1. Pursuant to cl 46D of sch 1 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), the Tribunal orders that:
   • (a) the costs of the applicant of the proceeding on and from 5 December 2012 including reserved costs be taxed by the Costs Court under the Scale of Costs in Appendix A of Chapter I of the Rules of the County Court, and when taxed be paid by the respondent;
   • (b) there be certificates for two counsel and for senior counsel for the hearings on 18 April 2013 and 1 July 2013; and
   • (c) there be no order as to the costs of the proceeding prior to 5 December 2012.

1. On 19 July 2013, the Tribunal published its decision following the rehearing of this proceeding.[1] The previous decision of the Tribunal was set aside, and Mr Kiatos was found guilty of professional misconduct. The Tribunal ordered that Mr Kiatos be reprimanded, and pay a fine of $3,000 to the Legal Services Board.
2. The Legal Services Commissioner ('the Commissioner') now makes application for the costs of the proceeding subsequent to the application for rehearing on 5 December 2012. No order for costs is sought by the Commissioner in relation to the proceeding prior to 5 December 2012. The Commission also seeks certificates for two counsel and for senior counsel for two appearances on 18 April 2013 and on 1 July 2013. A draft bill of costs shows the total amount of costs claimed to be $39,672. The draft bill is yet to be served or taxed.
3. Mr Kiatos opposes an order for costs in favour of the Commissioner and seeks an order for the costs of the proceeding to 8 November 2012. He opposes the grant of certificates for two counsel and for senior counsel.

1. Clause 46D of sch 1 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ('the VCAT Act') provides for specific rules to apply to the award of costs of a proceeding under Pt 4.4 of the Legal Profession Act 2004 (Vic) ('the Act'). Clause 46D provides:

(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.

1. Clause 46D provides a costs regime unique to legal practice matters. Key features of cl 46D are:
   • (a) Section 109 of the VCAT Act is excluded entirely.
   • (b) In the event that the Tribunal finds a practitioner guilty of unsatisfactory professional conduct or professional misconduct, the Tribunal must make an order requiring the practitioner to pay the costs of the Commissioner, and the costs of any complainant, unless the Tribunal is satisfied that exceptional circumstances exist.[2]
   • (c) In the event that cl 46D(2) does not apply, or in the event that the Tribunal is satisfied that cl 46D(2) does apply, but that exceptional circumstances exist, the costs of a proceeding are in the discretion of the Tribunal.
   • (d) In any event, the Tribunal must not make an order for costs against the Commissioner unless satisfied that special circumstances make it appropriate to do so.

1. The Tribunal has found that Mr Kiatos is guilty of professional misconduct under Pt 4.4 of the Act. This finding engages cl 46D(2) with the result that the Tribunal must make an order requiring Mr Kiatos to pay the costs of the Commissioner of the proceeding unless the Tribunal is satisfied that exceptional circumstances exist. While Mr Kiatos was initially successful before the Tribunal on 8 November 2012, that decision was set aside by order of the Tribunal and has no legal effect.
2. Mr Williams SC for Mr Kiatos referred to R v Kelly (Edward) where the Court considered the meaning of the term 'exceptional':[3]

It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique or unprecedented or very rare; but it cannot be one that is regularly, or routinely, or normally encountered.

1. Mr Williams SC referred to a number of decisions in different factual circumstances where the Tribunal had taken the view that there were exceptional circumstances.[4] He submitted that all 'exceptional circumstances' constituted 'special circumstances' for the purpose of cl 46D referring to Victorian Lawyers RPA Ltd v Kaine.[5]

1. Mr Williams SC further submitted that there were exceptional circumstances, alternatively special circumstances that the Tribunal should take into account in making any order as to costs. Principally he contended that:
   • (a) The result of the proceedings was a reprimand and modest fine imposed on Mr Kiatos.
   • (b) The charges initially laid against Mr Kiatos had been substantially amended with the result that Mr Kiatos ultimately pleaded guilty to one charge of a more benign nature.
   • (c) The Commissioner's case at the previous hearing was improper.
   • (d) The allegations made at the previous hearing were not pursued and were toned down.
   • (e) Mr Kiatos was in a poor financial position and was at risk of not being able to continue with his practice.
   • (f) There had been considerable delay in the investigation of the charges.
   • (g) The initial allegations made by the Commissioner had no proper foundation, were speculative and contrary to the admissions made by Mr Kiatos.
   • (h) Mr Kiatos had incurred considerably more cost than he would have incurred had there been a single hearing.
   • (i) Mr Kiatos had been required to invest significant time in the defence of the proceeding, and had suffered considerable angst, trouble and expense.
   • (j) The s 75 application had resulted in considerable benefit to clarify the nature of the Tribunal's rehearing jurisdiction in legal practice matters.[6]
   • (k) Mr Kiatos was co-operative and made numerous admissions. He also consented to the amendment of the charge.
   • (l) The decision in the initial hearing was an exceptional or special circumstance.
2. The Tribunal does not consider that the matters raised on behalf of Mr Kiatos are 'exceptional circumstances' or 'special circumstances' as should cause the Tribunal to order costs against the Commissioner in favour of Mr Kiatos, or deprive the Commissioner of costs which he seeks pursuant to cl 46D(2):
   • (a) Mr Kiatos was found guilty of professional misconduct. The main issue at the final hearing was whether he was guilty of professional misconduct or unsatisfactory professional conduct. This issue was resolved in favour of the Commissioner as set out in the Tribunal's reasons for decision.
   • (b) While the charges initially laid were compressed into one charge and the allegations were reduced in gravity, the allegation concerned the same incident relating to the execution of a credit application with Bowen & Pomeroy Pty Ltd on 4 February 2002. The circumstances of this incident are fully described in the Tribunal's previous reasons for decision.
   • (c) The Tribunal does not accept that the Commissioner's case at the previous hearing was improper. While the initial allegations made by the Commissioner were later reduced in scope so as to achieve a negotiated outcome, the result was to reduce the length of the final hearing from up to 6 days to less than one day.
   • (d) While Mr Kiatos has suffered substantial losses as a result of his involvement in property development in BTC Developments Pty Ltd with Mr Theo Kambouris and Mr Bill Floros, he is a practicing solicitor aged 50 years. He has been in legal practice since 1989. He has adult children, and his wife, now retired, owns a house valued at $850,000 in which he lives. The home is unmortgaged. Mrs Kiatos also owns land at Loch Sport valued at $150,000 with a small mortgage of $10,000. The Tribunal does not consider that an order for costs will deprive Mr Kiatos of his capacity to resume legal practice.
   • (e) The complaint against Mr Kiatos was received by the Commissioner on 14 August 2009. The complaint was then investigated. There was lengthy correspondence between the Commissioner, Mr Kiatos and legal representatives. The Tribunal is not satisfied that there was extensive delay by the Commissioner, or that this has any significance in terms of the order for costs that the Tribunal should make. The date of the incident has been taken into account by the Tribunal in relation to the penalty imposed on Mr Kiatos.
   • (f) The proceedings extended to an initial hearing and then to a rehearing. Greater costs were incurred than expected. However, it is reasonable that the Commissioner does not seek costs of the proceeding until the rehearing application commenced on 5 December 2012. No order will be made as to costs of the initial hearing or prior to 5 December 2012.
   • (g) The s 75 application was unsuccessful and was dismissed by the Tribunal. The Commissioner's costs only were reserved as a result of that hearing. While the s 75 application provided an opportunity to discuss the nature of the Tribunal's jurisdiction on rehearing, this is not an exceptional circumstance or special circumstance which ought adversely affect the Commissioner's position as to costs.
   • (h) Mr Kiatos has suffered considerable angst, trouble and expense. He has made numerous admissions. However, he has also been found guilty of professional misconduct on his own admission.
3. The Tribunal considers that the Commissioner's decision not to seek costs of the proceeding from 10 January 2012 to 4 December 2012 is reasonable having regard to cl 46D(2), and the fact that the decision of the Tribunal made on 8 November 2012 has been set aside. It considers that the Commissioner's application for costs of the proceeding on and after 5 December 2012 should be granted. The Commissioner seeks costs on the County Court scale of costs. This is the scale of costs ordinarily ordered by the Tribunal.
4. The Commissioner also seeks a certificate for two counsel and for senior counsel on two days, namely on the hearing of the s 75 application on 18 April 2003, and at the final hearing on 1 July 2013.
5. Senior counsel for Mr Kiatos contends that experienced junior counsel would have sufficed on each occasion.
6. The Tribunal will grant certificates for two counsel and for senior counsel in relation to the hearings on 18 April 2013 and 1 July 2013 for the following reasons:
   • (a) There were significant legal issues to be considered including:
     • (i) the nature of the Tribunal's jurisdiction on rehearing;
     • (ii) the relationship between the Legal Profession Act 2004 (Vic) and the Legal Practice Act 1996 (Vic);
     • (iii) the penalty to be imposed having regard to the date of the offence;
     • (iv) whether the offence took place in the practice of law; and
     • (v) whether the offence admitted was professional misconduct or unsatisfactory professional conduct.
   • (b) Following the s 75 hearing, Mr Kiatos also retained senior counsel who appeared at the main hearing and the costs hearing.
   • (c) The effect of the retainer of senior counsel was to significantly shorten the length of the main hearing. A possible contested hearing of up to 6 days involving contested issues of fact and law was completed in less than one day.

1. The Tribunal will order that:
   • (a) Mr Kiatos pay the Commissioner's costs of the proceeding on and after 5 December 2012;
   • (b) there be certificates for two counsel, and for senior counsel on 18 April 2013 and 1 July 2013; and
   • (c) there be no order as to the costs of the proceeding prior to 5 December 2012.

[1] Legal Services Commissioner v Kiatos [2013] VCAT 1152.

[3] [1999] UKHL 4; [2000] QB 198, 208. See also Legal Services Commissioner v Scott (No 2) [2009] QLPT 9 [17] (Fryberg J, Members Woods and Steinberg); Council of the Law Society of NSW v Hinde [2011] NSWADT 20 [16] (Hale J, Chesterman DP and Hayes M).

[4] Law Society of NSW v Markovski [2009] NSWADT 92 [28] (Molley and Currie JJ ,and Member Tingle); Edwards v Law Institute of Victoria [2008] VCAT 2034 [54] (Judge Ross VP); Legal Services Commissioner v O'Connor (No 2) [2006] LPT 002 [15]-[21] (Mullins J, Members Woods and Pacheco); Council of the Law Society of NSW v Webb (No 2) [2012] NSWADT 233 [46] (Currie J, Chesterman DP and Member Fitzgerald); Xu v Council of the Law Society of NSW [2009] NSWCA 430; (2009) 236 FLR 480, 491 [61]-[63] (Handley AJA, with whom Tobias JA and Basten JA agreed ).

[5] [2001] VLPT 16 (Member Howell).

[6] Legal Services Commissioner v Kiatos [2013] VCAT 529.