1. he did not know what the figures were for; 2. he was aware of his trust account obligations and should have known what the figures represented;

1. he had not entered all transactions into LMG's computerised trust accounting software program, REST; and

1. he was not very good at the trust account side of the business and needed to get someone to fix this.
2. Additionally, trust account reconciliation statements covering the period June 2013 to end May 2015 as produced by Mr Grogan at the June 2015 inspection (and as seized on that day by CAV inspectors together with other trust account records provided by LMG and subsequently examined):-
   1. Did not include monthly reconciliation statements for the months of July 2014, August 2014 and September 2014. Mr Grogan has subsequently advised that he believes these reconciliation statements were completed for LMG. However the reconciliation statements have not been produced to CAV;
   2. Contained, in respect of the months of March, October and December 2014, statements that were neither signed nor dated (and were thus not verified as being true and accurate within 14 days after the end of the relevant preceding month);
      1. Contained in respect of January 2015, a statement that was not dated;
   3. Contained, in respect of June 2013, two reconciliation statements, one dated 1 July 2013 and one dated 3 September 2013 (the two statements for the same period containing differing figures in respect of outstanding deposits);
3. A subsequent examination by CAV inspectors of 49 commercial rental files maintained for the commercial rental properties managed by LMG and constituting its estate agency business, as further produced by Mr Grogan to CAV inspectors and seized in November 2015 (the examination including electronic files produced by Mr Grogan as referred to in paragraph 8 below) and then reviewed by inspectors in conjunction with LMG's bank and reconciliation statements, indicated that:
   1. In 21 cases, no copy of the lease agreement was retained on the file.

1. In 28 cases, neither the tenant's name nor the landlord's name was referenced on the file (and in one further case the name of the landlord was not referenced).

1. In 19 cases, there were no particulars on the files as to the amount of monthly rental to be paid (In 17 additional cases, details of annual rent to be paid only were provided);

1. In no case were there any records retained on the files of the dates on which rent was received into the trust account;
2. In no case were copies of any rent receipts, rent received in ledger or rent received in bank statements, retained on the files;
3. Except in 4 cases, there was no evidence of any rental statement retained on the files;
4. Except in 8 cases, there were no references to repairs outgoings retained on the file;
5. Except in 5 cases, there were no insurance particulars contained on the files;
6. Except in 6 cases, there was no evidence of any other outgoings/utilities referenced on the files.

1. Inspector Davidson had telephoned LMG's officer in effective control, Mr Grogan on 5 November 2015 to advise that CAV would need to obtain all of LMG's commercial rental files. These were seized on 9 November 2015 as arranged with Mr Grogan, from an address which Mr Grogan advised Inspector Davidson was its new office address at 6/9 Yarra Street, South Yarra. Mr Grogan had placed its commercial rental files in boxes for CAV for collection on 9 November 2015. Mr Grogan also advised inspector Davidson on that day that he did have some additional electronic files which he would send to CAV. Three additional electronic files were so provided to Ms Davidson on 23 November 2015.
2. Further, an examination of the trust ledgers for the Westpac trust account from July 2013 to May 2015, as produced by Mr Grogan at the June 2015 inspection (and as seized on that day and subsequently examined by inspectors in conjunction with bank statements for the Westpac trust account) indicated that :-
   1. The trust ledgers contained at least two transactions which, while referenced in the trust ledgers, could not be located at all in the bank statements for the Westpac trust account at all, being:-
      1. An amount of $5974.96 in the trust ledger for 3 July 2013 in respect of [company name deleted], referenced under [surname deleted]; and
      2. An amount of $3154.67 in the trust ledger for 4 July 2013 in respect of [business name deleted], referenced under [surname deleted].
   2. The trust ledgers contained the following deposit transactions in respect of which the information in the trust receipts ledger differed from the reference for the relevant amount in the trust account bank statement (which referencing was not intelligible to the objective analyst) ;
      1. An amount of $434.00 deposited on 1 July 2013 in respect of [name deleted] referenced under '[name deleted] 2';
      2. An amount of $995.83 deposited on 9 July 2013 in respect of [business name deleted] referenced under '[name deleted] 303';
      3. An amount of $4800.00 deposited on 31 July 2013 in respect of [company name deleted], referenced under [name deleted];
      4. An amount of $1040.00 deposited on 5 May 2014 in respect of [name deleted] referenced under '[name deleted] 2';
      5. An amount of $2860.00 deposited on 6 May 2014 in respect of [names deleted] referenced under '[name deleted]';
      6. An amount of $945.83 deposited on 12 May 2014 in respect of [name deleted], referenced under [name deleted];
      7. An amount of $1850.00 deposited on 13 May 2014 in respect of [name deleted] referenced under [business name deleted];
      8. An amount of $15,094.41 deposited on.30 May 2014 in respect of [company name deleted], referenced under [name deleted];
      9. An amount of $995.83 deposited on 7 January 2015 in respect of [names deleted];
      10. An amount of $8048.50 deposited on 3 March 2015 in respect of [name deleted] referenced under [name deleted];
      11. An amount of $1650.00 deposited on 4 March 2015 in respect of [business name deleted] referenced under [name deleted];
      12. An amount of $6220.28 deposited on 31 March 2015 in respect of [business name deleted] referenced under [name deleted];
      13. An amount of $5342.57 deposited on 16 April 2015 in respect of [company and business name deleted] referenced under [name deleted].
3. Further, an examination of the cheque books forming part of documents seized from LMG's business premises, as produced by Mr Grogan to inspectors at the June 2015 inspection and subsequently examined by inspectors) revealed that :-
   1. Cheques were not always written in consecutive order and there were blank unused cheques between cheque butts for each cheque book. For instance:
      1. in cheque book [account number deleted], blank cheques remained for numbers [cheque numbers deleted];
      2. In cheque book [account number deleted] blank cheques remained for numbers [cheque numbers deleted];
   2. There was insufficient information contained on the cheque butts for the purposes of identifying matters such as name of the payee, the identity of the person on whose behalf the cheque was drawn and the identity of the account in the trust ledger to which the cheque was to be debited.
4. Further, notwithstanding:-

1. the notification of the alleged deficiency of $15,669.22 in the Westpac trust account in the 2013-2014 audit report from Tudor and Company, received by CAV in 2015 (as referred to in paragraph 3 above); and 2. the issue by a CAV inspector of a statutory Notice to Produce under section 70C of the EEA to LMG per Mr Grogan on 5 November 2015 seeking further information and documents, inter alia, explaining or in any way relating to the debit transactions from the Westpac trust account highlighted in Tudor and Company's 2013-2014 audit report ; and

1. Further follow up questions being issued by a CAV inspector on 18 November 2016 following a response to the section 70C Notice, as provided via Mr Grogan, on 9 November 2015;

Mr Grogan was unable to produce and did not produce or provide sufficient further explanation, information and/or any further trust account records and documents specifically concerning the alleged overdrawn transactions from the trust account as referred to in the 2013-2014 audit report.

1. Further, Tudor and Company, in response to a Notice to Produce under section 70D the EAA which Marcella Lobos, a duly appointed and authorised CAV Inspector caused to be issued in late December 2015, was unable to provide further detailed audit information to CAV regarding the specific components of the deficiency referred to in the 2013-2014 audit report and referred to Tudor an Company's difficulties in construing LMG's records. The information from Tudor and Company included advice that LMG would often pay landlords rent money when the tenants had not paid rent or rent in full and referred to reconciling items having unknown deposits.
2. In the result, due to LMG's inaccurate and incomplete records CAV inspectors were unable to further confirm the individual components alleged to have comprised the total overdrawn amount identified in the 2013-2014 trust account audit report for LMG for the purposes of confirming the deficiency.
3. In November 2015, Mr Grogan confirmed advice which he had earlier foreshadowed to CAV to the effect that as of 1 July 2015, LMG had engaged the services of Wealth Commercial (which utilises the RP office system) to run its trust accounting system and that all trust accounting procedures were being handled by Wealth Commercial including receipting, reconciliations, invoicing tenants and paying creditors and landlords..
4. LMG also did not cause its trust accounts for the year ending 30 June 2015 to be audited within three months after 30 June 2015 (as reiterated by Inspector Davidson to Mr Grogan on 8 December 2015). On 9 February 2016 CAV received a 2014-2015 trust account audit report for LMG dated 8 February 2016, covering the period 1 July 2014 to 30 June 2015, accompanied by a letter dated 8 February 2016, from Richard Vergona of the VA Group Pty Ltd, LMG's newly appointed auditor ('VA Group'). The letter included advice that as at 30 June 2015 there was a deficiency of $26,840.19 in the Westpac Trust Account and that amounts of $17,000.00 and $9840.19 had been repaid on 8 January 2016 and 29 January 2016. The letter also advised that for the seven months ending 31 January 2016 LMG's trust accounting had been performed accurately with no further deficiency issues identified.
5. The VA group stated in its letter that the overdrawn amount of $15,669.22 as at 30 June 2014 had been repaid. Correspondence to CAV from LMG (per Mr Grogan) also dated 8 February 2016 referred to this sum as having been repaid to the trust account. Mr Grogan has not provided any documents or records to CAV, however, such as bank records, evidencing restoration of any overdrawn transactions in LMG's Westpac trust account, despite previous requests by CAV to do so.
6. The procedures and record keeping in relation to trust accounts (for which Mr Grogan, as Officer in Effective Control of LMG, has been responsible) have been very poor, leading to considerable difficulties in construing the trust account transactions. Mr Grogan did not properly control and manage the trust accounting and record keeping elements of the business as required by the EAA. These failures are acknowledged in correspondence from Mr Grogan to CAV dated 8 February 2016 in which Mr Grogan includes acknowledgements to the effect that properly running a business in compliance with regulatory requirements has been difficult for him and any deficiency issues in LMG are reflective of poor record keeping and procedures.
7. In relation to LMG's past compliance history, there was a previously identified potential deficiency in LMG's Macquarie Trust account/record keeping issues raised (including reference to extensive use of reconciling items in bank reconciliations) in an audit report for the year ending 30 June 2008 from Tudor and Company which had resulted in LMG and Mr Grogan entering into an enforceable undertaking ("EU") to the Director of Consumer Affairs Victoria in January 2009. The EU indicated that CAV had received confirmation that LMG had repaid monies into the trust account to restore the deficiency (which was stated to have been due to inadvertence).
8. Subsequent to the EU in 2009 further qualified audit reports from Tudor and Company have been submitted in respect of LMG's trust accounts for the years ending 30 June 2010, 30 June 2011 and 30 June 2012. Matters noted in reports included variously, incorrect receipting of income received from training through the trust system (2010), incorrect payments (insurance) from the trust account (2010, 2011, 2012), clients incorrectly depositing into non trust account (2012), manual cheques written out of date order (2010) and incorrect use of a suspense account (2010).

[1] The names of clients, bank account and cheque numbers, addresses and other personal information has been redacted as it was not necessary to be included in these reasons.

[2] Second Reading Speech for the Estate Agents Bill, Hansard, Legislative Assembly, 1 May 1980, page 8972.

[3] Paragraphs 12 and 17 of the statement.

[4] [2015] VCAT 401.

[5] [2016] VCAT 1322.