The charges of professional misconduct, the facts of which are admitted by the Respondent, are found proven.

1. Charge 1: The Tribunal finds the Respondent guilty of professional misconduct within the meaning of s.4.4.3(1) of the Legal Profession Act 2004, in that within the period 5 November 2004 and 30 November 2005 he contravened s.174(1) of the Legal Practice Act 1996 Act by receiving Disbursement Amounts which were deposited directly into the Office Account and retained by the Law Practice for its own use instead of depositing the trust money into the Trust Account as soon as practicable after receipt.
2. Charge 2: The Tribunal finds the Respondent guilty of professional misconduct within the meaning of s.4.4.4(a) of the Legal Profession Act 2004, in that he engaged in a course of conduct in respect of Disbursement Amounts received within the period 5 November 2004 and 30 November 2005 which without reasonable excuse caused a deficiency in the Trust Account in breach of s.3.3.21(1) of the 2004 Act.
3. Charge 3: The Tribunal finds the Respondent guilty of professional misconduct within the meaning of s.4.4.3(1) of the Legal Profession Act 2004, namely misconduct at common law, in that as the principal of the Law Practice, he implemented a scheme which had the effect that Disbursement Amounts received between 5 November 2004 to 30 November 2005 were appropriated to his own use and benefit and which amounted to a breach of the fiduciary duty owed by him to each relevant client of the Law Practice to apply such moneys in accordance with the purpose for which they were supplied by that client.
4. Charge 4: The Tribunal finds the Respondent guilty of professional misconduct within the meaning of s.4.4.4(a) of the Legal Profession Act 2004, in that within the period 24 January 2006 and 1 March 2006 he contravened s.3.3.13(1) of the 2004 Act by receiving Disbursement Amounts which were deposited directly into the Office Account and retained by the Law Practice for its own use instead of depositing the trust money into the Trust Account as soon as practicable after receipt.
5. Charge 5: The Tribunal finds the Respondent guilty of professional misconduct within the meaning of s.4.4.4(a) of the Legal Profession Act 2004, in that he engaged in a course of conduct in respect of Disbursement Amounts received within the period 24 January 2006 and 1 March 2006 which without reasonable excuse caused a deficiency in the Trust Account in breach of s.3.3.21(1) of the 2004 Act..
6. Charge 6: The Tribunal finds the Respondent guilty of professional misconduct within the meaning of s.4.4.3(1) of the Legal Profession Act 2004, namely misconduct at common law, in that as the principal of the Law Practice, he implemented a scheme which had the effect that Disbursement Amounts received between 24 January 2006 and 1 March 2006 were appropriated to his own use and benefit and which amounted to a breach of the fiduciary duty owed by him to each relevant client of the Law Practice to apply such moneys in accordance with the purpose for which they were supplied by that client.
7. The Respondent is reprimanded in relation to the professional misconduct committed under each charge.
8. The Respondent is ordered to pay to the Legal Services Board an aggregate fine in respect of all charges of $25,000. By Consent the payment of this fine is stayed for one month.
9. The Respondent is ordered to undertake a trust account and office administration course approved by the Legal Services Commissioner.
10. The Respondent is ordered to pay the Legal Services Commissioner's costs of this application, fixed at $6,715.70.

1. On 10 February 2011, the Respondent John Hugh McCristal pleaded guilty to six charges of professional misconduct. After hearing submissions on behalf of the parties the Tribunal made the Preliminary Finding and Final Orders set out above and stated that it would provide detailed written reasons within one week. These are those reasons.

1. At all relevant times the Respondent was an Australian legal practitioner within the meaning of the Legal Practice Act 1996 ["the 1996 Act"] or the Legal Profession Act 2004 ["the 2004 Act"]. The Respondent was first admitted to practice on 6 November 1996 at the age of 33 years having previously worked as a Sales Representative.
2. In 2001 the Respondent entered into a Franchise Agreement whereby from 20 September 2001 he managed the law practice known as Maurice Blackburn Cashman Gippsland Pty Ltd as sole principal ["the Law Practice"]. The Respondent was responsible for the management and financial control of the Law Practice and was otherwise principally engaged in a litigation practice.
3. The Law Practice conducted business primarily at Level 1, 7 Parkview Suite, Princes Highway Traralgon Victoria and also at offices in Bairnsdale and Warragul.
4. On 9, 10, 27, 28 29 March and 7 June 2006, Mario Appiah and William McCormack, Inspectors appointed by the Legal Services Board pursuant to section 3.3.29 of the 2004 Act, conducted an investigation within the meaning of Division 3 of the 2004 Act into the trust account of and records relating to trust money received by the Law Practice.
5. The investigation disclosed that as at 28 March 2006, 42 office cheques drawn in the period 26 October 2004 to 2 March 2006 totalling $45,036 had not been presented ["Unsent cheques"].
6. All of the Unsent cheques pertained to money received by the Law Practice from its clients on account of unpaid third party disbursements, namely barristers' fees and one Occupational and Health Consultant's fee, in the period 5 November 2004 to 1 March 2006 [each a "Disbursement Amount"].
7. The Unsent cheques were all prepared by or at the direction of the Respondent and on his instructions were either retained by the Law Practice and/or deliberately not sent or delivered to the payee of the cheque.
8. The investigation revealed that the Law Practice had sent accounts to clients for amounts which were or included a Disbursement Amount and when payment for these accounts were received the moneys were deposited directly into the office bank account maintained by the Law Practice ["Office Account"] rather than the trust account maintained by the Law Practice ["Trust Account"].
9. At the time when the accounts were sent to clients for a Disbursement Amount and at the time when payments in respect of those accounts were paid into the Office Account, the Disbursement Amount owing to the third party service provider had not been paid.
10. The payment of the Disbursement Amount into the Office Account was applied for the benefit of the Respondent by reducing the level of indebtedness of the Law Practice's overdraft account.
11. On or before 11 December 2005 a total of 38 payments in the nature of Disbursement Amounts were received by the Respondent which constituted trust money within the meaning of the 1996 Act. The deposit of such Disbursement Amounts into the Office Account breached section 174(1) of the 1996 Act in that trust money was not deposited into the Trust Account as soon as practicable after receipt or at all. Furthermore, the direct deposit of each amount representing a Disbursement Amount into the Office Account breached section 188(1)(a) of the 1996 Act and thereby section 3.3.21(1) of the 2004 Act, by virtue of clause 4.4 of the Transitional Provisions contained in Schedule 2 to the 2004 Act, in that in each case and without reasonable excuse, the Respondent caused a deficiency in the Trust Account in the amount of the Disbursement Amount, such deficiency arising from the date of the deposit of the amount representing the Disbursement Amount into the Office Account.
12. Between 12 December 2005 and 1 March 2006 a total of 4 payments in the nature of Disbursement Amounts were received by the Respondent which constituted trust money within the meaning of the 2004 Act. The deposit of such Disbursement Amounts into the Office Account breached section 3.3.13(1) of the 2004 Act in that trust money was not deposited into the Trust Account as soon as practicable after receipt or at all. Furthermore, the direct deposit of each amount representing a Disbursement Amount into the Office Account breached section 3.3.21(1) of the 2004 Act, in that in each case and without reasonable excuse, the Respondent caused a deficiency in the Trust Account in the amount of the Disbursement Amount, such deficiency arising from the date of the deposit of the amount representing the Disbursement Amount into the Office Account.
13. During the investigation various issues which had been identified by the Inspectors were discussed with the Respondent and he was also asked to provide written confirmation of the remedial action he was to undertake. By letter to the Respondent dated 5 April 2006, Mr Appiah provided details of the various breaches of the Trust Account Practice Rules, the 1996 Act and the 2004 Act.
14. By letter dated 19 April 2006 the Respondent confirmed that he had withheld office cheques to delay payment of barristers fees owing and he had approached one barrister seeking consent to delay payment of his fees. He also identified three further deficiencies relating to un-presented cheques which had occurred following errors in loading past transactions and delay in reconciling the office account. He also provided confirmation that all outstanding disbursements the subject of the audit had now been paid.
15. The Respondent also advised that the deficiencies in his Trust Account occurred in the context of the following administrative problems:

1. incorrect data input and delays reconciling the office accounts; 2. the firm had expanded too quickly;

1. errors made by the accountant for the Law Practice in lodging BAS statements led to the repayment of $160,000 to the Tax Office, including penalty, which placed the Respondent under financial stress; and

1. he could not obtain bank finance and could not finance several litigation cases.
2. A report of the Inspector Mr Appiah dated 13 July 2006 was provided to the Legal Services Board.
3. Counsel for the Commissioner conceded that there was an inexplicable delay in the Inspector's Report being provided by the Board to the Commissioner.
4. Following receipt of the Inspector's Report, the Commissioner advised the Respondent by letter dated 17 September 2009 of his determination to initiate an investigation pursuant to section 4.4.8 of the 2004 Act in light of the apparent irregularities in his Trust Account and identified conduct which may amount to unsatisfactory professional conduct or professional misconduct.
5. By letter dated 30 October 2009 the Respondent's solicitors replied to the Commissioner confirming that the Respondent accepted all matters contained in the Inspector's Report and accepted that his conduct was wrongful and in breach of the 2004 Act and Rules. The Respondent also accepted that he obtained a financial benefit equivalent to the amounts due and payable to Counsel totalling $45,036. The Respondent admitted that one further Counsel's fee which was not on the list had been identified and paid on 26 June 2006. The Respondent also confirmed that he employed 13 staff including 9 full time staff and was personally responsible for the conduct of approximately 1000 current files.
6. In relation to remedial action the Respondent also confirmed that since the Inspector's audit of the Law Practice he has:

1. Identified errors in his account keeping which have been rectified; 2. Ensured that no similar errors/issues would arise again;

1. Upgraded his office systems and computer software;

1. Engaged a firm of accountants to assist in the reconciliation of his office account; 2. Upgraded the training of his staff; and 3. Engaged an additional staff member to assist in the monitoring and conduct of his accounting and billing systems.
2. By letter dated 9 April 2010 the Commissioner requested further information concerning the delay in payment of the fees of two Counsel. By letter dated 28 April 2010 the Respondent confirmed that he had made oral requests of two Barristers in the latter part of 2004 to consent to delayed payment of their fees which were subsequently paid in early 2006.
3. The Law Practice was subject to a further audit at the request of Professional Standards Law Institute of Victoria Ltd in late 2006/early 2007 and subsequent annual audits. No further adverse reports have been made.

1. The 1996 Act came into operation on 1 January 1997 and was repealed by the 2004 Act which came into operation on 12 December 2005. Accordingly, the relevant conduct of the Respondent occurred under the operation of both the 1996 Act and the 2004 Act.
2. However the Transitional Provisions in Schedule 2 of the 2004 Act enable breaches under the 1996 Act to be investigated and charges made under the 2004 Act.
3. The operation of the Transitional Provisions was considered recently by this Tribunal[1] and it is not necessary to again analyse their operation and effect in any detail here.
4. Under the 1996 Act, disciplinary charges were heard and determined by the Legal Profession Tribunal.[2] The Legal Profession Tribunal was abolished by the 2004 Act.[3] Since 12 December 2005, disciplinary charges have been heard by VCAT.[4]
5. In the present proceedings, the Commissioner accepts that an order should not be made against the Respondent unless the order is provided for in the 2004 Act and could have been made under the 1996 Act when relevant conduct occurred prior to the commencement of the 2004 Act. The Commissioner sought three orders; a reprimand, the imposition of a fine; and payment of the Commissioner's costs.
6. An order reprimanding the Respondent does not give rise to any problem of a transitional nature. The 1996 Act provided, and the 2004 Act provides, for the making of reprimands.[5] In the case of an order for costs the Respondent has agreed to pay the Commissioner's costs of $6715.70.
7. Under the 2004 Act, VCAT can impose a fine not exceeding $50,000 for professional misconduct, and a fine not exceeding $10,000 for unsatisfactory professional conduct.[6]
8. Under the 1996 Act, the amount of a fine that could be imposed by the Legal Profession Tribunal depended upon the constitution of the Tribunal. A Full Tribunal of the Legal Profession Tribunal could impose a fine not exceeding $50,000 for misconduct, and a fine not exceeding $1,000 for unsatisfactory conduct.[7]
9. The Transitional Provisions in Schedule 2 have the effect that a reference to the Legal Profession Tribunal in the 1996 Act is to be construed after 12 December 2005 as a reference to VCAT.[8]
10. The present Tribunal is constituted by a County Court Judge as Chairperson and two members. The parties conceded that the Tribunal as presently constituted is the equivalent of a Full Tribunal of three members under the 1996 Act, and that the presently constituted Tribunal could impose a fine not exceeding $50,000 for the Respondent's professional misconduct.

1. The Commissioner seeks a reprimand[9] together with a substantial fine in the order of at least $20,000 and agreed costs of $6,715.70.
2. The Commissioner submitted that the breaches were very serious, involving a misuse of trust money in a deliberate and calculated manner over an extended period. Normally such breaches would warrant cancellation of the practitioner's practising certificate. However, the Commissioner conceded that exceptional circumstances did apply and did not seek either suspension or cancellation of the Respondent's practising certificate.
3. The Commissioner accepted that the principle of specific deterrence was not an overriding factor in view of the Respondent's prior good character and there having been no further breaches since the impugned conduct was detected. Furthermore the Commissioner acknowledged that the Respondent had:

1. made full admissions and cooperated at all times; 2. ensured that all third parties were paid; and

1. substantially changed his method of practice so as to ensure that further breaches were most unlikely.
2. The Commissioner submitted that the principle of general deterrence was a primary objective in the Tribunal's determination. Compliance with trust account requirements is a fundamental obligation borne by a legal practitioner holding an unrestricted practising certificate.
3. The Tribunal was referred to two prior decisions of the Legal Profession Tribunal, namely: Victoria Lawyers RPA Limited v Mills Oakley Lawyers Pty Ltd and its partners[10]; and Law Institute of Victoria Limited v Simon Parsons. & Gary Singer[11]
4. In the matter of Mills Oakley the Tribunal found charges of misconduct proven against the corporate legal practice [which was fined $40,000] and seven partners of the firm, each of whom were fined $10,000. The facts in that case bear similarities with the subject case. The charges related to a failure to deposit trust money in the trust account of the practice and the depositing of such money into the office account. Cheques drawn on the office account were then written out for unpaid Counsels' fees and other disbursements and retained by the practise and released when suitable to the firm's internal cash flow. The breaches occurred over a number of months, involved significant sums of money [nearly $330,000] and caused delay in the payment of Counsel fees. The breaches were detected after the partners asked the Law Institute to inspect their trust account following the arrest of a new salaried partner for Australian Tax Office offences. Once notified of the breaches the partners immediately raised loans to enable all creditors to be paid. No client lost money and no complaint had been made.
5. In its reason for decision the Tribunal accepted that some exercise of leniency was warranted in the circumstances. It was also acknowledged that the respondents had admitted their guilt at an early stage and demonstrated remorse and contrition before the Tribunal. Nevertheless, the charges were serious, the conduct not "once off", the sums of money significant and a number of Counsel were disadvantaged in late payment of fees. These circumstances warranted a "high element of general deterrence" and called for "much more than a reprimand".
6. In the matters of Parsons and Singer the Tribunal found a charge of misconduct proven against the partners of the firm Simon Parsons & Co and ordered each partner to pay a fine of $10,000 plus costs. Again the facts reveal a modus operandi similar to the current case. Parsons and Singer conducted a legal practice in Morwell. During the period 8 June 2000 to 3 November 2001 sums totalling $126,161.50 were received from clients on account of mainly unpaid barristers' fees and also expert witness fees. These sums were either paid directly into the office account or paid into the trust account and then transferred to the office account from where office cheques were drawn but then retained in a manila folder. By August 2004 all outstanding disbursements had been paid and no complaint had been received. The deliberate practice of retaining cheques and delaying payment ceased in November 2001. The breaches were first detected during a routine audit in May 2004.
7. In its reasons for decision the Tribunal accepted that both partners were cooperative and freely admitted their guilt from the outset. The Tribunal also took account of their service to the local community and the fact that they were a substantial employer [with up to 70 staff] handling about 3000 litigation files. The benefit derived, as in this case was also limited to reducing the office account overdraft. The Tribunal noted that while the manipulation of trust monies was a serious case of misconduct and would normally involve the loss of right to practice, the Tribunal considered the total circumstances to be exceptional and deserving of the imposition of a fine.
8. These decisions were well known in the legal profession and in the communities concerned.

1. Mr Collis of Counsel tendered three references on behalf of the Respondent as follows:

1. Stephen Rex Plunkett Senior Lawyer Slater and Gordon Pty Ltd dated 2 February 2011; 2. Gary James Foster Principal Solicitor Maddens Lawyers dated 8 February 2011; and

1. Edward John Delany Barrister Victoria Bar dated 9 February 2011.
2. Mr Plunkett states that he initially employed the Respondent as an Articled Clerk at Slater and Gordon where he was a senior partner. The Respondent worked there for three years where he remained honest, hard working and eager to learn. The Respondent left the firm to purchase the franchise for Maurice Blackburn in Traralgon. Mr Plunkett and the Respondent remain close friends.
3. Mr Foster states that he first knew and worked with the Respondent when he was a Principal Solicitor with Slater and Gordon in Traralgon and Morwell and the Respondent was an Articled Clerk. Mr Foster describes the Respondent as having an excellent rapport with and empathy for clients, highly motivated, extremely hard working and a great team player. Mr Foster expressed some concern when the Respondent purchased the Maurice Blackburn franchise having been a relatively junior employee solicitor with no management skills or experience, particularly with the financial obligations that go with operating a business. Indeed Mr Foster subsequently raised his concerns with the Respondent when it appeared that he was being overwhelmed by the work load. Mr Foster confirmed that since the subject matters were identified, the Respondent has employed professional assistance and changed his work style. The Respondent also has a stable and supportive family.
4. Mr Delany states that he was briefed by the Respondent in both personal injury and occasional criminal matters while the Respondent was managing the Maurice Blackburn practice in Traralgon. Mr Delany became aware that the Respondent was trying to cope with a rapidly increasing workload and got into financial difficulties. He continues to be briefed by the Respondent and has attended his office to confer with clients. Mr Delany has also witnessed in recent years that the Respondent has employed capable and professional para legal staff and personal assistants. Mr Delany also attested to the high regard in which the Respondent is held by many senior and junior Counsel.
5. Each of the referees confirmed that the Respondent has expressed genuine remorse and an understanding of the seriousness of the matters.
6. Mr Collis for the Respondent submitted that he not only cooperated fully with the investigation but also brought to the attention of the Inspectors three additional discrepancies which they had not detected. Mr Collis also referred to the matters set out in the Respondent's letter dated 30 October 1999 and the extenuating circumstances in which the breaches occurred.
7. Mr Collis indicated that if the Respondent were fined then it is the intention of Maurice Blackburn to purchase the Law Practice and the Respondent would continue to work as a partner of that firm.

1. cooperated at all times; 2. accepted full responsibility for his conduct;

1. addressed the issues raised in the Inspector's Report in a proper and prompt manner;

1. sought advice from Professional Standards, engaged the services of additional accountants and revised his procedures and staff training to ensure no further breaches occur; 2. has otherwise sought to address difficulties experienced in office and file management; and 3. has demonstrated genuine remorse.
2. The Tribunal also takes into account that:
   1. There has been an inexplicable delay conceded by the Commissioner in having this matter finalised. However, in the circumstances such delay has also afforded the Respondent the opportunity to demonstrate a willingness and capacity to continue to operate his legal practice in accordance with his statutory obligations; and
   2. the Respondent comes before the Tribunal with prior good character and there have been no subsequent adverse findings following annual audits of his Legal Practice. The Tribunal notes the contents of the tendered references.
3. The Tribunal accepts that the Commissioner made proper concessions. In particular the Tribunal accepts that while Specific Deterrence remains important, it is not of primary concern in this case.
4. This Tribunal and the former Legal Profession Tribunal have consistently reinforced the fundamental importance of strict compliance with the Act and Rules by legal practitioners whose practising certificate authorises the receipt of trust moneys. The integrity of trust moneys cannot be ensured without such compliance. Furthermore, any abuse of the authority bestowed upon legal practitioners to receive and manage trust moneys reflects not only upon the practitioner directly involved but also the legal profession as a whole and fundamentally erodes public confidence. Breaches of the kind committed in this case will typically go undetected until identified by routine audit and sometimes remain concealed for years. General Deterrence must remain a paramount objective in any sanction which this Tribunal now imposes.
5. The Tribunal has determined to reprimand the Respondent as evidencing an appropriate condemnation of his conduct. There can never be any extenuating circumstances which will excuse a blatant and calculated breach of the legislation and Rules governing the management of trust moneys.
6. The Tribunal has further determined that a fine of $25,000 is a more appropriate penalty having regard to previous determinations of this Tribunal and the former Legal Profession Tribunal; the extended period of time over which the breaches took place; the deliberate and calculated manner in which the breaches occurred; and the apparent failure of the Respondent to take note of and learn from the sanctions previously imposed by the Tribunal in other cases for similar breaches.
7. The Tribunal notes with the concern the circumstances in which the Respondent committed the subject breaches, namely: an inexperienced solicitor, with no prior experience managing a legal office, in sole private practice in a country location, where he was apparently quickly overwhelmed by an extraordinary workload. The comments of the Respondent's friend and colleague Gary Foster were particularly insightful in this regard.
8. In retrospect the Respondent was clearly ill equipped to competently manage the financial demands and legal requirements of a busy sole practice. The Tribunal questions why this circumstance was not more proactively addressed by the Legal Services Board.
9. The Tribunal has further determined that the risks of future financial and office mismanagement will be reduced by requiring the Respondent to undertake a trust account and office administration course approved by the Legal Services Commissioner.
10. The implementation of management and cash flow reporting of the Law Practice and regular review of the Respondent's performance in regard to the operations of the Law Practice by the Franchisor may have brought to light at a far earlier stage the problems faced by the Respondent and avoided the Respondent from funding the Law Practice by relying upon trust money.
11. While no evidence was presented before the Tribunal concerning the relationship between the Respondent and his Franchisor, the Tribunal questions what if any relevant training, oversight or monitoring was performed by the Franchisor. These arrangements may properly be the subject of further enquiry by the Legal Services Board.

[1] Legal Services Commissioner v Shulsinger (Legal Practice) [2010] VCAT 1497 (9 September 2010)

[5] Sections 159(1)(c) & 160(1)(a) of the 1996 Act, and s.4.4.19(k) of the 2004 Act

[7] Sections 160(1)(c)(i) and 159(1)(b) respectively.

[11] TO555 & TO556 of 2005 10 November 2005