In this Appendix we reproduce a draft set of Solicitors Trust Account Regulations which the Law Society of New South Wales proposes should replace the current Regulations.
1. (1) These Regulations may be cited as the "Solicitors Trust Account Regulations, 19__ "
(2) These Regulations shall commence on the ________ day of ________ 19___
(3) The Solicitors Trust Account Regulations in force at the commencement of these Regulations are hereby repealed.
2. In these Regulations, unless the contrary intention appears:
“The Act” means the Legal Practitioners Act 1898;
“Approval”, or "Approved" means the written or published approval of the Society;
"Branch Office" means a Solicitors’ Practice Rules;
“Client” means a person or body from whom or on whose behalf Trust Moneys are received held or disbursed;
"Duplicate" includes in relation to any Trust Records; any record containing details identical to the original details of such record, including the machine number, produced by the same act of creating such original records;
“Files” means any documents, correspondence or papers relating to any Client or Clients;
“Machine Numbered in Series” means a process of consecutive numbering of a sequence of a Trust Record other than by hand and independently of the creation of such record;
"Registered Office" means the Solicitor’s registered office referred to in the Solicitors' Practice Rules;
"Trust Moneys" means moneys referred to in Section 41 of the Act, and includes all moneys held in any trust bank account;
"Trust Records" means Approved records of:
(a) receipts;
(b) bank deposits;
(c) cheques;
(d) bank statements;
(e) daily receipt and cheque transactions;
(f) ledger account journal transfers and adjustments;
(g) ledger transactions;
(h) ledger trial balance statements;
(i) Trust Security Investment Authorities; Securities Register;
(k) all minute books and records of the Solicitor’s Nominee Company;
for transactions involving Trust Moneys;
“Trust Security” means a mortgage, charge, security, bill of sale, loan contract, (whether evidenced in writing or not) or any document purporting to secure or regulate the repayment of moneys or any deposit of money held by or under the control of the Solicitor for or in trust for any other person.
“Visible Form” means any record of information whereby the information can be produced in permanent legible form on demand.
3.(1) These Regulations shall apply to every Solicitor who practises his profession in the course of which practice Trust Moneys or Trust Securities are received, held or disbursed by him or by any partnership of which he is a member.
(2) Every Solicitor shall keep, or cause to be kept, at his Registered Office, Trust Records in visible form.
(3) Any Solicitor may in respect of any Branch Office conducted by him and notified to the Society keep or cause to be kept separate Trust Records for that Branch Office, provided that he causes his trust records as a whole to include a consolidated ledger trial balance statement in accordance with (mutatis mutandis) Regulation I I as at the last day of March and September.
(4) All Trust Records shall be retained for six years after the last entry.
4. (1) Receipts shall be in Duplicate, shall be Machine Numbered in Series, shall contain either the words “Trust Account” or the word and symbol “Trust A/C”, and shall include provision for the entry of:
(a) the date of receipt;
(b) the amount of money received and the form in which it is received;
(c) the name of the person from whom and on whose behalf such moneys are received by the Solicitor; and
(d) particulars sufficient to identify the transaction and ledger account in respect of which the Trust Moneys are received.
(2) A receipt containing the particulars described in Clause (1) of this Regulation shall, as soon as practicable, be made out in respect of all Trust Moneys received by a Solicitor (excluding all transfers by journal entry).
(3) The original of such receipt shall be issued on demand, and if not so issued shall be retained.
5.(1) A bank deposit record shall include provision for the entry of:
(a) the date of the deposit;
(b) the amount of the deposit;
(c) whether the deposit consists of cheques, notes or coins (as the case may be); and
(d) in the case of cheques, the name of the drawer, bank branch and the amount of each cheque.
(2) Every Solicitor who, by himself or his partner, makes or causes to be made a deposit to his trust bank account, shall ensure that:-
(a) a bank deposit record is produced to the bank at the time of making a deposit;
(b) the particulars referred to in clause (1) of this Regulation are entered therein; and
(c) a Duplicate or summary of each such bank deposit record is authenticated by an officer of the bank and is retained by the Solicitor as a Trust Record.
6.(1) Trust Moneys shall not be drawn from a Solicitors trust bank account other than by cheque.
(2) Each such cheque shall:
(a) be Machine Numbered in Series;
(b) include a crossing (general or special) and the words "not negotiable";
(c) not be payable to cash;
(d) contain either the words "Trust Account" or the word and symbol "Trust A/c";
(e) be signed by;
(f) include provision for the entry of:
(3) A record shall be kept of each cheque and such record shall include:
(a) details identifying the ledger account to be debited;
(b) brief particulars of the subject matter or purpose for which the disbursement is made; and
(c) the particulars specified in paragraph (o of clause (2) of this Regulation.
7. Every Solicitor shall keep:
(a) A record of daily receipt and payment transactions in the nature of a cash book; or
(b) As part of the Duplicate or summary required by paragraph;
(c) or Clause (2) of Regulation 5, a record of daily cash (as distinct from cheque) receipt transactions containing particulars of:
8. (1) All transfers between accounts in the ledger not effected by cheque shall be recorded in a journal.
(2) A journal record shall contain such particulars as shall be sufficient to identify each such transaction and the reason for such transaction, including the names of all ledger accounts to be debited or credited, and the relevant reference number of other identification
9. (1) A separate ledger account shall be maintained for each matter for each Client in respect of Trust Moneys.
(2) Each ledger account shall include:
(a) the name of the Client;
(b) a reference number or other identification;
(c) particulars of all transactions affecting Trust Moneys relating to such matter, including;
(i) the date of each transaction;
(ii) a description of each transaction;
(iii) particulars sufficient to identify the Trust Record originating each transaction;
(iv) the amount of each transaction; and
(v) the resulting current balance of account arising from each transaction.
10. (1) A Solicitor who has received trust moneys shall as soon as practicable after completion of the matter in respect of which the trust moneys were received and at any time upon request of the client furnish to the client a Statement of Account showing therein or by reference to any other Statement of Account particulars of all trust moneys:
(a) received by the Solicitor from the client;
(b) received by the Solicitor from any person other than the client;
(c) disbursed by the Solicitor and
(d) remaining undisbursed.
(2) A Solicitor who has acted for a client in the investment upon loan of any Trust Moneys shall in addition to any requirement under Clause (1) of this Regulation and as soon as practicable, after payment of such moneys to the borrower, or to any other person on behalf of the borrower or in accordance with the borrower s direction furnish to the client a written statement signed by the Solicitor and recording the particulars referred to in paragraphs (a) to (k) of clause (2) of Regulation 15 hereof.
(3) A copy of every statement furnished under this Regulation shall be retained in the file relevant to the transaction
11. (1) A trial balance statement of all ledger accounts shall be prepared within twenty-one days after the last day of each month, effective as at such last day.
(2) A trial balance statement shall:
(a) state the month to which it refers and the date of preparation;
(b) list every ledger account by name of Client, reference number or other identification and balance of account at the end of such month;
(c) show the total of the ledger account balances;
(d) show a comparison between such total and the amount of Trust Moneys held by the Solicitor at the end of such month including a reconciliation with the bank balance as at that date as shown in the bank statements.
12. (1) Subject to clause (2) of this Regulation, a Solicitor applying for a certificate shall forward to the Society with his practising application or within such time after forwarding his application as the Council may in any particular case allow, a report in or to the effect of Form No. I in the Schedule to these Regulations, of a public accountant registered under the Public Accountants Registration Act, 1945.
(2) Where an applicant for a practising certificate has forwarded to the Society a Trust Account Report under clause (1) of this Regulation:
(a) the Council may require the applicant to furnish a report of another public accountant registered under the Public Accountants Registration Act 1945 and may, if it thinks fit, nominate such other accountants;
(b) the applicant, if he is so required, shall forward to the Society a report, in or to the effect of Form No. I in the Schedule to these Regulations, of such other accountant; and
(c) the cost of the report forwarded under this clause shall be borne by the Council unless the report so forwarded discloses that the applicant is in breach of or default under any of the provisions of the Act or the Regulations under the Act.
13. (1) A Solicitor may operate a Solicitors nominee company only as provided in these Regulations.
(2) A Solicitors nominee company shall be constituted whereby the Solicitor and his partners shall be the only shareholders and directors-, provided that, in the case of a sole practitioner:
(a) the Solicitors nominee company shall have an issued capital of not less than five shares all of which shall be of the same class and rank parri passu;
(b) the Solicitor shall be the holder of all but one of the issued shares in the Solicitors nominee company and shall be the beneficial owner of the remaining share;
(c) the Solicitor shall be a director of the Solicitors nominee company;
(d) the Solicitors nominee company shall have two directors only and shall have Articles of Association which provide inter alia that:-
(i) the quorum for meetings of directors shall be two;
(ii) in the case of an equality of votes at any meeting of directors the Solicitor shall have a second or casting vote;
(iii) no director shall be entitled to appoint an alternate director or an Attorney to act in his place;
(iv) no shareholder shall be entitled to appoint a proxy.
(3) The Solicitors nominee company shall have its registered office at the Solicitors registered office.
(4) The Society may at any time:
(a) certify that a person or class of person shall not be eligible to be a shareholder or a director of a Solicitor’s nominee company and no such person or class of person shall thereafter act as a shareholder or a director thereof.
(b) approve a person who shall be eligible to be a shareholder and/or director of a Solicitor’s nominee company.
(5) A Solicitor's nominee company shall not carry on any activity other than the activity from time to time as a trustee of holding and/or dealing with property for another person or persons.
(6) The solicitors nominee company shall not receive directly or indirectly any financed benefit from the activities of the solicitor s nominee company as described.
(7) Every trust security shall be approved by the board of the Solicitor’s nominee company and the Solicitor shall ensure that the resolution of the Solicitor’s nominee company approving a trust security as recorded in the minute book sets out so far as are relevant the following particulars:
(a) date of the Trust Security or date of receipt of the Trust Security by the Solicitor;
(b) brief description of the Trust Security to enable it to be readily identified, or alternatively a statement that the loan is unsecured;
(c) principal sum;
(d) rate of interest and time of payment;
(e) term of Trust Security;
(f) name and address of the borrower;
(g) name and address of the person on whose behalf the Trust Security is expressed to be made;
(h) name and address of the person if any, in whose favour the trust security is expressed to be made;
(i) date when the Trust Security is discharged or delivered out of the Solicitor’s possession and control (other than upon discharge thereof including reference to evidence of the disposal;
(j) amount contributed by each contibutory to the Trust Security.
(8) In respect of each transaction the Solicitor shall upon loan of any trust moneys, as soon as practicable after payment of such loan to the borrower or in accordance with the borrowers directions, give to the client a written statement signed by the Solicitor containing the information referred to in Clause (7) of this Regulation.
(9) (a) All Trust Moneys advanced on behalf of clients in any Trust Security in the name of the Solicitors nominee company and each repayment of such moneys shall be paid from and received into the Trust Bank Account.
14. A Solicitor shall obtain the prior written authority of the Lender or each Contributor, as the case requires, in or to the effect of Form 2 or Form 3 in the Schedule to these Regulations before any moneys are advanced under a Trust Security to which Regulation 15(1) applies, or where the borrower is related to the Solicitor, directly or indirectly.
15. (1) Every Solicitor who is authorised to collect principal and/or interest under any Trust Security (except on any discharge or partial discharge thereof or takes a transfer of any Trust Security into his own name or that of a Solicitor’s nominee company of which he is a member and/or director shall keep a register to be known as the Securities Register.
(2) Every such Solicitor shall enter into the Securities Register:
(a) date of the Trust Security or date of receipt of the Trust Security by the Solicitor;
(b) brief description of the Trust Security to enable it to be readily identified, or alternatively a statement that the repayment of the moneys is unsecured;
(c) principal sum;
(d) rate of interest;
(e) date interest due;
(f) date of maturity;
(g) name and address of the borrower;
(h) name and address of the person, if any, in whose favour the Trust Security was discharged or delivered out of the Solicitor's possession and control;
(i) name and address of the person if any, in whose favour the Trust Security is expressed to be made;
(j) date when the Trust Security was discharged or delivered out of the Solicitor’s possession and control;
(k) Brief details of disposal of the Trust Security on leaving the Solicitor’s possession and control (other than upon discharge thereof including reference to evidence of the disposal;
provided that no entry in the Securities Register shall be required in respect of:-
16. A bona fide delegation in writing by a solicitor of his authority to sign any cheque or cheques to be drawn on a trust account maintained by him or his firm in pursuance of the provisions of Section 41 of the Act shall not of itself be deemed to be professional misconduct if the delegation is not contrary to or inconsistent with any provision express or implied, of any relevant trust and, if the solicitor is practising on his own account or there is no solicitor with whom he is practising in partnership able to sign such cheques with due expedition
(A) the delegation to sign such cheques is to
(B) is for a period during which the solicitor is, by reason of illness, injury or absence for legitimate reason from his place of business, unable to sign such cheques with due expedition and
(C) is notified forth within writing to the Secretary of the Law Society of New South Wales and
(D) does not operate or purport to operate when a person with whom the solicitor is practising in partnership is able to sign such cheques with due expedition.
17. Any delegation by a solicitor of his authority to sign any cheque or cheques drawn on a trust account which is maintained by him in pursuance of the Provisions of Section 41 of the Act may be cancelled by the Council of the Law Society of New South Wales at any time and without notice to the solicitor and such cancellation shall be effective from the time it is communicated to any person who is authorised by the delegation to sign any such cheque or cheques.
FORM NO.1
LEGAL PRACTITIONERS ACT, 1898
Solicitors' Trust Account Regulations
Regulation 12
TO: THE LAW SOCIETY OF NEW SOUTH WALES
TRUST ACCOUNT REPORT
(by prescribed Accountant)
Name of Applicant for Practising Certificate:................................................................
Name of Partnership (if any) of which Applicant is a member: ................................
1. Subject to any qualification in clause 2 hereof:-
(a) I have inspected or caused to be inspected the trust records (as defined in the Solicitors’ Trust Account Regulations) of the said applicant/partnership which the applicant has produced and states are kept at his registered office as the trust records (as so defined) in connection with the trust account of the said applicant/partnership relating to transactions during the year ended on 31 st day of March immediately preceding this report.
(b) In my opinion the said trust records are of the nature and in the form prescribed by the said Regulations. The said trust records appear to have been maintained and kept in accordance with the said Regulations.
(c) The records include what purport to be ledger trial balance statements as at the last day of each of the twelve months ending on 31st day of March immediately preceding this report and which are in a form complying with the said Regulations. The ledger trial balance statement as at 31st March immediately preceding this report purports to show that the trust account was in balance at such date. The balance shown therein agrees with the balance shown in the bank statements and/or other related records.
(d) Other than any deposits made pursuant to Section 42A of the Legal Practitioners Act, 1898:
(i) There are no debit balances in any of the ledger trial balance statements referred to in paragraph (c) of this clause;
OR
(ii) The inspection revealed (No.)................... debit balances which were investigated and which have been satisfactorily explained to me.
(e) Having regard to the internal controls in operation, an examination was made of the additions of an appropriate number of accounts in the trust ledger (being not less than twenty or of all such accounts where there are not more than twenty) and the balance in each of those accounts as at the 31 st day of March referred to in paragraph (c) of this clause agrees with the corresponding balance shown for the same account in the ledger trial balance statement as at the same date.
(f) (i) The bank/s holding the trust account/s of the said applicant/ partnership has/have affirmed to me that at the close of business on 31st March immediately preceding this report the number/s and balance/s of the letter/s of credit issued to the applicant/partnership in respect of deposits made to The Law Society of New South Wales Special Account with that bank/those banks were as specified below; and
(ii) to the best of my knowledge and belief the total amount specified below was not less than the sum required by Section 42A of the Legal Practitioners Act, 1898, to be on deposit with The Law Society of New South Wales in respect of the applicant/partnership on that day.
| Name of Bank | Number | Balance | Letter Credit |
 | | | |
| Australia and New Zealand Banking Group Limited | | | |
| Bank of New South Wales | | | |
| Bank of New Zealand | | | |
| Banque Nationale de Paris | | | |
| Commercial Banking Company of Sydney Limited | | | |
| Commercial Bank of Australia Limited | | | |
| Commonwealth Trading Bank of Australia | | | |
| National Bank of Australasia Limited | | | |
| Rural Bank of New South Wales | | | |
| The Bank of Adelaide | | | |
| Other (specify) | | | |
| | | |
| | Total amount | $ |
2. I am unable to report in terms of paragraph (a), (b), (c), (d), (e) or (f) of clause 1 except with qualifications as follows:-
3. I am aware that The Law Society of New South Wales will rely upon the contents of this report when issuing a practising certificate to the said applicant.
Dated this ............................................ day of ...................................................... 1984
(Signed): ........................................................................................................................
Full Name: .....................................................................................................................
(BLOCK LETTERS)
Registered under the Public Accountants Registration Act, 1945.
Firm Name: (if any) .......................................................................................................
Address:..........................................................................................................................
Phone No.: ......................................................................................................................
