Victorian Legal Services Commissioner v Kotsifas
[2018] VSC 114
•6 March 2018 (reasons 19 March 2018)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2018 00450
| VICTORIAN LEGAL SERVICES COMMISSIONER | Plaintiff |
| v | |
| JOHN JAMES KOTSIFAS | Defendant |
---
JUDGE: | J FORREST J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 March 2018 |
DATE OF JUDGMENT: | 6 March 2018 (reasons 19 March 2018) |
CASE MAY BE CITED AS: | Victorian Legal Services Commissioner v Kotsifas |
MEDIUM NEUTRAL CITATION: | [2018] VSC 114 |
---
LEGAL PRACTITIONERS — VCAT recommendation that lawyer’s name be removed from the roll of practitioners — Application that practitioner’s name be removed — Professional misconduct — Previous professional disciplinary history of misconduct and unsatisfactory conduct — Order that practitioners name be removed from the roll — Supreme Court (Miscellaneous Civil Proceedings) Rules 2008, r14.13 — Legal Profession Uniform LawApplication Act 2014, sch 1 s 23(1)(c).
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms J Dodd | Victorian Legal Services Commissioner |
| For the Defendant | Mr H Aizen | George Liberogiannis & Associates |
HIS HONOUR:
Introduction
On 7 April 2017, John Kotsifas, a solicitor, was found guilty of 39 charges of professional misconduct by the Victorian Civil and Administrative Tribunal (VCAT). On 12 September 2017, following a penalty hearing, VCAT recommended that Mr Kotsifas’ name be removed from the local roll of lawyers admitted to the legal profession (the Roll). The Victorian Legal Services Commissioner (VLSC) has now brought an application for the removal of Mr Kotsifas’ name from the Roll, pursuant to r 14.13 of the Supreme Court (Miscellaneous Civil Proceedings) Rules2008.
The issue is whether Mr Kotsifas is a fit and proper person to be a legal practitioner and remain on the Roll.
Background to the application
Mr Kotsifas is 53 years of age. He was admitted to practise as a legal practitioner on 7 April 1993.
Mr Kotsifas has worked in various capacities since his admission; initially as an employee solicitor, then as a partner, then as a sole practitioner, then again as a partner, and finally, as a sole practitioner at J Kotsifas & Associates Lawyers & Consultants (the Practice).
On 27 October 2015, the Legal Services Board (the Board) declined to issue Mr Kotsifas with any further practicing certificate on the grounds that he was not a fit and proper person. He has not held a practicing certificate since that date.
Mr Kotsifas’ problems, in terms of his disciplinary history, commenced in 2006 when he was reprimanded in relation to altering trust records and providing an inaccurate trust account statement. Further complaints were received from his clients in February 2009, September 2010 and September 2012. These related to a failure to properly maintain, and alteration of, trust records, failure to provide itemised accounts, and the mishandling of trust money. On 26 November 2014, VLSC commenced an investigation concerning Mr Kotsifas’ apparent provision of false records to LIV trust account investigators. It was determined that Mr Kotsifas had engaged in unprofessional conduct and he was reprimanded.
In 2014, Mr Kotsifas pleaded guilty at VCAT to three charges of professional misconduct in relation to findings that he had prepared, lodged and defended multiple caveats in wilful disregard of known facts and law. On 24 December 2014, he was ordered to undertake nine additional continuing professional development (CPD) units, to appoint and pay a mentor for 12 months, with both the mentor and Mr Kotsifas reporting to the VLSC, and to pay the VLSC’s costs.
In July 2015, Mr Kotsifas pleaded guilty to five charges of professional misconduct and two charges of unsatisfactory professional conduct in relation to causing deficiencies in trust totalling $29,044 and failing to keep proper trust records. On 16 July 2015, VCAT ordered that he engage an accountant or bookkeeper to maintain his trust account records, and that he undertake a study course in relation to the conduct of trust accounts and provide a certificate of completion. He was also ordered to pay a fine of $20,000 plus costs fixed in the sum of $10,864.83.
On 27 October 2015, Dr Neil Hannan was appointed Manager of the Practice based upon Mr Kotsifas’ failure to comply with the orders of VCAT. During the course of the management, a total deficiency of $537,396.04 in the Practice trust account was identified.
Mr Kotsifas failed to complete the additional CPD units as required by the VCAT orders of 24 December 2014. As a result, on 22 February 2016 VCAT ordered that he be prohibited from applying for a practising certificate until all CPD units were completed and that he seek the VLSC’s approval in relation to proposed CPD units. To date, he has neither completed the additional units nor sought VLSC’s approval in relation to proposed units, as required by the VCAT orders.
On 8 December 2016, a Magistrate found that Mr Kotsifas obstructed the Manager on four separate occasions, in breach of section 364 of schedule 1 of the Legal Profession Uniform LawApplication Act 2014 (‘the Uniform Law’), by failing to comply with Dr Hannan’s lawful directions. Mr Kotsifas was ordered to pay $24,267.20 by way of civil penalty.
To date, nearly $1.3 million has been paid from the Fidelity Fund to former clients of the Practice, including legal costs and interest.
Mr Kotsifas has not contributed to the costs of the Management and Receivership of the Practice, the claims made on the Fidelity Fund or the civil penalty orders made by the Magistrates’ Court.
The 2016 charges
On 7 April 2017, Mr Kotsifas was found guilty at VCAT of 39 charges of professional misconduct.[1]
[1]Victorian Legal Services Commissioner v Kotsifas (Legal Practice) [2017] VCAT 489 (7 April 2017) (‘the misconduct decision’).
The substance of those charges was that, as the principal of the practice, Mr Kotsifas:
(a) caused deficiencies in the Law Practice trust account totalling $75,010.32 by withdrawing funds without proper authorisation;
(b) created false invoices, which were supplied to the Commissioner and Law Institute of Victoria (LIV) trust account investigators in an attempt to mislead them;
(c) fell substantially short of the required standard of competence and diligence, including by lengthy delays and failure to act in accordance with instructions; and
(d) made false representations with an intent to mislead, including by:
(i) dishonestly drawing and declaring statutory declarations and providing them to the Commissioner;
(ii) making a false representation to the Supreme Court, there by leading the Court into error; and
(iii) drawing, swearing and filing a false and/or misleading affidavit intending it to be relied on by the County Court.
So, in greater detail, VCAT found the following charges proved in relation to five clients of Mr Kotsifas:
(a) Ms Finch: Between 9 August 2012 and mid-2013, Mr Kotsifas:
(iv) caused five separate trust account deficiencies between 9 August 2012 and 6 September 2012 (inclusive) totalling $20,000;
(v) failed to furnish a trust account statement; and
(vi) dishonestly created two invoices and supplied them to trust account inspectors purporting them to be genuine with the intention of misleading the inspectors.
(b) Mr Loustas: Between 2011 and April 2012, Mr Kotsifas:
(i) failed to provide costs disclosure;
(ii) fell substantially short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent legal practitioner;
(iii) caused deficiencies totalling $8,732.60; and
(iv)failed to provide a trust account statement.
(c) Mr Kolokotsas: Between 2009 and December 2011, Mr Kotsifas:
(i) breached Rule 28.1 of the Professional Conduct and Practice Rules 2005 (the Rules) by sending a letter representing something which was known to Mr Kotsifas to be untrue;
(ii) caused a trust account deficiency of $15,289.19 on 20 December 2011; and
(iii) breached regulation 3.3.28(1) of the Legal Profession Regulations 2005 by failing to provide a trust account statement.
(d) Mr Theodorakkos: Between October 2012 and March 2014, Mr Kotsifas:
(i) dishonestly created an alleged invoice and supplied it to the VLSC with the intent to mislead;
(ii) dishonestly drew and declared a statutory declaration purporting to verify the alleged invoice and supplying that to the VLSC with the intention of misleading, resulting in a finding that Mr Kotsifas is not a fit and proper person to engage in legal practice;
(iii) significantly delayed lodging a caveat and failed to lodge a caveat in accordance with instructions in breach of Rule 1.2 of the Rules;
(iv) delayed in breach of Rule 1.2 of the Rules in failing to act on the Theodorakkos fraud allegations;
(v) breached s.4.4.11 of the Legal Profession Act 2004 by failing to comply with requirements of the VLSC to provide trust account records;
(vi) dishonestly created another alleged invoice and supplied it to the VLSC with the intention of misleading him; and
(vii) dishonestly drew and declared a statutory declaration which purported to verify the other alleged invoice and provided it to the VLSC with the intention of misleading him.
(e) Mr Rahme: These charges involved three separate matters concerning a client, Mr Adonis Rahme. VCAT found the allegations in relation to each matter proved: -
(A) In relation to a mortgagee sale, the conduct commenced in early 2011 and extended to October 2011 Mr Kotsifas:
(i) falsely represented that he had instructions to act and appear for Adonis Rahme and so lead the Court into error and caused it to pay Mr Kotsifas the sum of $30,988.53 (the Rahme Sum) which was due to Mr Rahme;
(ii) caused deficiencies totalling $30,988.53;
(iii) dishonestly applied the Rahme Sum to pay bills of account rendered to Patrick Rahme knowing that the Rahme Sum was the property of Adonis and that Adonis was not responsible for paying Mr Kotsifas’ bills
(iv) breached s.4.4.11 of the Legal Profession Act 2004 in failing to respond to a request from the VLSC to provide documentation relating to the Rahme sum.
(B) In relation to dealings with Gippsreal, the conduct commenced in 2012 and extended to December 2013. Mr Kotsifas fell substantially short of the required standard of competence and diligence in failing to communicate effectively, advise and use best endeavours to complete work as soon as possible.
(C) In relation to a dispute concerning a Mr Fegan, the conduct commenced in November 2011 and continued until November 2013. Mr Kotsifas:
(i) breached Rule 39.1 of the Rules by failing to communicate promptly and effectively with Mr Rahme in relation to a taxation of costs, proceedings in VCAT and the entry of a default judgement in the County Court;
(ii) fell substantially short of the standard of competence and diligence in both a taxation matter and a further proceeding in the County Court;
(iii) dishonestly drew and sent a letter to his client knowing its contents were untrue or calculated to mislead him in respect to the costs of mediation;
(iv) drew, swore and filed an affidavit in the Supreme Court knowing it would be relied upon by the Court and knowing its contents were false and/or calculated to mislead the Court;
(v) drew and sent a letter knowing it would be relied upon by the solicitors on the other side of the proceedings and knowing its contents were untrue and/or calculated to mislead;
(vi) drew and sent a further letter to the solicitors on the other side knowing it was intended to be relied upon and that its contents were untrue and/or calculated to mislead;
(vii) drew, swore and filed a further affidavit intending it to be relied upon by the County Court when its contents were false and/or calculated to mislead the Court.[2]
[2]This summary is taken from the affidavit of Raeleen Lisa Small of the LSBC, affirmed on 7 February 2018.
Following the penalty hearing, on 12 September 2017 the following orders were made by VCAT:
(a) VCAT recommends to the Supreme Court that the Mr Kotsifas’ name be removed from the Roll;
(b) Mr Kotsifas is not to apply for any practising certificate before 1 July 2027; and
(c) Mr Kotsifas pay the VLSC’s costs of the proceeding.
In the Penalty Decision,[3] VCAT described Mr Kotsifas’ conduct as follows:
Mr Kotsifas failed to account for money held on trust for clients, deducted trust money to pay for unrendered bills of account, had deficiencies in his trust account, used a client’s trust money for private purposes and failed to comply with the statutory requirements in relation to trust records and accounting … while the amounts involved in the charges before me were relatively small, the individual clients were still affected, as already noted, to their serious detriment, the instances of misconduct were not isolated and they constituted a pattern of conduct in which Mr Kotsifas showed an egregious disregard for his trust account responsibilities and for his clients’ funds.[4]
[3]Victorian Legal Services Commissioner v Kotsifas (Legal Practice) (No 2) [2017] VCAT 1460 (12 September 2017).
[4]Ibid [73].
Then, in recommending that Mr Kotsifas’ name be removed from the Roll, VCAT stated:
It is appropriate, when considering the issue of referral, to reiterate that in addition to the trust account – related offences, this conduct included the writing of open letters which the respondent knew contained falsehoods, swearing and filing false affidavits, making a false declaration and misleading the Courts. As referred to in the disciplinary decision, these forms of professional misconduct go to the very heart of the system and administration of justice. He has effectively had ten years to reflect on his conduct but has given no substantive indication that any steps have been taken towards rehabilitation. When all these matters are considered along with his failure to engage with the VLSC and his investigators and to his apparent disregard to both past disciplinary findings and this VCAT proceeding, strike off is required for the sake of the protection of the legal profession as a group, the courts, the justice system and community confidence in that system.[5]
[5]Ibid [74].
VCAT also determined that he not be granted a local practising certificate before 1 July 2027.
Should Mr Kotsifas’ name be removed from the Supreme Court roll of lawyers admitted to the legal profession?
VCAT has the power to recommend that Mr Kotsifas’ name be removed from the Roll pursuant to section 302(1)(f) of the Uniform Law. The Court has a discrete power to implement the Tribunal’s recommendation provided by section 23(1)(c) of the Uniform Law, as follows:
Removal from Supreme Court roll
(1)The Supreme Court may order the removal of the name and other particulars of a person from the Supreme Court roll, on—
…
(c) the recommendation of the designated tribunal.
I recently considered the principles to be applied in determining whether to exercise the power under section 23 in Victorian Legal Services Commissioner v Hession,[6] which I set out below.
[6][2018] VSC 38 (1 March 2018) [38] – [39] (‘Hession’).
The test to be applied in determining whether to exercise the power under section 23 was set out by McMillan J in Victorian Legal Services Commissioner v Horak:
In order to exercise its discretion to remove a practitioner from the roll, the Court must be satisfied at the time of the hearing that the practitioner is not a fit and proper person to be a legal practitioner, and is likely to remain so for the indefinite future.[7]
[7][2016] VSC 780 [57].
In Legal Services Board v McGrath,[8] Warren CJ emphasised that removing a practitioner from the Roll serves the purpose of protecting not just the public, but also the legal profession as a group, the courts, the justice system and the community’s confidence in the justice system. Her Honour also noted that the plaintiff bears the onus of proving to the Briginshaw standard that the test is made out. Thus, while the recommendation of the Tribunal should be given appropriate weight, the Court must independently exercise its discretion and is not bound to follow the Tribunal’s recommendation.
[8](2010) 29 VR 325.
I am comfortably satisfied on the basis of the material I have set out that Mr Kotsifas is, at the present time, not a fit and proper person to be a legal practitioner. His disciplinary history and the seriousness of the 2016 offences make this conclusion inevitable.
Mr Kotsifas’ history of misconduct is most unsatisfactory. He has breached the trust of his clients and flouted or ignored orders (or directions) of the VLSC. As far as I can tell, there is no prospect of him mending his ways in the future.
I confidently reach the conclusion that Mr Kotsifas will not be a fit or proper person to practice as a lawyer in the foreseeable future.
Once that conclusion is reached, the Court must order the removal of his name from the Roll.
0
2
0