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The Facts
In November 2010, a lawyer was hired to complete the sale of a
vendor's property near Campbelltown, NSW.
On the day before settlement, the lawyer faxed a letter to the
property buyer's lawyer directing how the cheques were to be
drawn on settlement. This included a direction that a cheque for
$12,000 be made out to Permanent Custodians Limited (PCL), the
lawyer's own mortgage lender. PCL had no connection to the
client's transaction.
At settlement, the cheques were handed over to the lawyer. The
$12,000 cheque was then banked by PCL, leaving the vendor $12,000
short on the sale proceeds.
The vendor complained to the Legal Services Commissioner who
maintains the standards within the legal profession.
The Legal Services Commissioner commenced disciplinary
proceedings against the lawyer in the Administrative Decisions
Tribunal (now known as the NSW Civil and Administrative Tribunal,
or NCAT).
The Commissioner asserted that the lawyer's behaviour
amounted to professional misconduct and that his name should be
removed from the roll of legal practitioners.
case a - The case for the Legal Services Commissioner
case b - The case for the lawyer
The lawyer's client never authorised him to direct any part
of the proceeds of settlement to PCL. The lawyer knowingly did so
anyway.
The lawyer's own employee gave evidence that the lawyer
authorised and directed the preparation of the directions,
including the payment of the $12,000 to PCL.
The tribunal also heard evidence from the purchaser's legal
secretary. Prior to settlement, she telephoned the lawyer and asked
whether he knew what that $12,000 was for. The lawyer responded
that "my client authorised me to draw it." The legal
secretary then asked the lawyer whether it was a personal loan to
which he replied: "Something like that."
The lawyer then personally attended settlement, where he was
handed the cheque for $12,000 made out to his mortgage lender, PCL.
That cheque was then banked by PCL, which was convenient for the
lawyer, since he was over $9,000 in arrears on his mortgage with
PCL.
Given the above, the lawyer clearly misappropriated his
client's funds and the tribunal should make a finding of
professional misconduct.
It's true that I was over $9,000 in arrears on my mortgage.
However, I intended to pay those arrears from my own funds.
Unfortunately, my secretary prepared the direction to pay $12,000
to PCL in error. Since it was an error, I lacked the intention on
which to base the allegation of misappropriation of funds.
In any event, my client knew in advance of the direction to
pay, so he consented to the payment, or at the very least acceded
to it.
As I did not misappropriate funds, and by extension did not
engage in professional misconduct, the tribunal must reject the
Legal Services Commissioner's application.
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