EPR T3 A1 Email and events NAVQSW 2023_06_26
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Ethics and Professional Responsibility
Task 3, Activity 1
Email and events
INDEX
Email from Min Nguyen
......................................................................................................................
2
Events occurring during Min Nguyen’s absence
................................................................................
4
Appendix 1
.......................................................................................................................................
10
Appendix 2
.......................................................................................................................................
11
Appendix 3
.......................................................................................................................................
12
Appendix 4
.......................................................................................................................................
13
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Email from Min Nguyen
EMAIL
From:
Min Nguyen (Principal)
To:
(Student Lawyer)
CC:
Alex Green (Law practice bookkeeper)
Subject
:
Arrangements during my week leave
Date:
Today
I’ll be on leave in Indonesia next week. I’ll get a sim card when I arrive at the airport and let you and
Alex know what the number is. Telephone and internet access will be problematic for most of the
week as I’ll be in some remote parts of Lombok. Do what you can to help Alex and attend to any
queries that might arise. Asher Zheng the manager of our local College Bank branch where our trust
and office accounts are kept is very helpful if there is any problem. Alex has his phone number. I’ve
appointed you signatory on the office and trust accounts. Just in case you are ill or for any other
reason can’t operate the accounts I’ve also appointed my brother Lawrence as signatory to operate
both accounts. Some of the things that you will need to attend to while I’m away (there may be
others) are listed below.
Tina Hudson sale to Li
This matter is scheduled to settle on Friday of next week. Tina has authorised Nguyen Solicitors to
do anything necessary to complete the electronic conveyancing transaction. Tina’s property at
Seabreeze is unencumbered so when settlement takes place the whole of the proceeds of sale will
be paid into Tina’s personal bank account rather than into our trust account. Our costs agreement
with Tina provides that Tina will pay a fixed fee of $1,800 for our costs and disbursements of
completing the settlement. I have sent a bill in advance to Tina for $1,800 on account of our costs for
this matter but note the matter isn’t concluded until settlement has taken place.
Dino Demarco ats Police
(ledger/matter ref 13099)
Demarco’s sentencing following his guilty plea to the charge for supply of methamphetamine is about
two months away. I‘ve given him an indication as to the likely sentence which includes a term of
imprisonment and a substantial fine. He might want to discuss his situation with you but all legal work
has been completed. He still owes Karen Assi, the barrister who we briefed to appear for him at his
trial, $1,200. See if you can extract that from him if he comes in.
Sprowle v Davis Peaches Pty Limited
This is a claim by our clients Lou and Jill Sprowle for damages for false and misleading conduct
under the Australian Consumer Law. We agreed to act and to obtain an advice as to prospects of
success. Our clients agreed to pay $2000 for our costs and an estimated $3,500 for a barrister, Mark
Richards, to provide his advice. The advice has been received and a copy sent to our clients a few
days ago. We also sent our bill of costs as agreed. We have not yet received Mark Richards’
account. Our clients may well want to discuss the advice with you next week. If they do, please
check the trust and office ledgers and the file to establish if Mark Richards’ account has been
received. Lou and Jill are good clients and usually pay our bills immediately. If any amount is
outstanding please ask them to settle the account. If Mark Richards’ account has been received,
arrange for that to be paid.
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Sonal Singh v Taylor Merdec
This is a new matter involving a dispute between our client and her neighbour Taylor Merdec. One of
the issues in dispute is the location of the boundary between our client’s property and her neighbour.
We are awaiting receipt of a survey report from Ivana Measure. The report is due to be received on
Wednesday. In anticipation of its receipt I’ve made an appointment for Sonal to come in to discuss
the report with you on Wednesday afternoon. Ivana’s fees were agreed at $800.
Patel and Sandhu
–
proposed purchase of newsagency
As you know, Arun and Mala made offers to purchase the Seabreeze newsagency but were outbid
by someone else. We advised them on the contract and incorporated a company to be the
purchaser. We had money in trust and billed them and were fully paid. There remains a balance in
trust which they said we should retain as they were still looking for a small business to buy. Arun has
just let me know they’ve given up on the idea of buying a business. He will drop in sometime next
week to pick up what’s left in trust. Say hello for me.
Action required
Consider the events on the following pages that occur during Min Nguyen’s absence.
Answer the questions (referring to the relevant legislation) that arise from each of the events
in the space provided.
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Events occurring during Min Nguyen’s absence
Events
Monday
Tina Hudson attends the office. She advises she has moved out of her house and the keys have
been left with the agent on sale. All is ready for Friday’s settlement. She will electronically transfer
the amount of $1,800 drawn from her personal account with Westpac in the next day or so, on
account of our agreed costs and disbursements to complete the settlement.
Q1
(a)
Should Tina’s
EFT of $1,800 be deposited into the firm’s trust account or office
account?
(b)
In accordance with your answer to question 1(a), identify all the accounting steps
to be completed assuming a bookkeeping system is used.
A)
Section 147(1) and 147(2) of the UPL set out the general obligations of a law practice in relation to
trust account. Although Tina bas moved out of the house and the keys are with her agent,
settlement is not until Friday and therefore Tinas EFT transaction should be deposited into the trust
account as the matter has not come to conclusion yet. This Is in accordance with section 129(1) and
137 of the LPUL 2014.
B)
For EFT, the accounting records that are required by the LPU GR NSW (2015)
The law practice must keep the trust records—
(a) in a way that at all times discloses the true position in relation to trust money received for or on
behalf of any person; and
(c) in a way that enables the trust records to be conveniently and properly investigated or externally
examined; and
(d) for a period of 7 years after the last transaction entry in the trust record, or the finalisation of the
matter to which the trust record relates, whichever is the later.
1.
Records of funds cannot be kept UNTIL the receipt is verified with the bank. Notice or
confirmation must be in written or electronic form (r 36(1)(b))
2.
Complete a deposit slip and present it to the bank to be stamped and initialled to confirm the
funds are in the trust account (recommendation)
3.
issue a receipt, showing both the date the receipt is made out and, if different, the date on
which the funds were credited to the account
4.
enter the information in the cash book and post it to the individual ledger account recording
both the date the receipt was made out and, if different, the date on which the funds were
credited to the account.
5.
Complete
standardised “authority” form and retain as part of the trust records and stored in the
order in which transfers were effected: r 43(5).
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Tuesday
Lou Sprowle arranges to meet with you later that day. You recall that Lou was sent a bill for $2,000
two days ago via email. You obtain a printout of the trust and general account ledgers in the matter of
Sprowle v Davis Peaches Pty Limited as set out at Appendix 1.
Q2
In relation to the $2,000 bill:
(a)
What action should you take to pay the bill from trust?
(b)
Identify the bookkeeping steps you will take to pay the bill, assuming a manual bookkeeping
system is used.
2 a) In accordance with LPUL s 144(2)(b) and General Rules 2015 r 42, the following steps were
taken to
pay the firm’s bill from trust include:
Where the law practice has given the person a bill relating to the money (r 42(3)):
(3) The law practice may withdraw the trust money if the law practice has given the person a
bill relating to the money and referring to the proposed withdrawal, and—
(a) if the person does not, at the end of the period of 7 business days after the person was
given the bill, object to the amount specified in the bill, or
(b) if the person objects to the amount specified in the bill within the period of 7 business
days afte being given the bill but has not referred the matter to the designated local
regulatory authority or for costs assessment, and the period of 30 days after the later of the
following dates has expired—
(i) the date on which the person was given the bill,
(ii) the date on which the person received an itemised bill following a request made in
accordance with section 187 of the Uniform Law, or
(c) if the money otherwise becomes legally payable.
The firm must sent the person a bill mentioning the money and referring to the requested withdrawal, the
law, the firm may then remove funds from the trust. If the customer does not contest the bill within seven
business days after receiving it, the trust funds may be removed.
2 b) The only way to move money between the general trust account and office account of a law business is
through check or electronic funds transfer (EFT). In order for the transfer to be made , the following details
are needed:
Date of transfer
Who or what entity the payment is received from or paid to
The purpose
The receipt or cheque number
The amount that has been debited or credited
You also check the Sprowle v Davis Peaches Pty Limited file and find that the barrister, Mark
Richards, has sent his memo of fees in the sum of $3,500. It came in this morning and you recall
that Min asked you to arrange for it to be paid.
Q3
Assuming that Lou has paid the $2,000 bill of costs from the money held on trust, what
will you say to Lou in relation to the $3,500 payment now due for barrister’s fees?
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LPUL ss. 138 and 144 provide that a law practise may only disburse trust funds in line with the
client's requests and in accordance with the protocols
specified by the Uniform Rules.
The invoice for disbursement should be forwarded to the client as a matter of urgency, requesting
their immediate attention and instructions on using the remaining $500.00 held in trust to settle the
bill. Additionally, a request must be made for an additional $3,000 deposit into the trust account,
and an expected trust deposit receipt must be provided to the client.
Expenses are documented in the ledger as coming from a separate funding source. After
generating the cost-related journal entry, we can then update the client's office ledger account,
debiting the amount to indicate that the client is indebted to the legal firm for these expenses.
Wednesday
Dino Demarco attends on you unannounced. He says that he has sold his car as he will have no use
for it if he is sentenced to imprisonment. He received $15,000 in cash for the car. He wants the
money to be banked as soon as possible but he doesn’t want to be able to access or operate on the
account, as he knows he’ll only spend it. Dino wants only you, Min or someone else from the law
practice to be able to access the money.
Dino doesn’t want you to bank the money into the firm’s general trust account; rather, he wants you
to invest it for him in an interest-bearing account, pending his sentencing. After discussion, he gives
you the cash together with a written direction to deposit the money in an interest-bearing account
with Westpac for a 6-month term in the name of Nguyen Solicitors.
Dino also hands you $1,200 in cash and asks you to give the cash to Karen Assi with his
compliments and apologies for the delay in payment of her fees for appearing on his behalf at the
trial.
At
Appendix 2
are forms for an Nguyen Solicitors Law Practice Trust Account receipt (X2) and at
Appendix 3
is the form of a deposit slip of Nguyen Solicitors Law Practice Trust Account.
Q4
(a)
Identify the two types of money you received from Dino today and what you
should do with both types of money.
(b)
Identify the accounting steps and bookkeeping steps that are required to be made
and maintained regarding both types of money.
(c)
Are there any additional reporting obligations regarding the cash received from
Dino?
(d)
If any money is required to be deposited to ‘Nguyen Solicitors trust account’,
complete the trust account receipt in Appendix 2 and, in anticipation of banking
that money into the trust account, complete the deposit slip in Appendix 3.
[You
are not required to complete receipts in duplicate.]
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a)
Investment Monet, Cash in transit money
b)
The amounts must first be deposited into the trust account : s 143 (1) LPUL
c)
Must retain sufficient partilcaurs to identify transaction and purpose of which the money was
received for a period of 7 years: s 140 (2) LPUL
Thursday
Sonal Singh attends her appointment. Ivana Measure’s survey report has been received with her
invoice for $800. After discussion, Sonal instructs us to send a letter of demand to Taylor Merdec
requiring part of a fence between the two properties to be removed. Sonal hands you a cheque
drawn on her personal bank account in favour of Ivana Measure for the $800 due.
Q5
(a)
What should you do with the cheque received from Sonal?
(b)
What accounting steps, if any, are required to be completed?
Q5(a) The cheque should be sent/ transferred/ delivered to Ivana as soon as practicable, after
it is received: s 140(1) LPUL.
Q5(b)The practise will record and maintain brief details that are necessary to identify the
relevant transaction and any purpose for which the money was obtained
because it was
received in the form of a cheque: s 140(2) LPUL
Alex Green tells you that Arun Patel and Mala Sandhu have called and asked for the balance in their
account to be transferred to them this afternoon. There is a nil balance in the office account. A copy
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of the trust ledger in respect of the matter of their proposed purchase of the Seabreeze newsagency
and the electronic funds transfer awaiting your signature is at
Appendix 4
.
Q6
(a)
Assuming you are authorised to approve the payment of trust money, should you
sign the electronic funds transfer in its present form?
(b)
If the electronic funds transfer is signed and the transfer is completed, identify any
consequences.
Q6(a) No, balance of ledger is $2000.00 and not $2,455.00 so there wouldn’t be enough.
Q6(b) If the electronic funds transfer is signed and the transfer is completed, there will be the
consequence of deficiency in the trust account, which practitioners cannot be responsible
for: s 148 LPUL.
Also the balance in the office account is nil, there
would be no funds to
cover it: s154 LPUL
Assume your first practising certificate was issued to you three months ago. You therefore have a
restricted practising certificate as you are required to be supervised. Assume also that Min’s brother,
Lawrence, has been admitted but has never engaged in legal practice and Lawrence is not employed
in the law practice and has no other connection with it. Min has directed you and Lawrence to sign
any trust account cheques in Min’s absence.
Q7
(a)
Does the legislation entitle Min to direct you or Lawrence to sign any trust
account cheques in Min’s absence?
(b)
Is this appropriate?
Q7(a) Under s 7 of the General
Rules, a “supervised legal
practice in the case of an
Australian legal
practitioner who is an
employee of a law practice (or
who, though not an employee
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of the law
practice, is working under
supervision in a law practice)
includes supervision by an
employee of the
law practice who holds an
Australian practising certificate
authorising the holder to
supervise legal
practice by others.” Therefore,
Joel is able to direct and
supervise.
Under s 43(2)(b), Mitchell can
sign a cheque as he is “an
authorised Australian legal
practitioner who
holds an Australian practising
certificate authorising the
receipt of trust money”.
Q7(b) This is appropriate, as so
long as it is delegated by the
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authorised principal (S 43(2)(a)
General
Rules 2015
Q7(a) a “supervised legal practice in the case of an Australian legal
practitioner who is an
employee of a law practice (or who, though not an employee of the law
practice, is working
under supervision in a law practice) includes supervision by an employee of the law practice
who holds an Australian practising certificate authorising the holder to supervise legal
practice by others.” : s 7 of the General Rules, - In accordance with this, Min is able to direct
and supervise and Lawrence can sign a cheque -
s 43(2)(b), “an authorised Australian legal
practitioner who holds an Australian practising certificate authorising the receipt of trust
money”.
Q7(b) Must be delegated by the authorised principal: S 43(2)(a) General Rules 2015
Friday
Tina Hudson’s sale settled this morning. The balance sale proceeds that were paid into the PEXA
environment by the purchaser of Tina’s house was disbursed directly into Tina’s personal bank
account by PEXA in accordance with our direction. Previously, Tina provided written instructions
authorising the payment of our costs and disbursements from the money held in trust on her behalf
Q8
Even though Tina has authorised payment and indicated that she has transferred the
funds, before Tina’s trust money can be withdrawn from trust and transferred to the
office account to pay the bill of costs, what must you check in relation to the funds
deposited?
S42(4) general rules
= Tina must write an order to withdraw the money. It must be stored as a
permanent records.
Then either EFTPOS or cheque transfer to office account. The cheque must be cleared before oney
can be moved from trust account.
Q
9
(a)
Identify the type of trust money that represented the balance sale proceeds as a
result of Tina’s authority to Nguyen Solicitors to do anything necessary to complete
the e-conveyance on her behalf.
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(b
)
Identify the accounting steps required to be completed and maintained regarding the
balance sale proceeds paid into the electronic workspace.
A)
Power money
B)
The law practice must keep—(a)
a record of all dealings with the money to which the law
practice or associate is a party, and(b)
all supporting information in relation to the dealings,
in a manner that enables the dealings to be clearly understood. – s 55(2) general rules.
Late in the afternoon, Alex informs you that she has written up the trust account and discovered a
small debit balance in the ledger account for the matter of Lau v Cousteau Limited. She says this
personal injury matter settled recently and the proceeds of settlement received into trust. Included in
the payments to be made out of the settlement was a payment to Paul Rakoi, an expert witness in
the proceedings. His fees were $2,030.50 but by oversight the cheque drawn to him was for
$2,350.00. She says Min was in a huge hurry just before he left on leave and made a simple
mistake. She also says the error would not have happened if the law practice had trust and office
accounting software and it’s time the law practice moved on from using antiquated handwritten
accounts. Alex has checked with Asher Zheng and unfortunately the cheque has been presented and
paid.
Q1
0
(a)
What steps, if any, should you take to rectify the deficiency? Is there anything else
you should do?
(b
)
Do you need to report the deficiency?
(c)
If the law practice had trust and office accounting software, would that have made it
less likely for the trust account to be overdrawn? Give reasons.
a)
Transfer funds from office account
b)
It must be reported as soon as practical: s154 of LPUL
c)
Although It was human error, technology would have still not picked it up as it was not
regarding a calculations but instead an error on instructions that were received.
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Appendix 1
Appendix 1
Trust Account Ledger
ACCOUNT NAME:
Sprowle, Lou and Jill v Davis Peaches Pty Limited
ADDRESS:
6/6 Conclave Avenue, Seaside
MATTER:
Damages claim in Federal Court
DATE
20XX
RECEIVED FROM
OR PAID TO
PURPOSE
REC/CH
Q/
JNL NO.
DR
CR
DR/C
R
BAL
(Four
months ago)
Fr L. Sprowle
On a/c c/d – initial advice
R231
2,500
00
CR
2,500
00
Office Account Ledger
ACCOUNT NAME:
Sprowle, Lou and Jill v Davis Peaches Pty Limited
ADDRESS:
6/6 Conclave Avenue, Seaside
MATTER:
Damages claim in Federal Court
DATE
20XX
RECEIVED FROM
OR PAID TO
PURPOSE
REC/CH
Q/
JNL NO.
DR
CR
DR/C
R
BAL
(Two days
ago)
Costs rendered – advice
re prospects of success
CJ213
2,000
00
DR
2,000 00
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Appendix 2
Appendix 2
NGUYEN SOLICITORS
118201
PO Box 2
Your capital City
20
xx
ABN 62 751 281 333
Received from
DINO DEMARCO
the sum of
FIFTEEN THOUSAND DOLLARS
dollars and
ZERO
cent
s
Cash
For and on behalf of
DINO DEMARCO
:
13099
(client name)
(matter description)
For:
Ledger Account / Matter Reference #
GENERAL TRUST ACCOUNT
Received by:
on behalf of:
DINO DEMARCO
Nguyen Solicitors
Law Practice
Trust Account
NGUYEN SOLICITORS
118202
PO Box 2
Your capital City
20
xx
ABN 62 751 281 333
Received from
DINO DEMARCO
the sum of
ONE THOUSAND TWO HUNDRED
dollars and
ZERO
cents
$
Cheque/Cash
For and on behalf of
DINO DEMARCO
:
13099
(client name)
(matter description)
For:
BARRISTER DEED – KAREN ASSI
Ledger Account / Matter Reference #
GENERAL TRUST ACCOUNT
Received by:
on behalf of:
DINO DERMARCO
Nguyen Solicitors
Law Practice
Trust Account
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Appendix 3
Appendix 3
Trust Account Deposit Slip
COLLEGE BANK
20xx
THE SUM
OF
SIXTEEN THOUSAND TWO HUNDRED DOLLARS
NOTES
16,200.00
COIN
TELLER
COMM
NO. ITEMS
PAID IN BY
CHEQUES
as herein
(signature)
FOR
CREDIT
OF
Nguyen Solicitors Law Practice
TOTAL
$
16,200.0
0
Account No
123 456 789
TRUST ACCOUNT
Proceeds of Cheques etc. will not be available until cleared
PARTICULARS OF CHEQUES, ETC.
DRAWER
BANK
PLACE
AMOUNT
1.
2.
3.
4.
5.
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Appendix 4
Appendix 4
Trust Account Ledger
ACCOUNT NAME:
A Patel and M Sandhu purchase of Seabreeze newsagency
ADDRESS:
10 Amy Street Seabreeze
ACCOUNT NUMBER/
MATTER REFERENCE:
2022/XX
DATE
20XX
RECEIVED FROM
OR PAID TO
PURPOSE
REC/CHQ
/
JNL NO.
DR
CR
DR/CR
BAL
(Three
months ago)
Fr Patel & Sandhu
On a/c c/d
R231
5,000 00
CR
5,000 00
(Two months
ago)
To ASIC
Incorporation fees
C231
545
00
CR
4,455 00
Two months
ago)
to Nguyen Office account
For costs
C233
2,455
00
CR
2,000 00
NGUYEN SOLICITORS
Law Practice
Electronic Funds Transfer Request
Date:
(today)
Client Name:
A Patel and M Sandhu
Matter Number:
2022/XX
Matter Name:
A Patel and M Sandhu purchase of Seabreeze
newsagency
Bank details of the payee have
been verbally validated and
confirmed:
Confirmed
Amount to be transferred:
$2,455.00
Payee/Account Name:
A Patel and M Sandhu
BSB:
312 -876
Account Number:
3456787
Reason for Transfer
refund of balance of moneys held in trust on
completion of matter
TRANSFER AUTHORISED BY:
………………………………
PRINT NAME:
…………………………………………………
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