TRUST MONEYS.

Star (Christchurch), Volume LXVI, Issue 20277, 11 April 1934, Page 5

TRUST MONEYS.

N.S.W. Takes Steps to Check Embezzlement. INDEMNITY FUND. (Special to the “ Star.”) SYDNEY, April 3. From time to time I have drawn attention to the frequent recurrenceof the embezzlement or misuse of trust, funds here by dishonest solicitors. Several cases involving large sums have been before our Courts recently, and a short time ago it was estimated that nearly *£500,000 had been lost in this way within the past six or eight years. Many suggestions have been made for the protection of clients against + his danger, and it is now announced that two steps are to be taken which should make it much more difficult for defaulting trustees to carry on their nefarious practices with impunity. Judges Frame Rule. In the first place the Judges of the Supreme Court, with a view to checking this serious epidemic of embezzlement, have framed a new rule which is intended to protect clients in such circumstances. It is laid down that when a solicitor acting for a client who is not a solicitor becomes aware, in the course of hi.-: practice, of facts which give rise in his mind to a reasonable suspicion that the trust funds of some other solicitor or certified conveyancer are not .‘n order, it shall be his duty to to make affidavit to this effect and to lodge his statement with the Prothonotary. That official may either bring the matter under the notice of the Courts at once, or forward the affidavit to the Law Institute. The council of that body, if it thinks that an inquiry should be made, shall call upon the solicitor in question to give an explanation and to submit his books for inspection. If the trust funds are not in ord-°r or if the solicitor evades or refuses to answer questions the institute must report back to the Prothonotary, wbJ

will then bring the whole matter before the Court. It is believed that this new rule will help materially to safeguard those people whose money is left in trust with lawyers. But further steps in the same direction are now to be taken by direct legislation. Proposed Legislation. The Minister of Justice has drafted a Bill, which is to be submitted to Parliament early in the coming session. It provides for a levy on all practising solicitors to establish a fund of approximately £IOO,OOO, which wdll be an insurance for those, members of the public who entrust their money to solicitors. The Bill also provides for “ surprise audits ” and for the setting up of a statutory committee to investigate charges of professional misconduct. There are stringent provisions for the keeping of proper accounts by solicitors ; and these, with the “ surprise audit,” are expected to have a strongly deterrent effect upon potential wrongdoers. It is believed that these measures—along with the guarantee fund for the indemnification of defrauded clients—will afford the public adequate protection.