Legal Practitioners (Miscellaneous) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 12 September 2019.)

The Hon. K.J. MAHER (Leader of the Opposition) (15:41): I rise today to indicate that Labor supports the large majority of the bill but that it will also be supporting amendments that have been filed that give effect to the Law Foundation continuing to receive contributions and some guidance about where those contributions will go.

We have received advice that, if passed into law, section 5 of the bill will change the formula set out in section 57A(2) of the act, which governs the allocation of interest accruing on solicitor trust accounts. As the bill is currently constructed, the practical effect of the amendment will be to reduce the amount paid to the Law Foundation of South Australia from 10 per cent to only 5 per cent, with a further option to reduce it to zero at the Attorney-General's discretion. We understand that this would equate to a very substantial cut to the Law Foundation, which likely means therefore that things that the Law Foundation fund are in danger.

It means that organisations like JusticeNet, which receives funding through the Law Foundation, may no longer be there or only be there in a greatly reduced form. For many years now, JusticeNet has operated in South Australia, funding itself on the donations of other generous organisations and individuals. In opposition, the Liberal Party spoke in support of JusticeNet. The current Attorney-General—the member for Bragg, Vickie Chapman—talked at length about the good work that JusticeNet does to support those most in need.

However, once in government, those sentiments strangely disappeared, and the Liberal government have refused to provide funding to JusticeNet, whereas the Labor government had done so, from time to time. This latest attack on funding to the Law Foundation further places in jeopardy the work that JusticeNet does.

As I have said, we will be supporting amendments filed by the Hon. Mark Parnell and the Hon. Connie Bonaros that have the effect of not allowing funding to the Law Foundation to cease or reduce, to make sure that part of that funding goes to organisations like JusticeNet to continue their good work.

The Hon. M.C. PARNELL (15:43): I, too, rise to speak briefly on this bill. The only clause of the bill that we are engaging with is clause 5. Clause 5 relates to the issue of how moneys that derive from the interest on trust accounts are distributed.

Under the current act, the distribution of interest on solicitors' trust accounts goes exactly as follows: 50 per cent to the Legal Services Commission or one or more community legal centres in such shares and subject to such conditions as the Attorney-General directs; 40 per cent of the money must be paid to the Fidelity Fund; and 10 per cent of the money must be paid to a person nominated by the Attorney-General subject to such conditions as the Attorney-General directs.

That final 10 per cent has historically always gone to the Law Foundation. The Law Foundation, members would be familiar, advertises, I think, twice a year. You see their ads in The Advertiser inviting people to make application for funding for various legal projects such as the provision of legal services or community legal education. The way it is worded in the current act, my understanding is that that 10 per cent is paid to a person nominated by the Attorney-General.

My understanding is that the only reason the Law Foundation of South Australia Incorporated was not included in the legislation is that they were not in fact incorporated when this legislation went through. Now, they are a longstanding recognised organisation. It is chaired by a senior member of the judiciary. They are part of the legal establishment in South Australia. So there is now no reason not to name them as the recipient of that final 10 per cent of the funds that come from interest on solicitors' trust accounts.

The current law is also deficient, and the Hon. Kyam Maher alluded to this. There is also provision in the current act which basically allows the Attorney-General to vary or revoke the conditions on which money is paid from time to time but also to vary the shares in which the money is allocated. In other words, the legislation sets out 50 per cent, 40 per cent and 10 per cent, but the Attorney-General has the ability to change those amounts. That does not lead to any degree of certainty because organisations rely on being able to adequately budget for their futures. They know roughly how much money is going to be coming in each year, so the idea that the Attorney-General can unilaterally, because it says in the act, without the approval of the Law Society, vary those shares I think is unacceptable.

The amendments that the Greens are proposing, and which I understand the majority of the chamber will support, basically lock in that final 10 per cent and name the Law Foundation of South Australia Incorporated as the beneficiary. I should say that the bill before us proposes to reduce that share from 10 per cent down to 5 per cent. The Greens' amendment puts it back to 10 per cent, where it always has been. Also, we are proposing to delete the power of the Attorney-General to unilaterally change those percentages. I just think that is not appropriate. The parliament saw fit to put the percentages in in the first place; the parliament, if it sees fit, can change those percentages. It should not be up to the unilateral discretion of the Attorney-General of the day.

The Greens' amendment proposed that the money going to the Law Foundation would be spent on the things that it has historically spent money on, namely, provision of legal services, legal research, education. That brings us to the further amendment that has been filed by the Hon. Connie Bonaros, which seeks to ensure that, of that 10 per cent going to the Law Foundation, at least half will go to the provision of legal services for the community; in other words, to fund important community justice organisations such as JusticeNet and other community legal centres.

I think what this parliament is doing, if it does indeed pass the Greens' amendment and the SA-Best amendment to that amendment, is that we will have put in place a lot more certainty. The Legal Services Commission will know exactly how much they are getting, the Law Foundation will know what they are getting, and the Fidelity Fund will continue to get 40 per cent of the pool. Organisations such as JusticeNet, whilst not named in the legislation, have traditionally been supported by the Law Foundation, and it would be my hope that the Law Foundation would continue to see value in supporting a service such as that. The parliament is telling the Law Foundation that, 'We so value the provision of community legal services that we would like you to spend at least half of the money that you get on that.'

I think these are sensible amendments. They effectively give effect to the status quo as it exists on the ground, and we do that by changing the law, removing the loophole and providing that the community will continue to have access to legal services and that they will be funded in part by interest on solicitors' trust accounts.

The Hon. C. BONAROS (15:49): I, too, rise to speak in reference to the Legal Practitioners (Miscellaneous) Amendment Bill 2019, and to echo the sentiments just expressed by the Hon. Kyam Maher and the Hon. Mark Parnell. As we know, the bill amends the Legal Practitioners Act and makes various amendments that purportedly improve the efficiency and operation of the Legal Profession Conduct Commissioner, as well as certain amendments aimed to improve and preserve the ongoing viability of the Fidelity Fund.

In addition, the amendments filed by the government to clauses 8 and 9 of the bill were passed which, in turn, amended sections 80 and 82 of the act. Those amendments dealt specifically with an issue raised by the South Australian Bar Association where the bill has a retrospective effect that extends the time in which a charge made against the lawyer or legal practitioner could be laid before the Legal Practitioners Disciplinary Tribunal. The effect of the amendments allow the issues raised by the commissioner in relation to extensions of time and the time period to lay charges to be addressed in the future but preserve the operation of the current Legal Practitioners Act for those matters already underway, thereby giving certainty to those practitioners who are the subject of current complaints and charges.

For the record, I indicate that SA-Best is supportive of the majority of the bill but, like my honourable colleagues, we will be opposing clause 5 of the bill for reasons already outlined by the Hon. Kyam Maher and the Hon. Mark Parnell. If passed into law, clause 5 of this bill, as drafted, will change the formula set out at section 57A(2) of the act which governs the allocation of the interest occurring on solicitor trust accounts.

The practical effect of the amendment will be to reduce the amount paid to the Law Foundation of South Australia from 10 per cent of the funds to only 5 per cent, with an option, of course, as has already been highlighted, to reduce it to zero at the Attorney-General's discretion. We simply cannot allow this to proceed in this manner. Again, we say so on similar grounds as those expressed by members opposite.

As I understand it, 10 per cent of the funds payable under section 57A(2)(c) of the act have been paid to the Law Foundation of SA every year since its creation in 1983, almost 40 years ago. The reduction in funds currently allocated to the Law Foundation of SA would represent a cut of approximately $180,000 a year, or around 16 per cent of its revenue.

Of course, we know the Law Foundation of SA, through its grants, provides vital funding for the promotion and development of legal research, law reform, education and training of legal practitioners and their employees, education in law and the legal system for the broader community, including programs in schools and universities, and of course, vitally, assistance for legal services to the community.

Ripping $180,000 from the Law Foundation to prop up the Fidelity Fund, because that is what we will be doing—propping up the Fidelity Fund—will have negative flow-on effects for funding for JusticeNet, through the Law Foundation, with it likely to be cut or significantly reduced should clause 5 pass as drafted. As we know, the government recently cut recurrent funding to JusticeNet which already runs on the smell of an oily rag and has to rely on grants from the Law Foundation and fundraising to eke out its existence.

The Law Foundation supports a number of organisations, not just JusticeNet, but the money it does receive from the foundation is absolutely critical. The Law Foundation has granted just $20,000 to JusticeNet, a small but much-needed amount. My colleague the Hon. Frank Pangallo and I have long advocated for funding for JusticeNet, as have other members in this place, including the Hon. Mark Parnell and the Hon. Kyam Maher. Only in the last week of sitting, I spoke once again about JusticeNet in the context of the Appropriation Bill and the Marshall government's Ebenezer Scrooge budget that could not even provide a meagre $120,000 a year to fund their operating costs.

I will keep repeating myself until JusticeNet is adequately funded because they provide such a vital service. They are a vital organisation that provides free legal services for civil claims to the poorest in our community and they fill the chasm left by the Legal Services Commission, which itself is severely underfunded and not able to provide assistance in civil law disputes.

As a result of these cuts to their funding, JusticeNet was recently forced to make the very difficult decision to close its state courts self-representation service later this month as it diverts its self-raised funds into maintaining its core business. The self-representation service, which was run by volunteers from some of Adelaide's most prominent law firms, has operated for the past six years, providing free legal advice and task assistance to thousands of individuals facing serious civil law problems but who cannot afford a lawyer.

JusticeNet executive director, Tim Graham, estimated the service provided around $241,500 in annual savings to government through reduced court operating costs, not to mention the more than $400,000 that volunteer lawyers contributed pro bono, providing more than 1,200 hours of free legal help to the service in the last financial year. I have to say that, with respect to the Treasurer and the Attorney-General, they should do the maths on that one in terms of what it is not costing them and their bottom line, but they should do so while hanging their heads in shame.

I find it very disingenuous of the government and the Attorney to claim that the hours of free work offered by lawyers who also work at the Crown Solicitor’s Office can somehow be attributed to the government's contribution to JusticeNet. Our Attorney-General knows only too well that unrepresented litigants are a heavy burden on the legal system, and adequate public funding ought to be a key priority, if for nothing else than to increase court efficiency. But not for this government.

The Marshall Liberal government has prioritised that short-term cost cutting takes precedence over long-term investment in improvements to court efficiency. And, wow, hasn't the Attorney-General's view changed on this very issue now that her party is in government. In opposition she said, 'We have no intention of cutting them off,' and that is precisely what this government has done.

The passage of clause 5 of the bill, unamended, will only serve to further imperil JusticeNet. I, on behalf of SA-Best, am not prepared to do that. To that end, as the Hon. Mark Parnell has already explained, I note that he has an amendment filed to enshrine the percentage paid to the Law Foundation as it currently operates in practice. We, too, are supportive of that amendment.

In addition, I have filed an amendment which tweaks the Hon. Mark Parnell's amendment to ensure that, of the 10 per cent paid to the Law Foundation, at least 50 per cent of that money must be applied to the provision of legal services to the community. I trust that these amendments combined will see JusticeNet and other organisations that undertake the thankless but crucial task of providing free legal advice in difficult circumstances to our most vulnerable South Australians receive adequate funding—not just dribs and drabs but adequate funding—to continue their valuable work.

I should say that originally I had intended to move two amendments—one that would name JusticeNet in the bill itself. I intended to do that because I think it was reflective of how vital that service is to South Australia, but I accept that this is a better compromise and that it will also result in, potentially, more contributions going to other community legal services as well. To that end, I indicate our support for the bill in general, subject, of course, to the amendments and the changes that I have just outlined.

The Hon. R.I. LUCAS (Treasurer) (15:59): I thank the honourable members for their contribution to the second reading.

Bill read a second time.

Committee Stage

In committee.

Clauses 1 to 4 passed.

Clause 5.

The Hon. M.C. PARNELL: I move:

Amendment No 1 [Parnell–1]—

Page 3, lines 1 to 13—Delete clause 5 and substitute:

5—Amendment of section 57A—Payment of interest accruing on trust accounts

(1) Section 57A(2)—delete 'Subject to subsection (3), the' and substitute 'The'

(2) Section 57A(2)(c)—delete paragraph (c) and substitute:

(c) 10% of the money must be paid to the Law Foundation of South Australia Incorporated subject to such conditions as the Attorney-General directs.

(3) Section 57A(3)—delete 'and may, from time to time, with the approval of the Society, vary the portion of the money allocated for payment pursuant to each paragraph of that subsection'

(4) Section 57A(5)—delete subsection (5) and substitute:

(5) Money paid to the Law Foundation of South Australia Incorporated pursuant to subsection (2)(c) must be applied in, or in relation to, the provision of legal services to the community, or to a section of the community, or must be applied for the purposes of legal research and education.

The amendment seeks to delete clause 5 and substitute a new clause 5. I pretty much elaborated on the contents of my amendment in my second reading contribution. As I have said, it effectively maintains the status quo as it exists on the ground and that is with 10 per cent of the money going to the Law Foundation of South Australia and removing the ability of the minister to unilaterally alter the percentages that are set out in clause 5 of the bill. As I also said in my second reading contribution, I have discussed with the Hon. Connie Bonaros her amendment to my amendment and I am supportive of that. I will be supporting my amendment and the Hon. Connie Bonaros's amendment to my amendment.

The Hon. R.I. LUCAS: I am advised by the Attorney-General that the government will be opposing this particular amendment and subsequently the amendment to the amendment; however, I acknowledge from the second reading contributions that we are unlikely to be successful no matter how persuasive the Attorney's arguments may be in this particular chamber.

This amendment locks into the Legal Practitioners Act the current proportions of funding that are allocated to trust account interest under section 57A, but, not only that, it locks in the Law Foundation as the body that receives the 10 per cent portion of funding. This amendment is deeply flawed and would be hugely problematic in a practical sense if enacted. Firstly, it undoes the government's attempt to secure the future of the Fidelity Fund by retaining the third portion of funding at 10 per cent. The government's bill reduces this portion of the allocation from 10 per cent to 5 per cent, with that extra 5 per cent redirected to the Fidelity Fund and with the option of also directing the remaining 5 per cent to the fund as well.

As has been outlined in the second reading, the government's amendments as contained in the bill are aimed at ensuring the Fidelity Fund is financially viable into the future. The Attorney-General has already indicated in the other place just how quickly the level of the fund is being depleted and its vital importance in not only funding the regulation of the profession, including the Legal Profession Conduct Commissioner and disciplinary tribunal, but acting as a compensation fund for those who have suffered losses due to the misconduct of their legal practitioner. Without the measures being introduced by the government's bill, there is a risk that the fund will no longer be able to fulfil all its legislative purposes, which is why it is so important for additional trust account interest to be channelled into the fund.

Secondly, enshrining the name of an organisation, in this case the Law Foundation, into the act presents a number of difficulties. Generally, naming specific organisations in legislation should be avoided, in the government's view, as the organisation may change its name, merge with another organisation or change its focus or purpose, meaning it is no longer the right organisation to receive the particular funding, or even cease to exist.

If any one of these events should happen, there would be a need to come back to parliament to amend the act. Obviously, coming back to parliament with a bill to amend an act is a considerable undertaking, a much lengthier process than using regulations or a ministerial discretion, as per the current provision. It is simply not practical to name an organisation in the act in this way.

An amendment of this kind also means that funding cannot be directed to any other organisation that might be a worthy recipient of the trust account interest funding. The flexibility in the provisions is present to ensure that the money is directed to the most appropriate organisation, and introducing a rigid requirement is not conducive to ensuring that the best possible organisation receives those funds. It is for these reasons that the government is opposing the amendment being moved by the honourable member.

The Hon. C. BONAROS: I move:

Amendment No 1 [Bonaros–1]—

Amendment to Amendment No 1 [Parnell-1]—Delete inserted clause 5(4) and substitute:

(4) Section 57A(5)—delete subsection (5) and substitute:

(5) At least 50 per cent of the money paid to the Law Foundation of South Australia Incorporated pursuant to subsection (2)(c) must be applied in, or in relation to, the provision of legal services to the community.

The reasons for that amendment I think have already been highlighted, but essentially they seek to amend the Hon. Mark Parnell's amendment to provide that at least 50 per cent of the money paid into the Law Foundation of South Australia Incorporated, pursuant to section 2C, must be applied in or in relation to the provision of legal services to the community.

The Hon. R.I. LUCAS: I rise on behalf of the Attorney-General to offer further explanation as to why the government, and the Attorney in particular, are opposing the amendment to the amendment as it does raise other issues as well. I indicate that the government will oppose this amendment since we are also opposing the Hon. Mr Parnell's amendment, and this amendment is obviously contingent on that amendment. This amendment deletes clause 5(4) inserted by the Hon. Mr Parnell's amendment, and inserts what would be a new section 57A(5) into the Legal Practitioners Act.

This amendment provides that 50 per cent of the allocation to the Law Foundation must be applied in or in relation to the provision of legal services to the community. It is an interesting choice to amend the Hon. Mr Parnell's amendment in this way, as the Hon. Mr Parnell's amendment retained the existing wording of the Legal Practitioners Act, aside from naming the Law Foundation itself, and is a much broader set of requirements for the trust account interest than this amendment from the Hon. Ms Bonaros.

The requirements for the application of the trust account moneys makes sense when the legislation reads 'a person nominated by the Attorney-General'. Obviously, this ensures that the interest money only goes to appropriate organisations. However, the requirements make much less sense when the Law Foundation is specified in the legislation, as the activities of that organisation are already known.

The difficulty that arises as a result of this amendment from the Hon. Ms Bonaros is that the Law Foundation does not in fact directly provide legal services to the community. The Law Foundation is a body that solely provides grants to other organisations. This means that the first part of the honourable member's requirement is a practical impossibility.

Some of the activities of the Law Foundation could be described as being in relation to the provision of legal services to the community, and so fulfilling the second part of the requirement. But this amendment still has the effect of restricting the ways in which the trust account money is applied unnecessarily.

It is the government's view, of course, that the Law Foundation should not be named in the legislation at all, and that it will cause all sorts of practical issues, as I previously outlined on behalf of the Attorney. But we also say that this amendment makes the original amendment even more problematic: firstly, by trying to get the Law Foundation to do something it cannot do—provide legal services; secondly, by unnecessarily restricting the way in which it allocates grants; and, lastly, by leaving out any requirement for the funding to go towards legal research and education.

This clearly has the potential to short-change organisations that are not in the sphere of community legal services but are involved in legal education and research, both of which are also worthy causes. It also makes the job of the Law Foundation in awarding grants much more complicated, having to calculate that at least 50 per cent of the interest moneys are applied in relation to community legal services.

It is for these reasons that the government is opposing the amendment. As I indicated earlier, the government acknowledges that at least in this chamber it does not appear to have the numbers for its view to prevail and it will need to be an issue further explored by the Attorney-General when the bill is potentially returned in an amended form to the House of Assembly.

The Hon. M.C. PARNELL: I cannot let the minister's comments go without remarking that lawyers love to play with words. I think the words that the minister has tried to play around with do not actually hold any water. The fact that the Law Foundation itself does not hang its shingle and have someone with a suit directly giving legal services to the community is neither here nor there, and the amendments as drafted do not anticipate that that is how the money has to be spent.

The words of the amendment are that the Law Foundation has to ensure that the money must be applied in or in relation to the provision of legal services. A pretty simple legal interpretation is that if they then give that money to an organisation that does in fact do that on-the-ground work and does have a shingle hung and provide directly those services, then they are satisfying the act as it will be in that regard.

In relation to the complexity of handing out money and how difficult it would be to work out whether they have spent half on the provision of legal services to the community, what we have to remember is that many more organisations ask for money than are able to be provided with money, and it is entirely a matter for the Law Foundation. Someone might ask for $100,000 for a grandiose project; they might end up getting only $5,000 or $10,000.

The Law Foundation can quite simply determine into which category an applicant fits, whether it is the provision of legal services or education or whatever else, and it can allocate the money accordingly. I have every confidence that when I read their next annual report they will have applied the law diligently and accurately, and I do not think that any problems are likely to result. I think the minister's objections to the amendments do not in fact hold any water at all. I am more resolved than ever to see this bill amended in the way proposed by the Greens and by SA-Best.

The Hon. K.J. MAHER: I indicate for the benefit of the chamber that the Labor opposition will be supporting both the Hon. Mark Parnell's amendment and the Hon. Connie Bonaros's amendment to the amendment, and I agree with many of the comments that have been made: the arguments just do not hold water. They do not hold much common sense either, that just because the Law Foundation is going to keep doing what it always has been doing that that is some reason not to support it. It just defies logic.

I also want to place on record, as I have done before in this place, the appreciation of the excellent work the Law Foundation does. I appreciated being shown their headquarters at Adelaide University, which is kind enough to host the Law Foundation, and how they go about their work. I pay tribute to Mr Tim Graham at the Law Foundation, who works tirelessly to make—

The Hon. M.C. PARNELL: JusticeNet.

The Hon. K.J. MAHER: Sorry, not the Law Foundation—at JusticeNet, who works tirelessly to make sure that people who probably otherwise would not have proper representation in the legal system do have that representation. It is a curious thing that before the election JusticeNet is good and after the election JusticeNet is not worth funding. We do not agree with that, and we will be supporting the amendments as put forward.

The CHAIR: Does any honourable member have a further contribution on these amendments? Both amendments have been moved, so the first question I am going to put is that the amendment moved by the Hon. C. Bonaros to clause 5 as proposed to be inserted by the Hon. M.C. Parnell be agreed to. I think that will find favour with the committee. Then, if it does find favour, I will put a subsequent question that clause 5 stand as printed, and those who are supporting the amendments vote no to that. I think that question will not find favour. Then I will put a question that the new clause 5 as proposed to be inserted by the Hon. M.C. Parnell and as amended by the Hon. C. Bonaros be so inserted. My understanding of what honourable members have said is that that question will find favour with the committee.

The Hon. C. Bonaros's amendment to amendment carried; the Hon. M.C. Parnell's amendment as amended carried; clause as amended passed.

Remaining clauses (6 to 11), schedule and title passed.

Bill reported with amendment.

Third Reading

The Hon. R.I. LUCAS (Treasurer) (16:17): I move:

That this bill be now read a third time.

Bill read a third time and passed.