Council of the Law Society of New South Wales v Konstantinidis

Council of the Law Society of New South Wales v Konstantinidis - [2020] NSWCATOD 91 - NSWCATOD 2020 case summary — Zoe

[5]

Introduction

On 3 July 2019 we published our reasons for decision in Council of the Law Society of New South Wales v Konstantinidis [2019] NSWCATOD 104. We found Simon Konstantinidis (the Solicitor) to have engaged in professional misconduct on two grounds in proceedings brought against him by the Council of the Law Society of New South Wales (the Law Society). We also found that he had engaged in unsatisfactory conduct in relation to a further ground. The proceedings were stood over for a further hearing on the penalty to be imposed as a result of our findings.
In our reasons for decision of 3 July 2019 we found that the Solicitor had failed to account in the amount of $33,000 to Apostolos and Ilias Stoikos (the Stoikos brothers) by retaining this money in his trust account between July 2012 and December 2016, contrary to a written direction from the Stoikos brothers Ground 1). We also found that by retaining this money in his trust account, the Solicitor had acted in contravention of s 255(1)(b) of the Legal Profession Act 2004 then in force (the LPA) (Ground 2).
In relation to a separate allegation, we found that the Solicitor had breached an undertaking that he had given in a letter sent to another practitioner dated 6 September 2011. We characterised this breach as unsatisfactory professional conduct (Ground 3). We dismissed an additional allegation that he was in breach of a second undertaking in his letter dated 6 September 2011.
The penalty proceedings were listed for hearing on 17 December 2019. In preparation for the hearing, the parties had filed and served written submissions and the Solicitor had also filed and served further affidavit evidence. Just before the hearing date we were informed that the parties were content for the Tribunal determine the matter ''on the papers". Accordingly we ordered, pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act), that the matter be so determined and that the hearing set down for 17 December 2019, be vacated.
These are our reasons for decision in relation to penalty. They should be read in conjunction with our reasons for decision dated 3 July 2019. As detailed below, we find that the Solicitor should be reprimanded, that he should pay a fine of $8,000 and that he should undertake trust accounting and ethics courses. We also find that the Solicitor should pay the costs of the Law Society, as agreed or assessed.

[8]

Fine

In relation to the size of the fine, the Law Society referred us to a number of recent decisions of this Tribunal. These were: Council of the Law Society of New South Wales v (Brent) Hedges [2018] NSWCATOD 149, Council of the Law Society of New South Wales v (Stephen) Hedges [2018] NSWCATOD 150, Council of the Law Society of NSW v Adamson [2019] NSWCATOD 7, Council of the Law Society of NSW v Messiha [2019] NSWCATOD 32 and Council of the Law Society of New South Wales v Searle [2019] NSWCATOD 70.
These decisions involved breaches of the trust account regulations and/or a failure to account. In Brent Hedges, the Tribunal considered further recent Tribunal decisions where fines of between $1,000 (in Council of the Law Society of NSW v Gallego (No 2) NSWCATOD 61) and $20,000 (in Russo v Legal Services Commissioner [2016] NSWCA 306) had been imposed. The Tribunal in Brent Hedges determined that the appropriate fine for breaches of ss 254 and 255 of the LPA involving "relatively small" amounts of trust funds, was $6,000. It also found that the solicitor had not acted fraudulently. In Stephen Hedges, his partner was fined $5,500 in relation to the same breaches.
In Adamson, Messiha and Searle the fines imposed were, respectively, $10,000, $12,500 and $12,000. In each case there were findings of serious misconduct and in two instances, findings of misappropriation of trust funds.
We were also referred by the Law Society to Tribunal decisions where fines were imposed when solicitors had not honoured undertakings. These were Council of the Law Society of New South Wales v Lewis [2019] NSWCATOD100, Council of the Law Society of NSW v Powell [2019] NSWCATOD 24 and Council of the Law Society of NSW v Marando [2018] NSWCATOD 194. In Lewis a fine of $4,000 was imposed, in Powell $1,000 and in Marando, $10,000. Each decision concerned a breach by the solicitor of an undertaking given to the Law Society, rather than to another practitioner.
Having regard to the penalties imposed in these decisions, the Law Society considered the fine that should be imposed on the Solicitor in these proceedings to be in the middle of a range of between $1,000 and $20,000 - that is $10,000. It was also relevant to our consideration of the size of the fine, according to the Law Society, that the Solicitor was likely to continue to practise and to earn an income. In those circumstances, a fine of $10,000, together with a reprimand would have "a meaningful deterrent effect, in both a general and a specific sense".

[13]

Fine

The Solicitor's submission also analysed the Tribunal decisions referred to by the Law Society. It concluded that there were differences between the objective circumstances in each those cases and in these proceedings. The amount of a fine in these proceedings should be appreciably less than $5,000.
The submission made the point that Grounds 1 and 2 - that the Solicitor had failed to account to his clients and was in breach of s 255 of the LPA, arose out of identical factual findings. Thus there was "one act as a matter of substance in respect of which a fine may made, notwithstanding that two complaints were established".
The Solicitor's conduct also did not involve the use of client money for his own advantage. Although we had found in our reasons for decision of 3 July 2019, that the Solicitor's conduct was ''deliberate", he had always believed that he was acting lawfully in refusing to pay the trust moneys in accordance with the direction from his clients. The Solicitor's subjective belief, although wrong as a matter of law, distinguished this case from the circumstances in the other cases referred to by the Law Society, and in particular from Brent Hedges.
In relation to our finding that the Solicitor had breached his undertaking (Ground 3), we were directed to the Tribunal's decision in Powell where a solicitor had failed to honour for an extended period an undertaking that she had given to the Law Society. The Tribunal found that this failure constituted professional misconduct and a fine of $1,000 was imposed. The Tribunal had also given serious consideration to not imposing any fine and to reprimand the solicitor only.
In our reasons for decision of 3 July 2019 we had made a finding of unsatisfactory professional conduct in respect of Ground 3, and the objective facts of the breach in Powell were "starkly more grave" than the Solicitor's "inadvertent" breach of the undertaking that he had given. In these circumstances no fine at all was warranted for this breach and the amount of the fine should be assessed having regard only to our findings in relation to the Grounds 1 and 2.
The earlier disciplinary findings against the Solicitor were also not matters which the Tribunal should take into account as matters increasing the amount of the fine which would otherwise be appropriate due to the nature of the conduct and their age.

[21]

Fine

S 562(4)(a) of the LPA entitles the Tribunal to order a practitioner to pay a fine of a specified amount, not exceeding $75,000. The Solicitor again accepted that his conduct warranted the imposition of a fine. We agree that a fine is warranted.
As we have set out above, there was considerable debate about the amount of the fine. We do not agree with the Law Society that the "range" of fines for comparable cases is between $1,000 and $20,000. In Gallego, a fine of $1,000 was imposed by the Tribunal, but this was considerably less than would have been imposed, but for the practitioner's difficult financial situation. The Solicitor's capacity to pay was not an issue in these proceedings.
In Russo, the Court of Appeal, having set aside the Tribunal's order that the solicitor's name be removed from the roll, imposed a fine of $20,000, noting that his conduct involved obvious deficiencies in the application of trust monies, and was exacerbated by the high handed and dismissive manner in which he responded to queries made on behalf of his client. Neither Gallego nor Russo assists us in determining the size of the fine in these proceedings.
To the extent that it is helpful, we regard the actual range for cases comparable to these proceedings to be between $4,000 and $12,000. However, whilst there is some benefit in conducting an analysis of comparable cases to determine where this matter falls within this range, ultimately each case must be determined on its own facts and circumstances.
Taking this approach, we have decided that a fine of $8,000 is appropriate and that it be paid within 60 days, as requested by the Law Society. In reaching this position the following factors are relevant to our decision: 1. Our findings in relation to Grounds 1 and 2 arose out of the same facts; 2. The Solicitor's conduct in relation to these Grounds was deliberate and continued for a long time, but it did not involve any dishonesty on his part or personal gain; 3. We did not take into account our finding of unsatisfactory professional conduct in relation to Ground 3 when assessing the amount of the fine. If the only finding against the Solicitor were that in Ground 3, we would have given serious consideration, as the Tribunal had done in Powell, to not imposing any fine; 4. We gave little weight to the reputation and character evidence relied on by the Solicitor; and 5. We gave little weight to the previous disciplinary findings against the Solicitor given the length of time that has elapsed since those matters were determined.

At a glance

Court

Decision date

Source

Judgment (25 paragraphs)

Parties

Cases Cited (14)

Cited By (2)