Wilkinson Kate: Lawyers and Conveyancers Bill — In Committee 
Wilkinson Kate: Lawyers and Conveyancers Bill — In Committee 
[Volume:629;Page:1561] 
KATE WILKINSON (National) 
: 
 As a personal contributor to the Renshaw Edwards levy I think this does have— 
Dr Wayne Mapp 
: $10000. 
KATE WILKINSON 
:—Yes $10000—some particular relevance to me. I certainly recall that at the time the thought of paying $10000 in times I must confess that were somewhat commercially lean was a bit of a burden. There were certainly philosophical arguments—probably stronger in those days than they are now—for the abolition of the fidelity fund. Under Part 10 there is provision for the establishment maintenance and management of the two fidelity funds both the Lawyers Fidelity Fund and the Conveyancing Practitioners Fidelity Fund. That in itself has its own permutations as Mr Connell pointed out. The rules however provide for a minimum size at which the fund is to be maintained if it is to be held out as a protection for the clients of lawyers or conveyancing practitioners. So in effect it is capped. It fixes the maximum amount that may be paid out to any individual claimant and it also fixes the maximum amount that may be paid out to all claimants. So it is not an unlimited guarantee; it is somewhat limited. There is also provision to pay differing amounts depending on the classes of lawyers. 
Now there has been considerable discussion about fidelity funds. We are aware that accountants do not have a fidelity fund but that lawyers do and yes the philosophical argument asks why innocent lawyers should effectively give an unlimited guarantee for all other lawyers. Why should lawyers guarantee someone over whom they have no control? Why should they guarantee someone when they have not even given a written guarantee? 
I think the Renshaw Edwards case really did highlight the situation. The levy at that stage was $28 million which was quite a considerable sum to be funded by business people at the rate of $10000 each. One has to bear in mind however that the Renshaw Edwards days were the heady days of solicitors’ nominee company mortgages. I have to say that trends have changed since then and the desire of lawyers to run their own nominee company mortgages has certainly dwindled in the last few years. I can think for example in Christchurch of only one firm that runs a substantial nominee company system. 
That system had its own checks and balances of course and was run by nominee company rules. Probably its most important feature was that if one’s client wanted to invest money that client had to sign either a specific authority or a general authority. That specific authority asked whether the client wanted to invest with so-and-so on a particular piece of land. In those cases the risk of running foul of the nominee company rules was slightly less than if there had been a general authority which was usually: “I authorise you to invest x thousands of dollars at y percent over whatever security.” I believe that that is how the Renshaw Edwards money was invested but it is less common now. The levy at the moment I think is something like $500 per practitioner or per partner so it is not actually a huge amount in the scheme of things. 
I would like to take up Mr Connell’s comment about the ability of such a small handful of conveyancers who would be able to contribute to a realistically funded fidelity fund. The whole idea of this Lawyers and Conveyancers Bill is to put lawyers and conveyancers on a level playing field and if any requirements are waived for conveyancers to pay into a fidelity fund because they cannot afford it and there are not enough of them then lawyers who are subject to the same strict regime cannot be reasonably expected to pay for that fidelity fund. I think that that could lead to some potential difficulties from a practical and realistic point of view.