Administrative Decisions Tribunal New South Wales

• Medium Neutral Citation: Council of the Law Society of NSW v Stokoe [2011] NSWADT 310
• Hearing dates: 16 December 2011
• Decision date: 16 December 2011
• Jurisdiction: Legal Services Division
• Before: J Currie, Judicial Member; S Hale, Judicial Member; S Hayes, Non-Judicial Member

Decision

Orders that:

1. The Respondent be fined $1,000, to be paid on or before 31 March 2012.

2. The Respondent be reprimanded.

3. The Respondent pay the costs of the Applicant as agreed or assessed.

4. The Respondent pay the Company compensation in the sum of $546-69.

• Catchwords: Legal Profession Act 2004; Professional Misconduct; delay in forwarding payments; breach of s.257; destruction of Investigator
• Legislation Cited: Legal Profession Act 2004; sections 257, 564, 570, 659
• Category: Principal judgment
• Parties: Council of the Law Society of New South Wales (Applicant); Paul Derek Stokoe (Respondent)
• Representation: C Groenewegen, Law Society of New South Wales (Applicant); P Stokoe (Respondent in person); L Muston (Legal Services Commissioner)
• File Number(s): 112015

REASONS FOR Judgment

Introduction

1 This case involved a claim that a legal practitioner, the Respondent, was guilty of professional misconduct by reason of his conduct in delaying the payment to his client of compensation payment instalments, breach of section 257 of the Legal Profession Act, 2004 and obstruction of an Investigator appointed by the Applicant, the Law Society of New South Wales. The Tribunal was also asked to make a compensation order in favour of the Respondent's client, a claim having been made by that client pursuant to section 570 of the Legal Profession Act, 2004.

Representation

2 At the hearing the Applicant was represented by Ms Groenewegen, the Respondent appeared in person, and the Legal Services Commissioner appeared by way of statutory entitlement under section 559 of the Legal Profession Act, 2004 and was represented by Ms Muston, solicitor.

The Application and the Particulars of Professional Misconduct

3 The Application set out four grounds of alleged professional misconduct, of which only three were pressed and dealt with at the hearing. These were (using the numbering appearing on the Application):

1. Delay in forwarding to the Complainant (that is, the principal of the client of the Respondent), compensation payments

2. Breach of section 257 of the Legal Profession Act, 2004; and

4. Obstructing the Investigator appointed by the Law Society of New South Wales.

4 In its Application, the Applicant sought orders that the Respondent be fined, that he be reprimanded, that he pay the costs of the Applicant as agreed or assessed and such further or other order as the Tribunal deems appropriate.

5 The Application set out Particulars of the conduct of the Respondent which it alleged support the allegation of professional misconduct. These were divided into two parts, the first dealing with grounds 1 and 2 (delay in forwarding payments and breach of section 257), and the second dealing with ground 4 (obstruction of the Investigator). In summary these were as follows. The conduct of the Respondent set out in the Particulars is summarised in paragraphs 6 to 11 below.

Particulars of delay in forwarding payments and breach of section 257

6 It is alleged that the Respondent received instructions from a client ("the Complainant") to act on behalf of the Complainant's company ("the Company") to recover monies from others ("the debtors"), apparently being monies relating to a construction dispute. On 26 May 2008 the Consumer Trader and Tenancy Tribunal made orders in favour of the Company against the debtors, under which the debtors were to pay the Company $20,000 by instalments. The first instalment of $5,000 was to be paid on or before 10 June 2008 and the balance by monthly instalments of $1,000 on the 10th day of each month thereafter.

7 On 24 November 2008 there began a course of correspondence and communication between the Respondent and the Complainant relating to delays in the Complainant or his Company receiving the instalment payments apparently received by the Respondent but not forwarded on. An email from the Respondent to the Complainant on 24 November 2008 acknowledged that:

"I have the 2 missing cheques as advised on the 19th! They made the mistake of sending them here. I will forward them to you by express post today."

8 The Complainant did not receive the cheques and emailed the Respondent on 17 December 2008 complaining about this. On the following day, 18 December 2008 the Respondent emailed the Complainant indicating that he had deposited the relevant amounts directly into the Complainant's account that morning. There seems no dispute that this was done.

9 On 9 February 2009, 9 July 2009, 7 August 2009 and 6 September 2009 the debtors drew cheques for the monthly instalments of $1,000 due to the Company and sent each of these to the Respondent, which he acknowledged. The Respondent mislaid the four cheques. It is alleged that he also failed to treat the money involved as "transit money" within the meaning of section 257 of the Legal Profession Act, 2004. On 15 December 2009 the Complainant wrote to the Respondent claiming the $4,000 involved and giving details of a bank account into which the missing money could be deposited. The Respondent obtained two replacement cheques totalling $4,000 and deposited that amount into the designated account.

Particulars of Obstruction of the Investigator

10 On 1 March 2010 the Investigator issued a notice ("the Notice") under section 659 of the Legal Profession Act, 2004 to the Respondent requiring certain documents to be produced to him on or before 10 March 2010. The Respondent failed do that. There then commenced a series of efforts by the Administrator to contact the Respondent and to arrange a meeting with the Respondent to discuss the Notice and the Respondent's compliance with it, and, apparently from about 7 April 2010, to obtain certain documents which would assist the Investigator's enquiries. The Investigator's efforts to have this meeting and to obtain the relevant documents from the Respondent continued until a meeting between the two of them on 17 June 2010; a period of over three months. Although there were meetings in the intervening period (on 7 April and 25 May 2010) it seems that those meetings did not satisfy the Investigator's enquiries.

11 On the Tribunal's count it is alleged by the Applicant that there were at least 6 instances of the Respondent either failing to return calls from the Investigator, failing to attend meetings with him previously arranged and agreed to or failing to deliver documents to the Investigator as arranged. However at least one of the missed meetings, the one arranged for 15 April 2010 is alleged to have resulted from the Respondent's absence from the office with influenza. The Respondent and the Investigator did meet on 17 June 2010.

Section 564 Instrument of Consent and Agreed Statement of Facts

12 At the commencement of the hearing the parties, including the Legal Services Commissioner, confirmed that they had executed an instrument of consent under section 564 of the Legal Profession Act, 2004 , under which, the parties agreed as to the facts set out in an attached Agreed Statement of Facts and agreed that the conduct by the Respondent reflected in those facts amounts to professional conduct. Significantly, the facts agreed in the Agreed Statement are identical with the facts alleged in the Particulars. The instrument of consent was filed at the hearing.

13 The instrument opens with the wording which is usual for such documents, referring to order to be made by the Tribunal by consent, but it then specifies merely that the orders are for a fine (of an unspecified amount) a reprimand and for costs as agreed or assessed.

14 Ms Groenewegen for the Applicant agreed with the Tribunal that, bearing in mind the Tribunal's discretion in relation to such instruments of consent pursuant to s.564(10) of the Act, the effect of the execution and tendering of the document was that all the facts in the Statement of Agreed Facts were no longer in dispute, and it was agreed that the conduct of the Respondent reflected by those facts amounted to professional misconduct, but that the issue of the nature and extent of the orders to be made by the Tribunal remained open. There were no submissions to the contrary from Ms Muston or from the Respondent. Accordingly the hearing proceeded on that basis; that is that effectively there was no contest as to the facts or the existence of professional conduct but the question of penalty and other orders remained to be determined.

The Respondent's Case

15 The Respondent addressed the Tribunal and indicated that he wished to adduce evidence which would go to the issue of penalty and other orders, consisting of character references and medical reports, and that he wished to address the Tribunal as to penalty.

(i) Contrition

16 The Respondent made various expressions of contrition concerning his conduct. He commenced his submissions with an apology for the conduct. He later said that he acknowledged his mistakes in practice which had led to the conduct complained of and told the Tribunal that he believed he had remedied the practice problems. He said that he fully accepted that what he had done was wrong, and the Tribunal understood that this clearly referred both to the delay in forwarding the moneys to the Complainant and the manner in which the Respondent had dealt with the Investigator. The Complainant said:

"I accept that I did wrong. I agree it was sloppy but that word is too soft. It was a matter of great professional embarrassment...I acknowledge my mistake and say that it just won't happen again"

(ii) Character evidence

17 The Respondent tendered three character references. Generally these confirmed that he was a competent lawyer of substantial experience. Two of the deponents were surprised to hear of the complaint and the Law Society's disciplinary action and said that found that out of character for the Respondent. The other deponent said he knew that the Respondent was embarrassed and regretful for his actions. One of the deponents, a legal practitioner, said:

"During all the periods that I worked with (the Respondent) I found him to be a competent solicitor of the highest ethical standard. At all times I found (him) to be passionate about his work and especially for members of the Master Builders of NSW who had difficulties beyond their financial means or even outside legal aspects."

(iii) Medical and pharmaceutical evidence and Respondent's contentions

18 The Respondent tendered two professional reports being a report from a consultant endocrinologist dated 26 October 2011 and a report from a registered pharmacist dated 14 December 2011.

19 Neither the endocrinologist nor the pharmacist were available for cross examination. The Tribunal understood that neither the Applicant nor the Legal Services Commissioner objected to the tendering of these reports, although Ms Groenewegen reserved the right to cross-examine the Respondent on these matters.

20 The endocrinologist's report confirmed that the Respondent had primary hypothyroidism requiring thyroxine therapy for the remainder of his life. The report went on to describe the clinical manifestations of primary hypothyroidism, but this was done in a generic way, without ascribing any of these manifestations to the Respondent. The stated manifestations included "lethargy including daytime somnolence". The report does not say anything about medication having been prescribed for the Respondent.

21 The pharmacist's report confirmed that Oroxine had been prescribed for the Respondent, that the pharmacist had provided the Respondent with this medication since June 2007 and that that medication needed to be stored in a refrigerator in order to be effective. It was reported that the Respondent's initial dose was 100mg per day which was subsequently increased to 200mg per day but (as related by the Respondent to the pharmacist) this had been reduced to 1200mg per week.

22 The Respondent told the Tribunal that he had suffered from diabetes since the age of 4. He said that that was put forward not as an excuse for the conduct complained of, but rather by way of partial explanation for his occasional lapses of concentration. In this regard the Respondent relied upon the statement in the endocrinologist's report as to the likely symptoms of lethargy and daytime somnolence. He said that he suffered from occasional "hypos"; that is hypothyroid reactions where underactivity of the thyroid gland brought about a drowsy state and caused him to sleep even during the day.

23 The Respondent added that for a substantial period he had not been aware of the need to keep Oroxine refrigerated and had stored in his kitchen near the hotplates on his stove. The pharmacist's report stated that:

"If this was done then the medication would not be effective in treating the hypothyroidism."

(iv) Cross -examination of the Respondent

24 Ms Groenewegen for the Applicant cross-examined the Respondent as to his medical history and the course of his medical consultations and medication. The Tribunal understood the Respondent to testify that as the result of a blood test in March 2008 his prescribed dosage of Oroxine had been doubled, to 200mg per day and that he had continued to take the medication at this dosage until his next tests which were about 9 months later, in early 2009. He recalled that at this stage he had been consulting the head of the endocrinology practice of which the doctor who had provided the report in evidence was a member. At that time the dosage was not increased. The Tribunal noted that there is some indication in the pharmacist's report that the dosage may have been reduced at that time.

25 Ms Groenewegen put it to the Respondent that, as this had been the time during which there had been a delay in the Respondent passing on the payments to the Complainant, the medical evidence was not consistent with the Respondent's hypothyroidism being a substantial cause of the conduct which is the subject of these proceedings. The Respondent conceded in reply that his medical condition did not directly prevent him from passing on the relevant cheques to the Complainant promptly, but he said at that the relevant time he had been practising alone and was going to sleep in his chair during office hours. It was further put to the Respondent that his thyroid function was being adequately medicated at all relevant times and that hypothyroidism was not a problem and if anything his status could be described as hyperthyroid; that is that he had excess activity of his thyroid gland. The Respondent rejected this.

The Applicant's submissions as to penalty

26 Ms Groenewegen for the Applicant told the Tribunal that the Law Society was not seeking a large fine.

27 As to the Respondent's medical evidence, she submitted that if at the time of the facts central to the complaint the Respondent's administration of Oroxine had been rendered ineffective by his failure to refrigerate it and incorrect storage as the Respondent had claimed, then the underactivity of his thyroid would have been detected when he was tested in early 2009. This had not happened. No increase in dosage had been prescribed at that time, and in fact it seemed that a decrease in the dosage of Oroxine had been prescribed.

28 Ms Groenewegen contended that the Respondent's conduct was not caused by his hypothyroidism. The cause was rather the Respondent's own poor choices in the way in which he ran his professional practice. This was evidenced by his delay in attending to necessary actions, his failure to return telephone calls, his failure to follow-through on statements of intention, his failure to attend meetings, his substantial delay in complying with statutory professional obligations and his misplacing of the relevant cheques.

29 Ms Groenewegen submitted that the matter was an appropriate one for a fine and that in the Law Society's view on the basis of all the facts and the nature of the conduct the fine should probably be towards the lower end of the scale.

The Legal Services Commissioner's submissions as to penalty

30 Ms Muston for the Legal Services Commissioner asked the Tribunal to take into account that not only had the Respondent expressed contrition for his actions at this hearing, he had done so at quite an early stage of correspondence with the Law Society.

31 Ms Muston further contended that the conduct of the Respondent did not involve fraudulent practice, but rather what might be described a "sloppy" practice, and that there was nothing in the agreed facts which showed that the Respondent's conduct should affect his future right to practice. Ms Muston indicated that the Legal Services Commissioner's position was that this might well be a matter where a reprimand alone would be sufficient penalty, but if the Tribunal were minded to impose a fine, in substitution or in addition to a reprimand, the fine should be at the lower end of the scale.

The Respondent's position on penalty

32 The Respondent did not expressly address the issue of penalty in his submissions but the Tribunal notes that in his Reply filed on 2 November 2011 the Respondent stated that:

"Mitigating circumstances will be relied upon to reduce the penalty/fine sought by the Applicant. Medical issues will be submitted in relation to the penalty."

The Tribunal's determination as to penalty

33 The Tribunal accepts the medical evidence as establishing only the following:

·that at relevant times the Respondent had a hypothyroid condition,

· that Oroxine had been prescribed for this condition and

·that clinical manifestations of hypothyroidism can include lethargy including daytime somnolence.

34 The medical evidence does not in the Tribunal's assessment establish anything beyond that. It does not establish the effect of hypothyroidism on the Respondent, or that hypothyroidism affected his practice. The endocrinologist's report is brief and its descriptions of manifestations of the condition are generic. Nothing is said as to whether the Respondent suffered any of the stated manifestations.

35 The Tribunal is also prepared to accept, on the basis of the Respondent' testimony, that there were times during the relevant period in which he may have felt drowsy at the office and may even have fallen asleep.

36 However, that neither explains nor excuses the conduct complained of. In the Tribunal's view the Respondent has failed to discharge the onus which he must bear in attempting to establish that his medical condition had such an effect upon his practice that it should be taken into account by the Tribunal in assessing the penalty which it should properly attach to his professional misconduct.

37 In the search for a cause of the Respondent's misconduct the Tribunal accepts the contention put by Ms Groenewegen for the Law Society as far more plausible . (See paragraph 27 above). It was not the Respondent's hypothyroid condition which was the cause of the misconduct. Rather the chief cause was the persistence of poor habits of professional practice which the Respondent appears to have allowed himself to succumb to. That is evidenced by his actions and omissions in dealing with what should have been a simple series of steps for the Complainant, and his course of dealings with the Investigator. This involved delay, failure to return telephone calls, failure to follow-through on statements of intention, failure to attend meetings, delay in complying with statutory professional obligations and misplacing cheques.

38 The Tribunal accepts the character evidence tendered by the Respondent as establishing that for the greater part of his career the Respondent has been regarded as a competent and conscientious practitioner who understood and met the high ethical standards required of the profession.

39 The Tribunal also accepts that the Respondent's conduct is not of the category which would justify any limitation or condition being placed on his right to continue to practice.

40 However the course of the Respondent's conduct, as set out in the Particulars and conceded by him, does amount to a substantial departure from the standards of proper professional practice, and the Tribunal believes that this does need to be marked out by way of a reprimand and a fine.

41 The Tribunal is also influenced by the Respondent's understanding and acceptance of what has occurred and his contrition, and in particular by the fact that his contrition was expressed early in the course of events. The Tribunal accepts that this contrition is genuine and that the Respondent is likely to improve the administration and conduct of his practice as a result of these proceedings. Accordingly the Tribunal does not see a need to impose any additional conditions or orders or to seek any additional undertakings from the Respondent in order to bring that about. The Tribunal agrees with the submissions on behalf of the Applicant and the Legal Services Commissioner that a fine should be towards the lower end of the scale.

42 On the basis of these finding s and factors the Tribunal believes that the appropriate penalty is a fine of $1,000 together with a reprimand.

Other orders

43 A costs order in favour of the Applicant is appropriate. The compensation claim by the Complainant needs to be the subject of a separate order for payment by the Respondent to the Company. There appears to be no need for any other orders.

The compensation claim by the Complainant

44 At the conclusion of the hearing the Tribunal was advised by the Respondent and representatives of the Law Society and the Legal Services Commissioner that, following discussions, it had been agreed by all relevant parties that the appropriate amount of compensation to be paid by the Respondent to the Company was $546-69 and that the compensation order should be in that amount. The Tribunal accepts this and will order accordingly.

Orders

The Tribunal orders that:

1.The Respondent be fined $1,000, to be paid on or before 31 March 2012.

2.The Respondent be reprimanded.

3.The Respondent pay the costs of the Applicant as agreed or assessed.

4. The Respondent pay the Company compensation in the sum of $546.69.

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Decision last updated: 25 January 2012