Part 4The combined trust account and other related accounts

Part 4—The combined trust account and other related accounts Division 1—The combined trust account 52B—Application to incorporated legal practices The regulations may provide that specified provisions of this Division, and any other provisions of this Act, the regulations or the legal profession rules relating to this Division, do not apply to incorporated legal practices (or a specified class of incorporated legal practices) or apply to them with specified modifications. 53—Duty to deposit trust money in combined trust account (1) A law practice must, within 14 days after 31 May, and within 14 days after 30 November, in each year, out of trust money held in the practice's general trust account, deposit the appropriate amount in the combined trust account. (2) The appropriate amount is the amount (if any) necessary to ensure that the following formula is satisfied: Where— A1 is the amount held on the practice's behalf in the combined trust account A2 is the lowest aggregate (determined by reference to the relevant ADI statements) of the amount held in the practice's general trust account and the amount (if any) simultaneously held in the combined trust account on the practice's behalf during the period of 6 months ending on 31 May or 30 November (as the case requires). (3) The combined trust account is a composite account consisting of separate accounts established by the Society at each approved ADI. (4) If a law practice maintains 2 or more general trust accounts, those accounts will, for the purposes of this section, be taken to be a single trust account the balance of which is the aggregate of the respective balances of each of those trust accounts. (5) A law practice— (a) may withhold money from deposit under subsection (1) if— (i) the money is necessary to meet an immediate claim on the practice's general trust account or to establish or maintain a reasonable balance in the general trust account sufficient to meet claims reasonably expected in the ordinary course of legal practice in the near future; and (ii) the practice has, on or before the day on which a deposit under subsection (1) is required to be made, given written notice to the Society accordingly; and (b) is not obliged to deposit money under subsection (1) in relation to a particular period of 6 months if the lowest aggregate referred to in subsection (2) was, during that period, less than $10 000 (or some other sum fixed by regulation for the purposes of this subsection). (6) If a general trust account is maintained by a firm of legal practitioners or a firm of incorporated legal practices or a firm of legal practitioners and incorporated legal practices, the general trust account will, for the purposes of this section, be taken to be the general trust account of each member of the firm, and the members of the firm are each liable to perform the obligations imposed by this section, but the discharge by 1 member of the firm of the obligations under this section in relation to the general trust account will be taken as a discharge by all the members of the firm of their obligations in relation to that general trust account. (7) If the Council has reasonable cause to suspect that a law practice has not complied with the obligations of this section, it may, by notice in writing served on the practice, require the practice to attend before it and to produce evidence of the trust money received by the practice, the amount from time to time standing to the credit of the general trust account, and such other relevant matters as may be specified in the notice. (8) If a law practice establishes a general trust account and has, at the time of establishing the account, no other trust account, the balance of the general trust account during the first month after its establishment is, for the purposes of this section, to be ignored. (9) A law practice that fails to make the appropriate deposit by the last date for payment is liable to pay the Society, for the credit of the statutory interest account, interest on the outstanding amount at the prescribed rate for the period of the default but, if the appropriate deposit is made within 7 days after that date, no liability for interest arises under this subsection. (10) A law practice may withdraw money held on the practice's account in the combined trust account if, and only if, the withdrawal is necessary to meet an immediate claim on the practice's general trust account or to establish a reasonable balance in the general trust account sufficient to meet claims reasonably expected in the ordinary course of legal practice in the near future. (11) If a law practice withholds money from deposit under subsection (5)(a) or withdraws money under subsection (10), the external examiner for the law practice must, in the external examiner's report for the relevant year, express an opinion on whether the withholding or withdrawal was justified, and if the amount exceeds the amount that could, in the external examiner's opinion, be reasonably justified, on the amount of the excess (but before the external examiner includes a statement expressing such an opinion in the report, the external examiner must allow the practice a reasonable opportunity to comment on the proposed statement and may make any modification to the proposed statement that the external examiner considers justified in the light of the practice's comments). (12) If the withholding or withdrawal of money is not justified, or exceeds an amount that could be reasonably justified, the law practice is liable to pay to the Society, for the credit of the statutory interest account, interest at the prescribed rate on the amount withheld or withdrawn, or the amount of the excess, (as the case requires), from the date of the withholding or withdrawal until the amount on deposit in the combined trust account is restored to the level required by this section. (13) The Society may, for any proper reason, remit interest payable under subsection (9) or (12) wholly or in part. (14) The Society— (a) may approve an ADI for the purposes of this section if satisfied that the ADI is prepared to pay a reasonable rate of interest on money deposited in the combined trust account; and (b) may revoke an approval previously given under this subsection. (15) If the Society revokes the approval of an ADI under subsection (14) the combined trust account, so far as it was kept at that ADI, must be transferred to an ADI that continues as an approved ADI. (16) In this section— general trust account has the same meaning as in Schedule 2. 55—Immunity from liability (1) No action at law or in equity lies against the Society or a legal practitioner for any action done in compliance with this Division. (2) This Division does not affect the interest or claim of any person beneficially entitled to trust money and any such interest or claim may be asserted and enforced as effectually as if this Division had not been enacted. Division 2—The statutory interest account 56—Statutory interest account (1) The Society must continue to maintain the statutory interest account. (2) The Society must pay into the statutory interest account all interest earned from deposits in the combined trust account. (3) The Society may invest any money contained in the statutory interest account in any manner in which trustees are authorised by statute to invest trust funds and must pay the income derived from any such investment into the statutory interest account. (4) The amount held in the statutory interest account may be applied to defraying any management fee or other expenditure relating to the management or administration of the combined trust account and the statutory interest account. (5) After making such provision for defraying expenditure under subsection (4) as the Society thinks fit, the Society must pay the balance of the money comprised in the statutory interest account (excepting money advanced to the statutory interest account for the purpose of investment), as to five-eighths to the Legal Services Commission, and, subject to subsection (6), as to three-eighths, to the Fidelity Fund. (6) If at any time the amount of the Fidelity Fund (including the value of any investments in which any of its money has been invested) exceeds an amount calculated by multiplying $11 500 by the number of legal practitioners who held practising certificates on the last preceding 30 June, the Society must hold the excess in the statutory interest account, to be paid or applied by the Society to the Legal Services Commission, or for any purpose approved by the Attorney-General and the Society. Division 3—Legal Practitioners Fidelity Fund 57—Fidelity Fund (1) The Society must continue to maintain the Legal Practitioners Fidelity Fund (formerly known as the legal practitioners' guarantee fund). (2) The Society may from time to time invest any of the money constituting, or forming part of, the Fidelity Fund in any manner in which trustees are authorised by statute to invest trust funds, and may advance, on such terms and conditions as the Society thinks fit, money from the Fidelity Fund to the statutory interest account. (3) The Fidelity Fund consists of— (a) the money paid into it from the statutory interest account; and (b) all money recovered by the Society under Part 5; and (c) the money credited by the Society to the Fidelity Fund under section 95; and (d) costs recovered by the Attorney-General, the Commissioner or the Society in disciplinary proceedings against legal practitioners, former legal practitioners, Australian-registered foreign lawyers or former Australian-registered foreign lawyers; and (da) any fee paid to the Commissioner; and (e) any money that the Society thinks fit to include in the Fidelity Fund; and (f) the income and accretions arising from the investment of the money constituting the Fidelity Fund. (4) Subject to subsection (5), money in the Fidelity Fund may be applied for any of the following purposes: (a) meeting any expenses incurred by LPEAC or members of LPEAC in exercising functions and powers under this Act; (b) meeting any expenses incurred by the Board of Examiners or members of the Board of Examiners in exercising functions and powers under this Act; (c) meeting any expenses incurred by the Tribunal or members of the Tribunal in exercising functions and powers under this Act; (d) meeting any expenses incurred by the Commissioner in exercising the Commissioner's functions and powers under this Act; (e) the costs incurred by the Society in appointing a legal practitioner to appear in proceedings in which a person seeks admission as a legal practitioner; (f) the costs of investigating complaints under this Act and of disciplinary proceedings under this Act; (g) the costs of conducting an audit or bringing proceedings under Schedule 1; (h) the costs of proceedings instituted by the Commissioner for the adjudication of legal costs; (i) the costs of prosecutions for offences against this Act; (j) costs consequent on the appointment of a supervisor or manager under this Act; (k) the costs of an investigation or examination under Schedule 2 Part 3; (l) the payment of honoraria, approved by the Attorney‑General, to members of LPEAC and the Tribunal; (la) the payment of the salaries and related expenses of the Commissioner and his or her staff; (m) the legal costs payable by any person in relation to any action arising from an honest act or omission in the exercise or purported exercise of powers or functions under Schedule 2 or 4 or by the Commissioner or delegated by the Commissioner; (n) the payment of money towards the costs of an arrangement under Part 3 Division 13 to the extent that those costs are, in accordance with the terms of the scheme and with the approval of the Attorney‑General, to be paid from the Fidelity Fund; (o) the costs of processing claims under Part 5 and of paying out those claims to the extent authorised by that Part; (p) defraying any management fee or other expenditure relating to the management or administration of the Fidelity Fund; (q) educational or publishing programs conducted for the benefit of legal practitioners or members of the public. (5) No payment may be made from the Fidelity Fund except with the authorisation of the Attorney-General. (6) The Attorney-General may, before authorising a payment from the Fidelity Fund, require the Society, the Tribunal, the Commissioner or any person engaged in the administration of this Act to provide such information and explanations as to the reason for the proposed payment as the Attorney-General may reasonably require. (7) The Attorney‑General may delegate to a person (including a person for the time being performing particular duties or holding or acting in a particular position) a function or power under this section. (8) A delegation under subsection (7)— (a) must be by instrument in writing; and (b) may be absolute or conditional; and (c) does not derogate from the power of the delegator to act in a matter; and (d) is revocable at will. (9) A function or power delegated under subsection (7) may, if the instrument of delegation so provides, be further delegated in accordance with that instrument. Division 4—Miscellaneous 57A—Payment of interest accruing on trust accounts (1) Interest accruing on a trust account (other than a separate trust account maintained by a legal practitioner for the exclusive benefit of a particular client) must be paid by the ADI concerned to the Society. (2) The Society must deal with money received by it pursuant to subsection (1) as follows: (a) 50% of the money must be paid to one or more of the Legal Services Commission or one or more community legal centres in such shares and subject to such conditions as the Attorney-General directs; and (b) 40% of the money must be paid to the Fidelity Fund; and (c) 10% of the money must be paid to the Law Foundation of South Australia Incorporated subject to such conditions as the Attorney‑General directs. (3) The Attorney-General may, from time to time, vary or revoke the conditions subject to which money is paid under subsection (2). (4) The Attorney-General may, from time to time, without the approval of the Society, vary the shares in which money allocated for payment pursuant to subsection (2)(a) is distributed under that paragraph. (5) At least 50% of the money paid to the Law Foundation of South Australia Incorporated pursuant to subsection (2)(c) must be applied in, or in relation to, the provision of legal services to the community. 58—Accounts and audit (1) The Society must keep proper accounts of all money received, disbursed, invested and otherwise dealt with under this Part. (2) The Society must cause the combined trust account, the statutory interest account, and the Fidelity Fund to be audited at least once in every calendar year by a public accountant approved by the Attorney-General and must send copies of the duly audited accounts to the Attorney-General. 59—Power to borrow for purposes of this Part The Society may borrow money for the purposes of any account or fund maintained under this Part and may defray the interest and other expenditure resulting from the borrowing from the appropriate account or fund.