Legal Services Division CITATION: Law Society of New South Wales -V- Pollack [1998] ADT COMPLAINANT: Law Society of New South Wales RESPONDENT: Philip John Pollack Mr A Martin (Chairperson) ( Judicial Member ) TRIBUNAL: Ms R Cox Mr R Gietzelt GROUNDS OF COMPLAINT: Professional Misconduct DATE OF JUDGMENT: 10/07/1998 Complainant: Mr D Hipsley LEGAL REPRESENTATIVES: Respondent: Mr B Miles The Council of the Law Society of New South Wales (the "Law Society") has informed the Legal Services Tribunal (the "Tribunal") of a complaint of professional misconduct against Philip John Pollack (the "Solicitor"). The grounds on which the complaint was made include ten alleged breaches of section 61(1) of the Legal Profession Act 1987 (the "Act"), two alleged breaches of regulation 32(2) of the Legal Profession Act Regulation 1994 , one alleged breach of section 61(2) of the Act and alleged breaches of regulations 27(2)(b) and regulation 27(2)(c) of the Legal Profession Regulation 1987 . Section 61(1) and 61(2) Section 61(1) states: "If a solicitor, in the course of practising as a solicitor, receives money on behalf of another person, the solicitor shall: (a) hold the money exclusively for the other person; and (b) ensure subsection (2) and the regulations are complied with in relation to the money." Section 61(2) states: "Money received on behalf of another person by a solicitor in the course of practising as a solicitor: (a) shall, except where the person on whose behalf the money is received otherwise directs, be paid, within the prescribed time, to credit of a general trust account at a bank in New South Wales and be held in accordance with such regulations as may be enforced in relation to trust money." It is professional misconduct for a solicitor to wilfully contravene section 61 or Section 62 of the Act. The principle relating to the meaning of "wilful" or "wilfully" in this context is as stated by Maugham J (as he then was) in Vickery (1931) 1CH572 page 583: "... 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 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. Australia Credit Corporation ("A.C.C.") Prasad The Solicitor acted for A.C.C. in an action against Prasad. On 19 July 1995 the Solicitor drew a cheque for $450 on his trust account for a filing fee in the Supreme Court. At the time the Solicitor drew that cheque he was aware no moneys had been deposited into the trust account on behalf of A.C.C. in the matter. Subsequently on 31 July 1995 the Solicitor deposited his cheque for $450 in his trust account to the credit of A.C.C. That cheque was dishonoured on 2 August 1995. The Solicitor admits these facts but denies that in the circumstances his conduct was wilful although he admits that his conduct was reckless. He says, it was necessary at short notice to prepare a summons and to attend at the Supreme Court Office to file it to set aside a statutory demand made on the client-the last day for compliance being 19 July 1995. He made arrangements with the client for funds to be made available to cover the filing fee and in anticipation that those funds would in fact be forthcoming and deposited to the credit of his trust account before handing over the cheque, he draw a cheque for the filing fee and left his office for the Supreme Court Office. Contrary to the Solicitor's belief the funds were not deposited to his trust account when expected or at all. The Tribunal finds that the solicitor committed a breach of section 61(1) and in so doing acted wilfully-on his own admission his conduct was "reckless" if in fact it was not intentional. The Tribunal finds that this conduct of the Solicitor was professional misconduct. A.C.C. and Murphy The Solicitors admits that on 16 October 1995 he received into his trust account the sum of $175 on behalf of the client and on that day transferred that amount to his general account in payment of fees. The Solicitor denies that he withdrew those moneys without the authority of his client A.C.C. The Solicitor claims that there was a special relationship between him and the client which allowed him to transfer his moneys from the trust account in payment of his fees without an express authority on each occasion he did so. In a letter of 23 November 1995 to the Law Society Mr Byrnes of A.C.C. denies that the Solicitor had any authority to transfer the $175.00 from his trust account to his general account. At that time the Solicitor who was a subtenant from A.C.C of his North Sydney office was in arrears with his rent in the sum of approximately $16,000. The Tribunal finds that the Solicitor did not have authority to transfer the $175 and doing so he was in breach of section 61(2) of the Act. The transfer of $175 took place in complete disregard of the obligations that the Solicitor had under section 61(2) and the Tribunal finds that the conduct was wilful and consequently professional misconduct. Cullen The Solicitor acted for Mr J Cullen in a matter against the Deputy Commissioner of Taxation. On 10 March 1994 the Solicitor withdrew the sum of $500 from his trust account for fees at which time there were no funds to cover such withdrawal from any monies held by the Solicitor on behalf of Mr Cullen. On 28 September 1995 and 6 October 1995 the Solicitor withdrew $50 on each occasion from his trust account for fees when there were no funds in the trust account held on behalf of Mr Cullen leaving Mr Cullen's trust account with a debit balance of $590. The Solicitor admitted these facts and that in all the circumstances his conduct was reckless and sufficiently reckless to amount to professional misconduct. The explanation given by the Solicitor was that as at 10 March 1994 there were a number of accounts outstanding which had been rendered to the client. At that time he believed there were funds held at the credit of the client for application towards those outstanding costs. Relying on that belief but without either writing the records or otherwise checking that the funds had actually been received the Solicitor made the transfer of $500. He says that on becoming aware of his error on or about 31 March 1994 after having written up his books he immediately deposited his own funds to cover the amount overdrawn. This refund was made but according to the trust ledger card the sum of $600 was received into the Solicitor's trust account from Mr Cullen on 21 August 1995 and on that day the Solicitor withdrew the sum of $590 having made a reverse deposit entry of $600 on that date. On 28 September 1995 a further sum of $100 was received from Mr Cullen and deposited to the trust account this amount being later withdrawn from the trust account in two sums of $50.00 each on the 28 September 1995 and 6 October 1995. The Tribunal finds that the Solicitor acted wilfully in breach of section 61(1) and finds that his conduct was professional misconduct. Hall and Street In this matter the Law Society alleges that there was a debit balance of $11.55 in the trust ledger account of these clients. The Law Society does not suggest that the conduct of the solicitor in this case was professional misconduct but says that this allegation was made as an example of the state of and the treatment by the Solicitor of his trust account and his records. The Tribunal finds that any breach by the Solicitor of section 61(1) in this matter was not wilful and consequently the Tribunal dismisses the allegation that the Solicitor was guilty of professional misconduct. The Tribunal comments that the Tribunal finds it difficult to understand that such an allegation was made the subject of the complaint in view of the minimal amount involved. Chandler Mr Chandler was a client of the Solicitor. Mr Chandler carried on business as Brookvale Freedom Motorcycles and in the company name of Mobike Pty Limited. On our about 14 February 1995 Mr Chandler engaged the Solicitor on behalf of Mobike Pty Limited and on or about 3 March 1995 forwarded the Solicitor the sum of $4,000. On or about 18 March 1995 at the Solicitor's request Mr Chandler forwarded two cheques to the Solicitor one for $15,000 (payable to the Solicitor) and the other for $11,000 (payable to Mr Evans of counsel) totalling $26,000. On 8 May 1995 the cheque for $11,000 payable to Mr Evans was endorsed "Please pay to P J Pollack and Co Trust Account" and signed by Mr Evans. On 18 May 1995 this cheque for the $11,000 was deposited in the Solicitors Trust Account. The relevant trust account ledger of Mr Chandler recorded the receipts of the $4,000 and the $11,000 a total of $15,000. The disbursement of this $15,000 was made in various amounts for the payment of fees to the Solicitor, for reimbursement to the Solicitor of payment of counsels fees and payment on 31 July 1995 of $4,963 to Henry Davis York. The result of all those transactions was that there was a debit balance in the trust account of Mr Chandler of $270. The Solicitor admitted these facts but denied that the contravention was wilful and claimed the debit balance came about through error. The cheque for $4,963 payable to Henry Davis York, (the solicitors who were the clients new solicitors) should have been for the amount of $4,693. The cheque although correctly drawn as to the wording of the amount was incorrectly drawn as to the figures. The Solicitor refers to his accounting to the client for funds on termination of retainer referred to in the Receivers report which correctly represented that the balance due to be $4,693. Although the Solicitor committed a breach of Section 61(1) the Tribunal was not satisfied that that contravention was wilful and accepts that the debit balance came about as a result of error. Accordingly the Tribunal dismisses this allegation. However the Solicitor admitted that the following withdrawals from this trust account namely: 3 May 1995 $1,000 10 March 1995 $600 16 March 1995 $385 17 March 1995 $1,015 were made before any fees accounts were prepared and were made without the proper authority of the client. The Solicitor made a further withdrawal from his trust account of the sum of $2,093 on 18 May 1995 and the Solicitor denies that this withdrawal was made before any fees account was prepared or that it was made without the authority of the client. Mr Chandler gave evidence and he stated that he did not give the Solicitor permission to withdraw the $2,093 from his trust account and that he never gave the Solicitor authority to withdraw fees from his trust account. The Tribunal accepts the evidence of Mr Chandler that he gave no authority for the withdrawal of the $2,093. The Solicitor admits that the other withdrawals were made before fees accounts were prepared and were made without the proper authority of the client. The Tribunal finds that these breaches of section 61(1) were wilful and consequently were professional misconduct. On or about 18 March 1995 Mr Chandler paid to the Solicitor the sum of $15,000. The Solicitor paid this amount into his general account for what he described as being "as the monies paid for his own use". In evidence the Solicitor stated that the $15,000 was an upfront retainer to him for work to be done by him and that he had not any obligation to pay that amount into his trust account. Mr Chandler in his affidavit and in evidence stated that the Solicitor had requested a cheque for $15,000 payable to the Solicitor as a fixed fee to the Solicitor for his fees of acting for him and his companies to obtain a Mareva injunction. The question is whether when the Solicitor received this $15,000 did he do so "on behalf of another person" or himself or in other words was the $15,000 "clients money" or money to which the Solicitor was immediately entitled. It can be argued that if money is paid to a solicitor on terms that the solicitor is entitled to appropriate that money immediately to the solicitor's own account for costs and disbursements which the solicitor will earn or incur in the future in the conduct of the client's business; if, the effect, the solicitor is being paid in advance for the work to be performed, then the money upon its receipt by the solicitor is not received on behalf of another person, it is not clients money, and maybe accepted by the solicitor to the solicitor's own account (paragraph 2635 of NSW Solicitors Manual (Riley). If payment of the $15,000 in this case fell within this category the Solicitor had no obligation to pay that amount into his trust account. The Tribunal is not satisfied that the $15,000 were moneys received by the Solicitor or on behalf of Mr Chandler within the meaning of Section 61(1) and consequently the Tribunal dismisses this allegation. Regulation 32(2) of the Legal Profession Regulation 1994 provides the prescribed procedure to be followed by a solicitor withdrawing money from his trust account in reimbursement of disbursements paid by the solicitor or for disbursements to be paid by the solicitor or money due, or to accrue due, to the solicitor for costs. The prescribed procedure is that the solicitor: (a) delivers a bill of costs in accordance with Part II of the Act and the client has authorised the withdrawal or receipt, or (b) delivers to the person such a bill of costs together with a written notice that, unless the person objects, the solicitor intends to withdraw the money and to apply it towards payment of the bill at the expiration of 30 days after the delivery of the bill and that period has expired without an objection being made to the solicitor. The Solicitor admitted that contrary to the requirements of regulation 32(2) of the Legal Profession Regulation 1994 he did not deliver to Mr Chandler outline bills prior to withdrawal of the moneys for the fees totalling $3,000 referred to above. The Solicitor however, claimed within respect to the withdrawal of $2,093 that he had submitted to the client an outline bill but admitted that such outline bill did not include the notice required by the regulation. The Tribunal finds that the Solicitor breached this regulation in respect of the withdrawal of $3,000 and the $2,093. Breach of the regulation does not of itself constitute a breach of the Act. Nevertheless failure to comply with a regulation by a solicitor is capable of being held to be professional misconduct or unsatisfactory professional conduct. The Tribunal finds that these breaches of the regulation did not constitute professional misconduct but however finds that the Solicitor's conduct constituted unsatisfactory professional conduct. Mrs Le The Solicitor acted for Mrs Le in an action brought against her by her landlord for arrears in rent for a restaurant business situated at 34 Falcon Street, Crows Nest. On 31 August 1995 Mrs Le handed to the Solicitor two cheques one for $3,000 and the other for $10,991.25. On that day the Solicitor withdrew from his trust account $2,000 for his fees and paid to Mr M Southwick of counsel $1,000 for his fees. The cheque for $10,991.25 paid to the Solicitor by Mrs Le was for settlement of the arrears of rent to be paid to the landlord. On 5 September 1995 that cheque was returned unpaid and two days later on 7 September 1995 Mrs Le replaced the dishonoured cheque with a bank cheque for $10,991.25, leaving in the trust account a credit to Mrs Le of $10.991.25. During the period 7 September 1995 to 13 October 1995 the Solicitor withdrew from the trust account $8,961.25 for his fees, $950 for reimbursement of counsels fees and paid $2,050 to Mr M Southwick of counsel for his fees. Mrs Le in her affidavit and in evidence stated that she had not given any authority to the Solicitor to withdraw these moneys from the trust account and that she did not receive any memoranda of fees and disbursements until 22 November 1995. Shortly after the receipt of $10,991.25, the landlord of Mrs Le called upon a guarantee for $10,000 which was payable at her bank, the ANZ Bank. As a consequence of that payment of $10,000 under the guarantee, the Solicitor states that when the bank cheque for $10,991.25 was deposited into his trust account, on 7 September 1995, by prior express agreement with Mrs Le, this amount was received on account of costs and disbursements. The action brought by Mrs Le against her landlord was for relief from forfeiture and these proceedings were heard in the Equity Division of the Supreme Court on 28 September 1995. In those proceedings Mrs Le swore an affidavit in which she said:- " I have paid all the rent up to August. Money to cover the August rent and the outgoings ($10,991.25) has been paid into my solicitor s trust account although I understand some of that was taken to cover legal fees. I understand the balance held in trust is in the sum of $2,796.75. " On 28 September 1995 Mrs Le gave evidence in the Equity division of the Supreme Court when she was asked:- " Between early September when you gave him the bank cheque and the middle of last week, you changed your instructions to Mr Pollack and allowed him to draw on that money to pay some legal fees, do you agree with that? " To which Mrs Le replied:- " Yes ." In evidence before the Tribunal, Mrs Le however stated: Q: " You did swear an affidavit? " A: " He teach me to say that. Q: " What ' s that? " A: " Mr Pollack, when I in the case of the Supreme Court, whatever barrister ask me, I say " yes " , I allow to spend money, that is what he teach me in the room. " Later when Mrs Le it was questioned as to what she said in the affidavit and whether she agreed with the statement in that particular paragraph she answered:- " In fact I am not agree because I did mention to let him using spend the money as his fee. That paragraph, that was his secretary and the barrister, we sit down together to make this all, the letter. " The allegation made is that the Solicitor withdrew the money for his to fees from the trust account in relation to the matter of Mrs Le without her authority in breach of section 61. The Tribunal is not satisfied that Mrs Lee did not give an authority to the Solicitor to apply both the $3,000 and the $10,991.25 in payment of his costs and disbursements including counsels fees. Mrs Le gave evidence in the Supreme Court to the effect that she had given an authority to the Solicitor and the Tribunal does not accept that this statement in her affidavit was the result of being "taught" by the Solicitor and the barrister. Accordingly the Tribunal dismisses this allegation. Martin and Hayes In November 1993 the Solicitor was instructed by Mr Martin and Mrs Hayes in relation to the re-financing of a private residence and the preparation of a contract for a business venture. In the course of so acting the following amounts were paid by Mr Martin or Mrs Hayes to the Solicitor:- 30 November 1993-cash $500 29 December 1993-cash cheque $1,500 The $1,500 was not placed into the Solicitor's trust account and it is alleged that this failure was a breach of section 61(1) of the Act. Mr Martin complained to the Law Society alleging that he had been overcharged and that the conduct of the matter by the Solicitor had been unreasonably delayed. He also complained about the matter of the account. The Law Society dismissed these complaints but suggested that if he wished to pursue the matter of the account, he should seek independent legal advice (see Law Society's letter of 19 December 1994-Exhibit "H"). The Solicitor claims that he was entitled to pay the $1,500 into his general account as a fixed fee for preparing the agreement for the business venture. However, the Solicitor in his letter of 7 June 1994 to the Law Society, stated:- " Late November 1993, Mr Martin provided me with instructions with respect to the preparation of a joint venture agreement relating to the importation and distribution of pool tables.---I indicated at the time my fees with respect to the preparation of the agreement would be in the sum of $200 per hour and requested an amount of $1,500 from Mr Martin, which was paid. " Neither Mr Martin or Mrs Hayes gave evidence. ] The Tribunal is satisfied that the Solicitor received the $1,500 on behalf of another person namely the client, and that the Solicitor was not entitled to appropriate that money immediately to his own account for costs and disbursements. The Tribunal finds that the conduct of the Solicitor was in breach of 61(1) of the Act but does not find that this breach was wilful. The Tribunal does not find that the Solicitor's conduct was professional misconduct but finds that it was unsatisfactory professional conduct. Greatbase and Navagee The Solicitor acted for Greatbase Pty Limited ("Greatbase") and Navagee Pty Limited ("Navagee") in respect of the sale of managerial rights of the Shiralee Lodge at Stewarts Point and the purchase of the property at 44 Bridge Street, Bermagui. On 7 November 1995 the Solicitor received into his trust account the sum of $50,000, the proceeds of the sale of the management rights. Between 8 November 1995 and 16 November 1995 the Solicitor withdrew from his trust account fees totalling $14,513.23. It is alleged that the Solicitor withdrew this money without Greatbase and Navagee's authority, that the Solicitor in the course of acting as a Solicitor, received these moneys on behalf of Greatbase and Navagee and failed to hold such moneys exclusively for Greatbase and Navagee. The Solicitor claimed that he was authorised to withdraw these fees from the trust account and that she was so authorised by Rachel Krysyna, a director of Greatbase. Rachel Krysyna was a solicitor employed by the Solicitor from March 1995 until late November 1995. She assisted the Solicitor in the work that was undertaken for Greatbase and Navagee. The Solicitor says that on 7 November 1995 Rachel Krysyna expressly authorised the immediate withdrawal of fees in relation to matters which had already been settled and, as and when settled, fees in relation to those matters which have not been settled, to the aggregate sum of $13,000. The Solicitor further claimed that as he withdrew fees from the trust account, he put notes on Miss Krysyna's file and on each occasion she said "no problems". Rachel Krysyna denies that occurred. The Solicitor further claims that when the matter started he said to Rachel Krysyna "I want moneys as and when I get the work done" and she said "no problem". Rachel Krysyna gave evidence and in cross-examination she was asked: Q: " I just put this to you; that, in fact, Mr Pollack did tell you that he was going to take costs out?" A: " No, completely incorrect. " Q: " And I put to you that he put file notes on the files and said to you, well, in effect " these are the costs " ? " A: " No, absolutely incorrect. " Q: " You agreed? " A: " No, that is completely incorrect. " The Solicitor claims that his authorisation to withdraw his costs from the trust account was confirmed in writing by Kim Krysyna, a director of Greatbase and of Navagee in a letter of 20 November 1995. A copy of this letter was annexed to the Receivers report and the only confirmation of authorisation to the Solicitor to deduct fees from the amounts held in the trust account (if in fact there was such an authority) was as stated by Kim Krysyna in the letter "we have borrowed an additional $50,000 when we only required possibly $10,000 for settlement. We require the balance of these funds immediately after your costs have been deducted". This letter was dated and sent after the fees totalling $14,513.23 had been withdrawn from the trust account by the Solicitor. The Tribunal finds that the Solicitor in withdrawing various amounts totalling $14,513.23 for his fees from his trust account did so in breach of Section 61, and that his conduct in so doing was wilful. The Tribunal finds that this conduct of the Solicitor was professional misconduct. Regulation 27 of the Legal Profession Regulation 1987 This regulation relevant in November 1993 provided that a solicitor should not borrow any money from a client of the solicitor unless the solicitor does not act for the client in relation to the borrowing transaction and the client is represented by another solicitor, unrelated to, and acting independently of, any party to the transaction, or unless the solicitor has made full disclosure of the interest in the proposed borrowing of the solicitor and the client is given independent advice by a solicitor who is unrelated to and acts independently of any party in the borrowing transaction and the solicitor giving the advice completes and signs a certificate of independent advice and delivers that certificate to the solicitor seeking the loan. McMahon It is alleged Mr McMahon was at all relevant times a client of the Solicitor and that at some time prior to 10 November 1993 the Solicitor telephoned Mr McMahon and enquired of Mr McMahon whether he had funds for investment. As a result of this conversation Mr McMahon paid the sum of $7,000 into a bank account in the name of the Solicitor-this money being a loan to the Solicitor. It is alleged that the Solicitor in borrowing this money was in breach of Regulation 27. The Solicitor admits that he did not comply with any of the provisions of Regulation 27 and that he borrowed the $7,000 from Mr McMahon. However, the Solicitor denies that at the relevant time Mr McMahon was a client of the Solicitor and submitted that consequently Regulation 27 did not apply. The Solicitor stated that he acted as a solicitor for Mr McMahon in respect of a number of matters during the 1980"s, the last matter being in 1986 and possibly in 1987. He did not act for Mr McMahon after he moved to Queensland in 1988. Mr McMahon in his affidavit stated that the Solicitor telephoned him on 10 November 1993 and said "I have a client who requires a short-term bridging loan for a period of 4 months, can you manage $5,000 at a good interest rate? It will be paid by 4 equal monthly instalments". To which Mr McMahon replied "I can manage this". The Solicitor said "would you like to double the amount" to which he replied "I can't manage that but I can manage $7,000, would that be at the same interest rate?" Mr McMahon could not recall the rate but it was an excellent rate. The Solicitor said "I need it quickly and can you manage cash"? Mr McMahon replied "I don't want to come to Sydney but I can deposit the cash in a bank in Brisbane so there will be no delays". The Solicitor said "the Bank is Advance Bank and your account number is 0622-18953. These funds will go into my trust account". The bank statement for the account of the Solicitor at the Advance Bank into which the $7,000 was paid discloses that at the date of deposit of the $7,000 he had a credit of only $3.74 in that account. The Solicitor in evidence said that in early November 1993 Mr McMahon telephoned him in his office at Wentworth Avenue, Sydney and said to him "Philip, I'm in town, let's have a cup of coffee, I want to know if there is a business around". He said that he and Mr McMahon met, the Solicitor took him to lunch the next day with a Mr Paul Jones who had been a prior borrower but Mr Jones had no further need for money. Mr McMahon left the Solicitor his phone number. The Solicitor rang him a week later and said "I need money" to which Mr McMahon replied "how much do you need". Regulation 27 provided that a ""client" includes any person for whom a solicitor .. has undertaken to act or furnish advice and any person seeking advice from, or offered advice by, the solicitor .. in respect of the investment of any money." Mr McMahon on the facts stated by the Solicitor was a client within the meaning of this definition. He was a person seeking advice in respect of the investment of the money. On Mr McMahon's version of the facts, he clearly fell within this definition of a client, if not a client in fact quite apart from this definition. The Tribunal finds that the Solicitor committed breaches of Regulation 27 as alleged. The Tribunal further finds that his conduct in so doing constituted professional misconduct. Olivieri In or about June 1995 the Solicitor acted for Germano Olivieri in proceedings in the Supreme Court of New South Wales and in the course of so acting the Solicitor during the period of 6 June 1995 to 14 September 1995, received into his trust account $3,000 on 6 June 1995, $6,000 on 19 July 1995, $450 on 4 August 1995, $2,550 on 18 August 1995, $500.00 on 25 August 1995, and $3,750 on 14 September 1995. The whole of these moneys were withdrawn by the Solicitor over the period 9 June 1995 to 14 September 1995 for his fees with the exception of a filing fee paid to the Supreme Court of $450. The Law Society alleged that the Solicitor acted in breach of Regulation 32(2) of the Legal Profession Regulation 1994 in that the Solicitor had forwarded to Mr Olivieri a memorandum of fees and disbursements due to the Solicitor, but such memorandum did not include as required by the regulation any written notice of the Solicitor's intention to draw fees at the expiration of 30 days after sending such memorandum of fees. The complaint is confined and limited to this allegation of breach of the regulation, although it was alleged that these fees were withdrawn from the trust account without the authority of Mr Olivieri. The Solicitor admits that the requisite notice was not included with the memorandum of fees dated 9 June 1995 which memorandum was forwarded to the client on 11 July 1995. The Tribunal finds that the Solicitor acted in breach of Regulation 32(2), that his conduct in so doing did not constitute professional misconduct but did constitute unsatisfactory professional conduct. Regulation 39 of the Legal Profession Regulation 1994 This regulation provides that a solicitor must, within 21 days after the end of each named month, prepare a trial balance statement disclosing each account in his or her trust ledger ... effective as at the end of that month. The Solicitor admits that in breach of that regulation, he failed to prepare a ledger trial balance statement for any month subsequent to 30 September 1995 up until at least the time of the Receivers inspection on 6 May 1996. This failure on the part of the Solicitor to comply with this regulation demonstrates his ignorance or failure to understand the requirements of the Act and the regulations in keeping trust account records. The Tribunal finds that this breach of the regulation constitutes professional misconduct. On 27 July 1993 the Legal Profession Disciplinary Tribunal (as the Tribunal was then called) heard a complaint by the Law Society against the Solicitor for wilful contraventions of section 61 of the Act. The Tribunal found that in four matters namely Martin, Ferrara, Moss and Whitehouse the Solicitor had wilfully contravened section 61 of the Act and that his conduct was consequently professional misconduct. The Tribunal imposed a fine of $2,000 with an order that the Solicitor pay the costs of the Law Society of those proceedings. These matters the subject of that complaint were the result of inspections by Trust Account Inspectors of the Law Society on 2 December 1991, 6 August 1992 and 25 September 1992 the first inspection being carried out by Mr George Thompson and the two other inspections by Mr Sofiak. The reports of these inspectors disclosed the following:- 1. Martin-the sum of $1000 showed as a debit in the Trust Account for the period of 232 days. The sum of $300 showed as a debit in the Trust Account for 3 days. The sum of $500 showed as a debit in the Trust Account for the period of 112 days and was current at the date of inspection in December 1991. 2. Ferrara-the sum of $691.50 showed as a debit in the Trust Account for a period of 52 days. The sum of $1106.50 showed as a debit in the Trust Account for a period of 154 days and was still current as at the date of inspection. 3. Moss-The sum of $1000.00 showed as a debit in the Trust Account for a period of 41 Days. It was reimbursed prior to the date of inspection. 4. Whitehouse-as at 13 December 1991 the ledger card for Whitehouse showed a credit balance in the trust account of the Solicitor of $81,584.95. On 16 December 1991 the Solicitor paid himself fees of $1,000 and then on 24 December 1991 drew a cheque for the Australian Tax Office for $80,703.95. This in fact left a debit of $119.00 in the trust account. On 10 January 1992 when there was already a debit balance in the trust account the solicitor paid himself a further $581.00 on account of disbursements which left a short fall of $700 in the trust account. That $700 was not deposited to rectify the shortfall until 5 August 1992 being the day before Mr Sofiak's inspection. In its determination the Tribunal said that it regarded the conduct of the Solicitor as serious. Whilst the Tribunal did not consider the fitness of the Solicitor to practise was in question it was of the view that the seriousness of the conduct warranted a fine. At the same time, it expressed the warning that if there was a recurrence of such conduct and the Solicitor would come before the Tribunal again at some future time, then the question of his fitness might be in issue. The Solicitor is 51 yeas of age. He is married and has two sons aged 21 and 20 years respectively. His wife is in full-time employment as a colour consultant. In 1970 he was admitted as a barrister having completed the Barristers Admission Board course studies. In 1966 during the course of his employment with the Commonwealth Government from 1966 until 1972 firstly in the Official Receivers Office and then the Deputy Crown Solicitor's office he worked as a non practising barrister in the Deputy Crown Solicitor's office until 1972 and then at the legal offices of Glasheen and Kerr solicitors in Sydney. In 1974 he was articled to Mr Patrick J Kerr of that firm and was admitted as a solicitor in 1975 and worked as an employed solicitor until 1980. In 1980 he acquired the firm of Glassheen and Kerr and practised as a sole practitioner until 1982 when he entered into partnership with Mr Kerr practising under the name of P J Kerr Pollack and Company. In 1984 he commenced practising as a sole practitioner and continued that practice until February 1996 when Mr Brown was appointed by the Law Society as manager of his practice. On 28 February 1996 the Supreme Court made an order appointing Mr D Lombe receiver of his practice-the Council of the Law Society having resolved to refuse to issue him with a practising certificate. The Solicitor is a bankrupt and is due for his statutory discharge from bankruptcy in March 1999. From February 1996 until mid 1997 he was unemployed. He is now in part-time employment with a small finance company and a video distribution company being employed by both companies on an "as needed" basis. The Solicitor in his affidavit has stated that if the Tribunal makes orders entitling him to the issue of a practising certificate he would propose to seek employment as a solicitor with a legal firm or with a corporation. Alternatively he would seek admission to the bar and practise as a barrister. Eight character referees were tendered on behalf of the Solicitor. These references were from barristers solicitors and lay persons and in the main supported the view that the Solicitor was a competent and honest person who could be allowed to continue to practise his profession as a solicitor albeit as an employed solicitor under supervision. One of the character references was from Mr G McDonald chartered accountant who had known the Solicitor for a period of about 4 years in the capacity as a solicitor in practice and more recently as an employee of a small finance company called Discount Acceptance Corporation Pty Limited. He had been made aware of the complaint made by the Law Society and had reviewed two large folders of information. He had always found the Solicitor to be forthright and honest in his dealings with him and had displayed a great understanding of many complex legal issues. Another reference was from Mr K J O'Farrell Managing Director of Network Entertainment stated that his company had employed the Solicitor since November 1997 as the Business Affairs Manager. He had been made fully aware of the matters that brought the Solicitor before the Tribunal and he had read the material. His observation was that the Solicitor was an honest, hard working and reliable person. He had been of invaluable assistance to the company in his ability to identify contentious issues and their resolution. The Solicitor's legal knowledge and skills would make him an invaluable asset to his company in the role of Legal Affairs Manager. This is a position that Mr O'Farrell proposed to offer him in the event that this Tribunal sees fit to make available a practising certificate to him. The Tribunal has found the Solicitor guilty of professional misconduct in relation to the conduct of his trust account, unauthorised withdrawal of fees from his trust account, failure to observe trust account regulations and the regulations to ensure that a solicitor fulfils his fiduciary duty to a client when he borrows money from that client. There is no allegation by the Law Society of any defalcation by the Solicitor but the Solicitor has displayed a serious disregard of his duties as a solicitor dealing with his trust account and the withdrawal of fees from his trust account. The Tribunal in making disciplinary orders does so in accordance with the principles expressed by Giles A J A in Law Society-v-Foreman LPDR No. 4 of 1994 as follows:- "The jurisdiction of the Tribunal and of this Court in disciplinary matters is exercised to protect the public, not to punish the solicitor. The object of protection of the public may require that the legal practitioner be removed from the roll, be suspended from practice, or only be permitted to practise under particular circumstance, where the practice under particular circumstances, where the practitioner is not fit to be held out to be trusted, at all, for a time, or without qualification, with the heavy responsibilities attendant on the office. The public is protected by ensuring that those unfit to practice do not hold themselves out as fit to practice. The object of protection of the public also includes deterring the legal practitioner in question from repeating the misconduct and deterring others who might be tempted to fall short of the high standards required of them. And the public, and professional colleagues, who practise in the public interest, must be able to repose confidence in legal practitioners, so an element in deterrence is an assurance to the public that serious lapses in the conduct of legal practitioners will not be passed over or lightly put aside, but will be appropriately dealt with." What order should the Tribunal make to adequately protect the public? If the Tribunal finds that the Solicitor is unfit to practise then that finding can only lead to an order that the name of the Solicitor be removed from the roll of legal practitioners. On the other hand if the Tribunal finds that the Solicitor is fit to practise on a restricted basis as an employed solicitor with stringent conditions to be fulfilled by the Solicitor before any practising certificate is issued to him will an order that such a restricted practising certificate be issued protect the public? The Tribunal after much careful deliberation finds that the Solicitor is fit to practise on a restricted basis and has decided that the appropriate protective orders to be made are that any practising certificate issued to the Solicitor be endorsed with the condition that the Solicitor is restricted from acting as a solicitor otherwise than in the course of employment by a solicitor holding an unrestricted practising certificate and that such a restricted practising certificate is not to be issued until the Solicitor has completed to the satisfaction of the Law Society such course or courses of further legal education as the Law Society may nominate. The Tribunal orders that: 1. Any practising certificate issued to the Solicitor be endorsed with a condition restricting the Solicitor from acting as a Solicitor otherwise than in course of employment by a solicitor holding an unrestricted practising certificate. 2. Before the issue of any such restricted practising certificate the Solicitor must complete to the satisfaction of the Law Society such course or courses of further legal education as the Law Society may nominate. 3. The Solicitor pay the costs of the Law Society to be agreed or as determined by the Tribunal. Dated this 7th day of October 1998. 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.