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Lawyers’ false attestation of documents and fraudulent certificates of advice

April 10th, 2011 · 3 Comments

Up-updated post, 18 May 2017:  See also LSC v Huggett [2017] NSWCATOD 67, which gathers together additional authorities at [63].

Updated post, 11 March 2016: In The Law Society of New South Wales v Gathercole [2016] NSWCATOD 27, the Tribunal was asked by the applicant to order the removal of the practitioner’s name from the roll for falsely attesting a wife’s signature in her absence on a document presented to the practitioner by the fraudster husband, a bank manager.  Though the Tribunal found that the conduct amounted to ‘professional misconduct of a very high degree’, the practitioner was insightful, remorseful, and had good references.  So they gave him a $5,000 fine instead.

Original post: What’s the going rate by way of penalty for lawyers successfully prosecuted for falsely attesting the execution of documents? As usual in the law of professional discipline, the cases are all over the place — what is analysed below is a collection, not a line of, authorities — but I am unaware of any case in which a lawyer’s practising certificate has been interfered with solely for purporting to sign as witness a document they did not witness the execution of or for falsely giving a certificate that advice about the document was given.  And you would have to say that a fine of a few thousand dollars and a reprimand is the going rate. Justice Kirby, then President of the Court of Appeal, adverting to the Court’s role as fixing the standards to be observed in determinations by disciplinary tribunals, overturned a disciplinary tribunal’s decision to strike off a solicitor who gave a false certificate of advice in relation to a mortgage, exacerbated the wrongdoing by oral representations to the mortgagee’s solicitor and was not frank in the disciplinary investigations.  The Court substituted a fine and a reprimand: Fraser v Council of the Law Society of NSW [1992] NSWCA 1992.

Because of the dishonesty inherent in this species of disciplinary wrong, the cases have traditionally been clear that it amounts to professional misconduct rather than to unsatisfactory professional conduct.  But the New South Wales Court of Appeal’s decision in Xu v Council of the Law Society of NSW [2009] NSWCA 430 bucks the trend and characterised one such instance as unsatisfactory professional conduct.  All of the other cases need be re-evaluated in light of the Court of Appeal’s decision.

Below are my notes of reading the cases, for a disciplinary prosecution in which I recently acted.  I was put onto some of them by readers of this blog, for which many thanks.

Law Society of NSW v Martin [2010] NSWADT 245

The practitioner had been in practice for 11 years.  He acted for a purchaser of property.  He purported to witness her signature on five related documents: a mortgage of that property granted to Oakland Investments, a Declaration by Borrower, a Loan Repayment Declaration by Borrower, an ‘Acknowledgment, Authority, Directions and Undertaking’, and an ‘Acknowledgement of Legal Advice by Borrower’.  The documents bore what appeared to be the client’s signatures.  The solicitor believed them to be signed by the client, but he did not witness the signing.

The Law Society and the practitioner agreed on the orders which were made.  The practitioner submitted that he had been trying to assist the client, that he was contrite, and that he had been tricked into signing the documents by the fraud of a mortgage broker whom he trusted.  The mortgage broker said the client would be borrowing money through her, was embarrassed because the practitioner had previously advised against obtaining mortgage finance, and when the practitioner asked when he could see her, the broker said the client was unable to attend the practitioner’s office due to work commitments, and provided to him the apparently already signed documents, which she said the client needed witnessed urgently.

In fact the broker was a fraudster.  The practitioner cooperated with the police and was audited by the Law Society.  They concluded he was an innocent victim of the fraud.  The mortgagee sued the client for the return of the funds successfully.  The solicitor paid the mortgagee’s costs of that action of $19,000.

The Tribunal noted that the fine was at the lower end of the range but did not interfere with the parties’ joint submissions as to penalty.

Result:

  • Reprimand;
  • Fine of $6,000 stayed 6 months;
  • Costs $2,500 stayed 6 months;
  • To be suspended in default of compliance.

Xu v Council of the Law Society of NSW [2009] NSWCA 430

(This was also the case which determined that it is not improper for a solicitor to retain a client’s passport pursuant to a possessory lien.) Handley AJA wrote the leading judgment, so far as the false attestation issue is concerned, and Tobias JA and Basten JA both agreed with it.

The solicitor saw a man who wanted to buy a property.  The man brought with him the contract.  The solicitor explained it to him and the man signed it.  The man took it away with him. He came back some days later and told one of the solicitor’s staff that his wife wanted to purchase along with him and that she had signed it.  The solicitor overheard that conversation, but did not thereafter see the contract.  Some weeks later, he signed a certificate that he had explained the contract to the purchasers, and that he had explained that by the certificate, they were renouncing their right to a cooling off period.  In fact, he had not explained the cooling off period to the wife. The solicitor said that he did not read the certificate, that he signed it carelessly.  In fact, the wife had been in China when her signature had been written on the contract by someone else.  The certificate had a space for the purchasers’ names to be inserted, but it was left blank.  The Court of Appeal said that was irrelevant.

Handley AJA said:

‘40 In this state of the evidence the Tribunal was entitled to find, as it did in substance (Red 18), that the solicitor’s failure to check the contract after he had learned that the client’s wife had signed it and her name had been added as a purchaser, reinforced by his signature of the incomplete s.66W certificate, was a representation (holding out) to the vendor and its solicitors. This representation, on which they were entitled to rely, was that the wife was also a purchaser and, after being properly advised, had knowingly waived her right to a cooling off period. The solicitor would have been liable for negligent misrepresentation and misleading and deceptive conduct if the vendor had suffered significant loss and brought proceedings. To that extent he has been let off lightly.

41 The findings of the Tribunal, so understood, do not establish “a substantial”, let alone “a consistent” failure to reach or maintain a reasonable standard of competence and diligence. However that conduct was within the definition of unsatisfactory professional conduct in s.496 (“conduct … that falls short of the standard of competence and diligence that a member of the public is entitled to expect”).

42 As a result of the solicitor’s acts and omissions an exchange of contracts between solicitors with a s.66W certificate failed to create a clearly enforceable contract for this simple transaction. However regardless of their consequences, these were momentary and isolated lapses.

43 A finding of unsatisfactory professional conduct, though not charged, was available to the Tribunal under s 562(6), and this Court has power to substitute that finding under ss.75A(6) and (10) of the Supreme Court Act and this should be done.

58 … The Tribunal’s decision that the first two charges were established should be confirmed but the finding that they constituted professional misconduct should be set aside and there should be substituted a finding that they constituted unsatisfactory professional conduct by the solicitor.

59 The solicitor’s conveyancing work in the Zhang matter was incredibly sloppy and his signing of the incomplete s.66W certificate was irresponsible. Although, by themselves, they were not acts of professional misconduct, repeated acts of this character would properly be characterised in that way. Although the acts were isolated and there is no evidence that they had been repeated in other transactions the solicitor should nevertheless be publicly reprimanded for them as acts of unsatisfactory professional conduct.

60 The fine imposed by the Tribunal for the third charge must be quashed, but the solicitor’s conduct reflected in the other charges still merits a fine which should be fixed at $1500.’

Result:

  • Tribunal’s finding of professional misconduct set aside and Court of Appeal’s finding of unsatisfactory professional conduct substituted;
  • Fined $1,500 (reduced from $2,500 fine imposed by Tribunal);
  • Reprimanded;
  • Costs (but set off against costs of passport matter in which he was successful, so no order as to costs).

Council of the Law Society of NSW v Beverley [2008] NSWADT 251

The solicitor did debt collection work for a company.  He knew its credit manager well, and had seen her signature many times.  She was on maternity leave and worked only a couple of days a week.  He also knew a commercial agent who acted for the company well.  He took instructions from and liaised with both.  The agent was sloppy with affidavits.  The sloppiness has occasioned difficulties, including adjournments.  Fearful that if he had the agent attend to the witnessing of the credit manager’s affidavit, he would not do it properly and by virtue of the credit manager’s part-time status the problem would not be cured in time, the solicitor emailed a draft affidavit to the credit manager and asked her to sign it and send it back undated and unwitnessed.  Upon receipt of such a document, he dated it and signed as witness.  He relied on it in obtaining a debtor’s bankruptcy.  Unbeknown to him, though, the credit manager had advised the commercial agent to accept a compromise and not proceed with the bankruptcy.  The solicitor became personally liable to pay solicitor-client costs of $47,000 in those proceedings.

The solicitor had been a sole practitioner for 20 years at the time of the wrongful conduct, practising exclusively in commercial debt recovery.  He had retired from law in favour of real estate about a year after the conduct, but wished to return to a different area of law, namely insolvency.  He had an income of $30,000 to $40,000 a year at the time of the hearing.

He was found guilty of professional misconduct.

Result:

  • Reprimanded;
  • Fined $2,500
  • Costs $3,500.

Law Society of NSW v Georgas [2008] NSWADT 82

A woman, her husband, and his parents were listed as borrowers on a loan document for $600,000.  The solicitor purported to witness the signatures of each borrower on the loan agreement and on the mortgage.  The borrowers purported to certify, by writing their signatures on another page of the loan agreement that they had obtained from the solicitor legal advice on the nature and effect of the loan contract and all securities to be granted, that they understood the nature and effect of the documents and that they understood the obligations and risks involved in signing the documents, and that they did so freely voluntarily and without pressure from any person.

The solicitor said that he had conducted a file review and realised that there were signed original mortgage documents on the file ‘and nothing had been done about them’.  He recalled that about 6 weeks previously, he had attended in his reception to an Indian family of two adults and two elderly parents, to witness mortgage documents.  He did not want to appear silly by ringing them to check that it was them whom he had attended on, and that he relied on his memory of the attendance to sign, belatedly, as witness.  He could not be sure that the Indian family in question had been the borrowers, because his practice was mainly conveyancing and he did many similar transactions.  There was no pressure of time to complete the transaction at the time when the solicitor signed as witness.  He could have had them rewrite the signatures.

More than three months later, the woman came to the solicitor’s office and told him that he had not witnessed her signature.  The solicitor said she admitted nevertheless that it was her signature and that she wanted to proceed with the loan, and that her concern was that her in-laws were included on the documents.

The woman contended that her signature had been forged, but the Tribunal declined to make that finding.

The Tribunal found that the conduct was professional misconduct within the Allinson test – disgraceful and dishonourable, but that it was at the lowest end of the scale.  In view of the fact that the solicitor recognised the error of his ways, and was unlikely to offend again.

Result:

  • Reprimand;
  • Fined $1,000;
  • Costs to be assessed.

Legal Services Commissioner v Flynn [2007] NSWADT 186

The practitioner had been admitted for about 5 years when the relevant conduct occurred, in June 2002.  The matter proceeded as a plea, with the Commissioner and the practitioner filing affidavits, neither requiring the other for cross-examination.  The solicitor made full and frank admissions from the outset, acknowledging the wrongfulness of his conduct.  He said at the relevant time ‘my singular focus, perhaps obsessively so, became to acquire and process as much work as possible.  It was at this point that I began to be absent from the office on a more regular basis as a result of taking instructions from all over Australia and, although I found that my levels of stress were increasing significantly, I thought I could simply work through it’.  He had lost $100,000 and foregone a lot of fees when a complex case he punted was lost.  His practice was affected by changes to the law in 2002 in relation to civil liability. He had been working at least 76 hours a week, sometimes only sleeping 4 hours a night.  His marriage had been under strain. In 2006, he sought psychological, and subsequently medical assistance in relation to his mental state.  His prognosis was good, and he had decided not to take on cases except from clients in his local area.

The solicitor had drawn a will, and a power of attorney and enduring appointment of guardian in favour of the client’s daughter.  He had seen his clients in his office in Northern NSW, but sent the documents to Northern Queensland where he claimed to have witnessed them (though it is unclear whether the will was one of these documents).

Subsequently, the solicitor acted in the face of a conflict of duties in the transfer of the client’s home to the attorney.  The Protective Commissioner successfully obtained an order to manage her affairs.  Through the Commissioner, the client lodged a caveat over her former property, claiming a beneficial interest.  The solicitor gave advice to the attorney registered proprietor about having the caveat removed.  Then the solicitor paid his bill out of trust, having obtained permission to do so from the client, when by virtue of the protective order, she was not competent to give such permission.

The Protective Commissioner had sued the practitioner for their costs of the protection application.  The solicitor had paid those costs in the sum of $63,000.

Result:

  • Reprimand;
  • Fined $4,000 stayed 3 months;
  • To be suspended in default;
  • Costs $2,500.

Legal Services Commissioner v Turner [2007] VCAT 1986

This was a decision of Judge Bowman.  The barrister signed a bank guarantee in three places, witnessing it as a legal practitioner, allegedly employed by the complainant who was the guarantor. The document contained a certification that he had explained the effects of the guarantee to her and that she appeared to understand it.  In fact, none of those things were true, and he had not witnessed the complainant’s signature.  He was a close friend of the complainant’s husband. Unbeknown to him, their relationship was rocky. But the husband assured the barrister that all was well. The barrister thought he was obliging both his friend and the complainant in doing what he did.  He signed it in a social situation.

The barrister was a practitioner of 20 years’ standing.  He had many impressive character witnesses and had done many good works.  He was deeply remorseful. The barrister ‘admitted his guilt’ from the outset, and cooperated completely and frankly with the Commissioner and the Tribunal.  He had a young daughter and a mortgage.

Result:

  • Reprimand;
  • $5,000 fine stayed 3 months;
  • $5,030 costs.

Legal Services Commission v Nguyen [2005] LPT 007 (PDF)

This was a decision of Queensland’s Legal Practice Tribunal, presided over by Chief Justice de Jersey.  The solicitor was a 35 year old with a busy suburban practice, who did a lot of community work.  This was his first ethical breach resulting in a disciplinary finding.  He purported to witness his firm’s client’s signature on a first home transfer concession form and lodged it with the revenue authorities. In fact, he did not witness the writing of the signature and did not check with the client that it was hers.  Initially, he claimed that the signature was the client’s, but later conceded that it must have been written by someone else within his firm.  Two counts of misconduct were found to be established: the false witnessing and the submission of the document to the revenue authorities.

Result:

  • Reprimand;
  • Fined $4,000 stayed 3 months;
  • Costs to be assessed.

Law Society of NSW v Shad [2002] NSWADT 236

The solicitor purported to witness the signature of the wife of a man he had known for more than two years.  Someone other than the wife signed the wife’s signature on a guarantee associated with a mortgage, a second mortgage and guarantee by companies of which she was director and shareholder, and a mortgage of a third property of which she was co-owner with her husband, and a guarantee.  The securities were associated with a loan of $910,000 from the Bank of Melbourne.

The solicitor had met the man’s wife only once, about two years before he witnessed signatures on the controversial documents. He had no recollection of what she looked like, except that she was Asian. The man, Mr Maniam, attended at the solicitor’s office and introduced his companion as ‘Jan Maniam’.  The solicitor assumed that she was the wife.  He explained the documents to the couple for 20 minutes, and then, as there were many documents to be signed, he excused himself after he had witnessed each of the man and the woman sign their signatures once.  He returned after they had finished, and signed the documents as witness.  In doing so, he represented that the document had been signed in his presence when it had not been, and that the signatory of what purported to be the wife’s signature was the signature of the wife, who was personally known to him.

The solicitor had been a sole practitioner for 25 years and had established a successful practice in the fields of conveyancing, estates and wills, employing 27 people.  He worked 12 hour days and conducted about 20-30 interviews a day.  He called 19 character witnesses by affidavit, including solicitors, barrister, senior churchmen, a law agent, and the principal of a real estate agency.  He did charitable work for the Church.  He readily acknowledged the foolishness of his conduct.  He had for a long time regretted the matters and said he would continue to do so for the rest of his life.

The prosecutor relied on a letter under cover of which the solicitor sent the mortgages to the lender’s solicitor.   In it the solicitor described them as having been duly signed and stamped.  The Tribunal said:

‘Although technically the description may be regarded as misleading, in the Tribunal’s view it does not warrant separate consideration as aggravating the misconduct evidenced by the false attestation.  This letter should properly be seen as bound up with the false allegations, it being remembered, of course, that with the letter came the very mortgages which included them.’

He was found guilty of professional misconduct.  He was also found guilty of professional misconduct in swearing a false affidavit with intent to mislead the Stamp Duties Office, and he produced a contract which had in fact been prepared in 1992 but backdated to 1987 and which he had deliberately prepared in accordance with the standard form current in 1986.  In litigation, he gave a false affidavit in relation to the same matters, and the Tribunal disbelieved the solicitor’s plea that the dishonesty was inadvertent.

Result (with no apportionment between the two charges):

  • Fine $35,000
  • Costs to be taxed.

Law Society of NSW v Andreone [1999] NSWADT 14

The solicitor, of 28 years’ standing, purported to witness a signature on an affidavit and take an oath when he was not present when the affidavit was signed and the oath was not taken in the proper manner.  It was an affidavit of documents. The representative of the client had signed the affidavit and faxed it to the solicitor.

The solicitor prepared a statement of claim for a client who instructed him to commence proceedings but failed to file them for years.  He frequently told her that they were filed and proceeding well.  There was similar conduct in another two matters as well.  In one of them, the solicitor made time recording entries which were false to suggest he had been to court when he had not.

The solicitor failed to commence proceedings for another client within the limitation period and then applied to extend the time without instructions from the client and without having advised the client of the failure.

The solicitor failed to file a document within time, with the result that an application was made to strike his client’s proceedings out.  The solicitor failed to advise the client, obtained adjournments several times without instructions, and consented to the strike out and an adverse costs order without instructions to do so.

Result:

  • Reprimand;
  • Fined $25,000;
  • Ordered to be paid costs to be taxed.

Matter of M / In the matter of Lynette Robyn McLardy [1998] 3 LPDR 23 (I have a copy)

This was a decision of the NSW Legal Services Tribunal.  The solicitor acted for the wife in Family Court proceedings.  The court ordered the husband to transfer a property to the wife.  The solicitor posted a transfer for the husband’s signature to his solicitor.  The husband said she was not to send further correspondence to his solicitors.  She re-sent the transfer directly to him for his signature.  She received it back from the husband, signed but not witnessed.  The solicitor repeatedly tried to have the husband re-sign the form in her presence as witness.  She even dropped in at his house several times.  Under pressure from the wife who needed the signed transfer in order to settle a loan, the solicitor signed as witness.  The form contained a representation on behalf of the witness that the transferor had signed in the witness’s presence, and that he was personally known to her.  The solicitor said she knew the husband’s signature, but acknowledged that the husband had never made any representation to her that he had signed the transfer.

The solicitor had many good works to her credit, and many glowing character references.  She was remorseful and had admitted her wrongdoing from the outset.  The conduct was characterised as fraudulent.  It appears to have been accepted that specific deterrence was not necessary, but general deterrence required a fine rather than just a reprimand and a costs order.

Result:

  • Reprimand;
  • Fine $2,000 stayed for four months, in default of payment: suspension until paid;
  • Costs: $3,433.

Fraser v Council of the Law Society of NSW [1992] NSWCA 1992

The solicitor applicant had been struck off the roll of practitioners at first instance, and successfully appealed.  The Court of Appeal substituted a reprimand and a fine of $7,000.  The solicitor had worked from a cubicle within a conveyancing company at Woollongong.  An employee of the Wagga Wagga office of the conveyancing company rang him. He knew and trusted this employee.  The employee told him that two clients of the conveyancing company urgently needed a certificate of advice.  He was told that a lawyer whose abilities he respected had already been given the advice the subject of the certificate, but had declined a certificate from the lawyer because he did not hold a practising certificate and could not establish that he held professional indemnity insurance.  The solicitor signed the certificate, falsely representing that he had personally advised the clients, whom he had never met.  Later, the mortgagee’s solicitor rang, and the solicitor told him that he had signed the certificate and held a full practising certificate.  The mortgagee’ solicitor telephoned again, and specifically enquired whether the solicitor had explained the mortgage documents by phone or in person.  The solicitor said ‘You have got the certificate of explanation.  You can rely on that.’  Pressed by the mortgagee’s solicitor about his personal attendance, the solicitor said:

‘You’ve got the certificate of explanation. You can rely on that and that’s all that need’s to be said.’

When investigated by the Law Society, the solicitor said he had difficulty remembering the case, but felt sure that this particular transaction was conducted by telephone.  At the disciplinary hearing, the solicitor resisted a finding that he had engaged in fraud, but later came to recognise that that was an appropriate characterisation of it.  The Law Society pressed for a substantial fine. The disciplinary Tribunal struck him off.

Result:

  • Fine $7,000 stayed;
  • Costs on a solicitor-client basis to be paid by solicitor.

 

See also:

Tags: "disgraceful and dishonourable" · common law · Discipline · Misconduct · Unsatisfactory conduct