Council of the Law Society of New South Wales v Bouzanis

The Council of the Law Society of New South Wales (the appellant) appealed to the Court of Appeal of New South Wales against a decision of the Civil and Administrative Tribunal that dismissed its application to remove solicitor Mr. Bouzanis (the respondent) from the roll of legal practitioners. The dispute concerned whether certain funds received from clients, intended to cover disbursements payable to third parties such as barristers and expert witnesses, constituted "trust money" under the *Legal Profession Act 2004* (NSW). The respondent had deposited these funds into his office account and subsequently used them for his own purposes, resulting in the non-payment of these third parties.

The primary legal issues before the Court of Appeal were whether the disbursements, described as "transit money" payable to third parties, were properly characterised as "costs due to the practice" and therefore not trust money, or whether they remained trust money requiring deposit into a trust account. The court also considered whether the respondent's use of these funds for his own purposes amounted to misappropriation of trust moneys.

The Court of Appeal reasoned that the definition of "legal costs" in section 4 of the *Legal Profession Act 2004* (NSW) encompassed amounts payable to third parties for services rendered in connection with the client's matter. Consequently, money received by a solicitor for the express purpose of paying such third-party disbursements was not "costs due to the practice" in the sense of being the solicitor's own income or fees. Instead, it was money held by the solicitor on behalf of the client for the specific purpose of payment to those third parties, thus constituting trust money. The court found that the Tribunal had erred in its interpretation of the Act.

The Court of Appeal allowed the appeal, set aside the Tribunal's order dismissing the application, and ordered a new hearing of the application by the Tribunal. The respondent was ordered to pay the appellant's costs of the appeal and was granted a certificate under the *Suitors’ Fund Act 1951* (NSW) in respect of those costs.