Law Society of New South Wales v McElvenny
[2002] NSWADT 166
•09/12/2002
CITATION: Law Society of New South Wales -v- McElvenny [2002] NSWADT 166 DIVISION: Legal Services Division PARTIES: APPLICANT
Council of the Law Society of New South Wales
RESPONDENT
Graham Charles McElvennyFILE NUMBER: 002022 HEARING DATES: 04/05/01, 05/07/01, 04/09/01 SUBMISSIONS CLOSED: 09/04/2001 DATE OF DECISION:
09/12/2002BEFORE: Needham CA - (Deputy President); Hale S - Judicial Member; Elliott K - Member APPLICATION: Professional Misconduct - careless or reckless swearing of false affidavit in Local Court proceedings - Unsatisfactory Professional Conduct - careless or reckless swearing of false affidavit in Local Court proceedings MATTER FOR DECISION: Principal matter LEGISLATION CITED: Legal Profession Act 1987 CASES CITED: Myers v Elman [1940] A C 282
Re Mayes & the Legal Practitioners Act [1974] 1 NSWLR 19
Re Hodgekiss [1962] SR (NSW) 340, (1959) 79 WN (NSW) 163 (CA)
Allison v General Council of Medical Education and Registration [1894] 1 QB 750
Prothonotary of Supreme Court of New South Wales v Costello [1984] 3 NSWLR 201
Law Society of New South Wales v Foreman (1994) 34 NSWLR 408
Coe v Bar Association of New South Wales [2000] NSWCA 13 Law Society of New South Wales v Plowes [1996] NSWLST 23REPRESENTATION: APPLICANT
L Pierotti, solicitor
RESPONDENT
P Brereton SC, barristerORDERS: 1. The Solicitor to pay a fine of $3750; 2. The Solicitor to undertake and pass a course of legal education, being the Legal Ethics course offered by the College of Law or a substantially equivalent course approved by the Law Society.; 3. The Solicitor to apply for admission to such course no later than the expiration of the time for appeal from this decision and commence the course as soon as a place is available.; 4. The Solicitor to pay the costs of the Law Society as agreed or assessed.
Background
1 The proceedings were commenced by an Information filed 22 November 2000 by the Law Society of New South Wales (“the Society”). The Respondent Mr McElvenny, is a solicitor in sole practice in Sydney (“the Solicitor”).
2 The Society seeks the removal of the Solicitor’s name from the Roll of Legal Practitioners for alleged professional misconduct, in that he swore a false Affidavit on 31 October 1996, either with knowledge or reckless indifference to the fact that the Affidavit was not true. The affidavit was made by the Solicitor on 31 October 1996 in verification of an Amended Defence filed 1 November 1996 in the Local Court in Sydney.
3 The Solicitor was the director of the first defendant in those proceedings and had acted as the solicitor for the defendants until immediately before the Amended Defence was prepared and verified by him.
4 The Solicitor admitted that the affidavit was false but says that he did not deliberately make an affidavit which he knew to be false. He accepts that it is incumbent upon a deponent, in particular a solicitor, to advert to the contents of the affidavit and to be satisfied of its accuracy. He admits unsatisfactory professional conduct but denies professional misconduct.
5 The Solicitor provided evidence by way of affidavits and was cross-examined at the hearing. At the conclusion of the hearing, senior counsel for the Solicitor and the representative of the Law Society made oral submissions and also provided detailed written submissions. In reaching our decision we have considered all the evidence and the helpful submissions of the parties.
The Evidence
6 The Solicitor had acted for the vendors on a contract for sale of rural land at Wollondilly made 7 December 1993 between Bullio Pastoral Pty Ltd, Anthony De Rosa and Andrew Bailey as vendors, and Deempend Pty Ltd as the purchaser. The property sold was lot 3 in a subdivision of rural land known as the Bullio subdivision. The vendors had previously sold other lots in the subdivision to other purchasers. Electricity had not been supplied to the lots at the time of the sales.
7 Clause 26(1) of the contract provided:
8 On completion of the sale on 27 January 1994 the vendors did not pay the $3000 to their solicitor, in clear breach of clause 26(1). As a result the money was not held by Mr McElvenny on trust for the purchaser as agreed.
“Contribution to Electricity
The Vendors shall on completion deposit with their solicitor the sum of $3,000.00 which shall be held in trust by him for the Purchaser and shall be disbursed as follows:
(a) if the Illawarra County Council connects electricity to the property within 2 years, the Illawarra County
(b) Council, on account of any sum due to that Council by the Purchaser in respect of that connection; or
(c) if the Illawarra County Council does not so connect the electricity, to the Purchaser.”
9 The electricity supply was not connected to lot 3 within the two year period specified in clause 26, so that the $3000 became payable to the purchaser. The purchaser’s solicitor requested payment by a letter dated 11 March 1996 to Graham C McElvenny & Co. The letter says:
10 The vendors did not pay the $3000 as demanded. Accordingly, after further correspondence, the purchaser on 25 May 1996 issued a Statement of Liquidated Claim in the Local Court to recover the $3000 from the vendors, together with interest and costs.
“I note that Condition 26 under the contract dated 7th December 1993 ...provided for you to retain $3,000 in trust, pending connection of the electricity supply to the lot.
I am instructed that the electricity has not been connected.
Could you therefore forward to me in accordance with Clause (b) your cheque for $3,000 in favour of my client.”
11 A Defence was filed on 4 June 1996 by Mr McElvenny, as solicitor for the vendors, and verified by him as the solicitor for the defendants and a director of the first defendant, Bullio Pastoral Pty Ltd.
12 The Defence denies that the vendors had neglected or refused to pay the $3000 to the purchaser and further denied that the Plaintiff was entitled to interest or costs. Unlike the Amended Defence the subject of the Information, this Defence does not allege that the $3000 was paid to the Solicitor.
13 The Defence was drafted by Mr McElvenny with the assistance of Mr John Rollason, a consultant to Lane & Lane. McElvenny gave evidence that because he is not experienced in litigation, he sought advice from Mr John Rollason concerning the drafting of a defence to the Local Court proceedings, Mr White being unavailable at the time. The Solicitor says that he told Mr Rollason that he did not maintain a solicitors’ trust account, that the $3000 was held by Mr De Rosa and that De Rosa had paid $500 from those moneys to the electricity authority.
14 The Solicitor’s evidence is confirmed by the unchallenged affidavit of Mr Rollason. Mr Rollason deposes that Mr McElvenny consulted him for help in drawing the grounds of defence and that in response to his questions concerning the factual background, Mr McElvenny informed him that he was a director of the corporate defendant, that he did not maintain a solicitors’ trust account and did not personally hold the money. He also recalls that the Solicitor told him that part of the money had already been used for work in connection with the supply of electricity to the subdivision.
15 We accept the evidence of Mr Rollason and the Solicitor. It is clear that Mr McElvenny disclosed to Mr Rollason that he had not received the $3000.
16 After the Defence was filed there was a motion to strike out by the purchaser, Deempend Pty Ltd. At that point that Mr. McElvenny sought the assistance of Mr Philip White of Lane & Lane. Mr White was a longstanding friend and an experienced litigator and advocate. Mr McElvenny had for many years referred his litigation work to Mr White.
17 He first consulted Mr. White on or about 28 October 1996. On that occasion Mr McElvenny told Mr White that the current Defence had been prepared by Mr Rollason, that there was a motion to strike out the Defence and that he would like Mr White to take over the matter. Mr White agreed to do so.
18 Mr White questioned Mr McElvenny concerning the matter and gave him certain advice. Mr White said that an Amended Defence should be filed and that he would draft it. He advised Mr McElvenny that he should pay $3000 to the purchaser forthwith. This much is common ground.
19 Either during or shortly after their conference, Mr White dictated an Amended Defence. Paragraph 3.2 contains a false statement to the effect that the vendors had paid the $3000 to their solicitor as required by the contract for sale.
20 There is a conflict of evidence between the Solicitor and Mr White concerning the instructions given at the initial consultation, in particular whether the Solicitor told Mr White that he held the $3000, and whether Mr McElvenny was present when Mr White dictated the Amended Defence.
21 Mr White gave evidence by affidavit and at the hearing. He accepts that he was aware that the Solicitor had never operated a conventional solicitor’s trust account. He says that he drafted clause 3.2 on the basis of instructions from the Solicitor that he was holding the $3000 in a separate bank account.
22 He says that during the initial consultation, he asked Mr McElvenny where he was holding the money, to which the Solicitor replied: “I am holding the money in a separate bank account”. Mr White asked him: “Have you got control over the account? Could you write a cheque now?” The Solicitor replied: “Yes”.
23 Mr White says he advised Mr McElvenny:
24 He says he prepared the Amended Defence on the basis of what the Solicitor had told him. He did so urgently because of the strike out motion the next day. At the time he understood from his conversation with Mr McElvenny that Mr McElvenny held the $3000, less perhaps $500 paid in respect of the electricity connection.
“In my opinion both the Plaintiff’s proceeding and the Defence are misconceived. The obligation to pay the sum of $3000 to the purchaser is the stakeholder’s obligation and the Plaintiff’s cause of action is against the stakeholder and not the vendors...You are confusing your position as a director of Bullio and the solicitor for the vendors. In my opinion you hold the money on trust for the Plaintiff ... you have an absolute obligation to pay the sum of $3000 to the Plaintiff”
25 Mr White says that he recalls that Mr McElvenny was present when he dictated the Amended Defence to his secretary, who was seated at a separate desk in Mr White’s office with the computer screen facing towards where Mr McElvenny was seated, so that the Solicitor could see, and presumably, hear his dictation of the Amended Defence.
26 The Solicitor was cross examined at length on the circumstances surrounding the preparation of the Amended Defence. He was sure that he informed Mr White that he had not received the money and he was adamant that the Amended Defence had not been prepared in his presence in the manner suggested by Mr. White.
27 Mr McElvenny’s evidence is that during his conference with Mr White on 28 October 1996 he handed Mr. White his files for the conveyancing and the Local Court proceedings. Mr White reviewed the pleadings and asked numerous questions and expressed the view that the Defence concentrated on the contractual rights between the parties to the contract and was unsustainable. Mr. White said: “This is a trust matter and both you and Rollason are incorrect. Leave it to me, I’ll fix it up”.
28 Mr McElvenny says that he told Mr White at the initial consultation that he did not conduct a trust account and did not hold the funds on trust. He told Mr White the funds were held by Mr De Rosa and drew his attention to the settlement sheet which directed that the balance be paid to the vendors in full on completion, with no direction to pay the $3000 to the Solicitor.
29 The Solicitor says that Mr. White told him:
30 When he left Mr White’s office on 28 October 1996, Mr. White said to him: “Leave me with the files, I’ll need to prepare an amended statement of defence”.
“Look Macka, forget it, all that’s irrelevant, this is just a straight trust matter. You’ve just got to pay that $3,000 as soon as possible. If necessary pay it out of your personal account and get reimbursement from De Rosa. Also you should raise with him that the other moneys for the Deempend property should be placed on trust with us”.
31 Mr McElvenny says that he drew a personal cheque for $3,000 to Deempend on 31 October 1996 and was reimbursed the following day by De Rosa who, to his knowledge, held that money in an account together with the electricity contributions for certain other lots in the subdivision. He thought this constituted a trust.
32 The Solicitor says that he first he saw the Amended Defence on 31 October 1996 when Miss Catherine Wood, an employed solicitor under Mr White’s supervision at Lane & Lane, attended his office briefly in the morning to ask him to sign the affidavit verifying the Amended Defence. He says that Miss Wood produced the Amended Defence and said: “We need this for tomorrow’s hearing”. He said: “Is this what Philip and I have been discussing?” Miss Wood nodded. He then signed the affidavit of verification which appears on the last page of the Amended Defence.
33 The affidavit states:
34 Mr McElvenny deposes that:
“The Amended Defence set out above is true in substance and in fact so far as the facts are known to the Defendants”.
Before signing the affidavit, the Solicitor corrected the spelling of his name in the affidavit of verification at the top of the third page.
35 When asked to explain what he meant by “scanning” the Amended Defence, Mr McElvenny said: “ The word ‘scan’ means to casually look through it – casually look through a document”. He also said “I didn’t scan it in the sense that I didn’t look at the contents generally speaking”.
“I scanned the form of the [Amended] defence but did not read it and accepted it in the belief that as it was drafted by Mr White it was based on our conference and swore the Affidavit after correcting my surname, before the witness, Catherine Wood”.
36 When cross examined as to the extent to which he had read or comprehended the Amended Defence, Mr McElvenny said that he did not read the Amended Defence, if he had read it he would certainly have noticed paragraph 3.2, indeed: “[T]hat would’ve been like a red rag to a bull”.
37 When he was questioned whether it came to his attention that the defence contained an assertion that the $3,000 had been deposited with him, he said: “It certainly wasn’t. That would have hit me like a bolt of lightning”.
38 On 31 October 1996, Mr White sent a fax to the purchaser’s solicitor stating (underlining added):
39 By fax dated 31 October 1996 Mr Howell replied to Mr White’s fax. He stated:
“Mr Graham McElvenny, solicitor, has asked the writer to assume conduct of the abovenamed Local Court proceedings.
We have advised Mr McElvenny that in our opinion his concern to look after the interests of his client Bullio Pastoral Pty Ltd, deflected from giving full consideration to his obligation as a solicitor concerning moneys given to him to be held on trust … Mr McElvenny saw your client’s instructions to demand repayment of the $3,000 as one amongst several steps your client has taken to frustrate Bullio’s interests.
He now accepts that this is a contractual matter which will need to be resolved in the future.
We have advised Mr McElvenny that since the sum of $3,000 was deposited with him in his capacity as a solicitor and to be held in trust he is bound to repay it to your client on demand. He has accepted that advice. We have asked him to provide us with a bank cheque for $3,000 in favour of Deempend Pty Ltd which will be forwarded to you …
Condition 26 imposed no obligation upon the vendors other than to deposit with Mr McElvenny the sum of $3,000. It was and at all relevant times has been common ground that the vendors complied with that obligation. …
A proceeding properly conceived would have named Mr McElvenny as defendant … then he could have, and would have interpleaded …
The trust pursuant to which Mr McElvenny held the sum of $3,000 did not impose an obligation to pay interest. …
If you do not agree to discontinue the proceeding … we will file an Amended Defence … together with a Motion to strike out your client’s Statement of Claim and for indemnity costs.”
40 Mr White replied with another fax dated 31 October 1996 which stated (underlining added):
“(a) Neither my client nor I have ever received confirmation that the money was deposited as agreed. Although at various times I have assumed that it had been, the Defendant’s agent, Mr McElvenny, has always avoided the issue, by failing to reply to my letters dated 11 March 1996, 12 April 1996, 22 April 1996 and 13 August 1996. The first three of these letters were sent prior to the issue of proceedings.
(i) In his conversation with me on 28th March, Mr McElvenny made no reference to the issue.
(ii) The notice of grounds of defence filed by Mr McElvenny does not plead that the money was put into trust and that the defendants had thereby discharged their full responsibilities. It did not seek to put the blame on Mr McElvenny.
(iii) Your facsimile implies, but does not state clearly, that Mr McElvenny received the money into his trust account. If this matter proceeds, your clients will be put to proof on this matter.”
41 What Mr Howell said was certainly not facile. Contrary to Mr White’s assertions, the $3,000 had not been deposited with Mr McElvenny, and we would think a clear breach of contract had occurred and the purchaser had a sustainable cause of action. Nonetheless the proceedings were defended.
“1. That you should assert that you were not aware that the sum of $3,000.00 had been paid to Mr McElvenny to be held on trust in accordance with clause 26 is vexatious having regard to the terms of your letter to him of 11 March 1996;
2. Mr McElvenny has arranged for the sum of $3,000.00 to be forwarded to Deempend Pty Ltd at the address stated;
3. Your assertion that you can sustain a course of action against the Defendants on the basis you state is facile.”
42 We note there was a conflict of evidence as to whether the Solicitor saw Mr White’s faxes of 31 October 1996 before they were sent. We think however it is unlikely they were shown to the Solicitor, who took little if any part in the proceedings after he engaged Mr White.
43 Some time later, on 21 March 1997, the proceedings came before the Local Court on an application by the plaintiff for leave to amend the Statement of Claim by adding Mr McElvenny as a defendant. By this time the Law Society had commenced an investigation into the matter, to the knowledge of both Mr McElvenny and Mr White.
44 By chance Mr McElvenny met and spoke with a Mr Richard Grahame in the foyer of their office building in Martin Place. Mr Grahame was an employed solicitor with Lane & Lane, who was handling the Local Court matter under Mr White’s supervision.
45 Mr Grahame told Mr McElvenny that he was on his way to the Local Court for the hearing of the notice of motion to join him as a defendant to the proceedings, because Mr McElvenny was holding the funds in trust. The Solicitor says this was the first time he became aware that Mr. White’s group believed that he had operated a trust account. He says that he told Mr Grahame:
46 The Solicitor’s evidence of this encounter is confirmed by an unchallenged file note of Mr Grahame dated 25 March 1997. The file note states:
“Curly, I have never held any money or operated a trust account.”
“1. I appeared before the Registrar at 9.30 am in the Local Court on Friday 21 March 1997. The matter was referred to the Magistrate...
3. The following issues cause me concern: …
d) Although the principal sum has been paid, interest and costs have not, and hence the cause of action remains on foot.
The Investigation by the Law Society
e) We wish to contend that neither of these are payable by the defendants because the action was ill conceived in that it:
1. the contract required payment by the vendors to their solicitor;
(i) was brought against the vendors;
2. the vendors did make payment to Graham [McElvenny] in the belief that he was their solicitor…
(v) therefore all of the vendors’ obligations have been fulfilled under clause 26 of the contract and no cause of action remains.
f. Alternatively we contend to the Professional Standards Committee that ‘Strictly speaking, he did not receive from Bullio Pty Limited the sum of $3000 into a trust account in his capacity as a solicitor.
NB. When I asked Graham [McElvenny] how the $3,000 was paid to him 15 minutes before the hearing he told me that the money was never actually paid to him!!!
THEREFORE
A. How can we contend that Graham [McElvenny] as a director of Bullio, caused money to be paid to himself in the belief that he was taking the moneys as a solicitor? …
ALTERNATIVELY
E. Do we know the precise facts? Was money ever actually directed to Grahame in the first place or was it all just held by Bullio as the purchase price?”
47 On 19 December 1996 the purchaser made a complaint to the Legal Services Commissioner requesting an investigation of the circumstances of the payment of the money and whether any impropriety had occurred. The complaint directly raised the question of whether the $3,000 had been paid into Mr McElvenny’s trust account in February 1996.
48 In the course of an investigation, the Law Society by letter of 17 January 1997 addressed certain questions to Mr McElvenny. A response was sent by Mr White on his behalf, by a letter dated 17 February 1997. Mr White said that this letter was prepared on his word processor, in all likelihood in the presence of Mr McElvenny, and with input from Mr McElvenny.
49 Mr McElvenny agreed that he assisted in the preparation of this letter. He said that his contribution was that he had never held the moneys on trust, had never received any moneys in respect of the matter, that he had paid $3,000 out of his personal account and was reimbursed by Bullio Pastoral Pty Ltd.
50 Mr White’s letter of 17 February 1997 referred to and enclosed the facsimiles of 31 October 1996 between Mr White and Mr Howell. The letter states:
51 This letter conveys the impression, particularly by enclosing the fax of 31 October 1996, that Mr McElvenny did receive the $3000 from the vendors. This was not correct, nor was the inaccuracy corrected in later correspondence to the Law Society, even after Mr Grahame had highlighted the issue by his detailed file note of 25 March 1997.
“As to the specific complaints by the complainant, Mr McElvenny instructs me as follows:
1. Graham McElvenny does not and has never operated a trust account. As I pointed out to Grahame, strictly speaking, he did not receive from Bullio Pty Ltd the sum of $3,000.00 into a trust account in his capacity as a solicitor. …
3. Graham McEvelvenny paid the sum of $3,000.00 on my advice.
4. I took the view that Graham McElvenny was best served, on the afternoon of 31 October 1996, to see the avoidance of the incurring of unnecessary costs as his first priority and pay the $3,000.00 himself and seek reimbursement from Bullio in due course. He followed my advice and in fact has been reimbursed the sum of $3,000.00 by Bullio.
4. I otherwise refer to the terms of my letter of 31 October 1996 …”
52 On 10 March 1997 Mr Howell provided his comments to the Law Society on Mr White’s letter of 17 February 1997. These are most instructive. In answer to Mr White’s allegation that the Local Court proceedings were ill conceived, Mr Howell makes the point that, on the contrary, those proceedings were bound to succeed given that a clear breach of contract occurred if the vendors had not deposited the $3,000 with their solicitor.
53 On 27 March 1997 Mr White wrote again to the Law Society in response to a letter dated 13 March 1997, which is not before us. In this letter Mr White purports to update the Law Society on events since his letter of 17 February 1997. Although the letter was sent two days after the date of Mr Grahame’s file note emphasising that Mr McElvenny had not received the $3,000, this is not disclosed in the letter. In answer to a question by the Deputy President, Mr White said that he knew before writing this letter that Mr McElvenny had told Mr Grahame that he had not received the money, but he did not disclose this because: “I wasn’t obliged to tell the Law Society what my client’s instructions were”.
54 When asked by the Deputy President whether he did not feel that he should correct the inaccuracy in his earlier letter to the Society, he said: “Now at this time the Law Society were not complaining that Mr McElvenny had sworn a false Affidavit. They were complaining that he had failed to comply with an obligation to release money to a trust and … there was no relevance to an allegation that he had sworn a false Affidavit because that allegation was not made”.
Findings of Fact
55 Central to these proceedings is whether Mr McElvenny was aware of the substance of clause 3.2 when he verified the Amended Defence. This involves the related issues of whether he instructed Mr White that he was not holding the $3000 and whether the Amended Defence was dictated in his presence.
56 On the related issues, we prefer the Solicitor’s evidence to that of Mr White. Mr McElvenny’s evidence that he told Mr White the relevant facts is consistent with his disclosure of those facts to both Mr Rollason, when preparing the original Defence, and to Mr Grahame, during their chance encounter some nine months later. We think it highly improbable that the Solicitor withheld from Mr White, a longstanding friend and trusted associate, the same facts he had already disclosed to Mr Rollason, a solicitor in the same firm as Mr White.
57 As a matter of demeanour, we found Mr McElvenny to be an honest and credible witness. He was candid and cooperative when giving his evidence at the hearing. He gave his answers openly and without hesitation or calculation.
58 Our assessment is consistent with the character testimonials provided for Mr McElvenny by various members of the legal profession.
59 We do not accept Mr White’s evidence where it is inconsistent with that of the Solicitor. Mr White’s affidavit concerning his advice at the initial consultation is confusing and to some extent internally inconsistent. His concession that at or about the time of the initial consultation, he told the Solicitor: “Find the money and pay it” is consistent with knowledge at the relevant time that the Solicitor did not hold the money. His letter to the Law Society of 17 February 1997, paragraph 4, also suggests such knowledge by the reference to “reimbursement” of the Solicitor. Mr White’s answers to questions posed in cross-examination, particularly concerning that letter, confirm our impression that at times his answers were influenced by the desire to justify his own conduct, notably his denial of knowledge that the $3000 was not held in trust by the Solicitor.
60 Accordingly we accept the Solicitor’s evidence that he did inform Mr White that he was not holding the $3000, and we accept his evidence that the Amended Defence was not dictated in his presence.
61 We accept the Solicitor did not advert to the contents of the Amended Defence before signing the affidavit and was not aware that the Amended Defence was false in a material respect when he signed the affidavit of verification. Accordingly we find that he did not deliberately swear a false affidavit and had no intention to deceive.
62 However we find that he acted recklessly when he verified the Amended Defence without even reading it. This conclusion is inescapable. Indeed in an affidavit made by the Solicitor in the predecessor proceedings concerning the same complaint and in evidence before us, he conceded: “The failure to properly appreciate the terms of the notice of grounds of [Amended] defence was done carelessly but not deliberately or for any reason of deception”.
Finding of Misconduct
63 As a solicitor, and the director of one of the defendants, the Solicitor’s obligation was to carefully read the Amended Defence and to satisfy himself of its accuracy before verifying it. There is a heavy onus on solicitors when making an affidavit to ensure that they read and understand the truth of its contents. In this case, the Solicitor failed in his duty to do so.
64 It was submitted for the Solicitor that the inadvertent making of a false affidavit does not constitute professional misconduct. In Myers v Elman [1940] A C 282, a solicitor on the record acted negligently in the conduct of his client’s affairs. Viscount Maugham said, at 288, in an oft quoted dictum:
65 In Re Mayes & the Legal Practitioners Act [1974] 1 NSWLR 19 at 25, Reynolds and Hutley JJ.A said with reference to this statement: “Despite this dictum, there is no reason in principle why conduct which can be classified as negligent cannot amount to professional misconduct”. Thus a breach of the statutory provisions and regulations concerning solicitors’ trust accounts, if “wilful” constitutes statutory professional misconduct and includes reckless as well as deliberate misconduct: Re Hodgekiss [1962] SR (NSW) 340, (1959) 79 WN (NSW) 163 (CA) per Hardie J at 354, Re Mayes & the Legal Practitioners Act, supra.
“[A] solicitor may be struck off the rolls or suspended on the ground of professional misconduct, words which have been properly defined as conduct which would reasonably be regarded as disgraceful by solicitors of good repute and competency ... mere negligence, even of a serious character, will not suffice”.
66 In Re Mayes the Court of Appeal held that a solicitor who failed to supervise the conduct of his partner who misappropriated trust monies had acted with reckless carelessness amounting to “wilful” failure to comply with the trust account provisions constituting statutory professional misconduct. Reynolds and Hutley JJ.A also held that his abdication of his joint responsibility was professional misconduct at common law. At 25:
67 The Solicitor raises as justification his complete reliance upon Mr White. We accept Mr McElvenny’s evidence that he left the conduct of the proceedings entirely in Mr White’s hands and trusted him to draw the Amended Defence consistently with the facts conveyed to him by the Solicitor. But this did not displace or qualify his obligation to satisfy himself of the accuracy of the facts to which his affidavit related, nor provide an excuse for his failure to do so.
“Partners have a joint responsibility to comply with the rules relating to clients’ money...We entirely reject the argument that a solicitor who is in partnership can, without being guilty of professional misconduct, simply leave the management of their joint trust account to his partner after he has reason to be apprehensive as to his misuse of it, if it subsequently appears that this facilitated misappropriation”.
68 In Re Mayes & the Legal Practitioners Act, supra, Reynolds and Hutley JJ.A said at 25:
69 The Solicitor also relies on his unfamiliarity with litigation, however the obligation to ensure the accuracy of an affidavit is not confined to litigious matters and extends to all legal practitioners.
“It is no answer for the appellant to claim that he left the conduct of the financial affairs of the firm to his partner. It would be no answer generally and certainly not in this case... Feelings of delicacy in the belief that queries or checks might be regarded as offensive to the spirit of mutual trust between partners do not, as claimed, excuse or justify an abdication of responsibility”.
Similarly in this case, it is no answer for the Solicitor to say that he simply delegated his obligations to someone else. His obligation was not delegable, it was his affidavit.
70 Applying the formulations of professional misconduct in Allison v General Council of Medical Education and Registration [1894] 1 QB 750 as applied in subsequent cases cited in Prothonotary of Supreme Court of New South Wales v Costello [1984] 3 NSWLR 201 at 203, we find that the Law Society has not established that the Solicitor’s conduct is of such a character that it constitutes professional misconduct.
71 The Tribunal is confidently satisfied on the requisite standard of proof that the Solicitor was guilty of unsatisfactory professional conduct by carelessly making an affidavit which was admittedly incorrect.
Orders
72 In considering what, if any, order we should make, we take into account the Solicitor’s admission of unsatisfactory professional misconduct and his admission in his Reply that his affidavit of verification was relevantly incorrect, putting in issue only the circumstances and his state of mind when he swore the affidavit.
73 We take into account the Solicitor’s candour at the hearing and his honesty in answering the questions addressed to him at the hearing.
74 We take into account the excellent character references provided by colleagues in the profession. The Solicitor comes before the Tribunal with a good record and his peers speak highly of him. These include Mr Cedric Vass whose affidavit carries particular weight since it is based on considerable knowledge of the facts surrounding the Information.
75 We bear in mind that the unsatisfactory conduct was an isolated act and not part of a systematic course of conduct.
76 We bear in mind the acceptance by the Law Society that the Solicitor was frank and open in his dealings with the Society during the investigation.
77 We also take into account the Solicitor’s reliance upon and trust in Mr White to conduct the defence of the Local Court proceedings in accordance with his instructions.
78 We take into account the Solicitor’s submission that he appreciates that he acted imprudently and his evidence that he realises that he should have given proper consideration to the Amended Defence before swearing his affidavit.
79 We also take into account the circumstance that this Information has effectively been before this Tribunal twice, the first proceedings having been affected by jurisdictional error.
80 The Solicitor has incurred expense in defending the proceedings and in addition he will have to bear the Law Society’s costs.
81 Nonetheless our role is the protection of the public. We are not satisfied on the evidence that the Solicitor fully appreciates and understands all of his obligations as a legal practitioner. We consider that the misconduct which has occurred calls for more than a reprimand.
82 This is not a case such as Law Society of New South Wales v Foreman (1994) 34 NSWLR 408, Coe v Bar Association of New South Wales [2000] NSWCA 13 and Law Society of New South Wales v Plowes [1996] NSWLST 23 where affidavits of verification or discovery were made which referred to documents known to be fabricated. In those cases the legal practitioner was struck off the roll.
83 Nor is this case analogous to those where a legal practitioner purports to witness a signature, makes an affidavit to that effect, or gives a false certificate of explanation in relation to a mortgage, when he or she did not in fact observe the execution of the document or give the independent advice. In such cases fines have been imposed in amounts up to $10,000 or more in combination with other misconduct.
84 Here the Solicitor acted carelessly and imprudently but without actual knowledge of the inaccuracy of his affidavit and with no intention to mislead. We consider that a fine of $3750 is appropriate.
85 In addition the Solicitor should attend a further course of training in legal ethics to refresh his knowledge of the obligations of a legal practitioner.
86 Accordingly we make the following orders:
1. The Solicitor to pay a fine of $3750.
2. The Solicitor to undertake and pass a course of legal education, being the Legal Ethics course offered by the College of Law or a substantially equivalent course approved by the Law Society.
3. The Solicitor to apply for admission to such course no later than the expiration of the time for appeal from this decision and commence the course as soon as a place is available.
4. The Solicitor to pay the costs of the Law Society as agreed or assessed.
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