The Law Society of New South Wales v Muir
[2008] NSWADT 237
•25 August 2008
CITATION: The Law Society of New South Wales v Muir [2008] NSWADT 237 DIVISION: Legal Services Division PARTIES: APPLICANT
RESPONDENT
The Council of the Law Society of New South Wales
Brian Thomas MuirFILE NUMBER: 082008 HEARING DATES: 14 July 2008 SUBMISSIONS CLOSED: 4 August 2008
DATE OF DECISION:
25 August 2008BEFORE: Haylen W - J (Deputy President); Riordan M - Judicial Member; MATTER FOR DECISION: Original Decision LEGISLATION CITED: Legal Profession Act 1987
Legal Profession Act 1994
Legal Profession Act 2004
Legal Profession Regulation 1994
Legal Profession Regulation 2002
Legal Profession Regulation 2005CASES CITED: Gladstone City Council v Local Government Superannuation Board [1980] Qld R 48
44 LGRA 175REPRESENTATION: APPLICANT
RESPONDENT
P Boyd, solicitor
No appearanceORDERS: The matter will be listed for directions on 8 September 2008 at 10 am in order to set a timetable for submissions and evidence (if any) in relation to penalty and the terms of orders to be made.
1 The Respondent practitioner Brian Thomas Muir was admitted to practice as a solicitor in February 1988. He was subsequently employed by three firms and in 1992 commenced practice as a sole practitioner under the firm name of Brian T G Muir and then from 1 July 1997 as Brian Muir. The Respondent practitioner did not practice between 1 July 2001 and 10 September 2002. As a sole practitioner, Mr Muir practiced out of Suite 205, "Cliveden", 4 Bridge Street Sydney.
2 On 19 January 2007, following Orders made in the Supreme Court pursuant to provisions of the Legal Profession Act 2004, Ms Jean Sayer was appointed Receiver for the law practice known as Brian Muir conducted by Brian Thomas Muir as principal. As a result of that appointment, Ms Sayer produced two reports, the first dated 24 April 2007 and the second dated 25 June 2007. On 2 November 2007, the Law Society of New South Wales forwarded copies of Ms Sayer's two reports to Mr Muir and requested any response he wished to make to the reports to be sent to the Law Society by Wednesday, 21 November 2007. This letter followed complaints made by the Law Society against Mr Muir on 19 January 2007 that, in turn, led to the appointment of Ms Sayer as the Receiver for Mr Muir's practice. On 6 December 2007 the Law Society again wrote to Mr Muir, referring to its earlier letter of 2 November 2007, advising that following the receipt of Ms Sayer's reports additional complaints had been made, namely: failure to account; misappropriation; failure to provide detailed accounts; failure to pay counsel's fees; delay; breach of section 256, section 259 and section 262 of the Legal Profession Act 2004. Mr Muir was requested to make available by Friday, 21 December 2007 any submissions he wished to make in relation to those matters.
3 By letter dated 24 January 2008, the Law Society advised Mr Muir that complaints against him had been considered by the Society's Professional Conduct Committee where it was resolved that issues of professional misconduct and unsatisfactory professional conduct, in the opinion of the Committee, were involved in the complaint and he was again invited to make submissions within 14 days of receiving the letter advising of the resolutions. The resolutions also expressed the opinion that, subject to any submissions from Mr Muir, it was satisfied that there was a reasonable likelihood that he would be found guilty by the Tribunal and that proceedings be instituted in the Tribunal in relation to the complaints pursuant to s 155(2) of the Legal Profession Act 2004. The letter identified breaches of several sections of the Legal Profession Act 1987, 1994, 2004, the Legal Profession Regulation 2002 and the Legal Profession Regulation 2005. Mr Muir was again advised at the conclusion of the letter that any submissions of fact and law or as to the orders sought before the Tribunal should reach the Society within 14 days of the date of the letter. The letter also stated that if no submissions were received within that time, the Committee would consider the complaint on the information presently available.
4 On 7 April 2008, the Council of the Law Society filed an Application for Original Decision in the Tribunal pursuant to the provisions of the Legal Profession Act 2004. The Orders sought were as follows: that the name of the solicitor be removed from the Role of Local Lawyers; that the solicitor pay the Applicant's costs of the proceedings; and, such further and other Orders as the Tribunal deems appropriate.
5 The grounds for the Application as initially pressed before the Tribunal set out 14 allegations of professional misconduct. The Grounds of the Application were as follows:
- Brian Thomas Muir, while practising as a Solicitor, was guilty of professional misconduct as set out in the following allegation:
Professional Misconduct
(1) The solicitor breached Section 61 of the Legal Profession Act, 1987
(2) The solicitor breached Section 62 of the Legal Profession Act, 1987
(3) The solicitor breached Section 117 of the Legal Profession Act, 1994 in that he negotiated a mortgage advance to Mxchange Pty Ltd.
(4) The solicitor breached Clauses 88-91 of the Legal Profession Regulation, 2002 dealing with controlled money.
(5) The solicitor failed to properly secure his client's trust funds.
(6) The solicitor misappropriated trust funds.
(7) The solicitor failed to respond to correspondence.
(8) The solicitor delayed in the administration of the Estate of the late Harold Gee.
(9) The solicitor breached Section 255 of the Legal Profession Act, 2004.
(10) The solicitor breached Section 256 of the Legal Profession Act, 2004.
(11) The solicitor breached Section 259 of the Legal Profession Act, 2004.
(12) The solicitor breached Section 264 of the Legal Profession Act, 2004.
(13) The solicitor failed to account.
(14) The solicitor failed to pay Counsel's fees.
6 The particulars provided with the Application were as follows:
- In these particulars, noting that the Legal Profession Act, 2004 commenced on 1 October 2005:
The Solicitor means Brian Thomas Muir.
"The Receiver" means Jean Sayer.
...
A. Radcape Pty Limited
The solicitor breached Section 61 of the Legal Profession Act 1987.
The solicitor breached Section 62 of the Legal Profession Act 1987.
The solicitor breached Section 117 of the Legal Profession Act 1994 in that he negotiated a mortgage advance to Mxchange Pty Ltd.
The solicitor breached Clauses 88-91 of the Legal Profession Regulation 2002 dealing with controlled money.
The solicitor failed to properly secure his client's trust funds.
The solicitor misappropriated the sum of $51,000.
(1) The solicitor acted for Radcape Pty Limited on the sale of a property at Robertson which settled on or about 25 October 2004. The sole directors of the company are Colin and Norma Hart.
(2) The net proceeds of sale of $336,016.21 were received by the solicitor and deposited to his trust account on 26 October 2004.
(3) After payment of vendor duty in the sum of $18,681.50, the balance remaining in the trust account of $317,334.71 was deposited by the solicitor into a controlled money account with St George Bank.
(4) Mrs Hart advised the Receiver that in November 2004 she was contacted by the solicitor with respect to making an advance from the Controlled Money Account of $80,000.00 for a period of three months at 8% per annum.
(5) Mrs Hart was unable to obtain details of the advance made by the solicitor until he sent her an email on 18 April 2006. That email indicated that in November 2004 a secured advance had been made to Robert Brockman Enterprises Pty Limited and that "There was a subsequent drawdown of $37,200.00 on 24 December 2004 in relation to that loan".
(6) Enquiries by the Receiver indicated that only $37,200.00 and not $88,200.00 had been advanced from the controlled money account to Robert Brockman Enterprises Pty Limited secured on property owned by Mxchange Pty Ltd. Further, the solicitor did not appear to take any steps to obtain the consent of the first mortgagee to enable the registration of a second mortgage over the property owned by Mxchange Pty Ltd in favour of Radcape Pty Limited.
(7) Enquiries by the Receiver indicated that $51,000 was withdrawn from the controlled money account on 24 November 2004 and paid by the solicitor to David Rogers ("Mr Rogers").
(8) The solicitor, Mr Rogers and another party were directors and shareholders in a company called Aussie Blooms Pty Ltd. Mr Rogers contributed $60,000.00 to the venture and he says that his interest in the company was to be acquired by the solicitor on or about 6 March 2001.
(9) Mr Rogers believed the amount due to him by the solicitor after allowing for expenses was $56,000.00. On 24 November 2004 he received a payment of $51,000 when that sum was paid into his bank account following the purchase by the solicitor of a bank cheque for that amount using the funds of Radcape Pty Ltd.
B. Estate Late Harold Joseph Gee and Estate Late Alfred Thomas Gee and Marie Gee
The solicitor misappropriated trust funds.
The solicitor breached 256 of the Legal Profession Act 2004.
The solicitor breached 259 of the Legal Profession Act 2004.
The solicitor breached Clauses 88-91 of the Legal Profession Regulation 2002 dealing with controlled money.
The solicitor failed to respond to correspondence.
The solicitor delayed in the administration of the Estate of the late Harold Gee.
(1) The solicitor acted for the late Harold Joseph Gee who appointed his brother Alfred Thomas Gee and his wife as executors of his estate.
(2) The only asset of the Estate other than real property was a bank account kept with the Commonwealth Bank. The balance in the account was realised on 26 March 2004 when the account was closed and the balance therein of $395,689.07 was deposited to a controlled money account kept by the solicitor for the Executors with St George Bank.
(3) The following amounts totalling $196,675.34 were withdrawn on the dates shown:
| 16.5.05 | $50,000.00 |
| 1.6. 05 | $20,000.00 |
| 16.6.05 | $65,000.00 |
| 25.7.05 | $30,000.00 |
| 3.9.05 | $20,000.00 |
| 7.10.05 | $11,675.34 |
(4) The requests for the first three transactions signed by the solicitor are false as to the beneficiary of the funds transferred and as to the account number of the beneficiary. In each case the amounts were transferred to the account of Robert Brockman Enterprises Pty Ltd. The application for the transfer of $65,000.00 signed by the solicitor incorrectly shows the beneficiary as "Gee, Marie & Alfred".
(5) The transfers on 25 July 2005 and 3 September 2005 respectively were to the account of BE and EA Andrews. On 7 October 2005 a bank cheque for $11,675.34 was purchased payable to Permanent Custodians Pty Limited.
(6) Enquiries by the Receiver indicated that Brett Edward Andrews and Elizabeth Anne Andrews had advanced moneys to the solicitor and the payment to them of $50,000.00 was repayment of the moneys lent.
(7) The Executors of the Estate (sic) Late Harold Joseph Gee did not authorise the solicitor to disburse moneys held on their behalf.
(8) The solicitor has misappropriated the sum of $196,675.34.
C. John and Mary Bays
The solicitor breached Section 61 of the Legal Profession Act 1987.
The solicitor breached Section 62 of the Legal Profession Act 1987.
The solicitor failed to properly secure his client's trust funds.
(1) On 12 September 2005, following a request by the solicitor, John and Mary Bays paid to him the sum of $10,000.00 in cash. The moneys were not banked by the solicitor into his trust account.
(2) At the time of payment the solicitor handed to John and Mary Bays a Form of Receipt and Acknowledgement signed by him and dated that day which states:
- Receipt is acknowledged of $10,000.00 as loan from John and Mary Bays to Mxchange Pty Ltd from 12 September for two months at 8% per annum. Guarantee by Brian Muir.
(4) The accounting records of Robert Brockman Enterprises Pty Limited indicate a loan by the solicitor to the Company. In the accounting records of the Company an amount of $10,000.00 has been credited on 12 September 2005 to the loan account of the solicitor with the company. It is impossible to identify and trace the cash of $10,000.00 given to the solicitor as being the amount of $10,000.00 deposited to the bank account of the Robert Brockman Enterprises Pty Limited.
D. Eureka Opals Pty Limited/Mrs L Loizoiu
The solicitor failed to pay Counsel's fees.
The solicitor failed to account.
The solicitor misappropriated the sum of $7,524.00.
The solicitor beached Section 255 of the Legal Profession Act 2004.
The solicitor delayed in progressing the matter.
(1) The solicitor acted for Eureka Opals Pty Limited ("Eureka") and the matter was heard in December 2004.
(2) Mr Ian Latham was briefed in the matter and on 21 March 2005 he sent his Memorandum of Fees to the solicitor in the sum of $7,524.00.
(3) On 24 October 2005, Orders were made in the NSW Industrial Relations Commission whereby a charge against Eureka was dismissed and it was to be paid its agreed costs of $14,500.00.
(4) On 19 June 2006, the solicitor sent an Invoice to the Crown Solicitor's Office advising his professional costs and disbursements were $14,500.00.
(5) On 24 July 2006, the solicitor received the sum of $14,500.00 which he deposited to his trust account and credited to the trust ledger account styled "W Buchanan (Eureka Opals) Litigation".
(6) On 9 August 2006, the solicitor purchased a bank cheque in the sum of $27,293.00 drawn payable to ING Bank being the first mortgagee of property owned by the solicitor. The amount of the bank cheque was debited to accounts in the trust ledger described as "B Muir - Fees" as follows:
- Debited to the trust ledger account of
| W Buchanan - litigation | 4,500.00 |
| Debited to the trust ledger account of L Loizoiu - | |
| Child/property Issues | 12,793.00 |
| $27,293.00 |
(7) The solicitor had acted for Mrs Loizoui with respect to the sale of a property pursuant to a Family Law Property Settlement and in late July 2006 moneys were received on her behalf by the solicitor.
(8) After receipt of the moneys, the solicitor spoke to Mrs Loizoiu and told her he would account to her for the proceeds of sale. Although the solicitor prepared a bill of costs, this was not forwarded to Mrs Loizoiu nor was she provided with any form of accounting and despite attempts, she had been unable to contact the solicitor.
(9) Despite requests by Mr Ian Latham to the solicitor, he had not been paid his fees in the sum of $7,524.00 and there has been a failure to account to him for this sum.
E. Justin Leef
The solicitor failed to account.
The solicitor misappropriated the sum of $933.25.
The solicitor breached Section 255 of the Legal Profession Act 2004.
(1) The solicitor acted for Justin Leef. In defending charges brought against Mr Leef, the solicitor obtained an Expert's Report from Mr G Johnson.
(2) On 1 April 2005 an Invoice was sent to the solicitor in the sum of $2,766.50 being the cost of Mr Johnson's Report which at the time of Miss Sayer's appointment had not been paid.
(3) On 28 March 2006 the NRMA sent a letter to the solicitor which said:
- As discussed, we would be very grateful if you provided us with a copy of the Police Brief of Evidence as well as a copy of your expert report. We undertake to pay you $2,450.00 to cover your administration costs and 50% of the cost of Mr Johnson's report. A cheque will be sent to you under separate cover.
(5) The terms on which the solicitor received payment from the NRMA was in reimbursement of one-half of the cost of Mr Johnson's report namely $1,383.25.
(6) The Receiver has paid $450.00 in part payment of the Invoice. There has been a failure to account by the solicitor for the balance received in reimbursement of the payment of his Invoice of $933.25.
7 The Respondent practitioner did not file a Reply in the Tribunal as required by clause 27 of the Rules of the Tribunal. By letter dated 8 April 2008, Mr Muir and the Law Society were advised that the Application was listed for Directions before the Tribunal on 7 May 2008. The Respondent practitioner did not attend that Directions hearing and the matter was set down for final hearing. By letter dated 24 June 2008 Mr Muir was advised that the Application made by the Law Society would be heard on 14 July 2008.
8 When the Tribunal convened to hear the Application there was no appearance by the Respondent practitioner, Mr Muir. At the time of the hearing, no Reply to the matters raised in the Application had been received from the Respondent practitioner. An Affidavit of Service deposed that on 18 April 2008 Brian Thomas Muir was served with an Application for Original Decision filed on 7 April 2008, an Affidavit of Mr Collins sworn on 3 April 2008 and an Affidavit of Ms Sayer sworn on 14 December 2007. The documents were personally delivered to Mr Muir at "Daventry" Old Kangaloon Road, Robertson NSW 2577 and at the time of service it was deposed by the process server that he asked the person served: "Mr Brian Muir?" to which the person replied: "Yeah". The process server said: "I have been instructed to give you these documents". The person served replied: "Right". The Tribunal was informed that the address used for all correspondence forwarded to Mr Muir by the Law Society, the Tribunal and the address attended by the process server was the address nominated to the Law Society by the Respondent practitioner at all relevant times. The Law Society had also notified Mr Muir, by letter dated 7 May 2008, that this matter was listed before the Tribunal for hearing on 14 July 2008. On 30 June 2008, the Law Society also advised Mr Muir of the composition of the panel of the Tribunal to hear the matter on 14 July 2008. None of the correspondence forward by the Law Society to Mr Muir had been returned and there was no record within the Tribunal's file of any correspondence directed to Mr Muir at the nominated address as being returned.
9 The Tribunal is satisfied from the terms of the Affidavit of Service and the correspondence passing between the Law Society, the Tribunal and Mr Muir that Mr Muir was served with the Application and particulars and supporting affidavits and was advised that the matter was listed for hearing before the Tribunal on 14 July 2008. Having so satisfied itself, the Tribunal proceeded to hear the Application in the absence of the Respondent practitioner. Apart from matters going to service and notification of the allegations, the Law Society relied on an affidavit of Raymond John Collins, solicitor for the Council of the Law Society charting the course of the investigating leading to the referral of the matter to the Tribunal. An Affidavit of Ms Jean Sayer dealt with her appointment as Receiver for the law practice conducted by the Respondent practitioner and formally adopted the contents of her two reports made while acting as Receiver. Leave was given to the Law Society to file further affidavits confirming a number of matters referred to in Ms Sayer's reports and relied upon in the particulars. Ultimately, further affidavits were filed from Mr Colin Hart, Mrs Nora Hart and Mr Ian Latham and were received as evidence in the matter. The Law Society also sought leave to withdraw the allegations concerning Mr and Mrs Bays: leave is granted to withdraw those allegations.
10 In presenting the Law Society's case, Mr Boyd stated that the most serious allegations were those relating to alleged misappropriation of funds of clients and that there were five categories of cases to be discerned from Ms Sayer's reports. A number of minor matters were not pressed.
11 The first matter related to Radcape Pty Limited ("Radcape") and arose in circumstances where the Respondent practitioner acted for that company in respect of the sale of that company's property in Robertson, NSW. The sole directors of Radcape were Colin and Norma Hart and the sale was settled on or about 25 October 2004. Ms Sayer's detailed report traces the receipt of the proceeds of the sale in excess of $336,000 by the Respondent practitioner and the depositing of some $317,000 into a controlled money account with St George Bank following the payment of vendor duty. Ms Sayer's report supports the facts alleged in the particulars supplied in relation to this matter, especially to the effect that there was no authority from the Harts to pay $51,000 from the controlled money account to Mr David Rogers. The amount paid to Mr Rogers was, in any event, not a loan at 8 per cent as had been canvassed with Mrs Hart in November 2004 but according to Mr Rogers, represented payment by the Respondent practitioner for Mr Rogers' interest in a company called "Aussie Blooms Pty Ltd", which the Respondent practitioner was purchasing on his own behalf, already having established an interest in that company.
12 Ms Sayer's reports indicate that in November 2004, the Respondent practitioner spoke to Mrs Hart and asked if the Harts were prepared to lend monies from their controlled account in the sum of $80,000 for a period of three months at 8 per cent. The report continues that Mrs Hart was unable to obtain particulars of the advance from Mr Muir until an email was sent on 18 April 2006 to Mr Hart by the Respondent practitioner concerning the investment. That email purported to refer to discussions that Radcape monies not retained in the St George account were lent to Robert Brockman Enterprises Pty Ltd and that the mortgage was secured by property owned by a related company and provided for the payment of interest at 8 per cent. The email then recorded that a sum of $81,544.47 was directed from the controlled money account in May 2005 to provide for "settlement in relation to the agreements entered with John Hart". There was no reference in the email to a term of three months and it appears, from the terms of the email, that the money lent in May 2005 was still owing in April 2006 and the email then spoke of steps being taken by the Respondent practitioner to recover the money lent.
13 During her investigation, Ms Sayer came across a Deed of Agreement of Loan purportedly made on 28 November 2004 between Radcape, Robert Brockman Enterprises Pty Ltd, Mxchange Pty Ltd and Robert Leslie Brockman. The agreement recites that Robert Brockman Enterprises Pty Ltd requested Radcape and Radcape had agreed to lend Robert Brockman Enterprises Pty Ltd an amount not exceeding $130,000 at 8 per cent per annum. Robert Leslie Brockman, the sole director and secretary of Mxchange Pty Ltd had agreed to provide security for the loan by way of mortgage of its property on the Pacific Highway, Artarmon, NSW and Robert Leslie Brockman a sole director and secretary of both companies warranted that, apart from a first mortgage, there was no other legal or equitable charge over the property. The Deed of Agreement appears to be executed by Mr Brockman on behalf of himself and the two companies of which he was the sole director and secretary and it also appears that Mr Muir witnessed the execution of that document by Mr Brockman. There appears to be no execution of the Deed by either Colin or Norma Hart. Mrs Hart had informed Ms Sayer that Mr and Mrs Hart had not received any documentation from the Respondent practitioner in relation to this advance and that prior to receiving the Deed of Loan Agreement in September 2006, Mrs Hart was not aware of an agreement to that effect and did not have a copy of that document. Mr and Mrs Hart had made demands of the Respondent practitioner since July 2005 for the repayment of the monies advanced. In her second report, Ms Sayer records that Mr and Mrs Hart had no knowledge of the recipient of the sum of $37,200 at the date when a Deed of Company Arrangement was entered into on 21 March 2006 to which, as a non-participating creditor, Mr Muir was a party. No authority had been given by the directors of the company Radcape to Mr Muir concerning the actions taken by him as an unsecured creditor of Robert Brockman Enterprises Pty Ltd. From the records of the Respondent practitioner it appeared that the amount of $51,000 paid to Mr David Rogers from the funds of Radcape Pty Ltd had no connection with Robert Brockman Enterprises Pty Ltd. Affidavits subsequently filed by Mr and Mrs Hart confirm that no authority was given by them to the respondent practitioner to enter these transactions.
14 On the material before the Tribunal, there was a breach of section 61(2) of the Legal Profession Act 1987 in that the Respondent practitioner did not hold monies received exclusively for and did not disperse the money in accordance with the directions of the persons on whose behalf that money was held. Section 61(8) provides that it is professional misconduct for a solicitor to wilfully contravene sub-sections (1) or (2). The material before the Tribunal also establishes that there was a breach of section 62 of the Legal Profession Act 1987 in that the Respondent practitioner did not keep in the case of trust money, accounting records that disclosed at all times the true position in relation to money received by the Respondent practitioner on behalf of another person. Section 62(4) provides that a wilful or contravention of this sub-section is professional misconduct. In both cases, the evidence supports a conclusion that the breach was wilful. In relation to the operations of the Legal Profession Regulation 2002 dealing with notice to persons regarding controlled money, the keeping of a controlled money register and a controlled money ledger and a listing of accounts, the material before the Tribunal establishes that, at least, there was a breach of clause 88(2), clause 89, clause 90(3) and (4) and clause 91.
15 In relation to the particulars alleging a breach of section 117 of the Legal Profession Act 1994, this was clarified to be a mistaken citation and was a reference to section 117 of the 1987 Act. The evidence was that the Respondent practitioner, acting in that capacity, negotiated or acted in respect of a regulated mortgage over property to secure the loan to Robert Brockman Enterprises Pty ltd. Section 115 of the Legal Profession Act 1987 defined a "regulated mortgage" as follows:
- "regulated mortgage" means a mortgage (including a contributory mortgage) other than:
(a) a mortgage under which the lender is a financial institution, or
(b) a mortgage under which the lender or contributors nominate the borrower, but only if the borrower is not a person introduced to the lender or contributors by the solicitor who acts for the lender or contributors or by:
- (i) an associate of the solicitor, or
(ii) an agent of the solicitor, or
(iii) a person engaged by the solicitor for the purpose of introducing the borrower to the lender or contributors, or
(c) a mortgage or a mortgage of a class, that the regulations prescribe as exempt from this definition.
(1) A solicitor must not, in the solicitor's capacity as a solicitor for a lender or contributor, negotiate the making of or act in respect of a regulated mortgage unless:
- (a) the mortgage is a State regulated mortgage, or
(b) the mortgage is a run-out mortgage, or
(c) the mortgage forms part of a managed investment scheme that is operated by a responsible entity.
As to the allegation of "misappropriation", it was submitted for the Law Society that the term was to be given its ordinary meaning, namely putting the funds to wrong use or to apply wrongfully or dishonestly to one's own use, funds entrusted to the respondent practitioner.
Butterworths' Australian legal Dictionary defines "misappropriation" as the wrongful application or stealing by an agent of a principal's money or property, citing Gladstone City Council v Local Government Superannuation Board [1980] Qld R 48; 44 LGRA 175.
In relation to Radcape Pty Ltd, the Respondent practitioner, having advised that the funds were being advanced to Robert Brockman Enterprise Pty Ltd, in fact used the funds to pay his debts to Mr D Rogers. The evidence supports the finding of a wrongful and dishonest application of these funds.
16 In relation to the particulars concerning the Estate of the Late Harold Joseph Gee, the Estate of the Late Alfred Thomas Gee and Marie Gee, it was alleged that the Respondent practioner misappropriated trust funds, breached section 256 and section 259 of the Legal Profession Act 2004 and also breached clauses 88-91 of the Legal Profession Regulation 2002 dealing with controlled money. The Respondent practitioner was also alleged to have failed to respond to correspondence and delayed the administration of the Estate of the Late Harold Gee.
17 Ms Sayer's report stated that the Respondent practitioner acted for Alfred Thomas Gee and Marie Gee in obtaining Probate of the Estate of the Late Harold Joseph Gee which was granted to them as Executors of the Estate in February 2004. Alfred Gee and Marie Gee were the residual beneficiaries of the Estate named in the Will and Mr Alfred Gee died on 30 October 2006. The detailed report of the Receiver, Ms Sayer, establishes the facts set out in the particulars, namely, that the only asset of the Estate other than real property was a bank account with the Commonwealth Bank and the balance of the account was realised in March 2004 when the account was closed and the balance of $395,689.07 was deposited to a controlled money account with St George kept by the Respondent practitioner for the Executors.
18 A total amount of $196,675.34 was withdrawn from the St George Account over six occasions from 16 May 2005 until 7 October 2005. The first three withdrawals totalling $135,000 by reference to vouchers provided by St George Bank enabled Ms Sayer to determine that the requests provided and signed by the Respondent practitioner were all false as to the beneficiary of the funds transfers and as to the account number of the beneficiary. The first three transactions totalling $135,000 were transferred to the account of Robert Brockman Enterprises Pty Ltd at a Bendigo Bank account. All three applications for transfer show the Bendigo Bank account but falsely state the name of the beneficiary - the account number was not that of the beneficiary shown on the application. Other amounts of $50,000 and $20,000 incorrectly showed the beneficiary on the application for the transfer as Mxchange Pty Ltd but the funds were transferred to the Bendigo Bank account in the name of Robert Brockman Enterprises Pty Ltd. A third amount of $65,000 was transferred direct to the account of Robert Brockman Enterprises Pty Ltd to the Bendigo bank account but the Respondent practitioner incorrectly signed the application showing the beneficiary as "Gee, Marie and Alfred". In May and September 2005, two cheques in the sum of $30,000 and $20,000 were transferred to an account held by BE & EA Andrews. Ms Sayer was later informed by Mr Brett Andrews that he and his wife had worked with the Respondent practitioner at another firm of solicitors some time previously and had lent money to the Respondent practitioner on a number of occasions. The amounts received in 2005 was the repayment of that money and Mr Andrews was unable to say where the Respondent practitioner obtained that money. Ms Sayer's report stated that there was no indication that the monies applied were in any way connected with Robert Brockman Enterprises Pty Ltd or Mxchange Pty Ltd.
19 In October 2005, a sum of $11,675.34 was paid to Permanent Custodians Ltd. The first mortgage registered on the title to property owned by Mxchange Pty Ltd was in favour of Permanent Custodians Ltd. The first mortgage registered on the tile of the property known as Suite 205, "Cliveden", 4 Bridge Street, Sydney owned by AZBA Pty Ltd was Permanent Custodians Limited. Mr Muir was the sole director and secretary of this company which was de-registered in January 2006. Ms Sayer was unable to establish whether the payment made to Permanent Custodians Ltd related to the mortgage of Mxchange Pty Ltd or to AZBA Pty Ltd, a company controlled by Mr Muir.
20 In a Statutory Declaration, Marie Gee stated, inter alia, that she was unhappy with the delay in finalising the Estate and called the Respondent practitioner's office on numerous occasions but had difficulty in getting in touch with him and he did not return her calls. She had instructed other solicitors to obtain the funds held by the Respondent practitioner who had been informed by the Respondent practitioner that the whole of the funds from the Estate of the Late Harold Gee had been loaned to Mxchange Pty Ltd at 8 per cent interest on a second mortgage on a property at Artarmon. The Respondent prctitioner, however, had no records of the loan but said that Marie Gee had verbally authorised the investment. In her Statutory Declaration, Marie Gee said that it was completely untrue that she had authorised any such loan to Mxchange Pty Ltd and she had not signed any mortgage documents or given any authorisation, verbally or in writing, to the Respondent practitioner to lend any of the Estate monies "to any one". The Respondent practitioner had offered to invest her funds with a friend but Mrs Gee told him that she was not interested in such arrangements and would invest her own money. Ms Sayer concluded that there was no authority given to the Respondent practitioner to disperse the monies held in trust by him on behalf of the Late Alfred Gee and Marie Gee and there had been a failure to account by him in the sum of $196,675.34.
21 The evidence before the Tribunal shows that the Respondent practitioner was in breach of section 256 of the Legal Profession Act 2004 and in particular sub-section 3, in that he disbursed controlled monies deposited in a controlled money account other than specified in a written direction relating to the money, or a later written direction given by or on behalf of the person on whose behalf the money was received. There was also a breach of section 259, dealing with the protection of trust money, in that monies standing to the credit of a trust account maintained by a law practitioner was not available for the payment of debts of the practice or any of the associates. There was also a breach of clause 88(2) of the Legal Profession Regulation 2002 and a breach of clause 89, clause 90(3) and (4) and clause 91 of the Regulations, as earlier discussed.
- The Society submitted that the Respondent practitioner, without the authority of Mrs Gee (the sole person entitled to direct Mr Muir to pay any amount from the trust funds) in fact paid the total of $196,675.34 to various persons or entities unrelated to the Estate and partly for his own purposes. That submission is supported by the evidence and there was, thus, a misappropriation of this money by the Respondent practitioner
22 The next set of particulars concern Eureka Opals Pty Ltd and Mrs L Lazio and allege that the Respondent practitioner failed to pay counsel's fees, failed to account, misappropriated the sum of $7,524, breached section 255 of the Legal ProfessionAct 2004 and delayed in progressing the matter.
23 The detailed reports provided by Ms Sayer established the facts as set out in these particulars. Counsel had rendered a memorandum of fees in relation to litigation concerning Eureka Opals Pty Ltd and although requesting payment, there was no evidence that those fees had been paid although the Respondent practitioner had received $14,500 in relation to professional costs and disbursements. An affidavit sworn by Mr Latham of Counsel confirmed that his fees had not been paid. Without paying counsel's fees, that sum of $14,500 together with $12,793 withdrawn from the account relating to Mrs Loizoiu, was paid to ING Bank by the Respondent practitioner. Ms Sayer established that the first mortgage registered on the property at 28 Fox Valley Road, Wahroonga owned by Mr Muir was in favour of ING Bank.
24 Ms Sayer could not find anything on the Respondent practitioner's files relating to counsel's fees concerning the payment of those fees or the receipt of costs following the litigation, nor was there any evidence or suggestion of a reduction of counsel's fees. In relation to Mrs Loizoiu, a bill of costs had been prepared but had not been forwarded to the client nor was she provided with any form of accounting. Mrs Loizoiu had made several efforts to contact the Respondent practitioner in order to finalise the matter. Although there was no record in the files of any correspondence with Mrs Loizoiu, upon investigation, it did appear to Ms Sayer that there were costs due to the Respondent practitioner by Mrs Loizoiu in respect of the property proceedings but there had been no formal accounting provided to Mrs Loizoiu.
25 Based on this material, the evidence establishes that the Respondent practitioner failed to pay counsel's fees, has failed to account, has misappropriated $7,524 and, further, was in breach of section 255 of the Legal Profession Act 2004 in that he did not hold trust money deposited in a general trust account of practice exclusively for the person on whose behalf it was received and disbursed the trust money otherwise than in accordance with the direction given by the person. There was also delay in progressing Mrs Loizoiu's matter when monies had been received by the Respondent practitioner on her behalf in late July 2006.
26 In relation to Mr Justin Leef the particulars allege that the Respondent practitioner failed to account, that the Respondent practitioner misappropriated $933.25 and was in breach of section 255 of the Legal ProfessionAct 2004. Ms Sayer's report establishes the facts contained in these particulars.
27 The Respondent practitioner had been instructed by Mr Leef in relation to a prosecution for a driving offence. The Respondent practitioner, in defending the charges, obtained an expert's report. The NRMA requested a copy of the police Brief of Evidence and a copy of the expert's report and wrote to the Respondent practitioner in terms that are set out in paragraph 3 of the particulars relied upon in relation to this matter. The sum of $2,450 was received from the NRMA on 30 March 2006 and deposited in the trust account of the Respondent practitioner. On 1 April 2006, the Respondent practitioner drew $2000 from this sum for costs and disbursements leaving a balance in the trust account of $450 which remained in the trust account at the date of receivership. Mr Leef's share of the costs of providing the expert's report (in total being $2,766.50), had not been paid at the time that Ms Sayer was appointed Receiver. The agreement with the NRMA meant that half the cost of the expert's report was to be met by Mr Leef, namely $1,383.25. The Receiver paid $450 in part-payment of this account representing the total remaining in the Respondent practitioner's trust account at the date of receivership. The balance of $933.25 remained outstanding. The evidence before the Tribunal establishes that the Respondent practitioner failed to account, misappropriated the sum of $933.25 and breached section 255 of the Legal Profession Act 2004 in the Respondent practitioner did not disburse trust money in accordance with directions given by Mr Leef and in recognition of the arrangements made with the NRMA for the provision of the expert's report.
28 The particulars relating to each matter have been established. The breaches of sections 61 and 62 of the Legal Profession Act 1987 being wilful, dictate a finding of professional misconduct. The remaining matters involving misappropriation also establish professional misconduct. The remaining statutory breaches establish professional misconduct as does the overall conduct of the Respondent practitioner as demonstrated by the evidence before the Tribunal.
29 The matter will be listed for directions on 8 September 2008 at 10 am in order to set a timetable for submissions and evidence (if any) in relation to penalty and the terms of orders to be made.
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