Law Society of New South Wales v Riordan [1999] NSWADT 10 (17 March 1999)

Last Updated: 17 March 1999

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL

CITATION: Law Society of New South Wales -v- Riordan [1999] NSWADT 10

REVISION DATE:

DIVISION: Legal Services

APPLICANT:

The Council of the Law Society of New South Wales

RESPONDENT:

John Richard Riordan

FILE NUMBERS: 9833

HEARING DATES: 02/02/99

SUBMISSIONS CLOSED: 02/02/1999

DECISION DATE: 17/03/1999

JUDICIAL MEMBER: C B Vass Presiding Judicial Member

LAY MEMBER: J J Catanzariti Judicial Member

LAY MEMBER: G Sartore Member

APPLICANT KEYWORDS: Dishonest/infamous conduct not in connection with legal practice; Professional misconduct - solicitor

MATTER FOR DECISION: Principal matter

PRIMARY LEGISLATION CITED: Legal Profession Act 1987

APPLICANT REPRESENTATIVE: D Barton instructed by R J Collins

RESPONDENT REPRESENTATIVE: J Riordan in person

ORDERS: 1. That the name of the legal practitioner be removed from the Roll of Legal Practitioners.

2. That the solicitor pay the costs of the Law Society as agreed or as determined by the Tribunal pursuant to Section 171E of the Legal Profession Act.

DECISION:

1 This Tribunal has before it an information dated 22 September 1998 and filed on that date in the Legal Services Tribunal claiming that John Richard Riordan (the solicitor) was guilty of professional misconduct within the meaning of Section 127(1)(b) of the Legal Profession Act 1987 on the grounds that "the solicitor pleaded guilty to five charges alleging breach of Section 229(4) of the Companies (NSW) Code and was sentenced to a term of imprisonment".

2 The Law Society sought orders that the solicitor's name be removed from the role of legal practitioners in New South Wales and that the solicitor be ordered to pay the costs of the Law Society incidental to these proceedings.

3 Section 127(1)(b) of the Legal Professional Act provides that for the purposes of the Act "professional misconduct" includes:

"(b) Conduct (whether consisting of an act or omission) occurring otherwise than in connection with the practise of law which, if established, would justify a finding that a legal practitioner is not of good fame and character or is not a fit and proper person to remain on the role of legal practitioners."

4 The Law Society relied upon the Affidavit of Donald Keith Barton sworn on 12 January 1999 annexed to which was a copy of the Judgment of Acting Justice Barr in the Supreme Court of New South Wales, Criminal Division delivered on 11 December 1995 and which Judgment related to the offences committed by the solicitor. The Judgment by His Honour establishes that the solicitor pleaded guilty to five counts under Section 229(4) of the Companies (NSW) Code. The charges all arise at a time when the solicitor was a director of Direct Acceptance Corporation Limited and each of the counts allege that the solicitor made improper use of his position as an officer of Direct Acceptance Corporation. The charges were that:

1. On or about 4 August 1989 together with Raymond Lord he made improper uses of his position as an officer of Direct Acceptance Corporation in order to gain an advantage for Caldervale Station, Riverbend Horse Stud, Xavi and Rex Colin Kilner in that he authorised the entry by Direct Acceptance Corporation into an agreement pursuant to which Direct Acceptance Corporation agreed to advance from time to time sums up to $2,000,000.00 to Caldervale, Riverbend, Xavi and Kilner.

2. On or about 21 March 1989 together with Raymond Lord he made improper use of his position as an officer of Direct Acceptance Corporation in order to gain an advantage for himself, Raymond Lord and Colin Lord in that he authorised the entry by Direct Acceptance Corporation into an agreement with Paul Dean Ramsbottom Isherwood, Martin Russell Brown and Colin Lord.

3. On or about 23 June 1989 he made improper use of his position as an officer of Direct Acceptance Corporation in order to gain an advantage for Caldervale Station, Riverbend Horse Stud, Xavi and Rex Colin Kilner in that he authorised the entry by Direct Acceptance Corporation into an agreement with Paul Dean Ramsbottom Isherwood, Martin Russell Brown and Colin Lord.

4. On or about 21 July 1989 he made improper use of his position as an officer of Direct Acceptance Corporation in order to gain an advantage for Caldervale Station, Riverbend Horse Stud, Xavi and Rex Colin Kilner in that in his capacity as a director of Direct Acceptance Corporation he attested to the affixing of the common seal of Direct Acceptance Corporation to an agreement for a scheme of arrangement in respect of Drum Reconditioners (NSW) Pty. Limited.

5. On or about 31 August 1990 together with Raymond Lord and Colin Lord he made improper use of his position as an officer of Direct Acceptance Corporation in order to gain an advantage for Caldervale Station, Riverbend Horse Stud, Xavi and Rex Colin Kilner in that he authorised the entry by Direct Acceptance Corporation into an agreement pursuant to which the loan facility which Caldervale Station, Riverbend Horse Stud, Xavi and Kilner had with Direct Acceptance Corporation was increased to $6,000,000.00.

5 His Honour says at Page 19 of his Judgment that:

"By their agreement with the tendered statement of facts, from which the facts in this Judgment are substantially drawn and by the conduct of their cases they have acknowledged that they acted dishonestly. They were aware of the conflict between their duties to Direct Acceptance and their private interests. The contrary was not submitted. They acknowledged through their Counsel's submissions that in authorising Direct Acceptance to enter into the agency agreement they were aware of that conflict and chose to act nevertheless. I infer that they were aware of the article prohibiting them from voting in respect of any contract or arrangement in which they had an interest. They repeatedly committed Direct Acceptance to advances in respect of which there was no expectation, at least in the middle and later stages of their conduct, that Direct Acceptance would be paid any interest on the money it was advancing. It also appears that the prisoners intended to deceive Direct Acceptance by associating themselves with the back-dating of documents from June 1989 to 21 March 1990 in order to give an appearance of regularity to the events that were happening. Riordan instructed Mr. Elliott to prepare the documents. Lord signed the minute which falsely stated that the board meeting was held on 9 March 1989."

6 His Honour when dealing with the evidence before him as to whether the solicitor was contrite expressed doubt. He said at Page 24 of his Judgment:

"There is evidence that he is contrite, though not from him. On 1 December 1995 he went to an interview with Dr. Jonathan Phillips, consultant psychiatrist, so that Dr. Phillips could prepare a report for use in Court. In their interview Riordan denied attempting to defraud Direct Acceptance or indulging in dishonest or sharp practise. The denial was false, of course and throws a real doubt on his claim to be contrite. Dr. Phillips expressed the view that Riordan's constellation of symptoms is highly suggestive of a major depressive illness but in doing so relied upon a number of assertions of fact of which there is no evidence. I do not think that I can give weight to that opinion. It fairly appears from the report that Riordan has not sought psychiatric treatment."

7 The solicitor was sentenced to a term of imprisonment of 2 years and 6 months and it appears he was in prison from 11 December 1995 until 25 October 1997.

8 Mr. Barton who appeared for the Law Society submitted that:

"The course of conduct involved resulted in the loss of millions of dollars to the debenture holders and resulted in the demise of a company which had been of quite long standing. In a particular clause of the articles the quantity to be not exceeded was expressed in pounds rather than dollars, which gives some idea of the lineage of Direct Acceptance Corporation. There was a wiping out of the loan by transferring it to Drum Corporation, which at the time that particular decision was taken had not been able to pay any interest on the loan it had already taken. I think the total amount outstanding was $2.9 million. I suppose it is fair to say that the company, being an artificial person, is in a particularly vulnerable position. None of the debenture holders were in a position to see exactly what was happening and there is no doubt that, had the solicitor and his partners engaged in the same transaction in a proper manner, that is by expressing their interest in the matter and having a general meeting, the money would not have been given at that general meeting. It is quite obvious why that course was not followed and it led to the demise of the company."

9 The solicitor's submissions in relation to the matter were made under oath and in summary they were:

1. That he felt totally humiliated and embarrassed by the events that have transpired and he said that what has happened goes against everything that he has ever espoused for himself and his peers and his family.

2. He sought from the Tribunal orders that he be permitted to remain on the role of the legal practitioners but subject to a condition that he would not be issued a practising certificate for a specified period which would give him the opportunity to demonstrate continued good conduct and the necessary trustworthiness to be a solicitor.

3. He submitted that he was of previous good character and that he is of good character apart from the conviction and imprisonment and he relied upon a number of Affidavits to support his contention that he is of good character. Those Affidavits will be specifically referred to later in this Determination.

4. He made the particular point of admitted the facts of what happened in relation to the charges and stated that what happened was not in any way a plotted scheme. He said that all the events that took place were documented on the files of Direct Acceptance Corporation and the auditors knew about them. He also says he discussed the transactions with the trustee and with a solicitor and he says nobody ever said to him, "John, you've mucked this up, it is wrong, there's a breach of the Trust Deed, it is wrong, it is a breach of the Articles".

5. He has disposed of all his assets and reached a settlement with the receivers of the company so he contends that he tried to do everything he possibly could to restore the position.

6. He says that, "What I am really doing is throwing myself on your mercy. It is a terribly big ask, I know that". He went on to indicate that what he was trying to do was salvage some dignity out of the events that had taken place and again referred to the people who were his referees who have known him from a time before the events in 1989 and 1990 and they think him to be a good and proper person.

10 Kimball John Hennessy provided an Affidavit in support of the solicitor. Mr. Hennessy is a solicitor having been admitted on 19 March 1971. He was in partnership at one stage with the solicitor and up to the present time has maintained a close personal relationship with the solicitor. Mr. Hennessy stated that it was his personal belief that the solicitor lacked the necessary experience and skills which were needed for the senior position which the solicitor held at Direct Acceptance Corporation and he also said he believed that this ultimately led to his manipulation by other Directors of the company and his naive commission of the offences for which he was convicted. He goes on to say that what the solicitor did, "Was an aberration in the life of an otherwise happy, popular and successful family man. I would stake a great deal on the fact that this aberration, or anything like it will never happen again".

11 Robert William Tobias also provided an Affidavit in support of the solicitor. He was a former partner of the solicitor. He states that:

"The commission of the offences was inconsistent with the way in which he previously pursued his professional life. Notwithstanding his convictions, I believe him to be a person of essential honesty and integrity. I would be pleased to have a continued association with Mr. Riordan."

12 Mr. Tobias and the solicitor have been close friends since 1973. He said that he has known the solicitor:

"To be a loving, caring and responsible father to his own three children and a loving and respected uncle to his many nieces and nephews. I know that John Riordan has made an enormous contribution to the school, church and sporting club activities with which his family has been associated."

13 Mr. Tobias says that he believes the solicitor has now:

"Rehabilitated himself and is playing a valuable and vital role in his community. Notwithstanding his convictions I believe that John Riordan is a man of absolute honesty and integrity."

14 Clive James Hinton also a solicitor and partner in Messrs. Phillips Fox provided an Affidavit in support of the solicitor. He comments positively in relation to the solicitor. He stated that he had worked closely with the solicitor for over 15 years and during that time had ample opportunity to observe his character and general demeanour. He stated that the solicitor when practising as a solicitor always practised with the highest ideals of the profession and was scrupulously honest and reliable. Mr. Hinton stated that outside the law he has known the solicitor and his family for over 20 years and that the solicitor is a loving, caring and responsible father to his own three children and a loving and respected uncle to his many nieces and nephews. He said that in recent years he has known the solicitor as a fellow parent of students at St. Ignatius College, Riverview and he has observed that the solicitor has been a generous and untiring worker at numerous school activities and functions. He indicated that the commission of the offences was thoroughly inconsistent with the solicitor's previous high standards of honesty and integrity and that he believed that the solicitor has rehabilitated himself and is playing a valuable and vital role in his community.

15 Richard John Glover, a solicitor provided an Affidavit in support of the solicitor. Mr. Glover has had more recent contact with the solicitor in that he has been providing to the solicitor instructions to help him along in the business that the solicitor has been conducting. That business relates to insurance assessing. Mr. Glover says that he believes the solicitor to be a man of integrity with high standards and that he had no reason to doubt the solicitor's honesty or essential decentness.

16 John Christopher Gleeson, a Catholic Priest and Head Master of St. Ignatius College, Riverview provided an Affidavit in support of the solicitor. He says that he has known the solicitor since July of 1993 and in that time the solicitor's two sons have graduated from the College. Father Gleeson says in his Affidavit:

"As someone who has known Mr. Riordan personally for five and half years, and who endeavoured to offer him and his family some pastoral care during the term of his imprisonment, I would be rock solid in my conviction that the offences were entirely inconsistent with his upright character and excellent reputation within the College family. Notwithstanding the offences, I have always held Mr. Riordan in high esteem because I know him to have been an obviously good and honest man in all his dealings within our school community. Indeed, while corresponding with him during his time in prison and watching his spirited efforts at rehabilitation, my admiration and affection for him have increased."

17 Importantly Father Gleeson said:

"If I had any doubts in making this Affidavit I could not sign my name to it and would have difficulties associating with him. Such is clearly not the case."

18 Ross James Findlay who is a company director and who has known the solicitor since December 1997 provided an Affidavit in support of the solicitor. Mr. Findlay was closely associated with the solicitor at the time that Mr. Riordan was the chairman of the parents rowing committee and it appears Mr. Findlay had daughters who were involved in rowing when at Loreto Kirribilli Convent. Mr. Findlay said that the solicitor:

"Has always bee generous with his time and acted fairly efficiently and honestly."

19 He went on to say that from his association with the solicitor:

"I can only conclude that he is now a reliable member of the community."

20 Murray Herbert Tobias, an eminent Queens Counsel has known the solicitor since 1979 and he has provided an Affidavit in support. Mr. Tobias is very complimentary of the solicitor's professional capabilities at the time that they had contact with each other in the professional sense. Mr. Tobias and the solicitor and their respective families had social contact from 1981 until 1994 as the solicitor and his family lived in the same street. During that time Mr. Tobias says that he was able:

"To observe that Mr. Riordan was indeed a devoted and loving husband and father, a person who held his religion, which he strictly observed, in high regard and a person who gave generously of his time and efforts with respect to various voluntary activities associated with the schools with which his children attended."

21 Mr. Tobias has not had contact with the solicitor since his release from prison in October 1997 but he says that he is aware from speaking to others:

"That he has done much to rehabilitate himself and to make amends for the conduct in respect of which he was charged and convicted. I am aware that his family has stayed together throughout what has obviously been a difficult period which is indicative of the love and esteem in which they have held their father and husband notwithstanding his obvious fall from grace."

22 Mr. Tobias went on to say:

"Mr. Riordan is a resourceful person who, I earnestly believe, will succeed in his endeavours although, at the same time, I have no doubt that his humiliation in being convicted of a criminal offence and serving a prison sentence will ensure that the high ethical standards that he exhibited to me during the time that he was a solicitor will be reinstated and adhered to in his future conduct."

23 The Tribunal was very impressed with both the stature of the referees and the kind words that they expressed in support of the solicitor. It is however clear from the transcript of the Sentencing Hearing before His Honour Acting Judge Barr that the solicitor was supported by similar references. His Honour said of the solicitor:

"He has always been regarded as scrupulously honest and reliable and a diligent, hard working, caring and compassionate man."

24 He also said:

"Riordan was highly regarded in church and community circles. He was generous with his time. Evidence of his prior good character is of the highest quality. It is truly a tragedy that he succumbed to the temptation to fund his ill advised commercial venture by criminal means. He and his family have already suffered humiliation. They will do so in the future."

25 Counsel for the Law Society referred the Tribunal to the decision of the High Court in Ziems -v- The Prothonotary of the Supreme Court of New South Wales [1957] HCA 46; 97 CLR 279. That was a case involving a barrister who had been sentenced to two years imprisonment with hard labour who had been involved in a motor vehicle collision with a motor cycle and the rider of the motor cycle died as a result of his injuries. The barrister was charged with manslaughter. The Supreme Court of New South Wales removed the barrister's name from the role of barristers on the ground of his conviction and sentence and the barrister appealed to the High Court. The High Court by majority allowed the appeal and suspended the barrister from practise during the continuance of his imprisonment.

26 At page 286 of the Judgment, Dixon CJ, a dissenting judge said:

"The duty of a Court cannot be affected by either description of consideration just as it cannot be affected by a consideration of the hardness of the case of the man who has been convicted. The jurisdiction the Court exercises has nothing to do with punishment. The purpose of the power to remove from the role of barristers is simply to maintain a proper standard, and that is a necessarily high standard, for the Bar is a body exercising a unique but indispensable function in the administration of justice."

27 The Counsel for the Law Society submitted that a solicitor is in the same position and we accept that submission.

28 Fullagar J. dealt with the question as to whether a conviction is unchallengeable and conclusive of the ultimate issue or whether the Court can go behind the conviction and he said at Page 288:

"But, descending to particularity, is it the conviction that is the vital thing, unchallengeable and conclusive of the ultimate issue? Or must we look beyond the conviction and endeavour to ascertain, as best we can on the material before us, the facts and circumstances of the particular case? To my mind there can be only one answer to these questions. The conviction is not irrelevant; it is admissible prima facie evidence bearing on the ultimate issue, and may be regarded as carrying a degree of disgrace itself. But, in the first place, its weight may be seriously affected by circumstances attending it, and it must be permissible to look at the conduct of the trial. And, in the second place, it is on what the man did that the case must ultimately be decided, and we are bound to ascertain, so far as we can on the material available, the real facts of the case. It is only when we have done this that we can be in a position to characterise the conduct in question, and to see whether we are really justified in saying that a man is disqualified from practising his profession."

29 This Tribunal has had placed before it the facts of the case which facts of course were admitted by the solicitor. His Honour Judge Barr in the sentencing judgment at Page 19 said:

"By their pleas of guilty the prisoners have admitted that they acted intentionally and with knowledge of all the relevant facts and that their intention in acting as they did was to gain an advantage for their companies and their colleagues. I take it that a director acts dishonestly when he has a consciousness that what is being done is not in the interests of the company and conducts himself deliberately in disregard of that knowledge."

30 Later His Honour says:

"It is necessary to impose substantial sentences for offences like the present ones, not least to deter others from acting in a similar manner. Offences of this kind are very serious because they have the potential to have serious effects upon the stability of companies, to the detriment of those companies and the public. They are hard to detect. Substantial time and money often need to be spent in exposing them. The present offences represent very serious breaches of the fiduciary duty which each prisoner owed to Direct Acceptance. The offences took place over a period of one year and five months and a substantial sum of money was paid or foregone by Direct Acceptance."

31 The Tribunal is left in no doubt that the personal misconduct by the solicitor shows that he is not a person who is a fit and proper person to practise as a solicitor.

32 The Tribunal wishes to make it very clear that it was impressed by the solicitor's presentation of his case before it and again states that it was very impressed by the character referees' Affidavits. The Tribunal has reached its decision because of the serious nature of the offences and the high standard which has to be maintained in order to be classified as a fit and proper person to remain on the role of legal practitioners. It is hoped that these comments may be of some assistance to the solicitor should he make an application for reinstatement to the role in the future.

33 The Tribunal makes a finding within the terms of Section 127(1)(b) of the Legal Profession Act that the conduct of the solicitor when he was a Director of Direct Acceptance Corporation Limited and from which he was convicted and sentenced justifies a finding that he is not a fit and proper person to remain on the role of legal practitioners and is guilty of professional misconduct.

34 The Tribunal makes the following orders:

ORDERS

1. That the name of the legal practitioner be removed from the role of legal practitioners.

2. That the solicitor pay the costs of the Law Society as agreed or as determined by the Tribunal pursuant to Section 171E of the Legal Profession Act.