32On 3 November 2002, the Solicitor attended a conference with senior and junior counsel, Sara Taylor and Sally Taylor to discuss and finalise the terms of settlement. At that time he prepared a handwritten will for Sara, in which she appointed Sally Taylor as her Executrix and left the whole of her estate to Tomas Taylor and Clive Taylor (her brothers). However, only the Solicitor witnessed the will (and it was therefore informal).
33The Solicitor's final bill of costs dated 19 January 2004 contained an entry for 23 November 2002, for an attendance on Sara "explaining settlement case $400 to $600 plus". On 23 November 2002 and 18 December 2002 Sara signed authorities to the Solicitor authorising him to deduct his costs and disbursements from monies held in trust. The latter authority referred to his costs as "recorded in your bill of costs dated 18 December 2002". However, no bill bearing that date was provided to Sara Taylor or Sally Taylor at that conference or at any later time.
34Terms of Settlement were filed in the Supreme Court in December 2002 and on 20 January 2003, the Solicitor received part payment of the settlement monies in the sum of $1,683,261.07. He paid it into a trust account that he opened that day with Westpac.
35No formal will was prepared before Sara Taylor died on 21 January 2003. The Solicitor was notified of her death that day and on 22 January 2003 (the next day) he withdrew the following amounts from the trust account:
(1)$150,000.00 payable to Marshall Sheehan & Associates
(2)$37,900.00 payable to Wagga Prestige - part payment for the purchase of a car by Sally Taylor for Sara (arranged before her death)
36However, after Sara's death, the Defendants sought leave to appeal against the Terms of Settlement to the Court of Appeal, the costs of care over Sara's lifetime being a substantial part of the settlement sum. On 3 February 2003 the Supreme Court ordered that the proceedings should, until further notice, continue in the absence of a person representing the plaintiff's estate and that any document that would otherwise be required to be served on the plaintiff should be served on the Solicitor's firm. That same day, the Solicitor received a further part payment of settlement monies ($500,000), which he deposited into the trust account.
37On 4 February 2003 a conference was held between the Solicitor, Sally Taylor, Tomas Taylor and Clive Taylor, at which:
(1)A Deed of Family Arrangement drafted by the Solicitor was signed by the Taylors whereby Sally Taylor was vested with a one third interest in Sara's estate;
(2)Sally Taylor and Clive Taylor signed an authority (which was dated 5 February 2003) authorising the Solicitor to deduct monies from trust in favour of the Solicitor;
(3)Tomas Taylor left the meeting before the authorities were signed and on or about 5 February 2003 he signed an identical authority.
During that meeting, the Solicitor informed the Taylors that senior counsel would receive about $150,000.00, that junior counsel would receive about $100,000 and that there was likely to be about three million (dollars) to be split between them. On 5 February 2003, he transferred sums of $333,333.33 from the Trust account to each of the Taylors.
38On 26 February 2003 the Solicitor faxed a notice of intention to apply for Probate to the local newspapers, but he took no further steps to apply for Probate in respect of the informal Will or Letters of Administration.
39On 14 April 2003 Sally Taylor wrote to the Solicitor stating in part:
"I am writing to formally request information that you have previously failed to produce.
Would you please forward to me the schedule of fees, amounts already in your trust account and amounts expected to be paid when costs are accounted from and what those costs are in relation to?..."
The Solicitor wrote to Sally Taylor on 16 April 2003 stating:
"I refer to your letter of the 14th April 2003. With regard to the final paragraph, I am unaware of any information that I have failed to produce.
There has been a significant delay in preparing bills of costs because we had to obtain advice from the Australian Taxation Office as to whether or not the bill was subject to GST... The bill of costs which was explained to Sara and yourself in January last year (sic) can now be drawn without GST being applicable to the majority of it and will be forwarded to you within the next week or so..."
40On 5 June 2003 Sally Taylor signed an authority to the Health Insurance Commission ("HIC") authorising it to release all monies to the Solicitor and the Solicitor forwarded this to HIC by letter dated 11 June 2003. On 23 June 2003 he received the sum of $242,825.95 from HIC, representing the balance of settlement proceeds after deduction of monies owed to it. Settlement monies received by the Solicitor to that date totalled $2,426,087.02.
41By letter dated 30 June 2003 (Sally Taylor states that she received this on 17 July 2003), the Solicitor forwarded a trust account statement addressed to "Estate Sara Taylor", which showed withdrawals from trust up to 30 June 2003 that left a credit balance of $648,223.41 in the trust ledger.
42On 17 July 2003 Mr Sofiak, trust account inspector, finalised an inspection of the Solicitor's trust account. He reviewed the trust ledger and file for Taylor Estate matter and was unable to locate any bills in relation to Sara Taylor's matter in the file. He asked the Solicitor for them and the Solicitor was unable to locate them, but he produced the authority dated 18 December 2002 as evidence that the bills had been given to Sara Taylor.
43By a letter dated 22 July 2003 to the Solicitor, Sally Taylor sought copies of tax invoices to support the withdrawals that he had made. On 24 July 2003 Sheekey Williams wrote to the Solicitor advising him that they had been retained to act for Sally Taylor and they enclosed a signed Authority for him to transfer the file held in relation to Sara's Estate to Sheekey Williams.
44By a letter to Sheekey Williams dated 8 August 2003 the Solicitor stated:
"....With regard to various matters relating to Sarah (sic) Taylor as we have advised you in our telephone conversations we are yet to complete the Revised Solicitor Client Bill of Costs...
We are using our best endeavours to revise the bill and provide a copy too.
In the meantime, we claim a "Fruits of Litigation" a lain (sic) pursuant to Sara's acknowledgement and authority over funds correctly held in our Trust Account awaiting Disbursement.
Pursuant to Sara's authority and the authority of Mrs Taylor any further Costs and Disbursements will be drawn from those funds and the balance will be remitted to you."
45On 18 August 2003 Sally Taylor lodged a complaint against the Solicitor with the Legal Services Commissioner (see: Ground 1). Further, on 20 August 2003 Sally Taylor, her son Tomas Taylor and his wife Sophia Taylor attended the Solicitor's office in Albury. Tomas and Sophia Taylor saw the Solicitor's employee, Jenna Hayes, print the following from the computer:
(1)A one line tax invoice dated 30 June 2003 for $483,754.74; and
(2)A bill entitled "Draft Memorandum of Fees" dated 11 July 2003 for $112,577.41 including GST of $10,234.31. This was an itemised bill with no disbursements.
46In their letter to the Solicitor dated 3 September 2003 Sheekey Williams stated in part "please provide us with a copy of your final draft bill before any further monies are removed from trust."
47On 7 September 2003 the Solicitor's trust records were forwarded to the Federal Magistrates Court in Melbourne in answer to an Enforcement Summons issued by his former wife in the Family Court of Australia in Melbourne on 7 August 2003 (requiring production of financial documents including his Firm's bank deposit books, passbooks and trust account records).
48In a letter to the Solicitor dated 9 September 2003, Sheekey Williams asked the Solicitor to send the original informal Will to them by registered post. They stated in part:
"In relation to monies held in trust, please note that you are specifically instructed (by the executor) not to deduct any further monies until you receive written instructions to that effect from the executor."
49In his letter to the Law Society dated 7 November 2003 in relation to those documents, the Solicitor stated in part that "the draft of (sic) Memorandum of Fees provided by you today is an illegally obtained document."
50In a further letter to the Law Society dated 10 November 2003, the Solicitor stated (note: Solicitor's emphasis):
"The so called Draft Memorandum of Fees is a document that is not my document. I have not previously seen (sic)...
It is not a document that I have caused to be produced nor is it a document that I have authorised to be provided to Mrs Taylor nor is it a document which forms the basis of an accounting for fees due in the matter... In fact this document is not relevant to the accounting for fees due in the late Sara Taylor's matter at all."
51In November 2003 the Solicitor produced his trust account records to his Melbourne solicitors, including bank statements, cheque butts and other trust records. These were made available to his former wife's solicitors between November 2003 and February/April 2004.
52By letters to the Solicitor dated 4 November 2003 and 11 November 2003 the Law Society asked him to provide copies of the bills to support the withdrawals from the trust account shown in the trust account statement issued to Sally Taylor dated 30 June 2003. He responded by letter dated 11 November 2003 that he had advised Sara Taylor and Sally Taylor that "...the final costs figure could be somewhere in the vicinity of $600,000 to $800,000 of which perhaps 60% to 80% could be recovered from the defendants." He restated this in his further letters to the Law Society dated 12 November 2003 and 19 December 2003 and in a letter to Sheekey Williams dated 18 December 2003. However, Sally Taylor denied that the Solicitor ever mentioned these figures and both Tomas and Clive Taylor denied that he quoted costs of that amount to them at the conference on 4 February 2003.
53In his letter to the Law Society dated 17 November 2003, the Solicitor stated that he enclosed copies of interim bills that had been rendered to the estate (although he did not enclose copies). He stated in part:
"...The interim rendering of interim bills is authorised by Sara in the various costs disclosure agreements which she has been provided with and which she has signed. The rendering of interim bills have been authorised by the beneficiaries of the Estate subject to Sara Taylor's death."
The next day (18 November 2003) the Solicitor faxed to the Law Society under cover of a handwritten fax cover sheet (which records a time received of 16:40) eleven (11) one page interim bills/tax invoices headed "Memorandum of Fees" as follows:
(1)22 January 2003 $150,000.00
(2)13 February 2003 $1,013.12
(3)28 March 2003 $11,000.00
(4)4 April 2003 $20,000.00
(5)14 April 2003 $50,000.00
(6)30 April 2003 $100,000.00
(7)6 May 2003 $20,000.00
(8)23 May 2003 $30,000.00
(9)5 June 2003 $10,000.00
(10)6 June 2003 $50,000.00
(11)13 June 2003 $15,000.00
54On 9 December 2003, Sally Taylor wrote to the Law Society advising that she had applied to have the Solicitor's costs assessed based on the trust account statement and the draft bill as she had not received any bills from the Solicitor. However, she did not proceed with that application. In any event, the Law Society sent her letter to the Solicitor by letter dated 23 December 2003. It drew the Solicitor's attention to s.61 of the LPA 1987 and clauses 45 and 78 of the 2002 Regulation and stated in part:
"It does not appear to me that you have as yet supplied evidence that you have complied with these procedures. Your further explanation and production of supporting evidence in this regard would be appreciated. Please provide a full explanation regarding what basis you state that you have complied with the procedures prescribed in Clause 78(2)."
55On 17 February 2012 the Solicitor faxed a "copy of final Bill of Costs" to the Law Society and stated in part "Subject to minor alterations this bill will be forwarded in hard copy via mail." The total costs and disbursements in the Bill were $687,398.48. The bill did not include counsel's fees.
56On 27 February 2004 the Solicitor's former wife issued a Subpoena for Production against the Solicitor requiring production on 9 March 2004 of all of his financial records including his trust records. On 28 February 2004 the Solicitor faxed to the Law Society further portions of the bill relating to "skill care and responsibility." The total costs and disbursements in this Bill were $1,209,447.45 ("the final bill of costs"), and included an amount for "disbursements paid by plaintiff" of $385,157.50.
57On 1 March 2004 Clive Taylor and Tomas Taylor received a final itemised bill of costs from the Solicitor dated 19 January 2004, including work done up to 16 February 2004, totalling $1,209,447.45, calculated as follows:
Professional costs due to the Solicitor's Firm $328,633.99
Including Care, Skill & Responsibility plus 80% $262,907.12
$659,431.92
Disbursements paid by the Solicitor $67,890.74
Plus 25% Premium $164,857.95
Total fees due to the Solicitor's Firm $824,289.95
Disbursements paid by plaintiff $385,157.50
Total costs of Action $1,209,447.45
58By letters to the Law Society dated 2 March 2004 and 8 March 2004, Sally Taylor and Tomas Taylor respectively queried various items in the final bill. By a letter to the Solicitor dated 9 March 2004 and faxed to him on 10 March 2004, the Law Society:
(1)Requested that he "confirm in writing on or before 12 March 2004 that there have been no further drawings on the trust account in this matter since July 2003";
(2)Forwarded copies of the letters from the Taylors dated 2 March 2004 and 8 March 2004.
The Solicitor acknowledged receipt of these letters by way of a fax to the Law Society dated 10 March 2004. He asserted that the matters raised in the letters were "...matters for assessment."
59The Solicitor wrote to Tomas Taylor on 12 March 2004 and noted:
"... you have been writing to Mr Scammell, costs assessor... You claim that there are matters which are included a number of times in bills of costs. Could you please fax me a copy of those pages on which you say things are included in the bills of costs on a number of occasions so that if there (sic) is indeed the fact, the situation can be rectified."
60In a further letter to the Solicitor dated 15 March 2004, the Law Society again asked him to confirm in writing by close of business the next day that there had been no further drawings in the trust account. However, on 7 April 2004 the Solicitor withdrew $55,000 for costs, and he made further withdrawals for costs thereafter.
61On 4 June 2004 the Solicitor's accountant forwarded an adverse Accountant's Report for the period to 31 March 2004 to the Law Society's Chief Trust Account Inspector. This noted several breaches relating to the handling of trust monies and on 17 June 2004 the Law Society appointed Jean Sayer ("the Investigator") as Investigator to investigate the Solicitor's affairs.
62In his Statutory Declaration dated 23 June 2004 responding to a Section 152 Notice issued by the Law Society, the Solicitor declared that at the conference on 4 February 2003 he indicated to Tomas Taylor that "I expected costs to be in the vicinity of $600,000 to $800,000 plus disbursements and he could expect to receive 60% to 80% of that amount back on assessment..."
63On 30 July 2004 Sally Taylor received a Grant of Probate in relation to Sara's informal Will.
64The Investigator prepared a report dated 11 August 2004 ("the Investigator's report"). The Investigator's report noted that as at 2 July 2004, the total amount of costs transferred from the trust account to pay the Solicitor's costs (excluding fees of counsel and other disbursements) was $835,513.12. However, between 22 January 2003 and 9 July 2004 multiple cheques payable to the Solicitors Firm and with respect to disbursements including counsel's fees had been drawn and debited to the account. These totalled $1,130,609.94, of which $855.513.12 was paid to the Solicitor's Firm and a total of $275,096.82 was paid for other disbursements.
65The Solicitor made a number of written submissions to the Law Society in relation to the Investigator's report. However, as a result of that report the Council of the Law Society resolved on 24 August 2004 to cancel his practising certificate and to refuse his application for a practising certificate for the year ending 30 June 2005. He then applied to the Supreme Court and orders were made on 24 August 2004 staying the cancellation. On 25 August 2004 he rectified the deficiency in the trust account ($6,138.00).
66On 21 December 2004, the Court of Appeal dismissed the Defendant's Application for Leave to Appeal in respect of the terms of settlement in Sara's matter. On 10 February 2005 Sally Taylor filed an Application for Assessment of the Solicitor's final bill of costs dated 19 January 2004.
67In a letter to the Law Society dated 15 July 2005, the Solicitor provided a further response to Jean Sayer's report. He stated:
"With regard to the matters raised by Mrs Sayer concerning complaints made by Mrs Sally Taylor and annexures "H12", an examination of those documents, which I have never seen before were provided to me as annexures in Ms Sayer's report reveals, that they were forwarded by facsimile to Ms Monica Thorman of Professional Standards on the 18th November, 2003 at 16:40 hours.
I can only assume that these documents were among the draft document purloined from my staff member by Mrs Sally Taylor on the 20th August 2003.
Mrs Monica Thorman has never disclosed to me that she had those documents in her possession, notwithstanding my answer to request for particulars, she implies that she was provided with the documents by myself. I have never supplied these documents to anyone."
68The Law Society replied to that letter on 26 July 2005 and stated in part:
"The annexures "H12" in Miss Jean Sayer's report dated 11 August 2004 were forwarded to the Society under cover of a 12 page facsimile from Marshall Sheehan & Associates to the Society on 18 November 2003. A copy of that facsimile is enclosed."
69By letter dated 11 August 2005, the Solicitor advised the Law Society that he had ceased practice in NSW and had closed his trust account in NSW and was now practising in Victoria.
70On 20 and 21 September 2005, Mr Sofiak carried out a final trust account inspection of the solicitor's practice. He produced a report dated 21 September 2005, which revealed debit balances in some matters.
71By letter dated 26 October 2005 the Solicitor replied to the Law Society's letter dated 26 July 2005 and stated in part:
"In examination of the facsimile it discloses that a fax coversheet, for what appears to be my handwriting with a facsimile header detailing that the coversheet, was sent to Professional Standards at 16:40 on the 18 November 2003.
It is unusual that the fax cover sheet does not identify the fax page as having been sent from my facsimile machine which identifies my practise (sic) as the source of all the documents on all facsimiles sent from my office...
I provided the interim memorandum of fees, pursuant to the actual fees agreement between Sara Taylor and myself to Mr Collins [the Manager of the Professional Standards Department] in 2003. The documents annexed to Miss Sayer's report are not the interim bills of costs I provided to Mr Collins.
As I have indicated before, I have not previously seen these documents.
Facsimile header notes on the documents identical to these documents contained in Miss Sayer's report suggest that they may have been provided to the Law Society by Tomas Taylor or his wife.
As I have previously stated, the documents have not been drawn with my knowledge or consent and they have certainly not been provided to Mrs Taylor or any member of her family as interim bills, the base (sic) upon which the funds were drawn from my trust account.
I enclose herewith charge cover sheets and similar court documents from the Deniliquin Local Court. These documents show that I was absent from Albury at Deniliquin Local Court on the 18th November, 2003 representing clients, who on that day, were committed to prison for a period of months and then released on having the conviction annulled on my application.
...
It is not possible for me to travel to Albury (sic) to Deniliquin and attend Court hearings for clients and be able to return by 16:41 hours.
It is at lease (sic) a 3 hour trip from Albury to Deniliquin and when I attend Court at Deniliquin, I leave Albury before 7:00am and usually return after 7:00pm.
I therefore was not in a position personally to forward the alleged interim bills of costs to the Law Society nor did I do so. I did not authorise the provision of those documents to the Law Society nor did I know of their existence.
They were provided to the Law Society by a personal (sic) unknown to me without my knowledge or authority.
The document show (sic) glaring inaccuracies on their face and are not documents I relied upon to transfer fees from my trust account to my general account in the matter of Sara Taylor. In these circumstances they cannot be relied upon as a basis for the allegation that I did not deliver a bill of costs to Sara Taylor and her mother on the 18th December, 2003 particularly in the circumstances where Sara Taylor and her mother signed receipts for the initial bills of costs. I have provided these receipts to you."
By a letter dated 7 November 2005, the Law Society responded to the Solicitor's letter dated 26 October 2005. It stated (relevantly):
- The fax cover sheet of 18 November 2003 has the same fax header as a facsimile received from your office on 17 November 2003. A copy of that facsimile is enclosed.
- No interim bills were enclosed with the facsimile dated 17 November 2003 from Marshall Sheehan & Associates to the Law Society.
- You have advised in your letter dated 26 October 2005 that on 18 November 2003 you were at Deniliquin Local Court representing clients who, on that day, were committed to prison for a period of months and then released on having the conviction annulled upon your application. The copies of court papers which you have provided appear to indicate that those matters were listed for mention only on 18 November 2003 and that annulment applications occurred on an earlier date.
- I had a telephone conversation with you at approximately 4:30 pm on 18 November 2003 in which you advised me that you had transferred monies pursuant to some interim bills which you were faxing to the Society "now".
- The only interim bills the Society has received from you are those enclosed with the 12 page facsimile dated 18 November 2003 from Marshall Sheehan & Associates to the Law Society. Those interim bills were annexures "H12" in Miss Jean Sayer's report dated 11 August 2004.
- You state that the interim bills of costs which were provided to the Society under cover of the facsimile dated 18 November 2003 and which were annexures "H12" in Miss Jean Sayer's report dated 11 August 2004 "are not the interim bills of costs I provided to Mr Collins". Please provide a copy of the interim bills you say you provided to Mr Collins and particulars of the date when you say that those interim bills were provided to Mr Collins and how they were provided to Mr Collins.
The Solicitor was also asked to make any further comment in relation to these matters by 18 November 2005.
72The Law Society alleges that the Solicitors denials of having sent the outline bills and the extracts of his letters dated 2 September 2004, 15 July 2005 and 26 October 2005 were an attempt to mislead it (Ground 7).
73On 15 December 2005 the Costs Assessor issued a Certificate of Determination as to the solicitor/client costs charged by the Solicitor to the estate of Sara. The Solicitor's costs including disbursements were assessed at $584,159.52. In total $1,209,447.40 had been charged by the Solicitor. The Solicitor was required to repay $637,382.35 to the estate, including the fee of $12,094.47 for the application. The Costs Assessor also referred the Solicitor's conduct in grossly overcharging the Estate to the Legal Services Commissioner of NSW as a result of which the Commissioner initiated a complaint that was then referred to the Law Society for Investigation (see: Ground 6).
74On 27 January 2006 the Solicitor lodged an Application for Review of the Assessor's determination with the Supreme Court. On 29 May 2006, a Costs Review Panel issued a Certificate of Determination upholding the determination of the Costs Assessor.
75On 21 June 2006, Sally Taylor obtained a Certificate of Judgment in the District Court against the Solicitor for the sum of $637,382.35. On 12 September 2006 the Solicitor filed a Debtor's Petition and was made bankrupt.
76On 22 June 2007 the Solicitor filed a Summons seeking orders that the Certificate of Determination of the Costs Assessor issued on 15 September 2005 be set aside and that the Certificate of Determination of the Costs Review Panel issued on 29 May 2006 be set aside. However, on 17 July 2007 the Summons was dismissed by the Court as there had been no appearance by any party.