Council of the Law Society of New South Wales v Leslie

Court of Appeal (NSW)|2021-04-01|Before: Macfarlan JA, White JA, McCallum JA, Mr P

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

THE COURT: The Council of the Law Society of New South Wales seeks an order that the name of the respondent, James Edward Leslie, be removed from the roll kept by the Supreme Court of New South Wales and the Australian Legal Profession Register. The Council also seeks an order that Mr Leslie pay its costs of these proceedings. The application is based on a recommendation made by the New South Wales Civil and Administrative Tribunal following the hearing of an application for disciplinary findings and orders against Mr Leslie, [1] pursuant to the Legal Profession Uniform Law (NSW).
Section 23(1)(c) of the Uniform Law provides that the Supreme Court may order the removal of a person's name from the Supreme Court roll on the recommendation of the Tribunal. The Court's jurisdiction under that provision is distinct from the Court's inherent jurisdiction (and does not derogate from that jurisdiction: s 264 of the Uniform Law). Although not in the nature of an appeal, such proceedings are assigned to the Court of Appeal: s 48(2)(k) of the Supreme Court Act 1970 (NSW) and r 65A.2 of the Supreme Court Rules 1970 (NSW).

Circumstances in which the disciplinary proceedings were brought

Mr Leslie was admitted as a lawyer of the Supreme Court of New South Wales on 9 July 1982. He worked as an employed solicitor until May 2006, when he became the sole principal of an incorporated legal practice, Leslie Hargrave Lawyers Pty Ltd. He acquired that practice from its former principal, Mr Hargrave.
On 15 June 2017, Mr Leslie pleaded guilty to four counts of possession of child abuse material contrary to s 91H(2) of the Crimes Act 1900 (NSW). On 19 September 2017 he was convicted on an amended two counts, and was sentenced to a term of imprisonment for nine months, the execution of which was suspended upon his entering into a good behaviour bond for the same period. On 16 November 2017, as a result of those offences, the Law Society suspended Mr Leslie's practising certificate with immediate effect. On 14 December 2017, the Law Society continued the suspension until 30 June 2018, being the expiration of the practising certificate, and appointed a manager of Mr Leslie's law practice for a period of two years under s 334(2) of the Uniform Law. As at that date, the balance of funds held in the practice's trust account was $3.94.
In March 2018, the manager appointed by the Law Society, Mr Richard Flynn, reported his concern that there were irregularities in the practice trust account involving two matters in which he suspected funds may have been misappropriated from clients. The Law Society appointed a trust account inspector, Mr Simon Ward, to investigate the affairs of the practice. In due course, Mr Ward produced a detailed report which, in short, confirmed Mr Flynn's suspicions. The disciplinary proceedings in the Tribunal were based primarily on the content of Mr Ward's report.

Proceedings before the Tribunal

The disciplinary proceedings were commenced by an application filed on 6 December 2019. The application sought an order recommending that Mr Leslie's name be removed from the roll on the basis that he was guilty of professional misconduct on the following grounds: 1. he caused a deficiency in a trust account; 2. he misappropriated trust funds; 3. he manipulated trust accounting records to conceal misappropriation of trust money; 4. he failed to comply with his obligations under the legal profession legislation in relation to holding trust money; 5. he contravened s 139 of the Uniform Law; and 6. he failed to comply with a notice issued to him under s 370 of the Uniform Law.
The Tribunal found all six grounds proven against Mr Leslie. The evidence on which those findings were based may be summarised as follows.

Ground one - trust account deficiency

Section 148 of the Uniform Law provides: A law practice, an Australian legal practitioner or any other person must not, without reasonable excuse, cause - (a) a deficiency in any trust account or trust ledger account; or (b) a failure to pay or deliver any trust money.
The first deficiency identified in Mr Leslie's trust account concerned a probate matter in which the client was Mr Peter Lambie, the son of the late Mary Patricia Lambie and the sole beneficiary and executor of her estate. Mr Lambie obtained a grant of probate in November 2016. In December 2016, a cheque in the sum of $209,856.46, representing the refund of a bond held for Mrs Lambie's aged care accommodation, was deposited into Mr Leslie's trust account. Mr Lambie received only $20,000 of those funds. He was travelling overseas for several months in the second half of 2017. By the time he started trying to contact Mr Leslie following his return from that trip, Mr Leslie's practising certificate had been suspended. Mr Lambie made many attempts to contact Mr Leslie, to no avail. In March 2018, he received a letter from Mr Hargrave, the former principal of Mr Leslie's practice, who informed him that Mr Leslie was no longer in practice. Mr Lambie instructed Mr Hargrave to act for him on an application to the Fidelity Fund for recovery of the misappropriated funds.
Ground one was based on Mr Ward's analysis of the trust account bank statements, which revealed that, between the date of deposit of the cheque for $209,856.46 and 31 March 2017, the whole of the trust monies held on account of the estate of Mrs Lambie had been used to make payments for purposes described by Mr Ward in the following terms: (1) to make payments on behalf of other matters whose trust funds had been either misappropriated or used to make payments for other matters; and (2) to make payments directly and indirectly into Mr Leslie's personal account in a blatant act of misappropriation of trust money; (3) in making payments to the Leslie Hargrave Pty Ltd general account (when there were no funds due and payable).
The Tribunal was satisfied on the strength of the evidence contained in Mr Ward's report that, by 17 January 2017, the practice trust account was deficient in the sum of $209,856.46 as a result of those payments. [2]
The Tribunal found that two further deficiencies were created, the first in May 2017, when Mr Lambie instructed Mr Leslie to pay to him the sum of $20,000 representing the cost of preparing his mother's house for sale. As Mr Leslie held no money on trust for the Lambie estate matter at that time, the payment of that amount created a further deficiency in the trust account. Secondly, on 21 June 2017, a payment of $159.23 was made from the trust account to One Path Life Ltd, causing the trust account to be overdrawn by $150.17. That was after Mr Leslie had been charged with the child sexual offences but before he was sentenced.
Mr Ward identified four additional deficiencies recorded earlier, on 31 January 2017, totalling $80,527.34. However, the Tribunal did not refer to these in its findings.

Ground two - misappropriation of trust funds

The allegation of misappropriation related both to the Lambie estate matter and to another client, Ms Maria Camilleri. As already noted, the funds received on account of the estate of Mrs Lambie had been entirely disbursed for purposes unrelated to that estate by 17 January 2017.
As to Ms Camilleri, Mr Leslie acted for her on the purchase of an off-the-plan property. In May 2017, Ms Camilleri paid $58,935 into the practice trust account for the purpose of paying the stamp duty due on that property. Mr Leslie disbursed the entire amount for purposes other than Ms Camilleri's matter (including paying the $20,000 to Mr Lambie later in May 2017).
The Tribunal considered the discussion of "dishonesty" in the decision of this Court in Berger v Council of the Law Society of New South Wales [2019] NSWCA 119 and was satisfied that the disbursement of the funds held on account of the Lambie estate matter and the Camilleri matter constituted dishonest misappropriation of trust funds. [3]

Ground three - manipulation of trust account records to conceal misappropriation

The way in which Mr Leslie recorded the various payments made using trust funds, held on account of the Lambie estate matter, was addressed in detail in Mr Ward's report and reproduced in the Tribunal's decision. [4]
Mr Ward analysed every payment recorded against the Lambie estate matter for the relevant period. He found that not one payment proved to be genuinely associated with that matter. One payment was described as a partial distribution of the estate made to Mr Lambie but turned out to be a $20,000 payment made directly into Mr Leslie's personal bank account. Other payments were made to the general account which Mr Ward inferred were part of "an ongoing attempt to provide working capital to Leslie Hargrave Pty Ltd and prevent the account exceeding a $50,000 overdraft". Mr Ward stated that Mr Leslie continued entering payments associated with other matters along with fictitious payments for costs and disbursements in the Lambie estate matter until 31 March 2017, when the reconciliation of the trust account records showed that ledger to be overdrawn in the amount of $6,627.79.
The Tribunal considered the relevant parts of Mr Ward's report and concluded at [70] that ground three was established.

Ground four - failure to comply with obligations in relation to the holding of trust money

Section 146 of the Uniform Law provides: A law practice must not mix trust money with other money unless authorised to do so by the designated local regulatory authority, and only in accordance with any conditions the designated local regulatory authority imposes in relation to that authorisation. Civil penalty: 50 penalty units.
Part of the money withdrawn from the funds held on account of the Lambie estate matter were transferred to the office account, which also contained money which was not trust money. The result was that trust money and other money were intermixed, in breach of s 146. The same occurred with part of the money deposited by Ms Camilleri for the payment of her stamp duty.
Separately, Mr Leslie conducted a controlled money account which was opened in 2010 in respect of a particular estate matter in the name of Houghton. For historical reasons, a small amount of trust money remained in that account in 2016. Mr Leslie transferred significant amounts from the office account into that account, apparently so that he could earn interest on those deposits. The Law Society's application particularised two of those payments in support of ground four, being $110,000 which was transferred from the office account to the controlled money account, and $243,764.01 which was transferred from the controlled money account to the office account.
Ground four was also supported by evidence establishing that Mr Leslie failed to keep trust records as required by s 147 of the Uniform Law. That breach was established by evidence from Mr Ward as to his attempts to obtain trust account records for the Leslie Hargrave Pty Ltd trust account. Mr Ward was unsuccessful in those attempts and was left to rely upon bank statements and limited records he was able to obtain from an external examiner who examined the Leslie Hargrave Pty Ltd trust account in 2015/2016 and 2016/2017. There were no trust records for the period from 31 March 2017 until Mr Flynn was appointed as manager of the practice on 16 December 2017.
Finally, ground four was supported by evidence that Mr Leslie breached r 42 of the Legal Profession Uniform General Rules 2015 (NSW), which prohibits the withdrawal of trust money for the payment of legal costs other than in accordance with the requirements specified in that rule. Mr Leslie applied $15,291 of the money transferred from the trust monies held on account of the Lambie estate matter to the office account for legal costs without providing a bill to Mr Lambie and without Mr Lambie's instructions or authority. He did the same with an amount of $38,790 on account of Ms Camilleri's matter.
On the strength of all those matters, the Tribunal found that ground four was made out. [5]

Ground five - contravention of s 139 of the Uniform Law

Section 139 of the Uniform Law imposes constraints concerning controlled money accounts. As already noted, [6] the controlled money account conducted by Mr Leslie was established solely for the purposes of the Houghton estate matter. Mr Ward's report provided detailed evidence of numerous payments into the controlled money account. As already noted, Mr Leslie appears to have used that account to earn interest for his own benefit. The Tribunal found at [90] that ground five was established

Ground six - failure to comply with a notice issued under s 370 of the Uniform Law

In his attempts to obtain trust account records from Mr Leslie, Mr Ward issued a notice under s 370 of the Uniform Law. He served the notice personally on Mr Leslie on 1 May 2018. The notice required production of trust account records by 11 May 2018. Mr Leslie did not comply with the notice within that period, or at all, and was accordingly in breach of s 370(2) of the Uniform Law.

The Tribunal's conclusion

The Tribunal found that Mr Leslie's conduct as alleged in grounds one to five each individually constituted professional misconduct. [7] Although the failure to comply with the s 370 notice, comprising ground six, on its own may have been regarded differently, the Tribunal concluded that Mr Leslie's failure to comply with that notice was a continuation of the course of conduct involving the dishonest misappropriation of trust funds and the manipulation of trust account records to conceal that dishonest misappropriation. In that context, the Tribunal found that the failure to comply with the s 370 notice also constituted professional misconduct. [8] The Tribunal determined that Mr Leslie is probably permanently unfit to practise as a solicitor and made an order recommending that his name be removed from the roll of solicitors kept by the Supreme Court of New South Wales, as contemplated by s 302(1)(f) of the NSW Uniform Law. [9] The Tribunal's order did not make reference to the Australian Legal Profession Register but removal from the Register would follow from the conclusion that Mr Leslie's name should be removed from the roll.

Proceedings in this Court

The Law Society submitted that, in the absence of any challenge to the Tribunal's findings of fact by way of an appeal by the respondent, this Court should accept those findings and the Tribunal's characterisation of Mr Leslie's conduct. The same submission has recently been accepted by this Court: Council of the Law Society of New South Wales v Yoon [2020] NSWCA 141 at [22], [32]-[33]. In that case, the Law Society raised an interesting question as to the application of s 91 of the Evidence Act 1995 (NSW) in professional disciplinary proceedings but the Court did not find it necessary to consider that issue in circumstances where there was no challenge by the solicitor to the Tribunal's findings. The position is a fortiori in the present circumstances where Mr Leslie has indicated his consent to the orders sought. That said, the use of the word "may" in s 23(1)(c) of the Uniform Law and the fact that the Court's inherent jurisdiction is supplemented but not replaced by the statutory jurisdiction suggests that this Court retains the responsibility to be satisfied that the orders sought are appropriate on the facts found.
There can be no doubt as to that conclusion here. This is a clear case in which the Court has a duty to protect the public against further misconduct by Mr Leslie. As noted by the Tribunal at [114], he has not sought to explain or excuse his conduct in any way and indeed has obfuscated the true position by his manipulation of records and his failure to produce proper records in response to Mr Ward's requests. We would endorse the Tribunal's conclusion that Mr Leslie is probably permanently unfit to practise as a solicitor and that his name should be removed from the roll.

Orders

For those reasons, we make the following orders: 1. The name of the Respondent be removed from the roll kept by the Supreme Court of New South Wales and the Australian Legal Profession Register. 2. The Respondent pay the Applicant's costs of and incidental to these proceedings.

Endnotes

Council of the Law Society of New South Wales v Leslie [2020] NSWCATOD 81 ("Tribunal decision").
Tribunal decision at [28].
Ibid at [41]-[48].
Ibid at [60]-[70].
Ibid at [84].
Above at [23].
Tribunal decision at [104].
Ibid at [107].
Ibid at [115]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 April 2021

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