506Recovery of regulated property—breach of trust etc

506 Recovery of regulated property—breach of trust etc (1) Subsection (2) applies if regulated property of or under the control of a law practice has, before or after the appointment of a receiver for the practice, been taken by, paid to, or transferred to, a person (the transferee) in breach of trust, improperly or unlawfully and the transferee— (a) knew or believed at the time of the taking, payment or transfer that it was done in breach of trust, improperly or unlawfully; or (b) did not provide to the practice or anyone else any or any adequate consideration for the taking, payment or transfer; or (c) because of the taking, payment or transfer, became indebted or otherwise liable to the practice or to a client of the practice in the amount of the payment or in another amount. (2) The receiver is entitled to recover from the transferee— (a) if subsection (1) (a) applies—the amount of the payment or the value of the regulated property taken or transferred; or (b) if subsection (1) (b) applies—the amount of the inadequacy of the consideration or, if there was no consideration, the amount of the payment or the value of the regulated property taken or transferred; or (c) if subsection (1) (c) applies—the amount of the debt or liability. (3) On the recovery of the amount from the transferee, the transferee stops being liable for it to anyone else. (4) If any money of or under the control of a law practice has, before or after the appointment of a receiver for the practice, been paid in breach of trust, improperly or unlawfully to a person (the prospective plaintiff) in relation to a cause of action that the prospective plaintiff had, or claimed to have, against a third party— (a) the receiver may prosecute the cause of action against the third party in the name of the prospective plaintiff; or (b) if the prospective plaintiff did not have at the time the payment was made a cause of action against the third party—the receiver may recover the money from the prospective plaintiff. (5) If any regulated property of or under the control of a law practice has, before or after the appointment of a receiver for the practice, been used in breach of trust, improperly or unlawfully to discharge a debt or liability of a person (the debtor), the receiver may recover from the debtor the amount of the debt or liability discharged less the consideration (if any) provided by the debtor for the discharge. (6) A person authorised by the law society council may give a certificate in relation to all or any of the following facts in relation to a law practice: (a) the receipt of regulated property by the practice from anyone, the nature and value of the property, the date of receipt, and the identity of the person from whom it was received; (b) the taking, payment or transfer of regulated property for the practice, the nature and value of the property, the date of the taking, payment or transfer, and the identity of the person by whom it was taken or to whom it was paid or transferred; (c) the entries made in the trust account and in any other ledgers, books of account, vouchers or records of the practice and the truth or falsity of the entries; (d) the money and securities held by the practice at a stated time. (7) If the receiver brings a proceeding under subsection (2), (4) or (5), a certificate given under subsection (6) is evidence and, in the absence of evidence to the contrary, is proof of the facts stated in it.