R v Just & Barclay
[2004] VSC 12
•3 February 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
CRIMINAL DIVISION
No. 1422 of 2003
| THE QUEEN | |
| v | |
| NORMAN JOHN JUST | First Accused |
| and | |
| GREGORY ANTHONY BARCLAY | Second Accused |
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JUDGE: | KELLAM J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 4 and 5 December 2003 | |
DATE OF SENTENCE: | 3 February 2004 | |
CASE MAY BE CITED AS: | R v Just and Barclay | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 12 | |
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CRIMINAL LAW - Solicitors - Deficiency in Trust Account - Plea of guilty - Issues of parity - Legal Profession Practice Act 1958 s.42(1).
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APPEARANCES: | Counsel | Solicitors |
| For the Crown | Mr T. Doherty | Office of Public Prosecutions |
| For the First Accused | Mr D. Brustman | Victorian Legal Aid |
| For the Second Accused | Mr P. Hayes Q.C. with Mr G. Traczyk | Harwood Andrews |
HIS HONOUR:
You, Norman John Just, and you, Gregory Anthony Barclay, have each pleaded guilty before me to one count of defalcation, contrary to s.42(1) of the Legal Profession Practice Act 1958, (“the Act”), in that on 21 September 1994 each of you being a solicitor and partner in the firm of Arthur Phillips & Just (“the firm”), had a deficiency of money in the trust account of that firm, and have not given a sufficient and satisfactory explanation of such deficiency.
Section 42 of the Act at the relevant time of your offence provided for a maximum penalty of seven years’ imprisonment upon conviction.
The deficiency in the trust account of the firm as at 21 September 1994 was approximately $125,000. By each of your pleas you each acknowledge that you have not given sufficient and satisfactory explanation for such deficiency.
The firm had a long and proud history for approximately a century, until 1994. It was, however, placed in receivership by order of this Court on 22 December 1994. The partners of the firm, as of 21 September 1994, were you, Norman Just, your brother, Peter Just, and you, Gregory Barclay. You, Norman Just, were the senior partner and with your brother held the equity in the firm. You, Gregory Barclay, the managing partner, held no equity in the firm.
Mr Jack Just, the father of you, Norman Just, and your brother, Peter Just, had been the senior partner of the firm between the 1950s and 1986. He retired as a partner in 1986, but continued with the firm as a consultant. However, the depositions reveal that he continued to attend the firm almost every day and continued to act for clients for whom he had acted for many years. It is apparent that notwithstanding the fact that he was no longer a partner in the firm he continued to hold considerable influence over the operations of his firm through his two sons. He died in 1999.
The firm conducted a general solicitors' practice. As part of that practice the firm managed contributory mortgage investments whereby the firm would invest clients’ moneys in registered mortgages through a contributory mortgage investment fund. The firm obtained a written authority from each client before any funds were advanced by way of a mortgage loan. However, money which was not re‑invested on security by way of a mortgage was held in interest bearing accounts. By reason of the successful operation of this fund the individual clients, including executors and trustees of deceased estates, placed substantial sums of money with the firm for the purposes of investment.
When a client was billed for work undertaken by the firm, the usual procedure was to prepare a bill and a cheque requisition which was signed by the solicitor concerned. A cheque would then be raised from the trust account and signed by two authorised signatories before being paid into the office account. The clients’ trust ledger would be amended accordingly. It is apparent that in the period of some months leading up to 21 September 1994 a serious cash flow difficulty became apparent in the administration of the firm’s business. The outgoings exceeded the incomings and there were inadequate funds to meet the demands of creditors. Between July 1994 and 21 September 1994, ten transfers were effected from client trust accounts to the office account of the firm without bills of costs being sent to clients. It is apparent that each of these cheques was signed and drawn from the trust account upon the basis of cheque requisitions only, and without bills of costs being raised at the relevant time. A total of ten cheques drawn on the trust account caused the deficiency in that trust account. Of these, nine were signed by you, Norman Just, and one was signed by you, Gregory Barclay.
The matter to which each of you has pleaded guilty is a serious matter. The maximum penalty stated under the Act is demonstrative of the view of the legislature in that regard. The community is entitled to expect high standards of integrity, responsibility and accountability from members of the legal profession. A solicitor responsible for a trust account is in a special position by reason of his being an officer of this Court and by reason of being able to hold himself out as a fit and proper person to whom clients may entrust their money with confidence. It is imperative that members of the community have trust and confidence in members of the legal profession and in their competence and integrity in relation particularly to money held on trust.
However, in each case, as has been pointed out by your counsel, there are some mitigating factors.
I turn first to such factors as relate to you, Norman Just.
First, you have pleaded guilty. You are entitled to have that fact taken into account in your favour. The community has, by your plea, been spared the time and cost of a trial. However, although I accept that your plea is reflective of some remorse, and although it was only shortly before your plea that the prosecution withdrew other allegations against you, it cannot be said that you pleaded guilty to the charge now on the presentment at the earliest possible moment.
I have been told something of your personal history and your circumstances. You are aged 59 years. Your father and your grandfather before him were solicitors who practised in the firm. You commenced your articles with the firm in 1966 and continued with the firm until it was placed into receivership in 1994. You married in 1967 and have two adult children. You have no prior convictions and I sentence you as a person of previous good character. I take into account the references that have been put before me. They are those from Mr David Miles, the Chairman of the Ambidji Group Pty Ltd, a communications and aviation company, and from Mr Brian Jackson, a shareholder and employee of the Ambidji Group. The reference from Mr Miles states that you are, in his opinion, a person of high professional skill and personal character. He is aware of your present circumstances but nevertheless expresses his view that you are a person “quite completely worthy” of his trust. Mr Jackson has known you for 12 years and expresses the opinion that you are an open, honest and hard‑working individual.
In addition, a report from psychologist, Mr Ian Joblin, has been put before me. Mr Joblin interviewed you in November 2003. He referred to the significant effect that the collapse of your practice and the charges which bring you to this Court have had upon you, and expressed the view that you continue to suffer anxiety and depression following upon the loss of your firm in 1994.
I accept that you have suffered significantly in consequence of the collapse of the firm and in consequence of the charges which were brought against you. I accept that prior to 1994 you were well regarded as a senior member of the legal profession and you were also well regarded in business circles. In consequence of the collapse of your practice, the home in which you and your wife had lived in Doncaster for 24 years was sold as was your holiday house at Lakes Entrance. Your counsel informed me that those assets were owned jointly with your wife but all proceeds of sale went to your creditors. Your counsel submits, and I accept, that that was honourable behaviour on the part of both you and your wife. In consequence of these matters, you have lost everything. You now live in rented accommodation and indeed I am informed, for a period of time in 1995, you were the beneficiary of social security benefits.
That said, however, it should be observed that the collapse of your firm is not a consequence of the matter to which you have pleaded guilty. Rather, the matter to which you pleaded guilty might be said to be symptomatic of the final and, with the benefit of hindsight, inevitable financial collapse of the practice.
In 1995, you were notified by the Law Institute that your Practising Certificate would not be renewed. You did not contest this action, as was your right. You have not held a practising certificate since that time.
Your health is indifferent indeed. You have been a diabetic for 15 years and for the last eight years have been dependent upon insulin. You suffer from hypertension and profound sleep apnoea which requires you to sleep with an oxygen mask. I accept that for a man of 59 years of age to suffer the disgrace of the collapse of your firm and the personal ignominy of these proceedings has had and will continue to have a significant consequence upon you.
Furthermore, I accept that you have suffered by reason of the disintegration of the family relations between you and your brother Peter, and with your father in the years following the collapse of your firm and his death in 1999. I accept that the breakdown of these relationships compound the anxiety and depression which Mr Joblin has concluded continue to affect you. I note further that you have not sought before me to attribute blame to your deceased father, notwithstanding the finding of Osborn J on the plea of your brother, Peter Just, that the deficiency in funds was at least partly a consequence of mismanagement by your father.
I turn to the matters particularly relevant to you, Gregory Barclay.
You, like your co-accused, Norman Just, pleaded guilty to the charge on the presentment which was filed shortly before your plea, and thus saved the community the expense of a lengthy and no doubt complex trial. I take that plea into account in your favour, notwithstanding the late stage at which it was entered, although, like your co‑accused, it cannot be said that you pleaded guilty to the charge in question at the earliest opportunity.
Furthermore, and notwithstanding the submissions of Mr Hayes QC that you have suffered clear remorse, and the statement of a psychologist who saw you shortly prior to your plea that you accepted responsibility for your offending, and expressed regret for it, I was unable to detect any sense of overwhelming remorse in the evidence given by you before me. However, I accept that your plea reflects your acceptance of responsibility for your actions and a degree of contrition.
You were born on 28 January 1957 and have accordingly just turned 47 years of age. You completed degrees in Law and Economics before commencing your articles in 1980. Subsequent to completing your articles you commenced work with Arthur Phillips Just but left in 1983 having obtained a senior position in a property development group. However, you returned to practice of the law in August 1991, and re‑joined the firm as a financial consultant. You were subsequently invited to become a partner of the firm in January 1993. Accordingly, as at that time you had never been employed as a solicitor by any firm of solicitors other than this firm. Accordingly, you were considerably junior to both Norman Just and Peter Just in age, experience and seniority in the firm at the time that you commenced the partnership. Indeed, as stated above, you at no stage were an equity partner.
Your senior counsel, Mr Hayes QC, submits that you are less culpable in relation to the matter to which you have pleaded guilty than either of your co‑accused. I accept that you did occupy a more junior position in the firm, and did not carry the responsibility for the deficiency in the trust account that your two equity partners did. However, you were the managing partner of the firm and, to this degree, at least the community is entitled to expect that you would exercise appropriate management and accountability in relation to the trust account.
You gave evidence before me, which on one view was somewhat inconsistent with your plea. You said in your evidence that you were unaware of the drawing of any cheque which caused a trust account deficiency, and that the one cheque for $20,000 which you signed on 14 September 1994, was not a cheque which you had requisitioned (notwithstanding the fact that the cheque requisition on its face stated it had been authorised by “GB”). Furthermore, you said that when you signed the cheque it was “on the basis of an authority from Ray Davis that there was in fact an appropriate bill attached to it”. When cross-examined by the prosecutor Mr Doherty and confronted with the position that despite the extensive depositional material in this case, there was no evidence that such a bill had been prepared prior to the date of the cheque you said, “Well … then I was lied to by Ray Davis”. There is no doubt from the statement of Mr Curtin, the investigating accountant from the Fraud Squad, that the bills (of which there were six) and which related to the cheque signed by you were not prepared prior to 14 September 1994 but were prepared later. Accordingly, the bills could not have been attached to the requisition which was provided to you by Mr Davis. Accordingly, as I understand your evidence, you signed the cheque because you were lied to by the accountant Mr Davis. Nevertheless, and as conceded by your junior counsel Mr Traczyk, at the minimum, you as a partner, and the managing partner at that, should have “been more aware of (your) obligations as a partner and should have taken a more active role in controlling the trust account”. Clearly you had an obligation, if Mr Davis presented you with a cheque to sign, to ensure that the documentation which supported payment from the trust account was put before you. This is all the more apparent when, it is clear from the decision of the Legal Profession Tribunal dated 2 December 1999, which your counsel tendered in evidence before me, that you stated before that tribunal that in late 1993 you had found that the then accountant had rendered bills of costs in relation to mortgage settlements before settlement of such matters. The fact that you were aware of previous irregularities in the trust account heightened the necessity for you to ensure that any cheque you signed did not bring the trust account into deficiency.[1]
[1]See p.5 of the decision of the Legal Profession Tribunal dated 2 December 1999 and para 31 of the written statement of Gregory Barclay filed before the Tribunal (Exhibits 2 and 3).
That said, however, I accept that the part played by you in relation to the deficiency was a lesser part than that of your co‑accused Norman Just. I accept also that, apart from your obvious interest in the firm remaining in business, you derived no personal benefit whatsoever from your action.
You have no prior convictions and I sentence you as a person of previously good character. Evidence was led on your behalf. I heard from Mr David Jaffy, a chartered accountant, who has been your accountant and tax adviser for a period of approximately 15 years. Mr Jaffy spoke well of your integrity and honesty.
In addition, other material was tendered before me. A psychology report prepared by a Mr Daniel Davis, in relation to an assessment he conducted upon you on 26 November 2003, was tendered before me. That report demonstrates that you have suffered significantly in consequence of the events which bring you before this Court. In particular, you suffered from significant anxiety and distress between 1998 and 1999 to a point that you gave consideration to suicide.
Furthermore, I have been provided with a number of references which I take into account in your favour. Those references are from Maureen Dewar, the Managing Director of RFI Industries Pty Ltd; Robert Andrew-Smith, the Managing Director of Access Commercial Finance Pty Ltd; Mr Alan Shnider, a partner of Wise Gershov Solicitors; Mr Peter Chapman, Executive Director of William Noall Limited, a firm of share brokers; Mr Robert Henderson, of Legal People; Mr King, Chairman of Poltech International Limited; and Mr Brott, a partner of Schetzer Brott & Appell. It should be noted that some of these references were provided for the purposes of an application by you to be re‑admitted to practice before the Legal Profession Tribunal. The order and the decision of the Legal Profession Tribunal dated 2 December 1999, granting permission for you to obtain an employee practising certificate upon condition that you undertake a course relating to the proper conduct of a trust account, was tendered before me by your counsel. It should be noted that the issue before the tribunal related to five charges of misconduct between February and May 1994 and not the matter which is now before me although it could be said the matters are related. You have accordingly been able to practise law since 1999 and although you did so at first, you ceased practising law pending the resolution of the charges which were brought against you in April 2002.
You are at present an executive director of Barclay and Chatswood Finance which is the financial services arm of a firm of solicitors.
Accordingly, in each case, you Norman Just, and you Gregory Barclay, have suffered public, professional and personal disgrace which bears heavily upon each of you. You have each already suffered significant penalty for your actions. You, Norman Just, have not practised since 1995 and you, Gregory Barclay, did not have a practising certificate between 1995 and December 1999 in connection with matters, related at least in some way to the matter now before me. You each have suffered by reason of the very substantial delay which has occurred since the events in issue. This delay was caused by the complexity of the investigation and the fact that charges were not laid until 2002. The complexity of the matter is demonstrated by the fact of a total of 2,365 pages. You have thus had to await the possibility of charges since 1994 and the consequences of the matter now before me since 2002. You are each persons with an otherwise unblemished record and I accept that you were persons of good character before the occurrence of the events which bring you to this court. I accept that both of you have taken substantial steps toward your rehabilitation.
It follows that I am satisfied that issues of specific deterrence, rehabilitation and the protection of the community are of no significance in the task which I have in sentencing you.
That said, however, and as I have stated previously, the offence to which you have pleaded guilty is a serious offence. Indeed, as conceded by Mr Hayes QC on your behalf, Mr Barclay, public confidence in the legal profession is greatly affected by such offences.
It should be observed that on 30 June 2003 and before Osborn J, Peter Just pleaded guilty to the charge to which you have each now pleaded guilty before me. In addition, he pleaded guilty to one count of false accounting, in breach of s.83A(1) of the Crimes Act 1958. Neither of you is now charged with similar offences under the Crimes Act. Peter Just was convicted and sentenced to 12 months’ imprisonment on each charge with six months of Count 2 being directed to be served cumulatively on Count 1, thus making a total effective sentence of 18 months which was then fully suspended.
It is submitted by Mr Doherty of Counsel that in terms of parity, Peter Just pleaded guilty at the committal hearing, was prepared to give evidence in any trial of the charges against each of you, and was less involved in the practice than were you, Norman Just. Mr Brustman of Counsel submits that in all the circumstances however, parity does not weigh against you, Norman Just. In particular, he submits that the fact that Peter Just pleaded guilty to charges of false accounting, which allegations are no longer made against you, is a relevant matter in relation to the issue of parity. He submits that any sentence imposed upon you, Norman Just, should not exceed the sentence imposed upon Peter Just for the same offence to which you have both pleaded guilty.
In my view, the part played by you, Norman Just, in relation to the deficiency in the trust account the subject of the charge before me, is clearly the most significant part of the three accused. Whilst I accept that somewhat like your brother, Peter, you were much engaged in outside business activities at the time, the fact is that you were the senior partner. You signed nine of the cheques which resulted in the deficiency of 21 September 1994. There can be no doubt that the statement of the investigating accountant from the Fraud Squad, Mr Gerard Curtin, as to proper accounting practice (appearing at para 13 on p.497 of the depositions) is correct. That evidence is that a cheque requisition for payment of a bill from a trust account should normally be accompanied by the bill.
At the very least, your conduct in relation to signing cheques which placed the trust account in substantial deficiency was, as your counsel concedes, “very, very careless conduct”. In my view, it is clear that at the time of signing each cheque you as a most experienced solicitor and the senior partner of the firm must have appreciated the impropriety of signing trust account cheques in payment of bills of costs which had not been then rendered, and were not attached to the cheque requisition forms. Thus, I conclude that your involvement in and knowledge of the fact of the deficiency was substantial and more culpable than that of each of your other partners.
Your counsel, Gregory Barclay, submits that in all of the circumstances of your offence the appropriate disposition is to record no conviction under s.8 of the Sentencing Act 1993. It is submitted that your actions were considerably less culpable than those of your co‑accused. I agree that that is so. I have no doubt that it is so in relation to your co‑accused, Norman Just. Whilst it appears to be clear from the sentencing remarks of Osborn J in relation to Peter Just, that he, Peter Just, was not primarily involved with the business of the firm on a day‑to‑day basis, he was an equity partner in contradistinction to your position. I accept that the Just family had far greater control over the firm and that you were in an inferior position as far as your influence and capacity to control the direction of the partnership was concerned.
For these reasons I consider parity with your two co‑accused does not require a similar sentence to be imposed.
Although some statements in the depositions suggest that you were a regular attender at partners' meetings[2], other statements[3] confirm your evidence that the partnership was really run by Norman and Peter Just, with their father as a significant presence. The record of interview with Norman Just at p.1820 and p.1870 of the depositions is to the effect that he, Peter Just, and the accountant handled the financial affairs of the firm and that there were "things going on at the firm" which you knew nothing about.
[2]See statements of Mary p.461, 469 and Raymond Davis pp.257, 262, 279 and 288.
[3]See statement of Julie Spengo at p.476.
As submitted by your counsel, you are still a young man with a family. I accept that you have worked hard to rehabilitate yourself since 1994 and that you have good prospects in the future. Mr Hayes QC submits that further action against you by the Law Institute in the event that a conviction is recorded can not be excluded. I accept that it is possible that the Law Institute may take further steps, particularly in circumstances whereby the matters which are before me are related to a different factual circumstance than that which was before the Legal Profession Tribunal in 1999. On the other hand, of course, the findings of the tribunal on the previous occasion on the material then before the tribunal, is likely to stand you in good stead in the event of any further application. However, as I say, future proceedings by the Law Institute are possible. I have given careful consideration to this submission and whilst I accept that you have suffered financial loss, deep personal shame and professional disgrace since the date of the offences, and that your part was a more minor part in the commission of the offence than your partners, nevertheless, in my view, a custodial sentence must be imposed.
It should be noted that offences under s.42 of the Legal Profession Practice Act (and its later equivalent) are almost invariably committed by persons of good character who are unlikely to re‑offend. Invariably such persons suffer greatly by reason of the offence committed by them. However, notwithstanding this fact, the considerations of proportionality, general deterrence and denunciation of the offence are an issue of significance in such cases, and in my view are highly relevant to the sentencing task now before me. The Courts must regard the breach of trust by a solicitor as a most serious offence. I have concluded that not withstanding the matters which weigh considerably in your favour, I have no alternative but to impose a prison sentence upon you.
However, having regard to all of the circumstances of the offences of both accused, and having regard to the matters which weigh in favour of both, I consider it appropriate to suspend entirely the terms of imprisonment which I propose to impose. In your case, Barclay, the period of suspension will be shorter than might otherwise be appropriate but may be of relevance in the light of the possibility of the Law Institute taking further action in respect of this matter.
Norman John Just, I sentence you to be imprisoned for a period of 15 months. I order that the entirety of that sentence be suspended for a period of 18 months.
Gregory Anthony Barclay, I convict you and I sentence you to be imprisoned for a period of three months and I order that the entirety of that sentence be suspended for a period of six months.
I am required by the Sentencing Act to explain to each of you that if you commit another offence punishable by imprisonment during the operational period of the suspended sentence you may be liable to actual imprisonment for the whole of the sentence imposed but so suspended.
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