352Recovery of regulated property where there has been a breach of trust etc.

352 Recovery of regulated property where there has been a breach of trust etc.

352 Recovery of regulated property where there has been a breach of trust etc.

(1) This section applies if regulated property of or under the control of a law practice has, before or after the appointment of a receiver for the law practice, been taken by, paid to, or transferred to, a person (the transferee) in breach of trust or 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 law practice or any other person 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 law practice or to a client of the law 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—

and, on the recovery of that amount from the transferee, the transferee ceases to be liable for it to any other person.

(3) If any money of or under the control of a law practice has, before or after the appointment of a receiver for the law practice, been paid in breach of trust or improperly or unlawfully to a person (the prospective plaintiff) in respect of 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.

(4) If any regulated property of or under the control of a law practice has, before or after the appointment of a receiver for the law practice, been used in breach of trust or improperly or unlawfully so as 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 so discharged less the consideration (if any) provided by the debtor for the discharge.