Is not authorised to receive trust money.[2]

1. Before the end of the financial year ended 30 June 2007, the respondent's status as a practitioner changed. On 16 May 2007, the respondent was issued with a further practising certificate in respect of the period from 14 May 2007 to 30 June 2007. That further or second practising certificate issued in respect of the year 30 June 2007 withdrew the applicant's right to practise on his own account and, at his own request, entitled him only to practise as an employee of a law practice and further he was not authorised to receive trust money.[3]
2. In fact, the respondent had practised as a principal on his own account from on or about 24 May 2004 and he practised on his own account as a sole practitioner under the business name 'Waterford Green Lawyers' ('WGL') from 26 May 2004 to 13 May 2007 when WGL closed. Thereafter, he held a practising certificate as an employee solicitor from 14 May 2007 to 28 February 2008 during which time he was engaged in legal practice as an employee legal practitioner with the firm of Gadens Lawyers. He further engaged in practice as an employee corporate legal practitioner from 27 February 2008 to 30 September 2009 when he was engaged in legal practice as an employee of Sportsco Pty Ltd.
3. The matters directly concerning the complaint, and hence the charges, arise in the following circumstances.
4. In about April of 2007, Ms Roa and her daughter decided to purchase a vacant block of land located at 6 Stores Court, Braybrook. The vendors were Tong Duy Tran and Minhhieu Nguyen. The second vendor is not related in any way to the respondent. There was no real estate agent involved in the sale and Ms Roa contacted the respondent who acted as the solicitor for the vendors. Ms Roa met the respondent at the offices of WGL in St Albans on or about 20 April 2007 at which time she paid the sum of $1,000 in cash in part payment of the deposit for the purchase. She was given a receipt that was not a trust account receipt.[4]
5. Shortly after making that payment, Ms Roa signed a contract of sale. On 9 May 2007, Ms Roa attended for a second time at the offices of WGL to pay the balance of the deposit. The respondent was not available to see her. She gave a cheque in favour of WGL for the balance of the deposit of $8,500 and that was given to the receptionist at WGL's offices in St Albans. On making this payment she was not given a receipt in any form.
6. The initial sum of $1,000 cash and the further sum paid by cheque of $8,500 represented payment to the respondent of 'trust money' within the meaning of that term in the Act. Each payment of money to the respondent in my view was clearly money entrusted to the respondent in his legal practice in the course of the provision of legal services by him.
7. 'Trust money' is defined in s 3.3.2 of the Act in the following terms:

Trust money, in relation to a law practice, means money entrusted to the law practice in the course of or in connection with the provision of legal services by the practice, and includes -

(a) money received by the practice on account of legal costs in advance of providing the services; and

(b) controlled money received by the practice; and

(c) transit money received by the practice; and

(d) money received by the practice, that is the subject of a power, exercisable by the practice or an associate of the practice, to deal with the money for or on behalf of another person.

1. It is necessary at this point to also set out what is meant by 'controlled money' and by 'transit money' in the Act.
2. 'Controlled money' in the Act means:

Money received or held by a law practice in respect of which the practice has a written direction to deposit the money in an account (other than a general trust account) over which the practice has or will have exclusive control.

Received by a law practice subject to instructions to pay or deliver it to a third party, other than an associate of the practice.

1. A further provision of the Act is also very relevant. Section 3.3.71 provides that a practitioner must not receive trust money unless authorised to do so.
2. I have set out the above definitions of controlled money and transit money which are found in s 3.3.2 of the Act as they relate to the defence advanced by the respondent to the charges laid. There is no dispute in this case that, at all relevant times, the respondent's practising certificate was subject to a condition that prohibited him receiving trust money.
3. After she had paid the sum of $9,500 in two payments to WGL, Mrs Roa subsequently telephoned WGL and sought a receipt in respect of the payment of the money she had paid. She attended WGL's St Albans offices on or about 17 May 2007 and on a number of occasions after that date. She found that the premises had been vacated by WGL.
4. Section 3.3.13 of the Act requires 'trust money' to be deposited into a general trust account. Relevantly, s 3.3.13 of the Act provides as follows:
   • 3.3.13 Certain trust money to be deposited in general trust account.
     • (1) Subject to section 3.3.17A, as soon as practicable after receiving trust money, a law practice or an approved clerk must deposit the money in a general trust account of the practice or clerk unless -
       • (a) the practice or clerk has a written direction by an appropriate person to deal with it otherwise than by depositing it in the account; or
       • (b) the money is controlled money; or
       • (c) the money is transit money; or
       • (d) the money is the subject of a power given to the practice or an associate of the practice to deal with the money for or on behalf of another person.

1. Section 3.3.17A requires money received by a practitioner in the form of cash to be deposited into a general trust account.
2. The respondent did not have a trust account and he was not authorised to have one.
3. In evidence before me, he said that he chose not to have a trust account as part of his practice as a legal practitioner because the cost of keeping a trust account was too high and the requirements of keeping a trust account were too stringent. Instead, he had arranged most of his practice on the basis that he did not receive 'trust money' within the meaning of the Act. In the case of conveyancing transactions, he told me, and I accept, that he had, in the most part, been able to act for vendors or purchasers in conveyancing transactions with the cheques being drawn by financiers, for example, banks who would draw the cheques and pay them to another bank. For the most part deposit money was received and banked by estate agents. In that way the respondent was not required to hold trust money in conveyancing transactions.
4. On the respondent's own evidence he was cognisant of the strict requirements for the handling of trust money and had chosen to organise his practice so that he did not hold trust money.
5. This case was different to other transactions. The respondent was acting for a vendor where there was no agent involved. Instead of an estate agent receiving and paying out the deposit money, the respondent received the deposit in two instalments but he had no account to pay them into. Instead, the total sum of $9,500 was paid into his general office account and then the proceeds were, at some point, paid to his clients, the vendors.
6. I hasten to add that there is no suggestion that the respondent personally gained by his conduct. He did not.
7. As I indicated earlier, the respondent ceased practice on his own account, trading under the name of WGL, on 13 May 2007 when he obtained an employee practising certificate and began employment with Gadens Lawyers. Nevertheless, on or about 23 May 2007, a letter was sent on the letterhead of WGL on behalf of the respondent's clients, the vendors, to the conveyancer then acting on behalf Ms Roa and her daughter[5]. The letter shows the respondent named as the principal of the firm and reads as follows:

We act on behalf of the vendor and understand you act for Ruth Roa and Kimberley Lini who has contracted to purchase the above property from our client. We note that settlement is scheduled for 4 June 2007. Accordingly please forward transfer of land and statement of adjustments to our office as a matter of urgency. If you have any queries please do not hesitate to contact our office.

1. On 5 June 2007 a further letter was written to the conveyancers acting on behalf of the purchasers. It was also on the letterhead of WGL,. This is followed by yet another letter on 11 June 2007[6] also on the letterhead of Waterford Green which did not show the respondent as principal, but which was signed by him. This letter was addressed to the purchasers direct. Each of the letters I have referred to was written after the respondent's practising certificate was made conditional upon him practising only as an employee.
2. In these circumstances, the charges have been laid.
3. Charge 1 (as amended) is, in substance, an allegation of professional misconduct. There are two aspects to the charge, namely the respondent failed to comply with a condition of his practising certificate by receiving trust money. The second aspect is really the same allegation, namely the respondent breached s 3.3.71 of the Act by receiving trust money when not authorised to do so.
4. Charge 2 relates to failing to bank the sum of $1,000 first received and, the subsequent sum of $8,500 next received, into a trust account, thus contravening ss 3.3.13(1) and 3.3.17A of the Act.
5. Charge 3 amounts to a charge of professional misconduct by failing to comply with Regulation 3.3.9(4) of the Legal Profession Regulations 2005 ('the regulations') by failing to issue a trust account receipt for either the sum of $1,000 or the sum of $8,500. The point of this charge is that, although a general receipt was given in respect of the first sum received of $1,000, that receipt was not in an appropriate form and did not contain the required particulars and there was no receipt whatsoever issued in respect of the sum of $8,500.
6. Charge 4 deals with the receipt of the cheque of $8,500 and the failure to issue a receipt in respect of it.
7. Charge 5 is a further charge of failing to give a receipt on either occasion that trust money was received contrary to regulation 3.3.9(2) of the regulations.
8. Charge 6 is a charge alleging, in general terms, that the applicant was guilty of professional misconduct by engaging in practice as a principal on his own account after 16 May 2007 when in fact he only held a practising certificate to practise as an employee.
9. The tribunal heard evidence from Mrs Roa who gave sworn evidence in accordance with her witness statement which was admitted into evidence as Exhibit F together with the various attachments. There was a dispute on the facts raised by the respondent who said in his evidence that in fact the contract which was signed by Mrs Roa and her daughter, had in fact not been signed when it was provided to Mrs Roa. I accept the evidence of Mrs Roa and I do not accept the evidence of the respondent on this point. In fact, it amounts to a matter of little, if any, consequence.
10. I find that whilst the respondent was in practice on his own account, trading under the name of Waterford Green Lawyers, he acted on behalf of the vendors in the conveyancing transaction with Mrs Roa and her daughter. I accept that the respondent was given two separate sums of $1,000 cash on or about 20 April 2007 and a further sum of $8,500 by cheque, payable to WGL, on or about the 9th day of May 2007.
11. I find that both the sum of $1,000 paid in cash and the sum of $8,500 was 'trust money' within the meaning of the Act. It was trust money because the respondent, as a legal practitioner, received each sum in the course of his legal practice. Each sum therefore fell within the definition of trust money. The respondent was required to bank that trust money into a trust account within s 3.3.13 of the Act or s 3.3.17A of the Act. The respondent did not bank the money into trust because he did not hold a trust account. I find the respondent in fact paid the money into his office account and then subsequently accounted for the money to the vendors. I find that at all times the respondent was mindful of his obligations under the Act and that he was not authorised to receive trust money and that the terms of his practising certificate prohibited him from doing so.
12. I find, as a matter of fact, that the respondent did not issue a proper trust account receipt in respect of the sum of $1,000 and he did not issue a proper trust account receipt in respect of the sum of $8,500.
13. I find that notwithstanding that the respondent ceased to hold a practising certificate entitling him to engage in legal practice on his own account on or about 13 or 14 May 2007, he nonetheless continued to practise for a short period after the conditions on his practising certificate changed. I accept the respondent's explanation that he did so for a short period and only with a view to ensuring that the transaction involving Mrs Roa was completed. The respondent gave evidence which I accept, that he had arranged for a former law clerk to have control of the file as a conveyancer. I accept that evidence. But the respondent permitted that conveyancer to use his letterhead to send correspondence to the purchaser and he signed the letters. To the purchasers and anyone acting for them the appearance was given the vendors were still represented by WGL when that was not in fact the case. Mrs Roa acted on this by attending the offices of WGL to find them unattended. That is a totally untenable situation for any legal practitioner to have allowed to happen yet it was the consequence that flowed from the actions of the respondent.
14. In fact, the transaction was unable to be completed. Mrs Roa explained to me and I accept, that she had difficulty obtaining finance to complete the purchase because she was unable to prove (by provision of a trust account receipt) that she had in fact paid the deposit on the purchase. This made it difficult for her to obtain finance and to obtain a builder who was to enter into a building contract, subject to finance, to erect a home on the property. In the result, proceedings were instituted in the Supreme Court between Mrs Roa and the vendors.
15. The respondent argued that although he may have failed to comply with the conditions of his practising certificate and also failed to comply with provisions of the Act or regulations his failure to comply was not wilful or reckless.
16. He further gave evidence before me and argued in submissions that in so far as the charges assert the money received by him was trust money this is wrong. The respondent contended that each of the sums of money received by him were not 'trust money' within the meaning of the Act but were either 'controlled money' or 'transit money' within s 3.3.13(1)(b) or (c) of the Act.
17. A reading of the Act and the definitions of 'controlled money' and 'transit money' which I have set out above, make it perfectly clear that neither sum of money received by the respondent could be classified as either controlled money or transit money. At no time did the respondent have any direction from any party involved in the transaction to bank any of the money in an account other than a trust account. I reject the respondents evidence and arguments on this issue.
18. Finally, the respondent argued that he agreed to do this transaction on the basis that he would hold the money 'in escrow' on behalf of one or other of the parties to the transaction. He argued he did not breach any provisions of the Act or rules that relate to the handling of trust money because he formed an honest and reasonable belief that he was not acting in breach of any sections of the Act or rules and that he was therefore not wilful or reckless in his contravention.
19. I reject the respondents evidence that he reasoned in this way and I reject the defence advanced by him. As a legal practitioner, the respondent knew and understood that he could only practise on his own account on the basis that he not receive 'trust money'. He knew that trust money had to be banked into a trust account. In organising his practice so that he did not hold trust money he clearly gave thought to his position. In acting in this transaction in the way that he did by banking the two sums received into his office account he also thought through what he was doing. I reject the respondent's explanation out of hand. In my view he decided to chance his hand by acting in a way he knew to be contrary to the act and regulations and contrary to the conditions of his practising certificate. I regard the respondent's defences and evidence advanced to support them as disingenuous.
20. It is clear to the tribunal that the principle charge brought against the respondent is charge 1, that is, that the respondent received trust money contrary to a condition on his practising certificate and when unauthorised. The tribunal finds that charge of misconduct proven.
21. Charges 2 to 5, whilst they have also been proven, they are all a consequence of the first charge and, in my view, when properly analysed, amount to unsatisfactory professional conduct. In the circumstances I consider it appropriate to apply s 4.4.20 of the Act.
22. Charge 6 is in a different category to charges 2 to 5. The respondent knew that he had closed his practice. He knew that there were files to be completed. He chose to practise as an employee with Gadens whilst, at the same time, holding himself out as a principal of WGL. That is a breach of the Act as is reflected in charge 6 and, in my view, amounts to professional misconduct.
23. For these reasons, charges 1 and 6 of professional misconduct are found to have been proven. Charges 2 to 5 are proven as charges of unsatisfactory professional conduct.
24. I turn to the question of penalty. I heard submissions from the parties on this issue asking both to assume I would find the charges proved.
25. The applicant was admitted to practice on 29 March 2004. Almost immediately, he went into private practice and practised on his account between 24 May 2004 and 13 May 2007. From 14 May 2007 to 26 May 2008, he practised as an employee of Gadens and thereafter, between 27 February 2008 and 30 June 2009, he was involved in corporate practice.
26. The records of the Law Institute of Victoria show that there have been no other disciplinary findings or proceedings taken against the respondent in the short period of time that he has been in practice.
27. He does not presently hold a practising certificate. Mr Nguyen told me that he intends to re-apply for a practising certificate and to once again involve himself in legal practice in the future. Mr Nguyen told me in evidence, and I accept, that he was embarrassed by the way this transaction had been handled and that he had always conducted the transaction in good faith and he quite frankly admitted that he should have paid more attention to the issue of 'trust money'. He further admitted that he misjudged the position with regard to trust money. He pleaded with me that the charges were out of proportion to the conduct that he engaged in and he said that he was mistakenly in error.
28. Whilst I do not accept his explanation as to honest and reasonable mistake or belief, I do accept that the gravamen of the charges here lay with charges 1 and 6. The respondent should not have engaged in practice which saw him receiving trust money and he should not have allowed himself to be engaged in practise as a principal on his own account when he was in fact an employee with Gadens.
29. I regard the circumstances giving rise to proving charge 1 as serious. Complying with conditions of a practising certificate and complying with provisions of the Act and Regulations with respect to handling of trust money and trust accounts is fundamental to engaging in legal practice in this state.
30. Mr Nguyen submitted that his financial position was precarious and that any monetary penalty inflicted would be 'disastrous' from his point of view. He asked that any monetary penalty involved be suspended. He said that any costs order would be likely to send him to the brink of bankruptcy. He said he has a mortgage and he was looking for a new job.
31. I have formed the view that an appropriate penalty in these matters is a global penalty which should be imposed. The whole intention of these disciplinary proceedings is to protect the public and not to punish the practitioner. Mr Senathirajah, who appeared as counsel for the applicant, urged that I impose a penalty which amounted a restriction on the respondent's right to practise for a period of 12 months and that the respondent, in the meantime, undertake 10 compulsory professional development points for practitioners obligations relating to trust accounts. Further, he asked that when the respondent does apply for a practising certificate, he be restricted from engaging in practice other than as an employee for a period of 12 months. Mr Senathirajah also asked for a fine in the sum of $1,000 to be made in respect of each charge.
32. I have considered these matters and have also considered the matters advanced on behalf of the respondent, particularly his precarious financial position. I have also taken into account the considerable delay in having the original complaint investigated and charges being laid and heard. None of the delay can be said to have been at the hands of the respondent who has had these matters hanging over his head now for over two years. In that time he appears to have conducted himself without complaint from anyone. For that reason it is not appropriate to impose a fine on each charge as was submitted for the applicant. The penalty I have decided upon is designed to ensure the public is protected by allowing the respondent to be properly trained as to his obligations in future and to have a period of supervision before he is permitted to practice again unsupervised on his own account.
33. I am of the opinion that the respondent's right to practise should be restrained for a period of 12 months and thereafter he should be required to work as an employee for a further 12 months. In the meantime, the respondent is to undergo a course in compulsory professional development and attain 10 CPD points engaging in courses directed to a practitioner's obligations relating to the keeping of trust accounts. Otherwise, the respondent is not fined. He will be ordered to pay costs. The orders of the tribunal will be as follows:

1. Charges 1 and 6 alleging professional misconduct are found to have been proved.
2. Charges 2 to 5 inclusive alleging professional misconduct are found to have been proven as unsatisfactory professional conduct.
3. The respondent is not permitted to apply for a practising certificate for a period of 12 months from 20 October 2011.
4. Prior to the respondent again receiving a practising certificate he is to undertake, over a period of 12 months, courses relating to a practitioner's obligations and responsibilities relating to the keeping of trust accounts and to acquire 10 compulsory professional development points.
5. The respondent cannot re-engage in legal practice on his own account unless, prior to doing so, he first holds a practising certificate with a condition restricting him to an employee for a period of at least 12 months.
6. Pursuant to s 46(d) of Schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998, the respondent is to pay the applicant's costs to be agreed or if no agreement to be taxed by the Registrar of the Tribunal.

[1] The Tribunal applies s 4.4.20 of the Act.

[5] That letter was attachment 'A' to the applicant's application.

[6] See annexures 9 and 10 to the application.