Clifton v The Council of the Law Society of New South Wales

The nature of the proceedings

1. The proceedings are in the nature of a merits review of the decisions (see s 100(1)(a) Legal Profession Uniform Law).
2. Further, the Court is not, in undertaking that merits review, undertaking a review of the precise reasons given by the Law Society for its decisions. The hearing is a hearing de novo in which the parties may adduce fresh evidence.
3. The Court is not in these proceedings reviewing the decision of the Tribunal. Indeed the plaintiff is not intending to appeal the decision of the Tribunal.
4. It follows that ordinarily the Law Society will make an application to the Court of Appeal in accordance with the recommendations of the Tribunal that the plaintiff's name be removed from the roll of solicitors.
5. The Court of Appeal will not be able to go behind the facts found by the Tribunal. However, the plaintiff may make submissions to the effect that there should be a different penalty.

Reasonably arguable case?

1. For the purposes of the stay application, the plaintiff says that he intends to adduce new evidence on the final hearing as to whether he is a fit and proper person to hold a practising certificate. He says that he will adduce evidence of his acceptance of the Tribunal's findings as to his conduct and acknowledgement of that past conduct. He says that he will adduce new evidence intended to establish that he is a fit and proper person and that he now has proper insight into his conduct.
2. He says that such evidence provides a basis for the submission that, at the very least, he has a reasonably arguable case. Again, I am not referring to an arguable case in the Court of Appeal. I am referring to an arguable case in these proceedings.
3. Mr Beaumont on behalf of the plaintiff submits that ordinarily the suggestion of a reasonably arguable case is not in issue. He did not apprehend that the Law Society might be taking a different view. However, the Law Society does take a different view. The Law Society does not accept that the type of evidence referred to by the plaintiff would be of such import that it could be said he has a reasonably arguable case.
4. Ms Morgan sought to distinguish cases such as Berger v Council of the Law Society of NSW (No 2) [2] , in which the solicitor indicated an intention to challenge some of the essential factual findings.
5. It is always difficult in a matter such as this to make any finding as to the strength of a person's case. Indeed, the Court should shy away from doing so, unless it can be said that the arguments pursued are so untenable as to be hopeless. That is not to mean that I am seeking to apply some different standard. I am just emphasising the difficulties in forming a view, at this particular stage, of the arguments which the plaintiff intends to pursue.
6. Plainly the Court should not be used merely as a means of a party seeking to obtain some commercial benefit, that is a stay whilst some commercial benefit might be obtained. It is necessary to accept that there is at least a reasonable basis for the case being pursued.
7. Having said that, it seems to me that having regard to the arguments raised on behalf of the plaintiff, evidence of a changed insight and greater understanding of the conduct may at least be the type of evidence which the Court would consider in undertaking the type of review available under s 100.
8. As such, to the extent that it is necessary to say so, I accept that there are at least arguments reasonably available to the plaintiff in the circumstances of this case.

The decision of the Tribunal

1. The decision of the Law Society to refuse to renew the plaintiff's practising certificate was, as would seem obvious, very much made with reference to the findings and decision of the Tribunal. The Tribunal made a number of findings which were plainly used as the basis for its ultimate recommendation.
2. Firstly, it made a specific finding of dishonesty against the plaintiff, that is, it found that the plaintiff acted dishonestly in authorising the transfers from his trust account and the creation of tax invoices. Indeed, it referred to the plaintiff's admission that he knew at the time that what he was doing was wrong and contrary to his obligations.
3. Secondly, the Tribunal made a finding that his conduct amounted to statutory professional misconduct and professional misconduct under the common law.
4. Thirdly, it made a finding that conversations about removing funds from the trust account occurred on at least three occasions, that is, it was not limited to just one occasion.
5. Fourthly, it rejected parts of the plaintiff's evidence including that he only became aware of borrowings from the trust account when he read the trust report.
6. It concluded at [76]-[77]: "In coming to this decision we find that Mr Clifton is not currently fit to practise… the Tribunal was not satisfied from his evidence that he fully understands the seriousness of his conduct... he was not able to give any explanation as to why he had not disclosed these matters at the relevant times and why he would now act differently in a similar situation."
7. As I have already indicated, the plaintiff intends on adducing evidence to in some way suggest that he does understand the seriousness of his conduct, provide an explanation and explain a greater insight than was found by the Tribunal. Those matters are relevant to any consideration as to whether he is a fit and proper person to hold a practising certificate.
8. Findings of dishonesty and a lack of recognition of that dishonesty must, of course, be particularly pertinent to any consideration of fitness to hold a practising certificate. Having said that, I am today determining the application for a stay.

Principles of an application for a stay

1. The parties both rely on a decision of the NSW Court of Appeal in NSW Bar Association v Stevens. [3]
2. The plaintiff submits that the approach to this type of application is very much the approach which has been consistently followed since Alexander v Cambridge Credit Corporation Limited. [4]
3. The plaintiff submits that the Court must do justice between the parties and accepts that the onus is on him to demonstrate a proper basis for a stay, which will be fair to all parties.
4. The plaintiff also emphasises that, in the exercise of its discretion, the Court should weigh considerations such as the balance of convenience. The Court should consider whether there is a risk that the proceedings will prove nugatory if the plaintiff succeeds and the stay is not granted, suggesting in those circumstances the Court would ordinarily exercise the discretion in favour of a stay.
5. The point made by the plaintiff is that there is a real risk that these proceedings will be rendered nugatory if a stay is not granted.
6. The Law Society submits that the Court should give significant weight to the protection of the public and the integrity of the regulatory system governing the conduct of solicitors and that those factors outweigh any other considerations such that a stay should not be granted.

Determination

1. The significance of the public interest and protection of the public was referred to by Spigelman CJ in Stevens and also referred to by Kirby J in Bryant v Commonwealth Bank of Australia. [5]
2. As Kirby J said, in a case such as this, that is a case involving deregistration of a professional lawyer, there are different considerations from cases involving no more than the suspension of the operation of orders affecting private litigants.
3. As Spigelman CJ then said at [104] in Stevens: "It is clear from this consideration of the authorities that each case must turn on its specific facts. The range of relevant considerations is broad. Nevertheless the fact that the issues involved in professional rights to practice concern the protection of the public, means that the public interest is always entitled to significant weight."
4. It follows that the protection of the public and the integrity of the regulatory system are matters which must be given significant weight in coming to any decision as to whether a stay should be granted.
5. Further, I am not undertaking the task with reference to the balance of convenience. Nor am I assessing whether a stay should be granted on the presumption that the status quo should simply be maintained.
6. I am approaching the consideration of whether a stay should be granted having regard to the significance of the protection of the public, integrity to the regulatory system and a range of other factors.
7. However, whilst the importance of the protection of the public in matters such as this cannot be overstated, in considering the protection of the public I must have regard to the particular facts of this matter. There may be cases in which the protection of the public and the public's confidence in the role of solicitors is such that all other factors can be given very little weight at all. In other cases, because of the nature of the conduct under consideration, the protection of the public may not assume as much importance.
8. In this matter, it is relevant that the plaintiff has been found by the Tribunal to have engaged in dishonest conduct but it is also relevant to understand the nature of the conduct and the steps which are now in place to ensure the protection of the public. In particular, it seems to me to be important that the Law Society has appointed a trust account supervisor who has control of the plaintiff's trust account.
9. As Mr Beaumont explained, the plaintiff is precluded from operating his trust account in any way. It is not merely that the supervisor might carry out a check from time to time. As I understand the position, the trust account supervisor is in place with the effect that the plaintiff has no ability to access his own trust account. In my view, that is a factor which is relevant in determining what weight I give to the issue as to the protection of the public.
10. Another factor which I do have regard to is whether the final determination will be rendered nugatory if the stay is not granted. I am not suggesting that factor would outweigh the other factors to which I have referred but this factor can be considered in conjunction with what is broadly described as the issue of prejudice to the plaintiff.
11. The plaintiff is a sole practitioner. He says that, if there is no stay and the manager is appointed, the manager will come in and inevitably clients will move on and by the time the hearing comes on, he will have suffered significant prejudice to such an extent that a final decision in his favour will not help him.
12. Of course, the Court's function is not to allow a solicitor in the circumstances to continue to practise so that he may wind down his practice or undertake the process of selling his practice. Those factors are not relevant. However, it is relevant to consider what will happen if a stay is not granted and he ultimately succeeds in these proceedings.
13. I have referred to the prejudice to the plaintiff and at least some prospect that these proceedings will be rendered nugatory if a stay is not granted.
14. Another matter that is relevant is a very recent development, that is Mr Waterson has now obtained an unrestricted practising certificate. As I understand the position Mr Waterson works in the practice. He has applied for an unrestricted practising certificate so that he can operate the practice.
15. Ms Morgan stated, just during the course of the hearing, that the Law Society has now made a decision to grant him an unrestricted practising certificate. I asked what that meant in terms of the appointment of the manager. I understand that this matter is moving quickly and the Law Society has not yet made any further decision about what that means in terms of the appointment of a manager.
16. A further matter which is relevant is the length of time for which a stay might be necessary. The protection of the public and confidence in the system is important but any prejudice to the plaintiff might have some additional significance if a stay is granted for a very limited time.
17. I do not intend to be suggesting that in some way the factors which should be considered by the Court are different if a stay is only sought for a limited period. It is just that having regard to the particular conduct of the plaintiff, the circumstances in which there is a trust account inspector and the uncertainty about what will be happening to Mr Waterson, the length of time of that a stay might be in place assumes greater importance.
18. In this regard I intend on listing the matter for final hearing forthwith. Subject to any short delay in the publication of the final judgment, the length of time for which the plaintiff will require a stay will be fairly short.
19. Having regard to all of those factors, I am satisfied that the plaintiff is entitled to the orders he seeks in the motion.
20. I make the following orders: 1. I order that the decision of the Council of the Law Society of NSW dated 6 August 2021 not to renew the practising certificate of David Vincent Clifton pursuant to s 81 of the Legal Profession Uniform Law (NSW) be stayed pending determination of prayer 1 of the Summons filed on 9 August 2021. 2. I order that the decision of the Council of the Law Society of NSW dated 6 August 2021 to appoint Penelope Jane Waters as manager to the plaintiff's law practice known as Clifton Legal Pty Ltd pursuant to s 334(2) of the Legal Profession Uniform Law (NSW) be stayed pending determination of prayer 2 of the Summons filed on 9 August 2021.
21. The effect of the orders is that the decisions of the Law Society of 6 August not to renew the practising certificate and to appoint a manager are stayed pending determination of these proceedings.

Costs

1. In my view is quite appropriate for the Law Society to be taking the position it takes. The matter is finely balanced, if I put it that way, and the Law Society is fulfilling its function.
2. The plaintiff is seeking an indulgence. The plaintiff has been successful but it remains appropriate, bearing in mind the background to the proceedings, that the plaintiff pay the costs of the motion. I order the plaintiff to pay the costs of the motion.

Endnotes

1. [2021] NSWCATOD 101.
2. [2013] NSWSC 1131.
3. [2003] NSWCA 95.
4. (1985) 2 NSWLR 685.
5. (1996) 70 ALJR 306 at 309; [1996] HCA 3. 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: 24 August 2021