Law Society of NSW v Hansen - [2004] NSWADT 183

No judgment structure available for this case.

CITATION: Law Society of NSW v Hansen [2004] NSWADT 183

DIVISION: Legal Services Division

PARTIES: APPLICANT
Council of the Law Society of New South Wales
RESPONDENT
Malcolm Henry Hansen

FILE NUMBER: 032015

HEARING DATES: 12/02/2004-13/02/2004

SUBMISSIONS CLOSED: 06/18/2004

DATE OF DECISION:
08/25/2004

BEFORE: Chesterman M - ADCJ (Deputy President); Clisdell RJ - Judicial Member; Fitzgerald R - Non Judicial Member

APPLICATION: Professional Misconduct - breach of Order - Professional Misconduct - breach of s. 61 of the Legal Profession Act - Professional Misconduct - breach of s. 62 of the Legal Profession Act - Professional Misconduct - gross negligence - Professional Misconduct - use Power of Attorney for own benefit

MATTER FOR DECISION: Principal matter

LEGISLATION CITED: Administrative Decisions Tribunal Rules (Transitional) Regulation 1998
Legal Profession Act 1987

CASES CITED: Barwick v Law Society of New South Wales (2000) 169 ALR 236
Council of the New South Wales Bar Association v Amor-Smith [2003] NSWADT 239
Deputy Commissioner of Taxation v Mutton (1988) 12 NSWLR 104
Law Society of New South Wales v Harvey [1976] 2 NSWLR 154
Law Society of New South Wales v Moulton [1981] 2 NSWLR 736
Re Mayes and the Legal Practitioners Act [1974] 1 NSWLR 19
Myers v Elman [1940] AC 282
New South Wales Bar Association v Cummins [2001] NSWCA 284
New South Wales Bar Association v Evatt (1968) 117 CLR 177
Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355
A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1
Veghelyi v. The Law Society of New South Wales, Unreported, Court of Appeal, NSW, 6 October 1995 (BC950549)

REPRESENTATION: APPLICANT
N Beaumont, barrister
RESPONDENT
In person

ORDERS: 1. That the name of the Solicitor be removed from the roll of legal practitioners.; 2. That the Solicitor pay the Law Society’s costs of these proceedings.

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, Malcolm Henry Hansen (‘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 four grounds.

2 The Law Society laid the Information pursuant to a complaint that it had made against the Solicitor on 6 March 2003 and after it had conducted the investigation required of it by s 148 of the Act.

3 The Law Society requested in the Information that the Tribunal make an order that the name of the Solicitor be removed from the Roll of Legal Practitioners, an order that he pay the Law Society’s costs and such further orders as the Tribunal deemed fit.

4 The Information set out four grounds, supported by Particulars, for a finding of professional misconduct against the Solicitor. They were as follows:-

2. he was grossly negligent:

(ii) with respect to the supervision of his clerk.

4. he wilfully breached Order 3 of the Orders of the Supreme Court dated 15 June 2001, in proceedings brought by the Law Society of New South Wales against the Solicitor, that all transactions involving receipt or disposal of trust moneys of clients be effected and transacted through the trust account of which Jean Sayer had been appointed Receiver.

5 Grounds 1 and 2 related to the same course of conduct by the Solicitor. The gist of the Law Society’s allegations against him, as finally formulated in its submissions to us, was that between 6 March 2000 and the end of May 2001, he had recklessly put Mr Graeme Jackson, a clerk employed by him in Hansen & Co (his firm in Queanbeyan), into a position enabling Mr Jackson to misappropriate substantial funds belonging to clients of the firm that were held in the firm’s trust account, and had recklessly failed to prevent Mr Jackson from so doing.

6 The evidence adduced by the Law Society tended to show that this conduct by the Solicitor commenced before 6 March 2000 – probably as early as October 1999. But a complaint under Part 10 of the Act cannot be made with respect to alleged conduct occurring more than three years before the date of the complaint, unless a determination is made on specified grounds set out in s 137(2). No such determination was made with respect to this complaint, the date of which was 6 March 2003. The Law Society therefore relied only on alleged conduct by the Solicitor occurring after 6 March 2000, while maintaining that some parts of its evidence relating to the period before this date were relevant in establishing such conduct.

7 We will accordingly consider Grounds 1 and 2 under a single heading. As Grounds 3 and 4 each concerned separate incidents and different forms of alleged misconduct, they will be treated separately.

8 The hearing of the evidence in this matter took place on 12 and 13 February 2004. By agreement between the parties, written submissions were then made to us as to whether (a) professional misconduct had been established against the Solicitor and (b) if so, what order or orders should be made against him under s 171C(1) of the Act. The last of those submissions was filed in the Registry on 18 June 2004.

Grounds 1 and 2: Failure to prevent misappropriations from trust account

9 Admissions by the Solicitor. The Solicitor did not at any stage deny that the misappropriations from his firm’s trust account to which these Grounds relate occurred on account of actions taken by Mr Graeme Jackson, his clerk and bookkeeper. In a written submission filed just before the hearing of these proceedings, he conceded that in consequence there had been breaches of ss 61 and 62 of the Act in the management of this account.

10 The relevant provisions of these sections 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:

(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

(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).

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….

(4) A wilful contravention of subsection (1), (2) or (3) is professional misconduct.

11 In a written submission filed after the hearing, the Solicitor made the further admission that his conduct in permitting Mr Jackson to make these misappropriations was reckless and for this reason answered the description ‘wilful’. It followed, as he acknowledged, that the complaint of professional misconduct under Ground 1 had been made out against him, pursuant to s 61(8) and s 62(4).

12 The Solicitor contended in the latter submission, however, that Ground 2 should be struck out for the reason that it simply ‘duplicated’ Ground 1.

13 On account of these admissions by the Solicitor, we need not review at length the evidence relating to Grounds 1 and 2. It is sufficient for us to outline the key features of this evidence, to consider whether his concession of wilful contravention of the relevant parts of ss 61 and 62 is warranted in the light of this evidence and to deal with his contention in relation to ‘duplication’ between the two Grounds.

14 Outline of the evidence. The details of these two grounds are principally contained in a report prepared by Ms Jean Sayer, a chartered accountant. On 15 June 2001, by order of the Supreme Court, Ms Sayer was appointed Receiver of the trust property of the Solicitor.

15 The Solicitor is now aged 45. He was admitted on 13 June 1985. Between 6 January 1992 and 21 March 2002, he practised either as a principal or as a sole principal of a firm. From 10 October 1994, he was the sole principal of a firm in Queanbeyan called Hansen & Co. At all relevant times he was in the Royal Australian Navy Reserves and was a Royal Australian Navy Lawyer.

16 Between October 1999 and November 2000, Mr Hansen’s employment by the Navy was effectively full-time, with the result that each week he spent no more than a few hours at the firm’s office. Between December 2000 and April 2001, it would appear that he spent only one or two days each week at the office.

17 Between a date in 1992 and the end of May 2001, the Solicitor employed Mr Graeme Jackson as a paralegal/secretary and bookkeeper. He entrusted to Mr Jackson the day-to-day running of the firm and the maintenance of its trust account. His authority included paying remuneration to himself and other employees of the firm.

18 Mr Jackson had authority to sign cheques on the firm’s office account and on an office account in the name of ‘Hansen Fitzgerald Naylor’ (‘the Naylor account’), which the Solicitor and another solicitor practising in Queanbeyan, Mr Matthew Fitzgerald, had opened in July 1999. Mr Fitzgerald shared office premises with Hansen & Co. The Naylor account was with the ANZ Bank, whereas the trust and office accounts of Hansen & Co were with the Commonwealth Bank.

19 The Naylor account had been opened because a partnership between the Solicitor, Mr Fitzgerald and a firm called Gordon Naylor & Associates had been discussed. The proposed partnership was never formed. Mr Fitzgerald did not sign any cheques on the Naylor account after October or November 1999, though he may have signed some at an earlier stage.

20 Between October 1999 and June 2001, Mr Jackson succeeded in misappropriating for his own use and benefit substantial sums of money belonging to the clients of Hansen & Co. According to Ms Sayer’s report and her evidence before us, the amounts of the misappropriations totalled $310,305.46 and there were failures to account to clients for amounts totalling $221,805.46.

21 The misappropriations were effected in four different ways. They were as follows:-

ii) By cheques drawn improperly on the trust account and deposited in the office account – nine matters; cheques totalling $76,400.00.

iii) By the improper deposit of trust monies into the office account – two matters; deposits totalling $12,750.00.

iv) By the improper deposit of trust monies into the Naylor account – 13 matters; deposits totalling $124,726.50.

22 While some of these misappropriations occurred before 6 March 2000 and therefore cannot be taken into account in these proceedings (see [6] above), it is clear that most of them occurred thereafter and were responsible for the loss to the clients concerned of most of the misappropriated funds.

23 The Particulars to Grounds 1 and 2 identified 33 different conveyancing transactions on behalf of clients in the course of which these misappropriations from trust funds occurred. In a large proportion of these, the firm acted for a single client, Royalla Properties Pty Ltd (‘Royalla’). The largest sum involved in a single failure to account to a client of the firm was $46,128.96.

24 The Solicitor did not realise that anything was amiss until the end of May 2001. On 23 May, Mr Jackson said that he was resigning his position with the firm, on grounds of sickness. After handing to the Solicitor a number of files and documents, he said that he would be departing for the north coast of New South Wales on 28 May. A trust account inspection was carried out for the Law Society on 24 May, forming part of the standard procedures for renewal of the Solicitor’s practising certificate. It revealed, according to the Solicitor in a statement prepared for the police, ‘some irregularities… but nothing of any great significance or concern’.

25 On 31 May, the Solicitor wrote out a cheque for $100,000, which Royalla had asked to be drawn from its trust account, and gave it to Ms Jutta Brinkmeyer, a director of Royalla. But later that day, he was told by the Commonwealth Bank that it could not be met because the account contained only $1,053. After a lengthy meeting with Ms Brinkmeyer, he concluded that a sum of $139,876.50 should have, but had not been, deposited in this account, and that Mr Jackson was responsible for this failure.

26 Both the Law Society and the police were then informed of the deficiencies in the trust account. On 15 June, as already mentioned, Ms Sayer was appointed as Receiver of the trust property of Hansen & Co.

27 It is not necessary to set out in detail all the methods adopted by Mr Jackson in misappropriating this money in the four ways listed above, or to describe each of the transactions in which the misappropriations occurred. It is sufficient to outline as follows the practices adopted in these transactions.

28 On numerous occasions between October 1999 and May 2001, the Solicitor signed blank cheques drawn on the firm’s trust account and gave them to Mr Jackson to fill in the names of the payees and the amounts drawn. In the absence of any significant supervision by the Solicitor, Mr Jackson then used these cheques to make improper payments to himself or to third parties for his benefit, or to make payments to the office account of Hansen & Co or to the Naylor account. He also paid into one or other of these office accounts cheques from clients or from other parties (for example, cheques for deposits paid by prospective purchasers) that should have been paid into the trust account. Being a signatory on both of the office accounts, he then exploited his freedom from supervision in order to make payments from them for his benefit. In some instances, he simply filled out, signed and presented cheques payable in cash.

29 Within this pattern of events, the Solicitor’s principal derelictions took two forms. We will explain these in turn.

30 First, as already indicated, he signed blank cheques drawn on the trust account and gave them to Mr Jackson to fill in the name of the payee and the amount of the cheque. In evidence before us, he claimed that in each case Mr Jackson explained to him what the cheque was for, showing him relevant documents in the file for the transaction. But he admitted that he made no attempt to sight the cheque again after Mr Jackson had made these all-important additions. When asked why he did not insist that the name of the payee and the amount paid were filled in before he signed the cheque, he could provide no better explanation than that he had employed Mr Jackson for many years, believed him to be trustworthy and at the time had no reason to think otherwise.

31 In this context, the Solicitor’s evidence before us further contradicted, in a distinctly unconvincing fashion, earlier contradictory written statements made by him regarding his attendance at the firm’s office between October 1999 and November 2000. In a statement given to police on 6 June 2001, he said that he was on naval duties in Sydney or Nowra ‘Mondays through to Fridays’ and only saw clients at the weekends. But in a letter to the then President of the Law Society dated 11 February 2003, he said that during this period he was ‘only ever in Queanbeyan on weekends or Wednesday afternoons after 4.00 pm with the banks being closed on those occasions’. In a letter to the Law Society’s Professional Conduct Committee dated 21 March 2003, the version given was that he was ‘clearly at the office… albeit on an infrequent basis of mostly only Wednesday afternoons and most weekends’. Finally, in evidence before us, his version was that he sometimes returned to Queanbeyan on Friday afternoons after the banks had closed, though not as frequently as on Wednesday afternoons.

32 Under pressure from Mr Beaumont in cross-examination, the Solicitor finally conceded that his oral evidence directly contradicted what he had written earlier. It would appear, though the point is not essential for our purposes, that the Solicitor’s earlier written statements were prompted by a desire to avoid any accusation that he participated with Mr Jackson in the thefts of his clients’ money. In his statement to the President of the Law Society, the words that we have just quoted formed part of a response to what he called an insinuation by Ms Sayer that he, as well as Mr Jackson, had presented cash cheques drawn on the office account of Hansen & Co. On the other hand, in his evidence at the hearing, he was apparently seeking to show that he was at least present in the office when Mr Jackson gave him blank trust account cheques to sign and was given some explanation of the purposes for which they were being drawn.

33 His version of these matters in oral evidence received some corroboration from the fact that most of the cheques that he signed in blank were in fact dated on a Wednesday or a Friday. But it provided no justification whatever for his having been prepared to hand signed blank cheques to Mr Jackson without making any effort (beyond listening to a purported explanation from Mr Jackson) to ensure that they were then written out in favour of appropriate payees and were for appropriate amounts.

34 Furthermore, we accept the submission of the Law Society that the inconsistencies between his statements on the important issue of his pattern of attendance at the office are serious ones. They show him to have been an unreliable witness.

35 The second major dereliction by the Solicitor was that, although he was prepared to sign blank trust account cheques, he did not at any stage before June 2001 check the trust account records, either before or after signing, in order to ensure that Mr Jackson’s handling of clients’ funds was both honest and competent. In a letter dated 11 November 2002 to the Law Society, he admitted this in the following terms:-

I was, in reality, completely ignorant about the state of the “books”, due to my large involvement with the Navy during most of the period that Jackson’s illegal activities took place and the fact that I trusted Jackson completely over a period of some twelve (12) years before this occurred during which time not one incident had occurred to make me doubt his honesty and integrity.

36 A striking instance of the Solicitor’s ignorance of the state of the trust accounts occurred on 31 May 2001. As outlined at [25] above, he wrote out a cheque for $100,000 from the trust account of Royalla without realising that the funds in the account barely exceeded $1,000.

37 It is clear, as he himself admitted in evidence, that if he had inspected the trust account records during the period when he was signing blank cheques, he would have come across obvious irregularities suggesting blatant dishonesty on Mr Jackson’s part.

38 Within the material unearthed by Ms Sayer, the most telling illustration of this is that on several occasions, the trust account ledger recorded a payment to the office account of an amount by way of ‘costs and disbursements’ due from a client vendor of land that equalled the amount that the firm had received as deposit on the sale from the purchaser.

39 In one such case, a purchaser’s deposit of $15,000 was paid into the trust account and credited to a trust account ledger styled ‘Royalla Properties Pty Ltd – sale lot 61’. Some months later, a trust account cheque for the same amount was drawn payable to Hansen & Co, paid into the firm’s office account and debited to this ledger account. Cash cheques signed by Mr Jackson were then drawn on the office account. Royalla was charged separately for the firm’s costs on the sale. The amount charged, as with numerous other sales of Royalla’s properties by the firm, was only $550.

40 The Solicitor admitted in cross-examination that in another similar case, where the amount paid as deposit was $7,000, he would immediately have realised, if he had inspected the trust account records, that the debit to the client of this same amount for costs and disbursements was ‘ridiculous’ and ‘crazy’. He agreed with Mr Beaumont that in such cases the misappropriation by Mr Jackson could not be described as ‘cunningly concealed fraud’.

41 He also agreed that when in June 2001 he at last conducted his own examination of the trust account records he ‘very quickly realised’ that the obvious irregularities in them suggested that considerable sums of money had been misappropriated.

42 The chief justification that the Solicitor put forward in evidence before us for not making the simple investigation required to discover the fraud was that, as indicated in the passage quoted above at [35] from his letter to the Law Society, he trusted Mr Jackson, believing that he had no reason to do otherwise.

43 Before May 2001, there were, however, good reasons why he should have suspected that this trust was misplaced. The relevant events are set out in a letter that he sent to the Law Society on 7 June 2001.

44 In February 2001, he was told by the Law Society that an accountant’s report on Hansen & Co’s trust account for the year ending 31 March 2000, which was required for the renewal of his practising certificate for 2000-01 had not in fact been sent to the Law Society. He had relied on Mr Jackson to obtain such a report and send it to the Law Society. In a letter to him dated 5 April 2001, the Law Society reminded him of this matter. He then spoke to Mr Jackson, who admitted that no report had been received from the firm’s accountant for the year ending 30 March 2000, nor for the succeeding year. Mr Jackson promised him that both these reports would soon be obtained. The Solicitor then advised the Law Society that the earlier of these reports would soon be forwarded.

45 In his letter of 7 June 2001 to the Law Society, the Solicitor admitted that after he received the Law Society’s letter of 5 April, ‘alarm bells should have been ringing in my years about my former bookkeeper’. But, as he then stated:-

Naturally nothing happened as far as my bookkeeper was concerned because he was still busy defrauding the trust account and the office account. I was no doubt tied up with other matters and quite frankly forgot about the matter because I assumed that my former bookkeeper had the matter in hand.

46 At the hearing, the Solicitor put forward another reason why he did not check Mr Jackson’s handling of the trust account. He claimed that in June 1999 Mr Matthew Fitzgerald, a Queanbeyan solicitor with whom his firm shared premises (see [18] above), agreed to act in a supervisory role while he was absent on naval duties.

47 Mr Beaumont challenged this assertion, pointing out to the Solicitor during cross-examination that he had not mentioned any such arrangement in his statement dated 6 June 2001, nor in a letter to the Law Society dated 8 June 2001. In this letter, he had mentioned another solicitor, Mr Victor Forrest, indicating however that Mr Forrest played a role only between January and March 2001 and ‘only worked on my files and did not have any input or supervision whatsoever relating to the conveyancing files for which Mr Jackson had the basic carriage of (sic)’. In his letter dated 11 November 2002 to the Law Society, he asked rhetorically whether, because Mr Fitzgerald had had some dealings with the Naylor account, he should not have ‘taken some form of responsibility for its operation and supervision’. The Solicitor did not, however, make any mention here of the alleged agreement of June 1999. In yet another letter, dated 10 December 2002, to the Law Society, he said that he had arranged for Mr Forrest to ‘supervise the office during part of my absences’ and that Mr Fitzgerald was ‘also acting in a supervising “role”’.

48 Having regard to the doubts that we have already expressed about the Solicitor’s credibility as a witness (see [34] above]), we agree with Mr Beaumont’s submission that his oral evidence regarding an alleged agreement in June 1999 for supervision by Mr Fitzgerald should not be believed. Although some references to oversight of the firm’s operations by Mr Fitzgerald appear in a statement by Ms Traie Olsen, an employee of the firm at the relevant time, Mr Fitzgerald was not called as a witness. It is not credible that, if such an arrangement was reached, the Solicitor would have failed to mention it at all in his statement of 6 June 2001 or in any of his subsequent letters to the Law Society. He gave no convincing explanation for this failure.

49 Our conclusions. As already indicated, the Solicitor conceded before the hearing that he had committed breaches of s 61 and s 62 of the Act. After the hearing, he made the further admissions that his conduct in permitting Mr Jackson to make these misappropriations was reckless and on that account ‘wilful’, and that he was accordingly guilty of professional misconduct pursuant to s 61(8) and s 62(4), as alleged in Ground 1.

50 If these admissions had not been made, we would in any event have concluded that professional misconduct under these two provisions had been amply shown by the evidence that we have outlined. The breaches of s 61(1), s 61(2) and s 62(1) were overt and blatant. The Solicitor’s conduct in giving Mr Jackson numerous opportunities, taking the form of signed blank trust account cheque forms, to defraud the firm’s clients and in taking no steps whatsoever, even when ‘warning bells should have been ringing’, to check that Mr Jackson was filling out these cheques forms appropriately and administering the trust account honestly and competently, displayed recklessness of a very high order. It was therefore, as Mr Beaumont submitted, ‘wilful’ in the sense used in several decisions on ss 61(8) or 62(4) or their predecessors.

51 We will set out two brief statements of principle from one of these decisions. In the Court of Appeal case of Re Mayes and the Legal Practitioners Act [1974] 1 NSWLR 19, Hardie JA stated as follows, at 21:-

It is well settled law that there can be wilful failure within the meaning of the section [i.e., the predecessor to s 61(8) and s 62(4)] without any positive intention to break the law; breaches committed over a period of time can, in the light of the relevant circumstances, be so substantial and reckless and show such complete indifference on the part of the solicitor to his important obligations to his clients and to the public, as to amount to wilful failure…

52 At 26, Reynolds and Hutley JJA said:-

Wilful misconduct can be established by evidence that a person acts with reckless carelessness, not caring what the results of his carelessness may be.

53 As indicated earlier, the Solicitor claimed that Ground 2 should be struck out for the reason that it simply ‘duplicated’ Ground 1. This Ground alleges that he was grossly negligent with respect to the conduct of his trust account and the supervision of his clerk.

54 The Solicitor cited no authority in support of this submission. In our judgment, it alleges a different kind of impropriety against him. One evident distinction is that the gross negligence alleged is not necessarily linked with breaches of s 61 or s 61. Accordingly, even though the accompanying particulars are the same for Ground 2 as for Ground 1, it cannot be said that there is ‘duplicity’.

55 In our opinion, the Solicitor’s admission of recklessness in relation to Ground 1, considered in conjunction with the circumstances in which this recklessness occurred, necessarily constitutes an admission of gross negligence such as is alleged in Ground 2. Furthermore, we would again hold that in any event the evidence clearly established the truth of these allegations set out in the particulars.

56 We hold further that the matters alleged and particularised in Ground 2 constitute professional misconduct. Sufficient authority for such a ruling may again be found in Re Mayes and the Legal Practitioners Act [1974] 1 NSWLR 19.

57 In this case, a solicitor entrusted management of his firm’s trust account solely to his partner in the firm over a period of years. He did not take steps, despite certain matters of concern being brought to his notice, to prevent his partner misappropriating substantial sums. In addition to finding statutory professional misconduct, as just indicated, Reynolds and Hutley JJA held as follows, at 26:-

The overall disregard of the obligations to the Law Society of a solicitor, those obligations being laid down for the protection of the general public who deal with solicitors, is in this case in our opinion so gross as to amount to professional misconduct at common law.

58 Hardie J stated at 22 that he preferred to base his conclusion in the case on statutory misconduct only and to refrain from expressing regarding misconduct at common law.

59 For the foregoing reasons, we find, in accordance with the Solicitor’s own admissions as regards Ground 1, that he committed professional misconduct as alleged and particularised in both Ground 1 and Ground 2 of the Information.

Ground 3: Improper use of the power of attorney granted by Mr Smith

60 Ground 3 stated as follows:-

3. [The Solicitor] used his Power of Attorney granted by Mr Anthony Smith to obtain moneys from Mr Smith’s bank account not for the benefit of Mr Smith but for his use and benefit.

61 In the accompanying Particulars of Complaint, the particulars relating to this Ground were as follows:-

2. The Solicitor, pursuant to his Power of Attorney, withdrew the following amounts from an account kept by Mr Smith with the Commonwealth Bank at Queanbeyan:

6.6.02 Cheque payable to Euro Villas $6,340.00

11.6.02 Cash $2,500.00

4. After August 2002, the Protective Commissioner became the Guardian of Mr Smith.

62 The Solicitor raised jurisdictional and procedural objections to the hearing of this Ground. He also contested important aspects of the Law Society’s evidence and submissions.

63 Issues of jurisdiction and procedure. The Solicitor raised these matters of jurisdiction and procedure in supplementary submissions, filed after the conclusion of the hearing.

64 The Solicitor raised the same arguments in connection with Ground 4 of the Information. We consider below their applicability to that Ground.

65 In its opening words, the Information states that all of the conduct of the Solicitor allegedly constituting professional misconduct occurred while he was ‘practising as a solicitor’.

66 As just indicated, the conduct alleged against the Solicitor in Ground 3 occurred in May and June 2002. The starting point for the objections that he made is the fact that his practising certificate was cancelled by the Law Society on an earlier date, 21 March 2002.

67 He drew our attention to parts of ss 3, 25, 126 and 128 of the Act. The passages of relevance are as follows:-

legal practitioner

solicitor means:

(a) a legal practitioner who holds a current practising certificate as a solicitor or barrister, or…

126 In this Part:

appropriate Council means:

(b) in relation to a complaint concerning a person who was a solicitor when the conduct the subject of the complaint allegedly occurred—the Law Society Council, or

(c) in relation to a complaint concerning a person who was neither a barrister nor a solicitor when the conduct the subject of the complaint allegedly occurred—the Bar Council or the Law Society Council, whichever the Commissioner nominates for the purposes of the complaint.

(c) a person who was a legal practitioner when the unsatisfactory professional conduct or professional misconduct the subject of a complaint allegedly occurred but who is no longer a legal practitioner (in which case this Part applies as if the person were still a legal practitioner).

68 In the Solicitor’s submission, two consequences followed, bearing upon the Tribunal’s jurisdiction to deal with Ground 3.

69 The first was that, in the period since cancellation of his practising certificate, he was not a ‘solicitor’ for the purposes of the Act. In consequence, the complaint in Ground 3 could not be preferred against him ‘as a solicitor’. This, he said, was ‘a nonsense’ as he ‘was not a solicitor when the subject of the complaint allegedly occurred’.

70 The second was based on the contention that, although at the time of this conduct he was ‘still technically a legal practitioner’, s 128(1)(a) and (c) had to be ‘read in conjunction’. This produced the result that

in order to be a legal practitioner to come within that section, one has to have been acting in the role of a solicitor or a barrister or both and not just a legal practitioner simply by virtue of still remaining enrolled with the Supreme Court of New South Wales.

71 It followed, in his submission, that s 128 had ‘no application’ in relation to Ground 3. Evidently, the conclusion he sought to draw was that proceedings under Part 10 of the Act could not be instituted against him at all with respect to this Ground because he was not at the relevant time a ‘legal practitioner’ within the meaning of s 128(1).

72 It is convenient to say at this point that in our opinion the second of these arguments clearly lacks merit. Section 128(1) does not even mention solicitors or barristers, let alone state or imply that a legal practitioner who does not fall within one or other of these categories is not a ‘legal practitioner’ for the purposes of Part 10. Furthermore, if this argument were correct, there would be no need for sub-paragraph (c) of the definition of ‘appropriate Council’ in s 126 to deal with the situation of ‘a complaint concerning a person who was neither a barrister nor a solicitor when the conduct the subject of the complaint allegedly occurred’.

73 In two written submissions on these matters, Mr Beaumont argued first that the Solicitor had waived any right to make these objections because he had not raised them until after the hearing had concluded. In particular, he had not raised them in his Reply, despite the provision in rule 27(2)(b) of the Administrative Decisions Tribunal Rules (Transitional) Regulation 1998 that a reply filed by a legal practitioner pursuant to s 167(3) of the Act must …

(b) traverse each allegation in the information with which the legal practitioner takes issue and must state in summary form any material facts and circumstances on which the legal practitioner relies.

74 Mr Beaumont conceded that the Solicitor was not a ‘solicitor’, as defined by the Act, at the time of the ‘immediate’ conduct alleged in Ground 3 and that the Legal Services Commissioner (‘the Commissioner’) had not ‘formally’ nominated the Council of the Law Society (‘the Council’) under s 126(c) as the ‘appropriate Council’, with respect to this Ground`. But he contended that for a number of reasons this did not mean that in relation to this Ground the Tribunal lacked jurisdiction or the proceedings were otherwise invalid. This was notwithstanding the wording of a provision of the Act to which the Solicitor had not in fact referred, despite its potential relevance to the case being advanced by him.

75 This provision is s 167(1), which reads as follows:-

the appropriate Council

76 The principal reason why, in Mr Beaumont’s submission, any failure of the Commissioner to ‘nominate’ the Council with respect to Ground 3 did not vitiate the proceedings was that it was wrong to apply the definition of ‘appropriate Council’ in s 126(c) to the phrase as used in s 167(1). This definition, he said, was instead applicable only to the provision in s 141(1) that the Commissioner may refer a complaint made to or by the Commissioner to ‘the appropriate Council’ if the complaint was not to be dealt with by the Commissioner under its own powers of investigation. In such circumstances, it was evidently necessary to cover the situation where the legal practitioner concerned was neither a barrister nor a solicitor at the time of the alleged conduct. Sub-paragraph (c) of the definition did this, by providing for the Commissioner to nominate one or other of the two Councils.

77 Mr Beaumont argued that if the definition of ‘appropriate Council’ were treated as applicable also to s 167(1), it would produce an absurd result in a case, such as the present, where the complaint had been made by a Council under s 134(1), not (as s 141(1) contemplates) to or by the Commissioner. The Council is required by s 134(3) to deal with such a complaint ‘in accordance with this Part’. This involves, amongst other things, forwarding a copy of the complaint to the Commissioner (s 135(3)) and, unless the Commissioner intervenes under s 147A, conducting an investigation into it (s 148). If after this investigation the Council is ‘satisfied that there is a reasonable likelihood that the legal practitioner will be found guilty by the Tribunal of unsatisfactory professional conduct or professional misconduct’, it is obliged by s 155(2) to institute proceedings in the Tribunal.

78 Mr Beaumont contended that in a case where the practitioner was not a barrister or solicitor at the time of the alleged conduct, this train of events does not include any ‘nomination’ of a Council by the Commissioner under sub-paragraph (c) of the definition in s 126. This is because no nomination is required, either under s 126 itself (it being only a definition provision) or under any other provision. But if the definition in s 126 were applied to s 167(1), with the result that the Council was not an ‘appropriate Council’ because no nomination had occurred, the absurdity would result that, in Mr Beaumont’s words, the Council was both ‘obliged … to commence proceedings in the Tribunal (s 155(2)) and yet powerless to do so (s 167(1))’.

79 The alternative approach for which Mr Beaumont contended was that the phrase ‘the appropriate Council’ in s 167(1) should be given its natural meaning, not the meaning specified in s 126. It should mean simply the Council that had assumed conduct of the complaint and the investigation. He relied on the proposition that a meaning for a word or phrase set out in a definition section of a statute should not apply within a particular provision of the statute if, in that specific context, a ‘contrary intention’ cane be shown. As authority for this proposition, he cited the judgment of Mahoney JA in Deputy Commissioner of Taxation v Mutton (1988) 12 NSWLR 104 at 108 – 110; Pearce, D C and Geddes, R S, Statutory Interpretation in Australia, Butterworths, 5th edn, 2001, para 6.62. He submitted also that Part 10 of the Act contained other provisions – for example, s 138(3), s 148(2A), s 169(1)(b) and s 171E(1) – in which the phrase ‘the appropriate Council’ could not be governed by s 126.

80 The Solicitor was given an opportunity to respond to this line of argument by Mr Beaumont. He chose not to do so.

81 Neither Mr Beaumont nor the Solicitor referred us to any cases specifically addressing this issue of interpretation of the Act. We have not discovered any such cases through our own researches.

82 As we see it, the line of reasoning adopted by Mr Beaumont may be taken a stage further. The requirement of ‘nomination’ of a Council by the Commissioner in the circumstances set out in sub-paragraph (c) of the definition in s 126 is only meaningful, in our opinion, if the Commissioner has a genuine choice to make. This may well be the case in the circumstances covered by s 141(1). When a complaint is made to or by the Commissioner and the practitioner concerned was neither a barrister nor a solicitor at the time of the alleged conduct, the Commissioner’s decision under s 141(1) as to which of the two Councils is best placed to investigate the complaint is in no way foreclosed by previous events and may involve the exercise of careful judgment.

83 By contrast, when events such as Mr Beaumont described have occurred, there is no statutory occasion for any nomination of a Council by the Commissioner until – according to the interpretation that he sought to oppose – proceedings by ‘the appropriate Council’ are contemplated in accordance with s 167(1). At this stage, however, the Commissioner would have no choice but to nominate the Council that had initially made the complaint, had investigated it, and had declared itself ‘satisfied’ under s 155(2) that there was a reasonable likelihood of a finding of professional misconduct or unsatisfactory professional conduct. If the Commissioner were at this stage to nominate as ‘appropriate’ the other of the two Councils, the nominated Council would not fall within s 155(2) (if for no other reason that it had not ‘completed an investigation into the complaint’, as required by s 155(1)) and the Council that had investigated the complaint would, as Mr Beaumont pointed out, be left powerless to discharge its obligation under s 155(2) to institute proceedings.

84 For these reasons, we consider that the phrase ‘the appropriate Council’ in s 167(1) of the Act should not be interpreted in accordance with the definition in s 126. The reason is that a sufficient ‘contrary intention’ is apparent within the Act. The phrase should instead be taken to refer to the Council that has carried out the investigation of that complaint, has satisfied itself in terms of s 155(2) and is inconsequence obliged to institute proceedings in accordance with s 167.

85 It follows from this ruling that the absence of any formal nomination of the Council of the Law Society by the Commissioner as ‘the appropriate Council’ to institute proceedings in this matter pursuant to s 167 of the Act does not, in our judgment, provide grounds for holding that the Tribunal lacks jurisdiction to hear the proceedings, so far as they concern Ground 3.

86 In view of this conclusion, Mr Beaumont’s remaining submissions on these issues of jurisdiction and procedure may be dealt with briefly.

87 He argued that, although the Commissioner did not ‘formally’ nominate the Council of the Law Society as ‘the appropriate Council’, there was an informal nomination, since the Commissioner knew of the complaint and its investigation by the Law Society and raised no objection.

88 We are inclined to think that, if nomination of a Council by the Commissioner were necessary, it would entail more than just deciding, with full knowledge of the relevant facts, that no objection should be raised. In its natural meaning, ‘nomination’ involves rather more than this.

89 Mr Beaumont relied on the High Court’s statement in Barwick v Law Society of New South Wales (2000) 169 ALR 236 at [53] that ‘not every departure from the procedures laid down by Pt 10… will result in a lack of jurisdiction under s 167’. If formal nomination was in fact required, its absence did not mean that, in the Court’s words at [63], these procedures had been ‘substantially bypassed’. Accordingly, pursuant to principles laid down by the Court in Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 at [93], it should be held that the Act did not intend a breach of this specific requirement to invalidate subsequent proceedings.

90 We agree with this submission. It derives support, in our view, from the considerations set out at [83 – 84] above.

91 Mr Beaumont submitted also (a) that the Solicitor suffered no prejudice and was denied no procedural safeguard on account of the absence of a formal nomination, (b) that other Grounds in the information related to conduct on his part when he was a solicitor, (c) that Ground 3 was intimately connected with his practice as a solicitor and (d) that the Commissioner would undoubtedly have nominated the Law Society if any nomination had been made.

92 In our judgment, these submissions appear correct as far as they go, but only the first of them raises an issue on which the validity of the proceedings might depend. Had the alleged procedural failure caused material prejudice to the Solicitor or denied him a significant procedural safeguard, we would be obliged, in the light of authorities such as Barwick, to give serious consideration to the proposition that the Tribunal lacked jurisdiction to hear these proceedings. The remaining three submissions would not ‘save’ the proceedings if on any of the grounds examined so far they were defective.

93 We return finally to an argument made by Mr Beaumont that we have already mentioned (at [73]). This was that the Solicitor had waived any right to make these objections that we are discussing because he had not raised them until after the hearing had concluded.

94 In our judgment, if we had held that on account of the alleged irregularities of procedure the Tribunal lacked jurisdiction, this could not be cured by any such waiver on the part of the Solicitor.

95 We take a different view with regard to the Solicitor’s contention that the proceedings were defective solely because with respect to all the matters alleged against him (including Ground 3) the Information claimed that he was ‘practising as a solicitor’ at the present time. Mr Beaumont labelled this a ‘pleading point’. We agree with this characterisation, and with Mr Beaumont’s submission that the Solicitor, through failing to raise the matter in his Reply or during the hearing, waived any right of objection that he might otherwise have had.

96 For these reasons, we dismiss the objections on grounds of jurisdiction and procedure that were raised by the Solicitor to the inclusion of Ground 3 in the Information.

97 Evidence and findings. As from about 1990, Mr Anthony Smith, the person mentioned in Ground 3, was a client of the Solicitor. A veteran of World War II, Mr Smith was by 2001-2002 of advanced years and in failing health.

98 Between 1 May 2001 and 8 August 2002, the Solicitor maintained a diary noting numerous meetings with Mr Smith and tasks performed for Mr Smith. He described Mr Smith as ‘Tom’ or just ‘T’. Copies of the handwritten notes, together with a typed transcript, were in evidence before us. During some periods, there were entries for almost every day; at other times, there were only two of three entries per week.

99 A significant proportion of the activities that the Solicitor recorded were such as might fall within his retainer as a solicitor: for example, preparing a will, negotiating about pensions with the Department of Veterans’ Affairs, making arrangements for carers and attending to the transfer and the management of a farm property owned by Mr Smith.

100 Numerous other entries recorded non-legal matters such as conversations with Mr Smith about his wartime experiences, sorting through his military service medals and papers, the Solicitor’s impressions of his state of health, discussions of this topic with third parties (for example, with Dr Azoury, who was Mr Smith’s doctor) and the Solicitor’s performance of personal tasks for Mr Smith, such as buying groceries and taking him on visits to Dr Azoury, a social worker or a hospital. There were also diary entries indicating that the Solicitor had stayed overnight at Mr Smith’s house.

101 At the end of each entry until 20 March 2002, being the day before the Solicitor’s practising certificate was cancelled, the Solicitor noted in minutes the length of time spent by him on the particular matter or matters recorded. Thereafter, the time spent was recorded sometimes, but not invariably.

102 In a sworn statement dated 19 March 2003, Ms Traie Olsen stated that she was engaged in ‘work experience’ at Hansen & Co between January 2001 and late March 2002. She was present at a number of meetings between the Solicitor and Mr Smith. She maintained that she was almost always present when the Solicitor made his notes of these meetings and that the notes were accurate. Ms Olsen was available to give evidence at the hearing, but was not called by either party.

103 On 29 May 2001, Mr Smith gave to the Solicitor an enduring power of attorney, which the Solicitor had prepared. He signed it in the presence of a Chamber Magistrate at Queanbeyan Court House, who explained its contents to him. The power of attorney was registered.

104 The diary entry for 21 June 2001 included the following:-

sic

105 On 22 June 2001, in a letter on the letterhead of Hansen & Co to Mr Smith, the Solicitor wrote that ‘our Mr Hansen has no intention of charging you any legal costs and disbursements for acting as your attorney’. The letter added that reimbursement would be required of the registration fees for the power of attorney, and also if ‘our Mr Hansen’ had to purchase ‘personal items’ for Mr Smith’s benefit. In the concluding paragraph, the letter invited Mr Smith to contact Mr Hansen if at any time he had concerns about whether Mr Hansen was charging him ‘legal costs’ for acting as his attorney, then went on to ‘specifically state that our Mr Hansen does not intend to charge you for those services’.

106 The diary entry for 22 June 2001 recorded a visit by the Solicitor and Ms Olsen to Mr Smith in hospital. It included this passage:-

sic

107 The diary entries, which are consecutive, for 24 and 30 July 2001 included the following passages:-

30/7 – attend on Tom with Traie – explained letter: his clear wishes re: extra expenses as P of Att – no longer relevant my letter of 22/6/01. T. O.K. with that just scared of being sent away – Crys (sic).

108 During the latter meeting (presumably), Mr Smith signed a typed declaration, dated 30 July 2001 and addressed to the Guardianship Board. It was expressed to be made ‘in the event that’ any person or person proposed that someone be appointed as his guardian. Mr Smith stated that he did not wish this to happen, as ‘I have an attorney who looks after my interest both legally, morally and financially’. He indicated that this was the Solicitor, who had been looking after his affairs under the power of attorney. He stated further that if anyone were to be appointed his guardian he would wish it to be the Solicitor, ‘as I have complete faith in him looking after my affairs as I have known him for a period in excess of ten (10) years’. He stated that two other individuals, Michael and Sue De Vere (named elsewhere in the evidence as Deveau), should in the alternative act as guardians if the Solicitor could not do so for any reason. The Solicitor signed this declaration as a witness.

109 A further typed declaration, also dated 30 July 2001, was signed by Mr Smith and witnessed by the Solicitor. It was addressed to ‘Malcolm Hansen – Attorney for Anthony Clarence Smith’ and headed ‘Instructions and Directions’. It read as follows:-

I note your promise and undertaking that you will not under any circumstance unless of an extremly (sic) urgent and unavoidable nature and only on the basis of at least two medical reports be they psychiatric or otherwise make arrangements for me to be placed in a nursing home or a retirement home or a mental hospital.

You are directed and authorised to do whatever is legally within your means to avoid the above situation arising.

If necessary, even if it costs a substantial amount of money to arrange for alternative care for me it is my deepest wish and desire that I not be placed within a nursing home, retirement village/home or mental institution.

I note that you have promised me that you will if at all within your powers not to allow me (sic) to be placed in one of those institutions.

110 A number of diary entries during the period from May to June 2001 record opinions held by the Solicitor, or by other friends of Mr Smith, that his mental capacities might be weakening. The earliest of these, on 5 May 2001, included the following passage:-

5/5… Sue [de Vere] concerned about him not able to cope any more – to nursing home – behaviour strange – re Jap soldiers – but most of time O.K. – I will stay night soon – make own assessment. Convinced if he not all there what about Will & P of A – to monitor T. very carefully…

111 Later entries in June and July 2001 indicated that questions were being raised by Ms de Vere about Mr Smith’s ‘mental competence’ (10 June); that she was concerned about guns being present on his property as he ‘wants to kill arabs, thinks thieves in house’ (14 June); that the Solicitor advised her about ‘scheduling T to hospital’ (he noted also ‘mad house – no way’) (14 June); that he advised Mr Smith as to his legal position (here he noted ‘not play up or may be scheduled? Nut house’); that Mr and Ms de Vere were ‘concerned about T re: wandering around, not sensible -?’(26 June); that he took Mr Smith to his doctor, Dr Azoury, ‘re: Tom in need for nursing home?’, noting however that ‘Dr happy with staying at home’, but would schedule Mr Smith ‘if absolutely necessary’ (10 July); and that Ms de Vere reported to him a telephone call from Mr Smith in which he spoke of ‘dreaming of people trying to burn down place’ (20 July).

112 In two further entries during the next three months, the Solicitor noted telephone calls from Ms de Vere. She expressed ‘concerns about Tom wandering off and seeing strange people, lesbians, thiefs (sic) and Jap soldiers’ (14 August) and that Mr Smith was ‘still imaging (sic) things’ (5 September). In a further entry dated 5 September 2001, the Solicitor recorded attending on Mr Smith ‘re: medical condition – seeing strangers, Jap soldiers, bugs?’, but added ‘not too concerned, eating well, drinking plenty of milk’. Entries dated 24 September and 9 October recorded discussions with Dr Azoury regarding Mr Smith’s mental state, in which Dr Azoury considered that he was still ‘O.K.’ to stay at home.

113 Further entries in which the matter of Mr Smith’s mental condition was raised somewhat inconclusively were made on 10 December 2001 and on 17 and 22 January, 6, 7, 21 and 25 February and 12 and 13 March 2002. The diary also records discussions with Dr Azoury on 6 and 21 February, in which, it would seem, Dr Azoury again did not recommend that Mr Smith be taken away from his home. In her statement, Ms Olsen indicated that, according to her understanding (apparently deriving from things said to her by the Solicitor), Dr Azoury did not want this to occur until it was ‘absolutely necessary’.

114 In the diary entries for 22 and 25 March 2002, the Solicitor recorded having told Mr Smith and Ms de Vere that he could no longer ‘do legal work’, that the power of attorney still remained and that he would now charge ‘only fees – my actual expenses, food bills, petrol etc’. These entries were clearly prompted by the cancellation of his practising certificate on 21 March.

115 The diary entry for 8 May 2002 reads as follows:-

S’O’N [stayed overnight] at T’s. he o.k. talk about costs and disbursements owing – he o.k. Traie cooking meals for him – leg of lamb tell T. will/maybe going o’seas to England – taking on the poms – tell him reasons why.

116 This episode is corroborated in Ms Olsen’s statement of 19 March 2003, at paragraph 29:-

… I clearly recollect Mr Smith was fully aware that he was being charged costs for Mr Hansen to act as his solicitor and Power of Attorney. Indeed, Mr Smith was fully aware when I attended on him at times and dates reflected in the diary about being charged for Mr Hansen’s services because discussions were had about the trip of Mr Hansen to England and how Mr Smith wished him to “get stuck into the Poms”. I can clearly remember Mr Hansen saying to Mr Smith at the time that “I wouldn’t be in a position to go but for the fees” to which Mr Smith [said] something about lotto or lottery tickets.

117 The diary entries indicate that on or about 11 May 2002 Mr Smith was admitted to hospital and that on or about 24 May he was transferred to an institution called Peppertree Lodge.

118 In the following four passages from the Solicitor’s diary, recording visits by him to Mr Smith in Peppertree Lodge, the issue of payments to him on account of costs and disbursements (‘C & Ds’) was mentioned:-

29/5… T. o.k., estimate of about $10k for C & Ds – no problem with same…

5/6… saw T. with Traie … he Q-?? re: tattslotto, lotto lottery – maybe make fortune – to paying my C & D’s of estimate $10k outstanding. O.K. for me to withdraw $6340 from a/c in UK. Going soon – about 8 weeks. To show T – itemized a/c of C & Ds shortly…

11/6 – See T with Traie and provide full C & Ds for H & Co and staying overnight – said about $3,200 but agreed to payment of $2.5k to complete C & Ds although may be extra incidentals such as food, groceries, clothing, petrol etc. T. no problem… T. no problem with C & Ds. Said very little else, just what pops up from time to time…

119 The diary records that the Solicitor visited Mr Smith at Peppertree Lodge on several further occasions, the last of which was on 8 August 2002. The entry for that day reads as follows:-

Attend very briefly on Lodge – no change, not sure if he will recognise me – I decide to go away. Not to see anymore – god love him.

120 A Report by Ms Sayer to the Law Society, dated 8 October 2002 and taking the form of a letter to Mr Collins, indicated that the Protective Commissioner became Mr Smith’s Guardian in August 2002, bringing to an end the operation of the power of attorney held by the Solicitor. Ms Sayer then stated that the Commissioner had informed her of three withdrawals of funds, totalling $13,528.62, that the Solicitor had made, pursuant to the power of attorney, from Mr Smith’s account at a bank in Queanbeyan.

121 The details of these withdrawals were as follows:-

6.6.02 Cheque payable to Euro Villas $6,340.00

11.6.02 Cash $2,500.00

122 Ms Sayer stated on page 1 of her Report that relatives of Mr Smith had made the application for Mr Smith’s affairs to be administered by the Commissioner because ‘Mr Smith, an elderly man for some time had been suffering from dementia and had periods of hospitalisation’.

123 Her Report concluded as follows on the next page:-

It seems to me that there would be a question as to the capacity of Mr Smith to give any instructions or directions in May/June, 2002 to Mr Hansen, or to give any approval to the withdrawal of the amounts detailed herein from his bank account. In view of the physical and mental condition of Mr Smith, it appears that Mr Hansen may be in breach of his fiduciary duty to Mr Smith in withdrawing the moneys from Mr Smith’s bank account for his own personal benefit.

124 In the course of a lengthy letter, dated 11 November 2002, to the Law Society, the Solicitor stated at paragraph 49 that, except for an amount of $1,569.15 with which we deal below, these three withdrawals of funds were justifiable as reimbursement to him for legal costs and disbursements between 1 May 2001 and 20 March 2002. (The latter date, it will be recalled, is the day before his practising certificate was cancelled.) He enclosed an itemised bill of costs and disbursements (‘the bill of costs’) for a total sum of $12,652.00.

125 In cross-examination, the Solicitor admitted that on 11 June 2002 he only ‘showed’ the bill of costs to Mr Smith. He never at any time gave a copy of it to Mr Smith, nor did he ever enter into a costs agreement with him.

126 The bill of costs was dated 11 June 2002. Its heading was as follows:-

BILL OF COSTS AND DISBURSEMENTS FOR PERIOD:- 01 May, 2001 up to and including 20/3/02 at rate of $120.00 per hour (normally $240.00 per hour) for professional costs.

127 In the next 9.5 pages, the bill of costs listed particulars of ‘attendances’, with dates and times spent. With one exception (an entry of 29 October 2001, referring to attendances with Mr Smith on his doctor, his accountant and his bank), these items all matched entries in the Solicitor’s diary. They had the same date, they referred to some at least of the matters noted in the diary entry for that date and they recorded the same amount of time spent.

128 The bill of costs therefore purported to charge costs to Mr Smith at $120 per hour not only for services rendered as a solicitor or as the holder of a power of attorney, but also for other personal services involving neither of these capacities.

129 There were, however, no items in the bill of costs matching the diary entries of 22 June or 30 July 2001 (see [106 – 107] above), or relating to the preparation of the documents bearing one or other of those dates (see [105, 108 – 109] above).

130 At the end of this list of ‘attendances’, the bill of costs recorded a figure of 76 hours and 40 minutes as the ‘total time’ devoted by the Solicitor to them. It calculated the ‘professional fees’ for them, at the stipulated rate of $120 per hour, as $9,120.00.

131 The next paragraph in the bill of costs was as follows:-

The above time costing does not take into account time spent taking you to and from various appointments be they medical, accounting banking or otherwise. Further, it does not take into account extra telephone calls from Sue Deveau estimated at this stage to be in excess of some 75 telephone calls to my office and home and mobile phone which, for time costing purposes, is estimated at some ten (10) hours extra costs incurred. This extra amount amounting to some $1,200.00 is waived.

132 The bill then itemised various disbursements totalling $557.00, covering STD and mobile phone calls, registration fees, faxes and stationery and the purchase of new locks for Mr Smith’s home.

133 The final item charged in the bill of costs was $2,975.00, representing an amount of $35.00 per day, or $3.50 per hour, (expressed to be ‘instead of normal $10.00 per hour recognized carer rate’), for each of 85 itemised occasions between 1 May 2001 and 16 May 2002 on which the Solicitor had stayed overnight at Mr Smith’s case. The dates of these corresponded with diary entries indicating an overnight stay.

134 The bill of costs then stated that $12,652.00 was the ‘total amount owing’ and that, as at 11 June 2002, the date of the bill, the ‘amount paid to date’ was $11,959.47. It is not clear how this amount was calculated, since the total of the two amounts withdrawn by the Solicitor before that date from Mr Smith’s bank account was only $11,028.62. The bill went on to indicate that the ‘balance outstanding’, being the sum of $692.53, was ‘written off’ and that ‘therefore’ the ‘balance outstanding’ (this phrase was used a second time) was ‘NIL as of 11.6.02’. It concluded by claiming, however, that between 21 March and 11 June 2002 the Solicitor had devoted a further 75 hours (estimated) to various tasks for Mr Smith – notably involving attendances on doctors, hospitals and Peppertree Lodge – but that the cost of these was ‘to be waived’.

135 This outline of the alleged state of affairs between the Solicitor and Mr Smith seemed not to take account of the Solicitor’s third and final withdrawal of money from Mr Smith’s bank account. The date of this withdrawal was the same as that given on the bill of costs – 11 June 2002. The amount withdrawn was, as we have said, $2,500. In consequence, the total amount withdrawn by him was greater, to the tune of $1,569.15, than the amount charged in the bill of costs.

136 In seeking to justify this excess, the Solicitor maintained in paragraph 49 of his letter of 11 November 2002 to the Law Society that an amount of $1,569.15 had been owed to him for

… other daily expenses which I paid for myself on behalf of Mr Smith including substantial groceries, medications, petrol…, colour television, meals on wheels, telephone bills etc.

137 In this letter, the Solicitor stated also, at paragraph 46, that he agreed with the contents of the first page of Ms Sayer’s Report, except that he claimed to have also requested that the Protective Commissioner should take over Mr Smith’s affairs.

138 Mr Beaumont argued that the Solicitor, in so stating, had expressed agreement with Ms Sayer’s statement that by the time of the withdrawals from Mr Smith’s bank account, he had been suffering from dementia ‘for some time’. The Solicitor denied this, maintaining that Mr Smith only began to suffer from dementia in May or June 2002 and had previously been entirely capable of understanding the nature of his dealings with the Solicitor. The Solicitor further contended that no appropriate medical evidence was provided to Ms Sayer, to the Law Society or indeed to this Tribunal that would support a finding of dementia during any period before May 2002.

139 In our opinion, this brief statement of the Solicitor in his letter of 11 November 2002 to the Law Society should not be treated as including an admission on this important matter.

140 In essence, the allegation made by the Law Society against the Solicitor in Ground 3, as particularised, is that, through use of the power of attorney given to him by Mr Smith, he obtained for his own use and benefit three payments totalling $13,528.62 from Mr Smith’s bank account, which were made other than for the benefit of Mr Smith and at a time when Mr Smith was incapable of looking after his affairs by virtue of his dementia.

141 In essence, the justification put forward by the Solicitor for withdrawing these amounts was that he had Mr Smith’s authorisation. In so claiming, he relied on the statement that Mr Smith signed on 30 July 2001 and the evidence from subsequent diary entries up to and including 11 June 2002 (the date of the final payment) that Mr Smith knew and approved of his obtaining payment for all services rendered by him.

142 It was not disputed by the Solicitor, however, that a significant proportion of the items listed in the bill of costs as ‘professional costs’ could not in any way be described as legal professional costs, nor even as costs associated with the holding of a power of attorney. The ‘attendances’ to which they related included such activities as purchasing groceries for Mr Smith, taking him to the doctor and discussing his wartime experiences with him. Fees for the performance of such services might have been chargeable by a carer, an appropriate rate for whose services was in fact set out in the bill of costs as $10 per hour.

143 Accordingly, to the extent, at the very least, that the payments from the bank account remunerated the Solicitor for these services at the ‘professional services’ rate of $120 per hour, they were for exorbitant amounts and were clearly ‘other than for the benefit of Mr Smith’. Even if, as the Solicitor claimed, the statement that Mr Smith signed on 30 July 2001 authorised the Solicitor to charge him for such services as part of a mandate to ‘arrange for alternative care’, it did not authorise the inclusion of them within a bill of costs for legal professional services charged at a rate appropriate for such services.

144 We reject also the Solicitor’s argument that authorisation to him to charge in this way for these services arose out of his subsequent conversations with Mr Smith. Even if, as he alleged, he reminded Mr Smith from time to time that he would be charging for costs and disbursements, it was not until May-June 2002 that he gave any indication as to what the amount charged might be. The diary entries during this period (see [118] above) disclose that he mentioned amounts to Mr Smith corresponding to the amounts that he actually withdrew. But on his own evidence, he did no more than to indicate these amounts and, on 11 June, the date of the final withdrawal, to ‘show’ the bill of costs to Mr Smith. He then relied on the alleged absence of any objection by Mr Smith. Even with a client of full mental capacity, these steps fall far short of obtaining authorisation for the withdrawal of payments which, for reasons that we have just given, we consider to have lacked authorisation on any other ground and to have been exorbitant.

145 Furthermore, we find that, as alleged by the Law Society, Mr Smith was by May-June 2002 a client not possessing full mental capacity. The Solicitor contended that we could not make such a finding because the Law Society tendered no medical report dealing with this issue. Mr Beaumont’s principal submission in response was that since, according to the Solicitor’s own evidence and that of Ms Olsen, Dr Azoury endeavoured for as long as possible, with the Solicitor’s strong support, to respect Mr Smith’s repeated wish not to be admitted to an institution, it must be inferred that dementia, or some such condition, had overtaken him by late May 2002, when he was admitted to Peppertree Lodge. Mr Beaumont referred also to statements by the Solicitor, in cross-examination, that by late May 2002 he had ‘serious concerns’ about Mr Smith’s ‘dementia’.

146 We make no finding regarding Mr Smith’s mental capacity at any earlier time. Although this matter was the subject of a deal of evidence and argument, it was not specifically raised in the case brought by the Law Society and need not be determined.

147 There were, as we have said, some items of what might be called ‘carers’ costs’ that were charged in the bill of costs at the rate of $3.50 per hour. The total amount charged was $2,975. On the reasoning that we have adopted, these were, we think, justifiable under the terms of the statement of 30 July 2001. The same applies to the payments on account of disbursements, there being no evidence that these were unwarranted.

148 For the foregoing reasons, the Law Society has however established to our comfortable satisfaction that, in terms of Ground 3 as particularised, (a) the Solicitor obtained for his own use and benefit payments by way of remuneration for personal services from Mr Smith’s bank account, (b) these payments were made other than for the benefit of Mr Smith and (c) they were made at a time when Mr Smith was incapable of looking after his affairs by virtue of his dementia.

149 We turn now to the charges that the Solicitor included in the bill of costs for services that arose out his holding of a power of attorney. We do not accept his claim that the statement of 30 July 2001 authorised him to seek remuneration for these, let alone at a rate appropriate for legal professional costs. We agree instead with Mr Beaumont’s submission that the words ‘even if it costs a substantial amount of money to arrange for alternative care for me’ refer only to the costs that would be chargeable by carers and by others directly associated with the provision of care.

150 Two further considerations urged by Mr Beaumont support this conclusion. One is that in his letter of 22 June 2001 to Mr Smith, the Solicitor stated more than once that his firm had ‘no intention of charging you any legal costs and disbursements for acting as your attorney’. Such an explicit assurance could not be extinguished by a single phrase in the statement of 30 July 2001 referring not to the exercise of the power of attorney but to the making of arrangements for alternative care. The other consideration is that in interpreting any agreement or understanding regarding costs between a solicitor and a client – particularly a lay client of advanced years, such as Mr Smith – any ambiguity should not be resolved in the solicitor’s favour.

151 We reject also the Solicitor’s claim that in the course of subsequent conversations with Mr Smith, up to and including 11 June 2002, Mr Smith authorised payment of costs connected with the power of attorney. We apply here the reasoning set out earlier at [144 – 145].

152 For these reasons, our finding with respect to the charges listed in the bill of costs for services associated with the power of attorney is the same as our finding with respect to the charges for personal services. The Law Society has established to our comfortable satisfaction that, in terms of Ground 3 as particularised, (a) the Solicitor obtained for his own use and benefit payments from Mr Smith’s bank account by way of remuneration for services associated with the power of attorney granted by Mr Smith, (b) these payments were made other than for the benefit of Mr Smith and (c) they were made at a time when Mr Smith was incapable of looking after his affairs by virtue of his dementia.

153 There remains for consideration the items in the bill of costs, such as those relating to the preparation of the power of attorney and of Mr Smith’s will, that clearly fell within the Solicitor’s retainer as a solicitor. No such item related to the period after the cancellation of his practising certificate on 21 March 2002. In the absence of any claim by the Law Society that these were unauthorised or were charged at excessive rates, we cannot hold that payment of them was ‘other than for the benefit of Mr Smith’.

154 The issue of professional misconduct. The question now arising is whether the findings against the Solicitor that we have just set out (at [148] and [152]) warrant the further finding that he has been guilty of professional misconduct.

155 In our judgment, two aspects of these findings are of primary significance. The first is that the Solicitor’s personal interest in obtaining remuneration for past services rendered was in conflict with his duty to exercise his power of attorney from Mr Smith solely in the interests of Mr Smith. The second is that he included in the bill of costs, in the guise of ‘professional costs’ and charged at an exorbitant rate which he sought to justify by reference to the rates applicable to legal professional costs, numerous items charged for services which in no way answered the description of legal professional services.

156 With regard to the first of these, it is well established that solicitors stand in a fiduciary relationship to their clients and that in any situation where the personal interests of a solicitor come into conflict with his or her duty to a client, the latter must be treated as paramount. Discharge of the duty to the client in such a situation may entail recommending that the client should take independent legal advice. If the client is clearly inexperienced in business matters, or is obviously likely for any other reason to place particular trust in the honesty and integrity of the solicitor, it is all the more important for the solicitor to treat the duty to the client as paramount.

157 In two leading authorities, Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 and Law Society of New South Wales v Moulton [1981] 2 NSWLR 736, the Court of Appeal has made it clear that breaches of these fiduciary duties may constitute professional misconduct, irrespective of whether the relevant client or clients actually suffered loss in consequence of the breaches. Both of these cases deal with a solicitor who invested funds entrusted to him by clients in ventures in which he had a significant personal stake, and who failed to provide the clients with sufficient information or advice to enable them to make an independent decision as to whether the investments were in their best interests. In both cases, the Court held that these breaches of duty constituted professional misconduct and ordered that the solicitor be struck off.

158 It is sufficient to quote the following passages from the judgments in these two cases:-

Harvey

Where there is any conflict between the interest of the client and that of the solicitor, the duty of the solicitor is to act in perfect good faith and to make full disclosure of his interest… Where a solicitor discovers that continuing to act for his client will, or may, bring the interests of client and his own interests into conflict, it will be a rare case where he should not, at least, advise his client to take independent legal advice. (Ibid at 170-171).

… it is abundantly clear that clients generally were not given any real understanding of the investment proposed, or already made, of their money or the risks involved or the real interest of the defendant. It is clear that very many of his clients looked to the defendant and trusted him as a solicitor, and a man connected with church activities, and, in an uninquiring fashion, looked to him and depended upon him to deal fairly with whim and with integrity and skill to apply their moneys in a way which would be in their best interests. Such reliance was complete in the very great number of cases where clients were quite inexperienced in matters of business or investment…. Many clients with whom he dealt were connected with the church; many were widows; some were widows of clergymen; many were elderly including elderly spinsters who relied upon him solely for advice (Ibid at 163).

In cases such as the present one, it is essential to remember, indeed to emphasize, that a solicitor stands in a fiduciary relationship to his clients. If he is to have business dealings with them on his own account… the requirements of the law are rigorous. The need for that rigour is obvious. Commonly to a great extent, always to some extent, the solicitor is in a position of special influence in respect of his client (Moulton at 739, per Hope JA).

… in considering whether a solicitor has been guilty of professional misconduct in a dealing with a client, and in considering the gravity of that misconduct, the fact that the client, in the ultimate event, suffers no loss is of little, if any relevance (Ibid at 740).

159 We turn now to what we have described as the second matter of primary significance in our findings. This is the Solicitor’s conduct in charging Mr Smith for personal services, and for services associated with the power of attorney, in the guise of ‘professional services’ and at an exorbitant rate, which he purported to justify by reference to the rates applicable to legal professional services.

160 Although the analogy is partial only, we consider that this conduct falls within the ambit of decisions to the effect that ‘gross overcharging’ of professional costs by a legal practitioner may constitute professional misconduct, particularly when the client concerned is ‘vulnerable’, in the sense of not being in a position to know whether the charges levied are fair and reasonable.

161 The leading authority for this proposition is Veghelyi v. The Law Society of New South Wales, Unreported, Court of Appeal, NSW, 6 October 1995 (BC950549). At p 8, Mahoney JA said:-

It is, in my opinion, now established, that gross overcharging as such may constitute professional misconduct and that, on an application such as this, it is not necessary to prove in addition that the lawyer was guilty of fraud or the like.

162 His Honour further stated, at 8 – 9, that gross overcharging was likely to constitute professional misconduct where the client or clients concerned could be described as ‘vulnerable’:-

Solicitors are, on the other hand, informed, or in a position to inform themselves, of what work may be required and what are fair and reasonable charges. They are, in that sense, in a position of advantage and trust is placed in them. Clients are entitled to be protected against the abuse of that advantage. It is, I am inclined to think, the fact that an advantage has been misused which may, in a particular case, warrant what the solicitor does being categorised as professional misconduct.

163 These propositions were applied by this Tribunal in Council of the New South Wales Bar Association v Amor-Smith [2003] NSWADT 239. The Tribunal found in that case, at [85 – 86], that the clients in question were also ‘vulnerable’ in a further, more conventional sense. This was that in the particular circumstances of the litigation in which they had instructed the practitioner concerned, they were in a very weak position to resist his demands for immediate payment of two accounts in which, in the Tribunal’s opinion, he had grossly overcharged. The Tribunal found that, having regard particularly to this aspect of the case, he had been guilty of professional misconduct.

164 In our judgment, Mr Smith could properly be called a ‘vulnerable’ client, in both the senses in which this term was used in these two cases. He trusted the Solicitor, he was susceptible to the Solicitor’s influence, he was not in a position to know what charges were fair and reasonable and, in view of his state of health and the Solicitor’s possession of a power of attorney, he could not easily prevent the payment being made from the funds in his bank account.

165 The analogy between the present case and the two authorities just cited is partial only, because rather than overcharging grossly for legal professional services, the Solicitor here levied what he called charges for legal professional services, calculated at an hourly rate appropriate to such services, when in fact the services that he had rendered – particularly those that we have called ‘personal services’ – did not fall within this description. But we consider that the principles stated in these authorities provide useful guidance in the present case.

166 Further guidance may be drawn from the frequently cited definition of professional misconduct by solicitors put forward by Viscount Maugham in Myers v Elman [1940] AC 282 at 288-289: ‘conduct which would reasonably be regarded as disgraceful or dishonourable by solicitors of good repute and competency’. The continuing relevance of this formulation was affirmed by Spigelman CJ in the Court of Appeal in New South Wales Bar Association v Cummins [2001] NSWCA 284 at [39]. We have little doubt that present-day solicitors of ‘good repute and competency’, if told of the Solicitor’s conduct in obtaining payment of the charges listed in the bill of costs in the manner that he adopted, would regard it as ‘disgraceful or dishonourable’.

167 Finally, we would draw attention to the following passage near the end of the cross-examination of the Solicitor by Mr Beaumont. It suggests that even by this time he had not understood the implications of his decision to remunerate himself by simply drawing money from Mr Smith’s account pursuant to the power of attorney:-

A: No, I disagree, sir.

Q: So you see no difficulty, in other words, with what you’ve done, in regards to Mr Smith?

A: That’s correct, yes.

168 In considering this interchange, it is important to remember that in his evidence the Solicitor claimed to have obtained Mr Smith’s written authorisation for, and verbal consent to, the payment of his costs and to have shown the bill of costs to Mr Smith. He denied having engaged in the conduct set out in Ground 3. But on his own showing, he never gave Mr Smith an opportunity to study carefully the bill of costs – in which, as we have said, remuneration for a number of personal services was charged at professional rates – and he never checked with Mr Smith to ensure that Mr Smith intended, in the statement of 30 July 2001, to authorise him to charge at all, let alone at professional rates, for costs associated with the power of attorney.

169 In these circumstances, his failure to recognise that the propriety of the conduct to which he himself admitted was, at the very least, open to doubt provides a further reason for concluding that the conduct which we have found proven under Ground 3 was professional misconduct.

170 Authority for this can be found in Law Society of New South Wales v Moulton [1981] 2 NSWLR 736. The Court of Appeal held here that where a solicitor acted in a manner that displayed ignorance of basic principles governing the duties of skill and good faith owed to a client, this was a factor suggesting that the solicitor’s conduct amounted to professional misconduct and indeed that the solicitor was not fit to remain on the roll. In addition to statements by Hutley JA at 751, 756-757 and 759, the following passages in the judgment of Hope JA at 740-741 illustrate this:-

A failure to understand and appreciate the care that must be taken by a solicitor who wants to make use of his trusting client’s money for his own purposes would generally show an unfitness to remain on the roll. In so far as Mr Moulton’s ignorance should be treated as a lack of knowledge rather than a lack of standards, it was not ignorance of some esoteric or difficult corner of the law; it was ignorance of general principles applicable to common activities of a solicitor…

171 For these reasons, the Law Society has proved to our comfortable satisfaction that the matters alleged in Ground 3 are true and that they amount to professional misconduct.

Ground 4: Payment of trust moneys into office account in breach of court order

172 Ground 4 of the Information against the Solicitor was in the following terms:-

He wilfully breached Order 3 of the Orders of the Supreme Court dated 15 June 2001, in proceedings brought by the Law Society of New South Wales against the Solicitor, that all transactions involving receipt or disposal of trust moneys of clients be effected and transacted through the trust account of which Jean Sayer had been appointed Receiver.

173 The facts relied upon by the Law Society can be shortly stated. As stated in Ground 4, the order of the Supreme Court, dated 15 June 2001, appointing Ms Sayer as Receiver of the trust account of Hansen & Co contained a requirement that all transactions involving receipt or disposal of trust moneys of clients be effected through the trust account.

174 Early in 2002, the Solicitor acted for Mr Neil Dodd in the purchase of a property and in applying for a First Homeowner’s Grant. The purchase was settled on 1 March 2002. On two occasions, the application for the grant was rejected.

175 On 20 March, Mr Dodd agreed during a telephone call to a suggestion by the Solicitor that when a third application was sent to the Office of State Revenue, it should include a request for payment of the anticipated grant of $7,000 into the office account of Hansen & Co, not the trust account. Mr Dodd also agreed that the Solicitor would deduct the costs and disbursements on the purchase from the grant, make two mortgage payments of $1,000 each on Mr Dodd’s behalf and pay the balance remaining to Mr Dodd. The purpose was to ensure that the mortgage payments were made when they were due.

176 By a letter to Mr Dodd written and posted on the same day, 20 March 2002, the Solicitor confirmed this arrangement. It stated that the costs and disbursements would be $3,253.94 and that after the mortgage payments had been made the balance to be remitted to Mr Dodd would be $1,746.06.

177 On 21 March, Mr Dodd signed a newly completed application form in which the Solicitor himself entered the details of the firm’s office account. On the same day the Solicitor sent the form to the Office of State Revenue with a covering letter, typed by Ms Traie Olsen, which included the following paragraph:-

Please note that we have been instructed by our client Mr Dodd for the sum of $7,000.00 to be placed into our Hansen & Co. Solicitors account and for that purpose we would be pleased if that amount could be deposited into that account ASAP.

178 On the same day, 21 March 2002, the Law Society cancelled the Solicitor’s practising certificate.

179 On 28 March 2002, the Office of State Revenue deposited $7,000 into the office account of Hansen & Co, representing the First Homeowners Grant for which Mr Dodd had applied. On that date, the account was overdrawn to the extent of $1,581.40. The deposit created a positive balance of $5,418.60.

180 Mr Beaumont submitted that the Solicitor ‘directly and clearly’ breached the Supreme Court order on 21 March 2002, by entering the office account details in the grant application form and sending it to the Office of State Revenue with an explicit request for payment of the grant into that account.

181 The Solicitor claimed that the jurisdictional and procedural objections that he raised in relation to Ground 3 (see [65 – 71] above) were equally applicable to this ground, because the payment into the office account occurred after the cancellation of his practising certificate. We accept Mr Beaumont’s submission, however, that the relevant conduct of the Solicitor occurred on 21 March 2002, before this cancellation took effect. Furthermore, for reasons already explained, we regard these objections as ill-conceived.

182 The Solicitor raised two other matters by way of defence. One was that Mr Dodd expressly authorised him, for a purpose that would benefit Mr Dodd, to ask for the grant to be deposited into the office account, and that this authorisation would, in his honest belief, provide valid grounds for departing from the terms of the Supreme Court order. We accept Mr Beaumont’s argument in response, however, that this provided no excuse for his deliberate breach of the order, of whose terms he was well aware.

183 The other matter put to us by the Solicitor was that at the time when the deposit occurred, he was no longer in charge of the affairs of the firm or specifically of its bank accounts. This contention is, however, answered by our acceptance of Mr Beaumont’s argument that the breach was constituted by the Solicitor’s direction to the Office of State Revenue on 21 March 2002, when he was still in charge of the firm.

184 For these reasons, we find Ground 4 to have been established to our comfortable satisfaction.

185 We also accept Mr Beaumont’s submission that it is professional misconduct for a solicitor to commit an intentional breach of a Supreme Court order that has been made, in conjunction with the appointment of a receiver, in order to ensure that all funds due to be paid into the solicitor’s trust account actually reach this destination. Even if the Solicitor honestly believed that instructions from his client provided a complete justification for his breach of the order of 15 June 2001, this would not disturb our finding of misconduct.

The orders to be made

186 The submissions put to us. Mr Beaumont submitted that if we accepted the Solicitor’s admissions in relation to Grounds 1 and 2 and found Grounds 3 and 4 to have been proved, we would necessarily conclude that he was not a fit and proper person to remain on the roll of legal practitioners. In the light of authorities such as New South Wales Bar Association v Evatt (1968) 117 CLR 177, we would then be bound to make an order under s 171C(1)(a) of the Act that he should be struck off the roll. Such an order was required, not by way of punishment, but to protect the public.

187 Mr Beaumont summed up this part of the Law Society’s case against the Solicitor as follows:-

In his wanton disregard for the pecuniary interests of his clients (Grounds 1 and 2), in his unconscionable exploitation of his position of advantage over, and relationship of trust and confidence with, Mr Smith (Ground 3), and in his clear breach of the Court order of which he was aware, and for which he had no reasonable defence (Ground 4), Mr Hansen has demonstrated that he lacks the necessary qualities of trustworthiness, diligence and care associated with, and possesses directly contrary qualities wholly incompatible with, a person fit to be a legal practitioner.

188 The Solicitor, in his principal written submission filed after the hearing, conceded (in para 328) that if we found that Ground 3 was established, we would ‘have no alternative’ but to strike him off. He maintained his denial, however, that he had acted as alleged in Ground 3.

189 The Solicitor also referred to his periods of full-time and part-time service with the Royal Australian Navy. The full-time periods were between 1986 and 1990 and, as indicated above, between October 1999 and November 2000. Between 1990 and October 1999, and again from December 2000 to a date in 2002, he served part-time. While acknowledging that this service stood greatly to the Solicitor’s credit, Mr Beaumont contended that it did not render him fit to practise as a solicitor, nor did it excuse his defaults.

190 The Solicitor tendered two favourable reports on his service in the Navy, prepared by senior officers. Mr Beaumont submitted that they were of little weight, as they were little more than performance reviews and neither of the officers had been made aware of the allegations and evidence put forward in these proceedings.

191 At many points in his correspondence with the Law Society prior to these proceedings and in his submissions to the Tribunal after the hearing, the Solicitor declared that he realised that, as ‘captain of the ship’, he must accept responsibility for what occurred in his firm, and specifically for the fraud committed by Mr Jackson. He also stated in his submissions that he regretted his failings in this regard, that he was sorry for the loss and hurt that had been inflicted on his clients and that he had displayed ‘real contrition’, both at the hearing and in the submissions.

192 ‘Leaving aside’ Ground 3, the Solicitor submitted, a period of suspension from practice would be a sufficient sanction to protect the public, as he had learned his lesson.

193 Our conclusions. In our opinion, we have no alternative but to order under s 171C(1)(a) of the Act that the Solicitor be struck off the roll of legal practitioners.

194 Such a severe sanction might not have been required under Grounds 1, 2 and 4 standing alone, particularly if the Solicitor had been prepared to acknowledge from the outset the deficiencies in his conduct to which those Grounds related. He did not assist his own cause, however, by putting forward inconsistent accounts of his attendance at the firm during the period of Mr Jackson’s dishonesty, or by claiming even at the hearing that his intentional breach of the Supreme Court order of 15 June 2001 was excusable because of his client’s consent. Furthermore, although he ultimately admitted the matters alleged in Ground 1, his admission of breaches of ss 61 and 62 of the Act did not occur until just before the hearing and his admission that they were wilful breaches did not occur until after the hearing.

195 When the particularly serious matters alleged and proved under Ground 3 are taken into consideration as well, there is, as the Solicitor himself acknowledged, no scope for a lesser sanction than an order striking him off the roll. His late acknowledgment of this is to his credit. Yet as indicated above at [167 – 169], he did not, as we see it, appreciate at the hearing that even on his own showing his conduct in relation to Mr Smith was questionable.

196 As explained in Law Society of New South Wales v Moulton [1981] 2 NSWLR 736 (see [170] above), this counts significantly against him, since it indicates that even at the hearing he did not appreciate important basic aspects of the duty of good faith owed by solicitors to clients. It is well established in the case law (see for example A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1 at [21], [38]) 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. This particular failure on the Solicitor’s part to assess critically his own past conduct is of course not determinative, but it lends support to a conclusion that overall appears unavoidable to us.

197 We note the points raised by the Solicitor in relation to his service and his good record in the Navy, but agree with Mr Beaumont that they cannot be given great weight in the present context.

198 The Law Society sought an order for the costs of these proceedings under s 171E of the Act. The Solicitor did not oppose this.

199 For the foregoing reasons, being satisfied that the Solicitor is guilty of professional misconduct as alleged in Grounds 1 – 4 inclusive of the Information, we order as follows:-

2. That the Solicitor pay the Law Society’s costs of these proceedings.

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Law Society of NSW v Hansen [2004] NSWADT 183

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Council of the Law Society of New South Wales v Halligan [2009] NSWADT 317

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Council of the Law Society of New South Wales v Halligan [2009] NSWADT 317

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Deputy Commissioner of Taxation v Coco [2003] QSC 119

Barwick v Law Society of New South Wales [2000] HCA 2

CITATION:	Law Society of NSW v Hansen [2004] NSWADT 183
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Council of the Law Society of New South Wales RESPONDENT Malcolm Henry Hansen
FILE NUMBER:	032015
HEARING DATES:	12/02/2004-13/02/2004
SUBMISSIONS CLOSED:	06/18/2004
DATE OF DECISION:	08/25/2004
BEFORE:	Chesterman M - ADCJ (Deputy President); Clisdell RJ - Judicial Member; Fitzgerald R - Non Judicial Member
APPLICATION:	Professional Misconduct - breach of Order - Professional Misconduct - breach of s. 61 of the Legal Profession Act - Professional Misconduct - breach of s. 62 of the Legal Profession Act - Professional Misconduct - gross negligence - Professional Misconduct - use Power of Attorney for own benefit
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Rules (Transitional) Regulation 1998 Legal Profession Act 1987
CASES CITED:	Barwick v Law Society of New South Wales (2000) 169 ALR 236 Council of the New South Wales Bar Association v Amor-Smith [2003] NSWADT 239 Deputy Commissioner of Taxation v Mutton (1988) 12 NSWLR 104 Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 Law Society of New South Wales v Moulton [1981] 2 NSWLR 736 Re Mayes and the Legal Practitioners Act [1974] 1 NSWLR 19 Myers v Elman [1940] AC 282 New South Wales Bar Association v Cummins [2001] NSWCA 284 New South Wales Bar Association v Evatt (1968) 117 CLR 177 Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1 Veghelyi v. The Law Society of New South Wales, Unreported, Court of Appeal, NSW, 6 October 1995 (BC950549)
REPRESENTATION:	APPLICANT N Beaumont, barrister RESPONDENT In person
ORDERS:	1. That the name of the Solicitor be removed from the roll of legal practitioners.; 2. That the Solicitor pay the Law Society’s costs of these proceedings.