The Legal Services Tribunal of New South Wales CITATION : Spero Pitsikas [1994] NSWLST 16 PARTIES : Spero Pitsikas FILE NUMBER(S) : of 1993 CORAM: Mr G B Molloy (Presiding Member) - Mr C. Robison - Mr D Mahon CATCHWORDS: Unsatisfactory Professional Conduct - falsely witnessing a document :- Unsatisfactory professional conduct. Tribunal considers itself not bound by findings in other Courts or Tribunals. Tribunal considers that alleged conduct should not be looked at in hindsight. Discussion as to the concept of unsatisfactory professional conduct and its relationship to negligence. Discussion of conflict of interest. LEGISLATION CITED: Legal Profession Act 1987 Hollington v Hewthorn and Company Limited 1943 (1KB27) ; Mercer v Pharmacy Board of Victoria (1968) VR72 at 81-83; CASES CITED: Briginshaw v Briginshaw (1938) 60CLR366; The unreported decision of this Tribunal in the matter of Ian Gordon Dun, No. 22 of 1993; Law Society v Harvey (1976) 2NSWLR 154 ; In the Will of Shannon 1977 1 NSWLR 210 DATES OF HEARING: 29 April 1994 DATE OF JUDGMENT: 06/14/1994 LEGAL REPRESENTATIVES: Mr D. Hipsley (instructed by Mr F.J. Smith) for the Law Society of New South Wales. Mr P. Hastings QC (instructed by James Moustacas & Co) for the Solicitor. JUDGMENT: AS A RESULT OF CERTAIN ACTIVITIES IN 1987, 1988 AND 1989, and after a contested hearing before his Honour Mr Justice Cole in proceedings in the Supreme Court, Commercial Division, Mr Pitsikas ("the Solicitor") suffered a judgment against him in some $4,949,508, plus costs, and the Solicitor's claim for indemnity against Law Cover was dismissed. As the result of an appeal from that judgment to the Court of Appeal, that Court held that the right of the Solicitor to indemnity from the Law Cover insurer should be upheld. The Solicitor's legal costs in relation to all those proceedings have not yet been finalised and, of course, the traumatic effect of all those proceedings on the Solicitor, and his family (no doubt) has been considerable and continuing. As a result of the findings made by Cole J the Law Society ("the Society") formed the view that the Solicitor may have been guilty of professional misconduct in various respects and in other respects guilty of unsatisfactory professional conduct. A Complaint was made to this Tribunal, which was subsequently amended and the Amended Complaint was the matter that was before us. How did the Solicitor get himself into this mess? Although there is no need to go into all the precise details, a synopsis will be sufficient for background purposes, although in the course of this judgment it will be necessary to look more closely at certain aspects. In 1987 a Mr Wall and a Mr Caralis approached the client of the Solicitor, Mr Manettas. All three apparently had children attending the same school. Mr Wall was apparently experienced in leasing property. Mr Caralis was involved in property development. The proposal advanced was that a property would be found, that Messrs Wall and Caralis would do feasibility reports, organise architects and builders and the pre-leasing of the property and that the three would then borrow the full amount to purchase and re-furbish the property. What is not referred to in the judgment of Cole J is precisely what was the input of Mr Manettas into this undertaking. This aspect becomes significant when one starts to really examine the professional conduct of the Solicitor. The proposal of Messrs. Wall and Caralis was for 100 per cent finance for the purchase and development. These were the heady days of the 1980s. All three participants only thought they could make profits - "losses were not discussed". In September/October 1987 Mr Manettas approached the Solicitor to arrange 100 per cent finance for "our syndicate" to purchase certain property in King Street, Newtown. The Solicitor, through contacts with the Government Insurance Office ("GIO"), arranged that finance. GIO Finance agreed to advance the monies, ultimately some $3.7 million to the purchaser company Dyclu Pty Limited subject to guarantees from Messrs Wall, Caralis and Manettas. The Solicitor acted for all parties to the transaction, including the GIO. The security for the loan was the property at Newtown, joint and several guarantees of Messrs Wall, Caralis and Manettas, and a second mortgage over property owned by Mr Manettas solely at Watsons Bay. In June 1988 the Solicitor was informed by Mr Manettas that he, Wall and Caralis were looking at another property in Leichhardt. Again, the proposal was that the GIO finance the purchase and re-development of this property at 100 per cent finance with directors' guarantees. The company used to purchase this property was Presabout Pty Limited, the loan was $3 million and the security was not only the Leichhardt property but also the Newtown property, the property owned by Mr Manettas solely at Watsons Bay and the personal guarantees of Messrs Wall, Caralis and Manettas. The guarantees for the loan agreements for both Dyclu and Presabout were joint and several, personal and both Loan Agreements were on the standard form used at that time by the GIO. The forms of Guarantee were typed documents. In 1988 Mr Manettas wished to raise more money in relation to yet a further development at Rozelle in which he was interested. He proposed that additional money could be raised on his Watsons Bay property by increasing the first mortgage to Mercantile Mutual from $600,000 to $2,000,000. The GIO, as second mortgagee, initially refused to consent to the additional monies "without extra security" and Mr Manettas offered additional security in the shape of 2,000,000 shares in Manettas Limited. The Solicitor prepared a Deed of Mortgage referring to 2,000,000 shares in anticipation of receiving GIO approval. However, in January 1989 the GIO said that it wished more security in the shape of 4,000,000 Manettas shares. The GIO also wanted an additional clause to the effect that if the shares fell in value by more than 20 per cent then additional security would be required from Mr Manettas. The Solicitor amended the proposed Deed of Mortgage to provide for security over the 4,000,000 shares but he omitted to insert the additional clause providing for the provision of further security in the event that the value of the shares fell. Suffice it to say that, on the evidence before the Tribunal, Mr Manettas was aware of that requirement of the GIO, although it had been omitted from the Deed. As with many matters like this, (and it is not an observation that can be made with hindsight but is a matter that should have been in the mind of every competent business person) non-equity finance can be a dangerous proposition. It only requires a very slight downward variation in market or a very slight upward variation in a mortgage rate to make the commercial proposition uneconomic. Uneconomic, of course, from the point of view of the borrower, uneconomic from the point of view of the lender and highly uneconomic from the point of view of the guarantor. It is elementary economics and the only way one can successfully avoid liability in the circumstances is to either ensure that there is adequate security or ensure that the development is completed and on-sold or adequately covered by appropriate income. In the instant cases, the market went bad, the borrower/companies defaulted and the GIO ultimately moved against the guarantors. And, of course, when things go bad those who have commercially lost look around for someone that they can blame for their misfortune. Mr Manettas found the Solicitor and, when sued by the GIO, he joined the Solicitor. Professional misconduct In the course of the proceedings a number of acts of the Solicitor came to light which, unarguably, constituted professional misconduct. It transpired that in relation to the Dyclu guarantee, the Solicitor signed as witness to the signatures of Messrs Wall, Caralis and Manettas in circumstances where he did not in fact witness any of those signatures. The attestation clause appears in the usual way: "Signed sealed and delivered by (the guarantor) in the presence of..." There is no need for this Tribunal to refer to previous decisions of this Tribunal which have made it abundantly clear that with an attestation clause of that type it is axiomatic that before a solicitor appends his signature as a witness the person executing the document by appending thereto his/her signature must actually so do in the presence of the Solicitor. Although it is true in the instant case that the signatures appearing on the Dyclu guarantee are those of the guarantors and although it is equally true that the guarantee document bound those guarantors, there is always the real risk that where a solicitor (or anyone else for that matter) signs as a witness in circumstances when he/she did not in fact witness the signature, the signature may be false. In other words, there is always a risk of forgery and there have been cases in this Tribunal where the signature alleged to have been witnessed by the solicitor was in fact forged. Not only is there responsibility placed upon a solicitor to "do the right thing" but where a solicitor says, in a document upon which other persons will rely, that he/she in fact witnessed the particular signature or signatures, a failure to so personally witness amounts to fraud and is professional misconduct. It was submitted on behalf of the Solicitor that the signatures were genuine and therefore there was no risk that the omission of the Solicitor to personally witness the actual signing provided an opportunity for deceit or fraud by any of the parties. Although the actual facts of this case may support that proposition in this case to some degree, we reject that proposition as a principle because experience has shown that, although a solicitor may be familiar with the signature of a client there is always the risk that the signature may be forged and the consequent risk of deceit or fraud is obvious. His Honour Cole J, on page 5 of his reserved judgment stated: "Mr Pitsikas signed each guarantee as witness to the signatures of Mr Manettas, Mr Wall and Mr Caralis." His Honour here refers to "each guarantee". With respect, that statement is at variance with the facts. It is clear, in our view, that Mr Pitsikas only signed the Dyclu guarantee - he did not attest the signatures of the guarantors on the Presabout guarantee. In the Particulars specified in the Amended Complaint, the Society alleges that the Solicitor witnessed the signatures on both guarantee documents. In relation to the allegation that he witnessed the signature on the Presabout guarantee document, we reject that allegation. We may further observe that it is a pity that the Court of Appeal did not correct that error and allowed that finding of fact to remain on the record when it is clear that that finding could not be supported by the evidence and was clearly wrong. It was put on behalf of the Society that this Tribunal was bound by the findings of fact of His Honour Cole J. On behalf of the Solicitor the contrary argument was advanced and reliance was placed upon the decision of Hollington v Hewthorn and Company Limited 1943 (1KB27) at first instance and 1943 (1KB587) on appeal. This case is authority for the proposition that evidence of a conviction for a particular offence is not evidence of the ingredients of the offence. It is not even prima facie evidence of the ingredients. Although this decision has been criticised and doubted in subsequent cases, there is very good reason behind that principle. Evidence of a conviction is only proof that another court on a different occasion considered that the defendant was guilty of the charge. If evidence of the conviction was relevant in a subsequent matter, then clearly that evidence could be led. However, if the fact of conviction is not relevant, the subsequent court has no knowledge of what evidence was before the original court that convicted the person, it cannot know what arguments were addressed to that original court or what influenced that court in arriving at its decision. More importantly, the issue before the original court is not the same as the issue before the subsequent court. The issue before this Tribunal is whether this Solicitor is guilty of professional misconduct or unsatisfactory professional conduct. These are entirely different issues than the issues before His Honour Cole J which were issues relating to negligence and the interpretation of the Law Cover insurance policy. Issues relating to professional misconduct are serious, grave and weighty. The standard of proof is the test of "comfortable satisfaction". The importance and gravity of the matters in issue must enter into the consideration of whether the evidence produces the reasonable satisfaction required, and it is only after the exercise of caution and after making a close scrutiny of the evidence that the requisite degree of satisfaction can be reached. There must be evidence that is precise and cogent evidence which survives careful scrutiny: see Mercer v Pharmacy Board of Victoria (1968) VR72 at 81-83 and Briginshaw v Briginshaw (1938) 60CLR366 per Dixon J at 361-362. And see the discussion of the principles that apply in the unreported decision of this Tribunal in the matter of Ian Gordon Dun, No. 22 of 1993, reasons for judgment handed down 9 May 1994. In our view it would be an extraordinary situation, and a travesty of justice, if a finding of fact against the Solicitor in another court or tribunal, howsoever senior, would be binding on this Tribunal when dealing with the Solicitor's professional conduct when it is clear that the finding of fact was incorrect in that it was not supported by the evidence or was contrary to the evidence. It is the duty of this Tribunal to closely scrutinise the evidence to ensure that the evidence is precise and cogent so that any finding of this Tribunal relating to professional conduct is properly founded. The Society's second complaint of professional misconduct is associated with the above. The Society complained that the Solicitor, on 11 March 1988, wrote to the lender (GIO) informing the lender that the guarantee had been executed by the guarantors, thereby misleading the lender when the Solicitor knew that he had not in fact witnessed the signing of the guarantee. This complaint can only relate to the Dyclu guarantee as that was the only guarantee in existence as at 11 March 1988. In the judgment of His Honour Cole J, at page 5, His Honour referred to that fact which, among other facts, His Honour regarded as of "central importance and grave concern". There is no doubt that the Solicitor did not regard his actions as inconsistent with proper practice or improper. He now understands that his action constituted professional misconduct. Professional conduct should not be looked at with hindsight "nor with a desire to right any perceived past wrong or deviation from what a Tribunal may now think should have been the case at the time of the act in question or what the Tribunal may wish the professional milieu to be at the time of hearing": see In the matter of Ian Gordon Dun (op. cit. at page 7). The concern of the Society about the number of practitioners referred to the Tribunal in relation to the provision of false certificates or purporting to witness signatures on documents that they did not, is reflected in an article that appeared in the Law Society Journal, Volume 32, No. 3, April 1994 at page 13. The Tribunal suspects that it may have been a not uncommon practice for solicitors to "witness" signatures in circumstances where they did not. There has been a spate of complaints to this Tribunal and it would not be unreasonable to conclude that there would be other similar conduct which has not come to light simply because the various transactions have not "gone wrong". It may well be that the Solicitor's appreciation of his conduct at the time was an appreciation that was held by other practitioners, albeit in the minority. We suspect that it was not uncommon, and has been not uncommon, for many years for practitioners to send documents out to a well known client, ask the client to sign it and the practitioner would "witness" the signature when the document was returned. The actions of this Solicitor in sending the letter of 11 March 1988 accords with his then appreciation of his conduct and the letter itself, although it misled the lender by implication rather than by its express terms, does not in our view aggravate the misconduct involved in the false attestation of the Dyclu guarantee. We find that the Solicitor, in sending the letter of 11 March 1988, was guilty of professional misconduct, but within the circumstances as set out above. The third complaint of professional misconduct against the Solicitor is that he falsely signed a Solicitor's Certificate relating to the Dyclu loan to the effect that he had explained the terms of the loan agreement to Dyclu and the three guarantors and that each of them had advised the Solicitor that they understood the terms of the Loan Agreement. The certificate also stated that the Solicitor was not the solicitor for the lender, the GIO. In His Honour's judgment, Cole J referred to this Solicitor's Certificate as one of the matters of "central importance and grave concern" which, His Honour stated, were "either undisputed at the hearing or were clearly established" (judgment page 5). His Honour found, on page 6, that "the signature to that certificate was no casual act for Mr Pitsikas signed it, printed his name and printed his business address in his own handwriting". As His Honour pointed out, the Certificate was false in two respects: firstly the Solicitor had not explained the loan agreement to any of the guarantors either as guarantors or as directors of the borrowing company; secondly, Mr Pitsikas was not the Solicitor for the lender. In the course of His Honour's judgment, at pages 6, 7 and 8, His Honour quoted at length from the transcript of evidence. In that evidence the Solicitor admitted that the certificate was false but that he believed that his clients were aware of the full conditions of the loan which were reflected in the loan agreement. He also agreed that the statement "I am not the solicitor for the lender" was quite false because, obviously, he was in fact acting for the lender. The full extent of the transcript of evidence and arguments before Cole J was not before us. We are unable to say, therefore, whether there are other portions of the transcript which may have thrown a different light upon the finding of His Honour. But His Honour did go to some trouble to set out verbatim in his judgment the evidence in support of his finding. But the evidence before us does throw a different light upon that finding. That evidence shows that in the documents that in fact were sent by the Solicitor to the lender (GIO) no such Solicitor's Certificate appears. There is a Certificate but it is not completed and not signed. So, therefore, the Solicitor did not complete any such certificate that he gave to the lender. Secondly, it would appear that, in the bundle of documents placed before the court, none of those documents showed the Solicitor's Certificate signed by the Solicitor. What happened was that Counsel for Mr Manettas produced a Certificate signed by the Solicitor. Clearly counsel received that from his client. How did his client obtain it? The Solicitor, in evidence before the Tribunal, stated that he did not recall having signed it. He said: "In my haste, I would say, in completing the documents, I signed it in error and left a copy in the file". He thought it was "possible that (Mr Manettas) could have asked me for a copy and I asked my secretary to photocopy a copy of the loan agreement". In answer to the question: "You are unable to shed any real light on how it was that Mr Manettas came to have a signed copy of the certificate?" the Solicitor answered: "No, other than I would have to say that he obtained it through our office." The Solicitor also said he was put under extreme pressure by his clients to complete this matter, a matter that had been around for some time, which had been the subject of some negotiations and which his clients wished to complete quickly. The Solicitor suggested that the signing of the Certificate was something that he would have done inadvertently in signing all the documents, and in this regard we accept the evidence of the Solicitor. If it was something upon which the Solicitor or his clients would have relied, in our view it would have been included in the documentation returned to the lender before the loan was made. It was not. The lender did not require it as a condition of loan and it was not relied upon by any party in completing the loan documentation. It is clear to us that the Solicitor accepted that he had made a mistake by completing the Certificate in circumstances where he did not have to complete the Certificate, he did so as part of the signing of the documentation in haste to complete the transaction, and simply put the incorrect certificate in his file and did nothing with it, recognising it as a mistake. This interpretation of the facts was certainly not one that found favour, if it was put to him, by His Honour Cole J. His Honour found that the execution by the Solicitor of the Solicitor's Certificate in relation to the Dyclu loan was "a further critical factor" (judgment page 45). His Honour said that the Solicitor's "dishonesty in certifying to GIO that the loan agreements had been explained...resulted in the GIO settling the matters" (judgment pages 45-46). However, the plain facts as put before this Tribunal show that the Solicitor did not certify to the GIO that the loan agreements had been explained. No certificate went to the GIO in those terms that was signed by the Solicitor. Upon a careful analysis of the facts as put before us in evidence, we are completely satisfied of that. It was said on behalf of the Society that the mere completion of the Certificate, whether or not anyone relied upon it and whether or not the Certificate was ever used, was professional misconduct because the Solicitor, in completing the Certificate, gave a false certification. With respect to that submission, we are unable to agree. We accept the Solicitor's explanation that it was one of a number of documents that he was signing at the time, that he signed and completed the Certificate by mistake, that he did not sent it on to the lender, and that he simply put it in the file because it was a document signed by mistake. It was signed in haste. It was signed under pressure. It was signed, in our view, inadvertently, was clearly incorrect as to part of its contents (i.e. the Solicitor certifying that he was not the solicitor for the lender when he clearly was) and it was a document upon which no party placed reliance. We do not entirely understand why it was that great store was placed upon this document at the hearing because it was quite clear that it had never been given to the lender. If a solicitor signs a document by mistake, and puts that document in his file, we are totally unable to see how that could amount to professional misconduct or unsatisfactory professional conduct. It may be that the Solicitor should have crossed out the Certificate, or thrown the document away. But he never used it, did not intend it to be used and did not sign it intending it to be used. In our view that part of the complaint is not made out. The Society has also argued that because the loan documentation included provisions for a Solicitor's Certificate that in itself was authority for the proposition that the Certificate should have been completed by the Solicitor. In this case, the loan documentation was pre-printed and there was nothing in the letter of approval that indicated the provision of such a Certificate as a requirement for the loan and there was nothing in any subsequent document to that effect. The GIO is a large financial organisation with its own specific requirements. The loans were not for small amounts of money, by any means. Experience shows that if lenders want such Certificates completed as pre-requisites to loan advances they will say so, quite clearly. Experience also shows that pre-printed forms often contain irrelevant material. We reject the submission. Unsatisfactory professional conduct The Society also brought against the Solicitor seven (7) counts of unsatisfactory professional conduct. In order to understand those charges it is firstly necessary to examine what is incorporated in the phrase "unsatisfactory professional conduct" and, secondly, to understand the findings of His Honour Cole J and the reasoning behind those findings. Like the statutory definition of professional misconduct, the statutory definition of unsatisfactory professional conduct is non-exclusive. By s.123 Legal Profession Act 1987, it "includes conduct (whether consisting of an act or omission) occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect from a reasonably competent legal practitioner". It was submitted on behalf of the Society that the non-inclusive definition differed from the non-exclusive definition of professional misconduct in the common law sense because, in looking at unsatisfactory professional conduct, it did not matter what other reputable members of the legal profession may think from time to time. What mattered was an objective test of what a member of the public was entitled to expect of a reasonably competent legal practitioner. To make a finding of unsatisfactory professional conduct it is not necessary, in our view, to have the same degree of satisfaction that is required to make a finding of professional misconduct. In the current disciplinary regime, unsatisfactory professional conduct matters generally go to the Legal Profession Standards Board and for the purpose of conducting such a hearing that Board is not bound to observe the rules of law governing the admission of evidence, but may inform itself of any matter in such manner as it thinks fit (s.143). Although it is true that hearings before this Tribunal are governed by the rules of evidence (s.157(2)), and properly so, the fact that hearings before the Board are not so governed and the penalties for an adverse finding are considerably less draconian (s.149) than the penalties for a finding of professional misconduct, leads one inevitably to the conclusion that the hurdles to be overcome in proving a case for unsatisfactory professional conduct are much less than those in relation to professional misconduct. However, that does not mean that the Board or this Tribunal should be any the less vigilant to ensure that professionally adverse findings against a legal practitioner are based upon proper grounds or that the Board or Tribunal is properly satisfied before making such an adverse finding. To make an adverse finding against a legal practitioner in relation to his professional conduct is a serious matter. A finding of unsatisfactory conduct is a "black mark" against a solicitor on his/her professional record. One must act with care, therefore, to ensure that such "black marks" are not entered without good reason. The concept of "unsatisfactory professional conduct" is a creation of statute. Prior to the Legal Profession Act 1987, there was no such animal - one was either guilty of professional misconduct in the common law sense, or not guilty of anything at all. The Parliament, however, clearly thought that an additional, but lower, level of professional conduct should be the subject of sanction. There would be few, if any, other professions or callings that are subject to this type of disciplinary regime. The legal profession has been encouraged for many years to be more competitive, market oriented and consumer responsive. The legal profession, like other professions and callings, is subject to the usual laws of negligence, contract, the strictures of the Fair Trading Act, and so on. Being a profession, as distinct from most other forms of occupation, it is also subject to the usual professional conduct sanctions. In addition it is subject to the lower standard of unsatisfactory professional conduct and, a factor often forgotten in media and political criticism, personal liability, against which there is little protection other than expensive professional indemnity insurance. How all this can be accommodated within a reasonable framework will, no doubt, be the subject of much robust discussion and the future may well result in an entirely different and less inflexible approach to what constitutes good professional conduct. The concept of unsatisfactory professional conduct was an attempt to impose upon the legal profession a disciplinary regime covering less serious professional conduct matters than those that would otherwise qualify as professional misconduct. It would be dangerous to attempt to define the parameters of unsatisfactory professional conduct. Certainly, in our view, and notwithstanding the width of the non-inclusive definition, it would not cover matters of mere negligence. It cannot have been the intention of the Parliament to impose upon the legal profession a professional standard that could be categorised as being 100 per cent perfect. There is an unfortunate tendency today, when loss is suffered by a person, to blame that person's adviser or professional and to avoid fixing responsibility on the person who suffered the loss. The concept of insurance and the so-called tide of consumerism seem to result in the consumer of services seeking to shift the blame from his/her own activities to those of the professional. Accepting blame for one's own activities and choices is definitely "out", and trying to put that blame on someone else is definitely "in". However, professional persons, in particular, are called upon daily to form opinions and judgments about numerous matters. If it is true that judicial opinions regularly differ, even on agreed facts, then it is even more true that a professional person, only hearing one side of a story, and being under commercial pressure in the conduct of his/her own business, is also human and he/she may form an opinion or reach a conclusion that may be different from other professionals or which, with the benefit of hindsight and contemplation in a calmer atmosphere, may well have been different. In our view, the concept of unsatisfactory professional conduct does not contemplate disciplinary proceedings being brought against a solicitor for mere negligence. What is required is something more than mere negligence, but something falling short of professional misconduct. It would be dangerous to offer an example, but an example can be found in the decision of this Tribunal In the matter of Ian Gordon Dun, to which reference was made above. It may have been different, in that case, if the Solicitor had been specifically instructed to issue a statement of claim, and he simply did not carry out those quite specific instructions - in that case, one might opine that the Solicitor would have been guilty of unsatisfactory professional conduct. A further example of such conduct might be not knowing that a contract for the sale of land should be stamped as distinct from knowing it should be stamped but not calculating the correct amount - the former shows a lack of professional competence and diligence, whereas the latter may be mere negligence. Once it is accepted that mere negligence does not come within the concept (and there are probably other activities of a solicitor that similarly do not constitute unsatisfactory professional conduct but about which some members of the public may find cause to complain) then one needs to look at each individual pleaded complaint to see whether the conduct complained of is sufficiently serious to warrant a "black mark" appearing in the professional conduct record of a solicitor. We now need to look at the decision His Honour Cole J. His Honour held Mr Pitsikas liable for the losses of Mr Manettas. It will be remembered that Mr Manettas and two other persons, Wall and Caralis, embarked upon two highly speculative undertakings to purchase and develop properties with 100 per cent borrowings. His Honour held that Mr Pitsikas signed the Dyclu guarantee as witness to the signatures of the three guarantors. That was true. His Honour held that Mr Pitsikas signed the Presabout guarantee as witness to the signatures of the three guarantors. That was not true. His Honour further held that when Mr Pitsikas wrote to the GIO on 11 March 1988 advising the GIO that the Dyclu documents had been executed by the mortgagors, Mr Pitsikas knew that the signatures had not in fact been witnessed. That was true. His Honour further held that Mr Pitsikas signed a Solicitor's Certificate relating to the Dyclu loan, that that certificate was dishonest because it certified to the GIO that the loan agreements had been explained and this resulted in the GIO settling the matter. That finding was not true, for the reasons specified above. Although His Honour said that those findings of fact where of "central importance and grave concern" clearly they were not findings that would have entitled Mr Manettas to recover damages against the Solicitor. There was no argument by Mr Manettas that it was his signature that appeared on the loan documentation and that he was bound by that documentation. So, how was it that the Solicitor was held to have been liable for the losses? His Honour said that he formed the view that Mr Pitsikas did not advise any of the guarantors that they should obtain independent legal advice. Where the Solicitor's evidence conflicted with that of Mr Manettas in this respect, His Honour rejected the evidence of the Solicitor. Mr Manettas apparently denied that the Solicitor suggested that he, Mr Manettas, should receive independent advice in relation to the Dyclu documents. But that in itself would not, surely, entitle Mr Manettas to recover against the Solicitor. His Honour found that the Solicitor did not consider any possible conflict of interest. That, also, does not fit Mr Pitsikas with liability. The nub of the matter was that Mr Manettas said to the Solicitor: "I am involved with two others, a Nicholas Wall and a Jim Caralis who will be guaranteeing the loan equally" and when asked by the Solicitor: "What would you use as security?" Mr Manettas replied: "The only security to be used is the property at Newtown and equal guarantees between the three of us." His Honour found that the expressions "guaranteeing the loan equally" and "equal guarantees between the three of us" are expressions fraught with ambiguity. The Solicitor admitted as such in cross-examination. He admitted that the phrases could have meant guarantees jointly and severally or guarantees limited to one third severally. His Honour found that Mr Pitsikas "simply didn't consider any question of ambiguity arising from the instructions he was given. He should have raised that ambiguity as solicitor for the guarantors...(in these circumstances a solicitor) would be bound to inquire of his client whether the guarantees were to be joint and several or limited." There were a number of other matters but the gravamen of case against the Solicitor was that if he had properly understood the instructions of Mr Manettas to the effect that the liability would be several only and limited, then the whole deal with the GIO would not have gone ahead because it was tolerably clear, as a matter of commercial reality, that the GIO would not have accepted a limited guarantee. And so, arising out of these facts and conclusions, the Society alleged as unsatisfactory professional conduct that the Solicitor had failed to act upon the instructions from Mr Manettas in circumstances where Mr Manettas intended that the guarantee be limited to a one third liability between each of the guarantors and the Solicitor failed to ascertain what Mr Manettas meant by his instructions. Taken baldly, one might have concluded, as His Honour did, that the instructions where ambiguous and should have been clarified. But one needs to look at the totality of the matter, not in the isolation of one conversation. Firstly, one needs to appreciate some of the background to the property deal. In 1987 Messrs Wall and Caralis approached Mr Manettas - they all had children attending the same school - and Mr Caralis said: "I want to do something whereby we have some fun together during the time our children are at school. It gives us a common interest which we can enjoy." (One would be hard pressed to find a more curious way in which to start a business relationship!) It will be remembered that Mr Wall was employed by a real estate agent and apparently experienced in leasing. Mr Caralis was involved in property development but His Honour's judgment, unfortunately and curiously, does not assist in finding out what benefit Mr Manettas could contribute to the project. It is quite clear from the evidence that each of the three parties proceeded "on the basis that we each go a third, a third, a third." Mr Wall said, effectively, that they would all share equally in any profits but he denied that there was any agreement to share equally in any loss - "losses were not discussed." He thought that the sharing of one third each was "a gentleman's agreement...losses were never discussed." Mr Caralis agreed that it was a gentleman's agreement, that "we each go a third, a third, a third. We all take profits out at the end. One is paid, we all are paid...we never spoke about losses." As the development proposition proceeded, the Solicitor's evidence before this Tribunal was to the effect that Mr Manettas wished to get the first development up and running as quickly as possible and, to that extent, an application was made to the GIO in the name of Mr Manettas. Now it is quite clear, in our view, that the GIO knew there were other persons involved. In the GIO Finance letter to Mr Manettas (personally and direct, it will be noted) 10 November 1987, it approves a drawdown facility to a limit of $4,000,000 to purchase the King Street Newtown property, to assist the completion of re-furbishing works and to capitalise the interest payable for the initial term of the loan. The letter of approval goes on to say that the security will be a first registered mortgage over the Newtown property, a second registered mortgage over the property owned by Mr Manettas personally at Watsons Bay, a personal guarantee by Mr Manettas and the GIO understood that two additional parties, Wall and Caralis, intended to guarantee the loan and it required information relating to their assets and liabilities including their background that must prove to be satisfactory. It is important to observe that there is nothing in this letter that would indicate that the liability of Mr Manettas was anything other that for the full amount of the loan. There was no reference to any limited form of guarantee and one would have thought that there would have been specific reference if such were to be the case. It is important to also recognise that the GIO required a satisfactory valuation of the Newtown property and it would consider the discharge of the second mortgage over the Watsons Bay property, including the guarantee of Mr Manettas, on the basis of a subsequent valuation of Newtown after completion of all re-furbishment works at a minimum value of $6,000,000. It was also a term of the loan approval that a life policy in $4,000,000 would be provided over the life of Mr Manettas but that requirement would be waived if the GIO was satisfied with the personal financial statements of Wall and Caralis. In particular, the GIO required confirmation that the statement of assets and liabilities of Mr Manettas constituted a fair and accurate picture of his net worth. No such requirement was imposed in respect of the financial statements of Wall and Caralis. The evidence discloses that the financial worth of Mr Manettas was in the order of $21,000,000 net, that of Mr Wall $507,000 net and that of Mr Caralis some $5,550,000 net. By letter dated 24 November 1987 GIO Finance indicated it no longer required the life policy over the life of Mr Manettas. Again, no reference is made to any limited forms of guarantee nor to any security required by Wall and Caralis. In these circumstances it is difficult to see, with great respect, that a business man with the undoubted expertise of Mr Manettas, who had clearly placed his own property at Watsons Bay as the primary security, no other security offered by the other guarantors, could have seriously contended that his liability was limited to one third. His Honour Cole J rejected portions of the evidence of Mr Caralis to the effect that he understood that the Watsons Bay property would be sold first. His Honour felt there was an "inherent probability" that Mr Manettas would personally undertake all the prospective loss for one third prospective profit and that that concept "repels acceptance". But Mr Manettas was an experienced business man. No other guarantor put up any security and one's commercial experience indicates clearly that the GIO would not have made a loan on limited guarantees in the above circumstances. The Solicitor gave evidence before the Tribunal and was subject to cross-examination. He stated that he first met Mr Manettas in approximately 1962. He commenced acting for him and by 1973 Mr Manettas had purchased about three investment properties. Various companies over the years were formed and the Solicitor received regular instructions from Mr Manettas and his various companies. In 1972 the Solicitor actually purchased property in partnership with Mr Manettas and was offered a share in the Cyren seafood restaurant, capital free. There is no need to recite the numerous instructions that the Solicitor received over many years from Mr Manettas, his family and various companies. Suffice it to say that Mr Manettas had on occasions previous to those in issue entered into joint and several guarantees. The relationship between the Solicitor and Mr Manettas was very close. The relationship between their respective families was very close. As late as 1982 Mr Manettas was granting joint and several guarantees to the Commonwealth Bank and later to Permanent Nominees. The Solicitor says that he was "never instructed by Mr Manettas at any time that the guarantee (in this matter) was to be limited to one third." He says "Although we had discussed the fact that there would be three shareholders in the company (Dyclu) and although looking at his instructions in isolation may give the impression that his instructions may have been ambiguous, at the time, in the circumstances surrounding the transaction and discussions we had in relation to the same, I did not find them to be so." The Solicitor said that he "believed that he (Manettas) was aware of the joint and several nature of the guarantees." The Solicitor conducted the negotiations with the GIO. Mr Manettas apparently volunteered a second mortgage over his Watsons Bay home in order to further secure the advance for the development of the Newtown property. The Solicitor says, and we think correctly, "I was at no time instructed to limit the guarantees to one third and it is certain from the circumstances surrounding the transaction that the GIO would not have contemplated the same. In my years of practice in the commercial area, I am unaware of any financial institution that would have agreed to limit guarantees in this manner. It would not be commercially viable to proceed with such a transaction." And this is particularly so, if we may so observe with respect, where the other guarantors were not putting up any security at all! It is of further interest to note that both Messrs Wall and Caralis in evidence before Cole J, stated that they knew that they were providing directors guarantees which were joint and several. It would seem that the only person who was of the view that the guarantees should have been limited was Mr Manettas, and he was the only person putting up security and who stood to loose his home. Indeed, Mr Caralis stated in cross-examination, when asked what risk he perceived: "I perceived the risk, we signed a guarantee, Mr Manettas put up as security in the case of the GIO the Watsons Bay property, which at the time he showed me through and he stated quite clearly `This is what I am putting up as security for these properties.'" In answer to a further question: "You didn't expect Mr Manettas to bear a third of the liability under the agreement as well as the entire value of his equity in the Watsons Bay property?" Mr Caralis replied: "That's how I understood it and we are here to speak the truth...The house is put up for security, that's the security." In answer to a further question: "Nobody ever told you in addition to being liable to one-third Mr Manettas would also have to put his Watsons Bay property or the value of it towards the liability?" Mr Caralis replied: "That's how I understood it." On page 81 of the transcript Mr Caralis admitted that he knew that the guarantee that he had signed was joint and several. Mr Wall gave similar evidence before Cole J. He stated that he had looked through the Watsons Bay property, that "Mr Manettas suggested to us (Wall and Caralis) that this was the property that he was going to put up to the GIO as additional security to support Presabout and Dyclu." He said that in discussions with a Mr Briggs of the GIO that Mr Briggs said to him: "We are looking at Mr Manettas. We are not interested in you or Caralis." He later said: "My dealings with the GIO have always been that it was Mr Manettas that they relied upon for the guarantees." So, although all parties appeared to have complained that the Solicitor did not explain the documentation to them, it was clear that two of the three parties thought that the documentation they were signing created joint and several liability and that the primary security for the guarantees was the Watsons Bay property owned by Mr Manettas. And Mr Manettas had given, in the past and on a number of occasions, joint and several guarantees. It was said by the Society that the Solicitor was not diligent in taking his instructions. The test, it was said, is not one of 100 per cent, but it is one of competence and diligence. It was said that there was sufficient ambiguity to amount to a requirement that the Solicitor clarify his instructions and that, presumably, that failure amounted to unsatisfactory professional conduct. In all the circumstances of this case, we are not of that opinion and that complaint is dismissed. It can now be seen, clearly, that the reason that Mr Manettas was invited to join with Messrs Wall and Caralis was not because of any particular expertise that he may have had in property development but because he could put up the security that the other co-developers/co-guarantors could not. And it is also quite clear that the GIO would not have even thought of proceeding with the Dyclu loan relying on the unsecured personal guarantees of Wall and Caralis without the valuable security offered by Manettas. Indeed, when Mr Manettas wanted to raise more money using the Watson's Bay property as security the GIO went to some trouble to ensure that this security was protected by obtaining additional security from Mr Manettas. And it was this additional security that was the subject of the next complaint of unsatisfactory professional conduct. The Society further complained that the Solicitor failed to act on instructions from the lender in that when Mr Manettas wished to increase the amount of his first mortgage to Mercantile Mutual the GIO initially agreed upon the basis that Mr Manettas grant it security over 2,000,000 shares in one of his companies, Manettas Limited, and subsequently the lender required that security to be increased to 4,000,000 shares and prior to the settlement the lender (GIO) instructed the Solicitor to include a term in the deed of mortgage to the effect that in the event of the shares falling in price by more than 20 per cent the GIO reserved the right to require additional security to compensate for the reduction in the value of its security and the Solicitor failed to include that compensation requirement in the deed of mortgage. In His Honour's judgment at page 38, His Honour found that those instructions "were simply overlooked." In our view, however, those instructions were pivotal to the consent of the GIO and were sufficiently proximate in time to have required a focus of attention by the Solicitor sufficient to bring him within the concept of unsatisfactory professional conduct. In our view, this complaint is made out. Conflict of interest The Society alleged that the Solicitor acted in circumstances which gave rise to a conflict of interest and supported this allegation by stating, baldly, that the Solicitor acted for the guarantors, for the lender and for the borrowers in relation to the two loans. How does this constitute a conflict of interest per se? There is clearly a conflict if one purports to act for adverse parties. There is clearly a conflict where parties who were otherwise ad idem cease to be so. But how can it be said that where parties are in fact ad idem there is a conflict of interest? The lender wanted to lend, the borrowers wanted to borrow and the guarantors wanted to guarantee. Mr Hipsley on behalf of the Society accepted that it was not pleaded against the Solicitor that there was a conflict at the beginning of the transaction. He submitted that there was a risk, or potential, of conflict because, until the deed of mortgage was executed, there were always negotiations between both sides as to what were to be the final terms of the agreement. He submitted that the actuality of conflict may not have presented itself until somewhere down the track when the GIO decided that they wished to re-negotiate, but the potentiality of conflict existed because it was a commercial matter between business men and as a commercial solicitor the Solicitor should have known that there is always negotiation. He submitted that there was always the potential, in this particular transaction, for something to go wrong and the Solicitor should have been alive to that possibility and the Solicitor should have appreciated that he was in a conflict situation where there were negotiations about terms and conditions of the loan and that he should have said something like "I am in a conflict situation. I can't protect all of you fellows. I can't protect the GIO. I will have to act for one or the other, but not all of you." However, it seems to us that the words "conflict of interest" are used very loosely in the legal world at present. Conflicts seem to arise, so it is said in loose parlance, where a solicitor acts for more than one party. Is there, for example, a conflict of interest between a husband and wife who jointly wish to purchase a property? Examined loosely, that must be the case. Is there a conflict between A, B, and a company owned jointly by A and B in equal shares, all of whom wish to take proceedings as plaintiff? Again examined loosely, then each of A, B and the jointly owned company would need to be separately represented. That would be an extraordinary proposition. Loose talk about justice and the cost of justice will have even less meaning if one interprets the words "conflict of interest" in a way that prohibits a legal practitioner for acting for more than one party in any transaction. It is worth noting that, at least under the current cost scales, Schedule One, there are a number of specifically legislative scales that enable a solicitor to act for more than one party to a conveyancing matter. For example, there is a scale for the same solicitor acting for mortgagor and mortgagee. And it is not illegal to act for more than one party to a matter (as distinct from litigation). A conflict of interest arises when one party wants something different from that of another party. In those circumstances there is, truly, a "conflict of interest" so that the Solicitor cannot discharge his/her obligations to each party. A conflict of interest must be real, not hypothetical. It must be subjective (i.e. subjective to the particular matter), not objective. A conflict is predicated on the assumption that the various clients of the solicitor actually want different things, i.e. they have different interests in that what each of them wants is different to what the other wants. It is clear that over the years, the ratio behind a prohibition of the solicitors acting where there is a conflict of interest has changed. In 1963 the Law Society Council considered the practice of solicitors permitting a building society to advertise the solicitor's office as a source from which information as to the building society's activities could be obtained was objectionable. In 1972 the Council appears to have accepted the then not uncommon practice of solicitors as acting as agents for insurance companies as a convenient means of dealing with clients' fire and general insurance requirements. The Council did not suggest that that was a conflict of interest and that solicitors were prohibited - to the contrary, it accepted the principle that the client should be entitled to full disclosure of the commissions and, presumably, if full disclosure was made and secret commissions avoided, the solicitor could in fact act for the insurance company and the client. In Law Society v Harvey (1976) 2NSWLR 154 the Court of Appeal in a judgment which found, correctly, that a solicitor's conduct was reprehensible in that he intermingled his clients' affairs with his own and preferred his own interests to those of his clients', did not say that in all cases, even where a solicitor was involved in a business transaction with the client, the solicitor should not act. At pp. 169-170 the Court said that where there was a conflict of interest between the interest of the client and that of the solicitor, "the duty of the solicitor is to act in perfect good faith and to make full disclosure of his interest. It must be a conscientious disclosure of all material circumstances, and everything known to him relating to the proposed transaction which might influence the conduct of the client or anybody from whom he may seek advice...The conflict of interest may, and usually will, be such that it is not proper, or even possible, for the solicitor to continue to act for and advise his client. A solicitor who deals with his client while remaining his solicitor undertakes a heavy burden. Where a solicitor discovers that continuing to act for his client will, or may, bring the interest of his client and his own interest into conflict, it will be a rare case where he will not, at least, advise his client to take independent legal advice." There is, of course a special relationship of trust and confidence between a solicitor and client and Harvey's case has been followed subsequently in circumstances where solicitors have had financial dealings with their clients. But it is quite clear that solicitors are not prohibited from acting in circumstances where there may be a "conflict of interest". They may well "undertake a heavy burden" but if they discharge that heavy burden then no criticism can be levelled against the solicitor. In the Will of Shannon 1977 1 NSWLR 210 Holland J admitted to probate a Will that permitted the executor/solicitor to charge, not only usual professional costs and charges in proving the Will and in execution of or in connection with the trusts of the Will but also to commission at the same rate as that applicable to the Public Trustee of NSW. The solicitor's client wanted the solicitor to act as his executor and the solicitor expressly explained to the client as testator the relevant factors and gave the testator the relevant warnings. It was not suggested, in any way at all, that the solicitor had acted improperly, although it is quite clear that the solicitor had an interest in the matter, an interest that by the terms of the Will was greater than if the solicitor had been a lay executor, but there was no suggestion that the solicitor had not discharged his duty. His Honour said, at page 218: "In my opinion, it is not possible to say that such clauses are generally bad and inadmissible to probate because of conflict of interest and duty. To do so would be to make the presumption that the duty fully to advise the testator and to ensure that he understood and approved the clause would not have been performed...I do not think it is for the Court to introduce such a rule or policy consideration and certainly not upon an assumption that solicitors generally cannot be relied upon to do their duty to their testator clients." So it is quite clear that, provided the solicitor carries out his duty to his respective clients, he does not have a conflict. Again, the conflict only arises where the clients each want something different. To plead "conflict of interest" and nothing more does not advance the matter further. There must be a real conflict between the clients. There is nothing at law to prohibit a solicitor for acting for more than one party in a non-contentious transaction. The so-called Loxton Memorandum published by the Law Society Council on 16 May 1975 talks about "a real conflict of interest", a "likelihood of a real conflict of interest" and "a solicitor acting for both parties must, consistent with his several duties to each client, act and be seen to be acting in an even-handed manner for each client". One has to look at each transaction and identify accurately the nature of the interests and the manner in which a solicitor, acting fairly, would be bound to serve those interests. A client is entitled to receive advice given fearlessly and independently, but if that advice is given, then a solicitor discharges his duty. In 1967 a Practice Note was published by the Prothonotary which made it quite clear that lump sum settlements inclusive of costs in actions for damages should not be entered into by solicitors. The reason for this Practice Note was that it tended "to place the plaintiff's solicitor in a position which his personal interest conflicts with that of his client". Clearly current practice is to accept lump sum offers inclusive of costs in settlement of actions. Presumably, times have changed but, in any event, it is clear that the only issue in such a case is whether a solicitor has discharged his duty to his client by informing the client of the amount of costs prior to the client accepting the lump sum offer so that the client is aware of how much nett the client is to receive. The Practice Note has, of course, disappeared. Although it is true that in Victoria the Law Institute has published a Rule which prohibits a solicitor acting for vendor and purchaser, lessor and lessee, lender and borrower and purchaser and lender, that prohibition only applies unless and until the solicitor obtains the written acknowledgment of all parties in accordance with a particular form. Indeed, the Rule accepts the fact that it is not strictly a conflict of interest situation because the Rule goes on to provide that in the event of a conflict of interest arising, the solicitor will cease to act for all of the parties for whom he/she has agreed to act unless each of them agrees in writing for which of them the solicitor may continue to act. In other words, the Rule accepts that there must in reality be a conflict of interest and such a conflict does not necessarily arise simply because a solicitor acts for more than one party to a transaction. It is further of importance to recognise that the "conflict of interest" under consideration here should not be confused with the use of that phrase as used by the Law Cover professional indemnity insurance scheme for the insurance year commencing 1 July 1994. That scheme recognises that, for the purposes only of assessing risk and insurance premiums, solicitors do in fact, quite legally, act for more than one party to a transaction but, if they do, the insurance premium is increased. Indeed, the insurers go to some effort to state that in so acting it is not necessarily improper. The risk is that solicitors may not in fact discharge their duty to each of their individual clients. It is important, therefore, to identify the particular interests which may be in conflict before one can conclude that there is, in reality, a true conflict of interest. In this case, it was Mr Manettas who approached the Solicitor and asked the Solicitor to see if he could arrange the finance through GIO because he, Mr Manettas, thought that the Solicitor had some relationship with the GIO. The GIO wished to lend, the borrower wished to borrow and the guarantors wished to guarantee. There was no conflict of interest. The problem that confronted Mr Pitsikas was not that he had a conflict of interest but, if one accepts the findings of Cole J, he failed to properly explain to each of the parties to the transaction the precise details of the transactions and the precise details of their individual responsibilities and liabilities. If he had so properly explained, then it could not be said that he had failed to discharge his duty to each of the parties to the transaction. Most, if not all, of the problems that arise when acting for more than one party arise out of the failure of the legal practitioner to properly and individually explain. Where a solicitor fails to discharge that duty to each of his clients, then he may be liable in tort and perhaps also in contract. But the fact that he acts for more than one party in a commercial transaction like the present should not, in our view, be a matter for comment, let alone a charge of unsatisfactory professional conduct. In our view, the charge of him acting in circumstances which gave rise to a conflict of interest between the parties is not made out. Mr Pitsikas did not recognise any conflict of interest, and neither do we. A conflict must be real, and not hypothetical, before a solicitor can be guilty of some failure to obtain a proper level of professional standard. Negligent conduct The Society complained that the Solicitor acted negligently in that "Mr Manettas instructed the Solicitor to draw the guarantee document in terms which were ambiguous" and the Solicitor failed to ascertain what Mr Manettas meant by his instructions. For the reasons set out above, we are not satisfied that the Solicitor conducted himself in such a way in relation to these transactions that would qualify for a finding of unsatisfactory professional conduct against him. He had a well founded belief as to the nature of his instructions and, as we have stated above, mere negligence is not, in our view, a ground for a finding of unsatisfactory professional conduct. The issue before Cole J was considered in terms of the tortious act of negligence. From a professional standards point of view, a tortious act of negligence may or may not amount to unsatisfactory professional conduct. The Society's submissions recognised that a distinction should be made between the tortious negligence considered by Cole J and the way in which "negligence" was used in the Amended Complaint. For reasons indicated herein this Tribunal has recognised the distinction and has made a finding against the Solicitor in respect of his failure to carry out his instructions relating to the deed of mortgage when additional security was required, but does not make a finding against him in relation to the alleged ambiguous instructions regarding the guarantee document. Negligence, breach of fiduciary duty and failure to give advice in best interests The last three complaints against the Solicitor arise out of the desire of Mr Manettas to borrow additional monies for other purposes on the security of his Watsons Bay property. It will be remembered that Mr Manettas had a first mortgage to Mercantile Mutual over this property, and a second mortgage in favour of GIO as part of the security for the advances to Dyclu and Presabout. Mr Manettas sought to increase the amount of his first mortgage to Mercantile Mutual and the complaint is that the Solicitor "did not discuss with the lender (GIO) the possibility of circumstances whereby a guarantor might be relieved of responsibility for a debt by reason of there being other secured creditors in circumstances such as the present one." The basis behind these three complaints arises out of cross-examination of the Solicitor in the proceedings before Cole J the Solicitor was asked this question: Q: "And you knew indeed that there may be circumstances whereby guarantors could claim to be entitled to be relieved either wholly or partly by reason of dealings by secured creditors with securities held by them. You understood that, didn't you?" And the Solicitor replied, baldly: "Yes". In answer to further questions, he said he did not offer any advice in relation to the GIO because additional security was being provided. His Honour found, on that evidence, that Mr Pitsikas knew that there would be circumstances where such a transaction could result in claims for relief by guarantors. Although it was referred to by His Honour in his judgment, it was certainly not a live issue in those Supreme Court proceedings. And, with respect, it seems a remarkable proposition of law to put to the Solicitor in cross-examination and, further, it seems a remarkable admission by the Solicitor in his answer. Indeed, when asked by the Tribunal Chairman: "What should he have said to the GIO?" Mr Hipsley, correctly, in our view, had to seek time to obtain instructions. Indeed, one would have to pause for some considerable time before being able to answer the question put to the Solicitor. Cole J did not assist because there is nothing in his judgment that would indicate what the Solicitor should have told the GIO. We suspect that the Solicitor was too quick to agree with the proposition put to him in cross-examination. It is important, in proceedings in this Tribunal, that complaints be properly particularised. The complaint alleged that there may be circumstances whereby a guarantor might be relieved of responsibility for a debt..." It was firstly suggested on behalf of the Society that the word "relieved" meant in the sense that the guarantor would be unable to pay the debt. But it seems to us that "relieved" in this context talks about, effectively, a release from the debt, i.e., that the guarantor does not as a matter of law have to pay the debt. The proposition of law put to the Solicitor is, it appears, that where you have co-guarantors and the guarantee is linked to a security, if there is an interference with that security without the consent of the guarantors, it may have the consequence of releasing those co-guarantors from their liability under the guarantee. Mr Hastings QC for the Solicitor was kind enough to draw our attention to a number of texts on this point. In Phillips and O'Donovan, The Modern Contract of Guarantee, 1992, 2nd ed., it is said that if a creditor interferes with or impairs the value of securities, the guarantor may be wholly or partly released from his liability. The authors then discuss three bases upon which this result can occur. The first basis depends upon a diminution in value of the primary security, the second basis depends upon there being a contract for a specific security to be held and the third basis depends upon the creditor remaining under an equitable duty to maintain securities for the benefit of the guarantor. So, if the primary security has not been diminished in value, then no discharge or release applies. The second basis does not appear to apply and the third basis of the equitable duty to maintain the securities only reduces the guarantor's liability to the extent that the value of the securities has been impaired as a result of the breach - it is not a release or discharge. In Rowlatt on Principal and Surety, 4th ed. by Marks and Moss the learned authors fix upon the proposition that there must be a contract that the creditor shall acquire or preserve any right against the debtor - if there is such a contract and the creditor does anything to release that right, then the surety is discharged, but when there is no such contract that does not release the surety unless he can show that he has received some injury in consequence of the creditor's conduct and in that event the surety is only released pro tanto. A surety is entitled to contribution from every co-surety and to the benefit of every security held by the creditor. But it would seem that the liability of the surety is not discharged absolutely, but the surety is entitled to an allowance commensurate with the value of the protection lost to him. Mr Hastings QC was kind enough to take us through the various passages that appear in these two works, but at the end of the day it seems to us that the proposition put to us to and the Solicitor in cross-examination and answered by him so glibly was a proposition that may or may not have been correct, depends on a number of circumstances, a careful analysis of each individual transaction and, in circumstances where the Solicitor formed the professional opinion that the value of the primary security had not been diminished at all by the proposed transaction, it seems to us to be not a matter of professional conduct if the Solicitor failed to give advice that it was subsequently thought he should have and in circumstances where the proposition of law requires more than a passing examination. There may be cases where failure to give proper legal advice may amount to unsatisfactory professional conduct. But opinions between professionals differ as to what advice should or should not be given and what opinions should or should not been formed. As we have stated, even judicial opinions in the highest courts differ on agreed facts. At the professional coalface it is difficult to see how an expression of professional opinion or the failure to express a professional opinion might found a complaint for unsatisfactory professional conduct. Certainly, in our view, not in this case and the complaints under this heading are not made out. Solicitor's history The Solicitor has been in practise for 23 years, having been admitted on 7 May 1971. He is married with four children. He was an active basketball player, engaged in the coaching of juniors, was the president of a basketball club, is now on the committee of a junior rugby union club and has managed junior teams. He has not been the subject of any adverse finding of a professional nature. Filed in support of the Solicitor, and admitted into evidence, were numerous statutory declarations of his peers and persons outside the legal profession, including clients. He is clearly a person who is held in high regard in the community. In our view, he is clearly a person who has tried to do his best. Unfortunately it appears that he allowed his close personal relationship with Mr Manettas to affect his professional judgment in the way in which he should have dealt with Mr Manettas. He has paid a heavy price. He has suffered greatly already as a consequence of the litigation to which we have referred above. In all the circumstances, although the Solicitor has been found guilty of professional misconduct in some respects and unsatisfactory professional conduct in some respects, the circumstances were such that in our view the Solicitor acted without any intent to deceive or defraud, in circumstances where his only desire was to assist his client and in circumstances where at all times he believed he was acting in a bona fide manner. There is no doubt, in our view, that the Solicitor has received and learned indelible lessons from his involvement in the Supreme Court litigation and the proceedings before this Tribunal. The circumstances are such, that in our view, the orders that the Tribunal should make should be on the lower end. Some of the problems that arose in the context of the matter referred to in this hearing arose because the Solicitor was put under pressure by the client. In those circumstances solicitors often think that they are doing the right thing by their clients by cutting corners and not travelling down the correct path. They are not doing the right thing by themselves, by their partners or by their clients. When clients (or courts for that matter) impose inappropriate time limits or exert undue pressure, solicitors should be alert to the risks involved so that they can avoid being led into error. In relation to the costs of the Society, although it is true that the Society has not altogether been successful, the proceedings were properly brought, the main grounds have been made out and the factual surrounding circumstances were generally the same. However, of the four issues of professional misconduct, the Society succeeded only as to two and those two were not put in issue by the Solicitor. Of the seven issues of unsatisfactory professional conduct the Society succeeded on only one. By far the bulk of the hearing time was spent in argument on matters in which the Society was not successful and, for the reasons set out in this judgment, had not sufficient substance that, in the scheme of this matter, warranted the time spent on them for the result obtained or the result that could reasonably have been expected commensurate with the effort. In our view the Solicitor should pay two thirds of the costs of the Society. Finally, and in deference to the strong submission by Mr Hipsley in which he counselled us to be wary of making any findings predicated on the veracity of Mr Manettas (he not having given evidence before us and we not having the opportunity to form any opinion thereon), we can say, quite clearly, that the findings we have made are based solely on the evidence that has been placed before us and reached to the requisite standards of proof that are required when this Tribunal is required to make findings against a Solicitor with respect to his/her professional conduct and standards. Orders The Tribunal makes the following orders that: 1. In relation to the findings that the Solicitor is guilty of professional misconduct, the Solicitor pay a fine of $2,000 within a period of 30 days from the date of this Order. 2. In relation to the finding that the Solicitor is guilty of unsatisfactory professional conduct the Solicitor pay a fine of $500 within a period of 30 days from the date of this Order. 3. The Solicitor be suspended from practice at the expiration of the said period of 30 days if the said fines shall not have been paid until they have been paid. 4. The Solicitor pay two thirds of the costs of the Law Society, such costs to be assessed on a solicitor and client basis as if taxed in the Supreme Court of New South Wales. 5. If agreement cannot be reached between the Solicitor and the Law Society as to the amount of such costs, either party shall have liberty to apply. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.