The Legal Services Tribunal of New South Wales CITATION : David Edward Quinn [1991] NSWLST 12 PARTIES : David Edward Quinn FILE NUMBER(S) : of CORAM: Mr D E Hunt (Presiding Member) - Mr A Martin - Mrs B Ingold CATCHWORDS: Professional Misconduct - mislead client - Professional Misconduct - fail to act honestly - Professional Misconduct - misappropriate trust moneys/moneys :- Legal Practitioners' Act 1898 LEGISLATION CITED: Legal Profession Act 1987 Bail Act 1978 CASES CITED: R v Freeman and others (1985) 3 NSWLR 303 DATES OF HEARING: 16/07/91 - 20/09/91 DATE OF JUDGMENT: 09/20/1991 Mr I.M. Wales of Counsel LEGAL REPRESENTATIVES: Mr Frederick Smith Mr A.J. Enright of Counsel Messrs Bicknell & Monteith JUDGMENT: The Legal Profession Disciplinary Tribunal In the matter of David Edward Quinn, a solicitor Reasons for determination and orders Before: Mr D.E. Hunt (Presiding Member) Mr A. Martin Mrs B. Ingold Appearances: Mr I.M. Wales of Counsel instructed by Mr Frederick Smith Solicitor appeared on behalf of the Law Society and Mr A.J. Enright of Counsel instructed by Messrs Bicknell & Monteith Solicitors appeared for the Solicitor. This Complaint was referred to the Legal Profession Disciplinary Tribunal (The Tribunal) pursuant to a resolution dated 13 December 1990 by the Council of the Law Society of New South Wales (The Law Society) that in its opinion David Edward Quinn (the Solicitor) may be guilty of professional misconduct and that a complaint be made to the Tribunal. The hearing before the Tribunal commenced on the 16 July 1991. The evidence before the Tribunal consists of the Report of Miss Jean Sayer Chartered Accountant dated 2 March 1988 who also gave oral evidence. Miss Sayer had been appointed by the Law Society on 12 November 1987 as an investigator pursuant to section 82(A) of the Legal Practitioners Act 1898 (the old Act) to investigate the affairs of David Edward Quinn. On the 11 February 1988 the Law Society appointed Miss Sayer as an investigator pursuant to section 55 of the Legal Profession Act 1987 (the new Act) to investigate the affairs of David Edward Quinn. The Solicitor filed a Statutory Declaration dated 4 June 1991 (Exhibit "3") and he also gave evidence and was cross-examined. The matters the subject of the Complaint concerned various transactions dating from December 1984 when the Solicitor was in partnership with another member of the profession and covered the period of his partnership with Messrs Hundt & Berghouse from January 1985 to November 1986. From November 1986 after Mr Berghouse left the partnership the Solicitor was in partnership with Mr David Colin Hundt and from July 1987 he practised~ as a sole practitioner until the 15 March 1991 when he sold the goodwill of the firm "Quinns" to Marsdens and ceased practising as a general practitioner. The Complaint comprises five (5) Grounds as set out in the particulars of Complaint and it is proposed to deal with these seriatim and the Tribunal will make its determination in respect of each of these Grounds. Ground 1: The Heath Matter It is alleged by the Law Society and admitted by the Solicitor that the Solicitor borrowed funds from a client Mrs Joan Patricia Heath without complying with the requirements of the Law Society in relation to the borrowing by a solicitor of his client's money as set out in the guidelines prepared by the Law Society appearing in special bulletin No 1 of 1979. The admitted facts are that in February 1985 the Solicitor purchased a property at 150 Hewlett Street Bronte which was to become his home and drew a cheque in the sum of $30,000.00 which was debited to the trust ledger account of the client which said sum was used to complete the purchase of his home. In his Statutory Declaration the Solicitor admits the facts set out above and refers to a letter dated 30 May 1985 from his then solicitors Messrs McDonell Morgan Milne & Salier to the Law Society which seeks to explain this transaction. In this letter the Solicitor acknowledges that independent advice was not obtained and that this arose from the fact that he had the mistaken impression that the family relationship between Mrs Heath and himself excused him from the obligation to obtain a certificate from an independent solicitor. In a Statutory Declaration dated 10 February 1985 from Joan Patricia Heath attached to this letter she states that the advance was approved by her verbally in a telephone conversation with the Solicitor "early in January" and she declares that she was satisfied with the following: (a) Collateral security offered (b) The term and interest rate (c) The ability of the borrower to meet the commitment. The Declaration also contains the following: "In any event because of the family relationship and my knowledge of the integrity of the borrower and in particular his father with whom I have associated for the past thirty odd years the loan would have been made without security if requested." Mrs Heath also confirmed that she had received all interest due and payable to her and that she was satisfied that all her funds lodged with Messrs Quinn & Gorman were in order. The family relationship referred to, according to the Solicitor, was that Mrs Heath was the mother-in-law of one of his father's sisters. The Solicitor now says that he has repaid the whole of the moneys to Mrs Heath - the balance of $15,000.00 on 26 September of 1990 together with interest - and tendered a letter from Mrs Heath advising that all moneys borrowed from her by the Solicitor had been repaid. In cross-examination the Solicitor agreed that Mrs Heath was the very kind of the person whom the requirements as to independent advice was designed to protect. He also agreed that he was aware of the guidelines in February 1985 when he borrowed the money and that he ignored them. Although he prepared a mortgage to evidence the borrowing from Mrs Heath this was not registered and the Solicitor admitted in cross-examination that he did not tell the State Building Society from whom he had borrowed $140,000.00 for the purchase of the property that he had entered into a second mortgage transaction and that he may have given the Building Society the impression that the source of funds other than those provided by the Building Society came from his own pocket. The Tribunal believes that a solicitor who consciously ignores the guidelines of his professional association laid down for the protection of clients as this solicitor did and failed to obtain proper security for the borrowing such as a registered mortgage or caveat is guilty of professional misconduct and the Tribunal so finds. Ground 2: The Savage matter It is alleged by the Law Society that during 1985 the Solicitor as co-executor of and solicitor for the estate of Lilian Mary Savage did, prior to the grant of probate advance moneys out of the estate through his trust account and thereby failed to discharge his obligations as a solicitor and as an executor. The substantial matter of complaint relates to an amount of $39,000.00 advanced from the Savage Estate to Mr and Mrs Uebel from the 23 May 1985 until the 15 October 1985 it being further alleged that such advance was unsecured. The situation is that Mr and Mrs Uebel were selling their property at 23 Hardin Street Canley Heights and purchasing another property at 31 East Parade Canley Heights for the sum of $59,000.00. The Solicitor advanced the total amount of the purchase money as a bridging loan being $39,000.00 from the Savage Estate, $13,000.00 from a client Mr Mcleod and $7,000.00 from another client Mrs Papadios. A mortgage document (Exhibit "4") was produced by the Solicitor showing the mortgagors as James Uebel of Canley Vale Building Society Manager and Rose Lily Uebel his wife and the mortgagee as Householder Investor Securities Pty Limited the amount secured being $59,000.00. The signature of James Uebel appears above the words "Signature of Mortgagor" and the signature of Rose Uebel above the words "Signature of Mortgagee". These signatures are not witnessed although the Solicitor says that the document was signed in his presence. Furthermore the following covenant was typed on the document and signed by the Uebels: "Fourthly: this security is collateral with the mortgagors property at Canley Heights and being that piece of land in the City of Fairfield Parish of St Luke and County of Cumberland being Lots 26 and 27 in deposited plan 1152 and being the whole of the land in Certificate of Title 15210 folio 246." The Solicitor in cross-examination agreed that the Uebels had not ever given a mortgage to Householder Investor Securities Pty Limited of the property which they were selling and stated in respect of the condition referred to above "I think it is an amateurish way of obtaining an acknowledgement from the Uebels that they recognised that this amount - rather, that their existing property was collateral security with the one that they were purchasing. Q: It doesn't have that effect does it?...A: It doesn't have that effect, no. Q: There was never any mortgage of the other property with which this mortgage could be collateral?...A: That is correct. Q: There was never any security interest registrable in respect of the property described in the fourth covenant?...A: That is so. Q: The only security document ever prepared was for the property which the Uebels where purchasing?...A: Yes. Q: That was a mortgage that was unregistrable?...A: Yes. Q: And certainly never registered?...A: That is so." The Solicitor acknowledged that the company shown as mortgagee Householder Investor Securities Pty Limited was the nominee company which he used as a trustee company for client's moneys that were put out on investment. So far as the advance to the Uebels of $39,000.00 is concerned the Solicitor conceded that he had no authority from the Savage Estate to advance these moneys although he said that he and his father were the executors of that estate. He acknowledged that the advance had been made before grant of probate and that the loan to the Uebels was entirely unauthorised. He also stated that Mr Uebel was the manager of the Campbelltown branch of the State Building Society and that he had a commercial relationship with this person as his firm at the time was on the Panel of solicitors that carried out State Building Society mortgage work. He acknowledged that this influenced him in arranging bridging finance in the transaction of the selling and buying of the Uebels house. He also acknowledged that he was prepared to prefer his own financial interests to the interests of his clients namely the Savage Estate. There is no evidence that the transaction was discussed with the major beneficiary a Mr Leo Eather although this person was said to be a close friend of the Solicitor's father. Whilst the Solicitor as a co-executor appointed under the will, would, in the opinion of the Tribunal, have certain powers of investment pending the grant of probate, the circumstances of this loan which was made without adequate security, were in the Tribunal's opinion improper and amounted to professional misconduct. It should be stated in the Solicitor's favour that he did hold the Certificate of Title and Transfer after settlement and after registering the transfer he retained the Certificate of Title until the sale of the Uebels house was completed. Nevertheless the Savage Estate was exposed to some risk in the absence of the advance being secured by a properly executed and registered mortgage or the lodging of a caveat. Ground 3: Alleged Breaches of Sections 41(1) and 42(2) of the old Act It is alleged by the Law Society that the Solicitor wilfully breached the requirements of section 41(1) and section 42(2) of the Legal Practitioners Act 1898 in six (6) instances as follows: A. Zinghini The circumstances of this matter are that the Solicitor has acted for Mr Zinghini in respect of the purchase of a rural property which had been completed without a survey being carried out and the client after settlement built a dam outside his boundary. The Solicitor and his father agreed to pay compensation to the client in an amount of $2,500.00, $500.00 being paid by the Solicitor and $2,000.00 by his father. On the 24 September 1987 the Solicitor purported to deposit to his trust account an amount of $8,834.81 of which $6,334.81 comprised cash and the balance of $2,500.00 being the two cheques of $500.00 and $2,000.00 from the Solicitor and his father respectively. On the same day a trust cheque in the sum of $2,500.00 was drawn payable to another firm of solicitors being described as "compensation to Zinghini". Of the amount of $8,834.81 said to have been deposited to the trust account on the 24 September 1987 the sum of $6,334.81 only was deposited and the cheques totalling $2,500.00 were not deposited until the 28 September 1987. It was admitted by the Solicitor that there was a debit in the trust account from the 25 September 1987 to the 28 September 1987 in the sum of $2,500.00 but the Solicitor says that this was inadvertent and not wilful and occurred because although the deposit slip showed that the total of $8,834.81 was to have been deposited at the bank the actual amount received was less the $2,500.00 as the cheques were not deposited for the three days that the trust account was in debit. The Solicitor says that one of his staff overlooked the deposit of the cheques and that there was no conscious or wilful decision on his part to withhold this deposit as alleged. The Tribunal accepts the Solicitor's explanation and whilst finding that the Solicitor was in breach of sections 41(1) and 42 (2) of the old Act finds that these breaches were not wilful. B. The Berghouse matter In this matter it is alleged that there was a debit in the trust ledger account of the client of $8,000.00 for a period of approximately one week. The circumstances are that on the 4 February 1986 the Solicitor received from a client (Berghouse) a cheque in the sum of $8,000.00 which was deposited to the trust ledger account of the client described as "on account of stamp duty". On the same date a cheque was drawn payable to the Commissioner of Stamp Duties in the sum of $6,821.50 and presented on the 12 February 1986. The cheque for $8,000.00 from Berghouse was dishonoured and reversed in the Solicitor's trust account bank statement on the 11 February 1986. On the 19 February 1986 the dishonoured cheque was replaced by an amount withdrawn from the State Building Society. From the 12 February 1986 to the 19 February 1986 the trust ledger account of Berghouse was in debit in the sum of $6,821.50 and it is alleged that the Solicitor failed to prevent the trust ledger account being in debit. The Solicitor's evidence is that this matter involved the purchase by Mr and Mrs Berghouse of their family home. Mr Berghouse was at this stage a partner of the Solicitor. The Solicitor states in his Statutory Declaration that his partner had the carriage of the matter and that he accepted responsibility although he did not realise that the debit was occurring. In evidence he said the transaction was being handled by one of the conveyancing clerks in the office. Whilst the admitted facts indicate a breach of section 41(1) of the old Act for which the Solicitor was responsible as a partner of the firm, as he was not handling the matter the Tribunal accepts that he was not aware of the debit and finds that the breach was not wilful so far as the Solicitor was concerned. C. Firm Control - Matter No 99-009999 It is alleged that the Solicitor did by transfer of funds from his trust account to his office account in April of 1986 cause or permit his trust account to be in debit. In the particulars given in respect of this complaint it is alleged that in April of 1986 and subsequently the Solicitor maintained a trust account ledger referred to as "firm control matter number 99-009999" which was used by the Solicitor to cover transfer of costs and disbursements from the Solicitor's trust account to his office account. On 24 April 1986 cheques were drawn on the trust account ledger amounting to $10,361.98 and presented on the same day. The amount was debited to various clients trust ledger accounts for costs and disbursements. The cheques were subsequently written back in the bank reconciliation indicating that the trust transfer was not brought to account in the trust account records on 24 April 1986 and it is alleged that there was a debit in the trust account from 24 April 1986 to 28 May 1986 in the sum of $10,361.98. Miss Sayer in her Report stated that the trust transfer journal and the firm control account for the period covering 24 April 1986 could not be found by Mr Quinn's staff and she was therefore unable to ascertain details of the costs intended to be covered by this transfer. In evidence she stated that she was able to identify one matter of Gavrilovic where there was a balance of $3,850.00 in the trust account on the 24 April 1986 and the trust office transfer dated the same day in the sum of $4,197.50 was debited to this account bearing the date of 28 May 1986. She stated that if the transfer to the office account had been posted on the correct date being the 24 April 1986 the account would have been in debit to the extent of $347.50. In his Statutory Declaration the Solicitor stated that it was the practise of the firm every Thursday for the bookkeeper to review any costs which might be in the trust account and these were listed by the book-keeper from the various settlement sheets which had been prepared during the course of the week. He annexed to his Statutory Declaration a sheet headed "Trust/Office Transfer dated 24.4.86" showing the various matters identified by the bookkeeper in respect of which costs could be transferred from trust to his office account and these amounted to $10,361.98 coinciding with the amount referred to in Miss Sayers report and in this complaint. In evidence the Solicitor tendered a bundle of trust account receipts corresponding with the items set out in annexure "D" to his Statutory Declaration (Exhibit "6"). The Solicitor says there were sufficient funds in the trust account to enable the trust/office transfer to be effected accept in the matter of Gavrilovic which was in debit to the extent of $347.50. The Solicitor says that this was not his matter, that it was under the control of his partner Mr David Hundt "who no doubt would have authorised the preparation of the firm's reconciliation sheet to effect the entry of debtor notation". (Solicitor's letter dated 5 December 1988 to the Law Society p.9.) The Solicitor also tendered in the proceedings (Exhibit "7") page 347 of his trust journal and although Miss Sayer in her Report and in evidence stated that she had asked for this and had been told by the Solicitor's staff that it was not available the Solicitor's explanation is that it could have been made available to her and he does not know why it was not made available. The Tribunal finds that except to the extent of $347.00 in the Gavrilovic account the Solicitor had sufficient funds in his trust account to cover the transfer to his office account in respect of costs and disbursements and notes that the Gavrilovic account was under the control of the Solicitor's partner and accordingly not something which would necessarily have been brought to the Solicitor's notice. The Tribunal makes no adverse findings against the Solicitor in respect of this ground. D. The Nimdex Matter It is alleged by the Law Society that the Solicitor's trust account was overdrawn from the 31 July 1986 to the 27 November 1986. The facts are that at all relevant times the Solicitor was a director of Nimdex Pty Limited and acted for the company in respect of a franchise agreement between it and Hollywood Boulevard Pty Limited in 1986. In evidence the Solicitor stated that his company had entered into a business venture for the franchise of videos and that this matter involved one of the franchise outlets. On the 31 July 1986 there was a balance in the trust ledger account of Nimdex Pty Limited of $1,945.04 and on the same date there was deposited to the credit of the trust ledger account of the company a cheque drawn by the Solicitor on one of his firm's business accounts in the sum of $7,000.00. This cheque was drawn by the Solicitor on another account in respect of which he stated that he believed that there were sufficient funds to meet the cheque. A further sum of $54.96 was credited to the trust ledger account of Nimdex and the balance of this account was at 31 July 1986 $9,000.00. On 31 July 1986 the Solicitor drew a trust cheque against the trust ledger account of Nimdex in the sum of $9,000.00 payable to Hollywood Boulevard Pty Ltd described as "Franchise Fees". The cheque drawn by the Solicitor on his business account was dishonoured on the 7 August 1986 and the trust ledger account was in debit in the sum of $7,000.00 from 31 July 1986 to 27 November 1986 when the Solicitor drew a further cheque for this amount which he deposited to the trust account to replace the dishonoured cheque. In addition to the debit in the trust account it is alleged that the Solicitor made false or misleading entries in his trust account records so as to cover up the fact of the debit by adding back to the pass sheet balance the amount of $7,000.00 representing the dishonoured cheque. The Solicitors explanation in his Statutory Declaration is as follows: "When I discovered that my cheque had been dishonoured I fully intended to make good but because I was hard pressed and short of funds it was not until 27 November 1986 that I addressed the position. I did not realise until I was confronted with it in the report of Miss Sayer that such a long time had elapsed before I repaid the cheque. Although I acknowledge that by not showing the true position in the trust account I have been guilty of misconduct, I did not intend to cover up the fact that my cheque had not been met and that it remained outstanding and that is why in the reconciliation the cheque is identified as a dishonoured cheque by reference of page 73 of the bank statement - see page 99 & 100 of the complaint." In cross-examination the Solicitor said that it would not have been impossible for him to have rectified the matter earlier and the following appears in the transcript at page 98: "Q: Is this the situation, you were aware from very early August 1986 that the cheque which had gone into trust to cover, as it were, the withdrawal of $9, 000 . 00 had bounced?...A: Yes. Q: You were aware from that moment that the general body of beneficiaries were therefore bearing a personal financial obligation?...A: Yes. Q: You were aware that it was entirely improper for a solicitor to permit that course to take place?...A: Yes I agree with you. Q: It would have been possible for you to redress the debit by putting in $7, 000 . 00 from other sources, other personal sources?~~...A: Yes. Q: But you chose not to do it?...A: Yes. Q: And the reason that you chose not to do it was because that you preferred to see that $7,000.00 used in some other personal and commercial purpose?...A: Yes you are right. Q: You chose not to stretch yourself financially and to pay back the $7,000.00?...A: I was relying upon indication that moneys would be paid to me and they were not forthcoming. Q: You knew in early August 1986 that there was a debit in the trust account related to a matter that was personal to you? A: Yes. Q: You knew it was your obligation to redress that debit immediately?...A: Yes I did. Q: You could have done so?...A: Yes." In further cross-examination the Solicitor stated that the cheque for $7,000.00 had been drawn on an account styled "Quinn, Hundt, Berghouse Business Account" into which funds or profits were deposited from time to time from the legal practice. He said that he was entitled to a first draw to the extent of $30,000.00 from this account and that it was from this account that the $15,000.00 was initially paid to Mrs Heath. He admitted that he had made no enquiry before he drew the cheque for $7,000.00 as to whether there were sufficient funds in the account to cover the cheque. This is by far the most serious of the complaints against the Solicitor and his explanation shows a lack of appreciation of the correct handling of a solicitor's trust account. It is clear that he was aware from an early date that his cheque had been dishonoured that this then put the trust account of Nimdex Pty Limited into debit to the extent of $7,000.00 and yet he took no steps to rectify the situation for some four months although he admits that it was not financially impossible for him to have done so. There was a clear breach of section 41(1) of the old Act and despite the fact that the bank reconciliations showed that there was a dishonoured cheque the position was confusing and the Tribunal finds that there was also a breach of section 42(2) of the old Act in that the accounts could not be properly and conveniently audited. Furthermore the Tribunal believes that the Solicitor preferred his own interests to that of his other trust account clients' and in doing so behaved disgracefully and dishonourably and was therefore guilty of professional misconduct by statute and at common law. E. The Morrison Matter It is alleged that the Solicitor acted for a client Morrison in 1986 in respect of a purchase and drew a cheque on the trust ledger account of the client when the balance was insufficient to meet the cheque so drawn. According to the particulars furnished under this ground in April 1986 the Solicitor acted for a client Morrison in respect of a purchase and disbursed trust account moneys from the trust ledger account of the client. It is alleged that on 21 April 1986 the Solicitor drew on the trust ledger account of the client a bank cheque for settlement moneys in the sum of $1,776.08 such cheque being presented on the same date. It is further alleged that on that date there was only an amount of $1,731.08 causing a debit of $45.00. The Solicitor admits responsibility for this but says that he did not have carriage of the matter and that the $45.00 was refunded on 14 May 1986. He was not cross examined on this matter. In the circumstances of this transaction whilst there was clearly a breach of section 41(1) of the old Act as the Solicitor was not handling the matter and the account was only in debit from 23 April 1986 until 2 May 1986 the Tribunal finds that the Solicitor did not act wilfully in this instance. F. Aratex Pty Limited It is alleged in-this matter that between December 1986 and September 1987 the Solicitor permitted the trust ledger account of the client Aratex Pty Limited to be in debit. The facts are that in 1986 the Solicitor acted on behalf of a client in respect of a shop lease. On 17 December 1986 the Solicitor received two amounts of $1,520.00 each which were credited to the trust ledger account of the client. On the 19 December 1986 a cheque was drawn against the trust ledger account of the client in the sum of $2,148.27. The deposits totalling $3,040.00 made on the 17 December 1986 were incorrectly credited by the bank to the Solicitor's general account. The Solicitor failed to cause the bank to correct this error until the 2 September 1987. Accordingly the trust ledger account of Aratex Pty Limited was in debit in the sum of $1,898.27 from 19 December 1986 to 2 September 1987. The Solicitor acknowledges the circumstance set out in Miss Sayers' Report and summarised above but states that his partner Mr David Hundt acted for both a Mr Birges and a Mr Houseeni the Directors of Aratex Pty Limited in respect of the company's lease of the premises at Shop 2 St Marys shopping centre. He acknowledges that although the amount of $3,040.00 was shown as a deposit in the trust account the cheques were inadvertently banked into the office account and this was not rectified until September of 1987. This matter was handled by the Solicitor's partner and the explanation given by the Solicitor is that "the firm's experienced bookkeeper terminated her employment in or about September 1986, at which time the junior/data operator was requested to fill the role of bookkeeper as well." (Solicitor's letter dated 5 December 1988 to Law Society p.11.) He has given no explanation for the fact that it took him nine months to correct the bank's error. He acknowledges that he should have been responsible to the extent of viewing the trust account reconciliation at the end of each month and that at the end of January it would have come to his attention. However he says that the bank error was not drawn to his attention. In the circumstances of this matter and in view of the length of time that the debit was outstanding the Tribunal finds a breach of section 41(1) of the old Act and whilst it finds that this breach was not wilful believes that the Solicitor should have been aware of the debit which was present for a period of approximately nine months and should have taken steps to correct it much earlier than it was corrected. G. Sherry In this matter it is alleged that the Solicitor transferred from the trust ledger account of the client to his office account the sum of $500.00 and that such transfer created a debit balance in the trust ledger account of the client and that the Solicitor was not justified in making this transfer. The circumstances as set out in the particulars of the complaint are that in 1985 the Solicitor acted for Mr Sherry in respect of a third party claim and arranged a litigation loan through Westpac Banking Corporation in the sum of $1,000.00. On the 6 February 1986 the sum of $500.00 was transferred from the trust ledger account of Mr Sherry to the office account of the Solicitor in respect of costs which had been debited on 4 February 1986 when there was no money in the trust ledger account of the client at the time and a debit balance was thereby created. The account was in debit from the 6 February 1986 to the 8 April 1986. On 23 October 1987 the Solicitor received settlement moneys in respect of the clients third party claim and such moneys were credited to the trust ledger account of the client. A statement of account and bill of costs was rendered on the 23 October 1987 which showed profit costs in the sum of $1,573.00 and included in the disbursements an amount of $500.00 which had been drawn on the 6 February 1986 on the trust ledger account of the client and described as "Quinns for professional fees". It is alleged by the Law Society that the $500.00 should have formed part of the profit costs of $1,573.00 and therefore should be refunded by the client to the Solicitor. In his Declaration the Solicitor says first that he did not have carriage of the matter and that initially it was handled by his partner Mr David Hundt and thereafter by an employed solicitor Mr Robin Fester. He said that this was a matter in which a litigation loan had been approved by the Westpac Banking Corporation and that $1,000.00 should have been paid to the client's trust account entitling his firm to draw against this. The Solicitor says that on 6 February 1986 the bank had approved seven similar transactions and transfers occurred in six of the transactions except the matter of Sherry. Accordingly the Solicitor says that he was entitled to assume that the transfer had taken place in this matter and to make the transfer to his office account in respect of costs and disbursements. The arrangement was that in respect of a litigation loan the client would sign an authority authorising the bank to make the transfer, the Solicitor would also sign an authority and the bank would then debit the client's account at the bank and credit the Solicitor's trust account with the amount of the litigation loan. The Tribunal accepts that this debit occurred because of a bank error and makes no adverse finding against the Solicitor. So far as the allegation concerning the accounting to the client the Solicitor has produced as annexure "F" to his Statutory Declaration a sheet dated 29 August 1987 headed "Preparing for informal pretrial" which he says was prepared by Mr Fester and this shows costs of $2,162.00 (to be reduced by $500.00). The Solicitor says that whilst the accounting is not conventional the costs have been reduced by the amount of $500.00 previously debited to the clients account as the statement of account shows an amount of profit costs of $1,573.00 and the further $500.00 shown as "Quinns for professional fees" as a disbursement which, whilst not identical with the figure in the pretrial sheet he believes was the Solicitor's method of showing the earlier payment of $500.00. Again the Solicitor was not cross-examined on this matter and the Tribunal accepts the Solicitor's explanation and whilst it finds that there was a breach of section 41(1) of the old Act, believes that this was not wilful and does not consider that there is any money outstanding from the Solicitor to the client. Ground 4 The allegation is that the Solicitor failed to exercise reasonable skill, care and diligence in the conduct of the affairs of his client Stibilij in proceedings in the Local Court, in particular that he failed on two occasions to attend Court on behalf of the client, that he failed to attend to a summons issued against the client and file a defence to such summons after having been given leave to file such defence and failed to keep the client informed of the conduct of the matter. In the particulars given in respect of this ground it is alleged that on the 10 July 1987 the Solicitor received instructions to act for Mr Stibilij on the defence of a Traffic Infringement Notice issued by police and on the defence of and to issue a cross claim in civil proceedings brought by the NRMA on behalf of the driver of another motor vehicle involved in a collision with Mr Stibilij's vehicle. The particulars further allege that on the 27 October 1987 and again on the 21 June 1988 Mr Stibilij attended the Local Court at Hornsby in respect of the police case and on each occasion the Solicitor failed to attend. In respect of this allegation the Solicitor declares in his Statutory Declaration that he was not instructed to appear for the client in the police court proceedings and that on the 21 June 1988 when the client appeared before the Magistrate he obtained a dismissal of the police summons under section 556(A) of the Crimes Act. The Solicitor has annexed to his Statutory Declaration of 4 June 1991 (annexure "G") a letter to Mr R.M. Sweet Barrister-at-Law dated 13 May 1988 in which he encloses a trust cheque in favour of Counsel for $250.00 in respect of this matter and the letter includes the following: "We advise that our client has now approached the Local Court at Hornsby for the purpose of amending his plea from not guilty to guilty. In the interim, the driver of the other vehicle has commenced proceedings by way of summons for motor vehicle property damage. "We shall be pleased to receive your advice whether you wish to accept a brief in this matter, noting your advices in Counsel (sic conference) that our client should consider strenuously defending the civil action." The Tribunal accepts the Solicitor's explanation that he was not instructed personally to appear in the police proceedings, this by prior arrangement with the client. In respect of the civil proceeding it is alleged that the Solicitor failed to file grounds of defence to the summons and default judgment was entered against the client. On 8 Septembe~r 1988 the Solicitor filed an application to set aside judgment and to be allowed to file a defence on behalf of the client, the said application being returnable before the Court on the 28 October 1988. The Solicitor failed to appear on that date. It is further alleged that the Solicitor then filed a further application to set aside the judgment and permit a defence to be filed on behalf of the client and this application was returnable before the Court on the 20 June 1989. On that date by consent judgment was set aside and the defence filed. It is further alleged that the Solicitor subsequently failed to inform the client of the progress of the clients case or otherwise to keep him informed of the matter. In his Statutory Declaration the Solicitor states in paragraph 23: "The explanation I offered the Commissioner of Conduct Department on 30 October 1989 was that after the judgment was finally set aside on 20 January 1989 no notification was received from the Court as to the call over date and I thought that Mr Stibilij may have decided not to proceed to defend the matter. I agree that in the circumstances I handled the matter badly." In evidence the Solicitor gave the following explanation: Mr Enright "Q. As far as the balance of the matter was concerned, first of all the default judgment was obtained as Mr Wales said in his opening because of your neglect?...A. Yes. Q. You eventually had that set aside, I think there were a number of hick-ups involved in that, you had the judgment set aside and then you did nothing further in the matter?...A. Yes, I admit that I handled the matter badly, but it was around the time - just to assist the Tribunal, my firm had a two year contract from the University of Sydney Union and the contract was to provide certain services to University students without obligation or charge and certain work was done for a number of students including Mr Stibilij. The difficulty arose that the contract with the University Union came to an end in March 1989 which is round about the time that I no longer attended the University of Sydney Campus and I do admit that I failed to keep in contact with Mr Stibilij notwithstanding that I was practising at Campbelltown and he was resident on the North Shore, but I do admit that I handled it badly. Q. You let him down rather badly you would agree?...A. Yes I do yes I say that." In the absence of any direct evidence from Mr Stibilij the Tribunal does not make a finding of professional misconduct in respect of this matter but finds that the Solicitor did fail to exercise reasonable care, skill and diligence in the conduct of the civil matter on behalf of the client. Ground 5 It is alleged that the Solicitor lodged a cash bail on behalf of a former client with moneys other than his own in circumstances where the Solicitor knew or ought to have known that the person or persons supplying the cash bail were either unwilling to lodge such bail on their own behalf or unlikely to be accepted as bail sureties and the Solicitor's conduct in the circumstances constituted professional misconduct. The particulars allege that prior to June 1988 the Solicitor had acted for Lee Henderson in relation to the defence of criminal charges laid by the police. On the 17 June 1988 Henderson was arrested by the police and charged with certain other criminal offences. On the 23 June 1988 the Solicitor was requested to arrange bail for Henderson in the sum of $2,000.00. Such request was made by persons other than Henderson who supplied the Solicitor with the sum of $2,000.00 to lodge to meet Henderson's bail. The Solicitor was aware prior to lodging the said sum of $2,000.00 that the money was neither his own nor the money of the persons requesting the Solicitor to so lodge the said sum. Such persons advised the Solicitor that they would not lodge the said sum of $2,000.00 themselves and further advised him that they were probably unacceptable to act as bail sureties. On or about the 24 June 1988 the Solicitor lodged in his own name $2,000.00 obtained as surety for the release of Henderson who was thereupon released from custody. Annexed to the Solicitor's Statutory Declaration of 4 June 1991 (annexure "H") is a copy of a statement dated 29 June 1988 which he gave to the police in connection with this matter. In this statement he admits to receiving $2,000.00 from a person called Deborah Huckstepp and her boyfriend Glenn which they said they had received from a girl name Tanya "they felt they wouldn't be accepted as a surety and expressed concern about having anything further to do with Henderson in relation to accommodation." In effect the Solicitor admits the allegation and declares "I very much regret that I did what I did and allowed my concern for my family to affect my judgment." In evidence the Solicitor agreed with his Counsel "that these people were coming around your house, your wife was pregnant, she got upset, you were rather spineless about it and agreed to do something to get rid of these people is that right?...A. Yes." In a letter dated 15 March 1990 from Messrs Bicknell and Monteith Solicitors to Mr L.W. Pierotti Solicitor Professional Conduct Department of the Law Society - annexure "J" to the Solicitor's Statutory Declaration dated 4 June 1991, Mr Bicknell sets out his instructions from the Solicitor as to the circumstances of this matter. The Solicitor's explanation is that he had acted for a man called Henderson in June of 1988 in respect of charges of conspiracy to murder. Henderson was acquitted and on the 6 June 1988 he was released. He was re-arrested on the 17 June 1988 and between the dates of his acquittal on 6 June 1988 and his rearrest on 17 June 1988 he would telephone the Solicitor at his home both during the day and at night and on several occasions he came to his home unannounced. The Solicitor says that his wife who was pregnant became "very apprehensive and nervous". There had been a meeting in a Hotel in Darlinghurst with the Solicitor and his wife, Henderson, the girl Deborah Huckstepp, her boyfriend Glenn and another girl the daughter of Sally-Anne Huckstepp following the acquittal of Henderson. On 23 June 1988 Deborah Huckstepp and her friend Glenn came to the Solicitor's home without an appointment and handed Mr Quinn cash of $2,000.00 to apply as bail for Henderson on certain conditions. The Solicitor believed that this was an opportunity to apply his own conditions and in effect "get rid of Henderson". The next day he went to the Huckstepp flat picked up Hend~erson's clothing and took them to the Sydney Police Centre and paid the $2,000.00 cash to the bail sergeant. On 28 June 1988 the Solicitor was required to approve certain altered conditions of bail and he went to Campbelltown Court House and signed a further bail undertaking. The Law Society asserts that the Solicitor's actions constituted professional misconduct. In his written submissions Mr Wales on behalf of the Law Society conceded that the Solicitor's actions probably did not amount to an offence under the Bail Act 1978 but that the lodging of sham bail can be an offence under the general law provided that the necessary guilty intention is established and he referred to R v Freeman and others (1985) 3 NSWLR 303. Despite persistent cross-examination the Solicitor would not agree that at the time he realised that he was doing anything improper, unprofessional or illegal and the following appears in the evidence: Mr Wales "Q. Did you have any consciousness when you signed the surety undertaking that you were doing anything wrong?...A. At the time no. Q. Then why do you agree that you were acting without courage in doing what you were then doing?...A. That is upon reflection and discussing the matter with my legal advisers. Q. But you accepted the position in acting the way that you acted when you signed the undertaking about being a surety, you acted spinelessly, isn't that right?...A. Yes. Q. It is a strong word is it not?...A. Yes. Q. It is not a word that you would readily apply to any conduct of your own?...A. No. Q. But do you also say that when you signed the undertaking you didn't have the least reason to believe you were doing anything improper or unprofessional?...A. I just didn't address it as analytically as that at the time. I just saw it as a way of just getting these people out of my life. Q. You didn't want these people hanging around your home?...A. No. Q. Your wife was concerned?...A. Yes. Q. She didn't like them either?...A. That's right. Q. You understood that if you put up the money given to you and signed the undertaking yourself that you would be rid of them?...A. Yes. Q. But if you believe that you were acting perfectly properly in putting up the money and signing the undertaking what was spineless about doing that to get rid of them?...A. Just going back to what I said I allowed a set of circumstances to lead me to do something that upon a lot of reflection I regret doing. Q. You say with the benefit of hindsight and with the benefit of advice about your position you would not do again what you did then?...A. Yes. Q. Because you now know that what you did was possibly a criminal offence certainly unprofessional?...A. Yes. Q. But do you say that when you did it before you did not know it was improper or unprofessional or illegal?...A. No. Q. When you say no, do you mean that was your state of mind you had no reason to believe that?...A. I didn't give it sufficient thought to reach that conclusion." In his further submissions Mr Wales refers to Donovan on the law of bail and in particular page 31 paragraph 0.19 "the giving of the security of cash for bail either by the defendant or a third party was (and is) illegal just as was an indemnity given to the surety by the defendant or a third person to pay the amount fixed for bail should the defendant abscond..." It is clear on the authorities that the Solicitor should not have put up other persons money as bail for Henderson representing that it was his own money nor signed the bail undertaking on this basis. The Solicitor in his Statutory Declaration and in evidence states that he did not recognise that what he was doing was wrong and the Tribunal accepts the Solicitor's evidence in this regard and makes no finding of professional misconduct. However the Tribunal believes that the Solicitor should have been sufficiently experienced to have realised that what he did was improper and could amount to professional misconduct. Background The Solicitor was born on the 14 November 1954 and is married with one child. He completed his Higher School Certificate in 1972 and graduated as a Bachelor of Commerce from the University of NSW in October of 1976. In early 1976 he enrolled in the Solicitors Admission Board and at the same time worked as a clerk in the firm of Colin Daley Quinn & Co Solicitors of Kogarah where his father was a partner. He completed his law studies in 1980 and thereafter attended the College of Law and was admitted as a Solicitor of the Supreme Court NSW on 17 December 1980. He was overseas from January to September 1981. In October of 1981 he commenced practising as a solicitor in partnership with his father at Campbelltown under the firm name of Quinn & Quinn. From October 1981 to 1 November 1983 he practised in partnership with his father at Campbelltown until his father retired. From 1 November 1983 until January 1985 he was in partnership with Bryan Gorman. As previously advised from January 1985 to 1 November 1986 he practised under the name of Quinn Hundt Berghouse at Campbelltown and Waverley in partnership with Messrs Hundt & Berghouse. In May of 1986 the partnership acquired the practice of Abigail & Co at 40 Grosvenor Street Woollahra. In November of 1986 Mr Berghouse left the partnership and from 1 November 1986 until 30 June 1987 he continued practising in partnership with David Colin Hundt under the firm name of Quinns at the University of Sydney, Sydney and at Campbelltown. In March of 1987 Quinns took over a large number of clients from Patrick Wilde who had practised at Campbelltown. In July 1987 he was practising on his own account and took over a number of clients of Mr Ian A Thompson Solicitor. From 30 June 1987 until 15 March 1991 he practised as a sole practitioner at Campbelltown, at the University of Sydney and for a time in an office at Elizabeth Street Sydney. on 15 March 1991 he sold the goodwill of his firm to Marsdens and ceased practising as a general practitioner. The Solicitor has retained approximately 140 of his old matters almost exclusively third party cases and has been provided with accommodation to complete these matters by Messrs Bicknell & Monteith Solicitors. Since the 18 March 1991 he has been on the Legal Aid Commission Panel for part-time assignments from the Legal Aid Commission in Sydney and Wollongong and from 27 May 1991 has been working for the Legal Aid Commission at its office at Parramatta. Having made finding adverse to the Solicitor in respect of ground 1, ground 2 and ground 3(D) the question for the Tribunal is to determine the appropriate order. In view of the Tribunal's findings in respect of the matters referred to above that the Solicitor has been guilty of professional misconduct the question must arise as to the Solicitor's fitness to practise. By far the most serious matter is the finding of professional misconduct in respect of ground 3(D) the Nimdex matter where the Solicitor allowed a debit balance of $7,000.00 to remain in the trust account from 31 July 1986 to 27 November 1986. The Solicitor knew that his personal cheque for $7,000.00 had been dishonoured on 7 August 1986 and did nothing to correct the position for approximately four months although in evidence he stated that it was not financially impossible for him to have corrected the position. The choice is between removing the name of the Solicitor from the Roll and suspension and the Tribunal has come to the conclusion that whilst the Solicitor's conduct, particularly in the Nimdex matter would justify an order removing his name from the Roll, it does not believe that the interests of the public require such an order. The Solicitor has acknowledged in evidence that he appreciates that his actions in the matter where the Tribunal has found professional misconduct were wrong and has expressed his deep regret and contrition. The Tribunal believes that the Solicitor, if allowed to practise in the future, will not offend again and for this reason does not propose to make an order removing his name from the Roll. In evidence the Solicitor has stated that he wishes to remain as a solicitor and if he is permitted to do so in the short term (three years at least) it is not his intention to return to private practice. In his submissions Mr Enright on behalf of the Solicitor indicates that if the Tribunal is disposed to make an order under section 163(1)(b) that a practising certificate not be issued for a specified period, the Solicitor is prepared to undertake that at the end of that period he would not practice on his own account or seek to obtain an unlimited practising certificate for a period which together with the period under section 163(1)(b) would total three years. The Tribunal notes the Solicitor's written undertaking dated 2 August 1991 not to practise on his own account or seek to obtain an unlimited Practising Certificate for a period which together with the period of suspension would total 3 years. The Tribunal recommends to the Law Society that before the Solicitor is issued with any unlimited Practising Certificate under section 33 (1) of the Legal Profession Act 1987 that it impose a condition requiring the Solicitor to undertake and complete a prescribed course in practice management in the 12 months preceding the issue of any such certificate. On the basis of the Solicitor's undertaking the Tribunal makes the following Orders pursuant to Section 163 of the Legal Profession Act, 1987. 1. That the Solicitor's current Practising Certificate be cancelled. 2. That a Practising Certificate not be issued to the Solicitor until the expiration of a period of 12 months from the date of this Order. 3. That the Solicitor pays the costs of the Law Society as if taxed by the Supreme Court on a Solicitor/Client basis and if the amount of these costs cannot be agreed then either party have liberty to apply to the Tribunal to assess the amount of such costs. 4. That if the costs referred to in Order 3 are not paid within the period of 12 months from the date hereof a Practising Certificate not be issued to the Solicitor until the said costs have been paid. Dated the 20 day of September 1991. 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.