Legal Profession Complaints Committee v Smith
[2014] WASC 458
•4 DECEMBER 2014
LEGAL PROFESSION COMPLAINTS COMMITTEE -v- SMITH [2014] WASC 458
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 458 | |
| FULL BENCH | |||
| Case No: | LPD:4/2014 | 4 DECEMBER 2014 | |
| Coram: | MARTIN CJ McKECHNIE J ALLANSON J | 4/12/14 | |
| 28 | Judgment Part: | 1 of 1 | |
| Result: | Order that name of practitioner be removed from the Roll of practitioners | ||
| A | |||
| PDF Version |
| Parties: | LEGAL PROFESSION COMPLAINTS COMMITTEE SIMON VICTOR SMITH |
Catchwords: | Legal practitioner Disciplinary proceedings Unauthorised withdrawal of trust funds Failure to keep proper records Failure to respond to complaints Whether practitioner a fit and proper person Removal from Roll of practitioners Costs of proceedings where conduct is admitted |
Legislation: | Legal Profession Act 2008 (WA), s 226, s 228, s 438, s 444 Legal Profession Regulations 2009 (WA), r 46, r 49, r 51 |
Case References: | In Re A Practitioner (1982) 30 SASR 27 Legal Profession Complaints Committee and Smith [2014] WASAT 134 Legal Profession Complaints Committee v Masten [2011] WASC 71 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- SMITH [2014] WASC 458 CORAM : MARTIN CJ
- McKECHNIE J
ALLANSON J
- Applicant
AND
SIMON VICTOR SMITH
Respondent
Catchwords:
Legal practitioner - Disciplinary proceedings - Unauthorised withdrawal of trust funds - Failure to keep proper records - Failure to respond to complaints - Whether practitioner a fit and proper person - Removal from Roll of practitioners - Costs of proceedings where conduct is admitted
Legislation:
Legal Profession Act 2008 (WA), s 226, s 228, s 438, s 444
Legal Profession Regulations 2009 (WA), r 46, r 49, r 51
Result:
Order that name of practitioner be removed from the Roll of practitioners
Category: A
Representation:
Counsel:
Applicant : Ms P E Le Miere
Respondent : No appearance
Solicitors:
Applicant : Legal Profession Complaints Committee
Respondent : No appearance
Case(s) referred to in judgment(s):
In Re A Practitioner (1982) 30 SASR 27
Legal Profession Complaints Committee and Smith [2014] WASAT 134
Legal Profession Complaints Committee v Masten [2011] WASC 71
Legal Profession Complaints Committee v McLean [2012] WASC 297
1 JUDGMENT OF THE COURT: The Legal Profession Complaints Committee (the Committee) seeks an order that Simon Victor Smith (the practitioner) be removed from the Roll of legal practitioners.
2 The State Administrative Tribunal (the Tribunal) has made and transmitted a report to this Court 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 as conclusive as to all facts and findings mentioned or contained in the report. The report is provided with a recommendation, pursuant to s 438(4)(b) of the Act, that the practitioner's name be removed from the Roll of practitioners.
3 The practitioner has filed a notice of his intention not to oppose the application and consents to his name being struck from the Roll of Practitioners.
The findings against the practitioner
4 The facts, and findings of the Tribunal, are set out in the Tribunal's reasons for decision in Legal Profession Complaints Committee and Smith,1 which reasons comprise the report to the court pursuant to the Act. The following matters are taken from that report.
5 The Committee alleged before the Tribunal that the practitioner engaged in unsatisfactory professional conduct and professional misconduct. These allegations were particularised in three grounds:
Ground 1
It was alleged that between about 7 November 2011 and about 29 May 2012, Mr Smith engaged in professional misconduct, namely:
1) dishonest conduct and/or illegal conduct, namely stealing; a contravention of s 226(1)(a) of the LP Act,
2) by withdrawing, without authority, and using for his own benefit, funds from the general trust account of his law practice, Smith Barristers and Solicitors (the firm), as follows:
a) the sum of $3,437, which was held on trust for the firm's client, Mr Tony Grego (Mr Grego);
b) the sum of $5,000.36, which was held on trust for the firm's clients, Mr William Sutton and Mrs Ruth Sutton (Mr and Mrs Sutton);
c) the sum of $8,759, which was held on trust for the firm's client, Ms Hazel Betts (Ms Betts);
d) the sum of $8,489.92, which was held on trust for the firm's clients, Mr Jai Ju Feng (Mr Feng) and Mrs Zhong Lang Wang (Mrs Wang); and
e) the sum of $6,437.89, which was held on trust for the firm's client, Mr Jim Phillips (Mr Phillips).
Ground 2
It was alleged that the practitioner, between about 7 November 2011 and about 29 May 2012, engaged in professional misconduct by failing to keep the firm's trust records in the manner required by the Legal Profession Regulations 2009 (WA) (Regulations) in that he:
a) failed to keep any separate client trust ledgers, as required by reg 49(1) of the Regulations;
b) failed to record the particulars for trust account transactions, as required by reg 49(2)(a), (b) and (c), reg 49(4)(a), (b), (c), (d) and (e), reg 49(5)(a), (b), (c) and (d) and reg 49(6)(a), (b), (c), (d) and (e) of the Regulations;
c) failed to keep a trust account receipts cash book and a trust account payments cash book, as required by reg 46 of the Regulations; and
d) failed to reconcile the firm's trust records each month, as required by reg 51(2) of the Regulations,
and thereby contravened s 228(3) of the LP Act.
Ground 3
It was alleged that the practitioner engaged in professional misconduct by not responding to the enquiries made by the Committee in letters to the practitioner dated 8 June 2012, 5 July 2012 and 6 November 2012.
6 The parties to the proceedings before the Tribunal agreed upon the relevant facts, which were adopted by the Tribunal in the terms agreed by the parties, namely:
1. At all material times, the practitioner:
1.1 was an Australian legal practitioner, within the meaning of the LP Act;
1.2 was a sole practitioner of the firm;
1.3 maintained a general trust account, within the meaning of s 205(1) of the LP Act, with Australia and New Zealand Banking Group Limited (ANZ) under the name 'Smith Barristers & Solicitors Law Practice Trust Account', BSB [***8], account number [***24] (Trust Account);
1.3 maintained a general office account with ANZ under the name 'Simon Victor Smith T/As Smith Barristers and Solicitors', BSB [***8], account number [***22] (General Account); and
1.4 maintained a personal account with ANZ under the name 'Simon Victor Smith', BSB [***8], account number [***51] (Personal Account).
2. On 14 June 2012, the Legal Practice Board (Board) via its delegate the Professional Affairs Committee (PAC) suspended the practitioner's practising certificate pursuant to s 58 of the LP Act.
3. On 15 June 2012 the PAC appointed Mr Ross Stuart Harrison (Mr Harrison) as Manager of the firm with such appointment to expire on 14 December 2013.
Client matters general Ground 1
4. As at 6 November 2011 the Trust Account had a credit balance of $7,461.36.
5. From at least 7 November 2011 to about 16 May 2012 the practitioner did not maintain trust ledger accounts, relevantly, in respect of the clients referred to in column 1 of schedule A to this Application (Schedule A) by reference to the client's name (Clients).
6. At all material times the practitioner also held money in his trust account for the benefit of clients for whom he did not maintain separate trust ledgers that are not the subject of this application.
7. Between 7 November 2011 and 16 May 2012 the practitioner received trust monies from, or for the benefit of the Clients, and deposited those monies received in respect of the Clients in the Trust Account to be held for the benefit of the Clients as shown in column 4 of Schedule A.
8. Between 7 November 2011 and 29 May 2012 the practitioner withdrew monies held for the benefit of the Clients from the Trust Account and transferred them to the General Account or Personal Account by effecting electronic trust transfers and/or by cheques drawn on the Trust Account as shown in columns 3 and 5 of Schedule A. The purpose of each withdrawal is set out in column 2 of Schedule A.
9. As at 29 May 2012 the balance of the money the practitioner should have held in the Trust Account for the benefit of each of the Clients is shown in column 6 of Schedule A (Balance Moneys).
10. Between 7 November 2011 and 29 May 2012 the practitioner also withdrew monies (the purpose for which was not recorded) from the Trust Account and transferred them to the General Account or Personal Account resulting in funds held in the Trust Account being less than the total that ought to have been held in the Trust Account as Balance Moneys (Balance Deficiencies).
11. As at 29 May 2012 the total of the Balance Moneys was $32,124.17.
12. As at 29 May 2012 the Trust Account had a balance of $601.
Client Tony Grego
13. On 3 December 2008 Judgment was entered in the District Court of Western Australia against Mr Erigo Fazio (Mr Fazio) for the sum of $351,324.20 (the judgment debt) owing to Mr Tony Grego (Mr Grego).
14. On 21 February 2011 Mr Grego entered into a service agreement with Australia Credit Collection Services (ACCS) for the recovery of the judgment debt.
15. On or about 16 August 2011, ACCS retained the practitioner to act on behalf of Mr Grego to enforce the judgment debt in the District Court (the Grego proceedings).
16. On or about 29 August 2011, the practitioner caused a letter to be sent to ACCS confirming the receipt of instructions and seeking that Mr Grego deposit the sum of $1,122.00 into the Trust Account on account of the firm's anticipated legal fees and disbursements.
17. On or about 7 November 2011, ACCS, on behalf of Mr Grego, paid $3,437.00, by cheque, into the Trust Account on account of the practitioner's anticipated fees and disbursements (Grego trust monies).
18. The practitioner issued a receipt for the Grego trust monies but failed to issue any trust statement or invoice in respect of the Grego trust monies.
19. On 24 November 2011, Ms Cait Clifton, a law clerk of the firm, emailed Mr Grego in the following terms:
Afternoon Tony,
We have received $3,437.00 in trust funds from Australian Credit Collection Service with instructions to recover your judgment against Eric Fazio. To enable documents to be lodged I require your written instructions to access the funds to pay for these enforcement proceedings.
Email authority is acceptable …
20. On 24 November 2011 the practitioner emailed Mr Grego in the following terms:
… Please note that what we require from you is written confirmation that you authorise us to use the $3,437.00 trust funds for the following purposes:
1. To pay out fees and disbursements we will send an invoice to you prior to applying these funds towards payment of any invoices sent to you; and
2. To pay any Court fees, Sheriff fees, Landgate fees or other third party fees necessary to enforce the judgment …
21. On or about 29 November 2011 the practitioner emailed Mr Grego in the following terms:
… As discussed we received a cheque from ACCS on 7 November 2011 in the sum of $3,437.00 which we were eventually told by Graeme Coates of ACCS was the amount of funds that they were holding in trust for you. We have now banked that cheque into our trust account and we enclose a copy of our trust receipt for your records.
We ask that you please confirm via return email that the amount of $3,437.00 is to be used for the following purposes:
1. To pay any necessary fees to the Court, the Sheriff, Landgate and any other governmental authority that is required in order for us to enforce your District Court judgment against Erigo Fazio …
2. To pay our invoice(s) for acting on your behalf in this matter. No funds will be applied toward payment of our invoice until we have issued an invoice to you and have received your written instructions that we are to pay our invoice from the funds we are holding in trust …
22. On 30 November 2011 Mr Grego emailed the practitioner and confirmed that the amount of $3,437.00 was to be applied as per the practitioner's email of 29 November 2011.
23. On 1 February 2012 the practitioner lodged two enforcement applications in the proceedings with the District Court and confirmed this by email, on the same day, to Mr Grego.
24. On 7 February 2012 the practitioner sent a letter to Investigative Solutions WA Pty Ltd (ISWA) seeking that the Means Inquiry Summons issued in the proceedings be personally served on Mr Fazio.
25. On or about 20 February 2012 the practitioner received a report from ISWA dated 15 February 2012 indicating that the Means Inquiry Summons had not been served on Mr Fazio and providing Tax Invoice #00018020 dated 16 February 2012 for attempted service in the sum of $74.60.
26. There is no evidence of any further work carried out in the proceedings.
27. The practitioner did not:
27.1 provide the client with a bill for legal services carried out by the practitioner;
27.2 provide the client with a trust statement at any time;
27.3 repay all, or any, of the Grego trust monies.
28. Mr Grego's reconstructed trust account ledger appears at Schedule A.
Client - Bill and Ruth Sutton
29. Between 2011 and 2012, the practitioner acted on behalf of Mr William Sutton and Mrs Ruth Sutton (Mr and Mrs Sutton) in relation to the following relevant matters:
29.1 on or about 13 September 2011 the practitioner was retained by WLJ Nominees Pty Ltd (WLJ), of which Mr Sutton is a director, to act on behalf of WLJ in relation to a dispute with West Coast Formwork WA Pty Ltd (10,012dispute);
29.2 on or about 13 September 2011, the practitioner was retained by Elmridge Pty Ltd (Elmridge), of which Mr Sutton is a director and Mrs Sutton is a Director/Secretary, to act on behalf of Elmridge in relation to a refinance application of the Bank of Queensland construction loan facility (10,013 refinance);
29.3 on or about 13 September 2011, the practitioner was retained by WLJ to act on its behalf in relation to a dispute with Mr A Teo (10,014 dispute); and
29.4 on or about 15 January 2012 the practitioner was retained by Mr and Mrs Sutton to act for them in relation to the sale of their property at 40 Rosella Lane, Subiaco in the State of Western Australia (the property) for the sum of $3,050,000 (10,130 sale).
30. During the course of acting in relation to the matters particularised at paragraph 29 above, the practitioner caused the following invoices to be issued:
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31. On 19 January 2012 the practitioner caused a cheque for the sum of $55,000.00 to be deposited in the Trust Account on account of the deposit in the 10,130 sale (deposit trustmonies).
32. The practitioner failed to issue a receipt to Mr and Mrs Sutton in respect of the deposit trust monies.
33. The practitioner failed to particularise payment of the deposit trust monies in the general trust account ledger.
34. On 17 February 2012 the 10,130 sale was settled.
35. On 17 February 2012 the practitioner caused a cheque to be deposited into the Trust Account, being the balance proceeds of settlement of the 10,130 sale, in the sum of $270,949.08 (settlementtrustmonies).
36. On 20 February 2012 the practitioner sent an email to Mr Sutton attaching a copy of Invoice 35 dated 20 February 2012 for the agreed rate of $700.00 plus GST and disbursements and relevantly stating as follows:
Can you please give me your written authorisation to pay this invoice and the following invoices from the funds I am currently holding in trust being the balance of the deposit paid by the purchasers of 40 Rossello Lane, Subiaco less the real estate agent's commission:
1. Invoice No. 10 dated 20/9/11 for matter No. 10,014 (Dispute with A. Teo) $543.40;
2. Balance of Invoice No. 008 dated 12 September 2011 for matter No. 10,012 (Dispute with West Coast Formwork) $1,044.50 ($5,000.00 paid off this invoice in 2011); and
3. Balance of Invoice No. 22 dated 19 December 2011 fore matter No. 10,013 (Bank of Queensland Refinancing) $216.26 ($7,260.00 already paid from trust as per your earlier authorisation).
With the amount of the attached invoice being $796.40 the total amount I am seeking your authorisation to apply from the trust funds is $2,600.56.
I confirm that once this amount is applied from trust there are no other amounts outstanding other than the $2,000.00 flat fee for matter No. 10,013 (Bank of Queensland Refinancing).
37. On 22 February 2012 the practitioner caused an email to be sent to Mr and Mrs Sutton stating relevantly as follows:
Please find attached my Invoice No. 38 for the agreed flat fee of $2,000.00 plus GST to see out the refinancing of BOQ.
May I please have your authorisation to pay this invoice from the funds I hold on trust.
38. The deposit trust monies were disbursed as follows:
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This left a balance in the Trust Account, with respect to Mr and Mrs Sutton's 10,130 sale, in the sum of $44,489.44.
- 39. The balance deposit trust monies and the settlement trust monies were disbursed as follows:
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This left a balance in the Trust Account, with respect to Mr and Mrs Sutton's 10,130 sale, in the sum of $15,000.00.
- 40. On a date unknown but between 13 March 2012 and 15 March 2012 the practitioner issued a Trust Statement to Mr and Mrs Sutton particularising the disbursement of deposit trust monies and settlement trust monies from the Trust Account.
41. On or about 15 March 2012 the practitioner issued Trust Account cheque No 001039 to Mr and Mrs Sutton in the sum of $10,000.00 leaving a balance of money held on trust, with respect to Mr and Mrs Sutton's matter, in the sum of $5,000.36.
42. On or about 3 April 2012 Mr and Mrs Sutton terminated the services of the practitioner in relation to all their matters.
43. On 3 April 2012 Mrs Sutton emailed the practitioner stating relevantly as follows:
… can you please transfer our file to Barry O'Toole at Corser & Corser … Also the $5000 that is in your Trust A/c can you pls send chq to Barry made out to Corser & Corser Trust Acc.
44. The practitioner did not respond to this email.
45. On 19 April 2012 Mrs Sutton emailed the practitioner stating relevantly as follows:
… can you pls as a matter of urgency forward our $5000 that is in your trust account to Barry O'Toole account details as follows: Corser & Corser Trust Acc [***0] [***63].
46. The practitioner did not respond to this email.
47. The practitioner failed to forward balance settlement trust monies as requested.
48. Mr and Mrs Sutton's reconstructed trust account ledger appears at Schedule A.
Client - Hazel Betts
49. On or about 16 April 2012 Ms Hazel Betts (Ms Betts) retained the practitioner to act on her behalf in relation to the purchase of a property located at 8/85 Shakespeare Avenue, Yokine in the State of Western Australia (the Betts matter).
50. On 8 May 2012 the practitioner emailed Ms Betts in the following relevant terms:
Please also note that the stamp duty of $8,759.00 must be paid prior to settlement and I ask that you kindly forward to me a cheque payable to 'Commissioner for State Revenue' in the sum of $8,759.00 to enable me to stamp the contract and the transfer.
51. On 15 May 2012 Ms Betts emailed the practitioner seeking his bank details to directly transfer stamp duty into his account.
52. On 15 May 2012 the practitioner emailed Ms Betts in the following relevant terms:
My trust account details are as follows:
Bank: ANZ
Name: Smith Barristers & Solicitors Law Practice Trust A/C
BSB: [***8]
A/C: [***24]
Can you please confirm via return email once you have transferred the $8,759.00 for stamp duty into my trust account and I will then draw a cheque payable to the Commissioner of State Revenue for $8,759.00 and use it to pay the stamp duty on the contract/transfer.
53. On 15 May 2012 Ms Betts emailed the practitioner advising him that her daily limit was $5,000.00 and as such she transferred that amount and would transfer the remainder the next day.
54. On or about 15 May 2012 Ms Betts paid $5,000.00, by electronic funds transfer (EFT) into the Trust Account, with the reference 'STAMP DUTY HAZEL B', on account of stamp duty in the Betts matter.
55. On 16 May 2012 Ms Betts paid $3,759.00, by EFT into the Trust Account, with the reference 'HBETTS SDUTY PART2', on account of the balance stamp duty in the Betts matter (with the deposit of $5,000.00, collectively referred to as Betts trust monies).
56. The practitioner failed to issue a receipt to Ms Betts for the Betts trust monies.
57. On or about 25 May 2012 the Betts matter settled.
58. On or about 29 May 2012 the practitioner lodged the following with the Office of State Revenue:
58.1 Duties Document Lodgment and Assessment Form;
58.2 a copy of the Contract for Sale of Land in the matter; and
58.3 a cheque for the sum of $8,759.00, made payable to State Revenue, in payment of stamp duty payable in the matter.
59. The practitioner did not particularise this payment of Betts trust monies in the general trust account ledger.
60. The practitioner did not inform Ms Betts of the payment of Betts trust monies.
61. Between 31 May 2012 and 12 June 2012 the cheque to the Office of State Revenue for $8,759.00 was dishonoured by the ANZ.
62. On or about 29 May 2012, the practitioner drew a cheque from the Trust Account for the sum of $210.00 made payable to Landgate.
63. The practitioner did not particularise this payment of Betts trust monies in the general trust account ledger.
64. The practitioner did not inform Ms Betts of the payment of this disbursement on her behalf.
65. Between 31 May 2012 and 12 June 2012 the cheque to Landgate for $210.00 was dishonoured by the ANZ.
66. There is no evidence of any further work carried out in the matter.
67. The practitioner did not:
67.1 provide the client with a bill for legal services carried out by the practitioner;
67.2 provide the client with a trust statement at any time;
67.3 repay all, or any, of the Betts trust monies.
68. Ms Betts' reconstructed trust account ledger appears at Schedule A.
Clients - Mr Feng and Mrs Wang
69. On 9 January 2012 the practitioner was retained by Mr Jai Ju Feng (Mr Feng) and Mrs Zhong Lang Wang (MrsWang) to act for them in relation to protecting their interests in their son's, Mr Ben Fang (the son), assets (theFeng matter).
70. On 18 January 2012 the practitioner deposited or caused to be deposited a cheque into the Trust Account, in the sum of $10,000.00 (Feng trust monies).
71. The practitioner failed to issue a receipt for the Feng trust monies.
72. The practitioner failed to particularise the deposit of the Feng trust monies in the general trust account ledger.
73. On 20 January 2012 the practitioner issued Mr Feng and Mrs Wang with Invoice No 28 for professional fees in the sum of $1,510.08 (including GST) and indicated that the invoice had been paid from the Feng trust monies.
74. On 20 January 2012 the practitioner transferred the sum of $1,510.08 from the Trust Account to the General Account, by electronic funds transfer, in payment of Invoice No 28 dated 20 January 2012.
75. The practitioner failed to particularise transfer of Feng trust monies in the general trust account ledger.
76. On 9 February 2012 the son sent an email to the practitioner particularising a correction to be made to the affidavit of Mrs Wang and requesting an account/receipt for the Feng trust monies paid.
77. The practitioner did not respond to this email.
78. On or about 20 February 2012 the practitioner received an 'Authority to Draw Down Funds from Trust Monies Held in trust by Simon Barristers and Solicitors' dated 20 February 2012 and executed by Mr Feng, Mrs Wang and the son.
79. There is no evidence of any further work carried out in the matter.
80. The practitioner did not:
80.1 provide Mr Feng and/or Mrs Wang with a trust statement at any time;
80.2 repay all or part of the Feng trust monies.
81. Mr Feng and Mrs Wang's reconstructed trust account ledger appears at Schedule A.
Client - Jim Phillips
82. On or about 18 January 2012, the practitioner met with Mr Jim Phillips (Mr Phillips) and was retained to act for F.U.S Management Pty Ltd (F.U.S) in a debt recovery action against Mr Steven Bycroft (Mr Bycroft) for the sum of $185,000.00 (the Phillips matter).
83. On 24 January 2012 the practitioner caused an email to be sent to Mr Phillips attaching the following:
83.1. a letter from the practitioner to Mr Phillips dated 23 January 2012; and
83.2 a costs agreement.
84. The letter from the practitioner to Mr Phillips dated 23 January 2013 stated relevantly as follows:
We attach hereto our costs agreement for your perusal, please sign and return with a cheque for $8,000.00 payable to Smith Barristers & Solicitors Law Practice Trust A/C for our anticipated fees and disbursements. We will invoice you on a monthly basis and payment of those invoices will be deducted from the funds in our trust account after we have sent the invoice to you.
85. On 7 February 2012 the practitioner received a letter from Mr Phillips, dated 31 January 2012, attaching the signed costs agreement and a cheque for $8,000.00.
86. On 7 February 2012 the practitioner deposited the cheque in the sum of $8,000.00, on account of anticipated legal fees and disbursements, into the Trust Account (Phillips trust monies).
87. On 7 February 2012 the practitioner issued a Trust Account receipt for the Phillips trust monies.
88. The practitioner did not particularise the deposit of Phillips trust monies in the general trust account ledger.
89. On 1 March 2012 the practitioner caused a letter to be sent to Mr Phillips together with the draft letter of demand to Mr Bycroft and Invoice No 43 dated 1 March 2012 for total professional fees in the sum of $1,562.11, including GST.
90. The letter to Mr Phillips relevantly stated as follows:
… please be advised that the enclosed invoice has been paid from the $8,000.00 we are holding in our trust account for this matter.
91. On 1 March 2012 the practitioner transferred the sum of $1,562.11 by electronic funds transfer from the Trust Account to the General Account.
92. The practitioner did not issue a receipt to Mr Phillips for payment of Invoice No 43 dated 1 March 2012.
93. The practitioner did not particularise the payment of Phillips trust monies, in the sum of $1,562.11, in the general trust account ledger.
94. On 13 April 2012 Mr Phillips sent an email to the practitioner seeking an update on the matter.
95. On 26 April 2012 Mr Phillips sent an email to the practitioner seeking a further update on the matter.
96. On 27 April 2012 the practitioner sent an email to Mr Phillips apologising for the delay in responding and attaching copies of the documents sent to Mr Phillips on 1 March 2012 which the practitioner alleged had been incorrectly addressed.
97. The practitioner sought instructions from Mr Phillips as to whether the letter of demand to Mr Bycroft was accurate.
98. There is no evidence of any further work carried out in the matter.
99. The practitioner did not:
99.1 provide Mr Phillips with a trust statement; or
99.2 repay any of the Phillips trust monies.
100. Ms Phillip's reconstructed trust account ledger appears at Schedule A.
Ground 2 - Failing to maintain books of account
101. Between 7 November 2011 and 29 May 2012, the practitioner:
101.1 did not keep any separate client trust ledger accounts in relation to the Clients of the firm from whom he received trust money as required by reg 49(1) of the Regulations;
101.2 did not record the particulars required by reg 49(2)(a), (b) and (c), reg 49(4)(a), (b), (c), (d) and (e), reg 49(5)(a)(b)(c) and (d) and reg 49(6)(a), (b),(c), (d) and (e) of the 2009 in respect of the Clients;
101.3 did not keep a trust account receipts cash book and a trust account payments cash book as required by reg 46 of the Regulations; and
101.4 did not reconcile the firm's trust records as at the end of each month as required by reg 51(2) of the Regulations.
Ground 3 - Failing to respond to enquiries
102. Between 30 May 2012 and 1 June 2012, Ms Anna Young, Senior Trust Account Inspector with the Committee (Ms Young) conducted an examination of the Firm and produced a report entitled 'Report on Examination of Office and Practice Records on 30 May 2012 and completed 1 June 2012 of Simon v Smith and Smith Barristers and Solicitors' and dated 8 June 2012 (Report).
103. The Report noted that the Trust Account was not satisfactorily maintained in a number of respects (including the Balance Deficiencies) and required action to be taken by the practitioner in respect of specified matters under the headings 'Action to be taken' in the Report (Action to be Taken).
104. The Action to be Taken included:
104.1 establishing monthly trust bank and trust ledger reconciliations as required by reg 51 of the Regulations;
104.2 utilising the firm's software package to issue appropriate trust receipts to clients;
104.3 establishing cash receipts and cash payments as required by the Regulations for all monies drawn and received to the Trust Account;
104.4 Refer to reg 45 of the Regulations to ascertain what details must be recorded for electronic trust transfers undertaken by the firm;
104.5 Refer to reg 65 of the Regulations to ascertain what Is required when drawing down legal fees from a client's trust ledger;
104.6 Full details should be maintained on trust ledgers noting why funds had been received to trust, why funs had been drawn from trust, cheque/receipt numbers, date, amount, who deposited funds, to whom funds were being drawn and a running balance from the time the ledger was opened until closure; and
104.7 The firm must return funds transferred, without authorisation, back to the Trust Account and if funds are due to the firm on any of the clients, then an invoice should be issued to the client to allow for those funds to be drawn from trust after seven days if the client does not dispute the invoice.
105. On 8 June 2012 the Committee wrote to the practitioner in the following terms:
105.1 advising the practitioner that a conduct investigation was being conducted;
105.2 providing a copy of the Report and seeking the immediate placement of funds into the firm's Trust Account; and
105.3 seeking the practitioner's submissions in respect of the conduct that concerned the Committee.
106. The practitioner did not respond to this correspondence.
107. On 5 July 2012 the Committee wrote to the practitioner in the following terms:
107.1 confirming that there had been no response from the practitioner to previous letters;
107.2 seeking the practitioner's response and advising that a failure to do so amounted to a breach of the Legal Profession Conduct Rules 2010 (WA) (Rules); and
107.3 suggesting that the practitioner engage senior counsel to assist.
108. The practitioner did not respond to this correspondence.
109. On 6 November 2012 the Committee wrote to the practitioner in the following terms:
109.1 confirming that there had been no response from the practitioner to previous letters;
109.2 providing a copy of reconstructed trust ledger of the firm as prepared by Ms Young;
109.3 providing summaries of the amounts which the Committee considered should remain in trust for various clients;
109.4 seeking the practitioner's response and advising that a failure to do so amounted to a breach of the Rules; and
109.5 suggesting that the practitioner engage senior counsel to assist.
110. The practitioner did not respond to this correspondence.
7 The schedule to which reference is made in the agreed statement of facts is included as a schedule to these reasons.
8 The practitioner accepted all of the Committee's contentions, which were recorded by the Tribunal in the following terms:
Ground 1
111. Between 7 November 2011 and 29 May 2012, the practitioner was not authorised or directed by any person beneficially entitled to any of the monies held in the Trust Account to withdraw the monies from the Trust Account which caused the Balance Deficiencies.
112. Between 7 November 2011 and 29 May 2012, the practitioner knew that:
112.1 the Trust Account did not hold any monies, or sufficient monies, to which the practitioner or the individual Clients whose trust accounts went into debit were beneficially entitled, to effect the withdrawals of monies from the Trust Account which caused the Balance Deficiencies; and
112.2 he was not authorised or directed by any person beneficially entitled to any of the monies held in the Trust Account to withdraw the monies from the Trust Account which caused the Balance Deficiencies.
113. The practitioner withdrew the trust monies from the Trust Account which caused the Balance Deficiencies with the intention of using those monies for his own benefit which conduct was, in the circumstances, dishonest and/or illegal conduct, namely stealing.
114. Further, the practitioner's conduct in causing the Trust Deficiencies between 7 November 2011 and 29 May 2012 contravened s 226(1)(a) of the LP Act.
Ground 2
115. From at least 7 November 2011 to about 16 May 2012 the practitioner did not maintain trust ledger accounts as set out in paragraph 101 above in respect of the clients and thereby contravened s 228(3) of the LP Act.
Ground 3
116. The practitioner's failure to respond to the reasonable enquiries of the applicant set out in paragraphs 105, 107 and 109 above involved conduct that fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner where the conduct involved a substantial and consistent failure to reach a reasonable standard of competence and diligence.
9 Although the practitioner had provided to the Tribunal a document in which he requested that he be suspended from practice rather than struck from the Roll of Practitioners, during the hearing before the Tribunal the practitioner consented to the Tribunal making and transmitting a report to this court including the agreed statements of fact and contentions with a recommendation that his name be removed from the Roll of Practitioners.
Relevant principles
10 The principles to be applied were set out by this court in Legal Profession Complaints Committee v Masten2as follows:
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': Legal Profession Complaints Committee and Masten [2010] WASAT 47 (S) [21].
As observed by the Tribunal the misuse of trust funds by a legal practitioner is an extremely serious matter: Masten [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 principles to this case
11 The practitioner has admitted to using trust monies for his own benefit and failing to properly maintain his trust accounts over a period of almost seven months. He did not promptly respond to enquiries from the Committee although to his credit he did eventually make a full confession to officers of the Legal Practice Board.
12 The practitioner's conduct is similar to that described by King CJ:3
This conduct was nevertheless an affront to the sanctity of the practitioner's Trust Account and this Court has a duty to vindicate the inviolability of the trust imposed upon a practitioner to treat his clients' money in all respects as their money and to use their money for their purposes and no other.
13 We have read the references which were put before the Tribunal including the practitioner's lengthy plea in mitigation. We have taken account of the circumstances in which the practitioner found himself, relating in part to the failure of his marriage, which appears to have contributed to the practitioner's misconduct. While we acknowledge the impact of his personal circumstances at the time they cannot override the fundamental obligation of this Court to provide appropriate protection to the public interest in the honesty and integrity of practitioners.
14 Although the misuse of trust funds did not occur over a long period and it is to the practitioner's credit that he has made reparation of the funds misappropriated, the circumstances demonstrate significant dishonesty. The practitioner's conduct undermines his trustworthiness and leads inevitably to the conclusion that he cannot be trusted to deal fairly within the system in which he practises. Striking the practitioner off the roll of practitioners is required to protect the public. The practitioner is not a fit and proper person to practise law.
Costs
15 In the Notice of Originating Motion, the Committee seeks its costs of this application. In circumstances in which 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.4
Conclusion
16 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.
1Legal Profession Complaints Committee and Smith [2014] WASAT 134.
2Legal Profession Complaints Committee v Masten [2011] WASC 71.
3In Re A Practitioner (1982) 30 SASR 27, 31.
4Legal Profession Complaints Committee v McLean [2012] WASC 297 [16].
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