Duty to deposit trust money in combined trust account
53 Duty to deposit trust money in combined trust account
A law practice must, within 14 days after 31 May, and within
14 days after 30 November, in each year, out of trust money held in the practice's general trust account, deposit the appropriate amount in the combined trust account.
The appropriate amount is the amount (if any) necessary to ensure that the following formula is satisfied:
Where—A1 is the amount held on the practice's behalf in the combined trust account
A2 is the lowest aggregate (determined by reference to the relevant ADI statements) of the amount held in the practice's general trust account and the amount (if any) simultaneously held in the combined trust account on the practice's behalf during the period of 6 months ending on 31 May or 30 November (as the case requires).
The combined trust account is a composite account consisting of separate accounts established by the Society at each approved
ADI.
If a law practice maintains 2 or more general trust accounts, those accounts will, for the purposes of this section, be taken to be a single trust account the balance of which is the aggregate of the respective balances of each of those trust accounts.
A law practice—
may withhold money from deposit under subsection (1) if—
the money is necessary to meet an immediate claim on the practice's general trust account or to establish or maintain a reasonable balance in the general trust account sufficient to meet claims reasonably expected in the ordinary course of legal practice in the near future; and
the practice has, on or before the day on which a deposit under subsection (1) is required to be made, given written notice to the Society accordingly; and
is not obliged to deposit money under subsection (1) in relation to a particular period of
6 months if the lowest aggregate referred to in subsection (2) was, during that period, less than
$10 000 (or some other sum fixed by regulation for the purposes of this subsection).
If a general trust account is maintained by a firm of legal practitioners or a firm of incorporated legal practices or a firm of legal practitioners and incorporated legal practices, the general trust account will, for the purposes of this section, be taken to be the general trust account of each member of the firm, and the members of the firm are each liable to perform the obligations imposed by this section, but the discharge by 1 member of the firm of the obligations under this section in relation to the general trust account will be taken as a discharge by all the members of the firm of their obligations in relation to that general trust account.
If the Council has reasonable cause to suspect that a law practice has not complied with the obligations of this section, it may, by notice in writing served on the practice, require the practice to attend before it and to produce evidence of the trust money received by the practice, the amount from time to time standing to the credit of the general trust account, and such other relevant matters as may be specified in the notice.
If a law practice establishes a general trust account and has, at the time of establishing the account, no other trust account, the balance of the general trust account during the first month after its establishment is, for the purposes of this section, to be ignored.
A law practice that fails to make the appropriate deposit by the last date for payment is liable to pay the Society, for the credit of the statutory interest account, interest on the outstanding amount at the prescribed rate for the period of the default but, if the appropriate deposit is made within 7 days after that date, no liability for interest arises under this subsection.
A law practice may withdraw money held on the practice's account in the combined trust account if, and only if, the withdrawal is necessary to meet an immediate claim on the practice's general trust account or to establish a reasonable balance in the general trust account sufficient to meet claims reasonably expected in the ordinary course of legal practice in the near future.
If a law practice withholds money from deposit under subsection (5)(a) or withdraws money under subsection (10), the external examiner for the law practice must, in the external examiner's report for the relevant year, express an opinion on whether the withholding or withdrawal was justified, and if the amount exceeds the amount that could, in the external examiner's opinion, be reasonably justified, on the amount of the excess (but before the external examiner includes a statement expressing such an opinion in the report, the external examiner must allow the practice a reasonable opportunity to comment on the proposed statement and may make any modification to the proposed statement that the external examiner considers justified in the light of the practice's comments).
If the withholding or withdrawal of money is not justified, or exceeds an amount that could be reasonably justified, the law practice is liable to pay to the Society, for the credit of the statutory interest account, interest at the prescribed rate on the amount withheld or withdrawn, or the amount of the excess, (as the case requires), from the date of the withholding or withdrawal until the amount on deposit in the combined trust account is restored to the level required by this section.
The Society may, for any proper reason, remit interest payable under subsection (9) or
wholly or in
part.
The Society—
may approve an ADI for the purposes of this section if satisfied that the ADI is prepared to pay a reasonable rate of interest on money deposited in the combined trust account; and
may revoke an approval previously given under this subsection.
If the Society revokes the approval of an ADI under subsection (14) the combined trust account, so far as it was kept at that ADI, must be transferred to an ADI that continues as an approved ADI.
In this section—
general trust account has the same meaning as in
Schedule
2.
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