Law Society of the Australian Capital Territory v Elmaraazey
[2017] ACTSCFC 2
•9 August 2017
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
FULL COURT
Case Title: | Law Society of the Australian Capital Territory v Elmaraazey |
Citation: | [2017] ACTSCFC 2 |
Hearing Date: | 9 August 2017 |
DecisionDate: | 9 August 2017 |
Before: | Murrell CJ, Mossop and Collier JJ |
Decision: | See [22] |
Catchwords: | LEGAL PRACTITIONERS – DISCIPLINE – Removal of a Practitioner’s Name from the Local Roll – withdrawal from trust account in excess of costs that had been billed – payment of cheque from trust money without authority – transfer of trust money to office account without authority – withdrawal of money for costs without notice or an invoice – borrowing money from a client in breach of r 10.1 of the Legal Profession (Solicitors) Rules 2007 (ACT) – failure to release documents to client following termination of a retainer in breach of r 6.2 of the Legal Profession (Solicitors) Rules 2007 – failure to issue a trust account statement in breach of s 57 of the Legal Profession Regulation 2007 (ACT) – failure to deposit trust money into trust account in breach of s 222 of the Legal Profession Act 2006 (ACT) – failure to hold trust money exclusively for the person on whose behalf it was received and dispersing trust money contrary to the direction given by the client in breach of s 223 of the Legal Profession Act 2006 – failure to account for trust money, failure to issue a receipt for trust monies received and failure to issue trust account statements in breach of s 230 of the Legal Profession Act 2006 – withdrawing trust money for payment of legal costs for which no tax invoice had been issued and no authority given to withdraw the money in breach of s 62 of the Legal Profession Regulation 2007 – failure to issue receipts for cash payments in breach of s 38 of the Legal Profession Regulation 2007 |
Legislation Cited: | Legal Profession Act 2006 (ACT), ss 222, 223, 230, 425(3)(a), 431(3) and 462 Legal Profession Regulation 2007 (ACT), ss 38, 57 and 62 Legal Profession (Solicitors) Rules 2007 (ACT), rr 6.2 and 10.1 |
Cases Cited: | A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1; 216 CLR 253 Council of the Law Society of the Australian Capital Territory v Mamdouh Elmaraazey (Occupational Discipline) [2009] ACAT 29 The Legal Practitioner v Council of the Law Society of the ACT [2016] ACTCA 35 |
Parties: | The Law Society of the Australian Capital Territory (Plaintiff) Mamdouh Elmaraazey (Defendant) |
Representation: | Counsel N Beaumont SC and T Power (Plaintiff) No appearance (Defendant) |
| Solicitors Phelps Reid Lawyers (Plaintiff) No appearance (Defendant) | |
File Number: | SC 112 of 2017 |
THE COURT:
Introduction
The defendant (‘the Practitioner’) is admitted as a legal practitioner under the Legal Profession Act 2006 (ACT) (‘LPA’). The Law Society of the Australian Capital Territory (‘Law Society’) has applied pursuant to s 431(3) of the LPA for the defendant’s name to be removed from the local roll of practitioners.
On 8 July 2013 the ACT Civil and Administrative Tribunal (‘the ACAT’) made an order pursuant to s 425(3)(a) recommending that the Practitioner’s name be removed from the local roll.
Section 431(3) provides that, where the ACAT makes an order recommending that the name of a practitioner be removed from the local roll, a copy of the order may be filed in the ACT Supreme Court and the Supreme Court may order the removal of the name from the roll.
The application under s 431(3) of the LPA is supported by the affidavit of Robert Anthony Reis, the Professional Standards Manager employed by the Law Society, sworn on 10 April 2017. The plaintiff also tendered a copy of the earlier disciplinary decision of the ACAT in relation to the Practitioner and a document proving that the Practitioner became bankrupt on 23 June 2017. No affidavit or other evidence had been filed by the Practitioner in advance of the hearing.
The proceedings were listed for hearing before the Court at 10:15 am on 9 August 2017. Neither the Practitioner nor any representative was in court at that time. When the Practitioner was called at 11:03 am, 11:40 am and 2:15 pm there was no appearance. There can be no doubt that the Practitioner was aware that the proceedings were listed to be heard on 9 August 2017, he having made an unsuccessful application to vacate that hearing date: see The Law Society of the ACT v Legal Practitioner [2017] ACTSC 159. In those circumstances the Court proceeded to hear the application.
Decisions of ACAT
The Practitioner had been the subject of disciplinary proceedings concerning a failure to provide a detailed account of costs when requested and eight failures to comply with trust accounting obligations. The Tribunal made orders and gave reasons for its decision on 7 September 2009: Council of the Law Society of the Australian Capital Territory v Mamdouh Elmaraazey(Occupational Discipline) [2009] ACAT 29. These charges were admitted by the Practitioner and the Tribunal concluded the Practitioner was guilty of professional misconduct and that the offences were serious. The Tribunal ordered a public reprimand and a 12-month suspension of the Practitioner’s practising certificate pending the satisfactory completion of a trust accounting course. That trust accounting course was not completed and the Law Society refused to renew the Practitioner’s unrestricted practising certificate in July 2010.
A second set of disciplinary proceedings were commenced in the ACAT in August 2010. These related to complaints from three different complainants who will be referred to in these reasons as FB, BB and SS. The findings of the Tribunal in relation to the complaint made by FB were as follows:
(a)The Practitioner had withdrawn $12,746 from FB’s trust account in excess of costs that had been billed. This was at least in part a result from paying an amount of $18,040 for counsel’s fees from money already held in trust and invoicing the client a further $18,040 for counsel’s fees. There was no evidence that the Practitioner took steps to investigate or correct this double counting.
(b)The Practitioner paid a cheque of $3500 to SS on 28 April 2009 from FB’s trust money without authority from FB to do so. The cheque was given to SS to partially repay a loan made by her to the Practitioner.
(c)The Practitioner transferred $10,000 on 31 August 2009 from FB’s trust account to his office account without FB’s authority. The Tribunal rejected as untruthful the evidence of the Practitioner that the money had been withdrawn from the account at the request of FB and paid to her. The Tribunal found that the Practitioner was under extreme financial stress at the time the money was removed from the trust account.
(d)The Practitioner had withdrawn amounts totalling $33,215 for legal costs without giving FB written notice or a tax invoice.
(e)In breach of r 10.1 of the Legal Profession (Solicitors) Rules 2007 (ACT) (‘Solicitors Rules’) the Practitioner had, on 10 March 2009, borrowed the sum of $10,000 from his client FB. The Tribunal rejected the Practitioner’s denial of this loan.
(f)The Practitioner had failed, in breach of rule 6.2 of the Solicitors Rules to release FB’s documents and files to her new solicitors following termination of a retainer with the Practitioner.
(g)The Practitioner had failed, in breach of s 57 of the Legal Profession Regulation 2007 (ACT) (‘LPR’), to issue FB with a trust account statement in relation to the disbursement of moneys held after 30 June 2008.
In relation to the complaint made by BB the findings of the Tribunal were as follows.
(a)The Practitioner failed to deposit into his trust account $18,605 received by him from BB on behalf of her brother MB in breach of s 222 of the LPA.
(b)The Practitioner had breached s 223 of the LPA by failing to hold some $26,000 that BB had paid to him for the trial involving her brother exclusively for the person on whose behalf it was received and by dispersing the money in breach of the direction given by the client.
(c)In breach of s 230 of the LPA the Practitioner failed to account to MB for the sums totalling $55,485 paid to the Practitioner by BB, failed to issue a receipt for trust monies received by the Practitioner and failed to issue trust account statements beyond 26 October 2008 in respect of two amounts paid to him totalling $31,000. Further, in breach of s 62 of the LPR he had withdrawn trust money in payment of legal costs for which no tax invoice had been issued to his client and for which no authority had been given to withdraw the money.
In relation to the complaint made by SS, the finding was that the Practitioner breached s 222 of the LPA by failing to deposit weekly cash-payments made by SS totalling $75,000 over the course of 14 months into his trust account and that he had also breached s 38 of the LPR by failing to issue receipts for those cash payments.
In considering whether the Practitioner should be found guilty of professional misconduct the Tribunal said:
116.The tribunal concludes that the conduct of the practitioner in failing to keep proper trust account records, that the conduct of the practitioner in paying money from his trust account to himself without the proper and appropriate written authority was a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence.
117.The tribunal further finds that the practitioner’s conduct in demanding and receiving cash payments, failing to issue receipts for those cash payments, failing to deposit those payments into trust, failing to produce appropriate and proper invoices, paying amounts to himself from trust in excess of invoices rendered is conduct that would reasonably be regarded as disgraceful or dishonourable by professional colleagues who are of good repute and competency.
118.The tribunal also finds that the practitioner’s approach to the original complaints and his conduct during the hearing would justify a finding that the practitioner is not a fit and proper person to engage in legal practice. ACAT notes that this is the second occasion on which the applicant has prosecuted the practitioner.
119.The tribunal finds that the conduct of taking amounts of money from the trust account of clients and paying it to himself, which amounts to theft from clients; the practitioner’s clear lack of understanding of his obligations in relation to trust accounting; his lack of credit and his cavalier attitude towards the conduct of the proceedings, results in the practitioner not being a fit and proper person to engage in legal practice and ought to be taken into account in relation to any future application to the legal profession for the granting of a practising certificate.
The Tribunal then considered what penalty should be imposed and concluded that the public interest required the prevention of conduct such as that demonstrated by the Practitioner and that it was therefore appropriate for the tribunal to recommend that the Practitioner’s name be removed from the local role.
Subsequently the Tribunal determined that it should set aside the orders that it had made in relation to penalty and receive evidence and submissions about the penalty that it should impose and the costs order that should be made in the light of its findings.
During the course of its reasons in relation to penalty (see Council of the Law Society of the ACT & The Legal Practitioner E (Occupational Regulation) [2013] ACAT 57) the Tribunal recorded:
(a)the Practitioner’s evidence demonstrated little understanding of or indeed regard for the rules of professional practice: see reasons at [42](a);
(b)the Practitioner offered no explanation in relation to the evidence of poor accounting: see reasons at [42](b);
(c)correspondence with another firm and the Practitioner’s evidence about it “showed that he had little understanding of the relationship between a practitioner and a client”: see reasons at [42](c);
(d)These matters and the “cavalier attitude that the practitioner demonstrated in the giving of his evidence during the five-day hearing reveals a lack of insight that is very concerning”: see reasons at [42](d);
(e)The Practitioner had previously been subject to disciplinary action and subsequently received support from a senior-practitioner mentor but had not informed the Law Society that he had completed the trust accounting course that was required: see reasons at [42](e); and
(f)The Practitioner was not a credible or satisfactory witness: see reasons at [43]
The Tribunal concluded in relation to penalty:
[46]A number of common themes underlie the complaints brought by each of the complainants in these proceedings, and these are relevant to the sanction to be imposed because common themes go to the serious, substantial and consistent failure by the legal practitioner to conduct his practice in a manner consistent with appropriate diligence and competence. Each of the complainants was in a position of financial vulnerability; each gave evidence of having to incur debt and obtain loans from banks and family or friends to meet the financial commitment of the payment of the practitioner’s legal fees over a period of years. Each complainant gave evidence that the practitioner required regular and large cash payments to be made to him, often otherwise than pursuant to invoices; and each of the complainants gave evidence that the practitioner did not issue receipts for most of the cash payments received. Each of the complainants gave evidence that they had received very few if any invoices from the practitioner; and SS gave evidence that she had never received a receipt or an invoice from the practitioner.
[47]The forensic accounting evidence showed a haphazard and irregular approach to general office accounting and trust accounting.
[48] The legal practitioner has, in breach of the Rules, borrowed money from his clients and failed to repay the amount borrowed.
[49] In general, the practitioner conducted his practice in an unsatisfactory manner, which would reasonably be regarded as disgraceful or dishonourable by professional colleagues who are of good repute and competency. The tribunal is of the opinion that the practitioner is not presently fit to hold a practising certificate.
[50]The legal practitioner’s failure to understand the error of his ways of itself demonstrates his unfitness to belong to a profession where, in practice, the client must depend upon the standards as well as skill of his professional adviser.
[51]In determining what sanction, if any, is to be imposed upon the practitioner, the tribunal must consider the seriousness of the conduct, the need to protect the public from such conduct, and, whether the conduct of the practitioner would tend to bring the legal profession into disrepute.
[52]Conduct of such a nature tends to bring the legal profession into disrepute in a general sense. That is a bad thing for which the appellant must bear appropriate blame. The public interest requires the prevention of such conduct. Therefore it is appropriate for the tribunal to recommend the practitioner’s name be removed from the local roll.
(footnotes omitted)
Subsequent proceedings
The Practitioner appealed against the decision of the Tribunal: Legal Practitioner v Council of the Law Society of the ACT (No 2) [2014] ACTSC 352. His appeals against the substantive findings of the Tribunal were unsuccessful. However he succeeded upon an argument that there was no power to reopen the proceedings as the Tribunal had done and that the first decision of the Tribunal had involved a denial of procedural fairness because he had not been given the opportunity to make submissions or lead evidence in relation to penalty. The Practitioner appealed to the Court of Appeal and the Law Society cross-appealed against the findings in relation to reopening of the proceedings. The Practitioner’s appeal was unsuccessful and the cross appeal by the Law Society was allowed with the effect that the second decision of the Tribunal stood: The Legal Practitioner v Council of the Law Society of the ACT [2016] ACTCA 35.
Decision
The Law Society relies on the Court’s statutory jurisdiction to discipline legal practitioners under the LPA. The statutory jurisdiction is separate from the Court’s inherent jurisdiction, which is preserved by s 462 of the LPA: Law Society of the Australian Capital Territory v Burns [2012] ACTSC 91; 6 ACTLR 282 at [8]–[18].
In exercising its statutory jurisdiction, the Court does not merely engage in an administrative process but independently decides whether it should accept the Tribunal’s recommendation of removal from the roll: Legal Services Commissioner v Rushford [2012] VSC 632; 38 VR 141 at [13].
The Court’s disciplinary jurisdiction is protective, not punitive: A Solicitor v Council of the Law Society of New South Wales [2004] HCA 1; 216 CLR 253 at [12], Council of the New South Wales Bar Association v Slowgrove [2009] NSWADT 150.
The issue for the Court is whether the Practitioner is a fit and proper person to remain upon the local roll: A Solicitor v Council of the Law Society of New South Wales at [15].
A legal practitioner who takes his or her client’s funds for his or her own benefit, and who demonstrates no remorse or understanding of the gravity of his or her misconduct, is prima facie not fit to remain on the roll: Kumar v Legal Services Commissioner [2015] NSWCA 161 at [115].
The conduct of the practitioner found by the Tribunal to have occurred demonstrates a pattern of conduct reflecting a lack of honesty and competence in dealing with clients which clearly demonstrates that he is incapable of meeting the standards required of him by law and clearly not a fit and proper person to remain upon the local roll. It is therefore appropriate for this Court to exercise the power that it has to order the removal of his name from the local roll.
The orders of the Court are therefore:
1.Pursuant to s 431(3) of the Legal Profession Act 2006 (ACT) the defendant’s name be removed from the roll.
2.The defendant is to pay the plaintiff’s costs of the proceedings
3.Order 2 does not take effect for a period of seven days and does not take effect until further order if within that period the defendant files written submissions (of not more than four pages) on costs.
4.If the defendant files submissions in accordance with Order 3 the plaintiff may file any submissions in reply (not more than four pages) within 14 days of the order.
5.If submissions are filed in accordance with Order 3, the issue of costs will be determined on the papers.
| I certify that the preceding twenty-two [22] numbered paragraphs are a true copy of the Reasons for Judgment of the Court. Associate: Date: 22 September 2017 |
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