R v Sirca [2001] VSC 128

5. That section, at the relevant time of your offences, provided for a maximum penalty of seven years' imprisonment upon conviction. Section 42 of the Legal Profession Practice Act 1958 provides that if there is a deficiency of money in or payable into any trust account of any solicitor, such solicitor shall, unless the solicitor gives a sufficient and adequate explanation of such deficiencies be guilty of an indictable offence.

8. Accordingly by your plea, you acknowledge that you have not given a sufficient or satisfactory explanation for each deficiency, the subject of the four counts on the presentment.

11. These crimes occurred when you were practising as a solicitor in Fitzroy during the years between 1990 and 1995. You undertook your articles with Slater and Gordon in 1974 and thereafter developed an expertise in Commonwealth Employees compensation. Between 1974 and 1990 you remained in employment with Slater and Gordon. During part of that period, you were a partner in that firm. In 1990 you left Slater and Gordon and in partnership with another former partner of Slater and Gordon, you set up your own legal firm.

14. It seems that during your days at Slater and Gordon, you became acquainted with some of the officials of the Builders Labourers Federation, including one Norman Gallagher and a man named Miftari. In about March or April of 1991, Gallagher and Miftari approached you and asked you to set up a secret bank account into which each of them was to contribute funds. The purpose of this account is unclear and it would appear that you have never informed investigators of the reason for its existence. That account was opened jointly in the name of your firm and in the name of a family company, beneficially owned by you and your wife. No trust accounts or other accounts were kept relating to the account in question and you had nothing but monthly bank statements and your own memory to rely upon as to the level of funds in the secret account at any particular time. That account was established at the Collingwood branch of the Commonwealth Bank of Australia.

17. Your legal firm at all material times, operated a trust account at the Commonwealth Bank of Australia at its 367 Collins Street, Melbourne branch. The firm also operated a general office account at the same branch.

20. Although your principal practice was involved with Commonwealth Workers Compensation, you had a small number of estates for which you were the solicitor. One of those estates was the estate of Kenneth Joseph McLelland.

23. On 8 September 1993 the trustees of that estate authorised and directed your firm to invest with the Commonwealth Bank the proceeds of the estate on behalf of five infant beneficiaries. On 10 September 1993, a sum of $25,755 was invested in a Commonwealth Bank account at the Collingwood branch on behalf of one of those beneficiaries.

26. On the same date, a sum of $25,752 was invested in a Commonwealth Bank account, Collingwood branch, on behalf of four other infant beneficiaries. Each of these two accounts was entitled in the name of your firm and noted to be held on behalf of the estate. Apart from small sums of interest and the deduction of bank charges, each of these accounts remained substantially constant in amount from the date of deposit on 10 September 1993 until 19 December 1994.

29. On 19 December 1994 however, $25,000 was withdrawn from the Cash Management Call account held on behalf of the four infant beneficiaries.

32. It is clear from the materials before me that on the same day, the $25,000 was paid to Mr Miftari who had no connection with the McLelland estate or with the infant beneficiaries of that estate.

35. It should be noted that although the secret account you operated on behalf of Gallagher and Miftari in the years after April 1991, had more than $100,000 paid into it, by June 1994, it had a balance of only $42.81.

38. No sum of money was paid into or out of that account between that date and until 19 December 1994 when the account was closed, and the then credit balance of $42.81 was paid to an unknown person.

41. It would appear that during 1995 one of the trustees for the beneficiaries of the McLelland Estate, a Mr Murnane, made enquiries of you as to the amount of money held on behalf of the estate.

44. On 11 August 1995 you wrote to Mr Murnane stating that a total of $54,993.40 was held on behalf of the estate. The letter stated that that sum was composed of three sums; of $27,515.40, $1,416 and $26,062.

47. The first two figures were accurate, and in accordance with the bank statements current as at the date of the letter. The sum of $27,515.40 was the sum then invested in the account for the single infant beneficiary.

50. The sum of $1,416 was the sum left in the account for the four infant beneficiaries, after the wrongful debiting from it of $25,000, which as it was subsequently discovered, had been paid out to Miftari on 19 November 1994.

53. There is no explanation for the origin of the figure of $26,062 appearing in the letter. There was in fact no third estate account, and the last mentioned figure appears to be an invention for the sole purpose of raising the aggregate sum to a level to be expected had there been no deficiency.

56. In 1996 an audit of your accounts for the year ended 31 June 1996 was undertaken by Mr Duncan McGregor, a person approved by the Law Institute under s.81 of the Legal Profession Practice Act.

59. Part of that examination involved the selection of a random sample of matters to verify transactions of the firm, which sample included correspondence with the aforementioned trustee, Mr Murnane.

62. As a result of this audit the deficiency of $25,000 in the sum held in trust for the four infant beneficiaries was discovered.

65. It should be noted that on 30 April 1996 you signed a certificate that the statement of trust moneys was true and correct. That certificate related to all trust moneys, trust investments and trust securities held by your firm as at 31 March 1996.

68. In regard both to this certificate and to a letter to Mr Murnane dated 11 August 1995 it should be noted that as at 31 March 1995 you had sole responsibility for only nine investment accounts, two of which were on behalf of the McLelland Estate. No sufficient or adequate explanation for the deficiency was provided to the investigating auditor. However, upon the auditor informing you of the deficiency you advised him of your intention to re-deposit the money in question. On 20 November 1996 $25,000 was re-deposited in the account, and the interest lost was subsequently also re-deposited by you.

71. Although you provided no adequate explanation to Mr McGregor you did subsequently, in a hearing before the Legal Profession Tribunal, assert that the sum of $25,000 was paid to Miftari by mistake. You asserted that at that time you believed that you were paying the payee from an account belonging to the payee. You informed the Legal Profession Tribunal that you did not observe the mistake or the resultant deficiency until you were questioned by the auditors in November 1996. That explanation, however, was not advanced before me on your plea.

74. You were not interviewed by police in relation to these matters until 4 June 1998 when you exercised your right not to answer any questions in relation to the deficiency in question.

77. You have pleaded guilty to Count 1, on the basis that you have no sufficient or satisfactory explanation for the deficiency in your trust account. For there to be a finding that there was in respect of this account a deliberate misappropriation, which in effect would amount to theft, would be in breach of the common law principle that a person cannot be sentenced for an offence with which he has been neither charged nor convicted.

80. I am, nevertheless, and consistent with such principle, required to take into account all the circumstances which are relevant to the offence with which you have been charged.

83. That is I am entitled to consider all of your conduct, including such conduct as may fail to mitigate or may aggravate the offence, as long as I do not take into account any circumstances which would have warranted a conviction for a more serious offence.

86. In my view, there is little which can be said to be mitigatory about the circumstances of the offence, the subject of count 1. In this context, I consider that the letter you wrote to Mr Munane on 11 August 1995 asserting that on behalf of the estate, you held the sum of $25,000 which had in fact on 19 November 1994 been debited and paid to Miftari is significant.

89. The letter had the effect of continuing and hiding the deficiency. Likewise, the fact that on 30 April 1996 you certified that the statement of trust money was true and correct when in fact it was not, is in my view significant in the sense that it likewise hid the deficiency. The end result was that the deficiency, the subject of Count 1 existed for approximately 23 months.

92. Counts 2, 3 and 4 relate to your handling as a solicitor of the affairs of Kevin Woodman, a client of the firm. During late 1993, Mr Woodman who lived in Western Australia learned that you had commenced legal practice in that State and that you specialised in Commonwealth compensation claims.

95. He consulted with you in February and in May 1995. On 15 December 1994 you wrote to Mr Woodman advising him that you required $7,000 to be paid by him in relation to solicitor/client costs associated with his application for review of a Commonwealth compensation determination. In January 1995 Woodman forwarded to your firm a bank cheque in that sum which was then placed in trust. On 6 February 1995 a trust account cheque in the sum of $1,100 was paid out of the sum held on trust for Mr Woodman to "Sandor".

98. The trust account ledger entry for 6 February 1995 stated that the sum had been paid out in respect of an engineers report. The evidence is clear that in fact the sum was paid out of trust to pay an invoice issued by Sandor Painting and Decorating Services, a painting company which did not relate in any way to Woodman's compensation case. In fact, a painter Sandor Sarkany was at the time undertaking painting works at your home. He invoiced your firm at your request.

101. You must have known, in my view, that what you were signing was a trust account cheque and that the payee was Sandor and that Sandor was your painting contractor. In such circumstances, it is difficult to see any mitigatory factor of significance in relation to this offence.

104. Counts 3 and 4 relate to amounts withdrawn from your firm's trust account in respect of money held on trust for Woodman. On 14 June 1995, your firm drew a trust account cheque for $1,464 payable to Total Travel. The cheque is recorded in the trust account ledger as "travel and accommodation for H.M.S." That sum was paid to Total Travel Pty. Ltd. for a return air fare and accommodation package to Perth.

107. In addition, on 22 June 1995 you withdrew the sum of $1,000 from the money held on trust for Mr Woodman. The sum was recorded as being payment for accommodation. That sum of money was deposited into your Mastercard account. Count 3 relates to this withdrawal. Count 4 relates to the drawing of a trust account cheque for money held on trust for Mr Woodman in the sum of $700 made payable to you on 7 July 1995. That cheque is recorded in Mr Woodman's account ledger as reimbursement of expenses.

110. On the same date, the trust account cheque for $700 was paid into an account held jointly with your wife. The auditor of your firm could not locate any travel or other documentation which supported the drawing on the trust account of the two cheque payments.

113. As your plea recognises, no sufficient or satisfactory explanation has been provided by you for the deficiency relating to each of Counts 2, 3 and 4. However, that said, it is appropriate to note that the Legal Profession Tribunal, having inquired into the circumstances of the events which form Counts 3 and 4 on the presentment was not satisfied to the degree of satisfaction required by the tribunal that the sums of money involved were not drawn by you to reimburse you for the costs of travelling and accommodation and other expenses incurred in relation to Mr Woodman's affairs.

116. Your counsel has submitted to me that your plea of guilty to Counts 3 and 4, notwithstanding such a finding, is reflective of a high level of remorse. It does appear to me that these two offences fall into a category of less seriousness than the offences, the subject of Counts 1 and 2. Nevertheless, the facts in this case are matters of concern. Members of the public are entitled to trust their solicitors and are entitled to believe that money held in trust accounts by such solicitors will not be removed from trust without proper authority and for good reason. Each of the matters appearing in the presentment raises an issue of breach of the trust which your clients were entitled to have in you. In my view the circumstances relating to Count 1 and Count 2 are of particular seriousness for the reasons set out above.

119. As has been pointed out by your counsel in the course of the plea made on your behalf, there are, however, a number of significant mitigatory matters. You have pleaded guilty to each count on the presentment and you are entitled to have that fact taken into account in your favour, and I do so. I do accept that such plea, particularly in relation to Counts 3 and 4, demonstrates remorse on your part. The community has by your plea been spared the time and the cost of a trial.

122. Furthermore, I take it into account in your favour that you indicated your intention to plead guilty to these charges at the earliest possible moment after proceedings were commenced against you.

125. In relation to this matter it is true, as your counsel submits, that there has been a considerable delay between your offences being detected and your prosecution. The audits which detected these offences in relation to Count 1 were conducted in March 1996, and in relation to Counts 2, 3 and 4 in February and March of 1998. On 4 June you were interviewed by police in relation to the matters, the subject of Count 1. You were interviewed in relation to the other matters in September 1998.

128. In relation to both of these records of interview, you exercised your rights not to incriminate yourself. However, the effect of your non-cooperation was that police interviewed numerous persons in order to prepare a full brief. The depositions contain 18 statements, a number of which were obtained during 1999 and as late as September 1999. The summons was issued and served in October 2000, and ultimately as stated above, you pleaded guilty at the earliest possible moment at the hand-up brief committal on 4 December 2000.

131. In the meantime, of course, there were proceedings in the Legal Profession Tribunal in December 1997, February 1998 and in April 1999. There has been some unexplained delay, but in all the circumstances it does not appear to me that such delay as there has been is inordinate or of overwhelming consequence in the whole circumstances of this proceeding, which it should be noted involved a painstaking financial investigation.

134. I have been told something of your personal history and your circumstances. You are now aged 52 years. You have no prior convictions, and accordingly I sentence you as a person of previously good character. Evidence has been led on your behalf. I have heard from Mr Timothy Tobin, a barrister, who was briefed regularly by you during your time in practice. I heard also evidence from Mr Jeffrey Cummins, a consultant clinical and forensic psychologist who saw you first at the request of your solicitors on 29 November 2000 and who has seen you on a number of occasions since.

137. Mr Tobin, who has known you since approximately since 1985, described you as an "industrious workaholic." He described you as highly expert in your chosen field of Commonwealth employees Workers Compensation cases. In Mr Tobin's opinion you were committed to undertaking legal work for the under-represented and underprivileged, and furthermore that the making of money from your practice was in his view a secondary concern to you.

140. Mr Tobin described you as frugal and sober in your habits. He said that he was incredulous when he learned of your offences and that in his view, your conduct was out of character and inconsistent with what he considered to be your regard for the propriety of the law and its ethics. He said that you suffer from great shame in consequence of these events and that the loss of your right to practise has devastated you. Mr Tobin described the emotional turmoil that you suffered in relation to the breakdown of your marriage, over the years the offences occurred and of the great pressure that the conduct of your busy practice brought upon you. He considered and described you as being a poor administrator.

143. I accept the evidence of Mr Tobin that you were previously a person of good character and that you were held in high regard by your professional peers during your time in practice.

146. Psychologist Jeffrey Cummins saw you at the request of your solicitors in November 2000 and subsequently treated you on a number of occasions throughout January, February and March of this year.

149. Mr Cummins formed the conclusion that you were severely depressed at the time of his initial examination. He considered that your offending behaviour, the decision of the Legal Profession Tribunal to cancel your practising certificate and to preclude you from re-applying before 1 February 2004 and these proceedings, have caused you to suffer a severe psychological demise. He likewise referred to the pressure under which you were working at the time of these offences.

152. You were born in Italy. You came to Australia at the age of one year. You attended Pascoe Vale Primary School and you finished your Year 12 at Oak Park High School before commencing a law degree at Monash University. You undertook your articles at Slater and Gordon in 1974 and you remained with that firm as an employee and as a partner for a time, until 1990 when you left to set up your own practice in partnership with another former partner of Slater and Gordon.

155. Your health is not robust. Apart from suffering from the depression referred to by Mr Cummins, you suffer from eye-sight problems and you have been a tablet dependent diabetic since 1997.

158. I accept that the cancellation of your practising certificate has had a profound consequence for you, both emotionally and financially. In recent times you have obtained employment as a baker and it would appear from both the evidence of Mr Tobin and from the reference tendered before me by your employer, that you have embraced your new employment with commitment.

161. I accept that your personal circumstances are such that there is much to be said in mitigation. Your early plea of guilty, your remorse, your previous good character, the pressure under which you worked and your personal circumstances at the time of the offences, together with your psychological state both at that time and now, are all significant matters of mitigation relevant to your plea.

164. I accept that specific deterrence and rehabilitation are now not matters of overwhelming relevance in relation to the appropriate sentence in your case. I accept further that the fact that the offences resulted in no substantial personal benefit to you and that you have repaid the sums in question in relation to Counts 1 and 2 are of mitigatory weight in all the circumstances.

167. However, as well as matters which are personal to you, I must take into account other matters, and in particular the issue of general deterrence is of considerable significance in cases such as this.

170. The public must have confidence in the legal profession and in the trust they bestow in members of the legal profession. They must have confidence that funds held by solicitors will not be removed from trust accounts unlawfully and without authority. Members of the legal profession must know that if deficiencies in trust accounts are detected, the consequences will be substantial if they are unable to give any sufficient and satisfactory explanation of such deficiency.

173. It has been submitted by your counsel that the appropriate course in the circumstances of this case, is to adjourn this proceeding without conviction upon your undertaking to be of good behaviour in the meantime. It is submitted that to record a conviction will have, to use the words of your counsel, "enormous influence" on whether you will be able to practise again in the future.

176. I have given careful consideration to these submissions, but in the end result I am not persuaded that to adjourn these proceedings without conviction is appropriate.

179. Despite all that can be said in your favour these offences were not mere administrative mistakes by an inexperienced solicitor. You had been in practice for nearly 20 years at the time of the commission of Count 1. You had during part of that time been a principal at Slater & Gordon, and in your own practice.

182. There is a continuation of offences before me, of which Counts 1 and 2 in particular are serious. I take into account the maximum penalties prescribed by Parliament.

185. In the circumstances I conclude that I have no alternative but to convict you and to impose a sentence of imprisonment, which I propose should be wholly suspended, to take into account the strong personal and other matters of mitigation.

188. On Count 1 I convict you and sentence you to three months' imprisonment. On Count 2 I convict you and sentence you to two months' imprisonment. On each of Counts 3 and 4 I convict you and sentence you to one month's imprisonment. That makes a total effective sentence of three months' imprisonment, which I direct be wholly suspended for a period of one year from today.

191. I am required by the Sentencing Act to explain to you that if you commit another offence punishable by imprisonment during the operational period of the sentence you may be liable to actual imprisonment for the whole or part of the time imposed.

194. Pursuant to s.86 of the Sentencing Act (1991) I order that you pay the sum of $1,700 to Mr Woodman in repayment of his loss incurred by reason of the deficiencies, the subject of Counts 3 and 4.

197. Do you want anything said about instalments in respect to that sum, or will I just grant a stay?

MR MULLALY: I think a stay would be in order. A stay - - -

HIS HONOUR: And I will grant a stay of three months upon that payment, and I will grant liberty to apply.

HIS HONOUR: In relation to that matter, which would enable an instalment application to be made.