Chapter 3 Conduct of legal practice
Part 3.1 Trust money and trust accounts
The purposes of this Part are as follows:(a) to ensure trust money is held by law practices in a way that protects the interests of persons for or on whose behalf money is held, both inside and outside this jurisdiction,(b) to minimise compliance requirements for law practices that provide legal services within and outside this jurisdiction,(c) to ensure the Law Society Council can work effectively with corresponding authorities in other jurisdictions in relation to the regulation of trust money and trust accounts.
(1) In this Part:approved ADI means an ADI approved under section 280 (Approval of ADIs) by the Law Society Council.
controlled money means money received or held by a law practice in respect of which the practice has a written direction to deposit the money in an account (other than a general trust account) over which the practice has or will have exclusive control.
Note. See section 256 (6) (Controlled money), which prevents pooling of controlled money.controlled money account means an account maintained by a law practice with an ADI for the holding of controlled money received by the practice.
deposit record includes a deposit slip or duplicate deposit slip.
external examination means an external examination under Division 4 of Part 3.1 of a law practice’s trust records.
external examiner means a person holding an appointment as an external examiner under Division 4 of Part 3.1.
general trust account means an account maintained by a law practice with an approved ADI for the holding of trust money received by the practice, other than controlled money or transit money.
investigation means an investigation under Division 3 of Part 3.1 of the affairs of a law practice.
investigator means a person holding an appointment as an investigator under Division 3 of Part 3.1.
permanent form, in relation to a trust record, means printed or, on request, capable of being printed, in English on paper or other material.
power includes authority.
transit money means money received by a law practice subject to instructions to pay or deliver it to a third party, other than an associate of the practice.
trust account means an account maintained by a law practice with an approved ADI to hold trust money.
trust money means money entrusted to a law practice in the course of or in connection with the provision of legal services by the practice, and includes:
(a) money received by the practice on account of legal costs in advance of providing the services, and(b) controlled money received by the practice, and(c) transit money received by the practice, and(d) money received by the practice, that is the subject of a power, exercisable by the practice or an associate of the practice, to deal with the money for or on behalf of another person.trust records includes the following documents:
(a) receipts,(b) cheque butts or cheque requisitions,(c) records of authorities to withdraw by electronic funds transfer,(d) deposit records,(e) trust account ADI statements,(f) trust account receipts and payments cash books,(g) trust ledger accounts,(h) records of monthly trial balances,(i) records of monthly reconciliations,(j) trust transfer journals,(k) statements of account as required to be furnished under the regulations,(l) registers required to be kept under the regulations,(m) monthly statements required to be kept under the regulations,(n) files relating to trust transactions or bills of costs or both,(o) written directions, authorities or other documents required to be kept under this Act or the regulations,(p) supporting information required to be kept under the regulations in relation to powers to deal with trust money.Trustees means the Trustees of the Public Purpose Fund.
(2) A reference in this Part to a law practice’s trust account or trust records includes a reference to an associate’s trust account or trust records.(3) A reference in this Part to a power given to a law practice or an associate of the practice to deal with money for or on behalf of another person is a reference to a power given to the practice or associate that is exercisable by:(a) the practice alone, or(b) an associate of the practice alone (otherwise than in a private and personal capacity), or(c) the practice or an associate of the practice jointly or severally, or jointly and severally, with either or both of the following:(i) one or more associates of the practice,(ii) the person, or one or more nominees of the person, for whom or on whose behalf the money may or is to be dealt with under the power.
244 Money involved in financial services or investments
(1) Money that is entrusted to or held by a law practice for or in connection with:(a) a financial service provided by the practice or an associate of the practice in circumstances where the practice or associate is required to hold an Australian financial services licence covering the provision of the service (whether or not such a licence is held at any relevant time), or(b) a financial service provided by the practice or an associate of the practice in circumstances where the practice or associate provides the service as a representative of another person who carries on a financial services business (whether or not the practice or associate is an authorised representative at any relevant time),is not trust money for the purposes of this Act.(2) Without limiting subsection (1), money that is entrusted to or held by a law practice for or in connection with:(a) a managed investment scheme, or(b) mortgage financing,undertaken by the practice is not trust money for the purposes of this Act.(3) Without limiting subsections (1) and (2), money that is entrusted to or held by a law practice for investment purposes, whether on its own account or as agent, is not trust money for the purposes of this Act, unless:(a) the money was entrusted to or held by the practice:(i) in the ordinary course of legal practice, and(ii) primarily in connection with the provision of legal services to or at the direction of the client, and(b) the investment is or is to be made:(i) in the ordinary course of legal practice, and(ii) for the ancillary purpose of maintaining or enhancing the value of the money or property pending completion of the matter or further stages of the matter or pending payment or delivery of the money or property to or at the direction of the client.(4) In this section:Australian financial services licence, authorised representative, financial service and financial services business have the same meanings as in Chapter 7 of the Corporations Act 2001 of the Commonwealth.
245 Determinations about status of money
(1) This section applies to money received by a law practice if the Law Society Council considers that there is doubt or a dispute as to whether the money is trust money.(2) The Council may determine that the money is or is not trust money.(3) The Council may revoke or modify a determination under this section.(4) While a determination under this section is in force that money is trust money, the money is taken to be trust money for the purposes of this Act.(5) While a determination under this section is in force that money is not trust money, the money is taken not to be trust money for the purposes of this Act.(6) This section has effect subject to a decision of a court or administrative review body made in relation to the money concerned.Note. Section 298 requires notice to be given to a client when money entrusted to a law practice is not trust money because of a determination under this section.
246 Application of Part to law practices and trust money
(1) Trust money received in this jurisdiction
This Part applies to the following law practices in respect of trust money received by them in this jurisdiction:(a) a law practice that has an office in this jurisdiction, whether or not the practice has an office in another jurisdiction,(b) a law practice that does not have an office in any jurisdiction at all.Note. It is intended that a law practice that receives trust money in this jurisdiction, that does not have an office in this jurisdiction, but that has an office in another jurisdiction, must deal with the money in accordance with the corresponding law of the other jurisdiction.(2) Trust money received in another jurisdiction
This Part applies to the following law practices in respect of trust money received by them in another jurisdiction:(a) a law practice that has an office in this jurisdiction and in no other jurisdiction,(b) a law practice that has an office in this jurisdiction and in one or more other jurisdictions but not in the jurisdiction in which the trust money was received, unless the money is dealt with in accordance with the corresponding law of another jurisdiction.(3) Exclusions
However, this Part does not apply to:(a) prescribed law practices or classes of law practices, or(b) prescribed law practices or classes of law practices in prescribed circumstances, or(c) prescribed kinds of trust money, or(d) prescribed kinds of trust money in prescribed circumstances.(4) Money received for costs not trust money
Money received in the course of or in connection with the provision of legal services by a law practice for or on behalf of another person for the payment of costs due to the practice (including costs that have been awarded by a court, tribunal or other body that has power to award costs), is not trust money for the purposes of this Act.(5) Meaning of having an office in a jurisdiction
A reference in this section to having an office in a jurisdiction is a reference to having, or engaging in legal practice from, an office or business address in the jurisdiction.Note. Section 195 (Trust money and trust accounts) applies this Part to Australian-registered foreign lawyers.
247 Protocols for determining where trust money is received
(1) The Law Society Council may enter into arrangements (referred to in this Part as protocols) with corresponding authorities about any or all of the following:(a) determining the jurisdiction where a law practice receives trust money,(b) sharing information about whether, and (if so) how, trust money is being dealt with under this Act or a corresponding law.(2) For the purposes of this Act, to the extent that the protocols are relevant, the jurisdiction where a law practice receives trust money is to be determined in accordance with the protocols.(3) The Law Society Council may enter into arrangements that amend, revoke or replace a protocol.(4) A protocol does not have effect in this jurisdiction unless it is embodied or identified in the regulations.
(1) For the purposes of this Act, a law practice receives money when:(a) the practice obtains possession or control of it directly, or(b) the practice obtains possession or control of it indirectly as a result of its delivery to an associate of the practice, or(c) the practice, or an associate of the practice (otherwise than in a private and personal capacity), is given a power to deal with the money for or on behalf of another person.(d) (Repealed)(2) For the purposes of this Act, a law practice or associate is taken to have received money if the money is available to the practice or associate by means of an instrument or other way of authorising an ADI to credit or debit an amount to an account with the ADI, including, for example, an electronic funds transfer, credit card transaction or telegraphic transfer.
249 Discharge by legal practitioner associate of obligations of law practice
(1) The following actions, if taken by a legal practitioner associate of a law practice on behalf of the practice in relation to trust money received by the practice, discharge the corresponding obligations of the practice in relation to the money:(a) the establishment of a trust account,(b) the maintenance of a trust account,(c) the payment of trust money into and out of a trust account and other dealings with trust money,(d) the maintenance of trust records,(e) engaging an external examiner to examine trust records,(f) the payment of an amount into an ADI account as referred to in section 283 (Statutory deposits),(g) an action of a kind prescribed by the regulations.(2) If the legal practitioner associate maintains a trust account in relation to trust money received by the law practice, the provisions of this Part and the regulations made for the purposes of this Part apply to the associate in the same way as they apply to a law practice.(3) Subsection (1) does not apply to the extent that the associate is prevented by the regulations from taking any action referred to in that subsection.
250 Liability of principals of law practice
(1) A provision of this Part or the regulations made for the purposes of this Part expressed as imposing an obligation on a law practice imposes the same obligation on the principals of the law practice jointly and severally, but discharge of the practice’s obligation also discharges the corresponding obligation imposed on the principals.(2) References in this Part and the regulations made for the purposes of this Part to a law practice include references to the principals of the law practice.
251 Former practices, principals and associates
This Part applies in relation to former law practices and former principals and associates of law practices in relation to conduct occurring while they were respectively law practices, principals and associates in the same way as it applies to law practices, principals and associates, and so applies with any necessary modifications.
252 Barristers not to receive trust money
A barrister is not, in the course of practising as a barrister, to receive trust money.
Division 2 Trust accounts and trust money
253 Maintenance of general trust account
(1) A law practice that receives trust money to which this Part applies must maintain a general trust account in this jurisdiction.Maximum penalty: 100 penalty units.
(2) A law practice that is required to maintain a general trust account in this jurisdiction must establish and maintain the account in accordance with the regulations.Maximum penalty: 100 penalty units.
(3) Subsection (1) does not apply to a law practice in respect of any period during which the practice receives or holds only either or both of the following:(a) controlled money,(b) transit money received in a form other than cash.(4) Subject to any requirements of the regulations, a requirement of this section for a law practice to maintain, or establish and maintain, a general trust account in this jurisdiction does not prevent the practice from maintaining, or establishing and maintaining, more than one general trust account in this jurisdiction, whether during the same period or during different periods.(5) Without limiting the other provisions of this section, the regulations may provide that a law practice must not close a general trust account except as permitted by the regulations, either generally or in any prescribed circumstances.
254 Certain trust money to be deposited in general trust account
(1) Subject to section 258A, as soon as practicable after receiving trust money, a law practice must deposit the money in a general trust account of the practice unless:(a) the practice has a written direction by an appropriate person to deal with it otherwise than by depositing it in the account, or(b) the money is controlled money, or(c) the money is transit money, or(d) the money is the subject of a power given to the practice or an associate of the practice to deal with the money for or on behalf of another person.Maximum penalty: 100 penalty units.
(2) Subject to section 258A, a law practice that has received money that is the subject of a written direction mentioned in subsection (1) (a) must deal with the money in accordance with the direction:(a) within the period (if any) specified in the direction, or(b) subject to paragraph (a), as soon as practicable after it is received.Maximum penalty: 100 penalty units.
(3) The law practice must keep a written direction mentioned in subsection (1) (a) for the period prescribed by the regulations.Maximum penalty: 50 penalty units.
(4) (Repealed)(5) A person is an appropriate person for the purposes of this section if the person is legally entitled to give the law practice directions in respect of dealings with the trust money.
255 Holding, disbursing and accounting for trust money
(1) A law practice must:(a) hold trust money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received, and(b) disburse the trust money only in accordance with a direction given by the person.Maximum penalty: 50 penalty units.
(2) Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law.(3) The law practice must account for the trust money as required by the regulations.Maximum penalty: 50 penalty units.
255A Manner of withdrawal of trust money from general trust account
(1) A law practice must not withdraw trust money from a general trust account otherwise than by cheque or electronic funds transfer.Maximum penalty: 50 penalty units.
(2) Without limiting subsection (1), the following are specifically prohibited:(a) cash withdrawals,(b) ATM withdrawals or transfers,(c) telephone banking withdrawals or transfers.(3) The regulations may make provision for or with respect to withdrawals by cheque or electronic funds transfer.(4) This section has effect despite anything to the contrary in any directions given to the law practice concerned, even if the directions are given by a person who is otherwise legally entitled to give the law practice directions in respect of dealings with the trust money.
(1) As soon as practicable after receiving controlled money, a law practice must deposit the money in the account specified in the written direction relating to the money.Maximum penalty: 50 penalty units.
(2) The law practice must hold controlled money deposited in a controlled money account in accordance with subsection (1) exclusively for the person on whose behalf it was received.Maximum penalty: 50 penalty units.
(3) The law practice that holds controlled money deposited in a controlled money account in accordance with subsection (1) must not disburse the money except in accordance with:(a) the written direction mentioned in that subsection, or(b) a later written direction given by or on behalf of the person on whose behalf the money was received.Maximum penalty: 50 penalty units.
(4) The law practice must maintain the controlled money account, and account for the controlled money, as required by the regulations.Maximum penalty: 50 penalty units.
(5) The law practice must keep a written direction mentioned in this section for the period prescribed by the regulations.Maximum penalty: 50 penalty units.
(6) The law practice must ensure that the controlled money account is used for the deposit of controlled money received on behalf of the person referred to in subsection (2), and not for the deposit of controlled money received on behalf of any other person, except to the extent that the regulations otherwise permit.Maximum penalty: 50 penalty units.
(7) Subsection (3) applies subject to an order of a court of competent jurisdiction or as authorised by law.
256A Manner of withdrawal of controlled money from controlled money account
(1) A law practice must not withdraw controlled money from a controlled money account otherwise than by cheque or electronic funds transfer.Maximum penalty: 50 penalty units.
(2) Without limiting subsection (1), the following are specifically prohibited:(a) cash withdrawals,(b) ATM withdrawals or transfers,(c) telephone banking withdrawals or transfers.(3) The regulations may make provision for or with respect to withdrawals by cheque or electronic funds transfer.(4) This section has effect despite anything to the contrary in any directions given to the law practice concerned, even if the directions are given by a person who is otherwise legally entitled to give the law practice directions in respect of dealings with the controlled money.
(1) Subject to section 258A, a law practice that has received transit money must pay or deliver the money as required by the instructions relating to the money:(a) within the period (if any) specified in the instructions, or(b) subject to paragraph (a), as soon as practicable after it is received.Maximum penalty: 50 penalty units.
(2) The law practice must account for the money as required by the regulations.Maximum penalty: 50 penalty units.
258 Trust money subject to specific powers
(1) Subject to section 258A, a law practice must ensure that trust money that is the subject of a power given to the practice or an associate of the practice is dealt with by the practice or associate only in accordance with the power relating to the money.Maximum penalty: 50 penalty units.
(2) The law practice must account for the money in the way prescribed by the regulations.Maximum penalty: 50 penalty units.
258A Trust money received in the form of cash
(1) General trust money
A law practice must deposit general trust money received in the form of cash in a general trust account of the practice.Maximum penalty: 50 penalty units.
(2) If the law practice has a written direction by an appropriate person to deal with general trust money received in the form of cash otherwise than by first depositing it in a general trust account of the practice:(a) the money must nevertheless be deposited in a general trust account of the practice in accordance with subsection (1), and(b) the money is thereafter to be dealt with in accordance with any applicable terms of the direction so far as those terms are not inconsistent with paragraph (a).(3) Controlled money
Controlled money received in the form of cash must be deposited in a controlled money account in accordance with section 256.(4) Transit money
A law practice must deposit transit money received in the form of cash in a general trust account of the practice before the money is otherwise dealt with in accordance with the instructions relating to the money.Maximum penalty: 50 penalty units.
(5) Trust money subject of a power
A law practice must deposit trust money that is received in the form of cash and is the subject of a power in a general trust account (or a controlled money account in the case of controlled money) of the practice before the money is otherwise dealt with in accordance with the power.Maximum penalty: 50 penalty units.
(6) Paramount operation of this section
This section has effect despite anything to the contrary in any relevant direction, instruction or power.(7) Definitions
In this section:appropriate person, in relation to trust money, means a person who is legally entitled to give the law practice concerned directions in respect of dealings with the money.
general trust money means trust money, other than:
(a) controlled money, and(b) transit money, and(c) money that is the subject of a power.
(1) Money standing to the credit of a trust account maintained by a law practice is not available for the payment of debts of the practice or any of its associates.(2) Money standing to the credit of a trust account maintained by a law practice is not liable to be attached or taken in execution for satisfying a judgment against the practice or any of its associates.(3) This section does not apply to money to which a law practice or associate is entitled.
(1) A law practice must not, otherwise than as permitted by subsection (2), mix trust money with other money.Maximum penalty: 100 penalty units.
(2) A law practice is permitted to mix trust money with other money to the extent only that is authorised by the Law Society Council and in accordance with any conditions imposed by the Law Society Council in relation to the authorisation.
261 Dealing with trust money: legal costs and unclaimed money
(1) A law practice may do any of the following, in relation to trust money held in a general trust account or controlled money account of the practice for a person:(a) exercise a lien, including a general retaining lien, for the amount of legal costs reasonably due and owing by the person to the practice,(b) withdraw money for payment to the practice’s account for legal costs owing to the practice if the relevant procedures or requirements prescribed by this Act and the regulations are complied with,(c) after deducting any legal costs properly owing to the practice, deal with the balance as unclaimed money under section 266 (Unclaimed money).(2) Subsection (1) applies despite any other provision of this Part but has effect subject to Part 3.2 (Costs disclosure and assessment).
262 Deficiency in trust account
(1) An Australian legal practitioner 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.Maximum penalty: 200 penalty units.
(2) A reference in subsection (1) to an account includes a reference to an account of the practitioner or of the law practice of which the practitioner is an associate.(3) In this section:cause includes 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.
263 Reporting certain irregularities and suspected irregularities
(1) As soon as practicable after a legal practitioner associate of a law practice becomes aware that there is an irregularity in any of the practice’s trust accounts or trust ledger accounts, the associate must give written notice of the irregularity to:(a) the Law Society Council, and(b) if a corresponding authority is responsible for the regulation of the accounts concerned—the corresponding authority.Maximum penalty: 50 penalty units.
(2) If an Australian legal practitioner believes on reasonable grounds that there is an irregularity in connection with the receipt, recording or disbursement of any trust money received by a law practice of which the practitioner is not a legal practitioner associate, the practitioner must, as soon as practicable after forming the belief, give written notice of it to:(a) the Law Society Council, and(b) if a corresponding authority is responsible for the regulation of the accounts relating to the trust money concerned—the corresponding authority.Maximum penalty: 50 penalty units.
(3) An Australian legal practitioner is not liable for any loss or damage suffered by another person as a result of the practitioner’s compliance with subsection (1) or (2).
(1) A law practice must keep in permanent form trust records in relation to trust money received by the practice.Maximum penalty: 100 penalty units.
(2) The law practice must keep the trust records:(a) in accordance with the regulations, and(b) in a way that at all times discloses the true position in relation to trust money received for or on behalf of any person, and(c) in a way that enables the trust records to be conveniently and properly investigated or externally examined, and(d) for a period determined in accordance with the regulations.Maximum penalty: 100 penalty units.
(1) A law practice must not knowingly receive money or record receipt of money in the practice’s trust records under a false name.Maximum penalty: 100 penalty units.
(2) If a person on whose behalf trust money is received by a law practice is commonly known by more than one name, the practice must ensure that the practice’s trust records record all names by which the person is known.Maximum penalty: 100 penalty units.
(1) If a law practice holding money in a trust account cannot find the person on whose behalf the money is held or a person authorised to receive it, the practice may:(a) pay the money to the Treasurer for credit to the Consolidated Fund, and(b) provide the Treasurer with such information as the Treasurer requires in relation to the money and the person on whose behalf the money was held by the practice.(2) If a law practice pays money to the Treasurer under subsection (1), the practice is relieved from any further liability in relation to the money.(3) The Treasurer must pay money deposited under this section to a person who satisfies the Treasurer as to his or her entitlement to the money.(4) Payment of money to a person under subsection (3):(a) discharges the Crown and the Treasurer from any liability in relation to the money, and(b) does not discharge the person from any liability to another person who establishes a right to the money.(5) The Treasurer may require any person to provide information that the person has, or can obtain, about the entitlement of a person to money paid to the Treasurer under this section and attempts made to locate the person.(6) A person of whom a requirement is made under subsection (5):(a) must comply with the requirement, and(b) must not, in purported compliance with the requirement, give information that he or she knows is false or misleading in a material particular.Maximum penalty (subsection (6)): 20 penalty units.
267 Appointment of investigators
(1) The Law Society Council may, in writing, appoint a suitably qualified person to investigate the affairs or specified affairs of a law practice.(2) The appointment may be made generally or for the law practice specified in the instrument of appointment.(3) An investigator may, with the approval of the Law Society Council, appoint an assistant.
(1) The instrument of appointment may authorise the investigator to conduct either or both of the following:(a) routine investigations on a regular or other basis,(b) investigations in relation to particular allegations or suspicions regarding trust money, trust property, trust accounts or any other aspect of the affairs of the law practice.(2) The principal purposes of an investigation are to ascertain whether the law practice has complied with or is complying with the requirements of this Part and the regulations under this Part and to detect and prevent fraud or defalcation, but this subsection does not limit the scope of the investigation or the powers of the investigator.
Chapter 6 (Provisions relating to investigations) applies to an investigation under this Division.
As soon as practicable after completing the investigation, the investigator must give a written report of the investigation to the Law Society Council.
271 When costs of investigation are debt
(1) If:(a) an investigator states in his or her report of an investigation that there is evidence that a breach of this Act or the regulations has been committed or evidence that a default (within the meaning of Part 3.4) has occurred in relation to the law practice whose affairs are under investigation, and(b) the Law Society Council is satisfied that the breach is wilful or of a substantial nature,the Council may decide that the whole or part of the costs of carrying out the investigation is payable to the Council and may specify the amount payable.(2) The amount specified by the Law Society Council is a debt owing to the Council by the law practice whose affairs are under investigation.
Division 4 External examinations
272 Designation of external examiners
(1) The Law Society Council may, in writing, designate persons (referred to in this Division as designated persons) as being eligible to be appointed as external examiners.(2) Only designated persons may be appointed as external examiners.(3) A person appointed as an external examiner may, with the approval of the Law Society Council, appoint an assistant.(4) An employee or agent of the Law Society may be a designated person.(5) The Law Society Council may revoke a person’s designation under this section.
273 Designation and appointment of associates as external examiners
(1) The Law Society Council may designate an associate of a law practice under this Division only if the Council is satisfied that it is appropriate to do so.(2) However, an associate of a law practice cannot be appointed as an external examiner under this Division to examine any trust records of a law practice of which he or she is an associate.
274 Trust records to be externally examined
(1) A law practice must at least once in each financial year have its trust records externally examined by an external examiner appointed in accordance with the regulations.Maximum penalty: 100 penalty units.
(2) The Law Society Council may appoint an external examiner to examine a law practice’s trust records if the Council is not satisfied:(a) that the practice has had its trust records externally examined as required by this section, or(b) that an external examination of the practice’s trust records has been carried out in accordance with the regulations.(3) Without affecting the generality of section 300, this section has effect subject to any exemptions provided by or given under the regulations from the requirement to have trust records examined as otherwise required by this section.
275 Final examination of trust records
(1) This section applies if a law practice:(a) ceases to be authorised to receive trust money, or(b) ceases to engage in legal practice in this jurisdiction.(2) The law practice must appoint an external examiner to examine the practice’s trust records:(a) in respect of the period since an external examination was last conducted, and(b) in respect of each period thereafter, comprising a completed period of 12 months or any remaining partly completed period, during which the practice continued to hold trust money.Maximum penalty: 50 penalty units.
(3) The law practice must lodge with the Law Society:(a) a report of each examination under subsection (2) within 60 days after the end of the period to which the examination relates, and(b) a statutory declaration in the prescribed form within 60 days of ceasing to hold trust money.Maximum penalty: 20 penalty units.
(4) The law practice must ensure that, within 12 months after the law practice ceases to be authorised to receive trust money or ceases to engage in legal practice in this jurisdiction:(a) any general trust account maintained by the law practice in this jurisdiction is closed, and(b) trust money held in any such account is dealt with as required by this Act and the regulations (such as by being disbursed in accordance with a direction given by the person on whose behalf it was received).(5) If an Australian legal practitioner dies, the practitioner’s legal personal representative must comply with this section as if the representative were the practitioner.(6) Nothing in this section affects any other requirements under this Part.
276 Examination of affairs in connection with examination of trust records
(1) An external examiner appointed to examine a law practice’s trust records may examine the affairs of the practice for the purposes of and in connection with an examination of the trust records.(2) If the law practice is an incorporated legal practice or multi-disciplinary partnership, the reference in subsection (1) to the affairs of the law practice extends to the affairs of the incorporated legal practice or multi-disciplinary partnership or of an associate, so far as they are relevant to trust money, trust records and associated matters.(3) A reference in this Division and Chapter 6 (Provisions relating to investigations) to trust records includes a reference to the affairs of a law practice that may be examined under this section for the purposes of and in connection with an examination of the practice’s trust records.
(1) Chapter 6 (Provisions relating to investigations) applies to an external examination under this Division.(2) Subject to Chapter 6, an external examination of trust records is to be carried out in accordance with the regulations.(3) Without limiting subsection (2), the regulations may provide for the following:(a) the standards to be adopted and the procedures to be followed by external examiners,(b) the form and content of an external examiner’s report on an examination.
278 External examiner’s report
(1) As soon as practicable after completing an external examination, an external examiner must give a written report of the examination to the Law Society.(2) The examiner must not disclose information in the report or acquired in carrying out the examination, unless permitted to do so under subsection (3) or under section 677 (Permitted disclosure of confidential information obtained in course of investigation, examination or audit).Maximum penalty: 20 penalty units.
(3) The examiner may disclose information in the report or acquired in carrying out the examination:(a) as is necessary for properly conducting the examination and making the report of the examination, or(b) to an investigator or a supervisor, manager or receiver appointed under this Act, or(c) if the law practice is an incorporated legal practice—to a receiver, receiver and manager, liquidator (including a provisional liquidator), controller, administrator or deed administrator appointed for the practice under the Corporations Act 2001 of the Commonwealth, or(d) to the law practice concerned or an associate of the law practice.
279 Law practice liable for costs of examination
(1) A law practice whose trust accounts have been externally examined must pay the costs of the examination.(2) If the Law Society Council appointed the external examiner to carry out the examination, the Council may specify the amount payable as the costs of the examination, and the specified amount is a debt payable to it by the law practice.
Division 5 Provisions relating to ADIs
(1) The Law Society Council may approve ADIs at which trust accounts to hold trust money may be maintained.(2) The Law Society Council may impose conditions, of the kinds prescribed by the regulations, on an approval under this section, when the approval is given or during the currency of the approval, and may amend or revoke any conditions imposed.(3) The Law Society Council may revoke an approval given under this section.
281 ADI not subject to certain obligations and liabilities
(1) An ADI at which a trust account is maintained by a law practice:(a) is not under any obligation to control or supervise transactions in relation to the account or to see to the application of money disbursed from the account, and(b) does not have, in relation to any liability of the law practice to the ADI, any recourse or right (whether by way of set-off counterclaim, charge or otherwise) against money in the account.(2) Subsection (1) does not relieve an ADI from any liability to which it is subject apart from this Act.
282 Reports, records and information
(1) An ADI at which a trust account is maintained must report any deficiency in the account to the Law Society as soon as practicable after becoming aware of the deficiency.Maximum penalty: 50 penalty units.
(2) An ADI at which a trust account is maintained must report a suspected offence in relation to the trust account to the Law Society as soon as practicable after forming the suspicion.Maximum penalty: 50 penalty units.
(3) An ADI must furnish to the Law Society reports about trust accounts in accordance with the regulations.Maximum penalty: 50 penalty units.
(4) An ADI at which a trust account is maintained must without charge:(a) produce for inspection or copying by an investigator or external examiner any records relating to the trust account or trust money deposited in the trust account, and(b) provide the investigator or external examiner with full details of any transactions relating to the trust account or trust money,on demand by the investigator or external examiner and on production to the ADI of evidence of the appointment of the investigator or the external examiner in relation to the law practice concerned.Maximum penalty: 50 penalty units.
(5) Subsections (1)–(4) apply despite any legislation or duty of confidence to the contrary.(6) An ADI or an officer or employee of an ADI is not liable to any action for any loss or damage suffered by another person as a result of:(a) reporting a deficiency in accordance with subsection (1), or(b) making or furnishing a report in accordance with subsection (2) or (3), or(c) producing records or providing details in accordance with subsection (4).
(1) The regulations may require a law practice to pay amounts out of a general trust account of the practice into an ADI account maintained by the Law Society.(2) Without limiting subsection (1), the regulations may provide for the following:(a) the type of account to be maintained by the Law Society,(b) the amount of the payments to be made.(3) All interest on the money in the account is payable to the Law Society on account of the Public Purpose Fund.(4) This section applies despite any other provision of this Part.
284 Status and repayment of deposited money
(1) Money paid under section 283 (Statutory deposits) into an ADI account maintained by the Law Society:(a) is held by the Law Society in trust for the law practice depositing the money, and(b) is repayable on demand.(2) Subsection (1) does not excuse a failure to comply with section 283 (Statutory deposits).(3) Until repaid, money deposited under section 283 (Statutory deposits) may be invested by the Law Society:(a) in accordance with Division 2 of Part 2 of the Trustee Act 1925 as if the money were trust funds, or(b) on deposit with the Treasurer, or(c) in an account with any ADI.(4) All interest on investments made under this section is payable to the Law Society on account of the Public Purpose Fund.
Division 7 Public Purpose Fund
(1) There is to be established a fund called the “Public Purpose Fund”.(2) The following amounts are to be paid to the credit of the Fund:(a) interest payable to the Law Society on account of the Public Purposes Fund under section 283 (Statutory deposits), section 284 (Status and repayment of deposited money) and section 288 (Agreements relating to payment of interest on general trust accounts),(b) such other amounts as are payable to the Fund by or under this Act.
286 Trustees of Public Purpose Fund
(1) There are to be Trustees of the Public Purpose Fund.(2) The Trustees consist of:(a) 3 persons appointed by the Attorney General, of whom:(i) 2 are to be members of the Law Society Council nominated by the President of the Law Society, and(ii) 1 is to be a person whom the Attorney General considers to have appropriate qualifications and experience to act as a trustee, and(b) the Director-General.(3) Schedule 4 has effect with respect to the Trustees.
287 Management and control of Fund
(1) The Trustees are to manage and control the Public Purpose Fund.(2) The Trustees may invest any amount standing to the credit of the Fund in accordance with Division 2 of Part 2 of the Trustee Act 1925 as if the money were trust funds.(3) The Trustees may enter into any agreement or arrangement with a person or body under which:(a) the person or body provides the Trustees with advice concerning the investment of any amount standing to the credit of the Fund, or(b) the person or body agrees to invest any such amount on behalf of the Trustees.(4) The Law Society is to administer the Fund on behalf of, and in accordance with the directions of, the Trustees.
288 Agreements relating to payment of interest on general trust accounts
(1) All interest on money in any general trust account at an ADI is payable to the Law Society on account of the Public Purpose Fund.(2) The Trustees may enter into an agreement with an ADI relating to the manner of payment to the Public Purpose Fund of interest on money in any such trust account at the ADI.
(1) The Trustees are to pay from the Public Purpose Fund the following:(a) any amounts payable from the Fund for a purpose referred to in section 290 (Payment of certain costs and expenses from Fund), in accordance with the approval of the Director-General under that section,(b) any amounts that the Trustees, with the concurrence of the Attorney General, determine should be paid from the Fund for a purpose referred to in section 292 (Discretionary payments from Fund for other purposes),(c) any amounts required to be paid from the Fund in accordance with an order of the Tribunal under section 566 (3) (Costs),(d) any costs or expenses incurred in collecting the interest payable to the Fund and in the management or administration of the Fund.(2) Payments from the Public Purpose Fund may be made from the capital or income of the Fund, at the discretion of the Trustees.(3) The fact that money is paid out of the Public Purpose Fund under this section does not preclude the recovery of that money in accordance with this Act from any person liable to pay the money. Any such money recovered must be paid to the credit of the Public Purpose Fund.
290 Payment of certain costs and expenses from Fund
(1) Payments are to be made from the Public Purpose Fund for the purpose of meeting the following costs and expenses:(a) the costs of a Council in making representations, or being represented or heard, under section 30 (Entitlement to be represented, heard and make representations),(b) the costs of a Council in exercising its functions under Part 2.4 (Legal practice by Australian legal practitioners), including in responding to any appeal referred to in that Part,(c) the costs of a Council or the Commissioner in exercising its functions in taking action under section 107 (Orders or injunctions), 234 (Supreme Court orders about conditions) or 721 (Injunctions),(d) the costs of a Council in exercising its functions under Part 2.7 (Legal practice by foreign lawyers), including in responding to any appeal referred to in that Part,(e) the costs of a Council in exercising its functions under Division 3 of Part 2.2 and Parts 2.5, 2.6 and 3.4,(f) the costs of the Law Society Council (including its members, employees or agents) in respect of an investigation or external examination under this Part, to the extent that such costs are not recoverable under section 271 (When costs of investigation are debt) or 279 (Law practice liable for costs of examination),(g) the costs of the Admission Board in connection with an appeal under section 28,(h) the costs of a Council in connection with an external intervention in relation to a law practice (including costs in connection with an application under section 630 or an appeal under section 649) and any fees, costs and expenses payable from the Fund under section 652 (Fees, legal costs and expenses),(i) the costs of the Commissioner in exercising functions under Division 7 of Part 2.4,(j) the costs of the Commissioner or the Tribunal in relation to the administration of Chapter 4,(k) the costs of a Council or the Commissioner in exercising functions for the purposes of Chapter 4 (Complaints and discipline),(l) the costs of a Council or the Commissioner in relation to any proceedings in or on appeal from the Supreme Court with respect to the discipline of an Australian legal practitioner or an Australian-registered foreign lawyer, including in relation to proceedings concerning the inherent jurisdiction and powers of the Supreme Court as referred to in section 590 (Jurisdiction of Supreme Court),(m) the costs of a Council or the Commissioner in connection with the provision of mediators for the mediation of consumer disputes under Chapter 4 or costs disputes under Division 8 of Part 3.2,(n) the costs of the costs assessors’ rules committee in exercising its functions for the purposes of this Act (see section 394 (Rules of procedure for applications),(o) the costs of the Law Society Council or the Commissioner in connection with an audit of a law practice under section 670,(p) without limiting any other paragraph, the costs of a Council or the Commissioner in exercising functions under section 85 (Regulation of advertising and other marketing of services) or regulations under that section (including the prosecution of offences under that section or those regulations).(2) Such payments are to be made by the Trustees in accordance with the approval of the Director-General.(3) The Director-General is to approve the payment from the Fund of such amounts as the Director-General considers necessary for the purpose of meeting any reasonable costs and expenses referred to in subsection (1), having regard to any budget submitted under section 291 (Submission of budgets to Director-General).(3A) If the amount of costs or expenses actually expended or incurred by a beneficiary in or in respect of a relevant period:(a) exceeds the amount approved for payment under subsection (3) in respect of costs or expenses of that kind—the Director-General is to approve payment from the Fund of such additional amount as the Director-General considers necessary and reasonable for the purpose of meeting or contributing to any underpayment, or(b) is less than the amount approved for payment under subsection (3) in respect of costs or expenses of that kind—the Director-General is to require the beneficiary to repay to the Fund such amount already paid to the beneficiary as the Director-General specifies for the purpose of recouping the whole or a part of any overpayment.(3B) Instead of dealing with an underpayment or overpayment in accordance with subsection (3A), the Director-General may deal with all or part of the underpayment or overpayment by way of adjustment of amounts approved under subsection (3) for payment to the beneficiary in or in respect of a future period.(4) An approval is subject to such conditions as the Director-General specifies in the approval.(5) Payments under this section may be made in advance of or by way of reimbursement of the relevant cost or expense.
291 Submission of budgets and supplementary budgets to Director-General
(1) For the purpose of determining the amount to be paid from the Public Purpose Fund for a purpose referred to in section 290 (Payment of certain costs and expenses from Fund), the Director-General may require the beneficiary of the payment to prepare and submit a budget or supplementary budget to the Director-General, in respect of such period as the Director-General directs, relating to the costs or expenses of the beneficiary (including projected costs and expenses).(1A) Without limiting subsection (1), a budget or supplementary budget may relate wholly or partly to a past period if the Director-General so directs or approves, whether or not any cost or expense has already been incurred or met by the beneficiary.(2) The budget or supplementary budget is to include such information as the Director-General directs. In particular, the Director-General may require the provision of information about the administration of the beneficiary.(3) The Director-General may refuse to approve a payment under section 290 if the beneficiary has failed to submit a budget or supplementary budget as required under this section.(4) In this section:beneficiary of a payment means the person or body to whom or in respect of whom a payment from the Fund may be made.
292 Discretionary payments from Fund for other purposes
(1) The Trustees may from time to time, with the concurrence of the Attorney General, determine that an amount is to be paid from the Public Purpose Fund for any of the following purposes:(a) the supplementation of any of the following funds:(i) the Legal Aid Fund,(ii) the Fidelity Fund,(iii) the Law and Justice Foundation Fund,(b) the promotion and furtherance of legal education in New South Wales,(c) the advancement, improvement and extension of the legal education of members of the community,(d) the conduct of research into the law, the legal system, law reform and the legal profession and into their impact on the community,(e) the furtherance of law reform,(f) the establishment and improvement of law libraries and the expansion of the community’s access to legal information,(g) the collection, assessment and dissemination of information relating to legal education, the law, the legal system, law reform, the legal profession and legal services,(h) the encouragement, sponsorship or support of projects aimed at facilitating access to legal information and legal services,(i) the improvement of the access of economically or socially disadvantaged people to the legal system, legal information or legal services.(2) The Trustees are to invite applications for payments from the Fund for the purposes referred to in this section at such intervals as the Director-General directs.(3) Before making a payment from the Fund for a purpose other than the supplementation of the Legal Aid Fund, the Trustees are to consider whether adequate provision has been made from the Fund for the purpose of supplementation of the Legal Aid Fund.(4) The Trustees may approve the making of a payment in advance under this section, but the period with respect to which the payment is made must not exceed 3 years.(5) A determination of the Trustees under this section may be made only by a unanimous decision of the Trustees. A unanimous decision is a decision supported unanimously at a meeting of the Trustees at which all the Trustees for the time being are present and vote.(6) This section does not require the Trustees to distribute all of the income or any of the capital of the Public Purpose Fund.(7) In this section:Law and Justice Foundation Fund means the Law and Justice Foundation Fund established under the Law and Justice Foundation Act 2000.
Legal Aid Fund means the Legal Aid Fund established under the Legal Aid Commission Act 1979.
(1) The Auditor-General may conduct a performance audit under Division 2A of Part 3 of the Public Finance and Audit Act 1983 of:(a) the activities of the Commissioner and the Councils for which costs and expenses may be paid from the Public Purpose Fund, and(b) the present and future liability of the Fund for the payment of those costs and expenses.(2) The performance audit may be conducted whenever the Auditor-General considers it appropriate.(3) For the purposes of the performance audit, Division 2A of Part 3 of the Public Finance and Audit Act 1983 applies as if the Attorney General were the head of the relevant authority.
294 Information about Fund to be included in Law Society Council report
(1) As soon as practicable after 30 June in each year, the Trustees are to provide the Law Society Council with a report about the income and expenditure of the Public Purpose Fund for the period of 12 months ending on 30 June in that year.(2) The Law Society Council is to include a copy of the report of the Trustees in its annual report for the same period under section 700 (Council to submit annual report).
Division 8 Miscellaneous provisions
295 Restrictions on receipt of trust money
(1) A law practice (other than an incorporated legal practice) must not receive trust money unless a principal holds an Australian practising certificate authorising the receipt of trust money.Maximum penalty: 200 penalty units.
(2), (3) (Repealed)(4) An incorporated legal practice must not receive trust money unless:(a) at least one legal practitioner director of the practice holds an Australian practising certificate authorising the receipt of trust money, or(b) a person is holding an appointment under section 142 (Incorporated legal practice without legal practitioner director) in relation to the practice and the person holds an Australian practising certificate authorising the receipt of trust money, or(c) the money is received during any period during which the practice:(i) does not have any legal practitioner directors, and(ii) is not in default of director requirements under section 142,so long as there was, immediately before the start of that period, at least one legal practitioner director of the practice who held an Australian practising certificate authorising the receipt of trust money.Maximum penalty: 200 penalty units.
296 Application of Part to incorporated legal practices and multi-disciplinary partnerships
(1) The obligations imposed on law practices by this Part, and any other provisions of this Act, the regulations or any legal profession rule relating to trust money and trust accounts, apply to an incorporated legal practice or multi-disciplinary partnership only in connection with legal services provided by the practice or partnership.(2) The regulations may provide that specified provisions of this Part, and any other provisions of this Act, the regulations or any legal profession rule relating to trust money and trust accounts, do not apply to incorporated legal practices or multi-disciplinary partnerships or both or apply to them with specified modifications.
297 Application of Part to community legal centres
(1) The regulations may provide that specified provisions of this Part, and any other provisions of this Act or any provisions of the regulations or legal profession rules relating to trust money and trust accounts, do not apply to complying community legal centres or apply to them with specified modifications.(2) For the purposes of the application of the provisions of this Part, and any other provisions of this Act or any provisions of the regulations or legal profession rules relating to trust money and trust accounts, to a complying community legal centre:(a) the obligations and rights of a law practice under those provisions extend to a complying community legal centre that is a body corporate, but only in connection with legal services provided by the centre, and(b) money received by a law practice on behalf of another person includes money received by any officer or employee of the complying community legal centre on behalf of another person in the course of providing legal services.(3) In this section:employee of a complying community legal centre includes a person whose services are made use of by the community legal centre in connection with the provision of legal services by the centre.
298 Disclosure to clients—money not received or held as trust money
(1) In this section:non-trust money means money that is not trust money for the purposes of this Act because of section 244 (Money involved in financial services or investments) or because of a determination under section 245 (Determinations about status of money).
(2) When money entrusted to a law practice is or becomes non-trust money, the practice must, in accordance with this section and the regulations, notify the person who entrusted the money to the practice that:(a) the money is not treated as trust money for the purposes of this Act and is not subject to any supervision, investigation or audit requirements of this Act, and(b) a claim against the Fidelity Fund under this Act cannot be made in respect of the money.Maximum penalty: 20 penalty units.
(3) The notification must be given, in writing, to the person at the time:(a) the money was entrusted to the law practice, if the money was non-trust money when it was entrusted to the practice, or(b) the money becomes non-trust money, if the money was trust money when it was entrusted to the practice.(4) The regulations may make provision for or with respect to the form and manner in which notification required by this section is to be given and the contents of the notification.
299 Disclosure of accounts used to hold money entrusted to law practice or legal practitioner associate
(1) A law practice must, in accordance with the regulations, notify the appropriate Council of the details required by the regulations of each account maintained at an ADI in which the practice or any legal practitioner associate of the practice holds money entrusted to the practice or legal practitioner associate.Maximum penalty: 50 penalty units.
(2) Subsection (1) applies whether or not the money is trust money and whether or not section 244 (Money involved in financial services or investments) or 245 (Determinations about status of money) applies to the money.
The regulations may make provision for or with respect to any matter to which this Part relates, including for or with respect to:(a) the establishment, maintenance and closure of general trust accounts and controlled money accounts, and(b) the manner of receiving, depositing, withdrawing, making records about and otherwise dealing with and accounting for trust money, and(c) without limiting paragraph (a) or (b):(i) the keeping and reconciliation of trust records, and(ii) the establishment and keeping of trust ledger accounts, and(iii) the establishment and keeping of records about controlled money and transit money, and(iv) the establishment and keeping of registers of powers and estates where trust money is involved, and(v) the recording of information about the investment of trust money, and(vi) the furnishing of statements regarding trust money, and(d) the notification to the Law Society Council of information relating directly or indirectly to matters to which this Part relates, including information about:(i) trust accounts, trust money and trust records, and(ii) the proposed or actual termination of a law practice that holds trust money, and(iii) the proposed or actual termination of engaging in legal practice in this jurisdiction by a law practice that holds trust money, and(iv) the proposed or actual restructuring of the business of a law practice so that it no longer holds or no longer will hold trust money, and(e) the creation and exercise of liens over trust money, and(f) providing exemptions, or providing for the giving of exemptions, from all or any specified requirements of this Part.
Part 3.2 Costs disclosure and assessment
The purposes of this Part are as follows:(a) to provide for law practices to make disclosures to clients regarding legal costs,(b) to regulate the making of costs agreements in respect of legal services, including conditional costs agreements,(c) to regulate the billing of costs for legal services,(d) to provide a mechanism for the assessment of legal costs and the setting aside of certain costs agreements.
(1) In this Part:bill means a bill of costs for providing legal services.
business day means a day other than a Saturday, a Sunday or a bank or public holiday.
conditional costs agreement means a costs agreement that provides that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate, as referred to in section 323 (Conditional costs agreements), but does not include a costs agreement to the extent to which section 324 (Conditional costs agreement involving uplift fees) or section 325 (Contingency fees are prohibited) applies.
costs includes fees, charges, disbursements, expenses and remuneration.
costs agreement means an agreement about the payment of legal costs.
costs assessment means an assessment of legal costs under Division 11.
costs assessor means a person appointed as a costs assessor under Division 11.
disbursements includes outlays.
fixed costs provision means a determination, scale, arrangement or other provision fixing the costs or maximum costs of any legal services that is made by or under legislation.
itemised bill means a bill that specifies in detail how the legal costs are made up in a way that would allow them to be assessed under Division 11.
litigious matter means a matter that involves, or is likely to involve, the issue of proceedings in a court or tribunal.
Note. A matter is a litigious matter when proceedings are initiated or at any stage when proceedings are reasonably likely.lump sum bill means a bill that describes the legal services to which it relates and specifies the total amount of the legal costs.
public authority means an authority or body (whether a body corporate or not) established or incorporated for a public purpose by a law of a jurisdiction or of the Commonwealth, and includes a body corporate incorporated under a law of a jurisdiction or of the Commonwealth in which a jurisdiction or the Commonwealth has a controlling interest.
sophisticated client means a client to whom, because of section 312 (1) (c) or (d), disclosure under section 309 or 310 (1) is not or was not required.
third party payer—see section 302A (Terms relating to third party payers).
uplift fee means additional legal costs (excluding disbursements) payable under a costs agreement on the successful outcome of the matter to which the agreement relates.
(2) In this Part, a reference to a law practice includes a reference to:(a) in the case of a person who was a sole practitioner when the legal services concerned were provided:(i) the former sole practitioner, or(ii) the executor of the will of the former sole practitioner, or(iii) the trustee or administrator of the estate of the former sole practitioner, and(b) subject to any other applicable arrangements:(i) the persons who were the partners of a former law firm or multi-disciplinary partnership when the legal services concerned were provided, and(ii) in the case of a law firm or multi-disciplinary partnership where there has been a change of partners since the legal services concerned were provided—subject to any other applicable arrangements, the firm or partnership as currently constituted, and(iii) the assignee of a law practice or former law practice, and(iv) the receiver of a law practice or former law practice appointed under this Act, and(c) any person of a class prescribed by the regulations for the purposes of this subsection.
302A Terms relating to third party payers
(1) For the purposes of this Part:(a) a person is a third party payer, in relation to a client of a law practice, if the person is not the client and:(i) is under a legal obligation to pay all or any part of the legal costs for legal services provided to the client, or(ii) being under that obligation, has already paid all or a part of those legal costs, and(b) a third party payer is an associated third party payer if the legal obligation referred to in paragraph (a) is owed to the law practice, whether or not it is also owed to the client or another person, and(c) a third party payer is a non-associated third party payer if the legal obligation referred to in paragraph (a) is owed to the client or another person but not the law practice.(2) The legal obligation referred to in subsection (1) can arise by or under contract or legislation or otherwise.(3) A law practice that retains another law practice on behalf of a client is not on that account a third party payer in relation to that client.
302B Costs assessment is to take into account GST
A costs assessor (or, in the case of a review of or an appeal against a costs assessment, a panel under Subdivision 5 of Division 11 or a court) is to take into account the GST (within the meaning of the A New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth) referable to the provision of legal services when making or reviewing a determination of legal costs payable.
Division 2 Application of this Part
303 Application of Part—first instructions rule
This Part applies to a matter if the client first instructs the law practice in relation to the matter in this jurisdiction.
304 Part also applies by agreement or at client’s election
(1) This Part applies to a matter if:(a) either:(i) this Part does not currently apply to the matter, or(ii) it is not possible to determine the jurisdiction in which the client first instructs the law practice in relation to the matter, and(b) either:(i) the legal services are or will be provided wholly or primarily in this jurisdiction, or(ii) the matter has a substantial connection with this jurisdiction,or both, and(c) either:(i) the client accepts, in writing or by other conduct, a written offer to enter into an agreement under subsection (2) (a) in respect of the matter, or(ii) the client gives a notification under subsection (2) (b) in respect of the matter.(2) For the purposes of subsection (1) (c), the client may:(a) accept, in writing or by other conduct, a written offer that complies with subsection (2A) to enter into an agreement with the law practice that this Part is to apply to the matter, or(b) notify the law practice in writing that the client requires this Part to apply to the matter.(2A) An offer referred to in subsection (2) (a) must clearly state:(a) that it is an offer to enter into an agreement that this Part is to apply to the matter, and(b) that the client may accept it in writing or by other conduct, and(c) the type of conduct that will constitute acceptance.(3) A notification has no effect for the purposes of subsection (2) (b) if it is given after the period of 28 days after the law practice discloses to the client (under a corresponding law) information about the client’s right to make a notification of that kind, but nothing in this subsection prevents an agreement referred to in subsection (2) (a) from coming into effect at any time.
(1) This section applies if this Part applies to a matter by the operation of section 303 or 304.(2) This Part ceases to apply to the matter if:(a) either:(i) the legal services are or will be provided wholly or primarily in another jurisdiction, or(ii) the matter has a substantial connection with another jurisdiction,or both, and(b) either:(i) the client enters under the corresponding law of the other jurisdiction into an agreement with the law practice that the corresponding provisions of the corresponding law apply to the matter, or(ii) the client notifies under the corresponding law of the other jurisdiction (and within the time allowed by the corresponding law) the law practice in writing that the client requires the corresponding provisions of the corresponding law to apply to the matter.(3) Nothing in this section prevents the application of this Part to the matter by means of a later agreement or notification under section 304.
306 How and when does a client first instruct a law practice?
A client first instructs a law practice in relation to a matter in a particular jurisdiction if the law practice first receives instructions from or on behalf of the client in relation to the matter in that jurisdiction, whether in person or by post, telephone, fax, e-mail or other form of communication.
307 When does a matter have a substantial connection with this jurisdiction?
The regulations may prescribe the circumstances in which, or the rules to be used to determine whether, a matter has or does not have a substantial connection with this jurisdiction for the purposes of this Part.
308 What happens when different laws apply to a matter?
(1) This section applies if this Part applies to a matter for a period and a corresponding law applies for another period.(2) If this Part applied to a matter for a period and a corresponding law applies to the matter afterwards, this Part continues to apply in respect of legal costs (if any) incurred while this Part applied to the matter.(3) If a corresponding law applied to a matter for a period and this Part applies to the matter afterwards, this Part does not apply in respect of legal costs (if any) incurred while the corresponding law applied to the matter, so long as the corresponding law continues to apply in respect of those costs.(4) However:(a) the client may enter into a written agreement with the law practice that the cost assessment provisions of this Part are to apply in respect of all legal costs incurred in relation to the matter, and Division 11 (Costs assessment) accordingly applies in respect of those legal costs, or(b) if the client enters into a written agreement with the law practice that the cost assessment provisions of a corresponding law are to apply in respect of all legal costs incurred in relation to the matter, Division 11 accordingly does not apply in respect of those legal costs.(4A) A written agreement referred to in subsection (4) need not be signed by the client but in that case the client’s acceptance must be communicated to the law practice by facsimile transmission, e-mail or some other written form.(4B) If a corresponding law applied to a matter for a period and this Part applies to the matter afterwards, this Part does not require disclosure of any matters to the extent that they have already been disclosed under a corresponding law.(5) This section has effect despite any other provisions of this Part.
309 Disclosure of costs to clients
(1) A law practice must disclose to a client in accordance with this Division:(a) the basis on which legal costs will be calculated, including whether a fixed costs provision applies to any of the legal costs, and(b) the client’s right to:(i) negotiate a costs agreement with the law practice, and(ii) receive a bill from the law practice, and(iii) request an itemised bill after receipt of a lump sum bill, and(iv) be notified under section 316 of any substantial change to the matters disclosed under this section, and(c) an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs, and(d) details of the intervals (if any) at which the client will be billed, and(e) the rate of interest (if any), whether a specific rate or a benchmark rate, that the law practice charges on overdue legal costs, whether that rate is a specific rate of interest or is a benchmark rate of interest (as referred to in subsection (1A)), and(f) if the matter is a litigious matter, an estimate of:(i) the range of costs that may be recovered if the client is successful in the litigation, and(ii) the range of costs the client may be ordered to pay if the client is unsuccessful, and(g) the client’s right to progress reports in accordance with section 318, and(h) details of the person whom the client may contact to discuss the legal costs, and(i) the following avenues that are open to the client in the event of a dispute in relation to legal costs:(i) costs assessment under Division 11,(ii) the setting aside of a costs agreement or a provision of a costs agreement under section 328 (Setting aside costs agreements or provisions of costs agreements),(iii) mediation under Division 8, and(j) any time limits that apply to the taking of any action referred to in paragraph (i), and(k) that the law of this jurisdiction applies to legal costs in relation to the matter, and(l) information about the client’s right:(i) to accept under a corresponding law a written offer to enter into an agreement with the law practice that the corresponding provisions of the corresponding law apply to the matter, or(ii) to notify under a corresponding law (and within the time allowed by the corresponding law) the law practice in writing that the client requires the corresponding provisions of the corresponding law to apply to the matter.Note. The client’s right to sign an agreement or give a notification as mentioned in paragraph (l) will be under provisions of the law of the other jurisdiction that correspond to section 304 (Part also applies by agreement or at client’s election).(1A) For the purposes of subsection (1) (e), a benchmark rate of interest is a rate of interest for the time being equal to or calculated by reference to a rate of interest that is specified or determined from time to time by an ADI or another body or organisation, or by or under other legislation, and that is publicly available.(1B) The regulations may make provision for or with respect to the use of benchmark rates of interest, and in particular for or with respect to permitting, regulating or preventing the use of particular benchmark rates or particular kinds of benchmark rates.(2) For the purposes of subsection (1) (f), the disclosure must include:(a) a statement that an order by a court for the payment of costs in favour of the client will not necessarily cover the whole of the client’s legal costs, and(b) if applicable, a statement that disbursements may be payable by the client even if the client enters a conditional costs agreement.(3) A law practice may disclose any or all of the details referred to in subsection (1) (b) (i)–(iii), (g), (i), (j) and (l) in or to the effect of a form prescribed by the regulations for the purposes of this subsection, and if it does so at the time the other details are disclosed as required by this section the practice is taken to have complied with this section in relation to the details so disclosed.
310 Disclosure if another law practice is to be retained
(1) If a law practice intends to retain another law practice on behalf of the client, the first law practice must disclose to the client the details specified in section 309 (1) (a), (c) and (d) in relation to the other law practice, in addition to any information required to be disclosed to the client under section 309.(2) A law practice retained or to be retained on behalf of a client by another law practice is not required to make disclosure to the client under section 309, but must disclose to the other law practice the information necessary for the other law practice to comply with subsection (1).(3) This section does not apply if the first law practice ceases to act for the client in the matter when the other law practice is retained.Note. An example of the operation of this section is where a barrister is retained by a firm of solicitors on behalf of a client of the firm. The barrister must disclose to the firm details of the barrister’s legal costs and billing arrangements, and the firm must disclose those details to the client. The barrister is not required to make a disclosure directly to the client.
311 How and when must disclosure be made to a client?
(1) Disclosure under section 309 must be made in writing before, or as soon as practicable after, the law practice is retained in the matter.(2) Disclosure under section 310 (1) must be made in writing before, or as soon as practicable after, the other law practice is retained.(3) Disclosure made to a person before the law practice is retained in a matter is taken to be disclosure to the person as a client for the purposes of sections 309 and 310.
312 Exceptions to requirement for disclosure
(1) Disclosure under section 309 or 310 (1) is not required to be made in any of the following circumstances:(a) if the total legal costs in the matter, excluding disbursements, are not likely to exceed $750 (exclusive of GST) or the amount prescribed by the regulations (whichever is higher),(b) if:(i) the client has received one or more disclosures under section 309 or 310 (1) from the law practice in the previous 12 months, and(ii) the client has agreed in writing to waive the right to disclosure, and(iii) a principal of the law practice decides on reasonable grounds that, having regard to the nature of the previous disclosures and the relevant circumstances, the further disclosure is not warranted,(c) if the client is:(i) a law practice or an Australian legal practitioner, or(ii) a public company, a subsidiary of a public company, a large proprietary company, a foreign company, a subsidiary of a foreign company or a registered Australian body (each within the meaning of the Corporations Act 2001 of the Commonwealth), or(iii) a financial services licensee (within the meaning of that Act), or(iv) a liquidator, administrator or receiver (as respectively referred to in that Act), or(v) a partnership that carries on the business of providing professional services if the partnership consists of more than 20 members or if the partnership would be a large proprietary company (within the meaning of that Act) if it were a company, or(vi) a proprietary company (within the meaning of that Act) formed for the purpose of carrying out a joint venture, if any shareholder of the company is a person to whom disclosure of costs is not required, or(vii) an unincorporated group of participants in a joint venture, if one or more members of the group are persons to whom disclosure of costs is not required and one or more members of the group are not such persons and if all of the members of the group who are not such persons have indicated that they waive their right to disclosure, or(viii) a Minister of the Crown in right of a jurisdiction or the Commonwealth acting in his or her capacity as such, or a government department or public authority of a jurisdiction or the Commonwealth,(d) if the legal costs or the basis on which they will be calculated have or has been agreed as a result of a tender process,(e) if the client will not be required to pay the legal costs or they will not otherwise be recovered by the law practice,Note. For instance, disclosure would not be required where the law practice acts in the matter on a pro bono basis.(f) in any circumstances prescribed by the regulations.(2) Despite subsection (1) (a), if a law practice becomes aware that the total legal costs are likely to exceed $750 (exclusive of GST) or the amount prescribed by the regulations (whichever is higher), the law practice must disclose the matters in section 309 or 310 (as the case requires) to the client as soon as practicable.(3) A law practice must ensure that a written record of a principal’s decision that further disclosure is not warranted as mentioned in subsection (1) (b) is made and kept with the files relating to the matter concerned.(4) The reaching of a decision referred to in subsection (3) otherwise than on reasonable grounds is capable of being unsatisfactory professional conduct or professional misconduct on the part of the principal.(5) Nothing in this section affects or takes away from any client’s right:(a) to progress reports in accordance with section 318, or(b) to obtain reasonable information from the law practice in relation to any of the matters specified in section 309, or(c) to negotiate a costs agreement with a law practice and to obtain a bill from the law practice.
313 Additional disclosure—settlement of litigious matters
(1) If a law practice negotiates the settlement of a litigious matter on behalf of a client, the law practice must disclose to the client, before the settlement is executed:(a) a reasonable estimate of the amount of legal costs payable by the client if the matter is settled (including any legal costs of another party that the client is to pay), and(b) a reasonable estimate of any contributions towards those costs likely to be received from another party.(2) A law practice retained on behalf of a client by another law practice is not required to make a disclosure to the client under subsection (1), if the other law practice makes the disclosure to the client before the settlement is executed.
314 Additional disclosure—uplift fees
(1) If a costs agreement involves an uplift fee, the law practice must, before entering into the agreement, disclose to the client in writing:(a) the law practice’s legal costs, and(b) the uplift fee (or the basis of calculation of the uplift fee), and(c) the reasons why the uplift fee is warranted.(2) A law practice is not required to make a disclosure under subsection (1) to a sophisticated client.
(1) Written disclosures to a client under this Division:(a) must be expressed in clear plain language, and(b) may be in a language other than English if the client is more familiar with that language.(2) If the law practice is aware that the client is unable to read, the law practice must arrange for the information required to be given to a client under this Division to be conveyed orally to the client in addition to providing the written disclosure.
316 Ongoing obligation to disclose
A law practice must, in writing, disclose to a client any substantial change to anything included in a disclosure already made under this Division as soon as is reasonably practicable after the law practice becomes aware of that change.
317 Effect of failure to disclose
(1) Postponement of payment of legal costs until assessed
If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed, the client or associated third party payer (as the case may be) need not pay the legal costs unless they have been assessed under Division 11.Note. Under section 369, the costs of an assessment in these circumstances are generally payable by the law practice.(2) Bar on recovering proceedings until legal costs assessed
A law practice that does not disclose to a client or an associated third party payer anything required by this Division to be disclosed may not maintain proceedings against the client or associated third party payer (as the case may be) for the recovery of legal costs unless the costs have been assessed under Division 11.(3) Setting costs agreement aside
If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed and the client or associated third party payer has entered into a costs agreement with the law practice, the client or associated third party payer may also apply under section 328 for the costs agreement to be set aside.(4) Reduction of legal costs on assessment
If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed, then, on an assessment of the relevant legal costs, the amount of the costs may be reduced by an amount considered by the costs assessor to be proportionate to the seriousness of the failure to disclose.(5) Effect on legal costs where law practice retains another law practice that fails to disclose
If a law practice retains another law practice on behalf of a client and the first law practice fails to disclose something to the client solely because the retained law practice failed to disclose relevant information to the first law practice as required by section 310 (2), then subsections (1)–(4):(a) do not apply to the legal costs owing to the first law practice on account of legal services provided by it, to the extent that the non-disclosure by the first law practice was caused by the failure of the retained law practice to disclose the relevant information, and(b) do apply to the legal costs owing to the retained law practice.(6) Circumstances where associated third party payer involved
In a matter involving both a client and an associated third party payer where disclosure has been made to one of them but not the other:(a) subsection (1) does not affect the liability of the one to whom disclosure was made to pay the legal costs, and(b) subsection (2) does not prevent proceedings being maintained against the one to whom the disclosure was made for the recovery of those legal costs.(7) Non-disclosure capable of constituting unsatisfactory professional conduct or professional misconduct
Failure by a law practice to comply with this Division is capable of being unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner or Australian-registered foreign lawyer involved in the failure.
(1) A law practice must give a client, on reasonable request:(a) a written report of the progress of the matter in which the law practice is retained, and(b) a written report of the legal costs incurred by the client to date, or since the last bill (if any), in the matter.(2) A law practice may charge a client a reasonable amount for a report under subsection (1) (a) but must not charge a client for a report under subsection (1) (b).(3) A law practice retained on behalf of a client by another law practice is not required to give a report to the client under subsection (1), but must disclose to the other law practice any information necessary for the other law practice to comply with that subsection.(4) Subsection (3) does not apply if the other law practice ceases to act for the client in the matter when the law practice is retained.
318A Disclosure to associated third party payers
(1) If a law practice is required to make a disclosure to a client of the practice under this Division, the practice must, in accordance with subsections (2) and (3), also make the same disclosure to any associated third party payer for the client, but only to the extent that the details or matters disclosed are relevant to the associated third party payer and relate to costs that are payable by the associated third party payer in respect of legal services provided to the client.(2) A disclosure under subsection (1) must be made in writing:(a) at the time the disclosure to the client is required under this Division, or(b) if the law practice only afterwards becomes aware of the legal obligation of the associated third party payer to pay legal costs of the client—as soon as practicable after the practice became aware of the obligation.(3) Section 315 (Form of disclosure) applies to a disclosure to an associated third party payer under subsection (1) in the same way as it applies to a client.(4) An associated third party payer for a client of a law practice has the same right as the client to obtain reports under section 318 (Progress reports) of legal costs incurred by the client, but only to the extent that the costs are payable by the associated third party payer in respect of legal services provided to the client, and the law practice must comply with that section accordingly.
Division 4 Legal costs generally
319 On what basis are legal costs recoverable?
(1) Subject to the provisions of this Part, legal costs are recoverable:(a) in accordance with an applicable fixed costs provision, or(b) if paragraph (a) does not apply, under a costs agreement made in accordance with Division 5 or the corresponding provisions of a corresponding law, or(c) if neither paragraph (a) or (b) applies, according to the fair and reasonable value of the legal services provided.(2) However, the following kinds of costs are not recoverable:(a) the costs associated with the preparation of a bill for a client,(b) the costs associated with the making of disclosures for the purposes of Division 3,(c) the costs associated with the making of a costs agreement with a client.
A law practice may take reasonable security from a client for legal costs (including security for the payment of interest on unpaid legal costs).
321 Interest on unpaid legal costs
(1) A law practice may charge interest on unpaid legal costs if the costs are unpaid 30 days or more after the practice has given a bill for the costs in accordance with this Part.(2) A law practice may also charge interest on unpaid legal costs in accordance with a costs agreement.(3) A law practice must not charge interest under subsection (1) or (2) on unpaid legal costs unless the bill for those costs contains a statement that interest is payable and of the rate of interest.(4) A law practice may not charge interest under this section or under a costs agreement at a rate that exceeds the rate prescribed by the regulations.(5) Subsection (1) applies in relation to a bill of costs given in the form of a lump sum bill even if the client afterwards requests or is afterwards given an itemised bill.
(1) A costs agreement may be made:(a) between a client and a law practice retained by the client, or(b) between a client and a law practice retained on behalf of the client by another law practice, or(c) between a law practice and another law practice that retained that law practice on behalf of a client, or(d) between a law practice and an associated third party payer.(2) A costs agreement must be written or evidenced in writing.(3) A costs agreement may consist of a written offer in accordance with subsection (4) that is accepted in writing or by other conduct.Note. Acceptance by other conduct is not permitted for conditional costs agreements—see section 323 (3) (c) (i).(4) The offer must clearly state:(a) that it is an offer to enter into a costs agreement, and(b) that the client may accept it in writing or by other conduct, and(c) the type of conduct that will constitute acceptance.(5) Except as provided by section 395A, a costs agreement cannot provide that the legal costs to which it relates are not subject to costs assessment under Division 11.Note. If it attempts to do so, the costs agreement will be void—see section 327 (1).(6) A reference in section 328 and in any prescribed provisions of this Part to a client is, in relation to a costs agreement that is entered into between a law practice and an associated third party payer as referred to in subsection (1) (d) and to which a client of the law practice is not a party, a reference to the associated third party payer.
323 Conditional costs agreements
(1) A costs agreement may provide that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate.(2) A conditional costs agreement may relate to any matter, except a matter that involves criminal proceedings or proceedings under the Family Law Act 1975 of the Commonwealth.(3) A conditional costs agreement:(a) must set out the circumstances that constitute the successful outcome of the matter to which it relates, and(b) may provide for disbursements to be paid irrespective of the outcome of the matter, and(c) must be:(i) in writing, and(ii) in clear plain language, and(iii) signed by the client, and(d) must contain a statement that the client has been informed of the client’s right to seek independent legal advice before entering into the agreement, and(e) must contain a cooling-off period of not less than 5 clear business days during which the client, by written notice, may terminate the agreement.(4) Subsection (3) (c) (iii), (d) and (e) do not apply to a conditional costs agreement made under section 322 (1) (c) (Costs agreements between law practices).(4A) Subsection (3) (c) (iii), (d) and (e) do not apply to a conditional costs agreement if disclosure under:(a) section 309 (Disclosure of costs to clients), or(b) section 310 (1) (Disclosure if another law practice is to be retained),in relation to the agreement was not or would not be required in the circumstances referred to in section 312 (1) (c) or (d) (Exceptions to requirement for disclosure).(4B) Subsection (3) (c) (iii), (d) and (e) do not apply to a conditional costs agreement made with a sophisticated client.(5) If a client terminates an agreement within the period referred to in subsection (3) (e), the law practice:(a) may recover only those legal costs in respect of legal services performed for the client before that termination that were performed on the instructions of the client and with the client’s knowledge that the legal services would be performed during that period, and(b) without affecting the generality of paragraph (a), may not recover the uplift fee (if any).
324 Conditional costs agreements involving uplift fees
(1) A law practice must not enter into a conditional costs agreement in relation to a claim for damages that provides for the payment of an uplift fee on the successful outcome of the claim to which the fee relates.(2) Except as provided by subsection (1), a conditional costs agreement may provide for the payment of an uplift fee.(3) The basis of calculation of the uplift fee must be separately identified in the agreement.(4) The agreement must contain an estimate of the uplift fee or, if that is not reasonably practicable:(a) a range of estimates of the uplift fee, and(b) an explanation of the major variables that will affect the calculation of the uplift fee.(5) If a conditional costs agreement relates to a litigious matter, the uplift fee must not exceed 25% of the legal costs (excluding disbursements) otherwise payable.(6) A law practice must not enter into a costs agreement in contravention of this section.Maximum penalty: 100 penalty units.
325 Contingency fees are prohibited
(1) A law practice must not enter into a costs agreement under which the amount payable to the law practice, or any part of that amount, is calculated by reference to:(a) (Repealed)(b) the amount of any award or settlement or the value of any property that may be recovered in any proceedings to which the agreement relates.Maximum penalty: 100 penalty units.
(2) Subsection (1) does not apply to the extent that the costs agreement adopts an applicable fixed costs provision.
Subject to this Division and Division 11, a costs agreement may be enforced in the same way as any other contract.
327 Certain costs agreements are void
(1) A costs agreement that contravenes, or is entered into in contravention of, any provision of this Division is void.(2) Subject to this section and Division 11, legal costs under a void costs agreement are recoverable as set out in section 319 (1) (a) or (c) (On what basis are legal costs recoverable?).(3) However, a law practice is not entitled to recover any amount in excess of the amount that the law practice would have been entitled to recover if the costs agreement had not been void and must repay any excess amount received.(3A) A law practice that has entered into a costs agreement in contravention of section 324 (2)–(5) (Conditional costs agreements involving uplift fees) is not entitled to recover the whole or any part of the uplift fee and must repay any amount received in respect of the uplift fee to the person from whom it was received.(4) A law practice that has entered into a costs agreement in contravention of section 324 (1) (Conditional costs agreements involving uplift fees) or 325 (Contingency fees are prohibited) is not entitled to recover any amount in respect of the provision of legal services in the matter to which the costs agreement related and must repay any amount received in respect of those services to the person from whom it was received.(5) If a law practice does not repay an amount required by subsection (3) or (4) to be repaid, the person entitled to be repaid may recover the amount from the law practice as a debt in a court of competent jurisdiction.
328 Setting aside costs agreements or provisions of costs agreements
(1) On application by a client, a costs assessor may order that a costs agreement or a provision of a costs agreement be set aside if satisfied that the agreement is not fair or reasonable.Note. Section 317 (2) also enables a client to make an application under this section for an order setting aside a costs agreement or a provision of a costs agreement where the law practice concerned has failed to make the disclosures concerning costs required by Division 3.(1A) The costs assessor may:(a) set aside merely a provision of the costs agreement even if the client applied for the whole agreement to be set aside, or(b) set aside the whole costs agreement even if the client applied merely for a provision of the agreement to be set aside.(2) In determining whether or not a costs agreement is fair or reasonable, and without limiting the matters to which the costs assessor can have regard, the costs assessor may have regard to any or all of the following matters:(a) whether the client was induced to enter into the agreement by the fraud or misrepresentation of the law practice or of any representative of the law practice,(b) whether any Australian legal practitioner or Australian-registered foreign lawyer acting on behalf of the law practice has been found guilty of unsatisfactory professional conduct or professional misconduct in relation to the provision of legal services to which the agreement relates,(c) whether the law practice failed to make any of the disclosures required under Division 3,(d) the circumstances and the conduct of the parties before and when the agreement was made,(e) the circumstances and the conduct of the parties in the matters after the agreement was made,(f) whether and how the agreement addresses the effect on costs of matters and changed circumstances that might foreseeably arise and affect the extent and nature of legal services provided under the agreement,(g) whether and how billing under the agreement addresses changed circumstances affecting the extent and nature of legal services provided under the agreement.(3) The costs assessor may decline to deal with an application under this section pending the completion of any investigation or determination of any information in relation to the conduct of any Australian legal practitioner or Australian-registered foreign lawyer.(4) If the costs assessor determines that a costs agreement or a provision of a costs agreement be set aside, the assessor may make an order in relation to the payment of legal costs the subject of the agreement or the provision of the agreement.(5) In making an order under subsection (4), the costs assessor must determine the fair and reasonable legal costs in relation to the work to which the agreement or the provision of the agreement related, taking into account:(a) the seriousness of the conduct of the law practice or any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf, and(b) whether or not it was reasonable to carry out the work, and(c) whether or not the work was carried out in a reasonable manner.(6) In making an order under subsection (4), the costs assessor may not order the payment of an amount in excess of the amount that the law practice would have been entitled to recover if the costs agreement or the provision of the costs agreement had not been set aside.(7) For the purposes of subsection (5), the costs assessor may have regard to any or all of the following matters:(a) whether the law practice and any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf complied with any relevant legislation or legal profession rules,(b) any disclosures made by the law practice under Division 3, or the failure to make any disclosures required under that Division,(c) any relevant advertisement as to:(i) the law practice’s costs, or(ii) the skills of the law practice or of any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf,(d) the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter,(e) the retainer and whether the work done was within the scope of the retainer,(f) the complexity, novelty or difficulty of the matter,(g) the quality of the work done,(h) the place where, and circumstances in which, the work was done,(i) the time within which the work was required to be done,(j) any other relevant matter.(8) The costs assessor may determine whether or not a costs agreement exists.(9) The costs assessor may order the payment of the costs of and incidental to determining an application under this section.(9A) A costs assessor must ensure that an order or determination under this section is accompanied by a statement of the reasons for the order or determination.(10) A party to a costs agreement may apply to the Manager, Costs Assessment under section 373 for a review of a determination to make, or not make, an order under subsection (1) or (4).(11) Subdivision 6 (Appeals) of Division 11 applies in relation to a determination to make, or not make, an order under subsection (1) or (4) as if references in that Subdivision to an application for a costs assessment were references to an application to set aside a costs agreement or a provision of a costs agreement.(12) In this section:client means a person to whom or for whom legal services are or have been provided.
Note. See also section 322 (6), which extends the application of this section to associated third party payers.
Division 6 Costs fixed by regulations
329 Regulations to provide for fixed costs
(1) The regulations may make provision for or with respect to the following:(a) fixing fair and reasonable costs for legal services provided in any workers compensation matter,(b) fixing the costs payable for legal services provided in connection with any claim for personal injury damages (within the meaning of the Civil Liability Act 2002),(b1) fixing the costs payable for legal services provided in connection with small claims applications (within the meaning of section 379 of the Industrial Relations Act 1996),(c) fixing the costs payable for the enforcement of a lump sum debt or liquidated sum for damages,(d) fixing the costs payable for the enforcement of a judgment by a judgment creditor,(e) fixing the costs payable for legal services provided in respect of probate or the administration of estates,(f) fixing an amount of costs for a matter that is not a legal service but is related to proceedings (for example, expenses for witnesses).(2) A law practice is not entitled to be paid or recover for a legal service an amount that exceeds the fair and reasonable cost fixed for the service by the regulations under this section.
330 Provisions relating to regulations generally
(1) The regulations may fix a cost under this Division for a particular legal service, for a class of legal services or for any part of a legal service.(2) The regulations may fix a cost under this Division:(a) as a gross amount for legal services, or(b) as an amount for specified elements in the legal services provided (for example, documents prepared), or(c) in any other manner.
331 Legal costs cannot be recovered unless bill has been served
(1) Subject to section 332A (Person may request itemised bill), a law practice must not commence legal proceedings to recover legal costs from a person until at least 30 days after the law practice has given a bill to the person in accordance with sections 332 (Bills) and 333 (Notification of client’s rights).(2) The Supreme Court may make an order authorising a law practice to commence legal proceedings against a person sooner if satisfied that:(a) the law practice has given a bill to the person in accordance with sections 332 and 333, and(b) the person is about to leave this jurisdiction.(3) A court or tribunal before which any proceedings are brought in contravention of subsection (1) must stay those proceedings on the application of a party, or on its own initiative.(4) This section applies whether or not the legal costs are the subject of a costs agreement.
(1) A bill may be in the form of a lump sum bill or an itemised bill.(2) A bill must be signed on behalf of a law practice by an Australian legal practitioner or an employee of the law practice.(3) It is sufficient compliance with subsection (2) if a letter signed on behalf of a law practice by an Australian legal practitioner or an employee of the law practice is attached to, or enclosed with, the bill.(4) A bill or letter is taken to have been signed by a law practice that is an incorporated legal practice if it has the practice’s seal affixed to it or is signed by a legal practitioner director of the practice or an officer or employee of the practice who is an Australian legal practitioner.(5) A bill is to be given to a person:(a) by delivering it personally to the person or to an agent of the person, or(b) by sending it by post to the person or agent at:(i) the usual or last known business or residential address of the person or agent, or(ii) an address nominated for the purpose by the person or agent, or(c) by leaving it for the person or agent at:(i) the usual or last known business or residential address of the person or agent, or(ii) an address nominated for the purpose by the person or agent,with a person on the premises who is apparently at least 16 years old and apparently employed or residing there, or(d) by sending it by facsimile transmission to a number specified by the person (by correspondence or otherwise) as a number to which facsimile transmissions to that person may be sent, or(e) by delivering it to the appropriate place in a document exchange in which the person has receiving facilities, or(f) in any other way authorised by the regulations.(6) A reference in subsection (5) to any method of giving a bill to a person includes a reference to arranging for the bill to be given to that person by that method (for example, by delivery by courier).(6A) Despite anything in subsections (2)–(6), a bill may be given to a client electronically if the client is a sophisticated client and requested the bill to be given electronically.(7) In this section:agent of a person means an agent, law practice or Australian legal practitioner who has authority to accept service of legal process on behalf of the person.
332A Request for itemised bill
(1) If a bill is given by a law practice in the form of a lump sum bill, any person who is entitled to apply for an assessment of the legal costs to which the bill relates may request the law practice to give the person an itemised bill.(2) The law practice must comply with the request within 21 days after the date on which the request is made.(3) If the person making the request is liable to pay only a part of the legal costs to which the bill relates, the request for an itemised bill may only be made in relation to those costs that the person is liable to pay.(4) Subject to subsection (5), a law practice must not commence legal proceedings to recover legal costs from a person who has been given a lump sum bill until at least 30 days after the date on which the person is given the bill.(5) If the person makes a request for an itemised bill in accordance with this section, the law practice must not commence legal proceedings to recover the legal costs from the person until at least 30 days after complying with the request.(6) A law practice is not entitled to charge a person for the preparation of an itemised bill requested under this section.(7) Section 332 (2), (5) and (6) apply to the giving of an itemised bill under this section.
333 Notification of client’s rights
(1) A bill must include or be accompanied by a written statement setting out:(a) the following avenues that are open to the client in the event of a dispute in relation to legal costs:(i) costs assessment under Division 11,(ii) the setting aside of a costs agreement or a provision of a costs agreement under section 328 (Setting aside costs agreements or provisions of costs agreements),(iii) mediation under Division 8, and(b) any time limits that apply to the taking of any action referred to in paragraph (a).Note. These matters will already have been disclosed under section 309 (1) (Disclosure of costs to clients).(2) Subsection (1) does not apply to a bill if disclosure under:(a) section 309 (Disclosure of costs to clients), or(b) section 310 (1) (Disclosure if another law practice is to be retained),in relation to the relevant costs agreement was not or would not be required in the circumstances referred to in section 312 (1) (c) or (d) (Exceptions to requirement for disclosure).(3) Subsection (1) does not apply in relation to a sophisticated client.(4) A law practice may provide the written statement referred to in subsection (1) in or to the effect of a form prescribed by the regulations for the purposes of this subsection, and if it does so the practice is taken to have complied with this section in relation to the statement.
(1) A law practice may give a person an interim bill covering part only of the legal services the law practice was retained to provide.(2) Legal costs that are the subject of an interim bill may be assessed under Division 11 (Costs assessment), either at the time of the interim bill or at the time of the final bill, whether or not the interim bill has been paid.
Division 8 Mediation of costs disputes
335 Meaning of “client” and “costs dispute”
In this Division:client has the same meaning as in section 350 (Application by clients for costs assessment).
costs dispute means a dispute between a client and an Australian legal practitioner concerning a bill, and includes a dispute over an amount claimed to be payable under a costs agreement.
(1) A client who is given a bill may refer a costs dispute about the bill to the Commissioner or to a Council for mediation if the amount in dispute is less than $10,000.(2) The Manager, Costs Assessment may refer a costs dispute about a bill to the Commissioner if the amount in dispute is less than $10,000.(3) The Manager, Costs Assessment may, by notice in writing, require the client and the Australian legal practitioner concerned to enter into a process of mediation if the amount in dispute is less than $5,000.(4) A costs dispute about a bill may be referred under this section at any time before an application for an assessment of the whole or part of a bill is accepted by the Manager, Costs Assessment.(5) Mediation is not limited to formal mediation procedures and extends to encompass preliminary assistance in dispute resolution, such as the giving of informal advice designed to ensure that the parties are fully aware of their rights and obligations and that there is full and open communication between the parties concerning the dispute.(6) Failure on the part of an Australian legal practitioner to comply with the terms of a notice under subsection (3) is capable of being unsatisfactory professional conduct or professional misconduct.
Division 9 Maximum costs in personal injury damages matters
337 Interpretation and application
(1) In this Division:defendant means a person against whom a claim for personal injury damages is or may be made.
party means plaintiff or defendant.
personal injury damages has the same meaning as in Part 2 of the Civil Liability Act 2002.
plaintiff means a person who makes or is entitled to make a claim for personal injury damages.
(2) This Division does not apply to the following costs:(a) costs payable to an applicant for compensation under Part 2 of the Victims Support and Rehabilitation Act 1996 in respect of the application for compensation,(b) costs for legal services provided in respect of a claim under the Motor Accidents Act 1988 or Motor Accidents Compensation Act 1999,(c) costs for legal services provided in respect of a claim for work injury damages (as defined in the Workplace Injury Management and Workers Compensation Act 1998),(d) costs for legal services provided in respect of a claim for damages in proceedings of the kind referred to in section 11 (Claims for damages for dust diseases etc to be brought under this Act) of the Dust Diseases Tribunal Act 1989.
338 Maximum costs fixed for claims up to $100,000
(1) If the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs for legal services provided to a party in connection with the claim are fixed as follows:(a) in the case of legal services provided to a plaintiff—maximum costs are fixed at 20% of the amount recovered or $10,000, whichever is greater,(b) in the case of legal services provided to a defendant—maximum costs are fixed at 20% of the amount sought to be recovered by the plaintiff or $10,000, whichever is greater.(2) The regulations may prescribe an amount to replace the amount of $100,000 or $10,000 in subsection (1) and may prescribe a percentage to replace the percentage of 20% in subsection (1). When such a replacement amount or percentage is prescribed, it applies for the purposes of subsection (1) in place of the amount or percentage that it replaces.(3) The regulations may contain provisions of a savings or transitional nature consequent on the making of regulations under this section.(4) When the maximum costs for legal services provided to a party are fixed by this Division the following provisions apply (subject to sections 339–341):(a) a law practice is not entitled to be paid or recover for those legal services an amount that exceeds those maximum costs,(b) a court or tribunal cannot order the payment by another party to the claim of costs in respect of those legal services in an amount that exceeds that maximum,(c) in assessing the amount of those costs that is a fair and reasonable amount, a costs assessor cannot determine an amount that exceeds the maximum set by this section.(5) In this Division:(a) a reference to legal services provided to a party is a reference to legal services provided to the party by a law practice (including by an associate of the law practice), and(b) a reference to costs for legal services does not include costs charged as disbursements for services provided by any other person or other disbursements.(6) If proceedings are commenced on a claim, the amount sought to be recovered by the plaintiff is taken to be the amount sought to be proved by the plaintiff at the hearing of the claim.(7) Maximum costs fixed by this Division apply despite regulations under section 329 (1) (b) (Regulations to provide for fixed costs) fixing those costs.
338A Maximum costs increased by additional amount for certain claims heard by the District Court
(1) This section applies to a claim for personal injury damages in respect of which the amount recovered does not exceed $100,000 that is made by proceedings heard by the District Court.(2) If the District Court referred the proceedings to arbitration and, following the arbitration, made an order for a full or limited rehearing of the proceedings concerned on the application of a party, the maximum costs fixed by this Division for legal services provided in connection with the claim to the other party are increased by the additional amount.(3) If the decision of the District Court in respect of a claim is the subject of an appeal, the maximum costs fixed by this Division for legal services provided in connection with the claim to the party who is the respondent to the appeal are increased by the additional amount or, if subsection (2) also applies to legal services provided to the respondent, by 2 times the additional amount.(4) For the purposes of this section, the additional amount is:(a) in the case of legal services provided to the plaintiff—15% of the amount recovered, or $7,500, whichever is the greater, and(b) in the case of legal services provided to the defendant—15% of the amount sought to be recovered by the plaintiff, or $7,500, whichever is the greater.(5) The regulations may prescribe a percentage to replace the percentage of 15% in subsection (4) and may prescribe an amount to replace the amount of $7,500 in subsection (4). When such a replacement percentage or amount is prescribed, it applies for the purposes of subsection (4) in place of the percentage or amount that it replaces.(6) The regulations may contain provisions of a savings or transitional nature consequent on the making of regulations under this section.
339 Maximum costs do not affect solicitor-client costs under costs agreements
(1) This Division does not apply to the recovery of costs payable as between a law practice and the practice’s client to the extent that recovery of those costs is provided for by a costs agreement that complies with Division 5 (Costs agreements).(2) The regulations may make provision for or with respect to requiring disclosure by a law practice to the practice’s client of information in relation to the effect of a costs agreement in connection with the operation of this Division.(3) The regulations may provide that a failure by a law practice to comply with the requirements of the regulations under this section disentitles the law practice to the benefit of this section, and in such a case this Division applies in respect of the claim concerned despite the terms of any costs agreement.
340 Costs can be awarded on indemnity basis for costs incurred after failure to accept offer of compromise
(1) If a party to a claim for personal injury damages makes a reasonable offer of compromise on the claim that is not accepted, this Division does not prevent the awarding of costs against another party to be assessed on an indemnity basis in respect of legal services provided after the offer is made.(2) An offer of compromise on a claim by a party is reasonable if the court determines or makes an order or award on the claim in terms that are no less favourable to the party than the terms of the offer.(3) The regulations may make provision for or with respect to requiring disclosure by a law practice to the practice’s client of information in relation to the operation of this section in respect of any refusal by the client to accept an offer of compromise.(4) If it appears to the court in which proceedings are taken on a claim for personal injury damages that a law practice has failed to comply with any provision of the regulations under this section, and that the client of the practice has incurred an increased liability for costs as a result of refusing a reasonable offer of compromise in connection with the claim concerned, the court may of its own motion or on the application of the client make either or both of the following orders:(a) an order directing the law practice to repay to the client the whole or any part of those increased costs that the client has been ordered to pay to any other party,(b) an order directing the law practice to indemnify any party other than the client against the whole or any part of the costs payable by the party indemnified in respect of legal services provided after the offer is refused.
341 Court may order certain legal services to be excluded from maximum costs limitation
A court hearing a claim for personal injury damages may by order exclude from the operation of this Division legal services provided to a party to the claim if the court is satisfied that the legal services were provided in response to any action on the claim by or on behalf of the other party to the claim that in the circumstances was not reasonably necessary for the advancement of that party’s case or was intended or reasonably likely to unnecessarily delay or complicate determination of the claim.
342 Apportionment of maximum costs between law practices
(1) If more than one law practice provides legal services to a party in connection with a claim, the maximum costs fixed by this Division are to be apportioned between them as agreed by them or (failing agreement) as ordered by the court hearing proceedings on the claim.Note. For example, this provision would apply in relation to the provision of legal services by both a firm of solicitors and a barrister.(2) The maximum then applicable to a particular law practice is the law practice’s apportioned share of those maximum costs.
343 Meaning of “amount recovered” on a claim
(1) A reference in this Division to the amount recovered on a claim includes any amount paid under a compromise or settlement of the claim (whether or not legal proceedings have been instituted).(2) In determining the amount recovered on a claim for personal injury damages, no regard is to be had to any part of the amount recovered that is attributable to costs or to the addition of interest.
Division 10 Costs in civil claims where no reasonable prospects of success
(1) Division extends to appeals
This Division extends to legal services in connection with proceedings in a court on appeal as well as a court at first instance.(2) Legal services provided by both barrister and solicitor
If legal services in relation to a particular matter are provided by both a solicitor and a barrister instructed by the solicitor, any function imposed by this Division on a law practice in respect of the provision of the services is to be read as imposing the function on both the solicitor and barrister.
345 Law practice not to act unless there are reasonable prospects of success
(1) A law practice must not provide legal services on a claim or defence of a claim for damages unless a legal practitioner associate responsible for the provision of the services concerned reasonably believes on the basis of provable facts and a reasonably arguable view of the law that the claim or the defence (as appropriate) has reasonable prospects of success.(2) A fact is provable only if the associate reasonably believes that the material then available to him or her provides a proper basis for alleging that fact.(3) This Division applies despite any obligation that a law practice or a legal practitioner associate of the practice may have to act in accordance with the instructions or wishes of the client.(4) A claim has reasonable prospects of success if there are reasonable prospects of damages being recovered on the claim. A defence has reasonable prospects of success if there are reasonable prospects of the defence defeating the claim or leading to a reduction in the damages recovered on the claim.(5) Provision of legal services in contravention of this section constitutes for the purposes of this Division the provision of legal services without reasonable prospects of success.
346 Preliminary legal work not affected
This Division does not apply to legal services provided as a preliminary matter for the purpose of a proper and reasonable consideration of whether a claim or defence has reasonable prospects of success.
347 Restrictions on commencing proceedings without reasonable prospects of success
(1) The provision of legal services by a law practice without reasonable prospects of success does not constitute an offence but is capable of being unsatisfactory professional conduct or professional misconduct by a legal practitioner associate of the practice who is responsible for the provision of the service or by a principal of the practice.(2) A law practice cannot file court documentation on a claim or defence of a claim for damages unless a principal of the practice, or a legal practitioner associate responsible for the provision of the legal service concerned, certifies that there are reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law that the claim or the defence (as appropriate) has reasonable prospects of success.(3) Court documentation on a claim or defence of a claim for damages, which has been lodged for filing, is not to be filed in a court or court registry unless accompanied by the certification required by this section. Rules of court may make provision for or with respect to the form of that certification.(4) In this section:court documentation means:
(a) an originating process (including for example, a statement of claim, summons or cross-claim), defence or further pleading, or(b) an amended originating process, defence or further pleading, or(c) a document amending an originating process, defence or further pleading, or(d) any other document of a kind prescribed by the regulations.cross-claim includes counter-claim and cross-action.
348 Costs order against law practice acting without reasonable prospects of success
(1) If it appears to a court in which proceedings are taken on a claim for damages that a law practice has provided legal services to a party without reasonable prospects of success, the court may of its own motion or on the application of any party to the proceedings make either or both of the following orders in respect of the practice or of a legal practitioner associate of the practice responsible for providing the services:(a) an order directing the practice or associate to repay to the party to whom the services were provided the whole or any part of the costs that the party has been ordered to pay to any other party,(b) an order directing the practice or associate to indemnify any party other than the party to whom the services were provided against the whole or any part of the costs payable by the party indemnified.(2) The Supreme Court may on the application of any party to proceedings on a claim for damages make any order that the court in which proceedings on the claim are taken could make under this section.(3) An application for an order under this section cannot be made after a final determination has been made under this Part by a costs assessor of the costs payable as a result of an order made by the court in which the proceedings on the claim concerned were taken.(4) A law practice or legal practitioner associate of the practice is not entitled to demand, recover or accept from a client any part of the amount for which the practice or associate is directed to indemnify a party pursuant to an order under this section.
349 Onus of showing facts provided reasonable prospects of success
(1) If the court (the trial court) hearing proceedings on a claim for damages finds that the facts established by the evidence before the court do not form a basis for a reasonable belief that the claim or the defence had reasonable prospects of success, there is a presumption for the purposes of this Division that legal services provided on the claim or the defence (as appropriate) were provided without reasonable prospects of success.(2) If the Supreme Court (when the Supreme Court is not the trial court) is satisfied, either as a result of a finding of the trial court or otherwise on the basis of the judgment of the trial court, that the facts established by the evidence before the trial court do not form a basis for a reasonable belief that the claim or the defence had reasonable prospects of success, there is a presumption for the purposes of this Division that legal services provided on the claim or the defence (as appropriate) were provided without reasonable prospects of success.(3) A presumption arising under this section is rebuttable and a person seeking to rebut it bears the onus of establishing that at the time legal services were provided there were provable facts (as provided by section 345 (Law practice not to act unless there are reasonable prospects of success)) that provided a basis for a reasonable belief that the claim or the defence on which they were provided had reasonable prospects of success.(4) A law practice or legal practitioner associate of the practice may, for the purpose of establishing that at the time legal services were provided there were provable facts (as provided by section 345 (Law practice not to act unless there are reasonable prospects of success)) that provided a basis for a reasonable belief that the claim or the defence on which they were provided had reasonable prospects of success, produce information or a document despite any duty of confidentiality in respect of a communication between the law practice or a legal practitioner associate of the practice and a client, but only if:(a) the client is the client to whom the legal services were provided or consents to its disclosure, or(b) the court is satisfied that it is necessary for the law practice or associate to do so in order to rebut a presumption arising under this section.
In this Division:client means a person to whom or for whom legal services are or have been provided.
350 Application by client or third party payers for costs assessment
(1) A client may apply to the Manager, Costs Assessment for an assessment of the whole or any part of legal costs.(2) A third party payer may apply to a costs assessor for an assessment of the whole or any part of legal costs payable by the third party payer.(3) An application for a costs assessment may be made even if the legal costs have been wholly or partly paid.(3A) If any legal costs have been paid without a bill, the client or third party payer may nevertheless apply for a costs assessment.(4) An application by a client or third party payer for a costs assessment under this section must be made within 12 months after:(a) the bill was given or the request for payment was made to the client or third party payer, or(b) the costs were paid if neither a bill was given nor a request was made.(5) However, an application that is made out of time, otherwise than by:(a) a sophisticated client, or(b) a third party payer who would be a sophisticated client if the third party payer were a client of the law practice concerned,may be dealt with by the costs assessor if the Supreme Court, on application by the costs assessor or the client or third party payer who made the application for assessment, determines, after having regard to the delay and the reasons for the delay, that it is just and fair for the application for assessment to be dealt with after the 12-month period.(6) If the third party payer is a non-associated third party payer, the law practice must provide the third party payer, on the written request of the third party payer, with sufficient information to allow the third party payer to consider making, and if thought fit to make, an application for a costs assessment under this section.(7) If there is an associated third party payer for a client of a law practice:(a) nothing in this section prevents:(i) the client from making one or more applications for assessment under this section in relation to costs for which the client is solely liable, and(ii) the associated third party payer from making one or more applications for assessment under this section in relation to costs for which the associated third party payer is solely liable,and those applications may be made by them at the same time or at different times and may be dealt with jointly or separately, and(b) the client or the associated third party payer:(i) may participate in the costs assessment process where the other of them makes an application for assessment under this section in relation to costs for which they are both liable, and(ii) is taken to be a party to the assessment and is bound by the assessment, and(c) the law practice:(i) must participate in the costs assessment process where an application is made under this section by the associated third party payer in the same way as the practice must participate in the process where an application is made under this section by a client, and(ii) is taken to be a party to the assessment and is bound by the assessment.(8) If there is a non-associated third party payer for a client of a law practice:(a) nothing in this section prevents:(i) the client from making one or more applications for assessment under this section in relation to costs for which the client is liable, and(ii) the non-associated third party payer from making one or more applications for assessment under this section in relation to costs for which the non-associated third party payer is liable,and those applications may be made by them at the same time or at different times but must be dealt with separately, and(b) the client:(i) may participate in the costs assessment process where the non-associated third party payer makes an application under this section in relation to the legal costs for which the non-associated third party payer is liable, and(ii) is taken to be a party to the assessment and is bound by the assessment, and(c) the law practice:(i) must participate in the costs assessment process, and(ii) is taken to be a party to the assessment, and(d) despite any other provision of this Division, the assessment of the costs payable by the non-associated third party payer does not affect the amount of legal costs payable by the client to the law practice.(9) In this section:client includes the following:
(a) an executor or administrator of a client,(b) a trustee of the estate of a client.third party payer includes the following:
(a) an executor or administrator of a third party payer,(b) a trustee of the estate of a third party payer.
351 Application for costs assessment by law practice retaining another law practice
(1) A law practice that retains another law practice to act on behalf of a client may apply to the Manager, Costs Assessment for an assessment of the whole or any part of the legal costs to which a bill given by the other law practice in accordance with Division 7 (Billing) relates.(2) If any legal costs have been paid without a bill, the law practice may nevertheless apply for a costs assessment.(2A) An application for a costs assessment may be made even if the legal costs have been wholly or partly paid.(3) An application under this section must be made within 60 days after:(a) the bill was given or the request for payment was made, or(b) the costs were paid if neither a bill was given nor a request was made.(4) An application cannot be made under this section if there is a costs agreement between the client and the other law practice.
352 Application for costs assessment by law practice giving bill
(1) A law practice that has given a bill may apply to the Manager, Costs Assessment for an assessment of the whole or any part of the legal costs to which the bill relates.(2) If any legal costs have been paid without a bill, the law practice may nevertheless apply for a costs assessment.(3) An application for a costs assessment may be made even if the legal costs have been wholly or partly paid.(4) An application may not be made under this section unless at least 30 days have passed since:(a) the bill was given or the request for payment was made, or(b) the costs were paid if neither a bill was given nor a request was made, or(c) an application has been made under this Division by another person in respect of the legal costs.
353 Application for assessment of party/party costs
(1) A person who has paid or is liable to pay, or who is entitled to receive or who has received, costs as a result of an order for the payment of an unspecified amount of costs made by a court or a tribunal may apply to the Manager, Costs Assessment for an assessment of the whole of, or any part of, those costs.(2) A court or tribunal may direct the Manager, Costs Assessment to refer for assessment costs payable as a result of an order made by the court or tribunal. Any such direction is taken to be an application for assessment duly made under this Division.(3) An application or direction under this section may not be made in relation to costs arising out of criminal proceedings in a court except as provided by section 257G of the Criminal Procedure Act 1986.(4) An application or direction under this section may be made in relation to an application for and the issue of an apprehended violence order within the meaning of the Crimes (Domestic and Personal Violence) Act 2007.
354 How to make an application for costs assessment
(1) An application for a costs assessment:(a) must be made in accordance with the regulations (if any), and(b) subject to subsection (4), must be accompanied by the fee prescribed by the regulations.(2) The application must authorise a costs assessor to have access to, and to inspect, all documents of the applicant that are held by the applicant, or by any law practice, Australian legal practitioner or Australian-registered foreign lawyer concerned, in respect of the matter to which the application relates.(3) The application must contain a statement by the applicant that there is no reasonable prospect of settlement of the matter by mediation.(4) The Manager, Costs Assessment may waive or postpone payment of the application fee either wholly or in part if satisfied that the applicant is in such circumstances that payment of the fee would result in serious hardship to the applicant or his or her dependants.(5) The Manager, Costs Assessment may refund the application fee either wholly or in part if satisfied that it is appropriate because the application is not proceeded with.
355 Consequences of application
If an application for a costs assessment is made in accordance with this Division:(a) the costs assessment must take place without any money being paid into court on account of the legal costs the subject of the application, and(b) the law practice must not commence or maintain any proceedings to recover the legal costs until the costs assessment has been completed.
356 Persons to be notified of application
(1) The Manager, Costs Assessment is to cause a copy of an application for costs assessment to be given to any law practice or client concerned or any other person whom the Manager thinks it appropriate to notify.(2) A person who is notified by the Manager, Costs Assessment under subsection (1):(a) is entitled to participate in the costs assessment process, and(b) is taken to be a party to the assessment, and(c) if the costs assessor so determines, is bound by the assessment.
The regulations may make provision for or with respect to the making and processing of applications for costs assessments.
357 Referral of matters to costs assessors
(1) The Manager, Costs Assessment is to refer each application for costs assessment to a costs assessor to be dealt with under this Division.(2) A costs assessor who has an interest in an application must, as soon as practicable after becoming aware of that fact, refer the application to the Manager, Costs Assessment for referral to another costs assessor.(3) If the Manager, Costs Assessment is satisfied that it is inappropriate for a costs assessor to determine a particular application that has been referred to the costs assessor, the Manager, Costs Assessment may:(a) revoke the referral of the application, and(b) refer the application for assessment to another costs assessor.(4) An application that has been referred to another costs assessor under this section is to be dealt with as a new assessment or, if the Manager, Costs Assessment so directs, by continuing the assessment.(5) When a referral has been revoked, the costs assessor to whom the application was initially referred must return all documents relating to the assessment of the application to the Manager, Costs Assessment. This includes documents relating to any work done on the assessment and a statement of the amount calculated for costs in respect of any work done on the assessment.
358 Costs assessor may require documents or further particulars
(1) For the purposes of determining an application for a costs assessment, a costs assessor may, by notice in writing, require a person (including the applicant, the law practice concerned, or any other law practice or client) to do any one or more of the following:(a) to produce, at a specified time and place, any specified document (or a copy of the document),(b) to provide written information on or before a specified date (verified by statutory declaration if the requirement so states) including, for example:(i) information as to the instructions given to, or work done by, any law practice in respect of the matter concerned, and(ii) information as to the basis on which the costs concerned were calculated,(c) to otherwise assist in, or co-operate with, the determination of the assessment in a specified manner.(2) A person who is subject to a requirement under subsection (1) must comply with the requirement.Maximum penalty: 50 penalty units.
(3) If a person fails, without reasonable excuse, to comply with a notice under this section, the costs assessor may decline to deal with the application or may continue to deal with the application on the basis of the information provided.(4) A failure by an Australian legal practitioner to comply with a notice under this section without reasonable excuse is capable of being professional misconduct.
359 Consideration of applications by costs assessors
(1) A costs assessor must not determine an application for assessment unless the costs assessor:(a) has given both the applicant and any law practice or client or other person concerned a reasonable opportunity to make written submissions to the costs assessor in relation to the application, and(b) has given due consideration to any submissions so made.(2) In considering an application, a costs assessor is not bound by rules of evidence and may inform himself or herself on any matter in such manner as he or she thinks fit.(3) For the purposes of determining an application for assessment or exercising any other function, a costs assessor may determine any of the following:(a) whether or not disclosure has been made in accordance with Division 3 (Costs disclosure) and whether or not it was reasonably practicable to disclose any matter required to be disclosed under Division 3,(b) whether a costs agreement exists, and its terms.
361 Assessment of costs by reference to costs agreement
(1) A costs assessor must assess the amount of any disputed costs that are subject to a costs agreement by reference to the provisions of the costs agreement if:(a) a relevant provision of the costs agreement specifies the amount, or a rate or other means for calculating the amount, of the costs, and(b) the agreement has not been set aside under section 328 (Setting aside costs agreements),unless the assessor is satisfied:(c) that the agreement does not comply in a material respect with any applicable disclosure requirements of Division 3 (Costs disclosure), or(d) that Division 5 (Costs agreements) precludes the law practice concerned from recovering the amount of the costs, or(e) that the parties otherwise agree.(2) The costs assessor is not required to initiate an examination of the matters referred to in subsection (1) (c) and (d).
362 Costs fixed by regulations or other legislation
(1) An assessment of costs fixed by a regulation under section 329 (1) (a), (b), (b1), (c), (d) or (e) is to be made in accordance with that regulation.(2) An assessment of costs fixed by a regulation under section 329 (1) (f) is to be made having regard to that regulation.(3) An assessment of costs fixed by a regulation under section 149 of the Motor Accidents Compensation Act 1999 is to be made in accordance with that regulation (despite anything to the contrary in a regulation under section 329).(4) An assessment of costs fixed by a provision of any other Act, or a statutory rule made under any other Act, is to be made:(a) if the costs are fixed by a provision of any other Act—in accordance with that provision (despite anything to the contrary in a regulation under section 329), or(b) if the costs are fixed by a provision of a statutory rule made under any other Act—in accordance with that provision (but only to the extent that the provision is not inconsistent with a regulation under section 329).
363 Criteria for costs assessment
(1) In conducting an assessment of legal costs, the costs assessor must consider:(a) whether or not it was reasonable to carry out the work to which the legal costs relate, and(b) whether or not the work was carried out in a reasonable manner, and(c) the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that section 361 or 362 applies to any disputed costs.(2) In considering what is a fair and reasonable amount of legal costs, the costs assessor may have regard to any or all of the following matters:(a) whether the law practice and any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf complied with any relevant legislation or legal profession rules,(b) any disclosures made by the law practice under Division 3 (Costs disclosure),(c) any relevant advertisement as to:(i) the law practice’s costs, or(ii) the skills of the law practice or of any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf,(d) (Repealed)(e) the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter,(f) the retainer and whether the work done was within the scope of the retainer,(g) the complexity, novelty or difficulty of the matter,(h) the quality of the work done,(i) the place where, and circumstances in which, the legal services were provided,(j) the time within which the work was required to be done,(k) any other relevant matter.
363A Interest on amount outstanding
(1) A costs assessor may, in an assessment, determine that interest is not payable on the amount of costs assessed or on any part of that amount and determine the rate of interest (not exceeding the rate referred to in section 321 (4)).(2) This section applies despite any costs agreement or section 321.(3) This section does not authorise the giving of interest on interest.(4) This section does not apply to or in respect of the assessment of costs referred to in Subdivision 3 (Party/party costs).
Subdivision 3 Party/party costs
364 Assessment of costs—costs ordered by court or tribunal
(1) In conducting an assessment of legal costs payable as a result of an order made by a court or tribunal, the costs assessor must consider:(a) whether or not it was reasonable to carry out the work to which the costs relate, and(b) whether or not the work was carried out in a reasonable manner, and(c) what is a fair and reasonable amount of costs for the work concerned.(2) In considering what is a fair and reasonable amount of legal costs, a costs assessor may have regard to any or all of the following matters:(a) the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter,(b) the complexity, novelty or difficulty of the matter,(c) the quality of the work done and whether the level of expertise was appropriate to the nature of the work done,(d) the place where and circumstances in which the legal services were provided,(e) the time within which the work was required to be done,(f) the outcome of the matter.(3) An assessment must be made in accordance with the operation of the rules of the relevant court or tribunal that made the order for costs and any relevant regulations.(4) If a court or a tribunal has ordered that costs are to be assessed on an indemnity basis, the costs assessor must assess the costs on that basis, having regard to any relevant rules of the court or tribunal and relevant regulations.
365 Effect of costs agreements in assessments of party/party costs
(1) A costs assessor may obtain a copy of, and may have regard to, a costs agreement.(2) However, a costs assessor must not apply the terms of a costs agreement for the purposes of determining appropriate fair and reasonable costs when assessing costs payable as a result of an order by a court or tribunal.
366 Court or tribunal may determine matters
This Division does not limit any power of a court or a tribunal to determine in any particular case the amount of costs payable or that the amount of the costs is to be determined on an indemnity basis.
367 Determinations of costs assessments
(1) A costs assessor is to determine an application for a costs assessment relating to a bill by confirming the bill or, if the assessor is satisfied that the disputed costs are unfair or unreasonable, by substituting for the amount of the costs an amount that, in the assessor’s opinion, is a fair and reasonable amount.(2) The costs assessor may include an allowance for any fee paid or payable for the application by the applicant.(3) A costs assessor may not determine that any part of a bill that is not the subject of an application is unfair or unreasonable.(4) A costs assessor may determine that the amount of fair and reasonable costs is the amount agreed to by the parties if during the course of the assessment the parties notify the costs assessor that they have agreed on the amount of those costs.
367A Determinations of costs assessments for party/party costs
A costs assessor is to determine an application for an assessment of costs payable as a result of an order made by a court or tribunal by making a determination of the fair and reasonable amount of those costs.
368 Certificate as to determination
(1) On making a determination of costs referred to in Subdivision 2 or 3 of this Division, a costs assessor is to issue a certificate that sets out the determination.(2) A costs assessor may issue more than one certificate in relation to an application for costs assessment. Such certificates may be issued at the same time or at different stages of the assessment process.(3) However, any such certificate may not set out the costs of the costs assessment within the meaning of section 369.Note. Section 369 makes provision for the recovery of the costs of costs assessments relating to costs to which either section 317 (Effect of failure to disclose) or 364 (Assessment of costs—costs ordered by court or tribunal) applies. The section requires a costs assessor to issue a separate certificate setting out the costs of such costs assessments. That section also makes provision for the effect of such a certificate.(4) In the case of an amount of costs that has been paid, the amount (if any) by which the amount paid exceeds the amount specified in any such certificate may be recovered as a debt in a court of competent jurisdiction.(5) In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed.(5A) The costs assessor must forward the certificate or a copy of the certificate to:(a) the Manager, Costs Assessment, and(b) each party to the assessment, unless subsection (6) applies.(6) If the costs of the costs assessor are payable by a party to the assessment as referred to in section 369, the costs assessor must:(a) forward a copy of the certificate to the Manager, Costs Assessment only, and(b) advise the parties that the certificate has been so forwarded and will be available to the parties on payment of the costs of the costs assessor.(7) Subsection (6) does not apply:(a) in respect of a certificate issued before the completion of the assessment process under subsection (2), or(b) in such circumstances as may be prescribed by the regulations.
(1) This section applies to the costs of a costs assessment in relation to:(a) costs to which section 317 (Effect of failure to disclose) applies, and(b) costs to which section 364 (Assessment of costs—costs ordered by court or tribunal) applies, and(c) costs that on assessment are reduced by 15% or more.(2) A costs assessor is, subject to this section, to determine the costs of a costs assessment to which this section applies.(2A) Subject to any order of or the rules of the relevant court or tribunal, the costs assessor may determine by whom and to what extent the costs of an assessment referred to in section 364 (Assessment of costs—costs ordered by court or tribunal) are payable and include the determination in the certificate issued under this section in relation to the assessment.(3) The costs of a costs assessment to which this section applies are payable:(a) for a costs assessment in relation to costs to which section 317 (Effect of failure to disclose) applies—by the law practice that provided the legal services concerned, or(b) for a costs assessment in relation to costs to which section 364 (Assessment of costs—costs ordered by court or tribunal) applies—by such persons, and to such extent, as may be determined by the costs assessor, or(c) for a costs assessment in relation to costs that on assessment are reduced by 15% or more—by the law practice that provided the legal services concerned or, if the costs assessor so determines, by such persons, and to such extent, as may be determined by the costs assessor.(4) The costs assessor may refer to the Supreme Court any special circumstances relating to a costs assessment and the Court may make any order it thinks fit concerning the costs of the costs assessment.(5) On making a determination, a costs assessor may issue and forward to each party and the Manager, Costs Assessment a certificate that sets out the costs of the costs assessment.(6) If the application for a costs assessment has been dealt with by more than one costs assessor, a certificate issued can set out the costs of any other costs assessor.(7) The certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs.(8) The costs of the costs assessor are to be paid to the Manager, Costs Assessment.(9) The Manager, Costs Assessment may take action to recover the costs of a costs assessor or Manager, Costs Assessment.(10) In this section:costs of the costs assessment includes the costs incurred by the costs assessor or the Manager, Costs Assessment in the course of a costs assessment under this Division, and also includes the costs related to the remuneration of the costs assessor.
(1) A costs assessor must ensure that a certificate issued under section 368 (Certificate as to determination) or 369 (Recovery of costs of costs assessment) that sets out his or her determination is accompanied by:(a) a statement of the reasons for the costs assessor’s determination, and(b) such supplementary information as may be required by the regulations.(2) The statement of reasons must be given in accordance with the regulations.
371 Correction of error in determination
(1) At any time after making a determination, a costs assessor may, for the purpose of correcting an inadvertent error in the determination:(a) make a new determination in substitution for the previous determination, and(b) issue a certificate under section 368 (Certificate as to determination) or 369 (Recovery of costs of costs assessment) that sets out the new determination.(2) Such a certificate replaces any certificate setting out the previous determination of the costs assessor that has already been issued by the costs assessor and, on the filing of the replacement certificate in the office or registry of a court having jurisdiction to order the payment of the amount of the new determination, any judgment that is taken to have been effected by the filing of that previously issued certificate is varied accordingly.
A costs assessor’s determination of an application is binding on all parties to the application and no appeal or other assessment lies in respect of the determination, except as provided by this Division.
Subdivision 5 Review of determination by panel
373 Application by party for review of determination
(1) A party to a costs assessment who is dissatisfied with a determination of a costs assessor may, within 30 days after the certificate under section 368 (Certificate as to determination) or 369 (Recovery of costs of costs assessment) has been forwarded to the parties that sets out the determination of the costs assessor or within such further time as the Manager, Costs Assessment may allow, apply to the Manager, Costs Assessment for a review of the determination.Note. Section 328 (10) provides that a party to a costs agreement may apply to the Manager, Costs Assessment under this section for a review of a determination to make, or not make, an order under section 328 to set aside the costs agreement or a provision of the costs agreement.(2) The application must:(a) be made in accordance with the regulations (if any), and(b) be accompanied by the fee prescribed by the regulations.(3) The Manager, Costs Assessment may waive or postpone payment of the fee either wholly or in part if satisfied that the applicant is in such circumstances that payment of the fee would result in serious hardship to the applicant or his or her dependants.(4) The Manager, Costs Assessment may refund the fee paid under this section either wholly or in part if satisfied that it is appropriate because the application is not proceeded with.(5) A party who applies for a review under this Subdivision must ensure that notice of the application is given to the other parties to the assessment not less than 7 days before the application is made or as prescribed by the regulations.
373A Application by Manager for review of determination of costs of costs assessment
(1) The Manager, Costs Assessment may, within 30 days after the issue of a certificate under section 369 (5) that sets out the costs of a costs assessment determined by a costs assessor, prepare an application for a review of the determination.(2) The Manager, Costs Assessment must ensure that notice of the Manager’s intention to apply for a review is given to the parties to the proposed review not less than 7 days before the application is referred to a panel under section 374 or as prescribed by the regulations.
374 Referral of application to panel
(1) The Manager, Costs Assessment:(a) in the case of an application duly made under section 373—is to refer the application to a panel, or(b) in the case of an application prepared under section 373A—may refer the application to a panel.(2) The panel is to be constituted by 2 costs assessors.(3) A costs assessor whose determination is the subject of an application for a review under this Subdivision may not be a member of a panel to which the application has been referred.(4) A member of a panel who has an interest in an application must, as soon as practicable after becoming aware of that fact, inform the Manager, Costs Assessment of that interest.(5) If the Manager, Costs Assessment is satisfied that a member of a panel has an interest in the application, the Manager must refer the application to a differently constituted panel that does not include that member.
375 General functions of panel in relation to review application
(1) A panel constituted under this Subdivision may review the determination of the costs assessor and may:(a) affirm the costs assessor’s determination, or(b) set aside the costs assessor’s determination and substitute such determination in relation to the costs assessment as, in their opinion, should have been made by the costs assessor who made the determination that is the subject of the review.(2) For the purposes of subsection (1), the panel has, in relation to the application for assessment, all the functions of a costs assessor under this Part and is to determine the application, subject to this Subdivision and the regulations, in the manner that a costs assessor would be required to determine an application for costs assessment.(3) However, the assessment is to be conducted on the evidence that was received by the costs assessor who made the determination that is the subject of the assessment and, unless the panel determines otherwise, the panel is not:(a) to receive submissions from the parties to the assessment, or(b) to receive any fresh evidence or evidence in addition to or in substitution for the evidence received by the costs assessor.(3A) A panel reviewing the determination of a costs assessor may determine that the amount of fair and reasonable costs is the amount agreed to by the parties to the review if during the course of the review the parties notify the panel that they have agreed on the amount of those costs.(4) If the costs assessors who constitute the panel are unable to agree on a determination in relation to an application, the panel is to affirm the determination of the costs assessor who made the determination that is the subject of the review.
376 Relevant documents to be produced to panel
(1) A panel constituted under this Subdivision may, by notice in writing, require a costs assessor, a law practice or any other person (such as an applicant or an associate of a law practice) to produce to the panel any document in his or her possession relating to an assessment of costs by a costs assessor.(2) If a person fails, without reasonable excuse, to comply with a notice under this section, the panel may decline to deal with an application for review or may continue to deal with it on the basis of the information provided.(3) A costs assessor is to retain in his or her possession any document relating to a costs assessment (other than a document that is returned to a party to the assessment) until:(a) the period of 12 months has elapsed since the issue of a certificate under section 368 (Certificate as to determination) setting out the determination of the costs assessor, or(b) the costs assessor receives a notice under subsection (1) in relation to the document,whichever happens first.(4) A law practice or an associate of a law practice is to retain in his or her possession any document relating to a costs assessment that is returned to the practice or associate by the costs assessor until:(a) the period of 12 months has elapsed since the issue of a certificate under section 368 setting out the determination of the costs assessor, or(b) the practice or associate receives a notice under subsection (1) in relation to the document,whichever happens first.(5) A contravention of this section by an Australian legal practitioner is capable of being professional misconduct.
377 Effect of review on costs assessor’s determination
(1) If the Manager, Costs Assessment refers a determination of a costs assessor to a panel for review under this Subdivision, the operation of that determination is suspended.(2) The panel may end such a suspension:(a) if it affirms the determination of the costs assessor, or(b) in such other circumstances as it considers appropriate.
378 Certificate as to determination of panel
(1) On making a determination in relation to an application for review of a costs assessment under this Subdivision, a panel is to issue each party and the Manager, Costs Assessment with a certificate that sets out the determination.(2) However, any such certificate may not set out the costs of the review within the meaning of section 379.Note. Section 379 requires a panel to issue a separate certificate setting out the costs of the review. That section also makes provision for the effect of such a certificate.(3) If the panel sets aside the determination of the costs assessor, the following provisions apply:(a) if the amount of costs has already been paid, the amount (if any) by which the amount paid exceeds the amount specified in the determination of the panel may be recovered as a debt in a court of competent jurisdiction,(b) if the amount of the costs has not been paid, a certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed,(c) if the costs assessor issued a certificate in relation to his or her determination under section 368 (Certificate as to determination) or 369 (Recovery of costs of costs assessment):(i) the certificate ceases to have effect, and(ii) any judgment that is taken to have been effected in relation to that certificate also ceases to have effect, and(iii) any enforcement action taken in respect of that judgment is to be reversed.(4) If the panel sets aside the costs assessor’s determination, any amount substituted by the panel may include an allowance for any fee paid or payable for the application for review by the applicant or for any amount paid or payable for the costs of the costs assessor by a party to the assessment.(5) If the costs of the panel are payable by a person referred to in section 379, the panel must:(a) forward the certificate to the Manager, Costs Assessment, instead of forwarding it or copies of it to the parties, and(b) advise the parties that the certificate has been so forwarded and will be available to the parties on payment of the costs of the panel.(6) Subsection (5) does not apply in such circumstances as may be prescribed by the regulations.
379 Recovery of costs of review
(1) A panel that conducts a review of a costs assessor’s determination under this Subdivision is to determine the costs of the review and may, subject to this section, determine by whom and to what extent those costs are to be paid.(2) If the panel affirms the determination of the costs assessor, the panel is to require the party who applied for the review to pay the costs of the review.(3) If the panel sets aside the determination of the costs assessor, and makes a determination in favour of the party who applied for review, the panel is to require the party who applied for the review to pay the costs of the review if the determination of the panel increases or decreases the total costs payable (as assessed by the costs assessor) by an amount that is less than 15 per cent (or such other percentage as may be prescribed by the regulations) of the total costs payable as assessed by the costs assessor.(4) Subject to subsections (2) and (3), the panel may require any party to the assessment that is reviewed to pay the costs of the review or may determine that the costs of the review are to be shared between the parties in any manner that the panel considers appropriate.(5) The panel is to issue to each party and the Manager, Costs Assessment, a certificate that sets out the panel’s determination under this section.(6) The certificate is, on filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs of the review.(7) The costs of the review are to be paid to the Manager, Costs Assessment.(8) The Manager, Costs Assessment may take action to recover the costs of a review.(9) Regulations may be made with respect to determinations of a panel under this section.(10) In this section:costs of a review means the costs incurred by the panel or the Manager, Costs Assessment in the course of a review under this Subdivision, and includes the costs related to the remuneration of the costs assessors who constitute the panel.
(1) The panel must ensure that a certificate issued under section 378 (Certificate as to determination of panel) or 379 (Recovery of costs of review) that sets out the determination of the panel is accompanied by:(a) a statement of the reasons for the panel’s determination, and(b) such supplementary information as may be required by the regulations.(2) The statement of reasons must be given in accordance with the regulations.
381 Correction of error in determination
(1) At any time after making a determination, a panel that conducts a review may, for the purpose of correcting an inadvertent error in the determination:(a) make a new determination in substitution for the previous determination, and(b) issue a certificate under section 378 (Certificate as to determination of panel) or 379 (Recovery of costs of review) that sets out the new determination of the panel.(2) Such a certificate replaces any certificate setting out the previous determination of the panel that has already been issued by the panel and, on the filing of the replacement certificate in the office or registry of a court having jurisdiction to order the payment of the amount of the new determination, any judgment that is taken to have been effected by the filing of that previously issued certificate is varied accordingly.
382 Appeal against determination of panel
(1) Subdivision 6 (Appeals) applies in relation to a decision or determination of a panel under this Subdivision as if references in Subdivision 6 to a costs assessor were references to the panel.(2) Subject to subsection (1), the panel’s determination of an application for review of a costs assessor’s determination is binding on all parties to the assessment that is the subject of a review and no appeal or other review lies in respect of the determination.
The regulations may make provision for or with respect to reviews under this Subdivision, including the constitution and membership of a panel and the procedure for conducting reviews.
384 Appeal against decision of costs assessor as to matter of law
(1) A party to an application for a costs assessment who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the District Court, appeal to the Court against the decision.(2) After deciding the question the subject of the appeal, the District Court may, unless it affirms the costs assessor’s decision:(a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or(b) remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application.(3) On a re-determination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given.
385 Appeal against decision of costs assessor by leave
(1) A party to an application for a costs assessment relating to a bill may, in accordance with the rules of the District Court, seek leave of the Court to appeal to the Court against the determination of the application made by a costs assessor.(2) A party to an application for a costs assessment relating to costs payable as a result of an order made by a court or a tribunal may, in accordance with the rules of the court or tribunal, seek leave of the court or tribunal to appeal to the court or tribunal against the determination of the application made by a costs assessor.(3) The District Court or court or tribunal may, in accordance with its rules, grant leave to appeal and may hear and determine the appeal.(4) An appeal is to be by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given.(5) After deciding the questions the subject of the appeal, the District Court or court or tribunal may, unless it affirms the costs assessor’s decision, make such determination in relation to the application as, in its opinion, should have been made by the costs assessor.
386 Effect of appeal on application
(1) If a party to an application for a costs assessment has appealed against a determination or decision of a costs assessor, either the costs assessor or the court or tribunal to which the appeal is made may suspend, until the appeal is determined, the operation of the determination or decision.(2) The costs assessor or the court or tribunal may end a suspension made by the costs assessor. The court or tribunal may end a suspension made by the court or tribunal.
387 Assessor can be party to appeal
A costs assessor can be made a party to any appeal against a determination or decision of the costs assessor by the District Court.
A copy of every document initiating an appeal against a determination or decision of a costs assessor must be served on the Manager, Costs Assessment by the party making the appeal.
389 Court may refer unreviewed determination to review panel
(1) If an appeal is made under section 385 (Appeal against decision of costs assessor by leave) against a determination of a costs assessor and the determination to which the appeal relates has not been reviewed by a panel in accordance with Subdivision 5 (Review of determination by panel), the court or tribunal to which the appeal is made may refer the appeal to the Manager, Costs Assessment for a review by a panel under that Subdivision.(2) For the purposes of Subdivision 5 (Review of determination by panel), the referral of an appeal by a court or tribunal under subsection (1) to the Manager, Costs Assessment is taken to be a duly made application for a review under that Subdivision.
(1) The Chief Justice of New South Wales may appoint persons to be costs assessors under this Act.(2) A costs assessor has the functions that are conferred on the costs assessor by or under this or any other Act.(3) Schedule 5 has effect with respect to costs assessors.(4) A costs assessor is not an officer of the Supreme Court when acting as a costs assessor.(5) Proceedings relating to anything done or omitted to be done by the Chief Justice of New South Wales in respect of the appointment or removal of a costs assessor (including terms of appointment and any other incidental matters) may not be instituted against the Chief Justice of New South Wales but may be instituted against “The Manager, Costs Assessment” as nominal defendant.
A matter or thing done or omitted to be done by the Chief Justice of New South Wales, the Manager, Costs Assessment or a costs assessor (including a costs assessor acting as a member of a panel constituted under this Division) does not, if the matter or thing was done or omitted to be done in good faith for the purpose of the administration of this Part, subject the Chief Justice of New South Wales, the Manager, Costs Assessment or any costs assessor personally to any action, liability, claim or demand.
A costs assessor must not disclose any information obtained in connection with the exercise of the costs assessor’s functions (including any functions as a member of a panel constituted under this Division) unless the disclosure is made:(a) in connection with the exercise of those functions or the administration or execution of this Act, or(b) for the purposes of any legal proceedings arising out of this Act or of any report of any such proceedings, or(c) in the case of information relating to an Australian legal practitioner or other person—with the consent of the practitioner or other person, or(d) with other lawful excuse.Maximum penalty: 20 penalty units.
393 Referral for disciplinary action
(1) If, on a costs assessment or review, the costs assessor considers that the legal costs charged by a law practice are grossly excessive, the costs assessor must refer the matter to the Commissioner to consider whether disciplinary action should be taken against any Australian legal practitioner or Australian-registered foreign lawyer involved.(2) If the costs assessor considers that a costs assessment raises any other matter that may amount to unsatisfactory professional conduct or professional misconduct on the part of an Australian legal practitioner or Australian-registered foreign lawyer, the costs assessor must refer the matter to the Commissioner to consider whether disciplinary action should be taken against an Australian legal practitioner or Australian-registered foreign lawyer.
394 Rules of procedure for applications
(1) There is to be a costs assessors’ rules committee consisting of those costs assessors appointed to the committee by the Chief Justice of New South Wales.(2) The committee is to regulate its own proceedings for the calling of meetings and the conduct of its business.(3) The committee may make rules, not inconsistent with this Part, governing the practice and procedure of the assessment of costs, including matters relating to the appointment of costs assessors to particular matters and the interests of costs assessors in particular matters.(4) The committee has any other functions conferred on the committee by or under this or any other Act.(5) Any amount payable from the Public Purpose Fund for the purpose of meeting the costs of the committee is to be paid, in accordance with section 290 (Payment of certain costs and expenses from Fund), to the Treasurer for credit of the Consolidated Fund.(6) The rules must be published on the NSW legislation website.(7) Sections 40 (Notice of statutory rules to be tabled) and 41 (Disallowance of statutory rules) of the Interpretation Act 1987 apply to the rules in the same way as they apply to a statutory rule.
395 Division not to apply to interest on judgment debt
This Division does not apply to an amount of interest ordered on a judgment debt (being an order for the payment of costs) under section 85 (4) of the District Court Act 1973 or section 95 (4) of the Supreme Court Act 1970.
395A Contracting out of Division by sophisticated clients
A sophisticated client of a law practice, or an associated third party payer who would be a sophisticated client if the third party payer were a client of the law practice concerned, may contract out of this Division.
396 Application of Part to cross-vested matters
(1) The regulations may make provisions modifying the application of this Part to matters commenced in another jurisdiction and transferred to the Supreme Court under cross-vesting legislation of the Commonwealth or another State or Territory.(2) Without limiting subsection (1), the regulations may modify the application of this Part by removing an obligation that a local legal practitioner or interstate legal practitioner would otherwise have (in relation to such matters) under this Part.
397 Application of Part to incorporated legal practices and multi-disciplinary partnerships
The regulations may provide that specified provisions of this Part do not apply to incorporated legal practices or multi-disciplinary partnerships or both or apply to them with specified modifications.
398 Application of Part to Australian-registered foreign lawyers
(1) This Part applies to Australian-registered foreign lawyers as if a reference in this Part to a law practice or an Australian legal practitioner were a reference to an Australian-registered foreign lawyer.(2) The regulations may make provisions modifying the application of this Part to Australian-registered foreign lawyers.
399 Imputed acts, omissions or knowledge
For the purposes of this Part:(a) anything done or omitted by, to or in relation to:(i) an Australian legal practitioner, or(ii) an Australian-registered foreign lawyer (except for the purposes of any provision of this Part prescribed by the regulations for the purposes of this section),in the course of acting on behalf of a law practice is taken to have been done or omitted by, to or in relation to the law practice, and(b) without limiting paragraph (a), the law practice is taken to become or be aware of, or to have a belief as to, any matter if:(i) an Australian legal practitioner, or(ii) an Australian-registered foreign lawyer (except for the purposes of any provision of this Part prescribed by the regulations for the purposes of this section),becomes or is aware of, or has a belief as to, the matter in the course of acting on behalf of the law practice.
400 Costs of administering Part
(1) All costs related to the administration of this Part (other than the costs referred to in section 394 (5)) (Rules of procedure for applications), are to be paid out of money to be provided from a working account established for the Attorney General’s Department by the Treasurer under section 13A of the Public Finance and Audit Act 1983 for the purposes of this Part.(2) The following amounts received by the Manager, Costs Assessment are to be paid to the credit of that working account:(a) an application fee for an assessment,(b) an application fee for a review of an assessment,(c) a payment for the costs of a costs assessor,(d) a payment for the costs of a review of an assessment.
Part 3.3 Professional indemnity insurance
The purpose of this Part is to continue the scheme for professional indemnity insurance to protect clients of law practices from professional negligence.
(1) In this Part:insurable barrister means a barrister who holds a local practising certificate that entitles the holder to practise as a barrister on his or her own account, other than a barrister:
(a) who is exempted, or who is a member of a class of barristers that is exempted, by the Bar Council from the requirement to be insured under this Part, or(b) who is engaged in practice referred to in section 111 (Government and other lawyers—exemption from certain conditions).insurable solicitor means a solicitor who holds a local practising certificate that entitles the holder to practise as a solicitor on his or her own account, other than a solicitor:
(a) who has given a written undertaking to the Law Society Council that the solicitor will not practise during the period to which the practising certificate relates otherwise than in the course of the solicitor’s employment by a body or person specified in the undertaking (not being employment by an incorporated legal practice), or(b) who is exempted, or who is a member of a class of solicitors that is exempted, by the Law Society Council from the requirement to be insured under this Part.(2) The Bar Council may exempt barristers or classes of barristers from the requirement to be insured under this Part on such grounds as the Council considers sufficient.(3) The Law Society Council may exempt solicitors or classes of solicitors from the requirement to be insured under this Part on such grounds as the Council considers sufficient.
403 Professional indemnity insurance for barristers
(1) The Bar Council must not grant or renew a local practising certificate to an insurable barrister unless it is satisfied that there is, or will be, in force with respect to the barrister an approved indemnity insurance policy.(2) A policy of indemnity insurance is approved if:(a) the policy is not to expire before the expiration of the local practising certificate of the barrister to whom the policy relates, and(b) the Attorney General has, by order in writing given to the Bar Council, approved the type of policy, the level of insurance provided by the policy and the terms of the policy, and(c) any conditions imposed by the order are complied with.(3) The Bar Council is entitled to accept as evidence that there is, or will be, in force with respect to an insurable barrister an approved indemnity insurance policy:(a) evidence in the form of written advice from an insurer or insurance broker to the effect that an insurer has agreed to issue the policy, or(b) evidence that the premium for the policy has been received and accepted by the insurer for the purposes of the issue of the policy, or(c) evidence that the regulations provide is acceptable evidence for the purposes of this section.
In this Division:approved insurance policy means a policy of indemnity insurance that is an approved insurance policy as provided by section 406 (Solicitor to be insured and to make contributions).
Company means the company that, immediately before the commencement of this Act, was managing the Solicitors’ Mutual Indemnity Fund established by the Legal Practitioners Act 1898.
Indemnity Fund means the Solicitors Mutual Indemnity Fund managed by the Company.
405 Solicitors Mutual Indemnity Fund
(1) The Solicitors Mutual Indemnity Fund managed by the Company consists of the following:(a) the Solicitors’ Mutual Indemnity Fund established by the Legal Practitioners Act 1898,(b) the money paid on account of the Indemnity Fund by insurable solicitors either as annual contributions or as levies under this Division,(c) the interest or other income accruing from investment of the money in the Indemnity Fund,(d) any other money lawfully paid into the Indemnity Fund,(e) investments made under section 408 (Investment of Indemnity Fund),(f) such other assets as are acquired as part of the Indemnity Fund.(2) The Company may arrange with an insurer for insurance of the Indemnity Fund or any part of it.(3) The Indemnity Fund is the property of the Law Society and may be used only for the purposes of this Division.
406 Solicitor to be insured and to make contributions
(1) The Law Society Council must not grant or renew a local practising certificate to an insurable solicitor unless it is satisfied:(a) that there is, or will be, in force with respect to the solicitor an approved insurance policy, and(b) that any contribution or levy, or instalment of a contribution, that is payable by the solicitor under section 411 (Contributions) or 412 (Levies) or under Schedule 7 has been paid to the Company.(2) A policy of indemnity insurance is an approved insurance policy if:(a) the policy is not to expire before the expiration of the local practising certificate of the solicitor to whom the policy relates, and(b) the Attorney General has, by order in writing given to the Law Society, approved of the insurer the type of policy, the level of insurance provided by the policy and the terms of the policy, and(c) any conditions imposed by the order are complied with.(3) The Law Society may negotiate with insurers and other persons in relation to the provision of indemnity insurance to any solicitor or former solicitor with respect to civil liability that may arise in connection with:(a) the solicitor’s or former solicitor’s practice or former practice, or(b) the solicitor’s or former solicitor’s administration of any trust or deceased estate of which the solicitor or former solicitor is or was a trustee or executor,and may do any other thing necessary for or in connection with the Law Society Council’s functions under this section.(4) The Law Society is entitled to accept as evidence that there is, or will be, in force with respect to an insurable solicitor an approved indemnity insurance policy:(a) evidence in the form of written advice from an insurer or insurance broker to the effect that an insurer has agreed to issue the policy, or(b) evidence that the premium for the policy has been received and accepted by the insurer for the purposes of the issue of the policy, or(c) evidence that the solicitor is employed by a law practice that has an approved indemnity insurance policy in force that covers the solicitor,(d) evidence that the regulations provide is acceptable evidence for the purposes of this section.
The Company is to maintain with an ADI in New South Wales a separate account with the name “Solicitors Mutual Indemnity Fund”.
408 Investment of Indemnity Fund
Money in the Indemnity Fund that is not immediately required for the purposes of the Fund may be invested:(a) in accordance with Division 2 of Part 2 of the Trustee Act 1925 as if the money were trust funds, or(b) on deposit with the Treasurer, or(c) in the purchase of securities or shares listed for quotation on a prescribed financial market (within the meaning of section 9 of the Corporations Act 2001 of the Commonwealth), or(d) in the acquisition of an interest in real estate in Australia, or(e) in bills of exchange drawn, accepted or endorsed by an ADI.
409 Payments from Indemnity Fund
(1) There is payable from the Indemnity Fund in such order as the Company decides:(a) the expenses incurred by the Company in carrying on its business, and(b) premiums in respect of any approved insurance policy required by section 406 (Solicitor to be insured and to make contributions), and(c) such amount as the Company determines towards meeting any difference between the indemnity provided by the approved insurance policy required by section 406 and the liability of a person insured under the policy, and(d) such other amounts as the Company determines.(2) The Company is required to pay from the Indemnity Fund the costs of an investigation of the Indemnity Fund, as referred to in section 414 (Investigation of Indemnity Fund), in accordance with a direction given by the Attorney General under that section.(3) The Company may make determinations under subsection (1):(a) that differ according to different circumstances, or(b) that are subject to compliance with conditions imposed by the Company,or that do both.(4) The Company may:(a) divide solicitors into classes approved by the Law Society Council, and(b) under subsection (1) (c), make a different determination for each of the classes.
410 Payments relating to defaulting insurers
(1) Payments may be made by the Company from the Indemnity Fund for the purpose of indemnifying any person who is insured under an approved insurance policy that was issued or renewed by a defaulting insurer, in accordance with arrangements approved from time to time by the Attorney General.(2) The Law Society and the Company may enter into an agreement with a defaulting insurer (including a provisional liquidator or liquidator of a defaulting insurer), or with any insured person, in connection with the payment of amounts from the Indemnity Fund under this section.(3) In particular, any such agreement may provide for the following:(a) the assignment or subrogation to the Company of the rights and remedies of a defaulting insurer or the insured person (or both) under or in connection with the approved insurance policy,(b) the recovery by the Company from a defaulting insurer of any amount paid from the Indemnity Fund under this section.(4) Any payment made from the Indemnity Fund under this section, and any agreement entered into with an insured person under this section, does not prevent the recovery by the Company from a defaulting insurer of any amount that would have been recoverable by the insured person under or in connection with the approved insurance policy had the payment not been made or the agreement not been entered into.(5) Any amount recovered by the Company as a result of the exercise of its functions under this section (including its functions under an agreement referred to in this section) is to be paid into the Indemnity Fund. This does not apply to any amount that is payable to another person:(a) under any other Act or law, or(b) under any agreement referred to in this section, or(c) under the regulations.(6) Payments may be made from the Indemnity Fund for the purpose of meeting any reasonable costs and expenses incurred by the Company in exercising its functions under this section, including its functions under an agreement referred to in this section.(7) For the purposes of this section, an insurer under an approved insurance policy is a defaulting insurer if the Company is satisfied that:(a) the insurer is unwilling or unable to meet any claims or other liabilities under the approved insurance policy, or(b) a liquidator or provisional liquidator has been appointed in respect of the insurer, or(c) the insurer has been dissolved.
(1) An insurable solicitor is liable to pay to the Indemnity Fund an annual contribution of an amount determined by the Company and approved by the Law Society Council. An insurable solicitor is also liable to pay to the Indemnity Fund such further amounts in respect of the annual contribution as may be determined by the Company and approved by the Law Society Council.(2) The Company may make a different determination under subsection (1) for a particular solicitor or class of solicitors.(3) If a solicitor applies for a practising certificate that will be in force for part only of a year commencing on 1 July, the contribution is such proportion of the total amount determined for the solicitor under subsection (1) as is borne to 1 year by the number of days for which the practising certificate will be in force.(4) A contribution required to be paid under this section must be paid to the Company on account of the Indemnity Fund.(5) The Company may permit a contribution to be paid by instalments under an arrangement approved by the Law Society Council.
(1) If the Company is at any time of the opinion that the assets of the Indemnity Fund may be insufficient to meet its liabilities, the Company may impose on each insurable solicitor a levy payable to the Company on account of the Indemnity Fund.(2) A levy is to be of such amount as the Company determines and may differ according to the different factors in relation to which contributions under this Division have been determined.(3) A levy is payable at the time, and in the manner, fixed by the Company which may, in a special case, allow time for payment.
413 Failure to pay contribution or levy
If, after being given written notice, an insurable solicitor fails to pay a contribution, instalment of a contribution, or levy in accordance with section 411 (Contributions) or 412 (Levies) or Schedule 7 (Professional indemnity insurance—provisions relating to HIH insurance) the Company must report the failure to the Law Society Council.Note. Part 2.4 provides for the suspension or cancellation of a local practising certificate for a failure to pay such a contribution, instalment of a contribution, or levy.
414 Investigation of Indemnity Fund
(1) The Attorney General may at any time appoint an appropriately qualified person to conduct an investigation in relation to the Indemnity Fund, including in relation to any of the following:(a) the state and sufficiency of the Indemnity Fund,(b) the adequacy of the amount or rate of any contributions or levies paid or payable under this Division,(c) the management of the Indemnity Fund by the Company, and the adequacy of the investment strategies being adopted by the Company,(d) such other matters relating to the Indemnity Fund as the Attorney General determines.(2) The Company is to provide all reasonable assistance to the person appointed to conduct the investigation.(3) The person appointed to conduct the investigation is to report to the Attorney General on the result of the investigation.(4) The Attorney General may, by notice in writing served on the Company, require the Company to pay from the Indemnity Fund the costs of the investigation.(5) For the purposes of subsection (4), the costs of the investigation means:(a) the reasonable costs and expenses incurred in connection with the investigation by the person appointed to conduct the investigation, and(b) the reasonable cost of any remuneration paid to that person in connection with the investigation.
(1) For the purpose of conducting an investigation under section 414 (Investigation of Indemnity Fund), an investigator may, by notice in writing served on any person, require the person to provide to the investigator such information or records relating to the Indemnity Fund or the Company’s management of the Indemnity Fund as the investigator specifies in the notice.(2) The notice must specify the manner in which information or records are required to be provided and a reasonable time by which the information or records are required to be provided.(3) A person who, without reasonable excuse, neglects or fails to comply with a requirement made of the person under this section is guilty of an offence.Maximum penalty: 100 penalty units.
(4) A person who provides any information in purported compliance with a requirement made under this section, knowing that it is false or misleading in a material particular, is guilty of an offence.Maximum penalty: 100 penalty units.
(5) In this section:investigator means a person appointed by the Attorney General under section 414 (Investigation of Indemnity Fund) to conduct an investigation in relation to the Indemnity Fund.
416 Application of Division to other persons
The Company may apply this Division (sections 406 (Solicitor to be insured and to make contributions) and 413 (Failure to pay contribution or levy) and Schedule 7 excepted) to persons who:(a) are not insurable solicitors, and(b) are within a class of persons approved by the Law Society Council for the purposes of this section, and(c) are insured under a policy of insurance that, if the persons were insurable solicitors, would be an approved policy of indemnity insurance for the purposes of section 406 (Solicitor to be insured and to make contributions), and(d) pay to the Indemnity Fund such contributions and levies as the Company determines and the Law Society Council approves.
417 Provisions relating to HIH insurance
Schedule 7 has effect.
The purpose of this Part is to establish and maintain a fund to provide a source of compensation for defaults by law practices arising from acts or omissions of associates.
In this Part:allow a claim includes compromise or settle the claim.
capping and sufficiency provisions of:
(a) this jurisdiction—means section 456 (Caps on payments) and section 457 (Sufficiency of Fidelity Fund), or(b) another jurisdiction—means the provisions of the corresponding law of that jurisdiction that correspond to those sections.claim means a claim under this Part.
claimant means a person who makes a claim under this Part.
concerted interstate default means a default of a law practice arising from or constituted by an act or omission:
(a) that was committed jointly by 2 or more associates of the practice, or(b) parts of which were committed by different associates of the practice or different combinations of associates of the practice,where this jurisdiction is the relevant jurisdiction for at least one of the associates and another jurisdiction is the relevant jurisdiction for at least one of the associates.default, in relation to a law practice, means:
(a) a failure of the practice to pay or deliver trust money or trust property that was received by the practice in the course of legal practice by the practice, where the failure arises from or is constituted by an act or omission of an associate that involves dishonesty, or(b) a fraudulent dealing with trust property that was received by the practice in the course of legal practice by the practice, where the fraudulent dealing arises from or is constituted by an act or omission of an associate that involves dishonesty.dishonesty includes fraud.
pecuniary loss, in relation to a default, means:
(a) the amount of trust money, or the value of trust property, that is not paid or delivered, or(b) the amount of money that a person loses or is deprived of, or the loss of value of trust property, as a result of a fraudulent dealing.relevant jurisdiction—see section 433 (Meaning of “relevant jurisdiction”).
(1) This section applies for the purpose of determining which jurisdiction’s law applies in relation to a default.(2) The default is taken to have occurred when the act or omission giving rise to or constituting the default occurred.(3) An omission is taken to have occurred on the day on or by which the act not performed ought reasonably to have been performed or on such other day as is determined in accordance with the regulations.
This Part does not apply to a default of a law practice consisting of a barrister.
422 Establishment of Legal Practitioners Fidelity Fund
(1) The Law Society must establish and maintain a Legal Practitioners Fidelity Fund consisting of:(a) the money (including invested money) that, immediately before the commencement of this section, made up the Solicitors’ Fidelity Fund maintained under the Legal Profession Act 1987,(b) the money paid on account of the Fidelity Fund either as annual contributions or levies under this Part,(c) the money paid in accordance with the regulations under section 197 (Fidelity cover) on account of the Fidelity Fund by locally registered foreign lawyers,(d) the interest or other income accruing from investment of the money in the Fidelity Fund,(e) money paid to the Fidelity Fund from the Public Purpose Fund, and(f) any other money lawfully paid to the Fidelity Fund.(2) The Fidelity Fund is the property of the Law Society, is to be administered by the Law Society Council and is to be applied in accordance with this Part.
423 Establishment of separate Legal Practitioners Fidelity Fund Account
(1) The Law Society must maintain with an ADI in New South Wales a separate account with the name “Legal Practitioners Fidelity Fund Account” and must pay to the credit of the account all money received on account of the Fidelity Fund.(2) The account is be operated in the manner determined by the Law Society Council.
424 Investment of Fidelity Fund
Money in the Fidelity Fund that is not immediately required for the purposes of the Fund may be invested:(a) in accordance with Division 2 of Part 2 of the Trustee Act 1925 as if the money were trust funds, or(b) on deposit with the Treasurer.
425 Payments from Fidelity Fund
There is to be paid from the Fidelity Fund in such order as the Law Society Council decides:(a) premiums for insurance of the Fidelity Fund,(b) legal expenses incurred in investigating or defending claims made against the Fidelity Fund, or against the Law Society in relation to the Fidelity Fund, or otherwise incurred in relation to the Fidelity Fund,(c) the amount of a claim (including interest and costs) allowed or established against the Law Society in respect of the Fidelity Fund,(d) the expenses of administering the Fidelity Fund, including allowances and travelling expenses for members of the Law Society Council and the Fidelity Fund Management Committee in connection with the exercise of their functions in relation to the Fidelity Fund,(e) the costs of the Law Society Council in exercising its function under section 699 (2) (Functions of Law Society), and(f) any other money payable from the Fidelity Fund under this Part or in respect of amounts paid or payable for the purposes of Chapter 5 (External intervention) or under rules or regulations made under this Act.
(1) The Law Society Council may by resolution delegate all or any of its functions in relation to the Fidelity Fund to a Management Committee consisting of:(a) 3 or more persons who are members of the Council, and(b) not more than 8 persons who are not members of the Council but are members of the Law Society.(2) The Law Society Council may by resolution rescind or vary a resolution made under subsection (1).(3) The Law Society Council may terminate a person’s membership of the Committee and may fill the subsequent or any other vacancy.(4) At a meeting of the Committee, 3 members, including at least 1 member of the Law Society Council, constitute a quorum.(5) At a meeting of the Committee:(a) a member of the Committee appointed for the purpose by the Law Society Council is to preside, or(b) if he or she is absent from the meeting, another member of the Committee elected for the purpose by those present at the meeting is to preside.(6) The decision of a majority of the members present and voting at a meeting of the Committee is a decision of the Committee and, in the event of an equality of votes, the member presiding at the meeting is entitled to an additional vote as a casting vote.(7) The Committee may call, adjourn, and regulate the conduct of, its meetings as it thinks fit.
The Law Society Council must cause the accounts relating to the Fidelity Fund to be audited annually by a firm of accountants approved by the Attorney General.
(1) The Law Society Council may arrange with an insurer for the insurance of the Fidelity Fund.(2) Without limiting subsection (1), the Law Society Council may arrange for the insurance of the Fidelity Fund against particular claims or particular classes of claims.(3) The proceeds paid under a policy of insurance against particular claims or particular classes of claims are to be paid into the Fidelity Fund, and a claimant is not entitled to have direct recourse to the proceeds or any part of them.(4) No liability (including liability in defamation) is incurred by a protected person in respect of anything done or omitted to be done in good faith for the purpose of arranging for the insurance of the Fidelity Fund.(5) In this section:protected person means:
(a) the Law Society or a member of the Law Society Council or the Fidelity Fund Management Committee, or(b) a member of staff of or a person acting at the direction of the Law Society, Law Society Council or Fidelity Fund Management Committee.
The Law Society cannot borrow money for the purposes of the Fidelity Fund.
Division 3 Contributions and levies
(1) An Australian lawyer must, when applying for the grant or renewal of a local practising certificate as a solicitor, pay to the Law Society on account of the Fidelity Fund the appropriate contribution to the Fidelity Fund for the year ending on 30 June during which the practising certificate would be in force.(2) A solicitor who is an interstate legal practitioner and who (whether alone or with a co-signatory) becomes authorised to withdraw money from a local trust account must pay to the Law Society on account of the Fidelity Fund the appropriate contribution to the Fidelity Fund for the year ending on 30 June during which the authorisation commenced or continues, as required by the regulations under section 472 (Interstate legal practitioner becoming authorised to withdraw from local trust account).(3) The amount of a contribution to the Fidelity Fund is an amount determined by the Law Society Council and approved by the Attorney General (subject to regulations under section 472 in the case of a contribution under subsection (2)).(4) The Law Society Council may determine different contributions for different classes of solicitors and may permit a contribution to be paid by instalments under an arrangement approved by the Council.(5) The amount of the contribution that would otherwise be payable for a year ending on 30 June is reduced by one-half if:(a) (in the case of a contribution under subsection (1)) the application for a practising certificate is made after 31 December in that year, or(b) (in the case of a contribution under subsection (2)) the solicitor becomes authorised to withdraw money from the local trust account after 31 December in that year.(6) The Law Society may refund, at a rate determined by the Law Society Council, a part of a contribution paid by a solicitor for a year ending on 30 June if:(a) (in the case of a contribution under subsection (1)) the solicitor ceases to practise as a solicitor at any time before 30 June in that year, or(b) (in the case of a contribution under subsection (2)) the solicitor ceases before 30 June in that year to be authorised to withdraw money from the local trust account.(7) This section does not apply to the Crown Solicitor or any other solicitor who:(a) is employed by the Crown or by a corporation prescribed for the purposes of this section, and(b) practises as a solicitor only in the course of that employment.
(1) If the Law Society Council is at any time of the opinion that the Fidelity Fund is likely to be insufficient to meet the liabilities to which it is subject, the Council may, by resolution, impose on each solicitor liable to contribute to the Fidelity Fund a levy payable to the Council on account of the Fidelity Fund.(2) A levy is to be of such amount as the Law Society Council determines and may differ according to whether the solicitor is an interstate legal practitioner and to whether a solicitor is practising:(a) on his or her own account or in partnership, or(b) as an employee of another solicitor, or(c) as an employee of a person who is not a solicitor, or of a corporation.(3) A levy is payable at the time, and in the manner, fixed by the Law Society Council, which may, in a special case, allow time for payment.
432 Failure to pay contribution or levy
If a solicitor fails to pay a contribution required under section 430 or, after being given the prescribed notice, fails to pay a levy in accordance with this Part, the Law Society Council may:(a) in the case of a local legal practitioner—suspend the solicitor’s practising certificate while the failure continues, or(b) in the case of an interstate legal practitioner—suspend that practitioner’s entitlement under Part 2.4 to practise in this State while the failure continues and request the corresponding authority in the jurisdiction in which the practitioner has his or her sole or principal place of legal practice to suspend the solicitor’s interstate practising certificate until the Law Society Council notifies the regulatory authority that the contribution or levy has been paid.
Division 4 Defaults to which this Part applies
433 Meaning of “relevant jurisdiction”
(1) The relevant jurisdiction for an associate of a law practice whose act or omission (whether alone or with one or more other associates of the practice) gives rise to or constitutes a default of the practice is to be determined under this section.Note. The concept of an associate’s “relevant jurisdiction” is used to determine the jurisdiction whose Fidelity Fund is liable for a default of a law practice arising from or constituted by an act or omission committed by the associate. The relevant jurisdiction for an associate is in some cases the associate’s home jurisdiction.(2) In the case of a default involving trust money received in Australia (whether or not it was paid into an Australian trust account), the relevant jurisdiction for the associate is:(a) if the trust money was paid into an Australian trust account and if the associate (whether alone or with a co-signatory) was authorised to withdraw any or all of the trust money from the only or last Australian trust account in which the trust money was held before the default—the jurisdiction under whose law that trust account was maintained, or(b) in any other case—the associate’s home jurisdiction.(3) In the case of a default involving trust money received outside Australia and paid into an Australian trust account, the relevant jurisdiction for the associate is:(a) if the associate (whether alone or with a co-signatory) was authorised to withdraw any or all of the trust money from the only or last Australian trust account in which the trust money was held before the default—the jurisdiction under whose law that trust account was maintained, or(b) in any other case—the associate’s home jurisdiction.(4) In the case of a default involving trust property received in Australia, or received outside Australia and brought to Australia, the relevant jurisdiction for the associate is the associate’s home jurisdiction.Note. Section 461 (Defaults involving interstate elements where committed by one associate only) provides that the Law Society Council may treat the default as consisting of 2 or more defaults for the purpose of determining the liability of the Fidelity Fund.
434 Defaults to which this Part applies
(1) This Part applies to a default of a law practice arising from or constituted by an act or omission of one or more associates of the practice, where this jurisdiction is the relevant jurisdiction for the only associate or one or more of associates involved.(2) It is immaterial where the default occurs.(3) It is immaterial that the act or omission giving rise to or constituting a default does not constitute a crime or other offence under the law of this or any other jurisdiction or of the Commonwealth or that proceedings have not been commenced or concluded in relation to a crime or other offence of that kind.
435 Defaults relating to financial services or investments
(1) This Part does not apply to a default of a law practice to the extent that the default occurs in relation to money or property that is entrusted to or held by the practice for or in connection with:(a) a financial service provided by the practice or an associate of the practice in circumstances where the practice or associate is required to hold an Australian financial services licence covering the provision of the service (whether not such a licence is held at any relevant time), or(b) a financial service provided by the practice or an associate of the practice in circumstances where the practice or associate provides the service as a representative of another person who carries on a financial services business (whether or not the practice or associate is an authorised representative at any relevant time).(2) Without limiting subsection (1), this Part does not apply to a default of a law practice to the extent that the default occurs in relation to money or property that is entrusted to or held by the practice for or in connection with:(a) a managed investment scheme, or(b) mortgage financing,undertaken by the practice.(3) Without limiting subsections (1) and (2), this Part does not apply to a default of a law practice to the extent that the default occurs in relation to money or property that is entrusted to or held by the practice for investment purposes, whether on its own account or as agent, unless:(a) the money or property was entrusted to or held by the practice:(i) in the ordinary course of legal practice, and(ii) primarily in connection with the provision of legal services to or at the direction of the client, and(b) the investment is or is to be made:(i) in the ordinary course of legal practice, and(ii) for the ancillary purpose of maintaining or enhancing the value of the money or property pending completion of the matter or further stages of the matter or pending payment or delivery of the money or property to or at the direction of the client.(4) In this section:Australian financial services licence, authorised representative, financial service and financial services business have the same meanings as in Chapter 7 of the Corporations Act 2001 of the Commonwealth.
Division 5 Claims about defaults
(1) A person who suffers pecuniary loss because of a default to which this Part applies may make a claim against the Fidelity Fund to the Law Society about the default.(2) A claim is to be made in writing in a form approved by the Law Society Council.(3) The Law Society Council may require the person who makes a claim to do either or both of the following:(a) to give further information about the claim or any dispute to which the claim relates,(b) to verify the claim or any further information, by statutory declaration.(4) The Law Society Council must investigate a claim made to it, including the default to which it relates, and may do so in any manner it considers appropriate.
437 Time limit for making claims
(1) Subject to section 439 (Time limit for making claims following advertisement), a claim does not lie against the Fidelity Fund unless the prospective claimant notifies the Law Society of the default concerned:(a) within the period of 6 months after the prospective claimant becomes aware of the default, or(b) within a further period allowed by the Law Society Council, or(c) if the Supreme Court allows further time after the Law Society Council refuses to do so—within a period allowed by the Supreme Court.(2) The Supreme Court or Law Society Council may allow a further period referred to in subsection (1) if satisfied that it would be appropriate to do so in a particular case having regard to matters the Supreme Court or Law Society Council considers relevant.
(1) If the Law Society Council considers that there has been, or may have been, a default by a law practice, it may publish either or both of the following:(a) a notice that seeks information about the default,(b) a notice that invites claims about the default and fixes a final date after which claims relating to the default cannot be made.(2) The final date fixed by a notice must be a date that is:(a) at least 3 months later than the date of the first or only publication of the notice, and(b) not more than 12 months after the date of that first or only publication.(3) A notice must be published:(a) in a newspaper circulating generally throughout Australia, and(b) in a newspaper circulating generally in each jurisdiction where the law practice:(i) has an office, or(ii) at any relevant time had an office,if known to the Law Society Council, and(c) on the internet site (if any) of the Law Society.(4) The Law Society Council may provide information to persons making inquiries in response to a notice published under this section.(5) Apart from extending the period during which claims can be made under this Part (where relevant), publication of a notice under this section does not confer any entitlements in relation to any claim or the default to which it relates or provide any grounds affecting the determination of any claim.(6) Neither the publication in good faith of a notice under this section, nor the provision of information in good faith under this section, subjects a protected person to any liability (including liability in defamation).(7) In this section:protected person means:
(a) the Law Society or a member of the Law Society Council or the Fidelity Fund Management Committee, or(b) the proprietor, editor or publisher of the newspaper, or(c) an internet service provider or internet content host, or(d) a member of staff of or a person acting at the direction of any person or entity referred to in this definition.
439 Time limit for making claims following advertisement
(1) This section applies if the Law Society Council publishes a notice under section 438 (Advertisements) fixing a final date after which claims relating to a default cannot be made.(2) A claim may be made:(a) up to and including the final date fixed under the notice, or(b) within a further period allowed by the Law Society Council, or(c) if the Supreme Court allows further time after the Law Society Council refuses to do so—within a period allowed by the Supreme Court,even though it would have been barred under section 437 (Time limit for making claims) had the notice not been published.
440 Claims not affected by certain matters
(1) A claim may be made about a law practice’s default despite a change in the status of the practice or the associate concerned after the occurrence of the act or omission giving rise to or constituting the default.(2) A claim that has been made is not affected by a later change in the status of the practice or associate.(3) For the purposes of this section, a change in status includes:(a) a change in the membership or staffing or the dissolution of the practice (in the case of a partnership), and(b) a change in the directorship or staffing or the winding up or dissolution of the practice (in the case of an incorporated legal practice), and(c) the fact that the associate has ceased to practise or to hold an Australian practising certificate (in the case of an associate who was an Australian legal practitioner), and(d) the death of the associate (in the case of a natural person).
(1) The Law Society Council may, at its absolute discretion, make payments to a claimant in advance of the determination of a claim if satisfied that:(a) the claim is likely to be allowed, and(b) payment is warranted to alleviate hardship.(2) Any payments made in advance are to be taken into account when the claim is determined.(3) Payments under this section are to be made from the Fidelity Fund.(4) If the claim is disallowed, the amounts paid under this section are recoverable by the Law Society as a debt due to the Fidelity Fund.(5) If the claim is allowed but the amount payable is less than the amount paid under this section, the excess paid under this section is recoverable by the Law Society as a debt due to the Fidelity Fund.
Division 6 Determination of claims
(1) The Law Society Council must determine a claim by wholly or partly allowing or disallowing it.(2) The Law Society Council must disallow a claim to the extent that the claim does not relate to a default for which the Fidelity Fund is liable.(3) The Law Society Council may wholly or partly disallow a claim, or reduce a claim, to the extent that:(a) the claimant knowingly assisted in or contributed towards, or was a party or accessory to, the act or omission giving rise to the claim, or(b) the negligence of the claimant contributed to the loss, or(c) the conduct of the transaction with the law practice in relation to which the claim is made was illegal, and the claimant knew or ought reasonably to have known of that illegality, or(d) proper and usual records were not brought into existence during the conduct of the transaction, or were destroyed, and the claimant knew or ought reasonably to have known that records of that kind would not be kept or would be destroyed, or(e) the claimant has unreasonably refused to disclose information or documents to or co-operate with:(i) the Law Society Council, or(ii) any other authority (including, for example, an investigative or prosecuting authority),in the investigation of the claim.(4) Subsections (2) and (3) do not limit the Law Society Council’s power to disallow a claim on any other ground.(5) Without limiting subsection (2) or (3), the Law Society Council may reduce the amount otherwise payable on a claim to the extent the Council considers appropriate:(a) if satisfied that the claimant assisted in or contributed towards, or was a party or accessory to, the act or omission giving rise to the claim, or(b) if satisfied that the claimant unreasonably failed to mitigate losses arising from the act or omission giving rise to the claim, or(c) if satisfied that the claimant has unreasonably hindered the investigation of the claim.(6) If the amount of a claim does not exceed $2,500 or such other amount as may be prescribed by the regulations, the Law Society Council may allow the claim after waiving compliance with such of the provisions of this Part as it thinks fit.(7) The Law Society Council must, in allowing a claim, specify the amount payable.
443 Claimant required to pursue claims etc
(1) The Law Society Council may give a claimant not less than 21 days’ written notice requiring the claimant to do such of the following as are specified in the notice:(a) take specified steps for the purpose of pursuing the claim,(b) supply the Law Society Council with specified particulars in relation to the claim,(c) produce or deliver to the Law Society Council any securities or documents necessary or available to support the claim or to enable the Law Society Council to establish any rights of the Law Society against the law practice,(d) do specified things in connection with the claim.(2) If the claimant fails to comply with the notice, the Law Society Council may:(a) wholly or partly disallow the claim, or(b) direct that the whole, or a specified part of, any interest otherwise payable under section 446 not be paid.
(1) The amount payable in respect of a default must not exceed the pecuniary loss resulting from the default.(2) This section does not apply to costs payable under section 445 (Costs) or to interest payable under section 446 (Interest).
(1) If the Law Society Council wholly or partly allows a claim, the Council must order payment of the claimant’s reasonable legal costs involved in making and proving the claim, unless the Council considers that special circumstances exist warranting a reduction in the amount of costs or warranting a determination that no amount should be paid for costs.(2) If the Law Society Council wholly disallows a claim, the Council may order payment of the whole or part of the claimant’s reasonable legal costs involved in making and attempting to prove the claim, where the Council considers it is appropriate to make the order.(3) The costs are payable from the Fidelity Fund.
(1) In determining the amount of pecuniary loss resulting from a default, the Law Society Council is to add interest on the amount payable (excluding interest), unless the Council considers that special circumstances exist warranting a reduction in the amount of interest or warranting a determination that no amount should be paid by way of interest.(2) The interest is to be calculated from the date on which the claim was made, to the date the Law Society Council notifies the claimant that the claim has been allowed, at the rate specified in or determined under the regulations.(3) To the extent that regulations are not in force for the purposes of subsection (2), interest is to be calculated at the rate of 5 per cent per annum.(4) The interest is payable from the Fidelity Fund.
447 Reduction of claim because of other benefits
(1) A person is not entitled to recover from the Fidelity Fund any amount equal to amounts or to the value of other benefits:(a) that have already been paid to or received by the person, or(b) that have already been determined and are payable to or receivable by the person, or(c) that (in the opinion of the Law Society Council) are likely to be paid to or received by the person, or(d) that (in the opinion of the Law Society Council) might, but for neglect or failure on the person’s part, have been paid or payable to or received or receivable by the person,from other sources in respect of the pecuniary loss to which a claim relates.(2) The Law Society Council may, at its absolute discretion, pay to a person the whole or part of an amount referred to in subsection (1) (c) if satisfied that payment is warranted to alleviate hardship, but nothing in this subsection affects section 449 (Repayment of certain amounts).
(1) On payment of a claim from the Fidelity Fund, the Law Society Council is subrogated to the rights and remedies of the claimant against any person in relation to the default to which the claim relates.(2) Without limiting subsection (1), that subsection extends to a right or remedy against:(a) the associate in respect of whom the claim is made, or(b) the person authorised to administer the estate of the associate in respect of whom the claim is made and who is deceased or an insolvent under administration.(3) Subsection (1) does not apply to a right or remedy against an associate if, had the associate been a claimant in respect of the default, the claim would not be disallowable on any of the grounds set out in section 442 (3) (Determination of claims).(4) The Law Society Council may exercise its rights and remedies under this section in its own name or in the name of the claimant.(5) If the Law Society Council brings proceedings under this section in the name of the claimant, it must indemnify the claimant against any costs awarded against the claimant in the proceedings.(6) The Law Society Council must pay into the Fidelity Fund any money recovered in exercising its rights and remedies under this section.
449 Repayment of certain amounts
(1) If a claimant:(a) receives a payment from the Fidelity Fund in respect of the claim, and(b) receives or recovers from another source or sources a payment on account of the pecuniary loss, and(c) there is a surplus after deducting the amount of the pecuniary loss from the total amount received or recovered by the claimant from both or all sources,the amount of the surplus is a debt payable by the claimant to the Fund.(2) However, the amount payable by the claimant cannot exceed the amount the claimant received from the Fidelity Fund in respect of the claim.
450 Notification of delay in making decision
(1) If the Law Society Council considers that a claim is not likely to be determined within 12 months after the claim was made, the Council must notify the claimant in writing that the claim is not likely to be determined within that period.(2) The notification must contain a brief statement of reasons for the delay and an indication of the period within which the claim is likely to be determined.
(1) The Law Society Council must, as soon as practicable, notify the claimant in writing about any decision it makes about the claim.(2) The notification must include an information notice about:(a) a decision of the Law Society Council to wholly or partly disallow a claim, or(b) a decision of the Law Society Council to reduce the amount allowed in respect of a claim.
452 Appeal against decision on claim
(1) A claimant may appeal to the Supreme Court against:(a) a decision of the Law Society Council to wholly or partly disallow a claim, or(b) a decision of the Law Society Council to reduce the amount allowed in respect of a claim,but an appeal does not lie against a decision of the Council to limit the amount payable, or to decline to pay an amount, under the capping and sufficiency provisions of this jurisdiction.(2) An appeal against a decision must be lodged within 30 days of receiving the information notice about the decision.(3) On an appeal under this section:(a) the appellant must establish that the whole or part of the amount sought to be recovered from the Fidelity Fund is not reasonably available from other sources, unless the Law Society Council waives that requirement, and(b) the Supreme Court may, on application by the Law Society Council, stay the appeal pending further action being taken to seek recovery of the whole or part of that amount from other sources.(4) The Supreme Court may review the merits of the Law Society Council’s decision.(5) The Supreme Court may:(a) affirm the decision, or(b) if satisfied that the reasons for varying or setting aside the Law Society Council’s decision are sufficiently cogent to warrant doing so:and may make other orders as it thinks fit.(i) vary the decision, or(ii) set aside the decision and make a decision in substitution for the decision set aside, or(iii) set aside the decision and remit the matter for reconsideration by the Law Society Council in accordance with any directions or recommendations of the Court,(6) No order for costs is to be made on an appeal under this section unless the Supreme Court is satisfied that an order for costs should be made in the interests of justice.
453 Appeal against failure to determine claim
(1) A claimant may appeal to the Supreme Court against a failure of the Law Society Council to determine a claim after 12 months after the claim was made.(2) An appeal against a failure to determine a claim may be made at any time after the period of 12 months after the claim was made and while the failure continues.(3) On an appeal under this section:(a) the appellant must establish that the whole or part of the amount sought to be recovered from the Fidelity Fund is not reasonably available from other sources, unless the Law Society Council waives that requirement, and(b) the Supreme Court may, on application by the Law Society Council, stay the appeal pending further action being taken to seek recovery of the whole or part of that amount from other sources.(4) The Supreme Court may determine the appeal:(a) by:(i) giving directions to the Law Society Council for the expeditious determination of the matter, and(ii) if the Court is satisfied that there has been unreasonable delay—ordering that interest be paid at a specified rate that is higher than the rate applicable under section 446 (Interest), until further order or the determination of the claim, and(iii) if the Court is satisfied that there has not been unreasonable delay—ordering that, if delay continues in circumstances of a specified kind, interest be paid for a specified period at a specified rate that is higher than the rate applicable under section 446 (Interest), until further order or the determination of the claim, or(b) by deciding not to give directions or make orders under paragraph (a).(5) No order for costs is to be made on an appeal under this section unless the Supreme Court is satisfied that an order for costs should be made in the interests of justice.
In any proceedings brought in a court under section 448 (Subrogation) or section 452 (Appeal against decision on claim):(a) evidence of any admission or confession by, or other evidence that would be admissible against, an Australian legal practitioner or other person with respect to an act or omission giving rise to a claim is admissible to prove the act or omission despite the fact that the practitioner or other person is not a defendant in, or a party to, the proceedings, and(b) any defence that would have been available to the practitioner or other person is available to the Law Society Council.
Division 7 Payments from Fidelity Fund for defaults
(1) The Fidelity Fund is to be applied by the Law Society Council for the purpose of compensating claimants in respect of claims allowed under this Part in respect of defaults to which this Part applies.(2) An amount payable from the Fidelity Fund in respect of a claim is payable to the claimant or to another person at the claimant’s direction.
(1) The Law Society Council may fix either or both of the following:(a) the maximum amounts, or the method of calculating maximum amounts, that may be paid from the Fidelity Fund in respect of individual claims or classes of individual claims,(b) the maximum aggregate amount, or the method of calculating maximum aggregate amount, that may be paid from the Fidelity Fund in respect of all claims made in relation to individual law practices or classes of law practices.(2) Amounts must not be paid from the Fidelity Fund that exceed the amounts fixed, or calculated by a method fixed, under subsection (1).(3) Payments from the Fidelity Fund in accordance with the requirements of subsection (2) are made in full and final settlement of the claims concerned.(4) Despite subsection (2), the Law Society Council may authorise payment of a larger amount if satisfied that it would be reasonable to do so after taking into account the position of the Fidelity Fund and the circumstances of the particular case.(5) No proceedings can be brought, by way of appeal or otherwise, to require the payment of a larger amount or to require the Law Society Council to consider payment of a larger amount.
457 Sufficiency of Fidelity Fund
(1) If the Law Society Council is of the opinion that the Fidelity Fund is likely to be insufficient to meet the Fund’s ascertained and contingent liabilities, the Council may do any or all of the following:(a) postpone all payments relating to all or any class of claims out of the Fund,(b) impose a levy under section 431 (Levies),(c) make partial payments of the amounts of one or more allowed claims out of the Fund with payment of the balance being a charge on the Fund,(d) make partial payments of the amounts of 2 or more allowed claims out of the Fund on a pro rata basis, with payment of the balance ceasing to be a liability of the Fund.(2) In deciding whether to do any or all of the things mentioned in subsection (1), the Law Society Council:(a) must have regard to hardship where relevant information is known to the Council, and(b) must endeavour to treat outstanding claims equally and equitably, but may make special adjustments in cases of hardship.(3) If the Law Society Council declares that a decision is made under subsection (1) (d):(a) the balance specified in the declaration ceases to be a liability of the Fidelity Fund, and(b) the Council may (but need not) at any time revoke the declaration in relation to either the whole or a specified part of the balance, and the balance or that part of the balance again becomes a liability of the Fund.(4) A decision of the Law Society Council made under this section is final and not subject to appeal or review.
Division 8 Claims by law practices or associates
458 Claims by law practices or associates about defaults
(1) This section applies to a default of a law practice arising from or constituted by an act or omission of an associate of the practice.(2) A claim may be made under section 436 (Claims about defaults) by another associate of the law practice, if the associate suffers pecuniary loss because of the default.(3) A claim may be made under section 436 by the law practice, if the practice is an incorporated legal practice and it suffers pecuniary loss because of the default.
459 Claims by law practices or associates about notional defaults
(1) If, in respect of a default arising from or constituted by an act or omission of an associate of a law practice (the first associate):(a) another associate (the other associate) of the practice, or the practice itself, has paid compensation for pecuniary loss resulting from the default, and(b) the other associate or the practice has, in the opinion of the Law Society Council, at all times acted honestly and reasonably in relation to the default,the other associate or the practice may make a claim as if the compensation paid by the other associate or practice were a pecuniary loss suffered as a result of the default.(2) The other associate or the practice may not claim under this section more than the amount paid by the other associate or practice as compensation for pecuniary loss resulting from the default as referred to in subsection (1) (a).(3) A reference in this section to another associate of the law practice includes a reference to:(a) a former associate of the practice, and(b) in relation to the payment of compensation and the making of a claim—the personal representative of a deceased associate of the practice or a deceased former associate of the practice.
Division 9 Defaults involving interstate elements
460 Concerted interstate defaults
(1) The Law Society Council may treat a concerted interstate default as if the default consisted of 2 or more separate defaults:(a) one of which is a default to which this Part applies, where this jurisdiction is the relevant jurisdiction for one or more of the associates involved, and(b) the other or others of which are defaults to which this Part does not apply, where another jurisdiction or jurisdictions are the relevant jurisdictions for one or more of the associates involved.(2) The Law Society Council may treat a claim about a concerted interstate default as if the claim consisted of:(a) one or more claims made under this Part, and(b) one or more claims made under a corresponding law or laws.(3) A claim about a concerted interstate default is to be assessed on the basis that the fidelity funds of the relevant jurisdictions involved are to contribute:(a) in equal shares in respect of the default, regardless of the number of associates involved in each of those jurisdictions, and disregarding the capping and sufficiency provisions of those jurisdictions, or(b) in other shares as agreed by the Law Society Council and the corresponding authority or authorities involved.(4) Subsection (3) does not affect the application of the capping and sufficiency requirements of this jurisdiction in respect of the amount payable from the Fidelity Fund after the claim has been assessed.
461 Defaults involving interstate elements where committed by one associate only
(1) This section applies to a default of a law practice arising from or constituted by an act or omission that was committed by only one associate of the practice, where the default involves more than one of the cases referred to in section 433 (2)–(4) (Meaning of “relevant jurisdiction”).(2) The Law Society Council may treat the default to which this section applies as if the default consisted of 2 or more separate defaults:(a) one of which is a default to which this Part applies, where this jurisdiction is the relevant jurisdiction, and(b) the other or others of which are defaults to which this Part does not apply, where another jurisdiction or jurisdictions are the relevant jurisdictions.(3) The Law Society Council may treat a claim about the default to which this section applies as if the claim consisted of:(a) one or more claims made under this Part, and(b) one or more claims made under a corresponding law or laws.(4) A claim about a default to which this section applies is to be assessed on the basis that the fidelity funds of the relevant jurisdictions involved are to contribute:(a) in equal shares in respect of the default, and disregarding the capping and sufficiency provisions of those jurisdictions, or(b) in other shares as agreed by the Law Society Council and the corresponding authority or authorities involved.(5) Subsection (4) does not affect the application of the capping and sufficiency requirements of this jurisdiction in respect of the amount payable from the Fidelity Fund after the claim has been assessed.
Division 10 Inter-jurisdictional provisions
(1) The regulations may authorise the Law Society Council to enter into arrangements (referred to in this Part as protocols) with corresponding authorities for or with respect to matters to which this Part relates.(2) Without limiting subsection (1), the regulations may authorise the making of a protocol that provides that the Law Society Council is taken to have:(a) requested a corresponding authority to act as agent of the Council in specified classes of cases, or(b) agreed to act as agent of a corresponding authority in specified classes of cases.(3) The regulations may:(a) provide for the amendment, revocation or replacement of protocols, and(b) provide that protocols or specified classes of protocols do not have effect in this jurisdiction unless approved by or in accordance with the regulations.
(1) If a claim is made to the Law Society Council about a default that appears to be a default to which a corresponding law applies, the Council must forward the claim or a copy of it to a corresponding authority of the jurisdiction concerned.(2) If a claim is made to a corresponding authority about a default that appears to be a default to which this Part applies and the claim or a copy of it is forwarded under a corresponding law to the Law Society Council by the corresponding authority, the claim is taken:(a) to have been made under this Part, and(b) to have been so made when the claim was received by the corresponding authority.
464 Investigation of defaults to which this Part applies
(1) This section applies if a default appears to be a default to which this Part applies and to have:(a) occurred solely in another jurisdiction, or(b) occurred in more than one jurisdiction, or(c) occurred in circumstances in which it cannot be determined precisely in which jurisdiction the default occurred.(2) The Law Society Council may request a corresponding authority or corresponding authorities to act as agent or agents for the Council, for the purpose of processing or investigating a claim about the default or aspects of the claim.
465 Investigation of defaults to which a corresponding law applies
(1) This section applies if a default appears to be a default to which a corresponding law applies and to have:(a) occurred solely in this jurisdiction, or(b) occurred in more than one jurisdiction (including this jurisdiction), or(c) occurred in circumstances in which it cannot be determined precisely in which jurisdiction the default occurred.(2) The Law Society Council may act as agent of a corresponding authority, if requested to do so by the corresponding authority, for the purpose of processing or investigating a claim about the default or aspects of the claim.(3) If the Law Society Council agrees to act as agent of a corresponding authority under subsection (2), the Council may exercise any of its powers or functions in relation to processing or investigating the claim or aspects of the claim as if the claim had been made under this Part.
466 Investigation of concerted interstate defaults and other defaults involving interstate elements
(1) This section applies if:(a) a concerted interstate default, or(b) a default to which section 461 (Defaults involving interstate elements where committed by one associate only) applies,appears to have occurred.(2) The Law Society Council may request a corresponding authority or corresponding authorities to act as agent or agents for the Council, for the purpose of processing or investigating a claim about the default or aspects of the claim.(3) The Law Society Council may act as agent of a corresponding authority, if requested to do so by the corresponding authority, for the purpose of processing or investigating a claim about the default or aspects of the claim.(4) If the Law Society Council agrees to act as agent of a corresponding authority under subsection (3), the Council may exercise any of its powers or functions in relation to processing or investigating the claim or aspects of the claim as if the claim had been made entirely under this Part.
467 Recommendations by Law Society Council to corresponding authorities
If the Law Society Council is acting as agent of a corresponding authority in relation to a claim made under a corresponding law, the Council may make recommendations about the decision the corresponding authority might make about the claim.
468 Recommendations to and decisions by Law Society Council after receiving recommendations from corresponding authorities
(1) If a corresponding authority makes recommendations about the decision the Law Society Council might make about a claim in relation to which the corresponding authority was acting as agent of the Council, the Council may:(a) make its decision about the claim in conformity with the recommendations, whether with or without further consideration, investigation or inquiry, or(b) disregard the recommendations.(2) A corresponding authority cannot, as agent of the Law Society Council, make a decision about the claim under Division 6 (Determination of claims).
469 Request to another jurisdiction to investigate aspects of claim
(1) The Law Society Council may request a corresponding authority to arrange for the investigation of any aspect of a claim being dealt with by the Council and to provide a report on the result of the investigation.(2) A report on the result of the investigation received from:(a) the corresponding authority, or(b) a person or entity authorised by the corresponding authority to conduct the investigation,may be used and taken into consideration by the Law Society Council in the course of dealing with the claim under this Part.
470 Request from another jurisdiction to investigate aspects of claim
(1) This section applies in relation to a request received by the Law Society Council from a corresponding authority to arrange for the investigation of any aspect of a claim being dealt with under a corresponding law.(2) The Law Society Council may conduct the investigation.(3) The provisions of this Part relating to the investigation of a claim apply, with any necessary adaptations, in relation to the investigation of the relevant aspect of the claim that is the subject of the request.(4) The Law Society Council must provide a report on the result of the investigation to the corresponding authority.
471 Co-operation with other authorities
(1) When dealing with a claim under this Part involving a law practice or an Australian legal practitioner, the Law Society Council may consult and co-operate with another person or body who or which has powers under the corresponding law of another jurisdiction in relation to the practice or practitioner.(2) For the purposes of subsection (1), the Law Society Council and the other person or body may exchange information concerning the claim.
472 Interstate legal practitioner becoming authorised to withdraw from local trust account
(1) An interstate legal practitioner who (whether alone or with a co-signatory) becomes authorised to withdraw money from a local trust account must:(a) notify the Law Society Council of the authorisation in accordance with the regulations, and(b) make contributions to the Fidelity Fund in accordance with the regulations.(2) Without limiting subsection (1), the regulations may determine or provide for the determination of any or all of the following:(a) the manner in which the notification is to be made and the information or material that is to be included in or to accompany the notification,(b) the amount of the contributions, their frequency and the manner in which they are to be made.(3) (Repealed)
473 Application of Part to incorporated legal practices
(1) The regulations may provide that specified provisions of this Part, and any other provisions of this Act or any legal profession rule relating to the Fidelity Fund, do not apply to incorporated legal practices or apply to them with specified modifications.(2) For the purposes of the application of the provisions of this Part, and any other provisions of this Act or any legal profession rule relating to the Fidelity Fund, to an incorporated legal practice, a reference in those provisions to a default of a law practice extends to a default of an incorporated legal practice, but only if it occurs in connection with the provision of legal services.(3) Nothing in this section affects any obligation of an Australian legal practitioner who is an officer or employee of an incorporated legal practice to comply with the provisions of this Act or any legal profession rule relating to the Fidelity Fund.
474 Application of Part to multi-disciplinary partnerships
(1) The regulations may provide that specified provisions of this Part, and any other provisions of this Act or any legal profession rule relating to the Fidelity Fund, do not apply to multi-disciplinary partnerships or apply to them with specified modifications.(2) For the purposes of the application of the provisions of this Part, and any other provisions of this Act or any legal profession rule relating to the Fidelity Fund, to a multi-disciplinary partnership, a reference in those provisions to a default of a law practice extends to a default of a multi-disciplinary partnership or a partner or employee of a multi-disciplinary partnership, whether or not any person involved is an Australian legal practitioner, but only if it occurs in connection with the provision of legal services.(3) Nothing in this section affects any obligation of an Australian legal practitioner who is a partner or employee of a multi-disciplinary partnership to comply with the provisions of this Act or any legal profession rule relating to the Fidelity Fund.
475 Application of Part to sole practitioners whose practising certificates lapse
(1) This section applies if an Australian lawyer is not an Australian legal practitioner because his or her Australian practising certificate has lapsed and the lawyer was a sole practitioner immediately before the certificate lapsed, but does not apply where:(a) the certificate has been suspended or cancelled under this Act or a corresponding law, or(b) the lawyer’s application for the grant or renewal of an Australian practising certificate has been refused under this Act or a corresponding law and the lawyer would be an Australian legal practitioner had it been granted or renewed.(2) For the purposes of other provisions of this Part, the practising certificate is taken not to have lapsed, and accordingly the lawyer is taken to continue to be an Australian legal practitioner.(3) Subsection (2) ceases to apply:(a) if a manager or receiver is appointed under this Act for the law practice, or(b) when the period of 6 months after the practising certificate actually lapsed expires, or(c) if the lawyer’s application for the grant or renewal of an Australian practising certificate is refused under this Act or a corresponding law,whichever first occurs.
476 Availability of property of Law Society
The Fidelity Fund is the only property of the Law Society available for the satisfaction of a successful claim.
Part 3.5 Mortgage practices and managed investment schemes
(1) In this Part:ASIC exemption means an exemption from the Corporations Act 2001 of the Commonwealth given by the Australian Securities and Investments Commission under that Act.
associate of a solicitor—see subsection (2).
borrower means a person who borrows from a lender or contributor money that is secured by a mortgage.
client of a solicitor means a person who:
(a) receives the solicitor’s advice about investment in a regulated mortgage or managed investment scheme, or(b) gives the solicitor instructions to use money for a regulated mortgage or managed investment scheme.contributor means a person who lends, or proposes to lend, money that is secured by a contributory mortgage arranged by a solicitor.
contributory mortgage means a mortgage to secure money lent by 2 or more contributors as tenants in common or joint tenants, whether or not the mortgagee is a person who holds the mortgage in trust for or on behalf of those contributors.
financial institution means:
(a) an ADI, or(b) a body that, immediately before 1 July 1999, was a society within the meaning of the Friendly Societies (NSW) Code or a body that is a friendly society for the purposes of the Life Insurance Act 1995 of the Commonwealth, or(c) a trustee company within the meaning of the Trustee Companies Act 1964, or(d) a property trust or other body corporate established by or in respect of a church that may invest money in accordance with an Act, or(e) a corporation or other body, or a corporation or body of a class, prescribed by the regulations for the purpose of this definition.lender means a person who lends, or proposes to lend, a borrower money that is secured by a mortgage.
member of a managed investment scheme has the same meaning as in the Corporations Act 2001 of the Commonwealth.
regulated mortgage means a mortgage (including a contributory mortgage) other than:
(a) a mortgage under which the lender is a financial institution, or(b) a mortgage under which the lender or contributors nominate the borrower, but only if the borrower is not a person introduced to the lender or contributors by the solicitor who acts for the lender or contributors or by:(i) an associate of the solicitor, or(ii) an agent of the solicitor, or(iii) a person engaged by the solicitor for the purpose of introducing the borrower to the lender or contributors, or(c) a mortgage, or a mortgage of a class, that the regulations prescribe as exempt from this definition.responsible entity has the same meaning as in the Corporations Act 2001 of the Commonwealth.
run-out mortgage means a regulated mortgage that was entered into before 7 September 2001 (the date of commencement of section 117 of the Legal Profession Act 1987, as inserted by the Legal Profession Amendment (Mortgage Practices) Act 2000), which is not:
(a) a State regulated mortgage, or(b) a mortgage that forms part of a managed investment scheme that is required to be operated by a responsible entity under the Corporations Act 2001 of the Commonwealth (as modified by any ASIC exemption or the regulations under that Act).State regulated mortgage is defined in section 478 (State regulated mortgage—meaning).
State regulated mortgage practice means a solicitor’s practice in respect of which a nomination made in accordance with section 480 (Nomination of practice as State regulated mortgage practice) is in force.
(2) In this Part, a reference to an associate of a solicitor is a reference to:(a) a partner of the solicitor, whether or not the partner is a solicitor, or(b) an employee or agent of the solicitor, or(c) a corporation, or a member of a corporation, partnership, syndicate or joint venture, in which the solicitor or a person referred to in paragraph (a), (b) or (e) has a beneficial interest, or(d) a co-trustee of the solicitor, or(e) a person who bears a prescribed relationship to the solicitor or to a person referred to in paragraphs (a) (d), or(f) a corporation that (if the solicitor or a person referred to in paragraphs (a)–(e) were, or is, a corporation) would be, or is, a subsidiary of the solicitor or person within the meaning of the Corporations Act 2001 of the Commonwealth, or(g) a person prescribed by the regulations as an associate of the solicitor.(3) For the purposes of subsection (2) (e), a person bears a prescribed relationship to a solicitor or other person if the relationship is that of:(a) a spouse, or(b) a de facto partner, or(c) a child, grandchild, sibling, parent or grandparent, whether derived through paragraph (a) or (b) or otherwise, or(d) a kind prescribed by the regulations for the purposes of this section.Note. “De facto partner” is defined in section 21C of the Interpretation Act 1987.
478 State regulated mortgage—meaning
For the purposes of this Part, a regulated mortgage is a State regulated mortgage, in relation to a solicitor, if:(a) the solicitor’s practice is a State regulated mortgage practice, and(b) the regulated mortgage does not form part of a managed investment scheme or, if it does form part of a managed investment scheme, the managed investment scheme is not required to be operated by a responsible entity under the Corporations Act 2001 of the Commonwealth (as modified by any ASIC exemption or the regulations under the Corporations Act 2001 of the Commonwealth).
479 Conduct of mortgage practices
(1) A solicitor must not, in the solicitor’s capacity as solicitor for a lender or contributor, negotiate the making of or act in respect of a regulated mortgage unless:(a) the mortgage is a State regulated mortgage, or(b) the mortgage is a run-out mortgage, or(c) the mortgage forms part of a managed investment scheme that is operated by a responsible entity.(2) A solicitor must not, in the solicitor’s capacity as solicitor for a lender or contributor, negotiate the making of or act in respect of a regulated mortgage except in accordance with:(a) the Corporations Act 2001 of the Commonwealth, or that Act as modified by any ASIC exemption or the regulations under that Act, and(b) this Act, the regulations and the legal profession rules.(3) A solicitor must not, in the solicitor’s capacity as solicitor for a lender or contributor, negotiate the making of or act in respect of a regulated mortgage that forms part of a managed investment scheme unless the solicitor complies with any ASIC exemption that applies to managed investment schemes that:(a) have more than 20 members, and(b) are operated under the supervision of the Law Society in accordance with that exemption.This subsection applies even if the regulated mortgage forms part of a managed investment scheme that has no more than 20 members.
(4) Subsection (3) does not apply if the managed investment scheme is operated by a responsible entity.(5) A solicitor who knows that an associate has contravened a requirement referred to in subsection (1), (2) or (3) must notify the Law Society Council of that fact in writing within 21 days after becoming aware of the contravention.(6) A contravention of this section is capable of being professional misconduct.
480 Nomination of practice as State regulated mortgage practice
(1) A solicitor who, in the solicitor’s capacity as solicitor for a lender or contributor, negotiates the making of or acts in respect of a regulated mortgage, or who proposes to do so, may, by notice in writing given to the Law Society Council, nominate the solicitor’s practice as a State regulated mortgage practice.(2) A nomination may, with the approval of the Law Society Council, be made for a solicitor by another solicitor (for example, by a solicitor on behalf of members of a firm of solicitors).(3) A nomination of a solicitor’s practice as a State regulated mortgage practice takes effect on the date the notice of the nomination is given to the Law Society Council.(4) A nomination ceases to be in force, in respect of a solicitor, if:(a) the solicitor revokes the nomination by notice in writing given to the Law Society Council, or(b) the solicitor ceases to be an Australian legal practitioner, or(c) the Law Society Council, by notice in writing served on the solicitor, rejects the nomination of the solicitor’s practice.(5) A nomination under this section is to include such information as may be required by the regulations or the legal profession rules.
481 Requirement to notify Law Society of State regulated mortgages
(1) A solicitor who, in the solicitor’s capacity as solicitor for a lender or contributor, negotiates the making of or acts in respect of a State regulated mortgage must give the Law Society Council notice in writing of that fact in accordance with the regulations or legal profession rules.Maximum penalty: 50 penalty units.
(2) A contravention of this section is capable of being professional misconduct.
482 Solicitor to have fidelity cover in respect of regulated mortgages
(1) A solicitor who, in the solicitor’s capacity as solicitor for a lender or contributor, negotiates the making of or acts in respect of a regulated mortgage must ensure that an approved policy of fidelity insurance is in force in respect of the solicitor for the purpose of compensating persons who suffer pecuniary loss because of any dishonest failure to pay money payable under the mortgage.(2) A policy of fidelity insurance is an approved policy of fidelity insurance if:(a) the Law Society Council is of the opinion that the terms of the policy comply with agreed national standards for fidelity insurance for solicitors, and(b) the policy is not to expire before the expiration of the local practising certificate or interstate practising certificate of the solicitor to whom the policy relates, and(c) the insurer and the terms of the policy have been approved by the Attorney General by order in writing given to the Law Society, and(d) any conditions imposed by the order are complied with.(3) A solicitor who, in the solicitor’s capacity as solicitor for a lender or contributor, negotiates the making of or acts in respect of a regulated mortgage without ensuring that an approved policy of fidelity insurance is in force in respect of the solicitor in accordance with this section is guilty of an offence.Maximum penalty: 50 penalty units.
(4) A contravention of this section is capable of being professional misconduct.(5) A contravention of this section does not limit the operation of section 483 (Bar on claims against Fidelity Fund relating to regulated mortgages).(6) This section does not apply in respect of any regulated mortgage that forms part of a managed investment scheme that is operated by a responsible entity.
483 Bar on claims against Fidelity Fund relating to regulated mortgages
A person who is a lender or contributor under a regulated mortgage is not entitled to make a claim against the Fidelity Fund for the purpose of obtaining compensation for a pecuniary loss if the claim relates to a regulated mortgage in respect of which a solicitor is required to have fidelity insurance under section 482 (Solicitor to have fidelity cover in respect of regulated mortgages).
484 Notification of insurance arrangements for regulated mortgage
(1) If a client entrusts money to a solicitor and the money, or part of the money, is proposed to be advanced to a borrower for a regulated mortgage, the solicitor must, within 7 days after the money is entrusted to the solicitor, give the client a notice in writing that:(a) advises the client of the effect of section 483 (Bar on claims against Fidelity Fund relating to regulated mortgages), and(b) includes details of the policy of fidelity insurance referred to in section 482 (1) (Solicitor to have fidelity cover in respect of regulated mortgages).(2) The solicitor must not advance any of the money to a borrower for a regulated mortgage unless:(a) the client has been given the notice referred to in subsection (1), and(b) after having been given that notice, the client has given the solicitor a specific authority in writing to advance the money for that mortgage.(3) A contravention of this section is capable of being professional misconduct.(4) A contravention of this section does not limit the operation of section 483 (Bar on claims against Fidelity Fund relating to regulated mortgages).(5) This section does not apply in respect of a regulated mortgage that forms part of a managed investment scheme that is operated by a responsible entity.
485 Failure to obtain fidelity insurance for regulated mortgage
(1) The Law Society Council must not grant a practising certificate to an Australian lawyer who is or will be required to comply with section 482 (Solicitor to have fidelity cover in respect of regulated mortgages) unless it is satisfied that:(a) there is, or will be, in force with respect to the Australian lawyer an approved policy of fidelity insurance within the meaning of section 482, and(b) the policy is, or will be, in force with respect to the Australian lawyer during the currency of the lawyer’s practising certificate.(2) The Law Society Council must suspend the local practising certificate of a solicitor who is required to comply with section 482 if it is not satisfied that:(a) there is in force with respect to the solicitor an approved policy of fidelity insurance within the meaning of section 482, and(b) the policy is in force with respect to the solicitor during the currency of the solicitor’s practising certificate.(3) If an interstate legal practitioner is required to comply with section 482 and the Law Society Council is not satisfied that there is in force with respect to the practitioner an approved policy of fidelity insurance within the meaning of section 482, the Council must suspend that practitioner’s entitlement under Part 2.4 to practise in this State while the failure continues and request the corresponding authority in the jurisdiction in which the practitioner has his or her sole or principal place of legal practice to suspend the solicitor’s interstate practising certificate until the Law Society Council notifies the corresponding authority that the practitioner is complying with section 482.
Division 3 Managed investment schemes
486 Involvement of solicitors in managed investment schemes
(1) This Part does not prevent a solicitor from carrying out any legal services in connection with a managed investment scheme that is operated by a responsible entity, or from having an interest in such a managed investment scheme or in the responsible entity for such a managed investment scheme.(2) However, if a client entrusts, or proposes to entrust, money to a solicitor to be invested in a managed investment scheme that is operated by a responsible entity, and the solicitor has a prescribed interest in the managed investment scheme, the solicitor must give the client a notice in writing that advises the client that:(a) the solicitor has an interest in the managed investment scheme, and(b) the operation of the managed investment scheme does not form part of the solicitor’s practice, and(c) there is no claim against the Fidelity Fund for a pecuniary loss arising from an investment in the managed investment scheme.(3) The notice is to include such other matters as may be required by the regulations or the legal profession rules.(4) The solicitor must not advance the money entrusted to the solicitor to the responsible entity for the managed investment scheme or to any other person unless the client has been given the notice.(5) A solicitor who knows that an associate has contravened a requirement referred to in this section must notify the Law Society Council in writing of that fact within 21 days after becoming aware of the contravention.(6) A contravention of this section is capable of being professional misconduct.(7) A contravention of this section does not limit the operation of section 487 (Claims against Fidelity Fund relating to managed investment schemes connected with solicitors).(8) For the purposes of this section, a solicitor has a prescribed interest in a managed investment scheme if:(a) the solicitor, or an associate of the solicitor, is a director of or concerned in the management of the responsible entity for the managed investment scheme, or(b) the solicitor, or an associate of the solicitor, is a shareholder in the responsible entity for the managed investment scheme, or(c) the solicitor, or an associate of the solicitor, is taken to be an agent of the responsible entity under Chapter 5C of the Corporations Act 2001 of the Commonwealth, or(d) the solicitor, or an associate of the solicitor, receives any pecuniary benefit from the managed investment scheme or the responsible entity for the managed investment scheme if a client of the solicitor invests in the managed investment scheme, or(e) the solicitor, or an associate of the solicitor, has an interest of a kind prescribed by the regulations or solicitors rules in the managed investment scheme or the responsible entity for the managed investment scheme.
487 Claims against Fidelity Fund relating to managed investment schemes connected with solicitors
A person who entrusts money to a solicitor to be invested in a managed investment scheme that is operated by a responsible entity is not entitled to make a claim against the Fidelity Fund for the purpose of obtaining compensation for any pecuniary loss arising from that investment.
488 Transfer of mortgages to responsible entity
(1) A solicitor who, in the solicitor’s capacity as solicitor for a lender or contributor, is responsible for the administration of a regulated mortgage must not transfer that mortgage to a responsible entity for a managed investment scheme unless the lender or contributor has given the solicitor authority in writing to transfer the regulated mortgage to the responsible entity.(2) A contravention of this section is capable of being professional misconduct.(3) For the purposes of this section, a solicitor transfers a regulated mortgage to a responsible entity when the solicitor does anything that results in:(a) a responsible entity for a managed investment scheme becoming the holder or custodian of the regulated mortgage, or(b) any advances of money made in respect of the mortgage, or the property that is charged or encumbered by the mortgage, becoming scheme property (within the meaning of the Corporations Act 2001 of the Commonwealth) of a managed investment scheme.
489 Regulations and rules relating to managed investment schemes
Without limiting section 493 (Regulations and rules relating to Part), the regulations and legal profession rules may include provisions for the purpose of:(a) ensuring that the operation of a managed investment scheme by a responsible entity is kept separate from a solicitor’s practice, and(b) ensuring that clients of a solicitor are aware that the operation of such a managed investment scheme does not form part of the solicitor’s practice.
Division 4 Transitional arrangements—pre-existing mortgages
490 Part extends to pre-existing mortgages
Schedule 8 contains provisions of a savings and transitional nature in connection with the operation of this Part.
491 Law Society may require information about mortgage practices
(1) The Law Society Council may, by notice in writing, require a solicitor to provide information to the Law Society Council about any of the following:(a) whether the solicitor, an associate of the solicitor or a person engaged by the solicitor negotiates the making of or acts in respect of regulated mortgages or has done so in the past,(b) details of regulated mortgages that continue to have effect,(c) whether the solicitor proposes:(i) to nominate the solicitor’s practice as a State regulated mortgage practice, or(ii) to transfer responsibility for any regulated mortgage, or(iii) to take no further action in respect of any regulated mortgage,(d) such other information, relating to regulated mortgages, as the regulations or the legal profession rules may require to be provided.(2) A contravention of this section is capable of being professional misconduct.
Nothing in this Part affects the terms of any policy of indemnity insurance approved under section 406 (Solicitor to be insured and to make contributions).
493 Regulations and rules relating to Part
(1) The regulations and, subject to the regulations, the legal profession rules may make provision for or with respect to:(a) regulated mortgages, including run-out mortgages, and(b) the involvement of solicitors in managed investment schemes.(2) In particular, the regulations and the legal profession rules may make provision for or with respect to the following:(a) the negotiation of the making of or acting in respect of regulated mortgages by solicitors,(b) the manner in which the Law Society Council is to be given any notice or other information under this Part,(c) the form of notices and authorities for the purposes of this Part,(d) the manner in which notices are to be given in accordance with this Part.(3) If the regulations or the legal profession rules prescribe a form of notice or authority for the purposes of this Part, the notice or authority is to be given in the prescribed form.