Wednesday, May 27, 2009

Disputed moneys - Is there a similar provision to section 12(4) of the Trust Accounts Act 1973 in the Legal Profession Act 2007?

There is no similar provision in the Legal Profession Act 2007 (LPA). Pursuant to section 249 of the LPA, a law practice must disburse trust money pursuant to a direction given by the person on whose behalf the trust money is held.

If there is a dispute as to the ownership of funds held in a trust account:
  1. If it is believed that one of the parties is entitled to the money, a letter should be sent to the other party advising that it is proposed to pay the money to the party believed to be entitled to the money, upon the expiry of a stipulated period (say - 1 month) and the other party should make an application to the Court if the other party wishes to prevent you from doing that.
  2. If there is doubt as to who is entitled to the money, both parties should be advised that the money will be retained in the trust account until both parties give consistent instructions (in writing) as to how the money is to be disbursed, or an Order is made by the Court how the money is to be disbursed.
  3. If there is no agreement (in writing) or a Court Order directing how the money is to be disbursed, and as at 1 April the money has been held in trust for more than 2 years, the law practice is required to lodge a return with the Public Trustee seeking a direction to pay the money to the Public Trustee pursuant to s713(2) of the LPA.In these circumstances, it is suggested that the law practice advise both parties that the law practice has requested the Public Trustee to take the money .

No comments:

Post a Comment