Legal Practitioners Ordinance 1970; Ex Parte: Law Society of the Australian Capital Territory [1988] ACTSC 53 (9 September 1988)

SUPREME COURT OF THE ACT

LEGAL PRACTITIONERS ORDINANCE 1970; Ex parte: LAW SOCIETY OF THE AUSTRALIAN
CAPITAL TERRITORY
S.C. No. 645 of 1987
Legal Practitioner

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1), Kelly(1) and Gallop(1) JJ.

CATCHWORDS

Legal Practitioner - failure of practitioner to obey court orders regarding auditing of trust account records - Legal Practitioners Ordinance 1970, s.41(1) and s.42E - disciplinary powers of court - severity of a reprimand when compared with an admonition.

Re a Barrister and Solicitor; Re Legal Practitioners Ordinance 1970 (ACT) (1979) 40 FLR 1

Ex parte Attorney_General for the Commonwealth; Re a Barrister and Solicitor (1972) 20 FLR 234 at p 239-240.

HEARING

CANBERRA
9:9:1988

Counsel for the Law Society: Mr. G. Lunney

Solicitors for the Law Society: Mallesons Stephen Jaques

Counsel for the Respondent: Mr. B. Hull

Solicitors for the Respondent: Gallens

ORDER

In relation to the matters before the Court, Peregrine William Frederick Whalley be reprimanded and that he pay the costs of and incidental to these proceedings, including any reserved costs.

DECISION

Peregrine William Frederick Whalley (the practitioner) was admitted to practise as a barrister and solicitor of this Court on 7 May 1974. From 1 July 1982 to 3 June 1986 he practised on his own account as a solicitor and held the appropriate unrestricted practising certificates issued by the Law Society pursuant to Part IIIA of the Legal Practitioners Ordinance 1970 (the Ordinance). On 11 July 1986 the practitioner wrote to the Law Society notifying the Society that he had ceased practice and had moved to Rockhampton in Queensland. He stated that he anticipated that by the end of July he would confirm closure of his trust account.

2. On 1 October 1986 the Law Society wrote to the practitioner drawing attention to his failure to comply with s.58(1A) of the Ordinance. The Society indicated that unless a satisfactory explanation for the practitioner's failure was forthcoming, disciplinary action would be considered.

3. The sub-section provides in part as follows:
(1A) .......where -

(a) a solicitor who practises in the Territory
on his own account ceases to practise on his
own account .....
the solicitor shall, not later than 7 days after
the date on which he so ceases to practise
engage an auditor or firm of auditors to audit
his records .... in respect of trust moneys held
during the period commencing on the first day of
the year in which he ceases to practise ..... and
ending on the date on which he ceases to practise
....
Penalty: $1,000."

4. The Law Society wrote on further occasions in similar vein and eventually on 8 December 1986 the practitioner replied, stating that he had experienced delays in receiving mail and that he had forwarded his records to his auditors, Messrs W.F. Jones & Associates of Yarralumla, with a request that an auditor's report be prepared for the periods in question. However, those auditors received no instructions to carry out any audit of the practitioner's trust account for any period subsequent to 31 March 1985.

5. On 16 July 1987 the Law Society moved the Court for certain orders against the practitioner. The practitioner was represented by counsel and did not oppose the application. The orders made were as follows:

"1. That the Barrister and Solicitor forthwith
engage an auditor or firm of auditors to audit
his records in respect of trust moneys held by
him as solicitor or the following periods:-
(1) for the period from 1 April 1985 to 31 March
1986 inclusive and
(2) for the period from 1 April 1986 to the date
that he ceased to practise as a solicitor in
the Australian Capital Territory.
2. That the Barrister and Solicitor notify the
Law Society of Australian Capital Territory
of the auditor or firm of auditors so engaged
within 14 days after the date upon which that
engagement is made.
3. That the Barrister and Solicitor deliver to
the Law Society of the Austalian Capital
Territory the duplicate of the report of the
auditor so engaged within 7 days after the said
report is delivered to the Barrister and Solicitor
4. That the Barrister and Solicitor's right to
practise in the Australian Capital Territory be
suspended until 14 days after the said audit
report is received by the Law Society of the
Australian Capital Territory.
5. That the Barrister and Solicitor be ordered
to pay the Law Society of the Australian Capital
Territory's costs.
6. That until further order, the name of the
Barrister and Solicitor should be not published
and nothing be published that would tend to
identify the Barrister and Solicitor."

6. On 11 December 1987 the Law Society moved the Court for a writ of attachment against the practitioner, and other consequent orders, for his failure to obey the orders of 16 July 1987. The application was adjourned to 18 December 1987 when the applicant attended in person before the Court, represented by counsel. An affidavit sworn by the applicant on that day seeking to explain his behaviour was filed. The application was further adjourned to 19 February 1988 when a further affidavit of the practitioner, sworn on that date, was filed. The practitioner was not in attendance, but he appeared by counsel. It was conceded by the Law Society and the Court was satisfied that the practitioner had obtained and provided audit reports of his trust account books and records for the year ended 31 March 1986 and for the period 1 April 1986 to 3 June 1986. The Court was satisfied that the audit reports, which were dated 22 December 1987, came into the possession of the practitioner on 9 January 1988 but were not furnished to the Law Society until 18 February 1988.

7. Counsel for the practitioner conceded and the Court was satisfied th at the practitioner had failed to comply with s.58(1A) of the Ordinance in that he had failed not later than seven days after the date on which he had ceased to practise to engage an auditor or firm of auditors to audit his records in respect of trust moneys held during the period 1 April 1985 to 31 March 1986 inclusive and for the period from 1 April 1986 to 3 June 1986 inclusive. The Court was also satisfied that the practitioner had failed to comply with the orders of 16 July 1987 in that he had failed forthwith to engage an auditor or firm of auditors to audit his records in respect of trust moneys held by him in respect of the aforementioned periods, that he had failed to notify the Law Society of the auditor or firm of auditors so engaged within fourteen days after such engagement and that he had failed to deliver the report of the auditor so engaged within seven days after the report was delivered to him.

8. It may be noted that the order requiring the practitioner to notify the Law Society of the engagement of the auditor or firm of auditors within 14 days of the date of such engagement did no more than require the practitioner to comply with the provisions of s.58(1B) of the Ordinance. Failure to obey the order was also a breach of that sub-section, which is in the following terms:

"s.58(1B) Where a person engages an auditor or
firm of auditors under sub-section (1A), he
shall, within 14 days after the date on which he
engages the auditor or firm, notify the Law
Society in writing of the name of the auditor or
firm, as the case requires."

9. The Court reserved its decision as to what disciplinary action, if any, should be taken against the practitioner. The attitude expressed on behalf of the Law Society was that, although the practitioner had failed to at was required of him. Similarly, the Law Society accepted that the practitioner had eventually complied with the orders of the Court, although again outside the times required. In those circumstances, the Law Society did not positively seek the imposition of any disciplinary punishment but invited the Court to make whatever order it saw fit to make in the circumstances.

10. The explanation offered by the practitioner for his conduct was tha t in the first instance he had simply overlooked his obligations to attend to the audit of his trust account because of the move from Canberra in May 1986 when he took up an appointment as a lecturer in law at the School of Business, Capricornia Institute, Rockhampton. His failure to attend to the correspondence received from the Law Society between July and December 1986 was explained again on the basis that he "overlooked to attend to that matter". Although he claimed in letters to the Law Society dated 8 December 1986 and 16 June 1987 that he had made arrangements for an auditor's report to be prepared by W.F. Jones and Associates, the affidavit of Warren Fletcher Jones, sworn on 15 July 1987 denied that any such arrangements had been made. We accept what Mr. Jones said.

11. In explanation of his disobedience of the orders of the Court the practitioner claimed that, having become aware of the order, he posted the necessary trust account documents to Mr.Jones on 28 July 1987, that the envelope containing those documents was returned to him unopened some four weeks later, that he sent the documents back to Mr. Jones' office by courier express and that the documents were returned to him yet again shortly thereafter without explanation. He took no further steps to comply with the orders of the Court until some time after 1 December 1987 when it appears that he became aware of the application for the writ of attachment.

12. We are satisfied that part of the explanation of the practitioner's failure to comply with the provisions of the Ordinance and the orders of the Court arose from domestic and family difficulties which attended the move to Rockhampton, and that these difficulties were exacerbated by an infection in his foot which affected his capacity to attend to personal and professional matters during July and August 1987 and also by the workload demanded of him in his position as a lecturer. We are further satisfied that from about mid-September to early December 1987 the practitioner was so affected by what amounted to depression and a sense of despair that he was not capable of discharging the responsibility of one whose name still remained on the rolls of the Court as a barrister and solicitor. We are also satisfied that by the end of December 1987 the practitioner had sufficiently recovered from his depression to appreciate the extent of his failure and to attend to the organization of his affairs in order to discharge his duties under the Ordinance and under the orders of the Court.

13. Mr Hull, who appeared for the practitioner, submitted that it would be inappropriate, if the Court decided to proceed, to impose one of the forms of punishment provided for in s.42E of the Ordinance. The submission was that in that event it would be appropriate for the Court to exercise its inherent jurisdiction and order some lesser or other form of punishment such as an admonition. That there is such an inherent power is undoubted: Re a Barrister and Solicitor; Re Legal Practitioners Ordinance 197 (ACT) (1979) 40 FLR 1 at p 17.

14. In our view, the conduct alleged and proved on the part of the practitioner in this case goes beyond technical non-compliance with the requirement of the Ordinance within the times stipulated. The Law Society on three occasions reminded the practitioner of his obligations and offered him an opportunity to explain his failure. He did not seek to support in evidence the assertions made by him in his letters to the Law Society of 8 December 1986 and 16 June 1987 that he had already sent his records to the auditor, and in the circumstances we must conclude that those assertions were false.

15. Whilst we appreciate that the practitioner had at least let the Law Society know of his move to Rockhampton quite soon after that move had occurred, and whilst we appreciate the difficulties facing the practitioner in his personal affairs which arose out of his move, we are not satisfied that his failure to take positive and effective steps to comply with his obligations until he realised that there was an application for a writ of attachment, can be completly excused. The gravity of his failure has been compounded by his attempt to mislead the Law Society as to what steps he had taken.

16. It is of the utmost importance for the proper conduct of the practi ce of a solicitor that the solicitor attend with scrupulous care to all matters relating to trust accounts and trust account records. It is equally important that the practitioner keep the Law Society notified of such matters relating to trust account records as are required by the Ordinance.

17. The powers expressly conferred upon the Court to discipline are set out in s.41(1) of the Ordinance. The Court may pursuant to that sub-section:-

(a) reprimand the barrister and solicitor;
(b) impose on the barrister and solicitor a
fine not exceeding One thousand dollars;
(c) suspend the right of the barrister and
solicitor to practise in the Territory for
such period as the Court thinks proper; or
(d) direct that the name of the barrister and
solicitor be removed from the Roll of
Barristers and Solicitors.

18. Section 42E of the Ordinance provides that a failure by a practitio ner to comply with, or a contravention by a practitioner of, a provision of the Ordinance or any other law in force in the Territory that imposes duties and obligations on practitioners is a matter that the Court may take into consideration in determining whether an order against the practitioner should be made under s.41 of the Ordinance. Moreover, s.41 of the Ordinance "does not describe or characterise the type of conduct which is to justify the Court in exercising one of the powers it gives" and a "breach of the Ordinance, or any other failure to which s.42E applies, may therefore bear on the question whether there has been misbehaviour or misconduct and obviously may on occasion itself constitute misconduct": Ex parte Attorney-General for the Commonwealth; Re a Barrister and Solicitor (1972) 20 FLR 234 at p 239-24.

19. We accept what the practitioner has said in his affidavit sworn 18 December 1987 in which he expresses the greatest respect for the law and the status and role of a solicitor, both as an officer of this Court and as a member of the community and that he is devastated by his realization that he has not only neglected the obligation to comply with the trust account audit requirement but has additionally failed to comply with the orders of the Court. For both he is extremely and deeply sorry and sorry also for the inconvenience he has caused to so many people as a result of his neglect. Nevertheless, in the circumstances, we are of the view that the conduct of the practitioner, notwithstanding his explanations, is such that it fell well short of those professional standards which must be fully maintained in order to justify the confidence of the public in placing their affairs, including their financial affairs, in the hands of solicitors. "The object of disciplinary proceedings is the protection of the public and the maintenance of proper standards in the legal profession and the object of disciplinary action is to protect the public and the reputation of the profession": Re a Barrister and Solicitor; Re Legal Practitioners Ordinance 1970 (ACT) (1979) 40 FLR 1 at p 25. In the circumstances we do not propose to impose a punishment by way of fine, further suspension from practice, or removal from the roll. Nevertheless, we are of the view that any disciplinary action short of a reprimand would not be sufficient to mark the Court's disapproval of the practitioner's failure to observe proper trust account procedures and failure to comply with orders of the Court relating there to. To In our view, and bearing in mind what we propose in relation to costs, a reprimand is the appropriate course.

20. As there has been an adverse finding in relation to the practitione r, it is appropriate to follow the usual course of removing any prohibition as to publication of his identity.

21. The Court orders that in relation to the matters before the Court, Peregrine William Frederick Whalley be reprimanded and that he pay the costs of the Law Society of and incidental to these proceedings, including any reserved costs.