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

Second Reading

Adjourned debate on second reading (resumed on motion).

Ms CHAPMAN (Bragg—Deputy Leader of the Opposition) (15:56): Members who are following this important debate will know that on the last occasion I was speaking about the guarantee fund. I was trying to explain briefly (probably not very successfully) the purpose of having the guarantee fund and that it had some origins really from a number of sources but essentially the windfall gain of interest payments on deposits in solicitors' trust accounts and in what was then called the Combined Solicitors Trust Account where certain proportions of deposits have to be placed under the current act—and that these moneys were to be applied for certain meritorious purposes.

I was going on to say that the fund also has other sources of income. The current provisions of the act provide that the Law Society must maintain a legal practitioners guarantee fund; that the fund consists of the moneys paid into it from the statutory interest account or moneys recovered by the society under Part V; a prescribed proportion of the fees in respect of moneys paid for the issue of the renewal of practising certificates—that is, of course, of legal practitioners; a prescribed portion of fees paid by interstate practitioners in certain circumstances; costs recovered by the Attorney-General, the board or the society in disciplinary proceedings against legal practitioners or former legal practitioners; and any fee paid to the board and any money that the society thinks fit to be included in the guarantee fund; and income and accreditations arising from the investment of money constituting the guarantee fund.

So there are quite a number of other sources now of moneys into the fund. The moneys under the current provisions of the act in the Guarantee Fund can be applied for the following (and I will paraphrase these):

meeting expenses incurred by the LPEAC;

costs incurred by the society in appointing a legal practitioner who would appear in proceedings dealing with the admission of a legal practitioner;

costs of investigating complaints (again, for similar proceedings);

costs of proceedings instituted by the board for taxation and legal costs;

costs of prosecution of other offences against the act;

costs consequent upon the appointment of a supervisor or a manager, which of course is to go into a legal practitioner's practice in the event of their suspension and other circumstances;

costs of examination conducted under the direction of the Attorney-General;

payment of certain honoraria for members of the tribunal and board for their sittings;

legal costs payable by members of the board and some other limited circumstances;

payment of money toward costs of arrangements in respect of terms of any scheme approved by the Attorney-General;

costs of processing claims; and

defraying any management fees or expenditure in relation to management administration of the fund and educational publishing programs conducted for the benefit of legal practitioners or members of the public.

I think members will appreciate that there is quite a significant diversity of source into the fund and there is quite a significant capacity under the current act for the funds to be applied.

With regard to the interest in the guarantee fund under the statutory interest account, that also has rules that apply to it for the application of those funds. When interest accruing on trust accounts is paid into the ADI, the society must deal with the money as follows: 50 per cent of the money to be paid to entities under the Legal Services Commission umbrella; 40 per cent of the money paid into the guarantee fund; and 10 per cent paid to a person nominated by the Attorney-General, subject to such conditions as the Attorney-General directs.

We have quite a strict regime of where these funds are to be applied and with whom. I should mention that, for example, last year the guarantee fund received $873,448 from its share of the practising certificate fee and total funds of about $4.5 million went into that fund. The bill does propose that there will be some changes to the administration and application of those fees, including the right to apply—and in what circumstances—for relief of funds when there has been some loss or damage suffered as a result of legal practitioners' failures. However, the other aspect of the government's proposal is to rename the guarantee fund a fidelity fund and some other aspects, as I say, in relation to the application.

I think I mentioned before that advocates (particularly those who are victims of the Magarey Farlam defalcation) have put some very significant submissions to us to make the funds more available. Mr Chris Snow—who I have referred to earlier—has put forward a number of submissions for reform and is seeking an independent lay-based board for the purposes of management of practitioner misconduct and similarly seeks to have a much tighter administration of the fidelity fund. The opposition has considered a number of those aspects.

There has been, since 2007, consideration of a number of the aspects of how fidelity funds would operate in other states and it is noted that the draft national law model does provide that 'fidelity authority must ensure that claims against the fidelity fund are determined independently at arm's length from the legal profession'. I mention that, of course, because those who are advocating for ultra independence are seeking to have that type of regime. I do not think there is anything further I can helpfully add in relation to that, suffice to say there are significant calls on these funds, and I will have a number of questions to ask in the committee stage as to the current funds that are accessible and particularly how they have been applied in the last 10 years.

I do wish to briefly mention the ILPs (incorporated legal practices). It is fair to say, from the evolution of how legal practice has operated, that there has been a desire for a number of people in the profession to allow for incorporation of legal practices. The prohibition against this historically really has been the fact that there is an expectation that a legal practitioner should be in charge of the operation of any legal practice, that they should be directly accountable. Consistent with that is that there shouldn't be the capacity for legal practice firms to then incorporate under some other structure which makes it available for other non-legal practitioners to be involved and, secondly, for there not be the direct responsibility of the legal practitioner.

However, the practices have developed interstate and the calls have been, particularly from the eastern states, to allow for incorporated legal practices. This bill proposes an amendment to enable that to happen in South Australia. The incorporated legal firm may have a single practitioner with a practising certificate as long as the practice '...to provide any service or conduct any business that does not involve engaging in legal practice'.

The bill also proposes that notice must be given to the Supreme Court by an ILP before it commences practice, or by existing company practitioners, if they intend to engage in legal services as an ILP. The audit procedures and other operations of the Law Society in respect of the ILPs operation, their compliance with the act, etc., even as a spot audit, and generated from their own determination to conduct an audit, will continue, and the ILP itself will be subject to bans under the Supreme Court provisions.

If a successful application is mounted by the Law Society, the commissioner, who I have referred to earlier, is to take over the new responsibility of the conduct board and/or the Attorney-General. There are certain processes that allow for legal practitioners to employ other professions in their practice; however, it should be noted that the bill doesn't allow for multidisciplinary practices in this tranche of reform.

There has been recognition of the Bar Association. I have already disclosed that I am a member of the South Australian Bar Association, and proudly so. The Law Society of South Australia has undertaken, over decades, a leading responsibility to register the list of all legal practitioners and has an ever-growing role in its oversight of that profession.

South Australia has a proud history, and I think it is one to be celebrated, of allowing, as a fused profession, for legal practitioners to practise as either counsel or as a solicitor, but also offers the opportunity for people to register to practise solely as a barrister, and the Bar Association, of course, is the representative body for those in that category.

I note that in fact the Bar Association has allowed, in recent years, an expanded membership opportunity. One of the features of a barrister is that they must be independent of influence by their employer. Sometimes, if they are under employment as in-house counsel, whether it is in a business or as a member of the DPP or the Crown Solicitor's Office, then of course they are, quite properly, responsible to their employer to undertake their instructions and to comply with the terms of that employment.

Notwithstanding that (I suppose) restriction on the full independence of someone who is employed in this category, as distinct from someone who is at the bar and self-employed as such, the Bar Association has allowed, in recent years, the opportunity for employed barristers in certain areas to join the Bar Association.

Both bodies, the Law Society and the Bar Association, have a significant role in the continuing professional education of legal practitioners. From time to time we here in the parliament have the benefit of submissions presented by each of these bodies on law reform and in some instances there is only one, but sometimes they are not in agreement with each other, they sometimes put differing views as to the development of the reform and legislative agenda that we have down here, and that is to be applauded. All of the different advice and considerations, we think, can only aid us in our deliberations. It is the Liberal Party's view that it is an opportunity for other representative bodies to be considered, but that is something that we will continue to pursue outside the bill.

There are a number of other aspects that have been considered in this bill. I think most of the issues are ones that I can cover during the committee stage. I know the member for Heysen has a contribution to make on this debate. I welcome that and want her to have an opportunity to do that today, so I will perhaps convey some of those other matters at the time of raising the issues in committee. Thank you.

Mrs REDMOND (Heysen) (16:12): I am delighted to see that we have a new attorney-general in the house. The bill we are discussing, the Legal Practitioners (Miscellaneous) Amendment Bill, is quite a comprehensive bill of 143 or so pages and a lot of it reflects the bill that was put before the house when I was shadow attorney-general back in (I think) 2007. There are three main areas I want to canvas in my contribution today, and they have, no doubt, already been dealt with fairly comprehensively by the deputy leader. Nevertheless, I want to put on the record my views on a number of those issues.

The first of those is the issue of incorporated legal practices and the national registration proposition. The thrust of the original legislation which was put to us in 2007 was to create a system whereby once you were registered to practice law in any given state you would be (basically) entitled to practice law throughout Australia. Up until we changed that system, the system has been that you are admitted to practise in a state or territory, and often you would get involved in more than one state or territory. I was admitted originally in New South Wales but then came here and had to satisfy certain requirements in order to be admitted here.

There are many people who are in that situation, particularly people who practise in particular jurisdictions. I have a friend, for instance, who when he was in practice did a lot of aeronautical work involving plane crashes and that sort of thing. That meant that he practised in jurisdictions around Australia and he had admission separately in the jurisdictions where he needed it.

I can see that there are benefits in being able to say that once you are qualified you are qualified to work throughout Australia. By and large, our laws are pretty similar. That said, I think there are some risks about being able to be admitted in Queensland and go to Victoria and assume that you know what has happened in Victoria, because we do still have separate parliaments passing separate laws all the time. I think that there should be some mechanism to ensure that people who hold out their shingle in a particular state do indeed have a sufficient knowledge of the law in that state or territory; but I am sure any of that can be overcome.

My curiosity about this aspect really relates to the fact that incorporated legal practices will create a very unusual situation, it seems to me, in that once you have incorporated a legal practice—and I am relying on what the former attorney-general told me in the previous debate—in effect we can have Woolworths Law firms and (pardon the pun) Coles Law firms. We can have a situation where Woolworths, with a practitioner at the head of Woolworths Law somewhere, can set up a law firm, maybe within their little supermarket area or maybe somewhere else.

During the last debate the former attorney-general confirmed very clearly on the record that yes indeed, my understanding was correct that we could have Woolworths Law and Coles Law. We could have a practitioner somewhere who was the head of such a firm and we could franchise Woolworths Law throughout the country. My curiosity about this stems from the fact that I have had significant dealings with the Pharmacy Guild in South Australia and the optometrists in South Australia in particular. Both of those groups wanted particularly to ensure that every step that was possible was taken to prevent Woolworths and Coles, who already control so much of not just the supermarket trade in this state, but the alcohol trade, the ownership of hotels—and elsewhere, not just in this state—and various other aspects of our lives, from doing this.

The optometrist and pharmacists in particular, and to some extent also the newsagents, have been at pains to try to prevent this from happening. Yet in this particular piece of legislation the legal practitioners, through their representatives, the Law Society, have said, 'Come on in, the water's fine. We actually welcome this prospect. We want this to be the case.' I suspect they have not thought it through, but nevertheless I just want to put on the record again my bemusement at the idea that the lawyers in this state do not see it as threatening that Woolworths and Coles could come in and franchise legal firms under their banner, or under whatever banner they chose to do it under, and create a really different regime for the practice of law in the state.

That is really just a by the by comment, though, in terms of the things that concern me deeply about this bill. I am not going to seek to overcome what is the intention of the bill as far as that goes. As far as I am concerned, if the Law Society has said that that is what the practitioners of this state want, and I am no longer a practitioner, then I am not going to try to stop it.

My second concern is about the issue of unsatisfactory or unprofessional conduct. The concern arises from the well-known case of Eugene McGee. I have a concern as to whether the amendments in this legislation actually do anything to address the problem of Eugene McGee. Eugene McGee, of course, did something which in my mind was unthinkable and inhumane, and he is worse than the dog dirt beneath anyone's feet as far as I am concerned. I have put my views about that on the record before. This is someone who used his knowledge of the law to avoid responsibility and to avoid doing what was the human thing. That is, he knocked a cyclist off his cycle and killed him but chose to use his knowledge of the law to avoid the consequences.

I am sure that every member of this place has people in their electorates who have signed petitions about the failure of this parliament and this government to actually do something to prevent that person from practising law in this state because, in my view, the public would assume that this is not a fit and proper person to be allowed to practise the law, having used the law for his own benefit in that way. I have some concerns as to whether the provisions for unsatisfactory professional conduct or professional misconduct will actually enable us to do anything about him. There are two questions of course. The first is: if it happened now, would these new provisions be able to do anything about it? The other question is: these events with McGee have already happened, so will the change to the legislation, if it goes through, enable us to now act against him?

I have some hope in that regard, because if we go to page 16 of the legislation, section 20AC sets out the grounds for amending, suspending or cancelling a practising certificate, and it says:

Each of the following is a ground for amending, suspending or cancelling a practising certificate:

(a) the holder of the certificate is not a fit and proper person to hold a certificate;

(b) if a condition of the certificate is that the holder of the certificate is or has been limited to a legal practise specified...[then they have breached that].

We have that provision, and I think further on, under section 20AJ, we have another provision that allows for the possibility of having an immediate suspension of a practising certificate on any other ground that the court considers warrants suspension of the certificate in the public interest. That is section 20AJ(1)(c).

When we get to the committee stage I will be asking the Attorney-General—and I am pleased to see the Attorney-General has returned to being his usual self—to answer some very specific questions about whether that will now enable action to be appropriately taken against Eugene McGee who, as I said, in my view, the public would absolutely unanimously consider has shown himself to be not a fit and proper person to be allowed to practise law in this state. That is the second of the issues that I want to canvass in my comments.

The third one is to do with the guarantee fund and I want to go back to basic principles on the guarantee fund. It was the sticking point which, while I was shadow attorney, when we last dealt with this proposed legislation, ultimately led to a deadlock conference, and the Attorney-General allowed the whole thing to lapse rather than to proceed because we could not reach agreement about the guarantee fund.

I have particularly firm views about the way in which guarantee funds should operate. I will go back to first principles in terms of how the thing is structured in the first place. When you are in private practice as a solicitor, you will frequently receive money into trust, and it will come in from different clients—and you could have hundreds of clients at a time—and it will obviously come in in odd amounts and for different periods of time. Sometimes, for instance, you might receive money by way of deposit or the rest of the money to be paid on the purchase of a house. Sometimes you might receive money because you have received the payments in an estate and you have to hold them in your trust account until they are paid out to the various beneficiaries.

Money is coming in all the time and money is being paid out all the time and, for obvious reasons, it is much too complicated to figure out who should get what interest in terms of clients getting the interest. Clearly, the lawyers cannot get the interest. They cannot profit from the money that is held by them in trust. Nor should the bank therefore get the interest. I mean, the money is held in a bank account and if the clients are not getting it and the lawyers are not getting it then that leaves the bank to make a profit.

The origin of the guarantee fund came about because someone had the bright idea—and it was a very good idea—to say, 'Well, rather than no-one getting the benefit of this money, or rather than the banks getting the benefit of this interest money, what we'll do is we will require lawyers in this state who have money in trust to regularly (basically twice a year) do an assessment and pay roughly two-thirds of the money they hold in trust down into a central fund, a combined trust account.' You keep enough there to keep your ins and outs going in your account, and if you know you have to get money out then that is fine because it is trust money, but there is a combined trust account where two-thirds of the money of all the solicitors' trust accounts in the state is held, and that earns interest.

What are we going to do with that interest? Initially, that interest was to provide the guarantee fund. I accept what the member for Bragg says, that there have been so few calls on that money that the fund has thereby created over a period of years that they have been able to identify some other uses. So, it has gone to legal practitioners' education, legal aid and all sorts of other things, but primarily this fund was able to provide a guarantee fund. The guarantee fund in my view is there so that there is an absolute security for people putting money into a solicitor's trust account, that they will have that money safely secured.

What happened? We have the case of Magarey Farlam, a very reputable firm. For some 15 years they had employed a person they thought was a reputable accountant. It took a long time before they realised that their reputable accountant was actually going to the bank and doing all sorts of dodgy things with the money that was held in trust, and no-one noticed until $4½ million worth of clients' money had been taken from the trust moneys.

My view is that at that point that is when that wonderful fund that had been established down town, earning interest on the combined trust account, should have stepped in and said, 'Okay, those clients have done nothing wrong.' There was never a suggestion that any client had done anything wrong. 'That's what the purpose of this fund is. We will pay the money to those clients and then we will chase the people who are responsible for that defalcation'—which is the term given to the fact that this accountant nicked off with all the money.

Therein began the dilemma, because instead of taking that approach and instead of making that fund the fund of first resort for the innocent people who had in good faith placed their money in a solicitor's trust account where they were not getting any interest on it, but in my view should have at least had the security of knowing that no matter what else it was going to be safe—no, instead of that, what the system said was, 'Oh no, this is a fund of last resort.

What you have to do is you have to sue the accountant, you have to sue the partners of the firm, you have to sue the auditors. You have to sue everyone else under the sun, and only when you have failed to get satisfaction of your entitlement from all of those sources can you come to this guarantee fund, which was set up for this very purpose, and ask for your money.'

There are those who argue that to do what I suggest—and that is make it a fund of first resort—would be too costly and would mean that people did not actually cooperate thereafter. Once they have their money, what would anyone's motive be in cooperating in getting their money back from the people who were actually to be held liable? I say to that: insurance companies do that every day of the week. Every day of the week people claim on their insurance and they have an obligation under that insurance to cooperate with the insurance company in pursuing whoever the wrongdoer might be.

In this case what we have is a situation where this government is intending to continue what I think is a totally inadequate response to this situation. I do not care what happens in other states. I do not think it is arguable to say that other states are not doing the same as what I am proposing. It is clear to me that if you put your money into a solicitors' trust account, then it should be absolutely safe. If, whether by the fault of the accountant, the partners or anyone else, your money is not safe, you should have an absolute entitlement to go to the fund created by the combined trust funds earning interest and get the money back.

Now, I also accept what the member for Bragg says about all these other things that are now done with this money, but it seems to me there would be no reason why we could not come up with a system which says, 'Alright, the percentage of the practising certificate fees that now go down into that fund could be set aside.' We could set aside some percentage of the interest to do those other things.

I do not mind if we have an actuary examine the fund and say, 'Well, only a certain percentage of this fund is needed.' But it seems to be an untenable situation not to say that, when you have put your money into a solicitors' trust account in good faith and you have done nothing wrong, when your money is no longer available you should be able to get that money from the fund.

Nothing on this earth will ever persuade me until the day I die that that is not the right and proper thing to do, and so that is the way I will be arguing as the matter goes through to committee stage. I am looking forward to the committee stage, because I am sure there will be lots to discuss, given just those few things about which I am concerned with this piece of legislation.

Ms BETTISON (Ramsay) (16:31): I rise today to express my support for this bill. The bill seeks to make amendments to the Legal Practitioners Act. This government understands how important it is to hold legal practitioners accountable for their actions and for South Australians to be able to trust that they are receiving proper services. As a result, this bill has given particular focus to increasing the protections available for consumers of legal services here in SA.

One of these protections is the introduction of a new publicly available database of practitioners who have been disciplined for professional misconduct. This proposed new provision provides that the commissioner is to maintain a register of disciplinary action. The following particulars are to be included when information about disciplinary action is entered into the register:

the full name of the person against whom the disciplinary action was taken;

the person's business address or former business address;

the person's home jurisdiction or most recent home jurisdiction;

particulars of the disciplinary action taken;

other particulars prescribed by the regulations or determined by the commissioner.

Further to this, the register is to be made available for public inspection on the internet. This will allow for greater transparency and assist those who are looking to engage a lawyer. Other proposed changes in this bill include a new procedure for the Supreme Court to deal with practitioners who pose an immediate risk to the public. The court, if satisfied that a ground exists, may decide to amend, suspend or cancel a practitioner's practising certificate.

It also outlines that certain events, including bankruptcy or being convicted of a serious offence, will trigger an obligation on a practitioner to explain to the court why he or she is still a fit and proper person to practise law. There are often reasons to seek out legal assistance, whether it be a small or large matter. The passing of this bill will protect South Australians and give them resources to make the right decision about the services they require. I commend this bill.

The Hon. J.R. RAU (Enfield—Deputy Premier, Attorney-General, Minister for Planning, Minister for Industrial Relations, Minister for Business Services and Consumers) (16:33): Thank you very much, Mr Deputy Speaker, and can I thank all of those who have made a contribution to the debate. I wanted to say a few words now. I gather, from what I have been able to gather from talking to some other members, that the intention is that we move into committee and in that mode we give some more detailed questioning to particular matters, which is obviously fine by me. I just wanted to address a couple of general propositions, which I gather were raised in the course of the debate in particular by both the member for Bragg and the member for Heysen.

First of all, there has been a question raised about the comparison between this legislation and the national legal profession model. It might be worth my while spending just a moment or two explaining how this thing has been going on. As members would probably be aware, in 2007 there was an attempt here in the state parliament by the former attorney to introduce legislation which would have had the affect of bringing South Australia more or less in line with the other jurisdictions at that time.

For various reasons that are not material now that did not happen, and so we continued to be operating under the 1981, but I do make this point: had that legislation passed when the former attorney put it up, the situation with respect to Mr McGee would have been judged against a different standard because the 1981 act would have been repealed, and a different set of professional conduct standards would have applied. It might well be that, had that occurred at that time, the saga of that particular sad matter might have panned out differently. But, anyway, that is just an observation.

In any event, what happened then was that the former federal attorney-general, Robert McClelland, in conjunction, I think with the commonwealth Attorney-General's Department, expressed some interest in pushing forward with uniformed national legal profession rules and regulation. That uniform regulation proposal was something which, as is the sort of thing one tends to expect of the commonwealth, produced this gargantuan piece of draft legislation.

It constructed elaborate models of centralised governance with a large committee overseen by a nabob of some description who would run the whole thing, and all of us in the provinces would basically just do as we were told and the world would be a happy place—that was the general thrust of it. I thought it was useful for me to seek the opinions of the judiciary and the legal profession in this state, and both of them had serious objections to this matter. In brief, can I say there were a couple of elements, without going into terrible detail about them.

The first one was that the governance structure was very top heavy. Not only was it top heavy, but it meant that there was going to be this ombudsman person sitting over everybody across the commonwealth, and the board of management of this top-heavy structure—for whom there was no explanation as to where their salaries would come from—would basically be selected by certain (and I hate using this word) stakeholders.

The interesting thing was that the states did not get a say in that because they were not stakeholders. So, the large law firms would have a seat at the table, and various other people would have a seat at the table, but particularly when you came from a small state, as we do, there was no guarantee that there would ever be a South Australian person sitting around that table, let alone that South Australia's opinions on any matters would ever have been taken into account. So that was concern number one.

Concern number two was: every time detailed questions about costings were asked, the answers kept coming back, 'Oh, we'll sort that out in due course.' You do not actually sign up for something until you know what the cost is. You do not sign up and then find out what the cost is, it seems to me.

There was the other question which exercised the minds of many of the judges in the various state and territory supreme courts about the independence of the judiciary. The idea that control of admissions in each jurisdiction would be removed from the states' supreme courts and vested in this other body was something that they found to be highly offensive.

It had virtually the total objection of the legal community in South Australia, with the exception of one or two large law firms that thought there might be something in it for them. It certainly had, in the form that it was being floated, strong opposition from the judiciary.

By the way, and this is something the member for Bragg might find interesting, to the extent that we were able to ascertain how much it was going to cost, guess who was going to be paying for it—new admittees, not the people in the large law firms who had been pushing for this so-called reform all this time. Let's not forget that this national law reform was a thought bubble that came out of a large law firm—

Ms Chapman: All the new undergraduates.

The Hon. J.R. RAU: Possibly so, but it was a thought bubble that came out of a large law firm group, which is an eastern state phenomenon. They wanted to be able to move their staff here and there and they did not want to have multiple trust accounts and they wanted everything to be so simple. So they put up—

Ms Chapman: To be harmonious.

The Hon. J.R. RAU: Harmonious, indeed. So they thought up this scheme which was absolutely beautiful for them. It was not only convenient for them and enabled them to shuffle people around like cards, but it also meant that somebody else paid for it—and who but the new admittees. How equitable is that? New admittees around the country pay to subsidise a scheme which advantages large law firms in New South Wales, Queensland and Victoria.

As you might have gathered, Mr Deputy Speaker, I came to the view that this was not a model which was going to be of great advantage to people here in South Australia. We did attempt to broker a resolution of this and, about two years ago at an Attorneys-General meeting, the attorney from western Australia and myself put forward a proposal which would have cut the bureaucracy part at the top of this down considerably and guaranteed each state, on a rotational basis, some role in the management of the overall structure—and would have dealt with the admissions problem.

That was rejected and the jurisdictions who rejected it then had people—I am not accusing any of those attorneys by the way—from their jurisdictions who had a clear interest in seeing this go forward who labelled me and Christian Porter, along with Dr Mahathir, as recalcitrants because we were not getting with the national program. What backward people we were.

Well, one by one they fell off the perch: Tasmania fell off the perch; the Northern Territory fell off the perch; the ACT was never in; and then Queensland fell off the perch. So now the national model (so-called) which is yet to be finished and is still sitting in some drawing room in Victoria being worked upon—by parliamentary counsel, I assume, and other thinkers in Victoria—is still to be created.

All I can say to the member for Bragg and everyone else is, it may or may not bear some resemblance to the document that has been floating around for the last couple of years—who knows? What I can tell you is that it's national only to the extent that if Victoria ever finishes this task, and if New South Wales say, 'Okay, we'll sign up,' they might then fall out about where the head office is going to be.

Ms Chapman: They did that 100 years ago; we had Canberra.

The Hon. J.R. RAU: Who knows? The head office could be in Canberra; that might be the solution—good point. I have to say that that has made this task for me and I think, to be fair to the Law Society, a lot more complex than it should have been. Originally we began this taking the so-called national model draft bill as our starting point and seeing whether we could use that as something we could work from to advance our position. As that bill kept transforming itself into different forms, we had to go back and start again.

The member for Bragg might be interested to know that eventually the Law Society and I came to the conclusion that because the national draft law was a moving target, as long as we decided that we were going to build our bill on that foundation, we would never get started. So we were left with the only sure foundation we had which was something that already existed, which meant we could go back to the 2007 bill, which never got in, or we could go back to something that was here, which is part of the reason why you will notice that this legislation is built on the foundation of the 1981 bill.

That was the preferred position of the Law Society and it is the position where we said rightio, at least that gives us some common ground to start building from. That is why we are where we are. So any questions that might be asked of me about how this compares with the national law on this or that is like asking me what the next set of X-Lotto numbers might be. I do not know, nor does anybody actually know.

All I can say to members is this represents a broad engagement of South Australia's legal practitioners with the current arrangements in other states, and it should significantly increase the opportunity for South Australia and other state jurisdictions to interact across borders in—to pick up the member Bragg's words—a harmonious fashion. It is not intended to be some sort of great fillip to the large law firm group.

I have to say, like the member for Heysen, I have on several occasions said to the Law Society, 'Be careful what you wish for. Why do you want some of these things? I'm not telling you what to do—I am a member of the profession. I am not telling you how to run the profession; I am not going to substitute myself for the president of the Law Society and the Law Council, but why do you want this? Why do you want the moat around the state filled in?' I have to say to members, they have been emphatic that that is what they want. It does not mean they are right, but they have been emphatic about it.

I can assure you that a lot of the measures in here that the member of Heysen might have concerns about are not in there because I pushed the Law Society to put them in. They are in there because, after arguing with the Law Society for some considerable period of time, I came to the conclusion I would never persuade them otherwise and it became clear to me that I could either just be completely genuinely recalcitrant and not cooperate with the profession, or I could actually say, 'Okay, if that's what you want, that's what you will get.'

That is sort of a potted history of this thing. I am terribly relieved that it is in here now, because it has been an enormous amount of work for people in the Public Service, and I thank everyone who has been involved in that: the parliamentary counsel and my staff who have been working on this in the endless negotiations we have had with the Law Society, and by 'endless' I mean literally for years discussing this.

I do want to take this moment to say thank you, as I said, to my staff, the people in the Attorney-General's Department, the people in the Law Society, in particular the former president Ralph Bonig, who has worked very hard on this, and a number of other people who have really put an enormous amount of effort into getting us to this point. I can say to the parliament that I met with the Law Society counsel on Monday evening, and the impression I got from that meeting was they wished the bill, as it is, to be passed as quickly as possible because they would like to be able to operate under the new trust account arrangements commencing with the next financial year, which is 1 July.

If this bill passes fairly quickly, that is a possibility; if the bill does not pass quickly, we are going to have to hold off the operation of some of those provisions for the whole year, otherwise they will be in the ridiculous situation where part way through financial year 2013-14 they have a complete change in accounting systems or trust recording systems. It would be impossible having to do two completely different regimes in the same financial year. So we either get this done now and give the practices an opportunity to be ready to go as of 1 July, or we are basically saying, 'You people won't be getting into this new arrangement until the beginning of July 2014.'

Another point raised by the member for Heysen was 'Woolworths Law'. The member for Heysen and I have had several discussions about that, and I do not disagree with a word she has said about the undesirability of having franchise-type things like that. She and I have never had a difference of opinion about this, ever. I do, however, restate all of my remarks recently about the Law Society in saying, 'Be careful what you wish for', and I did continue to have such concerns about the point that is being made by the honourable member that I hope to do more than just make me feel better.

On page 62 in the schedule, part 2 is 'Prohibition of non-legal services and businesses', which is intended to prevent a mixed business, if you like, a hybrid business, because I am very concerned about exactly what the honourable member has been talking about—and that is there at my insistence. That was intended to be directed towards that point.

Can I say, I understand that Victoria, for example, has been in a position where, since 2004, the capability of incorporated practices has existed, and to my knowledge there is no example in Victoria or anywhere else where incorporated practices exist (which have probably been elsewhere since 2007), where we have seen the phenomenon that the member for Heysen is concerned about. That does not mean it can never happen, I get that, but it is not something we have any cause to be apprehensive about on the basis of interstate experience. As I said, that provision on page 62 of the bill was intended specifically to, in part at least, address that concern.

I have discussed the national model point. In relation to unprofessional conduct, again, I will be brief. I emphasise again, had the 2007 legislation gone through, it may be that the McGee story might have panned out differently. Who knows? As it was, it did not go through, which meant that the 1981 version of the professional conduct rules continued to apply. It has been against that version of the professional conduct rules that McGee has been assessed.

The 2007 legislation had quite different provisions about professional conduct, and those provisions, which are to my understanding essentially uniform provisions across the commonwealth now, with the exception of South Australia, have been picked up in this bill. This bill now moves us to where we would have been had the 2007 legislation being passed back in 2007 and it moves us to where everybody else already is. We are moving to a national unprofessional conduct standard, and I would direct members to sections 68 and 69 of the bill, which are on pages 32 and 33. I will not read all of those out at the moment, but I should point out that those words are materially different from the current wording which I will just read out briefly for the purposes of this exercise. The bill provides:

unprofessional conduct, in relation to a legal practitioner, means—

(a) an offence of a dishonest or infamous nature committed by the legal practitioner in respect of which punishment by imprisonment is prescribed or authorised by law; or

(b) any conduct in the course of, or in connection with, practice by the legal practitioner that involves substantial or recurrent failure to meet the standard of conduct observed by competent legal practitioners of good repute.

Of course, in the context of Mr McGee it is limb (a) of that definition that was relevant, not so much, probably, limb (b). I think to understand the difference in relation to professional conduct matters it is relevant to look at sections 68 and 69 of the bill. I think the member for Heysen was probably quite correct directing our attention to page 20, which is section 20AJ, which, importantly, empowers the Law Society, the Professional Conduct Commissioner, or the Attorney, or indeed the court for that matter, to make an application of its own initiative to deal with matters in the public interest. So, there is locus standi on the part of four different bodies, the determination is made by the court and, obviously, the court will deal with such applications as may come before it in due course as it deems appropriate.

The last point I wanted to make briefly, in terms of general topics, was the fidelity fund. Again, I am not able to tell members exactly what the fidelity fund provisions would have been had the 2007 legislation gone through. I am not sure whether they would have been different from the current wording in the 1982 act. I might see if those who assist me can help me answer that question while I fill in for a moment by talking about what I did last night, which is watch television.

Mrs Redmond: You can just go quiet for a moment and talk to them.

Mr Gardner: Did you see The Voice?

The Hon. J.R. RAU: No, I did not.

Ms Chapman: Have a quiet moment.

The Hon. J.R. RAU: Okay, we will have a quiet moment. Maybe they will come back to me with that; they are in a huddle. They will come back to me in a minute if they can help me with it. Can I just say this: in the current legislation, which is the 1981 act, it states that a claim where 'a person suffers loss as a result of fiduciary or professional default', which clearly Magarey Farlam was, there is no question about that, and:

(b) there is no reasonable prospect of recovering the full amount of that loss (otherwise than under this Part),

the person may, by instrument in writing served on the Society, claim compensation under this Part.

The point made by the member for Heysen, if I understand it correctly, is the bar that needs to be cleared is the bar of no reasonable prospect of recovery. What the member for Heysen has said is that unlike every other jurisdiction our fidelity fund, or guarantee fund, should be a fund of first resort which would then have subrogated rights to pursue wrongdoers on behalf of the victim, and that is—

Mrs Redmond: A reasonable proposition.

The Hon. J.R. RAU: It is a point of view which I do not dismiss as being frivolous at all, but, with respect, I do not agree with it. I do not agree with it for a number of reasons. I can tell the honourable member that the Law Society vehemently disagrees with that point of view, not that that necessarily means it is wrong, but the Law Society makes the very good point that a lot of good works are done by the moneys in this fund and if the fund were likely to be the fund of first resort there would be a lot of money coming out and the money would be trickling back in. To the extent that the fund was diminished by that process it would not be available for a whole bunch of other things, such as the litigation assistance fund and various other things it does which are very useful.

So, I think—and the legislation reflects the view I have taken about this for some time—the truth lies somewhere between the proposition advanced by the member for Heysen and the current wording, which I would agree with her is a bit tough. It can result in people having to go off and make ridiculous law claims on the basis that there is a one in a million chance they might actually recover 20¢ from some fellow in Ecuador.

Members interjecting:

The Hon. J.R. RAU: I hadn't even got to the best bit.

The Hon. R.B. Such: Do you want me to do it again?

The Hon. J.R. RAU: No, that is fine. I would like to tell a small short story here. Once upon a time I was a commonwealth nominee on the Legal Services Commission. It was very interesting. My job was to transmit messages from Canberra to the members of the board and to listen to members of the board and transmit messages back. Sometimes I probably did not do it all that well, because I would transmit the message by reading out the letter and then I would say, 'That is a message I had to transmit, but actually I do not agree with that for the following reasons.' Consequently they had the act amended and put somebody else on to watch me. It was fun while it lasted. The point is, in the Legal Services Commission there is a longstanding proposition that there are two tests for whether a person receives assistance. These days it is slightly academic, because—

Mrs Redmond: There is no money for them.

The Hon. J.R. RAU: They do not assist that many people, except in criminal matters, but in civil matters once upon a time there were opportunities to be assisted by the commission. I am dating myself in that space. It might well be in matrimonial cases this is also the case, I would expect. I do recall at one stage there was a dispute in the Family Court, with, I believe, both sides funded by the commission, where the argument was about the pet budgie of the marriage. That really was not a good use of public funds.

Ms Chapman: Buy another budgie.

The Hon. J.R. RAU: Exactly; buy another budgie—or the wisdom of Solomon as in Dumb and Dumber. Anyway, let's not go there. The thing is this, the Legal Services Commission had a dual test. The first part of the test was a person's financial capacity. You had to be reasonably—

Mrs Redmond: Impecunious.

The Hon. J.R. RAU: Impecunious, exactly. You had to be reasonably impecunious to get past the financial test. Once you passed the financial test, that was not it. There was then a merit test. The merit test that was applied by the Legal Services Commission, and I believe applied quite frequently and successfully, said this: if you had sufficient financial hardship, they would only fund you if a prudent self-funding litigant in your position would pursue the action anyway.

What that meant was, people who wanted to do crazy things did not get funded. People who had a reasonable claim might get funded. It is actually section 60 and the amended bit is section (1)(a). This is to be added in after the existing section 60. It says:

In determining whether there is a reasonable prospect of recovering the full amount of a loss for the purposes of subsection (1)(b), potential action for the recovery of the amount that would not be taken by an ordinarily prudent, self-funded litigant is to be disregarded.

If we have the situation where, for example, the money has disappeared, a fellow is overseas, and we do not know where the person is, you would almost certainly pass muster on that test. Even if they put it in a bank somewhere, but the bank is in Lichtenstein and nobody knows how to get through the front door, you would probably get past that test. You would not have people being required to do absurd legal actions just to satisfy the section 60, subsection (1)(b) test, because that makes it clear that that test is not meant to be an enormous hurdle that no-one can clear, but is meant to sort out the people who are just too lazy to do the obvious from the people who are genuinely going to find it difficult to recover.

I think that formulation strikes a reasonable balance with the quite pure position of the member for Heysen. I understand the passion with which she holds that position; I do understand it, and there is certainly a purity about it, no question. But we need to bear in mind that these funds have other functions which, if they did not have them, would actually see the whole community worse off. To make a person who is perfectly capable of launching an action and recovering funds do that is not a great imposition if the recovery is a reasonable prospect. If it is not, that is a different matter.

The point was made by the member for Heysen about how it is said that people will not take as much interest in the matter if they have subrogated rights, but insurers deal with this all the time. There are insurers, and there are insurers and their relationships. The important thing about insurers is that, generally, they have an ongoing relationship with the insured, and the insured knows that to be uncooperative with the insurer might terminate or prejudice their ongoing relationship with the insurer.

That is different to this situation, because in this situation we have a one-off event where the person does not have an ongoing relationship with the insurer. They are in, they get their money, and they are out—that is it; finished. If you are talking about other situations, generally there is an ongoing relationship with the insurer which does set it in a slightly different context.

So, that is, in broad terms, my response to that matter. Mr Deputy Speaker, I believe it is the wish of the chamber to go into committee, and I would be pleased if we could do that. Again, I am happy when we do go into committee to deal with things in a fairly informal fashion without being too particular about clause 1 or clause 2 or whatever it might be.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

Ms CHAPMAN: I will ask this question on clause 1, because I think the Attorney has really covered it. As I indicated in my second reading contribution, we were keen to know what provisions in the bill were based on provisions in the national law, and it seems, if I understand the response correctly, that whilst there have been some early models of the national law, and there has been talk of a further model, no-one has yet seen the final model, so there is not the capacity to answer that in that sense.

I think I understand the explanation as being that a number of issues were raised with the original model at the national level. Areas of importance were identified here in South Australia in the key areas that we have canvassed in the debate, and those have been developed and ultimately came to be a part of the draft from a completely independent origin to what has been discussed and canvassed at the national level. If I have understood that correctly, I do not need to ask any further questions about that.

The Hon. J.R. RAU: Yes, essentially the member for Bragg has summarised it very well. I do not want to mislead the member for Bragg in the sense that it may well be that there are issues which we have picked up in our bill and which were issues in the national bill—so themes may be common—but the idea that any of this has been basically photocopied and slipped in here, absolutely not, because there is nothing even to photocopy from yet.

Clause passed.

Clauses 2 to 3 passed.

Clause 4.

Mrs REDMOND: I have a couple of questions and they are both on page 11 effectively. At the bottom of page 11 there is a definition of 'related body corporate' just above 'serious offence'. I have a question on that too, but 'related body corporate' means:

in relation to a company within the meaning of the Corporations Act...a related body corporate within the meaning of section 50 of that Act...

I for a long time have held the view that we should not actually use definitions which refer to definitions in other legislation, particularly commonwealth legislation. Putting that aside, my question relates to this proposition that the minister very kindly talked about in his second reading closing, and that is the prohibition on non-legal businesses that is referred to under Incorporated Legal Practices in the schedule.

We know for instance that Woolworths owns Beer Wine Spirits and it is a separate organisation, and someone else owns Dan Murphy's, and they have service stations and sell petrol and all sorts of things. Will that definition of related body corporate, coupled with the provision about the prohibition of non-legal businesses, be sufficient to stop Woolworths from owning a completely separate set of organisations which are effectively franchised legal practices?

The Hon. J.R. RAU: That is a very good question. We are just trying to ascertain where in the—

Mrs Redmond: The answer.

The Hon. J.R. RAU: Yes, the answer; indeed. No, but where in the bill 'related body corporate' appears. I note that on page 9 the definition of 'corporation' means:

(a) a company within the meaning of the Corporations Act...; or

(b) any other body corporate, or body corporate of a kind, prescribed by the regulations;

Then 'related corporate body' is 'a related corporate body within section 50 of that act.' That begs the question as to where in the legislation the term related corporate body is used. I will leave my advisors to have a look at it and if we can we will come back to that. If we are not able to get back to it this afternoon, then I am sure between the chambers we can deal with it. I think I understand the point; that is, you do not want to have Coles running through another—yes, I get it.

Mrs REDMOND: That is the point and I am curious as to how exactly it is achieved, and that seemed the appropriate place to ask the question. The other question relates to the definitions immediately under that, and that is 'serious offence' and 'show cause event', which goes over the page. Serious offence basically appears to be, in summary, an indictable offence in this state or any other state or territory, or something which would be an indictable offence here, whether it is in another state or territory or committed overseas. The show cause event basically relates to bankruptcy and bankruptcy-type events on a corporate basis.

There is no definition in the definitions clause of what constitutes a fit and proper person, and a lot of the things later on talk about the commission of serious offences or show cause events, and they seem to be quite constricted. Is there anywhere in this legislation an indication as to what sort of behaviour will constitute someone not being a fit and proper person?

In the medical field, for instance, we know that there are absolute bars on having relationships with patients, which do not apply in the law. Indeed, if one watches the wonderful series Rake it seems that the law is completely at the opposite end of that spectrum, or some lawyers are. I do not suggest that that should be appropriate, but I do have a concern, as I said, about Mr McGee and I consider that he is not a fit and proper person. If we do not have a definition anywhere, what is it that will capture that sort of behaviour which clearly makes someone not a fit and proper person?

The Hon. J.R. RAU: Thank you again for that question. 'Fit and proper person' is a very common formulation in legislation. I think it's in the liquor licensing area, for example. It's in a number of other areas where it is a matter the courts routinely apply. I don't think necessarily there is any advantage in attempting to define something which is a formulation which is well-understood by the courts, but I will certainly consider that matter. As to the other more particular question you ask, I think the answer to that lies more in the unprofessional conduct area than it does in the fit and proper person regime.

Clause passed.

Clauses 5 to 16 passed.

Clause 17.

Mrs REDMOND: Again, the Attorney did refer to some of this in his closing of the second reading. Just in response to the previous question, I referred in my comments to two provisions within clause 17, the first being 20AC, the grounds for amending, suspending or cancelling a certificate where the holder of the certificate is not a whole and fit or proper person, and again over on page 20, section 20AJ, that the Supreme Court can consider on the application of the Attorney-General, the society or the commissioner, or on the court's own initiative, that it is necessary in the public interest to immediately suspend a practising certificate on, firstly, any of the grounds on which a certificate could be suspended or cancelled and, secondly, the ground of the happening of a show cause event (which as we have already established is basically a bankruptcy type event) or any other ground that the court considers warrants suspension of the certificate in the public interest.

The words 'in the public interest' I think may have particular import. My question is, do either of those provisions anticipate the enabling of action being taken now, or once this legislation has passed, against Eugene McGee on the ground either that he is not a fit and proper person to hold a practising certificate, or on the ground that it is in the public interest to do so?

The Hon. J.R. RAU: I thank the honourable member for her question. I think it is significant that the honourable member is talking here about section 20AJ. I say it is significant because the immediate suspension proposition carries about it something of an interlocutory flavour, and it would not be my expectation that that section would be the final determination of a matter of suspension or otherwise of a practising certificate necessarily. You see that the next section, 20AK, talks about surrender and cancellation of certificates and so forth.

It seems to me that, whilst the immediate suspension is something that—it has that sense of urgency about it anyway. The other thing I note is that under subsection (2), there is a requirement that there has to be notice given to the holder of the practising certificate. That has to contain information about the nature of the statement or whatever, and the holder then has right of course, quite reasonably, of being heard on the matter, and then the court, under (5), may revoke at any time, whether or not a response to representation has been made by the holder.

I would say a couple of things about this. First of all, multiple individuals have locus standi here, and it is a completely separate and different type of procedure than the one that previously occurred in relation to unprofessional conduct, as such. It is a different exercise, because the direct substitute for the professional conduct provisions are in 68 and 69, so this is different from those.

The second point is that, as I have said, multiple parties clearly have an opportunity to exercise this application power. It would seem to me that the test would undoubtedly come down to a consideration of what would warrant a suspension and what obviously is in the public interest. I am not in a position to give a legal opinion as to those things any more than the rest of us are.

All I can say is—and I am not arguing with the member for Heysen—if indeed the conduct of Mr McGee or a person in similar circumstances was so reprehensible, it might well be that an application is made under 20AJ. But, given that this is a new provision, one can only assume that the court would give it careful consideration, and the question of what is in the public interest would be something that no doubt the first or second case would start to articulate a bit more clearly.

There is another matter, of course, in relation to Mr McGee that probably should be said; that is, even under the existing disciplinary rules—which, as I think I have made very clear, I think are inadequate—were it not for the fact—

The CHAIR: Sorry, Attorney. There is no flash photography, please. Attorney.

The Hon. J.R. RAU: Mr McGee, by good fortune on his part or bad management on the part of the prosecutor, managed to put before the court unchallenged evidence about his mental state. We might, as lawyers, have a view about that for a whole range of reasons, but let as be very clear about how this unfolded. McGee made an application—

Mrs Redmond: No, let's start at the beginning: McGee knocked someone off his bike and killed him.

The Hon. J.R. RAU: Yes, member for Heysen, I know that. I am not attempting in any way to trivialise Mr McGee's behaviour; not in any way. I am just saying that, as a matter of law, when the case came before the court, McGee introduced (I gather without much warning) psychiatric evidence about his mental state. For whatever reason, an adjournment was not sought. For whatever reason, no other evidence was called on that topic.

One might say the conduct of the prosecution was less than excellent. As I recall, some effort was made to obtain the services of somebody who was not a practitioner from South Australia because of the perceived difficulty of some personal relationship interfering with the way the whole process went. Maybe, in retrospect, that was not a smart call. Anyway, leave that as it is.

Whether any of us like it or not, we cannot get around the fact that the court received evidence, was not asked to adjourn, was not provided with other evidence, and made a finding on the basis of evidence before the court. I know the former premier liked using his Latin—I think that makes the court functus officio, doesn't it? I always wanted to use that; I have never really known what it means. That is it; that is finished.

At that point I think there was some consideration of an appeal or something and then, in the end, they said, 'Well, you know, given the way the evidence'—because, of course, cases are decided on evidence, as we all know. There is the evidence; here is the outcome. I just remind the member for Heysen and everybody else who, quite understandably, has a concern about this matter that if you take the thing back and ask, 'With what has this person been charged and of what have they been convicted?' They have not been convicted of murder, attempted murder, manslaughter, cause death by dangerous driving or whatever.

Ms Chapman: Careless driving.

The Hon. J.R. RAU: Careless driving. I think how we got there is lamentable but it is something over which none of us have any control, nor had any control at the time. The point I am trying to make is this: had there been an application to adjourn when Mr McFarlane's report first popped up or had another witness been called on this topic, and that evidence been quite different, the court might well, for all we know, have come to quite a different view about what the facts of the matter were.

However, one of the matters that the court had to decide was whether or not, as a matter of fact, this person was suffering from a mental impairment at the relevant time. They only had one bit of expert evidence in front of them, which the court accepted because it basically had no choice. To me, if you really want to trace all of this back and find the point in time where things started to go awry in this case, leaving aside the whole beginning, but I am talking about in terms of the prosecution of the matter—

Ms Chapman: What about the police inquiry in the matter?

The Hon. J.R. RAU: Yes, but even then, those things were redeemable had the prosecution not proceeded exactly as it did. Trust me, I am not here defending Mr McGee at all; I am just making the point in answer to the honourable member's question that, whether we like it or not, we can assert the fact that he was driving a vehicle which hit a man and killed him. We can assert that fact—and it is a fact. However, it is also a fact that he was put on trial and ultimately, for whatever reason, convicted of a relatively minor offence. When we ask any of the questions that the honourable member is asking of me, neither the member for Heysen or I can change that fact.

What, ultimately, the Supreme Court would make of that I do not know. It is one of the potential complexities of the matter. I guess that brings me back to the point: as I read this section anybody can say—when I say 'anybody', the court, the attorney, the society or the Commissioner—in the public interest this person should be suspended on the following grounds and give the grounds. Then it would be a matter for the court which, incidentally, has not had an opportunity of this type, nor could it have had an opportunity of this type really, to consider the matter from this perspective, because the legislative framework was not there.

Mrs REDMOND: Whilst I accept everything that the Attorney has said, that is the very reason why I am exploring whether or not this provision, and particularly section 20AJ on page 20, can overcome the inherent problem of what is created by what happened. There were a series of things: the appalling behaviour of Mr McGee in the first place and the failure of the police prosecution with the psychiatric evidence that he has detailed.

What I want to understand is whether or not this provision, or the earlier one about the fit and proper person, will enable an application to be made to say to the court, 'We want you to suspend this person because either (a) he is clearly not a fit and proper person; or (b) it is manifestly in the public interest for the sake of the reputation of the profession (apart from anything else) that this person not be allowed to get away with what he has got away with.'

The beginning of the Attorney's answer suggested to me that, in fact, his anticipation is that this is merely an interlocutory process and not one by which that outcome (which I believe would be the right and proper outcome for the community) can be achieved. I just want to clarify whether that is the Attorney's view.

The Hon. J.R. RAU: I make two points about this. Although it has that interlocutory flavour about it—which is quite a different flavour from sections 68 and 69, as you would appreciate—it clearly does anticipate there being an opportunity for the affected individual to be heard in their own cause and for a review of the decision. That leaves you in subsection (5) with the opportunity for the court to either revoke or to do whatever else they want to do. It might have, in a sense, the flavour of an interlocutory matter, but it is clearly something that is capable of extending over a prolonged period.

On the second point, all I can say, without being just a speculator on this topic, is that the Supreme Court on its own motion, the society, the commissioner or the attorney of the day, could place before the court an application under this section. What the court would make of it would be a matter for argument and determination by the court.

The member for Heysen has properly identified the passages in there that would be of significance, and it might be that one could argue with some considerable force that the public interest is a very broad concept and Mr McGee continuing to practise is bringing disrepute on the profession and the judicial system, and so forth, and it is in the public interest to revoke him. That may well be a successful argument—I don't know—but all I can say with any certainty is any of those four methodologies will enable an application of that type to be placed before the court. What ultimately the court does, I can't determine.

Mrs REDMOND: I have one brief comment, more than a question, but it is something perhaps for the Attorney to take onboard. In relation to the concept of fit and proper person, as you say, it is a well-known legal concept and it appears in all sorts of places, but there was a very well-known case back when I was being admitted in New South Wales of someone who was found to be not a fit and proper person by reason of this, and this only: that this young man had had a relatively minor infraction of the law as a relatively young teenager, so he had a record. When he did his affidavit for admission, he did not disclose that prior conviction. That young law graduate, way back then, never ever was able to get his practising certificate in that state.

So the threshold was considered to be, in fact, much more onerous for those people who wished to be members of the profession than perhaps for the public at large. Yet we seem to have in our midst at least one notable person who is not fit and proper, on any stretch of the imagination, and we have questions about whether that person can be dealt with.

The Hon. J.R. RAU: Just in response to the honourable member's point, it is a very interesting point. We've got a person who as a teenager commits a relatively minor offence. They then undertake the study of law. They then apply for admission, and in their application for admission they omit to mention a relatively minor previous offence. The critical thing, I suspect, in that case is not so much that this person had a relatively minor offence as a juvenile.

The critical thing is that a person who wishes to be admitted to the office as an officer of the court commences their process of admission by way of a misleading statement to the court. That is the problem, and that is not an insignificant problem. As officers of the court we all have responsibilities. Obviously, one of them is a duty of honesty and fidelity to the court. If your very application document discloses you as being either negligent at best or a bit slippery at worst, then that's a problem.

Ms CHAPMAN: I appreciate the contribution made by the member for Heysen and the answers given by the Attorney. Is it the intention of the Attorney to make an application to the Supreme Court in respect of Eugene McGee upon this bill being passed, and has he obtained any legal advice as to whether that's appropriate, prudent, or otherwise?

The Hon. J.R. RAU: I thank the honourable member for her question, but as best I can tell it's not 2:15.

Ms Chapman interjecting:

The Hon. J.R. RAU: Yes, I know, but it's not a question about the bill; it's a question about something completely different. I can say, though, that I have not turned my mind to this matter.

Clause passed.

Clauses 18 and 19 passed.

Clause 20.

Mrs REDMOND: I am only asking this question here because I couldn't find any other place to ask it. It relates to a matter that I spoke about in my comments on the second reading, and that is the issue of people who come from one state to another being able to practise. Whilst I accept the concept of people being able to practise in other states, one would normally expect that you have to have some familiarity with the laws of a particular state in order to practise.

Often, of course, people come in who have a specialist area and they become very familiar with that specialist area, but if we are going to have people who are just generally admitted, I am just curious as to what limitations there are, or conditions there are, on practice under the laws of participating states.

The Hon. J.R. RAU: It is interesting that the honourable member raises this point, because there is something that we did add in here quite late in the piece about different classes of practising certificates. It was a matter drawn my attention by the Chief Justice. It appears that in some states (perhaps New South Wales; I'm not sure) there is a particular subclass of practising certificate which is issued to corporate lawyers—in-house type people. Apparently that is a different certificate class to the certificate class that is issued to other people.

Mrs Redmond interjecting:

The Hon. J.R. RAU: Anyway, I am advised that in other states there are varying classes of certificate. The situation is that, when those people come to South Australia because there is no multiple class of certificate, that person must be issued with general practising certificate or nothing at all. That was considered to be a matter of potential concern.

I do not want to overblow this; the Chief Justice was not panicking because he had some horrible situation that he was worried about. He was just mentioning it was something that came to his thinking. There are provisions here about LPEAC, and off the top of my head I cannot remember what pages they are on, but it talks about certificates of different classes being prescribed by LPEAC. I think we are looking at section 14C, which states that LPEAC has the following functions, makes rules prescribing various things, and then we have added in:

and

(iii) the categories (if any) of practising certificate to be issued by the Supreme Court under Part 3 and the limitations on the practice of the profession of the law that apply in relation to those categories;

I might indicate to the member for Heysen as a matter of interest (perhaps) that one of the matters that has exercised my mind a little are the reports I have had from time to time of people who act as Legal Aid lawyers in criminal cases who, by reason of their inexperience or (perhaps) being in their autumn years, do not do justice to their client.

I have had private conversations with some members of the judiciary who have said to me that they personally felt very awkward that they had been placed in a position where counsel has appeared before them in a very serious matter and it has been transparent that counsel had precious little idea about what they were doing and that they feared they were actually crossing the judicial thin white line by reason of the amount of intervening they were doing in the case in order to preserve some fairness and justice. I have raised this with the Legal Services Commission, which initially had the reasonably predictable, and fair enough, I guess, response about solicitor of choice. To which my retort was: but not on the public purse and not if they are incompetent.

The other possibility that exists here might be something that would assist the Commission in being able to say that, for example, there is some sort of accreditation or something which enables a person to deal with a serious indictable offence, or maybe disentitles them to deal with a serious indictable offence, or whatever the case might be.

I am not saying these categories are in any way formed up or anything, I am just saying it provides potential for dealing with categories of certificate which exist in other jurisdictions that do not exist here which we could confine to their specialty, rather than have them opened up into broader—

Ms Chapman: As a condition.

The Hon. J.R. RAU: As a condition—and it might offer us some opportunity of greater refined management of people who are in the current profession where that is absolutely necessary, but I am just giving that by way of example of how that might be used.

Mrs REDMOND: Could I just explore that a little further, please, Mr Chairman. When I moved here from New South Wales, I had, obviously, qualified in New South Wales, studied law in New South Wales, some of which was federal but predominantly New South Wales. When I came here I then had to practice under supervision and file all sorts of affidavits and appear before the board of examiners, effectively, to satisfy them that I had a thorough and sound understanding of the law of this state before I could be admitted in this state.

I want to explore whether that is going to go by the by or whether, from what the Attorney is saying, there will be some mechanism to make sure that if someone qualifies in Victoria and moves to South Australia and says, 'Well, I qualified in Victoria. I've got my legal practising certificate. Provided I pay my registration and insurance then I can hang out my shingle', or will there be some mechanism to say: yes, you are familiar enough with the laws in this state to be considered sound to practise?

The Hon. J.R. RAU: The answer to that is we are not changing the position that the Supreme Court of South Australia is the ultimate arbiter of admissions. If the Supreme Court of South Australia is of the view that a person needs to demonstrate something to them or that there is some question about them, or whatever it is, we are not removing any of the control that the Supreme Court has over admissions.

Clause passed.

Clauses 21 and 22 passed.

Clause 23.

Mrs REDMOND: The question is really just to add to the first question I think I asked and that is about this issue of practice by corporations, and so I had already noted provisions regulating legal practice by corporations. Perhaps that can be combined with the questions that the Attorney has already taken on notice regarding the related body corporate and the incorporated legal practice issue. It is all by me directed at the same question and that is the extent to which we can have this franchising situation. I do not need to ask any further questions and I fully expect it to be taken on notice.

Clause passed.

Clauses 24 to 36 passed.

Clause 37.

Ms CHAPMAN: I do have some questions and again I expect some of this information will take a little while to collate. For each of the last 10 years, can I ask the following: what was the total income into the fund (we are talking about the guarantee fund here in clause 37); what was the income by source; what was the total expenditure of the fund; what was the expenditure from the fund by category; and what was the end of year balance of the guarantee fund?

The Hon. J.R. RAU: Obviously I do not know these things off the top of my head, but I would have thought they are all publicly disclosed information. I will endeavour to find an answer to those questions.

Ms CHAPMAN: We know that there are certain categories of source and application, but which of the entities are funded from the guarantee fund and, although we know that under the act, how much did each body receive per year in each of the previous five financial years? I ask that for two reasons. One is some of this information comes in the reports of other bodies that do receive income and broken down that can be achieved. We did ask for this information to be provided at a briefing and I will say that, whilst a number of matters have been provided—and we thank your advisers for doing that and following up matters—we have not had any response to this.

The Hon. J.R. RAU: I will see what we can do to assist in relation to those matters. Can I say, whatever the answer to those questions might be, there is still a philosophical point. The fact that the fund is doing useful things was a by the way observation on my part. The main point is that I think the prudent, self-funding litigant test is a reasonable test. It represents a reduction in the barrier for people from the past test, but it does not represent a complete dropping of the barrier to the point where everyone just hops into the fund and it is all subrogated. That is the point.

Ms CHAPMAN: Is there any information about how much is in the fund at present?

The Hon. J.R. RAU: No.

Ms CHAPMAN: Under section 67A of the act, an annual report of the guarantee fund must be tabled before the parliament. I understand the 2010-11 annual report of the guarantee fund has not been tabled in this place. If it has not, could the attorney ascertain why it has not, and have it tabled pretty quickly?

The Hon. J.R. RAU: I will follow these things up. That is why I responded to the first one. I would have assumed, given it is a statutory fund, that there is an annual report which would be tabled in the parliament, but I will have to follow that up.

Ms CHAPMAN: I look forward to receiving that information. I have some other questions on the same clause which, of course, relate to the Magarey Farlam case which, to some degree, is one of the reasons that we are here dealing with this important issue and the reform. Attorney, what was the total number of claims and the total amounts claimed from the guarantee fund by the Magarey Farlam victims?

The Hon. J.R. RAU: I will have to take that on notice.

Ms CHAPMAN: Did the Magarey Farlam partners claim against the guarantee fund under section 66 of the act and, if so, what amounts did they claim and what amounts were they paid?

The Hon. J.R. RAU: Ditto.

Ms CHAPMAN: Were all of the Magarey Farlam client's assets fully accounted for?

The Hon. J.R. RAU: Ditto.

Ms CHAPMAN: Were all dividends paid to the shareholders including those who were initially missing or returned to companies as undeliverable?

The Hon. J.R. RAU: Same again.

Ms CHAPMAN: What is the total itemised cost and expenses of the MF case for all parties, including the Attorney-General, his agencies and officials, the society, its professional standards branch, the supervisor, the manager, the victims, and the former Magarey Farlam auditors, Lawguard Management, law claims, the top-up insurers, and any other entity?

The Hon. J.R. RAU: Look, as much as I am looking forward to finding out answers to all of these questions, that one, with respect, on the face of it, sounds to me to be an oppressive question, because some of that is obviously material that I can have some opportunity to access by reason of it being a government record or whatever, but much of what has been mentioned is not, and I am in no position to direct other entities to do anything in particular about some of these things.

We will do what we can to answer that question but I want to make it clear: I have no idea what insurers or other people have spent. Who knows? If I say to them, 'Please tell me,' they will probably say 'What's it got to do with you?' and 'Who's going to pay for us to spend hours and hours rummaging through filing cabinets?' or whatever it might be. So, I will do my best, but I do not want to mislead you and say you are going to be getting, necessarily in any reasonable time or perhaps at all, detailed answers to all of those things. We will do what we can.

Ms CHAPMAN: I would hope, in response to that, that the Attorney will at least provide the information in respect of his own expenses and the agencies that are directly responsible to him, and I accept that he will do that. As to the Law Society and the other entities, I similarly accept that if that information has not already been sought and obtained, nor any briefings in respect of that from those relevant bodies, that that may take some considerable other effort, but I will await his consideration of that and information, if it is provided.

Finally on this area, given that the Attorney-General has to authorise all payments from the guarantee fund, what are the precise amounts paid to each particular item involved in the Magarey Farlam case? Again, whilst I accept that that would not be at your immediate fingertips, that is information that is directly available, and of which you, your predecessor or that person in office had to approve, and that that would be readily available to you, so I will hopefully receive an indication that that will also be provided.

The Hon. J.R. RAU: I will do my best to find that out. I just want to say that, whilst all of this is interesting, and I am not wishing to say that I will not cooperate in any way—I am not saying that at all—potentially some of the questions that have been asked could involve a number of people doing a great deal of work for a very long time, and I do not see that there is much benefit in that. But, by the same token, there may be a number of aspects of what has been asked for, that are relatively easily obtained, and I will do my best to obtain them.

Mrs REDMOND: The main part of clause 37 of course inserts a new subsection 4, which sets out a whole series of things for which money in the now-called fidelity fund can be applied. It is obvious that it begins by saying, 'Subject to subsection 5', which seems to me to give precedence to subsection 5, which is the clause that deals with the payment of money for what we have always known as the guarantee fund, for the sort of Magarey Farlam claims—the claims against the fund. I want to understand on what basis then the Attorney thinks that it is not appropriate to say, 'Well, that obviously does have priority.'

I said in my contribution that I do not object to the idea that for years and years this fund built up and built up. There were not that many claims and what there were were relatively minor. It had a massive amount of money and people sensibly said, 'You know what? We could use this for some other sensible things. We could set up the Litigation Assistance Fund, we can fund some legal education, we can fund the Legal Services Commission and we can do all sorts of other things.' However, the primary function of that money was always to be used to support the guarantee of solicitors' trust moneys. Am I incorrect in my understanding of that reading of subsections 4 and 5?

The Hon. J.R. RAU: I do not think that section indicates any change in the prime objective for the fund, but obviously because you want to maintain the fund to some reasonable degree you do not want to leave a broad discretion as to what things might be taken out of the fund to pay for. I think it is quite useful that it is quite a prescriptive list of things that can be taken out of the fund, because unless it is in that list you cannot take it out of the fund. I think that actually supports the point that the member for Heysen is making: it is a general fund for that purpose of supporting people who have been defrauded, but there are particular instances where some moneys can be taken out for other purposes.

Mrs REDMOND: But the Attorney does agree that the primary purpose of the fund, as delineated therefore, is to support people who have been defrauded?

The Hon. J.R. RAU: Yes. I am going to be able to say some Latin again: we are completely ad idem on that point. The only question is what the threshold is. That is the only issue. There is no question that this is a supporting fund—no question.

Mrs REDMOND: Clearly I am out on my own on this particular view. As I have already stated, my view is that when someone puts money into a solicitor's trust account of all places, it should be absolutely safe and there should therefore be an absolute guarantee. Once it is in a solicitor's trust account you have an entitlement to get it back, subject to your instructions to spend it for other purposes.

You are telling me though that the Law Society vehemently rejects that proposition and says, 'No, that should not be what we are using the money for,' which is after all money that comes from trust funds held on behalf of clients. So, it is basically a pool created by the public's money, called a guarantee fund—now going to be called a fidelity fund—both of which would suggest to the public that if their money goes in to a solicitor's trust account there it will be safe, and we are proposing law which is not going to guarantee that at all.

Progress reported; committee to sit again.


At 18:00 the house adjourned until Thursday 11 April 2013 at 10:30.


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