Council of the Law Society of NSW v Spinak

NCAT Occupational|2017-06-28

What are these proceedings about?

For more than 30 years Mr Stephen Nathan Spinak (Mr Spinak") has carried on a legal practice in his own name. It is apparently a busy practice with many current files, most of which relate to common law personal injury and workers' compensation matters. In early 2013 Mr Spinak was asked by three clients to act on their behalf in relation to a claim for compensation for injuries received by them in a motor vehicle accident in December 2012. They had previously been represented by another solicitor who we shall refer to as "the former solicitor".
In the course of his dealings in these matters Mr Spinak gave the former solicitor certain undertakings. These included an undertaking to keep the former solicitor informed about the progress of the proceedings for the three clients and an undertaking to meet the costs and disbursements of the former solicitor's firm as agreed or assessed, upon completion of the compensation proceedings for them. Mr Spinak also entered into Tripartite Deeds in respect of each of the three clients, to which the former solicitor was a party. One of Mr Spinak's obligations under those deeds was to retain sufficient in his trust account to meet the legal costs owing by the clients to the former solicitor
By its application to the Tribunal the Council of the Law Society of New South Wales asserts that Mr Spinak breached those undertakings. It is also alleged that Mr Spinak failed his obligation to retain sufficient in his trust account to meet the former solicitor's costs. The Law Society claims that this conduct amounted to professional misconduct. The Law Society seeks orders that Mr Spinak be reprimanded, that he pay a substantial fine, that he pay the Law Society's costs and such other orders as we think fit.
Mr Spinak has made certain concessions as to his conduct and he has entered into an Instrument of Consent under section 564 of the Legal Profession Act with Law Society and the Legal Services Commissioner ("the Commissioner"). The Instrument of Consent contains an Agreed Statement of Facts as required by s 564 (5) of that Act. For convenience of reference the text of the Instrument of Consent and the Agreed Statement of Facts is annexed as the Appendix to these reasons for decision.

The nature of the hearing

The practical effect of s 564 (8) of the Legal Profession Act is that even if a practitioner's consent, as reflected in an instrument of consent, is given before the proceedings before the Tribunal are commenced, those proceedings must nevertheless be commenced in the same way as if the consent had not yet been given. Sub-section 564 (10) empowers us to make such enquiries of the parties as we think fit in deciding whether to make disciplinary orders under Part 4.8 of the Act and to conduct or complete a hearing in relation to the complaint if we consider that to be in the public interest.
We decided that we should make further enquiries of the parties in deciding what orders to make and that it would be in the public interest for us to conduct a brief hearing of the matter in order to do this.

What are the real issues for determination?

It follows that the issues for our determination are: 1. do the facts of the matter ground a finding by us of professional misconduct, or of unsatisfactory professional conduct; and if so, 2. is the penalty agreed to in the Instrument of Consent appropriate ? Should Mr Spinak be reprimanded, be fined $2000 and ordered to pay the Law Society's costs in the agreed sum of $4000. Should we make any further or other orders?

Our decision and orders

As a result of the hearing we decided that the established and conceded facts grounded a finding of professional misconduct and that it was appropriate for us to make the orders stated in [5] above. We decided to order accordingly. We could not see a need for any further or other order.
These are the reasons for our decisions.

Jurisdiction: applicable legislation

It was common ground between the parties that the complaint on which the application is based was made but not disposed of prior to 1 July 2015 and that therefore the application stood to be determined under the Legal Profession Act 2004 and not the Legal Professional Uniform Law (NSW) as a result of the operation of Division 7 of Schedule 4 of the Uniform Law. The relevant provisions in that Division require that complaints made under Chapter 4 of the Legal Profession Act but not disposed of before the commencement date of the Uniform Law (1 July 2015) are to continue to be dealt with under the provisions of the Legal Profession Act.

The Law Society's evidence

The Law Society tendered without objection: 1. an affidavit of Anne-Marie Foord, the Solicitor for the Council of the Law Society, sworn on 23 November 2016, 2. the Instrument of Consent; and 3. the Agreed Statement of Facts.
Although there were no formal submissions at the hearing on behalf of the Law Society we understood, and there was no indication to the contrary, that the Law Society maintained the position reflected in the Instrument of Consent, that is that Mr Spinak was guilty of professional misconduct.

Mr Spinak's evidence and concessions

Mr Spinak through Counsel tendered his affidavit sworn on 28 February 2017 and he gave brief oral evidence under oath. He was not cross-examined, but answered some questions from Tribunal Members. Mr Spinak had also filed a brief Reply. The Reply did not directly address the issue of whether he was guilty of professional conduct, but by operation of the Instrument of Consent he consents to such a finding and there was nothing to the contrary put by him or by his Counsel at the hearing.

Our analysis and conclusions

The parties to the Instrument of Consent acknowledge that Mr Spinak's conduct set out in the Agreed Statement of Facts constitutes professional misconduct.
We agree. The agreed facts establish that Mr Spinak's breached his undertakings to the former solicitor and failed to retain sufficient in his trust account to meet the costs claimed by the former solicitor in clear breach of clause 2 of the Tripartite Deeds. We find that that conduct constitutes disgraceful and dishonourable conduct and that it would be regarded as such by Mr Spinak's peers of competence and repute. That is the oft-cited common law test of professional misconduct and associated from Allinson v General Council of Medical Education and Registration [1894] 1 QB 750.
It must follow that his conduct amounted to professional misconduct.

Are the proposed penalty orders appropriate?

We were satisfied that an order for a reprimand was appropriate in these circumstances. We noted that Mr Spinak consented to the reprimand and the Law Society did not press for a more substantial penalty order. We were satisfied that the facts of the case would not justify consideration of a suspension order.
We gave detailed consideration to the quantum of the proposed fine. At the hearing we sought explanation from Mr Pierotti, representing the Law Society, as to our concerns in this regard. Our source of concern was the recommendation from the Law Society's Professional Conduct Committee in its resolutions of 28 April 2016 and 13 May 2016 that the orders to be sought in the Tribunal proceedings should include an order: "That Stephen Spinak pay a substantial fine" (emphasis added).
We indicated to Mr Pierotti our view that it was not immediately apparent that a fine of $2000 could be regarded as substantial. Ultimately however we were satisfied by his explanation that, following the normal course in such matters, the quantum of the fine was subject to discussion and negotiation with Mr Spinak and his legal representatives and that the Law Society was satisfied that a fine of $2000. was appropriate and did not press for a more substantial fine.
In those circumstances and having considered the factors set out at [23] we found that a fine of $2000 was appropriate, notwithstanding that it could not reasonably be regarded as "substantial".
In reaching that conclusion we took into account: 1. Mr Spinak's clearly expressed insight as to his conduct and his acceptance that it fell below the standard which could reasonably do normally be expected of a solicitor; 2. his explanations to us of the revised arrangements he has instituted for supervising the conduct of matters conducted by his employed solicitor and, to the extent necessary by the part-time paralegals who he employs 3. his expressions of contrition for his conduct, which he confirmed in his testimony at the hearing; and 4. the fact that promptly upon being served with a Statement of Claim made by the former solicitor for his unpaid costs Mr Spinak arranged for payment in full of those costs from his office account. Although he did not at that time also pay the former solicitor the amount claimed for his professional costs of the recovery action, amounting to approximately $3000, he appears to have done so upon his default in this regard having been drawn to his attention by officers of the Law Society. That payment was apparently the made on or about 30 January 2015.

Conclusion and orders

It follows that we should make orders in accordance with those subject to the consent of the parties and the Commissioner as reflected in the Instrument of Consent.
We therefore ordered that: 1. Stephen Nathan Spinak is reprimanded; 2. Stephen Nathan Spinak is fined the sum of $2000; and 3. Stephen Nathan Spinak pay the costs of the Law Society in the agreed sum of $4000.

The Instrument of Consent and the Agreed Statement of Facts SPINAK attachment (115 KB, pdf) 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: 30 October 2018

Legal Profession Act 2004(NSW)

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