Kyriackou v Law Institute of Victoria Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2013 0112

MICHAEL KYRIACKOU	Appellant
V
LAW INSTITUTE OF VICTORIA LIMITED	Respondent

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JUDGES:	WARREN CJ, OSBORN JA and GINNANE AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	8 October 2014
DATE OF JUDGMENT:	11 December 2014
MEDIUM NEUTRAL CITATION:	[2014] VSCA 322
JUDGMENT APPEALED FROM:	Law Institute of Victoria Limited v Kyriackou [2013] VCAT 735 (His Honour Judge Macnamara, Vice President)

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LEGAL PRACTITIONERS – Lay associate – Appeal against VCAT disqualification order – Findings that actions of lay associate if by an Australian legal practitioner may have resulted in charges – Whether lay associate party to acts – Involvement of lay associate –Deficiency in trust account – Statutory misconduct – Professional misconduct – Penalty – Victorian Civil and Administrative Tribunal Act 1998 s 148 – Legal Profession Act 2004 ss 1.2.4(1)–(2), 2.2.5, 2.2.6(1)(b), (2), (3), (4), (5), 2.2.7, 2.2.8, 3.3.21, 4.4.2.

APPEAL – Appeal on question of law – Defective notice of appeal – Whether VCAT’s decision open on the evidence – Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 rr 4.15, 4.17.

EVIDENCE – Standard of proof – VCAT not bound by rules of evidence – Relevance of rule in Briginshaw v Briginshaw to VCAT proceedings – Failure of appellant to give evidence – Victorian Civil and Administrative Tribunal Act 1998 s 98 – Evidence Act 2008 s 140.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr A T Schlicht	John Yianoulatos
For the Respondent	Mr P J Riordan QC and Ms K J D Anderson	Anna Richards, Law Institute of Victoria

THE COURT

The appellant, Mr Michael Kyriackou, appeals on questions of law from the orders made by his Honour Judge Macnamara, Vice President of the Victorian Civil and Administrative Tribunal (‘VCAT’), on 28 June 2013.[1] The orders were sought in an application brought by the Law Institute of Victoria (‘LIV’) — as delegate of the Legal Services Board (‘LSB’). The orders made included that:

Pursuant to Section 2.2.6(2) of the Legal Profession Act 2004 the respondent [Michael Kyriackou] is a disqualified person for the purposes of Division 3 of Part 2.2 of the Act indefinitely.

[1] Pursuant to s 2.2.6(5) of the Legal Profession Act2004.

VCAT ordered Mr Kyriackou to pay LIV’s costs of the proceeding.

The hearing before VCAT lasted for 10 days. The LIV called 14 witnesses and Mr Kyriackou did not give viva voce evidence or call any witnesses.

The central issue raised in the VCAT proceeding was whether Mr Kyriackou had been a party to an act or omission that, had he been an Australian legal practitioner, may have resulted in a charge being brought before VCAT by the LSB. Section 2.2.6(1)(b) of the Legal Profession Act2004 (‘the Act’) entitles the LSB to apply to VCAT for an order that a person is a disqualified person if in the opinion of the LSB, the person, in this case a lay associate, has been a party to an act or omission that if the person had been an Australian legal practitioner may have resulted in a charge being brought in VCAT.[2]
[2]All charges in the proceeding apply to conduct that would be an offence if the person had been a legal practitioner. Since nothing turns on this aspect of the charges we will omit continuing reference to this hypothetical in our reasons.

Section 2.2.6(1)(b) states:

2.2.6 Order disqualifying persons
(1)The Board may apply to the Tribunal for an order that a person (other than an Australian legal practitioner) is a disqualified person for the purposes of this Division if the person—
…
(b)in the opinion of the Board has been a party to an act or omission that, if the person had been an Australian legal practitioner, may have resulted in a charge being brought in the Tribunal.

Upon the making of such an order, a local legal practitioner or a law practice must not have a lay associate who the practitioner or practice knows to be a disqualified person.[3]
[3] Section 2.2.7(1)(a) of the Legal Profession Act 2004.

Mr Kyriackou was not an Australian legal practitioner, but worked as practice manager in the legal practice of Mr Walter Edwards, who was an Australian legal practitioner. Mr Kyriackou was a lay associate of Mr Edwards, being an associate of the practice who is not an Australian legal practitioner.[4]
[4]The term ‘lay associate’ is defined in the Legal Profession Act 2004 by referring to the definition of associate: ss 1.2.4(1) and (2); and see s 2.2.5.

Mr Edwards was admitted to practice as a barrister and solicitor of this Court in September 1973. In August 2005, he established a legal practice (‘the Practice’) in Melbourne and opened a trust account. There was evidence before VCAT that Mr Edwards was the sole person authorised to sign trust account cheques of the Practice.

Mr Edwards gave evidence that whilst managing his practice, Mr Kyriackou carried on business as a provider of last resort financing and general support services to property developers through a number of companies, including MK River Pty Ltd (‘MK River’) and Australvic Property Management Pty Ltd (‘Australvic Property Management’). This finance was provided through syndicates of lenders. He gave evidence that he appointed Mr Kyriackou as his ‘practice manager’, which entailed providing administrative services to the Practice, including opening and distributing the incoming mail. Mr Edwards also gave evidence that he appointed Mr Kyriackou as a ‘law clerk’ with a view to him deputising for him in the Practice when, for instance, family business interstate required him to be absent.

VCAT stated that it found much of Mr Edwards’ evidence to be ‘troubling’ with regard to reliability, but on important points that were key to the case against Mr Kyriackou, the cross-examination did not entail any direct challenge to his evidence.[5]
[5]Law Institute of Victoria Limited v Kyriackou [2013] VCAT 735 (‘Reasons’) [97]–[98].

The appeal

Under s 2.2.6(5) of the Act, a person (other than an Australian legal practitioner) against whom a disqualification order has been made by the Tribunal may appeal to the Court of Appeal on a question of law. No leave is required as is ordinarily the case pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (‘the VCAT Act’).

At the date of the initiation of the appeal, O 4 r 4.15 of ch 2 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 required that an appeal to the Court of Appeal from a Tribunal be commenced by filing a notice of appeal. Rule 4.17 required, amongst other things, that the notice of appeal set out:

(a) the order of the Tribunal;

(b) whether the appeal is from the whole or part only of the order and, if so, what part;

(c) if the appeal is brought by leave, when leave was given and by whom;

(d) the question of law, if any, upon which the appeal is brought or which is involved in the order, as the case requires; and

(e) concisely the grounds of appeal.

In the present case, the notice of appeal purported to state 15 questions of law and a series of grounds of appeal with respect to such questions. Fourteen of the questions were pursued at the hearing of the appeal. Of these, six commenced with the words ‘Did the Tribunal err in law by finding that’ or ‘Did the Tribunal err in holding that … ’. Two commenced with the words ‘Did the Tribunal err in law by drawing the inference … ’. So expressed, the questions do not distinguish between errors of fact and errors of law.

Indeed, such grounds are commonly utilised in appeals by way of rehearing to denote a contention that the trial judge’s conclusions were against the weight of the evidence. Such contentions do not raise questions of law.

Likewise, the individual grounds of appeal were set out in groups under headings relating back to the purported questions of law. Some of these groups concluded with a ground encapsulating the contention that the Tribunal’s conclusions were not open (grounds 8, 18 and 23) but others concluded with grounds which simply asserted that the Tribunal ‘erred’ (grounds 12, 16, 22 and 28).

The relevant principles were summarised by Phillips JA in State of Victoria v Bacon.[6] In discussing grounds drafted in a similarly conclusory manner, his Honour said:

The difficulty and uncertainty inherent in this form of stating grounds of appeal was explored by Ryan J in Australian Telecommunications Corporation v Lambroglou,[7] a judgment which, if I may say so, would repay study by all those undertaking to draft a notice of appeal (as also the judgment of Brooking J in Motor Accidents Board v Coutts,[8] in which the statement of grounds (which were grounds of review) was criticised after a most comprehensive review of the Victorian cases; see also his Honour’s criticism of the grounds as stated in Victorian Workcover Authority v CE Heath Underwriting & Insurance Pty Ltd[9]).
More specifically, as Ryan J pointed out in Lambroglou, to allege error in the drawing of some particular conclusion (or as in that case to pose the question whether error lay in the drawing of that conclusion) will often simply cloak what it is sought to put in issue. That the judge erred in making some particular finding, if of fact, may mean, inter alia, that there was no evidence at all to support that finding, or that the primary facts were not proved from which an inference was drawn, or that though there was evidence of those primary facts that evidence ought to have been rejected, or that the inference, though open, ought not to have been drawn. Where the finding under attack is in truth of mixed fact and law, the allegation of error in arriving at the stated conclusion may conceal a contention that the judge misunderstood the law or, though properly understanding the principles, misapplied them; and where as here a statute is involved, the possibilities are often multiplied. This notice of appeal did nothing at all to resolve those difficulties.
Indeed, what Ryan J dubbed in Lambroglou[10] ‘the irritating tendentious formulary which recurs in the prefatory words’ of these so-called grounds of appeal is such as to suggest that the notice of appeal was framed in ignorance of the provisions of s 130 of the Act under which the right of appeal arises [which permits appeal only on a question of law].[11]

[6][1998] 4 VR 269.

[7](1990) 12 AAR 515.

[8][1984] VR 790, 794–8.

[9](1994) 7 VAR 1, 7–8.

[10]At 529.

[11][1998] 4 VR 269, 285–286 (citations in original).

To similar effect, Winneke P stated in HJ Heinz Company Australia Ltd v Turner:

The appeal identified 29 questions of law claimed to have been raised by the tribunal’s decision many, if not most, of which commenced with the words ‘Did the tribunal make an error of law in deciding that …’ and then reciting findings which, in many instances, were clearly questions of fact. As Phillips JA recently pointed out in State of Victoria v Bacon, this form of expression, even if it is intended to identify questions of law, is apt to confuse rather than clarify.[12]

[12][1998] 4 VR 872, 875 (citation omitted).

It follows that in our view the notice of appeal in the present case was seriously defective.

Nevertheless, upon the hearing of the appeal the appellant, without objection from the LIV, sought to confine the matters raised by the notice of appeal to questions of law.

The questions of law, as argued, in essence alleged that there was no basis for the findings of fact made by the Tribunal that led to its order. The legal principles that govern such a ground were addressed by Warren CJ in Myers v Medical Practitioners’ Board of Victoria in the following terms:

Essentially, by seeking to impugn various findings of fact, the appellant is seeking to rely on the error of law discussed in the judgment of Phillips JA in S v Crimes Compensation Tribunal.[13] Accordingly, if there are any grounds of appeal with respect to the tribunal’s decision, they would be, with respect to each of the board’s allegations made out against Dr Myers:
1.that the tribunal’s primary findings of fact were not open on the evidence before it;
2.that it was not open for the tribunal to find that the primary findings of fact substantiated each allegation made out against the appellant; and
3.that it was not open for the tribunal to find that the various charges against the appellant constituted unprofessional conduct as defined in s 3 of the Act.[14]

[13][1998] 1 VR 83.

[14](2007) 18 VR 48, 57 [35] (Chernov JA and Bell AJA agreeing).

We shall treat the appellant’s notice of appeal as raising the contention that it was not open to the Tribunal to make the ultimate findings of fact which it did adverse to the appellant.

Briginshaw

The grounds of appeal were expressed in part by reference to ‘the balance of probabilities with reference to s 140 of the Evidence Act2008 and/or the Briginshaw test’. In Briginshaw v Briginshaw,[15] Dixon J stated:

Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences.[16]

[15](1938) 60 CLR 336.

[16]Ibid 361–2.

Section 140 of the Evidence Act2008 embraces the same principles:

140     Civil proceedings—standard of proof
(1)In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2)Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account—
(a)       the nature of the cause of action or defence; and
(b)       the nature of the subject-matter of the proceeding; and
(c)       the gravity of the matters alleged.

There are two problems with the grounds of appeal formulated by reference to s 140 and the ‘Briginshaw test’. First, as the authorities make clear, Briginshaw does not postulate a test which creates a different standard of proof in civil cases.[17] Secondly, the Tribunal is not in any event bound by the rules of evidence.
[17]Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170, 171 (Mason CJ, Brennan, Deane and Gaudron JJ); Qantas Airways Ltd v Gama (2008) 167 FCR 537, [110] (French and Jacobson JJ).

Section 98 of the VCAT Act provides as follows:

98       General procedure
(1)       The Tribunal—
(a)       is bound by the rules of natural justice;
(b)is not bound by the rules of evidence or any practices or procedures applicable to courts of record, except to the extent that it adopts those rules, practices or procedures;

(c) may inform itself on any matter as it sees fit;
(d)must conduct each proceeding with as little formality and technicality, and determine each proceeding with as much speed, as the requirements of this Act and the enabling enactment and a proper consideration of the matters before it permit.

(2)Without limiting subsection (1)(b), the Tribunal may admit into evidence the contents of any document despite the non-compliance with any time limit or other requirement specified in the rules in relation to that document or service of it.
(2A)Without limiting subsection (1), at the hearing of a proceeding the Tribunal may admit into evidence any material put before the Tribunal at an earlier stage of the proceeding, or any material put before the Tribunal in another proceeding, if the Tribunal considers it desirable to do so.
(2B)Subsection (2A) is subject to any other provision of this Act, an enabling enactment or any other law that provides that evidence or material is not admissible in a proceeding.
…
(3)Subject to this Act, the regulations and the rules, the Tribunal may regulate its own procedure.
(4)Subsection (1)(a) does not apply to the extent that this Act or an enabling enactment authorises, whether expressly or by implication, a departure from the rules of natural justice.

Because the Tribunal is not bound by the rules of evidence, it is not bound by the provisions of s 140 of the Evidence Act2008 nor by the common law principles established by Briginshaw. Nevertheless, those principles reflect common sense notions of probability with respect to human conduct and it is entirely proper for the Tribunal to take them into account when considering allegations of serious misconduct. The High Court explained the underlying notion in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd.

[T]he strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. 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.[18]

[18](1992) 67 ALJR 170, 171 (Mason CJ, Brennan, Deane and Gaudron JJ) (citations omitted).

In the present case, counsel for the appellant submitted that the proceeding should be conducted on the basis of the rules of evidence and senior counsel for the LIV, without accepting that this was the correct approach, took the position that the LIV was prepared to meet the challenge of proving its case in accordance with the rules of evidence. In turn, his Honour ‘felt it appropriate to acquiesce’[19] in this approach. In so doing, he expressly recorded that he should not be taken to accept the correctness of the contention.
[19]Reasons [69].

In turn, his Honour approached the making of findings of fact cognisant of the principles stated in Briginshaw and s 140 of the Evidence Act2008.[20]
[20]Reasons [77].

We shall also approach the Tribunal’s findings of fact cognisant of the principles stated in Briginshaw. We do so, however, on the basis that those principles inform consideration of the question whether it was open to the Tribunal to conclude as it did as a matter of evidentiary logic.[21]
[21]Karakatsanis and Anor v Racing Victoria Ltd [2013] VSCA 305, [30]–[39]; Greyhound Racing Authority (NSW) v Bragg [2003] NSWCA 388, [35].

The scheme of the VCAT Act is plain and that scheme is that the Tribunal is not bound by the rules of evidence. The Legal Profession Act2004 modifies the application of some provisions of the VCAT Act,[22] but not s 98.

The facts[23]

[22]For example, s 148.

[23]The statement of facts in respect of the charges quotes from and draws on the parties’ Agreed Revised Summary of Proceedings and Issues.

The application before VCAT was contained in a document of the LIV described as ‘Further Substitute Application for Order’. The order sought was that Mr Kyriackou be made a disqualified person for the purposes of div 3 of pt 2.2 of the Act.

The application then particularised acts or omissions involving four transactions and in each of them listed the charges arising from the transaction that may have been brought in the Tribunal against Mr Kyriackou. We refer to those acts and omissions as the charges.

The March 2006 transactions concerning the sum of $180,064.95

The issue in respect of the March 2006 transactions was whether Mr Kyriackou had misappropriated $180,064.95 by directing, without authority, the payment of a cheque to Mr Stuart Carter for $127,956 in connection with the purchase of a property in Albert Park and the payment of a cheque to Australvic Property Management for $52,108.95. These sums were alleged to have been held on trust for the Abbotsford syndicate and the 13^thBeach syndicate, which consisted of groups of lenders.

The essence of the charges said to arise in respect of the sum of $180,064.95 is contained in the following particulars:

6.        The respondent misappropriated the sum of $180,064.95 by:
(a)without authority of the Syndicate Members, directing Newbury solicitors to produce bank cheques payable to:
(i)        Stuart L. Carter in the sum of $127,956; and
(ii)       $52,108.95 to Australvic Property Management Pty Ltd.
Particulars
The direction was in writing and consisted of a letter from the respondent to Newbury solicitors dated 14 March 2006. A copy is available for inspection.
(b)applying the funds without the authority of the Syndicate Members and for his own benefit and not for the benefit of the Syndicate Members by:
(i)paying the sum of $127,956 to Stuart L. Carter as part of the purchase price due by MK River Pty Ltd on the purchase of 10 St Vincent’s Place, North Albert Park.
Particulars

The Trust Deed is in writing and a copy is available for inspection. MK River Pty Ltd was the trustee of the MK Investment Trust. At the relevant times, the sole beneficiary of the MK Investment Trust was the respondent, who held the power of appointment under the Trust.
(ii)paying the sum of $52,108.95 to Australvic Property Management Pty Ltd.
Particulars

The respondent was a director of Australvic Property Management Pty Ltd and MK River Pty Ltd was the sole shareholder of Australvic Property Management Pty Ltd. The particulars to paragraph 6(b)(i) are repeated.

CHARGES under the Legal Profession Act 2004 if the respondent had been an Australian legal practitioner
7.In the circumstances set out in paragraphs 1 to 6 inclusive, the respondent was a party to acts or omissions that if the respondent had been an Australian legal practitioner, may have resulted in a charge being brought in the Tribunal namely:-
(a)statutory misconduct in that the respondent, on or about 14 March 2006, without reasonable excuse, caused a deficiency in the trust account of the Practice, contrary to section 3.3.21[(1)](a) of the Act, by causing the sum of the $127,956.00 to be applied to the purchase of 10 St Vincent Place North, Albert Park (‘the Albert Park property’);
(b)statutory misconduct in that the respondent, on or about 14 March 2006, without reasonable excuse, caused a deficiency in the trust account of the Practice, contrary to section 3.3.21[(1)](a) of the Act, by causing the sum of the [sic] $52,108.95 to be applied to the benefit of Australvic Property Management Pty Ltd;
(c)misconduct at common law in that the respondent, on or about 14 March 2006, caused a misappropriation of the sum of $127,956.00 being funds of the Syndicate Members by causing the funds to be applied to the purchase of the Albert Park property;
(d)misconduct at common law in that the respondent, on or about 14 March 2006, caused a misappropriation of the sum of $52,108.95 being funds of the Syndicate Members by causing the funds to be applied to Australvic Property Management Pty Ltd;
(e)misconduct at common law in that the respondent, on or about 14 March 2006, caused a misappropriation of the sum of $127,956.00 being funds of the Syndicate Members by causing the funds to be applied to the purchase of the Albert Park property, in which the respondent had a beneficial interest, without any or any proper authority.

The term ‘deficiency in [a] trust account’ is explained in s 3.3.21 of the Act, which states:

3.3.21 Deficiency in trust account
(1)An Australian legal practitioner or an approved clerk is guilty of an offence if he or she, without reasonable excuse, causes—
(a)a deficiency in any trust account or trust ledger account; or

(b) a failure to pay or deliver any trust money.
Penalty:Level 4 imprisonment (15 years maximum).

(2)A reference in subsection (1) to an account includes, in the case of an Australian legal practitioner, a reference to an account of the practitioner or of the law practice of which the practitioner is an associate.

(3) In this section—
causeincludes be responsible for;

deficiency in a trust account or trust ledger account includes the non-inclusion or exclusion of the whole or any part of an amount that is required to be included in the account.

The evidence before VCAT was that between September 2005 to October 2006, Mr Edwards’ Practice was retained to act on behalf of certain persons referred to as the ‘Abbotsford Property Syndicate’ and the ‘13^th Beach Property Syndicate’ to recover amounts loaned by them under three facility agreements to fund property development. The monies fell due for repayment, but the borrower defaulted.

The Abbotsford Property Syndicate had advanced the sum of $1,000,000 to Turnstile Pty Ltd, a company controlled by Mr David Kirkham, for the purpose of funding a property development in Abbotsford. Turnstile Pty Ltd was behind in its payments and Mr Kyriackou recommended, and the Syndicate accepted, advice that it defer repayment of the monies owing on the basis of provision of additional security. Mr Kirkham, through a company that he controlled, provided a mortgage over a property at Sorrento. A caveat was lodged over that property.

VCAT referred to the evidence of Ms Grace Ciavarella, who was the facility agent of the Abbotsford Property Syndicate and a member of the 13^th Beach Property Syndicate, that on 22 February 2006 Mr Kyriackou told her that the sum of approximately $180,000 was available from the proceeds of sale of the Sorrento property after paying all monies owing to the first mortgagee. The mortgage granted as security for the syndicate loans was discharged on the basis that the sum of $180,064.95 would be held by solicitors for the vendor/mortgagor, Newbury Bell, on trust and would be released to the Practice in exchange for the withdrawal of the caveat lodged on behalf of both syndicates. Mr Kyriackou spoke to, and corresponded with, John O’Halloran of Newbury Bell.

The particulars relating to the sum of $180,064.95 concern the payment of two cheques, the larger of which for $127,956 was for the purchase of a property at 10 St Vincent Place, Albert Park (‘the Albert Park property’). VCAT made the following findings concerning that purchase:

According to Mr Edwards, Mr Kyriackou invited Mr Edwards in his capacity as director of MK River Pty Ltd, a company which, it will be recalled, according to Mr Edwards, he ‘held on trust’ for Mr Kyriackou, to attend an auction of a property at 10 St Vincent Place, Albert Park. Mr Edwards said he was not surprised as to this proposal. Mr Kyriackou to his knowledge was an active property investor. He was frequently buying and selling property through a variety of entities. The property was knocked down to MK River for $1,080,000 with a deposit paid of $54,000 and settlement due on 20 January 2006. Mr Edwards executed a guarantee of the obligation of MK River as purchaser under the contract. The vendors of the property were a Mr & Mrs Harvey.
At some later stage, according to Mr Edwards, Mr Kyriackou informed him that the St Vincents Place property was being bought for Mr Edwards. Why this should be done was not immediately obvious to me. Mr Edwards said that he believed that this apparent benefaction might be in recognition of the legal work which he had done for Mr Kyriackou’s companies.[24]

[24]Reasons [30]–[31] (emphasis in original).

Settlement was due to occur in January 2006, but did not occur until 16 March 2006 due to delays in finance being obtained.

The purchaser of the Albert Park property was MK River, a company of which Mr Edwards was a director and sole shareholder at the time. Mr Edwards gave evidence that he held his shares on trust for Mr Kyriackou. MK River was the trustee of the MK Investment Trust. In March 2006, Mr Kyriackou was the sole beneficiary of the MK Investment Trust.

Mr Edwards gave evidence that Mr Kyriackou ran MK River. He stated that he became a director of that company because Mr Kyriackou had been bankrupt and although the bankruptcy was set aside, Mr Kyriackou apprehended that there may be an appeal against that decision.

MK River was the sole shareholder of Australvic Property Management and, as stated, the trustee of the MK Investment Trust of which Mr Kyriackou was the sole beneficiary. Australvic Property Management was registered on 18 April 2005.

VCAT set out the following evidence concerning settlement of the purchase:

Mr O’Halloran, the principal of Newbury Bell, gave evidence that the sum of $180,064.95, being the proceeds of sale of the Sorrento property, had been held in his firm’s trust account following the settlement of the sale in exchange for a withdrawal of the caveat lodged on behalf of the syndicate members. Mr O’Halloran produced a handwritten communication from Mr Kirkham dated 12 March 2006 authorising him to release the $180,000 from the Sorrento property ‘to WP Edwards trust a/c as a matter of urgency’. Mr Kirkham said that a representative of WP Edwards would collect the cheque ‘tomorrow say at 10.30 am’. Presumably, because Newbury Bell was holding the funds at the disposal of the syndicate members rather than Mr Kirkham or his companies, Mr O’Halloran spoke to Mr Kyriackou. He sent a facsimile to Mr Kyriackou at WP Edwards stating, inter alia[:]
I have instructions from David Kirkham to draw a bank cheque on behalf of Monogram Building and Design Pty Ltd payable to WP Edwards Solicitors Trust Account in the sum of $180,064.95.
I need a written authority from you stating that such is in accordance with the agreement and understanding provided by this office to you dated 22 February, 2005.

In response, Mr O’Halloran received a facsimile transmission on a fax header ‘WP Edwards Legal Practitioner’. The email was marked for Mr O’Halloran’s attention and in the heading stated ‘writer Michael Kyriackou re settlement funds held in trust’. The letter stated:
Dear John,
In response to our telephone conversation re your client’s instructions and the release of your undertaking that was given by yourself to our firm re your client’s settlement of the Sorrento property.
I advise that on the basis that cheques are drawn as directed by WP Edwards Solicitors and collected by no later than 3.30 pm today when [sic] you will be released entirely from your undertaking by WP Edwards Solicitor[s]. If you could make bank cheques in favour of the following[:] $127,956 in favour of Stuart Carter and the balance from $180,054.95 to Austral Vic Property Management.

The facsimile transmission was signed ‘Wally P. Edwards (solicitor). There appeared what purported to be Mr Edwards’ signature.[25]

[25]Reasons [23]–[24] (emphasis in original).

Mr Edwards gave evidence that: the facsimile header was not the proper letterhead of his Practice, he did not generally use facsimile headers but used ordinary letterhead even for facsimiles, and he had never seen the letter before it was sent. He denied that he had signed the letter. Mr Edwards also said he would not have addressed the letter to Mr O’Halloran as ‘Dear John’. However, the letter stated that the writer was ‘Michael Kyriackou’.

A Ms Dazkiw attended settlement in respect of the Albert Park property purchase on 15 March 2006, on behalf of the solicitor representing the vendor, Mr Stuart L Carter, and gave evidence that Mr Kyriackou attended on behalf of the purchaser and provided her with two bank cheques in the sums of $127,956 and $711, both of which were payable to Mr Carter.

As VCAT stated, Mr Edwards signed a guarantee for the purchase of 10 St Vincent Place, Albert Park, and, as director of MK River, signed a mortgage of the Albert Park property on 15 March 2006.

The other cheque for $52,108.95 from the proceeds of sale of the Sorrento property was made payable to Australvic Property Management. MK River was the sole shareholder of Australvic Property Management.

Mr O’Halloran gave evidence about, and produced copies of, the bank cheques. They established that the cheque for $127,956 was paid to Mr Carter and $52,108.95 was paid to Australvic Property Management.

Ms Ciavarella gave evidence that the syndicate members did not give authority for the $180,064.95 to be used in that manner.

The Tribunal’s findings concerning the March 2006 transactions

The Tribunal found that the sum of $180,064.95 was misappropriated and that whether or not Mr Edwards was concerned in the misappropriation, it could be properly said that Mr Kyriackou effected the misappropriation of the sum of $180,064.95.[26] The misappropriated monies had been received on trust for two syndicates, and had been misappropriated by being applied as part of the settlement monies due on the purchase of the Albert Park property by MK River.
[26]Reasons [114].

The Tribunal rejected Mr Kyriackou’s submission that the benefit of the misappropriation went to Mr Edwards and not to him.

The Tribunal acted on the basis that the charge under s 2.2.6 was established ‘merely [if Mr Kyriackou] has “been a party” to an act or omission’.[27] The Tribunal stated that there was no reason to conclude as a matter of logic, ‘that they [ie Mr Kyriackou and Mr Edwards] might not both have been “in on it”’. This, it said, was consistent with the regime in which the Albert Park property was vested in a company, the trustee of a trust where both men were, at least initially, beneficiaries.[28]
[27]Reasons [101] (emphasis in original).
[28]Reasons [102].

The Tribunal stated that it did not find that the misappropriated monies, that related to the Albert Park property, went solely to Mr Edwards and that:

The effect of the re-jigging of the trust, first, by excluding Mr Edwards as a beneficiary and secondly, by appointing a company controlled by Mr Kyriackou, namely Australvic Finance Pty Ltd as trustee, was to put the benefit of the misappropriation under the control of Mr Kyriackou. Mr Kyriackou sought to assert that beneficial entitlement in the proceeding before Justice Habersberger.[29]

[29]Reasons [104].

The Vice President was referring to proceedings in 2009 where, upon subsequent sale of the Albert Park property, the balance of the sale price after satisfaction of the first mortgagee’s debts and costs was paid into court. Habersberger J ordered that that sum be paid to the syndicate members, stating:

In the circumstances, I was satisfied that the sum of $127,956 from the Sorrento property sale proceeds belonging to the members of the two syndicates had been used in the purchase of the Property without their knowledge or authorisation. This was a breach of fiduciary duty entitling the third defendants in equity to trace their funds into the Property. Thus, the third defendants were entitled to lodge a caveat over the Property in respect of their equity or equitable interest under a constructive trust. This was done on 7 March 2007. As the prior-in-time caveators had withdrawn from the proceeding, there was no issue about priority. All that remained was quantifying the extent of the third defendants’ interest in the Property.[30]

[30]JGM Nominees Pty Ltd v Caveat Finance Pty Ltd (in liq) [2009] VSC 604, [32].

The Vice President reiterated that the evidence to which he had referred stood unchallenged:

including the evidence given by Mr Edwards that Mr Kyriackou had admitted that misappropriation in the presence of Mr Edwards and Mr Hayes QC in a conference in the latter’s chambers in January 2007. Three days of cross-examination saw no challenge to that evidence.[31]

[31]Reasons [105].

The reference to the conference in Mr Hayes QC’s chambers in January 2007 was to evidence given by Mr Edwards that at a meeting on 21 January 2007 in Mr Hayes’ chambers, Mr Kyriackou admitted that funds that he had used to purchase the Albert Park property were funds that properly belonged to the trust account of the Practice at the relevant time. Mr Kyriackou said that the funds were obtained from Ms Kathleen Murphy, who was a syndicate member, and from funds which were derived from another property transaction involving the 13^th Beach Syndicate.

The Tribunal accepted that Mr Kyriackou was involved in discussions relating to the settlement of the purchase of the Albert Park property and the disbursement of the monies throughout. The Vice President described him as having ‘been at the helm relative to the settlement of the purchase’.[32] He accepted Ms Dazkiw’s evidence that Mr Kyriackou tabled the bank cheques at settlement.[33]
[32]Reasons [107].
[33]Reasons [106].

The Vice President stated that whilst Mr Edwards must be regarded as ‘somewhat tarnished’, he did not regard him as ‘unreliable on this point’,[34] that is his evidence that his signature had been forged on the letter of 14 March 2006, which gave details of the payees of the two cheques that made up the $180,064.95.
[34]Reasons [107].

The Vice President rejected the suggestion that the appropriation of the Albert Park monies was authorised by the relevant syndicates.

The Tribunal found that Mr Kyriackou’s actions fell within the definition of statutory misconduct because they caused a deficiency in the trust account of WP Edwards contrary to s 3.3.21 of the Act. His Honour stated that:

The conduct is of such a flagrant nature that it should be characterised as the more serious species of disciplinary contravention, namely professional misconduct.
In my view, it also merits the characterisation of professional misconduct at common law, in accordance with the formulation adopted by Dean J in Re A Solicitor. Solicitors of good repute and competency would regard what occurred here as disgraceful and dishonourable.[35]
[35]Reasons [115]–[116].

The parties’ submissions concerning the March 2006 transactions

The appellant argued that there was no evidence of deficiencies in the trust account because the two cheques were paid directly from the solicitor, Newbury Bell, to Mr Carter and Australvic Property Management. Thus, he contended that the monies were never meant for the trust account, therefore there was no deficiency.

The appellant pointed to the role Mr Edwards played as the sole legal practitioner, the director of the firm, the director and secretary of MK River, the sole director of Australvic Property Management, and the sole person responsible to direct the trust account. He also pointed to the fact that the Albert Park property was held by MK River on trust for Mr Edwards, and that Mr Edwards believed the property was held solely on trust for him before the end of January 2006, and gave a guarantee and mortgage in connection with its purchase.

The appellant alleged that the Tribunal had incorrectly relied on evidence contained in the first two paragraphs of Mr Edwards’ supplementary witness statement, that he knew nothing of the letter of 14 March 2006, which were excluded when the remainder of the statement was admitted into evidence.

The appellant argued that there was no evidence that Mr Kyriackou had misappropriated the monies or caused the monies to be diverted and the sole beneficiary of the transaction was Mr Edwards. Mr Edwards gave unreliable evidence on many topics and the Tribunal ought to have accepted the proposition that he caused the payment of the two cheques. The only evidence of Mr Kyriackou’s involvement was that he carried out small administrative tasks.

The LIV affirmed the findings of the Tribunal regarding Mr Kyriackou. It submitted that it was not necessary for the Tribunal to be satisfied that Mr Kyriackou had misappropriated or even caused trust deficiencies of the relevant sums. It was sufficient under s 2.2.6(1)(b) for an adverse finding against a person to be made that there was evidence that the person misappropriated money for the benefit of a legal practitioner and not themselves.

The LIV contended that the submission that there was no trust account deficiency because the monies were never to go into the trust account was not put to the Tribunal. However, the monies had been received on trust and were diverted other than in accordance with the clients’ instructions. Accordingly, monies were not paid into the trust and there was a deficiency in the trust account in contravention of s 3.3.21(1), which applies to deficiencies including the:

non-inclusion or exclusion of the whole or any part of an amount that is required to be included in the account.[36]

[36]s 3.3.21(3) of the Act.

The Tribunal had abundant evidence to support its findings that Mr Kyriackou had been a party to the misappropriation of the sum of $180,064.95. He was involved in discussions relating to the settlement of the Albert Park property, he attended and tabled the bank cheques, and he was the ultimate beneficiary of the purchase of the property by MK River as trustee of the MK Investment Trust. There were also the admissions made to Mr Hayes and the fact that Mr Kyriackou had been the author of the letter dated 14 March 2006 in which he gave instructions to Mr O’Halloran for the drawing of the two cheques. The letter described Mr Kyriackou as the writer. Although the paragraphs dealing with this issue had been excluded from the witness statement, Mr Edwards gave other evidence that substantiated that he had not drafted or signed the letter.

Analysis of grounds of appeal relating to the March 2006 transactions concerning the sum of $180,064.95

There was evidence before the Tribunal upon which it could reach the conclusion that the charges in respect of the March 2006 transactions had been established. Therefore, no error of law is involved in its findings.

It was open to the Tribunal to find that, as alleged in particular six of the charges, Mr Kyriackou had misappropriated, or been party to the misappropriation of, the sum of $180,064.95, without the authority of the syndicate members. He had directed Newbury Bell solicitors to produce the two cheques and apply the funds, without the authority of the syndicate members, for his own benefit and not for the benefit of the syndicate members.

In the case of the cheque for $127,956, the purchaser of the Albert Park property was MK River. At the relevant time, Mr Kyriackou was the beneficiary of the MK Investment Trust of which MK River was the trustee. He therefore obtained a benefit, regardless of what understanding Mr Edwards may have had about the interest that he would gain in the property.

There was no dispute that, at Mr Kyriackou’s direction, the cheque for $52,108.95 was paid to Australvic Property Management. The shareholder of that company was MK River, the trustee of the MK Investment Trust of which Mr Kyriackou was the sole beneficiary.

The evidence before the Tribunal entitled it to conclude that Mr Kyriackou had been a party to a relevant act or omission, and that both Mr Edwards and Mr Kyriackou may have benefited from the purchase of the Albert Park property because the house was vested in a company, the trustee of the trust of which both men were, at least initially, beneficiaries. The Tribunal was entitled to conclude that the effect of the transactions affecting MK River was to put the benefit of the misappropriation under the control of Mr Kyriackou. The Tribunal was also entitled to accept Mr Edwards’ evidence that Mr Kyriackou had admitted the misappropriations in his presence and that of Mr Hayes QC in January 2007. The Tribunal was entitled to take into account that Mr Kyriackou had tabled the bank cheque for $127,956 at settlement. The Tribunal was entitled to take into account the terms of the letter of 14 March 2006 which described Mr Kyriackou as the writer.

Further, it was open to the Tribunal to conclude that Mr Kyriackou’s conduct satisfied the definition of statutory misconduct because it caused a deficiency in the trust account and that such conduct amounted to misappropriation of the cheques so as to constitute professional misconduct both under the Act and at common law.

The appellant has not established any error of law in the Tribunal’s findings in respect of the appellant’s use of the $180,064.95.

Transactions relating to Lumina (South Yarra) Pty Ltd and Nancy and Anthony Barnes

The second and third events with which the LIV application was concerned related to monies belonging to, or invested by, Anthony and Nancy Barnes as members of the ‘Third Mortgage Lending Syndicate’.

The charges that arose from these events were that on or about 22 October 2005, Mr Kyriackou failed to pay or deliver trust money of $40,352.94 to Anthony and Nancy Barnes, and that on 12 April 2006 a further sum of $15,346.92, which was paid into trust by Anthony and Nancy Barnes at the request of Mr Kyriackou for the purpose of recovering the syndicate funds, was also disbursed without authority.

The circumstances concerning the two amounts of $40,352.94 and $15,346.92 were argued by the LIV to form the basis of charges being: one count of statutory misconduct pursuant to s 3.3.21(1) of the Act[37] by causing, without reasonable excuse, a deficiency in the trust account of the Practice by failing to deliver trust money in the sum of $40,352.94 to Anthony and Nancy Barnes, and one count of misconduct at common law by misapplying the sum of $15,346.92, provided to the Practice for the purpose of the Third Mortgage Lending Syndicate, by using the said sum for a purpose other than a purpose of the Syndicate.
[37]The LIV’s Further Substitute Application for Order referred to s 3.3.21(b) of the Act.

We first deal with the issues concerning the sum of $40,352.94. The particulars that concerned the use of that sum by Mr Kyriackou were that:

13.On or about 22 October 2005, Anthony and Nancy Barnes instructed the respondent to pay the sum due to them of $40,352.94 to them.
Particulars
The instruction was oral and consisted of a conversation at a meeting in the board room of the Practice on or about 22 October 2005 between Anthony and Nancy Barnes on the one part and the respondent on the other part the substance of which was to the effect alleged.

14.Without authority and contrary to the express instruction of Anthony and Nancy Barnes, the respondent paid the proceeds of settlement to persons other than the Barnes.
Particulars

…
[the particulars set out the persons (payees) who had been paid the settlement monies of $720,000 plus the sum of $14,000 paid on account of costs which were alleged to be disbursed on the instructions of Mr Kyriackou given to Mr Edwards.]

15.Despite numerous requests, the respondent has failed to pay to Anthony and Nancy Barnes their share.
Particulars
Anthony Barnes made a number of oral requests between 20 October 2005 and December 2005 and was told by the respondent ‘I haven’t got it, I have invested it’.
On 2 December 2005 Anthony Barnes attended at the Practice and, because the respondent was not there, was told by the respondent on the telephone to write down the amount of money that was owed and provide particulars of the bank account into which he wanted the money to be paid. He left those details with the receptionist but the money was not paid. The note dated 2 December 2005 is in writing and is available for inspection.

The evidence concerning the amount of $40,352.94 due to Nancy and Anthony Barnes

In July 2005, Mr Kyriackou attended meetings held at the Practice in respect of another syndicate arrangement to fund a property development by Lumina (South Yarra) Pty Ltd (‘Lumina’).

In about September 2005, the Practice was retained by the Third Mortgage Lending Syndicate to recover the monies loaned to Lumina and secured by a mortgage. A notice of default dated 1 September 2005 was served on Lumina on a letterhead styled ‘WP Edwards Solicitors’ with the words ‘Michael Kyriackou Practice Manager’ in the top right hand corner and was signed by Mr Kyriackou as practice manager. The letter commenced ‘I advise that I act for the above mentioned Mortgagee’s [sic]’.

By deed of settlement dated 18 October 2005, Lumina agreed to pay the Third Mortgage Lending Syndicate $720,000 in full settlement. According to Wai Yee Wong, one of the investors present, Mr Kyriackou received the sum of $720,000 and, in the company of herself and Erik Steemers (one of the investors), deposited it into what she understood was the Practice’s trust account. Ms Wong then advised Mr Kyriackou how the funds, after costs, were to be distributed amongst the syndicate members. According to the calculations prepared by Ms Wong, an amount of $40,352.94 was due to Mr and Mrs Barnes and Mr Kyriackou was instructed to pay all the syndicate members the sum due to them in accordance with Ms Wong’s calculations.

Mr Edwards gave evidence that certain syndicate members provided written consents for their funds to be reinvested into Australvic Property Management for use in future loans. Mr Barnes gave evidence that he and his wife instructed Mr Kyriackou that they did not wish to invest their proceeds of the settlement with Lumina in a further syndicate, but wanted the proceeds paid to them.

Mr Mark Beck, a management consultant, gave evidence that he had reconstructed trust account ledgers to show the actual destination of the funds generated by the Lumina settlement.

Mr Beck gave evidence that between approximately January 2006 and July 2006, he assisted Mr Kyriackou with the administration of Australvic Property Management and several other of his companies. He had come to know Mr Kyriackou during 2005 through being a member of an investment syndicate and became a loans originator working with Mr Kyriackou.

In mid-February 2006, Mr Edwards asked Mr Beck to assist with difficulties he was having in reconciling the trust accounts of the Practice. He prepared such a reconciliation. Mr Beck’s reconstruction of the trust accounts formed the basis of the charges relating to the $40,352.94.

The Tribunal’s findings concerning the amount of $40,352.94

The Tribunal rejected the appellant’s attacks on Mr Beck’s reconstruction of the trust account ledgers, noting that his evidence was uncontradicted and unchallenged. The Tribunal accepted Mr Beck’s evidence.

The Tribunal also stated that Mr Beck had identified Mr Kyriackou’s handwriting on the relevant cheque stubs. That statement was not correct as Mr Beck had made no such identification.

The parties’ submissions concerning the amount of $40,352.94

The appellant argued that the evidence of Mr Beck concerning his reconstructed trust records was not accurate.

The appellant then argued that Mr Kyriackou was not ‘an associate’ within the meaning of the Act. There was no evidence from which it could be found or inferred that he was responsible for the paying or delivering of funds from the trust account of the Practice, much less that he was authorised to do so. This argument was not put to the Tribunal.

The appellant submitted that Mr Kyriackou did not disburse, or direct the disbursement of, the Lumina settlement monies, but that Mr Edwards had done so.

The appellant pointed out that his Honour wrongly found that Mr Beck had identified Mr Kyriackou’s handwriting on the cheque stubs.

The LIV accepted that his Honour’s finding that Mr Kyriackou’s handwriting was on the cheque stub was incorrect. However, it argued that Mr Kyriackou was responsible for handling the matter and had made admissions to Mr Barnes that he had invested the money. The LIV relied on the following evidence of Mr Barnes given to the Tribunal:

5.By terms of settlement entered into on the 18^th October, 2005 Lumina agreed to pay the syndicate the sum of $720,000 in full and final settlement inclusive of damages, interest, costs and GST on the basis of terms that included that the purported appointment of receivers be set aside ‘ab initio’.
6.At a meeting convened by the Respondent shortly thereafter he suggested to my wife, and I that we could invest the proceeds from the settlement with Lumina in a further syndicate. We instructed the Respondent that we did not wish to do so and that we required the sum of $40,352.94 (being our share of the settlement proceeds) to be paid to us.
7.I thereafter continuously pressed the Respondent for the repayment of our share of the proceeds [and] on one occasion I was told by the Respondent, ‘I haven’t got it — I have invested it’.

The LIV submitted that for the purposes of the charges, Mr Kyriackou was not required to have signed the Practice’s trust account cheques, but it was sufficient that he was a party to the act or omission which may have resulted in a charge if he had been an Australian legal practitioner: s 3.3.21(3) of the Act.

There was evidence on which the Tribunal could find that Mr and Mrs Barnes’ share of the settlement was the sum of $40,352.94.[38]
[38]Exhibit O.

There was also evidence from Mr Edwards that he acted on the instructions of Mr Kyriackou in the sense that Mr Kyriackou told him who the payees of the cheques were to be.

Analysis of grounds of appeal concerning the amount of $40,352.94

The Tribunal’s ultimate finding was based on the reconstructed trust accounts. The Tribunal took into account that Mr Beck’s evidence was uncontradicted and unchallenged. There was evidence to support the conclusion that the sum of $40,352.94 was used for a purpose foreign to the trust upon which it was received by the direction of Mr Kyriackou.

The appellant has not established that the findings of the Tribunal in respect of the charge were not open to it. The fact that Mr Kyriackou had no authority to deal with trust account funds did not prevent a finding that he was a party to the acts that dealt with trust account funds. There was no evidence that Mr and Mrs Barnes authorised the further investment of their funds.

The appellant has not established that the Tribunal’s findings in respect of the payment of $40,352.94 involved an error of law. There was evidence on which the Tribunal could find that Mr Kyriackou, without authority and contrary to the express instructions of Mr and Mrs Barnes, paid these proceeds of settlement to persons other than them.

The Tribunal considered the appellant’s criticism of Mr Beck’s account reconstruction, but accepted it, stating that it was uncontradicted and unchallenged. That submission was the only matter advanced at the Tribunal by the appellant in respect of the charges that are based on the payment of $40,352.94.

The Tribunal’s incorrect statement that Mr Kyriackou’s handwriting was on the cheque stubs does not mean that there was no evidence to support the charges in respect of the payment of $40,352.94.

In addition to Mr Beck’s evidence, the Tribunal had the evidence of Mr Barnes that Mr Kyriackou told him that he had invested the $40,352.94. That investment was made without Mr and Mrs Barnes’ authority and contrary to their instructions. The appellant has not established the error of law alleged to have been made by the Tribunal in respect of the sum of $40,352.94.

Mr Barnes’ payment of $15,346.92

The third transaction involved a further sum of $15,346.92 provided by Mr Barnes, which was intended to keep the Third Mortgage Lending Syndicate viable and enable the recovery of the entitlements of its members. Instead the money was paid for the benefit of a Mr Rocco Calderone, who was not a member of any of the lending syndicates.

The particulars of the charges that related to the sum of $15,346.92 were:

16.On or about 12 April 2006 the respondent requested about $15,000 from the Third Mortgage Lending Syndicate members for the purpose of recovering the entitlements of the Third Mortgage Lending Syndicate members.
Particulars
The request was oral and consisted of a conversation between the respondent and Kathleen Murphy on or about 12 April 2006 the substance of which was that the respondent said that there was a problem with the recovery of the Syndicate funds and that $15,000 was needed to be paid. Kathleen Murphy suggested that Anthony Barnes might be able to help; and subsequently relayed the request to Anthony Barnes who said that he would pay $15,000. The respondent was present with Kathleen Murphy when he made the telephone call to Barnes, and handed the telephone to Kathleen Murphy.

17.On 12 April 2006 the respondent requested [to] Anthony Barnes that the money required would need to be paid by the following bank cheques:
(a)bank cheque in the sum of $11,346.92 payable to Registered Mortgages Limited; and
(b)bank cheque in the sum of $4,000 payable to Property and Business Commercial Lawyers;

such cheques to be made available for collection by Mark Beck or Walter Edwards.
Particulars
The instruction was oral and consisted of:
(i)a conversation between the respondent and Mark Beck the substance of which was that he should tell Anthony Barnes to get him cheques made payable as alleged; and
(ii)a telephone conversation by Mark Beck to Anthony Barnes with instructions about amounts and payees of the cheque[s] who told him to make cheques available for collection made payable as alleged.

18.In accordance with the respondent’s request, on 12 April 2006 Anthony Barnes caused cheques made payable as alleged in paragraph 17 to be available for collection by Mark Beck or Walter Edwards the following bank cheques:
(a)bank cheque in the sum of $11,346.92 payable to Registered Mortgages Limited; and
(b)bank cheque in the sum of $4,000 payable to Property and Business Commercial Lawyers.

Particulars
Anthony Barnes’ instruction to the Bankwest Melbourne [branch] was in writing and consisted of a fax containing instructions in accordance with the respondent’s request alleged in paragraph 18. Copies of the fax and the cheques are available for inspection.

19.The respondent misapplied the further funds and the bank cheques were not applied to recovery of the Syndicate money but rather:
(a)the $4,000 cheque was paid to Property and Business Commercial Lawyers in satisfaction of legal fees owing to them by 9^th Greenjo Pty Ltd, a company unrelated to the Third Mortgage Loan Syndicate members;
(b)the $11,346.42 cheque was paid to RMBL Mortgage Income Investments in part settlement of an amount due to the company by 9^th Greenjo Pty Ltd; a company unrelated to the Third Mortgage Loan Syndicate members.

20.Anthony and Nancy Barnes have not been repaid the sum of $15,346.92 or any part thereof.

The Tribunal’s findings concerning Mr Barnes’ payment of $15,346.92

The Tribunal found that Mr Barnes invested the further sum of $15,346.92 in response to an urgent request by Ms K Murphy made at the behest of Mr Kyriackou that such funds were required to save the syndicate members from losing their investments. The Tribunal stated:

According to Mrs Murphy, Mr Kyriackou said:
unless we receive [extra funds] everybody could lose their funds but if funds could be made available the moneys would be paid back the following week.

Mr Kyriackou, she said, told her that $15,000 was required. Mr Barnes said that this request led to a conflict between him and his wife. He made available funds in the sum of $15,346.92. Shortly afterward, he received a phone call from a Mr Beck, an accountant, who had been engaged to work at the office of Mr Edward. Mr Beck asked that a bank cheque in the sum of $11,346.92 be obtained payable to Registered Mortgages Limited and another cheque in the sum of $4,000 payable to Property and Business Commercial Lawyers for $4,000. Mr Beck rang back shortly afterwards to say that the cheques were not required but then a further call indicated that they were required. Mr Barnes arranged for the Melbourne branch of Bankwest to draw the cheques and for them to be available for collection either by Mr Edwards or Mr Beck. Mr Beck gave evidence that he made these calls to Barnes at the request of Mr Kyriackou. The cheques were duly drawn and given to Mr Kyriackou. These cheques were given as to the larger one in part repayment of a loan by Registered Mortgages Limited to 9^th Greenjo Pty Ltd and as to the second cheque, to a law firm for legal costs owed to it by 9^th Greenjo Pty Ltd. The destination of those funds was verified by the evidence of Ms Nany Sutrisno. 9^th Greenjo was a company controlled by Mr Rocco Calderone. It has no apparent connection with the interests of the syndicate of which Mr [sic] Murphy and Mr Barnes were members. It belongs to the companies which Australvic Property Management had undertaken to refinance as part of its business of providing services to distressed property developers.[39]

[39]Reasons [46]–[47].

Thus, the Tribunal found that Mr Kyriackou outlaid the monies to meet liabilities of 9^th Greenjo Pty Ltd, a company associated with Mr Calderone. It was one of the companies which Australvic Property Management had undertaken to refinance as part of its business of providing services to distressed property developers. The Tribunal found that what occurred ‘was a clear misappropriation’. The funds were not used in accordance with the trust which was impressed on them. The Tribunal found:

Even although Mr Barnes was aware of the names of the payees of the bank cheques which he procured and made available to Mr Kyriackou, he made those funds available, in my view, upon the trust that the funds should be used for the protection of the syndicates’ entitlements. In my view, therefore, what occurred was a clear misappropriation. The funds were not used in accordance with the trust which was impressed upon them. I accept that Mr Kyriackou’s actions constituted misconduct at common law. What he did, if done by a legal practitioner, would be regarded by a competent and reputable solicitors [sic] as disgraceful.[40]
[40]Reasons [119].

The parties’ submissions concerning the amount of $15,346.92

The appellant submitted that there was no evidence that he had misapplied the sum alleged. He relied on Mr Barnes’ evidence that he knew who the payees of the cheques were and argued that Mr Barnes authorised the money to be paid to the payees and they were so paid.

The LIV contended that it had never been argued below that the money was used for the benefit of the syndicate, nor that there was a relevant connection between Mr Calderone and the syndicate.

Analysis of grounds of appeal relating to the sum of $15,346.92

The Tribunal accepted that Mr Barnes, following the request of Mr Kyriackou, had made the sum of $15,346.92 available to be used to protect the syndicate’s entitlements and the syndicate’s capacity to recover them. He provided two cheques totalling that sum. Those cheques were not used for the purposes for which they were requested, but were used for the benefit of 9^th Greenjo Pty Ltd.

The Tribunal was entitled to find that Mr Barnes had advanced the sum of $15,346.92 on the basis that it would be paid to assist the syndicate of which he was a member.

The appellant has not established any error of law by the Tribunal in respect of its findings relating to Mr Barnes’ investment of $15,346.92.

Charges relating to the use of money provided by Mr Noel McDermott

The remaining event that formed the basis of the LIV’s charges occurred in early February 2006, when Mr Noel McDermott deposited $33,000 into the trust account of Mr Edwards. Three cheques were then drawn against the trust account. The trust account balance immediately prior to the deposit of $33,000 was zero. The LIV alleges that the appellant, without authority, paid the monies by the cheques to barristers’ clerks and not for the purpose that the $33,000 was intended, being settlement with the liquidator of a company controlled by Mr Robert McDermott, who was the brother of Mr Noel McDermott.

The particulars of the charges were:

23.On 1 February 2006 Noel McDermott paid by way of telegraphic transfer the sum of $33,000.00 into the trust bank account of the Practice for use for the Purpose.
Particulars
The receipt of the sum of $33,000.00 is recorded in the trust account bank statement of the Practice on 1 February 2006.

24.Without authority, on or about 2 February 2006, the respondent paid $15,000 from the Trust monies held for the Purpose to Gordon & Jackson Barristers[‘] Clerk[s] with respect to the matter of Wilson v Aileen, which was not connected with the Purpose.
Particulars
The involvement of the respondent is to be inferred from the fact that cheque No. 051 was signed by Walter Edwards and left with the respondent in about December 2005 without the details of date, payee and amount being written on the cheque, for purposes of another anticipated transaction. All the writings on the cheque other than the signature were made by the respondent.
The sum of $15,000 was paid with respect to the following fee slips of barrister R Sadler:
1.        Fee slip 425605 for $3,017
2.        Fee slip 426930 for $8,525
3.        Fee slip 427333 for $3,458.
Copies of the cheques and the fee slips are available for inspection.

25.Without authority, on or about 2 February, 2006, the respondent paid the sum of $12,000 from the Trust moneys held for the Purpose to G W Meldrum Barristers[‘] Clerk[s] with respect to the matter of Wilson v Aileen, which was not connected with the Purpose.

Particulars
The involvement of the respondent is to be inferred from the fact that cheque No. 049 was signed by Walter Edwards and left with the respondent in about December 2005 without the details of date, payee and amount being written on the cheque, for purposes of another anticipated transaction, All the writings on the cheque other than the signature were made by the respondent.
The sum of $12,000 was paid with respect to the following fee slips of barrister P R Hayes QC:
1. Fee slip 331436 for $4,740
2. Fee slip 331465 for $7,260.
(i)Copies of the cheques and the fee slips are available for inspection.

26.Without authority, on or about 2 February, 2006, the respondent paid $3,500 from the Trust moneys held for the Purpose to G W Meldrum Barristers’ Clerk[s] with respect to the matter of Wilson v Aileen, which was not connected with the Purpose or for the benefit of McDermott.

Particulars
The involvement of the respondent is to be inferred from the fact that cheque No. 050 was signed by Walter Edwards and left with the respondent in about December 2005 without the details of date, payee and amount being written on the cheque, for purposes of another anticipated transaction, All the writings on the cheque other than the signature were made by the respondent.
The sum of $3,500 was paid with respect to the following fee slips of barrister J Goussis:
1.        Fee slip No. 331723 for $750
2.        Fee slip No. 329741 for $950
3.        Fee slip No. 332147 for $895
4.        Fee slip No. 329283 for $905.

Copies of the cheques and the fee slips are available for inspection.

These payments were said by the LIV to form the basis of charges, which were as follows. First, one charge of statutory misconduct pursuant to s 3.3.21(1)(a) of the Act by, on 2 February 2006, causing without reasonable excuse a deficiency in the trust account of the Practice by causing the sum of $30,500 to be applied to pay counsels’ fees from funds provided by Mr Noel McDermott, when there were no funds held on behalf of the Estate of Wilson, MK River or Samoiloff. Secondly, one count of misconduct at common law for causing a misappropriation of $30,500 on 2 February 2006 by applying trust funds held on behalf of Mr Robert McDermott for a purpose unconnected with him. Thirdly, one count of misconduct at common law for causing a misappropriation of $30,500 on 2 February 2006 by applying trust funds held on behalf of Mr Robert McDermott for a purpose unconnected with him without any or any proper authority. Fourthly and alternatively, one count of unsatisfactory professional conduct pursuant to s 4.4.2 of the Act by causing payments totalling $30,500 to be made in connection with the practice of the law which fell below the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner.

The evidence before VCAT was that:

(a)Mr Noel McDermott retained the Practice on about 31 January 2006 in relation to paying the liquidator of Richmond Car Sales Pty Ltd, a company associated with his brother, Mr Robert McDermott, the sum of $33,000 on behalf of his brother;
(b)Mr Noel McDermott conceded that he did not have a costs agreement or retainer with the Practice, that he only knew that the money related to settlement of a proceeding involving his brother, Mr Robert McDermott, and that he was just a third party providing funds on behalf of his brother to facilitate a settlement;
(c)on 1 February 2006, Mr Noel McDermott arranged funds in the sum of $33,000 to be provided by Bank Stationery & Packaging Pty Ltd into the trust account of the Practice, which was to be held on trust for a settlement with the liquidator proposed to occur on 3 February 2006;
(d)Mr Noel McDermott directed the said sum to be refunded in the event the settlement did not proceed by that date;
(e)Mr Noel McDermott demanded the return of the funds from Mr Edwards by three letters dated 23 March 2006, 13 April 2006 and 24 April 2006.

The Tribunal’s findings relating to the use of money provided by Mr Noel McDermott

The Tribunal made the following findings:

Mr Paul Burness was appointed as a liquidator of Richmond Car Sales Pty Ltd in February 2003. This company was associated with Mr Robert McDermott against whom Mr Burness took certain legal steps. I was shown a determination of Kenny J in the Federal Court of Australia: Richmond Car Sales Pty Ltd (in liquidation) v Robert McDermott[2006] FCA 52 where Her Honour determined an application by Mr McDermott to set aside a warrant issued under Section 530C of the Corporations Act. Presumably arising out of this dispute or some related matter, Mr Robert McDermott required $33,000 to be paid to the liquidator of Richmond Car Sales Pty Ltd and sought the assistance of his brother, Mr Noel McDermott who drew a cheque for $33,000 on an account of Bang Stationery and Packaging, which money was transferred by an international money transfer application to Mr Edwards’ trust account where the money was received on 1 February 2006. Mr McDermott sent a letter to Mr Edwards relative to this transfer marked ‘attention Messrs Edwards’ [sic] stating as follows:
The undersigned confirms herein that an amount of $33,000 paid by Bang Stationery and Packaging P/L on behalf of Robert A. McDermott have [sic] been transferred by IMT to WP Edwards Trust Account 083155 589255427. These funds are for the sole purpose of settlement with Paul A. Burness liquidator appointed to Richmond Sales P/L for vehicles Rolls Royce P2 39GY and Silver Shadow II known as Harry’s vehicle now claimed by Ram Parts P/L.
In the event that settlement does not proceed by 5 pm Friday 3^rd February 2006 the funds are to be refunded in full Monday 6^th February 2006. Please confirm ([email protected]) when the settlement is done.
Yours sincerely
Noel McDermott[41]

[41]Reasons [48] (emphasis in original).

Specifically, the Tribunal found that on 2 February 2006 Mr Kyriackou caused the following payments by cheque from the monies held on trust for Mr McDermott to be made in respect of the matter of Wilson v Aileen, which had no connection to the syndicates:

(a) $15,000 to be paid to Gordon & Jackson Barristers’ Clerks for barrister R Sadler regarding 3 fee slips;

(b) $12,000 to be paid to RW Meldrum Barristers’ Clerks for barrister P R Hayes QC regarding 2 fee slips; and

(c) $3,500 to Gordon & Jackson Barristers’ Clerks for barrister J Goussis regarding 4 fee slips.

The LIV thus alleged that these cheques, numbered 49, 50 and 51, were pre-signed by Mr Edwards in December 2005 and that the appellant subsequently filled out the details in February 2006. The evidence did not support those allegations. The parties agreed that the cheques were not pre-signed.

The evidence of Mr Beck to the Tribunal was that Mr Kyriackou had not signed the cheques. However, Mr Beck’s evidence to the Tribunal was that Mr Kyriackou’s handwriting was on other parts of the cheques, and that he had written the date, the names of the payees, the amounts and also the details of the cheques on the cheque stubs.[42]
[42]Transcript of Proceedings, Law Institute of Victoria Limited v Kyriackou (Victorian Civil and Administrative Tribunal, J61/2011, Judge Macnamara, Vice President, 16 April 2013) 529–31.

The parties’ submissions concerning the use of money provided by Mr Noel McDermott

The appellant argued that the LIV had not proved the case that it had identified in the particulars of the charges. Those particulars stated:

The involvement of the [appellant] is to be inferred from the fact that [the] cheque … was signed by Walter Edwards and left with the [appellant] in about December 2005 without the details of date, payee and amount being written on the cheque, for purposes of another anticipated transaction, All the writings on the cheque other than the signature were made by the [appellant].

The appellant submitted that the highest the LIV case went was that the three cheques were paid to barristers’ clerks, and that they had been filled out by Mr Kyriackou and then signed by Mr Edwards who had responsibility for the trust account.

The charges alleged incorrectly that the cheques had been pre-signed by Mr Edwards.

The appellant also submitted that the charges had not been made out because there was no proof that Mr Noel McDermott had retained the Practice. Instead, the client was his brother, Mr Robert McDermott. His Honour rejected that contention.

The LIV submitted that its case did not go outside the particulars of the charges. The evidence established that Mr Kyriackou had an involvement in the payment of the sums. The LIV relied on the two charges contained in paragraphs 27(b) and (c) of the application, which are summarised above.

The LIV submitted that there was no error in the finding that Mr Noel McDermott had retained the Practice.

The LIV contended that Mr Kyriackou had never submitted to the Tribunal that he was not involved in the payment of the three amounts to barristers.[43] Mr Edwards had stated that he always signed cheques on instructions from Mr Kyriackou. It was clear enough that Mr Noel McDermott had advanced the money for a particular purpose and that Mr Kyriackou was not authorised to pay it to anyone else.
[43]Transcript of Proceedings, Law Institute of Victoria Limited v Kyriackou (Victorian Civil and Administrative Tribunal, J61/2011, Judge Macnamara, Vice President, 22 April 2013) 875–6 (final submissions on behalf of Mr Kyriackou).

The Tribunal’s findings concerning the $30,500

His Honour referred to the fact that the particulars of the charges that Mr Edwards had pre-signed the cheques had not been established but stated:

For reasons previously given, the fact that one particular or part of a particular is not made out does not prevent a finding in favour of the main allegation if the substance of the evidence justifies this.[44]

[44]Reasons [124].

His Honour stated that evidence called by the LIV appeared to make out the charges which had been brought. It was clear enough that Mr Noel McDermott had advanced the money for a particular purpose and that Mr Kyriackou was not authorised to use it for any other purpose.

Analysis of the grounds of appeal relating to the use of money provided by Mr Noel McDermott

The initial issue is whether the LIV’s case goes outside the charges brought against Mr Kyriackou in respect of the use of money provided by Mr Noel McDermott.

Particulars of disciplinary charges play an important role in affording a fair hearing to the person who is the subject of the charge. In R v Solicitors’ Disciplinary Tribunal; Ex parte L (a solicitor),[45] the Full Court said of a notice given to a solicitor of disciplinary charges brought under the Legal Profession Act 1958:

The notice to the solicitor, if given pursuant to s. 31(1)(b)(i), is a notice which can be served at any time after the approval and referral so long as it is served not less than 14 days before the hearing. But if the notice is properly drawn so as to give to the solicitor adequate notice of the critical and material facts to be alleged against him, and is presented to the three councillors as a proposed notice, of course the written approval can incorporate by reference the paragraphs which will give such notice and use them as identification of the ‘matters’ approved for reference.
Such notice is intended to put the solicitor on notice as to the matters particularised in it as being particulars which will be led in evidence, in support of the ‘matter’ to be heard, and generally speaking its contents would adequately define the ‘matters’ for jurisdictional purposes, for they would comprise the material facts alleged to constitute each allegation of misconduct. …
It is sufficient to say that a solicitor presented before a full hearing of the Solicitors’ Disciplinary Tribunal should be made clearly aware, before the hearing commences, of that with which he is charged, and what material facts are alleged to constitute the charge or charges against him: see Gee v General Medical Council [1987] 1 WLR 564, at p 566 (HL); Johnson v Miller (1937) 59 CLR 467 per Dixon J, at p 489; Evatt J, at pp 495 and 497. …
Ever since Ridge v Baldwin [1964] AC 40, at pp 121 and 124–5 it has been accepted that in a case [such] as the present the precise nature of the charge must be clearly spelt out. The solicitor’s livelihood is at stake.
Should some new matter of misconduct be unearthed during the hearing, it will depend on [the] circumstances whether the Tribunal will have jurisdiction to hear it. At the very least a new charge would have to be laid (before it could be relied upon) so that the solicitor can then know of it, appreciate what he has to meet and be allowed ample opportunity to meet it: Lau Liat Meng v Disciplinary Committee [1968] AC 391, at pp 403–4 (PC).[46]

[45][1988] VR 757.

[46][1988] VR 757, 768, 770. In Simon v Legal Services Commissioner [2014] VSC 185, Emerton J set aside an order made by VCAT finding charges of professional misconduct in breach of the Act proved, which were not the charges brought against the legal practitioner.

The charge in respect of each of the three cheques alleges that, without authority, on particular dates, the appellant paid sums from the trust monies held for the purpose of effecting a settlement with the liquidator of Mr Robert McDermott’s business to barristers’ clerks to pay barristers’ fees in unrelated matters.

The particulars detailed how the appellant’s involvement with the three cheques was to be proved, rather than to the details of the charges. The charges were that Mr Kyriackou had caused a deficiency in the trust account and had misappropriated the sum of $30,500.

There was sufficient other evidence to support the charges. Mr Beck identified Mr Kyriackou’s handwriting on the cheques and cheque stubs, but not as the signatory. The error in the particulars was identified in the Tribunal hearing.

The appellant has not established any error of law in respect of the Tribunal’s conclusions concerning the payment of the amounts totalling $30,500.

Failure to call Mr Kyriackou

A feature of the Tribunal hearing was that Mr Kyriackou did not give evidence or call any witnesses. The LIV submitted that the Tribunal could be more readily satisfied of the factual matters in respect of Mr Kyriackou’s involvement because he did not give evidence contradicting the evidence called about Mr McDermott. That may entitle the inference that his evidence would not assist in this case.[47] The Tribunal refrained from drawing any adverse inference in this regard. We will return to this issue in dealing with the appeal against penalty.
[47]See Jones v Dunkel (1959) 101 CLR 298. The LIV relied on the statement of Heydon J in HML v The Queen (2008) 235 CLR 334, 438 [303]:
In civil cases the unexplained failure of a party to give evidence, call witnesses or tender material is not treated as evidence of fear that it would expose an unfavourable fact, nor as an assertion of the non-existence of the fact not proved: the only consequence is that the failure can cause an inference arising from the evidence of the opposing party to be more confidently drawn (citation omitted).

The appeal against the penalty

As previously stated, on 17 June 2013, his Honour ordered that pursuant to s 2.2.6(2) of the Act, Mr Kyriackou is a disqualified person for the purposes of div 3 of pt 2.2 of the Act indefinitely.

Under s 2.2.6(3) and (4), if such an order is made, the person may apply to VCAT to have the order revoked and VCAT may revoke the order if it considers it appropriate to do so. Mr Kyriackou may at any time apply to VCAT for a variation of the order. This is in contrast to the order made in respect of Mr Edwards, which precluded him from applying for an employee practising certificate until 30 June 2010, from applying for a practising certificate as a principal of a law practice until 30 June 2013, and from applying for a practising certificate which would allow him to receive or deal with trust money until 30 June 2018.[48] The end result was that Mr Edwards would be without a practising certificate for a period of at least three years.
[48]Edwards v Law Institute of Victoria [2008] VCAT 2034.

The Tribunal has the power to cancel a legal practitioner’s practising certificate and to order him or her not to seek a new certificate for a finite period. If it was considered that the prohibition should apply indefinitely, VCAT could refer the matter to this Court with the suggestion that the practitioner’s name be removed from the roll of practitioners kept by the Court.

The Tribunal’s decision regarding penalty

His Honour took into account that, unlike legal practitioners, Mr Kyriackou would be entitled to recommence working as a lay associate at the end of any finite period of disqualification without any further inquiry as to his fitness by any licensing bodies. This was in distinction from the position of a legal practitioner who must, at the end of a period of disqualification, establish that he or she was a fit and proper person to hold a practising certificate. His Honour therefore considered that there were good reasons for treating potential lay associates and practitioners differently.

His Honour found that the charges involved serious financial harm, in matters in which he considered that Mr Kyriackou took the lead.

His Honour referred to the judgment of Maxwell P in Quinn v Law Institute of Victoria Ltd[49] as establishing that while the objective of the disciplinary regime contained in the Act is the protection of the public, general and specific deterrence are proper measures in furtherance of that objective. His Honour took into account that the regulation of practitioners in the Act is directed at the protection of the public, yet considered that general and specific deterrence were proper objectives in service of that overall and greater overarching objective.
[49][2007] VSCA 122, [29]–[30].

His Honour found that the protection of the public against serious financial defalcations being repeated in the future required that the period of disqualification imposed on the appellant should be for an indefinite period.

The parties’ submissions regarding penalty

The appellant submitted that the penalty was manifestly excessive. He relied on the fact that he had no prior relevant disciplinary history and that his penalty was harsh in contrast with the penalty received by Mr Edwards on the same charges and more. He submitted that, on the Tribunal’s findings, his conduct was serious, but not the worst example of misconduct, and that the penalty was manifestly excessive and constituted an error of law. He contended that there was the same impediment to a lay person in seeking permission to work again as a lay associate as to a disqualified legal practitioner seeking to work again as a legal practitioner.

The LIV submitted that it was more flexible to leave the appropriate timing of the application to have the order revoked in the hands of the lay person. The LIV pointed to the provisions of ss 2.2.7 and 2.2.8 of the Act, which permit a local legal practitioner to apply to the LSB for approval of a lay associate who was a disqualified person, which approval may be granted subject to conditions.

Analysis of ground of appeal in respect of penalty

No error of law was shown in VCAT’s imposition of an indefinite disqualification. VCAT was exercising a discretion in determining the appropriate period of disqualification. The power of indefinite disqualification is a specific power available in respect of persons who are not legal practitioners. It is open to Mr Kyriackou to apply to VCAT at any point to have that disqualification lifted. It is true that both a disqualified lay associate and a disqualified legal practitioner have no automatic right to recommence working in a legal practice once their disqualification ends. The lay associate must obtain the approval of VCAT and the legal practitioner must obtain a practising certificate. However, the Act provides for an indefinite period of disqualification only in the case of a person who is not an Australian legal practitioner.

In cases such as the present, failure to give evidence is relevant in assessing both the appropriate penalty and whether the person is a fit and proper person to practise. In Stirling v Legal Services Commissioner,[50] the appellant, a barrister, had not paid income tax over an eight year period. The appellant did not give evidence at his disciplinary hearing in front of the Tribunal, the Court noted:

While there is no authority to suggest it is a duty of a legal practitioner to give evidence in a disciplinary tribunal, it is open for this court to question that failure, especially where an accused is seeking to positively show they are fit and proper to practise.[51]

[50][2013] VSCA 374 (‘Stirling’).

[51]Ibid [155].

The Court also stated:

The resolution to this matter sits somewhere in between the competing submissions of the respondent and the appellant. The respondent is correct to say that the forensic decision of the appellant not to provide a full explanation left the Tribunal with the unenviable task of attempting to piece together the evidence available to it to provide a complete picture of the appellant’s evidence. Further, it was open to the Tribunal, as it is open to us, to question the veracity of the claims of rehabilitation and remorse because the appellant did not provide it with any first hand explanation as to his charged conduct or the rehabilitation he has allegedly undergone.
On the other hand, the appellant is correct in noting that it is not open to a court or disciplinary tribunal to simply ignore the other evidence put on the grounds that the appellant could provide a more complete explanation by giving direct evidence.[52]

[52]Ibid [157]–[158].

Notably, the Court of Appeal in Stirling cited the decision of the New South Wales Court of Appeal in NSW Bar Association v Meakes,[53] where Tobias JA outlined how a court should treat the failure to give evidence in a professional disciplinary tribunal:

Yet these were the very matters which were wholly within the knowledge of the respondent and which he was [sic] did not offer to answer in the witness box. On the contrary, he chose the safety of the well of the Tribunal. Notwithstanding the advice of his then senior counsel, the respondent’s refusal to enter the witness box and provide evidence with respect to the matters referred to should have been the subject of harsh criticism by the Tribunal. Moreover, if that evidence had otherwise been relevant to the issue, his refusal to provide it would have significantly detracted from the weight to be attached to the tendered character references. In these circumstances, the only inferences one can draw from the respondent’s refusal to give sworn testimony in this matter was that his evidence would not have assisted his case in resisting a finding of professional misconduct.
…
In my opinion the failure of the respondent to give sworn evidence was inexcusable.[54]

[53][2006] NSWCA 340.

[54]Ibid [77]–[78].

In these circumstances, we consider the consequences of the failure of Mr Kyriackou to give evidence are clearly relevant to the penalty given by the Tribunal. To use the language of Tobias JA in Meakes, these matters were wholly within the knowledge of Mr Kyriackou. He chose the safety of the well of the Tribunal instead of entering the witness box and providing evidence in relation to the impugned transactions.

This course does not demonstrate any remorse or genuine acceptance of responsibility for wrongdoing. In turn, those aspects of the matter raise significant considerations in respect of the appropriate penalty relating to denunciation for specific deterrence and thereby the protection of the public.

In Hannebery v Legal Ombudsman,[55] Tadgell JA stated:

The nature and purpose of disciplinary proceedings before the Tribunal being as they are it follows that, in deciding on the appropriate penalty to award following a finding of misconduct, the Tribunal is not only entitled but obliged to take into account any failure by the practitioner ‘to understand the error of his ways’: New South Wales Bar Association v Evatt. Reasoning of that kind was applied to a practitioner’s failure to appreciate that his impugned conduct was wrong when he claimed to be ignorant of his duty when using a client’s money: Law Society of New South Wales v Moulton. As Beazley JA observed in Law Society of New South Wales v Walsh, ‘Whilst a practitioner’s expressed intention not to re-offend is relevant to mitigation, it will have little weight unless accompanied by an understanding of the wrongfulness of the conduct which was the subject of the disciplinary charge’.

[55][1998] VSCA 142, [22] (citations omitted).

We do not consider that in all cases where charges are established in respect of lay associates that an indefinite disqualification is an appropriate penalty. But the imposition of such a penalty in this case was open to the Tribunal, particularly in circumstances where Mr Kyriackou had not given evidence and had not explained his conduct or his attitude to future conduct to the Tribunal. If he applies to have the disqualification lifted, it may be expected that he will then attempt to provide an explanation for his conduct. That conduct significantly harmed the finances of syndicate members. It involved serious breaches of the standards of conduct expected of those who work in connection with legal practice. The penalty imposed was entirely warranted having regard to considerations of just punishment and both specific and general deterrence.

Conclusion

None of the appellant’s alleged errors of law has been established.

The appeal is dismissed.

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Citations

Kyriackou v Law Institute of Victoria Ltd [2014] VSCA 322

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[2014] VSCA 322

11 December 2014