Which case won?

The case for the Legal Services Commissioner
  • 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.
The case for the lawyer
  • 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.

So, which case won?

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Expert commentary on the court's decision

“This case is a reminder always to check your legal documents before approving them. If you see something that isn’t right, bring it to your lawyer’s attention.”
Tribunal finds lawyer guilty of professional misconduct

In Legal Services Commissioner v Kumar [2013] NSWADT 34, the tribunal found in favour of the Legal Services Commissioner, ruling that the lawyer, Mr Vijay Kumar, was guilty of professional misconduct. 

Following a further hearing, the tribunal also ordered that Mr Kumar’s name be removed from the roll of legal practitioners so that he could no longer practice law, that he pay compensation to his client and that he pay the Commissioner’s costs (Legal Services Commissioner v Kumar [2014] NSWCATOD 45).

Disgraceful or dishonourable conduct is professional misconduct

The tribunal noted that it is clear from the authorities that deliberate or dishonest misappropriation of funds is professional misconduct.

The tribunal also noted that the statutory definition of professional misconduct does not exclude the common law definition of professional misconduct. At common law, professional misconduct is conduct that “…would be ‘reasonably regarded as disgraceful or dishonourable’ by the lawyer’s professional [colleagues]…”. 

Lawyer’s evidence lacks credibility

The tribunal preferred the Legal Services Commissioner’s witnesses, finding that Mr Kumar’s evidence lacked substance and that his assertions strained credibility. 

As the tribunal said, “It would have indeed been a remarkable fortuitous error for [Mr Kumar]” if “the secretary, in error, completed the direction to pay in just such a manner as to result in Permanent Custodians being paid out the amount it needed in order to clear the debt owed by [Mr Kumar]”. 

The tribunal also pointed out that Mr Kumar did not offer any evidence to corroborate his story that his secretary prepared the direction to pay in error. 

Further, in the witness box the defendant was imprecise, rushed, unclear and kept halting. His evidence was unpersuasive.

Lawyer guilty of professional misconduct for misappropriation of funds

The tribunal concluded that based on the evidence, Mr Kumar’s behaviour was dishonest and resulted in the misappropriation of his client’s money. 

The tribunal found that such behaviour would reasonably be regarded as disgraceful or dishonourable by Mr Kumar’s professional colleagues.

Accordingly, Mr Kumar was found guilty of professional misconduct for misappropriation of funds belonging to his client.

Lawyer guilty of professional misconduct for obstructing audit of law practice

The Legal Services Commissioner has authority to audit law practices to ensure that they are complying with their professional obligations. 

In March 2010, the Commissioner had notified Mr Kumar of its intention to appoint an investigator to audit his law practice. 

Over the ensuing 11 months, Mr Kumar repeatedly delayed the audit with claims that he was unwell, was dealing with a family tragedy or was tied up in court. 

In its application to the tribunal to have Mr Kumar struck off, the Legal Services Commissioner included as a ground that Mr Kumar had obstructed the investigator in exercising his powers. 

The tribunal rejected Mr Kumar’s excuses for the delays. It said that the medical evidence provided by Mr Kumar was general in nature, and not specific to diagnosis, prognosis or how it would affect his ability to work. 

There was very little explanation by Mr Kumar of the family tragedy. The requests to reschedule were very last minute. 

Noting that the role of the investigator is extremely important for the legal profession, the tribunal found that Mr Kumar’s conduct in obstructing the audit would be reasonably regarded as disgraceful or dishonourable by Mr Kumar’s professional colleagues. As such, it amounted to professional misconduct.

Lawyer guilty of professional misconduct for deliberately misleading Commissioner

The tribunal also found that in his attempts to delay the audit, Mr Kumar had deliberately misled the Commissioner. 

Mr Kumar told the Commissioner’s office that he would be in court until “very late, 4 or 5pm” on a date suggested for the audit, when in fact he knew that he was not committed to court for that period. He could have made arrangements to allow the investigator to commence the audit. 

The tribunal referenced previous caselaw for the proposition that deliberately misleading the Commissioner is professional misconduct. 

The tribunal was also satisfied that Mr Kumar’s conduct in misleading the Commissioner would be reasonably regarded as disgraceful or dishonourable by his professional colleagues, and as such amounted to professional misconduct under the common law. 

In 2015 Mr Kumar appealed the tribunal’s decision, but his appeal was dismissed.

Importance of checking legal documents and preparing your case properly

This case is a reminder always to check your legal documents before approving them. If you see something that isn’t right, bring it to your lawyer’s attention. 

The case is also a reminder to prepare your case properly. Mr Kumar delayed obtaining legal representation and he did not have the necessary affidavit evidence that he could have had to assist his case. 

Although we don’t know if it would have changed the outcome in this particular case, having a properly, carefully and clearly prepared case can sometimes make the difference between winning and losing.

NOTICE: This article is accurate as at the time of publication and does not constitute legal advice. Please see our legal notices page for more information. Information related to coronavirus can be outdated very quickly.

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