Weaver v Law Society of New South Wales

[1979] HCA 35

HIGH COURT OF AUSTRALIA

Barwick C.J., Gibbs, Stephen, Mason and Aickin JJ.

WEAVER v. LAW SOCIETY OF NEW SOUTH WALES

(1979) 142 CLR 201

8 August 1979

Legal Practitioners

Legal Practitioners—Disciplinary proceedings—Estoppel—Issue estoppel—Proceedings against solicitor for professional misconduct—Denial of charges before statutory committee—Charges dismissed—Solicitor's testimony subsequently found wilfully false—Whether court able to rehear original charges and hear fresh charge of knowingly giving false evidence—Legal Practitioners Act, 1898 (N.S.W.), ss. 76, 79.

Decisions

Aug. 8.
The following written judgments were delivered:-
BARWICK C.J. I have had the advantage of reading the reasons prepared by my brother Mason for dismissing this appeal. I agree with them and do not desire to add anything on my own behalf. (at p203)

GIBBS J. I agree with the reasons prepared by MASON J. (at p203)

STEPHEN J. I agree with the reasons stated by MASON J. for the dismissal of this appeal. (at p203)

MASON J. This was an appeal by a solicitor by way of special leave against a declaration and order of the Court of Appeal whereby it was declared that the appellant had been guilty of professional misconduct and it was ordered that the appellant's name be removed from the roll of solicitors. This Court, having heard argument in support of the appeal, excluded from the grant of special leave a proposed challenge by the appellant to the penalty imposed upon him by the Court of Appeal on the ground of severity and otherwise dismissed the appeal, announcing that the reasons for the decision would be published later. (at p203)

2. The facts are summarized in the judgment of Street C.J. It appears that on a reference pursuant to s. 76 of the Legal Practitioners Act, 1898 (N.S.W.) ("the Act") the Statutory Committee found that the appellant had failed to comply with the requirements of the Act and the regulations made thereunder respecting the handling of trust moneys and solicitors' trust accounts. However, the Committee found that the failure was not wilful and that for this reason he had not been guilty of disgraceful or dishonourable conduct and that he had not been guilty of professional misconduct. In reaching this conclusion the Statutory Committee accepted the appellant's evidence that it was not until May 1970, the month when the respondent appointed a receiver of the partnership, that he knew of the irregularities in the firm's trust account and the handling of the trust moneys which it held. The transaction giving rise to the irregularities were handled by Knowles, his partner, who freely admitted his responsibility for what had occurred. (at p204)

3. The Statutory Committee published its findings in December 1970. (at p204)

4. In January 1971, the month after the publication of the Committee's findings, Knowles (whose name was ordered to be struck off the roll of solicitors) executed a statutory declaration and made available certain documents which, on their face, threw some doubt on the reliability of the appellant's denial of knowledge of what had occurred. The respondent appealed to the Court of Appeal, relying on this material as fresh evidence. The appeal was dismissed on a preliminary objection that no order had been made from which an appeal would lie (In re A Solicitor and the Legal Practitioners Act (1971) 2 NSWLR 113 ). Following the dismissal of that appeal the respondent issued a summons out of the Court of Appeal, seeking an order declaring that the appellant had been guilty of professional misconduct and such other order and orders as might be appropriate. The Court of Appeal overruled an objection that it had no jurisdiction to entertain the proceedings and remitted further proceedings in the matter of the Common Law Division (Law Society of New South Wales v. Weaver (1974) 1 NSWLR 271 ). (at p204)

5. The summons came on for hearing before Taylor C.J. at C.L. The respondent furnished six heads of particulars of professional misconduct. The first five heads covered substantially the same matters as had been referred to the Statutory Committee and had been the subject of the decision of that Committee. The sixth particular was as follows: "(f) Giving evidence before the Statutory Committee which was false to his knowledge and failing to disclose all or any of the documents annexed to the Statutory Declaration of Mr. Knowles on 29th January 1971." (at p204)

6. Taylor C.J. at C.L. found that the appellant knew of the misdirection of trust funds as far back as June 1968, that his denials on oath of such knowledge were false and that by July 1969 he knew of the extent to which trust funds had been used to finance the business ventures of Knowles and himself and that his denials in this regard were also false. However, the judge upheld the appellant's defence of issue estoppel, holding that all the allegations relating to trust account irregularities and misdirection of trust funds had been considered and dealt with by the Statutory Committee and that, accordingly, these matters could not be re-litigated in the new proceedings. Of the sixth particular, namely, the allegation that the appellant had given false evidence to the Statutory Committee, his Honour said:

"The Statutory Committee, from the terms of their judgment, accepted Mr. Weaver's denial that he had knowledge of these defalcations on the part of Knowles, and that finding stands. It is not open to the Society to now charge that what he said before the Statutory Committee was false, because that is to relitigate the essential issue which was fought before the Statutory Committee."

His Honour dismissed the summons. (at p205)

7. The Court of Appeal disagreed with the primary judge (1977) 1 NSWLR 67 . Street C.J., with whom Moffitt P. and Reynolds J.A. agreed, observed that s. 79 of the Act preserved the disciplinary jurisdiction of the Supreme Court over solicitors, thereby making its jurisdiction concurrent with that of the Statutory Committee and enabling the Supreme Court to re-litigate, otherwise than on appeal, issues already heard and determined by the Statutory Committee. The Chief Justice also held that the elements of issue estoppel were not made out because the respondent in the present proceedings was not a party to proceedings before the Statutory Committee. (at p205)

8. In this Court the appellant argued that it was a principle of the common law, based on the doctrine of issue estoppel, that a person should not be charged with perjury or false swearing in connexion with the giving of evidence in earlier proceedings against him for misconduct when the acceptance of that evidence resulted in a finding that he was not guilty of misconduct. It was urged that to allow the charge of false swearing to be litigated would necessarily lead to a re-litigation of the issues which had been adjudicated upon earlier by the Statutory Committee. To this submission there are a number of answers. (at p205)

9. First, the complaint of false swearing is new. It is not a complaint which was dealt with by the Statutory Committee. Secondly, the appellant's submission is not supported by the reasoning of the House of Lords in Reg. v. Humphrys (1977) AC 1 upon which the appellant relied. There a conviction for perjury was sustained in relation to evidence given by the accused at an earlier trial when the evidence in question had resulted in his acquittal at that trial. All the members of the House of Lords rejected the view that the doctrine of issue estoppel as applied in civil proceedings forms part of the criminal law. (at p206)

10. Viscount Dilhorne went further, stating that if issue estoppel forms part of the criminal law it does not prevent the prosecution of a person for perjury on the ground that he gave false evidence in prior proceedings when that evidence resulted in his acquittal on a criminal charge. His Lordship pointed out that "It is well established that in civil cases a decision which would found an estoppel and amount to res judicata can be impugned if it was obtained by fraud" (1977) AC, at p 21 . (at p206)

11. Lord Hailsham said (1977) AC, at p 30 :

"Since the Duchess of Kingston's Case, 2 Smith L.C. 644, it has been settled as a matter of law that issue estoppel does not in general apply where the earlier judgment is impugned on the ground of fraud, and I would have thought that this doctrine must obviously and most typically apply where the fraud consisted in perjured evidence being tendered in the previous proceedings which had the effect of misleading the court. No doubt, as was decided in Birch v. Birch (1902) P 62; (1902) P 130 , and as Diplock L.J. indicated in Mills v. Cooper (1967) 2 QB 459, at pp 468-469 , where the party seeking to impugn the earlier judgment has no significant new evidence to introduce in support of his claim, he will not be able to avail himself of the exception. I must also note that even in civil proceedings the doctrine of issue estoppel is not of universal application. Reasons of public policy may compel a court to look behind the litigation of the parties to discover the actual fact. In matrimonial cases this is, or at any rate was, a statutory obligation to ascertain the truth irrespective of estoppel."

Lord Salmon, who doubted the application to criminal proceedings of this element of the civil doctrine of issue estoppel, acknowledged that a judgment obtained by fraud (including perjury) in civil proceedings could be impugned (1977) AC, at pp 46-47 . And Lord Fraser considered that, had the civil doctrine of issue estoppel applied, it would not have precluded a prosecution for perjury in the circumstances before the Court (1977) AC, at p 58 . (at p206)

12. A majority of their Lordships therefore took the view that in civil proceedings issue estoppel does not apply to a judgment procurred by fraud (including perjury). With respect, I accept this as a correct statement of the common law. I would only add that the principle applies with equal force to a determination or finding as it does to a judgment. On the other hand, in criminal proceedings an earlier acquittal cannot be re-litigated (Reg. v. Storey (1978) 140 CLR 364 ), though a prosecution for perjury may be maintained in respect of the giving of false evidence which secured that acquittal. (at p207)

13. Disciplinary proceedings under the Legal Practitioners Act and in the exercise of the Supreme Court's inherent jurisdiction are not criminal proceedings, they are proceedings sui generis. When the court is called upon to examine the conduct of solicitors as officers of the court it is as much concerned to protect the public from misconduct on the part of solicitors as it is to ensure that issues already determined are not unnecessarily re-litigated. The court cannot disable itself from hearing and determining the very serious complaint against a solicitor that he has given false evidence merely because the complaint may or will involve the re-litigation of allegations of earlier misconduct of which the solicitor has previously been found not guilty. (at p207)

14. What is more, if it should appear that the earlier charge of misconduct was dismissed only by reason of the court having then accepted the solicitor's false testimony, the court should in my opinion proceed on the footing that he was guilty of the professional misconduct then charged and that by his false swearing he then avoided the consequences that would have attended that misconduct and deal with him accordingly. Any other approach would fail to take account of the public interest, for it might make the difference between removing the solicitor's name from the roll and imposing upon him a lesser penalty which would leave him at liberty to practise. (at p207)

15. For reasons which I have already given, this approach involves no violation of the doctrine of issue estoppel. The fact that the earlier finding that the appellant was not guilty of professional misconduct was procured by false evidence makes the doctrine of issue estoppel inapplicable (if it otherwise applies to a finding made by the Statutory Committee) and opens the way to a re-consideration of the earlier charges of misconduct. Accordingly, I reject the submission that issue estoppel was an answer to the respondent's summons. (at p207)

16. There remains the question whether the primary judge found that the appellant had given wilfully false evidence in the proceedings before the Statutory Committee. The appellant's counsel conceded that the judge had found that the appellant's evidence before the Statutory Committee was false. However, he contended that his Honour had refrained from finding that the evidence was wilfully false and submitted that the Court of Appeal was mistaken in thinking otherwise. In my opinion the submission is without substance. The judge found that the appellant gave wilfully false evidence and refrained from finding that he had committed perjury only because the judge considered that the defence of issue estoppel had been made out. (at p208)

17. In the proceedings before Taylor C.J. at C.L. the appellant was charged with giving false evidence before the Statutory Committee in relation to his knowledge of the deficiencies and irregularities in the partnership trust account and the use of trust account moneys to finance Gram Pty. Ltd., a company owned equally by Knowles and his wife and by the appellant and his wife, and other companies. In his statutory declaration before the Statutory Committee the appellant said:

"At the conclusion of the audit which I required to be done on 4th May 1970 I knew for the first time that there was a deficiency in the trust funds and the accountant informed me that the extent thereof was approximately $80,000.00. I ascertained for the first time whilst the audit was being done on the 4th May, 1970 that Mr. Knowles had advanced moneys out of the Trust Account upon unauthorised investments either without the client's knowledge or without such clients knowing the full facts as to how their money had been invested."

In answer to the allegation that trust moneys had been directed to Gram Pty. Ltd. he said in the same statutory declaration:

"I was never a party to Gram Pty. Ltd. being granted advances out of the Trust account and I did not know of such advances until after the 4th May 1970."

These denials were repeated by the appellant in his oral evidence before the Committee. (at p208)

18. Taylor C.J. at C.L., after reviewing the evidence, said:
"A great deal of the money that was taken from the trust account without authority was used to finance companies and firms in which Weaver had an interest; for example, he with his wife was a half owner of Gram Pty. Ltd. He was a director and public officer of the company. He says he did not know of this debit against Gram of $10,272 until the audit was held on 4th May 1970. He makes the same claim in respect of the $10,994 in relation to Aquarium Products, a firm registered under the Business Names Act and owned by Gram Pty Ltd. He does not dispute that he saw and signed balance sheets of Gram Pty Ltd. that were prepared by the auditors, Molesworth, Jones &Co. He says he first knew on 4th May 1970 that G. H. S. Knowles Transport had been financed out of the trust account to the extent that there was a debit of $23,384 as at that date. In relation to Berkshire Park Gravel &Sand Ltd., of which he was the secretary and the accounts of which company were prepared by Molesworth, Jones &Co. he says he has no recollection of being the Secretary of or signing any documents, or of a debit against that company of $11,085." His Honour continued:

"I find it impossible to accept that Weaver had no knowledge of these companies or of Knowles Transport trading and being financed out of trust funds. No doubt he did leave the keeping of the trust account ledgers to Knowles, and I have no doubt that he trusted Knowles in the first instance and also that Knowles did not actually tell him that there were deficiencies in the trust account, and also that he told him that he had moneys available from time to time to lend. But any solicitor knowing that his partner was using trust funds to finance business enterprises in which he and/or his partner were financially interested must have been aware that the use of trust funds for such a purpose, even if authorised, would have been highly improper, and I cannot conceive that Mr. Weaver did not realise that this was so. He either knew that there were no authorities or ignored the whole situation of the use of trust moneys by his partner. Weaver's own clients were involved in many of the transactions, which were obviously false, in the trust account ledger. A whole series of the clients' trust accounts was put to him by Mr. Darvall, for the Law Society in cross-examination and he admitted that the entries taking moneys from these accounts and putting them to the credit of other trust accounts then in debit and transferring the moneys back again via the journal were false entries. I am not prepared to accept that he did not know of them on the occasions when he must have looked at the ledger. There were debits shown in pencil in the various trust account ledgers, and these equally must have been seen by him."

His Honour concluded by saying: "In the light of all the evidence that points to Mr. Weaver knowing of the debit balances in the trust accounts at least from 1968 onwards, I am unable to accept his denials. It is true that a great deal of the evidence against him is circumstantial, but when all these facts and matters that point to his knowledge are taken together they lead me irresistibly to the conclusion that by June 1968 he was aware of debit balances in the trust account, and by July 1969 he was of a certainty aware of the extent of those debit balances and how the attempts were made to conceal them and the extent to which trust funds had been used to finance the business ventures of Knowles and of Knowles and Weaver, the partners in the practice." (at p209)

19. The passages which I have quoted make it abundantly clear that the primary judge found that the appellant had given wilfully false evidence before the Statutory Committee. The judge found that the evidence given was false and that it was false to the appellant's knowledge in that he knew the true facts as far back as 1968 and July 1969. The way in which the judge expressed his findings is to be explained by (a) the circumstance that it was never suggested that knowledge which the appellant had in 1968 and July 1969 was not present to his mind when he gave evidence before the Statutory Committee in 1970 and (b) the fact that his Honour upheld the defence of issue estoppel. (at p210)

20. It is for these reasons that I concurred in the dismissal of the appeal. As the question of penalty itself involved no special leave point it was appropriate that the question be excluded from the grant of special leave. (at p210)

AICKIN J. I agree with the reasons for dismissing this appeal which have been prepared by Mason J. and have nothing to add. (at p210)

Orders

Appeal dismissed with costs.