COMMENTS ON THE (VICTORIAN) LEGAL PROFESSION PRACTICE ACT SECTION 104A - 104Y

1. The definitions in section 51 apply to expressions used in sections 104A - 104Y. See in particular the definitions of “defalcation” “fund” and “money”.

2. In the definition of “property” in section 104A, paragraph (a) is confined to money or property “entrusted to or received ….by” the solicitor etc., presumably before the appointment of the receiver. The meaning of “property” should extent to money or property which would (were it not for the appointment of the receiver) be receivable by the solicitor after the appointment. Paragraph (b) of course deals with money received by the receiver but is confined to money in the nature of income. This suggestion would make the definition of “property” more compatible with the provisions of section 104B which speak of “property with … is recoverable by the solicitor” etc.

3. The cases in which a receiver may be appointed are stated in section 104B paragraphs (a) and (b). The proposals of the Council are set out in the proposed new section 65A of the Legal Practitioners Act. The Commission thinks that paragraphs (d) and (e) of the proposed section 65A should be included but that paragraphs (a), (b) and (c) would tent to defeat the utility of the receivership provisions. The events stated in the last mentioned paragraphs are events which take time to accomplish and there may be appeals. It is of the essence of the utility of the receivership provisions that they may be brought into operation instantly on it appearing that something has gone wrong concerning the dealings by a solicitor with trust money or property. There should, in the view of the Commission, be something along the lines of the Victorian section 104B (a), aided as that paragraph is by the definition of defalcation in section 51 (1) of the Legal Profession Practice Act 1958. Consideration should be given to the grant to a solicitor of a right to compensation out of the fund for injury to goodwill or other loss in case it should appear that a receiver has been appointed without due cause. The right to compensation should be excluded in a case where the solicitor has, in a matter of substance, failed to comply with the provisions of the Act or regulations relating to trust accounts.

4. In section 104C (1), the Court or Judge should have a discretion to permit service less than 48 hours before the return of the summons.

5. As to section 104C (2), it is perhaps implicit in this subsection that the application must be heard in Court and not in chambers or elsewhere. This possible implication should be excluded.

6. As to the provisions of section 104F dealing with a stop notice for a trust bank account, the Commission takes the view that as between the receiver and the bank, the receiver should be able to give notice concerning any bank account of the solicitor. For this view there are two reasons: firstly, unless this is done, a solicitor might put trust money beyond the immediate reach of the receiver by the simple expedient of paying it into a bank account which is not identifiable by its title as a trust account; and, secondly, the bank ought not to be put to inquiry on the question whether any account in the name of the solicitor etc. is a “trust account”. The receiver should, however, be directed by the legislation not to give notice, unless on reasonable grounds he believes that there is in the bank account money received for or on behalf of any person by the solicitor (compare the Legal Practitioners Act, s.41 (1)).

7. The Commission is of the opinion that the provisions of section 104L (2) are too rigid and may do injustice, and that the receiver should only be protected as to dispositions made by him before receiving notice of a claim and that there should be some relief to persons entitled to claim but who do not claim by reason of accident or mistake.

8. As to the section 104L (3), the Commission thinks that, as between solicitor and the client, the solicitor should retain any lien that he may have whether or not the proper claims of all claimants other than a solicitors are fully satisfied. As between the solicitor and the receiver, however, the receiver should be entitled to possession of the documents or writings under lien. Section 104M enables prompt determination of the solicitor’s claim for costs.

9. Further on section 104L (3), the subsection seems to alter what would otherwise be the substantive rights of the parties: this may be illustrated by references to the law of bankruptcy. Suppose the solicitor has two clients, A and B, and has received $1,000 for A and $1,000 for B and for the sake of clarity of statement, let it be supposed that the solicitor has paid each sum of $1,000 to a separate trust bank account. The solicitor, let it be further supposed, has a right to withdraw $100 from A’s $1,000 for costs and has wrongfully withdrawn $200 out of B’s $1,000. Under section 104L (3), the $100 belonging to the solicitor out of A’s $1,000 would go towards restoration of the wrongful withdrawal from B’s $1,000 and would not go in the order of priorities which would apply if the solicitor were bankrupt (see the Bankruptcy Act 1966 ss. 108 - 144). A piece of State legislation purporting to have such an effect may be invalid, but, if valid, it is unjust.

10. Section 104P (1) requires the receiver to pay all surplus money and deliver all surplus property to the institute. By section 104P (3), if, after meeting claims and expenses, there remains a surplus of moneys paid by the receiver to the institute , the surplus has to be paid to the solicitor. In some cases, perhaps many cases, these provisions are unnecessarily circuitous. An example is the case where a solicitor dies and the only occasion for appointing a receiver is to enable a prompt distribution to the persons entitled to the money in the trust bank account of the deceased solicitor. The Commission thinks that the receiver should be required to pay money or deliver property to the institute only on, and to the extent of, a request by the institute, and that otherwise he should pay the money or deliver the property to the solicitor.

11. Although section 104P (1) requires the receiver to deliver property (other than money) to the institute, the section is silent about what the institute is to do with property so delivered. There will no doubt be a variety of cases making it impracticable to lay down antecedently in the statute rigid rules for the manner of dealing with such property. The Commission suggests a provisions whereby the institute would deal with such property in such manner as the Court may direct, including sale and disposal of thee proceeds of sale as if the proceeds were moneys paid by the receiver to the institute under section 104P (1).

12. Section 104P (3) speaks of “the expenses of the receivership”. This expression is defined in section 104R (1), but only for the purposes of section 104R (2). The definition is also referred to in section 104O (3). The expression ought to be defined for all the purposes of the receivership provisions. The definitions should include a reimbursement made under section 104T.

13. Section 104R (2) says that an amount paid out of the fund for the expenses of the receivership shall be recoverable by the institute from the solicitor. Although perhaps it is implicit, it should be expressed, that the right of recovery is to be only to the extent to which the amounts paid plus amounts paid to the claimants under section 104P (2) exceed the money received under section 104P (1).

14. Section 104R (3) enables the Court to determine the amount of the remuneration of the receiver, but only on application by the institute or the receiver. The solicitor should be entitled to have the remuneration reviewed by the Court. He should also be entitled to have the other expenses of the receivership reviewed by the Court.