Law Society of New South Wales v Terracciano

[2005] NSWADT 86

CITATION:	Law Society of New South Wales v Terracciano [2005] NSWADT 86
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Council of the Law Society of New South Wales RESPONDENT Mark Terracciano
FILE NUMBER:	042002
HEARING DATES:	14/02/2005
SUBMISSIONS CLOSED:	02/14/2005
DATE OF DECISION:	04/15/2005
BEFORE:	Chesterman M - ADCJ (Deputy President); Brennan JWF - Judicial Member; Taksa L - Non Judicial Member
APPLICATION:	Professional Misconduct - breach of s. 61 of the Legal Profession Act - Professional Misconduct - fail to account - Professional Misconduct - misappropriate trust moneys/moneys
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Administrative Decisions Tribunal Rules (Transitional) Regulation 1998 Legal Practitioners Act 1898 Legal Profession Act 1987 Legal Profession Act 2004 Legal Profession Regulation 2002
CASES CITED:	A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1 Dupal v Law Society of New South Wales, Unreported, 26 April 1990, Court of Appeal, NSW (BC9002508) Ex parte Lenehan (1948) 77 CLR 403 Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 Law Society of New South Wales v Goold [2001] NSWADT 171 Law Society of New South Wales v Moulton [1981] 2 NSWLR 736 Law Society of New South Wales v Witherdin [2004] NSWADT 237 Re Penfold (1998) 2 LPDR 19
REPRESENTATION:	APPLICANT D Barton, solicitor RESPONDENT In person
ORDERS:	1. That the name of the Respondent be removed from the roll of legal practitioners; 2. That the Respondent pay the Applicant’s costs of these proceedings, agreed at $2,500, by ten equal monthly instalments over a period of 10 months, with the first instalment to be paid one calendar month after the date of this decision.

Introduction

1 In this matter, the Applicant, the Law Society of New South Wales (‘the Law Society’) laid by its Council an Information against the Respondent, Mark Terracciano (‘the Solicitor’), alleging that he was a legal practitioner within the meaning of the Legal Profession Act 1987 (‘the Act’) and that while practising as a solicitor he was guilty of professional misconduct on three grounds.

2 The Law Society requested in the Information that the Tribunal make orders that the name of the Solicitor be removed from the Roll of Legal Practitioners and that he pay the Law Society’s costs.

3 The resolution under s 155(2) of the Act to lay the Information was taken by the Council of the Law Society on 11 December 2003. The Information was filed in the Tribunal on 28 January 2004. At the hearing before us on 14 February 2005, the Law Society applied for leave to file it out of time, on the footing that by virtue of s 42 of the Administrative Decisions Tribunal Act 1997 and rule 14 of the Administrative Decisions Tribunal Rules (Transitional) Regulation 1998, it should have been filed within 28 days of the Council’s resolution. The explanation offered was that the Christmas/New Year holidays reduced the number of working days available and made it difficult to contact witnesses, and that there was an unusual degree of pressure of work. The Solicitor did not oppose this application.

4 At the hearing, we granted leave, being satisfied that the Law Society had provided a reasonable explanation for the delay, in accordance with s 44 of the Administrative Decisions Tribunal Act 1997.

5 We have since determined that leave was not necessary. Under s 167AA of the Act, which was inserted by the Legal Profession Amendment Act 2004, the time-limit for laying an Information was extended from 28 days to six months after the decision to lay it is taken under s 155(2). Clause 103 of Schedule 8 to the Act makes it clear that this substituted time-limit extends to informations laid before the date of commencement of s 167AA (15 August 2004), so long as (a) the Tribunal has not decided before that date that the proceedings were not validly instituted (b) and the proceedings are still pending before the Tribunal. The present Information satisfies these conditions.

6 The Information set out three grounds, supported by Particulars, for a finding of professional misconduct against the Solicitor. They were that the Solicitor:-

1. Failed to account for moneys received.

2. Wilfully breached Section 61 of the Legal Profession Act, 1987.

3. Misappropriated trust moneys.

7 The relevant provisions of s 61 of the Act are as follows:-

61 Money received by solicitor on behalf of another

(1) A solicitor who, in the course of practising as a solicitor in this State, receives money on behalf of another person:

(a) must pay the money, within the time prescribed by the regulations, into a general trust account in New South Wales at an approved financial institution and must hold the money in accordance with the regulations relating to trust money, or

(b) if the person on whose behalf the money is received directs that it be paid or delivered to a third party free of the solicitor’s control, must ensure that the money is paid or delivered:

(i) before the end of the next working day or, if that is not practicable, as soon as practicable after the next working day, or

(ii) no later than the day allowed by the solicitor’s authority or instructions (if that day is later than the day allowed under subparagraph (i)), or

(c) if the person on whose behalf the money is received directs that it be paid otherwise than into a general trust account or to a third party, must pay the money as directed and (if the money is to be held under the direct or indirect control of the solicitor) must hold the money in accordance with the regulations relating to controlled money.

(2) In any of those three cases, the solicitor must hold the money exclusively for, and must disburse the money in accordance with the directions of, the person on whose behalf it is held….

(8) It is professional misconduct for a solicitor to wilfully contravene subsection (1) or (2).

8 The Solicitor was born on 25 December 1972 and is now 32 years of age. In 1991, he commenced studying law at the Joint Examinations Board and obtained full time employment as a paralegal with Schrader & Associates, Solicitors, in Parramatta. Having completed his studies in 1996, he was admitted to practice on 6 February 1997.

9 He continued as an employed solicitor at Schrader & Associates until May 1998. In June 1998, he joined a firm at Penrith called Directlaw the Law Firm (hereafter ‘Directlaw’), in the capacity of an employed solicitor. Its sole principal was Mr Robin Fester.

10 The conduct of the Solicitor on which the Law Society relied in these proceedings occurred between November 1999 and May 2000 in the course of his employment by Directlaw. The Solicitor did not deny that this conduct occurred or that it amounted to professional misconduct. He submitted however that it did not warrant the making of an order that his name be removed from the roll of legal practitioners.

11 In these circumstances, it is unnecessary for us to set out in detail the evidence tendered by the Law Society. A summary of the admitted facts will suffice.

The relevant conduct of the Solicitor

12 The Solicitor’s dealings with payments received from clients. Most of the Solicitor’s work at Directlaw comprised litigation and personal injury matters. Mr Fester attended to conveyancing and other similar matters. At the time when the Solicitor joined the firm, it was agreed between him and Mr Fester that he would become a partner on 1 July 2000, once he had established the personal injury practice for the firm and completed the relevant practice management course.

13 While Mr Fester was the sole person authorised to operate Directlaw’s trust account, either he or the Solicitor, as a sole signatory, could operate a bank account called ‘Directlaw the Law Firm – General Account 2’ (hereafter ‘Directlaw General Account 2’). This account was used to draw wages.

14 Between 1997 and 2000, Directlaw did not generate a great deal of income, although its business was growing. There were periods when neither Mr Fester nor the Solicitor drew any income.

15 On thirteen occasions between November 1999 and April 2000, the Solicitor received or directed his secretary to receive a payment in cash or by personal cheque on behalf of the firm. The payment was made by or on behalf of a client of the firm in order to defray anticipated expenses to be incurred in a litigation matter of which the Solicitor had carriage. Instead of paying these amounts into the firm’s trust account, the Solicitor misappropriated them for his own use. He accordingly failed to account for them, or to hold and disburse them in accordance with the client’s directions.

16 The Information contains a Table setting out the name of the client involved in each of these thirteen transactions, the amount and date of each payment and the purpose for which the payment was made. Rearranged so as to list the payments in chronological order, this Table contained the following information under these four heads:-

Mills $1,000 11/99 Counsel’s fees

Starr $250 16/12/99 Fees for medical report

Alston $250 20/11/00 Fees for medical report

Mills $7,000 7/2/00 Counsel’s fees

Faranda $500 16/2/00 Fees for medical report

Sullivan $205 1/3/00 Fees for medical report

Borg $480 3/3/00 Fees for medical report

Richter $450 13/3/00 Fees for medical report

Drew $450 20/3/00 Fees for medical report

Luckman $600 20/3/00 Fees for medical report

Singh $500 30/3/00 Fees for medical report

Fitzsimmons $430 30/3/00 Fees for medical reports

Grima $1,000 5/4/00 Costs to defend court claim

17 The total of the thirteen amounts received by the Solicitor in these circumstances is $13,115.

18 On three of these thirteen occasions (the clients being Faranda, Borg and Rochter respectively), the Solicitor did not issue any receipt for the payment. On the remaining ten occasions, he gave an unnumbered receipt which did not comply with the requirements of Clause 80 of the Legal Profession Regulation 2002.

19 In an affidavit sworn on 23 December 2004, the Solicitor testified that he used his authority to operate Directlaw General Account 2 in order to pay all the fees for the medical reports in the above list. It was never his intention, he said, to fail to pay the doctors concerned or to ‘steal from’ the clients in these ten matters.

20 This assertion was disputed in a report prepared in August 2000 by Warren Gillett and Leo Gore, who are trust account inspectors employed by the Law Society. In this report on their investigation of the Solicitor’s conduct, they stated that some of the clients had told them that when they attended the doctor involved for a medical examination they were asked to pay for the report.

21 The Solicitor’s allegation that he paid for these medical reports out of the funds in Directlaw General Account 2 is consistent, however, with the fact that late in February 2000 a cheque drawn on that account was dishonoured. Mr Fester then discovered that without his knowledge the Solicitor had been withdrawing funds from the account. By a letter dated 16 March 2000, Mr Fester instructed the bank that from then on both his signature and that of the Solicitor was required on cheques drawn on Directlaw General Account 2. It would appear, however, that this instruction was not obeyed. In April 2000 Mr Fester discovered that all the funds had been withdrawn from the account.

22 In the matter of Grima, the Solicitor, despite having received $1,000 from the client in order to defend a Local Court claim, did not file a Notice of Appearance. For this reason, the firm did not receive notice of the hearing at the Court, which took place in May 2000, and did not provide any services to the client.

23 The Solicitor’s dealings with funds paid in settlement of a client’s claim. Between mid-1998 and April 2000, the Solicitor had the carriage of a motor vehicle accident claim for a client of Directlaw then known as Lea Ann Taylor. On 4 February 2000, on the joint advice of Mr Ken Pryde of Counsel and the Solicitor, she signed an authority to settle on terms that she should receive $39,500 and that Directlaw would receive $10,000 for its costs. The amount for costs was initially stated in the authority at $16,000, but was reduced to $10,000 by the Solicitor in his own handwriting. Ms Taylor acknowledged in the authority (a) that approximately $15,500 would be deducted from the settlement figure of $39,500 in order to repay various amounts to the Department of Social Security, the Health Insurance Commission and an insurance company, and to meet some out-of-pocket expenses and (b) that she would therefore receive about $24,000.

24 On or shortly before 20 April 2000, the firm received a cheque for $35,024.95 pursuant to the terms of settlement. Instead of paying this cheque into the firm’s trust account, the Solicitor paid it into Directlaw General Account 2. On or shortly before 28 April, the Solicitor handed to Ms Taylor a cheque for $23,524.95 drawn on this account, together with a list of out-of-pocket expenses for which he said that she would be responsible. This comprised three items totalling $1,432 and a fourth item for which it was stated that an account would be ‘faxed through shortly’.

25 On 27 April 2000, the Solicitor presented to the firm’s bank a cheque made out to ‘cash’ in the amount of $7,000, drawn on Directlaw General Account 2. He appropriated the proceeds of the cheque to his own use. On 3 May 2000, he presented a cash cheque for $3,000 drawn on the same account, and again appropriated the proceeds to his own use.

26 No bill of costs or statement of account was furnished to Ms Taylor. Mr Fester did not authorise the preparation of any bill of costs to be rendered to Ms Taylor or of any account or claim of party/party costs to be recovered from the respondent to her claim. He did not authorise the payment of the settlement cheque for $35,024.95 into Directlaw General Account 2, nor did he authorise the drawing of the cheque to Ms Taylor or of the two cash cheques presented by the Solicitor.

27 The Solicitor’s conduct summarised. We are satisfied that this conduct, admitted by the Solicitor, accords with the allegations stated and particularised in the Information. The Solicitor has in a number of transactions failed to account for moneys received from or for the benefit of a client, has wilfully breached the requirements of s 61(1) and s 61(2) of the Act and has misappropriated trust moneys.

28 We are also satisfied that, as the Solicitor also admitted, this conduct amounts to professional misconduct. This conclusion follows not only from the provision in s 61(8) of the Act that a wilful breach of s 61(1) or s 61(2) constitutes professional misconduct, but also, in particular, from the element of sustained dishonesty characterising his dealings with trust moneys, and with funds belonging to the firm employing him, over a period of six months or thereabouts. The total amount misappropriated by him was $23,115.

29 Having so concluded, we are required by the Act to consider what order or orders by way of penalty we should make, within the range set out in s 171C(1).

Considerations relevant to penalty

30 Submissions by the Law Society. Mr Barton, appearing for the Law Society, submitted that the serious deficiencies of conduct outlined in the Information left us no alternative but to order under s 171C(1)(a) of the Act that the Solicitor be struck off the Roll. He also sought an order for costs, under s 171E.

31 Mr Barton relied in particular on passages in the judgment of Kirby P in Dupal v Law Society of New South Wales, Unreported, 26 April 1990, Court of Appeal, NSW (BC9002508). This case concerned a solicitor who, having got into financial difficulties, withdrew from his trust account and applied for his own purposes funds belonging to his sister and to the beneficiaries of a trust for which he acted. He was found, amongst other things, to have wilfully contravened s 41(1) of the Legal Practitioners Act 1898 (the forerunner of s 61(1) of the present Act).

32 Having summarised these matters, Kirby P went on (BC9002508 at 3):-

The result is that in both of the cases complained of, the [Law] Society has shown misuse by the appellant [solicitor] of the moneys received by him on behalf of other person. What follows? …

Such a finding ordinarily requires removal from the roll. The research of neither counsel before the Court could produce a single case in which, following a finding of misappropriation of trust funds or wilful contravention of s 41(1) of the Act, the Court had not proceeded to remove the name of the practitioner from the roll of practitioners.

33 The President then referred to an unreported decision of the Solicitor’s Statutory Committee in 1981, in which a solicitor named Peck, who had withdrawn funds from his trust account, was not struck off, but was suspended for two years and reprimanded. The Committee found that there were significant extenuating circumstances. Having observed that he considered this case to be ‘wholly exceptional’, Kirby P went on (at 4):-

True, each case must depend on its unique facts. But for the reasons which I have stated, the normal consequence of the misuse of entrusted funds by a solicitor, and a finding of wilful breaches of the statutory prohibition in that regard, is removal of the name of the solicitor from the roll.

34 The other members of the Court of Appeal, Priestley and Handley JJA, delivered judgments concurring with Kirby P’s conclusion that the solicitor’s appeal against an order removing his name from the roll should be dismissed. At 22, Handley JA said that the Court ‘would be departing from a long course of authority’ if it were to substitute a period of suspension from practice for the order of removal.

35 Mr Barton referred us also to Law Society of New South Wales v Goold [2001] NSWADT 171. That case concerned a solicitor who, in circumstances of significant personal stress, misappropriated an amount of $1,500 that he had received from a client on account of costs due to the firm employing him. The Tribunal held that this one instance of professional misconduct, which the solicitor admitted, did not necessitate an order striking him off the roll, as he had been contrite and ashamed and his employer spoke highly of his competence and integrity. The Tribunal ordered that his practising certificate should be restricted for three years, so as to prevent him from practising as a principal, and that he pay a fine of $10,000.

36 In Mr Barton’s submission, the case of Goold fell within the range of exceptional cases where a solicitor’s misuse of trust funds did not lead to an order of removal from the roll. Unlike the present case, there was only a single defalcation, involving a small amount of money.

37 In Goold, at [4], the Tribunal referred to another case that it described as an ‘exception’, namely Re Penfold (1998) 2 LPDR 19. Here again there was a single defalcation, on this occasion involving trust funds in the amount of $6,000, by a solicitor who was suffering considerable personal stress. He reported his misappropriation to the Law Society some seven months later. Taking account of a number of factors, including his expressions of contrition and the strength of several assertions as to his integrity made by professional colleagues, the Legal Services Tribunal found that he was unlikely to offend in this manner again. It ordered that he be suspended from practice for two years and that any practising certificate issued to him after this period should be restricted for three years, so as to prevent him from practising as a principal.

38 Mr Barton submitted that cases such as Goold should be distinguished from the present case, and that in accordance with the general principle stated in Dupal we must make an order striking the Solicitor off the roll. He argued that this was necessary in order to deter other practitioners from engaging in similar misconduct. He referred in this context to Dupal, where the importance of deterrence of this kind is emphasised by Kirby P (BC9002508 at 1) and Handley JA (at 22), and to Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 (see Mahoney JA at 444 and Giles A-JA at 471).

39 Mr Barton referred us also to a passage (at 448) in the judgment of Mahoney JA in Foreman, where his Honour said, in effect, that in assessing whether a person is fit and proper to practise as a solicitor it is important to consider whether he or she will be able to withstand significant pressures that typically arise in legal practice, without resorting to dishonest ‘short cuts’.

40 Evidence and submissions put to us by the Solicitor. The Solicitor, who appeared in person, tendered three affidavits, sworn by himself, by his wife and by Mr Fester. None of these witnesses was required for cross-examination.

41 In his own affidavit, to which we have already referred, the Solicitor stated that during his employment by Directlaw he worked for about 14 hours each day – indeed for longer periods during the later months – without any professional assistance. By 1999, he became concerned about maintaining payments on his mortgage and car loans. Although he was working very hard, the firm was not yet receiving significant amounts of professional costs, so that both he and Mr Fester were not being paid consistently. In mid-1999, he could not sleep for longer than three or four hours each night, he had lost his appetite and he felt under extreme stress. He tried to conceal his stress from his wife. In October 1999, he started to feel ‘suffocated’ and ‘depressed about life in general’.

42 By December 1999, he had fallen behind in mortgage payments and was being pressed for payment by the mortgage provider. This caused him to work even harder and to isolate himself from his wife, family and friends. He began to suffer physical symptoms, such as heartburn and stomach cramps. By February 2000, he was vomiting on most evenings and was sometimes vomiting blood. In March 2000, the mortgage provider cancelled his mortgage loan and called for total repayment. He felt like he had been ‘shot’, he could ‘no longer think clearly’ and he was ‘very depressed’.

43 On or about 29 April 2000, the Solicitor suffered a breakdown. Having been given sleeping pills by a local medical centre, he was unable to wake up. A doctor who had been called to his home by his wife prescribed anti-depressant medication and referred him to Dr Rob McMurdo, a psychiatrist.

44 On 30 April 2000 (this date appears in an affidavit of Mr Fester), the Solicitor contacted Mr Fester, explained what had happened and indicated that he would not be returning to work. On 1 May 2000, he had the first of three consultations with Dr McMurdo. During June 2000, he met Mr Fester and advised him of the files that had been affected by his misconduct. Soon afterwards, he repaid all the money that he had drawn from Directlaw General Account 2. He also paid to Mr Geoffrey Davidson of Counsel the fee ($5,000) that Mr Davidson had charged in the matter of Mills.

45 Having been advised by Dr McMurdo that he should not return to work for at least one year, the Solicitor was in fact off work for about two years. During this period, he concentrated on returning to ‘some form of normality both physically and mentally’.

46 In his affidavit, the Solicitor stated that he understood that he had done ‘the wrong thing’, that he was most regretful and that he wished to apologise to the profession, the Law Society, Mr Fester and all the clients that were affected by his conduct. He added that he did not wish to offer excuses for his actions, but only some sort of explanation.

47 Annexed to the Solicitor’s affidavit were copies of three reports prepared by Dr McMurdo.

48 In the first of them, dated 5 May 2000, Dr McMurdo expressed the opinion that the Solicitor had ‘developed an acute anxiety disorder’ which seemed to be ‘related to his excessive work responsibilities’, that he presented as ‘a very obsessional individual’ and that the ‘monumental changes in his life’ that he would have to make would ‘not be easy to him’. Dr McMurdo recorded a statement by the Solicitor that he was planning to give up his legal practice, and his own advice that the Solicitor should take a small dose of Sinequan and should stay off work for at least three months.

49 In the second report, headed ‘To Whom It May Concern’ and dated 25 August 2000, Dr McMurdo recorded a diagnosis of Acute and Chronic Generalised Anxiety Disorder’ and an opinion that the Solicitor would most likely not be fit for work before January 2001.

50 In the third report, taking the form of a letter to the Solicitor dated 24 November 2004, Dr McMurdo indicated that he had examined the Solicitor on 1 May, 9 May and 17 August 2000 and repeated his diagnosis of an acute anxiety disorder. He indicated that the Solicitor had taken antidepressant medication (presumably between May and August 2000) and had found it beneficial. In addition to describing both the symptoms and consequences of anxiety disorders such as the Solicitor had suffered, Dr McMurdo expressed the opinion that the symptoms of anxiety – which, he said, included an inability to make constructive decisions, in contrast to normal behaviour patterns – had probably been present in the Solicitor for ‘several months’ before Dr McMurdo first examined him.

51 The affidavit by the Solicitor’s wife, Ms Jo-Anne Terracciano, was sworn on 6 July 2004. She corroborated in all material respects the Solicitor’s account of his working hours at Directlaw, his increasing anxiety and depression, the financial problems affecting both of them, his developing physical symptoms, his breakdown in April 2000 and his continuing deep regret over what he had done. She expressed the opinion that, having been off work for about two years, the Solicitor had ‘started improving’ in his ‘outlook on life’ and his ‘ability to cope and deal with issues’.

52 The affidavit by Mr Fester, sworn on 6 July 2004, corroborated the Solicitor’s evidence as to his working hours at Directlaw and the apparent decline in his health. It also corroborated the Solicitor’s statement that following their meeting in June 2000 he repaid to the trust account all the outstanding amounts. Mr Fester added that, as far as he was aware, the Solicitor had settled Mr Davidson’s account for fees in the Mills matter.

53 The final paragraph of Mr Fester’s affidavit was as follows:-

I have known Mark [the Solicitor] since December 1990 and can say that what has happened is totally out of character with the person I had known. He always demonstrated the highest ideals regarding the practice of law and what he has done is greatly at variance with those ideals. I have had discussions with Mark on a number of occasions since and he has expressed remorse at what he did, the fact that he had lost the ability to cope with his life prior to April 2000 and the fact that he understands that he has brought the profession into disrepute by his actions. He has also apologized to me for what has happened.

54 It may be added, for completeness, that in another affidavit by Mr Fester, dated 9 July 2004 and tendered by the Law Society, he said that on or about 1 May 2000 he found two envelopes in his drawer containing, respectively, cash amounts of $700 and $500 and the names of two clients (not in the list appearing above) whose matters had been handled by the Solicitor. He paid these amounts into the trust account, crediting them to the two clients.

55 In a short submission to us, the Solicitor said that while the affidavits that he tendered provided some explanation of what he had done he did not seek to offer any excuses, because nothing could excuse his conduct. He referred to Dr McMurdo’s reports, which confirmed, he said, that his life had got out of control. He referred also to his repayment of the misappropriated funds and his co-operation with the Law Society. He expressed his apologies to the Law Society, the Tribunal, Mr Fester, his clients and his colleagues. He asked that the Tribunal should not strike him off the roll, but acknowledged that it was obliged to do its duty in the matter.

Our conclusions

56 In considering the order that we should make, we have taken full account of the well-established principle that the test to be applied in determining whether a practitioner should be struck off the roll is present unfitness to be on the roll, not unfitness at the time of the professional misconduct alleged and proved in the proceedings (see, for example, A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1 at [21], [38]).

57 Although the Solicitor’s misconduct occurred some five years ago, it was so serious in its nature and its consequences that, making due allowance for the evidence and submissions advanced in mitigation, we are bound to conclude that he is not a fit and proper person to remain on the roll.

58 The case appears to us to fall squarely within a proposition, stated by Kirby P in Dupal v Law Society of New South Wales at 1, regarding the ‘criteria of general application’ that should be used by the court in cases of ‘wilful misuse of the funds of others’. He said:-

They should be such as to leave no doubt in the mind of a practitioner in financial difficulties, exposed to the temptation of using without clear authority the funds of another, the consequences that will flow for the right to practise when such misuse of funds is discovered.

59 Unlike Goold and Penfold, the present case should not in our view be treated as an exception to the normal rule, stated and applied in Dupal, that misuse of trust funds by a practitioner should result in removal from the roll. In contrast to these two ‘exceptional’ cases, the Solicitor in this case did not commit one single act of misappropriation. Instead, he engaged in a course of dishonest conduct over a period of six months. It comprised misappropriations of funds given to him by clients on thirteen separate occasions and a further misappropriation of a significant sum that had been paid to the firm for the benefit of a client as part of a settlement of litigation. The total amount misappropriated by him was the substantial figure of $23,115.

60 Furthermore, in contrast again to what appears to have been the situation in Goold and Penfold, the evidence tendered to us by way of mitigation contained only one testimonial from a fellow-practitioner and none from any former client or other associate of the Solicitor. We must of course allow for the fact that the Solicitor is relatively young and had only been in practice for about two years when the misconduct that has brought him to this Tribunal commenced. It is significant also that the single testimonial provided on his behalf provides a strong affirmation as to the strength of his professional ideals and comes from his former employer, who has suffered considerably from his misconduct. But the fact remains that the positive character evidence on his behalf is distinctly limited.

61 We consider that the present case must be distinguished also from a recent decision of this Tribunal which was not cited to us but which has some similarities to Goold and Penfold. In Law Society of New South Wales v Witherdin [2004] NSWADT 237, a client gave to a solicitor a cheque for $3,000 on account of fees due to counsel. At the solicitor’s request, the client substituted as payee a company controlled by the solicitor instead of the firm of solicitors of which he was a partner. In wilful breach of s 61 of the Act, the solicitor paid the cheque into this company’s account. His reason for acting in this way was that he was engaged in a continuing dispute with his fellow-partners over the amount of remuneration that he was receiving. He was also, in the layperson’s sense of the word, depressed.

62 The information laid by the Law Society against the solicitor included four other grounds amounting to professional misconduct or unsatisfactory professional conduct, none of which involved the handling of trust funds. At the hearing, he admitted all the matters alleged and that they constituted professional misconduct or unsatisfactory professional conduct, as claimed by the Law Society. His evidence in mitigation included several testimonials indicating that he enjoyed high respect among legal practitioners in the country town where he had been practising for more than 20 years, and in the wider community.

63 The Tribunal, relying principally on the fact that the misapplication of the client’s cheque was a single isolated incident and attaching significant weight to the testimonials, held that the normal rule stated in Dupal should not apply. It ordered that the solicitor’s practising certificate should be cancelled for a period of 18 months.

64 In the present case, the evidence in mitigation includes the reports by Dr McMurdo containing a diagnosis of acute anxiety disorder. But nothing in these reports indicates that, at the time when the Solicitor embarked upon his course of dishonest conduct, he was suffering from any kind of psychological disorder. He was subject to significant stress, occasioned by long working hours, a shortage of regular income and pressing financial commitments. But these constitute the only reasons for his having started to breach basic trust account requirements and divert to his own use funds that had been entrusted to him by his clients.

65 The contents of the Solicitor’s own affidavit have, moreover, some worrying features, three of which give particular cause for concern.

66 First, the affidavit, in the course of explaining that the Solicitor did not intend to ‘steal from’ his clients (or indeed to fail to pay the barrister in the Mills matter), states baldly that his intention at all times was to make the relevant payments on behalf of the clients ‘from the Directlaw general account when sufficient funds were available’. This affidavit was sworn as late as 23 December 2004, when the Solicitor had had ample time to reflect on the implications of his conduct. But he said nothing in it to indicate that at the time of his misappropriations he intended to repay the misappropriated funds, or indeed that he realised, at the time of swearing the affidavit, that every payment that he made from Directlaw General Account 2 in order to discharge an obligation of a client constituted a theft from his employer.

67 Secondly, the Solicitor stated as follows in this affidavit: ‘I do not recall any doctor who did not receive payment for a report where a client had previously paid for such a report’. But as indicated above at [19], the report prepared in August 2000 by Messrs Gillett and Gore states that, according to some of the clients, they were asked by their doctors to pay for their medical report. The Solicitor’s affidavit was sworn after he had had an opportunity to read this report. Because the affidavit uses the words ‘I do not recall…’, it does not directly contradict the report. But the overall impression conveyed in this passage is that the Solicitor was endeavouring to paint a less serious picture of the consequences of his actions than is warranted by the facts.

68 Thirdly, the Solicitor’s affidavit shows that his breakdown and his first notification of ‘what had happened’ to Mr Fester occurred on 30 April and that he had his first consultation with Dr McMurdo on 1 May. One might have thought that since the nature of his misconduct was being revealed and the reasons for it were being more fully explained to him, he would no longer persist in seeking to prop up his finances through misappropriating funds from either his clients or his employer. Yet in fact, having on 27 April presented to the firm’s bank a cash cheque for $7,000 drawn on Directlaw General Account 2, the Solicitor, on 3 May, presented another such cheque, this time for $3,000.

69 It is well established that evidence showing that a legal practitioner has failed to appreciate the nature and seriousness of misconduct that has been proved or admitted is a factor suggesting that he or she may not be a fit and proper person to remain on the roll: see eg Law Society of New South Wales v Moulton [1981] 2 NSWLR 736 at 740-741 (Hope JA). In different ways, each of these three aspects of the Solicitor’s affidavit appears to us to indicate a failure of this nature.

70 We should make it clear that we do not treat these three matters as forming part of the Law Society’s case against the Solicitor, as they were not specifically alleged. Their significance is that they detract from his case in mitigation.

71 We note finally a further aspect of the Court of Appeal’s judgments in Dupal v Law Society of New South Wales. At 5, Kirby P, citing a dictum of the majority of the High Court in Ex parte Lenehan (1948) 77 CLR 403 at 422, drew attention to the fact that a solicitor who had been struck off for pecuniary dishonesty could in appropriate circumstances be reinstated. ‘Restoration’, he said, ‘is difficult but not impossible’. Similar observations appear in the judgment of Handley JJA, at 23.

72 We are comfortably satisfied that by virtue of the misconduct that the Solicitor has admitted he is not a fit and proper person to remain on the roll of legal practitioners, and that he must accordingly be struck off.

73 The Law Society sought an award of costs under s 171E of the Act. Those costs have been agreed at $2,500, to be paid in ten equal monthly instalments.

74 Our orders are as follows:-

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, agreed at $2,500, by ten equal monthly instalments over a period of 10 months, with the first instalment to be paid one calendar month after the date of this decision.