The Legal Services Tribunal of New South Wales CITATION : Peter Roger Simons [1994] NSWLST 19 PARTIES : Peter Roger Simons FILE NUMBER(S) : of 1993 CORAM: Mr A. Martin (Presiding Member) - Ms E. Dutton - Mr W. Macquarie Professional Misconduct - breach of s. 61 of the Legal Profession Act :- s.173 of the Legal Profession Act 1987 CATCHWORDS: sections 41 and 42 Legal Practitioners Act 1898. Misappropriation of clients' funds in five instances. No exceptional circumstances to justify the Tribunal making an order other than to remove the name of the solicitor from the Roll. Consideration of the guidelines for borrowing from clients and Regulation 27. LEGISLATION CITED: Legal Profession Act 1987 Legal Practitioners' Act 1898 CASES CITED: Law Society v Bannister (LPDR No. 4 1993 at 28) ; In ex parte Macaulay (1930 30 SR (NSW) 194) DATES OF HEARING: DATE OF JUDGMENT: 12/15/1994 LEGAL REPRESENTATIVES: Mr D. Hipsley instructed by Mr L.W. Pierotti for the Law Society of New South Wales. Mr S. Cuddy for Solicitor. JUDGMENT: ON 12 AUGUST 1993 THE COUNCIL OF THE LAW SOCIETY OF New South Wales ("the Law Society") resolved that Peter Roger Simons ("the Solicitor") may be guilty of professional misconduct and that a complaint be made to the Legal Profession Disciplinary Tribunal pursuant to s. 135 of the Legal Profession Act 1987. The Legal Services Tribunal ("the Tribunal") heard and determines the Complaint under the transitional provisions of the Legal Profession Reform Act 1993 and its Regulations. The grounds of the Complaint are: 1. The Solicitor misappropriated the moneys of the executors of the Estate of the late Yvonne Desiree Herry in the sum of $14,000 and the Solicitor acted in breach of s.41 of the Legal Practitioners' Act 1898. 2. The Solicitor misappropriated the moneys of the Estate of Bozena Zimmer in the sum of $1,280.62 and the Solicitor acted in breach of s.61 of the Legal Profession Act 1987. 3. The Solicitor misappropriated the moneys of Mrs Van Langenberg in the sum of $5,002.19 and the Solicitor acted in breach of s.61 of the Legal Profession Act 1987. 4. The Solicitor misappropriated the moneys of the Estate of Lewis Royston in the sum of $8,500.00 and the Solicitor acted in breach of s.61 of the Legal Profession Act 1987. 5. The Solicitor misappropriated the moneys of the Estate of J.W. Metcalfe in the sum of $26,000.00 and the Solicitor acted in breach of s.41 of the Legal Practitioners' Act 1898. 6. The Solicitor misappropriated the moneys of the Estate of Thelma Constance Metcalfe and the Solicitor acted in breach of s.41 of the Legal Practitioners' Act 1898. 7. The Solicitor misappropriated funds of his client Ms Georgette Gray and the Solicitor acted in breach of s.41 of the Legal Practitioners' Act 1898. 8. The Solicitor breached the Guidelines for Borrowing Transactions when he borrowed money from Mr Allyn William Day. 9. The Solicitor breached the Guidelines for Borrowing Transactions when he borrowed money from Mr Colin Raymond Bass. 10. The Solicitor breached Regulation 27 of the Legal Profession Regulation 1987 when he borrowed money from Mr Laurence Austen Phillip Lonngren. 11. The Solicitor breached Regulation 27 of the Legal Profession Regulation 1987 when he borrowed money from Mr Robert O'Mara. The misappropriations referred to in grounds 1 to 5 inclusive are admitted by the Solicitor. The misappropriations alleged in grounds 6 and 7 were denied by the Solicitor. The Solicitor denied breaching the Guidelines for Borrowing Transactions referred to in grounds 8 and 9 and Regulation 27 of the Legal Profession Regulation 1987 referred to in 10 and 11. Mr Darryl Swindells, Chartered Accountant, who was appointed as Receiver to the property of the Solicitor on 16 December 1992 and Mr James Sofiak, a Law Society Trust Account Inspector, gave evidence. Their evidence of investigation into the matters of Herry, Zimmer, Van Langenberg, Royston and J.W. Metcalfe clearly establishes all these misappropriations and also that in each of the matters the Solicitor wilfully breached. s.41 of the Legal Practitioners' Act 1898 or s.61 of the Legal Profession Act 1987 as the case may be. The total sum so misappropriated by the Solicitor was $52,782.81. The Tribunal finds the Solicitor guilty of professional misconduct in each of the matters the subject of grounds 1 to 5 inclusive of the Complaint. In the matters of Estate of Thelma Constance Metcalfe and Ms Georgette Gray (grounds 6 and 7 of the Complaint) the evidence fell far short of evidence which would comfortably satisfy the Tribunal that the Solicitor misappropriated his clients' monies or that he acted in breach of s.41 of the Legal Practitioners' Act 1898 as alleged by the Law Society. In the case of the Estate of Thelma Constance Metcalfe there was no evidence at all that the Solicitor had received or used for his personal benefit any of the moneys that the Law Society alleged should have been distributed from the Estate to the State Library and to the University of New South Wales. In the case of Georgette Gray there was no evidence to support the allegation that the Solicitor had used $25,000.00 of this client's money for his own use without her approval. Ms Gray was not called to give evidence and in answer to a recent letter from Mr. Swindells requesting advice as to her approval of the use of these moneys, Ms Gray had replied, "I wish to state that I have no recollection of the events mentioned in your letter of 22nd September. I am sorry I can be of no further assistance." This reply is understandable. The transaction, the subject of this allegation took place nearly ten years ago. The Tribunal dismisses grounds 6 and 7 of the Complaint. The remaining four grounds of Complaint (8 to 11 inclusive) allege that in each case the Solicitor obtained a personal loan from a client of the Solicitor (namely Messrs Day, Bass, Lonngren and O'Mara) without first advising the client to obtain legal advice in accordance with the Guidelines for Borrowing Transactions or Regulation 27. The Solicitor in his Statutory Declaration admits that he did not advise any of the lenders that they should obtain independent advice. He had previously acted for the lenders but had no current matter with them at the time of the loan. The relationship of solicitor and client did not exist at the time and each of the lenders had been personal friends for periods up to fifteen years. The purpose of the borrowings was to assist him meet his personal debts and each of the lenders was informed that the loan was unsecured and repayable when he was in a position to do so. Counsel for the Law Society did not cross-examine the Solicitor although the Solicitor did give short oral evidence before the Tribunal. The word "client" means (inter alia) "one who applies to a solicitor for advice or commits his cause or legal interest to a solicitor's management". (See the Concise Macquarie Dictionary.) In s.173 of the Legal Profession Act 1987 Part 2 (Barristers' and Solicitors' Remuneration) the following definition appears, "client" includes - (a) any person who (whether as principal or agent and whether in the capacity of a trustee or otherwise) retains, or is about to retain a solicitor; and, (b) any other person who is, or may become liable to pay a solicitor's costs;" The Tribunal is of the view that a person who has been a client of a solicitor does not continue to be a client after the completion of the solicitor's retainer and will only resume the relationship of client and solicitor when that person applies to the solicitor for advice and takes some other steps to retain the solicitor's services. In the Guidelines for Borrowing Transactions the Council of the Law Society stated the view that (inter alia) (d) "client" means any person between whom any solicitor or the partner at any time of a solicitor or the employer of a solicitor any relationship of solicitor and client exists or any person seeking to invest money through a solicitor or approached by or on behalf of the solicitor for that purpose". Regulation 27 provides that `client' includes any person for whom a solicitor or the solicitor's firm has undertaken to act or furnish advice and any person seeking advice from, or offered advice by the solicitor or the solicitor's firm in respect to the investment of any money:". The evidence is that at the time that the loans were made there was no subsisting retainer between the Solicitor and the lender and therefore the relationship of solicitor and client did not exist at the time the loans were made. However it is necessary in view of the definition of "client" in the Guidelines for Borrowing Transactions and in Regulation 27 to consider whether the evidence establishes that whether the lenders were approached by the Solicitor for the purpose of investing money and whether they sought advice or were offered advice from the Solicitor in respect of the investment of any money. The Tribunal is of the opinion that the personal loans were not investments as contemplated by the Guidelines or Regulation 27. The evidence is that there was no certain date for repayment of the loans and it appears that no mention of interest being payable on the loans was made. Consequently the Tribunal dismisses these grounds of the Complaint. The Tribunal has found the Solicitor guilty of professional misconduct and it is now necessary to consider the appropriate order or orders that the Tribunal should make. The Solicitor was admitted to practice on 12 March 1965 and practised continuously until 15 December 1992 when his Practising Certificate was cancelled by the Law Society. He retired from the firm Simons & Baffsky in August 1980 and practised under the names of P.R. Simons, then Simons Grinston & Co until 2 January 1990 from which date until 19 November 1992 he practised in partnership with the firm Graeme Goldberg Partners. His practice was in the property and commercial fields. In the early 1980's a building syndicate of which he was a member got into financial troubles. As a result from 1984 to 1987 the Solicitor paid syndicate debts worth $300,000 to $400,000. In 1987 he sold his home and applied those proceeds to creditors. He disposed of all savings and real assets to pay creditors and he is now bankrupt. Since the cancellation of his Practising Certificate in December 1992 he has not been able to practise law and he has been supported by his wife financially. The Solicitor and his wife live in rented premises with two of their three children. In 1989 having sought medical advice from his general practitioner he was diagnosed by a neurologist Dr Dudley O'Sullivan as having Parkinson's disease. The Solicitor was prescribed medication which Dr O'Sullivan informed him would "control the disease" but the disease is characteristically "irreversible and progressively debilitating". Dr O'Sullivan in a report tendered in evidence stated, "He is now on medication which is controlling his disease to such an extent that there would not be any restrictions on his ability to carry on with professional practice.". Anthony Michael Simons, a practising solicitor and the brother of the Solicitor, gave evidence that provided that the Solicitor's name was not removed from the Roll and the Solicitor allowed to practise, that he would be prepared to employ the Solicitor as an employed solicitor at a weekly wage of $600 gross per week. His practice involved the provision of legal services to a firm of mercantile agents engaged essentially in recovery of debts and enforcing judgments. The work he contemplated for the Solicitor would be that he would be responsible for the work on files under his supervision which involved defended debts and he would also be required to assist in minor court appearances such as mentions. Leone Joan Simons the wife of the Solicitor stated in her Statutory Declaration of 18 October 1994 that in the event that the Tribunal made orders that had the effect of her husband's name remaining on the Roll and he being issued with a limited Practising Certificate restricting him to being employed as a solicitor and not as a sole practitioner or in partnership, then she would complete arrangements to borrow money to repay the sum of $52,782.81, the total of the sum of the misappropriations admitted by her husband. It is with this background that Counsel for the Solicitor submitted to the Tribunal that the appropriate order was one that would allow the Solicitor to practise with a Certificate restricting him to practise as an employee, not as a sole practitioner or in partnership. It was further submitted that as the Tribunal did not have the power to make an order in those terms that the Tribunal should accept undertakings from the Solicitor as to the restrictions under which he would practise in the future. In re the Law Society v Bannister (LPDR No. 4 1993 at 28) Sheller JA said: "When the jurisdiction of the Tribunal is invoked under Part 10 Division 7 of the Act to conduct a hearing into a complaint of professional misconduct by a legal practitioner, the primary consideration is to protect the public by preventing a person unfit to practise from holding himself or herself out to the public as a legal practitioner in whom members of the public might repose confidence. But the Tribunal must also act so as to deter the offender in the future and any other practitioner minded to behave in like manner. In the case of a solicitor these elements together or separately may call for the removal of the solicitor's name from the Roll or the imposition of a substantial fine". and again at 28: "The normal consequence of the misappropriation by a solicitor of a client's money is that his name be removed from the Roll. In ex parte Macaulay (1930 30 SR (NSW) 194) Street CJ said that where a solicitor had been proved guilty of theft he should not, unless in very exceptional circumstances, ever be allowed again to be held out to the public as a solicitor in whom confidence might be reposed.". The present case is one where the Solicitor has misappropriated the money of clients on more than one occasion and there are no exceptional circumstances which justify the Tribunal making an order other than an order to remove the name of the Solicitor from the Roll. There remains the matter of costs. In the matters of Gray and the Estate of T.C. Metcalfe no evidence was put before the Tribunal which could in any way comfortably satisfy the Tribunal the Solicitor was guilty of the misappropriations alleged. This absence of evidence should have been clear to the Law Society at least prior to the commencement of the hearing. Much time was wasted in the Society pursuing these allegations including in the matter of Metcalfe calling witnesses from the State Library and the University of New South Wales to establish that those bodies had no record of any final distribution of payment from the Estate. In these circumstances the Tribunal will award the Law Society 80 per cent of the costs it would otherwise be awarded. The Tribunal makes the following orders: 1. The name of the Solicitor Peter Roger Simons be removed from the Roll of Solicitors of the Supreme Court of New South Wales. 2. The Solicitor pay 80 per cent of the costs of the Law Society, such costs to be assessed on a solicitor/client basis as if taxed in the Supreme Court. 3. If the parties cannot agree on the amount of costs payable by the Solicitor, either party has leave to apply to have the amount of such costs determined by the Tribunal. 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.