The principal decision
9We held in the principal decision that with some limited exceptions the evidence, when considered in conjunction with the Solicitor's admissions and his decision not to testify, established the matters alleged and particularised in the Application. The decision gave a detailed account of these matters and quoted relevant passages from the statutes and regulations governing trust accounts. It also explained our reasons for concluding (a) that most of the matters alleged were proved, (b) that with some limited exceptions the various Grounds advanced by the Law Society were established and (c) that the Solicitor had engaged in professional misconduct.
10The following extracts from the principal decision (at [195 - 196], [206 -220], [224] and [227 - 230]) summarise our major findings and conclusions. In them, the phrases 'LP Act 1987', 'LP Act 2004', 'LP Regulation 2002' and 'LP Regulation 2005' refer respectively to the Legal Profession Act 1987, the Legal Profession Act 2004, the Legal Profession Regulation 2002 and the Legal Profession Regulation 2005:-
195 Mr Lynch did not contest Mr Stitt's contention that we were bound to conclude that the conduct admitted by the Solicitor amounted to professional misconduct. He acknowledged at the commencement of his submissions that this would be the inevitable outcome of our deliberations.
196 For reasons elaborated in the ensuing paragraphs, this is indeed our conclusion. The Solicitor's conduct would clearly be regarded as 'disgraceful and dishonourable' by reputable members of the legal profession and therefore amounted to professional misconduct at common law. In addition, we find that his numerous breaches of statutory requirements relating to the management of his trust account constituted professional misconduct under section 498(1)(a) of the LP Act 2004 and that the instances of overcharging that he admitted amounted to professional misconduct under section 498(1)(b)...
206 During a period of about eight years (from 1999 to 2007), the Solicitor extracted funds to pay his own costs and (in some instances) disbursements from no less than fifteen trust accounts without at any time observing the requirements of the relevant legislation. For withdrawals occurring before the commencement of the LP Act 2004, these requirements were referred to in section 61(3)(b) of the LP Act 1987 and set out in clause 78 of the LP Regulation 2002. For withdrawals occurring after the commencement of the LP Act 2004, they are referred to in section 261(1)(b) of that Act and set out in clause 88 of the LP Regulation 2005.
207 In some instances... the Solicitor obtained authorisation from the client to withdraw funds on account of costs. But this was not enough to relieve him of the statutory obligation to notify the client - for example, by sending an invoice - of his intention to take this step. He consistently failed to comply with this obligation.
208 All these withdrawals accordingly amounted to breaches of section 61(2) of the LP Act 1987 or of section 255(1) of the LP Act. Under section 498(1)(a) of the latter Act, they were capable of amounting to professional misconduct. In the circumstances of the present case we hold that they in fact did so.
209 Their significant effect was in each case to deprive the client of the opportunity to give consideration to, and possibly raise questions about, the scale of the costs being charged at the time when they were charged.
210 The detriment to his clients' interests thereby inflicted by the Solicitor was compounded in many cases by his failure to provide his clients with trust account statements at the times required by the legislation (i.e. by clause 77 of the LP Regulation 2002 or clause 82 of the LP Regulation 2005). Under section 498(1)(a) of the latter Act, these breaches of the Regulations were capable of amounting to professional misconduct. In the circumstances of the present case we hold that they in fact did so.
211 In some of the statements that the Solicitor did provide, he did not give sufficient details of the costs that he had withdrawn and he frequently did not acknowledge that over a period of time he had made a number of withdrawals of interim costs. In consequence, the withdrawals of significant amounts for costs was presented to clients as a fait accompli well after - in fact, sometimes years after - the withdrawals occurred. As [three specified] matters... illustrated, it was then still possible for clients to argue successfully that the amounts charged to them should be reduced. But the Solicitor's failures to provide them with full information periodically, as required by the legislation, was likely to make any challenge much more difficult for them.
212 We will mention here our acceptance of the Solicitor's assertions in his Amended Reply to the effect that in a number of matters he ultimately provided his client with a full account of moneys received and disbursed. Mr Lynch pointed out that the matters in which the Solicitor could make this claim included all those in which he admitted overcharging. We agree with Mr Lynch that this is a relevant consideration when assessing the full implications of the Solicitor's misconduct. But as we have just pointed out, any significant delay in accounting for moneys withdrawn to pay costs is likely to be detrimental to a client's interest in ensuring that the amounts charged for costs are not excessive. We note too that in Law Society of New South Wales v Carvan , Unreported, 14 May 1981 (BC8111397) and in Bolster v Law Society of New South Wales , Unreported, 20 September 1982 (BC8211696), the Court of Appeal held that solicitor cannot escape responsibility for serious breaches of their duties to their clients by showing that the clients in question did not suffer any loss. We therefore cannot attach much weight to this consideration.
213 In our judgment, the Solicitor's culpability with regard to his breaches of statutory requirements relating to trust accounts was all the greater because of three further aspects of his behaviour.
214 First, in contrast to the respondent solicitor in Carvan , it would be difficult for him, to say the least, to claim with any conviction that he was ignorant throughout the relevant period of his duty to notify his clients of any impending withdrawals from their trust account. In many of the cases outlined above - see for example [three specified matters] - he sent a costs disclosure document to the client in which the authority conferred on him to withdraw funds in order to pay costs was expressly made conditional on his raising an invoice or sending a request to the client, or was to take place in accordance with clause 88 of the LP Regulation 2005. But even if we assume that through not reading the 'small print' of these documents he remained unaware of these requirements, we are bound to rule, in line with Moffitt P's statement in Carvan , that his failure to inform himself about such an important aspect of a solicitor's duties was itself an instance of professional misconduct.
215 In dealing in this way with the question whether the Solicitor violated the statutory requirements with full awareness of their contents or because he was ignorant of them, we are rejecting a submission put by Mr Stitt. He argued that because the Solicitor chose not to give evidence in these proceedings we should infer that he was fully aware of the nature of these requirements. In disciplinary proceedings such as these, however, we should not make findings of seriously improper conduct against the respondent unless they are affirmatively established by cogent evidence. We decline to draw the inference urged upon us by Mr Stitt.
216 Secondly, the clients adversely affected by his breaches of the statutory requirements included two clients at least - Sister Tereba and Sister Paczowska - who were 'vulnerable' in the way described by Mahoney JA in Veghelyi v Law Society of New South Wales , Unreported, Court of Appeal, 8 February 1995 (BC9505459). In this context, we fully endorse two submissions advanced by Mr Stitt: (a) that the Solicitor abused the trust that they placed in him through relying on him totally to protect the interests of the Sisters and (b) that he aggravated his misconduct by obtaining their signatures to documents purporting to signify their approval of the amounts that he had withdrawn to pay his costs.
217 Thirdly, the Solicitor's breaches of the statutory requirements in fifteen separate matters were accompanied by overcharging (as later found by specialist assessors and admitted by him) in six of these matters and by an acknowledgment by him in three further matters... that he had withdrawn excessive amounts and should make a partial reimbursement. This particular aspect of his conduct demonstrated all too clearly why his breaches of the statutory requirements amounted to serious dereliction of his responsibility as a solicitor handling funds committed to him in trust.
218 It is particularly noteworthy in this context that [one of these three matters] was one of the earliest of the matters described above. Because of what happened in that matter, the Solicitor knew as early as September 2001 that when a client discovered after the event that costs had been withdrawn without proper notification an objection might be raised and he might feel compelled to deal with it by repaying part of the total amount withdrawn. He nevertheless persisted for some six years in withdrawing costs without proper notification to his clients.
219 As well as being significant in the way just outlined, the Solicitor's admitted conduct in overcharging his clients in the six matters that were referred to costs assessors amounts, as we have said, to professional misconduct under section 498(1)(b) of the LP Act 2004. Mahoney JA's judgment in Veghelyi provides ample authority for this conclusion.
220 [In] the six matters in question... the total of the amounts by which the Solicitor overcharged was the not inconsiderable sum of $52,590.08. In [a further] matter... he admitted having charged a further $1,000 contrary to the Victims Support and Rehabilitation Act 1996....
224 As to the three matters in which there was an allegation of misappropriation, we have already held... that this allegation is not established in the matter of Daude, but is established in [the matters of] Gibki and Laczny...
227 By contrast, what happened in Gibki was that the Solicitor transferred amounts totalling $1,284.20 into the Gibki estate account from a trust account of the Sisters relating to another estate. For reasons stated above at [126], we do not accept a submission by Mr Lynch that there was evidence of his being authorised to do so. In the absence of such authorisation, his conduct was patently dishonest.
228 Similar reasoning applies to the Laczny matter. As stated above at [136], [140] and [191 - 194], the Solicitor withdrew the sum of $600 from the Laczny estate, used it to pay a bill raised in the Milkow estate and never repaid it. In the absence of any authorisation, his conduct was patently dishonest.
229 Various other allegations made by the Law Society and found by us to have been established - for example, delay in accounting - might not of themselves amount to professional misconduct, but fall to be taken into consideration when assessing the overall impact of the Solicitor's misconduct.
230 For the foregoing reasons, our decision is that the Solicitor is guilty of professional misconduct...
11With reference to paragraph [206] of this summary, we should add that in addition to the 15 matters mentioned there (each of which involved breaches of trust account regulations), there were two further matters in which the Solicitor's activities amounted to professional misconduct.
12By way of explanation of paragraphs [216], [228] and [229], the following additional details should be noted. The two clients referred to in [216], Sister Tereba and Sister Paczowska, occupied at different times the position of Provincial Superior of the Congregation of the Sisters of the Holy Family of Nazareth. In the course of handling five separate matters pursuant to his retainer from them, the Solicitor engaged in misconduct of the kind outlined above. These matters included acting in the administration of the deceased estates of Tekla Gibki and Josephine Milkow and of an estate referred to in the Particulars as the Laczny estate.
13The 'other allegations' to which we referred at [229] included allegations of providing false information to the executors and/or the beneficiaries of two specified estates for which he acted and providing false information to a costs assessor following an objection by one of the executors to the amount of costs that he had charged. In none of these instances, however, was it both alleged and established that the Solicitor knew that he was providing false information. Our findings, therefore, went no further than that the information provided by him was false.
14Also included amongst these 'other allegations' was an allegation, which the Solicitor denied, of 'misleading' Sister Tereba. As we explained in the principal decision at [134 - 143] and [228], the Solicitor, after having improperly transferred the sum of $600 from the trust account of the Laczny estate into that of the Milkow estate, obtained Sister Teresa's authorisation for payment of an interim bill of costs for $600 relating to the Milkow estate by stating that this sum 'could be paid by deduction from funds held in trust'. In fact, there were no funds in the Milkow estate account, other than this amount of $600 improperly transferred from the Laczny estate. Our conclusion with regard to the Law Society's allegation that he misled Sister Tereba was as follows (in paragraph [143]):-
We also regard the statement made to Sister Tereba as obviously misleading. Although the phrase 'funds held' in the Solicitor's letter of 25 August 1999 to her could be interpreted as referring to funds held on behalf of the Sisters in some other trust account, it would evidently be assumed by a person in her position to refer specifically to funds received from the Milkow estate.
15In the principal decision at [230], we indicated that a further hearing was required for the purpose of determining, in the light of our conclusions, whether the orders sought by the Law Society by way of penalty should be made and, if not, what other course of action we should adopt under the relevant provisions (sections 562 and 566) of the LP Act 2004.