First public consultation to seek feedback on proposed measures to safeguard conveyancing moneys

11 AUG 2009

First public consultation to seek feedback on proposed measures to safeguard conveyancing moneys

Consultation Period:
11 Aug 2009 to 26 Aug 2009

2 A home is often a person’s most substantial asset. The money intended for its purchase or arising from its sale should therefore be properly protected.

Background

3 At present, the law does not prohibit the lawyers from holding clients’ conveyancing moneys as a stakeholder. In recent years, there has been a spate of cases where lawyers absconded with clients’ conveyancing moneys. For information on some past cases, please refer to Annex A.

4 Over the years, to address the issue, the Legal Profession (Solicitors’ Accounts) Rules have been tightened. After lawyer David Rasif absconded with $10 million of his clients’ moneys in 2006, the Legal Profession (Solicitors’ Accounts) Rules were amended in July 2007 to mandate that no sum exceeding $5,000 should be drawn except upon a cheque drawn by two lawyers. A lawyer could not receive or hold conveyancing moneys unless he had at least two signatories to his client account. Despite these amendments, lawyer Zulkifli Bin Mohd Amin managed to abscond in November 2007 with an estimated $6 million of clients’ moneys.

5 At the Opening of the Legal Year in January 2008, Chief Justice Chan Sek Keong was concerned that despite the tightening of the Solicitors’ Accounts Rules, the measures could not prevent desperate or crooked lawyers from helping themselves to clients’ moneys, and that the criminal conduct of this nature harms not only the reputation of the legal profession, but also the victims who could not get full compensation. The Chief Justice then appointed a Review Committee chaired by Justice VK Rajah to look into making changes to the conveyancing system to prevent further misappropriation of clients’ moneys by errant lawyers. The central recommendation of the Review Committee made in August 2008 was that lawyers be prohibited from receiving conveyancing moneys, and that an Implementation Committee be formed to put measures in place. The Chief Justice agreed with the recommendation of the Review Committee and forwarded the Review Committee’s report to the Minister of Law for consideration and implementation.

6 Arising from the recommendations of the Review Committee, the Minister for Law appointed Mr Wong Meng Meng, a Senior Counsel and also Vice-President of the Law Society, to chair an Implementation Committee to develop and implement a workable solution in October 2008. The Implementation Committee includes representatives from the Law Society, Central Provident Fund Board (CPFB), Monetary Authority of Singapore, Singapore Land Authority, Inland Revenue Authority of Singapore (IRAS), Association of Banks of Singapore, the Attorney-General’s Chambers, the Singapore Academy of Law and the Ministry of Law.

Views sought on proposed measures

7 The Implementation Committee has proposed a multi-pronged solution that provides adequate safeguards for buyers and sellers of properties with minimal disruption to the current conveyancing practice. The Ministry of Law seeks views on these proposed measures:

  1. Lawyers will be prohibited from receiving conveyancing moneys into their regular client account to which they have free access, preventing the potential for criminal breach of trust;
  2. Breach of this prohibition will subject the lawyer to disciplinary proceedings;
  3. Conveyancing moneys held by a seller's lawyer in his regular client account (for example, the Option deposit of four or nine per cent of the purchase price which a buyer passes to the seller's lawyer upon exercise of Option) will have to be held by entities approved and appointed by the Minister for Law;
  4. The Singapore Academy of Law (SAL) will be the main entity appointed to hold such conveyancing moneys. The Ministry of Law is also in ongoing discussion with potential participating banks to explore the provision of a service to hold the Option Deposit, and
  5. To prevent manipulation of names of payees, the appointed entities will only release the conveyancing moneys that they hold to approved categories of payees, namely sellers, mortgagee banks, buyers, the CPFB, the Housing & Development Board, IRAS and the Management Corporation of the subject property for arrears in management and sinking funds.

8 The Ministry of Law invites interested parties to provide their feedback on the proposed measures to safeguard conveyancing moneys. The consultation period is from 11 to 26 August 2009. The feedback may be sent in electronic or hard copy form to:

Legal Policy Division
Ministry of Law
100 High Street
#08-02, The Treasury
Singapore 179434
Fax: 6332 8842
E-mail:MLAW_Consultation@mlaw.gov.sg

Attachments

Last updated on 26 Sep 2013