Council of the Law Society of NSW v Messiha

NCAT Occupational|2019-02-04

Introduction

The Applicant filed an Application for disciplinary findings and orders.
The grounds set out in the Application are: 1. The Respondent misappropriated trust funds; 2. The Respondent wilfully breached Sections 138, 147, 148 and 154 of the Legal Profession Uniform Law (NSW). [Uniform Law] 3. The Respondent wilfully breached Sections 36, 45, 47, 48 and 52 of the Legal Profession Uniform General Rules. [Uniform Rules]

Jurisdiction

The Applicant brings the Application alleging that the conduct complained of amounts to professional misconduct pursuant to Section 300(1) of the Legal Profession Uniform Law (NSW).

The Evidence

The Applicant tendered the following evidence: 1. The Application, dated 12 June 2018 - Exhibit 1; 2. The Reply, dated 24 August 2018 - Exhibit 2; 3. Affidavit of Gregory William Livermore, dated 1 June 2018 - Exhibit 3; 4. Affidavit of Anne-Marie Foord, dated 12 June 2018 - Exhibit 4;
The Respondent tendered the following evidence: 1. Affidavit of Nadia Messiha, the Respondent, dated 24 August 2018 Exhibit A; The Respondent also gave oral evidence at the Tribunal's request.
Both the Application and the Reply were tendered in the Applicant's case because the Reply is a complete admission of the grounds for the Application and the particulars thereof.

Factual Background

The Respondent was born on 26 February 1985 in Khartoum in Sudan and is 33 years of age.
She deposes that her parents are of Egyptian background and they were part of a Coptic Christian minority living in Sudan.
In 1999, the Respondent's family immigrated to Australia. At that time she was 14 years of age. She had completed, in Sudan, approximately the equivalent of half of Year 10 in the NSW education system.
She enrolled at Nagle College, Blacktown and completed Year 10 there. She then attended Tyndale Christian School, Blacktown for Years 11 and 12.
The Respondent completed the Higher School Certificate in 2001 and studied law at the University of Technology.
The Respondent commenced the 5 year Bachelor of Law and International Studies course in 2002, which she completed in 2006. In 2007, she completed her practical legal training and graduated in 2008.
The Respondent married in 2008. She has two children.
The Respondent was admitted to practice on 16 May 2008 and worked for short periods in a number of law firms in NSW.
In July 2013, the Respondent commenced her own practice under the name "Hills Family Lawyers." That practice is now an incorporated legal practice.
The practice was primarily family law with some conveyancing and Will drafting.
The Respondent deposed that most of the clients she received came from referrals from pre-existing clients and and also from the Coptic Christian Community in Sydney.
The Respondent gave evidence that she had difficulties falling pregnant from 2010 and in March 2013 she suffered a miscarriage.
In February 2014, the Respondent and her husband sold their house in Blacktown to move closer to her parents in Beaumont Hills. Her first child was born in November 2014.

Shinouda Purchase

The matters giving rise to the Application, the grounds for it and the particulars thereof, arose from a conveyancing transaction carried out by the Respondent for Mr and Mrs Shinouda.
Without reciting the entirety and complexity of the facts, what follows are the salient facts. The Shinoudas were recommended to the Respondent by a mortgage broker with whom she had previous dealings.
The Shinoudas entered into a contract for the purchase of a house and land package in Queensland which required them to pay an initial deposit of $1,000 and thereafter a further payment of $9,000 being the balance of the deposit when their finance was approved. The contract (which was before us) required that the balance of $9,000 be paid by 19 October 2015.
The Respondent says that she received a letter dated 30 October 2015 from the vendor's Queensland's solicitors advising that as the requisite time had passed, the subject to finance clause was satisfied and the contract was unconditional. Furthermore settlement would take place on 9 November 2015 in Brisbane.
The Respondent said that when she received this letter she panicked because she had missed the deadline for payment. She said that she was aware from her discussions with the broker that the finance had not yet been approved but when she contacted the broker again after receipt of the above letter, the broker was optimistic that finance would be approved in the near future.
The Respondent says that she was too embarrassed to approach or speak to her clients. On 6 November 2015 she sent an email to the vendor's Brisbane's solicitors in which she requested both an extension of time for settlement to 17 November 2015 and a waiver of any penalty interest.
In response to her email and on the same day, the Respondent received a letter from the vendor's solicitor agreeing to an extension of time provided the $9,000 balance of deposit was paid on that day.
Later that same day the Respondent electronically transferred the sum of $9,000 from her trust account to the vendor's solicitors in satisfaction of the demand for the payment of the balance of the deposit.
At the time the Respondent made the electronic transfer, she knew that she did not have in the client's ledger of her trust account, sufficient funds for that payment to be made and she knew that the monies being paid would therefore come from other clients' trust monies to which her client had no entitlement.
On 10 November 2015, the Respondent made a further payment of $3,500 from her trust account in relation to the same purchase. At that time there was not $3,500 in her clients' account in her trust account to make that payment but she believed that the funds had been received into the trust account because she had seen a computer screenshot of the deposit transaction that day. However, the funds were not credited to her trust account until the following day, 11 November 2015. In her oral evidence the Respondent spoke about her panic, the inappropriateness of her behaviour and her fear that she would be thought to be incompetent by her community. The Respondent did not report to the Law Society the fact that withdrawals had been made from the trust account at times when insufficient funds had been deposited into the account by the clients such as would have permitted the withdrawals to be made.
The trust account shortages were detected by a trust account inspection and within a short period of time the Law Society resolved to suspend the solicitor's practising certificate and appoint a manager to her practice.
At its meeting on 19 January 2017, the Council of the Law Society resolved to lift the suspension of the solicitor's practising certificate and to terminate the appointment of the manager. The Council further resolved to appoint Mr Richard Savage, Solicitor as a supervisor of her legal practice for a period of two years. That supervision is ongoing.
As a result of the two drawings from the trust account, both of which, properly categorised, were misappropriations of trust monies, and because of the solicitor's then practise in entering trust account transactions belatedly, the breaches of the Uniform Law and Uniform Regulation previously recited in these reasons also occurred. They are not disputed by the Respondent.
Since the suspension, appointment of manager and the appointment of a supervisor, the solicitor has undertaken a number of bookkeeping and other business courses which she deposes to in paragraph 43 of her Affidavit.
The Society, given all that has occurred and the fact that the Respondent has cooperated throughout, seeks the following orders: 1. The Respondent be reprimanded; 2. The Respondent pay a fine; and 3. The Respondent undertake further education in the terms set out in Order 3 of the Application. 4. The Respondent pay the costs of the Society as agreed or assessed; and 5. Any further or other order as the Tribunal deems fit.

Submissions, discussion and finding

Mr Barnes, Counsel for the Respondent, drew our attention to the first three cases cited on the face page of these Reasons and said from them and relevant to the present case, could be found the following guidance in support of a reprimand rather than a more severe penalty:- 1. In each case there was a small sum involved - in this case $12,500; 2. In each case it was "a one-off"; 3. In each case there was no cover up; 4. In each case restitution of the funds took place quickly - as was the case here; 5. In each case there was remorse and contrition; 6. In each case the solicitor was otherwise fit to practise.
A further factor Mr. Barnes submitted was that there was no direct benefit to the Respondent in doing what she did.
Mr. Pierotti, for the Applicant, drew the Tribunal's attention to reasons which could otherwise be relied upon to justify a reprimand rather than some more severe penalty as in the matter of Shehadie at paragraphs 37 to 52 where discussion occurs on fitness to practise.
We have carefully considered all of the evidence, the legislation and the authorities to which we have been directed.
We have carefully considered and observed the Respondent in the witness box giving her oral evidence.
Given that the nature of disciplinary orders are protective rather than punitive, we are satisfied that neither the profession nor the wider public would be prejudiced by making the orders which the Society seeks.
We feel however that the Order that the Applicant suggests by way of further education should be enhanced to include a component of legal ethics as well as trust account keeping so that the respondent understands her duty to the law, the profession and the wider public. Whilst it is always laudatory to be well regarded by one's community, to be so well regarded should not subsume an obligation to the law, the profession and the wider public. Every legal practitioner is a member, in one way or another, of one or more communities. The expectations and the demands of the members of that or those communities should never motivate a solicitor to ignore his or her obligations as a legal practitioner.

Orders

We therefore make the following orders: 1. The Respondent be reprimanded; 2. The Respondent pay a fine of $10,000; 3. The Respondent undertake further education with the following terms: 1. within six months of the date of publication of these Reasons for Decision, the Respondent, at her own cost is to enrol and to successfully complete, by achieving a pass mark of not less than 50%, the Legal Practice Management - Sole Practitioners Course (as modified below) conducted by the College of Law NSW; 2. the course is to contain (in addition to all the other modules), specific modules which address legal ethics and in particular a solicitor's obligations when dealing with the receipt and payment of trust monies received from and disbursed for clients; 3. at the time of her enrolment, the Respondent must provide to the Chief Executive Officer of the College of Law NSW, a copy of this order so that the modules can be formulated and provided for in the course to be undertaken by the Respondent; and 4. upon her enrolment and again upon her successful completion of the course, the Respondent must provide written evidence within seven days to the Applicant of each event. 1. The Respondent pay the costs of the Law Society of New South Wales as agreed or assessed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 February 2019

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