MALFANTI v THE LEGAL PROFESSION DISCIPLINARY TRIBUNAL and ANOR SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE, MEAGHER and HANDLEY JJA 23 August 1993, 23 August 1993 [1993] NSWCA 171 SOLICITOR — Debit in trust account — finding of professional misconduct — tribunal gave no reasons for concluding that solicitor deliberately or was recklessly indifferent in disregarding his obligations under s41 of the Legal Practitioner Act — appeal by solicitor. COSTS — unreasonable prolongation of proceedings — investigative function of tribunal — failure of law society to adduce prima facie case — findings against solicitor reversed — order as to costs before Tribunal challenged SOLICITOR — failure to register old system mortgage — solicitor held title deeds. SOLICITOR — charges of professional misconduct — ten grounds asserted by Law Society — hearing over four days — majority of grounds dismissed — no evidence adduced by Law Society to substantiate these grounds — solicitor required to give evidence in the absence of a prima facie case against him — observations as to procedure before Tribunal. HELD: No evidence before the Tribunal allowed it to conclude that there had been a wilful breach of s41 - breach occasioned by existence of debit was of trivial magnitude and could not amount to professional misconduct - there is nothing wrong with a solicitor maintaining in his own name a trust account providing that U is always in credit. Allinson v General Council of Medical Education AND Registration [1894] 1 QB 750 applied. HELD: conduct could not amount to professional misconduct. (i) There is no reason why a solicitor should not be able to make a no case submission in disciplinary proceedings. Re Veron; Ex Parte Law Society of New South Wales (1966) 84 WN (NSW) Pt1l 136, considered. (ii) The obligation requiring a solicitor to assist the Tribunal in professional misconduct proceedings does not require the solicitor to enter the witness box to reply to unsubstantiated allegations incapable of establishing a case of professional misconduct. Johns v Law Society of New South Wales [1982] 2 NSWLR 1, considered. (iii) Where Law Society raises a ground of complaint it should frame it in such a manner that if proved it will lead to a finding of professional misconduct. (iv) Tribunal should give reasons explaining factual findings and how these lead to conclusion drawn. Held: per Clarke and Handley JJA (Meagher JA dissenting) - investigation of charges was warranted - nonetheless costs order should be varied as it was one in light of the manner in which the case was conducted that no reasonable tribunal could have reached - per Meagher JA - indemnity costs should be awarded. Meagher JA In this matter, which is an appeal by a solicitor, Mr Malfanti, from a decision adverse to him by the Legal Profession Disciplinary Tribunal, I have had the advantage of reading in draft the judgment of Clarke JA. I agree with it entirely except on the question of what is the appropriate order to make as to costs. 2 UNREPORTED JUDGMENTS Initially, the Law Society of New South Wales brought ten charges against Mr Malfanti. One of them, charge 7, contained within it four separate charges. Evidence was heard by the Tribunal for four days. After addresses, counsel for the Law Society asked that a finding be made that charges 1, 2, 3, 4, 5, 6, 7(a), 7(b) and 10 be found not proved, which the Tribunal did. However, the Tribunal did find charges 7(c), 7(d), 8 and 9 proved, that they constituted professional misconduct, and that Mr Malfanti should be fined $12,000.00 and ordered to pay the Society's costs. Clarke JA has demonstrated that charge 8 is meaningless, that to find charge 9 proved is fanciful, and that charge 7(c) and 7(d) were proved - if at all only in a limited technical sense. He has also demonstrated that by no stretch of the imagination can Mr Malfanti be convicted of professional misconduct. In these circumstances, it is obvious that neither the fine (which depends on a proper finding of professional misconduct) nor the order for costs can stand. It also follows, I think, merely from the facts I have stated that the Law Society should pay Mr Malfanti's costs both in this Court and before the Tribunal. Where, however, I differ from my brethren is that in my view the Law Society should pay Mr Malfanti's costs on an indemnity basis. The power vested in the Society to proffer a charge of professional misconduct against a practising solicitor is an extremely serious one, and should not be exercised lightly. In the present case, in my view, the Law Society has exercised that power irresponsibly. It has advanced against Mr Malfanti a series of charges without ever ascertaining that it had prima facie evidence of those charges. The bulk of the charges brought by the Law Society against Mr Malfanti (ie the charges other than 7(c), 7(d), 8 and 9), related to his alleged behaviour towards two of his clients. It has turned out that Mr Malfanti's assertion that neither of the two persons concerned was ever his client is entirely correct; it also turns out that the Law Society never had any evidence to suggest that either of these were Mr Malfanti's client. One can only wonder why the charges were ever made in the first place. The enormity of the Law Society's behaviour can be gauged by the fact that one of the charges against Mr Malfanti was that he falsely asserted that he owned certain shares in a company called International Food Technology Ltd. Miss Sayer, the investigator appointed by the Law Society to investigate Mr Malfanti's affairs and its principal witness, discovered that not only was the assertion not false, but was entirely accurate. Nonetheless, the Society, knowing that the charge against Mr Malfanti was baseless, persisted with it until the end. The costs which Mr Malfanti must have had to expend, I imagine, would run into tens of thousands of dollars. The depression and anguish he felt whilst the Law Society both at first instance and on appeal pursued its unjustified vendetta against him is not difficult to envisage. Nor, I might add, did Mr Hipsley, who appeared for the Society, despite his experience and learning, make any serious effort to justify his client's deplorable behaviour. The misconduct, for that is what the Law Society's behaviour is, in my view should attract an award of indemnity costs against it. Handley JA I agree with Clarke JA. Clarke JA The appellant was admitted to practise as a solicitor in 1964. Shortly after his admission he went overseas and remained away until 1965. Since that time he has practised continuously as a solicitor. Apart from a period when he was in employment, and maintained a right of private practice, he WAALFANTI v THE LEGAL PROFESSION DISCIPLINARY TRIBUNAL and ANOR (Clarké JA) practised in partnership or as a sole practitioner for a period of 26 years until the hearing before the Legal Profession Disciplinary Tribunal in February 1990. At the time of that hearing he was practising at Brookvale and was involved in a partnership at Pennant Hills. He gave evidence that he had not, to his knowledge, been the subject of a complaint to or by the Law Society and that evidence was uncontradicted. It is appropriate, therefore, to approach the present case upon the basis that he had been a solicitor of good character who had been in practice for a lengthy period of time. His present trouble started when he received a letter from Messrs Hunt and Hunt seeking the repayment of a loan made by Mr Kabbara to the solicitor. This letter provoked a reply from the solicitor in which it was asserted that the moneys were not paid to him by way of loan but for the purchase of shares in a public company. Upon receipt of this letter Messrs Hunt and Hunt complained to the Law Society saying, inter alia, that, "We are of the opinion that the documentation indicates a prima facie case of failure to account by Mr Malfanti". The Law Society responded immediately appointing an inspector, Mr Sofiak, to carry out an examination of the trust account of the solicitor's practise. That appointment was made on 28 July. I would infer that Mr Sofiak reported back to the Law Society in August 1988 for on 25 August the Council of the Law Society appointed Jean Sayer to investigate the affairs of the solicitor pursuant to s55 of the Legal Profession Act 1987. Miss Sayer presented her report on 16 November 1988 and the solicitor furnished his reply to that report on 20 March 1989. On 31 July 1989 the Law Society lodged a statement of complaint in respect of the solicitor with the Disciplinary Tribunal. Grounds 1 to 6 were concerned with the Kabbara complaint. In short those grounds asserted that the solicitor failed to obtain any security for a loan from his clients Sam and Haifa Kabbara to his client McNamara, the solicitor deliberately misled his clients Sam and Haifa Kabbara, the solicitor misled the Law Society, the investigator and Messrs Hunt and Hunt as solicitors for Sam and Haifa Kabbara insofar as he informed them that the sum of $50,000 was paid to him for the purchase of shares and the solicitor misled the Law Society in relation to a sum of $10,000 which he said was the consideration for the sale by him to the Kabbaras of certain shares in the company. In ground 7 the Law Society asserted that the solicitor had wilfully breached s41 of the Legal Practitioners Act 1898 and s61 of the Legal Profession Act 1987 (the former was in force at the time of the conduct about which complaint was made and clearly applied). That ground of complaint was supported by five particulars only two of which are presently relevant and I will set them out. They are: "(c) The Malfanti Account/Suspense Account and Malfanti Capital Adjustment Account have been in debit and remained in debit from time to time particularly from 4 February 1985 to 28 February 1985 and from 1 September 1985 to 3 January 1986 for varying amounts up to $694.49 (see at 27 and 28 of the Investigator's report and the copies of the trust account ledger sheets relating to this account attached to that report). (d) The trust account ledger card with respect to the sale of Michael McNamara to Perrotet was in debit in the sum of $565.00 from 17 May 1985 (see at 21 and 22 of the Investigator's report and a copy of the trust account ledger card attached to that report)." Ground 8 asserted that the solicitor had intermingled his own funds with those of his clients and particulars were furnished which read: 4 UNREPORTED JUDGMENTS "The solicitor conducted his own accounts which he called variously 'Malfanti Capital Account/Suspense Account' and 'Malfanti Capital Adjustment Account" within his trust account (see at 27 to 29 of the Investigator's report and the copies of the trust account ledger sheets attached to the Investigator's report)." Ground 9 asserted that the solicitor failed to obtain adequate security from one client for moneys loaned by the solicitor on behalf of other clients and that ground was supported by four particulars only one of which is presently relevant. That is particular (b) which reads: "A mortgage over real estate was signed by both McNamara as mortgagor and the solicitor as mortgagee which was neither stamped nor registered (see at 19 of the Investigator's report)." In ground 10 it was said that solicitor preferred the interests of his client Oayda to that of his client Olga May Henman. Particulars were furnished but it is unnecessary to recite them as the complaint was dismissed. The hearing of the complaint continued over four days in February and March 1990 and the Disciplinary Tribunal published its order and reasons for determination on 8 May 1991. The Tribunal found grounds 7(c) and (d), 8 and 9 established and that the solicitor had been guilty of professional misconduct. Consequently, the solicitor was fined $12,000 and ordered to pay the costs of the Society on a solicitor and client basis. The solicitor has challenged each of the findings made against him and the ultimate orders including the order in relation to costs. Although the Tribunal made findings in favour of the solicitor on grounds 1 to 6, 7(a), (b) and (e), 9(a), (c) and (d) and 10 it is important that I say something about the course of the proceedings, particularly insofar as there is a separate challenge to the costs order which was made. I have already pointed out that the hearing took four days. Most of that time was taken up with the agitation of the issues raised by the grounds in respect of which a finding in favour of the solicitor was made, particularly those grounds relating to the Kabbaras. What is more the solicitor was placed in a very difficult position insofar as the normal procedures of the Tribunal were not followed and there were no statutory declarations made by the Kabbaras. As a consequence not only was the solicitor unable to put on a declaration in reply but each of the witnesses, that is, Mr and Mrs Kabbara and Mr Oayda gave oral evidence. This was a time consuming exercise. I do not know why a declaration was not obtained from Mr Oayda but it does appear that Mr and Mrs Kabbara would not speak to the Law Society's legal representatives prior to the hearing. Not surprisingly in these circumstances, the evidence given by the Kabbaras did not substantiate grounds | to 6. Furthermore, Mr Kabbara gave evidence denying that the solicitor had ever been his solicitor. This evidence was regarded by the Tribunal in its decision as critical insofar as it destroyed, in the opinion of the Tribunal, the underlying basis of the grounds of complaint relating to the sum of $50,000 paid by the Kabbaras to the solicitor. In the light of this evidence, particularly when understood in the context of the evidence of Mr Oayda, which was broadly supportive of the solicitor, his counsel submitted to the Tribunal at the end of the Law Society's case that the proceedings concerning grounds | to 5 should be regarded as at an end and that the solicitor should be required to answer only the case made in relation to the later grounds. For reasons which are not presently apparent to me counsel for the Law Society objected to the submission and submitted that the course suggested by counsel for the solicitor was incompatible with the nature of the proceedings. As I understand his submission it was to the effect that it is incumbent upon a WAALFANTI v THE LEGAL PROFESSION DISCIPLINARY TRIBUNAL and ANOR (Clark6 JA) solicitor to give evidence in order to assist the Tribunal to determine what orders should be made in the case. At the end of the argument the Tribunal agreed with this submission and required the solicitor to give evidence concerning all complaints including those which were not supported by evidence. To put it mildly this was unfortunate for that decision unnecessarily prolonged the hearing insofar as the solicitor was required to give evidence in chief concerning a number of matters in respect of which there was no case against him. Furthermore, counsel for the Law Society then proceeded to cross examine him on those matters. Of course it is true to say that disciplinary proceedings before the Tribunal are different in principle from criminal and civil, inter parties, proceedings and as has been said by this Court it is not open to a solicitor when called upon to show cause, as an officer of the Court, "to lie by and engage in a battle of tactics... and to endeavour to meet the charges by mere argument" (Re Veron; Ex Parte Law Society of New South Wales (1966) 84 WN (NSW) Pt1 136, at 141 and 142). But in the same case their Honours went on to say that: "We are well aware that if a solicitor is called upon to show cause he may do so in several ways. He may (a) argue that the material before the court discloses no evidence of misconduct; (b) argue that the facts adduced in evidence do not warrant a finding of misconduct; (c) meet the situation by a denial or explanation...". Veron is clear authority for the proposition that it is not open to a solicitor to engage in a battle of tactics but it provides no support for the view that where, as counsel for the solicitor here suggested, the facts adduced in evidence disclose no evidence of professional misconduct a solicitor is nonetheless obliged to go into the witness box and give evidence in reply to evidentiary material which is incapable of establishing professional misconduct on his or her part. In principle Isee no reason why a solicitor should not seek to argue that the evidence adduced against him or her is incapable of establishing in law one or more of the grounds relied upon by the Law Society. Indeed if counsel for the solicitor seeks to argue that there is no evidence to support any of the grounds in the complaint I find it difficult to understand why a submission analogous to a 'no case' argument should not be entertained when the Law Society closes Us case. The position may not be the same where the solicitor wishes to contend that some grounds are not supported by evidence while conceding that others are. In some cases, for example, where there are discrete issues involved in the particular grounds the subject of the submission, it may be convenient to entertain a submission of no case. In others where, for instance, the grounds in respect of which the submission is to be made are, or possibly may be, linked with other grounds in respect of which it is conceded there is evidence it may be proper for the Tribunal to require the solicitor to give his or her evidence without ruling upon the submission. It is impossible in my view to lay down a rigid rule. The Tribunal is bound to mould its procedures to enable it efficiently and effectively to carry out its functions in an expeditious manner. In making these comments I have not overlooked the principle that a solicitor who appears before the Tribunal is bound to assist it in its investigations. (See Johns v Law Society of New South Wales [1982] 2 NSWLR 1, per Moffitt P at 6). I do not hold the opinion, however, that that obligation extends to requiring a solicitor to enter the witness box to furnish a reply on oath to evidentiary material which is incapable of establishing a case of professional misconduct. 6 UNREPORTED JUDGMENTS In this case counsel for the solicitor wished, in effect, to submit that there was no case to answer in relation to the allegations in grounds | to 6 which may be termed the Kabbara grounds. It was the allegations in these grounds which had led to the investigation and these grounds clearly formed the substantial case against the solicitor. More to the point they were quite discrete from all the other grounds with the exception of grounds 7(a) and (b). Although the inter relationship between grounds | to 6 and 7(a) and (b) was not great I do not pause to examine its detail for the simple reason that no appeal was brought against the decision not to entertain the no case submission. Notwithstanding, I have spent some time on the procedural question because, in my opinion, counsel for the Law Society misconceived the true nature of the proceedings and proceeded to persuade the Tribunal to act on his view of the law notwithstanding that in doing so he unnecessarily prolonged the already lengthy hearing. In addition, the Tribunal's requirement that the solicitor respond to the evidence in relation to grounds | to 6 bears some relevance on the question of costs. When it came to final addresses counsel for the Law Society submitted that questions | to 3 and 5 should be answered "No". In other words at the end of the hearing he recognised that the evidence did not justify findings adverse to the solicitor on these grounds. The Tribunal went further, as I have pointed out, and answered all questions except those to which I have referred in the solicitor's favour. A primary reason for doing so was that it was not satisfied that there was at the relevant times a relationship of solicitor and client between the Kabbaras and the solicitor. This finding was unsurprising in view of the fact that Mr Kabbara stoutly denied at all times that any such relationship existed. I turn then to the grounds found proved and the associated question whether, even if the grounds were established, it had been shown that the solicitor was guilty of professional misconduct. The Tribunal concluded that there were debits in the solicitor's trust account as alleged in para7(c) and para7(d) which were not satisfactorily explained by the solicitor. Those debits appeared in an account styled at varying times "Malfanti Account/Suspense Account" and "Malfanti Capital Adjustment Account". The Tribunal found that they were in debit from time to time particularly from 4 February 1985 to 28 February 1985 and from 1 September 1985 to 3 January 1986 for varying amounts up to $694.49 (Ground 7(c)). Particular (d) related to an account concerning the sale from Michael McNamara to Perrotet which was in debit in the sum of $656 from 17 May 1985 to 30 May 1985. The Tribunal said that the solicitor had sought to justify these shortages by explaining that they were covered by other moneys in another account and that the solicitor conceded he did not maintain any records complying with the Trust Account Regulations in relation to this account because he thought there was no need for it. The Tribunal proceeded to say that it took a most serious view of the naive attitude of the solicitor and his blatant departure from his obligations in relation to the maintenance and operation of his trust account and found that s41 had been wilfully breached. The solicitor did, however, give an explanation for these debits which, if accepted, answered the charge of wilfulness. I will come to that in a moment but it is pertinent to point out that the Tribunal failed to give any reasons for its conclusion that the breach of s41 was wilful and, in particular, failed to explain whether it considered that there had been a deliberate breach of the obligations imposed by s41 or whether the solicitor had recklessly disregarded his WAALFANTI v THE LEGAL PROFESSION DISCIPLINARY TRIBUNAL and ANOR (Clarké JA) obligations. This is but one example of the economy of reasoning shown in the Tribunal's reasons, which is a subject to which I will later return. What the evidence disclosed, and there was no dispute about this fact because it emerged clearly from the solicitor's trust account, was that for just over three weeks in February the Malfanti Capital Account/Suspense Account was in debit to a maximum of $25.89. Between September 1985 and January 1986 it was in debit in varying amounts the maximum being, as the Tribunal said, $694.49, which was the amount of the debit on | November and which continued to be the amount of the debit until 26 November when the debit was reduced to $71.12. The solicitor's explanation for the account was as follows: "I used it to transfer costs and disbursements into it with a view to eventually transferring those to my general account, and J also held a float in that account because I had had difficulty with the Bank, despite numerous requests not to charge the trust account with their fees for some reason or another they persisted to do so." (I understand a 'float' to mean a credit in the account as a form of insurance against unexpected debits.) The solicitor explained the February debits by saying that he simply had not written up the book and that there were moneys which should have been transferred to that account which would have kept it in credit and which he failed to transfer to the account until 28 February. An examination of the relevant accounts demonstrates that a credit had been available in the relevant other account on, or even before, 4 February and supports the solicitor's evidence to the hilt. The Tribunal did not say that it disbelieved the solicitor. Nor did it deal with his reason for this small debit. In my opinion it is impossible to conclude that the solicitor was guilty of a wilful breach of s41 in respect of this debit in the light of the evidence and I am of opinion that the Tribunal was in error in so doing. Additionally, I think this was trivial and in the circumstances of this case it could not possibly have supported a finding of professional misconduct. In relation to the other element of ground 7(c) the solicitor said, in addition to the explanations referred to in the Tribunal's reasons, that he had not written up the books as regularly as he might have and he failed to recognise that the debit existed. The validity of an explanation of this nature depends upon all the circumstances. If the position was that there were a large number of debits involving a significant sum of money it may be very hard to accept an explanation that failure to write up the books led to the debits. But where, as here, there is a relatively small debit in one trust account for a short period there does not seem any reason to conclude that the solicitor's explanation was other than a truthful one. Although the solicitor may have been open to criticism on the grounds that he was lax in his book-keeping, and although debits in a trust account almost always indicate a breach of s41, I am quite unable to accept that even if there was a breach in this case the evidence demonstrated that it was wilful. The debit relating to the McNamara Trust Account was in an amount of $565, which upon one interpretation of the trust ledger remained for 13 days. The solicitor said that the debit resulted from his failure to transfer that amount from the capital adjustment account and it was only at the end of May, when he was doing his trust balances, that he noticed that the account was in a debit situation and he straightened it out fairly quickly. It is clear, therefore, that there was a debit but there is no material justifying the inference that there was a wilful breach of s41. Indeed the solicitor denied that he had intentionally created the debit and no reason appears why his denial should be disbelieved. Of course, one 8 UNREPORTED JUDGMENTS of the difficulties in the reasons of the Tribunal is that there is no indication whether or not the members of the Tribunal accepted the evidence given by the solicitor on this aspect. Earlier in the reasons when the Tribunal was considering a possible conflict between the evidence of the solicitor and Mr and Mr Kabbara it accepted the version given by the solicitor. In addition the Tribunal expressly accepted his evidence in relation to ground 10. These findings would not suggest that the Tribunal rejected the evidence of the solicitor on this question. Unless, however, the Tribunal had rejected the evidence of the solicitor, who expressly denied wilfulness on this particular issue, it could not have made the finding which it did. Notwithstanding, there is simply no indication that it did reject his evidence. On the contrary on each occasion where the Tribunal considered the acceptability of the evidence of the solicitor it found in his favour. There is considerable doubt in my mind whether in this particular respect the solicitor breached s41 but, even accepting that there was a breach of that section, there is no material upon which an inference could be drawn that he did it wilfully. I turn now to ground 8 which, it will be recalled, read "The solicitor has intermingled his own funds with those of his clients". This ground is so imprecisely worded that I am not at all sure what the solicitor was charged with. If one reads the ground with the particulars, which I will not repeat, one might reach the conclusion that the complaint was that the solicitor intermingled his funds with those of his clients by maintaining accounts in his own name in the trust account. Whether or not it is proper to keep such an account I fail to understand how it could be said that such action constituted an intermingling. No doubt the credit balance in his own account would form part of the balance in the trust account but there is no intermingling involved in that. His own credit balance simply is part of an overall trust credit balance. The flaw in the apparent argument apparently advanced by the Law Society can be demonstrated by pointing out that were it otherwise every solicitor would be intermingling the moneys of one client with those of another by keeping trust accounts in their names. That is a nonsense. In my opinion where the Law Society raises a ground of complaint it should do so in terms which indicate that if an affirmative finding is made against the solicitor that will lead to a conclusion that the solicitor has acted improperly in some way. But an affirmative answer to question 8 does not necessarily lead to that conclusion in my opinion. Intermingling is an unfortunate word to use in the present context and it may be quite possible to give an affirmative answer to ground 8 and yet at the same time say that there was nothing improper in the intermingling involved. This court has more than once spoken of the need for the Law Society to exercise care in drafting the grounds of complaint so that they are easily comprehensible and the solicitor served with notice of those grounds of complaint would immediately know precisely what it is that is alleged against him or her. Particular cases in point are Johns (supra, at 5 and 6) and O'Reilly v The Law Society [1988] 24 NSWLR 204 at 224 and 225. In the latter case I referred to the unfortunate propensity of the Law Society to fall back on the word 'intermingle' in diverse situations many of which may be quite inappropriate. The present, as it seems to me, is a case in which the use of that word only served to compound the difficulty of understanding the precise nature of the charge. What is worse is that the reasons of the Tribunal neither contain any discussion of the gravamen of the charge, that is intermingling, nor make it clear precisely what it was that the solicitor was ultimately found to have done. No more was WAALFANTI v THE LEGAL PROFESSION DISCIPLINARY TRIBUNAL and ANOR (Clark@ JA) said on this subject than that "the maintenance of these accounts within the trust account clearly offends the principles laid down in Johns case and the Tribunal finds the ground proved". What was said in Johns relating to a solicitor maintaining an account in his own name in the trust account does not bear on intermingling at all. What Hope JA said, and Moffitt P agreed with him, was that a person cannot hold money in trust for himself except in limited circumstances and that the language of s41 strongly suggests that the trust accounts to which it refers are accounts in which trust moneys are held and not moneys owned by the solicitor. These statements were made in the context in which a solicitor transferred money on account of costs from trust accounts of clients to an account in his own name in the trust ledger. Nowhere in either complaint 8, or in the particulars furnished with it, is there any suggestion that the solicitor is charged with having done that. It is true that Moffitt P also referred to s42 and the need to keep the accounts in a manner that enabled them to be conveniently and properly audited but again the discussion involved the movement by the solicitor of moneys from a client's account to one of his own. In my opinion the statements of both judges were dicta. In the same case Mahoney JA expressed the opinion that the maintenance by a solicitor of what was described as a 'control account' in the trust ledger was not inconsistent with the obligations of a solicitor. As at presently advised, and without expressing any opinion on the propriety of transferring costs from a client ledger account to a control account kept by a solicitor I see nothing wrong with the solicitor maintaining an account in his own name in the trust account provided, of course, that it is always in credit. No doubt a solicitor may put such an account to an improper use but that is another question. The mere maintenance of the account does not, in my opinion, constitute professional misconduct on the part of a solicitor. Indeed it is proper to record that at the time of the hearing, although not at the time of the conduct complained of, regulations had been passed, pursuant to the Legal Profession Act 1987, which expressly provide that a solicitor may maintain an account in his or her name in the trust ledger provided certain conditions are fulfilled. (Legal Profession Act 1987 s61(3)(b); Reg17 of the Legal Profession (Trust Accounts and Controlled Money) Regulation 1988. What seems to have occurred here is that intermingling was charged and none was proved; that particulars were furnished asserting that the intermingling was constituted by the solicitor's maintenance of an account in his own name in the trust account, a claim which cannot be supported; and that the Tribunal found that it was wrong, and professional misconduct, to have an account in one's own name in the trust account. On any view the finding was, in effect, that the solicitor had, in maintaining the accounts, breached a section, or sections (possibly s42), of the Legal Practitioners Act and the regulations, with which breaches he had never been charged. The whole position is completely unsatisfactory and cannot be sustained. Even if one assumes that the solicitor was technically in breach of a section, or sections, of that Act and the regulations, that breach could not possibly, in my opinion, have constituted professional misconduct. To hold otherwise would indicate a complete failure to recognise the gravity of conduct which constitutes professional misconduct. The classical definition, which in broad terms holds good today, is that of Lopes LJ in Allinson v General Council of Medical Education and Registration [1894]1 QB 750: "(conduct) which could be reasonably regarded as disgraceful or dishonourable by his professional brethren of good repute and competency". 10 UNREPORTED JUDGMENTS For my part the maintenance of the accounts in question in this case could not, even if technically impermissible, qualify as disgraceful and dishonourable conduct. The final affirmative finding related to ground 9 and was that the solicitor had failed to stamp and register an old system mortgage in circumstances where he held all the title deeds. The Tribunal made no finding on the issue of stamping but was Satisfied that the unregistered security was inadequate and therefore found the ground proved. The solicitor said, and there was no reference to this in the reasons, that he did not register the mortgage because he thought there was no need to take that step in the light of the fact that he held all the title deeds. This was not an unreasonable approach although it would have been far wiser for him to have registered the mortgage. In the circumstances his transgression could be described as no more than mere negligence and could not be regarded as professional misconduct. In the result the ultimate finding of the Tribunal cannot be sustained and the orders should be set aside. I have more than once referred to the fact that the Tribunal made a general statement that the solicitor was guilty of professional misconduct and did not support it with any reasons at all. In the nature of the facts found proved against the solicitor it could not be said that a finding of professional misconduct automatically followed and it was incumbent upon the Tribunal to explain why it reached the conclusion that in the circumstances the solicitor's conduct did satisfy the test to which I have referred. Furthermore, it was incumbent upon it to identify that professional misconduct which it found proved. It is impossible to tell from the reasons whether the critical finding flowed from affirmative answers to all the findings adverse to the solicitor or only one or two and if so which. The Tribunal carries out functions of fundamental importance to the legal profession and to the public generally. It has great responsibilities which carry, as a necessary incident, obligations to conduct enquiries before it in an efficient and expeditious manner and in such a way as to accord justice to the parties before it. One aspect of that obligation is the giving of reasons which clearly explain the findings of fact which have been made and the reasoning process leading not only to those findings but to the ultimate conclusion or conclusions. (See Johns, supra, at 7) The Tribunal's reasons in this case were quite inadequate. Not only did they fail to address the ground in at least one instance but they failed to explain why the breach of s41 was, in the light of the evidence given, wilful and how it was that a finding of professional misconduct should have been made. It may be that part of the explanation lies in the length of time between the end of the hearing and the publication of the reasons but that in itself is an unsatisfactory feature of the present case. It may be that the problem was that some of the members of the Tribunal were busy practitioners who were working under great pressure. While that may be the explanation for the unsatisfactory reasons in this case it must be borne in mind that the members of the Tribunal are charged with high responsibility and if any member is unable to discharge that responsibility in a proper manner then he or she should cease to be a member of the Tribunal. The conclusion that I have reached leads to the consequence that the costs order which was made should also be set aside. Even if, however, I was disposed to uphold the orders made there would be a serious question whether the costs order could stand. The hearing took, as I have said, four days and yet the issues which led to the adverse findings could have occupied no more than one or two WAALFANTI v THE LEGAL PROFESSION DISCIPLINARY TRIBUNAL and ANOR (Clarke JA) hours of the Tribunal's time. The solicitor admitted the basic facts in relation to grounds 7(c) and (d), 8 and 9 and the explanation of that conduct and his excuses (for want of a better word) must have taken little time. Notwithstanding the Tribunal awarded costs against the solicitor on a solicitor and client basis. This was an astonishing order and again there were no reasons for it. Were it necessary to consider the question I would be disposed to the view that it was an order which no reasonable tribunal, which had turned its attention to the question, could have made. The reason why I particularly mention this issue is that the solicitor has sought from this court an order that the Law Society be ordered to pay his costs of the hearing before the Tribunal on an indemnity basis. His counsel submits in this respect that not only did the Law Society press ahead with its case on complaints 1-6 when there was no evidence to support them but its counsel also persisted in making an allegation that he was falsely asserting that he owned shares in a particular company when it had no evidence to support that assertion and when the Law Society's own investigator, Miss Sayer, found it a surprising one. I am of opinion that these features of the case make it necessary for the court to mould a particular order in order to do justice between the parties. Having regard, however, to the public interest role played by the Law Society and the general practice in relation to costs, I do not think it would be correct to make the order sought by the solicitor. The Law Society received a complaint from Messrs Hunt and Hunt which it was obliged to investigate. In conformity with its obligation it appointed an inspector and, subsequently, an investigator who duly reported to it. That report revealed, among other things, that there were debit accounts in the solicitor's name in the trust ledger. Debits in trust accounts are always a serious matter and they signal the distinct possibility that there is a deficiency of trust funds. In this case the debits were relatively small and did not extend over lengthy periods and were it not for one complicating feature it may have been proper for the Law Society to accept the solicitor's explanation. The feature of the ledger accounts which was highly suspicious was that some entries had been written up out of order in an apparent endeavour to rectify debits. Accounts should never be written up in this way and the cases show that attempts to cover up apparent debits often signal serious underlying discrepancies in the trust account. In my opinion the existence of these entries justified the Law Society's action in referring the matter to the Tribunal. The fact that counsel appearing for the Law Society did not cross examine the solicitor to test his explanation meant that there was no reason for rejecting it but that consideration does not detract from the fact that the Law society had reasonable grounds to refer the debit issues to the Tribunal. I conclude that the appropriate order is that the Law Society should pay two thirds of the solicitor's costs of the hearing before the Tribunal. The orders I would propose are: (1) Appeal allowed; (2) The orders made by the Tribunal be set aside and the complaint to the Tribunal be dismissed; (3) That the Law Society pay the solicitor's costs of the appeal; (4) That the Law Society pay two thirds of the solicitor's costs of the hearing before the Tribunal. 12 UNREPORTED JUDGMENTS (1) Appeal allowed; (2) The orders made by the Tribunal set aside and the complaint to the Tribunal dismissed; (3) The Law Society pay the solicitor's costs of the appeal; 5 (4) The Law Society pay two thirds of the solicitor's costs of the hearing before the Tribunal. Counsel for the Appellant: P ROBERTS AND DB McGOVERN 10 Instructed by: HOROWITZ AND BILINSKY Counsel for the Respondent: D HIPSLEY Instructed by: FREDERICK SMITH