The Legal Services Tribunal of New South Wales CITATION : Anthony Stanley Veghelyi [1991] NSWLST 13 PARTIES : Anthony Stanley Veghelyi FILE NUMBER(S) : of CORAM: Mr D Patten (Presiding Member) - Mr A Martin - Mrs B Ingold CATCHWORDS: Professional Misconduct - mislead client - Professional Misconduct - gross overcharging of client - Professional Misconduct - act without instructions - Professional Misconduct - misappropriate trust moneys/moneys :- Legal Practitioners' Act 1898 LEGISLATION CITED: Legal Profession Act 1987 Strata Titles Act Real Property Act CASES CITED: Stewart v Strevens 1976 2 NSWLR 321; Kennedy v Council of Incorporated Law Institute of NSW 1939 (13 ALJ 563 DATES OF HEARING: 03/04/91 - 29/04/91 DATE OF JUDGMENT: 04/29/1991 Mr Garling LEGAL REPRESENTATIVES: Mr Cuddy JUDGMENT: Legal Profession Disciplinary Tribunal In the matter of Anthony Stanley Veghelyi, a solicitor Findings and reasons for findings Before: Mr D. Patten (Presiding Member), Mr A. Martin and Mrs B. Ingold. Appearances: Mr Garling appeared for the Law Society of New South Wales; Mr Cuddy appeared for the Solicitor. This matter comes before the Tribunal on the complaint of the Law Society of New South Wales ("the Law Society") against Anthony Stanley Veghelyi (the Solicitor). The hearing commenced on 3 April 1989 before a Tribunal constituted by Mr Mitchell, Mrs Ingold and Mr Patten and continued over a further 21 days until 19 December 1989 when the hearing concluded and the Tribunal reserved it's decision. Unfortunately Mr Mitchell died suddenly before the Tribunal had announced it's decision. Subsequently before a Tribunal constituted by Mr Patten (presiding), Mrs Ingold and Mr Martin the whole of the record of the proceedings before the Tribunal as previously constituted was tendered as an exhibit. This record comprised all the exhibits tendered at the original hearing together with a transcript of all of the proceedings including the final submissions of counsel. Mr Martin read the exhibit privately and the Tribunal reconvened on 17 December 1990 when certain of the witnesses nominated by Mr Martin including the Solicitor who had given evidence at the original hearing were called, questioned by Mr Martin and other members of the Tribunal, cross examined and re-examined. The Tribunal then heard submissions from Mr Garling and Mr Cuddy at the conclusion of which the Tribunal reserved its decision. The amended complaint relied upon by the Law Society specified eight separate grounds which in turn when particularised involved a substantial number of separate clients and matters. In some cases a particular client or matter gave rise to more than one ground of complaint. It will be necessary for the Tribunal to deal separately with the various allegations which it does as follows: Mrs Pamela Hamilton In relation to Mrs Hamilton the Law Society alleges wilful breach of s. 41(1) of the Act (which wilful breaches if established constitute professional misconduct by statute in accordance with provisions of s. 43 of the Act) and gross overcharging of such a magnitude and in such circumstances as to constitute professional misconduct at Common Law. Mrs Hamilton consulted the Solicitor about mid 1984 at a time when her marriage to Dr Samuel Hamilton had broken down. At the time proceedings were already pending between Mrs Hamilton and her husband in the Family Court and she had previously consulted other solicitors in relation to those proceedings. The Solicitor thereupon undertook the carriage of the proceedings in the Family Court on Mrs Hamilton's behalf and those proceedings terminated so far at least as the court was concerned on 21 May 1986 when an agreement was approved pursuant to s. 87 of the Family Law Act. This agreement was the culmination of extensive negotiation between the parties their solicitors and counsel and was entered into on the day that the main issues in the litigation were set down for trial. Previously there had been various interlocutory proceedings and applications. A little over 2 months after the agreement between Mrs Hamilton and her husband was approved by the Court she received from the Solicitor a series of accounts most of them dated August 1986 comprising in excess of 100 pages. They consisted of separate month by month accounts in relation to the Family Law proceedings for the period from July 1984 to August 1986 together with some miscellaneous accounts for work done in other matters. There was also a summary totalling $215,810. 12 against which a credit was allowed of $211,371. 20 leaving a balance described as: "total amount due and payable $4,438. 92". These accounts will be hereafter reported as the "August 1986 accounts". It may be noted that of the total of $215,810. 12 all but $3,500. 00 related to the Family Law proceedings. Although the accounts were not in taxable form it would be fair to say that they comprised a very detailed narrative of the work performed by the Solicitor. Subsequently the Solicitor was requested by or on behalf of Mrs Hamilton to deliver a bill in relation to the Family Law proceedings in taxable form. Such a bill bearing date 17 July 1987 and signed by the Solicitor was duly delivered it's total inclusive of disbursements being $347,496. 73. That bill is according to the evidence the subject of pending proceedings before the Family Court. It will be convenient to deal with the allegation of gross overcharging first. Before coming to the central issue in respect of that allegation it is appropriate to mention several aspects which are to an extent peripheral, namely whether the proceedings were unusually complex, whether Mr Hamilton was a particularly demanding client, whether Mrs Hamilton freely and voluntarily on two separate occasions signed costs agreements with the Solicitor and the extent to which it is appropriate for the Tribunal to have regard to the bill delivered in taxable form rather than the August 1986 accounts. As to the complexity of the Family Law litigation and the categorisation of Mrs Hamilton as a demanding client the Solicitor's position is conveniently summarised in the question put by his Solicitor to Mrs Hamilton at page 915 of the transcript in the following terms: "I put to you that after you had made contact with Mr Veghelyi professionally you said words to this effect... `I want the best barristers I'm sick of dealing with morons and I want the very best Queen's Counsel you can find in Family Law and the very best barristers for my case. I am not afraid of the cost because we are arguing about millions of dollars here. My legal friends advise me you can be penny wise and pound foolish in large Family Law property cases like this'. " Mrs Hamilton denied this proposition as put to her and sought to minimise the significance of the matter by evidence such as the following passage which appears at page 917: "Certainly we were not aware it was worth millions, it was only worth a few hundred thousand at that stage. " The litigation between Mrs Hamilton and her husband centred around the property known at Elmswood at Gundy in the State of NSW. Although that property was subsequently sold by Mrs Hamilton for $1. 7 million dollars it is likely that it was worth much less than that sum during the period mid 1984 to May 1986. However the Tribunal is satisfied that Mrs Hamilton did instruct the Solicitor to spare no expense in achieving the best possible result. She for instance instructed him to retain Mr Monester a Victorian Queen's Counsel even though, before Mrs Hamilton first retained the Solicitor, Mr M. D. Broun of the NSW Bar had been consulted on her behalf. Having considered the whole of the evidence given upon this aspect of the case where the Solicitors evidence conflicts with the evidence of Mrs Hamilton the Tribunal prefers the evidence of the Solicitor. In reaching this conclusion it has taken particular account of the corroboration provided by Mr M. D Broun in his Affidavit of 3 December 1986 filed in the Family Court proceedings between Mrs Hamilton and her husband. The Affidavit was admitted into evidence and it is instructive to quote passages from it as follows: "The case was overall quite unusually complex and difficult. There were numerous substantial issues about the relevant financial history and the contribution of each party the present and financial position of each party and about the valuation and the feasibility of sub division of the rural property as well as disputes about furniture, stock equipment and maintenance. There were cross allegations of misappropriation of money. The whole case had developed even more bitterness and dispute than is usual in Family Law matters. The Affidavit material had become extensive. There had been a large number of interlocutory applications before I came into the matter. The husband appeared to me to be unusually intransigent and difficult. Mrs Hamilton was a very difficult and demanding client... Mrs Hamilton insisted throughout that the essential thing she wanted was to hold on to the homestead and some land. That added greatly to the difficulties in negotiations... To say that the dispute "only involved... Elmswood" is a serious simplification. Everything that they could dispute about the whole of their financial history back to the date of marriage was hotly disputed and there were a series of properties which had been owned prior to the last and most valuable. " The Tribunal finds as a fact that the proceedings between Mrs Hamilton and her husband were unusually difficult and complex and it also finds that Mrs Hamilton was an extremely demanding client who indicated to the Solicitor both expressly and by her conduct that she wanted him to give the utmost of his time and attention to her case without particular regard to cost. Two documents purporting to be fees agreements for the purposes of the Family Law Rules were signed between the Solicitor and Mr Hamilton the first being dated 20 June 1985 and the second 6 December 1985. Both documents provided for the Solicitor to charge his time at the rate of $160. 00 per hour. The document of 6 December 1985 also included provision for the Solicitor to charge for specific items as set forth and for the client to pay to the Solicitor an additional amount to cover care, skill and responsibility to be calculated "at 24 per cent of the total amount rendered on all bills". Much evidence was given as to the circumstances in which the two documents were signed. As for the document signed in Court during some interlocutory proceedings while Mr Monester appearing for Mrs Hamilton was actually on his feet addressing the presiding judge. According to Mrs Hamilton the Solicitor produced the fees agreement letter and said "unless you sign this now Mr Monester will walk out of here and go back to Melbourne". Mrs Hamilton in light of that threat says that she signed the draft. The Solicitor admits that the fees agreement signed by Mrs Hamilton and dated 20 June 1985 was actually delivered to him whilst Mr Monester was addressing Mr Justice Cook in the course of a short submission after his honour had given judgment substantially in favour of Mrs Hamilton. The Solicitor however denies that the agreement was signed by Mrs Hamilton and handed to him as a result of the threat referred to by her in her evidence. According to the Solicitor's Affidavit sworn 15 July 1988 in the Family Court proceedings between Mrs Hamilton and Dr Hamilton the handing over by Mrs Hamilton of the fees agreement in Court on the 20 June 1985 was the culmination of many conversations which the Solicitor had with Mrs Hamilton extending over a number of months during which time the Solicitor had on more than one occasion suggested to Mrs Hamilton that she should obtain independent legal advice and had received a reply that she had received advice that the agreement was in order "from someone, high up in the Law Society". If the evidence of the Solicitor as set forth in his Affidavit be accepted it is clear that although the agreement was actually handed by Mrs Hamilton to the Solicitor in Court during the course of proceedings she had had abundant opportunity previously to consider its terms and take independent advice about it. On the probabilities the Tribunal accepts the Solicitor's evidence as to the signing of the agreement in preference to the evidence of Mrs Hamilton and finds that the agreement was voluntarily signed by her. A considerable body of evidence was also adduced as to the circumstances of the signing of the fees agreement dated 6 December 1985. Mrs Hamilton's version of those circumstances was set forth in her Affidavit sworn 13 October 1986 in the Family Law proceedings. The Solicitor gave his version of the signing in considerable detail in his Affidavit sworn 15 July 1988 in the Family Law proceedings. The Solicitor's version of the circumstances was to an extent corroborated by the Affidavit by Mr M.D. Broun QC sworn 3 December 1986 in the proceedings in the Family Court. Again, having regard to the whole of the evidence upon the subject, the Tribunal finds as a fact on the balance of probabilities that the fees agreement constituted by the letter dated 6 December 1985 was voluntarily signed by Mrs Hamilton after she had been given an opportunity to obtain independent advice. The two fees agreements were designed to comply with Order 38, Rule 4 of the Family Law Rules in the form in which that rule stood during the period between 1 January 1985 and 9 February 1987. The rule then was in the following terms: "4(1) Nothing in these rules shall prevent: (a) A solicitor acting for a party to proceedings from entering into an agreement in writing with that party in relation to costs of the proceedings and charging in accordance with that agreement or (b) A solicitor or party from taking any proceedings available at Law in relation to such agreement. (2) Before entering into an agreement referred to in sub rule 1 with a party to proceedings a solicitor shall: (a) Provide the party with a copy of the division and schedule 2 and (b) Advise the party of the desirability of obtaining independent legal advice in relation to the agreement before entering into the agreement. " In the absence of an agreement properly entered into pursuant to Order 38, Rule 4 a solicitor unless otherwise ordered by a Court was at all relevant times prohibited from charging costs in excess of those prescribed. It is not disputed in the present case that the charges made by the Solicitor both in August 1986 accounts and in the Bill in taxable form exceeded by a very considerable margin the costs as prescribed under the Family Law Rules. As indicated however the Tribunal accepts that valid fees agreements were entered into between Mrs Hamilton and the Solicitor for the purposes of Order 38, Rule 4 of the Family Law Rules. That however is not an end to the matter. The Tribunal must, it believes, determine whether the costs actually charged by the Solicitor to his client even if calculated pursuant to the fees agreement represented such a gross overcharge as to introduce a connotation of disgraceful or dishonourable conduct by the Solicitor sufficient to justify a finding against him of professional misconduct. It is therefore necessary to turn to the evidence given in relation to the Solicitor's charges and for this purpose a useful starting point is the evidence of Mr Peter Twigg Solicitor who acted for Dr Hamilton in the proceedings in the Family Court. Mr Twigg is a senior and experienced Solicitor who practises extensively in the Family Law area. A copy of fees agreement entered into between him and Dr Samuel Hamilton was annexed to his Statutory Declaration dated 17 October 1989 tendered in evidence. According to the fees agreement Mr Twigg was entitled to charge Dr Hamilton $1,200. 00 per day or any part of a day and $240. 00 per hour for preparation. Other charges were also particularised. Mr Twigg conceded that his charges are in the high range of charges made by practitioners in Family Law matters but nevertheless the total of his costs and disbursements rendered to Dr Hamilton for the proceedings in which he acted for Dr Hamilton throughout was $62,343. 06. From his knowledge of the proceedings between Doctor and Mrs Hamilton and from his examination of the August 1986 accounts and the itemised bill in taxable form Mr Twigg gave as his opinion that the Solicitor's charges to Mrs Hamilton of $215,000. 00 approximately were grossly excessive. He formed this view having regard to the costs agreement constituted by the letter dated 6 December 1985. Mr Twigg also gave his opinion that the further sum of $347,496. 73 being the total of the bill in taxable form was also grossly excessive. Of the witnesses called in relation to the alleged overcharging obviously Mr Peter Twigg had the most intimate knowledge of the proceedings between Doctor and Mrs Hamilton and of their complexity. He was not of course in a position to make any allowance for the additional costs which the Solicitor could legitimately charge because of the demanding nature of his client. Other evidence in support of the Law Society's case upon this aspect of the matter was given by Mr J.F. Newnham who is also an extremely experienced Solicitor in Family Law matters. Mr Newnham had been provided with the various Bill of Cost rendered by the Solicitor to Mrs Hamilton including the bill in taxable form dated 17 July 1987. His opinion was that the rates of charges to be made by the Solicitor as disclosed in the letter of 6 October 1985 insofar as they specified an hourly rate, and various individual items, represented, with the exception of the charges to be made for photocopying, a rate of charge which was grossly excessive. Mr Newnham expressed the further opinion that having regard to his understanding of the nature of the matter and the fact that the Solicitor retained Junior and Senior Counsel his total charge of $215,000. 00 approximately grossly excessive. The Solicitor did not seek to justify in detail the charges made by him to Mrs Hamilton except to the extent that his charges were detailed in the bill in taxable form of the 17 July 1987. Having regard to the whole of the evidence and particularly the evidence of Mr Twigg and Mr Newnham the Tribunal thinks the conclusion is inescapable that the charges totalling approximately $215,000. 00 made by the Solicitor to Mrs Hamilton did represent a grossly excessive overcharge. Having reached this conclusion it also follows a fortiori that the bill of 17 July 1987 represented a gross overcharge. It should be pointed out that the bill of 17 July 1987 on its face indicated that the Solicitor had duplicated many charges and had without justification made a charge of $49,000. 00 for the preparation of the bill itself. In the opinion of the Tribunal, not withstanding that it has given the Solicitor the benefit of its findings as to the complexity of the litigation between Mrs Hamilton and Dr Hamilton and as to the demanding nature of Mrs Hamilton as a client the overcharging by the Solicitor was so gross as to import the notions of disgraceful or dishonourable conduct which could be relied upon to found a finding of common law professional misconduct. As indicated earlier the Law Society in relation to Mrs Hamilton also alleges wilful breaches of s. 41(1) of the Act. The allegation concerns the Solicitor's treatment of two amounts paid to the Solicitor on 24 July 1986 representing the proceeds of a mortgage effected by Mrs Hamilton. The amounts respectively were $140,000. 00 and $56,014. 78. In part the amounts were intended for payment of the Solicitor's costs and disbursements and for payment of a balance due by Mrs Hamilton to her husband pursuant to the agreement which she had recently entered into with him. According to the evidence the Solicitor deposited the cheque for $140,000. 00 in an account with the United Permanent Building Society Ltd and he deposited the sum of $56,014. 78 into a personal account in the name of the Solicitor. Sometime later the Solicitor withdrew from the Building Society deposit of $140,000. 00 the total sum of $132,007. 52 of which the Solicitor personally retained the sum of $94,474. 57. It was the Law Society's case that the Solicitor's treatment of the sums received by him on 24 July 1986 in this fashion constituted a wilful breach of s. 41(1) of the Act having regard to the terms of two letters written by Mrs Hamilton to the Solicitor, one dated 2 June 1986, and the other dated 23 July 1986. The former which admittedly was received by the Solicitor included the following paragraph: "I would like you to now finalise all my Family Law matters as expeditiously as possible and render for my perusal your final memorandum of fees together with those of Counsel for my approval before any payment is made out of monies you may hold on my behalf. Please do not proceed or incur costs in respect of any other matter on my behalf. " The letter, dated 23 July 1986, relied upon by the Law Society was in more complex terms. After referring to the fact that Mrs Hamilton had been requested to execute mortgage documents to secure an advance of $200,000. 00 which "in part is money raised to meet your legal fees" the letter went on to say "I wish you to know that I require these monies to be placed in your trust account and that no amounts are to be transferred for or on account of your fees until you have presented to me a proper itemised Bill of Costs". The Solicitors sworn evidence was that the letter dated 23 July 1986 was not received by him. In the light of that denial the Tribunal is not prepared to find affirmatively that the letter was received by the Solicitor. However the Tribunal regards the letter of 2 June 1986 as clear enough in terms. It specifically directed the Solicitor not to deduct any amount for his costs and disbursements from monies which came into his hands until Mrs Hamilton had perused and approved his final accounts. There seems to be no doubt that the Solicitor acted in blatant disregard of that requirement. The Solicitor contended that he was entitled to disregard Mrs Hamilton's stricture by virtue of the terms of the fees agreement to which reference has been made but this contention is rejected. There is no doubt in the Tribunal's mind that the appropriation by the Solicitor of the funds which came into his hands on 24 July 1986 having regard to the terms of the letter of 2 June 1986 constituted a wilful breach of s. 41(1) of the Act. Mr and Mrs D. J. Morris Mr Morris instructed Barnett Nicol & Carter about February 1983 to act for him in litigation pending between himself, Esanda Ltd and Roadmaster Haulage Pty Ltd. The conduct of those proceedings was assumed by Mr Veghelyi in or about March 1985 by which time the firm previously Barnett Nicol & Carter had become Barnett Nicol & Veghelyi. In March 1985 the litigation was settled upon terms inter alia that Mr Morris was to pay $5,000. 00 to Esanda Ltd and $11,625. 89 to Roadmaster Haulage Pty Ltd the latter sum being payable by way of an immediate payment of $4,000. 00 and the balance by equal monthly instalments over a period of three years. In order to meet his commitments Mr Morris raised a loan through the Solicitor's firm with St George Building Society and monies were paid into the Solicitor's trust account as the proceeds of that loan. Mr Morris according to his evidence believed that $4,000. 00 of the loan was earmarked as the payment he was obliged to make to Roadmaster Haulage Pty Ltd. He also understood that $1,000. 00 of the loan was for the Solicitor's costs he already having paid the Solicitor $3,000. 00 on account. In or about May 1985 the Solicitor in a conversation with Mr Morris reminded him of his liability to pay $4,000. 00 to Roadmaster Haulage Pty Ltd. Mr Morris said... "No you have the money for that" to which the Solicitor replied... "I will check with Lyn Hughes (an employee of the Solicitor) and let you know". Subsequently Mr Morris was told by the solicitor for Roadmaster Haulage Pty Ltd that the sum of $4,000. 00 had not been paid. He then contacted the Solicitor who said... "You will have to pay the $4,000. 00" and, after further discussion... "$5,000. 00 was for our costs". Later still in or about March 1987 Mr Morris received a memorandum of costs and disbursements from the Solicitor totalling $11,370. 67 for which credit of $7,025. 80 was allowed. The Law Society alleges that the Solicitor dealt with the monies received into his trust account from St George Building Society contrary to s. 41(1) of the Legal Practitioners Act (hereafter "the Act). The Law Society also alleges that the account of $11,370. 67 represents a gross overcharge as it included a charge made by the Solicitor of $234. 50 for acting in relation to a Variation of Mortgage the scale charge being $54. 00. The Solicitor's case was that he had express instructions from Mr Morris to retain $5,000. 00 out of the advance made by St George Building Society towards his costs. The Solicitor's Statutory Declaration of 3 April 1989 (paragraphs 25, 26, 27 and 28) sets out in some detail the conversations which the Solicitor says he had with Mr Morris in relation to the application of the St George Building Society advance. Neither Mr nor Mrs Morris were called to give evidence in the Law Society's case and having regard to the Solicitor's own evidence upon the subject which received some corroboration from a letter written by the Solicitor to St George Building Society dated 6 March 1985 which refers to anticipated legal expenses of $5,000. 00 and the lack of expert evidence as to the charges made by the Solicitor the Tribunal is not satisfied that either of the grounds of complaint in relation to Mr and Mrs Morris was made out. Adams The Solicitor acted for Mr and Mrs D. R. Adams during 1984 on the sale of a property known as Lot 5 Coach Street Wallabadah. The Solicitor's letter of 28 November 1984 reported that settlement of the sale had been effected on 23 November and indicated that at settlement the sum of $3,153. 00 had been received. The letter enclosed a memorandum of costs and disbursements totalling $1,304. 00. The Law Society alleges that the Solicitor failed to account to his clients for the proceeds of the sale of the property. Such failure constituting a breach of s. 41(1) of the Act. The Law Society also contends that the Solicitor's charge of $1,304. 00 represented a gross overcharge the appropriate scale based on a consideration of $3,500. 00. The Solicitor's answer to those allegations was that he acted for Mr and Mrs Adams on a number of the matters, that costs were due to him in respect of those other matters in addition to those due in respect of the sale of the Wallabadah land and that Mr Adams had authorised him to apply the proceeds of sale in discharge of all outstanding costs. Mr Adams gave evidence before the Tribunal and was cross examined at some length by the Solicitor. Whilst it may be that Solicitor was authorised to deduct costs of acting on the particular matter the Tribunal is satisfied that no authority was given to the Solicitor to deduct costs in respect of any other matter. As to the complaint of overcharging as it seems clear on the evidence that no agreement was entered into between Mr and Mrs Adams and the Solicitor in relation to the Solicitor's remuneration his costs were restricted to the appropriate scale and accordingly the Tribunal finds that his charge of $1,304.00 as against the scale charge of $173.00 represented a gross overcharge. Both complaints made by the Law Society in respect of Mr and Mrs Adams were accordingly in the opinion of the Tribunal established. Coles It was established that on 15 August 1986 the Solicitor issued a trust account receipt No. 760 for the sum of $1,000.00 received on behalf of his client Coles. The cheque however was not banked. On 19 August 1986 a further trust account receipt No. 766 was issued for the sum of $1,000.00 received from Coles. The relevant trust account ledger then showed a credit of $2,000.00. A cheque for $1,000.00 received from Mr Coles was included in the banking made on 19 August 1986. On 29 August 1986 the Solicitor drew against the trust account in the matter of Coles purchase from Hughes the sum of $2,000.00 in favour of Keith Soanes Real Estate and that cheque was presented against the trust account bank account on 12 September 1986. As the sum of $1,000.00 covered by receipt No. 760 had not been banked the drawing of a cheque in favour of Keith Soanes Real Estate resulted in a debit balance which was not apparent on an examination of the account. The Solicitor's explanation for the discrepancy (Clause 40 of his Statutory Declaration of 3 April 1989) is that the trust account receipts numbered 760 and 766 were issued in respect of the same cheque from the client in the amount of $1,000.00. This evidence whilst explaining that, by error, the same cheque was the subject of two receipts does not meet the allegation that the Solicitor subsequently overdrew his trust account by $1,000.00 when he paid a cheque for $2,000.00 to Keith Soanes Real Estate. In the opinion of the Tribunal these facts established a breach of s. 41(1) of the Act. The evidence does not however satisfy the Tribunal that such breach was wilful. It certainly however suggests gross negligence by the Solicitor. Musumeci The Solicitor acted for Mr and Mrs Musumeci in respect of a lease to a Mr Whittall for whom Messrs L.H. Halliday Hook & Co acted. In connection with the matter the Solicitor received from those solicitors into his trust account the sum of $200.00 being the security bond payable under the lease. The law requires that the money be paid to the Rental Bond Board. Subsequently the subject property was sold and Messrs L.H. Halliday Hook & Co requested that the Solicitor arrange a transfer of the bond or alternatively refund it. According to the evidence the Solicitor failed to comply with either of these requests and he also failed to respond to letters from Messrs L.H. Halliday Hook & Co written 25 June 1985, 19 July 1985, 28 August 1985, 21 February 1986, 10 March 1986, 20 August 1986 and 4 September 1986. According to the report of Miss Jean Sayer in evidence before the Tribunal the sum of $200.00 was not at the time of her examination held in the Solicitor's trust account. It did however appear that on 16 October 1985 the Solicitor wrote to Mr and Mrs Musumeci in these terms: "We confirm your instructions to settle your interim costs by transfer of monies presently held on trust in your name". In relation to this matter the Law Society alleges a breach by the Solicitor of s. 41(1) of the Act. The Solicitor's answer to this allegation as appears in paragraph 41 of his Statutory Declaration of 3 October 1989 was..."I was instructed by Mr and Mrs Musumeci to use the monies received from H.E. Whittall in part payment of their outstanding costs and disbursements". It is true as pointed out by Mr Cuddy in his submissions that the Society's case in relation to Musumeci relies virtually entirely on the evidence of Miss Sayer. Mr Cuddy submitted that the Solicitor was entitled to regard the sum of $200.00 representing the bond payable under the lease as funds over which his clients had control and that therefore they were entitled to direct him to apply the sum towards outstanding costs upon the basis that the obligation to pay the sum to the Rental Bond Board was their obligation as opposed to the obligation of the Solicitor. The Tribunal does not agree with this submission. In the view of the Tribunal it is clear that the bond was paid to the Solicitor on behalf of the lessee to be held on trust for payment to the Rental Bond Board. The appropriation by the Solicitor of the sum paid to him as a bond under the lease towards outstanding costs was in the opinion of the Tribunal whether or not the clients gave any authority a breach of s.41(1) of the Act and it is clear to the Tribunal that such breach was wilful and constituted professional misconduct by virtue of the terms of the statute. Munro In relation to the Solicitor's client June Munro the Law Society alleges statutory misconduct arising from a breach of s.41(1) of the Act and misconduct at common law constituted by the commencement by the Solicitor in a Local Court of proceedings for the recovery of costs from his client without first rendering a Bill of Costs in accordance with s.21(1) of the Act. It will be convenient to deal with the second ground first. Section 21(1) of the Act in effect and so far as it is relevant provides that no solicitor shall commence any action for the recovery of any fees, charges or disbursements for any business done by such solicitor until the expiration of one month after a bill of such fees, charges and disbursements signed by the Solicitor has been delivered to the party to be charged. Section 22 of the Act gives the party chargeable with a bill delivered in accordance with s.21 the right to apply within one month for the bill to be taxed in accordance with the Rules of the Supreme Court. It has been held (see Ex Parte Farmers Fertilizer Corp Ltd (1916) 33 WN (NSW) 182) that a bill for the purposes of s.21 must be a bill in taxable form and certainly the terms of s.22 seem to assume that in giving the party chargeable the right to have the bill (that is the bill delivered under s.21) taxed. The Solicitor sent an account to Ms Munro dated 8 April 1986 in the sum of $616.17. The account was not in taxable form but did contain a quite detailed recital of all the work done on Ms Munro's behalf and indicated that such work amounted to 9.83 hours which the Solicitor charged out at $62.00 per hour "as per Family Law Act/Scale of Charges". Subsequently on 18 July 1986 the Solicitor commenced proceedings against Ms Munro in the Court of Petty Sessions at 302 Castlereagh Street Sydney for the balance of the account. The commencement of that action constituted so it is contended by the Law Society not only a breach of s.21(1) of the Act but also professional misconduct at common law. Although it does appear that the commencement of proceedings in the Court of Petty Sessions against Ms Munro did constitute a breach of s.21 of the Act and provided Ms Munro with a good defence to the action, the Tribunal is of the opinion that the bringing of the action in the circumstances of this case did not of itself constitute professional misconduct. Although each case has to be considered on its own merits the Tribunal is of the opinion that as a general rule the mere institution of proceedings by a solicitor in breach of s.21 of the Act or its equivalent in the Legal Profession Act would not constitute professional misconduct at common law. The allegation that in relation to Ms Munro the Solicitor committed a breach of s.41(1) of the Act relates to a cheque for $200.00 drawn by Ms Munro in favour of the Solicitor on 5 May 1986. The cheque was physically delivered to the Solicitor by another client Mr Weir a friend of Ms Munro but it appears on the evidence that Ms Munro was never given credit for the proceeds of the cheque. The Solicitor contends that he was informed by Mr Weir that the cheque was to be credited to Mr Weir's account with the Solicitor. According to the evidence however that was not done either. The Solicitor's answer to the allegation as appears in his Statutory Declaration of 3 April 1989 was "the $200.00 was paid to me by Mr Weir with instructions to credit it to his account. His account was credited in accordance with those instructions". The Tribunal is not affirmatively satisfied that a wilful breach of s.41(1) of the Act was established. The evidence does however reveal gross laxity by the Solicitor in keeping of his financial records. Wesley The Solicitor had a client Mr Rocky Wesley. The trust account ledger for Mr Wesley shows that on 12 August 1985 at a time when it had a nil balance the sum of $500.00 was credited from "B.N.&V. General". On 17 August 1985 cheque 369561 for $500.00 was drawn against the account in favour of "B.N.&V. General". The evidence established that cheque 369561 although shown in the trust account ledger as being dated 17 August 1985 was in fact presented against the bank account on 7 August 1985. There was thus a debit balance in the trust account of $500.00 for the period 7 August to 12 August 1985. The Solicitor (paragraph 45 of his Statutory Declaration of 3 April 1989) explains the discrepancy by saying that the cheque drawn on 7 August 1985 was an inadvertent duplication of a cheque drawn against the trust account in payment of costs due to the Solicitor on 30 July 1985 at that time there being a balance of $500.00 in the trust account arising from cash paid in on 5 June 1985. The Solicitor does not explain the discrepancy between the date of the cheque as shown on the trust account ledger namely 17 August 1985 and the date the cheque was actually debited against the bank account namely 7 August 1985. The Solicitor pointed out that upon him becoming aware of the duplication the sum of $500.00 was repaid to the trust account. It is clear on the evidence that there was a deficiency in the trust account of $500.00 for the period from 7 August 1985 to 12 August 1985. The Tribunal is not however affirmatively satisfied that this breach was wilful although it again indicates grave shortcomings by the Solicitor in the keeping of his accounts. In relation to this matter the Law Society also alleged a breach of breach of s.42(2) of the Act whereby a Solicitor is obliged to keep accounts in such a manner as to disclose the true position in regard thereto. The fact that the trust account recorded a cheque as dated 17 August 1985, which in fact had been debited against the bank account some ten days earlier constitutes in the opinion of the Tribunal a breach of s.42(2) of the Act. Moreover as the Tribunal is satisfied that the entry of the incorrect date was deliberate it finds the breach of s.42(2) of the Act to have been wilful and therefore to constitute professional misconduct by Statute in accordance with s.43. Caterina Andrew Mrs Andrew was a client of the Solicitor in relation to divorce and custody proceedings. Pursuant to a negotiated settlement Mrs Andrew became entitled to the sum of $15,000.00 and it appears from the evidence that that amount was paid to the credit of the Solicitor's trust account and was then appropriated by him to satisfy a Bill of Costs dated 1 August 1986 which was in the following terms: "To our professional costs $15,000.00". The Solicitor contends that he was authorised by Mrs Andrew to apply money held in trust towards his costs. The evidence in relation to this matter is unsatisfactory in that Mrs Andrew was not called and it does appear that she probably signed an authority of the kind referred to by the Solicitor. The Law Society relies in the matter only upon a breach of s.41(1) of the Act. The Tribunal is not however satisfied that a wilful breach of s.41(1) of the Act was established. Kartali Mr Kartali became a client of the Solicitor in or about February 1985 the Solicitor being instructed to act for Mr Kartali in proceedings instituted against him in the District Court by Australia & New Zealand Banking Group Ltd for recovery of an alleged debt due to the bank. The complaint of the Law Society is that the Solicitor grossly overcharged Mr Kartali the evidence being that on 27 March 1987 the Solicitor rendered a Bill of Costs to Mr Kartali in the sum of $1,544.00 which amount was said to have been calculated on a time basis at the rate of $140.00 per hour. Apparently Mr Kartali subsequently requested the Solicitor to provide a detailed Bill of Costs which the Solicitor did on 21 April 1987 that bill totalling $1,874.50 for profit costs. Later however after a complaint by Mr Kartali and a reference by the Solicitor to an independent costs expert the Solicitor reduced his charges to $697.04. In the opinion of the Tribunal the evidence tendered before it does not enable it to make an affirmative finding of gross overcharging to Mr Kartali and accordingly the Tribunal finds that this complaint was not established. Goulding Mr Goulding instructed the Solicitor's firm to act in the recovery of compensation for property damage in the sum of about $1,100.00 which had occurred during an incident at Mr Goulding's home in May 1986. According to the evidence of Mr Goulding he had a conversation with the Solicitor's employee Mr Hale at Court on 22 May 1986 as a result of which he told Mr Hale that he was willing to settle the claim for a total sum of $1,750.00 inclusive of costs Mr Hale having told Mr Goulding the costs would be $750.00 and that Mr Goulding would receive $1,000.00. Later Mr Goulding received the sum of $500.00 only and when he complained about this to Mr Hale was told that the Solicitor had directed Mr Hale to charge $1,250.00 instead of $750.00. The Law Society alleges that the charge of $1,250.00 represents a gross overcharge and also that by deducting costs without authority from the settlement monies received the Solicitor was in breach of s.41(1) of the Act. In answer to the allegations the Solicitor said that he was not aware of the arrangement made by Mr Hale with Mr Goulding whereby $750.00 only was to be charged. The Solicitor further contended that the charge made by him was reasonable and that apart from the appearance at Court on 22 May 1986 there were two further Court appearances and an attendance at a police station. The Solicitor said that he believed that he had authority to deduct his costs from the amount paid to the credit of his trust account. On the evidence the Tribunal is not satisfied that either complaint made in relation to the Goulding matter was established. Hird Mr Hird according to his Statutory Declaration instructed the Solicitor's firm in mid 1983 to act for him in enforcing a judgment for about $3,000.00 which Mr Hird had obtained in the Industrial Commission early in 1983 against his former employers. Mr Hird received a letter dated 31 January 1985 from the Solicitor's firm which indicated that it had carried out some company searches and written letters demanding payment of the sum due to Mr Hird. In May 1985 Mr Hird instructed the Solicitor's firm to take no further action. In September 1985 however he received an account from the Solicitor's firm for $1,100.00 which recited that it was for "professional costs in acting on your behalf in this matter including all relevant searches and communications with Corporate Affairs Commission, Liquidator Ashwell Pty Ltd, insurance benefits and Removal Pty Ltd etc". The account gave Mr Hird credit for $250.00 previously paid by him on account of costs and disbursements and showed a balance outstanding of $850.00. Apparently Mr Hird ignored the account and in March 1987 the Solicitor commenced proceedings against Mr Hird in the Local Court at Glebe for recovery of the balance of the account plus interest. Mr Hird consulted other solicitors in relation to these proceedings and at one stage a default judgment obtained by the Solicitor was set aside and the Solicitor agreed to provide an itemised statement of his costs in taxable form. The Law Society alleges gross overcharging and misconduct arising from the commencement of proceedings in the Local Court at Glebe prior to delivery of a Bill of Costs in taxable form contrary to s.21(1) of the Act. The Solicitor's contention as appears in paragraph 66 of his Statutory Declaration dated 3 April 1989 is that the Bill of Costs sent to Mr Hird was prepared by a member of his staff on a time costing basis from the file. The Tribunal is not satisfied that the evidence before it warrants a finding of gross overcharging such as to justify the conclusion that the Solicitor had been guilty of professional misconduct. Furthermore, the Tribunal is not satisfied that in the circumstances the commencement of proceedings in the Local Court at Glebe based upon an outline bill which apparently was sent to Mr Hird and ignored by him warrants the making of an adverse finding against the Solicitor. Mason In this matter the Law Society alleges gross overcharging by the Solicitor in rather unusual circumstances. Towards the end of 1982 Mr Stewart Mason instructed Messrs Cragg Braye & Co, solicitors of Singleton of which the Solicitor was then an employee, to act in relation to the recovery of property damage following a motor vehicle accident. Apparently Mr Mason initially saw Mr Milton Bailey, another employee of Cragg Braye & Co, but he also saw the Solicitor on several occasions particularly after Mr Bailey left his employment with the firm. Mr Mason's evidence was that he was unaware that the Solicitor left Messrs Cragg Braye & Co until some time towards the end of 1983. Subsequently, Mr Mason instructed Mr Bailey who had joined another firm to act for him and Mr Bailey through Messrs Fitzgerald White Talbot & Co by about May 1987 brought the proceedings to a conclusion satisfactory to Mr Mason, received the amount of the judgment after the Solicitor had deducted their costs of $358.00. Mr Mason denies that any time he gave the Solicitor an instruction or authority to remove his file from Messrs Cragg Braye & Co or to act for him other than in his capacity as an employee of that firm. The Solicitor, however, between October 1986 and May 1987 carried out certain work purportedly on behalf of Mr Mason which resulted in the Solicitor rendering a detailed memorandum of costs and disbursements dated 29 May 1987 to Mr Mason totalling $3,011.00. The bill included such items as follows: "Perusal and consideration of all materials on file including witnesses' statements and consideration of facts and law $200.00 Drafting and engrossing Ordinary Statement of Claim$140.00 Attendances on Corporate Affairs Commission to search for registered office of the defendant company $140.00 Attendance at District Court to file Statement of Claims $70.00" The Solicitor concedes that he had no contact with Mr Mason after October 1984 but contends that in that month Mr Mason gave him an authority to take over the conduct of the matter. No such authority was tendered in evidence. The Solicitor conceded that after October 1984 he had no contact with Mr Mason but said that he started to do work in the matter in October 1986 because he was concerned that the period allowed by the Statute of Limitations would expire, an attitude somewhat difficult to understand as the accident had occurred in late 1982 and there was therefore a considerable period remaining in which action could be commenced. In this matter the Tribunal finds that the Solicitor did not have any authority to act for Mr Mason otherwise than as an employee of Cragg Braye & Co. It follows that the Solicitor had no right to seek payment of costs and disbursements from Mr Mason. If contrary to that finding the Solicitor was entitled to look to Mr Mason for payment of costs and disbursements the Tribunal has no doubt from a consideration of the bill dated 29 May 1987 that it represented a gross overcharge. Fahey In this matter the Law Society alleges professional misconduct by gross overcharging and professional misconduct constituted by the commencement of proceedings in a Local Court contrary to s.21(1) of the Act. Mr Fahey was charged with assault in March 1984 and engaged a friend, Mrs L. Hughes, then employed by Messrs Maxwell Miles & Co, solicitors, to represent him. Mrs Hughes subsequently joined the Solicitor's firm as a Senior Associate and she took Mr Fahey's file with her to the Solicitor's firm with Mr Fahey's authority and direction. In her capacity as Senior Associate of the Solicitor's firm Mrs Hughes represented Mr Fahey in Local Court proceedings as a result of which it appears that he was committed for trial in the District Court. The Solicitor's firm sent Mr Fahey a Bill of Costs dated 3 December 1984 for a total of $700.00 and that account was paid in cash on 21 January 1985. In March 1985 Mr Fahey signed an authority for his file to be transferred from the Solicitor's firm to Messrs Carneys, solicitors, as Mrs Hughes was leaving the Solicitor's firm and taking up employment with Messrs Carneys. It appears that Messrs Carneys commenced to act for Mr Fahey as early as 4 April 1985 on which date they wrote a letter to the Attorney General's Department requesting that no bill be filed. Nonetheless the Solicitor wrote to Mr Fahey on 6 May 1985 regarding the matter. In response to this letter Mr Fahey wrote to the Solicitor on 13 May 1985 pointing out that on 20 March 1985 he had signed an authority for the transfer of the file. On 15 May 1985 the Solicitor sent a further account to Mr Fahey purporting to be related to work done after 3 December 1984. This account totalled $406.20. Notwithstanding Mr Fahey's letter to the Solicitor of 13 May 1985 the Solicitor on 5 August 1985 wrote to Mr Fahey regarding the trial as though he was still acting for him. This letter contained the following paragraph: "We note that our account is still not settled and we ask that you immediately attend to same". In February 1986 Mr Fahey received two letters from the Solicitor. The first was in these terms: "We refer to our account of memorandum of costs and disbursements of 3 December 1984 which we have enclosed and note to date we have not received your payment for same. "We reluctantly advise that should payment not be received within seven days of this date we will be forced to close our file and commence legal proceedings to recover same". The other letter of 10 February 1986 was in these terms: "We refer to our account of memorandum of costs and disbursements of 15 May 1985 which we have enclosed and note to date we have not received payment for same. "We reluctantly advise that should payment not be received within seven days of this date we will be forced to close our file and commence legal proceedings to recover same". Apparently Mr Fahey had not previously received the account of 15 May 1985. He replied by letter dated 28 February 1986 in these terms: "I refer to your letter of 10 May referring to your communication of 15 May 1985. "In order that the matter may receive attention please itemise the individual cost against each day of service as listed by you". The Solicitor did not reply to Mr Fahey's letter but in June 1987 commenced proceedings against Mr Fahey in the Local Court at Glebe for recovery of $406.20 the costs alleged to be outstanding under the memorandum of 15 May 1985. The evidence in the case does not affirmatively establish to the Tribunal's satisfaction that the account of 15 May 1985 represented a gross overcharge although such material as there is before the Tribunal would suggest that is so. However, this is a case in which the Tribunal is of the opinion that the institution of legal proceedings in the Local Court without first having rendered a proper Bill of Costs could be regarded as disgraceful or dishonourable having regard to the circumstances generally and particularly to the clients request for a detailed bill which was ignored by the Solicitor. Davker Pty Ltd and Hayes The Law Society alleges that the Solicitor grossly overcharged his clients, Davker Pty Ltd and Hayes. The Law Society's case depends upon the report of Miss Jean Sayer, Annexures "T" and "U" thereto, and the assessment of Mr G.S. Lewis as to the costs properly payable. The Tribunal is not persuaded by the evidence that gross overcharging of a magnitude sufficient to justify a finding of professional misconduct was established against the Solicitor in relation to the clients mentioned. Ward The Solicitor acted for Mr Ward in a claim for compensation for personal injuries suffered in a motor vehicle accident on 25 November 1984. The claim was compromised by payment of the sum of $12,000.00 and a Deed of Release was executed which recited that the costs and disbursements of the Solicitor "will be approximately $4,000.00". The sum of $12,000.00 was received into the Solicitor's trust account on 15 May 1986 and on 20 May 1986 $4,400.00 was transferred to the Solicitor's general account as costs described in the relevant ledger as "payment of interim account". The balance of the sum of $12,000.00 was subsequently accounted for to Mr Ward. The account addressed to Mr Ward by the Solicitor as justifying the transfer of $4,400.00 into his general account was in these terms: "Re professional costs - interim account To our professional costs in relation to personal injuries claim $4,400.00 Less amount paid $4,400.00 $4,400.00 $4,400.00 $4,400.00 Balance nil." It appears, however, that Mr Ward did not receive the account as the original contained in an envelope addressed to the client was in the file when it was examined by Miss Sayer. Although prima facie a charge of $4,400.00 for acting in a personal injury claim up to negotiated settlement for $12,000.00 seems excessive the Tribunal is not affirmatively satisfied on the evidence that gross overcharging was established in this case. McGuckin Mr McGuckin instructed the Solicitor to act for him in 1984 for to recover damages for an injury Mr McGuckin suffered during the course of his employment. The Solicitor sent Mr McGuckin what purported to be an interim memorandum of costs and disbursements dated 2 March 1987 totalling $3,381.00 of which $350.00 comprised counsel's fees. On 22 June 1987 the Solicitor sent Mr McGuckin a further account purporting to be an interim memorandum of costs and disbursements "from 2 March 1987 to date". This account totalled $1,263.00. On the same date, that is 22 June 1987, the Solicitor sent N.E. McGuckin Farrier Services Pty Ltd an interim account totalling $350.00 and in July 1987 the Solicitor sent Mr McGuckin an itemised account in taxable form purporting to be "interim memorandum of costs and disbursements 2 March 1987 to date". This detailed account totalled $894.00. In the opinion of the Tribunal the material before it in relation to Mr McGuckin does not enable it to conclude that there was a gross overcharge made. The Solicitor's contention is that each of the bills in the matter was time costed applying an hourly rate of $120.00. The complaint under this head by the Law Society must in the opinion of the Tribunal be dismissed. D.&K. Hayes Re: Marnooke Pty Ltd ats Garling The Solicitor acted in ejectment proceedings upon the instructions of the agent D.&K. Hayes of L.J. Hooker Glebe. The Solicitor rendered an itemised Bill of Costs dated 3 April 1987 in the total sum of $717.20 including $6.00 disbursements. According to the report of Miss Jean Sayer the costs rendered by the Solicitor represented a gross overcharge in that the costs were assessed by Mr G.S. Lewis on behalf of the Law Society at $403.00. The Solicitor's evidence was that the file had been time costed on the basis of $120.00 per hour for professional time. The Tribunal is not persuaded in all the circumstances that the charge made by the Solicitor in his account of 3 April 1987 represented a gross overcharge and the complaint upon this aspect is dismissed. Berman The Solicitor acted for Mr Berman in 1985 in relation to the purchase by Mr Berman from National Westminster Finance Co of a property known as 135 Victoria Street Potts Point. The Solicitor sent an account to Mr Berman dated 4 September 1985 for $1,051.20 in respect of acting on the purchase and for $329.50 being: "To our professional costs in acting on mortgage with National Westminster Finance as per scale". The evidence of Mr Berman was that the purchase in 1985 of the property at 135 Victoria Street Potts Point was not financed by National Westminster, that the finance for that purchase was arranged separately through a bank in South Australia and the Solicitor had nothing to do with it. The Solicitor conceded the correctness of Mr Berman's evidence and that the charge of $329.50 was completely erroneous and should not have been made. The Solicitor explained what had transpired in paragraph 16 of his Statutory Declaration of 19 October 1989 as follows: "This inclusion of the amount for finance occurred because I was permitted access on one afternoon during proceedings in the Supreme Court of New South Wales between Mrs Freeman and me to all files relating to work done in my office which were taken by Mrs Freeman prior to or at the time of her dismissal. This time constraint and the lack of assistance by Mrs Freeman lead to the erroneous claim". It is therefore plain on the evidence that the charge of $329.50 in the Solicitor's memorandum of costs and disbursements of 4 September 1985 should not have been made and to that extent the memorandum represented a substantial overcharge. It is also, however, clear on the evidence that Mr Berman did not pay the overcharged amount and in the light of the Solicitor's explanation the Tribunal is not persuaded that the overcharge to Mr Berman was capable of constituting professional misconduct at common law. Incident involving Mr P. Glissan, arbitrator The Solicitor was the Defendant personally in proceedings instituted in the Local Court at 302 Castlereagh Street Sydney by a Mr Malik Driff as Plaintiff. The case was referred to the arbitration of Mr P.R. Glissan, Barrister-at-Law. The arbitration concluded on 13 October 1988 on which date Mr Glissan published an award and his reasons therefor. Mr Glissan found against the Solicitor and made an award against him in favour of the Plaintiff in the total sum of $4,764.86 including interest and costs. On or about 25 October 1988 the Solicitor telephoned Mr Glissan and had a conversation with him regarding the arbitration. Mr Glissan's version of the conversation is that the Solicitor said "I have just received a copy of what purports to be a judgment of yours. It confirms my belief that you were not competent to hear this case and were biased against me...I intend to take action to ensure that you will never ever arbitrate another action again...when we meet again it will not be a meeting you will relish". According to the evidence of Mr Glissan the Solicitor spoke the above words in a tone which Mr Glissan described as calm, composed, menacing and serious. Immediately after the conversation Mr Glissan made a handwritten note of it. Mr Glissan made a formal complaint to the Law Society regarding the Solicitor's conduct and the Solicitor was sent a copy of this complaint with an invitation that he comment upon it. The Solicitor then took the opportunity to write to Mr Glissan in these terms: "I refer to a copy of your letter of 26th instant to Mrs V.P. Shirvington and the Law Society of New South Wales. "I note that the terms of your letter does not state accurately the account of our conversation and I further note that the contents of the letter further demonstrates your biased (sic) and malice towards me which was evident not only at the time of the hearing of matter but was also demonstrated during the telephone conversations you had with both myself and my secretary and counsel. "I confirm that I intend to report your conduct and take the appropriate action". The Solicitor did not deny that he had a telephone conversation with Mr Glissan but gave a different version of what was said. According to the Solicitor as appears in paragraph 1 of his Statutory Declaration of 19 October 1989 the Solicitor said: "Mr Glissan this is Tony Veghelyi calling, I have just received a copy of what purports to be a judgment of yours. It confirms my belief that you are not competent to hear this case and you exhibited marked bias against me. I intend to take the appropriate action to ensure that you will never arbitrate another action in this fashion again". Having observed both Mr Glissan and the Solicitor give evidence in relation to this incident the Tribunal prefers the version of the telephone conversation given by Mr Glissan to the version given by the Solicitor. The Tribunal has no doubt that the statements made by the Solicitor to Mr Glissan even if the Solicitor's own version of those statements be accepted constituted conduct so disgraceful and dishonourable as to be capable of constituting professional misconduct at common law. The Tribunal regards it as essential to the administration of justice that persons performing judicial functions should be free to carry out their duties without the threat of being subjected to the kind of abuse to which Mr Glissan was subjected. The Solicitor's conduct in this particular case was certainly not excused by the fact that he was personally involved as a litigant in the proceedings. Copas Apparently for some time prior to December 1982 Mr Copas had been a client of the firm then known as Braye Cragg & Seamer at Singleton. In December 1982 Mr Copas telephoned the office of Bray Cragg & Seamer to speak to Mr Seamer. He instead spoke to the Solicitor who informed him that he was now handling that part of the practice formerly dealt with by Mr Seamer as Mr Seamer had been struck off the Roll of Solicitors. From at least the beginning of 1983 onwards Mr Copas instructed the Solicitor to act for him in relation to a matter involving Claud Neon Ltd. On 6 March 1987 the Solicitor sent Mr Copas a memorandum of costs and disbursements for the total sum of $6,388.00 of which $583.00 constituted Counsel's fees and other disbursements. The memorandum of costs and disbursements commenced with charges made in June 1978 and apparently referred to work conducted for Mr Copas by the firm Braye Cragg & Seamer during a period when the Solicitor was not employed by the firm. Indeed during part of the period the Solicitor was not even admitted to practice in New South Wales. Mr Copas denies that he gave the Solicitor any instructions to act for him prior to the end of 1982. In addition to such denial Mr Copas queried many of the items appearing on the Solicitors account of 6 March 1987. The Tribunal is unable on the evidence to determine whether or not all the items of work in the detailed account of 6 March 1987 were actually performed by the Solicitor but the Tribunal does accept Mr Copas' evidence that he did not give any instructions to the Solicitor to act for him prior to the end of 1982 and accordingly it seems to the Tribunal that the Solicitor in the absence of a formal assignment was not entitled to charge Mr Copas for costs which on the face of it were due to the firm of Braye Cragg & Seamer. In any event it is plain to the Tribunal that the charges made by the Solicitor for work allegedly performed in 1978, 1979 and 1980 greatly exceeded costs which a Solicitor of good repute would reasonably have been entitled to charge during that period. It is clear from the bill of 6 March 1987 that the Solicitor applied the same charge rate for the whole of the period represented by the bill that is from June 1978 to February 1987. The Tribunal concludes that the account of 6 March 1987 to Mr Copas represented a gross overcharge. Carter Miss C.A. Carter was injured in a motor cycle accident in July 1981. Thereafter she consulted Messrs W.G. McNally & Co and instructed them to act for her. Subsequently whilst employed by Gartrell White she sustained a work related injury and she also instructed Messrs W.G. McNally & Co to act for her in relation to that matter. It appears that the Solicitor was consulted by Miss Carter towards the end of 1984 and that thereafter there was some correspondence between the Solicitor's firm and Messrs W.G. McNally & Co regarding the handing over of the files and apparently also in relation to the payment of fees due to Messrs W.G. McNally & Co. The Solicitor wrote to Miss Carter on 25 June 1985 informing her that he had still not uplifted the file from her former solicitors and his later letter of 10 July 1985 said that the file had been received on 4 July. On 9 August 1985 the Solicitor's firm wrote to Miss Carter referring to a conference held with counsel and informing her that counsel's advice having been received the firm was attending to the..."Drafting, drawing and engrossing of the statement of claim in respect of both matters". The letter of 9 August 1985 went on to draw Miss Carters attention to a litigation lending service provided by Westpac Banking Corporation..."Enabling plaintiffs such as yourself not to be disadvantaged by the costs associated with the preculment (sic) of Court fees, costs associated with the payment to Doctors or medical reports and the normal incurring of disbursements in litigation matters". Subsequently the Solicitor by letter introduced Miss Carter to Westpac Banking Corporation and a litigation loan of $6,000.00 was made to her. At Miss Carters direction the bank paid the amount of the advance to the Solicitor and the sum of $5,923.00 being the net proceeds was paid into the Solicitor's trust account on behalf of Miss Carter on 22 October 1985. On the same day the Solicitor paid counsel's fees out of the trust account in the sum of $300.00 to Mr T. Brewster. Later on the 12 November 1985 he transferred $5,243.00 to his general account leaving a balance of $380.23 in the trust account. Miss Carters evidence is that she had a meeting with the Solicitor's employee, Mr Battye, in his office on the 16 August 1985 when the matter of the litigation loan was discussed. According to Miss Carter's evidence Mr Battye made it clear that the loan was not for the Solicitor's fees but for the expenses that the Solicitor's firm was to incur in connection with the matter. Later according to her evidence the Solicitor showed Miss Carter in his office a document dated 12 November 1985 which purported to be a memorandum of professional costs and disbursements. The top line of the memorandum read: "On account of professional costs and disbursements $5,060.00" There followed a list of disbursements totalling $483.00 the whole of the account amounting to $5,243.00. Underneath this total appeared: "amount received $5,243.00 Balance Due nil." Miss Carter says that she did not receive the account dated 12 November 1985 until it accompanied the Solicitor's letter to her of 13 March 1987. Miss Carter's Statutory Declaration of 4 April 1989 states that her actions for damages have not yet come to Court and that the amount currently outstanding on the litigation lending account is in excess of $12,000.00. The letter of 13 March 1987 referred to above was in the undermentioned terms: "We refer to our recent telephone conversation when you advised that you had no knowledge of how the litigation lending loan monies were applied by us. "Please find enclosed a photocopy of a memorandum of costs and disbursements dated 12 November 1985." Miss Carters' father, William Carter, substantially corroborated his daughter's evidence as to her dealings with the Solicitor. He placed the occasion upon which he and his daughter saw a copy of the memorandum of professional costs and disbursements dated 12 November 1985 in the Solicitor's office as late 1986 or early 1987. The complaint of the Law Society in relation to this matter is that the Solicitor without authority and in wilful breach of s.41(1) of the Act withdrew $5,243.00 from monies held in his trust account on 12 November 1985 and that the charge of $5,060.00 made by the Solicitor in the memorandum of professional costs and disbursements dated 12 November 1985 represented a gross overcharge. In relation to this matter the Solicitor in his Statutory Declaration dated 3 April 1989 said... "that before the client applied for the litigation lending loan he had explained to her that the purpose of the loan was to assist in paying his costs and disbursements and that Miss Carter agreed to apply for the loan on that basis". The Solicitor went on to say: "accordingly I believe that the payment of $5,243.00 was made with the clients authority". A Statutory Declaration made by Mr Battye corroborated the Solicitor's evidence that costs charged to Miss Carter were to be calculated on a time basis. His Declaration however, does not throw any light upon the question whether the purpose of the litigation lending loan was to provide for the Solicitor's costs in addition to disbursements. The report of Miss Sayer before the Tribunal includes an itemised statement compiled from the file of the work done by the Solicitor in relation to Miss Carters' matters prior to the memorandum of costs and disbursements of the 12 November 1985. The evidence before the Tribunal also includes a document which according to the Solicitor indicates that 42.166 hours were devoted to Miss Carter's matters and that an appropriate charge based on that time was $5,060.00 which was the amount of professional costs charged in the memorandum of 12 November 1985. Having regard to the fact that the Solicitor did not receive any files from Miss Carters former solicitors until July 1985 and that by November of that year he had done no more than file and serve a statement of claim the Tribunal is satisfied that the charge of $5,060.00 made in the memorandum of 12 November 1985 represented a gross overcharge. The Tribunal is also satisfied that neither Miss Carter nor her father were informed that the proceeds of the litigation lending advance were to be applied in payment of the Solicitors own costs. The Tribunal believes that the evidence of Miss Carter and her father as to this was corroborated by the Solicitor's firm's own letter of the 9 August 1985 which plainly only referred to disbursements. The Tribunal is also satisfied that the memorandum of professional costs and disbursements dated 12 October 1985 was not sent to Miss Carter until some time in 1987 and was not seen by her until late 1986 or early 1987. Where the evidence of Miss Carter and her father conflicts with the evidence of the Solicitor we prefer the former. In relation to this matter the Tribunal is satisfied that the Solicitor did commit a wilful breach of s.41(1) of the Act by withdrawing from the monies held in trust for Miss Carter the sum of $5,243.00 on the 12 November 1985. Pura Mr Pura was injured when he fell down the steps of the Opera House at Sydney in or about June 1984. He consulted a Mr Kneale, Solicitor who wrote some letters on his behalf. The matter was then referred to the Solicitor who assumed the carriage of it at the end of January 1985. According to the evidence the Solicitor made a telephone call to the Government Insurance Office and prepared a brief for Mr P. Garling of counsel. A conference was held with counsel attended by Mr Pura and Mr Widdowson a clerk employed by the Solicitor. Apparently Mr Garling advised that the claim had little prospect of success and it was not pursued. Mr Garling charged a fee of $60.00 for the conference and noted that it occupied 40 minutes. On 1 October 1986 the Solicitor rendered a Bill of Costs to Mr Pura for $400.00 together with disbursements of $78.33 including the fee of $60.00 due to Mr Garling making a total of $478.33. For some reason which the evidence does not explain the Solicitor rendered another Bill of Costs to Mr Pura, this time a detailed bill in taxable form on 5 May 1987. This bill was for a total sum of $1,264.00. It was not paid and on 23 June 1987 the Solicitor issued a summons out of the Local Court at Glebe claiming the sum of $1,264.00 together with interest. Mr Pura consulted other solicitors regarding this summons and a defence was filed. Subsequently the claim was compromised by the payment of $650.00 to the Solicitor in full settlement. The Law Society contends that the Solicitor's detailed Bill of Costs to Mr Pura of 5 May 1987 represented a gross overcharge. The Solicitor in answer said in his Statutory Declaration of 3 April 1989: "subsequently when the Bill of Costs was prepared it was prepared by my employed solicitor Mr Barac from the records in the file applying my hourly rate of $120.00. I believe that the amount charged was fair and reasonable having regard to the file records recording the work that was done and my hourly rate". Having examined the detailed Bill of Costs the Tribunal has no doubt many of the items charged by the Solicitor to Mr Pura did represent a gross overcharge. The Solicitor, for instance, charged for a number of items of work done by Mr Kneale before the Solicitor was instructed to act in the matter. In addition the Solicitor wrongly charged for preparing the memorandum of costs and disbursements and the sum of $280.00 for attending the conference with Mr Garling at the rate of $120.00 per hour this represents a conference lasting more than 2 hours whereas Mr Garlings note was that the conference occupied 40 minutes only. Moreover the conference was attended not by the Solicitor but by his clerk Mr Widdowson. Hallawi The complaint of the Law Society in relation to this matter is that the Solicitor in August 1987, without good reason terminated his retainer to act for Miss Hallawi in a claim for damages for personal injuries suffered in a motor vehicle accident on 7 June 1986. According to Miss Hallawi she first instructed the Solicitor's firm to act for her in June 1986 and thereafter had a number of communications with Mr Barac of the Solicitor's office. In August 1987 the Solicitor in a telephone conversation said to her..."Miss Hallawi I no longer want you be one of our clients. I will send you an account". To which Miss Hallawi asked "Why?" and the Solicitor responded..."all you Hallawis are the same". According to the Solicitor he ceased to act for Miss Hallawi when she refused to give an undertaking to pay costs and disbursements or to pay an interim bill for costs and disbursements which had been rendered to her. She insisted on waiting until the end of the matter before making any payment. The evidence does not reveal that the termination of Miss Hallawi's retainer occurred at a time or in circumstances which caused her any disadvantage. The Tribunal is of the opinion that mere termination by a solicitor of his retainer, whether or not the reason given is valid does not constitute professional misconduct except perhaps in an exceptional case where the timing of the termination is such as to cause prejudice to the client. There was no such prejudice in this case. Angela Ng and Yian Peng Soh The Solicitor acted for these clients in respect of a proposed purchase of a home unit at Glebe which purchase did not proceed. The Solicitor received from the clients the sum of $500.00 on account of his costs on 5 April 1986 which he deposited into his general account. On 4 June 1986 he rendered a bill and statement for a total of $529.50 being $450.00 costs and $79.50 disbursements and showed a reduction in total to $500.00. The Solicitors' file contained a number of diary notes recording the time spent on the matter which time totalled 6 hours 50 minutes. In a letter of complaint to the Society the clients alleged that they had only talked to the solicitor for about 25 minutes and later when the Society wrote to them setting out details of the diary notes Miss Soh telephoned Miss Sayers and stated that with the exception of 2 telephone calls there was only one conference with the solicitor which took place at the units. The clients did not file a Declaration and did not give evidence. The sum of $500.00 was paid into the general account of the Solicitor and not his trust account. Consequently the Tribunal finds that there was no wilful breach of s.41(1) of the Act No evidence was called in support of the complaint of a gross overcharge. In the absence of any such evidence the Tribunal is not satisfied that there was in fact such a gross overcharge. Linden Marskell The Solicitor acted for Linden Marskell in respect of certain criminal proceedings which were heard at the Balmain Local Court on 8 May 1985. The Solicitor briefed Mr Charles Waterstreet of Counsel to appear for the client at that hearing. On 7 May 1985 the Solicitor received the sum of $600.00 from his client and deposited this sum in his trust account. The matter was handled in the Solicitors office by Rosemary Freeman a solicitor employed in the capacity of a ..."consultant" by the Solicitor. Rosemary Freeman left the employ of the Solicitor on 5 July 1985 and the Solicitor stated in his Declaration that she was dismissed for impropriety. Mr Waterstreet rendered his memorandum of fees to the Solicitor on or about 8 May 1985 of the total sum of $700.00. The Solicitor did not pay these fees from the amount held in his trust account and on 4 September 1985 the Solicitor transferred the sum of $600.00 from his trust account to his office account for his costs. The complaint is that the Solicitor in transferring the sum of $600.00 from his trust account to his general account did so contrary to the terms upon which he had received the sum which was for counsels fees and that this was a wilful breach of s.41(1) of the Act. No evidence was given by the client or Rosemary Freeman and Counsel for the Society did not cross examine the Solicitor on the matter. The evidence of the Solicitor was that an account had been rendered to the client for costs. It was his belief that the monies had been paid on account of costs and not Counsels fees. The words..."Re Counsels fees" appearing on the trust ledger card he believes was entered on the card by Miss Freeman after she was dismissed by him. The Solicitor says that he was told that the money that was in the trust account was for his costs and the Barrister Mr Waterstreet had been paid in cash by the client. Examination of the copy of the trust ledger card which states under the heading `Particulars' "Lindon Maskell ... Re Counsels fees" calls into question the explanation given by the Solicitor as these particulars on the card appear to have been entered at the time of the whole entry for the receipt of the $600.00 cash. Nevertheless the Law Society did not call any witness to verify the complaint and in the circumstances the Tribunal finds that it was not established. Claude Mucciarrelli The Solicitor acted for Mr Mucciarrelli in respect of a paternity dispute. Mr Mucciarrelli paid the following amounts on the following dates to the Solicitor on account of costs and disbursements: 17 June 1985 - $500.00; 25 November 1985 - $500.00; 11 December 1985 - $500.00. These payments were made following requests by the solicitor and in particular by a letter dated 20 November 1985 the Solicitor requested that the client place him in funds in the sum of $1,000.00 for anticipated costs and disbursements and in the same letter referred to the fact that the cost of the relevant medical blood tests would be $425.00. On 4 September 1985, 11 December 1985 and 20 December 1985 the Solicitor rendered an account of costs and disbursements to the client in each case for $500.00 in the following terms: ..."Re Family Law interim account. On account of costs and disbursements $500.00 Less amount received $500.00 Balance nil." It was on those dates that the Solicitor drew these monies from his trust account into his general account. On 2 January 1986 the client wrote to the Solicitor and advised he had decided not to continue with the matter. He stated in his letter that since forwarding cheques totalling $1,000.00 no further correspondence had been received and therefore he requested reimbursement of this amount. He said..."this money you know was paid in advance for future costs plus HLA test". On 15 January 1986 the Solicitor wrote to the client and enclosed a memorandum of costs which showed costs due of $1,800.00, disbursements of $178.50 including a fee paid to the Division of Forensic Medicine of $153.00, from which was deducted the total sum of $1,500.00 received from the client leaving a balance claimed as outstanding of $478.50. Following receipt of that memorandum of costs the client requested the solicitor to submit an itemised Bill of Costs but such a Bill of Costs was never submitted by the Solicitor. The Solicitors file was made an exhibit. No independent assessment or preparation of an itemised Bill of Costs was made by the Law Society. The Solicitor stated that for the purpose of time costing the file he adopted an hourly rate of $120.00, that the amount of costs that he charged was a fair and reasonable charge for the work that was done and it was also below the recommended scale of costs for the Family Law Practitioners Association of New South Wales. The Solicitor stated in evidence that his practice was that where monies were held in trust for costs and disbursements he would prepare a summary bill addressed to the client and send it to the client and at the same time present a copy of the bill to the accounts person in his office with instructions to transfer monies from trust to cover the bill. This procedure he adopted in respect of each of the interim accounts for $500.00 and indeed this was done on the same day the money was received. The Law Society alleges that the Solicitor in transferring from his trust account the sum of $1,500.00 as stated committed breaches of s.41(1) of the Act and that these breaches were wilful. The Law Society also alleges that the total costs rendered to the client of $1,800.00 was a gross overcharge. Two questions arise: 1. Was the Solicitor entitled to transfer from his trust account the sum of $500.00 on rendering each of the interim accounts? 2. Was the charge of $1,800.00 for his cost a gross overcharge? A solicitor is not entitled to transfer from his trust account monies received on account of costs and disbursements without first rendering to his client a Bill of Costs (see Helsham J in Stewart v Strevens 1976 2 NSWLR 321). No such Bills of Costs were rendered to the client and in the opinion of the Tribunal the Solicitor did not have the authority to so transfer those monies from his trust account. The Tribunal therefore finds that there was a failure by the solicitor to comply with s.41(1) of the Act. In respect of the first transfer we are not satisfied that that failure was wilful however the two later transfers occurred at a time when the Solicitor well knew and had advised his client that a sum to at least the extent of $425.00 was required for payment of a medical blood test. These transfers constituted a wilful failure by the Solicitor to comply with s.41(1) of the Act, at least to the extent of the sum of $425.00 which was held by the Solicitor in his trust account for his client for a purpose which did not arise. Litigation lending loans A number of the complaints bought against the Solicitor alleging a wilful breach of s.41(1) of the Legal Practitioners Act ("the Act") arise from what has been termed a "litigation lending loan". In each case the Solicitor would apply to the Westpac Bank for a litigation loan on behalf of the client. This request was made in writing and was stated "to cover disbursements/legal expenses incurred by us on his behalf". This request was also signed by the client confirming it and noting the terms and conditions contained in that letter. The client would also sign an authority to the Solicitors firm authorising and directing (®MDBR¯inter alia®MDNM¯) "to pay any settlement or verdict monies 1. To Westpac Banking Corporation Martin Place branch the amount of my fully drawn advance on account of disbursements/legal expenses together with interest thereon. 2. To my solicitors in respect of all unpaid costs and disbursements. and 3. (the residue) to the credit of my Advantage Saver Account with Westpac Savings Bank Ltd 60 Martin Place Sydney". The client also gave a written irrevocable authority in the following terms: "You are hereby irrevocably authorised and directed to pay all monies advanced to me by your bank in respect of my disbursements/legal expenses required for the conduct of my matter to my solicitors Barnett, Nicol & Veghelyi or as they may direct. "My solicitors' have full discretion in respect of the disbursement of the proceeds of the advance and the bank has no responsibility whatsoever in respect of such disbursements". The practice was for the Solicitor, or one of his employees to accompany the client to the bank for an interview. In each of the cases we have considered the loan was approved and at a later date the proceeds of this loan were paid into the trust account of the Solicitor. In discussing the loan with the Solicitor each of the clients who gave evidence stated that they were either told directly by the Solicitor or understood from their discussion with him or his employee that the proceeds of the loan would be applied to the payment of disbursements, such as Court fees, fees for Medical Reports, Barristers fees and the like and in that the advance was not to cover in part or in whole the Solicitors professional fees. On the other hand the Solicitor maintained that in each case he had discussed with the client that the advance was to cover not only disbursements but his professional fees. It is significant that the Solicitor did not obtain any acknowledgment or authority in writing from the clients whereby the client acknowledged that the advance was also to cover his professional fees and the Solicitor maintained that having made the purpose of the loan known to the client he was entitled under the irrevocable authority that the client had given to transfer from his trust account not only monies for disbursements but also for his professional fees. We find in most of the complaints that the client did not give this authority to the Solicitor to so transfer from his trust account professional fees and we also find that the request for the advance being one to cover "disbursements/legal expenses incurred by us" and the form of the irrevocable authority to cover "disbursements/legal expenses" did not authorise the Solicitor to transfer professional fees. On the day or shortly thereafter that the litigation loan advance was paid into the trust account of the Solicitor, the Solicitor would prepare a memorandum of costs addressed to the client for costs and disbursements and then transfer this amount from his trust account to his general account. The amount so transferred was either the whole or substantially the whole of the advance and although the evidence of the Solicitor was that in each case the memorandum of account had been sent to the client, all of the clients denied that they had received this document. It is clear in any case that the clients would not have had an opportunity of considering the account before the Solicitor in fact transferred his costs from his trust account to his general account. These memoranda of account for costs and disbursements were not in narrative form, were more akin to a statement of account in most instances. The Solicitor in evidence stated throughout that it was his belief that he had the authority to transfer these monies from his trust account for his professional costs as he had that authority from his clients. In the cases that we find that he had no such authority it is necessary to consider that in making the transfers the Solicitor was guilty of a wilful failure to observe the provisions of s.41(1) of the Act. A "wilful failure" by a solicitor to comply with the provisions of s.41 the Act constitutes professional misconduct (s.61 and 62) Hardie J in re Hodgekiss 1962 (62 SR NSW 340) in an appeal to the Full Court of the Supreme Court of NSW from an order of the Solicitors Statutory Committee stated "it is thus essential in an inquiry as to whether there has been wilful breaches by a solicitor of the provisions of s.41 and 42 to examine the facts and circumstances relevant to his state of mind, knowledge and intention at the material dates". Hardie J noted a statement by Maugham J in re Vickery 1931 (1Ch 572 and 583) in the following terms: "a person is not guilty of wilful neglect or default unless he is conscious that, in doing the act which is complained of or in omitting to do the act which it is said he ought to have done, he is committing a breach of his duty, or is recklessly careless whether it is a breach of his duty or not". It is not necessary for a solicitor to have any positive intention to breach the law for the act or omission of the Solicitor to constitute a wilful failure within the meaning of the section. The Solicitor in evidence stated his belief that he was authorised to transfer from his trust account to his general account monies for his professional fees as he had made known the purpose of the litigation loan to each of the clients in question. We do not accept the evidence of the Solicitor that he made known this purpose to the clients in question. In our view he did not have authority to transfer these costs under the irrevocable authority given by the client as the words "disbursements/legal expenses" do not in our opinion include professional costs or fees of the Solicitor. If the Solicitor was not conscious that in transferring his costs from the trust account he was committing a breach of his duty under s.41(1) of the Act, his failure to apply his mind to the litigation loan documents and the standard of care which he must exercise in dealing with monies of his client in his trust account was so recklessly careless as to constitute wilful failure to comply with s.41(1) of the Act. In some of the complaints concerning litigation lending loans we have also found that the costs that the Solicitor transferred to his trust account in breach of s.41(1) of the Act were gross overcharges. It will be appreciated that the client in obtaining a loan from the bank incurred interest on the advance from the time the advance was drawn and paid into the trust account of the Solicitor. There was a pattern of conduct by the Solicitor in respect of the litigation lending loans which have been the subject of these proceedings. The clients were not given an opportunity to consider any charges that the Solicitor made for his professional fees before he transferred his monies from his trust account to his general account and this of itself shows a failure by the Solicitor either to understand or to practice "the precepts of honesty or fair dealing in relation to his clients". See judgment of Rich J in Kennedy v Council of Incorporated Law Institute of NSW 1939 (13 ALJ 563) which stated that professional misconduct in relation to a solicitor "need not fall within a legal definition of wrong doing. It need not amount to an offence under the law. It is enough that it amounts to grave impropriety affecting his professional character and is indicative of a failure either to understand or practice the precepts of honesty or fair dealing in relation to the Courts, his clients or the public". We find applying these principles that the Solicitor has failed to observe or practise precepts of honesty or fair dealing in relation to his clients and that this failure constitutes common law professional misconduct. Peter Alton Tree Two complaints are made by the Law Society, first a wilful breach of s.41(1) of the Act and second one of gross overcharging. The Solicitor was instructed to act for Mr Tree in respect of a workers compensation claim on or about 31 May 1984. The Solicitor also acted for Mr Tree in a total disablement claim with CSR (his employer). In October 1985 the Solicitor requested Westpac Bank to advance to Mr Tree $6,000.00..."to cover disbursements/legal expenses incurred by us on his behalf". This request was in writing (see exhibit "20") and Mr Tree signed the request confirming it and noting the terms and conditions contained in that letter. Mr Tree also signed an authority dated 25 October 1985 to the Solicitor's firm authorising and directing him (inter alia) "to pay any settlement or verdict monies: 1. to Westpac Banking Corporation Martin Place Branch the amount of my fully drawn advance on account of disbursements/legal expenses together with interest thereon 2. to my Solicitor's in respect of all unpaid costs and disbursements 3. (the residue) to the credit of my Advantage Saver account with Westpac Savings Bank Ltd 60 Martin Place Sydney." On the same date Mr Tree gave a written irrevocable authority to Westpac Bank in the following terms: "Advances to cover disbursements/legal expenses: you are hereby irrevocably authorised and directed to pay all monies advanced to me by your bank in respect of my disbursements/legal expenses required for the conduct of my matter to my Solicitors, Barnett, Nicol & Veghelyi or as they may direct. "My Solicitors have full discretion in respect of the disbursement of proceeds of the advance and the bank has no responsibility whatsoever in respect of such disbursement". The advance of $5,925.00 was made by the bank and paid to the trust account of the Solicitor on 12 November 1985. On 13 November 1985 the Solicitor transferred from his trust account to his general account the sum of $5,402.00 on account of his costs and paid from his trust account to Mr John Hanley of Counsel the sum of $150.00 for his fees. On the same day the Solicitor rendered a memorandum of professional costs and disbursements to Mr Tree being $5,000.00 on account of professional costs and disbursements $252.00 and Counsels fees of $150.00 making a total of $5,402.00. Mr Tree denied in evidence that he had ever received this memorandum of costs and disbursements. The Tribunal is satisfied that the Solicitor had no implied or express authority to transfer his professional cost from his trust account as stated. The only authority he may have had was to transfer..."disbursements/legal expenses incurred by him or his firm". Which authority did not in our view include his professional costs. The Tribunal is satisfied that the Solicitor committed a breach of s.41(1) of the Act. The Solicitor maintained that he was entitled to transfer these professional costs from his trust account as it was his belief that he was authorised to do so by the litigation loan documents that Mr Tree had signed. The Tribunal is satisfied that not withstanding this belief of the Solicitor this breach of s.41(1) of the Act was wilful. The second complaint was one of gross overcharging by the Solicitor in the professional costs that he charged Mr Tree. Mr Hardman a specialist Legal Costs Consultant gave evidence for the Law Society and in his report Mr Hardman stated that he had prepared a Bill of Costs in accordance with the appropriate scale in respect of the work related injuries suffered by Mr Tree in the total sum of $690.93 which together with disbursements of $250.00 totalled $942.93. Mr Hardman also prepared a Bill of Costs in respect of the claim against the CSR Retirement Employee's Fund for a total of professional costs in the sum of $74.28. In preparing these Bills of Costs Mr Hardman did not have the benefit of the file but he did have the benefit of the correspondence and diary notes copies of which were annexed to Miss Sayer's report. The Tribunal is satisfied that the Solicitor is guilty of gross overcharging in respect of his account for professional fees of $5,000.00 when compared with Mr Hardman's assessment of $765.21. Shirley Phelps Two complaints are made in respect of Mrs Phelps namely 1. a wilful breach of s.41(1) of the Act and 2. a gross overcharging. On 26 August 1980 Mrs Phelps was injured whilst dining at a restaurant. Initially Mrs Phelps instructed Mrs Rosemary Freeman to seek compensation for her injuries but on or about 2 May 1985 she instructed the Solicitor to act for her in the matter. On 17 January 1986 a litigation loan of $3,000.00 was made to Mrs Phelps by Westpac Bank these monies being paid into the trust account of the Solicitor. On the 23 January 1986 the ~sum of $2,000.00 was withdrawn from the trust account of the Solicitor and deposited to the Solicitors general account. This sum was drawn from the trust account of the Solicitor in payment of a memorandum of costs which stated that the Solicitor's professional costs were $1,920.00 plus disbursements of $80.00. Mrs Phelps in evidence stated that when the litigation loan was discussed with the Solicitor she was told by him that the loan monies were to be used for photographs and other payments out and the like. She denied that the Solicitor told her as the Solicitor alleged that these funds were also to be applied in payment of his professional costs. The litigation loan documents that the Solicitor and Mrs Phelps signed stated as in the case of Tree that the loan monies were for..."disbursements/legal expenses". The Solicitor claimed that he was entitled to transfer these monies as he believed that the litigation loan documents signed by the client gave him that authority. We are satisfied that the Solicitor did not have the implied or actual authority of the client to transfer this sum of $2,000.00 from his trust account to his general account and that in doing so he was guilty of a wilful breach of s.41(1) of the Act. On 10 August 1987 the Solicitor rendered a Bill of Costs to his client in the sum of $4,143.79 for professional costs and $1,119.60 for disbursements. The complaint of the Law Society is that these costs were a gross overcharge. The Solicitor taxed this Bill of Costs in the Supreme Court claiming in the Bill costs of $4294.08 and disbursements $1,119.60. The Court taxed his costs at $2,548.69 and the disbursements at $1,035.60. The overcharge represents a percentage overcharge of some 60 per cent and we find that this was a gross overcharge. The Bill of $1,920.00 of the 23 January 1986 was according to the Solicitor costed at $120.00 per hour - it was denied by Mrs Phelps in evidence that she had had any discussion with the Solicitor that his fees would be charged at $120.00 per hour. A Cost Consultant employed by the Solicitor, a Mr D.G. Thompson prepared an itemised bill showing total profit costs in the bill of $4,143.79 and the profit costs for the period 23 October 1980 to 23 January 1986 being the period of the bill of 23 January 1986 to be $1,360.51. It will therefore be seen that there was a substantial overcharge in respect of this bill of the 23 January 1986. Mary Anne Sweeney This is a complaint of overcharging. In March 1984 the Solicitor received instructions to act for Miss Sweeney in respect of a claim for damages for personal injury received in a motor vehicle accident. The Solicitor also acted in respect of a property claim for the client for damage to her motor vehicle arising out of the same accident. An ordinary Statement of Claim was filed in the District Court on behalf of Miss Sweeney by the Solicitor on 11 October 1985. The defendant could not be located and although the Solicitor wrote to the Government Insurance Office advising that the defendant was insured with that office it appears that no correspondence was received from the Government Insurance Office and that the file on the matter could not be located in the offices of the Government Insurance Office. Miss Sweeney received the following memoranda of costs and disbursements: 19 December 1986 - costs $1,470.00, disbursements $309.00 total $1,779.00; 5 June 1987 - costs $508.00, disbursements $4.00, total $512.00; 5 June 1987 - costs (in respect of the property damage claim) $200.00, disbursements $3.00. The Solicitor engaged a Costs Consultant, Mr D.G. Thompson to draft Bills in accordance with the scale and these Bills showed for profit costs for the personal injuries claim for the period to 19 December 1986 (being the first bill which showed profit costs off $1,470.00) $791.70. The second bill showed costs of $199.55 as against the Solicitor's charge of $508.00 and for the property damage claim Mr Thompson's bill was $107.57 as against the Solicitors charge of $200.00. Miss Sweeney made a Declaration which was put into evidence by the Law Society but the Solicitor did not call her for cross examination. The Solicitor in his evidence stated that he had discussed with Miss Sweeney his charges which would be $120.00 per hour and that she had agreed to this basis of charging costs. There was no letter or other document confirming this costs agreement as alleged by the Solicitor. The overcharge by the Solicitor for his profit costs was almost 100 per cent of the costs that his own Cost Consultant showed in his itemised Bill of Costs. We find that the Solicitor in this case was guilty of gross overcharging. Pauline Cassidy This is a complaint of gross overcharging. In March 1984 the Solicitor was instructed by Mrs Cassidy to recover arrears of maintenance alleged to be due to her by her ex-husband. No proceedings were instituted by the Solicitor on behalf of his client. On 15 January 1986 the Solicitor rendered a memorandum of his professional costs and disbursements being profit costs of $475.00 and disbursements of $9.50 making a total $484.50. Mrs Cassidy did not pay this account and on 17 February 1987 the Solicitor issued a Plaint and Default summons in the Local Court claiming $484.50 and costs of $50.00 and issue and service fees of $34.00. Mrs Cassidy filed a defence denying her indebtedness stating that the charges made were excessive and the work was not performed by the plaintiff as set out in his Bill of Costs. The Solicitor rendered an itemised Bill of Costs dated 24 April 1987 claiming $375.20 for costs and $9.50 for disbursements making a total of $384.70 and the summons was amended accordingly. Included in the itemised Bill of Costs was the sum of $100.00 for care, skill and responsibility. A Magistrate who heard the case in the Local Court found in favour of the Solicitor but reduced his claim from $384.70 to $276.20. He also awarded costs of those proceedings in favour of the Solicitor in the sum of $272.70. It appears from some of the remarks of the Magistrate during the hearing (as disclosed by the Solicitors file which was tendered in evidence before this Tribunal) that he was "dubious" about the charge of $100.00 for care, skill and responsibility and it appears that he disallowed this charge. We are not satisfied on the evidence that the Solicitor's itemised Bill of Costs of 24 April 1987 was a gross overcharge not withstanding the findings of the learned Magistrate in awarding the reduced verdict to the Solicitor. Nancy Spahich This is a complaint of gross overcharging. The Law Society puts its case on two bases 1. Miss Spahich did not instruct the Solicitor to act for her at all and 2. that if Miss Spahich did retain the Solicitor the costs charged and rendered to her were a gross overcharge. Miss Spahich in her evidence said that on 5 September 1985 she received a phone call from the Solicitor asking her whether she needed a Solicitor. She replied that she did not but that if in the future she did she would give him a ring. She then received a letter dated 6 September 1985 from the Solicitor advising her of an appointment to see him. She ignored this letter. She then received a further letter dated 19 September 1985 informing her of a further appointment to see the Solicitor on 1 October 1985. At this date at about 5 p.m. she attended the office of the Solicitor where she was taken into his office whereupon the Solicitor then received a phone call which lasted 10-15 minutes. The Solicitor then questioned her about her de facto relationship which had broken down and she told him that she already had a Solicitor and that she had had a de facto relationship with a man for 11 years, engaged to be married for 7 of those years and that she had left him. They had no joint property and he had offered her $6,000.00. She then asked the Solicitor what he thought of the offer and the Solicitor replied: "just take the $6,000.00 because I don't think you can get any more" she said..."thank you very much" and left. Miss Spahich alleged that no more than 5 minutes elapsed during the time this conversation took place. Miss Spahich claims that she had no further communication with the Solicitor until she received his letter dated 15 January 1986 together with his memorandum for costs in the sum of $250.00. In that letter the Solicitor advised Miss Spahich that..."he had been advised by a Mr Battye (an employee of the Solicitor) that whilst the figure of approximately $9,000.00 to $10,000.00 would be preferable to settle the present dispute with your former de facto it is prudent to accept the sum of $6,000.00 and avoid further litigation and the costs thereof". Miss Spahich claimed that she phoned the Solicitor on 20 January 1986 and complained that he had charged her $250.00 for a 5 minute consultation, she had not asked him to write any letters or to telephone her and she gave him no letters or documents. She offered to pay him half of the Bill and she says that the Solicitor accepted this offer. She did not forward the cheque for $125.00 and she then received a letter from the Solicitor dated 10 February 1986 saying that he would accept $200.00 in full settlement of the account if paid within 7 days otherwise he would commence proceedings for the recovery for the $250.00. She says that she was upset and decided not to send the $125.00 as he was asking for $200.00. On 25 February 1987 Miss Spahich received a Default Summons issued by the Solicitor out of the Local Court, Glebe. She subsequently spoke to a clerk of the Kogarah Local Court on 27 February 1987 and she then signed a Statement of Confession in the sum of $125.00 and made an Application for payment of this amount by instalments of $25.00 per month. She also signed a Notice of Grounds of Defence. She then received a notice refusing to accept the terms of payment and a Notice of Callover for 8 May 1987 at Glebe Court. On 5 May 1987 she received a letter dated 1 May 1987 and an account from the Solicitor dated 16 April 1987 from the Solicitor, this being an itemised Bill of Costs for $250.00. One of the items in this Bill of Costs was a charge of $74.78 for care, skill and responsibility. The Solicitor stated in his evidence that he performed the work at the request of Miss Spahich and that the $250.00 he charged was a fair and reasonable charge for the time that was spent on the matter. Mr Battye in his Declaration, tendered as evidence stated that he recollected that he had conferred with Miss Spahich and had spent time on research into the De Facto Relationships Act and to the best of his recollection the time he spent in conferences and research exceeded 2 hours. Whilst the evidence does support the contention that the Solicitor approached the client rather than the approach being made by the client to the Solicitor to act we are satisfied that in fact Miss Spahich did retain the Solicitor to advise her on the offer of $6,000.00 in settlement of the dispute with her de facto. We are not satisfied on the evidence that the only time spent by the Solicitor and/or his employee, Mr Battye, was for a period of 5 minutes as claimed by Miss Spahich and we accept that the work itemised in the Solicitors Bill of April 1986 was in fact carried out. Nevertheless we find that the charge of $250.00 was an overcharge having regard to the time that we consider should have been spent on the matter. However in all the circumstances we do not find that this overcharge was a gross overcharge. John Heal This is a complaint of gross overcharging. The Solicitor acted for Mr John Heal in respect of the purchase by him and a Mr Jansen of a home unit with company title at Potts Point Sydney. The purchase price was $63,000.00 and the Solicitor acted on the purchase and also for his clients as mortgagors in respect of an advance of $50,000.00 from Citicorp. On 1 August 1986 the Solicitor rendered his Bill of Costs in the total sum of $2,782.35 being $1,116.00 costs for acting on the purchase, $359.00 for acting on the mortgage advance and $570.00 for acting in relation to matters incidental to the purchase together with disbursements of $737.00 - the major disbursement being Stamp Duty of $527.60. The memorandum of costs of the Solicitor referred to the Title to the property as being under the Strata Titles Act whereas in fact the Title was Company Title. The Law Society alleges that the appropriate scale was the Real Property Act scale whereas the Solicitor charged for acting on the purchase and on the mortgage in accordance with the Old System title scale. We are of the opinion that the Society in alleging that the proper scale was the Real Property Act scale is clearly in error. While no scale was appropriate it was not unreasonable for the Solicitor to have regard to the Old System Scale. The only other matter that therefore arises is whether the charge of $570.00 for costs in respect of matters incidental to the purchase was of itself a gross overcharge. Mr Battye who was employed by the Solicitor states in his Declaration that he had a particular recollection that there were difficulties in obtaining the proportion of borrowings needed and that the client was always undecided about all matters referred to him for instructions. The Solicitor in our view did provide professional services beyond those that he would be normally required to perform in acting for a purchaser and on a mortgage and we are not satisfied that there has been any overcharge in respect of these services. Solon Baltinos This is a complaint of gross overcharging. The Solicitor acted for Mr Baltinos and others in relation to proceedings against one Rexstraw a solicitor in respect of taxation of that solicitor's costs. The Solicitor also acted for Mr Baltinos and others in respect to a matter brought upon the suit of one Karamanos. In the matter of Rexstraw the Solicitor rendered a Bill of Costs dated 8 July 1987 for $1,083.00 being costs of $1,072.00 and disbursements of $11.00. On 13 August 1987 the Solicitor rendered a further Bill of Costs in the same matter for $1,184.00 costs, $550.00 disbursements making a total of $1,734.40. On 8 July 1987 the Solicitor rendered his Bill of Costs in the matter of Karamanos being for costs $1,175.00 and disbursements at $12.00 making a total of $1,187.00. By an authority in writing dated 14 July 1987 addressed to Miss Sayer the Receiver for the Solicitor Mr Baltinos authorised a payment to the Solicitor of 2 trust account cheques which related to the Bills of Costs and in this authority Mr Baltinos stated that he had accepted these bills. Mr Baltinos did not give evidence and was not called. The Law Society relied on the report of Miss Sayer and the report of Mr Hardman Cost Consultant. In the matter of Rexstraw Mr Hardman assessed the costs at $2,300.00 as against the costs charged by the Solicitor of $2,256.00 and in respect of the matter of Karamanos Mr Hardman assessed costs at $840.00 as against the costs charged by the Solicitor of $1,175. 00. The evidence does not support the complaint of gross overcharging. Tanya Barbour This is a complaint of gross overcharging. Miss Barbour was involved in an accident on 8 April 1984 and instructed the Solicitor to act for her in a personal injuries third party claim shortly thereafter. A litigation lending loan was arranged by the Solicitor with the Westpac Bank for Miss Barbour on 27 August 1985. On 11 September 1985 the sum of $3,998.80 being the litigation loan was deposited to the trust account of the Solicitor. On 12 November 1985 the sum of $3,155.32 was transferred from the trust account of the Solicitor to his general account. A Memorandum of Costs issued under that date was quoted as being..."on account of professional costs $3,000.00, disbursements $155.32 making a total of $3,155.32. The Solicitor in evidence says that the client had agreed to his professional costs being charged at the rate of $120.00 per hour and he produced a time sheet (which did not record the dates or the nature of the attendances which represented each item of time) totalling 22.7 hours in support of this Memorandum of Costs. However as at the date of this Memorandum of Costs it appears that very little had been done by the Solicitor to further the claim of Miss Barbour. It was not until 14 October 1986 that an ordinary statement of claim was filed in the District Court on her behalf by the Solicitor. An offer was received from the Government Insurance office of $5,000.00 inclusive of all costs and expenses in a letter dated 21 October 1986. The Solicitor made every effort to communicate this offer to the client but it appeared that no contact had been made with the client since about August 1985 as she did not attend medical appointments made for her by the Solicitor shortly thereafter. Miss Barbour did not give evidence and was not called. No assessment of the Solicitors Costs was made by any Costs Consultant either on behalf of the Law Society or upon his behalf. Whilst it does appear to us that the Solicitor in charging $3,000.00 for his professional costs to the 12 November 1985 did in fact overcharge the evidence does not satisfy us that such an overcharge was a gross overcharge. Harry Smith This is a complaint of gross overcharging. On or about the 27 September 1984 Mr Harry Smith instructed the Solicitor to act for him in respect of a personal injury claim and a claim for property damage arising out of an accident which occurred on 31 August 1984 whilst Mr Smith was driving his motor cycle. A litigation loan of $6,000.00 with the Westpac Bank was applied for on 16 August 1985. On 13 September 1985 the sum of $5,925.00 deposited to the trust account of the Solicitor this being the litigation loan. On 13 November 1985 the Solicitor rendered a Bill of Costs to Mr Smith in the following terms: "Memorandum of costs and disbursements On account of costs to date $5,592.00 Amount received $5,592.00 Balance nil." On the same day the Solicitor transferred from his trust account to his general account the sum of $5,592.00. Mr Smith made a Declaration and this Declaration was tendered in evidence. Mr Smith was not cross examined on this Declaration. The Solicitor maintained that the amount charged for costs was assessed from the file and the time that had been spent on the matter which he stated represented approximately 46.6 hours in time. The Solicitor believed that the amount charged was fair and reasonable for the work that was done having regard to his hourly rate of $120.00. Mr Hardman the Cost Consultant retained by the Law Society prepared an itemised Bill of Costs for the period 20 September 1984 to 16 November 1987 based on his perusal of the material in the file and the profit costs in the bill amounted to $1,159.29, this bill being prepared in accordance with the appropriate District Court scale. We are satisfied that the Solicitor in charging $5,592.00 for his professional costs on 13 November 1985 was guilty of gross overcharging. Boyton/Pearce This is a complaint of gross overcharging. On or about 18 July 1986 the Solicitor acted for Meagan Pearce (the daughter of Mrs Margaret Boyton also his client) in relation to injuries she had received in a motor vehicle accident in which accident her mother was also injured. The instructions were given to the Solicitor by the clients mother as her next friend (Ms Pearce being an infant at the time). On 5 June 1987 the Solicitor rendered a Memorandum of Costs charging $1,600.00 for profit costs and $79.00 for disbursements making a total of $1,679.00. The Solicitor gave evidence that he had charged these costs at the rate of $140.00 per hour on the time spent on the matter. He put into evidence a time sheet on which sheet no dates were recorded or the nature of the work upon which the time was spent. This time sheet showed time spent of 10 hours 55 minutes. This bill was assessed by Mr Hardman the Cost Consultant retained by the Law Society. He inspected the file and prepared an itemised Bill of Costs in accordance with the District Court scale. The profits costs in this bill amounted to $477.38. We are satisfied on the evidence that the Solicitor in charging $1,600.00 for his profit costs on 5 June 1987 was guilty of gross overcharging. Margaret Boyton This is a complaint of gross overcharging. The Solicitor acted for Margaret Boyton in respect of a claim for damages for personal injuries suffered in a motor vehicle accident 30 July 1984 in which accident Mrs Boyton's daughter Meagan Pearce was also injured. The Solicitor so acted for Mrs Boyton between about July 1984 and January 1988 except for a period between November 1984 and August 1985 when the firm Braye & Co of Singleton acted for her. On 15 January 1988 the Solicitor rendered an itemised Bill of Costs to Mrs Boyton being $1,611.21 for costs, $150.00 for disbursements less an amount of $78.00 paid by the client making a total of $1,683.21. The Solicitor in evidence conceded that in respect of a number of items in his Bill of Costs he had charged at a time when he was not acting for Mrs Boyton and to that extent his Bill of Costs represented an overcharge. However these overcharges were not of any great significance and the Solicitors Bill of Costs was prepared by Mr D.G. Thompson Costs Consultant. Mr Hardman the Costs Consultant retained by the Law Society did not assess this itemised Bill of Costs but commented that 1. a number of conferences had been charged at the rate of $22.20 per hour when the rate should have been $15.00 per hour or even possibly $13.50 as the amount in issue was less than $20,000.00, 2. photocopies had been charged for as items as well as disbursements, 3. the allowance included for care, skill and responsibility was excessive at 20 per cent. Notwithstanding these comments of Mr Hardman it is difficult for the Tribunal to make a finding one way or the other as to whether the costs charged by the Solicitor in this case was a gross overcharge or not. Mur Group Pty Ltd This is a complaint of gross overcharging. The Solicitor acted for Mur Group Pty Ltd in respect of the purchase and subsequent sale of home units known as Parkside Terrace at Glebe. On 24 April 1987 and 4 June 1987 it is alleged by the Law Society that the Solicitor delivered Bills of Costs to Mur Group Pty Ltd in which he charged that Company a total of $42,585.44 for costs and disbursements. No person on behalf of Mur Group Pty Ltd gave evidence and no witness was called by the Law Society. Whilst there is a reference in the report of Miss Sayer that a Costs Consultant named Mahlab had stated (without any inspection of the relevant files) that of the Bills totalling $22,937.00 there could have been between $7,600.00 and $12,000.00 taxed off, the evidence of the Solicitor was that he charged costs in accordance with his agreement with the client including an agreement to charge on a time cost basis of $120.00 per hour for non-conveyancing matters. At one stage he agreed to reduce his conveyancing scale charges to 80 per cent of the appropriate scale. It is of significance that Counsel for the Law Society did not make any submission on this matter to the Tribunal and in the absence of evidence which establishes one way or another as to whether the charges made by the Solicitor were overcharges or not we find that the charges made by the Solicitor for his costs were not overcharges. Benn This is a complaint of gross overcharging. It is alleged that the Solicitor acted for 3 members of the Benn family in relation to actions for damages for personal injuries in respect of a motor vehicle accident 26 June 1981 and continued so to act until approximately June 1985. It is further alleged by the Law Society that the Solicitor rendered 3 Bills of Costs on 18 November 1985 claiming total costs and disbursements of $4,365.24 which was reduced on taxation to $1,062.96. No evidence whatsoever was tendered by the Law Society in support of this complaint. The only evidence given was that of the Solicitor to the effect that Bills of Cost were prepared by independent Cost Consultants namely Messrs Marriott & Co Legal Consultants at Parramatta and that he believed that the amount set out in these Bill of Costs as prepared by this independent Cost Consultant was a fair and reasonable charge for the work that was done as was recorded in the file. He further stated that when the matter proceeded to taxation that this was around about the same time as he was dealing with the Law Society's application for a Receiver to be appointed to his practice. He did not appear on the taxation of these Bills of Costs and he says accordingly that each objection taken on behalf of the clients by their solicitor at the taxation was upheld. No evidence was called by the Law Society to verify any of the matters alleged. The Solicitor in his evidence did concede that his Bills of Cost were reduced on taxation but gave his reasons for not attending the taxation of these Bills of Cost, which had been prepared by his Costs Consultants. The evidence does not support the complaint of gross overcharging not withstanding the concessions of the Solicitor. Diane McGregor Two complaints are made namely 1. a wilful breach of s.41(1) of the Act and 2. a gross overcharging. The Solicitor acted for Diane McGregor in respect of a personal injury claim which occurred on 24 December 1980 and in respect of a property damage claim which occurred on 14 April 1982. Initially Messrs William, Arnott & Poole acted for Mrs McGregor in respect of the third party claim but in about August 1981 this matter was taken over by Messrs Barnett, Nicol & Carter which firm later became known as Barnett, Nicol & Veghelyi. The Solicitor began to handle the matter some time in 1984. The Solicitor arranged a litigation lending loan from the Westpac Bank in June 1985 for $6,000.00 and the sum of $5,980.00 was paid into the trust account of the Solicitor on 27 June 1985. On 15 July 1985 the Solicitor transferred the sum of $5,980.00 from his trust account to his general account and on the same day rendered an interim account as follows: Commencement of action to 15 July 1985 $5,980.00 Amount paid $5,980.00 Balance nil. It appears that at about this time the Solicitor personally advanced Mrs McGregor the sum of $664.00 and by her written authority dated 27 June 1985 she authorised and directed the Solicitor to deduct such monies from either the settlement of her third party injury claim and/or other monies the Solicitor may hold upon her behalf. Apart from this direction Mrs McGregor gave evidence that she did not authorise the transfer of the litigation loan lending monies and says that until she received a letter from the Westpac Bank dated 14 October 1986 she was not aware as to what had happened to the proceeds of the litigation loan. Mrs McGregor who filed a Declaration and who gave evidence stated that when she discussed the litigation lending loan with the Solicitor he said that the loan was for payments of accounts etcetera. However she did state in her evidence that the Solicitor had told her that the purpose of the litigation loan was..."that it would cover the costs, so that it was to help me through the case so that I wouldn't have to outlay any of the costs for the case therein, meaning that he (meaning the Solicitor) would then take over the payment of the Doctor's certificates, which he did". In answer to a question from the then Chairman of the Tribunal this question being..."did you also think at that time it included the Solicitor's own charges for his own fees?" Mrs McGregor replied in the affirmative. Whilst the Westpac litigation loan documents were in the usual form and were expressed to cover disbursements/legal expenses in view of the evidence of Mrs McGregor we accept that the Solicitor had some ground for his belief that he was entitled to transfer monies from the litigation loan not only for disbursements but also for his professional costs. The Solicitor gave evidence that he had such a belief. In these circumstances although we find that there was a breach of s.41(1) of the Act we do not find that such a breach was wilful. Mrs McGregor's personal injury claim was subsequently settled for the sum of $65,000.00. The Solicitor obtained a written authority from Mrs McGregor to settle for this amount and in that authority Mrs McGregor agreed that the sum of $13,000.00 be deducted for legal costs and disbursements leaving a net amount to be received by her of $52,000.00. This authority was dated 26 August 1986. On 17 September 1986 the Solicitor received into his trust account the settlement monies of $65,000.00 and on that day he transferred from his trust account to his general account the sum of $7,272.20 for the balance of his costs paid Counsel's fees of $1,030.00, repaid the litigation loan account with Westpac Bank of $7,852.61 and paid into the account of Mrs McGregor $48,845.19. On the same day the Solicitor rendered his Bill of Costs being profit costs of $11,500.00, disbursements of $2,777.20 including Counsel's fees of $1,030.00, this Bill of Costs included costs in respect of the property damage claim. The complaint is that in transferring the sum of $7,272.20 from his trust account to his general account the Solicitor was guilty of a wilful breach of s.41(1) of the Act. The Solicitor rendered a more detailed Bill of Costs on 12 December 1986 for total costs and disbursements of $14,282.20 such a bill including Counsel's fees of $1,030.00. The Solicitor was entitled under the authority of 26 August 1986 to transfer the sum of $13,000.00 for his costs and disbursements from the settlement monies of $65,000.00. This leaves the question of whether he was entitled to transfer the additional $1,282.20 for his costs and disbursements in respect of the property damage claim. In respect of the complaint of gross overcharging the Law Society did not produce any evidence of what should have been the proper charges by the Solicitor for his professional costs in either of the two matters. Under these circumstances we find that the Solicitor was not guilty of a wilful breach of s.41(1) in transferring the sum of $7,272.20 from his trust account to his general account and that there was no gross overcharge. Robert McIntyre There are two complaints 1. a wilful breach of s.41(1) of the Act and 2. a gross overcharging. The Solicitor acted for Robert McIntyre (formerly Wright) in a workers compensation claim and a third party injuries claim. His workers compensation claim was in respect of a work injury received on 10 January 1985 and his personal injury claim arose out of a motor vehicle accident on 18 October 1985. On 6 August 1985 the Solicitor wrote to Mr Wright (as he then was) drawing his attention to the litigation lending service provided by the Westpac Bank and stated in his letter..."loans of up to $6,000.00 are available to assist in the costs of conducting your case". Mr Wright entered into a litigation lending loan with the Westpac Bank for the sum of $6,000.00 and signed authorities in the usual form, these authorities stating that the loan was to cover..."disbursements/legal expenses". The loan proceeds of $5,925.00 were paid into the trust account of the Solicitor on 13 September 1985. On 18 November 1985 the Solicitor transferred from his trust account to his general account the sum of $4,556.50 on account of his costs and disbursements on account of the workers compensation claim and $470.00 on account of his costs in respect of the personal injury claim. The Solicitor on the same day rendered Memoranda of costs and disbursements for these amounts the workers compensation claim being $3,750.00 for professional costs and disbursements of $806.00 and it being $470.00 costs for the personal injury claim. Mr McIntyre in his evidence stated that he was told by the Solicitor that the purpose of the litigation lending loan was "to pay costs and disbursements, such as Doctors bills, x-rays, and not professional costs. My understanding that any award due to me would be less his professional costs". When cross examined on the letter dated 6 August 1985 from the Solicitor as to his understanding of the words in that letter..."the costs of conducting your case", Mr McIntyre replied that his understanding was to pay for Doctors accounts and x-rays or whatever. Mr McIntyre gave evidence on a second occasion, when he was recalled, that his understanding of the loan was that it was to pay costs and disbursements such as Doctors bills, etcetera. On cross examination on that occasion in respect of the letter of 6 August 1985 referring to "the costs of conducting your case", Mr McIntyre was asked..."do you recall whether you ever queried what those costs were or meant with Mr Veghelyi? Not from memory. Again, my basic understanding of the litigation loan was to pay for costs and disbursements". The Solicitor in his evidence has said that he explained to Mr McIntyre that the litigation lending loan covered his own professional fees as well as disbursements. We find that the Solicitor in transferring $5,026.50 from his trust account, being part of the proceeds of the litigation lending loan, to his general account did so in breach of s.41(1) of the Act and we also find that this breach was wilful. The complaint of gross overcharging was not supported by any evidence called by the Law Society as to what the proper charges should have been and in the absence of any such evidence we find this complaint was not established. Uzeifa Asiran This is a complaint of gross overcharging. The Solicitor acted for Mr Asiran in a number of matters and one of those matters was in respect of a claim against the Government Insurance office. On 12 June 1987 the Solicitor rendered his interim bill of costs and disbursements to Mr Asiran for the total of $816.00 being $730.00 profit costs and $86.00 disbursements. On 5 February 1988 Mr Asiran authorised the Solicitor in writing to transfer the sum of $500.00 held in his trust account to his general account in part payment of this Bill of Costs. The case for the Law Society is that the profit costs in this case were assessed both by a Mr Lewis, Solicitor on behalf of Miss Sayers in the amount of $516.00 profit costs and by Mr Hardman, Cost Consultant in the amount of $517.73 for profit costs. Mr Asiran appears to have accepted this Bill of Costs and signed this acceptance on the copy bill together with an interpreter's signature stating that the bill and his acceptance had been translated - this acceptance being dated 5 February 1988. This complaint did not arise from any direct complaint by the client and arose during the time Miss Sayers was the Receiver of the practice of the Solicitor and when he, the Solicitor, requested her to draw a cheque on his trust account for $500.00 in part payment of this Bill of Costs. The Solicitor believed that the amount charged was fair and reasonable. The evidence given by Mr Asiran was not entirely satisfactory owing to some difficulties in giving this evidence through an interpreter. We find that whilst this charge for profit costs of $730.00 may have been an overcharge we do not find that it was a gross overcharge. Mr and Mrs Stevens This is a complaint of an improper exercise of a lien over a clients deed. The Solicitor acted for the son of Mr and Mrs Stevens who was charged with a number of criminal offences and who on 9 May 1985 appeared before the St James Local Court when bail was refused. It is alleged by the Law Society that on 23 May 1985 Mr Stevens senior swore an Affidavit in support of an Application for Bail for his son stating that he was prepared to lodge the Title Deeds of his home as security for bail and that these deeds were lodged with the Solicitor. After the Court subsequently refused bail Mr Stevens junior withdrew instructions from the Solicitor and Mr and Mrs Stevens senior requested their Title Deeds from the Solicitor in May or June 1985. It is alleged by the Society that the Solicitor refused to hand over the deeds saying that he intended to retain them pending payment to him of the balance of fees owing by Mr Stevens junior. The Solicitor subsequently handed over the deeds in about January 1987 it is alleged after numerous requests by Mr and Mrs S~evens, their solicitors and the Law Society. The explanation of the Solicitor was that this was a matter handled by an employee, Mrs Rosemary Freeman. His recollection was that Mrs Freeman had told him that the deeds had been lodged by Mr and Mrs Stevens senior in part as security for the clients costs and in part as security for bail in the event that the client's Bail Application was successful. The Bail Application failed and he retained the deeds in accordance of what he believed had been the original purpose for which they were provided. No evidence was called by the Law Society to substantiate its allegations. Whilst the Solicitor in his explanation did not state that either Mr or Mrs Stevens senior had agreed to be responsible for their sons costs which could have given rise to a lien in favour of the Solicitor over the title deeds for costs (on the other hand if the deeds had been lodged solely as security for bail the Solicitor would have had no such lien) in the absence of any evidence to substantiate the allegations of the Law Society we accept the explanation of the Solicitor. Cragg Braye & Co This is a complaint that the Solicitor improperly took and kept files of a firm of solicitors on ceasing association with that firm. The Solicitor was associated with the firm Cragg Braye & Co Solicitors of Singleton between 18 October 1982 and 18 December 1983. It is alleged by the Law Society that on termination of his association with the firm the Solicitor wrongfully removed a number of clients files from the firms office and/or wrongfully obtained a number of clients files which he had earlier removed from the firms office despite requests for their return by the proprietor of the firm and without the clients authority. It is also alleged that the Solicitor approached a number of clients of the firm seeking their instructions to act including a Mr Stewart Mason. No evidence was called by the Law Society to substantiate these allegations and in particular Mr Braye who was the proprietor of the firm both prior to and after the Solicitor's departure was not called. The Solicitor in his Declarations in answer to these allegations stated that his Solicitors, namely Smithers, Warren, Davenport & Mant had written a letter to the Law Society in answer to this complaint and that this letter set out the circumstances of his association and departure from the firm Cragg Braye & Co. This letter asserted (inter alia) that the Solicitor had commenced employment with Mr Braye in October 1982 and it was his understanding that the question of a partnership would be considered by him and Mr Braye after about 6 months. In February 1983 there was further discussion between the Solicitor and Mr Braye about this question of partnership and further discussions took place towards the end of June 1983. On about 1 July 1983 the Solicitor agreed to enter into partnership with Mr Braye and for a half share of the practice to pay him a sum of $50,000.00 by equal monthly instalments over a period of 4 years, first payment being due on 1 January 1984. The Solicitor and Mr Braye did not enter into a written agreement although the Solicitor did subsequently prepare a draft agreement, Mr Braye it appears avoided committing himself to a written agreement. However the Solicitor states that on several occasions after July 1983 Mr Braye represented to others, that he the Solicitor and Mr Braye were in partnership. The Solicitor ceased his association with Mr Braye on Sunday 18 December 1983. The Solicitor claims that notwithstanding there was no written partnership agreement that he was in fact a partner from 1 July 1983 until 18 December 1983. Mr Braye took proceedings against the Solicitor in the Supreme Court of New South Wales in its Equity Division which proceedings we understand have not been heard. There is evidence that there were negotiations for a settlement of these proceedings and indeed a draft settlement deed had been presented to the Solicitor by the solicitors for Mr Braye. One ~of the allegations made in this complaint made by the Law Society is that the Solicitor approached a number of clients of the firm seeking their instructions to act including a Mr Stewart Mason. There is a separate complaint relating to Mr Stewart Mason and we do not consider it is necessary in deciding this complaint to comment on that matter. The Solicitor says that he believed that at all material times he had been taken into partnership and he was entitled to remove the files when authorised by the client to do so after termination of the partnership. Whether the Solicitor was a partner and whether he was entitled to remove files in our view cannot be satisfactorily resolved on the evidence before us, and consequently we find this complaint was not established. Breach of s.26 of the Legal Profession Act 1987 The Solicitor admits that he was guilty of a breach of s.26 of the Legal Profession Act 1987 as he did not have a practising certificate as at and since 1 July 1989 but nevertheless carried out and charged for work done from 1 July 1989 to 25 July 1989 in the matter of Marshall. This admission was made before the Supreme Court when the Law Society applied for and obtained an Injunction restraining the Solicitor from practising and this admission was also made before this Tribunal. It is alleged by the Law Society that the Solicitor apart from carrying out and charging for work done from 1 July to 25 July 1989 on 26 July 1989 demanded (and received on or about 4 August 1989) the sum of $3,006.60 in respect of costs for work done as a Solicitor up to and including 25 July 1989 in the matter of Marshall. It is further alleged that on 26 July 1989 and 1 August 1989 the Solicitor demanded (and received on or about 4 August 1989) the sum of $2,000.00 on account of costs for work yet to be done by him as a Solicitor in the matter of Marshall. It is further alleged that the Solicitor after 1 July 1989 held himself out and did carry on practice as a solicitor under the name..."Barnett, Nicol & Veghelyi" at 347 Bong Bong Street Bowral. The Solicitor having admitted the breach of s.26, it only becomes necessary for us to consider his explanation and the matters that his Counsel submitted that we should take into consideration in deciding whether or not we should make a finding of professional misconduct. Matters that we have been asked to consider are: 1. In early July 1989 the Solicitor was suffering from glandular fever which reduced his working hours causing him difficulties in attending to professional matters. 2. The Solicitor was provided by the Society with a fresh copy of the necessary forms in accordance with the new regulations for completion and submission. At that time the Solicitor was unable to afford the necessary fees payable to the Society for his Practising Certificate and professional indemnity insurance. The Solicitor was not aware at that time of a facility available within the Law Society to advance application fees to members. 3. The Solicitor on prior occasions had been late in submitting his application for his Practising Certificate and had a..."late payment fee" applied. 4. The work of a legal nature performed by the Solicitor between 1 July 1989 and the date of the service of the order of the Supreme Court restraining him from practising as a solicitor, was minimal. The only client for whom the Solicitor did work and charged costs whilst he did not hold a practising certificate was Mr Marshall. Mr Marshall it appears was charged with certain criminal offences in the state of Queensland and for this purpose the Solicitor had engaged the services of a solicitor in Queensland as his agent. The Solicitor says in order to protect his clients interests and to ensure payment to his agent he performed the legal work he did for Mr Marshall. The evidence was that the Solicitor's applications for a practising certificate for the two previous financial years had been refused by the Law Society. In each of these years he had appealed to the Supreme Court and each such Appeal automatically operated as a Stay of the order of refusal of the Law Society to issue the practising certificate. Under the Legal Profession Act 1987 which applied to the year commencing 1 July 1989 such an appeal no longer operated as an automatic stay of the order of refusal of the Society to issue the practising certificate. Taking all these matters into consideration and in particular that the evidence is that the Solicitor acted without his Practising Certificate for a comparatively short time and in one matter only the Tribunal finds that this breach of s.26 does not constitute professional misconduct on the part of the Solicitor. Conclusion In the result although the Tribunal has found in favour of the Solicitor on a number of issues it has found adversely to him on some matters which by statute constitute professional misconduct and on other matters which in the opinion of the Tribunal taken together constitute professional misconduct at common law. The Tribunal therefore finds the Solicitor guilty of professional misconduct. The further hearing of the Law Society's complaint will be adjourned to a date to be fixed to enable submissions to be made as to the orders which should follow this finding. Dated this 8th day of March 1991. The Legal Profession Disciplinary Tribunal In the matter of Anthony Stanley Veghelyi, solicitor Determination and Orders Before: Mr D. Patten (Presiding Member), Mr A. Martin, Mrs B. Ingold. In this matter on 8 March 1991 the Tribunal for reasons which it then gave found the Solicitor guilty of Professional Misconduct in a number of respects. In some cases the misconduct arose by virtue of the express provisions of the Legal Profession Act 1987 and in other cases the Tribunal held that misconduct had been established in accordance with the principles of the common law. On 2 April 1991 the Tribunal sat to hear submissions as to the orders which it should make consequent upon its findings of March 8, 1991. Those submissions were presented on the Solicitor's behalf by Mr Wales of Counsel. For the Law Society there were written submissions by Mr Peter Garling, Counsel who appeared for the Law Society at the hearing, supplemented by oral submissions made by Ms Rosemary MacDougal. In addition to the helpful submissions of Mr Wales, Mr Garling and Ms MacDougal a body of evidence was tendered in the form of Statutory Declarations by members of the legal profession, former clients of the Solicitor and others. The makers of these Statutory Declarations spoke highly of the Solicitor both in a professional and personal sense. All of the material has been considered carefully by the Tribunal. The issue seems to it to be whether balancing its adverse findings against the Solicitor against the material presented in his favour, the Tribunal should conclude that the Solicitor has rendered himself unfit to practice in NSW. The Tribunal is of course mindful that its role in making this determination is the protection of the public and not punitive. Mr Wales drew the Tribunal's attention to the fact that the Tribunal had found in favour of the Solicitor in something of the order of half of the matters alleged against him. He also submitted that in the matters in respect of which adverse findings were made there was no suggestion of dishonesty or of defalcation. On the other hand Mr Garling submitted that the only order appropriate for the Tribunal to make in the light of its findings was an order that the name of the Solicitor be removed from the rolls. In Mr Garling's submission contrary to that of Mr Wales many of the findings made by the Tribunal involved an element of dishonesty. Although it may be argued that the conduct found adversely to the Solicitor did not involve defalcation in the normally accepted meaning of that term the Tribunal has no doubt that many of its findings did involve acts by the Solicitor which could only be categorised as dishonest. Moreover the Tribunal is of the opinion that it is entitled and indeed obliged to take into account the multiplicity of matters in which adverse findings have been made rather than consider the proper consequence of each finding in isolation. In the result despite the eloquence of Mr Wales and the evidence favourable to the Solicitor the Tribunal has reached the conclusion that its findings of March 8 must inevitably lead to an order that the name of the Solicitor be removed from the rolls. Accordingly the Tribunal makes the following orders: 1. That the name of Anthony Stanley Veghelyi be removed from the Roll of Solicitors in New South Wales. 2. That the Solicitor pay the costs of the Law Society such costs to be assessed on a Solicitor and Client basis as if taxed in the Supreme Court. 3. If an agreement cannot be reached between the Solicitor and the Law Society on the amount of costs, either party have liberty to apply to this Tribunal. Dated this 29th day of April 1991. 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.