(1) The Respondent, David Anthony Perkins, is found guilty of misconduct as defined in s.137 of the Legal Practice Act 1996, in that, being a legal practitioner, in the course of engaging in legal practice, he acted in reckless contravention of s.178 of the Act.

1 This matter has already been the subject of a number of rulings. The most recent of these was that delivered on 5th April last, when we ruled that there was a prima facie case made out by The Victorian Bar Inc. ("the Bar") of sufficient strength to defeat any submission of the "no case to answer" type, such having been argued by the legal practitioner, David Anthony Perkins ("Perkins"). Following that ruling, Perkins gave evidence and was cross-examined. He called no other witness. Both Mr Pitt of counsel, on behalf of the Bar, and Perkins, who represented himself, then made final submissions. After discussing the factual background of the matter and briefly summarising the cases as advanced on behalf of the Bar and Perkins, we shall deliver our ruling as to whether the charge brought by the Bar against Perkins has been made out.

2 The charge against Perkins brought by the Bar is pursuant to s.151(2) of the Legal Practice Act 1996 ("the Act"). In essence, it is based upon misconduct as defined in s.137 of the Act and particularly as defined in limb (a)(i) of that definition. The Bar is alleging that Perkins, being a legal practitioner within the meaning of the Act, acted in wilful or reckless contravention of the Act. The section of the Act of which contravention is specifically alleged is s.178(1), which provides as follows:-

"A legal practitioner (other than an incorporated practitioner) who does not hold a practising certificate authorising the receipt of trust money must not receive trust money."

3 "Trust money", as defined in s.3 of the Act, includes "money given or paid to ... a legal practitioner ... on account of legal costs in advance of legal services to be provided in the course of legal practice in Victoria".

4 It is alleged that Perkins, being a legal practitioner, entered into an agreement ("the agreement") to provide legal services to one David Anderson ("Anderson"). It is alleged that, pursuant to the agreement, Anderson paid to Perkins, in February and March 2003, sums totalling $50,000.00 ("the payment"), all or part of which was a payment paid in advance of legal services to be provided by Perkins. The legal services provided, and to be provided, by Perkins related to Supreme Court proceedings between Anderson and a number of defendants. It is then alleged that, at the time of receiving the payment, Perkins was not the holder of a practising certificate authorising the receipt of trust money and that, as soon as practicable after receiving the payment, which was an advance payment, he did not cause the money to be paid into a trust account or give it to an authorised legal practitioner or to an approved clerk.

5 Against this background of the charge which has been laid and the provisions upon which reliance is placed, we make the following findings of fact. Many of these could be described as being, in essence, non-controversial findings.

(i) Perkins is a legal practitioner within the meaning of the Act.

(ii) During the relevant year, namely 2002-03, Perkins did not hold a practising certificate authorising the receipt of trust money.

(iii) Perkins had provided legal services to Anderson for some years prior to the payment. The provision of these services dates back to March, 1998, and relates to the proceeding the subject of this charge.

(iv) As shall be discussed, Perkins ultimately prepared detailed accounts or tax invoices in relation to legal services provided by him to Anderson. One of these, Exhibit "E", was prepared in September, 2004. It is in two parts. Part 1 is headed "1998 through December 2002", and details of items of costs are set out thereunder. The total amount due is shown as $29,075.00. Despite some confusion that may have arisen in the mind of Anderson, we find that the provision of these services, which, according to Perkins' itemised invoice, ceased on 31st May 2000, are not central to the charge which is before us. They are only of interest by way of background, and by way of eliminating that amount and those services as being of immediate relevance.

(v) In late 2002, or, more probably, early 2003, Perkins entered into an agreement with Anderson pursuant to which he was to provide further services to Anderson in respect of Anderson's Supreme Court litigation against three defendants. The litigation was in the nature of alleged professional negligence by legal firms or advisors who had been retained by Anderson. Pursuant to this agreement, Anderson was to pay to Perkins the sum of $50,000.00.

(vi) Anderson (or his wife) paid $50,000.00 to Perkins. In February or March of 2003, $2,500.00 was paid directly to Perkins, and this seems to have been used immediately for payment of a fine which had been imposed on Perkins by this Tribunal in respect of a contempt matter. The balance of $47,500.00 was paid directly into Perkins' account with Bendigo Bank Limited in two instalments. $5,000.00 was paid on 5th March 2003 and $42,500.00 on 20th March 2003. Details of these payments are set out in Exhibit "H", which includes a breakdown or detailed account of work done by Perkins for Anderson, and which is headed "Part 2: January 2003 through August 2003", and to which is attached an accompanying letter, apparently directed to Anderson.

(vii) Perkins provided legal services to Anderson from approximately 6th January 2003 through to the payment of the last and substantial instalment on 20th March 2003. Details of some of the services provided by Perkins during this time are set out in the "breakdown" or account referred to in (vi) above, although many of the services are described in general terms and without specific dates.

(viii) The original trial date for Anderson's litigation in the Supreme Court was 17th March 2003, which trial date was vacated.

(ix) Perkins continued to provide legal services to Anderson after 20th March 2003. This is apparent from Perkins' "breakdown" or account which, for example, includes an attendance and conference in mid-May 2003. That this provision of services occurred is also apparent from Perkins' oral evidence. He also referred to taking work relating to Anderson's case with him to England in April, 2003, where he went for some three weeks. He gave evidence of doing work on Anderson's case in England at that time.

(x) Perkins last provided legal services to Anderson in mid-May, 2003. Anderson terminated the agreement with Perkins as at that time, and Perkins provided no further legal services to him.

(xi) Subsequently, Anderson sought from Perkins a bill of costs in respect of the $50,000.00 that had been paid. We gather that this was sought so that certain requirements concerning costs in relation to Anderson's litigation could be satisfied. The requesting of this bill of costs seems to have commenced in approximately December, 2003 and certainly such a request was continuing as at June, 2004. On 1st July of that year, Anderson complained to the Bar, and completed a Complaint Form (Exhibit "A"). Essentially, his complaint was, that for at least six months, Perkins had failed to provide him with a bill of costs which he, Anderson, needed in order to finalise details of his litigation.

(xii) After further correspondence with Anderson, the Bar referred the complaint and copy documents to Perkins. After some further correspondence, Perkins ultimately provided a detailed tax invoice to the Bar on 15th February 2005 (Exhibit "H").

6 The case advanced on behalf of the Bar by Mr Pitt could be summarised as follows.

7 No matter how the payments made by Anderson to Perkins are described, it is clear that the payments made in February and March 2003 were made in advance of at least some services to be provided. The heading on Exhibit "H" - the detailed tax invoice - shows that the work to which the payment relates was work to be carried out from January 2003 to August 2003, although Perkins states that he did no work for Anderson after mid-May 2003. It is equally clear from Exhibit "E" - the tax invoice in two parts - that the payment of $50,000.00, which appears under the heading "January 2003 through August 2003", was viewed by Perkins as a retainer to prepare Anderson's case and to run it at trial, at the rate of $250.00 per hour and $2,500.00 per day. That document states that, after the payment of $50,000.00 was received by the payment of that amount into Perkins' account with Bendigo Bank Ltd, the amount owing pursuant to the retainer was "nil". Perkins' own evidence supports the contention that the payment represented a payment of legal costs for work already done and work yet to be done.

8 Further, Exhibit "E", which was prepared by Perkins, states:-

"The retainer was on the basis that you would pay me $50,000.00 and that any further payment would be dependent upon you succeeding at trial. Payment of $50,000.00 was received by me in March 2003 by your paying that sum into my account with Bendigo Bank Ltd."

9 Whatever description be given to the payment, and whether or not it be described as a retainer, it was, by definition, trust money because it was given or paid "on account of legal costs in advance of legal services to be provided". Section 178 of the Act prohibits a legal practitioner who is not authorised to receive trust money from receiving it. If a barrister receives trust money, it must be paid to a clerk, or, in the absence of a clerk, to another person who is authorised to receive trust money. At the relevant time, Perkins was not authorised to receive trust money. By receiving trust money into his personal bank account, he was in breach of s.178(1) of the Act.

10 Perkins has asserted throughout the hearing that the $50,000.00 was not payment for the work that he had done prior to 2003. According to Exhibit "E", the amount owing for that work was $29,075.00. It is difficult to imagine why Anderson would pay $50,000.00 without intending it to extinguish past debt and to cover, even partly, future services. $50,000.00 is a very large amount to pay as a retainer in the sense in which that word is normally used by the Bar. The $50,000.00 is over and above any amount that was to be charged at the end of the trial should Anderson be successful. It is difficult to understand how the $50,000.00, paid in 2003, could have been a "retainer" in the traditional sense, given that Perkins had already been involved in Anderson's case, having drafted his Statement of Claim and having been involved in interlocutory steps since 1998. Had another party involved in the litigation attempted to retain him, Perkins would have been in an obvious position of conflict. In short, the payment of $50,000.00 bears none of the hallmarks of a traditional retainer, and appears to have been a payment associated with a "direct access" brief in respect of work which had been done and work which was to be done.

11 This being a disciplinary case, the standard of proof is proof on the balance of probabilities. However, the strength of the evidence necessary to establish proof on the balance of probabilities may vary according to the nature of what the applicant has sought to prove. In accordance with Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, the Tribunal must reach a state of reasonable satisfaction that the evidence has established the necessary ingredients of the charge, and "reasonable satisfaction" is a standard which rises as the civil issue becomes more serious in its nature and its consequences.

12 As the unqualified receipt of trust money is a very serious offence under the Act, the standard of proof is high. However, it is submitted that the necessary ingredients have been proved, and that the standard has been reached and satisfied.

13 It is more difficult to summarise the case advanced by Perkins, as it was somewhat wide ranging, but we shall attempt to do so.

14 The professional relationship between Anderson and Perkins went back some years. Perkins had done an enormous amount of work for Anderson and had "busted a gut" in Anderson's interests and in pursuing Anderson's case for professional negligence. Anderson was not satisfied with the efforts of barristers previously engaged.

15 The payment was a retainer. By accepting it, Perkins committed himself to the preparation and presentation of Anderson's case. If Anderson succeeded, Perkins could charge further amounts. If Anderson did not succeed at trial, no further fee would be payable. As at the time of the payment, Perkins had already done a very large amount of work on the case. He believed that it was necessary to prepare such things as very substantial chronologies. It had not been established by the Bar that the payment was in respect of legal costs in advance of legal services to be provided.

16 The Bar failed to call crucial witnesses, and particularly Anderson. No satisfactory explanation was given as to this failure. That Anderson is suffering from some form of mental illness is an assertion by him with no proof to support it. The absence of Anderson deprived Perkins of the opportunity to cross-examine him concerning the arrangement which existed between the two. Similarly, other witnesses, such as Mrs Anderson, who may have been able to give helpful evidence, were not called. These failures represent unfairness on the part of the Bar as a prosecuting agency as well as leaving the evidence in an inadequate and unsatisfactory state.

17 The problem is one of characterisation of the payment. Perkins accepted it as a retainer. There was no discussion of it being trust money or being paid into a trust account. Anderson could not have thought that the money was going into a trust account. The only bank account which Perkins had was his account with Bendigo Bank Ltd.

18 The fee paid was a retainer fee, and it was neither unreasonable or dishonest to take such a payment. Perkins gave substantial benefits by way of provision of legal services to Anderson. There was nothing unethical or improper in the arrangement. Perkins did not consider it a breach of trust. He did not characterise the money received as trust money, and it was not intended that it so be. It is clear that Anderson, from some source, has been recompensed in respect of the payment. No evidence was called by the Bar in relation to this.

19 A high standard of proof is required, and the Bar has not discharged that burden of proof. What was done by Perkins was not wilful, careless or reckless. He gave evidence to us as to his state of mind, which is important. It is a question of characterisation of the payment, and how he characterised it, which was as a retainer fee rather than as the payment of money in advance of legal services to be provided or trust money.

20 We agree that, given the serious nature of the issue to be determined, the state of reasonable satisfaction which we must achieve in order to find the charge proven is one that requires a high standard of proof. We note that, pursuant to s.178(1) of the Act, if the matter were being pursued as what could be described as a criminal charge, the penalty is imprisonment for 2 years. That is some gauge as to how seriously the legislature views the issue. However, as stated, the charge brought against Perkins is one of misconduct on the basis of wilful or reckless contravention of the Act namely, of s.178.

21 We are satisfied that the Bar has discharged the burden of proof assumed by it, and we find the charge proven. We have arrived at that conclusion for a number of reasons which we shall now set out. They are not listed in order of importance.

(i) At the relevant time, Perkins was a legal practitioner within the meaning of Act.

(ii) He did not possess a practising certificate which authorised him to receive trust money.

(iii) In February 2003, $2,500.00 was paid directly to Perkins by Anderson. In March 2003, $47,500.00 was paid, in two instalments, by Anderson into Perkins' bank account with Bendigo Bank Ltd. It was not paid into a trust account.

(iv) At least part of the payment was given or paid to Perkins on account of legal costs in advance of legal services to be provided. This is clear from the documentary material which has been tendered and from Perkins' own evidence. In particular, we refer to the following:-

(a) The relevant part of Exhibit "E" reads as follows:-

I was retained to prepare your case for trial and run it at trial at the rate of $250.00 per hour and $2,500.00 per day. The retainer was on the basis that you would pay me $50,000.00 and that any further payment would be dependent upon you succeeding at trial.

Payment of $50,000.00 was received by me in March 2003 by your paying that sum into my account with Bendigo Bank Ltd.

This follows Part 1 of the tax invoice which itemises amounts payable for work done between March 1998 and 31st May 2000, which amounts total $29,075.00. It is quite clear that the payment was intended by Perkins to be in respect of work other than that done between March 1998 and 31st May 2000. It is clear that at least part of the payment was intended to be in respect of legal work which had not been done as at the date of the payment. We accept that part of it related to the preparation of the case for trial and the running of it at trial. It is also to be remembered that the final and substantial instalment of $42,500.00 was, according to Perkins and as set out in Exhibit "H", paid on 20th March 2003. The original trial date of 17th March 2003 had already been vacated.

(b) Exhibit "H", the detailed tax invoice and attachments, demonstrates that Perkins considered that some legal work was done after the payment. Whilst it is not clear when many of the items of work were performed, these being described in a very general way, it is clear that some legal service was provided in May, 2003 and that this formed part of the itemised tax invoice prepared in respect of the payment. In other words, Perkins considered that the payment covered and included a legal service provided some 2 months after the payment was made. This is consistent with Perkins' own oral evidence, which was that the last time he provided legal services to Anderson was in mid-May, 2003.

(c) Perkins gave evidence that he took with him to England, in April 2003, material relating to Anderson's case and its preparation, and did some work in this regard whilst there. Of course, this is also after the date of the payment.

(d) Perkins gave evidence that he had done almost $50,000.00 worth of work on Anderson's case in January, February, March and April of 2003. He stated that it would have been only a couple of thousand dollars short of $50,000.00. Given the date of the payment, that is again indicative of work being done after the payment. It is also indicative of the fact that, as at the date of the payment, $50,000.00 worth of work had not been done.

(e) It is to be remembered that there is no evidence, or any suggestion, of any tax invoice or account being rendered by Perkins to Anderson in respect of work done prior to the time of the payment, followed by a later invoice in respect of work subsequently done. As is apparent from Exhibit "H", the payment was intended to be a "one-off" payment (albeit ultimately in three instalments) covering work that had been done and work that was to be done.

(f) Perkins gave evidence that, when requesting of Anderson the payment, it was a payment which would bind him (Perkins) to carry on the case and it established an obligation upon him to run it to judgment. He stated that the payment bound him to do a separate set of things - that is, separate from the work previously performed by him for Anderson. This again indicates that the payment included an amount paid or given in advance of legal services to be provided.

(g) We do not accept Perkins' argument that the payment was a "retainer", or that it should be characterised as such so as to remove it in some way from the concept of trust money as defined, and even if part of the payment covered services not yet provided. It is certainly not a "retainer" in the sense traditionally used at the Bar. Such a "retainer" is normally constituted by a back sheet delivered by a solicitor to a barrister, usually marked at a modest fee, and intended to secure the services of that barrister on behalf of a particular client. The intended effect is that the barrister will not appear against that client. The fee attached to it is not in respect of, or off set against, future legal services to be provided by the barrister. The present situation is quite different. On behalf of Anderson, Perkins had long been involved in the matter. As submitted by Mr Pitt, he could not then accept a brief against Anderson in the litigation because of the obvious conflict situation which would arise. In any event, there is no suggestion that the payment was made in order to ensure that Perkins did not appear in the matter against Anderson. There is no suggestion that it was designed to ensure that Perkins abstained from involvement in the matter. The direct opposite is the truth. By reason of the payment, Perkins was to remain in the matter, continue to do work in relation to it, and, if necessary, run the matter to judgment. Therefore, it was a payment on account of legal costs in advance of legal services to be provided, and falls within the definition of "trust money" contained in s.3 of the Act. The Act requires that such payment be paid into a trust account or given to an authorised or approved person. That did not happen.

(h) We might add that we have been able to arrive at the conclusion that part of the payment was given or paid to Perkins on account of legal costs in advance of legal services to be provided on the basis of Perkins' evidence and of documents prepared by him and placed in evidence. We have not needed to turn to or rely upon any correspondence or material provided to the Bar by Anderson or any other witness. Further, we do not regard the absence of testimony by such witnesses as causing some failure on the part of the Bar to make out its case in relation to the nature of the payment or, indeed, in any other way.

(v) An adjunct of Perkins "characterisation" argument, and obviously an important factor to be considered, is that of Perkins' state of mind at the relevant time. In order for the contravention of s.178 of the Act to constitute misconduct as defined in s.137, the contravention must be wilful or reckless. There is no argument but that it occurred in the course of engaging in legal practice.

(vi) We are not satisfied that the conduct engaged in by Perkins represents wilful contravention of the Act. The meaning of the words "wilful or reckless" in the context of misconduct by a solicitor received careful attention from J.D. Phillips J in Zaitman v Law Institute of Victoria (delivered 9 December 1994). The legislation there under consideration was the Legal Profession Practice Act 1958, but the consideration given by His Honour to the meaning of those words, as used in s.2A of that Act, is applicable to a consideration of the meaning of the words "wilful or reckless" as used in the definition of "misconduct" contained in s.137 of the Act now under consideration. In Zaitman, His Honour pointed out that the words "wilful" and "reckless" are both used, and some meaning must be imported to each of them. In relation to the word "wilful" he stated:-

"... the word "wilful" ... should surely be taken to make it an offence for a solicitor, who knows that it is a contravention of the Act (or the rules or regulations, as the case may be) for him to do or to fail to do some particular thing, intentionally to do that thing or fail or omit to do it."

(vii) In the present case, there is no evidence which establishes that, at the relevant time, Perkins knew that what was occurring was a contravention of the Act, but intentionally proceeded to do that thing (permit, or organise, for the money to be paid otherwise than into a trust account), or that he intentionally omitted doing what had to be done (paying the money into a trust account or giving it to an authorised or approved person). We accept that he was quite aware of, and indeed organised, requested, or demanded, what occurred. However, as was said in Zaitman, it is the contravention itself that must be wilful, and not the conduct. Thus, whilst we find that Perkins' conduct was deliberate and intentional, the evidence does not establish that his contravention of the Act was deliberate and intentional. Accordingly, we are not satisfied that any misconduct was constituted by the wilful contravention of s.178 of the Act.

(viii) We are satisfied that his contravention was reckless, and that the charge of misconduct is made out accordingly.

In Zaitman, J.D. Phillips J stated the following in relation to the meaning of the word "reckless":-

"On the other hand, the word "reckless" should be taken as requiring no more than that the solicitor be shown to have acted, not in the knowledge just described, but with reckless indifference, not caring whether what he does, or fails or omits to do (as the case may be) is a contravention of the Act, the rules or the regulations. The solicitor must, I think, have appreciated the possibility that his conduct (whether it be act or omission) might amount to a breach of the Act, the rules or the regulations ..."

It is hard to believe that there would be any legal practitioner, however newly admitted, who was not conscious, at least in a general way, of the importance of trust accounts, the significance attached to trust money, and the fact that there is, and basically always has been, a keen regulatory interest and statutory provisions concerning such things. It is hard to believe that, for any legal practitioner, however recently admitted, some alarm bells would not ring in a situation where money on account of costs, particularly in relation to work which has not yet been performed, is handed over by a client or paid directly into the practitioner's private bank account. Perkins is not newly admitted. He has been a legal practitioner for decades. It strains the bounds of credibility that, as an experienced legal practitioner, he did not appreciate that there was a risk that having a client pay money directly into his private bank account, where at least part of such money was for work not yet done, might be a contravention of the Act. We do not accept this. In our opinion, Perkins, being aware of the possibility that what he was doing or failing to do might be a contravention of the Act, then proceeded with reckless indifference as to whether it was or was not such a contravention.

Furthermore, as stated in Zaitman, there is a professional duty cast upon practitioners to keep abreast of the rules, at the very least in a general way. It is not desirable to put "a premium on ignorance", to use the terminology employed by J.D. Phillips J in Zaitman.

(ix) Needless to say, the approach adopted in Zaitman has been followed over the years by the Legal Profession Tribunal. One example of this, and a case involving s.178 of the Act, is Law Institute of Victoria Limited v Stapleton [2005] VLPT 11. Indeed, in addition to following the approach employed in Zaitman in relation to the word "reckless", the decision in Stapleton contains a very useful and pithy summary of the requirements of s.178. It is as follows:-

"There are two fundamental requirements relating to the conduct of trust accounts that are relevant in matters of this kind. The first is that money received from a client for work yet to be done is trust money. The second is that trust money deposited into a trust account must not be applied to the practitioner's own account as costs until a bill of costs, or a statement of account, or a tax invoice or an appropriate statement of some other kind is delivered to the client."

(x) Of course, insofar as the second requirement there referred to is concerned, the facts in the present case are different, but the principle can be seen.

In Stapleton, the Tribunal found that the legal practitioner received trust monies when he did not hold a practising certificate authorising him to receive trust monies, and that the monies were paid for work yet to be done, or for work only partly completed, and were deposited into an office account. In relation to the legal practitioner's state of mind in the context of the meaning of the word "reckless", the Tribunal found as follows:-

"Mr Lovegrove, who appeared for Mr Stapleton, informed me that Mr Stapleton did not appreciate that monies paid by way of retainer for work yet to be done are trust monies ... I accept that Mr Stapleton believed that the monies he received were not trust monies. On the other hand, it appears to me that Mr Stapleton did not carefully turn his mind to that issue, despite the fact that he received relatively large amounts of money by way of retainer for work yet to be done or only partly done. I am satisfied that Mr Stapleton must have been aware that he did not hold a practising certificate that authorised him to receive trust monies. It is a specific condition forming part of a practising certificate. Furthermore, I am satisfied that Mr Stapleton was "reckless", as that word is explained in the authorities, in not making proper enquiry when he received large amounts of money as to whether those monies were trust monies. Instead, he simply deposited the trust monies into his own account."

There are obvious parallels between the situation in Stapleton and the facts of the present case. Whilst we appreciate that we are not bound by the decision, the logic there applied seems to us to be equally applicable in this matter.

22 In summary, we are satisfied that a charge of misconduct as defined in s.137 of the Act has been proved against Perkins. The Bar has discharged the burden of proof which, as stated, we accept as being of a high standard. We are satisfied that Perkins, being a legal practitioner, in the course of engaging in legal practice, acted in reckless contravention of the Act, and in particular of s.178 of the Act. We are satisfied that, as a legal practitioner who did not hold a practising certificate authorising the receipt of trust money, in February and March 2003 he did receive trust money as defined in s.3 of the Act. We are satisfied that he did not pay the money into a trust account or give the money to an authorised legal practitioner or to an approved clerk.

23 In the circumstances, we find that Perkins is guilty of misconduct. We will hear the submissions in relation to penalty at a time and date which is mutually convenient and which is to be fixed.