Council of the Law Society of New South Wales v Bharati [2010] NSWADT 159 (25 June 2010)

Last Updated: 7 July 2010

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL

CITATION:
Council of the Law Society of New South Wales v Bharati [2010] NSWADT 159


DIVISION:
LEGAL SERVICES DIVISION

PARTIES:
APPLICANT
Council of the Law Society of New South Wales

RESPONDENT
Jyoti Bharati



FILE NUMBERS:
092008

HEARING DATES:
1 February 2010

SUBMISSIONS CLOSED:
26 February 2010



DATE OF DECISION:
25 June 2010

BEFORE:
Chesterman M - Deputy PresidentCurrie J - Judicial MemberTingle J - Non-Judicial Member





LEGISLATION CITED:
Administrative Decisions Tribunal Act 1997
Crimes Act 1900
Legal Profession Act 1987
Legal Profession Act 2004
Legal Profession Regulation 2005

CASES CITED:
Barry John Penfold [1997] NSWLST 23
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Colin Walter Peck, Unreported, Solicitor’s Statutory Committee, 23 April 1981
Dupal v Law Society of New South Wales, Unreported, Court of Appeal, NSW, 26 April 1990, BC9002508
Law Society of New South Wales v Bannister [1993] NSWCA 157
Law Society of New South Wales v Doherty [2009] NSWADT 155
Law Society of New South Wales v Doherty (No 2) [2009] NSWADT 296
Law Society of New South Wales v Goold [2001] NSWADT 171
Law Society of New South Wales v Green [2001] NSWADT 142
Law Society of New South Wales v McCarthy [2003] NSWADT 198
Law Society of New South Wales v McNamara [2007] NSWADT 162
Law Society of New South Wales v Moulton [1981] 2 NSWLR 736
Law Society of New South Wales v Witherdin [2004] NSWADT 264
Ex parte Lenehan [1948] HCA 45; (1948) 77 CLR 403
Prothonotary of the Supreme Court of New South Wales v Holt [2008] NSWCA 136
Prothonotary of the Supreme Court of New South Wales v P [2003] NSWCA 320
Prothonotary of the Supreme Court of New South Wales v Ritchard, Unreported, Court of Appeal, New South Wales, 31 July 1987, BC8701242
R v Patison [2003] NSWCCA 171

TEXTS CITED:


APPLICATION:
Solicitor – professional misconduct – breaches of Legal Profession Act 2004, sections 254, 262 and 264 – misappropriation of trust monies – creation of false trust account receipt – misleading trust account investigators – orders by way of penalty – costs

MATTER FOR DECISION:



REPRESENTATION:
APPLICANT
P Boyd, solicitor
RESPONDENT
A Singh, barrister


ORDERS:
1. The Respondent is guilty of professional misconduct as alleged in Grounds 1, 2, 3 and 5 of the Application
2. Grounds 4 and 6 of the Application are dismissed
3. The Respondent is reprimanded
4. The Respondent is to be permitted, if he so wishes, to resume practice as a solicitor, but any practising certificate issued to him is to be subject to the following conditions:-(a) He may only practise as the employee of a solicitor holding an unrestricted practising certificate.(b) He is not to operate on an account of a solicitor which contains or may contain trust funds.(c) He is to continue to take such medication for his depressive illness as may be prescribed by his treating general practitioner.(d) He is to furnish to the Applicant every six months a certificate from his general practitioner confirming that he has continued to take such medication as directed.(e) His employer is to be advised of these Orders and is to acknowledge in writing to the Applicant that he or she has been so advised.
5. The Respondent is to pay the Applicant’s costs of these proceedings as agreed or assessed.


Reasons for Decision:

REASONS FOR DECISION


Introduction

1 In an Application filed on 11 May 2009, the Council of the Law Society of New South Wales (‘the Law Society’) alleged that the Respondent solicitor, Mr Jyoti Bharati, had engaged in professional misconduct. The Application set out six Grounds, as follows:-

1. The Respondent breached section 254(1) of the Legal Profession Act 2004 (‘the Act’).

2. He breached section 262 of the Act.

3. He misappropriated trust monies.

4. He knowingly created a false trust account receipt.

5. He breached section 264 of the Act.

6. He misled trust account investigators.

2 The Application set out Particulars of these Grounds under three headings. These are summarised below, together with the evidence given at the hearing.

3 The Law Society sought the following orders:-

1. That the Respondent’s name be removed from the Local Roll of legal practitioners.

2. That the Respondent pay the Law Society’s costs.

3. Such further and (sic) order as the Tribunal deems appropriate.

4 In an Amended Reply filed on 28 January 2010, the Respondent admitted the breaches alleged in relation to Grounds 1, 2 and 5 of the Application and the misappropriation of trust monies alleged in Ground 3. He further admitted that, at least in so far as he misappropriated trust monies, he was guilty of professional misconduct. He also admitted most, though not all, of the Particulars. He denied the matters alleged in Grounds 4 and 6.

5 The Respondent was admitted to legal practice in New South Wales and obtained a practising certificate as a solicitor on 8 October 1999.

6 In consequence of some of the matters raised in the Application, the Respondent’s practising certificate was suspended on 24 September 2007. On the following day, the Supreme Court appointed Ms Jean Sayer, a chartered accountant, as receiver of the law practice, Bharati Solicitors, which he owned and conducted as a sole practitioner. He has not practised as a solicitor since then.

7 The complaints on which the Application is based were made by the Law Society on 4 October 2007 and 10 October 2008. On 22 December 2009, following investigation of these complaints, the Society resolved under section 537(2) of the Act that the Application should be lodged in the Tribunal.

8 At the hearing, which took place before us on 1 February 2010, all the evidence was given and preliminary submissions were made. At the conclusion of the hearing, we gave directions for the parties to file further submissions.

9 In addition to an affidavit dealing with formal matters sworn by the Law Society’s solicitor, Mr Raymond Collins, the Society relied on the following evidence: (a) a report dated 4 March 2008 prepared by Ms Sayer; (b) an affidavit sworn on 8 May 2009 by Mr Mark Shum, whom the Law Society had employed to investigate Bharati Solicitors; and (c) an affidavit sworn on 15 July 2009 by Mr Terrence Copas, who had assisted in this investigation. Mr Shum attended for cross-examination.

10 The Respondent relied on the following evidence: (a) an affidavit sworn by himself on 16 December 2009; (b) a report prepared on 15 December 2009 by Dr Olav Nielssen, a Visiting Psychiatrist at St Vincent’s Hospital, Sydney, following his examination of the Respondent; and (c) six sworn testimonials, provided principally by professional colleagues of the Respondent. The Respondent was cross-examined.

Relevant legislation

11 The three sections of the Act mentioned in Grounds 1, 2 and 5 of the Application are as follows:-

254 Certain trust money to be deposited in general trust account

(1) Subject to section 258A, as soon as practicable after receiving trust money, a law practice must deposit the money in a general trust account of the practice unless:

(a) the practice has a written direction by an appropriate person to deal with it otherwise than by depositing it in the account, or

(b) the money is controlled money, or

(c) the money is transit money, or

(d) the money is the subject of a power given to the practice or an associate of the practice to deal with the money for or on behalf of another person.

Maximum penalty: 100 penalty units.

262 Deficiency in trust account

(1) An Australian legal practitioner is guilty of an offence if he or she, without reasonable excuse, causes:

(a) a deficiency in any trust account or trust ledger account, or

(b) a failure to pay or deliver any trust money.

Maximum penalty: 200 penalty units.

(2) A reference in subsection (1) to an account includes a reference to an account of the practitioner or of the law practice of which the practitioner is an associate.

(3) In this section:

cause includes be responsible for.

deficiency in a trust account or trust ledger account includes the non-inclusion or exclusion of the whole or any part of an amount that is required to be included in the account.

264 Keeping trust records

(1) A law practice must keep in permanent form trust records in relation to trust money received by the practice.

Maximum penalty: 100 penalty units.

(2) The law practice must keep the trust records:

(a) in accordance with the regulations, and

(b) in a way that at all times discloses the true position in relation to trust money received for or on behalf of any person, and

(c) in a way that enables the trust records to be conveniently and properly investigated or externally examined, and

(d) for a period determined in accordance with the regulations.

Maximum penalty: 100 penalty units.

12 Section 258A, to which reference is made in the first of these sections, is not relevant to this case.

13 So far as relevant, regulation 61 of the Legal Profession Regulation 2005 states:-

61 Receipting of trust money

(1) This clause applies if a law practice receives trust money that is required to be paid into a general trust account.

(2) After receiving the trust money, the law practice must make out a receipt.

(3) The receipt must be made out as soon as practicable:

(a) after the trust money is received, except as provided by paragraph (b), or

(b) in the case of trust money received by direct deposit--after the law practice receives or accesses notice or confirmation (in written or electronic form) of the deposit from the ADI concerned.

(4) The receipt, containing the required particulars, must be made out in duplicate...

(5) For the purposes of subclause (4), the required particulars are as follows:

(a) the date the receipt is made out and, if different, the date of receipt of the money,

(b) the amount of money received,

(c) the form in which the money was received,

(d) the name of the person from whom the money was received,

(e) details clearly identifying the name of the client in respect of whom the money was received and the matter description and matter reference,

(f) particulars sufficient to identify the purpose for which the money was received,

(g) the name of the law practice, or the business name under which the law practice engages in legal practice, and the expression "trust account" or "trust a/c",

(h) the name of the person who made out the receipt,

(i) the number of the receipt.

(6) The original receipt is to be delivered, on request, to the person from whom the trust money was received....

14 Sections 497 and 498 of the Act bear upon the definition of professional misconduct. Section 498(1)(a) has immediate relevance. It states that ‘conduct consisting of a contravention of the Act, the regulations or the legal profession rules’ is ‘capable of being unsatisfactory professional conduct or professional misconduct’.

15 Subsections (2) and (4) of section 562 set out as follows the orders by way of penalty that the Tribunal may make against a local legal practitioner following a finding of professional misconduct:-

(2) Orders requiring official implementation in this jurisdiction

The Tribunal may make the following orders under this subsection:

(a) an order that the name of the practitioner be removed from the local roll,

(b) an order that the practitioner’s local practising certificate be suspended for a specified period or cancelled,

(c) an order that a local practising certificate not be issued to the practitioner before the end of a specified period,

(d) an order that:

(i) specified conditions be imposed on the practitioner’s practising certificate issued or to be issued under this Act, and

(ii) the conditions be imposed for a specified period, and

(iii) specifies the time (if any) after which the practitioner may apply to the Tribunal for the conditions to be amended or removed,

(e) an order reprimanding the practitioner,

(f) an order that the name of the practitioner be removed from the roll of public notaries maintained under the Public Notaries Act 1997.

(4) Orders requiring compliance by practitioner

The Tribunal may make the following orders under this subsection:

(a) an order that the practitioner pay a fine of a specified amount,

(b) an order that the practitioner undertake and complete a specified course of further legal education,

(c) an order that the practitioner undertake a specified period of practice under supervision,

(d) an order that the practitioner do or refrain from doing something in connection with the practice of law,

(e) an order that the practitioner cease to accept instructions as a public notary in relation to notarial services,

(f) an order that the practitioner’s practice, or the financial affairs of the practitioner or of the practitioner’s practice, be conducted for a specified period in a specified way or subject to specified conditions,

(g) an order that the practitioner’s practice be subject to periodic inspection for a specified period,

(h) an order that the practitioner undergo counselling or medical treatment or act in accordance with medical advice given to the practitioner,

(i) an order that the practitioner use the services of an accountant or other financial specialist in connection with the practitioner’s practice,

(j) an order that the practitioner not apply for a local practising certificate before the end of a specified period.

Note. This subsection is not an exhaustive statement of orders that must be complied with by the practitioner.

16 Section 566(1) states:-

The Tribunal must make orders requiring an Australian legal practitioner whom it has found to have engaged in unsatisfactory professional conduct or professional misconduct to pay costs (including costs of the Commissioner, a Council and the complainant), unless the Tribunal is satisfied that exceptional circumstances exist.

The Respondent’s conduct when acting for Mr Nayanhai Upendra Shah

17 Evidence. The matters giving rise to this Application occurred in 2007. Unless otherwise indicated, all dates given below refer to this year.

18 The most serious allegations made against the Respondent arise from his handling of a sum of $29,000 paid to him on 24 April, being the deposit provided by the purchasers of a property owned by Mr Nayanhai Upendra Shah. Mr Shah had retained the Respondent to act for him on the sale, and the deposit was paid to the Respondent as a stakeholder because no estate agent was involved. Mr Shah was looking for another property to buy.

19 At this time, the proportion of the Respondent’s practice devoted to conveyancing was very low. He estimated it at about 10%. He employed Ms Nian Ci Cao, a licensed conveyancer, to handle his conveyancing matters in a practice owned by her at separate premises.

20 On 24 April, contracts for the sale of Mr Shah’s property were exchanged at Ms Cao’s office. Under special condition 36, the purchasers agreed ‘to authorize release of deposit only for the vendor to any deposit to another property being purchased by the vendor, or stamp duty payment thereof’.

21 On the exchange of contracts, Ms Cao received three cheques constituting the deposit from Ms Esther Cossman, the purchasers’ solicitor: (a) a Commonwealth Bank cheque for $14,500 payable to ‘Bharati Solicitors Trust Account’; (b) an ANZ Bank cheque for $10,000 payable to ‘Bharati Solicitors’ or bearer; and (c) a National Bank cheque for $4,500 payable to ‘Bharati Solicitors’ or order.

22 Neither the Respondent nor Ms Cao had given specific instructions to Ms Cossman as to how the payees of these three cheques should be described. From now on, we will identify each of these cheques by reference to the different amounts for which they were drawn.

23 Ms Cao did not give a receipt from Bharati Solicitors to Ms Cossman. She photocopied the three cheques and placed the following annotation on the photocopy: ‘Above cheque is received from... [the purchasers] on 24 April 2007 for exchanged contract and Mr Bharati will mail the trust receipt to Esther’. She gave the photocopy to Ms Cossman and retained a copy of it for her file.

24 On the evening of 24 April, Ms Cao brought the cheques to the Respondent. He put them in his office safe. He did not look at them closely, though he realised that he was to hold them as stakeholder.

25 Several days later, the Respondent telephoned Mr Shah and told him that he had received the deposit in the form of three cheques, of which two were payable to his general account and one to his trust account. Mr Shah said that he had not seen a property that he liked and did not need the money at that time.

26 On 3 May, the Respondent took the $10,000 cheque into the branch of the ANZ Bank where he maintained both the trust account and the general account of Bharati Solicitors. He said in his affidavit that he ‘spoke with the teller who said that the cheque could not be deposited into my trust account’. In cross-examination, he confirmed that he asked for the cheque to go into his trust account, but the teller said that this was not possible. He did not ask for this matter to be referred to a supervisor or the branch manager. Although he said in cross-examination that he knew that the cheque should have gone into his trust account, he paid it into the general account.

27 Mr Boyd, appearing for the Law Society, did not put to the Respondent in cross-examination that his account of an unsuccessful request to the teller to pay the cheque into the trust account was untrue. In oral addresses at the hearing, Mr Boyd did however submit that this part of Mr Bharati’s evidence ‘beggars belief’.

28 We agree with Mr Boyd that it seems highly unlikely that a teller would have refused to permit a solicitor to deposit in his or her firm’s trust account a cheque made out to the name of the firm. But in the absence of evidence to this effect, and because Mr Boyd did not question directly the veracity of the Respondent’s evidence on this matter while cross-examining him, we do not find this evidence to be untrue.

29 At the time this cheque went into the general account of the Respondent’s firm, this account was overdrawn by $71.47. On 4 May, according to the bank statement for the account, four cheques totalling $6,125.29 were paid out of it. On 7 May, a cash cheque for $2,000 was presented and paid. On 9 and 11 May, two cheques, for $395 and $550 respectively, were paid out of it. These payments out of the general account brought the balance down to $848.24.

30 The Respondent admitted that he caused these payments to be made and that they were for his own business and personal expenses. He stated also that he had no intention of retaining permanently the deposited sum of $10,000. This statement was not challenged in cross-examination.

31 Early in May, Ms Cao telephoned the Respondent and advised him that the purchasers had asked her for trust account receipts for the deposit of $29,000. On 8 May, he took his trust account receipt book to her office and signed a receipt, which she had prepared, for this amount.

32 The receipt was on a numbered form with the headings ‘Bharati Solicitors’ and ‘Trust Account’. It recorded the receipt of $29,000 from the purchasers as the deposit on their purchase of the property from Mr Shah. It was dated 8 May 2007.

33 This receipt was sent to Ms Cossman under cover of a letter dated the same day. It was on the letterhead of Bharati Solicitors and was signed by Ms Cao. Under a heading identifying the sale by Mr Shah to Ms Cossman’s clients, it stated: ‘We refer to this matter and enclosed Trust Account (sic) for your Record.’

34 In his affidavit, the Respondent stated:-

At the time that I signed the receipt, I intended it to be an official acknowledgment that my firm had received the moneys. I did not intend to convey, by signing that receipt, that the moneys had been deposited into my trust account. At the time, I gave no thought to the difference between a general account receipt and a trust account receipt. Nor did I turn my mind to the issue of whether the moneys for which I had signed a receipt had been deposited.

35 During cross-examination, it was pointed out to the Respondent that (a) this receipt was dated more than two weeks after he had actually received the three cheques and (b) he signed it at a time when, because of his withdrawals since 3 May from the general account, he no longer held the total amount of the deposit. His replies were to the effect that the receipt was intended as ‘confirmation’ that his firm had in fact received the amount of the deposit and that he had not wanted to sign a backdated receipt.

36 On 25 May, at which time the balance in the Respondent’s general account was $261.90, he paid the $4,500 cheque into this account. On this occasion, he did not ask the teller to direct it to the trust account.

37 On 29 May, the Respondent withdrew $4,740 from this account by means of a cash cheque. He admitted that he used this money for his own business and personal expenses.

38 Late in June, Mr Shah advised the Respondent that he would soon be choosing a house to buy. During the first half of July, he told the Respondent that he had chosen a house and wished to apply the sum of $29,000 held by the Respondent towards the deposit that he had to pay.

39 On 11 July, the Respondent paid the $14,500 cheque into his trust account.

40 At a meeting with Mr Shah which, according to the Respondent, took place around the middle of July, the Respondent gave him three cheques drawn on the trust account, in the amounts of $14,500, $4,500 and $10,000 respectively. He told Mr Shah that he could present the first cheque immediately, though it was in fact dated 24 July. He asked that Mr Shah contact him before depositing the second and third cheques. These cheques were post-dated, to 1 August and 17 August respectively. Mr Shah told him that this arrangement presented no problems for him.

41 On 26 July, Mr Shah deposited the first of these three cheques drawn on the Respondent’s trust account into the account of Raine & Horne Padstow, to whom it was made payable.

42 According to the Respondent, on 29 July he notified Mr Shah that the second of the three cheques drawn on the trust account, being for $4,500, could be presented for payment. On 30 July, the Respondent paid $4,500 into his trust account. Mr Shah presented the second cheque on 1 August and it was duly paid.

43 According to the Respondent, shortly before 17 August he notified Mr Shah that the third of the three cheques drawn on the trust account, being for $10,000, could be presented for payment. On 17 August, the Respondent paid $10,000 into his trust account. Mr Shah presented the third cheque on the same day, 17 August, and it was duly paid.

44 Ms Sayer’s report stated that in her investigations of the affairs of Bharati Solicitors she could not locate any accounting records for the trust account showing the transactions just outlined, or indeed any transactions at all that occurred later than 31 March 2007. She stated also that no accounting records were ever kept for the general account.

45 In a letter dated 17 August to the Law Society, Mr Shah referred to the sale of his property, the purchasers’ provision of three cheques to cover the deposit of $29,000 and the condition in the contract of sale permitting him to apply this amount towards the purchase of another property. He stated that the Respondent had given him three trust account cheques for amounts totalling $29,000, that he had no complaint against the Respondent with regard to this matter and that he would still retain the Respondent to act for him in selling or buying properties.

46 The apparent reason why Mr Shah wrote in this way to the Law Society was that, in circumstances outlined below, the Society had commenced its investigation of the Respondent’s trust account.

47 Findings. The Respondent admitted that in his dealings with the three deposit cheques paid to him on 24 April, he breached three sections of the Act as alleged in the Particulars to the Application. The evidence clearly establishes these breaches.

48 He breached section 254 (1) by not paying the cheques into his trust account as soon as practicable after receiving them. In fact, he never paid the $10,000 cheque or the $4,500 cheque into the trust account, and he paid the $14,500 cheque into this account more than eleven weeks after he received it.

49 He breached section 262 in two ways. First, he failed, without reasonable excuse, to pay the first two of these cheques into his trust account, thereby creating a ‘deficiency’ as defined in section 262(3). Secondly, he failed until 20 July to deliver to Mr Shah any of the trust money that Mr Shah requested from him some days earlier, and he did not deliver the full amount requested until 17 August.

50 He breached section 264(1) in two ways also. First, he did not issue a receipt for the three deposit cheques as soon as practicable, as required by regulation 61 of the Legal Profession Regulation 2005. Secondly, he did not keep accounting records as required for any trust account transactions, including those relating to Mr Shah’s sale and purchase, that occurred later than 31 March 2007.

51 The Respondent also admitted that he misappropriated trust funds. The evidence clearly establishes this. It was alleged in the Particulars that between 3 and 10 May, he misappropriated $9,223.23. It could well be argued that the amount that he misappropriated was actually $10,000, the amount of the cheque that he deposited on 3 May, but nothing turns on this. Between 25 and 29 May, he misappropriated $4,500. These were misappropriations even if he intended at all times, as he maintained, to repay these amounts and even though he did in fact do this, by giving cheques to Mr Shah on 1 August and 17 August.

52 The Respondent denied Ground 4 of the Application, which alleged that he ‘knowingly created a false trust account receipt’.

53 In contending in his written submissions that this allegation was established by the evidence, Mr Boyd argued that by signing the trust account receipt on 8 May and forwarding it to Ms Cossman, the Respondent indicated to her that ‘the deposit monies would shortly be held in his trust account as part of normal everyday conveyancing transaction’. On the ground that the Respondent had already misappropriated part of the funds contained in the $10,000 cheque, Mr Boyd maintained that the receipt did not accurately reflect what had occurred with part of the $29,000 deposit, that it was false for this reason and that the Respondent knew it to be false.

54 Mr Singh, who appeared for the Respondent, relied on the explanation, reproduced above at [34], that the Respondent gave in his affidavit. He argued that if we accepted his explanation, we could not conclude that any false element in the receipt was ‘knowingly’ brought about by the Respondent.

55 Mr Singh made the following additional submissions: (a) Ms Cao, not the Respondent, was the person who ‘created’ the receipt; (b) the date shown on the receipt, being the date on which it was signed, was not false; (c) the receipt did not state expressly that the money received was in the Respondent’s trust account; (d) no normal trust account receipt could contain such a statement, because the usual practice is that a receipt for a cheque is issued at the time when the cheque is handed over, not after it has been banked; and (e) in fact, every express representation in the receipt was accurate. It acknowledged receipt of the amount that was paid; it contained accurate particulars of the reasons for the payment; and it ‘implied which account the money will be held in (at some future time)’.

56 After giving this matter careful consideration, we have concluded that the receipt cannot be described as ‘false’. It did not record the date, 24 April, on which the deposit cheques were delivered. But on 24 April Ms Cao had given to Ms Cossman a document acknowledging the delivery of those cheques and indicating that at some later date the Respondent would send by mail a trust account receipt. There could accordingly be no doubt in the minds of Ms Cossman or her clients that the date shown on this receipt was the date when it was signed, not the date of delivery of the cheques.

57 Viewed in the light of the Respondent’s statutory obligation to create and maintain proper trust account records, the receipt was incomplete. By virtue of regulation 61(5), it should have recorded both the date when the cheques were received and the date on which the receipt was signed. But this is not sufficient, in our opinion, to support a ruling that it was ‘false’.

58 It follows from this conclusion that the ‘element of knowledge’, as Mr Singh called it, is not made out. On the other hand, we do not accept his submission that the Respondent did not ‘create’ the receipt. A solicitor who instructs an employee to prepare a document and then signs the document must, in our opinion, be treated as the person who created it.

59 For the foregoing reasons, we hold that Grounds 1, 2, 3 and 5 of the Application (which were admitted) are made out in the evidence relating to the sale and purchase transactions in 2007 in which Mr Shah retained the Respondent. Ground 4 (which was denied) is not made out.

The Respondent’s conduct when acting for Mr Vernod Lal

60 In or before January 2007, the Respondent was retained by Mr Vernod Lal to act on the purchase of a property from Mr Lal’s former wife. Contracts were exchanged on or about 19 January 2007.

61 The Respondent received four bank cheques relating to this transaction, bearing dates between 16 and 30 January. He deposited all of them into his trust account. Two of the cheques were subsequently dishonoured. The total amount of the other two cheques was $296,003.20.

62 In her investigation of the Respondent’s records, Ms Sayer ascertained that neither of the butts relating to the deposit of these two cheques gave any particulars of the money deposited.

63 Between 19 January and 27 February, six cheques drawn from the trust account were presented for payment. The total amount of them was $295,848.00.

64 Ms Sayer ascertained that the butts relating to four of these cheques disclosed no more than the amounts of the cheques and the butts relating to the remaining two cheques disclosed only the amounts, the dates and the payees.

65 This evidence establishes that, as the Respondent admitted, he breached section 264 of the Act. He failed to keep his trust account records in a way that at all times disclosed the true position in relation to trust money received for or on behalf of any person and enabled those records to be conveniently and properly investigated or externally examined.

The Respondent’s conduct during a Law Society investigation

66 On 16 August, Mr Mark Chi Way Shum, who was then an investigator employed by the Law Society, was instructed to investigate the law practice of Bharati Solicitors pursuant to section 270 of the Act.

67 In the Particulars, the Law Society alleged that in making four statements to Mr Shum during the course of this investigation, the Respondent misled Mr Shum. One of these alleged statements was made during a telephone conversation with Mr Shum on 16 August and the other three during an interview conducted by Mr Shum at the Law Society’s office on 20 August. We will discuss these four alleged statements in turn.

68 The first statement. Mr Shum said in his affidavit, sworn on 16 May 2009, that on 16 August 2007, he rang the Respondent and told him (a) that he was inquiring into the conveyancing matter in which the Respondent was acting for Mr Shah, (b) that the Law Society had been notified that Mr Shah had received $14,500 and (c) that a cheque given to Mr Shah by the Respondent had been dishonoured. The Respondent replied that Mr Shah had received $19,000 and on the next day would receive the balance of $10,000.

69 According to Mr Shum, the following exchange then occurred:-

Respondent: The money will be paid from the general account.

Shum: Why is that paid from the general account?

Respondent: The three cheques were not banked into the trust account. Two cheques were banked into the trust account and the money was paid to the client.

70 The Law Society alleged that in making this statement about the accounts into which the three cheques were banked, the Respondent misled Mr Shum. In his written submissions, Mr Boyd maintained that when making this statement (and also the other three statements discussed below), the Respondent ‘knew that he had been caught out and was evasive in his answers to the investigators’.

71 In cross-examination, Mr Shum acknowledged that his allegation that a cheque given by the Respondent to Mr Shah had been dishonoured was incorrect. He adhered to his allegation, however, that the Respondent had made the statement that the Law Society claims to have been misleading. He maintained also that the Respondent’s command of English was good and that it was unlikely that he had misheard or misunderstood the Respondent.

72 Mr Shum also said during cross-examination that he had no memory of a later interview with the Respondent on 18 September 2007, at which the Respondent produced relevant documents and gave answers that served to correct mistakes made by him earlier. When documentary evidence of this interview, which lasted about 55 minutes, was put before Mr Shum, he acknowledged that it had taken place.

73 In his affidavit, the Respondent stated that he remembered having a number of conversations with investigators in August 2007. He claimed to have had difficulty answering the questions put to him because at that time he was depressed, he had high blood pressure and bouts of dizziness, and he was recovering from a car accident on 6 June, in which he had suffered serious injuries to his head. His claim that his mental performance during these conversations was affected by his depression, which dated from 2003, received support in the report prepared by his psychiatrist, Dr Nielssen.

74 With reference to the conversation on 16 August, the Respondent stated in his affidavit that he said the following to Mr Shum: ‘The three cheques were not banked into the trust account. The client has been paid for two of the cheques.’ He further stated:-

I said or intended to say that the $10,000 will be taken out of general account and put into the trust account and paid to the client. I said or intended to say that the two cheques (one for $14,500 and one for $4,500) that I had given to Shah had been banked by Mr Shah and had been cleared. I did not intend to suggest at any time that the two cheques had been banked into the trust account and the money paid immediately from that account to the client.

75 None of the Respondent’s affidavit evidence relating specifically to his conversations with Mr Shum was challenged in cross-examination.

76 In our opinion, the evidence on these matters, considered in the light of the principles stated by the High Court in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, is insufficient to satisfy us affirmatively that the Respondent misled Mr Shum intentionally or indeed through a desire to be ‘evasive’. It is of particular relevance, as Mr Singh submitted, that there was no verbatim record of the relevant telephone call.

77 We also accept the following submissions by Mr Singh: (a) Mr Shum may have misunderstood the Respondent, whose spoken English – as we could discern for ourselves – was sometimes difficult to comprehend; (b) Mr Shum may not have recollected precisely what was said, since he swore his affidavit some 21 months after the events to which it referred and he acknowledged having forgotten the interview with the Respondent on 18 September 2007; (c) the Respondent’s affidavit evidence as to what he said and what he meant to say was not challenged in cross-examination; and (d) any mistake of this nature made by the Respondent could well have been attributable to his memory problems at the time and to the fact that Mr Shum was asking him to supply detailed information without documentation in front of him, rather than to any dishonest or ‘evasive’ intent.

78 The second statement. At the interview on 20 August, Mr Copas was present, in his role as an assistant in the investigation of the practice of Bharati Solicitors. Mr Shum said in his affidavit that the following exchange occurred:-

Shum: When did you personally receive the cheques?

Respondent: Around 8th May 2007, when the trust receipt was issued.

79 The affidavit sworn by Mr Copas did not refer to this question and answer.

80 The Law Society alleged that in supplying this answer, the Respondent misled Mr Shum, since in fact the Respondent received the cheques more than two weeks earlier, on 24 April.

81 During cross-examination, Mr Shum acknowledged that the notes taken by him during the interview did not include the words ‘when the trust account was issued’.

82 He also agreed with the following propositions put to him by Mr Singh: (a) the Respondent did not have the file on the Shah matter with him at the interview; (b) the Respondent said that he was on medication for depression and that he was ‘feeling low’, indeed suicidal; (c) a number of the Respondent’s answers were to the effect that he could not remember; (d) a number of other answers of the Respondent were quite correct.

83 In his affidavit, the Respondent agreed that he told Mr Shum that he received the three cheques around 8 May 2007. This was, he said, his ‘best memory’ at the time of the interview. He claimed also to have felt ‘pressured and intimidated’ by Mr Shum and to have complained to him about his ‘aggressive’ attitude.

84 Mr Singh conceded that the Respondent’s recollection of the date of receiving the cheques was ‘wrong... by about two weeks’. But he argued that we could not find that the Respondent misled Mr Shum by indicating that the trust account receipt was issued on or about that date, since this was not in Mr Shum’s notes.

85 Taking all these matters into account, together with the submissions by Mr Singh outlined above at [77], we are not affirmatively satisfied that the incorrect answer that the Respondent did give regarding the date of receipt of the cheques was the product of a dishonest or evasive intent. It was undoubtedly misleading, but the most likely explanation is that the Respondent genuinely could not remember the date accurately. We agree with Mr Singh that it has not been sufficiently established that the Respondent misled Mr Shum by adding the words ‘when the trust receipt was issued’.

86 The third statement. Mr Shum said in his affidavit that at the interview on 20 August the following exchange occurred:-

Shum: What about the $4,500, did you put that into your general account?

Respondent: I deposited it into the general account then ordered a bank draft to the trust account in the same time, then I gave a cheque to Shah.

87 The affidavit sworn by Mr Copas did not refer to this question and answer.

88 The Law Society alleged that the Respondent misled Mr Shum by saying that he ‘ordered a bank draft to the trust account’ at ‘the same time’ as he paid the $4,500 cheque into his general account.

89 During cross-examination, Mr Shum adhered to his claim that the Respondent used the words ‘in the same time’ in the manner alleged in the affidavit.

90 The Respondent maintained in his affidavit that he did not recall using the words ‘in the same time’. He said that at that time he was confused about the sequence of events relating to the $4,500 cheque.

91 Mr Boyd acknowledged that if we did not accept Mr Shum’s claim that a phrase such as ‘at the same time’ was used, we should rule that this allegation was not made out.

92 Mr Singh submitted that since the sequence of events relating to the Respondent’s dealings with all three of the cheques comprising the deposit paid on Mr Shah’s property was quite complicated, we should accept the Respondent’s claim that he was ‘confused’.

93 We have found this issue difficult to resolve. There is no doubt that if the Respondent did supply the answer alleged by Mr Shum, he gave a very misleading impression of what happened to the funds transferred to his firm by the $4,500 cheque. Even if he did not use words such as ‘at the same time’, he still omitted to mention his own use of these funds. On the other hand, his answer to the specific question put to him – whether he put the $4,500 cheque into his general account – was correct.

94 Allowance should be made for the possibility that the phrase ‘in the same time’, as used by the Respondent, was intended to refer to the payment of $4,500 into his trust account and his provision of a cheque to Mr Shah. Both of these events occurred towards the end of July 2007. Taking into account also the submissions by Mr Singh outlined above at [77], we have concluded that this allegation has not been established at the requisite level of proof.

95 The fourth statement. Finally, Mr Shum said in his affidavit that at the interview on 20 August the following exchange occurred:-

Shum: When did you deposit the $10,000 into your office account?

Respondent: About one week ago, before 17 August 2007. Before that I just held onto the cheque.

Shum: But your receipt shows that you have received $29,000 on 8 May 2007.

Respondent: I acknowledge the mistake, I should have issued separate receipts.

96 Mr Copas in his affidavit recorded the same two questions and answers, except that he attributed the second question to himself, not to Mr Shum.

97 On 30 August 2007, there was a second meeting between Mr Shum and the Respondent at the Law Society’s office. Mr Shum stated in his affidavit that this included the following exchange:-

Shum: You advised at our last meeting that the cheque for $10,000 received from exchange in the Shah matter was deposited into your general account about one week before 17 August 2007. Is that correct?

Respondent: It’s long ago. I can’t remember.

Shum: When did you deposit the $10,000 into the trust account?

Respondent: I can’t remember.

98 The Law Society alleged that the Respondent misled Mr Shum by saying that he paid the $10,000 cheque into his general account ‘about one week ago, before 17 August 2007’, whereas in fact he did this on 3 May.

99 In cross-examination, Mr Shum acknowledged that the notes taken by him during the interview did not include these words. On the other hand Mr Copas, who was available but not required for cross-examination, said in his affidavit that the Respondent did use them.

100 In his affidavit, the Respondent said that at the time of the interview on 20 August 2007 he did not recall when he had deposited the $10,000 cheque. He claimed that he would have supplied ‘the best estimate’ that he could at the time.

101 If the Respondent, on 20 August (following mention of the trust account receipt) and again on 28 August, had not said to the investigators that he could not remember when he deposited the $10,000 cheque, we might well have concluded that this fourth allegation by the Law Society had been made out. Even allowing for his mental state and for the complexity of these matters, it is barely possible that he would have believed that a cheque that he actually deposited on 3 May was not deposited until more than three months later. But as soon as the date that he gave was queried, he withdrew it. Seen overall, the substance of his answers to this question was not misleading.

102 For these reasons, we conclude that the Law Society has not established its allegation, comprising Ground 6 of the Application, that the Respondent misled trust account investigators.

Professional misconduct

103 As already indicated, the Respondent admitted that his misappropriation of trust monies totalling $13,723.23, in the circumstances alleged in Ground 3 and set out in the Particulars, amounted to professional misconduct. We have no hesitation in saying that his conduct in this regard must be so characterised.

104 The conduct alleged in the three further Grounds that we have found to have been established – Grounds 1, 2 and 5 – involved contraventions of the Act. Each of these contraventions, according to section 498(1)(a), is ‘capable of being unsatisfactory professional conduct or professional misconduct’.

105 In our opinion, the conduct embraced by each of these three Grounds amounted to professional misconduct, for the following reasons.

106 The breaches of section 254(1) alleged in Ground 1 were an integral part of the course of conduct with which Ground 3 is concerned. He contravened this provision while engaged in the misappropriation of trust funds. These contraventions, like the acts amounting to misappropriation, should therefore be held to be professional misconduct.

107 By virtue of the same reasoning, the Respondent’s breaches of section 262 of the Act should also be held to be professional misconduct.

108 The Respondent’s breaches of section 264 of the Act took the form of failing to issue a receipt for trust money as soon as practicable and failing to keep accounting records as required. They occurred in connection with his misappropriation of trust monies, but were not confined to this context. In addition, he did not keep required records when acting for Ms Vernod Lal during January and February 2007 and (as Ms Sayer discovered) he kept no trust account records at all during the period between 31 March 2007 and the date (24 September 2007) on which his practising certificate was cancelled. This systematic failure to abide by his statutory obligations under section 264 of the Act clearly amounts, in our opinion, to professional misconduct.

109 We turn now to what has emerged as the most difficult aspect of this decision, namely, the order or orders that we should make under section 562 by way of ‘penalty’.

Evidence adduced by the Respondent bearing on the question of penalty

110 In addition to matters already mentioned, the Respondent’s affidavit included the following statements bearing upon the order or orders that we should make:-

1. He was born on 4 April 1942 in India. Until 1989, when he migrated to Australia, he worked in India, Fiji and Tonga, principally as a lecturer in political science.

2. Since 1989, he has worked as an interpreter between Hindi (and also Urdu or Nepali, on occasions) and English. In 1999, he both graduated in law and commenced practice (which he still maintains) as a migration agent.

3. About 70% of the matters in his legal practice between 2002 and 2007 were migration cases. The remaining categories (each amounting to 10%) were conveyancing, family law and criminal law. In the vast majority of matters that he undertook he did not receive any money in trust. He therefore knew very little about the management of trust accounts.

4. Between 2002 and 2005, he took on at least 50 matters (according to his estimate) on a pro bono basis. His income as a solicitor was relatively low: for example, he earned only $57,392 in 2003-2004 and $55,595 in 2004-2005.

5. If he had gone bankrupt or died during the period (between 3 May and 17 August 2007) when because of his misappropriations neither his trust account nor his general account held funds that his trust account should have held, his insurance policy or his wife would, he believed, have remedied the deficiency. This was not an aspect of the matter that he took into consideration at that time.

6. His income since the suspension of his practising certificate has declined markedly. He owes significant sums to various creditors. With his wife, he is however the co-owner of some farm properties.

7. He now understands properly the legal requirements relating to the management of trust funds by a solicitor. He deeply regrets what he had done. Although he never intended to retain his client’s money permanently, he acknowledges unreservedly that his conduct was wrongful. He believes that his reputation, which he has built up over many years notably amongst the communities of the Indian sub-continent, has been tarnished beyond repair.

8. If he were given the opportunity to practise again as a solicitor, he would work only as an employed solicitor in the fields of migration law, family law and criminal law. He would never again do conveyancing work or deal with trust monies.

111 The report on the Respondent’s psychiatric condition prepared by Dr Nielssen included a brief outline of the Respondent’s actions in misappropriating the funds entrusted to him. Dr Nielssen concluded that the Respondent had suffered since 2003 from a recurrent depressive illness, which was currently in remission. He found no evidence of psychotic illness, brain damage or dementia and estimated the Respondent’s intelligence as ‘in the higher part of the normal range’.

112 Dr Nielssen, who was not required for cross-examination, gave the following opinion on the question whether this illness affected the Respondent’s conduct during the period of significance in this case:-

... from the information available it seems likely that Mr Bharati was affected by symptoms of depression from early 2007, on the basis of a history of two previous distinct episodes of depression that responded to treatment with medication, the history of inconsistent adherence to treatment after recovery, which is often associated with relapse, and the findings of Dr Verma on 14.5.07 [these were that the Respondent was then affected by ‘depression’].

Mr Bharati reported early morning wakening, fatigue and impairment in concentration during episodes of depression. These symptoms are likely to have affected his mental performance at the time of the transaction that was the subject of the complaint and also at the time of his interview by Law Society investigators. Hence his depressive illness was a substantial factor contributing to his conduct at those times.

113 As already mentioned, six sworn testimonials, provided principally by professional colleagues, were tendered and admitted.

114 In the most detailed of these testimonials, Mr Bruce Levet of counsel placed significant emphasis on the Respondent’s willingness to act for little or no payment, often as ‘a solicitor of last resort’, on behalf of indigent members of his community. He stated that the Respondent, who had explained to him in detail the circumstances that resulted in the present proceedings, was ‘deeply remorseful’ and regarded himself as having ‘let down himself, his family and his community’. He referred to the financial hardship caused to the Respondent by the loss of the right to practise. At the same time, Mr Levet expressed the opinion that the ‘objective circumstances’ of this case might well warrant an order of removal of the Respondent’s name from the Roll and that certainly the Respondent should never again be permitted to hold an unrestricted practising certificate. But he concluded that on balance the ‘subjective factors’ that he had outlined would in his view justify an order permitting the Respondent to return to practice as an employed solicitor.

115 Of the other five testimonials, three were provided by solicitors, one by a barrister and one by a community worker. In all but one (the barrister’s testimonial), the deponent stated that he or she was aware of the nature of the Respondent’s misconduct. They all expressed the view that it would be appropriate for the Tribunal to show leniency towards the Respondent, since his misconduct was out of line with his general character and behaviour, he deeply regretted it and he had engaged in a great deal of professional work, frequently on a pro bono basis, for disadvantaged members of the community.

The Law Society’s submissions on penalty

116 Mr Boyd contended that, as requested in the Application, we should not accede to a submission on the Respondent’s behalf that he might be permitted to practise as an employed solicitor, but should order that his name be removed from the local roll of legal practitioners.

117 In support of this contention, Mr Boyd relied principally on the decision of the Court of Appeal in Dupal v Law Society of New South Wales, Unreported, 26 April 1990, BC9002508. In that case, the Court confirmed an order of the Legal Services Tribunal removing the appellant solicitor’s name from the Roll. At pp 20-21, Handley JA (with whom Priestley JA agreed) outlined the solicitor’s conduct as follows:-

... the appellant has been found guilty of misappropriation first of funds entrusted to him by his sister and then of trust funds. Moreover these misappropriations were associated with or in due course resulted in the production of false records, and attempts to deceive the Law Society which succeeded for a time in putting off the inevitable day. Those attempts at deception involved deliberate lies by the appellant in correspondence with the Society. Again and again when the appellant was put to the test between May 1982 and October 1988 he preferred his interest to his duty and the lie and the cover-up to frank and honest disclosure. While the appellant is entitled to point to the frankness and candour of his dealings with the Law Society after 19 June, 1986 his preference for his interest over his duty continued for some considerable time thereafter.

Complete restitution to the... Trust was not made until October 1988 some five years after the misappropriation of the funds of that Trust commenced. No doubt immediate restitution to the Trust after June 1986 would have been inconvenient if not painful, expensive and on any view, difficult. In the result the appellant continued to enjoy the use of Trust Funds as bridging finance for a further two years and four months after he made proper disclosure to the Law Society through his solicitor's letter of 19 June, 1986.

118 In a passage at p 22 cited to us by Mr Boyd, Handley JA explained as follows his reasons for dismissing the solicitor’s appeal:-

This Court would be departing from a long course of authority if it were to allow the appeal and substitute a period of suspension for the order of the Tribunal removing the appellant from the roll. Counsel were not able to refer us to any case where a solicitor found guilty of misappropriation or wilful contraventions of s41(1) [this is a provision resembling section 254(1) of the Legal Profession Act 2004] has not been struck off the roll. Any decision to the contrary would signal to the profession and the community that this Court was no longer insisting on solicitors maintaining the highest standards of personal honesty and integrity in their dealings with clients and the public and in the handling of monies entrusted to their charge. The maintenance of those standards and the public interest require, in my judgment, that this appeal be dismissed. It is well established that the jurisdiction being exercised in this case is not penal but disciplinary and that it must be exercised for the benefit of the public. Sympathy for the appellant and for the tragedy that he has brought on himself and his family by his inability to live up to the high standards which this Court and the profession demand of solicitors cannot be allowed to deflect this Court from doing its duty.

119 The judgment of Kirby P contains the following passage at p 1:-

... the response of the Court to the facts as found by Handley JA (which I also accept) necessarily expresses and reflects the standards which the Court requires of legal practitioners in this State. In an appeal such as the present, the Court disposes of the case before it by reference to criteria of general application. These should be clear and simple. They should be such as to leave no doubt in the mind of a practitioner in financial difficulties, exposed to the temptation of using without clear authority the funds of another, the consequences that will flow for the right to practise when such misuse of funds is discovered.

120 In his written submissions in reply, Mr Boyd referred us to three Court of Appeal cases: Prothonotary of the Supreme Court of New South Wales v Ritchard, Unreported, 31 July 1987; Prothonotary of the Supreme Court of New South Wales v P [2003] NSWCA 320; and Prothonotary of the Supreme Court of New South Wales v Holt [2008] NSWCA 136. He drew our attention specifically to a passage in the judgment of Young CJ in Eq in the second of these cases. At [17], his Honour stated the following propositions:-

(1) The onus is on the claimant to show that the opponent is not a fit and proper person. It is a civil onus: Re Evatt; Ex parte NSW Bar Association (1967) 67 SR (NSW) 236. However Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, 362 shows the particular standard that must be applied when working out the civil onus of proof.

(2) An order striking off the Roll should only be made when the probability is that the solicitor is permanently unfit to practice: Prothonotary v Richard (NSWCA 31.7.1987 per McHugh JA) and see NSW Bar Association v Maddocks (NSWCA 23.8.1988).

(3) The fact that the opponent has a conviction for a serious offence is not necessarily sufficient reason for an order striking that person off the Roll; see Ziems v Prothonotary [1957] HCA 46; (1957) 97 CLR 279, 283.

(4) The fact of conviction and imprisonment is, however, far from irrelevant and may be regarded as carrying a degree of disgrace itself. See Ziems case at 288.

(5) The Court needs to consider the conduct involved in the conviction and see whether it is of such personally disgraceful character that the opponent should not remain a member of an honourable profession: Re Weare [1893] 2 QB 439, 446; Barristers’ Board v Darveniza (2000) 112 A Crim R 438 (QCA).

(6) The fact that the opponent pleaded guilty to the charge will usually be counted in her favour: NSW Bar Association v Maddocks. Though we do not assume that all pleas of guilty necessarily show remorse, it is significant that in the instant case Keleman DCJ said that it did.

(7) Conduct not occurring in the course of professional practice may demonstrate unfitness if it amounts to incompatibility with the personal qualities essential for the conduct of practice. There may not even have been any criminal conviction with respect to that conduct. This is particularly so where the conduct over a long period shows systematic non-compliance with legal and civic obligations: NSW Bar Association v Cummins [2001] NSWCA 284; (2001) 52 NSWLR 279, 289; NSW Bar Association v Somosi [2001] NSWCA 285; (2001) 48 ATR 562.

(8) The concept of good fame and character has a twofold aspect. Fame refers to a person’s reputation in the relevant community, character refers to the person’s actual nature: McBride v Walton (NSWCA 15.7.1994 per Kirby P); Clearihan v Registrar of Motor Vehicle Dealers (1994) 117 FLR 455, 459.

(9) The attitude of the professional association is that the application is of considerable significance.

(10) The question is present fitness, not fitness as at the time of the crime: Prothonotary v Del Castillo [2001] NSWCA 75 at para 71.

121 Mr Boyd referred in his written submissions to five decisions mentioned by Mr Singh or by one of us at the hearing, each of which constituted, or at least appeared to constitute, an exception to the general principle that a solicitor found guilty of misappropriating the funds of a client should be struck off. These decisions are outlined below. Mr Boyd made a brief submission to the effect that none of them should be followed in the present case, as in all of them the respondent solicitor’s conduct was less serious than that of the Respondent in these proceedings. It followed, Mr Boyd argued, that the Respondent had not displaced the presumption stated and applied by the Court of Appeal in Dupal.

122 Mr Boyd’s submissions also included the following observations regarding the Respondent’s conduct and his claim for leniency:-

1. The Respondent’s testimony in cross-examination demonstrated that he still did not understand that all three of the deposit cheques, irrespective of whether they were or were not made payable to his trust account, should have gone into the trust account.

2. The Respondent appeared to treat the bank teller’s refusal on 3 May 2007 to pay the $10,000 cheque into his trust account as some sort of excuse for his subsequent actions. Furthermore, when depositing the $4,500 cheque into his general account on 25 May 2007, he did not even ask the bank teller to pay it into his trust account.

3. Having deposited both the $10,000 cheque and the $4,500 cheque into his general account, he did not transfer either of these amounts into his trust account, as he could easily have done. Instead, within a very short period of time he made use of the funds for his own purposes.

4. When asked in cross-examination how the amounts contained in these two cheques would have been repaid if he had gone bankrupt or had died while these amounts were not held in either his trust account or his general account, he gave very unsatisfactory answers. He still appeared unable to understand the legal effect of putting money received by a solicitor into a trust account rather than into the solicitor’s general account.

5. He adopted the unsatisfactory course of leaving the $14,500 cheque in his office safe for some eleven weeks, between 24 April and 11 July 2007.

6. The fact that he repaid the misappropriated funds to Mr Shah, thereby prompting Mr Shah to write on his behalf to the Law Society, did not excuse his conduct.

7. Although he expressed contrition in his affidavit and in cross-examination, it was not until 28 January 2010 that he filed an Amended Reply admitting the most serious of the Grounds in the Application. This did not appear to involve genuine contrition, but merely ‘a recognition of the inevitable’ (to quote a phrase used by the Court of Criminal Appeal in R v Patison [2003] NSWCCA 171 at [75 – 76]).

8. The testimonials tendered by him were ‘lightweight’, except for that provided by Mr Levet. The other deponents did not sufficiently indicate that they knew the facts of the case.

9. If he were permitted to practise as an employed solicitor, and subject to prohibitions against conducting conveyances or managing trust accounts, he might still have opportunities to misappropriate clients’ funds. An employer could not supervise everything he did. In some fields in which he wished to practise – for example, criminal law – he would still be in contact with his clients’ money. His financial situation was such that he might well succumb to the temptation to reoffend.

The Respondent’s submissions on penalty

123 Mr Singh sought to persuade us that what Mr Boyd called the ‘presumption’ stated and applied in Dupal should not apply in this case, but that instead we should make orders limiting the Respondent’s right to practise. In so submitting, Mr Singh relied on a number of decisions on penalty in which misconduct by a solicitor comparable to the Respondent’s misconduct was held not to warrant a striking-off order. These decisions are outlined below.

124 Specifically in relation to the Respondent’s misappropriation of funds entrusted to him, Mr Singh argued that it fell within the least serious of three categories of misappropriation by solicitors. In descending order of seriousness, these categories were as follows: (1) where the solicitor’s acts amount to a criminal offence, such as larceny under section 116(1) of the Crimes Act 1900 or fraudulent misappropriation under section 178A of this Act; (2) where the solicitor ‘has received moneys for payment to third parties, but deliberately delays or refuses to pay it to them despite demands’; and (3) ‘where the solicitor borrows or temporarily retains moneys of clients or third parties, but with no intention to deprive the clients of their moneys’. Mr Singh argued that the present case clearly fell within category (3).

125 An argument stemming from Dupal that Mr Singh also advanced was based on the following passage in the judgment of Kirby P (at pp 4-5):-

In Ex parte Macaulay (1930) 30 SR (NSW) 193 it was said that where a solicitor has been proved guilty of misappropriation of client funds he should not, unless in very exceptional circumstances ever be allowed again to be held out to the public as a solicitor in whom confidence might be reposed. In this regard, the Full Court was reflecting a long line of English authority. See eg Willes J in Re Poole (1869) 4 CP 350, 353. See also Incorporated Law Institute of New South Wales v Meagher [1909] HCA 87; (1909) 9 CLR 655.

Those decisions must now be read in the light of the remarks of the majority of the High Court of Australia in Ex parte Lenehan [1948] HCA 45; (1948) 77 CLR 403, 422:

"[They] ... properly emphasise the great importance of financial integrity in a solicitor, but they should not be regarded as laying down a rule of law that a solicitor who has been struck off the roll for pecuniary dishonesty cannot be reinstated and that an applicant for admission who has been guilty of a similar act cannot be allowed to proceed unless it is shown that there were some exceptional circumstances in the original offence."

Restoration is difficult but not impossible. In a number of recent cases this Court has demonstrated the difficulty facing a practitioner whose name is removed from the roll for pecuniary dishonesty in thereafter having his name restored. See eg Kotowicz v Law Society of New South Wales, Court of Appeal, unreported, 7 August 1987; (1987) NSWJB 146 and Dawson v Law Society of New South Wales, Court of Appeal, unreported, 21 December 1989; (1989) NSWJB 232. Ex parte Lenehan continues to stand for the proposition that: "When such a person applies for reinstatement he is in a more disadvantageous position than an original applicant because he must displace the decision as to probable permanent unfitness which was the basis of his removal."

126 Mr Singh pointed out that while the respondent in Dupal was ‘in his forties’, the Respondent in the present case was (at the time of hearing) nearly 68 years of age. After any period of ‘rehabilitation’ that might be considered essential, he would therefore, as Mr Singh put it, have ‘little or no working life left in him’. An order striking him off would amount to ‘professional death’ for him.

127 All of the decisions, other than Dupal, to which Mr Singh referred emanated from this Tribunal or from a body in the nature of a tribunal (for example, the Legal Services Tribunal) that previously determined misconduct proceedings brought against solicitors. Because none of these decisions is more authoritative than the rest of them, and because they must primarily be regarded as decisions on their particular facts, we will not refer to all of them.

128 The first in point of time that we will deal with is Colin Walter Peck, Unreported, Solicitor’s Statutory Committee, 23 April 1981. It was discussed in the following terms by Kirby P in Dupal at pp 3-4:-

The research of neither counsel before the Court could produce a single case in which, following a finding of misappropriation of trust funds or wilful contravention of s41(1) of the Act, the Court had not proceeded to remove the name of the practitioner concerned from the roll of practitioners. Properly, after judgment was reserved, counsel for the Law Society, following further enquiries, drew to the notice of the Court a decision of the Solicitor's Statutory Committee in the case of Colin Water Peck, unreported, 23 April 1981. That was a case where a solicitor, who inherited his father's practise on his retirement, experienced severe financial difficulties when, for want of new instructions, the outgoings came to exceed the income. To "keep functioning" he withdrew various amounts from his trust account which he was unable to make good from his own resources. There was a deficiency in his trust account of almost $2,750. He himself drew this to the notice of the Law Society. He disclosed a number of health problems and had numerous character witnesses. The Solicitor's Statutory Committee found breach of s41(1) of the Legal Practitioner's Act 1898. But in the circumstances it reprimanded the solicitor and suspended from from practise for two years. It did so "having regard to his frankness with the Law Society and [the] Committee and his contrite approach" and its finding that "he will be a fit and proper person to practise as an employed solicitor".

I regard to the decision in Peck, which is not a decision of this Court, as wholly exceptional. True, each case must depend upon its unique facts. But for the reasons which I have stated, the normal consequence of the misuse of entrusted funds by a solicitor, and a finding of wilful breaches of the statutory prohibition in that regard, is removal of the name of the solicitor from the roll. There is no reason why that consequence should not follow in the present case. To the extent that Peck suggests otherwise, I dissent from its holding.

129 In Barry John Penfold [1997] NSWLST 23, the respondent solicitor paid a client’s cheque for $6,000 into his personal account. He was impelled to do this by the financial needs of his firm. He used about $2,500 out of this money for his firm’s purposes. In the course of determining that he should not be struck off, but should be suspended from practice for two years, the Legal Services Tribunal considered the following matters to be factors suggesting leniency:-

1. The theft was a theft of a relatively small amount. Although $6,000.00 was misappropriated, less than $2,500.00 had been paid by the Solicitor to his own purposes, 2. There was no compounding of that theft by other thefts from other clients to make good the theft from the first client, 3. By the day of confession almost half of the amount had been repaid and the remainder of the debt to the client was paid within a further eight months, 4. The Solicitor has satisfied the Tribunal of his genuine remorse, 5. The Solicitor is bankrupt and virtually unemployed; he had previously been able to make no reserve provisions for his family; the family home has been sold and his personal life and that of his family is deeply affected.

130 In giving further reasons for not applying the presumption stated in Dupal, the Tribunal said:-

Suspension was not appropriate for Dupal but it is appropriate for this Solicitor; the difference in the gravity of their offences and the established contrition points to the fact that Mr. Penfold is "not probably permanently unfit to practice again". There are further proper indications in that regard in the Statutory Declarations of various solicitors and barristers filed in evidence for the Solicitor, attesting to their very high regard for the Solicitor’s integrity, despite the disclosure to them of the failing which has brought the Solicitor before this Tribunal.

131 In Law Society of New South Wales v Green [2001] NSWADT 142, the most relevant misconduct of the respondent solicitor (for present purposes) was that, having received funds from a client for the payment of counsel’s fees, he failed to pay them over to the barrister concerned for a period of more than three years. He only did so after the Law Society intervened. The penalties imposed by the Tribunal were a reprimand, a fine of $1,000, an order that he should not be permitted to practise until he complied with a notice served on him by the Society, an order that his trust account be subject to regular inspection over a specified period and an order that he attend a suitable course of further education.

132 At [64 – 66], the Tribunal explained its reasons for so ordering in the following terms:-

64 In summary, we have found Mr Green to have been guilty of professional misconduct in the following respects:

(a) in failing to provide information required of him by the Law Society’s Trust Account Inspector on 29 August 1997, being misconduct in breach of s.55(3) [of the Legal Profession Act 1987] (paragraph 14 above);

(b) in failing without reasonable excuse to comply with the s.152 Notice dated 3 February 1998 (paragraph 43 above);

(c) in wilfully breaching s.61 of the Legal Profession Act [this corresponds to section 264(1) of the Act of 2004] in relation to funds received in respect of costs and disbursements in the matter of Burg (paragraph 47 above);

(d) in failing to pay Counsel’s fees in the matter of Burg although put in funds for that purpose (paragraph 55 above).

65 As to the first two of these, Mr Green’s conduct reflected an entirely unsatisfactory approach to his professional obligations. No responsible, diligent practitioner would disregard the requirements of a Trust Account Inspector and of a statutory notice, particularly when they dealt with the serious matters that the subject communications dealt with...

66 The third and fourth of the matters in respect of which we have found professional misconduct constituted, for the reasons we have given above, serious departures from the standards to be expected of practitioners. They also call for the making of the orders to which we have referred. The fact that Mr Green had an apparently bona fide, although misconceived, view as to the operation of s.61 which in his mind rendered it inapplicable in the circumstances of the Burg matter, whilst not depriving his actions of the character of professional misconduct, is of some relevance on penalty and we have duly taken it into account.

133 In Law Society of New South Wales v Goold [2001] NSWADT 171, the respondent solicitor misappropriated, without (it would seem) repaying, a cash sum of $1,500 that a client had delivered to him to be deposited in his firm’s account. It was held in this Tribunal that he should not be struck off, but should be permitted to continue in practice on a restricted basis and should pay a fine of $10,000. Having cited parts of the above passages from the judgments of Kirby P and Handley JA in Dupal, the Tribunal said (at [4 – 7]):-

4 Two exceptions in fact exist in the cases of Colin Peck before the Solicitors’ Statutory Committee on 23 April 1981 and Barry John Penfold 1998 4LPDR at page 19. The Tribunal would, in almost every case, agree that no practising certificate should be granted in such a case. The present case is however we think exceptional enough to warrant a more lenient approach. Extenuating circumstances existed in October 1997. They included:

(a) the health of the solicitor (which he does not seek to rely upon as a factor but which was, the Tribunal thinks, a stressor affecting his judgment);

(b) the health of his wife which is in the same category;

(c) sudden and unforeseen expense through his insurer denying cover for a motor accident because he was under the influence at the time of it.

5 None of these would have helped in 1997. But three and a half years have passed, and the question now is whether he is, in August 2001, a fit and proper person to hold a limited practising certificate. His character evidence is of limited weight but of great weight is the affidavit and oral evidence of a partner in the firm where he is presently employed, Peter McCrohan. He told us today that Goold has his trust and that he displays maturity and humanity in his dealings with the firm’s personal injury clients.

6 He described in detail the financial controls in place at the firm which would seem to us to preclude any repetition of the offence and also of close monitoring of charging practice and collection and receipting of cash and cheques. The solicitor’s health is now stabilised and his wife’s epilepsy is controlled. His finances are under his father-in-law’s control. He impressed the Tribunal as contrite and ashamed. His account of his solicitor father’s reaction to his conduct brought tears to his eyes.

7 The Tribunal accepts his statement that this is a one-off episode and that he is unlikely to offend again.

134 In Law Society of New South Wales v McCarthy [2003] NSWADT 198, the Tribunal found the respondent solicitor guilty of professional misconduct on the grounds of (a) misappropriation of a client’s payment that should have been remitted to counsel and (b) wilful contravention of a provision (section 61(1)) of the Legal Profession Act 1987 resembling section 264(1) of the current Act. At [2 – 3], it outlined the circumstances as follows:-

2 The conduct in question involves one transaction. The following facts are not disputed. In 1999 the practitioner was practising as a solicitor, but (as is permitted) did not operate a trust account. He received a payment in settlement of a client’s case which related to costs and disbursements incurred by him on the client’s behalf. The amount of the payment was $4200, of which it was said by the practitioner and not disputed, that $3000 was in respect of counsel’s fees and $1200 was in respect of his costs. A cheque for $4200 was drawn in favour of the practitioner. It was deposited into the practitioner’s personal account on 24 June 1999.

3 The matter of non-payment of counsel’s fees was drawn to the attention of the Law Society by the client on 8 March 2000. Counsel’s fees were paid on 28 June 2000.

135 The Tribunal observed that in earlier disciplinary proceedings the respondent had engaged in misconduct of a similar nature. It also made the following critical observations (at [46 – 47]) about his attitude in the proceedings before it:-

46 We are not satisfied from his appearance before us that the practitioner has, even now, any real appreciation of the gravity of his conduct, or any contrition or remorse for what has occurred. We are not confident that if he were to find himself back in a situation where he was doing plaintiff’s work, or found himself in receipt of substantial trust monies while personally short of money, that he would not be tempted to place the money in a personal account and use it to meet short term personal necessities.

47 We agree with the submission of Mr Wales that there has been a lack of responsiveness and a lack of candour in the way in which he has dealt with the Law Society over this matter. There remains doubt in our minds as to whether the practitioner attaches any degree of gravity to his long delay in paying the fees due to counsel. Whether the third party professional is a barrister, a medical practitioner or some other form of service provider, it is incumbent on a solicitor once placed in funds to meet their accounts in a timely way. The practitioner seems to have difficulty in accepting that an egregious breach of the standard of timeliness might amount to professional misconduct...

136 At [52], the Tribunal said, however, that the respondent should not be regarded as unfit to practise. It made orders suspending his right to practise for three months and stipulating that thereafter he should only be permitted to practise as an employed solicitor.

137 In referring to this case, Mr Singh pointed out that the respondent solicitor was, as he put it, ‘travelling towards the end of his professional career’.

138 In Law Society of New South Wales v Witherdin [2004] NSWADT 264, the Tribunal Panel included two members of the present Panel (Deputy President Chesterman and Judicial Member Currie). The respondent solicitor admitted that he persuaded a client of the firm to which he belonged to substitute his name for that of the firm as the payee of a cheque for $3,000. He did so because he believed that the other members of the firm, with whom he was in dispute, had failed to pay him money to which he was entitled. The respondent also admitted that he had failed to carry out the instructions of another client, had misled other clients about the state of their matters and had delayed unduly in distributing a legacy. There was evidence that he was highly regarded within his local community and that this misconduct, which occurred within a period of one year, was entirely out of line with his normal behaviour.

139 The Tribunal, after acknowledging (at [113]) that the task of determining what orders it should make was ‘not easy’, held that despite the general principles stated in Dupal, a striking-off order was not warranted. It pointed out (at [118]) that the intended ‘victim’ of the respondent’s ‘misapplication’ of the cheque prepared by his client was not the client but the other members of his firm, though it added (at [119]) that his action was likely to cause significant embarrassment not only to the firm but also to the client. It ordered that the respondent’s right to practise should be suspended for a period of 18 months.

140 In Law Society of New South Wales v McNamara [2007] NSWADT 162, the respondent solicitor engaged, as the Tribunal said at [98], in ‘a course of dishonest conduct over a period from April 2005 until February 2006’. He ‘misappropriated funds given to him [in cash] by clients on twenty-four separate occasions totalling $5,227.50’. The Law Society did not seek an order removing his name from the Roll. In deciding that orders suspending him from practice for a period of 12 months and restricting his practising rights thereafter, the Tribunal observed as follows (at [97 – 101]):-

97 At first glance, this matter appears to fall within the proposition stated by Justice Kirby in Dupal, regarding the "criteria of general application" to be used by the Court in cases of ‘wilful misuse of the funds of others". His Honour stated:

They should such as to leave no doubt in the mind of a practitioner in financial difficulties, exposed to the temptation of using without clear authority the funds of another, the consequences that will flow for the right to practice when such misuse of funds is discovered.

98 Also, in this matter, unlike Goold, the Solicitor did not commit a single act of misappropriation. Rather, he engaged in a course of dishonest conduct...

99 Further, the evidence tendered to the Tribunal by way of mitigation included only one testimonial, from the Solicitor’s wife, and none from any fellow practitioner, former clients or other associates of the Solicitor. The Solicitor indicated that he was concerned about calling character evidence "because of the stigma". However, the fact remains that positive character evidence on his behalf is extremely limited.

100 We are mindful of the decision in Penfold. Applying Penfold to the current matter, we note that the theft was of a relatively small amount ($5,227.50 in total). Further, the Solicitor endorsed his long service leave entitlement cheque to the Firm on 9 May 2006, so that within a period of twelve days the moneys had been repaid. The Tribunal notes with some concern the Solicitor’s evidence that he could have repaid the money sooner, but did not do so, but that restitution nevertheless occurred shortly after the misappropriations were discovered.

101 The Solicitor has satisfied this Tribunal of his genuine remorse. We also accept that he was unemployed from 28 April 2006, following his summary termination for misconduct, until 15 January 2007. During that time he received ongoing treatment for his depressive illness from Dr Brash and Ms Wilson. He then secured employment with the Department of Defence and is currently employed as a Senior Investigator with the Department of Health & Ageing, in Sydney. Neither of those jobs involved the practice of law and he does not handle any funds in his current position. We therefore accept that the Solicitor has already been severely punished in a financial, personal and professional sense.

141 Finally, in Law Society of New South Wales v Doherty (No 2) [2009] NSWADT 296, the Tribunal considered what orders by way of penalty it should make in the case of a solicitor whom it had held in an earlier decision (Law Society of New South Wales v Doherty [2009] NSWADT 155) to have committed professional misconduct. The misconduct that it took into account was as follows: (a) the respondent had misappropriated the sum of $35,000, held on trust for his client Mr Rafter, for his own use and benefit; (b) he had breached section 255 of the Act, which requires that funds held in a trust account should be held exclusively for the benefit of the person entitled to them; (c) he had knowingly misled Mr Rafter; (d) he had delayed unreasonably in advising Mr Rafter of the misappropriation and (e) he had failed to account to Mr Rafter.

142 After a lengthy analysis of the facts and the relevant case law, the Tribunal decided that it should not accede to the Law Society’s claim that the respondent’s name should be removed from the Roll. It ordered instead that his practising certificate should be cancelled for one year and made subject to restrictions for a period of six years thereafter. The following passages from its judgment, at [135 – 138], indicate the particular reasons why it believed this lesser penalty to be sufficient:-

135... the principles that have been properly set out in cases in this Tribunal and in the Court of Appeal have arisen in circumstances where there has been a deliberate misappropriation of trust moneys, coupled with other activities designed (speaking generally) to hide or justify the misappropriation. Misappropriation is a type of theft and if the theft is done deliberately with intent to deprive the owner permanently, then the Tribunal will have absolutely no alternative but to remove the name of the Respondent from the roll.

136 That is not the case here. This is not a case where, on any view of the evidence, the Respondent engaged in a deliberate attempt to his knowledge to permanently deprive Mr Rafter of his funds. The Tribunal has reached the very clear conclusion that the Respondent at all times believed that he had the authority of Mr Rafter to appropriate in the manner that he did Mr Rafter’s $35,000.00. That conclusion is not at variance by any means with the conclusion of the Tribunal in its decision 23 June 2009 to the effect (at [115.5]) that any "belief that the Respondent may have had with regard to his company’s use of the $35,000.00 or the joint venture use of that money would be a belief not rooted in contract nor of any side agreement". There was no finding that the Respondent’s opinion as to his entitlement to use that money was a fraudulent opinion or an opinion not genuinely held.

137 There is no doubt that the Respondent was a novice when it came to joint venture agreements. There is also no doubt that, not only was he well out of his depth (as also was Mr Rafter), but they both had stars in their eyes and could only see riches coming to them from the various property transactions. However, it is to the Respondent’s credit that he could see the total hopelessness of the Hill End venture but it is not to his credit that he did not understand the joint venture contracts that he himself had prepared. Neither did he understand (even though he held an economics degree) that even if he had Mr Rafter’s approval the transactions with regard to the $35,000.00 had to be properly documented in a commercial/accounting fashion. Perhaps it was all done in a rush – there is no doubt about that – and there is no doubt that the Respondent acted for Rafter, Rafter’s company, the joint venturers and the joint venture companies. As we observed at [107] it was the Respondent who "drafted the agreement, had charge of administration of business but, at the relevant times, was apparently insolvent or at least under severe personal financial pressure at the time Rafter paid into his trust account the $35,000.00".

138 When one looks at the Decision [of] 23 June 2009 there were significant and serious findings against the Respondent. These findings were based upon the evidence and are not challenged. It is important, however, to observe that there was no finding against the Respondent of fraud and no finding that he did not genuinely believe that what he was doing with regard to the joint ventures was not proper. In order to reach its conclusions the Tribunal spent considerable time in analysing the joint venture contracts; then examined the course of conduct of the various parties; concluded that the course of conduct was at variance with the contractual obligations of the parties; and consequently the evidence of Mr Rafter was to be properly preferred as against that of the Respondent. However, that is not to say that the Respondent’s opinions were not genuinely held. Indeed, we have concluded that they were – such that it cannot be properly said (in our opinion) that the Respondent embarked upon a course of action which was designed to deprive Mr Rafter of his moneys. Rather, the course of action was based upon a misunderstanding of the joint venture documents, a misunderstanding of his role as a lawyer and a misunderstanding of his duties to Mr Rafter.

143 As both Mr Boyd and Mr Singh pointed out, this decision is under appeal.

144 Mr Singh submitted that in Dupal, Peck, Penfold, Goold, Witherdin, McNamara and Doherty the conduct of the respondent solicitor was ‘more serious’ than that of the Respondent in the present case. He submitted also that in Green and McCarthy the conduct of the respondent solicitor was ‘at least as serious’ as that of the Respondent.

145 It is convenient to mention here that Mr Boyd expressly disputed these assessments regarding Green and Witherdin, maintaining that neither of them ‘contained a charge of misappropriation, unlike this matter’.

146 Mr Singh submitted that a number of further matters arising from the evidence adduced by the Respondent should be taken into account in his favour. These were (a) the substantial proportion of the Respondent’s work that was performed pro bono; (b) the importance attached to this factor by his referees; (c) the ‘very modest’ income that he derived from his work as a solicitor; (d) his claim that his misappropriations were attributable not to ‘greed’ but to his misunderstanding, due to inexperience, of the rules governing trust accounts; (e) his willingness to make admissions and provide documents to Mr Shum and Mr Copas; (f) his contrition and remorse; and (g) the depressive illness from which he has suffered since 2003 and which Dr Nielssen found to have affected his behaviour during 2007.

147 Finally, Mr Singh argued that the issue of the bank teller’s refusal to pay the $10,000 cheque into the Respondent’s trust account was ‘something of a "red herring"’ and that Mr Boyd had placed undue emphasis on it. He submitted that the Respondent had never relied on this refusal as a justification for his later conduct, but had simply stated that it was the reason why the cheque was paid into his general account.

Discussion of the question of penalty

148 As pointed out above at [127], the decisions cited to us by Mr Singh, in which what we have called ‘the presumption in Dupal’ was not applied, were all decisions of this Tribunal or of like bodies charged with the responsibility of determining at first instance misconduct applications brought against legal practitioners.

149 We have thought it appropriate in these circumstances to conduct a brief search of Court of Appeal and Supreme Court cases in which Dupal was cited. This has unearthed one Court of Appeal decision which provides direct guidance to us, namely, Law Society of New South Wales v Bannister [1993] NSWCA 157.

150 In this case, the respondent solicitor, having received from the Compensation Court a payment of $43,000 as compensation due to a client for whom he had acted, induced the client to endorse the cheque to him, together with an authorisation for him to retain $3,000 out of this sum for his costs of the proceedings. Having paid the cheque into his firm’s account, the solicitor drew a cheque for $3,000 in favour of the client, but persuaded the client to cash this cheque and pay the proceeds to him. By making false entries in the firm’s ledger, he concealed these transactions from his partners. He had no entitlement to these costs, as they were due to be paid to him by the other party to the proceedings. His misappropriation only came to light about a year later because of a police investigation. Even then, he did nothing to repay the money to his client for more than six months and initially he made no payment on account of interest.

151 Setting aside the imposition of a fine of $10,000 on the solicitor by the Legal Profession Disciplinary Tribunal, the Court ordered that he should be struck off. We consider the following passage (at p 12) in the judgment of Sheller JA, with whom Gleeson CJ and Handley JA agreed, to be of direct relevance to the present case:-

Even taking account of the fact that a further period of nearly three years has passed since the Tribunal's determination I remain of the opinion that the appropriate order now to be made is that the Solicitor's name be removed from the roll. To adopt the language of Handley JA in Dupal v The Law Society of New South Wales (unreported) 26 April 1990 at 20, the favourable aspects demonstrated by the character evidence cannot possibly obliterate the sad but fundamental fact that the Solicitor misappropriated the funds of the client and deceived the client and his partners. Like his Honour in that case I do not think the Court in this case could possibly be satisfied at this stage that the Solicitor's candour and contrition are any more than a virtue borne of present necessity and the inevitability of close scrutiny. I reiterate that this is not the case of a solicitor who on the spur of the moment misappropriated his client's money and then within a short time, overcome by remorse, made good the misappropriation. This is a case of premeditated and carefully planned misappropriation. The Solicitor's conscience was unmoved until the misappropriation was revealed by a police investigation and even then not moved immediately to make good the defalcation to the client.

152 In expressly distinguishing ‘the case of a solicitor who on the spur of the moment misappropriated his client's money and then within a short time, overcome by remorse, made good the misappropriation’ from the case with which he was dealing, his Honour clearly suggested that not every act of misappropriation by a solicitor of his or her client’s money will warrant removal of the solicitor’s name from the Roll. In our opinion, the importance that he attached to other aspects of the conduct of the solicitor in Bannister accords with the general approach adopted in the decisions on which Mr Singh relied.

153 The underlying proposition that must be borne in mind is, as Young CJ said in Prothonotary of the Supreme Court of New South Wales v P [2003] NSWCA 320 at [17], that ‘an order striking off the Roll should only be made when the probability is that the solicitor is permanently unfit to practice’. This question of fitness is to be determined at the present time, not at the time of the relevant misconduct.

154 We would not characterise the Respondent in this case as ‘a solicitor who on the spur of the moment misappropriated his client's money and then within a short time, overcome by remorse, made good the misappropriation’. The reason is that, as we interpret the evidence, his restoration of the $29,000 to Mr Shah occurred because Mr Shah asked for it, not on account of feelings of ‘remorse’ that he experienced.

155 Up to a point, however, this description does apply to the objective facts of the present case. In a number of important respects, the Respondent’s conduct was markedly different to that of the respondent in Bannister. These include the following (a) there is no evidence that his decision to misappropriate the amount remitted in the $10,000 cheque was premeditated; (b) his evidence that at the time he had no intention to retain the misappropriated funds permanently was not challenged (so that his conduct belonged within the third and least serious category of misappropriation, as described by Mr Singh – see [124] above); (c) his failures to maintain trust account records as required by the Act sprang from ignorance, not from a desire to cover up what he was doing; and (d) he complied as soon as was feasible for him with Mr Shah’s request for the $29,000 deposit to be applied towards a purchase of property being made by Mr Shah.

156 As Mr Singh argued, further matters which should be taken into account in the Respondent’s favour include the following: (i) according to the unchallenged opinion of Dr Nielssen, the Respondent’s depressive illness ‘was a substantial factor contributing to’ his misconduct; (ii) he co-operated with the investigators appointed by the Law Society; (iii) in his legal practice, he acted pro bono for numerous clients; (iv) it was probably partly due to this that the income earned by him in this practice was relatively low; (v) he displayed remorse and contrition when the true significance of his actions was brought home to him; (vi) his referees all believed that his misconduct was entirely out of line with his character and his normal behaviour; (vii) he admitted all the grounds alleged in the Application that we have found to be established by the evidence; and (viii) because of his age, a strike-off order would, we think, constitute ‘professional death’ for him.

157 There remain, however, some aspects of his behaviour that give cause for concern. These can be outlined as follows.

158 In the first place, his action in paying the $4,500 cheque into his general account was not ‘on the spur of the moment’. Instead, it is to be inferred that, having paid the $10,000 cheque into this account some days earlier and then made use of the proceeds, he took the $4,500 cheque to the bank with the intention of repeating this exercise. To this extent, his conduct was premeditated, although in his evidence he did not appear to acknowledge this.

159 Secondly, we do not characterise as a ‘red herring’ the issue of the bank teller’s refusal to pay the $10,000 cheque into the Respondent’s trust account. What is significant about it is that the Respondent, in his affidavit and in cross-examination, appeared to treat this refusal as providing a partial explanation for his engaging in misappropriation. This is the case even though he did not go so far as to say or imply that if the teller had permitted him to pay the cheque into his trust account no misappropriation would have occurred. Our attitude to this issue may be summed up by saying that we consider it relevant, and not to the Respondent’s credit, that in his evidence at the hearing he appeared to regard the teller’s refusal as relevant.

160 Thirdly, we consider that the Respondent overstated the significance of his unfamiliarity with trust accounting requirements. It is one thing for a solicitor to be ignorant, even woefully ignorant, of these requirements. It is quite another thing for a solicitor to fail to understand, let alone abide by, the elementary principle that funds received from a client and not duly owed to the solicitor (for example, for costs and disbursements) do not belong to the solicitor and may not be used as he or she thinks fit.

161 In summarising Mr Singh’s submissions at [146] above, we formulated one of them as follows: ‘[the Respondent’s] misappropriations were attributable not to ‘greed’ but to his misunderstanding, due to inexperience, of the rules governing trust accounts’. We do not accept the latter part of this submission.

162 Fourthly, we agree with Mr Boyd that the Respondent’s claim to have shown contrition is undermined, to a degree, by his delay in acknowledging formally that he had misappropriated trust monies. It was only in his Amended Reply, filed on 28 January 2010, that he did this. In earlier versions of his Reply, filed on 24 June 2009 and 27 November 2009, he denied this Ground of the Application.

163 A common theme underlies these four considerations, notably the last three of them. It is that the Respondent, through lack of understanding or reluctance to admit his wrongdoing or a combination of these, has been slow to come to terms, and may not yet have fully come to terms, with the nature and significance of this wrongdoing. It is well accepted that a finding to this effect counts against a practitioner when it is to be decided whether past misconduct warrants a striking-off order or some lesser penalty: see for example Law Society of New South Wales v Moulton [1981] 2 NSWLR 736 at 740-741, 751, 756-757 and 759.

164 Notwithstanding these concerns, we have come to the conclusion that the test to be satisfied if a striking-off order is to be made – namely, that ‘the probability is that the solicitor is permanently unfit to practice’ – has not been satisfied. The factors spelt out above at [155 – 156] outweigh, in our opinion, the concerns that we have just expressed. The public interest will be sufficiently protected if, as Mr Singh and indeed the Respondent suggested, the Respondent’s future right to practise as a solicitor is made subject to suitable restrictions.

165 We believe that this outcome accords with the principles stated by the Court of Appeal in Dupal and Bannister. It is also compatible with the orders, falling short of striking off, that were made by the Tribunal and other comparable bodies in the decisions described at [128 – 142] above. We will not engage in detailed comparisons, which are of limited value because each case depends on its particular circumstances, but will simply say that the seriousness of the conduct dealt with in all or most of these decisions was at a similar level to that of the Respondent’s conduct.

Our orders

166 At the conclusion of his written submissions on behalf of the Law Society, Mr Boyd proposed that if we did not make the striking-off order sought in the Application, but decided instead that the Respondent should be permitted to practise, any practising certificate issued to him should be subject to certain conditions. In his submissions, Mr Singh indicated that the Respondent accepted that these conditions were appropriate.

167 For the foregoing reasons, we consider that the Respondent should be permitted to resume practice, but subject to conditions such as Mr Boyd proposed. The order that we make on this matter embodies those conditions with some formal amendments.

168 We also consider that the wrongfulness of the Respondent’s conduct as alleged in Ground 3 warrants a reprimand. On the other hand, a fine is not appropriate, as the suspension of his practising certificate on 24 September 2007 has caused him to suffer significant financial loss

169 In the Application, the Law Society sought an order that the Respondent pay its costs. Under section 566(1) of the Act we are bound, since we found the Respondent guilty of professional misconduct, to make such an order unless we are satisfied that ‘exceptional circumstances’ exist. No such circumstances were identified in Mr Singh’s submissions; indeed, neither party’s submissions addressed the question of costs.

170 We make the following orders:-

1. The Respondent is guilty of professional misconduct as alleged in Grounds 1, 2, 3 and 5 of the Application.

2. Grounds 4 and 6 of the Application are dismissed.

3. The Respondent is reprimanded.

4. The Respondent is to be permitted, if he so wishes, to resume practice as a solicitor, but any practising certificate issued to him is to be subject to the following conditions:-

(a) He may only practise as the employee of a solicitor holding an unrestricted practising certificate.

(b) He is not to operate on an account of a solicitor which contains or may contain trust funds.

(c) He is to continue to take such medication for his depressive illness as may be prescribed by his treating general practitioner.

(d) He is to furnish to the Applicant every six months a certificate from his general practitioner confirming that he has continued to take such medication as directed.

(e) His employer is to be advised of these Orders and is to acknowledge in writing to the Applicant that he or she has been so advised.

5. The Respondent is to pay the Applicant’s costs of these proceedings as agreed or assessed.