Law Society of New South Wales v Mavrakis [2005] NSWADT 13

CITATION: Law Society of New South Wales v Mavrakis [2005] NSWADT 13 DIVISION: Legal Services Division APPLICANT PARTIES: Council of the Law Society of New South Wales RESPONDENT George Mavrakis FILE NUMBER: 042028 HEARING DATES: 24/11/2004 SUBMISSIONS CLOSED: 11/24/2004 DATE OF DECISION: 01/31/2005

BEFORE: Clisdell RJ - Judicial Member; Riordan M - Judicial Member; Quayle C - Non Judicial Member APPLICATION: Professional Misconduct - fail to comply with s. 152 Notice MATTER FOR DECISION: Principal matter LEGISLATION CITED : Legal Profession Act 1987 CASES CITED: APPLICANT REPRESENTATION: P Boyd, solicitor RESPONDENT T Williams, solicitor ORDERS: Orders made 24 November 2004; 1. Information dismissed; 2. No order as to costs

REASONS FOR DECISION 1 The Council of the Law Society filed an Information in the Tribunal on 13 September 2004 alleging that the Solicitor, George Mavrakis, was guilty of professional misconduct in that he failed to comply with a Notice issued pursuant to Section 152 of the Legal Profession Act 1987. 2 The relevant conduct committee of the Law Society had resolved on 18 April 2002 to issue a Section 152 Notice to the Solicitor seeking information verified by Statutory Declaration within fourteen days of the date of service of the Notice of the Resolution and also to produce within fourteen days documents which were also specified in the Notice. 3 It was admitted by the Solicitor and was common ground that the Law Society did not receive the required Statutory Declaration, which was dated 29 August 2002, until late August or early September 2002. 4 The issue before the Tribunal was whether or not the Solicitor had failed without reasonable excuse to comply with the Section 152 Notice. There were no factual matters in dispute between the Law Society and the Solicitor and it was agreed that the complaints that were being investigated by the Law Society were complaints by someone who was not a client of the Solicitor, that the complaints extended over a period of some years and the investigation over a period of five years and that ultimately all complaints against the Solicitor were dismissed. 5 In these proceedings the Solicitor swore an Affidavit dated 19 November 2004, which subject to some minor objections, was to a large degree uncontested. The background of the complaints against the Solicitor was that from about the middle of 1999 a Mr John Cosco commenced to make a series of complaints in relation to the conduct of Mr Mavrakis, a number of other Solicitors and a Barrister. The complaints related to matters that were the subject of a series of Court cases involving Mr Cosco and companies controlled by him on the one hand, and individuals and companies under the control of a Mr Smiles and members of the Sialepis family. The complaint which was the subject of the Section 152 Notice was made on or about 31 March 2000 by way of a six page letter to the Legal Services Commissioner and was accompanied by a large volume of documents that were estimated by the Solicitor to exceed 100 pages. It should also be noted that the complaints by Mr Cosco were out of time, but were nevertheless accepted by the Legal Services Commissioner. 6 The Solicitor was subject to complaints by Mr Cosco in the years 1999, 2000, 2001 and 2002. He was spending a large amount of time addressing these complaints and as he responded to complaints, Mr Costs made further complaints against him. In paragraph 16 of his Affidavit, the Solicitor says: "I found it almost impossible to know how I could effectively address the campaign which was being conducted against me by Mr Cosco. His complaints ranged over scores of matters sometimes going back many years. In many cases he made allegations against me in respect of matters where I was not even the Solicitor. I did not have in my possession or immediately available to me many of the files and records to which I needed to refer in order to try to make a substantive rebuttal of the allegations being made against me. Most of the records were in the possession of other lawyers." 7 In paragraph 18 he deposes: "When I made submissions to the Society either personally or through my Solicitor, the usual result was simply to elicit a further stream of correspondence and documents from Mr Cosco in which he made further allegations against me." 8 The Solicitor further deposed in paragraph 21: "I had spent well over six months trying to assemble the information and material necessary to provide a complete rebuttal to Mr Cosco's complaints. By early 2002 I was becoming desperate to deal with the matters in a way which was conclusive and did not simply engender a fresh (sic) of complaints and allegations." We presume that the word "series" is missing from that paragraph. 9 The Solicitor continued in paragraph 22: "For that purpose, I contacted many Solicitors who held records relevant to the matters complained of by Mr Cosco, and undertook an exhaustive search of records relating to the various cases involving Mr Cosco and the Smiles' interests, and the Sielapis' interest. It is probably fair to say that I became obsessive in trying to assemble a refutation which was so well documented and comprehensive as to be obviously (to the Law Society) compelling." 10 It is useful to set out what the Law Society required in respect of the Notice that was served on the Solicitor. It was a comprehensive request for information that clearly would have required a careful and reasoned response. The particulars sought in the Notice were set out in two Schedules as follows: "SCHEDULE 1 Complaints accepted pursuant to Section 137(2) Legal Profession Act, 1987 by the Legal Services Commissioner on 20 February 2001. The legal practitioner is to provide his full and frank response verified by Statutory Declaration to the following questions arising from complaints made against him by John Cosco: 1. That from approximately May till December 1995, Mr Mavrakis aided his client Mr Smiles who was a Director of Elyard Corporation Pty Ltd ("Elyard"), in disposing of Elyard's assets to non creditors and preventing creditors from liquidating Elyard, in circumstances in which he knew, or ought reasonably to have known that Elyard was insolvent. a) Do you agree that you conducted yourself as described above?; b) If so, advise the reasons, if any, for such conduct and provide copies of any documents which support or corroborate your statement; c) If not, please advise the reasons why you disagree and provide copies of any documents which support or corroborate your statements; 2. That Mr Mavrakis acted in a conflict of interest by: a) Voting in and continuing to advise Mr Smiles on the Part X proposals notwithstanding the fact that he was himself a creditor to the value of $12,172.92 in respect of a personal guarantee and his firm was a creditor to the value of $80,000.00 in respect of legal fees; b) Acting for Mr Smiles and Sunset Corporation Pty Ltd ("Sunset") which was a creditor of Mr Smiles and which had paid several amounts to Mr Mavrakis to settle Mr Smiles' legal bills both in the six months period prior to and following Mr Smiles' Part X proposition. c) Do you agree that you conducted yourself as described above?; d) If so, advise the reasons, if any, for such conduct and provide copies of any documents which support or corroborate your statements; e) If not, please advise the reasons why you disagree and provide copies of any documents which support or corroborate your statements. 3. That Mr Mavrakis improperly advised Mr Smiles' bankruptcy trustee of the various counter claims he was conducting on behalf of Mr Smiles against creditors, while at the same time remaining silent about the damages claim Mr Mavrakis was conducting on behalf of Mr Smiles. a) Do you agree that you conducted yourself as described above? b) If so, advise the reasons, if any, for such conduct and provide copies of any documents which support or corroborate your statements; c) If not, please advise the reasons why you disagree and provide copies of any documents which support or corroborate your statements. 4. That Mr Mavrakis assisted Mr Smiles in the concealment of certain assets of the "Smiles Group" and/or the "Sialepis Group" from creditors and/or administrators namely: a) Mr Smiles' Court action against Strathfield Car Radio; b) Mr Smiles' share in the accountancy practice of Smiles Poulos & Associates; and c) Income from Mr Smiles' rental property at Gordon. d) Do you agree that you conducted yourself as described above? e) If so, advise the reasons, if any, for such conduct and provide copies of any documents which support or corroborate your statements; f) If not, please advise the reasons why you disagree and provide copies of any documents which support or corroborate your statements. 5. That Mr Mavrakis received undisclosed benefits from the leasing of Mr Smiles' Gordon residence, from acting for Sunset and for acting for Mr Smiles in claim against Strathfield Car Radio and the Commonwealth Bank, whilst knowing that Mr Smiles was under bankruptcy administration. a) Do you agree that you conducted yourself as described above? b) If so, advise the reasons, if any, for such conduct and provide copies of any documents which support or corroborate your statements; c) If not, please advise the reasons why you disagree and provide copies of any documents which support or corroborate your statements. 6. That Mr Mavrakis improperly concealed from the National Australia Bank, his knowledge of the true position of his client, Mr Smiles, when Mr Mavrakis was negotiating and concluding a discount settlement with that bank on behalf of Mr Smiles. a) Do you agree that you conducted yourself as described above? b) If so, advise the reasons, if any, for such conduct and provide copies of any documents which support or corroborate your statements; c) If not, please advise the reasons why you disagree and provide copies of any documents which support or corroborate your statements. 7. That on or about 28 March 1996, Mr Mavrakis improperly attempted to influence Mr Bowman, the complainant's Solicitor, to withhold information and assist him defrauding creditors of Mr Smiles. Specifically, Mr Mavrakis attended the office of Mr Bowman and said words to the effect that " if the existence of the 17 May 1995 joint venture agreement was revealed to the creditors if would harm everyone." a) Do you agree that you conducted yourself as described above? b) If so, advise the reasons, if any, for such conduct and provide copies of any documents which support or corroborate your statements; c) If not, please advise the reasons why you disagree and provide copies of any documents which support or corroborate your statements. SCHEDULE 2 The legal practitioner is to produce copies of all documents on which he relies in support of his answers to the questions set out in Schedule 1 above. FURTHER RESOLVED that if the legal practitioner is unable to comply with the preceding resolution, the legal practitioner musty provide a statutory declaration to the Manager of the Professional Standards Department, Law Society of New South Wales within 14 days after service on the legal practitioner of notice of this resolution stating the reasons for the inability to comply with this resolution." 11 What emerged in evidence was that the Solicitor was not simply sitting on his hands and ignoring the complaint. To the contrary, the evidence reveals that he was devoting a large amount of time, effort and money to formulating a reasoned, careful and accurate response to the matters sought in the Law Society's Notice. 12 The Solicitor can be criticized, as within fourteen days of receiving the Notice, he should have contacted the Law Society and sought an extension of time. He did not do so. For that reason there can ultimately be no complaint about the Law Society bringing these proceedings before this Tribunal. However, on or about 25 June 2002, approximately two months after the Notice was served on him (the notice was served on 26 April 2002), the Solicitor did write to the Law Society requesting an additional ten days to complete the reply. 13 The Solicitor did not complete his reply within ten days, but by 26 July 2002 Mr Williams, his Solicitor, had sent a very detailed submission, although unverified, addressing all the matters in the Section 152 Notice and additional relevant matters. That response was then put into the appropriate form of a Statutory Declaration, which the Solicitor made on 29 August 2002. 14 The Tribunal finds that the Solicitor's response was a complete response. It was detailed and comprehensive. 15 Prior to receiving Mr Williams' letter and the solicitor's Statutory Declaration, the Law Society had written to the Solicitor on 22 July 2002 indicating that they proposed to have a report prepared by the Professional Conduct Committee in respect of his failure to comply with the Notice issued under Section 152. On 6 December 2002 the Society resolved to initiate a complaint against the Solicitor for failing to respond to the Section 152 Notice. By that time the Solicitor had given a very detailed response to the Notice. 16 On 5 March 2003 all complaints relating to the subject of the Section 152 Notice were dismissed. On 18 March 2003 Mr Williams, on behalf of the Solicitor, made detailed submissions as to why the Society should not proceed with a complaint to the Tribunal over the Solicitor's failure to comply with the Section 152 Notice. In essence those submissions were repeated before the Tribunal on the basis that the Solicitor's failure was not without reasonable excuse given: - a) the complexity of the complaints; b) the detailed information required by the Notice; and c) the Solicitor's detailed reply, particularly bearing in mind the nature of the complaints, the age of the complaints and the Solicitor's difficulty in obtaining files and documents to enable him to make a reasoned response. 17 The Solicitor was briefly cross-examined by the Solicitor for the Law Society during the proceedings. In respect of the short evidence he gave, the Tribunal formed the view that the Solicitor was honest and forthright. 18 There have been many cases before this Tribunal of Solicitors failing to comply with Section 152 Notices. Pursuant to the provisions of the Legal Profession Act, it is professional misconduct not to respond to such a Notice without reasonable excuse. The Tribunal was not able to find a situation where the length of delay, as in this case at worst 16 weeks, had seen a Solicitor brought before the Tribunal facing a charge of professional misconduct. Invariably the cases that the Tribunal was referred to or otherwise considered involved lengthy delays usually in excess of 12 months. In a great number of those cases the information required by the Society was substantially less detailed than what was sought in this case from Mr Mavrakis. 19 The Tribunal is satisfied that Mr Mavrakis was not attempting to delay the investigation of the Cosco complaints. The Tribunal accepts the Solicitor was placed in a most difficult position because of the nature of the complaints. The Tribunal is mindful that the information sought in the Section 152 Notice required a careful, accurate and detailed response. The Tribunal is satisfied that the Solicitor was, during the time period between service of the Notice and the filing of his Statutory Declaration, actively seeking to respond to the complaint. The only criticism one can make of the Solicitor is his failure to seek an extension of time and it is not the view of this Tribunal that his actions in all the circumstances were unreasonable. We are not therefore satisfied that the Solicitor's failure to respond to the Notice amounted to professional misconduct. 20 Accordingly the complaint is dismissed. There will be no order as to costs.