Civil and Administrative Tribunal New South Wales

• Medium Neutral Citation: Council of the Law Society of NSW v Narayanasamy [2014] NSWCATOD 18
• Hearing dates: 1 August, 2013 & 15 October, 2013
• Decision date: 26 March 2014
• Jurisdiction: Occupational Division
• Before: S Hale, Senior Member; J Wakefield, Senior Member; J Butlin, General Member

Decision

1 The Legal Practitioner is publicly reprimanded.

2. The Legal Practitioner pay the costs of the Law Society as agreed or as assessed

• Catchwords: Legal Practitioner - Disciplinary Application - professional misconduct - failure to pay third party debt
• Legislation Cited: Civil and Administrative Tribunal Act, 2013; Legal Profession Act, 2004
• Cases Cited: Briginshaw v. Briginshaw (1938) 60 CLR 336; Allinson v General Council of Medical Education and Registration [1894] 1 QB 750; Law Society v. Xenos [2002] NSWADT
• Category: Principal judgment
• Parties: The Council of the Law Society of NSW (Applicant)
• Representation: Council of the Law Society of NSW) (Applicant); Jayram Narayanasamy (Respondent in Person)
• File Number(s): 122017

reasons for decision

Summary of complaint

1 By Application for Original Decision the Applicant Law Society, brought proceedings against the Respondent solicitor asserting that he was guilty of professional misconduct in that he failed to pay a third party debt to Independent Property Reports (Aust) Pty Ltd ("IPR"). The Applicant Law Society asserts that the debt owing at the time the proceedings were heard was $3,211.08.

2 At all relevant times the solicitor was the Principal of Jayram & Associates ("the law practice"). The Solicitor carried out legal practice in the name of the law practice.

3 On 15 October 2010 the Solicitor also became the Principal of Victor Lawyers Proprietary Limited.

4 The Law Society contends that the conduct of the Solicitor, as Principal of the law practice, in failing to pay to the third party, the debts which had been incurred by the Solicitor, constituted professional misconduct at common law.

5 The matter was heard by the Administrative Decisions Tribunal on 1 August and 15 December, 2013. On 1 January 2014, the Administrative Decisions Tribunal was abolished and its jurisdiction was acquired by the New South Wales Civil and Administrative Tribunal. This matter is a "part heard proceeding" within the meaning of clause 6 of Schedule 1 to the Civil and Administrative Tribunal Act, 2013 (CATA). This Tribunal may exercise all the functions which the Administrative Decisions Tribunal had immediately before its abolition. The provisions of the Administrative Decisions Tribunal Act, 1997, which would have applied to these proceedings had CATA not been enacted continue to apply: Clause 7(3) Schedule 1 to CATA.

The grounds of complaint

6 IPR carries out property searches and inspections.

7 In early June 2009 the law practice commenced to use the services of IPR. Initially, a solicitor with the law practice, Mr Sundar Rajeev was the person who made contact with IPR.

8 IPR provided its first strata report to the law practice on 22 June 2009. An invoice for the work done was forwarded to the law practice. The terms of IPR's invoice was that same was payable within 30 days. The terms had been agreed to by the law practice in an earlier conversation between an officer of IPR and Mr Rajeev.

9 Between June and November 2009 the law practice instructed the complainant to undertake further inspections and provide further reports. Further reports were accompanied by tax invoices for the work done by IPR and required payment within 30 days.

10 On 18 November 2009 and in response to its request for payment of its outstanding accounts, IPR received two cheques totalling $500.00 drawn on the general account of the law practice.

11 On or about 26 November 2009 the St George Bank informed IPR that those cheques had not been met on presentation.

12 In March 2010 IPR engaged a debt recovery agency to seek payment from the solicitor of outstanding invoices in the total sum of $2,300.00 ("the outstanding invoices"). No payment was recovered from the Solicitor.

13 On 16 June 2010, IPR commenced Local Court proceedings against the solicitor seeking to recover the amount owing for the outstanding invoices together with various costs and disbursements.

14 On or about 20 July 2010 the Solicitor filed a Defence to the complainant's claim in the Local Court. The Solicitor denied any liability for the outstanding invoices on the basis that "he was either the agent of [IPR] or in the alternative, [he] was the agent of the Client for which [IPR] had a contractual agreement to provide a building and pest inspection report".

15 On 22 December 2010 judgment was entered against the solicitor in favour of IPR in the sum of $3,211.08 ("the judgment debt").

16 By letter dated 19 July 2011, in response to the complaint, the Solicitor offered to settle the judgment debt in the sum of $3,211.08 less legal costs of $508.20 (which were said to have been paid) in five monthly instalments of $540.60 and commencing from 1 September 2011. This offer was rejected by IPR who proposed an alternate payment schedule. However, no final agreement was reached as to the payment of the judgment debt or the compensation which the complainant also sought.

17 In a statutory declaration declared on 23 November 2011 and provided to the Applicant Law Society, the Solicitor declared, in part, "I take responsibility and am willing to pay the complainant $3,000 including interest".

18 Notwithstanding the Solicitor's position in his statutory declaration of 23 November 2011, the Solicitor has failed to pay to IPR the judgment debt.

The First Hearing and the evidence

19 The Applicant Law Society filed two affidavits in support of its Application. The first Affidavit was sworn by Anne-Marie Foord on 15 August 2012, Ms Foord being the solicitor for the Applicant Law Society. The second Affidavit was sworn by Bronwyn Nagy, Director of IPR sworn 22 August 2012.

20 The Affidavits were tendered without objection.

21 The Solicitor filed a number of documents including a two page document filed in the Registry on 19 March 2013 in the nature of a Reply together with an Affidavit sworn on 14 January 2013. This document comprised 4 pages of what might be described as submissions together with 30 pages of annexed documents. A third document filed 24 July, 2013 headed "Mistake of Fact" comprised 6 pages in the form of submissions and 16 annexures. The final document comprised a one page letter written on letterhead of Universal Lawyers and signed by a Joy Quinones, the Principal solicitor of Universal Lawyers.

22 At the hearing the Solicitor indicated he would not be relying on any material filed by him as referred to in the previous paragraph, rather, he would make submissions. However, when questioned by the Tribunal he appeared to change his position. It seemed that his reluctance to rely on his Affidavit (such as it was) arose from the notice which he had been given by the Law Society that it would object to most of the material contained within in it. Even though he had been given the opportunity to file further evidence by Deputy President Haylen on 5 June 2013, he did not do so, his explanation being that he believed "it would suffer the same fate".

23 The Applicant Law Society submitted that it had come prepared for hearing on the basis that the matter would proceed by way of submissions only.

24 After further discussion the Solicitor made an application for an adjournment to enable him to file an Affidavit going to the evidence. When questioned as to what further material he might incorporate into his Affidavit the Tribunal established that the particular material was already before it and indicated that the matter could proceed subject to a short adjournment being granted in order for the Applicant Law Society to consider its position. In the meantime, the Tribunal noted that Ms Nagy, who had been called by the Solicitor for cross examination was present and all parties agreed her evidence should be taken.

25 In her evidence in chief Ms Nagy said that the Costs Order in her favour made by the Local Court in the sum of $508.20 had not been received by her from the solicitor to the best of her knowledge.

26 The Respondent's cross examination of Ms. Nagy was of little use to the Tribunal in determining this matter. The Respondent focused on the fact that initially, it was the Respondent's employed solicitor who ordered the reports from IPR and whether Ms. Nagy had formed the view that he was a "begrudged employee" and that she had never made any attempt to get in touch directly with the Solicitor. Ms Nagy responded; "He was given a tax invoice, he was going to pay for the tax invoice. He gave me a cheque, I don't see any reason to escalate it to anybody else. This is a normal procedure I do with all my customers." The Tribunal was at a loss to understand the line of questioning which was not apparently relevant to the issue which the Tribunal had to determine. Likewise, the questioning of Ms Nagy by the Solicitor as to the offer of settlement which he had made referred to earlier in paragraph 15 and which had been rejected by Ms. Nagy.

27 After the morning tea adjournment the Applicant Law Society formally sought an adjournment on the basis that it needed time to consider the further evidence that the Solicitor was intending to seek to put before the Tribunal. It comprised a bundle of letters which it had not sighted previously and which did not form part of the material placed before the Tribunal by the Solicitor. Whilst the Tribunal was mindful of the fact that one day had been set down for the hearing of the proceedings and the waste of resources flowing from the granting of an adjournment, given the frailty of the Solicitor's evidence, the fact that he was self represented and the further new material that was sought to be produced by him, in the interests of fairness, the Tribunal granted the adjournment. In doing so it issued specific directions for the filing and serving of further evidence stressing to the Solicitor his obligations in that regard.

The Second Hearing and the further Evidence

28 The proceedings came before the Tribunal again on 15 October, 2013. The Solicitor had filed three further documents being a document called an "Amended Affidavit" sworn on 2 September, 2013 and filed on 5 September, 2013, a second document called "Amended submission 2" filed on 5 September, 2013 and a third document untitled but filed on 29 August, 2013 and in the format of an affidavit. This last document appeared to be a repeat of earlier material filed by the Solicitor and in the nature of submissions. The Solicitor informed the Tribunal he intended to proceed on the basis of the first two documents, that is, his Amended Affidavit and his Amended submissions. The Amended Affidavit was tendered and much of the material objected to by the Law Society. The objections were ruled on.

29 The Law Society commenced its cross examination on the Defence which the Solicitor had filed in the Local Court proceedings by which he denied liability for the debt on the basis that he was either the agent of the Plaintiff or in the alternative he was the agent of the client for which the Plaintiff had a contractual agreement to provide a building and pest inspection report. At the time of the first question the Solicitor was asked whether he wished to object to answering the question or sought the issue of a certificate under s.128(3) of the Evidence Act. At his request the solicitor was given and read a printout of S. 128 of the Evidence Act and was given a "layman's" explanation of the effect of that Section. The Solicitor declined to answer the first question (in relation to his Defence) and indicated he did not wish to answer any further questions and was excused.

30 The Law Society then anticipated an application for adjournment for the purposes of amending the existing complaint to add further grounds or to file a further application. After consideration the Tribunal refused the application on the basis that the evidence had been heard, the Tribunal was in a position to determine the discrete issue, the proceedings had already been considerably delayed and it was not in the interest of the just, quick and cheap disposal of the matter that it be further delayed .

Submissions

31 In summary, the Law Society referred to the basis of the Defence filed by the Solicitor in the local court proceedings which it said "defied logic". It referred to letters (in evidence) written by the Solicitor to his clients for whom reports had been ordered advising them that "we were only acting as unpaid agent for IPR and unless payment is made in due course to IPR, they may seek to take legal action against you directly for the services provided by them in furnishing the strata report on the above property as the contract was between you and IPR........." The letters go on to say, 'However, please note, we have now received a Statement of Claim from the Solicitors acting for IPR. This mean that unless your payment of $250.00 is received and made payable to IPR within one week from the date hereof, we shall be forced to include you as co-defendant in the action being now taken in the court which will make you liable for any additional cost including the $250.00 still being owed.' These letters, said the Law Society, further demonstrated the Solicitor's unwillingness to meet his professional debts in the course of the conduct of his practice. This it was submitted went to the heart of the practice of law and there could be no doubt that the conduct fell into that general term of "disgraceful and dishonourable" as described by Justice Lopes in Allinson v General Council of Medical Education and Registration [1894] 1 QB 750.

32 The Solicitor in his written submissions asserted that he had consistently held the honest but mistaken belief that the clients concerned were to pay the service provider directly for the reports. He submitted that he was the victim of a begrudged employee who created the state of affairs contributing to the Solicitor's mistaken belief by issuing the tax invoices prepared on behalf of the law practice which did not include the IPR invoices as a disbursement. Additionally, the Solicitor said that the cheques which had been dishonoured had been drawn by his employee, who had authority to act on the office account, without reference to available funds. None of this material could be tested as the Solicitor declined to be cross examined. The Solicitor's oral submissions were to the same effect.

Findings

33 The Tribunal finds that the conduct complained of has been established to the requisite standard proof see Briginshaw v. Briginshaw (1938) 60 CLR 336. The Solicitor failed to pay his practice debts as and when they arose to IPR, and he again failed to pay those debts to the debt recovery agent engaged by IPR in March, 2010. The Defence which he filed in the local court proceedings in response to the Statement of Claim "defies logic" to use the language of Law Society. In the Tribunal's view the bona fides of that Defence is questionable. The Solicitor declined to answer questions put to him by the Law Society in relation to the Defence.

34 It is now some 4 ½ years since the conduct complained of occurred (during the period June, 2009 to November, 2009) and the debt to IPR remains outstanding.

35 Two offers of payment were made by the Solicitor; one referred to in paragraph 16 above and the second one by cheque which was sent to the Office of the Legal Services Commissioner when he was investigating the matter. The Tribunal does not have before it any details of that cheque but understands it remains with the Office of the Legal Services Commissioner and that it was not tendered by the Solicitor unconditionally. By the statutory declaration referred to in paragraph 17 above, the Solicitor acknowledged the debt but has failed to pay it.

36 The Solicitor's evidence both written and oral gave no comfort to this Tribunal that he appreciated the gravity of his conduct and the fact that the debt remains outstanding is reflective of this fact.

37 The day to day conduct of legal practice requires legal practitioners to honour their practice debts to third parties. This is a well established principle with which the Solicitor ought to have been familiar having been in practice since 1994. By letter dated 22 February, 2012 from the Law Society to the Solicitor, he was on notice that his professional body considered that he had engaged in conduct which could be found to constitute professional misconduct by this Tribunal. However, he continued to treat his responsibility to IPR as though it did not exist.

38 In the view of the Tribunal, the conduct complained of falls squarely within the parameters of Allinson's case, namely conduct which "would be reasonably regarded as disgraceful and dishonourable" by "professional brethren of good repute and competency". The law practice of which he was the principal having retained IPR to provide services, he having been the subject of a judgment for debt and having admitted the debt, the solicitor has without reason or excuse failed or neglected to satisfy the debt.

39 The failure by a practitioner to pay third party debts other than those for which moneys were held in trust was considered by the Administrative Decisions Tribunal in Council of the Law Society v. Xenos [2002] NSWADT at [283]. Although ultimately concluding, upon the basis of the contention of the Law Society which the Solicitor did not oppose, that failure to pay a third party amounted to unsatisfactory professional conduct in the circumstances of that matter, the Tribunal noted:

"[w]e should add that we were concerned that in view of the obdurate way in which he refused to discharge his obligation, both statutory (under section 279) and contractual, to pay the fees due to D A Strati this conduct on his part might have been more appropriately characterised as professional misconduct."

40 The conduct was ultimately characterised as unsatisfactory professional conduct in light of the absence of any evidence as to the reasonableness of the fees being charged and taking into account some evidence as to the Solicitor's health and financial situation during the relevant period. There are no such factors in the circumstances of this case.

41 The Tribunal finds that the facts establish a clear case of professional misconduct although at the lower end of the scale. The Law Society seeks an order that the Solicitor be publicly reprimanded and the Tribunal is of the view that this is an appropriate penalty.

Orders

(1) The Solicitor is publicly reprimanded.

(2) The Solicitor to pay the costs of the Law Society as and incidental to these proceedings, within three (3) months as agreed or assessed.

Compensation Claim

42 The Tribunal notes that IPR intends to pursue a compensation claim against the Solicitor although there is currently no formal evidence before the Tribunal. That being the case the Tribunal Orders that:

(1) The Complainant is to file and serve any evidence upon which she intends to rely within four (4) weeks of the date of these Orders.

(2) The Respondent is to file and serve a Reply to the Compensation Claim and any evidence to be relied upon in relation to that claim within a period of four (4) weeks thereafter.

(3) Should the parties consent, the Compensation Claim be determined on the papers.

(4) Should the parties not consent to Order 3, the Compensation Claim be relisted for directions on a date to be fixed but not before eight (8) weeks of the date of these Orders.

 

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar

Decision last updated: 26 March 2014