Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Prothonotary of the Supreme Court of New South Wales v Armstrong [2024] NSWCA 98 Hearing dates: On the papers Date of orders: 06 May 2024 Decision date: 06 May 2024 Before: Gleeson JA; Mitchelmore JA; Basten AJA Decision: (1) Declare that the respondent, Kathlin Annita Armstrong, is not a fit and proper person to remain on the Roll of Australian Lawyers. (2) Order that the name of Kathlin Annita Armstrong be removed from the Roll of Australian Lawyers. (3) Order that the respondent pay the applicant's costs of these proceedings, as agreed or assessed. Catchwords: LEGAL PRACTITIONERS — disciplinary proceedings — practitioner convicted of fraud offences and use of carriage service to menace or harass — whether fit and proper person to be on the Roll of Australian Lawyers — relief — order removing name from Roll of Australian Lawyers Legislation Cited: Legal Profession Uniform Law (NSW), s 264 Cases Cited: Council of the Law Society of New South Wales v Zhukovska (2020) 102 NSWLR 655; [2020] NSWCA 163 Council of the NSW Bar Association v Power (2008) 71 NSWLR 451; [2008] NSWCA 135 Prothonotary of the Supreme Court of New South Wales v Hansen [2023] NSWCA 189 Prothonotary of the Supreme Court of New South Wales v Thomson [2018] NSWCA 230 The Prothonotary of the Supreme Court of NSW v "A" (a pseudonym) [2023] NSWCA 258 Category: Principal judgment Parties: The Prothonotary of the Supreme Court of New South Wales (Applicant) Kathlin Annita Armstrong (Respondent) Representation: Counsel: H Bennett (Applicant) J Simpson (Respondent) Solicitors: Crown Solicitor's Office (Applicant) Heathcote & Associates (Respondent) File Number(s): 2023/445284 Publication restriction: Nil [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] JUDGMENT 1. THE COURT: On 21 October 2020, the respondent, Kathlin Annita Armstrong, was found guilty in the Local Court on seven charges of dishonestly obtain a financial advantage by deception, one charge of dishonestly obtain property by deception (collectively, the fraud offences), and one charge of using a carriage service to menace, harass or cause offence (the menace offence). On 21 December 2020, the Magistrate convicted the respondent and sentenced her as follows: 1. on the fraud offences, to an aggregate term of imprisonment of 2 years and 6 months, which the Magistrate ordered, on 14 January 2021, be served by way of an intensive correction order; and 2. on the menace offence, to release on entering a recognisance in the sum of $500 to be of good behaviour for 18 months. 1. The respondent appealed her convictions to the District Court. On 8 October 2021, the District Court dismissed the appeal and confirmed the convictions: Armstrong v R [2021] NSWDC 537 ("Armstrong"). 2. By Summons filed on 8 December 2023, the applicant, the Prothonotary of the Supreme Court of New South Wales, sought a declaration that the respondent is not a fit and proper person to remain on the Roll of Australian Lawyers (the Roll) and an order that her name be removed from the Roll. In seeking that relief, the applicant invoked the disciplinary powers of the Court which are preserved by s 264 of the Legal Profession Uniform Law (NSW) ("Uniform Law"). 3. The respondent does not oppose the relief sought and has cooperated in the preparation of a Statement of Agreed Facts (Agreed Facts), which has been signed on behalf of both parties. The applicant relies additionally on two affidavits of Brett Thomson, Acting Director and Prothonotary of the Supreme Court of New South Wales, sworn on 26 February 2024 and 5 April 2024 respectively. The respondent did not file any evidence. 4. The Court must be satisfied that it is appropriate to make the order to remove the respondent's name from the Roll: Council of the NSW Bar Association v Power (2008) 71 NSWLR 451; [2008] NSWCA 135 ("Power") at [9] (Hodgson JA, Beazley and McColl JJA agreeing). It is necessary for the Court to make findings of fact in appropriate detail as to the basis for its order, focusing on significant matters concerning the conduct that is the subject of the complaint: Power at [10]-[11]. 5. On the basis of the findings below and for the reasons explained, the Court is satisfied that the respondent is not a fit and proper person to remain on the Roll and her name should be removed from it. Basis of the application 1. On 21 July 2017, the respondent was admitted to the Supreme Court of New South Wales as an Australian lawyer (Agreed Facts [1]). She has not been admitted as an Australian lawyer in any other jurisdiction in Australia or New Zealand (Agreed Facts [2]). The date of the respondent's admission is significant having regard to the chronology of the criminal conduct that forms the basis for the application to remove her name from the Roll. 2. In seeking admission, the respondent provided a statutory declaration, dated 7 June 2017, in which she disclosed her criminal record as at that date. That history dated back to 1986 and involved convictions for dishonesty offences including, but not limited to, forgery, larceny, obtain financial and other benefits by deception, make false instrument and use false statement (Agreed Facts [7]). In June 2001, she was convicted and sentenced for 18 fraud-related offences (with further offences taken into account on a Form 1 under s 32 of the Crimes (Sentencing Procedure) Act 1999) for which she was sentenced to a term of imprisonment of 3 years commencing on 9 November 2000 with a non-parole period of 2 years and 3 months (Agreed Facts [8]-[10]). In the statutory declaration in support of her admission, the respondent stated that the last criminal offence she had committed was in 2000. 3. In 2007, the respondent co-founded a not-for-profit, non-government organisation, which was incorporated in 2008 and called the Women in Prison Advocacy Network (WIPAN), later renamed the Women's Justice Network (Agreed Facts [14]-[15]). Between 2008 and 2017, the respondent was a member of the Board of WIPAN. The respondent was paid for her work at WIPAN between 5 August 2013 and 26 August 2014 pursuant to a funding award she received, but otherwise she performed various roles within WIPAN for which she was not paid (Agreed Facts [18]). In addition to being a director, the respondent held a number of positions on the WIPAN Board, including Treasurer (2008-2012), Secretary (2012-2016) and President (2016-2017) (Agreed Facts [17]). 4. In the period relevant to the respondent's offending conduct, WIPAN had two bank accounts, which were respectively referred to in the Agreed Facts as the "WIPAN general account" and the "WIPAN FACS account". In late 2017, the Board became aware of an unauthorised transfer of $30,000 from the WIPAN general account to the account of Robyn Murray, made on 16 November 2017. Ms Murray was the respondent's partner at the time. She has since passed away (Agreed Facts [20]). 5. On 7 December 2017, a number of Board members held a meeting with the respondent, during which she was asked about the payment to Ms Murray. The respondent denied any wrongdoing and said that the payment was a donation that Ms Murray had made that she had refunded (Agreed Facts [23], [26]). She was also asked about other transfers made to her personal account from the WIPAN general account, which the respondent stated were incorrect and that the money would be returned (Agreed Facts [24]-[25]). 6. At the Board's request, the respondent stepped down as President. The Board subsequently investigated WIPAN's financial affairs and, having identified a significant number of unauthorised transactions over an extended period, referred the matter to NSW Police (Agreed Facts [27]-[28]). On 17 December 2018, the respondent was arrested and charged with the offences to which the Court has referred in [1] above (Agreed Facts [30]). 7. Each of the fraud offences is described in detail in the Agreed Facts at [37]-[56]. In summary, the respondent's offending involved 49 unauthorised transfers of funds in the period from 26 February 2016 to 4 December 2017, from one of the two WIPAN accounts to bank accounts of the following persons or entities: 1. the respondent, to a NAB account ($34,402) between 15 November 2016 and 4 December 2017 (sequence 1), and to a UBank account ($7,818) between 26 August 2016 and 17 November 2016 (sequence 5); 2. Kite Air Conditioning, on 13 January 2017 ($3,200), to install an air conditioning unit in the respondent's home (sequence 2); 3. Mega Press Pty Ltd (Mega Press) ($36,964) between 26 February 2016 and 12 May 2017 (sequence 3). Mega Press was a creditor of Breakout Media Communications Australia Limited (Breakout Media), an organisation that shared similar goals to WIPAN. Breakout Media, which employed the respondent, was run by Brett Collins, with whom the respondent was in an intimate personal relationship for a number of years. The respondent claimed that WIPAN owed Breakout Media money and transferred funds to Mega Press on that account; 4. Printforce Australia Pty Ltd (Printforce) ($55,604) between 17 March 2016 and 10 May 2017 (sequence 4). Printforce was another creditor of Breakout Media and the respondent made the transfers to it on the same claimed basis as the transfers to Mega Press; 5. Breakout Media, on 28 October 2016 ($1,746.50) (sequence 6); and 6. Ms Murray, with a number of transfers on 16 November 2017, one of $30,000 from the WIPAN general account, and three transfers from the WIPAN FACS account totalling $13,000 (sequences 7 and 8). 1. The total amount of funds transferred was $182,734.50. The respondent prepared false invoices for a number of the transfers and provided false descriptors for the internet banking transfers (Agreed Facts [37]-[38], [39], [40], [42]-[43], [44], [46]-[49], [50]-[51], [52], [54], [56]). In dismissing her conviction appeal, Judge Mahony described the respondent as having "perpetrated a deliberate and sustained course of deception" (Armstrong at [137]). 2. As to the menace offence, on 7 December 2017, the respondent sent text messages to the then Chief Executive Officer of WIPAN, Catherine Brennan, in relation to access to the WIPAN bank accounts (Agreed Facts [57]). During the course of those messages, the respondent sent a message to Ms Brennan in which she called her "a putrid dog & a contradictive one at that" (Agreed Facts [58]). 3. In pleading not guilty to the fraud charges, the respondent accepted that she had made the transfers, used false payment descriptors, and created false invoices (Agreed Facts [59]). However, she asserted by way of defence that she had a claim of right in respect of six of the fraud charges; that the transfer to Breakout Media was legitimate; and that the $30,000 transfer to Ms Murray was reimbursement of a donation (Agreed Facts [60]-[65]). In finding the respondent guilty, the Magistrate rejected those arguments (Agreed Facts [36]). 4. The Court has referred above to the sentence that the Magistrate imposed (Agreed Facts ([72]-[73]). Her Honour accepted that the respondent had suffered trauma as a child and a young person, including domestic violence, neglect and sexual abuse, and had engaged in alcohol and illicit substance use from an early age. Her Honour also referred to the respondent's significant history of fraud-related offending from 1986 to 2000 and noted the significant gap in her record after 2000, during which she had commenced her law degree whilst in prison, deferred it and recommenced it in 2012, completing her degree in 2016. 5. On 14 January 2021, the respondent lodged an appeal against her convictions in the District Court of NSW. As noted above, on 8 October 2021, the appeal was dismissed (Agreed Facts [88]). The respondent commenced proceedings in the Supreme Court to review the decision of the District Court but ultimately discontinued those proceedings (Agreed Facts [89]-[91]). Disclosures to the Law Society 1. On or about 20 December 2018, the respondent disclosed the charges to the Law Society as required under s 51 of the Uniform Law (Agreed Facts [92]). On 14 December 2020, she disclosed her convictions to the Law Society (Agreed Facts [93]); and on 20 October 2021 she disclosed that the District Court had dismissed her appeal (Agreed Facts [94]). In submissions to the Law Society dated 8 December 2021, the respondent stated that she accepted the decisions of the Local Court and the District Court and would not be pursuing any further appeals or reviews of her convictions (Agreed Facts [90]). She also expressed regret and remorse for her conduct (Agreed Facts [96]). 2. On 24 February 2022, the Council of the Law Society of New South Wales resolved to cancel the respondent's practising certificate for the year ending 30 June 2022. The Council also resolved that the respondent was not entitled to apply for the grant of a practising certificate for a period of five years (Agreed Facts [99]). In response to a request for submissions as to whether the Council should file an application seeking removal of her name from the Roll, a solicitor on behalf of the respondent stated that the respondent was contrite, ashamed and remorseful, that she accepted all findings made against her in criminal proceedings and that she was not indefinitely or permanently unfit (Agreed Facts [99]-[100]). Consideration of the application for removal 1. Noting that, since 2014, the Supreme Court admits an applicant "to the Australian legal profession as an Australian lawyer", and no longer as a "legal practitioner of the Supreme Court", the principles relating to removal from a roll of practitioners stated in earlier authorities remain apposite. In The Prothonotary of the Supreme Court of NSW v "A" (a pseudonym) [2023] NSWCA 258 ("A"), the Court (Ward P, Payne and Stern JJA) set out the inquiry for applications of this nature in the following terms: "[18] The ultimate issue, which must be determined as at the date of the hearing, is whether the practitioner is shown not to be a fit and proper person to be a legal practitioner of the Supreme Court upon whose roll the practitioner's name presently appears (see A Solicitor v Council of the Law Society of New South Wales (2004) 216 CLR 253; [2004] HCA 1 (A Solicitor) at [14]-[15], [21] per Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ). Whether a practitioner is of 'good fame and character' is also to be determined as at the date of the hearing (Ex Parte Tziniolis; Re The Medical Practitioners Act [1967] 1 NSWR 357; (1966) 67 SR (NSW) 448 (Tziniolis) at 475 per Holmes JA, with whom Wallace P agreed). [19] It is necessary to determine the question not only whether the respondent is unfit to practice but also whether the practitioner is likely to remain so." 1. The question is not only whether the respondent is unfit to practice but whether the practitioner is likely to be unfit for the indefinite future: Council of the Law Society of New South Wales v Zhukovska (2020) 102 NSWLR 655; [2020] NSWCA 163 at [99]. On that point, the Court stated in A at [21] that "[w]here serious misconduct has occurred in the past, one does not assume (in the absence of evidence to the contrary) that a change in a lawyer's character has occurred merely by the absence of repetition of that conduct". 2. The evidence in the present case establishes, and the Court finds, that the respondent used her position in WIPAN to engage in dishonest conduct of a significant and sustained kind. The respondent well knew (as one of WIPAN's founders) that WIPAN was a not-for-profit organisation with limited funding. Over a period of some 21 months, the respondent took advantage of the positions she held on the WIPAN Board to misappropriate WIPAN's funds to herself, her then partner, and other entities on account of an organisation run by person with whom the respondent had been in a personal intimate relationship for many years, totalling in excess of $180,000. The respondent, who was 48 years old at the time this offending commenced, sought to disguise the misappropriation by creating false invoices and using false descriptors for the transactions. The conduct involved substantial planning and premeditation. 3. When first asked questions about one of the transactions by the some of WIPAN's Board members in December 2017, the respondent denied any wrongdoing. She thereby sought to continue the deception. Upon being charged, the respondent asserted that she was entitled to the funds, maintaining that position through the trial and the District Court appeal until she decided, in December 2021, not to pursue further proceedings in the Supreme Court. Notwithstanding that in December 2021 she accepted responsibility for the offending and acknowledged regret and remorse, when served with the applicant's Summons in these proceedings her initial response, dated 22 January 2024, included a re-agitation of her claim of right defence and an attribution of the charges to a significant breakdown of her relationships with certain board members of WIPAN. 4. Of the two general categories of case in which the Court will consider removing a practitioner from the Roll (see e.g., Prothonotary of the Supreme Court of New South Wales v Hansen [2023] NSWCA 189 at [12]), the respondent's offending conduct falls within the category of personal misconduct that was not carried out in the practice of law. That said, and as the applicant submitted, the respondent engaged in the offending conduct in a professional capacity, and the conduct was plainly relevant to her practice of law, involving dishonesty and the misappropriation of funds. In Prothonotary of the Supreme Court of New South Wales v Thomson [2018] NSWCA 230 ("Thomson"), which concerned an admitted practitioner who engaged in offending conduct of a similar kind, the Court emphasised the following principles which are apposite in this case: "[14] First, although the fact of a criminal conviction and sentence is not necessarily sufficient to disqualify a person from continuing as a member of the legal profession, the defects of character revealed by the criminal conduct, and the disgrace flowing from conviction, may be incompatible with practice: Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279 especially at 288 (Fullagar J), 298 (Kitto J). That consequence follows more readily in relation to crimes involving dishonesty and misappropriation. In Re Davis (1947) 75 CLR 409 at 420, Dixon J observed that a member of the Bar must: … command the personal confidence, not only of lay and professional clients, but of other members of the Bar and of judges. It would almost seem to go without saying that conviction of a crime of dishonesty of so grave a kind as housebreaking and stealing is incompatible with the existence in a candidate for admission to the Bar of the reputation and the more enduring moral qualities denoted by the expression, 'good fame and character', which describe the test of his ethical fitness for the profession. [15] These considerations are not limited to applicants for admission to the Bar; they apply with equal, if not greater, force to practitioners who may seek to work as solicitors, in which capacity they would be entitled to hold trust moneys on behalf of clients. And an unfitness to do so may be shown by the commission of misappropriation offences with less objective seriousness than crimes such as break, enter and steal. [16] Secondly, conduct occurring outside the practice of law may nevertheless indicate a present unfitness to practice: Ziems at 290 (Fullagar J). As explained by Mason P in New South Wales Bar Association v Hamman [1999] NSWCA 404; (1999) 217 ALR 553 at [21]: The fact that the misconduct is not directly involved with practice in the law makes no difference where, as is conceded in the present case, the practitioner's behaviour would reasonably be regarded as disgraceful and dishonourable by professional brethren of good repute and competency (Allinson v General Council of Medical Education and Registration [1894] 1 QB 750; Prothonotary of the Supreme Court of NSW v Costello [1984] 3 NSWLR 201 at 203). [17] Mr Hamman's tax offences were described as involving "significant and prolonged dishonesty for personal gain": at [101]. Repeated misappropriation from any entity that has entrusted a person with control of its funds will expose a characteristic inconsistent with the holding of trust moneys for clients. [18] Thirdly, fitness to practise requires an appreciation of the high degree of trust that the court, of necessity, reposes in legal practitioners and of their general and ongoing obligation of candour to the court in which they desire to serve as an "agent of justice": Davis at 426 (Dixon J); Prothonotary v Montenegro [2015] NSWCA 409 at [70] (Meagher and Leeming JJA and Emmett AJA); Prothonotary v Comeskey [2018] NSWCA 18 at [29]–[31] (Basten JA)." (Emphasis added.) 1. In relation to the third of the principles to which the Court referred in Thomson, it is significant that the respondent's misappropriation of WIPAN's funds was well advanced at the time she applied for admission as a legal practitioner. Reference has already been made to the statutory declaration that she submitted with her application for admission, dated 7 June 2017, in which she said that the last criminal offence she committed was in 2000. As the applicant submitted, by that time the respondent had been fraudulently obtaining funds from WIPAN's accounts for more than one year, and she continued to do so for approximately five months following her admission until she was confronted and the matter was referred to the police. Consistently with the deceptive nature of the conduct in which she was then engaged, the respondent did not disclose it in her application for admission, nor in her application for an Australian practising certificate. Findings 1. Bearing in mind that the purpose of the present proceedings is the protection of the public, rather than further punishment of the respondent, the Court finds that the respondent is not presently a fit and proper person to remain on the Roll. It accepts the applicant's submission that the serious offences of dishonesty for which the respondent was convicted were contrary to the Court's and the community's high standards expected of legal practitioners. The respondent's conduct and lack of candour in respect of her convictions is incompatible with membership of the legal profession, with the nature and extent of the conduct having clear implications for the respondent's practice of law. 2. The Court also finds that the respondent is likely to be unfit for the indefinite future. It is significant to the latter conclusion that the offences she committed in 2016 and 2017 involved dishonesty, just as the offences for which she was convicted in the period up to 2001. At the same time as she was expressing "true remorse and deep regret" for her earlier offending, in seeking admission to the legal profession, the respondent was committing the further dishonesty offences that form the basis of this application, taking advantage of the trust placed in her as a director of WIPAN and as its President. The Court has no confidence that reformation is a future possibility, noting that the respondent has not herself given evidence directed to that prospect, or even as to her present state of remorse and contrition. 3. In reaching this conclusion, the Court is mindful of the personal circumstances which led the respondent into an early addiction to drugs and the offences of dishonesty committed prior to 2000. Although in 2017 it appeared, and the Legal Profession Admission Board accepted, that the respondent had, with admirable fortitude, overcome her earlier descent into dishonesty to fund illegal drug-taking, it is now clear that the confidence expressed by her character witnesses and by the Board at that time was misplaced. That is not to say that, on the material then before it, the Board was wrong to accept her assurances in the light of the facts as then known. Costs of the application 1. The applicant sought its costs of the proceedings. On 27 March 2024, the solicitor for the respondent stated in an email to the applicant's solicitor that "no order in relation to costs should be made", and requested that a costs order not be pressed. However, in a further email dated 2 April 2024, of which Mr Thomson gave evidence in his second affidavit at [4], the respondent's solicitor indicated that "none of the orders sought in the Summons filed on 8 December 2023 will be opposed" and that the respondent did not intend to make any submissions opposing a costs order in the proceedings (at [4]). In circumstances where the proceedings could not be resolved by consent, as the Court must be satisfied that the order for removal and any declarations sought are appropriate, costs should follow the event. Orders 1. Accordingly, the Court makes the following orders: 1. Declare that the respondent, Kathlin Annita Armstrong, is not a fit and proper person to remain on the Roll of Australian Lawyers. 2. Order that the name of Kathlin Annita Armstrong be removed from the Roll of Australian Lawyers. 1. Order that the respondent pay the applicant's costs of these proceedings, as agreed or assessed. ********** 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: 06 May 2024