Legal Services Commissioner v Hurley [1992] NSWCA 72 | Case summary

REASONS FOR DECISION 1 Brett William Hurley was admitted to practice as a solicitor in 1990 initially engaged as an employed solicitor but later as a salaried partner between late 1994 and September 1995. From November 1995 until February 1997 he was employed by Steven Nazarian solicitor at Chatswood. From February 1997 until June 2001, Mr Hurley was firstly a sole practitioner then in several partnerships at Chatswood. In July 2001 to late 2004 he was employed as a consultant solicitor and from early 2005 until September 2006 J Biady & Associates at North Sydney employed him as a solicitor. From April 2008 until February 2009 he was a consultant solicitor and since February 2009 he has been a consultant solicitor with Sid Hawach and Associates at Parramatta. While working as a solicitor between 1997 and 1999, Mr Hurley studied for a Bachelor of Medical Science at Sydney University which he completed in late 1999. During this period he attended University in the morning and would attend to his legal duties in the afternoon carrying large workloads. From 2001 until 2004 he then studied for a Medical Degree at Sydney University which he completed in late 2004. Again, he attended University most mornings and worked as a solicitor in the afternoon. During 2005 he completed an internship at a Sydney hospital and since early 2006 he has worked as a locum in emergency departments in Sydney and the Central Coast. The medical work is flexible and occupies approximately three shifts a week with much of the work being performed on the weekend. 2 Shortly after being employed by Mr Nazarian and for several months thereafter Mr Hurley made a series of financial advances to Mr Nazarian and two business partners totalling in excess of $220,000 in relation to a property that Mr Nazarian was renovating. The venture involved the creation of a boutique hotel and as part of the arrangement, Mr Hurley was to receive a share in the company. 3 When Mr Hurley was working for Mr Nazarian he was also facing allegations of improper conduct as a solicitor, ultimately being dealt with by the Tribunal in late December 1999. Mr Hurley said that, at this time, he was under an enormous mental strain and he did not think he would have lent any money to Mr Nazarian or as much money had he not been under so much pressure. He said he was anxious to appease Mr Nazarian in order to maintain his employment. The money he lent Mr Nazarian represented nearly all his savings. 4 In late 1996 the venture undertaken by Mr Nazarian, in part using funds advanced by Mr Hurley, failed and Mr Nazarian was declared bankrupt. Mr Hurley lost all the money he had advanced in relation to the venture and described the result as being "devastating". In early 1996 Mr Hurley had started to doubt Mr Nazarian's veracity in relation to the loan transaction and later he was informed about other matters that seemed to confirm that opinion. Ultimately, it became clear to him that he had been defrauded and he was very upset. 5 In late 2001 Mr Hurley sued Mr Nazarian for negligence. In 2002, with no defence filed, he obtained a default judgment and Mr Nazarian became bankrupt in July 2003. In 2005, the Trustee in Bankruptcy assigned to Mr Hurley the right to claim under Mr Nazarian's Professional Indemnity Insurance policy and in the same year, Mr Hurley commenced proceedings against LawCover and Munich Insurers. His then employer, Mr Jim Biady, acted as his solicitor in these proceedings. 6 During the course of pursuing these proceedings, Mr Hurley formed the view that the defendants to the proceedings had failed to discover a policy document that he and Mr Biady thought might be relevant to his claim. On the afternoon of Wednesday 22 August 2007, it occurred to Mr Hurley that if he telephoned Munich Insurance pretending to be from LawCover, someone might admit that there were discoverable documents which they had withheld. Later that same afternoon he telephoned Munich Reinsurance and pretended to be a James Taylor. He had seen Mr Taylor's name on a LawCover website. He made some enquiries about the Nazarian file but the person to whom he was speaking, Ms Ilana Cornell, asked him if there were two people with the name James Taylor because she knew the other one. When he was told he would need to talk to the solicitors about the file, a discussion ensued about from where he was calling when he then asked to speak to someone else. The telephone call was terminated shortly thereafter and Ms Cornell indicated that she would have to call him back on a telephone number she had recorded. 7 In November 2008 following the receipt of a complaint from Munich Reinsurance Group of Australasia ("Munich"), the Legal Services Commissioner applied to the Tribunal for an original decision in relation to Mr Hurley. The orders sought against Mr Hurley and the grounds for those orders were as follows: 1. A finding that the Respondent is guilty of professional misconduct. 2. In the alternative, a finding that the Respondent is guilty of unsatisfactory professional conduct. 3. Order that the Respondent's name be removed from the roll of practitioners. 4. In the alternative, order that the Respondent be publicly reprimanded. 5. Further and in the alternative, order that the Respondent be fined. 6. Order that the Respondent pay the costs of and incidental to the filing and hearing of the Application. 7. Such other orders as the Tribunal sees fit. GROUNDS FOR APPLICATION (INCLUDING PARTICULARS) GROUND 1 The Respondent engaged in misleading and deceptive conduct. Particular 1.1. The Respondent was the plaintiff in the matter of Brett William Hurley v LawCover Pty Ltd & anor in the Commercial List of the District Court of New South Wales being case number 3138 of 2005 (the Proceedings). Particular 1.2 On 22 August 2007 the Respondent telephoned Munich Holdings of Australasia Pty Ltd, agent in Australia for Munich Reinsurance America Inc., the second defendant in the Proceedings. Particular 1.3 The Respondent had a telephone conversation on that occasion with Ms Ilana Cornell, claims consultant at Munich Holdings of Australasia Pty Ltd (the Telephone Conversation). Particular 1.4 The Respondent, during the course of the Telephone Conversation referred to In particular 1.3 above, identified himself as James Taylor from LawCover, the first defendant in the Proceedings. Particular 1.5 The purpose of the Telephone Conversation was for the Respondent to arrange access to and inspection of the Munich Holdings of Australasia Pty Ltd file relevant to the Proceedings. Particular 1.6 The Munich Holdings of Australasia Pty Ltd file relevant to the Proceedings contained privileged material that the Respondent was not entitled to access. Particular 1.7 The Munich Holdings of Australasia Pty Ltd file relevant to the Proceedings had been subject previously to various orders in relation to discovery of documents. Particular 1.8 The Respondent's conduct during the course of the Telephone Conversation referred to in Particulars 1.1. to 1.5 above amounted to misleading and deceptive conduct. GROUND 2 The Respondent breached Rule 31 of the Solicitors Revised Professional Conduct and Practise Rules 1995. Particular 2.1 The Particulars to Ground 1 above are repeated. Particular 2.2 Ms Ilana Cornell was a representative of the second defendant to the Proceedings being a claims consultant with Munich Holdings of Australasia Pty Ltd. Particular 2.3 At all relevant times the Respondent was aware that the second defendant was represented in the Proceedings by Mallesons Stephen Jacques. Particular 2.4 At the time of the Telephone Conversation the Respondent was acting on his own behalf being the plaintiff to the Proceedings. Particular 2.5 The Respondent failed to notify Mallesons Stephen Jacques of his intention to communicate with their client. Particular 2.6 There had been no default of reply from Mallesons Stephen Jacques to the Respondent. Particular 2.7 The Respondent thereby breached Rule 31 GROUND 3 The Respondent breached Rule 34.1 of the Solicitors Revised Professional Conduct and Practise Rules 1995 Particular 3 1 The particulars to Ground 1 above are repeated Particular 3.2 During the course of the Telephone Conversation the Respondent represented to Ms Cornell that he was James Taylor, when he knew that fact to be untrue. Particular 3.3 During the course of the Telephone Conversation the Respondent represented to Ms Cornell that he was from LawCover when he knew that fact to be untrue. Particular 3.4 During the course of the Telephone Conversation in response to the question from Ms Cornell "Are there two James Taylors at LawCover?" the Respondent said, "I think so" when he knew that fact to be untrue. Particular 3.5 During the course of the Telephone Conversation in response to the question from Ms Cornell "What is the name of the firm you are calling from?" the Respondent answered "I don't know", when he knew that fact to be untrue. 8 Mr Hurley's Reply filed in the Tribunal accepted many of the particulars but sought to place them in a certain context. In relation to Ground 1, Particulars 1.1. to 1.4 were admitted. In relation to Particular 1.5 concerning the purpose of the telephone conversation, Mr Hurley denied the purpose was to arrange access or an inspection of the Munich file relevant to the proceedings. He stated that the purpose of the telephone call was to obtain information concerning an alleged failure by Munich Reinsurance America Inc to produce documents he believed were discoverable in the proceedings. In relation to Particular 1.6 he said he did not know and could not admit that the Munich file contained privileged material that he was not entitled to access. In relation to Particular 1.7 he admitted that orders for discovery had been made in the proceedings but denied that the Munich file had specifically been the subject of an order for discovery. In relation to Particular 1.8 Mr Hurley admitted that the conduct to which he had admitted in relation to Particulars 1.1. to 1.4 was misleading and deceptive. In relation to Ground 2, Mr Hurley relied on his Replies to the Particulars to Ground 1 and admitted Particular 2.2, 2.3. In relation to paragraph 2.4 Mr Hurley denied that, at the time of the telephone call, he was acting on behalf of a party. In relation to paragraph 2.5 he admitted that he failed to notify the defendants' solicitor of his intention to communicate with their client but in the circumstances, denied that he was obliged to do so. As to Particular 2.6. Mr Hurley admitted that there was no default in reply from solicitors but stated that, in the circumstances, it was irrelevant. In relation to paragraph 2.7 Mr Hurley denied having breached Rule 31 of the Solicitors Revised Professional Conduct and Practice Rules 1995. In relation to Ground 3, Mr Hurley repeated his Replies to the Particulars in Ground 1 and admitted Particulars 3.2, 3.3, 3.4, and 3.5 but in general response to this Ground, denied that the communication constituted by the telephone call was made on behalf of the client and accordingly denied having breached Rule 34.1. 9 At the hearing before the Tribunal, the matter proceeded on the basis that Mr Hurley admitted engaging in misleading and deceptive conduct in impersonating Mr Taylor from LawCover. The terms of the conversation he had with Ms Cornell were substantially accepted but he denied that he was seeking to arrange access and inspection of the file but rather was seeking to gather information about the existence of documents that had not been discovered. He denied a breach of Rule 31 and Rule 34.1 and submitted that they were simply inapplicable but did not hesitate to accept that the gravamen of the allegation was his wrongful impersonation of Mr Taylor in seeking information about the file held by the insurer in his own proceedings. Through his senior counsel, Mr Hurley accepted that his conduct was egregious but submitted that, although the conduct was deserving of a severe penalty, it did not warrant striking off. 10 Firstly, it is necessary to deal with the differing accounts of the short conversation that took place between Mr Hurley and Ms Cornell. According to Ms Cornell she took a telephone call at approximately 3.15 pm on 22 August 2007 in which the caller stated: This is James Taylor calling from LawCover. I am calling to arrange an inspection of your file regarding the insured, Steven Nazarian . The LawCover reference is 0190-02 Ms Cornell told the caller to speak to their solicitors to arrange that inspection and the caller asked to speak to someone from Ms Cornell's office about the matter and was told that they would have to call him back. There was a discussion about the number he was calling from and Ms Cornell then asked him if there were two people named James Taylor at LawCover to which the caller replied "I think so". Ms Cornell then said she knew James Taylor quite well and this was unusual and asked from where the caller was calling. Her telephone had the facility for caller identification and indicated a different number. At the hearing that number was accepted to be a discrete telephone line operating out of the office of Mr Biady where Mr Hurley was working. Importantly, Ms Cornell's affidavit evidence was that immediately after that conversation she made a handwritten file note of the conversation which was annexed to her affidavit. In substance, that file note was repeated in her affidavit. 11 In a statutory declaration dated late October 2007, Mr Hurley recounted the telephone conversation as introducing himself as James Taylor from LawCover and being asked if there were two people called James Taylor working there to which he replied that he thought so. He then said: I am ringing about production of your file regarding a matter. The insurer's name is Nazarian and the file number is 0190-02. He was told he needed to talk to their solicitors about that matter and then asked to be transferred to someone else. There was a discussion about telephone numbers and from which telephone number he was calling. 12 As can be seen from the above versions, Ms Cornell has the caller saying that he is calling to arrange "an inspection" of the file while Mr Hurley says that he was calling "about production" of the file. Not a great deal turns on the different words used especially in the light of the fact that the whole enterprise was extraordinary to the point of being irrational and bizarre. In any event, the Tribunal prefers Ms Cornell's evidence in relation to the content of the telephone conversation. She made a contemporaneous note of the conversation which was understandable in the circumstances. She was not cross-examined. Mr Hurley appears to have first committed himself to recall the incident in early October 2007 and later, at the end of October 2007, provided a statutory declaration to the Legal Services Commissioner in relation to the conversation. At the time of the conversation Mr Hurley did not take a note of what he said and was relying on his memory several weeks after the event. 13 What precisely was said is unlikely to be of any moment because, in this wholly bizarre event, it is difficult to believe that Mr Hurley was actually trying to arrange inspection of the file in Munich's offices by presenting himself there as Mr Taylor from LawCover in circumstances where he knew that, at least, Ms Cornell knew the "James Taylor" solicitor from LawCover and had already stated that the request was unusual. It might be expected that he would be requested to provide some identification. Nevertheless, on his own version of the conversation he said he was calling about "production" of the file. To whom was it to be produced? The alternative scenario is that Mr Hurley was seeking to engage anybody he could speak to about the content of the file in the hope of identifying the existence of certain documents which would then become the subject of an application for further discovery at which point he might expect the alarm bells to ring in Munich's offices. It is not for the Tribunal to speculate as to what might have ultimately happened in either scenario but having regard to the fact that the impersonating telephone call was made in the first place, either scenario is a possibility. 14 Ms Cornell's evidence before the Tribunal also indicated that the Nazarian file held by Munich contained, amongst other things, legal advice from their solicitors on the District Court proceedings, including issues of discovery. Mr Hurley accepted that this was likely to be so at the time he called seeking "production" of the file. 15 In his affidavit Mr Hurley stated that it was never his intention to attend Munich's office to inspect the file in the guise of being Mr Taylor. 16 In his oral evidence Mr Hurley said that, in the course of the District Court proceedings in which he was engaged, he had formed the view that there were documents that had not been produced which ought to have been produced. He believed that there was at least one document that should have been produced and perhaps others as well. Mr Hurley was aware of the 2001 to 2002 "run-off cover policy" and also wished to have produced the master policy for the same financial year and he suspected that those documents were being deliberately withheld. Proceedings for discovery had already taken place when he made the telephone call and continued after the call. Eventually Munich did produce those policies by way of discovery. 17 At the time he made the telephone call Mr Hurley said he was under great pressure and stress in relation to the litigation with the hearing approaching and he had not been happy with Mr Biady's representation of him and he did not think he was well prepared. When he made the telephone call he was not intending to obtain access to any privileged documents or information but he was only seeking the policy documents. Mr Hurley said that, immediately after the conversation, it was obvious that the person he had spoken to knew he was not really James Taylor and he also realised that he had done the wrong thing and that he should have "owned up" straight away. Instead, he began denying the incident. Approximately one week after the call, Mr Biady asked him if he knew anything about the telephone call but Mr Hurley was in denial and was hoping that the whole issue would not go any further so he denied any knowledge of the call. The next day he had a further discussion with Mr Biady in which he again denied knowing anything about the telephone call. He left the firm in September 2007. Mr Hurley said he thought the issue had blown over and was caught by surprise when he was asked about the telephone call and just kept denying it. 18 In early September 2007 Mr Hurley instructed Mr Patrick See, solicitor, to act for him in relation to the matter. When he spoke to Mr See he did not tell him the truth about what had happened but kept up the lie. 19 On 12 September 2007 the Legal Services Commissioner wrote to Mr Hurley advising him of a complaint received on behalf of Munich concerning a telephone call made on 22 August 2007 and dealt with by Ms Cornell. The Legal Services Commissioner noted that he was currently employed as a consultant with Biady and Associates and that firm acted for him in District Court proceedings he had commenced against LawCover and Munich. Mr Biady had provided responses to the complaint on behalf of himself and Mr Hurley. Mr Hurley was then asked to assist in the investigation by answering a number of questions in relation to the telephone number used at Biady's firm and whether, on 22 August 2007, he was present at the firm's offices and, if so, between what hours. 20 When Mr Hurley consulted Mr See, he described himself as being under huge stress and it was much worse than when he had made the telephone call. He was not sleeping and was in a terrible state. It was very awkward working at Biady and Associates because after a number of conversations with Mr Biady where he had denied the telephone call, Mr Biady said he had been put in a compromising position and they were not to talk. Mr Hurley was still content to work there but he was under stress. When he saw Mr See he told him "a fib" about the telephone call. 21 According to Mr Hurley's oral evidence, after seeing Mr See and continuing the lie, he considered the matter over the weekend and on the following Monday contacted Mr See and told him he had something to tell him. He made an appointment, attended the office and then informed Mr See that he had lied to him, apologised and admitted that he had made the telephone call. He had been closely cross-examined in the District Court proceedings about the telephone call and had stuck by his full and frank admission about the call. 22 When informed about making the telephone call, Mr See advised him not to make any concessions until he had full particulars of the complaint. Mr Hurley said he felt uneasy about this approach and instructed new solicitors in relation to the complaint. His new solicitor, Mr Graham Walkom, advised him to immediately concede to the Legal Services Commissioner about making the telephone call. They telephoned the Legal Services Commissioner's office on 15 October 2007 and informed them that he had made the call. Since then he had attempted to respond promptly to the Legal Services Commissioner's communications concerning the complaint and had given an honest and frank account of his actions. 23 Mr Hurley was closely cross-examined about the content of paragraph 30 of his affidavit which was in the following form: On or about 12 September 2007 I received a letter from the Legal Services Commissioner. Following this I instructed Patrick See, solicitor, of Lloyd and Lloyd to act on my behalf in dealing with the complaint. I told him that I had made the telephone call that was being investigated. I was advised not to make any concessions until he had full particulars of the complaint. 24 In cross-examination, Mr Hurley was taken to Mr See's file notes indicating that he first had contact with Mr See on 3 September 2007 and had then received the Legal Services Commissioner's letter of 12 September 2007. Mr Hurley accepted that, initially, he told Mr See a lie indicating that he did not make the telephone call but that was not contained in his affidavit. Mr Hurley said that, at this meeting, he was advised to wait for further particulars before making any further response because he had brought to that meeting a draft response which had wrongly implicated another person working in the office as likely to be responsible for the telephone call. That person was a friend of Mr Hurley and everything that he said in the response about that person was made up and he now could not understand why he did it but he was not thinking straight at the time and was under great pressure and was just trying to buy time. He knew that person would deny making the call but he hoped the person would then speak to him before doing anything else. Mr See's advice was not to put that material in the response to the Legal Services Commissioner and to wait to see what would be the next step taken by the Legal Services Commissioner. Mr Hurley said he was not in a very good state of mind when he wrote that response and it was crazy, irrational and dishonest. He was doing no more than delaying the inevitable. In his evidence he acknowledged that he was saved from an even more severe breach by Mr See's advice that the implication of another person should not then be forwarded to the Legal Services Commissioner. 25 None of that material was placed in Mr Hurley's affidavit although when he read it, he thought it could have been more expansive but he accepted it in the form presented by his solicitor. He agreed that he should have elaborated. He had not told his present solicitors until a week before the hearing in the Tribunal that he had initially lied to Mr See about the matter and only disclosed that when it became known that Mr See's files had been subpoenaed for production for these proceedings. Mr Hurley's recollection was that, on 24 September 2007, he returned to Mr See and then told him that he had made the telephone call. He then proposed to Mr See that they should call the Legal Services Commissioner and inform him that Mr Hurley had made the call and Mr See said that he did not think that should occur now and they should wait until the Legal Services Commissioner contacted them. 26 Mr Hurley said that there had been some confusion in his mind about the dates but when he had disclosed to Mr See that he had made the telephone call, he had proposed and had wanted then to tell the Legal Services Commissioner the truth. Mr Hurley accepted that it may not have come to light that he had lied to Mr See if he did not mention it in his affidavit and he would not have brought it up because he was embarrassed about lying to Mr See. When asked if he would have been happy for the Tribunal to receive his affidavit in its present form which kept the Tribunal in the dark about the fact that he had initially lied to Mr See, Mr Hurley responded that, when he checked the draft when first given to him, he was exhausted and he did not really go through it as well as he should have and he would have drafted it differentially but even then, it was not something he would have brought up. 27 In his affidavit evidence, Mr Hurley stated at paragraphs [33] and [34]: 33. I consider my action in making the telephone call to be foolish and deceitful. I am embarrassed of my conduct. I can now see that my judgement had become affected by the fact I had lost a considerable sum of money in circumstances where my then employer had deceived me. I believe that I saw the court proceedings as a means of remedying a wrong I had suffered. I can now see that I lost the ability to be objective about the litigation. 34. I would like to continue to practice law. My involvement in this matter has taught me a salutary lesson and if given the opportunity I will not again allow my judgement to be overcome by personal consideration. 28 In relation to Mr Hurley's previous appearance before the Tribunal in 1999, he admitted that he has signed his supervising partner's signature on two trust account cheques and accepted that was forgery. That occurred in 1993. In 1995 in a statement produced for a hearing he forged the signature of a witness, used the statement in court and obtained judgement, thus misleading the court. At that time he was a salaried partner of the firm. Mr Hurley accepted that was very serious misconduct. As a salaried partner he had also asked a staff member to forge the signature. He said he did so because he thought his own signature would be obvious. He accepted that it was an abuse of his position in the firm and it was wrong. In relation to the forging of trust account cheques, he accepted that he asked the firm's bookkeeper to become knowingly involved in the forging of his employer's signature on those cheques. He also accepted that it was dishonest to alter the dates on contracts to avoid stamp duty interest arising from fines and those acts taken between 1994 and 1995 were a fraud. 29 In cross-examination in relation to what he hoped to achieve by the telephone call, Mr Hurley said he suspected that there were other documents that had not been discovered but that was speculation on his part. He wished to know if there were discoverable documents being held and sooner or later he wanted to see those documents. 30 Mr Hurley accepted that, on his own version of the telephone conversation, he tried by deception to gain an advantage for himself in the District court case. He hoped to obtain some type of admission from whomever he spoke to that there were other discoverable documents that had not yet been produced on discovery. The conversation did not go the way he thought it would but he thought if he could talk to whoever was looking after the file and begin discussing which documents they had given to the solicitor and if they were holding any documents back and were not planning to give to their solicitors, he could seek those documents. He thought that, even though he did not know the person, he could trick somebody into telling him that they were holding documents back. He thought that by identifying himself as someone from LawCover the person he spoke to might be frank about the documents they might be trying to hide in the proceedings. He also thought they might be frank with him about this conspiracy. 31 Once such documents were identified, there was already a plan to file a notice of motion for further discovery. Having identified the documents a motion could have sought specific documents. He had not thought about how he could explain having evidence of these documents. He now could see that he could not use this information without exposing himself and what he had done but at the time he had not thought about it. He denied that it was his plan or intention to come into the Munich offices to obtain the documents. Mr Hurley accepted that he would assume that the documents in the Munich file, that he was asking about or seeking access to, would be likely to contain, amongst other things, privileged documents. 32 The Decision of the Tribunal in the 1999 proceedings concerning Mr Hurley was tendered in evidence with Mr Hurley accepting each of the findings, including findings of fact. In that case counsel for the Law Society claimed that Mr Hurley was guilty of professional misconduct and unsatisfactory professional conduct in relation to the following particulars: (i) In October 1993 he, without authority, in the Kent matters signed the name of Howard Simons to two trust account cheques, which cheques were ultimately presented to the bank and met by debit to the account styled "Remington & Co Trust Account trading as Simons Howard Norman". (ii) In the matter of Builders Bargain Centre v Polley, being proceedings for small debt recovery in the Small Claims Division of the Local Court the Solicitor prepared a statement to be used in the proceedings. Having asked a staff member to sign the name of an employee of the client Builders' Bargain Centre, and being refused, the Solicitor then signed the statement using the employee's name which falsely signed statement was tendered in the proceedings. (iii) By the insertion of a false date in a contract and producing that contract for stamping in a conveyancing matter for client Apostolidis, the Solicitor attempted to evade payment of additional stamp duty by way of a fine and committed a fraud on the Office of State Revenue. (iv) As in Apostolidis conveyance and again in Rudd and again in Davies the Solicitor inserted a false date in a contract to avoid payment of additional stamp duty by way of a fine and committed fraud on the Office of State Revenue. 33 The Tribunal found that there was professional misconduct. Some of the matters involved taking shortcuts in attempting to service the needs of clients or overcoming deficiencies that should otherwise have been attended to. It was emphasised that none of these actions were taken for personal gain and no client was out-of-pocket. Mr Hurley paid fines and other expenses and took action to have the judgement set aside and also paid the clients' expenses. Fourteen affidavits as to his good character were received, including one from the now retired Magistrate before whom Mr Hurley had used the forged signature in a statement to obtain a verdict. There was a reference to Mr Hurley working long hours and being under considerable stress and that his transgressions "were apparently completely out of character". He had demonstrated humiliation, shame and sorrow and had given a firm expression that, in the future, he would not depart from his responsibilities as a solicitor if he was allowed to continue in practice. The Tribunal concluded that, because of his good behaviour and the expenses he had paid, he should be: "publicly reprimanded"; fined $2,000; directed to pay the costs of the Council of the Law Society in the sum of $5,725; and, for a period of two years undertake to agree to his practicing certificate being endorsed by the Law Society with a condition that his right to practice be subject to practising in the employment of or in partnership with a solicitor holding an unrestricted practicing certificate. 34 In the present proceedings, ten affidavits were presented on behalf of Mr Hurley providing character evidence - solicitors swore nine affidavits and one affidavit was sworn by a barrister. They all spoke of the nature of their contact and work with Mr Hurley but spoke only in general terms of being aware of the matter that had brought him before this Tribunal by way of impersonating a LawCover solicitor. Some of the deponents had known him for a very long time, others had a shorter acquaintance but all of them spoke well of Mr Hurley in his work as a solicitor and his dedication to clients, especially those in financial need. A number of the deponents spoke of his actions as out of character and they all saw a future role for him as a practising solicitor. A number had provided character evidence by way of affidavit in the 1999 proceedings and there was some expression of surprise that Mr Hurley had again come to attention in this way. Some were previous partners or principals in firms in which he had worked. Their testimonials covered both social and professional contact and in various ways they all spoke well of him as a person and of his integrity and general honesty. None were required for cross-examination. Deliberation 35 While senior counsel for Mr Hurley readily accepted that the deception and impersonation carried out by his client clearly amounted to misconduct, it was submitted that the conduct did not fit within and therefore was not in breach of Rules 31 and 34.1. Those Rules provide as follows: Communicating with another practitioner's client 31.1 A practitioner who is acting on behalf of a party in any matter must not communicate in connection with that matter directly with any other party for whom, to the practitioner's knowledge, another practitioner is currently acting, unless- 31.1.1 notice of the practitioner's intention to communicate with the other party, in default of a reply from the other practitioner, has been given to that practitioner, who has failed, after a reasonable time, to reply; 31.1.2 the communication is made for the sole purpose of informing the other party that the practitioner has been unable to obtain a reply from that party's practitioner, and requests that party to contact the practitioner; and 31.1.3 the practitioner, thereafter, notifies the other practitioner of the communication. 31.2 A practitioner who receives notice from another practitioner that the practitioner's client has instructed or retained that practitioner may, after notifying the other practitioner, communicate with the former client for the purpose of confirming the client's instructions and arranging for the orderly transfer of the client's affairs to the other practitioner. 31.3 Rule 31.1 does not apply when the other party is represented by a barrister directly instructed by the party, and the barrister's retainer is so limited, in accordance with the rules of the New South Wales Bar Association, as to preclude the barrister from conducting correspondence on the party's behalf. Communications 34. A practitioner must not, in any communication with another person on behalf of a client: 34.1 represent to that person that anything is true which the practitioner knows, or reasonably believes, is untrue. 36 The practice service, Riley Solicitor's Manual (Butterworths) gives the following explanation for the so-called "no contact" rule. [27,055.10] Rationale for the "no contact rule The main justification usually cited for the "no contact" rule is to prevent a lawyer from circumventing the protection that legal representation provides to an opposing party. A concern is that direct access to the opposing party could allow the lawyer, because of his or her legal knowledge and position, to secure damaging admissions from that party, access privileged communications (see Ch 10) or undermine that party's trust in his or her lawyer. If so, the value of legal representation for the opponent is arguably reduced significantly. As explained by Kekewich J in Re Margetson and Jones: It is a professional rule that where parties to a dispute are represented by solicitors neither of those solicitors should communicate with the principal of the other touching the matters in question. That is a rule binding the profession as gentlemen, but it is also highly cognisant with good sense and convenience, because otherwise solicitors cannot really do their duty, and it is impossible for business to be properly conducted unless the solicitors have the full confidence of their clients and are enabled to communicate the one with the other upon that footing. 37 After initially accepting that there had been a breach of Rule 31, Mr Hurley retracted that admission when the Legal Services Commissioner drew his attention to an extract from Riley referring to a ruling of the Ethics Committee of the Law Society of New South Wales in the following terms: As clients are not prohibited from contacting their opponents, the issue arises as to whether a lawyer who is either a client in a matter, or self-represented, can legitimately directly approach a client represented by the opposing lawyer. On one level, it could be said that making directed contact is consistent with the rationale for the "no contact" rule in the first instance, because a lawyer, due to his or her legal knowledge, experience and position, may be able to influence an opponent, and potentially undermine the trust that the opponent has in his or her own lawyer. To this end, some American case law supports the view that lawyers cannot divorce their professional from their private selves and so should be deprived the right of laypersons to speak directly with the opposing client ... Yet the Ethics Committee of the New South Wales Law Society has ruled otherwise, to the effect that (citing V Shirvington, "Communications: a Perennial Problem (Part 1)" (May 1995) 33 LSJ 20): … a solicitor who is a party to a matter is not necessarily precluded from contacting a party on the other side who has a solicitor acting - as long as the contacting solicitor does so in a personal capacity and does not seek, as a solicitor, to influence the other party. It added, however, that prior to making personal contact the lawyer should discuss the matter with the opposing lawyer. But the committee did not address the likely event of the opposing lawyer refusing to allow direct contact, in which case it would presumably be discourteous to pursue that contact. It follows that a prudent lawyer-litigant will, as a matter of good practice, eschew direct contact with the client of another lawyer 38 In the District Court proceedings, as already mentioned, Mr Hurley was the client and Mr Biady was acting for him. His evidence was that, to save costs, he was doing some work himself and that evidence is taken to mean that he did not do that work as part of the work of Mr Biady's firm as chargeable hours but did so as a client using his legal training. In that sense there is some relevance in the ruling of the Ethics Committee although that ruling is somewhat equivocal, stating that the contact "is not necessarily precluded" so long as the contacting solicitor does so in a personal capacity and does not seek to influence the other party. When one returns to the rationale for the rule, it appears to cover a wide spectrum of contact. Importantly, as referred to in Riley, one of the reasons for the rule is that a lawyer could contact an opposing party and because of his or her legal knowledge, secure damaging admissions from that party. That is effectively what Mr Hurley intended to do when he contacted Munich: although he was the client he was using his legal knowledge to attempt, by deception, to obtain information about discoverable documents from the opposing party in his proceedings when they were represented by solicitors. In a technical sense Rule 31 might not apply because Mr Hurley was acting as the client and was not acting for a separate party but the rationale and spirit of the Rule has certainly been breached. The same may be said about Rule 34 even though Mr Hurley was the client. Riley indicates that breaches of Rules of this nature have brought fines and raised ethical issues. 39 In the present application, in substance, the Legal Services Commissioner focuses upon the deception and the impersonation of a LawCover solicitor in seeking the removal of Mr Hurley's name from the Roll (although other alternatives are pleaded). In a practical sense, bearing in mind the substance of the case, it does not appear to add anything of moment to the seriousness of the allegation constituting either professional misconduct or unsatisfactory professional conduct, that there was a breach of Rule 31 and/or Rule 34.1. In a sense the constituent elements of breaches of the nominated Rules are subsumed by the allegation framed by reference to the same conduct as constituting professional misconduct. This appears to be the appropriate approach to Grounds 2 and 3 of the application and bearing in mind the relatively short analysis of these Rules, this is not the appropriate case to attempt to establish the boundaries of the operation of Rule 31 and 34.1. 40 In relation to the conduct itself, senior counsel submitted for Mr Hurley that he had a fairly human reaction to being discovered and attempted to cover it up but then made a clean breast of it and accepted that he had lied and informed his solicitor and then the Legal Services Commissioner. This was put in the context of an acknowledgement that the conduct was "egregious" and an "unsavoury event". The evidence is somewhat more complicated than that and more revealing about Mr Hurley. After deliberately setting out to impersonate another solicitor who was employed by his opponent in District Court proceedings, he sought by trickery and deception to extract admissions from employees of the other party to his litigation in order to obtain better discovery against them. At one level the conduct has an element childish irrationality about it but it must be recognised that Mr Hurley took this action at a stage in his life when he had nearly twenty years in practice, had been a partner in firms of solicitors and was a very experienced solicitor. He was also a person who had become before the Tribunal in 1999 because of his extraordinary behaviour in dealing dishonestly and fraudulently with Trust accounts, claims, and proceedings in the Local Court. If ever there was a solicitor who should have known that what he was about to do in August 2007 was gross misconduct as a solicitor, that person had to be Mr Hurley. 41 It places too much of a gloss on what occurred to accept that he manfully stood up and accepted responsibility for his actions and did not budge from that stance, including in his evidence in the District Court. The evidence summarised earlier in this Decision shows that his immediate reaction was to deny he had made the telephone call and on two occasions when the matter was raised with him he lied to the principal of his firm, Mr Biady. He hoped it would blow over. He then lied to the solicitor he had instructed to represent him in any proceedings that flowed from his conduct. His proposed response given to his solicitor in answer to the queries raised by the Legal Services Commissioner implicated a work colleague and a friend. This story, in its entirety, was false. It was probably only the caution and professional skill of his solicitors in deciding that, at that stage, only the issues raised by the Legal Services Commissioner needed to be responded to that resulted in the implication of a work colleague not being raised with the Legal Services Commissioner. Having observed Mr Hurley in the witness box and having heard his evidence on this subject, it is the Tribunal's clear impression that had his solicitor decided to respond to the Legal Services Commissioner by implicating another work colleague, Mr Hurley would have done nothing to stop that response being forwarded thus inviting the Legal Services Commissioner to open a new line of enquiry. 42 In relation to paragraph 30 of his affidavit for these proceedings, Mr Hurley frankly admitted that paragraph did not disclose the full truth and when he swore that affidavit he was content with the position that the Tribunal not be informed that he had lied to his solicitor and that the Tribunal would not be made aware of his astonishing further suggestion that the response should implicate another work colleague. Significantly, it took more than one month from the time Mr Hurley was informed of the investigation being conducted by the Legal Services Commissioner for him to reach the position where he could confess to his new solicitor and make arrangements to inform the Legal Services Commissioner that he was in fact responsible for the telephone call. 43 As in the 1999 proceedings before the Tribunal, Mr Hurley in the present matter has frequently resorted to excuses of stress associated with a heavy workload as leading to his otherwise inexcusable behaviour. No one was better placed to support this proposition with medical evidence but none was forthcoming. It is disturbing, therefore, for the Tribunal to be confronted with evidence and a proposition that effectively says - when Mr Hurley gets busy and stressed in carrying out his professional duties he is inclined to take extraordinary, disgraceful and unethical steps and misconduct himself in a professional sense. 44 In relation to the character evidence, although provided by legal practitioners, the testimonials did not indicate with specificity what had been disclosed to the writer by Mr Hurley. Some writers referred to his conduct as being "out of character" yet did not attempt to explain their view in light of the 1999 proceedings. In this case the misconduct is neither minor nor isolated. In those circumstances the Tribunal accepts the submission put for the Legal Services Commissioner, namely, that this material is of limited assistance to the primary task of the Tribunal. 45 Mr Hurley now accepts that this is very serious misconduct. The evidence before the Tribunal shows that Mr Hurley has engaged in tricky behaviour, impersonation of a solicitor employed by an opposing party in his own litigation and deceptive behaviour. That this conduct is unethical and disgraceful is undoubted. That it represents a repetition of conduct dealt with in 1999, namely, the adoption of short cuts without regard to concepts of ethical behaviour, honesty and integrity is most disturbing. The position is well covered in Ex Parte Macaulay (1930) 30 SR NSW 193 at 193-4 where Street CJ said: Unless the Court insists on a high standard of conduct on the part of Solicitors - unless the Court punishes severely every lapse from the proper standard - the public will never be properly guarded and the profession will never retain the respect which it is to have in the community. 46 The primary role of the Tribunal in proceedings such as these is the protection of the public and to have its Decision act as an effective deterrent. The Tribunal is satisfied that Mr Hurley's actions in making this telephone call constitutes professional misconduct within the definition of that term as laid down by the Legal Profession Act 2004, namely, conduct occurring in connection with the practice of law that would justify a finding that he is not a fit and proper person to engage in legal practice. The conduct is of such seriousness that it would, in addition, satisfy the requirements of professional misconduct at common law and the tests laid down in Allinson v General Council of Medical Education and Registration [1894] 1 KB 750, namely, his conduct was such that it would reasonably be regarded as disgraceful or dishonourable by his professional colleagues of good repute and competency. 47 Having reached that conclusion it becomes necessary to consider what orders and directions should be made in relation to Mr Hurley's status as a solicitor. The Legal Services Commissioner has sought a finding that the respondent practitioner, Mr Hurley, is guilty of professional misconduct or alternatively, is guilty of unsatisfactory professional conduct. The primary remedy sought is removal from the roll, alternatively a public reprimand and/or a fine. The Tribunal has made a finding of professional misconduct but not every case of professional misconduct requires the removal of a solicitor's name from the roll and it is necessary to examine the merits of each case. When all the circumstances of this case are considered the Tribunal is unable to conclude that removal is appropriate. While Mr Hurley's actions are properly described as being disgraceful he is not, however, without redeeming qualities. Many such qualities have been highlighted by practitioners who have worked closely with him. Nevertheless, suitable steps need to be taken to assist him to address these flawed traits in his behaviour and to ultimately allow him to resume practice as a solicitor. The Tribunal regards it as being of some significance that Kirby P in Fraser v The Council of the Law Society of New South Wales [1992] NSWCA 72 accepted that once disgraceful or dishonourable conduct is established, the cancellation of the current practicing certificate arises as an issue and an option to be considered. In this case the Tribunal is firmly of the view that the appropriate course to adopt is to order that Mr Hurley's practicing certificate be cancelled forthwith and that he should not be permitted to apply for a new practicing certificate before 1 July 2010. It shall be a condition that, prior to the renewal of his practicing certificate he undertakes and satisfactorily completes any course or programme concerning (a) management of stress in practicing as a solicitor and (b) ethical practice as a solicitor, that the Council of the Law Society nominates as being appropriate. Mr Hurley is to pay the costs of the Legal Services Commissioner.

Legal Services Commissioner v Hurley

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Judgment (10 paragraphs)

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