Misfortunes in the pubs and hospitality caper ... Solicitor tossed off the jam roll ... No tax returns for 21 years ... Law Society and Legal Services Commissioner rapped for going soft on misconduct of prominent liquor licensing guru
The NSW Administrative Decisions Tribunal has pulled the chain on one of Sydney's better known pubs and liquor licensing solicitors, Jim Adams from the law shop Adams Molloy.
He was pinged on three counts of professional misconduct.
The tribunal found he failed to make compulsory superannuation contributions on behalf of his employees, remit GST and PAYG deductions to the ATO and lodge tax returns for a period of 21 years.
The extraordinary thing is that both the Law Society and the Legal Services Commissioner put their heads together and decided to press only for a reprimand.
The beaks were unmoved by witnesses who testified to Adams' good character, and by the solicitor's own explanation for his conduct, which they found at times to be "misleading [and] untrue".
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Adams started out as a clerk at the Kogarah local court and was admitted as a solicitor in 1974.
Initially, he plied his trade in Albury, where he also bought the licence of the first of a number of his adventures in the hotel business.
He moved back to Sydney in 1988, where he was the unpaid in-house solicitor for the Australian Hotels Association.
He also conducted a sole practice from the HQ of the pubs' lobbying outfit.
Following some failed ventures in the pubs industry, including hotels at Woolloomooloo and Goulburn, he established Adams Molloy in 2002 - Molloy being a former copper with the licensing squad.
The shop enjoyed some initial success, but on Adams' evidence, "collapsed" as a result of changes to liquor licensing laws in 2004.
Adams' evidence was that by 2005 the annual gross fees of the practice were $960,000, but the net profit from that was only $50,000.
The tribunal didn't believe it, saying that would be a profit of only 5.2 percent of turnover; "an extraordinarily low profitability for a legal practice".
In 2004 Adams and his close friend, a Mr Hicks, acquired the leasehold of a pub in Balmain.
Through a company called LagerBar Pty Ltd they also developed a concept for a "generic Australian bar" for the overseas market, into which Adams tipped an investment of between $100,000 and $200,000.
By December 2006, the business had failed. They agreed that Adams would transfer his interest in the hotel and LagerBar to Hicks in consideration of Hicks releasing Adams from liability for loans they had entered jointly, and a sum of $365,000.
In anticipation of Hicks' payment, which apparently didn't eventuate, Adams attempted to reach a settlement with the ATO. Eventually, Adams lodged tax returns for the period 1998-2007 in April 2008 and the ATO agreed that it would not pursue returns for the years prior.
Concept of a "generic Australian bar" proved unpopular overseas
The ATO commenced proceedings in the District Court in respect of unremitted GST and PAYG contributions and income tax and penalties for the 1998-2007 period. Adams declared bankruptcy, and notified the Law Society.
The Law Society placed conditions on Adams' ticket, including that he only be allowed to practice as an employed solicitor.
Since September 2008, Adams had been working at the firm Adams Legal Pty Ltd, directed by solicitor Michael Noyce, a former member of the "best practice board" of the Law Society.
Noyce wrote a letter to the Law Society extolling Adams' expertise and excellent reputation in the field of hospitality law, but did not testify.
By Adams' own admission, Noyce did not supervise Adams' work at the law shop.
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The Law 'n' Order Society filed an application with the ADT on January 28 last year.
Notably, the Law Society did not seek orders that Adams be struck from the jam roll - only that he be publically reprimanded and pay costs.
Adams admitted the three counts of misconduct and agreed with the orders sought in the Law Society's application.
The matter was listed before the tribunal in May 2010.
On that occasion the then presiding member alerted Adams to the possibility that he may be struck off rather than reprimanded. Adams sought an adjournment to prepare for this possibility.
Curiously, when proceedings recommenced on April 4, the Law Society did not change the orders sought in its original application.
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The ADT found that Adams was not a fit and proper person, and not of good fame and character, for the purposes of the noble trade of soliciting.
It found his failure to pay superannuation contributions for his employees was not a consequence of mismanagement or because he was unaware of his obligations, but reflected his preference for "the continuing conduct of his business and his finances, over the legal rights and interests of his staff".
Adams had a number of witnesses testify as to his honesty, trustworthiness and good character - his short-changed employees among them.
The tribunal was not persuaded because none of the witnesses had been aware that the solicitor had failed to comply with his financial obligations.
It found that they would not have given favourable testimony had Adams "properly informed the witnesses".
The ADT was also critical of Adams' attempts to explain his failure to remit GST and PAYG deductions to the ATO, finding that blaming his bookkeepers was "misleading [and] exaggerated".
Perhaps most damning was the rejection of Adams' evidence in relation to his failure to lodge tax returns.
According to Adams, during 1998-2008 he attempted to obtain funds to have his tax returns prepared by entering business ventures that subsequently went belly-up.
The tribunal thought this was "untrue [and] nonsense".
While the beaks were not unsympathetic to Adams' personal problems they nevertheless found that there were times when he was not "labouring under these crises", and that he simply chose not lodge his tax returns.
Adams' behaviour constituted a pattern that demonstrated a preference for his own interests over others, rendering him unfit for the jam roll.
The last paragraph from the ADT's findings is a nifty little slap on the knuckles for the regulators:
"We did not have assistance from the legal representatives of the Law Society or the Legal Services Commissioner by way of by way of cross examination of the respondent to test his evidence, no doubt because the Law Society and the Legal Services Commissioner had agreed with the respondent to an outcome that involved only a reprimand and an order for costs. But we consider that to be an inadequate response to the professional misconduct of the respondent for the reasons above."