Prothonotary of the Supreme Court of New South Wales v Milios

[2004] NSWCA 180

CITATION:	Prothonotary of the Supreme Court of New South Wales v Milios [2004] NSWCA 180 revised - 21/07/2004
HEARING DATE(S):	13 May 2004
JUDGMENT DATE:	13 May 2004
JUDGMENT OF:	Santow J at 36; Bryson JA at 37; McClellan AJA at 1
DECISION:	1. A declaration that the opponent has been guilty of professional misconduct.; 2. A declaration that the opponent is not a fit and proper person to remain on the Roll of Legal Practitioners of the Supreme Court of New South Wales.; 3. An order that the name of the opponent be, and hereby is, removed from the Roll of Legal Practitioners for the State of New South Wales.; 4. An order that the opponent pay the costs of and incidental to these proceedings.
CATCHWORDS:	LEGAL PRACTITIONERS: - solicitors - what constitutes professional misconduct - good fame and character - fit and proper person - criminal acts - forgery of mortgage documents to fraudulently obtain money - dishonest behaviour
LEGISLATION CITED:	Crimes Act 1900 (NSW) s 300(1); s 300(2)
CASES CITED:	Allinson v General Council of Medical Education and Examination [1894] 1 QB 750 Ex parte Tziniolis, Re The Medical Practitioners Act [1967] 1 NSWLR 357 Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655 In re A Solicitor; Ex parte Law Society [1912] 1 KB 302 In Re: Davis (1947) 75 CLR 414 New South Wales Bar Association v Smith (NSWCA, unreported, 9 May 1991) Prothonotary of the Supreme Court of New South Wales v Costello [1984] 3 NSWLR 201
PARTIES :	Prothonotary of the Supreme Court of NSW (Claimant) Nicolas Milios (Opponent)
FILE NUMBER(S):	CA CA41189/03
COUNSEL:	L K Crowley (Claimant) No appearance for Opponent
SOLICITORS:	I V Knight (Claimant) No appearance for Opponent

41189/03

SANTOW JA
BRYSON JA
McCLELLAN AJA

THURSDAY 13 MAY 2004

PROTHONOTARY OF THE SUPREME COURT OF NEW SOUTH WALES v Nicolas MILIOS

Judgment

1 McCLELLAN AJA: The opponent was admitted to the Roll of Legal Practitioners of the Supreme Court of New South Wales on 18 December 1987. He commenced practice as a solicitor but his Practising Certificate was cancelled on 5 June 1998.

2 On 17 December 2003 the Prothonotary filed a summons claiming:

1. A declaration that the opponent is guilty of professional misconduct.

2. A declaration that the opponent is not a person of good fame and character.

3. A declaration that the opponent is not a fit and proper person to remain on the Roll of Legal Practitioners of the Supreme Court of New South Wales.

4. An order that the name of the opponent be removed from the Roll of Legal Practitioners for the State of New South Wales.

5. An order that the opponent play the claimant’s costs.

3 The particulars relied upon in the summons were as follows:

(i) That between 17 December 1997 and 22 December 1997 the opponent made a false instrument with intent to induce a person as genuine, contrary to s 300(1) Crimes Act 1900 (NSW);

(ii) That between 1 May 1998 and 15 May 1998 the opponent made a false instrument with intent to induce a person as genuine, contrary to s 300(1) Crimes Act ;

(iii) That between 1 May 1998 and 15 May 1998 the opponent made a false instrument with intent to induce a person as genuine, contrary to s 300(1) Crimes Act ;

(iv) That on or about 22 December 1997 the opponent used a false instrument with intent to induce a person to accept such instrument as genuine, contrary to s 300(2) Crimes Act ;

(v) That on or about 15 May 1998 the opponent used a false instrument with intent to induce a person to accept such instrument as genuine, contrary to s 300(2) Crimes Act ;

(vi) That on or about 15 May 1998 the opponent used false instrument with intent to induce person to accept such instrument as genuine, contrary to s 300(2) Crimes Act .

4 For the purpose of these proceedings, the parties have agreed the relevant facts which have been included in an agreed statement of facts and I substantially adopt in these reasons.

5 The opponent commonly uses the name Nick Milios. However, on 18 December 1987 the opponent was admitted as a solicitor of the Supreme Court of New South Wales under the name Nicholas Milios.

6 The opponent operated as a sole practitioner from premises at 498 Anzac Parade, Kingsford. In 1996, the opponent acted on behalf of clients who wished to borrow money for short periods. The opponent obtained funds from the clients of other solicitors through a mortgage broker. One such solicitor was Mr James Carter, a principal of Nugent, Wallman and Carter Solicitors.

7 In 1997 the opponent began approaching Mr Carter directly in order to obtain loans on behalf of his clients. The loans were secured by mortgages over real property.

8 On 17 November 1997, the opponent was in possession of the title deeds of two properties owned by Steve and Christine Hardas and their daughter Sandra Hardas, namely, 1219 Botany Road, Mascot and 1-2 O’Rourke Crescent, Eastlakes. The opponent had acted for the Hardas family since 1990 and had acted on their behalf in relation to the purchase of these properties.

9 On 17 November 1997, the opponent approached Mr Carter and requested a loan of $210,000 on behalf of his clients, the Hardas family who were unaware that such a request had been made.

10 On 18 December 1997 Mr Carter prepared the necessary mortgage documents to support the loan. The mortgagee was Peter Schultes, a client of Mr Carter’s. The sum proposed to be loaned was $210,000 and the repayment period was for a term of three months. The property secured by the mortgage was land and a dwelling house at 1219 Botany Road, Mascot owned by Steve and Christine Hardas and their daughter, Sandra.

11 On 18 December 1997 the mortgage documents, including the unsigned mortgage number 3861471B were sent to the opponent.

12 On or about 20 December 1997 the opponent forged the signature of Steve, Christine and Sandra Hardas on the mortgage and other mortgage related documents and then fraudulently purported to witness their signatures. The opponent then returned the falsified documents to Mr Carter and then directed Mr Carter to pay the settlement sum of $210,000 into his trust account. Upon receipt of these documents, Mr Carter provided a bank cheque form the mortgagee in the sum of $210,000 in favour of the opponent’s trust account.

13 On 15 May 1998 a further loan was arranged in favour of Steve, Christine and Sandra Hardas without their knowledge. At the opponent’s request, Mr Carter arranged finance in the sum of $315,000 from a number of his clients. Mr Carter drew up two mortgages, namely a primary mortgage numbered 5074443U and a collateral mortgage numbered 5463549J. The first mortgage secured the Hardas’ family property situated at 1219 Botany Road, Mascot and the second mortgage secured Sandra Hardas’s property situated at 1-2 O’Rourke Crescent, Eastlakes. The sum proposed to be loaned was $315,000 and the term of the loan was 12 months. The unsigned mortgages and related documents were sent to the opponent who then forged the signatures. He forged the signatures of Steve, Christine and Sandra Hardas on the first mortgage (5074443U) and the signature of Sandra Hardas on the second mortgage (5463549J).

14 The opponent then forged the Hardas signatures on the related mortgage documents and fraudulently purported to witness those signatures. These documents were then given to Mr Carter and the sum of $315,000 was advanced. Out of the loan monies of $315,000 the opponent directed the mortgagees to pay Mr Peter Schultes the sum of $212,221.50 thereby discharging the original mortgage (numbered 3861471B).

15 Apart from outstanding legal costs and accrued interest payments the balance of the loan amounting to $97,957.09 was directed by the opponent to be paid to three separate companies, namely, Raztech Holdings Pty Ltd ($42,000), Samyo Enterprises Pty Ltd ($36,000) and Southern Cross Enterprises (NSW) Pty Ltd ($19,957.09). The latter payment was by way of a business loan arranged by the opponent in favour of Charles Boustani, the Director of Southern Cross Enterprises Pty Ltd. Mr Boustani repaid the sum of $15,000 to the opponent.

16 Some time in 1998 the opponent came to the attention of the Law Society of New South Wales.

17 On 20 November 1998 the Supreme Court appointed a receiver, Mr David Watson in respect of some of the opponent’s property.

18 In a statement dated 19 September 2001 Mr Watson noted that the balance of the opponent’s trust account was $1,325,380.99 as at 5 January 1998 which included the original advance of $210,000 for the Hardas mortgage, the subject of charges 1 and 4. Mr Watson was of the view that the advance of $210,000 intermingled with other monies in the opponent’s trust account and was applied by the opponent either in the purchase of shares by Vacentia Pty Limited, a company in respect of which the opponent owned one of three issued shares or was applied by the opponent for the benefit of a vendor of property.

19 On 14 December 1998 Mr Steve Hardas became aware of the mortgages entered into by the opponent. On the following day he reported the matter to the police.

20 The police interviewed the opponent on 25 July 2001. During the interview, the opponent admitted that he had forged the signatures of the Hardas family on the mortgage documents referred to above and that they had no knowledge of the financial arrangements. The opponent agreed that after falsifying the documents he returned them to Mr Carter. He stated that the proceeds of the mortgages were deposited into his trust account. The opponent agreed that he had directed that the balance of the monies advanced on the second occasion, after the original mortgage had been discharged, be paid in favour of Raztech Holdings Pty Limited, Samyo Enterprises and Southern Cross Enterprises. However, he was unable to recall why the payments were made to these companies. The opponent was unable to say whether the original advance of $210,000 formed part of the proceeds used to purchase shares by Vincentia Pty Limited.

21 On 25 July 2001 the opponent was charged by police with six offences, being the offences particularised in the summons in these proceedings.

22 On 11 October 2001 the opponent appeared before the Downing Centre Local Court for committal at which time the opponent pleaded guilty to the said charges and was convicted of each offence. He was sentenced to concurrent terms of imprisonment, the effect of which was imprisonment for three years with a non-parole period of two years. The opponent has served the non-parole period of the sentence and on 11 December 2003 was released on parole.

23 The opponent does not wish to contest the orders and declarations sought by the claimant in the summons filed herein, save for any order in respect of costs. However, when the matter was called this morning, the opponent did not appear. I should have indicated that the statement of agreed facts to which I have previously adverted has been signed by the opponent. However, the opponent has made no submissions to this Court in relation to the relief now sought by the claimant.

24 In Allinson v General Council of Medical Education and Examination [1894] 1 QB 750 Lopes LJ (at 763, with whom Lord Esher MR and Davey LJ agreed) said that "professional misconduct" consists of behaviour on the part of the (in this case) legal practitioner; "which would be reasonably regarded as disgraceful or dishonourable by his professional brethren of good repute and competency.”

25 This test was applied in In re A Solicitor; Ex parte Law Society [1912] 1 KB 302 at 311-312. It has also been applied in relation to barristers of this Court; (see Prothonotary of the Supreme Court of New South Wales v Costello [1984] 3 NSWLR 201 per Glass and Samuels JJA at 203.

26 In New South Wales Bar Association v Smith (NSWCA, unreported, 9 May 1991) Samuels JA formulated a test of professional misconduct, being whether the conduct “would reasonably incur the reprobation of professional brethren of good repute and competency.”

27 In the present matter, the opponent engaged in conduct over a period of several months which amounted to a continuous course of fraudulent behaviour. The opponent’s conduct was of a serious criminal nature. On three separate occasions he forged the names and signatures of his own clients in order to create mortgage instruments to fraudulently obtain monies for his own purposes. He has been convicted of relevant offences. The mere fact of a conviction for a criminal offence, although not determinative of the character of the opponent’s conduct, is material which is relevant to the question as to whether he is a fit and proper person to remain on the Roll of Legal Practitioners.

28 The opponent’s clients had invested their trust in him and engaged him in his professional capacity to act in their interests as their solicitor. The opponent has abused this position of trust by wilfully entering into loan and mortgage agreements without the consent of the client. The opponent further abused his position by forging his clients’ signatures in order to complete and execute the mortgage instruments and other associated documents necessary for him to obtain the relevant monies.

29 Apart from defrauding his own clients, the opponent deliberately deceived his fellow practitioner, a solicitor, Mr James Carter, by leading him to believe that the opponent was acting in a bona fide manner on behalf of his clients. The opponent deliberately and dishonestly caused Mr Carter to prepare mortgage documents and then used the fraudulently executed mortgage documents to induce Mr Carter to arrange for his own clients to provide loan monies.

30 I am in no doubt that by his actions the opponent has been guilty of professional misconduct and has demonstrated that he is not of good fame and character (see Ex parte Tziniolis, Re The Medical Practitioners Act [1967] 1 NSWLR 357 at 451; see also Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655 per Higgins J at 692.

31 The High Court considered the conduct of a legal practitioner who had committed criminal acts in In Re: Davis (1947) 75 CLR 414 which was an appeal in relation to the removal of a barrister from the Roll in which Dixon J stated (at 420):

“It would almost seem to go without saying that conviction of a crime of dishonesty of so grave a kind as housebreaking and stealing is incompatible with the existence of a candidate for admission to the Bar of the reputation and the more enduring moral qualities denoted by the expression, ‘good fame and character,’ which describe the test of his ethical fitness for the profession.”

32 The observations in In Re: Davis are applicable to a solicitor, particularly where, as in the present case, the crimes committed are serious crimes of dishonesty.

33 There is no evidence from which it could be concluded that the opponent is reformed.

34 I am also satisfied that the opponent’s conduct demonstrates that he is not a fit and proper person to remain on the Roll of Legal Practitioners. The public are entitled to place their trust and confidence in legal practitioners in the knowledge that they will act in the client’s interest. The public must be protected from persons such as the opponent who pursue their own financial gain by fraudulent means at the expense of the interests of their own clients. Other practitioners must also be deterred from acting in a similar manner.

35 In my opinion it is appropriate for this Court to make the following orders:

1. A declaration that the opponent has been guilty of professional misconduct.
2. A declaration that the opponent is not a fit and proper person to remain on the Roll of Legal Practitioners of the Supreme Court of New South Wales.
3. An order that the name of the opponent be, and hereby is, removed from the Roll of Legal Practitioners for the State of New South Wales.
4. An order that the opponent pay the costs of and incidental to these proceedings.

36 SANTOW JA: I agree.

37 BRYSON JA: I agree with McClellan AJA.

38 SANTOW JA; Accordingly those become the orders of the Court.

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Last Modified: 07/26/2004