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Lawyers and Conveyancers Act 2006

Fidelity Funds

328: Provisions applicable if fund insufficient to satisfy claims

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"What happens if there's not enough money to pay all claims against the Fidelity Fund"

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If you make a claim against a Fidelity Fund and there is not enough money to pay you, the fund will use future money to pay your claim. The organisation managing the fund decides which claims to pay first, considering how much hardship each claimant will suffer. They must follow rules, such as paying smaller claims first, and prioritising claims based on when they were made, unless there are special circumstances, as stated in section 329.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM367809.

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327: Money recovered by claimants to be held in trust if rights of subrogation apply, or

"Money from another source must be held in trust to repay the Lawyers' or Conveyancers' Fidelity Fund"

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"The Governor-General can decide to limit a special fund to help pay for legal costs."

Part 10Fidelity Funds

328Provisions applicable if fund insufficient to satisfy claims

  1. No money or other property belonging to a regulatory society other than the fund held by it under this Part is available for the satisfaction of any judgment obtained against the society in relation to the fund, or for the payment of any claim allowed by the society.

  2. Subject to section 329, if at any time the fund held by a regulatory society under this Part is not sufficient to provide for the satisfaction of all judgments obtained against the society in relation to the fund and for the payment of any claims allowed by the society, or for any other payments authorised under this Part or rules made under this Part, those judgments, claims, or payments must, to the extent to which they are not so satisfied, be charged against future accumulations of the fund.

  3. A regulatory society may, in its absolute discretion, having regard to subsection (4), determine the order in which the judgments and claims so charged against the fund are to be satisfied, and may, if the amount accumulated is not sufficient to satisfy all such judgments and claims in full, satisfy any of them in whole or in part.

  4. Without limiting the discretion of a regulatory society, in applying the fund towards the settlement of any such judgments and claims, it must have regard to the following rules:

  5. it must take into consideration the relative degrees of hardship suffered or likely to be suffered by the several claimants in the event of their claims against the fund not being satisfied in whole or in part:
    1. except in special circumstances, claims for amounts not exceeding $1,000 must be satisfied in full before claims for amounts exceeding $1,000 are satisfied to a greater extent than $1,000:
      1. where all other considerations are equal, claimants are to have priority as between themselves according to the dates of the judgments or the dates when the claims were admitted by the society, as the case may be.

        1. In this section, fund means,—

        2. in relation to a regulatory society that is the New Zealand Law Society, the Lawyers' Fidelity Fund; and
          1. in relation to a regulatory society that is the New Zealand Society of Conveyancers, the Conveyancing Practitioners' Fidelity Fund.

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