Council of the Law Society of New South Wales v Li

BELL CJ: By summons filed on 12 June 2024, the Council of the Law Society of New South Wales (Law Society) sought the following relief:

As recently noted in Council of the Law Society of New South Wales v Croke [2024] NSWCA 195 at [2] (Croke), such relief lies within this Court’s inherent jurisdiction, and is statutorily preserved by ss 22, 23 and 264 of the Uniform Law: see also Council of the Law Society of New South Wales v Karimjee [2021] NSWCA 179 at [5]-[6].

On 10 May 2023, the Respondent was convicted, following a plea of guilty to three counts of dishonestly obtaining a financial advantage by deception under s 192E(1)(b) of the Crimes Act 1900 (NSW) (Crimes Act). The counts involved defalcations from accounts held by the law firm in which he was then employed. The three counts were as follows:

The Respondent was sentenced to an aggregate term of imprisonment of 2 years and 8 months, to commence on 10 May 2023 and expire on 9 January 2026, with a non-parole period of 14 months.

By letter dated 1 November 2023, the Respondent advised the Law Society that he considered himself currently unfit to engage in legal practice, and that he agreed with the resolutions proposed by the Law Society which included the initiation of proceedings for the purposes of s 23(1)(b) of the Uniform Law in which the Council would apply for a declaration as to his unfitness for practice and the removal of his name from the Roll. The Respondent indicated that he would consent to such orders. He added that:

By subsequent letter dated 9 July 2024, the Respondent advised the Law Society that he consented to the declarations and orders sought in the summons filed on 12 June 2024.

Notwithstanding the Respondent’s consent to the orders sought, this Court must be independently satisfied that the Respondent is “not presently fit to practise and is likely to be unfit in the indefinite future such that the removal of his name from the Roll is appropriate”: Croke at [10]; see also Council of the Law Society of New South Wales v Duncan [2024] NSWCA 147 at [3].

In Council of the New South Wales Bar Association v Einfeld (2009) 258 ALR 768; [2009] NSWCA 255 at [16], it was observed that:

The following details of the offending are taken largely from the agreed statement of facts.

From 18 April 2019 to 1 September 2022, the Respondent, while employed as a solicitor with Sun Lawyers, deceptively caused amounts due to Sun Lawyers or its clients to be paid into bank accounts held in his own name. The amount misappropriated totalled $412,027.

On 6 September 2022, the offences were discovered when Ms Sun, the Principal of Sun Lawyers, received a complaint from a client about the Respondent’s conduct.

On 7 September 2022, Ms Sun notified the Law Society, and summarily dismissed the Respondent from employment at Sun Lawyers. On the same day, the Law Society engaged trust account inspectors to investigate the notification and prepare a report pursuant to s 165 of the Uniform Law. The Respondent cooperated with Sun Lawyers by providing a spreadsheet outlining each incidence of fraud – which was provided to the Law Society.

On 8 September 2022, the Respondent made a notification under s 154(1) of the Uniform Law, making admissions that: (i) in 2020, he caused trust monies in the sum of $67,000 to be paid into his personal bank account, rather than into Sun Lawyers’ trust account; (ii) around September 2022, he transferred a client $67,000 from trust funds held by Sun Lawyers on behalf of other clients; and (iii) from early to mid-2021, he issued clients of Sun Lawyers false invoices which directed payments to his personal bank account rather than Sun Lawyers’ trust account. In addition, the Respondent admitted that he failed to commence proceedings on behalf of clients, and misled them to believe that they had been commenced.

On 9 September 2022, the Respondent attended Surry Hills Police Station, where he made full admissions of the fraudulent conduct. On the same day, the Respondent was charged with one offence of dishonestly obtaining a financial advantage by deception under s 192E(1)(b) of the Crimes Act.

On 15 September 2022, the Law Society resolved to immediately suspend the Respondent’s practising certificate pursuant to s 77 of the Uniform Law. On 19 September 2022, the Law Society served the Respondent with notices, pursuant to s 83 of the Uniform Law, of its intention to cancel the Respondent’s practising certificate. On 26 September 2022, the Respondent notified the Law Society that he would not provide submissions in response to the notices. On 20 October 2022, the Law Society resolved to cancel the Respondent’s practising certificate for the year ending 30 June 2023.

On 10 May 2023, as explained above at [4], the Respondent was convicted on his pleas of guilty and was sentenced to an aggregate term of imprisonment of 2 years and 8 months, to expire on 9 January 2026. The non-parole period was 14 months, meaning that he was eligible for parole on 9 July 2024. The Respondent was also ordered to pay an aggregate sum of $167,000 to Sun Lawyers and the defrauded clients.

On the same day, her Honour Magistrate Farnan made the following sentencing remarks:

This Court is not precluded by s 91 of the Evidence Act 1995 (NSW) from relying upon the sentencing remarks. The Respondent expressly consented to the Law Society tendering her Honour’s reasons, after having been informed that those reasons may not be admissible to prove the truth of their contents without his consent: and see Croke at [9]; Hilton v Legal Profession Admission Board [2017] NSWCA 232 at [55]-[56].

The Law Society submitted that, having regard to the Respondent’s conduct, the Respondent is not a fit and proper person to remain on the Roll and he is probably permanently, or at least indefinitely, unfit to engage in legal practice.

In Croke, I explained at [11] that:

As Spigelman CJ emphasised in New South Wales Bar Association v Cummins (2001) 52 NSWLR 279; [2001] NSWCA 284 at [20], the legal profession demands the highest levels of integrity for various important reasons:

Critical to upholding confidence in the legal profession is the appropriate maintenance of trust accounts, as this Court explained in Barwick v Council of the Law Society of New South Wales [2004] NSWCA 32 at [118]:

In Council of the Law Society of New South Wales v Yoon [2020] NSWCA 141 at [28] (Yoon), this Court held that an amount just over $400,000 was a “substantial” sum to have misappropriated, and justified an order removing the practitioner’s name from the Roll. The misappropriation of any sum of money by a lawyer is a gross violation of the oath or affirmation which every new lawyer makes on admission to practice, namely to “truly and honestly conduct” themselves in the practice of a lawyer of the Supreme Court of New South Wales. Indeed, as this Court explained in Council of the Law Society of New South Wales v Green [2022] NSWCA 257 at [65], “the ordinary consequence of misappropriation of trust funds by a practitioner is removal from the roll”.

The Respondent misappropriated a substantial sum of money, affecting a wide range of clients. As in Council of the Law Society of New South Wales v Clarke [2022] NSWCA 57 at [9], and as described in Croke at [15], the Respondent’s offences:

For the above reasons, the Court should make the following orders:

KIRK JA: I agree with Bell CJ.

STERN JA: I agree with the Chief Justice.