Law Society of NSW v Berger

Law Society of NSW v Berger - [2017] NSWCATOD 137 - NSWCATOD 2016 case summary — Zoe

[2]

The Evidence

The evidence comprises: 1. Application for Disciplinary Findings and orders filed 8 October 2015; 2. Affidavit of Anne-Marie Foord sworn 4 September 2015 with exhibit AMF1; 3. Affidavit of James Sofiak sworn 26 August 2015 with exhibit JS1 excluding section commencing on page 3 headed "Complaint or other notification summary" through to end of paragraph 19 on page 17, following pages numbered 1 to end of email by Mittu Gopalan on page 4, commencing on page 5 from commencement of email from practitioner through to end of page 9, pages 27 - 29, 38 - 48, 63 - 71, 79, 80, 92 - 98, 116 - 120, 128 - 132, 146 - 162, 194 - 204; and 332 - 340; 4. Amended Reply filed in hearing on 22 February 2017; 5. Application for Disciplinary Findings and orders filed 14 March 2016 file number 1620067; 6. Affidavit of Anne-Marie Foord sworn 9 March 2016 with exhibit AMF2; 7. Affidavit of Kerrie Rosati sworn 15 March 2016, with exhibit KR 1; 8. Affidavit of Robert John McCourt sworn 18 May 2016 filed 5 October 2016; Reply to application filed 1 June 2016; 9. Reply to application filed 1 June 2016; 10. Applicant's tender bundle filed 17 October 2016, excluding paragraph 11 of pages 3-4, pages 179 - 196; 11. Affidavit of Victor Berger sworn 5 October 2016; 12. First affidavit of Victor Berger sworn 20 October 2016; 13. Second affidavit of Victor Berger sworn 20 October 2016; 14. Affidavit of Victor Berger sworn 20 February 2017; 15. Summary of facts prepared by the applicant and the respondent setting out facts as alleged by the applicant with underlined sections being contents disputed by the respondent. 16. Exhibit R1 - pages 89 - 91 of affidavit of Lynda Anne Muston sworn 17 July 2013; 17. Exhibit A1 - pages 175 - 176 of the affidavit of Lynda Anne Muston sworn 17 July 2013, excluding first paragraph; 18. Exhibit A2 - pages 159 - 168 of the affidavit of Lynda Anne Muston sworn 17 July 2013; 19. Exhibit A3 - email from practitioner to Mr Freedman; 20. Exhibit R2 - email from Lauren Goldsworthy of MPBF dated 24 May 2012 and attachments; 21. Exhibit R3 - WIP report for Milne Berry Berger as at 21 August 2013; 22. Exhibit R4 - letter from practitioner dated 16 April 2013 on Milne Berry Berger Freedman letterhead as the solicitor for the estate to himself and Mr Green as executors of the Will of the late Mrs N enclosing estate details, cost disclosures for the legal costs for the estate, and Standard Cost Agreement; 23. Exhibit A4 - pages 86- 98 to exhibit JS1

[3]

The Practitioner - training and experience

The practitioner graduated from the University of Sydney in Arts in 1965 and in Law in 1968. He did articles with a practice called JW Milne & Berry which comprised a sole principal and seven non-lawyers and had offices in Sydney and Gladesville.
He was admitted as a solicitor to the Supreme Court roll on 14 February 1969. He continued working for the firm. He became a partner the next year and then the firm had three partners, five employed solicitors and about 30 other staff.
Mr Freedman became a partner in about 1988 and the firm was renamed Milne Berry Berger and Freedman. Ms Gopalan became a partner in January 2009 and she assumed the role of Managing Partner.
In 2006 the practitioner was awarded a Master of Laws Degree from the University of Technology Sydney.
The practitioner practised as a solicitor in private practice in Sydney for more than 44 years from his admission in 1969 till the he was suspended by the Law Society on 1 July 2013.
He was the initial Chairman of the Wills and Bequests Division of the New South Wales Chapter of the United Israel Association (UIA) and held that position for more than 15 years. He was also a member of the Federal Executive of UIA and chairman of the federal Wills and Bequests Committee of UIA.
He has been a member of various chambers of commerce in Gladesville and Ryde and a member of Ryde Business Forum for 10 years during which time he served on the executive for more than 8 years.
In his affidavit of 5 October 2016, he testified that "for more than 30 years I have been accredited as a Business Law Specialist and accredited also as a Mediator and Arbitrator". He also said that he had been a member of the City of Sydney Law Society for over 20 years and for most of that period had held an office on the Executive. He had served two terms as President of the City of Sydney Law Society.
He also testified in that affidavit that: 1. He initiated and served on the Public Relations Committee of the Law Society of NSW for about 3 years; 2. He served on the Arbitration Committee on 2 occasions for a total of approximately 5 years; 3. Prior to his suspension he was the Honorary Solicitor of the Sephardi Synagogue for in excess of 20 years; and 4. He had throughout his career performed considerable work pro bono.
Presumably, since the introduction of compulsory legal education for practitioners, each year he has also completed sufficient continuing legal education to satisfy the requirements for the renewal of his practising certificate.
In oral evidence he said he had been a costs assessor with the Supreme Court for 3 years and conducted "about 50" costs assessments. After some evasion he conceded that he understood a solicitor's obligations regarding costs. When asked, he replied "Generally". But he rejected the proposition that generally a solicitor is better informed (about costs) than a client. He conceded a list of about 10 purposes of costs disclosures and he conceded "it is particularly important to disclose what you can".
He also testified that he had served as an Arbitrator with the District Court and the Local Courts.
He said he had a long experience in estate law but he wouldn't consider himself an expert in estate law. He said he had probably prepared about 500 wills in 43 years, acted as executor of an estate about 8 to 10 estates for and had applied for probate 200 to 300 times in the last 30 years. He said he had probably prepared 200 or 300 Powers of Attorney over 30 to 40 years, but said he doesn't consider that he has expertise in them. He said he doesn't consider he has expertise in wills or Powers of Attorney. When it was put to him that he wouldn't have taken positions as chair of the Wills and Bequests Committees if he didn't have some expertise, after some evasion he denied that and said he would have taken the position of Chair of the Federal Committee if he had no expertise because he was a member of the Federal Executive. When it was put to him that he wouldn't have chaired the Wills and Bequests Committee for more than 15 years without some expertise, he avoided the question and then said he would.

[4]

Some Initial Concerns from the Documents

The Tribunal members read the applications and affidavits filed by the parties before the hearing commenced on 31 October 2016. There were some areas that gave rise to considerable concerns about the respondent. They were matters that the document read before the hearing disclosed and some were not part of the findings in this stage one decision.
In his affidavit of 5 October 2016 at paragraphs 54-69, he dealt with the issue of why his partnership with Mr Freedman and Ms Gopalan was dissolved. His version of the reasons for the dissolution of the partnership is in stark contrast to documentary evidence including correspondence between him and Mr Freedman, advice obtained from a prominent lawyer, and advice from the Law Society.
The practitioner alleged that he signed a transfer of the home unit of Mrs N as her Power of Attorney and signed it before her death. But the document did not disclose that it was he who was signing or that he was signing pursuant to any Power of Attorney. His signature was illegible and he signed in the space for signature by the transferor. The transfer identified Mrs N as the Transferor.
After he became aware of the death of the testatrix, the transfer was resubmitted to him by the purchaser's solicitor because it had not disclosed that it was signed by him and as Power of Attorney. A certificate was attached then to the transfer certifying that he had signed pursuant to a Power of Attorney and citing the registration details of the Power of Attorney. Until that was done, the transfer was obviously invalid and not effective as it had not been executed by the transferor or by him as Attorney.
But the practitioner argued in paragraphs 78 of his affidavit of 5 October 2016: "I had executed the transfer under the Power of Attorney prior to the death of [Mrs N]. Subsequently, and after the death of [Mrs N], a staff member asked me to sign again on an Annexure to the Transfer. Apparently the reason was that the necessary attestation clause for execution under a Power of Attorney had not been inserted when I signed the document prior to the death of [Mrs N]. Rather than simply writing the necessary attestation clause, the staff member completed the attestation clause on an Annexure and asked me to sign the Annexure. As the transfer had already been signed, I thought nothing of it that in the context of the Power of Attorney no longer being effective".
He testified in his affidavit of 5 October 2016. "I did not recognise the execution of the annexure page as being a separate or different execution from that which had taken place prior to the death of [Mrs N]". But the situation was that if he did sign the transfer before the death of [Mrs N], he signed it as transferor and the form stated that Mrs N was the transferor. It was not an effective instrument.
The Tribunal was surprised that a solicitor of the practitioner's training and experience would have signed the transfer as transferor. It suggests a serious lack of diligence.
In relation to an "off the plan" sale of a lot in a proposed subdivision by a company of which he was the sole director and shareholder, he contended that "Special Condition 12" of the written contract did not correctly represent the agreement because in negotiations prior to the contract a different agreement was reached regarding the deposit. However, he as solicitor for the vendor submitted the written contract on behalf of his company to the solicitors for the purchasers containing special condition 12 which included conditions upon which the deposit might be made available to the vendor before completion.
He executed the contract on behalf of his company (the vendor) and he effected an exchange of contracts. He did not in any of his 4 affidavits in the proceedings acknowledge that he did not read the contract before he submitted it to the purchaser's solicitors, before he executed it for the vendor, or before contracts were exchanged. But those are clear inferences to be drawn from his evidence.
He blamed a staff member who was a conveyancing clerk. He said at para 102 of his affidavit of 5 October 2016: When Mrs Kunhi prepared the contract she included a condition (Special Condition 12 in the contract) relating to the release of the deposit. Special Condition 12 was adopted by her from the template which we used for contracts generally. It did not accurately reflect the requirement as to the purpose for which the deposit was to be released in the case of the sale to [Mr H]. I did not note that Special Condition 12 was inaccurate prior to signing the contract.
In reply to the complaint in application 1620067, the practitioner relied upon an assessment of the costs in the bill for the Estate of Mrs N by a cost assessor of the Supreme Court. In those assessment proceedings, the practitioner conducted the application on behalf of himself and Mr Freedman as applicant, and also represented the respondents as executors of the estate of Mrs N (himself and Mr Green). He did not raise any objections on behalf of the estate to any of the costs in the bill, notwithstanding that there was a very real issue as to non-disclosure of costs, and a substantial proportion of items in the bill were not legal costs.
He did not in these proceedings acknowledge in his 4 affidavits any conflict between his interest as an applicant in the cost assessment proceedings and his obligations to the respondent client (the estate) as an executor and its solicitor.
The costs assessor held at page 5 of his reasons: The application for assessment of costs is to be determined in accordance with the requirements of the 1984 Legislation. Pursuant to Section 367 of the Act, I am only empowered to determine the reasonableness of the costs that are expressly disputed in the objections. Costs that are not expressly disputed must be allowed (O'Connor v Fitti [2000] NSW FC 540). On 14 February 2014 I forwarded a notice to the cost respondent, being the executors of the Estate c/ 16-337 New South Head Road, Double Bay NSW 2028. In that letter I invited objections from the cost respondent. I received no objections. I also noted that no objections were provided to me with the application. I take notice of the procedure provided for in the Legal Profession Act which involves the manager, cost assessment giving a copy of the application to the cost respondent prior to the matter being assigned to me and allowing the cost respondent to file objections. In the absence of any objections from the Cost Respondent and noting the decision in O'Connor v Fitti referred to above, there appears to be no disputed costs in this matter, and accordingly I have confirmed the costs referred to in the tax invoice".
The cost assessor found that the law practice had not made any costs disclosure to the respondent and ordered the law practice to pay the costs of the assessment, being the fees of the assessor.
The Tribunal was also concerned that in his affidavit of 5 October 2016, the practitioner sought to rely upon the fact that there was no objection to the costs by the family members of Mrs N. In his role as solicitor for the law practice he served on himself and Mr Green as executors and Mrs N's estranged son and her estranged husband on 5 June 2012 a fee schedule showing total accumulated costs of $176,800.94 and then on 22 June 2012 an itemised bill for that amount.
Of those 4 men, only the son was a beneficiary under the Will, and his legacy was a fixed amount of $200,000. He had been estranged from his mother for some years. His legacy under the Will was not threatened by the amount of the costs in the bill.
The other beneficiaries were the daughter of Mrs N who was entitled to a legacy of $200,000, and her two infant children who were the residuary beneficiaries. It appeared from his evidence that the daughter and her children were not served with the fee schedule or the bill. From documentary evidence it appears that after payment of debts (including claims for legal costs) the amount available for distribution between the beneficiaries was more than $1,600,000.00.
The daughter was not prejudiced by the amount of the costs, but her daughters were. The application for assessment of costs was referred to an assessor on 22 November 2013. The daughter in about December 2013 engaged a solicitor. The solicitor was not provided with a copy of the bill by the practitioner's solicitor till a letter dated 3 April 2014. The solicitor was aware that the practitioner had filed an application for assessment of the costs. No objection was raised by the daughter or her children.
The costs decision is dated 5 June 2014. The elder of the grandchildren of Mrs N had turned 18 before the cost decision was released.
Another matter in the documents read before the hearing that gave the Tribunal some concern was that the costs awarded in the cost assessment issued on 5 June 2014 amounted to $176,800.74 and that was payable to the applicants for the assessment, the practitioner and his partner Mr Freedman. But by the directions of the applicant, those costs and other costs that the practitioner claimed on behalf of the law practice were paid to the practitioner or paid to others on his behalf from the proceeds of the sale of Mrs N's home unit. The total amount was $205,258.86.
On 17 June 2013 a trust account inspector reported that those transactions had resulted in a deficiency in the law practice trust account for that amount. The Practitioner on 21 June 2013 paid that amount into the law practice trust account. Later when he obtained the costs assessment for $176,800.74 the practitioner registered the award with the District Court and in about early 2016 by garnishee order (applied for in his sole name) obtained $178,748.07 from the trust account of the law practice.
He said in his oral evidence that although the cheque for those funds was payable to him, he deposited it into an account in the name of Ahtran Pty Ltd. He said in his affidavit of 5 October 2016 that the money "now forms part of the pool of monies in dispute on accounting of the assets of the former MMBF partnership, which is currently the subject of Supreme Court proceedings." He said that Mr Freedman's executor had been substituted for Mr Freedman in those proceedings. But when in cross examination it was put to him that he was holding it in trust pending the decision in those proceedings, he said he wasn't. It was put to him that he was holding it "separately for purposes of the dispute and not for yourself", he replied, "No. It was for my discretion I was holding it".
The practitioner, when he received that amount, did not pay any part of it to Mr Freedman. In these proceedings he purported to justify that conduct by the fact that Mr Freedman previously had opposed the practitioner charging the estate because the practitioner had not complied with the costs disclosure requirements and was recording non legal items in the fee schedule.
The Law Society alleged that the practitioner had failed to comply with an order of the Supreme Court. The order of 15 August 2013 required him to notify each of his clients of the dismissal of his appeal against suspension of his practising certificate by 21 August 2013. In May 2012 Ms Q had engaged him to prepare a will. It had not yet been done by 11 July 2013 when he wrote to her advising of the dissolution of his partnership and the establishment of his new law practice and asked her to sign and return the enclosed authority to the former partners to forward to him her files and any documents held on her behalf. She signed the document and returned it to him on 22 July. The order was made on 15 August. On 23 August she sent him an email regarding outstanding issues about her will. On 23 August he replied by email and on 24 August she replied to him.
He did not notify Mrs Q. In his affidavit sworn 5 October 2016 his evidence was that he delegated the responsibility of preparing the list of "all current clients" to his staff. He said that Mrs Q was omitted "from the list prepared by my staff" and "I did not note her omission from the list and even had I done so, it would not have been clear to me that she was at all material times as alleged, a client of the law practice". He did not say in his documents that he checked (or even read) the list his staff prepared or gave any instructions to staff as to how the information was to be obtained other than to get the list of matters where there was work in progress entries in the time recording records. He did not say that he read the list after it was prepared. He appeared to blame his staff for the omission.
The practitioner caused trust money (being funds belonging to Mrs N's estate from the sale of her residential unit) to pay legal costs for bills rendered by him after her death for services to her before her death and for legal services to her estate. His evidence is that when he did so he mistakenly believed he had the power to make those decisions as one of the two executors of her will, even though there had been no grant of probate. He also said he didn't know those funds were trust money. The Tribunal members were concerned that a practitioner with such training and experience would have such mistaken beliefs.

[5]

Credit of the Practitioner

The initial concerns arising from reading the documents included concern as to the practitioner's integrity, his honesty and his reliability as a witness. His presentation in the witness box and his evidence during the hearing reinforced those concerns. He presented as an unreliable witness. In relation to various instances of conduct constituting grounds for findings of unsatisfactory professional conduct or professional misconduct he raised a defence of ignorance or misunderstanding of relevant law. Such ignorance or misunderstanding was inconsistent with the extent of his training and experience a solicitor. Some of the legislative requirements about disclosures and consequences of failure to disclose had existed since commencement of the Legal Profession Act 1987 ("the 1987 Act").
For example where his dealings with trust money were alleged to breach legislative provisions, he claimed he didn't know the money was trust money. Where he had relied on being an executor nominated in a client's will for dealing with trust money after the death of the testator but before a grant of probate, he claimed he had a mistaken belief that prior to a grant of probate an executor had power to use funds of the deceased to pay debts for legal costs.
Also in regard to his claims that he thought he was entitled to use client money to pay costs, he inferred ignorance of law including the trust account provisions, disclosure provisions, section 261 of the Legal Profession Act 2004 (the 2004 Act") and clause 88 of the Legal Profession Regulation 2005 ("the 2005 Regulation"). Such claims of ignorance or mistaken belief were inconsistent with his extensive training and experience as a lawyer.
In paragraph 80 of his affidavit of 5 October he said: "I believed that as the person entitled under the contract and the will, I was entitled to direct the money as I saw fit, and that it was not in fact trust money". When asked on 28 June in the hearing what the contract was, he said "I don't know". (He may have meant his arrangement with Mrs N.) It was put to him that there was no contract that entitled him to the $154,000.00, he received from the funds from the sale of her home unit. He rambled with unresponsive statements, but eventually conceded there wasn't. He conceded when it was put to him that the statement in paragraph 80 was untrue. He was asked, "what do you say entitled you under the will?" and he replied, "The will says to pay debts."
In a letter of 6 December 2012 as solicitor for the estate of Mrs N he addressed himself as "Victor Berger as Power of Attorney", when the power of attorney had ceased to have effect 2 months before when Mrs N died.
The practitioner during cross examination claimed he had relied upon subclause 88(4) of the 2005 Regulation when he transferred trust money to pay a bill of costs rendered by him to himself as executor of an estate. But for reasons discussed later clause 88 did not apply and even if it had, he had taken the money less than 7 days after the bill, so the payment was not authorised by the subclause.
In relation to $20,000.00 of the settlement monies from the sale of Mrs N's unit that he withdrew from the trust account and paid to his son in law, in cross examination he denied that the money was trust money. It was put to him that he had no authority to do that and he replied, "I had Authority to pay the bill" (i.e. the costs bill) "How I disbursed that was up to my discretion".
In oral evidence the practitioner alleged that he had made costs disclosures that were not in evidence and that in his amended reply he had admitted weren't made. On one occasion he said "I'm pretty sure one was made", but he had admitted in his reply that no costs disclosure was made and no such document was in evidence.
He was often evasive. He avoided questions and gave unresponsive answers. He was asked whether he really believed that the executors to Mrs N's will were unlikely to have him as solicitor for the estate when he said that in his letter to Mrs N. He was evasive and then said he didn't. But when the question was repeated, he said he did.
Clause 88 of the 2005 Regulation is made pursuant to S 261 of the 2004 Act and relates to situations where a law practice can use a client's trust money to pay costs owing by the client to the law practice. When it was shown to the practitioner in cross examination he said he was aware of that clause in 2012. He said subclause 88(4) entitled him to withdraw the $154,000.00. When asked on what basis, he said he had sent a bill on 22 June 2012 to the children of Mrs N and he understood that by the time he took the money in October 2012, it was payable. When it was put to him that if that was the case, it was payable to the law practice; not him. His response was "the partners didn't want any of it".
He was asked if he sent the bill only to himself and he said he was not sure whether a copy was sent to someone else. He conceded there was no evidence he did. He conceded that taking funds to pay a bill rendered less than 7 days before is not authorised by Clause 88. He conceded he knew the money was beneficially owned by the estate, that he took it because he thought the law practice was entitled to the money and that he didn't comply with the relevant provisions of the 2004 Act and the 2005 Regulation.
When the practitioner was asked about his understanding of subsection 261(2) of the 2004 Act which provides that subsection 261(1) has effect subject to Part 3.2 (costs disclosures and assessment) of the Act, he gave no response.
When asked on 29 June 2017 in relation to his using $20,000.00 of trust money belonging to Mrs N's estate pay a debt he owed to his son in law whether he still considered the payment "necessary to preserve the assets" of the estate, he replied "I think so", but also he conceded the money was "used for his own personal benefit.
His cross examination took almost 3 sitting days. Early in the cross examination the presiding member advised the practitioner to be careful to not avoid questions or volunteer unresponsive material, because of the adverse effects that could have on the Tribunal's assessment of his credibility. It was suggested that before he gave his answers he should take time to check that what he was going to say was responsive to the question asked. But as the cross examination proceeded the evasiveness became more frequent and included not responding to some questions. This was despite further warnings from the Presiding Member and sometimes interruptions from a Tribunal member asking him for an answer to a question avoided. The evasiveness was quite irritating to the Tribunal and their responses to it seemed to be irritating to him. On the third day he was at times argumentative when asked to answer a question he had not answered. His conduct by the third day in the Tribunal's assessment appeared at times to be controlling and arrogant.
In cross examination on 28 June 2017 the practitioner alleged he had given costs estimates to Mrs N in relation the will etc. He said, "when costs arose, I gave her estimates". But there was no such evidence in any of his 4 Affidavits and no such allegation in his Amended Reply.
In paras 36 and 37 of his affidavit of 5 October 2016 he alleged he had discussions with Mrs N about the costs being incurred and about payment being deferred till after her death. In cross examination he alleged he had had costs discussions with Mrs N and gave her costs estimates regarding her will and associated work. He had not raised any such allegation in his Reply or in his 4 affidavits.
In his reply he claimed that s309 of the 2004 Act did not apply and because there had been no cost disclosure under s 309, Section 316 of the 2004 Act did not apply either. No written disclosure was in evidence. He conceded that if there had been oral disclosures it would have been in his interests to say that in his affidavits. He conceded he made no such allegations in his numerous submissions to the Law Society during its investigations. It was put to him that he did not make any such allegations in Supreme Court proceedings between him and the Law Society. He avoided the question. He was asked again and replied, "I don't know". He conceded that it would have been important to tell the Law Society if he had given Mrs N costs information orally.
It was put to him that the affidavit of 5 October 2016 was the first occasion he raised the allegation. He denied that and said he had "said something like that several times and on several occasions". But there was no evidence of any other occasion.
In cross examination the practitioner said when he gave Mrs N the "standard costs disclosure" for the sale of her unit, he believed it was "adequate". He said "That was my professional view of the work to be applied". He said all costs were included. But that it was not adequate because:

Given the amount of costs that had already been recorded it was not given before or as soon as practicable after the law practice was engaged. The document is dated 22 March 2012 but the first entry in the bill was 23 February 2012; and
The estimate of costs of $1,705.00 was not an estimate of total legal costs as required by s 309 of the 2004 Act. Clause s 2.3.1 and 3.1 of the disclosure show that the figure does not include an estimate of any of the items in 2.3.1 or other items than those in 3.1 that would fall within "total legal costs", given the definitions of "costs" and "legal costs" in ss4 and 302 of the 2004 Act; and
It was not an estimate of total legal costs because it did not include any estimate of the costs to be incurred under clause 2.2.

When it was put to him that it was fair to say that Mrs N would not have expected him to charge for non-legal work, he rejected the proposition. But there was no evidence of her ever agreeing to pay for such work. And in his email of 26 September 2011 to Mr Freedman he said, "I do not cavell (sic) with the proposition that that she, in her state of mind, would be under the belief she was not being charged." When he was asked whether that was his view at the time, he said it wasn't. When it was put to him that he lied to Mr Freedman, he denied lying. He then said that by saying he wasn't going to cavil with Mr Freedman he meant "I'm not going to argue at this time". But the dictionary meaning of cavil is "to raise irritating and trivial objections, to find fault unnecessarily" (Macquarie Australian Concise Dictionary, 4th Edition). It seems that what he said meant that he wouldn't raise trivial objections to the proposition that Mrs N believed she would not be charged for his non legal work. However, he was retreating from that statement by qualifying it.
In paras 36 & 37 of his affidavit of 5 October 2016 he alleged he discussed with Mrs N the issue of "costs being incurred by the extensive work she required me to undertake" and he set out what he alleged he said to her on more than one occasion. In cross examination he conceded that although during the Law Society investigation he had opportunities to convey that information, he did not do so. When asked whether he included that information in his evidence in the Supreme Court proceedings, he avoided the question. When the Question was repeated he said he didn't know. He denied that the affidavit of 5 October was the first time he raised such evidence. But it was not raised in other documents before the Tribunal.
One matter that was very damaging as to his reliability as a witness was that when he billed Mrs N for a total of $176,800.74 for work allegedly performed before her death, he did so in the name of the partnership, but without notice to his partners and in the knowledge that his two partners did not agree to him charging Mrs N at all. The three partners by agreement had obtained advice of another lawyer and staff at the Law Society that he should not raise a bill because of his failure to make any costs disclosures to Mrs N. This was an incident where he clearly knew that he should not render the bill, but did so any way.
The application commencing the proceedings was filed on 8 October 2015. It was not until his Amended Reply filed 22 February 2017, which was filed well after the affidavits supporting the application had all been served on him that he alleged in para 41(b) that it had been his "belief and understanding" that an executor named in a will had, between the testator's death and the grant of probate, "all necessary powers to take in and deal with the assets of the deceased person to such an extent necessary as was necessary for the purposes of preserving the assets and to permit the progress towards the obtaining of a grant of probate." When asked on 28 June 2017 in cross examination he said that that was true and still his view "to the best of my knowledge and belief". But this "belief" was not correct at the relevant time referred to in his Amended Reply or at 28 June 2017.

[6]

Unsatisfactory professional conduct and professional misconduct

In the 2004 Act, unsatisfactory professional conduct is defined in Section 496 as: unsatisfactory professional conduct" includes conduct of an Australian legal practitioner occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.
Under Section 497 of the 2004 Act, professional misconduct is described as follows: 1. For purposes of the Act, "professional misconduct" includes: 1. unsatisfactory professional conduct of an Australian legal practitioner, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence, and 2. conduct of an Australian legal practitioner whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice. 3. For a finding that an Australian legal practitioner is not a fit and proper person to engage in legal practice as mentioned in subsection (1), regard may be had to the matters that would be considered under section 25 or 42 if the practitioner were an applicant for admission to the legal profession under this Act or for the grant or renewal of a local practising certificate and any other relevant matters.
Section 498 of the 2004 Act provided: 498 Conduct capable of being unsatisfactory professional conduct or professional misconduct 1. Without limiting section 496 or 497, the following conduct is capable of being unsatisfactory professional conduct or professional misconduct: 1. conduct consisting of a contravention of this Act, the regulations or the legal profession rules; 2. charging of excessive legal costs in connection with the practice of law; 3. conduct in respect of which there is a conviction for: 1. a serious offence, or 2. a tax offence; or 3. an offence involving dishonesty; 1. conduct of an Australian legal practitioner as or in becoming an insolvent under administration; 2. conduct of an Australian legal practitioner in becoming disqualified from managing or being involved in the management of any corporation under the Corporations Act 2001 of the Commonwealth; 3. conduct consisting of a failure to comply with the requirements of a notice under this Act or the regulations (other than an information notice); 4. conduct of an Australian legal practitioner in failing to comply with an order of the Disciplinary Tribunal made under this Act or an order of a corresponding disciplinary body made under a corresponding law (including but not limited to a failure to pay wholly or partly a fine imposed under this Act or a corresponding law); 5. conduct of an Australian legal practitioner in failing to comply with a compensation order made under this Act or a corresponding law; 1. conduct of a person consisting of a contravention referred to in subsection (1)(a) is capable of being unsatisfactory professional conduct or professional misconduct whether or not the person is convicted of an offence in relation to the contravention.
Section 25 of the 2004 Act provided 25 Suitability for admission 1. In deciding if an applicant is a fit and proper person to be admitted, the Admission Board: 1. must consider each of the suitability matters in relation to the applicant to the extent a suitability matter is appropriate, and 2. may consider any other matter it considers relevant. 1. However, the Admission Board may consider a person to be a fit and proper person to be admitted despite a suitability matter because of the circumstances relating to the matter.
Section 42 of the 2004 Act provided: 42 Suitability to hold local practising certificate 1. This section has effect for the purposes of section 48 (Grant or renewal of local practising certificate) or any other provision of this Act where the question of whether or not a person is a fit and proper person to hold a local practising certificate is relevant. 2. A Council may, in considering whether or not the person is a fit and proper person to hold a local practising certificate, take into account any suitability matter relating to the person, and any of the following, whether happening before or after the commencement of this section: 1. whether the person obtained an Australian practising certificate because of incorrect or misleading information, 2. whether the person has contravened a condition of an Australian practising certificate held by the person, 3. whether the person has contravened this Act or a corresponding law or the regulations or legal profession rules under this Act or a corresponding law, 4. whether the person has contravened: 1. an order of the Tribunal, or 2. an order of a corresponding disciplinary body or of another court or tribunal of another jurisdiction exercising jurisdiction or powers by way of appeal or review of an order of a corresponding disciplinary body, 1. without limiting any other paragraph: 1. whether the person has failed to pay a required contribution or levy to the Fidelity Fund, or 2. whether the person has contravened a requirement imposed by a Council about professional indemnity insurance, or 3. whether the person has contravened a requirement of this Act or the regulations about trust money, or 4. whether the person has failed to pay other costs, expenses or fines for which the person is liable under this Act or the regulations, 1. other matters the Council thinks appropriate. 1. A person may be considered a fit and proper person to hold a local practising certificate even though the person is within any of the categories of the matters referred to in subsection (2), if the Council considers that the circumstances warrant the determination. 2. If a matter was: 1. disclosed in an application for admission to the legal profession in this or another jurisdiction, and 2. determined by a Supreme Court or by the Admission Board or a corresponding authority not to be sufficient for refusing admission, the matter cannot be taken into account as a ground for refusing to grant or renew or for suspending or cancelling a local practising certificate unless the matter was a pre-admission event (whether it happened before or after the commencement of this section), but the matter may be taken into account when considering other matters in relation to the person concerned. 1. A Council may decide to take no action or no further action in connection with a pre-admission event, if satisfied that it is appropriate to do so given the passage of time and other circumstances the Council considers relevant.

[7]

Chronology

The respondent took issue with numerous factual allegations and also raised numerous legal issues. The following chronology is generally taken from matters which were not in dispute.
In about February 2005 the practitioner commenced acting for Mrs N regarding preparation of a will. She was introduced to him by an organisation called "Jewish Care". She was about 84 years of age. Her health was not good. She was not able to go to his office so all consultations between them occurred at her unit in a retirement village or by telephone. The practitioner did not provide any written cost agreement and made no costs disclosure.
On 4 June 2006, the practitioner became a principal of the practice of Milne Berry Berger and Freedman ("the law practice"). The other partners were Mr Harry Freedman and Mittu Gopalan. The practitioner and Mr Freedman were equity partners in the law practice and Ms Gopalan was a partner entitled to a salary only.
On 3 May 2007 the Practitioner wrote a letter to Mrs N. He acknowledged that he had said he would be willing to be paid fees and disbursements, for the work he was doing for her, from her estate. It referred to previous discussions where (he alleged) he said it was unlikely her executors would engage him as solicitor for the estate because his relationship with her son had not been friendly and her daughter had "a very close relationship" with her son.
He proposed that he "could render an account up to the sum in surplus in our trust account from the sale of your property, and as to the remainder of our fees I give you details of them to date and I could seek payment of them in consideration for the release of the testamentary documents which I have, to the solicitors who [her son and her daughter] will instruct instead of me". He enclosed a bill for the sum in the trust account and an activity ledger card in respect of the remainder of "work to date".
The practitioner continued to do the work for Mrs N in the practice. His evidence is that Mrs N was strong minded and sometimes difficult. The practitioner described her in his oral evidence as "a very tough aggressive woman". Mrs N did not have any close friends or family. The practitioner's evidence in his affidavit was that she had only some irregular contact with her husband and her children. She was separated and estranged from her husband and he had lived in Poland for many years. She was estranged from her son and in January 2010 he ceased contact with her altogether. Her daughter and the daughter's two infant daughters lived overseas and had only infrequent contact with her.
On 27 November 2007 Mrs N executed a Power of Attorney prepared by the practitioner and appointing him as her attorney. The practitioner did not start a separate file or cost record for the power of attorney in his office. It was treated as part of the matter in which he received initial instructions in 2005. He made no costs disclosure for the power of attorney and no written cost agreement. He did not provide her with any bill for that work.
Mrs N requested (or the practitioner volunteered) that the practitioner attend to numerous matters that were not legal work. Some of the matters that he attended to on her behalf were to do with her business affairs, others were personal errands, others were phoning her or visiting her. In the office he recorded the time spent for Mrs N on matters that were not legal work in the same time records and same way as the chargeable time spent on legal work.
The frequency of the non-legal matters increased with time, and it developed to the extent that he was attending on her at her unit, sometimes on multiple occasions in a week, and also sometimes talking to her daily by telephone. She was not able to attend at his office to give him instructions or for him to advise her, so if they met he had to travel to her home. He included in his time recording the time spent travelling to and from her unit, and any other time that he spent travelling to or from performing chores or favours for her.
Mrs N signed the last codicil to her Will on 18 April 2008, the codicils having each been prepared on her instructions by the practitioner.
On 18 March 2009 the practitioner gave an undertaking to the Office of the Legal Services Commissioner that the law practice would comply with statutory obligations to disclose the basis of its costs in all matters in which it was retained ("2009 Disclosure Undertaking").
The 2009 Disclosure Undertaking was given in response to a complaint that had been made to the Office of the Legal Services Commissioner by Lillian Treadgold about the practitioner in relation to which the Office of the Legal Services Commissioner had found the solicitor had failed to disclose costs as required by the 2004 Act. The Practitioner undertook to comply with his statutory obligations to disclose the basis of his costs in all matters in which he is retained in the future. In the matter under complaint the initial estimate of total legal costs was $750.00. No other estimate was given and the bill was $7,656.94.
A will was prepared for Mrs N by the practitioner. It nominated the practitioner and Mr Green, an accountant acquaintance of Mrs N, as her executors. Mrs N executed the will on 13 July 2009. The practitioner did not start a separate file or cost record for the will in his office. It was treated as part of the matter in which he received initial instructions in 2005. He did not provide her with any costs disclosure, costs agreement or bill for that will.
Similarly with 7 codicils to her will, the time spent and disbursements were debited to the matter commenced in 2005. He made no separate costs disclosure. He made no separate time or costs record. He made no costs agreement and he rendered no bill.
Examples of the non legal services provided Mrs N and entered in the practice time records entered in March 2009 are: 1. 19/03/2009 - call to Mrs N to see how she is and make appointment for me to see her today at 1:00pm; 2. Conference with you re progress and arrangements at funeral, as well as your children's contact with you; 3. Telephone from you informing Robert was going away - we discussed recent matters involving Chevra Kadisha and you wished to see me. 4. Attended on payment of bills and discussing various matters, and you showing me security system and what I should do in the Chevra Kadisha and to collect your body. We discussed the matter generally. 5. Conference with you to your current state of health and relationships. 6. Telephone from you and discuss arrangements re Chevra Kadisha and that she will continue her daily calls to me even after Robert returns, even if it upsets him, he refuses to help her any further. 7. Telephone call from you giving you sign of life. 8. Telephone to you after having received your message … noting you wished me to receive your calls. 9. Telephone call from you and you talk about you are no longer offering to get the laundry and other things. I did notice that you had a schoolboy from the school next door generally helping you. 10. Telephone from you over the last few days. 11. Telephone from you and we discussed a variety of things of which you were particularly anxious to be absence, I reassure her to have things organised to take care of what she is asking to me (sic) she expressed upset at Robert again and that you didn't wish to tell him when you die. 12. Telephone from you as to your regular calls and your current health, and we discussing my coming to visit you and you remarked upon Robert.
A will was prepared for Mrs N by the practitioner. Mrs N executed the will on 13 July 2009. The practitioner did not start a separate file or cost record for this will in his office. It was treated as part of the matter in which he received initial instructions in 2005. He did not provide her with any costs disclosure, costs agreement or bill for that will. The will appointed the practitioner and an accountant associate of Mrs N, Mr Green, as executors. It appears from the evidence that the value of Mrs N's estate exceeded $1 million at that time. In the Will she gave legacies of $200,000 to each of her son and daughter, and the residue of her estate to her 2 granddaughters in equal shares.
The Will also authorised the executors to charge commission at the rates charged from time to time by the Public Trustee of NSW and also provided in clause 5 "I direct that my Trustee, Victor Berger, whether or not he accepts the office of Trustee under this my Will, will be employed as solicitor to my Trust Estate and shall be entitled to make all usual and proper charges for both his professional and other services in the administration of the Trust of this my Will and for his time and trouble that he would have been entitled to make if not a Trustee and so employed".
Similarly with 7 codicils. The time spent and disbursements were debited to the matter commenced in 2005. He made no separate costs disclosure. He made no separate time or costs record. He made no costs agreement and he rendered no bill.
The practitioner's evidence is that he informed Mrs N that he would not trouble her with a bill for his services but would bill her estate after her death.
Commencing when the son of Mrs N ceased to visit her in January 2010 the practitioner performed more non-legal tasks and favours for Mrs N and this continued with increasing frequency beyond 2010 until her death.
The last codicil by Mrs N was executed on 18 April 2011. In cross examination the practitioner said "I had my doubts" from 2010 as to whether she would be able to understand costs disclosures and he obtained had an assessment of her capacity to make a codicil in September 2011. He did not say what the result of that assessment was. No codicil was made after April 2011.
In mid-2011 the practitioner's partners had discovered that he had not made cost disclosures to Mrs N regarding the work for her on her Will and codicils, the Power of Attorney and advice and the practitioner was recording time spent on that work for billing and also recording as chargeable time, time spent doing non-legal chores or favours for Mrs N. The partners' view was that he should not charge the client for any of the items because of her circumstances, the time items that were not legal work and his failure to make costs disclosures. They informed him of their views, but he rejected them.
They agreed that Mr Freedman would obtain the advice of a prominent former councillor of the Law Society. That advice was provided by letter dated 8 September 2011 and discussed by the partners. The letter drew the attention of the partners to S182(4) of the Legal Profession Act 2004 ("The 2004 Act"), which includes provision that a regulation may provide that a breach of the regulation is capable of being unsatisfactory professional conduct or professional misconduct, and also the provisions of Section 317(7) of the 2004 Act which provides that: "(7) Non-disclosure capable of constituting unsatisfactory professional conduct or professional misconduct. Failure by a law practice to comply with this division is capable of being unsatisfactory professional conduct or professional misconduct on the part of any Australian Legal Practitioner or Australian Registered Foreign Lawyer involved in the failure.
The letter advised that the non-disclosure would be the responsibility of the practitioner himself; not of the other partners. The advisor said the Law Society suggested 2 options: 1. Waive all charges and the practitioner stand aside as executor; or 2. If the practitioner was not agreeable to that, terminate the partnership, and the practitioner could then practice separately from the other 2 partners.
On 10 September 2011 the other 2 partners in the law practice attended the Law Society Office and sought advice about potential liabilities regarding the practitioner's conduct in relation to the work for Mrs N for which no costs disclosure had been given. They were advised that there were only 2 options: 1. come to an agreement with the practitioner to write off all of the recorded charges and to make no further charges; or 2. Terminate the partnership.
0n 23 September 2011 the practitioner agreed with his partners to write off the existing charges debited to the file for Mrs N and make no further charges to her. His agreement was confirmed by email on 1 October 2011. But he did not honour the agreement. That day he instructed his assistant by email "The firm has decided any further work is not to be billed and past work written off. I ask that the time be recorded." He sent a copy to each of his partners.
Mr Freedman responded the same day and said the agreement was that "all billable wip is to be written off and no further billable time is to be recorded."
There were subsequent occasions when one or both of his partners raised objections to him continuing to retain the old time entries and/or making new ones.
By late 2011 a staff member of the retirement village had contacted the practitioner and told him that they could not meet Mrs N's care requirements. She said, "We are not geared up for caring for people. We had to clean her up a number of times because of diarrhoea. Generally she doesn't look well". She was in poor health. She was 90 years of age. The practitioner said she was frail and "abandoned" by her son.
On 26 January 2012 Mrs N suffered a collapse in the bathroom of her unit and was taken by ambulance to hospital. The practitioner's evidence is that from then she was "seriously disabled" and she made no further requests for him to attend. He discussed her predicament with her son and it was agreed she should be moved to a nursing home. She was then moved to live in a nursing home and the practitioner listed her unit for sale.
On 15 March 2012 the Office of the Legal Services Commissioner required, and the practitioner gave, a written undertaking that the law practice would comply with its statutory obligations for disclosure of the basis of its costs in all matters in which it was retained (2012 Disclosure Undertaking).That undertaking was given in a response to a complaint made to the Office of the Legal Services Commissioner about the practitioner by Blaga Adzioiski. in relation to which the Office of the Legal Services Commissioner formed the view that there was a reasonable likelihood that the Administrative Decisions Tribunal (as it then was) would find the practitioner had failed to disclose costs as required by the Legal Profession Act 1987 ("the 1987 Act"). The practitioner had given an estimate of total legal costs of $750.00, but the bill was $7,656.94.
In the practitioner's cross examination, he conceded that Mrs N by March 2012 "in a poor state, couldn't communicate at all, couldn't understand what you were saying But he believed she understood him." He said that from January 2012 his attendances were not in response to any request from her.
On 22 March 2012, the practitioner issued a standard cost agreement and a cost disclosure addressed to Mrs N regarding the proposed sale of her property in the retirement village. He did not give it to Mrs N, but to himself as her attorney. He estimated the total costs of acting on her behalf as $1,705.00 on the sale.
The practitioner's evidence in his first affidavit of 20 October 2016 is "By June 2012 [Mrs N's] state of health and mind had deteriorated both physically and intellectually to my observation that she could not sign documents".
On 5 June 2012, the practitioner sent an itemised fee schedule for $176,800.94 in respect to work done for Mrs N in connection with the Will and Codicils, the Power of Attorney, advice and non legal work. He did not send it to Mrs N. He sent it to himself as her attorney. He also sent it to her estranged husband and her estranged son. That bill and letter came to 48 pages.
The letter included the following statements: "from time to time I gave thought to engaging others who I thought might charge less and report to me, however [Mrs N] increasingly wanted my attention, which lead to a certain stage to:

My telephoning her every day and she becoming very cross at me when occasionally things distracted me;
[Mrs N] seeing that I was having difficulty in consistently calling her every day (there were a few occasions missed, but no more than were once or twice a month, including if I was overseas);
She suggested that I have a woman from the Chevra Kadisha call her instead of me, but that lady would not call on the Shabbat of Jewish holidays, and therefore I rang then on Shabbat and Jewish holidays, and [Mrs N] asked me a little time later to call her an extra time each week; and
She requiring me to go to her at least once a week and in some weeks more often, me to (sic) her at least once a week, and in some weeks more often, according to her needs that occurred once or twice a month……".

In the letter he also said: "We are quite happy for you to express your view on how much of the total fees and disbursements should be paid. We believe that it would be suitable for you to obtain independent legal advice. I have asked Michael Green's view in the past, and I leave him to express to you if you wish to be informed by him. The amount of money is considerable. Yes, we would be prepared to wait until the death of [Mrs N] so that she had no concerns as to the adequacy of her funds to support her through the rest of her life. Whereas in her circumstances as they were prior to her entering the nursing home, her affairs were less certain as to meeting her needs. Now that she has liquidated her assets, she has substantial funds which do not put in doubt the ability to provide for her for the rest of her life, we would prefer to be relieved of carrying outstanding fees and disbursements. I welcome your thoughts."
A bill was sent on 22 June 2012 with the details in the "itemised fee schedule" and additional detail as to the identity of the person performing each item of work, the units of work performed, and the billing rates. The practitioner testified that this was a "tax invoice". It was a bill. The bill was with a letter, and together they comprised 51 pages. They were sent by mail to her estranged husband in the Czech Republic and to her estranged son by email and to the practitioner himself as her attorney. They were not sent to Mrs N.
On about 31 August 2012, contracts for the sale of Mrs N's property were exchanged. Mrs N died on 4 October 2012. The sale had not been completed.
The practitioner proceeded to complete the sale of the property although the power of attorney no longer applied and probate had not been granted to the executors.
There is no evidence that he informed the purchaser or the purchaser's solicitors at or before completion of the sale that the transferor was already dead.
On 10 October 2012, the practitioner instructed a staff member for cheque directions to be given to the purchaser's solicitors for settlement of the sale on 12 October.
As at 12 October 2012, probate had not been granted in respect to Mrs N's estate. Settlement of the sale occurred on that day. The purchaser of the property provided cheques at settlement in accordance with the directions set out above, and the sale was completed.
On settlement of the sale of Mrs N on 12 October 2012, the cheque for $6,624.49 for part of the costs of the law practice on the sale was made payable to the law practice and was deposited into the office account of the law practice. The cheque for $154,000 provided by the purchaser and payable to the practitioner was deposited into a bank account in the practitioner's name. By that payment and others from the funds held in trust for the estate from the sale, the practitioner received or paid to his son in law amounts to a the total of $176,800.94 billed to Mrs N. No part of those funds were paid to Mr Freedman the other equity partner in the law practice.

[8]

Costs Disclosures - relevant law

Often a practitioner has superior knowledge of legal work and legal costs to that of the client by reason of greater training, education and experience in those areas. There is no "level playing field" where the client has no legal training or qualifications and little or no experience of legal matters and legal costs, but the lawyer does have considerable qualifications, training and experience in legal work and legal costs. Compulsory disclosure is one of the tools that have been employed to provide greater fairness to clients in relation to costs.
Amongst other benefits for the client, costs disclosures are intended to avoid clients being taken by surprise by charge rates or the magnitude of bills. Compulsory disclosure also benefits the law practice and the client by ensuring that clients are better informed about costs, less likely to be "ambushed" by a bill that is much more than they anticipated or can afford, more likely to properly recognise the costs factor in considering settlement of disputes or litigation, aware of the rates the lawyers are charging and more likely to pay the bills. Periodic billing is another such strategy.
The English Court of Appeal, considering similar disclosure provisions in the English Rules, held: The imposition of the discipline of producing estimates is one of the strategies which has been adopted to contain legal costs, and there is no doubt as to the public interest in avoiding the incurring of unnecessary legal costs. (Garbutt v Edwards [2006] 1All ER 553 at [33])
Compliance with the disclosure provisions is not just a formality for a legal practice. The legislature regards it as so important that it has created serious consequences for a law practice that follow or may follow non-disclosure.
Compliance with the disclosure requirements requires from the law practice commitment, detailed and careful consideration, and full and clear written communications to the client. Giving estimates of total costs to the client is not just routine or formality; it demands careful consideration. It requires at least specifying a realistic range.
Under the 1987 Act the relevant provisions were: 175 - Obligation to disclose to clients basis of costs 1. A barrister or solicitor must disclose to a client in accordance with this Division the basis of the costs of legal services to be provided to the client by the barrister or solicitor. 2. The following matters are to be disclosed to the client: 1. the amount of the costs, if known, 2. if the amount of the costs is not known, the basis of calculating the costs, 3. the billing arrangements, 4. the client's rights under Division 6 in relation to a review of costs. 5. the client's rights under Division 4 to receive a bill of costs, 6. any other matter required to be disclosed by the regulations. 1. The disclosure to a client is not required to be made by a barrister or solicitor who is retained on behalf of the client by another barrister or solicitor. However, the disclosure to the client is to include the costs of the barrister or solicitor so retained. 177 - Obligation to disclose estimated costs 1. A barrister or solicitor must disclose to a client in accordance with this Division an estimate of the likely amount of the costs of legal services to be provided to the client by the barrister or solicitor, if the amount of the costs is not disclosed under section 175. 2. A barrister or solicitor who is retained on behalf of a client by another barrister or solicitor must disclose to that other barrister or solicitor in accordance with this Division an estimate of the likely amount of the costs of legal services to be provided to the client by the barrister or solicitor, if the amount of the costs is not disclosed under section 176. 3. A barrister or solicitor who has disclosed to a person an estimate of the likely amount of the costs of legal services is to disclose to that person any significant increase in that estimate. 178 - When disclosure to be made 1. A disclosure under this Division is to be made before the barrister or solicitor is retained to provide the legal services concerned, unless this section otherwise provides. 2. If it is not reasonably practicable to make the disclosure before the barrister or solicitor is retained, the disclosure is to be made as soon as practicable after the barrister or solicitor is so retained. 3. A disclosure under this Division to a client as to the costs of a barrister or solicitor who is retained on behalf of the client by another barrister or solicitor is to be made as soon as practicable after the other barrister or solicitor becomes aware of the costs. 4. A disclosure under this Division as to any significant increase in the estimated costs of legal services is to be made as soon as practicable after the barrister or solicitor becomes aware of the likely increase in costs. 179 - Disclosure to be in writing 1. A disclosure under this Division must be made in writing and be expressed in clear plain language. 2. The disclosure may be made separately or in a costs agreement or in any other contract relating to the provision of the legal services concerned. 182 Effect of non-disclosure of matters related to basis of costs 1. If a barrister or solicitor fails to make a disclosure to a client in accordance with this Division of the matters required to be disclosed by section 175 in relation to costs, the client need not pay the costs of the legal services unless the costs have been assessed under Division 6. 2. A barrister or solicitor who fails to make a disclosure in accordance with this Division of the matters required to be disclosed by section 175 or 176 in relation to costs may not maintain proceedings for the recovery of the costs unless the costs have been assessed under Division 6. 3. The costs of any assessment referred to in this section (including the costs of the costs assessor) are payable by the barrister or solicitor seeking to recover costs. 4. Any failure referred to in this section does not of itself amount to a breach of this Act. However, the failure is capable of being unsatisfactory professional conduct of professional misconduct. 183 - Effect of non-disclosure of estimated costs 1. A failure by a barrister or solicitor to make a disclosure in accordance with this Division under section 177 of an estimate of the likely amount of the costs of legal services to be provided by the barrister or solicitor (or any significant increase in the estimate) does not of itself amount to a breach of this Act. 2. However, the failure is capable of being unsatisfactory professional conduct or professional misconduct. 192 - Bill of costs to be given before costs can be recovered from client 1. Proceedings for the recovery of costs by a barrister or solicitor for providing legal services must not be commenced or maintained against any person unless at least 30 days have passed since a bill for those costs was given to the person in accordance with this Division. 2. The Supreme Court may make an order authorising a barrister or solicitor to commence or maintain proceedings against a person sooner if the Supreme Court is satisfied that the person is about to leave New South Wales.
The relevant provisions of the 2004 Act and the 2005 Regulation are as follows: 301 Purposes The purposes of this Part are as follows: 1. to provide for law practices to make disclosures to clients regarding legal costs, 2. to regulate the making of costs agreements in respect of legal services, including conditional costs agreements, 3. to regulate the billing of costs for legal services, 4. to provide a mechanism for the assessment of legal costs and the setting aside of certain costs agreements. 302 Definitions 1. In this Part: bill means a bill of costs for providing legal services. ………………………………………………... costs includes fees, charges, disbursements, expenses and remuneration. costs agreement means an agreement about the payment of legal costs. …………………………………………. disbursements includes outlays. itemised bill means a bill that specifies in detail how the legal costs are made up in a way that would allow them to be assessed under Division 11. ………………………………………………………….. 1. In this Part, a reference to a law practice includes a reference to: 1. in the case of a person who was a sole practitioner when the legal services concerned were provided: 1. the former sole practitioner, or 2. the executor of the will of the former sole practitioner, or 3. the trustee or administrator of the estate of the former sole practitioner, and 1. subject to any other applicable arrangements: 1. the persons who were the partners of a former law firm or multi-disciplinary partnership when the legal services concerned were provided. and 2. in the case of a law firm or multi-disciplinary partnership where there has been a change of partners since the legal services concerned were provided - subject to any other applicable arrangements, the firm or partnership as currently constituted, and 3. the assignee of a law practice or former law practice, and 4. the receiver of a law practice or former law practice appointed under this Act, and 1. any person of a class prescribed by the regulations for the purposes of this subsection. 302B Costs assessment is to take into account GST A costs assessor (or, in the case of a review of or an appeal against a costs assessment, a panel under Subdivision 5 of Division 11 or a court) is to take into account the GST (within the meaning of the A New. Tax System (Goods and Services Tax Act) 1999 of the Commonwealth) referable to the provision of legal services when making or reviewing a determination of legal costs payable. 309 Disclosure of costs to clients 1. A law practice must disclose to a client in accordance with this Division: 1. the basis on which legal costs will be calculated, including whether a fixed costs provision applies to any of the legal costs, and 2. the client's right to: 1. negotiate a costs agreement with the law practice, and 2. receive a bill from the law practice, and 3. request an itemised bill after receipt of a lump sum bill, and 4. be notified under section 316 of any substantial change to the matters disclosed under this section, and 1. an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs, and 2. details of the intervals (if any) at which the client will be billed, and 3. the rate of interest (if any), whether a specific rate or a benchmark rate, that the law practice charges on overdue legal costs, whether that rate is a specific rate of interest or is a benchmark rate of interest (as referred to in subsection (IA)), and 4. if the matter is a litigious matter, an estimate of: 1. the range of costs that may be recovered if the client is successful in the litigation, and 2. the range of costs the client may be ordered to pay if the client is unsuccessful, and 1. the client's right to progress reports in accordance with section 318, and 2. details of the person whom the client may contact to discuss the legal costs, and 3. the following avenues that are open to the client in the event of a dispute in relation to legal costs: 1. Costs assessment under Division 11, 2. the setting aside of a costs agreement or a provision of a costs agreement under section 328 (Setting aside costs agreements or provisions of costs agreements), 3. mediation under Division 8, and 1. any time limits that apply to the taking of any action referred to in paragraph (i), and 2. that the law of this jurisdiction applies to legal costs in relation to the matter, and (1) information about the client's right: 1. to accept under a corresponding law a written offer to enter into an agreement with the law practice that the corresponding provisions of the corresponding law apply to the matter, or 2. to notify under a corresponding law (and within the time allowed by the corresponding law) the law practice in writing that the client requires the corresponding provisions of the corresponding law to apply to the matter. Note. The client's right to sign an agreement or give a notification as mentioned in paragraph (I) will be under provisions of the law of the other jurisdiction that correspond to section 304 (Part also applies by agreement or at client's election). (1A) For the purposes of subsection (1) (e), a benchmark rate of interest is a rate of interest for the time being equal to or calculated by reference to a rate of interest that is specified or determined from time to time by an ADI or another body or organisation, or by or under other legislation, and that is publicly available. (1B) The regulations may make provision for or with respect to the use of benchmark rates of interest, and in particular for or with respect to permitting, regulating or preventing the use of particular benchmark rates or particular kinds of benchmark rates. 1. For the purposes of subsection (1) (f), the disclosure must include: 1. a statement that an order by a court for the payment of costs in favour of the client will not necessarily cover the whole of the client's legal costs, and 2. if applicable, a statement that disbursements may be payable by the client even if the client enters a conditional costs agreement. 1. A law practice may disclose any or all of the details referred to in subsection (I) (b) (i) to (iii), (g), (i), (j) and (1) in or to the effect of a form prescribed by the regulations for the purposes of this subsection, and if it does so at the time the other details are disclosed as required by this section the practice is taken to have complied with this section in relation to the details so disclosed. 311 How and when must disclosure be made to a client? 1. Disclosure under section 309 must he made in writing before, or as soon as practicable after, the law practice is retained in the matter. 2. Disclosure under section 310 (1) must be made in writing before, or as soon as practicable after, the other law practice is retained. 3. Disclosure made to a person before the law practice is retained in a matter is taken to be disclosure to the person as a client for the purposes of sections 309 and 310. 312 Exceptions to requirement for disclosure 1. Disclosure under section 309 or 310 (1) is not required to be made in any of the following circumstances: 1. if the total legal costs in the matter, excluding disbursements, are not likely to exceed $750 (exclusive of GST) or the amount prescribed by the regulations (whichever is higher), 2. if: 1. the client has received one or more disclosures under section 309 or 310 (I) of the law practice in the previous 12 months, and 2. the client has agreed in writing to waive the right to disclosure, and 3. a principal of the law practice decides on reasonable grounds that, having regard to the nature of the previous disclosures and the relevant circumstances, the further disclosure is not warranted, 1. if the client is: 1. a law practice or an Australian legal practitioner, or 2. a public company, a subsidiary of a public company, a large proprietary company, a foreign company, a subsidiary of a foreign company or a registered Australian body (each within the meaning of the Corporations Act 2012 of the Commonwealth), or 3. a financial services licensee (within the meaning of that Act), or 4. a liquidator, administrator or receiver (as respectively referred to in that Act), or 5. a partnership that carries on the business of providing professional set-vices if the partnership consists of more than 20 members or if the partnership would be a large proprietary company (within the meaning of that Act) if it were a company, or 6. a proprietary company (within the meaning of that Act) formed for the purpose of carrying out a joint venture, if any shareholder of the company is a person to whom disclosure of costs is not required, or 7. an unincorporated group of participants in a joint venture, if one or more members of the group are persons to whom disclosure of costs is not required and one or more members of the group are not such persons and if all of the members of the group who are not such persons have indicated that they waive their right to disclosure, or 8. a Minister of the Crown in right of a jurisdiction or the Commonwealth acting in his or her capacity as such, or a government department or public authority of a jurisdiction or the Commonwealth. 316 Ongoing obligation to disclose A law practice must, in writing, disclose to a client any substantial change to anything included in a disclosure already made under this Division as soon as is reasonably practicable after the law practice becomes aware of that change. 317 Effect of failure to disclose 1. Postponement of payment of legal costs until assessed If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed, the client or associated third party payer (as the case may be) need not pay the legal costs unless they have been assessed under Division 11. Note. Under section 369. the costs of an assessment in these circumstances are generally payable by the law practice. 1. Bar on recovering proceedings until legal costs assessed A law practice that does not disclose to a client or an associated third party payer anything required by this Division to be disclosed may not maintain proceedings against the client or associated third party payer (as the case may be) for the recovery of legal costs unless the costs have been assessed under Division 11. 1. Setting costs agreement aside If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed and the client or associated third party payer has entered into a costs agreement with the law practice, the client or associated third party payer may also apply under section 328 for the costs agreement to be set aside. 1. Reduction of legal costs on assessment If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed, then, on an assessment of the relevant legal costs, the amount of the costs may be reduced by an amount considered by the costs assessor to be proportionate to the seriousness of the failure to disclose. 1. Effect on legal costs where law practice retains another law practice that fails to disclose If a law practice retains another law practice on behalf of a client and the first law practice fails to disclose something to the client solely because the retained law practice failed to disclose relevant information to the first law practice as required by section 310 (2), then subsections (1) - (4): 1. do not apply to the legal costs owing to the first law practice on account of legal services provided by it. to the extent that the non-disclosure by the first law practice was caused by the failure of the retained law practice to disclose the relevant information, and 2. do apply to the legal costs owing to the retained law practice. 1. Circumstances where associated third party payer involved In a matter involving both a client and an associated third party payer where disclosure has been made to one of them but not the other: 1. subsection (1) does not affect the liability of the one to whom disclosure was made to pay the legal costs, and 2. subsection (2) does not prevent proceedings being maintained against the one to whom the disclosure was made for the recovery of those legal costs. 1. Non-disclosure capable of constituting unsatisfactory professional conduct or professional misconduct Failure by a law practice to comply with this Division is capable of being unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner or Australian-registered foreign lawyer involved in the failure. 318 Progress reports 1. A law practice must give a client, on reasonable request; 1. a written report of the progress of the matter in which the law practice is retained, and 2. a written report of the legal costs incurred by the client to date, or since the last bill (if any), in the matter. 1. A law practice may charge a client a reasonable amount for a report under subsection (1) (a) but must not charge a client for a report under subsection (I) (b). 2. A law practice retained on behalf of a client by another law practice is not required to give a report to the client under subsection (1). but must disclose to the other law practice any information necessary for the other law practice to comply with that subsection. 3. Subsection (3) does not apply if the other law practice ceases to act for the client in the matter when the law practice is retained.

[9]

Ground 9.1 Failure to disclose costs - Mrs N's will etc

What started in 2005 as the preparation of a will, continued for more than 7 years and included the making of 7 codicils, a power of attorney and, it appears, some advice about possible appointment of a guardian for Mrs N. On 25 June 2012, the practitioner rendered the itemised bill for $176,800.94 in respect to work done from March 2009 onwards for Mrs N in connection with the Will and Codicils, the Power of Attorney and legal advice. Bills for work prior to 2009 had been rendered and paid. He did not send it to Mrs N, who was in a nursing home. He sent it to her estranged husband in Poland and her estranged son. That bill and letter came to 48 pages.
The practitioner contests this complaint on the basis that he was not obliged by Section 309 of the 2004 Act to make the initial disclosure because of the provisions in Section 312(1)(a) of that Act. It provides that the disclosures under Section 309 are not required to be made if "the total legal costs in the matter, excluding disbursements, are not likely to exceed $750 (excluding GST) or the amount prescribed by the regulation (whichever is the higher). But those provisions of the 2004 Act did not apply in February 2005. The relevant provisions of the 1987 Act applied until early October 2005.
Section 180 of the 1987 Act provided "A disclosure is not required to be made under this Division when it would not be reasonable to be required to do so." The Tribunal considers that because of Mrs N's vulnerabilities it was not unreasonable for the practitioner to have been required to make written disclosure of estimated total legal costs for the will before proceeding with the work. There was no evidence that he could not have done so. Accordingly he was obliged to make such disclosure but failed to do so.
If the practitioner had made the costs disclosure as required by the 1987 Act, he would have been liable (until early October 2005 under s180(3) of the 1987 Act and thereafter under s316 of the 2004 Act) to disclose to the client any significant increase in the estimate of total costs. The practitioner did not do so. In more than 7 years the practitioner did not give any costs disclosure to Mrs N on these matters, for which his charges were very substantial.
Even when one excludes the extensive items in the bill for legal costs that the expert, Ms Rosati, found were not legal work, and the numerous other items the description of which in the bill did not indicate that they were, the amount charged for the remaining items as legal work was very substantial. The disclosure requirements of the 1987 Act applied until early October 2005 and so under sections 175 and 177 of that Act, when Mrs N engaged him in February 2005 the practitioner was required to make the disclosures, including an estimate of total costs.
The Tribunal has concluded that his conduct in in failing to make the initial disclosures under the 1987 Act and, even apart from the legislative requirements, failing to make costs disclosures at all, constituted professional misconduct. It was unsatisfactory professional conduct involving a substantial and consistent failure to maintain a reasonable standard of competence and diligence. The reasons for that include:

his training and experience as a legal practitioner;
the vulnerabilities of Mrs N;
his obligations to her as her attorney and as her solicitor to act to protect her interests;
his knowledge of the disbursements and of times he was charging against the matter in the practice records;
the advice he had from his partners and others to waive any charges because of his non disclosures;
the similar advice from the Law Society relayed to him;
the amount of legal costs involved;
his failure to give periodic bills; and
the length of time that passed from March 2009 till the bill.

[10]

Ground 9.2 &10.1 Failure to disclose costs and breach of undertaking to Office of Legal Services Commissioner- Mrs N - Sale of retirement village unit

The practitioner, on 22 March 2012, provided a standard costs agreement and a standard cost disclosure to Mrs N regarding the sale. The estimate of total costs given was $1,705.00. That was not a genuine estimate of total costs. His evidence is that it was the law practice's usual quote for its costs on the sale of a property. The practitioner's evidence is that it was the standard figure he gave as the estimated total costs for such matters. He had no regard to the particular circumstances that the costs already accrued exceeded that figure and there was much more work to be done. The costs disclosure also did not comply with the requirement of s311(1) of the 2004 Act that it be made before or as soon as practicable after, the law practice was retained for the work.
According to the records of the practice, as at 22 March 2012, the costs already incurred in the matter comprised: 1. Professional fees $1,422.30 2. Disbursements $429.99 Total $1,852.29
From 22 March 2012, the practitioner was aware that the costs would be substantially more than the estimate of $1,705 because the costs were already $1,852.29, and the matter was incomplete.
Settlement of the sale occurred on 12 October 2012. In a letter of 6 December 2012 addressed to Mrs N at care of the practitioner as her attorney, the practitioner stated the costs on the sale were: 1. Practitioner's costs & disbursements $7,442.81 2. GST - $722.60 Total costs $8,165.41
The total costs of $8,165.41 charged by the law practice was nearly 5 times the estimate of $1,705 given on 22 March 2012. In his amended reply the practitioner stated that there was no "substantial change" requiring under section 316 that he give a revised estimate of total costs. The Tribunal finds that as at 22 March he was already aware that the costs would be substantially more than $1,705 and obliged by s 316 to give the client a revised estimate of total legal costs. That obligation continued unsatisfied for nearly 9 months until the letter of 7 December.
The practitioner failed to comply with the disclosure requirements of sections 309 and 316 of the 2004 Act. He also breached the undertaking given by him to the Office of the Legal Services Commissioner on 15 March 2012 to ensure that the legal practice complied with the disclosure requirements. The Tribunal finds that such conduct fell short of the standard of competence and the standard of diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.
Each of his failures to comply with disclosure requirements of sections 309 and 316 and the breach of his undertaking constituted unsatisfactory professional conduct.

[12]

Ground 8 - Failure to comply with order of the Supreme Court

The practitioner denied this ground. In about May 2012, Ms Q retained the practitioner, then of the law practice, to prepare her Will.
The law practice partnership was dissolved in May 2013 but Ns Q's will had not been completed. The Law Society in July 2013 suspended the practitioner's practicing certificate. The practitioner appealed that decision to the Supreme Court, and also sought a stay of the suspension decision pending a hearing of his appeal by the Court.
He was granted a stay of the suspension decision, subject to certain undertakings given by him.
In about mid July 2013, Ms Q received a letter dated 11 July 2013 from the new law practice informing her that the law practice had been dissolved and the solicitor had established the new law practice as his own practice. The letter enclosed an authority to the law practice for her to sign to allow for the transfer of Ms Q's file and any documents of hers from the law practice to the new law practice.
She signed the authority and sent it back on about 22 July 2013 to the new law practice.
The practitioner's appeal against the Law Society decision to suspend his Practicing Certificate was dismissed by the Supreme Court on 14 August 2013. On 15 August 2013 the court granted a short stay of the decision dismissing his appeal against the suspension, subject to certain conditions. Condition 6 was "that on or before 21 August 2013, the practitioner will notify his clients of the outcome of the principal proceedings". In that context "the outcome of the principal proceedings" meant the court's decision to dismiss the practitioner's appeal against his suspension.
Ms Q sent an email to the practitioner on 20 August 2013 relating to outstanding issues concerning her Will. On 23 August 2013 the practitioner sent Ms Q a response. On 24 August 2013 Ms Q sent a reply to the practitioner's email in relation to her instructions concerning her Will.
The practitioner failed to notify Ms Q before, on or after 21 August 2013 of the dismissal of his appeal from his suspension. The Law Society alleges that the failure to notify Ms Q of the outcome of the appeal was a breach of condition 6 imposed by order of the court.
The Law Society alleged that at all material times prior to 22 July 2013, Ms Q was a client of the practitioner and, accordingly, a client of the law practice. The practitioner did not deny this allegation, but said in his amended reply "the respondent does not admit that [Ms Q] was a client of the law practice at all material times prior to 22 July 2013". The practitioner admitted only that Ms Q was a "former client" as at 15 August 2013.
However, the matter of Ms Q's will in which initial instructions were given in about May 2012, had not been concluded in March 2013. In his email to her on 1 January 2014 he refers to his email on 2 March 2013 to Ms Q of a draft will and providing advice. He recognised her as a client by that letter and invited further instructions regarding her will. He sent her a bill for his work to date. The practitioner recognised her as a client of his on 21 July 2013 for purposes of informing her of his move and having her sign an authority to his former partners to release her documents and files to him. Ms Q on 20 August 2013 sent an email to the practitioner about outstanding issues relating to the drafting of her Will.
In response to the allegation that the practitioner's failure to notify Ms Q of the outcome of his appeal constituted a breach of condition 6 of the stay granted on 15 August 2013, the respondent did not deny that allegation and said: "the respondent says that the failure to notify was inadvertent, the circumstances being as follows:

Immediately following the publication of conditions referred to in particular [108] the respondent requested his Personal Assistant of many years to provide to him a list of all current clients, and to send a letter to each of those current clients being a letter dictated by him and which satisfied the requirements of condition 6 of the Suspension Decision.
[Ms Q's] name was not included in the list that was presented to him, and accordingly the standard form letter which he directed to be sent to all current clients was not prepared or sent. The respondent accepted the accuracy of the list presented to him and did not give any thought to [Ms Q] as a possible current client for the purposes of condition 6 prior to 21 August 2013".

In cross examination on 29 June 2017, when it was put to him that Ms Q was a client of his when the order was made. He avoided the question. When the presiding member repeated the question he answered, "no". He was asked if he now concedes she was. He avoided the question. When it was repeated, he answered "no". After various questions about the correspondence between him and her, he conceded that as at 20 August there was still work to be done. But he then denied that he at that date expected to do it. When it was put to him that he saw her as a client when he wrote to her on 23 August by email, he rejected the proposition.
The Tribunal is satisfied on the balance of probabilities that Ms Q was a client of the practitioner and of the law practice at all material times prior to the dissolution of the partnership on 24 May 2013, and at all material times subsequent to that, she was a client of the practitioner and of the new law practice. She was a client of the practitioner in May 2012 when she gave initial instructions, in March 2013 when he sent her advice and the draft, at the time he sent the letter of 11 July 2013 to her, on about 22 July 2013 when she returned the signed authority to him, as at 15 August 2013 when the order for notification of his clients of the outcome of the principal proceedings was made, on the day before 21 August when she emailed him about her will, on 23 August when he responded to her, on 24 August 2013 when she gave further instructions, as at 2 December 2013 when she sent a letter or email to him about the will, and as at 1 January 2014 when he replied and among other things discussed the work already done and invited any further instructions.
He did not disclose in his documents any detail of the instructions he gave his staff about how to identify his current clients. In cross examination he said he had a staff member prepare a list of existing clients from the ledger of work in progress. He appears to have delegated the responsibility to his staff. He did not allege that he checked or read the list his staff prepared. He appeared to be blaming his staff for his failure to notify Ms Q. The evidence establishes that the practitioner breached the condition ordered by the Supreme Court by failing to notify Ms Q by 21 August 2013 of the Court's decision dismissing the appeal against his suspension. It is surprising that although he had an email from her on 20 August, he did not check the list to ensure the notice he sent to clients was sent to her and, if it wasn't, send it to her that day.
The Tribunal finds that such conduct fell short of the standard of competence and the standard of diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner. It also demonstrates a less than serious respect for orders and conditions imposed on him by the Supreme Court. It is unsatisfactory professional conduct.

[13]

Ground 11 - Use of Deposit of Mr & Mrs H. Unethical conduct - applying received monies in breach of the terms of the agreement under which they were received.

As at 16 August 2012, the practitioner was the sole director and shareholder of a company, Storey Street Development Pty Limited ("SSD").
SSD was undertaking a residential development at 4, 6 and 8 Storey Street, Maroubra ("The Development"). One of the properties which SSD made available for purchase was Lot 1, 4 Storey Street, Maroubra, ("Lot 1"). The law practice acted for SSD in respect to the development and the sale of Lot one.
As at 16 August 2012, the development was incomplete. On that day, Mr & Mrs H, as purchasers, entered into a contract for sale of land with SSD as vendor in respect to Lot 1. The Lot 1 contract was in the form of a standard Contract for Sale of Land 2005 Edition with 23 Special Conditions. The total purchase price, pursuant to the Lot 1 contract was $1,150,000.
The deposit payable pursuant to the contract was $57,500. Mr & Mrs H paid the deposit on 16 August 2012 to the law practice as stakeholder. The deposit was paid into the trust account of the law practice. SSD sought to have a Special Condition in the contract that would allow it to have the use of the deposit between exchange of contracts and completion of the sale.
A conveyancing clerk had the conduct of the matter in the office of the practitioner. The practitioner did not read the contract or the Special Conditions before the contract was submitted to the purchaser's solicitors, before it was executed by him on behalf of SSD, or before contracts were exchanged.
Initially Mr & Mrs H had not agreed to the release of the deposit, but there were negotiations between the solicitors. On 10 August the solicitor for the purchasers, Mr Paffas advised the law practice that their clients wanted the contract to provide 4 months to settle and only 5% of the price to be released to the Vendor. On 14 August by letter Mr Paffas advised the law practice his clients wanted provision that the deposit could only be released "after the plan is registered at the land titles office". There is evidence that on 14 August this was agreed to by phone but the law practice advised Mr Paffas it wanted provision for the vendor to be able to make minor variations to the plan. Mr Paffas said that would be acceptable if it included a provision that the purchaser could rescind if the total area of the lot became less than 400 square metres or the back boundary was reduced.
Contracts were executed and exchanged on 31 August 2012. Special Condition 12 contained qualifications as to how the deposit could be used, and also as to the obligations of the vendor before it could be used. The Special Condition was as follows: Special Condition No 12 - Release of Deposit. 1. Notwithstanding any other provision hereof and particular clause 2 hereof, should the Vendor require the whole or part of the deposit paid hereunder for use as a deposit on the purchase by the Vendor of another property; stamp duty in respect to such property and such other reasonable disbursements in respect of such property, and the Vendor shall be entitled to apply the whole or any part of the deposit hereunder for that purpose provided that the Vendor's solicitor shall advise the purchaser's solicitors prior to applying the whole or any part of the deposit, the following details: 1. Address of the property to be purchased by the Vendor; 2. The amount of the deposit hereunder to be applied to the purchase; and 3. The manner in which the monies are to be held. The Purchaser shall, if so required, provide the Vendor's solicitor with an authority to the agent(s) to give effect to the provisions of this clause. No other Special Condition of the Lot 1 contract provided for early release of the deposit. Clause 19 of the Lot 1 contract included the following provision: 19 - Deposit by instalments 1. The deposit of 10% must be paid by the purchaser by two (2) 1. The 1st instalment of 5% must be paid on the contract date; 2. The 2nd instalment of 5% must be paid by 3:00pm on the completion date. 1. Any interest earned on investment of the first instalment of the deposit is payable in full to the vendor; 2. If the vendor terminates this contract, the vendor may, without limiting the vendor's other rights or remedies, recover as a liquidated debt all that part of the deposit that has not been paid by the purchaser. 3. If the purchaser does not pay any instalment on the due date, the purchaser must pay to the vendor interest on the amount due at the rate of 10% per annum calculated on a daily basis from (but not including) the due date up to and including the actual date of payment in full. 4. Clause 2 of the Standard Form applies and this further provision does not merge on completion. Clause 19 of the Lot 1 contact provided relevantly: 19 Rescission of contract 19.2 - normally, if a party exercises the right to rescind expressly given by this contract, or any legislation: 19.2.1 the deposit and any other money paid by the purchaser under this contract, must be refunded: …….
At some time after 16 August 2012 the practitioner caused the deposit of $57,500 to be disbursed from the trust account of the law practice. This was done without consultation with, or notice to, the purchasers or their solicitor. None of the details required by Special Condition12 to be provided to the purchasers before SSD could have any part of the deposit were provided. There is no evidence that SSD purchased any other property. None of SSD, the practitioner or the law practice had complied with Special Condition No 12 of the Lot 1 contract.
The disbursement of the deposit from the trust account of the law practice was an application of received monies (being the deposit of $57,500.00 which had been paid pursuant to the Lot 1 contract) in breach of the terms of the agreement under which those monies were received.
On 4 July 2014, SSD under the hand of the practitioner as its sole director, purported to rescind the Lot 1 contract by a notice of rescission.
On 8 July 2014 Mr & Mrs H , through their solicitor, advised the practitioner that they did not accept the notice of rescission dated 4 July 2014, but that: 1. If the contract was validly rescinded, Mr & Mrs H were entitled to a refund of their deposit pursuant to clause 19 of the Lot 1 contract; and 2. If the Lot 1 contract was not validly rescinded, Mr & Mrs H would give consideration to a mutual rescission of the Lot 1 contract upon receipt of a refund of the deposit.
There is no evidence of any reply to that. None of SSD, the practitioner or the law practice has returned the deposit monies or any part of them to Mr & Mrs H.
The complaint of the Law Society alleges that by his conduct the practitioner engaged in unethical conduct in applying and receiving monies in breach of the terms of the agreement under which they were received. It was intentional conduct done without notice to the purchasers.
The practitioner's reply to the allegation denies it. He alleges before the contracts were exchanged he negotiated with the purchaser's solicitor for the deposit to be released to his vendor company before settlement with less onerous requirements for his company than those in Special Condition No 12. The evidence he relied upon fell short of proving agreement on any such provision. On 4 May 2015 the Law Society had written to the practitioner enclosing copies of an email chain between the practitioner and the solicitor for the purchasers contradicting the allegation of any such agreement and inviting the practitioner to make any submissions about the document. On 8 May the Law Society wrote to the practitioner advising that it was proposing to commence proceedings in the Tribunal regarding this incident and seeking his removal from the roll. It again invited any submissions he wished to make.
The practitioner made no relevant submissions in his response of 20 May 2015 to the Law Society (or otherwise) to the email chain before the proceedings were commenced 5 months after the letter of 4 May. In cross examination he conceded that on 17 February 2017 he first raised an allegation of a relevant conversation with the solicitor for Mr & Mrs H on 0 August 2012 in which he alleged the solicitors agreed to a different Special Condition about release of the deposit to his company. He had not offered any evidence of it in any of his 3 previous affidavits, but raised it in his affidavit of 20 February 2017. His affidavit of 5 October 2017 addressed this ground in detail but made no mention of any such conversation. In cross examination he insisted he was telling the truth about the conversation, but the Tribunal did not accept his evidence.
The practitioner alleged Special Condition 12 was inserted in error by a clerk in his office who prepared the contract. The practitioner in his amended reply paragraph 134 says: "the respondent says that the position was not governed by Special Condition 12 of the contract notwithstanding that it did form part of the contract".
The practitioner has not relied upon any authority to support such a proposition. The purchaser and the vendor had legal representation and advice. Special Condition 12, was part of the contract prepared by the law practice on behalf of SSD, submitted by the practitioner to the solicitor for Mr & Mrs H, subjected to negotiations and then executed by both the purchasers and himself for the vendor. The legal representatives then exchanged contracts. The Tribunal finds that the defence of the practitioner has no merit and the parties' contract was the written document exchanged, which included Special Condition 12.
Special Condition 12 is the condition in the contract the parties eventually signed; not any different condition. Under the contract the law practice was the stakeholder for the deposit for both parties. It was clearly money held by the law practice on the conditions agreed to in the contract.
The deposit could only be made available to the vendor before settlement if the requirements of the conditions were satisfied. Those requirements were not satisfied. The practitioner knew that. He applied the deposit of $57,500.00 in breach of the terms of the contract under which the deposit was received. SSD later purported to rescind the contract. Neither SSD nor the practitioner has refunded any part of the deposit.
This ground has been proved. The Tribunal is satisfied that the conduct of the practitioner removing the deposit from the trust account and providing it to his company was conduct whereby he applied and received monies in breach of the terms of the agreement under which they were received.
The practitioner's conduct was seriously unethical conduct. It was dishonest and fraudulent. It was conduct that was a substantial failure to maintain a reasonable standard of competence and a substantial failure to maintain a reasonable standard of diligence. The Tribunal therefore finds that it was professional misconduct.

[14]

Ground 6 .1 Purported to act under a Power of Attorney after the donor of the power had died - execution of transfer

On or about 31 August 2012, the practitioner exercising the power of attorney of Mrs N and as her solicitor exchanged contracts for the sale of Mrs N's unit in the retirement village. Mrs N died on 4 October 2012.
The practitioner was notified of her death on 5 October 2012. There is no evidence that the practitioner informed the purchaser or the purchaser's solicitor of her death before completion of the sale.
The solicitor for the purchaser sent the transfer document to the practitioner under cover of a letter of 3 October 2012 and it was sent by express post. Presumably it was received into the practitioner's office on the morning of 4 October. The death certificate shows that Mrs N died the same day, but does not state the time of death. He signed the transfer in the space for the signature of the transferor. The evidence of Mr McCourt, solicitor for the purchaser is that the transfer signed by the practitioner was received by him under cover of a letter from the practitioner dated 9 October 2012.
When the practitioner signed the document, he signed his illegible signature in the space headed "Certified correct for the purposes of the Real Property Act 1900 by the transferor" and with the words "Signature of transferor" below it. The Transfer identified the transferor as Mrs N.
The transfer did not then refer to any Power of Attorney. He did not disclose on the form at the time he signed it that it was his signature, rather than the signature of the transferor (Mrs N) and he omitted to refer to there being any Power of Attorney. The signature was not the signature of the transferor and the transfer was therefore ineffective in that form. Registration would not have rendered it effective.
The practitioner stated in his affidavit of 5 October 2016 that he signed the transfer before Mrs N's death but the document did not arrive in his office until the day she died. After he had seen the affidavit of the Solicitor for the purchaser, in his second affidavit of 20 October the practitioner did not say that he signed the transfer before Mrs N died. He said "I signed the transfer on page 1 on 4 October 2012 before I had learned of [Mrs N's] death.
Then in his Amended Reply filed 22 February 2017 in reply to the allegation in the application of 8 October 2015 that he had "executed" the transfer after her death, he said the transfer "was executed under the power of attorney prior to the death of [Mrs N]". But he did not state the date or time when he signed. Nowhere does he disclose either the time of her death or the time at which he signed the transfer.
If the practitioner knew even the approximate times at which Mrs N died or at which he signed the transfer, he could have said so, but he didn't. Those times are not in evidence. If he signed the transfer on 4 October, he has not explained why he did not send it back to the purchaser's solicitors till 9 October.
In a letter dated 9 October 2012 the practitioner on the firm's letterhead provided replies to requisitions on title. It appears that the undated transfer that had been signed by the practitioner was enclosed as the solicitor for the vendor annexed a copy of that transfer to his affidavit of 18 May 2016. That is the transfer that does not refer at all to a Power of Attorney and has the signature of the practitioner as "transferor".
By letter dated 11 October 2012 from the solicitor for the purchaser to the law stationers for that solicitor, the Law Stationers were provided with the contract and advised that that transfer "is being picked up from the vendor's solicitor - Milne Berry Berger Freedman - by you today". The law stationers were instructed to arrange stamping of the contract and the transfer "and hold in escrow for settlement booked 12 October 2012". The transfer enclosed in that email was the undated transfer that had previously been executed by the practitioner but with annexure A which states "certified correct for the purposes of the Real Property Act 1900 by the person named below who signed this instrument pursuant to the Power of Attorney specified" then has the Practitioner's signature, "signature of attorney", "attorney's name Victor Berger" signing on behalf of [Mrs N] Power of Attorney Book 4627 No 327". Below that "I certify that the person named above with whom I am personally acquainted or as to whose identity I am otherwise satisfied, signed this instrument in my presence". "Signature of witness: [signature]. Name of witness: Shama Kunhi. Address of witness: c/- 154 Elizabeth Street, Sydney NSW 2000"
On 7 June 2013 Mr Sofiak asked the practitioner why he continued with the sale of the unit after Mrs N had died and the power of attorney "ceased to have authority". He replied, "my recollection was I signed the transfer before she died. I thought about proceeding and my view was the transfer was signed, why would you not complete, especially when we had so many months trying to sell it. I think we got a pretty good price for it. I got an extra sum from the purchaser above what her son was ready to sell it for."
The practitioner admits that his conduct in signing the certificate Annexure A to the transfer on 10 October 2012 constituted unsatisfactory professional conduct. His counsel on 27 June 2017 confirmed that but stated that the practitioner "doesn't agree that he knew it was false" and didn't intend to deceive anyone".
Because of findings elsewhere in these reasons, the Tribunal considers the Practitioner to be dishonest and an unreliable witness and does not accept his uncorroborated and undetailed evidence that he signed the transfer before Mrs N's death when the Power of Attorney was still in force.
The Law Society argues that the transfer was signed by the practitioner on 10 October 2012 because the itemized bill of the Law Practice to the estate of Mrs N includes as work done on 10 October 2012 "getting VB to sign transfer." But it also includes before that "preparing Annexure for Transfer as VB signing as Power of Attorney". That evidence appears to not be inconsistent with the practitioner having previously signed the Transfer itself and signed the Annexure on 10 October.
While the tribunal does not accept the practitioner's claim that he signed the transfer before Mrs N's death, there is no sufficient evidence to support a finding that he signed it after her death.
The Tribunal is satisfied on the balance of probabilities that the practitioner was aware that the power of attorney ceased to apply on Mrs N's death on 4 October 2012 and that if the purchaser's solicitors became aware of her death, the sale could be aborted or stalled. He therefore did not inform the purchaser or her solicitor of Mrs N's death. He signed the certificate on the transfer on 10 October to make it effective purporting to be empowered by the power of attorney and knowing that he wasn't. It was dishonest conduct and he knew it was.
The Tribunal finds that his conduct when he signed the transfer and when he signed Annexure A was on each occasion conduct in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner. It was both times unsatisfactory professional conduct.

[15]

Ground 6.2 Purporting to act under a Power of Attorney after the donor of the power had died and Ground 7.1 Purporting to act as executor of her will when there was no grant of probate- Settlement instructions and settlement

He also after her death and on or before 12 October 2012, instructed his staff to give directions to the purchaser's solicitors as to how the cheques for the settlement amount were to be drawn and gave instructions for the settlement. He denied that he did this purportedly as Mrs N's attorney. He admitted that he did so purporting to be exercising powers of an executor of Mrs N's estate. But probate of the will had not yet been granted and he had no such powers.
He said in his affidavit of 5 October 2016: While I was generally aware that a from the date of death the assets of a deceased person notionally vest in the NSW Trustee pending a grant of probate, property in the estate assets vests in the executor following a grant of probate from the date of death following a grant of probate under the doctrine of relation back."
In his amended Reply filed 22 February 2017 he said that he was unaware "of the effect of the provisions of s61 of the Probate & Administration Act 1898 or any other provision whereby the real and personal estate of a deceased person until probate or administration was granted was deemed to be vested in NSW Trustee." He said it was his "belief and understanding" that "pending a grant of probate, the person named as the executor in the will of a deceased person had all the necessary powers to take in and deal with the assets of the deceased person to such extent as was necessary for the purpose of preserving the assets and to permit the progress towards the obtaining of a grant of probate."
Given the practitioner's training and experience and his prior admission in his affidavit of 5 October 2016 the tribunal finds his evidence of such ignorance or mistaken belief is not credible and prefers his earlier admission in the affidavit of 5 October 2016. He knew that the executors had no powers until there was a grant of probate.
Also it appears that he completed the sale without informing the purchaser or her solicitors of Mrs N's death, so he continued in his dealings with them to rely on the fictions that Mrs N was still alive and the power of attorney was still effective.
In the period from the death of Mrs N till the sale was completed the practitioner had no authority pursuant to the Power of Attorney given on 27 November 2007 as Mrs N had died, and no authority as executor of her will, as there had been no grant of probate. The practitioner knew this.
The Tribunal finds that the practitioner's conduct after the death of Mrs N of falsely purporting to the purchaser's solicitor that the Power of Attorney was still effective and falsely purporting to his staff that he had the power as an executor to complete the uncompleted sale was dishonest.
That conduct was conduct in the practice of law that fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner. It was dishonest. It was unsatisfactory professional conduct.

[16]

Payments - relevant law

The following provisions of the Legal Profession Act 2004 are relevant to these matters:
"Trust money" is defined in S 243(1) of the 2004 Act as "money entrusted to a law practice in the course of or in connection with the provision of legal services by the practice". Section 243(1) This provision defines trust money as "money entrusted to a law practice in the course of or in connection with the provision of legal services by the practice". Section 254 - Certain trust money to be deposited in general trust account 1. Subject to section 258A, as soon as practicable after receiving trust money, a law practice must deposit the money in a general trust account of the practice unless: 1. the practice has a written direction by an appropriate person to deal with it otherwise than by depositing it in the account, or 2. the money is controlled money, or 3. the money is transit money, or 4. the money is the subject of a power given to the practice or an associate of the practice to deal with the money for or on behalf of another person. Maximum penalty: 100 penalty units. 1. Subject to section 258A, a law practice that has received money that is the subject of a written direction mentioned in subsection (I) (a) must deal with the money in accordance with the direction: 1. within the period (if any) specified in the direction, or 2. subject to paragraph (a), as soon as practicable after it is received. Maximum penalty: 100 penalty units. 1. The law practice must keep a written direction mentioned in subsection (1) (a) for the period prescribed by the regulations. Maximum penalty: 50 penalty units. 1. A person is an "appropriate person" for the purpose of this section if the person is legally entitled to give the law practice directions in respect of dealings with the trust money. Section 255 - Holding, disbursing and accounting for trust money 1. A law practice must: 1. hold trust money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received, and 2. disburse the trust money only in accordance with a direction given by the person. Maximum penalty: 50 penalty units. 1. Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law. 1. The law practice must account for the trust money as required by the regulations. Maximum penalty: 50 penalty units Section 258A is not relevant Section 259 - Protection of trust money 1. Money standing to the credit of a trust account maintained by a law practice is not available for the payment of debts of the practice or any of its associates. 2. Money standing to the credit of a trust account maintained by a law practice is not liable to be attached or taken in execution for satisfying a judgment against the practice or any of its associates. 3. This section does not apply to money to which a law practice or associate is entitled. Section 261 - Dealing with trust money: legal costs and unclaimed money This section applies only to legal costs owing to a law practice. It is inapplicable to costs claimed where there has been a failure to comply with a disclosure requirement because the client need not pay them unless there is an assessment (s317(1)). Section 262 - Deficiency in trust account 1. An Australian Legal Practitioner is guilty of an offence if he / she, without reasonable excuse, causes: 1. a deficiency in any trust account or a trust ledger account; or 2. a failure to pay or deliver any trust money. Maximum Penalty: 200 penalty units 1. …. 2. In this section: Cause includes be responsible for; Deficiency in a trust account or trust ledger account includes the non-inclusion or exclusion of the whole or any part of an amount that is required to be included in the account. Clause 88 of the Legal Profession Regulation 2005 This clause was made pursuant to s261 of the 2004 Act and prescribes the procedure for withdrawal of trust money from a trust account for payment of "legal costs owing". Clearly it does not apply where there has been a breach of the costs disclosure requirements in relation to costs billed but not assessed, as until assessment they are not "owing".

[17]

Misappropriation

It has been held that even a temporary use by a solicitor of his client's funds without prior approval amounts to "serious and deliberate dishonesty" and "that is precisely the sort of conduct which is antithetical to the trust and confidence which is required by a solicitor with custody of his or her client's money". (Kumar v Legal Services Commissioner [2015] NSWCA 161 at [61]).
The submission of the Law Society are that proof of misappropriation requires proof of intentional acts constituting a wrongful conversion of money and proof that those acts were objectively dishonest by reference to the ordinary standards of reasonable and honest people, but does not require proof that the perpetrator recognised those acts as dishonest.
The submissions for the practitioner relied upon the decision of Bell J in Brereton v Legal Services Commissioner [2010] VSC 378 as authority that an element of proof of misappropriation is a subjective belief of the perpetrator that his conduct is dishonest.
However the practitioner's submissions did not refer to the subsequent decision of the Victorian Court of Appeal in the appeal from that decision (Legal Services Commissioner v Brereton [2011] VSCA 241).There Tate JA (with whom Nettle and Ashley JJA agreed) said at [69]: "However, and with great respect to the trial judge, it is unclear whether dishonesty is a necessary element of misappropriation in the common law sense. In my opinion, there is room for doubt whether dishonesty is always an integral element of a charge of misappropriation within a professional disciplinary context".
Tate JA referred to the decisions of the Full Court of the Supreme Court of South Australia in Legal Practitioners Conduct Board v Jones [2010] SASFC 51 (at [12]) and Callaway JA in R v Lawrence [1997] 1 VR 459 at 466. Both Ashley JA and Tate JA preferred to leave the issue "for final decision on another day".
In various decisions of this Tribunal and its predecessor, (the Administrative Decisions Tribunal) misappropriation has repeatedly been found without requiring proof that the practitioner knew the conduct was dishonest (e.g. Council of the Law Society of NSW v Nicholls [2012] NSWADT 222; Council of the Law Society of NSW v Ross [2013] NSWADT 106 at [41]-[68]; Council of the Law Society of NSW v Greenstein [2015] NSWCATOD 122 at [26]-[32]; Council of the Law Society of NSW v Coombes [2015] NSWCATOD 108 at [36]-[43]; Law Society of NSW v Shehadie [2016] NSWCATOD 46 at [34]-[39] and [60]-[63].)
Whilst we are no persuaded that subjective knowledge of the perpetrator of the dishonesty is essential, the issue does not arise on the evidence in these proceedings.

[18]

First Payment 12/10/12 Grounds 1.1, 2.1, 3 and 7.1. Breach of section 254 of 2004 Act, causing deficiency in Law Practice trust account, purporting to act as executor when no authority because no grant of probate, misappropriation.

On or about 12 October 2012, on settlement of the sale of Mrs N's unit, the cheque for $154,000 payable to the solicitor provided by the purchaser in accordance with the direction to the purchaser given by the practitioner, was paid into a bank account in the name of the practitioner. The sum of $154,000 was part of the proceeds of sale of Mrs N' unit. It was trust money belonging to the estate of Mrs N. Section 254 of the 2004 Act required the practitioner to deposit those funds into a trust account operated by the law practice.
When on 7 June 2013 Mr Sofiak asked the practitioner on what authority he directed that $154,000.00 of the sale proceeds be paid to him and the practitioner replied, ""I suppose no authority as such. In June of last year I sent an itemized bill. The bill was to be paid from the estate. They had not raised any objection." (He was referring to the bill for $176,800.94.) He did not acknowledge breach of the disclosure requirements or that s 317(1) of the 2004 Act applied so the costs were not payable because there had not been an assessment.
In his affidavit of 5 October 2016 he said, "I believed as the person entitled under the contract and the will I was entitled to direct the money as I saw fit, and that it was not in fact trust money." He also said "I was not aware that it was not permissible for an executor to have recourse to the assets of the estate for payment of costs and other debts prior to the grant of probate." This is inconsistent with other evidence as to his knowledge and state of mind. In cross examination he conceded there was no "contract", was evasive and made unresponsive statements. He then conceded that the statement about a contract was untrue and he blamed his lawyers for saying that in his affidavit. Shortly after that he resumed saying that he thought that he was entitled to take the money under the will for "payment of debts", authorized by the will. When it was again put to him it was trust money, he replied "trust money for payment of that bill.
He said too in para 73 of that affidavit. "So far as I was concerned, and certainly in my own mind, the entitlement to the costs had been established and the requisite authority obtained". This is inconsistent with what he told Mr Sofiak on 7 June 2013. It is not credible.
He also said in that affidavit, "while I was generally aware that as from the date of death the assets of a deceased person notionally vest in the NSW Trustee pending a grant for (sic) probate, property in the estate assets vests in the executor following a grant of probate from the date of death under the doctrine of relation back". If he believed that, it was still consistent with the executors having no powers to pay legal costs from the estate funds prior to a grant of probate.
His Amended Reply filed 22 February 2017 stated: 1. It was the solicitor's belief and understanding at the relevant times that a bill having been sent, and no objection having been received, the amount owing on such bill was a debt due to the practice and upon receipt did not have the character of trust money, but was received by the Solicitor as a creditor of the Estate. If the solicitor was wrong in that understanding, it was nevertheless his understanding and belief genuinely held. 2. The solicitor was not at the relevant time or times aware of the effect of the provisions of s61 of the Probate and Administration Act 1898 or any other provision whereby the real and personal estate of a deceased person until probate or administration was granted was deemed to be vested in the NSW Trustee. It was the solicitor's belief and understanding that pending a grant of probate, the person named as the executor n the will of a deceased person had all necessary powers to take in and deal with the assets of the deceased person to such an extent as was necessary for the purpose of preserving the assets and to permit the progress towards the obtaining of a grant of probate."
The Costs were billed by the law practice and if they were payable, they would have been payable to the law practice. But the practitioner instructed that the $154,000.00 be paid to him and he deposited it into a bank account in his sole name. There is no evidence that before this conduct he consulted Mr Freedman or informed Mr Freedman of his intentions.
But because of his failure to comply with the disclosure requirements, under s317(1) of the 2004 Act the estate's position was it "need not pay the costs" unless there was an assessment and there had been no assessment. Section 261 of the Act, which provides for using trust money for payment of costs, refers to withdrawal of trust money for payment to a law practice's account for "legal costs owing" and deducting "legal costs properly owing" (s261(1) (b) & (c)) and specifically says in 261(2) that s261(1) "has effect subject to "Part 3.2 (Costs disclosure and assessment)". Because of the disclosure inadequacies and the absence of an assessment, the costs were not owing and section 261 did not give the practitioner any right to apply trust money of the estate for a payment towards the costs claimed in the bill. Clause 88 of the Legal Profession Regulation 2005 was made pursuant to Sec 261 and prescribes the procedure to be used under s 261 of the 2004 Act. It therefore applies subject to the costs disclosure requirements and only to costs "owing". The costs of $176,800.94 were not owing.
Because probate had not been granted in the estate of Mrs N, the executors named in the will had no powers to authorise funds of the estate to be used to pay any of those costs. He knew that, but purported to be acting pursuant to such powers.
The Tribunal is satisfied, given his poor credibility, demonstrated dishonesty, conflicting statements of what powers he believed a nominated executor had before any grant of probate, and his extensive training and experience as a solicitor, that at all material times he knew: 1. The $154,000.00 was trust money belonging to the estate of Mrs N; 2. the law required it be deposited into the law practice trust account; 3. pending a grant of probate, as one of the executors named in the will he had no power to do or authorize otherwise; 4. his conduct in causing the $154,000 to be paid to him and its deposit in his bank account was unlawful and dishonest.
The solicitor failed to deposit the sum of $154,000 into a trust account operated by the law practice. He breached Section 254 of the 2004 Act. He knew the law prohibited that conduct.
In failing to deposit the sum of $154,000 into a trust account operated by the law practice, the solicitor caused a deficiency in the trust account of the law practice in that amount.
In failing to deposit the sum of $154,000 into a trust account operated by the law practice, the solicitor purported to act as executor of the estate of Mrs N authorizing payment of the trust money to himself in circumstances where he had no authority to so act, as there had not yet been any grant of probate.
He purported that he had power as one of the executors named in the will to do the subject acts, but did not.
By placing the funds into his own account instead of the trust account of the law practice the practitioner misappropriated $154,000.00 belonging to Mrs N's estate. He knew it was trust money that belonged to the estate. He knew the legal requirement was for the law practice to deposit it into its trust account. He knew he had no power or right as one of the executors of the will, but without a grant of probate, to do otherwise or to use any of it for his own purpose. He knew what he was doing was unlawful and dishonest. It was also objectively dishonest by reference to the ordinary standards of reasonable and honest people. He misappropriated the $154,000.00.
These four grounds were proved. They include seriously dishonest and fraudulent conduct and involved a substantial sum of money. The conduct involved misappropriation of $154,000.00 of trust money and was illegal.
Members of the public are entitled to expect honesty and integrity from their solicitors. They expect to be able to trust the solicitor. A client is entitled to expect that if his solicitor allows his financial interests to conflict with those of the client, the solicitor will not give priority to his own financial interests over those of the client.
The Tribunal finds that these grounds together constitute professional misconduct.

[20]

Third payment 7/12/2012 - Mrs N's Estate - Grounds 4.1 & 7.2 - Breach of Section 255 of the 2004 Act, purporting to act as executor but no authority because no grant of probate.

On 6 December 2012 the law practice sent a letter of that date addressed to Mrs N at c/- the practitioner as her attorney. That letter: 1. Purported to outline the settlement of the sale of her unit; 2. Stated that the costs and disbursements of the law practice in relation to the sale came to a total of $8,165.41 including GST; 3. Stated that a cheque in the amount of $6,642.49 had been collected by the law practice on account of its costs as part of the settlement; and 4. Stated that there was a shortfall of $1,540.92 which would be transferred from trust.
On or about 7 December 2012 the solicitor caused $1,540.92 to be debited from the trust monies held on behalf of the estate of Mrs N and transferred from the trust account of the law practice to the office account of the law practice purportedly on account of its fees.
As at 7 December 2012, probate had not been granted in respect to the estate. The practitioner had no authority to make the third payment as executor. He had no authority under the Power of Attorney granted on 27 November 2007 since the death of Mrs N. The sum of $1,540.92 referred to was trust money that belonged to the estate and the executors had no power to authorize payment before probate was granted.
Section 255 of the 2004 Act required the practitioner to hold the sum of $1,540.92 referred to in a trust account operated by the law practice exclusively for the estate and disburse the trust money only in accordance with a direction given by the estate.
On the balance of probabilities the practitioner knew from when the funds were received till when the payment was made: 1. the money was trust money; 2. it belonged to the estate; 3. the law required it not be used for any purpose other than as directed by the estate or otherwise authorized by law; 4. until a grant of probate he, as one of the two executors named in the will, had no power to authorise or direct any payment of the legal costs; 5. he had no such power under the power of attorney as it no longer applied; and 6. no other law authorized the payment.
In causing the third payment to be made, the practitioner intentionally disbursed the sum of $1,540.92 despite having no valid direction or authorization to do so, and so breached Section 255 of the 2004 Act.
In causing that third payment to the made the practitioner purported to act as executor of the estate in circumstances where he had no authority to so act as there had not yet been any grant of probate.
On the balance of probabilities the practitioner knew his conduct was prohibited by law and dishonest.
The Tribunal finds that the conduct of the practitioner in (1) purporting to act as executor (2) causing the payment/ transfer of the money from the trust account was in both instances conduct in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner. Each was unsatisfactory professional conduct.

[21]

Fourth payment 25/01/2013 - Grounds 1.2, 2.2, 4.2, 5 & 7.3 Breach of Sections 255 and 259 of the 2004 Act. Purporting to act as executor when no authority because no grant of probate, causing deficiency in trust account, misappropriation

On or about 25 January 2013 the practitioner caused the sum of $20,000 to be paid from trust monies held on behalf of Mrs N's Estate to the son-in-law of the practitioner (Mr Penn) purportedly on account of "fees". When Mr Sofiak asked the practitioner on 7 June 2013 on what authority he made the payment, he replied "On the belief I could."
The practitioner said he used the amount as part payment of the bill of costs for $176,800.94 he claimed was owed by the estate to the law practice. But because of his failure to comply with the disclosure requirements, under s317(1) of the 2004 Act the Estate "need not pay the costs" unless there was an assessment and there had been no assessment. The costs were not owing.
In his affidavit of 5 October 2016 he said his understanding was that the $20,000 was not trust money and his understanding was the same as his belief in relation to the $154,000.00.
In his Reply regarding the allegations in relation to this matter, the practitioner relied upon his "mistaken belief and understanding" that pending grant of probate a person named as executor in the Will had "all necessary powers for taking and dealing with the assets of the deceased person to such extent as is necessary for the purpose of preserving the assets and to permit the progress towards the obtaining of a grant of probate".
Given the practitioner's poor credit, his other evidence inconsistent with this and his extensive training and experience, the Tribunal does not believe he had any such "mistaken belief and understanding".
At that time probate had not been granted. The practitioner had no power to authorise this fourth payment in circumstances where he had no authority pursuant to the Power of Attorney, the sum of $20,000 referred to belonged to the estate of Mrs N and probate had not yet been granted. There was no other law that authorized the payment.
Section 255 of the Act required the solicitor to hold the sum of $20,000 referred to in a trust account operated by the law practice exclusively for the estate and disburse the trust money only in accordance with a direction given by the estate. The practitioner by the 4th payment disbursed the money despite having no valid authorization to do so and breached Section 255 of the Act.
By payment of the $20,000 to his son in law Mr Penn in order to discharge a debt he owed to Mr Penn, the practitioner breached Section 259 of the 2004 Act which provides that money standing to the credit of a trust account maintained by the law practice is not available for the payment of debts of its associate(s).
In causing the 4th payment to be made without authority, the practitioner caused a deficiency of $20,000.00 in the trust account of the law practice.
In making the 4th payment, the practitioner purported to act as executor of the estate of Mrs N in circumstances where he had no authority to so act as there had been no grant of probate.
The Tribunal finds that the practitioner knew that he did not have any power pending the grant of probate to use the trust funds belonging to the estate of Mrs N for his own purposes such as to pay a debt he owed to his son-in-law or to pay the funds to the law practice in part payment of the bill for $176,800.91. With that knowledge he intentionally used the $20,000 for payment of a debt of his to his son in law.
The practitioner's conduct in paying Mr Penn, his son-in-law, $20,000 which belonged to the estate of Mrs N was intentional conduct of the practitioner. On the balance of probabilities the practitioner knew when he made the payment that: 1. the money was trust money; 2. it belonged to the estate; 3. the law required it not be used for any purpose other than as directed by the estate or authorized by law; 4. until a grant of probate he, as one of the two executors named in the will, had no power to authorise or direct any payment to Mr Penn or any payment of debts of the estate; 5. he had no such power under the power of attorney as it no longer applied; 6. no other law authorized the payment; and 7. his conduct making the payment was illegal and dishonest
His conduct was also objectively dishonest by reference to the ordinary standards of reasonable and honest people. He misappropriated the $20,000.00 of funds belonging to the estate.
The Tribunal has concluded that these complaints have been proved. They are serious breaches of the relevant provisions of the law and involve dishonest and fraudulent conduct. Each falls short of the standard of competence and diligence a member of the public is entitled to expect of a reasonably competent Australian legal practitioner. Each is unsatisfactory professional conduct.

[22]

Fifth payment 23/4/2013 - Estate of Mrs P - grounds 4.2, 7.4, 2.3 & 10Breach of Section 255 of the Act, purporting to act as executor when no authority because no grant of probate, causing deficiency of $8,751.90 in the trust account of the law practice.

On 2 January 2013, Mrs P died. The power of attorney executed in favour of the practitioner by Mrs P was terminated by her death. Although the practitioner was the executor of her will, probate had not been granted.
On or about 19 March 2013, the solicitor sent a draft bill to Mrs P's niece and nephew for various attendances undertaken by him on behalf of Mrs P in the months prior to her death, as well as some attendances after her death, including locating her will.
The practitioner rendered a bill of costs to himself as executor of Mrs P's estate on 22 April 2013. The practitioner had not made any cost disclosure in accordance with the requirements of Section 309 of the 2004 Act or otherwise. Accordingly, pursuant to sub-section 317(1) of the 2004 Act, the client was not required to pay the legal costs unless they had been assessed by an assessor. There had been no costs assessment and the costs were not owing.
On about the next day the practitioner caused the sum of $8,751.90 to be paid from trust monies held on behalf of the estate of Mrs P by transferring those funds from the trust account of the law practice to the office account of the law practice. The payment to pay for costs in the bill. Probate had not been granted at the time of the payment. Because the practitioner had not provided costs disclosures the costs were not payable until assessed. There was no assessment.
When Mr Sofiak asked the practitioner on 7 June 2013 on what authority the payment was made, he replied, "I thought we could do that." In his affidavit of 5 October 2016 he said in relation to the payment, "the work had been done and billed. It is correct that probate had not been granted at the time the money was paid or transferred. Probate was, however subsequently granted." He also said as to the alleged breaches of section 255, he had no intention to breach any of the relevant sections.
The practitioner had no authority to make the payment. Since the death of Mrs P he had no power under the Power of Attorney. In addition, he had no power as executor to authorize the payment, as probate had not been granted. Section 261 of the 2004 Act and clause 88 of the 2005 Regulation did not authorize the payment because under s317(1) of the 2004 Act the costs in the bill were not owing and were not owing or payable until assessed. There was no assessment.
The amount of $8,751.90 was trust money which belonged to the estate of Mrs P. Section 255 of the 2004 Act required the practitioner to hold those monies in a trust account operated by the law practice exclusively for the estate and disburse the trust money only in accordance with a direction given by the estate. In making the payment to the office account, the practitioner breached section 255 of the 2004 Act. That conduct of his also caused a deficiency in the trust account of the law practice.
In causing the 5th payment to be made, the practitioner purported to act as executor of the estate of Mrs P in circumstances where he had no authority to so act as there had been no grant of probate.
The practitioner in his affidavit of 5 October 2016 claimed in his affidavit that, as with some other payments, he acted on their "mistaken belief and understanding" that pending a grant of probate a person named as executor in the will had "all necessary powers for taking and dealing with the assets of the deceased person to such extent as is necessary for the purpose of preserving the assets and to permit the progress towards the obtaining of a grant of probate".
The Tribunal does not accept that the practitioner, given his extensive training and experience and poor credit, had such a "mistaken belief and understanding". The Tribunal finds on the balance of probabilities that the practitioner knew that:

The money was trust money belonging to Mrs P's estate;
There was a legal requirement that the trust money could only be used as authorized by the estate or by law;
The power of attorney ceased upon her death;
Until there was a grant of probate, he had no executorial powers to authorise the payment;
There was no other law that authorized the payment and
His conduct was unlawful and dishonest.

The practitioner in making the payment: 1. breached section 255 of the 2004 Act; 2. purported to act as executor of the estate when he had no authority to so act; and 3. caused a deficiency of $8,751.90 in the trust account of the estate;
The Tribunal finds that each of these 3 grounds has been proved and the conduct constituting each was dishonest conduct in connection with the practice of law that fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner and was therefore unsatisfactory professional conduct.

[23]

Sixth payment 6/5/2013 - Transfer of trust funds to pay of costs of acting for Estate of Mrs N. - Grounds 2.4, 4.3 & 7.5 - Breach of Section 255 of the 2004 Act, causing deficiency of in the trust account of the law practice, purporting to act as executor of deceased estate in circumstances where he had no authority to so act as there had been no grant of probate

On or about 22 April 2013 the practitioner caused a tax invoice be prepared in relation to the estate of Mrs N comprising costs and disbursements for the period since her death. The total of the bill was $14,341.55 including GST.
The solicitor since Mrs N's death on 4 October 2012 had made no cost disclosure in relation to acting for the estate of Mrs N in accordance with the requirements of Section 309 of the Act or otherwise. Because of the failure to make the disclosures required under Section 309 of the 2004 Act, the position was that the estate need not pay the legal costs unless they had been assessed (see s317(1)). They had not been assessed. Also section 261 or the 2014 Act and clause 88 of the 2005 Regulation did not apply to permit payment by funds held by the law practice trust account.
On or about 6 May 2013, the practitioner caused the sum of $14,341.55 to be paid from the trust monies held on behalf of Mrs N's estate to the law practice office account on account of fees for acting for the estate of Mrs N.
At the time of the payment, probate had not been granted in the Estate. The practitioner therefore had no authority to make the 6th payment in circumstances where he had no authority pursuant to the Power of Attorney since the death of Mrs N, the sum of $14,341.55 was trust money belonging to the estate and probate had not yet been granted.
Section 255 of the 2004 Act required the practitioner to hold the sum of $14,341.55 in a trust account operated by the law practice exclusively for the estate and disburse the trust money only in accordance with a direction given by the estate. The practitioner was not able to give such direction as he did not have any such power. By making the payment he breached section 255.
When on 7 June 2013 Mr Sofiak asked the practitioner on whose authority he made the payment the practitioner replied, "The same thing as the others." In his affidavit of 5 October 2016 he said in relation to the payment, "the work had been done and billed. It is correct that probate had not been granted at the time the money was paid or transferred. Probate was, however subsequently granted." He also said as to alleged breaches of sections 254, 255 and 259 of the 2004 Act, he had no intention to breach any of the relevant sections.

In causing the 6th payment ($14,341.55) to be made the practitioner purported to act as executor of the estate of Mrs N in circumstances where he had no authority to so act as there had been no grant of probate. There was no valid He had no valid direction to make the payment and therefore, as the practitioner admitted, he breached Section 255 of the 2004 Act.

The practitioner also by causing the payment to be made caused a deficiency of that amount in the trust account of the law practice.
In making the payment, the practitioner purported to act as executor of the estate of Mrs N when he had no authority to so act and there had not yet been any grant of probate.
On the balance of probabilities the practitioner knew at the time of the payment :

The money was trust money belonging to the estate;
It was required by law to be held in trust and only be dealt with in accordance with a valid authorization from the estate or as permitted by law;
As one of two nominated directors in the will, without a grant of probate he could not authorize payment of costs from the trust money;
The payment was not authorized by any other law; and
The payment would be illegal and dishonest.

Each of the breach of section 255, causing a deficiency in the trust account and purporting to act with the powers of an executor when there had been no grant of probate, was conduct in connection with the practice of law that fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner and was therefore unsatisfactory professional conduct.

[24]

Mrs Rosati's Expertise and Experience

The bill by the practitioner for work done for Mrs N since March 2009 was for a total of $176,800.94. The Law Society relied upon evidence by Ms K Rosati, whose evidence in chief was contained in her affidavit of 15 March 2016 and exhibit KR1.
Ms Rosati is the principal of the incorporated legal practice DG Thompson Pty Limited trading as DGT Costs Lawyers.
Ms Rosati's company has 11 staff members in Brisbane and Sydney and about 12 cost consultants. She graduated as a Bachelor of Laws from the University of Technology in 1988 and was admitted as a solicitor by the Supreme Court of NSW on 1 July 1988.
She is also registered as a practitioner with the High Court of Australia. She worked in the NSW court system while completing her studies and then as a litigation paralegal from 1984 to 1989 for Minter Ellison as a litigation paralegal and solicitor mainly in commercial litigation, property and general commercial practice groups.
She has worked with DGT since February 1998 as a Legal Costs Consultant. She took on the roles of Client Services Manager, Costs Consultants Manager, and then General Manager for the firm. She became Solicitor, Director and Principal of the firm in October 2007.
Ms Rosati has trained as a mediator and is registered Approved Costs Assessor in Queensland. She has practised exclusively in the area of legal costs law since joining DGT in 1998 (19 years ago) and is the holder of an unrestricted practising certificate in NSW.
Since 1998, Ms Rosati has regularly engaged in: 1. assisting clients of the firm in matters concerning the law and practice of legal 1. costing. I am frequently called upon to give advice to clients on: 2. the operation and effect of the Legal Profession Uniform Law (NSW) and it's predecessors; 3. the operation and effect of the Legal Profession Act 2007 (QLD) and the Legal Profession Act 2006 (ACT) and preceding legislation; 4. the workings of the New South Wales costs assessment system; the operation and effect of the costs provisions of the Federal Court Rules and the workings of the taxation system; 5. the operation and effect of the costs provisions of the High Court Rules and the working of the taxation system; 6. the operation and effect of the costs provisions of the Family Law Rules and the costs assessment system in that jurisdiction; 7. costing principles and practice; and 8. amounts recoverable under party/party costs orders 1. advising on the principles which apply in determining the reasonableness of costs under a party/party and indemnity costs order; 2. preparing submissions on costs for matters which are proceeding through the assessment system governed by the Legal Profession legislation in NSW, Queensland and the ACT; 3. the preparation of bills of costs, notices of objection and responses to notices of objection both myself personally and in a supervisory capacity; 4. advising in relation to, appearing at and supervising other lawyers in the firm who appear at pre-assessment conferences, conciliation conferences, confidential conferences and taxations of costs in the Federal Court, the High Court, the ACT Supreme Court and ACT Magistrate's Court; 5. advising on and acting as an expert in security for costs applications large commercial matters in State and federal jurisdictions; 6. advising on and acting as an expert in gross sum applications for costs in both State and federal jurisdictions; 7. preparing submissions for the Joint Costs Advisory Committee in relation to (4 the quantum of scales of costs in the federal courts; 8. assisting legal practitioners (solicitors and barristers) to create costs disclosure procedures that ensure compliance with their obligations under current legislation; 9. assisting legal practitioners to draft costs agreements and retainers for use between the legal practitioner and his or her client; 10. keeping our team of approximately 20 solicitors and costs consultants up-to-date with the rules of the law and practice of legal costing; 11. assisting to train new assessors employed by the firm; 12. giving Mandatory Continuing Legal Education lectures on legal costs issues, both on behalf of legal seminar providers and directly to law firms and other groups of practitioners. I deliver at least 20 such lectures per year and have done so since 2000. The public seminars I have given over the past few years include: 1. State Legal Conference; 2. The College of Law; 3. The Law Societies of NSW, Northern Territory, ACT and Tasmania; 4. QUT practical legal training course; 5. The Australian Lawyers Alliance; and 6. a large number of in-house seminars for law firm clients.
DGT takes instructions solely in matters relating to legal costs law and practice. It is one of the largest legal costing firms in Australia. It has offices in NSW, ACT and Queensland. It has been retained in many areas of practice in relation to costs and usually receives instructions to act in around 700 matters each year, exclusively in the area of legal costs, and many of these relate to costs in large personal injury matters
Ms Rosati has supervisory responsibility for all the matters. She has worked for hundreds of legal practices including large practices and sole practitioners. She has also acted for barristers, trust companies, state and commonwealth government departments, corporate clients and private clients.
In addition, she regular acts for clients as a solicitor on the record in cost assessment proceedings and also in the Federal Court, High Court and Family Court assessments. She also briefs counsel to act for clients in cost appeals and other cost applications as required.
Ms Rosati is often briefed to advise clients on the feasibility and practicality of obtaining gross sum cost orders with the court in large commercial proceedings in all jurisdictions rather than proceeding to assessment or taxation of costs.
She also regularly acts as an expert on applications for gross sum costs and applications for security for costs in all matters in all jurisdictions, but particularly in larger complex commercial matters in the Supreme Court of NSW and the Federal Court.
She is also from time to time appointed as an independent expert by way of deed and in large commercial disputes to determine the quantum of party / party costs that parties agree to be bound by.
She has listed in her curriculum vitae numerous proceedings including class actions, where the cost in question were in the millions of dollars.
She is also a consultant to the Australian Tax Office, Macquarie Bank, Banking and Property Group, ASIC, NSW WorkCover Authority, and the Law Council of Australia in the provision of advice regarding costs.
Ms Rosati is a member of the Cost Assessor's Users Group Committee which is the one of the NSW Supreme Court user's groups.
She is also a member of the Cost Committee of the Law Society of NSW. She was involved in the drafting and amendments of the "Current Costs Guidebook" published by the Law Society of NSW and is involved in writing an settling the text for publications on costs to be issued by the NSW Law Society Young Lawyers. 1. The President of the Law Society of NSW invited her to present a paper on alternatives to time costing at the Inaugural Cost Symposium convened by the Society in July 2011.
Ms Rosati, on instructions from the Law Society, provided an expert report on the bill rendered by the practitioner in the name of the law practice on 22 June 2012 in respect to services provided to Mrs N in the period from 19 March 2009 to 31 May 2012.

[25]

Discussion

It is clear from the evidence that his time spent on non-legal matters was billed at the same rate as for performing legal work. In claiming to time spent on non-legal tasks by the practitioner or his staff, even though such staff did not require the skills of a solicitor or a staff member of a solicitor, the practitioner applied the same hourly rates as he applied for legal work by the person. There was no evidence of any contractual agreement with Mrs N for the practitioner to be paid for any non-legal work by him or his staff or for the rates to be charged for such work and similarly there was no evidence of any agreement for the practitioner to be paid for time spent by him as part of his assistance to Mrs N as her power of attorney.
Ms Rosati in her report identified the specific items in the bill that she considered were legal work, those that were not legal work (including non legal items that were done for Mrs N pursuant to the power of attorney) and items the description of which did not disclose whether they were legal work.
Mrs Rosati's report was served on the practitioner in November 2015. The hearing commenced on 22 February 2017. The practitioner did not file any evidence in the in the proceedings that any of the items Ms Rosati in her report did not categorise as legal costs were in fact legal costs.
In his reply, the practitioner said "the solicitor does not reply item by item in his reply to the matters set out in schedule A, such matters being properly a matter for evidence to be heard by and tested before the Tribunal". He did not provide any evidence in reply to Mrs Rosati's evidence regarding individual items in the bill in the period of more than 18 months between his receipt of the report of Mrs Rosati in November 2015 and the conclusion of the hearing on 30 June 2017.
He alleged "that the opinions expressed by Ms Rosati are based on errors of law, errors of fact, failure to make proper investigation, and a failure to take account of records (in the form of files notes and other documents) which were available to the Law Society of NSW, but which were not made available to Ms Rosati, or which were made available to Ms Rosati but were not read or referred to by her and included records which were made available to the Cost Assessor of the Supreme Court of NSW".
The practitioner did not identify the alleged errors of Ms Rosati. He did not introduce evidence in response to her report.
Mrs Rosati's affidavit and her report were filed and served in the proceedings on 15 March 2016. She did not have the benefit of access to the files of the practitioner in relation to the items claimed in the bills.
During the hearing, on 22 February 2017, there were extensive submissions on the question of whether Mrs Rosati had appropriate expertise to found the opinions in her report. There were extensive other objections to content of her report. Ms Rosati was cross-examined by Counsel for the practitioner extensively. The Tribunal did not consider that the cross-examination created any serious doubts as to the expertise of Mr Rosati or the contents of her report.
In his reply to the application alleging professional misconduct by overcharging, the practitioner relied upon the assessment by the Supreme Court Assessor.
The practitioner also pleaded in his reply filed 31 October 2016 that the decision of the Cost Assessor created an estoppel and it was therefore not open to the Tribunal to make a finding that contradicts the finding of the Assessor or the District Court, in which he registered the assessment for enforcement. But the law Society was not a party to the assessment and no estoppel arises against it.
Given that the practitioner in the assessment proceedings had a conflict of interest and failed to make any objection on behalf of his client (the estate of Mrs N) to the costs included in the bill he had rendered, his involvement was an abuse of process, objections to the bill were not raised or considered. It is not necessary to decide in these proceedings, but there is doubt that the decision of the Assessor would raise any issue estoppel on those issues as between the law practice and the estate.
The practitioner in his reply denied that "the work which was not in the nature of provision of legal service strictly so called was work done pursuant to a Power of Attorney". But Ms Rosati did not distinguish between work that she considered to be done pursuant to a Power of Attorney and other work that was not legal services. The important distinction she raised was between the provision of legal services and provision of non-legal services.
The practitioner said in his reply "the solicitor does not admit that charging professional rates for work of a non-legal nature inherently constitutes overcharging". But the evidence does not establish any agreement by Mrs N to pay for non-legal services or as to the appropriate rates.
In his reply the practitioner also relied upon the fact that he "submitted the tax invoice, together with the revised fee schedule, to his co-executor of the estate, Mr Green, and to the beneficiaries of the estate. Neither Mr Green nor the beneficiaries raised any objections to the charges invoiced". He overlooked there that he was the solicitor for the estate, and it was his obligation to protect the interests of the estate. He did not do so.
The practitioner also argued that Ms Rosati's opinions "do not constitute a proper and sufficient basis" for challenging the determination of the assessor. But these proceedings by the Law Society are not challenging that decision. These proceedings are about the conduct of the practitioner.
Charging a professional rate for work of a non-legal nature constitutes overcharging, particularly where there had been no agreement for the client to pay and no agreement as to rates.
Charging, whether at all, or at professional rates, for work done pursuant to the Power of Attorney constitutes overcharging, particularly because there had been no agreement to pay for such work. Accordingly, by charging Mrs N $90,527.04 for carrying out work which was non-legal in nature and / or which was work done pursuant to a Power of Attorney held by the practitioner, the practitioner engaged in overcharging.
The practitioner charged Mrs N $28,533.52 for carrying our work the purpose or character of which is unknown. That work is particularized in schedule B to the application. It is not fair and reasonable for a practitioner to charge a client for work, the nature of which is unknown or unclear. Charging for work in such circumstances constitutes overcharging. Accordingly, in charging Mrs N for $28,533.52 for carrying out work the purpose or character of which is unknown, the practitioner engaged in overcharging.
The practitioner charged Mrs N $2,432.72 in respect of disbursements. There is insufficient information in the bill as to the purpose of the disbursements charged. Accordingly, the charges for disbursements, particularly when the total sum is considered, involved overcharging.
Ms Rosati reached the following conclusions in her report: Total of items identified as legal costs $38,673.00 Total of the power of attorney work and other Non legal costs $90,527.04 Total of other costs not identified as legal costs $28,533.52 Costs $157,733.56
In relation to the disbursements of $2,432.72 (incl GST), the total for disbursements was reduced by $1,848.69 for items that did not appear to be legal costs. The disbursements amounts that she advised did appear to be legal costs came to a total of $584.03.
Accordingly, it appears that the total of the legal costs and disbursements found by Ms Rosati to be identified in the bill was as follows: 1. Professional time $38,673.00 2. Disbursements $584.03 Total $39,257.03
The amount claimed in the practitioner's bill was $176,800.94. The difference of $137,543.91 was the extent of the overcharge.
The Tribunal has concluded that overcharging of Mrs N by the practitioner constituted professional misconduct because of: 1. The vulnerability of Mrs N; 2. Absence of cost disclosures; 3. Absence of regular periodic bills; 4. The charging of the rates for legal services for services that were not legal services; 5. The absence of any contract to pay for non-legal services; 6. The extent of the items that were not legal services; and 7. The extent of the items that were not identified in the bill as legal services for the client.
The conduct of the practitioner in charging the client $176,800.94 is conduct by the practitioner in connection with the practice of law that justifies a finding that the practitioner is guilty of professional misconduct.

[26]

Application for the Tribunal to disqualify themselves

At the last day of the stage one hearing (30 June 2016) when the practitioner's cross-examination had not been completed and the hearing was resumed at 11:45am after a morning tea adjournment, counsel for the respondent gave notice that he had instructions to apply for the Tribunal to disqualify itself on the basis of a reasonable apprehension of bias.
The cross-examination of the practitioner was completed and at about 3:15pm the Tribunal then heard submissions in relation to that application by the practitioner.
At about 4:15pm the Tribunal delivered its decision refusing the application, and made directions for the Stage 2 hearing. Reasons were not given in respect of the decision to refuse the disqualification application. Accordingly, the reasons are as follows.
The first passage relied upon by the practitioner is at page 15, lines 24-37 of page 15 of the transcript 22 February 2017. That passage is where the presiding member interrupted opening submissions by counsel for the applicant as follows: Presiding Member: "I have a question for you. In relation to the respondent's explanations to his conduct in the various areas, he relies on inadequate knowledge, of not knowing. So he says that he didn't know that the money he transferred at times was trust money. He said he didn't know that the contract that he issued from his office for Mr & Mrs [H] to buy a property from a company in which he was a sole director and shareholder contained a clause that restricted the use by the vendor of the deposit. He says that in various areas that he didn't know what he was doing was wrong. Is there any authority that if the Tribunal decides that he does not have the competence that one can expect from a solicitor of 40 odd years standing and has as Masters Degree in Business Law, that the level of competence is not what the community is entitled to expect, and that, therefore, it's a situation where he should be, you know, removed from the roll.
The second passage relied upon is an interruption by the presiding member on 22 February 2017 during cross-examination of Ms Rosati by Mr Lovas at pages 36-37 Mr Lovas: "…now in paragraph 120 you expressed the view that an attorney - sorry - that it is unnecessary and excessive for an attorney to make memos of the work that he has done, don't' you - I think I'm speaking from a cost perspective". Presiding member: "this is as distinct from a file note, I take it; having someone type up whatever it is you did or said? Mr Lovas: Well, do you refer to diary notes, file notes and memos as synonyms of each other? Presiding member: … I was using the word memo, I think because that was the word that was used in the bill. Mr Lovas: "I see, and you say that it is unnecessary and excessive --- Presiding Member: I think this is a situation where if someone makes a phone call to you and you write down what's happened in the phone call, that's reasonably required, but if you then dictate to your secretary to type up a memo to go on the file, or you type it up yourself or you re-write it, that's not reasonably necessary, or like some bills a solicitor will have a telephone conversation and then apparently not make any notes during the conversation but then charge the client other charges for writing a file memo, and set out what was said in the telephone conversation. Do you understand? That's what it seems she is talking about where here, where somebody else is involved".
The third passage is at page 17 of the transcript relied upon by the practitioner in support of the application which is: Presiding Member: "And I recall an occasion where Justice Hutley said some lawyers were coming along defending misconduct allegations on the basis that they were naïve because they were inexperienced and Hutley J said that no member of the public wants a lawyer who's naïve and inexperienced. They expect their lawyers to be smart. They expect them to be intelligent. Mr Lovas: Yes. Presiding Member: Yes - they expect them to be careful. Mr Lovas: But the difficulty we have is that Presiding Member: So it's not a defence to say he didn't know something that you should have known to the ultimate outcome (indistinct)
The fourth passage relied upon from 22 February 2017 is a comment by the presiding member at page 18 of the transcript in relation to the evidence concerning the ground that the practitioner did not comply with a court order. Presiding Member: "Well, when - I just don't know if I'm (indistinct) it seems that his idea of complying with the order was getting his secretary to do it. He doesn't say anywhere that he vetted what went out, the list or anything. He got his secretary to do it and it didn't go to the lady who says she was his client at the time.
Counsel for the practitioner said that this was "not a proper characterization of the evidence" because the practitioner had said in his affidavit evidence that he directed the staff to do a list and he dictated a letter to go to each of those people on the list. He said that the evidence was that the practitioner did read the list.
In paragraphs 90-93 of the practitioner's affidavit of 5 October 2015, the practitioner says "I directed my staff to prepare a list of all current clients. I prepared a letter to each of those clients informing them of the outcome of the principal proceedings". There was no statement that he read the list. Nor was there any statement that he gave instructions as to how the current clients were to be identified.
He says that the letter was sent to all of the persons identified on the list prepared by his staff. He says that the particular client was not included in the list "by my staff" and "I am not sure whether [Ms Q] was in fact a current client within the meaning of the Court's Order. She was not so identified by my staff." He does not say there that he read the list. He later says "I did not note her omission from the list, and even had I done so, it would not have been clear to me that she was at all material times, as alleged, a client of the law practice". He did not say in that affidavit that he read the list
The 5th passage occurs at pages 42-43 Mr Lovas: Ms Rosati, you've answered this. Presiding Member: (indistinct) Mr Lovas: We've answered this before, but we'll do it again. You agree with me that 439 is the only entry dated 9 January? - Yes, I do. And, therefore, it is the one that's referred to as 9 January on paragraph 123(a)? - In paragraph - I think you need to paragraph - you have to read paragraph 123. I'm actually listing those items there as examples of expected, fees for conferences. I'm not actually saying that they should not I'm forming an opinion with respect to all of those at the end of 125. Well, in that case, is it true that the first sentence of 125 is false?---No, it's not Because you now form the opinion, do you not - - Presiding Member: Look, you're putting to her - Mr Lovas: There's no objection to the question, your Honour Presiding Member: Well, I'm objecting to it because we're waiting for this to come to something. But if you look at Paragraph 123 it doesn't say that the witness rejected it, but what she does say is that there are - seem to be excessive claims for conferences and these are some of the claims of the pattern of very regular meetings, and so from January 2011 he says there were one, two, three, four, five, six, and he gives - she gives the dates. She doesn't say that she would disallow them, all of them, or any of them there. Mr Lovas: Read the first sentence of 125, please, Your Honour Presiding Member: Yes Mr Lovas: She says that they should not have been charged to the client. I'm putting to ---- Presiding member: Yes. Yes. Well, I would think that what she's saying is that the excessive frequency of the claims is what you're concerned about there and then, of course, she says most of which provide no indication of the reasons for the conference or the issues discussed. So, obviously, they shouldn't be allowed. Mr Lovas: May I ask a question?
The other matters that were raised by counsel as evidence supporting the application for disqualification were: 1. That there was on 30 June 2017 a "heated exchange" regarding the practitioner's communications annexures A and B to his affidavit of 5 October 2016 with the presiding member and the presiding member put to the practitioner more than once that he was not properly conducting himself in the witness box. The annexures were documents concerning expenditures relating to the development of which lot 1 being sold to Mr and Mrs H was a part. Its only relevance could have been in seeking to justify the taking and use of the deposit paid by Mr & Mrs H. But remediation, compliance with council development conditions, and other expenses in relation to the subdivision or development of which Lot 1 was part were not expenses that were permitted uses of the deposit money under special condition 12 of the contract. 2. On 30 June 2017 when the practitioner in answer to the question whether he prepared a chronology said he thought someone else did, the presiding member told him he was avoiding the question. 3. Questions by Senior Member Riordan of the practitioner were around the practitioner's instruction to his secretary to continue recording his times spent for Mrs N after he had agreed with his partners to write off the already recorded times/fees and not charge for further work in those matters. The questions included detailed questions about the account software system and the instructions he gave his secretary which counsel submitted, given detailed affidavit evidence of his secretary, might appear as cross examination by the Tribunal member and cause a fair minded observer to reasonably apprehend that the tribunal or a member was not open minded.
The test as to whether the Tribunal should have disqualified itself is whether in all the circumstances the parties or the public might entertain a reasonable apprehension that the Tribunal might not bring impartial and unprejudiced minds to the resolution of the question involved ( Galea v Galea (1990) NSWLR 263 (per Kirby A-CJ at 277D-278D, and Meagher AJ at 283D) .
In applying that test the circumstances that should be taken into account include the concerns the Tribunal members had from reading the documents before the hearing commenced. The subject interactions on 22 February 2017 between Tribunal members and the legal representatives and between tribunal members and the practitioner were in the context of those matters.
With regard to the conduct on 22 February relied upon, it could not in that context give rise to a reasonable apprehension of prejudice or impartiality. But in any event that conduct was on the first day of hearing evidence. The practitioner demonstrated no apprehension. He did not apply for the Tribunal to disqualify themselves on that day or within any reasonable time. It was not till more than 4 months later and the last of 5 days of hearing that he sought to raise those matters. With the benefit of legal advice and representation by solicitors and counsel he acquiesced in the hearing proceeding over that period and to its 5th hearing day and by doing that must be taken to have waived any rights to make such an application on 30 June 2017 in respect of the interactions on 22 February 2017.
With regard to the conduct on 30 June the subject of the application the circumstances in which the subject conduct of the panel members occurred include:

those initial serious concerns;
other very serious concerns as to the practitioner's credit that had emerged from the content of his oral evidence;
the practitioner's persistent avoidance of questions despite warnings; and
occasions of the practitioner arguing with Counsel for the applicant and panel members who were asking for answers.

His conduct had by that third day of his oral evidence been very annoying for the Tribunal members and made the hearing difficult and uncomfortable for them and any impartial observer.
The Tribunal is concerned to protect the public from unsatisfactory professional conduct and professional misconduct of lawyers (Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630 at 637 to 638) . To some extent its role is inquisitorial.
In the circumstances prevailing on 30 June 2017 a member of the public would not entertain a reasonable apprehension that any of the Tribunal panel did not bring an impartial and unprejudiced mind to the role of deciding the applications before them. The disqualification application was therefore dismissed on 30 June 2017.

At a glance

Court

Decision date

Catchwords

Source

Catchwords

Judgment (29 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (7)

Cited By (6)