Legal Services Commissioner v Rallis (Legal Practice) [2009] VCAT 1445

1. The Tribunal finds the Respondent guilty of two instances of misconduct within the meaning of s 137(a)(i) of the Legal Practice Act 1996.
2. The Tribunal finds the Respondent guilty of two instances of misconduct at common law.
3. Pursuant to s 160(1)(c)(vii) of the Legal Practice Act 1996:
   • (i) the Respondent may not apply for a practising certificate before 31 December 2010; and
   • (ii) the Respondent may not apply for a practising certificate which would authorise him to receive trust money before 1 July 2014.
4. The Respondent is to pay the sum of $2161.50 to Candida Patamisi by no later than 4pm Friday 21 August 2009.
5. The Respondent is to pay the Commissioner's cost of $24,500.00 in two equal instalments:
   • (i) the sum of $12,250.00 is to be paid by no later than 31 December 2009;
   • (ii) the sum of $12,250.00 is to be paid by no later than 31 December 2010.

1. Mr Elias Rallis was admitted to practise on 2 November 1983. He held an employee practising certificate between 10 November 1983 and 7 March 1988 and subsequently between 1 July 2001 and 30 June 2002, and held a principal practising certificate with an authorisation to hold trust money during the following periods:
   • 8 March 1988 - 31 December 1989
   • 14 October 1998 - 31 December 1999
   • 11 February 1999 - 30 June 2001
2. Mr Rallis was employed as a solicitor by the firm Leo Dimos & Associates from 21 May 2001 to around 30 June 2002.
3. He has not held a practising certificate since 30 June 2002.
4. The Legal Services Commissioner (the Commissioner) has brought two charges against Mr Rallis pursuant to the Legal Practice Act 1996 (the 1996 Act). The first relates to unqualified practice and the second to the unqualified receipt of trust money. The basic facts in relation to each charge are not in dispute.

'During the period 30 June 2002 to 19 September 2002 [Mr Rallis] engaged in unqualified legal practice under the name of Rallis Lawyers in breach of subsections 314(1) and 314(2) of the Legal Practice Act 1996 and in so doing [he] engaged in wilful or reckless contravention of the Legal Practice Act 1996 and [is] guilty of misconduct pursuant to section 137(a)(i) of the Legal Practice Act 1996 and/or misconduct at common law'.

1. Mr Rallis admits the charge. The relevant facts may be briefly stated.
2. While employed as a solicitor with Leo Dimos & Associates Mr Rallis acted on behalf of Candida Patamisi in relation to Ms Patamisi's litigation in the Family Court. Ms Patamisi had been a client of Mr Rallis when he was a principal of Rallis Katsimandakos Lawyers. Mr Rallis ceased to be employed by Leo Dimos & Associates on 30 June 2002. He continued to engage in legal practice in relation to Ms Patamisi's litigation, under the name of Rallis Lawyers, from 30 June 2002 to 19 September 2002, in particular:
   • ➢ On 6 August 2002 Mr Rallis sent a letter from Rallis Lawyers to Secombs (solicitors for the Respondent in the Patamisi litigation) seeking payment of settlement monies due to Ms Patamisi by a cheque in the sum of $6750 made payable to "Elias Rallis".
   • ➢ On 7 August 2002 Mr Rallis received from Secombs a cheque in the sum of $6750 made payable to "Elias Rallis" being payment of settlement monies due to Ms Patamisi ("the Secombs cheque"). The letter is addressed to "Rallis Lawyers".
   • ➢ On 12 August 2002 Mr Rallis (using the name and letterhead Rallis Lawyers) invoiced Ms Patamisi the sum of $6750 for costs and disbursements in relation to Ms Patamisi's litigation by rendering a memorandum of account dated 12 August 2002 ("the Rallis account").
   • ➢ On 19 September 2002 Mr Rallis filed a Notice of address for service with the Family Court giving Ms Patamisi's address for service as "Rallis Lawyers", 8 Moodie Place, St Kilda 3182" and his solicitor's code as "8978".
3. Mr Rallis did not hold a practising certificate in the period 30 June to 19 September 2002, when he engaged in legal practice in relation to the Patamisi litigation.
4. The conduct referred to in paragraph 7 was in breach of subsections 314(1) and (2) of the 1996 Act that is:

"(1) A person must not engage in legal practice in Victoria unless the person -

(b) is an incorporated practitioner that holds a practising certificate; or

(2) A person must not represent or advertise that they are qualified to engage in legal practice unless the person -

(b) is an incorporated practitioner that holds a practising certificate; or

1. Section 137(a)(i) of the 1996 Act defines misconduct to include:

"(i) wilful or reckless contravention of this Act, the regulations or practice rules that apply to the practitioner or firm or any other Act that relates to legal practice: ..."

1. On the basis of the admitted facts we find Mr Rallis guilty of misconduct within the meaning of s 137(a)(i) of the 1996 Act and of misconduct at common law.

1. The second charge relates to the 'Rallis account' and Mr Rallis' treatment of Ms Patamisi's settlement monies (the Secombs cheque). The relevant facts are not in dispute.
2. The Rallis letter directed that part of Ms Patamisi's settlement money (ie. $6750) be paid directly to Mr Rallis. This was done without Ms Patamisi's agreement.[1]
3. Mr Rallis then sent Ms Patamisi an account (the Rallis account) for total costs and disbursements of $6750.
4. In August 2002 Mr Rallis banked the Secombs cheque of $6750 in his personal bank account in circumstances where he had no entitlement to that money. Mr Rallis did not have a trust account at the relevant time as his previous trust account had been closed since 30 June 2001, when he ceased to hold a principal practising certificate.
5. The nub of the allegation against Mr Rallis is that by banking the Secombs cheque in his personal bank account he misappropriated $6750. The misappropriation arises because Mr Rallis had no entitlement to this money.
6. It is said that Mr Rallis had no entitlement to any part of the $6750 because:
   • (i) While the Rallis account is not itemised it is accepted that at least a portion of work was performed while Mr Rallis was in the employ of Leo Dimos & Associates. Mr Rallis has no entitlement to the costs in respect of that work. On 16 April 2004 Leo Dimos & Associates issued an account to Ms Patamisi (the 'Dimos account') in the sum of $2671.13.
   • (ii) To the extent that the Rallis account included work performed when Mr Rallis did not hold a practising certificate he is not entitled to recover any amount in respect of that work and is required to repay any amount so received (s 314(b) 1996 Act). The portion of the costs Mr Rallis received in respect of work performed from 30 June 2002 to 19 September 2002 belongs to Ms Patamisi.
   • (iii) The Rallis account also included a disbursement sum of $750.00 in respect of Mr Hutchins of Counsel's appearance on 8 April 2002. Mr Rallis had no entitlement to Mr Hutchins' appearance fee and that fee was money belonging to Mr Hutchins which was held by Mr Rallis on trust. Mr Hutchins' fee was ultimately paid by Mr Rallis on 11 April 2006.
   • (iv) The Rallis account also included a disbursement sum of $122.00 for a "service fee". The Respondent did not incur a service fee. The Dimos account records that Leo Dimos & Associates paid Ram Centre Pty Ltd a fee for service in the sum of $110.60. Accordingly the sum of $110.60 is trust money belonging to Leo Dimos & Associates and the balance, of $11.40, is trust money belonging to Ms Patamisi.
7. By letter to Mr Rallis dated 12 February 2004 from Leo Dimos & Associates and by letter dated 17 February 2006 from the Law Institute of Victoria ("LIV"), Mr Rallis was made aware that Mr Hutchins had not been paid his appearance fee for 8 April 2002 and that Leo Dimos & Associates had demanded payment of their costs and service fee. The Respondent attended to payment of Mr Hutchins' fee on 11 April 2006.
8. The second charge is in the following terms:

"In or about August 2002 [the Respondent] received trust moneys belonging to Leo Dimos & Associates (both in respect of costs and the service fee), Mr Hutchins of Counsel and Ms Patamisi (balance of costs and balance of service fee) in breach of section 178(1) of the 1996 Act and by banking those moneys in his personal account and refusing to return them (at all in the case of Leo Dimos & Associates and until 11 April 2006 in the case of Mr Hutchins) has contravened section 178 of the 1996 Act and the common law and by so doing engaged in wilful or reckless contravention of the 1996 Act and is guilty of misconduct pursuant to section 137(a)(i) of the 1996 Act and/or misconduct at common law."

1. Mr Rallis concedes that he has breached s 178(1) of the 1996 Act. Mr Rallis also admits to a charge of misconduct pursuant to s 137(a)(i) of the 1996 Act and to misconduct at common law.
2. The extent of Mr Rallis' misconduct is in dispute. Mr Rallis admits that he misappropriated part of the $6750. But he contends that it was lawful for him to retain some of that money (ie. $2161.50) because that was money payable by Ms Patamisi in respect of work done by Rallis Katsimandakos Lawyers between 1999 and 2001. We deal with this issue later.
3. On the basis of the admissions we find that Mr Rallis breached s 178 of the 1996 Act.
4. Section 178 is in the following terms:

(1) A legal practitioner (being a natural person) who does not hold a practising certificate authorising the receipt of trust money must not receive trust money.

1. We find Mr Rallis guilty of misconduct within the meaning of s 137(a)(i) of the 1996 Act and of misconduct at common law.

1. On the admitted facts we have found Mr Rallis guilty of two counts of misconduct within the meaning of s 137(a)(i) of the 1996 Act and two counts of misconduct at common law. The gravity of the misconduct was at issue in the proceedings and we propose to deal with those submissions in the course of determining the penalty to be imposed.
2. Section 160 of the 1996 Act provides that if the Tribunal finds a legal practitioner guilty of misconduct it may (relevantly in the context of this case) do one or more of the following:
   • make an order imposing a fine not exceeding $50,000;
   • refer the practitioner to the Supreme Court with or without a recommendation that the practitioner's name be struck off the roll of practitioners;
   • make an order suspending or cancelling the practitioner's practising certificate;
   • make an order specifying a period during which the practitioner may not apply for a practising certificate or for a practising certificate with particular conditions; and
   • make any other order the Tribunal thinks fit.
3. Section 159 sets out the penalties which may be imposed if the Tribunal finds a legal practitioner guilty of unsatisfactory conduct. These options are also available in circumstances where the Tribunal finds a legal practitioner guilty of misconduct (see s 160(i)(a)), and include:
   • impose a fine not exceeding $1000;
   • an order reprimanding the practitioner;
   • an order that the practitioner undertake a specified course of education; and
   • an order varying the conditions of the practitioner's practising certificate or imposing further conditions or restrictions on the certificate.
4. The Commissioner submits that the offences committed by Mr Rallis were serious. They were calculated, deliberate and involved misrepresentation and personal financial advantage from trust moneys. Accordingly an order is sought prohibiting Mr Rallis from applying for a practicing certificate for four years and being restricted from dealing with trust money for a further two years. The Commissioner also seeks the imposition of a fine of $6750, the payment of $2161.50 to Ms Patamisi and what the Commissioner describes as penalty interest payments to Leo Dimos & Associates and Ms Patamisi.
5. The Respondent contends that the orders sought are manifestly excessive and that an order preventing him from dealing with trust moneys for up to two years and a fine of up to $2000 would act as a significant deterrent, particularly when regard is had to the substantial costs order which is likely to be awarded. It is also submitted that Mr Rallis would undertake to attend appropriate training. The Respondent relies on the following mitigating factors:
   • the plea;
   • the 'age' of the offending and the delay in the proceeding coming before the Tribunal (particularly the delay from 18 April 2007 through to 29 September 2008);
   • the Respondent's behaviour/conduct and employment performance since the breaches;
   • health and psychiatric issues;
   • remorse;
   • the impact of any sanction on Mr Rallis and his family;
   • that ultimately no loss was suffered; and
   • extracurial punishment.
6. 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.
7. It is convenient to first deal with the gravity of the misconduct before turning to the matters advanced in mitigation.

1. Two basic propositions about the gravity of the misconduct are put on Mr Rallis' behalf:
   • Mr Rallis' failure to update his practising certificate was an oversight resulting from his limited or compromised capacity to address his administrative obligations at the time; and
   • Mr Rallis was entitled to believe he could bill and collect payment for some of the work he had done.
2. The first matter goes to the finding of unqualified practice. It is said that the evidence does not establish that Mr Rallis was attempting to take advantage of Ms Patamisi but rather his conduct was consistent with a desire to avoid disrupting his professional relationship with his client. It is submitted that Mr Rallis continued to represent Ms Patamisi in an appropriate and competent manner and were it not for the status of his practising certificate his dealings with her would have been wholly unremarkable.
3. The Respondent also points to the fact that the usual form of renewing practising certificates for the 2002 financial year was that employee solicitor renewals were part of a firm-based renewal package issued by the Law Institute of Victoria (the LIV). The date for the lodgement of practising certificate renewals in 2002 was no later than 30 April 2002, which was prior to any discussions regarding the Respondent's continuing employment with Leo Dimos & Associates.
4. Contrary to the submissions put on behalf of the practitioner we have concluded that at the time of the offending behaviour Mr Rallis was well aware that he had neither a practising certificate nor an appropriate trust account facility.
5. The unqualified practice with which we are concerned occurred in the period 30 June 2002 to 19 September 2002.
6. Mr Rallis most recently held a Principal Practising Certificate with authorisation to hold trust money for the period 11 February 1999 - 30 June 2001. By facsimile dated 30 July 2001 the practitioner was advised by the Professional Standards Division of the Law Institute of Victoria (LIV) that because he had failed to renew his Practising Certificate, contribute to the Fidelity Fund and Professional Indemnity Insurance or lodge an audit report for the period ending 31 October 2000, he must cease giving legal advice and receiving trust monies. That correspondence also referred the practitioner to s 314 of the Legal Practice Act, noting that the provision 'sets down severe penalties for unqualified practice'[2].
7. By letter dated 3 December 2001 Professional Standards informed Mr Rallis that the bank account of Rallis Lawyers needed to be audited and closed. A reminder letter, dated 12 March 2002, was subsequently sent[3].
8. By letter dated 15 April 2002 Professional Standards informed Mr Rallis that Victorian Lawyers RPA Ltd had complained that he had a number of outstanding audit reports and an open trust account.[4]
9. Mr Rallis responded to the correspondence from Professional Standards by letter dated 24 May 2002, in the following terms:

"I take this opportunity to apologise for not replying to your earlier correspondence. I assure you that I have not deliberately set out to ignore your correspondence however over the past 12 months my professional and personal circumstances hindered my dealing with the issues at hand in a more conclusive manner.

The complaint concerns my failure to date to lodge an audit report for the trust account operated by me during the time I was practising under my own name. Part of the problem was that in the transfer of documents and files between my then office and storage, several important documents and files that would have allowed me to comply with my audit obligations earlier were either lost or misplaced.

After some time I have managed to locate and/or replace the necessary correspondence and files and I will be in a position to lodge the appropriate report within the next 21 days.

As to my personal circumstances I recently lost my father after a short and unexpected illness, this tragic event and the grief involved not only affected my professional performance but my ability to deal with the issues raised by the complaint more expeditiously and effectively.

I am available to meet with you to elaborate on any issue that you may wish to raise with me.

In regards to any further correspondence relating to this matter, I request that it be sent to my residential address ..."[5]

1. On or about 16 August 2002 Mr Rallis lodged the following documents with the Victorian Lawyers RPA Ltd:
   • application for a practising certificate dated 15 August 2002;
   • statutory declaration for an Individual for a Practising Certificate under s 22, dated 16 August 2002; and
   • a cheque for a professional indemnity insurance premium of $572.[6]
2. By letter dated 2 September 2002 Professional Standards asked Mr Rallis to confirm that he had lodged the outstanding audit report. By 17 September 2002 Mr Rallis had still not lodged the audit reports and statutory declarations required under ss 184 and 185 of the 1996 Act and accordingly he was advised that his application for a practising certificate had been refused.[7]
3. Mr Rallis held an Employee Practising Certificate for the period 1 July 2001 - 30 June 2002. There was no reasonable basis for Mr Rallis to assume that Leo Dimos & Associates would make or had made an application for an Employee Practising Certificate for the period 1 July 2002 - 30 June 2003. We have reached this conclusion because:
   • Mr Rallis had made his own application for an Employee Practising Certificate for the previous period (ie. 1 July 2001 - 30 June 2002); and
   • Leo Dimos & Associates gave Mr Rallis notice of termination in May 2002.[8]
4. Contrary to the submissions put on behalf of Mr Rallis the evidence does not establish that the usual form of renewing employee practising certificates at that time was on a firm-wide basis. There is no such evidence in relation to the practice of Leo Dimos & Associates and the correspondence from the LIV which is relied upon is general in nature and simply provides the option of renewing employee practising certificates on a firm-wide basis. In our view there was no reasonable basis for Mr Rallis to believe that Leo Dimos & Associates had applied for a renewal of his practising certificate.
5. As to Mr Rallis' limited compromised capacity to address his administrative obligations at the relevant time we note the evident inconsistency between this proposition and the assertion that Mr Rallis continued to represent Ms Patamisi in an appropriate and competent manner. We deal with the evidence of Mr Rallis' mental health later.
6. We reject the proposition that Mr Rallis' failure to update his practising certificate was an oversight resulting from his limited or compromised capacity to address his administrative obligation at the time. We now turn to the proposition that Mr Rallis had an entitlement to part of the $6750.
7. It is contended that part of the $6750 - being the amount of $2161.50 - was money payable by Ms Patamisi in respect of work done by Rallis Katsimandakos Lawyers (RKL) and that it was lawful for Mr Rallis to deal with the money as he did. In support of this proposition the Respondent relies on the submissions made in the letter from his solicitors to the Legal Services Commissioner dated 7 April 2009 and the further written submissions of 29 May and 3 June 2009. We have considered all of this material.
8. The essence of the proposition put is that Mr Rallis is entitled to the payment of legal fees ($2000) and disbursements ($161.50) totalling $2161.50.
9. The $161.50 is said to relate to the payment of a filing fee on 15 February 2002. Mr Rallis was employed by Leo Dimos & Associates at the relevant time. It is submitted that Mr Rallis believes he paid the filing fee personally, but no receipt is produced in relation to the claimed disbursement.
10. The $2000 is an estimate, prepared by the Respondent's solicitors, of the work done by the firm RKL on the Patamisi file between May 1999 and May 2001. The methodology used to arrive at the estimated fees is set out in the letter to the Commissioner of 7 April 2009, in these terms:

"We have analysed the available material and used our knowledge of what would be involved in running the file for Ms Patamisi and sought to reconstruct an estimate of the work done by RKL between May 1999 and 21 May, 2001). In providing the estimate we have taken into account the following:

(a) the material on the RKL file held at your office

(b) The bill issued by Mr Rallis on 12 August 2002

(c) the rates in the costs letter sent by RKL to Ms Patamisi on 17 May 1999

(d) how long it takes to handle an intervention order proceeding

(e) allowed reasonable time for Mr Rallis who was the file operator to draw and engross various documents, attend on client by telephone, attend at the titles office to obtain a title, peruse relevant documents, attend on the other parties solicitor and attend in conference with the client and take detailed instructions on the property settlement (from the file and from instructions from client it appears two lengthy conferences with Patamisi took place on 15 July 1999 and 13 August 1999)

(f) our client's instructions that he paid both the issuing fee of $158.00 on 15 February 2002 and the title search fee (believed to be $3.50 on 10 June 1999 from his own pocket.

When taking all the above matters into consideration we estimate RKL performed 11 hours of legal work and 1 hour of clerical time. RKL's costs letter to Ms Patamisi disclosed a rate of $175.00 per hour for legal work and $80 per hour for clerical work. Thus the fees incurred by RKL for performing work between May 1999 and 21 May 2001 total $2025 (11 hours legal x $175 per hour + 1 hour clerical x $80 per hour) which we have rounded down to $2000.00."

1. There are a number of flaws in the approach adopted:
   • the basis for the estimate of 11 hours of legal work and 1 hour of clerical time is not disclosed and there is a lack of particularity about the nature of the legal work actually done;
   • the estimate is not supported by evidence from the person who undertook the task;
   • there is no evidence from Mr Rallis to the effect that the reconstructed estimate is reasonable having regard to the work performed by him at the time;
   • the $2000 estimate is not itemised or broken down in any way; and
   • Ms Patamisi has never been presented with an account for the sum now claimed.
2. Given these limitations we reject the proposition that Mr Rallis has any entitlement to the sum claimed.
3. We also note that Mr Rallis initially contended that he had an entitlement to a further sum (ie. $1917.37) which formed part of the $6750. This proposition was apparently put on the basis that this money was held to set off sums owed to Mr Rallis by Leo Dimos & Associates. Ultimately Mr Rallis resiled from this proposition and in the course of oral submissions conceded that he had no entitlement to this money. However the matter seems to have resurfaced in the subsequent written submissions put on Mr Rallis' behalf, in which it is submitted:

"The Respondent was ... entitled to consider it reasonable to retain the money related to work performed by him for Leo Dimos & Associates in circumstances where that firm owed an amount well in excess of that work."[9]

1. The basis for this submission is the contention that Mr Rallis had a right to set off that part of the $6750 which was owed to Leo Dimos & Associates against a shortfall in contributions made by Leo Dimos & Assocites to Mr Rallis' superannuation fund.
2. The proposition that it was 'reasonable' for Mr Rallis to retain this money is completely devoid of merit. In this context we note:
   • ➢ Leo Dimos & Associates paid the full amount owed to Mr Rallis for superannuation:
     • $491.85 paid to nominated fund on 24 June 2001.
     • $5498.62 paid to nominated fund on 24 June 2002 (this cheque was raised on 24 June 2002 but not presented, a new cheque raised and sent to the fund on 12 April 2006).

➢ Mr Rallis never gave notice to Leo Dimos & Associates that if he did not receive his superannuation payments it was his intention to set off the amount owed against payments made by clients to him for fees owing to Leo Dimos & Associates.

➢ During the course of oral argument Mr Rallis conceded that he had no entitlement to the part of the $6750 which was referrable to fees owed to Leo Dimos & Associates.

➢ The letter dated 12 February 2004 from Leo Dimos & Associates to Mr Rallis gave notice that the firm required payment of their fees. The firm was not paid its professional fees and disbursements until 7 April 2009, long after there was any basis for the set off argument (the superannuation debt being satisfied on 12 April 2006).

1. The Commissioner bears the onus of proof in respect of the allegations against Mr Rallis. The standard of proof required is proof on the balance of probabilities, or to put it another way the allegations must be established to the 'reasonable satisfaction' of the Tribunal[10]. The strength of evidence necessary to establish a fact on the balance of probabilities may vary according to the circumstances. As their Honours Mason CJ, Brennan, Deane and Gaudron JJ said in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd:

"The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish fact or facts on the balance of probabilities may vary according to the nature of what it is sought to provide. Thus authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary 'where so serious a matter as fraud is to be found'. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct."[11]

1. In the circumstances of this case we are conscious of the gravity of the consequences for the practitioner in the event that the allegations are established to the 'reasonable satisfaction' of the Tribunal. It follows that clear and cogent evidence is required before such satisfaction can be attained on the balance of probabilities.
2. Having regard to the clear and cogent evidence in this case we are satisfied that Mr Rallis misappropriated $6750. Misconduct of this nature is serious because it impacts on not just the client involved, whose trust has been betrayed, but on the profession as a whole. As Ormiston JA said in R v Coukoulis:

"Breaches by solicitors of duties of this kind to their clients ... brings the whole profession into disrepute and causes other clients to doubt whether their own, entirely respectable, solicitors might behave similarly."[12]

1. We now turn to the other matters advanced on behalf of the Respondent and before considering the general submissions on penalty. It is convenient to deal with the plea and remorse together.

1. The fact that Mr Rallis has admitted these charges is a significant mitigating factor in his favour. It is important that such admissions be encouraged.
2. Mr Rallis' admissions have resulted in a saving of public resources and have spared some of the relevant witnesses the inconvenience of attending the Tribunal to give evidence. It is appropriate that these matters be taken into account.
3. Remorse and insight into the relevant misconduct may also be mitigating factors. In this case the Respondent contends that he is genuinely remorseful for what he has done and such remorse is said to be evidenced by:

- the repayment of monies to Mr Hutchins of Counsel, Leo Dimos and Associates and Ms Patamisi;

- his discussion about his misconduct with Dr Lester Walton; and

- the disclosure of his misconduct to his work colleagues.

1. We have had regard to these matters but have concluded that Mr Rallis is not genuinely remorseful for his misconduct. It is evident from his actions that Mr Rallis has never viewed the circumstances in which he obtained the $6750 from Ms Patamisi's family law settlement as tainting those funds in his hands such that he should return the whole of those moneys to the rightful owners.
2. Mr Rallis has sought to retain the maximum benefit of the $6750 and has delayed the repayment of any of the money for as long as possible:
   • ➢ Mr Hutchins was not paid his brief fee of $750 until 11 April 2006, despite the fact that in a letter dated 12 February 2004 Leo Dimos & Associates gave Mr Rallis notice that Mr Hutchins had not been paid. Mr Rallis only paid Mr Hutchins after the LIV had given notice of its investigation in its letters of 11 November 2005 and 17 February 2006.
   • ➢ Leo Dimos & Associates were not paid their professional fees and disbursements until 7 April 2009. By letter dated 12 February 2004 Leo Dimos & Associates gave Mr Rallis notice that the firm required payment of their fees.
   • ➢ Ms Patamisi has only received $1921.13 of the $4078.87 that has been wrongfully retained by Mr Rallis out of Ms Patamisi's settlement money. Further, the payment of $1921.13 to Ms Patamisi was not made until 7 April 2009 and was accompanied by the following explanation as to payment:

"Despite having no evident legal obligation to do so (see below) our client has instructed us to pay Ms Patamisi $1921.13 for the work (including legal work) done from the time he left the employment of Leo Dimos. He does so primarily because it is evidently what the Legal Services Commissioner expects he should do to expiate his conduct. He also does so as a gesture of goodwill[13]."

1. This statement which accompanied the payment to Ms Patamisi makes plain that the payment was made to assist Mr Rallis in mitigating the penalty that he may receive in these proceedings, rather than as an acknowledgment of his wrongful conduct.
2. Mr Rallis accepts that it took too long to make these repayments. The explanations proffered for the delay are unconvincing. The fact that Mr Rallis may have 'put his head in the sand and hoped it would go away', is hardly a satisfactory explanation. Nor do the propositions that the calculations were difficult or that his decision making was compromised by depression provide a satisfactory explanation for the delay. On Dr Walton's evidence his depression lifted after he started work at Consumer Affairs Victoria in October 2002. The calculations were straight forward. Leo Dimos & Associates had told Mr Rallis what their fees were. He should have paid Leo Dimos & Associates and returned the balance to Ms Patamisi.
3. The Respondent also contends that it is clear from the report and oral evidence of Dr Lester Walton that the Respondent is remorseful for his conduct. Under cross examination Dr Walton said that Mr Rallis 'accepted he had been in error', that he was 'properly proceeded against' by the Legal Services Commissioner and made 'no attempt to excuse himself'.
4. In relation to remorse Dr Walton notes that Mr Rallis castigates himself for what he labels as 'stupidity' and said that he 'is quite markedly embarrassed, regretful and remorseful'.
5. But these comments need to be seen in the context of Dr Walton's subsequent opinion:

'Remorse in the usual sense does not apply, as not only has Mr Rallis not engaged in criminal behaviour but there is no identifiable meaningful victim as such. He thoroughly castigates himself for his misconduct and at present he is aghast that he has placed himself at risk of serious professional consequences.'[14]

1. Dr Walton's opinion is based on a false premise. Contrary to what is asserted in Dr Walton's report there are identifiable victims of Mr Rallis' misconduct and Ms Patamisi is still owed the sum of $2161.50.
2. We make no criticism of Dr Walton in this regard, he is reliant on what he has been told by Mr Rallis. But these omissions are relevant and limit the cogency of Dr Walton's evidence. It is also telling that in his discussions with Dr Walton, Mr Rallis did not mention his former client, Ms Patamisi, by name.
3. We are not persuaded that the statements made by Mr Rallis to Dr Walton establish genuine remorse. No doubt Mr Rallis regrets the circumstances which have brought him before the Tribunal but that regret relates to the risk of serious professional consequences, not genuine remorse.
4. We accept that Mr Rallis would have acquired some appreciation that what he did was wrong, simply as a consequence of his participation in these proceedings. But for the reasons given we are not persuaded that Mr Rallis has the requisite insight into his wrongdoing or that he is genuinely remorseful. We do not doubt that he regrets the impact these proceedings have had on his professional reputation and on his family, but such regret is not the same as insight or remorse.

1. Mr Rallis contends that the determination of this matter has been delayed as a consequence of the Applicant's inaction. In particular the Respondent refers to the delay from 18 April 2007 and until 29 September 2008.
2. The reference to 18 April 2007 arises because this is the date on which Mr Rallis' lawyers sent a letter to the Commissioner setting out a range of matters which the Commissioner was asked to take into account in deciding what action, if any, should be taken under s 151 of the 1996 Act (the Nicholson's letter). Section 151 deals with what happens after an investigation into a complaint is completed. Subsection 151(2) provides, relevantly, that an RPA must bring a charge to the Tribunal against the legal practitioner the subject of the investigation if satisfied that there is a reasonable likelihood that the Tribunal would find the practitioner guilty of misconduct.
3. The Respondent says that during the period of about 18 months from 18 April 2007 until 29 September 2008 neither he nor his solicitor heard from Professional Standards or the Applicant. It is submitted that this delay remains unexplained and inexplicable.
4. The Commissioner's written submissions of 13 May 2009 address the issue of delay and assert that the bulk of the delay in this matter has been caused by Mr Rallis raising unmeritorious arguments in his defence which have necessitated investigation and consideration by the Commissioner.
5. We accept that a number of the propositions advanced on Mr Rallis' behalf in the Nicholson's letter of 18 April 2007, lacked merit. We also accept that the matters raised would have necessitated investigation and consideration by the Commissioner. But while these matters could reasonably be expected to take some time, perhaps a period of up to six months, we are not persuaded that they adequately explain the delay of about 18 months between 18 April 2007 and 29 September 2008.
6. It follows that the Applicant has been responsible for a delay of 12 months in having these matters determined. The fact that the Respondent's actions may have contributed to an additional delay (ie. over and above this 12 months) is not to the point. The Respondent only relies on the delay occasioned by the Commissioner's inaction.
7. The 12-month delay attributable to the Commissioner is a mitigating factor[15] and we have taken it into account in determining an appropriate penalty.

1. Mr Rallis has been employed as a Principal Solicitor with Consumer Affairs Victoria (CAV) since October 2002. In that capacity he undertakes a wide range of legal duties covering written legal advice and advocacy work relating to the various statutes that CAV administers. The overall standard of Mr Rallis' work is high and he has been rated as satisfactory or superior in all assessments. There is no evidence that he has engaged in any misconduct as a legal practitioner during his employment with CAV.
2. The character references provided by his work colleagues[16] speak highly of Mr Rallis and of the contribution he has made to CAV.
3. These matters suggest that Mr Rallis' rehabilitation is well advanced, which is relevant to our determination of an appropriate penalty.

The impact of any sanction on Mr Rallis and his family

1. An order restricting Mr Rallis' capacity to apply for a practising certificate will necessarily limit his career opportunities, indeed that is the point of such an order.
2. But the order sought in respect of Mr Rallis' capacity to hold a practising certificate will not place his employment at CAV at risk. This is made clear in correspondence from Mr Stephen Devlin, General Counsel CAV, dated 27 April 2009:

"... there are no reasonable grounds to apprehend that Mr Rallis' employment is at risk in the event of an order specifying a period during which Mr Rallis may not apply for a practising certificate."[17]

1. We acknowledge that the outcome of these proceedings will have some adverse impact on Mr Rallis and his family and we have taken that fact into account.

1. A legal practitioner's mental condition may significantly reduce his moral culpability for the offending conduct, as distinct from his legal responsibility for it, such that denunciation is not a particularly relevant sentencing objective.
2. There may also be the need for 'sensible moderation' of general deterrence because an offender may not be an appropriate medium for making an example to others[18].
3. Dr Lester Walton, a consultant psychiatrist, assessed Mr Rallis on 26 February 2009. Dr Walton provided a report of his examination and gave evidence in the proceeding. In his report Dr Walton expressed the following opinion:

"1. In a context of feeling trapped in an unrewarding and demoralising work situation, as well as difficulties within his personal life, principally surrounding the deteriorating health and final death of his father, Mr Rallis succumbed to a depressive disorder. That diagnosis remains relevant currently.

It is not at all uncommon for there to be parallel substance abuse in a context of depression and that was a feature of Mr Rallis previously but is not currently.

1. It is well recognised that persons suffering from depression have difficulty motivating themselves towards necessary tasks, they experience difficulties prioritising issues and they may be indecisive. This emotional and intellectual compromise does not amount to a situation, as I see it, where Mr Rallis might be exculpated in relation to his professional misconduct but I do see his capacity to act consistently and responsibly as having been compromised by his depression.
2. It seems that prior to Mr Rallis engaging in a brief period of misconduct, he has worked previously, and he is working currently, seemingly as a successful employee solicitor and I would be surprised if he were tempted towards establishing his own practice again, presuming that he may have the opportunity to continue in practice, even at a later stage.
3. There is a history of Mr Rallis' mental health and the associated dermatological problems improving in parallel with his improved personal and employment circumstances. At present there has been a reversal of that progress, which is directly attributable to the outstanding proceedings. I would anticipate that once the matter is finalised then Mr Rallis' mental health ought to improve again. However, should that not be the case then he would become a candidate for active psychiatric treatment.
4. It is perhaps understandable that there might have been a degree of animosity between Mr Rallis and Mr Dimos but Mr Rallis does impress as being regretful and sorrowful about his misconduct. Remorse in the usual sense does not apply, as not only has Mr Rallis not engaged in criminal behaviour but there is no identifiable meaningful victim as such. He thoroughly castigates himself for his misconduct and at present he is aghast that he has placed himself at risk of serious professional consequences.
5. I am mindful that Mr Rallis has breached his professional obligations as a lawyer previously, which no doubt will be seen as relevant to the outcome in relation to the current matter but, speaking purely as a psychiatrist, it certainly would be in the best interests of Mr Rallis' mental health if he were able to continue to work in the fairly specialised area of practice where he is now located. That will enhance recovery from depression and his current type of work would seem to be relatively free from the type of obligations which have proved to be stumbling blocks for Mr Rallis in the past."[19]
6. A number of observations may be made about Dr Walton's evidence.
7. Dr Walton assessed Mr Rallis on one occasion and was not treating him at the time the misconduct occurred. While Dr Walton observes that at the time of examination Mr Rallis 'appeared clinically depressed' his assessment of Mr Rallis' mental health in 2002 is based on what Mr Rallis has told him. It is said that in mid 2001 Mr Rallis was confronted with difficulties in his personal life, his father was diagnosed with a serious illness and eventually died in October 2001. Mr Rallis became increasingly depressed and resorted to excessive alcohol consumption as a form of self medication.
8. But it is unclear how long Mr Rallis remained depressed. There is also a lack of clarity about the link between Mr Rallis' mental health and his misconduct.
9. As to the duration of his depression Dr Walton says:

"The situation in terms of Mr Rallis' personal difficulties, as well as his own health problems, ground on during 2002 until he finally resigned on 23 June 2002."

1. Two things may be said about this statement:
   • it suggests that Mr Rallis' mental health was not an issue after 23 June 2002 and on this basis would have had no impact on his offending; and
   • it appears that Mr Rallis was not entirely frank with Dr Walton at it is put that he resigned his employment, but the evidence is that his employment was terminated at the initiative of Leo Dimos & Associates.[20]
2. In the third paragraph of his opinion Dr Walton says that Mr Rallis' capacity to act consistently and responsibly was compromised by his depression. We accept that this would be so, but that evidence is somewhat vague about whether Mr Rallis was suffering from depression at the time of his offending.
3. Some clarification was provided during the course of Dr Walton's oral evidence. In effect Dr Walton said that Mr Rallis' depression had fluctuated over time. It had been present for a number of years, since 2001, with some amelioration after he started working at CAV. The illness had returned more recently as a consequence of these proceedings.
4. We accept that it is likely that Mr Rallis suffered from depression at the time of his misconduct. The extent and severity of his depression at that time is unknown. We accept that it would have had some impact on his capacity to act consistently and responsibly. Accordingly, to a limited extent, Mr Rallis' illness reduces his moral culpability for the offending.
5. The impact of the penalties which may be imposed on a practitioner with compromised mental health are also relevant.
6. But that is not a significant factor here. This is because the orders we propose to make will not jeopardise Mr Rallis' current employment and Dr Walton says:

"... it certainly would be in the best interests of Mr Rallis' mental health if he were able to continue to work in the fairly specialised area of practice where he is now located."

1. The Respondent contends that the presence of extra curial punishment is a significant factor in this case. It is submitted that the Tribunal's findings will be published and in his position as an advocate with CAV Mr Rallis regularly comes into contact with members of the legal professions. As a consequence it is said that his professional reputation will suffer.
2. The Tribunal can properly take into account any extra curial punishment a practitioner has suffered or will suffer in deciding what constitutes an appropriate penalty. But extra curial punishment refers to 'any serious loss or detriment' an offender has suffered or will suffer as a result of committing the offence, quite apart from any punishment imposed by the Tribunal.[21] We are not persuaded that extra curial punishment is a significant factor in this case.

1. The Respondent contends that the fact that no party has suffered loss as a consequence of his misconduct is a relevant consideration.
2. This contention is based on the proposition that Mr Rallis was entitled to retain $2161.50 of the $6750. We have rejected that proposition and accordingly it cannot be said that no-one has suffered loss as a result of the Respondent's misconduct. Nor can it be said that Leo Dimos & Associates and Mr Hutchins have not suffered a loss. They were denied the payment of money owing to them for a considerable period of time.

1. The Tribunal's powers to discipline legal practitioners for misconduct are primarily protective[22]. But its disciplinary orders are also punitive, 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."[23]

1. 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.
2. In sentencing generally it is necessary to balance just punishment; specific and general deterrence; denunciation; the protection of the community; and rehabilitation.[24]
3. 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.
4. Related to general deterrence is the proposition that in deciding on appropriate penalty the Tribunal may have regard to the effect which its order will have on the understanding, in the profession and amongst the public, of the standard of behaviour required of solicitors.[25]
5. General deterrence is a significant consideration in the circumstances of this case. Practitioners must clearly understand and adhere to their obligations in respect of trust money and ensure that they possess a practising certificate before engaging in legal practice.
6. Specific deterrence is also relevant having regard to Mr Rallis' history of disciplinary hearings and the lack of genuine remorse and insight.
7. Mr Rallis has had a number of previous disciplinary findings against him.
8. In October 1990 the Registrar of the Solicitor's Board found Mr Rallis guilty of misconduct within the meaning of s 2A(a) of the Legal Profession Act 1958 in that he recklessly contravened s 81A(1) of that act. A fine of $300 was imposed.
9. In August 2003 Mr Rallis pleaded guilty to four instances of misconduct associated with his failure to lodge audit reports and statutory declarations relating to his receipt of trust money. He was fined $600 and ordered to pay costs of $2300.
10. In September 2004 the Legal Profession Tribunal found the practitioner guilty of misconduct within the meaning of s 137(1)(i) of the 1996 Act on the basis of his wilful failure to comply with an order of the Tribunal. Mr Rallis was reprimanded and an order made that he could not apply for a practising certificate until he had lodged audit reports and statutory declarations in relation to trust money held by him during the period from 1 April 1999 to 17 August 2001.
11. It is relevant to note that these findings relate to the practitioner's statutory obligations in respect of trust money. They support the imposition of a penalty in aid of specific deterrence.
12. In determining an appropriate penalty in the circumstances of this case we have taken into account all of the matters canvassed earlier. We have decided to make an order precluding the practitioner from applying for a practising certificate before 31 December 2010 and precluding him from applying for a practising certificate which would authorise him to receive trust money before 1 July 2014. We will also order that he pay the sum of $2161.50 to Ms Patamisi.
13. We are not persuaded that the other orders proposed by the Commissioner are warranted.
14. In particular we reject the proposition that a fine of at least $6750 would be appropriate in the circumstances. This proposition was put on the basis that this is the sum by which Mr Rallis sought to be financially advantaged by wrongfully obtaining and keeping the $6750 deducted from Ms Patamisi's settlement money. The Commissioner submits that a fine of less than $6750 would not be a satisfactory financial disincentive against Mr Rallis' wrongdoing because it is less than the amount by which he stood to benefit if he had been prosecuted.
15. We do not find these arguments persuasive.
16. The determination of an appropriate penalty does not lend itself to mathematical calculation.
17. In this case we are satisfied that the penalty imposed adequately addresses specific and general deterrence and is for the protection of the public.
18. We note that the Commissioner sought an order prohibiting Mr Rallis from applying for a practising certificate for 4 years and being restricted from dealing with trust money for a further two years.
19. In our view two components in the order proposed by the Commissioner were unbalanced.
20. Having regard to the nature of the misconduct and the prior disciplinary findings we accept that Mr Rallis should not be authorised to deal with trust money for a considerable period. A period of five years is appropriate. But an order preventing him from applying for a restricted practising certificate for four years (as proposed by the Commissioner), is excessive. An 18-month period is appropriate.
21. This is consistent with the approach outlined by his Honour Maxwell P in Quinn in which it was said that the Tribunal would be expected to 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 President held that the latter sanction required separate consideration and evaluation 'because of the long term protection which the undertaking offered the public'.[26]
22. The Respondent resisted any order limiting his capacity to apply for a restricted practising certificate and submitted that a fine of up to $2000 together with some additional CPD obligations and a two year limitation on his capacity to deal with trust money, would be sufficient. We reject this submission.
23. In the past Mr Rallis has been fined for breaching his obligations in relation to trust money. Those fines did not deter him from engaging in the misconduct which brings him before the Tribunal on this occasion. A more punitive sanction is warranted in order to protect the public.
24. In support of the proposition that a fine of up to $2000 would be an appropriate penalty the Respondent contends that such an outcome would have some parity with the result in the recent case of Legal Services Commissioner v Morgan[27] (Morgan).
25. In Morgan's case the practitioner was found guilty of four instances of professional misconduct and a fine of $1000 was imposed in respect of each finding. But, as even a cursory examination of the decision in Morgan would make clear, the circumstances in that case are entirely different from the gravity of the misconduct in these proceedings. In Morgan the misconduct related to the practitioner's failure to comply with the Commissioner's requests to produce documents and an explanation of his conduct in relation to a disciplinary complaint. The circumstances in the matter presently before us are quite different and manifestly more serious.
26. Each case necessarily turns on its own facts and the Tribunal must determine an appropriate penalty having regard to all of the relevant circumstances. In this matter the misconduct is of a serious nature and we are troubled by the lack of genuine remorse and Mr Rallis' past history of disciplinary findings. We have balanced these considerations against the range of mitigating factors including his reduced moral culpability due to illness; Mr Rallis' subsequent good behaviour; and the 12-month delay occasioned by the Commissioner's inaction. We are satisfied that the penalty we have decided to impose is appropriate in the circumstances of this case. We now turn to the question of costs.
27. Section 162 of the 1996 Act provides that costs are in the discretion of the Tribunal but the Tribunal must not make an order for costs against 'an RPA, the Board or the Legal Ombudsman', unless satisfied that special circumstances make it appropriate to do so.
28. Mr Rallis did not resist the making of a costs order in favour of the Commissioner but contends that the quantum of costs claimed is excessive and disproportionate to the nature of the proceeding.
29. The Commissioner seeks an order for costs in the sum of $30,745. An itemised bill is attached to the Commissioner's written submissions of 13 May 2009. The Respondent challenges a number of the claimed costs at paragraphs 43-44 of his written submissions of 29 May 2009 and asks that the Tribunal fix a reasonable figure for costs and allow a substantial stay for the payment of those costs in view of the Respondent's financial circumstances. We have had regard to these submissions and to the Commissioner's supplementary submission dated 5 June 2009.
30. We propose to make some general observations about the matters raised and then fix a figure which we consider appropriate in the circumstances.
31. In relation to the particular matters raised we would make the following observations:

(i) We agree with the Respondent that counsel's fee should be fixed at County Court Scale D rather than counsel's daily appearance fee of $2,200 per day.

(ii) No further appearance is needed before the Tribunal to hear reasons for decision as the parties will be notified of the decision by other means.

(iii) We reject the Respondent's assertion that the Applicant adopted an inflexible attitude in the presentation and conduct of its case and did not explore or encourage opportunities to resolve the matter in a constructive and cost effective way. This assertion is not particularised or supported in any way. Contrary to the Respondent's assertion it seems to us that a proportion of the costs incurred directly relate to the manner in which the Respondent's representatives chose to conduct the proceeding. In a number of respects the arguments advanced on behalf of the Respondent changed over time and some were ultimately abandoned.

(iv) We accept that some of the sums claimed appear excessive (ie counsel's time in relation to the drafting of the witness statements and the sum claimed for the drafting of changes made to the agreed statement of facts).

(v) We reject the proposition that the desire of the Applicant to have the matter heard before a Full Tribunal resulted in additional costs. The 1996 Act provides that only a Full Tribunal may make an order specifying a period during which the practitioner may not apply for a practising certificate or for a practising certificate with particular conditions. In view of the order we have made it was entirely appropriate that this matter be heard by a full Tribunal.

1. In all the circumstances we propose to award costs to the Applicant in the sum of $24,500. Given the Respondent's financial circumstances, our order will make provision for time to pay.

[1] At the settlement conference there had been some discussion about Ms Patamisi's legal costs but no agreement on quantum.

[2] See attachment 2 to Exhibit A2, the Witness Statement of James Leach

[3] Ibid Exhibit A2 at Attachments 4 and 5

[4] Ibid Exhibit A1 at paragraph 7 and Exhibit A2 at Attachment 6

[6] Exhibit A2 at paragraph 9 and Attachment 8

[8] See Exhibit A3, Witness Statement of Leo Dimos, at paragraphs 4 and 5

[9] Paragraph 4(d) of the Respondent's written submissions of 29 May 2009.

[10] Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 362 per Dixon J

[11] [1992] HCA 66; (1992) 110 ALR 449 at 449-450, footnotes omitted

[12] [2003] VSCA 22 at [41]

[13] Refer Nicholsons letter dated 7 April 2009 to the Legal Services Commissioner which is exhibit R2 ("Nicholsons letter of 7 April 2009").

[14] Exhibit R3 at paragraph 5 of the Opinion

[15] R v Kane [1974] VicRp 90; [1974] VR 759 at 767; see generally Fox, RG, 'Criminal Delay as Abuse of Process' [1990] MonashULawRw 4; (1990) 16 Monash University Law Review 64

[18] R v Yaldiz [1998] 2 VR 376 at 381 per Batt JA (with whom Winneke ACJ and Hampel AJA agreed; cited with approval in R v Verdins [2007] VSCA 102 (23 May 2007) at [17]

[20] See Leo Dimos' witness statement Exhibit A3 at paragraph 4 where he says that Mr Rallis was given notice of termination in May 2002.

[21] R v Einfeld [2009] NSWSC 119 at [154]

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

[23] [2007] VSCA 122 at [30]

[24] 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; Sentencing Act 1991 s 5

[25] See Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 441-446

[26] [2007] VSCA 122 at [33]

[27] [2009] VCAT 100 (3 February 2009)