TRUST ACCOUNTS

Evening Post, Volume CXII, Issue 81, 2 October 1931, Page 8

TRUST ACCOUNTS

"A BAD; PRACTICE"

APPEAL COURT'S RULING

"It i.cannpt. be doubted that the keeping Of but. one bank account, even though it may be designated 'Trust Account/ into which a practitioner's own moneys are paid as well as his trust tnoneys, and- upon which he draws for his own working and other, expenses, is bad in practice. Not only thajt—but we are clearly, of opinion that it' is also a breach, of section 47 of the Law Practitioners Act, 1908."

This ruling was given by: the Court of Appeal to-day in a reserved judgment delivered by the Chief Justice (Sir Michael Myers) in answer to the question Mr. A. Free put to the Court when appearing for the New Zealand Law Society on Tuesday.

,The judgment proceeded: "In our opinion 'trust account' means an account into which only trust moneys are paid, a 'general trust account' being an account into which are paid a practitioner's trust moneys generally, and a separate trust account being an account into which are paid the moneys belonging to a special client or money held on some particular trust. An account which mixes a practitioner's -own moneys with trust funds and upon which the practitioner operates on his own account is not in our opinion a 'trust account' as contemplated by section 47. ' Of course, this does not mean tnat moneys paid into the trust account may not include sumo to which the practitioner is entitled for costs owing to him by the • client and' disbursements paid by him out of his general account on behalf of the client. Indeed, in practice that is customary and necessary, and the solicitor is, of course, entitled, from time to time to draw cheques upon his trust account for- moneys that are properly payable 'to'him in this way; but, subject thereto, all moneys in the'trust account must be held exclusively for the respective j persons on whose behalf they have been received, and paid out only to such persons, or as they direct."