At the relevant time, Mr Russo was the sole principal of the firm "Russo and Partners" and had been practising as a solicitor for about 29 years.
A complaint was lodged with the Commissioner on 16 August 2013 on behalf of a former client of Mr Russo (the Client). The complaint related to Mr Russo's conduct in relation to the non-payment of counsel's fees in a Property (Relationships) Act 1984 (NSW) matter in which Mr Russo had acted for the Client. Mr Russo had briefed counsel, Mr James Dupree, in that matter in November 2008 in relation to a proposed appeal. (Senior Counsel was also briefed to advise in relation to the proposed appeal but no issue arose in relation to this retainer.)
In the period from January to June 2009, Mr Russo rendered five invoices to the Client, three of which included amounts for counsel's fees. Payments were made by the Client in respect of four of the five invoices before the Client consulted another firm of solicitors (Adamson Solicitors) in about July 2009. Mr Russo declined to release his files to the new solicitors until the final outstanding fee note was paid and suggested that payment be made directly into the law firm's account "as [the Client] ha[d] done previously" (email of 24 August 2009). That amount was paid in August 2009. An itemised tax invoice was sought.
The genesis of the proceedings now before this Court is that Mr Dupree's fees (for which money had been paid into Mr Russo's general office account) were not remitted to him by Mr Russo. It appears that Mr Dupree was on notice from 6 May 2011 that the Client was asserting that his fees had already been paid to Mr Russo. Nevertheless, in 2012, Mr Dupree commenced proceedings in the Local Court against both the Client and Mr Russo for his unpaid fees, after unsatisfactory correspondence between Mr Dupree and Mr Russo about the fees. There is some doubt as to whether the Court process was in fact served on Mr Russo. He later declared that he had obtained his copy later by enquiry of the registry (statutory declaration dated 14 March 2014). The Local Court Registry records, however, suggest that a copy had been posted to both defendants on 7 March 2012. Nothing turns on whether or not Mr Russo was duly served for the purposes of the Court rules.
The Client was, at the time, a disabled person suffering from a number of medical conditions and was being "prepped" for, or had just undergone, heart surgery. His son instructed Adamson Solicitors in March 2012 that Mr Russo had been paid in full by his father; said that "obviously Mr Russo failed to pay Mr Dupree"; and advised that his father wished to defend the claim. However, it appears that no defence was filed for the Client.
Mr Dupree proceeded to obtain default judgment in chambers against the Client for the sum of $13,650.35 (being the amount of the unpaid fees plus interest and costs). Default judgment was entered 9 May 2012. An application on behalf of the Client to set aside the default judgment was dismissed in September 2012 and an order was made for the Client to pay the costs of Mr Dupree of that unsuccessful application. Mr Dupree then caused a garnishee order to be issued on the Client's bank to enforce the judgment, which resulted in the proceeds of the bank account ($887.49) being paid to Mr Dupree.
On 6 December 2012, Adamson Solicitors wrote to Mr Russo querying why sums paid by or on behalf of their client had not been disbursed to Mr Dupree. That produced no helpful response from Mr Russo; nor did he accede to their request that he pay the judgment sum obtained by Mr Dupree against the Client. In the course of the communications that followed, Mr Russo suggested that the Client's lawyers had wasted the Client's money on a defence of the proceedings in which had the Client discharged the outstanding amount the costs would have been minimised, queried whether the solicitor had obtained proper instructions and said:
We … are most concerned as to how this resistance to payment of Mr Dupree's fees is escalating out of control.
Pausing there, it is perfectly understandable that a client would resist having to pay twice for the same fees. It is also perfectly understandable that a client would resist being sued by a barrister, in the absence of a direct access retainer, when the client had already paid the fees to the solicitor.
On 8 August 2013, yet another firm of solicitors became involved on the Client's behalf. They wrote to Mr Russo requesting copies of all trust account statements showing all payments by the client to Mr Russo and all payments by him on behalf of the Client with respect to all matters in which he had acted for the Client. As at 16 August 2013, Mr Russo had not replied to that letter. Complaint was then lodged with the Commissioner relating to the failure of Mr Russo to pay to Mr Dupree the moneys received by his law practice from the Client and deposited into its office account (totalling $10,131) and the failure to account to the Client for those moneys.
The Commissioner first wrote to Mr Russo on 13 September 2013 regarding the matter. Mr Russo's response was to assert that the Commissioner should not deal with the complaint because it was more than three years since the alleged conduct. He asserted that all the material requested had been provided to the solicitors who had taken over the Client's matter from him and that there was no suggestion that there was any basis to support the Client's contention that payment had been made to him. There is, however, no suggestion that Mr Russo had made any enquiry within his firm as to whether any moneys had been received in respect of the fees.
The Commissioner proceeded to investigate the complaint, which was modified in October 2013 to include a third allegation as to breach by failure to disburse trust funds of $10,131 in accordance with a direction by the Client.
Mr Russo's response to the Commissioner's then request for information and documents was that he did not have the file and could not provide any of the material requested by the Commissioner. The Commissioner pointed out that Mr Russo should be able to provide copies of all trust records (and certain other documents). However, as at 6 December 2013 those had not been provided. On 17 January 2014, Mr Russo said he was "currently in the process of retrieving the file" and intended to provide "a full accounting exercise". That still had not been provided as at 11 February 2014 when the Commissioner issued a formal notice under s 660 of the Legal Profession Act 2004 (NSW) for the provision of specified informal documents. It was in response to this that Mr Russo made the statutory declaration earlier referred to in which he conceded (for the first time) that he had failed to pay Mr Dupree's tax invoices in circumstances where the Client had paid those fees to Mr Russo. He also asserted that the funds were not trust funds.
Mr Russo referred in the statutory declaration to the fact that he had forwarded to Mr Dupree a cheque in payment of the fees in question. That occurred on the day before the time for compliance with the Commissioner's notice under s 660 expired. When forwarding the cheque to Mr Dupree, Mr Russo apologised to Mr Dupree in respect of the "oversight" and stated that "no doubt" Mr Dupree and the Client would need to "sort out the litigation matter".
There was further correspondence between the Commissioner's office and Mr Russo and others in relation to the complaint. The Client had at that time been "in and out of hospital". Another firm of solicitors in May 2014 advised the Commissioner that the Client sought compensation in the sum of $4,048, being legal costs.
Mr Dupree's response by letter dated 6 June 2014 to the suggestion that it was he who needed to "sort out" the litigation was to reject it out of hand. He set out a reconciliation of the moneys expended on the interest incurred in respect of the outstanding fees, and made demand on Mr Russo for the balance of the judgment debt plus interest. Mr Russo made no attempt to meet that demand.
On 23 July 2014, the Client's daughter (since the Client was by then displaying "strong symptoms of Alzheimer's disease") paid to Mr Dupree the sum of $7,213.97 by way of reconciliation of the amount owing on the judgment debt. In the context of the complaint to the Commissioner, compensation for this sum was sought from Mr Russo.
Following the investigation, the Commissioner's preliminary view was that the allegations were substantiated but when he notified this to Mr Russo the latter contended in response that the Commissioner had failed properly to consider or to take into account various matters. Mr Russo did not accept that he had failed to account to the Client "until the course of this complaint" (by which he was presumably referring to the point at which he made the statutory declaration referred to at [8] and [16] - [17] above) and maintained that the moneys were "money in transit" and that there was no evidence of a direction by the Client to pay the funds to Mr Dupree. He staunchly resisted the suggestion that he might be required to pay compensation, blaming the Client for failing to provide evidence to rebut Mr Dupree's claim for non-payment of fees.
On 11 December 2014, the Commissioner lodged his application with the Tribunal for disciplinary findings and orders, seeking a finding that Mr Russo was guilty of professional misconduct or in the alternative unsatisfactory professional conduct; that Mr Russo's name be removed from the Roll or alternatively that Mr Russo be publicly reprimanded and, further or in the alternative, that Mr Russo be fined. An additional claim for compensation by the Client was noted in the application.
There were three grounds on which the application was made.
First, that Mr Russo had breached s 255 of the Legal Profession Act in depositing trust moneys (the payments made by the Client in respect of Mr Dupree's fees) directly into Mr Russo's general office account. The Commissioner contended that the moneys paid by the Client in respect of counsel's fees were clearly trust moneys and, having been included in the firm's invoices, their receipt amounted to a direction to pay those funds to counsel. The Commissioner contended that Mr Russo was in breach of his obligation to hold trust moneys exclusively for the person on whose behalf the moneys were received, and in not disbursing the trust money only in accordance with a direction given by the person.
The Tribunal found this conduct to be established and to amount to unsatisfactory professional conduct. The Tribunal considered that Mr Russo's conduct fell far 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 (see [130]-[131] of the Tribunal's reasons).
Second, that Mr Russo had failed to pay three tax invoices issued by Mr Dupree to Mr Russo on behalf of the Client for services rendered by Mr Dupree as counsel.
The Tribunal again found this to be established. The Tribunal said that a competent solicitor would have known that the funds had been paid to his practice and would have ensured that the disbursements in a bill were particularised so as to record that information for the solicitor's client ([133]). The Tribunal considered Mr Russo's failure to pay counsel's fees was either intentional or done because he was recklessly indifferent to his obligations and that it amounted to professional misconduct ([140]).
Third, that Mr Russo had failed to account to the Client in relation to the payments made by the Client for counsel's fees and not paid by Mr Russo to counsel until 13 March 2014.
The Tribunal found that, in the absence of any explanation for the deposits into the office account, Mr Russo must have given the details to the Client, and thus Mr Russo was causing trust moneys to be paid into his account. The Tribunal considered that, in the absence of contrary evidence, there were financial pressures which would have motivated Mr Russo not to investigate the deposit into his office account and, if he knew of it, not rectify it. The Tribunal considered that the failure to pay counsel's fees was either intended or done because of reckless indifference to Mr Russo's obligations.
The Tribunal found the third complaint also to be established. The Tribunal found that Mr Russo's conduct in failing to account to the Client amounted to a substantial and consistent failure to reach or maintain a reasonable standard of diligence amounting under s 497(1)(a) of the Legal Profession Act to professional misconduct ([118] and [144]).
The Tribunal then made the orders referred to earlier for the removal of Mr Russo's name from the Roll.
As noted, Mr Russo does not now contest the findings of misconduct. Rather, his complaint is, first, that the Tribunal proceeded under the incorrect legislation (the Legal Profession Act and not the Legal Profession Uniform Law (NSW)) and so did not have power to make the order for his removal from the Roll (but only had a power to make a recommendation that the Supreme Court effect his removal from the Roll) and, second, that he was denied procedural fairness in that the order for removal from the Roll was made without him having an opportunity to make submissions against such an order, or to adduce character evidence relevant to the making of such an order in circumstances where the Commissioner had indicated to the Tribunal that he did not press for an order for removal and had submitted that the appropriate penalty was a reprimand and fine. Mr Russo further argues that his conduct did not justify removal from the Roll.
In February this year, Mr Russo paid the sum of $7,500, as agreed with the Client, in full settlement of the Client's compensation claim.
[2]
Appeal
An appeal to this Court from the Tribunal's decision (whether to be dealt with under the Legal Profession Act or the Uniform Law, the relevant provisions of which came into operation on 1 July 2015) is by way of re-hearing.
The grounds of appeal, as appearing in the amended notice of appeal, leave for the filing of which was given at the hearing, are as follows:
1. The Tribunal erred in:
(1) directing itself that as at 1 July 2015 the Application before it was for the purposes of clause 26 of Schedule 4 of the Legal Profession Uniform Law (NSW) (Uniform Law) "... a complaint made under Chapter 4 [of the Legal Profession Act 2004 (2004 Act)] but not disposed of..," ; and
(2) not directing itself that the Application before it was by operation of clause 2 in Schedule 4 of the Uniform Law to be determined as an application made under the Uniform Law.
2. Further to paragraph 1, the Tribunal erred in:
(1) ordering pursuant to s 562(2) of the 2004 Act the removal of the appellant's name from the Supreme Court Roll (Order); and
(2) not determining that s 302 of the Uniform Law conferred no power to make the Order.
3. Alternatively to 1 and 2, the Tribunal in the circumstances of:
(1) the Legal Services Commissioner not having sought an order to the effect of the Order; and
(2) the Tribunal itself not having given notice to the Appellant that in making the Order
denied the Appellant procedural fairness in making the Order.
4. The Tribunal erred in concluding that the Appellant was not a fit and proper person to engage in legal practice.
Mr Russo sought leave to adduce further evidence, in the event that he were to succeed in setting aside the order for removal of his name from the Roll, namely character evidence from various persons, including members of the legal profession, and an affidavit of his own. There was no objection to that evidence being adduced. Leave was provisionally given for those affidavits to be read. In those character affidavits, each of the deponents (each of whom had read the Tribunal's judgment) deposed to his view as to the integrity and honesty of Mr Russo, his experience of dealing with Mr Russo in a professional context, and to his opinion that Mr Russo was a fit and proper person to continue in practice as a solicitor.
In his own affidavit, Mr Russo has deposed to changes to the way in which counsel's fees are now recorded and paid for in his firm ([7]-[9]) and has explained that the firm had traded in credit, without an overdraft facility, and that moneys were not left in the general account as it was a non interest-bearing account ([5]) (this being relevant to the Tribunal's findings referred to at [29] above).
The Commissioner filed a notice of contention in which the Commissioner contended that the decision of the Tribunal should be affirmed on the ground that:
1. The Tribunal had jurisdiction to determine the Application under the Legal Profession Act 2004 (NSW) (LPA 2004) notwithstanding repeal of the LPA 2004, as the Application was filed before 1 July 2015 in respect of complaints made under Chapter 4 of the LPA 2004, by reason not only of the transitional provisions in Schedule 4 clause 26 of the Legal Profession Uniform Law (NSW) but also the provisions of either or both of s 14(2) of the Interpretation of Legislation Act 1984 (Vic) and s 30(1) of the Interpretation Act 1987 (NSW).
[3]
Submissions
The Commissioner accepted, for the purpose of the stay application before Barrett AJA, that there was an arguable case that Mr Russo had been denied procedural fairness and did not seek to argue otherwise at the hearing of the appeal. In written submissions on the appeal, the Commissioner accepted that ground 3 of the notice of appeal would be made out.
That concession was well-founded. It was made clear at the commencement of the Tribunal hearing that the Commissioner no longer pressed for an order for the removal of Mr Russo's name from the Roll and that the Commissioner's position was that "a reprimand and a fine would be appropriate" on the Commissioner's "view of the conduct" (though the Commissioner pressed for a finding of professional misconduct or, alternatively, unsatisfactory professional conduct). That position was maintained by the Commissioner at the conclusion of the hearing in this Court.
While Mr Russo accepts that the Tribunal was not constrained by the view of the matter taken by the Commissioner, his complaint is that at no stage during the hearing (or thereafter) did the Tribunal inform him that it was considering removing his name from the Roll. He argues that, given the submissions made by the Commissioner, the Tribunal ought to have indicated to him that it was inclined to a different course and the matters causing the Tribunal to be so inclined.
The written submissions for the Commissioner filed before commencement of the Tribunal hearing had expressly contemplated a two-stage process, i.e., with penalty to be determined at the second stage. The Commissioner accepts that the Tribunal did give an indication in the course of submissions that there would not be another such occasion (to make submissions in respect of the penalty) and says that there may be seen to have been an oblique indication that the Tribunal might be contemplating a strike off order (referring to some exchanges at the Tribunal hearing - at Black 81L-M; Black 74J and Black 74W) but the Commissioner accepts that the Tribunal did not squarely raise with the parties, during the course of submissions, that it proposed to embark on consideration of a fitness leading to potential removal from the roll.
Mr Russo notes that the Tribunal is required to take such measures as are reasonably practicable to ensure, among other things, that parties have a reasonable opportunity to be heard or otherwise to have their submissions considered (referring to s 38(5) of the Civil and Administrative Tribunal Act 2013 (NSW)). He submits that he was not afforded a reasonable opportunity to be heard, or to have his submissions considered, on the issue as to his fitness to confine to practise as a solicitor.
Mr Russo points to Barwick v Council of the Law Society of New South Wales [2004] NSWCA 32, where this Court considered that there had been procedural unfairness where a solicitor, because of the terms of the Society's closing submissions, had assumed that it was not necessary for him to deal with a particular ground of misconduct alleged against him in the proceeding and did not do so, in circumstances where the Tribunal then proceeded to find that ground established.
The Commissioner notes that in Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 the Full Court of the Federal Court held that a person likely to be affected by a decision made under a statutory power attracting the requirement for procedural fairness, may be entitled to require the decision maker to identify "any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made" and to advise "of any adverse conclusion which has been arrived at which would not obviously be open on the known material" (though the decision maker is not otherwise obliged to communicate provisional views).
The Commissioner also refers to Goldie v Minister for Immigration & Multicultural Affairs [1999] FCA 1277; (1999) 52 ALD 321 at [25], [35] and [39] where the Full Court of the Federal Court held that it was a denial of natural justice for the Administrative Appeals Tribunal hearing an appeal from the Minister to have used a particular aspect of the appellant's conduct to support a conclusion that he was of bad character, on a basis different from the respondent's case and wholly different from the only way the appellant had been given any warning his conduct might be used against him.
[4]
Determination
In circumstances where the Commissioner had clearly taken the position before the Tribunal that removal from the Roll was not pressed, and it may be accepted that Mr Russo did not seek to adduce character evidence or otherwise make submissions at that stage as to his fitness to continue to practise as a solicitor on the assumption that that was not an order that was being sought against him, the complaint as to denial of procedural fairness is made out.
In those circumstances, it is not necessary to consider the first two grounds of appeal, which raise issues relating to the application of the transitional provisions in the Uniform Law in respect of complaints "not disposed of" before 1 July 2015. It was not suggested by the Commissioner that there were other matters that might be affected by a determination as to the operation of the transitional provisions to cases such as the present. Nor did the Commissioner suggest that the matter of consequential orders should be remitted to the Tribunal if, as is the case, this Court were to be of the view that ground 3 was made out; instead, inviting the Court to determine the appropriate orders to be made (referring by way of example to Xu v Council of the Law Society of New South Wales [2009] NSWCA 430). In the interests of the quick, just and cheap disposition of the real issues in dispute, that is the appropriate course now to be taken.
The appeal should be allowed on the basis that ground 3 is made out.
[5]
Appropriate penalty
As a formal matter, on the question of penalty, leave should be given for Mr Russo to read both his further affidavit sworn 9 August 2016 and affidavits from the following character witnesses:
1. Brad Heydon, solicitor, sworn 23 June 2016;
2. Geoffrey McDonald, barrister, affirmed 27 June 2016;
3. Ian Douglass George, barrister, sworn 27 June 2016;
4. David Cameron Eardley, barrister, sworn 29 July 2016;
5. Timothy Stuart Hale SC, sworn July 2018; and
6. Schon Gregory Condon, accountant, sworn 1 August 2016.
The Commissioner did not seek to contest any of the character evidence.
There being no challenge to the findings of professional misconduct, it is not necessary to revisit those findings (other than in respect of the inference drawn by the Tribunal that the conduct of Mr Russo was intentional or reckless in relation to the moneys being in his general office account). Suffice it to note that the conduct of Mr Russo in this matter was clearly professional misconduct as well as being highly unsatisfactory. He had retained counsel. In the ordinary course it was to him that counsel was entitled to look for payment of his fees, pursuant to the retainer between them. Mr Russo had been put in funds to effect that payment and he resisted (or failed to respond to) a number of requests for an account of the payments that had been made by and on behalf of the Client which, had they been properly addressed, should have revealed that the Client had indeed already put him in funds to meet counsel's fees.
The assertion by Mr Russo that he no longer had the file, if that were to be understood as encompassing trust account records, would have been an obvious breach of the obligations of a solicitor in relation to the keeping of trust accounts (as was pointed out to him by the Commissioner). Since he later suggested that he was currently "retrieving" a file from archives, the response he gave to initial enquires in that regard was unsatisfactory to say the least.
Mr Russo's attitude, as apparent from the communications referred to above, was high-handed and dismissive of legitimate queries made on behalf of his former client. His conduct had the effect that an elderly and unwell former client was subjected to the stress of court proceedings being instituted for the recovery by counsel of fees the funds for which he had already forwarded to Mr Russo. Implicitly, payment of invoices which included a component for counsel's fees must (in the absence of any instruction to the contrary) have been understood as conveying a direction to pay those fees. It cannot sensibly be argued otherwise. In any event, once the matter was queried it should have been promptly and properly dealt with by Mr Russo.
Mr Russo's explanation for what occurred (as recounted in the submissions made on his behalf to this Court) was to the following effect: that the Client had paid senior counsel involved in the matter directly; that the amounts payable in respect of Mr Dupree's fees were deposited directly into Mr Russo's office account by or for the Client; that at the time of those deposits Mr Russo did not himself reconcile or otherwise check deposits into his office account; that when the file was transferred to the Client's new solicitor, Mr Russo did not keep a copy of the file; and that at no time before about the first half of 2012 did Mr Dupree raise with him the matter of outstanding fees for the matter (though over that period he and Mr Dupree were in contact with each other often several times a week).
Mr Russo's explanation continued along the lines that: at some time in 2012 Mr Dupree advised Mr Russo that he was suing the Client for outstanding fees but that this advice did not cause Mr Russo to think that the Client had in fact paid Mr Russo fees due to Mr Dupree; that at a later stage Mr Dupree informed Mr Russo that a judgment had been obtained against the Client and that an application to set aside the judgment had been refused, which again did not cause him to think that the Client had paid money on account of fees due to Mr Dupree to Mr Russo; and that in that context he had understood the correspondence from Adamson Solicitors as seeking to dispute his fees rather than as an assertion that he received moneys on account of fees due to Mr Dupree. He submits that he regarded the correspondence from Marks Griffiths and Bova (a third firm of solicitors engaged by the Client who wrote to him on 8 August 2013 - see [13] above) as having been "superseded" by the complaint to the Commissioner notified to him in August 2013.
None of that explains the dismissive way in which Mr Russo responded at least initially both to the complaint made on behalf of the Client and to the Commissioner's investigation of that complaint. The suggestion that it was not just or fair for the Commissioner to investigate the matter because three years had gone by (when what the Client was complaining about was being required twice to pay for the same fees and having been sued for moneys he had already forwarded for payment to counsel) is, in hindsight, extraordinary and does not reflect well on Mr Russo.
In these proceedings, Senior Counsel appearing for Mr Russo accepted that the response by Mr Russo to the correspondence he received from December 2012 was "entirely unsatisfactory" (T 7.41). However, it was submitted that there was no basis for a finding of deliberate conduct by Mr Russo to advantage himself because of financial pressure (which the Tribunal reached by way of an inference from the state of the balances in Mr Russo's general office account). In that regard, it is noted that the application to the Tribunal did not allege, and the Commissioner did not subsequently allege, that Mr Russo had deliberately "pocketed" the money received on account of fees due to Mr Dupree.
Insofar as the Tribunal relied on evidence that the daily balances in the office account were minimal, Senior Counsel for Mr Russo submits that such evidence is not itself any evidence that Mr Russo was under financial pressure and that the evidence that the office account was not operated on overdraft is some evidence to the contrary of the conclusion reached by the Tribunal. It is submitted that the absence of evidence of Mr Russo's financial position did not permit the Tribunal's conclusion that Mr Russo had a financial motive not to pay Mr Dupree.
It should be accepted that, in light of Mr Russo's most recent affidavit explaining the operation of the account, there is not a satisfactory basis for such an inference to be drawn.
There was no allegation of dishonesty or of misappropriation. However, whether inadvertent or an administrative oversight, the overall impression from the material before this Court (including the correspondence referred to above) is that Mr Russo failed to make even the most rudimentary enquiry as to the status of the Client's accounts, when he was on notice that the Client had been the subject of an adverse judgment for those amounts and was asserting that he had already paid the fees to Mr Russo. The fact that Mr Russo had sent the Client's files to new solicitors does not explain the fact that he should have had, and retained, trust account records that would have enabled him (had they been properly maintained) to determine with relative ease that moneys had been paid by his former client for payment of counsel's fees; and that he should have realised that the fees in question (for which a default judgment had been obtained) should have been paid by him to Mr Dupree much earlier out of the moneys that he had received from the Client.
Mr Russo accepts that he can be fairly criticised for his attitude to the approaches made on behalf of his former client by the respective sets of solicitors and initially to the Commissioner but argues that such an attitude is not of itself a basis for striking him off the Roll. Further, it is submitted for Mr Russo that although his attitude reflected what he described as a "persistent mindset" that he had not received money on account of fees due to Mr Dupree, by the time the matter was before the Tribunal that had changed. That may be accepted insofar as he made the concessions he did in the statutory declaration submitted to the Commissioner and admitted in re-examination before the Tribunal that it was his failure to look at his bank statements and reconcile them that clearly caused the problem. The Tribunal was of course in a better position to access Mr Russo's overall attitude to the issues before it, having seen him give evidence.
There is now evidence, as referred to earlier, that in recognition of what had occurred Mr Russo has changed his practices, namely that counsel's fees are not included in his invoices to clients, clients are separately advised of them and asked to pay counsel directly, and there is a manual ledger recording for any counsel briefed of his or her issued invoices and payments accrued by that counsel as received. Additionally a daily printout of the daily activity on the office and trust accounts is obtained and reviewed. It should, however, be noted that in cases where solicitors have themselves retained counsel (cf direct access briefs) then, subject to the terms of the retainer, it remains the responsibility of the solicitors to meet counsel's fees in accordance with the relevant costs agreement (which is why Mr Dupree's proceedings against the Client in contract were at all times misconceived). Nothing said here should be taken as approving any different course.
As already noted, Mr Russo now accepts that there was unsatisfactory conduct on his part and accepts that it amounted to professional misconduct. He has deposed to the procedures now in place at his firm to minimise the risk of any such misconduct in the future. Character references have been provided on his behalf that attest to his abilities as a solicitor and to his honesty and integrity in his professional dealings with clients.
In all the circumstances, it cannot be concluded by reference to the unfortunate incident involving the Client that Mr Russo is not a fit and proper person now to continue in practice as a solicitor. That should not be understood as any condonation of his professional misconduct. He should be publicly reprimanded and a fine should be imposed.
As to the former, there was some debate at the hearing with Senior Counsel for the Commissioner as to the terms of the reprimand. The provision for the making of such a reprimand appears in both the Legal Profession Act and Uniform Law in similar terms. In circumstances where Mr Russo himself submits to an order that there be a public reprimand, and this Court clearly has the power to order it, it is not necessary here to determine the issue as to the particular legislative regime under which the complaint was required to be dealt with.
As to the fine, the Commissioner, with the consent of Mr Russo, forwarded a supplementary submission (at the Court's request) as to the fines that have been levied in legal profession disciplinary proceedings between 2005 and 2016. Mr Russo also filed written submissions on this issue.
In summary, over the period referred to in the Commissioner's submissions, fines ranging from $2,000 in a range of matters to $48,000 in Legal Services Commissioner v Bryden and Hagipantelis (No 3) [2012] NSWADT 225 have been imposed for a variety of misconduct - the highest fine relating to breach of advertising regulations. The Commissioner notes that, earlier, in 2002, a fine of $35,000 was imposed (Law Society of New South Wales v Shad [2002] NSWADT 236) for the false witnessing of signatures on mortgage documents and attempts to mislead the Law Society, the Court and a bank.
Mr Russo submits that the most comparable matters to take into account in determining the amount of the fine (which he accepts should be a "significant fine") are those of Council of the Law Society of New South Wales v Ross [2013] NSWADT 106 and Law Society of New South Wales v Hannam [2006] NSWADT 24 where the fine imposed for the misconduct in each case was $5,000. In Ross, the practitioner received fines of $5,000 each for two matters - deliberate transfer of $9,900 for costs from trust to office without authority; and subsequently failing to pay counsel's fees after authorisation to transfer from trust to office of a sum of $2,200 more than required for those fees in any event. In Hannam, there was a failure to keep proper accounting records in respect of 16 client matters. The agreed fine, which the Tribunal considered lenient, was $5,000.
Mr Russo submits that in the cases where the fine imposed has been at or above $10,000 the conduct in question was more egregious than his. In particular, Mr Russo refers to the following cases.
First, Council of the Law Society of New South Wales v Hancock (No 2) [2009] NSWADT 327, where there was a gross delay in performance of a retainer (the stamping of documents), a failure to communicate with the client for three years, and failure to comply with a s 660 notice. Mr Russo says, here, that although he accepts he unsatisfactorily "failed to engage with the substance" of the Client's correspondence, that was for a lesser period of time (about 12 months) and he did comply with the statutory notice (although it should be noted that the s 660 notice was issued following delay in his response to the Commissioner's earlier requests for information). The fine there imposed was $12,000.
Second, Legal Services Commissioner v McCarthy [2010] NSWADT 269, where the practitioner had been the subject of three earlier unrelated findings and professional misconduct and the fine of $10,000 was based on a failure to comply with a s 660 notice preceded by persistent failure to respond to correspondence from the clients and the Commission.
Third, Bar Association of New South Wales v Miller (No 2) [2011] NSWADT 148, where the practitioner was fined $10,000, having ignored a s 660 notice and not having otherwise explained his conduct.
Fourth, Legal Services Commissioner v Tsalidis [2013] NSWADT 101, where the practitioner had been found in earlier and separate proceedings to have engaged in unsatisfactory professional conduct and professional misconduct and was later the subject of four applications in which there were five findings of professional misconduct and three findings of unsatisfactory professional conduct, including a failure to comply with four s 660 notices and failures to comply with the Tribunal or other statutory requirements. The practitioner was fined $12,000.
Fifth, Council of the Law Society of New South Wales v McHugh [2014] NSWCATOD 37, where there was consent to a fine of $10,000. The matter involved trust account breaches in respect of 11 client matters and a failure to remit GST and superannuation contributions in respect of employees.
Finally, Council of the Law Society of New South Wales v Vaughan [2015] NSWCATOD 156, where the practitioner was fined $20,000, having borrowed $40,000 from a client that subsequently denied the fact of the loan and that the lender was a client, and having transferred fees of $4,400 from trust to office without authority.
Reference is also made to Re Robb (1996) 134 FLR 294 at 310 (to which the Tribunal had itself made reference), where trust funds were transferred to an office account to pay counsel but the payment was delayed for several months and the conduct was found to amount to professional misconduct. There, the Court said:
Where the solicitor holds a client's funds for the very purpose and uses them for the solicitor's own means, the solicitor's conduct is that the Court must take steps to ensure that the solicitor concerned and other members of the profession who might act likewise, whether through indifference or ignorance, understand the seriousness of their breach of duty.
…
It is necessary then that the order of the Court, although not punitive in character, deliver the message that no matter how efficient, eminent or popular the practitioner, conduct like that in the present case must be understood by all professional practitioners to amount to professional misconduct.
Under the Legal Profession Act, s 562(7), the maximum fine for professional misconduct was $75,000 and for unsatisfactory professional conduct was $10,000. For completeness, it may be noted that under the equivalent earlier legislation in 1987, the amounts were $50,000 and $5,000 respectively and under the Uniform Law (which Mr Russo contends is the applicable legislation under which the Commissioner's application should have been determined) there is now a maximum fine for professional misconduct of $100,000 (s 302(1)(l)) and for unsatisfactory professional conduct of $25,000 (s 299(1)(f)).
Counsel for Mr Russo characterises the present case as one where the application was founded on Mr Russo's dealings with one matter, for one client, in respect of one (of the two) counsel retained in the matter, and related to Mr Russo's conduct in respect of a small number of invoices. It is said that the evidence did not suggest that Mr Russo's failings were systemic or widespread (though the manner in which the general office account was operated might well give rise to questions as to how counsels' fees were invoiced and accounted for in other matters). As to the compensation to the Client, it is submitted that the compensation paid (in the amount sought by the Client's legal representative) resulted in the net amount paid by the Client to Mr Russo being less than the sum of the relevant invoices. (That, of course, does not take account of the stress occasioned to the Client. Nor is it clear whether the Client received full reimbursement of costs incurred by him in addressing the matter.)
It is submitted that, on the evidence before the Tribunal, the likely explanation for what occurred was inadvertence; that this is not a case where the solicitor deliberately used moneys held on trust for his own purpose; that it is an isolated incident, which should have been resolved at the time it arose; and that Mr Russo accepted before the Tribunal that the fact that it was not so resolved was his fault.
That said, Mr Russo's misconduct involved obvious deficiencies in his application of trust moneys (and a failure to recognise that moneys paid for counsel's fees were properly to be regarded as trust moneys). His failure satisfactorily to account to his former client (both in an accounting sense and in the sense of accepting that he was accountable to the Client for what had occurred) for moneys received in payment of counsel's fees was exacerbated by the high-handed and dismissive manner in which Mr Russo responded to queries made on behalf of the Client.
The fine to be imposed must convey to the legal profession and to the community in general that such conduct is unacceptable.
The Court was informed that it was common ground between the parties that the applicable maximum penalty would not be increased beyond that applicable at the time the matter was dealt with (T 16.14). Approaching the matter on the agreed basis that the maximum penalty would be $75,000, the appropriate fine to mark the Court's censure of this misconduct in the present case is $20,000. For the reasons given above, particularly at [52] - [54], this was a serious case of professional misconduct involving an elderly and unwell former client and none of the cases cited by Mr Russo as a "comparable" stands in the way of that conclusion.
[6]
Conclusion
The following orders should be made:
1. The appeal be allowed.
2. The order made by the Tribunal on 12 April 2016 for the removal of the appellant's name from the Supreme Court Roll of legal practitioners be set aside.
3. In lieu thereof, order that:
1. the appellant be reprimanded in respect of his professional misconduct and unsatisfactory professional conduct as found by the Tribunal.
2. a fine of $20,000 be imposed.
As to costs, although Mr Russo did not seek an order for costs in his favour (T 17.31), he argued against an order that he be required to bear the Commissioner's costs. In the Court's opinion, Mr Russo should bear the costs of the Commissioner of this appeal. It was clearly in the public interest for the Commissioner both to bring the proceedings in the Tribunal and to appear as a contradictor in this Court. The Commissioner quite properly made the appropriate concessions that enabled the appeal to be conducted efficiently. Mr Russo had to bring the proceedings he did in order to obtain the relief he sought in relation to his ability to continue to practice as a solicitor. He alone is responsible for the misconduct which led to these proceedings. He should bear the Commissioner's costs of the appeal.
[7]
Amendments
21 November 2016 - Order 2 - 12 August 2016 changed to 12 April 2016
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 21 November 2016
ibunal
Jurisdiction: Occupational Division
Citation: [2016] NSWCATOD 42
Date of Decision: 12 April 2016
Before: Mullane ADCJ, Principal MemberJ Wakefield, Senior MemberM Bolt, General Member
File Number(s): 1420356