Kumar v Legal Services Commissioner

1. [1]

   BASTEN JA: I agree that the appeal must be dismissed with costs, for the reasons given by Leeming JA.

2. [2]

   LEEMING JA: This is an appeal by a former legal practitioner, Mr Vijay Kumar, also known as Mr Vijay Kumar Dindayal, whose name was removed from the Roll of Practitioners following findings of professional misconduct including deliberate dishonesty. I propose that the appeal be dismissed with costs. On the most important aspect of the appeal, I have concluded that one aspect of Mr Kumar’s case belatedly raised before the Tribunal was not addressed by it in terms. However, I have concluded that nothing turns on its failure to do so, because I am persuaded beyond any doubt that had the Tribunal considered that aspect of his case, it would necessarily have rejected it.

Procedural Background

1. [3]

   The Legal Services Commissioner applied to the (former) Administrative Decisions Tribunal, for findings that Mr Kumar was guilty of professional misconduct and for an order that his name be removed from the Roll of Practitioners. Following a hearing lasting five days before the Tribunal constituted by two judicial members and one non-judicial member, Mr Kumar was found guilty of professional misconduct on three separate bases. First, the Tribunal found that Mr Kumar had deliberately and dishonestly misappropriated $12,000 from the proceeds of the settlement of a conveyance by one of his clients (Mr Malik). Secondly, the Tribunal found that Mr Kumar had contravened s 674 of the Legal Profession Act 2004 (NSW) by obstructing or misleading an investigator attempting to undertake an audit of Mr Kumar’s practice over the period from 23 March 2010 to 3 March 2011, thereby constituting professional misconduct. Thirdly, the Tribunal found that Mr Kumar had deliberately misled the Commissioner as to his whereabouts on 1 February 2011, in the course of an investigation, such as to amount to professional misconduct. See Legal Services Commissioner v Kumar [2013] NSWADT 34.

2. [4]

   Following a further hearing on 29 July 2013, the Tribunal ordered that Mr Kumar’s name be removed from the Roll of Practitioners, that he pay compensation to Mr Malik “in the amount of $3,000, on the basis that part-payments totalling $9,000 have been made”, and that he pay the Commissioner’s costs: Legal Services Commissioner v Kumar [2014] NSWCATOD 45.

3. [5]

   The Administrative Decisions Tribunal was abolished on 1 January 2014, after the latter decision was reserved, but it was common ground that transitional provisions empowered the NSW Civil and Administrative Tribunal (constituted by the same members) to determine that matter. In what follows, I refer simply to the “Tribunal” to denote either the Administrative Decisions Tribunal or the Civil and Administrative Tribunal, whichever is appropriate, and refer to the two decisions as the “Liability Decision” and the “Penalty Decision”.

4. [6]

   Mr Kumar’s appeal is as of right, in accordance with cl 29(2) of Sch 5 of the Civil and Administrative Tribunal Act 2013 (NSW). The appeal is by way of rehearing, to which s 75A of the Supreme Court Act 1970 (NSW) applies: cl 29(4). Section 75A(10) authorises this Court on appeal to make any finding or assessment which ought to have been made at first instance. Pursuant to subss 48(1)(a)(viii) and (2)(f) of the same Act, the appeal is assigned to the Court of Appeal.

5. [7]

   Mr Kumar’s 24 grounds of appeal may conveniently be divided into five groups, as they were in his written and oral submissions. He challenges each of the three adverse findings made against him. He also challenges the finding that he had only repaid $9,000 of the $12,000 found to have been misappropriated, and he challenges the order removing his name from the Roll of Practitioners. It will be necessary to deal with the latter challenge as an independent issue on appeal only if Mr Kumar’s challenges to the three adverse findings all fail. If any of Mr Kumar’s challenges to the adverse findings were to succeed, the Court would have to re-exercise the discretion as to penalty (assuming some findings of professional misconduct are sustained).

Challenge to the finding of dishonest misappropriation of $12,000 of client’s money

1. [8]

   Grounds 2 - 10 of the amended notice of appeal challenged the Tribunal’s finding that Mr Kumar’s behaviour was dishonest and resulted in a misappropriation of $12,000 of his client’s money. That was, by far, the most serious finding made by the Tribunal, and oral submissions on those grounds occupied the majority of the time spent hearing the appeal. Mr Kumar submitted that the rejection of his evidence by the Tribunal was affected by material error, and that the Tribunal had failed to address the principal submission on mistake advanced before it.

2. [9]

   In 2010, Mr Kumar acted for Mr Malik, the vendor of land at Eagle Vale. The purchase price (including adjustments) was $319,541.12. The settlement had been twice postponed and was to take place at 2:30pm on Tuesday 30 November 2010. In the morning of 29 November 2010, a single-page fax containing cheque directions was sent from Mr Kumar’s office to J A Kavanagh & Co, the purchaser’s solicitors, relevantly in the following terms:

3. [10]

   The letter was signed on behalf of Mr Kumar by someone else whose identity was not disclosed in the evidence.

4. [11]

   A legal secretary, Ms Kasey Mercieca, employed by the purchaser’s solicitors, received two emails (at 9:48 and 10:02 on the morning of settlement) from the purchaser’s lender, both enquiring what the cheque to Permanent Custodians for $12,000 was for. The second email requested that she ask the vendors, as the answer would be required for the lender’s compliance department. Ms Mercieca’s response at 10:19am was:

5. [12]

   Ms Mercieca made a file note, dated 30 November 2010, of her telephone attendance on Mr Kumar, recording:

6. [13]

   Ms Mercieca made a statutory declaration on 22 December 2010 (just over three weeks after the settlement) confirming what is recorded in the contemporaneous emails and her file note. Ms Mercieca was not required to attend for cross-examination before the Tribunal.

7. [14]

   Mr Kumar and an assistant, Mr Arunesh Avinash Ram, personally attended settlement that afternoon. The settlement proceeded and they received cheques including a bank cheque drawn on the Commonwealth Bank of Australia, dated 30 November 2010, in favour of Permanent Custodians Limited or bearer in the sum of $12,000. Later that day, that cheque was delivered to solicitors acting for Permanent Custodians by Mr Ram, unaccompanied by Mr Kumar. It was credited to Mr Kumar’s loan account three days later.

8. [15]

   In order to evaluate the evidence before the Tribunal, and, especially, Mr Kumar’s state of mind at the time, it is necessary to say something about Mr Kumar’s loan account.

9. [16]

   At the end of 2003, Mr Kumar had borrowed $293,370 from Permanent Custodians, secured by a first registered mortgage over what was described as an investment property in western Sydney. The purchase price was $330,000. The loan to value ratio was 89.81%.

10. [17]

    The Commissioner obtained correspondence, which was tendered in the Tribunal, that Mr Kumar’s loan was part of a mortgage trust and formed “part of GE Money’s Home Lending Business in Australia”.

11. [18]

    Mr Kumar rapidly fell into arrears. In March 2005 a writ of possession issued, and Permanent Custodians’ solicitors advised that payment of some $11,841 was required within seven days or else the writ would be lodged with the Sheriff. There was further correspondence throughout 2005, leading to an eviction scheduled for 10 November 2005. On 9 November 2005, the eviction was stayed. Mr Kumar fell behind again in 2007, leading to a rescheduled eviction on 21 June 2007. Mr Kumar paid the full amount outstanding by bank cheque on 19 June 2007, and once again the eviction was stayed. (Mr Kumar’s financial difficulties in 2005 and 2007 were not confined to his lender; in each of 2005 and 2007, creditors’ petitions appear to have been filed against him; they were resolved without a sequestration order being made.)

12. [19]

    The evidence did not disclose the state of Mr Kumar’s indebtedness to Permanent Custodians in 2008, 2009 or the first half of 2010. The statement for the second half of 2010 shows indebtedness of around $280,000 - $290,000.

13. [20]

    Interest was accruing at around $2,200 - $2,500 per month. A “Serious Arrears Fee”, a “Base Arrears Fee” (twice) and a “Repeat Arrears Fee” were imposed in July, August, September and October, with another “Serious Arrears Fee” being imposed in November. Fees described as “Legal Costs” were imposed in July, September and October. Three of the four monthly repayments of $2,491.07 in the period between August and November were reversed (with a “Pmt Reversal Fee” of $40 being charged in each case). It may readily be inferred that the monthly credits were made pursuant to an automatic funds transfer instruction, and were reversed due to insufficient funds being in the account being drawn upon.

14. [21]

    Further, on 16 December 2010, an amount of $199.88 was imposed as “Stayed Eviction Costs”. Once again, it would appear that Permanent Custodians was threatening to exercise its rights under the mortgage.

15. [22]

    It was in those circumstances that the amount of $12,000 was credited to Mr Kumar’s loan account on 3 December 2010 (a Friday). Internal bank documents showed that (a) Mr Kumar’s account number was written in hand on the copy of the cheque received by Westpac and (b) Westpac credited the $12,000 to “an account in the name of GEL Custodians Pty Ltd ATF Arms II Clearing Account”. That represents a legally precise description of what was stated by the head of servicing and collections of GE Money in his letter to the office of the Legal Services Commissioner dated 28 July 2011:

16. [23]

    The substantial balance from the settlement, $107,936.56, was credited to Mr Malik’s ANZ bank account on 9 December 2010, together with another amount of $5,500. There were further deposits into the same account on 16 December ($2,000), 17 December ($500) and 30 December 2010 (two deposits of $500). Those six deposits total $9,000. The Tribunal found that they represented $9,000 paid to Mr Malik by Mr Kumar. There was no challenge to that finding.

17. [24]

    There is no doubt that Mr Kumar received his client’s money. There can be no doubt that Mr Kumar was in urgent need of funds at the time his client’s money was transferred to his loan account. He had failed to make any monthly repayment over the last three months, he had incurred a “Serious Arrears Fee” on 22 November 2010, and his lender was, once again, threatening to evict him. As will be seen below, in the second half of the first hearing, Mr Kumar contended that he thought, at the time, that there were two instructions to pay $12,000 to Permanent Custodians.

18. [25]

    Mr Kumar’s case on mistake relied on the evidence of Mr Ram. Mr Ram swore an affidavit that he began to work for Mr Kumar following his being retrenched from the construction industry. He said “I had not had any experience in conveyancing”. He said:

19. [26]

    In examination-in-chief Mr Ram said that “the direction that was given to me by [Mr Kumar] on the phone and the figures that I took from the settlement sheet I [not transcribable] on a note pad and then – that’s what I prepared and then I gave it to the girl when she came.” Mr Ram said that he could not remember the name of the girl that typed up the letter. In further examination-in-chief, Mr Ram was asked:

20. [27]

    There was no material additional evidence adduced from Mr Ram and there was no cross-examination of him.

21. [28]

    The material error which Mr Kumar alleged the Tribunal had made was its failure to address one aspect of Mr Kumar’s case:

22. [29]

    There was a subsidiary dispute on appeal whether that case had ever been clearly advanced before the Tribunal. The transcript of submissions reveals that it was advanced, although it could and should have been put more clearly than it was. Something to that effect was put when counsel appearing in the Liability Hearing said:

23. [30]

    The principal reason for the lack of clarity is that the details of Mr Kumar’s claimed mistake arose only in his cross-examination on the third day of the trial. It was not contained in his response to the originating process, nor in his affidavit. Nevertheless, Mr Kumar was permitted to give this evidence:

24. [31]

    Consistently with Mr Kumar’s evidence reproduced above, it was not put to Mr Malik, who was called in the Commissioner’s case and cross-examined at length on the first and second days of the hearing, that he had “issues with GE Money” or that he had given instructions to Mr Kumar’s firm to repay his own personal loan.

25. [32]

    Given the seriousness of the issues, and possible implications for Mr Kumar’s reputation and professional standing, the appropriate course is to proceed on the basis that such a case was advanced, notwithstanding the less than satisfactory way in which the issue arose.

26. [33]

    The Tribunal dealt with ground 4, the alleged dishonest misappropriation of $12,000 of Mr Malik’s money first, at [18]-[49] of the Liability Decision. It summarised the evidence advanced in support of the Commissioner’s case at [18]-[30] in a way which, in light of what follows, need not be recounted here. It asked whether either of two explanations advanced by Mr Kumar could be seen as “a possible route to an explanation for the misdirection of the $12,000”: at [35]. The first was that Mr Malik knew in advance of the direction to pay: at [36]-[37]. I can appreciate why the Tribunal approached the case on that basis, because the affidavit states “He knew everything in advance what happened [sic]” and “I say that Mr Malik knew in advance the cheque direction [sic]”. But it was put on appeal, and in my view correctly when considered against the balance of the evidence, that in fact what Mr Kumar was saying was that after the conveyance had settled, Mr Kumar told Mr Malik of the mistake, and that he would remedy it, before Mr Malik confronted him in his office.

27. [34]

    The second possibility was that there was an error by Mr Kumar’s secretary (viz, someone other than Mr Ram, who does not appear ever to have been identified by name). The Tribunal considered this at [38]-[44] and rejected it as a viable explanation because it “simply does not survive comparison with other reliable and credible evidence”: at [40]. In the course of explaining that conclusion (which is not challenged on appeal), the Tribunal stated that it regarded Mr Kumar as a “patently unpersuasive witness”: at [42]. It said:

28. [35]

    No challenge was made, nor could it have been made, to those conclusions based on the Tribunal’s assessment of Mr Kumar in cross-examination.

29. [36]

    There was some evidence which could be seen as supporting Mr Kumar’s claim that the payment of $12,000 to Permanent Custodians was the result of a mistake. There is a file note of a conversation with Mr Kumar recorded by Ms Sheree Hayden, a licensed conveyancer acting for Mr Malik, on 8 December 2010 as follows:

30. [37]

    However, the Tribunal did not address in terms the claim emerging from Mr Kumar’s cross-examination that he was confused, and mistakenly believed that Mr Malik had directed that a cheque for $12,000 be paid to Permanent Custodians to repay Mr Malik’s own indebtedness to that company. It does not follow inexorably that the Tribunal’s conclusion that Mr Kumar misappropriated $12,000 from his client Mr Malik was erroneous. If the Tribunal could not reasonably have concluded that there was even a possibility that Mr Kumar was mistaken, then this complaint falls away. Only if there is some substantial wrong or miscarriage of justice can the proceedings be remitted to the Tribunal: Uniform Civil Procedure Rules 2005 (NSW), r 51.53. It was for this reason that on appeal the Commissioner submitted:

31. [38]

    The critical questions arising on Mr Kumar’s claimed case of mistake are: how did the cheque come to be presented upon Westpac and how did the funds come to be credited to Permanent Custodians in reduction of Mr Kumar’s indebtedness to that company?

There was no mistake by Mr Kumar

1. [39]

   Mr Kumar’s case appears to have involved not one but two mistakes. The first was by Mr Ram in confusing Mr Kumar’s instructions regarding the Malik settlement and his instructions to prepare a cheque to Permanent Custodians on behalf of Mr Kumar personally. The second was Mr Kumar’s mistaken belief, upon learning that $12,000 of the Malik settlement proceeds were to go to Permanent Custodians, that Mr Malik gave instructions for the payment in order to reduce his own indebtedness to Permanent Custodians.

2. [40]

   Mr Kumar’s case that he mistakenly thought that the $12,000 settlement cheque made out to Permanent Custodians was at the direction of Mr Malik depends on certain propositions which are wholly implausible.

3. [41]

   Mr Kumar’s case turns on the proposition that Mr Kumar had $12,000 of his own money which could be used to reduce his personal indebtedness. Only if he believed that there were such funds could Mr Kumar have been under the mistaken belief that he had used his own funds, rather than Mr Malik’s money, to repay his own indebtedness. But there is nothing to suggest that such funds were available, and there are four circumstances incontrovertibly established by the contemporaneous documents suggesting that they were not.

4. [42]

   The first is Mr Kumar’s increasing indebtedness at the time. As noted above, Mr Kumar’s loan statements for the period July 2010 – May 2012 were in evidence. Mr Kumar was in substantial arrears. His lender had, once again, begun to take steps to obtain possession of the mortgaged property. The Tribunal found (at [22]), and no challenge was made to the finding, that Mr Kumar’s personal loan was in arrears in the amount of $9,569.12 on 3 December 2010, and the payment on that day of $12,000 cleared the arrears.

5. [43]

   The loan statements showed interest accruing monthly in amounts of approximately $2,200. They also showed automatic credits on 2 August, 31 August, 30 September, 1 November and 30 November in the amount of $2,491.07; the credits recorded on 2 August, 30 September and 1 November were reversed a few days later and fees imposed. This material suggests that Mr Kumar did not have $12,000 of his own funds available on 30 November 2010.

6. [44]

   Secondly, on 21 July 2010 Integral Energy notified Mr Kumar that the electricity supply at his Liverpool offices would be cut off in two days, because payment of his electricity bill from the previous September had not been made. The evidence does not appear to disclose whether the threatened disconnection in fact occurred.

7. [45]

   Thirdly, faced with full knowledge by Mr Malik of the misappropriation and the threat of a complaint to the Law Society, Mr Kumar repaid on 9 December 2010 only $5,500, with four subsequent deposits between 16 and 30 December 2010 totalling $3,500. I deal with what Mr Kumar claimed were additional payments below. But the pattern of deposits – especially, the final payments of $500 in the second half of December – strongly indicates that Mr Kumar did not have $12,000 of his own funds at any time in December 2010. If there were some other explanation for his being unable promptly to repay his client in full, it was not provided by Mr Kumar.

8. [46]

   Fourthly, sequestration proceedings had been commenced in 2010 against Mr Kumar. The extract from the National Personal Insolvency Index in evidence referred to “Dindayal, Vijay Kumar”, the address given in Campbelltown was one used by Mr Kumar, and Mr Kumar confirmed to the Tribunal that the names were “one and the same” and that the petitioning creditor had bought his debt from National Australia Bank. The Court Reference given in the extract was SYG 2080/2010, which indicates that the proceedings were commenced in 2010. The extract shows that a sequestration order was ultimately made on 20 December 2011. At the time of the hearing in April 2015, Mr Kumar was still a bankrupt.

9. [47]

   How did the proceeds of the bank cheque for $12,000 come to be credited to Mr Kumar’s loan account? Mr Ram’s evidence was that he gave no direction to the solicitors with whom he left the cheque for it to be applied to Mr Kumar’s account (see above). One possibility is that Mr Ram in fact conveyed, mistakenly, to the solicitors that the cheque was to be credited to Mr Kumar’s account. But the Tribunal saw Mr Ram give evidence and accepted it as reliable, and so this possibility cannot be reconciled with what he expressly denied in his affidavit. Another possibility is that Mr Kumar, personally or by an agent, told the solicitors to credit his loan account – but that would constitute deliberate dishonesty. There may be other possibilities. But all of this fell to be explained as part of Mr Kumar’s case, and it was not.

10. [48]

    As noted at [26] above, evidence was adduced in chief from Mr Ram that:

11. [49]

    This evidence is difficult to understand. On one view, it reads as if Mr Ram fully understood that the bank cheque which he was to procure in favour of Permanent Custodians to reduce Mr Kumar’s indebtedness was to be derived from Mr Malik’s proceeds of sale, and that Mr Malik would be reimbursed from the $6,000 contained in Mr Kumar’s desk, plus $6,000 in fees which were expected to come in. If that is so, then there can be no doubt that Mr Kumar was instructing Mr Ram to misappropriate his client’s funds (for there was no suggestion that Mr Malik authorised his solicitor to appropriate the $12,000). If that is not so, then, taking Mr Kumar’s case at its highest, and assuming that he thought at the time that there were two amounts of $12,000 to be paid, how did Mr Ram consider that a cheque direction would assist Mr Kumar in his goal of using $6,000 in cash in his desk to repay his lender? And how could a cheque direction have anything to do with funds that had not yet been received?

12. [50]

    Mr Kumar’s case appears to have extended to the propositions that Mr Ram was confused, and erroneously included a $12,000 cheque direction in the letter, rather than causing Mr Kumar’s personal funds to be used to obtain a bank cheque. Perhaps when Ms Mercieca asked Mr Kumar about the $12,000 cheque direction, his case is that he mistakenly believed that Mr Malik had given those instructions (for that is what she recorded in her file note and transmitted to the purchaser’s lender as having been said by him). But that is not all. For Mr Kumar attended the settlement and personally received the bank cheques on behalf of his client, including the $12,000 bank cheque. Mr Kumar’s case of mistake must include the proposition that Mr Kumar believed that when Mr Ram delivered that cheque to Permanent Custodians’ solicitors later that very afternoon, he was doing so in accordance with Mr Malik’s instructions that somehow had been received by Mr Ram.

13. [51]

    Further, Mr Kumar’s case that he was mistaken depends on a most unlikely coincidence. He happened urgently to wish to deposit $12,000 of his own money to his lender Permanent Custodians, and told Mr Ram that he had $6,000 in his desk and $6,000 coming in. Mr Kumar’s case on mistake is that at precisely the same time he believed that his client Mr Malik also wished to repay precisely the same amount of $12,000 to the same non-bank lender.

14. [52]

    It was essential for Mr Kumar, whose account was in arrears, to repay at least $9,569. His next repayment was scheduled for 30 November 2010, as it happens, the very day of the twice adjourned settlement. He could have repaid $10,000, or $11,000 or any amount, but chose to repay precisely the same amount which he believed his client was repaying to the same lender on the same day. Moreover, there was no clear evidence that Mr Malik owed any money to Permanent Custodians or that there was a reasonable objective basis for Mr Kumar to hold a belief that Mr Malik was indebted to Permanent Custodians for any amount, let alone for precisely the same sum as Mr Kumar.

15. [53]

    This was not a case where Mr Kumar was wholly unaware of the cheques drawn by a client on the settlement of a conveyance, which became mixed up with his own; far from it. Mr Kumar’s case that there was a mistake requires a much more improbable scenario – that Mr Kumar was personally involved in attempting to cause two payments in the same amount to the same lender on the same day to be made, one using his own funds, the other using the funds from the settlement of his client’s conveyance. To put it mildly, that is a highly improbable coincidence.

16. [54]

    If truly there were a mistake when Mr Kumar obtained the benefit of his client’s $12,000, then any solicitor in Mr Kumar’s position conscious of his obligations would immediately (a) advise his client of the mistake and (b) repay the client in full. The mistaken solicitor would be able to do so, because the solicitor would still have the $12,000 of his own money which had been mistaken with that of the client. Mr Kumar did not do this.

17. [55]

    There was a dispute about precisely when Mr Kumar learnt of the mistake, which cannot be resolved in this appeal (Mr Kumar maintained that he told Mrs Malik and then Mr Malik pre-emptively; Mr Malik denied this). However, there can be no dispute that Mr Kumar learnt of the fact that Mr Malik’s settlement funds had been credited to his loan account no later than when he was confronted by Ms Hayden on 8 December (see below). Even then, he did not repay the $12,000. Mr Kumar only began to repay the $12,000 on 9 December 2010. He repaid at least some of the remainder in a series of small deposits over the next three weeks, including three deposits of $500 in the second half of December. That is not the conduct of a solicitor who mistakenly receives his client’s money.

18. [56]

    Ms Hayden was a conveyancer who had been retained by Mr Malik to inquire about the missing $12,000. She was not required to attend for cross-examination. She gave unchallenged evidence that Mr Kumar was aware he had received the benefit of $12,000 of his client’s money, without authorisation, and that he was obliged to repay it. Taking the view of the evidence which is most favourable to Mr Kumar, there is still no credible explanation consistent with honesty for his not doing so in full in early December upon learning of the mistake.

19. [57]

    To be clear, I have considered the possibility that somehow there was a mistake on 30 November 2010, but that when Mr Kumar came to know that he had received the benefit of his client’s $12,000, he did not immediately have access to funds to repay his client. But I cannot reconcile a mistaken belief that he was expecting $12,000 of his own money to pay his overdue loan on 30 November, with that not occurring but him not having $12,000 no later than eight days later when he knew that a “mistake” had occurred. If some unexpected financial misfortune befell Mr Kumar in the first week of December, he made no attempt to adduce evidence of it.

Conclusion – there was no mistake

1. [58]

   It may assist to return to the essential features incontrovertibly established in the evidence. Mr Kumar had actual knowledge of (a) the inquiry from the purchaser’s solicitor as to the purpose of the cheque, (b) the receipt of the bank cheque at settlement, and (c) giving it to Mr Ram to lodge with Permanent Custodians’ solicitors. All three events took place on the same day. And Mr Kumar well knew that a bank cheque was required to clear his arrears, lest once again an eviction take place on the mortgaged property.

2. [59]

   The circumstances referred to in the 18 preceding paragraphs lead irresistibly to the conclusion that the mistakes by Mr Ram and/or Mr Kumar on which his case depends did not occur. The three most telling circumstances are (a) Mr Kumar did not – because he could not – repay the money immediately, (b) the extreme unlikelihood of there being two bank cheques in the same amount and for the same non-bank lender, and (c) the inherent implausibility of Mr Ram’s evidence of obtaining a bank cheque from cash and funds expected to come in. The conclusion is irresistible because no other non-fanciful inference is available which can be reconciled with what occurred. To the contrary, Mr Kumar acted with the intention of obtaining the benefit of those monies, which he urgently needed in order to clear the arrears on his loan, to prevent an eviction notice being executed, and to prevent his bankruptcy.

3. [60]

   Mr Kumar denied all this, on his oath, and was cross-examined on it. But there was and is no plausible explanation inconsistent with deliberate dishonesty. The fact that the explanation was advanced for the first time on the third day of the hearing, years after the event, reinforces my conclusion. I am conscious that the finding is extremely damaging to Mr Kumar; indeed, it is destructive of his professional career and professional status and reputation. Such a finding should only be made in accordance with s 140 of the Evidence Act 1995 (NSW) and the principles in Briginshaw v Briginshaw. But I am more than comfortably satisfied that such a finding should be made.

4. [61]

   Those conclusions are not inconsistent with a genuinely held belief that the $12,000 was only a small fraction of the proceeds of settlement, and would be taken only for a short period of time, and was expected to be repaid speedily, perhaps in such a way that Mr Malik might never know. That is the tenor of some of Mr Ram’s evidence (particularly, the $6,000 in the drawer and the other $6,000 in legal fees expected to come in) and Ms Hayden’s evidence (“Client got more than $107,000.00” and “It was only for a short time. I was going to give it back. I’ve got it going in.”). Lest there be any doubt about it, even a temporary use by Mr Kumar of his client’s funds without prior approval amounts to serious and deliberate dishonesty. That is precisely the sort of conduct which is antithetical to the trust and confidence which is required by a solicitor with custody of his or her clients’ money.

No failure to apply the Briginshaw standard

1. [62]

   For the reasons just given, a separate ground of appeal (ground 1), which is the claim that the Tribunal failed to apply the principles in Briginshaw, probably does not separately arise. But in any event there is nothing in it. The Tribunal expressly made mention of the “serious allegations of breaches by [Mr Kumar] of his professional obligations” at [9] and said that it had made “substantial efforts … to understand [Mr Kumar’s] case in answer to these most serious allegations”: at [31]. The Tribunal expressly applied a “generous approach” to Mr Kumar’s case: at [35]. Indeed, when rejecting one of the Commissioner’s complaints, that Mr Kumar had misled the Court, it did so in terms consistent with Briginshaw (it concluded that the Court had been misled, but did “not think that the source of this misinformation can conclusively be traced back to [Mr Kumar]”: Liability Decision at [102]).

2. [63]

   Not lightly would it be inferred that the Tribunal approached its task in a way which was inconsistent with applying the correct standard of proof. A fair reading of its reasons makes it plain that the Tribunal was conscious of the seriousness of the allegations and the correspondingly heightened need to be satisfied that they were made out.

Issue Four: The compensation order for $3,000

1. [64]

   It is convenient to address the fourth issue (which arises out of ground 17 of the amended notice of appeal) at this point, because it is closely related to the first. The Tribunal ordered Mr Kumar to repay Mr Malik $3,000, on the basis of its finding that he had only repaid $9,000. Mr Kumar contends that there was appellable error in the Tribunal not being satisfied that he had repaid Mr Malik in full. He also claims an entitlement as of right to challenge the Tribunal’s decision not to grant leave to Mr Kumar to issue further subpoenas.

2. [65]

   True it is that Mr Kumar said, on his oath, that he had repaid the $12,000. He does not say that he repaid Mr Malik directly in full. His affidavit stated:

3. [66]

   Mr Kumar maintained that evidence in cross-examination. At the Penalty Hearing, he gave the following evidence (what follows has not been corrected):

4. [67]

   Mr Kumar had caused subpoenas to produce documents in the names of Mr Malik and his wife to be issued to the Commonwealth Bank, St George, Westpac and ANZ, none of which disclosed the additional payments he claimed. (Strictly, they were summonses to produce documents, but I will refer to them as subpoenas, consistently with the language used by the Tribunal.) In all, the subpoenas returned documents relating to some five accounts, as well as a Westpac “Holden card”. The accounts included an ANZ “Low Rate Mastercard” account, which contained cash deposits of $2,000, $500, $500 and $500 between 16 and 30 December 2010 to which reference has already been made.

5. [68]

   The Tribunal addressed this at [139]-[145] of the Penalty Decision:

6. [69]

   The first error asserted is that the Tribunal should have accepted the evidence of Mr Kumar, albeit uncorroborated by any documents, especially since Mr Malik ceased to pursue his compensation claim in the proceedings. I cannot agree. As for the former, the Tribunal considered Mr Kumar to have been deliberately dishonest. For the reasons already given, no error is shown in that conclusion. In those circumstances, it was not erroneous for the Tribunal to reject Mr Kumar’s uncorroborated testimonial evidence. The logical consequence of its finding of deliberate dishonesty was that Mr Kumar was either deliberately lying to the Tribunal, or else had a deluded (albeit genuine) recollection of the events of November and December 2010. As for the latter, it was common ground before the Tribunal that Mr Malik was pursuing a claim for compensation against the Fidelity Fund. Thus, in abandoning his claim against Mr Kumar, Mr Malik did not accept that the money was not owing.

7. [70]

   Mr Kumar tendered a file note made by his instructing solicitor, which referred to the Registrar refusing leave to issue a summons to produce in April 2013, and an application for that decision to be reviewed, which was declined. However, the file note concluded:

8. [71]

   Mr Kumar claims to enjoy an appeal as of right from the refusal of leave to issue a subpoena. His written submissions assert:

9. [72]

   Mr Kumar’s submission is not sound. The joint judgment of the High Court in Gerlach, at the paragraph on which Mr Kumar relies, expressly added a qualification, namely, that a new trial is not ordered unless there has been a miscarriage of justice. That same qualification was applied in Guss v Johnstone. The current form of that rule is found in r 51.53 of the Uniform Civil Procedure Rules 2005 (NSW). It is unnecessary to pause to consider what other qualifications exist, because I do not consider there to have been any miscarriage of justice. In so saying, I should not be taken to be endorsing the proposition that a challenge may be made as of right on an appeal following a trial to, say, a decision as to the scope of discovery, or to issue a subpoena, or some other interlocutory ruling. I pass over the other qualifications because it is sufficient to deal with the gravamen of the complaint, that there was some measure of unfairness in the Tribunal’s process. I conclude that there was not.

10. [73]

    Mr Kumar accepts that he received $12,000 of his client’s money, in addition to fees. Over the following month, he repaid $9,000, as may be seen on Mr Malik’s bank statements. He claims he repaid the remaining $3,000, plus fees of $1,430 plus a further $2,000. He did not tender any of his personal or business bank account records; if he had done so, that may have shed light on (say) the deposit of the $1,430 fees he received by way of bank cheque, and any withdrawals used to repay his clients. Instead, he issued a series of subpoenas to attempt to find a deposit or deposits in Mr and Mrs Malik’s accounts which he could claim were the amounts he repaid. The result was documents disclosing no fewer than five savings and credit card accounts (and the “Holden Card” account) in the names of Mr or Mrs Malik. Then, three months prior to the hearing, his solicitor determined not to press the point, because Mr Malik was no longer pursuing a claim against him. No further step having been taken in advance of the hearing as a result of that deliberate decision, there was no miscarriage of justice in the Tribunal’s refusal to permit further subpoenas to be issued which would only be returnable after the conclusion of the Penalty Hearing.

Issue 3: Obstructing or misleading an investigator contrary to s 674

1. [74]

   Grounds 11 - 14 of the amended notice of appeal challenge the Tribunal's finding at [82] of its Liability Decision:

2. [75]

   Section 674 of the Legal Profession Act is in the following terms:

3. [76]

   Mr Kumar challenges the finding on essentially two distinct bases. First, on the facts, he maintains that the Tribunal erred in rejecting his submission that he had a reasonable excuse. He relies on claims that he was suffering debilitating back injuries throughout the period, that his mother was ill, that he was in mourning for the loss of his father and brother-in-law, and that a close family member had died. He says that he was short staffed, and that when investigators attended his offices (by arrangement) and found them locked with “a lot of post” under the door, that illustrated his lack of staff, not any hindering or delaying of the investigation. Mr Kumar also says that he gave, on 31 January 2011, an undertaking to ensure that the audit would be conducted between 14 and 18 March 2011. Finally, he relies on the fact that he did eventually give the investigators some of the material requested from him.

4. [77]

   Secondly, as a matter of law, he maintains that this ground of the Commissioner’s application to the Tribunal was “duplicitous”, although he acknowledges that duplicity does not apply directly to disciplinary proceedings. He says that s 674 creates two offences: obstructing an investigator, and misleading an investigator, and that he was charged with both, in a manner which was procedurally unfair. He says that the ambiguity “came to a head” in the Penalty Decision, in that the finding of obstructing and hindering the investigation was summarised as one of misleading the investigators. As quoted in Mr Kumar’s written submissions in chief (paragraph 74):

5. [78]

   The underlying pattern of Mr Kumar’s conduct was very substantially admitted. The Commissioner relied upon no fewer than 10 requests by Mr Kumar for the postponement of the audit of his practice. There can be no doubt that it was open to the Tribunal to find that during this 11 month period when investigators were seeking to conduct an audit of Mr Kumar's practice, they were sufficiently hindered and delayed by Mr Kumar so as to amount to an obstruction within the meaning of s 674 (noting that “obstruct” includes “hinder” and “delay”). The question on appeal, then, is whether appellable error is made out in respect of the Tribunal’s conclusion that Mr Kumar lacked a reasonable excuse.

6. [79]

   “Reasonable excuse” was addressed by the Tribunal at [72]-[74] of the Liability Decision:

7. [80]

   It is not sufficient for Mr Kumar merely to repeat his submissions at first instance. In order to succeed on appeal, he needs to establish appellable error. The finding of an absence of a reasonable excuse applicable for a period extending over 11 months was one which (as may be seen from the previous paragraph) considered the various submissions advanced by Mr Kumar and reached an evaluative conclusion. It does not disclose error.

8. [81]

   Contrary to ground 13 of Mr Kumar’s appeal, there is no reason why it was necessary to consider every individual delay separately. It was open to the Tribunal to take a broader approach, having regard to the total length of delay (during which time Mr Kumar continued to practise) and the fact that he was able to make time to act for clients although a suite of reasons was claimed to prevent his making time for the Commissioner’s investigators. It is not suggested that (save for the submissions based on duplicity addressed below) the Tribunal made any error of law in reaching that conclusion.

9. [82]

   Mr Kumar advances a series of submissions cumulatively within this topic. First, he says that s 674 creates separate offences of obstructing an investigator and misleading an investigator. Secondly, he says that the particularised conduct relates to “a number of separate and discrete events that were improperly aggregated”: (a) the repeated postponements of the audit, (b) the failure to provide requested financial information or responses, (c) misleading the Commissioner as to his whereabouts on 10 December 2010, and (d) misleading the Commissioner as to his whereabouts on 1 February 2011. Finally, he says that there was real unfairness to him in the Penalty Hearing, because findings of obstruction were regarded as equivalent to findings of misleading conduct which in turn supported a finding that Mr Kumar had engaged in a repeated and continuous course of deliberate dishonesty.

10. [83]

    I cannot accept any of Mr Kumar’s submissions based on duplicity for the reasons that follow.

11. [84]

    First, I consider that s 674 creates a single offence, not two offences. Neither party pointed to any authority on point, and so the matter is to be approached as a matter of principle.

12. [85]

    The point of an investigation is to facilitate a purpose. Two purposes are presently relevant. The first is what the Act describes as “complaint investigations” (see s 657(1)(c)), thereby fulfilling the important public purpose of ensuring that complaints of misconduct by practitioners can be investigated and, in an appropriate case, be the subject of disciplinary proceedings. Thus each complaint “must be investigated”: s 525(1), except in circumstances where s 525(2) applies. Following an investigation, the Commissioner “must” either commence proceedings against the practitioner, or dismiss the complaint, or take summary action under s 540: see s 537(1). It is plain that the purpose of a complaint investigation is to provide material on the basis of which the relevant body (here, the Commissioner) can perform its obligation under s 537 to commence proceedings, or dismiss the complaint, or summarily discipline the practitioner.

13. [86]

    The second is a “compliance audit”, which may take place whether or not a complaint has been made, and which will result in a report which must be provided to the Law Society Council or the Commissioner, and may be taken into account in connection with disciplinary proceedings: s 670(5) and (6).

14. [87]

    Once it is seen that an investigation serves a particular purpose, it is readily concluded that anything which misleads an investigator is also apt to obstruct the investigator, in the presently relevant sense of hindering, delaying, resisting or attempting to obstruct the investigator from fulfilling that purpose. Obstruction is plainly not confined to physical obstruction but includes, in this context, steps taken to misdirect or slow down the investigation.

15. [88]

    The converse proposition is not true: not everything that obstructs an investigator will inevitably mislead him or her. But the conclusion that to mislead an investigator is necessarily to obstruct the investigator makes it plain that this is a case where two words are used disjunctively to denote a single offence.

16. [89]

    As much is confirmed when regard is had to s 674(2). It is plain that there is an offence if a person hinders, delays, resists or attempts to obstruct an investigator exercising a power under the Act, but it does not follow that each of the verbs constituting the inclusive definition of “obstruct” gives rise to a separate offence.

17. [90]

    The question is one of statutory construction. If two offences were created, then every offence of misleading would also amount to obstructing in circumstances where the misleading of the investigator amounted to a hindering or delaying of the investigator. There is no rational basis for separating what on its face is a single provision creating a single offence into two offences. The position is as described by Jordan CJ in Ex parte Polley; Re McLennan (1947) 47 SR (NSW) 391 at 392:

18. [91]

    Secondly, I do not accept Mr Kumar’s submission that he should have been charged with four contraventions of s 674. Even if the rules associated with duplicitous criminal prosecutions applied, the starting point must be the statute: see Rockdale Beef Pty Ltd v Industrial Relations Commission of New South Wales [2007] NSWCA 128; 165 IR 7 at [97] and Environment Protection Authority v Truegain Pty Ltd [2013] NSWCCA 204; 85 NSWLR 125 at [47]-[52]. There was a single investigation. That investigation was, by a variety of means all of which were particularised by the Commissioner and in very large measure admitted, obstructed. It was appropriate that the Commissioner’s application to the Tribunal contain a single complaint.

19. [92]

    It is revealing that although at first instance, Mr Kumar did complain that the ground was duplicitous because it pleaded both alternatives (see transcript, 1 August 2012, p 54), no complaint was made that there should have been four separate contraventions alleged. That is an indication that it was not perceived to give rise to procedural unfairness.

20. [93]

    Mr Kumar ultimately accepted that “the question is whether Mr Kumar has been denied procedural fairness by reason of a charge being duplicitous”. In circumstances where the particulars were substantially admitted, and the defence turned upon a lawful excuse, I fail to see anything procedurally unfair about the proceedings.

21. [94]

    The particular procedural unfairness of which Mr Kumar complained was that in the Penalty Hearing, there had been a “slide” from misleading to obstructing. That turns upon a selective reading of the Tribunal’s reasons. As noted above, Mr Kumar relies on the first sentence of [72] of the Penalty Decision, but the whole paragraph is as follows (my emphasis):

22. [95]

    A fair reading of the Tribunal’s reasons as a whole does not disclose any inappropriate mischaracterising of its findings from the Liability Decision.

Issue Two: Misleading the Commissioner as to Mr Kumar’s whereabouts on 1 February 2011

1. [96]

   This issue arises out of grounds 15, 15A and 16 of the amended notice of appeal. The Commissioner’s initiating application alleged that Mr Kumar had “deliberately misled the Commissioner about his whereabouts on 1 February 2011”. Particulars 1.29, 1.30 and 1.31 to the Commissioner’s originating process in the Tribunal were all admitted. They were:

2. [97]

   Mr Kumar acted for Mr Karem. He gave evidence that on 31 January 2011 Mr Karem spoke with Mr Kumar, who advised him that he was unwell and might be unable to appear for him the following day. Mr Karem sought and obtained an adjournment on 1 February 2011 until 24 February 2011. The Court coversheet records the adjournment and notes:

3. [98]

   The Commissioner tendered a memorandum dated 1 February 2011 by Ms Bedggood, one of the two investigating officers who attempted to carry out the audit on that day. Both attended Mr Kumar’s Campbelltown office at 9am and again at 9.40am. On both occasions all doors were locked and no one responded to their knocking on the door. They arrived at Bankstown Court at around 10.40am, and found that Mr Karem’s matter had already been adjourned. The file note then records:

4. [99]

   Mr Kumar then said that he would telephone Mr Collins that afternoon. Mr Kumar sent text messages to Mr Collins including “I w cal u at 5pm” and “Am sorry I cant call u at 5pm battery is dead”.

5. [100]

   Mr Karem affirmed an affidavit which was read in Mr Kumar’s case. It concluded:

6. [101]

   When cross-examined in the Liability Hearing, Mr Karem gave evidence that he had a face-to-face conversation with Mr Kumar on 1 February 2011, inside the courthouse but outside the courtroom. He agreed with the (leading) question in re-examination that he had “reflected on what you told the Magistrate and you realised that it was inaccurate”. He was cross-examined further, and had no explanation for why his affidavit made no mention of the conversation on 1 February 2011, which he agreed he regarded as “an important fact”.

7. [102]

   It will be seen that Mr Karem’s affidavit explains what was recorded on the Bankstown Court file as part of the reason for the adjournment of Mr Karem’s matter, while his oral evidence attempted to go further so as to address the claim that Mr Kumar was not in fact in Bankstown Court on 1 February 2011, even though that is what he told the investigating officers. The Tribunal was not reasonably satisfied on the balance of probabilities that the Court had been misled by Mr Kumar as to his whereabouts on that day, and dismissed ground 2 of the application: at [101]-[104] of the Liability Decision. Its basis for doing so was that it did “not think that the source of this misinformation can conclusively be traced back to [Mr Kumar]”. The Commissioner did not seek to challenge that reasoning by way of cross-appeal.

8. [103]

   The Tribunal found the Commissioner had been misled because it accepted the evidence of Ms Bedggood reproduced above that Mr Kumar would not be finished in court until “very late, around 4 or 5pm”. The Tribunal found at [111] of the Liability Decision:

9. [104]

   Mr Kumar submitted that that finding impermissibly departed from the way the Commissioner’s case had been particularised. He submitted that “[t]he charge related to Mr Kumar’s present whereabouts and not to expected or anticipated future whereabouts”. That is to say, Mr Kumar submitted that the charge was confined to Mr Kumar’s statement that he was in Bankstown Court, something which was false, rather than that the audit could not proceed on that day.

10. [105]

    That is an unduly narrow reading of the Commissioner’s case. Ground 3 was that Mr Kumar had “deliberately misled the Commissioner about his whereabouts on 1 February 2011”. Particular 1.30 was that Mr Kumar “advised that he was unable to attend the audit as he was in Liverpool Court on 1 February 2011 in the matter of Hejaaz Karem” (emphasis added). The finding by the Tribunal is within the Commissioner’s case as particularised. Contrary to Mr Kumar’s submission, the charge related to Mr Kumar’s whereabouts on 1 February 2011, not merely his whereabouts at 10.50am on that day, because as particularised, the representation made by him was that he was unable to attend the audit on that day.

11. [106]

    Two matters may be noted for completeness. The first is that it is not necessary to address the Commissioner’s notice of contention that the Tribunal should have found that Mr Kumar was not “in Bankstown Court”. In light of Mr Karem’s oral evidence, which went well beyond his affidavit, it is not appropriate to do so. The second is that even if Mr Kumar had been wholly successful on these grounds of appeal, it would not, as will be seen below, have had any impact upon the penalty.

Issue 5: Penalty

1. [107]

   Grounds 18 - 22 were advanced against the possibility that all other grounds might fail (for if any of the findings of professional misconduct had been set aside, it would be necessary to re-exercise the discretion as to the appropriate sanction). Mr Kumar maintains, boldly, that the appropriate orders would have been a reprimand and some restrictions on his practising certificate.

2. [108]

   The Tribunal in its Penalty Decision proceeded on the basis that its findings of deliberate dishonesty warranted removal from the Roll unless there were some clearly applicable ameliorating factor: at [90]. Mr Kumar contended that the Tribunal erred in concluding that its findings amounted to “repeated and sustained acts of deliberate dishonesty”. Mr Kumar also says that insufficient regard was given to his character references, that he was being punished twice for the findings of professional misconduct on both grounds 1 (obstructing or misleading an investigator) and 3 (deliberately misleading the Commissioner as to his whereabouts on 1 February 2011), that it failed to place sufficient weight on other ameliorating features, including the medical and psychological evidence, that Mr Kumar’s practising certificate had been suspended since March 2011 and that insufficient weight was given to Mr Kumar’s remorse and contrition. I cannot agree.

3. [109]

   The Tribunal’s reasons for that finding at [65]-[76] are lengthy, but in light of one of the criticisms made by Mr Kumar, need to be reproduced in full:

4. [110]

   The Tribunal’s findings in relation to the misappropriation of $12,000 of Mr Malik’s money are findings of deliberate dishonesty. Even up to the hearing of this appeal, Mr Kumar has refused to accept a finding of deliberate dishonesty (although he does acknowledge that his practice was poorly organised). The untruths told to Mr Malik, Mr Kumar’s employees, Ms Mercieca and Ms Hayden in 2010 and the maintenance of a deception subsequently fully warrant the Tribunal’s conclusion of repeated and sustained acts of dishonesty.

5. [111]

   Mr Kumar criticises the Tribunal’s reliance in the list reproduced above on the fifth element, which was misleading and deliberately obstructing investigators. That was serious misconduct, but is qualitatively different from the deliberate dishonesty in every other paragraph. However, its inclusion in the list cannot be said to have materially influenced the Tribunal’s rejection of Mr Kumar’s submission that the conduct should be seen as an isolated instance or relatively minor in scope.

6. [112]

   Next, it may be doubted that a submission that insufficient weight has been given to favourable considerations is, by itself, a valid ground of appeal. Something more must be shown. Giving weight to considerations of this kind involves an evaluative judgment similar to the exercise of a discretion. Indeed it is an inherent part of the exercise of a discretionary power. As Latham CJ said in Lovell v Lovell (1950) 81 CLR 513 at 519, an appellate tribunal will not set aside a finding on this ground alone “unless the failure to give adequate weight to relevant considerations really amounts to a failure to exercise the discretion actually entrusted to the court”. What has been said above about the way in which Mr Kumar, until and including the hearing of the appeal, has maintained the position that his actions concerning Mr Malik’s $12,000 are not dishonest is a complete answer to the submission that his acts were isolated. The same consideration is also an answer to the claimed contrition and remorse. What is more, the Tribunal said at [108]-[109] that:

7. [113]

   Those findings are not challenged on appeal, nor could they be.

8. [114]

   Moreover, the severity of the orders made wholly accords with authority. Mr Kumar’s circumstances were not dissimilar from those in Dupal v The Law Society of New South Wales [1990] NSWCA 56. In that case, Kirby P said:

9. [115]

   Finally, there is nothing in the claimed double punishment for grounds 1 and 3. A man or woman who takes his or her client’s funds for his or her own benefit, and who demonstrates no remorse or understanding of the gravity of his or her misconduct, is prima facie not fit to remain on the Roll. The findings in relation to Mr Malik’s $12,000 by themselves warranted the orders made. The Tribunal correctly regarded them at [93] not as “in the nature of technical or procedural rules or practices” but as “the very basic obligations of honesty and trustworthiness discussed in the major cases” and “fundamental principles of honesty and fair dealing”.

Orders

1. [116]

   No appellable error has been made out on any of Mr Kumar’s grounds of appeal. The appeal should be dismissed. No submissions were made to the effect that Mr Kumar’s bankruptcy should alter the ordinary position as to costs, which should follow the event.

2. [117]

   SACKVILLE AJA: I agree with Leeming JA.