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Queensland Law Society Amendment
QUEENSLAND LAW SOCIETY
AMENDMENT BILL 1999
EXPLANATORY NOTES
GENERAL OUTLINE
Objectives of the Legislation
The Bill:
· empowers the Council of the Queensland Law Society to impose
reasonable levies to meet an insufficiency of assets in the Legal
Practitioners' Fidelity Guarantee Fund ("the Fund") and to
determine claims on the Fund on a reasonable basis;
· authorises the Minister to direct the Council in respect of claims
and allows for levies to be imposed by regulation;
· validates levies previously imposed by the Council and provides
for levies collected to be part of the Fund and not to have been
advanced by the Society; and
· excludes persons from claiming on the Fund for losses of money
placed with solicitors for investment purposes and not in
connection with their traditional legal work.
Reasons for the objectives and how they will be achieved
The Queensland Law Society Act 1952 ("the Act") provides for the Fund
to reimburse persons who suffer pecuniary loss through stealing or
fraudulent misappropriation of money or property entrusted to a solicitor.
The position of the Fund has deteriorated in recent years with shortfalls
being met by practitioner levies. The situation has been exacerbated by
claims totalling $6.5M in respect of a former Gold Coast solicitor. The
Council of the Queensland Law Society has discretion to pay claims in
excess of the statutory cap of $60,000 per practitioner. In recent history,
claims have been paid in full. The Council indicated its intention to impose
the cap for current claims.
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Queensland Law Society Amendment
The Government has advised the Society that it considers that it would be
reasonable for:
· the Council to exercise its discretion in accordance with its
previous practice to not impose the cap on claims of $60,000 per
practitioner;
· the claims in respect of investment loans to not be met to less than
the principal after allowing for amounts paid in respect of the
loans;
· other allowable claims to be paid in full unless there are other
special circumstances;
· the $2M previously collected as levies and held by the Society to
be immediately disbursed to the Fund and the current loan of levy
monies to be forgiven; and
· the Society to again levy practitioners over 1 or 2 years to meet
the current shortfall, with the claims to be paid by instalment, as
necessary.
The Society advised that legislation would be needed to pay claims on the
basis suggested by the Government.
The Bill provides for:
· the Council to impose reasonable levies on practitioners in respect
of the Fund;
· the Council to have regard to the levies that might be imposed
when considering whether the Fund has, or will have, sufficient
assets for the Council to exercise its discretion to pay more than
$60,000 per practitioner;
· the Council, in determining the amount to be applied in
reimbursing a loss of moneys placed with a practising practitioner
for investing in loans, to have regard to the principal invested and
to be able to deduct amounts received by the investor in respect of
the loan;
· the Minister to direct the Council in respect of claims; and
· levies to be imposed by regulation under a provision which will
expire 1 year after its commencement;
· the levies that have been imposed by the Council as payable into
the Society's general funds to enable it to give or advance an
amount to the Fund to be validated;
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Queensland Law Society Amendment
· the levy moneys (including those still retained in the general fund)
to be taken to be levies imposed under the fidelity fund levy
provision and not to have been paid to the general account; and
· an advance from the general fund arising out of or consequential
to the levy to be taken not to have been made.
Administrative cost to Government of implementation
None.
Fundamental legislative principles
The Bill raises one issue regarding consistency with the fundamental
legislative principles contained in section 4 of the Legislative Standards Act
1992. Section 4 requires that legislation have sufficient regard to rights and
liberties of individuals and the institution of Parliament.
The Bill retrospectively removes the Queensland Law Society's right to
the repayment of advances of approximately $2M to the Fund from its
general account and provides for the levy moneys held in the Society's
general funds to be part of the Fund.
This infringement of the fundamental legislative principles, is considered
to be reasonable having regard to the following matters:
· Under current legislation, the Council could not impose a levy on
practitioners for the purposes of the Fund of more than $20 per
annum or $100 during a practitioner's career. Therefore, the
practice was adopted by the Council of imposing general levies
and providing the moneys out of its general funds.
· Doubt has been expressed as to the validity of the levies.
· Had the Act provided, as the Bill now proposes, for the Council
to impose reasonable levies for the purposes of the Fund, a loan
would not have been needed.
· Practitioners were levied for the purpose of satisfying liabilities of
the Fund.
· The Society could have gifted the moneys to the Fund.
· Gifting the levy moneys would have been reasonable in light of
the moneys deducted from the Fund by the Society over the years
for the costs of the regulation of the profession.
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Queensland Law Society Amendment
Consultation
The Queensland Law Society has been consulted. There has been public
consultation through the release of the Green Paper on Legal Profession
Reform. The Department of the Premier and Cabinet has been consulted.
NOTES ON PROVISIONS
Part 1--Preliminary
Clause 1 sets out the short title of the Act.
Clause 2 states the Act to be amended as the Queensland Law Society Act
1952.
Clause 3 provides for the Minister to be able to require the Council to
have a written report about the Fund.
Clause 4 removes the monetary limits on levies that may be imposed by
the Council, allowing the Council to impose levies it considers reasonable.
Clause 5 provides for the Governor in Council to impose a levy for the
purposes of the Fund, with this provision expiring 1 year after its
commencement.
Clause 6 provides for the Council:
· in determining the amount to be applied in reimbursing a loss of
moneys placed with a practising practitioner for investing in
loans, to have regard only to the principal amount and to be able
to deduct any amounts received by the investor in respect of the
loan;
· to have regard to the levies that might be imposed when
considering whether the Fund has, or will have, sufficient assets
for the Council to exercise its discretion to pay more than $60,000
per practitioner; and
· to give notice to the Minister where a person's loss is not to be
reimbursed or reimbursed in full or if reimbursement will not be
paid within 2 years.
Clause 7 provides for the Minister to direct that a loss be reimbursed or
reimbursed to a greater extent or within a stated period.
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Queensland Law Society Amendment
Clause 8 excludes from reimbursement from the Fund amounts that a
practising practitioner receives or holds on trust and is instructed to invest,
unless the principal purpose for the amount being held on trust is a purpose
other than investing the amount.
Clause 9 and 10 insert new division headings.
Clause 11 provides for:
· the levies that have been imposed by the Council in the last five
years as payable into the Society's general funds to enable it to
give or advance an amount to the Fund to be validated;
· the levy moneys (including those still retained in the general fund)
to be taken to be levies imposed under the fidelity fund levy
provision and not to have been paid to the Society's general
funds; and
· an advance from the general fund arising out of or consequential
to the levy to be taken not to have been made.
© The State of Queensland 1999