Robb & Anor v Law Society (ACT)

(1996) 72 FCR 225

---

(Judgment by: KIEFEL J) Court:

Judges: BLACK CJ
JENKINSON
SACKVILLE

KIEFELMERKEL JJ

Subject References:
LEGAL PRACTITIONERS
whether practitioners dealt with client monies in accordance with client directions
whether sums representing unpaid disbursements could be treated as the practitioners' own money
delays in paying disbursements where client monies made available for that purpose
delay in paying refunds to clients
whether professional misconduct
particular liens
LEGAL PRACTITIONERS
penalty
matters other than those the subject of charges taken into account
conduct of disciplinary proceedings

Legislative References:
Legal Practitioners Act 1970 (ACT) - ss67(1), 62, 87(1), 87(5), 94(2), 91, 98(2)(b)

Case References:
Chamberlain v The Law Society of The Australian Capital Territory - (1992) 43 FLR 149
Guy v Churchill - (1887) 35 Ch D 489
Johns v Law Society of New South Wales - [1982] 2 NSWLR 1
Re Johnston and re the Legal Practitioners Ordinance 1970 - (1979) 32 ACTR 37
Northwest Construction Co Pty Ltd (In Liquidation) v Marian - [1965] WAR 20
Worrell v Power & Power - (1993) 46 FCR 214

Hearing date: 11 OCTOBER 1996
Judgment date: 24 DECEMBER 1996

MELBOURNE

---

Judgment by:
KIEFEL J

On 7 June 1996 the Supreme Court of the Australian Capital Territory ordered that Gary Alan Robb be suspended from practice as a barrister and solicitor for a period of eighteen months and that his partner, Gerard Peter Rees, pay a fine of $20,000 and that each of them pay the costs of the Law Society of the Australian Capital Territory on a solicitor and client basis. Those orders were made following the consideration of a report prepared by the Law Society with respect to certain conduct engaged in by the practitioners and a hearing at which evidence was adduced. Each of the practitioners appeals from the Supreme Court's findings as to the conduct in question and the disciplinary orders made.

Section 67(1) of the Legal Practitioners Act 1970 (A.C.T.) ("the Act") provides as follows:

"67.(1)

If, on a report under section 62 or otherwise, the Supreme Court is satisfied that a barrister and solicitor is guilty of professional misconduct or unsatisfactory professional conduct, the Court may, by order, do all or any of the following:

(a)

direct that his or her name be removed from the Roll of Barristers and Solicitors;

(b)

suspend for such period as the Court considers appropriate his or her right to practise in the Territory as a barrister, as a solicitor or as a barrister and solicitor;

(c)

impose on him or her a fine not exceeding 200 penalty units;

(d)

where the barrister and solicitor is practising solely as a barrister - reprimand him or her."

Orders were made after the Supreme Court had declared itself satisfied that the practitioners had been guilty of professional misconduct.

Section 62 provides for the preparation of a report by the Professional Conduct Board of the Law Society, where it is considered that the matter ought to be dealt with by the Supreme Court. And it is relevant, to later discussion, that the proceedings in the Supreme Court were conducted upon such a report.

The conduct to which their Honours principally referred in reaching their decision was that engaged in in breach of the Act and in particular ss 87(1) and 94(2) which, stated shortly, require a solicitor to retain client monies as trust monies and to deal with them only as directed by the client. I shall consider later the question whether their Honours took into account other conduct. The practitioners had, in their Honours' view, failed to pay disbursements and outlays as their instructions required and to pay them timeously. At the same time they obtained advantages from late payment, to which they were not entitled. The disbursements and outlays which ought to have been paid promptly were, for the most part, counsel's fees and expert witnesses' fees. The conduct, upon which the Law Society had reported, also involved the retention of some refunds from third parties, which ought to have been paid to clients. It was at no time however suggested that the practitioners had not intended making payment, but rather that it was not open to them to choose some later time to do so. The argument for the practitioners was, essentially, that the monies in question ought to be regarded not as client monies but those to which the practitioners were entitled.

Their Honours also stated that s 91 of the Act had been breached. It provides that a solicitor is to cause all trust monies received by the solicitor from or on behalf of a client to be paid into a general trust bank account maintained by the solicitor within a stated period of time. Whilst the section was not specified in the Law Society report, there was reference to payment of the refunds due to clients to the office account of the practitioners and not the trust account.

Another aspect of the conduct which had been relied upon by the Law Society and which was referred to in the report by it to the Court, was that the practitioners were also guilty of gross neglect and delay in making the payments. This was not the subject of any express finding by the Supreme Court.

The Statutory Provisions

Sections 87(1) and 94(2) provide as follows:

"87.(1)

All moneys received by a solicitor, in connection with the solicitor's practice in the Territory, from, or on behalf of, a client of the solicitor shall, for all purposes, be deemed to be held in trust for that client to be disbursed, or otherwise dealt with, by the solicitor in accordance with the instructions of the client."

...

"94.

...

(2)

Subject to subsection (3) and to Division 8, a solicitor shall not withdraw any money from a trust bank account except for the purposes of payment to, or disbursement according to the direction of, the person for whom the money is, by virtue of section 87, to be deemed to be held in trust."

The expression "trust moneys" is defined in s 3 to mean: "moneys that are, by virtue of section 87, to be deemed to be held by a solicitor in trust for a client of that solicitor".

It may be observed that the provisions operate together, the former confirming the existence of a trust with respect to monies held for or on behalf of the client and, therefore, the need for instructions as to the use to which they may be put, and the latter containing a prohibition against the use of those monies other than as authorised. For present purposes it is clear from these provisions that monies to which the client would otherwise be entitled to be paid ( "client monies" ) but which are intended to be utilised in meeting expenses incurred on that client's behalf (or "disbursed" ) are to be put to that use alone. The question whether there has been any misconduct because, relevantly, the obligations cast by the statute have been breached, would then likely fall to be determined simply by a consideration of the terms of the authority. Further qualification or description of the duty owed to the client was not relied upon by the Law Society and, in light of the statutory provisions, would not seem to take the matter further.

The Conduct Identified

Mr Robb was admitted as a legal practitioner on 16 August 1976 and received an unrestricted practising certificate in January 1980. He carried on practice either on his own behalf or in partnership from 1984. In May 1987 Mr Rees joined the firm commenced by Mr Robb. He had been admitted on 10 August 1982 and received an unrestricted practising certificate in January 1990. His experience with respect to the keeping of accounts and the handling of client money was more confined, as he had not worked in a private firm. He became an equity partner in January 1990. Another person later joined the partnership but he was not made the subject of any complaint or charges.

The practice of the firm largely concerned personal injury litigation for plaintiffs. The practitioners usually acted on a speculative basis, so that payment of the firm's fees was dependant upon success in the client's action. To facilitate this style of litigation the practitioners had made arrangements with a number of barristers, and some expert witnesses, whereby payment of their fees was also postponed to judgment or settlement. There was no fixed time within which counsel or those witnesses were to be paid and, as their Honours observed, counsel who had not been involved in final negotiations or the trial of the action were necessarily reliant upon the practitioners to advise them when payment could be made. The practice also paid some litigation expenses on behalf of these clients, on the basis that it would be refunded at the conclusion of the action.

Although there was debate about the length of time taken to pay counsel, it seemed that it was not the practice of counsel on the firm's panel to send accounts rendered. There are a number of reasons why this might be so and their Honours did not express any conclusion upon it. There was apparently no objection to the delay in payment by counsel regularly retained by the practitioners. The complaint concerning non-payment of fees in circumstances where client monies had been made available for that purpose and which led to the report to the Court was instigated by one person, Mr Walmsley, a barrister who had been briefed by the firm for many years and who had enjoyed a close social relationship with the two practitioners, especially Mr Rees. He had acted extensively for the practitioners and derived a substantial income from the practice. He was also generally aware of delays in receiving payment and had earlier taken the step of raising the level of his fees to hedge against it. For reasons not presently relevant, he wrote to the partners on 16 August 1993 detailing the fees he considered to be due to him. Relations between Mr Walmsley and the practitioners deteriorated from that point. By the end of August he had lodged a complaint with the Law Society concerning money authorised by some of the firm's clients to be transferred from the trust account to the office account for disbursement, and in particular for payment of his fees, but which had, to the contrary of those instructions, been retained by the firm for many months prior to payment. Payment of over $25,000 was made by the firm to Mr Walmsley in January 1994 and some further payments were made thereafter. However a further complaint was lodged by him with the Law Society in May 1994.

It is necessary then to turn to the procedures employed by the practitioners. The starting point is of course the client instruction.

Where a settlement was proposed, which was the more common occurrence by dint of the nature of the practice, the practitioners obtained an authority from the client to settle the action for a specified sum "inclusive of costs". It recorded the client's understanding that the amount of costs and disbursements was expressed as a lump sum and that these sums were to be paid. It concluded by nominating the net sum which was to be paid to the client after these payments. In some cases the instruction would also contain an acceptance of the solicitor's lump sum assessment and would disclaim any requirement for an itemised account. An additional authority, obtained from the client about the same time, was in standard form and provided:

"I hereby authorise GARY ROBB & ASSOCIATES, Barristers and Solicitors, to disburse or otherwise deal with all monies received by them from me on my behalf in relation to the above matter in accordance with my instructions, express or impliled (sic) for, but not limited to the following purposes/expenses ...".

There was then set out a comprehensive list which included barrister's fees and court fees, those for medical reports, telephone calls and other disbursements usual in litigation. With respect to payments to be made on the client's behalf it went on:

"This authority extends to all monies received relating to this matter including monies received after the initial amount.

I also authorise you to deduct your reasonable costs and disbursements from the funds held in the Trust Account".

What was later provided to the client as a "bill of costs" provided a little more information concerning costs and disbursements, but the Supreme Court was of the view that they were not itemised.

The submissions made for the practitioners contended that they believed and were entitled to believe that the sum representing unpaid disbursements, which was to be taken from the trust account according to the authority, assumed the same status as their fees. That is to say, the monies were no longer the client's but could be deducted by the solicitors from the client monies and dealt with as their own. But the reference to the deduction of funds for disbursements from the trust account must be read with the other express instruction that they in fact be disbursed. There is absent any authority that the practitioners might have the benefit of monies to be used for payment of expenses, but not yet put to that purpose. To the contrary, the client's instruction was that any dealing had to be on the client's behalf. No different view is gained by reference to the client's acknowledgment that disbursements had to be paid. It did not, relevantly, amount to any kind of concession on the part of the client that the solicitors were themselves liable for the disbursements or were entitled to the trust monies as their own.

It follows, in my view, that the authorities executed by the clients, properly construed, permitted the solicitors to deduct from client monies a sum representing their fees and disbursements which they had already paid, and to retain those monies. It also permitted them to lawfully transfer from the trust account to the office account a sum representing unpaid expenses incurred by or on behalf of the client. But that transfer was only for the purpose of attending to payment of those expenses. That was the extent of the client instruction.

On receipt of the settlement monies the practitioners would, as the Act required, pay them to the trust account. They would then send a document to the client which specified the lump sum said to be the solicitors' costs and the total amount of disbursements of which, as I have said, some detail was provided. Once rendered, and in purported compliance with the instructions previously given, the total amount of the disbursements which had been shown on the face of that bill was credited to the office ledger in the name of the client. This was in addition to the transfer of the practitioners' own costs in the matter. Disbursements which were not paid remained in the office account. In respect of a period described as from at least July 1992 a "cash management account" was conducted by the practitioners in conjunction with the office account, the latter effectively operating on an imprest system. The surplus standing in the office account, and which was in part made up of unpaid client disbursements, was paid to the cash management account from time to time. An amount was periodically transferred back to the office account to meet cheques drawn in payment of expenses. Whilst the terms of the report imply some earlier commencement of this practice, none other was identified by the investigating accountant. This system was discontinued from about December 1993. In January 1994 a new office account was opened when the additional partner joined the firm and the practice was not thereafter reverted to.

It is necessary then to turn to the delay which occurred in payment of the disbursements and the steps which were undertaken with respect to the fund held in the practitioners' office account for the purpose of payment. These were dealt with in the report of the Law Society's accountant.

From January 1993 accounts were opened for four barristers and some doctors in the books of the firm (the "creditors' accounts"). Mr Walmsley was one of those persons. Fees due to the barristers, or the doctors, were transferred, by journal entry, from the office account to the particular creditor's account. Any cheques then drawn would be shown as a debit in the creditor's account. To this point the appearance of payment is created. However, the investigating accountant found a series of cheques which had been written back, by credit reversal, into the office account without a cheque having been drawn. It is of some importance that on the Society's evidence this practice could only be said to relate to Mr Walmsley. The accountant's searches revealed that fees rendered by Mr Walmsley, totalling almost $72,000, were posted to his creditor's account prior to June 1993 but that a sum in excess of $63,000 was later transferred back to the office account. These earlier entries were, it appears to have been conceded, made for tax purposes. It needs also be noted here that, in an endeavour to obtain this taxation advantage, some entries were effected prior to settlement so that, whatever else one might say of the propriety of the procedure, the entries in question did not on every occasion relate to client monies. Further, the transfer for tax purposes was not itself relied upon by the Society as a ground for a finding of misconduct. The conduct upon which the Society relied concerned the failure to pay fees and expenses in accordance with their authority.

The report was inconclusive as to the actual delay in the payment of fees. What was however discovered, in the process, was that some cheques drawn in favour of Mr Walmsley, in a particular period, had been kept in a folder and sent out to him at intervals determined by the office manager in consultation with the practitioners. Mr Walmsley had been alerted to the practice because of the date appearing on some cheques.

The Society, in its report, identified and relied upon the retention of these cheques as showing wilfulness. However the accountant's evidence only justified a finding of wilfulness in relation to delays in the payment of Mr Walmsley's fees. The other barristers, for whom these accounts were also created, appear to have been paid about two months after receipt of the client funds into the office account. And whilst the accountant's evidence might support a finding of "wilfulness", in the sense that the solicitors determined not to pay Mr Walmsley immediately, it did not show that, as between themselves and the client, they understood the monies to be the client's. The question of their state of mind assumes some importance in connection with penalty, to which I shall subsequently refer.

With respect to the barristers whose fees were not shown in a separate account, the accountant found a number of cases where there were long delays. These were set out in an annexure to the report, which was referred to by the Supreme Court, which traced the funds to payment. The annexure dealt with the period from April 1991 to January 1994 and concerned twenty one matters which appeared, as their Honours found, to be neither a random selection nor a complete list. Nevertheless that was all that was disclosed by the investigation. For the most part the delays were approximately five months but, more typically, two to four months. On two occasions however there were delays in payment of counsel's fees of 241 and 595 days.

Apart from the delay occasioned in paying out fees and expenses on behalf of the clients, the solicitors also received refunds which were to be paid to clients. The accountant found several examples of lengthy delay in refunding those sums and that they had remained, in the interim, in the office account. There was, however, no suggestion that this was deliberate and there was no finding to that effect by the Court. In these instances oversight, consistent with inefficient procedures, appears to have been accepted as the explanation.

The conduct identified by the Law Society as amounting to misconduct on the part of the practitioners, and which contravened sub-sections 87(1) (referred to in the grounds of misconduct, in error, as s 89(1)) and s 94(2) of the Act, in summary, involved the following: failures to apply client monies to the payment of accounts within a reasonable time, when the monies had been transferred from the trust account to the office account for that purpose; failures to carry out the instructions of the client to disburse those sums and in breach of the instructions using the funds for their own benefit either by retaining them in the office account or in their cash management account; and the retention of refunds made by third parties due to clients. The particulars provided in the report limited the relevant conduct to a period of something under three years. How widespread the practice may otherwise have been and whether any other substantial delays had been incurred in payment was not dealt with in the allegation.

The Findings of the Supreme Court and Submissions as to them.

For the present I shall confine the discussion of the approach taken by the Supreme Court to the breaches of statutory obligation, the subject of the Law Society's report and, in effect, the charges the practitioners had to meet. The Court was of the view that the practitioners were in breach of their duty to the client once they transferred the funds from their trust account to the office account, but did not then attend to payment of fees and other expenses owing.

As I have earlier observed, the principal submission for the practitioners was that the monies received into the office account were not then affected by any obligation to the client. There were a number of aspects to this contention, the nub of which seemed to be that monies transferred with the client's authority to the office account became the solicitors' or were no longer those in which the client retained an interest. This submission was not accepted by the Supreme Court and in my respectful view correctly so. What it ignores is the terms of the instructions, which were to disburse the monies received in payment of the specified fees and expenses. And it would follow from that instruction, by implication, that payment was to be made as soon as reasonably practicable. Indeed the practitioners did not submit, as I understood their argument, to the contrary of the proposition that it was intended that the monies were to be utilised to pay fees and any other disbursements. Rather they sought to address the delay in doing so, and the use made of the money in the meantime, by reference to some entitlement they had to treat the monies as their own and therefore to pay entirely at their discretion. There is, however, no basis for such an assertion.

Reliance was sought to be placed upon the practitioners' own liability to the barristers they had retained for payment of their fees. By this means, it was argued, one could see that the monies were transferred to the office account for the purpose of exonerating the practitioners against their own liability to pay disbursements incurred on the clients behalf. Such an approach would, of course, place monies provided to a practitioner to meet unpaid disbursements in the same category as those already paid by the practitioner and in respect of which the solicitor was presently entitled to a refund.

But again, the submission ignores the terms of the authority, which is not an acknowledgment that the practitioner is liable to pay the disbursements and therefore may take funds as his own and deal with them in his own time. The authority is to take, from the monies held in trust for the client, sums to meet disbursements incurred on the client's behalf and to pay them. And as I have earlier observed, the payment would need be attended to as soon as practicable, to prevent any claim being brought by persons to whom the obligation to pay had arisen because settlement monies had been received. This is consistent with the requirement that any dealings be on the client's behalf. The retention of those monies in either the office account or the cash management account was obviously not for the client's benefit but for the practitioners'. It was, in this connection, that their Honours in the Supreme Court observed that the practitioners seemed oblivious to the conflict as between their interests and their duties to the clients. Their Honours said:

"However the arrangement between the solicitor and counsel did not of itself affect the rights and obligations as between the solicitors and the client. The duty to the client required the solicitor to pay counsel upon receipt of the settlement monies. If the settlement moneys, having been paid into the trust account as they had to be, remained there, it is arguable that there would have been no breach of the obligation to the client so long as the solicitors, within a reasonable time, used the funds for the purposes for which they were received. But once the moneys were transferred to the solicitors' office account, there was an immediate risk of a breach of the obligation not to use them otherwise than as authorised. The obligation was not discharged by allowing them to remain in the office account or to provide a fund for further transfer to the solicitors' cash management account."

In the conclusions stated, the Supreme Court did not advert to a breach of s 98(2)(b) of the Act. Nevertheless the Court had earlier made a finding to that effect. Section 98(2)(b) provides that a solicitor must keep accounting and other records as disclose particulars of all trust monies received or paid and keep those records in such a manner that they can be conveniently and properly audited. The particulars given of the conduct relied upon by the Law Society, in this connection, were as to the cheques drawn by the solicitors in favour of Mr Walmsley, but withheld. Their Honours found that this practice was not justified and was in breach of the section. Their Honours made other findings concerning the solicitors' duty to counsel for payment of fees. I shall refer in more detail to them, and the part they may have played in the ultimate orders made by the Supreme Court, later in these reasons.

Whether Professional Misconduct/Penalty

The Act was the subject of substantial amendment in 1993 and after the decision in Chamberlain v The Law Society of the Australian Capital Territory (1992) 43 FCR 148, where it had been observed that there were no definitions with respect to conduct which might give rise to disciplinary action. Section 37 of the Act now provides that " professional misconduct" includes:

"(a)

unsatisfactory professional conduct of a substantial, recurring or continuing nature;

(b)

conduct (whether consisting of an act or omission) occurring otherwise than in connection with the practice of law that would justify a finding that its perpetrator is not of good fame and character or is not a fit and proper person to remain on the Roll of Barristers and Solicitors; and

(c)

conduct that is professional misconduct by virtue of section 118".

(Section 118 is not here relevant). The section also defines "unsatisfactory professional conduct" as including:

"conduct (whether consisting of an act or omission) occurring in connection with the practice of law that falls short of the standard of competence and diligence that a client is entitled to expect of a reasonably competent legal practitioner."

It is these two terms which are referred to in s 67(1) (set out above) as warranting disciplinary action ranging from reprimand to removal from the Roll of Barristers and Solicitors.

Their Honours did consider, at some length, the style and manner of the conduct of litigation by the practitioners and expressed opinions as to aspects of them. That relating to the duty owed to counsel concerning payment of their fees was one such topic. The propriety of obtaining instructions on an "all-up" basis was another. Whilst these matters appear to have been influential in another respect, namely in determining the appropriate disciplinary action, their Honours, it seems to me, did not venture beyond the conduct prescribed in the Law Society's report in determining that there had been professional misconduct, at least by reference to its nature. Their Honours were concerned, in this connexion, with conduct constituted by an unauthorised dealing with client monies. What is not entirely clear is whether their Honours proceeded upon the basis that the conduct had been more extensively undertaken by the practitioners than the Society's evidence disclosed. At one point in the reasons the Court said:

"the solicitors did not seek to make out a case that these were the only examples of delay in paying disbursements once the settlement or judgment moneys were in hand, and it is likely that there were many others".

It was not necessary for the solicitors to disavow conduct occurring other than as specified by the Society and it does not seem to me to be a necessary inference, from what was disclosed by a relatively limited investigation, that there had been a substantial number of other delays in payment or that the delays were necessarily great.

Nevertheless, a conclusion that the appellants had engaged in professional misconduct was open to the Supreme Court, having regard to the conduct which was detailed in the report. Once it is accepted that the conduct involved unauthorised dealings with client monies it is clearly in a different, and more serious category than that which might be explained by lack of competence. It involved not a few isolated incidents, but a course of conduct. And that conduct was "substantial", because it concerned breaches of statute relating to fundamental obligations owed to a client. That explains why it was not appropriate simply to deal with it on the basis of the practitioners' lack of understanding. I should add, with respect to a submission made for the practitioners in argument, that it was not in my view, incumbent on the Supreme Court to require evidence of other practitioners before concluding, in circumstances such as these, that professional misconduct was involved. The nature of the obligations in question rendered such a course unnecessary.

It does not, however, follow from that conclusion that the disciplinary orders imposed, and in particular that suspending the practitioner from practice for eighteen months, were justified having regard to the conduct the subject of the report.

Their Honours observed, prior to making the orders in question, that it was desired to make it clear to the profession that such breaches of obligation were to be treated as professional misconduct and that a strong message to that effect was necessary. That is clearly a matter relevant to the Court's consideration of an appropriate order. However, with respect to their Honours, the severity of the orders is such that I am obliged to conclude that, having regard to the matters referred to by their Honours, they proceeded upon a basis which extended beyond the conduct identified in the report and relied upon by the Law Society. That conclusion is reinforced by the absence of any finding of knowledge of wrongdoing on the part of the practitioners.

It will be recalled that the only "wilfulness" imputed to the practitioners by the Law Society concerned the retention of cheques drawn in favour of Mr Walmsley. Their Honours, in their stated conclusions, observed that the practitioners could not rely upon any misapprehension arising by reason of any ambiguity in the terms of the statute. That must be so. The problems which arose stemmed from their lack of knowledge generally but, perhaps more particularly, from a lack of understanding of what the authorities given to them conveyed. But, more relevantly, as I have said, nowhere was it found by the Court that the practitioners acted in the knowledge that they were using client monies. The relatively minor benefit gained from the cash management account, or from the credit balance from time to time in the office account, was not the result of any conscious wrongdoing but of ordinary management of monies which were thought, wrongly, to be their own. One might expect that cases involving a lack of understanding of the terms of the practitioners' own authorities will be rare. In this case however it appears to have been the only conclusion which could be reached.

The explanation for the severity of the orders imposed, in my respectful view, must then be gleaned from the wider review undertaken by the Supreme Court of the mode of litigation and from the views formed, in the process, of a number of undesirable aspects to it. What this did was to highlight the indifference of the solicitors to potential conflicts and to their obligations, as their Honours at various points observed. In so doing, it seems to me, it has also likely operated as influential when the Court came to consider the extent to which they ought to be held responsible.

At an early stage in their reasons their Honours said, whilst explaining certain preliminary observations, that because the evidence compelled the Court to consider questions which " go well beyond allegations of breaches of particular provisions of the Legal Practitioners Act" it was necessary to discuss aspects such as the fiduciary duty owed by the practitioners in question to their clients. The Court considered that to do so involved no real unfairness, since senior counsel for the practitioners, Mr Conti QC, had been in a position to make submissions upon these topics. As I have earlier observed, the Law Society did not place reliance upon any such additional quality the conduct may have, beyond that contained in the Act. Nor does it seem to me to add anything to what the Act provides. However it is likely that the Supreme Court considered that it added to the gravity of the matter rather than provide the context in which the matter was to be considered.

There were also a number of instances where it likewise appears that their Honours took a serious view of aspects of the manner in which litigation was conducted by the practitioners. In the way in which these concerns are expressed it is also likely, in my view, that they operated as influential with respect to the Court's view of the practitioners and their conduct. Their Honours commenced by observing that the fact that the practice was confined to plaintiffs was a relevant one and that the personal interest in the outcome rendered the possibility of potential conflicts of interest ever present. And, at one point it seems, their Honours considered the whole style of the litigation, which had assumed the proportions of what was described as a "litigation factory", played a part in the indifferent attitude which the solicitors came to have as to their obligations to clients and others. Such a conflict did arise, in their Honours' view, when the practitioners sought instructions to settle on a lump sum basis. Not only did the Court deprecate this practice, it expressed the view that it was improper and in breach of duty. I have not here dealt with the correctness of these opinions, for the relevant question which arises, in my view, is whether they ought to have been relied upon in imposing the suspension and fine.

The question of the practitioners' obligation to counsel also assumed considerable importance with the Court, for their Honours expressed views that the delay in payment involved impropriety, that the obligation to pay counsel was absolute and that it might itself qualify as professional misconduct.

The duty to pay counsel retained by a solicitor did not form any basis of the Law Society's report. It focused upon the duties to the client under the Act. And, similarly, the Law Society's case did not relate to aspects of the litigation practice which caused the Court much concern. In this respect it was submitted, for the practitioners, that had they been forewarned of the potential importance of the issue of instructions from the client they would have produced further evidence and explanation. It was not otherwise suggested by the Society that the practitioners ought to have been alert to the possibility that the Court would come to hold views about other aspects of their practice and it does not seem to me that it could do so. What occurred does not appear to have been contemplated by either party.

To these observations, concerning the matters which may have influenced the Court in determining what orders were appropriate, ought be added that relating to the extent of other delays which the Court seems to have accepted as likely to have occurred but which, as I have earlier observed, must involve speculation. In my respectful view these were matters which went beyond those which might be treated as aggravating factors with respect to the relevant conduct, that set out in the report. They were species of conduct and breaches of obligation different from that the subject of complaint and report. They could not render more serious the action necessary with respect to the more limited conduct upon which these proceedings in the Supreme Court were based and of which the practitioners had notice. It follows, in my respectful view, that each of the disciplinary orders made was disproportionate to the conduct in question.

Whilst I would not interfere with the finding of professional misconduct, in connection with the conduct the subject of the report, it is necessary in my respectful view that the orders of suspension and fine be set aside. In the case of the former, a period of suspension is appropriate but it ought to be limited to six months. The fine imposed ought, in the absence of any real pecuniary benefit received, to be reduced to $6,000.

I regard the reduced penalties as appropriate to give effect to the findings made as to the gravity of the professional misconduct engaged in by the practitioners. That misconduct involved a clear breach by the practitioners of the obligation imposed by statute to only deal with moneys which they had held on behalf of a client in accordance with the instruction or direction of the client. The existence of a misconceived and unjustified, albeit honest, claim for an entitlement to do so does not detract from that conclusion. Had the practitioners acted in the knowledge that they were dealing with money which they had held on behalf of clients contrary to the instructions or directions of the clients then a more severe penalty might have been appropriate.

On the basis that the finding as to misconduct has remained undisturbed I do not consider there is warrant in interfering with the orders made as to costs of the hearing before the Supreme Court. It is appropriate that the parties have an opportunity to file written submissions on the issue of the costs of the appeal.