The Legal Services Tribunal of New South Wales CITATION : O'Reilly v Law Society of New South Wales [1988] NSWLST 2 PARTIES : O'Reilly v Law Society of New South Wales FILE NUMBER(S) : CA 419 of 1986 CORAM: P Kirby - JA Mahoney - JA Clarke CATCHWORDS: Professional Misconduct - mislead client - Professional Misconduct - fail to keep client adequately advised - Professional Misconduct - make false statement - Professional Misconduct - fail to act honestly - Professional Misconduct - misappropriate trust moneys/moneys :- LEGISLATION CITED: Legal Practitioners' Act 1898 Supreme Court Act Moody v Cox and Hatt [1917] 2 Ch 71, 81 ; Spector v Ageda [1973] 1 Ch 30, 48; Law Society of New South Wales v Harvey [1976] 2 NSWLR 154, esp 171; Coulton & Ors v Holcombe & Ors (1986-87) 132 CLR 1; Kennedy v Incorporated Law Institute 13 ALJ 563; Rejfek v McElroy 112 CLR 517, at 521 ; Briginshaw v Briginshaw 60 CLR 336, at 362); Tyrrell v Bank of London (1862) 10 HLC 26; 11 ER 934; Law Society of New South Wales v Harvey 1976 2 NSWLR 154; Rakusen v Ellis Munday & Clark (1912) 1 Ch 831 ; CASES CITED: D & J Constructions Pty Ltd v Head & Ors (1987) 9 NSWLR 118; Johns v Law Society of New South Wales (1982) 2 NSWLR 1; Lau Liat Meng v Disciplinary Committee (1968) AC 391 at 403-4; R v Solicitors' Disciplinary Tribunal 1988 VR 757, at 770; Suttor v Gundowda Pty Ltd 81 CLR 418, at 438; New South Wales v Veron 84 WN Pt 1 136 ; The New South Wales Bar Association v Kalaf NSW Court of Appeal, 11.10.88, unreported; The Law Society of New South Wales v Jones, NSW Court of Appeal, 27.7.78, unreported ; Kotowicz v Law Society of New South Wales, NSW Court of Appeal, 7.8.87, unreported.) ; Law Society of New South Wales v Moulton (l981) 2 ,NSWLR 736; Datt v Law Society of New South Wales 148 CLR 319 DATES OF HEARING: 23/12/88 DATE OF JUDGMENT: 12/23/1988 LEGAL REPRESENTATIVES: JUDGMENT: Supreme Court of New South Wales Court of Appeal O'Reilly v Law Society of New South Wales Judgment Appeal from Solicitors' Statutory Committee CA 419 of 1986 Coram: Kirby P, Mahoney JA, Clarke JA Friday 23 December 1988 Appeal allowed Orders 1. Appeal allowed. 2. Order of the Statutory Committee striking the name of the appellant off the roll of Solicitors of the Supreme Court of New South Wales set aside and in lieu thereof order that the appellant be fined $5,000. 3. The appellant to pay the respondent's costs of the hearing before the Statutory Committee and of the appeal. Kirby P This appeal from the Solicitors' Statutory Committee has taken the Court to the findings of the Committee upon the three categories of alleged misconduct which were said to justify the removal of the appellant's name from the Roll of Solicitors. The misconduct alleged involved (a) wrongful "intermingling" of his affairs, and those of his companies, with the affairs of his clients and a want of attention to the stringent duties imposed in such circumstances upon a solicitor; (b) the making of false statements to the Law Society and to the Statutory Committee; and (c) touting for business. Alleged lying to the Statutory Committee I agree in the conclusions which Clarke JA has expressed concerning the allegations that the appellant lied to and deceived the Law Society investigators and the Committee. The Committee had the advantage of observing the appellant when he gave evidence before it. I keep that advantage in mind (together with the superior position which it is conventionally believed to give to the observer in determining truth-telling) when considering the entitlement of this Court to reach a different conclusion for itself. There is no doubt that a conclusion of deliberate lying to the Committee, at least in a matter material to its enquiry into the solicitor, would warrant a conclusion that the solicitor was guilty of professional misconduct. In a proper case, it could sustain an order removing his name from the Roll. The Committee, and this Court, must approach such a conclusion, having regard to the seriousness of its consequence. It must do so with great care. A high degree of satisfaction is required before the conclusion may finally be accepted. It is important to observe the distinction between preferring the evidence of another witness or doubting the evidence of the solicitor (on the one hand) and reaching the affirmative opinion that the solicitor has deliberately lied to the Committee (on the other). Having regard to the equivocal nature of the answers of the solicitor upon which the Society principally relied to sustain its conclusion in this regard, I am not convinced that, save in one particular, it was open to the Committee by the requisite standard, to decide that the appellant deliberately lied to it. The exception is the one which Clarke JA has identified in respect of the answers to questions 15B, 15C and 15D. Having said this, I am left with the impression that the appellant, as in his dealings with his clients, was less than entirely candid to the Committee. Of course, in dealing with the Committee he was facing serious charges. There was the prospect of grave disciplinary action. In such circumstances, the adoption of a defensive posture may be, to some extent, understandable. So might the presentation of evidence in a way thought to be most favourable to him. But such a "defensive" position is not warranted in the relationship between a solicitor and his clients. That is the very reason why the law is at pains to forbid or strictly regulate situations where the conflict of personal interest and professional duty may occur. In such circumstances, a solicitor bears a "grievous responsibility" to avoid a conflict between his personal interests and his duty to his client. See Moody v Cox and Hatt [1917] 2 Ch 71, 81; Spector v Ageda [1973] 1 Ch 30, 48. This is the reason why the law insists upon full candour and appropriately complete disclosure to the client before an apparent conflict of interest and duty on the part of a solicitor will be excused. The allegation of touting for business So far as the charge of touting for business is concerned, I likewise agree with the conclusions of Clarke JA. The mere proximity of the offices of the appellant and of his associated mortgage company, Home Mortgage Corporation of Australia Limited, would not amount to anything more than a technical breach of regulation 29(1) of the Solicitors' (General) Regulations. I regard any such breach as inconsequential in the circumstances of this case. Certainly, it would not necessitate the removal of the appellant's name from the Roll of Solicitors. This is an order reserved to cases where it is necessary that it should be made for the protection of the public. The allegation of intermingling of affairs with clients' These conclusions leave the question of the alleged "intermingling" of the appellant's affairs with those of his clients. It is necessary to determine whether he observed the stringent obligations which must be complied with where such intermingling takes place. Mahoney JA in his reasons has drawn attention once again to the extent of those requirements and to the reasons which support them. See esp Law Society of New South Wales v Harvey [1976] 2 NSWLR 154, esp 171. I do not repeat the passage from the judgment of Street CJ, writing for the Court, which is contained in Mahoney JA's reasons. I should not, for my part, wish this decision of the Court to be seen as any relaxation of the stringent obligation on solicitors which is there set out. It is not an obligation in every case to avoid links with finance companies or mortgage brokers because such links may inescapably involve the solicitor in the appearance of a conflict of interest and duty. Searching out and providing finance, particularly for land title conveyancing, has long been a function of solicitors in our community. That function can be beneficial to clients, especially those inexperienced in financial matters who look to the solicitor for guidance. Access to finance in such circumstances may be in the best interests of the client. But where the solicitor has an interest in the finance provided, however indirect, there is an inevitable risk of the reality, or appearance, of a conflict of interest and duty. That risk can only be avoided by the most scrupulous conduct on the part of the solicitor. Depending upon any special terms of the retainer, such conduct will oblige him or her to do at least the following: (a) To disclose the interest fully and candidly to the client, preferably confirmed in writing in case of later disputes or inquiries; (b) To advise and facilitate the provision of independent advice where that is appropriate and to do so in more than a perfunctory way; and; (c) To advise on, and facilitate access to, alternative sources of funds, particularly where these may be to the client's advantage, being more beneficial than those which the solicitor can provide directly or through any associated company in which he or she has an interest, however indirect. By these stringent standards, I am not convinced that the appellant met his obligations to all of his clients. I regard departure from the stringent requirements as a very serious infraction of the solicitor's duty as a member of an honourable profession. Quite apart from the ethical reasons for candour, full disclosure and the provision of the best possible advice to clients, uncontaminated by the risk of personal interest, there are practical reasons which support what I have said. Clients trust solicitors to provide them with neutral and beneficial advice. They do so because it is the requirement of the law and the rule of the profession that the solicitor must not put himself or herself into a position where any lesser standard is observed. If it became common, or even regularly the case, that solicitors made undisclosed private gains, directly or indirectly, from finance companies or other sources with which they were associated, the faith of the community in the integrity and trustworthiness of solicitors would be seriously shaken. That would affect adversely honourable members of the profession. It would reflect adversely upon the profession's reputation for integrity. It will therefore not be tolerated by the Court. I turn from these considerations of the high standard required by the law to the facts of this case. Those facts must be considered in this Court in the light of the way in which the case was conducted before the Statutory Committee. I say at once that I am left with the uneasy conclusion that the appellant may not have complied with the standards set out above but may not be dealt with in these proceedings for his non-compliance by reason of the way in which the charges were presented against him before the Statutory Committee. In the case of the "Barnsley" transactions, I should myself prefer the conclusion secondly stated by Clarke JA. I believe that there was a clear separate duty to R. and I. Barnsley Pty Limited. I consider that it was necessary by the stringent requirements of the law, for the solicitor to make full and separate disclosure to that client and to ensure that he had properly received instructions to act for it notwithstanding. In my view, no slippage of the rigorous duty of full disclosure should be tolerated, simply because of past dealings with a principal of the company, Mr Barnsley. Forms must be observed in these transactions. A failure to comply with them often carries an attendant risk that the substance of the solicitor's duty will also be overlooked. Nevertheless, in view of the knowledge which Mr Barnsley had, the previous advice to him about independent legal advice, the absence of any suggestion of loss and the absence of any complaint by the client, I do not regard the breach as a serious one in that case. I turn the charge of wrongful intermingling of the appellant's personal financial affairs (or those of companies in which he had a personal interest) with the financial affairs of his clients. I agree with what Clarke JA has said about the unsatisfactory nature of the question posed for the decision of the statutory committee. It is essential, both for the due protection of the interests of the solicitor and for the proper approach by the decision-making tribunal to its task, that charges of professional misconduct should be specified with particularity. Only then will the findings made give rise to decisions of appropriate certainty and particularity. The consequence of the investigation of a question of generality can be seen in this appeal. When, at the hearing of the appeal, counsel for the Society sought to specify with appropriate particularity the precise objection to the arrangements which the appellant had with a number of clients, he was met by the barrier to such a recast case presented by the decision of the High Court of Australia in Coulton & Ors v Holcombe & Ors (1986-87) 132 CLR 1. Whilst I do not regard the way in which the Society sought to recast its case as presenting a "wholly new case", the principle in Coulton is a strict one. It is designed to defend fair procedures. Parties who might have called further evidence, tested evidence differently and made different submissions below ought not unfairly to be deprived of those rights by a first attempt, on appeal, to raise a different case. I suspect that the Society might, on the facts proved, have been able to satisfy the Statutory Committee that the appellant was guilty of the conduct described in the case as reconstituted. However, I agree that it is not open to the Society, particularly in proceedings such as this, to reframe its case in such a significant way. The appellant was entitled to have clear notice at the hearing before the Statutory Committee of the precise ways in which the Society alleged he had been guilty of professional misconduct. He should not have to face a case, different in significant respects, for the first time on appeal. The possible need for further investigation Like Clarke JA, I do not find this conclusion entirely satisfactory. For my own part I would say nothing about whether it would still be open to the Society to proceed against the appellant upon charges such as those which were reframed at the hearing before this Court. On the one hand, it is desirable that there be finality of proceedings such as this. The appellant should not face a form of double jeopardy. On the other hand, the Court is the guardian of the public interest and the Society safeguards the high standards which the law demands of solicitors. I would reserve the question whether the case needs further investigation of the appellant's conduct. This should be left for the Society to determine. Such a course is consistent with the Court's primary role as an adjudicator of matters lawfully brought to it. I part from this case with an expression of disquiet that that public interest may not be fully protected by the conclusion to which I have come with the other members of the Court. I am driven to that conclusion chiefly by the way in which the proceedings were conducted before the Statutory Committee rather than by a conviction that the order finally proposed is that which is appropriate to the whole of the conduct revealed. But the duty of this Court is to consider that conduct carefully and to measure the matters proved against the specific charges which were brought. The Court must protect the public. But it must do so in proceedings which are fair to the solicitor. Upholding fair procedures, including for solicitors charged with professional misconduct, is part of the fabric of the law by which the Court defends the public interest. Orders I agree with the orders proposed by Clarke JA. Mahoney JA The facts have been detailed by Clarke JA. His Honour's statement of them enables me to go to the substance of the complaints which, in the hearing before this Court, were made against the solicitor. As Clarke JA has shown, these complaints may be conveniently divided into three groups: (l) The wrongful intermingling of the affairs of the solicitor and his companies with the affairs of his clients; (2) The making of false statements to the Law Society of New South Wales and the Statutory Committee; and (3) The touting for business. I agree with what has been said by Clarke JA in relation to (2) and (3). I agree also with what his Honour proposes in relation to them. I desire to add to what has been said in relation to the first group of complaints. In order to deal with these complaints, it will be convenient to state in a simplified form what was, or was seen to be, the conduct of the solicitor and the relationships between him, his companies, and Home Mortgage Corporation of Australia Ltd ("HMC"). To simplify is necessarily to omit. Qualifications are to be made to what I shall say in relation to the arrangements set up by the solicitor and what was done pursuant to them. However, those qualifications appear sufficiently from what has been said by Clarke JA or may be drawn from what his Honour has said and I do not therefore need to repeat them. The structure of the arrangements In broad terms, the structure of the arrangements which, as the Law Society has submitted, had been set up by the solicitor was as follows. Persons ("borrowers") who desired to borrow money on the security of real estate would go to HMC. They might go to it directly and without initial intervention from the solicitor; or they might go to it because the solicitor referred them to it. HMC would agree to lend money to the borrowers on security of real estate. HMC would ordinarily not have the money to lend to them. It would arrange to have the money available by having a pre-arrangement with a person ("the assignee") who had such money. That pre-arrangement would involve that the borrower would grant a mortgage to HMC; HMC would assign the loan and the security to the assignee for a sum of money; and that sum would be used by HMC to pay to the borrower the amount lent to him by HMC. The pre-arrangements involved, or frequently involved, two things: a premium to HMC and a guarantee by the solicitor or his companies. The contemplation was that HMC would be paid by the assignee a sum more than the sum to be lent by HMC to the borrower. The difference ("the premium") constituted HMC's profit on the transaction. In some cases, ordinarily the cases where the assignee was a financial corporation (Beneficial Finance Corporation Limited and Citibank Limited were referred to in this regard), the assignee would require and would be given a guarantee that the borrower would repay the loan. The guarantee would be given by the solicitor and his wife or by a company owned by the solicitor and his wife. At least in some cases, a fee would be charged of the borrower for this guarantee. The guarantee fee, to whomever it was technically payable, ordinarily went to HMC and augmented its financial resources. It appears that the transactions which took place did not always follow a standard course. However, what I have said constitutes the essential structure of the arrangements by which the solicitor and those related to him operated. It is the complaint of the Law Society that, insofar as the transactions which occurred were in accordance with arrangements of this kind, the solicitor was guilty of professional misconduct. The complaints against the solicitor which emerged during the hearing before this Court were, in substance, three: (i) that the borrowers were not made aware of the structure of the transactions and that the solicitor owed to them a duty to assure that they were; (ii) that the borrowers were not made aware, in the cases in which they were provided, of the fact that the premium and the guarantee payments were made and, as it was suggested, were in an economic sense to be borne by the borrowers; and (iii) that the solicitor did not fully advise those borrowers who were his clients of the opportunities available to them for procuring a more advantageous arrangement from HMC and/or the assignees. These complaints are not separate; they are related and overlap. However, it will be convenient to refer to them separately as providing particular focuses of complaint as made before this Court. It is, with the benefits which hindsight gives, clear that problems of these kinds were apt to arise in arrangement structured as the solicitor's arrangements were. However, as Clarke JA has indicated, they did not emerge, or did not emerge with appropriate clarity, at the hearing before the Statutory Committee. To this I shall refer subsequently. I come now to the duty of a solicitor acting in the context of such arrangements. His duty will, of course, depend upon the nature and extent of what he is retained to do. In some cases, he will be retained only to carry out, by the necessary legal procedures, a business arrangement made between his client and others. In other cases, his retainer will involve the giving of advice in relation to the form and desirability of the agreed transaction. But in other cases, his retainer may involve that he advise his client, insofar as a solicitor may be expected to advise on such matters, upon the different ways in which the client's end may be attained and the economic advantages and disadvantages of each of them. In the cases here relevant, or some at least of them, the solicitor's retainer was of the third kind or of that nature. In some cases, e.g., those involving Mr Barnsley and his company, the extent of the economic advice which the solicitor was expected to give may have been limited; it may be that none was sought. However, in other cases, the giving of economic advice in this sense was amongst the things which were sought and expected from the solicitor. I shall deal with the matter by reference to such cases. Arrangements structured in this way are apt to produce problems for the solicitor involved. These problems derive, inter alia, from two things: the solicitor's duty to provide for his client all the information and assistance which he can appropriately give to him; and the conflicts which are apt to arise between the interest of the client and those of the solicitor or others for whom he acts. In principle, a solicitor owes to his client the duty to tell him of everything of which he knows which will be of assistance to the client in relation to the matters within his retainer. And, within such limits, he is to do what he can to further the client's interests. The extent of a solicitor's obligation in relation to these two matters has long been recognised. In Tyrrell v Bank of London (1862) 10 HLC 26; 11 ER 934; Lord Westbury LC said: "My Lords, the decision which I shall advise your Lordships to pronounce in this case rests, in my opinion, on very clear principles and rules of conduct, of which it would be in the highest degree mischievous to impair the force or weaken the application ... The principle is that the solicitor shall not be permitted to make a gain for himself at the expense of his client. The client is entitled to the full benefit of the best exertions of the solicitor. The relation of solicitor and client involves, of course, the relation of principal and agent. The duties of the first relation include all of those of the second and something more; ... ". Subsequently, the Lord Chancellor: "... it is abundantly clear that two of the most important principles to be evermost sedulously preserved in considering the cases in which there is a breach of the high duties that are incident to the relation of solicitor and client, have plainly been violated by Tyrrell. It was his bounden duty to tell his clients what he had done. It was his bounden duty to give his clients the benefit of those exertions which he had employed for his own advantage. He forgot the first duty of a solicitor in the concealment and falsehood which were practised. My Lords, there is no relation known to society, of the duties of which it is more incumbent upon a court of justice strictly to require a faithful and honourable observance, than the relation between solicitor and client; and I earnestly hope that this case will be one of the many which vindicate that rule of duty which has always been laid down, namely, that a solicitor shall not, in any way whatever, in respect of the subject of any transactions in the relations between him and his client, make gain to himself at the expense of his client, beyond the amount of the just and fair professional remuneration to which he is entitled." What Westbury LC there said was adopted and applied in this Court in Law Society of New South Wales v Harvey 1976 2 NSWLR 154. In England, the position has been stated succinctly. In Halsbury's Laws of England, 4 ed, Vol 44, par 131(4), it is said: "A solicitor must put at his client's disposal not only his skill but also his knowledge so far as is relevant". In Spector v Ageda (1973) Ch 30, Megarry J, at 48, said: "The essential question is not one of failure to investigate, but the quite different question of failure to advise the client of what the solicitor already knows. Disregarding the particular circumstances of the present case, I cannot believe that any reputable solicitor would carry through a transaction for his client by way of discharging an obligation that the solicitor knew to be wholly or partly unenforceable or void and say not a word to his client about the defects in the obligation. In the present case, there were, of course, special elements. One was that Mrs Spector had added the words about two per cent per month interest after the memorandum had been signed. There is no evidence to suggest that the borrowers knew that she had done this. What Mr Scott must then establish is that where a solicitor accepts clients in a transaction, he need not tell them that, after execution, he has altered to their detriment a document recording the obligation that they are seeking to discharge by means of the transaction. He need not tell them, nor need he seek to advise them of the effect the alteration may have under the general law and under statute. If he remains completely silent as to his wrongdoing, he has nevertheless done all the law requires him to do for his client. Leave all else on one side, and Mr Scott must go as far as this to make good his contention. Such an argument has only to be stated to be rejected; in my judgment, it is wholly wrong. A solicitor must put at his client's disposal not only his skill but also his knowledge, so far as is relevant; and if he is unwilling to reveal his knowledge to his client, he should not for him. What he cannot do is to act for the client and at the same time withhold from him any relevant knowledge that he has: see, e.g., Moody v Cox (1917) 2 Ch 71." In arrangements of the present kind, where the solicitor's retainer extended beyond the mere carrying out of a transaction already made, problems were apt to arise. The solicitor, because of his association with HMC, knew that there were other persons, the assignors, who were or at least might have been willing to advance money on mortgage to the borrowers. And, for example, the question might arise whether the solicitor should have said to a particular borrower: "You need not go to HMC. If you act through HMC, there will be involved the economic cost of the premium payable to HMC on assignment of the mortgage and of the guarantee fee. You should go directly to (the assignee) and obtain an economically better transaction. At least, you may be able to obtain such. And I will use my best endeavours on your behalf to obtain such for you". Information of this kind would or may have been available to the solicitor because of his association with HMC and/or the assignees. Questions of nicety might arise in such a situation. There are, no doubt, limits to what, of what he knows, a solicitor must disclose to a particular client. And he may be under obligations of confidentiality or otherwise which would be broken if he gave such advice to a borrower. What would have been the solicitor's obligations, on the one hand to a borrower and on the other hand to HMC and particular potential assignees, is not clear. These matters were, I think, not pursued in detail before the Statutory Committee. But were the matters here in question simply as I have said, the solicitor would have been in breach of his duty to his clients if he did not give advice generally to this effect. But, in some of the cases in question in this proceeding, the facts were or may have been different. It is because this matter was not, as such, fully pursued before the Statutory Committee that difficulties have arisen in this regard in the appeal. It may be that, for example, the particular borrower had entered into his transaction because of his relationship with HMC rather than with the solicitor and so the solicitor's obligations may have been more restricted. It may be that the borrower would, as the parties were aware, not have benefited by going directly to an assignee because the assignee would not have been prepared to deal directly with him. It may be that, in the particular case, the assignee would not have entered into the transaction without the benefit of the guarantees or would not have given better terms. These matters were not investigated in detail before the Statutory Committee. It is possible that evidence could have been called to show that the solicitor knew that, because of the position of the potential assignees, the borrower could not pursue such options as these. And Mr Gyles has submitted that, as the rehearing before this Court is not a rehearing ab initio, the implications of these matters should not be held against the solicitor. I confess to some scepticism in this regard. If the arrangements were as I have indicated and if the instances which the Law Society had particularised were matters dealt with under those arrangements, then there was inevitably a conflict of interest and for a solicitor to put himself deliberately in a position of such conflict will be to invite a finding of professional misconduct. I do not mean by this that the existence of a conflict of interest will necessarily involve professional misconduct. In Law Society of New South Wales v Harvey at 171, the court laid stress upon the need to avoid such a position. It said: "A conflict of interest which is avoidable, and ought to be avoided, is that which arises from a deliberate proposal of the solicitor that his client deal with him. ... In varying degrees the trust of and reliance upon the solicitor to act fairly and independently arising from the initial preparedness of the solicitor and client to trade may remain as the reason why the client ultimately deals with the solicitor and not someone else. It is difficult to be sure that it does not. In the absence of very special circumstances, a solicitor who promotes himself as the dealer with his client misuses his position. A solicitor who constantly promotes dealings with various clients clearly misuses his position, and puts it beyond his capacity to observe his primary duty to his clients. The price of being a member of an honourable profession, whose duty to his client ought not to be prejudiced in any degree, is that a solicitor is denied the freedom to take the benefit of any opportunity to deal with persons whom he has accepted as clients. Therefore he ought neither to promote, suggest, or encourage a client to deal with him, but rather should take all reasonable steps positively to avoid dealing directly, or indirectly, with his client. There are of course exceptional cases where the transaction may be in the special interest of a particular client, but such cases will be isolated and need to be dealt with (sic) conscientious regard for the procedures already referred to." The role of a solicitor qua the seeking and providing of finance has, at least in this country, a long history. A person may come to a solicitor seeking to borrow on the security of his real estate; another person may come to the solicitor for the purpose of lending on such security. It is common experience that a solicitor brings them together and has the advantage of acting as solicitor on the mortgage transaction. I would not wish to suggest that the conventional transaction involves professional misconduct. Nor is there necessarily misconduct in a solicitor acting habitually in transactions of this kind. There will be the usual problems where he acts for both parties. But there will not, of necessity, be misconduct in such a case. But, in this case, if the solicitor acted for the borrower and his retainer was to advise upon the economic advantages of the transaction, then the possibility of conflict was apt to become a certainty. Or it was apt to be that the solicitor, doing what he could for the client, would be obliged to advise him to avoid the burden of the premium and the guarantee fees by, for example, going directly to the proposed assignee of the mortgage. If, because of his own interest in securing for HMC one or both of these, he did not give that advice, he failed in his duty to his client. But, it is not appropriately clear that this duty arose or was broken in the cases particularised against the solicitor. Mr Gyles QC, with his usual skill and persistence, pressed that default in relation to the particularised matters have not been shown, or have not been shown with a degree of proof sufficient for satisfaction on issues of this kind. In the end, I think Mr Gyles' submissions should, in this regard, be accepted. It may be that, in the particular transactions, the procedures to which I have referred were not followed so as to give rise to the problems inherent in them. In some cases, as Clarke JA has indicated, the borrowers went, not to the solicitor as his clients, but to HMC and from that company to the solicitor. In some cases, the client may have made clear that he did not desire the solicitor to advise him on economic matters; the cases of Mr Barnsley and his company may, on investigation, have been seen as such. And had the issues been precisely urged against the solicitor and investigated in full, a different position may have obtained. I therefore do not find proved the charge of (as it has been described) wrongful intermingling of the affairs of the solicitor and his companies with the affairs of clients. And I am not prepared to deal with the matter at this stage upon the basis that that which is charged against the solicitor is breaches of duty of the kind to which I have referred. For these reasons I agree with the orders proposed by Clarke JA. Clarke JA On 4 September 1986 the Solicitors' Statutory Committee constituted under the Legal Practitioners' Act 1898 (as amended) ordered that the name of the appellant be struck off the roll of solicitors of the Supreme Court of New South Wales. This order followed a reference to the Committee of a number of questions by the Council of the Law Society of New South Wales. There were 17 questions originally referred but 7 additional questions were added in a supplementary reference. Many of the questions were answered in the appellant's favour and did not require consideration during the hearing of the appeal except to the extent that they raised issues which bore on the grounds of appeal. The significant adverse findings concerned three different categories of alleged misconduct. They were: (l) Wrongful intermingling of the affairs of the appellant and his company with the affairs of clients. (I include within this category the complaint that he failed to disclose to a client or ex-client the true nature of mortgage and loan transactions involving his company); (2) The making of false statements to Law Society and the Statutory Committee; and (3) Touting. The third category is the least important and insofar as both the first two concern the operations, and statements made concerning the operations, of a company conducted by the appellant it is desirable at the outset that I describe the areas of operation of that company. The company was incorporated on 22 February 1982 as Ilebravo Pty Ltd and its name was changed on 12 May 1983 to Home Mortgage Corporation of Australia Ltd ("HMC"). On the same day it became a public company. At all relevant times it had three directors including the appellant and his wife who were the sole beneficial owners of its shares. It was the proprietor of the business name "The Secondary Mortgage Market" and it carried on business in New South Wales and Queensland from 1983 until its business ceased upon the reference of the appellant to the Statutory Committee. Its general manager for most of the time of its operations, Mr E. Flint, held a money lender's licence in respect of New South Wales and in Queensland the company itself held a licence. It advertised extensively and secured a large number of customers. There was a dispute between the appellant and Mr Batley, an investigator appointed pursuant to s.82A of the ®MDBR¯Legal Practitioners' Act®MDNM¯ to investigate the affairs of the appellant, as to whether it was appropriately described as a mortgage broking company. The label seems to matter little for it is the nature of its activities which requires scrutiny. In broad terms it offered to provide finance at rates which it regarded as attractive to persons wishing to borrow on the security of registered real property mortgages. One particular feature of the finance offered was considered by the appellant to be unique at the time and attractive to customers. That is, that it loaned moneys upon terms that instalments of principal and interest would be fixed for the term of the mortgage. While interest rates may have fluctuated HMC accommodated for this factor by expanding the term of the mortgage rather than creating hardship to borrowers by increasing the size of instalments. It also made loans upon terms that instalments of interest only were payable and these were sometimes availed of by persons with bad credit ratings. In addition the borrowers were required to take out insurance against sickness and accident and against loss of income through retrenchment. The funds which were advanced by HMC rarely, if ever, came from the company. Once it had secured a customer it sought to assign the loan at a premium to an interested money lender. In most cases the moneys were provided by large money lending companies such as Citicorp Ltd ("Citicorp") but on some occasions smaller companies and investors took an assignment, at a premium, of the mortgage. In nearly every instance HMC was able to obtain funds from an investor or money lender prior to the completion of the transaction so that on settlement the funds were made available to the customer and the mortgage between the borrower and HMC and assignment were presented to the ultimate lender. In a submission to the Complaints Committee of the Law Society made on 16 October 1983 the appellant said, inter alia, "To date it has always been successful in disposing of mortgages at a premium over the capital amount of the loan. It has also been successful in arranging sales of its mortgages in sufficient time for the proceeds of sale to be available at settlement on its own loan transactions." The appellant contended, and still maintains, that HMC was able to obtain assignees of the mortgages, notwithstanding that the terms of the mortgage in question were attractive to the customer, because of guarantees provided by way of collateral security. In those cases in which Citicorp or Beneficial Finance Corporation Ltd ("BF") were the effective lenders the guarantees were provided by the appellant and his wife. In other instances guarantees were provided by two of the appellant's companies, Trouber 194 Pty Limited and Chrymall Pty Ltd which, according to the appellant, were mere shells with no assets of substance. At the time Mr Batley reported on 14 September 1983 the obligations of these companies were not backed up in any way but the appellant contends that at some later date he and his wife guaranteed the obligations of both these companies. He also claims that they were guaranteed by another of his companies, Kemu Pty Ltd ("Kemu"). It will be necessary to refer to these guarantees later in this judgment. The two sources of income for HMC were the premiums which it received on the assignment of the mortgages and commission paid by a borrower, between one-and-a-half and 5 per cent, in respect of the provision of the guarantees. While those commissions should strictly have been payable to the guarantor company they all found their way into the funds of HMC. In New South Wales HMC was managed for much of the time of its operations by Mr E. Flint and it also employed a representative and a secretary. The business of the company was conducted from premises on the same floor of the building as, and immediately adjoining, the Parramatta office of O'Reilly and Booth, the appellant's firm. A common entrance way led to separate reception areas for HMC and for the firm although both receptionists were visible to each other. The accounting records of the company were kept by the staff bookkeeper of the firm. On all or most occasions the appellant acted for HMC in New South Wales in respect of the loan transactions. On some occasions it also acted for borrowers and on others it also acted for the lenders who were providing the funds. The appellant conceded that he had referred some clients to HMC but claimed that most of the borrowers were attracted to the company by its advertising and the efforts of its representatives. The appellant stoutly denied what he perceived to be the attitude of the investigator that he had available intending lenders whom he could introduce directly to borrowers but chose to complicate the transactions by introducing HMC in the middle with no real function except to charge procuration and guarantee fees. He also challenged the accuracy of the phrase "procuration fees" contending that what HMC received were premiums. In view of the physical proximity of the appellant's practice and HMC and the fact that on occasions he referred clients to his own company and on other occasions acted for more than one party in the transaction there was undoubtedly a significant risk that conflicts of interest and duty would occur. Accordingly, the operations of the company provided a potential source of great problems. The efforts by some solicitors in the past to build the financial receipts of their practices and at the same time to supplement their incomes by setting up commercial money lending operations which operated in conjunction with their firms have been the subject of a number of cases. In some, the manner of operation itself led to an unacceptable conflict of interest and duty. In others, the potential for conflict was converted into actual conflict. Those solicitors did not serve the legal profession well and the actions taken against them stand as a warning to any solicitor who is foolish enough to endeavour to emulate their methods of operation. That is not to say that a solicitor may not set up a commercial money lending company. But if he or she does so it is essential that the activities of that company be kept entirely separate from the solicitor's practise of his or her profession. While there may be occasions on which the solicitor could act for customers of the commercial operation the circumstances in which he could properly do so would require the exercise of a great deal of care on his or her part and would almost certainly involve that the solicitor make full disclosure of all relevant known facts and require that the client take independent advice. I should not be taken to be saying that there is an absolute prohibition but I wish to emphasise that it should be recognised that whenever a solicitor, either personally or through his company, seeks to deal with his own client then the potential for conflict is so great that it will only be in rare cases that such a dealing could be acceptable. Having said that, it is important to remember two things in this case. Firstly, this is not a civil claim in which it is asserted that a solicitor has breached his or her fiduciary duty to his clients or exercised undue influence. It is a reference in a disciplinary proceeding in which the ultimate question is "Has it been shown that the solicitor was guilty of professional misconduct?" In this context it is well to remember the dictum of Rich J in Kennedy v Incorporated Law Institute 13 ALJ 563, to this effect: "A charge of misconduct as relating to a solicitor need not fall within any legal definition of wrongdoing. It need not amount to any offence under the law. It is enough that it amounts to grave impropriety affecting his professional character and is indicative of a failure either to understand or to practise the precepts of honesty or fair dealing in relation to the courts, his clients or the public. The particular transaction must be judged as a whole and the conclusion drawn whether it betokened unfitness to be held out by the court as a member of a profession in which confidence could be placed." Secondly because of the grave nature of the charges there must be clear proof of the facts said to give rise to the misconduct so as to induce "on a balance of probabilities an actual persuasion of the mind as to their existence" (Rejfek v McElroy 112 CLR 517, at 521; Briginshaw v Briginshaw 60 CLR 336, at 362). I turn then to the first category of charges. The first relevant finding was that the appellant failed to disclose to his client, R. and I. Barnsley Pty Ltd, the true nature of the mortgage and loan transactions involved in the transfer to that client of the interest of HMC in certain loans and mortgages. This question was wrapped up with two others, whether he had failed to disclose his interest in HMC and failed to advise the client to seek independent advice, but insofar as findings were made in his favour on those questions there is need only to consider the assertion that he failed to disclose the true nature of the transactions. There was an initial issue as to whether Mr Barnsley or his company was a client of the appellant in the transactions in question. It was not disputed that the appellant had acted for Mr Barnsley on earlier occasions but the appellant contended in evidence that he was not doing so on those occasions in which Mr Barnsley's company took an assignment of a mortgage from HMC. As I understand the reasons of the Committee it broadly accepted that this was so but proceeded upon the basis that the relationship of influence which arose during the time when Mr Barnsley was a client of the appellant continued and pervaded the transactions in question. This conclusion is drawn, in essence, from two statements in the reasons. They read: "Mr Barnsley was a client of the solicitor. He was a farmer and controlled R.I. Barnsley Pty Ltd, a company which was registered as a money lender since about 1981. The solicitor had acted for him in relation to enforcing securities under various mortgages where default had occurred and also in a number of advances where he had been contacted by borrowers and had decided to enter into mortgages. In none of these was his firm otherwise involved." And later: "At the point of time when the solicitor introduced HMC to Mr Barnsley the solicitor had acted for him in a number of transactions. There existed a solicitor/client relationship between them. Mr Barnsley's decision to enter into the dealings and his decision not to require legal advice must be seen in the context of that existing relationship. That relationship did not come to an end by reason of the fact that in the particular transactions the solicitor did not act for R and I Barnsley Pty Ltd or that in other transactions various other solicitors acted for Mr Barnsley and his interests." There is an initial problem with this approach in that the question submitted, on its strict construction, proceeded upon the basis that Mr Barnsley's company was the appellant's client in the particular transactions. The committee appears to have decided that that was not so and strictly therefore it seems to me that the question which was submitted should have been answered no. However, it may be that, in the manner in which the case was litigated, it was open to the Committee to adopt the approach that while the appellant did not act for the Barnsley company in these particular transactions, the fact that he had earlier acted for Mr Barnsley in other transactions gave rise to a duty in the appellant to disclose the true nature of HMC's involvement in the transactions. It is appropriate therefore to consider the Committee's answer upon the basis that the question was wide enough to cover the circumstance that Mr Barnsley had been a client of the appellant. It is not difficult to perceive that in particular circumstances the fact that a solicitor had acted for a particular client in a number of transactions might require him to make full disclosure to that client in respect of a transaction in which he was proposing to deal with his client even though he did not intend to, and did not, act for the client in the transaction in question. That situation would arise, for instance, if there was a continuing relationship of solicitor and client and the solicitor purported to deal with his client in a commercial matter in which he declined to act for the client. In those circumstance a prima facie duty would arise to make full disclosure and, probably to advise that the client should obtain independent legal advice, would arise. But there may be other circumstances when no such duty arose. If the solicitor had acted for a client in one transaction and years later purported to enter into a commercial dealing with him, although not acting for him, then it would be unlikely that any such duty would arise. The question is, like those concerning a solicitor who, once having acted for one side in litigation, thereafter seeks to act for the other (see Rakusen v Ellis Munday & Clark (1912) 1 Ch 831; D & J Constructions Pty Ltd v Head & Ors (1987) 9 NSWLR 118) one of degree involving a consideration of all circumstances. Accordingly, it is necessary to analyse the relationship between the appellant and the Barnsley company in order to determine whether the appellant became obliged to disclose to the Barnsley company the true nature of each of the transactions and in particular whether he was obliged to inform that company that no money was lent by HMC and that in each case the loan moneys were provided by the Barnsley company. I have adopted the language of the Statutory Committee in phrasing the question in that way although I have some difficulty in understanding the nature of the failure in the light of the passage from the evidence of the appellant which the Committee set out in its judgment. That passage reads: "I told him that the Home Mortgage Corporation was lending money to people on mortgage to Home Mortgage Corporation, and in a way it was exactly similar to a transfer by direction in real estate; that that mortgage would be immediately transferred to the purchaser of the mortgage, and the funds that were used to purchase the mortgage, less the premium for the mortgage, would be passed on and used as the funds were advanced to the borrower. In the same way the funds provided by a purchaser are passed through a transferring purchaser to an ultimate purchaser of real estate being transferred by direction." What I would understand the appellant to have been saying was that the moneys provided by the ultimate lender were the moneys which were made available to the borrower and that HMC was not itself providing the funds. It may be, however, that this appeal should be approached upon the basis that, inferentially, the Committee rejected that evidence. It is a difficult inference to draw when one appreciates that on a number of aspects the Committee accepted his evidence and his evidence was corroborated in material respects by that of Mr Barnsley. Nonetheless I will proceed on the assumption that that inference was drawn. What the evidence demonstrates is that while the appellant had, prior to introducing Barnsley to HMC, acted for him he did not act for his company on the occasions in question. Furthermore, in nearly every instance in which the Barnsley company took an assignment of a mortgage from HMC Mr Barnsley dealt solely with Mr Flint. He was aware that the appellant acted for the mortgagors, in some instances at least, but he himself had little, if any, contact with the appellant concerning these transactions. In saying this I am paying particular regard to the evidence of Mr Barnsley which was tendered in support of the appellant's own evidence. He made it quite plain that while he had been told by the appellant to get independent legal advice he neither sought it nor wanted it. The appellant had not acted for him or his company in regard to the transactions under consideration, nor had he relied on the appellant at any time for advice as to whether he should enter into any transaction with HMC. These circumstances do not provide a basis, in my opinion, for determining that, in substance the previously enjoyed relationship imposed a fiduciary duty under which the appellant was required to disclose every relevant fact about HMC and its operations to Mr Barnsley. It would seem that Mr Barnsley's previous experiences with the appellant and his satisfaction with the work performed by him were operative factors leading to his decision to deal with HMC but as the appellant told him to seek independent legal advice and neither invited entry into any particular transaction nor took any part in it, except insofar as he acted for mortgagors, no reason appears for imposing on the appellant the duty with which he had failed, according to the findings, to comply. Accordingly, in my opinion, the Committee erred in concluding that an affirmative answer should be offered to the question. I would add this final comment. Even if I be wrong and there was a relevant duty in the particular circumstances of this case it seems to me that the breach, if any, was of such a technical nature that it could not have provided grounds for a finding of professional misconduct. All that could be said is that the appellant failed to bring home to Mr Barnsley the finer details of the transaction in circumstances where he did provide a workable outline of its method of operation. The next question to which an affirmative answer was tendered was Question 3 which read: "The solicitor failed adequately and properly to protect the interests of his clients." Particulars were furnished of four instances in which this was said to have occurred and the affirmative answer was only proffered in answer to Particular 4 which itself read: "The solicitor failed to advise clients for whom he acted, and in particular F. & M. Borsonne, W. & S. Reeves and Mr and Mrs Romstein, that payments made by them to HMC by way of a fee for the provision of a guarantee to HMC of the client's indebtedness under the respective mortgages and loan were paid to two companies, Trouber 194 Pty Ltd ("Trouber") and Chrymall Pty Ltd ("Chrymall") which companies had no, or no sufficient, assets to honour any such guarantees. The Committee found that although the appellant disclosed his interest as majority shareholder in HMC and Trouber he did not discuss the financial position of Trouber with the clients nor disclose that it was a company which had insufficient assets to honour any guarantee. (Chrymall, which was also referred to in the particulars, was, it would seem, quite irrelevant.) This finding was clearly open on the evidence. Accordingly, the Committee correctly answered the question "Yes". However, the furnishing of that answer to the specific question which was raised does little to assist in a determination whether the solicitor had been guilty of professional misconduct. It simply reveals that in a particular respect the solicitor failed to pass on information to clients which, in strictness, he should have. The evidence however goes further and reveals a number of unsatisfactory aspects of the appellant's dealings with these clients involving, on occasions, actual conflicts of interest and duty. The difficulty is that this particular question did not raise any complaint about those aspects, to which I will later refer, and raised what was, in effect, a charge of misconduct in failing to make a specific disclosure. The manner in which this question was expressed led, in my opinion, to considerable difficulties in the formulation of the issues which the Committee were called upon to determine and created even greater problems for the Committee when it came to pronounce its findings. I will return to that matter when I consider the next question but for the present it is sufficient to reiterate that Question 3(4) was correctly answered "Yes". The next question reads: "Whether the solicitor wrongfully intermingled his personal financial affairs, or the financial affairs of companies in which he had a personal interest, with the financial affairs of his clients?" Seven clients, all of whom were mortgagors, in addition to R. & I. Barnsley Pty Ltd, were named in the particulars supporting the question. Difficulties arose during the hearing of the appeal when the appellant's senior counsel, Mr R.V. Gyles QC, complained that the respondent was seeking to advance arguments in support of the orders made by the Statutory Committee which had never been put below. According to Mr Gyles the two separate bases on which it was being urged the court should uphold the findings of the Statutory Committee were never the subject of consideration before the Statutory Committee. Accordingly, it is necessary at the outset to examine the terms of the questions raised and the conduct of the hearing at first instance in order to ensure that the ultimate orders were based upon the matters initially raised for the consideration of the Committee and that the Court, on appeal, confine itself to a review of the orders in the light of the issues which were contested before the Committee. It is not surprising that difficulties have arisen. Question 6, and in particular 6(f), were framed very generally and lacked the particularity necessary to alert the appellant to the case which he was obliged to meet. The question raised in general terms the issue whether he had wrongfully intermingled his personal financial affairs, or those of his companies, with the financial affairs of his clients. In support of the case being made by the respondent particular (f) asserted that HMC, the appellant's company, dealt with seven named clients of his in making loans to them and in those transactions the appellant acted for both borrower and lender. The other particulars, with two exceptions (6(b) and 6(g)), simply referred to a few instances in which other companies of the appellant borrowed moneys from his clients. While there was posed the question whether there had been wrongful intermingling there was no specification of the manner in which the appellant had improperly conducted himself nor did the question or the particulars raise a case of specific misconduct. For instance, it was not said that he improperly profited from dealing with a client or failed to make full disclosure to a client. In paragraph 6(f) it was said that the appellant frequently dealt with his clients but it is unclear whether it was being asserted that he frequently dealt with the named clients or whether he frequently dealt with clients generally of whom the named ones were but examples. This is of importance for it is one thing to say a solicitor systematically breached his duty and quite another to say that he did it on a few specified occasions. In short, the terms of the question were quite unsatisfactory and failed to bring home to the appellant with the required degree of specificity the nature of the case that was being made against him. In my opinion, it is no answer for the respondent to assert that the proceedings were of an inquisitorial and not adversary nature and that it was sufficient if the nature of the case emerged during the inquisition. This court has said on more than one occasion that despite the nature of the proceedings natural justice requires that the solicitor being brought before the Statutory Committee be apprised in clear terms of the nature of the case which he or she is called upon to meet. In Johns v Law Society of New South Wales (1982) 2 NSWLR 1, Moffitt P said at 6: "However, despite the investigative nature of proceedings before the Committee when questions are referred to it by the Law Society, and despite the non adversary nature of disciplinary proceedings before the court, a solicitor or barrister should be made aware of precisely what is put against him before a decision is come to or an order made adverse to him. In many cases where 'questions' are referred to the Committee by the Law Society, an investigation has already been made by or on behalf of the Law Society, and, while the proceedings before the Committee retained their character provided by s.76, in reality precise matters are being alleged against the solicitor so as to be susceptible of either particularised questions or of general questions supported by particulars." The opinion which the learned President there expressed could be described as a conventional one and conforms with the manner in which disciplinary proceedings are in general conducted in other states and countries with similar legislative provisions. (See Lau Liat Meng v Disciplinary Committee (1968) AC 391 at 403-4..) Recently the full Supreme Court of Victoria in a judgment delivered in December 1987 said: "It is sufficient to say that a solicitor presented before a full hearing of the Solicitors' Disciplinary Tribunal should be made clearly aware, before the hearing commences, of that with which he is charged, and what material facts are alleged to constitute the charge or charges against him." (R v Solicitors' Disciplinary Tribunal 1988 VR 757, at 770.) 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 the light of 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 wish 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 of 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: "A solicitor ought not to 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." (at 172). That 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 used frequently since, sometimes in cases far removed from 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. While there is an initial problem in determining whether the Committee confined its consideration to question 6(f), which is mentioned in a sub-heading, or dealt generally with question 6, it is, I believe, appropriate to approach the present issues upon the basis that it adopted the latter course. In seeking to find the appropriate answers to the question the Committee made a number of findings many of which have already been dealt with in my initial observations. In addition it found that Kemu and Cenelit Pty Ltd ("Cenelit"), which were, in effect, the appellant's companies, borrowed moneys from Henk Holdings Pty Ltd, a client of the appellant, in February 1983. It also found that Cenelit borrowed money in December 1982 from Delnor Pty Ltd, which was the family company of Paul Gase an employee of the appellant. A further finding which the Committee made was that Kemu operated in the business of conveyancing agents, performing registration and similar services for clients of the appellant for which services the clients paid. In the final paragraph of the findings concerning question 6 the Committee said: "HMC frequently dealt with clients of the solicitor in connection with loans and mortgage advances to those clients which had been negotiated by HMC. The solicitor acted for HMC and for the borrower clients. In some of these transactions Citicorp Australia Ltd and Beneficial Finance Ltd were lenders by virtue of having provided the funds which were made available to the borrowers and in these transactions the solicitor acted for the lenders as well as for the borrowers." The Committee then answered question 6 "Yes". As I understand these findings the committee concluded that the appellant received financial benefits from HMC and that insofar as he acted for borrowers from that company he was wrongfully intermingling his affairs with those of the borrower clients. In the cases of Kemu and Cenelit he was again wrongfully intermingling his affairs with those of the lender client, or in the case of Delnor a company owned by his employee. It would appear that he was also found to have been acting wrongfully in permitting Kemu to charge his clients for its services. Mr Gyles submitted that these findings demonstrated that the legal basis upon which the Committee acted was that a solicitor, or his company, was forbidden the right to borrow moneys from a client or to act for a person who was borrowing money from his company. There was an absolute prohibition on intermingling. This was, according to Mr Gyles, a wholly misconceived approach and involved a misunderstanding of the relevant legal principles. He submitted that, while it might be correct to say that if a solicitor intermingles his affairs with those of his clients in the manner in which it was said the appellant did on this occasion that intermingling is prima facie wrongful, the ultimate question depends upon an examination of the solicitor's retainer and the facts in each particular instance. In this case, Mr Gyles complained, there was no examination in the findings of the retainer pursuant to which the solicitor acted on the occasions in question, nor did the~ Committee disclose in what manner the intermingling, or acting for the client, was said to be wrongful. Accordingly, it was argued that legal error was disclosed in the Committee's findings and that it should be set aside. Because of that legal error the Committee had failed to undertake the task imposed on it of determining whether in the circumstances of each particularised transaction the appellant's conduct departed from the required standards and, if it did, whether that departure constituted professional misconduct. In examining this submission I have proceeded upon the basis that, while there was a degree of overlap between the questions, the committee exposed its reasons for proffering an affirmative answer in the paragraph under discussion. Upon that basis I have concluded that there is force in the appellant's submissions. The Committee has taken the stand that it was wrong of the appellant to act for borrowers from HMC notwithstanding the particular circumstances and whether or not, for instance, independent advice was given or full disclosure made. That conclusion is reinforced by the Committee's later reference to a passage in the judgment in Harvey's case (at 171) in which the Chief Justice makes this statement: "Therefore he ought neither to promote, suggest nor encourage a client to deal with him, but rather he should take all reasonable steps positively to avoid dealing directly or indirectly with his client." But in my opinion that statement does not mean that in every case, and no matter the particular circumstances, that a solicitor borrows from, or lends to, a client he will be guilty of professional misconduct. There is a need to examine the particular circumstances in all but the clearest of cases in order to determine whether there has been a breach of any duty by the solicitor and whether that is a serious matter such as to justify a finding of professional misconduct. In this case one needs only to refer to two of the clients mentioned in the particulars, and by the Committee, to indicate the diversity of the circumstances of the transactions called in question. One involved Mr and Mrs Romstein. They were in a desperate financial situation and had no security to assist them to obtain a loan. They had a pending third party action in which the appellant was acting. He suggested that funds might be made available through HMC upon the security of an irrevocable authority to apply any verdict moneys in discharge of the debt. The Romstein's took advantage of this offer and a loan was negotiated in which the ultimate lender was Mr Barnsley's company. HMC obviously obtained some financial benefit from the transaction but Mr Barnsley was well aware of the nature of the advance and the Romsteins were greatly advantaged by it. There are, no doubt, certain aspects of the transaction in which the appellant failed strictly to comply with the duties imposed upon him as a solicitor dealing with his client. But I am far from saying that those matters would lead to a finding of professional misconduct. A more usual instance of the conduct complained of occurred in the case of W.R. & R.V. Ellis. They borrowed moneys from HMC in 1983 after seeing an advertisement in the Daily Telegraph. They had no solicitor and advised Mr Flint that they were happy for the appellant's firm to act as their solicitors. They did not meet the appellant who merely prepared the relevant documents and dispatched them for execution in Muswellbrook where they lived. Indeed the only contact that they had with the appellant was in 1985 when, having been unable to raise Mr Flint, Mr Ellis spoke to the appellant on the telephone and arranged a two year extension of the mortgage. In this instance the client, who acknowledged his satisfaction with the transaction, negotiated the advance himself and retained the appellant solely for the implementation of the loan he had secured. While it could be said that the appellant should have made full disclosure of his interest in HMC and given advice to Mr Ellis concerning the guarantee before undertaking to act for him I find it difficult to see that the appellant, in his dealing with Mr Ellis was guilty of professional misconduct. But whether or not that is correct the circumstances simply were not investigated in the findings. Similarly none of the other matters identified in the particulars were subjected to the requisite analysis. The Committee simply proceeded upon the basis that he had dealt with his clients and had therefore wrongfully intermingled his affairs with those of his clients. The premise that any dealing was necessarily wrongful was, in my opinion, erroneous. Accordingly it would seem to me that the appellant has made good his challenge to the answer furnished to this question. The respondent has, however, sought to persuade the court that it should furnish a similar answer to question 6 upon grounds appearing in the evidence but not the subject of express findings by the Committee. Mr Taylor, counsel for the respondent, submitted that the evidence demonstrated that the appellant had indulged in conduct which gave rise to two significant areas of breach of duty. In the first place he contended that the appellant was involved in a scheme the purpose of which was the systematic extraction of moneys by HMC from clients of the appellant in return for which they received no appreciable benefit. The scheme involved the appellant in repeated conflicts of interest on a regular basis. In short the appellant set up a system designed to "cream off" (to use the colourful expression which found its way into the discussions during the hearing) moneys from clients without any regard for his obligation to avoid conflicts of interest and duty. It was a case of the deliberate pursuit of self interest. In the second place the appellant had repeatedly failed to observe his duty towards his borrower clients and to protect their interest, He did so, in the main, by failing to disclose to them that HMC was not advancing moneys of its own and that all it was doing was assisting them to obtain an advance from either a large commercial lender, such as Citicorp or BF, or a small investor. This failure was compounded by his non-disclosure that HMC was extracting from them a guarantee fee in respect of a guarantee provided by a worthless company. The whole situation was made even worse, so it was said, by the appellant's failure to advise the borrowers that they may be disadvantaged financially in accepting the loan from HMC and that, in any event, the guarantee for which they were paying a fee was, given the guarantor's rights of subrogation, of no real benefit to them. These submissions and the manner in which they were developed led Mr Gyles to complain that the respondent was seeking to make a wholly new case, which had not been the subject of any of the questions referred, upon the hearing of the appeal. Upon this complaint being made Mr Taylor conceded that the matter of the appellant's failure to make proper disclosure and to give proper advice to the borrower clients had not been raised as such, before the statutory committee. He sought to justify his reliance upon these particular non-disclosures, which, in fairness, it should be pointed out he emphasised following some questions from the bench, upon the basis that the intermingling raised in question 6 had to be evaluated against the adequacy of the disclosure. The concession that is made in my opinion requires the court upon the hearing of the appeal to decline to uphold the Committee's orders upon the basis of a failure to make full disclosure of those matters to the borrowers. The principles expressed in Coulton & Ors v Holcombe & Ors 162 CLR 1, binding parties to the manner in which they conducted the case at first instance, apply without qualification to a case such as the present. The basis of the principle is that it would be unjust to permit a party to depart from the stance which it had taken in the court at first instance and to endeavour to run, on appeal, an entirely fresh case which was not the subject of consideration by either the parties or the first instance tribunal. Despite the investigative nature of the proceedings before the Statutory Committee the dictates of justice require that that rule apply with equal force upon an appeal from a decision of the Statutory Committee. Counsel did not make the same concession in respect of the submissions he made concerning the systematic extraction of moneys from borrowers but contended that the case properly arose for consideration under question 6. That question, which I have already set out, did raise a very general question but immediately limited the breadth of inquiry by the provision of particulars. Those particulars did not suggest a scheme or system but directed attention to a small number of specific instances. What fell to be investigated under the question therefore was whether there had been wrongful intermingling in those specific instances to which reference was made in the particulars. I am unable to accept the proposition that the respondent is entitled to disregard the particulars and to raise a case of systematic breach of duty for the first time on the appeal. I recognise that the Statutory Committee itself failed to recognise the ambit of the question posed. In failing to identify the precise area of inquiry under question 6 and to address its findings to the issues properly raised under that question it appears to have disregarded the words of caution of Moffitt P in Johns. Accordingly, it is not open to the respondent to seek to support the affirmative answer upon the basis of the submissions to which I have just referred. The conclusion is not entirely satisfactory but is dictated, I believe, by the fact that this is an appeal under s.75A of the Supreme Court Act and that the Court in considering that appeal should, except in the limited circumstances referred to in Suttor v Gundowda Pty Ltd 81 CLR 418, at 438, confine the parties to the issues contested below. Even more importantly it needs to confine the respondent to the case which it sought to make in the questions which it referred to the Statutory Committee. There is however a problem. During the appeal the court has been referred to evidence in the case which provides prima facie support, at least, for the assertion that the appellant did breach his duty fully to inform and properly to advise the borrowers of the nature of the transaction and the circumstances surrounding the payment of a guarantee fee. The question which then arises concerns the course which the court should take in the light of that evidence. This question is best left for consideration after I have dealt with the other issues which arise. The Statutory Committee also found that the appellant had breached s.41 and 42 of the Legal Practitioners' Act but proceeded to conclude that the breaches were not wilful. Accordingly they do not automatically constitute professional misconduct s.43) and it will be necessary to have regard to these findings, from which no appeal has been brought, in determining whether misconduct has been shown. It is convenient to deal next with the final matter raised by the appellant which was the finding that the appellant had breached reg 29(1) of the Solicitors' (General) Regulations. That regulation bars a solicitor from touting or acting in such a manner as calculated to attract business unfairly. The Committee found that in 1982 and 1983 HMC had business premises immediately next door to the appellant's practice on the fifth floor of 410 Church Street, North Parramatta and concluded that, while HMC's office was fully partitioned from the solicitor's office and had a separate entrance door which clearly identified its office, the proximity between the two offices was so close that there was a breach of reg 29(1). I am far from persuaded that the mere proximity of the offices justifies a finding that the regulation had been breached but whether it was or not is a matter of small import in this case. That is because even if the appellant did breach the regulation in the manner, which I regard as technical, found by the Committee that breach would provide no basis, whether viewed in isolation or in conjunction with other matters, for a conclusion that he had been guilty of professional misconduct. Given the changed community attitudes to advertising in the legal profession it seems to me unfortunate that this unimportant matter was introduced into what was, on any basis, a lengthy and complex investigation. I turn then to consider the second category of the questions. What was said was that the appellant had lied to, and deceived, the Law Society and the Statutory Committee. It should be said at once that a finding that a solicitor has deceived a court or tribunal provides compelling evidence of his unfitness to practise. The profession is an honourable one and nothing less than complete honesty and candour in all instances is acceptable. The client should be entitled to rely on the truthfulness of all that he is told. The courts should likewise be entitled to accept without question assertions made by a solicitor. If a solicitor is found to have deliberately lied to a client or to the court then he has failed, in a fundamental respect, to adhere to the required standards. (See Law Society of New South Wales v Veron 84 WN Pt 1 136; The New South Wales Bar Association v Kalaf NSW Court of Appeal, 11.10.88, unreported; The Law Society of New South Wales v Jones, NSW Court of Appeal, 27.7.78, unreported; Kotowicz v Law Society of New South Wales, NSW Court of Appeal, 7.8.87, unreported.) But care must be taken in reaching a conclusion that the solicitor has lied or deceived the tribunal. In particular there is a need to distinguish carefully between cases in which the evidence of a solicitor is not accepted and those in which there is an affirmative finding that he has deliberately lied or sought to mislead the tribunal. It goes without saying that a tribunal needs to be satisfied to that degree of persuasion which is necessary to satisfy the Briginshaw test before it can properly make a finding that a solicitor has lied or deliberately deceived the tribunal. The appellant complained through his counsel both during the hearing before the Statutory Committee and the appeal that the introduction of the allegations of deception at a very late stage in the hearing and after the appellant had been cross-examined effectively breached the rules of natural justice. The respondent replied by pointing out that the courts had on more than one occasion said that a solicitor who deceived the Committee would almost certainly be guilty of professional misconduct and that charges asserting that he deceived the Committee could not be laid until after he had given his evidence. Mr Taylor went so far as to say that the charges, or questions as they are more accurately described, were made the subject of the supplementary reference in order to enable the appellant to know the case he was to meet and to facilitate his opportunity to reply to that case. This answer is an effective riposte to those additional questions which asserted that the appellant lied before the Committee. They do not, however, provide any answer to his complaint that if he were to be charged with lying to the Law Society or its investigators in 1983, or at any time before the commencement of the hearing, it was quite unfair to delay the preferment of questions raising those charges until after he had given his evidence and been cross-examined. No reason has appeared from the material given in evidence, nor in the reasons of the Statutory Committee for allowing the supplementary reference to be relied upon in the hearing, which exposes a sound basis for raising matter which should have been raised prior to the commencement of the hearing at a time when the appellant's evidence had been concluded. The course followed necessarily involved a degree of unfairness to the appellant which, in my opinion, should have been avoided. Nonetheless it lay in the discretion of the Committee to allow that course to be taken, and apart from observing that the introduction of questions concerning deception at points of time earlier than the commencement of the hearing gave force to the appellant's complaints of unfairness, I see no reason for dwelling upon this subject. There is a difficult question whether the deception alleged in fact occurred. In this respect it is important to bear in mind the clear distinction between a conflict of evidence which is explicable upon the basis that witnesses have different recollections as to what occurred and those conflicts the circumstances of which indicate that one or other party is deliberately lying. In this case the problems facing the court have been exacerbated by a difference of viewpoint between the appellant on the one hand and the Statutory Committee on the other hand as to the true nature of the business of HMC and the appropriateness of the view, to which the appellant adhered to the end, that HMC was not a mortgage broker but granted loans upon the security of real property mortgages which it then assigned. Many questions were directed by members of the Committee to the appellant on this subject and in a sense this aspect of the case, which was relatively unimportant, tended to distract attention from the questions at issue. In saying this I do not wish to be taken as suggesting that a serious question did not arise as to whether the appellant's involvement in HMC gave rise to serious questions. Rather I seek to emphasise that the questions raised were ones of substance and not form. It did not matter whether the business was described as that of a moneylender or a mortgage broker. The question at issue was whether the appellant had involved himself in unacceptable conflicts of interest. While I would agree with the Committee's expressions of opinion that it was probably more accurate to describe HMC as a mortgage broker I do not believe that it mattered whether the appellant shared that view or not. Furthermore, I would not be prepared to accept that if he adhered to his conviction that HMC was a money lender he was lying. Of course this court did not see or hear the appellant give evidence and did not enjoy the advantages of the Statutory Committee. That body was much better placed to determine whether the appellant's evidence should be accepted or rejected and whether he was lying. The restraints which require an appellate court to interfere with findings of a trial court on questions of credibility apply with equal force in the present situation. The court could only come to the conclusion that the findings of the committee were not justified upon the most cogent grounds. The first relevant question was whether the solicitor falsely stated in submissions to the Law Society in October 1983 that he did not carry on the business of HMC. The committee said, inter alia, this about that submission: "The solicitor's initial statement was in his submission to the Law Society of 16 October 1983 where he said: 'I am not carrying on HMC's business ... the business has its own manager and contacts the public only through that manager and not through me or my employees.' This statement, confirmed in his declaration of 4.10.85, was false as can be seen from the solicitor's own evidence: 'Q. What were you doing in May 1983? A. I was looking after all three offices, and helping Flint and HMC to get established. Q. So you were running in part your legal practice and running in part HMC? R. A. That's correct.'" While I would not wish to convey the impression that this was the only evidence referred to by the Committee it is patently clear that this piece of evidence did not falsify his earlier statement. The evidence concerned May 1983 when the business was being set up. The submission related to a date some five months later when, no doubt, the manager was far more experienced and playing a far bigger part in the business of HMC. His evidence neither addressed nor falsified the earlier statement in his submission. But that is only one of the problems with the Committee's finding on this issue. When the appellant said that the business had its own manager and contacted the public only through the media and not through him or his employees he was making a statement which appears from the evidence to have been, in substance, correct. In these circumstances his expression of opinion that he was not carrying on the business seems to have been a permissible view. No doubt others could hold a different view but that does not mean his expression of the situation should be treated as a lie. The business was being carried on in October 1983 by Mr Flint and the company's employees and whatever the appellant's participation I do not accept that his statement that he was not carrying on the business could be regarded, in its context, as an act of deception. What must be recognised is that there can be genuine differences of opinion where questions of degree are involved. It is quite different to the situation which would arise if, for instance, he had said that he never signed letters on behalf of the company and the evidence demonstrated that he signed many such letters. In my opinion the Committee erred in the conclusion that the appellant deliberately lied in an endeavour to deceive the Law Society when he made the statement referred to. Questions 15F and G also involve statements to the Law Society. The appellant was said to have lied in a letter of 23 March 1983 to the Law Society when he said that "the only source of loan funds that the company has is from capital contributed by myself and my wife or from profits generated from the sale of mortgages". This statement, it should be remembered, was made at a time when the business was just starting. In evidence given years later he conceded that the only funds which had ever been available during the course of the operations of HMC were the funds generated from the sale of mortgages. As events turned out neither he nor his wife provided any capital. I am not sure that it matters, or at any relevant stage mattered, whether capital was provided by himself or his wife. But even if this is to be treated as an important matter I am unable to discern any rational basis upon which it could be said that his statement was a deliberate falsehood and demonstrated deception. When he made the statement he may well have intended that capital funds be made available and later changed his mind. Nothing in the evidence denied that possibility. Question 15G raised the issue whether the appellant had falsely stated that he did not say to an inspector Mr Wheeler that HMC made loans from capital supplied by him and his wife. On its face this raises a different question than 15F. But the particulars suggested that the question focused on the statement he made in his letter of 23/3/83, which he handed to Mr Wheeler, rather than any oral statement. Indeed the Committee seems to have understood the question in that way for it makes no mention in its reasons of any oral statement. In my opinion the statement, already set out, in his letter, provides no basis for the falsehood found. In any event the letter of 23 March 1983 was with the Law Society and it is hardly to be expected that in his submission later that year he was denying what he earlier said. The other questions (15B, 15C, 15D, 15E) raised issues that he had lied in his evidence. One answer, that proffered to question 15E, was in my opinion misconceived. He said in evidence that he had no interest whatsoever in money paid to HMC. The Committee accepted that this was technically correct but, taking the view that the question had been asked in a general sense, thought it was not a true answer. I confess to difficulty in understanding how an answer which is accurate, in the technical sense, could be regarded as a deliberate falsehood. Leaving aside my problems in understanding what precisely was meant by the 'general sense', I can discern no basis upon which it could be said that the appellant necessarily appreciated that the questioner was seeking an answer technically incorrect and that any failure to provide that answer was a deliberate falsehood. I do not believe that the answer to that question can be supported. That leaves only the answers to questions 15B, 15C, 15D in which he was said to have given false evidence in October 1985 as to the divestment by his wife and himself of their shares in HMC and as to the relative parts in the operation of HMC played by himself and Mr Flint. As to the former there was, it seems to me, material upon which the Committee was entitled to conclude that the evidence was erroneous and, more importantly, falsely given. No basis appears why this court should interfere with those findings. As to the latter the position is more complicated. There was a conflict of evidence between Mr Flint, whom the Committee accepted, and the appellant. There was also some objective evidence which tended to support Mr Flint's testimony. Given the advantaged position enjoyed by the Committee and the limited right of this Court to interfere in findings of credibility which are inherently credible and which are supported by the evidence the Committee's findings in this respect are not open to attack. However, what should be emphasised is that this particular evidence related to the degree of the appellant's involvement in the management of HMC. This was, at best, a peripheral matter. What was in question was his conduct as a major shareholder in HMC towards his clients. What was important was the existence or possibility of conflict of interests which arose when the appellant sought to deal with his clients. The fact that he might have made some assessments of the amount of mortgage guarantee fees or done other administrative work for HMC does not, it seems to me, bear directly on the issue of conflict. Nonetheless, the finding that he did make a false statement in evidence must stand. In the light of these conclusions I turn to consider the question, which was not directly adverted to by the Statutory Committee in its findings, whether the appellant should be found guilty of professional misconduct. Obviously the findings of legal error on the part of the Committee vitiate its final order and it is necessary for the Court to undertake the task upon the basis of the findings which remain. Those findings in essence establish that the appellant failed to advise a number of clients that one of the guarantor companies had no assets to honour the guarantee, the appellant had, although not wilfully, breached ss. 41 and 42 of the ®MDBR¯Legal Practitioners' Act®MDNM¯ and had given false evidence in instances, on peripheral matters to the Statutory Committee. In determining whether professional misconduct has been shown it should not be overlooked that the appellant faced a number of additional charges alleging, inter alia, failure to disclose and failure to advise clients to seek independent advice, upon which he received favourable answers. It was, it seems to me, demonstrated that he always disclosed his interest in HMC and invariably advised clients to seek independent legal advice. The question posed is a difficult one in the circumstances, particularly as some material respects in which the appellant appears to have failed the appropriate duties of disclosure and properly protecting the interests of the borrowers, were not raised in the reference and thus not properly submitted for the consideration of the Committee. At an earlier stage in this judgment I adverted to this problem. It is now necessary to consider whether, these matters not having been litigated, an order should not be made referring those particular questions to the tribunal recently constituted to deal with complaints against solicitors. In view of the changes in the law it is no longer possible simply to refer these additional questions to the Statutory Committee under s.76 of the Legal Practitioners' Act. The considerations which move me to reject the making of any such order are also relevant upon a consideration of the ultimate order which should be made in this case and I set them out. The appellant is a forty-one year old man who was admitted to practise on 28 July 1972. He has since then practised except for a period in 1973 when he was ill. During that period it would appear that with the exception of the present matters his practice has been conducted at all times properly and that nothing unfavourable is known about him. His problems started with his rather ill-considered involvement in HMC. At a very early stage in that involvement, and after a routine visit by a Law Society inspector, he wrote to the Law Society disclosing his participation in the company. I have already referred to an alleged false statement made in the letter he then wrote but it is I think relevant to set out the substance of the letter itself. It read: "Re: Home Mortgage Corporation of Australia Pty Ltd Both myself and my wife, Ann Josephine O'Reilly, are the directors and shareholders of the above company. That company is involved in the granting and immediate sale of first mortgages. The company sells the mortgages to listed public companies at a premium which generate profits to the company. The company does not obtain funds from the public to lend. The only source of loan funds that the company uses is from capital contributed by myself and my wife and from profits generated from the sale of mortgages. Loans are granted both to clients of O'Reilly and Booth Solicitors and to members of the public other than clients. Full disclosure of the shareholding in the company is made to clients of O'Reilly and Booth - none to date. The company has only just commenced trading and it is expected that the majority of loans will be to persons other than clients of ours. The company does not pay interest to depositors. Indeed the company does not have depositors." It cannot be suggested that there was full disclosure of all those aspects of the operation of HMC which give rise to disquiet. For instance, the letter says nothing about the guarantee fees. But it does disclose the likelihood of loans by the company to the appellant's clients. The very dealing with clients which was the subject of question 6, and which proceeded upon the basis that there was an absolute prohibition against dealing with clients, was exposed in black and white. Following this letter the Law Society approved the appointment of Mr Batley as investigator under s.82A on 16 June 1983. Mr Batley, later in conjunction with Mr G.S. Lewis, conducted an investigation into the appellant's operations in the period between July and September 1983. During the latter month the appellant sought advice from Mr Tribe, a solicitor of long standing and good repute in the community who previously employed the appellant, and he was referred by Mr Tribe to Mr L.C. Gruzman QC for advice. There is no need to dilate upon the content of this advice. It is sufficient to observe that the appellant was sufficiently concerned to comply with the proprieties and started winding down the operations of HMC shortly thereafter. On 14 September Mr Batley submitted his report and following this the appellant was invited to make written submissions to the Law Society which he did on 16 October and which the Law Society acknowledged on 31 October. While there was other correspondence with the Law Society in the intervening period the next significant event was the resolution that he be referred to the Law Society on 30 May 1985. Despite the complaints that have been made of some of the statements in his initial letter to the Law Society and his later submissions, I cannot detect in them anything other than a desire to make disclosure of his activities. With hindsight no doubt he would have preferred that the disclosure had been fuller but nonetheless I accept that he was making a genuine attempt, particularly in his submissions to put the facts before the Society. He certainly was not endeavouring to conceal his activities and it is not suggested that he did not co-operate at all times with the investigators. It is not without significance in the present case that no client or borrower has come forward and asserted any disquiet or dissatisfaction with the treatment he received. Nor has any lender complained. On the contrary the evidence concerning Mr Ellis and Mr Barnsley tends to the conclusion that they were both very satisfied with their dealings with HMC and the appellant, knowing at all times of his involvement with the company. No one has lost any money. On the contrary on the only occasion that a mortgagor defaulted, Mr Barnsley's company had its loss made good by the appellant under his guarantee. The case bears no relationship to the facts in Harvey, or the later case of Law Society of New South Wales v Moulton (l981) 2 ,NSWLR 736, although it must be said that the system he adopted necessarily involved a conflict of interest between the appellant and his borrower clients. In all these circumstances I do not think that it is necessary to require any further investigation of the appellant's conduct. It seems to me that the misconduct proved against him and in particular the findings that he lied to the Statutory Committee, require the Court to conclude that he has been guilty of professional misconduct. I have not reached that conclusion without some hesitation but it seems to me that a demonstrated lack of candour to the Statutory Committee falls within the category of grave impropriety. That finding does not, however, lead inevitably to a consequential finding that he is unfit to practise. The powers afforded to the Statutory Committee under s.77 of the Legal Practitioners' Act, which are conditioned upon a finding of professional misconduct (Datt v Law Society of New South Wales 148 CLR 319), provide a clear expression of legislative intention that a finding of professional misconduct does not necessarily lead to unfitness. This conclusion clearly follows from the fact that the Statutory Committee is empowered to suspend, or fine, a solicitor. In my opinion the findings in this case when considered in the light of all the evidence, and in particular the matters to which I have just referred, do not demonstrate that the appellant is unfit to practise nor that the protection of the public requires that his name be removed from the Roll. In my opinion the demands of justice in this case will be properly met by the imposition of a fine of $5,000 and an order that the appellant pay the costs of the appeal. Accordingly, the orders I propose are as follows: (l) Appeal allowed. (2) Order of the Statutory Committee striking the name of the appellant off the Roll of Solicitors of the Supreme Court of New South Wales set aside and in lieu thereof order that the appellant be fined $5,000.00. (3) The appellant to pay the respondent's costs of the hearing before the Statutory Committee and of the appeal. 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