The Legal Services Tribunal of New South Wales CITATION : David John Twomey [1992] NSWLST 19 PARTIES : David John Twomey FILE NUMBER(S) : of CORAM: Mr F Herron (Presiding Member) - Mr G B Molloy - Mr D Mahon CATCHWORDS: Professional Misconduct - make false statement - Professional Misconduct - prepare false documents :- LEGISLATION CITED: CASES CITED: Allison v General Council of Medical Education and Registration (1894); Demetrios v Gikas Dry Cleaning Industries Pty Limited (1991) DATES OF HEARING: 30/06/92 - 08/09/92 DATE OF JUDGMENT: 09/08/1992 Mr B.J. Murdoch LEGAL REPRESENTATIVES: Mr G.C. Lindsay Messrs Sly & Weigall JUDGMENT: Legal Profession Disciplinary Tribunal In the matter of David John Twomey Judgment Before: Mr F. Herron (Presiding Member), Mr G. Molloy and Mr D. Mahon. Appearances: Mr B.J. Murdoch, Solicitor, for the Law Society; Mr G.C. Lindsay, instructed by Messrs Sly & Weigall for the Solicitor. Hearing date: 30 June 1992. The facts in this matter are relatively straight forward. The solicitor acted for the State Bank of New South Wales in relation to a proposed loan to Mr Ngoc Buu To. As part of the loan arrangements, the bank required a mortgage over certain land at Canley Vale owned by a Mrs Thi Huong Tran, effectively as guarantor. The solicitor prepared the necessary mortgage documents and the guarantee mortgage and a document entitled "Acknowledgment and Consent of Third Party/Guarantor/Covenantor" in which Mrs Tran was described as the party granting consent. It appears that Mrs Tran is one and the same as Mrs To and is the wife of Mr To, the borrower. It appears that when the documentation had been prepared by the solicitor, Mr To informed the solicitor that his wife was in Inverell consequent upon certain medical advice that required their son to be taken out of Sydney following head injuries suffered in an accident. The solicitor appeared to be aware of this incident and, consequently, as Mr To said that as he was travelling to Inverell, the solicitor gave to Mr To all the relevant documentation for execution by Mrs Tran, his wife. Mr To subsequently returned the documentation to the solicitor. Each had been signed in the relevant place, apparently by Mrs Tran, but none of her signatures had been witnessed. The solicitor witnessed the signature of the mortgagor on the Real Property mortgage granted over the land at Canley Vale owned by Mrs Tran and also witnessed the signature of Mrs Tran in the "Acknowledgement and Consent". The solicitor then delivered the documents to the State Bank, apparently the loan was advanced and the mortgage over the property owned by Mrs Tran was registered. It appears that the solicitor knew both Mr To and Mrs Tran prior to this transaction. He had not apparently previously acted for her, although she had accompanied her husband to the solicitor's office and the solicitor may have been to their restaurant on a number of occasions and to certain fund-raising events. Pausing at this point, it is quite clear that when the solicitor appended his signature to the mortgage as the witness to the apparent signature of Mrs Tran, he had not in fact witnessed the signature of Mrs Tran. The mortgage itself states (from the point of view of the attesting witness) "Signed in my presence by the mortgagor who is personally known to me". It clearly was not signed in the presence of the solicitor. Similarly, in the "Acknowledgment and Consent" the signature of the consenting party is stated to have been signed by her "in the presence of" the solicitor. Clearly, that was also not the case. Furthermore, and equally as clearly, the solicitor knew when he signed those documents purporting to witness the signature of Mrs Tran, that the State Bank would rely upon those documents for the purposes of granting an advance to Mr To of $50,000.00. Regrettably for the solicitor, it turns out that the signature purporting to be that of Mrs Tran, was in fact forged. So it appears that the signature that the solicitor purported to witness was never in fact at any time the signature of Mrs Tran. In the formal Complaint of the Law Society, it was alleged that at all material times the solicitor acted for Mr To and Mrs Tran. In a detailed submission to the Society by the solicitors for the solicitor and, presumably, upon instructions, it was stated that the solicitor acted for Mrs Tran as mortgagor. During the course of the hearing, when this was challenged by a question from the Bench, counsel for the solicitor confirmed that it was true to say that the solicitor acted for Mrs Tran. This was further confirmed later during the hearing at T7 but at T8 the following exchange took place: Q: Mr Twomey, if I may ask this question, when did you get instructions from Mrs Tran and how did you get instructions from her in relation to this transaction? A: I didn't get instructions from her. I got instructions from the State Bank and I asked Mr To to get his wife to come to the office and that was when Mr To told me that his wife had gone to Inverell. Q: What you are really saying, (is)...that the instructions were received from the State Bank or from Mr To primarily presumably from Mr To, you never really got instructions from his wife? A: That's true. Q: And you assumed presumably that the instructions from him were the instructions given on behalf of his wife as well?A: That is correct, yes. Q: That's the only point I was trying to make, you didn't get instructions from this person who gave the guarantee. It is regrettable that prior to the proceedings and during the course of these proceedings, the solicitor appeared to adhere to the view that he had in fact instructions from Mrs Tran when, at all times, he did not. However, that may have been a misunderstanding on his part and, at the hearing, a misappreciation on his part as to what was being asked. However, it does underline the problem that often confronts solicitors in their daily practice when obtaining instructions from married people. It clearly indicates that, at least at some point of time in the transaction, the solicitor must obtain direct instructions from both parties. It is clearly not sufficient, and this case illustrates this principle, to simply obtain instructions from one party to a marriage and assume that those instructions come from both parties. Although the principle must apply in all cases, it seems to the Tribunal that there were sufficient warning signs to have alerted the solicitor to a possible problem. In the very first place, the loan was only to Mr To not to his wife. In the second place, it was clear that it was a guarantee mortgage and a guarantee acknowledgment. In the third place, the land that was to be the subject of the third party mortgage was land not owned by both the married persons, but only by Mrs Tran. And fourthly, the solicitor had not spoken to Mrs Tran about the transaction, was apparently unfamiliar with her signature and, as he stated, he supposed that "it was really a question of trust". As far as the State Bank and Mrs Tran are concerned, the solicitor has made good all losses, no doubt at considerable cost to himself. It is in these regrettable circumstances that the matter comes before the Tribunal. There is no question that the actions of the solicitor were, in his own words, "stupid", "foolish and inexcusable" and that "such conduct can lead to potentially catastrophic consequences for our clients and the practitioner himself". The solicitor went further and stated that he was "keenly aware of the seriousness of (his) conduct and felt an acute sense of shame and disappointment in (himself)." He said that he deeply regretted the effect that his conduct would, or may have, on the profession as a whole. In the original written submission made on behalf of the solicitor, his solicitors submitted that his actions did not amount to professional misconduct but only amounted to unsatisfactory professional conduct. Mr Lindsay, in his submissions, submitted that it was not necessary to resolve the question of whether or not a proper characterisation of the conduct is professional misconduct or unsatisfactory professional conduct. However, in the view of the Tribunal, it is proper to characterise legally offensive conduct. Improper characterisation may well result in an inappropriate order. Improper characterisation may also have the unintended consequence of down-playing the seriousness of the conduct to the ultimate detriment of the solicitor and the profession as a whole. It is the view of this Tribunal that the conduct of the solicitor in this case amounted to common law professional misconduct i.e. something done by a person in the pursuit of his profession "which would be reasonably regarded as disgraceful or dishonourable by his professional brethren of good repute and competency." (Allison v General Council of Medical Education and Registration (1894) 1QB 750). This definition, which relies for its enforcement on the function of peer judgment, reflects the self regulation of our profession and is adaptable to changing professional customs and attitudes as the common law generally accommodates social and economic change. (See, for example, In the matter of Paul Fraser (No.6 of 1991) (unreported)). In the view of the Tribunal, there is no doubt that purporting to personally witness the signature of a mortgagor on a guarantee mortgage when the solicitor did not in fact so witness that signature is conduct that would be reasonably regarded as disgraceful or dishonourable by the solicitor's brethren of good repute and competency. This Tribunal has pointed out on a number of previous occasions (In the matter of Paul Fraser and In the matter of Ian Burnham Mitchell (1992) 1 LPDR 6) that serious consequences flow from improperly appending one's signature as a witness to this type of document. The duty that the solicitor owes is not only a duty to the mortgagor. It is also a duty to the incoming mortgagee and any solicitor for the incoming mortgagee. (See Demetrios v Gikas Dry Cleaning Industries Pty Limited (1991) 22 NSWLR 561.) The solicitor, when appending his signature as witness, would have known that the intending mortgagee would rely on the proper execution of the guarantee mortgage and supporting document in making the advance to the borrower. In the matter of Ian Burnham Mitchell, at page 9, the Tribunal had this to say:"The form of the attestation could not be clearer:`Signed ¯in my presence by the mortgagees who are personally known to me.' In the view of the Tribunal it is untenable even to contemplate that a person as qualified as a solicitor should be unable to understand those words and the actions that they require. They are simple and direct. They are obviously there to mean what they say, and are to be used for a real purpose. They are clearly there to ensure that the documents which bear them, and which are capable of creating important legal interests in property, are executed under rigidly controlled principles. In the view of the Tribunal, any solicitor who departs from those principles is guilty of disgraceful conduct." And at page 10, the Tribunal felt "obliged to issue a very strong warning signal to the profession generally that conduct of the nature described will be regarded most seriously, and that solicitors who indulge in it must expect to suffer very serious consequences". The Tribunal in this matter repeats those warnings. It may be that the practise of solicitors in purporting to witness signatures that they do not in fact witness exist to some degree in the profession. It is important that the profession be aware that such conduct will not find favour in the Tribunal. Solicitors have an obligation to act with propriety and assume, by their professional calling, a high standard of obligation to not only their clients but also to the public and their profession. Pausing at this point, we were referred to Re: A Barrister and Solicitor (58 ACTR 1). In that matter the solicitor was the solicitor on the record in an application by a NSW barrister to be admitted to practice in the Australian Capital Territory. In support of that application, the solicitor had filed an affidavit which had been sworn by the applicant barrister before a Justice of the Peace in NSW. The solicitor had been informed that the affidavit had been sworn too long before the hearing before admission. As the solicitor was a Justice of the Peace for NSW, he altered the date of the jurat in the barrister's affidavit and purported to witness the barrister's signature. Before so doing, he had spoken to the barrister. He then filed the affidavit as if it had been sworn at the latter date on which he had altered it. It was held that the solicitor had not acted disgracefully or dishonourably. Curiously, the ACT Supreme Court (Kelly, Gallop and McGregor JJ) appeared to give little or no reasons for drawing the conclusion that they "did not take the view that (the solicitor) acted disgracefully or dishonourably". Their view appeared to be that the solicitor's conduct arose from the solicitor's misconception of the solemnity associated with the swearing of affidavits and a general lack of understanding of the duties of the solicitor and a Justice of the Peace in this respect. Of course, each case depends upon its particular circumstances. There is no question that in Re: A Barrister and Solicitor the affidavit had already been properly sworn by the barrister. Presumably, it is all a question of how the adjudicating authority views the conduct complained of and whether the conduct fits within the Common Law "definition" of professional misconduct as it changes from time to time. Clearly, the view of the ACT Supreme Court in 1984 was that the type of conduct complained of was not sufficient to merit a finding of professional misconduct (although, we note, that the solicitor was in fact reprimanded and fined $1,000.00 and ordered to pay costs). In the instant case before this Tribunal however, the conduct complained of is of a much more serious quality. It was not just a question of altering the date on the jurat of an already-sworn affidavit and purporting to witness the signature of the deponent who had already properly sworn the affidavit in this case the solicitor purported to personally witness the signature of a person from whom he had no instructions, whose signature he had not witnessed, whose signature was in fact forged and upon the execution of these documents the lending authority would rely to make a not insubstantial advance. Each case depends upon its particular facts, and the Tribunal has no hesitation in finding the solicitor guilty of professional misconduct. That having been said, in the words of Mr Lindsay for the solicitor, "the substantial question before the Tribunal is what is the proper order to make in these proceedings?" There is no doubt at all that the solicitor is not only contrite, but has clearly faced up to his obligations and as stated: "I can only say to you and to the Tribunal that having gone through the stress and the shame of these proceedings for the last year I can assure the Tribunal that there is absolutely no way that this would ever happen again, absolutely none." The Tribunal, having seen the solicitor in the witness box and having considered the numerous statutory declarations filed on his behalf, is clearly of the view that the actions taken by the solicitor the subject of the Complaint were totally out of character and are an aberration on his otherwise excellent character. The solicitor did not stand to gain personally from his actions. He appears to be well respected by his fellows, to be generally honest and reliable in his dealings, has shown an attention to detail and exactness and a high standard of professionalism otherwise in his practice. The Tribunal is of the opinion that the solicitor is a fit and proper person to continue to practice as a solicitor. The Society conceded that no evidence was placed before the Tribunal to suggest that the solicitor was unfit at this time to continue in practice. It was submitted on behalf of the solicitor that his conduct merited a reprimand, and nothing more. The Tribunal is respectfully of a different opinion. The Tribunal regards the conduct of the solicitor as sufficiently serious to warrant a fine. Although the solicitor has made restitution and is substantially out-of-pocket as a result, the fact that no loss is ultimately involved does not assist the solicitor on the question of his conduct. However, the solicitor did act with promptness in addressing the issue and in ensuring that no person suffered any loss as a consequence of his conduct. The Tribunal has borne those factors in mind in assessing what Orders it should make. The Tribunal therefore Orders: 1. The solicitor pay a fine of $4,000.00 within a period of 30 days from the date of this Order. 2. The solicitor be suspended from practice at the expiration of the said period of 30 days if the said fine shall not have been paid until it has been paid. 3. 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. 4. If agreement cannot be reached between the solicitor and the Law Society as to the amount of such costs, either party shall have liberty to apply. Dated this 8th day of September 1992. 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.