four months. The Designamite mortgage settled on 16 April 2002. The net proceeds after deduction of the usual costs and disbursements were appropriated and used by Lafeven in acquiring the Church Point property and in Cooke’s and Bennett’s building and car hire business.

On 30 April 2002, contracts were exchanged on the sale of the Fairfield property for a sale price of approximately $600,000.

Arrangements were made to re-finance the Designamite mortgage by way of a new mortgage advance from Susan Lesley Pinset [‘the Pinset mortgage’]. The Solicitor acted for Lillian May Cooke on the discharge of the Designamite mortgage and on the new mortgage to Pinset.

At the request of the solicitor, it was agreed between Cooke and the Solicitor that the sum of $250,000, being part of the proceeds of the Pinset mortgage, be loaned to MTB.

As at 8 May 2002, interest on the first mortgage was in arrears in the sum of $70,000.

By letter dated 13 May 2002 the Solicitor directed that $212,168.86 of the proceeds of the Pinset mortgage be paid to MTB Enterprises Pty. Limited.

Settlement of the Pinset mortgage took place on or about 14 May 2002.

On or about 14 May 2002, MTB received the sum of $212,168,86.

On 25 May 2002, MTB granted to Lillian May Cooke a mortgage over MTB’s lease of The Incinerator securing the sum of $250,000 [‘the second mortgage’]. A caveat over the same lease was also provided. The mortgage was not stamped and neither the mortgage nor the caveat was registered.

On 28 June 2002, the sale of the Fairfield property settled.

The first mortgage was again in default from July 2002.

Despite the requests of Cooke, the Solicitor failed to provide her with a copy of any consent to the second mortgage by the first mortgagee. No such consent was obtained.

As at 1 November 2002 the first mortgage was in arrears in the sum of $43,750.00.

The Solicitor obtained a further advance from which he made a payment of $75,000 on behalf of Lafeven on or about 1 November 2002. No payments were made under the second mortgage.

The further advance referred to above was obtained by MTB providing, without the consent of the first or second mortgagee, a third mortgage over the lease of The Incinerator.

3 By letter dated 22 November 2006 the Applicant advised the tribunal that the following orders would be sought in place of those contained in the disciplinary application filed on 22 February 2006:

(i) That the name of Paul Herbert Kennedy be removed from the Roll.

(ii) That Paul Herbert Kennedy pay the Society’s costs.

(iii) Such other order as to the Tribunal seems fit.

4 A copy of the Applicant’s letter was forwarded to Mr Tony Browne, solicitor.

5 The matter came on for hearing on 11 December 2006, when the Solicitor appeared in person. He had previously been represented by Mr. Tony Browne, solicitor, however, he informed the Tribunal that for financial reasons he had withdrawn Mr. Browne’s instructions. He stated that he had retired from practice and did not hold a Practising Certificate. He submitted that in the circumstances there was no public interest in continuing the proceedings.

6 Reliance was placed on section 568(ii) of the Legal Profession Act 2004 [‘the Act’], which provides:

(1) Proceedings before the Tribunal with respect to a complaint cannot be terminated, whether by withdrawal of the disciplinary application or otherwise, before the Tribunal makes its final decision about the complaint, without the leave of the Tribunal.

(2) The Tribunal may give leave for the purposes of this section if it is satisfied that continuation of the proceedings is not warranted in the public interest.

7 The Tribunal found this submission was without substance, as it considered that there was a clear public interest in the continuation of the proceedings. The fact that he does not hold a current Practising Certificate is irrelevant. Regardless of whether he held a current Practising Certificate, or his intentions with regard to the future, the position is that he remained on the Roll and could take out a further Practising Certificate if he was so inclined.

8 There was no application by the applicant to withdraw the disciplinary application, and there were no reasons advanced that could justify the Tribunal terminating proceedings of its own motion.

9 Accordingly, the Solicitor was informed that the matter would proceed.

10 The allegations made in the disciplinary application, and the particulars provided, were suggestive of serious misconduct, which, if established, required a determination by the Tribunal of the question as to whether the Solicitor’s conduct was such as to warrant the removal of his name from the Roll and the making of any order with respect to payment of the Society’s costs, or any other orders deemed appropriate.

11 The Solicitor then sought an adjournment by reason of the belated change in the orders sought. There was no convincing explanation proffered by the Applicant for the belated and radical change in the Disciplinary Application, which, as amended, now sought the most serious of orders, the removal of the Solicitor’s name from the Roll.

12 The Solicitor had been aware since February 2006 of the original orders sought, however he was not advised of the amended application until a date in late November 2006.

13 The Tribunal accepted his claim that he was prejudiced by reason of his receipt of less than three weeks notice of the amended Disciplinary Application, and acceded to his adjournment application.

14 The matter was relisted for hearing on 29 and 30 January 2007, a date suitable to the Solicitor.

15 The Solicitor raised the further complaint that what he regarded as unnecessary and prejudicial material had been included in the affidavit of Jean Sayer. He contended that as the Tribunal members had read this material he was prejudiced and the matter should not proceed.

16 The Tribunal considered that it was able to give a fair and impartial consideration to the Disciplinary Application, as it was capable of disregarding any irrelevant or prejudicial material. Clearly, the Tribunal would have to read any material to which objection was taken, to determine whether it was appropriate and relevant to its considerations. In any event, the Applicant undertook to examine the relevant affidavit filed and to present a further affidavit omitting the allegedly prejudicial material. In fact, this was done, and the Tribunal considered only the fresh affidavit of Jean Sayer sworn 12 December 2006.

17 By letter dated 27 January 2007 the Solicitor advised the Tribunal that he was an undischarged bankrupt and stated that, as such, he had no legal standing before the Tribunal. He reiterated his submission that there was no public interest in the matter being dealt with by the Tribunal and advised that his trustee in bankruptcy did not have any interest in pursuing the defence of the proceedings, as there were not sufficient funds to continue the defence and there was no benefit to be derived by the creditors of his estate.

18 The Solicitor further advised that he had been admitted to Hornsby Hospital on 11 January 2007 for what was diagnosed, at the time, as a stroke. He was released four days later and was undergoing further tests. He attached a brief medical certificate dated 15 January as to his unfitness.

The Hearing

19 On 29 January 2007 the matter came on for hearing. Mr. Tony Browne, solicitor, who had formerly acted for the Solicitor, appeared amicus. He stated that he desired to place before the Tribunal a medical certificate which was attached to the solicitor’s letter of 27 January 2006. The Tribunal informed Mr. Brown that the certificate was inadequate and provided no real information as to whether the Solicitor was fit to appear before the Tribunal and did not provide a sufficient diagnosis or prognosis.

20 The Tribunal adjourned so as to allow Mr. Browne an opportunity to contact the Solicitor and to obtain further instructions as to his intentions and as to whether he wished to provide an appropriate medical certificate and seek a further adjournment.

21 When the matter resumed Mr. Brown informed the Tribunal that the Solicitor indicated that he had undergone tests on 16 January 2007 and 18 January 2007, apparently relating to his lung function, that he was to be re-examined by a breathing and lung function specialist on 9 February 2007, and that he had been advised not to place himself under stress.

22 Mr. Browne informed the Tribunal that the Solicitor did not seek an adjournment as he had received advice that because of his bankruptcy the Tribunal had no standing. Mr Browne stated that the Solicitor was prepared to abide the Tribunal’s decision. He then withdrew.

23 There was no evidence placed before the Tribunal as to the extent or the anticipated duration of the Solicitor’s condition and as to how it impacted on his capacity to attend the hearing. Nor was there any evidence to support the Solicitor’s claim that he was bankrupt. He had made no such claim of bankruptcy when he appeared in person before the Tribunal on 11 December 2006.

24 Absent any evidence which would justify an adjournment on medical grounds, and the Tribunal’s finding that the Solicitor’s bankruptcy, if indeed he is bankrupt, was irrelevant to its determination of the Disciplinary Application, and in view of Mr. Browne’s specific statement that the Solicitor did not seek an adjournment, the Tribunal decided that it would proceed. It did not regard bankruptcy as a shield protecting the Solicitor.

25 The Applicant relied principally upon the affidavits of Raymond John Collins, sworn 17 February 2006; John Bennett, sworn 27 September 2006; Gail Cooke, sworn 27 September 2006, and her oral evidence; Jean Sayer, sworn 12 December 2006, and those of the Solicitor sworn 29 April 2006 and 24 July 2006.

26 The Tribunal does not set out the detail of the evidence which is contained in the affidavits and testimony referred to. Suffice it to say that the evidentiary material establishes the factual position as outlined herein:

27 The Solicitor was admitted to practice on 5 December 1969 and at all material times was a sole practitioner.

28 In or about 1998 or 1999, the Solicitor met Gail Marie Cooke [‘Gail Cooke’] and her partner John Edward Bennett [‘Bennett’]. Gail Cooke worked for the Solicitor in his office from May 1999 until August 2000. He acted for them on mortgage and property transactions.

29 As at August 2000 Gail Cooke was the carer of her mother Lillian May Cooke (‘Lillian’]. Lillian was partially deaf and visually impaired. She was the owner of a house at 410 Horsley Drive Fairfield.

30 Gail Cooke and Bennett decided that due to her deteriorating health Lillian should live with them and that the Fairfield house be sold.

31 The Solicitor was instructed to prepare a contract for sale of the Fairfield house and a General Power of Attorney appointing Gail Cooke as Lillian’s attorney. He was to act on the sale of the Fairfield house.

32 Gail Cooke and Bennett were the owners of a company, Lafeven Pty. Limited [‘Lafeven’], and they instructed the Solicitor to act for them and Lafeven on the purchase of a property at Church Point.

33 The Solicitor owned a company MTB Enterprises Pty Limited [‘MTB’], which had a leasehold interest in a property known as The Incinerator that was owned by Willoughby Council. A first mortgage of the lease entered into on the 8 November 1999, which secured a loan of $1,000,000, which was due for repayment by MTB on 8 November 2001.

34 Gail Cooke and Bennett wished to purchase a property at Church Point via their personal company Lafeven. They intended to sell Lillian’s Fairfield property for approximately $600,000 and apply these funds as an unsecured loan to Lafeven to form part of the purchase price of $1.85 million for the Church Point property. Gail Cooke and Bennett did not have the necessary deposit monies and initial development monies for the Church point property. They elected to mortgage Lillian’s Fairfield house for $200,000 to provide Lafeven with the necessary funds, pending its sale.

35 In February 2002, a loan of $200,000 was obtained from Designamite Pty Limited. The mortgage was for a term of four months and was settled on 16 April 2002. The Solicitor acted on this transaction and the monies were disbursed as per the instruction of Gail Cooke, as Lillian’s Attorney, and were substantially used by Lafeven in acquiring the Church Point property.

36 The Solicitor acted for Lillian on the Designamite mortgage, and on the sale of her Fairfield house, in respect of which contracts were exchanged on 30 April 2002.

37 The Designamite mortgage was refinanced by a fresh mortgage advance of $450.000 from Susan Pinset [‘the Pinset mortgage’]. This amount was in excess of what was required, however, the mortgagee would not advance a lesser sum.

38 As a result of the request by the Solicitor, it was agreed between Gail Cooke and he that the sum of $250,000, being part of the proceeds of the Pinset mortgage, be loaned to his company MTB.

39 The Pinset mortgage was settled on 14 May 2002. The $450,000 advanced under the Pinset mortgage was to be secured over the Fairfield house. The Solicitor wrote to the Solicitors for the mortgagee by letter dated 13 May 2002, directing the proceeds of the mortgage advance as follows:

Prentice Jarvin – Mortgagee’s Solicitor’s costs 1,695.75

Commercial Loans On-Line 6,187.50

Designamite Pty Ltd.-Discharge of mortgage 204,547.89

Harris & Co Solicitors for Designamite 400.00

Lafeven Pty Limited 25,000.00

MTB Enterprises Pty Limited 212,168.86

$450,000.00

40 As at 8 May 2002, MTB was in arrears owing under the first mortgage in the sum of $70,000. The Solicitor never sought the consent of the first mortgagee as to the advance under the purported second mortgage.

41 The Solicitor’s primary purpose in obtaining funds from Lillian was to pay the arrears due under the first mortgage from MTB.

42 The Tribunal accepts the evidence of Gail Cooke and Bennett as to the circumstances in which the loan monies were requested by the Solicitor. The Solicitor had informed Gail Cooke and Bennett that he was looking for some interim money to tide him over until he could re-finance his business and asked would they be interested in putting Lillian’s house up as security and he would arrange finance on it. He offered to provide a second mortgage against The Incinerator, not just a loan agreement, and his personal guarantee. Gail Cooke stated, ‘If you can guarantee it I’ll agree to take out the second mortgage on The Incinerator.’ To which the Solicitor responded, ‘I’ll have the papers drawn up as soon as possible.’

43 Prior to this, Bennett had been asked by the Solicitor, ‘’Would Gail lend me $250,000 on a short term basis?’ To which Bennett replied, ‘Paul, you’re talking to the wrong person. You should talk to Gail.’ Bennett was present when the Solicitor said to Gail Cooke, ‘I need $250,000 for one month until my loans come through.’ He heard Gail Cooke say, ‘Well Paul, seeing you guarantee you can pay in one month, I will lend you the money on a second mortgage over The Incinerator, provided you pay all the legal and out of pocket expenses.’ To which the Solicitor replied, ‘Yeah, don’t worry.’ Bennet was present when Gail Cooke attended the Solicitor’s office and demanded that he affix the seal and pay the stamp duty. The Solicitor responded, ‘Don’t worry Gail.’

44 When MTB received the sum of $212,168.86 on or about 14 May 2002, no second mortgage document nor any caveat was presented to Gail Cooke.

45 It was not until 25 May 2002, eleven days later, that the Solicitor produced a mortgage document to her.

46 At the time the Solicitor presented the mortgage document and the unsigned caveat, Gail Cooke signed a document stating that she had received independent legal advice. On sighting it she enquired, ‘What’s this?’ To which the Solicitor responded, ‘Just sign it. Between friends it’s OK.’ She noticed that the seal of MTB was not affixed to the mortgage document and that stamp duty had not been paid. She raised this with the Solicitor. Gail Cooke eventually completed the document and at a later date, through other Solicitors, the stamp duty was paid by Gail Cooke.

47 On the Solicitor’s version of events it was Bennett and Gail Cooke who suggested that surplus funds from the Pinset loan be utilised by MTB.

48 At no stage did the Solicitor deny that there had been a borrowing by MTB from Lillian. On his own account, when the Pinset mortgage was processed, an advance of $212,168.86 was made to MTB.

49 The Solicitor claimed that the subject mortgage was prepared by himself for MTB, and not for Lafeven, Cooke and Bennett. He maintained that at that time Lafeven, Cooke and Bennett were obtaining separate legal advice.

50 Whilst admitting that he did not seek the consent of the first mortgagee to the second mortgage, the Solicitor maintained that Gail Cooke had instructed him not to seek such consent.

51 The Solicitor denied that it was he who was to lodge the caveat over ‘The Incinerator’ and claimed that he did not have any professional obligation to stamp and register the caveat or mortgage documents, as he had handed them over to Gail Cooke.

52 Gail Cooke, in her sworn evidence before the Tribunal, stated that she did not instruct the Solicitor not to seek the first mortgagee’s consent to the second mortgage, as the Solicitor claimed.

53 She agreed that, subsequent to the loan, payments were made to her or on her behalf by MTB, however, these were totally independent of the debt to Lillian Cooke but related to a transaction involving Bennett, herself and Lafeven, which was entirely independent of Lillian Cooke.

54 She stated that there was no arrangement whereunder the costs owed to the Solicitor by Bennet and herself and Lafeven, for transactions entirely unrelated to the loan from Lillian Cooke, were to be set off against the debt owed by MTB to Lillian.

55 Gail Cooke further stated that the Solicitor did not inform her she should obtain independent legal advice in relation to the advance from Lillian to MTB, and in fact she did not do so.

56 The Tribunal has no hesitation in accepting the versions of Bennett and Gail Cooke as contained in their affidavits and in the oral evidence of Gail Cooke where they are in conflict with the Solicitor’s account.

57 Whatever subsequent payments were made by MTB to, or on behalf of, Gail Cooke, Bennett, or Lafeven, whatever costs may have been incurred by them simply don’t bear upon the loan transaction whereunder MTB borrowed money from Lillian.

Rule 12

58 The Revised Professional Conduct and Practice Rules 1995 were made under the 1987 Act and are deemed to have been made under the 2004 Act. Rule 12 relates to the matter of practitioners borrowing money from clients, and, relevantly, provides:

12.1 A practitioner must not borrow any money, nor assist an Associate to borrow any money from a person –

12.1.1 who is currently a client of the practitioner or the practitioner’s firm;

12.1.2 for whom the practitioner or practitioner’s firm has provided legal services, and who has indicated continuing reliance upon the advice of the practitioner, or practitioner’s firm in relation to the investment of money; or

12.1.3 who has sought from the practitioner, or the practitioner’s firm, advice in respect of the investment of any money, or the management of the person’s financial affairs.

26. ‘Associate’ is defined as:

associate a reference to an associate of a practitioner is a reference to:

a) a partner, employee, or agent of the practitioner;

b) a corporation or partnership in which the practitioner has a significant beneficial interest;

c) in the case of a solicitor Corporation or subsidiary Corporation;

d) a member of the practitioner’s immediate family.

59 The Solicitor was the sole Director and shareholder of MTB, and as such he clearly had a significant beneficial interest in that Corporation, within the definition of ‘Associate’ for the purpose of Rule 12.

60 It is plain that the Solicitor assisted an Associate [‘MTB’] to borrow money in the sum of at least $212,168.86 from his client Lillian, and, as stated, the Solicitor does not deny this.

61 The Solicitor was fully aware that Gail Cooke, Lillian’s Attorney, had agreed to advance the loan monies in the belief that they would be secured by a second mortgage over ‘The Incinerator’, together with the Solicitor’s guarantee.

62 The Solicitor knew when the loan monies would pass to MTB, yet seemingly, at that stage there was no second mortgage document, no caveat, nor any record of the Terms and conditions of the loan. The client was left totally bereft of documentation that might have afforded her some protection.

63 The Solicitor was aware that at the time MTB received those loan monies the first mortgagee’s consent had not been sought for a second mortgage. Further, the Solicitor knew that even if an appropriately signed and sealed second mortgage document had been properly executed it could only with difficulty have been registered without the production of the Title Deeds. They would only have been forthcoming with the agreement and consent of the first mortgagee.

64 The conclusion is inescapable that the Solicitor would have been aware that such consent would have been difficult, if not impossible, to obtain when MTB was in arrears in its obligations to the first mortgagee; accordingly, consent wasn’t sought.

65 Gail Cooke had been deceived into agreeing to make the loan advance, as she did so in the belief that a registerable second mortgage would protect it. Yet, at all stages, the Solicitor would have been aware that the purported second mortgage would not have protected his client’s interests.

66 Indeed, the belated production of that second mortgage document was little more than a charade.

67 The Solicitor had a clear duty to inform his client of any difficulties that might be encountered with regard to the registration of a second mortgage. That would have included an obligation to inform his client that the consent of the first mortgagee to such second mortgage had not been sought and that MTB was in arrears under its obligations pursuant to the first mortgage.

68 Yet, the Solicitor deliberately withheld this intelligence. He had precluded his client from receiving information vital to her consideration of the wisdom of making the loan.

69 The Tribunal has no doubt that had Gail Cooke been advised of the problems referred to it would have been highly unlikely that she would ever have agreed to the loan transaction.

70 The Solicitor claimed that he had prepared the mortgage documents for MTB, a claim which the Tribunal unhesitatingly rejects. The Solicitor was clearly acting for Lillian and had a duty to protect her interests, not those of MTB, the Solicitor’s company.

71 It is patent that the Solicitor should have counselled his client to obtain independent legal advice with regard to the loan advance. The obvious explanation for his failure to do so is that he would have been aware that any competent solicitor would have advised against the making of the loan, having regard to the lack of appropriate security.

72 The Tribunal is of the opinion that the Solicitor callously disregarded his client’s interests in failing to ensure that she had whatever protection could have been afforded by a registered second mortgage.

73 The Solicitor came before the Legal Services Tribunal in 1996. See Paul Herbert Kennedy [1996] NSWLST 20. The date of that Tribunal’s judgment was 12 December 1996.

74 The Solicitor was found guilty of professional misconduct in that he breached his fiduciary duty to a client in failing to advise her that she should obtain an independent legal advice. It is not necessary to recite the details of that transaction. Suffice it to say it involved a borrowing from a client by a Company of which the Solicitor was a Director.

75 In that same proceeding, in relation to another two clients, he was found to be in breach of his fiduciary duty to advise them to obtain independent legal advice in respect of a borrowing transaction by a Company of which he was a Director and shareholder. Again, his conduct was found to be professional misconduct.

76 He was subjected to a substantial fine.

77 The relevance of these proceedings is that the Solicitor would have been made acutely aware of his legal and ethical obligations in relation to the borrowing of money from clients by Companies of which he was a Director and/or a shareholder.

78 The circumstances surrounding these matters, whilst not identical to the instant case, are of sufficient similarity to have put the Solicitor on clear notice of the prohibitions relating to borrowing from clients, and of his obligations to advise a client to seek independent legal advice. The findings of the Legal Services Tribunal that he was guilty of professional misconduct and his being subjected to a substantial fine, did not serve as a deterrent.

79 The Solicitor’s conduct was calculated and premeditated. It did not represent a one-off fall from grace, some inadvertence or mere carelessness.

80 The Solicitor was in clear breach of his fiduciary duty to Lillian, in that there can be no doubt the Solicitor placed his own interests before that of his client, and left an elderly, handicapped lady unprotected.

81 He blatantly breached his statutory obligations and cast aside his ethical and professional duties, apparently to obtain monies to satisfy a debt he couldn’t otherwise meet. His conduct would be regarded as disgraceful and dishonest by his professional brethren of good repute and competency.

82 In the material which he filed before the Tribunal he made no claim of any attempt to repay his debt, and nowhere in his affidavits has he suggested that some reimbursement is contemplated. There is no proposition which indicated any intention between May 2002 and the present to repay the debt in whole or in part.

83 Instead, the Solicitor has made claims, which the Tribunal unhesitatingly rejects, to the effect that payments to some entity entirely unrelated to Lillian, and costs not her responsibility, represent some repayment or satisfaction of the debt.

84 Indeed, in his affidavits he has obfuscated and raised irrelevant issues and descriptions of dealings that do not touch on issues raised in the disciplinary application.

85 The Solicitor is not before this Tribunal for his failure to repay the debt, and the observations made as to his conduct subsequent to the borrowing transaction are but reflective of his lack of insight into his offending conduct.

86 At no stage in his affidavits and responses to the Law Society did he directly address the allegation that he had breached Rule 12, which deals with a solicitor’s obligations with regard to borrowing transactions, by offering some explanation or defence.

87 There has been no demonstration of remorse or contrition, no statement of regret for Lillian’s loss. If, as he claims, he is now bankrupt, it seems unlikely that she will ever be repaid.

88 It is evident that either the Solicitor has absolutely no appreciation of his ethical failures, his negligence and breaches of his fiduciary duties, no insight into his misconduct. He regarded his obligations as a practitioner with contumely and contempt.

89 In making its findings, the Tribunal has had regard to the requisite standard of proof enunciated in Briginshaw v Briginshaw 60 CLR 336.

90 The Tribunal is comfortably satisfied that the Solicitor breached Rule 12 of the Revised Professional Conduct and Practice Rules dealing with borrowing transactions, in that he assisted an Associate, MTB, to borrow money in the sum of $212,168.86 from his client Lillian May Cooke.

91 Further, it is so satisfied that he was negligent in failing to secure registration of the second mortgage, that he was guilty of unethical conduct in that he breached the Rule against borrowing from a client, and that he was negligent in failing to seek the consent of the first mortgagee.

92 The Tribunal is further so satisfied that he acted in conflict with the interests of his client in preferring his own interests to those of Lillian May Cooke, i.e., he was in breach of his fiduciary duty to her.

93 In summary, the Tribunal formally finds that the allegations in the Disciplinary Application have been clearly established to its comfortable satisfaction and that the Solicitor’s conduct constitutes professional misconduct.

94 It is no part of the Tribunal’s function to penalise or punish the Solicitor. In considering a complaint of professional misconduct, it is the Tribunal’s primary function, upon a finding that professional misconduct has been established, to make orders appropriate for the protection of the public.

95 The Tribunal has considered whether the public interest could be served or protected by such orders as suspension, reprimand, a fine, or the imposition of conditions on the Solicitor’s Practising Certificate issued or to be issued.

96 It considers that the gravity of the Solicitor’s misconduct is such that the only order appropriate for the protection of the public to prevent a solicitor unfit to practise from holding himself out as a legal practitioner in whom his clients might place trust and confidence and to maintain the standards of the legal profession, is that the Solicitor’s name be removed from the Roll.

97 The question of deterrence looms in a matter such as this, both personal deterrence and general deterrence. It must be seen that there is a meaningful price to be paid if a solicitor abuses the privileges extended to him and deals with members of the public in breach of his statutory and ethical obligations and not in their interests but in his own. When news of this Tribunal’s determination is published it may well deter some other practitioner from neglecting his or her obligations to a client.

Orders

98 The orders of the Tribunal are:

1. That the name of the Solicitor be removed from the Roll of legal practitioners.

2. That the Solicitor pay the Law Society’s costs of these proceedings as agreed or assessed.