Dishonesty in a solicitor: does it require striking off?

Updated post, 1 July 2016: see the English High Court case Law Society of Ireland v Patrick Enright described in this case note.

Original post: In Fraser v Council of the Law Society of NSW [1992] NSWCA 72, which is part of the subject of this post, President Kirby made some comments on the relationship between the jurisdiction to strike a practitioner off the roll and a finding or admission of dishonesty, that is, fraud.  The Court of Appeal unanimously overturned the decision of a disciplinary tribunal striking off the roll a solicitor with an otherwise unblemished record  for fraudulently giving a certificate of advice to a mortgagor, then not being frank about it towards the mortgagee’s solicitor and in the disciplinary investigation, and having difficulty accepting, in the disciplinary tribunal that what he had done amounted to fraud. Kirby P said that a finding of fraud is not a prima facie indicium that a lawyer ought to be struck off; everything depends on the circumstances:

‘By his affidavit the appellant acknowledged that the provision of the false certificate: “… was wrong and that I ought not to have done it.” The affidavit sought to explain the provision of the certificate by reference to the reported urgency facing the mortgagors, the assurance that proper explanation had been given by Mr McConnell and the confidence which the appellant had in Mr McConnell’s ability and integrity.

In respect of the telephone call from the mortgagee’s solicitor, the appellant agreed with the solicitor’s affidavit. He also agreed that he had been evasive. He explained that he was trying to assure the solicitor that the certificate had been given after a proper explanation to the mortgagors without telling him a lie by affirming expressly either a face-to-face interview or a telephoned explanation by himself.

In questioning by the Court, the appellant baulked at the suggested that, by what he had done in giving the certificate, he had been engaged in a fraud, specifically upon the mortgagee. His resistance to the charge of “fraud” appeared to rest upon the following bases:

1. That nobody had in fact suffered any damage from what he had done;

2. That he had not intended to cause damage to anyone and indeed had only acted as he did because of an emergency and to help the mortgagors in their predicament;

3. That he had received no fee or benefit whatsoever for himself for what he had done; and

4. That he was convinced that the mortgagors had been given, by Mr McConnell, as accurate and thorough an explanation as they could hope for.

However, as he was pressed each of these defences fell away. Ultimately, the appellant came to acknowledge, as was clearly the fact, that he was guilty of fraud. Cf Demetrious v Gikas (above) at 564. The acknowledgment occurred in the following passage of questioning by members of the Court:

“HANDLEY JA: Q: Sitting in the witness box, you realise what you did was not only a foolish and wrong but that it was fraudulent? A: I baulk at the world fraudulent. I look, if you want a yes or no answer, I suppose I would have to say yes. But I really don’t, the word ‘fraud’, I don’t believe I was party to any fraud.

Q: What is it about your conduct at the time and what you did that gives you difficulty in seeing it as fraudulent?

A: Well, the situation is I have never met the Livingstones and quite frankly I have gone to such extraordinary lengths to help these people. Why would I do such a thing? It really is incomprehensible that I should do such a thing as I have done.

CRIPPS JA: The fraud is directed to the mortgagee’s solicitor.

KIRBY P: And the mortgagee.

CRIPPS JA: p: Why do you not think it was fraudulent towards them? A: I believe, I feel uncomfortable with the word ‘fraud’.

HANDLEY JA: Q: The Court, I think, understands that, but apart from being uncomfortable I am trying to find out whether you recognise it, looking in the mirror, that is what you did. If you don’t I would like you to explain to me that what you did was not fraudulent? A: I don’t like the use of the word ‘fraudulent’ but I believe it was. It was an action which led to money passing hands, yes, so in that sense it is right but there was no benefit to me. If anything, it has been nothing but detriment to me and it has cost me dearly and my family dearly and it has destroyed my reputation.

Q: I will ask you the question again, do you now recognise that what you did  was fraudulent or do you have a reason why you think that what you did was not fraudulent?

A: I believe that my action was fraudulent.”

It was suggested in cross-examination that, although the appellant received no fee for the false certificate, he enjoyed certain economic advantages from his consultancy with the Title Conveyancing Company. Hence, it was suggested, he derived indirect benefits from his misconduct. He denied that he gave any consideration to any such benefits. He asserted complete independence of action when advising clients referred to him by the Title Conveyancing Company. I would be prepared to accept that his conduct was not motivated by any perception of direct or indirect gain but was intended to be of help to Ms Goode and, as he believed, to the mortgagors facing the urgent necessity to obtain a
certificate to replace that of Mr McConnell which had been rejected.

3. The appellant acknowledged both before the Tribunal and in this Court that he had acted wrongly. He came to acknowledge that he had acted fraudulently. So far as the suggestion of moral blindness is concerned, it is perhaps understandable that the appellant should baulk at the acknowledgment of fraud. He was confronted, in a public courtroom and in the presence of members of his profession with an assertion of particularly disgraceful conduct. I am prepared to accept that he did not intend to act disgracefully. He had rationalised in his own mind the propriety of what he was doing, its moral justification and its justification so far as the mortgagors were concerned. He failed to consider the position of the mortgagee, the potential position of the mortgagors and his own  duties as a solicitor and officer of the Court. I accept the appellant’s expression of contrition. I believe that, whatever doubts might earlier have existed, he came in the solemn circumstances of the appeal hearing at least, to a full realisation of the gravity of his misconduct, of its seriousness for legal purposes and of its offence to professional standards and to moral principle. Just as a failure to appreciate the full measure of error is relevant to exclusion from the company of the legal profession, so such realisation (even belated) is a consideration relevant to restoration to that company. Cf In the Matter of the Application of Noel Norman Dennis, Court of Appeal, unreported, 12 December 1988, per Samuels JA.

I can understand the force of the contention that a person who acknowledges fraud is, by that acknowledgment, excluded from the company of the legal profession. But fraud manifests itself in a multitude of ways. For example in the law of insurance, fraud was formerly, without more, a reason to justify denial of indemnity by an insurer: whatever the nature of the fraud or of its consequences in the particular case. This stern rule was justified by the duty of the utmost good faith owed by the insured to the insurer. In the review of this area of the law, it was concluded that the courts should have the power to adjust more delicately the rights of the parties in cases: “… where the loss of the insured’s claim would be so seriously disproportionate of the harm which the insured’s conduct has or might have caused.” See the Law Reform Commission (Cth), Insurance Contracts (ALRC 1982) 118. This view was adopted by the legislature. See Insurance Contracts Act 1984 (Cth), s56(2).

The duty of this Court is to protect the public, to uphold the standards of the legal profession and to mark the disapprobation of the conduct of legal practitioners who engage in fraud of whatever kind. Such duty raises legal and social considerations somewhat different from fraud in insurance claims. Insureds come from all backgrounds. Solicitors enjoy special privileges and submit to special duties as a consequence. However, fraud clearly manifests itself in  a multitude of different ways. The fraud to which the appellant admitted in this case was potentially serious. But in the event, it had serious consequences only for the appellant himself. I do not believe that fraud as such, admitted or proved, requires in every case, without more, the removal of the name of a solicitor from the roll. It is necessary to examine in each case the nature of the fraud involved. Many acts of fraud will indeed require removal from the roll. In other cases, a less drastic determination will be appropriate.’

Justice of Appeal Cripps’s comments were similar:

‘I have had the opportunity of seeing Mr Fraser give evidence in the witness box. I accept his evidence. He acknowledged, as he always has, that his conduct did not measure up to the standard required of solicitors and asked the Court to accept that his conduct amounted to “temporary lapse which arose out of the belief that he was not acting against the interests of any party”. It was put to Mr Fraser that he knew when he gave the Certificate and when he answered questions by Mr Morton a couple of days later with respect to that Certificate, his conduct was fraudulent. He did not deny that he had behaved badly and that his conduct was deceitful. However, he was reluctant, at first, to concede that his conduct should be characterised as fraudulent. Later, he acknowledged that what he had done amounted to a fraudulent representation to the mortgagee (see Demetrios v Gikas Dry Cleaning Industries Pty Ltd (1991) 22 NSWLR 561). Mr Fraser’s refusal to acknowledge that his conduct was fraudulent was relied on by Mr Garling, on behalf of the Law Society, as demonstrating a failure to understand and appreciate the seriousness of his conduct and that his ignorance should be treated as ignorance of “general principles applicable to common activities of a solicitor” (see Law Society of New South Wales v Moulton [1981] 2 NSW LR 736 at 741).

In fairness to Mr Fraser, it must be borne in mind that before the Tribunal and before this Court he did not dispute that his conduct was deceitful and that it fell short of professional standards. I do not think his reluctance to label his conduct as fraudulent has the significance the Law Society submits. Mr Fraser believed that Mr and Mrs Livingstone had been told by Mr McConnell what he would have told them had he interviewed them. It was not as though he was representing to the mortgagee that Mr and Mrs Livingstone had had the mortgage explained to them when he knew they never had or had no reason to suppose they had. He believed the mortgage had been properly explained. His professional misconduct was representing that he was the person who had explained the mortgage. When answering questions under cross examination, he was disputing the degree of culpability of his conduct. I do not regard his reluctance to make a concession that he was guilty of fraud as demonstrating ignorance of his obligation. Rather, I think, it was conduct borne of a reluctance to continue to debase himself publicly.’

Justice of Appeal Handley’s approach was perhaps less forgiving.  He cited the following decisions relating to disciplinary approaches to fraudulent conduct:

‘These include In Re Salwey (1894) 15 NSWLR 117 30 where the solicitor was struck off for fraud and perjury although the fraud was not against a client. The Court however indicated that if after the lapse of some years the respondent was able to bring forward testimonials of good character he might possibly induce the Court to restore him to the Roll. In Re Coleman (1905) 5 SR (NSW) 272 the solicitor, at a client’s request, wrote to a mortgagee suggesting 35 that a stock mortgage be back dated and the amount of the advance falsely inflated to protect one creditor of the client to the detriment of another. The suggestion was not acted on. The solicitor was suspended from practice for twelve months. In Re Daly (1907) 7 SR (NSW) 561 the solicitor had made false and fraudulent representations to counsel to induce the latter to accept a brief without payment of the fee in advance. He later gave false evidence to the Full Court which the Court rejected and categorised as perjury. He was suspended from practice for eighteen months, and the Chief Justice said (564): “The respondent is apparently a young man, who has not long been practising his profession. If he had had a longer experience it may be that we should have felt it to be our duty to strike his name off the Roll. We have decided to take a more lenient course, believing that this will act as a warning to him.” In Re Drew (1920) 20 SR (NSW) 463 the solicitor prepared letters which he knew were to be signed by his client and fraudulently back dated. They were never used. The Full Court ordered that he be suspended from practice for six months. Finally in Re a Solicitor (1935) 52 WN(NSW) 182 the Full Court found that the solicitor was a party to providing sham bail and had failed to realise until very late in the proceedings that he had done anything improper. He was suspended from practice for six months. Compare Cahill v Law Society (1988) 13 NSWLR 1.’

See also:

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