Council of the Law Society of New South Wales v Haseldine

NCAT Occupational|2018-02-22

ddigan (Applicant) CJ Haseldine (Respondent in person)

Solicitors: Law Society of New South Wales (Applicant) C J Haseldine Solicitor (Respondent) File Number(s): 2015/00383906, 1520225

Introduction

On 31 October 2017 we delivered reasons for decision in Council of the Law Society of New South Wales v Haseldine [2017] NSWCATOD 156 (Haseldine No 1). We found that the solicitor, who was executor of the estate of Niobe Rideout Belletty, was guilty of professional misconduct for breaches of fiduciary duty upon paying to himself executor's commission when he had neither filed nor passed accounts nor obtained the informed consent of beneficiaries to the Will of the deceased dated 10 December 2010 (the Will). We determined that two further grounds alleged by the Council in its application in the proceedings, namely breach of s 255 of the Legal Profession Act 2004 (NSW) (LPA) and misappropriation of trust money were not established.

Jurisdiction

Pursuant to Schedule 4, clause 26(1) and (2) of the Legal Profession Uniform Law (NSW) No 16a (LPUL), although these reasons are being published after 1 July 2015, the legal principles to be applied are those in force before the commencement of the LPUL.

Further procedural history of the matter

On 22 February 2018, we conducted a second hearing to determine in light of our findings in Haseldine No 1 what orders should appropriately be made under s 562 of the LPA and on the question of costs.
Pursuant to directions made at the conclusion of the first hearing Mr Haseldine filed an affidavit affirmed 16 November 2017 together with an exhibit thereto. The affidavit was read and admitted into evidence without objection. Mr Haseldine also tendered letters of character reference addressed to the Tribunal from Peter Doyle of counsel dated 18 November 2017 and Allan Stockman solicitor dated 16 November 2017 which were admitted into evidence without objection. Mr Haseldine filed and served written submissions on 17 November 2017. The Council filed and served written submissions on 8 December 2017.
Although the Council did not seek to cross-examine Mr Haseldine on his affidavit we considered it appropriate in light of the Tribunal's findings to offer Mr Haseldine the opportunity to give further evidence on oath if he wished as to his insight into the wrongfulness of his conduct and contrition. The Council in its submissions had put both matters in issue in light of the contents of letters written to the beneficiaries by Mr Haseldine after the first hearing to which we shall refer. Mr Haseldine gave oral evidence on oath.
At the conclusion of that evidence and oral submissions by the parties we reserved our decision.

Mr Haseldine's response to the Council's application in Haseldine No 1

In Haseldine No 1, Mr Haseldine did not dispute the factual matters particularised in the application. He admitted debiting the sum of $11,000 from the estate trust ledger and transferring it to his general office account. He admitted that prior to making the transfer he did not: 1. obtain the direction or authority from the beneficiaries to withdraw $11,000 from the trust account; 2. obtain the informed consent of all or any of the beneficiaries to the passing of accounts; 3. file or pass accounts or make application for the payment of commission to the Court pursuant to s 86 of the Probate and Administration Act 1898 (NSW) (PAA); or 4. obtain an order of the Court pursuant to s 86 of the PAA authorising him to receive commission in a sum either approved by or nominated by the Court.
Mr Haseldine's position was that clause 10 of the Will provided authority for the debiting of the estate trust ledger on account of executor's commission and paying it into his general account. In the alternative he submitted that the payment was authorised by the beneficiaries retrospectively.
Mr Haseldine denied the alleged breach of s 255 and misappropriation. We concluded that those grounds were not made out.
In the course of the initial investigation Mr Haseldine gave a written undertaking to the Council to refund any moneys ultimately found to have been paid to him without authority.

Findings of Conduct

The relevant findings of conduct in Haseldine No 1 were helpfully summarised by the Council in its written submissions: 13. The Tribunal found ground 1 of the Application - being that the Respondent had breached his fiduciary duty in that he paid himself executor's commission when he had neither filed nor passed accounts, nor obtained the informed consent of the beneficiaries - was established, and made findings of professional misconduct both under s. 497(1)(b) LPA and at common law. Grounds 2 (breach of s.255 LPA) and 3 (misappropriation of trust monies) were not established. 14. In holding that ground 1 was established, the Tribunal made the following findings: (a) the transfer of moneys from trust to office for the commission payment to the Respondent was not authorised by clause 10 of the Will as, on its proper construction, clause 10 in the Will drafted by the Respondent merely entitled him to claim commission, and did not authorise him to calculate it on his own account and pay it; (b) not all sui juris beneficiaries consented retrospectively to the commission payment to the Respondent; (c) in order to exercise free choice in the consideration of the request for their consent, the beneficiaries would require information in the nature of that identified by the Society; (d) there was no evidence that the Respondent had regard to any of the matters identified by Lindsay J in Re Estate Gowing; Application for Executor's Commission [2014] NSWSC 247 when assessing the amount of commission, nor was there evidence that the Respondent undertook a detailed assessment of what was just and reasonable having regard to the pains and trouble which he says were involved in the administration of the estate; (e) the Respondent did not inform the beneficiaries of an appropriate legal basis for the calculation of his claim for commission, and did not inform them of the matters set out in paragraph 25(c) of the Application; and (f) such consent as was given by the beneficiaries was not informed in the respects detailed by the Society and was therefore ineffective. 15. In holding that the Respondent's conduct constituted professional misconduct, the Tribunal made the following findings: (a) the Respondent's conduct occurred "otherwise than in connection with the practice of law" for the purposes of s. 497(1)(b) LPA; (b) the finding made concerning the unauthorised payment of commission by the Respondent to himself was a grave matter, and was a serious breach; (c) the Respondent as a fiduciary failed to discharge his general obligation to fully inform the beneficiaries of the basis and calculation of his claim for commission when seeking approval, and was a serious breach; (d) at Judgment [217]: There is no issue in these proceedings that the conduct concerned dishonesty. However, in our view, the breaches of fiduciary duty which we have found directly reflect upon Mr Haseldine's ability to competently construe a commission clause or give accurate and relevant information to beneficiaries for the purpose of obtaining consent. He has received a benefit in the form of the commission payment without authority in breach of the trust under the Will. This conduct incorporating as it does skills of interpretation and understanding of and discharging fiduciary duties for the protection of beneficiaries goes to the heart of his competence and fitness to practice law. In our view the fiduciary breaches which we have found do not reflect an acceptance by Mr Haseldine of high standards of conduct and acting in accordance with them. (e) the breaches of fiduciary duty warranted a conclusion as to the Respondent's general behaviour or inherent qualities as, although not occurring in connection with the practice of law in the circumstances in which they occurred, are otherwise of central importance to legal practice; (f) the established conduct justified a finding that the Respondent "… is not a fit and proper person to engage in legal practice within the meaning of s. 497(l)(h) and is guilty of professional misconduct..."; and (g) in relation to the finding of professional misconduct at common law, the Tribunal stated: In our view the fiduciary breaches which we have found manifest the absence of qualities which are essential for the conduct of legal practice. We find that the failure to maintain the integrity of the estate funds of which he was trustee in the circumstances in which it occurred while not dishonest amounted to impropriety affecting his personal character and was indicative of a failure to understand and practise the precepts of honesty and fair dealing in relation to the beneficiaries. The same finding is made in respect of Mr Haseldine's failure to elicit the beneficiaries' informed consent. We are satisfied and find that his conduct in the circumstances identified would be reasonably regarded as disgraceful and dishonourable by his professional brethren of good repute and competency and that there should be a finding of professional misconduct at common law.

The evidence of Mr Haseldine

Mr Haseldine's affidavit evidence exhibited copies of letters dated 9 November 2017 forwarded by him by prepaid post to the surviving beneficiaries named in the Will enclosing cheques payable to each beneficiary. The cheques were drawn on the law practice's general office account and comprised proportional amounts calculated by reference to each beneficiaries' share in the residue which when added together constituted a complete refund of the moneys claimed by Mr Haseldine for commission in the sum of $11,002.20. In each of the letters other than that to Mrs Deanna Smith, Mr Haseldine stated: "I note that the costs I charged the estate for acting in a professional capacity have not been the subject of challenge nor has issue been taken with the actual amount of the commission I claimed. Notwithstanding the precise wording of the will, it has been determined that the writer ought to have passed accounts and that the writer's letter to you pursuant to which you gave your consent to commission, did not provide you with sufficient information to allow you to make 'an informed decision' when you gave your consent. In short, it has been determined that the writer ought not to have paid himself commission regardless of your consent."
In the letter to Mrs Smith, Mr Haseldine stated: "I note that the costs I charged the estate for acting in a professional capacity have not been the subject of challenge nor has issue been taken with the actual amount of the commission I claimed. Notwithstanding the precise wording of the will, it has been determined that the writer ought to have passed accounts and that the writer's letter to you did not provide you with sufficient information to allow you to make 'an informed decision'. In short it has been determined that the writer ought not to have paid himself commission regardless of the consents of the other beneficiaries and you declining to take other action."
Mr Haseldine was not required for cross-examination. The Council had submitted that the contents of the letters and submissions made by Mr Haseldine did not demonstrate a change of attitude or insight into the wrongfulness of his conduct in light of the Tribunal's findings.
As we have indicated, we were concerned that Mr Haseldine have an opportunity to give evidence on oath concerning those matters if he so wished. Mr Haseldine was sworn and gave oral evidence in answer to questions from the Tribunal. He referred to his affidavit and the fact that he had made full refund to all beneficiaries without being asked to do so. He said that two cheques had yet to be presented and that he had ensured there was money in his general office account to cover those cheques although he was yet to contact the payees.
Mr Haseldine said that he had been involved in hundreds of hearings on penalty in various matters and was aware of the importance of contrition. He gave evidence that he was most embarrassed by the events which had occurred. He said that he was a solicitor of 51 years standing without blemish. He said that he was very sorry about the whole affair. Mr Haseldine said that he had taken the Tribunal's decision to heart and lost more than twelve kilograms in weight over the last twelve months. He said that very few of his acquaintances knew about the proceedings because of his embarrassment. He said that he understood the ramifications of his conduct. He said that he had attempted to resolve the matter of the payment of commission with the beneficiaries by the letters which he had sent.
Mr Haseldine said that he still practised in estate law and children's law as a sole practitioner but had made a point of not continuing the operation of his trust account. He has no staff.
Mr Haseldine was asked by the Tribunal whether he understood the Tribunal's finding in Haseldine No 1 that in the absence of a clause in a Will expressly providing for an entitlement to and means of calculation of commission no claim for commission could be made other than by passing accounts or obtaining the informed consent of all beneficiaries. He said that he did.
In his letter to beneficiaries Mr Haseldine had said: "As I indicated in earlier correspondence, it seems that the range of commission is between one and two percent of the gross value of the estate. The amount I claimed was a little less than one percent."
Mr Haseldine was asked whether he was aware that the calculation of commission by reference to the gross value of an estate was not an accurate statement of an executor's entitlement. He said that he was. The Council did not ask any questions of Mr Haseldine in cross-examination. We accept Mr Haseldine's evidence which was given frankly in its terms. There is no proper basis to doubt it.
There were also in evidence the character references to which we have referred.
Mr Stockman practises as a solicitor at Warren & Warren in Bankstown. He was admitted to practice on 24 November 1967. He conducted practice in partnership with Mr L R Evans until the latter's retirement in 1978. Before that he worked as an employed solicitor and sole practitioner in the Bankstown area. His letter states that since his admission he has had considerable professional and other contact Mr Haseldine. He was aware of the proceedings taken by the Council against Mr Haseldine since they were commenced and had read the Tribunal's decision.
Mr Stockman stated that over the past 50 years he has acted in many litigious and other matters in which Mr Haseldine has acted for another party. He said that they had both conducted advocacy practices particularly the Local Court and before that the Court of Petty Sessions, the Family Court and other New South Wales courts. Mr Stockman had also been active in the affairs of the Bankstown Regional Law Society from its inception until recently. Mr Stockman said that in his dealings with him, Mr Haseldine had always pursued his clients' best interests in a manner which was not only courteous but professional. Mr Stockman has never had any reason to doubt the honesty and integrity of Mr Haseldine and he cannot recall any other practitioner questioning Mr Haseldine's honesty and integrity. He said that he was surprised that Mr Haseldine's conduct had been found wanting. In his view Mr Haseldine is a fit and proper person to hold an unrestricted practising certificate.
Mr Doyle is a member of the New South Wales Bar. He had read the decision of the Tribunal and spoken with Mr Haseldine about it. He has known Mr Haseldine since the age of ten. His father was a friend of Mr Haseldine and the families met up socially. Mr Haseldine and his wife were present at Mr Doyle's wedding and Mr Haseldine has acted for Mr Doyle and his wife in some conveyancing matters.
Professionally, Mr Doyle had been instructed as counsel by Mr Haseldine in a number of matters. When Mr Doyle's wife commenced her own legal practice, he was aware that Mr Haseldine had been generous with his time in providing advice to Mrs Doyle in different areas of practice.
Mr Doyle said that he was aware that Mr Haseldine had served the community by joining Rotary Australia and that he had been a member of the Rotary Club at Bankstown for many years.
Mr Doyle said that he had never had any concern about the integrity of Mr Haseldine in the conduct of either his personal life or professionally. He said that he was aware that Mr Haseldine had acted in a manner that he believed he was entitled to and that he was in error in this belief. Mr Haseldine has informed him that he had made full restitution to the beneficiaries.
Mr Doyle is aware that Mr Haseldine has sold his practice and now practises predominately in children's law. He is semi-retired and practises from home. The area of children's law in which he practises is in the Care jurisdiction where the Court tries to find the best solution for children the subject of proceedings. Mr Doyle is aware that fees paid to lawyers who practice in the area are by way of grants of legal aid and at rates substantially lower than what a lawyer would charge when acting privately. He said that Mr Haseldine has substantial experience in this area of law and can also draw upon his vast experience in practising in the area of family law throughout his career. He said that he has no doubt that the experience which Mr Haseldine brought to this area of law would assist the Children's Court in coming to outcomes which would benefit children the subject of its orders.
Mr Doyle said that he was not aware of any adverse findings involving Mr Haseldine in disciplinary matters. His personal opinion of Mr Haseldine has not changed. He remains of the opinion that Mr Haseldine is a fit and proper person to hold a local practising certificate.
In his written submissions Mr Haseldine set out some personal information to which we have also had regard.
Mr Haseldine was born in 1944 and was admitted to practice in New South Wales as a solicitor on 10 February 1967 after less than five years as an articled clerk.
In 1967 he assumed management of a practice at Padstow with full responsibility for all aspects including management of the trust account. He acquired the practice in January 1970 since which time he has been in practice on his own account or in partnership. He disposed of the practice which he was then conducting at Bankstown under the name of Milford, Haseldine & Williams approximately two and a half years ago and has continued to practice under his own name from home in semi-retirement.
Mr Haseldine is on panels maintained by Legal Aid New South Wales for family law, criminal law, general civil law, child care and protection matters and domestic violence. Before being admitted to the panels, Legal Aid requires that a candidate has demonstrated professional competency in the relevant area.
In the area of domestic violence, Mr Haseldine attends Local Courts at Parramatta and Blacktown on a duty or sessional basis. He provides general advice to people on whose behalf the Police have issued applications for apprehended violence orders and whose cases are listed before the Court that day. In semi-retirement nearly all of Mr Haseldine's income is derived from one or other of the panels to which reference has been made.
Mr Haseldine has been a Local Court arbitrator since 1986. He was one of the first civil claims arbitrators to be appointed. He has heard cases from Bankstown and Burwood Local Courts.
For some years, Mr Haseldine's former partner and he conducted a weekly free legal advisory service for the Indo-China Refugee Association at Bankstown which continued until the Association had to make scheduling changes.
In around 1970 the Law Society of New South Wales commenced its own legal aid scheme in the Central Court of Petty Sessions at Liverpool Street and the Children's Courts at Minda, Yassmar and Lidcombe. Mr Haseldine participated in all those courts for some years. Mr Haseldine was a member of Bankstown Rotary Club, twice serving as president, twice as secretary and various terms as a director. He is now a member of Strathfield Rotary Club. He has been a member of Rotary Australia for over 43 years.

General principles concerning the making of orders under s 562 LPA

As the Council has submitted it is well established that disciplinary proceedings are concerned with the protection of the public. The Tribunal's role is aimed at protecting clients and members of the public from harm that could be caused by dishonest, incompetent or non-diligent legal practitioners. It is not punitive. The disciplinary jurisdiction is directed to ensuring the maintenance of high standards within the profession; Council of the Law Society of NSW v Weller [2017] NSWCATOD 38 at [40].
The extent of the protective duty was explained by Beazley JA in Law Society of New South Wales v Walsh [1997] NSWCA 185 at [40]: "40. 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"; see also NSW Bar Association v Meakes [2006] NSWCA 340 per Basten JA at [114].
The orders which might be made by the Tribunal are set out in s 562 LPA and include orders that: 1. The Respondent's name be removed from the Roll; 2. The Respondent's practising certificate be suspended for a specified period or cancelled; 3. The Respondent be reprimanded; and/or 4. The Respondent pay a fine.
Basten JA said in Meakes at [113]: "… no order should be made which has more serious consequences for the practitioner than is reasonably necessary in execution of the protective purpose."
As the Council has submitted the principles which guide the Tribunal in determining whether a respondent's name should be removed from the Roll were summarised by Beazley JA in Walsh at [43], namely: "(a) The Tribunal's power is discretionary; (b) Subject to considerations which would compel the Tribunal to impose a lesser penalty the protective nature of the jurisdiction calls for the removal of a practitioner's name from the Roll where the practitioner has been found to be not of good fame and character; (c) The subjective considerations which might compel a different course are ones which themselves are relevant to and enhance the essential nature of the Court's jurisdiction, which is the protection of the public. An example is where the legal practitioner has reported the subject conduct to the Law Society or Bar Association. The relevance of mitigating conduct of that type is that it encourages practitioners guilty of misconduct promptly to report it; (d) In general mitigating factors such as evidence of a respected reputation, no previously found misconduct, or service to the profession "are of considerably less significance than in the criminal sentencing process"; Law Society of New South Wales v Bannister (1993) 4 LPDR 24 at [13]."
The ultimate issue where 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 upon whose Roll the practitioner's name appears; A Solicitor v Law Society of New South Wales (2004) 2016 CLR 253 at [15]; Prothonotary v Gregory [2017] NSWCA 101 at [6] - [7]; Council of the Law Society of New South Wales v Kim [2017] NSWCA 292 at [4].
The Tribunal might also take into account the persistence with which the conduct has been pursued and the degree of candour displayed by the practitioner in the course of the disciplinary hearing; Legal Services Commissioner v Baker [2006] QCA 145 at [46]; Prothonotary v Gregory [2017] NSWCA 101 at [29]. As the Council submitted, the Tribunal should not make an order for removal unless persuaded that the probability is that the practitioner is permanently unfit for practice. Unless so persuaded the proper order is usually one of suspension or fine instead of removal; New South Wales Bar Association v Cummins (2001) 52 NSWLR 279 at [26] per Spigelman CJ, Stanoevski v Council of the Law Society of New South Wales [2008] NSWCA 93. The question for the Tribunal is present fitness, that is, whether it is satisfied at the time of hearing that the practitioner is a person who may be properly held out to the public as a fit and proper person to be entrusted with the duties and responsibilities of a solicitor; Prothonotary v Del Castillo [2001] NSWCA 75 at [71].
Conduct which if established would justify a finding that the practitioner is not a fit and proper person to engage in legal practice within the meaning of s 497(1)(b) of the LPA and the finding made in Haseldine No 1 at [220] is to be understood as the classification of the conduct according to the importance of the standard and seriousness of the breach rather than a prediction as to the actual order a Tribunal would be likely to make; see The Council Of The New South Wales Bar Association v Sahade [2007] NSWCA 145 per Basten JA at [70]. It is open to the Tribunal to revise its view as to the question of fitness following a stage 2 hearing; Sahade at [88]. The Tribunal anticipated that the question of fitness would be considered in the context of appropriate orders at the time of the second hearing; Haseldine No 1 at [222].

Submissions of the Council

The original complaint notified to Mr Haseldine by the Council in its letter of 7 May 2015 identified grounds of professional misconduct being the payment to himself of executor's commission when he had neither filed nor passed accounts nor obtained the consent of beneficiaries and conduct in breach of s 255 of the LPA. The orders sought were that Mr Haseldine be reprimanded, pay a fine and costs. The complaint was amended by the Council's letter to Mr Haseldine dated 25 June 2015 to include a count of misappropriation of trust moneys. The orders sought were also amended to include an order that Mr Haseldine's name be removed from the Roll. As we have indicated we determined that the grounds of breach of s 255 and misappropriation were not made out.
In its written submissions the Council raised concern as to whether Mr Haseldine had, by his evidence and submissions, demonstrated a change of attitude or insight into the wrongfulness of his conduct in light of the Tribunal's findings in Haseldine No 1. It referred to submissions by which Mr Haseldine attempted to justify his conduct, canvassed matters the subject of findings by the Tribunal and suggested that the proceedings were commenced unnecessarily by the Society. Having heard Mr Haseldine's oral evidence on oath, Council did not press that submission.
The Council submitted that notwithstanding the Tribunal's findings which might on one view be capable of supporting an order for removal of Mr Haseldine's name from the Roll the Tribunal might consider it more appropriate in light of there having only been a finding on ground 1 of the complaint to order that: 1. The Respondent be reprimanded; 2. The Respondent to pay a substantial fine; 3. The Respondent to pay the Society's costs.
The Council submitted that the Tribunal's power to make orders under s 562 of the LPA is not restricted by the orders sought and that the Tribunal might impose in its discretion a fine of not exceeding $75,000 in the case of professional misconduct. It submitted that the seriousness by which the Tribunal viewed the Respondent's conduct will impact upon the quantum of the fine.
In the Council's submission the purpose for imposing the quantum of a fine is to mark the Tribunal's disapproval of the Respondent's conduct; Walsh at [40] per Beazley JA; Law Society of New South Wales v Shad [2002] NSWADT 236 at [70]. It said that although the jurisdiction of the Tribunal in disciplinary matters was exercised to protect the public and not to punish the legal practitioner the object of protection included deterring the legal practitioner in question from repeating the misconduct and deterring other practitioners who might be tempted to fall short of the high standards required of them. It said that an element in deterrence is an assurance to the public that serious lapses in the conduct of legal practitioners will not be passed over or lightly put aside but will be appropriately dealt with; Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at p 470 per Giles A-JA; Legal Services Commission v Anderson [2015] NSWCATOD 56 at [21] and Council of the NSW Law Society v Vaughan [2015] NSWCATOD 156 at [143] - [144].
By way of assistance in the assessment of the quantum of any fine the Council referred us to decisions in which fines were imposed on legal practitioners found to have engaged in similar conduct.
The decision of the Administrative Decisions Tribunal in the Council of the Law Society of New South Wales v Butt [2012] NSWADT 47 concerned complaints that Mr Butt had: 1. Deposited a cheque in the amount of $650,040.62 into his trust account without the authority of the payee, the Estate of the Late Eva Michelle Anderson; 2. Disbursed funds from his trust account without the authority by the entity entitled to the funds, the Estate of the Late Eva Michelle Anderson.
The Tribunal made orders that Mr Butt be reprimanded, that he be fined $5,000 and that he pay the Society's costs as agreed or assessed in accordance with an instrument of consent filed by the parties.
The Tribunal took into account Mr Butt's evidence that he was confused as to the decision and intention of the superannuation trustee in sending the cheque and the issue of the consequences of the superannuation payment not being available to meet claims of creditors of the insolvent estate. It also took into account his acknowledgement that he had no authority to negotiate the cheque and statement that he had arranged a personal loan in order to repay the sum to the estate.
The Council referred us to the statement of the Tribunal in Butt at [25] - [26] where it said: "25. The respondent has practised as a solicitor for about 38 years and so far as we are aware there have been no previous disciplinary proceedings against him. Based on that and the extensive evidence of good character, the subject conduct is out of character for him. 26. The Respondent is genuinely contrite. We accept that the Respondent's conduct was not motivated by any fraudulent intent or personal gain and he did not make any significant personal gain from acting in the matter. We accept he made an honest error and has now paid the whole of the funds to the estate at considerable cost to him."
In contrast to the decision in Butt the Council submitted that in the present proceedings the Tribunal had made significant adverse findings including as to Mr Haseldine's fitness to practice. The Society submitted that the quantum of any fine should be substantial.
The Council referred us to the decision in the Law Society of NSW v Shehadie (No 2) [2016] NSWCATOD 151 where a fine of $25,000 was imposed along with the cancellation of Mr Shehadie's practising certificate for 12 months.
Mr Shehadie was admitted in 1978 and became sole principal of his legal practice in 1989 and practised in conveyancing and mortgage lending. Four charges were laid by the Law Society in relation to the handling of moneys in connection with conveyancing and mortgage transactions. The first three of these concerned statutory breaches of the LPA. Mr Shehadie admitted that he had acted as a solicitor in respect of a regulated mortgage in breach of s 479(1) of the LPA. He admitted that in breach of clause 6 of Schedule 8 to the LPA he had failed in his obligation to give written notice to a client of the fidelity insurance risk she might face if she entrusted money to him. He admitted that he had failed to hold trust money in the general trust account of the practice and that he disbursed the trust money without a direction from the person on whose behalf it was received in breach of s 255 of the LPA. The fourth charge related to an allegation of misappropriation which was contested. Mr Shehadie admitted the factual particulars but denied that he had behaved dishonestly. The Tribunal found that his conduct amounted to misappropriation at least to the extent that it would be seen by reasonably minded objective observers as dishonest; Shehadie (No 2) at [3] - [8].
The Tribunal took into account that until the occurrence of the events under notice in the proceedings Mr Shehadie had an unblemished career but was concerned that he had taken only limited steps to address the problems identified by his behaviour and expressed concern about Mr Shehadie's level of insight into his conduct.
The Council further referred us to the decision in the Vaughan where a fine of $20,000 was imposed in respect of conduct including breaches of basic fiduciary obligations of a solicitor to his client relating to complaints of borrowing from a client and breach of s 255 of the LPA.
The Council lastly referred us to the decision in Russo v Legal Services Commissioner [2016] NSWCA 306 where a fine of $20,000 was ordered on appeal upon findings that Mr Russo's misconduct involved "obvious deficiencies in his application of trust moneys (and the failure to recognise that moneys paid for Counsel's fees were properly to be granted as trust moneys) …" which "… was exacerbated by the high handed and dismissive manner in which Mr Russo responded to queries made on behalf of the client" and was a case of serious professional misconduct; at [81] - [83].
The Council also referred us to the individual history report maintained by the Council in respect of Mr Haseldine which was in evidence. Excepting the decision in Haseldine No 1 in the period since his admission to practice in February 1967 Mr Haseldine has had no complaint or conduct finding made against him.

Respondent's submissions

Mr Haseldine summarised in his written submissions the circumstances surrounding the conduct in question and other matters which he asked the Tribunal to take into account. He addressed some matters which were not relevant to the consideration of appropriate orders or were otherwise unsupported by any evidence or findings in Haseldine No 1. These matters included whether in determining not to make immediate restitution of the commission payment in response to the initial complaint Mr Haseldine took into account the position taken by the Council in respect of another protocol recommended for transferring money from a trust account later shown to be incorrect at law. This he submitted indicated that the Council was not infallible. The matters also included whether other practitioners would regard Mr Haseldine's error as deserving of a penalty. We have not taken these matters into account.
We have considered the following matters the subject of written submissions by Mr Haseldine: 1. When asked to act as executor by the testatrix Mr Haseldine was conscious of the possibility of a conflict of interest, provided a draft of the Will and when confirmed he arranged for solicitors to advise the testatrix of the Will and to act as witnesses. 2. In drafting clause of the Will used the words "entitled" in what he said was the plain and ordinary meaning of that word, namely to "… give (a person etc) a rightful claim (to a thing, to do)…". 3. It was his understanding of the use of the word "entitled" that no further formality would be required other than to justify the quantum as being reasonable according to the wording of the clause. 4. The cases referred to in the first Reasons for Decision in Mr Haseldine's submission suggests a common range of commission between one and two percent of the gross value of the estate. 5. His claim was a little under one percent calculated on that basis and the reasonableness of his claim was not in issue. 6. He was not aware of s 86A of the PAA in specific terms although he was aware in general terms of the relevant provisions of that Act. Even if he had been aware of the section he submitted that his construction of clause 10 required nothing further to justify his claim. 7. His trust account records were not impugned and there was no attempt by him to obscure relevant facts. He co-operated fully with the Applicant's auditor. 8. In his words Mr Haseldine was appalled at the suggestion that he had failed to comply with the relevant requirements and believed that he had done so. 9. He wrote to the Applicant confirming that if he was determined to be in error he would make refunds of appropriate sums to the beneficiaries. The evidence in this hearing was that he has done so. 10. He accepted that the Tribunal has determined that the letters which he forwarded to beneficiaries did not provide sufficient information to allow them to make an informed decision about his claim for commission. He identified the considerations to which he said he had regard in drafting the letter to beneficiaries. 11. Having regard to the matters which he had undertaken as executor in the administration of the estate he received an amount of commission to which he would have been entitled had he followed what he now knows to have been the correct procedure. 12. He appreciated that there was a great deal of information he could have provided to the beneficiaries although in the written submissions he said that he was at a loss as to what additional useful information he could have provided to allow the beneficiaries to make an informed decisions. 13. Although his letters to beneficiaries were inadequate they at least put each beneficiary on notice of the claim for commission, provided a certain amount of information and put each beneficiary on notice of the financial effect his claim would have on the beneficiaries' legacy under the Will. 14. In over 50 years in practice this was his only experience of a complaint. He acknowledged his misunderstanding of the relevant law. He noted that in another estate administration he advised the client who was executor to obtain consent of the beneficiaries before payment of the commission.
As the Council had submitted some of these written submissions appeared to seek to justify Mr Haseldine's conduct or canvass matters the subject of findings by the Tribunal. It raised in its written submissions, but did not press after hearing Mr Haseldine's oral evidence, its concerns that Mr Haseldine's submissions did not demonstrate a change of attitude or insight into the wrongfulness of his conduct. Mr Haseldine's written submissions were filed before hearing. We have considered them in light of the evidence which he gave on oath and his oral submissions at hearing.
In oral submissions, Mr Haseldine said that his conduct was clearly in error but undertaken in good faith. He said that the error came about as a result of a mistaken but honest belief as to his entitlement to pay commission based upon his construction of clause 10 of the Will. He conceded that he had failed to fully inform the beneficiaries when seeking to obtain their consent to the retrospective payment of the commission. He said that he regretted both matters. He submitted that his conduct indicated bona fide attempts to comply with the requirements and that his error had been rectified immediately upon publication of Haseldine No 1 in accordance with the undertaking given to the Council before commencement of the proceedings.
Mr Haseldine also asked the Tribunal to take into account the mental anguish which he said he has endured over the course of the proceedings. He asked the Tribunal to conclude that it is appropriate to impose a reprimand only or even to take no further action.

Conclusion as to appropriate orders

It was held in Re Clayton (1961) SR 132 that due and proper weight must be given to the position of the professional body on the question of appropriate orders. Taking into account the general principles to which we have referred and the position of the Council, we find that in the circumstances of this matter the protection of the public does not require an order for the removal of Mr Haseldine's name from the Roll. We are not satisfied that he is "permanently, or at least indefinitely, unfit to practise" to use the formulation adopted by Spigelman CJ in New South Wales Bar Association v Murphy [2002] NSWCA 138 at [27] referred to in Shehadie (No 2) at [51]. As at the time of the second hearing he has not been shown not to be a fit and proper person to be an officer of the Supreme Court.
In Haseldine No 1 we found that the breaches of fiduciary duty which were established and which reflected Mr Haseldine's ability to construe a commission clause and give accurate and relevant information to beneficiaries for the purposes of obtaining their informed consent to the payment of commission went to his competence and fitness to practice law. The misconduct was serious involving as it did a breach of trust. However the conduct did not involve dishonesty. Mr Haseldine acknowledged factual matters in the course of investigation and the proceedings and gave an undertaking to the Council to refund the subject moneys if it was established that he was not authorised to pay himself the moneys by way of commission which he has done. Mr Haseldine has given evidence which we have accepted of his acknowledgement of, insight into and understanding of his conduct and contrition. The conduct which we have found occurred on one occasion in over 50 years of practice. Mr Haseldine is in semi-retirement and no longer operates a trust account. We are comfortably satisfied that the conduct will not recur.
This is not a case such as that which was considered in Law Society of New South Wales v Flynn [2013] NSWADT 70 at [127] to [141] where the Tribunal expressed concern as to the practitioner's level of insight into his conduct, the practitioner had been the subject of prior complaints and had been found to have deliberately sought to mislead the Local Court. In light of his evidence to which we have referred we are satisfied that Mr Haseldine is a person who might properly be held out to the public as a fit and proper person to be entrusted with the duties and responsibilities of a solicitor.
In the course of consideration we have had regard to the character references in support of Mr Haseldine which had been tendered and accepted into evidence without objection. Such matters are as Beazley JA said in Walsh at [43] of considerably less importance in the determination of appropriate orders in conduct proceedings than in the criminal sentencing process; see also Legal Services Commissioner v Kumar [2014] NSWCATOD 45 at [80] - [90] referring to Foreman at p 449 per Mahoney JA. Such weight as might be given to character references is greater where the breaches of professional standards are minor and isolated than where they involve dishonesty; Foreman at p 444.
Mr Stockman and Mr Doyle were not required for cross-examination. They are both legal practitioners of longstanding. Both have known Mr Haseldine professionally and Mr Doyle personally for many years. The references were given in the knowledge of the conduct findings made in Haseldine No 1. We do not doubt that Mr Stockman and Mr Doyle have honestly set out factual matters detailing their involvement with Mr Haseldine and matters of which they were aware going to his character. Mr Stockman confirmed that he has no reason to doubt the honesty and integrity of Mr Haseldine. Mr Haseldine's honesty and integrity were not in question in this hearing. There has been no finding of dishonesty. It has not been asserted on behalf of the Council that he lacks integrity. Both referees proffer their opinion that Mr Haseldine is a fit and proper person to hold a local practising certificate.
With respect to Mr Stockman and Mr Doyle the material which has been provided is of limited relevance to the issue of fitness to practise being considered in this hearing. We do not doubt that Mr Haseldine was of previous good character, has been active in the local community including the local regional law society and has given long service in Rotary. He has acted for children in the care jurisdiction at rates substantially lower than lawyers would charge privately. However, neither of the references addresses in detail the conduct the subject of the findings in Haseldine No 1. Many of the matters going to character to which reference is made predate the conduct under consideration. The Tribunal is in the best position to assess the question of fitness in all the circumstances which are before it. The best evidence going to that issue is that of Mr Haseldine who we are satisfied holds insight and understanding into his conduct and is contrite and not likely to repeat the conduct. We have taken the evidence of Mr Haseldine's previous good character into account in considering the imposition and quantum of a fine.
Having regard to the general principles to which we have referred we are satisfied that in all the circumstances the protection of the public including ensuring the maintenance of high standards within the profession will be satisfied upon the making of orders for a reprimand and fine. Whilst we have been satisfied upon Mr Haseldine's evidence that by reason of his insight, understanding and contrition he is not at the time of the second hearing permanently unfit to practise, the finding in Haseldine No 1 gives rise to a more general concern in the interests of the protection of the public that practitioners ensure that any authority to deal with trust moneys is lawful. We are also mindful of the need to ensure that the trust placed by members of the public in members of the profession is not misplaced. To paraphrase the passage from the Law Society of NSW v Jones (Unreported Court of Appeal, 29 July 1978) (NSW) per Street CJ, members of the public who may be wholly inexperienced or unskilled in matters of business or of law inevitably must put great faith and trust in the honesty of persons who are legal practitioners in the handling of moneys on their behalf. This trust is placed even when moneys are held by a practitioner otherwise than in connection with the practise of law. Many testators would choose to appoint a legally qualified executor and trustee rather than a non-legally qualified person with the expectation that the administration of the estate would be managed professionally and lawfully.
We have given due and proper weight to the submission of the Council concerning the amount of a fine. We are satisfied however in all the circumstances of this case that the discharge of the Tribunal's protective and educative function will be satisfied by the imposition of a fine which is lower than one which might be regarded as substantial. Although the Tribunal made significant adverse findings as to Mr Haseldine's conduct for the purposes of s 497(1)(b) of the LPA we do not consider that those circumstances warrant a fine in the nature of those imposed in Shehadie, Vaughan or Russo. Unlike the position in Shehadie the conduct did not involve statutory breaches including s 255 of the LPA or a finding of dishonesty. Unlike the position in Vaughan the conduct arose out of one transaction. It did not concern a number of breaches of the fiduciary obligation. It did not concern any breach of s 255 of the LPA. Unlike the position in Russo the conduct did not involve obvious deficiencies in breach of trust in circumstances in which Mr Haseldine although erroneously considered that he was authorised to transfer the funds and later that he had the informed consent of all beneficiaries. The conduct was not exacerbated by any high handed or dismissive response to the complaint. Rather, Mr Haseldine was co-operative, admitted factual matters and while contesting the proper construction of the subject clause as a matter of law and whether as a matter of fact all beneficiaries had given informed retrospective consent to the payment of commission he undertook to repay any moneys ultimately found to have been received by him without authority.
In considering the amount of the fine we have also had regard to the fact that although we found that the failure to meet the required standard was substantial the conduct arose from error rather than dishonesty. Mr Haseldine has clear realisation and insight into and understanding of his failure to meet the standard and has expressed contrition. He has otherwise practised without blemish for over 50 years. His individual history report is evidence at one level of his previous good character. This is corroborated by the character references in evidence to which we have afforded some weight on that issue in circumstances in which the conduct did not involve dishonesty and was isolated.
We have separately had regard to Mr Haseldine's treatment of the trust moneys upon notice of the investigation and complaint. Although he was co-operative with the investigation and, as we have said, undertook to repay the moneys if the transfer was found not to be authorised and has done so he has had the benefit of the use of the moneys in the interim period. The moneys were not maintained within the safety of a trust account and were at least for that reason alone at some level at risk.
We have lastly taken into account in setting the amount of the fine our determination below that Mr Haseldine is liable to pay the Council's costs of the proceedings. At the hearing the Council could not give us an indication of what its costs were. We note that the proceedings had been listed for two hearing days with counsel and that affidavits and written submissions have been prepared and filed by the Council. It can be expected that the Council's costs as agreed or assessed will not be nominal. This is a relevant consideration in assessing the level of a fine; Environment Protection Authority v Barnes [2006] NSWCCA 246 per Kirby J referred to in Legal Services Commission v Bechara (No 3) [2009] NSWADT 313 at [15].
Having regard to these matters we find that the Tribunal's disapproval of the conduct and that aspect of the object of protection of the public being a deterrence to other practitioners who might be tempted to fall short of the high standards required and assuring the public that serious lapses in the conduct of legal practitioners would not be passed over or lightly put aside will be satisfied upon the imposition of a fine in the sum of $5,000.

Costs

Schedule 5, Clause 23 of the Civil and Administrative Tribunal Act 2013 (CAT Act) provides at 23(1), (6) and (7) as follows: "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. (6) The Tribunal may fix the amount of costs itself or order that the amount of costs be assessed by a costs assessor under the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014). (7) An order for costs may specify the terms on which costs must be paid."
The Council seeks an order for costs.
Mr Haseldine submitted that the conduct giving rise to the complaint and findings of the Tribunal arose from a genuine error. He said he co-operated with the Council fully in respect of its investigation of the matter and said that he was now semi-retired. He made no other submissions concerning whether any exceptional circumstance existed sufficient to justify displacement of the normal rule.
As the Tribunal indicated in Council of the Law Society of New South Wales v Wehbe [2018] NSWCATOD 14 at [389] the meaning of the words "exceptional circumstances" in the context of s 566 of the LPA now repealed but relevantly in similar terms to clause 23 was considered by the Tribunal in Council of the New South Wales Bar Association v BRJ (No.2) [2015] NSWCATOD 140 which said at [22]: "22 Without attempting to provide a meaning of "exceptional circumstances" in s 566 of the Act, which is all encompassing, we are of the view that for the purposes of this application, a circumstance is exceptional where it is one which is such as to form an exception, which is out of the ordinary course, or unusual, or special or uncommon. It need not be unique or unprecedented or very rare, but it cannot be one that is regularly, or routinely, or normally encountered in cases heard in the Tribunal in which findings of unsatisfactory professional conduct or professional misconduct are made. A circumstance will not be exceptional if it is only relevant to penalty or mitigation of penalty. It is implicit in s 566 (1) that an order exempting a respondent practitioner found guilty of unsatisfactory professional conduct or professional misconduct from paying costs incurred by the applicant, is not warranted simply because exceptional circumstances of some kind or other are present. The nature of the exceptional circumstances must be such as to justify displacement of the normal rule that a costs order should be made. If the Tribunal is satisfied that exceptional circumstances in this sense exist, it has a discretion under s 556 (1) not to order a respondent legal practitioner to pay the applicant's costs or the whole of the applicant's costs [relevant authorities cited]."
In our view the matters raised by Mr Haseldine in his submissions are not matters which are not regularly or routinely or normally encountered in cases heard by the Tribunal in which findings of professional misconduct are made. The fact that the conduct in issue arose from error, that Mr Haseldine co-operated with the Council and that he is semi-retired are not of their nature exceptional circumstances such as would justify displacement of the normal rule. There was no submission by Mr Haseldine that his semi-retirement gave rise to straitened financial circumstances. We note that such circumstances even including bankruptcy do not sound as an exceptional circumstance for the purposes of clause 23.1; Council of the New South Wales Bar Association v Miller (No.2) [2012] NSWADT 129 at [44].
In the absence of exceptional circumstances Schedule 5, clause 23 of the CAT Act requires that we make a costs order in favour of the Council.

Orders 1. The Respondent be reprimanded. 2. The Respondent be fined $5,000. 3. The Respondent is to pay the Applicant's costs of and incidental to these proceedings as agreed or assessed.

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: 20 March 2018

Legal Profession Act 2004(NSW)

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