CITATION: Law Society of NSW v Young [2010] NSWADT 264 DIVISION: Legal Services Division APPLICANT Council of the Law Society of NSW PARTIES: RESPONDENT Pamela Young Legal Services Commissioner FILE NUMBER: 102008 HEARING DATES: 5 October 2010 EXTEMPORE DECISION DATE: 5 October 2010 BEFORE: Patten D - Deputy President; Fairlie D - Judicial Member; Bubniuk L - Non-Judicial Member CATCHWORDS: Solicitor-disciplinary application-Assisting in encumbering a title without there being a caveatable interest.-Knowingly making a false Statutory Declaration. LEGISLATION CITED : Legal Profession Act 2004 CASES CITED: Council of the New South Wales Bar Association v Butland [2009]NSWADT 177 APPLICANT L Pierotti, solicitor REPRESENTATION: FIRST RESPONDENT In person SECOND RESPONDENT L Muston, solicitor 1.The First Respondent is guilty of professional misconduct ORDERS: 2.The First Respondent is reprimanded 3.The First Respondent is to pay the costs of the Applicant agreed at $3,000, such costs to be paid by monthly instalments of $100. REASONS FOR DECISION Introduction 1 On 5 October 2010, the Tribunal heard this matter. At the conclusion of the hearing, the Tribunal made the orders set out in the final paragraph of these Reasons for Decision. The Tribunal indicated that they would publish their reasons at a later date. These are those reasons. 2 On 14 May 2010, the Council of the Law Society of NSW ("the Law Society") filed an application alleging that the Respondent, Pamela Young ("the Solicitor"), was guilty of professional misconduct on two grounds. These were: A. Unethical conduct: Assisting in encumbering the title of property without there being a caveatable interest. B. The Solicitor knowingly made a false Statutory Declaration. 3 In the Application, the Law Society sought the following orders: 1. That the Solicitor be reprimanded. 2. That the solicitor be fined. 3. That the Solicitor pay the costs of the Applicant of and incidental to this Application. 4. Such other order s as the Tribunal sees fit. 4 On 14 May 2010, the Law Society filed an affidavit, sworn the previous day, by Raymond John Collins, in support of the Application. 5 The central allegation in the Particulars to the Application and in Mr Collins' affidavit, was that in 2006, the Solicitor had lodged a caveat on behalf of her client over a property at Garden Suburb, in the Lake Macquarie area, owned by a Mrs Anukorn Srisuwan. Schedule 1 to the caveat, set out the nature of the estate or interest claimed by the caveator in the property. It stated that the Registered Proprietor was the director of a company which was indebted to the caveator for arrears in rent. In Schedule 2 to the caveat, the Solicitor made a statutory declaration to the effect that the caveator had a good and valid claim to the estate or interest in the property as set out in the caveat. 6 On 9 June 2010, Mr Brian Barlow of Bowen-Thomas and Barlow, Solicitors, filed a Reply on behalf of the Solicitor and on 11 June 2010, filed an affidavit from the Solicitor, sworn 4 June 2010. 7 The Reply and the Solicitor's affidavit admitted the relevant Particulars. However in response to the Grounds of professional misconduct, the Reply stated: " Ground 1 (A) The solicitor believed at the time of lodgement of the Caveat that her client had a caveatable interest ", and "Ground 2 (B) The Solicitor did not knowingly make a false declaration. When the Solicitor made the statutory declaration on the Caveat she believed that the caveator had or may have had a caveatable interest." 8 In paragraph 4 of her affidavit, the Solicitor said "I say that I have not been guilty of professional misconduct as alleged by the Council of the Law Society of New South Wales and I oppose the Orders sought by the Law Society of New South Wales in these proceedings." The proceedings were then ready to be fixed for a hearing on a contested basis. The Instrument of Consent and Agreed Statement of Facts. 9 In September 2010, an Instrument of Consent ("Consent"), made under section 564 of the Legal Profession Act 2004 ("the Act"), and an attached Agreed Statement of Facts, was filed in the proceedings. The Consent had been executed by the Law Society, on 30 August 2010, the Legal Services Commissioner on 2 August 2010 and on 23 August 2010, by the Solicitor. 10 The parties to the Consent consented to the Tribunal making a finding that the conduct of the Solicitor, as described in Grounds A and B, and particularised in the attached Agreed Statement of Facts, amounted to professional misconduct. 11 Grounds A and B in the Agreed Statement of Facts were in identical terms to the Grounds contained in the Law Society's original Application. The Particulars in the Agreed Statement of Facts were in the following terms: PARTICULARS Lease between A&R Spencer Investments Pty Ltd and A&T Lighting Wholesale Pty Ltd 1.The Solicitor acted for A & R Spencer Investments Pty Ltd ("the Company"). 2.From about November 2000 the Company leased industrial premises it owned at 10B/311 Hillsborough Road, Warners Bay ("the rental property") to Warners Bay Lighting Pty Limited, the sole director of which was Mr Manut Srisuwan ("Manut"). 3.On 4 August 2004 the Company entered into a new lease of the rental property to A & T Lighting Wholesale Pty Limited ("Lighting Wholesale") for a period of three years from 1 April 2004 ("the Lease"). The sole director of Lighting Wholesale was Manut's wife, Mrs. Anukorn Srisuwan ("Anukorn"). Manut guaranteed the lease. 4.Although the Solicitor acted for the Company in drafting the lease, all the negotiations for the terms and conditions of the lease were between Manut and Mr. Spencer. 5.Lighting Wholesale fell into arrears with its rent. Lodgement of Caveat 6.Anukorn was the sole registered proprietor of a property at Garden Suburb ("the Garden Suburb property"). 7.In about August 2006 Anukorn exchanged contracts on the sale of the Garden Suburb property with completion scheduled for 29 September 2006. 8.On or about 28 September 2006 the Solicitor lodged a caveat over the Garden Suburb property on behalf of the Company as the Caveator ("the Caveat"). 9.Schedule 1 of the Caveat, dealing with the Nature of the estate or interest claimed by the Caveator, provided as follows: "Lease registration no AB 4049955. Registered proprietor is the director of A & T Lighting Wholesale Pty Ltd ACN 084 649 632 who leases a commercial unit from the caveator." 10.In addition, in Schedule 1 of the Caveat, the Solicitor specified that the facts giving rise to the estate or interest claimed were: " The registered proprietor is in arrears of rent in the amount of $38,835.67." 11.In paragraph (K) of Schedule 2 of the Caveat the Solicitor made a statutory declaration dated 26 September 2006 as follows: "I Pamela Young of 53 King Street, Warners Bay solemnly and sincerely declare that- 1.To the best of my knowledge, information and belief the caveator has a good and valid claim to the estate or interest set out in Schedule 1. 2.This caveat does not require the leave of the Supreme Court or the endorsed consent of the [blank] ; 3.This caveat is certified correct for the purposes of the Real Property Act 1900. I make this solemn declaration conscientiously believing the same to be true by virtue of the provisions of the Oaths Act 1900." 12.Prior to the lodging of the Caveat the Solicitor informed her client that, in her opinion, "… we may not have a caveatable interest and if push came to shove we would have to with draw (sic) it" Regardless of her opinion, the Solicitor complied with her client's instructions and proceeded to lodge the Caveat. 13.On 29 September 2006 the following communications took place: (a)Anukorn's Solicitor sent a fax to the solicitor therein advising that he acted for Anukorn and that, in his view, the Lease did not create a right to lodge a caveat. (b)the Solicitor responded that the Company had instructed her that the Caveat would be removed upon receipt of $38,835.67 from Manut and Anukorn, being the arrears of rent outstanding on the rental property. (c)Anukorn's Solicitor responded to the solicitor that (i) the balance owing was only $24,899.75 and that he had been instructed that the administrator had been paying the rent; (ii) he had instructions to hold $24,899.75 in trust following receipt of funds on the sale of the Garden Suburb property the following week; (iii) the funds were to be held against " the actual nett (sic) liability established by your client following completion of the administration, taking into account any payments or credits made…" ; and (iv) he would be proceeding with the lodgement of lapsing proceedings and that the solicitor must be clearly aware that the Company had no caveatable interest in the Garden Suburb property. (d)the Solicitor wrote to Anukorn's Solicitor advising (i) that her client had instructed her to accept "…that your client lodges the sum of $24,899.75 into your Trust Account pending the completion of the administration…" ; and (ii) she had instructed her city agents to attend "…settlement today at 3pm on our behalf with the Withdrawal of Caveat together with the $79.00 registration fee…" 15.On 29 September 2009 settlement of the sale of the Garden Suburb property took place. 12 The Instrument of Consent also contained the parties' consent to the Tribunal making the following orders: 1. The Solicitor be reprimand. (sic) 2. The Solicitor pay the costs of the Applicant agreed at $3,000.00, such costs to be paid by monthly instalments of $100. The Hearing 13 At the hearing, Mr Pierotti appeared for the Law Society and Ms Muston represented the Legal Services Commissioner ("Commissioner"). The Commissioner thereby became a party to the proceedings under section 559(5) of the Act, as the Second Respondent. The Solicitor represented herself. 14 Mr Pierotti requested the Tribunal to make orders in terms of the Instrument of Consent. He pointed out that the Law Society no longer pressed for the imposition of a fine as it had in its original Application. Ms Muston supported Mr Pierotti. The Solicitor stated that she also consented to orders being made in the terms of the Instrument of Consent. 15 At the outset of the hearing, the Tribunal indicated to the parties that, in accordance with the discretion given to the Tribunal under section 564(10) of the Act, when deciding whether to make orders pursuant to an Instrument of Consent, they wished to conduct the hearing in the usual manner before reaching our conclusions. In taking this approach, the Tribunal was assisted by the comments of the Tribunal in Council of the New South Wales Bar Association v Butland [2009]NSWADT 177, at paragraphs 29 -31 and 33 and 35, as to the matters to take into account in deciding whether to make the Consent Orders. 16 Mr Pierotti then tendered, unopposed, the affidavit of Raymond John Collins, sworn 13 May 2010, the affidavit of the Solicitor sworn 4 June 2010 and the Instrument of Consent signed by all parties, with the Agreed Statement of Facts attached. 17 The Solicitor also tendered, unopposed, a bundle of letters comprising three recent character references from solicitors in the Newcastle area, a letter from her accountant Mr Trevor Ramsay, dated 17 September 2010, two handwritten notes dated 31 March 2008 and 12 March 2010 from Dr Denis Gordon, and a letter from a Clinical Psychologist, Anne Sharkey, dated 9 March 2010. 18 The letter from Mr Ramsay stated, in part, that "The Practitioner had been forced to close her business premises on 2 March 2009 due to the decline in business and is now conducting her legal practice from her domicile", and "We are instructed by our client that work in progress has now reduced to NIL and there appears little likelihood of such prevailing circumstances changing". 19 The March 2008 note from Dr Gordon stated, in part, that "This lady lives alone and has a low threshold for acute anxiety". In her letter, Ms Sharkey said that the Solicitor had been referred to her for an opinion and management of anxiety and depression. The stressful events that she had been dealing with since 2006, as outlined by the Solicitor to Ms Sharkey, included "an issue with the Law Society and ongoing issues with the Owner's Corporation involved with her residence." 20 Ms Sharkey continued that in 2006 : " It was at this time, when according to Pam she was under immense stress, that Pam then reportedly signed a legal document involving a caveat that she then recognised was an error. Pam attributes this error in thinking to the stress placed upon her by the Owner's Corporation." 21 The Solicitor gave her evidence under oath. Mr Pierotti took her to paragraph 4 of her affidavit sworn 4 June 2010, as set out above in paragraph 8 of these Reasons for Decision, where she had said that, she had not been guilty of professional misconduct. She said that that was her belief at the time she had signed the affidavit, but that subsequently she had come to recognise that her conduct was more serious than she had earlier believed, and that knowingly making a false declaration did amount to professional misconduct. 22 She said that at the time she had sworn the Statutory Declaration and lodged the caveat in 2006, she had let her emotions override her brain, that she had not stood up to her client and that she had let him control her. 23 The Solicitor also said that although she held a current practising certificate, she had little or no current work. However, she wished to continue practising on a part time basis from her home. Discussion and Conclusions 24 The Solicitor's conduct, as particularised in the Agreed Statement of Facts, clearly amounted to professional misconduct. It was troubling to the Tribunal that she had taken so long to come to that realisation. Her initial response to the Law Society in 2007, following the complaint made by the solicitor for the Registered Proprietor, Mrs Srisuwan, as revealed in the correspondence attached to Mr Collins' affidavit, was to deny the allegations and to express disgust that the complaint had been made. 25 Also, in her correspondence with Mrs Srisuwan's solicitor at that time, she showed no awareness that her position in relation to the caveat, was untenable. In her letter dated 10 September 2007, the Solicitor appeared to take the position that, notwithstanding what was revealed by searches in the public registries, she had been misled into believing that Mr Srisuwan and not his wife, was the director of the company indebted to the Solicitor's client for rent, and secondly that Mr Srisuwan was the joint registered proprietor of the Garden Suburb property. 26 Perhaps more disquieting was the underlying assumption in this letter, that had Mr Srisuwan been the joint owner of the property, as the guarantor of the lessee company, that would have given her client an unchallengeable entitlement to lodge a caveat on the property. 27 By 2009, in her letter to the Law Society, the Solicitor said "I have done my own research and have studied up on caveats and this incident of placing a caveat against a property which is suspect, will not happen again," and that, "I now know that what I believed at the time of my swearing the statutory declaration was wrong in law." However as we have noted above, it was not until August this year that the Solicitor accepted that what she had done, amounted to professional misconduct. 28 Nevertheless, although the Solicitor's conversion on the way to Damascus was late, the Tribunal is satisfied that it is genuine. Having regard to the evidence before us, in particular the evidence of the Solicitor on the day of the hearing, we came to the view that the Orders set out in the Instrument of Consent were appropriate in the circumstances. 29 Accordingly we made the following orders: 1.Solicitor guilty of professional misconduct 2.Order pursuant to Section 564 Legal Profession Act that consent be given to instrument of consent and in accordance therewith. a)Solicitor is reprimanded b)Solicitor to pay applicants costs of $3000 by monthly instalments of $100.00 each, first payment 5 November 2010. 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