QLD Conflict of Interest between a solicitor and conveyancer

[Mec]

My ex partner and I just sold a home due to separation/divorce. His solicitor and our joint conveyancer (who is handling the home sale) seem to have a conflict of interest.

1. I have requested the Conveyancer's trust fund details over the phone. She said she would send me an e-mail with the details.
2. Instead of getting back to me, she sent a letter to the other party's solicitor saying 'We can't hold the funds but we are happy to put it in your trust fund' (I wasn't CC-ed into correspondence).
3. My ex's solicitor then sent me a letter saying that the funds can't be kept at the conveyancing firm and had to be held at their firm . They made it sound like I have no choice but to agree to this arrangement. They referred to the email received from the conveyancer. I believe I should have been notified (about the inability to hold my funds) by my own conveyancer and not from the other party's solicitor.
4. I called the conveyancer and confronted her. I demanded an explanation why they were suddenly unable to hold the excess funds from the sale. She completely turned around and suddenly claimed 'Of course we can hold the funds. That's no problem.'
5. She immediately sent an e-mail to my ex's solicitor saying she's been advised by her client (me) to hold the funds at their account.
   
   Why did she lie to me?
   I don't understand why she first claimed they can't hold the funds, and then changed her mind when I confronted her. This upset me immensely. This isn't right. These two women clearly tried to manipulate me into putting the excess money from the sale into my ex's solicitors' trust account.
   
   Would my ex benefit from this arrangement? (the funds' being in his solicitor's account)
   What would be the benefits of this arrangement? Could my ex pay legal fees with it, before settlement? Could his solicitor take a cut in advance?
   
   Is this misleading behaviour even legal?
   Is this a code of conduct breach? Is this an obvious conflict of interest? Do I report this to someone? Should I ask for disclosure of conflict of interest and the nature of their relationship?
   
   Should I get a different conveyancer immediately?
   Can the action of a biased conveyancer in any way affect the outcome of the property settlement? Can she release funds to the other party without my consent?
   
   What do I need to know about trust funds?
   How do I know who I can trust? What is my best option?
   
   Can co-owners of the same property use different conveyancers in settlement?
   My ex and I have no contact. I fell uncomfortable with sharing a conveyancer with him, when she is clearly showing bias and collaborating with the other party's legal representation.
   
   I can't afford legal representation right now. Can Legal Aid represent me?

 

[Rob Legat - SBPL]

My first question is how do you know that your conveyancer initially said that she couldn't hold funds in trust? You said you weren't copied in on the correspondence. It's possible that she didn't lie to you - and that whoever did tell you that was the liar, or there could have been a miscommunication and you're not aware of the full story.

It's worth pointing out, too, that 'conveyancers' in Queensland are really paralegals working for a law firm (either directly or via an offshoot). Only solicitors in Queensland can do conveyancing work - either directly or via supervision. If you're ever experiencing trouble with the person handling the conveyance, ask to speak to the supervising solicitor.

What is the purpose of the funds? Is it in the nature of shortfall for the bank, or is it for the legal fees on the conveyance?

Done properly, there should be no problem in your ex's solicitor holding the funds in trust - provided they do it the right way. Under the trust accounting requirements, they would be required to open a new stakeholder file in the names of you and your ex and only disburse the funds on instructions from both of you. When received they'd need to issue a trust account receipt showing the names of the clients - that's how you check it's in both names. Then, the funds cannot be appropriated for an unauthorised use.

While you can technically get separate representation for the conveyance, it will cost you and it will make matters more technically difficult (i.e. more expensive). You'll be doubling up on processes. The sale process is relatively straightforward. Simply put: review contract, monitor contract, arrange release of mortgage, execute transfer documents, calculate/check settlement figures, attend settlement.

The Queensland Conveyancing Protocol, which they should be following, explains the process as it goes and includes a lot of information. You need to read all of it - and if they're not explaining it, ask why not.

I doubt Legal Aid will assist with this, but I can't say for sure.

 

[Mec]

My first question is how do you know that your conveyancer initially said that she couldn't hold funds in trust? You said you weren't copied in on the correspondence. It's possible that she didn't lie to you - and that whoever did tell you that was the liar, or there could have been a miscommunication and you're not aware of the full story.

The e-mail I received from my ex's solicitor (asking me to approve the funds being kept in their trust account) referred to the e-mail from the conveyancer, which they have attached, where the conveyancer said: 'Unforunately we are unable to hold funds in our trust account, we can however transfer them to your trust.' I was disappointed that this information came from the other party, not my own conveyancer. Like mentioned above, I wasn't CC-ed into that correspondence between them.

On a Wednesday I have requested from my conveyancer to give me details of their trust account so I can forward them to the bank. She said it was no problem and that she would e-mail me the details. However, instead, two days later I have received the before-mentioned e-mail from the solicitor. After I have confronted the conveyancer about her e-mail correspondence with the solicitor, she went back to claiming that it was 'preferred' if the solicitors kept the money, but they can (still) do it if I would like them to.' It seemed to me that she consulted with the other party about giving me the trust account details, and the other party expressed a preference to hold the money in their account, so the conveyancer wrote them an e-mail saying they can't hold the funds, so that the solicitors could get my consent for the funds to be kept with them.

It's worth pointing out, too, that 'conveyancers' in Queensland are really paralegals working for a law firm (either directly or via an offshoot). Only solicitors in Queensland can do conveyancing work - either directly or via supervision. If you're ever experiencing trouble with the person handling the conveyance, ask to speak to the supervising solicitor.

Yes, I plan on speaking to someone higher up in that company today.

What is the purpose of the funds? Is it in the nature of shortfall for the bank, or is it for the legal fees on the conveyance?

The funds are subject to a dispute after separation (De-facto). My ex refuses to settle and we are in the process of agreeing on the split of the home proceeds. The money we are in dispute of is my family inheritance and is quite a substantial amount.

The sale process is relatively straightforward. Simply put: review contract, monitor contract, arrange release of mortgage, execute transfer documents, calculate/check settlement figures, attend settlement.

What do you mean by attend settlement? Do I need to be in the same room as my ex?

The Queensland Conveyancing Protocol, which they should be following, explains the process as it goes and includes a lot of information. You need to read all of it - and if they're not explaining it, ask why not.

Can you please send me a link?
Thank you for your reply. Much appreciated.

 

[Rob Legat - SBPL]

Regarding the holding of trust funds, I would say a mix of things has happened (in varying degrees): (1) The conveyancer determined there was multiple reasons for the trust funds and that they shouldn't be the ones to hold funds for purposes not related to the sale itself, and/or (2) they got cold feet about holding funds that could potentially wind up disputed.

Asking for an explanation of what has gone on is suitable. Be aware that in this situation the conveyancer is acting for both you and your ex - a precarious position. Any hint of a dispute between the parties and they're going to be locked into being unable to do anything and may decide to terminate their retainer - because they can't act where there is a conflict.

Whoever holds the funds in trust, you need to make sure they're acknowledging in writing as being held for both you and your ex. If there's a dispute about how they're to be disbursed, then the funds will have to be paid into the court and an application made by one of you two (you or your ex) to sort it out. If whoever holds the funds treats them in any other matter while there is a dispute, they're begging for trouble as that is a direct breach of the trust accounting rules.

You won't need to attend settlement if the conveyancer is doing everything. You can choose to do so, but it is unusual. Further, if electronic conveyancing is being used (admittedly, still very rare in Queensland), then it's all done in cyberspace.

I can't send give you access to a copy of the Conveyancing Protocols - they're owned by Lexon, the Queensland Professional Indemnify insurer and cannot be given to the public without written approval from them. They won't mean anything in themselves in any case. What I was more meaning is that the conveyancer should be sending you information such as a report on the contract, a booklet about the conveyancing sale process, ensuring proper identification procedures are followed, sending you a checklist of things you need to do, outlining any searches that need to be done, and so on.