Law Society of NSW v Marks [2010] NSWADT 315

CITATION: Law Society of NSW v Marks [2010] NSWADT 315

DIVISION: Legal Services Division

APPLICANT The Council of the Law Society of New South Wales PARTIES: RESPONDENT Stephen Marks

FILE NUMBER: 092037

HEARING DATES: 26 May 2010

SUBMISSIONS CLOSED: 26 May 2010

EXTEMPORE DECISION DATE: 26 May 2010 BEFORE: Molloy G - Judicial Member; Riordan M - Judicial Member; Tingle J - Non-Judicial Member

CATCHWORDS: Notice under s 660 - misappropriation

LEGISLATION CITED : Legal Profession Act 2004

APPLICANT L Pierotti, solicitor REPRESENTATION: RESPONDENT In person

1. The solicitor pay a fine of $1,000.00. ORDERS: 2. The solicitor is publicly reprimanded. 3. The solicitor pay the costs of the Law Society as agreed or assessed.

REASONS FOR DECISION 1 The Tribunal proposes to deal with the matters raised by way of an ex-tempore judgment. The solicitor has come before this Tribunal because he has failed to pay proper attention to his legal practice and the requirements of the Legal Profession Act 2004 (Legal Profession Act) and otherwise at law such that the Law Society has referred a complaint against him alleging a number of breaches which it is asserted, either together or individually, constitute professional misconduct. In support of the application to this Tribunal, the Law Society has filed a number of affidavits all of which, and the facts contained therein, are uncontested and the Tribunal is satisfied that the requisite standard of proof that the complaints made by the Law Society and particularised in its Application for Original Decision, filed 16 December 2009, are made out. 2 The Tribunal does not propose to set out in detail, in this decision, the facts as asserted and proved. The Tribunal is satisfied that those facts as asserted, have, in fact, been proved in the material that has been filed and admitted into evidence. The Tribunal proposes, however, to review some of those matters in a summary form. 3 The solicitor is a sole practitioner and was admitted to practise on 4 July 1986. He practices in Gorokan under the name "Stephen Marks Solicitors" and the Tribunal has no doubt that, over the course of his years of practice, he has dealt with many matters that have been completed quite satisfactorily and about which no complaint has been made and which have not come to attention. 4 The Law Society has asserted that in relation to two matters the solicitor, without reasonable excuse, failed to comply with a requirement under s 660 of the Legal Profession Act, which is a section of the Act which requires a solicitor to provide information as requested. A notice may be served upon a solicitor, when a complaint has been made, for the purposes of carrying out a complaint investigation. In the circumstances before the Tribunal, a s 660 notice dated 28 August 2007 was served upon the solicitor on 11 September 2007 and the notice required the solicitor to verify by statutory declaration the information requested on or before the 21st day after service. The solicitor did not respond to that notice within the 21 days. 5 The second s 660 notice is dated 1 December 2008 and was served upon the solicitor on 9 December 2008 and again the solicitor failed to respond within the period of 21 days set out in the notice. Both notices are clear in their terms and both notices direct the attention of the solicitor to various sections of the Legal Profession Act to which the solicitor should have paid proper regard. Section 660 notices are generally issued by the Law Society or an investigator only as a last resort, the legal practitioner having been written to on numerous occasions prior to the issue of a notice seeking to elicit from the legal practitioner information. In the circumstances before the Tribunal the Law Society went through that exercise. It failed to obtain the information, and was required to issue the s 660 notices. The solicitor did not, in fact, comply with the s 660 notices within the reasonable time as specified in each notice such that it must follow that the case is made out. 6 The case is put on two grounds. One, that there is a failure to comply with s 660 without reasonable excuse and secondly, that the solicitor has failed to assist the investigation of a complaint. The Tribunal has no hesitation in finding that those two allegations are made out clearly on the facts. Ultimately the solicitor did, in fact, provide the information but clearly failed to assist the investigator in the investigation of two complaints and failed to comply with s 660 notices. In any event, the solicitor has offered no excuse for these numerous failures, as we have indicated. 7 It is important to understand however, in relation to the first s 660 notice, that related to a failure to pay the fees of briefed counsel. The evidence before the Tribunal clearly demonstrates that the solicitor had been left up in the air or left in the lurch by his client. The solicitor, by his handwritten note dated 13 December 2006, which is recorded at page 39 of the affidavit of Mr Collins sworn 15 December 2009, makes this statement "I apologise - the money is owed - my client has not paid me - I will respond asap - I have no money, will try to pay asap." The solicitor, on the facts before the Tribunal, did in fact pay the fees of counsel and that is a relevant consideration even though he was, in fact, without funds from the client. 8 The third allegation pleaded against the solicitor is that he failed to communicate with the solicitor for another party in relation to a de facto relationship claim. The solicitor in the circumstances acted for the female party to that relationship and Messrs Wood Roberts, Solicitors, acted for the male party. On eight occasions from 27 October 2005 until 28 November 2007, the solicitors for the other party wrote to the solicitor and on each occasion, without any written response, save that there was one telephone call. It is not appropriate, indeed inappropriate, for a solicitor in the circumstances as asserted and proved on the material, not to respond to correspondence. Even if the solicitor was instructed not to respond, it is proper professional courtesy to inform the other party's legal representative that those are his instructions. In these circumstances that did not take place and that complaint is made out; and it is worthwhile noting that these failures to respond resulted in the second s 660 notice. 9 The more important matter before the Tribunal is the matter of Heffernan. This is a matter where the solicitor is asserted to have breached s 255 of the Legal Profession Act and also to have misappropriated trust money. It is a serious, grave and weighty allegation to make against a solicitor that he or she has misappropriated trust money. We have been assisted by counsel for the Law Society today and propose to make an observation about that in a moment. 10 Section 255 of the Legal Profession Act requires a solicitor or a law practice "To hold money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received, and to disburse the trust money only in accordance with a direction given by the person." 11 In the matter of Heffernan the solicitor took to his own use the sum of $1,892 which was money received by him from the client in the circumstances which we shall enumerate in a moment. 12 The solicitor failed to return that money to the client when, in fact, the money was received from the insurer and did so but only after the Law Society trust account inspector had inspected his accounts and drawn the matter to his attention. Only then did the money get refunded to the client. 13 The material is set out on page 3 and 4 in the summary form of the Application for Original Decision. Again, in summary form, it is plain that on 12 May 1999 the sum of $500 was received from the client and that was paid to a particular doctor. On 10 March 2001 the sum of $462 was also received from the client and on the same day paid to the doctor. 14 The particular matter involving Mr Heffernan was settled and a settlement cheque of $21,600 was received from the insurer which sum was credited to the client's ledger account. On 17 January 2008, from the trust monies held, that is, from $21,600, $880 was paid to a doctor. On 28 January 2008 the solicitor rendered a tax invoice to the insurer which included the $500 paid to the first doctor, $462 paid to the second doctor which was, in fact, the second payment to the first doctor and $880 to the second doctor. On 25 February 2008 the insurance company paid the full amount of the solicitor's memorandum which included the three payments. The three payments amounted to $1,892 which represented a refund due to the client for monies paid by the client for the three doctor's reports. 15 The solicitor banked, into his office account, the full amount of the monies received from the insurer, thus depriving the client of a refund of $1,892. The material in support of those findings is clearly set out in Exhibit D and the Tribunal had no difficulty in making the findings that we have indicated. Clearly the solicitor should have refunded to the client the $1,892 that had been received on the client's behalf from the insurer. A trust account inspector subsequently inspected the books of the solicitor, determined that the $1,892 had not been refunded to the client and doing the best that we can, it seems that the solicitor, in fact, repaid to the client that sum within eight weeks. 16 In these circumstances it is submitted by the Law Society that the conduct of the solicitor amounted to misappropriation in that the solicitor was either recklessly careless or in all the circumstances it could implied that he was recklessly careless. The solicitor attempted to offer an explanation from the bar table that he left the matter to his bookkeeper but, and to do him credit, he readily accepted that the ultimate responsibility rested in him as he is the person who actually conducts the trust account and it was he who should have checked and made sure that the monies that had been received by the client on account of three medical reports were, in fact, refunded to the client when the monies were received from the insurer. 17 There is, in our view, no doubt that technically there has been a misappropriation. Clearly the solicitor did not have proper regard to the payments and should have paid more attention to the wrap up of the Heffernan matter. But having said all that, it is plain to us that whatever may have been the solicitor's faults, it was a mistake, and there was no deliberate dishonesty. It was perhaps, putting it kindly, clumsy; but clearly there has been a technical misappropriation but there is no evidence of wilfulness. 18 The Tribunal finds the allegations as pleaded in the Application for Original Decision proved. The Tribunal fines the solicitor $1,000. The solicitor is publicly reprimanded and the solicitor is ordered to pay the costs of the Law Society as agreed or assessed. The Tribunal wishes to say that the solicitor has indicated that he is embarrassed and chastened. We accept his statement and the Tribunal is satisfied that the solicitor is unlikely to come to attention again. Orders 1. The solicitor pay a fine of $1,000.00. 2. The solicitor is publicly reprimanded. 3. The solicitor pay the costs of the Law Society as agreed or assessed.