Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Council of the Law Society of NSW v Low [2020] NSWCATOD 142 Hearing dates: On the papers Date of orders: 07 December 2020 Decision date: 07 December 2020 Jurisdiction: Occupational Division Before: J Wakefield, Senior Member G Ulman, Senior Member B Thomson, General Member Decision: The Tribunal, having found that Chee Kiong Low is guilty of professional misconduct, orders that: 1. The Respondent solicitor is publicly reprimanded. 2. The Respondent solicitor must: (a) Undertake, complete and pass, at his own expense, within 6 months of the date of the orders or within such further time as may be agreed by the Director, Professional Standards of the Law Society of NSW (Director) an appropriate course in legal ethics as approved by the Director (ethics course) and therein achieve a pass mark of not less than 50%; (b) Undertake, complete and pass, at his own expense, within 6 months of the date of the orders or within such further time as may be agreed by the Director, an appropriate course in trust and office accounting as approved by the Director (trust course) and therein achieve a pass mark of not less than 50%; and (c) Within seven (7) days of receipt of notification of the result of his participation in the ethics course and the trust course, provide to the Director, the original of such notifications. 3. The Respondent solicitor is to pay a fine of $3,000 within three calendar months of the date of these orders. 4. The Respondent solicitor is to pay the Applicant's costs of and incidental to the proceedings as agreed in the sum of $5,000. Catchwords: PROFESSIONS AND TRADES- Legal Practitioner - application for disciplinary findings and orders – application to recommence proceedings – professional misconduct – borrowing from client in breach of Rule 12.3.1 of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) – instrument of consent - public reprimand - fine Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Justice Legislation Amendment Act (No 2) 2019 (NSW) Legal Profession Act 2004 (NSW) Legal Profession Uniform Law 2014 (NSW) No 16a Legal Profession Uniform Law Application Act 2014 (NSW) Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) Cases Cited: Allinson v General Council of Medical Education & Registration [1894] 1 QB 750 Bechara v Legal Services Commissioner (2010) 79 NSWLR 763; [2010] NSWCA 369 Briginshaw v Briginshaw & Anor [1938] 60 CLR 336 Bronze Wing International Pty Ltd v SafeWork NSW [2017] NSWCA 41 Council of Law Society of New South Wales v Renfrew [2019] NSWCATOD 63 Council of New South Wales Bar Association v Breeze [2015] NSWCATOD 152 Council of the Law Society of New South Wales v Low [2019] NSWCATOD 154 Council of the Law Society of NSW v Laftsidis [2010] NSWADT 317 Council of the Law Society of NSW v Lyons [2012] NSWADT 166 Council of the Law Society of NSW v Mavrakis [2010] NSWADT 103 Council of the Law Society of NSW v Stormer [2010] NSWADT 240 Council of the Law Society of NSW v White [2011] NSWADT 11 Council of the New South Wales Bar Association v Butland [2009] NSWADT 177 Council of the NSW Law Society v McEncroe [2015] NSWCATOD 109 Council of the NSW Law Society v Vaughan [2015] NSWCATOD 156 Dona v The Council of the Law Society of NSW [2014] NSWCA 444 Kennedy v Council of the Incorporated Law Institute of New South Wales (1939) 13 ALJR 563 Law Society of New South Wales v Walsh [1997] NSWCA 185 Law Society of NSW v Barwick and Deshnicz [2002] NSWADT 66 Law Society of NSW v Harvey [1996] 2 NSWLR 154 Law Society of NSW v Moulton [1981] 2 NSWLR 736 Legal Services Commissioner v Searle [2016] NSWCATOD 23 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd & Ors (1992) ALR 449 Texts Cited: Nil Category: Principal judgment Parties: Council of the Law Society of New South Wales (Applicant) Chee Kiong Low (Respondent) Representation: Solicitors: Law Society of New South Wales (Applicant) Respondent (Self-represented) File Number(s): 2020/00028208; 2018/00363802 Publication restriction: Nil reasons for decision Background 1. By application filed on 2 January 2020 in File Number 2020/00028208 (the application) the Council of the Law Society of New South Wales (the Council) sought the following orders: 1. That the Solicitor be reprimanded. 2. The Solicitor: 1. Undertake, complete and pass, at his own expense, within 6 months of the date of the orders or within such further time as may be agreed by the Director, Legal Regulation of the Law Society of NSW (Director) an appropriate course in legal ethics as approved by the Director (ethics course) and therein achieve a pass mark of not less than 50%; 2. Undertake, complete and pass, at his own expense, within 6 months of the date of the orders or within such further time as may be agreed by the Director, an appropriate course in trust and office accounting as approved by the Director (trust course) and therein achieve a pass mark of not less than 50%; and 3. Shall, within seven (7) days of receipt of notification of the result of his participation in the ethics course and the trust course, provide to the Director, the original of such notifications. 1. The Solicitor be fined. 2. The Solicitor pay the costs of the Society as agreed or assessed. 3. Any further or other orders the Tribunal deemed appropriate. 1. The application was supported by the affidavit of Anthony James Lean sworn 24 January 2020. Mr Lean is the solicitor for the Law Society of New South Wales and the Society's Director, Legal Regulation. 2. The matters the subject of the application were previously before the Tribunal in proceedings 2018/00363802 (the earlier proceedings) commenced by application for disciplinary findings and orders filed on 26 November 2018 (the earlier application). The earlier proceedings were the subject of the Reasons for Decision in Council of the Law Society of New South Wales v Low [2019] NSWCATOD 154. By those reasons the earlier proceedings were dismissed on the Council's application upon a finding that the Tribunal did not have jurisdiction to hear and determine the earlier application. Recommencement of proceedings 1. The Council seeks to recommence the earlier proceedings pursuant to cl. 23(5)(a) of Part 5 to Sch 9 of the Legal Profession Uniform Law Application Act 2014 (NSW) (LPULAA). No submissions were made by the parties concerning jurisdiction and the Respondent solicitor raised no objection to the recommencement of the earlier proceedings. 2. Clause 23(5)(a) is relevantly in the following terms: "(5) Any proceedings commenced in a court or tribunal by an authorised delegate or subdelegate that were terminated on a relevant invalidity ground during the relevant period at the instigation of an authorised delegate or subdelegate-- (a) may be recommenced under the authority of this clause by the same delegate or subdelegate in the court or tribunal on the basis of the applications and other documents by which those proceedings were last commenced" 1. Clause 23(6) provides: "(6) Proceedings may be commenced or recommenced under the authority of this clause despite section 137 of this Act, but only if they are commenced or recommenced no later than 6 months after the day on which this clause commences." 1. Clause 23(10) provides relevantly: "relevant invalidity ground, in relation to proceedings, means on the ground that the proceedings were not validly commenced by an authorised delegate or subdelegate because of any one or more of the following reasons— (a) the delegate or subdelegate was not authorised to commence the proceedings by the 2015 delegation, including because— (i) the 2015 delegation was not valid, or (ii) the terms of the 2015 delegation did not allow the delegate or subdelegate to commence the proceedings, or (iii) the delegate, subdelegate or NSW Commissioner did not comply with a provision of the 2015 delegation, (b) the proceedings were based on a complaint purportedly made to or by the delegate or subdelegate in circumstances where this Act or the Uniform Law required the complaint to have been made to or by the NSW Commissioner, (c) the proceedings were based on a complaint purportedly made to or by the delegate or subdelegate in circumstances where there was non-compliance with a requirement of section 267 of the Uniform Law. relevant period means the period commencing on 18 June 2015 and ending immediately before the day on which this clause commences." 1. The LPULAA was amended to include Part 5 to Sch 9 by enactment of the Justice Legislation Amendment Act (No 2) 2019 (NSW), which was assented to on 22 November 2019. Therefore, the day on which clause 23(6) commenced was 22 November 2019. 2. The relevant period referred to in clause 23(5) and as defined in clause 23(10) is the period commencing on 18 June 2015 and ending 21 November 2019. The Reasons for Decision in Low were published on 9 October 2019. The earlier proceedings were accordingly terminated on that day which falls within the relevant period. 3. The earlier proceedings were terminated on the instigation of the Council because no "complaint" as defined in s 265 of the Legal Profession Uniform Law 2014 (NSW) No 16a (LPUL) had been made as required by s 267; see Low at [20]. Non-compliance with a requirement of section 267 of the Uniform Law is one of the relevant invalidity grounds defined in clause 23(10). 4. These proceedings are being recommenced by the Council which was the delegate or subdelegate which had commenced the earlier proceedings as required by s 23(5)(a) LPULAA. The recommencement application was filed on 2 January 2020 within 6 months of 22 November 2019 and within the time provided by clause 23(6). 5. Accordingly, on the material before us, the Tribunal has jurisdiction to determine the proceedings by way of recommencement of the earlier proceedings. Evidence before the Tribunal 1. By his affidavit filed in support of the application Mr Lean sought an order that the material filed by the Council in the earlier proceedings be deemed to be filed in the recommenced proceedings being: 1. Affidavit of Ronald Frederick Dunlop sworn 8 November 2018. 2. Affidavit of Anne-Marie Foord sworn 20 November 2018. 3. Instrument of Consent filed on 15 April 2019. 4. Applicant's submissions on orders filed dated 13 May 2019. 5. Affidavit of Nadya Justine Haddad affirmed 12 September 2019. 1. The proceedings were listed for a directions hearing on 11 March 2020 before Judge Cole, Deputy President. The Respondent solicitor was present at the directions hearing. The following orders and/or directions were made: 1. These proceedings are the recommencement of the proceedings in NCAT matter 2018/00363802 under clause 23(5)(a) of Part 5 to Schedule 9 of the Legal Profession Uniform Law Application Act 2014. 2. All material filed by the parties in NCAT matter 2018/00363802 is deemed to have been filed in these proceedings. 3. Evidence adduced and submissions made in NCAT matter 2018/00363802 are deemed to have been adduced and made in these proceedings. 4. The matter is remitted to the Tribunal constituted as it was for NCAT matter 2018/00363802 for determination on the material and evidence in NCAT matter 2018/00363802. 1. In addition to the material filed by the Council to which we have referred the following pleadings, evidence and submissions filed by the Respondent solicitor in the earlier proceedings are deemed to have been filed in these proceedings: 1. Affidavit of the Respondent sworn 13 February 2019. 2. Reply to application for disciplinary proceedings filed on 14 February 2019. 3. Affidavit of the Respondent sworn 4 May 2019. 4. Respondent's submission on orders filed on 11 June 2019. 1. We have had regard to this material which was admitted into evidence in the earlier proceedings without objection. We have also had regard to the transcript of the evidence given by the Respondent at the hearing of the earlier proceedings on 15 April 2019 which evidence is deemed to have been adduced in these proceedings. The present application 1. The ground presently relied upon was set out in the earlier application in the following terms: "CHEE KIONG LOW is guilty of professional misconduct in that he: 1. The Lawyer borrowed the amount of $100,000 from Ms Chu Lin Lee, being a client of the Lawyer in breach of Rule 12.3.1 of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW). Particulars In these Particulars: 'the Solicitor' means Mr Chee Kiong Low 1. From 8 December 2013, the Solicitor acted for Ms Chu Lin Lee in respect of various Estate matters. Specifically, an Application for Letters of Administration and a claim in the Supreme Court of NSW under the Succession Act 2006 (NSW) in respect of her late spouse. 2. Related Family Provision consent orders were made on 17 November 2014 as a result of which a property situated at (number withheld) Fleet Street, Carlton (the Carlton Property) would be sold and, in part, the sum of $64,000 would be paid to Ms Lee together with a 'balance' of funds after various other payments. 3. Letters of Administration were granted to Ms Lee on 23 February 2015. 4. The sale of the Carlton Property settled on 20 April 2015. 5. Ms Lee's net share from the sale of the Carlton property totalled $432,486.91. 6. On 24 April 2015 ($311,257.69 and $37,222) and 6 August 2015 ($130,500), as a result of Court orders in favour of Ms Lee, a total amount of $432,486.91 was paid into the Solicitor's Trust Account. 7. On 22 April 2016, the amount of $10,000 was withdrawn from the amount held by the Solicitor in his trust account for Ms Lee and paid to her. The trust account balance standing to the credit of Ms Lee was then $415,317.41. 8. On 27 April 2015 the sum of $64,000 was paid directly into the Solicitor's Office Account on account of costs 9. On 27 October 2016, the Solicitor borrowed $100,000 from Ms Lee. That amount was deducted from the amount held in his trust account on behalf of Ms Lee (the Loan). 10. The Loan was supported by (a) an 'authority' from Ms Lee dated 27 October 2016 which stated "I Chu Lin Lee authorises Kiong Low to withdraw $100,000 from trust monies held in Kiong Low & Co Trust Accounts for loan to Kiong Low"; and (b) an 'acknowledgment' dated 27 October 2016 which stated "Kiong Low acknowledges receipt of $100,000 from Chu Lin Lee repayable over 2 years from today at interest rate of 5% per annum". 11. The Loan was for a period of two (2) years and at an interest rate of 5% per annum with the principal and interest payable at the conclusion of this period. 12. After the making of the Loan, the sum of $315,317 41 remained to the credit of Ms Lee in the Solicitor's trust account. 13. The Loan was used by the Solicitor to purchase a property at 18 Soma Avenue, Bowral. 14 Ms Lee confirmed that the she had authorised the Loan. 15. The balance of the amount held by the Solicitor in the Trust Account on behalf of Ms Lee remained in the trust Account in accordance with Ms Lee's standing instructions. 16. At the time of the Loan Ms Lee remained a client of the Solicitor. 17. The borrowing by the Solicitor was contrary to the prohibition contained in Rule 12 of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015." 1. By his Reply filed on 14 February 2019 the Respondent admitted ground 1 and particulars 1 to 17. Instrument of Consent 1. The Instrument of Consent entered into pursuant to s 144 of the LPULAA was signed by the parties and filed on 15 April 2019. It was in the following terms "CONSENT The NSW Civil and Administrative Tribunal having found that the conduct of CHEE KIONG LOW described under the heading 'grounds of complaint' and particularised in the annexed Agreed Statement of Facts amounts to professional misconduct makes, by consent, the following orders: The Respondent: 1. be Reprimanded 2. undertake, at his own expense, within 6 months of the date of the orders or within such further time as may be agreed by the Director, Professional Standards of the Law Society of NSW (Director) an appropriate course in legal ethics as approved by the Director (Ethics Course) and therein achieve a pass mark of not less than 50%; 3. undertake, at his own expense, within 6 months of the date of the orders or within such further time as may be agreed by the Director, an appropriate course in trust and office accounting as approved by the Director (Trust Course) and therein achieve a pass mark of not less than 50%; and 4. shall, within seven (7) days of receipt of notification of the result of his participation in the Ethics Course and Trust Course, provide to the Director, the original of such notification. 5. pay the costs of the Society as agreed or assessed." 1. The ground of complaint and particulars 1 to 17 in the earlier application were set out in identical terms in the Agreed Statement of Facts attached to the Instrument of Consent. Findings on the evidence 1. In assessing the evidence we have regard to the seriousness of the allegation made, the inherent unlikelihood of an occurrence of a given description and the gravity of the consequence flowing from a particular finding in determining whether an issue has been proven to our reasonable satisfaction; see Briginshaw v Briginshaw & Anor [1938] 60 CLR 336 per Dixon J at p. 362. 2. We have also had regard to the statement by Mason CJ for the plurality in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd & Ors (1992) ALR 449 at [450] that: "the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary 'where so serious a matter as fraud is to be found.(Rejfek v McElroy (1965) 112 CLR, at 521). Statements to that effect should not, however, be understood is directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct." 1. This approach was approved by Leeming JA in Bronze Wing International Pty Ltd v SafeWork NSW [2017] NSWCA 41 at [126]. 2. Each of the allegations of fact contained in the particulars to the complaint which have been admitted by the Respondent and appear in the agreed statement of facts was the subject of evidence. We find each of those facts to be established. 3. At the hearing of the earlier proceedings on 15 April 2019 the Tribunal was concerned to be satisfied that all outstanding interest due to the client upon the terms of the loan had been paid. A direction was made that the Respondent solicitor file a further affidavit: 1. Advising as to the request of the client that she obtain, at the respondent's expense, independent advice as to the payment of interest owed to her in respect of the advance to respondent (sic) of the sum of $100,000 on 27/10/2016; 2. Providing evidence of payment by the Respondent to the client of any further interest owed to her in respect of the advance in (a) above (the advance); 3. providing evidence of the total interest paid to the client in respect of the advance. 1. Pursuant to that direction the Respondent filed his affidavit sworn on 4 May 2019. The evidence set out in that affidavit was in the following terms; 1. The Respondent wrote to the client on 15 April 2019 requesting that she obtain independent advice at his expense on the interest payable on the loan of $100,000 set out in the Schedule being a loan said to be repayable over 2 years from 27 October 2016 at an interest rate of 5% per annum. 2. Loan repayments had been made to the client as follows: 30 April 2018 $10,000 1 May 2018 $40,000 13 February 2019 $50,000 1. Interest payments had been made to the client as follows: 11 April 2019 $5,000 14 April 2019 $5,000 1. As at the date of swearing his affidavit the Respondent had not received a response from the client. He gave evidence that she had previously indicated that she would not be seeking independent advice on interest payable on the loan, in his words "the reason being that it is a negligible sum in terms of our good will". 2. On 22 April 2014 the Respondent wrote to Ken Yaw & Co Accountants seeking advice on further interest payable on the loan because of late payment of part of the principal and late payment of interest and requesting that he calculate the amount "most favourable/beneficial to the lender". 3. Ken Yaw & Co provided advice to the Respondent by email dated 2 May by reference to an attached worksheet that the total outstanding interest due to 2 May 2019 was $50.88. 4. On 2 May 2019 the Respondent transferred $100 into his trust account to be held for the client for payment of outstanding interest. This amount was in excess of that the subject of the advice from Ken Yaw & Co. The Respondent said that he was doing this "to show fairness and appreciation" to the client. A copy of the trust account statement showing the transferred amount was in evidence. 1. The Respondent further annexed to his affidavit a schedule showing payments of the principal sum and interest in the amounts referred to totalling $110,100. 2. The Council did not object to the Respondent's further evidence or seek to serve any evidence in reply. We accept the further evidence comprised in the Respondent's affidavit sworn 4 May 2019 and we find the facts to which we have referred established. The circumstances of the loan 1. The Respondent borrowed $100,000 from the client and that amount was deducted from the amount held in his trust account on her behalf. The balance of the money in the trust account in the sum of $315,317.41 was maintained. The client remained a client of the Respondent. The borrowing was supported by the "authority" and "the acknowledgment" to which we have referred. 2. The agreed characterisation of the acknowledgment was that accrued interest at the rate of 5% per annum on the principal was payable at the conclusion of the 2 year period. 3. Repayments of the principal were made in the sums of $10,000 on 30 April 2018, $40,000 on 1 May 2018 and $50,000 on 13 February 2019. Interest payments were made in the sums of $5,000 on 11 April 2019, $5,000 on 14 April 2019 and a further sum of $100 on 2 May 2019 upon a calculation of interest payable for late payment of principal. The payment of principal in the sum of $50,000 on 13 February 2019 and all interest payments were made outside the terms of the loan acknowledgment which required repayment "over 2 years". There was no evidence that the client extended the term of the loan. 4. The Respondent gave evidence that the client had been left destitute when her husband died intestate and the matrimonial home was transferred to her stepson as joint tenant. As the Tribunal understood it the client sought to make a claim for provision out of the intestate estate of her husband. The Respondent said that he acted for the client after several solicitors had declined to act for her. He said that he persuaded counsel to be sympathetic and that counsel agreed to take the matter provided the Respondent stood guarantor for his fees. He said that he stood to receive no fees and have to pay counsel's fees as guarantor should his client not have been successful in the proceedings. 5. The Respondent's evidence in relation to the loan was in the following terms: "I did not take advantage of the client. I did her no harm. The prevailing interest rate was about 3% and I am paying her 5% per annum. She is unemployed and the interest she earns from this transaction would give her an additional income of $5,000 per year for 2 years. I paid her back the $100,000 principal sum and will pay the interest and any additional interest in a month's time. … Moreover as she is a lonely person, I have often brought her to the Bowral property together with my other friends because she enjoys the environment and because she likes the garden. I am saying all this not to make an excuse, but as an explanation." 1. The Respondent gave evidence that the $100,000 borrowed from the client was used towards the purchase of an investment property although he earned no income for approximately 2 years after purchase. It was the only loan that he used in order to purchase the property. 2. The Respondent gave oral evidence to the following effect: "… I must add that I have been thoroughly stupid in this case because if I had thought fully and carefully on it I could have borrowed it from somebody else. I did scrutinise the regulations left, right and centre and look at the definition of client and in my ignorance and stupidity there were no other matters for her, so I thought she wasn't a client as was quoted in the caselaw, so it's no excuse, it's just an explanation, I did it, I wasn't out to take advantage of her, I really, really look at the regulations and I was quite confident that she wasn't a client. As you can see, the moneys in the trust account were there for 4 years, never moved, she doesn't have any other matter in front of me, so I was stupid to only look at the regulations, solicitors' rules and not look up the caselaw where was quoted. As I have said if I knew, I didn't need to borrow from her, I could have borrowed it from somebody else." 1. There was no evidence as to the source and availability of any alternate borrowing. 2. Although she was in receipt of moneys upon being successful in the proceedings in which he represented her, at the time of the loan the client remained on Centrelink benefits. The client was an elderly widow. She was not in employment. The Respondent described his client as a "lonely person" and he took her on excursions. 3. There was also evidence in the form of his letter of 2 May 2018 in response to an inquiry of the Law Society as to whether the Respondent had returned the borrowed funds, that he had repaid $50,000 of the loan and deposited that amount into his trust account in favour of the client. He had not repaid the balance of the loan or any interest saying: "I had some financial distractions in the last months or so. This is because apart from my PAYE deductions, I had to pay an additional tax of $14,000 for the last financial year. Further I have given about A$22,000 from February 2017 for the maintenance and education of a mentally disabled relative in Malaysia." 1. We accept the matters deposed to by the Respondent as evidence of facts of which he was directly aware or as to his understanding about matters of which he was not directly aware. We find those facts and his understanding of matters of which he was not directly aware to be established. Whether professional misconduct is established 1. Although admitted by the Respondent neither party made submissions as to whether the ground of complaint and the conduct the subject of the facts set out in the Statement of Agreed Facts attached to the Instrument of Consent constituted professional misconduct. 2. Rule 12.3.1 of the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 (NSW) (Conduct Rules) provides as follows: "Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 – Reg 12 12. Conflict concerning a solicitor's own interests … 12.3 A solicitor must not borrow any money, nor assist an associate to borrow money, from: 12.3.1 a client of the solicitor or of the solicitor's law practice, … UNLESS the client is: (i) an Authorised Deposit taking Institution, (ii) a trustee company, (iii) the responsible entity of a managed investment scheme registered under Chapter 5C of the Corporations Act 2001 (Cth) or a custodian for such a scheme, (iv) an associate of the solicitor and the solicitor is able to discharge the onus of proving that a full written disclosure was made to the client and that the client's interests are protected in the circumstances, whether by legal representation or otherwise, or (v) the employer of the solicitor." 1. The exceptions to the Conduct Rules do not fall within the facts which have been established. 2. Rule 2.3 provides that: "2.3 A breach of these Rules is capable of constituting unsatisfactory professional conduct or professional misconduct, and may give rise to disciplinary action by the relevant regulatory authority, but cannot be enforced by a third party." 1. Professional misconduct at common law was identified in Allinson v General Council of Medical Education & Registration [1894] 1 QB 750 to be conduct which would be regarded as disgraceful or dishonourable by professional colleagues of good repute and competency. 2. Rich J in Kennedy v Council of the Incorporated Law Institute of New South Wales (1939) 13 ALJR 563 at [563] observed that professional misconduct involved conduct which amounted to: "..a grave impropriety affecting (the practitioner's) professionalism and character and was indicative of a failure either to understand or to practice the precepts of honesty or fair dealing in relation to the courts, his clients or the public. .." 1. The New South Wales Court of Appeal noted in Bechara v Legal Services Commissioner (2010) 79 NSWLR 763; [2010] NSWCA 369 at [44] that: "There are no fixed categories of professional misconduct. Much depends on whether the conduct falls outside the generally accepted standard[s] of common decency and common fairness." 1. Professional misconduct is also defined in s 297(1) of LPUL which provides: "297 Professional misconduct (1) For the purposes of this Law, "professional misconduct" includes-- (a) unsatisfactory professional conduct of a lawyer, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence." 1. Unsatisfactory professional conduct is defined in s 296 LPUL as follows: "296 Unsatisfactory professional conduct For the purposes of this Law, "unsatisfactory professional conduct" includes conduct of a lawyer 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 lawyer." 1. The relevant authorities concerning the failure by a legal practitioner to avoid a conflict of interest upon the borrowing of money from a client were considered by the Tribunal in Council of the New South Wales Law Society v McEncroe [2015] NSWCATOD 109 at [20]. The claims in McEncroe were that the solicitor had both breached the prohibition in Rule 12 but also abandoned the fundamental requirements of the fiduciary relationship between the solicitor and the client by entering into a transaction in which the interests of the client and the solicitor conflicted and the consequences that flowed from that in terms of his obligations to the client. As the Tribunal noted at [24]: "24. [t]he relationship of the solicitor to his client is a fiduciary relationship and involves fiduciary duties by the solicitor to the client. One such obligation is to avoid any arrangement where the lawyer's interests conflict with those of the client. 25. The transaction whereby a solicitor borrows from his client might be expected to involve a conflict of interest for various reasons. The lender needs independent legal advice. If it is in the interest of the lender to obtain interest and the interest of the borrower to minimise any interest, those interests conflict. The interests of the lender may include obtaining security for the loan. If it is in the borrower's interest to avoid or minimise security, then in that regard the interests of the solicitor and his client conflict." 1. The Tribunal referred to the decision of the New South Wales Court of Appeal in Law Society of NSW v Harvey [1996] 2 NSWLR 154 where Street CJ said at p170: "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. To disclose less than all that is material may positively mislead. Thus for a solicitor merely to disclose that he has an interest, without identifying the interest, may serve only to mislead the client into an enhanced confidence that the solicitor will be in a position better to protect the client's interest. The conflict of interest may, and usually will, be such that it is not proper, or even possible, for the solicitor to continue to act for and advise his client. 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." 1. The Court of Appeal held that Mr Harvey had "deliberately and for his own benefit, caused the affairs of his clients to be intermingled with his affairs and that, whilst supposedly acting for them, he grossly preferred his own interests to those of his clients" (at p172); McEncroe at [27]. 2. As the Tribunal said in McEncroe at [28] the Court of Appeal held that Mr Harvey had "disregarded the need to protect his clients properly by failing to provide adequate security for the borrowings from the clients and held that it was gross abuse of trust by the solicitor and justified him being struck off the roll of solicitors". 3. The Tribunal further referred to the decision of the Court of Appeal in the Law Society of NSW v Moulton [1981] 2 NSWLR 736 saying from [31]: "31. … Mr Moulton was a solicitor. He was found by the Solicitors Statutory Committee in disciplinary proceedings to have been guilty of professional misconduct by way of borrowing from clients. The loans were to him or his company which he controlled and in which he had a substantial interest. The Statutory Committee held that his conduct constituted professional misconduct and fined him $1,000.00. On appeal, the Court of Appeal held that the relevant professional misconduct rendered him unfit to remain on the roll and he was struck off. 32. The Court of Appeal noted that the solicitor became aware in 1979 of the 1975 decision in NSW Law Society v Harvey and then made arrangements to repay the client loans. 33. Hope JA, with whom Reynolds JA agreed, said: "In cases such as the present one, it is essential to remember, indeed to emphasise, 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 great extent, always to some extent, the solicitor is in 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 a free and informed decision about the proposed transaction. Since in these circumstances the interest of the client and of 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." Law Society of NSW v Moulton (1981) 2NSWLR 736 at 739F to 740B) 34. His Honour also said (at 740B) "…in considering whether a solicitor has been guilty of professional misconduct in a dealing with a client, and in considering the gravity of that misconduct, the fact that the client, in the ultimate event, suffers no loss is of little, if any, relevance. If the acts or omissions of a solicitor constitute professional misconduct, they do so at the time when they occur." 35. His Honour also said (at 740D): "…. it is also necessary to say that none of the propositions I have stated is new law; they were not established for the first time by the decision in Harvey [1976] 2 NSWLR 154. Indeed they are expressive of a standard of behaviour which members of the public should be entitled to and expect without recourse to legal precedent of those whose probity as well as skill has been certified by the court. It is no answer to the charge of professional misconduct in relation to transactions with his client's money that the solicitor did not appreciate that what he was doing constituted misconduct." (Law Society of NSW v Moulton (1981) 2NSWLR 736 at 740 D to E) 36. Hope JA also relied upon the Decision of the High Court in NSW Bar Association v Evatt (1968) 117 CLR 177 and quoted the passage from that decision (at p184): "The respondent's failure to understand the error of his ways of itself demonstrates his unfitness to belong to a profession where, in practice, the client must depend upon the standards as well as the skill of his professional adviser". 37. His Honour said: (at 740G): "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 and Mr Moulton's ignorance should be treated as a lack of knowledge rather than a lack of standards, it was not ignorance of some esoterical or difficult corner of the law; it was an ignorance of general principles applicable to common activities of the solicitor in which, for the most part, Mr Molton was regularly engaged, and it was ignorance which he took no steps to remedy." (Law Society of NSW v Moulton (1981) 2NSWLR 736 at 740G) 38. In his judgement Hutley JA, who also agreed that the solicitor should be struck off, held: "The difficulties in reconciling a solicitor's fiduciary duty to his client when borrowing from him had been a subject of communications from the Law Society to its members and of articles in the Law Society's journal during the seventies, culminating in a Special Bulletin to all members of the Society setting out a statement unanimously approved by the Council on 22 March 1979. Only the latest seems to have entered the consciousness of the respondent. "On 20 March 1975 the Judgment of the Court of Appeal in Law Society of NSW v Harvey [1976] 2 NSW LR 154 was handed down. This case got much publicity, both in the press and the Law Society's Journal, but does not appeared come to the notice of the respondent. "The ultimate issue is a simple one, but the enquiry has to be wide ranging. To adopt words of Kitto J when speaking of disbarment of the barrister: 'The answer must depend on one's conception of the minimum standards demanded by a due recognition of the peculiar position and functions of a solicitor' ((Ziems v the Prothonotary of the Supreme Court of NSW (1957) 97 CLR 279 at p 298 and quoted with approval by the High Court in Clyne v NSW Bar Association (1960 104 CLR186 at pp188,189 )" (Law Society of NSW v Moulton (1981) 2 NSWLR 736 at 750A) 39. His Honour also said (at 751 D):- "It would seem to follow that a solicitor fit to remain on the Roll must make reasonable efforts to keep up with current developments in his field of practice. In a world of rapid change we must try to keep up to date. "The issue which faced the Statutory Committee when it decided not to remove the respondent from the roll was not how to punish him, for this order is not a punishment (as is a fine or reprimand), but whether he was fit to be held out by the Court as a solicitor." 40. Hutley JA also said (at 754 D) "He is a professional man, put forth as a professional advisor and any person is entitled to have from the solicitor on the Roll elementary advice on the law of trusts. It is not, in my understanding of what is the minimum standard required of a solicitor, that such ignorance, coupled with unwillingness or incapacity to take the elementary steps necessary to equip himself with the requisite knowledge, should be tolerated. The respondent was at the time of hearing a practitioner of some 18 years standing, and he was no mere tyro emerging from a law school. To look at this transaction purely in terms whether or not he was guilty of a deliberate breach of trust is to weigh it, in my opinion on entirely wrong principles. It, of itself, disqualifies him from remaining a solicitor, unless it is to be treated as an entirely exceptional aberration." 41. Later Hutley JA said (at 756 D): "What was decided by this Court in Harvey represented no innovation in law. The judgement, itself, was expressly based upon a speech of Lord Westbury in Tyrrell v Bank of London (1862) 10 HLC 26 at p 39; 11 ER 934, at p 939, and the principle that the solicitor has a fiduciary duty to his client goes back well before that time. It is a disregard of the fiduciary relationship which provides the real gravamen of the complaint." 1. The Tribunal in McEncroe referred to the decisions where findings have been made that borrowing by a solicitor from a client without the client having independent legal advice constituted professional misconduct at [42], namely Law Society of NSW v Barwick and Deshnicz [2002] NSWADT 66, Council of the Law Society of NSW v Mavrakis [2010] NSWADT 103, Council of the Law Society of NSW v Stormer [2010] NSWADT 240, Council of the Law Society of NSW v White [2011] NSWADT 11, Council of the Law Society of NSW v Lyons [2012] NSWADT 166 and Council of the Law Society of NSW v Laftsidis [2010] NSWADT 317. 2. The Tribunal in McEnroe also had regard to the decision of the Court of Appeal in Dona v The Council of the Law Society of NSW [2014] NSWCA 444 where a paralegal who borrowed from a client had engaged in conduct that, had it been engaged in by a legal practitioner would have supported a finding that the practitioner was guilty of professional misconduct; per Barrett JA at [71]. 3. The evidence of the circumstances of the loan to which we have referred establish and we find that the Respondent failed to ensure that the client received independent advice on the proposed loan transaction. He failed to ensure that the loan was formally documented to protect the interests of the client relying instead upon the acknowledgment and authority. The interest payments due on 27 October 2018 were not paid until 11 and 14 April 2019 immediately prior to the hearing of the earlier proceedings. Although the Respondent suggested that the interest rate being paid was in excess of what the client would receive under the prevailing rate of bank deposit interest the loan was unsecured. The moneys were utilised by the Respondent to purchase an investment property. Interest was to be payable in arrears. There was no evidence that the Respondent might have obtained funding on similar terms from any other source. In effect he was obtaining an unsecured loan with deferred interest. 4. The Respondent confirmed in oral evidence that he appreciated that the client was at all relevant times a client of his firm. The Respondent acknowledged that by borrowing from a client he relied upon his advice as a solicitor and he might have put himself in a position in which his interests were preferred to hers. He did not advise the client to take independent advice nor prepare any detailed loan documentation to protect her. He did not offer or advise her to take security. The Respondent accepted that if he had become bankrupt his client would have been unsecured. The Respondent accepted that he obtained a benefit where interest was payable to his client in arrears. 5. Additionally, the Respondent was unable to repay the full loan or interest within the loan period because he had to make PAYE payments, pay additional tax for the previous financial year and sought to provide for the maintenance and education of a mentally disabled relative in Malaysia. 6. The Respondent accepted in cross examination that by the failure to repay the loan at least as at 2 May 2018 he had also preferred his interests to that of the client. 7. The evidence establishes and we find that the entry into the loan by the Respondent was in breach of Rule 12.3.1 of the Conduct Rules and that the Respondent thereby entered into an arrangement where his interests conflicted with those of his client. 8. As Hope JA said in Moulton (with whom Reynolds JA agreed) to which passage reference has been made, it is no answer to the charge of professional misconduct in relation to transactions with a client's money that the solicitor did not appreciate that what he was doing constituted misconduct. Nor is there any real relevance to the fact that the client suffered no ultimate loss. The misconduct is assessed at the time when the relevant acts occurred. 9. Having regard to the authorities to which we have referred we are satisfied that the conduct of the Respondent which has been established in breach of Rule 12.3.1 of the Conduct Rules and which the Respondent has admitted constitutes professional misconduct both at common law and within the meaning of s 297(1)(a) of the Uniform Law. Consideration of the proposed consent orders 1. The Instrument of Consent was entered into pursuant to s 144 of the LPULAA. Section 144 provides as follows: "Consent orders 144 Consent orders (1) The Tribunal may, with the consent of the respondent lawyer contained in a written instrument, make orders without conducting or completing a hearing in relation to the complaint. (2) Consent may be given before or after the proceedings were initiated in the Tribunal with respect to the complaint. (3) If consent is given before the proceedings were initiated, an investigation of the complaint (whether commenced or not) may be dispensed with, and any investigation of the complaint already being conducted may be suspended or terminated. (4) This section does not apply to consent given by the respondent lawyer unless the lawyer and the NSW Commissioner have agreed on the terms of an instrument of consent. (5) Without limiting what may be included in the instrument of consent, the instrument is to contain an agreed statement of facts (including as to the grounds of complaint) and may contain undertakings on the part of the respondent lawyer. (6) The instrument of consent must be filed with the Tribunal. (7) Nothing in this section affects the procedures regarding the initiation of proceedings in the Tribunal where consent was given before the proceedings are initiated. (8) If consent was given before the proceedings are initiated, the proceedings are nevertheless to be initiated with respect to the complaint in the same way as if the consent had not yet been given. (9) The Tribunal is to be constituted in the same way as for the conduct of a hearing into the complaint. (10) In deciding whether to make orders pursuant to an instrument of consent, the Tribunal may make such inquiries of the parties as it thinks fit and may, despite any such consent, conduct or complete a hearing in relation to the complaint if it considers it to be in the public interest to do so." 1. Section 302 of the LPUL provides: "302 Determination by designated tribunal--disciplinary matters (1) If, after it has completed a hearing under this Part into the conduct of a respondent lawyer, the designated tribunal finds that the lawyer is guilty of unsatisfactory professional conduct or professional misconduct, the designated tribunal may make any orders that it thinks fit, including any of the orders that a local regulatory authority can make under section 299 in relation to a lawyer and any one or more of the following-- (a) an order that the lawyer do or refrain from doing something in connection with the practice of law; (b) an order that the lawyer cease to accept instructions as a public notary in relation to notarial services; (c) an order that the lawyer's practice be managed for a specified period in a specified way or subject to specified conditions; (d) an order that the lawyer's practice be subject to periodic inspection by a specified person for a specified period; (e) an order that the lawyer seek advice in relation to the management of the lawyer's practice from a specified person; (f) an order recommending that the name of the lawyer be removed from a roll kept by a Supreme Court, a register of lawyers kept under jurisdictional legislation or the Australian Legal Profession Register; (g) an order directing that a specified condition be imposed on the Australian practising certificate or Australian registration certificate of the lawyer; (h) an order directing that the lawyer's Australian practising certificate or Australian registration certificate be suspended for a specified period or cancelled; (i) an order directing that an Australian practising certificate or Australian registration certificate not be granted to the lawyer before the end of a specified period; (j) an order that the lawyer not apply for an Australian practising certificate or Australian registration certificate before the end of a specified period; (k) a compensation order against the lawyer in accordance with Part 5.5; (l) an order that the lawyer pay a fine of a specified amount not exceeding $100 000 if the lawyer is found guilty of professional misconduct. (2) Subject to section 303, the designated tribunal may make ancillary or other orders, including-- (a) an order for payment by the lawyer of expenses associated with orders under this section, as assessed or reviewed in or in accordance with the order or as agreed; and (b) an interlocutory or interim order, including an order of the kind referred to in subsection (1). (3) The designated tribunal may find a person guilty of unsatisfactory professional conduct even though the complaint or charge alleged professional misconduct. (4) If the designated tribunal makes an order that a lawyer pay a fine, a copy of the order may be filed in the registry of a court having jurisdiction to give judgment for a debt of the same amount as the amount of the fine and the order may be enforced as if it were an order of the court. (5) To avoid doubt, the power of the designated tribunal under subsection (1) to make any of the orders that the designated local regulatory authority can make under section 299 extends to making orders of that kind in relation to a lawyer whom the tribunal finds is guilty of professional misconduct. (6) It is intended that jurisdictional legislation may provide a right of appeal against or a right of review of the designated tribunal's decision." 1. We have referred to the orders sought by the Council in the earlier application and the subject of the Instrument of Consent. No fine had been sought. 2. The proposed orders also differ from the earlier application in that the reference in paragraph 2 to "Director, Professional Standards" appears as "Director, Legal Regulation". This is repeated in the application. We have taken the reference in the Instrument of Consent to be the correct reference for the purposes of considering appropriate orders. 3. Neither party made submissions about the approach to be taken by the Tribunal in considering the making of Consent Orders. 4. The relevant approach was discussed in Legal Services Commissioner v Searle [2016] NSWCATOD 23 at [21] by reference to the Administrative Decisions Tribunal's decision in Council of the New South Wales Bar Association v Butland [2009] NSWADT 177. The decision in Butland concerned the operation of s 562 of the Legal Profession Act 2004 relevantly in identical terms to s 303 of the LPUL. The Administrative Decisions Tribunal in Butland said the following: "[15] The making of orders by the Tribunal under Part 4.8, and in particular, s 562, of the Legal Profession Act serve primarily to protect the public – Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 250-1. Further, however, these orders may be used to mark the community's disapproval of lapses from the high standard legitimately expected by the public of legal practitioners. Moreover, it will usually follow that orders under Part 4.8 also act as a specific deterrent to the legal practitioner involved as well as a general deterrent to all other practitioners. Thus, orders under Part 4.8 also assist to maintain proper standards in the legal profession – Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 441, New South Wales Bar Association v Hamman [1999] NSWCA 404 at [21]. [16] Having regard to these matters, where the conduct found to have been engaged in by a legal practitioner is serious, for example because it involves dishonesty and it is not a single, isolated incident, orders under s 562(2)(a) that the name of the practitioner be removed from the local roll and s.562(2)(b) that the practitioner's local practicing certificate be cancelled may be appropriate. We take into account that this disciplinary jurisdiction remains concerned with whether the legal practitioner is a fit and proper person to be held out as such to the public - Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 444 and see generally at 440 – 446. … [29] Section 564(1) and (10) of the Legal Profession Act makes plain that the Tribunal has a discretion whether or not to make orders consented to in an instrument of consent under that section. The Tribunal does not act, nor should it be seen, as merely a 'rubber stamp' – see the comments of the Federal Court in a similar context in Australian Communications and Media Authority v WE.NET.AU Pty Ltd [2008] FCA 1530 at [8]. Nonetheless, the consent of the parties and the Legal Services Commissioner are matters that deserve significant weight. [30] These circumstances are similar to, and some guidance can be derived from, cases where Courts exercising regulatory or disciplinary powers are presented with joint submissions by the parties (often including the relevant regulator) as to the appropriate civil penalties and consent orders which they request the Court to make. These often occur in matters under the civil penalty regimes such as those established by the Trade Practices Act 1974 (Cth) or the Corporations Act 2001 (Cth) and involving, respectively, the Australian Competition and Consumer Commission or the Australian Securities and Investments Commission. [31] Barrett J set out the Supreme Court's approach to consent orders in regulatory matters (including orders in relation to disqualification from management) under the Corporations Act and related legislation in Australian Securities and Investments Commission v Elm Financial Services Pty Ltd (2005) 55 ACSR 411; [2005] NSWSC 1020, as follows:- 9 The parties have, in each case, agreed the duration of the disqualification. That, however, does not absolve the court of its duty to consider the appropriateness of the penalty in the light of the agreed facts and the surrounding circumstances. This is made clear by the decisions of the Full Federal Court in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission [1996] FCA 1134; (1996) 71 FCR 285 and, more recently, Minister for Industry Tourism and Resources v Mobil Oil Australia Pty Ltd [2004] FCAFC 72; [2004] ATPR 41-993 (and see, in the present statutory context, Australian Securities and Investments Commission v Vizard (2005) 54 ACSR 395). In the Mobil Oil case (at [51]) the following propositions were seen as emerging from the reasoning in NW Frozen Foods: (i) It is the responsibility of the Court to determine the appropriate penalty to be imposed under s 76 of the TP Act in respect of a contravention of the TP Act. (ii) Determining the quantum of a penalty is not an exact science. Within a permissible range, the courts have acknowledged that a particular figure cannot necessarily be said to be more appropriate than another. (iii) There is a public interest in promoting settlement of litigation, particularly where it is likely to be lengthy. Accordingly, when the regulator and contravenor have reached agreement, they may present to the Court a statement of facts and opinions as to the effect of those facts, together with joint submissions as to the appropriate penalty to be imposed. (iv) The view of the regulator, as a specialist body, is a relevant, but not determinative consideration on the question of penalty. In particular, the views of the regulator on matters within its expertise (such as the ACCC's views as to the deterrent effect of a proposed penalty in a given market) will usually be given greater weight than its views on more "subjective" matters. (v) In determining whether the proposed penalty is appropriate, the Court examines all the circumstances of the case. Where the parties have put forward an agreed statement of facts, the Court may act on that statement if it is appropriate to do so. (vi) Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the Court would have arrived at that precise figure in the absence of agreement. The question is whether that figure is, in the Court's view, appropriate in the circumstances of the case. In answering that question, the Court will not reject the agreed figure simply because it would have been disposed to select some other figure. It will be appropriate if within the permissible range. 10 There has been some criticism of this approach as involving "platitudes": see per Weinberg J in Australian Prudential Regulation Authority v Derstepanian [2005] FCA 1121. And in Vizard (above), the court imposed a higher penalty than that agreed by the parties and sought by the regulator. 11 It is clear that the court is in no way constrained by the parties' agreement and that, having made the declaration of contravention, it must exercise its discretion as to penalty. In the present case, the factual background does not, to my mind, indicate that the respective periods of disqualification proposed by the parties are inadequate. … [33] If the necessary adjustments to these principles are made to take into account the express statutory regime under s 564 of the Legal Profession Act and the particular nature of the disciplinary powers being exercised by the Tribunal, we believe they provide useful guidance as to the exercise of the Tribunal's discretion in cases such as the present. [34] We note that, by reaching agreement with the Bar Association and obtaining the consent of the Legal Services Commissioner well before the hearing date, the Barrister had contributed to a saving of most of the two days set aside for the hearing of the appropriate orders. Agreed resolution of disciplinary proceedings utilising the regime established under s 564 of the Legal Profession Act is to be encouraged, where appropriate. This consideration favoured making the orders sought by the parties. … [36] In all the circumstances, we considers (sic) orders (a) and (b), consented to by the parties and by the Legal Services Commissioner were appropriate and within the permissible range of orders that could legitimately have been made." 1. Section 564(10) of the Legal Profession Act was in identical terms to s 144(10) of the LPULAA. As the Tribunal noted in Searle at [23] the approach in Butland has been followed in subsequent decisions of the Tribunal including Council of New South Wales Bar Association v Breeze [2015] NSWCATOD 152. The Tribunal in Searle considered that it was necessary to consider the question of whether the proposed consent orders are within the permissible range but also whether there are any public interest factors that would cause the Tribunal to conduct and complete a hearing. We have had regard to the approach identified in Butland in considering the orders sought. Legal principles concerning appropriate orders 1. The Council referred us to the principles to which we should have regard in determining appropriate orders upon a finding of professional misconduct. These were discussed in Council of Law Society of New South Wales v Renfrew [2019] NSWCATOD 63 at [55] citing Beazley JA (as she then was) in Law Society of New South Wales v Walsh [1997] NSWCA 185. These include: "1. the protection of the public, which is of paramount importance; 2. the maintenance of the high standards of the profession; 3. deterring not only the particular practitioner but others who may stray from the appropriate standards and serving as a reminder to the profession; 4. the gravity of the conduct involved; and 5. emphasising the unacceptability of the conduct involved." 1. The Council submitted and we accept that the relevant principles in determining appropriate orders by reference to the authorities including Harvey and Moulton are: 1. The Respondent's conduct should be considered at the time of its occurrence. 2. The Respondent's breach of the Rule was not only that but a fundamental breach of his professional obligations so as to warrant the utmost disapprobation by way of a finding of professional misconduct. 3. The fact that the client did not suffer any real loss as a result of the Respondent's conduct ought not be a consideration when determining any sanction to be imposed nor for that matter, the description of the conduct itself. 4. The Respondent's recognition of his misconduct should be a relevant consideration. 1. In his submissions the Respondent took no issue with these statements of principle and otherwise as he put it "concurred" with the statement of facts and circumstances of the matter as set out in Council's submissions. Council's submissions on appropriate orders 1. At the oral hearing we considered pursuant to s 144(10) LPULAA that when deciding whether to make the orders in the Instrument Consent it was in the public interest to hear from the parties on the imposition of a fine. By the application in these proceedings the Council had sought a fine in addition to the other orders agreed in the Instrument of Consent. 2. The Council submitted that the question to be addressed upon considering the purpose of a fine is informed by the principles enunciated in Walsh. The Council submitted that a review of the authorities in which fines have been imposed indicates that the imposition of a fine normally marks what the Tribunal has considered quite serious misconduct. 3. The Council referred us to a number of authorities where fines were imposed for breaches of the prohibition on borrowing by a solicitor. These included the matters of Searle, Barwick & Dechnicz, Mavrakis, Stormer, Lyons, Laftsidis [2010] NSWADT 317 and Council of the NSW Law Society v Vaughan [2015] NSWCATOD 156. Of these the Council submitted that the relevant facts in Searle, Lyons and Mavrakis might be said to be the best indicators of what, if any, fine might be imposed by the Tribunal in the present proceedings. In Searle the solicitor had borrowed sums totalling $46,000. In addition to a reprimand the Tribunal imposed a fine of $5,000. In Mavrakis the funds borrowed were just over $3,000. The Tribunal imposed a reprimand, the imposition of the conditions and a fine of $3,000. In Lyons the Tribunal considered a borrowing of $300,000 which was later increased to $773,830. The borrowing fell into default and proceedings were commenced resulting in the lender retrieving the moneys advanced. The solicitor was reprimanded and fined the sum of $6,000. The Respondent's evidence and submissions on appropriate orders 1. In his submissions on appropriate orders the Respondent noted that in the matter of Searle the Respondent had two other breaches in the proceedings and one prior caution. There was no documentation for the loan. The total of $46,000 which was borrowed over four occasions in which three of these occurred without client authority. In Lyons the Respondent submitted that the loan had fallen into default. In Mavrakis he submitted that there were multiple breaches. 2. The Respondent submitted that the facts in this matter in comparison to the matters of Searle, Lyons and Mavrakis reflected the lowest range of offending. 3. In his submissions the Respondent raised the following further matters which he said constituted extenuating circumstances to be taken into account by the Tribunal on the question of appropriate orders; 1. The Respondent was at the time of the hearing in April 2019 68 years old and was planning for retirement. 2. The Respondent has been in practice for 20 years without any disciplinary action. 3. The Respondent's earnings have reduced because of a reduction of 40% in conveyancing matters owing to difficult lending conditions. 4. The Respondent has not borrowed from clients or ex-clients before. 5. The offence occurred as a result of an erroneous belief that the Respondent's relationship with the lender was no longer that of solicitor and client. 6. The Respondent documented the loan, told the lender the purpose of the loan and where the money was going to. 7. The Respondent divulged the breach to the Law Society voluntarily, co-operated with the investigation and conceded from the very beginning the error that he had made. 8. There is minimal danger of reoffending or otherwise being a danger to the community. 1. The Respondent gave evidence that he was born in Malaysia and migrated to Australia in 1988. After working as a sales executive in a multinational company he undertook legal studies in part, in his words, because he "wished to make a contribution to Australian society". He applied to undertake legal studies as a mature aged student both at the University of New South Wales and the University of Technology Sydney. After several rejections he obtained a place at the University of Technology in 1990 as a part-time student at the age of 40. After what he called the stress of undertaking legal studies while working full time and being the father of two young children he graduated in 1994. The Respondent then had no income for half a year while he undertook the PDLP course with the College of Law. Upon admission to practice he worked as a supervised solicitor for 2 years and then started his own firm in 1998 in Hurstville, NSW. 2. The Respondent gave evidence that he spent some of his earnings in helping young people as he put it "with good moral outlook and aspirations". He sponsored a young man to study at Monash University in accountancy. He also assisted another young man to obtain a medical degree and has continued to give money for the maintenance and education of a mentally disabled relative in Malaysia. He said that 25 years ago he was asked by a mentally disabled person for a favour and declined. That person subsequently committed suicide. He believed that he could not risk another suicide because of inadequate or late support of that person. 3. The Respondent gave evidence that he practised with an ethical approach and fair play in his dealings with fellow Chinese solicitors and clients. He said that he always tried to bridge the cultural gap of the Chinese with regard to the notion of the rule of law in Australia and utilisation of alternative dispute resolution methods instead of resorting to the courts. He said that he has no record of unethical practices in 20 years of practice. He said that he valued the opportunity to practice as a solicitor and viewed it as a privilege as well as a duty. 4. The Respondent gave evidence that he now appreciated that Ms Lee was a client of his and that he remained in a fiduciary relationship with her. He said that he understood that borrowing from a client could give rise to a conflict of interest and that where a client relied on his advice as her solicitor he put himself in a position in which his interests were preferred to hers. The Respondent said that he was extremely sorry. 5. The Respondent gave evidence that he did not think it was fair to the client that he did not secure the loan. He conceded that he obtained a benefit where interest was payable in arrears rather than as the loan was either drawn down or during the period of the loan. The Respondent agreed that he was unable to repay the principal amount within the period of the loan. 6. The Respondent gave evidence that one reason he had not repaid the loan is that he had to make PAYE payments, that he had additional tax of $14,000 for the previous financial year and that he wished to provide a sum of $22,000 for the maintenance and education of a mentally disabled relative in Malaysia. The Respondent agreed that to the extent of late payment of the loan he preferred his interests to those of the client. 7. The Respondent said that he is prepared to work with the Council to attend courses or undertake whatever other remedial actions the Tribunal thinks fit. 8. Lastly, the Respondent informed the Tribunal that he has requested the lender to withdraw all her moneys from the Respondent's trust account. It is not clear whether this has occurred. Findings on appropriate orders 1. We have taken into account the submissions of the parties and the oral evidence which the Respondent gave to which reference has been made. 2. We are satisfied from his oral evidence and final submissions and his execution of the Instrument of Consent that the Respondent has an understanding of the conflict of interest arising from his breach of Rule 12 of the Conduct Rules and that he is contrite and remorseful. He has been co-operative from the commencement of the complaint. 3. The Council did not seek an order for the removal of the Respondent's name from the Roll. We accept the Respondent's evidence that he is most unlikely to repeat the conduct. We find that the risk to the public occasioned by the Respondent continuing to remain in practice is low and that it is not necessary for the protection of the public that such an order be made. 4. In his affidavit dated 13 February 2019, the Respondent sought that a public reprimand not be imposed. We understand from his final submissions that that request was not pressed. 5. We have considered the proposed consent orders and find that they are within the permissible range. In our opinion, the maintenance of the high standards of the profession and the deterrence of others who may stray from appropriate standards, to serve as a reminder to the profession of the gravity of the conduct involved and to emphasise the unacceptability of the conduct involved require that the Respondent receive a public reprimand. The Respondent should also undertake, complete and pass appropriate courses in legal ethics and trust and office accounting at his own expense. These orders have been sought by the Council and agreed by the Respondent in the Instrument of Consent. 6. In addition to the other orders agreed in the Instrument of Consent in light of the circumstances of the loan which we have found to have occurred and to give effect to the principles enunciated in Walsh it is in our opinion also appropriate to require the solicitor to pay a fine as the Council has sought. We consider that the misconduct by the Respondent although an isolated instance was serious in the circumstances which we have outlined. We have assessed the fine in the sum of $3,000 by reference to the authorities to which we have referred. No other complaint has been established against the Respondent. The fine should be less than that imposed in Searle which involved several breaches. 7. Where a finding has been made that a solicitor engaged in professional misconduct in the absence of exceptional circumstances the Tribunal is bound by Schedule 5, Clause 23 of the Civil and Administrative Tribunal Act 2013 (NSW) to order costs in favour of the applicant. 8. The Respondent has assessed its costs in the sum of $5,000 and this has also been agreed by the Respondent in the Instrument of Consent. 9. In considering appropriate orders we have also had regard to the fact that the Respondent will incur additional costs of undertaking the trust course and ethics course the subject of the proposed orders. Orders 1. The Tribunal, having found that Chee Kiong Low is guilty of professional misconduct, orders that: 1. The Respondent solicitor is publicly reprimanded. 2. The Respondent solicitor must: 3. (a) Undertake, complete and pass, at his own expense, within 6 months of the date of the orders or within such further time as may be agreed by the Director, Professional Standards of the Law Society of NSW (Director) an appropriate course in legal ethics as approved by the Director (ethics course) and therein achieve a pass mark of not less than 50%; 4. (b) Undertake, complete and pass, at his own expense, within 6 months of the date of the orders or within such further time as may be agreed by the Director, an appropriate course in trust and office accounting as approved by the Director (trust course) and therein achieve a pass mark of not less than 50%; and 5. (c) Within seven (7) days of receipt of notification of the result of his participation in the ethics course and the trust course, provide to the Director, the original of such notifications. 6. The Respondent solicitor is to pay a fine of $3,000 within three calendar months of the date of these orders. 7. The Respondent solicitor is to pay the Applicant's costs of and incidental to the proceedings as agreed in the sum of $5,000. ********** 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 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 December 2020