The Legal Services Tribunal of New South Wales CITATION : Salvatore Francipane [1994] NSWLST 5 PARTIES : Salvatore Francipane FILE NUMBER(S) : of 1993 CORAM: Mr A. Martin (Presiding Member) - Mr A. Edgar - Mr I. Ferguson CATCHWORDS: Professional Misconduct - breach of s. 61 of the Legal Profession Act - Professional Misconduct - fail to act honestly - Professional Misconduct - fail to keep accounts - Professional Misconduct - misappropriate trust moneys/moneys - Professional Misconduct - prepare false documents :- Fraud misappropriation of monies LEGISLATION CITED: Legal Profession Act 1987 CASES CITED: DATES OF HEARING: 6 April 1994 DATE OF JUDGMENT: 05/17/1994 LEGAL REPRESENTATIVES: Mr I. Wales (instructed by Mr F.J. Smith) appeared for the Law Society of New South Wales Mr M. Lynch instructed by Greg Murray, Craddock, Murray & Newman for the Solicitor. JUDGMENT: This matter was referred to the Legal Profession Disciplinary Tribunal ("the Tribunal") pursuant to a resolution of the Council of the Law Society of New South Wales ("the Law Society") dated 25 March 1993 that a complaint be made to the Tribunal pursuant to s.135 of the Legal Profession Act 1987 the Act"). The complaint alleged that: 1. The Solicitor wilfully breached s.61 of the Act. 2. The Solicitor committed a fraud on the Office of State Revenue. 3. The Solicitor defrauded and misappropriated monies from Mr Andrew Budiman. 4. The Solicitor defrauded and misappropriated monies from Dr Lo Mascolo. 5. The Solicitor defrauded and misappropriated monies from Mr & Mrs S. Johnson. The Law Society sought the following orders: 1. That the name of the Solicitor be removed from the Roll of Solicitors. 2. That the Solicitor pay the costs of the Law Society of these proceedings. The Solicitor was admitted to practice on 22 December 1983 and worked as an employed solicitor until 7 January 1985 when he commenced practice as a sole practitioner under the name of Francipane & Co until 29 September 1991. From 30 September 1991 he practised in partnership with Mr George Hovan under the firm name of Hovan & Francipane at 18-20 York Street, Sydney until 10 February 1992 on which date the partnership was dissolved. Concurrently during this period the Solicitor practised in partnership from 10 August 1987 to 30 November 1988 under the firm name of A.J. Giam & Co and Giam De Rubers & Francipane from 1 December 1988 to 9 February 1989. On 13 February 1992 the practising certificate of the Solicitor was cancelled pursuant to s.35(b) of the Act. The Solicitor by his Counsel admitted the particulars and the further particulars of the complaint and further admitted that this admission amounted to an admission that the Solicitor had been guilty of professional misconduct. The Solicitor acted for a Mr Andrew Budiman in respect of the purchase of vacant land at Wedderburn from Yap Yan Pin Pty Limited for a consideration of $3,350,000. Mr Budiman was a director and share holder of Yap Yan Pin Pty Limited which company was placed in liquidation on 22 August 1991. Cowley Hearne & Co solicitors acted for the vendor company and contracts were exchanged on 8 April 1991. On 12 April 1991 Mr Budiman gave his cheque to the Solicitor for $170,251.50 payable to Francipane & Co for the stamp duty payable on the contract. This cheque was deposited by the Solicitor to his office account. The Solicitor then drew a cheque on his office account in the amount of $170,251.50 payable to the Office of State Revenue and this cheque was lodged with the Office of State Revenue together with the agreement for sale for stamping. The agreement was duly stamped and the Solicitor by his Counsel concedes that at the same time the transfer was marked duly stamped. On 15 April 1991 the Solicitor stopped payment of this cheque for $170,251.50 and as a result the amount of $170,251.50 was reversed by the bank and credited to the office account of the Solicitor. On 16 April 1991 the Solicitor drew a cheque on his office account in the sum of $155,000 payable to Anchors Away - Charter Tours which cheque was used by the Solicitor to purchase a bank cheque from the National Australia Bank payable to Anchors Away - Charter Tours. The sum of $155,000 was money due by the Solicitor in his personal capacity to Mr Athos, the proprietor of Anchors Away - Charter Tours. On 30 May 1991 the Contract of Sale between Mr Budiman as purchaser and Yap Yan Pin Pty Limited as vendor was rescinded. On 19 November 1991 Mr Budiman complained to the Law Society concerning his inability to obtain from the Solicitor a refund of the sum of $170,251.50 which the Solicitor should have obtained from the Office of State Revenue as a refund of stamp duty following the rescission of the contract. The Solicitor claimed that these monies were retained by him in relation to a Bill of Costs dated 6 April 1991 issued to the directors of Yap Yan Pin Pty Limited in the total sum of $180,055. Notwithstanding this claim the Solicitor paid back Mr Budiman the sum of $170,000 in three instalments. The first instalment of $50,000 was paid on or about 15 November 1991 and there was no evidence before the Tribunal as to the source of these funds. The second instalment of $50,000 was paid on or about 3 December 1991. This instalment was covered by a bank cheque purchased from the National Australia Bank Haberfield by a Dr Anita Lo Masclow payable to Francipane & Co. The cheque was endorsed by the Solicitor "please pay Budiman". Dr Lo Mascolo had given the Solicitor this cheque in payment for certain share options she had agreed to purchase from Halbear Pty Limited of which company the Solicitor was a director. Dr Lo Mascolo did not know Mr Budiman and did not authorise the Solicitor to endorse the cheque to Mr Budiman or to use the cheque for any purpose other than for the purchase of the options. The final instalment of $70,000 was paid on 13 December 1991. This sum of $70,000 in fact belonged to clients of the Solicitor, Mr & Mrs S. Johnson. The Solicitor acted for Mr & Mrs S. Johnson on the sale of their property at 120 Bowman Street Pyrmont to a Mr & Mrs Coyne. The Solicitors acting for Mr & Mrs Coyne Messrs Astridge & Murray were requested by the Solicitor to draw a cheque in the sum of $70,000 payable to A Budiman as part of the settlement monies on the purchase. Mr & Mrs Johnson did not know Mr Budiman and did not authorise the payment to him. On this evidence and the admissions of the Solicitor the Tribunal finds the Solicitor wilfully breached s.61 of the Act in each of the matters of Budiman, Lo Mascolo and Johnson. The Tribunal also finds the Solicitor committed a fraud on the Office of State Revenue and that he defrauded and misappropriated monies from Mr Andrew Budiman, Dr Lo Masclow and Mr & Mrs S. Johnson. The Solicitor did not give evidence and the only evidence on his behalf was the tender of four character references. One of these references was from a Dr Peter Gesovic and he stated:<>"I am aware that during 1990-91 Sam was under severe stress for a number of reasons and that these culminated in the development of a peptic ulcer in early 1993: I feel this was present for some time beforehand and reflects his great personal distress." There was also a reference from Dr A. Lo Masclow (the client of the Solicitor mentioned above) and she stated:<>"During the period 1990-92 Mr Francipane attended my practice on several occasions. He was under extreme stress. He complained of palpitations, headaches and chest pain. He had lost considerable weight. He was also having difficult marital problems and was attending a marriage counsellor with his wife. He was finding it very difficult to cope." No evidence was called by the Solicitor to link his medical condition as so described by these doctors to his conduct the subject of this determination. Counsel for the Solicitor submitted that the appropriate order which the Tribunal might make would be to suspend the Solicitor from practice until February 1995 and to impose conditions on his right to practise, such as he being only permitted to practise as an employed solicitor under supervision of others. It was submitted that this in effect would be a suspension for a period of 3 years as the Solicitor had not practised since February 1992 when his practising certificate was cancelled. The Tribunal rejects this submission and considers that such an order for suspension of the right of the Solicitor to practise for a period would be wholly inappropriate in the circumstances of this case. The Solicitor has been guilty of wilful breaches s.61 of the Act, deliberate fraud and fraudulent misappropriations constituting serious misconduct which calls for an order from the Tribunal removing his name from the Roll of Solicitors. There is one further matter and that is the costs of 10 March 1994 which were reserved by the Tribunal on that day. The hearing of the complaint was fixed for 21 February 1994. On 9 February 1994 the Solicitor applied to the Tribunal to have this hearing date vacated on the ground that he was a defendant in Supreme Court proceedings which were listed to commence on 14 February 1994 being specially fixed for 2 weeks. The Tribunal refused this application. On 16 February 1994 the Solicitor made a further application to the Tribunal to vacate the hearing date of 21 February 1994. The Tribunal granted this application stating that it was of the opinion that it would be unreasonable to expect the Solicitor to not only appear in two places at the same time but to be mentally and physically involved in the preparation of these matters which would be proceeding almost concurrently. The matter was then re-listed for hearing on 10 March 1994. On 4 March 1994 the Law Society was advised by the Solicitor's advisers that the Supreme Court proceedings were still continuing and were likely to be continuing on the hearing date of 10 March 1994. On 7 March 1994 the Law Society advised the Solicitor's solicitor that they would oppose any application to vacate the date of hearing of 10 March 1994. On 10 March 1994 the Tribunal granted the application of the Solicitor to adjourn the hearing. In doing so the Tribunal stated that consistent with the decision of the Tribunal on 16 February 1994 it would be unreasonable to expect the Solicitor to appear in two places at the same time. The costs of 10 March 1994 were reserved and the hearing adjourned to 6 April 1994 when the hearing took place. Counsel for the Solicitor submitted that the costs of 10 March 1994 should not be paid by his client as it was unreasonable for the Law Society to oppose the adjournment. The Tribunal upholds this submission and will make no order for the costs of 10 March 1994. Orders The Tribunal makes the following orders that: 1. The Solicitor's name be removed from the Roll of Solicitors of the Supreme Court of New South Wales. 2. The Solicitor pay the costs of the Law Society of these proceedings (other than the costs of 10 March 1994) on a solicitor/client basis as if taxed in the Supreme Court of New South Wales. 3. If agreement cannot be reached between the Solicitor and the Law Society as to the amount of such costs, either party shall have liberty to apply. 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.