In these proceedings the Council of the Law Society of New South Wales, ("the Law Society") originally sought an order that Roger Hardinge Braham, ("the Solicitor"), be removed from the Roll. It was alleged that he had engaged in professional misconduct in failing to supervise his son, Berkeley Braham, in relation Berkeley Braham misapplying money from the Solicitor's trust account, and in breaching ss 264 and 255 of the Legal Profession Act 2004 ("the LP Act"). The Solicitor was at all relevant times the sole principal of the law firm known as Stuart Cook & Braham at Tenterfield. ("the Law Practice"). He is 81 years old.
On 1 July 2015 the LP Act was repealed and the Legal Profession Uniform Law Application Act 2014 ("the Uniform Law Application Act") and the Legal Profession Uniform Law (NSW) ("the Uniform Law") came into force on the same day. We are satisfied that this Tribunal, as a designated Tribunal for disciplinary matters under this legislation, has the jurisdiction to hear and make orders in relation to this matter.
[2]
The Instrument of Consent and Agreed Statement of Facts
Some weeks before the proceedings were to be heard, an Instrument of Consent, under s 564 of the LP Act, (now section 144 of the Uniform Law Application Act), signed by the Law Society, the Solicitor and the Legal Services Commissioner on various dates in May and June 2015, was filed with the Tribunal. In that Instrument the parties consented to orders that the Solicitor be reprimanded, that he give an undertaking to cease practising from 1 July 2015, and that he pay the Law Society's costs. When the matter came before us on 13 July 2015, we were informed that the Solicitor had not renewed his certificate for the year commencing 1 July 2015.
Attached to the Instrument was an Agreed Statement of Facts particularising the matters which caused the Law Society to initiate these proceedings. This is a detailed document amounting to 35 paragraphs, and rather than attempt to summarise it here, it is reproduced in full at the end of these reasons.
Under s 564 (10) of the LP Act, (s 144 (10) of the Uniform Law Application Act), the Tribunal, in determining whether to make orders pursuant to an Instrument of Consent, may make such enquiries of the parties as it thinks fit, and may, despite the consent, conduct a hearing in relation to the complaint. In this instance we did not conduct a full hearing. Rather, following the formal tender of the Law Society's affidavit evidence, we heard short submissions from Ms Groenewegen on its behalf and then from the Solicitor.
Also relevant to this decision not to conduct a hearing was the fact that on the same day and that these proceedings came before us (on 13 July 2015) this Tribunal, similarly constituted, also dealt with the application by the Law Society to have Berkeley Braham (the solicitor's son) disqualified from employment as a lay associate. Although Berkeley Braham did not appear, that application proceeded to a full hearing and the Tribunal's decision in relation to Berkeley Braham is now published as The Council of the Law Society of NSW v Berkeley Braham [2015] NSWCATOD 98.
The reports of the Law Society's Trust Account Inspector, Mr Mitchell, relied upon by the Law Society in its application against Berkeley Braham, were also tendered in these proceedings and they are the basis for much of the Agreed Statement of Facts. In summary, over a two year period between 2010 and 2012, Berkeley Braham forged the Solicitor's signature on trust account cheques and withdrew approximately $239,000 from the Welsh Estate funds that were held in trust. Except for some small amounts, this money was not paid to the beneficiary, Mr Dennis Welsh, but rather into the general office account - ostensibly for costs that had not been incurred.
There was also evidence before us of an earlier issue that arose in 2009 in relation to the Law Practice's trust account and Berkeley Braham. These events were not relied upon by the Law Society in its complaint against Berkeley Braham, but did form part of the Agreed Statement of Facts in these proceedings (see: paras 5, 6 and 11-15).
It appears that after a routine inspection of the Solicitor's files in 2009, it came to light that there was a deficiency of approximately $21,000 in the firm's trust account. This was brought about by Berkeley Braham entering receipts for funds that were never deposited into the trust account. The report of the Law Society's Trust Account Inspector prepared at that time noted (see: para 12 of the Agreed Statement of Facts) that the trust account records were not well organised and that Berkeley Braham appeared to have had unsupervised control of the Law Practice's accounting records for at least the previous five years.
The conclusion reached by the Trust Account Inspector in relation to that matter was that the Solicitor had failed to supervise the work of Berkeley Braham in his capacity as book keeper, and that this was the case regardless of whether he had presented the solicitor with falsified records. The Solicitor then deposited the amount of $21,057.90 into his trust account to make good the deficiency.
On 19 March 2010, after the Trust Account Inspector's report issued, the Solicitor and Berkeley Braham met with The Chief Trust Account Inspector and the Manager of the Professional Standards Department at the Law Society's offices. According to the Agreed Statement of Facts, the latter "spoke frankly and harshly to them both. I am satisfied that both understand the necessity of future compliance both as to what is needed to be done and the repercussions of failure. Unless you think otherwise, I propose to close the Law Society's file". However, regrettably within six months Berkeley Braham had commenced forging the Solicitor's signature on the trust account cheques that were drawn on the Walsh Estate funds.
[3]
Failure to Supervise
The primary complaint against the Solicitor is that he failed to supervise his son in relation to the financial affairs of the Law Practice. Berkeley Braham's duties included maintaining the trust and office records (as he was a signatory to the general office account) and effecting electronic transfers to and from the general office account. He was not qualified as a lawyer, although he had apparently completed some law course subjects, and he held no accounting qualifications.
As set out in the Agreed Statement of Facts, the Solicitor did not examine the ledger for the Walsh Estate matter during the entire period that Berkeley Braham was wrongly withdrawing money from these trust funds. He also did not examine the file itself during this time although he was aware that the late Mrs Walsh's property had been sold and that the balance of the proceeds remained undistributed and un-invested in the firm's trust account.
This is not a situation where the wrongdoer covered his tracks by creating fictitious entries in the trust records, except perhaps in relation to the two cheques that are the subject of the alleged breach of s 264 of the LP Act. If the Solicitor had looked at the ledger he would have seen the unauthorised payments and in fact, the Solicitor only became aware of the deficiencies in the trust account when the beneficiary, Dennis Walsh, complained to the Office of the Legal Services Commissioner that the Estate's proceeds had not been distributed to him.
[4]
Section 255 of the LP Act
In relation to the breach of s 255 of the LP Act by the Solicitor, the Agreed Statement of Facts lists each of the cheques paid from Estate's trust funds without the authority of Mr Walsh (see: para 31). That section provides that a law practice must hold trust money exclusively for the person on whose behalf it is received, in this case the beneficiary Mr Walsh, and must disburse the money only in accordance with a direction by that person.
[5]
Section 264 of the LP Act
In relation to the breach of s 264 of the LP Act, the Agreed Statement of Facts also lists the two forged cheques that were paid by Berkeley Braham to third parties from the Walsh Estate's funds and were wrongly described in the trust account records in order to disguise the transactions (see: para 33). S 264 (b) of the LP Act provides that a law practice must keep trust records that at all times disclose the true position in relation to trust money. Also, s 264 (c) requires the records to be kept in such a way that enables them to be conveniently and properly investigated or externally examined.
[6]
Our Findings
Having considered the material in the Instrument of Consent (including the Agreed Statement of Facts) and heard the Law Society's submissions, we are satisfied that the Solicitor's admitted conduct in failing to supervise Berkeley Braham and in committing breaches of s 255 and s 264 of the LP Act amounts to professional misconduct on his part.
[7]
What are the Appropriate Orders
As to what orders should be made in the circumstances, Ms Groenwegen confirmed that Law Society did not press its initial application that the Solicitor's name be removed from the Roll and that the parties agreed that a reprimand would be a more appropriate outcome based upon the Solicitor's undertaking that he would cease practising after 1 July 2015.
There are a number of reasons why we are satisfied that a reprimand is the more appropriate outcome in the circumstances and para 35 of the Agreed Statement of Facts sets out the most important of these reasons. These are that: the Solicitor did not receive any benefit from the actions of Berkeley Braham; he cooperated fully with the Law Society at all times in relation to its investigation; and as soon as he became aware of the missing trust account moneys in relation to the Walsh Estate, he made good the deficiency (as he had in relation to the 2009 deficiency) from his own funds, which required him to sell his family home.
The Solicitor also addressed the Tribunal on these issues and other related matters. He said that he was devastated when the Walsh Estate's deficiencies were revealed to him and that with the benefit of hindsight he should have realised that something was wrong. He remains embarrassed and distressed by what occurred. He said that Mrs Rowena Cox, who had been working with him since 2001 and had obtained a law degree during this period, was now entitled to an unrestricted practicing certificate and had taken over the Law Practice from 1 July 2015. He had been obliged to retain his own practising certificate until 1 July 2015 to enable there to be an orderly transition and he intended to continue to assist her with administrative matters on a part-time basis.
The Solicitor also drew to our attention to the fact that he had been practising with an unblemished record for over 55 years, during which he had been very active within the local community and legal profession in his region and had served as the Mayor of Tenterfield for three years. He had also been awarded an Order of Australia Medal for his contributions to the community. Ms Groenewegen acknowledged and endorsed the contributions that he had made.
Prior to the conclusion of the hearing, Ms Groenewegen submitted that it was open to the Tribunal (in the exercise of its powers under s 564 of the LP Act in relation to an Instrument of Consent) to reprimand the Solicitor but to allow him to retain his practising certificate (although not as a Principal). The Solicitor said that he would prefer that outcome. However, while Ms Muston (who appeared on behalf of the Office of the Legal Services Commissioner) acknowledged that the Tribunal could take that course, she was not in a position to say whether the Legal Services Commissioner would support it.
The Tribunal retired for a short time to consider whether it was appropriate to proceed on that basis, bearing in mind that this may have required an adjournment of the hearing. Ultimately, we determined not to adopt that course of action for two reasons. Firstly, we did not conduct a full hearing and to depart so markedly from the position agreed between the parties, particularly when considering the orders initially sought by the Law Society, would have required evidence on oath by the solicitor and possibly also from other witnesses and potentially also cross examination of those witnesses (or some of them).
Secondly, while the Tribunal acknowledges the significant contribution made by the Solicitor to his local community over many years, we have to take account of the fact that there were two separate events involving Berkeley Braham misapplying money from the Law Practice's trust account. After the 2009 incident was brought to the Solicitor's attention he should have been on notice. However, despite the Professional Standards Department's Manager speaking "frankly and harshly" to him and informing him that there would be repercussions if there was not compliance in the future, it appears that Solicitor did nothing and permitted Berkeley Braham to continue to have unsupervised control of the trust account. We have therefore concluded that the orders proposed in the Instrument of Consent (except in relation to costs) are appropriate in the circumstances.
[8]
Costs
In relation to costs, Ms Groenewegen submitted that the Tribunal could depart from terms of the Instrument of Consent and decline to make an order that Solicitor pay the Law Society's costs. The provisions governing costs are found at cl 23 (1) in Sch 5 of the Civil and Administrative Tribunal Act 2013 ("the CAT Act"). Relevantly, that section provides that where the Tribunal finds that a respondent lawyer has engaged in professional misconduct, the Tribunal must make a cost order against that respondent lawyer, unless the Tribunal is satisfied that exceptional circumstances exist.
The expression "respondent lawyer" is not defined in the CAT Act. However, we were referred to s 303 of the Uniform Law, which now repeats the provisions of cl 23 (1) of CAT Act in relation to costs - except that it uses the term "lawyer" rather than "respondent lawyer". S 261 of the Uniform Law provides that where this term is used in the relevant chapter of the Uniform Law, it can refer to a former Australian legal practitioner. Thus we are satisfied that a costs order could be made against the Solicitor notwithstanding that he has ceased practising.
Ms Groenewegen submitted that as the Solicitor had derived no personal benefit from the actions of Berkeley Braham; had made good the deficits and had cooperated fully with Law Society at all times, this constituted "exceptional circumstances". She drew our attention to the decision in Council of the Law Society of New South Wales v Hinde [2011] NSWADT 20, where under a similar statutory provision then found in the LP Act, the Tribunal did not make a costs order against a solicitor although there had been a finding of professional misconduct against him as a result of the misapplication of trust monies. We note that in that case, not all of the three redeeming features identified in this case by Ms Groenewegen existed. We are satisfied that "exceptional circumstances" have been established in this instance.
[9]
Orders
Noting that the Respondent has complied with his undertaking that he cease practising from 1 July 2015, we order as follows:-
1. That the Respondent is guilty of professional misconduct
2. That the Respondent is reprimanded.
Instrument of Consent - 1520083 (528 KB, pdf)
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: 21 September 2015