Law Society of New South Wales v Doueihi [2002] NSWADT 265

CITATION: Law Society of New South Wales v Doueihi [2002] NSWADT 265 DIVISION: Legal Services Division APPLICANT PARTIES: Council of the Law Society of New South Wales RESPONDENT Michael John Doueihi FILE NUMBER: 012013 HEARING DATES: 20/11/02 SUBMISSIONS CLOSED: 11/20/2002 DATE OF DECISION: 12/17/2002

BEFORE: Nader J QC - ADCJ (Deputy President); Cox R - Member; Gietzelt R - Member APPLICATION: Professional Misconduct - breach of s. 61 of the Legal Profession Act - Professional Misconduct - delay in accounting for trust moneys - Professional Misconduct - render account without justification MATTER FOR DECISION: Principal matter LEGISLATION CITED : Legal Profession Act 1987 CASES CITED: APPLICANT REPRESENTATION: P Boyd, solicitor RESPONDENT D Gasic, barrister ORDERS: 1. The Solicitor to pay a fine of $7,500.00 the said fine to be paid within 6 calendar months of the date hereof.; 2. In the event that the fine referred to in paragraph 1 not be paid within the time specified, the Solicitor's Practising Certificate to be suspended from the date on which the payment is due until the date on which the fine is paid.; 3. The Solicitor is publicly reprimanded.; 4. The Solicitor to pay the legal costs of the Law Society within 12 months of the date hereof, such cost being agreed at $8,000.00.; 5. The Solicitor to complete successfully the Legal Ethics Bridging Course conducted by the College of Law within 6 months of the date hereof.

1 By Amended Information dated 1 August, 2002, the Council of the Law Society of New South Wales (the Society) alleged that Michael John Doueihi (the Solicitor) was guilty of professional misconduct on the grounds that: 1. the Solicitor wilfully contravened section 61 of the Legal Profession Act, 1987 ; 2. the Solcitor, without justification, rendered an account to his client, Mrs Cheng Kent Choi Yuk, for having entered into correspondence with the Society in respect of a complaint made by a third party; 3. the Solicitor delayed in accounting for trust moneys. 2 The Society relies upon the following facts and circumstances: 1. On or about 1 November 1996 Mrs Cheng Kent Choi Yuk ( "Cheng" ) instructed Mr Michael John Doueihi ( "the Solicitor" ) in relation to a property matter with her estranged partner Anthony Chau ( "Chau" ). Cheng and Chau had purchased a property being unit 8, 170-172 Ben Boyd Road, Neutral Bay ( "the property" ) and the mortgagee was taking action to sell the property because of arrears of mortgage repayments. 2. No costs agreement was entered into between the Solicitor and Cheng. 3. Both Cheng and Chau were, at the time the Solicitor was instructed, resident of Hong Kong. 4. The Solicitor instructed solicitors in Hong Kong, Messrs Deacons, Graham & James, ( "Deacons" ) to act for him in respect of such matters as service of documents. 5. Cheng, through the Solicitor, consented to the mortgagee exercising power of sale over the property. 6. The property was sold by auction on 7 March 1997 and settlement occurred on 21 April 1997. 7. As a result of the mortgagee's sale of the property a net sum of $21,887.79 was payable to Cheng and Chau. Those moneys were ultimately paid into Court. 8. By Summons numbered 1392 of 1997 in the Equity Division of the Supreme Court, proceedings were commenced by Cheng in respect of the property ("the proceedings"). 9. The proceedings were dealt with ex-parte on 19 October 1998 at which time Bryson J made a number of Orders. Relevantly, that the Summons be taken as being served on 5 September 1998; that the partnership was dissolved on 7 March 1997; that Cheng was entitled to the sum of $16,582.94 and that Chau pay the sum of $7,000 by way of costs and disbursements in relation to the proceedings. 10. On 19 October 1998 the Court further ordered that the monies paid into Court standing in the sum of $21,666.29 be paid to Cheng in part satisfaction of the orders of that day and referred to in paragraph 9 above. 11. The sum of $21,666.29 was paid into the Solicitor's trust account on 30 November 1998 and to the credit of a trust ledger account styled "Ms Cheng Kent Choi Yuk". 12. By letter dated 23 November 1998 the Solicitor advised Cheng of the outcome of the proceedings and that Deacons were requesting approximately $3,800.00 for the work undertaken by them. The account indicated that the balance held in trust was $4,334.29. 13. On 23 November 1998 the Solicitor forwarded an account to Cheng in the sum of $17,332.00. That account comprised professional costs of $9,805.40 and disbursements of $7,526,60. 14. On 3 December 1998 the Solicitor transferred to his office account the sum of $5,083.35 from moneys standing to the credit of Cheng in his trust account and in part-payment of his costs. The Solicitor did not have Cheng's authority or direction to do so. 15. By letter dated 8 December 1998 Cheng wrote to the Solicitor and objected to his bill. 16. On 15 December 1998 the Solicitor paid a further $3,000.00 from the trust account to Counsel on account of his fees. That payment was without Cheng's authority or direction to do so. 17. By letter dated 4 January 1999 the Solicitor responded to Cheng's letter of 8 December 1998. He indicated that he was prepared to waive the sum of $891.40 previously charged on account of care, skill and consideration. The Solicitor further advised Cheng that a sum of $5,225.69 was now available to her in the trust account. 18. By letter dated 27 January 1999 Cheng made further enquiry of the Solicitor as to Deacon's costs as well as other matters in the Solicitor's accounting. 19. By letter dated 8 March 1999 the Solicitor provided to Cheng an itemised account wherein he reduced his professional costs from $9,805.40 to $8,400.70. The Solicitor indicated that this additional sum of $1,404.70 would be credited to Cheng's trust account which now would have a balance of $5,738.99. This last figure of $5,738.99 was based on the Solicitor's initial advice of 23 November 1998 that the balance in the trust account was $4,334.29 not his later advice of 4 January 1999 that the balance would then have been $5,225.69. 20. By letter dated 28 April 1999 the Solicitor wrote to Cheng noting that he had received no response from her in relation to his letter of 8 March 1999 nor had he received instructions as to the payment of Deacon's account. The Solicitor further advised that he was holding monies in trust to cover both the account of Deacons as well as his outstanding costs together with any surplus payable to Cheng. The Solicitor sought instructions as to what Cheng required the Solicitor to do in relation to the matter. 21. By letter dated 2 August 1999 the Solicitor wrote to Cheng advising that he had reviewed the files and that there were four issues outstanding. (a) Deacons Graham & James outstanding Disbursement fee; (b) Complaint by Deacons Graham & James with the Law Society of New South Wales; (a formal complaint was lodged by Deacons, Graham & James on 14 January 1999 against the solicitor's firm for non-payment of their account). (c) Outstanding fees payable to the Solicitor's Firm; and (d) Finalisation of itemised costs. The Solicitor again claimed the sum of $9,805.40 by way of professional fees and which sum had been sought in his original account of 23 November 1998. The Solicitor further indicated that by 9 August 1999 he would attend to the following: 1. Draw the balance of professional costs and disbursements from monies held in trust; 2. Attend to payment of Deacons Graham James Solicitors for the invoice rendered; 3. Assign to the Cheng the right to dispute the invoice rendered by Deacons Graham James Solicitors upon which the Solicitor would authorize Cheng to deal directly with that firm of solicitors. 4. Render a final account. 5. Disburse the balance of monies held in trust to Cheng within 37 days. 22. On 30 August 1999 the Solicitor paid the sum of $3, 621.20 to Deacons on account of their outstanding account. That payment was without Cheng's authority or direction. 23. On 30 August 1999 the Solicitor withdrew the sum of $5,448.65 from the trust account moneys standing to the credit of Cheng and in further payment of his costs. That payment was without Cheng's authority or direction. 24. As at 30 August 1999 the amount held in the Solicitor's trust account on behalf of Cheng was $4,513.09. 25. On 21 September 1999 the Solicitor withdrew the sum of $714.00 from the trust account moneys standing to the credit of Cheng and in further payment of D G Thompson's fees for producing the itemised account sent to Cheng on 8 March 1999. That payment was without Cheng's authority or direction. 26. As at 21 September 1999 the amount held in the Solicitor's trust account on behalf of Cheng was $3,799.09 27. By letter dated 21 September 1999 the Solicitor wrote to Cheng referring to his letter of 2 August 1999 and enclosing a further memorandum of costs and disbursements. This memorandum was in respect of a complaint which had been made by Deacons to the Law Society of New South Wales in respect of their unpaid account and the work which had been carried out by the Solicitor in responding to that complaint. The bill was in the sum of $3,065.00. 28. By letter dated 30 September 1999 Cheng wrote to the Solicitor and objected to his bill in the sum of $3,065.00. The letter further said in part:- "I now insist that you forward to me all the proceeds of the settlement less the barristers charges, the fees for Deakins and $5738.99 plus interest incurred for the trust account that was originally agreed between you and I." 29. By letter dated 8 November 1999 Cheng wrote to the Solicitor which letter said in part:- "It has already over two months since I sent you the letter of demand for the captioned settlement. I hereby demand your immediate action to send me the settlement of A$5738.99 plus interest incurred for the trust account." 30. By letter dated 19 November 1999 Cheng wrote to the Solicitor which letter said in part:- "Please do not disregard this notice as it will be the final notice before I take further action. I am allowing you 14 days to respond. In that time, I expect to receive; 1/ Balance of the settlement proceeds" The Solicitor did not reply to the letters to him from Cheng dated 30 September 1999, 8 and 19 November 1999. 31. By Application dated 31 May 2000 Cheng objected to the Solicitor's bill of costs and applied to the Supreme Court for the matter to be referred to a costs assessor. 32. On 19 January 2001 the cost assessor issued his certificates of determination. 33. Thereafter Cheng made many requests for the Solicitor to pay her the sum held in trust namely $3,799.09 but he refused to do so. 34. On 21 May 2001 solicitors acting on behalf of Cheng issued a Statement of Liquidated Claim against the Solicitor seeking payment by him of the sum of $3,799.20. The Solicitor refused to make payment and lodged a defence to the Claim together with a Third Party Notice. 35. On 4 October 2001 the Solicitor paid to the solicitors acting on behalf of Cheng the sum of $3,799.20. 3 The supporting affidavit evidence establishes the matters of complaint. 4 Most significantly, at the hearing, the Solicitor, through Mr Gasic, his counsel, admitted the substance of all of the matters alleged. Those admissions are accepted by the Tribunal thus obviating the necessity of referring to the particular matters of evidence tending to prove the facts alleged. 5 The Solicitor in his pleadings denied that he had been guilty of professional misconduct. His admissions at the hearing, albeit belated, have saved a great deal of time and expense and have been of considerable utilitarian value to the Society and the Tribunal, and thus to the community itself. In considering the orders that we should make we have taken this fact into account in mitigation. We think that it is appropriate to provide encouragement to those practitioners who may have been guilty of professional misconduct or unsatisfactory professional misconduct to admit their guilt. 6 The parties handed to us an agreed minutes of draft orders. The fact that the Society and the Solicitor, expertly advised, agreed upon the orders is a matter to which we give considerable weight. However, these proceedings not being truly adversarial, it is necessary for us to satisfy ourselves that the orders sought are appropriate in the public interest. 7 After careful consideration, be think that they are appropriate orders. They not only contain a significant punitive element but they provide an educational element that hopefully will enable and inspire the Solicitor to avoid the same errors in future. 8 We have also taken into account that the Solicitor has been reprimanded on six occasions under section 155(3)(b) of the Legal Profession Act 1987 in the past for matters which, we were informed, were of a different nature from the matters the subject of this complaint. 9 Therefore, we order that: 1. The Solicitor to pay a fine of $7,500.00 the said fine to be paid within 6 calendar months of the date hereof. 2. In the event that the fine referred to in paragraph 1 not be paid within the time specified, the Solicitor's Practising Certificate to be suspended from the date on which the payment is due until the date on which the fine is paid. 3. The Solicitor is publicly reprimanded. 4. The Solicitor to pay the legal costs of the Law Society within 12 months of the date hereof, such cost being agreed at $8,000.00. 5. The Solicitor to complete successfully the Legal Ethics Bridging Course conducted by the College of Law within 6 months of the date hereof.