SHAW MCNEIL SEDGWICK AND LAW SOCIETY OF NEW SOUTH WALES FINDINGS OF FACT SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL Cripps JA 18 June 1993 [1993] NSWCA 244 Cripps JA. On the twenty first day February 1992 the Legal Profession Disciplinary Tribunal ordered that the name of Shaw McNeil Sedgwick be removed from the Roll of Solicitors of New South Wales. Mr Sedgwick appealed to the Court pursuant to s 164 of the Legal Profession Act 1987 which provides as follows: (1) Any party to a hearing conducted by the Tribunal may appeal to the Supreme Court against the Tribunal's determination of complaint. (2)... GB)... (4) An appeal shall be by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original hearing, may be given. Before the Tribunal The Law Society of New South Wales (the Society) alleged several instances ofprofessional misconduct by Mr Sedgwick. The Tribunal found some of the allegations made out and rejected others. Mr Sedgwick's appeal is directed to the order made by the Tribunal that his name be removed from the Roll. He does not challenge any findings of fact. However, the Society maintains that some, but not all, allegations rejected by the Tribunal should be held to have been proved and, in addition, makes fresh allegations of misconduct arising out of matters handled by Mr Sedgwick some of which are alleged to have occurred since the determination by the Tribunal (in February 1992) and some of which are alleged to have happened earlier but about which it had no previous knowledge. Mr Sedgwick denies the later allegations and, as Thave said, seeks to uphold the findings of the Tribunal made in his favour which are disputed by the Society. On 4 May 1992, Priestley JA stayed the order of the Tribunal and appointed a receiver, Miss Sayer, upon a term that all relevant transactions involving clients of the Appellant shall in respect of the said transactions be effected and transacted through the trust account of which Jean Sayer has been appointed Receiver. Pursuant to the order made by Kirby P on 13 April 1993 I am determining, in the Common Law Division of the Court, disputed questions of fact 'arising in the appeal'. Upon determination, I will send the findings of fact to the Court of Appeal. Before turning to the task in hand there are two matters I should mention. First, at the end of the hearing before me, Mr Sedgwick, who represented himself, and Mr Donovan QC, on behalf of the Society, asked me to record their joint submission that upon the matter being finally disposed of by the Court of Appeal, the Court, to be properly constituted, should include the judge who made the findings of fact. Conformably with the parties" request, the joint application is 2 UNREPORTED JUDGMENTS recorded. Second, I adjourned an application by the Society at the end of the four day hearing that the stay ordered by Priestley JA be lifted upon Mr Sedgwick giving an undertaking to the Court that until the appeal was disposed of, all moneys received by him, otherwise than in respect of costs for work rendered and for which Mr Sedgwick had previously submitted an itemised bill and had furnished a copy thereof to the Receiver, be lodged in his Trust Account. Mr Sedgwick was admitted as a solicitor on 22 September 1969. His professional life has been spent with the firm, Cope Norton & Sedgwick. The firm was owned by Mr Sedgwick's father who, at the time of his death on 27 October 1982, was a sole practitioner. Mr Sedgwick had earlier sold his interest in the partnership to his father for the sum of $6,250 which, apparently, he owed the Taxation Department. Thereafter and until his father died, he worked as an employed solicitor. Mr Sedgwick Sr by his Will left his practice to his wife, Mrs N G Sedgwick, Mr Sedgwick's mother. From the date of hisfather's death in October 1982 until his mother's death on 12 August 1988, Mr Sedgwick continued to run the practice. His mother owned the business and he was employed as a solicitor. On the 9 December 1982 Mr Sedgwick informed the Society that he was the solicitor in charge of the firm and that within a short time the practice would be assigned and transferred to him. He asked for advice as to any further requirements. There is no evidence of any response by the Society. Mr Sedgwick continued to run the practice for his mother until her death on 12 August 1988. He then advised the Society that he was the proprietor of the firm Messrs Cope Norton and Sedgwick. Before the Tribunal it was alleged that Mr Sedgwick's misconduct fell into three broad categories. The first concerned breaches of s 61 of the Legal Profession Act 1987, the gravamen being that he withdrew moneys deposited in his Trust Account and transferred them to his General Account without authority. Second, that in breach of s 62 of the Act he failed to keep his accounts in order. Third, that he improperly conducted the practice after his father died and before he became the proprietor upon the death of his mother and that he improperly administered his mother's estate. FINDINGS OF THE TRIBUNAL ACCEPTED BY THE SOCIETY AND MR SEDGWICK. The Tribunal found that during the period between his father's death and his mother's death, Mr Sedgwick ran the practice for his mother for nearly sixyears contrary to the provisions of s 119 and its legislative predecessor. The legislation precludes an unqualified person from sharing in the receipts of a legal practice except in special circumstances and for a limited period. Mr Sedgwick said he did not believe he was acting unlawfully because the practice made a loss (after his salary was paid) each year and hence no profits were shared. The Tribunal found that Mr Sedgwick had totally misconceived the scheme of the Act which is designed to preclude an unqualified person from sharing in the receipts of a legal practice except in special circumstances and for a limited period. The Tribunal rejected the Society's allegations that Mr Sedgwick acted improperly in the administration of his mother's estate and, in particular, with respect to the occupation of his late mother's home. It rejected, in terms, his sister's allegations of impropriety which, it found, were motivated by vindictiveness. However, it found with respect to his administration of his mother's estate that he had transferred $4470.08 from the Estate Trust Account \GRIAW MCNEIL SEDGWICK AND LAW SOCIETY OF NEW SOUTH WALES FINDINGS OB FACT (Cripps JA) to his office account without rendering a bill and in breach of s 61 of the Act and cl 8 of the Legal Profession (Trust Account and Controlled Money) Regulation 1988. The Tribunal found Mr Sedgwick has misused trust funds belonging to the Estate of the late Thomas Pratt, the executors and trustees of which were elderly people. Mr Pratt died some time prior to 1980. From 1980 until April 1986, Mr Sedgwick held $5362.82 in his Trust Accounton behalf of the Estate. On 24 April 1986 and on 23 February 1988 moneys were transferred from the Trust Account to the General Account without authority and were used by Mr Sedgwick for his own purposes including the payment of money for long service leave to two retiring employees. The Tribunal found that he had delayed in accounting to the beneficiaries for more than seven years, that he was guilty of misappropriation of clients" money and guilty of trying to cover up his dereliction of duty. The Tribunal found that Mr Sedgwick transferred the sum of $1000 from the Trust Account of the Estate of the late Eva Mary Josephine Courte to his General Account without authority from the executor and without rendering a bill of costs. It found that he had attempted to cover his tracks. It found that with respect to the Estate of the late George William Fletcher he delayed the administration of the Estate and, because he transferred costs from his Trust Account to his General Account before the grant of administration, he was in breach of ss 41 and 42 of the earlier legislation. It accepted, however, that Mr Sedgwick understood he was authorised by Mr Norman Fletcher, the executor, to transfer the money. There were a number of charges of misconduct brought against Mr Sedgwick which were rejected by the Tribunal. For example, it found that the Society failed to make good its allegation that, when acting for Mr Houston in a conveyancing transaction, he had failed togive him independent advice. It also found that although he was negligent in the manner of handling Mr Moulden's affairs, he was not in breach of s 61 and cl 8 of the Regulation when he transferred $7060.37 from his Trust Account to his General Account. Mr Sedgwick acted for the Estate of the late Robert Palmer. The Tribunal rejected the allegation that he had overcharged the estate. However, it found that he had transferred money on account of the costs from his Trust Account without rendering a bill of costs. There was no charging clause in the Will. The Tribunal found that Mr Sedgwick's conduct was not relevantly 'wilful' because it accepted Mr Sedgwick's claim that he had acted upon the advice of counsel, Mr Glissan, which he misunderstood. FINDINGS DISPUTED BY THE SOCIETY The Society maintains that Mr Sedgwick's conduct in the manner of running the practice after 1982 was not only undertaken in the knowledge that what was being done was unlawful but also for the purpose of diminishing the value of his mother's estate by saddling it with debts of the practice so that on her death he would acquire the practice and his brothers and sisters would be left to divide up the debt-ridden estate of his mother. Mr Sedgwick accepts that he was in breach of the law but denies his conduct was relevantly 'wilful'. He maintains he thought he was entitled to run the practice at a loss so that there would be no profits being shared with anunqualified person. That is what he told his brother, who gave evidence on his behalf. For reasons which will emerge in greater detail later, I find his explanation difficult to accept and I think the Tribunal's statement to the effect that Mr Sedgwick misconceived his obligations under the legislation 4 UNREPORTED JUDGMENTS meant that he knew that what he was doing was in breach of the law. However, the Society goes further and maintains that his purpose was to defraud his brother and sisters. The Society alleged that when acting for an elderly client, Miss Bromwich, he transferred $963.90 from his Trust Account to his General Account without her authority. It found Mr Sedgwick had authority to transfer the money and to use it for Miss Bromwich's needs when she was in a retirement village. The Society submits that the Tribunal misunderstood the evidence and that Mr Sedgwick had acted unlawfully. It pointed to his evidence that he received his instructions on 24 October 1986 but did not transfer the money until 16 February 1988. The Tribunal found that it could not: understand the delay in transferring the money from the trust account to the office account nor the necessity to make the transfer at all. Finally, the Society challenges the finding that, with respect to the Estate of the late Robert Palmer, his unauthorised transfer of moneys was because he misunderstood the advice he had received from Mr Glissan of counsel. The Society points to the circumstance that Mr Glissan did not tell him he could transfer the moneyfrom his Trust Account to his General Account as he did. Mr Sedgwick's explanation is, I think, that because Mr Glissan told him he was not obliged to be out of pocket, he, Mr Sedgwick, viewed that as advice that he could lawfully transfer funds as he did. The Society maintains that his excuse is not acceptable. Either it is untrue, which is its first submission, or if true, it demonstrates a lamentable understanding of his obligations. The matters to be determined with respect to the findings of the Tribunal are, accordingly, whether Mr Sedgwick conducted the practice between 1982 and 1988 ignorant of his legal obligations and whether his purpose was to defraud his brother and sisters. Second, whether he had Miss Bromwich's authority to transfer $963.90 from his Trust Account to his General Account. Third, whether he genuinely 'misunderstood' counsel's advice with respect to being paid his costs from the Estate Account without any court order or other authority. THE NEW ALLEGATIONS 1. Gross delay in handling a claim by Pauline King on behalf of her son for damages for personal injuries suffered on 10 January 1988. 2. Professional misconduct, negligence and dereliction of duty when acting for Mrs Torrens, Mr Torrens and their son, Gordon. 3. Professional misconduct, negligence and dereliction of duty acting on behalf of Mr and Mrs Marsden and their son, Paul. 4. Professional misconduct, negligence and dereliction of duty acting for Mrs Joyce Gordon. 5. Professional misconduct and dereliction of duty acting for Mr and Mrs Creighton. 7. Misconduct and dereliction of duty acting for Mr and Mrs Hill. 8. Professional misconduct and dereliction of duty acting for Mr Lewis Clavan. 9. Professional misconduct and dereliction of duty acting for Mr Keeble. A further allegation of professional misconduct and dereliction of duty was made with respect to his conduct when acting for Mrs Day but the allegation was withdrawn at the hearing. PAULINE KING \GRIAW MCNEIL SEDGWICK AND LAW SOCIETY OF NEW SOUTH WALES FINDINGS OB FACT (Cripps JA) Pauline King's son Matthew (aged 7 at the time of the injury) was injured when he slipped on a ladder at the local swimming pool on 10 January 1988. Shortly thereafter Mr Sedgwick was consulted about making a claim for damages. A litigation loan with the State Bank was arranged by Mr Sedgwick on 12 February 1988 for $2900. It is not clear how much of the money was paid into a Savings Account as, it would seem, ordinarily happened. However, what is clear is that Mr Sedgwick did almost nothing and as at 20 May 1992, the loan debt was $1443.17 by which time it was, apparently, assigned to Mr Sedgwick. Mr Sedgwick has not yet issued a writ and has done little more than ask Miss King on 13 April 1992 for details ofout-of-pocket expenses. Mr Sedgwick's explanation that the treating doctor, Dr Boyd, died in 1989 is not, I think, the real explanation for the delay. It is merely a circumstance which he has seized upon to try and justify inordinate delay. Accordingly I find that he has not competently handled Miss King's action. THE TORRENS FAMILY Mr Sedgwick acted for Mr and Mrs Torrens and their son, Gordon, over a number of years. He acted for Mr and Mrs Torrens in a conveyancing transaction, for Mrs Torrens in a claim for damages for personal injury and, at the request of Mr and Mrs Torrens, for their son, Gordon, on charges of rape and stealing. On 24 January 1986 Mr Sedgwick, on Mrs Torrens" behalf, applied to the State Bank at Casino for a 'litigation loan' in the sum of $2800. In 1989 Gordon Torrens was charged with rape and in 1990 with stealing. The allegations of impropriety against Mr Sedgwick arise out of these matters. It is alleged against Mr Sedgwick that he misapplied moneys by transferring them from his Trust Account to his General Account without authority, that he claimed fees for work done in connection with the charges against Gordon Torrens in respect of which there was a grant of legal aid, that after Miss Sayer was appointed receiver he received money on account of the State Bank account and placed it into his general account for the purpose of concealing from her that he hadreceived the money and that he failed adequately to advise Mrs Torrens with respect to her litigation loan. It is not easy to unravel the allegations made against Mr Sedgwick because, in part, the Society is dependant upon the accurate recollections of Mr and Mrs Torrens. I find their recollections were not always accurate. For example, Mr and Mrs Torrens maintained in evidence that Mr Sedgwick was not authorised to commit the sum of $115 for a pest inspection by W A Flick & Co with respect to a property they were purchasing. It is clear, in my opinion, that Mr Sedgwick was authorised to obtain the inspection certificate. He did not claim money from Mr and Mrs Torrens in contravention of s 41 of the Legal Aid Commission Act 1979. There are, however, certain allegations made against him which have, in my opinion, been made out. After Mr and Mrs Torrens changed solicitors, Mr Sedgwick made representations to them which were not true. In February 1991 the Torrens" solicitors sought an accounting from Mr Sedgwick and alleged that neither Mr nor Mrs Torrens had authorised certain payments which Mr Sedgwick said he had paid on their behalf. Mr Sedgwick told Mr and Mrs Torrens" new solicitors that Mrs Torrens was indebted to the State Bank of Casino in the sum of $7775.37 for repayment of her litigation loan account. Mr Sedgwick has given evidence that in 1990 the Bank assigned the debt to him. Later Mr Sedgwick received the sum of $2719.04 (together with another $922.39) which Mr Sedgwick placed in his General Account. He said he didnot put the money into his Trust Account because he was not acting for the State Bank. His explanation 6 UNREPORTED JUDGMENTS that he could not put it in the Trust Account because he was not acting for the State Bank need only to be stated for it to be rejected. The best interpretation I can place on his evidence is that he put the money into his General Account because he considered himself to be the debtor. However, that is not what he represented to Mrs Torrens. Mr Sedgwick has said that he always had the authority of Mr or Mrs Torrens when he transferred money earlier from his Trust Account to his General Account. I am not persuaded that he did. In my opinion, he transferred money from his Trust Account to his General Account without authority. By 'without authority' I mean that Mr and Mrs Torrens were not properly advised and did not give their informed consent to what Mr Sedgwick was doing. With respect to the 'litigation loan', Mrs Torrens denies she received any advice about the matter at all. I think Mr Sedgwick gave her some advice but whether that advice was satisfactory is another matter. Mrs Torrens borrowed $2800 in 1986. By 3 April 1990 the indebtedness had risen to $6000. Later Mr Sedgwick said it was $7775.37. The money was transferred from the State Bank to a Savings Account. Mrs Torrens received interest on the Savings Account which was less than the interest she was paying the Bank. Her case was by no means open and shut. It was that she slipped on the steps of a building owned and occupied by a proprietary companywhich carried no insurance cover for indemnity for third party liability. The circumstance that Mr Sedgwick allowed the loan to increase in the way it did bespeaks, in my opinion, professional incompetence on his part. Mr Sedgwick transferred moneys from his Trust Account to his General Account contrary to law and was incompetent in handling Mrs Torrens" third party claim. I do not think it has been established that he attempted to breach the Legal Aid Commission Act 1979, that is, I do not think it has been established that he attempted to deceive the Legal Aid Commission nor do I think that the transferred money from his Trust Account to his General Account was for the purpose of defrauding the Torrens in the sense that he intended to deprive them permanently of it. It is apparent, however, that he used their money for his own purposes. I am not satisfied that what he did in 1992 was for the purpose of deceiving the receiver. I think he put the money in his own account because he believed that he was the person entitled to it. However, that was not what he represented to Mrs Torrens" solicitors. THE MARSDENS Mr Sedgwick was retained to act for Mr and Mrs Marsden on two conveyancing transactions and for their son, Paul, with respect to his matrimonial proceedings against his wife, Trudi. Mr and Mrs Marsden wished to sell their land and buy another block of land. The land they wished to sell was owned by each of them and theirson, Paul, in one third equal shares. When Paul separated from his wife, she claimed an interest in Paul's one third share of the property. Thereafter her solicitors claimed a caveat had been lodged by her to protect her interests. In fact, it appears that a caveat was not lodged but Mr Sedgwick thought it was. It may be he should have made inquiries but I note that Miss Sayer in her report assumed, like Mr Sedgwick, that the caveat had been lodged. The caveat (or supposed caveat) had to be removed. Mr Sedgwick, acting on behalf of Paul, was successful in obtaining an undertaking from Trudi Marsden's solicitors that she would remove the caveat so that Mr and Mrs Marsden could sell the property. I must also record that as at October 1987, Paul Marsden and Trudi Marsden came to an arrangement to settle their differences. He agreed to pay her $500 and \GRIAW MCNEIL SEDGWICK AND LAW SOCIETY OF NEW SOUTH WALES FINDINGS OF FACT (Cripps JA) she undertook to make no further claims on him. The $500 was paid to Mr Sedgwick. Previously to that, Paul Marsden had paid him about $1500 on account of his legal expenses. The complaint the Society makes against Mr Sedgwick relates to the sale of Mr and Mrs Marsden's land to Mr Edgecombe, to the grant of legal aid to Paul Marsden on 16 February 1987 in respect of his divorce and to what was alleged to be misuse of Paul Marsden's money. Mr Sedgwick alleges that Mr Paul Marsden owed him $5740 for work done prior to the grant of legal aid after taking account of the $1500 odd he had received. The Legal Aid Commission disputed certain items in MrSedgwick's bill to it and on 20 April 1989 wrote to him and asked that he amend the bill and give details of the property settlement between Paul Marsden and Trudi Marsden. It also referred to allegations by Mr Paul Marsden's new solicitors that Mr Sedgwick was claiming for work done which was covered by the grant of legal aid and asked for Mr Sedgwick's comments. Mr Sedgwick did not reply to the Legal Aid Commission's letter. Mr and Mrs Marsden (and Paul Marsden, he having a one third interest in the property) agreed to sell the subject land to Mr Edgecombe for $120,000. The transaction was completed on 1 June 1989. When accounting to them, Mr Sedgwick recorded that the proceeds of sale were applied in part to the purchase of another property for Mr and Mrs Marsden. There is no dispute about this. However, Mr Sedgwick also deducted the sum of $5740 on account of the fees owed by Paul Marsden referred to above. Neither Mr nor Mrs Marsden denied that Mr Sedgwick acted in their interests in removing the threat of their former daughter-in-law to register a caveat on the title. I do not understand their claim to be that he did not charge proper fees. However, both maintained that the money should not have been deducted from the proceeds of sale because the debt was owed, not by them, but by their son, Paul. Mr Sedgwick was of the opinion that he was entitled to deduct the money. It should be recorded in Mr Sedgwick's favour that Mr and Mrs Marsden believed that the debt of $5740 was that of their son and they have saidin evidence that he has since done work for them for that value. I am not prepared to find that Mr Sedgwick was not entitled to the sum of $5740. However, I am of the opinion that he did not have the authority of Mr and Mrs Marsden to deduct that sum from the balance of purchase moneys. In addition, he did not pay $500, as he was directed, to Paul's wife, Trudi, but placed the money in his General Account. Furthermore, when explaining the matter before me, Mr Sedgwick was less than frank. He said that Mr and Mrs Marsden had authorised him to deduct the money at least two weeks prior to | June 1989. I do not think that is correct. On any view of the matter, on 1 June 1989 Mr and Mrs Marsden were unhappy that the deduction had been made. So much is confirmed by Ms Rea, an employee of Mr Sedgwick. She said that Mr and Mrs Marsden were dissatisfied but that after matters had been explained to them, they left the premises agreeing that the money should have been deducted. Mr Sedgwick had said much the same thing. Mr and Mrs Marsden have said that they left Mr Sedgwick's office wholly disgruntled. If Mr Sedgwick had received Mr and Mrs Marsden's authority two weeks earlier to deduct the money, I have some difficulty in understanding why Mr and Mrs Marsden would have expressed dissatisfaction on 1 June 1989. In my opinion, Mr Sedgwick deducted the money because he thought he was entitled to it. He had not rendered the necessary account and he did not have Mr and Mrs Marsden's authority to deduct the money. 8 UNREPORTED JUDGMENTS The Society makes a further charge against Mr Sedgwick and it is this. Two weeks prior to the settlement date, Mr Sedgwick paid out of Mr Edgecombe's moneys Mr and Mrs Marsden's indebtedness to Avco Finance Pty Ltd, the National Bank of Australia and people from whom Mr and Mrs Marsden had purchased a garage. The Society disputes that Mr Edgecombe in fact gave the authority. Its suspicions were enlivened by the circumstance that a copy of the Trust Account ledger sent to the Society was in fact different from the actual record kept by Mr Sedgwick. It is fairly clear from Mr Edgecombe's evidence that he gave Mr Sedgwick the authority to disburse the moneys to Avco Finance, the National Bank of Australia and the supplier of the garage. He did this on 15 May 1989. Mr Edgecombe has conceded that this is so and there is a document on file bearing Mr Edgecombe's signature authorising Mr Sedgwick to make the appropriate payments. It follows, therefore, that I have concluded that the Society's allegation that Mr Edgecombe did not authorise the deduction has not been made out. However, criticism of Mr Sedgwick's conduct does not end there. Not only am I satisfied that the Society had grounds for complaint that Mr Sedgwick acted improperly in not advising Mr Edgecombe to take independent advice before committing money to the repayment of Mr and Mrs Marsden's debts without becoming the registered proprietor of the land but that the information he furnished to the Society amounted todeliberate concealment of what had happened. Had Mr and Mrs Marsden not proceeded with the sale, Mr Edgecombe would have been prejudiced. Mr Sedgwick was acting for both parties. It was of singular importance to Mr and Mrs Marsden that the debts be paid because they were being pressed by their creditors. When Mr Sedgwick was asked to produce his records with respect to this matter, he did not forward to the Society copies of the ledger cards as requested. He furnished copies of ledger cards typed up to give the appearance that they were copies of the originals. The ledger cards that went to the Society showed that the moneys passed out of Mr Sedgwick's Trust Account on | June 1989, ie the date of settlement, whereas moneys were paid to Avco Finance Pty Ltd and the National Australia Bank at least two weeks before that date. The conclusion is inescapable, in my opinion, that Mr Sedgwick attempted deliberately to mislead the Society. His evidence before me was less than satisfactory about these matters. He was asked why he did not send the Society a true copy of the ledger cards. His explanation was that they contained information about Mr Edgecombe's affairs which he thought should not have been sent to the Society. I do not accept his explanation. There was nothing untoward about the other material on the ledger card. However, if Mr Sedgwick was as sensitive as he claims to his obligations to Mr Edgecombe, he could easily have obscured that partof the ledger card which related to Mr Edgecombe's affairs well after the period ending | June 1989. Mr Donovan QC submits that he misled the Society because he had no authority from Mr Edgecombe to act as he did. That inference would be attractive were it not for Mr Edgecombe's evidence. Bearing in mind the gravity of the charge, I am not prepared to conclude, as the Society asks, that Mr Sedgwick forged Mr Edgecombe's signature on the authority and I think the probable explanation is that Mr Sedgwick had some misgivings or second thoughts about whether or not he had properly advised Mr Edgecombe. After all, Mr Edgecombe had given his authority to disburse a large part of the money he had lodged with Mr Sedgwick. If the sale had not gone through, he would have been severely \GRIAW MCNEIL SEDGWICK AND LAW SOCIETY OF NEW SOUTH WALES FINDINGS OB FACT (Cripps JA) prejudiced. He was not a person used to handling large sums of money or dealing in property. The money he used to purchase the land was the result of a common law third party claim. I record that although Mr Sedgwick claimed money from Paul Marsden with respect to work that had been covered by the grant of legal aid and that he did so in contravention of the statute, I am not persuaded he did so for the purpose of double charging and for the purpose of keeping the additional money himself. His attempt to recover money from the Legal Aid Commission was not, as I find, to defraud the Legal Aid Commission. Had he recovered the money, he would, I accept, have accounted to Paul Marsden or to Mr and Mrs Marsden. However, the Society has persuaded me that Mr Sedgwick failed to account to Trudi Marsden for $500 deposited by Paul Marsden for payment to her. That money was placed in his General Account and used by him. Furthermore, he, as I find, consciously attempted to mislead the Society with respect to this Trust Account ledger. JOYCE ISOBEL GORDON Mrs Gordon consulted Mr Sedgwick in November 1986 to act for her in a claim against the estate of the late Cyril Gordon Mason under the Family Provision Act 1982. Ms Gordon made a number of allegations against Mr Sedgwick. Not all of them are correct. For example, she alleged that Mr Sedgwick lodged a caveat over the property in dispute without her authority. She signed the application and Mr Sedgwick informed her by letter that the caveat had been lodged. I mention this matter because it is an indication of the unreliability of her evidence. As will be seen, I have come to the conclusion that Mr Sedgwick acted improperly in his dealings with Mrs Gordon and he was less than truthful in the witness box. These findings do not, however, depend on me accepting Mrs Gordon as a reliable witness. In April 1987 Mr Sedgwick made an application for legal aid on behalf of Mrs Gordon. It was granted on 7 September 1988 and back dated to 22 April 1987. (The litigation became complicated by the circumstance that one of the defendants named in the proceedings was not, infact, an executor to whom probate had been granted. He obtained an order that Mrs Gordon personally pay his costs in an amount of $563.90 which amount was later reduced on taxation to $185.68. Mrs Gordon did not pay and a writ of execution issued. I will not pursue this matter further because it was not the subject of investigation during the proceedings. It may help to explain, however, Mrs Gordon's resentment of Mr Sedgwick.) Mrs Gordon's claim against the estate was settled. She received $21000 on terms that each party paid its or her own costs. She abandoned her claim under the Family Provision Act and acknowledged she was not an eligible person under that legislation. She also undertook to remove the caveat. On 9 October 1989 Mr Sedgwick prepared a bill for the Legal Aid Commission in an amount of $12973.85. He had received the $21000 and the money was placed in his Trust Account. That account reveals that it was disbursed as follows: 7.12.89 Transferred to Office account on account of costs re Peter Croke Mobile Homes $1000.00 7.12.89 Office Account- costs re Wilkinson and Mason Estate $6000.00 10 UNREPORTED JUDGMENTS J I Gordon — Verdict less costs 8.12.89 and loan of $150.00 $13850.00 17.5.90 Office account — refund of loans 150.00 $21,000.00 On 12 December 1989 Mr Sedgwick accounted to Mrs Gordon in a letter as follows: 'Received on verdict $21000.00 Less: Reimbursement of loans made to you as follows (thereafter 8 loans were itemised and about which there is no dispute) $1150.00 Less: Retained on account of costs to Await repayment and reimbursement of Legal Aid Commission $6000.00 Paid to you $13850.00". On 5 January 1990 The Legal Aid Commission advised that professional costs as rendered were accepted in the sum of $10177.50 and that, in accordance with its practice, the Commission would pay 80%. With respect to the disbursements (and which was the difference between the amount accepted by the Legal Aid Commission and the amount claimed by Mr Sedgwick) he was asked to provide evidence by way of Memorandum of Fees and the like. On 16 July 1990 the Legal Aid Commission forwarded Mr Sedgwick $8142 and again requested the information it had earlier asked for on 5 January 1990. The Commission also asked to be informed whether the settlement moneys had been received in order that the Commission could determine the amount repayable to it by Mrs Gordon. Mr Sedgwick wrote to Mrs Gordon on 31 July 1990 and claimed from her the difference between the amount set out in his original account ($12973.85) and the amount received from the Legal Aid Commission ($8142). He said she owed him $4831.85. On 3 October 1990 the Legal AidCommission again wrote to Mr Sedgwick for copies of memoranda of fees and lists of disbursements and it asked which, if any, had been paid by him. In his response Mr Sedgwick referred, inter alia, to the sum of $6000 which, it is to be recalled, he had previously transferred to his General Account and had informed Mrs Gordon that it was being 'retained on account of costs to await repayment and reimbursement of Legal Aid Commission'. On 30 January 1991 Mr Sedgwick wrote to the Legal Aid Commission. He referred to earlier letters in which he had said he had paid certain barrister's fees (which amounted to less than half of the claimed disbursements). He also explained his accounting to Mrs Gordon. It was set out as he had set it out to her on 12 December 1989 except that with respect to the $6000 the words 'less retained on account of costs to await repayment and reimbursement of Legal Aid Commission' were substituted for the words 'less retained on account of fees, disbursements and costs in relation to further personal injury claim against P Croke Mobile Homes'. UGRUAW MCNEIL SEDGWICK AND LAW SOCIETY OF NEW SOUTH WALES FINDINGS GF FACT (Cripps JA) I interpose here and mention that Mrs Gordon injured her arm when she slipped and fell at a caravan park. The accident occurred in 1988. As at January 1991 all he had done was obtain a medical report from a Dr Watson. He did not commence proceedings. Despite the above, in his letter to the Legal Aid Commission on 30 January 1991 and after informing itthat he had kept $6000 with respect to Mrs Croke's claim against Mobile Homes he wrote: We are in the process at the moment of completing a District Court personal injury action by Mrs Gordon against Peter Croke Mobile Homes in which she received substantial injuries to her left shoulder and arm and we anticipate that this action will be heard at the only District Court sittings to be held at Casino in July of this year. We anticipate that her action will be successful and that she will receive a substantial amount. Naturally, of course, no application was made for legal aid to cover the cost of this second action as she was in receipt of these other monies and therefore would not be entitled to any legal aid. We have transferred to our clients" general account the sum of $6000 and out of that amount we have already disbursed the following: Sundry court fees and inquiries $370.00 Medical reports from Dr Watson $150.00 Anticipated expense within the next two or three months: Barrister's fees on advice and brief for hearing. $2250.00 Report from North Coast Appraisal Agency. 475.00 Filing fee on praecipe and further documents. 125.00 Witnesses" expenses (1 day) for Dr Watson from Southport. $1100.00 Witnesses" expenses Dr Castagna (Casino). 500.00 Medical report from Dr Castagna. 150.00' The Legal Aid Commission wrote to Mr Sedgwick on 27 May 1991. He was told by it that on the information he had supplied the Commission was entitled to $13168.35. He could retain $1021.35 but the balance of $12,147.00 was to be payable to the Commission. The Commission pointed outthat Mr Sedgwick had claimed he had retained $4831.85 from the settlement moneys. He was again reminded that he was not entitled to retain any more than $1021.35 and was asked to forward the balance of $3810.50 to the Commission. The Legal Aid Commission later complained to the Society. Mr Sedgwick's explanation in the witness box as to why he did not respond to the requests from the Legal Aid Commission were, I find, untruthful. He said he did not reply because he was given explicit instructions by Mrs Gordon not to respond. He said that on 12 August 1992 Mrs Gordon told him: I am not going to pay those bastards anything and don't give them any money. Do not even bother to reply. 12 UNREPORTED JUDGMENTS Mrs Gordon denies giving Mr Sedgwick these instructions. Having seen Mrs Gordon in the witness box, I am not prepared to accept her denial. I think it is probable she did say words to the effect described by Mr Sedgwick. However, it is also clear to me that Mr Sedgwick has seized upon these remarks to justify his failure to respond to the Legal Aid Commission. Mr Sedgwick said he was in a dilemma because on the one hand he was told by his client he was to have nothing to do with the Legal Aid Commission and on the other he could not account to Mrs Gordon properly because had he transferred any moneys to her, he may have been himself liable to the Legal Aid Commission. Frankly, I find his explanation absurd and untruthful. Mr Sedgwick had no entitlement to transfer as he did the sum of $6000 from his Trust Account to his General Account. During the period it remained in his General Account, the account was below $6000. It is clear, therefore, that on any view of the matter he was using her money for his purposes. In cross examination, Mr Sedgwick admitted that his entry by which $1000 was transferred from the Trust Account to the General Account on account of the Peter Croke Mobile Homes claim was false. He said that it was a mistake and should have been on account of the loans he had made to Mrs Gordon. In fact, as is undisputed, Mrs Gordon owed him $1150. I am prepared to accept, therefore, there was a mistake but why it should have been payable on account of Peter Croke Mobile Homes I do not know. Mr Sedgwick disputed all the allegations made against him with respect to his handling of Mrs Gordon's affairs. During cross examination, he reluctantly conceded his wrongdoing. However, he remained reluctant to make any admissions until he was compelled to do so. An illustration of this was when he was asked how he could avoid the allegation that the $6000 transferred from his Trust Account to his General Account was being used for his purposes he said: At all times since I received the money I was ready and willing to account for it, subject to her instructions and subject to the resolutions of the problems with the Legal Aid Commission."'Finally and reluctantly Mr Sedgwick has conceded his conduct was improper and that with hindsight he would now have to accept that he did not have Mrs Gordon's permission to transfer money from his Trust Account to his General Account. He said he always believed he had her authority and that he made an error of judgment. Mr Sedgwick did not have Mrs Gordon's authority to transfer the money and I do not believe he ever thought he did. Of singular significance is a letter of the Legal Aid Commission of 27 May 1991 in which it claimed to be entitled to the sum of $13168.35 and in which Mr Sedgwick was told he was not entitled to retain $4831.85 and that he could only retain $1021.35. As I have said, he did not respond to this letter and he did not respond to later letters. Finally and reluctantly, Mr Sedgwick conceded that his conduct was wrong and that it was improper of him to have claimed from Mrs Gordon the sum of $4831.85. Even on his version of events, his conduct amounted to a breach of the Legal Aid Commission Act 1979. He said at the time that he was under financial pressure. In cross examination his attention was directed to the statement he made to the Legal Aid Commission concerning the proposed use of the $6000 for the pending litigation against Peter Croke Mobile Homes. It was put to him quite clearly that he had written two conflicting versions about this matter and that his statement to the Legal Aid Commission was false and for the purpose of deceiving it. His reply in the witness box was that when he wrote the letter hisintention was merely to alert the Legal Aid Commission to the fact that the litigation against Peter Croke Mobile Homes would shortly be settled and \GRIAW MCNEIL SEDGWICK AND LAW SOCIETY OF NEW SOUTH WALES FINDINGS GB FACT (Cripps JA) my intention there was that rather than demand from her by way of contribution $6000, or $8000, or whatever they sought, that they might allow her to retain that to enable her to proceed with the action against Peter Croke Mobile Homes. I do not accept his explanation. Furthermore, in my opinion, he intended the Legal Aid Commission to believe that he had, in effect, forwarded a true copy of the account he had rendered to Mrs Gordon. Mr Sedgwick has said in cross examination that he did not intend to deceive. He had merely made an error. I cannot conclude otherwise than that Mr Sedgwick was not telling the truth on oath. It is clear that what he was previously doing was telling Mrs Gordon one version of the events and the Legal Aid Commission an entirely different version. I am not prepared to conclude that he intended to defraud Mrs Gordon in the sense of depriving her permanently of moneys to which she was entitled. However, I am of the opinion that he acted as he did, first, because he wished to use her money and, second, because he wanted to cover up his actions to the Legal Aid Commission. The Society has established that with respect to Mrs Gordon's matters Mr Sedgwick was in breach of the provisions of the Legal Aid Commission Act 1979, that he attempted to mislead the Legal Aid Commission, that he improperly transferred trust funds from his Trust Account to his General Account and that he attempted to misleadthe Legal Aid Commission. Furthermore, Mr Sedgwick was untruthful in the witness box. THE CREIGHTONS Mr and Mrs Creighton sought Mr Sedgwick's advice as to whether they could maximise their social security entitlements by transferring a property in Casino to their children as a gift. Mr Sedgwick had received a dividend from Norco Limited in an amount of $8239 which he had deposited in his Trust Account. He transferred $3000 to his General Account On account of stamp duty and enquiries re the purchase of property by Fuller and Creighton. He paid Mr and Mrs Creighton $5329 on 2 October 1991. Mr Creighton said he had no recollection of authorising Mr Sedgwick to transfer $3000 from the Trust Account to the General Account. I accept his evidence and I am satisfied the matter was not discussed. Later Mr Sedgwick wrote to Mr and Mrs Creighton forwarding them a cheque for $2174 being the difference between expenditure allegedly incurred on their behalf and the $3000 referred to above. On 16 April 1993 and just before the present hearing, Mr Sedgwick sent Mr Creighton a bill claiming the sum of $826. The amount claimed included only one item that had previously been identified as a disbursement. Otherwise, the two statements were not reconcilable. I am not persuaded that Mr Sedgwick was attempting to defraud the Creightons in the sense of charging them twice for the same work. It is unlikely Mrand Mrs Creighton would have paid him twice. However, it is clear that it was done for the purpose of attempting to deceive the Society in its investigation into his affairs. The first account totalled $826 for itemised disbursements. That is, the account in November 1991. The second account in April 1993 claimed $303.50 for disbursements (which was one of the amounts claimed in November 1991) and the balance of $522.50 for costs owing for work done by Mr Sedgwick and for advice tendered. In fact, in terms, Mr Sedgwick claimed an entitlement of $1022.31 and purported to make an allowance of $499.81 to arrive at the sum of $522.50. 14 UNREPORTED JUDGMENTS Mr Donovan has submitted that in November 1991 he sent an account for disbursements, not all of which had been incurred and that in April 1993 he sent an account which accorded with the disbursements recorded in his ledger cards and claimed the difference for work done. Mr Sedgwick said he did incur the disbursements claimed in November 1991. The ledger cards do not record disbursements other than in an amount, in all, of $303.50. The disbursements (other than for an amount of $303.50) claimed in November 1991 do not appear in Mr Sedgwick's books. The charge against Mr Sedgwick is not that he improperly used his client's money. It is that he charged for work not done. This allegation is, I think, inescapable. But even if my view be wrong, he cannot avoid the charge that the letter written in April 1993 wasfor the purpose of attempting to deceive the Society in its investigations into his affairs. CLAVAN Mr Clavan owed money to Elders Estate Limited. Mr Sedgwick, on his behalf, arranged for the debt to be paid by instalments. On 30 and 31 July 1992 Mr Clavan gave Mr Sedgwick $763 and $324 for payment as to $1000 to Elders. Mr Sedgwick paid $1000 to Elders. However, the money did not go into his Trust Account. The Society alleges that not only was his conduct unlawful in that it was in breach of the statutory and regulatory requirements but that it contravened the order of Priestley JA in May 1992. Mr Sedgwick's explanation as to why the money did not go into his Trust Account was not satisfactory. He said that it was his belief that money paid to him for payment out within twenty four hours did not have to be deposited in his Trust Account. Even if that was Mr Sedgwick's genuine belief, it could have had no relevance to the receipt of Mr Clavan's money. Mr Sedgwick did not send the money to Elders for more than a week. His conduct had the result that Ms Sayer did not know he received the money. He denied the suggestion put to him that he held it for as long as he was able in his General Account to keep that account in credit. His explanations generally were not satisfactory. At one stage in his cross examination he said he had overlooked sending the money to Elders on the same day. That statement was made not long after he said that it was not put into his TrustAccount because it was to be paid out on the same day. He also said he had actual authority from Mr Clavan to pay all amounts of money into his General Account. I do not think he did. It is true that this matter was not put to Clavan when he gave his evidence and before he returned to Casino. There was nothing in Mr Clavan's evidence to suggest he gave authority as to what account Mr Sedgwick was to place his money and, in any event, if Mr Sedgwick wished to maintain that what he had done was done with Mr Clavan's express authority he ought to have put that to Mr Clavan in cross examination and he did not. Mr Sedgwick did not misappropriate Mr Clavan's money. Although the Society suggested that some payments made by Mr Clavan may not have found their way to Elders, there is absolutely no evidence that the money received by Mr Sedgwick was not passed on to Elders. The findings I make are that he placed money in his General Account when it should have been placed in his Trust Account and the moneys were left there for between one and two weeks before being paid out to the intended ultimate recipient. Furthermore, that Mr Sedgwick knew the money should have been paid into his Trust Account and consequently was aware that his conduct was in breach of the order made by Priestley JA. KEEBLE \GRIAW MCNEIL SEDGWICK AND LAW SOCIETY OF NEW SOUTH WALES FINDINGS QB FACT (Cripps JA) Mr Sedgwick agreed that he received $9500 from Mr Keeble which he placed in his Trust Account. Without his authority on 22 April 1991, he transferred an amount of $1500 to his General Account. He had not rendered abill of costs. Mr Keeble accepts that he may have authorised the payment and, because the Society says it does not propose to take the matter any further, that is the finding I make. CONCLUSIONS WITH RESPECT TO DISPUTED FINDINGS OF THE TRIBUNAL 1. Miss Bromwich I do not agree with all the findings of the Tribunal. I believe Mr Sedgwick had Miss Bromwich's authority to use her money for her needs and that he received those instructions in October 1986. He transferred the money from his Trust Account to his General Account in February 1988. There it remained. There was no reason why the money should have been taken out of the Trust Account at all unless for the purpose of paying for a requirement of Miss Bromwich. I can only conclude that he transferred the money in order to boost his General Account. He either knew that what he was doing was unlawful or, if he did not, his conduct demonstrates a lamentable lack of understanding of his professional obligations. 2. Palmer The Tribunal found that Mr Sedgwick transferred moneys from the Estate Account to his General Account because he misunderstood advice given to him by Mr Glissan of counsel. I am bound to say I find it difficult to understand what it was that Mr Sedgwick misunderstood. Mr Glissan did not tell him he couldtransfer the money as he did. However, I am not prepared to disturb the Tribunal's findings. 3. The Estate of Norma Gwendoline Sedgwick The Tribunal found that Mr Sedgwick was in breach of the law in the way he conducted the practice between 1982 and 1988. The question I am asked to determine is whether Mr Sedgwick intended to defraud his brother and sisters. I am not satisfied he was. He said he believed he was entitled to act as he did provided only the practice made no profits. That explanation does not really explain why the practice was not sold. However, rejection of his explanation does not establish the criminal intention suggested by the Society. But whatever his motive, his conduct reflects adversely on his professional competency. The Tribunal's findings of misconduct involving misappropriation of clients" moneys, false entries in Trust and General Account records, wilful breaches of s 61 of the Act and professional incompetence are upheld. In addition the Society has proved other instances of breaches of the Act with respect to Mr Sedgwick's dealings with Trust moneys. It has also established non-compliance with orders of this Court, improper concealment of relevant matters from the Legal Aid Commission and the Society and inexcusable delay in handling his clients" affairs. Mr Sedgwick was not always frank with the Court and, on occasions, was untruthful. Accepting, as I have, that many unlawful acts were not done with an intent tocheat or defraud clients in the sense of permanently depriving them of their money, the Society has established nonetheless that Mr Sedgwick by his conduct has exhibited ignorance of his obligations under the Act, to the Court and to members of the public generally. 16 UNREPORTED JUDGMENTS Orders accordingly.