Victorian Lawyer with Alleged Tax Debt of $2.6 Million Fights to keep Practising Certificate

Dimitrios Jimmy Daikou failed in his bid to stay a decision of the Victorian Legal Services Board (VLSB) to refuse to renew his practising certificate pending the final determination of review proceedings. The Victorian Civil and Administrative Tribunal (VCAT) found that Mr Diakou’s pattern of non-compliance with the law and his legal obligations as a practitioner created a significant risk to the public.

In considering principles relevant to a stay application the Tribunal said:

16. In relation to whether a failure to stay a decision will render the application nugatory, the Tribunal should consider whether irreparable damage will have been done to the applicant by the operation of the decision before the completion of the review, which cannot be undone if the applicant succeeds at the final hearing.

17. It is also the case that there should be a predilection in favour of not putting people out of business before their review has been heard. In relation to professional and occupational regulation, the dominant principle of whether the refusal of a stay would render the application for review nugatory, is balanced against community interest considerations, including the protection of the public. The protection of the public may in some cases outweigh the desire not to inflict irreparable damage on the applicant and others relying on his services.

The Tribunal considered the decision of the VLSB under review as follows:

20. The Decision letter states that the Board had decided that Mr Diakou was not a fit and proper person to hold a practising certificate and that pursuant to section 45(2) of the Uniform Law, the Board could not renew a certificate in those circumstances. The grounds set out in the Decision letter were Mr Diakou’s:

1. failure to hold public liability insurance (‘PII’), showed a pattern of failing to comply with the law;
2. continuing failure to comply with CPD requirements showed a pattern of failing to comply with the law; and
3. continued reference in Mr Diakou’s emails to the statement ‘Liability limited by a scheme approved under the Professional Standards Legislation’, when he did not have PII and so the scheme could not apply to him.

21. In the Board’s Outline of Submissions to the Tribunal and in oral submissions, the Board also sought to rely upon:

1. The applicant’s evidence in another Tribunal proceeding that he personally owes the Australian Taxation Office (‘ATO’) the amount of $2.6 million in tax and that his law practice owes the ATO an additional $190,000;
2. A copy of a County Court of Victoria order, in which the ATO had entered judgement against Mr Diakou in the amount of $1,619,760.69 plus interest of $34,032.96 and costs;
3. Sub-paragraphs a and b above, indicate a disregard for legal and civic obligations regarding the payment of income tax and this is a matter of relevance to fitness to practice;
4. Mr Diakou is responsible for a failure to discharge professional obligations to Aptum Legal Pty Ltd, resulting in a creditor’s petition to be heard on 30 November 2025;
5. An argument that Mr Diakou was likely to be placed in bankruptcy;
6. An argument that disciplinary charges in another VCAT proceeding were likely to be proven; and
7. Mr Diakou’s widespread failures to comply with orders made by the Tribunal, in a disciplinary proceeding brought against him by the Board and also in the present proceeding. The Board submitted that the way a practitioner conducts himself or herself in disciplinary proceedings many itself demonstrate unfitness to practice.

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The Tribunal considered the evidence and said:

30. Mr Diakou has given detailed evidence in his affidavit about the effect of a failure to grant a stay on his personal finances, his support for his elderly parents, his clients’ legal matters and the future viability of the law firm.

31. In relation to the debts said to be owed to the ATO and the Board’s submission that these matters should be taken into account, the Tribunal is not satisfied that there is sufficient evidence and detail about these matters at this stage for them to be considered in deciding whether to grant a stay of the decision under review. Therefore, the Tribunal is unable to consider, for this application, whether Mr Diakou has a disregard of legal and civic obligations regarding the payment of income tax, save as discussed below for the purpose of whether there is a serious question to be tried.

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38. The Tribunal finds that there is a significant risk that if a stay of the decision under review is not granted and Mr Diakou succeeds in his review, that the application for review may be nugatory.

39. Mr Diakou’s evidence is that he is a sole practitioner and has one part time employee, being a bookkeeper. Shortly before the decision under review was made, he appointed another legal practitioner, Mr Pederick, as a legal director of the firm in case his renewal was not granted. Mr Diakou’s evidence was to the effect that Mr Pederick is able to operate his firm for a short time, but he has his own firm and clients. The Tribunal is satisfied that if a stay is not granted there is a significant risk that Mr Diakou’s clients may seek alternative legal representation in their current and future legal matters. Mr Diakou’s evidence was that two clients are the basis for approximately 97 percent of the work of his firm. The Tribunal notes the potentially long period before this review is heard in the context of the risk to Mr Diakou losing his clients if a stay is not granted. There is a significant risk that irreparable damage will be done to Mr Diakou and his business if a stay is not granted. This is a significant issue in weighing whether to grant a stay of the decision under review.

40. However, although this is the primary consideration, it is not the only consideration and needs to be balanced against other factors including the community interest. A significant issue in determining whether to grant a stay in this matter is the risk of allowing Mr Diakou to continue to practice.

41. Relevantly, Mr Diakou has given evidence that he has very few clients and would offer an undertaking that he would not take on any further clients while this proceeding is being resolved. Further, he states that his PII is now up to date and paid through to 30 June 2026. He would also undertake to participate in professional development worth five CPD points each quarter, up to the date of the hearing and to provide proof of this to the Board.

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45. For the purpose of this stay application, the Tribunal finds that Mr Diakou has exhibited a pattern of non-compliance with the law and his professional obligations regarding CPD. He has exhibited a risk of non-compliance with the law even when on notice of the non-compliance.

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56. The interests of Mr Diakou’s clients may also suffer if a stay is not granted. At the present time, there is limited evidence of the particular circumstances of Mr Diakou’s current files, such as whether litigation files are approaching trial or other important events. However, if the stay is not granted, the clients would lose the services of a lawyer who has been conducting their legal matter. They may change law firms, with the resulting loss of Mr Diakou’s knowledge of the file and the likelihood of incurring additional legal costs, to have another lawyer get up to speed with the file.

57. These private interests are to be balanced against the public interest, which in this case significantly includes the need to protect the public from Mr Diakou. As discussed above, the Tribunal has found, for the purpose of the stay application (and made on the basis of necessarily interim findings) that Mr Diakou’s continuation in practice with the granting of a stay, poses a risk to the public as he has a pattern of non-compliance with the law and his obligations as a legal practitioner. The fact that the law firm has now paid his PII retrospectively and for the current practice year, does not resolve the risk that Mr Diakou has a pattern of non-compliance with the law and his obligations as a practitioner. Further, for the purpose of this stay application the risk also includes the risk that Mr Diakou will not comply with the law and his obligations as a practitioner, even when these matters are brought to his attention by the regulator. This risk is not significantly overcome by the undertakings offered by Mr Diakou. The public interest in determining this application is very significant.

Ultimately the Tribunal decided to dismiss the application for a stay of the decision to not renew Mr Diakou’s practising certificate.

The full case can be read here.