Administrative Decisions Tribunal New South Wales

• Medium Neutral Citation: Council of the New South Wales Bar Association v Miller [2011] NSWADT 297
• Hearing dates: 18 and 19 August 2011
• Decision date: 14 December 2011
• Jurisdiction: Legal Services Division
• Before: M Chesterman, Deputy President; L Robberds QC, Judicial Member; C Bennett, Non-judicial Member

Decision

1. The Respondent is guilty of professional misconduct under Ground 1 of the Application in file 112004.

2. The Respondent is guilty of unsatisfactory professional conduct under Ground 2 of the Application in file 112004.

3. The Respondent is guilty of professional misconduct under each Part of the Application in file 112008.

4. The proceedings in both files are set down for further directions at 9.30 a.m. on Thursday 22 December 2011.

• Catchwords: Disciplinary application - barrister - obtaining loan from client in breach of fiduciary duties - refusal or failure to repay part of loan - negligence in providing opinion - failure to comply with notices requiring information
• Legislation Cited: Administrative Decisions Tribunal Act 1997; Administrative Decisions Tribunal Rules 1998; Duties Act 1997; Legal Profession Act 1987; Legal Profession Act 2004
• Cases Cited: Allinson v General Council of Medical Education and Registration [I894] 1 KB 750; Council of the New South Wales Bar Association v Sahade [2007] NSWCA 145; Jones v Dunkel (1959) 101 CLR 298; Heydon v NRMA Ltd (2000) 51 NSWLR 1; Kennedy v The Council of the Incorporated Law Institute of New South Wales (1939) 13 ALJ 563; Law Society of New South Wales v Grech [2006] NSWADT 73; Law Society of New South Wales v Harvey [1976] 2 NSWLR 154; Law Society of New South Wales v Hussein [2010] NSWADT 182; Law Society of New South Wales v Moulton [1981] 2 NSWLR 736; Legal Services Commissioner v Keddies [2011] NSWADT 114; New South Wales Bar Association v Cummins (2001) 52 NSWLR 279; NSW Bar Association v Bland [2010] NSWADT 34; Walsh v Law Society of New South Wales (1999) 198 CLR 73; Ziems v Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279
• Category: Principal judgment
• Parties: Council of the New South Wales Bar Association (Applicant); James Mathew Miller (Respondent)
• Representation: Counsel; K Williams (Applicant); Eakin McCaffery Cox (Applicant); No appearance (Respondent)
• File Number(s): 112004, 112008

DECISION

Introduction

1 (M CHESTERMAN (DEPUTY PRESIDENT), L ROBBERDS QC (JUDICIAL MEMBER), C BENNETT (NON-JUDICIAL MEMBER)): This decision relates to two disciplinary Applications brought by the Council of the New South Wales Bar Association ('the Bar Association') against the Respondent, James Mathew Miller, an Australian Lawyer within the meaning of the Legal Profession Act 2004 ('the LP Act').

2 The Respondent was admitted to the Supreme Court Roll of Legal Practitioners (as it then was) on 14 December 2001 and obtained a barrister's practising certificate on 15 February 2002. He held a current local practising certificate until it was suspended with effect from midnight on 6 April 2009. It was subsequently cancelled with effect from midnight on 1 May 2009.

3 In what we will call the First Application (in file 112004), the Bar Association sought orders as follows:-

1. That, James Mathew Miller, by his conduct particularised in Ground 1, has engaged in professional misconduct.

2. Further, or in the alternative, that James Mathew Miller, by his conduct particularised in Ground 1, has engaged in unsatisfactory professional conduct under s 496 of the Legal Profession Act 2004 (NSW).

3. Further, that James Mathew Miller, by his conduct particularised in Ground 2, has engaged in professional misconduct.

4. Further, or in the alternative, that James Mathew Miller, by his conduct particularised in Ground 2, has engaged in unsatisfactory professional conduct under s 496 of the Legal Profession Act 2004 (NSW).

5. Further, or in the alternative, that James Mathew Miller, by the whole of his conduct particularised in Grounds I and 2, has engaged in professional misconduct.

6. Such further or other orders pursuant to s. 562(2)(a), (c) and (e) and s.562(4)(a) and (j) of the Legal Profession Act 2004 (NSW) as the Tribunal thinks fit.

7. The respondent James Mathew Miller pay the applicant's costs of the proceedings.

4 As just indicated, two Grounds were advanced in this Application. All of the conduct of the Respondent particularised in it occurred during the period when he held a barrister's practising certificate.

5 Ground 1 involved his request for, acceptance of and failure to repay a loan of $150,000 from a person for whom he then acted in court proceedings. Ground 2 involved a failure by him to advise, and the provision of negligent advice, in relation to stamp duty payable by the same person.

6 On the date when the First Application was filed (23 February 2011), the Bar Association also filed an affidavit sworn by its solicitor in these proceedings, Ms R MacDougal, on 23 February 2011; an affidavit sworn by Mr Peter Adams, a former client of the Respondent, on 14 February 2011; and an affidavit sworn by Mr David Adams, a solicitor practising in New South Wales, on 10 February 2011. Exhibited material relating to each of these affidavits was also filed.

7 In what we will call the Second Application (in file 112008), the Bar Association sought orders as follows:-

1. That, James Mathew Miller has engaged in professional misconduct.

2. That these proceedings be heard at the same time as proceedings no 112004.

3. Such orders as are provided in s. 562(2)(a)-(e) or s. 562(4)(a)-(j) of the Legal Profession Act 2004 (NSW) ("the Act") as the Tribunal thinks fit.

4. The respondent James Mathew Miller pay the applicant's costs of the proceedings.

8 This Application contained two Parts. The conduct of the Respondent particularised in Part A occurred during the period when he held a barrister's practising certificate. The conduct particularised in Part B occurred after he had ceased to hold a practising certificate. In each Part, the conduct alleged was failure to comply with a notice from the Bar Association requiring information to be provided and documents to be produced.

9 On the date when the Second Application was filed (4 April 2011), the Bar Association also filed an affidavit sworn on the same day by Ms MacDougal, together with exhibited material.

10 The Particulars to both Applications are set out below.

11 The Respondent did not file a Reply to either Application or any evidence. He did not appear at a directions hearing on 6 April 2011 relating to the First Application, or at either of two directions hearings, held on 4 May 2011 and 1 June 2011, relating to both Applications.

12 On 4 May 2011, the Tribunal directed that the two Applications be listed for hearing together. On 1 June 2011, it set them down for hearing on 18 and 19 August 2011.

13 At the hearing of the Applications, Ms Williams of Counsel appeared for the Bar Association. There was no appearance by or on behalf of the Respondent.

14 At the commencement of the hearing, Ms Williams tendered, and we admitted, the four affidavits that we have already described, together with four further affidavits.

15 Three of these further affidavits related to the First Application. They were sworn as follows: by Mr A Saad, a licensed commercial agent, on 24 March 2011; by Mr Peter Adams on 15 August 2011; and by Ms MacDougal on 18 August 2011. The fourth affidavit, relating to the Second Application, was sworn by Mr Saad on 20 April 2011. Material was exhibited to each of Mr Saad's affidavits.

16 It is convenient to record here that we admitted just one more item of documentary evidence in these proceedings. This was a copy of a Statement of Claim in the District Court of NSW at Sydney, filed on 24 May 2007 by the Deputy Commissioner of Taxation against the Respondent.

The Bar Association's application for leave to proceed ex parte on both Applications

17 Ms Williams submitted that relevant parts of this evidence showed that with regard to both Applications the Bar Association had complied with the provisions of the Administrative Decisions Tribunal Rules 1998 ('the ADT Rules') relating to cases when there was no appearance by a respondent to a disciplinary application filed under the LP Act. The purpose of these provisions is to ensure that the respondent has received adequate notice both of the nature of the case being brought against him or her and of the date of the hearing.

18 Ms Williams further submitted that we should therefore hear and determine the two Applications in the absence of the Respondent.

19 Having considered this evidence, together with certain documents contained in the Registry's files and the relevant provisions of the ADT Rules, we indicated that we accepted these submissions.

20 We also granted an application made by Ms Williams for the two Applications to be heard jointly and for evidence in each one of them to be evidence in the other.

21 It is appropriate that we record here our reasons for making these decisions at the hearing.

Relevant statutory provisions

22 Section 138 of the Administrative Decisions Tribunal Act 1997 ('the ADT Act') contains the following provisions relating to the service of documents and the giving of notices:-

138 Notices, service and lodgment of documents

(1) Service of documents and giving of notices

For the purposes of this Act, a notice or document may be given to a person (or a notice or document may be served on a person):

(a) in the case of a natural person-by:

(i) delivering it to the person personally, or

(ii) leaving it at, or by sending it by pre-paid post to, the residential or business address of the person last known to the person serving the document...

23 The relevant provisions of the ADT Rules are rules 25, 26, 27 and 29. Their use of the term 'information' instead of 'application' and their references to the Legal Profession Act 1987 show that they have not been amended to take account of the enactment of the LP Act in 2004. They state:-

25 Accompanying affidavit

(1) If an informant lodges an information with the Tribunal, the informant must at the same time lodge with the Tribunal an affidavit sworn by a competent person on the informant's behalf containing particulars that are sufficient to:

(a) identify the author of the complaint to which the information relates and describe briefly the allegations of unsatisfactory professional conduct or professional misconduct on which the complaint is based, and

(b) describe briefly the action taken by the informant to investigate the complaint, and

(c) identify:

(i) any person who investigated the complaint, or matters associated with it, and on whose evidence the informant relies, and

(ii) the reports or other documents relating to the investigation which the informant intends to tender in evidence, and

(d) establish, for the purposes of section 128 of the Legal Profession Act 1987 , that the person who is the subject of the complaint was a legal practitioner to whom Part 10 of the Legal Profession Act 1987 applies, at the time when the alleged professional misconduct, or unsatisfactory professional conduct, occurred.

(2) The informant must lodge with the information and the affidavit required by subrule (1):

(a) true copies of the reports and other documents, if any, referred to in subrule (1) (c) (ii), identified as exhibits to that affidavit, or

(b) an affidavit by the person who conducted the relevant investigation annexing copies of the reports and other documents.

26 Service of information and related documents

As soon as practicable after lodging the information with the Tribunal, the informant must serve sealed complete copies of the following documents on the legal practitioner in accordance with section 138 of the Act:

(a) the information, and

(b) any affidavit, report or other document lodged with the Tribunal under rule 25.

Note. Section 138 of the Act provides for the means by which the service of documents may be effected for the purposes of the Act.

27 Lodgment of a reply to information

(1) The legal practitioner in respect of whom an information is lodged must lodge with the Tribunal a reply to the information as required by section 167 of the Legal Profession Act 1987 within 21 days from the day on which the documents referred to in rule 26 are served.

(2) The reply must:

(a) be in or to the effect of the approved form, and

(b) traverse each allegation in the information with which the legal practitioner takes issue and must state in summary form any material facts and circumstances on which the legal practitioner relies.

(3) If the legal practitioner fails to lodge with the Tribunal a reply complying with subrule (2) within the time specified by subrule (1) or such further time as the Tribunal allows, the legal practitioner may not lead evidence on the hearing of the information in relation to any matter of which notice should have been given in a reply unless the Tribunal grants leave to do so.

29 Matter may be listed for hearing despite absence of legal practitioner

The Tribunal may list an information for hearing and may proceed to conduct a hearing, despite the legal practitioner's failure to appear, if the following matters are proved to the satisfaction of the Tribunal:

(a) that the documents referred to in rule 26 have been served on the legal practitioner,

(b) that the time limited for the lodging of a reply to the information, or any extension of that time ordered by the Tribunal, has expired,

(c) that the time specified by the Tribunal for compliance with any direction given by it to the parties has expired,

(d) that when it proceeds to conduct a hearing, sufficient notice has been given to the legal practitioner of the date of the hearing.

24 The question of joinder of proceedings such as these is dealt with in section 554 of the LP Act. It states:-

The Tribunal may, subject to its rules and the rules of procedural fairness, order the joinder of more than one disciplinary application against the same or different Australian legal practitioners.

25 A further provision of relevance is section 73(1) of the ADT Act. It states: 'The Tribunal may, subject to this Act and the rules of the Tribunal, determine its own procedure.'

The steps taken to notify the Respondent

26 The evidence that we will now summarise established to our satisfaction that, so far as the First Application is concerned, the requirements of these Tribunal rules regarding notice to the Respondent were complied with.

27 The affidavit sworn by Ms MacDougal on 23 February 2011 contained the material specified in rule 25.

28 The evidence on which we found Rule 26 and Rule 29(a) to have been satisfied is as follows. In his affidavit of 24 March 2011, Mr Saad deposed that on 1 March 2011 he effected personal service on the Respondent of the First Application, Ms MacDougal's affidavit of 23 February 2011, Mr Peter Adams' affidavit of 14 February 2011 and Mr David Adams' affidavit of 10 February 2011, together with the material exhibited to those affidavits. He stated that he understood the Respondent's last-known address to be Unit 805, 23 Shelly Street, Sydney. On arriving at these premises, he rang a buzzer for Unit 805. A man who answered said that he was James Mathew Miller and came down to the foyer to meet Mr Saad. This man took the documents in question from Mr Saad and signed a receipt confirming that he had been served with them. A copy of this receipt was annexed to Mr Saad's affidavit. The signature on it resembles a signature of the Respondent at the foot of an application for renewal of a practising certificate, which forms part of the material exhibited to Ms MacDougal's affidavit of 4 April 2011 (relating to the Second Application).

29 The requirements of paragraphs (b) and (c) of Rule 29 were satisfied for the following reasons: (1) the time specified by Rule 27(1) for lodging a Reply expired on 22 March 2011; (2) an extension to that time, granted by the Tribunal at the directions hearing on 6 April 2011, expired on 3 May 2011; and (3) no other direction specifying a time for compliance by either party was ever given.

30 The evidence on which we found Rule 29(d) to have been satisfied is contained in Ms MacDougal's affidavit of 18 August 2011. She testified as follows:-

(a) On 6 April 2011, she sent by email to the Respondent, at an address for him ('[e-mail]') that she had previously used successfully, a message advising him of the extension of time for him to file a Reply and of the date (4 May 2011) of the next directions hearing. She received no subsequent communication to the effect that this email had not been successfully transmitted.

(b) On 4 May 2011, she sent to the Respondent, both by email and by prepaid postage, a letter advising him that at the directions hearing earlier that day both the First and the Second Application had been listed for further directions on 1 June 2011 and for hearing over two days on 18 and 19 August 2011. She received no subsequent communication to the effect that the email had not been successfully transmitted, and the posted letter was not returned to her firm.

(c) On 6 June 2011, at her request, Ms Sarah-Jayne Mills, who was her personal assistant, sent by email to the Respondent, at the address '[e-mail]', a letter advising him that at the directions hearing on 1 June 2011 the Tribunal had confirmed the hearing dates of 18 and 19 August 2011 for the two Applications.

(d) Later on 6 June 2011, Ms Mills received an email message including the following passages:-

From: James Miller [[e-mail]]...

Re:... Council of the New South Wales Bar Association v Yourself...

Dear Ms Mills

I have the document. This return email may be taken as proof of service, so far as I am concerned.

Kind regards

James Miller

(e) On 16 August 2011, Ms MacDougal sent by email to the Respondent, at the address '[e-mail]', a message referring to the hearing to take place at the Tribunal on 18 and 19 August 2011. Attached were copies of the affidavit of Mr Peter Adams sworn on 15 August 2011, and of a Chronology, an Outline of Submissions and a List of Authorities prepared on behalf of the Bar Association. Later that day, Ms MacDougal received an email confirmation that her message had been successfully transmitted.

31 Ms MacDougal referred in her affidavit to other steps that she took in order to ensure that the Respondent received sufficient notice of the hearing dates, as required by Rule 29(d). It is not necessary to describe these here, as the parts of her affidavit that we have outlined demonstrate amply that he had actual notice of these dates.

32 We will now outline briefly the evidence establishing to our satisfaction that, so far as the Second Application is concerned, the requirements of the Tribunal rules regarding notice to the Respondent were complied with.

33 The affidavit sworn by Ms MacDougal on 4 April 2011 contained the material specified in rule 25.

34 The evidence on which we found Rule 26 and Rule 29(a) to have been satisfied is as follows. In his affidavit of 20 April 2011, Mr Saad deposed that on 13 April 2011 he effected personal service on the Respondent of the Second Application and Ms MacDougal's affidavit of 4 April 2011, together with the material exhibited to this affidavit. He stated that he understood the Respondent's last-known address to be Unit 805, 23 Shelly Street, Sydney. On arriving at these premises, he rang a buzzer for Unit 805. A man who answered said that he was James Mathew Miller and came down to the foyer to meet Mr Saad. This man took the documents in question from Mr Saad.

35 The requirements of paragraphs (b) and (c) of Rule 29 were satisfied for the following reasons: (1) the time specified by Rule 27(1) for lodging a Reply expired on 11 May 2011; (2) no extension to that time was granted by the Tribunal; and (3) no other direction specifying a time for compliance by either party was ever given.

36 The evidence on which we found Rule 29(d) to have been satisfied is that contained in paragraphs (b), (c) and (d) of our summary (at paragraph [30] above) of material contained in Ms MacDougal's affidavit of 18 August 2011.

37 As to the question of joinder, we were satisfied that the Respondent had due notice that the Bar Association would apply for the two Applications to be heard jointly. The Bar Association stated that it intended to make this application in paragraph 15 of its Outline of Submissions, which was served on the Respondent by email on 16 August 2011 (see paragraph [30(e)] above). We treated the application as being for an order that, to quote from the recent decision of the Tribunal in Legal Services Commissioner v Keddies [2011] NSWADT 114 at [30], 'the matters be heard at the same time rather than being an application that the matters be merged into the one proceeding'. Taking due account of section 554 of the LP Act 2004 and section 73(1) of the ADT Act, we could discern no reason, arising from considerations of procedural fairness, from the ADT Act or from the Tribunal's rules, why this approach should not be taken. As will appear from the Particulars set out below, there are significant factual connections between the two Applications.

38 We also acceded to the Bar Association's application for an order that evidence in each of the two matters should be evidence in the other. In its decision in Keddies at [52], the Tribunal said of such an order: 'If there be any doubt that s 554 of the LPA travels that far, s 73(1) of the ADT Act is available to make such an order.'

The matters alleged in Ground 1 of the First Application

39 Both of the Grounds of the First Application related to the Respondent's conduct in the course of acting as a barrister for Mr Peter Adams (hereafter 'the Client') in three related proceedings against Mr Scott Harrod in the Supreme Court during the period from August 2004 to June 2008.

40 Ground 1 was the subject of a complaint made by Mr David Adams (hereafter 'the Solicitor') to the Bar Association on 28 August 2009. The Solicitor is a brother of the Client.

41 Ground 1 is in the following terms:-

The respondent breached his fiduciary duty to his client, Mr Peter Adams ( the Client ) by requesting and accepting a loan of $150,000 from the Client in the course of acting as a barrister for the Client in Supreme Court of New South Wales proceedings 2004/2776 and 2006/2062, without:

(a) advising the Client to obtain independent legal or other advice in relation to whether to make the loan and, if so, the terms of the loan;

(b) documenting the terms of the loan or recommending to the Client that the terms should be documented; and

(c) offering or providing security for his obligation to repay the loan, or disclosing to the Client any information about his ability to repay the loan,

and by subsequently refusing or failing to repay the loan.

42 The Particulars to Ground 1 are as follows:-

1.1 The respondent was at all material times an Australian lawyer pursuant to s. 5 of the Legal Profession Act 2004 (NSW) and an Australian legal practitioner pursuant to s. 6 of that Act carrying on practice as a barrister.

1.2 At all material times, the respondent was retained by Mr David Adams, solicitor, of Adams Raves Marsh & Co (the Solicitor ) to act on behalf of the Client in Supreme Court of New South Wales proceedings 2004/2796 (the 2004 proceedings ) and Supreme Court of New South Wales proceedings 2006/2062 (the 2006 proceedings ).

1.3 On or about 21 September 2006, the respondent asked the Client for a loan of $150,000 and told the Client that:

1.3.1 he needed the loan in order to pay his tax; and

1.3.2 if he could not pay his tax, this may result in him being " struck off the Register ".

1.4 The Client apprehended that, if he did not make the requested loan, the respondent may be struck off and would then be unable to continue acting as a barrister for the Client in the 2004 proceedings and the 2006 proceedings, to the detriment of the Client.

1.5 On 22 September 2006, the Client paid $150,000 to the respondent as a loan on the following terms (the Loan ):

1.5.1 professional fees charged by the respondent for his work for the Client as a barrister would be offset against the respondent's liability to repay the Loan to the Client; and

1.5.2 if any part of the Loan remained outstanding at the end of the 2004 proceedings and the 2006 proceedings after deducting the respondent's fees as described above, the respondent would repay that outstanding amount to the Client at that time.

1.6 The respondent did not, prior to accepting the Loan or at any time, recommend that the Client obtain independent advice in relation to the Loan and the Client did not obtain any such advice.

1.7 The respondent did not, prior to accepting the Loan or at any time, record the terms of the Loan in writing or recommend to the Client that this should be done, and the terms of the Loan were not recorded in writing.

1.8 The respondent did not, prior to accepting the Loan or at any time, offer or provide any security for his obligation to repay the Loan to the Client.

1.9 The respondent did not, prior to accepting the Loan or at any time, disclose to the Client any information about his ability to repay the Loan.

1.10 In or about October 2006, the Client and two companies related to the Client, in PWS Interiors Pty Limited ACN 078 258 170 ( PWS ) and Endeavour Interiors Pty Limited ACN 085 619 021 ( Endeavour ), commenced proceedings in the Commercial List of the Supreme Court of New South Wales that were related to the subject matter of the 2004 proceedings and 2006 proceedings (the Commercial List proceedings and, collectively, the Supreme Court proceedings ).

1.11 The Supreme Court proceedings were settled in principle on or about 29 May 2008.

1.12 On 2 June 2008, the respondent sent an email to the Client in the following terms:

"I acknowledge that, of the 150k you kindly loaned me in late 2006, 70k remains outstanding and re-payable."

1.13 Since 22 September 2006, the respondent had issued only one bill for his fees in connection with the Supreme Court proceedings, being a bill dated 30 October 2006 for $9,355.50 (including GST).

1.14 The respondent did not disclose to the Client any information to support or verify his claim that the total amount of fees owing to him for his work as a barrister in relation to the Supreme Court proceedings since 22 September 2006 was $80,000.00 (including GST) (that is, further fees of $70,664.50, including GST, in addition to the fees included in bill dated 30 October 2006).

1.15 In September 2008, the Client asked the respondent to start repaying the amount of $70,000, being the amount of the Loan that the respondent had acknowledged was owing to the Client.

1.16 The respondent told the Client that he would make a payment to the Client within one week, but did not do so.

1.17 During September and October 2008, the Client left several messages for the respondent requesting repayment of the amount of $70,000, or part thereof. The respondent did not respond to these messages except by:

(a) asserting (wrongly) that the Client had said that the respondent was not required to repay the amount; and

(b) asserting (wrongly) that respondent had "volunteered to repay $70,000 "on ethical grounds".

1.18 The respondent has not repaid any part of the amount of $70,000 to the Client.

The evidence relating to the Loan

43 Most of the evidence relating to these allegations was contained in the Client's affidavit of 14 February 2011 (hereafter the 'Client's first affidavit'). The most important aspects of his evidence regarding his Loan of $150,000 to the Respondent were as follows.

44 On or about 21 September 2006, the Respondent asked him on the telephone whether he knew anyone from whom the Respondent might borrow money. The Respondent then requested that the two of them might meet. When they met at a cafe shortly afterwards, the Respondent said words to the following effect (Client's first affidavit, para 16):-

I have a problem paying my income tax. Because my girlfriend Lote, who has now left me, took out $80,000.00 from my bank account. I'm in a desperate situation because I have a tax bill due and non-payment of that tax bill could cause me to be struck off the Register. Can you lend me $150,000?

45 The Client replied:-

Look, I understand you've got a tax bill. I'll send you the $150,000.00 provided we come to some arrangement on the accounts for your fees. If there is a balance at the end of the case you can pay it back then.

46 The Respondent then said:-

If there is a balance I'll pay it back.

47 At that time, the Respondent, pursuant to instructions from the Solicitor, was acting on behalf of the Client in the 2004 proceedings and the 2006 proceedings and the Solicitor was preparing the documents required for commencement of the Commercial List proceedings. The Client believed that the total of the Respondent's fees to complete all three sets of proceedings, including fees amounting to $29,935.13 that he had already paid on invoices issued by the Respondent, would be somewhere between $80,000 and $100,000.

48 On 22 September 2006, the Client gave to the Respondent a cheque for $150,000 drawn by a company (Prewick Pty Ltd) owned by the Client. The Respondent expressed gratitude to the Client. On the same day, the cheque was debited to this company's account.

49 The Client testified that he made the Loan because he thought that it would be 'a good way of tying Miller down to complete the Supreme Court proceedings' (Client's first affidavit, para 18). He referred in this connection to a failure by the Respondent to attend a conference in April 2006 and a subsequent suggestion by the Respondent (which the Client did not follow) that other counsel should be retained.

50 In his first affidavit at para 18, the Client also gave the following reasons for making the Loan:-

At the time of this loan, I had placed a great deal of trust in Miller. He had substantial knowledge about my case, he seemed to be on top of all of the detail and he had devised what appeared to be a good strategy for the presentation and hearing of the case. I had confidence in Miller. If I had to change counsel I would have incurred extra costs and I had already invested a lot of money in the case. I was worried that, as Miller had suggested that he leave the case before, he may do so again if there was a doubt about his ability to continue due to tax problems. I was also worried that, if Miller was struck off for not paying tax (as he had told me might happen) he would not be able to continue to act for me in the case.

51 In the same paragraph, the Client also stated as follows:-

The terms of the loan were not recorded in writing and I do not recall any suggestion from Miller that it should be recorded in writing. Miller did not suggest that I should obtain any independent advice about the loan and I did not do so.

52 On 30 October 2006, the Respondent issued a further invoice for fees totalling $9,355.50. This prompted the Client to tell the Solicitor, for the first time, that he had made the Loan.

53 On 24 October 2006, the Commercial List proceedings were commenced in the Supreme Court.

54 In or about November 2006, the Respondent conveyed the opinion to the Client that the Client's opponent in the Supreme Court proceedings, Mr Scott Harrod, did not have qualifications that he had claimed to possess and had breached his fiduciary duties as a de facto company director, and would for these reasons be ordered by the Court to pay money to the Client. As stated in his first affidavit at para 21, the Client then said: 'If that's the case, then the $150,000.00 that I have made as a loan can be yours.' The Respondent replied: 'From now on, I'll definitely give you the Rolls Royce treatment.'

55 On 24 May 2007, as stated above at [16], the Deputy Commissioner of Taxation filed a Statement of Claim against the Respondent in the District Court of NSW at Sydney. The Deputy Commissioner claimed $372,450.02 in respect of unpaid income tax relating to the years of income ended 30 June 2003, 30 June 2004, 30 June 2005 and 30 June 2006, together with additional charges for late payment. Two of the four notices of assessment on which this claim was based were issued on 14 September 2006. The remaining two notices were issued on 6 and 13 October 2006 respectively.

56 On 18 September 2007, the Deputy Commissioner of Taxation obtained judgment in these District Court proceedings against the Respondent for the sum of $432,693.67 plus costs.

57 Early in May 2008, the Respondent said to the Client that he had changed his opinion about the Supreme Court proceedings, which were set down for hearing in the following month, and that it would be 'foolhardy' for the Client to continue with them. On the Respondent's advice, the Client then asked him to negotiate a settlement involving a payment by the Client to Mr Harrod and the transfer of certain land and shares from Mr Harrod to the Client.

58 On 27 May 2008, the parties to the Supreme Court proceedings agreed in principle to terms of settlement along these lines, pursuant to which the sum payable by the Client to Mr Harrod was to be $600,000. On 5 June 2008, they executed a deed of settlement and on the following day the proceedings were dismissed.

59 As explained below, a significant aspect of the advice given by the Respondent to the Client with regard to this settlement constitutes Ground 2 of the First Application.

60 On 2 June 2008, the Client had a telephone discussion with the Respondent about the Loan. Later that day, the Respondent sent him an email in the following terms:

A note to confirm our discussion today: I acknowledge that, of the 150k you kindly loaned me in late 2006, 70k remains outstanding and re-payable.

61 According to para 34 of the Client's first affidavit, he had a further discussion with the Respondent at or shortly after this date, during which he said: 'Now that I have to pay $600,000, the deal that you had that you'd get the lot is off.' The Respondent replied: 'My fees are $80,000. The balance of $70,000 will be the repayment.'

62 After the Loan was made, the Respondent did not give or offer to give any invoice for his fees to the Client except for the invoice (mentioned above) that he provided on 30 October 2006. But the Client decided not to query this amount of $80,000 quoted by the Respondent, because, as he said in para 35 of his first affidavit:-

I was concerned that Miller seemed to me to be behaving quite erratically and I didn't want to make things worse by rocking the boat. I thought that I simply might not get any more than the $70,000 and I preferred to take that and cut my losses rather than get into a dispute with Miller.

63 On 19 June 2008, a Bankruptcy Notice, based on the judgment debt obtained by the Deputy Commissioner of Taxation on 18 September 2007, was served on the Respondent.

64 During September 2008, the Client, in the course of a conversation near the building where the Respondent's chambers were located, asked the Respondent about repayment of the sum of $70,000. The Respondent said that he was due within a week to receive money from a client, which should enable him to pay part of the amount outstanding within a week. Subsequently, the Client left telephone and text messages for the Respondent reminding him of this matter, but there was no response.

65 On 9 October 2008, at the Client's request, the Solicitor sent an email message to the Respondent asking him to confirm arrangements for paying the sum of $70,000.

66 On or before 15 October 2008, the Client left a printed version of an email under the door of the Respondent's chambers. It said that the Client was 'doing it tough because of what is happening with the stock market' and that he wanted to talk to the Respondent in order to 'work out a payment scheme' that could help him, even if it involved repayments of no more than $1,000 or $2,000 per month.

67 On 15 October 2008, the Respondent replied by email in the following terms:-

I have your message and an email from David.

I should remind you that I volunteered to repay 70k of the initial advance you were kind enough to make and that I volunteered to make that repayment on ethical grounds, with you having repeatedly stated that you did not require me to repay any of initial advance. That said, I remain committed to repaying the 70k and as soon as I have capacity to begin to make good on that commitment, I will get back to you.

In the circumstances I should decline to offer further unpaid assistance with the development issues at Seal Rocks.

68 On the same day, the Client, in a reply by email to the Respondent, pointed out that it was only if Mr Harrod had been ordered to pay him money that he had declared himself willing to let the Respondent keep all of the $150,000, that after the settlement of the Supreme Court proceedings the Respondent had acknowledged his obligation to repay $70,000 and that about a month earlier the Respondent had said that he would soon repay at least part of this amount. The Respondent did not respond to this email or send any other communication to the Client.

69 On 24 November 2008, a Creditor's Petition filed by the Deputy Commissioner of Taxation was served on the Respondent. On 19 December 2008, a Sequestration Order was made against him.

70 At the time of the Client's first affidavit, the Respondent had not repaid any part of his acknowledged debt of $70,000. The Client stated in his later affidavit, sworn on 15 August 2011, that the Respondent had still not repaid the balance of $70,000 owed to him, that he had lodged a proof of this debt in the Respondent's bankruptcy and that he was unaware of the Respondent's whereabouts.

71 As already stated, the Respondent did not file a Reply or any evidence in these proceedings.

Our findings on this evidence

72 In our judgment, this evidence clearly establishes virtually all of the matters alleged and particularised in Ground 1 of the First Application.

73 As the foregoing outline shows, the Client's first affidavit contains statements confirming many of these matters. The only specific allegations that it does not expressly confirm are those set out in paragraph (c) of the Ground and restated in the following terms in paragraphs 1.8 and 1.9 of the Particulars:-

1.8 The respondent did not, prior to accepting the Loan or at any time, offer or provide any security for his obligation to repay the Loan to the Client.

1.9 The respondent did not, prior to accepting the Loan or at any time, disclose to the Client any information about his ability to repay the Loan.

74 Having regard to the Respondent's failure to testify, we consider that the omission by the Client, in the course of his detailed account of the making of the Loan, of any reference to security being provided or offered sufficiently supports a finding that Particular 1.8 (and the equivalent part of paragraph (c) of Ground 1) has been established.

75 As to Particular 1.9, the Respondent's statement to the Client, on or about 21 September 2006, that he was 'in a desperate situation' because he had 'a tax bill due' could be characterised as 'information about his ability to repay the Loan'. But this statement left it open for the Client to infer that if he granted the Respondent's request and lent him $150,000, the Respondent's financial problems would be solved. For this reason, the statement, in our judgment, conveyed a misleading impression as to the Respondent's ability to repay. He did not disclose the full scale of his very substantial liabilities for income tax, both accrued at the time of the Loan and soon to accrue.

76 The Statement of Claim filed in the following year by the Deputy Commissioner of Taxation (see [55] above) shows that at the time of the Loan the amount of income tax to which the Respondent had been assessed, just one week earlier, was $132,429.30 plus a significant sum for interest. By 13 October 2006, little more than three weeks later, he had been assessed for a further amount of $227,827.42 plus interest.

77 We draw the following inferences: (a) at the time when the Respondent asked for the Loan, he knew, at least in general terms, the scale of his indebtedness to the Deputy Commissioner of Taxation; and (b) he knew or ought to have known that his failure to warn the Client that the Loan might not be sufficient to rescue him from his financial predicament was likely to give the Client a false impression regarding his ability to repay.

78 Subject to this qualification relating to paragraph 1.9 of the Particulars and the equivalent part of paragraph (c) of Ground 1, we find that Ground 1 and the associated Particulars are established.

The Bar Association's submissions

79 The primary argument put before us by Ms Williams, both in her Outline of Submissions and orally, was that the conduct of the Respondent in relation to the Loan amounted to professional misconduct, both at common law and under section 497(1)(b) of the LP Act. In the alternative, she submitted that this conduct was unsatisfactory professional conduct under section 496.

80 With regard to the concept of professional misconduct at common law, she cited the following descriptions from leading authorities:-

(a) Conduct that 'would reasonably be regarded as disgraceful or dishonourable' by the barrister's 'professional brethren of good repute and competency': Allinson v General Council of Medical Education and Registration [I894] 1 KB 750 at 763 and New South Wales Bar Association v Cummins (2001) 52 NSWLR 279 at [36]-[66].

(b) Conduct amounting to 'grave impropriety affecting [the barrister's] professional character' and 'indicative of a failure either to understand or to practise the precepts of honesty or fair dealing in relation to the Courts, his clients or the public': Kennedy v The Council of the Incorporated Law Institute of New South Wales (1939) 13 ALJ 563 per Rich J at 92.

(c) Conduct showing 'a defect of character incompatible with membership of a self-respecting profession': Ziems v Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279;

81 She submitted further that conduct need not occur directly in the practice of law in order to constitute professional misconduct. Instead, it was sufficient if the conduct had a close connection with the practice of law or if it manifested the presence or absence of qualities that are incompatible with or essential for the practice of law. For these propositions, she relied on the judgment of Spigelman CJ in New South Wales Bar Association v Cummins (2001) 52 NSWLR 279 at [36].

82 The provision of the LP Act on which Ms Williams relied, section 497(1)(b), states:-

Professional misconduct includes...

(b) conduct of an Australian legal practitioner whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice.

83 Section 496 defines unsatisfactory professional conduct as:-

conduct of an Australian legal practitioner occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.

84 Against this background of general principle, Ms Williams claimed at paragraph 42 of her Outline of Submissions that the following particular features of the Respondent's behaviour in relation to the Loan justified its being characterised as professional misconduct:-

(a) his request for a loan from the Client, and his alluding to the possibility of being 'struck off' (with the obvious consequence that he would not be able to continue to act for the Client in the Supreme Court proceedings) if the Client did not make the loan, in circumstances where he had been acting in the proceedings for two years, the Client had trust and confidence in him and the Client would be prejudiced (or perceived that he would be prejudiced) if he had to engage new counsel;

(b) non-disclosure of his financial position when requesting the loan;

(c) his failure to take any steps to ensure that the Client's interests were protected before the loan was made by insisting that the Client obtain independent legal advice based on full disclosure of the Respondent's financial position;

(d) his conduct in accepting the loan, notwithstanding the one-sided nature of the transaction;

(e) his assertion by his email dated 15 October 2008 that he was not obliged to repay the balance of the loan, but would do so voluntarily 'on ethical grounds';

(f) his refusal by his email dated 15 October 2008 to repay the loan except 'as soon as I have the capacity to begin making good on that commitment'; and

(g) his non-disclosure in the email dated 15 October 2008 of his impending bankruptcy and consequent inability to repay the loan.

85 With reference to the Respondent's conduct in requesting and accepting the Loan without fully disclosing his financial position or ensuring that the Client obtained independent legal advise based on that full disclosure, Ms Williams relied in particular on two decisions of the Court of Appeal, Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 and Law Society of New South Wales v Moulton [1981] 2 NSWLR 736. She argued that although both of these cases involved disciplinary proceedings against solicitors, the principles stated and applied in them were directly applicable to the relevant dealings between the Respondent, a barrister, and the Client.

86 In Harvey , the conduct of the respondent solicitor included investing moneys entrusted to him by his clients in speculative ventures in which he himself had an interest that he failed to disclose. Most of the clients concerned were inexperienced in matters of investment and some of them completely lacked any understanding of these matters. Ms Williams relied on the following statement of principle contained in the Court's judgment (delivered by Street CJ) at 170-171:-

Where there is any conflict between the interest of the client and that of the solicitor, the duty of the solicitor is to act in perfect good faith and to make full disclosure of his interest. It must be a conscientious disclosure of all material circumstances, and everything known to him relating to the proposed transaction which might influence the conduct of the client or anybody from whom he might seek advice. ... A solicitor, who deals with his client while remaining his solicitor, undertakes a heavy burden. Where a solicitor discovers that continuing to act for his client will, or may, bring the interests of his client and his own interests into conflict, it will be a rare case where he should not, at least, advise his client to take independent legal advice. ...

A conflict of interest which is avoidable, and ought to be avoided, is that which arises from a deliberate proposal of the solicitor that his client deal with him. If, for example, a client seeks aid or advice from a solicitor concerning lending or borrowing, or the acquisition or disposal or dealing with assets, the solicitor will disregard his primary duty as a solicitor referred to so trenchantly by Lord Westbury, if he uses the occasion to become the party who deals with his client... Even the tender of advice to his client to have independent legal advice, although of importance, does not really overcome the objection to the solicitor having proposed, invited or encouraged the client to deal with him or his company in the proposed transaction.

87 In Moulton , the respondent solicitor systematically borrowed money from clients. In some instances, his role was that of an executor holding funds for infant beneficiaries. The only security (if any) that he provided took the form of unregistered or third mortgages over property owned by himself or members of his family. The interest that he paid was at a significantly lower rate than would normally have been paid on such loans. At no time did he suggest to any of the clients that they should obtain independent legal advice. There was no finding that he had exerted influence on any of the clients to persuade them to agree to these transactions.

88 In her submissions, Ms Williams quoted the following passage in the judgment of Hope JA (with whom Reynolds JA agreed) at 739-740:-

In cases such as the present one, it is essential to remember, indeed to emphasize, that a solicitor stands in a fiduciary relationship to his clients. If he is to have business dealings with them on his own account, and in particular if he is to borrow money from them, the requirements of the law are rigorous. The need for that rigour is obvious. Commonly to a great extent, always to some extent, the solicitor is in a position of special influence in respect of his client. Clients must be able to rely upon the professional advice of their solicitor and to place in him the fullest confidence that he will protect them and handle their affairs in their interests. Where a solicitor wishes to borrow from a client, the client must be put in a position to make free and informed decision about the proposed transaction. Since in these circumstances the interests of the client and the solicitor can and generally must conflict, the best and easiest way to achieve this result is to insist that the client have independent and informed advice. If this does not happen, a heavy burden indeed lies upon the solicitor to show that he has done everything in his power to protect the interests of his client and to ensure that the client is aware of every circumstance that is or might be relevant to his decision. If a solicitor wishes to use his client's money to finance some business he is carrying on, it is almost impossible to see how the client can be adequately protected and advised without insisting that he gets independent advice. Moreover it must be borne in mind that many clients are not able effectively to decide whether an investment is a prudent one, no matter what information is given to them, and that the greater the trust of the client in the solicitor the greater is the need for independent advice where a conflict of interest may arise.

89 Ms Williams also referred to the following passage in the judgment of Hutley JA at 758-759:-

What this solicitor would have had to do, it seems to me, was to

(a) make a full disclosure of his interests in the enterprises;

(b) make full disclosure of all prior securities to those which the lender was to receive;

(c) as he stressed the fact that his personal covenant was important to the security of the borrower, make a full disclosure of his own personal financial position;

(d) because he was married and his own financial position might at any time be radically altered by any matrimonial dispute which could involve the property of both members of the family, make a full disclosure of his wife's financial position;

(e) provide a proper independent valuation of the security;

(f) provide an explanation, intelligible to the lender, of the disadvantages which flowed from being a second or third mortgagee;

(g) provide an explanation, intelligible to the lender, in those cases, which were numerous, in which the borrower was merely a contributory mortgagee, of the disadvantage which flowed from the position of being a contributory mortgagee;

(h) provide an explanation of the disadvantages to the lender which flowed from the non-registration of the mortgage;

(i) make known to the client the comparable rates of interest obtainable in the market by lenders who were prepared to lend money on comparable terms for comparable security to that which was being offered.

Having explained all this, it would have been his duty to be satisfied that the assent was that of a person who comprehended the risks involved and did not rely simply upon the trust which, for some reason, he had managed to inspire in his clients... It goes without saying that there would be a very rare occasion in which a solicitor, using his client's money for his own enterprises, could ever satisfy these tests.

90 Two further rulings in the decision in Moulton were brought to our attention by Ms Williams. The first was that the Court treated as irrelevant the fact that, ultimately, the clients of the respondent solicitor suffered no loss (see Hope JA at 748-749). The second was that solicitors could not rely on their failure to realise that conduct of the type involved in the case was improper as a defence in proceedings for professional misconduct. On this matter, Hope JA said (at 740-741):-

A failure to understand and appreciate the care that must be taken by a solicitor who wants to make use of his trusting client's money for his own purposes would generally show an unfitness to remain on the roll. In so far as Mr Moulton's ignorance should be treated as a lack of knowledge rather than a lack of standards, it was not ignorance of some esoteric or difficult corner of the law; it was an ignorance of general principles applicable to common activities of a solicitor in which, for the most part, Mr Moulton was regularly engaged, and it was an ignorance which he took no steps to remedy.

91 An additional submission by Ms Williams relating to the Respondent's behaviour in requesting and accepting the Loan was that he thereby placed himself at risk of being unable to discharge his professional responsibilities in the Supreme Court proceedings consistently with his obligations under Rule 18 of the New South Wales Barristers' Rules, in the form that they then took. Rule 18 provided:

A barrister must not act as the mere mouthpiece of the client or of the instructing solicitor and must exercise the forensic judgements called for during the case independently, after appropriate consideration of the client's and the instructing solicitor's desires where practicable.

92 Ms Williams pointed out that the potential for a loan made by a client to a barrister to interfere with the barrister's obligation to exercise independent judgement in the conduct of proceedings is expressly recognised in the current version of the New South Wales Barristers' Rules (which commenced operation on 8 August 2011). Rule 47, which appears in a section entitled 'Independence', states:

A barrister must not receive any money or property by way of loan from any client, the relative of a client or a business entity of which a client is a director, partner or manager during the course of a retainer with that client unless the ordinary business of the client, client's relative or the business entity includes lending money.

93 Ms Williams' final contention with regard to Ground 1 of the First Application was that the Respondent's email of 15 October 2008 to the Client regarding repayment of the Loan displayed a complete failure on his part to understand his fiduciary and ethical obligations to the Client, if not also an element of dishonesty. In paragraphs 35 and 36 of her Outline of Submissions, she formulated this argument as follows:-

35. It is submitted that the substance and the tone of the Respondent's email dated 15 October 2008 shows no regard for the Client's legitimate interest in recovering the money lent to the Respondent. The Respondent's claim that he 'volunteered' to repay $70,000 'on ethical grounds' is inconsistent with his earlier email of 2 June 2008... At best, it demonstrates a complete lack of understanding by the Respondent of his fiduciary and ethical obligations to the Client. At worst, it is a dishonest attempt by the Respondent to water down and escape from the obligation to repay the balance of the $150,000 loan after deducting the fees payable to him in respect of the Supreme Court proceedings. The Client was at a disadvantage in enforcing repayment due to the lack of any written record of the terms of the loan.

36. Although it is clear from the Respondent's email of 15 October 2008 that he did not presently have the capacity to repay the $70,000, it does indicate that the Respondent will pay and implies that he expects to have the capacity to do so in the foreseeable future. It is submitted that the email was misleading insofar as the Respondent failed to mention the District Court judgment that had been entered against him by the Deputy Commissioner of Taxation on 18 September 2007 for $432,693 and the Bankruptcy Notice issued by the Deputy Commissioner of Taxation on 19 June 2008 in respect of that amount. It is reasonable to infer that notwithstanding the loan of $150,000, as at 15 October 2008, the Respondent had no means of satisfying the judgment debt in full and must have known that he was likely to be made bankrupt in the near future. This should have been disclosed in his email to the Client.

94 Ms Williams submitted that although this dishonesty did not occur directly in the course of the Respondent's legal practice, it occurred in his dealings with a former client, with whom he had entered into a transaction in breach of his fiduciary duty at a time when he was acting for the client. There was therefore, she claimed, a 'close connection' with his practice. She cited in this context the following passage from the judgment of Basten JA in Council of the New South Wales Bar Association v Sahade [2007] NSWCA 145:-

. .. wiIIingness to engage in deceptive or dishonest behaviour will generally be a matter of central relevance. Such a characteristic may be revealed by conduct in the practice of law or in conduct unrelated to the practice of law. Whatever the context of the conduct, the element of character thus revealed is likely to be relevant although if based on conduct in the practice of law, the context will usually give rise to heightened concern.

Our conclusions on Ground 1

95 In our opinion, Ms Williams' primary argument must be accepted, for the reasons (broadly speaking) that she advanced. The Respondent's conduct in relation to the Loan, as described in Ground 1 of the First Application and the accompanying Particulars, was professional misconduct at common law and under the statutory definition contained in section 497(1)(b) of the LP Act.

96 We are satisfied that the Respondent's behaviour in requesting and accepting the Loan was conduct that 'would reasonably be regarded as disgraceful or dishonourable' by his 'professional brethren of good repute and competency' ( Allinson v General Council of Medical Education and Registration [I894] 1 KB 750 at 763) and that was 'indicative of a failure either to understand or to practise the precepts of honesty or fair dealing in relation to... his clients...': Kennedy v The Council of the Incorporated Law Institute of New South Wales (1939) 13 ALJ 563 per Rich J at 92. This conclusion follows, we believe, from the Court of Appeal's strong disapproval of broadly similar breaches of fundamental duties of good faith towards clients by the respondent solicitor in Law Society of New South Wales v Moulton [1981] 2 NSWLR 736 and from the general principles stated by the Court both in that case and in Law Society of New South Wales v Harvey [1976] 2 NSWLR 154.

97 In Harvey the Court of Appeal took account of the fact that most of the clients concerned were inexperienced in matters of investment and some of them completely lacked any understanding of these matters. In some of the loan transactions dealt with in Moulton , the respondent was acting as an executor holding funds on trust for infant beneficiaries. In the present case, the Client was not, it may be assumed, 'vulnerable' in either of these ways. But the Respondent's assertion that he might be struck off if his request for the Loan was not granted, thereby leaving the Client without a barrister to continue representing him in the Supreme Court proceedings, put pressure on the Client to accede to this request. In that specific manner, the Client may be considered to have been 'vulnerable'.

98 Furthermore, we have found (see [75 - 77] above) that the Respondent must have known that by saying he was 'in a desperate situation' because he had 'a tax bill due', he conveyed a misleading impression as to his ability to repay, by virtue of the scale of his undisclosed liabilities for income tax. This statement left it open for the Client to infer that if he made the Loan, the Respondent's financial problems would be solved. A reading of the passage from Hutley JA's judgment in Moulton listing the steps that the respondent solicitor would have had to take to comply with his fiduciary duties (see [89] above) clearly demonstrates that the half-truth conveyed by the Respondent amounted to wholly inadequate disclosure of his financial situation. His Honour included the following two steps in his list:-

(c) as he stressed the fact that his personal covenant was important to the security of the borrower, make a full disclosure of his own personal financial position;

(d) because he was married and his own financial position might at any time be radically altered by any matrimonial dispute which could involve the property of both members of the family, make a full disclosure of his wife's financial position;

99 In the present case, it may be observed, the 'personal covenant' of the Respondent was not merely 'important'. It was all that was offered to the Client.

100 We agree with Ms Williams' submission that the Respondent's acceptance of the Loan created a risk that he might, in the course of the Supreme Court proceedings, act in breach of Rule 18 of the New South Wales Barristers' Rules, in the form that they then took. We also agree that it would be in clear breach of the current Rule 47. But since there was no breach of the then existing Rules, we do not attach any weight to these considerations.

101 As to Ms Williams' submissions regarding the Respondent's email of 15 October 2008, we agree that, as claimed by her in paragraph 35 of her Outline, his allegations that the Client had 'repeatedly stated' that the Loan need not be repaid to any extent and that any repayment by him would therefore be 'voluntary' constituted an attempt to 'water down and escape from' his legal obligation to repay part of it. We reach this conclusion because we are satisfied that at the time when the Respondent made these allegations he must have known that they were untrue. The principal grounds for this finding are twofold: (a) the Respondent's own acknowledgment, in his email of 2 June 2008, that he was obliged to repay $70,000; and (b) more significantly, the Client's evidence, which we accept in the absence of any testimony at all from the Respondent, that during a conversation in September 2008 the Respondent foreshadowed making a payment of part of the amount 'outstanding', following receipt of money from a client (see [64] above).

102 In paragraph 1.17 of the Particulars, these two allegations are described as having been made 'wrongly'. In the preceding two paragraphs, the conversation in September 2008 is referred to. Having regard particularly to this aspect of the context in which paragraph 1.17 is to be found, we consider that the term 'wrongly' is an appropriate one to apply to this aspect of the Respondent's conduct. We do not make the more serious finding of 'dishonesty' that Ms Williams sought in her submissions, since the Respondent did indicate in the same email that he was prepared to repay the amount of $70,000.

103 We agree also with Ms Williams that the composition and sending of the email by the Respondent had a sufficiently close connection with his practice of law to warrant being taken into account on the question whether he committed professional misconduct as alleged in Ground 1.

104 On the other hand we cannot, in determining this question, take into account Ms Williams' claim (in paragraph 36 of her Outline of Submissions) that the Respondent's email of 15 October 2008 was 'misleading' because of its failure to mention the District Court judgment and the Bankruptcy Notice that the Deputy Commissioner of Taxation had caused to be issued against him. The reason is that neither Ground 1 nor the associated Particulars contain any assertion that the email was misleading for this reason. It is well established that the only matters on which we may properly base a finding of professional misconduct are those set out in the Application. This follows from the decision of the High Court in Walsh v Law Society of New South Wales (1999) 198 CLR 73: see in particular the judgment of McHugh, Kirby and Callinan JJ at 94-95

105 This rejection of one component of the Bar Association's case against the Respondent is in no way sufficient to disturb our overall conclusion that his conduct alleged in Ground 1 (as particularised) of the Application and established by the evidence amounts to professional misconduct, both at common law and under section 497(1)(b) of the LP Act.

106 Our decision under this statutory provision is predicated on our opinion that the Respondent's conduct in relation to the Loan was conduct that, to quote from the provision, 'would justify a finding' that he is 'not a fit and proper person to engage in legal practice'. For reasons given by Basten JA in Council of the New South Wales Bar Association v Sahade [2007] NSWCA 145 at [53 - 75] (referring to the predecessor of this provision in the Legal Profession Act 1987, section 127(1)(b)), this does not mean that we have found the Respondent at the present time to be not 'fit and proper' to engage in legal practice. As his Honour explained, the purpose of this phrase in section 127(1)(b) was to describe past conduct of a legal practitioner that would constitute professional misconduct, not to frame a criterion to be applied to the current situation of a practitioner against whom disciplinary proceedings had been instituted.

107 Despite Ms Williams' alternative submission, the conduct of the Respondent in relation to the Loan could not, in our opinion, be held to constitute unsatisfactory professional conduct. His competence and his diligence - these being the matters with which section 496 is concerned - were not in issue.

The matters alleged in Ground 2 of the First Application

108 Ground 2 was the subject of a complaint made by the Solicitor to the Bar Association on 29 January 2010. It is in the following terms:-

The respondent, in the course of acting as barrister for the Client, PWS and Endeavour in the Supreme Court proceedings:

a) failed, in the course of advising the Solicitor and the Client on or about 16 May 2008 about a proposed settlement of the Supreme Court proceedings, to advise whether transfers of certain shares in PWS and Endeavour (together, the Share Transfers ) and of an interest in real property at Seal Rocks, New South Wales (the Seal Rocks property and the Property Transfer ) proposed to be made by the other party to the Supreme Court proceedings ( Harrod ) in favour of the Client as part of that settlement, would be liable to duty under the Duties Act 1997 (NSW), in circumstances where:

i) the shares the subject of the proposed Share Transfers were "dutiable property" under s 11(1)(d) and s 11(2) of the Duties Act 1997 (NSW) and were "marketable securities" within the meaning of that Act;

ii) the proposed Share Transfers were "dutiable transactions" within the meaning of s 8 of the Duties Act 1997 (NSW);

iii) under ss 12, 13 and 21 of the Duties Act 1997 (NSW), the Client (as transferee) would be liable to pay duty in respect of each proposed Share Transfer at the rate set out in s 33 of that Act based on the greater of the consideration for the Share Transfer and the unencumbered value of the

shares, subject to any applicable exemptions or concessions under Parts 6, 7 and 8 of Chapter 2 of the Act;

iv) no exemptions or concessions under Parts 6, 7 and 8 of Chapter 2 of the Duties Act 1997 (NSW) were applicable to the proposed Share Transfers;

v) the legal title to the Seal Rocks property was held by the Client and Harrod as tenants in common in equal shares;

vi) the proposed Property Transfer involved a transfer of Harrod's interest in the Seal Rocks property to the Client;

vii) the beneficial ownership of the Seal Rocks property was in dispute in the Supreme Court proceedings;

viii) the Client alleged in the Commercial List proceedings that Harrod's contribution to the purchase and development of the Seal Rocks property was limited to $64,000 and claimed a declaration that Harrod held his interest in the property on a resulting trust or constructive trust for the Client and an order that he transfer his interest to the Client for no consideration;

ix) Harrod claimed in the 2006 proceedings an order under s 66G of the Conveyancing Act 1919 (NSW) appointing a trustee and vesting the Seal Rocks property in the trustee on trust for sale, with the net sale proceeds to paid to Harrod and the Client in equal shares;

x) Harrod's interest in the Seal Rocks property was "dutiable property" within the meaning of s 11(1)(a) and s 11(1)(l) of the Duties Act 1997 (NSW);

xi) the proposed Property Transfer was a "dutiable transaction" under s 8 of the Duties Act 1997 (NSW);

xii) under ss 12 ,I3 and 21 of the Duties Act 1997 (NSW), the Client (as transferee) would be liable to pay duty in respect of the proposed Property Transfer at the applicable rate set out in s 32 of that Act based on the greater of the consideration for the Property Transfer and the unencumbered value of Harrod's interest in the Seal Rocks property, subject to any applicable exemptions or concessions under Parts 6,7 and 8 of Chapter 2 of the Act;

xiii) alternatively, if the transaction were properly characterised as a "partition" under s 30 of the Duties Act 1997 (NSW) the Client (as transferee) would be liable to pay duty on the proposed Property Transfer at the applicable rate set out in s 32 of that Act based on the greater of the amount by which the unencumbered value of the Seal Rocks property exceeded the unencumbered value of the Client's interest immediately prior to the Property Transfer and the consideration for the Property Transfer, subject to any applicable exemptions or concessions under Parts 6, 7 and 8 of the Act;

xiv) s 55 of the Duties Act I997 (NSW) provided that duty of $50.00 was payable on a transfer of dutiable property from the apparent purchaser of the property to the real purchaser if the dutiable property (or part thereof) was vested in the apparent purchaser on trust for the real purchaser and the real purchaser had provided the money for the purchase and any improvements made after the purchase;

xv) s 57 of the Duties Act 1997 (NSW) provided that duty of $50.00 was payable on a transfer of dutiable property for no consideration to a beneficiary made under and in conformity with the trusts contained in a declaration of trust;

xvi) there were no exemptions or concessions that may have been applicable to the proposed Property Transfer under the Duties Act 1997 (NSW) other than s 55 and s 57;

xvii) the terms of the proposed settlement of the Supreme Court proceedings did not include any declaration, acknowledgement or court order to the effect that Harrod held his legal interest in the Seal Rocks property on trust for the Client;

xviii) in the circumstances referred to in paragraphs (vii) to (ix) and (xvii) above, the exemptions under ss 55 and 57 of the Duties Act 1997 (NSW) would not be available and the Client would be liable to pay duty on the Property Transfer, as referred to in paragraph (xiii) above;

xix) the terms of the proposed settlement of the Supreme Court proceedings included a payment of $600,000 to be made by the Client to Harrod simultaneously with the delivery of the duly executed Share Transfers and Property Transfer to the Client, and did not specify what (if any) part of that payment represented consideration for the Share Transfer and/or the Property Transfer; and

xx) Harrod made no claim against the Client in the Supreme Court proceedings for damages or any other relief (excluding costs orders) that would involve payment of money by the Client to Harrod;

b) further, advised the Solicitor and the Client on or about 28 May 2008 that no duty was payable in respect of the proposed Share Transfers and Property Transfer, which advice was incorrect in the circumstances referred to in paragraphs (a)(i) to (xx) above;

c) further or in the alternative to (b) above, failed to advise the Solicitor and the Client during the period from about 28 May 2008 to about 5 June 2008 when drafting the terms of a deed of release between the Client, PWS, Endeavour and Harrod to give effect to the settlement of the Supreme Court proceedings that the Client would be liable to pay duty on the proposed Share Transfers and Property Transfer, which advice should have been given in the circumstances referred to in paragraphs (a)(i) to (xx) above;

d) further or in the alternative to (a) to (c) above, failed to advise the Solicitor and the Client during the period from about 16 May 2008 to about 5 June 2008 in relation to:

i) the manner in which the transactions the subject of the deed of release, Share Transfers and Property Transfer could or should be structured for the purpose of ensuring that the Client was not liable to pay duty in respect of those transactions under the Duties Act 1997 (NSW), or minimising any such duty payable by the Client;

ii) the terms of the court orders required to be made disposing of the Supreme Court proceedings in order to prevent the Client being liable to pay duty under the Duties Act 1997 (NSW) in respect of the transactions referred to above, or minimising any such duty payable by the Client;

iii) the evidence and other material that the Client would need to present to the Office of State Revenue (OSR) when submitting the deed of release, the Share Transfers and Property Transfer for stamping in order to support any submission that no duty was payable by the Client or, alternatively, that any particular exemption or concession under the Duties Act 1997 (NSW) applied;

iv) the likely prospects of success of any such submission made to the OSR on behalf of the Client; and

v) the risk that the OSR would assess the deed of release, the Share Transfers and/or Property Transfer as liable to duty under the Duties Act 1997(NSW) and, if so, the amount of duty that would be payable by the Client;

e) advised the Solicitor and the Client on 26 June 2008 that the Property Transfer was exempt from duty on the basis that it was a partition, because the Client had claimed in the Supreme Court proceedings that Harrod held his legal interest in the Seal Rocks property on trust for the Client, and that the consideration for the Property Transfer should be described in the Transfer of Land form as " $0.00: settlement of legal proceedings '' in order to avail the Client of the "partition exemption", which advice was incorrect in circumstances where:

i) in the context referred to in paragraph (a) above, the Client, PWS and Endeavour and Harrod had executed a deed of settlement ( Deed ) pursuant to which they had agreed to discontinue the Supreme Court proceedings with no order as to costs, Harrod agreed to transfer to the Client his interest in the Seal Rocks property and the shares, and the Client agreed to pay Harrod $600,000 simultaneously with delivery of the duly executed Property Transfer and Share Transfers;

ii) the recitals to the Deed recorded that Harrod disputed the claims made by the Client in the Supreme Court proceedings;

iii) the Deed did not specify what (if any) part of the $600,000 payment represented consideration for the Property Transfer and/or the Share Transfers;

iv) Harrod contended that the consideration for the Property Transfer was $600,000;

v) the Deed did not include any declaration or acknowledgement to the effect that Harrod held his legal interest in the Seal Rocks property on trust for the Client;

vi) the Supreme Court of New South Wales had made orders dismissing the Supreme Court proceedings;

vii) the Client and Harrod had consented to those orders in accordance with the Deed;

viii) the Supreme Court of New South Wales had not made any declaration or order in the Supreme Court proceedings to the effect that Harrod held his legal interest in the Seal Rocks property on trust for the Client; and

ix) the Duties Act 1997 (NSW) applied to the Property Transfer as set out in paragraphs (a)(v) to (xx) above; and

x) accordingly, the Client would be liable to pay duty on the Property Transfer.

109 The Particulars to Ground 2 are as follows:-

2.1. The respondent was at all material times an Australian legal practitioner pursuant to s 6 of the Legal Profession Act 2004 (NSW) carrying on practice as a barrister.

2.2. In April 2004, the Client commenced the 2004 proceedings claiming a declaration that Harrod held his interest the Seal Rocks property on trust for the Client to the extent that Harrod's legal interest as tenant in common exceeded 18.29% of the land value.

2.3. In April 2008, Harrod commenced the 2006 proceedings claiming an order under s 66G of the Conveyancing Act 1919 (NSW) appointing a trustee and vesting the Seal Rocks property in the trustee on trust for sale, with the net sale proceeds to paid to Harrod and the Client in equal shares.

2.4. In October 2006, the Client, PWS and Endeavour commenced the Commercial List proceedings claiming, in relation to the Seal Rocks property, a declaration that Harrod held his interest in the property on trust for the Client and an order that Harrod transfer that interest to the Client for no consideration.

2.5. The relief claimed by the Client, PWS and Endeavour against Harrod in the Commercial List proceedings also included:

2.5.1. declarations to the effect that Harrod had acted in breach of fiduciary duties owed to PWS and Endeavour;

2.5.2. declarations to the effect that Harrod had acted in breach of statutory duties owed to PWS and Endeavour;

2.5.3. orders requiring Harrod to account to each of PWS and Endeavour for any profits or benefits obtained by him in connection with the said breaches of fiduciary and statutory duties;

2.5.4. orders requiring Harrod to repay his loan accounts with PWS and Endeavour;

2.5.5. equitable damages; and

2.5.6. damages.

2.6. Harrod did not make any claim in the Supreme Court proceedings against the Client, PWS or Endeavour for damages or other relief involving payment of money by any one or more of them to Harrod (with the exception of costs orders).

2.7. At all material times, the respondent was retained by the Solicitor to act on behalf of the Client, PWS and Endeavour in the Supreme Court proceedings.

2.8. As at May 2008, the Supreme Court proceedings were listed to be heard together, commencing on 10 June 2008.

2.9. On or about 19 May 2008, the Client, on the advice of the respondent, made an offer to Harrod to settle the Supreme Court proceedings on terms that:

2.9.1. the Client would pay Harrod the sum of $600,000;

2.9.2. simultaneously with the payment of that sum, Harrod would transfer to the Client his interest in the Seal Rocks property and certain shares in PWS and Endeavour, both companies incorporated in New South Wales; and

2.9.3. the Supreme Court proceedings would be dismissed with no order as to costs (the Settlement Offer).

2.10. In giving the advice referred to in paragraph 2.9 above, the respondent failed to provide any advice to the Client or the Solicitor about whether duty would be payable on the Property Transfer or the Share Transfers under the Duties Act 1997

(NSW).

2.11. The Settlement Offer was made in writing by letter from the Solicitor to DLA Phillips Fox, the solicitors for Harrod, and was sent by facsimile on 16 or 19 May 2008 (the Settlement Letter).

2.12. The Settlement Letter was drafted by the respondent.

2.13. The Settlement Letter did not specify or propose how the sum of $600,000 to be paid by the Client to Harrod was to be apportioned between the Property Transfer, the Share Transfers and/or the settlement of the Supreme Court proceedings.

2.14. The Settlement Letter did not stipulate that no consideration was payable for the Property Transfer or the Share Transfers.

2.15. The Settlement Letter did not include or require any declaration or acknowledgment to be made or given by Harrod to the effect that he held his legal interest in the Seal Rocks property on trust for the Client or, alternatively, that the Client was the beneficial owner of the whole of the Seal Rocks property.

2.16. The court orders proposed in the Settlement Letter to dispose of the Supreme Court proceedings did not include any declaration of a trust in favour of the Client in respect of Harrod's legal interest in the Seal Rocks property.

2.17. The Settlement Offer was accepted by Harrod by letter dated 27 May 2008 from DLA Phillips Fox to the Solicitor, subject to the parties entering into a deed containing mutual releases and subject also to the Client indemnifying Harrod for any liability that Harrod may have to pay duty on the Property Transfer or the Share Transfers.

2.18. On 28 May 2008, the respondent advised the Client and the Solicitor at a conference held in the respondent's chambers that:

2.18.1. no duty was payable on the Property Transfer or the Share Transfers; and

2.18.2. further, no duty was payable by the Client on the Property Transfer on the basis that it was a "partition".

2.19. The Client agreed to the settlement of the Supreme Court proceedings on the terms proposed by Harrod, as set out in the letter of 27 May 2008 from DM Phillips Fox to the Solicitor, relying on the advice given by the respondent referred to in paragraph

2.18 above.

2.20. On or about 28 May 2008, the respondent prepared a draft deed of release to give effect to the settlement, including short minutes of order for the dismissal of the Supreme Court proceedings, which were attached to the deed of release as Schedule A.

2.21. On or about 2 June 2008, the respondent prepared a final deed of release, again including short minutes of order for the dismissal of the Supreme Court proceedings attached as Schedule A.

2.22. On or about 5 June 2008, the Client, PWS, Endeavour and Harrod each signed the deed of release in the terms prepared by the respondent on or about 2 June 2008 (the Deed).

2.23. During the period 28 May 2008 to 5 June 2008, the respondent did not provide any advice about duty in respect of the Deed, the Property Transfer, the Share Transfers, or liability of the Client to pay duty under the Duties Act 1997 (NSW) in respect of those documents or transactions, other than the advice referred to in paragraph 2.18 above.

2.24. Neither the draft deed prepared by the respondent on 28 May 2008, the final deed prepared by the respondent on 2 June 2008 nor the Deed executed on 5 June 2008 specified the consideration for the Property Transfer or the Share Transfers, or provided that no consideration was payable for those transfers.

2.25. Neither the draft deed prepared by the respondent on 28 May 2008, the final deed prepared by the respondent on 2 June 2008 nor the Deed executed on 5 June 2008 contained any declaration of trust in respect of Harrod's interest in the Seal Rocks property or any admission or acknowledgement by Harrod to the effect that he held his legal interest on trust for the Client or, alternatively, that the Client was the beneficial owner of the whole of the Seal Rocks property.

2.26. The short minutes of order contained in Schedule A to the draft deed prepared by the respondent on 28 May 2008, the final deed prepared by the respondent on 2 June 2008 and the Deed executed on 5 June 2008 did not include a declaration to the effect that Harrod held his legal interest in the Seal Rocks property on trust for the Client.

2.27. On 6 June 2008, the respondent appeared in the Supreme Court proceedings on behalf of the Client. The Court made orders by consent in accordance with the short minutes in Schedule A to the Deed dismissing each of the Supreme Court proceedings. The respondent did not seek any declaration or order to the effect that Harrod held his legal interest in the Seal Rocks property on trust for the Client.

2.28. On 25 June 2008, the Solicitor submitted to Harrod's solicitor the proposed Transfer of Land to give effect to the Property Transfer, stating the consideration as " pursuant to court order ".

2.29. On 25 June 2008, Harrod's solicitor advised the Solicitor that:

"Our preliminary view is that it is inaccurate to state the consideration as being 'pursuant to Court Order' since there is in effect no Court Order that the parties execute the documents in these terms, rather the obligation arises from the Deed entered into by the parties. It would seem to us that the consideration for the land transfer is $600,000and the consideration for the share sale transfer is $nil."

2.30. On 26 June 2008, the Solicitor sought the respondent's advice as to the consideration to be stated in the Transfer of Land.

2.31. On 26 June 2008, the respondent advised the Solicitor and the Client that:

2.31.1. the Property Transfer was exempt from duty on the basis that it was a partition, because the Client claimed in the Supreme Court proceedings that Harrod held his legal interest in the Seal Rocks property on trust for the Client; and

2.31.2. the consideration should be described in the Transfer of Land as " $0.00: settlement of legal proceedings " in order to avail the Client of the "partition exemption".

2.32. On 27 June 2008, and in reliance on the respondent's advice referred to in paragraph 2.30 above, the Solicitor submitted to Harrod's solicitor a revised Transfer of Land describing the consideration as " $0.00: settlement of legal proceedings ".

2.33. Harrod's solicitor maintained that it was not accurate to describe the consideration for the Property Transfer as " $0.00 ". The Solicitor therefore amended the Transfer of Land further to describe the consideration as " Settlement of legal proceedings ".

2.34. On 4 July 2008:

2.34.1. Harrod provided to the Client the duly executed Property Transfer and Share Transfers; and

2.34.2. the Client simultaneously paid Harrod the sum of $600,000, in accordance with the Deed.

2.35. The duly executed Property Transfer and Share Transfers described the consideration as: " Settlement of legal proceedings ".

2.36. Duty is payable on each of the Property Transfer and the Share Transfers under ss 8, 11, 12, 13, 21, 30, 32 and 33 of the Duties Act 1997 (NSW).

Relevant stamp duty legislation

110 As at May 2008, the Duties Act 1997 contained the following provisions of relevance to Ground 2:-

8 Imposition of duty on certain transactions concerning dutiable property

(1) This Chapter charges duty on:

(a) a transfer of dutiable property, and

(b) the following transactions:

(i) an agreement for the sale or transfer of dutiable property,

(ii) a declaration of trust over dutiable property,

(iii) a surrender of an interest in land in New South Wales,

(v) a vesting of dutiable property by or as a consequence of an order of a court of this or another jurisdiction, whether inside or outside Australia,

(vii) a vesting of land in New South Wales by, or expressly authorised by, statute law of this or another jurisdiction, whether inside or outside Australia,

(2) Such a transfer or transaction is a dutiable transaction for the purposes of this Act.

(3) In this Chapter:

declaration of trust means any declaration (other than by a will or testamentary instrument) that any identified property vested or to be vested in the person making the declaration is or is to be held in trust for the person or persons, or the purpose or purposes, mentioned in the declaration although the beneficial owner of the property, or the person entitled to appoint the property, may not have joined in or assented to the declaration....

transfer includes an assignment, an exchange and a buy-back of shares in accordance with Division 2 of Part 2J.1 of the Corporations Act 2001 of the Commonwealth.

11 What is "dutiable property"?

(1) Dutiable property is any of the following:

(a) land in New South Wales,...

(d) shares:

(i) in a NSW company, or

(ii) in a corporation incorporated outside Australia that are kept on the Australian register kept in New South Wales,...

(l) an interest in any dutiable property referred to in the preceding paragraphs of this section, except to the extent that:

(i) it arises as a consequence of the ownership of a unit in a unit trust scheme and is not a land use entitlement, or

(ii) it is, or is attributable to, an option over dutiable property, or

(iii) it is an interest in a marketable security, being an interest that is traded on the Sydney Futures Exchange.

(2) Despite subsection (1), the following marketable securities are not dutiable property:

(a) shares, or units in a unit trust scheme, that are quoted on the Australian Stock Exchange or a recognised stock exchange,

(b) an interest in shares, or an interest in units in a unit trust scheme, if:

(i) the shares or units are quoted on the Australian Stock Exchange or a recognised stock exchange, or

(ii) the interest is quoted on the Australian Stock Exchange or a recognised stock exchange.

12 When does a liability for duty arise?

(1) A liability for duty charged by this Chapter arises when a transfer of dutiable property occurs.

(2) However, if a transfer of dutiable property is effected by a written instrument, liability for duty charged by this Chapter arises when the instrument is first executed.

13 Who is liable to pay the duty?

Duty charged by this Chapter is payable by the transferee, unless this Chapter requires another person to pay the duty.

21 What is the "dutiable value" of dutiable property?

(1) The dutiable value of dutiable property that is subject to a dutiable transaction is the greater of:

(a) the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non-monetary consideration), and

(b) the unencumbered value of the dutiable property.

30 Partitions

(1) What is a partition?

For the purposes of this section, a partition occurs when dutiable property comprised of land in New South Wales that is held by persons jointly (as joint tenants or tenants in common) is transferred or agreed to be transferred to one or more of those persons.

(2) Single dutiable transaction

For the purposes of this section and sections 16 and 18, a partition is taken to be a single dutiable transaction.

(3) Dutiable value

The dutiable value of a partition is the greater of:

(a) the sum of the amounts by which the unencumbered value of the dutiable property transferred, or agreed to be transferred, to a person by the partition exceeds the unencumbered value of the interest held by the person in the dutiable property transferred, or agreed to be transferred, to each person by the partition immediately before the partition, and

(b) the sum of any consideration for the partition paid by any of the parties.

(4) Minimum duty

The minimum duty chargeable on a transaction that effects a partition is $10.

(5) Who is liable to pay the duty?

Duty charged by this section is payable by the persons making the partition or any one or more of them.

32 General rate

(1) The rate of duty chargeable on a dutiable transaction is as follows:...

[The rates specified here range from $1.25 to $5.50 for every $100 of dutiable value.]

(2) This rate applies unless other provision is made by this Chapter.

Note. The rates of duty chargeable on dutiable transactions in respect of marketable securities are dealt with in section 33 and section 150. Concessional rates of duty chargeable on certain dutiable transactions are dealt with in Part 6 of this Chapter.

33 Shares, units, derivatives and interests (marketable securities)

(1) The rate of duty chargeable on dutiable transactions in respect of marketable securities is 60 cents per $100, or part, of the dutiable value of the marketable securities.

(3) A minimum rate of duty of $10 is chargeable under this section in respect of a transfer of shares of a corporation that is not the legal or beneficial owner of land in New South Wales.

55 Property vested in an apparent purchaser

(1) Duty of $10 is chargeable in respect of:

(a) a declaration of trust made by an apparent purchaser in respect of identified dutiable property:

(i) vested in the apparent purchaser upon trust for the real purchaser who provided the money for the purchase of the dutiable property, or

(ii) to be vested in the apparent purchaser upon trust for the real purchaser, if the Chief Commissioner is satisfied that the money for the purchase of the dutiable property has been or will be provided by the real purchaser, or

(b) a transfer of dutiable property from an apparent purchaser to the real purchaser if:

(i) the dutiable property is property, or part of property, vested in the apparent purchaser upon trust for the real purchaser, and

(ii) the real purchaser provided the money for the purchase of the dutiable property and for any improvements made to the dutiable property after the purchase.

(1A) For the purposes of subsection (1), money provided by a person other than the real purchaser is taken to have been provided by the real purchaser if the Chief Commissioner is satisfied that the money was provided as a loan and has been or will be repaid by the real purchaser.

(1B) This section applies whether or not there has been a change in the legal description of the dutiable property between the purchase of the property by the apparent purchaser and the transfer to the real purchaser.

57 Property passing to beneficiaries

(1) Duty of $10 is chargeable in respect of a transfer for no consideration of dutiable property to a beneficiary made under and in conformity with the trusts contained in a declaration of trust, subject to subsections (2) and (3).

(2) Subsection (1) applies only to the extent that the property being transferred is property that the Chief Commissioner is satisfied is:

(a) wholly or substantially the same as the property the subject of the declaration of trust and that:

(i) duty charged by this Act has been paid in respect of the declaration of trust over that property, or

(ii) the declaration of trust is exempt from duty, or

(b) dutiable property representing the proceeds of re-investment of property referred to in paragraph (a), or

(c) property to which both paragraphs (a) and (b) apply.

(3) Subsection (1) applies only if the transferee was a beneficiary at the time at which duty became chargeable in respect of the declaration of trust.

The evidence relating to Ground 2

111 The evidence adduced in support of Ground 2 and the associated Particulars was principally located in the Client's principal affidavit and in the Solicitor's affidavit. Exhibited to these affidavits was a considerable quantity of documentary material. This included copies of (a) correspondence regarding the settlement of the Supreme Court proceedings between the Respondent, the Solicitor, the Client and Mr Harrod's legal representatives and (b) the principal documents relating to the settlement: for example, various drafts and the final version of the Deed executed by the parties, the Property Transfer and the Supreme Court's orders dismissing the proceedings by consent.

112 Having examined this material, we find that it clearly substantiates the matters alleged and particularised in Ground 2. We will add only a few observations on certain aspects of it.

113 First, the statement in paragraph 2.10 of the Particulars that before the Settlement Offer was made on 19 May 2008 'the respondent failed to provide any advice to the Client or the Solicitor about whether duty would be payable on the Property Transfer or the Share Transfers' is at odds with a claim made by the Client in his principal affidavit. This claim was to the effect that the stamp duty implications of the proposed offer of settlement were discussed in the course of a conference between the Client, the Solicitor and the Respondent which, according to the Solicitor, occurred on 15 May 2008. The Client deposed that he recalled advice by the Respondent that the proposed offer of $600,000 to Mr Harrod would be in return for a transfer of both the property at Seal Rocks and Mr Harrod's interest in the companies, and that this would 'negate stamp duty' because it involved a 'partition'. Advice of this nature was not mentioned, however, in the Solicitor's account of this conference.

114 In view of the advices provided later by the Respondent (see [115] and [117] below), the question whether he failed to raise the matter of stamp duty at all before the making of the Settlement Offer (as alleged in the Particulars) or gave an opinion about it at the conference on 15 May 2008 (as recalled by the Client) is not of major significance.

115 Secondly, according to the Solicitor's affidavit, at the conference on 28 May 2008 referred to in paragraph 2.18 of the Particulars, the Respondent said words to the following effect: 'Stamp duty is not an issue. Neither party has to pay duty on the transfer - it is exempt.' The Solicitor did not suggest that at this conference the Respondent gave as the reason for the exemption the fact that a partition was involved. According to the Client, the Respondent used his computer to bring up a clause about partitions, which he printed and gave to the Solicitor. The Client understood from this that the fact that the transfer of real property involved a partition was the basis of the Respondent's advice that stamp duty would not be payable.

116 Thirdly, we think it important to outline the evidence demonstrating the significance of the Respondent's advice relating to stamp duty. The Solicitor stated in his affidavit that in acting for the Client in relation to the settlement, he relied on the advice received from the Respondent on 28 May 2008. The Client, in para 33 of his principal affidavit, stated as follows regarding his decision shortly after that date to agree to the settlement:-

After the settlement was completed, I was informed by David Adams that I have a liability for stamp duty which is yet to be resolved. I was shocked at receiving this advice. The basis upon which I instructed Miller to settle the Supreme Court proceedings was that the payment that I was required to make to Harrod in the sum of $600,000 was the only liability that I would have. Had I known that the settlement would attract stamp duty I would not have agreed to settle on this basis.

117 Fourthly, we think it important to outline also the evidence regarding the Respondent's reasons for advising the Solicitor that the Property Transfer would be exempt from duty, at least if the consideration was described as '$0.00 settlement of legal proceedings'. This advice was conveyed on 26 June 2008 in an email in the following terms:-

First: the relevant proposition advanced for Peter, in the litigation, is that S. Harrod held 100% of his interest in the land on constructive trust, for Peter.

Second: The relevant 'exemption' from duty on transfer is the transfer ( sic ) - from S. Harrod to Peter - would, therefore, be that it constitutes a 'partition' (see explanatory text below)

Third: If monetary consideration is noted on the Transfer, the exemption will not be available.

Fourth: Given Peter's position as to his interest in S. Harrod's registered share, the first limb of the calculation set out in the explanatory text applies and duty is $0.00 , because the value of S. Harrod's share (pre-transfer) is equal to the value of Peter's interest in S. Harrod's share (pre-transfer).

Fifth: To avail Peter of the partition exemption consideration on the land transfer would be described as "$0.00: Settlement of Legal Proceedings." Here I note the Deed of Release does not specify $600,000 is paid in exchange for transfer of S. Harrod's interest in the land but is, rather, an amount paid in settlement of the parties' respective claims.

If it assists, you may forward these remarks to Mr Murray [the solicitor for Mr Harrod] for his review.

118 The 'explanatory text' referred to in the second paragraph and attached to the email was a short outline of the terms of subsections (3) and (4) of the section (section 30) of the Duties Act 1997 that deals with duty on partitions.

119 This email, sent to the Solicitor after the settlement of the Supreme Court proceedings had been completed, constitutes the only account in the evidence before us of the reasoning underlying the Respondent's advice that the Property Transfer, if appropriately drafted, would not attract stamp duty.

120 Fifth and finally, there was evidence relating to the steps taken by the Solicitor and the Client to have the Property Transfer stamped.

121 In his affidavit, the Solicitor stated that after he lodged the Property Transfer for stamping in March 2009, the Office of State Revenue disputed his claim, based on the advice given to him by the Respondent, that the Transfer was exempt from duty under the provisions relating to partitions.

122 The Client, in his affidavit of 15 August 2011, stated as follows: (a) according to his understanding of the requirements stipulated by the Office of State Revenue, duty could not be ascertained until he obtained a valuation of the Seal Rocks property; and (b) as a self-funded retiree, he was not in a position to do this because the Respondent had not repaid the balance of $70,000 still owing under the Loan.

The Bar Association's submissions

123 In her Outline of Submissions at paras 76 and 77, Ms Williams formulated the Bar Association's claim under Ground 2 as follows:-

76. It is submitted that... the Respondent fell short of " the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner " and thereby engaged in unsatisfactory professional conduct within the meaning of s 496 of the LP Act in each of the following respects:

(a) failing to advise (or providing negligent advice) in relation to stamp duty between 15 and 19 May 2008;

(b) providing negligent advice in relation to stamp duty on 28 May 2008 (assuming that the advice was provided on that date and not at the earlier conference on 15 May 2008);

(c) failing to take stamp duty issues into account in the drafting of the deed of settlement and failing to advise the Client as to how the terms of the deed or the court orders could be drafted so as to minimise stamp duty or support a claim for exemption;

(d) providing negligent advice in relation to stamp duty on 26 June 2008.

77. It is further submitted that these instances of unsatisfactory professional conduct, considered as a whole, amount to professional misconduct within the meaning of s 497(1)(a) of the LP Act...

124 Section 497(1)(a) states that professional misconduct includes:-

... unsatisfactory professional conduct of an Australian legal practitioner, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence.

125 The specific submissions put by Ms Williams in support of this claim replicated to a significant extent the matters stated in Ground 2 itself and the accompanying Particulars.

126 An additional matter to which she drew our attention was a letter dated 28 May 2010 from the Solicitor to the Bar Association's Deputy Director of Professional Conduct, in which the Solicitor estimated the stamp duty payable on the Property Transfer at figures within the range from $80,000 to $100,000. These figures were based on estimates within the range from $1,700,000 to $2,100,000 for the value of the interest in the property held by Mr Harrod. The Solicitor added that the duty could not be finally determined until a valuation of this interest was obtained.

127 Ms Williams added that her own calculation of the duty, based on a valuation of $1,700,000, was in the vicinity of $78,000, but that if the duty was assessed under section 30(1)(b) by reference to the consideration of $600,000 paid by the Client, it would only be about $22,000 or (if this consideration was treated as split equally between the Property Transfer and the Share Transfers) about $18,000.

128 The important implications of these calculations were, in Ms Williams' submission, as follows: (a) irrespective of which approach to assessing duty was ultimately adopted, a significant amount of duty would have to be paid by the Client; (b) the Respondent's advice that no duty was payable was therefore seriously misleading; and (c) if he had structured the Deed between the Client and Mr Harrod in an appropriate fashion, he might well have substantially reduced the amount of duty payable by the Client.

129 She described the Respondent's handling of the question of stamp duty as manifestly negligent. The gist of her argument on this matter may be set out in the following ten propositions:-

1. A reasonably competent and diligent Australian legal practitioner in the Respondent's position would have advised the Solicitor and the Client that before the terms of settlement of the Supreme Court proceedings were finalised, the likelihood that the Client would be required to pay substantial sums by way of stamp duty on the Property Transfer and the Share Transfers needed to be addressed. For the reasons set out in paragraph 67(a) of the Particulars, the Property Transfer would be a 'dutiable transaction' and liable to more than nominal duty even if it were characterised as a 'partition', unless specific measures to avert this were adopted in the drafting of the Deed pursuant to which the proceedings were settled. For the reasons set out in paragraph 67(c) of the Particulars, the Share Transfers were 'dutiable transactions' and liable to more than nominal duty.

2. The Respondent did not at any time convey any such advice to either the Solicitor or the Client. According to the Client, he communicated an obviously incorrect opinion, shortly before the Settlement Offer was made, to the effect that the Property Transfer would be exempt from duty because it involved a partition. According to the Solicitor, he communicated this incorrect opinion after the Offer had been accepted in principle, adding subsequently (after the settlement had been finalised) that the Transfer was exempt because a partition was involved. At no stage did the Respondent convey any advice regarding the liability of the Share Transfers to stamp duty.

3. Because both the Client and the Solicitor, relying on these incorrect advices, assumed that no substantial amount of stamp duty would be payable, the Client did not seek either (a) to withdraw the Settlement Offer while negotiations were still continuing or (b) to negotiate more favourable terms.

4. A reasonably competent and diligent Australian legal practitioner in the Respondent's position would have realised that if any of the exemptions contained in sections 55 and 57 of the Duties Act 1997 were to apply to the Property Transfer, the Deed would have to contain an acknowledgment by Mr Harrod, or it would have to be shown by other evidence, that before the Transfer Mr Harrod held his interest in the Seal Rocks property on trust for the Client.

5. In drafting the Deed and finalising the settlement of the Supreme Court proceedings on behalf of the Client, the Respondent made no attempt to achieve this outcome, other than to seek to describe the consideration for the Property Transfer as '0.00: settlement of legal proceedings'. This description was manifestly incorrect since Mr Harrod had made no claim for damages in the proceedings.

6. Furthermore, the recitals to the Deed, as drafted by the Respondent, contained a statement that, far from acknowledging the Client's claim that he held his interest in the Seal Rocks property on trust for the Client, Mr Harrod disputed this claim.

7. The Respondent also failed to state in the Deed what part of the Client's payment of $600,000 represented consideration for the Property Transfer and what part for the Share Transfers.

8. A reasonably competent and diligent Australian legal practitioner in the Respondent's position would have realised that the features of the Deed mentioned in the two preceding paragraphs would have weakened any claim by the Client that the Property Transfer should attract nominal duty only.

9. The five propositions that the Respondent stated in his email of 26 June 2008 in support of his advice that the Property Transfer would be characterised as a partition and would attract only nominal duty were manifestly incorrect. The assertion in the first of them - that Mr Harrod held 100% of his interest in the Seal Rocks property on trust for the Client - would not be accepted, in the absence of sufficient evidence, by the Office of State Revenue. The second maintained, wholly incorrectly, that if the Transfer were characterised as a partition under section 30 of the Duties Act , that would be sufficient to render it exempt. The third proposition - that if monetary consideration was noted on the Transfer no exemption would be available - implied incorrectly that an exemption would be granted if no consideration were stated. The fourth proposition took no account of the terms of section 30(1)(b). The fifth proposition - that the Transfer would be exempt under section 30 if the consideration were stated to be '$0.00: settlement of legal proceedings' - took no account of the fact that Mr Harrod had not made a claim for damages.

10. If the Respondent had believed that he was not sufficiently expert on stamp duty matters to provide correct advice and/or to draft the Deed in a manner that ensure the best possible outcome for the Client with regard to stamp duty, he could and should have suggested that another solicitor or barrister be asked to deal with this aspect of the settlement. But he did not do this.

130 In arguing that the giving of negligent advice by a barrister could constitute unsatisfactory professional conduct under the definition contained in section 496 of the LP Act, Ms Williams relied on the Tribunal's discussion of this topic in NSW Bar Association v Bland [2010] NSWADT 34 at [185 - 197]. The Tribunal, having reviewed the legislative history of the predecessor of this definition (i.e., a definition in the same terms contained in section 123 of the Legal Profession Act 1987), said at [193]:-

After taking account of section 33 of the Interpretation Act 1987 and the above second reading speeches, the Tribunal is of the view that unsatisfactory professional conduct can, in appropriate circumstances, include negligence and that the law of the tort of negligence is particularly relevant where the question is whether the conduct of an Australian legal practitioner, in giving legal advice to a client, is unsatisfactory professional conduct.

131 The Tribunal then referred to authority, notably in the Court of Appeal's judgments in Heydon v NRMA Ltd (2000) 51 NSWLR 1, to the effect that, as the Tribunal stated at [197]:-

The Tribunal is of the view that the standard of competence and diligence which Ms Elkins [the complainant in the case] was entitled to expect from the Barrister when he gave her advice, was that which a member of the public was entitled to expect of a reasonably competent barrister. Ms Elkins was not entitled to expect that the advice was correct, but she was entitled to expect that in giving the advice the requisite degree of competence and diligence had been exercised by him.

132 As indicated earlier, a further claim by the Bar Association was that the Respondent's conduct alleged in Ground 2 involved 'a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence' and therefore amounted to professional misconduct under section 497(1)(a) of the LP Act. In this connection, Ms Williams argued that the Respondent's failure to reach the required standard was 'substantial' because of the obvious importance of correct advice on stamp duty being given to the Client and because the manifest deficiencies of his handling of the matter. She argued that this failure was 'consistent' because it lasted over a substantial period of time, from the conference on 15 May 2008 to the date, on or about 5 June 2008, when the Client executed the Deed.

Our conclusions on Ground 2

133 In our opinion, the Bar Association's claim that the Respondent engaged in unsatisfactory professional conduct is clearly made out, for the reasons elaborated by Ms Williams. We endorse those reasons and would add only two brief observations.

134 The first relates to the behaviour of the Respondent at the conference between him, the Solicitor and the Client on 28 May 2008. At this point, the Settlement Offer had been accepted in principle by Mr Harrod, but negotiations about details were still in train. It would still have been open to the Client to seek to vary the terms of the settlement on the ground that it had adverse stamp duty implications to which he had not previously given consideration. Furthermore, this question of stamp duty had been expressly put on the agenda by Mr Harrod's stipulation that the Client must indemnify him against any duty payable by him on the Property Transfer or the Share Transfers.

135 The Respondent failed, at this important juncture, to give close and careful consideration to section 30. Although the mode of assessment of duty that this relatively brief section sets out in subsection (3) is not expressed very clearly, the section as a whole does not convey the impression, even on a casual reading, that a transferee can easily make out a claim to be liable only for the nominal duty of $10 mentioned in subsection (4). It would not have been unduly difficult for the Respondent to deduce that the Property Transfer was highly unlikely to have been assessed for nominal duty only under section 30.

136 Secondly, we have not taken into account an allegation in the Client's second affidavit to which Ms Williams drew our attention. This was that as a self-funded retiree, he was not in a position to obtain a valuation of the Seal Rocks property because the Respondent had not repaid the balance of $70,000 still owing under the Loan. Our reason for leaving this allegation out of account is that it was not included in Ground 2 (or indeed in Ground 1) or in the accompanying Particulars.

137 We do not accept the claim by the Bar Association that the conduct of the Respondent as alleged and particularised in Ground 2 amounted to professional misconduct under section 497(1)(a) of the LP Act. The Respondent clearly failed to 'reach or maintain a reasonable standard of competence and diligence'. But his failure related to one matter only - the Client's liability for stamp duty on the transfers to be made under the settlement of the Supreme Court proceedings - and it stemmed from only one erroneous opinion that he formed - that under section 30 only nominal duty would be payable. For these reasons, we do not think that there was a 'substantial' or a 'consistent' failure to reach or maintain the required standards.

138 Our conclusion therefore is that the Bar Association has established unsatisfactory professional conduct under Ground 2.

Consideration of Grounds 1 and 2 together

139 A final submission by the Bar Association in relation to the First Application was that if we did not find that the Respondent engaged in professional misconduct in respect of each of Ground 1 and Ground 2, we should find that his conduct as a whole constituted professional misconduct at common law and within the meaning of section 497 of the LP Act.

140 In the Bar Association's Outline of Submissions, Ms Williams submitted that it was permissible for the Tribunal to take that approach because Grounds 1 and 2 both relate to conduct engaged in by the Respondent in the course of and in connection with acting as a barrister for the Client. The Tribunal, she maintained, was entitled to view the whole of the Respondent's conduct towards his Client in the course of that professional relationship and to decide, based on the facts established at the hearing, whether it amounted to professional misconduct.

141 She acknowledged that in two decisions, Law Society of New South Wales v Grech [2006] NSWADT 73 and Law Society of New South Wales v Hussein [2010] NSWADT 182, the Tribunal had not been prepared to adopt the measure, advocated by the Law Society, of 'bringing together separate and limited findings of breaches of different kinds of professional duty in order to arrive at a single finding of professional misconduct' (see Grech at [162] and Hussein at [136]).

142 Ms Williams argued, however, that we should distinguish these cases, for the following reasons. In Grech , the Tribunal found that the separate grounds (considered individually) did not constitute professional misconduct because the Law Society had not established all of the necessary facts. The grounds were not all closely related, in that some of them related to the misappropriation of trust funds and others related to failure by the respondent solicitor to respond to notices issued by the Law Society. Furthermore, the Law Society did not allege unsatisfactory professional conduct. In Hussein , the respondent solicitor's conduct related to several different clients and failure to assist in the Law Society's investigations.

143 We are not persuaded by these submissions, because the breaches of professional duty to which the two Grounds referred differed markedly from each other. To 'wrap them up' together as one single ground of professional misconduct would be to obscure these differences. It would blur the distinction between professional misconduct and unsatisfactory professional conduct that the legislature has explicitly created in sections 496 and 497 and their predecessors.

The matters alleged in the Second Application

144 As stated above, this Application contained two Parts, A and B. In each of them, the conduct alleged was failure by the Respondent to comply with a notice from the Bar Association requiring information to be provided to it.

145 The Grounds and accompanying Particulars were in the following terms:-

Complaint

A. In breach of s.660(3) and s.671(I) of the Act, the respondent failed to comply with a Notice dated 5 February 2009, issued pursuant to s.77 and s.660 of the Act (the "First Notice") and served on him on that date, such notice requiring a response by him to the Council of the New South Wales Bar Association by no later than 4.00 pm on 20 February 2009.

B. In breach of s.660(3)and s.676(3) of the Act, the respondent failed to comply with a Notice, dated 10 May 2010, issued pursuant to s.660 of the Act (the "Second Notice") and served on him on 21 May 2010, such notice requiring a response by him to the Council of the New South Wales Bar Association 14 days after service.

Particulars of Part A of the Complaint

1 The respondent was at all material times an Australian lawyer pursuant to s. 5 of the Act and an Australian legal practitioner pursuant to s. 6 of the Act, carrying on practice as a barrister.

2 On or about 19 June 2008, the respondent applied to the applicant to renew his practising certificate for 2008/2009. The respondent provided a negative answer to question 11 on page 4 of the application form, in circumstances where the Deputy Commissioner of Taxation had obtained a final judgment against him in the District Court of New South Wales at Sydney in the sum of $432,693.67 on 18 September 2007.

3 On 24 November 2008, the respondent was served with a creditor's petition by the Deputy Commissioner of Taxation. This was a show cause event to which Division 7 of Part 2.4 of the Act applied (the "First Show Cause Event").

4 The respondent was required by s.67(2)(a)of the Act to notify the applicant of the First Show Cause Event within 7 days after the happening of the event.

5 The respondent failed to notify the applicant of the First Show Cause Event by 1 December 2008, or at all.

6 The respondent was required by s 67(2)(b) of the Act to provide the applicant with a written statement within 28 days after the happening of the First Show Cause Event explaining why, despite the First Show Cause Event, the respondent considered himself to be a fit and proper person to hold a local practising certificate.

7 The respondent failed to provide the said statement in respect of the First Show Cause Event by 23 December 2008, or at all.

8 On 19 December 2008, the respondent became a bankrupt. This was a show cause event to which Division 7 of Part 2.4 of the Act applied (the "Second Show Cause Event").

9 The respondent was required by s 67(2)(a) of the Act to notify the applicant of the Second Show Cause Event within 7 days after the happening of the event.

10 The respondent failed to notify the applicant of the Second Show Cause Event by 27 December 2008 or at all.

11 The respondent was required by s 67(2)(b) of the Act to provide the applicant with a written statement within 28 days after the happening of the Second Show Cause Event explaining why, despite the Second Show Cause Event, the respondent considered himself to be a fit and proper person to hold a local practising certificate.

12 The respondent failed to provide the said statement in respect of the Second Show Cause Event by 16 January 2009, or at all.

13 The First Notice was issued for the purpose of the applicant's investigation pursuant to s.68 of the Act as to whether the respondent was a fit and proper person to hold a local practising certificate.

14 The First Notice was served on the respondent on 5 February 2009 by courier to the respondent's then place of practice.

15 The First Notice required the respondent to:

(a) provide by 4 pm on 20 February 2009 information and documents concerning the events referred to in paragraphs 2 to 13 herein; and

(b) co-operate with the applicant's investigation by making a request of the Australian Taxation Office by 4pm on 16 February 2009 for specified information about the respondent's taxation affairs,

but the respondent did not do so.

16 The applicant will at the hearing rely upon the First Notice as if it were fully set out herein.

Particulars of Part B of the Complaint

17 The respondent was at all material times a local lawyer pursuant to s. 5 of the Act and has not held a practising certificate since 1 May 2009.

18 The applicant issued the Second Notice to the respondent for the purpose of its investigation under Chapter 4 of the Act of a complaint made by Mr David Adams on behalf of Mr Peter Adams by letter dated 28 August 2009.

19 The respondent was personally served with the Second Notice on 21 May 2010.

20 The Second Notice required the respondent to produce documents and provide information for the purpose of the said investigation within 14 days after service of the Second Notice on the respondent, but the respondent did not do so.

21 The applicant will at the hearing rely upon the Second Notice as if it were fully set out herein.

Relevant legislation

146 The following provisions of the LP Act are relevant to this Application:-

4 Definitions

show cause event , in relation to a person, means:

(a) his or her becoming bankrupt or being served with notice of a creditor's petition presented to the Court under section 43 of the Bankruptcy Act 1966 of the Commonwealth, or

67 Holder of local practising certificate-show cause event

(1) This section applies to a show cause event that happens in relation to a person (referred to in this Division as the holder) who is the holder of a local practising certificate.

(2) The holder must provide to the appropriate Council both of the following:

(a) within 7 days after the happening of the event-written notice that the event happened,

(b) within 28 days after the happening of the event-a written statement explaining why, despite the show cause event, the person considers himself or herself to be a fit and proper person to hold a local practising certificate.

68 Investigation and consideration of show cause event

(1) On becoming aware of the happening of a show cause event in relation to an applicant or holder, the appropriate Council must investigate and determine within the required period whether the applicant or holder is a fit and proper person to hold a local practising certificate.

77 Relationship of this Division with Chapters 4 and 6

(1) The provisions of Part 4.4 (Investigation of complaints), and the provisions of Chapter 6 (Provisions relating to investigations) that are relevant to Part 4.4, apply, with any necessary adaptations, in relation to a matter under this Division, as if the matter were the subject of a complaint under Chapter 4.

(2) Nothing in this Division prevents a complaint from being made under Chapter 4 about a matter to which this Division relates.

660 Requirements in relation to complaint investigations

(1) For the purpose of carrying out a complaint investigation in relation to an Australian lawyer, an investigator may, by notice served on the lawyer, require the lawyer to do any one or more of the following:

(a) to produce, at a specified time and place, any specified document (or a copy of the document),

(b) to provide written information on or before a specified date (verified by statutory declaration if the requirement so states),

(c) to otherwise assist in, or co-operate with, the investigation of the complaint in a specified manner.

(3) A person who is subject to a requirement under subsection (1) or (2) must comply with the requirement.

Maximum penalty: 50 penalty units.

(4) A requirement imposed on a person under this section is to be notified in writing to the person and is to specify a reasonable time for compliance.

671 Failure to comply with investigatory powers etc

(1) The failure of an Australian legal practitioner to comply with any requirement made by an investigator in the exercise of powers conferred by this Chapter is professional misconduct.

676 Obligation of Australian lawyers

(3) An Australian lawyer who is subject to:

(a) a requirement under section 660 (Requirements in relation to complaint investigations), or

(b) a requirement under provisions of a corresponding law that correspond to that section,

must not, without reasonable excuse, fail to comply with the requirement.

(4) An Australian lawyer who contravenes subsection (2) or (3) is guilty of professional misconduct.

727 Service of notices on practitioners

A notice required to be served on or given to an Australian legal practitioner under this Act is served on or given to the practitioner if:

(a) it is served personally on or given personally to the practitioner, or

(b) it is sent by post or delivered to the practitioner's place of practice, business or residence last notified by the practitioner to a Council.

The evidence regarding the two Notices

147 The Bar Association's evidence in this Application was principally contained in Ms MacDougal's affidavit sworn on 4 April 2011, together with the exhibited material. This material included copies of the creditor's petition that the Deputy Commissioner of Taxation had issued against the Respondent and of the Sequestration Order made against him on 19 December 2008.

148 The First Notice was issued in the course of the Bar Association's investigation, pursuant to section 68 of the LP Act, of the two Show Cause Events that are described in the Particulars. It required the Respondent to do the following within 14 days of receiving the Notice: (a) produce documents, namely any statement of affairs that he had filed in his bankruptcy and all documents relating to his personal and business-related spending during a specified period: (b) provide information, verified by statutory declaration, in answer to eight questions relating to the two Show Cause Events and to his financial affairs; and (c) 'otherwise assist in or co-operate with' the Bar Association's investigation of these Events by requesting the Australian Taxation Office to send to him documents and information relating to his tax situation, forwarding such information and documents (when received) to the Bar Association and authorising current and former accountants and tax agents employed by him to release information regarding his affairs to the Bar Association.

149 The Notice also drew the Respondent's attention to the provisions of section 660(3) and subsections (3) and (4) of section 676 relating to the consequences of non-compliance.

150 The material exhibited to Ms MacDougal's affidavit included a copy of a courier's delivery docket indicating that on 5 February 2009 the courier had delivered the First Notice (together with a separate notice under section 68(2)) to his practice address. Under section 727(b) of the LP Act, this was valid service for the purposes of this Act. Copies of both notices were also sent by email to him on 5 February 2009.

151 On 23 February 2009, after the time specified for compliance with the First Notice had elapsed, Ms Helen Barrett, who was employed by the Bar Association as Deputy Director, Professional Conduct, sent an email to the Respondent in which she wrote: 'I urge you to respond to the s 660 notice dated 5 February 2009 and to provide the written statements required pursuant to s 67 of the Legal Profession Act 2004 as a matter of urgency.'

152 In an email to Ms Barrett dated 2 March 2009, the Respondent wrote:-

In relation to the subject matter of your email, I was first notified on 19 February 2009 that a sequestration order had been made. I am, tomorrow, meeting with the trustee (Jones Partners) to finalise my statement of position. I expect to be bale (sc. able) to comply with the notice to produce documents by Thursday 5 March 2009.

153 On 9 March 2009, Ms Barrett sent to the Respondent stating that the Bar Association had not received any response to the First Notice from him and that it was important that he 'co-operate by providing as a matter of urgency the information and documents requested in the s 660 notice'.

154 No reply to this email was received from the Respondent and no information or documents were received in answer to the First Notice.

155 On 29 April 2009, as noted earlier in this decision, the Bar Association cancelled the Respondent's practising certificate. It notified him of this step by letter dated 1 May 2009.

156 The Second Notice was issued in the course of the Bar Association's investigation of the Solicitor's complaint dated 28 August 2009 that ultimately formed the basis of Ground 1 of the First Application. It required the Respondent to do the following within 14 days of receiving the Notice: (a) produce documents relating to the costs that he charged and the work that he had performed in relation to the Supreme Court proceedings: (b) to provide information, verified by statutory declaration, in answer to seven questions relating to these matters.

157 The Notice also drew the Respondent's attention to the provisions of section 660(3) and subsections (3) and (4) of section 676 relating to the consequences of non-compliance.

158 On 21 May 2010, according to a statutory declaration by a licensed process server that forms part of the material exhibited to Ms MacDougal's affidavit of 23 February 2011 in the First Application, the Respondent was personally served with the Second Notice at 805/23 Shelley Street, Sydney. As indicated above at [28] and [34], this is the address at which he received further documents relating to these proceedings.

159 On 8 June 2010, after the time specified for complying with this Notice had elapsed, Ms Barrett sent a letter to him at his address in Shelley Street advising that if he wished to advance any reason for his non-compliance with the Notice, including any medical condition that prevented him complying, he should do so by 23 June 2010. She added that if he relied on a medical condition, he should furnish evidence in support from his treating doctor(s).

160 Ms MacDougal's affidavit of 4 April 2011 gave the following explanation for the references to the Respondent's medical condition in this letter from Ms Barret. The Bar Association had become aware from correspondence with the Respondent during the period from December 2009 to February 2010 in relation to the complaints made by the Solicitor that the Respondent had been treated for skin cancer. In addition, during correspondence with the Bar Association relating to another matter, the Respondent said both in May 2009 and in June 2010 that he had suffered from a depressive illness since early 2007.

161 No reply to Ms Barrett's letter of 8 June 2010 was received from the Respondent.

162 On 2 September 2010 the Bar Association made a complaint under section 504 of the LP Act against the Respondent in relation to his non-compliance with the two Notices.

163 During the Bar Association's investigation of this complaint, Ms Barrett again invited him, in a letter dated 14 October 2010, to furnish reasons for his non-compliance with the First and Second Notices, including any medical condition (with supporting evidence) that had prevented him from complying. In the course of further correspondence by email during the next few days, the Respondent stated that he was 'not in a position to deal with the issues raised in' this correspondence due to further medical problems (including future surgery for removal of a tumour), his bankruptcy, his being unemployed and his inability to engage a legal advisor. He also declined to provide any medical certificate or other medical evidence relating to his non-compliance, adding the following observation:-

It is unlikely that a reasonable medical practitioner could, retrospectively, offer a genuine assessment of my state of mind and health at the relevant time.

164 In this correspondence during October 2010, the Respondent stated that, at the time when he received the Second Notice, he did not have possession of any of the required documents or records relating to the work that he performed for the Client. He apologised for, but did not explain, his failure to notify the Bar Council of this difficulty earlier. He also did not offer any explanation for his failure to respond to the First Notice.

Our conclusions regarding the Second Application

165 This evidence proves to our satisfaction that each of the two Notices under section 660 of the LP Act was served on the Respondent at the time alleged in the Particulars, that he failed to comply with each Notice within the time specified in it and that, save in one respect, there was no 'reasonable excuse' for his non-compliance.

166 The only matter alleged by him that would constitute a 'reasonable excuse' is that he did not possess any of the documents (relating to his handling of the Client's affairs) that the Second Notice required him to produce. He did not put forward this excuse, however, until October 2010, some four months after the time for compliance had expired.

167 We agree with Ms Williams' submission that the Respondent had ample opportunity to explain his reasons for non-compliance. We also agree that it was insufficient for him to refer in general terms to medical conditions without articulating how they adversely affected his ability to comply or providing medical certificates or doctors' reports to substantiate his claims.

168 In Part A of this Application, the Bar Association claimed that the Respondent's non-compliance with the First Notice amounted to professional misconduct under section 671(1) of the Act. It seems to us, however, that, as stated in both Notices, subsections (3) and (4) of section 676 are the applicable provisions when notices under section 660 are concerned. In contrast to section 671(1), the former subsection refers expressly to section 660.

169 Section 676 requires the question of 'reasonable excuse' to be resolved against the Respondent if professional misconduct is to be found. Section 671 does not advert to this question. Since we have held that, save in one limited respect, there was no evidence suggesting that a 'reasonable excuse' existed, our finding of professional misconduct in relation to both Notices is valid under either provision.

The future conduct of these proceedings

170 For the foregoing reasons, our decision is that the Respondent is guilty of professional misconduct under Ground 1 of the First Application, unsatisfactory professional conduct under Ground 2 of this Application and professional misconduct under each Part of the Second Application.

171 A further hearing is therefore required for the purpose of determining what order or orders should be made under section 562 of the LP Act 2004 and how the Bar Association's application for costs should be determined.

172 For the purpose of fixing a date for this hearing, the matter is set down for further directions at 9.30 a.m. on Thursday 22 December 2011.

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Decision last updated: 14 December 2011