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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
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LEGAL PRACTITIONERS (MISCELLANEOUS) AMENDMENT BILL

Committee Stage

In committee.

(Continued from 10 April 2013.)

Clause 37.

Mrs REDMOND: I wanted to ask, in particular, firstly about subclause (5), which deletes the existing subsection (4) and substitutes instead a new subsection (5), which seems to place a higher priority on spending the money for purposes other than what I believe is its intended purpose. If I can go back and historically explain that the fidelity fund used to be called the guarantee fund, and it came about simply because when people put money into solicitors' trust accounts they were not paid interest on their money in the trust account, for very cogent reasons.

Basically, if you put money into a solicitor's trust account—you might put $100 in there for a couple of days for some reason, there might be money coming in to pay the final payment on a conveyance, or there might be money coming in on an estate in dribs and drabs and then being paid out to various people at various times—it was too difficult to contemplate and figure out who would get how much money, so no interest was paid on that money.

The solicitors had the accounts and they could not earn the interest on trust money either, nor was it reasonable for the banks to have a windfall from the money that was placed into solicitors' trust accounts, which was after all held in banks. So, the system was developed whereby roughly two-thirds of the money that was held in each solicitor's trust account went down into the combined trust account, where it was still held in trust, but that then earned interest, and that interest became the guarantee fund.

I do not see that there is much difference between the name 'guarantee fund' and 'fidelity fund'. Indeed, if anything, I would have thought that fidelity fund would connote something much more reliable and trustworthy even than a guarantee fund. Over a period of time, because not enough claims were made against that fund, because it was there to guarantee the funds that people had placed in trust with solicitors, that fund built up quite a lot and so it began to be used for other purposes, including legal practitioners' education, funding legal aid and all those things.

I want the minister to confirm that in fact what we now have is basically a reversal of the situation so that, 'Subject to subsection (5), money in the Fidelity Fund may be applied for any of the following purposes:' and that includes legal practitioners' education, expenses incurred by the board of examiners, expenses incurred by the tribunal or members of the tribunal, expenses incurred by the commissioner, and costs incurred by the society in appointing a legal practitioner to appear in proceedings in which a person seeks admission. All sorts of other things, listed down to paragraph (q), seem to take priority over the fundamental thing that this fund, in my view, should be set up for, and was set up for originally, that is, that people who have their money in a solicitor's trust account should be entitled to know that, whilst they are not getting interest on the money, that interest is forming a fund that will guarantee the safety of those funds.

Of course, we have the famous case in this state of Magarey Farlam, which was a very substantial, well-known and good firm. They had what they thought was a trusted financial officer for some 15 years, and for a lot of those years he was going along to the bank and doing all sorts of dodgy things—taking the trust cheques to the bank himself and, because he was so trusted, for instance, saying at the bank, 'Oh, they have put the wrong name on this,' and changing in front of the tellers the name and having it paid in fact to his own private benefit. It was not until he had absconded with some $4½ million of clients' trust funds that this was discovered.

I have a very firm view that the first and foremost purpose of the guarantee fund, as it was then called, the fidelity fund as it is now to be called, given, as I said, that it is money that has been placed into a solicitor's trust account—the word 'trust' is significant—and given that you are not going to earn interest on the money that is in that trust account, should be to guarantee (that is why it used to be called a guarantee fund) that if anything happens to that money there is a fund that is going to make it good, that you will get your restitution from.

My first question to the minister is: am I correct in my reading of subclause (5) that all these other things listed from A to Q in new subclause (4), as it is renumbered, will indeed take precedence over the payment to legitimately entitled people who have made the error of thinking that in putting their money into a solicitor's trust account their money will be safe?

The Hon. J.R. RAU: I think the minister has informed me of the member's question. I do not think there is any question that the fidelity fund's primary purpose is to meet any requirement for indemnities arising from poor behaviour on the part of lawyers. It is the fund of, in the government's view, last resort. That is its primary purpose. All we have provided for here is that there are subsidiary other particular purposes to which the fund might be put in the appropriate circumstances, and only to those additional purposes. The fund is not something there that is sort of at large and can be harvested for whatever purpose anyone wants. It is there for particular purposes, the primary purpose of which is to act as a fund of last resort in the event of an individual being defrauded, or whatever, by a lawyer and then not being able to recover the funds directly.

Mrs REDMOND: There seems to me to be an implicit contest between the two terms the minister has used: the primary purpose of the fund and it being a fund of last resort. I take it that the minister would agree—maybe my question should be: would the minister agree—that in the case of the Magarey Farlam litigants, where we have a clear example of people who have been ripped off by the malfeasance not of a practitioner in that case, but of an employee of a practitioner and $4.5 million is taken from the trust account and those people are left without recovery of that money for a considerable time. Many of them have to expend considerable amounts of money, which they do not have. Some people spent more than $100,000 trying to get their own money back from the trust account, notwithstanding the existence of the old guarantee fund.

What I want to clarify and have on the record is that, indeed, that is not going to improve under this system, because your intention is still that this will be a fund of last resort. The fund was depleted dramatically, not only by the eventual repayment of monies, but by the fact that more than double that amount—more than $4.5 million of the fund's money—was spent trying to resist the claimants. So, we doubled the cost to the guarantee fund. It went to more than $9 million ultimately. Can the minister clarify whether there will be: (a) any improvement in that situation under this new regime; and (b) whether or not the costs of $4.5 million expended by the guarantee fund in defeating people who were legitimately entitled to recover their money—all they had done was put money into a solicitor's trust account—whether those types of costs will still be coming out of this fund under these arrangements?

The Hon. J.R. RAU: I thank the member for her question. Can I supplement my last answer? It is probably important for us to have on the record that some of the monies going into this fund are not only the principal and the interest in the fund, but they are also the annual practising certificate fees which are coming in from legal practitioners. So, it is not just a matter of the principal and the interest. There is also an annual supplement that is coming in through the practising certificate payments.

Section 57 of the current act in fact articulates where all of those sources of monies might be coming from. As to the particular question that is being asked about Magarey Farlam, at the root of all of this is the fact that, whilst I respect the member for Heysen's sincerity about her point of view, and I also respect the absolute and total consistency of her point of view, I do not share her point of view. The difference is this: just as the nominal defendant in the case of a CTP claim is the defendant of last resort when you cannot find another defendant, and just as in very many other schemes you have what is ultimately a safety net sitting there in the event of all other systems failing, that is the purpose of the guarantee fund.

It is not intended to be a piggy bank anyone could put their hand into and then let the guarantee fund sort out whether it can recover the money in due course from whoever it is the tortfeasor might be. I have acknowledged, however, always and in this bill, that that should not mean that the person who is the person against whom the civil wrong has been committed should not be obliged to jump through ridiculous hoops endlessly in order to access the fund.

There are other funds of this type. For example, there is the land agent's fund, as I recall, which sits under either the real estate act or the Land Agents Act, one of those pieces of legislation, in the event that if you provide a deposit to a land agent to buy block of land and the land agent skips off with your money to Argentina or somewhere and you have lost your money, there is a fund there. Again, it is entirely reasonable and proper that there is a fund where, in the end, if you cannot recover the money from the person who has stolen it from you or from their company of which they are a servant or agent—or whatever the case might be—then yes, there is a place where you can go to recover those funds. But that is not the place you go first; it is not the first door you go to.

I understand something of the Magarey Farlam litigation and I do believe that one of the major difficulties in the Magarey Farlam case was that, from my point of view, it is arguable that these people were required to go beyond reasonable efforts to recover the moneys by themselves, and, to that extent, I have attempted to rectify that problem by changing the gateway provisions here so that we have the gateway provision being defined by a reference to a prudent self-funding litigant.

That is not a test unknown to the law. It is a test that has been applied by the Legal Services Commission forever and it is pretty simple: if you as a prudent self-funding litigant would pursue an individual for that money in the expectation of recovery, then that is exactly what you should do. If the chance of recovery is so remote, or the degree of difficulty involved in pursuing a person is so remote that no prudent self-funding litigant would, in effect, go to the casino and put all their money on 24 red, or whatever it is—red or black, I am not sure, but anyway I will say red—

Ms Chapman: Fifteen red.

The Hon. J.R. RAU: Fifteen red is it, rightio. Nobody is asking anybody to do that—certainly not me. I understand the member for Heysen has been concerned about the way these people had to battle the system, but I am confident that by changing the gateway provision there will be no repetition of that type of thing.

The other thing I should say is that it has been suggested to me—and I do not convey this information to the chamber on the basis that I verify this to be true, I just say that I have heard it said and I put it no higher than that—that it may have been that some of the decisions made by some of those litigants, for reasons disconnected with the litigation, did not help their cause either. But that is really not, ultimately, to the point. The main point is this: I believe that the adjustment of the gateway provision will mean that any person who has a reasonable expectation of recovery from a third party who has done them a civil wrong will be able to pursue that and recover.

To the extent that they are not able to do that, or to the extent that recovery is so difficult, whether by reason of the fact that the third party is impecunious, or by reason of the fact that the action is so difficult, or by reason that the person has disappeared—whatever the case might be—that person would have reasonable access to the fund. That was the intention of the change. That is what I think, in plain English, the change represents.

Mrs REDMOND: Would the minister concede that everyone would have been better off—the guaranteed fund as well as all the litigants—if, as soon as the defalcation in Magarey Farlam had been made public and calculated, the reinstatement of $4½ million to that trust fund occurred so that everyone's money was safe, and the guarantee fund simply then pursued whoever they might say?

One of the arguments that kept the thing going for so long—and I think Justice Debelle, as he then was, made comment about it in some of his judgements because there was an argument amongst various people as to whether you would have the tracing clients and the pooling clients—was whether you traced the individual amounts that had been stolen from individual trust account amounts or whether you looked at the trust fund as a whole and that took up a lot of time and a lot of legal expertise.

As I say, $4½ million was stolen and more than $4½ million was then spent in the arguments. So, the first question I have is: does the minister concede that indeed everyone, including the guarantee fund as it then was, would have been better off had they simply paid back the $4½ million in the first place and then, under subrogated rights, on behalf of everyone who was a potential claimant (because they could not have a conflict of interest within their own guarantee fund themselves) simply pursued whoever was available to pursue?

The Hon. J.R. RAU: There is a number of answers to that. The first one is that it is really impossible to step into the time tunnel and go back there and re-create events and predict exactly how they would have tumbled out. The second point is that if, with the benefit of hindsight, one were able to foresee that $4½ million in legal fees were expended and, if the question is simply, had one been able to foresee this would it have been cheaper just to pay out the thing in the first place and be done with it, I guess that is an arguable point.

But the honourable member then goes to say, 'Well, assume you've just paid out the $4½ million and it's pooled funds, and you've paid $4½ million to reinstate the pool, and then the rights are subrogated.' Therein lies the problem because there is nothing to suggest that, had that been the course of action that was adopted, the fund itself would not have had to expend about $4½ million in pursuing the subrogated rights. So, it is very possible that we would have had a zero sum gain even if the suggestion that has been made by the honourable member had been taken up.

So, no, I do not necessarily accept that the fund would ultimately have been any better off. It might have been that in these particular circumstances some of the claimants might have had to go through less waiting and concern, and that is not a trivial matter, obviously. It is something again which I emphasise we have tried to acknowledge and take into consideration, because the gateway provision has been changed in order to make it unlikely that people who are finding themselves in the same position as the litigants in the Magarey Farlam case would need to be put through the degree of litigation process before there was some ultimate resolution of their problem.

Mrs REDMOND: In relation to the gateway provision, which the minister says has been changed, can he inform the house who makes the decision as to what a reasonable self-funded litigant would do? It seems to me that if you are in your 70s or 80s and you have your entire life savings in a solicitor's trust account where you believe it is safe and suddenly it is gone, you are not really in a position, in my view, to pursue anyone. Certainly you would have no faith in going to any solicitor.

What I want to know is who makes the decision about what a reasonable self-funded litigant would do. And, if someone is determined by whoever it is that they are to be classified as a reasonable self-funded litigant, where does that leave that person in their seventies or eighties who has no money because it has all been stolen from a solicitor's trust account? Where does that leave them in terms of actually beginning, let alone completing, an action for the recovery of the funds that were held in a solicitor's trust account?

The Hon. J.R. RAU: A couple of points here: I guess what the member for Heysen is asking me is whether or not there is some definition in the legislation as to whether the reasonable self-funded litigant is an objective or subjective test. I do not think the legislation is that particular about that, but I do note that the Legal Practitioners Act in section 64 (1) provides:

The Society—

meaning the Law Society—

must satisfy any valid claim under this Part, to the extent determined by the Society or the Supreme Court, out of the guarantee fund.

So, my understanding of that provision is that that the claimant would at the initial port of call go to the Law Society and say, 'Look, here it is. You're the gatekeepers of the fund. I've suffered this loss. I, by reason of whatever circumstances, don't think it is reasonable that I should be required to pursue this matter myself,' and the society would be then in a position to consider and make a determination about that matter. By my reading of 64(1) I would assume that, in the event of the individual being dissatisfied with the determination of the society, there would be the opportunity to have that reviewed by the Supreme Court.

Mrs REDMOND: I understand that, but you are saying that it is the society who is the arbiter—the society who actually holds the fund—and the society is then the arbiter of who is going to get access to it on the basis of who is a reasonable self-funded litigant and who does not have to go through that provision.

The Hon. J.R. RAU: I am suggesting that, whether stated explicitly or not, the society finds itself in the de facto position of a trustee for a declared trust, being the holding of these funds for these particular purposes under the act, and they have a fiduciary duty to behave in a way that is entirely consistent with the terms of the trust. If they do not behave in a fashion then they are in breach of trust, and that would be an extremely serious matter.

Mrs REDMOND: Well, I am puzzled as to the use of the term 'whether it is stated specifically or not'. Does the act say who makes the decision about whether someone is a reasonable self-funded litigant? Who makes that decision and where does it say in the act who makes the decision?

The Hon. J.R. RAU: Section 64(1); it is the Law Society. They are the trustees, and if you do not like their outcome you go to the Supreme Court.

Ms CHAPMAN: I indicate firstly that in the previous debate I raised some questions about the current guarantee fund and brought to the attention of the Attorney that the annual report for 2010-11 had not been tabled, although 2011-12 had been tabled. I just confirm that the Attorney provided a copy of that to me last night, electronically. I think while we were in Tango at the Norwood Town Hall it was coming through. I thank him for that and note that he intends to remedy that error, in that it had not been tabled, and he will be attending to that, I assume, today. With that material the Attorney also provided some collated material, in particular the claims on this fund over the last 10 years.

Perhaps I will just indicate a couple of things. I am happy to table the whole document; it may assist anyone looking at this in due course. The net assets of the fund, as at 30 June 2012, were $26,594,367. In 2002-03, they were $18,826,732. Essentially, it has had an income over that period of the last 10 years which reflects, as has been pointed out in the debate, significant proceeds from interest on trust account funds but also a very significant contribution from the practising certificate fees of solicitors.

For the record, I referred to one of these figures before, but I think it is important in light of the committee questioning that the $4,829,443 received last year into the fund—that is, 2011-12—was comprised of, from the statutory interest account, $805,982; from the special interest account, $1,778,139; and from the investment account—bearing in mind that this fund, as at 30 June, had net assets of $26,594,367—$1,168,079. The legal practitioners fees were $873,488 and then there were various recoveries of funds of around about the $200,000 mark, which make up that income.

Of the expenses, I think it is important to note that the Legal Practitioners Conduct Board took $2,828,972. The professional standards general expenses was $877,740. Other major expenditure included the disciplinary proceedings expenditure of $141,589. Whilst, last year, there was actually a net deficit in the annual income/expenditure of just under $0.5 million, it is noted that there was a substantial revaluation of assets. There had been the sale of a particular asset during the year and I am assuming, without going into it today—I do not think that is necessary—that at least one particular investment was sold. It came back in as a capital payment and that has been reflected in these accounts.

I think the point is well made by the member for Heysen that the significant portion of the funds and the interest on the accumulated funds have their origin with clients' money that sits in trust accounts. It is fair to say, as the Attorney points out, that, on average, about a quarter of the funds comes from legal practitioners, in one way or the other, particularly from the share of their practising certificates, but I think it is important that we have that on the record.

My questions, however, relate to the claims because, whilst the Attorney indicates and confirms that the Law Society will have and continue to have the management of the assessment and the distribution of funds, the law also requires that nothing can be paid out by the Law Society without the Attorney-General's approval. Whilst the Attorney has not been the Attorney over the whole of the period that is reflected in this information, I note, as follows, that, in the 2002-03 year, $6,000 was paid out to claims; nothing in 2003-04; in 2004-05, $6,866; in 2005-06, $121,000; in 2006-07, $347,704; nothing in 2007-08; nothing in 2008-09; nothing in 2009-10; nothing in 2010-11; and then $3,000 in 2011-12. Firstly, Attorney, have you received any request for consent to distribution from this account which you have rejected in the time that you have been Attorney-General?

The Hon. J.R. RAU: I certainly do not recall having—hang on, let me break this down: given the fact that, under whatever section it is, this account can be applied to a great many different purposes and that your question was directed to any expenditure out of this fund rather than expenditure in respect of claims—

Ms Chapman: No, claims.

The Hon. J.R. RAU: You are narrowing it to claims?

Ms Chapman: I meant claims.

The Hon. J.R. RAU: Okay. If it is only claims, without checking, I cannot be absolutely certain, but I am 99 per cent certain that I have not.

Ms CHAPMAN: I refer now to the 2011-12 report from the Law Society which refers to the claim for $3,000 which was paid out in that financial year and was reported on in detail on page 4 of their annual report on the fund. Attorney, you would recall that this was an occasion where there was a relationship between a client and a practitioner (Mr Wharff) in 2002 that was terminated, where there was a dispute in respect of legal costs.

The legal practitioner was later declared bankrupt. Essentially, there was a negotiated settlement of $30,000 from the insurers, but exclusive of a deductable amount of $3,000. The aggrieved party (the former client) had made a claim on the guarantee fund, which is the subject of this discussion, and ultimately the Professional Standards Committee of the Law Society determined that the deductable amount of $3,000 was a valid claim against the fund.

I am not sure how much of this information is given to you before we all read it here in the parliament but, in any event, they determined that that was acceptable. Interestingly, the Solicitor-General had provided an opinion—we do not actually get to see his opinions, but they are quoted here, which is helpful—in which he stated that the payment should be made. He stated:

...in my view, the Deed makes clear that the compromise reached does not include the amount now the subject of the claim against the Guarantee Fund.

It then goes on to explain in the report that the payment would be made. We understand that legally you are obliged to sign off on this to enable the payment, and we are assuming by the material provided to us that that has occurred. Are you aware, Attorney—because this is not reported on—whether any applications have been made against the fund in the time that you have been Attorney-General which the Law Society's Professional Standards Committee has rejected?

The Hon. J.R. RAU: No, I am not aware of any such matter.

Ms CHAPMAN: In the absence of there being any information, to your knowledge, of claimants who have felt that they have been unfairly represented by the committee's determination, (that is, adversely), are you satisfied, Attorney, that the threshold gateway you are introducing here will be satisfactory? Is there any aspect in relation to the committee's current processing of these claims that you find has been inadequate, unacceptable or unreasonable in its dealings with the claims?

The Hon. J.R. RAU: In answer to that question, I have had no evidence or even intelligence to the effect that the Law Society is improperly dealing with these matters, and therefore I think it is not an unreasonable assumption to make that, because there has been no complaint to me and nothing has come to my attention, indeed there is no outstanding grievance by a member of the public with the Law Society in this particular context. However, if there were, I can assure the honourable member that members of the public routinely write to me about all manner of things that they are displeased about, and the member for Bragg might be fascinated by the range of displeasures that are out there.

Almost every single thing that goes on can in some quarters arouse displeasure. So, if somebody was grossly aggrieved by a refusal by the Law Society to cooperate with their request for indemnity out of the fund, I confidently anticipate that I would have heard about it, because the aggrieved person would no doubt consider that writing to me would be, if not the next port of call, certainly one of their ports of call. They might have even written to the honourable member or Mr Wade in another place, but none of these things have happened, so I have no reason to lack confidence in the society's capacity to properly deal with the matter.

Ms CHAPMAN: The Attorney can be assured that usually the level of upset, anger or extreme displeasure that constituents write about—often people who are languishing at Her Majesty's pleasure, of course—very often copies of those letters arrive on my desk (and I am sure the member for Heysen has had a good number of them in her time here in the parliament). It is of some comfort to know that there has not been any complaint in this area. I think I accept, from the government's viewpoint, that people are dealt with and continue to be dealt with fairly.

I ask in relation to the current financial year whether the Attorney is able to tell us whether any other funds have been paid out this financial year that he has approved (obviously he would not know if they had not been approved), and give a quick summary as to nature of the application and/or whether any complaints have been presented and rejected?

The Hon. J.R. RAU: I have no specific recollection of either of those things, but my very strong feeling is that there has been no claim (and I am very confident that is the case, although without doing a check I cannot be 100 per cent certain), and I am even more confident—to the point of almost absolute certainty (although I would not go quite that far without a check)—that there has been no issue where I have refused to sign off on anything.

Clause passed.

Clause 38.

Mrs REDMOND: Attorney, I have a question on clause 38(2), and I am really just looking for an explanation because I cannot find the relevant section. It states that:

(a) a claim can only be made in relation to a fiduciary or professional default by—

(i) an interstate legal practitioner; or

(ii) an incorporated legal practice that is not required to be insured...

in circumstances provided for by an agreement or arrangement made by the Society with the approval of the Attorney-General under section 95AA;

I assume there is to be some sort of standard arrangement or agreement entered into. Can the Attorney explain the intention of that section?

The Hon. J.R. RAU: This section is one to which, I must say, I have not given my total and undivided attention up until this moment.

Mrs Redmond: Others have.

The Hon. J.R. RAU: Others may have, and I am just looking at others presently to see whether their total and undivided attention has come up with anything. I suspect that it means that there will be some standard agreement or arrangement and that would be something that would be promulgated by the Attorney of the day. Can I get back to the honourable member about that, because we will be dealing with this matter beyond the luncheon adjournment, I expect?

Mrs REDMOND: The point I am trying to get at is that, if an interstate legal practitioner is practising in this state, what will be the basis of allowing or disallowing claims, and similarly if there is an incorporated legal practice, what is to be the basis of allowing or disallowing claims with respect to those practitioners?

The Hon. J.R. RAU: Very good question, member for Heysen. I will ask those who assist me to help me to recall what I had in mind when this particular provision was drafted.

Clause passed.

Clauses 39 and 40 passed.

Clause 41.

Mrs REDMOND: There are a couple of issues I want to raise here. Clause 41 deals with unsatisfactory professional conduct and professional misconduct. It does not seem to deal with whether someone is a fit and proper person. I just want to confirm first of all that my understanding is correct, that is, these provisions in clause 41 simply relate to behaviour as a legal practitioner. Can unsatisfactory professional misconduct ever occur when someone is simply behaving badly in areas beyond their legal practice or is it always going to relate to their practice of the law and be on a sliding scale of unsatisfactory professional conduct where they may have been too slow in responding to a client's request or something but they have not actually done something wrong or, at a higher level, actual professional misconduct where they have behaved so badly that there is some sort of reprimand?

The Hon. J.R. RAU: The answer to that question is that section 69A is the first limb, which is talking about your behaviour as in the Latin 'qua' legal practitioner—is that right? I do not know; I cannot remember—but as a legal practitioner. Section 69B is a more general catch-all provision and these are, the honourable member might be interested to know, what are now the national standard formulations for these type of things, which brings us into line with the other states. As I mentioned last time we were here, it is probably unfortunate that we were not in this position many years ago, back in 2007. Nevertheless, this picks up conduct which is completely disassociated from one's practice as a legal practitioner.

Mrs REDMOND: Thank you; that is just what I wanted to hear. Will it be possible for the new legal profession conduct commission (that is then set up under this clause in the new section 71) to look at Eugene McGee and under section 69B say, 'I am aware of this person's conduct and I find this person not to be a fit and proper person to be allowed to practise the law'?

The Hon. J.R. RAU: It is not possible for me to answer that question for a number of reasons but let's look at it from this point of view. The test is different—we have just established that under, as it would be, section 69—and it is probably going to fall to some question as to whether this is a substantive or procedural matter. I recall, if I am correct, that there is an old case of Maxwell v Murphy about that.

Mrs Redmond: Your advisers are looking nonplussed.

The Hon. J.R. RAU: They would be because it is a very old case and they are up to date. They would not know about this case because they are current and I am delving into the leather-bound volumes with dust on them. The point is that there is, as the honourable member knows, a presumption against a retrospective application of penalty. However, that starts to get more complex when one starts talking about statutes of limitation and various other things. The only answer I can give to the honourable member is that that is a matter which the commissioner, in due course, may well turn his or her mind to, and the commissioner may or may not determine that it is appropriate to proceed.

I am confident that the honourable member and/or other people will, in due course, be inviting the commissioner to consider that course of action and it will then be a matter of what the commissioner chooses to do about it. So, I am not able to give some undertaking or assurance; I think that would be misleading. It is a matter that will be determined in due course, once the commissioner is appointed.

Mrs REDMOND: I thank the Attorney for that. I was not asking for the Attorney's undertaking or assurance, but merely an indication as to whether it will be within the scope for the commissioner under these terms given, as the Attorney referred to, the statutory presumption against retrospectivity. I assume that that will not mean that every practitioner in the state is free to behave as badly as they want to until this legislation comes in and then, as long as they are fit and proper from that day forward, they cannot be touched.

The Hon. J.R. RAU: I can give the honourable member some comfort about that because there are transitional provisions that apply. Let us say, for example, there is a person who is out there presently who has failed to meet the current standard, and the new legislation comes into place. The transitional provisions would make it absolutely clear that that person would still be capable of being pursued under the new regime, and that would be something that the commissioner would do.

The difficulty about the proposition that the honourable member has raised is not the people who are in breach of the current laws and are either about to be prosecuted or perhaps even are yet to be considered for prosecution. Prosecution is the wrong word: I should say 'disciplinary action'. Those people are clearly going to be captured by the transitional provisions. The difficulty with the person who presently would only be captured by limb (b) of section 69 is that there is currently no analogue to limb (b). That is the difficulty. Anybody who is captured by the existing provisions will be swept into the new regime by reason of transitional provisions.

Mrs REDMOND: I have another question on another part of the legislation under this clause. I notice that the new section 71—if I can refer to the section, rather than the total clause—sets up the office of the new legal profession conduct commissioner, and subsection (3) provides that a person is only eligible for appointment if the person is a legal practitioner of at least seven years' standing. I can understand why you would want that.

What puzzled me was that, under the subsequent new section 74 relating to the acting commissioner, there is a provision that the minister may appoint a person who may be a Public Service employee to act as commissioner under terms and conditions according to the determination of the minister. I am curious why, if it is necessary for the commissioner to be a legal practitioner, you can then have an acting commissioner to whom the same provision does not apply.

The Hon. J.R. RAU: It is a fair enough question. I do not think it was ever intended that we would have an acting commissioner for this role other than as a caretaker. The provision, whilst it would probably in practice always involve the appointment of a legal practitioner, may for reasons of administrative convenience temporarily not involve such a person, but it was always my comprehension that the acting commissioner's role was not intended to be a permanent feature of the commission.

In the event, for example, of a sudden resignation or a death or some sort of hiatus between the termination of one commissioner and the appointment of another, it would be necessary for somebody to be able to discharge those functions. I did not see much merit in being so prescriptive as to put that amount of prescription into it. In practice, it would likely be an officer of the crown law department, but I do not see any particular hazard to anybody in that provision.

Mrs REDMOND: The reason for my question is a historical one and that is that once upon a time I would have absolutely accepted the Attorney's assurance in that regard. However, the Attorney may recall that we had a little problem here with the ombudsman's retirement. Eugene Biganovsky left the Office of the Ombudsman and the Ombudsman's Act specifically provided that there could be an appointment of an acting ombudsman, and Ken MacPherson was appointed as the acting ombudsman. Indeed, the legislation actually said that you could have someone appointed to be the acting ombudsman, and he was there for 18 months as the acting ombudsman.

I might also point out that the legislation specifically said that the ombudsman could not be over the age of 65 and at the time of his appointment, Ken MacPherson, you will recall, was already well and truly over the age of 65, because this government had attempted to pass in the other place legislation to allow Ken MacPherson to continue as the auditor-general of this state, not other auditors-general and not other people in other offices, but specifically just Ken MacPherson.

The government attempted to bring in legislation to allow just him to continue as the auditor-general of this state, notwithstanding that the act under which he was appointed specifically said he could not be over the age of 65 and so they attempted to bring in legislation to say, 'Oh, but we will make an exception for Ken MacPherson.' That got dropped and Ken MacPherson was forced to retire as the auditor-general and then, notwithstanding that the ombudsman legislation said he could not be appointed as the ombudsman because he was over the age of 65, he was appointed as the acting ombudsman and stayed in that position for 18 months.

So, the Attorney will appreciate my concern about whether or not you are going to have a situation where, notwithstanding that the legislation says that the legal professional conduct commissioner has to be a legal practitioner, the government is then likely to turn around and find some useful fop for them to appoint as a public servant who has no legal qualifications to be in the role of the legal professional conduct commission.

The Hon. J.R. RAU: I have got a couple of responses to that. The first one is that I stand by my statement about what my intention would be. I cannot speak for others, but I can speak for myself and I can assure the honourable member that what I said a moment ago is exactly what I would be doing.

Secondly, I do not actually have any big issue about this, because the honourable member is suggesting something which is of no trouble to me, in the sense that I do not have a problem with the person being a legal practitioner; indeed, that would be my intention. I must say, if one attributes mala fides to every minister in relation to every provision in every act on the basis of one or two events (which I know the honourable member has deep feelings about), one would be amending every act of parliament to the nth degree and would not be serving the public interest. I think that is about as far as I can take it.

Mrs REDMOND: I have one more question on this clause, but it is way over on page 37 in relation to investigations by the commissioner at the top of page 37—Investigations by the commissioner, section 77B. Basically, subsection (2) provides that the commissioner must make an investigation into the conduct of a legal practitioner or former legal practitioner if he has been directed to do so by the Attorney-General or the Law Society or a complaint has been received in relation to the conduct of the legal practitioner.

I just wonder whether the Attorney would be minded to consider including a provision or an amendment to suggest that we add something like the words, 'unless the commissioner considers the complaint to be vexatious or frivolous' or whatever. I have come across situations where you can get vexatious complainants who make complaints about practitioners which do require under the current legislation, as well as under this legislation, the investigation by the commissioner or the current equivalent—the conduct board—and they take up a lot of time and energy unnecessarily both by the current board or, in the new case, the commissioner, and the practitioner, and I can guarantee that as a sole practitioner it is a time consuming exercise.

The Hon. J.R. RAU: I am delighted to say that I am in furious agreement with the member for Heysen on this point; there are very vexatious people out there. There are some whose names I will not mention in this place, but I know the member for Heysen knows who I am talking about, and the member for Bragg would know as well.

These people have been litigating uphill and down dale in every single court and now, you will be pleased to know, because they are deemed to be vexatious in some places, they have moved their attention to none other than the conduct board, where they have a cascading series of complaints about solicitors—they went to the first solicitor, they did not get what they wanted and they complained about them; they got another solicitor to help them with the complaint, they complained about them, etc.

The good news is that, if you go to 77C, you will see that we had anticipated this problem. What we have said is that they have only to turn their mind to it and, once having turned their mind to it, if they come to the view that it does not have merit or it is frivolous or silly or whatever, they then throw it away—a very important power for the commissioner to have.

Ms CHAPMAN: My questions are on clause 41, as it covers the definitions of misconduct and unprofessional conduct, the appointment of the commissioner and essentially the powers of the commissioner. They are the three areas I indicate I will be asking about.

May I say, firstly, Attorney, in relation to the concept of having legal costs, in particular, the overcharging as part of the definition of unprofessional conduct, the opposition notes that, around Australia, various jurisdictions have adopted the excessive legal costs as being the sufficient threshold. But I do note that, under the national model (and we know the whole process has effectively gone a bit pear-shaped), there seems to still be a push for a lower threshold; I think it is charging more than 'a fair and reasonable amount for legal costs' in connection with the practice of law.

Obviously, the Attorney goes off to these meetings, and we want to monitor whether there is some validity in this and maybe it is something we will review in due course. Can I say that we are not moving to object to the definition that has been adopted—it is consistent with other jurisdictions—but is there still some push for this lower threshold and, if so, from where is this coming, that is, the basis of the model law?

The Hon. J.R. RAU: I am pleased that the opposition is indicating that there will not be an attempt to change this because, as you quite rightly say, it is part of a national model. I think that the answer to that question goes back into the mists of time when this national project was first hatched; it was a coalition of interest that gave rise to this so-called national idea.

As best as I can determine it, because it predates my time as Attorney (I came into it as it was really hitting its straps), it was a sort of witches' brew which had several ingredients. One was the commonwealth Attorney-General's Department wanting to create some enormous edifice, à la most commonwealth things. The second thing was the large law firms group wanting to make things really easy for themselves and to have everyone else pay for it. The third thing was a drive, particularly from Victoria, at the time to take what was certainly an 'out there' view about how far consumer protection laws should be incorporated into and be guiding principles of the management of legal practices.

To be fair, I have to say to the member for Bragg that there are some people out there in the universe who would like to have the whole practice of law in Australia managed by CHOICE Magazine and have no legal involvement at all. So there has been a bit of tension in the system for a while. I think those tensions—and this is only my impression—go back to a very early phase when it was actually being nutted out between the jurisdictions, and those have, I think wisely, come back to a more sensible level of national standards which I think we should be part of, and I am very happy that we are going to be part of them. I do not perceive there to be any active push currently in relation to the matter the member for Bragg has talked about.

Ms CHAPMAN: On the question of professional conduct oversight, as we know, part of the two-tiered system that we have currently, with a board and a tribunal, is to be replaced with the legal practitioner conduct commissioner and, under this section, the appointment provisions with their powers. What seems to be an ingredient—which the opposition remains concerned about; we are still consulting with others on this matter—is that whilst the government has been consistent with other jurisdictions, in this area, it seems to be very happy to be different and to effectively exclude lay contribution.

It is, of course, the prerogative of governments to cherrypick out the bits they like and reject the bits they do not like but, of course, it is for the parliament to make the final decision. So, we will give this matter some further consideration. It seems that other jurisdictions have been sufficiently revered and respected by this state adopting parts of their wise recommendations to, in this instance, as I say, reject it.

New South Wales, Victoria and Queensland allow for non-lawyers to be appointed as the commissioner and all have done so. Various other models could be looked at as to how there could be lay contribution but, as I say, there seems to be a wholesale rejection of this concept here. There have been other areas where this government—headed in the legal world by the predecessor, the member for Croydon, but nevertheless under this government—has recognised the importance of laypeople having a role, whether it is victims of crime or other sentencing aspects where a contribution could be made.

The opposition remains a little puzzled as to why there seems to be a wholesale rejection of the ordinary man, as they say, being represented in some way, if for no other reason than to support the concept of there being a structure of integrity to ensure that that independence is recognised. Can the Attorney perhaps enlighten us as to why that has been so utterly rejected?

The Hon. J.R. RAU: I can, and I have to say that I have some quite strong views about this. My views are informed by my experience, and I want to point to a couple of matters. First of all, no rational person would suggest that the Director of Public Prosecutions should have his or her prosecutorial discretion filtered or in some way seeking the approval of a layperson. That would be a transparent absurdity. There is some analogy between the prosecutorial discretion exercised by the Director of Public Prosecutions and the laying of a complaint, albeit in the context of this as a disciplinary complaint, against a legal practitioner. That is point number one.

Point number two is the current legal professional conduct board does have lay people on the board. I can tell the member for Bragg that of all of the frustrations I have had in the period I have had the privilege of having this job none or few compare with my frustration in dealing with the Legal Practitioners Conduct Board. If I had the time, I would go chapter and verse into all the difficulties but suffice it to say, something as simple and rudimentary as finding out why the board does anything is impossible.

To that simple question, 'Why; why did you do that?' they do not provide reasons. The member for Bragg might be interested to know that the reasons are held in the minds of the people on the board. Each one of them could be making their decision for any number of reasons—for example, 'I don't like that person's haircut', 'That person's name is similar to a chap I went to school with who I didn't like'. I have no idea and nor does anybody else.

So, the idea that we have somebody who has legal training and has some rigour and is going to be capable of providing a definitive answer to the question, 'Why have you done this?' or 'Why have you not done this?', is very important for transparency because I can assure the member for Bragg the present arrangements are so opaque that even the attorney-general of the day cannot by repeatedly asking questions in writing get any answers of any benefit at all.

I made a decision some time ago, because of my personal experience in dealing with this organisation, that it was absolutely critical for the proper disciplinary arrangements to be actually applied to legal practitioners and applied in a way that was effective and transparent that there had to be a removal of this present horribly encumbered system. It is an experiment which was well meant but unfortunately has miserably failed, and the sooner it is committed to history the better.

The third point I would like to make is—and the members for Bragg and Heysen know this better than most—since when have legal practitioners, and in particular the Supreme Court that sits on top of this, been old softies when it comes to one of their own going off the rails? Since when?

Mrs Redmond: Eugene McGee.

The Hon. J.R. RAU: What a cheap, inappropriate and inaccurate remark! The member for Bragg would be aware that during our time as practitioners there have been some of our brethren who have slipped off the path of righteousness and some of those people have wound up being before the court. I remember when chief justice King had a few of our colleagues come before the court about what should happen to them, about whether they should be able to practise and so forth. I do not want to mention any names, because that is not helpful, but the member for Bragg knows what I am talking about.

Some of those people are still not able to practise because of offences they committed, whether criminal or otherwise, years and years ago, because the legal profession is actually quite unforgiving, and quite properly so, of members of the legal profession who transgress important rules about appropriate conduct, because every one of those people who is allowed to continue is a person who makes it more difficult for the others to continue properly.

Never let it be said that the courts in particular have been old softies on lawyers. They are not. It is for those reasons—and more importantly by reason of the fact that this has been a subject of extensive consultation with the Law Society, which has endorsed this proposal holus bolus. When I say that, I mean the whole bill. I am very strongly of the view that this is the way to go, because it will mean we will have a professional person doing the job. The person will be able to provide reasons, which will actually add to the transparency of the process.

There is absolutely no evidence to suggest that having laypeople involved in this is anything other than putting parsley around the main course. In the case of the present arrangements—I cannot emphasise this enough—it means it is totally impossible for the attorney-general of the day, whoever that might be, to find out why that board has done anything. It is totally impossible.

To hark back to the matter the member for Heysen has been raising repeatedly (and, indeed, I think the member for Bragg has done it several times as well), that is, the question of a certain practitioner involved in a motor vehicle accident and a death some years ago, when the Legal Practitioners Conduct Board made its decision about that matter, I wrote to them and said, 'You've made a decision. Why?' I effectively got a letter back which said, 'You can read. Work it out for yourself.' I wrote back and said, 'That's actually not very helpful. Can I have a bit more information?'

In the end, after this ping pong of correspondence, I wound up having to say to them, 'Righto, just give me everything you've got,' and I then gave that to the Crown Solicitor and asked for advice from that quarter. I have had it up to the eyeballs with dealing with that particular organisation, and whoever wants to be attorney-general would not, in their worst nightmare, want to have to continue to deal with this outfit.

Mrs REDMOND: I fail to see in the Attorney's response on that matter why it is the layperson who is tarred with the brush of the problem. I just want to comment on a couple of things that the Attorney said. First, in relation to the idea of a layperson directing the DPP in the discretion, can I remind the Attorney that someone who never practised law in this state did indeed direct the DPP to appeal in a decision and that became the subject of a matter that went to the Full Court. I would say, first, that that is not necessarily a good argument.

Secondly, the Attorney referred to how hard we are on ourselves. Strangely enough, I had a late-night phone call last night from a former practitioner who informed me that he had occasion to deal with someone who was at the time a practitioner of the court who was found guilty of some offence and fined $50,000, subsequently committed another offence and was fined another $25,000, so became an adviser to this government and has now been put on the magistracy bench.

Ms CHAPMAN: I thank the Attorney for indicating why he should reject a layperson as commissioner, which is, I think, in essence, that unless they are legally trained and have the obligation to publish reasons, for the reasons you have indicated as necessary for any review of the matter by you as Attorney or any other superior board or court, there should be, from your perspective, no possibility of them being commissioners. It does not seem to explain why they should be removed altogether, given that we have a number of disciplinary procedures for other professions which allow for consumers/laypersons to be involved. In any event, that is a matter that we will review over the next while as we complete this matter.

I turn to the investigative powers of the commissioner. This, as the Attorney knows, provides for the removal of the privilege against self-incrimination and is a matter of very significant principle from our side of politics, one of which we remain concerned about. Unfortunately, we have to repeatedly deal with bills in which the government is insistent upon pressing that direction.

The Hon. J.R. RAU: Can you tell me where that is?

Ms CHAPMAN: Schedule 4 of the bill. I have moved to that because it is referred to in this section, Mr Chairman.

The CHAIR: That is in clause 56, isn't it, schedule 4?

Ms CHAPMAN: I have schedule 4 on page 127.

The Hon. J.R. RAU: Where does it say that?

Ms CHAPMAN: It states, 'A failure by a legal practitioner to comply with the requirement is capable of constituting unsatisfactory professional conduct or professional misconduct.' I am reading from subclause (6). This is in relation to the provisions relating to requirements.

The Hon. J.R. RAU: I think it is in clause 5.

Ms CHAPMAN: 'The investigator imposing,' yes, under subclause (4).

The Hon. J.R. RAU: Clause 5(3).

Ms CHAPMAN: That is the fairly standard approach of the government. I do not want to get into a big battle about this, but it seems that, again, there is removal of privilege against self-incrimination. I indicate that is a matter of concern for our side of politics. I wonder at the origin of this. Is it because it is the usual practice of the government, or is there some other basis where this is necessary in this legislation?

The Hon. J.R. RAU: I am advised that it is already in the act anyway and that this is just to do with the investigative powers of the commissioner, so we are not adding any value. So that it is very clear to other members who might not be aware of this, if you are talking about a police officer, police officers under the Police Act and under general orders are required to answer questions even if they incriminate themselves, and failure to answer them is a disciplinary offence in and of itself. The saving thing for the police officer is that the answers given to the commissioner might only be used in respect of a disciplinary matter and not for other proceedings, which is what this says.

Clause passed.

Clauses 42 to 55 passed.

Clause 56.

Ms CHAPMAN: My question is: would compliance with the cost disclosure requirements under clause 56, schedule 3, part 3 prevent a practitioner from being able to be found liable for excessive charging under clause 41, which is the section 70 clause that we referred to before?

The Hon. J.R. RAU: What page is that?

Ms CHAPMAN: I will just find it again for you. Costs disclosure—103. Is that it?

The Hon. J.R. RAU: Yes. What is the question again?

Ms CHAPMAN: The question is: would the compliance with the cost disclosure requirements under this clause prevent a practitioner from being able to be found liable for excessive charging under clause 41, which is the section 70 provision?

The Hon. J.R. RAU: I think there is a distinction between disclosure and overcharging. If one has negotiated a costs agreement with the law practice, received a bill from the law practice upon request and so forth, and there is compliance with all of this, then there is compliance with the disclosure rules, but the disclosure rules and the overcharging proposition are not the same.

Ms CHAPMAN: Can you just make that clear: that would not exclude potential excessive charging or unprofessional conduct?

The Hon. J.R. RAU: No, it would not. Mere disclosure does not render something okay if it is not.

Mrs REDMOND: On page 62—I will use the page reference for ease of locating it—at the top of the page is section 2 of schedule 1: Prohibition of non-legal services and businesses. My understanding is that, notwithstanding you are now going to be able to have an incorporated practice, rather than a partnership, it is to be strictly legal services that are provided. They cannot have, for instance, a combined legal and accounting firm.

Equally, I know that it has not been the practice in this state, but in other states lawyers have commonly entered into the provision of mortgage and finance broking on behalf of clients, and matched up clients. Some clients have money that they want to put into businesses and so on. I just want to confirm that those things, under this now national scheme, will indeed be outlawed by that provision.

The Hon. J.R. RAU: My reading of it is that an incorporated legal practice may not provide any service or conduct any business that does not involve engaging in legal practice, so I think the answer to the honourable member's question is that that is quite correct.

The CHAIR: Any more questions on clause 56?

Mrs REDMOND: Yes, still on that. Clause 56 goes for a long time, I am afraid.

The Hon. J.R. RAU: Can I point it out, to make it even clearer, that section 95BA of the existing act provides:

On and from the commencement of this section, mortgage financing is not to be regarded as part of the practice of the profession of the law.

That is in the current act.

Mrs REDMOND: I am pleased to know from the Attorney's answer that in fact the rest of the states will be coming along to our view of the world, because it has not been the common practice here, but it certainly has been in other states. Can I turn to page 65, at the very bottom of that page: Incorporated legal practice without legal practitioner director. Whilst that seems quite straightforward, there is a difference between having someone who is a director and someone who is actually present running the practice.

Can the Attorney confirm whether in fact it will nevertheless be possible for an incorporated legal practice to exist with a director who is technically a director but who does not actually attend the office? Is it going to be possible to have someone who can be technically a director and therefore not breach the provisions of that clause but nevertheless not be present and therefore have a practice that is running without actually having a lawyer around?

The Hon. J.R. RAU: The answer to that is yes. The incorporated practice, provided it is compliant with having one legal practitioner director at least, could have, for example, an office manager who is the day-to-day manager of things in the office, but bear in mind that the actual delivery of legal services by that incorporated practice would still have to be performed by legal practitioners. So, if you went into this incorporated practice, it would not be the case that you would be seen by a clerk or an office manager in connection with your legal problem. You would have to be seen by a lawyer, because a person who receives reward for offering legal advice must be a person who holds a current practising certificate.

The public would be insulated in the sense that the person to whom they would be speaking would be a lawyer and the services would be performed, as always, by a lawyer, but if the honourable member's question is about whether the day-to-day management of the practice at that sort of higher level would necessarily be done by a person with a practising certificate, the answer to that is not necessarily. There would simply be, on the board of that body, a legal practitioner.

I have to emphasise, and I did mention it before, that this bill represents a compromise between various views around the place. This is not something I personally would have wished to insert into the legislation, this whole business about incorporated legal practices. This is something the Law Society has been on about for a very long time. Whilst I was not prepared to go as far as perhaps in their ideal world I might have gone, I have decided that, in the interests of listening to them and providing them with the opportunity of becoming more involved in a national profession, I would accept some degree of this incorporated legal practice process, which has been a phenomenon in other states for some years.

As I have said to them, and I think I said in the parliament before, I wonder about their wisdom in wishing this upon themselves. I think I even did suggest at one stage that they might be like the turkey that cannot wait for Christmas, but it is a matter for them. They think it is a good idea. I have been up and down with them and, as I said, this bill represents a series of well-discussed, lengthily discussed, positions, which in the end represent a consensus position rather than just my view or just their view.

Mrs REDMOND: Thank you, and I take on board the Attorney's comments. I have more than once expressed in this place my concern about what they are wishing for, but like the Attorney, I accept that the Law Society says they want this. I have no fundamental objection to the idea that we move from the somewhat antiquated idea that we all have to be in these huge partnerships to a modern construct of an incorporated legal practice, but I will just go back to the original part of the Attorney's answer, which was really where my question was directed.

The Attorney would be aware that, in many of the larger firms, it is commonplace for people to perhaps, in the first instance, see a partner of a firm, maybe even a senior associate, and then a lot of the work is actually done by the fifth lackey down the line and further down and further down, so that there is the potential for much of the work to be done face to face with someone other than a lawyer. So, commonly, in some of the larger firms, at one point they were employing, for instance, investigators who would go out and take statements from witnesses, they would employ legal clerks—all sorts of people.

My concern is to address the possibility, and I believe it is a real possibility, that we can end up with a Woolworths law, with a director in New South Wales and all these other people who are not in fact legal practitioners, who are nevertheless able to provide services, provided there is someone at the top of the heap who says, 'Yes, I am the person who is responsible for and overseeing this work.' I want to know what the provisions are in this legislation that will prevent that, somewhat extreme, example from occurring.

The Hon. J.R. RAU: We are not disturbing the law about the fact that legal services can only be provided by a legally qualified legal practitioner. One of the things that does come across my desk from time to time—and it is usually disbarred practitioners, or sometimes it can be people who have got that sort of Walter Mitty thing where they think they are a doctor or a lawyer or something and they are out there sort of pretending to be something. Now, they come to people's attention very quickly—

Mrs Redmond: But sometimes not.

The Hon. J.R. RAU: I can assure you that people are pretty vigilant about pursuing those people, and I can promise you nothing that we are doing here is intended to water that down in any fashion. If you have people who are non lawyers for reward performing what amount to legal services, I do not care who is running it—Woolworths, Coles or somebody down the street—they are breaching the Legal Practitioners Act and they should be prosecuted.

Mrs REDMOND: Can I remind the Attorney that not so very long ago, I am sure since I have been in here, there was a case—not in this state—of a young woman who not only held herself out but set up her practice as a solicitor and did not get found out until she in fact decided to move to the bar, and that was the trigger that led to her downfall. But she had actually been in practice for a number of years as a solicitor, because, quite frankly, you are not required—well, you have to have your name and theoretically should have your practising certificate. But people do not, as they would look for a builder's licence, for instance, go and check on practitioners.

I do still have this concern, and I just want to put it on the record, that under the incorporated practitioners' system, it will be more than possible for legal services to be provided with someone interstate overseeing the conduct of a legal practice in this state and it concerns me. On page 67 at the very bottom of the page is a provision relating to conflicts of interest. It states:

...the conduct of a legal practitioner who is a legal practitioner director of an incorporated legal practice; or...an employee of an incorporated legal practice, the interests of the incorporated legal practice or any related body corporate are also taken to be those of the practitioner.

My question is—I hope a simple one—is the intention of that clause to prohibit the creation of Chinese walls within legal practices, whether they be incorporated or not, because there have been in this state (that I am aware of) cases where practitioners within different parts of the same large firm have said, 'No, we don't have a conflict of interest, we can act for this client and that client'—even though they may obviously have a conflict of interest. They have said, 'Because we have established Chinese walls within our own organisation, we are both able to act for these different practitioners.' Is that the intention, and will it be banned?

The Hon. J.R. RAU: That is certainly the way I read it. There is a deemed knowledge, which is a corporate knowledge, and I cannot, for the life of me, see how you can divide that up between individual people who are employees. So my reading of it leads me to the same conclusion.

Mrs REDMOND: I refer to schedule 3 on page 119, which talks about the adjudication of costs and application by clients or third party payers for adjudication of costs and so on, and they are talking about a 'sophisticated client', and I could not find any definition in the schedule anywhere as to what specifically is meant by 'sophisticated client'. Is that going to be a subjective assessment in each case and, if it is, whose subjective assessment?

The Hon. J.R. RAU: I am told that if we look to page 99, we have a definition of 'sophisticated client'.

Mrs REDMOND: It is a bit far back. I could not find it.

The Hon. J.R. RAU: Yes, it is on the bottom of page 99. It ties back into other disclosure provisions there. Isn't that handy?

Mrs REDMOND: It is really helpful.

The Hon. J.R. RAU: Yes, it is defined, and it is not at large.

Clause passed.

Schedules 1 and 2 and title passed.

Bill reported without amendment.

Third Reading

The Hon. J.R. RAU (Enfield—Deputy Premier, Attorney-General, Minister for Planning, Minister for Industrial Relations, Minister for Business Services and Consumers) (12:47): I move:

That this bill be now read a third time.

I will not traverse any of the material that we have covered in relation to the actual bill itself. I would like to thank the member for Heysen and the member for Bragg for their hard work in having a look at this piece of legislation, and I very much appreciate the effort they have put in. I hope that, ultimately, both houses will be able to pass this unamended because it has been, as I mentioned earlier, the product of an enormous amount of work by members of the Law Society, members of the Attorney-General's department, the advisors that I am fortunate enough to have working for me and parliamentary counsel.

I would like to take the opportunity to thank all of those people who have been involved in this mammoth project that has gone on for years—literally—and I can say that I would not have been able to get anywhere near where we are now without the help of all you people. You have done a fantastic job and, even though I am a little bit impatient sometimes, ultimately it has all been worth it—at least from my point of view, and I hope from everyone else's point of view, because this has been a huge job.

I know the work is not yet over because my advisors and the Attorney-General's department staff who have been helping us in here will no doubt help members in the upper house before we are done, and that is a joy that awaits you over the next few weeks I guess. I do want to sincerely say my great thanks because this is a very important piece of work, and it is very important for the profession in South Australia that we bring ourselves into the 21st century, so thank you to all concerned.

Ms CHAPMAN (Bragg—Deputy Leader of the Opposition) (12:49): I wish to join with the Attorney in thanking those who have been providing advice to the parliament as this bill has gone through its gestation. It has been a long pregnancy and it has been fraught with difficulty in its early period, but there are aspects now which are coming to final landing, which I think will serve the legal profession and, most importantly, the general community well. I do not share the Attorney's or even the member for Heysen's reticence on incorporation. I think this is an important corporate advance for the profession. It is not alien to almost every other profession, except prostitution. In any event, I make the point that in the modern world it is important that as professional service providers we have the opportunity to function and that consumers have the protection of incorporated practices; so I welcome that.

There are a couple of things I wish to place on the record. One is that lawyers, like any other body or group (whether it is a profession, making a product or growing crop) have the right to associate in various groupings and to have representation. That may be through a society, a body, an association, or a union. These are important alliances and groupings, which on our side of politics we cherish as being a matter of choice, not only to join it, if it exists as a representative body, but if other representative bodies develop they are also available not only to receive members who wish to be in their association but also to be represented by them.

During the course of the development of this bill I think most members and I strongly appreciated the advice of the Law Society of South Australia as a peak body of representation for legal practitioners. I recognise the development and maturity of the Bar Association of South Australia (of which I previously acknowledged I am a member and whose origins predate my birth). It has strengthened in number, as have its public statements on important issues. It has been an effective body in presenting sometimes different views from the Law Society and, importantly, those who are at the independent bar.

It should be remembered that these are not just barristers who sit around in chambers, like on some television program, but barristers who are now represented in the DPP's office and other government offices who have been historically prohibited from joining the Bar Association, but we changed the rules a few years ago. Although they previously were excluded on the basis that they were not able to be independent because they were employed by a government, those rules have been relaxed and they are now fully functioning and valuable members of the association.

These bodies represent very significant and sometimes different aspirations, and they do a terrific job and I wish to thank them. I wish to say that from our side of politics we respect that diversity, that choice, and we will keep an eye on how we might best utilise the representative bodies in future consultation and, in particular, the operation of the act and its management.

The other aspect, which is not in this act to any great degree, is the way in which we avoid all of the disciplinary process, that is, the education of legal practitioners. Unlike nurses, who, after 10 years, have to redo their whole training, lawyers, amongst many other professions, have the privilege that once they attain their degree and practising certificate it is a recognisable academic achievement and it gives them the right of entry to practise.

However, with the development of continuing legal training, and now the compulsory obligations for that to occur, legal practitioners must undertake a certain amount of study in the form of tuition and attendance at lectures throughout the year in order to be eligible to renew their practising certificate. I think this is an important initiative. I am not big on compulsory things, but I think that in relation to the obligations they have it is important.

I wish to place on the record my plea that whoever—whether it is the Law Society or other representative bodies—works with governments on the standard of the continuing legal education, it should be a matter that is uppermost in their minds, not just the legal ethics (much of which has been attempted to be legislated in this act) but maintaining a high standard of continuing legal education.

I just note, from my own experience in recent times, that it may be that legal practitioners in South Australia shy away from providing training to others. Are they too busy? I do not know what the answer is, but we seem to have in this state an extraordinary number of interstate people who come here to provide continuing legal education without actually having a working knowledge of the state jurisdiction.

I for one support and respect the diversity of our jurisdictions. Some want to harmonise everything, but that, in my view, is not the best opportunity for South Australia. We need to maintain some distinctive independence, and that means ensuring that the legal practitioners who work in this field maintain a standard that takes that into account. This is no reflection on those who come from interstate. Clearly, they are experienced and very capable, particularly on the ground in their own jurisdictions. But I would ask that that be at least noted by those who might read this debate. We support the passing of the bill.

Mrs REDMOND (Heysen) (12:55): I just want to make a few closing comments in relation to this bill on the third reading and, in particular, re-express the concerns I addressed when I made my contribution on the second reading. Contrary to what the member for Bragg suggested, I do not object to the idea of incorporated legal practices. I simply question whether the outcome will be as desirous as the Law Society seems to think and whether there may not be some hidden difficulties, given the concurrent nationalisation, effectively, of the practice. Indeed, the member for Bragg just referred to the fact that members come here from interstate and do not really have a familiarity with the local jurisdiction.

The more important aspects of the bill, however, remain, for me, whether or not this bill will result in Eugene McGee facing the consequences which I believe he should have faced for the despicable act he committed. I believe that makes him not ever a fit and proper person to practise the law in this state. I am hopeful that whoever becomes the legal conduct commissioner will, indeed, take on that issue as part of their brief in making sure that only fit and proper people are engaged in the practice of the law in this state. I am glad to see that all the ladies got the memo about wearing something orange today—it is just remarkable.

However, more importantly, it saddens me unbelievably that I will now have to tell everyone that the least safe place to put your money is in a solicitor's trust account and that you will have no guarantee whatsoever of money placed with a solicitor, in a trust account, being safe and, if it is stolen, being returned to you. I think that that makes the practice of the law in this state less than it should be. I think we should hang our heads in shame for passing legislation which does not make it compulsory for the guarantee fund to replenish funds when they are stolen from innocent clients.

I think that we had an opportunity in this legislation to correct what has clearly been something that is very wrong. It has been evidenced by a massive case in this state, and we should have taken the opportunity to address it, but, sadly, we are not doing so. I think that particularly the Law Society, in supporting the current and proposed mechanism, should hang its head in shame for diminishing the practice of the law in this state.

Bill read a third time and passed.


[Sitting suspended from 12:59 to 14:00]


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