Council of the Law Society of NSW v Donnelly

NCAT Occupational|2016-08-08

Background

The Council of the Law Society (the applicant) has applied to the Tribunal 2004 for disciplinary findings and orders to be made pursuant to the Legal Profession Act 2004 (LPA) against the respondent, Paul Joseph Donnelly, a legal practitioner.
The first application (1520101) was lodged on 4 June 2015. The second application (1520272) was lodged on 24 December 2015. The first application sets out seven categories of conduct for which a finding of professional misconduct is sought, either individually or when considered as a whole. The second application sets out three categories for which a finding of professional misconduct is sought, either individually or when considered as a whole. As a result, there are 10 grounds before us where a finding of professional misconduct is sought and 16 grounds where a finding of unsatisfactory professional conduct is sought.
The applicant seeks orders for the removal of the respondent's name from the roll of local lawyers (or such other orders as the Tribunal deems appropriate) and its costs, as agreed or assessed.

Evidence

The Tribunal received into evidence the material that the applicant served upon the respondent, as follows: First application: affidavit of John Michalski, trust account investigator (sworn 21 May 2015) accompanied by Exhibit JM 1 (pp 1-68); and affidavit of Anne-Marie Foord, solicitor (sworn 29 May 2015) accompanied by Exhibit AMF 1 (pp 1-667). Second application: Affidavit of Anne-Marie Foord, solicitor (sworn 21 December 2015) accompanied by Exhibit AMF 2 (pp 1-38).
Mr Maddigan addressed the Tribunal regarding each of the 26 grounds that were particularised in the applications. His written submissions particularly addressed the following allegations that the respondent did not admit, namely: 1. First application - grounds 1, 2, 5 and 6 (professional misconduct) and grounds 17, 18, 20, 22 and 23 (unsatisfactory professional conduct); 2. Second application - all 3 grounds (professional misconduct).

Background

The respondent is aged 67 years. He admitted as a legal practitioner on 4 May 1984 (aged 34 years) and practised continuously thereafter. In May 2006 he became the Principal of the law practice known as Donnelly Lawyers, located in Unanderra (a suburb of Wollongong, New South Wales) after previously practising as a Principal with other law practices.
He also regularly undertook work in Queensland and a number of the complaints that are before us relate to his management of matters for clients in Queensland. He was assisted in his Queensland practice by Mr Carleton Thomas, Queensland resident who was formerly a Barrister. He acted as 'a go-between' and put potential clients in touch with the respondent, but the precise nature of their professional relationship is a matter of contention in these proceedings.
In preparing the first application the applicant adopted the understandable logic of setting out first that matters it saw as constituting professional misconduct followed by the matters it saw as constituting unsatisfactory professional conduct. The second application is confined to matters seen as constituting professional misconduct. As a result, the grounds in the applications are not in a client-by-client or matter-by-matter format. Before dealing with the grounds themselves we believe that it would assist to outline the nature of the client relationships and matters that have given rise to the grounds for the applications.
Fischer Matter: As at September 2010, Mr Cameron Fischer was serving a sentence of eight years' imprisonment in Queensland as a result of convictions for various drug-related offences in that State. His mother, Ms Danka Fischer, approached Mr Carleton Thomas for advice on the prospects of success of appealing against the convictions and sentence to the Queensland Court of Appeal. Mr Thomas agreed to act for her and held himself out as being an employee of the respondent's law firm in so doing. For example, he used the respondent's letterhead the firm name of 'Donnelly Lawyers' and he signed correspondence on a 'per' basis. He described himself as 'Dr Carleton Thomas LLB LLM PhD Hons Law'.
By letter dated 3 October 2010 Mr Cameron Fischer formally instructed Donnelly Lawyers to act on his behalf in relation to the potential appeal. On or about 18 January 2011 Ms Fischer paid $22,000 to the applicant on account of professional costs and disbursements. However, on 9 May 2011, following adverse publicity relating to Mr Thomas in the Queensland press, Ms Fischer terminated the retainer by way of a letter that was co-signed Mr Fischer. Her new solicitor, Mr Mark Gray wrote to the respondent seeking a refund of the $22,000, but the respondent failed to reply to that letter.
On 14 June 2011 Mr Gray made a complaint to the Queensland Legal Services Commissioner, who referred the matter to his NSW counterpart and the NSW Commissioner in turn referred the matter to the applicant for investigation. We note that in referring the matter to the applicant the NSW Legal Services Commissioner observed that the respondent had apparently handled funds for a client that were ostensibly set aside to pay somebody who claimed to be a barrister (Mr Thomas) and that Mr Thomas was not a barrister in either Queensland or New South Wales.
The complaint was investigated by Mr Michalski. In his affidavit he deposed that Mr Thomas was formerly a Queensland barrister, but as at 2010 he had not been on the Roll of Barristers for at least eight years (as a consequence of having suffered 'a nervous breakdown'). He examined the way in which the payment of $22,000 (which was divided into two amounts of $12,000 and $10,000) was handled by the respondent and he identified a number of apparent breaches of the respondent's trust account and costs-disclosure obligations.
White Matter: Mr White was involved in a dispute with his wife regarding access to a child of the marriage and matrimonial property. In July 2010 he had retained a Brisbane law firm to act for him as the named respondent in family law proceedings his wife initiated in the Federal Magistrates Court. In December 2010, in preparation for the hearing the Brisbane law firm provided him with a copy of the material filed by his wife and requested his further instructions.
However, in January 2011 Mr White terminated the retainer of the Brisbane law firm and engaged Mr Donnelly's firm to act for him after he had made contact with Mr Carleton Thomas. The first hearing of the family law matter took place on 8 March 2011, but Mr White complained that Mr Donnelly was not prepared for the hearing. The Magistrate made directions for the further conduct of the matter, which were mainly related to the valuation of the former matrimonial home.
Mr White later complained that Mr Donnelly did not take steps to comply with the Magistrate's directions. As a result, a conciliation conference scheduled for 21 April 2011 could not proceed and the matter was adjourned. Mr White terminated Mr Donnelly's retainer on 13 January 2011.
In May 2011, Mr White's mother made a complaint to the Queensland Legal Services Commissioner on Mr White's behalf and this complaint was ultimately referred to the applicant for investigation. The complainant alleged that Mr Donnelly failed to appear at court and questioned his right to keep the sum of $5000 that was paid to him on account of costs.
Mr Michalski's applicant's investigation identified a number of failures by the respondent regarding his professional conduct, his failure to make proper costs disclosure and overcharging of costs.
Jennings Matter: This is a New South Wales case. In 2009 Mrs Jennings engaged the respondent to act for her in respect of her arrest on an outstanding warrant, which she claimed was 'wrongful'. She complained that she suffered emotional and psychological distress and medical costs as a result of the respondent's conduct.
We note that the respondent filed a Statement of Claim in the NSW Supreme Court on behalf of Mrs Jennings claiming damages for false arrest and false imprisonment. He briefed Ms Healey of counsel to appear (Ms Healey accepted the brief on a speculative basis).
Ms Healey made a complaint to the applicant on 16 November 2011 regarding the respondent's conduct of the matter. She alleged that he was incompetent in his conduct of the matter and stated that she had recommended that Mrs Jennings engage another solicitor. Mrs Jennings had accepted her recommendation and in April 2011 she engaged Rossi Simicic, solicitors, to act for her. However, in June 2011 Mrs Jennings received a bill from the respondent that sought payment of $81,410.'60 for services rendered", including fees due to a previous solicitor, but omitted any fees due to Ms Healey.
In her complaint, Ms Healey questioned the respondent's justification for the fees; she expressed the opinion that he had done very little work in the matter and asserted that the fees claimed were exaggerated and dishonest. She also noted that the respondent was 'presently bankrupt' and expressed the view that the bill was an attempt by the respondent to improve his financial situation in relation to the bankruptcy. She stated that Mrs Jennings had separately received a letter from the bankruptcy service that required her to pay the bill. Ms Healey also stated that there was an oral agreement between herself and the respondent to the effect that she would charge professional fees only if there was a successful outcome.
Mrs Jennings made her own separate complaint against the respondent in March 2013. She agreed with and adopted Ms Healey's concerns; she alleged that the respondent made unsatisfactory representations and had failed to disclose his costs in writing; she also complained of excessive charging for services provided; and she alleged that the respondent had behaved towards her in a rude and aggressive manner.
Stevens Matter: On 7 February 2012 Ms Stevens, who was then then not legally represented, filed an application for a Protection Order under the Domestic and Family Violence Protection Act in the Queensland Magistrates Court, at Cairns.
On or about 28 February 2012, Ms Stevens retained the respondent to act as her solicitor in relation to this matter. The go-between was Mr Carleton Thomas, whom the Magistrate described as the respondent's 'law clerk'. The defendant vigorously contested Ms Stevens' application and the matter proceeded to a hearing on 3 May 2012. The Magistrate dismissed the application as being 'frivolous and vexatious' and ordered Ms Stevens to pay costs as neither Ms Stevens nor the respondent appeared at the hearing.
The respondent then applied to the Court on Ms Stevens' behalf to relist the matter and the Registry listed it for re-hearing on 9 October 2012. However, neither Ms Stevens nor the respondent failed to appear at that hearing. The Magistrate determined the matter in chambers and dismissed it for lack of jurisdiction as he lacked power to reopen that class of matter.
The respondent asserts that he arrived at the Court on 9 October 2016, but that he believed the matter had been listed for hearing later in the day, and that when he learned of the Magistrate's dismissal order he immediately lodged a fresh application for a Protection Order on behalf of Ms Stevens.
We note that the first part of this fresh application repeated grounds that were determined in the initial application, but that the second part of it set out fresh grounds. We also note that the respondent swore an affidavit in support of this application in which he made comments regarding the history of the initial proceedings and his role in them including explanations for his failure to appear at the hearings.
The fresh application was listed for hearing on 25 January 2013. However, this application was also dismissed as being 'frivolous and vexatious' and the Magistrate ordered Ms Stevens to pay costs. Neither the Respondent nor Ms Stevens appeared at the hearing. We note that in his Judgment the Magistrate referred to the 'extraordinary, nay, appalling history' of the matter and detailed a number of failures by the respondent and Mr Thomas to comply with the Court's directions. He directed the Registrar to refer his judgment and all correspondence relating to the matter to the Queensland Legal Services Commissioner. His Honour's observations are set out at pp 361-380 of AMF 1.
The Queensland Legal Services Commissioner referred the complaint to the NSW Legal Services Commissioner, who in turn referred it to the applicant for investigation.
Newton Matter: This is another Queensland matter in which Mr Carleton Thomas was responsible for introducing the client to the respondent. On behalf of Face 2 Face Foundation Pty Ltd, a Queensland charitable body, Mr Newton retained the respondent's firm to recover a debt in April 2012. A statutory demand was issued and the alleged debtor filed an application to set aside or vary the statutory demand. The matter was listed for hearing. Mr Newton complained that the respondent failed to attend the hearing.
Henderson Matter: This is another Queensland case, which is extensively particularised (paras 278 to 313) in the first application. Ms Graham (the sister of Mr Henderson, a prison inmate) made contact with Mr Carleton Thomas to discuss an appeal to the Queensland Court of Appeal against Mr Henderson's conviction and sentencing. Mr Thomas organised for the respondent's law firm to act for Mr Henderson, based upon a quote of $5000 for legal fees. Ms Graham paid the respondent the sum of $3,500 on account of costs and later also paid the sums of $2,000 (on 26 March 2013) and $1,500 (on 4 June 2013).
The appeal was listed for hearing on 26 August 2013, by which time the respondent formed the view that he no longer held instructions in the matter as Mr Henderson had directed him to transfer his file to Fisher Dore, Lawyers, by way of an authority dated 18 July 2013. He transferred the file to that firm on 8 August 2013. However, he remained the Solicitor on the Record and the Court did not receive any further notice of appearance in the matter.
On 19 August 2013, Mr Henderson wrote to the Registry of the Court of Appeal expressing his concern over the respondent's handling of his appeal. The appeal was heard by the Court of Appeal on 26 August 2013, during which the respondent appeared by telephone before their Honours Holmes, Morrison and North JJA. Holmes JA questioned the respondent regarding his failure to adhere to the Court's directions and the Timetable for preparation of the Appeal. She also questioned him regarding the nature of his connection to Mr Thomas; his role in the matter; his failure to advise the court of any inability for the matter to proceed; and regarding the fees that he had already charged to Mr Henderson. Holmes JA directed the respondent to file an Outline of Submissions and an Affidavit showing cause why the Court should not refer his conduct to both the Queensland and NSW Legal Services Commissioners. Mr Henderson, who in attendance at the hearing, also made submissions to the Court regarding the difficulties that had beset him and the hearing of the appeal was adjourned.
On 4 October 2013, the Court of Appeal referred the matter to the Queensland Legal Services Commissioner, who subsequently referred it to the NSW Legal Services Commissioner. As with the other matters, the matter was ultimately referred to the applicant for investigation.
Charupalli Matter: This is a family law matter. It is the subject of the second application. The complaint arises from a routine trust account investigation that the applicant conducted at the respondent's law practice on 22 August 2014. At that time the respondent was an undischarged bankrupt and he did not operate a trust account. The trust account inspector noted that the client had made various payments to the respondent to meet the costs of a valuation and identified three instances of intermixing trust monies with other monies in the general office account. Soon after the inspection was completed the respondent was discharged from bankruptcy and he resumed operating a trust account on 8 September 2014.

The Applications

In considering the applications, we have marked grounds as either admitted, not admitted or denied, using our best efforts to reflect statements made by the respondent in his various documents and particularly the Second Reply. We will first determine whether each of the grounds is proven, in the sense that the particulars are wholly are party made out. After that, we will consider whether the conduct proven should be characterised as professional misconduct or unsatisfactory professional conduct.

First Application: Professional Misconduct Grounds

Ground 1 - White and Henderson matters - Not admitted. Section 254 LPA provides relevantly: (1) Subject to section 258A, as soon as practicable after receiving trust money, a law practice must deposit the money in a general trust account of the practice unless: (a) the practice has a written direction by an appropriate person to deal with it otherwise than by depositing it in the account, or (b) the money is controlled money, or (c) the money is transit money, or (d) the money is the subject of a power given to the practice or an associate of the practice to deal with the money for or on behalf of another person. Maximum penalty: 100 penalty units.
The application alleges that the respondent failed to comply with s 254 LPA. 'Trust money' is defined in s 243 LPA as including money received on account of costs.
The evidence clearly establishes that the client White paid the applicant $5,000 in cash on account of costs on 3 March 2011 and that the respondent deposited it into his office account.
The evidence also establishes that on 26 March 2013 and 4 June 2013, respectively, Ms Graham (on behalf of the client Henderson) paid sums of $2,000 and $1,500 to Mr Carleton Thomas, whom the respondent authorised to receive money on behalf of his law practice. When these monies were received the respondent was an undischarged bankrupt and could not operate a trust account and he was unable to comply with s 254 LPA.
In his Second Reply the respondent asserts that he has no direct knowledge of this matter. However, we agree with the applicant's submission that this assertion is not consistent with statements that the respondent made to the Queensland Court of Appeal in The Queen v Henderson on Monday, 26 August 2013. At that time, he acknowledged there that Mr Thomas was authorised to receive money on his behalf and stated that normally the monies received by Mr Thomas were be banked into his general account. Moreover, the relevant transactions were directly canvassed in the questions that the Bench (Holmes JA) posed to the respondent (see line 32, p 482 of Ex AMF 1).
We note that none of the exceptions to the primary rule have been put in issue. Ground 1 is proven.
Ground 2 - White and Fischer matters - Not admitted. The basic rule is that a law practice must hold trust money (such as money received on account of costs) exclusively for the person on whose behalf it is received, and only disburse that money in accordance with a direction given by the person: s 255 LPA. By depositing the money received from Mr White into the law practice's office account, without any direction from his client to deal with that money provided in that way, the respondent applied the money to his own use.
In the Second Reply the respondent asserted that the money received from Mr White was in respect of work that he had already performed. That money was received on 3 March 2011, but the tax invoice that the respondent issued on 13 April 2011 only itemised work that was performed after that date, i.e. 7 March 2011 and 8 March 2011. We therefore reject the respondent's assertion. He also asserted during the course of the investigation that he had a costs agreement with Mr White that allowed him to act as he did. However, he failed to produce any evidence of such an agreement.
A similar allegation is made in respect of the client Fischer. On 18 January 2011 Ms Fischer paid the respondent $22,000 on account of costs, which he deposited into the trust account. However, he withdrew the sum of $15,000 by way of 3 separate withdrawals of $5,000 on 21 January 2011, 25 January 2011 and 18 February 2011. During the investigation he asserted that the money had been wrongly deposited into the trust account, but did failed to establish any proper basis for that assertion.
We are satisfied that no meaningful legal services had yet been provided and that the monies were properly deposited into the trust account. As a consequence, the respondent required authority from his client before withdrawing any monies from the trust account. He did not obtain that authority. Ground 2 is proven.
We also note the respondent's admission in respect of Ground 9 (see below) that he failed to provide to Ms Fischer with a trust account receipt for her payment as required by cl 61 of the Legal Profession Regulation 2005 (LPR).
Ground 3 - Fischer matter - Admitted. Section 660 (1) LPA provides: 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.
The respondent admits that he failed to respond to the three s 660 Notices that the applicant issued during the course of its investigation. They are described in the application as: the 'Second Fischer Notice' dated 6 December 2012; the 'White Notice' dated 6 December 2012; and the 'Healey Notice' dated 6 December 2012.
As the allegations are admitted we will not deal with them at length. By way of explanation for his failure to comply with the notices, the respondent stated (in his Second Reply) that he was affected at the time by the 'pressure of work ... and failure to recognise the importance of compliance'. Not only are practitioners obliged by law to comply in a timely way with notices of this kind, they also have an ethical duty to co-operate fully with inquiries made by the Regulator; to respond to those inquiries in a candid, transparent and frank way and do so in a way that minimises cost and inconvenience to the Regulator (a cost ultimately borne by fellow practitioners and the wider community). The respondent's belated explanation is rejected. Ground 3 is proven.
Ground 4 - Fisher, White and Jennings matters - Admitted. This Ground focuses on a legal practitioner's obligation (set out in s 660 (1) (c) LPA) 'to otherwise assist in, or co-operate with, the investigation of the complaint in a specified manner'. Section 676 LPA provides, among other matters, that a practitioner must not, without reasonable excuse, fail to comply with a requirement under s 660 LPA.
The particulars refer to the respondent's long delays or complete failures to comply with inquiries and requests made by the investigator in: Fischer (see Particulars 84-89); White (Particulars 126-133); and Healey (Particulars 158-165). In each matter there were egregious delays. We reject the respondent's belated explanation in the Second Reply. Ground 4 is proven.
Ground 5 - Jennings matter - Not Admitted. This Ground alleges that the respondent 'behaved rudely about a complainant in letters to the Society dated 26 November 2013 and 20 December 2013'. The applicant submits that a legal practitioner is ethically bound to conduct their dealings with members of the community and their clients according to the same principles of honesty and fairness that are required in their relations with Courts and other lawyers and in a manner that is consistent with the public interest. The applicant relies upon the Statement of Principles for Rules 32-36 (Relations with third parties) of the Revised Professional Conduct and Practice Rules 1995.
In his letters dated 26 November 2013 and 20 December 2013, the respondent described his client as 'a liar', and in the latter letter he also added asserted she 'apparently also wishes to become a thief by not wishing to pay her account'. On their face these are extreme descriptions to apply to a complainant and they are bullying and abusive in nature and angry in tone and would certainly qualify as 'rude'. The respondent maintained the anger reflected in his letters in his Second Reply, in which he asserted that he was the subject of 'false accusations'; was being 'pestered' by the client's husband; and complained that the client's behaviours were to be seen in the context where 'no moneys whatever were proffered [sic] for the work done' in connection with the client's claim for damages.
We agree with the applicant's submission that the words used in the respondent's letters are objectively rude and that his response did not engage with the substance of the complaint. Further his depiction of the client in his Second Reply as being at fault for not having paid for the work done is itself misleading and unfair as he acknowledged in his letter to the applicant dated 1 July 2012, that he was aware that the client did not have funds to pay for any litigation and stated that he agreed to act on a contingency basis. Ground 5 is proven.
Ground 6 - Jennings matter - Not admitted. The usual expectation of any person who appoints an agent to look after their interests is that the agent will handle communications and dealings with those who might wish to deal with them in relation to those interests. Where people involved in a transaction or litigation have engaged solicitors to represent their interests, the solicitors must deal with each other, and not bypass one another and deal directly with the client. Rule 31 of the Revised Professional Conduct and Practice Rules 1995 reflects these principles.
This Ground alleges that the respondent failed to adhere to Rule 31 in relation to Mrs Jennings, at the point when she was no longer his client. Between 2009 and 30 March 2011 the respondent acted for Mrs Jennings in relation to her claim for damages against the State of New South Wales. However, in April 2011, she decided to end that relationship and to retain Rossi Simicic, Lawyers, to act for her.
We accept the applicant's submissions that communications issued by Rossi Simicic to the respondent on 23 June 2011 and 4 July 2011, seeking a copy of any costs agreement signed by Mrs Jennings, would have made it clear to the respondent that Mrs Jennings had instructed another firm to act for her. However, the respondent chose to correspond with Mrs Jennings directly and he asserted that he did not have a copy of the costs agreement that she signed. He informed her that he wished her to sign a costs agreement before he released any files to the new solicitor.
The applicant has observed that Mrs Jennings once worked for the respondent, and that the respondent and his wife had been personal friends of Mr and Mrs Jennings for several years. However, regardless of any personal relationship between them, we consider the Solicitor's letter to Mrs Jennings as evidence of a breach of the no contact rule. Ground 6 is proven.
Ground 7 - Henderson matter - Admitted. The application alleges that the respondent breached his duty to the Court. As previously noted, the Court required him to attend the hearing on 26 August 2013 in order to explain his role in the handling of Mr Henderson's matter, and to particularly inform the Court he had failed to take the steps required to prepare the appeal for hearing.
The respondent's response to this ground is that on 8 August 2013 his instructions were withdrawn by Mr Henderson. However, he could not provide any explanation to the Court for his failure to advise the Court of the withdrawal of his instructions and why he remained as the Solicitor on the record.
As previously noted, the respondent's conduct of the Henderson matter is the subject of paragraphs 278 to 313 (inclusive) of the Application. However, this Ground refers only to paragraph 312. Each of the following points is supported by the Transcript (found at Ex AMF 1, pp 481-489):

He did not file a notice of ceasing to act for Mr Henderson at the earliest possible time, that is on or shortly after receiving on 9 August 2013 the authority from the new firm (Fisher Dore) dated 8 August 2013
He said in correspondence with the Court dated 31 May 2013 that he needed to review thoroughly ten deed boxes of evidence prior to being able to prepare an outline of argument. The material was never reviewed by him.
He said in correspondence to the Court that his file was released to Fisher Dore on 22 August 2013. No correspondence bearing that date was received by Fisher Dore, whether to enclose the file or advise them that it could be collected at Mr Thomas' premises. He later admitted to the Court that date of 22 August 2013 in his correspondence was wrong and that he did not know whether Fisher Dore received the file.
When asked by the Court whether Mr Carleton Thomas would have banked the money forwarded by Mrs Graham into his trust account or office account he failed to inform the Court that he did not operate a trust account.
He did not file an Outline of Argument as ordered.

Ground 7 is proven.

First Application: Unsatisfactory Professional Conduct Grounds

Ground 8 - Fischer matter - Admitted. Mr Gray (Ms Fischer's new solicitor) wrote to the respondent on 29 May 2011 requesting a refund of the sum of $22,000 that his client paid to the respondent on account of costs on 18 January 2011. He failed to respond to that letter.
In his letter to the applicant dated 19 March 2012 the respondent stated that he did not consider that he had any obligation to repay the money as he had completed his work for Ms Fischer and she had terminated his services. Mr Gray's letter also put the respondent on notice of a dispute over the monies paid to him by Ms Fischer. He admitted that he failed to reply to the letter.
The applicant's submissions also draw attention to the action that the respondent took one week later (on 6 June 2011) to transfer $2,000 from the trust account to his office account. Ground 8 is proven.
Ground 9 - Fischer matter - Admitted. The respondent has also admitted that he failed to provide Ms Fischer with trust account receipts for the monies that she paid on account of costs on 22 January 2011. The investigator's material discloses that he had raised two unsigned trust account receipts dated 18 January 2011, and later provided her with two office account receipts dated 11 February 2011. Ground 9 is proven.
Ground 10 - White matter - Admitted. The application alleges that the respondent failed to prepare for Court on 8 March 2011. The evidence is clear that he took no steps to prepare for the hearing, resulting in an adjournment. Ground 10 is proven.
Ground 11 - White matter - Admitted. The application alleges that the respondent failed to take steps to obtain the valuations required by the Court's order dated 8 March 2011. The available evidence clearly establishes this and that as a result the conciliation conference scheduled on 21 April 2011 could not proceed. Ground 11 is proven.
Ground 12 - White matter - Admitted. The application alleges that the respondent failed to comply with the Directions made by the Federal Magistrate. The available evidence clearly establishes this allegation. We are satisfied that Ground 12 is proved.
Ground 13 - White matter - Admitted. This allegation is more global in nature, namely that the respondent failed to adequately prepare Mr White's case. Again this is clearly indicated by the available evidence. We are satisfied that Ground 13 is proved.
Ground 14 - Jennings matter - Admitted. The application alleges that the respondent failed to disclose costs in writing to his client. We note that on 1 July 2012 the respondent advised the applicant in writing that he had entered into 'a contingency agreement' with his client. However, he was unable to produce any record of such an agreement and he later informed the Legal Services Commissioner that he did not have any notes concerning costs. This is a clear breach of a solicitor's duty under s 309 LPA. Ground 14 is proven.
Ground 15 - Newton matter - Admitted. The application alleges that the respondent failed to attend Court in response to the defendant's application to set aside or vary his client's Statutory Demand for payment of an alleged debt. The allegation is clearly established by the available evidence. Ground 15 is proven.
Grounds 16-20 - Stevens matter. The application raises five separate allegations concerning the respondent's conduct of the Stevens matter. The allegations are essentially derived from the observations made by Magistrate Pinder in his judgment dated 25 January 2013 and the applicant's subsequent investigation. The allegations are interrelated and the relevant narrative appears at paragraphs 224 to 277 (inclusive) of the application.
We must make our own assessment of the failures and omissions listed by the Magistrate and we are not bound by his findings. However, we note that the respondent has not made any substantive reply to either to the applicant or this Tribunal. We have set out the basic procedural history of this matter previously in this decision and make the following comments and findings:
Ground 16 - Admitted. The allegation is that the respondent 'abused the process of the Court'. It evidence is overwhelmingly in that regard. The applicant never appeared in court, on each of the three occasions it was listed.
Grounds 17 and 18 - Not Admitted. Ground 17 of the application alleges that the respondent attempted to mislead, or misled, the Court. Ground 18 alleges that the respondent was discourteous to the court. The allegations are particularised in paras 224 to 269 of the application.
The respondent denies these allegations, but he has not made any substantive reply to the particulars.
In his reasons (at 373-374 of AMF 1) the Magistrate carefully explained why he considered that the respondent had engaged in conduct that sought to mislead the court, and did so either intentionally or recklessly. He filed a fresh application on his client's behalf, which was supported (as required) by a Statutory Declaration made by his client and which he witnessed. In that application he failed to identify the recent history of the dispute, including the hearing on 3 May 2012 and its outcome, the relisting of the matter and the outcome of the relisting on 9 October 2012. The application also did not differentiate between the grounds that were before the court on 3 May 2012 and how they differed from new grounds. The Magistrate stated: Had this matter come before another Magistrate, had the Registry not diligently identified that the proceedings were, in fact, related to the earlier proceedings, the Court would have been misled in considering [sic] of the present application on the basis that the grounds deposed by the aggrieved were undetermined, and could have been persuaded in the circumstances to act upon them.
The Magistrate made similar findings as to further matters: for example, the respondent's role in taking his client's Statutory Declaration in which she swore under oath that the contents were true and correct in circumstances where many of the matters had been dealt with to finality in the proceedings of 3 May 2012, and found to be untrue.
The Magistrate also referred to the attempt made by the respondent's employee, Mr Carleton Thomas, on 11 October 2012 to obtain Ex-Parte an interim protection order and his failure to serve it on the defendant's solicitor, Mr Bovey (a local solicitor), when it was well known to both of them that he acted for the defendant. At that hearing Mr Thomas was questioned as to why he had not served the interim application on Mr Bovey. Mr Thomas replied that the defendant had recently physically assaulted the applicant. The Magistrate noted that this was not a proper explanation for failing to serve process on the defendant's solicitor. The Magistrate found that Mr Thomas, and the respondent, had handled the interim order application in a way that was misleading. By avoiding service on Mr Bovey, when that could have been done without any difficulty, they had engaged in conduct that could have misled the Court as to what had already occurred, had the matter gone before a Magistrate unfamiliar with the history. The Magistrate made a direction for service by the next day of the interim order application on Mr Bovey. That did not occur. The magistrate concluded (at 377 of AMF 1): 'The aggrieved solicitors are clearly wholly in contempt of these orders'.
As the applicant's submissions note, the proper administration of justice necessitates that Courts are able to rely upon what a practitioner says and does: Wentworth v Rogers [1999] NSWCA 403. Consequently, where a practitioner is found to make a false statement, the fact that it was made recklessly as opposed to knowingly will not prevent a finding of misconduct.
We are satisfied that Ground 17 is proved.
Ground 18 alleges that the conduct (the subject of the previous Grounds) constituted discourtesy to the Court. The respondent contests that characterisation.
In support of this Ground, the applicant relies upon the respondent's failure to appear at the Cairns Magistrates Court on five occasions (3 May 2012, the hearing of the first application; 9 October 2012, the hearing of the relisting application; 29 November 2012, 21 December 2012, and finally, 25 January 2013, the hearing of the second application).
In our view the Magistrate's observations in relation to these failures, and the others to which he referred, were well justified. He stated (at 379 of AMF 1): The conduct of Donnelly Solicitors the principal, I understand, of whom is Mr Paul Joseph Donnelly, and the person who identified himself as Mr Thomas, is, in my view, extremely extraordinary; concerning. It reflects an attitude of discourtesy to the Court, of contempt in relation to orders that were made, of discourtesy and unprofessionalism to fellow practitioners in relation to their dealings with the [defendant's] solicitors, and, in my view, ought to be the subject of a very full and thorough examiner investigation [sic] by the Legal Services Commissioner.
We are satisfied that Ground 18 is proved.
Ground 19 - Stevens matter - Admitted. The application alleges that the respondent failed to serve an application on the respondent's legal representative even after having the Court directed him to do so. We have already referred to this failure (in non-compliance with the directions given 13 October 2012). The Ground has been proved.
Ground 20 - Stevens matter - Denied. The application alleges that the respondent caused a costs order to made against his client.
In his Second Reply (at para 20) the respondent stated that the Court could, if it had so desired, have made a costs order directly against him.
The applicant submits that if the respondent had conducted the matter in a professional manner on his client's behalf, which would have included providing advice regarding the evidence required, the need to be present at Court (in order to be questioned), and the strengths and weaknesses of her position, the Court may not have made any costs orders against her.
We will not discuss in detail the Magistrate's considerations that led him to make costs orders against Ms Stevens at the conclusion of both of the hearings that both she and the respondent had failed to attend. We accept the applicant's submission that the absence of a personal costs order against the respondent does not mitigate the seriousness of his conduct. Ground 20 is proven.
Ground 21 - Henderson matter - Admitted. The allegation is that the respondent delayed the preparation of the appeal with the result that it was the subject of criticism for want of prosecution. Paragraph [311] refers to the respondent twice obtaining adjournments to no end whatsoever; failing to take any steps to comply with the Directions made by the Court of Appeal in relation to criminal matters by preparing a written outline of argument and providing advice to the Registrar that he no longer represented the accused; and failing to take any steps to inform the Court that he would not be ready to proceed on the hearing date.
In his Second Reply, the respondent sought to excuse his conduct as follows: The only excuse that I have is that I took the view that unless moneys were paid I would not act. No moneys were paid and I did not act.
The applicant criticised this explanation and pointed to a number of steps that the respondent took between 29 April 2013 and 26 August 2013 that indicated that he was continuing to act in the matter, namely: his letters to the court seeking adjournments, 29 April 2013, 31 May 2013; his email dated 23 August 2013, requesting to appear at the hearing listed for 26 August by telephone; and his statements to the Court on 26 August in relation to acting for Mr Henderson. Ground 21 is proven.
Ground 22 - Henderson matter - Denied. The application alleges that the respondent failed to supervise his employee, Mr Carleton Thomas. The allegation is particularised solely in relation to the Henderson matter.
We are satisfied that the evidence, in particular the respondent's statements to the Queensland Court of Appeal (see AMF 1, 483: 8-16; AMF 1, 496, para 2; AMF 1, 585, para 3; AMF 1, 645 & 647), establish that Mr Thomas had a working relationship with the respondent, and whatever its precise details as to remuneration, hours and the like, the relationship satisfied cl 8 of the LPR. This defines an employee of an entity as: ... a person who is employed or engaged under a contract of service or contract for services in or by an entity whether or not: (a) the person works full-time, part-time, or on a temporary or casual basis or (b) the person is a law clerk or an articled clerk.
We reject the respondent's statement in his Second Reply that 'Mr Carleton Thomas was never an employee and hence I did not have a duty to control him. Mr Thomas is an ex SAS Sergeant so the question of control is alien'.
It is well established that a practitioner must take all reasonable steps to exercise supervision and control over an employee and cannot shelter behind the fact of his or her physical separation from the employee: Re Mayes [1974] 1 NSWLR 19; Re Johnston (1979) 32 ACTR 37 at 40; Council of the Law Society of NSW v McHugh [2014] NSWCATOD 37. Furthermore, the wholesale delegation without any accompanying supervision or monitoring can be characterised as wilful misconduct even if nothing happened to suggest to the practitioner that these responsibilities were being abused: Council of the Law Society of NSW v Halligan [2009] NSWADT 317 at [65].
One of the reasons that the respondent gave for his delay in preparation of the Henderson appeal was that he needed to access and go through ten deed boxes comprising Mr Henderson's file that were with Mr Thomas. If he had ten deed boxes comprising Mr Henderson's file, the respondent failed to ensure that either they were transferred to the respondent to prepare the case or that Mr Thomas dealt with the files in a manner which allowed the case to be prepared.
The application also alleges that the respondent failed to ensure that Mr Thomas issued a receipt for money paid to the law practice by Ms Graham on Mr Henderson's behalf. In relation to this allegation, the respondent informed the Queensland Court of Appeal on 26 August 2013 that Mr Thomas had authority to receive moneys on his behalf (AMF 1, 483; 8-16). There is no contest that Mr Thomas failed to issue a receipt to Ms Graham. Ground 22 is proven.
Ground 23 - Henderson matter - Denied. The application alleges that the respondent dealt with trust money in breach of cl 88 of the LPR in that he did not issue a bill of costs prior to utilising trust money paid for that purpose. The allegation is particularised in relation to two transactions, namely Ms Graham's payments of $2,000 to Mr Thomas on 26 March 2013 and of a further $1,500 on 4 June 2013.
At the time of those transactions, the respondent could not operate a trust account as he was an undischarged bankrupt. However, he informed the Queensland Court of Appeal that Mr Thomas had authority to receive money on his firm's behalf and that normally the monies received by Mr Thomas would be banked into his general account (AMF 1, 483: 14-25).
It follows that despite the respondent's general denial, he breached cl 88 in that the preconditions that govern a solicitor's right to draw down monies paid by a client on account of costs could not be met in circumstances (as he was unable to deposit the money into a trust account). Ground 23 is proven.

Second Application: Professional Misconduct

The application alleges 3 Grounds of professional misconduct relating to the affairs of the client, Charupalli, namely: 1. Breach of s 254 LPA, which requires legal practitioners to deposit monies into in a trust account, subject to various exceptions and qualifications. 2. Breach of s 260 LPA, which prohibits mixing of trust money with other money, unless specially authorised in the way set out in sub-section (2). 3. Misappropriation.
We will deal briefly with Grounds 1 and 2, with respect to which the complaints are particularised as referring to payments made by Mr Charupalli in connection with the valuation of overseas land holdings that were relevant to his family law proceedings. The payments were deposited into the respondent's office account in February 2014 and March 2014.
On 19 July 2011, upon a petition by the Deputy Commissioner of Taxation, the Federal Magistrates Court made a sequestration order against the respondent and he remained an undischarged bankrupt until 28 August 2014. He was therefore not entitled to hold moneys as a trustee during that period and he did not operate a trust account.
Clearly, the monies were deposited into the office account in breach of s 254 LPA. That conduct resulted in the mixing of monies received in trust with other moneys, in breach of s 260 LPA.
The graver allegation is contained in Ground 3, being misappropriation. The allegation is that for at least three periods of time in February 2014 and March 2014, the balance of the office account remained positive only because of the wrongful deposit into it of the trust monies received from Mr Charupalli. However, as the balances were less than the total of the trust monies held on behalf of Mr Charupalli, it can be inferred that part of this trust money was drawn down by the respondent for his own use.
Paragraph 13 of the application sets out the history of deposits and withdrawals from the office account between 10 February 2014 and 4 March 2014. (See also AMF 2, pp 18-19). We accept the applicant's submission that but for these deposits the office account would have been overdrawn by $707.73 at the end of the relevant period.
The respondent admits that during February 2014 and March 2014 he was under financial pressure (AMF 2, 24) and was an undischarged bankrupt and the available evidence indicates that he wrote four cheques totalling $3183.27; made cash ATM withdrawals totalling $800; and also made various liquor store purchases during that period.
We find misappropriation proven.

Characterisation of Misconduct

Section 496 LPA provides: 496 Unsatisfactory professional conduct For the purposes of this Act: unsatisfactory professional conduct includes conduct of an Australian legal practitioner 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 Australian legal practitioner.
S 497(1) LPA provides: 497 Professional misconduct (1) For the purposes of this Act: professional misconduct includes: (a) unsatisfactory professional conduct of an Australian legal practitioner, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence, and (b) conduct of an Australian legal practitioner 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 practitioner is not a fit and proper person to engage in legal practice. (2) For finding that an Australian legal practitioner is not a fit and proper person to engage in legal practice as mentioned in subsection (1), regard may be had to the matters that would be considered under section 25 or 42 if the practitioner were an applicant for admission to the legal profession under this Act or for the grant or renewal of a local practising certificate and any other relevant matters.
In addition, s 498 LPA provides: 498 Conduct capable of being unsatisfactory professional conduct or professional misconduct (1) Without limiting section 496 or 497, the following conduct is capable of being unsatisfactory professional conduct or professional misconduct: (a) conduct consisting of a contravention of this Act, the regulations or the legal profession rules, (b) charging of excessive legal costs in connection with the practice of law, (c) conduct in respect of which there is a conviction for: (i) a serious offence, or (ii) a tax offence, or (iii) an offence involving dishonesty, (d) conduct of an Australian legal practitioner as or in becoming an insolvent under administration, (e) conduct of an Australian legal practitioner in becoming disqualified from managing or being involved in the management of any corporation under the Corporations Act 2001 of the Commonwealth, (f) conduct consisting of a failure to comply with the requirements of a notice under this Act or the regulations (other than an information notice), (g) conduct of an Australian legal practitioner in failing to comply with an order of the Disciplinary Tribunal made under this Act or an order of a corresponding disciplinary body made under a corresponding law (including but not limited to a failure to pay wholly or partly a fine imposed under this Act or a corresponding law), (h) conduct of an Australian legal practitioner in failing to comply with a compensation order made under this Act or a corresponding law. (2) Conduct of a person consisting of a contravention referred to in subsection (1) (a) is capable of being unsatisfactory professional conduct or professional misconduct whether or not the person is convicted of an offence in relation to the contravention.
Finally, there are several provisions where breach is deemed to be either professional misconduct or unsatisfactory professional conduct.
It will be seen that both statutory definitions are inclusive, not exhaustive. In the case of 'professional misconduct', the common law definition is therefore preserved, i.e. conduct in a professional capacity which would be reasonably regarded as disgraceful or dishonourable by professional brethren of good repute and competency: see Allinson v General Council of Medical Education and Registration [1894] 1 QB 750; Re a Solicitor: ex parte The Law Society [1912] 1 KB 302.

Findings

In the current matter we have found all Grounds proven.
The applicant submits that grounds 1 to 7 (inclusive) of the first application and all 3 grounds of the second application should properly be characterised as 'professional misconduct'. In some, the characterisation results from one of the categories of s 498 LPA being satisfied. The applicant also submits that the sixteen Grounds of the first application should properly be characterised as unsatisfactory professional conduct.
We do not consider it fruitful to engage in a charge-by-charge examination of the appropriate characterisation. Clearly the matters proven reveal grave misdemeanours by the respondent over a period of several years, in a variety of ways and in a variety of matters and in two States. There is some repetitive conduct, such as: failures to appear at court on behalf of clients; receipt of moneys on account of costs in a disorganised and unsatisfactory way; failure to find a solution to the problem created by being an undischarged bankrupt and therefore unable to operate his own trust account; the undertaking of work on a regular basis in Queensland when his practice was located in New South Wales; as well as the curious relationship with Mr Carleton Thomas, the former barrister. It would appear that Mr Thomas worked around the Courts in Brisbane and in Cairns, and acted as 'a finder' and/or 'go-between' for the respondent. It would appear that he engaged in work as a law clerk on the respondent's behalf in a largely unsupervised manner.
We are satisfied that the breaches of professional standards are so numerous, and many are so grave, that a global finding of professional misconduct is warranted.

Appropriate Order

S 562 of the LPA provides that where the Tribunal is satisfied that the respondent is guilty of professional misconduct or unsatisfactory professional conduct, it may make such order as it thinks fit, including any one or more of the orders specified in that section. These include an order for removal of the practitioner's name from the roll; cancellation or suspension of a practising certificate; imposition of conditions on a practising certificate; reprimand; fine; orders directing to the practitioner to undertake educational courses and the like; and orders to undertake counselling or a health program and the like.
The applicant submits that the appropriate order is that the respondent's name be removed from the roll of local lawyers.
As noted by Gleeson CJ in A Solicitor v Council of the NSW Law Society [2004] HCA 1; 216 CLR 253; 204 ALR 8; 78 ALJR 310 (4 February 2004) ...[N]ot all cases of professional misconduct justify or require a conclusion that the name of a practitioner should be removed from the roll. Where an order for removal from the roll is contemplated, the ultimate issue is whether the practitioner is shown not to be a fit and proper person to be a legal practitioner of the Supreme Court upon whose roll the practitioner's name presently appears.
Disciplinary orders have as their ultimate purpose the protection of the community from further harm. They also serve to protect the public from similar defaults by other practitioners. See generally, Law Society of New South Wales v Walsh [1997] NSWCA 185 at 40. The key difference between an order cancelling a practising certificate and an order for removal from the roll is that the former order usually has a temporal quality, and the practitioner remains a member of the legal profession. It is possible that a person may not be seen as fit to hold a practising certificate but not be seen as lacking the fitness, or good fame and character, to be permitted to remain a member of the legal profession albeit a non-practising member.
This distinction is discussed by the Court in, for example, New South Wales Bar Association v Murphy [2002] NSWCA 138, per Spigelman CJ at [25]- [28]; and per Giles JA at [41] ff. The latter order (removal from the roll) should only be made where the court or tribunal is satisfied that the practitioner is probably permanently unfit to practise: Prothonotary of the Supreme Court of New South Wales v Ritchard (NSWCA, 31 July 1987, unreported) per McHugh JA; New South Wales Bar Association v Maddocks (NSWCA, 23 August 1988, unreported) per Kirby P; New South Wales Bar Association v Cummins [2001] NSWCA 284; [2001] 52 NSWLR 279.
The respondent's failure to appear and give evidence must have adverse consequences for his case. We referred at the beginning of our reasons to the importance of practitioners giving evidence in their defence in disciplinary proceedings. The respondent's various explanations for his conduct found in the formal replies and the correspondence to which we have referred have not been verified and have not been tested under cross-examination.
There is therefore no evidence before us regarding his current understanding of his obligations as a legal practitioner. We therefore have no evidence to support a finding that he is currently fit to practise law.
On the contrary, as recently as 4 July 2016 the respondent advised the applicant in writing that he ceased legal practice and retired for reasons concerned with his age and health. He also alluded to 'productive work' that he considers that he did for his clients over the course of his career and referred to 'some of the high points' where he feels his work has made a special contribution to the advancement of the law and justice. This strongly suggests that the respondent was in denial concerning his conduct at that time and there is no evidence that he has come to any subsequent realisation concerning his obligations as a legal practitioner.
We are not satisfied that the respondent is presently a fit and proper person to practise as a legal practitioner, and further that his lack of fitness is probably permanent. His name should be removed from the roll of local lawyers.

Costs

The Society seeks an order for costs against the respondent. The general rule in the Tribunal is that each party bears its own costs, unless 'special circumstances' warrant an order for costs: see generally, Civil and Administrative Tribunal Act 2013 (NCAT Act), s 60. That rule does not apply in this jurisdiction if adverse conduct findings are made against the respondent.
Clause 23(1) of Sch 5 of the NCAT Act provides relevantly: (1) Despite section 60 of this Act, the Tribunal must make orders requiring a respondent lawyer whom it has found to have engaged in unsatisfactory professional conduct or professional misconduct to pay costs (including costs of the Commissioner, a Council and the complainant), unless the Tribunal is satisfied that exceptional circumstances exist.
The respondent has not sought to demonstrate that there are any 'exceptional circumstances'.
The usual order will therefore be made.

Orders

The respondent is guilty of professional misconduct.
The Tribunal orders that his name be removed from the local roll.
The Tribunal orders the respondent to pay the applicant's costs (including costs of the Council), as agreed or assessed. [This decision was ready for publication on 05 December 2016. Its publication has been delayed due to technical difficulties.] 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: 14 March 2017

Legal Profession Regulation 2005(NSW)

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