Council of the Law Society of NSW v Orford

The relevant persons involved in the joint venture and these proceedings

1. To aid understanding of these reasons it is useful that we set out the names, so far as relevant, of the parties to the transactions that occurred in respect of the CPP and to other relevant persons, entities and property. For convenience, we have generally adopted the same descriptor of persons and property used by the Society in the Application.

• 14, 16 and 18 Connells Point Road, South Hurstville (Lots 1-15 in SP 79702) collectively as "the CPP".
• Mr Joseph (aka as Joe) Samia as "Mr Samia". Mr Samia approached Ms Cavallaro in early 2003 to invest in the CPP and she became one of a number of joint venturers. Ms Cavallaro initially contributed $42,500 and later provided a further sum of $100,000 to the CPP on behalf of herself and her sister, Ms Maria Cavallaro.
• Christine Jamil Samia as "Ms Samia", Vivian Boudib as "Ms Boudib", Paul George Dos Santos as "Mr Santos", John George Boudib as "Mr J Boudib", Carolyn Joyce Bourchier as "Ms Bourchier", Ali Akram Farhat as "Mr Farhat", Ms Zena Kak as "Ms Kak", Ms Sanaa Halbouni as "Ms Halbouni" and Mr Abbas Kais as "Mr Kais". These persons, and Ms Cavallaro, are asserted to have been the joint venturers. We refer to them as "the partners". They did not have a formal partnership agreement. The solicitor asserts he did not act for the partnership.
• Likehart Pty Ltd as "Likehart". Likehart is the corporate vehicle used for another property development. A number of the partners in the CPP were also investors in Likehart to jointly develop a property at Leichhardt, NSW.
• Mr Mark Boudib as "Mr Boudib". Mr Boudib is an engineer and was involved with the development of the CPP. He attended settlement of the sales of some or all of the lots including the settlement of Lot 8. During some stage of the development he became involved in its financing and held a cheque book on behalf the partners. He lodged caveats against the titles of certain lots including Lot 9.
• Ms Cavallaro is an accountant. She is employed by the firm Maria Cavallaro & Co. Her sister, Ms Maria Cavallaro, is the principal of the accounting firm. Ms Maria Cavallaro provided accountancy services for the partners and attended some meetings of some of the partners at the solicitor's office. Ms Cavallaro became one of the registered proprietors of 18 Connells Point Road and subsequently of Lots 7, 8 and 9 in the CPP. Ms Maria Cavallaro purchased, through a company she controlled, Lot 6 in the CPP.
• Mr Farhat became one of the registered proprietors of 18 Connells Point Road and subsequently Lot 7, 8 and 9 in the CPP. Mr Farhat was originally shown as the purchaser on a contract for sale of Lot 7 for a purchase price of $430,000. The stamp duty assessed was reduced by 25 per cent as the purchase was a related party transaction (Mr Farhat already holding a one quarter interest in Lot 7 as a tenant-in-common). The contract for sale was amended by the practitioner to a sale price of $322,500 (albeit the solicitor refers to a sum of $322,000).
• Ms Zena Kak as "Ms Kak". Ms Kak is a real estate agent. She became one of the registered proprietors of 18 Connells Point Road and subsequently of Lot 7, 8 and 9 in the CPP.
• Ms Sanaa Halbouni as "Ms Halbouni". Ms Halbouni was one of the registered proprietors of 18 Connells Point Road and subsequently of Lot 7, 8 and 9 in the CPP. Her husband, Mr Said Halbouni, showed the executed transfer in respect of Lot 7 to the solicitor sometime after the settlement of the sale of that lot.
• Mr Abbas Kais as "Mr Kais". Mr Kais was a partner and one of the registered proprietors 16 Connells Point Road and subsequently of Lot 8. Mr Kais purchased Lot 8 from Mr Farhat, Mr Kak, Ms Halbouni and Ms Cavallaro as tenants-in-common for a purchase price of $430,000, although the transfer was amended to show a consideration of $330,000 to reflect Mr Kais' purported contribution to the CPP.
• Mr Jack Jacovou as "Mr Jacovou". Mr Jacovou is a solicitor practising in the firm Jacovou & Co Solicitors. Mr Jacovou acts for Ms Halbouni.
• Mr Ronald Dunlop as "Mr Dunlop". Mr Dunlop is a Trust Account Inspector employed by the Society. He conducted an investigation of the solicitor and prepared a report dated 24 March 2010. We will refer to this report as "the Dunlop report".
• Mr David Paul Courtenay as "Mr Courtenay". Mr Courtenay was appointed by the Society as an investigator in July 2011. Following his investigation of the involvement of the solicitor with the CPP he prepared a report dated 12 June 2012. We will refer to this report as "the Courtenay report". He subsequently prepared a supplementary report dated 19 September 2012. We will refer to this report as "the supplementary Courtenay report".
• Ms Anne-Marie Foord as "Ms Foord". Ms Foord is the Manager, Professional Standards Committee of the Society. Ms Foord swore an affidavit, relied on by the Society in these proceedings, dated 22 December 2014.

The background

1. The following matters, unless noted by us to be an allegation, are facts established to the requisite civil standard. The following paragraphs contain, where appropriate, facts set out in the Agreed Statement of Facts filed 19 October 2015 and signed by the parties' solicitors.
2. On 6 May 1997 the solicitor was admitted as a solicitor by the Supreme Court of NSW and in July 1981 he first obtained a practising certificate which he has held continuously since that date. He has practised as sole principal of John Orford & Associates since approximately 1994.
3. In 2001 the solicitor met Ms Kak when she was introduced to him by Mr Samia.
4. In 2003 the solicitor asserts he spoke to Mr Samia, who told him about a proposal to develop the three properties at 14, 16 and 18 Connells Point Road, South Hurstville and that subsequently were acquired for the CPP. At that time the solicitor asserts he discussed with Mr Samia the exercise of an option pursuant to Put and Call Option Deed in respect of the properties. The solicitor asserts Mr Samia instructed him to send correspondence to an address at 284 Railway Street, Carlton NSW.
5. In early 2003 Ms Cavallaro was approached by Mr Samia who proposed to her that she should invest in the CPP. In about February 2003 Ms Cavallaro herself, and/or on behalf of herself and Ms Maria Cavallaro, invested an initial sum of $42,500 in the CPP.
6. In June 2003 the practitioner asserts he had a brief telephone discussion with Ms Cavallaro about the purchase of 18 Connell Point Road and advised her there was no "cooling off" period.
7. On 17 June 2003 contracts for the sale of 14 Connells Point Road were exchanged. The purchasers were Ms Samia, Ms Boudib and Mr Santos as tenants-in-common. On the same day 16 Connells Point Road was purchased in the names of Mr J Boudib and Ms Bourchier as joint tenants.
8. Also on 17 June 2003 18 Connells Point Road was purchased in the names of Mr Farhat, Ms Kak, Ms Halbouni and Ms Cavallaro for a purchase price of $850,000. A s 66W was signed by the solicitor on that date and sent to the vendor's solicitors.
9. Ms Cavallaro asserts that in July 2005 Mr Samia approached her and asked her to invest a further sum of $100,000 into the CPP. On 4 July 2005 Ms Cavallaro transferred $100,000 into an account in the name of Likehart.
10. In around 2006 the solicitor asserts he came to understand that the CPP would involve the three properties acquired by the partners being subdivided and developed with the erection of 15 investment units.
11. The solicitor asserts that the partners did not have a partnership agreement, nor did he act for the partnership, but various meetings of the partners were held at his office. The solicitor asserts he understood that Mr Boudib told the partners he, (Mr Boudib) was "doing the finance".
12. The solicitor asserts, in mid 2007, at meeting of the partners Mr Boudib told them the mortgage debt in respect of the CPP had to be reduced very quickly.
13. The solicitor asserts that between mid 2007 to late 2009 approximately 10 to 12 meetings of the partners were held in the reception area of his office.
14. On 6 November 2007 Mr Boudib sent an email to the solicitor, with a copy to Ms Maria Cavallaro, attaching a letter about settlement requirements. Mr Boudib advised that, in addition to $270,000 required to discharge the first mortgage in respect of each unit, the full balance, including initial deposits held should be by paid by way of bank cheque in his favour. Mr Boudib said "This will facilitate the lifting of the caveat on each title in due course". He further said "To date monies owed to second tier funding is in excess of $850,000 which continues to increase due to amortization of interest at approximately $41,000 per month". Mr Boudib advised he would attend on settlement of each sale and requested the solicitor advise him of the relevant settlement dates.
15. A Contract for Sale of Lot 9 in the CPP was prepared by the solicitor in about December 2007. The vendors shown on the contract were Mr Farhat, Ms Kak, Ms Halbouni and Ms Cavallaro and the purchasers were third parties not associated with the partners. The purchase price for Lot 9 was $445,000. Ms Cavallaro asserts she did not sign the contract and her signature is a forgery.
16. Raine and Horne acted as the real estate agents on the sale of Lot 9. The solicitor asserts he sent a blank or "generic" contract for sale to Raine and Horne. On 22 December 2007 the purchasers' solicitor for Lot 9 forwarded a transfer to the solicitor.
17. On 9 January 2008 Ms Kak attended the solicitor's office and signed the transfer for Lot 9 in the solicitor's presence. The solicitor completed the certification on the transfer and gave it to Ms Kak. The solicitor asserts he thereafter did not see the transfer until shown to him by Mr Dunlop or Mr David Castle, another investigator retained by the Society.
18. On 16 January 2008 the solicitor's clerk wrote to Raine and Horne instructing them that a cheque for the balance of the deposit should be drawn in favour of Mr Boudib. On the same day the solicitor rendered a memorandum of fees in respect of the sale of Lot 9 to Mr Samia c/- Railway Parade Carlton. The solicitor asserts this is the address of a real estate agency operated by Ms Kak and that Ms Kak's de facto partner was, and is, Mr Samia.
19. On 22 January 2008 the solicitor wrote to Mr Fahrat, Ms Kak, Ms Halbouni and Ms Cavallaro c/- 284 Railway Parade Carton confirming settlement of the sale of Lot 9. The solicitor advised, "[a]s instructed, the proceeds of sale were drawn in favour of M Boudib".
20. At some time prior to 18 February 2008 the solicitor asserts he witnessed Ms Kak's signature on transfers he had instructed his conveyancing clerk to prepare for Lot 7 and 8 at a consideration $450,000. At that time, he asserts, he was instructed that the purchaser of the two lots would be Mr Farhat. The solicitor later changed the amount of the consideration to $430,000 being the valuation figure received from a registered valuer for each lot.
21. On 18 February 2008 the solicitor asserts he received advice from the Office of Stamp Duties and amended the amount shown on the transfer for Lot 7 to $322,000 being the valuation price of $430,000 less 25 per cent to represent Mr Farhat's interest as vendor of his one quarter interest. (We note the contract discloses a sale price of $322,500 representing a 25 per cent discount). He also inserted an amount of $330,000 on the transfer for Lot 8.
22. In late March 2008 the solicitor asserts Mr Boudib advised him Mr Kais would be the purchaser of Lot 8. The solicitor asserts he was advised separately by Mr Samia and Mr Boudib not to amend the amount of consideration on the Lot 8 transfer.
23. The practitioner asserts after he instructed his conveyancing clerk to prepare transfers for Lot 7 and 8 Ms Kak came to his office, and that he witnessed her signature on the transfers. He asserts the transfer was subsequently returned with Ms Halbouni's signature on the transfers but not those of Mr Farhat and Ms Cavallaro.
24. The practitioner asserts that he telephoned Ms Cavallaro, Mr Fahrat and Mr Kais to come into his office and they each signed the transfers for Lot 7 and 8, and he initialled the amendments made in respect of Lot 7. The solicitor did not see Ms Halbouni sign the transfer and says that he put a "post it" note on the transfer for Lot 7 as a reminder to himself of the need to witness Ms Halbouni's signature prior to settlement. He asserts he did not put a post it note on the transfer for Lot 8 believing the note on Lot 7 was a sufficient reminder. The solicitor acknowledges he did not witness Ms Halbouni's signature before settlement although the transfers bore his certification that he had witnessed the signatures of all four vendors.
25. On 9 May 2008 the solicitor's clerk attended at the settlement of Lot 8 and received the sum of $270,966 being approximately $60,000 less than the purchase price shown on the contract of $330,000. On 16 May 2008 the solicitor wrote to Ms Kak, Ms Halbouni, Mr Farhat and Ms Cavallaro of 284 Railway Street Carlton confirming settlement of the sale. On the same day Mr Boudib withdrew a Caveat lodged against the title of Lot 8.
26. On 16 May 2008 the solicitor also wrote to Mr Kais confirming settlement of the sale of Lot 8.
27. On 16 June 2008 settlement of the sale of Lot 7 was completed.
28. On 27 November 2008 the solicitor wrote to Ms Kak, Ms Halbouni, Mr Farhat and Ms Cavallaro at 284 Railway Street Carlton about the sale of Lot 8 advising: We were instructed the Contract price was $330,000. On settlement a cheque was received for $270,000. We are unsure as to why the Contract shows $330,000 (sic) (all other Contracts appear to be $430,000 or more). However based on our instructions there is a sum of $60,000 owing plus adjustments as described in unit 1 and unit 5.
29. On 4 November 2009 Mr Jacovou wrote to the practitioner on behalf of his client, Ms Halbouni. Mr Jacovou said he was instructed that his client was the registered proprietor of certain properties that had been sold, and the practitioner appeared to have witnessed her signature on transfers. Mr Jacovou asserted his client said that she had never spoken to the solicitor in relation "to this matter" nor had the solicitor ever witnessed her signing any document.
30. By letter dated 6 November 2009 the solicitor wrote to Mr Jacovou and asserted he had witnessed Ms Kak's signature on the transfer to Lot 7 which she took from his office and arranged for the other vendors to have their signatures affixed and witnessed.
31. On 22 January 2010 the solicitor wrote to Mr Dunlop and repeated the information provided to Mr Jacovou about the execution of the transfer for Lot 7.
32. On 25 March 2011 the solicitor provided a statement to the Society and Mr Castle in which he asserted he had witnessed Ms Kak's signature on the transfer, and did not see the transfer again until shown to him by Mr Said Halbouni.
33. On 14 December 2009 a notification pursuant to s 263 of the Legal Profession Act 2004 (NSW) was made by Mr Jacovou against the solicitor to the Society.
34. In December 2009 Mr Dunlop commenced an investigation on behalf of the Society. He prepared a report dated 24 March 2010.
35. On 16 December 2010 Mr Castle was appointed as an investigator under s 267 of the Legal Profession Act.
36. On 21 July 2011 the Society resolved to make complaints against the solicitor. On the same day Mr Courtenay was appointed as an inspector under s 267 of the Legal Profession Act.
37. On 2 August 2012 the Society resolved to make further complaints against the solicitor
38. On 18 September 2014 the Society resolved to institute proceedings in the Tribunal pursuant to s 537 of the Legal Profession Act.

The Transitional provisions

1. As may be seen from the above paragraphs, the grounds of complaint alleged against the solicitor cover the period 2003 to 2011. Accordingly, they bring into play provisions of the Legal Profession Act 1987 (NSW) (the 1987 Act), the Legal Profession Act 2004 (NSW) (the Legal Profession Act), and the Legal Profession Uniform Law (NSW).
2. The Legal Profession Act commenced operation on 1 October 2005. Schedule 9 Part 2 of that Act contained transitional provisions. Complaints that were pending under the 1987 Act were to be dealt with under the 1987 Act. Clause 17 of Schedule 9 applied to conduct that occurred, or was alleged to have occurred, before the commencement of the Legal Profession Act 2004. In such case cl 17 (4) provided the matter should be dealt with under the Legal Profession Act but subject to the caveat in cl 17 (4) that the Tribunal could not make any determination or order against a person that was more onerous than could have been made under the 1987 Act.
3. The Legal Profession (Amendment) Act 2006 (NSW), which commenced operation on 2 June 2006, inserted cl 17A into Schedule 9 Part 2 of the Legal Profession Act to deal with proceedings instituted in the former Administrative Decisions Tribunal after 1 October 2005 but before 2 June 2006 in respect of a complaint arising prior to that date. Such proceedings were to be dealt with, subject to any decision of the President of the Tribunal, as proceedings under the 1987 Act. Clause 17A has no relevance to these proceedings.
4. These proceedings were filed in the Tribunal on 29 January 2015 and eventually listed for hearing on 26, 27 and 28 October 2015. On 1 July 2015 the new uniform legal profession scheme commenced operation in Victoria and NSW. In broad terms, the scheme operates by the NSW Parliament adopting the relevant Victorian legislation, and any amendments made to it, by the Victorian Parliament.
5. The Legal Profession Uniform Law Application Act 2014 (NSW) (the Application Act) repealed the Legal Profession Act, and enacted (in s 4) that the Legal Profession Uniform Law set out in Schedule 1 to the Legal Profession Uniform Law Application Act 2014 (Victoria) applies in NSW as if it were an Act of this State. The NSW applicable law is to be cited as Legal Profession Uniform Law 2014 (the Uniform Law). Transitional provisions are contained in both the Application Act and the Uniform Law. The general savings and transitional provisions in the Application Act (Schedule 9 Part 2 cl 3) are subject to the Uniform Law.
6. Schedule 4 of the Uniform Law sets out the savings and transitional provisions. Division 7 of Schedule 4 provides that complaints made under Chapter 4 of the Legal Profession Act but not disposed of before the commencement date, and investigations commenced, but not completed by 1 July 2015, are to continue to be dealt with under the provisions of the old Act (cl 26(2)). Matters occurring prior to 1 July 2015 that have not been subject of a complaint or investigation are to be heard under the Uniform Law (cl 27(4)). However, disciplinary action may not be taken in such circumstances if it is more onerous than the disciplinary action that could have been taken under the Legal Profession Act (cl 27(6)).
7. Thus, this matter is heard under the provisions of the Legal Profession Act as if that Act had not been repealed.
8. We note in passing that the complaints are over three years old, the relevant decision having been made by the Society in 2011 under s 506(3) of the Legal Profession Act including in respect of the 2003 complaint. No issue was raised by the practitioner about the criteria in s 506(2) having been met.

Relevant statutory provisions

1. Under s 496 of the Legal Profession Act unsatisfactory professional conduct is defined as follows: 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.
2. Professional misconduct is defined in s 497 of the Legal Profession Act as follows: (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.
3. Section 498 sets out instances of conduct such as overcharging, committing an offence involving dishonesty, conviction for a serious offence, and tax evasion that may also constitute unsatisfactory professional conduct or professional misconduct. That section is not relevant to the facts of this case.

Relevant legal principles

1. In her helpful outline of submissions Ms Webster SC (Ms Webster) on behalf of the Society set out in [4]-[20] the relevant legal principles applicable to this matter with reference to authority.
2. Mr Lloyd accepted as correct statement of principles those set out in [4], [7], [9], [11], [12]-[14], [15-18] of Ms Webster's submissions. We concur with counsels' submissions.
3. We will deal with the relevant principles when considering each of the grounds agitated by the Society.

The standard of proof and evidentiary rules

1. Given the serious nature of the grounds and the consequences for the practitioner if established, the standard of proof discussed in the High Court in Briginshaw v Briginshaw [1938] HCA34; (1938) 60 CLR 336 applies to these proceedings. (see also Neat Holdings and Karajan Holdings Pty Ltd [1992] HCA 66; 67 ALJR 170).
2. Clause 20 of Schedule 5 of the Civil and Administrative Tribunal Act 2013 (NSW) provides that the rules of evidence apply to these proceedings.

Ground 1 - the s 66W Certificate

1. This ground may be disposed of shortly. The solicitor gave evidence that he had refreshed his memory of events concerning the s 66W certificate he forwarded to the vendor's solicitors in 2003 from his telephone log of incoming calls. He said that he had telephoned Ms Cavallaro and told her that once she proceeded with the sale she was "locked in" and she acknowledged she wished to proceed with the purchase.
2. Crucially, Ms Cavallaro, who we found to be an honest witness, agreed in cross-examination that it was possible that she spoke to the practitioner and the words spoken included the conversation as asserted by the practitioner. In doing so she departed from her evidence in her affidavit.
3. Given the considerable length of time of over 12 years that has passed since the certificate was issued, Ms Cavallaro's concession was appropriately made. It is however regrettable to note that the practitioner did not suggest that he had kept a file note of this important conversation or that he had written to the vendors confirming exchange of contracts and the provision of a s 66W certificate on exchange. The keeping of a file note, or better still, confirmation in writing on the important topic of advice relevant to a s 66W certificate reflects good practice. If the conveyancing file was intact a file note would have corroborated the practitioner's evidence. But failure to keep a file note or to write to the vendors is not part of the complaint made against the practitioner.
4. Given Ms Cavallaro's concession, we are not satisfied that this ground is established to the requisite standard.

Ground 2 - false certification of transfers for Lots 7 and 8

1. A number of the particulars in respect of this ground are conceded by the solicitor and it is unnecessary we repeat them. Particular 12 asserts that the practitioner did not witness the signatures of the vendors on the transfers for Lots 7 and 8 at the time they were signed by the vendors.
2. The practitioner admits that he did not witness Ms Halbouni's signature on the transfers although his certification represents that he did so.
3. In his Further Amended Reply the solicitor admits that the representations by way of his certification were designed to be provided to and relied upon by the Land and Property Information. He denies the words in the particulars 14 and 24 that his actions "were calculated to" be provided to and relied on by Land and Property Information. In respect of particulars 15 and 25 while admitting that in witnessing the transfers of Lots 7 and 8 that the certification represented was inaccurate as she did not sign in his presence, he denies that the "falsely certified" that he was personally acquainted with Ms Halbouni.
4. Section 46 of the Real Property Act 1900 requires a witness to a signature on a transfer to provide a certificate in accordance with "an approved form". The relevant form provides: I certify that the person(s) sitting opposite, with whom I am personally acquainted to as to whose identity I am otherwise satisfied, signed this instrument in my presence
5. Section 117(4) of the Real Property Act relevantly provides: (4) In this section, eligible witness, in relation to the execution of an application, dealing or caveat, means a person who: (a) is at least 18 years of age, and (b) is not a party to the application, dealing or caveat, and (c) has known the person to whose execution of the application, dealing or caveat the witness is attesting for more than 12 months or has taken reasonable steps to ensure the identity of that person. (5) Without limiting the generality of subsection (4) (c), a witness is to be considered as having taken reasonable steps to ensure the identity of the person to whose execution of the application, dealing or caveat the witness is attesting if the person has taken the steps prescribed by the regulations.
6. In XU v Council for the Law Society of NSW [2009] NSWCA 430 a solicitor prepared and witnessed a male purchaser's signature on a contract for sale of a unit "off the plan". The purchaser took the contract away to "think about" it and some days later returned to the solicitor's office with the contract on which his wife's name and her signature in Chinese characters had been added. The solicitor overheard the purchaser tell his conveyancing clerk that his wife was to be a joint purchaser and had signed the contract. The addition of the wife's signature had the effect that both signatures appeared to have been witnessed by the solicitor. The solicitor also provided a s 66W certificate although the names of the purchasers were not inserted in the certificate. The wife subsequent repudiated the contract saying her signature was a forgery and that she was in China at the relevant time.
7. The former Administrative Decisions Tribunal (ADT) found that the practitioner was guilty of professional misconduct. On appeal by the solicitor to the NSW Court of Appeal, Handley AJA found the complaints asserted by the Society in respect of the contract for sale and the s 66W certificate proved, but rejected the ADT's determination that the conduct was professional misconduct because it did not demonstrate the practitioner's conduct established "a 'substantial' let alone 'a consistent' failure to reach or maintain a reasonable standard of competence and diligence". Rather, his Honour determined a substitute finding of unsatisfactory professional conduct should be made.
8. Other authorities to which we were referred considered conduct where a solicitor falsely attested to witnessing an affidavit (Council of the Law Society v Chau [2011] NSWADT 271) and where a solicitor falsely represented loan documents had been properly executed including one facility agreement having been signed in his presence. The solicitor's conduct led to losses by a bank when the signatures were found to be forgeries (see State Bank of NSW v Yee (1994) 33 NSWLR 618). In the former case (Xu) the relevant solicitor's conduct was found to constitute professional misconduct. In the latter case the court found it was the solicitor's representation that led to the bank's losses.
9. As earlier noted, the practitioner concedes his admitted conduct in respect of Ground 2 constitutes professional misconduct. The present matter may be distinguished from the facts in Xu where the wife's signature was added to the contract by the husband after the solicitor had witnessed the husband's signature. In these circumstances Handley AJA, with whom Basten and Tobias JJA agreed, concluded that the conduct was an isolated incident of careless and sloppy conveyancing and constituted unsatisfactory professional conduct but was not conduct of such a substantial or consistent failure to meet the appropriate standard to constitute professional misconduct. Here, the solicitor witnessed Ms Kak's signature, saw two of the other vendors and had them initial amendments to the transfer, but failed to ensure he saw Ms Halbouni to witness her signature before settlement. This failure is acknowledged by the practitioner's counsel to be a substantial failure to meet the appropriate standard.
10. There are ten particulars relied on in respect of this ground. The Society plead particular 14 as follows: The representations by way of the Solicitor's certification that he had witnessed the signatures of the Vendors on the transfer for Lot 7 were calculated and designed to be provided to and relied upon by the purchaser of Lot 7 and Land and Property Information. [our emphasis]
11. In respect of particular 14 the solicitor in his Further Amended Reply states: admits that the representations by way of the Solicitor's certification that he had witnessed the signatures of the Vendors on the transfer to Lot 7 were designed to be provided to and relied upon by the Land and Property Information and; otherwise denies paragraph 14
12. While Ms Webster submitted, because of the solicitor's concession of professional misconduct and the admission of the particulars except the words "were calculated", we could be satisfied the ground was established, Mr Lloyd pointed out that it was important we make necessary factual findings about this particular because of the impact of those findings on penalty.
13. Mr Lloyd did not dispute the serious nature of the solicitor's conduct in making a certification on a transfer other than in the presence of someone who has already signed the document. He acknowledged it is a substantial failure within the meaning of s 498.
14. Mr Lloyd submitted that the solicitor was not challenged about his explanation of the circumstances of the execution of the transfer and amendment initialled by the three other vendors. Mr Lloyd candidly conceded the solicitor should not have allowed the transfer to be relied on at settlement, but he noted it was not the solicitor's intention that the transfer should leave his office without him having seen Ms Halbouni.
15. We accept the solicitor's evidence set out in [76] to [82] of his affidavit was not subject to challenge. We accept his evidence of the circumstances surrounding the execution of transfer. We are satisfied that the practitioner's actions were not deliberate actions undertaken with intent to deceive the purchaser or the Land and Property Information, although they had that effect. Rather, they reflected his poor system of reminder and a general lack of care in his conveyancing practices.

Grounds 3 and 5

1. These grounds both concern the solicitor's role in acting, or purporting to act, for Ms Cavallaro in respect of the sale of her interest in Lot 9 and settlement of that sale. This sale was a sale in respect of which Raine and Horne acted as agents for the vendors and was a sale to third parties not members of the partnership or the Likehart partnership or joint venture.
2. The solicitor concedes in his Further Amended Reply that he acted for all four vendors in respect of the sale of Lot 9 who held the land as tenants in common in equal shares. The transfer discloses the solicitor's signature as witness to all four vendors' signatures.
3. Ms Cavallaro denies giving the solicitor instructions to sell Lot 9. She asserts her signature on the transfer is a forgery. The solicitor's position is that he does not know if the signature is a forgery. Ms Cavallaro was not challenged on this point in her cross-examination. This question is irrelevant to determination of the complaint.
4. The solicitor asserts that Ms Kak attended his office in early January 2009 immediately after the Christmas break, that he gave her the transfer with a request that she have the other vendors sign it and have their signatures witnessed by Mr Boudib or someone else. The solicitor got Ms Kak to sign the transfer in his presence and he witnessed her signature.
5. Ms Kak was not required for cross-examination and her affidavit as read is before us without challenge. She stated that she attended the solicitor's office and signed documents, and that at times she would take documents to other parties or post them or partners would pick up documents from her office. She also deposed that she knew signatures on documents including transfers had to be witnessed. She also explained that when a sale was negotiated by "the Real Estate Agent" a sales advice was sent to the solicitor's firm "and he would proceed with the required legal documents to complete the settlement".
6. Ms Kak did not depose to the circumstances of the execution of the transfer of Lot 9 or the circumstances in which Ms Cavallaro's asserted signature was added to the transfer if that fact was known to her.
7. It is not in dispute that the solicitor rendered fees to the vendors in respect of the sale of Lot 9, and that reporting letters following settlement were sent to them c/- 284 Railway Parade, Carlton. The solicitor's clerk attended the settlement and transfers were stamped at settlement using the solicitor's stamping authority.
8. Mr Lloyd on behalf of the solicitor drew our attention to the practice adopted in other matters where Ms Kak had taken documents away for signature and witnessing. He conceded that it would have been desirable for the solicitor to amend the form of transfer to provide for the signature and witness for each vendor. But he pointed out this omission to provide for more than one vendor's signature was an "anomaly" in the standard transfer form.
9. Mr Lloyd drew our attention to the actual pleading used in the complaint. He submitted that we should not find that the solicitor had the requisite intention of falsity when he witnessed Ms Kak's signature. In his oral submissions Mr Lloyd said: So in terms of working out whether what was in Mr Orford's mind was a dishonest or false certification as alleged, one fact that's relevant is that when he put that certification on he must have known that the certification could not have been intended to relate to each and every signature on the right‑hand side, which rather makes it more acceptable or less unacceptable to have in his mind that the certification may not necessarily relate to each of the other three transferors So in terms of working out whether what was in Mr Orford's mind was a dishonest or false certification as alleged, one fact that's relevant is that when he put that certification on he must have known that the certification could not have been intended to relate to each and every signature on the right‑hand side, which rather makes it more acceptable or less unacceptable to have in his mind that the certification may not necessarily relate to each of the other three transferors (transcript 28 October 2015 p 14)
10. The nub of the solicitor's defence to this complaint is that he did not intend his witnessing of the signatures on transfer to be relied on by the purchaser and Land and Property Information, nor in witnessing the transfer did he falsely represent that he was personally acquainted with the vendors. He relies on the fact that Ms Kak had, at other times, taken documents from his office for signature and witnessing by third parties. He further relies on the fact that Ms Kak is an experienced real estate agent who was well aware of the need for a vendor's signature on a transfer to be witnessed.
11. The Society assert it is the failure of the solicitor to give thought to the manner in which he attested Ms Kak's signature, only one of the vendors, that allowed the forgery to occur. It is submitted, as discussed by Giles J in State Bank of NSW Ltd v Yee at [8] had the vendors suffered loss (which is not asserted in this case) that loss would be attributable to the solicitor's breach of duty (as a result of recklessness or laxity) and would have formed the basis of that loss.
12. In Johns v Law Society of NSW (1982) 2 NSWLR 1 Moffitt P pointed out at page 5 the need for formal particulars to define the breach asserted against a practitioner with precision. At page 6 the President explained the necessity for the solicitor subject to court (or we would say tribunal) proceedings to be "made aware of precisely what is put against him before a decision is come to or an order made adverse to him".
13. The transfer document discloses that the character "x" was inserted in four places below the notation "Signature of the transferor" but no markings for additional witnesses appear on the document. While this may have been sloppy practice, the pleadings are directed to the solicitor's conduct being "calculated and designed to be provided to be relied on by the purchaser" and the solicitor "falsely certifying he was personally acquainted with or otherwise satisfied as to the identity of the persons who signed the transfer in his presence".
14. We are satisfied on the evidence before us that the solicitor's clerk attended at settlement. The solicitor was not absolved by Mr Boudib's attendance from ensuring the transfer was properly executed and witnessed before it was handed over at settlement. He did not do so. We are accordingly satisfied that particular 36 is established.
15. However, given the wording of particular 37 we are not satisfied the evidence demonstrates this particular is established. We accept the solicitor's evidence that he did witness Ms Kak's signature and expected she would have the other vendors sign the transfer and have their signature independently witnessed. In this respect we refer to and adopt the reasoning of the plurality in Murphy v Farmer (1988) 165CLR 19 about the construction of the word "false". We do not find that the practitioner purposely or deliberately sought to portray he was personally acquainted with or otherwise satisfied as to the identity of each of the vendors. Rather he was careless, his practices were lax, and his failure to check the transfer prior to settlement constitutes a substantial failure within the meaning of s 498.
16. While the Society has not established particular 37, we are satisfied that the particulars that are established prove Ground 3.
17. Ground 5 asserts that the solicitor did not receive instructions from Ms Cavallaro or anyone one her behalf to act on the sale of Lot 9, nor did he receive instructions to disperse the proceeds of sale to Mr Boudib or anyone else.
18. The solicitor provided answers to the Society about this transaction (Affidavit of Ms Foord at [684-686]). He there asserted "Antoinette Cavallaro never gave instructions to the writer to act on the sale (of Lot 9) because the writer did not act on the sale. As previously stated the writer provided a generic off the plan Contract to the Agent and the Estate Agent acted on the sale and exchanged Contracts". He further asserted he was never in possession of the contract for sale, and that Ms Cavallaro and Ms Maria Cavallaro were well aware of the sale because of their accounting role for the partnership.
19. We are unable to accept the solicitor's assertion that he did not act on the sale. He rendered accounts to the vendors and his stamping authority was used at settlement attended by his employee. The solicitor's position is first that he received instructions for this and other sales from Mr Boudib on behalf of the partners after contracts had been exchanged and that Mr Boudib had actual or ostensible authority to give instructions for settlement.
20. The following exchange occurred during the solicitor's cross-examination: Q. That transfer was presented at - exchanged settlement with only you as the witness to all four signatures appearing on it? A. Yes. Q. You don't say that you witnessed Ms Cavallaro sign that transfer, do you? A. Absolutely not. Q. You accept that that transfer in that form conveys to the Registrar General, for example, that s 117 of the Real Property Act has been complied with and you're completing the certification as to all four transferrals signing the transfer? A. The end result of the document, that's correct, but it didn't leave my office in that form. Q. You acted on the settlement, your office acted on the settlement of lot 9, didn't it? A. We were subservient or almost redundant to Mark Boudib at settlements. Mark Boudib was in possession of the transfers, Mark Boudib was in possession of the withdrawal of caveats, Mark Boudib controlled the settlement. Q. You were nominated on this document as the solicitor, although it doesn't say solicitor. Your name and address appear on this as witnessing the four signatures on the lot 9 transfer? A. Yes, we prepared the transfer but we were, as I said, way, way behind Mark Boudib at settlements. Mark Boudib, B‑O‑U‑D‑I‑B, I think. (Transcipt 26 October 2015 p 74).
21. The solicitor relies on his assertion that Mr Boudib had authority to give instructions on behalf of the partners primarily based on of his attendance at meetings held at the solicitor's office. While the solicitor deposes to a meeting at which Mr Boubid produced a letter of authority to attend on behalf of his wife, and it was thereafter accepted he had authority to act on her behalf, he adduced no evidence of actual authority given by Ms Cavallaro to Mr Boudib and she disputes such authority was given. As we will shortly discuss, the evidence relied on to support this submission is inconclusive.
22. There is no evidence before us that the solicitor had express actual authority to act on behalf of Ms Cavallaro in respect of the sale of Lot 9, or to authorise the payment of the proceeds of sale, including the deposit held by the Agent, to Mr Boudib.
23. Mr Lloyd submitted that we could find the solicitor had implied actual authority or ostensible authority to do so. In so submitting he relied on Equiticorp Finance Ltd (in Liq) v Bank of New Zealand (1993) 32 NSWLR 50 at p 132. There Clarke JA and Cripps JA discussed ostensible authority and noted the relevant question to be whether the principal has held out the agent as having an authority to act on his [or her] behalf.
24. We are not satisfied that the evidence before us demonstrates any sufficient holding out by Ms Cavallaro that Mr Boudib had authority to give instructions to the solicitor on her behalf. At its highest, the evidence demonstrates that Mr Boudib was present at meetings attended by some of the partners, arranged finance for the partners, and that he lodged caveats on the sub-divided Lots. It is seeking to draw a very long bow to draw to suggest that by these actions Ms Cavallaro herself, or by her sister, Ms Maria Cavallaro, held Mr Boudib out as having authority to act on her behalf. We reject the submission the solicitor could rely on Mr Boudib having ostensible authority to instruct the solicitor on Ms Cavallaro's behalf to act on the sale of Lot 9.
25. In reaching this finding we are satisfied that each of the particulars in Ground 5 is established.

Ground 4

1. This ground relates to the settlement of the sale of Lot 8. The essential factual matters surrounding the sale are not in contention. The contract for sale bore a sale price of $330,000 and was for a sale to Mr Kais, a partner, but not a vendor of the property. The proceeds received at settlement from the incoming mortgagee were $257,466.73.and the solicitor confirmed by letter dated 16 May 2008 that the proceeds of sale were $270,966. As set out earlier in these reasons under "background" the solicitor wrote to the vendors on 27 November 2008 noting uncertainty as to why the purchase price was $330,000 and stated that "based on our instructions there is a sum of $60,000 owing plus adjustment as described in unit 1 and unit 5".
2. Mr Lloyd on behalf of the solicitor does not dispute that, in normal circumstances, a solicitor must not hand over title documents without obtaining the full amount due on settlement, but he submits the circumstances of this sale were not normal circumstances.
3. The gist of the solicitor's defence to this ground is that he acted on actual instructions from Ms Maria Cavallaro, who had actual authority from her sister to give those instructions. In summary, he asserts that Ms Cavallaro, or Ms Maria Cavallaro attended at partners' meetings held at his office at which figures presented by Mr Boudib were discussed and the partners agreed to those figures. Mr Lloyd drew our attention to a copy document annexed to Mr Dunlop's report (page 822). This undated document headed "to Maria" is asserted to be a fax sent by Mr Boudib which notes "Unit 8, Ali $455,000 - 135+320 -270= indecipherable".
4. Also annexed to the Dunlop report is a file note (820 and 830) dated 18 January 2011, a date long after settlement. It appears to be written by the solicitor. He notes speaking to Bourchier and MC (semble Ms Maria Cavallaro) about the Bourchier purchase. The note read "U have to call a meeting to sort out capital injection and A/cs ….is arrive $310K and the other two $270,000. …..I said 'that may well be the case Ive done the conveyancing but U really shld sort it out". [original spelling and abbreviations]. We find this note does not support a finding that Mr Kais' capital contribution to the CPP was agreed prior to the settlement by either Ms Cavallaro and/or Ms Maria Cavallaro.
5. Mr Kais in his affidavit relied on by the solicitor deposes he contributed a total of $460,000 in respect of Lot 8. However, he says he did not keep receipts for building works totalling $45,000.
6. In his oral evidence the solicitor claimed his letter of 27 November 2008 had been written to "flush out" the partner or partners who owed money to the CPP. He also explained that, based on his calculations, the shortfall was not $60,000 as stated in his letter to the vendors, but rather $27,000. He explained he had overlooked a deposit of $33,000. He also said "I had a very, very strong suspicion there was no shortfall" (transcript 27 October 2015 page 11). We were not referred to any evidence of $33,000 having been paid to the agent. We note the actual figures would appear to be a shortfall of $59,034, or if a deposit of 10 per cent was paid, $26,034.
7. There is no dispute and we are satisfied that the solicitor acted for both the vendors and purchaser of Lot 8, Mr Kais. We also accept a registered valuer valued the unit at $430,000 and this was the original contract price. We also accept the sale price was amended to $330,000.
8. We accept that Ms Cavallaro is truthful in her evidence when she states that she did not receive a letter dated 16 May 2008 advising of settlement. However we note that Ms Cavallaro conceded in cross-examination that she signed the contracts for sale of the purchase of Lot 18, purchase and other contracts sale and transfers where her address was shown as c/- 284 Railway Parade Carlton. In these circumstances we find it was not unreasonable, without any instructions from Ms Cavallaro to the contrary, for the solicitor to write to the vendors, including her, at that address.
9. Ground 4 raises two issues. First, is the Society precluded from asserting the ground if the ground is inaccurate referring as it does to a shortfall of $60,000 rather than approximately $27,000 as asserted by the solicitor in his oral evidence? Secondly, did the solicitor recklessly fail to protect the interest of the vendors by permitting his clerk to hand over the certificate of title and transfer at settlement without receiving the full amount due on settlement?
10. Mr Lloyd submitted that the ground should fail because of the inaccuracy in respect of the sum of $60,000. He referred us to the decision in Johns v Law Society of New South Wales. In Johns Moffitt P referred to the need for precision in pleadings so that a practitioner is aware of what is put against him or her. Essentially his Honour was referring to an aspect of natural justice, namely one of procedural fairness.
11. In more recent times, also in the context of professional disciplinary proceedings, the Court of Appeal has considered the question of particulars in a complaint brought against a medical practitioner (see King v HCCC [2011] NSWCA 353). McColl JA, having noted the express statutory requirements relevant to a complaint brought under the repealed Act and the decision in Walsh v Law Society of NSW [1999] HCA 33; (1999) 198 CLR 73 explained there was no prejudice to a practitioner when a specific particular of sexual abuse was not pleaded as the practitioner was well aware that was the logical consequence if certain factual findings of digital penetration of a female patient without clinical justification were found proved.
12. Here, there has been an extensive investigation carried out by the Society and the practitioner afforded an extended opportunity to explain why settlement occurred with a shortfall. While we accept the pleading is framed in terms of the Council's resolution, the solicitor has at all times clearly been on notice of the Society's assertion, namely that he was reckless in allowing settlement to proceed without recovering the full amount due on settlement. It appears to us therefore that there is no procedural unfairness to the practitioner regardless of whether the shortfall is $60,000 or $27,000 (or some other figure). The solicitor was on notice from the 54 particulars pleaded in respect of this ground, and the earlier Council resolutions, that the issue was his asserted recklessness in permitting settlement with a shortfall regardless of quantum of that shortfall. Further, it was the solicitor's position at all times up to his evidence given in cross-examination that the shortfall was $60,000. This assertion, which appeared in the solicitor's correspondence, was relied on by the Society.
13. We have also taken into account the practitioner's agreement to [46] and [51] of the agreed statement of facts.
14. As with our findings in respect of actual or ostensible authority discussed earlier in these reasons, we are not satisfied that the practitioner has established that Ms Maria Cavallaro consented at a partnership meeting to the sum of $270,000 being received on settlement rather than the full amount disclosed on the contract. The facsimile addressed to "Maria" is undated. It is clear from the solicitor's correspondence averting to the shortfall he did not know who owed money to whom. His file note of 11 January 2010 is further evidence that there was doubt about whether Mr Kais was entitled to the credit he received.
15. The solicitor was well aware of the disputes between the partners, and the intermingling of funds from the CPP and Likehart developments. These facts should have placed him on high alert to get specific instructions from each of the vendors, or in Ms Cavallaro's case from her or Ms Maria Cavallaro before allowing settlement to proceed as it did.
16. Particular 54 asserts the solicitor "recklessly failed" to protect the interests of the vendors. In the recent decision of Fraser v Health Care Complaints Commission [2015] NSWCA 482 Basten JA referred to the correct interpretation of "reckless" noting the word must be construed in the context in which it is used. His Honour explained at [30]-[33]: Much judicial ink has been devoted to the meaning of the word "reckless", whether used in adjectival or adverbial form, and in a variety of contexts, usually involving a provision in a statute. The result has been the unremarkable conclusion that meaning will depend on context. As Lord Hoffmann explained in R v Brown, in a passage cited with approval in Collector of Customs v Agfa-Gevaert Ltd: "The unit of communication by means of language is the sentence and not the parts of which it is composed. The significance of individual words is affected by other words and the syntax of the whole." Accordingly, as the meaning of an individual word will rarely, if ever, give rise to a legal rule or principle this line of jurisprudence need not be extended. Suffice it to say, as explained by Buss JA in Giudice, "[a] criminal offence may be created by statute with a criterion of intention, knowledge or awareness, recklessness or reckless indifference, or foresight with respect to some act, circumstance or consequence." In the present case, the language was to be found, not in a statute, but in the particular of a complaint of misconduct alleging that the appellant was "recklessly indifferent" to a fact or state of affairs, namely that Mr Krishnan was not a registered medical practitioner. The Tribunal accepted that the complainant was required to establish a particular state of mind on the part of the appellant. That did not require actual knowledge of Mr Krishnan's status, nor an affirmative belief in the true position, namely that he was not registered. However, it was not sufficient to conclude that the appellant ought in all the circumstances, acting reasonably, to have entertained a doubt to as to whether Chittoor Krishnan was registered. Rather, it was necessary that the appellant, being aware of a real possibility that he might not be registered, closed her mind to that matter. To speak of a person closing her mind to a particular state of affairs carries the necessary implication that she is aware of the significance of the state of affairs. Nothing turned on that issue in the present case. The basis upon which the appellant said that the Tribunal failed to apply the subjective standard of reckless indifference relied upon passages in which the Tribunal expressed itself in what appeared to be objective terms. However, as explained by Edelman J in Giudice: "It is possible that the references by the Tribunal to 'should have been aware' and 'should have considered' might be read as shorthand references to A matter that any reasonable practitioner would have been aware so that the inference to draw from the circumstances was that this practitioner was aware that the statement might be untrue and made that statement without satisfying himself that it was true and regardless of the consequences."
17. It is clear to us from the solicitor's evidence he consciously allowed settlement to proceed when he knew there was real doubt about who owed funds to CPP or who had paid what capital to the partnership. We are satisfied that at the time of settlement the solicitor closed his mind to whether the sum received on settlement was the correct amount to be paid by Mr Kais or on his behalf, and authorised his clerk to hand over the relevant documents that enabled Mr Kais to become the registered proprietor without obtaining the correct contract price for Lot 8 thus failing to protect the interest of his vendor clients. We are satisfied that Ground 4 is established.

Grounds 6, 7 and 8

1. These grounds are intrinsically linked. The common thread running through the grounds is that the solicitor provided a false version of the circumstances surrounding his purported certification of the transfer of Lot 7 and his statements were misleading and calculated to be relied on by Mr Dunlop, Mr Castle and Mr Jacovou. A similar claim is made in respect of Lot 8 but limited to statements to Mr Castle. The false version is asserted to have been firstly made to Mr Jacovou, and repeated to Mr Dunlop and Mr Castle.
2. There is no dispute that the solicitor's first explanation of his witnessing the transfers for Lot 7 and Lot 8 to Mr Jacovou was incorrect. Similarly, his responses to Mr Dunlop and Mr Castle were incorrect. We also accept that at least from September 2012 the solicitor had received his files and could refer to them when providing answers to the Society.
3. The solicitor's changed evidence came relatively late in the day. He relied on his Further Amended Reply and his affidavit sworn 1 June 2015 at [107]-[127].
4. However, he was not challenged as to the truthfulness of his assertion of genuine mistake about the lot numbers. Mr Lloyd in his written submissions noted that it is not correct to say that an erroneous statement by a solicitor to an opponent or to a court, or to the Society will constitute professional misconduct. Rather he submitted the misstatements by the solicitor were errors.
5. It is regrettable that the solicitor did not have earlier access to his files, or that when he did, those files did not alert him to his error in confusing the circumstances of the execution and witnessing of the transfer in respect of Lot 9 with the witnessing of the Lot 7 and 8. But we do not find the solicitor deliberately gave false evidence to Mr Jacovou, Mr Dunlop or Mr Castle nor did he intend to mislead them. The three grounds are not established.

Conclusions

1. We are satisfied that grounds 2, 3, 4 and 5 are established. Consequently, we find that the practitioner is guilty of professional misconduct as, in each proven instance, for the reasons enunciated above, his conduct involved a substantial and consistent failure to reach or maintain a reasonable standard of competence and diligence.

Stage 2 proceedings

1. As noted at the commencement of these reasons, we agreed that these proceedings should be conducted in two stages.
2. The date for the hearing of the Stage 2 proceedings will be notified to the parties by the Registrar. 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

Amendments 02 March 2016 - Reference to senior counsel amended to counsel (Coversheet and paragraph 80). 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: 02 March 2016