The Legal Services Tribunal of New South Wales CITATION : George Kekatos [1994] NSWLST 13 PARTIES : George Kekatos FILE NUMBER(S) : of 1993 CORAM: Mr A. Martin (Presiding Member) - Mr J. Molloy - Mr J. O'Neill. CATCHWORDS: Professional Misconduct - breach of s. 61 of the Legal Profession Act :- LEGISLATION CITED: Legal Profession (Trust Accounts and Controlled Money) Regulations 1988 Legal Profession Act 1987 CASES CITED: DATES OF HEARING: 22 December 1994 DATE OF JUDGMENT: 12/22/1994 LEGAL REPRESENTATIVES: Mr R.R. Stitt QC and Mr G.C. Lindsay instructed by Mr G.S. Still for the Law Society Mr J.L. Lindsay QC and Mr R.N. Gye instructed by Mr R. Koffel for the Solicitor. JUDGMENT: Complaint: Allegations of breaches of Sections 61 & 62 of the Legal Profession Act 1987; breaches of undertakings to Windeyer J in Supreme Court proceedings; Solicitor acted for purchasers in conveyancing transactions where the purchase price in the contract was not the true purchase price. Supplementary Complaint: Alleged that the Solicitor sought to induce a company and its Solicitor to mislead the Law Society and the Tribunal. Second Supplementary Complaint: Alleged that the Solicitor prepared and witnessed a Statutory Declaration which was known or ought to have been known by him to be false. Solicitor declined to answer Supplementary Complaints, withdrew his answer to the initial Complaint and all evidence filed by him in the proceedings. Without admission, the Solicitor consented to the Orders sought by the Law Society. Tribunal found the Solicitor guilty of professional misconduct in relation to each complaint. Solicitor's name removed from the Roll. Chairman: The Tribunal has decided to give its determination today. I would ask Mr Molloy to give that determination. Mr Molloy: This Tribunal has before it a Complaint by the Law Society of New South Wales against the solicitor filed 8 August 1994 in which it alleges wilful contraventions of sections 61(1)(a), 61(1)(b), 61(2)(a), 61(2)(c) and 62 of the Legal Profession Act, wilful contraventions of Parts 2 and 3 of the Legal Profession (Trust Accounts and Controlled Money) Regulations 1988, being failures by the solicitor to account for trust moneys held by him on behalf of various clients; failure by the solicitor to keep proper and accurate records of trust and controlled moneys and the deposited trust moneys by the solicitor into his general account. The Law Society also alleges that the solicitor failed to write up his general ledger cards for a long time and that failure has resulted in the records of the solicitor not disclosing at all times the true position in relation to money received by the solicitor on behalf of any person, and failure to keep his accounting records in a manner that enables them to be conveniently and properly audited. The evidence before this Tribunal shows clearly that on numerous occasions the solicitor, without lawful authority, deposited trust moneys into his general or office account, retained moneys in his general account that were trust moneys, failed to account for moneys held in trust, failed to hold trust moneys exclusively for the use of a particular client, failed to disburse moneys as directed by the particular client, drew moneys in respect of professional costs without having rendered a Bill of Costs and without authority of the particular client, failed to keep proper records as required by law and failed to comply with the clear obligations placed upon solicitors under the general law and under the said sections of the Legal Profession Act and the said Regulations made thereunder. The evidence lead by the Society extending to in excess of 600 pages, shows quite clearly that the failures by the solicitor were fundamental and so widespread that it was impossible to reconcile either his general or trust accounts. The evidence also shows that the solicitor paid into his general account client cheques payable to third parties. There was further evidence that the solicitor clearly breached undertakings given to his Honour Windeyer J on 29 October 1993, being undertakings that the solicitor would, in fact, comply with section 61 of the Legal Profession Act and would transfer to his trust account any amount standing to the credit of clients in his general account after deduction therefrom of any outstanding memoranda of costs which had been rendered to the particular clients prior to 29 October 1993. The Law Society also preferred a Complaint that alleged the solicitor was guilty of common law professional misconduct in that, on numerous occasions the solicitor acted for purchasers in conveyancing transactions in which the purchase price in the contracts was not the true purchase price in that the contracts contained provisions entitling the various purchasers to pay a much lesser price should completion not take place within a particular time limit, provided information to proposed lending bodies that was designed to mislead those lending bodies into believing that the purchase price was a higher price so that the loans were obtained in amounts exceeding or equal to the actual or true price; and in circumstances where the transfer and notice of sale showed an inflated price and not the true or actual price and in circumstances where the solicitor knew at all material times that the inflated price was not the price at which the conveyances were being completed. The solicitor engaged in this course of conduct to enable his clients to borrow moneys which they otherwise would not have been able so to do. The conduct of the solicitor in this respect was not isolated but took place on eight separate occasions during 1992 and 1993. The solicitor also based his professional costs on the inflated price. By supplementary Complaint filed 14 December 1994 the Society alleged that the solicitor sought to induce a company and its solicitor to mislead the Law Society by withdrawing complaints which the company had previously made against the solicitor by representing that the solicitor had properly appropriated to himself $22,500 paid to him by the company. By seeking to induce the company to mislead the Society as to the circumstances in which the company paid to the solicitor certain moneys and by seeking to mislead the Tribunal that he had authority from the company to apply a company cheque payable to the Office of State Revenue in $7,500 to the solicitor's own benefit and a cheque payable to "G. Kekatos Trust account" in $15,000 also to his own benefit and by endeavouring to induce the company to withdraw its complaints against him by threats, including a threat that in evidence proposed to be adduced from him in certain proceedings in the Federal Court the solicitor would have lapses of memory. By Supplementary Complaint dated 16 December 1994, the Society alleges that the solicitor prepared and witnessed a statutory declaration which was known or ought to have been known by him to be false. That he caused or allowed that statutory declaration to be committed to the Commissioner of Stamp Duties in support of an application for assessment of duty, and that he sought to mislead the Society and this Tribunal by falsely stating in a statutory declaration made by him on 13 September 1994 and filed in these proceedings that he had at no time acted for the vendor/transferors and that he had not known that the purchaser and the female vendor were the same person. In support of the Complaint and the two Supplementary Complaints, the Law Society has tendered without objection a vast quantity of material which, in our opinion, supports the various grounds of Complaint. The solicitor has also filed with the Tribunal a voluminous statutory declaration and numerous supporting statutory declarations by various individuals. The hearing was set down for at least seven days and, on the first day, senior counsel for the Society in his opening address correctly summarised the various allegations and submitted that the allegations were so very serious to support an order that the name of the solicitor be removed from the Roll. On the second day senior counsel for the solicitor applied for an adjournment on the basis that the solicitor wished to consider his position. That application was consented to and the adjournment was later extended by consent for a further day. On 20 December 1994, senior counsel for the solicitor announced to the Tribunal that the solicitor had considered his position. He stated that no answer would be made by the solicitor to both the Supplementary Complaints that the solicitor withdrew his Answer to the initial Complaint and all the evidence filed by him in these proceedings and, without admissions, the solicitor consented to the orders sought by the Society. An adjournment was sought to today for the purposes of the solicitor tendering character evidence. The Tribunal is satisfied on the evidence, admitted to the requisite standard of proof, that the solicitor is guilty of professional misconduct in relation to each of the complaints and in relation to the totality of the complaints. The solicitor was admitted to practice on 8 July 1983. He worked as an employed solicitor until 1 February 1987 and from that date he practised as a sole practitioner under the firm known as "Kekatos & Associates" and under that name he entered into partnership on 8 November 1993. At the time of the various breaches of his professional responsibilities the solicitor had been in practice for a sufficient number of years for him to have the requisite experience and knowledge that should have persuaded him that the various activities about which complaints have now been made were activities that were not only in breach of the Legal Profession Act but also amounted to professional misconduct under the general law. It is axiomatic that members of the public must have faith and trust in legal practitioners so that funds placed in the care of those legal practitioners are dealt with properly, are not misappropriated, are not disbursed other than in accordance with proper directions and that proper records are kept. It is also axiomatic that the Courts must be able to rely upon undertakings proffered to them by legal practitioners and it is equally axiomatic that solicitors must not be parties to the making of false declarations or actively participate in attempts to mislead the Society or this Tribunal. We have had placed before us three statutory declarations deposing to the good character of the solicitor. None of those declarations impinge at all upon the factual matters that have been alleged by the Society and more than adequately proved. It is significant that the solicitor has proffered no answer to the various Complaints. That he has withdrawn his formal Answer, that he has withdrawn all his evidence, that he consents to the orders sought, albeit "without admissions" and that he offers no evidence himself and no explanation at all for his conduct. We are drawn inevitably to the conclusion that the solicitor is not fit to remain on the Roll of Solicitors in this State. Chairman: Consequently, the Tribunal makes the following orders. 1. The name of George Kekatos be and the same is removed from the Roll of Solicitors in New South Wales. 2. The costs of the Law Society to be paid by the solicitor, such costs to be assessed as if assessed by a Supreme Court Cost Assessor pursuant to the provisions of Part 11 of the Legal Profession Act. 3. If the parties cannot agree on the quantum of those costs either party to have liberty to apply to the Tribunal to determine the amount of those costs. 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.