Part 3.1Part 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.