Law Society of New South Wales v Kekatos [2005] NSWADT 79 (7 April 2005)

Last Updated: 7 April 2005

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL LEGAL SERVICES DIVISION

CITATION: Law Society of New South Wales v Kekatos [2005] NSWADT 79


PARTIES: APPLICANT
Council of the Law Society of New South Wales
RESPONDENT
Jim Kekatos



FILE NUMBERS: 032028 and 042006

HEARING DATES: 29/03/2004

SUBMISSIONS CLOSED: 16/07/2004



DECISION DATE: 07/04/2005

BEFORE: Mattila J - Judicial MemberFox R - Judicial MemberFitzgerald R - Non Judicial Member





LEGISLATION CITED: Legal Profession Act 1987
Legal Profession Regulation 2002

CASES CITED: Re Hodgekiss 62SR (NSW) 240
In the matter of Patrick Danile Kane Solicitors Disciplinary Tribunal Application No 8670/2002
Veghelyi (Supreme Court of NSW matter number 12662 of 1989, unreported, 6 September 1989)
Law Society of New South Wales v Graham [2004] NSW ACT 213
Law Society of New South Wales v Cass [2004] NSW ACT 259

APPLICATION: Professional Misconduct - fail to comply with s. 152 Notice
Professional Misconduct - fail to lodge accountant's report with Law Society

MATTER FOR DECISION: Principal matter


APPLICANT REPRESENTATIVE: APPLICANT
L Pierotti, solicitor

RESPONDENT REPRESENTATIVE: RESPONDENT
R MacDougal, solicitor

ORDERS: 1.In matter number 032028 in relation to Mr Cassaniti, the First Complaint is dismissed. In relation to the Second Complaint in relation to Mr Chen Matter Number 032028 the Solicitor is guilty of professional misconduct and fined $500 with three months to pay
2.In Matter Number 042006 that the Solicitor failed to lodge an Accountant’s Report on time as required under Clause 94(I) of the Legal Profession Regulation 2002. – Matter dismissed
3.In matter number 032028 and matter number 042006, no order for costs


Reasons for Decision:

REASONS FOR DECISION

The Information

1 These reasons for decision deal with two separate informations brought against Jim Kekatos ("the Solicitor"). Information 032028 alleges two (2) separate incidences of failure to comply with a Section 152 Notice, and Information 042006 alleges a failure to comply with Section 94(1) of the Legal Profession Regulation 2002 in that the Solicitor failed to submit an accountant’s Report with his application for a practising certificate in May of 2003.

Background

2 The Solicitor completed his law studies through the Solicitor’s Admission Board and was admitted to practice on 14 December 1994. The Solicitor was initially employed by his cousin trading as Kekatos & Associates in Parramatta, a firm which subsequently changed its name to T. Bouzanis. The original engagement was as an employed solicitor doing general litigation work, conveyancing, lease work, advices to small business and commercial clients including debt collection and landlord and tenant work.

3 In 1996, the Solicitor became a partner in the firm, but that partnership was dissolved in February of 2002. The Solicitor then became a sole practitioner in Parramatta, continues to practice there, and now has two employed solicitors who work under this supervision. Both employed solicitors have been in practice for less than two years.

The First Complaint – File No. 032028

4 Mr Cassaniti, a former client of the Solicitor, lodged a complaint with the Law Society. In accordance with the Society’s usual practice, the complaint was referred to the Solicitor in June of 2002, asking for his comments, but the Solicitor did not respond. He was sent a reminder on 8 August 2002 and the Solicitor responded to that on 27 August 2002 in a letter in which he asked for more time, indicating that he had instructed solicitors to represent him in the matter, and to respond on his behalf.

5 By letter of 30 August the Law Society indicated that, in view of the length of time which had passed, a full response was required within fourteen (14) days.

6 There was no response up to 1 November 2002 and on that day the Society executed a Section 152 Notice requiring a response by 5 pm 14 November 2002. The Notice was not served on the Solicitor until 7 November 2002. It contained 14 questions, some of which required a detailed response. It also required the Solicitor to forward to the Law Society all files relating to Reliance Financial Services Pty Limited. Reliance Financial Services appears to have been Mr Cassaniti’s vehicle for his commercial lending activities, and there were a significant number of files.

7 When the Solicitor failed to respond by 14 November 2002, the Law Society initiated the current complaint and the Solicitor was informed of that complaint on 5 December 2002.

8 We accept that the Solicitor substantially complied with the Notice with his statutory declaration of 24 December 2002.

Delay by Kekatos

9 We do not condone the delay in the Solicitor’s response to the Law Society. It is clear that he was first asked for information in a letter dated 26 June 2002, and that there were reminders to him well before the formal Notice issued. However the Notice dated 1 November 2002 and served on 7 November 2002 effectively only gave the Solicitor seven (7) days to respond.

10 We accept that the matter at hand was of some complexity, and that it would have taken days rather than hours in effort, consideration and application to prepare appropriate and meaningful responses to the Notice, even if all of the files in question were readily and immediately available.

11 In the matter of Legal Services Commissioner –v- Browne [2004] NSW ADT 63, where a Practitioner had 15 or 16 days from the date of service to the required date for compliance, this Tribunal quoted with approval the words of Smart J in the matter Veghelyi (Supreme Court of NSW matter number 12662 of 1989, unreported, 6 September 1989).

"It will an unusual and complex case when a delay of more than 14 days is acceptable and often the reply should be delivered within a shorter period such as 7-10 days. Replies to the Law Society in respect of complaints warrant a high priority".

We do not resile from that position, but note that Smart J was commenting on the requirements of section 35 (2) (c) of the Legal Profession Act 1987. That section entitled the Law Society to refuse to issue a practising certificate to a solicitor who, on being required by the Council to explain conduct by him or her, failed and continued to fail to give an explanation satisfactory to the Council. That was a penalty less severe and more discretionary than that which follows from Section 152 (4) of the current legislation. Whilst we acknowledge the clear intent of the section, that a practitioner respond properly, fully and quickly, we cannot lose sight of the very serious consequence for failure, being a finding of misconduct. The severity of that consequence, we are satisfied is the very reason why the legislation then required (and still does require) on the one hand, the specification of a reasonable period of time, and, on the other hand, even if a reasonable period of time is given, gives the practitioner an opportunity of giving a reasonable excuse for not complying.

12 Although, as we have said, in most circumstances a fourteen (14) day compliance period would be a sufficient time, the Notice now under consideration left the Solicitor seven (7) days only. That, in the circumstances of this matter, was insufficient time. If the Notice does not specify a reasonable period of time for compliance, then the Notice does not comply with Section 152 (3) and so is bad, and the Solicitor had no obligation to comply. It follows that this part of the information must be dismissed.

13 We note that the Law Society, quite properly, in its submissions raised the fact that the shortness of time given by the Notice was not raised in any way until the morning of the hearing, but that does not change the fact that the Notice was defective.

The Second Complaint – File No. 042006

14 The second complaint arose in relation to non payment of agency fees to the firm of Elrington Boardman & Allport Solicitors in Canberra, for the services of one of their solicitors, a Mr Chen. A dispute arose in relation to the quantum of fees and the extent of the instructions. The Solicitor and his client failed to pay the account and Mr Chen lodged a complaint with the Law Society.

15 On 6 March 2003 the Law Society served a Section 152 Notice on the solicitor. The Notice was in better form in that it did not specify a date, but instead required the scheduled information "on or before 14 days after service on the legal practitioner of the Notice of this resolution".

16 We were not told of the correspondence (if any) which preceded the Notice, however the information sought was:-

"1. Between 28 September 2001 and 27 November 2001 did you request Elrington Boardman Allport Lawyers to act as your agent in Canberra in relation to a criminal matter in the ACT Magistrate’s Court involving your client, Mr Frank Fischetti?

2. Did you receive accounts from Elrington Boardman Allport rendered 5 October 2001 in the sum of $506.44 including disbursements and 23 November 2001 in the sum of $1,555.13?

3. Did you receive correspondence from Elrington Boardman Allport dated 2 April 2002 and 15 April 2002? If so, did you respond to this correspondence?

4. Are you aware that Elrington Boardman Allport obtained judgment against you in recovery proceedings out of the ACT Magistrate’s Court on 3 September 2002?

5. Please provide your explanation for your failure to pay the fees and disbursements of Elrington Boardman Allport."

17 There was no response from the Solicitor until a statutory declaration dated 25 June 2003 which made appropriate admissions, and raised, perhaps by way of excuse, his belief that the fees were excessive and involved work which the complainant had not been instructed to do. Payment was made on that day.

18 However, on 19 June 2003, the Professional Conduct Committee of the Law Society had already resolved that a complaint be made against the Solicitor for failing to comply with the Notice. The Solicitor was invited to raise any matter going to his defence, but he did not, and in effect only relied on the other matter raised in his statutory declaration of 25 June. It said "My delay in answering the S 152 Notice has been due to the pressure of work as a sole practitioner and my inability to obtain payment of the fees from my client".

19 Before us the Solicitor also raised an almost complete turnover of his staff between the months of January and June of 2003.

20 There is no doubt in our minds, even had the Notice arrived without any prior warning or correspondence from the Law Society, that it could have easily been complied with within the fourteen (14) day time limit which it set, and that such fourteen (14) day time limit was entirely reasonable. The matter raised by way of excuse does not qualify as reasonable excuse for an almost three (3) month delay in compliance.

21 It follows that the act of professional misconduct has been committed.

Late Lodgement of Accountant’s Report in 2002 and 2003 – File No. 042006

22 The Solicitor maintained a trust account and/or controlled money account since he commenced practice as a sole practitioner in February 2002. The first Accountant’s Report was due to be lodged with the Law Society on 15 May 2002 in accordance with Clause 48(1) of the Legal Profession Regulation 1994, but the Solicitor failed to lodge it by the due date. He eventually did so, at the last moment in response to the Law Society’s threat to appoint a receiver to his practice.

23 At the meeting of the Council of Law Society on 18 July 2002 the Solicitor was given a warning against failing to lodge his Accountant’s Report on time in the future. None the less he failed to lodge 2003 Accountant’s Report by the due date. An explanation was given:- the books of account were not up to date due to his inability to obtain a book–keeper. The books were sent to the accountant after the due date for lodgement and as a result the report was not completed on time.

24 The accountant apparently failed to complete the report (which was qualified) until the day of the Council meeting. The Council resolved that the Solicitor be offered a Practicing Certificate limited by the same kind of conditions as have been referred to in the maters of Law Society of New South Wales v Graham [2004] NSW ACT 213 and Law Society of New South Wales v Cass [2004] NSW ACT 259. The Solicitor had already consented to these conditions, being the monthly submission of trust account balances and quarterly inspection and report by a nominated Senior Solicitor.

Reasons for decision in Matter No. 042006

25 The Tribunal is satisfied that the Solicitor failed to comply with clause 94(1) of the Legal Profession Regulation 2002 in that when making the application for a practicing certificate for the year ending 30 June 2003, it was not accompanied by an Accountant’s report as required by the regulation. The Council of the Law Society must refuse to issue a practicing certificate in those circumstances.

26 Section 30(1) of the Legal Profession Act 1987 provides:

"30(1) A council must refuse to issue a practicing certificate if the application for it:

a) is not accompanied by the appropriate fee; or

b) is not accompanied by, or does not contain, such information as may be prescribed by the Regulations."

Clause 94(1) of the Legal Profession Regulation 2002, inter alia, provides that a Solicitor who has held or disbursed money to which Section 61(1) of the Act applies, must on or before making the application for a renewal of a practicing certificate, lodge with the Law Society an Accountant’s Report in the prescribed form.

However, there is no specific statutory sanction for those who do not comply with the prescribed time limit, but who comply at the very last moment before the Council makes the inevitable decision to refuse to issue a practicing certificate.

27 The Society alleges that such a late submission amounts to professional misconduct, and further takes the position that such failure cannot be unsatisfactory professional conduct. This Tribunal has already dealt with that procession in the matter of Graham and then took a similar position in the matter of Case. The failure by the Solicitor is defined in Section 127 of the failure was almost exactly the same as the failures in Graham and Cass, save that, instead of the financial stringency which faced those two solicitors, Mr Kekatos’s problems arose out of either disorganisation or inattention. Whilst we do not in any way wish to be seen as condoning such conduct, we are not satisfied that the Solicitor’s failure is any worse than the failures in the matters of Cass and Graham, and so find that there is neither professional misconduct or unsatisfactory professional conduct.

28 The Applicant referred the Tribunal to In the matter of Patrick Danile Kane, solicitor and in the matter of the Solicitors Act 1974 – Solicitors Disciplinary Application No. 8670/2002. The Tribunal notes this decision in the United Kingdom but finds that the decision in that matter is based on legislation that is significantly different in a relevant material aspect to Clause 94(1) Legal Profession Regulation 2002 in that provision of the accountants report is not a condition of obtaining a practising certificate

29 The question for the Tribunal to determine is whether the failure "is far beyond any negligence, even gross or culpable negligence, and involves that a person wilfully misconducts himself who knows and appreciates that it is wrong conduct of his part in the existing circumstances to do or fail or omit to do (as the case may be), a particular thing, and yet intentionally does, or fails or omits to do, or persists in the Act, failure or omission regardless of consequences . . . or acts with reckless carelessness, not caring what the results of his carelessness may be." Re Hodgekiss 62SR(NSW) 340.

30 In the opinion of the Tribunal, this is not the case. There is no evidence that the Solicitor’s conduct amounts to a substantial and consistent failure to reach reasonable standards of competence and diligence in the practice of the law. The Tribunal does not therefore find that the Solicitor has been guilty of unsatisfactory professional conduct.

31 Lastly we observe, just as the Tribunal did in the matter of Cass, that it was inappropriate for the Law Society to fail to warn the Solicitor of the prospect of the current Information when it sought his consent to the condition imposed on his practicing certificate. The Solicitor should have been warned that, as an alternative to consenting to the conditions imposed on his practising certificate, he had the choice of an appeal against the refusal to issue. We stress that we make no criticism of the Council in the conditions which it imposed, our criticism is of the failure to alert the Solicitor to the alternative provided by Section 38 (B) of the Act, in view of the prospect that his actions might result in the Council taking the present proceeding.