Council of the Law Society of New South Wales v Truong

NCAT Occupational|2015-01-12

Introduction

On 1 October 2014, the Applicant, the Council of the Law Society of New South Wales ('the Law Society'), filed a Disciplinary Application claiming that the Respondent, Albert-Edris Tri Dai Minh Truong ('the Solicitor'), had been guilty of professional misconduct.
This Application stemmed from a Complaint made by the Law Society against the Solicitor, the text of which was communicated to him in a letter from the Society dated 25 February 2014.
The orders sought in the Application were that the Solicitor:- 1. be reprimanded 2. if, at the time the Tribunal makes its orders the solicitor holds a practising certificate, the solicitor's practising certificate be suspended until such time as the solicitor complies with the section 660 Notice 3. if, at the time the Tribunal makes its orders the solicitor does not hold a practising certificate, no practising certificate be issued until such time as the solicitor complies with the section 660 Notice 4. pay the costs of the Applicant as agreed or assessed 5. be subject to any other order as the Tribunal deems appropriate.
The single Ground of the Application was as follows:- Albert-Edris Truong is guilty of professional misconduct because without reasonable excuse, he failed to comply with a requirement under section 660 of the Legal Profession Act 2004.
Incorporating one amendment made at the hearing, the Particulars were as follows:- Background 1. Albert-Edris Truong ['the Solicitor']: a. was born on 22 February 1971 and is currently 43 years of age; b. was admitted to the roll of the Supreme Court of NSW on 5 April 2002; c. at all material times was the solicitor director of the incorporated legal practice known as Edrison Lawyers Pty Ltd trading as Edrison Lawyers ['the Law Practice']. 2. In the 5 months period commencing 9 November 2012 Mr Garry Napper, Trust Accounts Investigator for the Law Society, requested among other things from the Solicitor, 6 matter files and documents and documents pertaining to 29 large deposits to the Law Practice office accounts. 3. On 3 February 2013, Mr Napper requested that the Solicitor provide bank reconciliations or trial balances for the months ended November 2012 to February 2013. 4. The Solicitor failed to produce the matter files, documents, bank reconciliations and trial balances requested by Mr Napper. 5. On 22 April 2013 Mr Napper referred to the Professional Standards Department for action his report dated 22 April 2013 into the Law Practice ['the Report']. 6. The summary of the Report was as follows: 'The practitioner Albert Truong, though requested over a period of 5 months, has filed [sic] to provide 6 matter files and details 29 large deposits to his office/general bank account. More recently he has failed to provide bank reconciliations and trial balances for months ended November 2012 to February 2013.' The section 660 Notice 7. On 23 May 2013 Mr Jeffrey David Edwards, Licensed Process Server, personally served the Solicitor with a set of documents including a Notice pursuant to section 660 of the Legal Profession Act 2004. 8. The terms of the Notice were that the Solicitor was required to produce to the Law Society on or before the fourteenth day after service of the Notice: a. verified by statutory declaration, the information set out in Schedule 1; and b. the documents specified in Schedule 2. Under Schedule 2 of the Notice the Solicitor was required to produce the following matter files: i. L325 W468 Wu - purchase of house and land package Melbourne ii. LB017 W747 Mok - purchase Metro Grand iii. L335 W468 Zhi Yun Ma - proposed purchase iv. LB001 W747 Zhi Yun Ma - proposed purchase property v. L312 W468 Chen & Li - purchase Summit vi. LC021 W418 Yuan Yuan Chen - purchase Rhodes 9. The fourteenth day after service was 6 June 2013. The Solicitor's Response to the Notice 10. The Solicitor responded to the Notice by letter and Statutory Declaration each dated 6 June 2013. 11. In his response to the Notice the Solicitor failed to: a. Provide copies of all bank statements for all office and trust accounts for the period 1 November 2011 to date; b. Provide confirmation letters for all monies deposited to the office accounts which the Solicitor says were loans to him; c. Provide the attachment in relation to the deposit of $12,500.00 on 24 July 2012 into Westpac BSB… Account no…; d. Provide the original matter file relating to the deposit of $42,731.00 on 18 January 2012 into Westpac BSB… Account no…; e. Provide matter files for trust ledger L335 W468 Zhi Yun Ma and LB001 W747 Zhi Yun Ma; f. Advise why the sum of $42,731.00 described above was retained in the office account for the period 18 January 2012 to 19 June 2012; g. Advise when deposits into the office account of $200,000.00 on 21 December 2011 and $9,600.00 on 22 December 2011 as settlement monies were withdrawn. 12. By Statutory Declaration dated 7 June 2013 the Solicitor stated that he had misplaced or lost the clients' file or documents in the matters of Yuan Yuan Chen and Zhi Yun Ma. 13. The Solicitor provided further answers to the Notice on 23 and 30 April 2014 so that the notice is answered in substance. 14. In addition to being 10 months late, the Solicitor's responses in April 2014 were not verified by statutory declaration. Reasonable Excuse 15. The Solicitor has failed to provide any reasonable explanation for his inadequate response to the Notice.

Legislation

So far as relevant, s 660 of the Act states:- 660 Requirements in relation to complaint investigations (1) For the purpose of carrying out a complaint investigation in relation to an Australian lawyer, an investigator may, by notice served on the lawyer, require the lawyer to do any one or more of the following: (a) to produce, at a specified time and place, any specified document (or a copy of the document), (b) to provide written information on or before a specified date (verified by statutory declaration if the requirement so states), (c) to otherwise assist in, or co-operate with, the investigation of the complaint in a specified manner. (3) A person who is subject to a requirement under subsection (1) or (2) must comply with the requirement. Maximum penalty: 50 penalty units. (4) A requirement imposed on a person under this section is to be notified in writing to the person and is to specify a reasonable time for compliance.
Subsections (3) and (4) of s 676 should also be quoted. They are in the following terms:- 676 Obligation of Australian lawyers (3) An Australian lawyer who is subject to: (a) a requirement under section 660 (Requirements in relation to complaint investigations), or (b) a requirement under provisions of a corresponding law that correspond to that section, must not, without reasonable excuse, fail to comply with the requirement. (4) An Australian lawyer who contravenes subsection (2) or (3) is guilty of professional misconduct.

Relevant aspects of the evidence

The evidence admitted at the hearing included the following documents filed before the hearing: (a) an affidavit sworn on 23 July 2014 by Ms A-M Foord, the solicitor for the Law Society, to which a quantity of documentary material was exhibited; and (b) an affidavit affirmed by the Solicitor on 4 November 2014. Also admitted, on the Solicitor's tender, were two statutory declarations affirmed by him on 18 July 2014 and a report by an External Examiner, Mr J Oehlers, relating to the Solicitor's firm, Edrison Lawyers Pty Ltd (hereafter 'the Law Practice').
Neither the Solicitor nor any of the other witnesses was required for cross-examination.
As the Particulars demonstrate, the Law Society did not allege that the Solicitor failed wholly to comply with the Notice under s 660 of the Act ('the Notice') that had been served on him on 23 May 2013. The Society's claim focused instead on two specific aspects of his response to the Notice.
The first of these was that within the period of fourteen days after service specified in the Notice the Solicitor did not provide the information and documents described in P11.
The second was that the Solicitor failed to verify by statutory declaration all of the information that he did provide.
It is convenient to mention here that the Notice included a clause indicating that if the Solicitor was unable to comply with its requirements, he was obliged to provide a statutory declaration on or before the fourteenth day after service of the Notice, stating the reasons for his inability to comply.
We will deal first with the Law Society's claims of failure to provide all the information required by Schedule 1 of the Notice and failure to produce the documents described in Schedule 2.

Alleged shortcomings in the Solicitor's provision of information

The Law Society made two allegations of failure by the Solicitor to provide information required by the Notice. These were set out in P11(f) and (g).
The question in the Notice to which these two paragraphs of the Particulars related was the last of the questions (no. 16) in Schedule 1. Henceforth, we will refer to this question, which is of particular significance in these proceedings, as 'Question 16'. It commenced as follows:- 16. I refer you to the following list of deposits [being 29 of the deposits raised by Mr Napper with you - the schedule]…
Question 16 then set out brief particulars of 29 deposits of money into three specified bank accounts maintained by the Law Practice. One of these was the Westpac account into which the deposit referred to in P11(f) (and also P11(d)) and the two deposits referred to in P11(g) were made. The particulars given of these deposits were as follows:- 18/01/12……..42,371.15 …… EFT - Dep Port Headland WA 21/12/11……..20,000.00 ……...EFT - Yaqin Yuan Yuan Settlement 22/12/11 ……..9,600.00 ………EFT - Yaqin Yuan Yuan Settlement
Question 16 then concluded as follows:- In respect of the above 29 deposits: i. Nominate the client or other person to whom each of the deposits relates to (sic) and who provided the funds. ii. In respect of each of the deposits, advise as to the purpose for (sic) the provision of the funds to you.
As stated in P10, the Solicitor initially responded to the Notice by sending a statutory declaration and a letter, both dated 6 June 2013, to the Law Society. In the statutory declaration, he provided substantive answers to all of the questions in Schedule 1 of the Notice except Question 16. His answer to Question 16 was 'Please see my letter addressed to Mr. Pierotti sent on 6/6/2013'. In the concluding paragraph of the declaration, he added 'Please refer to my letter addressed to Mr Pierotti sent on 6/6/2013.' (Mr Pierotti, an Investigator employed by the Law Society, was the person who issued the Notice on the Society's behalf.)
With specific reference to the deposit of $42,731 referred to in P11(f), this letter of 6 June 2013 addressed by the Solicitor to Mr Pierotti (hereafter 'the letter of 6 June 2013') contained the following statement:- 18/1/12 $42,731.15 client pays money for settlement cheque go out on 19/6/12 for the amount of $42,731.15.
The letter of 6 June 2013 also conveyed the following response to the allegation in P11(g):- 21/12/11 $20,000.00 this plus (sic) the $9,600.00 below (22/12/12 (sic)) client in China paid cash for settlement. 22/12/11 $9,600.00 see immediately above.
In the letter dated 25 February 2014 from the Law Society to the Solicitor conveying the terms of the Complaint to him, the Society made the allegations of failure to comply with the Notice that were subsequently included in the Particulars as P11(a)-(e), (f) and (g). The letter indicated that within 14 days he should provide a written response to the Complaint.
In a letter dated 23 April 2014 to the Law Society (this is one of the letters to which P13 refers), the Solicitor provided the following responses to the allegations contained in P11(f):- … I enclose bank statement No 32 of account no… There was a Typo error that I made when responding as the date gone out of the account is 19 Jan 2012. It is not 19 Jun (sic) 2012. You can verify this typo error with all the account statement provided.
He also responded as follows to the allegation in P11(g):- …the money was withdrawn by the purchase of bank cheque on 23/12/2012. Copy of the bank statement part where it is enclosed and marked point 5 (sic).
As the Solicitor acknowledged in this letter of 23 April 2014, his initial answer regarding the deposit of $42,731 referred to in P11(f) had contained a significant inaccuracy. It is for this reason (as Ms Groenwegen pointed out in her submissions to us) that the Law Society included in the Complaint the allegation subsequently appearing in the Application as P11(f).
This allegation of non-compliance in P11(f) related, however, to information that the Notice itself did not require. Nowhere in Question 16 or in any other part of Schedule 1 was it stipulated that the Solicitor should provide any advice as to why the amount of $42,731 deposited in the office account on 18 January 2012 was retained in that account for any length of time.
As indicated above at [23], Question 16 required information on three quite different matters: (a) the identity of the client or other person to whom the relevant deposits related, (b) the person who provided the funds and (c) the purpose for which the deposits were made. It did not refer to retention of any of these funds in the office account of the Law Practice or to the purpose for which any such retention occurred.
For this reason, we reject the Law Society's claim of non-compliance with the requirements of the Notice set out in Particular 11(f) of the Application.
For similar reasons, we also reject the Law Society's claim of non-compliance set out in Particular 11(g). The allegation made in this Particular was that the Solicitor had failed to advise as to the date or dates on which the two deposits described in the Particular (occurring on 21 and 22 December 2011 and being for 'settlement monies') were withdrawn. But the Notice did not require this information to be provided.
We will add here that at the hearing Ms Groenewegen drew our attention to a number of points in the letter of 6 June 2013 at which the Solicitor made a brief statement about one of the 29 deposits listed in Question 16. She argued - with justification, in our opinion - that these statements did not cover the three specific matters (identified above at [32]) on which Question 16 required information with respect to each of the deposits.
Non-compliance of this nature was not, however, alleged in the Application. The only alleged shortcomings in the information provided by the Solicitor were those outlined in P11(f) and (g).
For the foregoing reasons, these two allegations of non-compliance must be left out of account when we are assessing the extent to which the case pleaded in the Application has been established.

Alleged shortcomings in the Solicitor's production of documents

The documents that the Solicitor was required by the Notice to produce to the Law Society were described as follows in the following three paragraphs of Schedule 2 of the Notice:- A. In respect of the schedule referred to in 16 above, provide the original of all: office copy receipts; bank deposit records; telegraphic transfer advices; trust account ledgers; office account ledgers; and all such other records held by you in relation to the deposits listed in the schedule. B. Provide the files requested by Mr Napper at the second meeting. C. If you did not respond to the letter referred to in question 14 of Schedule 1 above, provide a copy of your response and all attachments and enclosures to it.
The 'second meeting' referred to in paragraph B was identified in paragraphs 5 and 6 of Schedule 1 as a meeting between Mr Napper and the Solicitor on 9 November 2012. At that meeting, Mr Napper gave to the Solicitor a list of 12 matter files that he required for review. The Solicitor stated that he could not produce them on that day.
The letter referred to in Paragraph C was identified in paragraph 14 of Schedule 1 as a letter dated 2 February 2013 from Mr Napper to the Solicitor. In this letter, Mr Napper requested production of 6 out of the 12 files appearing on the list given to the Solicitor at the second meeting, together with details and/or documentation regarding 29 deposits not previously dealt with at a meeting that had taken place on 14 December 2012.
The Law Society made five allegations of failure by the Solicitor to produce documents required by the Notice. These were set out in P11(a) to (e). It is convenient to discuss them separately.
P11(a) - failure to produce bank statements. In this Particular, the bank statements claimed to have been required by the Notice were the statements 'for all office and trust accounts for the period 1 November 2011 to date'. In Schedule 2 of the Notice, however, the statements required were confined to those relating to the 29 deposits that were listed in Question 16. As already stated, these deposits were made into three specified bank accounts of the Law Practice. Two of these accounts were with Westpac and the third with the National Australia Bank.
In his Reply, the Solicitor pleaded as follows in relation to P11(a): (i) it had not been clear to him that he was required to produce all bank statements during the period from 1 November 2011 to the date of the Notice; (ii) he believed instead that the period was only to be 'the investigation period of Mr Napper'; (iii) he accordingly provided bank statements of all accounts including the trust account for the period from 1 November 2011 to the end of November 2012; and (iv) the bank statements from 1 November 2011 to the date of the Notice would be 'voluminous'.
Although the Solicitor delivered a number of documents to the Law Society on 6 June 2013, they did not include any bank statements relating to the accounts referred to in Question 16. He also failed to provide a statutory declaration giving reasons for his inability to produce such statements. It was not until 23 April 2014 that he produced statements of this nature. Along with statements for the trust account of the Law Practice, they were enclosed with his letter of that date to the Law Society.
As Ms Groenewegen acknowledged at the hearing, the list of documents in Schedule 2 of the Notice made no specific reference to bank statements. But we agree with her that the phrase 'all such other records held by you in relation to the deposits listed in the schedule' at the end of paragraph A was sufficient to indicate that the Notice required production of any bank statement on which any one or more of the 29 deposits listed in Question 16 were recorded.
On the other hand, the Solicitor clearly had good grounds to assert in his Reply that the Notice did not require production of 'all bank statements for all office and trust accounts for the period 1 November 2011 to date', as was claimed in P11(a). In this Particular, therefore, the Application made an allegation of non-compliance that was not fully supported by the terms of the Notice.
For the foregoing reasons, our findings in relation to this allegation are as follows. In so far it was concerned with bank statements on which any of the 29 deposits listed in Question 16 were recorded, the allegation is established by the evidence. Production of these statements did not take place until a date (23 April 2014) significantly later than the date (6 June 2013) by which production was required. No statutory declaration giving reasons for the Solicitor's inability to produce them on or before 6 June 2013 was provided to the Law Society by that date.
P11(b) - failure to produce 'confirmation letters'. In his Reply, the Solicitor's pleading in response to this Particular commenced as follows:- As to 11(b), at the time the Respondent made his Statutory Declaration [he] was not aware that he needed to provide letters witnessing the loans. When this was explained to him, he promptly obtained such letter[s] with the exception of one whom he could not contact. These letters were required [sc: requested] and obtained… on 29 May 2014 with the exception of one of the creditors…
In the letter of 6 June 2013, the Solicitor stated that five out of the 29 deposits listed in Question 16 involved loans. One of the loans was from his father. In the other four cases, the lender was identified as 'my previous staff'.
In his letter of 23 April 2014 to the Law Society, the Solicitor confirmed that one of the loans was from his father and said that he would ask his father to confirm this in writing. In relation to the other four loans, he said that the lender was a former employee of his, Mr Hongbo Li and that he was no longer on good terms with Mr Li.
In a letter to the Law Society dated 30 April 2014, the Solicitor enclosed a letter from his father confirming the loan. In a letter dated 5 May 2014, he enclosed copies of letters sent by him to Mr Li asking for confirmation of the four loans that he claimed to have been made by Mr Li.
The Law Society did not adduce any evidence establishing or suggesting that at the time when the Notice was served on the Solicitor he had in his possession any 'confirmation letters' relating to the loans that he claimed to have been made. The Solicitor's pleading on this matter and the evidence just outlined suggest that, on the balance of probabilities, no such letters existed at that time. Because the categories of documents (listed in Schedule 2) of which the Notice required production did not use the phrase 'confirmation letters' or any similar phrase, the Solicitor was under no obligation to state why the documents that he produced in his immediate response to the Notice did not include any such letters.
Manifestly, therefore, the inclusion of P11(b) in the Application and, in a different format, in the Complaint was misconceived. This Particular makes an allegation of failure to produce documents that the Law Society, in consequence of its examination of the material that it obtained through issuing and serving the Notice, wished to have prepared and submitted to it. These were not documents that the Notice itself required to be produced.
For these reasons, we reject the Law Society's claim of non-compliance with the Notice set out in Particular 11(b) of the Application.
P11(c) - failure to provide an attachment relating to a specified deposit. In his Reply and his affidavit, the Solicitor stated as follows. This attachment was omitted in error from the documents that he provided to the Law Society on 6 June 2013. When he became aware of this omission through reading the Complaint conveyed to him in the Law Society's letter of 25 February 2014, he remedied the situation by producing the attachment on 30 April 2014.
It would appear however from the Solicitor's letter of 23 April 2014 to the Law Society that it was on this earlier date that he sent the attachment to the Society, as an enclosure to this letter.
The Law Society did not contest this claim by the Solicitor that his omission to include the attachment among the documents produced to the Society on 6 June 2013 was an omission of which he did not become aware until late in February 2014.
Our findings in these circumstances are that the Solicitor failed to comply with the Notice in the manner alleged in P11(c), that he did not become aware of this failure until late in February 2014 and that he remedied it on 23 April 2014.
P11(d) - failure to produce the matter file relating to the deposit of $42,731 referred to in P11(f). The evidence before us regarding this alleged failure is inconclusive because the correspondence between the Law Society and the Solicitor regarding the deposit of $42,731 (in so far as it is contained in this evidence) is concerned solely with the issue raised in P11(f). Furthermore, this evidence (as far as we can tell from perusing it carefully) does not disclose the identity of the relevant client of the Solicitor or of anyone else involved in the transaction to which the deposit related.
In his Reply, the Solicitor pleaded in relation to this Particular that 'the file is there for inspection'.
The onus of proving the matter alleged in this Particular lies on the Law Society. It has not pointed to any evidence that might discharge this onus. We accordingly reject its claim of non-compliance with the Notice set out in Particular 11(d) of the Application.
P11(e) - failure to provide two matter files relating to the client Zhi Yun Ma. In the letter of 6 June 2013, the Solicitor gave an account of certain aspects of a matter in which (it would appear) Zhi Yun Ma was a client. A short covering letter from him to the Law Society (also dated 6 June 2013) accompanied this letter, his statutory declaration (bearing the same date) responding to Schedule 1 of the Notice and three of the six matter files that Paragraph B of Schedule 2 of the Notice required him to produce. This covering letter was in the following terms:- I enclose statutory Declaration, Letter to Law Society of 6/6/2013 and files in the matter of Wu, Mok and Chen & Li. Regarding Yuan Yuan Chen file I cannot find it. Regarding Zhi Yun Ma please see Letter to Law Society of 6/6/2013 for full explanation.
An email sent by Mr Pierotti to the Solicitor on 7 June 2013 acknowledged receipt of the three files sent by the Solicitor on the previous day. It described the three other files to which the Solicitor had referred as 'Ma - proposed purchase - August 2012', 'Ma - (further) proposed purchase - June 2012' and 'Chen - purchase Rhodes'. It continued as follows:- You say that you are unable to find the "Yuan Yuan Chen" file and that your letter of 6 June 2013 deals with the Ma file (sic). I have perused that part of your letter dealing with Ma - I do not understand how there is any explanation for not providing your file/s as required by the Notice. As to the matter of "Yuan Yuan Chen"… please note the requirements of the Notice issued to you - specifically, if you are "unable to comply with the preceding requirements, you must provide a statutory declaration… stating the reasons for your inability to comply." You have not, to my view, complied with this requirement.
In a reply by email sent on the same day, the Solicitor wrote 'I will provide my statutory declaration for the Ma and Yuan Yuan Chen file (sic).'
Later on 7 June 2013, the Solicitor sent to the Law Society the statutory declaration referred to in P12. So far as relevant, it stated:- It is not easy to admit or confess but I have misplaced or lost the client's file or documents in the matter (sic) of Yuan Yuan Chen and Zhiyun Ma. I cannot locate them despite searching for the file and documents relating to these matters. I have been moving office have many files and documents moved and in the process of moving and relocating files and documents were lost.
On the basis of this evidence, our findings in relation to P11(e) are these: (i) the Solicitor did not produce the two matter files to which this Particular refers; (ii) he provided instead a statutory declaration, as permitted in the Notice, stating the reasons for his inability to produce them; and (c) the date on which he provided this declaration was one day later than the date stipulated in the Notice for compliance with its requirements. It follows that to the limited extent indicated in (c), he failed to comply with the Notice.

Failure to provide verification

The Law Society's Complaint against the Solicitor, of which he received notification in its letter to him dated 25 February 2014, did not refer at all to failures by him to verify his response to the Notice. As far as we can ascertain from the evidence, this matter was not raised with him by the Law Society until 24 June 2014. A letter to him from the Society bearing that date contained this passage, preceded by a reference to 'previous correspondence':- I confirm that your responses to the Notice have not been verified by statutory declaration as required and their provision is outside the time specified in the Notice and section 660 of the Legal Profession Act, 2004 has been breached.
In each of the two statutory declarations dated 18 July 2014 that the Solicitor tendered at the hearing (see [13] above), he affirmed the truth of the contents of letters that he had sent to the Law Society on 23 April and 5 May 2014. In one of these declarations, he also affirmed the truth of the contents of letters that he had sent on 30 April and 21 June 2014.
We have already outlined the relevant features of the letters of 23 and 30 April and 5 May. These letters also contained material relating to his claim (discussed below) that he had a reasonable excuse for any failure on his part to comply with the Notice. In the letter of 21 June, he repeated his claim that Mr Li had not responded to his requests to furnish a confirmation letter regarding the alleged loan to him (see [50] above).
The Law Society's claim of failure by the Solicitor to verify information provided by him had two components, as follows: (a) as mentioned in P10, some of the information that he provided on 6 June 2013 - specifically, his answers to Question 16 - was contained in a letter, for which no verification was furnished; and (b) the information that he furnished in his letters of 23 and 30 April 2014 to the Law Society was also not verified. We will discuss each of these components separately.
Failure to verify the contents of the letter of 6 June 2013. It is noteworthy that this claim of failure to verify was not the subject of a specific allegation in the Application. The only reference to it was the statement in P10 that the Solicitor's response to the Notice on 6 June 2013 was 'by letter and Statutory Declaration'.
In his Reply, the Solicitor admitted P10 without making any comment about it. In his affidavit, he made no mention of the issue of failure to verify the contents of the letter of 6 June 2013.
At the hearing, he did not seek to argue that because this failure to verify had not been specifically adverted to in the Application, he had not been put sufficiently on notice that it was part of the Law Society's case against him.
His principal submission was instead that since his statutory declaration of 6 June 2013 indicated at two places that his letter of the same date contained his response to Question 16 (see [24] above), the letter should be treated as incorporated within the declaration. He also pointed out that in email messages sent to him on 6 and 7 June 2013 in which the Law Society required the provision of further documents, there was no mention of his obligation to verify the information provided in this letter.
We add here that in the email of 7 June 2013 from which we quoted an extract at [62], Mr Pierotti advised the Solicitor that he would 'ask Mr Napper to peruse your correspondence and Statutory Declaration to ensure that all outstanding matters have been responded to' [emphasis added]. The lack of verification for this 'correspondence' did not attract any criticism.
In her submissions, Ms Groenewegen argued that the references to the letter of 6 June 2013 in the Solicitor's statutory declaration of the same date could not be regarded as sufficient to 'incorporate' the letter within the declaration, or for any other reason to constitute verification of its contents.
After careful consideration, we have concluded that although the allegation of failure to verify this letter should evidently have been given more prominence in the letter, we are not prepared to rule, in the absence of any claim to this effect by the Solicitor, that he was not adequately notified that it formed part of the Law Society's case against him. We consider that at the hearing he had a sufficient opportunity to object to its inclusion.
We agree with Ms Groenewegen that a statement in a statutory declaration to the effect that the reader should 'refer to' or 'see' a separate document is insufficient to 'incorporate' the document into the declaration and thereby to verify it.
We are also bound to conclude that the Law Society's failure, until about a year after the Solicitor's declaration and letter were sent to the Law Society, to point out to him that he had failed to verify the letter does not alter the fact that in this important respect he had failed to comply with the requirements of the Notice.
This is, in our opinion, an important matter for two reasons. First, the distinction between statements which have been sworn or affirmed as true in a statutory declaration and statements that are merely made in a letter is a substantial one. The significance of an oath or affirmation cannot be ignored. Secondly, the information required in Question 16 was of prime importance for the investigation conducted by Mr Napper.
As far as we can ascertain from the evidence, this failure by the Solicitor has not been remedied. The statutory declarations of 18 July 2014 that he tendered at the hearing do not address the contents of the letter of 6 June 2013.
Failure to verify the contents of the letters of 23 and 30 April 2014. This allegation, contained in P14, is clearly substantiated according to its terms. As indicated above at [50 - 51], these letters provided information required by Question 16 in relation to five of the deposits listed in this Question. Although the Notice required verification of this information, this was not provided until 18 July 2014.
The Solicitor sought to justify this failure by pointing out that the Law Society's letter of 25 February 2014 did not require verification of his answers to the questions contained in it. But the requirement of verification arose under the Notice. It was not, in our opinion, discharged simply because a subsequent letter from the Society did not refer to it.
We therefore conclude that the allegation in P14 is made out to the following extent. The Solicitor failed, until 18 July 2014, to comply with the requirement to verify the information falling within the scope of Question 16 that he provided to the Law Society in his letters of 23 and 30 April 2014.
We turn now to the question whether the Solicitor, through failing to comply with the Notice in the ways that we have determined, engaged in professional misconduct.

Whether the period stipulated for compliance with the Notice was 'reasonable'

An issue to be determined in this context is whether the period of time specified in the Notice for compliance with its requirements - fourteen days following service - was a 'reasonable time' as required by s 660(4) of the Act. This issue was not addressed in the parties' submissions.
The Notice required the provision of a substantial quantity of information and the production of numerous documents. If the Solicitor had not been previously confronted with similar requirements during the five-month period of Mr Napper's investigation of his practice (from November 2012 to April 2013), the two-week period stipulated for compliance with the Notice would, in our opinion, have been unreasonably brief. But as is claimed in P6 (which the Solicitor did not contest in his Reply), Mr Napper told him as early as 9 November 2012 that he was obliged to provide the information and documents that were subsequently called for in the Notice. Within the two-week period for compliance, he did not make any request for an extension.
It is relevant here that, as mentioned above at [18], the Notice included a clause advising him that if he was unable to comply with its requirements, he was to provide a statutory declaration on or before the date specified for compliance, stating the reasons for his inability to comply.
Having regard to these considerations, we conclude that the time stipulated in the Notice for compliance was 'reasonable' as required by s 660(4).

Whether the Solicitor had a 'reasonable excuse' for his failures to comply

Under s 676(3) of the Act, the obligation of compliance with a notice under s 660 does not apply where there is a 'reasonable excuse' for non-compliance.
The Solicitor's evidence and submissions. As indicated above at [8], the Solicitor pleaded in his Reply that he did indeed have a 'reasonable excuse' for any failure on his part to comply with the Notice. His affidavit contained most of the evidence on which he relied.
So far as this evidence related directly or indirectly to the period (between 23 May and 6 June 2013) when he was obliged to comply with the Notice, it was to the following effect. At some unspecified time during the second half of 2012, Mr Li, who had been one of his 'key employees', left the Solicitor's practice at two days' notice, along with two other employees. The Solicitor had to shoulder the burden of training and supervising four inexperienced employees who replaced them. Towards the end of August 2012, he relocated his practice at short notice, with the consequence that many files were placed into storage. In addition, a number of files were stored at Mr Li's 'place', or were 'intercepted by employees leaving the practice' or were 'lost as a result of the move'. During 'the investigation period', the only people working in the practice were himself, his wife and one employee.
In his affidavit, the Solicitor also sought to explain why he did not respond to the Law Society's letter of 25 February 2014 (notifying him of the Complaint and requiring further information) until 23 April 2014. His explanation was that he was receiving 'minimal assistance' from his wife in his practice because her father was very ill.
In other parts of his affidavit, the Solicitor maintained that the Law Society had interpreted some 'misunderstandings' as 'lack of co-operation' on his part and had 'given the worst possible interpretation' to any errors in his responses. He also set out reasons why in the period from May to June 2014 he did not reply promptly to correspondence from the Law Society. It is not necessary to outline these reasons here.
The Solicitor also relied on the External Examiner's report that he tendered at the hearing (see [13] above). In his affidavit, he testified that he 'hired' the Examiner, Mr Oehlers, during May 2013. Mr Oehlers' report, dated 28 May 2013, related to the maintenance of trust records and the receipting and disbursement of trust money by the Law Practice during the period from 1 April 2012 to 31 March 2013. Its conclusions were to the effect that these matters had been attended to satisfactorily.
In his submissions to us at the hearing, the Solicitor stated that during the period following service of the Notice he was under considerable stress from his clients and his staff and that it had not been 'humanly possible' to comply with the Notice.
The Law Society's submissions. The principal arguments advanced by Ms Groenewegen on the issue of 'reasonable excuse' were as follows: (a) since (as was stated in Ms Foord's affidavit) the Solicitor was admitted to practice as long ago as April 2002 and had been the sole principal of the Law Practice since August 2005, it was not open to him to claim that any difficulties experienced by him were the fault of the Law Society; (b) the staff departures described in his affidavit occurred well before the Notice was served; (c) any stress caused by such events could not constitute 'reasonable excuse' under s 660(4); and (d) none of the matters outlined in his affidavit explained why he was able to comply substantially with the requirements imposed by Mr Napper and by the Notice to provide information about deposits and produce documents, but could not comply wholly with the Notice within the time specified.
Discussion and conclusions. In dealing with this aspect of the case, it is useful to start by recapitulating our findings as to the Solicitor's non-compliance with the Notice.
His specific failures to comply may be summarised as follows: (i) he did not produce until 23 April 2014 the bank statements (relating to the 29 deposits listed in Question 16) that were required by paragraph A of Schedule 2 to the Notice; (ii) he omitted to produce on 6 June 2013 an attachment relating to a specified deposit, but after being notified of this omission in the Law Society's letter of 25 February 2014 he sent the attachment as an enclosure to his letter of 23 April 2014; (iii) he did not provide a statutory declaration regarding the two matter files relating to Zhi Yun Ma until 7 June 2013, one day after the date stipulated for compliance; (iv) he failed to verify the contents of the letter of 6 June 2013, which contain his answers to Question 16 in Schedule 1 of the Notice; and (v) he failed, until 18 July 2014, to comply with the requirement to verify the information falling within the scope of Question 16 that he provided to the Law Society in his letters of 23 and 30 April 2014.
We regard the small-scale failures described in items (ii) and (iii) as excusable in all the circumstances of the case. If they were the only instances of failure on his part, we would be reluctant to rule that he had contravened s 676(3) and should therefore be held under s 676(4) to have engaged in professional misconduct.
The other three instances of non-compliance stand, however, on a different footing. We agree with Ms Groenewegen, broadly for the reasons that she gave, that there was no 'reasonable excuse' for these failures to comply with the Notice. We make the following additional observations.
With reference to item (iv) in the foregoing list, we find that at the time when the Solicitor prepared and signed the letter of 6 June 2013 and the statutory declaration bearing the same date, he must be taken to have been conscious of the requirement of verification stated in the Notice. He decided, nevertheless, that while he would verify his answers to the first 15 questions in Schedule 1 to the Notice, he would leave unverified the answers to Question 16 that he furnished in the letter. He did not offer any explanation of this decision, either in documents filed in these proceedings, in other correspondence with the Law Society or in his submissions at the hearing.
As indicated earlier, Question 16 was of particular importance. It required information regarding the 29 deposits in the office account of the Law Practice with which Mr Napper's investigation was particularly concerned. The answers given by the Solicitor in the letter of 6 June 2013, although relatively brief, went a long way towards satisfying the requirements of the Question. For this reason, his failure to verify these answers is not a trivial matter and some sort of explanation for this failure would be necessary to justify a finding of 'reasonable excuse'.
Much the same reasoning applies to item (v) in the list of the Solicitor's failures set out at [99], except that the additional information supplied by him was relatively insubstantial and that some sort of explanation arises from the fact that the Law Society's letter requiring him to supply this information did not mention verification.
As to item (i) in this list, we make the point that Paragraph A of Schedule 2 of the Notice expressly stipulated that he should produce 'all such other records' (in addition to records in a number of categories already mentioned) that he 'held… in relation to' the 29 deposits into his office account. Any legal practitioner endeavouring conscientiously to comply with this stipulation could not fail to appreciate that if he or she possessed any bank statements in which any of these deposits were recorded, they should be included amongst the documents produced. The Solicitor's failure in this regard must be regarded as a significant breach of his duty to ascertain, to the best of his ability, what were the precise requirements of the Notice and to comply with them as best he could.

Our orders

We have decided that the Solicitor failed to comply with the Notice in a number of respects, which we have summarised above at [98]. We have decided also that the time stipulated for compliance by him was reasonable in the circumstances and that the evidence does not establish any 'reasonable excuse' for his failures to comply.
For these reasons, the sole Ground of the Application has been made out. By virtue of s 676(4) of the Act, the conclusion that must follow is that the Solicitor has engaged in professional misconduct. The Act does not provide for any lesser finding, such as one of unsatisfactory professional conduct.
On account of this conclusion, a further hearing is required, for the purpose of determining (a) what order or orders by way of penalty, if any, we should make under s 562 of the Act and (b) the question of costs.
The proceedings are accordingly set down for further directions at 9.30 a.m. on 8 April 2015. 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: 31 March 2015

At a glance

Court

Decision date

Source

Judgment (9 paragraphs)

Parties

Cited By (1)