Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Council of the Law Society of NSW v Zhukovska (No 2) [2019] NSWCATOD 196 Hearing dates: 5 November 2019 Date of orders: 05 November 2019 Decision date: 05 November 2019 Jurisdiction: Occupational Division Before: J S Currie, Senior Member M Sindler, Senior Member J Schwager AO, General Member Decision: (1) The local practising certificate of Myroslava Zhukovska is cancelled and any new practising certificate shall not be issued to Myroslava Zhukovska before the end of 12 months from the date of these orders. (2) Myroslava Zhukovska is fined $9000. (3) Myroslava Zhukovska is reprimanded. (4) Myroslava Zhukovska is to pay the Law Society's costs of and incidental to these proceedings, as agreed or assessed. Catchwords: PROFESSIONS AND TRADES – solicitor –professional disciplinary proceedings – penalty orders – findings of professional misconduct and unsatisfactory professional conduct at earlier hearing – solicitor's client a person of advanced years – solicitor appointed as attorney – solicitor's use of estate management structures including a trust on client's behalf Findings of professional misconduct at previous hearing – absence of independent advice on proposed estate – planning structures – effect of deed of successor appointor – unsecured loans to clients from a trust without instructions or knowledge of client – breach of Legal Profession Act 2004 (NSW) s 479 – overcharging – preferring solicitor's own interests to those of her client – breach of fiduciary duty Further findings of unsatisfactory professional conduct on 5 grounds "Probable permanent unfitness" to be a legal practitioner – duties as officer of the Court – protection of public – findings of current unfitness but not probable permanent unfitness – cancellation of practising certificate for minimum of 12 months – fine of $9000 – reprimand – costs order – recommendation to Law Society: conditions for re-issue of Practising Certificate Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Evidence Act 1995 (NSW) Legal Profession Act 2004 (NSW) Legal Professional Uniform Law (NSW) Cases Cited: A Solicitor v Council of the Law Society of New South Wales [2004] 216 CLR 253 Council of the Law Society of NSW v Zhukovska [2019] NSWCATOD 66 Dupal v The Law Society of New South Wales [1990] NSWCA 56 Law Society of New South Wales v Osman [2018] NSWCATOD 75 Law Society of New South Wales v Walsh [1997] NSWCA 185 Law Society of NSW v Berger (No. 1) [2017] NSWCATOD 137 Law Society of NSW v Shehadie (No 2) [2016] NSWCATOD 151 New South Wales Bar Association v Cummins [2001] NSWCA 284 New South Wales Bar Association v Murphy [2002] NSWCA 138 Prothonotary of the Supreme Court of NSW v P [2003] NSWCA 320 Prothonotary of the Supreme Court of NSW v Ritchard (Court of Appeal (NSW), 31 July 1987, unrep) Stanoevski v The Council of the Law Society of New South Wales [2008] NSWCA 93 Texts Cited: F. Riley (ed) "NSW Solicitors' Manual" (current loose-leaf edition) Para 33,090.5 Category: Principal judgment Parties: Council of the Law Society of NSW (Applicant) Myroslava Zhukovska (Respondent) Representation: Counsel: S Barnes (Applicant) A Cameron (Respondent) Solicitors: Law Society of NSW (Applicant) HWL Ebsworth Lawyers (Respondent) File Number(s): 2017/00280701 Publication restriction: Nil REASONS FOR DECISION Background and purpose of these proceedings Background 1. By orders of this Tribunal made on 8 May 2019, Ms Myroslava Zhukovska, a Solicitor who had been admitted on 3 July 2009, who had obtained an unrestricted practising certificate and then commenced sole practise through an incorporated legal practice in August 2012, was found guilty of professional misconduct in respect of 5 grounds alleged by the Law Society of New South Wales ("the Law Society") and guilty of unsatisfactory professional conduct in respect of 5 other grounds. For convenience we shall refer to the proceedings by which she was found guilty of those matters as "the liability proceedings" or "the liability hearing" and the orders made on 8 May 2019 as "the liability orders". 2. The orders arose from a complaint by the Law Society as to Ms Zhukovska's conduct in respect of one of her clients, Ms Dulcie Barbara Heane. Ms Heane was a woman of advanced years who had recently taken up residence in an aged care facility. 3. The liability orders having been made, the purpose of this second hearing was to consider the penalty orders which should be made. For convenience we shall refer to this second stage of the proceedings as "the penalty hearing" or "the penalty stage" and to the orders made at the conclusion of the penalty hearing on 5 November 2019 as "the penalty orders". Findings in the liability proceedings 1. Details of the surrounding facts and our findings as to Ms Zhukovska's liability for professional misconduct and unsatisfactory professional conduct are set out in more detail in our reasons for decision concerning the liability proceedings ("the liability Reasons"); see: Council of the Law Society of NSW v Zhukovska [2019] NSWCATOD 66. 2. In summary, in those proceedings Ms Zhukovska was found guilty of professional misconduct in relation to the following grounds alleged by the Law Society: 1. Ground 4: failure to ensure that Ms Heane obtained independent legal advice as to the effect of the Successor Appointor Deed; 2. Ground 6: the making of unsecured loans to clients without instructions or knowledge of Ms Heane; 3. Ground 7: breach of s 479 of the Legal Profession Act 2004 ("LPA") in relation to the advance of $40,000 as an unsecured loan to another client without Ms Heane's knowledge or consent; 4. Ground 11: overcharging of Ms Heane and her related entities. 5. Ground 12: Ms Zhukovska preferred her own interests to those of her client Ms Heane; and 6. a finding that Ms Zhukovska's conduct, particularly in respect of Grounds 4, 6, 7, 8, 11 and 12 constituted a serious and substantial breach of her fiduciary duty as a solicitor. 1. In addition, Ms Zhukovska was found guilty of unsatisfactory professional conduct in relation to the following grounds alleged by the Law Society: 1. Ground 2: Ms Zhukovska's actions in proposing and then implementing a trust structure for Ms Heane's estate, involving the creation of the Barbara Heane Trust ("the Trust") and to incorporate a company, Dulbar Investments Pty Ltd ("Dulbar Investments") as the trustee of the trust in circumstances where she did not arrange for Ms Heane to receive independent advice, legal or otherwise, in respect of these matters and there was no reasonable legal necessity to establish this structure. 2. Ground 3: Ms Zhukovska's actions in preparing a Will for Ms Heane under which Mr Christopher Charlton, Chartered Accountant, whom Ms Heane had not met, was appointed as her executor and trustee and under which Ms Heane bequeathed the whole of her estate to the trustee and directed that her residuary estate be transferred to the Trust in circumstances where there was no reasonable legal necessity for that to be done in order to give effect to Ms Heane's testamentary intentions. 3. Ground 5: breach of section 254 of the LPA (which requires certain trust money to be deposited in a general trust account). Ms Zhukovska acted on the sale of Ms Heane's home unit at Collaroy ("the Collaroy Unit") but failed to deposit the settlement money into the trust account of the law practice but instead deposited it into a bank account in the name of Dulbar Investments. 4. Ground 8: breach of Rule 12.3 of the New South Wales Professional Conduct and Practice Rules 2013 ("the Conduct and Practice Rules"). Ms Zhukovska herself borrowed from Ms Heane/Dulbar Investments a sum of $150,000. 5. Ground 10: failure to disclose receipt of trust money. Ms Zhukovska did not disclose that her firm received trust money in relation to the sale of the Collaroy unit in her "Law Practice Declaration and Trust Money Statement" for the period 1 April 2013 to 31 March 2014. 1. No findings of professional misconduct or unsatisfactory professional conduct were made in respect of the remaining two grounds; namely: 1. Ground 1: failure to take any reasonable steps to ensure that Ms Heane has sufficient capacity to understand the nature and effect of a Power of Attorney prepared by Ms Zhukovska, before she executed that instrument on 17 July 2013. 2. Ground 9: alleged breach of section 674 of the LPA (which relates to obstruction or misleading of an investigator) by reason of her answers to questions from a Law Society Trust Account Investigator on or about 27 February 2017, relating to the receipt or holding of trust money relating to the sale of Collaroy Unit. 1. In summary then, we found Ms Zhukovska guilty of professional misconduct in respect of 5 of the 12 grounds, guilty of unsatisfactory professional conduct in respect of 5 other of those grounds and made no finding in respect of the remaining two grounds. Jurisdiction, relevant statutory provisions and available disciplinary orders 1. At the liability hearing it was uncontested that the issues in these proceedings stood to be determined under the Legal Profession Act 2004 ("the LPA") and not under the Legal Professional Uniform Law (NSW) No.16a ("the Uniform Law"). 2. The text of the principal provisions of the LPA and other statutory provisions to which we have referred in these reasons is set out in the Appendix. 3. The provision which is central to these proceedings is s 562 of the LPA, which provides that upon being satisfied that an Australian legal practitioner has engaged in unsatisfactory professional conduct or professional misconduct, we may make such orders as we think fit, which may include any one or more of the orders specified in subsection (2) of that section. The real issues and our determination of them 1. In order for us to act consistently with the "guiding principle" set out in section 36 of the Civil and Administrative Tribunal Act ("the NCAT Act"), which requires us and the parties to facilitate the resolution of the real issues in the proceedings justly, quickly and cheaply, it is obvious that we need to identify the real issues at an early stage. 2. The real issue at the penalty stage was which disciplinary orders should be made in respect of Ms Zhukovska's established professional misconduct and unsatisfactory professional conduct. By operation of s 562(1) of the LPA the orders available to us include, but are not restricted to, those set out in s 562(2). Initial issue: is Ms Zhukovska probably permanently unfit to remain a legal practitioner? 1. The Law Society sought an order under s 562(2)(a) that Ms Zhukovska's name be removed from the local Roll. 2. It is clear from the authorities that the ultimate issue, where an order for removal from the Roll is contemplated, is whether the practitioner is shown not to be a fit and proper person to be an officer of the Supreme Court: A Solicitor v Council of the Law Society of New South Wales [2004] 216 CLR 253. In New South Wales Bar Association v Cummins [2001] NSWCA 284 at [24], Spigelman CJ confirmed the principle which had been adopted by McHugh JA in the unreported decision of Prothonotary of the Supreme Court of NSW v Ritchard (Court of Appeal (NSW), 31 July 1987, unrep) to the following effect: "An order for the involuntary removal of the name of a practitioner from the Roll of solicitors is made only because the probability is that the solicitor is permanently unfit to practise. Unless the Court is persuaded that the probability exists, the proper order to make will usually be one of suspension or fine instead of removal." 1. It seems to be well accepted as a result of those authorities that the test to be applied in deciding whether a practitioner's name should be removed from the Roll is whether he or she is "probably permanently unfit to practise". Real issues 1. On that basis the real issues for determination in these, the second stage proceedings, are these: 1. Is Ms Zhukovska probably permanently unfit to practise? (If so her name will be removed from the local Roll). 2. What, if any, other disciplinary orders should we make, bearing in mind that we may make, but are not limited to making, any one or more of the orders set out in s 562(2) of the LPA? 3. Should there be any particular conditions to the orders we make or any further recommendations? Evidence at penalty hearing 1. No further evidence was adduced by the Law Society. Ms Zhukovska's character evidence and proposed unsworn statement 1. Counsel for Ms Zhukovska, Ms Cameron, tendered without objection 3 items comprising character evidence in support of her client. Those items were: 1. a letter from HWL Ebsworth Lawyers (the solicitors for Ms Zhukovska) dated 2 October 2019 attaching a character reference by Ms Kanokwan Subhodyana, a solicitor and registered migration agent. This was admitted as Exhibit R1; 2. a further letter from HWL Ebsworth dated 27 September 2019 which, with its attachments, was admitted as Exhibit R2. The attachments comprised certificates of completion, receipts and acknowledgements in respect of Ms Zhukovska's asserted attendance at professional training and education courses, but also 3 character references, as follows: 1. a character reference dated 11 September 2019 from H A John, who described himself as a buyer's agent; 2. a character reference dated 20 August 2019 from Mr Tom Miles, Food Services Coordinator, Manly Meals On Wheels; and 3. a character reference dated 11 September 2019 from Mr James Reilly, who signed himself as "BCom CA" and whom we understand to have an accountancy qualification. 1. Significantly, Ms Zhukovska herself did not provide an affidavit or other form of sworn written statement for this hearing. 2. It was initially indicated by Ms Cameron that Ms Zhukovska was prepared to give an unsworn statement from the witness box or perhaps from the Bar table. Mr Barnes for the Law Society objected to any such procedure and he relied upon section 21 of the Evidence Act 1995 which requires a witness in a proceeding to either take an oath or make an affirmation before giving evidence. There are some limited exceptions to that requirement; for example, an unsworn statement may be given by a person who is not competent to give evidence about a fact, including by reason of any mental intellectual or physical disability. But clearly those exceptions do not apply here and we concluded that Ms Zhukovska should be given the opportunity to make a statement only upon oath or affirmation. 3. By operation of s 38(2) of the NCAT Act the Tribunal is not bound by the rules of evidence in relation to its proceedings, but an exception to that rule is made for proceedings in this Division, by cl 20 of Schedule 5 to the NCAT Act. The effect of that clause is that, despite section 38 of the NCAT Act, the Tribunal must observe the rules of evidence in proceedings in this Division which concern a question of professional misconduct. 4. Mr Barnes contended that the Law Society had appeared on this day on the understanding that Ms Zhukovska had adduced all evidence on which she intended to rely and that if she wished to give sworn evidence, he would be entitled to cross-examine her. He contended that he would be placed at a strategic disadvantage in attempting to do so on this day because of his expectation that all of Ms Zhukovska's evidence had already been presented. In that event he would seek an adjournment. 5. Ultimately, Ms Cameron indicated that her instructions were that Ms Zhukovska was not prepared to and did not wish to give sworn testimony at this hearing and that, other than the items referred to at [19], no further evidence was to be adduced on her behalf. In short Ms Zhukovska declined the opportunity to make a sworn or affirmed statement, on which she might be cross-examined. 6. It is of course ultimately the Respondent's decision as to the nature of any evidence tendered in penalty proceedings of this type in this Division. But Ms Zhukovska's decision to decline to give sworn testimony may be regarded as unfortunate, because although we had had the advantage of observing her giving evidence, including under sustained cross-examination at the liability hearing, we were deprived of a further opportunity to do so at this penalty hearing. 7. Ultimately we gave very little weight to the unsworn statements from H A John, Mr Miles and Mr Reilly. We did so for two reasons. Firstly, it is clearly established that testimonials are of restricted value where misconduct is more serious and secondly because none of these referees were legally qualified. We accepted the written submissions by Mr Barnes on behalf of the Law Society in this regard. He cited Riley's NSW Solicitors' Manual at paragraph 56.3 for the first proposition and paragraph 56.44 for the second proposition. The latter paragraph provides a useful explanation of why testimonials from non-legally qualified deponents are, in the opinion of the learned editors of the Manual, "of practically no value": "56.4.1. The reason is not that only (experienced) lawyers are good judges of character, but because the relevant enquiry concerns the fitness of an errant lawyer to practise law. Only those who have the requisite knowledge of legal practice, therefore, can properly make such an assessment." 1. We gave greater weight to the character statement by Ms Subhodyana because she appears to be legally qualified and she asserted (at least in her second statement of 1 October 2019) that she had read our decision in the liability proceedings and was aware of our findings against Ms Zhukovska in that decision. Nevertheless, the weight which we were prepared to give to Ms Subhodyana's statement was limited by the fact that the statement was not sworn or affirmed. The Law Society's case 1. The Law Society's case is that Ms Zhukovska's name should be removed from the local Roll. In his oral submissions at the penalty hearing, Mr Barnes contended that Ms Zhukovska's conduct was such as to justify the conclusion that she so egregiously breached her professional obligations that it must follow that she should not be allowed to practise. 2. Mr Barnes reminded us that, as reflected at [138] of our reasons for decision in the liability proceedings, we had concluded that: ".. Ms Zhukovska's conduct was tainted with unfairness, a lack of frankness and candour and ultimately, a failure to have the proper regard to the interests of her client Ms Heane. Her overcharging is but one instance of this, but it demonstrates clearly a deliberate course of action by Ms Zhukovska which preferred her own interests and those of her legal practice to those of her client Ms Heane." 1. The Law Society relied on the recent summary of the leading authorities in Law Society of New South Wales v Osman [2018] NSWCATOD 75 and contended that those authorities laid particular emphasis on the need to give prominence to the fact that disciplinary proceedings such as these are concerned with the protection of the public. We were referred to the statements of Beazley JA (as she then was) in Law Society of New South Wales v Walsh [1997] NSWCA 185, where Her Honour made her oft-cited observation that: "The court's duty to protect the public is not confined to the protection of the public against further misconduct by the particular practitioner who is the subject of the disciplinary proceedings. It extends to protecting the public from similar defaults by other practitioners. Thus, it is relevant to take into account the effect the order will have upon the understanding in the profession and amongst the public of the standard of behaviour required of solicitors." 1. In that judgment Her Honour also confirmed other important principles relevant to consideration of penalty, which include that, subject to considerations which would compel the Tribunal to impose a lesser penalty, the protective nature of the jurisdiction calls for the removal of the practitioner's name from the Roll when the practitioner has been found not to be of good fame and character. The subjective considerations which might compel a different course are ones which themselves are relevant to and enhance the essential nature of the Tribunal's jurisdiction to protect the public. 2. The Law Society contended that Ms Zhukovska's established actions and course of conduct demonstrate that she is "probably permanently unfit" to be a member of the profession within the meaning given to that term in New South Wales Bar Association v Cummins, which we have discussed further at [15] and at [45] and that her submissions and unsworn evidence provided for this hearing were insufficient to displace that conclusion. 3. On that basis, the Law Society sought an order removing Ms Zhukovska's name from the local Roll and an order for costs. 4. In relation to costs, the Law Society contended that there is nothing "exceptional" in the facts so as to attract a different order or to justify a payment by Ms Zhukovska of part only of the Law Society's costs, by reference to Schedule 5, clause 23 to the CAT Act. 5. At this hearing, the Law Society did not expressly seek any other orders. However, by its application it had in addition sought "such further orders as the Tribunal deems fit". That of course confirms our power under s 562(1) of the LPA to make any order we think fit, including any one or more of those specified in the other sub-sections of section 562. Ms Zhukovska's case 1. Ms Cameron contended that an order for removal from the Roll was not appropriate on the established facts of the case and that in determining appropriate orders, we should have regard to the primary purpose of penalty-fixing in such cases: namely, the protection of the public. 2. In her contention it was difficult to identify the actual harm to which the public would be made vulnerable in the event that Ms Zhukovska were permitted to resume practice, given that it was conceded that that resumption might be subject to appropriate conditions and restrictions for a reasonable period. With such appropriate conditions and restrictions, the entitlement of Ms Zhukovska to practise the law in this State could not be seen presently as a risk to the public. 3. Ms Cameron further contended that the Tribunal would not be inclined to remove Ms Zhukovska's name from the Roll were appropriate weight given to the following factors: 1. The fact that, unlike in many cases in which the practitioner's name has been removed from the Roll, all the conduct by Ms Zhukovska subject to the Law Society complaints in these proceedings related to a single client, Ms Heane. 2. While it is not put forward as in any sense an excuse for her client Ms Zhukovska's conduct, it is undisputed that she was, at the relevant time, an inexperienced and junior legal practitioner who had not had the benefit of proper supervision. Those factors go to the gravity of her conduct, and in particular, her present fitness to practise, some 5 or 6 years later and, of course, they go to the issue of the appropriate penalty. 3. An order removing Ms Zhukovska's name from the Roll would effectively end her career. 4. We should take into account our finding in the liability hearing that Ms Zhukovska had made efforts to improve her knowledge in relation to powers of attorney and taking instructions from older people and had taken some steps to ensure that Ms Heane had capacity to understand the Power of Attorney which she prepared: see liability Reasons at [43]-[46]. 5. Ms Zhukovska frankly acknowledged the fact that much of her conduct failed to meet the professional standard required in order to be a member of the legal profession; for example that she should have recognised a potential conflict of interest in relation to the Successor Appointor Deed (liability Reasons at [4], [92] and [94]). 6. This case is distinguishable from those where misappropriation or sustained dishonesty have occurred. In contradistinction to those cases, here, the legal services for which the practitioner had been engaged were in fact provided to the client. 1. Ms Cameron also contended that in relation to the ground involving overcharging, despite the fact that some very serious findings have been made against Ms Zhukovska in relation to this ground, the Tribunal would take into account the following factors particular to this case: 1. the services were provided and that this was not a case where Ms Heane was entirely unaware of the costs being incurred or where she received no benefit whatsoever from those costs (compare Law Society of NSW v Berger (No. 1) [2017] NSWCATOD 137); 2. at least by the conclusion of the liability hearing, Ms Zhukovska had acknowledged that she should not have charged for doing non-legal work relating to the renovations to the Collaroy Unit. Ms Cameron referred to the liability Reasons at [61] and [63]-[64], ending with the comment by her client under cross-examination that: "Right now, I think it would be unconscionable to do it" (that is, to render a professional charge incorporating supervision of the renovation work)…I didn't think it at the time." 1. Ms Cameron also contended that, contrary to what is asserted on behalf of the Law Society, Ms Zhukovska has demonstrated some acceptance of the nature of her conduct and in particular the fact that it does not meet the required standard, as well as her remorse for that conduct. Our attention was drawn to Ms Zhukovska's affidavit of 25 January 2018 at [164] where she says: "I deeply regret that I have in any way breached my professional obligations as a solicitor in relation to the matters the subject of these proceedings…" 1. Ms Cameron also asked us to take into account the fact that since the events in question, Ms Zhukovska has made some effort to attend appropriate seminars and courses of professional education, some details which, including certificates of completion, were attached to her solicitors' letter of 27 September 2019. 2. She also asked us to take into account in particular the character reference from Ms Subhodyana who is a practising lawyer and the two other references provided which, although they are from non-lawyers, are indicative of Ms Zhukovska's community service. CONSIDERATION Authorities: removal from the Roll and possible alternatives Fitness to be an officer of the Court and protection of the public 1. It is clear from the authorities that the ultimate issue, where an order for removal from the Roll is contemplated, is whether the practitioner is shown not to be a fit and proper person to be an officer of the Supreme Court: A Solicitor v Council of the Law Society of New South Wales [2004] 216 CLR 253. 2. It is also clear that, in deciding that ultimate issue, the Tribunal must proceed on the basis that disciplinary proceedings are concerned with protection of the public. See Law Society of New South Wales v Walsh [1997] NSWCA 185 at 224, per Beazley JA (as she then was) and the authorities cited there. Justice Beazley went on to confirm that: "The Court's duty to protect the public is not confined to the protection of the public against further misconduct by the particular practitioner who is the subject of the disciplinary proceedings. It extends to protecting the public from similar defaults by other practitioners. Thus, it is relevant to take into account the effect the order will have upon the understanding in the profession and amongst the public of the standard of behaviour required of solicitors." "Probable permanent unfitness" 1. In New South Wales Bar Association v Cummins [2001] NSWCA 284 at [26], and in New South Wales Bar Association v Murphy [2002] NSWCA 138 at [25], Spigelman CJ confirmed the principle, which had been adopted by McHugh JA in the unreported decision of Prothonotary of the Supreme Court of NSW v Ritchard (Court of Appeal NSW, 31 July 1987), that : "(an) order for the involuntary removal of the name of a practitioner from the Roll of solicitors is made only because the probability is that the solicitor is permanently unfit to practise. Unless the Court is persuaded that the probability exists, the proper order to make will usually be one of suspension or fine instead of removal." 1. That formulation, which involves a determination of the probable permanent unfitness of the practitioner, was adopted by Young CJ in Eq, in Prothonotary of the Supreme Court of NSW v P [2003] NSWCA 320 and in many subsequent cases. 2. However, in Stanoevski v The Council of the Law Society of New South Wales [2008] NSWCA 93 at [53] and [54], Campbell JA provided further analysis of the term "permanently unfit". He noted that Counsel in the matter had accepted that a requirement to establish "permanent unfitness to practise" did not mean that it was necessary for the applicant (in that case the Law Society) to prove that in no circumstances whatever would the solicitor be fit to practise and that it was clear that "permanent" could not have that shade of meaning. Campbell JA said, at [54]: "Rather, in my view, it has the shade of meaning of being likely to be unfit to practise for the indefinite future… If the Tribunal or Appeal Panel is of the view that a person is presently unfit to practise, but after a particular period of time will be once again fit to practise, then suspension for that period of time is the appropriate order… Removal from the Roll is appropriate only when a legal practitioner is unfit to practise, and suspension for a particular period is not appropriate." 1. However, doubts have been expressed about the utility of adopting an overly formulaic approach to this question. For example, in Dupal v The Law Society of New South Wales [1990] NSWCA 56, in a short (but not dissenting) judgment, Priestley JA said (at 58): "I … do not find it necessary for deciding the appeal to consider the precise way in which the appellant's conduct should be characterised as a matter of legal labelling. It is sufficient, as I see the appeal, to say that the appellant's actions, as a solicitor…were dishonest and indefensible to a degree requiring that his name be struck off the roll..." Unfitness to retain a practising certificate 1. The case of Murphy, cited at [45] above, concerned a barrister who had not complied with his tax obligations for some years because of personal financial difficulties. The Court of Appeal gave consideration to the difference between unfitness to remain on the Roll and unfitness to retain a practising certificate. Spigelman CJ reviewed the applicable legislative provisions and discussed the Court's choice between making an order for striking off and an order for cancellation or suspension of the practitioner's practising certificate. In a judgment which approved the Chief Justice's analysis of these matters, Giles JA (with whom Priestley JA agreed) observed as follows: "[111]… The difference between unfitness to hold a practising certificate and unfitness to be a legal practitioner may not be great in many cases. But the difference cannot be overlooked… [113]… Refusal, cancellation or suspension of a practising certificate upon determination of unfitness to hold a practising certificate is not punitive of the legal practitioner. It is protective of the public in the same manner as removal from the Roll. Fitness to hold a practising certificate is to be assessed as having in mind the high standards required of legal practitioners in the practice of their profession. The standards are required because the relationship between legal practitioner and client, between legal practitioners, and between legal practitioners and the court is one of trust in the performance of professional functions, and because there must be confidence in the public and in those engaged in the administration of justice that legal practitioners will properly perform those functions." 1. His Honour's observations were approved and applied by this Tribunal in Law Society of NSW v Shehadie (No 2) [2016] NSWCATOD 151 at [50]. Assessment and penalty orders Fitness to practise 1. We concluded and informed the parties at the conclusion of the penalty hearing that we cannot be satisfied that the Respondent's conduct, as serious and deserving of condemnation as it was, demonstrated that she is "permanently or at least indefinitely unfit to practise" (to use the terminology adopted by Spigelman CJ in NSW Bar Association v Murphy). 2. Her name should not, therefore, be removed from the Roll. 3. However her conduct does demonstrate that she is not presently a fit and proper person to be permitted to practise as a solicitor in New South Wales. She is not someone who, presently, should be held out to the public, to members of the profession or to the Courts as possessing the qualities of competence, diligence and trustworthiness required and expected of a solicitor. It must follow that her right to practise should be removed, for at least some time. 4. We came to that conclusion for the following reasons. 1. Although we had found that Ms Zhukovska's conduct had in many respects fallen below the standard to be expected of members of the profession, this was not a case which involved misappropriation of funds or clear dishonesty. That distinguishes it from many of the cases in which the Tribunal or the Court has removed the practitioner from the local Roll. 2. Again without in any way minimising the seriousness of our findings as to Ms Zhukovska's conduct, our findings were based on the course of her conduct in relation to one only of her clients. There is no indication and there have been no allegations put to us that conduct of the type which led to our findings of professional misconduct were repeated in her dealings with other clients. That is not in any sense a "telling factor", but, in fairness, it should be and was taken into account by us in deciding the form of the penalty orders. 3. The previous factor should be assessed in conjunction with consideration of Ms Zhukovska's relative inexperience and her assertions that she received very little proper supervision or training as an employed solicitor prior to starting her own practice. We accept the substance of those assertions. 4. It is true that in the liability Reasons at [145] we emphasised that any explanation or excuse based on Ms Zhukovska's lack of experience in dealing with trusts, estates or trust property, or her misconception of the identity of her client, is "palpably inadequate". We reiterate those remarks, but they were directed to the central question in that stage of the proceedings; namely whether Ms Zhukovska's conduct amounted to professional misconduct. That is why we concluded that paragraph with a finding that the conduct would be regarded as disgraceful and dishonourable by solicitors of this State of good repute and competency. It follows that, despite those adverse findings and remarks in the Liability proceedings, her relative inexperience may be relevant to the question of whether she should be permanently deprived of the right to practise by way of a strike off order, or alternatively whether her immediate right to practise should be curtailed because she is not presently fit to practise. Ms Zhukovska's wish to continue to practise 1. Notwithstanding Ms Zhukovska's decision to decline to give oral evidence at this hearing, as dealt with at [24], we accept that she does wish to continue to practise as a solicitor. That was clear from statements on her behalf from the Bar table (to which we ascribe the appropriate reduction in weight because of that mode of their presentation). Additionally, any fair reading of the unsworn statement of Ms Subhodyana, with whom it appears, Ms Zhukovska has had some contact at a professional level, reveals Ms Subhodyana's understanding that Ms Zhukovska wants a chance to practise again. Ms Zhukovska told Ms Subhodyana that: "..if given a chance (she would) ensure that she (would) not make the same mistakes again". 1. Again, on any fair reading of it, that reveals at least some degree of recognition and acceptance of her departure from the required standard of conduct (if not quite contrition) by Ms Zhukovska. 2. We have taken into account two substantial flaws in Ms Zhukovska's case that she be allowed to practise. Firstly the relative absence of obvious and genuine contrition: Ms Zhukovska's statement concluding her affidavit of 25 January 2018 at [164] is a statement of "deep regret" but it is an isolated one and she did not take up the opportunity to repeat it to us at this hearing. That failure to seize the opportunity to indicate genuine contrition by way of sworn testimony at the penalty hearing is the second substantial flaw in her case. 3. Nevertheless, we are satisfied to the requisite standard that Ms Zhukovska's desire to be allowed to continue professional practice is genuine and she has stated her preparedness to undertake further appropriate professional education and training or to be suitably supervised, at least for a period. Orders relating to Practicing Certificate 1. Nothing in the preceding paragraphs should be read as minimising our condemnation and express disapproval of many aspects of Ms Zhukovska's conduct or as any gloss upon our conclusions as to that conduct, for example those at [138] and [145] the liability Reasons. Her conduct does deserve to be roundly condemned. She is unfit to hold a current practising certificate. 2. However we were satisfied that the public, other members of the profession and the Courts would be sufficiently protected in the manner discussed by Priestley JA in Murphy, as cited at [49] above, by an order cancelling Ms Zhukovska's practising certificate for at least 12 months, together with the other orders discussed below. We are satisfied that the necessary degree of protection could in that way be afforded without an order removing her name from the Roll. Conditions on re-issue of practising certificate and restrictions on practice 1. Because Ms Zhukovska is not permanently or indefinitely unfit to practice, (although she is currently unfit), it is important that as soon as practicable, appropriate conditions be settled for any re-issue of the practising certificate and for ongoing conditions and restrictions to be placed on any re-issued practising certificate. 2. We are not in a position to settle those conditions and restrictions. There was no submission to us in any detail as to the type or extent of such conditions and restrictions, other than a concession by Ms Zhukovska, through Counsel, that she would be prepared to accept a condition as to ongoing practice education and training and some form of supervision. 3. It is appropriate therefore that those conditions and restrictions be established by the Law Society. It seems appropriate that we should make recommendations to the Law Society to assist this process. We emphasise that these recommendations do not form part of our formal order and are not intended to limit the discretion available to the Law Society in these matters. Recommendation to Society as to Practising Certificate 1. On that basis we recommend to the Law Society that early consideration be given to the imposition of preconditions to the reissue of a practising certificate to Ms Zhukovska and that they might well include amongst such other things as is thought appropriate, requirements for: 1. a suitable period of supervision of Ms Zhukovska's legal work and her compliance with professional ethical and accounting practices, by a solicitor of substantial relevant experience and standing; 2. satisfactory completion by Ms Zhukovska (by way of personal attendance rather than remote online participation), and assessment with a mark of not less than 65%, of recognised comprehensive professional training courses on such topics as elder law, the law of powers of attorney, wills and estates practice, ethics and trust accounts. Reprimand and fine 1. In making the penalty orders we were satisfied that the conduct of Ms Zhukovska, which was the basis of our findings in the liability proceedings, justifies the imposition of a reprimand and in addition a fine of some substance. These elements are necessary to mark to other members of the profession and to the public the seriousness of our findings as to her professional misconduct. 2. A public reprimand is clearly appropriate. 3. As to the necessity for a fine, Ms Zhukovska was found guilty of either professional misconduct or unsatisfactory professional conduct in respect of 10 out of the 12 grounds on which the Law Society based its application. Substantial professional misconduct, of the type described in more detail in the liability Reasons, was established in 5 of those grounds. We have reviewed the circumstances and compared them with the range of fines imposed in leading reported cases. In all the circumstances we have concluded that a fine of $9000 is appropriate. Costs 1. It was submitted on Ms Zhukovska's behalf that any costs order made against her should reflect what was termed her "partial success" in the proceedings, namely that no finding was made in respect of two of the grounds and that unsatisfactory professional conduct, rather than professional misconduct, was found in respect of 5 grounds. 2. We found that submission unpersuasive. Clause 23 of Schedule 5 to the NCAT Act requires us to make a costs order against a respondent lawyer found to have engaged in unsatisfactory professional conduct or professional misconduct, unless we are satisfied that "exceptional circumstances" exist. To the extent that the submissions made on behalf of Ms Zhukovska were intended to assert that her "partial success" in the Liability Proceedings constituted "exceptional circumstances", we reject that contention. It is not in any real sense exceptional in matters of this kind for the Tribunal to find that certain grounds have not been established or that the practitioner's conduct asserted in respect of certain grounds did not amount to professional misconduct but amounted to unsatisfactory professional conduct. There are no exceptional circumstances here. Ms Zhukovska must pay the Law Society's costs. 3. We ordered and recommended accordingly. Orders 1. The local practising certificate of Myroslava Zhukovska is cancelled and any new practising certificate shall not be issued to Myroslava Zhukovska before the end of 12 months from the date of these orders. 2. Myroslava Zhukovska is fined $9000. 3. Myroslava Zhukovska is reprimanded. 4. Myroslava Zhukovska is to pay the Law Society's costs of and incidental to these proceedings, as agreed or assessed. ********** APPENDIX Statutory Provisions Civil and Administrative Tribunal Act 2013 (NSW) 36 Guiding principle to be applied to practice and procedure (1) The "guiding principle" for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The Tribunal must seek to give effect to the guiding principle when it: (a) exercises any power given to it by this Act or the procedural rules, or (b) interprets any provision of this Act or the procedural rules. (3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal: (a) a party to proceedings in the Tribunal, (b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal. (4) In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings. (5) However, nothing in this section requires or permits the Tribunal to exercise any functions that are conferred or imposed on it under enabling legislation in a manner that is inconsistent with the objects or principles for which that legislation provides in relation to the exercise of those functions. Costs 60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be awarded by the Tribunal, the Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014 ) or on any other basis. (5) In this section: "costs" includes: (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal. SCHEDULE 5 23 COSTS CONSEQUENT OF ADVERSE CONDUCT FINDINGS (1) Despite section 60 of this Act, the Tribunal must make orders requiring a respondent lawyer whom it has found to have engaged in unsatisfactory professional conduct or professional misconduct to pay costs (including costs of the Commissioner, a Council and the complainant), unless the Tribunal is satisfied that exceptional circumstances exist. … (7) An order for costs may specify the terms on which costs must be paid. Evidence Act 1995 (NSW) 21 Sworn evidence to be on oath or affirmation (1) A witness in a proceeding must either take an oath, or make an affirmation, before giving evidence. (2) Subsection (1) does not apply to a person who gives unsworn evidence under section 13. (3) A person who is called merely to produce a document or thing to the court need not take an oath or make an affirmation before doing so. (4) The witness is to take the oath, or make the affirmation, in accordance with the appropriate form in Schedule 1 or in a similar form. (5) Such an affirmation has the same effect for all purposes as an oath. 13 Competence: lack of capacity (1) A person is not competent to give evidence about a fact if, for any reason (including a mental, intellectual or physical disability): (a) the person does not have the capacity to understand a question about the fact, or (b) the person does not have the capacity to give an answer that can be understood to a question about the fact, and that incapacity cannot be overcome. Note: See sections 30 and 31 for examples of assistance that may be provided to enable witnesses to overcome disabilities. (2) A person who, because of subsection (1), is not competent to give evidence about a fact may be competent to give evidence about other facts. (3) A person who is competent to give evidence about a fact is not competent to give sworn evidence about the fact if the person does not have the capacity to understand that, in giving evidence, he or she is under an obligation to give truthful evidence. (4) A person who is not competent to give sworn evidence about a fact may, subject to subsection (5), be competent to give unsworn evidence about the fact. (5) A person who, because of subsection (3), is not competent to give sworn evidence is competent to give unsworn evidence if the court has told the person: (a) that it is important to tell the truth, and (b) that he or she may be asked questions that he or she does not know, or cannot remember, the answer to, and that he or she should tell the court if this occurs, and (c) that he or she may be asked questions that suggest certain statements are true or untrue and that he or she should agree with the statements that he or she believes are true and should feel no pressure to agree with statements that he or she believes are untrue. (6) It is presumed, unless the contrary is proved, that a person is not incompetent because of this section. (7) Evidence that has been given by a witness does not become inadmissible merely because, before the witness finishes giving evidence, he or she dies or ceases to be competent to give evidence. (8) For the purpose of determining a question arising under this section, the court may inform itself as it thinks fit, including by obtaining information from a person who has relevant specialised knowledge based on the person's training, study or experience. Legal Profession Act 2004 (NSW) 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. 479 Conduct of mortgage practices (1) A solicitor must not, in the solicitor's capacity as solicitor for a lender or contributor, negotiate the making of or act in respect of a regulated mortgage unless: (a) the mortgage is a State regulated mortgage, or (b) the mortgage is a run-out mortgage, or (c) the mortgage forms part of a managed investment scheme that is operated by a responsible entity. (2) A solicitor must not, in the solicitor's capacity as solicitor for a lender or contributor, negotiate the making of or act in respect of a regulated mortgage except in accordance with: (a) the Corporations Act 2001 of the Commonwealth, or that Act as modified by any ASIC exemption or the regulations under that Act, and (b) this Act, the regulations and the legal profession rules. (3) A solicitor must not, in the solicitor's capacity as solicitor for a lender or contributor, negotiate the making of or act in respect of a regulated mortgage that forms part of a managed investment scheme unless the solicitor complies with any ASIC exemption that applies to managed investment schemes that: (a) have more than 20 members, and (b) are operated under the supervision of the Law Society in accordance with that exemption. This subsection applies even if the regulated mortgage forms part of a managed investment scheme that has no more than 20 members. (4) Subsection (3) does not apply if the managed investment scheme is operated by a responsible entity. (5) A solicitor who knows that an associate has contravened a requirement referred to in subsection (1), (2) or (3) must notify the Law Society Council of that fact in writing within 21 days after becoming aware of the contravention. (6) A contravention of this section is capable of being professional misconduct. 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: (a) an order that the name of the practitioner be removed from the local Roll, (b) an order that the practitioner's local practising certificate be suspended for a specified period or cancelled, (c) an order that a local practising certificate not be issued to the practitioner before the end of a specified period, (d) an order that: (i) specified conditions be imposed on the practitioner's practising certificate issued or to be issued under this Act, and (ii) the conditions be imposed for a specified period, and (iii) specifies the time (if any) after which the practitioner may apply to the Tribunal for the conditions to be amended or removed, (e) an order reprimanding the practitioner, (f) an order that the name of the practitioner be removed from the Roll of public notaries maintained under the Public Notaries Act 1997 . (3) Orders requiring official implementation in another jurisdiction The Tribunal may make the following orders under this subsection: (a) an order recommending that the name of the practitioner be removed from an interstate Roll, (b) an order recommending that the practitioner's interstate practising certificate be suspended for a specified period or cancelled, (c) an order recommending that an interstate practising certificate not be granted to the practitioner before the end of a specified period, (d) an order recommending that: (i) specified conditions be imposed on the practitioner's interstate practising certificate, and (ii) the conditions be imposed for a specified period, and (iii) the conditions specify the time (if any) after which the practitioner may apply to the Tribunal for the conditions to be amended or removed. (4) Orders requiring compliance by practitioner The Tribunal may make the following orders under this subsection: (a) an order that the practitioner pay a fine of a specified amount, (b) an order that the practitioner undertake and complete a specified course of further legal education, (c) an order that the practitioner undertake a specified period of practice under supervision, (d) an order that the practitioner do or refrain from doing something in connection with the practice of law, (e) an order that the practitioner cease to accept instructions as a public notary in relation to notarial services, (f) 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, (g) an order that the practitioner's practice be subject to periodic inspection for a specified period, (h) an order that the practitioner undergo counselling or medical treatment or act in accordance with medical advice given to the practitioner, (i) an order that the practitioner use the services of an accountant or other financial specialist in connection with the practitioner's practice, (j) an order that the practitioner not apply for a local practising certificate before the end of a specified period. (5) 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. (6) 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. (7) 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: (a) $10,000 in the case of unsatisfactory professional conduct not amounting to professional misconduct, or (b) $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. (8) 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. (9) 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). 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: 02 January 2020