CITATION: Law Society of New South Wales -v- Pinto [2003] NSWADT 59 DIVISION: Legal Services Division APPLICANT PARTIES: Council of the Law Society of New South Wales RESPONDENT Joseph Santos Pinto FILE NUMBER: 012039 HEARING DATES: 16 & 17 September 2002 SUBMISSIONS CLOSED: 09/17/2002 DATE OF DECISION: 03/25/2003 BEFORE: Barnes M - Judicial Member; Mattila J - Judicial Member; Bennett C - Member APPLICATION: Professional Misconduct - breach of s. 61 of the Legal Profession Act - Professional Misconduct - breach of s. 62 of the Legal Profession Act MATTER FOR DECISION: 1.The Solicitor Joseph Santos Pinto is publicly reprimanded. 2. Joseph Santos Pinto pay the costs of the Applicant of and incidental to the proceedings LEGISLATION CITED : Legal Profession Act 1987 CASES CITED: O'Reilly v Law Society of NSW 1988 24NSWLR 204 Malfanti v Legal Professional Discipline Tribunal (unreported) 1993 Court of Appeal REPRESENTATION: P Boyd, Solicitor I Wales, SC, Barrister ORDERS: 1. The Solicitor Joseph Santos Pinto is publicly reprimanded.; 2. Joseph Santos Pinto pay the costs of the Applicant of and incidental to the proceedings Background 1 Joseph Santos Pinto (the solicitor) was admitted as a solicitor in New South Wales on 8 July 1983. He has practised as a sole practitioner since 31 August 1987. Arising out of issues brought to attention incidental to a trust account inspection, the Council of the Law Society of NSW on 19 May 1999 pursuant to the provisions of s.55 of the Legal Profession Act appointed Ms. Jean Sayer, Investigator, into the affairs of the solicitor. 2 Thereafter Ms. Sayer prepared a report of 14 September 1999. 3 The solicitor had an opportunity to respond to that report. 4 On 1 November 2001 the Professional Conduct Committee was satisfied that there was a reasonable likelihood the solicitor would be found guilty by the Tribunal of Professional Misconduct and that proceedings be instituted in the Tribunal pursuant to s.155(2) of the Legal Profession Act 1987. 5 By Information filed on 29 November 2001 the Council of the Law Society of NSW alleged that Joseph Santos Pinto whilst practising as a Solicitor was guilty of professional misconduct on the ground that: 1. The Solicitor failed to keep Trust Account Records that disclosed at all times the true position in relation to money received. 2. The Solicitor failed to keep Trust Account Records in a manner that enabled them to be conveniently and properly audited. 3. The Solicitor intermingled funds of the Solicitor's company and those of his clients. 6 Particulars of these grounds were identified in a schedule to the Information. 7 Relevantly by way of the Reply certain admissions have been made by the Solicitor and it should be noted that such admissions were of a general character, that is the admissions did not deal specifically with each particular relevant to each ground of the Information. Such admissions included: GROUND 1: THE SOLICITOR FAILED TO KEEP TRUST ACCOUNT RECORDS THAT DISCLOSED AT ALL TIMES THE TRUE POSITION IN RELATION TO MONEY RECEIVED 1. The Respondent admits that in certain trust account records maintained by him did not disclose at all times the true position in relation to all monies received. 2. Insofar a the trust account records were inaccurate or inadequate such inadequacies or inaccuracies were attributable to clerical error or inadequate understanding on the part of the Respondent as to the requirements of the Legal Profession Act and/or the relevant regulations thereunder relating to the maintenance of trust account records. GROUND 2: THE SOLICITOR FAILED TO KEEP TRUST ACCOUNT RECORDS IN A MANNER THAT ENABLED THEM TO BE CONVENIENTLY AND PROPERLY AUDITED 1. The solicitor admits that in certain respects trust account records maintained on behalf of the firm were not kept in a way which enabled them to be conveniently and properly audited. 2. The solicitor attributes such failure to, in some cases clerical error, but more generally to inadequate understanding on his part of the requirements of the Legal Profession Act and the relevant Regulations thereunder. GROUND 3: THE SOLICITOR INTERMINGLED FUNDS OF THE SOLICITOR'S COMPANY AND THOSE OF HIS CLIENTS 1. The solicitor admits that he held in the trust account of the firm funds which belonged to either the solicitor or the solicitor's family company Admark Investments Pty. Limited and that such funds were held in accounts within the general trust account which also contained funds belonging to clients of the solicitor. 8 Mr. Boyd on behalf of the Law Society when this matter proceeded to hearing on 16 and 17 September 2002 made it clear that there were no allegations against the Solicitor of dishonesty or breach of fiduciary duty. There was no allegation that the Solicitor sought to present the Trust accounts in such a way as to advantage himself. 9 The evidence makes it abundantly clear that the key area of concern in relation to accounting records related to "controlled money" and the movement of money in and out of the Trust Account to other accounts. 10 Here the relevant statutory provision is s.62 of the Legal Profession Act 1987 which provides: "Keeping of Accounts (1) A solicitor shall keep: (a) in the case of trust money (within the meaning of section 61)- accounting records, or (b) in the case of money other than trust money – such accounting records or other records (if any) as may be required by the regulations, that disclose at all times the true position in relation to money received by the solicitor on behalf of another person. (2) The accounting records referred to in subsection (1) shall be kept in a manner that enables them to be conveniently and properly audited. (3) Without limiting the generality of subsection (2), the accounting records referred to in subsection (1) shall, if the regulations so require, be kept in such manner as the regulations prescribe. (4) A wilful contravention of subsection (1), (2) or (3) is professional misconduct." 11 Of necessity when a finding is made of wilful contravention of 61(1), (2) and (3) there must be a finding of professional misconduct. 12 The solicitor's conduct of the trust account had not been the subject of any relevant criticism prior to 1999 and it is noted that the Trust Account Inspectors, had between 1987 and 1999 considered the solicitor's accounts at intervals of 1 to 2 years. 13 Further the solicitor's external accountants, Holden and Bolster undertook the annual analysis of the trust account records for the preparation of the Accountant's Certificate necessary for the annual renewal of the solicitor's practising certificate. 14 Further it is to be noted that the solicitor had been admitted to practice prior to the introduction of legislation dealing with controlled moneys and his relevant experience as a solicitor prior to commencing practice as a sole practitioner had involved him in receiving little or no instruction in relation to the setting up or the administration of accounts. 15 Relevantly he engaged the services of a Mr. E. Karamihas a local accountant to supervise and administer his trust account and all controlled moneys accounts. 16 Generally it would be Mr. Pinto's staff who would write up these accounts and all reconciliations and trial balances were undertaken by Mr. Karamihas or his staff, although there were times when the solicitor's wife would post entries as Mr. Karamihas would be busy. 17 The information required by Mr. Karamihas came from source documents such as cheque books or receipt books and also information supplied to him by the solicitor, usually through the solicitor's staff. 18 The Tribunal finds the solicitor did not normally make any entries personally. The Tribunal also finds, when Mr. Napper the trust account inspector in 1999 expressed concern the solicitor moved promptly to address the issues of concern. 19 Further the Tribunal finds that the controlled money accounts were opened for what the solicitor referred to as "investor clients" or accounts containing entries directly relating to such accounts. 20 Investor clients were members of the ex patriate Portuguese community who were held in high regard or repute within the local Portuguese community. 21 Such investor clients enjoyed the trust of members of the Portuguese community. This led to a situation based upon trust where an individual would give money to the trusted investor, relying on that person to invest the money and for the appropriate return to be paid in due course. 22 As it transpired the investor clients would not even usually tell the solicitor about the arrangements between themselves and individual members of the community, nor did the investor client or the community member press for any formal recording of the arrangements between themselves. 23 Relevantly there were circumstances where rather than simply leave money in the trust account where it would enjoy no interest, the solicitor placed the money in controlled money accounts. 24 For the solicitor's part he took the view that when money was entrusted to him by an investor client it was appropriate that he should hold monies in the name of that client and subject to his direction, irrespective of whether there may have been an ultimate further investment by others to the investor client. 25 The solicitor in order to demonstrate his good faith and his own trust in the investor clients on occasions committed substantial amounts of his own money or the family company Admark Investments Pty. Ltd. with the various investor clients. 26 He did this by depositing his own or Admark Investments Pty. Ltd. money in the control money accounts in the name of individual investor clients. 27 Mr. Karamihas was called to give evidence. 28 He confirmed that in his experience the practice of placing funds with trusted investors in the Portuguese community was quite common and relevantly the Tribunal accepts his evidence as accurate in all relevant respects and specifically notes the following: 1. The controlled money accounts were handwritten because the computer accounting package could not cope with controlled monies. 2. Mr. Karamihas mainly dealt with the staff member who was preparing the primary documents and it was often a secretary. 3. Mr. Karamihas works for approximately four firms of solicitors . 4. Mr. Karamihas confirmed that Mr. Pinto was unfamiliar with the accounting and never wrote up the trust accounts or the controlled money accounts. 5. He also acknowledged that the notations for the controlled money accounts were insufficiently detailed and were inadequate due to lack of information. 29 In terms of the Tribunal's obligations to determine this matter, on behalf of the Law Society it is submitted that there is an obligation to consider each ground and each particular of each ground. 30 On behalf of Mr. Pinto, Mr. Wales submitted that the Tribunal's obligation did not involve having to determine whether each and every particular was made out, but rather there was an obligation to determine the complaint and to give reasons. 31 In that context it was appropriate to consider the nature of the complaint and to give illustrations from the evidence. 32 Mr. Wales made the point that the very nature of the particulars provided by the Law Society and the way such particulars are styled did not lend itself readily to the Tribunal considering each and every particular, however that is not to say that he was seeking to suggest there was any inherent procedural defect in the Information such that it could be struck out. 33 Mr. Wales on behalf of the Solicitor admitted that Grounds 1 and 2 had been made out and there were numerous instances of non compliance with s.62. 34 No such concession was made in relation to the Ground 3 dealing with intermingling. 35 The Tribunal accepts that in a range of circumstances it has not been possible to establish either from the Trust Account records or the Controlled Money records to establish from whom monies deposited to these accounts was received and it is not possible to establish to whom such monies were disbursed and whether or not when such monies were disbursed. 36 Significant efforts were made by the solicitor to remedy the state of the trust account. This involved Holden Bolster Services Pty. Ltd. trading as Holden & Bolster in reconstructing a number of accounting records relating to controlled money accounts. 37 Mr. A. Koutzoumis, chartered accountant of Holden & Bolster through the solicitor secured the report of Ms. Sayer and it was his task to reconstruct the accounts in which respect Ms. Sayer had raised concern. 38 The intention being to construct a set of records that fairly and truly disclosed the nature of the transaction. 39 Mr. A. Koutzoumis acknowledged in his affidavit that it was not possible to recreate the relevant records showing all of the detail required for a variety of reasons principally being: 1. The detail of transactions in the form in which entries had been posted to the ledgers previously was not sufficient to identify precisely what had occurred. 2. The number of withdrawals and deposits by way of bank cheques where it was not readily possible to identify the recipient of the bank cheque or the ultimate drawer who authorised the drawing of the bank cheque. 3. It was not always possible to trace transactions through records provided by the relevant bank. 40 Mr. Koutzoumis relied at least in part on explanations and instructions provided by Mr. Pinto however he also confirmed it was not possible to conclusively corroborate or refute the explanations provided by the gentleman as the bank had a limited ability to provide copy of tax or vouchers. 41 The solicitor in his evidence acknowledged in the event he had died it would not have been possible to unravel the accounts. The solicitor accepted responsibility for failing to keep the records appropriately. The Tribunal accepts the solicitor is a witness of truth. 42 As conceded by Mr. Wales, there are numerous breaches and the Tribunal is accepting of the view that it is not necessary to deal with each and every particular. 43 However the Tribunal considers it important to at least illustrate examples of where the Solicitor significantly fell into error in relation to his obligations pursuant to s.62 and by way of background the Tribunal finds that certain controlled money accounts were created in or about 1994 through to in or about 1999 and it came to the attention of a Mr. Napper a Trust Account Inspector that there were certain controlled money accounts for persons whom the solicitor referred to as investor clients. 44 The concern being that the ultimate source of the funds held on behalf of the investor clients was not clearly identified. Further there were concerns that the solicitor's own money or his family's money and/or the family company Admark Investments Pty. Ltd. was also held in either the Trust Account or the Control Money Account. 45 The Tribunal finds that these accounts were open for investor clients or were accounts which contained entries directly relating to such accounts. The investor clients would place money with the solicitor until such time as they proceeded to make an investment of their choosing and to facilitate the money earning interest the solicitor would place the money in controlled money accounts rather than have it remain in trust. 46 Such controlled money accounts were interest bearing were included accounts with AEFC Limited. The solicitor was always aware of who the investor client was and was not always aware of whose money was being placed into the Trust account or into the controlled money accounts. 47 It is appropriate to give limited example of the particulars, noting there was some 4-5 investor clients in total. 48 In relation to Particular (b) of Ground 1 the Society referred to a matter of A & H Rodrigues which was part of the investigation undertaken by Ms. Sayer. Mrs. Sayer's report was tendered in the proceedings. Relevantly Ms. Sayer noted: "Alberto and Herminia Rodrigues 1. Mr . Pinto acted for Mr. & Mrs. Rodrigue in relation to a superannuation claim and received on their behalf the amount of $4,989.39 on about 14 January, 1992. 2. The net amount remaining after the deduction of costs amounted to $4,321.39 and this amount was placed on deposit with AEFC Limited on about 8th April, 1992 in an account styled "Alberto & Herminia Rodrigues", Account No. 160642. 3. Mr. Pinto also acted for Mr. Rodrigues in respect of the preparation of his Income Tax Return and rendered a bill on 1st July, 1992 in the sum of $130.00 which he advised would be paid from interest earned on the AEFC investment. A refund of tax was received on 19th August, 1992 in the amount of $1,346.35 and this amount was also deposited to the AEFC Account. 4. The balance in the account which amounted to $5,787.28 was withdrawn on 3rd March, 1993 and deposited to the Trust Account. I do not have the Trust Account records back as far as December, 1993 and I am unable to say how this sum was accounted for to the clients. 5. Thereafter large amounts were deposited into the AEFC Account and there is no indication that these amounts were received from or on behalf of the clients, Mr. & Mrs. Rodrigues. 6. I have not been able to establish on whose behalf moneys were received by Mr. Pinto and deposited to this account subsequent to the initial deposit of moneys held for Mr. & Mrs. Rodrigues, except for an amount of $40,779.00 deposited on 8th July, 1994. This cheque was drawn on the Trust Account on 5th July, 1994 and debited to the trust ledger account of Mrs. Nabor Dos Reis, Account No. 3401 and the details are simply "Commonwealth Bank of Australia – Settlement moneys" 7. The cheque is covered by a deposit of $100,000.00 to the account on the same day of an amount drawn from an AEFC Account in the name of Nabor Dos Reis. I am not able to identify the source of funds deposited to this account. 8. Entries in the trust ledger account are as follows:- Debit Credit 5.7.94 AEFC Limited – Withdrawal of moneys 100,000.00 5.7.94 CBA – Settlement moneys 37,994.77 5.7.94 CBA – Settlement moneys 40,779.00 26.7.94 CBA – Settlement moneys 15,000.00 11.8.94 AEFC Limited –Withdrawal of moneys 40,670.25 11.8.94 CBA – Settlement moneys 46,896.48 9. As at 1st October, 1994 the amount on deposit in the AEFC Account in the name of Rodrigues was $163,591.20. On 2nd November, 1994 the amount of $75,000.00 was withdrawn from the account and deposited to the Trust Account to the credit of the trust ledger account styled Mr. & Mrs. Rodrigues, Account Matter No. 3116. On the same day a cheque was drawn payable to A. & C. Nobrega described as "part settlement moneys". There is no reference to the transaction in the file of Mr. & Mrs. Rodrigues or any indication of any authority given concerning this payment. 10. Under date of 22nd February, 1995 Mr. Pinto received a letter from the Taxation Department concerning the AEFC Account which was apparently named in the official records as DFDF F DDSDS and the address for the account as the post office box of J.S. Pinto & Co. The Taxation Office was querying the account as the Tax File Number given did not match up with the abovementioned name. 11. The document to be completed and returned to the Tax Office to give the correct details concerning the account was completed by Mr. Pinto in the name of Alberto Rodrigues and signed by Mr. Pinto as solicitor for the client. This document was forwarded to the Taxation Office by Mr. Pinto on 27th February, 1995. On the following day the balance in the account which amounted to $121,104.78 was withdrawn and deposited to the Trust Account and credited to the trust ledger account in the name of Mr. & Mrs. Rodrigues, Account No. 3116. 12. On 28th February, 1995 the same day as the deposit, the amount of $121.104.78 was withdrawn from the Trust Account by cheque payable to the Commonwealth Bank of Australia. This cheque was deposited to an AEFC Account opened by Mr. Pinto in the name of Luis De Castro forming part of a deposit of $150,000.00 made on that day. These moneys were never accounted for to Mr. & Mrs. Rodrigues and there is no evidence to suggest in any case that the funds were received or held on their behalf. " 49 In reply to the original report of Ms. Sayers, the solicitor through his own legal representative by letter of 1 March 2000 wrote to the Professional Standards Department of the Law Society and relevantly in relation to this matter submitted the following: The transactions which occurred on that account and to which Ms. Sayer directed particular attention. were those within the period 19 April 1994 and 28 February 1995. My client says that Mr. Rodrigues was a person held in high esteem within the expatriate Portuguese community served by my client's practice, and my client anticipated that money would be placed by other members of the community in Mr. Rodrigues' account for the purpose of mortgage investment. The amount of $40,779.00 deposited to the controlled money account on 8 July 1994 (referred to at pages 8 and 9 of the Ms. Sayer's report) was withdrawn, as Ms. Sayer noted from the trust ledger account of Mrs. Nabor Dos Reis. My client was made aware after the Dos Reis money had been deposited to the Rodrigues account, that the money in fact belonged to Mr. A. & Mrs. C. Nobrega, and they had agreed to its deposit with Rodrigues for the purpose of a mortgage investment. My client believes that the deposit of $30,000.00 to the Rodrigues controlled money account on 30 August 1994 came from A. & C. Nobrega although Holden & Bolster have been unable to verify the source of the payment. My client says that the withdrawal from the controlled money account of the sum of $75,000.00 on 2 November 1994 was deposited first to the Rogrigues account in the trust account, and then paid out to Mr. & Mrs. Nobrega at their request and with the approval of Rodrigues. Attachment 1 to this letter is a copy of the cheque for $75,000.00 payable to A. & C. Nobrega and endorsed with a receipt apparently from one of the payees of the cheque. The $75,000.00 was made up by the two deposits of $40,779.00 and $30,000.00 abovementioned and interest accrued to the controlled money account. I am instructed that apart from the Dos Reis deposit of $40,779.00 and the Nobrega deposit of $30,000.00 the other money deposited to the Rodrigues controlled money account was that of Mr. Pinto or his family company Admark Investments Pty. Limited. My client says that he deposited his own funds to the account in order to encourage his client to make funds available through the account for mortgage investment. When that objective was not realised, Mr. Pinto closed the account and the amount of $121,104.78, which was withdrawn from the account and ultimately deposited to the Luis De Castro account was entirely money belonging to him or his family company. Attachments 2 and 3 are "sub ledgers" compiled by Holden & Bolster which divide the transactions which occurred on the Rodrigues controlled money account between those originating with the deposit of funds by my client, and the accrual and payment of interest, and those deposits which represented Nobrega money. Attachment 4 is a copy of the controlled money ledger account with the identifying numbers used in the "sub ledgers" placed against the transactions commencing with the deposit of 8 July, 1994. 50 We will not incorporate the attachments in this decision however this series of "transactions" clearly demonstrates the inadequacies of the solicitor's record keeping in terms of s.62 and Ground 1 is clearly made out. 51 Turning to Ground 2 the Society relies upon precisely the same particulars for Ground 1 and for convenience the Tribunal refers to a matter of Manual Coelho. "Manuel P. Coelho – Sale to Joe Maria Andrade 1. Mr. Pinto acted for both parties in respect of the sale by Mr. Manuel Pascol Coelho of his half-share of property known as 9/1-5 Woodcourt Street, Marrickville to Joe Maria Andrade. Contracts were exchanged on 27th November, 1998 showing a purchase price of $82,500.00. There was no deposit payable on exchange of Contracts. 2. Mr. Andrade obtained a loan from the Commonwealth Bank of $134,000.00 to assist in the purchase. There was a mortgage to the same bank registered on the title to be discharged on settlement. 3. The bank was directed by Mr. Pinto to pay the mortgage advance of $134,000.00 on 17th December, 1998 by cheque as follows: M. Coelho $90,000.00 Commonwealth Bank of Australia to discharge mortgage $17,593.24 J.M. Andrade $26.406.76 4. There is a photocopy of the cheque in the sum of $26,406.76 in the instruction file which has been signed by Mr. Andrade in acknowledgement of the receipt of the cheque. 5. I have established that the cheque in the sum of $90,000.00 was deposited on 17th December, 1998 by Mr. Pinto to the AEFC Account in the name of John Spinola, Account No. 182136. 6. The balance in this account was withdrawn on 11th February, 1999 in the sum of $387,893.01, which sum included the amount of $90,000.00 received on behalf of Mr. Coelho, and deposited to the Trust Account and credited to the trust ledger account of John Spinola. In the Controlled Money Ledger Account of Spinola, the amount of $90,000.00 is shown as received from John Spinola. There is no evidence of any authority given by either Mr. Coelho or Mr. Andrade to the deposit of the sum of $90,000.00 into the AEFC Account in the name of Spinola. To the contrary a letter from Mr. Pinto to the clients dated 18th January, 1999 indicates that the sum of $90,000.00 was disbursed to Mr. Coelho. 7. The balance in the Trust Account to the credit of John Spinola was disbursed on behalf of Mr. Pinto in respect of the purchase of TFC Australia (Holdings) Pty. Limited, a cheque payable to Fafelu Pty. Limited and the final balance in the account was withdrawn in the sum of $85,937.43 and deposited back into the AEFC Account in the name of Humberto Quintal. 8. A photocopy of the face of the bank cheque in the sum of $90,937.50 is in the file and has been signed by Mr. Coelho. 9. The sum of $82,500.00 was ultimately paid to Mr. Coelho on 24th May, 1999 described as the sale proceeds due to him. The letter to Mr. Coelho concerning the payment states as follows: "We are pleased to advise the above matter has finally settled and now enclose Trust Account cheque in your favour for the agreed sale price of $82,500.00 for your share of the unit. We enclose a copy of front page of Contract and copy of Valuation for your attention." 10. The sum of $82,500.00 was cheque no. 3045 drawn on the Trust Account dated 24th May, 1999 payable to M.P. Coelho which was debited to the trust ledger account relating to the sale by Coelho to Andrade, number 7564. 11. I have established that the cheque was covered by a deposit to the Trust Account on 24th May, 1999 of a cheque shown as received from Mr. J. Andrade in the amount of $90,937.50. This amount was a bank cheque purchased on 13th May, 1999 with a Trust Account cheque which was debited to a trust ledger account styled "Luis De Castro", number 6081 shown as payable to Manuel Coehlo. The cheque in turn was covered by a deposit to that account on 13th May, 1999 of an amount of $304,490.23 which was withdrawn from an AEFC Account kept in the name of Luis De Castro. There were no funds in the account of De Castro relating to either Andrade, Coelho or to a person, Spinola or for that matter De Castro. 12. The balance remaining in the trust ledger account of Coelho was disbursed by cheque payable to Antonio Figueros in the sum of $8,437.50. There is an Authority prepared by Mr. Pinto in the file signed by Manuel Coelho authorising this payment. 13. I am not able to establish from the file whether any amount in excess of $82,500.00 was held on behalf of Mr. Coelho as representing the balance of the sale of the property. 14. File notes in the file indicate that initially the agreed half-share was $90,000.00 and may be this was the amount to be paid to Mr. Coelho, although it exceeded the sale price as per the Contract. A Valuation obtained valued the property at $165,000.00. There is no documentation in the instruction file and no form of accounting issued to either the vendor or purchaser concerning the moneys received and disbursed in this matter." 52 In response to the issues raised by Ms. Sayer at pages 21 to 23 of her report under this heading Mr. Pinto in part makes the following responses: "Coelho is the uncle of Andrade and Coelho agreed to sell his half share of the subject unit to his nephew Andrade for $82,500.00. Mr. Pinto was instructed that Andrade owed other monies to Coelho and therefore Coelho was to receive the total of $90,000.00 on settlement. Andrade borrowed $134,000.00 to complete the purchase and pay Coelho the $90,000.00 and the balance for other purposes. He received the cheque for $26,405.76 referred to at page 22 of Ms. Sayer's Report. Coelho also received the cheque drawn in his favour for $90,000.00. Mr. Coelho returned the next day with his wife and the cheque and instructed Mr. Pinto to invest the money in Mr. De Castro's account until it was needed for renovations which were intended at Mr. Coelho's home. Mr. Pinto did contact Mr. De Castro and obtained confirmation and authority for such deposit. By mistake, the cheque was deposited to the account of J. Spinola. The error was discovered on the day the Spinola account was closed when there was an excess of funds of approximately $90,000.00 namely $85,937.43. Mr. Pinto telephoned Mr. Coelho immediately and annexed is Mr. Coelho's acknowledgement by way of explanation and consent. Mr. Coelho did not need the money and wished to continue the investment with Mr. De. Castro. Mr. Pinto then correctly arranged to have the sum of $90,000.00 invested with Mr. De. Casto as from 11 February 2000 from funds he held personally with Mr. De Castro. Mr. Pinto paid all interest owing to Mr. Coelho personally on 11 February 1999. As Mr. Coelho did not want to be paid the sum of $90,000.00 Mr. Pinto therefore agreed to credit Mr. Coelho with the sum of $90,000.00 from his own funds which he had on investment with Mr. De Castro with the consent and authority of Mr. Coelho and Mr. De Castro as per Mr. Coelho's original instructions. Some time later when Mr. Pinto was advised by the Trust Account Inspector that he could not invest funds in this way he telephoned Mr. Coelho, closed the account and again with the consent and authority of Mr. Coelho and Mr. De Castro a cheque was drawn in favour of Mr. Coelho in the sum of $90,937.50 (which included interest) and given to Mr. Coehlo on 17 May, 1999. Mr. Coelho then instructed Mr. Pinto to rebank the cheque to his Trust Account and to draw two cheques as follows:_ Mr. Coelho - $82,500.00 A. Figueiras - $ 8,437.50 Mr. Pinto understood the second cheque was intended to pay one of the tradesman who had been working on Mr. Coelho's home namely Mr. Figueiras. Mr. Pinto was asked by Mrs. Coelho to provide them with a letter, which she and her husband could hand to the Social Security Department confirming that the net sum paid to them from their sale was $82,500.00 because this is the figure they had told the Department of Social Security some months earlier when the sale took place and this was half of the agreed valuation between them and their nephew Mr. Andrade. This was all done to assist the client with the consent and authority of all clients. Mr. Pinto issued Coelho a letter in those terms dated 24 May 1999 as required by Mr & Mrs. Coelho. We enclose a written consent an authority signed by Mr. Spinola and countersigned by Mr. Coelho, confirming his knowledge and authority of the transaction, together with a copy of Mr. Pinto's diary for the relevant period confirming that Mr. Coelho attended his office on both 11 and 12 February, 1999 and in such circumstances is not breach of Section 61." 53 Again the Tribunal will not refer to any of the attachments. 54 Again there is ample evidence that Ground 2 has been made out. In addition there are the solicitor's admissions. 55 The Tribunal notes there is no criticism levelled at the honesty or integrity of any of the investor clients or those who had faith in them. GROUND 3 – INTERMINGLING 56 In summary the solicitor admits that he held in the Trust Account of the firm funds which belonged to either the solicitor or the solicitor's family company, Admark Investments Pty. Ltd. and that such funds were held in accounts within the General Trust Account which also contained funds belonging to clients of the solicitor. 57 On the solicitor's behalf it was denied that any of the factual circumstances particularised by the Law Society in relation to this allegation constituted professional misconduct. 58 Further it should be noted that the solicitor for all purposes has denied at any time acting in relation to the Trust Account or the maintenance of the Trust Account records in a way that was contrary to his instructions. 59 The Tribunal is also mindful that not a single complaint has been raised by any of the solicitor's clients in relation to the matters which have been brought to the Tribunal by the Law Society or indeed by any of the persons who placed faith in the investor clients. 60 In relation to this allegation of "intermingling" of funds of the solicitor's company and those of his clients, the Tribunal is referred relevantly to the decision of O'Reilly v Law Society of NSW 1988 24NSWLR 204 at 225 and the relevant quote provides, from the decision of Clarke J A the following: "The difficulties posed by the question presently under consideration seem to me to have been compounded by the use of the word "intermingled" and the assertion that the intermingling was wrongful. On one view, which is the most likely view in light of particular 6(f), the respondent was asserting that it was wrongful of the appellant to intermingle his personal financial affairs with those of a client. To put it another way that every time a solicitor intermingles his personal affairs with those of a client he will be guilty of professional misconduct no matter in what particular circumstances the intermingling occurs. On the other hand the question could be seen as raising the issue whether in particular circumstances, which are not defined, this particular intermingling was wrongful. It does not appear that this lack of clarity in the question was clarified at the hearing and this bears on the more important question whether the parties litigated a particular question which the Committee proceeded to determine. To see whether that occurred it will be necessary to refer to the actual findings but before I do that I with to point out that the problems may well have been avoided if the word "intermingle", which means "mix with", had not been used. Its use in the present context is or relatively recent origin. Prior to 1975 I do not believe it had been used in this context. In that year however the Chief Justice delivered the judgment of the Court in "Law Society of New South Wales v Harvey" [1976] 2 NSWLR 154, and in the course of doing so said (at 172): "...A solicitor ought not intermingle his personal affairs, in a sense including the affairs of companies, ventures of others with whose financial position he has a personal connection, with the affairs of his client." The statement was perfectly understandable in the context in which it appeared. However, those who advise the Law Society and draft the questions submitted in references seem to have become enamoured of the word. It has been frequent since, sometimes in cases far removed from Law Society of New South Wales v Harvey. In my opinion that use is unfortunate for it tends to conceal rather than reveal. No doubt the intermingling, and the manner in which it is wrongful, can be made the subject of particulars but absent an indication of the features of the circumstances that are said to make the intermingling improper the question would lack the necessary clarity." 61 The factual matters in this case must be distinguished from the matters relating to the Decision of Harvey where relevantly it needs to be borne in mind there were serious allegations against the solicitor in terms of the solicitor preferring his interests, to that of his client. 62 There is no evidence that this is the case in this matter and the Tribunal was further referred to the decision, unreported of the NSW Court of Appeal of Malfanti v Legal Professional Discipline Tribunal and relevantly Clarke J A noted: "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 of 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 complaints 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 5-6) and O'Reilly v The Law Society [1988] 24NSWLR 204 at 224-5. 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 said on this subject than that "the maintenance of these accounts within the trust account clearly offends the principles laid down in John 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 s.41 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 s.42 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 the 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." 63 The Tribunal bearing in mind the nature of the allegations and the way the allegation has been framed cannot be comfortably satisfied that any professional misconduct has occurred in relation to this ground. 64 In this matter the Law Society within the Information sought orders in substance that the Solicitor be the subject of a fine and the Solicitor pay the Society's costs of and incidental to these proceedings. 65 In considering this information it falls of course to the Tribunal as well to determine whether the Solicitor is a fit and proper person to continue to practice and in that context the Tribunal is comfortably satisfied that none of the relevant circumstances warrant the Solicitor's Practising Certificate being put under threat. 66 Substantial non contested evidence has been tendered as to the Solicitor's good character and honesty from persons who have dealt with him professionally and socially. The Tribunal is accepting of that evidence and is comfortably satisfied there is no issue regarding Mr. Pinto's right to practice. 67 In the public interest consideration has to be given to an appropriate penalty, whilst the Society proposed a fine, we are persuaded by submissions on behalf of the Solicitor that in the public interest it is not necessary to impose a fine and rather the appropriate course is for the Solicitor to be publicly reprimanded. 68 In considering the public interest the Tribunal cannot see how it will be better served by imposing a fine particularly when regard is had to the following: 1. The Solicitor being liable for the Law Society's costs of these proceedings. 2. The Solicitor paid Law Society Investigator fees of approximately $34,500.00. 3. The Solicitor having incurred substantial professional costs and disbursements himself in relation to the hearing before the Tribunal by retaining his own Solicitor and Barrister. Such fees up to April 2002 exceeding $21,000.00. 4. The Solicitor having incurred very substantial remedial costs in relation to putting his Trust Account records in order. A sum in excess of $20,000.00 to Holden & Bolster. 5. The Solicitor having undertaken further specific training himself at the College of Law in Practice Management including Trust Accounts. 6. The personal anguish and shame experienced by the Solicitor. 7. The Solicitor having closed all controlled money accounts and increasing the level of scrutiny of his trust account records. 69 Accordingly the Tribunal finds that the Solicitor is guilty of Professional Misconduct in relation to Grounds 1 and 2 of the Information and Orders pursuant to s.171C that the Solicitor be publicly reprimanded for his Professional Misconduct. 70 The Tribunal dismisses the allegation within Ground 3 of the Information relating to Intermingling. 71 The Tribunal orders the Solicitor pay the costs of the Applicant of and incidental to the proceedings. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.