Law Society of New South Wales v Smith [2003] NSWADT 163

CITATION: Law Society of New South Wales v Smith [2003] NSWADT 163 DIVISION: Legal Services Division APPLICANT PARTIES: Council of the Law Society of New South Wales RESPONDENT Graeme Alan Smith FILE NUMBER: 022005 HEARING DATES: 24/09/2002, 01/10/2002 SUBMISSIONS CLOSED: 10/01/2002 DATE OF DECISION: 07/09/2003

BEFORE: Fox R - Judicial Member; Greenwood J - Judicial Member; Klika D - Member APPLICATION: Professional Misconduct - deal with assets after bankruptcy - Professional Misconduct - practice without being holder of practising certificate MATTER FOR DECISION: Principal matter LEGISLATION CITED : Legal Profession Act 1987 CASES CITED: APPLICANT REPRESENTATION: L Pierotti, solicitor RESPONDENT S Cuddy, solicitor ORDERS: That the Solicitor:-; 1. Not be issued with an unrestricted practising certificate until 1 July 2005;; 2. Pay the costs of the Society within 90 days of the date of this Order.

1 There are two matters raised against the Solicitor. 2 The first of these is that after he declared himself bankrupt, he purported to deal with his car in a manner contrary to the rules which apply to a bankrupt's estate. The second is that he practised without an appropriate practising Certificate from 1 September 2000 until 14 March 2001, when he became entitled to practise as a sole practitioner. 3 The facts of the first matter are quite simple, and we accept that which the Solicitor put to us. The Solicitor had obtained a substantial advance from his father well prior to the 24 February 2000 bankruptcy declaration. The advance was secured over the Solicitor's then home, and when that home was sold (also before the bankruptcy declaration) an amount of $16,500.00 remained outstanding to his father. Partly as substitute security, and partly just to protect this asset, essential for the Solicitor's work, it was agreed that the car be made the subject of a Bill of Sale in favour of the Solicitor's father. The Solicitor's father signed the Bill 6 days before the bankruptcy declaration, but the Solicitor did not sign it until 17 March, 21 days after the change of status, when, as a matter of law, the car had become the property of the Trustee in Bankruptcy. No matter what might have been the legal effect of this particular manoeuvre had the Solicitor also signed and effected stamping and registration of the Bill before the bankruptcy declaration, the clear fact of the matter was, and as was known to the Solicitor, he had no property in the vehicle when he executed the Bill of Sale. 4 We accept all of the Solicitor's evidence in relation to his financial circumstances, and accept that he honestly believed that all of his financial difficulties arose out of the actions of his former partner. Those actions had led to the Solicitor once previously appearing before this Tribunal and being struck off and led to the Solicitor solely bearing the brunt of the Commonwealth Bank's debt collection procedures. Further, even if we accept that, as a Solicitor put it, a debt of $120,000.00 had led to a claim for $460,000.00, and even if we accept that the car was totally essential for the Solicitor's daily living and income earning activities, it still does not excuse the Solicitor's conduct. No matter how much we may sympathise with the Solicitor's anger and desperation at the predicament in which he had found himself for many years, we are satisfied that he knew that he had no title to the vehicle. The Solicitor did not suggest to us that he took these steps as an angry aberration, and we must view it as a deliberate and calculated step. However, we are satisfied that we must take into account the whole of the background, and the Solicitor's family and financial circumstances, and are not satisfied to the relevant standard of comfort that this particular action demonstrates a permanent flaw in the Solicitor's character. In this sense, it should be viewed as something of a more temporary kind. 5 The Solicitor was readmitted on 17 July 1998 and, entitled to practise as an employee only, was employed by Hynes & McCormack Solicitors of Murwillumbah on 10 August 1998. Two years of that employment having passed, the Solicitor, potentially, was able to practise on his own account if he complied with the Law Society Guidelines. Broadly speaking these were that he had to attend at and complete the work required for a Law Society approved practice management course, and satisfy the Law Society Membership Committee that he had satisfactorily undertaken a relevant range of matters during his two years of restricted practice. 6 The Solicitor having practised previously, it is not surprising that on 7 August 2000 he was granted exemption from the practice management course. The Solicitor then made formal application by letter of 8 November 2000 for approval for an unrestricted certificate. This was a 2 page letter, simply reciting, by short headings, the nature of the work which the Solicitor had undertaken whilst with Hynes & McCormack. 7 The Solicitor's letter of application was received by the Law Society on 15 November, and on 20 December 2000 the Society wrote to the Solicitor advising that the Membership Committee would consider the matter on 22 January 2001. On 16 January 2001 the Solicitor was advised that his letter of 8 November was not sufficiently detailed, and invited him to make further submissions. The Solicitor replied by letter of 19 January 2001 that he wished to rely on the "short" 8 November 2000 letter. The Membership Committee considered the matter at its 22 January 2001 meeting and called for further submissions. The Solicitor then (on 29 January 2001) submitted a much more detailed writing to the Society, but the Committee was not able to consider the matter at its meeting of 12 February 2001, and the matter went over to the meeting of 12 March 2001, when, finally, the Committee approved. 8 By that time the Professional Indemnity Insurance world had been turned upside down, and the Solicitor was (through no fault of his) not able to obtain the requisite insurance cover until shortly before the present hearing. However the processing of the application (for an unrestricted certificate) was put on hold to await our decision. 9 We accept that, pursuant to the practice Management Course exemption on 7 August 2001 and his resignation from Hynes and McCormack on 31 August 2000, the Solicitor was not ill advised to make arrangements to open an office to practise on his own account. We also understand how those arrangements may have been foiled by the Society Committee timetable not moving as expeditiously as the Solicitor had anticipated. We appreciate the financial pressure which that placed upon the Solicitor. But none of that excuses his taking instructions and acting contrary to the conditions of his practising certificate. 10 The Solicitor conceded taking steps in three separate litigious matters which might be seen to be merely administrative and taken so that the clients (who had been previously been with the Solicitor at Hynes and McCormack) would not be disadvantaged. We note that more "hands on" litigious aspects in these matters were referred to other local practitioners. Nevertheless the steps which were taken, even if done without fee, were clearly legal work and contrary to the conditions of the Solicitor's practising certificate. 11 The Solicitor also conceded that he had, for a fee in each case, in the period in question, effected 6 cottage conveyances and one other (not dissimilar) conveyancing matter. It is these, of course, which caused us the greatest concern. The Solicitor held no professional indemnity insurance, and, as an undischarged bankrupt, was entirely without personal assets or resources. That is a circumstance which left the clients entirely without recourse for such work should there have been some sort of failure. In this sense, the Solicitor's acting strikes at the very heart of the system of professional regulation in this State. The public is entitled to assume that there will be recourse to insurance or assets should legal work, effected by a Solicitor, not have a satisfactory outcome. 12 We have considered long in this matter. The supervision of legal professional qualifications, and the right to practise law without restrictions, are matters of the gravest public importance. We would not wish to be seen in any way to appear to endorse the Solicitor's questioning of the Society's right to seek full and proper compliance with its requirements. Further, we stress that the Solicitor's taking instructions in the conveyances (despite the small number and despite the relatively low fees which he claimed), is a matter of very deep concern. 13 We are not satisfied that the Solicitor should practise for some years yet without the full benefit of the guidance of another practitioner. 14 We stress that we do not presume to seek to direct the Society in the requirements it might wish to impose, generally, in relation to its issuing unrestricted practising certificates, nor do we suggest anything in that regard in relation to this particular solicitor. 15 We direct that he not be free to practise on his own account until end May 2005, subject always to full compliance with the Society's requirements which may apply at that time. In making that order we indicate that we would not wish to prevent the Solicitor from making application to the Society, for the requisite approvals, at any time after 1 January 2005. 16 The orders are that the Solicitor:- 1. Not be issued with an unrestricted practising certificate until 1 July 2005 and, 2. Pay the costs of the Society within 90 days of the date of this order