LAW SOCIETY OF NEW SOUTH WALES v WALSH

LAW SOCIETY OF NEW SOUTH WALES v WALSH - [1997] NSWCA 185 - NSWCA 1997 case summary — Zoe

[53]

Moate Avenue, Brighton-le-Sands in which she had been living since her return to Sydney from Manning Point and that I would cease paying interest on (a) personal loan (of $20,000.00) which (the deceased) had made to me. It was further agreed between us that should (the deceased's) health or financial situation vary then the position would have to be reconsidered. My recollection is that it was on the same week-end that Mrs Brain) again raised the question of her being provided with financial assistance so that she could buy a home in Sydney. After (Mrs Brain) had moved into the deceased's property at 55 Moate Avenue, Bright-le-Sands (she) sold her former home at Sandridge Road, Manning Point for some ninety-five thousand dollars ($95, 000.00) and was anxious to buy a home of her own in Sydney. The matter was discussed between myself (Mrs Brain) and Mrs Farlow and during the course of the conversation I indicated that I wished ultimately to acquire the original family home in Stuart Street, Blakehurst and Mrs Farlow indicated that she wished to acquire the farm property at Hillville. An agreement was reached between the three of us that I would purchase the Blakehurst property, Mrs Farlow would purchase the Hillville property and I would repay the loan that I had received from my mother. The deposits of forty thousand dollars ($40, 000.00) and fifty thousand dollars ($50, 000.00) to be paid by myself and Mrs Farlow respectively in respect of the properties to be purchased by us plus the repaid loan of twenty thousand dollars ($20,000.00) would then be advanced by (the deceased) to (Mrs Brain) by way of advancement from her estate. Additionally it was agreed that when our mother passed away (Mrs Brain) would be entitled to have the first opportunity to purchase one of the remaining properties at market value. None of these arrangements were (sic) documented as it was felt that this was unnecessary the whole transaction being between members of the family and I felt that I could accept the word of (Mrs Brain)... As a result of this arrangement (Mrs Brain) purchased the property 8 Shoalhaven Road, Sylvania Waters for the sum of two hundred and forty thousand dollars ($240,000.00) by contract dated 6 May 1988 which was completed on | July 1988. In addition to the monies which were to be advanced to her by (the deceased Mrs Brain) obtained a loan from the State Bank of New South Wales of forty thousand dollars ($40, 000.00). For that reason the one hundred and ten thousand dollars ($110,000.00) which (the deceased) was advancing had to be treated as a gift by way of advancement to her and as (the deceased's) attorney I agreed to this arrangement. The State Bank required confirmation of the arrangement and... I supplied (a Statutory Declaration) to the said Bank in response... The monies referred to above were paid by Mrs Farlow and myself in accordance with the direction of the solicitor for the vendor to (Mrs Brain) and did not pass through (the deceased 's) accounts."

[119]

Thereafter, as it would seem, Messrs Wilshire Webb caused to be filed in proceedings No 101210 of 1989 in the Probate Division of the Court a Statement of Claim seeking an order for the revocation of the grant of Probate to the Respondent and for other orders. Why it was thought necessary for such proceedings to be filed when it would have been open to the Registrar, on application to him, to revoke the grant which had been made inadvertently and notwithstanding the filing of the Caveat (see, for example, In the Will of Christian3; Aslan v Kopf; Estate of Kopf*; Estate of Cosgrove5; Tristram & Coote's Probate Practice®; Williams Mortimer and Sunnucks: Executors Administrators and Probate7?; Geddes Rowland and Studdert: Wills Probate and Administration Law in New South Wales8) I do not know. Nor was this the only procedural aberration which attended those proceedings. It would seem that, for reasons which I find it completely impossible to understand, the proceedings to revoke the grant of Probate were transferred from the Probate Division to the Equity Division of the Court where they were given proceeding No 2474 of 1989. It would further seem that, on 16 June 1989, the proceedings came before one of the judges in the Equity Division of the Court and there were then made, by consent, a number of orders including an order that the grant of Probate to the Respondent be revoked and that Probate "of the estate" (sic) be granted to the Respondent and Mrs Brain jointly, which orders ought not to have been made in proceedings in the Equity Division of the Court. At the same time, so it would seem, it was noted that Mrs Brain and the Respondent acknowledged that Mrs Brain owed the Defendant the sum of $60,000.00 and that Mrs Brain owed Mrs Farlow the sum of $50,000.00 and that no interest should be paid in respect of such borrowings, a notation which I would have thought the Court ought not to have made since Mrs Farlow was not a party to the proceedings before the Court.

[487]

In this case, the respondent's conduct which was the subject of the complaint has warranted a finding that he is not a person of good fame and character. The conduct had as its genesis a family arrangement. That is a matter to which I will return. However, as has been fully canvassed by Powell JA, his misconduct went beyond the family arrangement. Although the respondent's admission that he had advised clients to act in a way similar to the way he acted in relation to powers of attorney was not the subject of any complaint, it does indicate a failure to appreciate that the important obligations imposed upon the grantee of a power of attorney are to be strictly observed and are not to be made subservient to mere convenience. The respondent clearly failed to recognise this. Further, the wrongful conduct was engaged in over a period of several years. It touched nearly all, if not ale aspects of the arrangements relating to the estate. The solicitor persisted in the defence of his conduct before the Legal Services Tribunal. Whilst acknowledging and giving full weight to his right to do so, he did so in circumstances where, as Powell JA has found and I agree, he failed to comprehend or ignored the fiduciary duty to which he was subject as grantee of the Power of Attorney. This failure was compounded by his evidence before the Tribunal as to the use of the Power of Attorney, which was false and either made with knowledge of the falsity, or recklessly, not caring whether it be true or not. His lack of honesty on that occasion was not an isolated instance of dishonesty. The respondent drafted three different Affidavits of Assets and Liabilities in support of the application for probate. The third affidavit is not presently relevant. Mrs Brain, the respondent's sister and co-executor refused to sign the first affidavit as she disputed the valuations which the respondent had placed upon certain of the properties. The respondent then drafted, swore and filed a different Affidavit of Assets and Liabilities (the second affidavit). This was false in a number of respects. It failed to disclose two properties, erroneously characterised the interest of the deceased in one property as an equitable interest only, and failed to accurately disclose the existence of money advances to and from or on behalf of the estate made by and between the beneficiaries. The second affidavit was filed and sworn in circumstances where the respondent did not present it to Mrs Brain, but filed it in support of an application for probate on his behalf with leave reserved to Mrs Brain to apply to be joined as an executor. However, he had failed or neglected to give her notice of his intention to apply for probate as he was required to do. Not only was the second affidavit false, its contents demonstrated a sophisticated knowledge of the legal and equitable principles of property law as well as of the fiscal consequences which flowed from characterising the interests in the properties as he did. The only possible conclusion is that he sought to benefit himself by his dishonesty.

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