1. Walter Percival Edwards was admitted to legal practice some 35 years ago. In 2003 he met a Michael Kyriackou and came to develop a close relationship with him. This relationship was to be Mr Edwards' downfall.
2. In about March 2005 Mr Edwards operated the legal practice of W.P. Edwards Solicitors from Suite 727, 1 Queens Road, Melbourne. Mr Kyriackou was initially Mr Edwards' law clerk and later became his practice manager. Mr Kyriackou also operated a business as a lender of last resort to property developers in financial distress (the bail out business). He would put together a group of investors, called syndicates, to provide the necessary finance. Mr Edwards was also involved in the bail out business, as a director of some of the relevant corporate entities.
3. The affairs of the bail out business and the legal practice were closely connected. The arrangement between Messrs Edwards and Kyriackou with respect to the bail out business and Mr Edwards' legal practice included the following features:
   • Mr Edwards was to receive one percent of the value of projects completed by the bail out business.
   • Mr Kyriackou, or entities controlled by him, owned the premises from which the legal practice operated and he paid the wages of all the staff of the legal practice and all other expenses associated with the running of the legal practice.
   • Mr Kyriackou was to refer clients to the legal practice; as events unfolded Mr Edwards' most significant clients were the legal entities associated with the bail out business.
   • Mr Kyriackou engaged the staff of the legal practice, including the bookkeeper who managed the legal practice's trust account.
4. Mr Edwards' contribution to the bail out business was essentially the provision of a practising certificate and acting as Mr Kyriackou's frontman.
5. A random inspection of Mr Edwards' trust account revealed a number of serious concerns. The Legal Services Board subsequently appointed someone to manage the legal practice.
6. In October 2006 the practice effectively ceased to operate as it had no money to pay staff or meet its other expenses. Mr Edwards' estate was sequestrated pursuant to the provisions of the Bankruptcy Act on or about 17 May 2007. He remains an undischarged bankrupt.
7. In a decision issued on 24 June 2008 the Tribunal found Mr Edwards guilty of:
   • misconduct within the meaning of s 137 of the Legal Practice Act 1996 (the 1996 Act);
   • professional misconduct within the meaning of s 4.4.3(1) of the Legal Profession Act 2004 (the 2004 Act); and
   • professional misconduct at common law.
8. As a consequence of these findings the Tribunal was not persuaded that Mr Edwards was a fit and proper person to hold a practising certificate and so dismissed his application to review the Law Institute decision refusing to renew his practising certificate.
9. The issue in the present proceedings is the penalty to be imposed on Mr Edwards in respect of the earlier findings of misconduct.

1. The Tribunal's powers to discipline legal practitioners for misconduct are primarily protective[1]. But its disciplinary orders are punitive as well as protective, as Maxwell P observed in Quinn v Law Institute of Victoria Limited (Quinn):

"The available sanctions are, by their nature, punitive, and the objectives of specific and general deterrence - which serve the protection of the public - depend upon the sanctions having punitive effect."[2]

1. His Honour went on to say that in circumstances where the Tribunal's protective function is paramount it is to be expected that the Tribunal will choose that sanction which maximises the protection of the public. Quinn's case was concerned with alleged overcharging and the choice before the Tribunal was between a period of suspension and a proffered undertaking to have bills of costs independently assessed. The Court of Appeal held that the latter sanction afforded a greater likelihood of protection of the public.
2. His Honour also said that because the Tribunal's disciplinary jurisdiction is punitive, in the service of protecting the public, the principles applicable to sentencing apply by analogy.
3. In sentencing generally it is necessary to balance just punishment; specific and general deterrence; denunciation; the protection of the community; and rehabilitation.[3]
4. Specific deterrence is directed at the particular offender. The concept of general deterrence of others by the punishment of an offender is that an understanding that an offence is followed by substantial adverse consequences will prevent others from committing the offence.
5. The nature and gravity of the misconduct is central to the process of determining an appropriate sanction. A range of other factors may also be relevant, depending on the circumstances of the particular case, for example previous disciplinary findings; remorse; the practitioner's health; the losses suffered as a result of the practitioner's conduct; and whether the practitioner has made admissions.
6. Before turning to deal with the matters which are relevant in this case I propose to set out the parties' submissions with respect to the appropriate penalty.

1. The LIV submits that consideration should be given to referring Mr Edwards to the Supreme Court with a recommendation that he be struck off. In the alternative it is submitted that there must be a significant period during which Mr Edwards not be entitled to hold a practising certificate and before he is entitled to apply for a practising certificate he should undertake a course of instruction.
2. In particular the LIV contends that the Tribunal should order that Mr Edwards:
   • (i) Not be entitled to apply for any practising certificate for a period of five years;
   • (ii) Not be entitled to apply for a principal practising certificate for a period of ten years;
   • (iii) Not be entitled to apply for a principal practising certificate authorising the receipt of trust moneys for a period of fifteen years;
   • (iv) Be required to undertake specified courses of professional development in any event; and
   • (v) Pay the costs of the Institute of an incidental to this matter.
3. Mr Edwards contends that there were a range of 'exceptional extenuating circumstances' and mitigating factors in this case which are relevant to the question of penalty. The extenuating circumstances are said to effect the applicant's culpability. Three particular matters are highlighted:
   • (ii) the trust account records in relation to his legal practice were lost or destroyed in late 2005 or early 2006 and Mr Kyriackou was involved in the loss or destruction of those records;
   • (iii) the trust account records were 'reconstructed' by an accountant, Anna Pandolfo, in either December 2005 or early 2006, and Mr Kyriackou was involved in the reconstruction process; and
   • (iv) Mr Edwards became aware of the trust account problems in February or March 2006 and in particular he became aware of the direct deposit of funds by syndicate members into the trust account.
4. Mr Edwards submits that once he became aware that the trust account records didn't balance, ie. in December 2005, he did everything he could to address the issue.
5. In terms of mitigation Mr Edwards relied on a number of matters:
   • He worked (on a part-time and full-time basis) to put himself through tertiary education.
   • He has had an involvement in a range of sporting associations, as President of the Melbourne Tenpin Bowling Association and of the Aberfeldie Club with the Essendon Little Athletics Club.
   • Between 1986 and 1989 he was a member of two statutory boards associated with the regulation of dentistry technicians.
   • From 1986 to 1994 he was a member of the committee of management of the Royal Dental Hospital.
   • In 1994 he became (and remains) a disability support pensioner due to the stress and depression he suffered (and continues to suffer) as a result of defamation proceedings to which he was a party and subsequent investigations into police corruption.
6. Mr Edwards submits that in view of the extenuating circumstances and mitigating factors there should be no limitation on his ability to apply for an employee practising certificate. He also submitted that after a period of 2 years he should be permitted to apply for a principal's practising certificate with the right to deal with trust money.
7. I now turn to the matters which are relevant to the determination of the appropriate penalty in this case.

1. In May this year I found that in the course of engaging in legal practice Mr Edwards had breached the following provisions:
   • s 178(1) of the 1996 Act
   • s 3.3.21(1)(a) of the 2004 Act
   • Regulations 3.3.9(5)(f) and 3.3.12(7) of the Regulations
   • Rules 15(2)(f), 17(4), 17(7) and 19 of the Rules.
2. The details of these breaches are set out in my reasons for decision dated 24 June 2008.
3. I also found that Mr Edwards' contravention of the above provisions was reckless and on that basis found him guilty of misconduct within the meaning of s 137 of the 1996 Act and guilty of professional misconduct within the meaning of s 4.4.3(1) of the 2004 Act. Both Acts are relevant because of the period of time over which the misconduct occurred.
4. These findings all relate, in one way or another, to Mr Edwards' management (or rather lack of management) of his trust account. Mr Edwards abrogated his obligations in respect of his trust account. He deferred to Mr Kyriackou insofar as trust cheques were concerned and would sign trust cheques presented to him without making any inquiries as to the purpose for which the cheque was drawn or the authority to disburse the funds. On occasions he signed trust cheques to cash or without the payee details completed.
5. The trust account deficiencies identified involved a substantial failure to maintain a reasonable standard of competence and diligence with respect to the operation of his trust account.
6. At the disposition hearing Mr Edwards submitted:
   • he did not 'sleep' upon the problems with the trust account when those problems were first drawn to this attention but did all he could to identify the problem and address it;
   • the problems with the trust account were caused by the deliberate and malicious act of Mr Kyriackou rather than by any act of negligence on Mr Edwards' part;
   • the persons most affected by Mr Kyriackou's actions were not clients of the legal practice - they appear to be clients only because the original trust ledger records were destroyed and tampered with;
   • he immediately dismissed Mr Kyriackou once evidence was obtained that Mr Kyriackou had acted deceitfully and dishonestly; and
   • he had endeavoured to cooperate with the LIV and other authorities and had been active in reporting Mr Kyriackou's fraudulent conduct.
7. There are two difficulties with these submissions. The first is that some of the matters put are not entirely accurate, in particular Mr Edwards' assertion that he cooperated with the LIV. In fact there were a number of instances where Mr Edwards issued trust cheques in breach of his undertaking to the LIV not to do so without the authorisation of an LIV Inspector, Mr Ron Hall[4]. Further, Mr Edwards did not move to dismiss Mr Kyriackou until late in 2006 - some considerable time after he became aware of the problems with the management of his trust account.
8. The second problem with these submissions is that they gloss over the extent to which Mr Edwards' abrogation of his responsibilities facilitated the wrongdoing of others. I find Mr Edwards' lack of insight into his wrongdoing, and his propensity to blame others, troubling. The responsibility for ensuring that the operation of the trust account conformed with the relevant regulatory requirements clearly rested with Mr Edwards.
9. The facts disclose an abrogation of Mr Edwards' obligations with respect to his trust account. In effect Mr Edwards signed trust cheques presented to him by either Mr Kyriackou or Ms Hateley and only enquired as to whether there were sufficient funds available to cover the cheque. He apparently made no inquiries as to the purpose for which the cheque was drawn or the authority to disburse the funds. He deferred to Mr Kyriackou insofar as trust cheques were concerned. On occasions he signed trust cheques to cash or without the payee details completed.
10. Mr Edwards failed to exercise reasonable diligence in relation to the operation of his trust account and his legal practice generally in that:
    • he never checked to see if there were ledger cards in respect of 'clients' who were unfamiliar to him;
    • he signed disbursement authorities without perusing the documents he was signing;
    • he failed to check his trust account bank statements for December 2005, January 2006 and February 2006;
    • he was unable to access the MYOB system which electronically recorded the transactions on his trust account, as he did not know the password to access the system;
    • all correspondence to the legal practice was intercepted and distributed by Mr Kyriackou; and
    • Mr Edwards was unaware that correspondence and advice, on the legal practice's letterhead, was going out to clients.
11. I accept that Mr Edwards was deceived by Mr Kyriackou; but Mr Edwards was only able to be deceived because he failed to review trust account bank statements or to check the trust ledger cards to see if there were any 'clients' who were unfamiliar to him.
12. Ms Hateley's evidence in the disposition proceedings makes manifest Mr Edwards' lack of engagement in his legal practice. When Ms Hateley approached Mr Edwards for assistance in respect of trust account matters she was rebuffed. According to Ms Hateley, Mr Edwards 'threw his hands in the air and said talk to Michael (Kyriackou); I don't know what's going on talk to Michael'.
13. Mr Edwards' lack of diligence facilitated the misappropriation of significant sums of money, though Mr Edwards did not derive any personal benefit from the misappropriations.
14. Mr Edwards effectively ceded the running of his legal practice to Mr Kyriackou. Mr Kyriackou was a rogue and he deceived Mr Edwards; but Mr Edwards was only able to be deceived because he took no active interest in finding out what was going on in his practice.

1. There is no record of any previous Tribunal matters involving Walter P Edwards.

1. I do not doubt that Mr Edwards regrets his involvement with Mr Kyriackou and the losses which have been suffered by a number of the syndicate members. But, as I have already indicated, he demonstrates a lack of insight into the extent to which he has contributed to these problems. Such lack of insight is relevant to the determination of an appropriate penalty.
2. As Tadgell JA observed in Patrick Anthony Hannebery v Legal Ombudsman:

"The nature and purpose of disciplinary proceedings before the Tribunal being as they are it follows that, in deciding on the appropriate penalty to award following a finding of misconduct, the Tribunal is not only entitled but obliged to take into account any failure by the practitioner 'to understand the error of his ways': New South Wales Bar Association v Evatt [1968] HCA 20; (1968) 117 CLR 177 at 184. Reasoning of that kind was applied to a practitioner's failure to appreciate that his impugned conduct was wrong when he claimed to be ignorant of his duty when using client's money: Law Society of New South Wales v Moulton [1981] 2 NSWLR 736. As Beazley JA observed in Law Society of New South Wales v Walsh (unreported CA (NSW) 15 December 1997) "Whilst a practitioner's expressed intention not to re-offend is relevant to mitigation it will have little weight unless accompanied by an understanding of the wrongfulness of the conduct which was the subject of the disciplinary charge."

The reasons [of the Tribunal below] indicate to my mind no more than that, in fixing the penalty of cancellation of the appellant's practising certificate, and specifying the period during which he should be disentitled to apply for another, the majority took account of his failure to acknowledge and understand the significance of his dereliction of professional duty. This, in the circumstances, was an entirely appropriate consideration, disclosing no error of principle."[5]

1. The substantive disciplinary proceeding which led to the findings of misconduct presently under consideration were assisted by admissions made by Mr Edwards as to the relevant facts. By letter dated 22 May 2008 Mr Edwards did not contest the factual matters particularised in the LIV's notice to admit. These admissions resulted in a significant saving in hearing time and it is appropriate that that matter be taken into account as a mitigating factor.

1. Mr Edwards is a disability support pensioner, though it is not contended that his disability reduced his moral culpability for the offences under consideration.

1. I have taken into account Mr Edwards' prior community involvement (as set out at paragraph 21 herein).

1. Contrary to the LIV's submission I am not persuaded that the circumstances of this case warrant a referral to the Supreme Court, with or without a recommendation that Mr Edwards be struck off. Mr Edwards' misconduct largely consists of sins of omission, rather than commission. He did not personally benefit from his misconduct.
2. While I accept that Mr Edwards was deceived by Mr Kyriackou, he was only able to be deceived because he effectively ceded the running of his legal practice to Mr Kyriackou.
3. Mr Edwards' lack of diligence facilitated the use of his trust account to receive and disburse money on behalf of corporate entities in circumstances which were likely to mislead members of the public into believing that they could have recourse to the Fidelity Fund. Indeed a number of syndicate members lost significant sums of money. I also find Mr Edwards' lack of insight into his wrong doing troubling.
4. Mr Edwards has not been able to practise since 28 June 2007 when his practising certificate was suspended. Having regard to all the circumstances I am satisfied that a further period should be prescribed within which he is not able to apply for a practising certificate. Mr Edwards will not be able to apply for an employee practising certificate until 30 June 2010. The end result is that Mr Edwards will be without a practising certificate for a period of at least three years. But for Mr Edwards' admissions the period specified would be longer. Before Mr Edwards applies for a practising certificate he will be required to undertake 5 CPD units in the fields of ethics and professional responsibility. Such a requirement is necessary in order to remind Mr Edwards of his professional obligations.
5. As the offences relate to Mr Edwards' capacity to control his own law practice and to competently manage his trust account it is appropriate, in order to protect the public, that a further period be specified within which he is not able to apply for a principal practising certificate or for a practising certificate which would allow him to receive or deal with trust money.
6. I propose to make the following orders:
   1. Walter Percival Edwards may not apply for an employee practising certificate until 30 June 2010.
   2. Walter Percival Edwards may not apply for a practising certificate as a principal of a law practice until 30 June 2013.
   3. Walter Percival Edwards may not apply for a practising certificate which would allow him to receive or deal with trust money until 30 June 2018.
   4. Before Walter Percival Edwards applies for a practising certificate he must undertake 5 CPD units in the field of ethics and professional responsibility.

7. I now turn to the question of costs.
8. Clause 46D of Schedule 1 to the VCAT Act deals with costs in disciplinary matters, it says:

"(1) Subject to this clause, the costs of a proceeding under Division 4 or 5 of Part 4.4 of the Legal Profession Act 2004 are in the discretion of the Tribunal.

(2) The Tribunal must make an order requiring an Australian legal practitioner whom it has found guilty of unsatisfactory professional conduct or professional misconduct to pay costs (including the costs of the Commissioner and the complainant (if any) unless the Tribunal is satisfied that exceptional circumstances exist.

(3) The Tribunal must not make an order for costs against the Commissioner unless satisfied that special circumstances make it appropriate to do so.

(4) Section 109 does not apply to a proceeding under Division 4 or 5 of Part 4.4 of the Legal Profession Act 2004.

(5) In this clause, "Australian Legal practitioner", "Commissioner" and "complainant" have the same meaning as in the Legal Profession Act 2004.

1. This proceeding arose out of applications by Mr Edwards seeking a review of decisions by the LIV to firstly suspend his practising certificate and then to refuse to renew it. Such applications were instituted pursuant to s 2.4.37 of the 2004 Act. Section 2.4.37 is in part 2.4 of the 2004 Act and accordingly there is some doubt as to whether clause 46D(2) applies in the circumstances of this case.
2. But it is unnecessary for me to express a concluded view about that issue because even if clause 46D(2) applies I am not persuaded that I should award costs in the circumstances of this case.
3. Mr Edwards is a disability support pensioner and an undischarged bankrupt. He did not personally benefit from his misconduct and made admissions which resulted in a significant saving in hearing time. Having regard to the particular circumstances of this case I am satisfied that 'exceptional circumstances' exist, within the meaning of clause 46D(2) and decline to make an order for costs.

[1] Hannebery v Legal Ombudsman [1998] VSCA 142

[2] [2007] VSCA 122 (14 June 2007) at [30]

[3] R v Mooney, per Young CJ unreported, Supreme Court of Victoria Full Court, 21 June 1978, cited in R v Anderson [1981] VicRp 17; [1981] VR 155; R v Tsiaras [1996] VicRp 26; [1996] 1 VR 398; and R v Verdins [2007] VSCA 102 (23 May 2007); Sentencing Act 1991 s 5

[4] See my decision of 24 June 2008 at [114]-[118]

[5] [1998] VSCA 142 at [22]- [23] per Tadgell JA with whom Phillips and Chernov JJA agreed