Vertzayias v Council of the Law Society of NSW

The factual circumstances relating to this finding 5The Applicant relied upon an Affidavit that he swore on 24 October 2012, in which he deposes to the factual background to the complaint against him and to which he annexes correspondence exchanged between himself and the Law Society. He also relied upon an Affidavit sworn by Dion Vertzayias (his son) on 23 October 2012. 6The Law Society tendered a bundle of documents relevant to the investigation of the Complaint. 7The Tribunal notes that the following facts are not in dispute: (a)The Applicant has two children a son, Dion and a daughter, Dioni. (b)Dioni resides from time to time in Greece and has executed a Power of Attorney in favour of Dion to manage her affairs. (c)By Agreement between the Dion and Dioni, $40,000 (which was Dioni's share of proceeds of the sale of property) was lent to Dion. Dion deposited this into a joint account that he held with his then wife, Helen Carayannis. (d)The marriage of Dion and Helen broke down in July 2008 and in January 2009 correspondence was exchanged between them regarding the sum of $40,000. (e)Helen disputed that the money in the bank account belonged to Dioni. Accordingly the ownership of the sum of $40,000 was a live issue in any forthcoming dispute under the Family Law Act between Dion and Helen for the division of matrimonial property. (f)On 9 March 2000, Dion commenced proceedings in the Federal Magistrates Court, seeking Parenting Orders in respect of the child of the marriage. (g)On 18 March 2009 the Applicant, acting on behalf of Dioni, commenced proceedings in the Local Court of New South Wales against Dion and Helen. He sought repayment of the sum of $40,000. (h)Shortly afterwards, Helen filed an Application for Property Orders in the Federal Magistrates Court and Dioni was joined as the Second Respondent. Helen also filed a Notice of Motion seeking to stay the Local Court proceedings on the basis that the issue before the Local Court formed part of the dispute between her and Dion as to whether or not it was part of a matrimonial property pool. (i)The Applicant swore an Affidavit on 21 April 2009 and this was filed in the Federal Magistrates Court on the first return date of 22 April 2009. In this he gave evidence concerning the sum of $40,000 and Dioni's claim that it was her proceeds from the sale of property. He deposed that: (i)He acted on the sale and that he received the sale proceeds into his trust account after settlement; (ii)He was the intermediary between Dion and Dioni when Dion asked to borrow that money "as working capital for my practice" and Dioni was prepared for Dion to temporarily use her assets (on this and other occasions). (j)On 23 July 2009 the Local Court heard Helen's Application to stay the Local Court proceedings. The Applicant appeared on behalf of Dioni. During the course of those proceedings the Applicant tendered his Affidavit sworn on 21 April 2009 (from the Federal Magistrates Court proceedings) and Helen's solicitor sought to cross-examine him regarding the contents of that affidavit. The transcript issued by the Local Court indicates that the following exchange took place between Magistrate Heilpern and the Applicant [at page 8 at line 8] : His Honour: Just a moment. You wish to cross examine this witness on this affidavit? Okay, no problem. Vertzayias: I am bound by the court rules. His Honour: Do you have any difficulties with that? Vertzayias: No, not at all. His Honour: How long have you been a solicitor for in this jurisdiction? Vertzayias: 30 years your honour. His Honour: Do you understand the risk that you place yourself at by coming up into the witness box on an issue where you are the father in law, am I correct? Vertzayias: Yes Your Honour His Honour: The father in law of a party to proceedings. You are also the solicitor and you placing yourself in a position where you are going to be cross-examined on an affidavit. Vertzayias: Yes Your Honour His Honour: You don't want to seek separate legal representation? Vertzayias: No, Your Honour. (k)The Applicant subsequently went into the witness box and gave evidence and was cross-examined. In his closing submissions to the Court, the Applicant argued that the evidence he gave was relevant to the fact that the $40,000 was not a matrimonial asset. (l)In granting the motion to stay the proceedings, Magistrate Heilpern stated (see: Transcript p. 24, lines 24-44): I should also comment as follows. I gave a very, very clear warning to Counsel, to the solicitor for the plaintiff. I said to him that he ought to consider getting an adjournment before he is cross-examined. He did not. As a result of that cross-examination and the evidence given, the manner in which he answered those questions, it is crystal clear to me what is really going on here. What is really going on here is that the couple have separated and the father and daughter want to do what they can to preserve the assets of the son, at the expense of the mother. I would not be able to make the conclusion in circumstances where somebody does not give evidence. But rarely have I seen in the witness box such an effort to ensure that the plaintiff's case is successful for all the most improper reasons. This motion was destined to succeed and the fact that the solicitor who happens to be the father of the daughter and the father of the second defendant, goes into bat, and allows himself to be cross-examined on issues that are way above and beyond, is indicative of a loss of judgement of that practitioner, and indicative of what is really behind these proceedings. That is, an effort to ensure that the family Vertzayias gets as much money away from the ex-wife as possible. I have rarely seen such a shifty witness in the witness box. (m)On 17 August 2009 the Applicant swore and filed a further Affidavit in the Federal Magistrates Court. This Affidavit forms the basis of the Complaint regarding which the decision under review was made. In the first paragraph of that Affidavit, he deposed as follows: I am Dion's father and the solicitor for the second respondent. This Affidavit was principally filed in response to an Affidavit sworn by Helen on 5 August 2009, which concerned a number of issues in respect of the property of the marriage including the sum of $40,000 that was the subject of the claim by Dioni.

The Law Society' Investigation and Findings 8A number of complaints were made against the Applicant by his former daughter in law arising out of both the Federal Magistrates Court and Local Court proceedings. All but one of her complaints was dismissed by the Professional Standards Committee of the Law Society following investigation. The only complaint that was upheld was that the applicant breached Rule 19 of the Revised Professional Conduct and Practice Rules 1995 while appearing as the advocate for his daughter in the Notice of Motion on 23 July 2009 at the Downing Centre Local Court ("the first breach"). 9On 9 May 2012, the Applicant's daughter in law wrote to the Law Society and advised that in light of the history of the matter, she no longer wish to proceed with her complaint. 10On 31 May 2012, in finding that the solicitor was in breach of Rule 19, the Committee noted that in his letter to the Society dated 30 April 2012 the Applicant stated: On 23 July 2009 before Magistrate Heilpern by going into the witness box was clearly an error of judgement which I regret. The Committee stated: The Committee in assessing the solicitor's lack of judgement in his breach of Rule 19 takes into account (i) the proceedings were a stay application and not the hearing of the substantive issue, (ii) the solicitor's involvement in the proceedings concerned his family in matrimonial proceedings, and (iii) there is no evidence of solicitor knowingly breached Rule 19. It issued a caution to the Applicant. We note that during the investigation of the complaint concerning the first breach of Rule 19, the Committee had cause to review the Applicant's conduct in the Federal Magistrates Court after 23 July 2009 and, having done so, it brought its own complaint against the Applicant. 11The Committee had accepted that up to and including the Applicant's appearance on 22 April 2009, there were exceptional circumstances justifying his continuing to act for Dioni in the proceedings in which he was a material witness. However, it determined that by continuing to remain on the record as the solicitor for Dioni (the Second Respondent in the Federal Magistrates Court proceedings) and then filing a further Affidavit, which he filed on behalf of Dion (the First Respondent in those proceedings) the Applicant had committed a second breach of Rule 19. 12In his letter to the Committee dated 30 April 2012, the Applicant stated that his role in the Federal Magistrates' Court proceedings after 23 July 2009 'were minimal'. Specifically, he stated that he did not attend a Conciliation Conference after this date and that the proceedings were settled in November 2009 and that Consent Orders were entered in December 2009 - without his involvement or participation. In respect of his Affidavit sworn on 17 August 2009, he stated (in his response to the complaint): ... It was necessary for the writer to file the affidavit sworn 17 August 2009 in order to rebut Helen's evidence relating to the purchase of properties on behalf of Dion and Dioni, the history of Dion's working life in my office, the commencement of his own practice in my office, the "Raptis litigation", Dion's move to the Randwick premises and what work I did on his behalf after his move, reimbursements and other matters. Most of the material in the aforesaid affidavit is in support of Dion's property case for whom (sic) I DID NOT ACT. If the matter had proceeded to hearing I was the only person able to provide this material. 13The Committee noted that this response did not address the fact that the Applicant's Affidavit sworn on 17 August 2009 contained material evidence regarding Dioni's claim to the sum of $40,000 notwithstanding the criticism that he had received from the Magistrate on 23 July 2009. In light of the Magistrate's comments, the Committee was not satisfied that there were 'exceptional circumstances' that justified his continuing to act for Dioni in the Federal Magistrates Court proceedings in which he was a material witness. 14In considering this Complaint, the Committee noted: (a)Although the solicitor has held a (unrestricted non-principal) practising certificate from 1 July 2010, the solicitor has not been practising as a solicitor since he closed his law practice McDonnell Vertzayias lawyers on 30 June 2010; (b)The proceedings have settled; (c)The Court did not consider the conduct; (d)No complaint about the conduct was made during the course of the proceedings; and (e)The solicitor in response to the complaints admits he breached Rule 19 (on a prima facie basis) and has offered the Society an apology.

The Hearing before the Tribunal 15The Tribunal has before it a further affidavit from the applicant concerning the alleged breach of Rule 19 and heard oral evidence from him under cross-examination. 16We note that the Applicant stated that when he swore the offending Affidavit he did not turn his mind to Rule 19 and that he was far more concerned with the need to rebut the issues raised by Helen in her Affidavit. He regarded the dispute regarding the sum of $40,000 to be only a peripheral matter in disputed property proceedings and he did not consider that it was important. However, he said that he had now had time to reflect on Rule 19, but that he was not aware of it at the time he swore the Affidavit. He had not heeded the Magistrate's warning and now conceded that he was foolish not to have done so. The Applicant eventually agreed with the proposition, after numerous rejections of it, that his evidence regarding the sum of $40,000 that he deposed to in his further Affidavit sworn on 17 August 2009 was material to a live dispute, meant that he was in breach of Rule 19. However, while we note that Mr Pierotti put to the Solicitor that it was irrelevant for whom the Affidavit was filed, the Applicant maintained that the fact that he did not file his further Affidavit on behalf of the Second Respondent made a difference. He repeated several times that he 'felt aggrieved' by the Committee's decision to issue a Reprimand.

Decision of the Tribunal 17The Revised Professional Conduct Rules were issued in 1995. However, Rule 19 enshrines an ethical principle that has its foundation in the common law. A statement of this principle is found in the decision of Campbell CJ in Chapman v Rogers: Ex parte Chapman [1984] 1 Qd R 238: For the reasons that it is desirable to avoid any suggestion of real or apparent conflict between the duty to the court and the obligation to the client, I consider that it is generally unwise for a solicitor, who is not himself appearing as at the court or as an instructing solicitor in court but who is aware that it is likely he will be called as a material witness (other than in relation to formal or non-contentious issues), to continue, either personally or through his firm, to represent the client if this can be reasonably avoided. 18Clearly it is not desirable for an advocate to leave the bar table in order to enter the witness box and to then be exposed to cross-examination. As stated in Pittorino v Meynert [2001] WASC 245 per Bredmeyer M: The vice of a lawyer acting as both witness and instructing solicitor (or Counsel) in a case is that he may be tempted to tailor his evidence to support his client. 19However the rule goes further in that it relates not only solicitors will who appear as advocates, but to solicitors who "act". The effect of the rule is that there is a prohibition on a solicitor/advocate, to whom it is known or becomes apparent that they will be required to give material evidence, in acting or continuing to act unless "exceptional circumstances" justify it. 20Riley's Solicitors Manual [at paragraph 21,035] notes: The rationale for the prescription against a lawyer acting in a case in which there is reason to believe that he or she will be a witness is weightier when the lawyer has a personal interest in the outcome of litigation. The concern is that a lawyer with an interest in the outcome (whether or not pecuniary) might tailor his or her evidence in some way to procure a result that suited that interest. Even outside of this possibility, which the court will not assume readily, the circumstances may give to an independent observer reasonable cause to question the lawyer's capacity for independence in the matter. 21A list of the factors that may be taken into account in determining whether or not the evidence is "material" is found in Riley's Solicitors Manual at [21,040.5]. These include: (a)The degree to which it will lead to the success of the client's case; and (b)Whether or not similar evidence is available from any other source and the extent to which it is in dispute, if at all. 22The bare circumstances of this case, namely the Applicant being the father of both Respondents in the Federal Magistrates Court proceedings and being the Solicitor on the record for the Second Respondent, in which there was a live issue as to what assets were matrimonial assets, patently demonstrates that the Applicant had more than a potential conflict of interest in acting for the Second Respondent. 23This conflict of interest was specifically brought to the Applicant's attention by Magistrate Heilpern about three weeks before he swore his further Affidavit. However, he failed to heed the Magistrate's warning concerning his conduct and he continued to act for the Second Respondent without making any effort to either obtain advice about, or to familiarise himself with, Rule 19. This does not reflect well on the Applicant's competence and diligence as a legal practitioner, a matter that he ultimately conceded during submissions. 24Nevertheless, the Applicant maintained that he had been 'treated unfairly' by the Committee because his second affidavit was not the subject of a complaint to the Law Society. He submitted that there was an element of 'double jeopardy' involved in the Committee pursuing its complaint against him, as it had essentially dealt with the same factual issues in respect to his conduct when issuing the caution on 31 May 2012. 25There is no dispute that the caution was issued by the Society nearly three years after both the first breach of Rule 19 was complained of and he filed his second Affidavit and it is not alleged that the Applicant continued to pursue a course of conduct in disregard of a caution. 26Mr Pierotti submitted that the Committee relies upon the fact that a Magistrate clearly put the Applicant on notice concerning a breach of his professional obligations and that this justifies drawing a distinction between the first breach and the second breach. The Tribunal accepts this submission as there is undisputed evidence that the Applicant breached Rule 19 by swearing and filing the second Affidavit on 17 August 2009. 27Further, unlike the first breach, there are no 'exceptional circumstances' that excuse the second breach. Rather, the circumstances clearly demanded that the Applicant should have ceased to act for the Second Respondent in the Federal Magistrates proceedings because he was a material witness and there is no evidence that he did not have sufficient time arrange for alternative legal representation. 28In addition, we do not accept that this second breach of Rule 19 was rendered less serious because the offending Affidavit was filed on behalf of his son rather than the party for whom he was the Solicitor of record. 29Accordingly, the Tribunal makes the following orders: (1)Pursuant to section 63(3)(a) of the ADT Act, the decision of the Professional Conduct Committee of the Law Society dated 25 June 2012 is affirmed. (2)The Application is dismissed. (3)The Applicant is to pay the Respondent's costs, as agreed or assessed.

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: 17 December 2012