Wilkinson Kate: Lawyers and Conveyancers Bill — In Committee 
Wilkinson Kate: Lawyers and Conveyancers Bill — In Committee 
[Volume:629;Page:1543] 
KATE WILKINSON (National) 
: 
 Following on from what my learned colleague Mr Finlayson has said and bearing in mind that I come from the other end of the spectrum—being a mere conveyancer and certainly not being someone who is ever likely to take silk— 
Simon Power 
: Oh steady on. 
Dr Richard Worth 
: Oh you’re too quick to deny your skill. 
KATE WILKINSON 
: I may wear silk I tell members but the chances of me taking silk are I think very remote. I will concentrate on one clause of Part 6 that as a past conveyancing lawyer I find is of the utmost importance. It is clause 102 which relates to the control of trust accounts. 
Again my learned colleague Mr Finlayson has commented on the changing nature of the profession and I certainly agree wholeheartedly with that. I also suggest that in some cases it is changing because the onerous obligations of running a trust account should not be underestimated. Having said that on the other side of the coin I appreciate and accept that it is absolutely vital that when we are dealing with other people’s money the correct rules and procedures are in place for that. That is perhaps reflected in clause 102 which has 25 separate purposes for which the Governor-General may make regulations. Those purposes are all in relation to the use auditing and regulation of trust accounts. I am not decrying that at all; I think it is great that it should be emphasised like that. 
I have a couple of queries perhaps for the Minister. One of the requirements under those regulations is that a firm keep a register of properties. I am not sure exactly what that means because if conveyancing firms had to keep a register of all the properties they ever dealt with that might create its own bureaucracy by itself. Subclause (f) states in full: “requiring the keeping of registers of properties authorities and appointments held by practitioners and related persons or entities and incorporated firms:”. If I go back to my former career if you like I can perhaps compare that only to what we used to call the register of trust securities. That was a very important register that we all learnt about in our first year of law never having heard about it before which basically meant that if a firm had control say with a power of attorney without an independent attorney or the like then that firm had to fill in the register of trust securities. So I wonder whether the keeping of a register of properties is meant in some way to relate to that register of trust securities. Perhaps when I have finished my call the Minister may like to clarify that for me. 
I will move on to consider the regulations themselves. They regulate “the use and audit of trust accounts of practitioners …” which is very vital and prohibit or regulate “the collection of money of a client by a lawyer …”. Again we are dealing with other people’s money; we are not dealing with lawyers’ money. It is important that those regulations are strict. There are provisions for “regulating the lending of money of a client by a practitioner …” and “the borrowing of money of a client by a practitioner …”. We do not have to look very far in the newspapers to see a recent incident of a practitioner who may perhaps have borrowed money from his client using an enduring power of attorney. Certainly in my 26 years as a conveyancing lawyer that was not a practice to be encouraged—whatsoever. 
 The payment investment and recording of money and other valuable property entrusted to practitioners is vital in the regulations as well. It is important that the checks and balances are put in place. The money belongs to other people; it does not belong to the practitioner. Therefore the regulations should be very strict and very robust. 
In my earlier call in relation to Part 6 I mentioned the training in relation to trust account management and I certainly do not intend to repeat myself. Suffice it to say to the Minister that I would like to know whether the old trust account partner training is to be incorporated into the trust account management training rather than doubling up the training. I would appreciate some clarification on that point. There are regulations to prescribe the duties of persons appointed to conduct examinations of accounts and prescribing the duties of practitioners. In relation to conducting the examination of accounts one may find anecdotally that many of the defalcations have been discovered and revealed not by persons examining the accounts but by the partners of the defalcating person. Although I endorse the robust examination of accounts I think it should be done by somebody who is suitably qualified to be able to understand the vagaries of any legal system and of the conveyancing systems. 
I would perhaps offer caution at this stage especially in relation to the Land 
online 
 dealings. As I understand it Land 
online 
 electronic dealings will soon become compulsory for all law firms and conveyancing firms. Although I accept that that is a very efficient way to conduct conveyancing I also wonder whether there will be enough checks and balances to ensure that skulduggery does not happen. To give an example—not to give away any trade secrets of course—it is very easy for a solicitor to sign a document and have it witnessed when the signature is not that of the client. So it is actually very very easy for such misdeeds to occur and the protections in place have to be somewhat robust. 
The regulations further provide for “a scheme for the protection of money entrusted to practitioners …”. I am not quite sure exactly what is meant by that—whether there is to be a separate layer of bureaucracy in relation to that or whether it is just a catch-all phrase relating to trust accounts in general. There are further provisions for “the establishment of an inspectorate by the New Zealand Law Society or the New Zealand Society of Conveyancers or by both …”. I mentioned before that I am concerned that we do not build up conveyancers by bringing down law practitioners in the sense that the standards must dovetail in order to ensure that the integrity of both professions is suitably maintained. Again I urge that some cognisance be taken of that. 
There are quite a few provisions for regulations. One of them clause 102(o) authorises any auditor or the Law Society “to communicate directly for the purpose of establishing whether the regulations have been complied with—(i) with clients of lawyers and with related persons or entities; and (ii) with clients of incorporated law firms; and (iii) with clients of conveyancing practitioners and with related persons or entities; and (iv) with clients of incorporated conveyancing firms; and (v) with other persons:”. Again I seek clarification from the Minister that that regulation is intended to be subject at all times to professional privilege and that that certainly is not intended to be breached pursuant to clause 102(o) of the bill. 
There are other regulations that will obviously prescribe the fees and costs. We all know that the fees and costs of running a trust account are not insignificant. Having said that I think the current system in which people do not get audited regularly—it is more of a spot audit—is certainly adequate and suitable and it seems that that is prescribed again in this bill. 
In conclusion subject to clarification on those two points I certainly endorse the strict and robust provisions for regulations relating to trust accounts. Obviously that will be dependent on the regulations themselves but judging from the intent in the bill it is certainly clear that the maintenance of a trust account is an issue that is taken very seriously—and it should be taken very seriously. I endorse the robustness of clause 102. 
The CHAIRPERSON (H V Ross Robertson) 
: We now move to the voting on Part 6.