Compensation Fund s. 16E

(1) Every advocate shall on occasion applying for the Annual Certificate pay to the Law Society a contribution of such sum as the Law Society from time to time determine and the Law Society shall pay that contribution to the Compensation Fund.

(2) An Advocate who applies for an Annual Certificate shall be required to pay half of the contribution so determined if the practising certificate for which he applies is valid for less than six (6) months.

(3) The Law Society may invest any moneys out of the Compensation Fund is honest

(4) The Law Society may invest any moneys out of the Fund which are not immediately required for any other purposes and, for the purposes of this section, the Law Society shall have full powers of trustees under any written law.

(5) The Law Society may insure the Fund with any registered insurance business in Malaysia for any purpose and on any terms as the Law Society may consider expedient.

(6) There shall be carries to the credit of the Fund-

(a) all annual contributions paid to the Law Society in pursuance of subsection(2);
(b) all interests, dividends, and other income or accretions of capital arising from the investments of the Fund;
(c) any proceeds of any realization of any investments of the Fund;
(d) all sums received by the Law Society under any insurance effected by the Law Society under subsection (5); and
(e) any other moneys which may belong or accrue to the Fund or be received by the Law Society in respect of the Fund.

Use of Compensation Fund

All moneys from time to time forming part of the Fund and all investments of the Fund shall be applicable-

(a) for the payment of any costs, charges and expenses of establishing, maintaining and administering the Fund;
(b) for payment of any premiums on insurance effected by the Law Society under subsection (5);
(c) for the payment of any grants which the Law Society may made under subsection (8); and
(d) for payment of any sums payable out of the Fund by virtue of this section.

(8) Where it is proved to the satisfaction of the Law Society that any person has sustained loss in consequence of dishonesty on the part of any advocate or clerk or servant of an advocate in connection with that advocate’s practice in Sabah as an advocate, or in connection with any trust of which that advocate is a trustee, then subject to this section, the Law Society may, if it thinks fair and reasonable, make a grant to that person out of the Fund for the purpose of relieving or mitigating that loss.

Use of Unutilised Compensation Fund

(9) In any year there has been neither an application made for a grant from the Fund nor grant made from the Fund, the Law Society may in its discretion transfer from the Fund all interests, dividends and other accretions of capital arising from the Fund, any part thereof, to a Fund of the Law Society established for the purposes of purchasing or maintaining a library for the use of the members of the Law Society and to a fund established for the purpose of providing legal aid.

(10) A grant may be made under this section whether or not the advocate had a valid certificate to practise when the act of dishonesty was committed and notwithstanding that subsequent to the commission of the act the advocate has died or had his name removed or struck off the roll or has ceased to practise or been suspended from practice.

(11) On the grant made by the Law Society under this section to any person in respect of any loss-

(a) the Law Society shall to the extent of the amount of the grant be subrogated to such rights and remedies as the person to whom the grant is made may be against the advocate, clerk or servant in respect of the loss; and
(b) the person to whom the grant is made shall have no right by way of bankruptcy or other legal proceedings or otherwise to receive any sum out of the assets of the advocate, clerk or servant in respect of the loss until the Fund has been reimbursed with the full amount of the grant.