Law Society of New South Wales v Mattila

Evidence at the Stage 2 Hearing

1. The Law Society did not seek to rely on any evidence other than that tendered by it at the Liability hearing and admitted into evidence.
2. Mr Lynch SC for the Solicitor relied upon the two affidavits of the Solicitor tendered at the Liability hearing, being Exhibits A and B. He also tendered a further affidavit of the Solicitor sworn 12 February 2018; an affidavit of Nea Goodman sworn 6 February 2018; and an affidavit of Phillip Christopher Roberts affirmed 9 February 2018. Those affidavits were admitted into evidence without objection.

Orders Sought

1. The Law Society in its Application seeks orders that: 1. The Solicitor's name be removed from the Roll; 2. The Solicitor pay the Law Society's costs as agreed or assessed; and 3. Such other order as the Tribunal deems appropriate.
2. The Solicitor, by her Reply, consents to Orders (2) and (3) above but does not consent to the primary Order sought by the Law Society, namely that her name be removed from the Roll.

The orders which are available under section 562

1. Findings of professional misconduct having been made, we may, under s 562(1) of the Legal Profession Act 2004, make such orders as we think fit, including any one or more of the orders specified in s 562(2). Paragraph (a) of that subsection permits an order that the name of the Solicitor be removed from the local roll.

"Fit and proper person" and protection of the public

1. Professional misconduct at common law includes conduct in the pursuit of professional activities that would reasonably be regarded as disgraceful or dishonourable by professional colleagues of good repute and competency.
2. It is clear from the authorities that the ultimate issue, where an order for removal from the roll is contemplated, is whether the practitioner is shown not to be a fit and proper person to be an officer of the Supreme Court :A Solicitor v Law Society of New South Wales [2004] 216 CLR 253.
3. It is also clear that, in deciding that ultimate issue, the Tribunal must proceed on the basis that disciplinary proceedings are concerned with protection of the public. See Law Society of NSW v Walsh [1997] NSWCA 185 at 224, per Beazley JA (as she then was) and the authorities cited there. Justice Beazley went on to confirm that: "The Court's duty to protect the public is not confined to the protection of the public against further misconduct by the particular practitioner who is the subject of the disciplinary proceedings. It extends to protecting the public from similar defaults by other practitioners. Thus, it is relevant to take into account the effect the order will have upon the understanding in the profession and amongst the public of the standard of behaviour required of solicitors."

Limitations on the power to "strike-off" and the availability of a restoration order

1. Kirby P discussed and analysed the relevant principles in the leading case of Dupal v Law Society of New South Wales [1990] NSWCA 56, at 58, in the following terms: "In ex parte Macaulay (1930) 30 SR (NSW) 193 it was said that where a solicitor has been proven guilty of misappropriation of client funds he should not unless in very exceptional circumstances ever be allowed again to be held out to the public as a solicitor in whom confidence might be reposed. In this regard the full court was reflecting a long line of English authority. See e.g. Willes J Re Poole [1869] 4CP 350, 35 and Incorporated Legal Institute of New South Wales v Meagher [1989] 9 CLR 655." Those decisions must now be read in the light of the remarks of the majority of the High Court of Australia in Ex parte Lenehan [1948] 77 CLR403, 422: "[They] … properly emphasised the great importance of financial integrity in a solicitor, but they should not be regarded as laying down a rule of law that a solicitor who has been struck off the roll for pecuniary dishonesty cannot be reinstated and that an applicant for admission who has been guilty of a similar act cannot be allowed to proceed unless it is shown that there were some exceptional circumstances in the original offence." Restoration is difficult but not impossible. In a number of recent cases this Court has demonstrated the difficulty facing a practitioner whose name is removed from the roll for pecuniary dishonesty and thereafter having his name restored. Cegkotowicz v Law Society of New South Wales, Court of Appeal, Unreported, 7 August 1987; [1987] NSWJB146 and Dawson v Law Society of New South Wales, Court of Appeal, Unreported, 21 December [1989] NSWJB 232. Ex Parte Lenehan continues to stand for the proposition that: "When such a person applies for reinstatement he is in a more disadvantageous position than an original applicant because he must displace the decision as to probable permanent unfitness which was the basis of his removal." If a court is of the opinion that a practitioner is not probably permanently unfit to practice again, it should pause before ordering removal of that person's name from the Roll. It should consider the appropriateness of suspension. But for the reasons which I have stated, suspension in this case is not appropriate. Removal must follow. By the same token, like the other members of the court, I can contemplate circumstances in which, in the future, this appellant's name might be restored to the roll upon proof of satisfactory conduct in the meantime and the good opinion of his professional colleagues to whom full details of the fact as found by this court have been made known. As Handley JA has demonstrated, there are a number of matters which stand to the appellant's credit. But that is not uncommon in this melancholy class of case. And those facts do not justify a different result in the circumstances proved."
2. The principles guiding the Tribunal in determining whether a solicitor's name should be removed from the Roll were summarised by Beazley JA in Walsh at 43 as follows: 1. The Tribunal's power is discretionary; 2. Subject to considerations which would compel the Tribunal to impose a lesser penalty, the protective nature of the jurisdiction calls for the removal of a practitioner's name from the roll when the practitioner has been found not to be of good fame and character; 3. The substantive considerations which might compel a different course are ones which themselves are relevant to and enhance the essential nature of the Tribunal's jurisdiction, which is the protection of the public. An example is where the legal practitioner has reported the subject conduct to the Law Society or Bar Association. The relevance of mitigating conduct of that type is that it encourages practitioners guilty of misconduct to promptly report it. 4. In general, mitigating factors, such as evidence of a respected reputation, no previously found misconduct, or service to the profession "are of considerably less significance than in the criminal sentencing process". (Citing Law Society of NSW v Bannister [1993] 4 LPDR 24 at 13)

"Probable permanent unfitness" to practice

1. In New South Wales Bar Association v Cummins [2001] NSWCA 284 at [24], Spigleman CJ confirmed the principle which had been adopted by McHugh JA in the unreported decision of Prothonotary of the Supreme Court of NSW v Ritchard (Unreported, Court of Appeal NSW, 31 July 1987), to the following effect: "An order for the involuntary removal of the name of a practitioner from the Roll of solicitors is made only because the probability is that the solicitor is permanently unfit to practise. Unless the Court is persuaded that the probability exists, the proper order to make will usually be one of suspension or fine instead of removal."
2. That reflects the principle enunciated by the High Court (in the context of an application for reinstatement) in Ex Parte Cummins, noted at [16] above.

The Law Society's case

1. The Law Society's case was to the effect that the Solicitor's established misconduct cannot be justified by the financial pressures she was undergoing at relevant periods nor by her reliance on her stated belief that sufficient covering funds would be forthcoming from Ratesco [Exhibit A, paragraph 115], or that her client Mr Humphries would understand and condone her actions [Exhibit A, paragraph 116].
2. Mr Maddigan for the Law Society drew our attention specifically to the fact that although the Solicitor's explanation for misappropriating $138,000 from Mr Humphries was to pay rent and staff salaries (Exhibit A, paragraph 115), the amounts outstanding to her employees Mr Horne and Ms Lynn were not in fact paid from the misappropriated funds and that Ms Lynn is still owed $15,196.85.
3. Mr Maddigan had informed us during the Liability Hearing that a fidelity fund payment of $149,589.04 had been made to Mr & Mrs Humphries in March 2017.
4. Mr Maddigan further submitted as follows. 1. The Solicitor was admitted in May 1985 and practiced up to the suspension of her practicing certificate in September 2014. She should have been aware of the gravity of her misconduct due to her significant experience, and so a severe sanction is justified. 2. She was a member of the Legal Services Tribunal and later the Administrative Decisions Tribunal. During that time (1995 to 2004) she heard and determined a number of matters regarding complaints of breaches of relevant provisions of legislation pertaining to trust accounts and misappropriation of trust monies. She was and is well aware of the principles governing any solicitor's use of trust funds and those imposing very high standards of honesty, integrity and compliance with the law on members of the profession. 3. The Solicitor's professional experience and expertise and former office-holding as set out above permitted her to appreciate fully the seriousness of her misconduct, thereby removing any element of ignorance which might otherwise have diminished the degree of her culpability. 4. It was not merely a matter of the Solicitor knowing the obligations of any member of the profession in these respects and knowing her obligation to comply with legal and fiscal obligations towards employees. It was a matter of understanding the significance accorded to such conduct by the law and the heightened seriousness accorded to such conduct when committed by a person with the Solicitor's background and experience.
5. On that basis and the basis of its submissions generally the Law Society sought an order removing the Solicitor's name from the local Roll and an order for costs.

The Solicitor's case

1. Mr Lynch SC for the Solicitor recognised that the ultimate question for us is whether the Solicitor is permanently unfit to be a member of the profession so as to justify her removal from the Roll, or, alternatively, whether the public interest would be adequately protected by something less than removal. He submitted that a period of suspension equating to the period of the Solicitor's current suspension of her right to practice ought be ordered rather than striking her off; with her return to practice being conditional upon the Solicitor practising only as an employee with no entitlement to hold trust money.
2. Mr Lynch noted that the Solicitor's practicing certificate has been suspended since September 2014 and accordingly the appropriate order would be for that suspension to continue until 31 December 2018, a total period of in excess of four years and that thereafter her entitlement to practice be restricted to practice as an employee for a further two years.
3. Mr Lynch relied upon observations in the Court of Appeal in Council of the Law Society of NSW v Foreman [1994] 34 NSWLR 408. In that case the solicitor was a prominent and senior practitioner and an acknowledged expert with national recognition in her field of practice. The solicitor, knowing that a particular internal timesheet kept by her firm's accounts department would form part of an affidavit to be submitted to the Court, altered that timesheet so as to indicate (to her and her firm's advantage) that a costs agreement had been given to her client, and she had then allowed the false timesheet to be attached to an affidavit, knowing that it would be relied upon by the Court. Mr Lynch relied upon certain comments in the judgments of Giles AJA and Kirby P.
4. Giles AJA said: "It must be recognised that people otherwise of capacity and integrity can act irrationally and contrary to their normal standards under accumulated pressures or in response to a particular situation, but I do not think that was the case here"
5. Kirby P observed: "It is in the public interest that such a conscientious legal practitioner should remain in practice, so long as this can be achieved consistently with the maintenance of the standards of the legal profession….Because the jurisdiction is for the protection of the public, regard also may be had to the public's interest in restoration to the roll of such persons as had demonstrated, including by their work, activities and life, a fitness to be restored."
6. We digress slightly to note that ultimately His Honour Justice Kirby was in dissent from the Court of Appeal's decision that the solicitor should be struck-off. (Although he made it clear at 412F, that he was reluctant to give any "appearance of dogmatism" and that "(t)his is far from the conviction which I feel about the resolution of this case"). He proposed instead that: 1. The solicitor be suspended for 4 years and a practising certificate not be issued to her during that time, unless within that time she demonstrated to the President of the Law Society for the time being that she had secured employment as a solicitor in a community legal body (such as the Legal Aid Commission, the Aboriginal Legal Service, Redfern Legal Centre or the Public Interest Advocacy Centre); and 2. at the end of the 4 year period she be issued with a practising certificate.
7. Although we did not understand Mr Lynch to suggest that orders of that order of particularity were appropriate here, he did submit that a suspension of the Solicitor's right to practice in the terms summarised in [23] and [24] above would be appropriate.
8. He asked us to give substantial weight to the fact that the Solicitor has not in these proceedings nor at any stage during the course of the Law Society investigation sought to assert that her actions were justified by financial pressures. In relation to the trust account misappropriation we were taken to her affidavit of 12 May 2017 [Exhibit A] where she said, at [116]: "At the time I thought that Mr Humphries would understand and would condone my actions. However, I had no proper independent basis for that belief, and deluded myself into rationalising what was fundamentally a dishonest act. I accept that at no time did Mr Humphries authorise the appropriation of the money".
9. On the question of contrition it was submitted that the Solicitor has: 1. co-operated with the investigator and with the Law Society at all stages; 2. accepted that in the course of the investigation and in the course of these proceedings her conduct is to be found to be professional misconduct; 3. acknowledged the seriousness of that conduct; 4. accepted that her conduct warranted her removal from practice by the suspension of her practicing certificate, and 5. accepted that her return to practice, if the Tribunal elects to permit her return, would be accompanied by conditions protective of the public. Those conditions, she suggests, would be that she would only be entitled to hold a practising certificate entitling her to practice as an employee. It would follow that she would not be entitled to hold trust money.
10. Mr Lynch SC submitted that a four year suspension would appropriately reflect the Tribunal's disapproval of the Solicitor's conduct, and that we would not be satisfied that at this point in time the Solicitor was permanently unfit to practice.
11. Mr Lynch further submitted that: 1. unlike the position in Foreman, the Solicitor did not make improper alterations to a document; swear an affidavit knowing it to be false; nor enter false entries into a trust ledger; 2. there was no occasion prior to 2014 where the Solicitor's character could be doubted; 3. there was no reason to conclude that what occurred in relation to Mr Humphries' trust monies demonstrated a fundamental fault in the Solicitor's character. Rather, as Giles AJA had said in Foreman, it was a reaction to a particular set of circumstances which would not be repeated; and 4. that there was no scheme in what occurred and no use by the Solicitor of the trust monies for the maintenance of her lifestyle: the misappropriation was a "one off" occurrence from which one could not properly conclude that she was permanently unfit to remain in practice.
12. Significantly, we understood Mr Lynch to submit that we would not properly conclude that as at the date of the Stage 2 Hearing the Solicitor was probably permanently unfit to remain in practice. Instead, Mr Lynch urged us to consider that suspension of her right to practice for four years would adequately mark for the benefit of other practitioners the high standards that society expects of members of the profession.

Consideration and Conclusions

1. The Tribunal's role in matters such as this is a protective one. Its purpose is to protect clients and members of the public from the harm that could be caused by dishonest, incompetent or non-diligent legal practitioners rather than being punitive. The Tribunal's disciplinary jurisdiction is aimed at ensuring the maintenance of high professional standards within the legal profession.
2. In Dupal v Law Society of NSW [1990] NSWCA 56, a case involving misappropriation of monies entrusted to a solicitor, Kirby P said: "…the normal consequence of the misuse of entrusted funds by a solicitor, and a finding of wilful breaches of the statutory prohibition in that regard, is removal of the name of the solicitor from the roll"
3. In the same decision, Handley JA referred to a number of factors; many of which exist here, which Counsel for the solicitor in Dupal had submitted ought result in the appropriate order being suspension rather than removal from the roll. Those factors, some of which, it is contended, are present in the current case, included: 1. The solicitor being frank and candid in his evidence before the Tribunal and in his dealings with the Law Society; 2. the solicitor having expressed genuinely felt contrition and remorse; 3. full restitution having been made to all parties concerned; 4. the shock and shame of the solicitor's exposure being such that he would never offend again; and 5. the considerable body of impressive character evidence from practitioners of good standing.
4. His Honour, whilst noting that these issues could not obliterate the fundamental fact that the solicitor had been found guilty of misappropriation, and after discussing the submissions of frankness, candour and restitution that had been made on the solicitor's behalf, said: "This Court would be departing from a long course of authority if it were to allow the appeal and substitute a period of suspension for the order of the Tribunal removing the Appellant from the Roll. Counsel was not able to refer us to any case where a solicitor found guilty of misappropriation or wilful contraventions of section 41(1) has not been struck off the roll. Any decision to the contrary would signal to the profession and the community that this Court was no longer insisting on solicitors maintaining the highest standards of personal honesty and integrity in their dealings with clients and the public and in the handling of the matters entrusted to their charge. The maintenance of those standards and the public interest require, in my judgment, that this appeal be dismissed. It is well established that the jurisdiction being exercised in this case is not penal but disciplinary and that it must be exercised for the benefit of the public. Sympathy for the appellant and for the tragedy that he has brought on himself and his family by his inability to live up to the high standards which this Court and the profession demand of solicitors cannot be allowed to deflect this Court from doing its duty."
5. Mahoney JA in Law Society of NSW v Foreman [1994] NSWCA at 440 when discussing the principles to be applied in deciding what order should be made on the finding of professional misconduct in that case said: "In the relevant sense the protection of the public is in my opinion not confined to the protection of the public against further default by the solicitor in question. It extends also to the protection of the public against similar defaults by other solicitors and has, in this sense, the purpose of publicly marking the seriousness of what the instant solicitor has done. But, in my opinion, it would be wrong to confine the objects of disciplinary proceedings and the purposes to be achieved by the orders made in them strictly to matters of this kind. Those purposes and objectives have traditionally been seen as having a wider operation. In the end, the question to be determined is whether the solicitor is a fit and proper person to be a solicitor of the Court and the other orders to be made are to be directed to ensuring that, to the extent she is not, her practice is restricted."
6. We adopt and apply the reasoning of Handley JA in Dupal and Mahoney JA in Foreman. We cannot be satisfied that in this case there are any "exceptional circumstances" of the type referred to in Ex Parte Lenehan, which was cited with apparent approval by Kirby P in Dupal :(see [14] above).

Is the Solicitor "probably permanently unfit" to be allowed to practice?

1. We accept that, on the basis of the authorities referred to at [14] and [16] above, the current law is that any decision to remove the Solicitor from the Roll must, at least "usually", (to adopt the wording of McHugh JA in Prothonotary v Ritchard as noted at [16] above), be based on a conclusion that she is, on the basis of the evidence available, probably permanently unfit to be allowed to practice.
2. We note in passing that that this formulaic approach has not received universal support. For example, in Dupal, in a short (but not dissenting) judgment, Priestley JA (at 58) said: "I do not find it necessary for deciding the appeal to consider the precise way in which the appellant's conduct should be characterised as a matter of legal labelling. It is sufficient, as I see the appeal to say that the appellant's actions, as a solicitor…were dishonest and indefensible to a degree requiring that his name be struck off the roll..."
3. As we say , even it is "legal labelling", the "probably permanently unfit" test does constitute the current law, at least insofar as a positive application of the test will "usually" be necessary in order to justify a striking-off order. (As to "usually", see [14] and [42] above).
4. We are satisfied that the Solicitor's actions were dishonest and indefensible to a degree requiring that her name be removed from the roll.
5. But is she probably permanently unfit to be allowed to practice? In our view she is. Her name must be removed from the roll.
6. We have reached that conclusion (and, for completeness, our conclusion in [44] above) on the following grounds. 1. As the Solicitor has conceded, the misappropriation of trust monies was fundamentally and plainly a dishonest act. 2. The Solicitor has been in professional practice for a significant period of time. As noted in the reasons for the Liability Decision (Law Society of NSW v Mattila [2017] NSWCATOD 166 at 90), she provided an affidavit for the purposes of the Liability Hearing, 93 paragraphs of which describe her personal background, career and achievements. She was a well-known member of the profession. She is a former alternate Councillor of the Law Society and a former President of Women Lawyers. She had also served as a Member of the Legal Services Tribunal, and the Administrative Decisions Tribunal. It is an inescapable conclusion that her professional experience and expertise were such that she could appreciate and in our view must at all relevant times have appreciated: 1. the dishonest and grossly improper nature of her actions and omissions; 2. their effect on her client Mr Humphries and her employees Mr Horne and Ms Lynn; 3. in relation to her dealings with Mr Humphreys, the fact that they constituted not only a breach of trust and misappropriation, but also a breach of fundamental rules governing treatment of clients and their money, as well as constituting dishonesty and conduct which would be regarded as disgraceful and dishonourable by her professional colleagues of good repute and competency; and 4. the likely consequences of her actions for her client Mr Humphries and her employees Mr Horne and Ms Lynn. 1. Much of what is contended in the written submissions filed on the Solicitor's behalf is persuasive. It is not disputed that the Solicitor made an early acknowledgement of her professional misconduct; that she cooperated with the Chief Trust Account Inspector of the Law Society; and made candid disclosures to the Law Society of what had occurred in relation to the trust account and as to the outstanding nature of superannuation and employee benefits. Similarly it is clear that the Solicitor did not oppose her suspension. However, unfortunately, these favourable aspects cannot and do not obliterate the sad but fundamental fact that the Solicitor has been found guilty of misappropriation of trust funds, of dishonesty, breach of trust and of misuse of monies properly payable to two of her employees. 2. In submissions on the Solicitor's behalf which sought an order for suspension rather than removal from the Roll, it was contended that the Solicitor's return to practice is "probably the only means by which she could make restitution in a reasonable time". We find that contention completely unpersuasive. It is not the role of the Tribunal to allow a solicitor, who otherwise may have had their right to practice removed, to continue to be allowed to hold themselves out as a solicitor in order to enable or to accelerate their repayment of amounts wrongfully taken or withheld from others (in this case the Solicitor's named employees). Such a result would fly in the face of the authorities. In particular it would allow and be perceived as endorsing a course of action which would hold out the Solicitor to the public as someone in whom confidence could be reposed. 3. Although there is some evidence in the Solicitor's affidavits of 4 August 2017 (Exhibit B) and 12 February 2018 (Exhibit C) of the Solicitor's work history since suspension of her practicing certificate and financial position since that time, there is no evidence of any substantial attempts being made, or followed-through, to reimburse misappropriated trust funds to Mr Humphries or to reimburse Ms Lynn for the unpaid wages and expenses due to her. We regard this as most serious. 4. There is no evidence of a medical nature in support of the Solicitor's description in paragraph 20 of Exhibit C of significant health issues reducing her ability to work in the six month period preceding the swearing of that affidavit. 5. The Solicitor has provided no evidence as to: 1. the effect of the misappropriation on Mr Humphries, nor 2. the effect on her former employed solicitors of superannuation contributions (and in the case of Ms Lynn; superannuation and wages) not being paid. 1. To borrow the words of Handley JA in Dupal (at 68), the Solicitor ran into financial difficulties but was not prepared to take the hard but honest way out, but rather "chose the soft option of dishonesty involving misappropriation of the funds of others".
7. We conclude with two brief observations. 1. Firstly, an observation based on Handley JA's concluding remarks in Dupal, at 68. That is that the decision in Ex Parte Lenehan stands as continuing authority for the proposition that a strike off order is not final and is not, in the graphic language of James QC (as he then was), in Jauncey v Law Society (Court of Appeal, unreported, 1 February 1989) "a sentence of professional death". Although readmission is not common, there are instances of readmission to the roll on demonstration of a sufficient period of commendable conduct showing rehabilitation and fitness. 2. Secondly, an observation similar to that by Kirby P in Dupal, at [58]. We can contemplate circumstances in which at some future time the Solicitor's name might be restored to the roll upon proof of her satisfactory conduct in the meantime and the good opinion of her professional colleagues to whom full details of the facts found by us have been made known.

Orders

1. The Tribunal, having found Jennifer Margaret Mattila (the Respondent) guilty of professional misconduct in respect of Application grounds 1, 2, 3, 5 and 6 orders that: 1. The name of Jennifer Margaret Mattila be removed from the local Roll, and 2. there being no exceptional circumstances which might lead to a different order, the Respondent is to pay the costs of the Law Society of NSW, as agreed or assessed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 June 2018