Law Society of NSW v Mendigorin

[2005] NSWADT 185

CITATION:	Law Society of NSW v Mendigorin [2005] NSWADT 185
DIVISION:	Legal Services Division
PARTIES:	APPLICANT Council of the Law Society of New South Wales RESPONDENT Mario Mendigorin
FILE NUMBER:	042027; 052004
HEARING DATES:	01/11/2004, 27/05/2005
SUBMISSIONS CLOSED:	06/09/2005
DATE OF DECISION:	08/09/2005
BEFORE:	Clisdell RJ - Judicial Member; Riordan M - Judicial Member; Elliott K - Non Judicial Member
APPLICATION:	Professional Misconduct - breach of s. 61 of the Legal Profession Act - Professional Misconduct - breach of s. 62 of the Legal Profession Act - Professional Misconduct - fail to account - Professional Misconduct - fail to honour undertaking - Professional Misconduct - fail to keep client adequately advised - Professional Misconduct - misappropriate trust moneys/moneys - Professional Misconduct - mislead Court/Tribunal
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Legal Profession Act 1987
CASES CITED:	Dawson v The Law Society of New South Wales, Court of Appeal 21.12.89 unreported Law Society of NSW v Colin Walter Peck (Statutory Committee 23/04/1981) Law Society of NSW v Barry John Penfold (1998 – 4 LPDR 19) Law Society of NSW v Gould [2001] NSWADT 171
REPRESENTATION:	APPLICANT L Pierotti, solicitor RESPONDENT 01/11/2004 - M Dudhee, barrister 27/05/2005 - In person
ORDERS:	Orders made on 4 August 2005: 1. That the name of Mario Mendigorin be removed from the roll of legal practitioners; 2. That the Solicitor pays the costs of the Law Society as agreed or assessed; 3. That the Law Society have leave to file in the Tribunal an agreed quantum of costs for the purpose of enforcement; 4. Further leave to apply in respect of costs on seven days notice.

1 The Council of the Law Society of New South Wales filed two Informations against the Solicitor Mario Mendigorin. The first Information was filed on 29 July 2004 and raised the following grounds of alleged misconduct:

i. The Solicitor wilfully breached Section 61 of the Legal Profession Act 1987.

ii. The Solicitor wilfully breached Section 62 of the Legal Profession Act1987.

iii. The Solicitor failed to keep adequate records in relation to matters handled by him in that he failed, within a reasonable time after settlement, to prepare final letters to the clients confirming settlement and forwarding final settlement statements accounting to them for the monies paid at settlement.

iv. The Solicitor breached his undertaking.

2 The Solicitor filed a response which simply said “Not denied (all allegations)”.

3 Evidence was heard by the Tribunal in relation to these allegations on 1 November 2004. Although at that time there was no allegation of misappropriation the Tribunal became concerned about the Solicitor’s activities after hearing him give evidence and taking into account answers he gave to certain questions, particularly in cross-examination. In the initial Information the Law Society was not seeking an order that the Solicitor be struck off the roll of legal practitioners but rather that he have a restricted practising certificate requiring him to work only as an employee, pay a fine and pay costs.

4 At the conclusion of the evidence and prior to submissions the Presiding Judicial Member made the following observation:

“Mr Pierotti, I think as a matter of fairness I should indicate that as a result of some of the answers Mr Mendigorin gave in cross-examination, the Tribunal has some concerns, and I don’t think it would be fair to either party – and I address this to you as well, Ms Dudhee – I don’t think it would be fair to either party to assume that the Law Society’s recommended penalties are the only penalties that the Tribunal will be considering.

So if there is any apprehension by any party that Mr Mendigorin’s right to practise under supervision is the only consideration that the Tribunal will have in mind, then I want it clearly understood that we are going to be looking at all possible sanctions against Mr Mendigorin, including removal from the roll. Now, if as a result of that, there are some additional submissions that you wish to make and you would like an adjournment for that purpose, then the Tribunal will be amenable to an adjournment.”

5 As a result of that observation the proceedings were adjourned to enable the Law Society to consider it’s position. On 28 February 2005 the Council of the Law Society of New South Wales filed a further Information, this time in proceedings 052004. The alleged grounds of professional misconduct were:

i. The Solicitor attempted to mislead the Administrative Decisions Tribunal.

ii. The Solicitor misappropriated trust monies.

Again the Solicitor responded in his reply as follows:
“All allegations not denied.”
The Solicitor filed a further Affidavit and was again cross-examined when the matter was heard by the Tribunal on 27 May 2005. The matters were heard together with the consent of both parties. On the second day of hearing the Solicitor represented himself and Mr Pierotti continued as Counsel for the Law Society.

6 In respect of the first Information the Law Society relied on the following evidence:

i. Affidavit of Raymond John Collins sworn 28 July 2004 with numerous documents annexed being in essence a procedural Affidavit.

ii. Affidavit of Frederick John Smith made 23 July 2004 with his investigator’s report annexed.

The Solicitor relied on the following evidence:
i. An Affidavit made by himself on 15 September 2004.

ii. Character letter Reverend Rodolfo Tan.

iii. Character evidence from Jessie Icao.

iv. Character evidence from Eduardo Yunon.

7 In proceedings 042027 the Law Society initially submitted that “this is not going to be the worst case that this Tribunal would see or has seen.” Later in his opening Mr Pierotti said this:

“I hasten to say this. There is no allegation before you of any misappropriation. That is not pleaded. There is no suggestion, and if that is a concern of yours, I would respectfully suggest that that be cast aside. What we have before you today is a host of matters where the practitioner has failed to comply with statutory requirements which are, we will submit to you, critical in the maintenance of the efficacy of trust funds, monies that have been received from clients, and admitted to, have gone into office accounts, personal accounts, call them what you will, but certainly not in a trust account.”

8 Certainly the evidence filed by the Law Society supported that submission. It was only when the Solicitor gave evidence that it became apparent that in addition to the matters detailed by the Law Society in their evidence, that in fact the Solicitor on his own admission was misappropriating the funds of his clients, albeit for relatively small sums.

9 At the commencement of the hearing on 1 November Counsel for Mr Mendigorin, Ms Dudhee, advised the Tribunal that the effect of the Solicitor’s lodged Reply amounted to an admission of all complaints.

10 The Tribunal was satisfied on the evidence before it and as a result of the admissions that the Law Society had established wilful breaches of Sections 61 and 62 of the Legal Profession Act 1987 and had also established to the Tribunal’s satisfaction grounds 3 and 4. It was on the question of penalty that the Tribunal warned the parties that it did not feel bound by the Law Society’s submissions contained in the Information in so far as they dealt with the issue of penalty.

11 Mr Mendigorin had been a sole practitioner operating an office at Ashfield. Following a visit from a trust account inspector, the Law Society appointed Frederick John Smith as an investigator on 18 October 2001. By that time Mr Mendigorin was an employed Solicitor, his employer being Belen Oag. Mr Smith attended the premises where the Solicitor was employed at Ashfield on 22 October 2001 and 8 November 2001. His report was forwarded to the Law Society in January 2002, with at that time an intention to conduct a further examination in February 2002.

12 The Solicitor did not operate a trust account. However the Solicitor from time to time received what were quite obviously trust monies, both in cash and by cheque. His method of dealing with these sums was to either keep the cash and then make payments from his office account to third party suppliers of services such pest inspections and building reports, search enquiries and the like, or deposit the cheques into his office account. This was a regular practice although as a result of the initial enquiries it did not appear that any monies had been misappropriated. It was also clear from Mr Smith’s inspection that the Solicitor was extremely lax in reporting to his clients when matters had been finalised. Delays in paying third party suppliers of services were also apparent. Delays often of some months in forwarding final settlement statements were common. The Law Society particularised seven instances of delay, the longest being from a settlement on 7 May 1999 to settlement letter on 7 October 1999. It would appear that 7 October 1999 was a day on which a number of settlement letters were sent with five of the seven examples of delay having their settlement letter issued on 7 October 1999.

13 Complaint four dealt with a breach of undertaking. That was an undertaking sought by the Law Society in a letter to the Solicitor seeking the provision of accounting records. The Law Society letter said in part:

“In order that the Society may be assured that your accounting practices are complying with all the rules and regulations in respect of the Legal Profession Act, we ask that this information be provided monthly for a period of six months or until the Society is satisfied that your accounting practices are in compliance with the appropriate rules and regulations.

We ask that you provide this undertaking on or before 5.00pm Friday 30 June 2000.”

14 By letter dated 30 June 2000 the Solicitor responded:

“Re: Law Society Complaint.

Many thanks for your letter 26/06/00.

I hereby make the personal and professional undertaking required in said letter.”

15 The Solicitor did not comply with this undertaking in that he did not produce the documents required in paragraphs 1 and 2 of the letter to the Society. The Solicitor admitted the breach of undertaking.

16 The Tribunal’s concerns in relation to the Solicitor’s activities arose in respect of evidence given by the Solicitor in three particular transactions. These were:

i. Navales purchase from Countinho

ii. J Valipour – purchase.

iii. Lourdes Santos – purchase.

17 In respect of the Navales purchase the Solicitor acted for both parties in the sale and purchase of property known as Lot 15 Galloway Crescent, St Andrews. On 30 October 1998 the Solicitor received the sum of $8,000.00 from the Navales. This comprised a cheque for $7,000.00 and cash for $1,000.00. The Solicitor issued an undated, unnumbered, hand-written receipt for the sum of $8,000.00 on a facsimile transmission sheet. He did not record the receipt of the money. On 2 November 1998 the Solicitor deposited the cheque for $7,000.00 in his Colonial Bank office account. The bank deposit mentions the narration “Navales”. The Solicitor did not deposit the sum of $1,000.00 into a trust account.

18 When giving evidence before the Tribunal on 1 November, the Solicitor was asked:

“Are we to take that, sir, that you kept the $1,000.00 cash and did not deposit it even to the office account?”

Answer:

“Yes sir.”

19 It was not until 7 January 1999 that $8,000.00 was withdrawn from the Colonial Bank office account and used for the purposes of the Navales. The Solicitor had the use of both the $7,000.00 cheque and the $1,000.00 cash between 2 November 1998 and 7 January 1999. The Tribunal is satisfied that that amounts to a misappropriation of trust monies although reimbursement was made on 7 January 1999.

20 In the matter of Valipour the Solicitor acted for Valipour in relation to a purchase of a property at 52 Willis Street, Rooty Hill. Contracts were exchanged on 16 November 2000 and settlement took place on 12 December 2000. On 11 December 2000 the Solicitor, on the letterhead of Belen Oag, issued an invoice for costs of $935.00 (including GST) and disbursements of $463.60 a total of $1,398.60. Amongst the disbursements was $308.00 for pest and building reports. On 3 January 2001 the Solicitor deposited the sum of $1,398.60 into the Colonial office account. As at 1 October 2001 the sum of $308.00 remained unpaid to the third party provider of services. The Solicitor had the use of that $308.00 from 3 January 2001 until at least 1 October 2001. When cross-examined about this matter the Solicitor was asked:

“You had the benefit of that $308.00, didn’t you, for at least ten months?”

Answer:

“The office had the benefit of that, sir, the practice…”

Further question:

“Yes, well, you don’t say that you had the benefit of it?”

Answer:

“Personally, sir?”

Question:

“Yes?”

Answer:

“Yeah, I do, sir.”

21 The Tribunal is comfortably satisfied that the Solicitor misappropriated the sum of $308.00 although it may be that that sum has since been paid to the third party provider of services.

22 The Solicitor acted for Lourdes Santos in relation to the purchase of a property at 29A Rawson Street, Punchbowl. Contracts were exchanged on 18 May 2001. On 11 May 2001 the client drew a cheque in favour of the Solicitor in the sum of $300.00. The client also drew two further cheques each in the sum of $308.00 payable to J R Blair Surveyor and Macario De Guzman, Building Inspector. The Solicitor did not deposit these sums into the trust account of Belen Oag. On 22 May 2001 Solicitors’ Urgent Enquiries Pty Ltd issued a tax invoice in relation to various searches it had carried out for the property at 29A Rawson Street, Punchbowl in the sum of $194.00. This was part of the amount charged by the Solicitor in the sum of $300.00.

23 On 2 July 2001 the Solicitor issued two tax invoices. The first tax invoice was in the sum of $1,039.50 comprising profit costs of $800.00, GST of $80.00 and disbursements of $145.00 with GST of $14.50. The second invoice was for $916.00 comprising pest and building report fees (which had been paid in May 2001) in the sum of $308.00, Survey report of $308.00, an amount for searches and enquiries and services fee in the sum of $300.00 which was not particularised. The invoice noted the total sum of $916.00 being paid by cheques. The Solicitor did not pay the invoice from Solicitors’ Urgent Enquiries Pty Ltd until after 11 August 2001.

24 Again these cheques had been deposited to the Solicitor’s office account. There was a misappropriation in respect of the sum of $194.00 from 11 May 2001 until 11 August 2001. Of greater concern however was the fact that the Solicitor at no time ever did a full and proper accounting to the client leaving the Solicitor with the sum of $106.00 in his possession, as far as the Tribunal can establish to the present day. That amount clearly has been misappropriated and unlike the other misappropriations by the Solicitor where the client or the third party provider has eventually been paid or repaid, this amount remains in the Solicitor’s possession.

25 On 1 November the Solicitor’s explanation for the poor accounting was that he had not been the person who prepared the tax invoices. Nevertheless although he was an employed Solicitor at the time, Mr Mendigorin was effectively running the Ashfield office. At no time was he authorised to deposit trust monies into his office account. He was directly asked in cross examination:

Question:

“And can you tell this Tribunal what you did with the other $106.00?”

Answer:

“I don’t recall sir.”

26 As a result of this evidence the Law Society filed the further Information in proceedings No 052004. In addition to raising the issues of misappropriation the Society also alleged that Mr Mendigorin attempted to mislead the Administrative Decisions Tribunal. At the hearing on 27 May the Solicitor appeared confused about what matters he was admitting and what matters he was denying. Eventually the initial position was reached that the Solicitor admitted misappropriating the monies of Mr Navales, and denied all other allegations. During the course of cross-examination it became apparent that the Solicitor agreed with the particulars in relation to all matters but denied that the conclusion drawn should be one of misappropriation or misleading conduct.

27 In relation to the issue of misleading the Tribunal, the Solicitor eventually, after lengthy cross-examination, agreed that he had attempted to mislead the Tribunal. Perhaps he reached that conclusion as a result of cross-examination on his Affidavit which was sworn on the morning of the hearing, that is 27 May 2005, and filed during the course of the hearing. In that Affidavit, the Solicitor attempted to explain the discrepancy in relation to the Lourdes Santos purchase by deposing that he had been acting for Lourdes Santos since January 2001 and two proposed purchases by Mrs Santos had failed. The Solicitor suggested that perhaps those files contained unpaid tax invoices which would cover the missing monies in the Rawson Street purchase. He was not however able to point to any tax invoices to support the contention in paragraph 17 of his Affidavit, which said as follows:

“Despite my efforts and the client’s cooperation the Contracts in these two earlier matters of Mrs Santos were not exchanged. I do not recall having received any money in relation to these matters. It could be that the cheque for $300.00 alleged to have been issued in favour of MM (in C(iii) and C(iv) of the complaint) could have been related to any one of these matters for costs.”

28 When it was pointed out to the Solicitor in cross-examination by Mr Pierotti that the amounts he had received had been paid to him in May and that these transactions were in January and February, he conceded that it could not be said that the monies received in May related in any way to the two previous aborted transactions.

29 Although the Tribunal accepts that the evidence of Mr Mendigorin on 1 November 2004 in relation to his knowledge of trust account procedures was unsatisfactory, it was not of a mind at that time to accept that he had been deliberately misleading. The Tribunal was however of the view that his Affidavit of 27 May 2005 was misleading and consequently his admission after lengthy cross-examination that he had been intending to mislead the Tribunal, has left the Tribunal members comfortably satisfied that that ground of complaint has been established.

30 On 27 May the Solicitor attempted to give explanations in relation to the matters of Navales, Valipour and Santos. The Solicitor’s explanations in cross-examination were unimpressive and in essence there was in effect admissions by Mr Mendigorin of each of the misappropriations. He did however attempt to explain the misappropriation of the Santos monies by saying that that was a practice that he had learnt from Ms Oag. His evidence was that it was common practice to charge a lump sum for enquiries and not to carry out a formal accounting. Mr Pierotti in cross examination put to the Solicitor that indeed he had received a very detailed letter from Mr Oag at the time that she had employed him, after his practising certificate had been restricted following the Law Society inspection, requiring him to comply with the requirements of trust account monies and trust account regulations. Mr Mendigorin conceded that he had received that letter but even after receiving that letter still conducted himself by placing monies which were obviously trust monies, and on occasions monies which must have been the property of Ms Oag, as his employer, into his own personal account.

31 On 1 November 2004 the Solicitor called two character witnesses. Mr Icao and Mr Yunon had previously been employed by Belen Oag at the same time as Mr Mendigorin. However, it was apparent when both Mr Icao and Mr Yunon gave evidence that they were not aware of the nature of the allegations against Mr Mendigorin. They had provided him with a character reference and appeared before the Tribunal on the basis that they believed he was seeking to have his practising certificate restored. They were not aware of the allegations of breach of undertaking. They were not aware of the allegations of failing to keep accounts or delay in reporting to clients. As such, their evidence in support of Mr Mendigorin on a character basis can have limited if any weight. It is in the Tribunal’s view regrettable that Mr Mendigorin did not provide those character referees with full details of the information alleged against him.

32 Accordingly in respect of information 04207 the Tribunal is satisfied that the Law Society have established each of the four allegations contained in that information. In respect of proceedings 052004 the Tribunal is satisfied that the Law Society has established each of the grounds alleged in that information. The Tribunal is satisfied that the Solicitor is guilty of professional misconduct on each of the six grounds contained in the Informations.

33 The Tribunal was greatly assisted by lengthy written submissions from Mr Pierotti. These written submissions were in effect in relation to the first day of hearing on 1 November 2004, but as the second complaints arose out of evidence given on 1 November they were very relevant to the allegations contained in the second information.

34 The question to be determined by the Tribunal is what is the appropriate penalty. The jurisdiction of the Tribunal is protective and not punitive. Mr Pierotti’s submissions rightly deal with the consequences of misappropriation being that the usual order is removal of the name of the Solicitor from the roll of legal practitioners. In fairness to the Solicitor Mr Pierotti referred the Tribunal to those very rare instances where Solicitor’s names were not removed from the roll following misappropriation. In particular he referred the Tribunal to the matters of Colin Walter Peck (Solicitor’s statutory committee 23 April 1981), Barry John Penfold (1998 – 4LPDR 19) and Law Society of New South Wales v. Gould [2001] NSW ADT 171.

35 Mr Mendigorin provided written submissions which were effectively a plea for leniency. Despite his earlier admission that he had attempted to mislead the Tribunal given in evidence, he maintained in his written submissions that he had not attempted to mislead the Tribunal. Mr Mendigorin also referred the Tribunal to the matter of Penfold. Part of that decision referred to by the Solicitor contains the following:

“This Solicitor (referring to Mr Penfold) has been candid and his preference of his own interest over that of Mr Vass (albeit continued) in one instance, cannot be said to amount to a tendency, the evidence is that this was one isolated instance of a course of dishonest conduct which cannot be properly described as prolonged.”

36 Mr Mendigorin also referred to a passage in that decision of reference to the matter of Dawson v The Law Society of New South Wales, Court of Appeal 21.12.89 unreported, in the Court of Appeal.

“In the case of some offences, committed over an extended period with deliberate intent and resulting in severe losses by clients, it would be very difficult to contemplate any circumstances in which the name of the offender will he restored to the roll. But where the offences are isolated, where there is no evidence of prolonged deliberate conduct, and where to the full extent possible in the circumstances the funds of clients are being restored so that there is no eventual pecuniary loss..… In addition to the obvious benefit to the community which flows from early confession and full restitution, there is public benefit in a clear demonstration to the profession that a single slip from the right path (even if that slip is an act of theft) if made good, not compounded and expeditiously admitted does not inevitably mean professional death ….

The moral courage demonstrated by timely confession is one of the pointers to a character which is not so flawed that it cannot be redeemed.”

37 There is of course a very real difference between the Solicitor’s actions in the matter of Penfold and Mr Mendigorin’s action. Mr Penfold approached the Law Society and told them of a misappropriation in his practice. He repaid the money in full and was suspended by the Tribunal for two years rather than struck off. It was an isolated one off incident. The difference in this case is that as far as the Tribunal can see, Mr Mendigorin although guilty of misappropriating relatively small sums does seem to have conducted a course of deliberate conduct in a number of matters over a number of years. The Law Society evidence only pointed to examples of conduct and did not amount to a complete audit of every transaction or file that Mr Mendigorin had worked on. The Solicitor’s attempts to justify his misappropriations on the basis that they were common practice of other Solicitors, or the clients never complained, or that he did more than he received remuneration for and the clients were therefore better off, shows an alarming flaw in his character which despite the relatively small quantum involved in the misappropriations causes this Tribunal great concern.

38 The Tribunal cannot be satisfied given the unsatisfactory nature of Mr Mendigorin’s evidence before it, his general lack of candour, the lack of any evidence to suggest that the passage of time since his conduct in 2001 has led to any significant rehabilitation and the lack of proper character evidence, that there can be any conclusion other than that Mr Mendigorin is not a fit and proper person to remain on the roll of legal practitioners. Accordingly the Tribunal makes the following formal orders:

i. That the name of Mario Mendigorin be removed from the roll of legal practitioners.

ii. That the Solicitor pays the costs of the Law Society as agreed or assessed.

iii. That the Law Society have leave to file in the Tribunal an agreed quantum of costs for the purpose of enforcement.

iv. Further leave to apply in respect of costs on seven days notice.