The Legal Services Tribunal of New South Wales CITATION : Yael Teresa Jimenez [1996] NSWLST 19 PARTIES : Yael Teresa Jimenez FILE NUMBER(S) : of 1995 CORAM: Mr G Molloy (Chairperson) - Mr C. Staff - Mr D Mahon CATCHWORDS: :- misappropriation not wilful but amounting to unsatisfactory professional conduct. LEGISLATION CITED: Land and Environment Court Act 1979 Legal Profession Act 1987 Re: Hodgekiss (1962) 62 SR (NSW) ; Richmond River Council v Oshlack (Court of Appeal No. CA 40120/94, 3 July, 1996); CASES CITED: Latoudis v Casey (1990) 170CLR ; Harold v Smith 5 H. & N. 381; Law Society v Jiminez (No. 24 of 1990, 30 October, 1995, unreported) DATES OF HEARING: 11 September 1996 and 13 September 1996. DATE OF JUDGMENT: 11/29/1996 LEGAL REPRESENTATIVES: Mr Jubb (Solicitor) (instructed by Mr G. Still ) for the Law Society of New South Wales. The Solicitor in person. JUDGMENT: Misappropriation of trust money – money held in a separate account for three and a half years – no records kept – practice sold – money withdrawn by solicitor – unusual circumstances – finding that misappropriation not wilful, but amounting to unsatisfactory professional conduct. Verdict money retained for costs – costs memorandum rendered to other party and paid – money not impressed with any trust. Alleged failure to comply with consent orders – misunderstanding – no adverse finding. Failure to advise client of counsel's advice – unsatisfactory professional conduct. Compensation – procedure to be followed. Costs – principles that apply. A lthough the facts are not in issue to any substantial o r significant degree, the conclusions are. The difference of opinion between the Law Society and the solicitor is illustrated by the fact that the Society submits that the solicitor's name should be removed from the Roll of Legal Practitioners whereas the solicitor submits that any proved misconduct is of an essentially minor nature. The Society preferred one complaint alleging professional misconduct and two complaints alleging unsatisfactory professional conduct but, as the case developed, the Society ultimately submitted that the facts revealed such a consistent failure to reach reasonable standards of competence and diligence that warranted the ultimate order for removal of the solicitor's name from the Roll. The question that this Tribunal has to determine is whether, on the facts, such an order is warranted. It is convenient to deal with the allegations in the order in which they were presented in the filed Information. Failure to Account: Any allegation of failure to account is a very serious allegation. What it essentially means is that the solicitor is alleged to have misappropriated (ie. stolen) moneys belonging to the client. The facts in support of this allegation can be summarised as follows: On 5 June, 1989 the solicitor settled certain workers' compensation proceedings for her client, in which her client was awarded $18,480.00, inclusive of medical expenses. In separate common law proceedings in the District Court, arising out of the same incident, the client was awarded $3,000.00 by consent with each party to pay its own costs. In the Terms of Settlement the $3,000.00 was stated as being a verdict and judgment in favour of the client but there was no issue before us that the $3,000.00 was in fact in payment of the solicitor's professional costs. Indeed, it is not unusual to craft Terms of Settlement in that way so that the verdict and judgment is entered in the sum agreed for professional costs but as a verdict and judgment. On 6 June, 1989 the solicitor sent to the solicitor for the defendant (in both proceedings) a memorandum of costs in total $7,375.00, which figure included profit costs on the workers compensation application of $2,800.00, common law costs as agreed in $3,000.00, various amounts for counsel's fees and various medical reports. Subsequently the workers compensation moneys in $18,480.00 were forwarded to the solicitor as were a cheque in $3,000.00 and a further cheque in $4,375.00, the last being the balance of the memorandum of costs. Shortly after receipt of the $18,480.00 the solicitor opened an account with the State Bank, Liverpool Branch in her name as trustee for the client and deposited into that account the $18,480.00. From that account she paid to the client $15,000.00, $80.00 to a doctor and $710.00 to another doctor, leaving a balance in the account of $2,690.00. It was conceded, but only after considerable argument, that the solicitor had failed to pay two doctors for three medical reports in total $355.00. It was also conceded, but again only after considerable argument, that on any view the client was entitled to the whole of the $2,690.00. The moneys remained in the trust account until 21 January, 1993 when the solicitor closed that account with a cash withdrawal to herself of $3,321.39, which sum incorporated accrued interest on the $2,690.00. In addition, the $3,000.00 (verdict moneys in the District Court common law proceedings) was retained by the solicitor in payment of her costs in circumstances where the solicitor did not provide the client with a memorandum of costs "in respect of the common law action". It was submitted by the Law Society that the solicitor was not entitled to retain those costs without such a memorandum and that the $3,000.00 should have been placed into a trust account for the client. Those were the basic facts upon which the Law Society submitted that there had been a misappropriation, a breach of Section 56 Workers Compensation Act 1926 (which prohibits a legal practitioner from deducting funds from award moneys) a breach of Section 61 Legal Profession Act 1987 and Regulation 8 Legal Profession (Trust Account and Controlled Moneys) Regulations in not keeping required records and in transferring moneys without the client's authority and misleading the Law Society in various subsequent correspondence by failing to advise that she had appropriated the $2,690.00 to her own use which moneys were held in trust for the client. The hearing of this matter occupied more than what was reasonably necessary on the basic facts simply because there was a continuing dispute about the nature and effect of the transactions. There seemed to be considerable confusion on what was the effect of the workers' compensation payment. And it took some considerable time to crystallise, to the satisfaction of all parties before us, the nature and effect of such a payment. Indeed, it was not until the second hearing day when this aspect was resolved. It is important at this point in the Judgment to clarify this issue: The starting point is the redemption order made by Commissioner Burchart on 5 June, 1989, for a lump sum of $18,480.00. It is important to recognise that it was in fact a redemption order ie. a redemption of the worker's (client's) entitlement to weekly compensation by way of a lump sum settlement. Consequently, it does not include medical and hospital fees, consultation fees, counsel's fees, solicitor's costs, qualifying fees and so on. These items are correctly covered by Order 2 which ordered that the respondent company pay "the applicant's costs (including fee for counsel, 3 qualifying fees and fee for counsel for advice on evidence) forthwith after they had been agreed or taxed". When a worker's compensation application is redeemed for a lump sum, the whole of the redemption sum is payable to the worker and is not to be syphoned off in various directions and, in particular, is not to be used to pay legal costs, counsel's fees, medical fees and so on. When the $18,480.00 was received by the solicitor it should have been paid direct to the client/applicant /worker. This was not done. It was placed into a controlled money account in the name of the solicitor in trust for the client. On any view, therefore, the client was entitled to the whole of the $18,480.00, not to the $15,790.00 only but also to the $2,690.00 that remained in the controlled money account. One assumes that the solicitor would have sought instructions from the client in respect of the orders made when the Award that was approved. The order for costs etc. appears to reflect what we would have assumed to have been an agreement reached between the respondent company and the solicitor and it appears that that agreement restricted to three the number of qualifying medical fees that could be recovered. It also appears that the client paid out $575.00 on account of various medical reports and consultations. It seems clear to us that on any view the client should have been reimbursed for those payments. The question is: from where does that money come? Answer: it comes from the claim that the solicitor makes against the insurer for costs and expenses. The solicitor, it seems to us, should have included in her account to the respondent company (through its insurer) all of the medical accounts paid by the client. Unfortunately, she did not include those payments amounting to $575.00 but she did include other expenses (in $125.00, $150.00 and $80.00 for the three medical reports) and she recovered those moneys from the respondent company. It follows that the total of all medical accounts, whether recovered or otherwise, or included in the solicitor's bill of charges and expenses or not included, should have been paid to the client, whether or not they were recovered by the solicitor in her bill. Indeed, it was from that failure to pay (ie. a failure to pay $793.74 for medical services for thermography for which the provider made a claim against the client) that arose all of the problems under this heading of alleged failure to account. Unarguably, therefore, the client was entitled to the $2,690.00 remaining in the controlled money account together with $575.00 which should have been paid to her from the solicitor's own pocket, the solicitor having failed to recover those expenses from the respondent company. A total of $3,265.00. It is clear that the above sets out what should have in fact happened. It is also clear, on the evidence, that there were various outstanding medical bills (in total $1,918.14), some of which appear to have been paid by the client direct, and it seems to us that in relation to those medical bills we would need to know what negotiations and arrangements were reached by the client and the insurer at the Commission because it is sometimes the case that the insurer will not agree to pay for various medical, physiotherapic etc. fees and so those fees not so agreed would not be included in the solicitor's bill. In those circumstances the client would have had to be made aware that the fees not so included would have to be paid by the client from the award moneys. No evidence one way or the other was put before us on this issue and we make no further comment about it. On any view, however, it appeared (after considerable difficulty and clarification) that the client was entitled to at least $3,265.00. The solicitor's evidence was that she reached an agreement with the client to the effect that from the award moneys the client would receive $15,000.00 and that the balance of the award moneys would be used to pay various medical expenses. This argument quite frankly made no sense to us simply because the responsibility for the payment of those medical expenses remained with the client for the simple reason that they were to be paid from the award moneys. The plain fact of the matter was that many of the medical accounts were not paid from the award moneys and were retained in the controlled money account and the solicitor did not from that account pay those medical expenses. If the whole of the award moneys had been paid directed to the client, as is the proper practice, then the issue of payment of outstanding medical expenses would not have arisen simply because the client would have paid those expenses direct. As it turned out, the client could not pay them because she did not have the money and the solicitor did not pay them as a factual matter at all from her own pocket and neither did she pay them from the controlled moneys. After some further calculations and debate the solicitor conceded that the proper thing for her to do now was to re-imburse her client in the following manner: Total amount owing: $2,690.00 (balance remaining undistributed in controlled money account) plus $355.00 (outstanding medical fees claimed by the solicitor in her bill of costs and unpaid): total $3,045.00; plus $631.39 nett interest accumulated up to the date of closure: $3,676.39. Factor in that in December, 1995 the solicitor paid the client $355.00, in August, 1996 $730.00 and on 11 September, 1996 $1,000.00. Then calculate the amount due as follows: to $3,676.39 add interest at Supreme Court rate 21 January, 1993 to 20 December, 1995; from total deduct $355.00; on that sub-total calculate interest thereon at the relevant Supreme Court rate from 20 December, 1995 to 31 August, 1996; from that sub-total deduct $730.00; on that sub-total calculate interest from 31 August, 1996 at the relevant Supreme Court interest rate to 11 September, 1996; from that sub-total deduct $1,000.00; on that sub-total add interest at the relevant Supreme Court rate from 11 September, 1996 to the date of payment – and then pay the result of that calculation to the client. The solicitor agreed to carry out those calculations in conjunction with the solicitor for the Law Society, provide to the Law Society a bank cheque payable to the client so that the Society could pass that on to the client. Returning now to the issue of alleged misappropriation and failure to account, on 22 December, 1992 the solicitor was informed of the client's complaint that certain medical bills had not then been paid. Some correspondence ensued and on 21 January, 1993 the solicitor closed the controlled money account by way of a cash withdrawal of $3,321.39 and appropriated that money to her own use. The solicitor explained her actions in this way: At the time of the redemption she practiced under the name of "Jimenez & Associates". In September, 1989 she sold her practice to her then employed solicitor who purchased the practice and all work in progress. She says she forgot about the controlled money account. She says it was the only controlled money account she operated and she simply forgot about its existence. She thought the workers' compensation/common law matter had been completed and she thought no further about it. She heard nothing further from the client. She says that when she sold her practice she closed her general account but she thought she had more than one State Bank account. It appears from the copy bank statements that in fact the Bank sent out some statements relative to the controlled money account in the initial stages but later, for unexplained reasons, the address on the statements appears to be quite incomplete so it is not difficult to conclude that the statements were either not sent out or returned to the Bank unclaimed. She says that she had a general account with State Bank which she opened in 1989 in which she retained until June, 1990. She also had an account with the State Bank at Bondi Junction. In addition, she held $37.00 in an account in relation to a homeless child that she had assisted some years before. She says she discovered the existence of the State Bank $37.00 account when she was unpacking and she went to the State Bank at Bondi Junction and asked to close the account. The teller, who apparently brought up on the computer screen the name "Jiminez and Associates", informed the solicitor that there was another account in that name with a balance of about $3,000.00. The solicitor said that she had many accounts but she thought she had closed all the accounts when she sold her practice back in 1989. Having forgotten about the controlled money account for which were no records at all kept in her former practice and no records handed over to the purchaser when she sold it, she thought, so she says, that it must have been another general account. She thought that perhaps that she had not closed her general account or all of her general accounts and she was not alerted to the fact that the account was in fact a trust account because, although the account had been opened in the name of the solicitor in trust for the client, the Bank's computer indicated that the name of the account was simply "Jiminez & Associates". The solicitor thought, therefore, that it was a general account and that it was her money. She said she did not associate the amount with the client, did not associate the moneys with the client notwithstanding the fact that some four months previously she had received from the Law Society an enquiry relating to the client and moneys alleged to have been not accounted, she was "convinced it was my general account", simply closed the account and took the money. In these circumstances the Law Society submitted that the actions of the solicitor amounted to professional misconduct and indicated a failure to understand the fundamental requirements of dealing with a client's money, particularly having regard to the fact that, it was submitted, the solicitor was aware that the Society had received a complaint from a former client. The fact of the complaint should have rung alarm bells in the mind of the solicitor so that the solicitor must have known that the moneys were not hers. After all, it was submitted, it was the only controlled money account held by the solicitor. The submission went further: no records had been kept by the solicitor in breach of her duties under the Legal Profession Act and the regulations; no information had been provided to the client about the moneys retained; when she sold her practice she closed her general account so she could not have possibly believed that the money was hers; that her submission is simply unbelievable coming from a practicing solicitor; and, even at the hearing, there had been no proper accounting to the client. The Society submitted that the actions of the solicitor were "wilful" within the terms of Re: Hodgekiss (1962) 62 SR (NSW) 340 in that her actions were recklessly careless because she must have been conscious that in closing the account she was recklessly careless as to whether that closure and the appropriation by her of the moneys was a breach of her duty to comply with professional and legal requirements. Legal Profession Act, 1987, Section 61 makes it quite clear that a solicitor, in the course of practicing as a solicitor, who receives money on behalf of another person, must hold that money exclusively for the other person and ensure that the regulations are complied with in relation to that money. A wilful breach of Section 61 is taken to be statutory professional misconduct. The solicitor submitted that she was not guilty of any recklessness or carelessness or wilfulness. She simply forgot about the moneys that she held on behalf of the client some three-and-a-half years before. She simply did not realise that it was controlled money. She was told by the Bank that the money was in her name (ie. the name of her former firm) and was not told of the full name of the account which would have thrown up the fact that it was a trust account. She submitted, with some force, that she would not be stupid enough to mis-deal with an amount as small at $3,000.00. She thought the account was either a forgotten general account or perhaps an account derived from unpresented cheques. She denied that she had misled the Society but at the time she was suffering from "severe burnout" and that it was very probable that she could have totally, utterly, wiped the existence of that account from her mind and when she attended at the State Bank she did not make any connection between the particular closure of the account and the moneys in trust for the client. She submitted that it was only recently that she understood the true nature of what had happened (and, indeed, it was only on the second day of the hearing that a true grip was obtained on what should have happened to the workers' compensation redemption moneys) but at the time she was "ecstatic" to be told that these moneys were sitting in an account in her name. Every case must be considered on its merits. It is always a fine line between stupidity and deliberate conduct, between being a flipperty-gib and conduct that is reckless or careless. In all the circumstances we have formed the view that the conduct of the solicitor in this matter does not amount to professional misconduct. On any view there is a clear breach of Workers Compensation Act, Section 56, there is a failure to account, there is a breach of the Legal Profession Act and regulations in that proper records in conformity with the regulations had not been kept with regard to the redemption moneys held in trust. The primary question is whether, when the solicitor closed the State Bank account and appropriated the moneys therein to her own use, was she guilty of a wilful contravention of Section 61(1). In Re: Hodgekiss Hardy J. concluded (in relation to the former Section 43) that such a Section has application "on occasions when the solicitor knew or believed that he was committing such breaches or was recklessly careless in that regard. It is thus essential in an enquiry as to whether there have been wilful breaches by a solicitor of the provisions. ... to examine the facts and circumstances relative to his state of mind, knowledge and intention at the material dates". We are satisfied that this solicitor is an essentially honest person. She may well be disorganised but we accept her evidence that at the time she closed the account she was simply not aware that the moneys therein were trust moneys and that it was a trust or controlled money account. In reaching this conclusion we have examined "the facts and circumstances relative to (her) state of mind, knowledge and intention at the material dates" and we have concluded that her conduct in this regard was neither wilful in the ordinary sense of the word nor was it recklessly careless. We should record that in our view the solicitor when closing the account should have obtained a bank statement or record of transactions to make absolutely sure that the moneys were truly hers unimpressed by any trust or other encumbrance. Her failure to investigate this, to simply regard it as some sort of "windfall", does her no credit and demonstrates a carelessness as to the discharge of her obligations to others. After all, the account was in her name on the computer and it would be commonsense, if nothing else, to "check it out" simply because it was at all times reasonably foreseeable that the account could well have included moneys that were not hers or, even in her own interests, money upon which some taxation liability may have rested. To simply pocket the money without proper enquiry, and as a solicitor, is on the upper end of the unsatisfactory professional conduct spectrum. None of that, however, alters the plain fact of the other breaches to which we have made reference and now that the solicitor is aware, and starkly aware, of her actions she has told the Tribunal that she will re-pay the money to the client together with interest thereon in the manner stated above. Of course, none of these problems would have arisen had the solicitor complied with the provisions of the Workers' Compensation Act nor would they have arisen had the solicitor complied with the provisions of the Legal Profession Act and its regulations. Had proper records been kept then, having regard to our finding that the solicitor is a basically honest person, the records would have thrown up the problem and it would have been affirmatively addressed by the solicitor. We have no doubt that her conduct is careless, perhaps "scatty", but not recklessly careless and neither has she been shown to be indifferent to her obligations. In the peculiar circumstances of this case and having regard to the impression that we have formed of this solicitor, we are not inclined to make a finding of professional misconduct but are of the view that her conduct falls below the standard of competence and diligence that a member of the public is entitled to expect from a reasonably competent legal practitioner and therefore she is guilty of unsatisfactory professional conduct. Before departing from this aspect, a subsidiary submission was made by the Law Society to the effect that the $3,000.00 the subject of the common law claim should have been deposited into a trust account and the client provided with a memorandum of costs in respect of the common law action. The submission was that because the terms of settlement categorised the $3,000.00 as being a "verdict and judgment in favour of the plaintiff in the sum of $3,000.00" and that Order 2 provided that "each party to pay her or its own costs of the action" then the moneys were truly the client's and were thereby impressed with a trust in favour of the client. The moneys, it will be remembered, were paid directly into the solicitor's general account. It seems, however, on the evidence that those moneys, although described as indicated in the Terms of Settlement, were in fact on account of costs. The Society, in its submissions, "conceded those moneys were to go to (the solicitor) eventually, but via the right channels". There seemed to be absolutely no doubt that the solicitor was entitled to the full amount of $3,000.00. The submission by the Society can only be of some technicality if somehow or other because of the appellation given to these moneys in the terms of settlement the money should have been passed through the trust account and a technical bill of costs rendered to the client before the moneys were appropriated by the solicitor. If this is truly the submission that was made then we simply reject it. The reality is that these moneys were never impressed with any trust – they were always moneys paid to the solicitor for her professional profit costs and it matters not how they were described in the Terms of Settlement. It may well have been that the solicitor should have rendered an account to the client but even that course of action we do not think would have, in reality, been appropriate simply because the agreement between the solicitor and the insurer was that the $3,000.00 was on account of her professional costs. And that, it seems to us, was really the end of the matter. Failure to comply with Consent Orders: In 1992 the solicitor acted for the defendant in certain proceedings in the NSW Court of Appeal. Those proceedings were settled pursuant to Consent Orders. Those Orders provided, inter alios, that a caveat over certain property would be withdrawn and that a previous order would be set aside. The Orders also contained various Notations generally to the effect that both parties would act to complete a nominated contract for sale dated 18 August, 1992 of the same property and that upon settlement and out of the purchase moneys the parties would pay the agent's commission and legal costs and disbursements "on the sale according to the scale costs", made various other provisions and, finally, provided that the balance of the proceeds of sale after various payments "shall be held in the names of both solicitors in a duly appointed Trustee Account earning interest, and shall stand in such account pending agreement between the parties or further order as to their disposal." It was alleged as against the solicitor that, she acting on the contract and having the carriage of the contract, failed to ensure that the balance of the proceeds of sale were placed in a trust account in the name of both solicitors, notwithstanding numerous requests for her so to do and caused to be deducted from the trust fund an amount of costs not authorised by the Orders. The factual position was again not in dispute: the trust moneys were held in the name of the solicitor (at that time in the name of the solicitor's employer, the solicitor having already sold her practice back in 1989 and was at the time of the Consent Orders and Notations employed by a well known firm of solicitors) in trust for her client only. Notification had been given to the solicitor for the other party by letter. However, clearly the account should have been in the joint names of both solicitors in trust for both parties. For reasons that are not clear the solicitor failed to take any steps to rectify the matter notwithstanding numerous requests from November, 1992 through to the date of distribution of the proceeds of sale. This failure by the solicitor is unexplained, although in May 1993 she indicates that she regarded it as an "oversight". The final distribution of the trust moneys was made in late May, 1993. It would appear that no loss was suffered, that the solicitor had an honest but mistaken belief as to the requirements of the Notations to hold the moneys in joint names of the solicitors for the parties but in all the circumstances we are not prepared to make an adverse finding against the solicitor in this regard because we have formed the view that her conduct, although incorrect, was not of such seriousness as to warrant a professional conduct finding against her. The second part of this complaint against her is that she deducted from the joint funds an amount of costs not authorised by the Court Orders. What she did was deduct proper costs of her acting on the nominated contract but she also deducted an additional amount of $280.00 being her costs for preparing a contract in anticipation of an auction. The Court notation was that out of the settlement moneys the parties were to pay the "legal costs and disbursements on the (our emphasis) sale according to the scale costs" and the argument was that "the sale" was in fact the contract that the parties undertook to complete ie. the nominated contract dated 18 August, 1992. The solicitor submitted, and we accept, that the notation was capable of interpretation so that all of the legal costs, including any abortive legal costs on preparation of documents in anticipation of a sale, were covered by the notation. She submitted that at the time of the Court Orders both parties were aware of the previous attempts to effect sale and the work done by the solicitor and she thought that the legal costs incurred in relation to previous attempts to sell were included in the notation so that she was properly authorised to make the deduction. We have formed the view that, even if we are wrong in our conclusion, the complaint against the solicitor in this regard falls into the category of de minimus and we would not be prepared to make a finding of a breach of proper professional conduct standards against the solicitor; but in any event we have formed the view that her actions were not improper in the circumstances. Failure to Advise In March, 1992 the solicitor acted for the husband in certain Family Law proceedings. Those proceedings were resolved pursuant to Terms of Settlement. Order 10 of those Terms provided, inter alia, that within 14 days the husband would pay direct to the wife $120,211.24 "representing 55 per cent of the total assets in" a nominated provident fund and upon so doing the wife would forfeit all her right title and interest in that fund and the husband would indemnify the wife as a consequence. What the husband did, apparently upon some advice, was endeavour to pay to the wife $90,711.24 being, so he said, the $120,211.24 agreed sum less provision for tax. Somehow or other he concluded that the agreement in the Terms of Settlement was on the basis that the $120,211.24 was a gross sum and that tax had to be deducted therefrom prior to payment. The client complained and certain proceedings were instituted by the wife. The solicitor obtained the advice of counsel who advised (in our view and with respect quite correctly) that the deduction of tax prior to making the payment to the wife was quite inappropriate and that a proper construction of the Terms of Settlement did not require the fund to make any payment to the wife at all. Rather the husband was to make the payment and upon making the payment he then became entitled to his wife's interest in the Fund. Clearly, so counsel concluded and we respectfully agree, the $120,211.24 was to be paid from the husband's funds without deduction of tax. In any event, one might seriously query whether any tax would have been deducted in those circumstances, the payment having been made by the husband, not by the fund. There was also some minor observations relating to a possible application under Family Law Act, Section 79A and counsel provided his written advice on 18 June, 1992. For some reason not explained the solicitor failed to either pass on that advice to the client or tell the client of the advice and its contents. There was some argument before us to the effect that there was in fact an obligation by the solicitor to forward to the client the actual Advice. We are not sure whether this is in fact correct, although it is quite common practice. Indeed, in our view a solicitor of repute would in fact pass on a copy of the Advice to the client. But in any event there is a clear obligation to inform the client of the substance of the advice and this the solicitor failed to do. When the matter ultimately came back before the Family Court 1 September, 1992 it was counsel himself who informed the client of his previous advice 18 June, 1992 and this resulted in a settlement in which the husband paid the full amount to the wife together with interest (amounting to some $10,000.00). Clearly, the conduct of the solicitor amounts to unsatisfactory professional conduct and there was really no argument by her to the contrary. Compensation In the filed Information the client in the Family Law proceedings sought compensation pursuant to Section 171D Legal Profession Act, 1987, "the nature of which is to be advised". At the outset of the hearing there was no appearance by or on behalf of the claimant for compensation. Indeed, to the contrary, the claimant had notified the solicitor for the Law Society that he would not be proceeding with the compensation application. Consequently, we confirm the oral order made on 11 September, 1996 to the effect that the application for compensation be dismissed. It is important to recognise that applications for compensation under Section 171D depend for their success on, inter alia, the completion of a hearing and the Tribunal being satisfied that the legal practitioner is guilty of unsatisfactory professional conduct or professional misconduct. Consequently, the actual hearing of an application for compensation must await the determination of the Tribunal of the substantive matters before it relating to professional conduct and a finding or findings against the legal practitioner. Applicants for compensation must therefore be made aware that their right to claim compensation is dependant upon those two factors so that the hearing of their claim for compensation must await the final Determination and Orders of this Tribunal as to professional conduct. It is only then that the applicant can mount his/her case and the applicant must from that point satisfy the Tribunal pursuant to the provisions of Section 171D. There have been occasions in the past when applicants have appeared on the first day of a hearing and tried to seek leave to intervene, on the basis presumably that their intervention will have some impact in proving the breach or breaches of professional conduct standards alleged. As a general rule we are of the view that although an applicant should perhaps appear on the first day to announce his/her appearance for the purposes of the compensation claim, that would be the extent of his/her participation in the hearing until after the Tribunal had delivered its Determination and Orders. It is from that point that the compensation claimant would be entitled to conduct his/her case for a compensation order under the Section. Conclusions The solicitor has been found guilty of, effectively, four counts of unsatisfactory professional conduct, firstly in relation to a breach of Workers Compensation Act, Section 56, secondly with a breach of Legal Profession Act, Section 61 (but not wilfully), thirdly with a breach of Regulation 8 of the Legal Profession (Trust Account and Controlled Moneys) Regulations and fourthly in failing to provide advice on an important issue by failing to inform a client of the content, nature and effect of an advice received from briefed counsel. The solicitor has been found not guilty of a wilful breach of Section 61 Legal Profession Act, of a deliberate misappropriation of trust moneys in the workers' compensation proceedings, of misleading the Law Society in that regard, of failing to ensure that terms of Consent Orders were complied with and of deducting from joint trust funds an amount of costs not authorised by those Consent Orders. A complaint was also made against her that she charged the Family Law client for work done in correcting the problems that arose in the Family Law matter – this matter was not seriously argued (if at all) before us and the solicitor is entitled to finding in her favour in this regard. The really serious issues that occupied most of the hearing time related to the workers' compensation matter. On all levels the solicitor's conduct left something to be desired and if she had conducted her practice in accordance with proper standards and legal requirements she would not have ended up with a complaint having been made against her and these proceedings being instituted against her. In all the circumstances we have formed the view that the seriousness of her conduct is towards the upper end of the spectrum of unsatisfactory professional conduct. We are particularly concerned with her conduct relating to the controlled money account and the question to be decided is what orders this Tribunal should now make. The solicitor has been before the former Legal Professional Standards Board No. 4 of 1989 when that Board made certain findings against the solicitor 21 March, 1991 and ordered that she be reprimanded. The Board also made additional orders one of which was as follows: The solicitor's current and/or future Practicing Certificate(s) be endorsed with a condition restricting the solicitor from acting as a solicitor otherwise than in the course of employment by a solicitor holding an unrestricted practicing certificate. The solicitor also came before the former Legal Profession Disciplinary Tribunal and its Judgment is reported in (1992) 2 LPDR 8. That Tribunal, by majority, made certain findings to the effect to the solicitor was guilty of professional misconduct but in all the circumstances ordered that she be reprimanded and fined $2,000.00 and pay costs. It is matter of record that the costs of those proceedings were more than considerable, the hearing having taken place over a period of five days. There was some evidence before us as to various personal traumas suffered by the solicitor from about late 1988 to about 1993. For some reason not explained the solicitor is currently undertaking a medical science course at the University of Sydney. She says she wishes to carry out mediation work, family law work, probate and conveyancing and wishes to work part time. At present, she says, her only source of income is Austudy supplement and some small income from some Saturday morning employment. However, she says her current debts are in the order of $60,892.00, her assets are in the order of $7,500.00 and her weekly expenses are in the order of $240.00. We note that she is to pay to her former client the controlled money and the interest thereon calculated as indicated above. We have absolutely no doubt that the Law Society was quite justified in bringing these current proceedings against the solicitor. Although we cannot see that the making of a costs order against the solicitor will be in her interests nor in the interests of the Law Society nor in the interests of the public or the legal profession, we can see no reason in law from departing from the general or ordinary rule that costs follow the event, for the following reasons: The Law Society was clearly justified in bringing these proceedings. It has been more than substantially successful. The power of the Tribunal to make orders for costs against a legal practitioner under Legal Profession Act s.171E(1) and s171C(1)(i) is discretionary but must be exercised judicially and in accordance with proper practice and precedent, notwithstanding the effect that such orders may have on the future economic viability of the practitioner. Compassion is not sufficient. Orders for costs are not punitive. They do not operate as a penalty on the unsuccessful party. In the recent case of Richmond River Council v Oshlack (Court of Appeal No. CA 40120/94, 3 July, 1996) the Court considered the position of an unsuccessful applicant who brought proceedings in the public interest. The Judge at first instance (Stein J.) categorised the litigation as "public interest litigation" and refused to order costs against the applicant, notwithstanding that the applicant had no pecuniary interest in the outcome of the litigation, that there was significant public interest in its outcome, the subject matter of the proposed development, its environmental aspects and that s.69(2) Land and Environment Court Act 1979 left the question of costs to the discretion of the Court. Sheller J.A. said (at 16-17): "The practice, which has developed in the Land and Environment Court and been espoused by Stein J in this case, of taking account of the fact that the proceedings were brought not for private benefit but in the public interest, when considering what costs orders should be made, is in conflict with the principles which Latoudis v Casey sets out. If a costs order against the respondent amounted to a penalty, clearly a court, as a matter of discretion, would not lightly impose such a penalty upon a person who brought proceedings in the public interest. But if, as is the law, the costs must be treated as compensation for a successful party, in this case the appellant, the fact that the unsuccessful party has proceeded in the public interest is not a consideration to be taken into account in determining what order should be made for costs. If persons acting in the public interest are not to be discouraged from bringing proceedings pursuant to s 123 by the fear that, if unsuccessful, they will have to meet the costs of the other party, the legislature may need to consider whether the costs of the other party, if successful, should be met from the public purse rather than the private purse of the person so acting." And in Latoudis v Casey (1990) 170CLR 534 Mason C.J. at 569 said: "Speaking generally, before a court deprives a successful defendant in summary proceedings of his or her costs, it will be necessary for the informant to establish that the defendant unreasonably induced the informant to think that a charge could be successfully brought against the defendant or that the conduct of the defendant occasioned unnecessary expense in the institution or conduct of the proceedings". There is more than adequate authority that "costs as between party and party are given by the law as indemnity to the person entitled to them; they are not imposed as a punishment on the party who pays them nor given as a bonus to the party who receives them" per Bramwell B. in Harold v Smith 5 H. & N. 381. In the case of hardship suffered by the paying party this Tribunal has power to make orders from time to time to permit the paying party time to pay: see Law Society v Jiminez (No. 24 of 1990, 30 October, 1995, unreported). In addition the findings that we have made against her do require, the continuation of the previous order made by the Legal Profession Standards Board 21 March, 1991 and what we propose is that that order be re-enforced or underlined by an order in similar terms by this Tribunal. Finally, we express the view that this solicitor really does need to get a grip upon herself, cease to be emotional and "scatty", concentrate and focus on the need to discharge her duties as a solicitor in a proper and rigorous manner notwithstanding the pressures that may be placed upon her from time to time, whether they be pressures from clients or from personal difficulties that she may have from time to time. It would be not unfair to warn her that should any further matters of professional misconduct and/or unsatisfactory professional conduct be proved against her in the future this Tribunal may need to look very carefully at whether she should continue to hold a practicing certificate. Her conduct, thus far is close to her being an embarrassment to the profession and although in totality is not at this point such as to warrant some type of protective order is close enough for us to warn her that any continued failure to approach the practice of law in a proper and rigorous manner may well put her right to practice in jeopardy. Orders The Tribunal makes the following Orders: 1. The solicitor pay a fine of Two thousand dollars ($2,000.00) within a period of four months from the date of this Order. 2. The solicitor be suspended from practice at the expiration of the said period of four months if the said fine had not been paid and such suspension continue until the said fine has been paid. 3. The solicitor's current and/or future Practicing Certificate(s) be endorsed with a condition restricting the solicitor otherwise than in the course of employment by a solicitor holding an unrestricted Practicing Certificate. 4. The Solicitor pay the costs of the Law Society in such sum as the parties may agree and in default of agreement as determined by the Tribunal. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.