Administrative Decisions Tribunal New South Wales

• Medium Neutral Citation: Council of the Law Society of NSW v Clapin (No 2) [2011] NSWADT 246
• Hearing dates: 22 July 2011
• Decision date: 31 October 2011
• Before: M Chesterman, Deputy President; M Riordan, Judicial Member; C Bennett, Non-judicial Member

Decision

1. The name of the Respondent is to be removed from the Roll of Local Lawyers.

2. The Respondent is to pay the costs of the Applicant of and incidental to these proceedings.

• Catchwords: Solicitor - disciplinary application - professional misconduct - consequential orders
• Legislation Cited: Legal Profession Act 1987
• Cases Cited: Council of the Law Society of New South Wales v Clapin [2011] NSWADT 83; Dupal v Law Society of New South Wales [1990] NSWCA 56; Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 656; Law Society of New South Wales v Jones, Unreported, Court of Appeal, 29 July 1978; Re Legal Practitioners Act 1970; Law Society of the Australian Capital Territory v Gates [2006] ACTSC 126; Re Melvey; Ex parte Law Society of New South Wales (1966) 85 WN (NSW) (Pt 2) 289; Merrick v Law Society [2007] EWHC 2997; [2007] All ER (D) 282; NSW Bar Association v Maddocks (Unreported, NSW Court of Appeal, 23 August 1988, BC8801576); Prothonotary v P [2003] NSWCA 320; Prothonotary v Richard (Unreported, NSW Court of Appeal, 31 July 1987, BC8701242) Prothonotary of the Supreme Court of New South Wales v Nikolaidis [2010] NSWCA 73; Smith v New South Wales Bar Association (1992) 176 CLR 256; A Solicitor v Council of the Law Society of NSW [2004] HCA 1; Veghelyi v Law Society of New South Wales, Unreported, Court of Appeal, 8 February 1995 (BC9505459); Walter v Council of Queensland Law Society Inc (1988) 62 ALJR 153
• Category: Principal judgment
• Parties: Council of the Law Society of New South Wales (Applicant); William Daniel Clapin (Respondent)
• Representation: Counsel; R Stitt QC (Applicant); T Lynch (Respondent); R J Collins (Applicant); T A Williams (Respondent)
• File Number(s): 092034

decision

Introduction

1 (M CHESTERMAN (DEPUTY PRESIDENT), M RIORDAN (JUDICIAL MEMBER), C BENNETT (NON-JUDICIAL MEMBER): This is the second decision to be delivered in these proceedings.

2 In a Disciplinary Application filed on 11 December 2009, the Council of the Law Society ('the Law Society') claimed that William Daniel Clapin, a solicitor (hereafter 'the Solicitor'), had engaged in professional misconduct. The Application set out a number of Grounds for this claim, together with lengthy and detailed Particulars.

3 The allegations contained in the Particulars chiefly concerned the Solicitor's handling of fifteen matters between 1999 and 2007, each of which arose out of the administration of a deceased estate. The principal Grounds asserted by the Law Society were (a) breaches (in some instance, pleaded as 'wilful' breaches) of statutory provisions regulating the management of trust accounts and requiring trust account statements to be issued, (b) charging excessive costs and (c) misappropriation.

4 The orders sought in the Application were:-

1. That the name of William Daniel Clapin be removed from the Roll.

2. That William Daniel Clapin pay the costs of the Law Society.

3. Such other order as the Tribunal deems fit.

5 The Solicitor filed a Reply on 4 May 2010 and an Amended Reply on 7 March 2011. In the Reply, he admitted all except one of the alleged breaches of statutory provisions, but denied that any of these breaches were wilful. He also denied overcharging, misappropriation and an allegation of misleading a named client. In the Amended Reply, he withdrew his denials of wilfulness and of overcharging, but maintained his denials of misappropriation, misleading a client and breaching a statutory provision. He also asserted that although in a number of instances he had failed to issue trust account statements on the date or in the form prescribed by the legislation, he had subsequently issued statements accounting for all funds received and disbursed.

6 The first hearing of the Application took place before us on 7 March 2011. The issues to which it related were (a) the extent to which the allegations made by the Law Society were established by the Solicitor's admissions and by the evidence; (b) which of a number of Grounds advanced by the Law Society were established; and (c) whether, and if so on which of these Grounds, the Solicitor should be found guilty of professional misconduct.

7 At that hearing, the Law Society, for whom Mr Stitt QC appeared, tendered a number of affidavits, which were admitted without objection. The Solicitor, for whom Mr Lynch of counsel appeared, did not tender any evidence. Mr Lynch also stated that his client did not contest the Law Society's claim that his conduct amounted to professional misconduct.

8 On 23 April 2011, we delivered our decision on the matters canvassed in the hearing on 7 March 2011 ( Council of the Law Society of New South Wales v Clapin [2011] NSWADT 83 - hereafter 'the principal decision').

The principal decision

9 We held in the principal decision that with some limited exceptions the evidence, when considered in conjunction with the Solicitor's admissions and his decision not to testify, established the matters alleged and particularised in the Application. The decision gave a detailed account of these matters and quoted relevant passages from the statutes and regulations governing trust accounts. It also explained our reasons for concluding (a) that most of the matters alleged were proved, (b) that with some limited exceptions the various Grounds advanced by the Law Society were established and (c) that the Solicitor had engaged in professional misconduct.

10 The following extracts from the principal decision (at [195 - 196], [206 -220], [224] and [227 - 230]) summarise our major findings and conclusions. In them, the phrases 'LP Act 1987', 'LP Act 2004', 'LP Regulation 2002' and 'LP Regulation 2005' refer respectively to the Legal Profession Act 1987, the Legal Profession Act 2004, the Legal Profession Regulation 2002 and the Legal Profession Regulation 2005:-

195 Mr Lynch did not contest Mr Stitt's contention that we were bound to conclude that the conduct admitted by the Solicitor amounted to professional misconduct. He acknowledged at the commencement of his submissions that this would be the inevitable outcome of our deliberations.

196 For reasons elaborated in the ensuing paragraphs, this is indeed our conclusion. The Solicitor's conduct would clearly be regarded as 'disgraceful and dishonourable' by reputable members of the legal profession and therefore amounted to professional misconduct at common law. In addition, we find that his numerous breaches of statutory requirements relating to the management of his trust account constituted professional misconduct under section 498(1)(a) of the LP Act 2004 and that the instances of overcharging that he admitted amounted to professional misconduct under section 498(1)(b)...

206 During a period of about eight years (from 1999 to 2007), the Solicitor extracted funds to pay his own costs and (in some instances) disbursements from no less than fifteen trust accounts without at any time observing the requirements of the relevant legislation. For withdrawals occurring before the commencement of the LP Act 2004, these requirements were referred to in section 61(3)(b) of the LP Act 1987 and set out in clause 78 of the LP Regulation 2002. For withdrawals occurring after the commencement of the LP Act 2004, they are referred to in section 261(1)(b) of that Act and set out in clause 88 of the LP Regulation 2005.

207 In some instances... the Solicitor obtained authorisation from the client to withdraw funds on account of costs. But this was not enough to relieve him of the statutory obligation to notify the client - for example, by sending an invoice - of his intention to take this step. He consistently failed to comply with this obligation.

208 All these withdrawals accordingly amounted to breaches of section 61(2) of the LP Act 1987 or of section 255(1) of the LP Act. Under section 498(1)(a) of the latter Act, they were capable of amounting to professional misconduct. In the circumstances of the present case we hold that they in fact did so.

209 Their significant effect was in each case to deprive the client of the opportunity to give consideration to, and possibly raise questions about, the scale of the costs being charged at the time when they were charged.

210 The detriment to his clients' interests thereby inflicted by the Solicitor was compounded in many cases by his failure to provide his clients with trust account statements at the times required by the legislation (i.e. by clause 77 of the LP Regulation 2002 or clause 82 of the LP Regulation 2005). Under section 498(1)(a) of the latter Act, these breaches of the Regulations were capable of amounting to professional misconduct. In the circumstances of the present case we hold that they in fact did so.

211 In some of the statements that the Solicitor did provide, he did not give sufficient details of the costs that he had withdrawn and he frequently did not acknowledge that over a period of time he had made a number of withdrawals of interim costs. In consequence, the withdrawals of significant amounts for costs was presented to clients as a fait accompli well after - in fact, sometimes years after - the withdrawals occurred. As [three specified] matters... illustrated, it was then still possible for clients to argue successfully that the amounts charged to them should be reduced. But the Solicitor's failures to provide them with full information periodically, as required by the legislation, was likely to make any challenge much more difficult for them.

212 We will mention here our acceptance of the Solicitor's assertions in his Amended Reply to the effect that in a number of matters he ultimately provided his client with a full account of moneys received and disbursed. Mr Lynch pointed out that the matters in which the Solicitor could make this claim included all those in which he admitted overcharging. We agree with Mr Lynch that this is a relevant consideration when assessing the full implications of the Solicitor's misconduct. But as we have just pointed out, any significant delay in accounting for moneys withdrawn to pay costs is likely to be detrimental to a client's interest in ensuring that the amounts charged for costs are not excessive. We note too that in Law Society of New South Wales v Carvan , Unreported, 14 May 1981 (BC8111397) and in Bolster v Law Society of New South Wales , Unreported, 20 September 1982 (BC8211696), the Court of Appeal held that solicitor cannot escape responsibility for serious breaches of their duties to their clients by showing that the clients in question did not suffer any loss. We therefore cannot attach much weight to this consideration.

213 In our judgment, the Solicitor's culpability with regard to his breaches of statutory requirements relating to trust accounts was all the greater because of three further aspects of his behaviour.

214 First, in contrast to the respondent solicitor in Carvan , it would be difficult for him, to say the least, to claim with any conviction that he was ignorant throughout the relevant period of his duty to notify his clients of any impending withdrawals from their trust account. In many of the cases outlined above - see for example [three specified matters] - he sent a costs disclosure document to the client in which the authority conferred on him to withdraw funds in order to pay costs was expressly made conditional on his raising an invoice or sending a request to the client, or was to take place in accordance with clause 88 of the LP Regulation 2005. But even if we assume that through not reading the 'small print' of these documents he remained unaware of these requirements, we are bound to rule, in line with Moffitt P's statement in Carvan , that his failure to inform himself about such an important aspect of a solicitor's duties was itself an instance of professional misconduct.

215 In dealing in this way with the question whether the Solicitor violated the statutory requirements with full awareness of their contents or because he was ignorant of them, we are rejecting a submission put by Mr Stitt. He argued that because the Solicitor chose not to give evidence in these proceedings we should infer that he was fully aware of the nature of these requirements. In disciplinary proceedings such as these, however, we should not make findings of seriously improper conduct against the respondent unless they are affirmatively established by cogent evidence. We decline to draw the inference urged upon us by Mr Stitt.

216 Secondly, the clients adversely affected by his breaches of the statutory requirements included two clients at least - Sister Tereba and Sister Paczowska - who were 'vulnerable' in the way described by Mahoney JA in Veghelyi v Law Society of New South Wales , Unreported, Court of Appeal, 8 February 1995 (BC9505459). In this context, we fully endorse two submissions advanced by Mr Stitt: (a) that the Solicitor abused the trust that they placed in him through relying on him totally to protect the interests of the Sisters and (b) that he aggravated his misconduct by obtaining their signatures to documents purporting to signify their approval of the amounts that he had withdrawn to pay his costs.

217 Thirdly, the Solicitor's breaches of the statutory requirements in fifteen separate matters were accompanied by overcharging (as later found by specialist assessors and admitted by him) in six of these matters and by an acknowledgment by him in three further matters... that he had withdrawn excessive amounts and should make a partial reimbursement. This particular aspect of his conduct demonstrated all too clearly why his breaches of the statutory requirements amounted to serious dereliction of his responsibility as a solicitor handling funds committed to him in trust.

218 It is particularly noteworthy in this context that [one of these three matters] was one of the earliest of the matters described above. Because of what happened in that matter, the Solicitor knew as early as September 2001 that when a client discovered after the event that costs had been withdrawn without proper notification an objection might be raised and he might feel compelled to deal with it by repaying part of the total amount withdrawn. He nevertheless persisted for some six years in withdrawing costs without proper notification to his clients.

219 As well as being significant in the way just outlined, the Solicitor's admitted conduct in overcharging his clients in the six matters that were referred to costs assessors amounts, as we have said, to professional misconduct under section 498(1)(b) of the LP Act 2004. Mahoney JA's judgment in Veghelyi provides ample authority for this conclusion.

220 [In] the six matters in question... the total of the amounts by which the Solicitor overcharged was the not inconsiderable sum of $52,590.08. In [a further] matter... he admitted having charged a further $1,000 contrary to the Victims Support and Rehabilitation Act 1996....

224 As to the three matters in which there was an allegation of misappropriation, we have already held... that this allegation is not established in the matter of Daude, but is established in [the matters of] Gibki and Laczny...

227 By contrast, what happened in Gibki was that the Solicitor transferred amounts totalling $1,284.20 into the Gibki estate account from a trust account of the Sisters relating to another estate. For reasons stated above at [126], we do not accept a submission by Mr Lynch that there was evidence of his being authorised to do so. In the absence of such authorisation, his conduct was patently dishonest.

228 Similar reasoning applies to the Laczny matter. As stated above at [136], [140] and [191 - 194], the Solicitor withdrew the sum of $600 from the Laczny estate, used it to pay a bill raised in the Milkow estate and never repaid it. In the absence of any authorisation, his conduct was patently dishonest.

229 Various other allegations made by the Law Society and found by us to have been established - for example, delay in accounting - might not of themselves amount to professional misconduct, but fall to be taken into consideration when assessing the overall impact of the Solicitor's misconduct.

230 For the foregoing reasons, our decision is that the Solicitor is guilty of professional misconduct...

11 With reference to paragraph [206] of this summary, we should add that in addition to the 15 matters mentioned there (each of which involved breaches of trust account regulations), there were two further matters in which the Solicitor's activities amounted to professional misconduct.

12 By way of explanation of paragraphs [216], [228] and [229], the following additional details should be noted. The two clients referred to in [216], Sister Tereba and Sister Paczowska, occupied at different times the position of Provincial Superior of the Congregation of the Sisters of the Holy Family of Nazareth. In the course of handling five separate matters pursuant to his retainer from them, the Solicitor engaged in misconduct of the kind outlined above. These matters included acting in the administration of the deceased estates of Tekla Gibki and Josephine Milkow and of an estate referred to in the Particulars as the Laczny estate.

13 The 'other allegations' to which we referred at [229] included allegations of providing false information to the executors and/or the beneficiaries of two specified estates for which he acted and providing false information to a costs assessor following an objection by one of the executors to the amount of costs that he had charged. In none of these instances, however, was it both alleged and established that the Solicitor knew that he was providing false information. Our findings, therefore, went no further than that the information provided by him was false.

14 Also included amongst these 'other allegations' was an allegation, which the Solicitor denied, of 'misleading' Sister Tereba. As we explained in the principal decision at [134 - 143] and [228], the Solicitor, after having improperly transferred the sum of $600 from the trust account of the Laczny estate into that of the Milkow estate, obtained Sister Teresa's authorisation for payment of an interim bill of costs for $600 relating to the Milkow estate by stating that this sum 'could be paid by deduction from funds held in trust'. In fact, there were no funds in the Milkow estate account, other than this amount of $600 improperly transferred from the Laczny estate. Our conclusion with regard to the Law Society's allegation that he misled Sister Tereba was as follows (in paragraph [143]):-

We also regard the statement made to Sister Tereba as obviously misleading. Although the phrase 'funds held' in the Solicitor's letter of 25 August 1999 to her could be interpreted as referring to funds held on behalf of the Sisters in some other trust account, it would evidently be assumed by a person in her position to refer specifically to funds received from the Milkow estate.

15 In the principal decision at [230], we indicated that a further hearing was required for the purpose of determining, in the light of our conclusions, whether the orders sought by the Law Society by way of penalty should be made and, if not, what other course of action we should adopt under the relevant provisions (sections 562 and 566) of the LP Act 2004.

The second hearing

16 The second hearing took place on 22 July 2011. The parties had the same representation as before.

17 At this hearing, Mr Lynch tendered correspondence, which was admitted without objection, indicating that since January 2011 the Solicitor had been taking steps to wind up his practice as a solicitor and that he wished to transfer his files and other documents into the custody of another solicitor. This correspondence also disclosed that on 16 June 2011 the Law Society Council had resolved, having regard to our findings in the principal decision, that the Solicitor was no longer a fit and proper person to hold a practising certificate, and that on 6 July 2011 it had for this reason determined to refuse to issue to him a practising certificate for the year ending 30 June 2012.

18 Mr Lynch also tendered a copy of a deed entered into on 2 October 2008 between the Solicitor and the Law Society. It related to the reimbursement by the Solicitor of costs incurred by the Society in having the affairs of the Solicitor's firm investigated and subsequently placed into receivership. Mr Lynch stated that the Solicitor had become liable to pay costs totalling $166,676.64, out of which he had paid $81,471.46 so far. We admitted this evidence on the basis that it revealed a significant financial burden that had been visited on the Solicitor in consequence of his misconduct and was therefore relevant to the question of penalty.

19 Finally, Mr Lynch tendered nine testimonials in affidavit form. Subject to some deletions occasioned by objections raised by Mr Stitt, we admitted these affidavits. We also admitted an unsworn testimonial from the chief executive officer of a former institutional client of the Solicitor.

20 We then heard oral submissions from Mr Stitt and Mr Lynch as to what orders we should make under sections 562 and 566.

21 The present decision summarises these submissions and states our conclusions with regard to them. It should be read in conjunction with the principal decision.

The Law Society's submissions

22 Mr Stitt emphasised in his submissions the broad and well-established principle that a 'primary object' of disciplinary proceedings against a legal practitioner 'is to protect members of the public from professional misconduct' ( Walter v Council of Queensland Law Society Inc (1988) 62 ALJR 153 at 157 per Mason CJ and Wilson, Deane, Toohey and Gaudron JJ). He cited the statement by Deane J (in Smith v New South Wales Bar Association (1992) 176 CLR 256 at 270) that 'disciplinary proceedings against a legal practitioner are primarily directed towards the protection of the public and not the punishment of the legal practitioner'.

23 A further statement of general principle on which Mr Stitt relied was the following passage in the judgment of Mahoney JA in Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 441-442:-

What, then, are the purposes of the orders to be made and the considerations to be taken into account? It has frequently been said that disciplinary procedures and the orders made in the course of them are directed not to the punishment of the solicitor but to the protection of the public. This, of course, is true. The protection of the public has been described as, for example, the primary purpose or a primary object of such proceedings: Walter v Council of Queensland Law Society Inc (1988) 62 ALJR 153 at 157E; 77 ALR 228 at 235; Smith v New South Wales Bar Association (1992) 176 CLR 256 at 270 per Deane J; or one of the primary objects of the proceedings and the orders made: see Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 251. In the relevant sense, the protection of the public is in my opinion not confined to the protection of the public against further default by the solicitor in question. It extends also to the protection of the public against similar defaults by other solicitors and has, in this sense, the purpose of publicly marking the seriousness of what the instant solicitor has done.

24 With specific reference to the facts of this case, Mr Stitt placed significant emphasis, as he had done at the first hearing, on the following passage in the judgment of Street CJ (with whom Reynolds and Samuels JJA concurred) in Law Society of New South Wales v Jones , Unreported, Court of Appeal, 29 July 1978:-

Reliability and integrity in the handling of trust funds are fundamental prerequisites in determining whether an individual is a fit and proper person to be entrusted with the responsibilities belonging to a solicitor. Members of the public, many of them wholly inexperienced and unskilled in matters of business or of law, inevitably must put great faith and trust in the honesty of solicitors in the handling of moneys on their behalf. The Court must ensure that this trust is not misplaced.

25 Mr Stitt argued that this passage was particularly relevant to our assessment of the Solicitor's misconduct in the course of his retainer by the Congregation of the Sisters of the Holy Family of Nazareth. He referred to the uncontested evidence from Sister Tereba and Sister Paczowska (outlined in the principal decision at [97 - 99]) that, having no qualifications or experience in legal or accounting matters, they relied wholly upon him to act for the Congregation and protect its interests and signed every document that he placed before them without raising any queries about it.

26 The standards of conduct laid down by Street CJ were also important, Mr Stitt submitted, when considering (a) the other features of the Solicitor's conduct identified in the passages just quoted from the principal decision and (b) the provision by him of false information to a costs assessor (as to which see above at [12]).

27 According to Mr Stitt, a further factor of prime importance was that the Solicitor had chosen not to testify in these proceedings. In consequence, no explanation, apology or evidence by way of exculpation of his misconduct had been placed before the Tribunal. It was clear on the authorities, Mr Stitt maintained, that while respondent practitioners in proceedings such as these were under no legal obligation to give evidence, it was incumbent on them to assist relevant authorities to obtain relevant information about their conduct.

28 In pressing his submission that for the foregoing reasons the only appropriate sanction in this case was an order removing the Solicitor's name from the Roll, Mr Stitt relied primarily on the judgments of Kirby P and of Handley JA (with whom Priestley JA agreed) in Dupal v Law Society of New South Wales [1990] NSWCA 56. In that case, the Legal Profession Disciplinary Tribunal found that the respondent solicitor had misappropriated funds entrusted to him by his sister and had wilfully contravened statutory provisions broadly corresponding to sections 255 and 264 of the LP Act 2004. By majority, it ordered that his name be removed from the Roll. On appeal by him, the Court of Appeal confirmed both the Tribunal's findings regarding his conduct and its order that he should be struck off.

29 At pp 2 - 3, Kirby P stated:-

The result is that in both of the cases complained of, the Society has shown misuse by the appellant of the moneys received by him on behalf of other persons. What follows? The answer to that question takes me back to the observations with which I began these reasons. Such a finding ordinarily requires removal from the roll. The research of neither counsel before the Court could produce a single case in which, following a finding of misappropriation of trust funds or wilful contravention of s41(1) of the Act [this was the equivalent to section 255(1) of the LP Act 2004], the Court had not proceeded to remove the name of the practitioner concerned from the roll of practitioners. Properly, after judgment was reserved, counsel for the Law Society, following further enquiries, drew to the notice of the Court a decision of the Solicitor's Statutory Committee in the case of Colin Water Peck, unreported, 23 April 1981....

I regard to the decision in Peck, which is not a decision of this Court, as wholly exceptional. True, each case must depend upon its unique facts. But for the reasons which I have stated, the normal consequence of the misuse of entrusted funds by a solicitor, and a finding of wilful breaches of the statutory prohibition in that regard, is removal of the name of the solicitor from the roll. There is no reason why that consequence should not follow in the present case. To the extent that Peck suggests otherwise, I dissent from its holding.

30 The relevant passage from Handley JA's judgment is at p 12:-

This Court would be departing from a long course of authority if it were to allow the appeal and substitute a period of suspension for the order of the Tribunal removing the appellant from the roll. Counsel were not able to refer us to any case where a solicitor found guilty of misappropriation or wilful contraventions of s41(1) has not been struck off the roll. Any decision to the contrary would signal to the profession and the community that this Court was no longer insisting on solicitors maintaining the highest standards of personal honesty and integrity in their dealings with clients and the public and in the handling of monies entrusted to their charge. The maintenance of those standards and the public interest require, in my judgment, that this appeal be dismissed. It is well established that the jurisdiction being exercised in this case is not penal but disciplinary and that it must be exercised for the benefit of the public. Sympathy for the appellant and for the tragedy that he has brought on himself and his family by his inability to live up to the high standards which this Court and the profession demand of solicitors cannot be allowed to deflect this Court from doing its duty.

31 Mr Stitt's contention was that these statements of principle, relating directly to the conduct alleged and proved against the Solicitor, made it clear that he was not a fit and proper person to remain on the Roll and should therefore be struck off.

32 With regard to the evidence tendered by Mr Lynch regarding the Law Society's refusal of the Solicitor's application to renew his practising certificate, Mr Stitt submitted that it was quite appropriate for the Society to act in this way. It was not, he said, trying to pre-empt the Tribunal's decision on penalty, since it was well established in the case law that the grounds for cancelling or refusing to renew a practising certificate differed significantly from the grounds for striking off a legal practitioner.

33 Finally, Mr Stitt put forward two submissions relating to the affidavits that Mr Lynch had tendered, attesting to the Solicitor's integrity and good character. The first was that the opinions of any referee could not supplant those formed by the Tribunal. The second was that according to the terms of the affidavits some of the deponents had not read the principal decision. They stated only that they were aware of the allegations made by the Law Society. This, according to Mr Stitt, was not enough to apprise them of the true nature and significance of the Solicitor's misconduct.

34 In support of these submissions, Mr Stitt relied on a short passage in the judgment of Griffiths CJ in Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 656 at 677 and a rather longer discussion of the value of testimonials in the judgment of the Court of Appeal in Re Melvey; Ex parte Law Society of New South Wales (1966) 85 WN (NSW) (Pt 2) 289 at 298-299. Since the principles stated in these passages are well established and were not contested by Mr Lynch, we will not quote from them here.

The Solicitor's submissions

35 Mr Lynch argued that although the Solicitor's misconduct was of a serious nature, it was insufficient to establish affirmatively that he was permanently unfit to practise, and that instead of ordering removal of his name from the Roll we should make orders suspending his entitlement to practise for a significant period of time.

36 Mr Lynch made a number of submissions referring specifically to the major instances of misconduct that were alleged and proved.

37 He pointed out that while this misconduct related to the Solicitor's handling of as many as 17 files, the investigator appointed by the Society had examined a number of other files without coming across any evidence of further misconduct. Accordingly, there were no grounds for inferring that the proven misconduct was only part of a wider range of instances.

38 As to the relatively numerous contraventions of statutory provisions applying to trust accounts, Mr Lynch claimed that they were a consequence of 'incomprehension' by the Solicitor of what these provisions required him to do. In so far as in a number of matters the contravention took the form of failing to issue trust accounts at stipulated times, the Solicitor usually remedied the situation by issuing a statement at the conclusion of the matter.

39 With regard to the instances of overcharging, Mr Lynch pointed out that there were only seven of these (including the matter in which the fees charged contravened the Victims Support and Rehabilitation Act 1996) and that in each of them the Solicitor did ultimately disclose the amount that he had charged. Furthermore, in the matter, described in the principal decision at [174 - 190] and mentioned above at [12], in which following a challenge by his client to the amount of fees initially charged he had engaged a costs assessor, he had substantially reduced this amount, to the satisfaction of the client.

40 Mr Lynch's submission relating to the ground of misappropriation was that it had been found in only two matters and that the amounts involved ($1,284.20 and $600) were comparatively small.

41 In support of these submissions, Mr Lynch relied on the judgment of the Supreme Court of the Australian Capital Territory in Re Legal Practitioners Act 1970; Law Society of the Australian Capital Territory v Gates [2006] ACTSC 126. This comprised brief reasons, given ex tempore by Higgins CJ with the agreement of Crispin and Connolly JJ, in a case in which the respondent solicitor admitted 'a persistent and egregious failure to comply with trust account regulations, and, more importantly, to properly deal with trust account funds'. The Chief Justice described this failure as 'both wilful and serious as well as being persistent'. He referred, however, to the following matters 'in mitigation': (a) the respondent had suffered ill health; (b) he was 'generally of good character'; (c) he had displayed 'competence in the performance of legal work': (d) no 'defalcation, dishonesty or failure to advance his clients' interests' had been alleged; and (e) the respondent had been 'candid and forthcoming concerning his shortcomings'. The Court's conclusion, stated without discussion of relevant authorities, was that there should be a declaration that the respondent had engaged in professional misconduct and that his right to practise in the Australian Capital Territory should be suspended, initially for 12 months and thereafter until such time as he had paid the costs of the proceedings against him.

42 Mr Lynch relied also on the decision of the Queen's Bench Division, Administrative Court, in Merrick v Law Society [2007] EWHC 2997; [2007] All ER (D) 282. Here the respondent solicitor instituted proceedings for damages on behalf of a client and obtained a legal aid certificate relating to his costs. Having received an amount in settlement of the proceedings, he transferred part of it ( 10,000) into his office account on account of costs. He did this with the client's consent, but it was prohibited by legal aid legislation. A solicitor's disciplinary tribunal, having found that this was 'conduct unbefitting a solicitor', suspended him from practice for 12 months and ordered that he pay costs totalling 45,000. The respondent was 67 years old. He had been in practice for 42 years and had an unblemished record.

43 In an appeal instituted by the respondent, the Court upheld the order of suspension, but set aside the costs order. Gross J, with whom Thomas LJ agreed, said that the arguments put in support of the appeal required 'anxious consideration', because this was 'a first offence in a long career', no dishonesty was alleged and the 'practical effect of the suspension' was to bring to an end the respondent's professional career 'with obvious consequences for his livelihood'. His Honour also described the 'sentence' as 'severe'. But he concluded that due to 'the gravity of this misconduct', which involved 'the improper utilisation of client money from the sacrosanct client account', and to the 'damage done by such conduct to the reputation of the solicitor's profession', there were no grounds for interfering with the sanction imposed by the tribunal. He stated also that 'the absence of dishonesty does not render the sanction inappropriate; had there been dishonesty, the overwhelming likelihood is that Mr Merrick would have been struck off'.

44 Mr Lynch referred to the following aspects of the Solicitor's personal circumstances: he was 75 years old; he had been admitted more than 42 years ago; he had practised with 'complete integrity' for many years; and to strike him off would accordingly involve substantial and undeserved ignominy.

45 In response to Mr Stitt's arguments stemming from the fact that the Solicitor had chosen not to testify, Mr Lynch contended that he had co-operated throughout with the investigations of his practice that the Law Society had set in train and had admitted from the outset that his conduct amounted to professional misconduct.

46 Finally, Mr Lynch argued that the Law Society itself, through not taking steps until mid-2011 to prevent the Solicitor continuing in practice, had demonstrated that it did not believe his conduct to warrant removal of his name from the Roll. This stance on the part of the Law Society, he claimed, should be treated as an acknowledgment, to which we should attach significant weight, that suspension of his right to practise for a significant period was a sufficient and appropriate sanction.

47 It was pointed out to Mr Lynch from the Bench that the Law Society's change of attitude on this question may have been due to the fact that the Solicitor did not admit the allegations of overcharging until March 2011. Mr Lynch's response was that this admission showed the Solicitor to have been gaining some insight into the nature of his past conduct, and that its timing did not affect the contention that the Society did not consider a striking off order to be necessary in this case.

Our conclusions

48 In our opinion, the findings underlying our determination of professional misconduct on the part of the Solicitor require further findings to be made against him, even after the evidence tendered and arguments advanced by Mr Lynch have been taken into account. These are that as a matter of probability he must be regarded as 'permanently unfit to practise' and that accordingly an order removing his name from the Roll must be made.

49 This formulation of the criterion to be applied when deciding whether a striking off order should be made appears in a number of Court of Appeal decisions: for example, Prothonotary v Richard (Unreported, 31 July 1987, BC8701242), NSW Bar Association v Maddocks (Unreported, 23 August 1988, BC8801576) and Prothonotary v P [2003] NSWCA 320 at [17(2)].

50 We take into account also that, as the High Court stated in A Solicitor v Council of the Law Society of NSW [2004] HCA 1 at [21], when determining whether a striking off order should be made against a legal practitioner, the question of his or her fitness to practise must be determined at the present time, not at some anterior point of time.

51 The features of the Solicitor's misconduct to which we attach particular weight in reaching these conclusions may be summarised as follows.

52 His misconduct was not limited to a single instance of improper behaviour, or indeed to just a small number of instances. Instead, it embraced a course of conduct on his part lasting for about eight years (from 1999 to 2007) and involving his management of funds in no less than 17 trust accounts. This factor of itself distinguishes the present case from the second of the two authorities on which Mr Lynch relied: i.e., Merrick v Law Society [2007] EWHC 2997; [2007] All ER (D) 282.

53 At first sight, the Solicitor's practice of withdrawing amounts from trust accounts in payment of his costs without notifying his clients might appear to have involved little more than technical breaches of trust account regulations, particularly in those instances where the client had signed a general authority permitting such withdrawals. But as we pointed out in the principal decision at [218], he maintained this practice even though the possibility that a client might have good grounds for contesting the amount that he charged was brought to his notice as early as September 2001. This aspect of the evidence, we should add, provides a significant counter to Mr Lynch's submission, referred to above at [38], that the Solicitor's breaches of trust account requirements were due to 'incomprehension'.

54 As we said in the principal decision at [216], the clients whom he treated in this fashion included at least two - Sister Tereba and Sister Paczowska - who were 'vulnerable' in the way described by Mahoney JA in Veghelyi v Law Society of New South Wales . His manifest betrayals of the trust that these two clients reposed in him included one of the six instances of overcharging that he admitted, both of the instances of misappropriation (denied by him but found by us to be proved) and his misleading of Sister Tereba (also denied by him but found by us to be proved).

55 Furthermore, as we observed in the principal decision at [220], the total of the amounts by which the Solicitor overcharged was the substantial sum of $53,590.08 (including the sum of $1,000 charged in contravention of the Victims Support and Rehabilitation Act 1996).

56 In assessing the significance of the Solicitor's decision not to testify, we have obtained useful guidance from the judgment of the Court of Appeal in Prothonotary of the Supreme Court of New South Wales v Nikolaidis [2010] NSWCA 73. The Court in this case granted declarations to the effect that the respondent solicitor was guilty of professional misconduct and that he was not a fit and proper person to remain on the Roll of Local Lawyers. It therefore ordered that his name be removed from the Roll.

57 In its joint judgment at [22], the Court (Allsop P, McColl and Young JJA) described the relevant conduct of the respondent in the following terms: '[he] engaged in a deliberate and planned course of action involving third parties to deceive a costs assessor appointed by the Supreme Court in order to advance his position against a former client.' At [23], it pointed out that this conduct occurred over ten years earlier and asked: 'Should the Court take into account the effluxion of time?' In partial answer to this question, it stated as follows at [25]:-

25 In circumstances where the respondent chooses not to come forward to assist by giving evidence in the disciplinary proceeding, the failure to provide an exculpatory statement or explanation means that inferences from proved facts can be drawn more safely because the defendant has failed to give any explanation of matters peculiarly within his knowledge: Azzopardi v The Queen [2001] HCA 25; 205 CLR 50; Weissensteiner v The Queen [1993] HCA 65; 178 CLR 217; [ Council of the New South Wales Bar Association v Power [2008] NSWCA 135 at 463-467 [20]-[29]; and Council of the New South Wales Bar Association v Einfeld [2009] NSWCA 255 at [23]]. Similarly, in the context of assessing whether reformation may or may not have occurred, in circumstances where the respondent does not give evidence, it is difficult to see how it can be concluded that the reflection upon the underlying character of the respondent by the commission of a planned offence of dishonesty does not reflect on him over ten years later.

58 In these proceedings, the impact of the Solicitor's decision not to testify also has two distinct aspects.

59 First, because he 'failed to give any explanation of matters peculiarly within his knowledge', we were bound in the principal decision to put to one side the possibility that presumptively improper conduct on his part could and in fact should have been characterised as innocent. We could not conclude, for example, that his overcharging for costs in any or all of the seven of the matters outlined in the Particulars was attributable to honest and excusable errors committed by him or by members of the staff of his firm.

60 Secondly, there is now insufficient evidentiary material before us to support a finding that 'reformation' may have occurred since the period, ending about four years ago, during which the misconduct of the Solicitor occurred. As Mr Stitt pointed out, the Solicitor has not given any evidence to demonstrate that he genuinely understands the reasons why his actions amounted to professional misconduct, or that he regrets it and wishes to apologise for it. Although, as Mr Lynch contended (see [35] above) he might have co-operated with the investigations of his practice, we do not discern any admission of professional misconduct, or of alleged matters that would clearly constitute misconduct, in the Reply that he initially filed. It was only in his Amended Reply that he admitted overcharging or that some of his breaches of trust account requirements were wilful.

61 In making these observations, we have taken into consideration the contents of the ten testimonials that Mr Lynch tendered at the second hearing (see [19] above).

62 Of the nine testimonials in affidavit form, one was provided by a judge, another by a retired judge, three by solicitors, two by barristers and one by an accountant. Contrary to a submission made by Mr Stitt, all but one of the deponents stated that they had read the principal decision. All of them stated that they believed the Solicitor to be a reliable and hard-working person of integrity, honesty and good character. Most of them used terms such as 'surprised', 'shocked' or 'distressed' when learning of the findings made in that decision and stated that they regarded the conduct described in those findings as contrary to their estimation of his character.

63 These testimonials also included statements to the following effect: (a) that the Solicitor was 'disappointed' at the principal decision, but 'accepted' it 'without bitterness or rancour'; (b) that he was 'devastated by the professional findings against him'; and (c) that he was 'seriously embarrassed and contrite about the matters which have given rise to these disciplinary proceedings'.

64 Three of the testimonials contained statements, based on personal observation, to the effect that because the Solicitor appeared at times to be over-burdened with work on behalf of his clients, he was inclined to allow insufficient time for tasks such as assessing the costs that he should charge for his work or ensuring that other administrative matters, such as book-keeping, were attended to. It was also suggested in one of these testimonials that because the Solicitor may have been 'inefficient and slow' he may have spent more time than was necessary undertaking work on behalf of an estate and 'may have charged for all that'.

65 Three of the sworn testimonials and the single unsworn testimonial contained affirmations by the maker of them that even after becoming aware of the findings against the Solicitor they would employ him as their solicitor, recommend him to someone else as a solicitor or accept a brief from him.

66 The unsworn testimonial was from Mr Kevin Rocks, the chief executive officer of a religious organisation called Holy Family Services. Although the Solicitor admitted to wilful breaches of trust account provisions in acting for this organisation and although Mr Rocks regarded his work to have been 'careless and possibly sloppy', Mr Rocks stated in an affidavit tendered by the Law Society at the first hearing that he still retained the Solicitor to provide conveyancing to Holy Family Services (see the principal decision at [153]). In his testimonial tendered by Mr Lynch at the second hearing, Mr Rocks stated that he would continue to retain the Solicitor if the Solicitor were permitted to continue in practice.

67 Testimonials such as these require careful consideration, particularly in view of the principle that the criterion that we must apply in our decision regarding a striking off order is whether as a matter of probability the Solicitor must, at the present time, be regarded as 'permanently unfit to practise'. But we are bound to point out that in cases such as these a striking off order is often made despite character evidence suggesting that it is not warranted.

68 This was the situation, for instance, in two of the authorities to which we have referred. In Re Melvey; Ex parte Law Society of New South Wales (1966) 85 WN (NSW) (Pt 2) 289, the Court of Appeal struck off the respondent solicitor even though he had filed 'over a hundred affidavits', including thirty sworn by barristers or solicitors, in which 'the trend' was that he was 'a hard-working man, full of human sympathy and goodwill, and one who did not spare himself in his clients' interests and who was respected and liked by all' (see the judgment at 298). The same order was made in Dupal v Law Society of New South Wales [1990] NSWCA 56, even though there was 'a considerable body of impressive character evidence from practitioners of good standing and eminence who had personal knowledge of, and contact with the appellant while he was in active practice at Muswellbrook' (see the judgment of Handley JA at p 11).

69 We should add specifically that the suggested explanations given in some of the testimonials for the Solicitor's improper practices with regard to assessing costs (see [59] above) cannot in our opinion carry any significant weight, due to the absence of any testimony from him on these matters. The same must apply to the statement in one testimonial that he appeared to be 'contrite'.

70 We are not impressed by Mr Lynch's submission based on the fact that the allegations contained in the Particulars related to 'only' 17 files handled by the Solicitor (see [37] above) or by his submission that because the Law Society did not take steps until mid-2011 to prevent the Solicitor continuing in practice, it did not believe that his conduct warranted removal of his name from the Roll (see [46]). As to the latter submission, it is highly significant, as we pointed out at the hearing, that the Solicitor did not admit the serious matter of overcharging until March 2011.

71 Undoubtedly, it is distressing that the professional career of a person who practised for many years without a stain on his record should be brought to an end by an order that his name be removed from the Roll. But for the foregoing reasons, we have determined that this is the order that we must make.

72 Under section 566 of the LP Act 2004, the Tribunal is obliged to make a costs order against a legal practitioner whom it has found guilty of professional misconduct, unless 'exceptional circumstances' exist. No such circumstances have been alleged or established. We accordingly order that the Solicitor pay the costs of the Law Society of and incidental to these proceedings.

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Decision last updated: 14 November 2011