CITATION: Law Society of New South Wales v Bowler [2009] NSWADT 83 DIVISION: Legal Services Division APPLICANT The Council of the Law Society of New South Wales PARTIES: RESPONDENT Katherine Kirkpatrick Bowler ( aka Kate Bowler) FILE NUMBER: 082023 HEARING DATES: 27 March 2009 SUBMISSIONS CLOSED: 27 March 2009 DATE OF DECISION: 17 April 2009 BEFORE: Riordan M - Judicial Member; Bishop C - Judicial Member; Bubniuk L - Non-Judicial Member CATCHWORDS: Professional Misconduct – misappropriation – Prohibition on employment as a lay associate – costs. LEGISLATION CITED : Legal Profession Act 2004 Conveyancers Licensing Act 2003 Law Society of New South Wales v Bonham [2008] NSWADT 55 Law Society of New South Wales v Bannister (1993) 4 LPDR 24 at 28 CASES CITED: The Law Society of New South Wales v Jones (unreported, 27 July 1978, CA NSW) Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655 at 681 Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362. APPLICANT A Matalani, solicitor REPRESENTATION: RESPONDENT no appearance ORDERS: 1. That pursuant to Section 18(2) of the Legal Profession Act 2004 ("the Act"), any law practice is prohibited from employing or paying the Respondent in connection with the legal practice engaged in by the law practice, without approval from the Law Society pursuant to Section 17 of the Act 2.That pursuant to Section 20(3) of the Act, the Respondent is to pay the Law Society's costs of these proceedings, as agreed or assessed. REASONS FOR DECISION 1 At all times relevant to the matters before the Tribunal, the Respondent was a Conveyancer and held a license issued under the provisions of the Conveyancers Licensing Act 2003. In that capacity she was employed as a lay associate by the Law Practice of King-Christopher Carpenter Pty Limited ("the Practice"), being a legal practice that engaged in legal practice principally in this jurisdiction. 2 On 1 May 2008 the Professional Conduct Committee of the Law Society made the following resolution: "1. RESOLVED that proceedings be commenced in the Legal Services Division of the Administrative Decisions Tribunal, seeking an order under Section 18, Legal Profession Act, 2004, prohibiting (without approval under Section 17) any law practice from employing or paying in connection with the legal practice engaged in by the law practice Katherine Kirkpatrick Bowler (a.k.a. Kate Bowler), and seeking a further order for the Society's costs in the proceedings, on the grounds that Katherine Kirkpatrick Bowler (a.k.a. Kate Bowler) is not a fit and proper person to be employed or paid in connection with a legal practice and the grounds that Katherine Kirkpatrick Bowler (a.k.a. Kate Bowler) has been guilty of conduct that, if she were an Australian Legal Practitioner, would have constituted unsatisfactory professional conduct or professional misconduct. "2. FURTHER RESOLVED that the Committee, suspecting that the information in the report of Leo Gore dated 27 February 2008 relates to an offence or offences that may have been committed by Katherine Kirkpatrick Bowler (a.k.a. Kate Bowler), resolves that the said report and any information, knowledge or documents within the Society's possession be made available to an officer of the NSW Police Service under section 677(1)(f) Legal Profession Act, 2004 (noting the duty to report suspected offences pursuant to Section 730A)." 3 On 18 September 2008 the Law Society filed an Application for Original Decision pursuant to the Legal Profession Act 2004 ("the Act"). The orders sought were as follows: a. An order under Section 18(2) of the Act prohibiting any law practice from employing or paying the Respondent in connection with the legal practice engaged in by the law practice, without approval under Section 17. b. An order pursuant to Section 20(3) of the Act that the Respondent pay the Law Society's costs of these proceedings. c. Such further or other orders as the Tribunal thinks fit. 4 The grounds for the Application as set out in the Application allege that the Respondent misappropriated a total of $23,007.50, by under stamping two Contracts of Sale and drawing two cheques on the Trust Account of the Practice, the first in the sum of $18,955 and payable to Tamworth Anglican College and the second in the sum of $4,052.50 and payable to Calrossy School, in payment of personal expenses (namely, school fees). 5 The particulars provided with the Application were as follows (note that the Respondent is described as "the Associate"): "A.The Practice acted for Mr Brian Gordon Meikeljohn in relation to his purchase of a property at Cumnock, NSW. The Associate under stamped that Contract of Sale. B.The trust ledger in the matter of Meikeljohn records two cheques drawn to the Office of State Revenue in the amounts of $839 and $18,955. C.The Associate drew the cheque in the sum of $18,955 to Tamworth Anglican College to pay for personal expenses, namely her daughter's school fees (date of cheque: 27 November 2007). D.The Practice acted for Mr Stephen John Mason & Roxanne Marie Mason in relation to the purchase of a property at Windera, NSW. The Associate under stamped that Contract of Sale. E.The trust ledger in the matter of Mason records two cheques drawn to the Office of State Revenue in the amounts of $216.50 and $4,052.50. F.The Associate drew the cheque in the sum of $4,052.50 to Calrossy School to pay for personal expenses, namely her daughter's school fees (date of cheque: 15 January 2008). G.As a result of information received from the Office of State Revenue, Mr Leo Gore (a trust account inspector) attended the Practice to conduct an investigation. H.Mr Gore requested Mr Carpenter produce a number of files for examination. I.The Associate then asked Mr Carpenter "John can I see you privately for a minute?" at which point the Associate left the room with Mr Carpenter. J.The Associate made admissions to Mr Carpenter in relation to under stamping two Contracts of Sale, as follows: Associate: "I've done something incredibly stupid. I've stolen some stamp duty money in these two matters." Mr Carpenter: "How much is involved?" Associate:"About twenty thousand dollars, I was desperate. These are the only two matters. I was trying to think of a way to fix it up. I'm so sorry I've broken your trust in me. I've been sick all night." K.Mr Carpenter conveyed this information to Mr Gore. L.At approximately 9:45am, Mr Gore had a conversation with the Associate in the presence of Mr Carpenter and Mr King-Christopher. During this conversation, the Associate made the following further admissions: "I under stamped the stamp duties in relation to the matters of Meikeljohn and Mason. … I drew two cheques for each matter, a small one to the OSR and a second one to Calrossy School for school fees." M.During this conversation, the Associate admitted that the cheques were drawn from the trust account. N.The Associate's employment was terminated effective immediately. O.At approximately 10:30am, the Associate provided a written statement, in which admissions were made. The statement included the following: "1. In the matter of Meikeljohn… I under stamped the Contract for Sale and Transfer and drew a trust account cheque for the under stamped amount payable to the Office of State Revenue. I then drew a Trust cheque for the balance of the stamp duty monies payable to Calrossy School in payment of my daughter's school fees. 2. In the matter of Mason… I under stamped the Contract for Sale and Transfer and drew a trust account cheque for the under stamped amount payable to the Office of State Revenue. I then drew a Trust cheque for the balance of the stamp duty monies payable to Calrossy School in payment of my daughter's school fees." P.The total amount of $23,007.50 was misappropriated by the Associate. Q.The deficiency of $23,007.50 was immediately repaid into the Practice's trust account by the Partners." 6 The Respondent did not file a Reply in the Tribunal as required by clause 27 of the Rules of the Tribunal. By letter dated 8 October 2008, the Respondent and the Law Society were advised that the Application was listed for Directions before the Tribunal on 12 November 2008. 7 The Respondent did not attend that Directions hearing and the matter was set down for final hearing. By letter dated 13 November 2008, the Respondent was advised that the Tribunal made directions that she file and serve a Reply by 2 December 2008 and that her Affidavits or other material were to be filed and served by 30 January 2009. Also, by letter dated 25 February 2009 the Respondent was advised that the Application would be heard on 27 March 2009. 8 When the Tribunal convened to hear the Application there was no appearance by the Respondent. At the time of the hearing, no Reply to the matters raised in the Application had been received from the Respondent. An Affidavit of Service deposed that on 7 October 2008 Katherine Kirkpatrick Bowler (a.k.a. Kate Bowler) was personally served with an Application for Original Decision filed on 18 September 2008, an Affidavit of Mr Collins sworn on 18 September 2008 and an Affidavit of Mr Gore also sworn on 18 September 2008. The documents were personally delivered to her at "84 Vista Avenue, Catalina in the State of New South Wales" and that at the time of service it was deposed by the process server that he asked the person served: "Are you Katherine Kirkpatrick Bowler?" to which the person replied: "Yes". 9 The Tribunal was informed that this address was used for all correspondence forwarded to the Respondent by the Law Society and the Tribunal. It further heard that the Law Society had also notified the Respondent by letter that this matter was listed for hearing before the Tribunal on 27 March 2009 and that it had also notified her of the composition of the Panel of the Tribunal. None of this correspondence had been returned to the Law Society and there was no record within the Tribunal's file that any of its correspondence to the Respondent, at that nominated address, had been returned. 10 The Tribunal is satisfied from the terms of the Affidavit of Service and the correspondence from the Law Society and the Tribunal to the Respondent that the Respondent was properly served with the Application and particulars and supporting Affidavits and was properly advised that the matter was listed for hearing before the Tribunal on 27 March 2009 by sending her such notice by pre-paid post to her last known address (as required by section 138(1)(a) of the Administrative Decisions Tribunal Act). Having so satisfied itself, the Tribunal proceeded to hear the Application in the absence of the Respondent. 11 Apart from matters going to service and notification of the allegations, the Law Society relied on an affidavit of Raymond John Collins, Solicitor for the Council of the Law Society, deposing to the Resolutions made by the Professional Conduct Committee that led to the matter being referred to the Tribunal. An Affidavit of Mr Leo Gore dealt with his investigation and formally adopted the contents of his Report dated 27 February 2008. 12 During the hearing, the Tribunal noted that while the Particulars to the Application allege that the cheque drawn in the sum of $18,955 on 27 November 2007 was actually made payable to "Tamworth Anglican College" and not "Calrossy School," as admitted by the Respondent to both Mr Carpenter and in her Statement. The Tribunal also noted that in his report dated 27 February 2008, Mr Gore stated that he had served a Notice on the relevant Bank to produce copies of the two misappropriated cheques. However, there is no evidence before the Tribunal to the effect that those cheques were available to the Respondent at the time that she made these admissions and gave her statement. 13 While this may possibly explain the discrepancy in the evidence regarding the payee of the first of the two misappropriated cheques, it is not necessary for the Tribunal to make any finding on this issue as the payee is a school and the Respondent admitted that she drew both cheques in order to pay school fees. Accordingly, the Tribunal does not regard this discrepancy in the evidence as being fatal to the Law Society's case. It is satisfied that the Respondent is not prejudiced by granting leave to the Law Society to amend its particulars to the Application to indicate that the first of the two cheques was actually drawn in favour of "Tamworth Anglican College" and it grants that leave. 14 Based on the evidence before the Tribunal and particularly the Respondent's Admissions to Mr Carpenter and contained in her Statement dated 15 February 2008, the Tribunal is comfortably satisfied that the Respondent engaged in conduct which, if she were an Australian legal practitioner, would have constituted unsatisfactory professional conduct and/or professional misconduct, as follows: a.Breach of section 255(1) of the Act. The evidence indicates that she misappropriated a total of $23,007.50 from the trust account of the Practice. Accordingly, those trust monies were not held exclusively for and dispersed in accordance with the directions of the persons on whose behalf it was held. b.Breach of Section 264 of the Act. The evidence indicates that the trust account records did not disclose at all times the true position in relation to the trust monies. c.Breach of Section 259 of the Act, which provides: "(1) Money standing to the credit of a trust account maintained by a law practice is not available for the payment of debts of the practice or any of its associates." The Tribunal is comfortably satisfied that the Respondent's conduct was wilful and, as such, would constitute professional misconduct. 15 Section 18 of the Act provides: "(1) This section applies to a person who is not an Australian legal practitioner and who is or was a lay associate of a law practice that: (a) engages in legal practice principally in this jurisdiction, or (b) employs or employed the person to work principally in this jurisdiction, and so applies whether or not the law practice subsequently ceased to exist or engage in legal practice principally in this jurisdiction and whether or not any person ceases, by death or otherwise, to be a legal practitioner associate of the law practice. (2) On application by a Council, the Tribunal may make an order prohibiting (without approval under section 17 (Associates who are disqualified or convicted persons)) any law practice from employing or paying in connection with the legal practice engaged in by the law practice a specified person to whom this section applies, if: (a) the Tribunal is satisfied that the person is not a fit and proper person to be employed or paid in connection with that legal practice, or (b) the Tribunal is satisfied that the person has been guilty of conduct that, if the person were an Australian legal practitioner, would have constituted unsatisfactory professional conduct or professional misconduct. (3) An order under this section may apply to a specified law practice or specified class of law practices or may apply to law practices generally. (4) An order under this section may be revoked by the Tribunal on application by a Council or the person against whom the order was made." 16 By reason of her misconduct, the Tribunal is satisfied that the Respondent is not a fit and proper person to be employed or paid in connection with that legal practice and that she has been guilty of conduct that, if she were an Australian Legal Practitioner, would have constituted unsatisfactory professional conduct or professional misconduct. 17 Section 20(4) of the Act provides that: "(4) A Council must: (a) retain in its office a register of orders made under Section 18 or 19 on its Application or approvals given to it under Section 17; and (b) permit the register to be inspected during office hours and without charge, but only if the inspection is made by an Australian Legal Practitioner." 18 In its submissions, the Law Society relied upon the decision in The Law Society of New South Wales v Bonham [2008] NSWADT 55, in which the Tribunal stated: "In the Tribunal's view it is most important that a practical avenue should exist for the recording of prohibition orders made against employees of legal practices, under Section 18 of the Act. Firstly, this is in accordance with the general purpose of Part 2.2 of the Act to protect the public interest in the proper administration of justice by ensuring that legal work (and in the opinion of the Tribunal, work related to legal practice) is carried out only by those who are properly qualified to do so. Secondly, the Act itself in section 17(1), imposes an obligation on legal practitioners to ensure that they do not have a lay associate of the law practice who is known to be a disqualified person (and that term is defined in section 4 to include persons who are prohibited from employment under section 18(2)). Sub-section 17(2) goes on to provide that: "A contravention by a law practice of sub-section (1) is capable of being unsatisfactory professional conduct or professional misconduct on the part of a principal or legal practitioner associate of the law practice involved in the contravention. The Tribunal notes these provisions and recommends to the Law Society that the effect of Section 17, and the existence of the Law Society's register of orders under Section 20(4) be drawn to the attention of its members." This Tribunal expressly adopts that decision. 19 The Tribunal is aware of a number of authorities that indicate the serious view taken over the years by the Tribunal and the Court of Appeal where findings of professional misconduct have been made in circumstances where there has been a misappropriation of clients' funds by a Solicitor. The Tribunal accepts the thrust of those authorities and the fact that the issue is to be determined on the present fitness of the Respondent to practice rather than her fitness at the time of the misconduct. 20 In particular, in Law Society of New South Wales v Bannister (1993) 4 LPDR 24 at 28, Shellar JA stated: "When the jurisdiction of the Tribunal is invoked under Part 10 ... of the Act [referring to the Legal Profession Act 1987] 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 practice from holding himself or herself out to the public as a legal practitioner in whom members of the public might repose confidence. The Tribunal must also act so as to deter the offender in the future and any other practitioner minded to behave in a 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." 21 However, in the current matter there is no evidence from the Respondent concerning her current fitness and, conversely, no evidence before the Tribunal that indicates that there has been any change in the Respondent's fitness since the misconduct occurred. 22 In The Law Society of New South Wales v Jones (unreported, 27 July 1978, CA NSW), Street CJ (at page 10) stated: "Reliability and integrity in the handling of trust funds are fundamental pre-requisites in determining whether an individual is a fit and proper person to be entrusted with the responsibilities belonging to a solicitor." 23 The Tribunal accepts that its role in dealing with a finding of professional misconduct is essentially protective rather than punitive and that its role is also educative and must have regard to the issue of deterrence. In handling clients' money, solicitors are in a fiduciary relationship and in addressing an appropriate penalty the Tribunal should have regard to not only the protection of the public against similar conduct, but also to the standard of behaviour required of solicitors. In our view, the same principles to matters concerning the conduct of lay associates. 24 In the Law Society of New South Wales v Foreman (1994) 34 NSWLR 408, Kirby P, after referring to a passage from the judgment of Isaacs J in Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655 at 681, stated (at 142): "It is still true today, as it was in 1909, that high standards are expected of legal practitioners, particularly in their dealings with clients and the courts. This is so that members of the public, litigants, other practitioners and the courts themselves can have confidence in the integrity of those who enjoy special privileges as legal practitioners." 25 Having regard to these well known principles and accepting that the onus to be satisfied is that laid down by Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362, the Tribunal has concluded that the conduct of the Respondent is so serious that if she was an Australian legal practitioner, she could not be regarded as a fit and proper person to remain so. 26 At the time of the misconduct, the Respondent was the holder of a Conveyancers Licence issued under the Conveyancers Licensing Act 2003. Section 8 of that Act provides: "(1) A natural person is eligible to hold a licence only if the Director-General is satisfied that the person: … (e) is not a disqualified person, …" 26 "Disqualified person" is defined in Section 10(p) of the Conveyancers Licensing Act 2003, as a person who "… is disqualified from being employed in a law practice by virtue of an order made under Division 3 of Part 2.2 of the Legal Profession Act 2004 …" 27 The Tribunal accepts that the making of an order under Section 18(2) of the Act will make the Respondent ineligible to hold a Conveyancers Licence and that this is a most serious step and one likely to have profound implications for her professional life and beyond. It is a step that is not lightly taken but the evidence before the Tribunal compels a finding that the Respondent's conduct warrants this serious step. She has been found guilty of misappropriating a significant amount of monies held in trust for the Practice's clients' in two cases and her dealings with those monies resulted from a deliberate course of conduct. The Tribunal finds that the protection of the public requires that an order be made under Section 18(2). 28 Accordingly, there are ample grounds and reasons for granting the orders sought by the Council of the Law Society and the Tribunal proposes to make those orders as follows: 1.That pursuant to Section 18(2) of the Legal Profession Act 2004 ("the Act"), any law practice is prohibited from employing or paying the Respondent in connection with the legal practice engaged in by the law practice, without approval from the Law Society pursuant to Section 17 of the Act. 2.That pursuant to Section 20(3) of the Act, the Respondent is to pay the Law Society's costs of these proceedings, as agreed or assessed. 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