Law Society of New South Wales v Lee

[2005] NSWADT 242

CITATION:	Law Society of New South Wales v Lee [2005] NSWADT 242
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Law Society of New South Wales RESPONDENT Siu Kay Michael Lee
FILE NUMBER:	052014
HEARING DATES:	28/09/2005
SUBMISSIONS CLOSED:	09/28/2005
DATE OF DECISION:	10/25/2005
BEFORE:	Clisdell RJ - Judicial Member; Currie JS - Judicial Member; Bennett C - Non Judicial Member
APPLICATION:	Professional Misconduct - breach of s. 61 of the Legal Profession Act - Professional Misconduct - breach of s. 62 of the Legal Profession Act - Professional Misconduct - gross negligence - Professional Misconduct - mislead Law Society/Bar Association/LSC
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Legal Profession Act 1987
CASES CITED:
REPRESENTATION:	APPLICANT D Barton, solicitor RESPONDENT T Williams, solicitor
ORDERS:	Orders made on 28 September 2005; 1. That the Solicitor be fined the sum of $1,000.00 to be paid within three months of 28 September 2005; 2. That the Solicitor be publicly reprimanded; 3. That the Solicitor pay the Society’s costs of and incidental to the proceedings in the sum of $2,750.00 such costs to be paid within three months; 4. That the Solicitor undertake and satisfactorily complete within twelve months of 28 September 2005 a course relating to trust account management as approved by the Law Society and implement as necessary any procedures recommended; 5. That the Solicitor’s practice be subject to inspection at the Solicitor’s cost by an independent practitioner nominated by the Law Society at intervals of three, six and nine months from 28 September 2005; 6. That if the Solicitor fails to comply with Orders 1, 3, 4 and 5 above his practising certificate be immediately suspended until such order is complied with.

1 The Council of the Law Society of New South Wales filed an Information (later amended at hearing) that the legal practitioner while practicing as a Solicitor was guilty of professional misconduct on the following grounds:

Willful contravention of Section 61 of the Legal Profession Act 1987.

Willful contravention of Section 62 of the Legal Profession Act 1987.

Attempting to mislead the Law Society.

Willful breach of the Legal Profession Regulations paragraph 34(1) and (2), 36(1) to (5), 37, 38, 39 and 41(2).

2 The facts alleged by the Society were in most respects admitted by the legal practitioner.

3 Mr Lee commenced practice on his own account as a sole practitioner on 1 July 2000. His principal office was at Forest Road Hurstville with branch offices in Bridge Street Sydney and Hughes Street Cabramatta. The practice was essentially a conveyancing practice.

4 The Solicitor maintained three bank accounts with St George Bank one of which was an office account and the other two accounts used (more or less) as trust accounts.

5 The Solicitor came under notice not because of any complaint by a client but following a regular trust account inspection by the Law Society. It was apparent to the trust account inspector that the Solicitor was not correctly operating accounts, not keeping proper records and was regularly dealing with trust monies in breach of the Regulations and the Act. Examples of the way in which the Solicitor deposited trust monies to his office account were set out by the Law Society. Some examples are:

Purchase of 1502/600 Railway Parade, Hurstville.

In this transaction the Solicitor acted for his brother-in-law in relation to the purchase of the above property. On the following dates the Solicitor received monies in relation to the purchase and deposited them to his office account:

12 September 2001 $39,980.00 being a deposit

11 October 2001 $13,980.00 being stamp duty

25 October 2001 $121,980.00 being settlement monies

In respect of each receipt of money there was no record kept in accordance with the Legal Profession Regulations and the Act.

Purchase of 79/10-22 Dora Street, Hurstville.

In this transaction the Solicitor acted for Sonny Kurnjawan in relation to the purchase of the above property. On 11 February 2002 the Solicitor received the sum of $16,034.00 for stamp duty on the purchase and paid the monies to his office account. On 15 February 2002 the Solicitor paid the stamp duty from his office account in the sum of $15,984.00. The $200.00 balance was said by the Solicitor to have been used in respect of disbursements incurred by the Solicitor in respect of the transaction.

6 The Solicitor regularly failed to retain duplicate receipts for any trust monies received, failed to maintain a record of trust cheque particulars for the period 15 May 2000 to 6 August 2000, failed to maintain a record of daily trust payment transactions in the form of a payments ledger or cash book and failed to prepare monthly trust bank reconciliation statements. The Solicitor did not maintain a trust journal. The Solicitor did not keep a separate trust ledger account for each matter for each person for whom trust money had been held and the Solicitor failed to prepare a monthly trust trial balance.

7 It was not suggested by the Society nor was there any evidence that the Solicitor has misappropriated monies for his own benefit. What became apparent when the Solicitor gave evidence was that despite having attended compulsory courses, such as the College of Law and, since these matters came to the attention of the Society, a further trust accounting exam through the College of Law in October 2002, the Solicitor’s knowledge of what constitutes trust monies remains poor.

8 As a result of the inspection by the Law Society trust account inspector a Receiver was appointed to the Solicitor’s practice. Mr Lee was required to pay Receiver’s fees of $66,960.45 as a result of that appointment. He was also ordered to pay legal costs in respect of the Supreme Court proceedings where the Receiver was appointed and a further amount of Receiver’s fees in the sum of $6,285.00.

9 It had been the Solicitor’s practice to ask clients for $250.00 to cover the cost of disbursements. His conveyancing practice was operated on the basis of a flat fee of $750.00 including standard searches and rate enquiries but excluding special disbursements such as survey reports, building or pest reports. The Solicitor gave evidence before the Tribunal that he now understood that the receipt of monies such as the $250.00 on account of disbursements must be paid to a trust account.

10 It was common ground that the Solicitor had to a large extent reformed his errant ways. On the advice of Mr Williams, who represented the Solicitor at the hearing, there have been substantial changes to the way in which the Solicitor operates his practice. Although he does not operate a trust account, the Solicitor understands the need now for clients to give him cheques directed to third party providers rather than accepting funds from clients which are then placed in his office account in breach of the Act and Regulations.

11 The Tribunal’s jurisdiction is protective. The Law Society did not seek nor does the Tribunal find that the Solicitor should be suspended from practice or struck off. The Tribunal is of the view that with further education it is unlikely that this Solicitor will appear before the Tribunal in the future. Mr Lee gave evidence before the Tribunal that he settled approximately 60-80 conveyancing transactions a month. Given the large number of clients that he would have seen over the five year period since he has been a sole practitioner, and bearing in mind the difficulty of keeping low fee paying conveyancing clients happy, it is to his credit that there have been no complaints against him.

12 The Tribunal is satisfied that the Solicitor was guilty of professional misconduct as alleged and admitted. Both Mr Williams for the Solicitor and Mr Barton for the Law Society submitted that a modest fine would be appropriate. The Tribunal was of the view that the Solicitor had already suffered a substantial financial penalty in respect of costs and Receiver’s fee and that a substantial fine would be inappropriate in these circumstances. The Tribunal accepts the Solicitor’s explanation that the contraventions although willful arose primarily from ignorance and a reckless disregard for the obligations of the Solicitor under the Act and Regulations. The Tribunal was however concerned that the Solicitor should be subject to some further monitoring and complete a further course of education in respect of trust account management. Accordingly the Tribunal made the following orders:

Orders

1. That the Solicitor be fined the sum of $1,000.00 to be paid within three months of 28 September 2005.

2. That the Solicitor be publicly reprimanded.

3. That the Solicitor pay the Society’s costs of and incidental to the proceedings in the sum of $2,750.00 such costs to be paid within three months.

4. That the Solicitor undertake and satisfactorily complete within twelve months of 28 September 2005 a course relating to trust account management as approved by the Law Society and implement as necessary any procedures recommended.

5. That the Solicitor’s practice be subject to inspection at the Solicitor’s cost by an independent practitioner nominated by the Law Society at intervals of three, six and nine months from 28 September 2005.

6. That if the Solicitor fails to comply with Orders 1, 3, 4 and 5 above his practising certificate be immediately suspended until such order is complied with.