Mr Nelson having been found guilty of nine counts of professional misconduct, the Tribunal orders as follows:

1. Mr Nelson's practising certificate is cancelled, with effect from 2 September 2013. No practising certificate may be issued for eight months after the date the cancellation commences.
2. Any practising certificate issued to Mr Nelson as a principal in the future is to be subject to the condition that he employ a bookkeeper approved by the LSC, and/or make other arrangements for the financial management of his practice approved by the LSC.
3. Liberty to apply in relation to the date when the cancellation of Mr Nelson's practising certificate comes into effect.
4. Mr Nelson is to pay the LSC's costs, fixed at $9,000.

1. Mr Nelson is a 79 year old sole practitioner in East Brighton. He was admitted to practice in 1958. His career has included nine years holding an employee practising certificate from January 1982 to December 1990. In December 1990, his practising certificate was suspended for 12 months following findings of misconduct for failing to complete work on behalf of five clients, and acting for both lender and borrower in connection with a loan of money, without the written acknowledgement of the parties. He did not resume practice in Victoria until June 1998. In 2000, after a further 27 months of practice holding a principal practising certificate (without the authority to receive trust money) he again ceased practising for seven and a half years. On this occasion his ceasing to practice was associated with fraudulent activities having been undertaken by an employee who he had failed to supervise properly. At a disciplinary hearing relating to these matters in November 2003, he undertook not to practise for another three years. He did not at that stage intend to resume practice at all.
2. However, Mr Nelson did resume practising on 11 January 2008. He has continued to hold a principal practising certificate (not authorising the receipt of trust moneys) since then (except for a two month hiatus in mid-2008).
3. The applicant (LSC) has brought nine charges against Mr Nelson, relating to conduct in acting for two clients in 2009. The most serious charges again relate to failure properly to supervise an employee who wrongly accepted cash payments totalling $7,500 from clients. Most of this money has now been lost. The other charges relate to failing to provide information to the LSC, and receipt of trust moneys by that employee on another two occasions (amounting to less than $1,000) again, when the practice was not authorised to do so. Ultimately, Mr Nelson pleaded guilty to all nine charges of professional misconduct.

1. Mr Nelson's firm acted for Mrs Cheryle Chapple in a Supreme Court proceeding relating to a mortgage over land owned by Mrs Chapple. Notwithstanding that Mr Nelson did not hold a practising certificate authorising the receipt of trust money, a law clerk employed by him, Mr John Lelleton, received three cash payments, direct from the client, each in the sum of $2,500. No receipt was issued by Mr Lelleton for any of the three cash payments. The first payment was made in April 2009 in the vicinity of chambers of a barrister brief in these proceedings. The second payment was made in or around June 2009 outside the chambers of another barrister, who was subsequently briefed in the matter. The third payment was made in July 2009 either outside Mr Lelleton's home or in his office.
2. Mr Nelson was still unaware of the receipt of these payments by Mr Lelleton in March 2012. Of the $7,500 received, $1,100 was used to pay the first barrister's fee. The balance of the moneys received from the client ($6,400) has not been able to be recovered.
3. The receipt of these three sums is the basis for the first six charges of professional misconduct against Mr Nelson. For each payment, there is a pair of charges. First, there is a charge of receiving trust moneys without holding a practising certificate authorising this (contrary to s.3.3.71(1) of the Legal Profession Act 2004 (the Act)). In each case the professional misconduct alleged is a substantial failure to maintain a reasonable standard of competence and diligence, contrary to s.4.4.3(1)(a) of the Act.
4. The second charge in relation to each of the three payments is of professional misconduct, once again within the meaning of s.4.4.3(1)(a) of the Act, and comprised by the failure of the law practice to issue a receipt to the client for the cash money received from Mrs Chapple.
5. The LSC's investigation into Mrs Chapple's matter commenced with receipt of a complaint from her dated 22 January 2010. Mr Nelson's practice had acted for her in relation to a foreclosure process by a mortgagee of her house in Mulgrave. It appears the practice negotiated a settlement, which would have prevented the sale of Mrs Chapple's house, but the moneys due to be paid under that settlement were not paid, and so Mrs Chapple did lose her house.
6. Whilst Mrs Chapple alleged that this occurred because the practice and counsel briefed had in effect abandoned her, and acted negligently, those issues were not part of the matters put by the LSC in its case against Mr Nelson. I note for completeness that in a letter to the LSC of 17 November 2011, Mr Nelson asserted that Mrs Chapple was the victim of a fraud perpetrated by a finance broker, that her predicament was hopeless, and her legal team had done all it could to assist her.
7. However, even in March 2012, Mr Nelson was still asserting to the LSC in correspondence that there was no proof that Mrs Chapple had made the three cash payments to Mr Lelleton. It was not until some later time that Mr Nelson accepted that this had occurred. This is illustrative of the difficulties the LSC faced in conducting the investigation: it was ultimately discovered that Mrs Chapple was the victim of two separate alleged frauds, and those involved (in particular Mrs Chapple, Mr Nelson and Mr Lelleton) were unable or unwilling to provide information to the LSC. So it took a long time for the LSC to get to the bottom of the events which actually occurred. It had to chase down original records of payments made to Mr Lelleton and to counsel. Mr Nelson's practice did not have adequate records, and Mr Nelson was not aware of the cash payments having been made.
8. The graveman of Charges 1 - 6 is that Mr Nelson did not properly supervise Mr Lelleton. Whilst his guilty plea is an acknowledgement that he did not, Mr Lewenberg sought to emphasise the extent to which Mr Nelson himself was a victim.

FAILURE TO PROVIDE INFORMATION TO THE LSC (CHARGE 7)

1. Charge 7 alleges professional misconduct within the meaning of s.4.4.3(1)(a) of the Act in that contrary to s.4.4.11(1)(a) and (b) of the Act, Mr Nelson failed to provide the LSC with documents, records and an explanation relevant to its investigation into a complaint by Mrs Chapple.
2. The LSC's investigation proceeded from January 2010 to May 2012 without much progress being made. On 7 May 2012, the LSC sent Mr Nelson a formal request for specified information under s.4.4.11(1)(a) and (b). The LSC's request was for:
   • Confirmation that counsel had been paid $1,100 by cheque from Mr Nelson's personal bank account. Or if this was not correct, and the circumstances were as stated in his letter of 15 March 2012 that Mr Lelleton used his own funds to purchase a bank cheque, Mr Nelson was requested to provide his firm's documentary evidence that such a cheque was purchased.
   • A complete set of accounting books (ledgers, journals, cash receipt books, cash payment books, banking records) and any other documents that disclose the receipt and expenditure of funds in relation to the Chapple matter.
   • Records disclosing all employee payments to Mr Lelleton.
   • Documentary evidence and an explanation of the source of funds used for payment of two sets of court fees for the filing of a counterclaim in the Chapple matter. This was to include the precise amount paid, the date paid, who paid the funds into court and how they were accounted for in the firm's records.
3. Despite a number of follow-ups and promises of a response over the following several months, Mr Nelson has never complied with this request.

1. In 2009 Mr Nelson's firm was acting for Ms Wendy Fitzpatrick in relation to recovery of a debt owed to her. Ms Fitzpatrick's partner, Mr Kerry Milte, a barrister, and Mr Nelson were longstanding friends. The appropriate procedure for a practitioner such as Mr Nelson who did not hold a practising certificate authorising the receipt of trust moneys was for him to arrange for a client to pay disbursements such as Court filing fees direct.
2. However, for the convenience of Ms Fitzpatrick, who it was said lived some distance from central Melbourne, a different arrangement was made to enable the filing of a complaint in the Magistrates' Court at Melbourne. The sum of $350 was paid into Mr Nelson's TAB account on 11 June 2009 at 1.47 pm. Six minutes later, the sum of $330 was withdrawn by Mr Sam Dinley, who was working for Mr Nelson at the time. Mr Dinley used those funds to pay the filing fee at the Melbourne Magistrates' Court.
3. Again, this comprised the receipt of trust moneys by Mr Nelson, contrary to the restriction on his practising certificate. This was the subject of Charge 8, which alleged professional misconduct within the meaning of s.4.4.3(1)(a) of the Act (being a substantial failure to maintain a reasonable standard of competence and diligence) by these actions.
4. A second payment of $460 from Ms Fitzpatrick was made into Mr Nelson's TAB account some time after the first payment. The purpose was to enable Mr Sam Dinley to pay the Court fee for entering judgment in default of appearance. The sum of $350 was withdrawn from the account on 7 July 2009, 10 minutes after the sum of $460 had been deposited.
5. It was later demonstrated that this money would not have been used to enter judgment, because firstly, a defence had been lodged. And secondly, had a default judgment been able to be entered, the cost at that time would have been only $17.
6. Subsequently, in a letter dated 8 August 2011, Mr Nelson asserted he would have regarded the deposit of $460 into his TAB account as reimbursement by Mr Milte for use of a mobile phone provided to him by Mr Nelson. Mr Milte advised he did pay an amount into the TAB account for mobile phone usage, but recalls that the amount was around $100 or $200. Mr Nelson accepted that at least part of this sum of $460 comprised trust money.
7. Regardless of these uncertainties, the position is that the payment of both these amounts constituted the receipt of trust money by Mr Nelson, contrary to the restriction on his practising certificate.
8. The receipt of $460 on 7 July 2009 was the subject of Charge 9, which was otherwise in the same terms as Charge 8.
9. Whilst the payments the subject of Charges 8 and 9 were relatively small and were made to save inconvenience for clients, who were also personal friends, and were only held for a short period, nevertheless they were a breach of the strict rules prohibiting the receipt of trust moneys by Mr Nelson, given that his practising certificate did not allow this.

1. The matter was set down for a two day hearing commencing on 23 April 2013. However, on that day, Mr Lewenberg appeared, he indicated he had only been briefed the day before, to replace Mr Chris Dale, who was no longer representing Mr Nelson. Mr Lewenberg sought an adjournment on this basis, which was granted. The Tribunal's order on that day was made on the basis that Mr Nelson gave an undertaking:

To allow inspection by prior arrangement by a person appointed by the Legal Services Commissioner, of all documents and records relevant to his legal practice, fortnightly from today, until the hearing of this matter, and to allow entry to any premises from which he practices, for this purpose.

This served to accord a significant measure of protection to the public, pending the conduct of the adjourned hearing.

1. I find Mr Nelson guilty of professional misconduct in relation to all nine charges. As his plea of guilty recognises, his conduct in failing properly to supervise Mr Lelleton, not responding to the LSC's statutory information requests, and in breaching the trust accounting requirements, constitutes a substantial failure to maintain a reasonable standard of competence and diligence.

1. The LSC contended that Mr Nelson's practising certificate should be cancelled and he should be disqualified from applying for a new practising certificate for at least 12 months.
2. The following matters were put on Mr Nelson's behalf in support of his contentions that his right to practise should not be interfered with.
3. Mr Lewenberg made submissions addressing Mr Nelson's disciplinary record. This is reasonably extensive. I accept Mr Lewenberg's submission that the December 1990 finding against Mr Nelson for failing to complete work on behalf of clients as soon as possible and acting for both a lender and borrower without obtaining written acknowledgement of the parties are not in the same category as the present charges.
4. The other disciplinary findings up to 2003 are as follows: There were two findings of misconduct on 10 August 1990, one for failing to apply for a practising certificate, and another for failing to comply with a request to provide information to the Law Institute. On 5 December 2000, there were six findings of unsatisfactory conduct for failing to provide information under s.137 of the Legal Practice Act 1996 (the equivalent of the present s.4.4.11). On 29 June 2011 and 15 May 2002, there were two more findings of unsatisfactory conduct for the same thing.
5. The most serious prior findings against Mr Nelson, and those most relevant to the present proceedings, were the ones made on 18 November 2003 by the full Tribunal of the Legal Profession Tribunal. In brief, these related to activities undertaken by a solicitor employed by Mr Nelson, Mr Tom Scriva, and a law clerk, Ms Jullyan. The decision states that he completely failed to supervise Mr Scriva and Ms Jullyan. As a result money was received when its receipt was not authorised. Proper records were not kept. This was to Mr Scriva's financial advantage and to the financial detriment of clients of the firm. Mr Nelson was not alleged to have acted dishonestly. But he was very largely unaware of the activities of Mr Scriva in particular. The Tribunal emphasised the very serious nature of the breaches involving the receipt of trust moneys by a firm whose principal, Mr Nelson, did not have a practising certificate authorising the receipt of trust money. The Tribunal accepted Mr Nelson's undertaking not to apply for a practising certificate before 1 December 2006. This was three years and one month from the date of the decision, 18 November 2003. And it was a further three years and three months after Mr Nelson had ceased to hold a practising certificate - on 23 August 2000. So the total time away from practice as a result of the Tribunal's order was six years and four months.
6. Mr Lewenberg submitted that there was a difference between the breaches involving Mr Scriva and those involving Mr Lelleton. He said that the Scriva breaches occurred over a longer period of time (1998 - 2000), in relation to a number of transactions and a number of clients. Whilst it is true that the scope of the breaches in 1998 - 2000 was greater than those in 2009, they were of a similar nature. They both involved employees acting without Mr Nelson's authority, or knowledge, and accepting money from clients (which was lost) when the practice was not authorised to receive trust money. Mr Lewenberg also sought to distinguish the 1998 - 2000 conduct from the present matters on the basis that whilst bells should have been ringing about Mr Scriva's conduct, that was not the case for Mr Lelleton, given that the payments were received by Mr Lelleton away from Mr Nelson's office and, in effect, it would have been more difficult for Mr Nelson to prevent Mr Lelleton's conduct than Mr Scriva's.
7. Other matters put on Mr Nelson's behalf were:
   • His plea of guilty, which had saved hearing time, and had saved five witnesses from attending the hearing.
   • The fact that as a result of the undertaking Mr Nelson gave on 23 April 2013, the practice had employed an experienced bookkeeper who has significantly improved the financial operation of the practice. The LSC acknowledged that the presence of the bookkeeper had significantly improved things, and also that since the April 2013 adjournment, Mr Nelson had been co-operative and receptive to suggestions to improve his practice. Mr Lewenberg suggested, in effect, the public would be well enough protected now that the bookkeeper was employed, without the need to interfere with Mr Nelson's right to practise.
   • In relation to the failure to provide information in response to the LSC's statutory request, it was said Mr Nelson was simply unable to do so. He had been misled by Mr Lelleton. When he asked Mr Lelleton for information, in order to respond to the LSC's inquiries, none was forthcoming. (Indeed, I note that, Mr Lelleton was on 24 May 2013 declared to be a disqualified person under Part 2.2 of the Act indefinitely as a result of having been found guilty of the offence of obtaining property by deception in 1996.)
   • In relation to the Fitzgerald matter, it was put that whilst it was acknowledged that all trust account breaches are serious, this is at the lesser end of the scale of these types of matters. I accept this, although the use of a TAB account for the receipt of money from clients in any circumstances reflects badly on the profession.
   • The fact that Mr Nelson is 79 years old, and any order preventing him from practising for a particular period would have a greater effect than if it applied to a younger practitioner. He referred to the decisions by the Tribunal and the Supreme Court concerning Mr Nigel Mark Turner to that effect.[1]
   • Written references were provided by five referees, including three solicitors who had been articled to him, and two members of counsel. I accept the positive statements made in these references, including as to his honesty and provision of pro bono assistance to members of the community in need. This is referred to further below.

1. The primary consideration I must take into account is the protection of the public. The suggestion might be made that this is similar to the case of Quinn v Law Institute of Victoria[2]. In that case, the practitioner was found guilty of charging grossly excessive costs. The Full Tribunal of the Legal Profession Tribunal ordered that his practising certificate be suspended for 12 months. The Court of Appeal found that there was an alternative sanction which provided greater protection to the public. That was to accept the practitioner's undertaking to have all his client bills independently assessed.
2. The position in this case is different to Quinn in several significant ways, however. First, the circumstances here are not so cut and dried. The appointment of a bookkeeper is not such a complete answer to the issues raised as was the solution able to be adopted in Quinn - and no undertaking to retain the bookkeeper for the duration of Mr Nelson's practice was given, although perhaps it was implied. Further, there were mitigating issues in the form of mental health considerations which Mr Quinn was able to bring to bear. And, of course, every case turns on its own facts and the nature of the misconduct is quite different in the two cases.
3. I accept that solicitors who are principals are vulnerable to dishonest actions by rogue employees. However, when it comes to giving consideration to practitioners whose employees breach the rules, versus protection of the public, it is clear that the regulatory regime favours the latter rather than the former. It imposes strict obligations of vicarious liability by principals for their employees.[3]
4. In response to an indication to say how Mr Nelson's approach to the supervision of staff had changed, and in effect, what it had learnt from his experience, the reply was not greatly reassuring. As described above, the circumstances of the 2003 decision should have forcefully demonstrated to Mr Nelson that he needed to adopt a more hands on approach to supervision of his employees. It is noteworthy, however, that within 15 months of Mr Nelson again resuming practise, Mr Lelleton was acting in the way described above. In her complaint to the LSC, Mrs Chapple said she had 'hired John Lelleton and apparently David Nelson'. It appears that Mr Nelson had little if anything to do with the client. She had gained the impression that his law clerk was her solicitor.
5. Mr Lelleton's actions are anathema to good practice: he received substantial amounts in cash from clients for unspecified expenses, when the practice was not authorised to receive trust moneys, and did not even provide a receipt.
6. The reply given to the invitation to say how Mr Nelson's approach to supervision of his employees was to the effect that now the bookkeeper was on board, the practice was being more effectively controlled financially, and this would bring about proper supervision of staff. In other words, the focus was still on delegation by Mr Nelson. Whilst retaining the bookkeeper is bringing significant improvement, what the history of Mr Nelson's practice demonstrates is that more hands on supervision is required. I was not satisfied that Mr Nelson had sufficiently altered his hands off approach even after his experiences of 1998 - 2000, and 2009. This is of great concern in relation to the vital consideration of protection of the public.
7. Mr Nelson is entitled to some credit for his plea of guilty. This is limited, however, by the fact that it was made late, and in circumstances where the investigation was prolonged, with little assistance having been provided by Mr Nelson. It is true that the five witnesses were saved from attending on 18 July 2013, but they did attend, ready to give evidence, at the adjourned hearing of 23 April 2013.
8. Clearly, a prohibition on practising for any substantial period will impact on Mr Nelson very significantly, given his age, and I take that into account. It was said he wishes to continue a practice which one referee described as now effectively a part-time practice involving pro bono legal services or conditional costs legal services to clients who can otherwise not afford to be legally represented. I also take into account the contribution Mr Nelson has made over many years. He has given 20 law graduates a start in the law as article clerks. His referees have indicated he has assisted people in distress, often without payment. They attest to his honesty and integrity. It was said he is soft hearted and trusting.
9. Unfortunately he has been more trusting than an principal of a legal practice can afford to be. He made what were obviously in hindsight bad choices when employing staff, with the consequence that clients have been significantly disadvantaged.
10. In this case specific deterrence is relevant, given my concerns about the extent to which Mr Nelson has not demonstrated an understanding of the need to supervise staff more closely. Also, I note the Chapple and Fitzpatrick conduct occurred little more than a year after his return to practice following a similar incidents in the period 1998 - 2000.
11. General deterrence is relevant as well, given the gross breaches his employee was able to engage in (and the time it took to uncover the truth).
12. In view of Mr Nelson's practising history, I believe that the protection of the public demands that he be required to continue to employ a bookkeeper (or make other arrangements for the financial management of his practice approved by the LSC) at any time when he practises in the future. I will make an order to that effect.
13. Whilst the failure to supervise Mr Lelleton is the most serious matter, consideration of sanction is also affected by the trust account breaches, and the failure to respond to the LSC's request for information (in relation to which there are numerous prior findings for the same thing).
14. The question remaining is whether the protection of the public, together with the other associated factors relevant in determining sanction, require that Mr Nelson be banned from practising for a period. As was stated in Quinn[4], although the primary purpose of disciplinary proceedings is protective, most of 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. Mr Nelson's record tells against him. I have concluded a fine would not be sufficient to convey the appropriate level of denunciation of his conduct.
15. In all the circumstances of this case, I have determined that the protection of the public requires that Mr Nelson be prohibited from practising for eight months, and that if and when he resumes as a principal, he must employ the services of a bookkeeper approved by the LSC, and/or make other arrangements for the financial management of his practice approved by the LSC.
16. Finally, Mr Nelson is also required to pay the costs of the LSC under Clause 46D of Schedule 1 to the Victorian Civil and Administrative Tribunal Act 1998. Those costs were agreed in the sum of $9,000.

[1] Legal Services Commissioner v Turner [2012] VSC 394 at [102]; Legal Services Commissioner v Turner [2013] VCAT 390 at [69].

[2] [2007] VSCA 122 per Maxwell P, Chernov and Nettle JJA.

[3] See the definition of 'law practice' in s.1.2.1 of the Act, which includes 'an Australian legal practitioner who is a sole practitioner'. The consequence of this is that a sole practitioner is responsible by the law practice for compliance with every statutory obligation under the Act. See also s.7.2.12- Liability of Principals.

[4] [2007] VSCA 122 at [30] per Maxwell P.