These disciplinary proceedings were instituted on 28 November 2013 in the Administrative Decisions Tribunal by the Council of the Law Society ('the Law Society'). The Respondent is Mark Francis Gallego (hereafter 'the Solicitor').
The Civil and Administrative Tribunal ('the Tribunal') acquired jurisdiction over the proceedings on 1 January 2014, the day of its commencement. It has already published two decisions relating to them. In Council of the Law Society of New South Wales v Gallego [2014] NSWCATOD 102 ('the First Decision'), it held that the Solicitor had engaged in professional misconduct and in unsatisfactory professional conduct by virtue of certain of the matters alleged in the Law Society's application. In Council of the Law Society of New South Wales v Gallego (No 2) [2015] NSWCATOD 10 ('the Second Decision'), it made orders by way of penalty and a costs order against the Solicitor.
The necessity for a third decision arises on account of the following circumstances.
At all times until shortly before the publication of the Second Decision, the Tribunal constituted to hear and determine the proceedings comprised Principal Member Chesterman, Senior Member Riordan and General Member Bennett.
The hearing relating to the matters dealt with in the Second Decision took place on 3 December 2014. The Tribunal reserved its decision.
A draft of what was later published as the Second Decision, including the Tribunal's orders, was then prepared by Professor Chesterman and sent to Ms Riordan and Mr Bennett for their comments. On 7 February 2015, Mr Bennett stated in an email message to Professor Chesterman that he agreed to the making of the orders and the reasons for decision in the form proposed, subject only to the correction of a small number of typographical errors.
Sadly, Mr Bennett died on 11 February 2015. On 13 February 2015, being unaware of this, Ms Riordan sent a message to Professor Chesterman signifying her agreement to the draft decision. On 16 February 2015, being also unaware of Mr Bennett's death, Professor Chesterman sent the decision in final form to the Registry for publication and provision to the parties. It was published as the Second Decision on 23 February 2015.
As a result of the death of Mr Bennett on 11 February 2015, his office as a member of the Tribunal became vacant by operation of cl 7(1)(a) of Schedule 2 to the Civil and Administrative Tribunal Act 2013. It follows that at the time when the draft of the Second Decision was agreed to by Ms Riordan, as also at the time when this decision was published and provided to the parties and the orders in it were formally made, the Tribunal was not constituted as required by cl 4 of Schedule 2 to the Administrative Decisions Tribunal Act 1997 (as in force at 31 December 2013).
This clause appears to have been the applicable provision in the light of cll 7 and 13 of Schedule 1 to the Civil and Administrative Tribunal Act. For the purposes of cl 4 of Schedule 2 to the Administrative Decisions Tribunal Act, Mr Bennett had been the lay member referred to in cl 4(1)(b)(i). The conclusion that the Tribunal was not properly constituted after Mr Bennett's death would equally follow from cl 18(1)(b)(i) of Schedule 5 to the Civil and Administrative Tribunal Act, if that Act rather than the Administrative Decisions Tribunal Act were applicable.
On being advised of these unfortunate circumstances, the President directed the Divisional Registrar to relist the matter before him. At a hearing on 6 March 2015, at which both parties were represented, he ordered that the matter be stood over until 27 March 2015 for short submissions on the operation of s 52(1) of the Civil and Administrative Tribunal Act and on the question whether, and if so how, the Second Decision should be set aside.
Section 52 of the Civil and Administrative Tribunal Act states:
52 Reconstitution of Tribunal during proceedings
(1) The President may replace the member, or one of the members, constituting the Tribunal after the consideration of a matter by the Tribunal has commenced if, before the matter is determined, the member:
(a) becomes unavailable for any reason, or
(b) ceases to be a member, or
(c) ceases to have a qualification required for participation in the proceedings.
(2) The President may not replace a member unless the President has first:
(a) afforded the parties an opportunity to make submissions about the proposed replacement, and
(b) taken any such submissions into account.
(3) The Tribunal as so reconstituted is to have regard to the evidence, submissions and decisions in relation to the matter that were given or made before the Tribunal was reconstituted.
On 27 March 2015, having heard submissions by the parties, the President made orders by consent to the following effect: (a) the Second Decision, together with the orders giving effect to that decision, was set aside under cl 9(1)(a) of the Civil and Administrative Tribunal Regulation 2013; (b) for the purpose of determining what orders should now be made in the proceedings, the Tribunal was to be reconstituted by Principal Member Chesterman, Senior Member Riordan and General Member Hayes; and (c) the decision on this matter was reserved.
On 7 April 2015, the Tribunal, as so reconstituted, deliberated on the questions of penalty and costs that had been determined in the Second Decision. In so doing, it had regard to the materials described in s 52(3) of the Civil and Administrative Tribunal Act.
The Tribunal's conclusion on these questions is that the orders made in the Second Decision were correctly made, for the reasons given in that decision.
It is appropriate that in the present decision, which replaces the Second Decision, those orders and the supporting reasons (amended so as to take account of the events just outlined) should be restated. This is done in the ensuing paragraphs.
[2]
The subject matter of the present decision
This decision deals with two substantive matters: (1) what consequential order or orders should be made against the Solicitor under section 562 of the Legal Profession Act 2004 ('the Act') following the Tribunal's findings of professional misconduct and unsatisfactory professional conduct in the First Decision; and (2) whether, and if so in what terms, a costs order should be made against him under section 566 of the Act.
As already stated, these disciplinary proceedings were instituted on 28 November 2013. On 1 January 2014, the Administrative Decisions Tribunal was abolished and its functions were taken over by the Civil and Administrative Tribunal. The proceedings thereupon became 'unheard proceedings' as defined in clause 6(1) of Schedule 1 of the Civil and Administrative Tribunal Act. Clauses 7(1) and 7(3)(b) of this Schedule stipulate that such proceedings are to be heard by the Civil and Administrative Tribunal, but are to be determined as if that Act had not been enacted.
In his Reply, filed on 10 March 2014, the Solicitor denied, wholly or in part, two of the five Grounds of the Law Society's application and admitted the remaining three.
At a hearing on 8 May 2014, the Tribunal received evidence and submissions on the question whether the Law Society had established professional misconduct, or in the alternative unsatisfactory professional conduct, on each of these five Grounds.
In the First Decision, which was delivered on 19 September 2014, the Tribunal held the Respondent to have been guilty of professional misconduct on Grounds 1, 2, 3 and 5. It made a finding of unsatisfactory professional misconduct on Ground 4. The nature of these Grounds is explained below.
A further hearing on the questions of consequential orders and costs took place on 3 December 2014. As at the earlier hearing, Ms Groenewegen appeared for the Law Society and Ms Merkel of counsel for the Solicitor.
At the commencement of the later hearing, Ms Merkel applied for it to be adjourned, on the ground that due to health problems the Solicitor had not been able to obtain evidence on which he wished to rely. The Tribunal was shown medical reports as to the nature and scale of these problems. But on becoming aware that there was no major conflict between the parties on the principal question to be determined - that of the order or orders to be made by way of penalty under section 562 of the Act - it ruled that the hearing could proceed without any denial of procedural fairness to the Respondent.
The Law Society relied on the evidence that it had previously tendered. The Solicitor tendered a second affidavit dated 2 December 2014, on which he was briefly cross-examined, and copies of two letters sent to him on 26 November 2014 by the National Australia Bank.
Having heard submissions on penalty and on costs, the Tribunal reserved its decision.
[3]
The relevant conduct of the Solicitor
The Grounds of the Law Society's application and the Particulars accompanying them are set out in full in the First Decision, together with the Tribunal's findings relating to them. In the present context, the following aspects of them should be mentioned.
Grounds 1 to 3 and 5 were concerned in different ways with the failure by the Solicitor, over a period of more than three years between 2006 and 2009, to abide by restrictions attaching to his practising certificate. During this period, the certificates issued to him contained conditions to the effect that he could only practise as an employee or as a 'restricted/non principal'. But he in fact practised pursuant to arrangements whereby he was designated as a 'consultant' to a law practice. On occasions, he was the 'consultant' to two or more law practices concurrently. In addition, he signed and/or filed documents indicating or implying that he was the solicitor on the record for a party to legal proceedings, when this was not the case. He did this more than once even though (according to him) the other party or parties and their legal representatives were aware of the true situation.
It was for these reasons that the Tribunal found Ground 5 to have been established. This Ground was in the following terms: 'The Solicitor… [p]ractised outside the conditions of his practising certificate between 10 December 2004 and 1 July 2010.'
The Tribunal also found that Grounds 1, 2 and 3 were established. Each of them alleged that he prepared a document for use in legal proceedings which stated or implied that he was the solicitor on the record for a party to these proceedings, when in fact his status was that of an employed solicitor or a 'consultant'.
The Tribunal further found that the conduct to which these Grounds referred was professional misconduct. In so concluding, it attached weight to the fact that the Solicitor had, by his own admission, failed both (a) to take out professional insurance relating to his activities as a 'consultant' and (b) to take reasonable steps to ensure that the law practices by which he was engaged in this role had obtained insurance cover for him. At [75], it stated: 'His attitude to these important matters may fairly be described as cavalier.'
As explained at [71 - 75], the Tribunal based its finding of professional misconduct on three provisions of the Act. These were: (i) section 58(1), which prohibits the holder of a practising certificate from contravening a condition attaching to it; (ii) section 498(1)(a), which states that any contravention of the Act is 'capable of being unsatisfactory professional conduct or professional misconduct; and (iii) section 497(1)(a), which includes the following in the definition of professional misconduct:
(a) 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…
At [74 - 75], the Tribunal stated:
74 In our judgment, each instance of the Solicitor taking steps in legal proceedings… in circumstances where (at best) he was a 'consultant' of some kind to a legal practice and (at worst) no such consultancy arrangement existed must be viewed as, at least, an instance of unsatisfactory professional conduct…
75 The numerous such instances, occurring over more than three years, constitute a course of conduct that 'involves a substantial or consistent failure to reach or maintain a reasonable standard of competence' within the meaning of section 498(1)…
In the remaining Ground, Ground 4, it was alleged that the Solicitor 'attempted to mislead the Court of Appeal' in the following manner. In the course of a hearing during November 2011, he was questioned by judges of the Court as to whether he held an unrestricted principal practising certificate at the time (January 2009) when he filed a Notice of Appearance on behalf of a client implying that he did hold such a certificate. He gave the false and misleading answer that this was in fact the case.
At the hearing on 8 May 2014, Ms Groenewegen advised that the Law Society no longer claimed that the Solicitor intended to mislead the Court.
In the First Decision at [79 - 80], the Tribunal set out the following conclusions regarding Ground 4:
79 In our opinion, the Solicitor's behaviour on that occasion fell well short of appropriate professional standards. We make allowance for the fact that because he did not expect questions on this specific topic he was thrown into a state of confusion and might well have been unable to recall when indeed he did obtain an unrestricted principal certificate. But what he should have done was to admit that he could not immediately provide a correct answer to the Court's questions. Instead, he supplied answers that he should have known to be seriously misleading…
80 In our opinion, this behaviour manifestly did not meet 'the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner'. We find that it amounted to unsatisfactory professional conduct under section 496 of the Act…
[4]
The Solicitor's response to the Law Society's application
In his Reply, the Solicitor denied Ground 4. But after the Law Society indicated at the hearing that it withdrew its allegation of an intention to mislead the Court of Appeal, the position adopted by him did not differ significantly from that of the Society.
The Solicitor also denied Ground 5. His principal contention was that his engagement as a 'consultant' did not constitute a breach of the conditions attaching to his practising certificate. He also denied, or did not admit, allegations in the Particulars to Ground 5, to the effect that he had not been covered by professional indemnity insurance and that in acting for a particular client in legal proceedings he had assumed the role of solicitor on the record. He gave evidence and was cross-examined on each of these matters. The Tribunal's findings on each of them were in the Law Society's favour.
[5]
The Solicitor's evidence at the second hearing
The letters from the National Australia Bank that the Solicitor tendered were to the effect that the Bank had cancelled two credit cards held by him. The total of the debts owed on these cards was about $11,000.
In his affidavit sworn on 2 December 2014 and in oral evidence at this hearing, the Solicitor testified that he was in severely straitened financial circumstances, for the following reasons. He had been unemployed throughout 2014, despite having made many attempts to find unemployment. His only income was a New Start Allowance of about $658 per fortnight, which commenced during May 2014. He was owed substantial sums, including amounts totalling about $22,000 that he held in his trust account but was not permitted to withdraw. But he did not have the resources to seek recovery of them. If and when his claim of entitlement to them was successful, the net amount that would remain in his hands would only be about $11,000, because of his debt to the Bank. He had been compelled to withdraw money from a superannuation fund in order to pay his debts. He did not own a car or any real property. He had been ordered to vacate a unit that he rented because he had not been able to maintain his rent payments.
The Solicitor also testified that he suffered from chronic back pain and from depression.
This evidence was not challenged in cross-examination.
[6]
The Law Society's submissions on penalty
In her written and oral submissions, Ms Groenewegen placed emphasis on the following aspects of the Solicitor's conduct.
By purportedly acting as a 'consultant', he 'enjoyed the privileges of being a principal', but 'evaded' and 'shirked' the requirement to obtain insurance imposed on principals by section 406(1)(a) of the Act. His attitude to the question of insurance cover, which the Tribunal had characterised as 'cavalier', created a real risk that one or more of his clients would be denied recovery for losses caused by his conduct of their matters.
His contravention of the conditions attaching to his certificate constituted not only professional misconduct (as the Tribunal had found) but also a criminal offence, under section 58(1) of the Act.
The period of time during which this contravention occurred was more than five and a half years - from 10 December 2004 to 1 July 2010.
The Solicitor's conduct had the effect of diverting judicial officers away from their 'proper focus'. This was because they were obliged to determine the question of his status in the relevant proceedings.
When questioned by Beazley JA and Sackville AJA in the Court of Appeal in the manner outlined in Ground 4, he gave answers that he should have known to be seriously misleading. Their Honours were so dissatisfied with his response that they arranged for a complaint to be made to the Office of the Legal Services Commissioner.
Ms Groenewegen argued that in view particularly of these aspects of his conduct, there were reasons for believing that he did not fully appreciate 'the nature, extent and gravity of his wrongdoing'.
This was, she maintained, a case in which the Tribunal should 'grasp the opportunity to educate members of the profession by demonstrating its abhorrence of conduct comprising acting beyond the confines of a practising certificate and/or without binding insurance'. It should be mindful, however, that its jurisdiction in disciplinary proceedings is 'protective of the public, not punitive of the practitioner'.
In her written submissions, which were filed before the second hearing, Ms Groenewegen maintained that in order to fulfil this purpose the Tribunal should order by way of penalty that the Solicitor be reprimanded and that he pay a substantial fine. At the hearing, however, she submitted that in view of the evidence of his impecuniosity, which was not challenged, a fine might not be required and might indeed operate as a form of punishment.
[7]
The Solicitor's submissions on penalty
Ms Merkel did not dispute that the penalty of a reprimand was warranted in this case. She argued, however, that the Tribunal should not impose a fine, for the following reasons.
First, there was no finding that the Solicitor, when acting as a 'consultant', fell outside the scope of the insurance policies maintained by the various law practices which engaged him. In fact, no client had made a claim against him, but if one had been made, it was at least possible that he would have been covered.
Secondly, there was no finding of any fraudulent intent on his part. For this reason, Ms Groenewegen's use of terms such as 'evaded' and 'shirked' to describe his conduct was not justifiable. Because this would appear to be the first case in disciplinary proceedings in which it has been decided that a solicitor engaged as a 'consultant' should ensure that he or she has insurance cover, it was understandable that the Solicitor did not realise that this was required of him.
Thirdly, it was clear from the uncontested evidence as to his impecuniosity and, indeed, his physical and psychological disabilities that the impact of any fine imposed on him would be punitive.
[8]
The Tribunal's conclusions on penalty
The Tribunal is conscious of the fact that at the hearing on penalty, Ms Groenewegen acknowledged that the imposition of a fine might not be necessary so long as a reprimand (as to which both counsel agreed) was administered.
The main reason, however, why the Law Society has made this concession is the Solicitor's financial situation. Impecuniosity is undoubtedly a factor that should be taken into consideration when determining the amount of any fine imposed under section 562 of the Act. The Tribunal is not convinced, however, that in the circumstances of this case it should be treated as a ground for not imposing any fine at all.
The Tribunal's reasons are as follows. But for the Solicitor's impecuniosity, it would have little hesitation in deciding that his behaviour should attract a fine as well as a reprimand. This behaviour involved conduct, over a period of at least three years, that contravened restrictions on his practising certificate, took no account of a real risk that he lacked insurance cover and more than once conveyed to judges (if not also to opposing parties) a misleading impression as to the capacity in which he acted for parties to legal proceedings. Even at the first hearing of the present proceedings, he showed himself to be unwilling to acknowledge that when he entered into a 'consultancy' agreement with a law practice, the responsibility lay on him to make sure of two things: (a) that he was not in breach of any restriction currently attaching to his practising certificate; and (b) that he had insurance cover.
The Tribunal has decided that the Solicitor's impecuniosity provides a reason for fixing a fine at a much lower level than would otherwise be appropriate, but not for deciding that there should be no fine at all.
Its orders by way of penalty are that the Solicitor be reprimanded and that he pay a fine of $1,000.
[9]
The costs of the proceedings
As indicated above, the orders sought by the Law Society included an order that the Solicitor pay its costs of the proceedings. At the second hearing, the Tribunal was advised that the parties had agreed the costs at $12,000.
According to the law to be applied to these proceedings (as to which, see [17] above), the governing provision (now repealed) is section 566 of the Act. Subsections (1) and (6) of this section state:
(1) The Tribunal must make orders requiring an Australian legal practitioner 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.
(6) The Tribunal may fix the amount of costs itself or order that the amount of costs be assessed by a costs assessor under Part 3.2.
In her written submissions, Ms Groenewegen maintained that there was no material before the Tribunal that would support a finding of 'exceptional circumstances' under subsection (1). She cited Council of the New South Wales Bar Association v Miller (No 2) [2012] NSWADT 129 (at [44]) as authority for the proposition that 'not even bankruptcy alone will constitute exceptional circumstances'.
At the second hearing, however, she suggested that while 'mere impecuniosity' would not amount to exceptional circumstances, a costs order should not be made where this would prevent financial rehabilitation by the respondent practitioner.
Ms Merkel argued that the following factors constituted 'exceptional circumstances': (a) the Solicitor was impecunious; (b) he lacked any capacity to pay costs; (c) he was in an age group where re-instatement in employment is difficult; (d) in the two matters (described in the Law Society's application) where his representation of clients had been called into question, costs had been awarded against him personally; (e) he had serious physical and psychological disabilities; and (f) a lengthy hearing had not been required in this case.
Ms Merkel relied on the decision of the Administrative Decisions Tribunal in Council of the Law Society of New South Wales v Hinde [2011] NSWADT 20. In that case, the Tribunal, having recorded a finding of professional misconduct against the respondent solicitor, went on to rule that by virtue of 'exceptional circumstances', he should not be ordered to pay the Law Society's costs. It based this ruling principally on his poor financial circumstances of the respondent solicitor and on the fact that he was 82 years of age. It summarised its reasons as follows, at [32 - 33]:
32 The features of this case that support a finding of 'exceptional circumstances' are… the advanced age of the Respondent and his straitened financial situation. The relevant aspects of his financial situation are these: (a) he has a very small regular income, taking the form of a state pension; (b) he has no assets of significant value; (c) due in particular to his age, he has no significant prospect of obtaining gainful employment; and (d) any costs order against him could only be satisfied by small instalment payments commencing on a future date and lasting over a significant period of time.
33 In the context of disciplinary proceedings such as these, we are satisfied that these constitute 'exceptional circumstances'. They fall within the phrase 'out of the ordinary course, or unusual, or special, or uncommon', used in R v Kelly (Edward) [2000] QB 198 at 208 and adopted by the Queensland Legal Practice Tribunal in Legal Services Commissioner v Scott (No 2) [2009] QLPT 9 at [19]. The hearing of disciplinary proceedings against a legal practitioner who is both as far past the normal age of retirement and as impoverished as the Respondent is indeed a most unusual phenomenon.
In considering these submissions, the Tribunal takes account of a later decision of the Administrative Decisions Tribunal that was not mentioned in the parties' submissions. In Council of the Law Society of New South Wales v Webb (No 2) [2012] NSWADT 212, the Tribunal held that an order for payment of only 50% of the Law Society's costs was justified in the light of 'exceptional circumstances'. At [52], it outlined these as follows:
52… The trial was longer than it need have been; the Solicitor remains liable to pay a very substantial sum towards the costs of the investigation of his practice; his financial circumstances are relatively poor…
The Tribunal has decided that this is also a case in which 'exceptional circumstances' exist, but only to the extent of providing partial relief from liability for costs.
In so deciding, it takes account of the following matters. The degree to which the Solicitor is impoverished is comparable to that of the respondent in Hinde. His prospects of re-employment, at least in the immediate term, are low and they might be reduced if he is ordered to make a significant payment on account of costs. He raised relatively little opposition to the case brought by the Law Society, though the opposition that he did raise inevitably contributed to the scale of the costs incurred by the Society.
The Tribunal's order is that he is to pay the Law Society's costs in the amount of $2,000.
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
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Decision last updated: 24 April 2015