The Law Society’s Ethics Committee recently released the following Ethics Ruling as guidance for the profession. For your convenience, we’ve listed the ruling below but it can also be found in our Ethics Rulings Database.
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Date: September 13, 2018
Cite as: 2018 SKLSPC 9
Code Chapter: 7.2-11
Code Heading: Undertakings and Trust Conditions
Classification: Trust funds
Practice Area: Real Estate
Lawyer X has retained money in trust on a real estate matter for Client A for approximately 7 years. The money is bound by trust conditions.
Lawyer X inherited the file and the trust conditions from Lawyer Y. Lawyer X is unable to fulfil the trust conditions in order to release the money from their trust account. Lawyer X has attempted to negotiate a resolution of the matter with Client A and the opposing party, who is now self-represented, with no success. Neither Client A, nor the opposing party wish to pursue the release of the money held in trust.
In the circumstances, Lawyer X needs to consider how to divest themselves of the funds held in trust. If Lawyer X is unable to obtain instructions from their client, Lawyer X should consider withdrawing. The ownership of the trust funds is a legal issue that will likely require the determination of the courts.
Generally, lawyers are again encouraged to ensure that, in accepting trust conditions, they think ahead as to whether the conditions allow for a certainty of end point in relation to funds held in trust. If the release of the trust funds requires action on behalf of another party outside of the control of the lawyer, consider using a third party to confirm completion of the trust condition, or implementation of deadlines after which the money will be paid to a certain party, or arbitration or mediation clauses in the event of disagreement.