The monies paid by Sonal is considered as transit money. Hence, the firm must deliver the payment
to the other party as per the instructions of the client as soon as practicable. (s140 (1) of LPUL).
For record keeping purposes, the transit money must be noted within the practice record and brief
particulars must be made to identify the relevant transactions. This record must be maintained for
a period of 7 years (s140(2) and (3) of LPUL).
Alex Green tells you that Jim Payne and Valerie Sanders have arranged to collect their cheque this
afternoon. There is a nil balance in the office account. A copy of the trust ledger in respect of the
matter of their proposed purchase of the Seabreeze newsagency and the trust cheque awaiting your
signature is at
Assuming you are authorised to sign trust cheques, or to send that money by way of
EFT, should you sign the cheque or authorise the transfer of funds?
If the trust cheque is signed and handed to the clients in its present form, identify any
The trust cheque has been issued for the amount of $2455, however, according to the
trust ledger, the remaining balance should be $2500. Hence, due to this error, I cannot
sign the cheque. Further, the cheque does not include the full name of the clients.
If the trust cheque is issued, the incorrect amount will cause a deficiency within the trust
account. According s148 of the LPUL, law practices are prohibited from causing a
deficiency without a reasonable excuse. An error must be corrected as soon as possible.
Under s154(1) of LPUL, the legal practitioner must provide written notice to the Law
Society as soon as he or she is aware of the irregularity.
Assume your first practising certificate was issued to you three months ago. Assume also that Joel
Edge's brother, Mitchell, has been admitted but has never engaged in legal practice and Mitchell is
not employed in the law practice and has no other connection with it.
Was Joel entitled to allocate the power to operate the trust and office accounts to both you
and Mitchell during Joel's absence?
Was it appropriate for Joel to have allocated this power to both you and Mitchell?