VEGHELYI v THE LAW SOCIETY OF NEW SOUTH WALES

Court of Appeal (NSW)|1995-02-08|Before: Kirby P, Priestley JA, Mahoney JA

KIRBY P, MAHONEY and PRIESTLEY JJA 8 February 1995, 6 October 1995

LEGAL PRACTITIONERS - solicitor - professional misconduct - gross overcharging - whether wilful - payments out of trust accounts - absence of authority of clients - held: Appeal dismissed - removal from roll confirmed.

LEGAL PRACTITIONERS - solicitor - professional misconduct - threat to barrister/arbitrator following award in litigation involving solicitor - held: Disgraceful - and dishonourable professional misconduct at common law.

LEGAL PRACTITIONERS - professional misconduct - gross overcharging of clients - Legal Profession Disciplinary Tribunal finds that solicitor has grossly overcharged a number of clients - typical case involved charge of $1,304 for completed sale whereas scale fee, in the absence of agreement, was $173 - finding on the evidence that overcharging was wilful - finding in certain cases that solicitor paid funds out of trust accounts without authority of client - held: Except in respect of two cases, the Court of Appeal should in the appeal, come to the same conclusions adverse to the solicitor as the Tribunal did and should confirm the Tribunal's order that the solicitor's name be removed from the roll of solicitors New South Wales Crime Commission v Fleming; New South Wales Crime Commission v Heal (1991) 24 NSWLR 116 (CA), considered.

LEGAL PRACTITIONERS - solicitor - misconduct - solicitor involved in litigation - litigation referred by Local Court to arbitration by barrister - upon publication of an award adverse to the solicitor, he writes to arbitrator asserting bias and his intention "to take action to ensure that you will never ever arbitrate another action again" - threat that "when we meet again it will not be a meeting

you will relish" - barrister/arbitrator refers correspondence to Law Society - Legal Profession Disciplinary Tribunal finds solicitor's conduct disgraceful and dishonourable and such as to constitute professional misconduct at Common Law - on appeal to the Court of Appeal - held: Having regard to the findings as to acceptable evidence made by the Tribunal, and allowing fully for the right of a party to accuse an arbitrator of bias, the statements and threats of the solicitor went beyond permissible conduct and amounted to professional misconduct at common law - order that solicitor's name be removed from roll of solicitors confirmed.

TRUSTS - solicitor's trust account - authority to draw upon - authority in the case of money deposited by third party - held: Unnecessary to determine full operation of legislation having regard to the findings of fact made by the Tribunal undisturbed in the appeal.

WORDS and PHRASES - "for or on behalf of any person" Legal Profession Act 1898, s41, s42, s43

Legal Profession Act 1987, s208G ORDERS Appeal dismissed with costs.

Mahoney JA The Law Society of New South Wales brought proceedings against Anthony Stanley Veghelyi upon the ground that he had, in substance, been guilty of professional misconduct in respect of some nine matters. The proceedings came before the relevant Disciplinary Tribunal and were heard over a substantial period during 1989 and 1990. On 8 March 1991 the Tribunal, in a written judgment, held that he had been shown to have been guilty of professional misconduct in respect of some five matters but not in respect of the remainder. On 29 April 1991 the Tribunal ordered that his name be removed from the Roll of Solicitors.

Mr Veghelyi appealed against these orders. In his notice of appeal he contested the correctness of the findings made against him. The Law Society has, upon the appeal, contended that some of the matters found by the Tribunal not to have been established had been proved and it has raised those matters upon the appeal. In view of the findings on other matters, I do not think it is necessary to pursue those matters further.

The facts are detailed in the judgment of Priestley JA. I agree with the orders proposed by Priestley JA and generally with his reasons. I desire to add observations of my own in respect of three matters: the delay which has occurred in the prosecution of the appeal; the nature and incidents of an appeal to this Court; and the nature and proof of professional misconduct by gross over-charging.

Considerable time has elapsed between the date of the orders made by the Disciplinary Tribunal, 29 April 1991, and the date of hearing of this appeal, 7 and 8 February 1995. "Delay" for this purpose is the time which elapses in excess of the time within which a proceeding should, in the circumstances and with proper diligence, have been brought to a determination. It is, in my opinion, proper to describe the period which has elapsed in the present case, namely, 2 years and ten months, as involving considerable delay.

There is, in my opinion, a public interest in bringing proceedings of the present kind to a final determination without delay. A solicitor is an officer of the court. Notwithstanding the terms of the Legal Profession Act 1987 he remains such. As an officer of the court and as a person who has, or has had, the privileges and responsibilities of a solicitor, what he is and what he does in this regard is the subject of public scrutiny and there is a legitimate public interest in them. The position of such a person should not, as the result of unacceptable delay, be allowed to remain uncertain.

In saying this, I do not direct blame at any of the parties personally involved in this proceeding. I am conscious of the illnesses to which Mr Veghelyi says he has been subject. The Law Society no doubt satisfied itself that Mr Veghelyi was no longer practising law and to that extend the determination of his final position was less urgent than it might have been: if he was a person not fit to be a solicitor, the position of the public was protected by his undertaking not to practise. And the pursuit of proceedings of this kind can be expensive. I am conscious of the cost which no doubt has been involved in the preparation of the appeal for hearing. The legislation has long placed upon the Law Society, as the relevant professional body, the duty of dealing with disciplinary matters of this kind. It is a duty which it may have wished to bear as part of a regime of self-regulation of the profession. But the cost of discharging that duty may be substantial. Where the public interest has been safeguarded, the Law Society may be tempted to

URJ VEGHELYI v THE LAW SOCIETY OF NEW SOUTH WALES (Mahoney JA) 3

think that the moneys in question may be better spent than by pursuing an appeal which has not been actively pressed by the solicitor. However, in my opinion there remains a public interest in the timeous disposal of proceedings of this kind. With proper exceptions, the Law Society - and, I think, this Court - should ensure that such proceedings are brought to a conclusion without unnecessary delay.

It has been accepted, in my opinion correctly, that the present appeal involves a rehearing ab initio of the charges made against the solicitor. Under the previous legislation, the relevant section, s78, provided for an appeal which was a rehearing. Under the Legal Profession Act 1987 the appeal is "by way of a new hearing": see s171F(4).

Appeals are of various kinds. In Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1921) 46 CLR 73 at 106 et seq, what was said by Dixon J suggests that appeals are broadly of three kinds: appeals involving a hearing ab initio; appeals both upon fact and law, but upon the basis that the appeal of fact is dealt with upon the material which was before the court appealed from; and an appeal only upon questions of law. See generally Da Costa v Cockburn Salvage and Trading Pty Ltd (1970) 124 CLR 192 at 206 et seq per Windeyer J; Ex parte Currie; Re Dempsey (1968) 70 SR 9NSW) | at 9 et seq per Jacobs JA and Holmes JA; Superintendent of Licences v Ainsworth Nominees Pty Ltd (1987) 9 NSWLR 691 at 705. The legislation providing for a particular appeal may, of course, provide for an appeal which is of a different kind but, in general, appeals are of one of these three kinds.

The present appeal is in my opinion of the first kind. The legislature has, I think, made clear its intention that a person appealing from a finding of a relevant disciplinary tribunal is to have a hearing ab initio before the Supreme Court of New South Wales. The appeal has been assigned to the Court of Appeal. Accordingly, the legislation prima facie requires that the proceeding be reheard ab initio before a court constituted by three judges of the court or otherwise in accordance with the provisions of the Supreme Court Act 1970.

The reason why such an appeal is provided for may be inferred. A finding against a lawyer in a proceeding of this kind may be destructive of him, personally, professionally and financially. It may affect his right to practise his profession and so may involve payment or loss of substantial sums. But at least equally important, it may destroy his honour, his standing in his profession and in society. The view may have been taken that proceedings of this kind should be dealt with only at the highest level. That, I infer, is essentially the reason why the legislature enacted that such appeals shall be dealt with by this Court.

But such a method of appeal may - it frequently will - impose significant burdens both upon the lawyer and upon the court. Not infrequently, an appeal involves contested issues of fact and a long examination of what the lawyer has done. Such a proceeding, if conducted before a court of three judges, will often involve a great expenditure of public time and private money. Therefore, I do not doubt that the legislature, in providing for such a form of appeal, had in mind the ways in which such an appeal may be dealt with by this Court and the methods which have been adopted, by this Court and other courts hearing appeals ab initio, to reduce the burden of excessive legal costs.

Two things may be referred to in this regard. First, the Supreme Court Act has established procedures whereby, when a proceeding comes before this Court which can conveniently and properly be dealt with by a single judge, some or all of the proceeding may be referred to a single judge. See generally Supreme Court

Act s51. The Act empowers this Court to send a proceeding for determination by a single judge: s51(4). In my opinion, it empowers this Court, inter alia, to refer particular issues of fact or law for determination by a single judge and to determine the appeal upon the basis of the determination made by the judge to whom the issues have been referred. A procedure of this kind was adopted in Sedgwick v Law Society of New South Wales (Court of Appeal, 18 May 1994, unreported).

Second, I think the legislature had in mind the way in which, in practice, appeals involving a hearing ab initio have been dealt with in other contexts. For many years, appeals to the District Court from decisions of magistrates have been appeals ab initio (These appeals have conventionally been described by lawyers as "Quarter Sessions appeals"). Ordinarily, or at least frequently, in order to avoid unnecessary time and expense, such appeals have been conducted by the tender to the judge on appeal of the record of the proceeding below. The parties have accepted the evidence called below as evidence in the hearing on appeal. Where issues of fact have remained in contest, in some cases the parties have, for example, recalled the relevant witnesses to give oral evidence and the appeal court has decided such issues accordingly. In other cases, the parties have accepted, for the purposes of the appeal hearing, that the findings of fact, including findings as to credibility and the like, made by the court below are to be adopted by the appeal court: cf McCormack v Federal Commissioner of Taxation (1979-1980) 143 CLR 284 at 304. It is not necessary for present purposes to pursue the care which must be taken in adapting procedures of this kind to ensure that, on the one hand, the parties are not involved in unnecessary delay and expense and, on the other hand, the appeal court properly discharges its function as on a reharing de novo.

I do not doubt that the legislature, when it provided that appeals of the present kind should be by way of hearing ab initios did not intend to prevent the parties adopting beneficial procedures of this kind. It did not, I think, intend to impose upon the parties the burdens of cost and delay which would be involved if in every case they were required precisely and in form to re-present all of the evidence before this Court and to re-contest issues of credibility and the like which in the circumstances they did not desire to re-contest. I see no implication in the legislation which would require that to be done, at least where the Court did not feel that justice required that it should be done.

In the present case, the material placed before the Disciplinary Tribunal, as placed before this Court, consists of some thirteen volumes containing some 3608 pages. The material included evidence of many witnesses. There were a number of matters in respect of which on a rehearing de novo a decision was in principle required in respect of, as I have compendiously described them, issues of credibility and the like. The cost and time involved in re-contesting those matters formally before this Court would, in my opinion, have been crushing.

In the circumstances, the parties sensibly followed the conventional course to which I have referred. The material presented below, as contained in the record before this Court, was presented to this Court in its written form. The written judgments of the Tribunal were placed before this Court. Insofar as issues of fact were in principle to be determined, the appeal was conducted upon the basis that the Court would accept the determinations made by the Tribunal, insofar as they determined issues of primary fact, credibility and the like. With exceptions not here relevant, there was to be no cross-examination. The appeal has been conducted accordingly.

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The Court and the parties have been conscious of the incidents of such a procedure, referred to in cases such as McCormack v Federal Commissioner of Taxation (1979-1980) 143 CLR 284 at 304, 321; see also Federal Commissioner of Taxation v Students World (Australia) Pty Ltd (1978) 138 CLR 251 at 260-262, 271. In order to prevent misunderstanding of the course to be followed, reference was made to such matters in the preparation of the proceeding prior to the hearing of the appeal and during the course of the hearing before this Court.

To prevent misunderstanding, it is proper to record that Mr Roberts, for Mr Veghelyi, has been free to submit that, given the findings of primary facts, the other inferences or findings of fact which were made by the Tribunal are wrong or unjustified. He has made submissions of this kind in relation, inter alia, to the findings of gross over-charging: to this I shall refer subsequently. But this has been done upon the basis that the findings of the Tribunal, insofar as they were based upon credibility and the like, are accepted.

In my opinion the course which has been adopted is one which is appropriate under the legislation and expedient in the interest of the parties.

The Tribunal found that, in a number of cases, the solicitor had been guilty of gross over-charging and that that over-charging constituted professional misconduct. Mr Roberts, for the solicitor, took exception to such findings in a number of respects. His criticism of some of them was strong; he suggested that in some cases the Tribunal had, in effect, not understood the nature of a complaint of gross over-charging and that in other cases the primary facts found or accepted did not support the complaint made. His submissions included the submission that the solicitor had, in effect, acted merely in accordance with a contract or arrangement made with the client and that charges so made could not be or were not over-charges. It is therefore necessary to refer to the general nature of a complaint of gross over-charging and to the proof of such complaints.

It is, in my opinion, settled for this Court that gross over-charging may of itself constitute professional misconduct. It was in earlier times sometimes suggested that gross over-charging did not justify a summary application against a solicitor for professional misconduct unless there was involved, as it was described, an element of "wilful fraud". See Chitty's Archbold Practice, 12th ed, (1866) Vol 1 at 151; 13th ed, Vol 1, 154. The cases cited in support of the text were Meux v Lloyd 2 CBNS 409; and Re Eyre 1 CBNS 151. It is not necessary to consider to what extent those cases in fact supported the principle referred to in the text. It is, in my opinion, now established that gross over-charging as such may constitute professional misconduct and that, on an application such as this, it is not necessary to prove in addition that the lawyer was guilty of fraud or the like: see, eg, Ray v Newton (1913) 1 KB 249 at 255. These principles, in my opinion, have been established by the Veron and the Evatt cases: see Law Society of New South Wales v Veron (1966) 84 WN (Ptl) (NSW) 136; and Evatt v Bar Association of New South Wales (1968) 117 CLR 177; 67 (NSW) 236.

In Veron at 144; the Full Court of the Supreme Court of New South Wales said:

"Tt has long been recognised that the charging of extortionate or grossly excessive costs by a solicitor may amount to professional misconduct: Meux v Lloyd 2 CBNS 409; 140 ER 476; In re Hill (1887) 4 TLR 65. All the modern text-writers treat such conduct as a head of professional misconduct: Cordery on Solicitors, 6th ed, 604; Lund, Guide to Professional Conduct and Etiquette of Solicitors, 65; Halsbury's Laws of England, 3rd ed, vol 36, 226, para314..."

Subsequently, in Evatt, the Full Court and the High Court acted upon the basis of the views expressed in Veron and in Miles (1966) 84 WN (Pt1) (NSW) 163.

It is in my respectful opinion proper that this view of what constitutes professional misconduct be maintained.

In deference to Mr Roberts' submissions, it is, I think, relevant to consider first the reason why gross over-charging, as such, may be held professional misconduct. The Court has traditionally and for centuries exercised control over "the excessive fees and other unnecessary demands" made by solicitors of the court: see, eg, Holdsworth's History of English Law, 2nd ed, Vol 6, 434; Vol 12, 56-62. Clients are, or may frequently be, in a vulnerable position vis-a-vis their solicitors; the presumption of undue influence is, I think, based at least in part upon the fact that when making decisions clients ordinarily or at least frequently place trust in their solicitors. They ordinarily are not in a position to know without investigation what work must be done and what charges are fair and reasonable; they ordinarily assume that the solicitor will make only such charges.

Solicitors are, on the other hand, informed, or in a position to inform themselves, of what work may be required and what are fair and reasonable charges. They are, in that sense, in a position of advantage and trust is placed in them. Clients are entitled to be protected against the abuse of such an advantage. It is, I am inclined to think, the fact that that advantage has been misused which may, in a particular case, warrant what the solicitor does being categorised as professional misconduct.

It is then necessary to consider the principles on which charges are to be categorised as gross overcharges in the relevant sense.

The determination of what are the principles upon which charges are to be categorised for this purpose and the categorisation of charges in a particular case each pose particular problems. Mr Roberts' argument has, in my opinions correctly suggested that the consequences of-over-charging are serious and that, in the context of the present day practice of law, it may be difficult to determine whether, in a particular case, charges are to be so categorised. It is therefore necessary to understand the basis on which they are to be so categorised.

A solicitor's entitlement to remuneration is conventionally stated in terms of what is fair and reasonable in the circumstances: see Re Stuart; Ex parte Cathcart (1893) 2 QB 201; Clare v Joseph (1907) 2 KB 369 at 372, 376, 378; New South Wales Crime Commission v Fleming (1991) 24 NSWLR 116 at 121-123, 127-128, 142-144. Where charges are so far beyond that as to be grossly disproportionate, professional misconduct may be involved. This is so in England and in Australia; a somewhat similar principle appears to have been adopted in the United States of America notwithstanding the different attitude taken in that country to lawyers' costs: see generally American Bar Association Model Rules of Professional Conduct, in particular R1.5 which provides "a lawyer's fee shall be reasonable..." and R8.4 which states that violation (or attempted violation) of any rule constitutes "professional misconduct". For a discussion of these rules, see G Hazard, Jr and WW Hodes, The Law of Lawyering, 2nd ed, 1990, Vol 1, and S Gillers and RD Simon, Jr, Regulation of Lawyers: Statutes and Standards, 1991. A principle stated in such terms is, of course, inherently indeterminative. But I do not think that it is possible to formulate the principle in terms which are more specific.

The determination of what in a particular case is fair and reasonable will require consideration of various factors. S208G of the Legal Profession Act 1987 provides:

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"208G. In assessing what is a fair and reasonable amount of costs, a costs assessor may have regard to any or all of the following matters:

(a) the skill, labour and responsibility displayed on the part of the barrister or solicitor responsible for the matter;

(b) the complexity, novelty or difficulty of the matter;

(d) the place where and circumstances in which the legal services were provided;

(e) the time within which the work was required to be done;

See also New South Wales Crime Commission v Fleming (1991) 24 NSWLR 116. In that case, Gleeson CJ discussed the determination of "reasonable legal expenses" by reference to "the market for legal services in which the client, as a consumer, is obliged to seek such services" (at 124, 127-128). Kirby P set out eight general criteria for determining "reasonable legal expenses" (at 142-144).

These are, in my opinion, relevant factors for present purposes. Such factors assist in the determination both of what is fair and reasonable and what is grossly disproportionate. But in the end, the quantification of costs remains an exercise in judgment, upon the result of which minds may legitimately differ.

Mr Roberts, in his submissions, placed reliance upon this. A finding of professional misconduct should not, the submission suggested, turn upon an error of judgment. His submissions suggested further that it would be wrong to categorise as grossly excessive and so professional misconduct a solicitor's quantification of costs where the solicitor relied upon the terms of a written costs agreement and calculated his costs accordingly or where the quantification resulted from the fact that he had an excessive view of the value of his own services.

There is, in my opinion, force in these suggestions. In earlier times, the possibility of error in the assessment of fair and reasonable costs was, no doubt, less than it is now. The circumstances of legal practice were more homogeneous than they are now. The number of partners in legal firms in Australia and in England was, it would appear, significantly less than now: the Court may know that, forty-five years ago, the partners in even the largest firms in Sydney numbered about seven or thereabouts. See generally D Weisbrot, Australian Lawyers; RL Abel, The Legal Profession in England and Wales The resources necessary for the effective and efficient practice of law were considerably less than now. Accordingly, there was less difficulty in deciding what, in a particular case, was a fair and reasonable charge. This has relevance to this appeal because what in fact would be charged by other reputable solicitors, or would be thought reasonable by them, could be stated in evidence by them and would provide substantial evidence as to what would be such in the instant case. This appears to have been the approach previously adopted by the courts: what was a fair and reasonable charge - and accordingly what was grossly in excess of it - was conventionally established by the evidence of other solicitors experienced in charging for work of the relevant kind: see Re Stuart; Ex parte Cathcart (1892) 2 QB 201; Re Barrett; Ex parte Male (1884) 14 VLR 153.

But the Court must recognise that the organisation of the legal profession has changed, the nature and extent of the legal services now provided extend over a wide spectrum, and fees may be fair and reasonable notwithstanding that they are at the opposite ends of a correspondingly wide spectrum. It is therefore necessary

to consider how far the previous approach remains appropriate. I shall refer, by way of example, to two factors which are of relevance to the submissions made by Mr Roberts: the change in the nature of legal practice; and the growing tendency (in New South Wales amounting in effect to a legal requirement: see Legal Profession Act, Ptl1, Div 3); that costs agreements be made between solicitor and client.

It is, in my opinion, to be recognised that whether costs are fair and reasonable will depend upon - or at least be affected by - facts such as the size of the solicitor's firm, the resources employed or available to be employed by it, the value which the lawyers place upon their skill and expertise, and the urgency of the client's requirements. What is fair and reasonable for a large firm may be, in the ordinary case, grossly excessive for a sole practitioner. This is to be borne in mind, for example, in any assessment of the value of the evidence of other solicitors as to whether fees which have been charged are fair and reasonable. What is fair and reasonable, though still a matter of judgment by responsible practitioners, must be determined following an appropriate analysis of the practice of the particular solicitor.

In the present case, this factor does not justify the quantum of the fees charged by the solicitor to the relevant clients. There was, in my opinion, nothing in the nature of the solicitor's practice, the resources employed by him, or the particular circumstances of the cases which would justify the level of the fees charged or render inapplicable the views expressed in evidence as to the reasonableness of what he claimed. What the solicitor did was available to be examined. The solicitor may, perhaps, have valued his services higher than those of an ordinary practitioner. But, in my opinion, there are limits to what this may justify. There was nothing in the evidence to warrant the conclusion that what he did for the clients warranted such high valuations of his services.

Mr Roberts stressed the fact that, in various cases, the fees charged had, as he submitted, been calculated in accordance with costs agreements made by the solicitor with the relevant clients. This is, of course, an important fact. A solicitor may desire to have a large small practice or he may believe his services to be of such value that he can successfully practice by doing few things for large fees. Within limits, a solicitor may choose the nature of the practice he conducts and have costs agreements which are appropriate to it.

But, as I have said, there are limits. There are circumstances in which costs, though calculated according to a costs agreement, will in total be unacceptably excessive. Cases dealt with by the Tribunal illustrate this. They include cases in which the total of the fees charged was, in my opinion, far beyond what would ordinarily be reasonable for the work shown to have been done. If the total of such fees was to be justified by the costs agreements, the inference would be either that the time taken was unacceptable or the rates specified in the costs agreement required justification.

A client who is able to form an informed judgment may agree to fees calculated on a time basis and may, for example, contemplate that the solicitor may spend upon his matter time far in excess of what ordinarily would be spent. In such a case, what would ordinarily be a grossly excessive charge may not be such. I do not exclude the possibility that such charges may be upheld. But that is not the nature of the present cases. There was nothing in these cases to establish an agreement of this special kind. The evidence did not establish that

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the individual clients understood that the solicitor's services were of special worth or that he would spend, and charge for, time in excess of the time ordinarily required for those services.

Ihave dealt with these submissions at length because of the importance of the issues of principle which Mr Roberts' submissions have raised. However, in the end I am not satisfied that the analysis of the individual cases made by the Tribunal was wrong or that, in the event, their conclusions should be set aside. lam satisfied that the solicitor charged fees which were grossly excessive for the services rendered and that those fees were not justified by the matters relied on. The findings of the Tribunal were, in my opinion, justified.

Priestley JA THE APPEAL, AND THE AGREED METHOD OF DEALING WITH IT.

Following the making of findings upon an amended complaint by the Council-of-the Law Society of New South Wales (the Law Society), the name of Mr Veghelyi, the appellant, was on 29 April 1991 ordered by the Legal Profession Disciplinary Tribunal (the Tribunal) to be removed from the roll of solicitors in New South Wales. The delay in the appeals coming on for hearing and the nature of the appeal are discussed in the reasons of Mahoney JA, who explains the course followed in the hearing of the appeal. I will not again go over the ground he covers but simply note the effect of his reasons, which in my opinion are sound and proper.

This appeal could have been conducted by way of full rehearing. The parties recognised the wastefulness of this. They agreed, with the consent of the court, that they would put before the court in written form all the material which was before the Tribunal, along with the reasons of the Tribunal for the orders that it made, and that they would then proceed on the footing that this court would accept the Tribunal's determinations of primary fact and credibility; that there would be no further oral evidence, with the exception of some evidence going to the health of the appellant and to questions of conveyancing practice; that on the basis of these materials it would be open to the parties to make submissions concerning the inferences or findings which this court should make upon the basis of the matters of primary fact found by the Tribunal; and the matters of primary fact included the Tribunal's findings concerning credibility.

The Tribunal had made findings adverse to the appellant arising from his dealings with sixteen clients and also his conduct towards an arbitrator in a case with which he was concerned. Amongst these findings were eleven of gross overcharging amounting to misconduct at common law; eight of wilful breach of s41(1) of the Legal Practitioners Act, 1898 (the Act), these findings all being to the effect that the appellant had appropriated to himself moneys for professional costs for which he had no authority; one of wilful breach of s42(2); three of other conduct amounting to misconduct at common law; one of breach of s21; and one of breach of s26. In the cases of some clients more adverse findings than one were made. For example, in the cases of five clients findings against the appellant involved both breaches of s41 and gross overcharging. I will deal with the cases of these five clients first, then the three other cases of wilful breach of s41(1), then the remaining cases of overcharging and then the other cases.

In considering for myself whether the various matters alleged against the appellant have been proved, I have had in mind, in every instance, that the onus of proof is upon the Law Society, according to the civil standard. In applying this

standard I have treated all of the matters alleged against the appellant as serious. My eventual conclusion is that in all but two instances I am satisfied that the Law Society discharged the onus of proof. In each instance I have come to my conclusion bearing in mind the gravity of the fact to be proved and have approached the matter on the basis that I should only come to the conclusion that a matter was proved if I were comfortably satisfied of it bearing in mind the gravity of what was sought to be proved.

In view of the part played by s41 in the first eight cases I will be dealing with, I will set it out at this stage.

"s41(1) All moneys received in New South Wales for or on behalf of any person by any solicitor shall be held by him exclusively for such person, to be paid to such person, or to be disbursed as he directs, and until so paid or disbursed the moneys shall be paid into a bank in New South Wales to a trust account, whether general or separate.

(2) The moneys shall not be available for the payment of the debts of the solicitor to any other creditor of the solicitor, or be liable to be attached or taken in execution under the order or process of any Court at the instance of any such other creditor.

(3) Nothing in this section or in s42A shall be construed to take away or affect any just claim or lien which any solicitor may have against or upon any of the moneys, and nothing in this section shall apply to moneys receivable by a solicitor for or on account of legal costs, whether already due or to accrue due."

THE FIVE CASES IN WHICH BOTH BREACHES OF s41(1) AND GROSS OVERCHARGING WERE ALLEGED.

Hamilton. In regard to this client the particulars of the wilful breach of the s41 ground of complaint were as follows:

"(a) The Solicitor acted for Mrs Pamela Hamilton in relation to a family law matter and other associated matters.

(b) By letter dated 2 June, 1986 Mrs Hamilton required the Solicitor to render a final Memorandum of fees for her approval before any payments were made out of moneys on her behalf.

(c) By further letter dated 23 July, 1986 Mrs Hamilton required the Solicitor to retain certain moneys in his trust account until the Solicitor had presented her with a proper itemised bill of costs.

(d) On or about 11 July, 1986 Mrs Hamilton paid the Solicitor the sum of $65,000 which was deposited by him in his trust account. The said sum was by trust cheque 853077 paid to Adrian Twigg and Co., Solicitors, who were the Solicitors for Mrs Hamilton's former husband.

(e) On 24 July, 1986 Mrs Hamilton caused to be paid to the Solicitor the following amounts for costs and disbursements and for payment of balance of moneys owed to her former husband:

(f) The sum of $140,000 was not deposited by the Solicitor to his trust account but was deposited in an account with the United Permanent Building Society Ltd. Between 30 July, 1986 and 11 August, 1986 the Solicitor withdrew the total sum of $132,007.52 from the said account of which sum the Solicitor personally retained the sum of $94,474.57.

(g) The sum of $56,014.78 was not deposited by the Solicitor to his trust account but was deposited into one of his personal accounts and retained by him.

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(h) (This particular directed the reader to a further document containing thirteen pages of detail.)"

The particulars of the gross overcharging ground asserted that the appellant had charged the client a total of $215,810 for costs and disbursements between July 1984 and August 1986, and referred to the para(h) details.

These complaints arose from Family Law proceedings which were unusually difficult and complex. The Tribunal found in the appellant's favour that Mrs Hamilton was an extremely demanding client who made it clear to the appellant that she wanted him to give the utmost of his time and attention to her case without particular regard to cost.

The Tribunal noted that in the absence of an order to the contrary by a court, the Family Law Rules prohibited a solicitor from charging costs in excess of those prescribed, unless by agreement properly entered into pursuant to the Rules. The Tribunal said that the fees in question exceeded by a very considerable margin the prescribed fees.

There was a dispute before the Tribunal whether fees agreements which the appellant relied on as having been properly entered into pursuant to the Rules were voluntarily entered into by Mrs Hamilton. The Tribunal's finding on that dispute was in favour of the appellant, so that the Tribunal proceeded on the basis that valid fee agreements had been entered into. Having made that finding however, the Tribunal continued that that finding was "not an end to the matter. The Tribunal must, it believes, determine whether the costs actually charged by the Solicitor to his client even if calculated pursuant to the fees agreement represented such a gross overcharge as to introduce a connotation of disgraceful or dishonourable conduct by the Solicitor sufficient to justify a finding against him of professional misconduct.

It is therefore necessary to turn to me evidence given in relation to the Solicitor's charges and for this purpose a useful starting point is the evidence of Mr Peter Twigg Solicitor who acted for Dr Hamilton in the proceedings in the Family Court."

The Tribunal then referred to Mr Twigg's evidence and his experience in the Family Court. They also referred to the evidence of Mr JF Newnham "also an extremely experienced Solicitor in Family Law matters". Both Mr Twigg and Mr Newnham expressed the opinion that the solicitors charges were grossly excessive.

After consideration of the evidence, the Tribunal said the conclusion was "inescapable that the charges totalling approximately $215,000... did represent a grossly excessive overcharge". The $215,000 bill was the first which the appellant had sent to Mrs Hamilton. When he was asked to deliver a bill in taxable form he delivered one dated 17 July 1987, totalling $347,496. This second bill included a charge of $49,000 for the preparation of the bill, a charge which the Tribunal said was "without justification". It followed from the Tribunal's conclusion about the earlier bill, that the second one also represented a gross overcharge. The Tribunal also pointed out that in the second bill it was apparent on its face that the appellant had duplicated many charges.

For the appellant it was submitted that it was perverse for the Tribunal to find that the appellant's hourly rate was grossly excessive in the light of evidence before the Tribunal from experienced practitioners such as Mr Broun QC to the effect that the hourly rate charged by the appellant was "not an unreasonable amount for a solicitor of experience in Family Law to charge". It was further submitted that in the absence of any evidence of a consideration of the appellant's

files by Mr Twigg and Mr Newnham the Tribunal could not conclude that either the appellant's charges grossly exceeded those he was entitled to make under the costs agreements, or that work said to have been undertaken was not undertaken or that there was over-servicing and that in the absence of some such basis no finding of gross over-charging could be made.

As against this, the Tribunal had commented that the appellant had not sought to justify in detail his charges beyond pointing to what was set out in his second bill and to the fees agreements.

This submission can most simply be answered by saying that in Mr Newnham's statutory declaration he set out the materials upon which he based his opinion, and to my mind, having looked at those materials myself, they were an adequate basis for his opinion. I have looked also at the cross-examination of Mr Newnham before me Tribunal by the then representative of the appellant, and nothing, to my mind, was drawn from him at all damaging to his opinion. Nothing was put to him relevant to the arguments now raised, so that this court does not know what his answers would have been. His evidence remains, as it was, strong material supporting ie complaint. The Tribunal saw the various witnesses for and against the appellant on the issues now in question and in my opinion was amply entitled to accept what was said by Mr Newnham and Mr Twigg. In view of the way the matter was conducted before the Tribunal and the constraints that places upon this court in reviewing the evidence for itself, and in light of the basis upon which the appeal was presented to the court, I would come to the same conclusion as the Tribunal.

The facts relating to the s41(1) breach were as follows. Mrs Hamilton's family law proceedings ended with a settlement which, inter alia, dealt with the ownership of some land. $200,000 was borrowed upon the security of a mortgage of the property. From this two amounts totalling $196,014.78 were paid to the appellant by Mrs Hamilton on 24 July 1986. The Tribunal found these were intended in part for payment of the appellant's costs and disbursements and for payment of the balance due by Mrs Hamilton to her former husband. Some time later the appellant withdrew $132,007.52 of which he personally retained $94,474.57.

By letter dated 2 June 1986, which the appellant admitted he received, Mrs Hamilton had written to the appellant saying, inter alia:

"T would like you now to finalise all my family law matters as expeditiously as possible and render for my perusal your final Memorandum of Fees together with those of counsel, for my approval, before any payment is made out of the moneys you may hold on my behalf. Please do not proceed or incur costs in respect to any other matter on my behalf."

She wrote again by a letter dated 23 July 1986, but the Tribunal accepted the appellant's statement that he had not received it, saying that in any event the letter of 2 June 1986 was clear enough in its terms.

For the appellant it was argued before the Tribunal that he was entitled to appropriate Mrs Hamilton's moneys in the way that he did because of the terms of the fees agreements. These however had been signed in 1985. The $196,000 went to him after he received the letter of 2 June 1986 and he must have known that the moneys were being left with him subject to the terms of that letter. The Tribunal was of the view that he acted in blatant disregard of its requirements and concluded that there was no doubt that his appropriation of the funds constituted a wilful breach of s41(1).

URJ - VEGHELYI v THE LAW SOCIETY OF NEW SOUTH WALES (Priestley JA) 13

The argument based upon the fees agreements was repeated in this court, but in my opinion must fail for the reason given by the Tribunal.

In this court a further argument was relied on. This was that the effect of s 41(3) was that s41(1) did not apply to the moneys received by the appellant because they were receivable by him for or on account of legal costs either already due or to accrue due. Quite apart from other difficulties with this submission, it is not supported by the facts. In view of the terms of the letter of 2 June 1986 the moneys did not fall within the description "moneys receivable by a solicitor for or on account of legal costs".

In my opinion breach of s41(1) was established against the appellant.

Mr and Mrs Adams. In its amended complaint, the Council's grounds arising from the appellant's dealings with his clients, Mr and Mrs Adams, were, |. wilful breach of s41(1) of the Act and 2. gross overcharging.

The particulars given of the first ground were that in 1984 the appellant acted for his clients on the sale of a property for $3,500, that the sale was completed on 23 November 1984 but the appellant failed to account to the clients for the proceeds.

The particulars of the second ground were that on the same sale the sale price was S3,500, the appellant rendered his bill in the sum of $1,304 and the appropriate scale costs were $173.

The Tribunal stated the appellant's answer to the grounds and then its own opinion as follows:

"The Solicitor's answer to those allegations was that he acted for Mr and Mrs Adams on a number of the matters, that costs were due to him in respect of those other matters in addition to those due in respect of the sale of the Wallabadah land and that Mr Adams had authorised him to apply the proceeds of sale in discharge of all outstanding costs.

Mr Adams gave evidence before the Tribunal and was cross examined at some length by the Solicitor. Whilst it may be that Solicitor was authorised to deduct costs of acting on the particular matter the Tribunal is satisfied that no authority was given to the Solicitor to deduct costs in respect of any other matter. As to the complaint of overcharging as it seems clear on the evidence that no agreement was entered into between Mr and Mrs Adams and the Solicitor in relation to the Solicitor's remuneration his costs were restricted to the appropriate scale and accordingly the Tribunal finds that his charge of $1,304.00 as against the scale charge of $173.00 represented a gross overcharge. Both complaints made by the Law Society in respect of Mr and Mrs Adams were accordingly in the opinion of the Tribunal established."

On appeal, it was submitted for the appellant in regard to the failure to account in breach of s41(1) that although the appellant had had no authority to deduct the costs which he had deducted, he had had written authority to deduct other costs and to retain those which he had deducted. It was then said that there was no finding of wilfulness on the appellant's part and that as, as he contended, it would have been easy to misunderstand the written authority, this was a fatal flaw in the Tribunal's finding.

However, what the Tribunal did in regard to the s41 ground was find that the complaint by the Society was established. The complaint was, as the amended complaint makes clear, that there had been wilful breach. Thus in finding the complaint established the Tribunal was making a finding of wilful breach.

The argument relied on by the appellant is therefore reduced to the submission that on the materials before them and on their finding the Tribunal could not find that the breach was a wilful one. When the terms of the written authority are considered, and it is taken into account that it was written by the client's new solicitors in a context of dispute about the appellant's proper costs, it is difficult to see how the appellant could honestly misunderstand it. In my opinion the Tribunal were entitled to reach the conclusion they did. I would do the same.

In regard to the overcharging complaint, there seems to be no room for the appellant to dispute that he had no authority or agreement from the clients to make the charge of $1,304 for the completed sale, nor that the scale fee in the absence of agreement was $173.

For the appellant it was pointed out that the $1,304 included a $400 disbursement and therefore the figure that should be considered was $904. It was then argued that it was logically unsound to reason from the fact that the scale fee was $173, to the conclusion that a fee of $904 must be a gross overcharge. If this were all that was involved in the Tribunal's finding, the appellant's logic might be acceptable. However, in addition to the disparity between the scale and the charged fee, the Tribunal had available to it the knowledge that a specialist Tribunal is entitled to take into account in evaluating the difference between the two fees. In my opinion the Tribunal was well within its entitlements in making the judgment that it did that the fee charged by the appellant was a gross overcharge.

Carter. Miss Carter had a personal injuries claim for negligence arising from an accident in July 1981. Towards the end of 1984 she decided to change her solicitors. The appellant received the file from her former solicitors on 4 July 1985. The appellant claimed that by 12 November 1985 his professional costs and disbursements amounted to $5,060. The Tribunal found that by that time he had done no more than file and serve a statement of claim and on that basis concluded that the charge of $5,060 represented a gross overcharge.

The appellant's submission in this court was that the Tribunal's conclusion appeared to be based on an assumption that the appellant was not entitled to render an account for work performed by Ms Carter's former solicitors and therefore could not have spent the claimed amount of time on the file. To my mind, if the Tribunal did make such an assumption, it would appear to be a correct one. In any event, the substance of what the Tribunal said, brief though it was, was not challenged by the appellant, and appears to me to lead directly to the Tribunal's conclusion.

The s41(1) breach was said to have been committed in respect of moneys raised by a litigation loan. The evidence showed that litigants were borrowing money, usually through the agency of their solicitors, from banks, for the purposes of litigation. Standard forms of documents were in use in connection with these borrowings. It was argued for the appellant, both before the Tribunal and in this court, that on the proper construction of the documents, solicitors were entitled, when they received on behalf of their clients, the litigation loan moneys from the banks, to appropriate their own costs from those moneys.

It is not necessary in Miss Carter's case to examine the detail of this contention, because it was found as a fact by the Tribunal that both the appellant and the solicitor employed by him had assured Miss Carter that the loan moneys were not for solicitors fees. The appellant had asserted the contrary. In that state of the facts it was not open to the appellant in any event to assert as against Miss Carter that he was entitled to appropriate his own charges (gross overcharges as

URJ - VEGHELYI v THE LAW SOCIETY OF NEW SOUTH WALES (Priestley JA) 15

it happened) from the loan moneys. Also in that state of the facts it was open to the Tribunal to conclude that the breach was wilful.

In regard to the matters complained of in Miss Carter's case, I come to the same conclusions as the Tribunal.

Tree. The Tribunal noted that the appellant had been instructed to act for Mr Tree in regard to two matters. Miss Sayer's report annexed various materials-relevant to the costing of the work done by the appellant. A specialist Legal Costs Consultant, Mr Hardman, gave evidence that the scale charged for the work together with disbursements totalled $1,017. The appellant charged $5,000. His answer to the complaint was that his costs were calculated at an hourly rate of $120 and he thought the amount charged to Mr Tree was fair and reasonable. On the evidence before it the Tribunal came to the conclusion that the appellant's charge was a gross overcharge.

The submissions in this court were that the Mr Hardman had misconceived the basis upon which he assessed the charges and that both he and the Tribunal had misunderstood the scope of the work done by the appellant.

The first submission to some extent depended on the second. The second was based on the fact that on page 13 of Miss Sayer's report there is reference to a statement of claim filed on 1 October 1986 in the Supreme Court which, by implication from counsel's submission, should have been taken into account in the Mr Hardman's estimates, and was not.

However, the gross overcharging of which complaint was made concerned accounts rendered for costs and disbursements to 11 February 1986. Work done after that date was not relevant to the complaint. Mr Hardman was not cross-examined about the basis he used for estimating the costs figure he gave in Mr Tree's case.

On the materials before this court, and on the basis upon which this issue was contested in respect of the appellant's accounts to Mr Tree, I reach the same conclusion as the Tribunal.

In regard to the s41(1) breach, the relevant facts again concern what came to be called overall, litigation lending loans. In Mr Tree's case, certain basic facts, as found by the Tribunal were not disputed by the appellant.

In October 1985 he had requested Westpac Bank to advance to Mr Tree $6,000 "... to cover disbursements/legal expenses incurred by us on his behalf". The last paragraph of this letter of request said:

"Peter Tree (sic) signature appears at the foot of this letter in confirmatizion (sic) of this request."

Then, next to the appellant's signature the following appeared:

"T confirm the above request and not the terms and conditions contained herewith."

Mr Tree also signed an authority, apparently at the same time, addressed to the appellant's firm, saying:

"re: ADVANCES TO COVER DISBURSEMENTS/LEGAL EXPENSES

On completion of this matter, I hereby irrevocably authorise and direct you or such other Solicitor as I may instruct herein to pay any settlement or verdict moneys I may receive in relation to the above claim as follows:

(i) To Westpac Banking Corporation, Martin Place Branch, the amount of my fully drawn advance on account of disbursements/legal expenses together with interest thereon.

(ii) To my Solicitors in respect of all unpaid costs and disbursements.

(iii) (The residue) to the credit of my Advantage Saver account with Westpac Savings Bank Ltd, 60 martin Place, Sydney.

This authority is for valuable consideration received, is irrevocable and cannot be cancelled without the prior written consent of Westpac Banking Corporation."

On the same day again Mr Tree signed a further authority, headed "Irrevocable Authority", addressed to Westpac as follows:

"RE: ADVANCES TO COVER DISBURSEMENTS/LEGAL EXPENSES

'You are hereby irrevocably authorised and directed to pay all moneys advanced to me by your Bank in respect of disbursements/legal expenses required for the conduct of my matter to my Solicitors, Barnett, Nicol and Veghelyi or as they may direct.

My Solicitors have full discretion in respect of the disbursements of proceeds of the advance and the Bank has no responsibility whatsoever in respect of such disbursement."

An advance of $5,925 was made by the bank and paid to the appellant's trust account on 12 November 1985. The following day the appellant transfered from his trust account to his general account the sum of $5,402 on account of his costs. He paid counsel from his trust account $150 for fees incurred. On the same day he prepared a memorandum of his own professional costs and disbursements in the sum of $5,000.

The Tribunal was of the view that the appellant was not authorised to do that by any of the documents upon which he relied.

In this court further evidence was admitted from an experienced solicitor, Mr SG Hume. He gave evidence of the use of the Litigation Lending Scheme and the fact that while it was in use, documents such as the letter of request and the authorities used in Mr Tree's case were also used by numbers of other solicitors in connection with their clients' litigation. He gave various opinions about what solicitors might or might not do with moneys advanced by banks pursuant to such documentation bearing in mind the obligations created by s41. The solicitor's opinions concerning the proper construction of the documents and s41 were not admissible on the question of what the law actually was in regard to those matters, which is a matter of argument for the parties and decision by the court, but were said to be relevant to the question whether what the appellant was doing was no more than what many reputable solicitors were doing at the time. Mr Hume himself did not at any time engage in such practice.

However, even as to practice, Mr Hume's evidence was of dubious help to the appellant. He agreed that although he himself took the view that s41(1) did not require that moneys paid to a solicitor on account of solicitor's costs for work not yet done should go into the solicitor's trust account, there were many solicitors at the relevant time (before the law in this respect was put beyond doubt) who felt that such money should be paid into the solicitor's trust account as clients' moneys covered by s41(1).

The appellant's submission was that both the foregoing documentation and materials extrinsic to that documentation, including Mr Hume's evidence, made it plain that funds obtained under the Litigation Lending Scheme were, as a matter of generality, intended to be used for the payment of solicitor's costs and disbursements and that the appellant was justified in having that understanding.

The Tribunal took the view that any entitlement for the appellant to do what he did depended entirely on the documentation for the particular loan, or authority from the client. This seems to me to be plainly right.

URJ - VEGHELYI v THE LAW SOCIETY OF NEW SOUTH WALES (Priestley JA) 17

The Tribunal then expressed itself to be satisfied that the documentation gave the appellant no implied or express authority to transfer his professional costs from his trust account in the way that he did. There was no contention of any other direct authority.

I agree with the Tribunal's view of the documentation.

This conclusion makes it unnecessary to consider the appellant's submission that s41 did not oblige the appellant to credit the loan money to his trust account. Whether that submission is right or not, the appellant did credit the moneys to his trust account, and paid them out to himself without authority.

Like the Tribunal, I am of the view that there was a wilful breach of s41(1).

Phelps. In the case of Mrs Phelps, the complaint of overcharging arose from the fact that the appellant rendered a bill of costs (which had been prepared by a cost consultant) showing total profit costs of $4,143.79. This bill was taxed in the Supreme Court at $2,548.69. The Tribunal held that the bill as rendered represented a gross overcharge.

For the appellant it was said that it was not enough for the Tribunal simply to compare the two sums. It was argued that the fact that there was a substantial difference between the amount claimed and that allowed on taxation did not necessarily show that there had been a gross overcharge. At 21 and 22 of the affidavit of Mr Hume were relied on also. These pages set out his own views about overcharging, and how an experienced person such as himself would go about forming an opinion whether a particular charge was excessive. I do not think anything he said leads to the view that the Tribunal could not have reached the conclusions it did on the particular cases before it; or that this court could not reach the same conclusions.

Counsel's point that the disparity did not necessarily lead to a conclusion of overcharging is right. The extra element required is the evaluative judgment of the Tribunal or court, based on practical legal experience, which will be taken into account in deciding whether the difference amounts to gross overcharging.

In the present instance, the Tribunal had also taken into account that the appellant's bill had been costed by charging $120 per hour for his time but that it was denied by Mrs Phelps that she had had a discussion with the appellant for the charging of his fees at that rate.

That left the position as being one where the appellant was entitled to charge what was fair and reasonable but no more. The result reached by the taxing officer must be taken as the equivalent of a ruling binding both the appellant and Mrs Phelps that a fair and reasonable charge was $2,548.69. The appellant had no authority to charge more than that and was not entitled to ask for more than that. It seems to me that to charge $1,595.48 more than he was entitled to, when the amount he was entitled to charge was $2,548.69 is fairly described as a gross overcharge.

A litigation loan was obtained for Mrs Phelps. The facts are on all fours with those of Miss Carter. The appellant took $2,000 from the $3,000 borrowed, which had gone into the trust account, and took it without authority. This was held by the Tribunal to be a breach of s41(1). I reach the same conclusion.

In the case of each of clients named Musumeci, Mucciarelli and McIntyre a single breach of s41(1) was found and no more.

Musumeci. The appellant acted for Mr and Mrs Musumeci who leased premises to a tenant for whom other solicitors acted. The appellant received from those solicitors $200 to be paid to the Rental Bond Board as the tenants' security

bond payable under the lease. The appellant paid the money into his trust account. When Miss Sayer examined the appellant's trust account the sum was not there. There was evidence before the Tribunal from which the inference could be drawn that the amount had been held in the trust account in the names of Mr and Mrs Musumeci and had been used to settle interim costs the appellant claimed from them.

The Tribunal held that the bond had been paid to the appellant on behalf of the tenant to be held on trust for payment to the Rental Bond Board and that the appropriation by the appellant of the amount to himself was a breach of s41(1), because even if Mr and Mrs Musumeci had authorised the appellant to do what he did, their authorisation was irrelevant, since it was the tenant who was interested in the money and might give directions concerning it. The primary direction of course would be that the money be paid to the Rental Bond Board.

In this court it was argued for the appellant that although the appellant should have remitted the money to the Rental Bond Board as requested, nevertheless there was no breach of s41(1) because it had not been necessary for ie bond money to be deposited to the solicitor's trust account. This submission was based on the proposition that the bond money was not received on behalf of the appellant's clients and therefore should not have been credited to their names in his trust account. A further part of this submission was that s41(1) only applies to moneys received by a solicitor for or on behalf of a client.

I do not agree with this submission. The words in the subsection are moneys received... for or on behalf of any person". The subsection seems to me to have been a statutory direction to solicitors as to the way in which all moneys received by them on trust for any person, whether client or not, (although no doubt usually a client). Even if that be doubtful, in the present instance the moneys were placed by the appellant in a trust account, and despite that trust account bearing the wrong label in naming the beneficiary, once acknowledged to be on trust by being placed in the trust account, the moneys should not have been disbursed without the authority of the person entitled to give directions in respect of them.

I reach the same conclusion as the Tribunal on this matter.

Mucciarelli. The appellant deposited in his trust account three amounts of $500 received from his client on 17 June, 25 November and 11 December 1985. The moneys were paid on account of costs and disbursements. The latter two payments were made following a letter dated 20 November 1985 from the appellant asking his client to place him in funds in the sum of $1,000 for anticipated costs and disbursements. In this letter the appellant told his client that the cost of a blood test to be done would be $425.

On 4 September, 11 December and 20 December 1985 the appellant transfered $500 from his trust account into his general account. On each occasion he rendered an account of costs and disbursements to the client for $500, the account being in the following form:

URJ - VEGHELYI v THE LAW SOCIETY OF NEW SOUTH WALES (Priestley JA) 19

On 2 January 1986 the client wrote to the appellant saying he was not going on with the matter, that he had not heard from the appellant since forwarding the two later amounts, and asking for their repayment. On 15 January 1986 the appellant wrote to his client, enclosing a memorandum of costs showing his own costs as $1,800, disbursements of $178.50, and claiming a balance outstanding of $478.50 after giving credit for $1,500 for money received.

The client then asked the appellant for an itemised Bill of Costs which he never got.

The following was recorded by the Tribunal in its reasons: "The Solicitor stated in evidence that his practice was that where monies were held in trust for costs and disbursements he would prepare a summary bill addressed to the client and send it to me client and at the same time present a copy of the bill to the accounts person in his office with instructions to transfer monies from trust to cover the bill. This procedure he adopted in respect of each of the interim accounts for $500.00 and indeed this was done on the same day the money was received."

Before the Tribunal the Law Society submitted that wilful breaches of s41(1) were committed on each occasion the appellant transfered the sum of $500 from his trust account.

The Tribunal found that on each occasion there was a failure by the appellant to comply with s41(1). This was on the footing that in Stewart v Strevens (1976) 2 NSWLR 321, Helsham J had held that a solicitor is not entitled to transfer from his trust account moneys received on account of costs of disbursements without first rendering a Bill of Costs to his client, and that that had not happened in the present case.

However, the Tribunal found that the only wilful failure to comply with s41(1) was in regard to the sum of $425 which the appellant was holding in the trust account for a purpose which did not arise.

It was submitted to this court that Stewart v Strevens was not authority for the proposition which the Tribunal obtained from it. It was also submitted that moneys received by a solicitor in respect of costs and disbursements may be immediately deposited to the solicitor's general account.

It is not necessary in Mr Mucciarelli's case to decide whether the submission concerning Stewart v Strevens is correct. The Tribunal's decision was confined to the $425 which me appellant had mentioned in his letter of 20 November 1985 as being the cost of the relevant medical tests. When the appellant paid money into his trust account including money earmarked for that purpose, he could not deal with it except for that purpose unless he had the authority of his client. This he did not have. By transfering that amount into his general account, which was his own account, and his alone, the appellant was making the $425 available for his own purposes.

In my opinion this was a clear and wilful breach of s41(1).

McIntyre. The case of this client was similar to that of Miss Carter in that the alleged s4(1) breach was in respect of moneys raised by a litigation loan. The appellant sought to rely before the Tribunal, and in this court, on the documentation signed by the client as authorising him to appropriate his own costs from the litigation loan moneys received from the bank.

As in Miss Carter's case, the client said he had been told by the appellant that the loan was for costs and - disbursements and that his understanding was that the appellant would take his professional costs from any award resulting from the litigation.

The appellant gave evidence saying he had explained to the client that the loan covered his own professional fees as well as disbursements.

Although the Tribunal did not say in so many words that they did not accept this evidence from the solicitor, it is plain beyond all doubt from the sequence and expression of their reasons that they did not accept his evidence, did accept that of the client and concluded that in transfering money for his own costs from his trust account to his own account he did so in wilful breach of s41(1).

There was quite sufficient in this state of affairs to justify the Tribunal's finding of wilful breach of s41(1), a conclusion which I also reach.

Mason. In 1982 Mr Mason instructed a firm of solicitors in Singleton by whom the appellant was employed to act for him in a matter. The appellant apparently did some work for him while employed by the firm. He had also dealt with another employee of the same firm. Both the other employee and the appellant left the employment of the firm. Mr Mason instructed the other employee, now working with another firm, and he brought the matter to a conclusion which resulted in judgment for Mr Mason, which was paid to him after deduction of the costs. This was about May 1987.

Meanwhile, the appellant, in practice on his own account, purported to do work for Mr Mason in the same matter. Mr Mason gave evidence that he had never given any authority to the appellant to work on the matter after he left the employ of the Singleton firm. The Tribunal found that the appellant did not have any authority to act for Mr Mason after he left the Singleton firm. The Tribunal also held that the appellant had no right to seek payment of any costs and disbursements from Mr Mason.

The Tribunal considered the items for which the appellant had claimed to be entitled to be paid and said that if he had been entitled to claim for anything from Mr Mason, what he did claim was on its face a gross overcharge.

However, on the Tribunal's finding the appellant had, as the Tribunal correctly said, no right to seek payment of those costs and disbursements from Mr Mason. It may be right to describe as a gross overcharge the attempt to charge for something for which there was no entitlement at all, or it may be that a gross overcharge is not the right description of the facts.

It does not seem to me to matter, because whichever way it is looked at, it is professional misconduct.

The appellant had every opportunity to meet the substance of the particulars with which he was charged and in my opinion showed no answer to the substance of the particulars.

Copas. This is another case which originated with the appellant's employment by the firm of solicitors in Singleton. Mr Copas was a client of that firm, where the appellant did some work for him. Mr Copas became the appellant's client when he went to practise on his own account.

In 1987 the appellant sent Mr Copas a memorandum of costs and disbursements containing a significant claim for work done while Mr Copas was a client of the Singleton firm. The charges were claimed from June 1978. Mr Copas denied he had given the appellant any instructions to act for him before the end of 1982. He also queried whether the appellant had actually done a number of the matters listed on the account prior to 1982. The Tribunal did not make any findings on the question of what work the appellant had actually done for Mr

URJ - VEGHELYI v THE LAW SOCIETY OF NEW SOUTH WALES (Priestley JA) 21

Copas while in the employ of the Singleton firm but expressly accepted Mr Copas's evidence that he had given no instructions to the appellant to act for him before the end of 1982.

The Tribunal also said it was plain that the charges made by ie appellant for work allegedly done in 1978, 1979 and 1980 greatly exceeded the costs which a solicitor of good repute would reasonably have been entitled to charge during that period and noted that it was clear that for that period the appellant had applied the same charge rate for the whole of the period represented by the bill from June 1978 to February 1987. That is, when the appellant claimed his costs from Mr Copas in 1987 he charged him 1987 rates for work done (allegedly) in 1978, 1979 and 1980.

When these matters are taken together with the Tribunal's conclusion that the appellant had not been entitled to charge Mr Copas in any event for any work done while he was in the employ of the Singleton solicitors, a conclusion which I think is clearly right, it seems to me that the finding of gross overcharging was inevitable. I agree with this conclusion of the Tribunal.

Pura. The appellant took over the carriage of a negligence claim by Mr Pura in January 1985. The appellant briefed counsel. Mr Pura and a clerk attended on a conference with counsel. Counsel noted the conference took forty minutes. He charged $60. After the conference the claim was not pursued.

On 1 October 1986 the appellant rendered a Bill of Costs to Mr Pura for $400 plus disbursements of $78.33 including counsel's fee of $60.

At a glance

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Before

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Judgment (273 paragraphs)

Parties

Cases Cited (10)

Cited By (4)