Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Law Society of New South Wales v Leonard [2017] NSWCATOD 58 Hearing dates: 15 March 2017, 20 and 29 March 2017 (submissions) Date of orders: 18 April 2017 Decision date: 18 April 2017 Jurisdiction: Occupational Division Before: The Hon F Marks ADCJ (Principal Member) P Moran (Senior Member) M Bolt (General Member) Decision: The respondent is guilty of professional misconduct. Orders and interstate recommendations made for; Completion of trust account course Suspension of registration for 6 months Supervision for 1 year Regular audits for 1 year Costs Catchwords: Legal practitioner-monies received for unpaid disbursements paid into office account in breach of trust account legislation-failure to pay disbursements in a timely manner-finding of professional misconduct-respondent not fit to practice-registration suspended-orders to undertake trust account course and for supervision, audits and to pay costs. Legislation Cited: Legal Profession Act 2004 Cases Cited: Ex parte Tziniolas : Medical Practitioners Act (1996) 67 SR (NSW) 448: 84 WN (NSW) (Pt2) 275 Gary Alan Robb and Gerard Peter Rees v The Law Society of the Australian Capital Territory [1996] FCA 1131 Law Society of NSW v Beazley [2017] NSWCATOD 335 Law Society of New South Wales v Hannam [2006] NSWADT 24 Law Society of New South Wales v Walsh [1997] NSWCA 185 Walsh v Law Society of New South Wales [1999] HCA 33 Category: Principal judgment Parties: Council of the Law Society of New South Wales (applicant) Michael John Leonard (respondent) Representation: Counsel: L W Pierotti Solicitor (applicant) T F Edwards Solicitor (respondent) Solicitors: A-M Foord (applicant) M+K Lawyers (respondent) File Number(s): 2016/00378831, 1620271 Publication restriction: Non-publication order with respect to any client of the respondent, any barrister and other debtor or creditor of the respondent the subject of the proceedings. reasons for decision Introduction 1. These proceedings are constituted by an Application For Disciplinary Findings And Orders brought by the applicant, Council of the Law Society of New South Wales seeking certain findings and orders against the respondent Michael John Leonard. The Application was founded upon allegations that by his conduct the respondent, a legal practitioner, had breached sections 254, 255 and 260 of the Legal Profession Act 2004 ("the Act"), and that he "delayed in paying third parties." It is uncontroversial that the Act applies to these proceedings by reference to the dates during which the admitted professional misconduct of the respondent occurred. 2. In summary terms, the respondent was the sole director and principal of a law firm Leonard Legal Pty Ltd trading as Leonard Legal. It is alleged that the respondent's law firm received certain monies, which included amounts payable by way of disbursements to third parties, which were not paid into a trust account and which were not paid out to the recipients for a considerable period of time. The respondent was also alleged to have failed to pay fees due to two counsel retained by his firm on behalf of clients for an inordinately lengthy period. 3. The Application alleges that between 27 February 2012 and 9 July 2013 the respondent received funds into the general account of the firm from clients in payment of invoices which included disbursements due to a process server. Details provided in the Application refer to 40 such invoices and that payment was not made to the process server for periods ranging at a minimum of 118 days up to a maximum of 629 days. The majority of the payments were not made until at least 400 days after the money had been received by the respondent's firm. In fact, all of the disbursements were paid to the process server on 20 November 2013. The Application also alleges that the funds which had been paid to the respondent's firm which included the outstanding disbursements to the process server were intermixed with the respondent's own funds and were not held "as required, in a Solicitor's trust account." 4. The first of the allegations concerning the failure to pay counsel's fees asserts that the respondent's law firm was rendered an invoice by counsel on 19 October 2012 in the sum of $1650 for services provided in June, July and October 2012 in certain Local Court proceedings on behalf of a client. An invoice was rendered to the client on 22 October 2012 for profit costs and disbursements totalling $3765.30 including counsel's fees. Of this amount $3500 was received into the trust account on 11 April 2013. All of the monies standing in the trust account were transferred to the office account on 17 April 2013 but counsel's fees were not paid. The counsel concerned initiated proceedings for recovery of his fees and the respondent negotiated payment "by weekly instalments" in September 2014. 5. In the second matter involving counsel's fees an invoice was rendered on 5 March 2013 for $2338 for attendances in the Local Court. An invoice was forwarded to the client on 28 March 2013 which included fees due to counsel and which was paid on 8 May 2013. These monies were banked into the office account and no payment was made to counsel. Counsel again appeared for the client on 18 June 2013 and rendered a further account for $1000. A further invoice was forwarded to the client, including counsel's fees on 31 July 2013 which was paid on 11 September 2013. Again, these monies were paid directly into the office account. Counsel was not paid outstanding fees until 14 November 2013. This constituted a delay of 199 days for the first invoice and 63 days for the second invoice. 6. The respondent filed a Reply on 31 January 2017. In that document, which was signed on his behalf by his solicitor, the respondent admitted all of the particulars of the grounds of complaint contained in the Application and admitted that his conduct "as particularised amounted to professional misconduct." 7. The Application filed by the applicant sought orders that we can conveniently summarise follows; 1. The respondent be reprimanded 2. The respondent at his own expense undertake within six months an appropriate course in trust accounting, and that he pass that course. If he failed to satisfactorily complete the course he would undertake a further course and if he failed to complete that course his Practising Certificate would be suspended. 3. That the respondent pays "a substantial fine." 4. That the respondent pays the applicant's cost. The statutory background 1. The relevant provisions of the Act of which the respondent has agreed that he has been in breach have now been repealed, but were in force during the period when the misconduct of the respondent giving rise to these proceedings occurred. They are as follows; 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: 1. the practice has a written direction by an appropriate person to deal with it otherwise than by depositing it in the account, or 2. the money is controlled money, or 3. the money is transit money, or 4. 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. 1. 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: 1. within the period (if any) specified in the direction, or 2. subject to paragraph (a), as soon as practicable after it is received. Maximum penalty: 100 penalty units. 1. 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. (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: 1. hold trust money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received, and 2. disburse the trust money only in accordance with a direction given by the person. Maximum penalty: 50 penalty units. 1. Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law. 2. The law practice must account for the trust money as required by the regulations. Maximum penalty: 50 penalty units. 260 Intermixing money 1. A law practice must not, otherwise than as permitted by subsection (2), mix trust money with other money. Maximum penalty: 100 penalty units. 1. A law practice is permitted to mix trust money with other money to the extent only that is authorised by the Law Society Council and in accordance with any conditions imposed by the Law Society Council in relation to the authorisation. The evidentiary material 1. A large amount of documentary material was tendered into evidence on a consent basis. We shall refer to relevant portions of this evidence during the course of these reasons for decision. In addition, the respondent gave oral evidence including cross examination. 2. The respondent was born on 24 October 1961. After completing an LLB at Bond University and attending the College of Law he was admitted as a solicitor in September 1993. The respondent has also completed an LLM at University of Sydney. From 1990 until 2003 the respondent practised as a solicitor in an employed capacity. In 2003 the respondent commenced practice as a Solicitor/Director of a law firm together with another solicitor. That arrangement ceased and the respondent practised as the sole Solicitor/Director of a law firm, Leonard Legal, from 2005 to 2013. That law firm had offices in Sydney, Melbourne and Brisbane. 3. In 2004 Leonard Legal was appointed one of two firms of solicitors servicing the finance work of a Victorian based finance company. The work was said to involve "loan documentation, effecting the security for these loans at the time of settlement, attending to discharge of loans and recovery action on defaults." In addition Leonard Legal was engaged by corporations and some high net worth individuals to carry out property and conveyancing work general commercial litigation, debt recovery, insolvency matters and leasing. The firm employed up to 30 professional and other staff spread across the three offices, the majority of whom were employed in the Sydney office. 4. The largest source of income was the Victorian based finance company. It appears to have paid fees of around $1 million per annum. That company went into receivership in July 2008, resulting in a halt in the substantial cash flow. Furthermore, the respondent asserted that around that time its financial circumstances were adversely affected by the "global financial crisis". 5. Leonard Legal was also said by the respondent's solicitor to have acted for a number of "major debt collection clients". One of those clients would have caused the law practice to have at any one time "up to 1000 open and active files." The nature of the business was described as being "high volume and high turnover with many transactions which required focus account support." 6. From May 2005 the respondent was the sole signatory of the general and trust bank accounts operated by Leonard Legal. The respondent, through his solicitor, said that he was encountering difficulties as the sole Director of the law firm in coping "at a number of levels." This included running the three offices in Sydney, Melbourne and Brisbane. 7. In addition to cash flow problems, the respondent's solicitors said that after 2008 "there were a series of accountants/bookkeepers who simply were not up to the task of managing the volume of transactions generated by the Law Practice and importantly collecting invoices rendered." These were the reasons why the respondent admitted "that third-party providers were not paid in a timely way when invoices rendered to clients were paid." 8. Tellingly, the respondent's solicitors said "In about late 2011 or early 2012 a trust account Inspector from the Law Society cautioned (the respondent) that its then accountant did not have the requisite skills to manage the large volume of transactions generated by the Law Practice, which the inspector compared in volume to a law practice the size of Gadens". The letter then referred by name to a number of the accounting staff employed by the respondent during the period 7 July 2004 to 1 July 2013. It was conceded on behalf of the respondent "that some of the employed and contracted account staff were incapable of dealing with the volume of transactions generated by the Law Practice and self-evidently in the years 2012 and 2013 there was some instability relating to the accounting staff. Nevertheless, the Solicitor accepts that it was his responsibility to engage and supervise the accounting staff and he failed to do that. The failure though was principally due to his having to manage 3 offices; generate new paying work; supervising employed solicitors; and dealing with the cash flow stresses occasioned by the slow payment of invoices by major clients." 9. The solicitor for the respondent conceded, on behalf of his client that as at 14 November 2013 the respondent was unaware and had not turned his mind to the possibility that monies which he had received from clients for payment of third-party disbursements not yet paid were "in fact held on trust for the third-party providers". 10. An affidavit sworn by Chandra Sivakumar, a trust account investigator employed by the Law Society of New South Wales was admitted into evidence. Exhibited to this affidavit was a report that he had provided dated 19 May 2014 concerning certain aspects of the respondent's law firm's trust account. The report was produced as a result of an investigation into complaints by a process server concerning the non-payment of approximately $6000 which had been received by the respondent's law firm from its clients. 11. Mr Sivakumar met with the respondent on 14 November 2013 concerning the outstanding monies due to the process server. At first the respondent "tried to brush aside the complaint by stating words to the effect the complaint has nothing to do with handling of trust monies and is a commercial transaction between 2 commercial organisations." The respondent then said that he could not recall that the matter of the outstanding accounts had ever been brought to his attention. He was then asked to explain the internal processes within the law practice relating to the receipt, approval and payment of supplier invoices and whether he reviewed monthly debtors and creditors. He said that the respondent "did not offer any explanation but instead said words to the effect we had some staff administration issues in the accounts section and these have been addressed now.". 12. Towards the end of 2013 the respondent merged his business with another firm and he became a Director of that firm in January 2014. The respondent has since severed his relationship with that firm. He has entered into a restraint clause which is effective for 12 months from 30 August 2016. The respondent has indicated that he intends travelling overseas for six months between April and October 2017 and during that period will investigate undertaking migration work as part of a law practice which he would open in Melbourne. 13. In oral evidence the respondent confirmed that he knew during the course of 2010 that he was having problems with his accounts department in the law practice. He was aware that non-payment of invoices was continuing as at 2012. During this period, he said he had considerable difficulty in obtaining and retaining suitable bookkeeping staff. He said that he did his best to obtain personnel, and met weekly with the accounts section to look at debtors and creditors. He conceded that he was not aware of matters having been finalised and whether a client had been invoiced, monies have been received and disbursements paid out. He accepted that it was his responsibility to ascertain this information. He said that his clients paid monies by way of electronic funds transmission into his general account and had established those procedures with them. 14. The respondent also confirmed that he was unaware that monies received from clients which included disbursements not yet paid out were trust monies. This was despite the fact that he had been an employed solicitor for 10 years before commencing his own law practice. 15. It is clear from correspondence between solicitors acting for the respondent and the applicant that there had been negotiations seeking a consent outcome of these proceedings. The major area of controversy was a condition that the respondent undertake an appropriate trust account course and complete that course satisfactorily. He currently resides in Melbourne and there does not appear to be any local course which includes an assessment process by which it can be determined that a student has passed or failed. Much of the evidence of the respondent given in an affidavit sworn by him for the purpose of the proceedings and in his oral evidence was directed to this matter. It is not necessary that we refer to this evidence at this stage. The nature and extent of the misconduct 1. We have previously set out the provisions of sections 254, 255 and 260 of the Act. The respondent has conceded that he has breached these provisions and that he is guilty of professional misconduct. Nevertheless, it is necessary that we determine this matter for ourselves. The Act defines unsatisfactory professional conduct and professional misconduct in the following terms; 496 Unsatisfactory professional conduct For the purposes of this Act: "unsatisfactory professional conduct" includes conduct of an Australian legal practitioner occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner. 497 Professional misconduct 1. For the purposes of this Act: "professional misconduct" includes: 1. unsatisfactory professional conduct of an Australian legal practitioner, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence, and 2. conduct of an Australian legal practitioner whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice. 1. For finding that an Australian legal practitioner is not a fit and proper person to engage in legal practice as mentioned in subsection (1), regard may be had to the matters that would be considered under section 25 or 42 if the practitioner were an applicant for admission to the legal profession under this Act or for the grant or renewal of a local practising certificate and any other relevant matters. 1. The provisions of section 498 of the Act are also relevant; 498 Conduct capable of being unsatisfactory professional conduct or professional misconduct 1. Without limiting section 496 or 497, the following conduct is capable of being unsatisfactory professional conduct or professional misconduct: 1. conduct consisting of a contravention of this Act, the regulations or the legal profession rules, 2. charging of excessive legal costs in connection with the practice of law, 3. conduct in respect of which there is a conviction for: 1. a serious offence, or 2. a tax offence, or 3. an offence involving dishonesty, 1. conduct of an Australian legal practitioner as or in becoming an insolvent under administration, 2. conduct of an Australian legal practitioner in becoming disqualified from managing or being involved in the management of any corporation under the Corporations Act 2001 of the Commonwealth, 3. conduct consisting of a failure to comply with the requirements of a notice under this Act or the regulations (other than an information notice), 4. conduct of an Australian legal practitioner in failing to comply with an order of the Disciplinary Tribunal made under this Act or an order of a corresponding disciplinary body made under a corresponding law (including but not limited to a failure to pay wholly or partly a fine imposed under this Act or a corresponding law), 5. conduct of an Australian legal practitioner in failing to comply with a compensation order made under this Act or a corresponding law. 1. Conduct of a person consisting of a contravention referred to in subsection (1)(a) is capable of being unsatisfactory professional conduct or professional misconduct whether or not the person is convicted of an offence in relation to the contravention. 1. It is important in considering whether unsatisfactory professional conduct or professional misconduct has been established to focus attention on the particular circumstances which apply to the proceedings. We were referred by the applicant to the decision of the Full Federal Court in Gary Alan Robb and Gerard Peter Rees v The Law Society of the Australian Capital Territory [1996] FCA 1131, which also involved a failure by solicitors to remit monies in a timely fashion to counsel and to pay other disbursements. However, the factual situation which applied in those proceedings was relevantly different to those with which we are concerned in these proceedings. In Robb, the solicitors had conducted a personal injuries practice, and had utilised a form of authority for the transfer of monies including fees and disbursements to their office account. Questions arose about the efficacy of the form of authority which they had used. Questions also arose about the approach taken in the proceedings below from which the appeal had been brought being a decision of the Supreme Court of the Australian Capital Territory. There was also evidence that the solicitors had, in some way, manipulated the indebtedness particularly to counsel for taxation purposes. However, significantly, the Court determined that a delay in paying fees to counsel did constitute professional misconduct and, in the circumstances of those proceedings, justified in the case of one of the solicitors a period of suspension of 6 months. 2. It is sufficient only for present purposes to refer to the following extract from the joint judgement of Black CJ and Merkel J. Their Honours said; "The central fact remains, however, that a course of conduct was engaged in that involved moneys which had been held on behalf of clients being dealt with in a manner that was not in accordance with the instructions or directions of those clients. The trust and confidence reposed by clients in legal practitioners representing them is an essential element in the relationship between practitioner and client and the misconduct of the practitioners in the present case had the tendency to undermine that trust and confidence. A period of suspension from practice was called for in the case of the first appellant but in all the circumstances we consider that the period of six months suspension proposed by Kiefel J is appropriate." 1. Our primary task is to identify the particular misconduct of which the respondent is guilty. The essence of the breaches of sections 254, 255 and 260 of the Act is that the respondent failed to ensure that the relevant monies received from clients were banked into a trust account. Realistically, that failure was confined to monies due and owing by way of disbursements to third-party providers. This is not a case of a solicitor having received client monies which were unlawfully appropriated for the personal use of the solicitor. (We shall assume that all of the monies received by way of professional costs were confined to services already provided.) 2. In written submissions the solicitor for the respondent sought to confine the gravity of the misconduct of the respondent in the following manner; "8. The presiding member of the Tribunal was concerned that the particulars in the Application and the evidence of Mr Swakumar (affidavit sworn 14 November 2016) of matters which occurred in 2012 amounted to professional misconduct warranting a suspension. The presiding member's concern seemed to be that moneys received by the Respondent into his general account which included disbursements payable to third parties had to be immediately paid into the Respondent's trust account and then disbursed. 9. While the presiding member's concern may have been correct when moneys paid to legal practitioners were invariably by cheque (which took some days to clear), that concern is addressed by the fact that in current practice moneys are paid to legal practitioners electronically in cleared funds and by section 129(2)(a) of the Legal Profession Uniform Law (NSW) (the Law). 10. Section 129(2)(a) of the Law states that ".. the following money is not trust money for the purposes of the Law: (a) money received by a law practice for legal services that have been provided and in respect of which a bill has been given to the client." 11. The money received by the Respondent in 2012 falls squarely within the terms of section 129(2)(a). Indeed the Law Institute of Victoria opines in relation to the Law that: "Non-Trust Money There is an expanded definition of non-trust money so that it now includes money received for legal services after a bill is given. Accordingly, such money need not be banked into a trust account, even if it includes unpaid disbursements." 12. The Respondent concedes however, that the moneys received for third parties (unpaid disbursements) should have been paid in a timely way. While the proceedings are brought under the Act, as submitted even in 2012 the practice outlined has been followed since electronic banking became the norm." 1. Of course, the legislation upon which this submission relies was not in operation at the time of the misconduct of the respondent with which we are dealing. We do not understand the submission to be put in a manner which contradicts the clear position of the respondent that he has conceded breach of the provisions of the Act which are alleged against him. We understand the submission to focus on the nature and extent of the culpability of the respondent. In accepting the submission on this basis, and confining the culpability of the respondent to the failure to pay into the trust account monies received on account of unpaid disbursements, we should not be taken to have made any observations at all about whether or not unpaid disbursements fall within the expression "legal services". 2. However, in confining the culpability of the respondent in the manner which we have already observed, it is still necessary to consider the conduct of the respondent in having failed to pay a considerable amount of money to the process server over a very long period of time, and in having failed to pay the fees to the two counsel as particularised in the Application document, also for an exceedingly lengthy period. It is beyond doubt that these failures are of a serious nature. Solicitors are expected to discharge the indebtedness of their clients in a timely manner, even allowing for such personal liability as a solicitor may incur for the payment of outstanding fees to counsel. The monies received by the respondent which are the subject of these proceedings did not "belong to" his law firm in any meaningful sense. They were received to discharge the indebtedness of the clients to the third parties which the law firm had incurred on behalf of the clients. On the evidence, there was simply no systematic attempt made by the respondent's law firm to pay out these monies in a timely fashion. Indeed, the process server only received payment, albeit very late, after lodging a complaint with the Law Society of New South Wales. One of the counsel involved was required to institute proceedings to recover fees owing, and was then faced with the ignominy of having to accept payment by instalments from the respondent. 3. The circumstances are indicative of systemic failures on the part of the respondent of a serious kind, and which reflect adversely on the reputation and integrity of the profession generally, as well as this respondent in particular. In our opinion the conduct of the respondent the subject of the complaints as particularised against him constitutes professional misconduct. There has been a substantial and consistent failure to maintain a reasonable standard of competence, diligence and conduct (cf Sec 497(1)(ii)). It is not necessary that we dwell on this matter, because of the concession properly made by the respondent that he is guilty of professional misconduct. 4. We find the respondent guilty of professional misconduct. Protective orders 1. It is now necessary to consider what orders should appropriately be made consequent upon the finding of professional misconduct which we have made. The available orders are set out in section 562 of the Act which is in the following terms; 562 Determinations of Tribunal 1. Orders generally: If, after it has completed a hearing under this Part in relation to a complaint against an Australian legal practitioner, the Tribunal is satisfied that the practitioner has engaged in unsatisfactory professional conduct or professional misconduct, the Tribunal may make such orders as it thinks fit, including any one or more of the orders specified in this section. 2. Orders requiring official implementation in this jurisdiction The Tribunal may make the following orders under this subsection: 1. an order that the name of the practitioner be removed from the local roll, 2. an order that the practitioner's local practising certificate be suspended for a specified period or cancelled, 3. an order that a local practising certificate not be issued to the practitioner before the end of a specified period, 4. an order that: 1. specified conditions be imposed on the practitioner's practising certificate issued or to be issued under this Act, and 2. the conditions be imposed for a specified period, and 3. specifies the time (if any) after which the practitioner may apply to the Tribunal for the conditions to be amended or removed, 1. an order reprimanding the practitioner, 2. an order that the name of the practitioner be removed from the roll of public notaries maintained under the Public Notaries Act 1997 . 1. Orders requiring official implementation in another jurisdiction The Tribunal may make the following orders under this subsection: 1. an order recommending that the name of the practitioner be removed from an interstate roll, 2. an order recommending that the practitioner's interstate practising certificate be suspended for a specified period or cancelled, 3. an order recommending that an interstate practising certificate not be granted to the practitioner before the end of a specified period, 4. an order recommending that: 1. specified conditions be imposed on the practitioner's interstate practising certificate, and 2. the conditions be imposed for a specified period, and 3. the conditions specify the time (if any) after which the practitioner may apply to the Tribunal for the conditions to be amended or removed. 1. Orders requiring compliance by practitioner The Tribunal may make the following orders under this subsection: 1. an order that the practitioner pay a fine of a specified amount, 2. an order that the practitioner undertake and complete a specified course of further legal education, 3. an order that the practitioner undertake a specified period of practice under supervision, 4. an order that the practitioner do or refrain from doing something in connection with the practice of law, 5. an order that the practitioner cease to accept instructions as a public notary in relation to notarial services, 6. an order that the practitioner's practice, or the financial affairs of the practitioner or of the practitioner's practice, be conducted for a specified period in a specified way or subject to specified conditions, 7. an order that the practitioner's practice be subject to periodic inspection for a specified period, 8. an order that the practitioner undergo counselling or medical treatment or act in accordance with medical advice given to the practitioner, 9. an order that the practitioner use the services of an accountant or other financial specialist in connection with the practitioner's practice, 10. an order that the practitioner not apply for a local practising certificate before the end of a specified period. Note : This subsection is not an exhaustive statement of orders that must be complied with by the practitioner. 1. Ancillary or other orders The Tribunal may make ancillary or other orders, including an order for payment by the practitioner of expenses associated with orders under subsection (4), as assessed or reviewed in or in accordance with the order or as agreed. 2. Alternative finding The Tribunal may find that a person has engaged in unsatisfactory professional conduct even though the complaint or disciplinary application alleged professional misconduct or may find that a person has engaged in professional misconduct even though the complaint or disciplinary application alleged unsatisfactory professional conduct. 3. Maximum fine The amount ordered by the Tribunal under this section to be paid by way of fines by any one Australian legal practitioner in connection with the Tribunal's findings about a complaint must not exceed in total: 1. $10,000 in the case of unsatisfactory professional conduct not amounting to professional misconduct, or 2. $75,000 in the case of professional misconduct. If the Tribunal finds that the practitioner has engaged in both professional misconduct and unsatisfactory professional conduct not amounting to professional misconduct, the amount must not exceed $75,000 in total. 1. Reprimands If the Tribunal makes an order reprimanding the practitioner, the Tribunal is to publish the order and a statement of its reasons for making the order. 2. It is sufficient compliance with the requirement to publish an order under subsection (8) if the Tribunal provides to the Commissioner sufficient information to enable the Commissioner to exercise the Commissioner's powers or functions in respect of the Register of Disciplinary Action required to be kept under Part 4.10 (Publicising disciplinary action). 1. It is well-known that the purpose of orders made following a finding of professional or other misconduct are protective in nature, and are not intended to be punitive, albeit there may be a consequential punitive effect. It is also important to emphasise that the protection of the public is not confined to a consideration of the fitness for practice of the particular practitioner. Other matters to be taken into account include the deterrent effect that an appropriate order will have not only on the particular practitioner concerned, but also on other practitioners. Furthermore, an appropriate order will also assist in upholding the confidence of the public in the integrity of the profession generally. All of these matters need to be taken into account. In doing so, it follows logically that it is inappropriate to focus attention on one matter and one matter only, namely the present unfitness for practice of the particular practitioner. 2. As we have observed, there are two aspects to the misconduct of the respondent. The first relates to the failure to make payment of the monies received into the trust account. The respondent said that he did not understand that he had to do so. This reflects an ignorance of the then prevailing statutory regime which applied to his practice. He had at that stage been in practice as a principal for some years. He had previously been in practice as an employed solicitor for many years. The brief information available is to the effect that the respondent had had general experience as a solicitor over a number of fields of practice. It is difficult to believe that a solicitor with such experience would not understand that monies received on account of unpaid disbursements would need to be placed into a trust account, because they were clearly monies to be held in trust for the clients who had a primary obligation to see those disbursements paid. Furthermore, it is notorious that the requirement to keep a compliant trust account is a necessary foundation of any law practice, and all principals of law practices must strive to comply with their obligations in this regard. It is difficult to believe that a solicitor with the experience of the respondent who was establishing himself as a principal in a law practice would not have made the necessary enquiries to ensure that his practice was compliant with his trust account obligations. In general terms, ignorance of the law is no excuse. In specific terms, ignorance of trust account obligations is unlikely to evoke much sympathy when demonstrated by a solicitor. Notwithstanding these observations, this aspect of the respondent's misconduct is of lesser significance than the second aspect, which we shall now discuss. 3. The second aspect of the misconduct of the respondent is the contumelious, long-standing, and entirely unmeritorious failure of the respondent to ensure that his law practice paid out the third party disbursements which were clearly due and owing, notwithstanding that he had received payment therefor. The excuse given by the respondent for the failure to make these payments is that, in effect, his accounts department was out of control over a long period of time. He conceded that he was aware of this situation and that he had been forewarned by a trust account Inspector about this situation. The respondent said in evidence in a manner which we found unconvincing that he tried to retain appropriate staff. In the absence of any evidence that there was, in some way, an inability to attract appropriate accounting staff in the area where the accounts department was located throughout this long period we cannot be satisfied that the respondent undertook the steps which should properly have been undertaken to ensure that the accounts area of his law firm was properly staffed and able to meet the statutory obligations of the law practice. 4. The only insight into the reason for the misconduct of the respondent is that contained in his own evidence, corroborated by the evidence of Mr Sivakumar which we have previously summarised. On his own admission, the respondent was unable to properly supervise his practice, and in particular the accounts area. We do not understand why he was unable to put in place processes to enable appropriate management to occur. He obviously spread himself too thin. In evidence he said that in hindsight he should have taken some hard decisions but for reasons which have not been explained, and of which we are unaware, he took no measures to rectify this situation. Persons dealing with law practices either as clients or third-party providers are entitled to expect that the practice will be properly and efficiently conducted and that the practice will be in a position not only to handle trust monies according to law, but will be able to receive and disburse monies in a timely manner. If this were not the case, the vast practice of law dealing with all manner of commercial transactions, property transactions and the many other areas of human endeavour with which the legal profession is involved would create chaos in the business and wider community. 5. Because we do not understand why it is that the respondent failed to conduct himself appropriately in the two aspects which we have referred to, we do not understand whether there is, for example, some inherent underlying defect of character involved which might render the respondent incapable of conducting a law practice in a proper and appropriate manner. There may be some other benign reason for what occurred, but there is no evidence other than the facile and glib explanation proffered by the respondent that he had spread himself too thin, that he had difficulty in obtaining and retaining accounting staff and that in hindsight he should have taken some hard decisions but did not do so. And even if this were the position based on some evidentiary material, how can we be confident that the respondent is unlikely to repeat this behaviour? 6. We are fortified in this conclusion because the respondent has given no indication of any expression of remorse or contrition for any inconvenience or loss suffered by the third-party providers who were deprived of monies otherwise due and owing to them for a considerable period of time and who were put to trouble and effort in order to secure the payment of those monies. Nor, apart from formally acknowledging his breaches of the relevant trust account provisions has he expressed any remorse or contrition for those breaches. Indeed, the approach taken by the respondent's solicitor in submissions has been directed to minimising the nature of the breaches of the legislation. 7. We are of the opinion that the professional misconduct which was committed by the respondent was indicative that he was not then fit to practise his profession as a solicitor at the time this occurred. We have already provided reasons why misconduct of this kind is not consistent with the proper conduct of a law practice. We have no evidence why the respondent misconducted himself in this manner and no evidence that he would be unlikely to do so in the future. The burden of demonstrating that he is now fit to practise his profession rests on the respondent. 8. We are also mindful that, as Walsh JA said in the New South Wales Court of Appeal in Ex parte Tziniolas : Medical Practitioners Act (1996) 67 SR (NSW) 448 at 461: 84 WN (NSW) (Pt2) 275 at 286: "Reformations of character and behaviour can doubtless occur but their occurrence is not the usual but the exceptional thing. One cannot assume that change has occurred merely because some years have gone by and it is not proved that anything of a discreditable kind has occurred. If a man has exhibited serious deficiencies in his standards of conduct and attitude it must require clear proof to show that some years later he has established himself as a different man." 1. Although these comments were made in the context of a medical practitioner, they are relevant also to our consideration of the circumstances of the respondent. We need some form of proof to show that this respondent has established himself "as a different man", being a man who would not again engage in the misconduct which is a feature of these proceedings. 2. During the course of the hearing we discussed what may be the appropriate range of orders with representatives of the parties. We have already referred to the primary position of the applicant that an appropriate order would involve the imposition of a reprimand together with other ancillary orders. In our opinion suspension is a more appropriate order, for reasons which we shall shortly develop. 3. The submissions made on behalf of the parties were based upon a number of observations, particularly in the New South Wales Court of Appeal about the limited circumstances in which an order for suspension should be made. However, each case must be considered by reference to its own particular circumstances, and, necessarily, observations about whether unfitness to practice might be appropriately regarded by reference to some time limitation may have limited relevance. Some of the cases relied upon were based on factual situations which were clearly distinguishable, and the reliance on observations in Law Society of New South Wales v Walsh [1997] NSWCA 185 made by both parties need to be considered in the context that the decision of the Court of Appeal was set aside on the basis that it misunderstood its jurisdiction as determined by the High Court in Walsh v Law Society of New South Wales [1999] HCA 33. 4. The respondent submitted that "The Applicant has never submitted the Respondent is unfit to practice. The relevant committee of the Applicant considered the terms of the orders it seeks maturely and the Tribunal would be slow to countermand the Applicant's considered position….Indeed, at the hearing the Applicant submitted that it was seeking a fine of less than $10,000 not the Respondent's suspension." However, the parties are rarely put in the same position as the Tribunal when conducting a hearing, because we have had the advantage of considering the oral evidence given by the respondent in addition to the documentary material which the parties had available to them. In any event, we are not bound by any position taken by either party and we are required to make our own determination having regard to the statutory matrix in which this Tribunal operates and to relevant guidance furnished by appellate courts and other decisions of this Tribunal. 5. In submissions made on his behalf, the respondent emphasised that there was "no suggestion of dishonesty or misuse of trust money, (Law Society of NSW v Beazley [2017] NSWCATOD 335 a fine of $6,000 was imposed)." Such a submission ignores the fact that the respondent failed to ensure that the monies held in the law practice for payment to third-party providers were paid out for a considerable period of time, and then only after complaints were made about the respondent. 6. The respondent also submitted that "he is regarded as 'a man of good character and high professional reputation', again no evidence by the Applicant to the contrary, the Respondent's good character must be assumed (there was no misappropriation of trust moneys (and in Law Society of New South Wales v Hannam [2006] NSWADT 24 (at 27 & 29), the solicitor was fined $5,000)." Again, this submission misstates the burden which reposes on the respondent. It is not for the applicant to demonstrate that the respondent generally is not a man of good character and high professional reputation. The applicant need only demonstrate to the requisite standard of proof that the respondent is guilty of the professional misconduct as alleged. If the respondent wishes to demonstrate that otherwise he is a man of good character and high professional reputation, the burden of doing so rests on him. No such evidence has been adduced in these proceedings. 7. In determining what protective orders are appropriate we will, however, take into account that this is the only matter in which an allegation of unprofessional conduct or professional misconduct has been made against the respondent. Furthermore, the respondent has admitted that he is guilty of the misconduct as alleged and, to that extent, has co-operated with the applicant. In stating this, however, we should not be seen to be indicating that the respondent has shown any real measure of insight or otherwise expressed contrition or remorse for what has occurred. 8. We are of the opinion that the nature and extent of the misconduct of the respondent, and particularly the second aspect of that misconduct which we have earlier identified demonstrates that it is of a serious kind. It is of a kind which is inconsistent with the expectations of the community and the legal profession generally. It demonstrates unfitness to practice as a solicitor. In the absence of any demonstrated matters which would give us confidence that if the respondent were to recommence practice as a solicitor now he would not again engage in conduct of a similar kind we are of the opinion that a suitable protective order is one which would involve the suspension of his registration as a legal practitioner. Because he intends, as we understand it, practising in Victoria it is appropriate that the suspension cover his practice as an interstate practitioner also. 9. We think that a period of six months' suspension is appropriate. This will give the respondent an opportunity to contemplate the nature and extent of his misconduct, and to gain some insight as to why this occurred and what steps might appropriately be undertaken to ensure that there is no re-occurrence in the future. We would also propose making ancillary orders to provide further protection requiring supervision and the conduct of regular audits for a limited period. Furthermore, the respondent should undertake and complete an appropriate course dealing with the requirements and responsibilities of the conduct of a solicitor's trust account and should be required to satisfy the applicant that he has completed the course and satisfactorily understands the statutory requirements. 10. The applicant sought an order for costs. No reason has been advanced by the respondent why a costs order should not be made. We propose to make a costs order accordingly. Orders 1. Pursuant to the finding of professional misconduct which we have made, we make the following recommendations and orders; 1. The local practising certificate of the respondent be suspended for a period of six months effective from this date 2. We recommend that the interstate practising certificate of the respondent be suspended for a period of six months effective from this date 3. That prior to re-commencing practice the respondent undertake and satisfactorily complete a course acceptable to the applicant conducted by a recognised tertiary institution covering solicitor's trust account legal compliance. If that course is a component of a broader course it will be sufficient compliance with this order that the respondent satisfactorily complete that component. If the institution does not provide for a mechanism which certifies satisfactory completion, this may be satisfied by the respondent demonstrating to the chief trust account inspector or his or her nominee that he understands and is familiar with the operation of solicitors' trust account requirements. 4. That within 1 month of resuming practice, the respondent nominate a practitioner suitable to the applicant, of not less than 5 years' experience as a principal of a solicitor's practice, as a supervisor of his practice. Supervision under this order shall continue for a period of one year. The respondent shall meet personally with the supervisor at intervals of no less than monthly to discuss with the respondent the management and conduct of his practice with particular regard to the operation of the accounting function of the practice and compliance with any applicable trust account regulations. The supervisor shall acknowledge to the applicant that he or she has received a copy of these reasons for decision, is prepared to undertake and maintain supervision in accordance with this condition, and that he or she will continue to supervise the respondent. The supervisor shall provide a written report to the applicant within one month of the expiry of each monthly period. In the event that the supervisor is unable or unwilling to continue to supervise the respondent, the respondent shall nominate another practitioner suitable to the applicant to continue supervision for the remainder of the period subject to the provisions of this order. 5. That within three months of resuming practice, and thereafter every three months until the expiry of one year, the respondent shall cause a qualified person suitable to the applicant to conduct an audit of the trust and office accounts of his practice with a view to determining compliance with legislative requirements pertaining to accounts to be maintained with respect to that practice and he shall require the auditor to furnish a written report thereon to the applicant within one month of the expiry of each three months' period. 6. We recommend that conditions (4) and (5) above be imposed on the respondent's interstate practising certificate 7. The costs of compliance with conditions (4) and (5) above be borne by the respondent. 8. The respondent is to pay the costs of the applicant assessed in default of agreement. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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. Decision last updated: 18 April 2017