The NSW Civil and Administrative Tribunal (NCAT) has found David Hunter guilty of disbursing funds from his trust account despite a written undertaking that he would not until a matter was resolved. He has admitted it was a breach and accepted that the penalty would be sufficient, given his lack of intention for wrongdoing. 

In November 2017, Mr Hunter gave a written undertaking to a fellow practitioner in connection with the completion of a conveyancing transaction, in which he was retained by a client to sell a unit in a neighbourhood plan. Amid the transaction was the issue of payment to the neighbourhood association for strata levies.  

He wrote: “I confirm that you have my undertaking that I will not disburse funds in my trust account to my client until the issue of payment to the community is resolved.” 

The purchaser’s solicitor by affidavit asserted that she understood the undertaking to mean that of the amounts to be paid on completion, $60,000 was to be retained in trust to cover the purchaser’s liability to the neighbourhood association. 

Mr Hunter said he understood the words “payment to the community” in his undertaking to refer only to a “community contribution fee” of $2,000 imposed by the lot for the neighbourhood association to cover estimated costs of approving the transfer.

In December 2017, Mr Hunter disbursed the $60,000, with $50,000 to the vendor’s partner, $5,447 to the vendor and $2,000.60 into his own account. It left the balance of $2,000.40 in the vendor’s trust account. 

The Law Society of NSW submitted that the words of Mr Hunter in the undertaking were “clear and unequivocal” and there was no basis on which the purchaser and their solicitor were not entitled to rely on them. 

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Mr Hunter admitted that the undertaking had been breached and, in his own words, had been “poorly drawn and insufficient attention [was] given to the important task”. 

He said the matter did not indicate reckless carelessness or amount to a substantial failure to maintain a reasonable standard of competence and diligence as the breach was not deliberate and there was an absence of dishonesty. 

The entire judgement can be read on AustLII: Council of the Law Society of NSW v Hunter [2021] NSWCATOD 22 (23 February 2021).