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PART VI
LEGAL PRACTITIONERS’ FIDELITY FUND
(ss 53-78)

53. Legal Practitioners’ Fidelity Fund

The Legal Practitioners’ Fidelity Fund established by section 2 of the Legal Practitioners’ Fidelity Fund Act, 1990 (Act 22 of 1990), shall, notwithstanding the repeal of that Act by this Act, continue to exist under the same name.

54. Purpose of fund

(1) Subject to the provisions of this Act, the fund shall be applied for the purpose of reimbursing persons who may suffer pecuniary loss as a result of-
(a) theft committed by a legal practitioner or a candidate legal practitioner attached to, or a person employed by such a legal practitioner, of any money or other property entrusted by or on behalf of such persons to the legal practitioner or to such a candidate legal practitioner or a person employed in the course of the legal practitioner’s practice or while acting as executor or administrator in the estate of a deceased person or as a trustee in an insolvent estate or in any other similar capacity; and
(b) theft of money or other property entrusted to an employee referred to in paragraph (cA) of the definition of “estate agent” in section 1 of the Estate Agents Act, 1976 (Act 112 of 1976), or a legal practitioner referred to in paragraph (d) of that definition, and which has been committed by any such person under the circumstances, and in the performance of an act, contemplated in those paragraphs, respectively.

(2) The Fund shall not be applied to reimburse any person as contemplated in subsection (1), unless, in the case of a theft committed by-
(a) a legal practitioner, the legal practitioner was at the time of the theft the holder of a fidelity fund certificate or an exemption granted by the Council under section 67(2);
(b) a candidate legal practitioner, the candidate legal practitioner was at the time of the theft attached to a legal practitioner contemplated in paragraph (a); or
(c) a person employed by a legal practitioner, the legal practitioner by whom such person was employed at the time of the theft was a legal practitioner contemplated in paragraph (a).
[Subsec (2) added by sec 4 of Act 4 of 1997.]

55. Fund to vest in and to be held in trust by board of control

(1) The fund shall vest in and be administrated by a board of control to be known as the Legal Practitioners’ Fidelity Fund Board of Control.

(2) The fund shall be held in trust by the board of control for the purposes mentioned in this Part.

(3) The board of control may under its name sue and be sued.

56. Constitution of board of control

(1) The board of control shall consist of-
(a) the chairperson of the Council; and
(b) three legal practitioners appointed annually by the Council, of whom at least two shall be legal practitioners who are not members of the Council, and at least two are persons who have been engaged in private practice for a period of not less than five years.

(2) The Council may appoint an alternate member from among its number to act in the place of the chairperson of the Council during his or her absence or inability to act as a member of the board of control.

57. Period of office of members of board of control

A member of the board of control appointed under section 56 (1) (b) shall hold office until his or her successor has been appointed and, unless another is appointed in his or her place in any year, he or she shall be deemed to have been reappointed.

58. Vacation of office by members of the board of control

(1) A member of the board of control shall vacate his or her office if he or she-
(a) ceases to be a legal practitioner or is suspended from so practising;
(b) resigns and his or her resignation is accepted by the Council; or
(c) is removed from office under subsection (2).

(2) A member of the board of control referred to in subsection (1) may be removed from office by the Council if he or she-
(a) is incapacitated by physical or mental illness;
(b) is convicted of an offence which, in the opinion of the Council, debars him or her from serving as a member of the board of control.

59. Chairperson of board of control

(1) The board of control shall annually elect one of their number, other than the chairperson of the Council, to be the chairperson of the board of control.

(2) If the chairperson is absent from a meeting of the board of control, the board shall from among its number elect a chairperson for that meeting.

60. Meetings of board of control

(1) The board of control shall meet at such times and at such place as it or its chairperson may determine from time to time.

(2) Three members of the board of control shall constitute a quorum at a meeting thereof.

(3) The decision of the majority of the members of the board of control present at a meeting thereof shall be a decision of the board of control and, in the event of an equality of votes, the person presiding shall have a casting vote in addition to his or her deliberative vote.

61. Committees of board of control

(1) The board of control may appoint one or more committees to assist in the exercise of its functions, and may at any time alter the constitution of such a committee and fill a vacancy which occurs in the membership thereof.

(2) The members of a committee appointed in terms of subsection (1) shall from among their number elect the chairperson of the committee.

(3) The board of control may-

(a) delegate and assign to a committee appointed in terms of subsection (1) such of its powers and functions as it may think fit;
(b) instruct such a committee, either generally or in a specific case, to enquire into and to advise the board of control on any matter in relation to the functions of the board of control.

(4) The board of control shall not be divested of any power delegated to a committee thereof and may amend or withdraw a decision of such a committee.

62. Validity of resolution signed by all members of board of control

A resolution in writing of the board of control signed by all its members shall be as valid as if it had been passed at a meeting of the board.

63. Revenue of fund

The fund shall consist of-
(a) the annual contributions by legal practitioners and interest paid to the fund in terms of this Act;
(b) the revenue obtained from investments of the fund;
(c) money recovered for the benefit of the fund;
(d) money received on behalf of the fund from an insurance company under a contract of indemnity referred to in section 66;
(e) other money lawfully paid into the fund.

64. Banking account

(1) Money in the fund shall be paid into an account at a banking institution or building society to the credit of an account to be known as the Legal Practitioners’ Fidelity Fund Account.

(2) The board of control may from time to time invest moneys of the fund which are not immediately required for the purposes mentioned in this Act.

65. Audit

(1) The accounts of the fund shall be audited by a registered accountant and auditor appointed by the board of control.

(2) A person appointed under subsection (1) shall, at least once in every year and not later than a date to be determined by the board of control, draw up a balance sheet and profit and loss account of the fund and forthwith submit certified copies thereof and of his or her report thereon to the chairperson of the board of control and to the Council.

66. Insurance contracts for purpose of indemnifying fund and legal practitioners

(1) The board of control may enter into a contract with a person or company carrying on fidelity insurance business whereby the fund will be indemnified to the extent and in the manner provided in such contract against liability to pay claims under this Act.

(2) A contract referred to in subsection (1) shall be entered into in respect of legal practitioners generally.

(3) A claimant against the board of control shall not have-
(a) a right of action against a person or company with whom a contract of indemnity has been entered into in terms of this section, in respect of such contract; or
(b) a right to any money paid by the insurer in accordance with such contract.

(4) Any money paid by an insurer in accordance with a contract of indemnity shall be paid into the fund for appropriation by the board of control.

67. Exemption of certain legal practitioners from requirement to hold a fidelity fund certificate

(1) A legal practitioner who is in the full-time employment of the State or of a law centre or who is not practising on his or her own account or in partnership or who is exempted under subsection (2) shall, subject to subsection (3), not be required to obtain and hold a fidelity fund certificate.

(2) Upon application made to it by a legal practitioner practising or intending to practise as a legal practitioner for his or her own account or in partnership, the Council may exempt such practitioner from holding a fidelity fund certificate if-
(a) in the case of a legal practitioner practising or intending to practise on his or her own account, such legal practitioner furnishes the Council with a written declaration stating that he or she will not in the conduct of his or her practice accept or receive or hold moneys for or on account of another person; or
(b) in the case of a legal practitioner practising or intending to practise in partnership, such legal practitioner furnishes the Council with a written declaration signed by every person who is or will be a member of such partnership stating that neither such partnership nor any member thereof will in the conduct of the practice of the partnership accept or receive or hold moneys for or on account of another person.

(3) Any legal practitioner who has been exempted under subsection (2) from holding a fidelity fund certificate and who in the conduct of his or her practice accepts or receives or holds any money for or on account of another person, without first obtaining a fidelity fund certificate in accordance with the provisions of section 68 shall not be entitled to any fee, reward or disbursement in respect of anything done by him or her while so practising and shall be guilty of an offence and liable on conviction to a fine not exceeding N$200 000 or to imprisonment for a period not exceeding 10 years or to both such fine and such imprisonment.

(4) An exemption contemplated in subsection (2) may be granted by the Council to a legal practitioner subject to such conditions as the Council may determine, including a condition requiring the legal practitioner to furnish the Council with a guarantee of fidelity in favour of the fund, in a form and by a person approved by the Council, guaranteeing the fidelity of such legal practitioner to an amount determined by the Council.
[Subsec (4) added by sec 5 of Act 4 of 1997.]

68. Application for and issue of fidelity fund certificate

(1) A legal practitioner practising or intending to practise on his or her own account or in partnership shall, unless he or she is exempted in terms of section 67, apply in the prescribed form to the secretary of the Law Society for a fidelity fund certificate.

(2) An application in terms of subsection (1) shall be accompanied by the contribution, if any, payable in terms of section 69.

(3) Upon receipt of the application in terms of subsection (1), the secretary of the Law Society shall forthwith issue to the applicant a fidelity fund certificate in the prescribed form if he or she is satisfied that the applicant-
(a) has discharged all his or her liabilities to the Law Society in respect of his or her contribution; and
(b) has complied with any other lawful requirement of the Law Society.

(4) A fidelity fund certificate shall be valid until 31 December of the year in respect of which it was issued.

(5) A document purporting to be a fidelity fund certificate which has been issued contrary to the provisions of this Act shall be null and void and shall on demand be returned to the Law Society.

69. Contributions to fund by legal practitioners

(1) Subject to the provisions of this section, every legal practitioner practising on his or her own account or in partnership shall annually when he or she applies for a fidelity fund certificate pay the amount as may be fixed by the board of control from time to time.

(2) Where a legal practitioner commences to practise as such on or after 1 July in any year, he or she shall in respect of that year pay half of the amount of the contribution which is payable for that year in terms of subsection (1).

(3) When the board of control, or the Law Society on behalf of the board of control, gives notice in writing to legal practitioners that the nett value of the fund exceeds N$3 000 000 all legal practitioners who are liable to pay the annual contribution referred to in subsection (1) shall, as from a date determined by the board of control and specified in the notice, no longer be required to pay that contribution, except if the liability to pay that contribution is recommenced by virtue of a notice given in terms of subsection (4).

(4) Where, at any time after a notice in terms of subsection (3) has been given, the board of control, or the Law Society on behalf of the board of control, gives notice in writing to legal practitioners that the nett value of the fund is less than N$3 000 000, every legal practitioner referred to in subsection (1) shall, as from a date determined by the board of control and specified in the notice, again be liable to pay the annual contribution referred to in subsection (1), whereupon the notice previously given in terms of subsection (3) shall lapse.

(5) For the purposes of subsections (3) and (4), “nett value of the fund” means all moneys standing to the credit of the fund in terms of section 63, less the sum of all unpaid claims and other liabilities outstanding against the fund

(6) Where the liability in respect of the annual contribution imposed by subsection (1) is suspended by virtue of the provisions of subsection (3), a legal practitioner who applies for the first time for a fidelity fund certificate while such a suspension is in force shall pay a single contribution in the amount as determined by the board of control, and be subject to any subsequent recommencement of that liability notified in terms of subsection (4).

(7) Notwithstanding the provisions of subsection (3), the board of control may require a legal practitioner in respect of whom the fund has been applied as a result of any of the circumstances referred to in section 54 to pay the annual contribution referred to in subsection (1) to the fund for such period as the board of control may determine.

(8) A legal practitioner who is not in possession of a fidelity fund certificate and who intends to commence to practise on his or her own account or in partnership, shall, before commencing so to practise, give notice of such intention to the secretary of the Law Society, and he or she shall thereupon become liable to pay to the fund the amount of the contribution referred to in subsection (1) or (6), as the case may be, unless he or she is exempted in terms of section 67 from holding a fidelity fund certificate.

(9) All contributions payable under this section shall be paid to the Law Society, and the Law Society shall remit such contributions to the board of control within 30 days of receipt thereof.

70. Payments from fund

(1) Subject to the provisions of this Act, the fund shall be applied for the following purposes, namely-
(a) all claims, including costs, payable in terms of this Act, and interest as provided in subsection (2);
(b) in the discretion of the board of control, a contribution towards expenses incurred by a claimant in establishing his or her claim;
(c) legal expenses incurred in defending a claim made against the fund or otherwise incurred in relation to the fund;
(d) premiums payable in respect of contracts of insurance entered into by the board of control under section 66;
(e) expenses incurred in the administration of the fund and investigations by the board of control or its committees in respect of matters which concern the fund, including allowances to members of the board of control in respect of their services or their reasonable travelling and accommodation expenses incurred in connection with the affairs of the fund;
(f) in the discretion of the board of control, the bank charges or a portion thereof paid by a legal practitioner in connection with the keeping of a trust account;
(g) in the discretion of the board of control, the premium or a portion thereof payable in respect of a professional indemnity group insurance policy taken out in favour of legal practitioners;
(h) in the discretion of the board of control, the costs or a portion thereof incurred by a legal practitioner in connection with the obtaining of a fidelity fund certificate;
(i) in the discretion of the board of control, the defraying of the whole or a portion of the cost and expenses incurred by the Law Society for the purposes of or in connection with steps taken by it in terms of section 25 or 32;
(j) loans and interest thereon;
(k) other moneys which are payable or may be paid from the fund in accordance with this Act.

(2) The board of control may in its discretion pay an amount out of the fund as interest on the amount of any judgement obtained or a claim admitted against the fund, but the rate of interest shall not exceed the prevailing rate of interest prescribed under section 1(2) of the Prescribed Rate of Interest Act, 1975 (Act 55 of 1975).

(3) If the amount of the fund, including the assets thereof, is less than N$ 100 000 or fifty per cent of the total income of the fund for the previous year (whichever is the greater), the board of control may in its discretion refuse to pay or postpone the payment of any amount for any of the purposes mentioned in paragraphs (a), (b), (f), (g), (h) and (i) of subsection (1).

71. Grants from fund for education or research in law and for enhancement of professional standards of legal practitioners

If the amount of the fund exceeds the sum of N$ 1 000 000, the board of control may out of the excess in question-
(a) with the approval of the Council, make grants on such condition as the board of control may determine with such approval-
(i) to any person or institution for tertiary education for the purposes of education or research in the science of law or in legal practice;
(ii) for the purpose of the furtherance of the administration or dispensation of justice;
(iii) to assist in the representation of members of the Law Society in participating in the activities of any international or regional association of legal practitioners where such participation is, in the opinion of the board of control, in the interests of the Law Society or the administration of justice in Namibia, or of education in the science of law or in legal practice, and may, with such approval, at any time revoke such grant or a part thereof;
(b) pay an honorarium or compensation to a person for services rendered at the request of the board of control with the object of enhancing the professional standards of legal practitioners;
(c) contribute towards the costs of the Law Society, including the costs of any law library established or maintained by it.

72. Limitation of liability of fund

(1) The fund shall not be liable to pay, nor pay, an amount in respect of loss suffered-
(a) by a person as a result of theft committed by a legal practitioner while the legal practitioner is in the employment of a person who is not a legal practitioner, whether such theft was committed in the course of his or her employment or in the course of any private practice carried on by him or her on his or her own account outside such employment, except if he or she, at the time of the theft, held in respect of such practice a fidelity fund certificate or an exemption granted by the Council under section 67(2);
[Para (a) substituted by sec 6 of Act 4 of 1997.]
(b) by the spouse of a legal practitioner as a result of theft committed by that legal practitioner;
(c) by a legal practitioner as a result of theft committed by a partner or employee of that legal practitioner or by an employee of a partnership in which the legal practitioner is a partner;
(eA) by a person as a result of theft committed by a legal practitioner, whether or not such legal practitioner is the holder of a fidelity fund certificate or an exemption granted under section 67 (2), or by a candidate legal practitioner attached to such legal practitioner, or by an employee of such legal practitioner, of any moneys received, invested, controlled, or managed, including any interest or capital redemption payments collected, in connection with an investment practice;
[Para (eA) inserted by sec 6 of Act 22 of 2002.]
(d) by a legal practitioner as a result of theft committed by a member or employee of a professional company of which the legal practitioner is a member;
(e) as a result of theft committed by a legal practitioner whose fidelity has been guaranteed by a person, either in general or in respect of the particular transaction, to the extent to which it is covered by the guarantee;
(f) by a person as a result of theft committed by a legal practitioner after that person has received a notification in writing from the secretary of the Law Society or the board of control warning him or her against the employment or continued employment of such legal practitioner.

(2) A claim for reimbursement as contemplated in section 54 shall be limited-
(a) in the case of money entrusted to a legal practitioner, to the amount actually handed over, without interest; and
(b) in the case of securities or other property, to an amount equal to the average market value of the securities or property at the date when written demand is first made for their delivery, or, if there is no average market value, the fair market value as at that date of the securities or property, without interest.

(3) Only the balance of any loss suffered by a person after deduction from the loss of the amount or value of all moneys or other benefits received or receivable by that person in respect of the loss from a source other than the fund, may be recovered from the fund.

73. Procedure for instituting claims against fund

(1) No person shall have a claim against the fund in respect of theft contemplated in section 54 unless-
(a) written notice of the claim is given to the Council and to the board of control within three months after the claimant becomes aware of the theft or by the exercise of reasonable care should have become aware of the theft; and
(b) within six months after a written demand has been sent to him or her by the board of control, the claimant furnishes the board of control with such proof as the board of control may reasonably require.

(2) If the board of control is satisfied that, having regard to all the circumstances, a claim or the proof required by the board of control has been lodged or furnished as soon as practicable, it may in its discretion extend any of the periods referred to in subsection (1).

74. Actions against fund

(1) No action shall without leave of the board of control be instituted against the fund unless the claimant has exhausted all available legal remedies against the legal practitioner in respect of whom the claim arose or his or her estate and against all other persons liable in respect of the loss suffered by the claimant.

(2) An action against the fund in respect of a loss suffered by a person as a result of theft committed by a legal practitioner or an employee of a legal practitioner, shall be instituted within one year of the date of a notification directed to such person or his or her legal representative by the board of control informing him or her that the board of control rejects the claim to which the action relates.

(3) In an action against the fund any defence which would have been available to the person against whom the claim arose, shall be available to the fund.

75. Subrogation

On payment out of the fund of money in settlement in whole or in part of a claim under this Act the fund shall be subrogated to the extent of such payment to all the rights and legal remedies of the claimant against a legal practitioner or a person in relation to whom the claim arose, or in the event of his or her death or insolvency or other legal disability, against a person having authority to administer his or her estate.

76. Exemption of fund from certain provisions of certain laws

(1) The revenue of the fund shall be exempt from the provisions of any law relating to payment of income tax.

(2) The provisions of any law relating to insurance (other than a law relating to the compulsory insurance of employees) or the provision of security in connection therewith, shall not apply to the fund.

77. Indemnification in respect of certain acts

No action for damages shall be instituted-
(a) against the fund, the board of control or a member or employee of the board of control in respect of anything done in the bona fide exercise or performance of its or his or her powers or duties in terms of this Act; or
(b) against the Law Society, the Council, a member of the Council or official or employee thereof, in respect of a notification issued in good faith for the purposes of section 72(1)(f).

78. Preservation and disposal of records and documents in possession of board of control

(1) A record or document in possession of the board of control relating to a claim instituted against the fund shall, subject to the provisions of subsection (2), be preserved at the office of the secretary of the board of control.

(2) The chairperson of the board of control may, after the lapse of five years from the date on which a claim to which a record or document relates is settled by the board of control or adjudicated upon by a court or rendered unenforceable by lapse of time, direct that such record or document be removed to some other place of custody or be destroyed or otherwise disposed of.