Council of the Law Society of New South Wales v Thornton

What is this matter about?

1. Mr Brian David Thornton ("Mr Thornton" or "the Solicitor") was admitted as a solicitor of the Supreme Court of New South Wales in July 1984 and on 1 January 1986 became a partner and principal of the firm Cragg Braye & Thornton. He subsequently became a sole practitioner under that practice name. As we understand it, the firm operates a regional law practice in the Newcastle-Hunter Valley region.
2. Between May and October 2010 Mr Thornton, in his personal capacity, received agreed settlement payments from a former practice partner against whom he had commenced Supreme Court proceedings. The amounts were paid into his firm's trust account.
3. At that time a firm of chartered accountants had been engaged by Cragg Braye & Thornton as the firm's authorised external examiner and Mr Thornton arranged for the services of an employee of that accounting firm ("the bookkeeper") to be made available to Cragg Braye & Thornton. It appears to be uncontested that the bookkeeper's responsibilities included the maintenance of trust account records and the drawing of cheques.
4. In October 2010 Mr Thornton decided to withdraw some of the agreed settlement payments, being an amount of $20,000, from the trust account.
5. On or about 19 October 2010 Mr Thornton signed an authority for the bookkeeper to make that withdrawal.
6. On that date that amount was withdrawn and was deposited by Mr Thornton into his personal account. Mr Thornton asserted that the debited $20,000 should have been (but was not) debited against a trust ledger in his own name relating to the Supreme Court proceedings, to which, of course, he was a party in his personal capacity.
7. On the same date two unrelated cheques which totalled $20,000 were drawn on the trust account in connection with a separate matter being handled by the law firm. Subsequent examination of the accounts by Mr Gregory Livermore, an Investigator with the Law Society, revealed that those two cheques were not listed as presented on the firm's bank reconciliation as at 31 October 2010.
8. Significantly, two debit adjustments were made as a result of the bookkeeper, in preparing Cragg Braye & Thornton's bank reconciliation dated 4 November 2010, incorrectly matching those two cheques against the payment made to Mr Thornton of $20,000 and as a result, the payment of $20,000 authorised by Mr Thornton on or about 19 October 2010 as referred to at (1) above was never recorded in the trust account records.
9. Mr Thornton asserts that he did not give instructions for the debit adjustments to be made and was unaware of the adjusting entries until the time of the inspection of his accounts by the Law Society in March 2017. The external examiners (that is, the accounting firm who employed the bookkeeper) did not identify the incorrect recording of these transactions. None of their external examination reports between 2010 and February 2017 identified the error.
10. Further transactions in early 2011 caused Cragg Braye & Thornton's trust account to be in deficient by $20,000 ("the trust account deficiency"). Mr Thornton asserts that he was unaware of the trust account deficiency until it was drawn to his attention by the Law Society's investigator Mr Livermore in March 2017.
11. The deficiency was cleared when Mr Thornton deposited $20,000 to the law firm's trust account on 14 March 2017.
12. On 16 April 2019 the Law Society commenced proceedings against Mr Thornton in this Tribunal based on the trust account deficiency and related dealings. However, on 9 October 2019 the Tribunal (constituted by the current Panel) dismissed those proceedings for want of jurisdiction: Council of the Law Society of NSW v EBX [2019] NSWCATOD 155. The dismissal was based on the jurisdictional issues identified and described in Council of the Law Society of NSW v DXW [2019] NSWCATOD 101.
13. By an Application received by the Tribunal on 10 February 2020 and an amendment received on 22 May 2020 the Law Society alleged that Mr Thornton was guilty of professional misconduct by reason of his conduct relevant to the trust account deficiency; in that that he had breached section 260 of the Legal Profession Act, 2004 ("the LPA"), (which prohibits a law practice, other than as permitted by s 260(2), from intermixing trust money any other money), he had used trust monies that he was not entitled to use and he had caused a deficiency in the Cragg Braye & Thornton trust account. The Law Society sought orders that the Solicitor be reprimanded, pay a fine and pay the Law Society's costs as agreed or assessed.
14. Our task was to ascertain whether on the established evidence, agreed facts and concessions, Mr Thornton was guilty of professional misconduct or alternatively of unsatisfactory professional conduct and if he were guilty of either, what penalty orders should be made.
15. We decided that Mr Thornton was guilty of unsatisfactory professional conduct but not of professional misconduct, that he should be reprimanded but not fined and that he should pay the Law Society's costs as agreed or assessed. These are our reasons for those decisions.

Relevant statutory provisions

1. For convenience of reference, the text of the principal statutory provisions we have referred to in these reasons is set out in the Appendix.

Uncontested facts

1. It was clear from the pleadings and the parties' submissions that, apart from the matters recited at [1] to [13] above, the following facts and legal conclusions were uncontested. 1. Three payments (which are described more fully in the Application as the First, Second and Third Settlement Payments) totalling $77,500 ("the Settlement Payments") were received by Mr Thornton between 18 May and 18 October 2010 ("the payment period"). They were payments from Mr Thornton's former practice partner in accordance with a mediated settlement of Supreme Court proceedings brought against her by Mr Thornton. 2. Each payment was deposited into Cragg Braye & Thornton's trust account ("the Trust Account"). During the payment period the Trust Account also contained monies held on trust for the clients of the firm's law practice. 3. In those circumstances Mr Thornton had intermixed trust monies with other monies and accordingly was in breach of section 260 of the LPA. That is Ground 1 of the Law Society's Application: see [22] below. 4. During the payment period the Settlement Payments were the only monies belonging to Mr Thornton that were held in the Trust Account and that account also contained monies held on trust for clients of the law practice. 5. Between 19 May 2010 and 2 June 2010 Mr Thornton caused $25,000 (the proceeds of the first Settlement Payment) to be withdrawn from the Trust Account. Between 24 June 2010 and 12 July 2010 he caused a further $25,000 (the proceeds of the second Settlement Payment) to be withdrawn from the Trust Account. 6. On 19 October 2010 Mr Thornton's accountant, in accordance with his direction, caused $20,000 from the third Settlement Payment to be withdrawn from the Trust Account and deposited into the Mr Thornton's personal account with the National Australia Bank ("the personal account"). 7. On 24 January 2011, in order to pay his personal tax debt, Mr Thornton caused $15,144.16 to be withdrawn from the Trust Account and paid to the Deputy Commissioner of Taxation. 8. He subsequently caused the following amounts, totalling $12,355.84 to be withdrawn from the Trust Account: 1. on 10 March 2011, 12 April 2011, and 30 May 2011, amounts totalling $8000, which were deposited into the personal account; and 2. on 31 August 2012 and on 12 February 2013 amounts totalling $4355.84, which were deposited into the law firm's office account. 1. At no time was Mr Thornton authorised or directed to cause either: 1. $7644.16 of the payment referred to in (7) above to be withdrawn from the trust account and paid to the Deputy Commissioner of Taxation; or 2. the total of $12,355.84 referred to at (8) to be withdrawn from the Trust Account and paid into the personal account and the practice's office account in the respective amounts noted above.(It is noted that the total of the amounts referred to in (a) and (b) is $20,000.) 1. As a result, Mr Thornton had used trust monies which he was not entitled to use (Ground 2 of the Application) and had caused a deficiency in the trust account (Ground 3 of the Application).

Applicable law

1. It was common ground that the current application is the subject of a complaint made under the Legal Profession Uniform Law (NSW) ("the Uniform Law") and therefore falls to be dealt with under the Uniform Law rather than under the LPA.

Standard of proof

1. Any finding by us of professional misconduct or unsatisfactory professional conduct must be made to the standard recommended in Briginshaw v Briginshaw and Another [1938] 60 CLR 336. In that matter Dixon J (as he then was), discussed the dichotomy between the criminal and civil standard of proof and expounded what has become known as the "Briginshaw standard": "Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding our considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal."
2. In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd and others (1992) ALR 449 at 450, the majority of the High Court, led by Mason CJ approved the Briginshaw standard, but noted that: "(T)he strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary 'where so serious a matter as fraud is to be found.(Rejfek v McElroy (1965) 112 CLR, at 521). Statements to that effect should not, however, be understood is directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct."
3. The approach to the Briginshaw standard in the Neat Holdings case was more recently approved by Leeming JA in the NSW Court of Appeal in Bronze Wing International Pty Ltd v SafeWork NSW [2017] NSWCA 41 at [126].

The Law Society's case

1. In essence, the Law Society's case was that the Solicitor's actions constituted professional misconduct by him, because he breached section 260 of the LPA (Ground 1), used trust monies that he was not entitled to use (Ground 2) and caused a deficiency in the Trust Account (Ground 3) (collectively "the Grounds").
2. In relation to the assertion that we should make a finding of professional misconduct, the Law Society did not assert that Mr Thornton had been dishonest, but rather that he had been "recklessly careless" in two respects: 1. in failing to remember that on 19 October 2010 he had caused $20,000 from the third Settlement Payment to be withdrawn from the trust account and deposited into his personal account; and 2. in failing, between November 2010 and March 2017, to review monthly bank reconciliations and to investigate the two "debit adjustments" on the trust account's monthly bank reconciliations.
3. On that basis the Law Society's initial position was that Mr Thornton's conduct constituted both common law professional misconduct and professional misconduct as defined in section 297 of the Uniform Law.
4. As we understood it, the Law Society indicated that it would rely upon a breach of section 297 by the Solicitor (that is, statutory professional misconduct), but that it did not press a contention that his conduct also amounted to common law professional misconduct within the Allinson test, as discussed in more detail at [36] below. In case we have misunderstood the Law Society's intention in this regard, we have addressed both forms of professional misconduct below.
5. The Law Society sought orders that the Solicitor be reprimanded, that he pay a fine (which in the Law Society's submission could appropriately be in the range of $4000 to $8000), that he pay the costs of the Law Society as agreed or assessed and such other orders as the Tribunal might think fit.

Solicitor's case

1. In essence, Mr Thornton's case was as follows.
2. He did not dispute many of the central facts in the matter. By his Reply, as amended by a document filed on 4 June 2020 he admitted: 1. the relevant facts which we have set out above at [17]; 2. that in the circumstances as admitted he had intermixed trust monies with other monies; 3. that in so doing he had breached section 260 of the LPA; 4. that at no time was he authorised or directed to cause $7644.16 of the payment withdrawn from the Trust Account or to be paid to the Deputy Commissioner of Taxation or to cause the monies referred to at [17] (8) above to be withdrawn from the trust account; 5. that in all the circumstances he had used trust monies that he was not entitled to use and had caused a deficiency in the trust account.
3. Mr Thornton accepted that his conduct amounted to unsatisfactory professional conduct and we accepted that that was so and found accordingly. However he did not admit professional misconduct.
4. His case in relation to the charge of professional misconduct was that he was unaware of the trust account deficiency until it was drawn to his attention by Mr Livermore, the Law Society inspector, in the course of his investigation in March 2017 and that: 1. the trust account deficiency was an innocent mistake brought about by the actions and oversight of the bookkeeper; 2. the accountancy firm, which itself had responsibility for bookkeeping generally and was the employer of the bookkeeper, had eventually conceded the error which had been responsible for the trust account deficiency; 3. the bookkeeper's error was compounded by the fact that the accounting firm, as the external examiners of his law firm's accounts, had failed to uncover the trust account deficiency in the course of their subsequent audits and none of that firm's external examination reports between 2010 and February 2017 had identified the error; 4. Mr Thornton had throughout acted on the assumption, which in the circumstances was a reasonable one, that the trust account deficiency did not exist, until he was apprised of it by Mr Livermore, the Law Society inspector in March 2017; and 5. he had then immediately rectified the deficiency from his own funds.
5. In addition Mr Thornton referred to a letter dated on or about 2 June 2017, a copy of which was part of annexure in JH-1 to the affidavit of Nadya Justine Haddad, the Acting Director of Professional Standards of the Law Society, affirmed on 15 April 2019 (appearing at pages 362 and 363 of annexures to that affidavit). That affidavit was admitted into evidence. The letter was from Mr Mark Pepper of the chartered accountants' firm to Mr Livermore of the Law Society. In it, Mr Pepper confirmed as follows: "In 2011 the irregularity was due to the audit team incorrectly treating the two debit adjustments of $5000 and $15,000 in 2011 as outstanding deposits received but not included in the bank therefore resulting in the bank statement balance reconciling to the cashbook balance. The notations on the bank reconciliation that these debit adjustments were actual payments/cheques was not investigated by the audit team. In future audits a breakdown in our control and review processes caused these entries not to be further investigated during the bank reconciliation testing procedures and therefore not reported to the Law Society.. "(Emphasis added)

"Professional misconduct"

1. Professional misconduct is defined inclusively in section 297 of the Uniform Law. It includes: 1. unsatisfactory professional conduct which involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and 2. conduct of a lawyer that would, if established, justify a finding that the lawyer is not a fit and proper person to engage in legal practice.
2. Subsection (2) of the section provides that for the purpose of deciding whether a lawyer is or is not a fit and proper person to engage in legal practice as referred to in (b) above, regard may be had to the matters that would be considered if the lawyer were an applicant for admission to the Australian legal profession or for the grant or renewal of an Australian accessing certificate and any other relevant matters.
3. As confirmed in Legal Services Commissioner v Livers [2017] NSWCATOD 117 at [138], it is accepted that Parliament, in formulating a statutory definition of professional misconduct, nevertheless intended to preserve the common law meaning of the term.
4. The Tribunal in that case accepted that at common law professional misconduct was conduct that would be reasonably regarded as disgraceful or dishonourable by professional colleagues of good repute and competency. That is the test, commonly referred to as "the Allinson Test", derived from observations in Allinson v General Council of Medical Education and Registration [1894] 1 QB 750 at [758]. Although the statutory phrase under consideration in that case was "infamous conduct in a professional respect", the Allinson test was extended and applied to the conduct of solicitors in In re a Solicitor; Ex parte Law Society [1912] 1 KB 302 at 311-312. A detailed examination of the history of judicial construction of the phrase was undertaken by Spigelman CJ in New South Wales Bar Association v Cummins [2001] NSWCA 284 at [37].
5. In Kennedy v Council of Incorporated Law Institute of New South Wales (1939) 13 ALJ 563 at 563, Rich J observed that professional misconduct involved conduct which amounted to: " ..a grave impropriety affecting (the practitioner's) professionalism and character and was indicative of a failure either to understand or to practice the precepts of honesty or fair dealing in relation to the courts, his clients or the public. The particular transaction the subject of the charge must be judged as a whole and in the conclusion whether it betokens unfitness to be held out by the public as a member of the profession in whom confidence could be placed, or on the other hand, although a lapse from propriety, was not inconsistent with general professional fitness and habitual adherence to moral standards, (must) be reached by a general survey of the whole transaction."

"Unsatisfactory professional conduct"

1. Under section 296 of the Uniform Law unsatisfactory professional conduct is defined inclusively. It includes conduct of a lawyer occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.
2. In Donaghy v Council of the Law Society of NSW (No. 2) [2015] NSWCA 224 at [94], the Court of Appeal recognised that conduct involving a contravention of "legal profession rules" (that is, rules made under Part 7.5 of the LPA) may also constitute unsatisfactory professional conduct. By analogy, the same principle should apply to Legal Profession Conduct Rules made or recognised under Part 9.2 of the Uniform Law.
3. A more detailed analysis of the development of the concept of "unsatisfactory professional conduct" and relevant case law is set out in BRJ v Council of the New South Wales Bar Association [2016] NSWSC 146] (Supreme Court of NSW, Adamson J) at [66]-[102].

The real issues

1. In order to give effect to the "guiding principle" set out in section 36 of the Civil and Administrative Tribunal Act (No 2) 2103 (NSW), which is that the Tribunal must facilitate the just, quick and cheap resolution of the real issues in the proceedings, we proceed to identify those real issues.
2. On the basis of the cases as put to us, the admissions and concessions made including Mr Thornton's concession that his conduct amounted to unsatisfactory professional conduct and our finding that that was so, the real issues for resolution by us are: 1. Did Mr Thornton's conduct amount to common law professional misconduct; that is, breach of the Allinson standard? 2. Did his conduct amount to statutory professional misconduct; that is, did his conduct involve a breach of section 297 of the Uniform Law? In particular, as submitted by the Law Society, had there been professional misconduct because Mr Thornton had been "recklessly careless", in failing: 1. to remember that on 19 October 2010 he caused $20,000 from the third Settlement Payment to be withdrawn from the trust account and deposited into his personal account; and 2. to review monthly bank reconciliations and investigate the two "debit adjustments" on the trust account's monthly bank reconciliations? 1. Was he otherwise guilty of statutory professional misconduct; for example was he "recklessly indifferent" to his obligations? 2. What penalty orders are appropriate?

Unsatisfactory professional conduct

1. Mr Thornton conceded that his conduct amounted to unsatisfactory professional conduct within section 296 and we make a formal finding to that effect. The evidence clearly demonstrates that his conduct was conduct in connection with legal practice which fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.

1.Common law professional misconduct?

1. We found that Mr Thornton's conduct when taken as a whole did not justify a conclusion that he was guilty of professional misconduct. On the basis of the established facts we accepted that the trust account deficiency was not the result of a deliberate or (as discussed below) a careless mistake and that it was brought about by the omissions and lack of oversight by the bookkeeper and exacerbated by the fact that the accounting firm, as the external examiners of the law firm's accounts, failed to uncover the trust account deficiency in the course of several subsequent audits, so that none of that firm's examination reports between 2010 and February 2017 identified the error.
2. The Allison test is based on the standards of "professional colleagues of good repute and competency". In order to establish professional misconduct it is necessary to find that such professional colleagues would regard the conduct in question as disgraceful or dishonourable and would reach that conclusion reasonably.
3. We do not think that watermark has been reached.
4. In reaching that conclusion, we are of the view that members of the profession of good repute and competency may well regard the conduct of Mr Thornton which is in question (including any failure to check the position of the trust account or to recall relevant withdrawals) as unfortunate and as being below the expected standard of competence and diligence. But, particularly in light of the failure by the external examiners to identify the bookkeeper's errors or otherwise to bring the trust account deficiency to light, members of the profession of good repute and competency could not reasonably conclude that Mr Thornton's actions and omissions reached the high water mark of conduct which was "disgraceful or dishonourable".
5. It follows that there is no common law professional misconduct and we find accordingly.

2.Statutory professional misconduct (s 297): "reckless carelessness"?

1. We understood the Law Society's position to be that Mr Thornton was guilty of statutory professional misconduct by reference to s 297(1) (a), because his conduct involved a substantial failure to reach or maintain a reasonable standard of competence and diligence and that that conclusion rested on contentions that: 1. as principal of the law practice he was responsible for ensuring that it complied with the requirements in relation to the handling of trust money; and 2. he failed to do that and in particular was recklessly careless in failing: 1. to remember that on 19 October 2010 he had caused $20,000 from the third Settlement Payment to be withdrawn from the trust account and deposited into his personal account; and 2. to review the monthly bank reconciliations and investigate the two "debit adjustments" on the trust account's monthly bank reconciliations (and had so failed between November 2010 and March 2017 when the issue was brought to his notice by Mr Livermore of the Law Society: Law Society's submissions at [56]).
2. The Law Society's dual contentions, which are central to its claim of professional misconduct, are that those omissions by Mr Thornton constituted reckless carelessness of a sufficient degree for there to have been a "substantial failure to reach or maintain a reasonable standard of competence and diligence" within the meaning of s 297 (1) (a).
3. In aid of the contention that Mr Thornton's conduct was "recklessly careless" the Law Society relied in particular on the cases of Council of the Law Society of NSW v McHugh [2014] NSWCATOD 37 and Council of the Law Society of NSW v Nicholls [2012] NSW ADT 222.
4. In McHugh there had been a failure properly to supervise an office manager who frequently withdrew monies from the trust account to pay staff wages and other outgoings. That places that case on quite a different footing to the present one. In McHugh there was deliberate, continuing, unsupervised misuse of trust funds. There was no comparable failure asserted here.
5. In Nicholls the Tribunal was satisfied that the deposit of trust monies into the office account was a deliberate act on the solicitor's part and that her subsequent actions in permitting the office account balance to fall below the total of the trust monies "were similarly deliberate and not acts of mere inadvertence on her part… She converted the trust monies to her own use". See [2012] NSW ADT 222 at [35]. There were no comparable deliberate acts here.

3. Other statutory professional misconduct; e.g. "reckless indifference"?
4. For completeness, we have also considered whether Mr Thornton's actions and omissions may properly be characterised as "reckless indifference". That phrase in the relevant context was examined in detail in the Western Australian Court of Appeal decision, Guidice v Legal Profession Complaints Committee [2014] WASCA 115 and that decision was in turn subject to observations by the New South Wales Court of Appeal in Fraser v Health Care Complaints Commission [2015] NSWCA 421, particularly at [29]-[33] and [35]. As the New South Wales Court of Appeal noted "much judicial ink has been devoted to the meaning of the word 'reckless'". The Court cited Edelman J (as he then was) in Guidice when he analysed the scope of "reckless" by explaining that: "It is possible that the references by the Tribunal to (the phrases) 'should have been aware' and 'should have considered' might be read as shorthand references to: "a matter that any reasonable practitioner would have been aware so that the inference to draw from the circumstances was that the practitioner was aware that the statement might be untrue and made that statement without satisfying himself that it was true and regardless of the consequences."
5. In Fraser, the New South Wales Court of Appeal noted with apparent approval the suggestion in Guidice that to speak of the person "closing his or her mind" to a particular state of affairs carries the necessary implication that he or she is aware of the significance of that state of affairs.
6. In our view, in order for the Law Society to establish reckless indifference in light of the standards considered in Fraser, it would have to show that Mr Thornton, having been aware of a real possibility that the trust account balances were incorrect and that the external examiners' reports were deficient in this regard, effectively closed his mind to the matter.
7. That is not what happened. It is not an accurate or reasonable analysis or summation of the facts in the present case.
8. We find that Mr Thornton was not "recklessly indifferent" to the relevant acts and omissions in any way which constituted a substantial failure to reach or maintain a reasonable standard of competence and diligence.
9. Mr Thornton's actions and omissions fell short of the standards of competence and diligence that might reasonably be expected of a competent lawyer by members of the public. They certainly had substantial and unfortunate consequences. But they did not constitute a substantial or a consistent failure to maintain a reasonable standard of competence and diligence nor do they justify a finding that Mr Thornton Is not a fit and proper person to engage in legal practice.

4.What penalty orders are appropriate?

1. We note that Mr Thornton, in his written submissions, accepted that each of a reprimand, fine and costs order was appropriate and also accepted "such other order as the Tribunal thinks fit".
2. However we read that as his indication that he is prepared to accept some form of disciplinary order under each of those categories and we do not regard ourselves as bound by that preliminary indication to make an order in each of those categories. The question of which penalty order category under section 302 of the Uniform Law is appropriate and in what form is, in that sense, at large.

Factors influencing the imposition of an appropriate penalty

1. In reaching our decision as to which penalty orders are appropriate we have taken into account: 1. Mr Thornton's acceptance, both as to the omissions which had occurred, their effect and his responsibility for them at what appears to be the earliest possible stage in the circumstances; that is, immediately upon or very soon after being apprised of the real situation with the trust account by Mr Livermore of the Law Society. 2. His acceptance that his conduct was at least unsatisfactory professional conduct. 3. His early repayment of $20,000 into the trust account, upon being apprised of the trust account deficiency. 4. The genuine contrition which from that time he has expressed. He repeated his contrition in his affidavit, in his written submissions and at the hearing. We were provided with several written character references (in most cases verified by affidavit or statutory declaration).They were for the most part impressive and persuasive. Most of them confirmed Mr Thornton's substantial remorse for his actions. Mr Simon Harben SC, a past president of the Newcastle Bar Association, provided an extensive character reference which described Mr Thornton's high standing and his reputation in the region Mr Harben observed that Mr Thornton had been "gutted" by the circumstances of this case. 5. Mr Thornton's good standing in the profession, as verified by the written references. 6. The fact that this case can be distinguished from many in which the Tribunal has imposed substantial penalty orders (including but not restricted to substantial fines). The significant distinguishing features in this case are: 1. the existence of appropriate "fallback" procedures through the appointment of external examiners, which might reasonably have been expected to have uncovered and notified the trust account deficiency, which could then, at an early date, have been rectified. 2. The omissions and failures of the bookkeeper, exacerbated by the ongoing failure of the external examiners to identify the problem: the two debit adjusting items totalling $20,000 were included on every month end bank reconciliation for the law firm's trust account from November 2010 to February 2017; 3. perhaps to a lesser degree, the fact that the bookkeeper who made the initial error was not a direct employee of the Solicitor but in fact a secondee from the accounting firm which was the appointed external auditor. 1. We have also taken into account that at the conclusion of the hearing, at our suggestion, Mr Thornton undertook to the Tribunal and to the Law Society that within 6 months of the date of the hearing he would complete an appropriate course of continuing legal education in relation to solicitors' responsibilities concerning trust accounts and provide the Law Society with a certificate of completion.

Reprimand

1. Mr Thornton should be reprimanded. As has been noted in Law Society of NSW v English [2011] NSW ADT 39 and in many other cases, the nature of the Solicitor's conduct should be "marked out" to the profession as a whole and the public as falling short of the standard of behaviour expected by legal practitioners. In our view the reprimand will also appropriately mark out our disapprobation of his conduct; in particular that for 6 years his supervision of the bookkeeper was insufficient to notice the ongoing error that was later found by Mr Livermore.

Fine

1. We have given substantial consideration as to whether a fine should be imposed. A substantial fine in what might loosely be termed the "medium-range" of $4000 to $8000 was suggested by the Law Society.
2. The Law Society's written submissions set out 3 grounds on which a fine would be justified, namely: 1. to publicly mark the seriousness and appropriately reflect the Tribunal disapprobation of the Solicitor's lapses from the high standard of conduct which is legitimately expected; 2. to maintain proper standards of conduct within the legal profession; and 3. "to protect the public by deterring the (Solicitor) from engaging in similar conduct in the future and deterring other practitioners behaving in a similar manner."
3. In light of our findings as to the extent of the Solicitor's departure from expected standards and taking into account the undertaking proffered by Mr Thornton as noted above, we are of the view that in the circumstances of this case the imposition of a reprimand and a costs order will sufficiently mark the seriousness of the conduct and our disapprobation of it, will be sufficient to encourage proper standards and deterrence for other practitioners and will provide an appropriate level of public protection and deterrence in reference to (3) above.
4. For those reasons a fine will not be imposed.

Costs

1. Mr Thornton must pay the costs of the Law Society as agreed or assessed. We could not see that any other penalty orders are appropriate.

Conclusions and Orders

1. It follows that on the basis of our finding that Brian David Thornton ("the Solicitor") is guilty of unsatisfactory professional conduct, we will order that: 1. The Solicitor is reprimanded. 2. The Solicitor is to pay the costs of the Law Society of NSW as agreed or assessed.

Legal Profession Act, 2004 (NSW)

1. 260 Intermixing money 1. A law practice must not, otherwise than as permitted by subsection (2), mix trust money with other money.

Legal Profession Uniform Law (NSW) No.16a 296 Unsatisfactory professional conduct For the purposes of this Law, "unsatisfactory professional conduct" includes conduct of a lawyer occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer. 297 Professional misconduct 1. For the purposes of this Law, "professional misconduct" includes-- 1. unsatisfactory professional conduct of a lawyer, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and 2. conduct of a lawyer whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the lawyer is not a fit and proper person to engage in legal practice. 1. For the purpose of deciding whether a lawyer is or is not a fit and proper person to engage in legal practice as referred to in subsection (1)(b), regard may be had to the matters that would be considered if the lawyer were an applicant for admission to the Australian legal profession or for the grant or renewal of an Australian practising certificate and any other relevant matters. Civil and Administrative Tribunal Act (2013) NSW 36 Guiding principle to be applied to practice and procedure 1. The "guiding principle" for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. 1. The Tribunal must seek to give effect to the guiding principle when it-- 1. exercises any power given to it by this Act or the procedural rules, or 2. interprets any provision of this Act or the procedural rules. 1. Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal-- 1. a party to proceedings in the Tribunal, 2. an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal. 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: 11 September 2020