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[2014] NSWCATOD 68
NCAT Occupational
2013-11-27
Original judgment source is linked above.
The Complaint 1The Applicant, David Harold Weston, by application filed 30 May, 2013 seeks a review of a reviewable decision made by the Respondent, the Council of the Law Society of New South Wales ('the Law Society'.) The application is grounded upon an alleged failure by the Law Society to determine the Applicant's application for the issue of a practising certificate for the year ended 30 June 2013. This follows the suspension of the Applicant's practising certificate on 24 October 2010 following a "show cause notice" issued by the Law Society. 2By amended Application filed 23 September, 2013 the Applicant sought an order for the issue of an unrestricted practising certificate for the year ending 30 June, 2014 based on the refusal by the Law Society to issue a practising certificate for the year ending 30 June, 2014. However, ground 1 of the Applicant's amended Application referred back to the refusal of the 2013 Application and given that this ground has not been formally withdrawn by the Applicant, and to ensure there is no misunderstanding of its status, we deal with this aspect in these Reasons. 3The proceedings came before us on 27 November, 2013 conducted under Part 5 of the Administrative Decisions Tribunal Act 1997 (ADTA). Chapter 3 of the ADTA provides the Tribunal's powers on review. 4On 1 January 2014, the Administrative Decisions Tribunal was abolished and its jurisdiction was acquired by the New South Wales Civil and Administrative Tribunal. This matter is a "part heard proceeding" within the meaning of clause 6 of Schedule 1 to the Civil and Administrative Tribunal Act, 2013 (CATA). This Tribunal may exercise all the functions which the Administrative Decisions Tribunal had immediately before its abolition. The provisions of ADTA, which would have applied to these proceedings had CATA not been enacted continue to apply: Clause 7(3) Schedule 1 to CATA.
Background 5There is a considerable history leading to the instant proceedings. 6The Applicant was admitted to the roll of legal practitioners on 18 December, 1991. He has held practising certificates from 1 January, 1992 until 24 October, 2010. The last practising certificate held by the Applicant which entitled him to practise as an employed solicitor and barrister was issued to him for the period 1 July 2010 to 30 June 2011 in about September 2010. 7A sequestration order had been made against the Applicant on 15 June 2010. This appears to have been notified by the Applicant to the Law Society on 25 June, 2010. It seems that documents were sought from the Applicant by the Law Society and amongst Australian Taxation Office documents provided by him it was ascertained that on 2 March, 2005 the Applicant had been convicted in the Local Court Parramatta for failing to lodge an income tax return for the year ending 30 June 2003. This tax offence had not previously been disclosed by the Applicant. 8Both the sequestration order and the tax offence were show cause events pursuant to Div 7 of Pt 2.4 Legal Profession Act 2004 ('the LPA'). 9The relevant section of Div 7 is S66 which provides: "66 Applicant for local practising certificate-show cause event (1) This section applies if: (a) a person (referred to in this Division as "the applicant" ) is applying for the grant of a local practising certificate, and (b) a show cause event in relation to the person happened, whether before or after the commencement of this section and whether before or after the person was first admitted to the legal profession in this or another jurisdiction. (2) As part of the application, the applicant must provide to the appropriate Council a written statement: (a) about the show cause event, and (b) explaining why, despite the show cause event, the applicant considers himself or herself to be a fit and proper person to hold a local practising certificate. (3) ........ (4) ........ (5) ........ (6) ........ (7) ........ (8) ........ 10By letters dated 25 June 2010, the Law Society issued formal notices to the Applicant under S 68 of the LPA requesting him to provide specific information from the Australian Taxation Office. Those documents were provided to the Society on 4 August 2010. On 9 September 2010 the Applicant provided a copy of his Statement of Affairs. Amongst the materials provided was a statutory declaration of 7 September 2010. After that was received by the Law Society the Applicant's practising certificate for the 2010/2011 year was issued. 11Thereafter, further questions were put to the Applicant by the Law Society in a letter dated 23 September, 2010. The relevant parts of that letter read as follows: ...."Having reviewed the Society's files, there appear to be outstanding a number of matters which you have been asked to address as well as questions which clearly remain unanswered from prior correspondence. Firstly, there remain the matters raised in the report of Mr Gore of 19 April 2007 [a copy of which was provided to you by Miss Dobosz of the Society]. Not only the non payment of Mr Foster's fees and your undertaking to Messrs Verekers, but the apparent relationship with Mr Cofini who, you no doubt understand, is a disqualified person for the purpose of the Legal Profession Act, 2004. As the matter stands, there does not appear to have been received from you any response to that report and the serious matters it deals with. Please let me have same without delay. More closely aligned to your recent show cause disclosures, I need from you a very clear explanation of your relationship with the various entities referred to in the material from the Australian Taxation Office and how it is that the various amounts owed by a number of entities were ascribed to you and which, in due course, would found the bankruptcy. For example, what was your relationship with the Lazarus Family Trust and how did the tax indebtedness come to be. You have referred to a Mr Vincent having acted as your accountant. Would you please provide his contact details and an authority by which the Society can contact him and request information as to your tax position over the years, both individually and otherwise. If Mr Vincent did not attend to the affairs of the Lazarus Family Trust and the other corporate entities, please advise who did and provide appropriate authorities. Please advise as to any results of your enquiries as to how the tax conviction came to be recorded against you. You indicated that the property at Strathfield had been inherited by you and on which you were able to borrow the $150,000 advanced to Mr Fredericks [funds which you recouped]. You also indicated that the practice was very busy and that you were under a clear impression that the practice was financially viable. As you have not disclosed any substantial assets in your Statement of Affairs, please advise of your assets, both real property and otherwise, which you have held since your appointment as Manager to Mr Frederick's former practice and when disposed of [including mortgages, sale/purchase price etc.]. Please advise of any holidays and travel over the past five (5) years and approximate costs thereof. Please also advise of any other activity, recreational or otherwise which has been a financial drain over the past five (5) years. Finally, in your Statement of Affairs you refer to proceedings brought by "Luopoulos" in the District Court [proceedings number 1515/09]. Please advise as to the nature of the proceedings. I note that you are making enquiries of the ATO in respect of the proceedings which had been brought in the Local Court. You will no doubt inform me of the outcome of those enquiries. I remind you that this matter must be dealt with by no later than 24 October 2010 and failing which, the Society is bound to refer the papers to the Legal Services Commissioner for him to make a final determination in the matter. Consistently, please note that any Practising Certificate held by you will be automatically suspended whilst the matter remains outstanding. I note your comment that this matter has been outstanding 'far too long' - it is therefore imperative that you give it your immediate and absolute attention. You have already failed to comply with an undertaking to provide typed information." 12By letter of 13 October, 2010 the Applicant requested that his practising certificate be cancelled and purported to withdraw his show cause notification. He was advised that the practising certificate could not be cancelled where a matter was under consideration. 13As of 24 October 2010, which was the end of the extended 'required period' under S 68(5), the material provided to the Law Society was insufficient to enable the Council to make a determination whether or not the Applicant was a fit and proper person to hold a practising certificate. The result was that, under S 70(1) of the LPA, the determination of the show cause event passed to the Legal Services Commissioner and the Applicant's practising certificate was suspended. 14After the Commissioner took over the determination, correspondence passed between his office and the Applicant between October 2010 and 18 February, 2011. In that final letter the Commissioner sought further information and specific answers to questions asked of the Applicant in earlier correspondence from the Law Society. 15On 11 March 2011 the Applicant applied to the Administrative Decisions Tribunal, Legal Services Division, seeking an order for the lifting of the suspension of his practising certificate (proceedings No. 112005 heard on 8 June, 2011 before Deputy President Mr D. Patten, Mr. J. Currie (Judicial member) and Ms. E. Hayes (Non-judicial member). 16On 9 June, 2011, the Tribunal dismissed the application, on the basis that the Applicant had not supplied the explanations sought by the Commissioner and that the application was futile because the year relevant to the practising certificate was at an end. 17On 13 January 2012 the Applicant filed a Summons in the Supreme Court of New South Wales, Common Law Division seeking relief by way of declaration that he was not a disqualified person and an order that he be granted the right to apply for an unrestricted NSW Solicitor's practising certificate forthwith upon the basis that he was a fit and proper person to be granted same. 18On 16 March 2012 the Supreme Court made orders by consent (in relation to the Summons filed 13 January, 2012) that the Summons be dismissed and that the Applicant pay the Law Society's costs of and incidental to the Summons. 19On 3 August, 2012 the Applicant lodged an application for a practising certificate for the period 1 July 2012 to 30 June 2013. 20On 20 September 2012 the Law Society resolved to refuse the application on the basis that as at the time of the August 2012 application being lodged the Applicant had not answered the questions asked of him by the Legal Services Commissioner in letters dated 29 October, 2010, 23 December, 2010 and 18 February, 2011. The Law Society's decision was notified to the Applicant in a Revised Information Notice given pursuant to S 68(8) of the LPA on 22 October, 2012. The Notice drew attention to his rights of review under S 75 LPA which provided that he could apply to the Tribunal for a review of the decision and thereafter, to the NSW Court of Appeal pursuant to S 729A of the Act. 21The Law Society had earlier issued an Information Notice to the Applicant noting the terms of the resolution of 20 September but informing him, wrongly, that he had a right of appeal under S 108 of the LPA to the Supreme Court. The Revised Notice corrected that statement. However, prior to the Council resolving that he was not a fit and proper person the Plaintiff had filed a Notice of Motion dated 11 September, 2012 in the proceedings filed in January, 2012 that had been dismissed by consent in March, 2012. The Plaintiff sought to re-file that Notice of Motion and file an affidavit in support when he appeared before Schmidt J on 12 September, 2012. Her Honour declined to permit those documents to be filed. 22On 26 September 2012 the Applicant handed to the Supreme Court two documents relevant to the Notice of Motion which he had unsuccessfully attempted to file when he appeared before Schmidt J on 12 September, 2012. Those two documents purported to be a Summons and an affidavit in support. The Summons sought a declaration that the Applicant was a fit and proper person; a declaration that the Applicant be granted a NSW practising certificate forthwith together with procedural order relating to short service and damages to be assessed. At the request of the Law Society the matter was relisted before the court when directions were made for the filing and serving of documents by the Applicant including a fresh Summons, a Statement of Claim re the damages and Affidavits. 23On 6 December, 2012 the Applicant filed a Summons which under the heading TYPE OF CLAIM contained the following: (a)Reinstatement of NSW Solicitor's practising certificate having been suspended; (b)Declaration that I am a fit and proper person to hold same above; (c)Damages for economic loss; (d)Punitive damages; (e)Interest upon orders. 24The same things appeared under the heading RELIEF CLAIMED. 25On 6 December, 2012 the Applicant also filed a Statement of Claim. Under the heading TYPE OF CLAIM the following appeared: (a)Reinstatement of suspended practising certificate; (b)Declaration that I am a fit and proper person; (c)Damages for past and future economic loss and interest. 26The same thing appeared under the heading RELIEF CLAIMED. Under the heading PLEADINGS AND PARTICULARS the following appeared: (a)Solicitor's practising certificate suspended late Oct 2010 (s 70 LPA) (b)Notice of refusal to issue fresh certificate 20 September 2012; (c)Plaintiff is unemployed and precluded from employment in a legal firm; (d)Plaintiff needs expert assessment of economic loss; (e)Plaintiff bases damages upon failure by Defendant to exercise judicial and administrative failures (sic). 27No further affidavits were filed by the Applicant. 28On 16 January, 2013 the Law Society wrote to the Applicant pointing out a number of difficulties with the documents which had been filed by him. In particular, the letter pointed out that the Statement of Claim did not identify the cause of action upon which the Plaintiff sued. Particulars were sought of a number of matters in the Statement of Claim. In addition, the Law Society pointed out to the Plaintiff that unless proper particulars were provided the Society may move to strike out the Statement of Claim under r 14.28 UCPR. In any event, the Society reserved its rights to seek a summary dismissal under r 13.4 UCPR on the basis that no reasonable cause of action was disclosed and that the proceedings were frivolous or vexatious or an abuse of process. 29On 23 January, 2013 the Applicant faxed a letter purporting to provide the particulars requested. The letter did not contain any identification of the cause of action upon which the Plaintiff sued. 30On 27 February, 2013, in Weston v. Law Society of New South Wales [2013] NSWSC 94 Davies J. dismissed the Supreme Court proceedings. In doing so, His Honour said: "35. There are two separate aspects to the Plaintiff's claim and the Law Society's application to dismiss the proceedings. The first concerns the relief claimed for a reinstatement of the practising certificate and a declaration that the Plaintiff is a fit and proper person. 36 The relief for the reinstatement of the suspended practising certificate is misconceived. Practising certificates are issues each year for the period ordinarily commencing 1 July in any year. The practising certificate which was suspended in 2010 cannot now be reinstated. 37 However, if what the Plaintiff was really intending to achieve was the issue of a practising certificate for the current year, the only way this could be achieved would be to apply for the review available from the Law Society's refusal to grant him a practising certificate on 20 September 2012. The appropriate right of review is found in S 75 LPA and is to the Administrative Decisions Tribunal as set out earlier in this Judgment. The provisions of S 108, permitting an appeal to this Court, do not apply to decisions made under Division 7 of Part 2.4 LPA concerning show cause events. 38 The Plaintiff's response to that and his explanation for seeking the declaration that he is a fit and proper person is that this Court (he says) is responsible for determining if someone is a fit and proper person to be admitted as a lawyer. Moreover, he said, if he is dissatisfied with any determination of the Administrative Decisions Tribunal he is entitled to appeal to this Court. 39 I reject the Plaintiff's submissions for these reasons. First, his proceedings are not concerned with his being admitted as a lawyer; they are concerned with his right to a practising certificate (see the distinction made in SS 5 & 6 LPA). Secondly, it is the Admission Board who, in the first instance, determines whether a person is fit and proper for admission (see SS 25, 26 and 31 LPA) but not for the obtaining of a practising certificate. The Law Society Council or the Bar Council determine who is a fit and proper person for the purpose of issuing a practising certificate (SS 41 and 42 LPA) The right of review from such a determination is to the Tribunal. Thirdly, the determination of fitness and propriety to remain on the roll as a lawyer is by the Court of Appeal, and any appeal from the ADT regarding practising certificates lies to the Court of Appeal and not to a single judge of the Common Law Division of the Court. 40 The relief for reinstatement of the practising certificate, even if understood as meaning relief by way of appeal from the Law Society's refusal in September, 2012 is misconceived. Similarly, where there is a statutory right of appeal that does not include a single judge of the Common Law Division it would be entirely inappropriate for a single judge to make a declaration concerning his fitness and propriety. 41 There is the further consideration that the Plaintiff's proceedings that were commenced in January, 2012 were dismissed by consent. Those proceedings sought the same relief as the present proceedings seek (except the present claim for damages). In Nominal Defendant v Manning (2000) 50 NSWLR 139 Heydon JA said at [72] that a litigant bringing a second application where circumstances have not changed on evidence available earlier faced serious and self-created risks of an adverse exercise of judicial discretion. That was said in respect of interlocutory applications. It may have greater force in respect of interlocutory applications. It may have greater force in respect of final relief even if the earlier dismissal here did not produce a res judicata. It is not necessary to decide this matter because, for the reasons I gave earlier, the claim for this relief is hopeless and is doomed to fail. 42 The second aspect to the relief sought is the claim for damages. 43 Section 730 LPA relevantly provides: 730 Protection from liability No liability is incurred by: ............ (b) the Law Society or the Law Society Council, or their committees, including a Management Committee to which a function is delegated under section 426 (Management Committee) ........ or an employee or agent of, or a person acting at the direction of, any of them for anything done, suffered or omitted to be done in good faith in the exercise, or purported exercise, of a function under this Act. 44 Nowhere is it alleged in the pleading or elsewhere that in coming to its determination on 20 September 2012 there was a lack of good faith on the part of the Law Society or its Council or employees. Nothing in the affidavit filed by the Plaintiff makes any such assertion nor provides any evidence which could lead to an inference of a lack of good faith. There is nothing in the reasons proffered by the Law Society Council for the determination that it made that could lead to an inference of a lack of good faith. 45 In my opinion that is sufficient to demonstrate that the claim for damages is not based on any reasonable cause of action 46 Furthermore, what purports to be the pleading of the cause of action does not by any means satisfy the requirements of the Rules and good practice to proper pleading and particularisation The importance of proper pleading has been emphasised in a number of cases particularly Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR135 at [20] - [21] and McGurk v University of New South Wales [2009] NSWSC 1424 at [21] - [35] - see also Udowenko and Ors v Chief Executive Officer and Board of Directors of St George Bank - a Division of Westpac Banking Corporation and Ors [2011] NSWSC 867 and Constantinidis v. Kehagiadis [2011] NSWSC 974 at [7] - [12]. 47 In this regard it is to be recalled that the Plaintiff, although appearing for himself, is not untrained or unversed in what is required for proper pleading. Not only has he been a solicitor since 1991 but he asserted in Court that as a solicitor he had been a litigator. In my opinion, no particular allowance should be made for the Plaintiff on the basis that he does not have legal representation. However, even if the Plaintiff had not been a lawyer the pleading contained in the Statement of Claim could not be allowed to remain in its present form. The only issue is whether the pleading should merely be struck out with the Plaintiff given leave to repealed or whether the claim for damages should be dismissed. 48 In my opinion the proceedings should be dismissed. The lack of any material suggesting a lack of good faith on the part of the Law Society points to a high probability that the Plaintiff cannot succeed in the claim for damages. Furthermore, the Plaintiff undoubtedly committed two show cause events which have not been satisfactorily explained either to the satisfaction of the Legal Services Commissioner nor to the Council of the Law Society. 49 Moreover, the suspension of his practising certificate in 2010 came about by force of S 70(1) LPA. That suspension remains in force until the Commissioner decided that he is a fit and proper person. Interestingly, on 13 October 2010 (11 days before the expiry of the 'required period') the Plaintiff asked that his practising certificate be cancelled. He was told that that was not possible when the matter was under consideration. 50 There is a right to approach the Tribunal to remove the suspension imposed by S 70. The Plaintiff did that but was unsuccessful. He did not thereafter apply for a practising certificate until 24 January 2012, nine days after he filed his Summons in this Court (referred to in paragraph 13 above). 51 The Law Society informed him by letter of 7 February 2012 that before a practising certificate could be issued the Plaintiff would have to provide answers to matters asked of him by the Legal Services Commissioner in his letters of 29 October, 2010, 23 December, 2010 and 18 February, 2011. Apart from sending some documents to the Law Society on 27 March 2012 the Plaintiff did not respond to the matters asked of him until 18 June 2012. Thereafter he made the application for a practising certificate on 31 July, 2012. 52 In circumstances where the suspension was imposed by statute, the Plaintiff had sought the cancellation of the practising certificate, the Tribunal rejected his application for review, the Plaintiff had consented to the dismissal of his proceedings in this Court filed in January 2012 and his failure thereafter to apply for a practising certificate until 31 July 2012, the claim for damages would be doomed to fail even if the requirement to show a lack of good faith did not obtain. " 31On 10 April, 2013 the Applicant made a second application for the issue of a practising certificate for the year ended 30 June, 2013 (the 2013 Application). 32On 30 May, 2013 the Applicant filed the Application for Review referred to in the first paragraph of these Reasons. 33On 20 June, 2013 the Law Society Council resolved to refuse the second application the relevant resolution being as follows: "Resolved that the application made by David Harold Weston [and received 11 April 2013] for a Practising Certificate for the year ending 30 June 2013 be refused under S 66(7)(b) of the Legal Profession Act 2004 on the basis that Mr. Weston has failed to show in his written statements about the following show cause events: (i) the making of a sequestration order against him on15 June, 2010; (ii) his conviction in the Local Court at Parramatta on 2 March 2005 for failing to lodge an income tax return for the year ending 30 June, 2003; that he is a fit and proper person to hold a Practising Certificate'. 34On 20 June 2013 the Applicant made an application for the issue of a practising certificate for the year ended 30 June 2014 (the 2014 Application). 35On 25 June, 2013 the Information Notice in relation to the refusal of the second application was issued. 36On 18 July, 2013 the Law Society Council refused the 2014 Application the relevant resolution stating: " Resolved that the application made by David Harold Weston [received 21 June, 2013] for a Practising Certificate for the year ending 30 June 2014 be refused under s 66(7)(b) of the Legal Profession Act 2004 on the basis that Mr. Weston has failed to show in his written statements about the following show cause events: (i) the making of a sequestration order against him on 15 June 2010; (ii) his conviction in the Local Court at Parramatta on 2 March 2005 for failing to lodge an income tax return for the year ending 30 June 2003, that he is a fit and proper person to hold a Practising Certificate" 37On 19 July, 2013 the Information Notice in relation to the refusal of the 2014 Application was issued which attached the 22/10/2012 Revised Information Notice in relation to the refusal of the First Application. 38On 4 September, 2013 the Applicant commenced Supreme Court proceedings 2013/268026 against the Law Society and the State of NSW seeking damages, punitive and exemplary damages and interest. 39On 19 November, 2013 on the application of the Law Society, Harrison J dismissed the Supreme Court proceedings on the basis there was no cause of action available on the documents filed by the Applicant in the proceedings. 40On 23 September, 2013 the Applicant filed his Amended Application for Review pursuant to S 75 of the LPA which is the application for determination before us.
The Relevant Law 41The right to review arises under S 75 of the LPA which provides: "75 Review of decisions by Tribunal (1) An applicant or holder who is dissatisfied with a decision of a Council or the Commissioner under this Division with respect to the applicant or holder may apply to the Tribunal for an administrative review under the Administrative Decisions Review Act 1997. (2) A Council must notify the Commissioner of the lodging of any application for review of a decision of the Council. The Commissioner must notify the appropriate Council of the lodging of any application for a review of a decision of the Commissioner. (3) In proceedings on a review by the Tribunal of a decision under this Division in which the question of whether a person is a fit and proper person to hold a local practising certificate is at issue: (a) the onus of establishing that a person is a fit and proper person to hold a local practising certificate is on the person asserting that fact, and (b) it is to be presumed in the absence of evidence to the contrary that any statement of facts in the reasons of a Council or Commissioner for the decision concerned is a correct statement of the facts in the matter, and (c) a certificate of conviction of an offence (being a certificate referred to in section 178 (Convictions, acquittals and other judicial proceedings) of the Evidence Act 1995) is admissible in the proceedings and is evidence of the commission of the offence by the person to whom it relates, and (d) a document that appears to be a document issued for the purposes of or in connection with any application, proceedings or other matter arising under the Bankruptcy Act 1966 of the Commonwealth is admissible in the proceedings and is evidence of the matters stated in the document. (4) The Tribunal may make any order it considers appropriate on a review under this section, including any of the following orders (a) an order directing the appropriate Council to grant, or to refuse to grant, an application for a local practising certificate, (b) an order directing the appropriate Council to cancel or suspend for a specified period a local practising certificate, or to reinstate a local practising certificate that has been cancelled or suspended, (c)an order that an applicant or holder is not entitled to apply for the grant of a local practising certificate for a specified period not exceeding 5 years, (d) an order directing the appropriate Council to impose conditions on a local practising certificate for a specified period, or to vary or revoke conditions imposed by the appropriate Council or to vary the period for which they are required to be imposed. (5) The Tribunal may not order the imposition of conditions on a local practising certificate without first taking submissions from the appropriate Council as to the appropriateness of the proposed conditions. (6) The appropriate Council is to give effect to any order of the Tribunal under this section." 42The note to s 75 provides that: 'Note reviews are carried out under Chapter 5 of the Administrative Decisions Tribunal Act 1997. Section 729A modifies the operation of that Act. An appeal lies to the Supreme Court under S 729A against a decision of the Administrative Decisions Tribunal.' 43Section 63 of the ADTA appearing within Chapter 5 of that Act provides: ''63(1) In determining an application for a review of a reviewable decision, the Tribunal needs to decide what the correct and preferable decision is having regard to the material then before it, including the following.. (a) any relevant factual material; (b) any applicable written or unwritten law (1) For this purpose, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant enactment on the administrator who made the decision. (2) In determining the application for review of a reviewable decision, the Tribunal may decide: (a) to affirm the reviewable decision, or (b) to vary the reviewable decision, or (c) to set aside the reviewable decision and make a decision in substitution for the reviewable decision it set aside, or (d) to set aside the reviewable decision and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal. 44The Tribunal in its considerations is not required to consider only factual material that was before the Council of the Law Society. It can consider "any relevant factual material", Barakat v Law Society [2013] NSWADT 271 at [16]. 45Counsel for the Law Society referred us to the test considered by Giles JA in New South Wales Bar Association v Murphy [2002] NSWCA 138; (2002) 55 NSWLR 23. His Honour held at [107] "the test of a fit and proper person to hold a practising certificate is stated as to each of act of bankruptcy, indictable offence and tax offence. But the fact of commission of an act of bankruptcy, an indictable offence or a tax offence is not what matters. The Council, and the Court, must look to the circumstances in which the act of bankruptcy, indictable offence or tax offence was committed. If no more than the fact of commission of an act of bankruptcy, an indictable offence or tax offence is known, any opinion as to what the circumstances of the commission show cannot be held. What matter is the circumstances in which the act of bankruptcy, indictable offence or tax offence was committed". His Honour went on to say at [108] "The circumstances must show that the legal practitioner is not a fit and proper to hold a practising certificate. The Council must be persuaded. An even balance means that the circumstances do not show what must be shown". 46His Honour stated at [112] "It is necessary to find the circumstances in which the legal practitioner committed the act of bankruptcy, in order to ask whether the circumstances show that the legal practitioner is not a fit and proper person to hold a practising certificate". 47This test which Counsel for the Law Society submitted required the Council to be positively persuaded on the material before it that the practitioner is now not a fit and proper person seems to be at odds with the onus upon a review under s 75(3)(a) of the LPA on the Applicant to establish that he is a fit and proper person. 48In fact the onus under s 75(3)(a) did not exist under the Legal Profession Act 1987 which was in force when Murphy was determined. As the Tribunal said in Barakat: "11 It is important to note para 75(3)(a) which put an onus on the applicant in this review to prove he is a fit and proper person to hold a local practising certificate. There was no such provision in the previous legislation: the Legal Profession Act 1987. 12 In submissions of 7 November 2012 to the law Society on behalf of the Applicant, Mr Williams made comparisons between the conduct of these proceedings and dicta in NSW Bar Association v Murphy [2002] NSW CA 138 and Doherty v The Law Society of NSW [2003] NSW SC 105, but without reference to the absence of a provision similar to para 75(3)(a) of the current Act in the 1987 Act that applied in those cases. 13 In the section 67 statements of both Mr Roulstone and Mr Barakat, apparently prepared by Mr Williams, at para 21 there is a statement: "McClellan J made it clear at [14] in Murphy -v- Bar Association of NSW [2001] NSWSC p.1191, that provisions then in force concerning the bankruptcy of a practitioner properly understood meant that the act of bankruptcy raised the occasion of the practitioners fitness to practice but did not raise any adverse presumption or impose any onus on the practitioner." 14 However, the submission did not refer to the provisions of para 75(3)(a) of the Legal Profession Act 2004, which clearly places an onus on this practitioner to prove fitness to practice. 49The Court in Murphy was concerned with consideration of whether the circumstances surrounding the commission of an act of bankruptcy, indictable offence or tax offence warranted a finding adverse to the practitioner. The relevant refusal arose under s 38FC(1) of the Legal Profession Act 1987 which provided: "38FC Refusal, cancellation or suspension of practising certificates - bankruptcy, indictable offences and tax offences; (1) A Council must refuse to issue, or must cancel or suspend, a practising certificate if: (a) the Council is aware that the applicant for or holder of the practising certificate has, since being admitted as a legal practitioner, committed an act of bankruptcy or been found guilty of an indictable offence or a tax offence, and (b) the Council considers that the act of bankruptcy, indictable offence or tax offence was committed in circumstances that show that the applicant or holder is not a fit and proper person to hold a practising certificate." 50As Beech-Jones J found in Barakat v The Law Society of New South Wales [2004] NSWSC 773 at [137] s 48(3) of the Legal Profession Act 2004 which grounded the determination of the Law Society the subject of those proceedings was not so confined. Similarly, s 66(7)(b) pursuant to which the Law Society refused Mr Weston's application for a practising certificate the subject of this application is not so confined. Indeed, Giles JA in Murphy at [108] contrasted the operation of s 38FC(1) of the 1987 Act with s 38FE(1)(b) which is the pre-cursor in form to s 66(7)(b). 51Accordingly, having regard to the statutory onus upon the Applicant to satisfy the Tribunal that he is a fit and proper person to hold a practising certificate in a review under s 75 the subject of this application in the Tribunal's opinion the test in Murphy does not apply to require the Tribunal to be separately satisfied on such a review that the Applicant is not a fit and proper person at the time of the determination. Indeed, a Tribunal could never be so satisfied where no evidence was offered. 52As to what is "fit and proper", the Tribunal in Roulstone at [2002] said "As to the words "fit and proper" Spigelman CJ in NSW Bar Association v Cummins [2001] NSWCA 284; (2001) 52 NSWLR 279 at 284 endorsed what was said by Kitto J in Ziens v Prothonotary of the Supreme Court of NSW [1957] HCA 46; (1957) 97 CLR 279 at 298: " .. They should be understood as a reminder that a barrister is more than his client's confidant adviser and advocate, and must therefore possess more than honesty, learning and forensic ability. ... If a barrister is found to be, for any reason, an unsuitable person to share in the enjoyment of those privileges and in the effective discharge of those responsibilities, he is not a fit and proper person to remain at the Bar."" 53In Wardell - v - New South Wales Bar Association [2002] NSWSC 548 the Supreme Court was reviewing a decision of the Bar Council cancelling the practising certificate of a barrister following his bankruptcy, which occurred as a result of his debtor's petition. The Bar Council had resolved that Wardell was not a fit and proper person to hold a practicing certificate. Cripps AJ said in his judgement at [36] "...it is not only legal competence and the trust of the professional associates that determines fitness and propriety to hold a practising certificate. If that were all there were to it, Mr Wardell would have to succeed in this appeal. In my opinion, however, the test also extends to embrace aspects of character derived from conduct." 54Cripps AJ concluded at [45] that Mr Wardell "has shown such a reckless disregard for his obligations as to amount to an intention to avoid them." 55The Tribunal in Hutchinson v Legal Services Commissioner [2011] NSWADT 87 cited at [66] referred to the decision in Murphy at [161]: "...A legal practitioner who spends all his or her money on self-indulgent high living, in disregard of ordinary commercial obligations, may be just as much (or as little) deserving of criticism as a legal practitioner who prefers ordinary commercial obligations over taxation obligations. But criticism is really not the point. The point is what the conduct shows of the legal practitioner's fitness to hold a practising certificate" 56The Tribunal in Barakat said at [177]: "It has been well recognised in New South Wales since at least the decision of the court of appeal in New South Wales Bar Association - v - Hamman [1999] NSWCA 404 that failure of the lawyer to fulfil the civic duty to pay tax, even though in the particular circumstances it may not involve any offence, constitutes unsatisfactory professional conduct or professional misconduct. (See also NSW Bar Association - V - Somosi [2001] NSWCA 285; NSW Bar Association - V - Cummins [2001] NSWCA 284.)" 57Giles JA in Murphy at [113] stated: "Fitness to hold a practising certificate is to be assessed having in mind the high standards required of legal practitioners in the practice of their profession. The standards are required because the relationship between legal practitioner and client, between legal practitioners, and between legal practitioners and the Court is one of trust in the performance of professional functions, and because there must be confidence in the public and in those engaged in the administration of justice that legal practitioners will properly perform those functions". 58Having reviewed the authorities Beech-Jones J in Barakat (Supreme Court) held at [149]: "The authorities including those that having already been discussed, recognise that for a practitioner to be considered fit and proper they must maintain certain obligations beyond those imposed by law". His Honour noted that an exhaustive statement of the scope of those obligations was not possible.
The ATO History 59The ATO information issued on 26 July, 2010 indicated a single offence, the tax offence of 2 March, 2005. The ATO information recorded a plea of guilty and that Mr. Weston was fined $1,000 and ordered to pay court costs. 60Mr. Weston's tax return for the years 2005 and 2006 were lodged in January, 2008 after a demand had issued. The return for the 2008 year was lodged some 38 weeks late, and the 2009 return had not then been lodged, although no demand had issued. There was an amount outstanding in respect to Mr. Weston's personal income tax account of $2,102.65. 61Mr. Weston was recorded as having been the public officer of : (a)Alareb Investments Pty Ltd. (20 June 2008 to date) (b)Lazarus Family Trust (8 June 2003 to date) 62No income tax was then outstanding for either of those entities 63In relation to the Lazarus Family Trust, of which Mr. Weston was Trustee, returns for the 2004, 2005, 2006, 2007, 2008 and 2009 years had not then been lodged, and demands had issued for the returns for the years 2004, 2005, 2006 and 2007. 64There had been delays in lodgement of the BAS statements for Mr. Weston and Alareb Investments. There were substantial amounts outstanding on BAS accounts for Mr. Weston and companies: (a) Lazarus Family Trust $110,432.94 (b) Alareb Investments $57,484.21 (c) Individual (Asad Lawyers) $420,598.44
65No pending proceedings were recorded of Mr. Weston or either of the entities. 66Historically, a notice of intended legal action had issued on 28 September, 2005 for a debt of $60,797.45 for the Lazarus Family Trust. A statement of liquidated claim was filed on 20 October 2005. It was served on 23 February, 2006 and judgement was obtained on 22 November, 2006. 67A further notice of intended legal action issued on 28 February 2008 for a total debt of $113,942.02 being: Penalty incurred as a director of BLG (NSW) Pty Ltd. $13,495.00 Trustee for the Lazarus Family Trust $79,523.98 Individual ATO debt $20,923.04
68A bankruptcy notice was served on the Applicant on 15 October, 2009 for the total amount of $87,959.46, being the judgement obtained on 22 November 2006 plus costs and judgement interest. The ATO filed a creditor's petition on 27 April 2010 and a sequestration order was made in the Federal Magistrates Court on 15 June 2010 (the act of bankruptcy occurred on 4 February 2010). 69In relation to Alareb Investments Pty Ltd. a notice of intended legal action issued on 13 April 2010 in relation to a debt of $55,799.21 and a garnishee notice issued on 28 May, 2010 to the Commonwealth Bank of Australia for the amount of $56,572.12. 70There was no current debt collection action pending in respect of Mr. Weston's position as trustee of the Lazarus Family Trust.
The Show Cause Provisions 71The 'show cause' provisions are contained in Part 2.4 Div 7 of the 2004 Act. Show cause event is defined in S 4 as follow: "show cause event" in relation to a person, means: (a) his or her becoming bankrupt or being served with notice of a creditor's petition presented to the Court under section 43 of the Bankruptcy Act 1966 of the Commonwealth, or (b) his or her presentation (as a debtor) of a declaration to the Official Receiver under section 54A of the Bankruptcy Act 1966 of the Commonwealth of his or her intention to present a debtor's petition or his or her presentation (as a debtor) of such a petition under section 55 of that Act, or (c) his or her applying to take the benefit of any law for the relief of bankrupt or insolvent debtors, compounding with his or her creditors or making an assignment of his or her remuneration for their benefit, or (d) his or her conviction for a serious offence or a tax offence, whether or not: (i) the offence was committed in or outside this jurisdiction, or (ii) the offence was committed while the person was engaging in legal practice as an Australian legal practitioner or was practising foreign law as an Australian-registered foreign lawyer, as the case requires, or other persons are prohibited from disclosing the identity of the offender. 72Section 11 of the Act reads as follows: "References to convictions for offences (1) A reference in this Act to a conviction includes a finding of guilt, or the acceptance of a guilty plea, whether or not a conviction is recorded. (2) Without limiting subsection (1), a reference in this Act to the quashing of conviction for an offence includes a reference to the quashing of: (a) a finding of guilt in relation to the offence, or (b) the acceptance of a guilty plea in relation to the offence. (3) However, a reference in this Act to the quashing of a conviction for an offence does not include a reference to the quashing of a conviction where: (a) a finding of guilt in relation to the offence, or (b) the acceptance of a guilty plea in relation to the offence, remains unaffected."
The circumstances surrounding the show cause events. 73In order to consider the circumstances surrounding the show cause events, we have had regard to the material filed by the Applicant in the proceedings which we list as follows: (1)A two and a half page statement signed by the Applicant, dated 21 November 2013 and filed in the Tribunal on 25 November 2013. This document sets out the Applicant's background in terms of his legal history and says at paragraph 11: .."11. I was served with a Bankruptcy Notice 2009 thence Creditors Petition resulting in sequestration Order June 2010, but I was unaware of the debt owed to the petition creditor being the Deputy Commissioner of Taxation 12. I did prior to the bankruptcy event set up as principal Assaad Lawyers, Chouman Lawyers and tried to crystalise Metleg & Associates 13. I reported the show cause event and upon investigating taxation records found a finding but no conviction for failure to lodge a taxation return but my accountant of whom is not contactable failed to follow my instructions 14. It appears that the Respondent relied upon CIT[S66 LPA 2004] but also relied inconsistently upon CIT[S68 LPA 2004] the later invoking CIT[S70 LPA 2004] resulting in a then recent practising certificate being suspended 15. I replied to the show cause event to the best of my knowledge and engaged in numerous proceedings both before this Tribunal and the Supreme Court of N.S.W to no avail, being financially unable to obtain further legal advice currently in receipt of Centrelink benefits 16. I submit that I must be a fit and proper person and in any event the denial by the Respondent is on par with a disqualification and I refer to the case of Robbie Waterhouse v Australian Jockey Club involving what was then described as the "fine cotton affair" being a serious act of misconduct Cit[substituting race horses] whereby he was disqualified for approximately 2 years but regained his book maker license my matter does not fall anywhere approaching that conduct." (2)Letter written by the Applicant to Ms Lynda Muston, Assistant Commissioner (Legal) which appears to be undated although it does have a stamp on it by the Office of the Legal Services Commissioner dated 20 December 2010. This letter appears to be in response to a letter from Ms Muston to the Applicant dated 29 October 2010 and provides information relevant to the Applicant's then current situation and includes information regarding the sale and purchases made by the Applicant and his then wife during a period 1998 to 2004. (3)Letter from the Applicant to the Legal Services Commissioner undated but showing a received stamp by the Office of the Legal Services Commissioner 9 February 2010. This letter is by way of response to letters from the Office of the Legal Services Commissioner dated 23 December 2010 and 14 January 2011 which enclosed a copy of Mr Gore's report. (4)One page document headed "Submissions re issue of practising certificate" signed by the Applicant and dated 18 June 2012. In that document the Applicant says that the tax offence of failing to lodge a tax return was due to a misunderstanding with the accounts department and had he received a demand from the ATO he would have lodged a return forthwith albeit in summary form. He says he has no criminal record. The Applicant further says that in regards to the tax debt and bankruptcy he had no knowledge of the GST running account being out of order and he denies calls made by him seeking extension of time for payment. He then refers to being given a bank cheque by his "now ex de-facto" in 2003 to 2004, a date he could not recollect, for an amount of $50,000 which he deposited into the office account but says had he known of the tax debt he could have paid it in full or in part arrangement. He says he first became aware of the tax debt upon being served with a Bankruptcy Notice in October 1999 which he opposed before the Federal Court. He further says regarding Gore's report it was dismissed but he noted it concerned money owed to Foster of Counsel regarding a matter of Di Santo but that he was not aware that client's fees were recovered. He further says he was not the signatory to the office account and unaware of the disbursement of funds save reading of Gore's report in 2010. He says it would be impossible for him to trace the monies except he was aware that Foster's complaint was dismissed. He goes on to say that as to other tax liabilities he made numerous enquiries and his understanding was that the corporate debts were paid or written off but that he may have a small debt of $2,000.00. He released some of his superannuation in 2011 and tax was deducted so he assumed that he owed nothing to the ATO save for the bankrupt amount. (5)The next document relied on by the Applicant is a one page document being annexure C to an Affidavit of the Applicant dated 6 December 2012 and filed in the Supreme Court proceedings number 2012/379719. The Applicant says in that annexure C under the heading "taxation offence" as follows: "The offence was a failure to lodge a Taxation return of which was proven but no conviction recorded but I am aware it is a show cause event. I did not receive a warning to prosecute. My office mail was opened and sorted by my staff and it appears that if a notice was sent of which would be a usual ATO Procedure it was not for some reason brought to my attention. At that stage my personal Tax was in order and had I been aware of a warning notice I would have personally lodged a return A.S.A.P My taxation matters both business and personal were dealt with in house I became aware of the tax office when State Debt Recovery notified me of a debt I did not appear at court but I can't recall whether I Became aware of the office bank in 2005 but it seems unlikely as I would have been aware it was a show cause event. My Professional record was then excellent and I had no reason not to disclose. I have no criminal record and shortly before the Sequestration order I had applied For a Master Security Licence and obtained a clean Police check and character Reference to establish I was a fit and proper person but my application could not Proceed. I do however apologise for my tardiness" (6)Three handwritten references dated 4 November, 2013 (Fernando Guerrochena, David L Oliver and Olivera Popesco). These references are scant on detail but indicate that the Applicant spoke for and supported the referees at their respective court appearances.
The 2013 Application 74The 2013 Application for a review of a reviewable decision under S75 of the LPA was impliedly grounded upon there having been no decision by the Law Society by (16 May, 2013) as to the granting of the Applicant's practising certificate for the year ended 30 June, 2013 for which application was made on 10 April, 2013. 75The application is in its terms misconceived. No decision had been made which was amenable to review under s 75 LPA 76Accordingly, to the extent that the Applicant seeks to review the lack of decision by 16 May, 2013, that part of his Application is dismissed there being no jurisdiction. 77Additionally, for the reasons Davies J gave in Weston v Law Society of New South Wales at [36] referred to above any application for relief in the nature of the issue of a practising certificate for the year ended 30 June 2013 is also misconceived, the period of that certificate having expired.
The 2014 Application 78The question for the Tribunal is whether Mr Weston is a fit and proper person to hold a practising certificate at the time of this determination. The onus is on the Applicant to establish that fact. 79As set out above, the Law Society had refused the further application for the issue of a practising certificate on 18 July 2013 under S 66(7)(b) of the Legal Profession Act 2004 on the basis that the Applicant had failed to show in his written statements about the identified show cause events that he was a fit and proper person to hold a practising certificate. 80S 66(7)(b) provides that the Council may refuse to grant a local practising certificate if the applicant has provided a written statement in accordance with this section (namely as to the show cause events) that he was a fit and proper person to hold a practising certificate. Importantly, S 66(8) provides that if a local practising certificate is refused under S 66(7) the Council is not required to exercise its function under S 68 in relation to the application. Accordingly, Mr. Weston's reference to any application under S 68(8) is inapposite. 81None of the material set out above assists us in forming anything more than a superficial and incomplete view as to the circumstances surrounding the show cause events. In summary, the Applicant's position appears to be that he was not personally aware of the tax offence or any of the ATO demands because someone in his office dealt with those documents and apparently instructed a representative to appear on his behalf without his knowledge on at least two occasions including to make a guilty plea. There was no evidence called to support this contention. In the Tribunal's view it is unlikely to be credible. Mr Weston further says he was unaware of the other matters raised, that he was a director/principal of Berala Law Group but not a shareholder and had no knowledge of its tax affairs. This also would, if accurate, reveal a lack of understanding of the obligations and duties upon a company director. There was no substantive evidence as to the context in which the events occurred. 82The Court of Appeal in Murphy rejected the proposition that tax obligations are "of a special kind": per Giles JA at [161]. The Court found that tax obligations should be treated as no different to other financial obligations and that the relevant inquiry is why the obligation was not met, what was done and what could have been done to meet them: per Giles JA at [162]. No evidence was adduced by the Applicant on these matters. 83It is the view of the Tribunal that the Applicant has not established to our satisfaction that he is a fit and proper person to hold a local practising certificate within S 75(3)(1) of the Legal Profession Act 2004. He has failed to respond in any detail to the questions put to him by the Law Society in its letter dated 23 September, 2010 and the Legal Services Commissioner in his letters dated 29 October 2010, 23 December 2010 and 18 February 2011. He has otherwise failed to adduce any evidence from which the Tribunal could be satisfied as to his fitness to practice.
Costs 84No application for costs was made by the Law Society at the time of the hearing. That failure does not of itself prohibit the Law Society from seeking a costs order following the determination of its claim given the Tribunal's finding. 85In considering the question, the Tribunal has had regard to the Tribunal's Guidelines on Costs (Practice Note Number 22, issued 1 October, 2009), Section 566 of the LPA (repealed on 1 January, 2014 by the Civil and Administrative (repeal and Amendment) Act but remaining operative for our purposes and the decision in Chronopoulos v. Carossel Pty Limited [2010] NSWADT 191 at [2]. 86The Tribunal favours the approach adopted by the Guidelines which encourages parties to advise the Tribunal at the conclusion of the hearing if they wish to make an application for costs even if at that time the application is based on an assumption as to the outcome of the proceedings. Such an approach avoids delay in the finalisation of the matter and reduces costs. In the absence of any application, the Tribunal makes no order as to costs.
Order 87The decision of the Council of the Law Society made on 18 July, 2013 to refuse the application by David Harold Weston for a practising certificate for the year ended 30 June 2014 is affirmed.
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: 25 June 2014
David Harold Weston
The Council of The Law Society of NSW
(2000) 50 NSWLR 139
(2002) 55 NSWLR 23
(2001) 52 NSWLR 279
(1957) 97 CLR 279