Administrative Decisions Tribunal New South Wales

• Medium Neutral Citation: Council of the Law Society of New South Wales v Dalla [2011] NSWADT 130
• Hearing dates: 29 April 2011
• Decision date: 29 April 2011
• Jurisdiction: Legal Services Division
• Before: M Chesterman, Deputy President; N Isenberg, Judicial Member; J Butlin, Non-judicial Member

Decision

1. The Respondent is reprimanded.

2. The Respondent is to pay the Applicant's costs as agreed or assessed.

• Catchwords: Disciplinary application - solicitor - failure to pay superannuation contributions for employee - instrument of consent
• Legislation Cited: Legal Profession Act 2004
• Cases Cited: Council of the Law Society of New South Wales v Nicopoulos [2011] NSWADT 84; Council of the Law Society of New South Wales v Somerfield [2008] NSWADT 235; Council of the New South Wales Bar Association v Butland [2009] NSWADT 177; Law Society of New South Wales v Bouzanis [2006] NSWADT 55; Law Society of New South Wales v Gillroy [2010] NSWADT 232; Law Society of New South Wales v Vosnakis [2007] NSWADT 42; New South Wales Bar Association v Cummins (2001) 52 NSWLR 279
• Texts Cited: Riley, Solicitors Manual
• Category: Principal judgment
• Parties: Council of the Law Society of New South Wales (Applicant); Legal Services Commissioner (Intervenor); Samir Benab Dalla (Respondent)
• Representation: P Boyd (Applicant); L Muston (Intervenor); G Walsh (Respondent)
• File Number(s): 102029

REASONS FOR DECISION

The course of these proceedings

1 On 8 November 2010, the Council of the Law Society of New South Wales ('the Law Society') filed an Application alleging that the Respondent, Samir Benab Dalla ('the legal practitioner'), while practising as a solicitor, was guilty of professional misconduct on the following Grounds: (1) failure to pay employee's superannuation contribution entitlement, and (2) failure to make superannuation contributions on behalf of the complainant. Particulars of the alleged misconduct were supplied in a schedule to the Application.

2 The orders sought in the Application were that the legal practitioner be publicly reprimanded and that he pay the Law Society's costs of the proceedings.

3 On 8 and 10 November 2010 respectively, the Law Society filed two affidavits in support of the Application, both of which were sworn by its solicitor, Ms Anne-Marie Foord, on 8 November 2010. On 8 November 2010, the Society also filed an affidavit sworn by the complainant, Ms Zayneb Elshab, on 3 November 2010.

4 In her affidavit filed on 10 November 2010, Ms Foord stated that the legal practitioner was admitted to practice on 22 May 1987 and had held a practising certificate since that date.

5 On 10 February 2011, the legal practitioner filed a Reply to the Application, in which he admitted the two Grounds of the Application and the accompanying Particulars. With respect to Ground 1, he also made the following statements:-

1.2 The Respondent says that on and from 30 June 2002 unto ( sic ) 21 April 2006 he had an honestly held belief that Ms Elshab was an independent contractor and not an employee and thus, not entitled to superannuation.

1.3 The Australian Taxation Office has ruled in respect of an Application from the Respondent that pursuant to the deeming provisions that ( sic ) Ms Elshab was entitled to superannuation.

6 On 11 March 2011, the legal practitioner filed an affidavit sworn by him on 9 March 2011.

7 At a directions hearing on 6 April 2011, the Law Society and the legal practitioner indicated through their representatives that an Instrument of Consent had been agreed to and would be filed at or before the hearing of the Application.

8 At this hearing, which took place before us on 29 April 2011, Ms Muston appeared for the Legal Services Commissioner. Through so appearing, pursuant to an entitlement to intervene conferred by section 559(1)(c) of the Legal Profession Act 2004 ('the LP Act'), the Commissioner became a party to the proceedings under section 559(5).

9 Mr Boyd, appearing for the Law Society, tendered unopposed the affidavits sworn by Ms Foord and Ms Elshab.

10 Mr Boyd also handed up for filing the foreshadowed Instrument of Consent, which was dated 29 April 2011. It had been executed by the Law Society, the legal practitioner and the Legal Services Commissioner.

11 The Instrument of Consent stated that the signatories gave their consent to the Tribunal making (a) a finding that the conduct of the legal practitioner described in the Particulars of Agreed Facts amounted to professional misconduct and (b) the following orders, by consent:-

1. The solicitor Samir Dalla be publicly reprimanded.

2. Samir Dalla is to pay the costs of the Council of the Law Society of New South Wales in these proceedings.

12 Mr Walsh, who appeared on behalf of the legal practitioner, tendered unopposed the legal practitioner's affidavit. The legal practitioner was not required for cross-examination.

13 Mr Boyd requested us to make orders in terms of those set out in the Instrument of Consent. He made various submissions, aspects of which are outlined below, about the conduct of the legal practitioner described in the Particulars of Agreed Facts. He also advised us that Ms Elshab sought an order for compensation.

14 Ms Muston and Mr Walsh indicated that they supported this request made on behalf of the Law Society. Aspects of their submissions are also outlined below.

15 At the conclusion of the hearing, we stated that we would grant this request. We made orders substantially as proposed in the Instrument of Consent, preceded by a finding that the legal practitioner had engaged in professional misconduct. Those orders took effect on the date of the hearing and were incorporated into a Notice of Decision sent to the parties on 4 May 2011. We also gave directions relating to the disposal of the compensation claim.

16 In addition, we indicated that we would publish written reasons. The present decision constitutes those reasons.

The Particulars of Agreed Facts

17 The Particulars of Agreed Facts, forming part of the Instrument of Consent, were in the following terms:-

PARTICULARS OF AGREED FACTS

Re: SAMIR DALLA

In respect of the following grounds of complaint, the Legal Practitioner engaged in professional misconduct:

Complaints

1. The legal practitioner failed to pay employee's superannuation contribution entitlement.

2. The legal practitioner failed to make superannuation contributions on behalf of the complainant.

Particulars

"The legal practitioner" means Samir Dalla

"Ms Elshab" means the ( sic ) Zayneb (Zoey) Elshab the complainant

1. Ms Elshab commenced employment with the legal practitioner on 18 June 2001 and her employment ceased on 21 April 2006.

2. On 16 July 2001 a PAYG payment summary signed by the legal practitioner disclosed that the Gross payment made to Ms Elshab for the period from 18 June 2001 to 30 June 2001 was $454.00.

3. The legal practitioner failed to make superannuation payments for Ms Elshab for the year ending 30 June 2001.

4. On 18 June 2007 the legal practitioner forwarded a letter to the Society which said:-

I have not received as yet formal assessment (if unfavourable, the short fall will be about $5000 on top of the conceded $1,127.36).

5. On 3 October 2007 the legal practitioner forwarded a letter to the Society which said:-

Conclusion

With respect to Mr (sic) El Shab's superannuation entitlements, l have conceded her entitlement for the period 18.06.01 to 30.06.02. Indeed I never disputed her entitlement for this period. The delay in payment for this period was mainly because Ms El Shab never advised me of her choice of a particular fund.

As to the balance of her alleged entitlement, I have taken steps to clear the issue with the ATO. On 23 July 2007 I finally received ATO Assessments to which l have lodged objections. I believe that l have never breached any duty owed to Ms El Shab..

Period from 1July 2001 to 30 June 2002

6. A PAYG Payment Summary disclosed that the Gross payment made to Ms Elshab by the legal practitioner for the year ending 30 June 2002 was $14,092.00.

7. The legal practitioner disputed that Ms Elshab was an employee for this period.

8. The legal practitioner failed to make superannuation payments for Ms Elshab for the year ending 30 June 2002.

9. On 1June 2007 the AT0 sent a letter to the legal practitioner which said in part:-

We have now finalised our audit of your superannuation guarantee and choice of superannuation fund obligations.

.....

We have raised superannuation guarantee charge (SGC) assessments and you will soon receive separate notice of assessment. Attached is an explanation of the components of the SGC. A breakdown of the total of individual shortfalls is also attached.

A document attached to the letter showed the shortfall for this period as $1,127.36.

10. On 28 June 2007 the Australian Taxation Office ("ATO") issued to the legal practitioner a Superannuation Guarantee Default Assessment for $2,064.30 for this period which included an additional charge of $187.66 under section 59(1) of the Superannuation Guarantee (Administration) Act 1992.

11. On 28 August 2007 the legal practitioner lodged an objection to the aforementioned Assessment.

12. On 23 January 2008 the AT0 disallowed the objection, subject to Review/Appeal.

13. On 13 May 2008 the legal practitioner in writing advised the Society "I have decided to bitterly accept the Superannuation internal ruling" .

14. On 15 August 2008 the AT0 sent a letter to the legal practitioner which said in part:-

Enclosed is an Application for an Arrangement to Pay by Instalments (Individual). Please complete the form and return it to this Office by 5 September 2008. A payment must accompany this application. Further payments should continue to be made while the application is being considered.

15. On 26 August 2008 the legal practitioner forwarded a letter by facsimile transmission to the Society which said in part:-

With respect to payment of superannuation I refer to my facsimile of 13 May 2008 and confirm my advice therein that 1 am negotiating an agreement with Superannuation Guarantee to pay Ms El Shab's outstanding superannuation entitlement by instalments.

16. On 20 August 2009 the AT0 sent a letter to the legal practitioner which said in part:-

On 28 June 2007 we sent you an assessment notice . . . for the year ended 30 June 2002

...

We have now recalculated the additional charge you are required to pay and have determined that a credit of $187.66 is owing to you.

17. On 21 September 2009 the legal practitioner sent a letter to the AT0 which said:

I refer to your Assessment issued 20/08/09 (copy of first page attached) and to my subsequent phone calls requesting your office approval to payment of the charge by monthly instalments. l am still awaiting for your response

Your urgent reply would be appreciated.

Period from 1 July 2002 to 30 June 2003

18. A PAYG Payment Summary disclosed that the Gross payment made to Ms Elshab by the legal practitioner for the year ending 30 June 2003 was $18,130.00.

19. The legal practitioner disputed that Ms Elshab was an employee for this period.

20. The legal practitioner failed to make superannuation payments for Ms Elshab for the year ending 30 June 2003.

21. The Applicant repeats paragraph 9 above.

A document attached to the letter showed the shortfall for this period as $1,631.70.

22. On 28 June 2007 the AT0 issued to the legal practitioner a Superannuation Guarantee Default Assessment for $2,768.98 for this period which included an additional charge of $251.72.

23. On 28 August 2007 the legal practitioner lodged an objection to the aforementioned Assessment.

24. On 23 January 2008 the AT0 disallowed the objection, subject to Review/Appeal.

25. The Applicant repeats paragraphs 13 -15 above.

26. On 16 April 2009 the AT0 sent a letter to the legal practitioner which said in part:-

We advise that we have commenced an informal review of decision on your objection to the Superannuation Guarantee charge for the year ended 30 June 2003, quarters ended 30 September 2003, 31 December 2003, 31 March 2004, 30 June 2004, 30 September 2004, 31 December 2004, 31 March 2005 and 30 June 2005.

We have commenced this review as our response provided to you in our Notice of Decision letter dated 23 January 2008 and the Reasons for Decision may be incorrect.

To enable the Commissioner to complete the review please provide the information below by 30 April 2009.

27. On 15 July 2009 the AT0 sent a letter to the legal practitioner which said in part:-

We advised you on 16 April 2009 during a telephone conversation between tax officer Caterina Bishop and Mr Samir Dalla that the notice of decision and reasons for decision that issued to you on 23 January 2008 may be incorrect and that we would undertake a review of your objection.

.....

NOTICE OF OBJECTION DECISION

We have re-considered your objection and allowed it in part, as follows...

The letter advised that the Superannuation Guarantee Charge for the quarters ended 30 September 2003, 31 December 2003 and 31 March 2004 had been reduced. The letter continued:-

The Part 7 penalty will be reduced from 10% to nil for the year ended 30 June 2003 and quarters ended 30 September 2003 to 30 June 2005 inclusive.

Although the year ended 30 June 2002 does not form part of this review, the Part 7 penalty for this period will also be amended to nil in line with the reduction for all periods under review.

We will issue amended assessments for these years/quarters in due course.

28. On 20 August 2009 the AT0 sent a letter to the legal practitioner which said in part:-

On 28 June 2007 we sent you an assessment notice... for the year ended 30 June 2003.

...

We have now recalculated the additional charge you are required to pay and have determined that a credit of $251.72 is owing to you.

29. The Applicant repeats paragraph 17 above.

Period from 1 July 2003 to 30 September 2003

30. A PAYG Payment Summary disclosed that the Gross payment made to Ms Elshab by the legal practitioner for the year ending 30 June 2004 was $24,275.00.

31. The legal practitioner disputed that Ms Elshab was an employee for this period.

32. The legal practitioner failed to make superannuation payments for Ms Elshab and another employee for the quarter ending 30 September 2003.

33. The Applicant repeats paragraph 9 above,

A document attached to the letter showed the shortfall for this employee for period as $549.17.

34. On 28 June 2007 the AT0 issued to the legal practitioner a Superannuation Guarantee Default Assessment [relating to two employees] for $1,134.24 for this period which included an additional charge of $103.I1 under section 59(1) of the Superannuation Guarantee (Administration) Act 1992.

35. The Applicant repeats paragraph 11 above. On 23 January 2008 the AT0 partially allowed the objection.

The Applicant repeats paragraphs 13 -15, 23, 26 & 27 above.

36. On 20 August 2009 the AT0 sent a letter to the legal practitioner which said in part:-

Under section 37 of the Superannuation Guarantee (Administration) Act 1992, we have reassessed the amount of superannuation guarantee charge you must pay and have determined that a credit of $245.78 is owing to you.

.....

The assessment notice we sent you on 28 June 2007 has since been reviewed as one or more of the details we previously used to calculate your superannuation guarantee charge have changed...

37. The Applicant repeats paragraph 17 above.

Period from 1 October 2003 to 31 December 2003

38. A PAYG Payment Summary disclosed that the Gross payment made to Ms Elshab by the legal practitioner for the year ending 30 June 2004 was $24,275.00.

39. The legal practitioner disputed that Ms Elshab was an employee for this period.

40. The legal practitioner failed to make superannuation payments for Ms Elshab and another employee for the quarter ending 31 December 2003.

41. The Applicant repeats paragraph 9 above.

A document attached to the letter showed the shortfall for this employee for period again as $549.17.

42. On 28 June 2007 the AT0 issued to the legal practitioner a Superannuation Guarantee Default Assessment [relating to two empIoyees] for $1,114.52 for this period which included an additional charge of $101.32 under section 59(1) of the Superannuation Guarantee (Administration) Act 1992.

43. The Applicant repeats paragraph 11 above. On 23 January 2008 the AT0 partially allowed the objection.

The Applicant repeats paragraphs 13 -15, 23, 26 & 27 above.

44. On 20 August 2009 the AT0 sent a letter to the legal practitioner which said in part:-

Under section 37 of the Superannuation Guarantee (Administration) Act 1992, we have reassessed the amount of superannuation guarantee charge you must pay and have determined that you owe a further amount of $14.78.

As this is an amendment to the previous superannuation guarantee charge which was payable on 7June 2007, the further amount was also payable on that date.

The letter contained the further paragraph as set out in paragraph 36 above.

45. The Applicant repeats paragraph 17 above.

Period from 1January 2004 to 31 March 2004

46. A PAYG Payment Summary disclosed that the Gross payment made to Ms Elshab by the legal practitioner for the year ending 30 June 2004 was $24,275.00.

47. The legal practitioner disputed that Ms Elshab was an employee for this period.

48. The legal practitioner failed to make superannuation payments for Ms Elshab for the quarter ending 31 March 2004.

49. The Applicant repeats paragraph 9 above.

A document attached to the letter showed the shortfall for this employee for period as $543.20.

50. On 28 June 2007 the AT0 issued to the legal practitioner a Superannuation Guarantee Default Assessment for $824.63 for this period which included an additional charge of $74.96.

51. The Applicant repeats paragraph 11 above. On 23 January 2008 the AT0 partially allowed the objection.

The Applicant repeats paragraphs 13 -15, 23 - 27 above.

52. On 20 August 2009 the AT0 sent a letter to the legal practitioner which said in part:-

Under section 37 of the Superannuation Guarantee (Administration) Act 1992, we have reassessed the amount of superannuation guarantee charge you must pay and have determined that you owe a further amount of $223.10.

As this is an amendment to the previous superannuation guarantee charge which was payable on 7June 2007,the further amount was also payable on that date.

The letter contained the further paragraphs as set out in paragraphs 36 & 43 above.

53. The Applicant repeats paragraph 17 above.

Period from 1April 2004 to 30 June 2004

54. A PAYG Payment Summary disclosed that the Gross payment made to Ms Elshab by the legal practitioner for the year ending 30 June 2004 was $24,275.00.

55. The legal practitioner disputed that Ms Elshab was an employee for this period.

56. The legal practitioner failed to make superannuation payments for Ms Elshab and another employee for the quarter ending 30 June 2004.

57. The Applicant repeats paragraph 9 above.

A document attached to the letter showed the shortfall for this employee for period again as $543.20.

58. On 28 June 2007 the AT0 issued to the legal practitioner a Superannuation Guarantee Default Assessment for $809.77 for this period which included an additional charge of $73.61.

59. The Applicant repeats paragraph 11 above. On 23 January the AT0 partially allowed the objection.

The Applicant repeats paragraphs 13 -15, 23, 26 & 27 above.

60. On 20 August 2009 the AT0 sent a letter to the legal practitioner which said in part:-

On 28 June 2007 we sent you an assessment notice . . . for the quarter ended 30 June 2004.

...

We have now recalculated the additional charge you are required to pay and have determined that a credit of $73.67 is owing to you.

61. The Applicant repeats paragraph 17 above.

Period from 1 July 2004 to 30 September 2004

62. A PAYG Payment Summary disclosed that the Gross payment made to Ms Elshab by the legal practitioner for the year ending 30 June 2005 was $26,000.00.

63. The legal practitioner disputed that Ms Elshab was an employee for this period.

64. The legal practitioner failed to make superannuation payments for Ms Elshab for the quarter ending 30 September 2004.

65. The Applicant repeats paragraph 9 above.

A document attached to the letter showed the shortfall for this employee for period again as $589.81.

66. On 28 June 2007 the AT0 issued to the legal practitioner a Superannuation Guarantee Default Assessment for $861.2 ( sic ) for this period which included an additional charge of $78.29.

67. The Applicant repeats paragraph 11 above. On 23 January 2008 the AT0 disallowed the objection.

The Applicant repeats paragraphs 13 -15, 23, 26 & 27 above.

68. On 20 August 2009 the AT0 sent a letter to the legal practitioner which said in part:-

On 28 June 2007 we sent you an assessment notice . . . for the quarter ended 30 September 2004.

...

We have now recalculated the additional charge you are required to pay and have determined that a credit of $78.29 is owing to you.

69. The Applicant repeats paragraph 17 above.

Period from 1October 2004 to 31 December 2004

70. A PAYG Payment Summary disclosed that the Gross payment made to Ms Elshab by the legal practitioner for the year ending 30 June 2005 was $26,000.00.

71. The legal practitioner disputed that Ms Elshab was an employee for this period.

72. The legal practitioner failed to make superannuation payments for Ms Elshab and another empIoyee for the quarter ending 31 December 2004.

73. The Applicant repeats paragraph 9 above.

A document attached to the letter showed the shortfall for this employee for period again as $589.81.

74. On 28 June 2007 the AT0 issued to the legal practitioner a Superannuation Guarantee Default Assessment for $844.93 for this period which included an additional charge of $76.81.

75. The Applicant repeats paragraph 11 above. On 23 January 2008 the AT0 disallowed the objection.

The Applicant repeats paragraphs 13 -15, 23, 26 & 27 above.

76. On 20 August 2009 the AT0 sent a letter to the legal practitioner which said in part:-

On 28 June 2007 we sent you an assessment notice . . . for the quarter ended 31 December 2004.

We have now recalculated the additional charge you are required to pay and have determined that a credit of $76.81 is owing to you.

77. The Applicant repeats paragraph 17 above.

Period from 1 January 2005 to 31 March 2005

78. A PAYG Payment Summary disclosed that the Gross payment made to Ms Elshab by the legal practitioner for the year ending 30 June 2005 was $26,000.00.

79. The legal practitioner disputed that Ms Elshab was an employee for this period.

80. The legal practitioner failed to make superannuation payments for Ms Elshab and another employee for the quarter ending 31 March 2005.

81. The Applicant repeats paragraph 9 above.

A document attached to the letter showed the shortfall for this employee for period again as $576.99.

82. On 28 June 2007 the AT0 issued to the Iegal practitioner a Superannuation Guarantee Default Assessment for $811.07 for this period which included an additional charge of $73.73.

83. The Applicant repeats paragraph 11 above. On 23 January 2008 the AT0 disallowed the objection.

The Applicant repeats paragraphs 13 -15, 23, 26 & 27 above.

84. On 20 August 2009 the AT0 sent a letter to the Iegal practitioner which said in part:-

On 28 June 2007 we sent you an assessment notice . . . for the quarter ended 31 March 2005.

...

We have now recalculated the additional charge you are required to pay and have determined that a credit of $73.73 is owing to you.

85. The Applicant repeats paragraph 17 above.

Period from 1 April 2005 to 30 June 2005

86. A PAYG Payment Summary disclosed that the Gross payment made to Ms Elshab by the legal practitioner for the year ending 30 June 2005 was $26,000.00.

87. The legal practitioner disputed that Ms Elshab was an employee for this period.

88. The legaI practitioner failed to make superannuation payments for Ms Elshab and another employee for the quarter ending 30 June 2005.

89. The Applicant repeats paragraph 9 above.

A document attached to the letter showed the shortfall for this employee for period again as $583.40.

90. On 28 June 2007 the AT0 issued to the Iegal practitioner a Superannuation Guarantee Default Assessment for $804.03 for this period which included an additional charge of $73.09.

91. The Applicant repeats paragraph 11 above. On 23 January 2008 the AT0 disallowed the objection.

The Applicant [repeats] paragraphs 13 -15, 17, 23, 26 & 27 above.

92. On 20 August 2009 the AT0 sent a letter to the legal practitioner which said in part:-

On 28 June 2007 we sent you an assessment notice . . . for the quarter ended 30 June 2005.

...

We have now recalculated the additional charge you are required to pay and have determined that a credit of $73.09 is owing to you.

Instruments of consent

18 Under the heading 'Consent orders', section 564 of the LP Act contains the following provisions relating to instruments of consent that are executed after a disciplinary application has been filed in the Tribunal:-

(1) The Tribunal may, with the consent of the Australian legal practitioner concerned contained in a written instrument, make orders under this Part without conducting or completing a hearing in relation to the complaint.

(2) Consent may be given before or after the proceedings were commenced in the Tribunal with respect to the complaint.

(3) ....

(4) This section does not apply to consent given by the practitioner unless the practitioner, the Commissioner and (if applicable) the relevant Council have agreed on the terms of an instrument of consent.

(5) Without limiting what may be included in the instrument of consent, the instrument is to contain an agreed statement of facts (including as to the grounds of complaint) and may contain undertakings on the part of the practitioner.

(6) The instrument of consent must be filed with the Tribunal.

(7) ...

(8) ...

(9) The Tribunal is to be constituted in the same way as for the conduct of a hearing into the complaint.

(10) In deciding whether to make orders under this Part pursuant to an instrument of consent, the Tribunal may make such inquiries of the parties as it thinks fit and may, despite any such consent, conduct or complete a hearing in relation to the complaint if it considers it to be in the public interest to do so.

19 The Tribunal's decision in Council of the New South Wales Bar Association v Butland [2009] NSWADT 177 (see [29 - 31], [33] and [35]) provides useful guidance as to the matters to be taken into account in deciding whether to make consent orders proposed in an instrument of consent filed under this section.

20 An important principle stated in that case by the Tribunal (at [31]) is that where the parties have jointly proposed an order or orders by way of penalty, it will not be useful to investigate whether the Tribunal would have arrived at that precise outcome in the absence of agreement. The question is whether that outcome, in the Tribunal's opinion, is appropriate in the circumstances of the case. In answering this question, the Tribunal should not reject the agreed outcome simply because it would have been inclined to make some other order or orders. The outcome proposed will be appropriate if it is 'within the permissible range'.

Discussion and conclusions

21 On reviewing the evidence tendered and admitted at the hearing, we find that it adequately substantiates the matters outlined in the Particulars of Agreed Facts. We find also that these Particulars provide a sufficient factual basis for each of the two Grounds stated in the Application.

22 By way of clarification of the evidence, we asked the parties' representatives what was the total amount of the default by the legal practitioner in meeting his obligations to pay superannuation contributions for the benefit of his employees. The agreed answer was $7,283.85, though because larger figures were mentioned by the Australian Taxation Office ('the ATO') in its correspondence with the legal practitioner, we understand that this might represent only the amount to which Ms Elsab is entitled, and it takes no account of the income that might have been earned on this amount if it had been lodged in a superannuation fund at the appropriate time. We were also told that because the legal practitioner was declared bankrupt on 28 July 2010 and receives only limited amounts of income, he has not paid any part of this sum, either to the ATO or to Ms Elsab. As already mentioned, her claim for compensation remains to be determined.

23 We are satisfied that the conduct of the solicitor described in the Particulars of Agreed Facts amounts to professional misconduct. In five Tribunal decisions of which we are aware, the failure by a solicitor to pay superannuation contributions to which his or her employees were entitled by virtue of their employment has been held to constitute professional misconduct at common law and/or under the statutory definition in section 497(1)(b) of the LP Act. These decisions are Law Society of New South Wales v Bouzanis [2006] NSWADT 55, Law Society of New South Wales v Vosnakis [2007] NSWADT 42, Council of the Law Society of New South Wales v Somerfield [2008] NSWADT 235, Law Society of New South Wales v Gillroy [2010] NSWADT 232 and Council of the Law Society of New South Wales v Nicopoulos [2011] NSWADT 84.

24 The reasoning underlying this conclusion is well explained in the following passage from Gillroy , at [43 - 45]:-

43 Each of the solicitors was clearly guilty of a breach of very important and basic statutory obligations as particularised in the Law Society's Application namely a failure to pay employees' superannuation contributions; a failure to pay employees' Group Tax and a failure to pay GST.

44 The conduct of the solicitors was conduct which clearly occurred in the course of the legal practice conducted by the firm, of which the solicitors were principals. It has not been submitted on behalf of the solicitors that the conduct somehow involved an offence in a personal rather than a professional capacity, even although it may be open to argument that the conduct here involved administration of the business of the firm rather than legal professional work as such. Be that as it may, it is recognised by the authorities, for example the discussion in Riley at paragraph [36,000] and in the definition of "professional misconduct" in s 497(1)(b) of the Legal Profession Act 2004 [NSW] , that the notion of professional conduct extends to conduct of an Australian legal practitioner which occurs otherwise than in connection with the practice of the law. As is stated in Riley at paragraph [36,000]:

"It stands to reason, therefore, that conduct by a lawyer that is unrelated to his or her professional practice can amount to professional misconduct. Spigelman CJ so explained the circumstances where this may be in New South Wales Bar Association v Cummins " (2001) 52 NSWLR 279.

45 The conduct of the solicitors clearly falls within the concept of professional misconduct which is understood at common law in accordance with the well known test articulated in the case of Allinson v General Council of Medical Education and Registration [1894] 1 KB 750, and which has been endorsed by Australian courts, for example in the case of Re a Solicitor [1960] VR 617 at 620, and the other authorities cited at note 2 of Riley at page 90, 260. The test inquires as to whether the lawyer has behaved in a manner that would reasonably be regarded as disgraceful or dishonourable by his or her professional brethren of good repute and constancy.

25 In deciding that the order by way of penalty proposed in the Instrument of Consent - namely, a reprimand - is 'within the permissible range', we take into account the following matters put to us in the parties' submissions at the hearing.

26 Mr Boyd, Ms Muston and Mr Walsh all placed emphasis on a matter raised by the legal practitioner in his Reply (see [5] above): namely, that during the period between 30 June 2002 and 21 April 2006 (being the date on which Ms Elsab left his employment) he honestly believed that she was an independent contractor, not an employee, and was therefore not entitled to superannuation contributions. They also pointed out (a) that during 2009 the ATO, apparently in acknowledgment of this belief, had remitted all the penalties that it had previously imposed on account of his default in paying contributions, and (b) that there was no likelihood that he would be prosecuted.

27 Mr Walsh drew our attention to the following aspects of the legal practitioner's current circumstances as outlined in his affidavit: (a) he is now aged 72; (b) he receives a Commonwealth pension on account of ill health (evidence of which was furnished in the form of a medical certificate); (c) he supplements this pension by only small weekly amounts (ranging between $50 and $100), earned through providing legal advice on a part-time basis to members of the Lebanese community, particularly in the Lakemba area; (d) he owes a substantial sum ($80,243.82 as at 3 November 2010) to the ATO; and (e) in a letter to him dated 22 December 2010, his trustee in bankruptcy stated that on account of his financial situation he was not currently liable to make any compulsory contributions to his estate.

28 Mr Walsh further pointed out that the legal practitioner admitted his wrongdoing in his affidavit and that except for a caution administered in 2009, no disciplinary action had been taken against him.

29 We sought guidance from the parties' representatives as to the approach to penalties taken in previous decisions relating to misconduct such as occurred in this case. We were referred to the first four of the five cases listed above at [23].

30 Law Society of New South Wales v Gillroy [2010] NSWADT 232 is the only case within this group in which the order made against a respondent practitioner by way of penalty was that of a reprimand alone. The case involved two disciplinary applications, which were heard jointly. The two respondents (Mr Gillroy and Ms Hendy) were the solicitor directors of an incorporated legal practice. Due to a significant deterioration in the financial situation of their practice, they ceased to draw income for themselves from the funds of the practice and they deferred making their statutory payments of group tax, GST and superannuation contributions. At an early stage, they commenced negotiations with the ATO in relation to their failure to make these payments on time. They also notified their employees that they were not paying superannuation contributions. Their evidence was that they believed these measures to be preferable to terminating the employment of some of their staff.

31 Taking into account these matters, together with a finding that the conduct of the respondents involved 'no dishonesty and no breach of obligations to the Court' (see the decision at [50]), the Tribunal held that a reprimand was a sufficient penalty to be imposed on Ms Hendy. In addition to a reprimand, it ordered that Mr Gillroy attend courses on practice management and ethics and that his practice be subject to mentoring. Among the reasons that it gave for these additional orders were that, in contrast to Ms Hendy, he had been slow to acknowledge the nature of his breach of professional obligations and to express contrition (see [33 - 38], [60 - 62]).

32 In two of the other cases to which we were referred - Council of the Law Society of New South Wales v Somerfield [2008] NSWADT 235 and Council of the Law Society of New South Wales v Nicopoulos [2011] NSWADT 84 - the Tribunal imposed a fine as well as a reprimand, and also made an order designed to ensure that the respondent solicitor became more compliant with his professional obligations with regard to financial management. But in each of these cases, the misconduct established against the respondent was not limited to failure to pay superannuation contributions. It also included breach of statutory requirements governing the handling of trust funds.

33 In Law Society of New South Wales v Bouzanis [2006] NSWADT 55, the only form of misconduct established against the respondent solicitor was that during a period of about four years he had failed to pay superannuation contributions on behalf of an employee. The evidence indicated that he knew that he was obliged to make these payments, that he had not replied to correspondence from the employee or the employee's solicitor requesting that they be made and that on one occasion he failed to make them because he 'needed the money for other things' (see the decision at [2 - 3]). Although the Tribunal accepted (see [22]) that he was of good character and was 'genuinely contrite', it concluded that a fine of significant size ($10,000) as well as a reprimand was called for.

34 In Law Society of New South Wales v Vosnakis [2007] NSWADT 42, the respondent solicitor was struck off. The Tribunal's reasons include the following observation at [52]:-

In the opinion of the Tribunal, the respondent's failure to comply with his civic obligations to make superannuation payments on behalf of his employees; to pay GST and PAYG tax at the time those obligations fell due, are of a nature encompassed by the Chief Justice's definition [in New South Wales Bar Association v. Cummins (2001) 52 NSWLR 279 at 289] of the extended meaning of 'professional misconduct'. Not only did these obligations arise in the course of the conduct of his practise, but the failure to meet these obligations in that context render the respondent not a fit and proper person to remain on the roll.

35 As Mr Boyd pointed out at the hearing, however, the respondent's misconduct in Vosnakis went well beyond failing to pay superannuation contributions. It also included failing to comply with a statutory notice from the Law Society requiring information to be provided; wilful breaches of legislation relating to the handling of trust funds; misappropriation of deposit monies; borrowing money from a client in breach of Rule 12 of the Solicitors Professional Conduct and Practice Rules; failing to document the loan or secure the interests of the client when borrowing from the client; and placing himself in a conflict of interest when borrowing from his client.

36 A feature distinguishing the present case from those which we have just discussed is that the legal practitioner claimed to have honestly believed that he was not required to pay superannuation contributions on behalf of Ms Elshab. The Law Society did not dispute this claim. Having regard to this, to his age, health and present financial circumstances (as outlined above at [27]), to what is likely to be his professional role in the future and to the approach to broadly similar facts taken by the Tribunal in Law Society of New South Wales v Gillroy [2010] NSWADT 232, we consider that the single order proposed by way of penalty in the Instrument of Consent - namely, a reprimand - is 'within the permissible range'.

37 Section 566(1) of the LP Act states that the Tribunal must order an Australian legal practitioner whom it has found to have engaged in unsatisfactory professional conduct or professional misconduct to pay costs (including costs of the Commissioner, a Council and the complainant), unless the Tribunal is satisfied that 'exceptional circumstances' exist. Since in this case no evidence disclosing 'exceptional circumstances' has been put before us, we are bound to make the costs order proposed in the Instrument of Consent.

38 The orders that we made at the hearing on 29 April 2011 are based on the foregoing considerations. They are reproduced on the cover sheet of this decision.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Administrative Decisions Tribunal.

Registrar

Decision last updated: 02 June 2011