Walter v The Council of the Queensland Law Society Incorporated

[1988] HCATrans 2

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No of 1987

B e t w e e n -

GLENN ROBERT wALTER

Appellant

and

THE COUNCIL OF THE QUEENSLAKD

LAW SOCIETY INCORPORATED

Respondent

MASON CJ

WILSON J

DEANE J
TOOHEY J

GAUDRON J

Walter(2)

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 9 FEBRUARY 1988, AT 10.18 AM

Copyright in the High Court of Australia

C2Tl/l/RB 1 9/2/88

MR D.M.J. BENNETT, QC: May it please the Court, I appear

with my learned friend, MR G.A. THOMPSON, for

the appellant. (instructed by Callens)

MR G.L. DAVIES, QC:  May it please the Court, I appear with

my learned friend, MR J.S. DOUGLAS, for the

respondent. (instructed by Cannan & Peterson)

MASON CJ:  Yes, Mr Bennett.

MR BENNETT: If Your Honours please. Your Honours, I hand

up the outline of submissions.

MASON CJ:	Thank you.
MR BENNETT:	Your Honours, Mr Justice Megarry in his book,

Miscellany at Law, describes an English statute of the 18th century dealing with the waterworks for a small English town in which in the middle of a very long section dealing with some technical

details the words appear:

and the Town Clerk's marriage is hereby

dissolved -

and thus it is said, in the account in the book,

that the town clerk of the particular town was

able to obtain a statutory divorce.

The point of the anecdote, of course, is

something which is well known to lawyers and that

is that one can conceal something either by saying

too much or by saying too little. Every clerk

who has done a discovery affidavit knows that

one can conceal an incriminating document• either

by attempting to argue that one should not produce

it at all or by concealing it in the third tea- chest from the left in a huge pile of documents

hoping it will not be picked up on inspection.

This case is an example, we would submit, of that sort of problem.	The appellant was charged
with a very large number of charges, most of them

comparatively minor, .some of significance but

certainly not in any of them indicative of dishonesty.

I will, in due course, without taking Your Honours

through all of them, give Your Honours a short

conspectus of the nature of the charges. But

it is apparent to anyone reading them that the

solicitor was charged with conducting a mortgage

lending practice in a careless and incompetent

way and that in the course of it he had shown

a disregard for a number of rules concerning the

management of such a practice and of trust accounts.

The principal charge seems to have been that he

regularly acted for mortgagor and mortgagee and

while in a situation of conflict acted in ways
which did not operate to the advantage of one or other

of the clients.

C2Tl/l/ND	2	9/2/88
Walter(2)

MR BENNETT (continuing):  When one looks at the present charge

in that context, one gets a very clear impression as

to the type of matter being alleged. It is not

simply a case of saying, "Here are 700 counts of

illegal parking and one account of murder."

Presumably in such a case a person is able to select

which is the serious one and deal with it accordingly.
This is a case, on the other hand, where the wording
of the charge, in the context of other charges, and
the way in which the case was conducted at the hearing,
clearly contained no suggestion of dishonest

misappropriation and yet, the solicitor having dealt

with it that way, having not called witnesses who

might have been relevant had that charge been dealt

with in that way, who he considered, or his advisors

considered not worth calling, where it was simply

one of a number of a different type of charge to

which he was, in a sense, pleading guilty, the

Full Court said, "We interpret from the result and

from our view of the evidence that this solicitor

was guilty of stealing."

I have put in an appendix to the submissions

some figures. Obviously those figures have no

great weight in themselves; they simply are a

dramatic illustration of one aspect of the concealment

to which I have referred. The relevant charge is

seven lines out of 39 pages; in one affidavit it is

eight lines out of 44 pages and in the other it is

two and a half pages out of 112. The appellant dealt

with the matter showing the seriousness with which
he thought it should be dealt with in his own

affidavit, but giving it 19 lines in 72 pages.

Of course, it is that answer, those 19 lines, which

is said to be one of the reasons why he has

contradicted himself and given false evidence in

relation to it.

In the cross-examination it took slightly more

space. It took ten and a half pages out of 78. But

as Your Honours will see, the cross-examination was

on a rather different basis, and I will show

Your Honours that in due course.

MASON CJ:	There is a mistake, is there not, in paragraph 1 of the appendix. It is charge 15(c),is it not? Or
is that finding 15 (c)?
MR BENNETT:	Yes, it is 15(c)(vii), I am sorry, Your Honour.

I do not know where the (vii) came from. It is

15(c)(vii).

C2T2/l/VH	9/2/88
Walter(2)

MR BENNETT (continuing): It is also of significance while I

am dealing with this to point out to Your Honours

that the cross-examination treated it the same

way. If Your Honours just go for a moment to page 300

line 13, the cross-examiner is introducing the subject,

to which I will return when I get to the facts, of

the inconsistency between the earlier letter and the

solicitor's evidence, and what is put to him is not

something suggesting he is a thief but:

What have you said to the Law Society about this

particular mess of McKay?	What have you said?
Would you read it out?

The characterization the cross-examiner gave it was

the characterization which was the whole approach

taken by the Law Society which one gets from the

charges and one gets from the trial. It was a mess,

that was the charge. He defended himself against

the charge of "mess" by, in effect, pleading guilty

and explaining it and suddenly on appeal this bombshell

of misappropriation is raised of stealing is raised

for the first time.

One of the matters which led to the confusion

is that many of the charges, including charges in

the immediate vicinity, are charges with which - one
hesitates to use the word "trivial" in this context -

charges in relation to which that must be the only

word. For example, on page 344 charge lS(c)(x),

three subparagraphs after the relevant charge, is

that:

he failed to ensure that ..... a declaration of

trust

was stamped, the stamp duty being $6.00, on the evidence, an adhesive stamp. That was a charge

of which he was found guilty. Paragraph (ix),

a charge in which he was not found guilty, which

was not found proved, was a charge that he failed

to account for $25.94. Paragraph (viii), another

charge of which he was not found guilty, was perhaps

the most trivial of all the charges. What happened

there was that the solicitor had prepared a letter

enclosing a cheque for $8 S-98 - that was the wrong

amount. He realised it was the wrong amount before

the letter was sent and it was placed on a spike

in his file.

C2T 3/1 /MB	4	9/2/88
Walter(2)

MR BENNETT (continuing):  He then sent a letter enclosing the

correct amount. That is found by the inspector and

he is charged with - he prepared or caused to be

prepared - that is the charge - a letter addressed

to Mr McKay's parents purporting to enclose a cheque for $8000-odd as moneys due to the second mortgagee, neither of which letter or cheque was received by

Mr McKay's parents or Mr McKay, although they did

receive a cheque drawn for the right amount. That, of course, was something of which was not to be a -

he was, in effect, acquitted of the charge. I will

use the word "acquitted" and "convicted", but

Your Honours will appreciate it is a shorthand and

inaccurate expression.

Those are the three charges immediately after

the relevant ones. The ones before it make it even clearer the nature of what he is being charged with.

If one goes to the beginning of paragraph 15, on

page 341, and this is the preamble which governs the

whole of charge 15, what he is charged with is this:

In the period commencing on or about

23 December 1982 Mr Walter acted as solicitor

for or, alternatively, caused or permitted

his firm to act as solicitors for ..... Durand -

who was the borrower and -

McKay (the lender used being -

an inhouse company -

in a transaction in which Mr McKay advanced
money to Mr Durand in circumstances of

conflict between the interests of Mr :McKay

and Mr Durand and in so doing -

this is the particulars of causing or

permitting his firm to act in a situation of conflict:

He failed to explain ..... the existance and

nature of the said conflict -

and he is guilty of that:

He failed to advise Mr McKay to obtain

independent legal advice -

he is guilty of that:

He acted ..... contrary to interests of Mr McKay -

the lender -

particulars whereof are as follows.

C2T4/1/SR	5	9/2/88
Walter(2)

So now in the course of a conflict he has acted contrary to the interests of the lender, that is the

charge, and the particulars of acting contrary to

the interests of the lender in a situation of conflict

are (1):

he failed to obtain ..... an independent and

contemporaneous valuation.

He is acquitted of that. (b):

..... he failed to ensure that Mr McKay was

advised, that the security ..... would be a

second mortgage.

He is acquitted of that:

he failed to cause enquiries to be made of .....

the Tweed Shire Council -

and a whole list of bodies.	He is convicted on the
first four and acquitted on the others.	Some of

the others are quite surprising. I am sure the
residents of Tweed Heads would be surprised to know

that there was a need to search in relation to the

Urban Transit Authority or the Metropolitan Water he was acquitted of those:

(iv)   He failed to prepare ..... mortgagee's

requisitions -

he is acquitted of that. And:

(v)      he failed to advise Mr McKay, or .....

failed to ensure that Mr McKay was

advised, that three out of four

payments of interest ...... were not made
on or before the due dates.

That is part of the relevant transaction which we

will come to, that is clearly acting in a situation

of conflict, not telling the lender that the borrower

is late with his interest:

(vi)   he failed to take any steps ..... to recover the amount of extra interest ..... in

consequence of the three late payments -

because only the lower amount was charged on the

Law Society's figures. And interspersed in all that

is this one which suddenly we are told is unlike

all the others, a charge of stealing:

(vii)   he paid or, alternatively, he caused or

permitted to be paid, to persons other

C2T4/2/SR 6 9/2/88

Walter(2)	(Continued on page 6A) than Mr McKay or other than at Mr McKay's
direction, amounts totalling $7,960.00
from amounts totalling $10,050.00
received by his firm into its trust account
on behalf of Mr McKay.

A reasonable person, I submit to the Court, would

interpret that as meaning, he, in the course of

generally favouring the interests of one party in
a conflict situation, he mistakenly paid amounts of

interest to the wrong lenders.

(Continued on page 7)

C2T4/3/SR	6A	9/2/88
Walter(2)

MR BENNETT (continuing): That is the inference one would draw.

Certainly there is nothing in that charge that flags it as a charge of any greater seriousness

and, as I have shown Your Honours, it was treated

that way at the hearing; he was cross-examined

about this mess of these payments which is,

we would respectfully submit, a fair description.

That is the general background, we would

submit, and that was our first submission, to
the way one should look at the decision of the

Full Court, or particularly the decision of

Mr Justice Williams.

MASON CJ:  I suppose the strongest thing, Mr Bennett,

in relation to the misapplication of the interest

payments appears at page 151, paragraph 3B(a): Matters of concern arising in relation

to these payments are -

and the first matter dealt with 1s:

(a) The misapplication of the interest

payments received on behalf of Mr McKay

is disturbing.

MR BENNETT:  Yes. We would say that about this: firstly,

of course, it uses the word -

MASON CJ:  And then, of course, it goes on - you

want to read the last sentence as well:

The money was used to pay interest due

on three other loans, which makes an explanation

of clerical or administrative error difficult

to accept, particularly as in some cases

there were payments to different lender

clients on the same or nearly successive

days.

MR BENNETT:  Yes. Your Honour, we would say a number of

things about that: firstly, it uses the word

"misapplication" which is not the word one would

use if one were charging stealing. This paragraph,

we would submit, is rather like a person in
a pleading saying, "the only inference which
the plaintiff can draw from these facts is fraud",

but it does not actually allege fraud. It is

a circumlocutious way of making an allegation

of dishonesty. Secondly, the word "disturbing"

is a word of some ambiguity.

C2TS/l/SDL	7	9/2/88
Walter(2)

:t:1R BENNETT (continuing):  It could mean that what is alleged

to be involved is not merely a "clerical or
administrative error", but reckless indifference, or

gross incompetence, or gross disregard to what moneys

were paid from the trust account to whom. That is

rather the inference which that paragraph suggests, a

more serious case of incompetence. Of course,

"clerical or administrative error" on its own might

not involve any offence by the solicitor. I suppose

if one had the extreme case where a solicitor
instructed money to be paid from his trust account to

J.A. Smith and it is paid by mistake to J.B. Smith

because the bookkeeper misreads his handwriting, that

is a clerical or administrative error, but it is

hard to imagine a solicitor being disciplined in

relation to that.

So, in a sense, "clerical or administrative

error" can be seen as opposed to gross incompetence,

negligence or carelessness in one's responsibilities

to administer one's trust account, and we would submit

that paragraph is consistent with that. That is

certainly the highest it gets. We accept that,

Your Honour.

The second matter to note, before I show what

use we make of that submission, is that if that charge

was to be treated in the manner in which it was

treated by the Full Court, we submit there was a

denial of natural justice because the true

significance of the charge was never properly

identified to him.	I do not propose to labour
authorities in relation to this.	Your Honours are

familiar with the general rule laid down by this Court

in ASSOCIATED NORTHERN COLLIERIES. Your Honours need

not go to it:

I take the fundamental principle to be that the opposite party shall always be fairly apprised of the nature of the case he

is called upon to meet, shall be placed

in possession of its broad outlines and

the constitutive facts which are said

to raise his legal liability.

One cannot simply put facts, even in a case involving

a member of the legal profession, and say, "Well,

here are the facts you are charged with.	You work
out what the offence is."	One has to go a little
further than that.

(Continued on page 9)

C2T6/l/HS	8	9/2/88
Walter(2)

MR BENNETT (continuing):  And reading the paragraph on page 151

one gets the impression there is almost a deliberate

failure to go the full length - almost as if someone

has said "I do not feel,consistent with my ethical

duties,I can properly make an allegation of stealing

on this evidence and, therefore, I do not make

it." One almost has that impression from it and

that, of course, is a very proper course to have
taken but it is a course which precludes what later

occurred.

Now, the case I want to take Your Honours

to on it, the nearest, perhaps, example of this

type of principle is ANNAMUNTHODO V OILFIELD

WORKERS' TRADE UNION, a Privy Council decision,

(1961) AC 945. That was a case where - it was

a union expulsion case and the union member was

charged with a number of specific offences, none

of which carried the penalty of expulsion.	There
was another offence in the rules, the conduct

unbecoming offence, which permitted expulsion if

his general conduct was "prejudicial to the interest

of the Union". What the inquiring committee did

was to find him guilty of all·the charges and then

say, "Well, those offences are so serious that

you are guilty of conduct prejudicial to the interests

of the union and therefore you can be expelled."

And the Privy Council held that could not be done

because he had not been charged with that offence

and one could not simply say, "Well, it followed

from all the others and was the same facts and

one can conclude it in that way."

At page 955, the first full paragraph on that

pag~ at point 2, Their Lordships said:

But even if rule 11(7) only empowered

more severe penalties, nevertheless those
severe penalties could only be imposed when
the conduct was prejudicial to the interests

of the union:  and their Lordships think that,

even on that view, the rule should not have

been invoked without giving Walter Annamunthodo

notice of it.

Mr Lazarus sought to treat the specific

formulation of charges as immaterial. The

substance of the matter lay, he said, in the

facts alleged in the letter as to the meetings

..... and the allegations he had made.

Exactly the same approach here:  it said that the

substance is the facts alleged and approved not

the label that is put on them.

C2T7/l/AC	9	9/2/88
Walter(2)

MR BENNETT (continuing):

Their Lordships cannot accede to this view.
If a domestic tribunal formulates specific

charges, which lead only to a fine, it cannot without notice resort to other charges, which lead to far more severe penalties.

Of course, here the penalties are at large in both

cases, but we know from what was done that the appropriate

penal~y for the other charges he was found guilty

of was a year's suspension and the appropriate

penalty for stealing is striking off. So that

paragraph is applicable, although applicable by

virtue of general approach rather than specific rule.

The other case to which I have referred I will not

take Your Honours to. It was a case where a solicitor

was struck off in Singapore. He had received multiple

costs in a motor accident case: party/p~rty,.

solicitor/client, and direct from the client, and

had not properly explained to the client that he
had received party/party costs as well, so, in effect,

the charge was that he had doubled up and not disclosed

it.

The charge was put on the basis that it was a

breach of some regulation in relation to liability received from the client was money that he should not
cases that only certain taxed costs should be paid.

have retained and he was then found guilty of that

second defence and the Privy Council held one could

not change the nature of it in that way.

The importance of the matter is that while the

jurisdiction is protective, while the inquiry may be

wide-ranging, if there was going to be a charge of

serious criminal conduct made against a solicitor, he

must be given proper notice of it and a proper

opportunity to meet it. That was simply not done in

this case. Now, coming to the third submission - there

I have used the phrase "the Full Court" - I mean,

of course, the majority of the Full Court- Your Honours

do not have the third judgment. We have managed to obtain from the Supreme Court of Queensland a cover

piece which makes clear what my instructions were

at the special leave application and what we have said

at all stages, which was that Mr Justice Connolly

agreed with Mr Justice Williams, and not with

Mr Justice Shepherdson.

(Continued on page 11)

C2T8/l/VH	10	9/2/88
Walter(2)

MR BENNETT (continuing):  There is apparently no document,

as such, emanating from His Honour recording that

concurrence. It was said from the bench and everybody

has treated it on that basis.

MASON CJ:  Yes, it is apparently not infrequent practice

in the compilation of appeal books from Queensland.

It is as if a judge who merely agrees does not count

in some way.

MR BENNETT:  Yes. But certainly, as I understand it, there is

no question about it in this case. If Your Honours

wish to see it, we do have a cover document which

makes it clear.

MASON CJ:  No, there is no occasion, we accept what you say.

MR BENNETT:  Yes, if Your Honours please. Now, it is

important to note, of course, and it will become

more important when I come to the question of what

order should be made that the dissenting judgment

of Mr Justice Shepherdson dealt with the matter on

a totally different basis and His Honour expressed

the view that I am putting to this Court, that the

Full Court was not entitled to treat the charges

being one of stealing for the first time. It is

also interesting that Mr Justice Williams took the

view at the end of his judgment that the other

charges alone would have been insufficient to justify

a striking off.

If I take those two sentences from each judgment and disregard the other the appellant would have

succeeded. Now, the rules - I do not propose to
take Your Honours to the rules unless Your Honours

wish to, but the obligation is to publish findings

and orders and the statutory connnittee has apparently

interpreted that as meaning that one lists the various

charges and one makes findings of yes or no in relation

to each charge.	We would submit that is an
inappropriate course.	We have not appealed against

it. We did not appeal against it, of course, because

we were satisfied with the orders that were made,

there was no scope for an appeal.

The importance of it arises, however, when the Full Court attempts to interpret from orders what

decisions must have been made.	Now, Mr Justice Williams
out it on two bases.	He said, first,"One can work

back and reason what the statutory committee must

have found'and, secondly, he said,"I can get there

myself looking at the evidence, analysing the

evidence and my views are as follows based on the

facts."

C2T9/l/MB	11	9/2/88
Walter(2)

MR BENNETT (continuing): I have to deal with both. Dealing

with the first in vacuo, if I may, before I come

to the facts, the working back in that way, in

my respectful submission, is not an appropriate

course for an appellate court to take, particularly

where it involves making for the first time a

finding of dishonesty. Now, that was discussed

in a slightly different context by this Court
in McCORMACK V FEDERAL COMMISSIONER OF TAXATION,

143 CLR.284.

That was a case where the Taxation Board

of Review had given a decision without making

a finding on credibility and the Full Federal

Court, after an intermediate appeal, had made a series of findings on credibility adverse to the relevant witnesses and two of the Justices of this Court who were both part of the majority expressed direct criticism of that approach.

Mr Justice Jacobs, at page 321, said this:

The Federal Court of Australia undertook

the task of itself assessing the whole of
the evidence.

And he refers to the judges who:

felt able from the record of evidence to
reach the positive conclusion that the
taxpayer was not a reliable or completely
truthful witness and that the evidence of

the husband was unconvincing. It is very

difficult for a court on appeal to make findings

on the honesty and credibility of a witness

different from those made by the tribunal

who heard the evidence or even to make a

finding that a witness is not an honest witness
without having seen and heard that witness.

However, it is not necessary to determine whether the court on this appeal was in a

position to make a positive finding -

because the conclusion was no different.

However, a finding that the evidence of the taxpayer and her husband did not have

such a decisive weight does not itself affect

the weight of Mrs Schwind's evidence. Deane J

felt himself able to conclude that the taxpayer

had a motive not to acknowledge to Mrs Schwind

that she had purchased the property ..... He

could reach this conclusion as to motive
on the basis of the view which he reached
that the taxpayer and her husband were
knowingly engaged in a kind of transaction
which they knew to be in some way reprehensible.

C2TlO/l/ND'	1:	9/2/88
Walter(2)

In other words, the finding which His Honour had

made was that witnesses as to whom the tribunal

had said nothing but had reached an adverse

decision in its order, His Honour found to be

deliberately untruthful and then that was put

together with the whole of the facts to create

a view of Mrs Schwind's evidence.

MASON CJ: This is not directed to "working back" though,

is it? Is it not directed to, as it were, fresh

findings such as the second ground that

Mr Justice Williams took in the instant case?

MR BENNETT: It seems to be partly both, Your Honour.

Certainly it is concerned mainly with that, yes,

because it is a case where the first tribunal gave

no reasons and the finding was adverse.	Yes, there
is no actual working back in this passage,
Your Honour.	What Your Honour says is correct.

Such a view would be one which could have

been reached by the tribunal which heard
the evidence of the taxpayer and her husband

but with respect I do not think that it could

be reached by the appeal court particularly

when it had not been explored at first

instance. The negative finding that the

taxpayer's evidence. was not entitled to the

special weight of an honest witness, a finding

which had support from the ultimate

conclusion of the tribunal which heard the
evidence, is in a different position from
the positive finding that immediately after

the purchase the taxpayer deliberately

concealed her true purpose. I am therefore

of the opinion that the course ..... was not

one which was open to it.

And Mr Justice Murphy, at pages 323 to 324, said at 323 point 7:

(Continued on page 14)

C2Tl0/2/ND	13	9/2/88
Walter(2)
MR BENNETT (continuing):

I would not single this case out for remission for another hearing, especially if the purpose contemplated is that the

court to which it is remitted should find

whether the taxpayer or a witness is "honest"

or "dishonest".

And then he criticizes the Court making findings
of that nature where they are unnecessary.

In relation to working back, we submit this:

firstly, if the tribunal had found stealing

it is inconceivable that it would have made

the order it made. In other words, if it found
there was a deliberate stealing of money, with

all that that involves, of the type which

Mr Justice Williams found, the tribunal would

have reached a different order. It is, therefore,

we would respectfully submit, highly unlikely

that the tribunal reached the same conclusions.

So if that is so, before one goes any further,

it must be fallacious to work back. There are

a number of ways the statutory committee could have
reached its decision. First of all, it might
have concluded as a matter of law, wrongly,

perhaps, or as a matter of fact - maybe correctly,

maybe wrongly - that Mr Durand's, the debtors,

casual statements to the solicitor were insufficient

to fix the money with being money held on behalf

of the other three creditors rather than Mr McKay.

They might rightly or wrongly, probably wrongly,

have come to that conclusion.

One certainly cannot assume that they

came to another one. They might have simply

reasoned wrongly and taken the view, "Well,

there was a mess; the money was put in the

wrong trust account first, then paid out to

other people.	The whole way he handled it was
quite inappropriate and we reason, wrongly,

that it is appropriate to find him guilty of

that matter". After all,if they saw it as simply

another charge of incompetence, it was not

a matter of enormous significance to the solicitor

or the Law Society whether he was found guilty

on that particular charge.

I do not, in saying that, wish to minimize

in any way the importance of the finding of professional misconduct against a solicitor
but where one is making several dozen of such

charges, all of the same general nature, the

importance of any one can fairly be regarded

as significantly less. One ought not to assume

that the statutory committee spent hours deliberating

C2Tll/l/SDL	14	9/2/88
Walter(2)

in relation to this one charge when it occupied

such a small overall role. There are all sorts

of reasons, and we submit those are the main

ones, which may have led it to its result and an appellate court ought not to speculate and

work back in some inexorably logical way and

say, "There is the charge, he is guilty of that;

his evidence was this, therefore they disbelieved

his evidence; therefore he lied on oath; therefore

he committed perjury and stealing and therefore

he should be struck off".

MASON CJ:  But it is very difficult to evolve a general

inflexible principle in relation to working

back, is it not? Does it not all depend on

the circumstances of the case?

MR BENNETT:  Of course it does, Your Honour, yes, with

respect. If a case is conducted on the basis

that a man is charged with stealing, he says

and his only defence is, "I had the permission
of the owner to take the goods", and the owner

is called and said, "He did not have my permission",

and he is called and says he did; that is the

only issue fought, the case is brought as a

stealing case and a conclusion - there is no

judgment but simply the words, "We find you

guilty", no doubt one can work back. There

is no difficulty there.

But the problem arises when one works back

in a case like this where there is a general

charge of the type which appears here. There

are a number of explanations of that charge,

some negligent, some grossly incompetent and
some amounting to stealing; there is an explanation

given and an explanation which may or may not exonerate him from all of those, and then the

conclusion is drawn. But what I will have to do and

what I will do is put to the Court a rational

explanation consistent with innocence which

will, nevertheless, be consistent with the evidence.

I propose to put that to Your Honours in due

course.

The working-back passage appears at page 382

to 383. Two lines from the bottom of page 382

His Honour says this:

(Continued on page 16)

C2Tll/2/SDL	15	9/2/88
Walter(2)

MR BENNETT (continuing):

The relevant finding by the Statutory Committee

was expressed in terms that it found the facts

alleged in para. 15(c)(vii) to have been

proved. That of necessity involved a finding

that the four amounts totalling $10,050.00

represented interest payable by Durand to

McKay and that such sum was paid into the

relevant trust account on behalf of McKay. It
also involved a finding that the respondent

caused or permitted to be paid out of that

trust account, without appropriate direction

from McKay, amounts totalling $7,960.00. It

follows from those primary findings that the

respondent must have deliberately used McKay's

money in order to credit other clients'

accounts with interest due to them.

Just stopping there, this is not on the basis of the

denial and rejection of the denial. It does not

follow at all, we would submit, from the finding that

it had been done deliberately; that it was deliberately

used in order to credit other clients' accounts. That just ignores the possibility of mistake or

possibility of giving excessive weight to a direction that was not a sufficient direction. We would submit

the word "deliberately" just does not follow from
what goes before. His Honour then goes on:

In other words the respondent (disregarding the wishes of McKay) -

Now, there was not the slightest piece of evidence

about Mr McKay's wishes. In a sense, his wishes -

MASON CJ: It seems to mean, though, in the context, does it

not, ~egardless of the wishes of McKay, rather than

disregarding the wishes of McKay.

MR BENNETT:  I would submit the word does not carry that meaning.

MASON CJ:  Normally it would not, of course, and one suspects

that the use of the word."deliberately" above indicates
that the judge was using "disregarding" in its

ordinary sense.

MR BENNETT: 

That is my submission, Your Honour.

MASON CJ: 

It may be the evidence indicated that it was a case

of regardless of the wishes, but none the less the
combination of "deliberately" and "disregarding"

does seem to support what you say.

MR BENNETT:  Yes, I so submit, Your Honour. Then:

It was argued for the respondent that such was

not a necessary consequence of the findings

made by the Statutory Committee, and the Court

C2Tl2/1/VH	16	9/2/88
Walter(2)

should not speculate as to that Committee's reasoning processes. But, in my view, that submission does not withstand careful

analysis; a finding that the facts alleged

in the paragraph in question had been
proved of necessity involves a finding that

the -

and this has two parts,( a)-

that the moneys were properly credited to

McKay's trust account, and -

(b) -

disbursed without authority. Indeed, in my

view, that was the only finding reasonably

open on the evidence.

That is a lesser - - -

MASON CJ:	That seems to stop short of "deliberately used."
MR BENNETT:	Yes, it stops short there, Your Honour. But

the earlier part is stronger. Then he goes on to

talk about stealing and, at page 384, line 29, he

comes to a section of his judgment which takes

several pages, concerned with the fact that he was

repaid in full not being a defence. We would not

dispute that for a moment. If a solicitor takes

money of his client intending to repay it when

his horse wins or for any other reason and does

repay it, clearly that is not a matter which goes

to his guilt. That is used in a slightly different

way. At page 387, His Honour then says - and there

is no suggestion in this case, of course, that that

stopped it being stealing if it otherwise was - page 387,

line 8:

In this case counsel for the respondent argued that there was no suggestion that the

practitioner stood to gain anything personally
from the transactions.	That may well be so,

but I agree completely with the remarks quoted

..... supporting the proposition that in the

long run it is irrelevant that no-one has

suffered loss.

(Continued on page 18)

C2Tl2/2/VH	17	9/2/88
Walter(2)

:t1R BENNETT (continuing):  That is, we would respectfully

submit, a complete non sequitur. It is dealing with

two totally different issues. Certainly it is

irrelevant that no-one has ultimately suffered loss

and that the money was repaid, but the fact that he

did not stand to gain anything, the relevance of that

is that it goes to the probability of him having a

guilty intention at all, as opposed to just being

incompetent and careless. It is not that it goes to

the question of suffering loss.

Before I come to the facts, there is one other

submission I should make and that is (b) on page 2 of

my submissions, and that is that had he been charged
with stealing the matter would have been dealt with

quite differently.	First of all, one would have
thought Mr Durand would have been called.	If the

situation was that Mr Durand was not going to support

that evidence, presumably the Law Society would have

called him, presumably they investigate or interviewed

him. Certainly if this is seen as a charge of

stealing one would have thought that would be the first

thing one would do, but Mr Durand is not called.

We did not call him either, no doubt - I was

not counsel conducting the hearing - but no doubt

because the approach being taken was a general plea

of guilty to allegations of incompetence and it was

not thought necessary to call him. That may have

been an unwise judgment, but one is entitled to say

that that decision is one which should only be made

in the context of knowing how serious the allegation

is, and a decision not to call him where his evidence

was marginally relevant to a charge of incompetence

or carelessness, perhaps deliberate carelessness in

the sense that he ought to have known that care should

have been taken, is very different to not calling him

whence the allegation is stealing.

Similarly the evidence of the other lenders may have been relevant if there were discussions

affecting them. One just does not know, but the

matter would have been conducted differently. (Continued on page 19)

C2Tl3/l/HS	18	9/2/88
Walter(2)

MR BENNETT (continuing): Indeed, apart from anything else,

it is probable that had it been conducted as a

stealing case there would have been at least the

formal evidence of Mr McKay saying, "I did not

give my consent". Your Honours would be aware

that in every burglary case the home owner is

called to mouth the words in answer to the question:

"Did you consent to the accused Alf Smith taking

your video cassette recorder when he broke the

window and entered your house?"	The question is
always asked and answered.

There is a controversy in the House of Lords

in the 1970s as to whether that is an element
of the prosecution case or consent is a defence
and one does not need to go into the question of

whether it is, in fact, necessary or not to tender

that evidence. But the importance of it is that

it would have emphasized the nature of what was being charged and it would, no doubt, have been

done if it was a stealing case but there is no

attempt to do that and, as I say, no one regards

it as worthwhile calling Mr Durand. The manager's

evidence is absolutely vital on this question of

stealing - the way it was run - if it was treated

as stealing.

There is also questions of onus of proof.

If one applies the test applied in New South Wales,

which is the BRIGINSHAW approach to burden of proof

in solicitors' disciplinary cases,there would be

a different degree of BRIGINSHAW onus in a charge

of stealing than in a charge of gross incompetence.

If one was applying the Queensland approach there
would be an even greater difference because the

Queensland cases suggest that where a criminal

offence is charged against a solicitor it must

be proved beyond reasonable doubt. May I just

hand to Your Honours a case, which is not in the

list of authorities, it is RE N.E.G., (1940) QWN,

Case No 25,	and it was, in fact, referred to
in one of the judgments in the Full Court in this
case on a different aspect.	The two passages to

which I wish to refer are first on the second page

of the report, at about point 8 - the long paragraph
beginning "On that evidence" - half-way down that
paragraph, and after the citation, Mr Justice Douglas

says:

(Continued on page 20)

C2Tl4/l/AC	19	9/2/88
Walter(2)

MR BENNETT (continuing):

The general rule is that where a solicitor is

charged with a criminal offence in relation to
professional matters, the offence must be proved

with as much strictness as it would be in criminal

law - that is, the burden of proof is as heavy

as it would be in a criminal case.

And then in the last paragraph:

As to the degree of proof required, I prefer to

leave that an open question. I think, in any case,

it must be strictly proved. That is to say,

where a charge is made against a solicitor it

must be strictly proved, and to my mind there is

no strict proof here. But I am resting my

judgment on the fact that the Cormnittee, to

my mind, have not made a finding of stealing.

Hauntingly reminiscent to the present case. The

importance of that is, that there is another

hypothesis which needs to be considered and that is

that the statutory cormnittee - if one is working

back - found on the balance -

of probabilities but not on the higher test that the

solicitor's evidence should be disbelieved. In other

words,if the cormnittee was not treating it as a

criminal offence and was treating it as a charge of

a "mess", as counsel described it, they may have

taken the view - we just do not know - that the

same standard of proof was not required that really

was required.

Another example of the approach is that taken

by the Privy Council - again I hand this case to

Your Honours - in RE AUGUSTUS STEWART. It is a

fairly early case but it lays down a general principle

which, we would submit, would not be controversial

today. This was a solicitor who was struck off in

Bengal who appealed to the Privy Council. It is

RE AUGUSTUS STEWART, LR II PC 88. At page 95

Their Lordships set out with approval a passage

from - I am sorry, I withdraw that.

(Continued on page 21)

C2Tl5/l/MB	20	9/2/88
Walter(2)

MR BENNETT (continuing):  At page 103, the Privy Council

sets out, with approval, some statements made by

Mr Justice Norman in the court below and Their

Lordships say this, at the top of page 103:

Mr Justice Norman concurred with the other learned Judges in thinking "that the

Appellant had been guilty of a very great

and serious irregularity -

and there is a further discussion of that.	Then
about 10 lines down:

He further says, "I should require the fraud

or the crime to be as distinctly proved

against him as if he stood upon his trial

at the bar of a Criminal Court for the

offence." He finally came to the conclusion

that the false statement was, in fact, not

made with intent to injure or defraud any one,

and with still more confidence that on the

evidence no such intent had been proved;

and he accordingly suggested suspension as
an adequate punishment.

Their Lordships feel bound, on the consideration of the whole evidence ..... to come to the

conclusion that the Order ..... ought to be

discharged.

On the next page, the last paragraph, the first lines:

The reasons assigned for the false

statements, though unsatisfactory, had any

fraud whatever followed upon the transaction,
are not inconsistent with the possibility

of honest motives.

That is the approach taken. Is it inconsistent with

the possibility of an honest motive? Now having said all that, may I now go to some of the facts

one needs to look at. It is of significance that

we know from page 299, unless one concludes that this

evidence was rejected too, that Mr McKay was aware

that his instalment interests were not being paid.

Now at line 12, on page 299, Mr Walter is asked: Well, did you tell Mr McKay that his interest

instalments weren't being paid?----He was

aware of that.

Did you tell him?---Yes, I did.

How did you tell him?---At the time he worked

at Coolangatta, and I saw him fairly regularly.

And?---And I told him.

C2Tl6/l/SR 21 9/2/88

Walter(2) (Continued on page 21A)

What?---That this guy was slack in his

interest payments.

And so on. Now, if this had been fought on an issue

of stealing, one would have thought that if that

statement is true, that is inconsistent with the

Society's case that the money was at all times

McKay's money that went into the trust account.

(Continued on page 22)

C2Tl6/2/SR	21A	9/2/88
Walter(2)

MR BENNETT (continuing):  Yet there was no suggestion of

recent intervention put. If recent intervention

had been put, no doubt Mr McKay could have given

that very evidence. Indeed, probably it would

have been admissible anyhow as going to the res

gestae but whether it was admissible or not does

not matter a great deal. The point is that

Mr McKay was not called. Again, no one thought

it necessary, on either side.

I have been indicating to Your Honours that

I was going to give you an explanation consistent

with innocence and may I proceed to do that. This

explanation accommodates all the solicitor's

statements and it accommodates, as I will show,

all his cross-examination.	The explanation is
very simple.	The instructions given by Mr Durand

were vague and general. He was, of course, the

debtor and he was a debtor who owed a number of

debts and he was entitled, under the rule in

CLAYTON's case, to make an appropriation.	But
he did so in a very general and casual way ..

On page 296 the solicitor gives evidence of the conversation with Mr Durand and at line 16

he is asked:

Is this a direction by writing or orally?---

No, it happened on more than these occasions, on more than one occasion; ·it was oral.

Each time he sent in a cheque - - -?---He

normally dropped it in himself.

Not always but he normally dropped the cheque

1n.

What did he say?---He said, "Look, use for

these other matters."

Now that is a fairly casual CLAYTON's case direction.

The solicitor, having received that direction,

proceeded to do more or less that. If one goes

to the trust account ledger Your Honours can see
the actual payments on page 170 in volume 1.

Your Honours see at the top of that page, if

Your Honours look at it sideways, there are first two receipts of 2512.50.

(Continued on page 23)

C2Tl7/l/ND	22	9/2/88
Walter(2)

MR BENNETT (continuing): Then there is a payment of $2000 to

Mr Mckay's brother which was with authority, and I

will deal with that later because that is one of the

matters Mr Justice Williams refers to, then there is

a third payment of $2512, and then three payments of

interest to the smaller creditors, $687, $800 and

$261. Your Honours will note that those three

together amount to less than the interest due to

Mr McKay. All three together amount to about, what,

$1600, $1700. So their total, if one paid those

three small lots of interest, there would be some

change for Mr McKay, although a good deal less, of

course, than he was entitled to, about a quarter of

his interest.

Then there is some further payments and the

balance is carried forward and it is carried forward

on to page 169 at the bottom where the $2301 is

carried forward, there is another interest payment of

$2512, and then again the series of small payments

being made. Now, the explanation of the versions

-given by the solicitor is also on - once one

appreciates that this is a very general direction

and given to someone who is not showing the highest
degree of conveyancing and bookkeeping skills in the

management of his mortgage practice, the rest falls

into place fairly easily. When he writes his letter

he says, at the bottom of page 379, and this is -

I have to keep returning to this - this is in a few

lines in a long letter. It is line 25 on page 379:

As explained to your Mr Austin, the interest accounts for Luscombe, Costello

and Roberts, Johnson, Mcfarlane, Kidd and

McKay became mixed due to clerical and

accounting error.

That could, of course, relate to the payment of money

due to three of them into Mr McKay's account,

some money due to four of them. In other words, the

error is that instead of carefully apportioning each

one as it comes in, it is just all put into Mr McKay's

account:  (Continued on page 24)

C2Tl8/l/HS	23	9/2/88
Walter(2)

MR BENNETT (continuing):

Regarding the mixing of the interest of funds, we advise that the Borrower used to forward cheques to our Office payable

usually to Murlen Nominees. The cheques
were receipted into our Trust Account and

unfortunately, from time to time interest

cheques were drawn from the wrong ledgers

due to clerical error . .The error

was as between respective Lenders and at

no time were any moneys paid out to this

firm or any pecuniary gain made by our
firm. In other words, we received no benefit

at all from the error."

That is relating generally to the mixing-up

and paying out of the wrong accounts. Alternatively,

one might regard that letter as not referring

to the payment into the accounts but simply

as saying, "Look, I appreciate these accounts

are badly kept; I appreciate it was a mess",

and he is saying in general terms that it was

a mess without descending to the particular

that in relation to these particular payments
they simply went into the wrong ledger in the

first place. That, perhaps, is a particular

of the general clerical and accounting errors.

When he comes to prepare his affidavit,

as one would expect, there is greater care given

to it and at that point he recalls the generalized

directions he was given and on which he acted

and he particularizes it. He says, at page 380:

" . I say that, when the sum of Ten

thousand and fifty dollars ($10,050.00)

was paid by Durand, he directed me to

appropriate that amount firstly towards

interest due to Luscombe, Costello and

Roberts and appropriate any balance to

McKay. In the circumstances, I say that

all the moneys were not recieved into the
trust account on behalf of McKay.

Then there is a sentence which does not seem

to make sense in the context:

At the time I received those funds, I acted

on the appropriation given at the time

of the payment.

It may be that that is intended to read, "I
did not act on the appropriation given at the

time of payment", that max be the best explanation

of it; or, it may mean, 'I acted in the sense

that I made a mental note that it was in the

wrong account", or it may mean, "appropriation

C2Tl9/l/SDL	24	9/2/88
Walter(2)

by reference to the amount on the cheque~'which was

the exact amount due to McKay, but whatever

that sentence means - - -

WILSON J:  Why would it not be an appropriation in accordance

with the direction referred to earlier in the

quote?

MR BENNETT:  Because that is not what he did, Your Honour.

He did the opposite. As he says, in the next

sentence:

I accept that the receipt of those moneys

into one trust account was incorrect

accounting-,

1n other words, it should have gone into four trust accounts.

It is difficult to construe that penultimate

sentence but the explanation given as a whole

is quite clear.

One can well understand, if one is acting in a fairly casual way in relation to these

funds, that one would regard it as part of the

overall offence to which he was pleading guilty,

if I can put it that way, when he prepared his
letter and then, when he applied his mind to

the particular charge, dealt with it this way. Then one gets to the six points which are

raised by Mr Justice Williams, with which I

have to deal.

DEANE J:	Mr Bennett, I have not picked up where in the
ledgers does the $10,500 appear?

MR BENNETT: It is the total of the four payments of $2500-odd.

DEANE J:	On page 170?
MR BENNETT:	Yes, Your Honour, and 169. If Your Honour

looks at page 170 first, there are three payments

of $2512.50 there and on 169, at the bottom,

there is a fourth one, the second entry in the

right-hand column - - -

DEANE J:	I am sorry.
MR BENNETT:	169, the foot of the page, the last of the

three things on that page, on the right-hand column, the first entry is a carried-forward figure, 2301.

C2Tl9/2/SDL	25	9/2/88
Walter(2)

DEANE J:	Yes.
MR BENNETT:	The second entry is the fourth payment of $2512.50;

four times $2512.50 is $10,050.

DEANE J:	What, it was one cheque received, was it?
MR BENNETT:	There were four cheques, Your Honour.
DEANE J:	Four cheques, I see.
MR BENNETT:	Four interest cheques, roughly q~arterly.

DEANE J: Well, I still do not fully follow the figures ..

MR BENNETT:  I will go through it again, Your Honour, I am

sorry, it is my fault. If Your Honour goes to

page 170, at the top of the page there is

Mr McKay's ledger. Your Honour sees the word,

"McKay" at the very top of the page, slightly to

the right, "G. McKay, advance."

DEANE J :  Why is it Mr McKay's tedger? Why is it not Merlin Nominees ledger?

MR BENNETT:  Well, it is Merlin Nominees ledger. It was the

trustee; it was the legal owner of the mortgage.

Mr McKay was the lender and the equitable owner of

the mortgage. S o it is "G. McKay, advance to

Durand." Then there is the first interest payment

credited on the right-hand colurrm, $2512.50 on

April 11. On July 7, the second one, $2512.50;

payment out of $2000 to Mr McKay's brother; third

interest payment, $2512.50. Then payments of the

smaller amounts of interest to Costello, to Luscombe,

to Roberts, then another to Costello, another to

Luscombe. Then the very last entry, $2301.25 is the

balance figure which is carried forward.

One then goes to page 169 and the third of the

accounts on that page is the continuation of what I

have just shown Your Honour. There is the $2301.25

carried forward, the fourth payment of $2512.50.

Your Honour appreciates that four times $2512.50

is $10,050.00.

DEANE J:  Well, what relation did those amounts of $2512.50

bear to the interest that was payable to Mr McKay?

MR BENNETT:  It was the exact amount at the lower rate.

DEANE J: I see. That was applied in payment of interest due

to other •lenders.

MR BENNETT: 

Yes, Your Honour. Pursuant, the solicitor says,

to the debtorsr- direction at the time of payment,
saying, in effect, pay the others first and give the

change to Mr McKay.

C2T20/l/VH	26	9/2/88
Walter(2)

MASON CJ:  Why was not the balance of $2301.25 paid to

Mr McKay, or, as it were, the immediate balance

after the first instalments were due to the others?

MR BENNETT:  He was not asked and there is no evidence as to

that, Your Honour. He says he saw Mr McKay

regularly and there is just no explanation given

for that.

MASON CJ:  What he says was that he told Mr McKay that his

interest payments were not being paid.

MR BENNETT:	Yes, Your Honour.
MASON CJ:	But, on the evidence that you have directed our

attention to, payments were being made to which

Mr McKay would have been entitled to a balance at

any rate.

MR BENNETT:  Your Honour, what he said was a little less than

that. It is page 299 line 12, and this is in the context of a series of questions showing that his

claim is that part of it was received for McKay.

He is then asked at line 12:

(Continued on page 28)

C2T20/2/VH	27	9/2/88
Walter(2)

MR BENNETT (continuing):

Well, did you tell Mr McKay that his interest

instalments weren't being paid?

Which is, of course, a slightly unfair question

in the sense that what the previous questions

demonstrate, if the witness' evidence is accepted,

is that they were being paid in part and late.

His answer is:

He was aware of that.

Did you tell him?---Yes, I did.

How did you tell him?---At the time he worked

at Coolangatta, and I saw him fairly regularly.

And?---I told him.

What?---That this guy was slack in his interest

payments.

So, it is about as casual as the direction that

is given to him.

TOOHEY J:  But was he slack in his interest payments so far

as Mr McKay was concerned?

MR BENNETT: Well, on any view of it, they were all late.

They were around a month late - that sort of figure.

TOOHEY J:  But with some sort of regularity, were they each

roughly a month late?

MR BENNETT:  Yes, Your Honour, as I recall it. I can check

that - the dates are at page 170. I think the

first one was due in March and paid in April; the

second was due in June and paid in July; the third

was due in September paid in October and the fourth

was due in December and paid in January.	Yes,
they were all roughly a month late.

TOOHEY J: But, Mr Bennett, when you say they were due in each of those months, do you mean they were due on the last day of each of those months or at some

earlier day?

MR BENNETT:  There is evidence of the exact dates, Your Honour,

I do not have it at my fingertips, I will ask my

learned junior to check that.

TOOHEY J:  Could I just ask you another question. What does

one see if one goes to the ledgers relating to
the other lenders? There must be something that

throws up the fact that they are receiving interest

from some undisclosed source apparently.

C2T21/l/AC	28	9/2/88
Walter(2)

MR BENNETT:  No, Your Honour, because, in fact, one of the

things that occurred, which I will come to in a
moment, is that a letter was written to Durand

saying that he had not paid interest on behalf of one of those lenders and that is one of the

matters relied on against the solicitor as

disproving his story, and I will come to that.

But it never went through their ledgers. What

the solicitor did, on his version, was to say:

he got the cheque, the borrower gave him this broad

appropriation, he put it all into the McKay account
and then paid the other three out of that in a

dilatory sort of way from time to time and it never

went into their ledgers - it was just paid by cheque

from the trust account in the name of McKay.

TOOHEY J: Well, do you mean their ledgers, that is the ledgers

of the other lenders, would not reflect the payments

out that are shown in the ledger account relating

to McKay?

MR BENNET:  Yes, Your Honour, and that is, as Your Honour

will see in a moment, why the problem arose with

the letter in relation to Mr Luscombe. I am told

by my learned junior that the date is the 15th

of the month - they were all due on the 15th.

DEANE J:	Was there any explanation as to why the amounts
should be $2512.50 if they were not intended for
Mr McKay?

MR BENNETT:  I will come to that in a moment, too, Your Honour,

that is also one of the six reasons. There was

no evidence about that and it was one of the matters

relied on - that they were the exact amount due

to Mr McKay.

DEANE J:  What - there was not a standing order to a bank

or something like that?

MR BENNETT:  No, it was just a cheque. Your Honours, the

six matters which Mr Justice Williams relied on

appear at page 381 and the first of them is the

one that Your Honour Mr Justice Deane just put

to me: that the four amounts were the precise

amounts and he says that it is therefore:

improbable that ..... would be the subject

of an instruction.

We would submit there is nothing improbable about

a scenario in which the debto~ being unable to

pay all of them, writes a cheque for the largest

one, having been told the figure, comes in with

it but none for the others, and then thinking about

C2T21/2/AC 29 9/2/88

Walter(2) (Continued on page 29A)

it on the way in says to the solicitor: "Look,

pay it to the other smaller ones first and give

the larger one the change." And then having got
in the habit of writing that amount and being

unable to meet all of them just keeps doing that

- keeps writing the same amount.

(Continued on page 30)

C2T21/3/AC	29A	9/2/88
Walter(2)

MR BENNETT (continuing:) But, again, Durand is not called.

No doubt he would have been had this charge been

put in this wav: and one has to speculate. There is

nothing improbable, we would submit, about that scenario.

MASON CJ: It sounds very probable to me, that a man having

first concluded that he was going to pay this amount

and then directed that it should be split up amongst

other people, the amount bearing no reference at all

to their entitlements, should continue to do so

thereafter.

MR BENNETT:  Having decided in his own mind that is what he

was able to afford in a particular month, or particular

quarter, there is a certain human lethargy, I suppose,

in doing the same thing, "That was the amount I paid

last quarter and it seemed to keep them quiet."

MASON CJ:  I suppose all it shows, Mr Bennett, is that you

have a much more Byzantine mind than I have.

MR BENNETT: Que i1;1st .does not know. One might also ask why would he pay

that o"n~ and not pay the other three at all; there

is one large one and three small ones. The evidence

does not suggest that Mr McKay was pressing at all

through the solicitor, there is no evidence suggesting

that. So it is not as if there is one creditor

pressing and the three smaller ones not pressing.

But there are possible reasons for it. There is

no doubt when he wrote the cheque he worked it

out that way the first time, but then he did it.

But, of course, what this does do, what this factor does do is provide an explanation of how it may have
got into Mr McKay's trust account because the

ledger keeper, the person who does the allocation,

may well have simply seen the amount and said, "Well,

that is obviously Mr McKay's cheque." Alternatively,

the solicitor may simply have, having got the

general, the very general appropriation, perhaps

not thought much of it at first and then realized

that - simply put the money into Mr McKay's account

and then thought about it and perhaps, "Well, maybe	I should make the payments I was told to make" as
he is reminded of them.

These things are only improbable if one

hypothesizes a beautifully run computerized city
practice with a perfect bookkeeper applying his

mind precisely to the legal concepts involved.

It is obvious that this country practice was not

carried on in that way. Once one makes that

assumption a lot of these inconsistencies cease

to be inconsistencies.

MASON CJ:  Mr Bennett, is page 299 the only evidence that

we have from the appellant about the appropriation

by Durand?

C2T22/l/MB	30	9/2/88
Walter(2)

MR BENNETT:  No, Your Honour, there is a short passage at

page 323 when, in the course of evidence about some other matters, there were - one of them impinged on

this matter and the cross-examiner went back to

it. At 323 line 5 - I am not sure who Geoff is but

in any event there is a question about Geoff - I think

he may have been one of his partners -

Sooner or later he would have had the details

of the mortgage. Oh no, he wouldn't, because

it's in the name of Murlen Nominess. I wanted to

ask you about that evidence that you gave about the

instructions from Mr Durand in relation to the
payments credited to McKay's ledger account and paid

to Costello, Roberts, etcetera. Did you say

that he instructed you at the time of making each

payment, what to do with those particular funds,

or that he instructed you at the beginning, and

you just followed that for the four subsequent

matters?

Answer:

Each time he came into the office -

and we were told before he normally came into the

office, but presumably not always -

Each time he came into the office he told

me what to do with the cheques, how the moneys

were to be appropriated.

MASON CJ: That was the point I was going to ask you about,

whether there was just one general appropriation

according to your client or whether there were

four appropriations.	He goes on then to deal
with it, does he?

(Continued on page 32)

C2T22/2/MB	31	9/2/88
Walter(2)

MR BENNETT:  Yes, we do not know if it was four, Your Honour,

it was a number - it was in general, each time

he came :into the off ice, but he did not always come

into the office:

What did he say?---I can't remember exactly.

He said, "here is a cheque for interest.

Can you use it for those various persons?"

and I said, "Yes, I will."

Now, on one view that is the instruction to divide

it up rateably, on another view, one could pay the

three smaller ones and give the big one the

change. It could be anything. And the statutory

committee may have concluded that because of the

vagueness of that direction it was just insufficient

under CLAYTON's case. And then he says,in

relation to Mr Justice Deane's question, at line 19:

The cheque - I believe that the reason the

cheque was for the amount - well, for the

correct amount on the McKay matter is

simply that he drew it for that amount.

I don't know why he drew it for the

amount, but he did, and he told me to

appropriate it for those various other

matters. This wasn't the only occasion he

had done that. That sort of appropriation

didn't only happen in this matter.

So that is the first matter, the exact amount.

DEANE J:	Of course, it may well be that if one were to reject Mr Walter's evidence in that regard, it would still leave open the possibility that it was he who raised the need to pay part to these smaller loans
so that everybody would be at least a little bit happy?

MR BENNETT: That is a less favourable inference for the

solicitor, but still one, one would have thought,

short of the seriousness of that which is made against

him by the Full Court.

DEANE J: It would be far less likely that that is what

happened than what Mr Walter said and that is that

the borrower came in with a cheque, the precise

amount for one lender and of his initiative suggested

that it would be better to pay out the three and

the balance to the fourth?

MR BENNETT:  I am sorry, Your Honour, I misunderstood Your Honour's

question, yes, I am sorry. Yes, if that happened,
if there was a preliminary part to the conversation
of the debtor going in with the cheque for the

large one and the solicitor saying, "What about the

C2T23/l/SR	32	9/2/88
Walter(2)

three smaller ones", and he says, "Oh well apply it

to them first", that certainly makes it much more

probable and would explain why the cheque was for

the larger one only in the first instance.

DEANE J:	Or the solicitor saying, "McKay is taking things
fairly easily, but there will be murder if these
three smaller one do not get paid, why don't we do
this"?

MR BENNETT:  Yes, that is certainly possible, Your Honour. He

is not asked about whether there was any preamble

to the remark.

DEANE J:	The evidence is inconsistent with there being a preamble, I would have thought, but that is a
different question?
MR BENNETT:	Your Honour, one does not know if he would remember

the preamble, one would not expect him to remember

the preamble, what is important is the answer not

what goes before. And all one would store away,

if one stored anything, would be the instruction,

not how the instruction was obtained. And once

that is done on the first occasion one can well

understand how lethargy causes the cheque to be written

for the same amount each time. "I took that amount

in last time and it seemed to be accepted and no one

said anything, so I will keep doing it". I mean

there is gross incompetence in not following it

up, or not at least telling Mr McKay exactly what

is happening and so on beyond the more general

remark, but it all seems to have been taken very

casually. And certainly Mr McKay was told in general

terms - he must have known he was not getting his

interest and yet there is no suggestion of any

complaint from him.	So that is the first of the six
matters.

The second is that:

The payment out of $2,000.00 to McKay's

brother on 16th August, 1983 (a transaction

agreed to have been with Authority) is not

consistent with the explanation that only

the balance should be appropriated to

McKay's account.

We would submit a number of things about that.

First~ and there is some evidence about that which

I will take Your Honours to in a moment.

(Continued on page 34)

C2T23/2/SR	33	9/2/88
Walter(2)

MR BENNETT (continuing):  There is the fairly obvious possibility

that being in the wrong account it was seen there and

when McKay wanted money to be paid out ot him,

$2000, he simply says to the bookkeeper, "How much 1

. . K ? II II s h II "W 11 . h .

1s 1n Mc ay s account. o muc . e give 1m

a cheque for $2000. 11 But that is speculation.

But again, the charge was not treated in the serious

way that is involved.

He is asked about that at page 297 and 298.

At 297 he is asked, at the top of the page:

Couldn't you have corrected the error then by taking it out to Mackay's ledger?---I should have but it didn't occur to me.

You just drew the cheques on Mackay's account

to these other three lenders?---I should have put the money in the other lenders'

accounts. I realise that.

What about the $2,000 that went to Mr Mackay's

brother?

Then there is an objection which takes most of

the rest of the page. It is allowed at line 30.

MR HANSON:  You did, in fact, pay $2,000

to Mr Mackay's brother, is that so?---Yes.

Was that an oral instruction?---Yes.

Whom from?---The lender himself.

Mr McKay?---I think it was him. It could

have been his parents. I just cannot remember.

It was either him or his parents.

Again, it shows a fairly casual approach is taken

to the precise instructions.

Did you ever see these ledger cards?---I

wasn't in the habit of examining them, no.

Well, do they mean anything to you, if we

look at them?---Yes, they will.

Well, did it ever come to your notice that the money was being put into McKay's account

when his instructions were otherwise? Did

that never come to your notice?---It was

something that I didn't think about.

I am not asking if you thought about it.

Did you ever notice it, or hear about it

C2T24/l/ND	34	9/2/88
Walter(2)

from the bookkeeper, or from any other

source?---I never discussed it, and I never

examined the trust ledgers.

When did you first find out it had happened?---

When Mr Franklin brought it to my attention.

How could you draw cheques on McKay's account in favour of Costello, Luscombe and Roberts;

can you tell me?---Simply because that was

the way the borrower had told me to appropriate
the moneys. I agree with you that the moneys
should have been received into separate trust

accounts.

So the cross-examiner does not press the inconsistency

which is relied on by Mr Justice Williams and I

do not think he returns to it. No, I am fairly

sure he does not. So the inconsistency, as such,

is not put to him. It is never put to him, "But

just a moment, if this isn't McKay's money, how

are you paying it to him?" If one does the calculation

which we know was not done, when that money was

paid - if Your Honours go to the trust ledger at

page 170, Your Honours will see that it is the

change due to Mr McKay at the time the 2000 is

paid is slightly less than the the $2000. It is

about $1500 that was left over from the fir~t

two payments if one assumes that the other three

were being notionally credited with it. So, in

fact, there was only about $1500 of Mr McKay's

there and therefore the $2000 was in excess of

that.

But one can easily understand how that mistake

would arise and it was not, of course, put to

the solicitor that that was inconsistent with what

he was saying.

(Continued on page 36)

C2T24/2/ND	35	9/2/88
Walter(2)

MR BENNETT (continuing):  So he was not given a chance to

say exactly how that money came to be paid to his

brother. It is certainly consistent with carelessness

and sloppy handling of trust funds.

WILSON J:  Is there any explanation, Mr Bennett, of the delay

in making the appropriation or the disbursements to

Costello, Luscombe and Roberts?

MR BENNETT:  No, Your Honour. We would submit that just

shows general dilatoriness, that no one was paid.

It is not as if it is more consistent with one or the

other version. It is simply that there is money

going in and it is not being paid out to anyone.

WILSON J:  The evidence then is that on the 8th or the 11th

Mr Durand brings a cheque in and says, "Disburse

this to the others and leave the balance for McKay",

and the first compliance with that instruction is

November 30, over seven months later.

MR BENNETT:  Yes, but Your Honour, that problem arises equally

if one takes the Law Society's version which is that

the money was always McKay's, paid in for McKay.

It is still not paid out for six months. It does not

seem to have been a practice of paying out money as

it came in, and that leads really to

Mr Justice Williams' third point, because he says

at page 381, line 13, the point

Your Honour Justice Wilson has just made to me that:

No disbursements other than to

Mr McKay's brother were made until over

seven months after the first instalment

was received into the McKay account.

That is inconsistent with the explanation.

The answer seems to be he is just dilatory about

passing on this sort of payment.

WILSON J:	Yes.	I had not got to (iii).
MR BENNETT:

We stress it is equally inconsistent with the

two versions. In other words, to the extent that it

is a factor it is a neutral factor.	The fourth
one -

MASON CJ:  By the way, just before we leave these payments,

it is right to say, is it not, that at the time the

alleged initial appropriation was made by Durand, the

instruction was given,there was in fact no liability

to Luscombe, Costello and Roberts?	In fact their
loan had not then been made.

MR BENNETT:  One of them, Your Honour. May I come to that?

That is point 5 of Mr Justice Williams, and I was

going to come to that in a moment, if I may.

C2T25/l/HS	36	9/2/88
Walter(2)
MASON CJ:	Very well.	Deal with it in the order you

proposed to do.

MR BENNETT:  If Your Honour pleases. Your Honour, the fourth

matter is that it does not appear in the letter to

the Law Society and I have dealt with that at the

beginning. The letter to the Law Society was simply

a letter pleading guilty to having a mess and

it is not inconsistent with the specific explanation

that the moneys went into the wrong trust account.

All that goes to is whose mess it was, which client's mess it was, rather than the general explanation.

We would submit that is not a major matter, particularly as that is mitigated enormously in its

significance as a matter of credibility by the fact

that it is one of a number of very small items.

Fifthly:

The respondent appears to maintain with

respect to each of the receipts in question

that the direction as to appropriation

involved the payment of interest with respect to the loan from Costello and

Roberts; but the evidence clearly

establishes that the loan from Costello

and Roberts was not made until three days

after the first instalment of McKay's

interest was received.

That is the point Your Honour the Chief Justice puts

to me.	He explains that in cross-examination at
page 303.

(Continued on page 38)

C2T25/2/HS	37	9/2/88
Walter(2)

MR BENNETT (continuing):  The second question on that page:

When the first payment that went to the MacKay ledger, came in on 11 April there was then no Roberts or Costello loan, is

that so, if Mr Austin has got it right?

---I think that must be right.

He says it.	He says it was taken up on
the 15th or	so, doesn't he?---Yes.

You say that this fellow Durand directed
you to appropriate the payments to Luscombe,

Costello and Roberts?---Yes. Is that what you say?---Yes.

He could not give this direction in respect

to the first MacKay interest payment, could

he?---(No answer)

Because he has not taken up the loan on

11 April, is that right?---That appears

to be right.

So when Durand walked in with his cheque

for $2,512.50 on 11 April 1983, what

instructions did he give you to do with

it if it could not have been to pay Costello,

Roberts and Luscomebe? What instructions did he give you?---At that stage we were about to organise the Costello and Roberts loan.

And this is a loan to be made in a few days.

If you were organizing it in April, the

instalment of interest wouldn't be due

until May, would it, presumably?---That

is right.

Well, how could Durand be giving instructionss

in April to pay interest to Costello and

Roberts?---I think he realized the liability

was coming, and he asked me to appropriate

to it.

And so on. Again there is nothing all that

surprising about that.

MASON CJ: It strikes me as very surprising, Mr Bennett.

MR BENNETT:  Really, he has a number of debts, some existing,

some not. That is only one - there were others

which were to be paid and that one is about

to go through and he says, "Give it to them,

too." Of course, in any event, the balance

C2T26/l/SDL	38	9/2/88
Walter(2)

of his evidence does not establish that the direction

was given on the first occasion. It may well

be that the first occasion the direction was

given was the second occasion. That would be

consistent with a number of things: it would

make the payment of the $2000 totally innocent

because then there would have been at least

2000 of McKay's there; it is consistent with

the evidence that he usually came in and whenever

he came in he gave the instruction; and it

occasions, startin? with the second, this

is consistent with - it avoids the problem of of

the first payment being just before that mortgage.

problem and the McKay s brother problem do

not arise and that is consistent with all the
evidence.

It is true he does not say that when this is put to him, one would not expect him to remember

that detail at this stage; if one puts oneself

in the position of a solicitor being cross-examined

about precisely when each direction was given -

he remembers it being given on, more or less,

each occasion and it is put to him that on the

first occasion it could not have been, and he

does not then specifically remember that that

was an occcasion when he did not come in.

But, if that is so, it is a complete answer

and it is the sort of answer which would have
been investigated and thought of and discussed

with witnesses, and so on, had he been charged with stealing but which simply was not thought of, dealt with, except on the run, the way the case was conducted.

WILSON J: Costello and Roberts - they were two separate

mortgages, each of which was made after 11 April?

MR BENNETT:  I think, Your Honour, I may be wrong in this,

that was a single mortgage owned as tenants in common

in different proportions.

WILSON J:  But it is referred to separately in the ledger:

there was Costello, Luscombe, Roberts?

MR BENNETT:  Yes. It was two separate loans secured by

one mortgage, I am told.

WILSON J: Secured by a single mortgage?

MR BENNETT:	Yes, Your Honour.
DEANE J:	Mr Bennett, while you are being interrupted - if, at page 170, one treats the evidence as mistaken in relation to the first payment of $2512.50, would what then happened be consistent with a direction as to appropriation of the later payments? . In other words, hrn.-1 much of all this did Mr McKay end up
getting, either by payment to his brother or by attention to his own credit?

C2T26/2/SDL	39	9/2/88
Walter(2)

MR BENNETT:. It then becomes consistent, Your

Honour. The balance in the account is exactly

the balance after taking out the payments to the

other three and the $2000. So, in that sense, the

balance is exactly consistent with what would be due

to him if the direction was given.

DEANE J:  But how much is the balance that Mr McKay got the

benefit of from the four payments?

MR BENNETT:  One can work it~ Your Honour, without adding up

the numbers on my feet, it is roughly $750

times 4 less $2000,_ which is roughly $1000.

DEANE J:  Well then, the problem on what I am putting to

you would be that if such a direction as to appropriation

applied to three and not four, one extra payment has

been made to the smaller lenders.

MR BENNETT:  I see, I am sorry. That involves counting the

payments, an exercise I have not done. Yes, there

seem to have been four blocks of payments. Again,

that is consistent with another possibility, and I

hasten to add that the point in relation to all these

possibilities is that they are all possibilities

consistent with innocence of what the Full Court

puts. That is, that the appropriations were made

on the second, third and fourth occasions, but that the

solicitor erroneously took the view that he was

entitled to treat that as an appropriation for all

four. Although a CLAYTON's case appropriation must

be made at the time of payment, he erroneously took

a different view of it. That would accorrrrnodate that

problem.

Now, there are some other aspects of this. At page 296, line 20, the phrase used is, "these other

matters." At page 323, line 18, it is, "those

various persons." So the phrase used is ambulatory

and, assuming it was said on all occasions, it Would

simply be an error of interpretation by the solicitor

to treat it as applying to the mortgage not yet made
by three days at the time of the first payment.	The
general instruction is, "Look, pay all the others
first, whatever they are, and then pay Mr McKay."

The final matter, the sixth point, is that in June '84,

which is some time later, a letter of demand was

written to the borrower on behalf of Luscombe claiming

interest that was due to Luscombe was outsta.nding,

whereas in fact the payments had been made.

That is equally consistent with both cases, or equally inconsistent with both cases. · The money

had been paid to Mr Luscombe so that whether or not -

that letter is not treating the money as Mr McKay's

money, that letter, after the event, is simply

forgetting that the money has in fact been paid to

Mr Luscombe. We would submit the obvious explanation

C2T27/l/VH	40	9/2/88
Walter(2)

is that, at the time the letter is written, someone

looks at the trust ledger and does not go any

further.	And (c) is, in Mr Luscombe's ledger, no
payments to Mr Luscombe.	So that point, in other

words, really provides an answer to one of the

matters Your Honour Mr Justice Toohey put to me

earlier, that Luscombe's ledger, showing nothing,

it is naturaly that someone glancing at that and

not remembering all these transactions would write

the letter.

(Continued on page 42)

C2T27/2/VH	41	9/2/88
Walter(2)

GAUDRON J:	Well, was there, in fact, a ledger for Mr Luscombe?
MR BENNETT:	I am not sure what the evidence said about that,

Your Honour, but certainly there was no suggestion that these amounts were entered in such a ledger

and one would assume they were not. That would,

of course, be totally consistent with what occurred

in paragraph (vi). Presumably a ledger would have

been opened in the ordinary course when the mortgage

was taken out and there is no suggestion that any

entries were made in it. I think there may be some

evidence on that which my learned junior is just

turning up. Yes, page 305. The question is answered

at page 305, Your Honour, line 13:

Where would you get the information to support

this letter to Durand, to pay up $12,000,

15 months interest. Where would that information

come from? Off Luscombe's ledger card, perhaps?

Answer:

Well, I guess it would have at that time; because Luscombe was being paid out of McKay's

ledger.

Oh, I see. Luscombe's ledger card shows no

interest received, once he is getting paid

off McKay's ledger card?

Answer:

That's right.

I am reminded of one other matter from my learned

junior in relation to the question Your Honour

the Chief Justice was asking me about the exact

amount, that is, that another possibility is that

Durand - I think this is somewhere in the evidence -

apparently had a number of companies and a number

of different ventures for which he was borrowing

money, and he may have had a bookkeeper who wrote	the cheque and then, when he delivered it he got	in the habit of giving this instruction in relation
to it. That would be another explanation of why the cheque was the right amount.

But, again, we are denied the opportunity to

investigate it because of the way the matter is

dealt with at the hearing.

TOOHEY J:  Mr Bennett, leaving aside the payment made to

Ronald McKay, is it the position that between April 1983

and March 1984 - I take those dates from the two

ledger cards on 169 and 170 - that no payments at

all were made to Mr McKay?

MR BENNETT:  Yes, Your Honour.

C2T28/l/MB	42	9/2/88
Walter(2)

TOOHEY J:  Are there ledger cards which carry the matter any

further forward in time?

MR BENNETT:  Not in evidence, Your Honour. I think that

may have been the time that the Law Society started

looking at the matter and everything was sorted

out. I am not sure about that.

TOOHEY J:	Yes, thank you.
MR BENNETT:	Now, the final matter I want to deal with is

the question of what order should be made by this

Court if it is otherwise in the appellant's favour,

and I simply want to put this. The statutory

cormnittee, which is an experienced cormnittee of

solicitors, dealt with the matter and formed a

view that the appropriate penalty was a suspension.

The majority of the Full Court took the view about

stealing, about which I have been addressing

Your Honours this morning. If that view is wrong

what remains of Mr Justice Williams' judgment is the passage at page 387 line 15 where His Honour

says:

In approaching the question of penalty in
this case, one cannot disregard the fact that
the respondent was found ..... to have been
guilty of professional misconduct in a variety of

areas. Whilst none of the other charges would

have warranted striking the respondent's

name from the roll, such matters cannot be

ignored when one is determining the appropriate

penalty to impose with respect to a finding
of professional misconduct based on

dishonesty.

So, we would submit, one draws the inference from
that, that His Honour did not. His Honour took

a different view to Mr Justice Shepherdson and did

not take the view that the other charges justified

striking off on their own. (Continued on page 44)

C2T28/2/MB	43	9/2/88
Walter(2)

DEANE J:	But Mr Justice Shepherdson did not take that view.
MR BENNETT:	He did not, Your Honour, and I will come to

that.

DEANE J:	He took the view that this charge and the other
charges justified striking off even if one did not find dishonesty as an ingredient of this charge.

MR BENNETT:  He did, Your Honour. He was dissenting.

DEANE J:	But the point I am making is, what
Mr Justice Williams says there is not inconsistent
with what Mr Justice Shepherdson said. It simply c:toes not deal with it because the other charges exclude all the matters we have been talking about.
MR BENNETT:	Yes, that is so, Your Honour, but it is unlikely

when one looks at the plethora of charges that

this one, on its own, simply as part of the general

incompetent running of the practice would have

tipped the scales between a year's suspension and

a striking off. That is, we would submit, a fairly

unlikely hypothesis to attribute to His Honour.

And if one does not attribute that hypothesis to

him he appears to be suggesting that the charges

do not justify striking off. Certainly that was

the view taken by the statutory committee and we

would submit the:view of the statutory committee

is not inconsistent, at least, with the view of
the majority. If the majority did not deal with
the question of whether the penalty should be increased
there is simply no reason for this Court to do
so for this reason, that the appeal to the Full'

Court was not put on the basis that the charges

as a whole had been inadequately penalized. The
appeal to the Full Court was based on one matter

and one matter only and that was charge lS(c)(vii) and

it was argued on my instructions in that way.

That being so, there is simply no need, once

the basis of the majority decision goes, if it

goes, for this Court to say, "Well, we need to	have a look at the question whether the penalty
was adequate." There is no appeal on that ground. And that being so, there is no need to send it
back. We would submit the appropriate order is
to restore the order of the statutory committee.

It is true that Mr Justice Shepherdson took

a different view but he took the view, we would

submi~ in the absence of submission. His judgment

took the opposite view on both aspects.	I will
just show Your Honours the two passages.	At page 374,
at the top of the page, His Honour says:

C2T29/l/ND	44	9/2/88
Walter(2)

In the instant case the respondent's

solicitor was not charged with wrongful

conversion and I am not prepared to draw

from the finding of the Statutory Committee

that the facts stated in paragraph lS(c)(vii)

had been proved, an inference of stealing.

Had the respondent been charged with

stealing or wrongful conversion of the moneys .....

the respondent may in the course of his various

explanations have said why he would for no

apparent benefit to himself have helped other

persons eg Roberts, Costello, Luscombe and

R. McKay. Such explanations may have had

some bearing on proof of every element of

the charge brought and also may have been

relevant to the matter of penalty.

So he disagrees on that. He then turns to penalty

and striking off and says, at line 10 on page 375:

(Continued on page 46)

C2T29/2/ND	9/2/88
Walter(2)
MR BENNETT (continuing):

As Williams J has said in his judgment

the respondent has been found guilty of

professional misconduct in a variety of areas

on a variety of charges. Many of the charges

show circumstances of conflict of interest

between clients in transactions commencing

between November 1982 and January 1985.

Collectively the Statutory Committee's findings,

when coupled with what can only be seen as
the respondent having lied under oath before

the Statutory Committee -

and that is a matter which, I submit, is not an

inference which can be drawn, for the reasons I

have given -

and earlier having given misleading information

to the Queensland Law Society -

and, again, that is not an inference, we submit,

can be drawn -

show that the respondent's name should be

struck from the Roll of Solicitors.

So, His Honour would have made the order on the

basis of the existing matters plus those two matters

partially gleaned from the lS(c)(vii) issue. And

my submission is that one simply cannot find perjury

at an appellate leve~ where it is not found below,

on the material here.

There has been discussion from time to time

on what has been described as the Catch 22 facing

solicitors appearing before statutory committees

and courts where if their evidence is disbelieved

in any respect they are struck off for lying rather

than for, or in addition to, the charges actually

brought against them. Whether or not that is

not concerned with here but to say that one can	appropriate in the normal case Your Honours are	be struck off in the Full Court for lying where
the lying occurs before a body which is only said to have found that by inference, we would submit,
is a totally wrong approach.

That being so, having seen what the dissenting

judgment says and what the majority say, there

is no occasion, we would submit, for this Court

to deal with the question of whether the penalty

was not severe enough or to remit it for consideration
of that issue. That issue was not one argued in

the Full Court and it is not one which remains

C2T30/l/AC	46	9/2/88
Walter(2)

a live issue between the parties, we would submit,

although Mr Justice Shepherdson, combined with
the findings about lying, dealt with it. And for
those reasons, we would submit, the appropriate

order is for the appeal to be allowed and the

decision of the statutory committee restored.

I should say this to Your Honour

Mr Justice Toohey:  I had thought it was implicit,

my learned junior has reminded me of it, that,

of course, there is no question but that McKay

was ultimately paid in full and everyone else was

ultimately - - -

TOOHEY J:	No, I understand that.
MR BENNETT:	There is no suggestion of any other

misappropriation. May it please the Court.

MASON CJ: Thank you, Mr Bennett. Yes, Mr Davies.

MR DAVIES:  May it please the Court, may I hand up some

outlines of our submissions.

MASON CJ:	Thank you.
MR DAVIES:	Your Honours, may I make a point at the outset

which, perhaps, should have been made in the outline
of submissions but in answer to some submissions
our learned friend has made.

The charge in paragraph 15(c)(vii) was not,

in terms, necessarily a charge of stealing. It
was a charge of misapplication of money. Consequently,
the acts which constituted that charge could have

been committed negligently or dishonestly and the

penalty, of course, depends upon whether they were
committed negligently or dishonestly. The first

explanation which the appellant here gave - that

was the one in the letter, which as Your Honour

the Chief Justice pointed out Mr Austin, in his

affidavit, found it difficult to accept - was of
clerical error.	Now, had that been accepted and

had that been the appellant's contention at the

hearing before the statutory committee then it

was one which was consistent with negligence rather

than dishonesty. But the second version, and the

one to which the appellant adhered in his evidence

before the statutory committee, was one which was

inherently incredible and inconsistent ith the

first. And the second explanation be , in our

respectful submission, necessarily disbelieved

the only conclusion was that the misapplication

was dishonest rather than incompetent.

C2T30/2/AC	47	9/2/88
Walter(2)

TOOHEY J:  Mr Davies, what exactly do you mean by "dishonest"

in that sense. It is not suggested, I gather, that

the appellant was seeking any benefit for himself

by what he did?

MR DAVIES: 

No.

TOOHEY J: 

So what is meant by saying that he acted dishonestly?

MR DAVIES: 

Robbing Peter to pay Paul, Your Honour,· He intended

to deprive Mr McKay of money to pay other creditors
of Mr Durand.

TOOHEY J: It rather prompts the question, why, which may

not be an entirely relevant question, but it - - -

MR DAVIES:  One can think of explanations why. ·rt may be

because he liked the other creditors more or
because they were pressing more. There is no explanation

in the evidence as to why and one can perhaps only

speculate, but that appears to be, in our respectful

submission, the only inference which can be drawn

from the totality of the evidence and in the end the

finding which was made by the statutory committee.

Your Honours, our learned friend has already

made the point which we would really like to make

again, that the sums totalling $10,050 were in fact

four payments of $2512. 50, which precise_ly represented

the reduced payments under the loan by McKay to

Durand. And we should add, as appeared also obvious,

they were paid by the appellant into an account in

McKay's name. That appears conveniently, actually,

in Mr Justice Williams' judgment- I do not want to
take Your Honours to it- at pages 378 to 379 and it

also appears in Mr Austin's affidavit, volume 1,

page 147 and the ledger cards which our learned friend

has taken you to at page 169 and page 179.

Those facts, in our respectful submission, show

that the payments were payments of interest on

McKay's loan and that they were deposited as such.

Now we say this is important because the finding of

the statutory committee was that amounts totalling

$10,050 received by his firm into his trust account

on behalf of Mr McKay as payments of interest by

Mr Durand - that is the finding of the statutory

committee,that they were amounts totalling $10,050

received by his firm into its trust account on behalf

of Mr McKay, as payments of interest by Mr Durand.

And that finding, Your Honours, by the _

statutory committee is based on those facts, that is

that the sums were the precise instalments payable

to Mr McKay by Mr Durand, that they were paid when

they were due, after those sums were due not

immediately after, and perh_aps I just might correct

a factual error which our learned friend made when

C2T31/l/SR	48	9/2/88
Walter(2)

asked, I think, by Your Honour Mr Justice Toohey,

when those sums were due. They were in fact due

on the 23rd of each month and as our learned friend

said, paid, really in each case in all but one,

substantially less than a month later, but in the

following month in each case. I can give Your Honours

the dates of payments and the dates on which they

were due if it is of some assistance. The first

payment to McKay was due on 23 March 1983 and it

was received on 11 April. The second was due on

23 June and paid on 7 July. The third was due

on 23 September and paid on 11 October, and the

fourth was due on 23 December and paid on 31 January.

But, the point that we really make,Your Honours,

is that the finding that amounts totalling $10,050

received by his firm into the trust account on

behalf of McKay as payments of interest by Durand,

that finding is based on those facts, that the

amounts were those precise sums and they were paid

into McKay's trust account. And it follows necessarily,

in our respectful submission, that by that finding

the statutory committee disbelieved the appellant's

sworn evidence, because the appellant's sworn

evidence in his affidavit - and perhaps if I could

take Your Honours to it briefly, it is volume 2,

page 203, paragraph {k).

(Continued on page 50)

C2T31/2/SR	49	9/2/88
Walter(2)

DEANE J:	Mr Davies, could I interrupt you right away from
the course of your argument? What you are saying obviously has force, but must not the starting point be the simple question whether this man was
charged with stealing before the statutory cormnittee
and whether he had an opportunity of dealing with
that charge before that cormnittee, because if all
that appears is that he was not squarely ·
charged with stealing before the statutory cormnittee,
but that one can, looking at their findings, infer
that there is a strong case for saying the effect
of the findings is that he should be thought to be
guilty of stealing, one has not really faced up to
the first question?
MR DAVIES:	In our respectful submission, the first question

is answered by saying that he was charged with an

offence, if I can put it that way, of misapplication

of money. He must have known that that offence was

an offence which could take place by acts of

dishonesty, or acts of negligence. Indeed, at the

time of the charge, the explanation which he had given

was one which, if believed, was consistent with

negligence. But then he swore an affidavit which

was inconsistent with that, in consistent with the

earlier explanation,which, if it was believed,

exculpated him; if it was disbelieved, indicated he

had been dishonest.

DEANE J:	I follow that, but somewhere in the ~oceedings before the statutory committee, on that approach,the stage
should have been reached when it was squarely said,
"We now charge this man with dishonest misappropriation,"
or, "We now allege it against him."  On what I have
seen, there is no suggestion that that was ever said.

MR DAVIES: Well, if Your Honour intends by that, said in the

sense of preferring a formal charge, that is correct.

DEANE J:  Made clear.

MR DAVIES:  That is correct. There was no formal charge made.

DEANE J;	No, I meant made clear.
MR DAVIES:	Well, in the first place, Your Honour, it was made

clear by Mr Austin's affidavit, we would submit, the

passage which His Honour the Chief Justice referred

to earlier, that the explanation which he gave in the

first place was difficult to believe. That is an

explanation he gave in a letter, so that is really

doubting whether he is being honest in that

explanation. Then during the course of the case, it

appeared, in our respectful submission, that

Mr Hansen Q:, for the Society, questioned the honesty	of the appellant with respect to his second application;
but that was during the course of Mr Hansen's

C2T32/l/VH	50	9/2/88
Walter(2)

cross-examiniation of the appellant, really, in

fact, suggesting to him that he was not telling

the truth. Now that was put to him and we have

a note of addresses which were made to the

statutory committee where again the submission was

made to the statutory committee that that was not

honest.

DEANE J:  Except - I will stop taking your time, but this

is worrying me - there is a great difference between

a suggestion of mistaken or false evidence to defend

a charge of extreme negligence and a suggestion of

mistaken or false evidence to avoid a charge of

dishonest misappropriation. Well now, looking at
the appeal book, I personally am still left completely

unable to form a firm view as to whether the

statutory committee found this man to have been

guilty of dishonest misappropriation, as distinct

from negligence which he attempted to explain by

unacceptable evidence.

(Continued on page 52)

C2T32/2/VH	51	9/2/88
Walter(2)

MR DAVIES: Unless, and this is our submission, Your Honour,

by giving the evidence he rejects the earlier

explanation given. The earlier explanation

given in his letter was that in fact, due to

clerical error, the payments from time to time

were wrongly made out of accounts. The evidence

which he gave before the statutory committee
was that in effect this money was really wrongly

paid into McKay's account because it was other

people's money. So the two explanations are

really quite inconsistent and, in our respectful

submission, disbelieving him on his final version

to the statutory committee cannot leave standing,
as a possible explanation, even, the earlier

explanation of clerical error because it is

just a quite different story.

In our respectful submission, if the only

inference from the objective, factual evidence,

plus the disbelief of the appellant's evidence
before the statutory committee, is that the
conduct was dishonest they are, in our respectful

submission, suggesting to him that his evidence

was dishonest, submitting to him that his evidence

is dishonest and submitting that that explanation is a dishonest explanation is, in our respectful

submission, the same as saying that the conduct

must have been dishonest, there cannot be another

explanation. The inference, in our respectful

submission, must be clear because it is the

only inference which is open.

Your Honours, if I could go back to the

point I was making before:  we say the statutory

committee must have disbelieved the evidence

because the appellant swore that, at the time

of payment - and by that he clearly meant the

time of each payment because Your Honours will

recall in that passage which our learned

friend last cited to Your Honours at pages 303

to 304, he dealt specifically with the first

payment on 11 April - that at the time of each

payment of these sums, Durand directed appropriation
of them first	towards Luscombe, Costello and

Roberts and only then as to the balance to McKay. We would submit, with respect, that that evidence

is incredible for a number of reasons, they

being some of the reasons but not all of the

reasons given by His Honour Mr Justice Williams

in his judgment in the passage referred to by

our learned friend.

Can I state those reasons now:  the first

of them, Your Honours, is that it requires the

statutory committee and, indeed, this Court,

to believe that Durand drew four cheques, each

for precisely the amount which was owned to

McKay, when each of those amounts was due and

C2T33/l/SDL	52	9/2/88
Walter(2)

yet directed the appellant to appropriate those

payments to other creditors who were owed different

amounts at different times. He did not do this

just once, he did this on four separate occasions.

In our respectful submissions, that evidence

is incredible and, in our respectful submission,

there are only two possible conclusions and

that is that it is true or that it is deliberately

untrue. It is not, in our respectful submission,

evidence that could have been mistaken.

The second reason why, in our respectful

submission, that evidence is inherently incredible

is that at the time when the first of those

directions was given there was no loan from

Costello and Roberts and, indeed, the money

from Costello had not even been received by

the appellant. It was not even received by

the appellant to use for a loan until 14 April.

And, as Your Honours will recall, the first

instalment was received on the 11th. Your Honours

heard his explanation given at pages 303 to 304,

"Well, it was corning up and there would not

have been an instalment due the following month" -

although this is unstated - "and although payments
to McKay might thereby fall behind we will make
sure that we make these payments to Costello

and Roberts on the precise date it is due.

in fact, make arrangements for it in advance -

a month in advance of the date upon which it

is due".

(Continued on page 54)

C2T33/2/SDL	53	9/2/88
Walter(2)

MR DAVIES (continuing):  My learned friend really said there

was - and this was his explanation consistent with

innocence - there was general direction given by

Durand to the appellant. But that is just not

true, that is not consistent with the only evidence·

which is given by the appellant, the only evidence

given by the appellant that there were four

separate directions given on each of these occasions

of payment, four specific directions given. He

goes into quite specific detail about the direction

that was given in respect of the payment on 14 April.

The third reason, Your Honours,is that despite the instruction given there was no payment out to

Luscombe, Costello and Roberts until November 1983.

Now, my learned friend said that is consistent

with either view, but it is not. It is not just a

question of no payment out, no credit to Luscombe's

account at all, it is credited to, aid remains

credited to, McKay's account until November 1983

despite the fact that by that time there had been

three specific directions given with respect to

crediting those payments to Costello and others.

So, in our respectful submission,that is quite

inconsistent with the versi,=:m· which he gave.

The fourth reason, Your Honours, is that the

payment of $2000 to McKay's brother is inconsistent
because when it was paid the amount which was then

owing to Luscombe, Costello and Roberts was more

than the total which was in the McKay account. So

if, when he made the payment out to McKay's brother

he had received these instructions - this is

16 August, and by that time he had received two

such specific instruction - if he had received these

instructions and was obeying these instructions

he would not have been in a position to pay anything

out to McKay's brother because the whole of the

amount which was held in McKay's account was held

upon behalf of Luscombe, Costello and Roberts.

We have given Your Honours the references to the

appeal books which shows that at that time there

was a total of about $7000 owing to those three

creditors.

The fifth reason, Your Honours, is that the

evidence is inconsistent with the earlier letter

from the appellant to the Law Society. I pointed

out to Your Honours the inconsistency between those

two versions. The assertion in the letter was never

that money had been mistakenly credited to McKay,

it was that money had been mistakenly drawn from

that account.

C2T34/l/MB	54	9/2/88
Walter(2)

MR DAVIES (continuing):  The letter says, "From time to time

cheques were drawn from the wrong ledgers due to

clerical error". That is the clerical error,he says,

not that cheques were paid into wrong ledgers, but

they were drawn from the wrong ledgers, and our

learned friend says, "This letter had not been

carefully thought out, and then later on" - this

is the explanation he gives - "later on the appellant

carefully thought out what he was going to say in

evidence and having thought about it more carefully

managed to formulate this story and therefore it is

more likely to be true". But in fact, what the

evidence shows is that the letter was prepared with

a great deal of care. There were in fact four or

five drafts of this letter prepared before it was

forwarded to the Law Society. I will not take

Your Honours to the passage, bt,. can I give it to you.

It is the appellant's evidence volume 2, page 302,
lines 20 to 25, where he says, 'Four or five drafts

of this letter were prepared".

Now, what is abundantly clear, in our respectful

submission, is that when the matter comes before the

statutory committee, the appellant completely resiles

from - though he tries to say there is no difference

between them - he completely resiles from the version

which is given in his earlier letter and adheres to

the version which is given in his affidavit, not

surprisingly, of course. That appears from his

cross-examination throughout and most of it, I think,

has been referred to and I will not take Your Honours

to the passages. I think they are contained in our

outline - they are. Paragraph (v) of our outline

sets out those passages and I will not take

Your Honours to them, but the point we make in that

outline is that that version was either correct or

deliberately made up.

It just could not have been a mistake.

Either he did get a specific direction on each

of those occasions to appropriate these moneys to

these other people, or he did not, and it is not the

thing that one, in our respectful submission, could

be mistaken on in respect of four separate occasions,

and if it was rejected it must, in our respectful

submission, be rejected as dishonest.

TOOHEY J:  That seems to shift the notion of dishonesty a little

from the conduct of the appellant in regard to the

trust account and really is more general conduct in

relation to the inquiry and the explanations that he

gave to the statutory committee. It is coming closer

really to the approach taken by Justice Shepherdson

rather than the other members of the court.

C2T35/l/HS	55	9/2/88
Walter(2)

MR DAVIES: In the end by Justice Shepherdson, perhaps,

Your Honour, but what we are really saying is that once one rejects that evidence as being dishonest

evidence and when.ome looks at the finding of a

statutory committee, that is that it was money

received by him on McKay's behalf into McKay's

trust account, then there is no explanation for

the payments out other than robbing Peter to pay

Paul. There is no possible explanation for those

payments out. It is McKay's money, it is received in

as McKay's money. That is the effect of the finding

because the finding, as we pointed out earlier,

Your Honour, is based on those facts, the facts

that they were the precise sums, they were paid
at the precise times they were due and they were
received into McKay's account and the finding says
they were received on behalf of McKay.

That finding not only rejects that evidence but accepts that it is McKay's money and there

can be no explanation in· our respectful submission

for payment out of McKay's money to someone else

than the one we have just given Your Honours.

Whilst we accept what Your Honour Justice Deane

said, that there has been no preferment of a charge

of dishonesty, we do submit, with respect, that

from the outset doubts were already cast upon the

veracity of the explanations given by the appellant.

The first of them was the passage to which

Your Honour the Chief Justice referred this morning,

that is the passage at 151, paragraph 3B(a)	and
I shall not read it.

DEANE J:	But however you go about it, do not we come back
to this point, that if the statutory committee
regarded itself as dealing with an allegation of
dishonesty it was under a statutory duty to make
a finding of fact in relation to that specific
allegation and it did not make any at all which
strongly indicates that the statutory committee
did not regard itself as dealing with an allegation
of dishonest or fraudulent misappropriation or
stealing?

(Continued on page 57)

C2T36/l/ND	56	9/2/88
Walter(2)

MR DAVIES:  We say, with respect, that it did make that

finding of fact by making the finding - - -

DEANE J:	Now where did it make the finding of dishonest or
fraudulent misappropriation?

MR DAVIES: It is a wrapped-up finding, Your Honour, but it

is the finding that 15(c)(vii) is proved.

DEANE J: But, Mr Davies, if there was a charge of stealing

brought against somebody in terms of 15(c)(vii),

it would not last a minute in the criminal court?

MR DAVIES: 

I accept that, Your Honour, but one must accept

the way, in our respectful submission, in which
this arises, that when 15(c)(vii) is preferred it

is simply misapplication of m:ney and the statutory comnittee

says, 1.we do not know whether you misapplied this
dishonestly or negligently, we doubt the explanation

that you have given to us, we seriously doubt
whether in fact you have been honest in the

explanation given to us, but at the moment we do
not know whether you have misapplied it dishonestly

or negligently" and then he files an affidavit which gives a quite different and inconsistent

explanation and the statutory committee says, in
effect, "We disbelieve that explanation which you
give and it is a necessary consequence of that
disbelief that the only inference can be drawn,

because of the finding which we make, is that you
must have misappropriated it dishonestly."

DEANE J: 

I do not want to delay you, but what the statutory
committee said in its findings is perfectly consistent,
I would suggest to you, with a finding of
negligent misappropriation and with a rejection of

his explanation of that negligence. Well now, if

that is so, there is no way, I would suggest to you,

that you could get a finding of stealing or dishonesty

from it in compliance with the committee's

statutory obligation under section 6(3)(b) of the

Act that obliges it to set out a statement of the

findings in relation to the facts of the case.

MR DAVIES: 

Yes, well can I simply answer Your Honour this

way, that in our respectful submission, the finding

which the statutory committee made is consistent

only with a finding that moneys had been paid by

Durand into a trust account held on behalf of

Mr McKay.

(Continued on page 58)

C2T37/l/SR	57	9/2/88
Walter(2)

MR DAVIES (continuing):  The explanation given by the

appellant before the statutory committee is

inconsistent with that. He says that is not

so, it was not paid in. But having accepted that

it was paid in on behalf of McKay the explanation

which was given, in our respectful submission,

earlier, can no longer continue to be an

acceptable explanation because the appellant says,

himself, "That is just not the explanation. It

was not so. I accept that it was paid in on behalf

of McKay" - in the end because the explanations

are disbelieved. What explanation can there be?

In our respectful submission, there can be no

explanation for payment out of moneys which are

held on trust for McKay other than it is a

deliberate intention to pay some other creditors.

I do not think I can advance it any further in answer to Your Honour's point except, perhaps,

to make the point I was going to make earlier

that, before the statutory committee, as I think

I said, both during the course of cross-examination

and in address Mr Hanson questioned the truth of

the appellant's second explanation. His

cross-examination appears at page 296 and I can

only say, with respect to his address, that it

appears from notes which we have.

I should have made this point also:

the appellant said he knew the money was 1n

McKay's account and that he directed the payment

out so there is no question, in our respectful submission, of it being a careless payment out without his knowledge. He knew the money was in

McKay's account and he directed the payment out.

Perhaps I should take Your Honours to that passage.

It is at page 298 and if you go down towards the bottom of the page - from about line 35:

Well, you knew the money was in McKay's account?

---Yes, I did.

You did? It was put there four times?---I
told you.
But four times it went there. Was the cheque made payable to McKay, was it?---I think it was made payable to our trust account -
and so on.	So there cannot be any doubt about

his knowledge that it was there; he knew it was

in McKay's account and the finding was that it

was held on behalf of McKay and in our respectful

submission there cannot be any explanation, as

we have submitted, other than dishonesty.

C2T38/l/AC	58	9/2/88
Walter(2)

MR DAVIES (continuing):  Now, if he knew that and it was,

as we put it earlier, a payment out robbing one to

pay the other, then in our respectful submission,

that is dishonest and the only conclusion, in our

respectful submission, is that he should have been

struck off. We rely upon the authority which was

relied on by the Full Court, RE: H.A SOLICITOR,

particularly in the judgment of Mr Justice Philp.

The other point we really wanted to make, Your Honours,

·is that if the appellant's evidence about

the authority given to him is false, as we have said,

it must have been deliberately false, and that alone,

in other words, lying before the statutory body set

up to determine the fitness of solicitors, demonstrates

his unfitness to remain a solicitor. Alternat~vely,

at the very least, it transforms perhaps other less

serious conduct into conduct of a most serious kind,

and together demonstrates his unfitness. We refer to

what Mr Justice Moffatt, the president of the Court

of Appeal,. said in NEW SOUTH WALES BAR ASSOCIATION

V LIVESEY, and I will not take Your Honours to that

specific passage.

WILSON J:  Is the notice of appeal to the Full Court in the

appeal books?

MR DAVIES:	Yes, it is, Your Honour.
WILSON J:	Do you happen to have the page?

TOOHEY J:  Page 368. That notice, Mr Davies, does not raise

as a ground of appeal the last matter that you have

just spoken of. It seems to me at any rate that it

is looking at the circumstances relating to the

payment out from the trust account.

MR DAVIES:  Yes, that is true, Your Honour.,. I think I.

am correct in saying - I will just have it turned up -

that that was nevertheless submitted to the Full Court

and the matter was argued, that question was argued

in the Full Court. I am just getting the outline

of argument before the Full Court turned up to

ascertain whether that is right or not. (Continued on page 60)

C2T39/l/VH	59	9/2/88
Walters(2)

MR DAVIES (continuing): Yes, Your Honour, in the Full Court

the submission was made and the outline says:

The solicitor was also dishonest in his

explanation of the circumstances. That alone,

or at least in addition, demonstrates his

unfitness to practise.

And there is a reference to NSW BAR ASSOCIATION

V LIVESEY. So that question was argued in the

Full Court though, as Your Honour correctly points out, not in the notice of appeal.

Your Honours, just two minor points: one

is, our learned friend refered to the BRIGINSHAW

test and suggested that the test in Queensland

was different and referred to the case of RE N.E.G.

QWN 25 (1940). In fact, it does not appear to

be contrary to that. The ·dictum of

Mr Justice E.A. Douglas is to the contrary but
Mr Justice Phillips specifically left that question

open although we would submit that the difference

really does not make any difference to the

consequence of this case. And in the end, I think,

Mr Justice Shepherdson really accepted the submission

which.we make really in the last sent~nce of our

outline, that the conduct in telling untruths
together with his earlier conduct d€monstrated

his unfitness.

They are our submissions, may it please the

Court.

DEANE J:	Mr Davies, if contrary to your submissions one
were eventually to come to the view that
Mr Walter had never been properly charged with
dishonest misappropriation and that the statutory
committee had not directed its attention to that but that the facts before the statutory committee
plainly required, in the public interest, that
that matter be addressed, what would be the
appropriate course for us to follow?
be sent back to the statutory committee or what Could it
should be done?
MR DAVIES:	We would submit the appropriate course would

be to remit it to the statutory committee but,

having said that, Your Honour, I would have to

say that I have not looked to see whether in fact

that is an - - -

DEANE J:	I mean, another alternative would be to take the:
approach, "Well, if that wasn't before the statutory
committee it would suffice to make it clear that
he could now be charged with that."

C2T40/1/ND	60	9/2/88
Walter(2)

MR DAVIES:  Yes, although, in our respectful submission,

it really is something that arises out of the same

facts and, really, it is the same matter.

DEANE J:	Yes, I can see the force of that.
MASON CJ:	Mr Davies, it is past a quarter to one, perhaps if we adjourn now and then when we return at 2.15
you can take this matter up with us.
MR DAVIES:	Thank you, Your Honour.

AT 12.48 PM LUNCHEON ADJOURNMENT

C2T41/l/MB	61	9/2/88
Walter(2)

UPON RESUMING AT 2. 20 PM:

MASON CJ:	Yes, Mr Davies.
MR DAVIES:	Your Honours, in answer to the question raised

before lunch, rule 37 of the Rules of Court

made pursuant to the Queensland LAW SOCIETY ACT

provides that the rules of the supreme court apply

mutatis mutandis in respect of appeals under

the Queensland LAW SOCIETY ACT and the appeal

rules of the Rules of the Supreme Court, which

is Order 70, provide in rule 25 that:

A new trial may be ordered on any question,

whatever be the grounds for the new trial,

without interfering with the finding or

decision upon any other question.

And rule 32 is really similar to the Rules of

Court under the Queensland LAW SOCIETY ACT because

it provides that:

Where by any Act or regulation provision

is made for an appeal to the Full Court

and no provision is made as to the practice or

procedure ..... then the provisions of this order

shall	so far as possible apply to such
appeal.

So, in our respectful submission, the consequence

is that the matter could be remitted to the

statutory committee for a trial on that issue.

MASON CJ:	Thank you, Mr Davies.	Yes, Mr Bennett?
MR BENNETT:	There is no dispute about that power.	Of

course, the JUDICIARY ACT makes it clear	that
this Court has the power to do whatever	the
Full Court could have done.

Your Honours, my friend's arguments depend

upon a number linchpins. He has submitted that

the only conclusion one can draw from what has
occurred is that the solicitor was robbing Peter

to pay Paul. If that is so, one must ask a

number of questions: the first is, why pay

the money into McKay's account in the first
place? Why not, if he was going without authority
to pay it out to the other lenders, pay it into
their trust accounts as it was received? There

is simply no apparent motive for doing it the

way he did it other than carelessness combined

with a vague instruction.	The same applies
very much to the letter.

C2T42/l/SDL	62	9/2/88
Walter(2)

MR BENNETT (continuing): If he was lying, if he had invented

the story of the statement made to him by Durand,

why, one asks, would he start by ~iving one

explanation and then give another. But there is

more to that because if one looks at the explanation

he gave in the letter,and it appears at pages 162

to 163 -we are hampered of course in dealing with
this because we do not know precisely what it is

in reply to. It is not in reply to 15(c)(vii) as

such because that had not yet been formulated.	But
under the heading B "Payment of interest to

Luscombe"- now just stopping here, presumably what

was being complained of at this stage is a

payment to Luscombe when there was no credit to

Luscombe in the trust account. In other words,

presumably what is being answered is a suggestion

that moneys were taken from the trust account to

pay someone for whom there was no credit.	And
he says:

As explained to your Mr Austin, the interest

Accounts for Luscombe, Costello & Roberts, Johnson, Macfarlane, Kidd and McKay became mixed due to clercial and accounting error.

The interest accounts became mixed.	A clerical
and accounting error:

These errors were in fact, remedied before

our recent audit ..... and the Society's

Auditors were readily able to trace the

mixing of the Accounts, and, we believe,

are satisfied that all Lenders have received

their due entitlement.	The Auditors Report .....
should reveal this.

And there is something about a Macfarlane mortgage:

Regarding the mixing of the interest of funds, we advise that the Borrower used to

forward cheques to our Office payable

usually to Murlen Nominees.

That was the legal proprietor of the mortgage:

The cheques were receipted into our Trust

Account and unfortunately, from time to

time interest cheques were drawn from the

wrong ledgers due to clerical error.

(Continued on page 64)

C2T43/l/SR	63	9/2/88
Walter(2)

MR BENNETT (continuing):  My friend relies on that as saying,

"Therefore it was in the right account but the

wrong payments were made," and it goes on.

Paragraph 4 on the next page:

As indicated in 4B above -

and we do not know what this is in answer to, but

it is probably to something closer to lS(c)(vii)

but one does not know -

the interest received on account of the

various Lenders was unfortunately mixed

So that is directly, one would have thought, consistent

with saying it was paid into the wrong account rather
than out of the wrong account or to the wrong person

out of the right account -

due to administrative, clerical and accounting

error and, as advised in 4B above, was put

right prior to the audit by Messrs Austin and

Franklin. The error was as between respective

Lenders and at no time were any monies paid out

to this firm or any pecuniary gain made by our

firm. In other words, we received no benefit

from the error.

So he is not tying himself in those statements, if

one is going to treat them with the precision with

which my learned friend has treated them. He is not

tying himself to the proposition that the moneys

were correctly held on behalf of McKay.	He is not
mentioning the question	of the appropriation.

But before one can say by not mentioning it he is

concealing it or not saying it then because he had not

thought of that excuse - before one can say that, one

has to know what the question was, and there is no

evidence of the question. So we do not know

precisely what was put to him to which that was the

answer, except presumably it was some earlier version

of the general allegations.

How could it then be said, well, looking at that,

he does not mention an explanation he gave later,

therefore that is the end of it. So one cannot assume

from that that there is some direct inconsistency.

My friend then says, "Well, look at lS(c)(vii)

and look at the finding." He says :tn the context

of the evidence actually given in relation to the

appropriations by Mr Durand, that evidence must have

been disbelieved.	The point there is, it is not black
and white.	It is rather like saying a person is a

liar because he gives a different answer on two

successive days, to the question in cross-examination,

"Was X an important matter to you?"

C2T44/l/VH	64	9/2/88
Walter(2)

MR BENNETT (continuing): If a witness says yes one day and

no the next day no one would suggest that shows

he is lying. It is a subjective concept which he applies his mind to at the time and he gets

a different result each time he applies his mind

to it. It is not a question of fact. And the

same thing here: the finding is a broad finding.

The finding is that he acted contrary to the interests

of Mr McKay by paying other than to Mr McKay

moneys received into its trust account on behalf

of Mr McKay. So the finding is a conclusion of

law that it is received on behalf of Mr McKay.

That does not, necessarily, mean that the committee

rejected the evidence that on a number of occasions

Mr Durand said words to the effect, "Divide it

up amongst all of them" or "Pay the others first"

or some very general matter.

They could easily have taken the view, rightly

or wrongly, that that was not a sufficient

appropriation bearing in mind the other matters.

But one cannot say that the result indicates that they must have disbelieved him. And, as I say,

if he was lying, if he had invented this story,

why did he not say it straight away. It is far

more likely, we would submit, that his explanation

is the correct one. My friend says: "Oh, his

affidavit was to exculpate him. If accepte~ that

explanation got him off the hook". It did not

at all. The explanation got him from one guilt

of negligence to another guilt of negligence. people to having credited them in the trust account to the wrong people. It was not an exculpatory thing, bearing in mind what he was charged with,
and no one could imagine that the way he put his

matter in the affidavit he thought he was charged

with theft.

So one cannot say that he put an exculpatory

affidavit on. That, in my respectful submission,
is simply not the case.	And my friend has

submitted that his evidence was that he got the

direction from the debtor, Mr Durand, on four occasions.

That is simply, as I pointed out, not the evidence.

The evidence is that he usually came in with his

cheque and whenever he came in he said words to

that effect. That does not amount, necessarily,
to all four occasions. Now, my friend referred

to the first interest payment and to the fact that

it was not due till the fol lowing month. If

Your Honours go to page 173 there is something
which may well be the explanation, although, again,

and no doubt because of the way the trial was

conducted, no one looked at this.

C2T45/l/AC	65	9/2/88
Walter(2)

MR BENNETT (continuing):  If Your Honours go to line 15

Your Honours will see the interest was originally

payable on 15 April and someone has typed out the

"April" and typed in "May". That is what appears

to me to have been done. Now, it may, of course,

simply have been done in the typing without anything

else but it is also possible that at the time,

on 11 April, it was thought the interest would be
payable on 15 April, on the same day as the loan
was made. One does not know. But one certainlv

cannot assume that the money was so far off from

being due.

In relation to the $2000 my friend submits thac

it is inconceivable. We submit it is very easy

to conceive an explanation consistent with the

solicitor's version. Well, he is asked for the

money, he says to his bookkeeper, "How much is in
McKay's account?", is told and sees that he can
pay the $2000 and does not apply his mind - I think

he said at one point he did not apply his mind to

the matter to the fact that some of the moneys in

there are not McKay's. If he is doing it in

the stupid way he was doing it that is a very

natural mistake to make. It certainly does not make

the story incredible or improbable.

Now, my learned friend referred to the passage

in relation to the inconsistency with the earlier

letter, at page 302 lines 20 to 25. I simply remind

Your Honours that that and the preceding answer

show that the letter was a joint letter. We do not

know how long the letter was but no doubt,bearing

in mind we have the documents, it was a fairly

long letter. This was one fairly small aspect

of it. Finally, coming to the question of

appropriate relief may I stress this. The matters

on which one or other members of the Full Court

relied upon in making the order striking off were,

I suppose, threefold. They were (1), the other

matters, the matters other than 15(c)(vii); (2), the

aggravated lS(c)(vii) which Mr Justice Williams

found and (3), the allegation of lying. (Continued on page 67)

C2T46/l/MB	66	9/2/88
Walters(2)
~R BENNETT (coni:inuin:~;:	If Your Honours accept	:ny

submission, the lying is not established, certa~~~~

not on an acceptable standard, giving him the

benefit of the doubt and bearing in mind the

difficulties under which he was labouring and so

on. He gave an explanation which is not

inconsistent with the facts and if that is so

one is left simply with the matters found by the

statutory committee, matters which, we would submit -

Your Honours have not been addressed on the seric~s~ess

of the other matters and my friend has not sought

to put, at any stage, that those matters on their

own would justify striking off, either in the

Full Court or here, as I understand it.

If Your Honours accept that view of the matter

that the extended approach to lS(c)(vii) ought

not to be taken and that Your Honours are not

satisfied that, either from the decision or from

the evidence, that there was deliberate perjury,

appropriate order must be 1'appeal allowed,	then that must be the end of the matter, the
statutory committee decision restored 11 • If
Your Honours are concerned about the question of
lying alone but are not concerned about the extended
lS(c)(vii) then. in my respectful submission, it
is still appropriate to make that order. The
statutory committee heard him, it dealt with the
matter, it formed a view of credibility, whatever
it was and it reached a decision on the basis of
that and, in my respectful submission, it is a
classic case where an appellate court, whether
the Full Court or this Court, ought not to
interfere to find lying where the tribunal has
not made that finding.

It is one thing to form a different view of the facts

andthe probabilities than the view formed at the

trial. WARREN V COOMBES permits appellate courts

to do that.and it bas been .part of their armoury

since then. But it is quite another to say, "We

will, although this was not done at first instance,

make a finding that the evidence given was
deliberately untrue. 11	And in my respectful submission

the Court ought not to take that step and the fact

that two members of the Full Court took that step

and the dissenting member appears to have agreed
with that part of it, although without giving the

same degree of reasons or making clear the extent

to which he considered there was dishonesty, is,

in my respectful submission, not a reason why this

Court should remit the matter to enable that to

be done afresh.

C2T4 7 / 1/ND	67	9/2/33
Walter(2)

:1R BENNETT (continuing):  So we would submit the aoorooria:2

course, if the Court is concerned about that,' is

nevertheless simply to allow the appeal and withdraw

the statutory committee. For those reasons it is

my respectful submission that those are the orders

which should be made. If the Court is against ~e

on that but otherwise with me on the appeal, we woulc

agree with my learned friend that the appropriate

course is to remit to the statutory cormnittee,
rather than to the Full Court and in any of those

events we submit there should be an order for cos:s

in our favour. May it please the Court.

MASON CJ:  Thank you, Mr Bennett. The Court will consider i:s

decision in this matter and adjourn until 10.15 an

tomorrow morning.

AT 2.37 PM THE MATTER WAS ADJOURNED SINE DIE

C2T48/l/HS	68	9.12/88
Walter(2)