The Legal Services Tribunal of New South Wales CITATION : Richard William Wales [1997] NSWLST 25 PARTIES : Richard William Wales FILE NUMBER(S) : of 1996 CORAM: Mr A Martin (Chairman) - Mr J. O'Neill - Miss J Greenwood CATCHWORDS: Professional Misconduct - breach of s. 61 of the Legal Profession Act - Professional Misconduct - misappropriate trust moneys/moneys :- LEGISLATION CITED: Legal Profession Act 1987 CASES CITED: DATES OF HEARING: 11 March 1997 DATE OF JUDGMENT: 09/25/1997 LEGAL REPRESENTATIVES: Mr I Wales for the Law Society No appearance for the Solicitor JUDGMENT: The Tribunal found that the solicitor had fraudulently misappropriated clients funds in amounts totalling about $400,000 and was thereby guilty of professional misconduct. The Tribunal ordered that the solicitor's name be removed from the Roll of Legal Practitioners and that he pay the Law Society's costs. The Complaint T he complaint was made by the Council of the Law Society against Richard William Wales (the Solicitor). The grounds of complaint are as follows:- 1. The Solicitor wilfully breached Section 61 of the Legal Profession Act 1987 ("the Act"). 2. The Solicitor misappropriated moneys of his client. Particulars of the Complaint 1. Matter of Collingridge 1. From April 1992, or thereabouts, the Solicitor acted for Mrs Carolyn Collingridge in a Family Law dispute with her husband. 2. By a document dated 17 November 1992, Mrs Collingridge authorised and directed the husband's solicitors to pay moneys due to her to the Solicitor. 3. On 27 November 1992, the husband purchased a bank cheque from the State Bank, Gordon branch, in the sum of $35,000 made payable to the Solicitor. The bank cheque was forwarded to the Solicitor. 4. On 4 December 1992, without the authority or instructions of his client, the Solicitor deposited the bank cheque into a personal account with the National Australia Bank, Law Courts Branch. 2. Matter of Wagemaker 1. From July 1992 or thereabouts, the Solicitor acted for Mrs Michelle Wagemaker in a Family Law dispute with her husband, Mr Dennis Owen Leaudais. 2. At all material times, Mrs Wagemaker and Mr Leaudais were joint tenants of a property known as Unit 20, 10-14 Short Street, Thornleigh. 3. By written agreement dated 19 February 1993 Mrs Wagemaker and Mr Leaudais settled their property dispute upon terms which provided, inter alia, for the payment of certain sums to Mr Leaudais and the sale of the Thornleigh property. 4. Mrs Wagemaker subsequently agreed to buy out the interest of her husband in the property and, for that purpose, made an application for a loan from Advance Bank, which application was granted. 5. Settlement was scheduled for 14 April 1993. On that date, the Solicitor attended the office of the solicitors for Advance Bank and received cheque No. 1663465 in favour of the State Bank in the sum of $197,113.78. 6. The cheque payable to the State Bank was deposited to the Solicitor's trust account on 19 April 1993 and credited to the trust ledger account of Mrs Wagemaker. 7. The Solicitor on or about 27 April 1993 drew a cheque on his trust account in the sum of $197,113.78, which cheque was debited to Mrs Wagemaker's trust ledger account and used that cheque to purchase a Westpac Bank cheque in favour of the National Australia Bank in that sum. The cheque was then repurchased by Westpac and a fresh bank cheque in the same amount drawn in favour of St George Bank on 3 May 1993. 8. On 3 May 1993, the Solicitors, without authority or instructions, banked the cheque in favour of St George Bank into a personal account with the St George Bank, No 035 020 319, in the joint names of himself and his wife. The account, immediately prior to the deposit of the cheque, had a credit balance of $305.96. From that account, the solicitor made withdrawals totalling $191,985.89. 3. The Estate of Larden 1. In and before 1993, the Solicitor acted for Mrs R Scott, the executrix of the estate of C R Larden. 2. In the matter of Wagemaker, the Solicitor received on 16 March 1993 a letter from the solicitors for the husband requiring payment of $10,000 by 17 March 1993. 3. On 16 March 1993, the Solicitor drew a cheque in the sum of $10,000 on his trust account payable to "bank cheque - D O Leaudais". 4. The cheque was debited to the trust ledger account of Mrs R Scott - estate C Larden and was shown in the Solicitor's trust account records as an advance to O D Leaudais. 5. The Solicitor had no instructions or authority from Mrs Scott to debit the cheque to the account of the estate or to advance estate funds to Mrs Wagemaker or Mr Leaudais. 4. The Estate of Halliday 1. From August 1992 or thereabouts, the Solicitor acted for Mr John Halliday and Mrs Anne Hoffman, the executors named in the will of their late mother, Gwenda Phyllis Halliday. Probate was granted to the executors on 4 January 1993. 2. On 10 June 1993, the Solicitor drew cheque No. 812634 in the sum of $150,000 on his trust account. The cheque was debited to the Halliday estate trust ledger account and represented estate funds. 3. On 10 June 1993 the Solicitor deposited the above mentioned cheque into his general account at the National Australia Bank, City Tattersalls branch, which then had a credit balance of $2,232. 4. The Solicitor had no authority or instructions to withdraw the said sum from this trust account or to pay it into his general account. 5. From the general account, the Solicitor paid out, without instructions or authority, sums totalling $111,287. The evidence There was no appearance by or for the Solicitor. The Law Society's evidence consisted of statutory declarations of Gary James Still (the solicitor for the Council of the Law Society), Carolyn Collingridge, Michelle Dorothy Maria Wagemaker, Rhonda Vera Scott, John Watsford Halliday and Anne Melva Hoffman. To the declaration of Mr Still were annexed extracts from the reports of the Receiver who had been appointed by the Supreme Court over the property and practice of the Solicitor, copies of the relevant correspondence, bank deposit slips, cheques and the Solicitor's Trust Ledger account records. Also annexed were copies of other relevant documents including a Certificate of Conviction of the Solicitor certifying that the Solicitor on 5 August 1994 had been convicted of 2 charges of fraudulent misappropriation - the Solicitor having pleaded guilty to these charges. The Facts 1. In the matter of Collingridge In early April 1992 the Solicitor commenced to act for Mrs Collingridge in a Family Law dispute with her husband. The Solicitor was instructed to settle the Family Law Matter with the client's ex-husband which required the husband to pay to Mrs Collingridge money by instalments the last instalment being for $35,000. On 17 November 1992 Mrs Collingridge gave a written authority and direction to her ex-husband's solicitors to pay all monies to her under the settlement to the Solicitor. A cheque for $35,000 was forwarded by the ex-husband's solicitor to the Solicitor on or about December 1992. Thereupon the Solicitor banked this cheque into his personal account with the National Australia Bank. Mrs Collingridge did not authorise the Solicitor to deposit the cheque for $35,000 in his personal account and the Solicitor failed to account to her for these monies. 2. In the matter of Wagemaker On or about July 1992 the client Michelle Dorothy Maria Wagemaker consulted the Solicitor to act for her in her Family Law matter. The client entered into an agreement with her husband to purchase his interest in the matrimonial property, this property being mortgaged to the State Bank. The agreement required the client to pay her ex-husband the sum of $25,000 and various amounts of money by instalments with an extension to pay the husband by 17 March 1993. Mrs Wagemaker arranged with the Advance Bank for a loan of $210,000 for the purpose of discharging the mortgage to the State Bank. The Advance Bank was advised that the Solicitor was acting for Mrs Wagemaker. On or about 2 April 1993 the client telephoned the Solicitor and was advised that the settlement had been attended to. Subsequently the client received a letter dated 1 April 1993 from the Advance Bank confirming that settlement of the loan had been completed and advising the client of her monthly repayments. The client was under the impression that the settlement with the Bank had occurred on or about 1 April 1993 and was subsequently provided with a statement by Lyn Philips solicitor that settlement had been delayed until 14 April 1993. On settlement the Solicitor received from the Advance Bank's solicitor a cheque payable to the State Bank in the sum of $197,113.78, and this cheque was deposited into the Solicitor's trust account on 19 April 1993. On or about 27 April 1993 the Solicitor drew a cheque on his trust account in the sum of $197,113.78. This cheque was debited to Mrs Wagemaker's trust ledger account and that was then used by the Solicitor to purchase a Westpac Bank cheque in favour of the National Australia Bank for the same sum. The cheque was then repurchased by Westpac and a fresh bank cheque for the same amount drawn in favour of the St George Bank on 3 May 1993. On 3 May 1993 the Solicitor without authority or instructions from the client banked the cheque in favour of the St George Bank to a personal account with the St George Bank Account Number 03520319 in the joint names of the Solicitor and his wife. The account had a credit balance of $305.09 prior to the deposited cheque and from that account the Solicitor then made various withdrawals totalling $191,985.89. 3. In the Estate of Halliday The Solicitor acted for John Halliday and Anne Hoffman the Executors of the Will of Gwenda Phyllis Halliday. On 10 June 1993 the Solicitor drew from the Estate Trust Ledger Account the sum of $150,000 by trust cheque number 812635. Those funds were paid by the Solicitor into his general account at the National Australia Bank City Tattersalls Branch. Thereafter the Solicitor drew on the general account various amounts. The Executors had not authorised or instructed the Solicitor to withdraw the $150,000 from his trust account. From his general account the Solicitor paid out, without instructions or authority, sums totalling $111,287. 4. In the Estate of Colin Ross Larden The Solicitor acted for Rhonda Vera Scott the Executrix of the Will of her late father Colin Ross Larden. The client instructed the Solicitor to act on her behalf in the finalisation of the Estate. On or about 17 March 1993 the Solicitor debited the Estate Trust Account in the sum of $10,000 and such funds were used to purchase a bank cheque payable to D O Leaudais. Mr Leaudais was the former husband of the client Michelle Dorothy Maria Wagemaker. At no time was the Solicitor authorised by the client to purchase a bank cheque for $10,000 payable to D O Leaudais. On 5 August 1994 the Solicitor was convicted in the District Court of 2 charges of fraudulent misappropriation and sentenced to 3 years penal servitude. These charges related to the misappropriation of $150,000 in the matter of the Estate of Halliday and of the sum of $197,113.67 in respect of the matter of Wagemaker. Conclusion In the matters of Collingridge, Wagemaker and the Estate of Halliday, the Solicitor fraudulently misappropriated sums of moneys totalling $382,113.78. In the matter of the Estate of Larden the Solicitor drew a cheque on his trust account $10,000 without instructions or authority from his client, this cheque being used to meet a liability that the Solicitor had to pay that sum to Mr D O Leaudais. The Tribunal finds that this conduct of the Solicitor to be professional misconduct. Professional misconduct is something done by a person in the pursuit of his profession, which would be reasonably regarded as disgraceful or dishonourable by his professional brethren of good repute and competency. Section 61 of the Act relevantly provides that if a solicitor in the course of practising as a solicitor receives money on behalf of another person the solicitor shall hold that money exclusively for the other person. A wilful breach of that provision constitutes professional misconduct and in this case the misappropriations were deliberate so as to constitute wilful breaches of section 61. By his conduct the Solicitor has demonstrated that he is not a fit and proper person to remain on the Roll of Legal Practitioners and consequently the Tribunal makes an order removing his name from the Roll. Orders The Tribunal therefore orders: That the name of Richard William Wales be removed from the Roll of Legal Practitioners. That Richard William Wales pay the costs of the Law Society determined by the Tribunal in the sum of $6,028.90 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.