Commissioner for Fair Trading v Aird [2005] NSWADT 204

CITATION: Commissioner for Fair Trading v Aird [2005] NSWADT 204 DIVISION: Legal Services Division APPLICANT PARTIES: Commissioner for Fair Trading RESPONDENT Stuart Gordon Aird FILE NUMBER: 042036 HEARING DATES: 04/08/2005 SUBMISSIONS CLOSED: 08/04/2005 DATE OF DECISION: 08/30/2005

BEFORE: Vass CB -Judicial Member; Hedison J - Non Judicial Member; Costigan M - Non Judicial Member APPLICATION: Professional Misconduct - claim a general retaining lien when not entitled to - Professional Misconduct - fail to pay money into trust account MATTER FOR DECISION: Principal matter LEGISLATION CITED : Conveyancers Licensing Act 1995 Legal Profession Act 1987 Law Society of New South Wales v Bannister NSW Supreme Court of Appeal BC9301831 – 27 8 93 CASES CITED: Keefe v Law Society of New South Wales (1998) 44 NSWLR 451 Hollis v Vabu Pty Limited (2001) HCA44 APPLICANT REPRESENTATION: V Griswold, solicitor RESPONDENT G Jemmeson, solicitor ORDERS: 1. The Information is dismissed; 2. The Conveyancer's costs to be paid from the Statutory Interest Account.

REASONS FOR DECISION 1 The Information is brought by the Commissioner for Fair Trading (the Commissioner) against Stuart Gordon Aird (the Conveyancer), who is a licensed Conveyancer under the provisions of the Conveyancers Licensing Act 1995 (the Act). The Information alleges that the Conveyancer trading as Sterling Conveyancers, is guilty of professional misconduct on the following grounds: a) The Conveyancer, in the course of conducting a conveyancing business, received money on behalf of clients K Hatzianestis and M Velonaki on 9 January 2002 and 9 April 2002, and failed to pay this money into a general trust account at a bank, building society or credit union in contravention of Section 25(1) of the Act. b) The Conveyancer, in the course of conducting a conveyancing business, received money on behalf of clients K Hatzianestis and M Velonaki on 9 January 2002 and 9 April 2002, and claimed a general retaining lien over such monies which they were not entitled to do under Section 25(4)(a) and (b) of the Act. THE LEGISLATION 2 Division 2 of Part 3 of the Act deals with trust money and section 25 sets out how conveyancers are to deal with monies received on behalf of another person. That section provides: "(1) A Licensee who, in the course of conducting a conveyancing business, receives money on behalf of another person; (a) must pay the money, within the time prescribed by the regulations into a general trust account at a bank, building society or credit union in New South Wales, and must hold the money in accordance with the regulations relating to trust money; or (b) if the person on whose behalf the money is received directs that it be paid otherwise that into a general trust account, must pay the money as directed and (if the money is to be held under the direct or indirect control of the Licensee for more than the period prescribed by the regulations) must hold the money in accordance with the regulations relating to controlled money. (2) In either case the Licensee must hold the money exclusively for, and must disburse the money in accordance with the directions of, the person on whose behalf it is held. (3) This section: (a) … (b) … (c) does not prevent a Licensee from exercising a general retaining lien for unpaid costs and disbursements in respect of money in a trust account or a controlled money account (other than money received subject to an express direction by the client with respect to the purpose for which the money is to be applied)…" 3 Section 25(7) provides that: "(7) It is professional misconduct for a Licensee to contravene this section." 4 The Conveyancer in his Reply admitted that funds were not banked into a general trust account and that breach of S25(1) of the Act had occurred, but further contended that he was an employee of Sterling Conveyancers and had no control over the management of the conveyancing business. He further contended in his Reply that it was not he that received the cheques referred to hereunder, nor was it he who exercised any retaining lien in relation to those cheques. THE FACTS (a) Morag MacLachlan, the Proprietor of Sterling Conveyancers, was engaged by K Hatzianestis and M Velonaki (the Clients), to act for them on the purchase of a company title property and contracts were exchanged on 22 October 2001 and settlement was to take place on 10 December 2001. (b) Approximately 2 weeks prior to the settlement, Ms MacLachlan delegated the matter to the Conveyancer in order to arrange the settlement. (c) The Clients obtained finance from St George Bank who appointed George Shad & Co to represent it. When the security documents were presented, the clients attended the offices of Sterling Conveyancers on 6 September 2001 and they provided two cheques, one for stamp duty of $1,701.00 and the other a stamping fee for the sum of $126.00. The mortgage was stamped and returned to George Shad & Co on the same day. (d) George Shad & Co had overlooked the fact that the mortgage had already been stamped. (e) The settlement did not take place on 10 December 2001 but took place on 12 December 2001 and the clients were disappointed with Sterling Conveyancers with the delay in settlement. Subsequent to the settlement, George Shad & Co realised that a mistake had been made in relation to the stamp duty and on 9 January 2002, that firm returned a trust account cheque in favour of the clients for the sum of $1,701.00 and expressly asked that the cheque be passed on to the clients. That particular cheque was placed in a file by, it is alleged, an inexperienced young receptionist and was not drawn to the attention of Mr Aird or Ms MacLachlan. Later, on 9 April 2002, George Shad & Co forwarded a further trust account cheque for the sum of $126.00 in favour of the clients with a similar request that the cheque be passed onto the clients and again, this cheque was placed in the file by the receptionist and neither the Conveyancer nor Ms MacLachlan was informed. (f) The next event was on 3 July 2002 when Sterling Conveyancing received a facsimile from George Shad & Co asking for detail in relation to the unpresented cheques. Sterling Conveyancers instituted a search for the file which had been stored away as a closed file. When it was received from security storage, the two cheques were discovered in the file. (g) On 8 July 2002, Sterling Conveyancers then raised an account, which had not been raised before, for the sum of $1,403.55 and sent to the clients that account with a letter indicating that they were holding two cheques in favour of the clients in the sum of $1,827.00 and that they intended to hold those cheques until their account was paid. 5 The evidence of Morag MacLachlan was that: (a) Sterling Conveyancers is a registered business name and she was and is the sole owner/proprietor. (b) The Conveyancer did not work for her on a full time basis and has not been employed since the end of 2002. (c) The Conveyancer had no financial interest in the business. (d) She gave over conduct of the conveyancing matter to the Conveyancer a few weeks before it was due for settlement to arrange settlement. (e) It was she, on behalf of Sterling Conveyancers, who entered into the fee agreement with the clients. (f) She approved the letter sent by Sterling Conveyancers to the clients on 8 July 2002, and that letter was signed by Ms Denis Ranger, another employed conveyancer, and not by Mr Aird. (g) A complaint was made to the Tribunal against her in relation to the same transaction and she was found to be guilty of professional misconduct and fined $1,000.00 and publicly reprimanded. 6 The evidence of the Conveyancer, Stuart Aird, was: (a) He was a part-time employee of Sterling Conveyancers. (b) He had no financial interest in the business. (c) Any letters he wrote on behalf of Sterling Conveyancers were discussed with Morag MacLachlan before being sent. (d) He on no occasion received any monies in the transaction and in particular, the cheque for the sum of $1,701.00 sent by George Shad & Co to Sterling Conveyancers on 9 January 2002 and the further cheque for the sum of $126.00 sent by the same firm to Sterling Conveyancers on 9 April 2002. (e) After the matter was settled by the Conveyancer, the file was passed on to others to finalise. (f) He telephoned the Secretary of the Australian Institute of Conveyancers NSW Division about the time the letter of 8 July 2002 was sent by Sterling Conveyancers to the Clients, and he sought advice as to whether the cheque could be withheld until costs were paid, and he alleges that he was told that course of action was acceptable. He further stated that the telephone inquiry was made after discussion with Morag MacLachlan. 7 It is clear that the form of the complaint in the Information and the particulars of the complaint, are made out against Sterling Conveyancers. However, the important matter that remains for this Tribunal's determination, is whether the Conveyancer, as a licensed conveyancer, was "conducting a conveyancing business so as to place upon him personally the obligation to comply with Section 25(1) of the Act." THE COMMISSIONER'S SUBMISSIONS 8 The Commissioner's Submissions can be summarised as follows: (a) He starts by acknowledging that the Conveyancer asserts that he is not in breach of Section 25 of the Act because his conduct did not occur "in the course of conducting a conveyancing business." The Commissioner asserts that the Act imposes certain professional responsibilities upon "licensees" and states that licensees are not firms or businesses-they are persons licensed under the Act to carry out "conveyancing work". (b) He submits that the words "in the course of conducting a conveyancing business" as used in Section 25, should be interpreted so as to give effect to the purpose of the Act. (c) He further submits that to suggest, as the Conveyancer does, that a licensee employee should be spared from the obligations of the Act would lead to an absurd result. He states that if this were the case, any licensed employee could escape responsibility for actions in breach of the Act by simply pointing the finger at his or her employer. (d) The further submission was that in order to give effect to the intention of the Act, the words in Section 25 should be read so as to apply to a licensed conveyancer who is conducting "conveyancing business". He states that such an interpretation would give effect to the clear intention of parliament that all licensees are required to comply with the same standards of professionalism. 9 The Tribunal does not accept the submission that the expression "in the course of conducting a conveyancing business" should be narrowly construed. 10 There are no doubt circumstances in which a conveyancer would be carrying on the conveyancing business but that is not the factual situation in this matter. The Tribunal is satisfied that the Conveyancer was only a part-time employee of Sterling Conveyancers and that he was given specific tasks to undertake within the conveyancing matter by Morag MacLachlan, the proprietor of business, who was in fact the licensee carrying on the conveyancing business within the terms of Section 25 of the Act. 11 The Tribunal therefore finds that the Conveyancer was not as at 9 January 2002, nor 9 April 2002, conducting a conveyancing business. 12 The Tribunal further finds that the Conveyancer did not receive money on behalf of the Clients, nor did he exercise a general retaining lien. The evidence which the Tribunal accepts is: (a) The Conveyancer did not receive the cheques sent to Sterling Conveyancers on 9 January 2002 and 9 April 2002. (b) The exercise of the lien by Sterling Conveyancers was exercised by the letter of 8 July 2002 and that letter was not written by the Conveyancer. 13 The Tribunal also notes for completeness that Section 25(3)(c) provides for a license exercising a general retaining lien for unpaid costs and disbursements "in respect of money in a trust account…" In this matter, no monies had been paid into a trust account and Sterling Conveyancers had no statutory right to claim a general retaining lien in relation to the cheque. 14 It follows then that the Tribunal dismisses the information. 15 The Conveyancers sought an order for costs should the information be dismissed. Under the provisions of Section 171(E) of the Legal Profession Act 1987, the Tribunal is empowered to make an order that the Conveyancer's costs be paid out of the statutory interest account provided there are special circumstances to make that order. The Tribunal had tendered to it a letter written by the solicitors for the Conveyancer on 21 February 2005 to the Office of Fair Trading. That letter pointed out that at an earlier Directions Hearing, his Honour Judge O'Connor had allowed an adjournment for the purpose of submissions to be filed with the Office of Fair Trading to have the Information withdrawn. The letter sets out the nature of the complaints and pointed out that the Conveyancer was only an employee and that he was not a licensed conveyancer conducting a conveyancing business. The letter went on to point out that an order would be sought for costs and mentioned the provision of Section 171(E) of The Legal Profession Act 1987. 16 The Tribunal finds that there are special circumstances to make an order for costs in favour of the Conveyancer. ORDERS 17 The Tribunal orders: 1. That the information be dismissed. 2. That the cost of the Conveyancer, as agreed or assessed, be paid from the Statutory Interest Account.