A once-prominent Wollongong lawyer has been found guilty of engaging in professional misconduct after he "consistently failed" to manage his law firm.
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The Law Society is seeking to have solicitor Aaron Kernaghan banned from working as a lawyer after he was found guilty of seven counts of professional misconduct and two counts of unsatisfactory professional conduct after complaints were made by former clients in July 2015.
In a decision handed down by the NSW Civil and Administrative Tribunal late last week, Kernaghan was found to have failed to pay superannuation to an employee, lodge tax returns, pay GST and other taxes and fiddled with trust account money when operating under his former firm Kernaghan and Associates Pty Ltd (KAPL) from 2010.
The tribunal classified unsatisfactory professional conduct of a lawyer as a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence; and conduct that "reasonably be regarded as disgraceful or dishonourable by professional colleagues of good repute".
The tribunal heard a number of former clients made complaints against Kernaghan, including a woman who Kernaghan had failed to return owed money to.
On that occasion, in March 2016, Kernaghan did not pay the woman $3500 after she entered into a costs agreement for an estimated $4400 for Kernaghan's legal services which included attendance at a court hearing.
The woman paid the money, however the hearing did not proceed and Kernaghan initially agreed to refund the woman $3500 but failed to process the payment.
Kernaghan said he had "extenuating personal circumstances" and "directed that a payment be made... and believed that had occurred".
The tribunal also ruled that Kernaghan failed to comply with an Office of the Legal Services Commissioner request to access his business' records in an attempt to facilitate an investigation by the Law Society.
Despite Kernaghan providing a medical certificate for the date he was required to supposed to the request by, the tribunal found that was "not a satisfactory answer to his failure to respond".
Additionally, Kernaghan failed to pay superannuation to one of his employee's for an extended period of time.
"In respect of the superannuation payments, a former employee of the solicitor has been disadvantaged through the significant underpayment of superannuation and the solicitor has not remedied that disadvantage," the tribunal documents said.
In his defence, Kernaghan provided evidence that compulsory superannuation charges was a matter that he had "attempted to resolve by way of negotiations and discussions with the Australian Taxation Office over the course of several months".
The tribunal also found Kernaghan had failed to lodge some business activity statements on time since 2011 up until June 2015, nor income tax returns from 2010 to 2015.
Kernaghan said he had discussions with the ATO but he eventually had to close his firm after it went into liquidation.
He could not meet the agreements he made with the ATO but had repaid some of the money he owed.
"The evidence available to the tribunal shows that KAPL failed to pay significant amounts of company income tax, running deficit debts and superannuation guarantee charges and had a history of non-compliance with its taxation obligations," tribunal documents said.
"The Law Society submitted these failures represent a systemic failure that warrants a finding of professional misconduct.
"There is no evidence or material before us that the solicitor was mistaken as to his obligations to pay. . . Rather, the Solicitor accepts that he was obliged to pay the superannuation contributions in respect of his, then, employee and likewise, pay the debts of KAPL to the ATO."
The tribunal found he also did not pay an invoice for an expert report he had commissioned in a case, with Kernaghan admitting it was not paid in a "timely manner".
"In our view the solicitor had clear knowledge that he was required to pay the expert and has neglected to satisfy the relevant debt," the tribunal documents said.
The case will return to the tribunal at a later date to determine what orders should be made as a consequence of the findings.
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