Legal Profession Complaints Committee v McLean

[2012] WASC 297

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT  :   FULL BENCH

CITATION:   LEGAL PROFESSION COMPLAINTS COMMITTEE -v- McLEAN [2012] WASC 297

CORAM:   MARTIN CJ

McKECHNIE J
EM HEENAN J

HEARD:   ON THE PAPERS

DELIVERED          :   28 AUGUST 2012

FILE NO/S:   LPD 2 of 2011

BETWEEN:   LEGAL PROFESSION COMPLAINTS COMMITTEE

Applicant

AND

ALEXANDER JASON McLEAN
Respondent

Catchwords:

Legal practitioners - Disciplinary proceedings - Removal from Roll of Practitioners - Whether practitioner fit and proper person to remain member of the legal profession - Unauthorised withdrawals of trust funds

Legislation:

Criminal Code (WA), s 409
Legal Profession Act 2008 (WA), s 438(2)(a), s 444(1), s 444(2)

Result:

Practitioner to be removed from Roll of Practitioners

Category:    B

Representation:

Counsel:

Applicant:     Legal Profession Complaints Committee

Respondent:     Alexander Jason McLean

Solicitors:

Applicant:     Legal Profession Complaints Committee

Respondent:     Alexander Jason McLean

Case(s) referred to in judgment(s):

Legal Profession Complaints Committee and McLean [2011] WASAT 199

Legal Profession Complaints Committee v Masten [2011] WASC 71

McLean v The State of Western Australia [2011] WASCA 60

1. JUDGMENT OF THE COURT:  The Legal Profession Complaints Committee (the Committee) moves the court for an order that Alexander Jason McLean (the practitioner) be struck off the Roll of Legal Practitioners (the Roll) and that the respondent pay the costs of the application to be taxed if not agreed.

2. The court has received a report from the State Administrative Tribunal (the Tribunal) pursuant to s 438(2)(a) of the Legal Profession Act 2008 (WA) (the Act). Pursuant to s 444(1) of the Act, the report is to be taken to be conclusive as to all facts and findings contained in the report.

1. The motion before the court is brought pursuant to s 444(2) of the Act. That section provides that upon reading a report from the Tribunal, and without further evidence, the court may make a variety of orders including the removal from the Roll of the name of a local practitioner. The respondent has filed a Notice of Intention Not to Oppose Application and does not oppose his name being struck off the Roll. Both parties consented to the matter being determined on the papers.

The report from the Tribunal

1. The facts and findings of the Tribunal are set out in its reasons for decision in Legal Profession Complaints Committee and McLean [2011] WASAT 199. They can be summarised as follows.

2. On 1 June 2010 the practitioner pleaded guilty to two charges of gaining a benefit by deceit or fraudulent means with intent to defraud, contrary to s 409 of the Criminal Code (WA). Each offence involved the misappropriation of funds held in the trust account of a legal firm by which the practitioner was employed to the benefit of the Ukrainian Association of Western Australia, a voluntary organisation of which the practitioner was the secretary. The first offence took place on 20 December 2002, and involved a benefit of $115,672.66. The second offence took place on 8 September 2005, and involved a benefit of $116,475.03.

3. The practitioner was sentenced to 1 years and 4 months imprisonment on each count, to be served cumulatively, resulting in a total effective sentence of 2 years and 8 months imprisonment.  He was made eligible for parole.

4. The Tribunal adopted the following portion of the reasons given by Mazza J (McLure P & Newnes JA agreeing) in the Court of Appeal in McLean v The State of Western Australia [2011] WASCA 60 as adequately describing the particular circumstances of the offences:

   At all material times, the appellant was an employed solicitor in the litigation department of a law firm.  His clients included a number of major banks.  In addition to work he performed for clients of that law firm, he also acted as the solicitor, on an unpaid basis, for the Ukrainian Association of Western Australia (the Association).  He was, at times, the secretary of that body.  The Association was in financial difficulty, which arose out of the construction of a new function centre in a Perth suburb.

   The first offence occurred after a bank had paid to the appellant's law firm unclaimed moneys that the bank had received from mortgagee sales of property.  The moneys were the balance of funds received from those sales after repaying the sums secured by the mortgages and the costs of the sales to the bank.  The appellant directed that $115,672.66 of these moneys be held in the trust account of the law firm for the Association.  Between 24 December 2002 and 5 August 2003, funds from that account were disbursed as various payments made on behalf of the Association.  On 12 August 2003, the balance of the funds, $65,314.42, was forwarded to the Association.

   At the time of the second offence, the appellant was handling a mortgagee sale by a bank with respect to property belonging to a deceased estate.  The bank authorised the firm to hold $116,475.03 in trust, and then pay those funds to the Sheriff's Office for the benefit of the deceased estate.  On 8 September 2005, contrary to the bank's authority, the appellant forwarded a cheque to the Sheriff's Office from the firm's trust account in the sum of $116,475.03 directing that the money be applied to the Association for a writ of execution against it.  On the same day, a debenture was issued by the Association to the appellant for an identical sum.

   The function centre, which was at the centre of the Association's financial problems, was sold on 10 February 2006.  The appellant was paid from the proceeds of that sale $116,475.03 in satisfaction of the debenture.  He deposited some of those moneys into his bank account and some into a credit card account in his name. 

   In March 2008, a solicitor acting on behalf of the deceased estate contacted the firm.  By then, the appellant was a non-equity partner in another law firm.  The appellant was interviewed by a partner of the (former) firm and later that day the appellant sent a bank cheque in the sum of $116,475.03 to the firm. 

   A commercial settlement was reached with respect to the repayment of the amount the subject of count 1, while the sum the subject of count 2 was, as I have already set out, repaid in full [8] ‑ [13].

5. The Tribunal noted that the practitioner was not motivated by personal gain, but was motivated to obtain a benefit for the Association of which he was secretary. However, in the view of the Tribunal (and the judge passing sentence on the practitioner), that did not excuse the practitioner's conduct [25].

6. The Tribunal also rejected a submission made on behalf of the practitioner to the effect that the offences were isolated incidents which occurred in circumstances which will never be repeated. The Tribunal noted that there was a significant period of time between the occurrence of the two offences during which the practitioner maintained the deception. The Tribunal also noted that when the Association repaid the practitioner, the practitioner did not take any immediate steps to repay the party from whom the funds had been misappropriated. The Tribunal also noted that the practitioner attempted to maintain his innocence in his dealings with the Committee by placing blame on his secretary and others [26].

7. The Tribunal expressed the view that when a legal practitioner misappropriates funds from his or her client and is sentenced to a term of imprisonment for doing so, it would only be in the most extraordinary circumstances that the result would be anything other than a recommendation to the effect that the practitioner be struck off the Roll. The Tribunal did not consider that there were any extraordinary circumstances in the case of this practitioner, and accordingly determined to make a report to this court with a recommendation to the effect that the practitioner be struck from the Roll [29].

Relevant principles

1. The principles to be applied in cases of this kind are conveniently set out in the judgment of this court in Legal Profession Complaints Committee v Masten [2011] WASC 71:

   The principles to be applied in an application of this kind are well established.  The jurisdiction of the court to remove a practitioner from the Roll is not exercised for the purpose of punishing the practitioner concerned, but for the protection of the public and the reputation and standards of the legal profession:  Re Maraj (a legal practitioner) (1995) 15 WAR 12, 25 (Malcolm CJ, Kennedy & Franklyn JJ agreeing); Ziems v Prothonotary of the Supreme Court of New South Wales [1957] HCA 46; (1957) 97 CLR 279, 286 (Dixon CJ, McTiernan, Fullagar & Kitto JJ agreeing); Legal Profession Complaints Committee v Brennan [2010] WASC 198 [10] (Martin CJ, Murray & Hall JJ agreeing). Since the object is to protect the public and the reputation of the profession, the consequences for the practitioner may be either more or less severe than they would be if the only object of the proceedings was one of punishment: Legal Practitioners Complaints Committee v Lashansky [2007] WASC 211 [19].

   The critical question to be addressed by the court is whether the practitioner is shown not to be a fit and proper person to be a legal practitioner:  Ziems (297 - 298); A Solicitor v The Council of the Law Society of New South Wales [2004] HCA 1; (2004) 216 CLR 253 [15]; Legal Practitioners Complaints Committee v Thorpe [2008] WASC 9 [43]. Fitness to practise law requires that the practitioner must command the personal confidence of his or her clients, fellow practitioners and judges: In re Davis (1947) 75 CLR 409, 420 (Dixon J), Thorpe [43], and Brennan [11]. The personal circumstances of the practitioner may be relevant to explain the conduct of the practitioner, which is discussed in further detail below.

   Striking off is an order reserved for very serious cases, where the character and conduct of the practitioner is seen to be 'inconsistent with the privileges of further practice':  Barristers' Board v Darveniza [2000] QCA 253; (2000) 112 A Crim R 439 [38]. In that case, Thomas JA observed that 'the quality most likely to result in striking off is conduct which undermines the trustworthiness of the practitioner, or which suggests a lack of integrity or that the practitioner cannot be trusted to deal fairly within the system which he or she practises' [33].

   Honesty and integrity are essential characteristics required of legal practitioners.  The court has generally taken a very serious approach to cases in which a practitioner's conduct has involved dishonesty:  see Brennan [15], Legal Practitioners Complaints Committee v Palumbo [2005] WASCA 129 [23]; Legal Practitioners Complaints Committee v De Pardo [2007] WASC 266 [14]. Honesty is particularly important where practitioners are dealing with monies entrusted to them by their clients. Some of the minimum standards expected of practitioners in respect of money held on trust are set out by Malcolm CJ in Re Maraj:

   Integrity, reliability and an appropriate level of efficiency in the administration of money held on trust are all qualities which any reasonably experienced practitioner may be expected to demonstrate, in addition to being professionally competent in pursuing his or her clients' interests (25).

   In this context, the Tribunal correctly stated that the public is entitled to expect that practitioners will act 'with meticulous care and complete honesty and accountability':  Sentencing decision [21].

   As observed by the Tribunal the misuse of trust funds by a legal practitioner is an extremely serious matter:  Sentencing decision [21]. However, there have been several cases in which the inability to keep a trust account adequately has not lead to the practitioner being struck off the roll: see Council of the Queensland Law Society Inc v Cummings; Ex parte Attorney-General of Queensland and Minister for Justice [2004] QCA 138; Attorney-General and Minister for Justice (Qld) v Priddle [2002] QCA 297; Legal Practitioners Complaints Committee v Edward [2007] WASC 287. Importantly, in these cases the lack of dishonesty on behalf of the practitioner was a significant factor in the decision to impose a lesser penalty.

   In contrast, the courts will generally strike off defaulting practitioners in serious cases of trust account defalcation, particularly where dishonesty is a factor:  Cummings [22] (McMurdo P, Davies JA & Fryberg J agreeing); see also Council of the Queensland Law Society Inc v Wakeling [2004] QCA 42; Brennan.  The need for such an approach was emphasised in the oft-cited passage of Street CJ in Law Society of New South Wales v Jones (Unreported, NSWCA, 27 July 1978):

   Reliability and integrity in the handling of trust funds are fundamental prerequisites in determining whether an individual is a fit and proper person to be entrusted with the responsibilities belonging to a solicitor. Members of the public, many of them wholly inexperienced and unskilled in matters of business or of law, inevitably must put great faith and trust in the honesty of solicitors in the handling of moneys on their behalf. The Court must ensure that this trust is not misplaced (10).

   Where a practitioner has dishonestly misused trust monies, authority clearly establishes that, almost inevitably, the most appropriate order will be to strike the practitioner off the Roll [16] ‑ [23].

Application of relevant principles to this case

1. The practitioner has pleaded guilty to two offences of dishonesty.  In each case the dishonesty involved the misappropriation of trust funds which he knew were held in the trust account of the firm by which he was employed for the benefit of clients of that firm.  Although the practitioner does not appear to have been motivated by direct personal gain, the offences were nevertheless serious and resulted in the imposition of a substantial term of imprisonment which was upheld on appeal.

2. The practitioner maintained the deception over a significant period of time - it was approximately six years between the perpetration of the first fraudulent misappropriation and the discovery of both frauds.  As we have noted, the Tribunal found that the practitioner did not take any immediate steps to repay the funds to the party entitled to them when some of the funds misappropriated were repaid by the Ukrainian Association.  Further, the practitioner attempted to conceal his conduct from the Committee and unsuccessfully attempted to lay the blame on others for his fraud.

3. These events clearly demonstrate that the practitioner is not a fit and proper person to be a legal practitioner, as they demonstrate his lack of the essential personal qualities of honesty and integrity.  In this court, the practitioner does not submit that there are any exceptional aspects of his conduct or personal circumstances which would support a conclusion that his name should not be removed from the Roll of Practitioners.  To the contrary, as we have noted, the practitioner accepts that the appropriate order is for removal of his name from the Roll, and does not wish to be heard in opposition to the Committee's motion.

4. The court will order accordingly.

Costs

1. Although the motion lodged by the Committee seeks its costs, the court has been advised that this aspect of its application is not pressed.  As this court has noted in previous cases, where the practitioner does not oppose the orders sought by the Committee, it is appropriate to regard the costs of these proceedings as part of the cost of regulating the profession, and to make no order as to costs.

Orders

1. For these reasons, the court will order that the name of the practitioner be removed from the Roll of Practitioners and makes no order as to the costs of these proceedings.