Client funds interest in a solicitor's fiduciary account stays with clients absent valid agreement or binding custom.

Interest earned on clients' money held by a solicitor in a fiduciary capacity remained beneficially owned by the clients unless informed clients agreed, expressly or by implication, or a legally sufficient professional custom transferred that ownership. The practical difficulty of allocating interest among many clients did not change the proprietary position. The same principle applied to interest arising from loans made out of clients' funds. As the interest did not belong to the solicitor, it could not be treated as his earned income, and the claim to earned income relief failed.

---

---

Issues: Whether interest earned on clients' money held in a solicitor's general account and placed on deposit receipts marked "for clients", together with related loan interest, belonged to the solicitor so as to constitute his earned income and qualify for earned income relief.

Analysis: The interest was generated by the use of clients' money held in a fiduciary capacity. In the absence of evidence of express or implied agreement by informed clients, or a legally sufficient and notorious professional custom, the solicitor could not convert that interest into his own property. The difficulty of allocating interest among numerous clients did not alter the proprietary position. The same reasoning applied to interest arising from loans made out of clients' money, since the beneficial ownership of the interest remained with the clients whose funds produced it.

Conclusion: The interest did not belong to the solicitor and therefore could not be treated as his earned income. The claim to earned income relief failed.

Ratio Decidendi: A fiduciary who earns interest from clients' money cannot retain that interest as personal income unless a valid agreement or legally established custom transfers the beneficial ownership to him.

---