JOHNS v THE LAW SOCIETY OF NEW SOUTH WALES SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SAMUELS AP, MAHONEY and CLARKE JJA 5 June 1991, 6 June 1991 [1991] NSWCA 158 LEGAL PRACTITIONERS — PROFESSIONAL MISCONDUCT LEGAL PRACTITIONERS — solicitor struck off in 1981 for professional misconduct — application for restoration to the Roll of Solicitors — principles set out in Ex parte Dennis Re The Legal Practitioners' Act, Court of Appeal, 23 December 1988, unreported, applied — order made admitting to Roll. Samuels JA The claimant, Robert James Johns, was born on 30 March 1946 and admitted as a solicitor of the Supreme Court of New South Wales on 6 June 1969. From 1972 until 1975 he carried on practice as a sole practitioner in Bankstown and from 1976 or 1977 to 1981 at Padstow and Revesby. On 27 August 1981 the Solicitors' Statutory Committee ordered that the claimant's name be struck off the Roll of Solicitors and an appeal to the Court of Appeal was dismissed on 15 June 1982. The claimant now seeks an order that he be admitted or readmitted to the Roll. The particulars of the professional misconduct found against the claimant are set out in the report of the appeal: Johns v The Law Society of New South Wales [1982] 2 NSWLR 1. There is a convenient summary contained in the written submissions filed on behalf of The Law Society upon which I can gratefully draw. (1) There were findings of dishonesty in that the claimant, at least twice, falsely certified to The Law Society that he had complied with s41 and s42 of The legal Practitioners Act 1898 (the provision then in force) "not only carelessly and recklessly but knowing [that his certificates] were false": [1982] 2 NSWLR at 11 and 16. This conduct was aggravated by the fact that it ignored not only the advice of the claimant's own accountant, Mr Talbot, but that of Mr Moss and Mr Wilton, investigators for The Law Society who first examined the claimant's affairs in March 1977 and continued investigations from time to time at intervals up to the hearing of the appeal. (2) For his own personal benefit (as well as for the use of clients) the claimant deliberately and systematically misapplied the general trust funds of unidentified clients: [1982] 2 NSWLR at 12, 13 and 14. (3) Without justification the claimant systematically took trust money and used it for his own purposes; he deliberately took trust money and applied it for his own company; on some occasions he "just took" the money and misapplied it: ibid, and at 15. (4) The claimant's trust account records were in a deplorable state and the gravity of his conduct was compounded by the difficulties involved in verifying his explanations and in unravelling the rights of his clients and by exposure of certain of his explanations as incorrect. (5) In consequence of his misapplication of his general trust funds the claimant intermingled his clients' moneys and affairs with those of himself and his company: [1982] 2 NSWLR at 13 and 14. 2 UNREPORTED JUDGMENTS (6) The claimant persisted in a "pig headed fashion" in systematically drawing moneys from his trust account allegedly as costs - despite the knowledge of his earlier misconduct - despite what a Law Society inspector and an investigator appointed under s82A had said in reports which he had read, and despite what the investigator and his own accountant had advised; he knowingly breached s41 after The Law Society's intervention: [1982] 2 NSWLR at 17. (7) The claimant improperly failed to observe an undertaking he had given to the Commissioner of Stamp Duties and acted improperly in relation to the affairs of an estate for which he was acting: [1982] 2 NSWLR at 11 and 12. However, no loss was suffered by any of the claimant's clients and, despite the deliberation and falsity which undoubtedly characterised certain of these activities, there appears to have been no element of premeditated criminal assault upon his clients' funds. Of course, the fact that in the ultimate result a client suffers little or no loss from acts of undoubted professional misconduct is of little, if any, relevance: Law Society of New South Wales v Moulton [1981] 2 NSWLR 736 at 74G per Hope JA. It is the risk of loss which is a far more important factor and which may in certain cases be the element which characterises the acts or omissions as professional misconduct. But the absence of loss may nevertheless tend to explain the nature and extent of the misconduct. The claimant has sworn two affidavits in support of the application and has provided thirty affidavits from friends and professional and social acquaintances, deposing in general terms to his present integrity and responsibility. The claimant himself says that he was able to accept the decision of the Court of Appeal and thereafter set out to make a new life for himself and his family and to reestablish, so far as he could, his reputation in the community. He had been living with his wife and children at Burradoo in the Southern Highlands and they live there still. Since 1981 the claimant has engaged in what might compendiously be called property development of various kinds, including the purchase, improvement and sale of a motel and the acquisition and development of an hotel in Bowral. In the course of these business activities the claimant has dealt with a number of real estate agents, architects, engineers and others "directly involved in the preparation and execution of plans for projected buildings or renovations." In consequence he has, he says, gained an insight "into the acquisition of licensed premises, the transfer of liquor licences, traffic authority requirements and liquor laws and licensing regulations generally." The hotel, which appears to be a major investment asset, is owned by the claimant's family company and is at the moment under lease. The affidavits which have been filed deal with many aspects of the claimant's life, both social and commercial, since 1981 and are, without exception, extremely favourable. They indicate that he enjoys a high reputation with those with whom he has had social and business contacts, for the meticulous and dependable manner in which he conducts his business affairs and for his generosity, and support of local activities. All the deponents assert that they are aware that the claimant has been struck off the roll and of the reasons for The Law Society's action. However, as in every case of this kind, the Court must have some lingering doubt as to whether all of them fully understand the grounds upon which this grave decision was taken and the reasoning which informed the determinations of both the Statutory Committee and the Court of Appeal. For example, and this is an explicit indication of what may be immanent in some of the other material, one deponent, a real estate agent who has known the claimant and his wife since about 1972, in relation to his endeavours to ascertain the exact reasons for the claimant's URJ JOHNS v THE LAW SOCIETY OF NEW SOUTH WALES (Samuels JA) 3 being struck off says: "From further inquiries made by me, I have ascertained that despite his failure to maintain his account books in a proper manner, there has never been any suggestion of dishonesty on his part, nor was any person owed moneys as a result of Robert Johns representing them as Solicitor. I have read the decision of the New South Wales Court of Appeal relating to his striking off as a Solicitor." With all respect, the deponent must have gained very little from his perusal of the Court's reasons. The question whether the deponents fully appreciate the extent to which the claimant's conduct fell below that required of a solicitor is perhaps a somewhat arid one. It may be that the deponents do not appreciate exactly the reasons why the claimant's right to practice was terminated and may therefore feel a degree of sympathy for him which a true appreciation of the facts would not sustain or authorise. Nevertheless, a reading of the affidavits with appropriate reservations still indicates that a significant number of citizens, whom I would fully accept, of course, as honest and well motivated, are able to speak in very high terms of the claimant as they have known him. I should perhaps add particular references, really on the other side of the ledger, to those who are able to make the more useful comparison between the claimant's personality as it was before 1981 and as it now appears. A member of the bar, for example, observes that the claimant, when he first met him in 1975, was "rather abrasive and self assured" but has seen him develop over the years "into a very unassuming and caring person." A solicitor who has known the claimant since about 1968 says that in the early years of their friendship "I noticed that the applicant tended to object to certain criticism levelled at him. This characteristic no longer forms part of his personality and he takes positive steps to remedy any faults pointed out to him." Above all, Mr Lloyd Talbot, an accountant who has advised the claimant over the years, and in whom the claimant in recent times has evidently placed considerable confidence, describes his pointing out to the claimant in 1978 or 1979 that his method of operating his trust account was inconsistent with the general usage and common practice adopted for that purpose. But the claimant nevertheless persisted in his own ways. Mr Talbot, I should add, says that over a period of about six months during which he worked on the claimant's accounts, he observed that no client would suffer any pecuniary loss as the result of the manner in which the claimant's trust account was maintained. This, with all respect to Mr Talbot, may be a somewhat dubious statement, but I will accept and apply it to indicate that Mr Talbot, who is plainly an accountant of capacity and perception, saw nothing to indicate the existence of attempts to commit deliberate fraud upon any of the claimant's clients. The important point is perhaps that so far as Mr Talbot is concerned, he is of the opinion that the claimant has learned several lessons from the grave problems encountered in the previous conduct of his legal practice. One positive consequence is that the claimant now brings the most meticulous care to the conduct of his financial and business affairs. The claimant, on the footing of this material, asks the Court to be satisfied that he is now a fit and proper person to be admitted to practice and has, in short, been able to rehabilitate himself and shed the serious defects of character which led him to commit the acts and omissions which constituted the professional misconduct for which he was struck off. He is now in a comfortable financial position and does not contemplate any further property development. He wishes to be readmitted in order to work as an employed solicitor dealing with 4 UNREPORTED JUDGMENTS commercial matters and applications for liquor licences, a field in which he has a good deal of practical experience and such knowledge of the relevant law as that has provided. Mr Bohdan Bilinsky, who is the claimant's solicitor and who practises in partnership at Bowral, has told the Court that he and his partner would be prepared to employ the claimant, first of all for two days in each week until such time as the increase in the volume of work for which he was fitted permitted his employment on a full time basis. Mr Bilinsky's proposal is that he be initially involved in commercial and conveyancing matters and in some probate work, and he is prepared to supervise personally all the claimant's work. The claimant's motives for making the application are perhaps of minor relevance to the question of his fitness, which is the issue we have to determine. However, he said in the witness box that he wishes to practise as a solicitor because he thinks that he has knowledge which may be of general service and because he seeks to restore his name and standing by readmission to the Roll. The Law Society opposes the application on the short around that the Court should not be satisfied that the claimant has discharged the heavy onus of proof which rests upon him. I endeavoured to set out the threshold issues to be determined in Ex parte Dennis Re The Legal Practitioners' Act, Court of Appeal, 23 December 1988, unreported, and I will venture to set out what I said there: "The principles of law which are to be applied are not in doubt. The applicant bears the onus - which is a heavy one - of satisfying the Court that he should be readmitted, and in order to do so he must displace the decision as to probable permanent unfitness which was the basis of his removal: Ex parte Munro: Re Legal Practitioners' Act (1969) 71 SR 448 at 454; Kotowicz v Law Society of New South Wales (No 2) (Court of Appeal 7 August 1987, unreported) per Kirby P at 19 and 20 and per Samuels JA at 3; Ex parte Lenehan (1949) 77 CLR 403 at 422. In reaching its decision the Court should act with the greatest caution and only on solid and substantial grounds, and must depend upon its own assessment of the applicant's character, uprightness, honour and __ trustworthiness: Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655 at 664 and 692; Lenehan at 422. It is, of course, equally well established that in discharging its responsibility to supervise the discipline of solicitors, the Court is not exercising a punitive but a protective role, having primary regard to the protection of the public interest and of the interests of the profession: Clyne v New South Wales Bar Association (1960) 104 CLR 186 at 201-2 and New South Wales Bar Association v Evatt (1968) 117 CLR 177 at 183." The observations in Ex parte Lenehan, which have been consistently followed, may be misapplied unless it is remembered that they were made in the course of explaining what had been earlier said in Ex parte Macaulay (1930) 30 SR 193 and in mitigating what had previously been regarded as the effect of statements made in that case at 194. In my opinion, the material upon which the claimant relies satisfies me that since 1981, to adopt what was said in Ex parte Lenehan at 424: "... he has behaved in such a way as to raise a strong presumption that he has redeemed his early errors and that they did not reflect any permanent defect of character." I have briefly summarised the nature of the material which the claimant has deployed in support of his application. It establishes, to my mind, that the claimant has led an entirely honest and blameless life since 1981 and has established himself as a successful businessman by methods of complete propriety. In assessing whether an applicant for restoration to the Roll has established the rehabilitation which the order he seeks requires, consideration URJ JOHNS v THE LAW SOCIETY OF NEW SOUTH WALES (Mahoney JA) 5 must be given to the nature of the misconduct which led to the disqualifying order in the first place, and to the evidence of the activities since which are said to manifest restoration of character. In the present case, the offences committed prior to 1977, and between that year and 1979, serious as they were - and as, indeed, they must have been to justify the order that was made - are not such as to connote irrebuttable moral incapacity. As to the events since, the claimant has demonstrated as good a record as anyone could reasonably be capable of presenting. Accordingly, taking together the far from irredeemable nature of the misconduct and the way in which the claimant has set about redeeming himself since, I am satisfied that the necessary degree of rehabilitation has been demonstrated. In my opinion, therefore, the claimant is fit to practise as a solicitor and it is proper that an order should be made admitting him to the Roll. I have been somewhat concerned as to whether the Court should make some order requiring the solicitor to practise only as an employee for some period of time. The claimant himself has indicated that this is the capacity in which he desires at present to return to the profession. Obviously, however, this view may change; and, indeed, if the return to professional practice proves successful, it may be an entirely understandable consequence that the claimant may wish to undertake more of the responsibilities which he once discharged. It would not be right, therefore, to impose any permanent restriction upon the extent to which he can practise. We are not, I think, concerned only with moral capacity, although that is the primary matter for consideration upon any application of this kind. The claimant has been away from the law for ten years or thereabouts and may well require refresher exercises in order to ensure that he can adequately tackle the resumption of professional practice, even as an employed solicitor under the supervision of an experienced practitioner such as Mr Bilinsky. However, although I think that the Court has power either to require an undertaking from the claimant such as that which was required and given in Nash v The Law Society of New South Wales, Court of Appeal, 30 August 1988, unreported, or to make a direct order limiting the ambit of the claimant's practice, I do not think that either course should be adopted in the present case. It is a matter for The Law Society to determine whether the claimant should be given an unlimited practising certificate or whether he should be restricted in some way, and I think it would be appropriate to leave such a decision to the Society, in the light of these reasons and the intention which the claimant has expressed to this Court. Accordingly, I would merely order that the claimant be admitted as an Attorney, Solicitor and Proctor of the Supreme Court of New South Wales and that he should pay The Law Society's costs of this application since, in my opinion, the Society is entitled to require a claimant in these circumstances to make good his application before the Court. Mahoney JA I agree with the judgment of Mr Justice Samuels and generally agreewith his reasons. For myself I see some significance in the reasons given by the applicant for seeking admission to practice. Such reasons may be relevant in themselves insofar as they give an indication of the fitness and capacity of the applicant to practise. They may be relevant insofar as they provide an insight into and help in the assessment of the truth or accuracy of what an applicant has said. I have found such evidence and assistance in the present case. I accept that in substance the applicant wishes to establish, by his admission to practice, that he is now a fit and proper person for the purpose. That is a legitimate purpose. 6 UNREPORTED JUDGMENTS On the evidence that is before the Court and in particular the applicant's own evidence as to what he now proposes to do and how he now proposes to practise, and giving full consideration to what has been said, I am satisfied that it is appropriate that he now be admitted. I agree with the orders which have been proposed. Clarke JA I agree with the judgment and reasons of Mr Justice Samuels. 1. That the Claimant be admitted as an Attorney, Solicitor and Proctor of the Supreme Court of New South Wales. 2. That the Claimant pay The Law society of New South Wales' costs of this application. Counsel for the Claimant: M H TOBIAS QC/MRS H SIMPSON Counsel for the Opponent: G C LINDSAY Solicitors for the Claimant: WILLIAMS BILINSRY, BOWRAL Solicitors for the Opponents: ROSEMARY MacDOUGAL, THE LAW SOCIETY OF NEW SOUTH WALES