Part 11 – Lawyers’ Fund for Client Compensation

11.1 Interpretation

11.1.1  In this Part:

  • claim” means a claim for compensation from the Fund;
  • claimant” means a person who is making a claim;
  • claim’s year” means the period from May 1 to the following April 30;
  • Committee” means the Lawyer’s Fund for Client Compensation Committee;
  • pecuniary loss” includes, but is not limited to, taxes, interest, late charges and similar penalties required to be paid by a claimant as a result of the conduct giving rise to a claim, but does not include general damages.

11.2 Purpose of Fund

11.2.1  The Fund established under Part IV of the Act is to compensate claimants who have sustained pecuniary losses because of misappropriation or wrongful conversion of the claimant’s money or property by a member of the Society or a Law Corporation.

Payment of Premiums

11.2.1.1  If the Fund is insured, the premiums for such coverage may be paid from the Fund.

Establishment of LRA Compensation Fund

11.2.2  There is hereby established a fund, to be called the LRA Compensation Fund, for the purpose of reimbursement in the event the Minister of Finance is required to pay compensation pursuant to the Land Registration Act for claims arising out of dishonesty, fraud or criminal acts in the certifying of title by a practising lawyer.

11.3 Application for Compensation

11.3.1  A claimant may claim for compensation from the Fund or the fund established pursuant to Section 60 of the Act.

Content of Application

11.3.2  A claim for compensation in the prescribed form must be submitted to the Executive Director within six (6) months after the loss came to the knowledge of a claimant and must contain:

  • contact information for the claimant;
  • information about the member of the Society whose alleged misappropriation or conversion gave rise to the claim;
  • detailed facts supporting this claim, including the date on which the claimant had knowledge of the loss;
  • the nature of the relationship with the member of the Society whose alleged misappropriation or conversion gave rise to the claim;
  • such other information as may be required by the Executive Director or the Committee.

Supporting Material

11.3.3  In addition to the information provided in the claim for compensation, the claimant shall provide to the Executive Director supporting material and documentation to substantiate the loss.

Additional Information

11.3.4  The Executive Director at any time may require additional information, additional proof of information or additional evidence to support the claim.

Failure to Cooperate

11.3.5  The Executive Director may deny the claim if:

  • the claimant refuses or fails to comply with a requirement of the Executive Director; or
  • the statutory requirements as set out in Section 57 of the Act and subregulation 11.4.1 are not met.

11.4 Review of Claims

11.4.1  On receipt of a claim, the Executive Director must determine if the claim meets the criteria for consideration by the Committee, specifically whether:

  • money or other property was entrusted to or received by a member of the Society in the member’s capacity as a lawyer;
  • the member of the Society misappropriated or wrongfully converted the money or other property; and
  • the claimant sustained a pecuniary loss as a result of that misappropriation or wrongful conversion.

Application Goes to Committee

11.4.2  If the claim meets the criteria set out in Section 57 of the Act and subregulation 11.4.1, then the Executive Director must:

  • advise the Society’s insurer of the claim in accordance with the requirements of the applicable insurance policy; and
  • provide a report to the Committee with all relevant information about the claim and any relevant supporting materials.

Failure to Meet Criteria

11.4.3  If the Executive Director determines that the claim has not met the criteria as required by subregulation 11.4.1, the claimant will be notified in writing of the reasons the claim has not been reported to the Committee.

Timing of Claim

11.4.4  No payment will be made out of the Fund unless the Executive Director receives notice the claim within six (6) months after the loss comes to the knowledge of the claimant.

11.4.5  Notwithstanding subregulation 11.4.4, the Committee may extend the time for making a claim to a maximum of twenty-four (24) months after the loss came to the knowledge of the claimant.

Consideration by Committee

11.4.6  Following the receipt of a report under subregulation 11.4.2(b), the Committee may:

  • meet with a claimant or a claimant’s representative about the claim; or
  • conduct a hearing to determine the facts the Committee must decide before approving or denying a claim or making a recommendation to Council, which hearing must be conducted in accordance with the rules of natural justice.

Decision of Committee

11.4.7  Following consideration of the claim for compensation, the Committee may:

  • if the claim is for less than $5,000.00, dismiss or approve the claim in whole or in part; or
  • if the claim is for $5,000.00 or more, report to Council with recommendations regarding denial or approval of the claim.

Decision is Final

11.4.8  A decision by the Committee under subregulation 11.4.7(a) or (d) is final and not subject to appeal.

11.5 Consideration by Council

11.5.1  On receipt of a report from the Committee pursuant to subregulation 11.4.7(b), Council may:

  • approve, reject or alter the recommendation of the Committee;
  • determine that additional information is required before it can consider the report and request that the information be provided;
  • take such other steps as it considers appropriate to allow for a determination of a claim; and
  • place conditions that it deems advisable upon any payment.

Decision is Final

11.5.2  A decision by Council under subregulation 11.5.1(a) or (d) is final and not subject to appeal.

11.6 Assignment and Release of Information

11.6.1  If a claim for compensation is approved, the Society must receive:

  • an assignment by the claimant to the extent of the payment, of whatever rights the claimant has against a member of the Society or any other person, which assignment must entitle the Society to claim on its own behalf to recover payments made out of the Fund;
  • a release of any future claim which the claimant may have against the Society and the Fund;
  • such other documentation as may be required by the Committee or Council;
  • consent from the claimant to allow the Society to release the claimant’s name and information about the claim to law enforcement authorities, unless Council consents to the withholding of such information.

11.6.2  The claimant who requests Council to consent to the withholding of information must include with the claim for compensation a letter to the Executive Director requesting that information not be released to law enforcement authorities and explaining the reason for the request.

11.6.3  On receipt of a request from a claimant pursuant to subregulation 11.6.2, Council may:

  • approve the request in whole or in part;
  • reject the request;
  • determine that additional information is required and request that the information be provided; or
  • take such steps as it considers appropriate to allow for a determination of the request.

11.6.4  Notwithstanding Council’s approval of a request pursuant to subregulation 11.6.3(a), the Society must respond fully to lawful demands made by law enforcement authorities for claimant names and claimant information.

11.6.5  The Society will not disclose information that is subject to solicitor-client privilege except as may be required by law.

11.7 Cap on Payments

11.7.1  Payments out of the Fund shall be limited to the amount available to the Society through insurance for all claims made in that claims year.

Other Payments

11.7.2  Council may, in its discretion, reallocate all or a portion of the property of the Fund that is in excess of the Fund’s reserve required to meet its obligations under the Mobility Defalcation Compensation Agreement.

11.8 Interjurisdictional Payments

11.8.1  Any claims from a client arising from the misappropriation or conversion of monies or property by a member while engaged in the practice of law outside the Province shall be processed in accordance with the Mobility Defalcation Compensation Agreement of the Federation of Law Societies of Canada.

11.8.2  The provisions of the Mobility Defalcation Compensation Agreement apply to a claim for compensation from the Lawyers’ Fund for Client Compensation involving a mobile lawyer.

11.8.3  If a dispute arises with another host governing body concerning any matter under the Mobility Defalcation Compensation Agreement, the Executive Director, following consultation with the Executive Committee, may do one or both of the following:

  • agree with the other governing body to refer the matter to a single mediator; or
  • submit the dispute to arbitration under Appendix 5 of the Interjurisdictional Practice Protocol.

LAND REGISTRATION ACT COMPENSATION FUND

11.9 Interpretation

11.9.1  In Regulation 11.9:

  • Department” means the Department of Service Nova Scotia and Municipal Relations;
  • LRA Agreement” means the Agreement between the Minister and the Society dated March 7th, 2003 regarding the relationship, duties and   between the Society and the Minister in relation to the LRA;
  • year” means the twelve (12) month period commencing April 1st and ending March 31st.

Funding

11.9.2  The obligations of the LRA Compensation Fund may be paid out of the fund or funded from fees payable by members, by special levies against members, or may be secured by insurance, bonding or other similar means, as approved by Council.

Payment of Premiums

11.9.3  If the obligations of the LRA Compensation Fund are insured, money allocated to the LRA Compensation Fund may be used for the payment of premiums.

Scope of Claims

11.9.4  Claims against the LRA Compensation Fund shall be:

  1. restricted to claims arising out of dishonesty, fraud or criminal acts in the Certifying of Title by a member;
  2. restricted to claims not covered by another form of compensation;
  3. restricted to claims against members whose precipitating actions occurred during the currency of the LRA Agreement; and
  4. limited in amount as follows:
    1. a maximum of One Hundred Thousand Dollars ($100,000.00) per claim;
    2. a maximum of Two Hundred and Fifty Thousand Dollars ($250,000.00) in total per year, non-cumulative.

Review of Limits

11.9.5  The limits above may be reviewed and adjusted by written agreement between the Society and the Minister, pursuant to the terms of the LRA Agreement.

Notice of Loss

11.9.6  The Department shall notify the Executive Director as soon as practicable after a claim is submitted or action commenced pursuant to Section 87 or 88 of the Land Registration Act, if such claim or action may have arisen out of dishonesty, fraud or criminal acts in the Certifying of Title by a member.

Payment of Claims

11.9.7  Payment of a claim from the LRA Compensation Fund shall only be made following a recommendation of the Committee and approval of Council.

Committee

11.9.8  The Committee shall organize, manage and administer the LRA Compensation Fund in accordance with these Regulations and the LRA Agreement.

Application for Reimbursement

11.9.10  To apply for payment from the LRA Compensation Fund, the Minister, or a claimant who has suffered a loss referred to in subregulation 11.9.4, shall file with the Executive Director a completed application (which may be in a form prescribed by the Society), which written application shall include the following information:

  • the name and address of the member of the Society whose dishonesty, fraud or criminal acts in the Certifying of Title is alleged to have led to the requirement to pay compensation by the Minister of Finance (the “Loss”);
  • the amount of the Loss;
  • details of the circumstances surrounding the Loss;
  • the date upon which the dishonesty, fraud or criminal acts came to the knowledge of the Registrar General or the claimant, as the case may be; and
  • any supporting material or documentation required to substantiate the Loss.

Report to Committee

11.9.11  Upon receipt of an application, the Executive Director will forward the application of the Committee for review.

Inquiry by Committee

11.9.12  The Committee shall consider the application and may make such inquiry as it, in its discretion, deems necessary for the purpose of:

  • determining the facts upon which the Minister relies;
  • determining whether the reimbursement sought in the application comes within the scope of the purpose, restrictions and limitations of the LRA Compensation Fund, as set forth in these Regulations; and
  • recommending whether a payment out of the LRA Compensation Fund to the Minister should or should not be made.

Recommendation of Committee

11.9.13  At the conclusion of its inquiry the Committee shall report its findings and recommendations to Council with respect to each application referred to it by the Executive Director.

Review and Decision by Council

11.9.14  Council shall review the report and recommendations of the Committee and determine that:

  • no payment be made; or
  • a payment be made to reimburse the Minister, or the claimant, in whole or in part; and
  • any payment so made shall be subject to the condition that the Minister, or the claimant, will assign to the Society whatever rights the Minister has against the member who caused the Loss.