Council of the Law Society of New South Wales v Terepo

NCAT Occupational|2018-12-04

REASONS for decision Background and the purpose of these proceedings

Following hearings by this Tribunal panel on 18 August 2017 and 23 February 2018 ("the initial hearing" or "the initial proceedings"), by orders made on 2 July 2018 we found the Respondent in these proceedings, Ms Sesila Fehoko Terepo, solicitor, guilty of professional misconduct and of unsatisfactory professional conduct.
Our findings of misconduct were based on the Law Society's allegations, which we found to be made out. In summary they were that: 1. at all relevant times Ms Terepo was a sole practitioner and that in November 2014 she provided access to her law practice's trust account to her husband (who is not within the class of persons to whom such access can be given), 2. on various dates between 3 November 2014 and 9 February 2015 monies were withdrawn from that trust account without the authorisation of the relevant clients of the firm; 3. apart from a withdrawal of $850 which occurred on 9 December 2014, the monies withdrawn from the trust account were transferred either to the office account of the law practice or to a personal account maintained by Ms Terepo; and 4. so far as the withdrawal of the $850 on 9 December 2014 was concerned, it was made by Ms Terepo personally and withdrawn in the form of cash.
In our reasons for decision dated 2 July 2018, at [101] we found Ms Terepo guilty of professional misconduct for the following reasons: 1. Ms Terepo, at the very least, was recklessly indifferent to the possibility of monies that had been entrusted to her by clients and placed in the trust account of the Law Practice might be misappropriated, by giving access to the trust account to a person who to her knowledge was not an Australian legal practitioner, an associate of the Law Practice, or an employee of the Law Practice. 2. She misappropriated the $850 on 9 December 2014. She withdrew the money from her trust account without the authority of the persons on whose behalf the money was received into trust and accordingly was in breach of section 255 of the Legal Profession Act 2004 ("the LPA") 3. In making the withdrawal referred to in (2) by way of cash withdrawal, she was in breach of section 255A of the LPA. 4. The conduct in (1) to (3) above amounted to a substantial failure to maintain a reasonable standard of competence and diligence; was conduct that demonstrates that Ms Terepo is not a fit and proper person to engage in legal practice, and was conduct which would reasonably be regarded as disgraceful or dishonourable by professional colleagues of good repute and competency. 5. Ms Terepo breached sections 263 and 264 of the LPA; conduct that itself involves a substantial failure to maintain a reasonable standard of competence and diligence, and demonstrates that she is not a fit and proper person to engage in legal practice. 6. Ms Terepo failed to assist the investigator in the investigation of a complaint and failed to comply with a Notice served pursuant to section 371 of the Legal Profession Uniform Law (NSW), No.16 a ("the Uniform Law"). Although she had provided certain limited information, she had failed to respond the specific questions posed by the section 371 Notice and had provided no explanation for that failure. We found that this conduct constituted a substantial failure to maintain a reasonable standard of competence and diligence, it demonstrated that Ms Terepo is not a fit and proper person to engage in legal practice and is professional misconduct by operation of ss 466(1)(d) and 466(6) of the Uniform Law.

The issues for our determination

We conducted a further hearing on 4 December 2018 ("the penalty hearing" or "the penalty proceedings"). In its application and in the initial proceedings the Law Society indicated that if Ms Terepo were found guilty of professional misconduct on the basis indicated above, it would seek a recommendation from us that her name be removed from the Roll. At the opening of the penalty hearing the Law Society confirmed that it sought such a recommendation and a costs order.
It followed that the issues for our determination in the penalty proceedings were: 1. whether we should make an order under s 302 (1)(f) of the Uniform Law recommending that Ms Terepo's name be removed from the Roll; and 2. whether, in the alternative or in addition, we should make any other of the orders available to us under section 302 of the Uniform Law.
We decided to recommend under s 302 (1)(f) of the Uniform Law that Ms Terepo's name be removed from the Roll and to order her to pay the costs of the Law Society as agreed or assessed. None of the other orders available under section 302 of the Uniform Law appeared to be appropriate.
These are our reasons for those decisions.

The applicable legislation

In the liability proceedings it was accepted that the Law Society's application, including the question of any penalty orders to be made, fell to be determined under the provisions of the Uniform Law and not under the LPA, because the complaint the subject of the application was made in October 2015; that is; after the July 2015 commencement of the Uniform Law.

Preliminary issue: Non-participation of Ms Terepo and procedural fairness

Ms Terepo did not participate in the penalty hearing either in person or through a legal representative. She had not participated in the initial proceedings.
In our reasons for decision from the initial proceedings at [8] to [10] we set out the responses made by Ms Terepo to the Law Society's application and at [19] to [28] we set out the steps which we required to be taken to ensure that Ms Terepo had been made sufficiently aware of the initial proceedings. Ultimately we were satisfied on the basis of the evidence adduced by the Law Society that the application and other relevant documents had been personally served on Ms Terepo, that the time for provision of a reply in compliance with our other directions had expired and that sufficient notice of the initial hearing had been given to Ms Terepo.
For the purposes of the present penalty proceedings, given Ms Terepo's absence and lack of response, we sought to ensure that she had proper notice of these proceedings and that procedural fairness had been extended to her. At the penalty hearing the Law Society tendered and relied upon: 1. an affidavit of Geoffrey David Edwards, a licensed process server made on 6 July 2018, to the effect that on 6 July 2018 he had attended at the usual place of abode of Ms Terepo with a view to serving on her a letter of 5 July 2018 from the Law Society (which is annexed to his affidavit and which in turn attaches a copy of our orders in the initial proceedings and advises the date and time of a further directions hearing) and, having no response from any occupants of the dwelling he placed documents in a sealed envelope marked "Private and Confidential" and addressed to Ms Terepo under what he describes as "the principal door" of the premises. He asserts that he observed that that the premises were currently occupied and that there was uncollected mail for Ms Terepo at the address; and 2. an affidavit of Mori Fahd sworn on an undisclosed date in October 2018. Mr Fahd asserted that on 6 October 2018 he attended the same address as referred to by Mr Edwards, in an attempt to serve on Ms Terepo a letter from the Law Society setting out details of the penalty proceedings and its submissions as to penalty orders, but was told by the present occupant that only he and his parents had lived at the address for the previous two months and that Ms Terepo was not known at the address.
These two affidavits were unchallenged and were persuasive. We were satisfied that all reasonable attempts had been made by the Law Society to notify Ms Terepo of the directions hearing which followed the orders made at the initial hearing, the penalty orders which would be sought by the Law Society and its submissions on penalty. We were satisfied that in the circumstances Ms Terepo had been extended procedural fairness in relation to these matters and that on that basis the penalty hearing should proceed in her absence.

The Law Society's case

The Law Society had filed general submissions on 7 August 2017 which included some submissions as to penalty and it had made subsequent written submissions as to penalty orders, filed on 26 September 2018. At the penalty hearing Mr Pierotti, Solicitor, the Litigation Manager of the Society, made supplementary oral submissions. The second set of written submissions and Mr Pierotti's oral submissions focussed principally on the question of whether we should recommend Ms Terepo's removal from the Roll.
In essence, the Law Society's case is that the evidence establishes a course of conduct by Ms Terepo which is substantially unexplained and which reflects that her conduct of the financial side of her practice has been of such a poor standard that notwithstanding that the allegation of misappropriation was upheld only in respect of the cash withdrawal of $850, she is unable to demonstrate that she has the necessary qualities of reliability and integrity in the handling of trust funds to remain on the Roll. The Society cited the description of the necessary qualities by Street CJ in Law Society of New South Wales v Jones (unreported: Court of Appeal (NSW), 27 July 1978), in the following terms: "Reliability and integrity in the handling of trust funds are fundamental prerequisites in determining whether an individual is a fit and proper person to be entrusted with the responsibilities belonging to a solicitor."
The Law Society also relied on the fact that over approximately the last 30 years, cases where a solicitor is found to have engaged in the improper use of trust funds or misappropriation have, with very few exceptions, resulted in the solicitor's removal from the Roll. Kirby P noted in Dupal v The Law Society of New South Wales [1990] NSWCA 56 at 57 that such a finding ordinarily requires removal from the Roll and in that case only one clearly distinguishable case before the Solicitors' Statutory Committee (being the unreported matter of Colin Walter Peck (unreported, Solicitors' Statutory Committee 23 April 1981)) resulted in a lesser penalty. In his helpful submissions at the hearing Mr Pierotti observed that on the basis of the research undertaken by the Law Society it appears that there have been only about 6 cases since the decision in Peck in which such conduct has not resulted in removal from the Roll and in each of those cases the relevant tribunal was satisfied that there were unusual or special facts which took the case outside the ambit of the usual result as referred to by Kirby P in Dupal.

"Fit and proper person" and protection of the public

It is clear from the authorities that the ultimate issue, where an order for 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 :A Solicitor v Law Society of New South Wales [2004] 216 CLR 253.
It is also clear that, in deciding that issue, the Tribunal must proceed on the basis that disciplinary proceedings are concerned with protection of the public. See Law Society of NSW v Walsh [1997] NSWCA 185 at 224, per Beazley JA(as she then was) and the authorities cited there. Justice Beazley went on to confirm that: "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."
Her Honour had summarised the principles guiding the Tribunal in determining whether a solicitor's name should be removed from the Roll at 43, as follows: 1. The Tribunal's power is discretionary; 2. 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 when the practitioner has been found not to be of good fame and character; 3. The substantive considerations which might compel a different course are ones which themselves are relevant to and enhance the essential nature of the Tribunal'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 to promptly report it. 4. 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". (Citing Law Society of NSW v Bannister [1993] 4 LPDR 24 at 13)."
In Dupal v Law Society of NSW [1990] NSWCA 56, a case involving misappropriation of monies entrusted to a solicitor, Kirby P said: "…the normal consequence of the misuse of entrusted funds by a solicitor, and a finding of wilful breaches of the statutory prohibition in that regard, is removal of the name of the solicitor from the roll"
His Honour, whilst noting that these issues could not obliterate the fundamental fact that the solicitor had been found guilty of misappropriation, and after discussing the submissions of frankness, candour and restitution that had been made on the solicitor's behalf, said: "This Court would be departing from a long course of authority if it were to allow the appeal and substitute a period of suspension for the order of the Tribunal removing the Appellant from the Roll. Counsel was not able to refer us to any case where a solicitor found guilty of misappropriation or wilful contraventions of section 41(1) has not been struck off the roll. Any decision to the contrary would signal to the profession and the community that this Court was no longer insisting on solicitors maintaining the highest standards of personal honesty and integrity in their dealings with clients and the public and in the handling of the matters entrusted to their charge. The maintenance of those standards and the public interest require, in my judgment, that this appeal be dismissed. It is well established that the jurisdiction being exercised in this case is not penal but disciplinary and that it must be exercised for the benefit of the public. Sympathy for the appellant and for the tragedy that he has brought on himself and his family by his inability to live up to the high standards which this Court and the profession demand of solicitors cannot be allowed to deflect this Court from doing its duty."
We adopt the reasoning of Kirby P and Handley JA in Dupal and Mahoney JA in Foreman and apply it to the present case. We cannot be satisfied that in the present matter there are any "exceptional circumstances" of the type referred to in Ex Parte Lenehan, which was cited with apparent approval by Kirby P in Dupal .

"Probable permanent unfitness" to practice

In New South Wales Bar Association v Cummins [2001] NSWCA 284 at [24], Spigleman CJ confirmed the principle which had been adopted by McHugh JA in the unreported decision of Prothonotary of the Supreme Court of NSW v Ritchard (Unreported, Court of Appeal NSW, 31 July 1987), to the following effect: "An order for the involuntary removal of the name of a practitioner from the Roll of solicitors is made only because the probability is that the solicitor is permanently unfit to practise. Unless the Court is persuaded that the probability exists, the proper order to make will usually be one of suspension or fine instead of removal."
So any decision to recommend the removal of a solicitor from the Roll must, at least "usually", (to adopt the wording of McHugh JA in Prothonotary v Ritchard as noted above), be based on a conclusion that she is, on the basis of the evidence available, probably permanently unfit to be allowed to practice.
We note in passing that that this formulaic approach has not received universal support. For example, in Dupal, in a short (but not dissenting) judgment, Priestley JA (at 58) said: "I do not find it necessary for deciding the appeal to consider the precise way in which the appellant's conduct should be characterised as a matter of legal labelling. It is sufficient, as I see the appeal to say that the appellant's actions, as a solicitor…were dishonest and indefensible to a degree requiring that his name be struck off the roll..."
Even if it is an exercise in "legal labelling", the application of the "probably permanently unfit" test does appear to be appropriate under the current law, at least insofar as a positive application of the test will "usually" be necessary in order to justify a striking-off order.
We found in the initial proceedings (as recorded in the reasons for decision from the previous hearing at [101]) that: 1. Ms Terepo was at the very least recklessly indifferent to the possibility of monies that had been entrusted to her by clients and placed in the trust account might be misappropriated by giving an unqualified person (her husband) access to the trust account 2. she misappropriated $850 by making the relevant withdrawal without the authority of the clients on whose behalf the money was received into trust ; 3. these failures amounted to a substantial failure to maintain a reasonable standard of competence and diligence which demonstrated that she is not a fit and proper person to engage in legal practice.
Having heard the penalty proceedings, we were reinforced in these views. Ms Terepo's actions in relation to her clients monies coupled with her failure to assist the investigator or to provide any real explanation were in our view improper to a degree that she is probably permanently unfit to be allowed to practice. There is nothing to suggest the contrary. It must follow that we should recommend that her name be removed from the roll.
In concluding however we observe that, as noted in Handley JA's concluding remarks in Dupal at [68], there is authority for the proposition that a strike off In the graphic language of James QC (as he then was) in Jauncey v Law Society (unreported, Court of Appeal NSW, 1 February 1989)it is not necessarily "a sentence of professional death". Although readmission is not common, there are instances of readmission to the Roll were the practitioner has demonstrated a sufficient period of commendable conduct and the good opinion of his or her professional colleagues, which indicates his or her rehabilitation and regained fitness.

Costs

We were satisfied that there were no exceptional circumstances which would justify a departure from the result required by clause 23 (1) of Schedule 5 to the Civil and Administrative Tribunal Act, which is that where a lawyer has been found to have engaged in professional misconduct or unsatisfactory professional conduct, the Tribunal must make orders requiring that lawyer to pay the costs of the applicant Council, here, the Council of the Law Society.

Recommendation and Order

On the basis of the reasons set out above, we: 1. Recommended that the name of Sesila Fehoko Terepo be removed from the Roll kept by the Supreme Court of New South Wales and the Australian Legal Profession Register; and 2. Ordered that Sesila Fehoko Terepo is to pay the costs of the Council of the Law Society of NSW, 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: 26 April 2019

Legal Profession Act 2004(NSW)

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