1. The decision of the Law Institute of Victoria to refuse to issue a practising certificate to Mr Delahunty is affirmed.
2. Order 1 shall not take effect until 28 May 2012.
3. Mr Deluhunty not be grated a local practising certificate before 26 April 2014.
4. Mr Delahunty not be granted a practising certificate entitling him to act as principal of a practice before 26 April 2019.
5. Mr Delahunty not be granted a practising certificate entitling him to hold trust monies before 26 April 2027.

1. Mr Delahunty is a 65 year old solicitor. For most of his 40 year long career, he has practised as a sole practitioner in suburban Melbourne. From 1998, he practised under the name "Legal Rite" in Murrumbeena. He has had a number of longstanding clients. His practice has included preparing wills, assisting aging clients with their affairs, and acting in the administration of deceased estates. Over the years, he has developed some very bad practices in relation to fulfilling his trust accounting obligations, in the course of acting for his clients.
2. This proceeding commenced as an application for review of a decision of the Law Institute of Victoria Limited (LIV) on 4 July 2011 refusing to renew Mr Delahunty's practising certificate. The decision was made by the LIV as delegate of the Legal Services Board (LSB). It was made on the grounds that he is not a fit and proper person to hold a practising certificate. It followed a report dated 21 April 2011 by LIV inspectors Mr Aruna Harinda Colombathantri and Mr Ronald Lewis Pata, after a random inspection of Mr Delahunty's trust account records (Inspection Report). This report found numerous breaches of the Legal Profession Act 2004 (Act) and the Legal Provision Regulations 2005 (Regulations) in relation to his trust account obligations. It found deficiencies in Mr Delahunty's trust account in the sum of $385,542.70 (if acting as an Australian legal practitioner in all matters dealt with in the in the report) or $268,334.70 (if not acting as an Australian legal practitioner in all matters). The Investigation Report was the basis of a proceeding brought in the Supreme Court by the LSB seeking the appointment of a receiver of Mr Delahunty's practice.
3. On 14 September 2011, the Supreme Court ordered that a receiver be appointed over all the regulated property of the practice. The receiver was to attempt to sell the practice, but not wind it up until further order.[1]
4. Mr Delahunty is still able to practise as a result of the operation of s 2.4.5 of the Act. This has the effect that his 2010-11 practising certificate remains in force until he has exhausted all rights of review in relation to the decision to refuse to renew it.
5. In October 2011, Mr Delahunty obtained employment at the nearby firm of Morley Naughton Pearn and Cook in Bentleigh. (That firm has purchased Mr Delahunty's former practice from the receiver.) He then made application for an employee-only practising certificate for the period to June 2012. This would not entitle him to act as a principal of a firm, nor to be responsible for trust monies.
6. On 7 December 2011, the LIV refused this application. Mr Delahunty then amended his review application to VCAT, such that he challenged the 7 December 2011 decision of the LIV as well. At the commencement of the hearing, Mr Tatarka, for Mr Delahunty, made it clear that all Mr Delahunty sought from this review was a practising certificate entitling him to practice as an employee. He did not seek the ability to practice as a principal, nor to be authorised to deal with trust monies. The LIV agreed to confine the hearing in this way. Accordingly, I make no further reference to the first application to VCAT which Mr Delahunty lodged in July 2011.
7. For the LIV, Mr Randall sought that its decision to refuse to renew his practising certificate be upheld on the basis that Mr Delahunty is not a fit and proper person to hold a practising certificate. He relied on the Inspection Report, and the decision of the Supreme Court. Further, he sought that a period of four or five years be set as the time before Mr Delahunty could again apply for a practising certificate of any type. He submitted that a longer period be ordered before he could apply for a practising certificate entitling him to act as a principal, and that a longer period again should be set before he could make an application for a practising certificate entitling him to receive trust monies.
8. The LIV also seeks that a finding of professional misconduct be made against Mr Delahunty. This is on the basis that the orders which the Tribunal may make on a "fit and proper" finding under Part 2 of the Act include those which may be made under the disciplinary provisions of Part 4 of the Act.
9. For Mr Delahunty, Mr Tatarka did not contest the findings of the Investigation Report. He submitted, however, that the protection of the public is not such a significant factor here as it otherwise would be, since Mr Delahunty did not seek the right to practise again as a principal, nor to hold trust monies. Whilst recognising that VCAT's ruling must convey a significant element of denunciation of Mr Delahunty's conduct, he submitted that Mr Deluhunty be allowed to continue to practise. Alternatively, if a period without a practising certificate was imposed, for the reasons he elaborated, it should not be for an extended period. He also contended that it was not technically possible for VCAT to make a finding of professional misconduct against Mr Delahunty under Part 4.

1. The decision to refuse to renew the practising certificate was made under s 2.4.7 of the Act on the basis that the applicant was not a fit and proper person to hold a practising certificate. Section 2.4.4 sets out the factors relevant to determining whether a person is fit and proper. The most relevant here is 2.4.4(1)(c), which is whether the person has contravened the Act or the Regulations. Also, under s 2.4.4(1), any "suitability" matter" in s 1.2.6 may be taken into account. The matters in s 1.2.6 include, at 1.2.6(1)(a), whether the person is currently of good fame and character.
2. The decision of Kyrou J to appoint a receiver was made on the basis that he accepted the submissions of the LSB that pursuant to s 5.2.1 of the Act, external intervention was warranted on the basis that Mr Delahunty:
   • was not dealing adequately with trust money (s 5.2.1(d)(i));
   • had committed a serious irregularity in relation to trust money (s 5.2.1(d)(ii));
   • has been or is likely to be found guilty of an offence relating to trust money (s 5.2.1(d)(vi)).
3. The Court also relied on s 5.2.1(e): "where any other proper cause exists in relation to that practice".
4. The provision of the Regulations which was primarily relevant to the Supreme Court proceedings was reg 3.3.34. This sets out what a legal practitioner must do before he or she can withdraw money from a trust account. This can occur pursuant to a costs agreement, instructions given, or reimbursement of money already disbursed on behalf of the client. It can also occur following the rendering of a bill to the client. In all cases, the client must be notified beforehand of the proposed withdrawals of money from trust.
5. This review was brought pursuant to s 2.4.37. This enables an applicant to seek review of a refusal to renew a practising certificate. Section 2.4.37(3) provides:

On a review under this s, in addition to having all the powers of the Board in respect of that decision, the Tribunal may make any order the Tribunal could make under s 4.4.17 or 4.4.19 (except paragraph (a)).

1. Those provisions relevantly provide as follows:

4.4.17 Orders requiring official implementation in this jurisdiction

The Tribunal may make the following orders under this section -

(a) an order recommending to the Supreme Court that the name of the practitioner be removed from the local roll;

(b) an order that the practitioner's local practising certificate be suspended for a specified period or cancelled;

(c) an order that a local practising certificate not be granted to the practitioner before the end of a specified period;

(d) an order amending the conditions of the practitioner's local practising certificate or imposing further conditions, restrictions or limitations on the certificate.

4.4.19 Orders requiring compliance by practitioner

The Tribunal may make the following orders under this section -

(b) an order that the practitioner pay a fine of a specified amount, not exceeding $10 000 in the case of a finding of unsatisfactory professional conduct and $50 000 in the case of a finding of professional misconduct;

(c) an order that the practitioner undertake and complete a specified course of further legal education;

(d) an order that the practitioner undertake a specified period of practice under specified supervision;

(e) an order that the practitioner do or refrain from doing something in connection with the practice of law;

(f) an order that the practitioner cease to accept instructions as a public notary in relation to notarial services;

(g) an order that the practitioner's practice be conducted for a specified period in a specified way or subject to specified conditions;

(h) an order that the practitioner's practice be subject to periodic inspection by a specified person for a specified period;

(i) an order that the practitioner seek advice in relation to the management of the practitioner's practice from a specified person;

(j) an order that the practitioner not apply for a local practising certificate before the end of a specified period;

(l) an order that the practitioner report on the legal practice of the practitioner to a specified person at specified intervals;

(m) an order that the practitioner not employ, engage or recommend a specified person or class of persons;

1. The facts relevant to this review are largely undisputed. They are primarily set out in the Inspection Report and attachments to it.
2. In addition, the decision of Kyrou J distils and recites key facts. That decision also sets out his Honour's conclusions as to Mr Delahunty's conduct in relation to four of the matters referred to in the inspection report: the Smith, Ladd, Cook and McCorquodale matters.
3. I will deal with the facts in relation to the four matters which were the subject of Supreme Court proceedings in less detail that the decision of Kyrou J. I do not believe it is necessary or useful to carry out the descriptive task undertaken by His Honour all over again. His Honour's decision is easily accessed. Of course, these proceedings are for the purpose of consideration of whether a practising certificate should be renewed, rather than whether a receiver should be appointed. However, the factual matters, and also to an extent the court's conclusions about Mr Delahunty's conduct, are relevant to this review. This is because the breaches of the requirements of the Act and Regulations relating to trust account responsibilities are the foundation for both enquiries[2].

1. The first matter considered by the Supreme Court was the estate of Neal Smith, who died in 2003. His estate was valued at approximately $806,790.00. The Court found there was a deficiency of $73,650.50 in the trust account relating to this estate. This included first, approximately $28,000.00 paid to Mr Delahunty by way of legal fees. Whilst the will entitled Mr Delahunty to legal fees, he was unable to demonstrate that any accounts for these fees had been rendered.
2. Second, the deficiencies include roughly $43,000.00 in executors' commission. This was paid half to Mr Delahunty and half to his coexecutor, Mr Smith's son. The will did not provide for executor's commission to be paid.
3. The commission was said to have been taken as costs by Mr Delahunty. The total amount of legal fees and commission deducted by him was $49,670. The way he did it was simply to deduct amounts, generally in round figures, from the Smith trust account from time to time. These were referred to in the ledger as "L.R.- Costs".
4. Mr Delahunty's response to this in his affidavit of 13 July 2011, included the contention that the signing of the administration statement by the residuary beneficiaries some years later constituted consent to the payment of the executors' commission and the legal costs.
5. Mr Tatarka indicated negotiations are underway in order to resolve the situation as to the amount of legal fees and commission which would actually be allowed to Mr Delahunty The participants in these discussions include the four significant charities (which it can be assumed are well able to protect their own interests) which are the residual beneficiaries of the estate.

1. The second matter considered by the Supreme Court was the Estate of Barry Ladd. He died in 2007. Mr Delahunty had acted for him since about 1980. He left an estate which was at the time valued in excess of $7 million. I was told this figure has increased significantly since 2007. The will contained a clause entitling Mr Delahunty, and his co-executor, Mr Wallis (Mr Ladd's accountant) to charge professional fees, but not executor's commission.
2. Despite this, Mr Delahunty deducted $66,094.97 which it appeared he viewed as commission, during the course of the administration of the estate. In any event he was not able to demonstrate he had rendered accounts for his legal costs. Nor was he able to demonstrate that he had obtained the fully informed consent of both of the principal beneficiaries to the payment of commission. Rather, he had tried to negotiate an agreed figure or percentage for commission with the beneficiaries.
3. In addition, he deducted $17,965.04 from funds held in his trust account relating to the Ladd estate for purposes which did not relate to that estate. In total, the court found there was a deficiency of $84,060.01 in his trust account for Mr Ladd.
4. Again, it was put on behalf of Mr Delahunty that negotiations are underway to resolve the question of how these deficiencies should be dealt with, and how much should be paid to the executors by way of commission and to Mr Delahunty by way of legal costs. Again, it was said the beneficiaries are legally represented, and well able to protect their own interests in these negotiations.

1. Thirdly, the Court considered Mr Delahunty's actions in acting for Ms Cook. Ms Cook was another longstanding client of Mr Delahunty. He had acted for her since 1985. As Ms Cook's health deteriorated due to old age, she executed a joint enduring power of attorney in favour of Mr Delahunty and her doctor. Dr Peter Drake, in early 2001. Mr Delahunty stated in an affidavit that Ms Cook had told him she wanted him to be compensated for the work he had done and the friendship he had offered her since 1985 and for the work he would carry out as her attorney.
2. Her health continued to deteriorate. She went into an aged care facility in 2002. Her house was sold and the proceeds paid into Mr Delahunty's trust account. Her condition deteriorated further such that she was placed in a nursing home. Ultimately she fell into a coma. She had no family, so her affairs were completely in the hands of her attorneys. The power of attorney did not contain a clause authorising the charging of fees for acting as an attorney. Between 2003 and 2010. Mr Delahunty withdrew assets totalling $102,960.00 from her trust account. Although Mr Delahunty had put to the Court that these were, at least mostly, non legal fees and expenses associated with the administration of Ms Cook's affairs, the Court nevertheless found in the absence of evidence to the contrary, that they were legal costs. Accordingly, it found that there was a deficiency of $102,960.00 in Mr Delahunty's trust account for Ms Cook.
3. In his letter of 1 November 2010 to the inspectors, Mr Delahunty stated that as Ms Cook did not recognise anyone, he did not see "any point in providing accounts to her".

1. The final matter ventilated in detail in the Supreme Court proceedings was Mr Delahunty's conduct in acting for another elderly and infirm client, Ms McCorquodale. Mr Delahunty held a power of attorney executed by Ms McCorquodale, and withdrew $12,400.00 from her bank account between December 2007 and September 2010. The Court held this did not represent deficiency in his trust funds.
2. In summary, the Supreme Court found that deficiencies of $260,670.00 existed in relation to Mr Delahunty's trust accounts in relation to the Smith, Ladd and Cook matters.

1. At paragraphs 107-126, Kyrou J said:
   1. At [54] above, I concluded that there is a deficiency of $73,650.50 in relation to the Smith Estate. In my opinion, the fact that Mr Delahunty suggested that the signing of the administration statement by the residuary beneficiaries constituted consent to the payment of executor's commission, indicates that Mr Delahunty is ignorant about his most basic obligations as a fiduciary.
   2. At [72] above, I concluded that there is a deficiency of $84,060.01 in relation to the Ladd Estate. Mr Delahunty did not have any legal authority to charge an executor's commission. In my opinion, the communications set out at [64]and [65] above indicate that, at all relevant times, the question of whether he would be authorised by the beneficiaries to take executor's commission remained unresolved. Notwithstanding this, Mr Delahunty paid himself 'interim commission'.
   3. At [84] above, I concluded that the amount of $102,960 that was withdrawn from Ms Cook's funds in the Trust Account constitutes a deficiency in the Trust Account. Even if the amount of $102,960 does not constitute a deficiency, the withdrawals totalling $102,960 represent egregious breaches of fiduciary duty by Mr Delahunty. He took advantage of Ms Cook's vulnerability and helped himself to her money without maintaining any records in relation to the payments and without considering himself accountable for the payments.
   4. For Mr Delahunty to say that there was no point accounting to Ms Cook for the withdrawals he had made because of her comatose state suggests an appalling indifference to Ms Cook's interests. At the very least, Mr Delahunty should have retained accurate and comprehensive records for the services he allegedly provided to Ms Cook, provided those records to Dr Drake and sought Dr Drake's authority for the withdrawals.
   5. Mr Delahunty's conduct in relation to the persons affected has involved a breach of s 3.3.21 of the LP Act and various other provisions of the LP Act and the LP Regulations. It is an understatement to say that his conduct constituted serious breaches of trust. He withdrew at will from the funds held on trust for Ms Cook, the Smith Estate and the Ladd Estate without seeking the prior consent of those entitled to those funds and without at any time providing a full and frank explanation for his actions.
   6. There are two possible explanations for Mr Delahunty's actions. The first explanation is that he was ignorant of his legal obligations. The second explanation is that he acted dishonestly. As the Board has not sought to establish dishonesty for the purposes of this case, I find that Mr Delahunty's actions are explicable by his ignorance of his legal obligations. Such ignorance in a lawyer who has practised on his own account for 40 years is most disturbing.
   7. In making the above findings against Mr Delahunty, I have taken into account the importance of the evidence relating to those findings and the gravity of the matters alleged against Mr Delahunty, as required by s 142(2) of the Evidence Act 2008.
   8. Mr Delahunty was on notice from 9 December 2010 that the Inspectors were alleging that there was a significant deficiency in the Trust Account and that he was required to restore the deficiency within seven days. Instead of remedying the deficiency, Mr Delahunty basically ignored the substance of the Inspectors' allegations against him. Even if it is assumed that, prior to the receipt of the Inspectors' Report on 6 May 2011, Mr Delahunty did not have sufficient particulars of the alleged deficiency to enable him to take effective remedial action, since 6 May 2011, he cannot have been under any misapprehension of the allegations against him.
   9. Mr Delahunty's conduct since 6 May 2011 indicates that, notwithstanding the detailed allegations that were made against him, he failed to grasp the seriousness of his conduct and the steps that he needed to take as a matter of urgency to rectify the position. His letter dated 22 August 2011 to Ms Ladd and Ms Bailey, which was written with a view to obtaining their fully informed consent to his retention of executor's commission, was not only inadequate, it was also potentially misleading.
   10. Either Mr Delahunty did not understand the nature of the information that he had to communicate to Ms Ladd and Ms Bailey to enable them to make a fully informed decision or, worse still, he deliberately withheld information from them. Once again, I will assume, in Mr Delahunty's favour, that he did not have a sufficient understanding rather than that he acted deliberately. That lack of understanding, however, is a matter for serious concern.
   11. Mr Delahunty's actions since 6 May 2011 do not inspire any confidence that, left to his own devices, he would be capable of satisfactorily communicating with the persons affected about their potential rights against him in relation to funds that he has appropriated without lawful authority.
   12. It is not an answer to these difficulties for Mr Delahunty to say that he can satisfactorily deal with the persons affected with the assistance of the Board. Having reviewed Mr Delahunty's conduct, the Board has decided that a receiver should be appointed for the Practice. The LP Act does not expressly empower the Board to assist practitioners in the manner suggested by Mr Delahunty. Even if it is assumed that the Board has incidental power to provide such assistance, the Board is simply not prepared to provide that assistance as an alternative to the appointment of a receiver in Mr Delahunty's case.
   13. More fundamentally, the simple fact is that Mr Delahunty has created a serious deficiency in the Trust Account and is currently unable to remedy that deficiency. He is, in effect, asking the Court to enable him to continue conducting the Practice while that deficiency remains, so that he can generate income to enable him to remedy the deficiency over time. In my opinion, that is something that the Court cannot countenance. This is particularly so in this case because, based on the net income of the Practice in the financial years 2009 and 2010, it is likely that Mr Delahunty's disposable income for the rest of his working life will not be sufficient to remedy the deficiency.
   14. As Mr Williams has submitted, in deciding whether to appoint a receiver, the Court's primary consideration is the public interest and the interests of the persons affected. The interests of Mr Delahunty must also be taken into account, but not in preference to the public interest and the interests of the persons affected. In circumstances where Mr Delahunty is effectively insolvent - in the sense that he is not currently able to repay amounts owing to the persons affected - and has an insufficient understanding of his obligations to the persons affected - including what information he must provide to them to enable them to make a fully informed decision about any financial settlement with him - it cannot be in the public interest or in the interests of the persons affected, to permit Mr Delahunty to continue to conduct the Practice.
   15. In all the circumstances, the appointment of a receiver for the Practice is warranted under s 5.2.1(d)(i), (ii), (vi) and (e) of the LP Act. The 'other proper cause' for the purposes of s 5.2.1(e) is Mr Delahunty's inability to remedy the deficiency in the Trust Account. In these circumstances, it is necessary to appoint a receiver in order to protect the interests of clients - especially Ms Cook - in relation to trust money.
   16. I have considered the possibility of appointing a receiver over the regulated property of the persons affected rather than over all the regulated property of the Practice. However, in the light of the large number of serious Trust Account irregularities to which reference is made in the Inspectors' Report and the significant deficiency in the Trust Account, I have concluded that it is essential that the receiver take control of all the regulated property of the Practice. That control will enable the receiver to thoroughly investigate the affairs of the Practice and Mr Delahunty's dealings with the Trust Account and to consider the most effective way of restoring the deficiency in the Trust Account and protecting the interests of the persons affected.
   17. The receiver will be able to make full disclosure to the persons affected in relation to their rights against Mr Delahunty. Under s 5.5.14(3) of the LP Act, the receiver can bring proceedings in the name of the persons affected against Mr Delahunty to recover the deficiencies in the Trust Account. A supervisor or manager appointed by the Board would not have this power and therefore, in the circumstances of this case, the appointment of a receiver is required.
   18. It was common ground that the appointment of a receiver for the Practice would not affect Mr Delahunty's appointment as an executor of any estate or his status as a donee of any power of attorney. It was also common ground that the appointment of a receiver would not prevent Mr Delahunty from commencing a new practice on his own account with a new trust account, from practising as a partner of a law firm or from becoming an employee solicitor of a law firm. The appointment of a receiver will not, in itself, destroy Mr Delahunty's livelihood.
   19. In the circumstances of this case, it is appropriate that the receiver take steps, in consultation with Mr Delahunty, to sell the Practice rather than to wind it up immediately. Given the Practice's negligible profitability, a sale by the receiver is unlikely to be feasible. Nevertheless, it should be attempted in good faith. If a sale can be achieved, it may generate modest funds that could assist in reducing the deficiency in the Trust Account.

1. For the above reasons, I will make an order appointing the Board's nominee, James Leach, as the receiver for the Practice. I will direct that the receiver attempt to sell the Practice and that, for the purpose of facilitating a possible sale of the Practice, until further order, the receiver not wind up the Practice.
2. The Court ordered that the receiver's first task was to try to sell the practice, although it thought this was unlikely to be feasible.

1. As matters have transpired, the practice has been able to be sold to Morley Naughton Pearn and Cook. So the present position is that Mr Delahunty is now back working for some of his old clients, as an employee solicitor of that firm.

1. Whilst for the purposes of the proceeding before Kyrou J the above four matters were focussed on, the Investigation Report contained a review of an additional eight matters- 12 in all. In addition to the problems mentioned above in relation to the four files of Smith, Ladd, Cook and McCorquodale, the Investigation Report indicated similar concerns about the other eight matters. It also indicated concerns about a lack of co-operation with the inspectors (see also paragraphs 114 and 115 of the decision of Kyrou J, above) the intermixing of trust money, inaccurate and incomplete records, lack of reconciliation statements and possible breaches of s 83 of the Crimes Act 1958. I was not told of any charges being pursued in relation to the latter. The Inspection Report indicated the concerns about the conduct of Mr Delahunty's trust account stretched back to 1999.

1. Although the matter was argued before me in terms of the sanctions which should imposed, the initial question I must decide is whether Mr Deluhunty is a fit and proper person to hold a practising certificate. If the answer is no, then the question becomes, what disposition should be imposed, and in particular, how long should it be before an application can be made for a practising certificate in the future?
2. Mr Randall submitted that the findings of Kyrou J all went to the question of fitness to practice. He referred to the great vulnerability of Mr Delahunty's clients. He also submitted that Mr Delahunty's conduct, once the non-compliances with the Act and Regulations were drawn to his attention, was inadequate. He submitted that the breaches were so fundamental to the practice of law that a newly admitted practitioner would be aware of them, let alone a practitioner with the experience of the applicant. He submitted that the conduct engaged in here was so serious that it is necessary from the point of view of general deterrence to order that there be a significant period before Mr Delahunty could be allowed to practise again, in any manner
3. Key amongst the submissions Mr Tatarka put on behalf of Mr Delahunty was first, that he no longer represents a danger to the public, because he does not intend ever again to practice as a principal, or to be responsible for trust monies. Second, he submitted that his conduct was not dishonest. This is demonstrated, he said, by looking at Mr Delahunty's trust account records- there is no attempt to hide the payments- they are very easy to identify.
4. Mr Tatarka also put the following matters on behalf of Mr Delahunty:
   • He has a clean disciplinary record apart from the present matters
   • In relation to each of the Smith, Ladd and Cook matters, arrangements either have been, or will be made by negotiation, such that the clients hopefully will not be disadvantaged. As indicated, negotiations are proceeding, with the intention being that Mr Delahunty will receive something by way of reimbursement for the work he has undoubtedly carried out on these clients' files. Mr Tatarka submitted that the amounts he had taken were in the range of what he would have received if he had gone about charging for his services in the proper way (although there was no detailed evidence about this one way or the other).
   • The breaches occurred in the context of longstanding client relationships, which went beyond just providing legal services. For example, for Ms Cook, he managed her affairs, and paid her bills, and she depended on him more and more over time. Mr Delahunty is one of a dying breed of solicitors who carries on this style of practice. The undoubted "hardness" of his response to the investigators as to why he did not prepare bills for his services to her belies his care for her over many years.
   • Mr Delahunty had conducted his trust account for many years in breach of his obligations, and been subject to annual audit, yet nothing was ever picked up until a random audit was conducted
   • No immediate suspension was imposed. Instead, the LIV waited until the end of the registration period, and then refused to renew his practising certificate at that point. Thus the need to protect the public was not so urgent as to require immediate action.
   • The category of practitioners to whom a "message" needs to be sent by the sanctions applied in this case was limited to small firms and sole practitioners, where the solicitor manages the trust accounting obligations personally, rather than larger firms.
   • Mr Delahunty is 65 years old. He is much closer to the end of his working life than a younger practitioner, such that a prohibition from practising for a certain period represents a much greater proportion of his remaining time in the workforce. This, it was said, militated in favour of any period of prohibition on practising being shorter, rather than a longer, as an extended period would in effect spell the end of his career.
5. Some material was put on behalf of Mr Delahunty by way of character evidence. His son gave oral character evidence. This was mostly confined to personal matters. There was a written reference from his accountant, Mr Falconer, which spoke positively of Mr Delahunty as a professional colleague who occupied an adjoining office, and from the perspective of being a client. There was also a brief positive reference from another client, Dr Peter Drake (who was Mr Delahunty's co- attorney in relation to Ms Cook). Mr Delahunty did not give evidence himself.
6. Finally, there was an affidavit from Mr Anthony Naughton, which stated:
   1. I am a sole practitioner and the sole proprietor of the firm Morley Naughton Pearn & Cook of Bentleigh.
   2. That I was admitted to practice in November, 1982 and have acted as a sole practitioner since February. 1996.
   3. The Applicant, Ross Vincent Delahunty, commenced employment with me in early October, 2011. He is employed for four days per week. The employment occurred as a result of me advertising a position for a solicitor due to the retirement of my employee solicitor, Mr Michael Pentland, who had been with me for over twelve years. I interviewed four solicitors in total for the position and selected the Applicant as he was the most experienced and capable by a considerable margin. He was clearly the most suitable person to join my firm.
   4. In our initial interview I enquired why it was that the Applicant was no longer the principal of Legal Rite and I am satisfied that he has fully appraised me of the reasons and has provided to me a copy of Mr Justice Kyou's decision handed down in the Supreme Court in September, 2011.
   5. I knew the Applicant prior to October, 2011. We sometimes met and talked at the Bentleigh Post Office when collecting mail. Otherwise I have had no contact with him professionally or socially whatsoever save and except for the occasional dealing between our respective firms.
   6. Before employing the Applicant I made enquiries with Mr Tony Cook who had known of the Applicant in a professional capacity for about 40 years and he gave a strong endorsement of the Applicant.
   7. Since employing the Applicant I have purchased from the Receiver of Legal Rite the former practice of the Applicant. The Applicant is working on the files that belonged to this firm and other files that had been introduced to this firm through Legal Rite and/or the Applicant.
   8. The Applicant has displayed that he is capable of handling a wide range of files which are litigation in the main but also comprise business and commercial enterprise files. I have found the Applicant to be competent in dealing with those files. Not all files that are introduced to this firm through Legal Rite or the Applicant have been dealt with personally by the Applicant as I have Conveyancing and Probate staff that have dealt with those type of files introduced by the Applicant.
   9. The Applicant does not operate a computer.
   10. To date I have been satisfied that the Applicant is competent and that his work is done expeditiously. He is under my constant supervision in that I collect and distribute incoming mail and I check all outgoing mail produced by staff.
   11. The Applicant has no involvement whatsoever with the disbursement of Trust Monies held by Morley Naughton Pearn & Cook. I am the sole signatory to the Trust Account and as such I am responsible for the handling of all Trust monies that are received and/or disbursed by my practice.
   12. If the Applicant receives a Local Practicing Certificate it is my intention to retain his services as an employee solicitor. It is not easy finding experienced competent solicitors to work in suburban legal offices and it would be difficult to replace the Applicant if he was barred from legal practice.

1. The requirement that an applicant be a fit and proper person to hold a practising certificate arises from the fact that solicitors are members of an honourable profession, in whom the public must be able to."repose unbounded confidence" [3] As Gillard J said in Victorian Lawyers RPA v Yvonne Grace Young[4], "...the public must be confident that those they engage as lawyers are fit and proper persons to provide appropriate, proper, careful and competent legal services".
2. The provisions of s 1.2.6 (suitability matters) and 2.4.4 (suitability to hold a practising certificate) are applicable in considering whether a person is fit and proper to hold a practising certificate. They include at 1.2.6(1)(k), whether a receiver has been appointed to the legal practice engaged in by the person. Also under s 2.4.4(1)(c), any contravention of the Act or Regulations must be taken into account in determining whether a person is fit and proper to hold a practising certificate.
3. Although the provisions relating to granting of practising certificates and professional disciplinary proceedings are separately dealt with in the Act (see paragraphs 66 and following, below) they are to a significant extent interrelated. As the case law demonstrates, this reflects the fact that they are based on the same principles of protection of the public, and professional capacity and integrity. Several provisions create links between the Part 2 and Part 4 processes. Section 2.4.37 empowers VCAT in Part 2 proceedings to impose any of the sanctions which may be imposed following findings under Part 4 of professional misconduct or unprofessional conduct. Section 4.4.3(2) provides that in determining fitness to practice as a basis for a finding of professional misconduct, regard may be had to suitability matters that would be considered if the practitioner were an applicant for admission to the legal profession under the Act or for the grant or renewal of a local practicing certificate.
4. VCAT's disciplinary function is of course primarily protective: Hanneberry v Legal Ombudsman[5].
5. In Quinn v Law Institute of Victoria[6] (at paragraph 30) Maxwell P said:

[30] Nevertheless the phrase "not so much to punish as to protect" [used in Hanneberry] underlines the fact that the Tribunal's orders are punitive as well as protective. The available sanctions are, by their nature punitive, and the objectives of specific and general deterrence - which serve the protection of the public - depend on the sanctions having punitive effect.

[31] Critically for present purposes, however, the Tribunal's protective function is paramount. Thus, where there is a choice of sanctions, it is to be expected that the Tribunal will choose the sanction which maxims the protection of the public.

1. The punitive aspect of disciplinary decisions was referred to by Ross J in Legal Services Commissioner v Brott[7] as follows:

[8] Of course the protection of the public is not confined to protection from further misconduct by the practitioner in question. It extends to protecting the public against similar acts of misconduct by publicly denouncing the misconduct in question. Seen in this way it is apparent that specific and general deterrence are relevant to the exercise of the Tribunal's disciplinary powers. As Giles AJA said in Law Society of New South Wales v Foreman (Foreman):

"the public is protected by ensuring that those unfit to practise do not continue to hold themselves out as fit to practise. But the object of protection of the public also includes deterring the legal practitioner in question from repeating the misconduct, and deterring others who might be tempted to fall short of the high standards required of them. And the public, and professional colleagues who practise in the public interest, must be able to repose confidence in legal practitioners, so an element of deterrence is an assurance to the public that serious lapses in the conduct of legal practitioners will not be passed over or lightly put aside, but will be appropriately dealt with."[8]

1. There principles have frequently been applied in disciplinary cases. In the light of section 2.4.37 they are also applicable in determining the disposition upon review of a decision that a person is not a fit and proper person to hold a practising certificate.
2. Finally, the fact that a finding of not fit and proper has been made against a solicitor does not mean that he or she cannot in the future apply for and be granted a practising certificate. Whilst being struck off the roll of practitioners assumes permanent unfitness to practice[9], the fact that s 2.4.37 makes available to VCAT the full range of sanctions for disciplinary breaches in Part 4, indicates that a possible return to practice in the future is contemplated by Part 2.

1. Many of the cases relating to the "fit and proper" criterion concern dishonesty. Here, however, the LIV relied on the findings of Kyrou J, and the Investigation Report, and explicitly did not seek to put the case any higher than the findings made by his Honour. As appears from the passage quoted above at paragraphs 112 and 116, this was on the basis that Mr Delahunty was ignorant of his legal obligations in relation to trust accounting, rather than that he was dishonest.
2. However, even on this basis, I find that Mr Delahunty is not a fit and proper person to hold a practising certificate at the present time. His taking of executor's commission and fees without authority, in particular from vulnerable clients, and his breaches of his trust accounting obligations were so egregious and fundamental, that the conclusion must follow that he is not fit and proper to hold a practising certificate, even as an employee only, and without the authority to deal with trust monies. A practitioner who is restricted in this way still has significant involvement in, and responsibilities for, his clients' personal legal affairs.
3. It is well accepted that breaches of trust accounting requirements are amongst the most serious breaches a practitioner can commit. As indicated in paragraphs 10 and 44 above, the Act specifically provides that contravention of provisions of the Act and Regulations (s 2.4.4(1)(c)), and the appointment of a receiver (s 2.4.4(1)(k)) are matters which can constitute grounds for a finding that a person is not fit and proper to hold a practising certificate. Further, having a deficiency in a trust account is an offence under s 3.3.21(1) of the Act which carries a maximum penalty of 15 years.
4. These sums of money involved here were substantial, and the breaches continued for many years.
5. I now turn to the other matters put by Mr Tatarka on Mr Delahunty's behalf. From the material put at the hearing, it is not possible to say whether Mr Delahunty's clients in relation to the Smith, Ladd and Cook matters will end up significantly worse off than if he had undertaken the proper steps so as to become entitled to take monies from his trust account for his fees, expenses and commission. This is intended to be resolved by negotiation. There is nothing to suggest Mr Delahunty has been significantly enriched by his conduct. To the extent there is a deficiency, Mr Delahunty does not have the means to make this good. The uncertainty about this question emphasises the problem with Mr Delahunty's conduct: he has created a situation where the only way of concluding that he has not taken more money than he would be able to claim if he had gone through the proper processes, depends on his say so. This is an untenable position for him, and it illustrates why proper records must be kept, and proper trust accounting procedures must be carried out.
6. In relation to the failure of annual audits to pick up his breaches, it was of course Mr Delahunty's responsibility to comply, not anybody else's.
7. In relation to the fact that Mr Delahunty was not immediately suspended after the Inspection Report was produced, this is accepted, however I do not believe it is of great significance given the report was dated 21 April 2011, and the practising certificate expired on 30 June 2011. I accept Mr Randall's submission that in the circumstances of this case at least, there were logistical considerations which favoured the process which was adopted.
8. Accordingly, the application by Mr Delahunty for review of the decision of the LIV refusing to renew his practising certificate is refused.

1. In terms of disposition, the Court of Appeal in Quinn indicated that the Tribunal should choose the sanction which maximises the protection of the public. It also indicated that because the principles applicable to sentencing should apply by analogy to disciplinary decisions, the existence of any mental illness should be taken into account when determining the sanction to be applied. That was a significant factor in the circumstances of Quinn. Although Mr Delahunty's case did include some matters relating to his health, in contrast to Quinn, these did not relate to mental health and are of little relevance to the question of disposition
2. In reliance on Quinn, Mr Tatarka submitted that the public is now sufficiently protected, given that Mr Delahunty is now practising as an employee solicitor only, and is prepared to undertake not to seek to practise as a principal or to hold trust monies.
3. Unfortunately, I do not believe the decision in Quinn avails Mr Delahunty here. As discussed above, his breaches of his trust accounting obligations are so serious, that the need for general deterrence, as an aspect of the protection of the public, demands some period without the right to practise. Nor can it be said that depriving Mr Delahunty of the right to practice in this instance provides less protection to the public than not doing so.
4. The LIV sought that this be four or five years. I take into account the personal and professional character evidence put on Mr Delahunty's behalf by his son, Mr Falconer, Dr Drake and Mr Naughton. Whilst positive, this evidence was not extensive. There was no reference to community activities, for example. And, more significantly, little or nothing was put in relation to insight or remorse. In this regard, I note his response to the investigation was not completely fulsome.
5. In relation to the submission that the "target audience" for this decision is small firms and sole practitioners, that is clearly not a small category, and so I do not believe that is a factor which would have the effect of lessening the sanction to be imposed.
6. Given that Mr Delahunty is now practising as an employee solicitor (to the satisfaction of this employer) the imposition of a period before he can again seek a practising certificate will obviously create inconvenience for the firm, quite apart from the hardship to him. In appropriate circumstances, rehabilitation is an important consideration. Here, however, Mr Delahunty is not seeking to resume the operation of a trust account. Further, once again, this cannot overcome the need to recognise the seriousness of the conduct in this case by imposing a disposition which prevents Mr Delahunty practising for an appropriate period.
7. In this case, I have concluded that the appropriate disposition is that Mr Delahunty be prevented from applying for a practising certificate for a period of two years. I recognise that if he was to obtain a practising certificate in the future, and he was able to return to his current position at Morley Naughton Pearn and Cook, or a similar position, the concerns about protection of the public from the type of conduct the subject of this proceeding would largely be dealt with, given that he would be acting under supervision of his principal. In the light of his current employment at Morley Naughton Pearn and Cook, and the time it has taken for this review process to be carried out, I will order that this decision not take effect until the expiry of one month from the date of this order. I did not receive any submissions as to any further education which Mr Delahunty should undertake before any future application for a practising certificate is granted. I therefore make no order about that matter. It can be dealt with as part of the application process. I will also order a minimum period of seven years expire before he may apply for a practising certificate as the principal of a legal practice, and 15 years before he may apply for a practising certificate allowing him to hold trust monies.

1. As indicated, the LIV sought that a finding of professional misconduct be made against Mr Delahunty as well as a finding that he is not a fit and proper person to hold a practising certificate. This submission was made on the basis that VCAT's powers on review of the decision by the LIV (as delegate of the LSB) to refuse to issue a practising certificate include all relevant powers exercisable upon the making of a finding of professional misconduct against a practitioner. These include the power to make orders including a reprimand, a fine, supervision, the imposition of practice conditions, requiring further legal education be undertaken, suspending or cancelling a practising certificate, ordering that a practising certificate not be granted before the end of a specified period, and recommending to the Supreme Court that the name of the practitioner be removed from the local role. The LIV in effect submitted that a finding of professional misconduct should in this case flow on from a finding that Mr Delahunty is not a fit and proper person to hold a practising certificate under Part 2. It is noted that one of the ways in which professional misconduct is defined at s 4.4.3(b) itself invokes the "fit and proper" criterion. Also, it was said the breaches of the Act and Regulations he had committed constituted professional misconduct within the meaning of s 4.4.4(a) (namely conduct constituting a contravention of the Act or Regulations).
2. Mr Randall pointed to the decision in Edwards v Law Institute of Victoria (Legal Practice)[10], where a finding of professional misconduct was made in a proceeding brought by a practitioner challenging a refusal to renew a practising certificate. He said this had been the practice historically. In a supplementary written submission provided after the hearing, he referred to decisions under the Legal Practice Act1996 (the 1996 Act) of Henderson v Victorian Lawyers RPA Ltd[11], and Nelson v Victorian Lawyers RPA Ltd[12].
3. He said the ability to make a finding of professional misconduct as one of the outcomes of a review of the refusal to renew a practising certificate under Part 2 was beneficial in practical terms, in that it avoided duplication of proceedings.
4. On behalf of Mr Delahunty, Mr Tatarka submitted that VCAT cannot make a finding of professional misconduct in these proceedings. He acknowledged that VCAT could find that the elements of misconduct were satisfied, as part of its decision on a Part 2 review, but said it would not actually make that formal finding.
5. The process under Part 2 involves the LSB (or as here, the LIV as its delegate) determining whether to renew a practising certificate (under s 2.4.7). In doing so, it applies the suitability criteria set out in s 2.4.4. These include the "suitability matters" set out in s 1.2.6. It is of course able to ask the practitioner for a response to anything adverse it is aware of, before making a decision, but this is not stated explicitly. Rather, the onus is on the applicant to declare any relevant matters. After it makes a decision it is required to give an information notice about the decision to the practitioner (s 2.4.12(3)).
6. Divisions 6 and 7 of Part 2 set out provisions which apply in relation to the imposition of conditions (s 2.4.13 - 2.4.18) and the amendment, suspension or cancellation of practising certificates (s 2.4.19 - 2.4.36). These require notice to be given to a practitioner if the delegate believes grounds exist to take such action, and for representations in response to be made and considered (s 2.4.21). There are provisions in relation to immediate suspension of practising certificates (s 2.4.22 - 2.4.25), and the disclosure of "show cause" events by practitioners (s 2.4.26 - 2.4.29).
7. The disciplinary provisions are set out in a separate Part of the Act - Part 4 Section 4.1.1 provides:

(a) to provide a scheme for the discipline of the legal profession in this jurisdiction, in the interests of the administration of justice and for the protection of consumers of legal services and the public generally;

(b) to promote and enforce the professional standards, competence and honesty of the legal profession;

(c) to provide a means of redress for complaints about the legal profession.

1. Part 4 establishes a complaints based process for dealing with both civil complaints (including costs disputes) and disciplinary complaints. The regulatory body for the purposes of Part 4 is the Legal Services Commissioner (LSC), not the LSB. In terms of disciplinary matters, Part 4 provides for investigations, which can be initiated either by a complaint, or on the own motion of the LSC. The LSC is not a decision making body. It seeks to mediate civil disputes. It has the power to reprimand or caution with a practitioner's consent (s 4.4.13(3)(b)). But if serious action is to be taken, the LSC assumes the role of prosecuting disciplinary matters before VCAT. It is VCAT which has the role of determining whether a practitioner is guilty of unsatisfactory conduct or professional misconduct.
2. In my view, the correct interpretation is that VCAT cannot make a finding of "professional misconduct" in proceedings commenced under Part 2. To do so would be contrary to the regime established by the Act which establishes two separate processes in Part 2 and Part 4 respectively. Under Part 4, a practitioner is given explicit notification that he or she is charged with "professional misconduct". Further, the disciplinary process under Part 4 is conducted by a different body to the registration process under Part 2. Thirdly, the presumption in favour of the applicant being awarded its costs applies to the LSC in Part 4 proceedings, but not to the applicant in Part 2 matters.[13]
3. Whilst the dispositions in s 4.4.17 and 4.4.19 (except paragraph (a)) are available following on from a decision not to renew a practising certificate, the Act does not provide for an actual finding of "professional misconduct" or "unsatisfactory conduct" to be made following a Part 2 process. Section 2.4.37(3) does not state that that such a finding can be made. Nor is there any statement that the provisions of Part 4 leading up to a finding of professional misconduct, or of unprofessional conduct, are deemed to be satisfied by a Part 2 process.
4. The cases under the 1996 Act referred to by Mr Randall do not support the conclusion that a finding of professional misconduct can be made on a Part 2 review under the Act. Section 28 of the 1996 Act enabled a refusal to issue a practising certificate on the ground of misconduct. Section 30(3)(b) allowed for that outcome on review by the Full Tribunal. In contrast, a finding of professional misconduct is not specified as a ground for refusal to renew a practising certificate under Part 2 of the Act. In both Henderson and Nelson the Legal Profession Tribunal was reviewing a decision of a decision maker below that the practitioner was guilty of misconduct.
5. In relation to Edwards, I note the decision[14] states that the LIV made allegations against Mr Edwards, in particular that he was guilty of misconduct both at common law and arising from his wilful or reckless contravention of the Act, Regulations and the Legal Practice Rules. Thus it appears that Mr Edwards was given some notice of the intention to seek that VCAT make a finding of professional misconduct against him, as one of the outcomes of his review proceedings challenging the refusal to review his practising certificate. It does not appear that the question of whether a finding of professional misconduct could be made was raised as a contested issue between the parties in the two Edwards hearings, and the issue is not analysed in the decisions.
6. From a policy point of view, one can certainly see that it is desirable properly to integrate the Part 2 and Part 4 processes to avoid duplication. Under the present regime, in imposing a sanction under Part 4, VCAT in effect finds that conduct would constitute professional misconduct or unprofessional conduct, but cannot formally make that finding.
7. In the present case, had Mr Delahunty been charged, on the information before me, I would have found him guilty of professional misconduct under Part 4 in relation to his breaches of the Act and Regulations relating to his trust account obligations. I would have done so on the basis that Mr Delahunty has engaged in professional misconduct within the meaning of s 4.4.3(b) of the Act (justifying a finding that he is not a fit and proper person to engage in legal practice) and s 4.4.4(a) (contravention of the trust accounting obligations under the Act and Regulations of a sufficiently serious magnitude to constitute professional misconduct). Further, I would have imposed the same sanction, namely a period of two years before he may reapply for a practising certificate of any kind, seven years before he may apply for a practising certificate as the principal of a legal practice, and 15 years before he may apply for a practising certificate allowing him to hold trust monies.
8. The consequence of the conclusion that no formal finding of professional misconduct can be made as an outcome of Part 2 review proceedings is that it may be necessary in many cases (and may be prudent in most, if not all) for the LSC to bring Part 4 disciplinary charges in tandem with Part 2 reviews. I understand this will create some duplication, however, that is a consequence of the statutory regime which must be applied. I am not aware whether this issue arises under the new national legislative scheme due to be introduced in the next year or so. If it does, however, it would be desirable for the new law to be drafted so as to make clear the precise relationship between the provisions which are equivalent to the present Part 2 and Part 4 provisions.

[1] Legal Services Board v Ross Vincent Delahunty [2011] VSC 453, 14 September 2011, per Kyrou J

[2] They are also the foundation for the third category of enquiry, namely, whether professional misconduct has occurred. This is dealt with below.

[3] See .Ex parte Munro, Re The Legal Practitioners Act (1969) 71 SR (NSW) 448 Walter v Council of Queensland Law Society Inc [1988] HCA 8; (1988) 77 ALR 228 at 235; Smith v New South Wales Bar Association [1992] HCA 24; (1992) 176 CLR 239 at 251

[4] [2001] VSC 28 at paragraph 25.

[5] [1998] VSCA 142

[6] [2007] VSCA 122

[7] (Legal Practice) [2008] VCAT 2399

[8] (1994) 34 NSWLR 408 at 471

[9] New South Wales Bar Association v Cummins [2001] NSWCA 284, (2001) 52 NSWLR 279, New South Wales Bar Association v Murphy [2002] NSWCA 138

[10] [2008] VCAT 2034

[11] Legal Professions Tribunal matter No T0181 of 1999, 3 August 1999

[12] Legal Profession Tribunal matter No T0530/1997, 10 November 1997

[13] Victorian Civil and Administrative Tribunal Act 1998, Schelule 1, cl 46D

[14] Edwards v Law Institute of Victoria (Legal Practice) [2008] VCAT 1277, at paragraph 10. The decision as to disposition is Edwards v Law Institute of Victoria (Legal Practice) [2008] VCAT 2034