SOLICITORS (PROFESSIONAL INDEMNITY AMENDMENT) RULES

SOLICITORS (PROFESSIONAL INDEMNITY AMENDMENT) RULES

SOLICITORS (PROFESSIONAL INDEMNITY)
(AMENDMENT) RULES

Cap. 159, section 73A)

[1 October 1986.1]

1.These Rules may be cited as the Solicitors (Professional

Indemnity) (Amendment) Rules.

2. In these rules, unless the context otherwise requires-

'Authorized Insurers' means persons carrying on liability insurance business or
pecuniary loss insurance business and recognized as such by the Society.

'Basic Premium' means the amount, established by applying the formula set
out in paragraph 3(1)(a) of the Schedule hereto (and which is represented
by the letter 'P' in such formula) as varied by sub-paragraphs 3(3) or (4)
of the Schedule hereto.

'Certificate of Insurance' means the certificate issued by Authorized Insurers
or a person specified by Authorized Insurers under the Professional
Indemnity Insurance Scheme, upon compliance by a Firm with the
provisions therein, in such form as the Society and the Authorized
Insurers may from time to time prescribe, certifying that the Firm named
therein is insured under the Professional Indemnity Insurance Scheme for
the period therein mentioned and subject to the terms and conditions
therein contained;

'Certified Public Accountant' shall have the meaning attributed thereto in the
Professional Accountants Ordinance.

'Firm' means the firm as from time to time constituted carrying on the Practice.

'First Period of Insurance' means the Period of Insurance commencing 1
October 1986 and expiring 30 September 1987, both days inclusive.

'Former Master Policy' means the master policy entered into between the
Society and Authorized Insurers, expiring on 30 September 1986;

'Gross Fee Income' means

'C

(a)all professional fees, remuneration, commission and charges of any
kind whatsoever which are rendered in connection with the Insured's
Practice, and

(b)all income derived by any service, administrative or trustee company
or trust in so far as its activities are carried out solely in connection
with the Practice but excluding





(i)any company which accepts monies for investment other than
as a trustee; and

(ii)any income derived by any company within this subparagraph
(b) for services rendered to the Insured's Practice or to any
other company within this subparagraph (b) where and to the
extent that such income is included in the Gross Fee Income of
the Insured's Practice or of such other company as aforesaid.

'Insurance Year' means a period commencing on 1 October in any year and
ending on 30 September in the following year.

'Insured' means the Firm, or any Principal in the Firm, any person employed
in connection with the Practice (including any assistant solicitor, any
solicitor who is a consultant in the Firm, and any articled clerk) any
solicitors who have ceased by reason of death, retirement or otherwise to
practise as Principals in the Firm and former employees employed in or in
connection with the Practice (including former assistant solicitors.
consultants and articled clerks as aforesaid) and the estate and/or the legal
representatives of any of the foregoing, and also including any service
administrative or nominee company or trust insofar as its activities are
carried out in connection with the Practice, to the intent that each of the
foregoing shall be severally insured.

'Master Policies' means the two professional indemnity insurance policies to
be entered into between the Society and Authorized Insurers effective on
the 1 October 1986 and 'Master Policy' means any one of such Master
Policies.

'Panel Solicitor' means a firm of solicitors appointed by the Council in
consultation with Authorized Insurers to act on behalf of an Insured in
respect of any claim against the Insured covered under the Professional
Indemnity Insurance Scheme.

'Period of Insurance' means the period specified in the Schedule to the
Certificate of Insurance issued from time to time.

'Practice' means the business of practising as a solicitor (including the
acceptance of obligations connected with and incidental to such practice as
Trustee, Executor, Attorney-under-Power, Tax Agent, Patent Agent,
Trade-Mark Agent Company Secretary or Company Director) undertaken
by the Insured or its predecessors in business alone or with others,
provided always that wherever any fees or other income accrue therefrom
they insure to the benefit of that business.

'Principal' means a partner or sole practitioner and shall also include any
solicitor held out as a Principal.

'Professional Indemnity Insurance Scherne' means the professional indemnity
scheme, to take effect from 1 October 1986, whereby solicitors in private
practice in Hong Kong are required to be covered by professional
indemnity insurance the principal





terms of which are set out in the Schedule to these Rules, as from
time to time amended by agreement between the Society and
Authorized Insurers;

'Related Costs' means all costs and expenses incurred with Authorized
Insurers' consent in the defence or settlement of any claim against
the Insured;

'Relevant Date' means the date when a claim the subject of the
Insuring Clauses of the Certificate of Insurance is first made
against the Insured or the date, if earlier, when circumstances
which might give rise thereto first came to the notice of the
Insured;

'Unqualified Staff means a person who is not a solicitor and includes

(a) articled clerks; and

(b)persons employed otherwise than by the practice (e.g. by a
service company) but for the purposes of the Practice.

3. The Society is hereby authorized-

(a)to enter into one or more agreements with one or more
Authorized Insurers for the establishment and operation of the
Professional Indemnity Insurance Scheme, such agreement or
agreements to be binding on the Society and all solicitors in
private practice who are not exempt from complying with the
Rules;

(b)to establish and maintain one or more funds as part of the
Professional Indemnity Insurance Scheme; to appoint and
remove staff or consultants whose services are necessary or
requisite for the investment and administration of such funds
and the payment of claims therefrom;

(c)to require every solicitor required to take out and maintain
professional indemnity insurance under the Professional
Indemnity Insurance Scheme to contribute to such funds and
to set the rate of such contribution;

(d)to pay into such funds such contributions, any income from
the investment of moneys in such funds, the proceeds of sale
of any investment, and any other moneys which the Society
may resolve from time to time should be paid into such funds:
to pay out of such funds amounts payable by way of
premiums or contributions for insurance, reinsurance or other
arrangement for limitation of liability entered into by the
Society; remuneration payable to staff or consultants and any
other costs and expenses incurred by the Society pursuant to
the maintenance, administration, operation and investment of
such funds and to satisfy claims against the Insured under the
Professional Indemnity Insurance Scheme;





(e)to invest any moneys standing to the credit of such funds in
any manner approved by the Society through the Council
from time to time; and

(f)to do all such acts, deeds, matters or things as are necessary
for or incidental to the establishment, administration and
operation of the Professional Indemnity Insurance Scheme.

4. The powers conferred by these rules on the Society shall be
exercisable by the Council as it may from time to time resolve.

5. (1) Subject to rule 7-

(a)every solicitor who is, or is held out to the public as, a
solicitor in private practice in Hong Kong shall be-
(i) bound by the agreements entered into by the Society
in accordance with rule 3; and
(ii) required to be covered by professional indemnity
insurance under the Professional Indemnity Scheme;

(b)every Principal in private practice as a solicitor in Hong
Kong shall take out for himself and for all assistant
solicitors and consultants in his firm and at all times
maintain professional indemnity insurance under the Pro-
fessional Indemnity Insurance Scheme on the terms and
conditions specified in the Master Policies from time to
time.

(2) Every such Principal who is required to take out and
maintain professional indemnity insurance shall pay to the Society,
on demand by the Society, all amounts payable by him (whether to
the Society or otherwise) under the Professional Indemnity Insur-
ance Scheme and, subject to such payments and to compliance with
all obligations thereunder and under these rules, shall be entitled to
be issued with a Certificate of Insurance for the relevant Period of
Insurance.

6. A practising certificate shall not be issued to any solicitor
who is required to take out and maintain professional indemnity
insurance and who fails to do so. Any current practising certificate
which has been issued to such solicitor shall be suspended and
such person shall not be qualified to act as a solicitor pursuant to
section 7 of the Ordinance while he shall fail to maintain in force
professional indemnity insurance which is evidenced by a Certificate
of Insurance.

7. (1) Rule 5 shall not apply to a solicitor or a class of
solicitors for the time being exempted by the Council from com-
pliance with these rules or to a solicitor or a class of solicitors
engaged only in a category or categories of professional business
specified by the Council.





(2) The Council may-

(a)exempt from compliance with these rules any solicitor or any
class of solicitors specified by the Council;

(b)exempt from compliance with these rules any solicitor or any
class of solicitors engaged only in a category or categories of
professional business specified by the Council;

(c)grant such exemption either indefinitely or for a specified
period or subject to such other conditions as the Council may
from time to time determine; and

(d) revoke any exemption granted.

8. (1) Subject to paragraph (3) every Principal who is in private
practice as a solicitor in Hong Kong shall, on or before 15 August in
each Insurance Year or such other date as may be prescribed by the
Council, produce to Authorized Insurers or to a person specified by
Authorized Insurers

(a)a certificate signed by a certified public accountant containing
particulars of the Gross Fee Income as required by the
Professional Indemnity Insurance Scheme attributable to the
Practice for the immediately preceding accounting year of the
Practice or, if such certificate for the immediately preceding
accounting year is not available, such certificate may with the
approval of the Council be in respect of the accounting year
of the Practice ending not earlier than 31 March in the
preceding year; and

(b)such other information in connection with the Practice made
up to 31 July (or such other date as may be prescribed by the
Council) in the same Insurance Year as may be required by
Authorized Insurers for the purpose of assessing the
premiums or contributions payable by that Practice.

(2) Production with the approval of the Council of a certified public
accountant's certificate of gross fee income for a period other than the
immediately preceding accounting year of the Practice, in accordance
with sub-paragraph 8(1)(a), shall not relieve any Principal thereof of his
obligation to produce to Authorized Insurers a certificate in respect of
the immediately preceding accounting year of the Practice. Such
certificate, when available shall be produced immediately on demand by
the Society or Authorized Insurers.

(3) If a Principal, in a Practice, supplies particulars of the Gross Fee
Income of the Practice and the other information in connection with the
Practice in accordance with paragraph (1), the other Principals in the
same Practice shall not in addition be required to supply such
particulars or information.





(4) Subject to paragraph (3), if such Principal referred to in
paragraph (1) fails to show reasonable cause for not supplying
particulars of the Gross Fee Income of the Practice or the other
information in connection with the Practice, in accordance with
paragraph (1) or (2)-

(a)such failure shall be an event of professional misconduct
on the part of such Principal and the other partner or
partners in such Practice as at the date of such failure; and

(b)without prejudice to any other power or remedy of the
Society, the Council may apply to the Court for an order
compelling such Principal or each of the other partners in
the practice to show reasonable cause why they should not
supply such particulars and information.

9. (1) The Society shall be entitled to demand, sue for and
recover in its own name as a debt due to the Society the amount of
any premium, contribution or other payment payable in accordance
with the terms of the Professional Indemnity Insurance Scheme
from every Principal liable to pay the same or from the Firm in
which he was a partner when the amount became due and payable.

(2) Notwithstanding the foregoing, if for any reason the
Society shall fail or refuse to take any necessary action to recover
from any Principal or Firm any amount due in accordance with the
terms of the Professional Indemnity Insurance Scheme, Authorized
Insurers shall be entitled, on giving to the Society not less than 14
days previous notice in writing in that behalf, to take such action in
their own name.

10. (1) If any Principal liable to make payment under or in
respect of the Professional Indemnity Insurance Scheme of any
amount for which the Insured is not indemnified under such scheme
without reasonable excuse fails to make payment of such amount on
demand for payment of the same being made by the Society then
such failure shall be an event of professional misconduct on the part
of such Principal.

(2) A demand for payment of the amount referred to in
paragraph (1) shall only be made by the Society after Authorized
Insurers or their agent shall have given written notice to such
Principal that payment of such sum is required by Authorized
Insurers for payment into Court, or settlement, or satisfaction of
judgment, on any claim and payment is not made within 14 days of
such notice being given by Authorized Insurers or their agent to such
Principal.

11. Every solicitor referred to in rule 5 agrees to waive the duty
of confidentiality of the Panel Solicitor to such solicitor to the extent
that the Panel Solicitor may report to the Council full details of any





claim made against the Practice of which the solicitor is or was a
Principal or employee (including the failure or refusal of the solicitor to
co-operate with the Panel Solicitor concerning the claim) in respect of
any act or omission covered by the Professional Indemnity Insurance
Scheme.

12. The Solicitors (Professional Indemnity) Rules shall cease to
apply after 30 September 1986.

THE SCHEDULE

1. PARTICULARS OF INSURANCE COVER

(1)Indemnification of the Insured against all loss to the Insured whensoever
occurring arising from any claim first made against the Insured during the
Period of Insurance in respect of any description of civil liability whatsoever
incurred in connection with the Practice or from any such claim made during
or subsequent to the Period of Insurance arising out of circumstances notified
to Authorized Insurers during the Period of Insurance as circumstances which
may give rise to a claim.

(2) Authorized Insurers will not indemnify the Insured in respect of-

(a) the deductible any one claim as set out in paragraph 2(2) below;

(b)any claim arising from any notice received by the Insured prior to 1
October 1986 from any person advising or intimating that it is the
intention of such person to hold the Insured responsible for any act or
omission, and any legal proceedings brought in respect of any such act or
omission, in connection with the Practice;

(e) loss arising out of any claim-

(i)for death, bodily injury, physical loss or physical damage to property
of any kind whatsoever (other than property in the care, custody and
control of any of the Insured in connection with the Practice for
which the Insured is responsible, not being property occupied or used
by the Insured for the purposes of the Practice);

(ii) for the payment of a trading debt incurred by the Insured;

(iii)brought about by the dishonesty or fraudulent act or fraudulent
omission of the Principal. Provided that this exclusion shall not
apply to liability arising out of any claim brought about by the
dishonesty or fraudulent act or fraudulent omission of any persons
employed in the Practice;

(iv)directly or indirectly caused by or contributed to by or arising from
ionizing radiations or contamination by radioactivity from any
nuclear fuel or from any nuclear waste from the combustion of
nuclear fuel, the radio-active toxic explosive or other hazardous
properties of any explosive nuclear assembly or nuclear component
thereof, directly occasioned by pressure waves caused by aircraft or
other aerial devices travelling at sonic or supersonic speeds, or from
war, invasion, acts of foreign enemies, hostilities (whether war be
declared or not), civil war, rebellion, revolution, insurrection,
military or usurped power;

(y) in respect of any liability incurred in connection with a Practice
conducted wholly outside Hong Kong;

(vi)made by Carrian Investments Limited (CIL), Carrian Holdings
Limited (CHL) or any of their respective subsidiary or associate
companies or by the shareholders, creditors or liquidator(s) of any of
them in respect of professional or other work done by the insured for






or on behalf or for the benefit of CIL, CHL or any of their
respective subsidiary or associate companies at any time prior to the
liquidation of such company but the Insurer shall remain liable in
respect of professional or other work done for or on behalf of or for
the benefit of the liquidator(s) of such company. In this subclause
'subsidiary' shall bear the meaning ascribed by section 2(4) of the
Companies Ordinance; or





(vii) subject to paragraph 4(1) hereof where the Insured's breach of or non-
compliance with any condition of the Master Policies or the
certificate of insurance has resulted in substantial prejudice to the
handling or settlement of any claim against the Insured.

2. AMOUNT OF COVER
(1) (a)that part of the Insured's loss that exceeds the deductibles referred to in
paragraph 2(2) up to a sum not exceeding the difference between such
deductibles and HK$1,000,000, in respect of any one claim; and

(b)that part of the Insured's loss that exceeds HK$1,000,000 up to but not
exceeding a further sum of HK$4,000,000, in respect of any one claim.

(2) The deductibles for the purpose of sub-paragraph (1)(a) are

(a)In respect of the first HK$30,000 any one claim where the Insured is a
sole practitioner at the Relevant Date;

(b)Where the Insured is a partnership, in respect of any claim against that
partnership or its predecessors in business, the first HK$20,000 any one
claim multiplied by the number of Principals in the Firm at the Relevant
Date;

(c)In addition to sub-paragraph (a) or (b) above, in respect of HK$15,000
any one claim multiplied by the number of assistant solicitors and
consultants in the Firm at the Relevant Date;

Provided that in respect of any Firm the aggregate of the amounts set out in
sub-paragraphs (a) or (b) and (c) above shall not exceed the first HK$200,000
any one claim.

3. PREMIUM ASSESSMENT
(1) (a)Save in the case referred to in sub-paragraph (2) (when the premiums
shall be assessed by Insurers as therein provided) the amount of all
premiums shall be calculated either

(i) according to the formula-

P=G* x N*R(I) M*R(2) U*R (3)] 1

N+M+U 100

multiplied by

Where

P the amount (subject to any appropriate adjustment made
under sub-paragraph (3) or (4)) of the Basic Premium which
may also be the premium.

N Number of Principals (as at 31 July immediately preceding
such Period of Insurance).

M Number of assistant solicitors and consultants (as at 31 July
immediately preceding such Period of Insurance).

U Number of Unqualified Staff (as at 31 July immediately
preceding such Period of Insurance).

G Gross Fee Income of the Firm (which shall be determined by
the delivery to Authorized Insurers of a certificate of a
certified public accountant of the Gross Fee Income
attributable to the Practice for the immediately preceding






accounting year of the Practice or for some earlier period
approved by the Council in accordance with rule 8(1)(a), plus
a factor to be applied by Authorized Insurers to this figure to
compensate for the historical basis of the Gross Fee Income
calculation (such factor not to exceed 10 per cent) and which
shall be subject to adjustment as provided in sub-sub-paragraph
(b)(iv) below.





R(1), R(2) R(3) Rates as set out in the following table-

Others
Gross Fees PartnerAssistant (Unqualified
HK$Million R (1)R (2) Staff)

R (3)
0-5 1.62 1.84 2.16
5-10 1.40 1.40 1.84
10-25 1.08 1.30 1.51
25-50 0.86 0.97 1.08
50-100 0.65 0.76 0.86
100+ 0.43 0.54 0.65

or,

(ii) in the circumstances set out below in sub-paragraph (7), according to
the formula

F x P

Where-

P P above, and

F the appropriate factor referred to in sub-paragraph (7)(c).
(b) (i) The first premium and all renewal premiums are to be regulated by the
number of Principals, assistant solicitors, consultants and unqualified
staff engaged or employed in the Practice from time to time and the
Gross Fee Income of the Firm;

(ii) The information described as N, M, U and G in sub-paragraph (a)
above shall be properly recorded and the Insured shall at all times
allow Authorized Insurers to inspect such records;

(iii) Particulars of the names and the position held in the Practice of
every Principal, assistant solicitor and consultant and the numbers of
and position(s) held by unqualified staff in the Practice at 1 October
1986 shall be submitted by the Firm to Authorized Insurers on or
before 29 November 1986. Thereafter a return shall be sent to
Authorized Insurers on or before the last day of December, March,
June and September in each year commencing with 31 December
1986 showing every subsequent change in such particulars (and the
date of such change) occuring since the date of the previous return;

(iv) Upon receipt by Authorized Insurers of the certificate of Gross Fee
Income and information pursuant to rule 8 to enable Authorized
Insurers to assess the premium for the next Period of Insurance,
Authorized Insurers will also, based on such information and the other
information referred to in sub-paragraph (iii) above, calculate and
adjust the premium for the preceding Period of Insurance. Any
difference in the amount of the assessed premium paid for the
preceding Period of Insurance and the premium established by such
calculation shall be met by a further payment by the Firm or, in the
event of the Firm being dissolved prior to payment, by the Principals
of the Firm immediately prior to such dissolution to Authorized
Insurers or by a refund to the Firm or such Principals by Authorized
Insurers, as the case may be.

(c)If any Principal who is required to take out and maintain professional
indemnity insurance fails to provide Authorized Insurers with a certified
public accountant's certificate of the Gross Fee Income or other
information (as defined in sub-paragraph (b) above) pursuant to rule 8(1)
then such Principal (and his Partners if any) in the Practice shall be






jointly and severally liable to pay

(i)for the First Period of Insurance, an amount equal to 400% of the
total amount payable by the Firm as premium under and in respect of
the Former Master Policy for the period from 1 October 1985 to 30
September 1986; and





(ii) thereafter, for each successive Insurance Year an amount equal to
200% of the rate of premium for the preceding Insurance Year,

until such Principal (or his Partners if any) has made disclosure of such
particulars of the Gross Fee Income or other information as was required.

(d)Upon a Principal making good all failures under sub-paragraph (c) above,
Authorized Insurers shall assess the premium payable in respect of the
Practice. If the amount of the premium as assessed

(i)is less than the amount of the premium paid, the difference shall be
repaid to the Firm without interest; or

(ii) exceeds the amount of the premium paid, the Firm shall upon
demand pay to Authorized Insurers the balance of the amount of
premium together with interest on the amount of such balance at the
rate of 4 per cent per annum above the best lending rate from time
to time of The Hongkong and Shanghai Banking Corporation
calculated from the date stipulated in or prescribed by the Society
under rule 8(1) until receipt of payment by Authorized Insurers.

(2)In the case of a solicitor or solicitors commencing a Practice during any
Insurance Year the premium payable in respect of such Practice for the year
of commencement of practice shall be assessed by Authorized Insurers based
on the average premium paid for the current Insurance Year by firms of
similar composition to the Practice and be paid pro rata and such basis shall
continue to be applied until such Practice shall have submitted a certified
public accountant's certificate of Gross Fee Income and other information in
accordance with the foregoing provisions of this clause.

(3)The minimum Basic Premium payable in respect of a Practice for an
Insurance Year shall be HK$40,000. Provided that such amount shall be
reduced to HK$20,000 if the Gross Fee Income of that Practice does not
exceed HK$500,000 for that Insurance Year.

(4)The maximum Basic Premium payable in respect of a Practice for the First
Period of Insurance shall be limited to HK$1,500,000 and for any subsequent
Periods of Insurance shall be such amount as may be specified by the Council.

(5)The premiums payable for a Period of Insurance shall be due and payable to
Authorized Insurers on or before the 30 September immediately preceding the
Period of Insurance. Provided that in the case of a practice referred to in sub-
paragraph (2) the premium payable for its first Period of Insurance shall be
paid forthwith on demand.
(6) (a)Notwithstanding anything to the contrary in paragraph 3 Authorized
Insurers may with the authority of a resolution of the Council at any time
during a Period of Insurance demand in writing from every Principal who
is required to take out and maintain professional indemnity insurance at
any time during the Insurance year when the demand is made such further
sum as may be authorized by the Council to make up a deficit or
anticipated deficit in the funds maintained by the Society for the
Professional Indemnity Scheme and such Principal shall be bound to pay
such further sum to Authorized Insurers within 30 days after the date of
issue of such written demand.

(b)Subject to the amount of payments received from such Principals being
sufficient to cover the amount of the deficit or anticipated deficit, the
sum which such Principal shall be required to pay shall be that proportion
of the deficit or anticipated deficit as the total amount of the premiums
payable after appropriate adjustment as provided in paragraph 3(1)(b)(iv)
by such Principal for the Insurance Year when the demand is made bears
to the total amount of the premiums payable after adjustment by all
Principals under the Professional Indemnity Scheme for such Insurance
Year. Provided however that such Principal may be required to make an






interim payment on account of the sum which such Principal is to pay
hereunder. Such interim payment (which shall be subject to subsequent
adjustment) shall be that proportion of the deficit or anticipated deficit as
the premium paid by such Principal for the Insurance Year when the
demand is made bears to the total amount of the premiums then paid for
such Insurance Year.
(7) (a)If during any period of four Insurance Years immediately prior to any
Period of Insurance an insurer on behalf of the Insured shall have paid any
claims, then the premium payable for such Period of Insurance shall not
be





the Basic Premium but shall be calculated in accordance with the formula
set out in paragraph 3(1)(a)(ii) by multiplying the Basic Premium by the
appropriate factor established pursuant to sub-paragraph (c) below.

(b)For the purposes of sub-paragraph (c) below, claims paid during such
period

(i) shall not include-

(aa) any amount in excess of HK$5,000,000 in respect of any one
claim;

(M) the amount of any claim paid by Insurers under the Former
Master Policy on behalf of the Insured prior to the 1 October
1986 the full amount of which is paid by the Insured to
Authorized Insurers under the Master Policies prior to 1 October
1986 provided that this exclusion shall only apply in respect of
claims paid by Insurers under the Former Master Policy (and
repaid by the Insured) which do not exceed the aggregate of 50%
of the premiums paid by the Insured in respect of compulsory
professional indemnity insurance in respect of the four
Insurance Years prior to 1 October 1986;

(cc) the amount of any deductible paid by the Insured;

(dd) the legal costs and disbursements incurred in successfully
defending a claim made against the Insured;

(ee) the legal costs and disbursements (including defence and
claimants' costs) paid in respect of a successful claim made
against the Insured under the Former Master Policy; and

the amount of any claim paid under or in respect of a policy of
insurance other than the Former Master Policy or the Master
Policies or Master Policy.

(ii) shall include all legal costs and disbursements (including defence and
claimants' costs) which are paid in respect of a successful claim made
against the Insured under the Professional Indemnity Insurance
Scheme.
(c) (i)If claims so paid exceed 0% of the total amount of premiums paid in
the four years preceding the Period of Insurance but do not exceed
50% of premiums so paid, a factor of 1.06 shall be applied to the
premium;

(ii) if claims so paid exceed 50% of the total amount of premiums paid
in the four years preceding the Period of Insurance but do not exceed
100% of premiums so paid, a factor of 1.13 shall be applied to the
premium;

(iii)if claims so paid exceed 100% of the total amount of premiums paid
in the four years preceding the Period of Insurance but do not exceed
200% of premiums so paid, a factor of 1.33 shall be applied to the
premium;

(iv) if claims so paid exceed 200% of the total amount of premiums paid
in the four years preceding the Period of Insurance but do not exceed
300% of premiums so paid, a factor of 1.53 shall be applied to the
premium;

(y) if claims so paid exceed 300% of the total amount of premiums paid
in the four years preceding the Period of Insurance but do not
exceed 400% of premiums so paid, a factor of 1.78 shall be applied
to the premium;







(vi) if claims so paid exceed 400% of the total amount of premiums paid
in the four years preceding the Period of Insurance but do not
exceed 500% of premiums so paid, a factor of 1.98 shall be applied
to the premium;

(vii) if claims so paid exceed 500% of the total amount of premiums paid
in the four years preceding the Period of Insurance but do not exceed
600% of premiums so paid, a factor of 2.18 shall be applied to the
premium;





(viii) if claims so paid exceed 600% of the total amount of premiums paid
in the four years preceding the Period of Insurance but do not exceed
700% of premiums so paid, a factor of 2.43 shall be applied to the
premium;

(ix) if claims so paid exceed 700% of the total amount of premiums paid
in the four years preceding the Period of Insurance but do not
exceed 800 of the premiums so paid, a factor of 2.63 shall be
applied to the premium;

(x)if claims so paid exceed 800 of the total amount of contributions
paid in the four years preceding the Period of Insurance but do not
exceed 900% of premiums so paid, a factor of 2.88 shall be applied
to the premium;

(xi)if claims so paid exceed 900% of the total amount of premiums paid
in the four years preceding the Period of Insurance but do not exceed
1000% of premiums so paid, a factor of 3.00 shall be applied to the
premium;

(xii)if claims so paid exceed 1000% of the total amount of premiums
paid in the four years preceding the Period of Insurance, a factor of
3.50 shall be applied to the premium.

4. OTHER MAIN TERMS

(1)If the Insured shall prefer any claim knowing the same to be false or
fraudulent as regards amount or otherwise the insurance shall become void
only in respect of such fraudulent claim or that fraudulent part of an otherwise
valid claim.
(2) (a)When an amount for which the Insured is not indemnified under the
Master Policies is required by Authorized Insurers or their agent for
payment into court or settlement or satisfaction of judgment on any
claim, Authorized Insurers or their agent shall give notice in writing to
the Insured requiring payment of such amount and each Principal in the
Firm shall thereupon become severally liable to pay the same to
Authorized Insurers.

(b)If such amount is not paid to Authorized Insurers within 14 days after
service of such notice, Authorized Insurers may pay the same on behalf
of the Insured and each Principal in the Firm shall thereupon become
further liable to Authorized Insurers for interest on such amount from the
date of payment of the same by Authorized Insurers at the same rate as
allowed for a judgment debt from fine to time under section 49 of the
Supreme Court Ordinance, Chapter 4.

(3)For the purpose of calculating the Insured's loss any one claim, Related Costs
shall be aggregated with the sum paid in respect of such claim and claimant's
costs.

(4)All recoveries or payments recovered or received subsequent to a claim
settlement shall be applied as if recovered or received prior to such settlement
and all necessary adjustments shall then be made between the Insured and
Authorized Insurers.

(5) Decisions by the Council

The decision of the Council shall be final and binding on all persons affected
on any question arising as to:

(i)the maximum amount of Premium or Basic Premium payable for any
Period of Insurance;

(ii) the number of Principals in a Practice at any date;







(iii) the number of Unqualified Staff in a Practice at any date;

(iv) the number of assistant solicitors and consultants in a Practice at any
date;

(v)any information or other matter on the basis of which any adjustment in
Premium is assessed in accordance with paragraph 3(1)(b)(iv) hereof,

(vi) the amount of any additional contribution to meet the amount of any
deficit or anticipated deficit under paragraph 3(6) hereof,

(vii)the calculation of the amount of any claim paid and claims loading under
paragraph 3(7) hereof and all matters which are to be included or
excluded when establishing the amount of claims paid.
L.N. 236/86.

L.N. 236/86.

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