SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Blackburn CJ, Connor and Davies JJ
27–30 November 1978, 13 August 1979
Headnotes
Legal practitioners — Professional misconduct — Powers of court — Object of disciplinary proceedings — Standard of proof — Breaches of Ordinance — Personal default — Trust moneys — Paid out without instructions — Invested without proper documentation — Paid to other clients — False or misleading trust account records — False and misleading statements to clients — (ACT) Legal Practitioners Ordinance 1970 ss 41, 42E, 51
A barrister and solicitor was the senior of three partners in a firm of solicitors practising in partnership in Canberra. He had the principal responsibility for the financial affairs and accounting procedures of the practice, and was regarded as the partner most expert in matters involving the investment of clients’ moneys.
During 1975 and 1976 there occurred a number of irregularities in dealings with clients and with client’s moneys. They arose out of the practitioner’s inability to handle the pressure of work which devolved upon him.
In three instances he caused payments to be made to clients, who were pressing him in relation to their own affairs, which were debited in the trust account ledger against moneys held by the firm in trust for the beneficiaries of an estate.
He paid to a client in a litigious matter moneys out of his own funds which the client understood to have been recovered from the defendant. He subsequently received money from the defendant in settlement of the client’s claim. He caused payments to be made to two other clients, which were debited in the trust account ledger to the moneys so held on behalf of that client.
In three instances payments were made to clients in advance of moneys being received into the trust account against which the payments might be debited. The trust account records did not accurately reflect the true position about the payments.
Moneys held on behalf of clients were invested on a number of occasions without instructions, without security, and without informing the client of the investment or its terms.
He gave false and misleading information about their affairs to a number of clients and to solicitors acting for a former client.
He had been admitted to partnership in 1967. There was no evidence of any misappropriations during 1977 or 1978. The misappropriations were small in relation to the overall size of the trust account. The practitioner at all times had a reasonable prospect of repaying clients.
Held: (i) The court has inherent power to deal with the misconduct of practitioners, in addition to the powers provided in s 41(1) of the Legal Practitioners Ordinance 1970. The inherent power extends beyond the power to strike off and suspend.
Ex parte Attorney-General (Cth); Re a Barrister and Solicitor (1972) 20 FLR 234, referred to
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(ii) The object of disciplinary proceedings is the protection of the public and the maintenance of proper standards in the profession, not punishment or retribution. The test to be applied is whether the person charged is a fit and proper person to remain a member of the profession.
Harvey v Law Society of New South Wales (1975) 49 ALJR 362, per Barwick CJ at 364 ; 7 ALR 227 at 230;; Ex parte Attorney-General (Cth);; Re a Barrister and Solicitor (1972) 20 FLR 234, per Fox, Blackburn and Woodward JJ at 243–4, applied
(iii) The standard of proof in disciplinary proceedings is according to the civil onus, taking into account the gravity of the facts to be proved.
Ex parte Attorney-General (Cth);; Re a Barrister and Solicitor (1972) 20 FLR 234 at 246, applied
(iv) The mere fact that a breach of the ordinance has occurred is not alone sufficient to establish professional misconduct. Professional misconduct involves personal default on the part of the practitioner, whether it be a deliberate wrongful act or negligence personal to him.
Re Mayers and the Legal Practitioners Act [1974] 1 NSWLR 19 and; Re a Solicitor [1960] VR 617, referred to
(v) The practitioner had been personally responsible for the breaches of s 51(2) of the Legal Practitioners Ordinance 1970.
(vi) His conduct in relation to those breaches amounted to serious misconduct.
(vii) His conduct in failing to take reasonable steps to protect the interests of a client, whose moneys were being invested on loan, by proper documentation and entries in the trust account records constituted punishable misconduct.
(viii) His conduct in giving false and misleading information to clients and to solicitors for a client constituted punishable misconduct.
(ix) The nature of the practitioner’s misconduct was so grave that he was not a fit and proper person to practise, and it was necessary for the maintenance of the standards of the profession that his name be removed from the roll.
Notice of Motion
These proceedings were commenced by notice of motion on behalf of the Law Society of the Australian Capital Territory that a barrister and solicitor show cause why he should not be dealt with for professional misconduct following the determination of a number of questions set out in the notice of motion. The proceedings in fact proceeded as a motion that the practitioner be dealt with for professional misconduct. Details of the misconduct alleged are set out in the judgment.
ALAN HOGAN
BARRISTER-AT-LAW
I A Curlewis, for the Law Society of the Australian Capital Territory.
J Faulks, for the barrister and solicitor.
Cur Adv Vult
Blackburn CJ, Connor and Davies JJ.
On the completion of his law course, Peter Noble Guild undertook employment in the firm of solicitors of which Mr J J A Kelly and Mr J D Dainer were then the
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partners. In 1965, Mr B R Gallen was admitted to partnership. In November 1966 Mr Dainer retired and, in February 1967, Mr Kelly also retired. In 1967 Mr Guild was admitted to partnership; in 1968 Mr K J Johnston was admitted to partnership and, on 1 July 1973, Mr M A Somes was admitted to partnership. On 31 January 1975 Mr Gallen retired from the partnership, leaving Mr Guild as the senior member of the partnership which was then known as Gallen, Guild & Johnston. Mr K J Johnston retired from the firm on 31 December 1977. Mr Guild attended to all types of legal work, but developed a particular reputation as a commercial lawyer. For many years he had the chief carriage of the financial affairs of the practice and was the person in the practice who gave most attention to the investment of moneys for clients.
In 1977, the auditors of the firm’s trust account raised a number of queries respecting matters relative to the trust account. Mr Guild answered these queries and an unqualified audit certificate was granted. Subsequently, in 1978, during Mr Guild’s absence on holidays, Mr Somes ascertained that there were irregularities in the firm’s trust account. These matters were brought to Mr Guild’s attention and, on 22 or 26 May 1978, Mr Somes dissolved his partnership with him. On 24 May 1978, solicitors for Mr Guild wrote to the President of the Law Society of the Australian Capital Territory that: “Our client believe he has been responsible for breaches of the Legal Practitioners Ordinance.” The letter set out matters respecting clients Larsen, Dow, Mangan, Bradbury and Mosely. The letter concluded:—
E. General
(1) Our client obtained no personal monetary gain from any of the transactions.
(2) Our client has now dissolved his partnership with Mr Somes.
(3) Our client hereby surrenders his unrestricted practising certificate and seeks the issue to him of a restricted certificate until the 30 June 1978.
(4) Our client subject to the issue of the restricted certificate intends to be employed by his former partner and any new partner Mr Somes may take solely for the purpose of assisting in the transition period following the dissolution.
(5) Our client does not propose to renew his restricted practising certificate after the 30 June 1978.
(6) Our client has advised us of the other matter pending before the Disciplinary Committee of the Society on the 4th August 1978, but as yet we have no detailed instructions about this.
(7) Our client is aware of the gravity of his offences and realizes that they are matters which will be dealt with by the Supreme Court.
(8) Should the Society think it appropriate our client is prepared to have these new matters dealt with by the Disciplinary Committee on the 4th August, 1978 on the basis that a report be made, by consent, to the Court on that day.
(9) It seems likely that the other matter might be similarly treated after we have had a chance to look at it.
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(10) We are assured by our client that he is not aware of any other breaches of the Legal Practitioners Ordinance by him and that in all other respects the trust account of his firm is in order.
(11) We are instructed that by the close of business today we shall have sufficient funds deposited in our trust account by our client to pay the principal and interest due to both Mrs Dow and Mrs Larsen.
No practising certificate, restricted or otherwise, was granted to Mr Guild for the remainder of the 1978 year or for the year ended 30 June 1979. On 31 May 1978 the President of the Law Society requested Miss Jean Sayer, a chartered accountant, to examine and report upon the trust account of the firm in respect of the period from 1 January 1973. On 21 June 1978 Miss Sayer reported a number of irregularities which she had found in the trust account, including irregularities other than those mentioned in the letter of disclosure from Mr Guild’s solicitors to the President of the Law Society. Miss Sayer reported a deficiency in the trust account of $14,277.12. Shortly thereafter, this sum was made good out of moneys due to Mr Guild on the dissolution of the partnership. Subsequently, application was made to this court by the Law Society of the Australian Capital Territory that Mr Guild be dealt with for misconduct.
Before turning to the terms of the notice of motion, it is convenient to deal with relevant aspects of the facts. Mr Gallen has said on affidavit that Mr Guild was “… loyal and diligent in his work and worked tremendously hard…. He was well liked by the staff and by clients and was a person for whom I had the highest respect and regard…. I believe that Mr Guild has been a dedicated lawyer and that he has worked assiduously for the benefit of his clients and for the development of his practice.” An affidavit from Mr Eric Condos, a businessman, filed in these proceedings, states that: “I have found Mr Guild to be a man who is very conscientious, dedicated to his profession and a person who is held in very high esteem by his clients and others who know him.” An affidavit by Trevor Leonard Jobling, public servant, said: “I have the utmost confidence in his integrity and honesty.” It may be noted, however, that these were the only affidavits as to competence which were filed in these proceedings. We accept from them that Mr Guild was reasonably well-regarded and generally competent. Nevertheless, in this type of disciplinary proceeding, we would have expected a greater number of affidavits as to competence and reputation to be filed had Mr Guild a sound reputation in the profession of this Territory. It is, indeed, clearly established that he was dilatory in attending to the affairs of many of his clients. Mr Gallen said in his affidavit filed in these proceedings:—
Not long before I left it was my opinion that possibly Mr Guild was undertaking too much work and I had suggested to him that he should share some of the work load.
However, Mr Guild assured me that he was able to cope with the work both within office hours and by working at home.
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17. After I went to the Bar I was from time to time briefed by Mr Guild’s firm and I did notice that there was a deterioration in the quality of the work that was coming to me.
It seems that it was this feature of Mr Guild’s work which was the primary cause of the problems which now confront him. It seems that, as a consequence of his inefficiency in dealing with his clients’ affairs, Mr Guild deceived clients and his partners and, from his own funds and from funds held on behalf of other clients, paid to clients moneys which the clients expected to receive from the proper prosecution of their affairs.
An example of Mr Guild’s procrastination and deceit may be seen in the action handled by Mr Guild on behalf of Monaro Mix Specified Concrete Pty Ltd, of which company Mr Ian Robert McPherson and his father, Mr Donald McPherson, were directors. In relation to this matter, we prefer and accept the evidence of Mr Ian and Mr Donald McPherson and of Mr A C Hain, their employee, to that of Mr Guild. In February 1976 instructions were given to Mr Guild to commence an action in the name of Monaro Mix Specified Concrete Pty Ltd against two defendants. A writ was issued on 23 February 1976 and was served on the same day. An appearance was entered on 27 February and a defence was filed on 8 March 1976. A reply was filed on 16 March 1976 and a memorandum of close of pleadings was filed on 30 March 1976. A summons for directions was issued on 14 April 1976 and an order for directions made on 28 April 1976. Thereafter, effectively, nothing occurred in the prosecution of the action and Messrs I R and D McPherson were misled by Mr Guild as to its progress. During September, October, November and December 1976, inquiries were made as to a date for hearing. Various explanations were given for the lack of a date including the explanation that “because of a huge backlog of cases a hearing date would not be available until February 1977”. In mid-February 1977, Mr Guild falsely informed Mr Ian McPherson that the matter had been set down for hearing in March 1977. A fortnight later, Mr Guild informed Mr Ian McPherson that neither Mr McPherson nor his father would be required to attend a hearing “as both defendants had ‘shot the sponge in’”. In April 1977, Mr Guild falsely informed Mr Donald McPherson that judgment had been signed. Subsequently, Mr Donald McPherson discussed with Mr Guild the oral examination of the defendants and the undertaking of bankruptcy proceedings against them. In August 1977 Mr Guild informed Mr McPherson of a date and time when the oral examination was to take place. Mr McPherson attended the Supreme Court on that date. He did not see the defendants, but saw Mr Guild at the court. Mr Guild told him that neither defendant had appeared for examination and that a bench warrant would be issued for their arrest. On 22 September 1977, Mr Guild informed Mr Hain, an employee of the plaintiff, that settlement in full, plus interest, would be made on 15 October 1977. We need not proceed further with the details of this matter. In fact, the
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action had not proceeded since the middle of 1976 because, apparently, there was thought to be some defect in the statement of claim. Whatever the defect was, it was not attended to and the action remained dormant. A notice of intention to proceed was filed on 7 October 1977 but no effective progress was made. In a letter of 26 October 1977 to Messrs Snedden, Hall & Gallop, solicitors who had been asked by the McPhersons to investigate the progress of the action, Mr Guild wrote: “Because of the advice received from Mr Kelly of counsel consideration had to be given as to whether there was any further amendment necessary to the statement of claim and an amended draft statement of claim was submitted to senior counsel to settle but he indicated that he did not propose to settle the matter and returned the amended statement of claim. There would still remain some doubt as to the statement of claim which was previously settled by counsel.” This letter gives no adequate explanation for the inexcusable delay. No adequate progress was made in the action after the middle of 1976 and, thereafter, Mr Guild misled his clients as to the progress of the action, even to the extent of advising that judgment had been entered.
The evidence of Mr Guild on this matter contradicted that of Mr I R McPherson, Mr D McPherson and the employee, Mr Hain, on most material aspects of the matter. Mr Guild said in summary: “I think that originally Mr Smith from the office was doing the work and then at a later stage they contacted me at different times and I indicated to them the stage we had then reached and indicated, I think, at one stage, as I have said in the affidavit, that it might have been possible to set it down at a time when another case would be taken out of the list, and then indicated that it would not be set down then and indicated that I would have to do some work in relation to looking up the amended statement of claim situation.” Whenever there is a conflict between the evidence of Mr I R McPherson, Mr D McPherson and Mr Hain on the one hand and of Mr Guild on the other, we prefer and accept the evidence of the former rather than that of Mr Guild. In particular, we accept that Mr Guild was the solicitor handling the action for the plaintiff, as far as the McPhersons were aware, that the delay in prosecution of the action was inexcusably long and that Mr Guild gave explanations for the delay which were not true.
The above is but one example of Mr Guild’s inability to handle the affairs of all his clients promptly and efficiently. Ultimately, no doubt because he was embarrassed, he paid out of his own moneys, and out of moneys held on behalf of others, moneys which his clients were expecting that he would obtain for them in the proceedings in which he was acting as their solicitor. Mr Guild has estimated, and we accept that, before the irregularities in the trust account had been found by his partners, he had paid to his clients out of his own moneys approximately $30,000 to $40,000 in advance of the finalization of their affairs. In addition, trust moneys held for clients were used to satisfy others of his clients.
Before turning to consider particular transactions, we should mention that some of the firm’s trust account ledger cards were maintained so as
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to disclose the moneys received and paid on behalf of a particular client. Others were maintained so as to disclose the manner in which moneys relating to a particular transaction had been dealt with. The former is clearly a satisfactory means of recording trust account entries, for, by looking at a trust ledger so kept, it is possible readily to ascertain the position in relation to the trust moneys of any particular client. It is not necessary to search through a number of transaction ledger cards and perhaps the transaction files to ascertain the client’s position. The latter may be a satisfactory means of recording dealings in a trust account, provided that no moneys are recorded in the account which are not relevant to the particular transaction. In these proceedings, it was not argued that the method was not proper. The Gallen, Guild & Johnston ledger cards normally recorded receipts and payments in relation to particular transactions. However, some ledger cards recorded transactions which had no relationship to the transaction with which the card commenced and, occasionally, recorded receipts or payments of moneys on behalf of clients whose names did not appear at the head of the card. It should be noted that Mr Guild was the partner in the firm who had particular responsibility for supervision of the accounting system of the firm. Thus, in answer to the question who had general responsibility for supervision of the accounting system, Mr Guild said: “Well, I had generally helped in relation to that and basically I did most of that.”
We turn now to consider matters which occurred in the affairs of clients:—
(a) Mr Paul Dick
Mr Guild commenced an action for personal injuries on behalf of Mr Paul Dick. Interlocutory judgment was entered on 30 November 1972. Thereafter, in July 1976, to placate his client, Mr Guild caused $1200 to be paid to Mr Dick from the firm’s trust account and arranged that the sum be debited to his own personal ledger card in the trust account as “P Dick — Re Loan from P Guild”.
Subsequently, in September 1976, at a time when the action had not, in fact, been settled, Mr Guild informed his client that the action had been settled for an amount which effectively was the amount sought by Mr Dick. As Mr Dick was content with that result, Mr Guild arranged that he be paid. $16,000 was paid to Mr Dick on 17 September 1976 out of the firm’s trust account. On the instructions of Mr Guild, this sum was debited in the ledger to Mr Guild’s own account. The entry put that account into debit as there was then only $15.09 standing to its credit. We shall deal with this aspect of the matter subsequently. A further $3500 was debited to trust moneys held on behalf of the Estate of Sutcliffe, Deceased. We shall deal with this matter subsequently. The balance to be paid to Mr Dick ($15,000) was represented by moneys which had been paid into court by the defendant in the action. Without disclosing to the court that he had informed his client that the action had been settled for a much larger sum, Mr Guild obtained an order that the
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sum of $15,000 paid into court be paid out to the solicitors for the plaintiff. This sum was paid into the firm’s trust account. However, prior thereto a cheque for $15,000 was paid to Mr Dick out of the trust account. The cheque which effected the defalcation did not pass through the usual accounting procedures but was obtained by Mr Guild in blank form from the book-keeper and was personally written out by him. A trust ledger card entitled, “Dick, Paul re Supreme Court Action” was opened showing a debit of $15,000 paid to Mr Paul Dick on 13 October 1976. The date was incorrect. The cheque was actually presented for payment and paid on 1 October 1976. In any event, whichever date be adopted, the account was placed in debit by this entry. On 14 October 1976, the account was credited with $15,000 being the moneys in court as mentioned above.
Mr Guild said, in evidence, that he informed his client that the action had been settled, “because there had been some delay on my part in handling the thing and [there] had been discussions with him and I told him that in an effort to finalize it and not to cause any further concern for him”. Mr Guild said he had no authority from Mr Dick to settle the matter for less than the amount he had informed Mr Dick. He said that he had to borrow money to pay the amount which was paid out of his own funds to Mr Dick. Mr Guild said that a reasonable assessment of Mr Dick’s claim “would have been $20,000 to $25,000”. He arrived at the sum he had specified to Mr Dick, “after discussions with him as to what he wanted to receive from the settlement”.
In an affidavit filed in these proceedings, Mr Guild said: “I deny in any way that I attempted to falsify the records of the trust account and believe that I gave the book-keeper full details of what had been done. … The notice of acceptance of the payment into court was authorized by me as soon as I discovered that the money had not been paid into trust.” The book-keeper did not give evidence to the court, nor did she make any statement to Miss Sayer. She left the employ of the firm shortly after the defalcations in the trust account had been brought to light. This court does not have before it clear evidence showing how the defalcation and the incorrect entry on the ledger card came about. No instruction vouchers were tendered in evidence. However, it may be noted that Mr Guild had general supervision of the accounts of the firm, Mr Dick was his client and the transaction arose out of his action in informing Mr Dick that he had settled his action when he had not in fact done so. Moreover, the cheque for $15,000 was personally written out by him, not by the book-keeper.
(b) Mrs M A Larsen
On 21 June 1973, a sum of $4000 held in the trust account on behalf of Mrs M A Larsen was lent, together with $8000 held on behalf of another client, Mrs E M Briant, to Mrs S E Lobelson on mortgage. The property the subject of the mortgage was sold on 16 January 1975 and the mortgage was discharged. The settlement moneys were credited to a trust ledger account entitled “Lobelson sale to Pearce”. Of these moneys, $4227.12 was due to Mrs Larsen, though this was in no way
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disclosed by a trust ledger card. On 30 May 1975 there was an investment of $4200 with Canberra Holdings Pty Ltd debited to the “Lobelson sale to Pearce” account. The particulars stated “Canberra Holdings Pty Ltd, Four thousand two hundred dollars … Auth PNG. (Peter Noble Guild)”. On 18 September 1975 this advance, together with interest, totalling in all $4355.57, was re-paid and credited to the “Lobelson sale to Pearce” account. On 9 October 1975, there was credited to the account a sum of $5000 described as “Civic Co-op Perm Build — re Marie C Guild and H G Rumble”. Out of the credit of $9382.69 then standing to the credit of the “Lobelson sale to Pearce” account, $9000 was paid to Mr H G Rumble. The particulars were given “H G Rumble Nine thousand dollars”. This payment of $9000 was made to him in respect to the costs of Riverbank Pty Ltd which we shall later mention. Plainly, this was a defalcation for which Mr Guild was responsible. The funds held for Mrs Larsen can be traced to the credit entry in the “Lobelson sale to Pearce” account. They were misappropriated by Mr Guild and paid to Mr H G Rumble, a client of the firm who was pressing Mr Guild for action in relation to an order for costs which Riverbank Pty Ltd had obtained against a defendant. In an affidavit filed in this matter, Mr Guild said: “I intended that the moneys to Mrs Larsen should be repaid after the payment [of] costs in the matter of Rumble.” In his oral evidence, he said that he had no authority from Mrs Larsen to take the money and that his attitude was “that effectively it was a loan to me and that I would repay Mrs Larsen in full together with interest in relation to it”. He said that no document was executed evidencing the loan from Mrs Larsen to himself and that he had anticipated paying interest equivalent to what was then the going rate for building society money. We accept that Mr Guild intended and reasonably expected to repay to Mrs Larsen her entitlement in due course. Nevertheless, what occurred was a fraudulent misappropriation of trust moneys. Mr Guild’s case to this court is not assisted by the several references in his evidence to his having regarded the misappropriated moneys as loans to him, which, plainly, they were not.
It was also put against Mr Guild that the investment of $4200 with Canberra Holdings Pty Ltd on 30 May 1975 was improperly made and insufficient care was taken to protect Mrs Larsen’s interests. Mrs Larsen was Mr Johnston’s client. It appears that the moneys had been left with him on the footing that they would be invested on mortgage. Mr Guild denied, and there is no evidence to contradict his denial, that he was aware of that instruction. Mr Guild said that his recollection was that he had discussed with Mr Johnston the fact that Canberra Holdings Pty Ltd wanted a short-term loan and the possibility of Mrs Larsen’s money being used for that purpose. Mr Guild said that his recollection was that the moneys were available for it. In cross-examination, Mr Guild conceded that mortgage documents between Canberra Holdings Pty Ltd had been prepared but not executed and that it appeared that “… it was the intention of everyone that the loan should have been secured”. In cross-examination, Mr Guild conceded that Canberra Holdings Pty Ltd was not, at the time, the registered proprietor of the land the
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subject of the mortgage documents. No document, either of loan or of security, was executed as between Canberra Holdings Pty Ltd and Mrs Larsen. In the circumstances, we conclude that Mr Guild was responsible for the investment and that, whether or not he understood that Mrs Larsen’s instructions were to invest her moneys on mortgage, he took insufficient steps to protect her interests and to ensure that the investment was made with her authority. In coming to this conclusion, we take into account the fact that the $4200 was debited to the “Lobelson sale to Pearce” trust ledger card which, on its face, disclosed no interest of Mrs Larsen in that investment. The debiting of $4200 to the “Lobelson sale to Pearce” trust ledger card and the lending of the moneys to Canberra Holdings Pty Ltd, without the execution of any document of loan or document of security and without the express approval of Mrs Larsen, was not, in our view, a proper means of dealing with the moneys which Mrs Larsen had left with the firm for investment on her behalf.
On 28 July 1977 Messrs McKoy, O’Sullivan & Clemens, the New Zealand solicitors for Mrs Larsen, who then lived in New Zealand, wrote to Messrs Gallen, Guild & Johnston as follows:—
We act for Mrs Larsen in Rotorua and we understand that she has some funds invested through your firm on mortgage.
For some years Mrs Larsen advises that she has not received any statement or reports from you and she is uncertain as to exactly what arrangements were made for disposal of interest under the mortgage etc.
We would be grateful if you could sort out the situation and prepare at least a summary statement as to what has happened to the investment and the interest and forward it to us so that we can appraise our client of the situation.
No answer was received, and the New Zealand solicitors wrote again on 6 September 1977. Mr Guild responded on 23 September 1977 and said: “We refer to your letter of the 6th September 1977 and would advise that Mrs Larsen’s money had been placed on investment by way of mortgage.” This letter was misleading in that, since Mrs Lobelson had repaid the mortgage moneys due by her, Mrs Larsen’s funds were not invested on mortgage and, at the time of the letter, Mrs Larsen’s funds were not invested at all, but had been misappropriated. In his evidence to this court, Mr Guild said that he regarded himself as having borrowed the funds and that, in his view, his letter was not misleading. In our view, the letter was a dilatory response to the request first made on 28 July and was deliberately misleading. It will be noted that the letter stated that Mrs Larsen’s money “had been placed on mortgage” which was strictly accurate. Nevertheless, it was an entirely misleading response to the enquiry. In evidence, Mr Guild said that he could not remember whether the word “had” was merely a misprint of “has” or whether it had been deliberately inserted in the letter. Whichever be the case, Mr Guild’s letter was a slow response to the enquiry, was misleading to the recipient solicitors and to Mrs Larsen and failed to disclose that Mr Guild had misappropriated the trust funds held for Mrs Larsen.
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(c) Estate of Sutcliffe, Deceased
Gallen, Guild & Johnston acted for the executors of the Estate of Sutcliffe, Deceased. In the middle of September 1976, the firm held $23,806.26 for beneficiaries, being three children of the late Mr Sutcliffe. The beneficiaries were under age and in the care of their mother, Mrs G M Dow. Mrs Dow and the executors were clients of Mr Johnston but, as we have mentioned above, Mr Guild was the partner in the firm who particularly concerned himself with investment of trust moneys. On 21 October 1976, on the instructions of Mr Guild, a sum of $4300 and a further sum of $1000 were invested in the Public Service Employees’ Credit Union in the name of another client, Mrs S K Graf. These sums were debited to the funds held for the beneficiaries of the Sutcliffe Estate. The payments made to the Public Service Employees’ Credit Union were misappropriations of moneys held in trust. In relation to this matter, Mr Guild said, in an affidavit filed in this court, that “… these moneys would have been repaid when the settlement of that [the Graf] matter had been completed … and that I regarded the moneys taken as being a loan to me which would be repaid with interest when the other funds became due”. In evidence, Mr Guild said that there had been delay in the making of an application to the Supreme Court of Papua New Guinea on behalf of Mrs Graf and that he told her he had obtained an advance from the defendant in the action in which she was concerned.
Mr Guild said in evidence that he had spoken to Mr Johnston about advancing moneys from the Sutcliffe Estate to his, Mr Guild’s wife, on mortgage, and said: “I suppose that is when I took over the matter.” He was told by Mr Johnston that there was $23,800 in the trust account for investment. There was a discussion about the $12,000 which Mrs Guild wished to borrow and Mr Guild’s recollection was that the balance of the trust funds “could be put in a savings account or a building society account”. Mr Guild did not himself see Mrs Dow. Mr Guild did not make any attempt to advise Mrs Dow where the money was invested or of the interest that was received. He said of the sums totalling $5300 invested in the name of Mrs Graf: Basically that was a loan to me on which I would be required to pay moneys to Mrs Dow in due course.”
On 21 October 1976, $6506.26 was deposited with the Civic Co-operative Building Society in the name of Mrs Dow. We are satisfied the proper attention was not given to the interests of the infant children. Mr Guild took over responsibility for the investment moneys. It does not appear that he consulted the will to ascertain the terms upon which the trust funds could be invested or the executors or Mrs Dow to ascertain from them what, in all the circumstances of the case, would be an appropriate investment. Nor, having taken over the investment of trust funds, did he advise the executors or Mrs Dow as to the manner in which those funds had been invested.
On 26 October 1976, a sum of $3500 was paid to Mr Paul Dick, for the reason we have already mentioned. This sum was debited to the funds held on behalf of the Estate of Sutcliffe, Deceased. The default was met by a payment into the account on 29 October 1976 of $3595.
(1979) 32 ACTR 13 at 24
This sum was paid from Mr Guild’s own personal funds. In evidence, Mr Guild said: “My recollection was that I had paid the money in the same day the cheque was drawn. … I believe that I would have given the withdrawal slip and the bank book at the same time [as drawing the cheque].” It should be noted, however, that Mr Guild was the person in the firm who engaged in the task of investing the trust funds of the Sutcliffe Estate, and Paul Dick was his client. This transaction should have had nothing whatever to do with the Sutcliffe trust funds. It was Mr Guild’s duty to exercise general care and responsibility over the whole of the trust account and in particular to ensure the proper maintenance of the trust accounts of the clients for whom he acted. This he did not do.
The balance of the moneys held on behalf of the Estate of Sutcliffe, Deceased, together with moneys of Mr and Mrs Guild which were paid into the trust account and credited to the ledger card in which the Sutcliffe Estate moneys were recorded, which was headed “Dow G. Sale to AAESDA”, were paid out to F & G Nanninga in repayment of moneys which had been borrowed by Mrs Guild. It was put on behalf of the Law Society that this was not a disbursement according to the instructions of the person or persons for whom the money was deemed to be held in trust. A mortgage document recording a loan of the $12,000 was executed by Mrs Dow as mortgagee and Mrs Guild as mortgagor. It was put on behalf of the Law Society that Mr Guild did not advise Mrs Dow or the executors to seek independent advice in respect of the advance made to Mrs Guild. The execution of the mortgages between Mrs Dow and Mrs Guild is inconsistent with the information before the court that the estate was held for the three infant children. This aspect was not, however, pursued by counsel for the Law Society and we do not concern ourselves with it. There is no sufficient evidence before the court that Mrs Dow did not authorize the loan and there is no sufficient evidence before the court to conclude that Mrs Dow was not given proper advice by Mr Guild. In an affidavit filed in this matter, Mr Guild said: “At no time did I have discussions with Mrs Dow in relation to the original advance in respect of the loan. … I believe that Mrs Dow, who is Mr K Johnston’s client, had spoken to her and received the necessary instructions about the advance to be made. The advance was made by way of mortgage over the property referred to in the said notice of motion which is now contracted to be sold and the loan will be paid out in full together with all interest payments from the proceeds of the said sale.”
In his oral evidence, Mr Guild said: “I had a discussion with Mr Johnston concerned about advancing moneys by way of mortgage to my wife. … I cannot recall the exact words but the effect of it was eventually either he — I think he suggested it — or somehow it was agreed — that Mrs Dow might be a person who was prepared to lend money. … I understood that the instructions were that the $12,000 mortgage amount was to be placed on — could be placed on the mortgage in respect of the property which my wife owned and that the balance was to be placed in a Civic Co-op Society account or a building
(1979) 32 ACTR 13 at 25
society account or something of that nature.… I do not think I have spoken to Mrs Dow at all, except maybe on one occasion when she rang to ask could the interest payment cheque be paid either at home or somewhere else.”
In an affidavit filed in this matter, Mrs Dow has stated:—
However, the evidence before the court is that a document of mortgage dated 31 October 1976 was executed. Therefore, Mrs Dow’s recollection may, in this respect, be inaccurate. The evidence before the court does not show that Mr Guild acted in this matter other than as solicitor for his wife. Although Mr Guild said that, after discussing the possibility of the mortgage loan of $12,000, he had taken over the matter, the evidence does not show that he personally had any communication with Mrs Dow until after the mortgage document had been executed. A person in the firm other than Mr Guild may have dealt with Mrs Dow in relation to this matter. The evidence does not justify the conclusion that Mr Guild was guilty of any professional misconduct in relation to this.
(d) Mr W H Mangan
On a number of occasions, Mr Guild had handled the investment of funds on behalf of Mr W H Mangan. On each occasion prior to the subject transaction, Mr Mangan signed a document of loan. In November 1973 Mr Mangan received a cheque for a little over $4000, being repayment of moneys due to him plus interest. Shortly thereafter, Mr Guild telephoned him and said that he could reinvest the moneys. Mr Guild sent a clerk to Mr Mangan’s place of work and received the cheque from him. That cheque for $4042.57 was banked into the firm’s trust account and was lent out thereafter to a Mr Lopilato. There was a dispute between the Law Society and Mr Guild as to whether the loan to Mr Lopilato, which was unsecured, was authorized by Mr Mangan. The evidence that it was not authorized is not strong and we are not prepared to make a finding adverse to Mr Guild in this respect. However, the evidence before the court is that no document of loan was executed. Moreover, Mr Mangan was not advised of the making of the loan to Mr Lopilato or of the terms of the loan, though subsequently he received a trust account cheque for $42.57 representing interest and a slip of paper with hand-writing indicating that the sum was interest to date on a loan of $4000 at 12 per cent to Mr Lopilato. Later, there were difficulties in recovering the loan from Mr Lopilato and much of the sum due to Mr Mangan was made good to him by Mr Guild out of his own funds. Mr Mangan was called to give evidence and said: “I have never made any complaint about Mr Guild or the firm because they have always dealt with me pretty well.” In our opinion, it is proper to conclude from the evidence that, in making the investment on behalf of Mr Mangan, Mr Guild failed to exercise the care expected of a solicitor in that he failed to ensure that the loan was properly documented and that his client was informed fully of the transaction which had occurred.
(1979) 32 ACTR 13 at 26
(e) Mrs S K Graf
Mr Guild handled proceedings in which a claim for compensation was made in the Supreme Court of Papua New Guinea by Mrs Sheila Kathleen Graf on behalf of her children. The claim was settled in 1975 but moneys paid into the Supreme Court of Papua New Guinea could not be released save with the approval of the court. No application for approval of the settlement and for payment out of the moneys was made. To satisfy his client, Mr Guild arranged for certain payments to be made out of the firm’s trust account on behalf of Mrs Graf. On 5 October 1976, a sum of $4000 was debited to his own account in the trust ledger and, on 21 October 1976, one sum of $4300 and a further sum of $1000 was debited to the trust ledger account of the Estate of Sutcliffe, Deceased. These sums were paid out for the benefit of Mrs Graf. In evidence, Mr Guild said that originally he did not have the carriage of the Graf claim, it being handled at first by another firm of solicitors, but that, when it was handled by Gallen, Guild & Johnston, he was the person in that firm who had the carriage of it. Mr Guild said that there was delay in making the application to the Supreme Court of Papua New Guinea for approval of the settlement and that: “The main delay was on my part.” The dates do not appear in the evidence save that the claim was settled in 1975 and that payments were made on behalf of Mrs Graf by misappropriating moneys held on behalf of the Estate of Sutcliffe, Deceased, in October 1976. We conclude from the fact that there was misappropriation of trust funds, that there was undue delay in the prosecution of the claim to the extent that Mr Guild had become extremely embarrassed by it.
(f) Mr H G Rumble
On the instructions of Mr H G Rumble, Mr Guild handled an action for Riverbank Pty Ltd against the Commonwealth of Australia. On 28 October 1974 an order for costs was made in favour of Riverbank Pty Ltd in the action. On 12 February 1975 Mr Rumble paid $12,000 to the firm to cover certain disbursements. Subsequently, to satisfy Mr Rumble, at a time when no bill of costs had been prepared to taxation, Mr Guild arranged with Mr Rumble that there would be paid to Mr Rumble $9000, representing what he estimated would be the costs receivable from the Commonwealth of Australia, and that the firm would be entitled to retain the total amount recovered from the Commonwealth of Australia when the bill of costs had been taxed. The sum of $9000 paid to Mr Rumble on 9 October 1975 was met in part by a debit to the trust funds held by the firm on behalf of Mrs M A Larsen.
(g) Mr P Bradley
Mr Guild had the conduct of a claim on behalf of Mr P Bradley. In September 1975 Mr Guild informed Mr Bradley that the claim had been finalized. He arranged that Mr Bradley receive a cheque for $1368 from the trust account. This sum satisfied Mr Bradley’s claim. The court was not asked by the Law Society to consider the circumstances in which that payment of $1368 was made. We assume that the $1368 was paid out of
(1979) 32 ACTR 13 at 27
funds held in the trust account for Mr Guild. Subsequently, a sum of $750 was received on 15 July 1976. It was paid into the trust account and a ledger card was opened in the name “Bradley re Boast”. The sum was recorded as “Verdic(t) Moneys”. Mr Guild was unable to recall whether the $750 was money which had been paid into court on behalf of Boast or whether he had settled the claim for that sum. He said that he, Mr Guild: “Regarded it in part, I suppose, as mine, incorrectly.” In law, the moneys were Mr Bradley’s moneys and were received by the firm on his behalf, notwithstanding that Mr Guild had paid him the $1368 in September 1975. The moneys were correctly recorded on the trust ledger card as Mr Bradley’s moneys but, presumably, Mr Bradley was not informed of their receipt. On 16 July 1976, on instructions of Mr Guild, a sum of $500 was paid to Mrs M A K McGeogh and debited to these moneys and, on 27 July 1976, the balance of $250 was paid to P & E Marinolli. These payments were misappropriations of money held by the firm for Mr Bradley which Mr Guild wrongly treated as his own.
(h) Mrs Bradbury and Mr and Mrs Mosely
Mrs Bradbury and Mr and Mrs Mosely at different times lent money to Mr and Mrs Guild to be secured on mortgage. The Law Society has raised matters in relation to these two transactions, firstly, that the clients were not advised to obtain independent advice in relation to the transactions and, secondly, that there was undue delay amounting to professional misconduct in attending to certain mortgage documents. However, the evidence presented in relation to these matters is inadequate to enable the court to form a conclusion that there was professional misconduct in either of these respects.
(i) Mrs Caramanico
On 9 October 1975 $6000 was advanced by Mrs Caramanico to Mrs P E Strik. The Law Society alleges that Mr Guild was guilty of undue delay amounting to professional misconduct in failing to take action to call up the loan and that Mr Guild was guilty of professional misconduct in that he failed to adequately protect the interests of Mrs Caramanico in relation to the loan. However, there is inadequate information before the court to enable the court to draw a conclusion that Mr Guild was responsible for neglect in either respect in relation to this matter.
(i) Mrs McGeogh
A trust ledger card entitled “R T McGeogh. Re paintings” discloses the receipt of a payment of $2500 on 29 March 1976, and payments, $1700 to M A K McGeogh on 29 March 1976, $500 to A Dambrosio on 8 April 1976 and $300 to E Rankin on 13 April 1976. These were said by the Law Society to have been disbursed without authority. In our view, the evidence before the court is inadequate to permit the court to draw a conclusion of professional misconduct on Mr Guild’s part. R T McGeogh and M A K McGeogh were husband and wife, and there is no evidence before the court that would justify the court in drawing the conclusion that moneys received on behalf of the one were misappropriated
(1979) 32 ACTR 13 at 28
to the other. There is no evidence that the payments to Dambrosio and to Rankin were made without authority. Mr Guild said in evidence: “I paid them [the moneys] out at this stage in relation to advice from Mrs McGeogh.” In an affidavit he said: “It was with her concurrence that these moneys were retained and were used by me.” This evidence was not the subject of cross-examination and there was no evidence to the contrary. The evidence should, therefore, be accepted.
(k) Guild Personal Account
On 17 September 1976, when the trust ledger card which recorded Mr Guild’s personal transactions, had $15.09 standing to its credit, a trust account cheque for $16,000 was paid to Mr Dick. Subsequently, it was debited to the trust ledger card which recorded Mr Guild’s personal transactions in the trust account. Funds sufficient to meet the debit were not received into the trust account and credited to the ledger card until 21 September 1976. Although the cheque was dated 17 September 1976, it was debited to Mr Guild’s personal trust ledger card on 21 September 1976 after a number of credit entries had been made recording the receipt of moneys sufficient to meet the debit. Thus, on its face, the ledger card shows no deficiency. The evidence does not disclose clearly how it came about that the incorrect date was inserted in the trust ledger card. Mr Guild said in evidence that he had expected the book-keeper to ensure that the necessary moneys were credited to the account before the cheque was paid to Mr Dick.
We turn now to the issues raised in this proceeding. Section 41(1) of the Legal Practitioners Ordinance 1970 provides:—
(a)reprimand the barrister and solicitor;
(b)impose on the barrister and solicitor a fine not exceeding One thousand dollars;
(c)suspend the right of the barrister and solicitor to practise in the Territory for such period as the Court thinks proper; or
(d)direct thut the name of the barrister and solicitor be removed from the Roll of Barristers and Solicitors.
The ambit of this provision was considered by Fox, Blackburn and Woodward JJ in Ex parte Attorney-General (Cth); Re a Barrister and Solicitor (1972) 20 FLR 234. Their Honours pointed out that s 42 e provides that a failure by a barrister and solicitor to comply with, or a contravention by a barrister and solicitor of, a provision of this Ordinance or any other law in force in the Territory that imposes duties and obligations on barristers and solicitors is a matter that the court may take into consideration in determining whether an order against the barrister and solicitor should be made under s 41 of this Ordinance, that s 41 of the Ordinance “… does not describe or characterize the type of conduct which is to justify the court in exercising one of the powers it gives” and that “A breach of the Ordinance, or any other failure to which s 42 e applies, may therefore bear on the question whether there
(1979) 32 ACTR 13 at 29
has been misbehaviour or misconduct and obviously may on occasion itself constitute misconduct.”
In addition to the power conferred upon it by s 41, the court has an inherent power to deal with misconduct of barristers and solicitors, the power arising as a corollary of its authority to admit persons to practise as barristers and solicitors of the court. The inherent jurisdiction extends beyond the power to strike off and suspend. In Ex parte Attorney-General (Cth); Re a Barrister and Solicitor, supra, their Honours said, at p 244: “Under its inherent jurisdiction, and apart from statute, the court may also suspend, or admonish, and may do no more than order the offending practitioner to pay the costs of the disciplinary proceedings. In several cases, fines have been imposed, apparently on the view that imposing such a penalty is also within the court’s inherent power (see Re L F Heydon (1901) 1 SR (NSW) 81; Re Fanker (1913) 30 WN (NSW) 39). In Re W C Moseley (1925) 25 SR (NSW) 174, the court was of the view that the solicitor had been guilty of professional misconduct ‘of a kind that cannot be passed over lightly’, but the penalty was a censure, an order to repay a small sum of money, and an order to pay the costs of the proceedings. In Bhandari v Advocates Committee [1956] 1 WLR 1442, the Court of Appeal for Eastern Africa, having found professional misconduct, simply admonished the practitioner. Its decision was upheld in the Privy Council, without any question being raised as to the appropriateness of the penalty” (see also pp 240–1).
These proceedings were commenced by notice of motion on behalf of the Law Society of the Australian Capital Territory that “Peter Nobel Guild, a Barrister and Solicitor of this Honourable Court, show cause why he should not be dealt with for professional misconduct following the determination of the questions set out hereunder”. In other cases, a motion to show cause has been treated as an appropriate procedure: see Ex parte Attorney-General (Cth); Re a Barrister and Solicitor, supra, and Re Bannister and Legal Practitioners Ordinance; Ex parte Hartstein (1975) 5 ACTR 100. However, this court was not called upon to make an order that Mr Guild show cause why he should not be dealt with for professional misconduct. Rather, the motion proceeded on the footing that it was a motion that Mr Guild be dealt with for professional misconduct. We consider the motion on that footing. The allegations of misconduct have not been considered by the disciplinary committee of the Law Society and no report has been made pursuant to s 37 of the Legal Practitioners Ordinance.
A practitioner is entitled to particulars of allegations of misconduct which are made against him. As this proceeding was commenced by notice of motion on behalf of the Law Society of the Australian Capital Territory, it was appropriate that particulars of that motion should be given by the Law Society. Particulars were requested and were given. In response to a request for particulars of the original notice of motion, particulars were delivered on 25 August 1978. Those particulars referred to specific matters and transactions. An amended notice of motion was filed on 24 November 1978 setting out several matters additional to those raised in the original notice of motion. We take the
(1979) 32 ACTR 13 at 30
ambit of the proceedings to be limited by the terms of the amended notice of motion and by the particulars given, save in one respect. Neither the amended notice of motion nor the particulars which are before the court refer to the cheque for $16,000 which was paid to Mr Dick and debited to Mr Guild’s personal trust ledger card in the circumstances we have mentioned above.
However, this transaction was raised by counsel for the Law Society without objection from counsel for Mr Guild and evidence was given concerning it both on behalf of the Law Society and on behalf of Mr Guild. We therefore take it to be a subject transaction in these proceedings. As disciplinary proceedings are on foot also against other members of the firm of Gallen, Guild & Johnston, we should mention that the terms of the amended notice of motion and of the particulars given are not the same as, and in some respects are more limited than, the terms of the equivalent documents in those other proceedings.
The limitations imposed upon the proceedings by the terms of the notice of motion and by the particulars given have narrowed the issues which one might have expected to be litigated on this motion. In the facts set out above, we have referred to several matters relating to the management of the trust account records which might well have been the subject of investigation. An example may be seen in the trust records respecting the Lopilato ledger card to which we have referred. Notwithstanding that trust funds were received from Mr Mangan, there was no record of that fact in the trust ledger cards other than the opening of a ledger card headed “Lopilato re loan — Mangan”, the first entry therein being “Crossin & Co. Trust A/c — re Mangan loan to Lopilato — $4042.57”. A person seeking to ascertain what had occurred with respect to Mr Mangan’s money would not have ascertained the fact without going to the card filed under the name “Lopilato”. The next entry on the card was a credit entry “P N Guild Tax A/c $1100”. The next entry was a debit of $5064.48 being a repayment to Allan R Nelson & Christie, apparently a firm to whom Mr Lopilato owed money. The ledger card gives no explanation as to why Mr Guild’s personal moneys were entered on the card and why there was a payment to Allan R Nelson & Christie out of the credit balance formed by the receipts from Mr Mangan and Mr Guild. On the face of the ledger card, there was a mixing of the trust funds of Mr Mangan with funds received from Mr Guild. The payment out of $5064.48 left a balance in the account of $78.90. The next entry was a debit of $42.57 shown as paid to Mr Mangan. No doubt this was the interest payment which Mr Mangan received, to which we have already referred. Nevertheless, it was not paid out of interest, for no interest had been received in the account. It was paid out of the balance of the moneys held in trust. The card does not disclose whether it was to be treated as paid out of the moneys received from Mr Mangan or out of the moneys received from Mr Guild. The last entry was a journal entry transferring the remaining credit of $32.52 “to Lopilato and to Mercantile Credits — File”.
This method of dealing with trust account moneys and of recording of trust account receipts and payments seems most unsatisfactory. The
(1979) 32 ACTR 13 at 31
ledger card records matters which Mr Guild could have been asked to explain because both Lopilato and Mangan were his clients and, in addition, he had the general responsibility in the office for the supervision of the accounting system. However, the matters we have mentioned in relation to the Lopilato trust ledger card were raised in the particulars only with respect to the question whether “Mr Guild was guilty of failing to adequately protect the interests of Mr W H Mangan in relation to a loan in the sum of $4000 to Mr M Lopilato”. The notice of motion and the particulars do not raise any general matter respecting the manner in which the trust account and the trust account records were maintained. Necessarily, in these proceedings, we have formed a concluded view only upon the matters which have been specifically raised for consideration and we make no finding in relation to any other matter.
We turn now to the issues raised by the amended notice of motion and to the particulars given. The first issue raised by the amended notice of motion is whether Mr Guild was guilty of breaches of s 51(2) of the Legal Practitioners Ordinance 1970. Section 51(2) provides:—
It is unnecessary for us to deal with each of the matters specifically referred to in the amended notice of motion and in the particulars given of the motion. Three instances have been proved of the fraudulent misappropriation by Mr Guild of moneys held by the firm in trust for clients. On 9 October 1975, a cheque for $9000 was drawn on the trust account in favour of Mr H G Rumble. The cheque was debited to the “Lobelson sale to Pearce” account and appropriated $4000 of moneys held in trust for Mrs M A Larsen which were credited to that account. On 21 October 1976, one cheque for $4300 and a further cheque for $1000 were drawn on the firm’s trust account and paid to the Public Service Employees’ Credit Union in favour of Mrs S K Graf. The moneys were debited to the balance held by the firm for the beneficiaries of the Sutcliffe Estate. The three misappropriations were made on the direction of Mr Guild who knew them to be misappropriations of trust funds. The payments were made to satisfy other clients who were pressing Mr Guild for action in relation to their affairs. Mr Guild’s conduct in this regard was unlawful, disgraceful and dishonourable.
The evidence further establishes that the $750 which had been received in settlement of Mr Bradley’s claim was misappropriated on the instructions of Mr Guild by the payment on 16 July 1976 of $500 to Mrs M A K McGeogh and the payment on 27 July 1976 of $250 to P & E Marinolli, Mr Guild regarded the moneys as his moneys because he previously had paid to Mr Bradley $1368, which sum Mr Bradley understood to be recovered from the defendant. The sum held in trust was, however money received in settlement of Mr Bradley’s claim. It
(1979) 32 ACTR 13 at 32
was therefore money which the firm held in trust for Mr Bradley. It was so recorded in the trust ledger card. In our view, practitioners of good repute and standing would regard this transaction as serious misconduct.
Three instances were proved in which payments were made to clients in advance of moneys being received into the trust account from which those payments might be debited. On 17 September 1976 a cheque for $16,000 was drawn on the firm’s trust account in favour of Paul Dick. Subsequently, it was debited to Mr Guild’s personal trust ledger card. On 17 September 1976 that account had only $15.09 standing to its credit, funds sufficient to meet the debit not being received into the account until 21 September 1976. On 1 October 1976 a cheque for $15,000 was drawn on the firm’s trust account in favour of Paul Dick. It was debited to a trust ledger card commenced in the name of Paul Dick and it was given the date 13 October 1976. Funds to meet the payment were not received until 14 October 1976. This cheque for $15,000 was not pass through the usual accounting procedures but was personally written out by Mr Guild. On 26 October 1976 a cheque for $3500 was drawn on the firm’s trust account in favour of Paul Dick and debited to the funds standing to the credit of the Sutcliffe Estate. Moneys to meet this cheque were received from Mr and Mrs Guild on 29 October 1976. There is so little evidence before the court on these matters that we have pondered whether we should make a positive finding that there was a deliberate misappropriation of trust moneys in these three instances. The standard of proof was considered in Ex parte Attorney-General (Cth); Re a Barrister and Solicitor (1972) 20 FLR 234. At p 246 their Honours said: “The question of the standard of proof in disciplinary proceedings against a legal practitioner has been discussed in Bhandari v Advocates Committee [1956] 1 WLR 1442; In the Matter of a Practitioner of the Supreme Court [1960] SASR 178 at 194, and in Re Evatt; Ex parte New South Wales Bar Association (1967) 67 SR (NSW) 236. In the last-mentioned case, the Court of Appeal in a joint judgment said: ‘The onus of proof is upon the Association but is according to the civil onus. Hence proof in these proceedings of misconduct has only to be made upon a balance of probabilities: Rejfek v McElroy (1965) 112 CLR 517.’ Reference in the authorities to the clarity of the proof required where so serious a matter as the misconduct (as here alleged) of a member of the Bar is to be found, is an acknowledgment that the degree of satisfaction for which the civil standard of proof calls may vary according to the gravity of the facts to be proved: Briginshaw v Briginshaw (1938) 60 CLR 336 at 362 per Dixon J, as he then was; Helton v Allen (1940) 63 CLR 691; Smith Bros v Madden Bros [1945] QWN 33 at 42 per Dixon J.”
Having regard to the seriousness of the issue as to whether or not there was a deliberate defalcation in each of these cases, the question arises whether an affirmative conclusion adverse to Mr Guild should be made on the material which is before the court. The court has only the entries in the ledger cards and Mr Guild’s evidence. Mr Guild has denied that he gave instructions for the payment out to Mr Dick of funds
(1979) 32 ACTR 13 at 33
prior to the receipt of moneys in trust for him. The book-keeper responsible for the entries was not called to give evidence to the court and no document of instruction for the drawing of any cheque has been tendered in evidence. However, in the light of the fact that fraudulent misappropriations of trust moneys were made by Mr Guild, that these three matters all concerned Mr Guild’s client Mr Dick and arose in the peculiar circumstances which we have outlined, that the debit of $16,000 was to Mr Guild’s own trust ledger card, that the cheque for $15,000 was personally written out by him and that all three matters occurred within a short time of each other, we think the conclusion is irresistible that these three transactions were defalcations made deliberately by Mr Guild, though made in the expectation that funds would shortly thereafter be received to make them good.
In any event, breaches of s 51(2) occurred. Moneys were paid out of the trust account to a person who was not entitled to receive the trust funds and without authorization from the persons on whose behalf the trust funds were held. Mr Guild was a partner in the firm. This of itself is sufficient to establish a breach of s 51(2), but it is not sufficient to establish professional misconduct. Professional misconduct involves some personal default on the part of the practitioner whether it be a deliberate wrongful act or negligence personal to him: see Re Mayes and the Legal Practitioners Act [1974] 1 NSWLR 19 and Re a Solicitor [1960] VR 617. Mr Dick was Mr Guild’s client and the payments were made to him on Mr Guild’s instructions. Mr Guild was the partner in the firm who had the particular responsibility for the supervision of the accounting system of the firm. The defalcations arose out of the decision by Mr Guild to inform his client that his action had been settled and the implementation of that decision. Whether or not the payments were to Mr Guild’s actual knowledge made in advance of the receipt of the moneys from which they properly could be paid, the whole matter was initiated by Mr Guild’s actions. It was his responsibility to ensure that no defalcation occurred and we are satisfied that he was at least grossly negligent in this regard. In our view, solicitors of good standing and repute would regard his actions and negligence in relation to these three matters as serious misconduct.
In relation to the investment with Canberra Holdings Pty Ltd of the $4200 held for Mrs Larsen, we are satisfied that there was such little care taken by Mr Guild to ascertain what were the instructions of Mrs Larsen, to ascertain whether the investment was a proper one to make, to protect the interests of Mrs Larsen when making the investment and to inform Mrs Larsen of the investment made that the investment was a breach of s 51(2). So little care was taken of Mrs Larsen’s interests that the investment cannot be characterized as a disbursement according to the direction of Mrs Larsen, the person for whom the money was held in trust. In our opinion, Mr Guild’s negligence in this regard amounted to misconduct justifying the taking of action by this court in disciplinary proceedings.
We are of a similar opinion with respect to the investment on 21 October 1976 of $6506.26 with the Civic Co-operative Building Society of moneys held in trust for the Sutcliffe Estate.
(1979) 32 ACTR 13 at 34
Breaches of s 51(2) were also alleged in respect to the McGeogh trust funds and in respect to the transfer of certain costs from the firm’s trust account to the firm’s office account. The former allegation has not, in our view, been substantiated and the allegations as to the transfer of costs are too minor in comparison to the other matters raised in these proceedings to justify our dealing with them.
Undue delay amounting to professional misconduct in attending to clients’ affairs was alleged in relation to the failure to have the party and party costs of Riverbank Pty Ltd agreed or taxed with the Commonwealth, the failure to make application to the Supreme Court of Papua New Guinea for approval of the settlement and release of the moneys held in court in the action in which Mrs S K Graf was the plaintiff and the matters relating to Mrs Bradbury, Mr and Mrs Mosely and Mrs Caramanico. We make no adverse finding in relation to the matters relating to Mrs Bradley, Mr and Mrs Mosely and Mrs Caramanico. In relation to the matters respecting Riverbank Pty Ltd and Mrs Graf, we are of the view that there was delay amounting to misconduct. However, the gravamen of those matters lies rather in the misappropriations of the trust funds to which the delay led. The delay does not add significant weight to the counts of misconduct which we have already found against Mr Guild.
It was alleged that Mr Guild failed to counsel clients to seek independent legal advice in respect of transactions in which he or members of his family had a personal financial interest. The allegations were made in relation to the transactions between Mrs Dow and Mr and Mrs Guild, between Mrs Bradbury and Mr and Mrs Guild and between Mr and Mrs Mosely and Mr and Mrs Guild. We do not find any of these allegations to have been established.
It was alleged that Mr Guild failed to take action to protect his clients’ interests in transactions in which he acted as solicitor for both parties. Allegations were made in relation to the transactions involving the Sutcliffe Estate, Mrs Caramanico and Mr W H Mangan. We do not make any finding adverse to Mr Guild in relation to the first two matters. In the matter relating to the loan between Mr Mangan and Mr Lopilato, we are of the view that Mr Guild failed to take reasonable steps to protect the interests of Mr Mangan in that no document of loan was recorded, no ledger card or file was opened in Mr Mangan’s name which related to the transaction and no document was held by the firm which recorded the terms of the loan made. In our view Mr Guild’s conduct in this matter fell so far below the standard of competence and efficiency required of a solicitor as to constitute misconduct punishable by this court in the exercise of its disciplinary jurisdiction.
It was alleged that, during 1977, Mr Guild was guilty of providing false and/or misleading information to his clients, Mr I R and Mr D McPherson. Messrs McPherson were the directors of Monaro Mix Specified Concrete Pty Ltd and we have set out the facts concerning the action in relation to which the company was the plaintiff. In our view, Mr Guild deceived his client and Mr I R and Mr D McPherson as to the prosecution of that action and the deceit was such that solicitors of good
(1979) 32 ACTR 13 at 35
standing and repute would regard his conduct as disgraceful and dishonourable.
It was further alleged that, by the letter dated 23 September 1977, Mr Guild was guilty of giving false and/or misleading information to Messrs McKoy, O’Sullivan & Clemens, the New Zealand solicitors for Mrs Larsen. In our opinion, it has been established that this letter was misleading both to Mr Guild’s own client and to the recipient firm of solicitors. Messrs McKoy, O’Sullivan & Clemens had sought information respecting the investment of Mrs Larsen’s funds. The response did not disclose how those funds had been invested in the past or that they had been misappropriated. In our opinion, the action of Mr Guild in writing the letter fell so far below the level of conduct required of a solicitor in his relationships with his client and with other solicitors as to amount to misconduct, justifying the taking of action by this court in disciplinary proceedings.
Mr Guild is almost 40 years of age, married, with children. His ambition in life was to be a barrister and solicitor of the Supreme Court of the Australian Capital Territory. He became senior partner in a well-regarded firm of solicitors. As a result of his defaults, he has lost his position in the firm and is now employed in a real estate office.
Undoubtedly, the misconduct we have mentioned arose out of Mr Guild’s inability to handle the pressure of work which devolved upon him. We also take into account in Mr Guild’s favour that the amount of the misappropriations was small in relation to the overall size of the trust account and that, at all times, Mr Guild had a reasonable prospect of repaying to his clients the amounts which were due to them. Moreover, the evidence does not show that affairs were becoming worse. The defalcations which we have mentioned occurred in 1975 and 1976. It has not been alleged in this proceeding that there was any misappropriation of trust funds during 1977 or 1978. It was put on behalf of Mr Guild that he was the victim of the legal system, that there was a tendency for competent practitioners to undertake more work than reasonably they are able to handle. However, although we accept that there is a substantial call upon the services of competent practitioners, we do not accept that that call justifies neglect or inefficiency in the handling of the affairs of any client. Certainly, it does not justify or excuse conduct and negligence of the type with which we are here concerned.
The object of disciplinary proceedings is the protection of the public and the maintenance of proper standards in the legal profession. Disciplinary proceedings are not taken by way of punishment, per Barwick CJ in Harvey v Law Society of New South Wales (1975) 49 ALJR 362 at 364 ; 7 ALR 227 at 230, or to exact retribution, per Fox, Blackburn and Woodward JJ in Ex parte Attorney-General (Cth); Re a Barrister and Solicitor (1972) 20 FLR 234 at 244. In the former case, Barwick CJ said that the function of the court was “… to examine the material proffered to it in order to determine whether that material establishes that the solicitor has failed, by action or inaction, to maintain in his conduct the standards required of him as a member of the
(1979) 32 ACTR 13 at 36
profession. The court’s duty is to ensure that those standards of the profession are fully maintained ….” In the latter case, Fox, Blackburn and Woodward JJ said that the object of disciplinary action is “… to protect the public and the reputation of the profession”. Their Honours discussed the principles to be applied in determining whether conduct of the practitioner has been of such a nature as to justify the intervention of the court. We respectfully adopt the principles enunciated by their Honours. At p 243 their Honours said: “When it is a question of removal from the roll, there is, in the end, a single question, namely, whether the legal practitioner who has been charged is a fit and proper person to remain a member of the profession (see per Latham CJ in Re Davis (1947) 75 CLR 409 at 416). In Ziems v Prothonotary of Supreme Court of New South Wales (1957) 97 CLR 279 at 298, Kitto J said that the issue is not capable of more precise statement.”
In our view, the misconduct of Mr Guild was so grave and his conduct so breached the standards required of practitioners in the Australian Capital Territory that it is necessary, for the maintenance of the standards of the profession, to remove his name from the roll of practitioners admitted to practise as barristers and solicitors of this court. He has been guilty of professional misconduct so grave as to show that he is not a fit and proper person to practise as a barrister and solicitor of this court. It will be noted that Mr Guild’s misconduct was such as to involve him in acts which affected his clients, his partners (eg the arrangement with Mr Rumble concerning the costs of Riverbank Pty Ltd), other solicitors (Messrs McKoy, O’Sullivan & Clemens) and this court (eg in relation to the action in this court in which Monaro Mix Specified Concrete Pty Ltd was plaintiff he misled his client and its directors Mr I R and Mr D McPherson, as to the progress of the action and, in the action in this court in which Mr Dick was the plaintiff, at a time when his client understood that the action had terminated, he applied for and obtained an order for the payment out of moneys in court). His misconduct primarily affected his relationship with his clients but, nevertheless, it had an ambit much wider than that. We would order that his name be removed from the roll of practitioners admitted to practise as barristers and solicitors of this court.
Solicitors for the Law Society of the Australian Capital Territory: Davies, Bailey & Cater.
Solicitors for the barrister and solicitor: Higgins, Faulks & Martin.
