Council of the Law Society of New South Wales v Pikoulas [2016] NSWCATOD 97

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Council of the Law Society of New South Wales v Pikoulas [2016] NSWCATOD 97 Hearing dates: 7 June 2016 Date of orders: 29 July 2016 Decision date: 29 July 2016 Jurisdiction: Occupational Division Before: D Patten, Principal Member N Isenberg, Senior Member E Hayes, General Member Decision: (1) The Solicitor is guilty of professional misconduct. (2) Order that the name of the Solicitor be removed from the roll of local practitioners. (3) Order the Solicitor to pay the costs of the Council on the ordinary basis as agreed or assessed. Catchwords: Breaches of act and regulation in relation to money held on trust – Failure to cooperate with investigation Legislation Cited: Legal Profession Act 2004 Legal Profession Uniform Law (NSW) Legal Profession Uniform Law Application Act 2014 Legal Profession Regulation Act 2005 Category: Principal judgment Parties: The Council of the Law Society of New South Wales (Applicant) George Pikoulas (Respondent) Representation: Counsel: C Groenewegen (Applicant) File Number(s): 1420258, 1520039

REASONS FOR DECISION 1. These two applications by the Council of the Law Society of NSW (the Council) are for findings that George Pikoulas (the Solicitor) is guilty of professional misconduct and consequential orders. 2. The matters were heard together on 7 June 2016 when Ms C Groenewegen appeared for the Council. There was no appearance for the Solicitor and as it appeared that he had been notified of the hearing it proceeded in his absence. 3. The Tribunal has jurisdiction to hear the matters by virtue of Schedule 4 Division 7 cl 26 to the Legal Profession Uniform Law (NSW) applied as a law of NSW by s4 of the Legal Profession Uniform Law Application Act as the relevant complaints were made under the Legal Profession Act 2004 but not disposed of before the commencement day of the Legal Profession Uniform Law (NSW). 4. The earlier application 1420255 alleged multiple breaches of the Legal Profession Act and Legal Profession Regulation. It also alleged the making of false statements in the Declarations which the Solicitor was required to make to the Law Society in each of the periods 1 April 2000 to 31 March 2010 and 1 April 2011 to 31 March 2012. 5. The relevant provisions of the Act and regulation were: Legal Profession Act 2004 253 Maintenance of general trust account (1) A law practice that receives trust money to which this Part applies must maintain a general trust account in this jurisdiction. Maximum penalty: 100 penalty units. (2) A law practice that is required to maintain a general trust account in this jurisdiction must establish and maintain the account in accordance with the regulations. Maximum penalty: 100 penalty units. (3) Subsection (1) does not apply to a law practice in respect of any period during which the practice receives or holds only either or both of the following: (a) controlled money, (b) transit money received in a form other than cash. (4) Subject to any requirements of the regulations, a requirement of this section for a law practice to maintain, or establish and maintain, a general trust account in this jurisdiction does not prevent the practice from maintaining, or establishing and maintaining, more than one general trust account in this jurisdiction, whether during the same period or during different periods. (5) Without limiting the other provisions of this section, the regulations may provide that a law practice must not close a general trust account except as permitted by the regulations, either generally or in any prescribed circumstances. 254 Certain trust money to be deposited in general trust account (1) Subject to section 258A, as soon as practicable after receiving trust money, a law practice must deposit the money in a general trust account of the practice unless: (a) the practice has a written direction by an appropriate person to deal with it otherwise than by depositing it in the account, or (b) the money is controlled money, or (c) the money is transit money, or (d) the money is the subject of a power given to the practice or an associate of the practice to deal with the money for or on behalf of another person. Maximum penalty: 100 penalty units. (2) Subject to section 258A, a law practice that has received money that is the subject of a written direction mentioned in subsection (1) (a) must deal with the money in accordance with the direction: (a) within the period (if any) specified in the direction, or (b) subject to paragraph (a), as soon as practicable after it is received. Maximum penalty: 100 penalty units. (3) The law practice must keep a written direction mentioned in subsection (1) (a) for the period prescribed by the regulations. Maximum penalty: 50 penalty units. (4) (Repealed) (5) A person is an appropriate person for the purposes of this section if the person is legally entitled to give the law practice directions in respect of dealings with the trust money. 255 Holding, disbursing and accounting for trust money (1) A law practice must: (a) hold trust money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received, and (b) disburse the trust money only in accordance with a direction given by the person. Maximum penalty: 50 penalty units. (2) Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law. (3) The law practice must account for the trust money as required by the regulations. Maximum penalty: 50 penalty units. 256 Controlled money (1) As soon as practicable after receiving controlled money, a law practice must deposit the money in the account specified in the written direction relating to the money. Maximum penalty: 50 penalty units. (2) The law practice must hold controlled money deposited in a controlled money account in accordance with subsection (1) exclusively for the person on whose behalf it was received. Maximum penalty: 50 penalty units. (3) The law practice that holds controlled money deposited in a controlled money account in accordance with subsection (1) must not disburse the money except in accordance with: (a) the written direction mentioned in that subsection, or (b) a later written direction given by or on behalf of the person on whose behalf the money was received. Maximum penalty: 50 penalty units. (4) The law practice must maintain the controlled money account, and account for the controlled money, as required by the regulations. Maximum penalty: 50 penalty units. (5) The law practice must keep a written direction mentioned in this section for the period prescribed by the regulations. Maximum penalty: 50 penalty units. (6) The law practice must ensure that the controlled money account is used for the deposit of controlled money received on behalf of the person referred to in subsection (2), and not for the deposit of controlled money received on behalf of any other person, except to the extent that the regulations otherwise permit. Maximum penalty: 50 penalty units. (7) Subsection (3) applies subject to an order of a court of competent jurisdiction or as authorised by law. 264 Keeping trust records (1) A law practice must keep in permanent form trust records in relation to trust money received by the practice. Maximum penalty: 100 penalty units. (2) The law practice must keep the trust records: (a) in accordance with the regulations, and (b) in a way that at all times discloses the true position in relation to trust money received for or on behalf of any person, and (c) in a way that enables the trust records to be conveniently and properly investigated or externally examined, and (d) for a period determined in accordance with the regulations. Maximum penalty: 100 penalty units. Legal Profession Regulation 2005 75 Maintenance of controlled money accounts—section 256 (4) of the Act (1) For the purposes of section 256 (4) of the Act, a controlled money account must be maintained under an account name that includes the following particulars: (a) the name of the law practice concerned, (b) the expression "controlled money account" or the abbreviation "CMA" or "CMA/c", (c) such particulars as are sufficient to identify the purpose of the account and to distinguish the account from any other account maintained by the law practice. (2) This clause does not apply to an account established in this jurisdiction before 1 October 2005. 76 Receipt of controlled money (1) This clause applies if a law practice receives controlled money. (2) The law practice must operate a single controlled money receipt system for the receipt of controlled money for all its controlled money accounts. (3) After receiving controlled money, the law practice must make out a receipt. (4) The receipt must be made out as soon as practicable: (a) after the controlled money is received, except as provided by paragraph (b), or (b) in the case of controlled money received by direct deposit—after the law practice receives or accesses notice or confirmation (in written or electronic form) of the deposit from the ADI concerned. (5) The receipt, containing the required particulars, must be made out in duplicate, whether by way of making a carbon copy or otherwise, unless at the time the receipt is made out those particulars are recorded by computer program in the register of controlled money. (6) For the purposes of subclause (5), the required particulars are as follows: (a) the date the receipt is made out and, if different, the date of receipt of the money, (b) the amount of money received, (c) the form in which the money was received, (d) the name of the person from whom the money was received, (e) details clearly identifying the name of the person on whose behalf the money was received and the matter description and matter reference, (f) particulars sufficient to identify the purpose for which the money was received, (g) the name of and other details clearly identifying the controlled money account to be credited, unless the account has not been established by the time the receipt is made out, (h) the name of the law practice, or the business name under which the law practice engages in legal practice, and the expression "controlled money receipt", (i) the name of the person who made out the receipt, (j) the number of the receipt. (7) If the controlled money account to be credited has not been established by the time the receipt is made out, the name of and other details clearly identifying the account when established must be included on the duplicate receipt (if any). (8) The original receipt is to be delivered, on request, to the person from whom the controlled money was received. (9) Receipts must be consecutively numbered and issued in consecutive sequence. (10) If a receipt is cancelled or not delivered, the original receipt must be kept. (11) A receipt is not required to be made out for any interest or other income received from the investment of controlled money and credited directly to a controlled money account. 77 Deposit of controlled money—section 256 (5) of the Act For the purposes of section 256 (5) of the Act, the prescribed period for which a written direction referred to in section 256 (1) of the Act is to be kept is 7 years after finalisation of the matter to which the direction relates. 78 Withdrawal of controlled money must be authorised (1) A withdrawal of money from a controlled money account of a law practice must be effected by, under the direction of or with the authority of: (a) an authorised principal of the law practice, or (b) if a principal referred to in paragraph (a) is not available: (i) an authorised legal practitioner associate, or (ii) an authorised Australian legal practitioner who holds an unrestricted practising certificate authorising the receipt of trust money, or (iii) two or more authorised associates jointly. (2) A written record of the required particulars must be kept of each withdrawal unless at the time the withdrawal is made those particulars are recorded by computer program. (3) If at the time the withdrawal is made the required particulars are recorded by computer program, a written record must be kept that is sufficient to enable the accuracy of the particulars recorded by the computer program to be verified. (4) For the purposes of subclauses (2) and (3), the required particulars are as follows: (a) the date and number of the transaction, (b) the amount withdrawn, (c) in the case of a transfer made by electronic funds transfer—the name and number of the account to which the amount was transferred and the relevant BSB number, (d) the name of the person to whom payment is to be made or, in the case of a payment to an ADI, the name or BSB number of the ADI and the name of the person receiving the benefit of the payment, (e) details clearly identifying the name of the person on whose behalf the payment was made and the matter reference, (f) particulars sufficient to identify the purpose for which the payment was made, (g) the person or persons effecting, directing or authorising the withdrawal. (5) The particulars are to be recorded in the order in which the payments are recorded and are to be recorded separately for each controlled money account. (6) In this clause: associate means an associate of the law practice. authorised means authorised by the law practice to effect, direct or give authority for a withdrawal of money from the controlled money account. 80 Register of controlled money (1) A law practice that receives controlled money must maintain a register of controlled money consisting of the records of controlled money movements for the controlled money accounts of the practice. (2) A separate record of controlled money movements must be maintained for each controlled money account. (3) A record of controlled money movements for a controlled money account must record the following information: (a) the name of the person on whose behalf the controlled money is held, (b) the person's address, (c) particulars sufficient to identify the matter, (d) any changes to the information referred to in paragraphs (a)–(c). (4) The following particulars must be recorded in a record of controlled money movements for a controlled money account: (a) the date the controlled money was received, (b) the number of the receipt, (c) the date the money was deposited in the controlled money account, (d) the name of and other details clearly identifying the controlled money account, (e) the amount of controlled money deposited, (f) details of the deposit sufficient to identify the deposit, (g) interest received, (h) details of any payments from the controlled money account, including the particulars required to be recorded under clause 78 (2). (5) With the exception of interest and other income received in respect of controlled money, particulars of receipts and payments must be entered in the register as soon as practicable after the controlled money is received by the law practice or any payment is made. (6) Interest and other income received in respect of controlled money must be entered in the register as soon as practicable after the law practice is notified of its receipt. (7) The law practice must retain as part of its trust records all supporting information (including ADI statements and notifications of interest received) relating to controlled money. (8) Within 15 working days after each named month, the law practice must prepare and keep as a permanent record a statement as at the end of the named month: (a) containing a list of the practice's controlled money accounts showing: (i) the name, number and balance of each account in the register, and (ii) the name of the person on whose behalf the controlled money in each account was held, and (iii) a short description of the matter to which each account relates, and (b) showing the date the statement was prepared. 1. The Solicitor who at relevant times was the principal of George Pikoulas Solicitor held a Trust account styled George Pikoulas Law Practice Trust Account at the Batemans Bay branch of the Commonwealth Bank. He also held several other accounts with the Commonwealth Bank., including a Business Transaction Account which was not declared to the Law Society as a trust account, nor was not a controlled money account as defined in the Act, and Regulation, y. Yet included monies entrusted to the Solicitor by a client Vladimir Budinsky. Another account styled George Pikoulas Controlled Money Account held pooled monies entrusted to the Solicitor by several of his client''s. 2. Deficiencies in the Solicitor's handling of his clients' money came to the notice of Mr Jim Sofiah, the Law Society's Trust Account Inspector, during a routine investigation of Mr Pikoulas' practice in June 2009. Subsequently there was an investigation by Mr F A House on behalf of the Law Society. The report of Mr House dated 23 October 2012 is in evidence before us, it being verified by his affidavit sworn 11 April 2014 (exhibit B), in which Mr House expressed this "general conclusion": 15 General Conclusion There has been a breach of Section 264 of the Legal Professional Act 2004: S264 (2) (a) states that the law practice must keep the trust records in accordance with the regulations and S264 (2) (b) that they must be kept in a way that at all times discloses the true position in relation to trust money received for or on behalf of any person. Manifestly neither has been the case. Fortunately the volume of the records is small. They do not, however, represent anything like a proper record. A deficiency of trust money over the period is clearly involved. There has also been a breach of S 254 of the Legal Profession Act 2004 which directs that a practice must deposit money in a general trust account of the practice unless the money is subject to a written direction to deal with it otherwise, or is controlled money or transit money or power money. None of the money was received in cash. I am of the opinion that Mr. Pikoulas' conduct might be adjudged wilful in view of the length of time over which the breaches have continued and his failure to reply to queries addressed to him by trust investigators/external examiners. His conduct may be such as to warrant consideration pursuant to S497 and/or S498 of the Legal Profession Act, 2004 - Possible Professional Misconduct and/or Conduct capable of being unsatisfactory professional misconduct. 1. Earlier in the report Mr House had provided further details: Mr Pikoulas forwarded his request for the appointment of a Trust Investigator as External Examiner with copies of various papers. On examination it became apparent that what had been described as a Controlled Money account was in fact a single bank account in which client monies had been deposited and pooled. At PP17-42 will be found a copy of all papers forwarded by Mr. Pikoulas and described as his Controlled Money records. On examination at his office, it was found that these were indeed the only records kept of trust monies received by him. I could find no written instructions to invest the money in the records or in the files; there is no evidence of any interest being paid by the bank in respect of monies in the account, neither into the account itself nor into Mr Pikoulas's general account. The account was thus (in effect) an undeclared general trust account, being an account into which the funds of more than one client had been deposited, and had been described incorrectly as a Controlled Money/ account. The attached papers showed that the records were not in accordance with the regulations for either a general trust account or a controlled money account. Mr Pikoulas passed through the account monies relating to 4 clients amounting to a total of $20,500 during the year 1/4/2011 to 31/3/2012. In the year to 31st March 2012 there were 12 transactions on the bank account It was further apparent that the bank statements for the period opened with an overdrawn (debit) balance of $500.00, see P31. In view of this I looked back to the previous year's record and found that the External Examiner for the previous year had been Mr Sivakumar of the Trust Accounts department. I located the papers prepared by Mr Sivakumar and discovered that he had issued a qualified report (see P43.44) and raised queries (see P38), and that these queries had never been answered by Mr Pikoulas. At PP11-13 is a statement by Mr. Sivakumar in relation to this. I therefore issued an adverse External Examiner's Report on the current year's records as supplied by Mr Pikoulas (see PP45-46) and asked for the practice to be assigned to me for investigation. I attended the practice on 17 July 2012 and examined: - the actual records kept by Mr Pikoulas in relation to the "Controlled Money account", - the practice General Account and a number of files - two relating to amounts passed through the account and five selected at random from non-Legal Aid files; much of the practice work is Legal Aid work. The paperwork record kept in relation to the so-called Controlled Money Account is somewhat difficult to understand. It is deficient in a number of respects; for example there is no coherent movement record, and only one Controlled Money Listing was produced. This listing (see P18) shows a preparation date of 24/6/2011, purports to be "as at 24/6/2011" but for some reason shows an amount of $20,000 in the name of Vladimir Budinski (which had in fact been withdrawn in March 2011) and a further $10,000 in the name of Ivan Goya, whereas from the bank statement (see P33) it is easily seen that at close of business on 24 June 2011 there was in the account an amount of $4500 representing $5000 of Mr Goya's money (the other $5000 having been paid to Hozack Clisdell Solicitors on 11/5/2011) less the opening debit balance of $500. As noted above no written directions were seen, and none was offered by Mr. Pikoulas. Regardless of whether the account was described as a Trust account or as a Controlled Money account, there was a deficiency of $500 throughout the period from 28/3/2011 (when $548.30 was withdrawn for costs against a credit balance of $48.30) until 12/10/2011 (when the account was reduced to NIL by the withdrawal for costs of $362). The original overdraw resulted in Mr Pikoulas borrowing $500 of the bank's money on overdraft of the account. On 7/4/2011 Mr Go/a deposited $10,000 in respect of his debt matter thus extinguishing the overdrawn balance, but resulting in a deficiency of $500 in his own account. On 5 and 6/7/2011 a lady called Boronia Cooper deposited $7500 for stamp duty and on 6 and 11/7/2011 $6638 of this was expended. This meant that $862 remained to the credit of Ms Cooper. Then on 4/8/2011 the second $5000 of Mr Goya's debt was paid over. This left a balance of $362 in the account, whereas Ms Cooper (now the only person whose money remained in the account) should have had a balance of $862. Thus the $500 deficiency had now been transferred to Ms Cooper. At some point Ms Cooper was declared bankrupt. Mr Pikoulas spent some time trying to locate the file (on which he said he had been working), without success. Bills of costs were issued in Ms Cooper's matter on 3/5/11 and 5/10/11 (copies retrieved from Mr. Pikoulas' computer record are on file) in the amount of approximately $18,000 which remain mostly unpaid according to Mr. Pikoulas, and on 12/10/2011 Mr Pikoulas withdrew the remaining $362 on account of his costs. It is apparent that had the correct amount of $862 remained in the account Mr Pikoulas would have been entitled to withdraw this amount. In this way Mr Pikoulas in effect repaid the bank's money with his own. Nevertheless it must be said that Mr Pikoulas failed to replace the deficiency promptly, since there was a deficiency of client funds from the time Mr Goya deposited his money on 7/4/2011 until the final balance was withdrawn on 12/10/2011 1. Also in evidence are the Declarations made to the Law Society upon renewal of the Solicitor's practiscing certificate. In Part A of the declaration in respect of the period 1 April 2010 to 31 March 2011 the Solicitor indicated that he held no money that was required to be deposited into a General Trust Account but did receive or hold Controlled Money. These statements were both false according to the findings of Mr House. In Part B of the Declaration the Solicitor falsely stated that as at 31 March 2011 he held controlled money. 2. On 19 September 2014 the Solicitor filed an affidavit in the earlier proceedings which Ms Groenewegen tendered (exhibit E) as admissions by the solicitor. We reproduce the whole of the affidavit other than formal parts: 2. I set up a controlled money account for the purpose of handling clients' money in accordance with the law applying to solicitors' accounts 3. Before opening the controlled money account I consulted a barrister colleague, whom I had known and instructed for 14 years, Mr Bruce Levet of Henry Parkes Chambers, Elizabeth and Liverpool Streets, Sydney. He advised me as to the opening of such an account in respect of a family law matter in which I was instructing him. I also consulted the NSW Law Society for advice as to such an account, and was referred to the Legal Profession Act 2004 and associated legislation and the Law Society website. 4. I secured the clients' consent by having them enter into a costs agreement which specified that the client consented to its money being deposited into the controlled money account Annexed hereto as Attachment 1, I include the costs agreements of relevant clients authorising such an account in each case. 5. I was extremely cautious in setting up and conducting the account I paid heed to the legislation, but also what information I could glean from the Law Society website and Law Society investigators over time 6. I requested the account to be audited by Law Society inspectors, as I wanted to be assured by such that the account was being conducted properly, and because there were so few entries in the account, I considered it was more appropriate to have the account audited by the Law Society I attempted to comply with any suggestions or requests of the Law Society inspectors from time to time. 7. The requests of inspectors became more complicated over time. It became increasingly difficult to deal with the requests to review my account by the inspectors and the matters raised by them Despite my willingness to satisfy those requests, in particular the latest requests of Law Society inspector Mr Frederick House, the matter eventually has come to this forum by the actions of the Law Society. 8. In early 2013 the Law Society refused to audit my account and advised me to engage an independent examiner. I accordingly engaged an independent qualified Law Society accepted registered examiner, Mr Joseph O'Sullivan of Gleeson and Partners (Accountants) (telephone 02-44742255) to audit the account for the period 1.4.2012 to 31.3.2013 Mr O'Sullivan examined the account and certified compliance of the account for that period. This certification was accepted by the Law Society and my registration for the year commencing 1.7.2013 to 30.6.2014 was approved and effected by the Law Society and my practising certificate was issued for that period 9. I had not changed, nor did I change, the method or substance of the set up of, or dealing with, the account since it had been inspected by the Law Society or since its inception, except for changes suggested by the Law Society inspectors, when I had it examined by Mr O'Sullivan. Mr O'Sullivan did not make any adverse remarks about the account or suggest that I should change my conduct, or method of keeping, of the account He found that it was in order without reservation. 10. In April 2013 I closed my controlled money account and I have not operated any such account or trust account, general or otherwise, ever since. My practising certificate was renewed for the period 1.7 2014 to 30.6.2015, and I am currently in practice. 1. We have no doubt that the evidence summarised above did indeed reveal breaches of the sections and regulation referred to. Although we are satisfied that the breaches arose from lack of knowledge rather than dishonesty they are sufficiently serious in degree as well as number to warrant the finding of professional misconduct which we make. 2. The later proceedings 1520039 also seek a finding of professional misconduct and consequential orders. The grounds are stated: George Pikoulas is guilty of professional Misconduct because he: 1. Attempted to mislead the Law Society 2. Attempted to mislead the Tribunal 1. In relation to the later proceedings Mr Chandra Sivakumar, Trust Account Investigator employed by the Law Society, said in an affidavit sworn 19 February 2015 that he was appointed an External Examiner of the Solicitor's trust account records on 8 July 2011. He had access to documents provided by the Law Society to the Solicitor a few days earlier but he said they were insufficient for him to prepare a report. He deposed as to what he did next: 4. … l telephoned the Solicitor on 18 July 2011 on his land line and mobile phone. I left a message on his mobile phone. I received no response from the Solicitor. 5. I telephoned the Solicitor on 26 July 2011 on his land line and mobile phone. I left a message on his mobile phone. I received no response from the Solicitor. 6. I telephoned the Solicitor on 16 August 2011 on his land line and mobile phone. I left a message on his mobile phone. I received no response from the Solicitor. 7. On 25 August 2011 I spoke by telephone with the Solicitor about further documents I needed to conduct the External Examination. The Solicitor said words to the effect: 'I'll send them by express post today.' I did not receive any documents from the Solicitor after that phone call. 8. On 7 September 2011 I telephoned the Solicitor again about further documents I said words to the following effect: 'Can you please forward the documents to me urgently? I did not receive any documents from the Solicitor after that phone call 1. On 24 October 2011 Mr Sivakumar wrote to the Solicitor: Re: External Examination 2010-11. I refer to my telephonic talk with you on 7/09/2011 requesting additional details in relation to the Controlled Money account held by your practice during 2010-11. We have not received a response from your firm till date. The documents received from you on 29/06/2011 are not complete and sufficient for me to express an opinion for the lodgement of an external examination report. Clauses 75 to 80 of the Legal Profession Regulation lays down the detailed accounting records to be maintained in relation to controlled monies held by a law practice. The requirements are briefly summarized below. 1. Written Direction from the client to open a Controlled Money A/C. Sec.256(l). 2. Controlled Money Receipt. Clause. 76. 3. Controlled Money Payment. Written Direction from client for withdrawals. Clause 78 & 88. 4. Controlled Money Register. Clause 80. 5. Controlled Money Listing. Clause 80(8). This is a summary of all controlled money accounts held by a law practice as at the end of each month. The documents received from you were reviewed and my comments on the same are given below. a. The controlled money bank statement reveals further deposit after the initial deposit and also a number of withdrawals. These have not been updated in the movements register. Written Direction from the client for various payments are not available. Please forward a copy of the updated register and also a copy of client approvals. b. Clause 75 of the Regulations lays down that the Controlled Money A/C should identify the account namely the beneficiary. Hence the current account should be modified as "George Pikoulas Legal Practice ITF V.Budinsky Controlled Money A/C". Kindly arrange to modify the account details with the bank. c. A Controlled Money Listing as on 31 March 2011 duly signed by you is required to comply with Clause 80(8). Please note if you wish to continue with my appointment as External Examiner for 2010-11 for your practice the above information should be forwarded to my attention at the Law Society within 7 working days. Thanking You. Sincerely. Chandra Sivakumar Investigator 1. The Solicitor did not reply to the letter and Mr Sivakumar, on 11 November 2011, prepared a report for the Law Society which contained this paragraph: 'The Controlled Money Records maintained for the sole controlled money transaction are incomplete and do not comply with the requirements of the Legal Profession Act and Regulation. The attached letter to the law practice details the shortcomings. The Practitioner has never responded to repeated requests for additional documentation and in the absence of the same I am unable to express an opinion for this report. In brief the law practice failed to properly account for the client's controlled money' 1. Mr Sivakumar testified that he received a copy of the Solicitor's affidavit reproduced above on 16 February 2015. The affidavit proceeded: I checked my working papers and the documents produced to me by the Solicitor in relation to my investigation of the Law Practice. I have never received from the Solicitor and nor have I previously seen the document 'Costs Disclosure and Retainer Agreement Between Solicitor and Client' pertaining to Mr Vladimir Budinsky or any other client. 1. Finally Mr Sivakumar referred to an email sent by the Solicitor to Ms Groenewegen on 16 February 2015: Cora Groenewegen Professional Standards I have read your letter of 16 February 2015. I made available files and any other papers held, in respect of the relevant clients, to the examiners and the costs agreements were available to those examiners. I did not attempt to withhold information from the examiners and it would have been, and continue to be, against my interests to withhold such costs agreements from the examiners. I cannot recall every process in the course of events during the examination process, but the costs agreements were available at all times to see from records available to the examiners. I gave the examiners open access to all files and documents held by me. It was when the assertions or allegations were made that I had failed to obtain the clients' consents to the opening of controlled money accounts that I was able to collect those agreements, from files and any other papers, as a single event, to show that consent had been obtained from the clients. It may have been that the consents, because they were contained in the costs agreements, were not readily evident to the examiners. But there was no attempt to mislead the examiners. There were many allegations and requests made of me. The issue of consent in the matter of the controlled money accounts was but one of many other matters put to me to address. There was certainly no intention to mislead either the Law Society or the Tribunal as the documents were disclosed in support of my assertion that consent had been obtained, during the course of evidence provided by me to the Law Society and the Tribunal in this matter coming to a hearing. I assert the disclosure of such documents does not disclose an intention to mislead but an intention to disclose relevant facts in support of assertions made by me in my defence to all the allegations made against me. Consent was merely one of many issues in contention in the matters alleged by the Law Society. Yours faithfully George Pikoulas 1. In relation to the above email Mr Sivakumar deposed: On 19 February 2015 I received a copy of forwarded email correspondence [without annexures] between Cora Groenewegan and the Solicitor on 16 and 19 February 2015. Annexed at page 50 of my affidavit and marked B is a copy of that email [without annexures]. In relation to Mr Pikoulas' statements I say: a. no Costs Agreements as referred to in the email was make available to or seen by me; b. the External Examination was done from the Law Society and I did no visit the Law Practice; c. I did not have 'open access' to all the files and document held by the Solicitor. 1. The six costs agreements annexed to the Solicitor's affidavit of 19 September 2014 are all in the same form and none is signed, although there is no significance in that circumstance. They bear typed dates respectively 2 October 2010, 10 March 2011, 1 May 2011, 10 December 2011, 15 January 2012 and 20 September 2012. 2. According to the affidavit of Anne-Marie Foord sworn 18 July 2014 the Solicitor was born on 9 June 1950 and admitted to practice as a Solicitor on 8 June 1984. He held practising certificates from 27 June 1996 to 30 June 1997, 1 July 1998 to 30 June 1999 and 1 July 2001 to the date of the affidavit. There was evidence that the practising certificate was not renewed in 2015. In respect of the periods covered by those practising certificates he was the principal of George Pikoulas & Associates which practiced at Bateman's Bay. According to the Council's records he did not maintain a trust account before 2009. 3. Material tendered by the Council in its case (exhibit F) included two reports concerning the state of the Solicitors mental health. The earlier a certificate by Dr Richard Baker: To whom it may concern Re: George Pikoulis (DOB: dd/mm/yy) George is currently admitted to the psychiatric unit of Prince of Wales Hospital. He is currently experiencing symptoms of severe depression and has several medical comorbidities that are requiring inpatient medical care. He has not consented at this stage to a full psychiatric report however the treating team would strongly support an adjournment of his case regarding the alleged professional misconduct issue until he has the capacity to attend the hearing. Kind Regards, [SIGNED] Dr Richard Baker Psychiatry Registrar to Prof Mitchell Mood Disorders Unit, Prince of Wales Hospital 1. The second report by Professor Philip Mitchell is much more extensive: 15th September, 2015 Cora Groenewegen Solicitor Professional Standards The Law Society of NSW 170 Phillip Street SYDNEY NSW 2000 Email: cora.groenewegen@lawsociety.com.au Dear Ms. Groenewegen, RE: MR. GEORGE PIKOULAS D.O.B. dd/mm/yy This report is written in response to your correspondence to my registrar Dr. Baker of August 17, 2015. As Dr. Baker has now moved to another hospital, and I was the treating psychiatrist at the time of Mr. Pikoulas's admission, I deemed it most appropriate that I respond to your concerns with this brief report. In response to your specific questions: ● Mr. Pikoulas suffered from major depressive disorder with melancholic features. ● He was admitted to Prince of Wales Hospital at Randwick for the period April 12 to July 2, 2015. ● It appeared Mr. Pikoulas had been depressed for about a month prior to the admission. There was no clear evidence of past episodes of depression. ● The depression clearly had significant effects upon Mr. Pikoulas' functional capacity. When he presented he had significant concentration and thinking difficulties and was markedly physically slowed (i.e., he had psychomotor retardation). At one stage during the admission he was so depressed that he was unable to eat and drink sufficiently, so had to be involuntarily detained for a short period. For most of the admission he was a voluntary patient. ● The degree of cognitive impairment with his depression would have been highly likely to affect his organisational capacity and his exercise of judgement. ● His condition responded very well to treatment with the antidepressant escitalopram and a small dose of the antipsychotic quetiapine It is not possible to be definitive as to whether he had suffered from similar symptoms in the period July to September 2014. Yours sincerely, [SIGNED] Philip Mitchell AM, FASSA Scientia Professor and Head, School of Psychiatry, UNSW 1. Ms Groenewegen in her submissions to us conceded that the Solicitor's conduct did not amount to defalcation by failing to account for clients' monies entrusted to him. She did however submit that we should find that the costs agreements were dishonestly prepared for the purpose of deceiving both the Council and this Tribunal. As to this we do not think the evidence warrants such a serious finding of dishonest conduct. 2. None the less, at the least, the failure of the Solicitor to furnish the costs agreements when expressly asked for them much earlier than he provided them was a serious breach of his obligation to cooperate with the Council in its investigations. Moreover as earlier indicated multiple breaches of statutory obligations were committed by the Solicitor in respect of his handling of monies paid on account of costs to be incurred. More seriously, these breaches continued for years after the Council first drew his attention to his transgressions. 3. In the circumstances, including the failure of the Solicitor to participate in the hearing before us or explain why he did not do so, we feel obliged to make a finding of professional misconduct against him. Furthermore we are not satisfied in the interests of the community that he is presently a fit and proper person to practice as a lawyer. This of course may not be a permanent situation but it is up to the Solicitor to establish otherwise.