Part XIII – Assurance Fund Rules

Definitions

For the purpose of this Part, “member” means a member of the society, a former member of the
society, a professional law corporation and a former professional law corporation.
(Adopted: Rule 13.01, Summer Term Convocation, June 10, 2005)

Funds Continued

13.02 The assurance fund (the “fund”) established by benchers by resolution dated the 4th day of April, A.D., 1983 is continued and is subject, with respect to any claim made against it after the date of coming into force of this rule, to the provisions of this rule.

Amount of the Fund

13.03 The amount of the fund shall be fixed from time to time by resolution of benchers, and such annual assessment shall be made by benchers on the members of the society as shall be required to maintain the fund at the amount so fixed. The amount of the fund shall be reviewed by benchers not less than once every two years.

Application for Grant

13.04 (1) A person who claims a pecuniary loss because of the misappropriation or conversion by a member practicing in the province of Newfoundland and Labrador of money or other property entrusted to or received by the member in the course of the practice of law may apply for compensation from the fund by delivering a written application in an approved form to the executive director. If money or other property is received by a member with whom there is no solicitor and client relationship or otherwise not in the course of the practice of law, any misappropriation or conversion of money or other property shall not entitle a person to claim from the fund. Money or property entrusted to or received by a member as a trustee shall be deemed not to be entrusted to or received in the course of the practice of law.

(2) Every application for payment from the fund shall be filed as soon as practicable after the loss in respect of which the application is made first came to knowledge of the claimant, but in no event more than 2 years after the person seeking compensation became aware of the facts giving rise to the application.

(3) Notwithstanding rule 13.04(2), an application shall not be taken after the expiration of ten years from the date of

(a) the act or omission on which the application is based; or

(b) the last of a series of acts or omissions or the termination of a course of conduct where the application is based upon a series of acts or omissions or a course of conduct

(4) Notwithstanding rules 13.04(2) and 13.04(3) where at the time the right to bring an application arises a person is under disability the time within which to bring an application is postponed for as long as that person is under disability.

(5) To be eligible to make a claim against the fund the applicant must establish that he or she

(a) has suffered a pecuniary loss described in rule 13.04(1);

(b) is not a party to and did not in any way aid, abet or condone the misappropriation or conversion of money or property involved;

(c) is not a business or professional partner of the misfeasant member unless the loss arose in a solicitor and client relationship;

(d) has not been reimbursed from any source for the amount claimed from the fund.

(Amended: Rule 13.04(5d), Fall Term Convocation, October 3, 2014)

(e) is not an insurer or any person claiming under a right of subrogation either in his or her own name or the name of the person directly suffering the loss and is not a trustee in bankruptcy or the purported assignee or transferee in respect of the claim of the person directly suffering the loss; and

(f) shall assign to the society any judgment, order, including a criminal code compensation order, or other right obtained or existing against the member to the extent of the amount payable to him or her from the fund.

(6) An application for reimbursement from the fund shall include the following information:

(a) the name and address of the member of the society whose misappropriation or conversion is alleged to have led to the loss;

(b) the amount of the loss;

(c) details of the circumstances of the loss;

(d) the date upon which the loss first came to the knowledge of the applicant;

(e) confirmation that the loss arose out of a solicitor client relationship between the applicant and the member alleged to have caused the loss; and

(f) any supporting material or documentation to substantiate the loss.

(7) The executive director shall notify the member concerned in writing and refer an application delivered pursuant to rule 13.04(1) to the insurance committee for review and investigation.
(Amended: Rule 13.04(7), Fall Term Convocation, October 15, 2007)

Inquiry by the Insurance Committee

13.05 (1) The insurance committee shall consider the application and may make such inquiry as it in its discretion deems necessary, or advisable including the holding of a hearing, and shall consider any available information, documents or other evidence for the purpose of

(a) determining the facts upon which the application relies

(b) determining whether the applicant is in need of assistance; and

(c) recommending whether a grant out of the fund should or should not be made.

(2) The insurance committee may postpone its investigation of a claim pending

(a) final disposition of any disciplinary action, including judicial review or an appeal taken against or by the member in respect of whom the claim is made; or

(b) final disposition of any criminal prosecution, including appeal, taken against or by the member or former member in respect of whom the claim is made.

(3) At the conclusion of its inquiry, the insurance committee shall report its findings and recommendations, with reasons, to the benchers with respect to each application.
(Amended: Rule 13.05, Fall Term Convocation, October 15, 2007)

Payment From Fund

13.06 (1) Following receipt of the insurance committee recommendations under rule 13.05(3), benchers may, in its sole and absolute discretion, and on terms it thinks fit

(a) pay money out of the fund to compensate the person entitled for all or part of the loss; or

(b) determine that no payment shall be made.
(Amended: Rule 13.05, Fall Term Convocation, October 15, 2007)

(2) In deciding the amount of compensation, if any, payable from the fund under rule 13.06(1), benchers shall have regard to all relevant factors, including the following:

(a) the hardship to the applicant;

(b) the extent to which the applicant contributed to, acquiesced in or delayed in reporting the misappropriation;

(c) the extent to which the applicant cooperated in the investigation or adjudication of the application; and

(d) whether there are alternate civil or criminal remedies available to the applicant.

(3) In considering an application under this Part, benchers may in its sole discretion hear the applicant or any other person, including the concerned member, respecting any facts or issues with which it is concerned and shall decide the procedure to be used.

(4) As a pre-condition to payment, benchers may require the applicant to obtain and/or assign to the society part or all of a civil judgment or criminal code compensation order made against the member, or any other person reasonably perceived to be liable for the loss, respecting money or other property claimed by the applicant.

Maximum Grant

13.07 (1) Subject to 13.07(3), payment of grants from the fund shall be limited to:

(a) the sum of $300,000 in respect of any individual claim

(b) the sum of $300,000 arising from a single transaction, regardless of the number of persons presenting a claim in relation to this transaction.

(c) for all claims in a given claims year, total grants paid by the fund shall not exceed $1m. However, this limit per claims year may be exceeded in a year when the Law Society has obtained insurance coverage applicable to the claims made, the annual grant limit then being no greater than the limit of such insurance.

In this rule, the term claims year refers to the period from July 1st to the following June 30th.

Once an occurrence has been reported to the fund, all claims arising from that occurrence are assigned to the claims years in which the occurrence was first reported.

Occurrence means the misappropriation or wrongful conversion by a member of money, securities or property entrusted to or received by a member in the member’s capacity as a lawyer.

(Amended: Rule 13.07 (1a,b,c), Fall Term Convocation, October 3, 2014)

(2) Benchers may authorize payment out of the fund for expenses incurred

(a) to administer the fund

(b) to investigate applications to the fund

(c) for any matter relating to the protection and maintenance of the fund.

(3) Benchers may in their sole and absolute discretion authorize grants from the fund in excess of the limits set out herein.

(Adopted: Rule 13.07(3), Fall Term Convocation, October 3, 2014)

Recovery of Payment Made

13.08 Where benchers pay money out to the fund, benchers may order that the member, on account of whose misappropriation or conversion the money is paid out, repay to the society all or part of that amount and fix the date by which the repayment shall be completed.

Inter Provincial Practice of Law

13.09 Any claim from a client arising from the misappropriation or conversion of money or property by a member engaged in the practice of law outside the province shall be processed in accordance with the interjurisdictional practice protocol of the federation of law societies of Canada.

(Adopted Rule XIII, Fall Term Convocation, October 1, 2001; Amended Rule XIII, Summer Term Convocation June 10, 2005)