Law Society of New South Wales v Vosnakis

[2007] NSWADT 42

CITATION:	Law Society of New South Wales v Vosnakis [2007] NSWADT 42
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Council of the Law Society of New South Wales RESPONDENT Joseph Con Vosnakis
FILE NUMBER:	062016 & 062018
HEARING DATES:	23/01/2007
SUBMISSIONS CLOSED:	23 January 2007
EXTEMPORE DECISION DATE:	23 January 2007
DATE OF DECISION:	23 February 2007
BEFORE:	Karpin A - ADCJ (Deputy President); Clisdell RJ - Judicial Member; Bennett C - 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 New South Wales Bar Association v. Cummins (2001) 52 NSWLR 279
REPRESENTATION:	APPLICANT P Boyd, solicitor RESPONDENT T A Williams, solicitor
ORDERS:	1. The name of Joseph Cohn Vosnakis to be removed from the Roll.; 2. The respondent to pay the costs of the applicant of and incidental to the proceedings in both matters.

1 These two matters were heard by the Tribunal on 23 January 2007. The respondent did not appear, but was represented by Mr T A Williams, solicitor.

2 At the conclusion of the hearing, the Tribunal made the following orders:

1. That the name of Joseph Con Vosnakis be removed from the Roll

2. That the respondent pay the costs of the applicant of and incidental to both matters.

The Tribunal, advised the parties that written reasons would be published.

3 File number 062 016: the applicant alleges, and the respondent concedes that he was guilty of professional misconduct in the circumstances that he, without reasonable excuse, failed to comply with a Council requirement under s. 152 Legal Profession Act 1987 and, that the respondent failed to assist the Law Society in the investigation of a complaint in further breach of s.152.

4 Section 152 provides:

152 Powers of Council or Commissioner when investigating complaint

(1) For the purpose of investigating a complaint, a Council or the Commissioner may, by notice in writing served on any legal practitioner, require the legal practitioner to do any one or more of the following:

(a) to provide written information, by a date specified in the notice, and to verify the information by statutory declaration,

(b) ...

(c) to otherwise assist in, or cooperate with, the investigation of the complaint in a specified manner.

(4) A legal practitioner who, without reasonable excuse, fails to comply with such a requirement is guilty of professional misconduct.

5 Particulars of grounds of complaint: By letter dated 17 January 2005, the applicant referred to the respondent, a complaint forwarded to the applicant by the Legal Services Commissioner (the Andrews Complaint). The applicant sought a response within 14 days. No response was received. The applicant again wrote to the respondent on 22 February 2005. No response was received. The applicant again wrote to the respondent on 14 April 2005 advising that if he failed to respond by 21 April 2005 the matter would be referred to the Professional Conduct Committee of the Society (“the Committee”). No response was received.

6 At its meeting on 4 May 2005 the Committee in exercise of its delegated power, made certain resolutions pursuant to the provisions of s.152. No notice of those resolutions was served on the respondent. At a further meeting on 8 September 2005, the Committee made resolutions pursuant to the provisions of section 152. A notice in accordance with those resolutions was personally served on the respondent on 12 September 2005. He did not comply with the terms of the notice.

7 At its meeting on 20 October 2005, the Committee resolved that:

1. The solicitor, without reasonable excuse, failed to comply with council requirements under section 152 of the Legal Profession Act 1987;

2. The solicitor has failed to assist the Law Society in the investigation of complaints.

8 By letter dated 25 October 2005 the respondent was advised of the above resolutions and asked to provide his response within 14 days. No response was received from the respondent.

9 At its meeting on 17 November 2005 the Committee resolved to refer the matter to the Tribunal as a complaint pursuant to s. 537(2) Legal Profession Act 2004. This decision was communicated to the respondent by letter dated 17 November 2005. The respondent did not reply to that letter.

537 Decision of Commissioner or Council after investigation

(1) After completion of an investigation of a complaint against an Australian legal practitioner, the Commissioner or a Council must:

(a) commence proceedings in the Tribunal under this Chapter, or

(b) …

(c) …

(2) Unless section 540 (Summary conclusion of complaint procedure by caution, reprimand, compensation order or imposition of conditions) applies, the Council or the Commissioner must commence proceedings in the Tribunal with respect to a complaint against an Australian legal practitioner if satisfied that there is a reasonable likelihood that the practitioner will be found by the Tribunal to have engaged in unsatisfactory professional conduct or professional misconduct.

10 The respondent admits that he, without reasonable excuse, failed to comply with a council requirement under section 152 Legal Profession Act 1987. He also admits that he failed to assist the Law Society in the investigation of a complaint. The Tribunal is satisfied that his failures in this regard constitute professional misconduct pursuant to s.152(4).

11 The second application filed on 31 July 2006 (file 062018) alleges that the respondent is guilty of professional misconduct upon the following grounds:

That he wilfully breached sections at 61 and 62 of the Legal Profession Act 1987 ;

He misappropriated deposit monies;

He delayed paying superannuation guarantee levies for his employees;

He failed to lodge, GST returns for his Kogarah office from July 2000;

He failed to pay PAYG in relation to his employees;

He borrowed money from a client in breach of Rule 12 of the Professional Conduct and Practice Rules;

He failed to document the loan when borrowing from the client;

He failed to secure the interests of his client when borrowing from it;

He placed himself in a conflict of interest when borrowing from his client.

12 Sections 61 relevantly provide:

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

13 Particulars 1, 2 & 3 assert breaches of section 61 of the Legal Profession Act in that it is alleged the respondent misappropriated deposit monies in each case. Those allegations are admitted by the respondent.

i) Mettas matter: The respondent acted for the vendors. The contract provided for the deposit of $85,000 to be held by the vendor’s solicitor. On 1 April 2003 the respondent paid the deposit cheque into his general account where it remained until paid out to his clients on 3 July 2003 following settlement. Thus the respondent had the use of the sum of $85,000 between 1April and 3 July 2003.

ii) Jayway matter: the respondent acted for Jayway on sale of a property. The contract provided for the deposit to be held by the solicitor on behalf of the vendor. The respondent received the cheque in the sum of $50,000 which he paid into his general account on 30 June 2003. On 6 April 2005, the respondent paid $50,000 into his trust account in respect of this matter. Thus the respondent had the use of the sum of $50,000 between 30 June 2003 and 6 April 2005.

iii) Mastrogiannis matter: The respondent acted for the vendors. The contract provided for the deposit of $35,000 to be held by the solicitor on behalf of the vendor. On 30 June 2003 the respondent deposited the cheque in the sum of $35,000 into his general account. On 23 July 2003 he paid $27,250.00 to his clients in accordance with a term of the contract. On 12 November 2003, the respondent paid his clients the balance of the deposit monies in the sum of $7,750.00 Thus the respondent had the use of $35,000 between 30 June and 23 July 2003, and of $7750.00 between 23 July and 12 November 2003.

14 Particular 4 is an allegation that the respondent wilfully breached s.62 Legal Profession Act1987. The respondent admits the breach.

15 Section 62 relevantly provides:

62 Keeping of accounts

(1) A solicitor shall keep:

(a) in the case of trust money (within the meaning of section 61) - accounting records, or

(b) in the case of money other than trust money - such accounting records or other records (if any) as may be required by the regulations,

that disclose at all times the true position in relation to money received by the solicitor on behalf of another person.

(2) The accounting records referred to in subsection (1) shall be kept in a manner that enables them to be conveniently and properly audited.

16 The respondent acted for Arisdean Pty. Ltd (‘the Company’) whose directors and shareholders were his parents in law from whom he held Power of Attorney. The Company held accounts with the Commonwealth Bank and the National Australia Bank. Pursuant to the Power of Attorney, the respondent was enabled to operate on the bank accounts. He failed to maintain accounting records that enabled him to explain transactions he transacted pursuant to that Power of Attorney.

Delay in paying employees’ superannuation guarantee levies:

(a) the respondent employed Thomas Liondos as a solicitor from 26 August 1996 until 2 April 2004. The respondent failed to pay Mr Liondos’ superannuation entitlements except for the 1997/1998 year until 21 September 2004.

(b) the respondent employed Margaret Riggio. The respondent failed to pay her superannuation entitlements for approximately 9 years, until 11 November 2004.

(c) the respondent employed Lillian Nassouh from January 2003 until October 2004. The respondent failed to pay Ms Nassouh’s superannuation entitlements until 19 May 2005.

(d) the respondent employed Bill Zahr. He failed to pay Mr Zahr,s superannuation entitlements from the second quarter of the year ending 30 June 2003 until 19 May 2005.

17 The respondent admits the allegations relating to non-payment of employees superannuation levies.

Australian Taxation Office (GST)

The respondent failed to pay GST remittances to the Australian Taxation Office from January 2001 to January 2005.

The respondent's records failed to disclose any payments to the Australian Taxation Office for PAYG. tax instalments on behalf of his employees.

18 The respondent admits he failed to pay employee superannuation levies; GST remittances; and PAYG instalments.

19 Borrowing money from a client: the respondent admits that he borrowed money from a client in breach of Rule 12 of the Professional Conduct and Practice Rules. On 9 June 2004 the solicitor borrowed from Cavendish Ventures Pty Limited the sum of $75,000, which he repaid on 31 August 2004. The respondent failed to document the loan; he failed to secure the interest of his client in relation to that borrowing; and he placed himself in a conflict of interest in those circumstances.

20 The solicitor for the respondent advised from the bar table that all employees’ superannuation payments; GST; and PAYE payments had been paid. That advice, although unsupported by evidence, was accepted by the applicant.

21 In respect of each matter, constituting a breach of section 61, the funds deposited into the respondents office account were made available to his clients as and when required. There is in no shortfall of client funds. Similarly, all unpaid monies due to the Australian Taxation Office or payable in respect of employees’ superannuation levies have been paid. There is no evidence or suggestion that the bank accounts administered by the respondent under the Power of attorney he held for his parents-in-law, have been adversely affected by his dealings.

22 It is to the respondent's credit that he has not sought to defend his actions, but has, in respect of each of the allegations, admitted his wrongdoing. The respondent did not appear before the Tribunal. However, his solicitor filed an affidavit of the respondent dated 22 January 2007, in which the respondent acknowledges that he has read the material upon which the applicant relies; he understands the gravity of the allegations in terms of professional conduct; he says: ‘I except (sic) that I have been seriously derelict in the discharge of my obligations as a solicitor in relation to the matters particularised in the applications, and as described in the report by Mr Watson. I do not wish to contest the allegations against me or the evidence offered by the Society in support of those allegations. I do not oppose the making of the orders sought by the Society.’

23 Mr Williams tendered a report of Dr Sampson F. Roberts, forensic psychiatrist, dated 18 on January 2007. The respondent was first assessed by Dr Roberts in October 2006. Dr Roberts was aware of the allegations made against the respondent.

24 Dr Roberts noted that the respondent is a 47-year-old married man with two children aged 16 and 18 years. He has been in practice as a solicitor in a busy practice. The respondent gave a history of depressive symptomatology characterised by low mood, anhedonia, impaired concentration and memory, insomnia, diminished libido, social withdrawal and irritability, extending over the previous two to three years. He had also experienced suicidal ideation, although had made no plans to act on those thoughts. There was no history of prior psychiatric illness, either for the respondent or within his immediate family. So far as his general health was concerned, he had been diagnosed with obstructive sleep apnoea two years prior to his attendance at Dr Roberts rooms.

25 Although not stated, it appears that Dr Roberts placed the respondent on antidepressant medication, which was increased when the respondent attended Dr Roberts on 11 January 2007.

26 Dr Roberts noted there was no evidence of delusions, hallucinations or thought disorder, and that the respondent demonstrated insight into the pathological nature of his condition. The respondent ‘demonstrated a sound ability to attend to’ conversation.

27 Dr Roberts diagnosed the respondent as suffering from symptomatology consistent with a major depressive episode, exacerbated by obstructive sleep apnoea.

28 Dr Roberts noted that the respondent ‘has demonstrated meticulous compliance with regard to his attendance for follow-up appointments and continues to comply with treatment recommendations.’ He opined that the respondent’s ‘capacity to perform to his usual standard, will return within a three to six month period.’ That being the period within which it could be anticipated there would be complete resolution of the respondent's depressive symptomatology.

29 In the opinion of Dr Roberts, the respondent was not fit to participate in disciplinary proceedings. ‘Such a process would have the potential to adversely impact upon … the respondent's mental state, leading to a more protracted illness.’

30 Having regard to the opinion of Dr Roberts, the affidavit filed by the respondent, and having regard to the fact that he was represented before the Tribunal, no adverse finding should be made in respect of the respondent’s failure to attend before the Tribunal.

31 The Tribunal is satisfied to the requisite standard, Briginshaw v. Briginshaw (1938) 60 CLR 336 that each of the complaints set out above, and admitted by the respondent, constitutes professional misconduct.

32 The Tribunal acknowledges that the respondent has now met all his financial obligations, and that no loss has been occasioned to his clients or employees. Nonetheless the respondent’s numerous failures to deal with his client’s funds in accordance with his legal obligations in respect of trust monies received, clearly renders him unfit to remain upon the roll. He engaged in blatant and sustained breaches of the provisions of s.61, and failed to maintain adequate records in breach of s. 62.

33 The respondent’s failures to pay monies due for employee superannuation contributions, PAYG tax, and GST also, in this context, constitute professional misconduct. As Spigelman CJ, with whom Mason P and Handley JA agreed, said in New South Wales Bar Association v. Cummins (2001) 52 NSWLR 279 at 286:

‘This failure was an inexcusable pattern of illegal conduct in complete defiance of his civic responsibilities.’

34 Considering the meaning of the expression ‘professional misconduct’ in that case, involving the failure of Mr. Cummins to file tax returns for almost 4 decades, the Chief Justice said at 289:

“There is authority in favour of extending the terminology ‘professional misconduct’ to acts not occurring directly in the course of professional practice. That is not to say that any form of personal conduct may be regarded as professional misconduct. The authorities appear to me to suggest two kinds of relationships that justify applying the terminology in this broader way. First, acts may be sufficiently closely connected with actual practice, albeit not occurring in the course of such practice. Secondly, conduct outside the course of practice may manifest the presence or absence of qualities which are incompatible with, or essential for, the conduct of practice. In this second case, the terminology of ‘professional misconduct’ overlaps with and, it is usually not necessary to distinguish it from, the terminology of ‘good fame and character’ or ‘fit and proper person’.”

35 In the opinion of the Tribunal, the respondent's failure to comply with his civic obligations to make superannuation payments on behalf of his employees; to pay GST and PAYG tax at the time those obligations fell due, are of a nature encompassed by the Chief Justice’s definition of the extended meaning of ‘professional misconduct’. Not only did these obligations arise in the course of the conduct of his practise, but the failure to meet these obligations in that context render the respondent not a fit and proper person to remain on the roll.

36 The Tribunal is satisfied in relation to each of the allegations made by the applicant, and admitted by the respondent, that the respondent is guilty of professional misconduct.

37 The Tribunal orders:

1. The name of Joseph Con Vosnakis be removed from the Roll.

2. The respondent to pay the costs of the applicant in matters 062016 & 062018.