Second Session, 44th General

Assembly

49 Elizabeth II, 2000

BILL 24

AN ACT RESPECTING

PREPAID

FUNERAL SERVICES

Received and

Read the First Time

Second Reading

Committee

May 11/00 Amendment

Third Reading

Royal Assent

HONOURABLE ERNEST MCLEAN

Minister of Government Services and

Lands

Ordered to be printed by the

Honourable House of Assembly

EXPLANATORY NOTE

The purpose of this Bill is to enact laws with

respect to the provision of prepaid funeral services in the

province.

A BILL

AN ACT RESPECTING PREPAID

FUNERAL SERVICES

Analysis

Short title

Definitions

3. Licence

4. Prohibition

5. Assurance fund

6. Seller trust fund

7. Seller requirements

8. Prohibition

9. Rescission

10. Cancellation

11. Seller to provide services

12. Inspection

13. Search with warrant

14. Regulations

15. Fees and forms

16. Offence

17. Transitional

18. Commencement

Be it enacted by the

Lieutenant-Governor and House of Assembly in Legislative

Session convened, as follows:

Short title

1. This Act may be cited as the Prepaid Funeral

Services Act .

Definitions

2. In this Act

(a) "association" means the Newfoundland

and Labrador Funeral Services Association Inc. incorporated

under the Corporations Act ;

(b) "assurance fund" means the Consumer

Protection Fund for Prepaid Funerals established under

section 5;

(c) "beneficiary" means a person who is

named in a prepaid funeral contract on whose death funeral

services are to be performed or funeral goods are to be

provided or delivered under that contract;

(d) "buyer" means a person, whether or

not he or she is a beneficiary, who purchases funeral

services or funeral goods under a prepaid funeral contract;

(e) "department" means the department

presided over by the minister;

(f) "financial institution" means a

financial institution as defined in the Bank Act

(Canada), a credit union operating under the Credit Union

Act and a corporation licensed under the

Trust and Loan Corporations Licensing Act ;

(g) "funds" means all money or other

consideration received as payment for a prepaid funeral

contract and all interest accrued or earned on that money or

other consideration;

(h) "funeral goods" means those items of

merchandise sold or offered for sale directly to the public

that will be used in connection with a funeral or an

alternative or final disposition of human remains;

(i) "funeral services" means the

(

i) care and preparation of human

remains, and

(ii) co-ordination of rites and

ceremonies in connection with the disposition of human

remains,

and other services to be performed, made

available or provided by a seller and carried out at the

request of a person responsible for funeral and disposition

arrangements of the human remains

[, excluding cemetery services] ;

[comma and words in brackets removed by an amendment in

committee]

(j) "licence" means a licence issued

under

section 3;

(k) "minister" means the minister

appointed under the Executive Council Act

to administer this Act;

(l) "prepaid funeral contract" means a

contract, agreement or a series or combination of contracts

or agreements other than a contract of insurance issued by

an insurer licensed under the Insurance Companies Act

(

i) under which a seller promises,

for a specified monetary consideration paid in advance

of death in a lump sum or by instalments, to provide or

make available funeral services or funeral goods for use

at a time determinable by the death of the beneficiary,

(ii) that is a prepaid, prearranged

deposit contract, where the funds are left with the

seller and are to be used towards the eventual costs of

funeral goods and funeral services on behalf of the

beneficiary,

(iii) that is a prepaid, prearranged

trust contract where the buyer and the seller have a

fixed agreement for the provision, on behalf of the

beneficiary, of funeral goods and funeral services

specified in the contract, or

(iv) under which, for monetary

consideration, a seller provides counselling or advice

to a person with respect to funeral services or funeral

goods; and

(m) "seller" means a person who, as a

seller or provider of or the person undertaking to provide

counselling, advice, funeral services or funeral goods,

enters into, proposes to enter into or solicits another

person to enter into a prepaid funeral contract.

Licence

(1) A person may, in writing, apply to the

minister for and the minister may issue to that person a licence to

be a seller.

(2) A person applying under subsection (1) shall

provide to the minister

(

a) copies of proposed prepaid funeral

contracts;

(

b) the required fee; and

(

c) other records and documents that are

required by regulation.

(3) The minister may refuse to issue a licence to

a person and may cancel the licence of a licensee where the minister

is of the opinion that a

(

a) person has made a false or misleading

statement in the application for a licence or in documents

in support of that application;

(

b) person applying for a licence or a

licensee cannot meet or no longer meets the requirements of

this Act with respect to the assurance fund, a trust fund or

other requirements under this Act.

(4) Where the minister is satisfied that a seller

does not comply with this Act or is not able to carry out the

obligations imposed upon the seller under this Act, he or she may

order that seller to take the remedial action that is necessary to

bring the licensee into compliance with this Act and for that

purpose may direct that an auditor perform an audit and inspect the

books, documents and other records of the seller that relate to

prepaid funeral contracts.

(5) The seller who is the subject of the audit

and inspection shall pay the remuneration and expenses of an auditor

directed under subsection (4).

(6) A seller and an operator or employee of the

seller's place of business shall give the auditor directed under

subsection (4) reasonable help to enable the auditor to carry out

his or her duties and shall provide information that the auditor may

reasonably require.

Prohibition

(1) A person shall not act as a seller or

otherwise sell, offer to sell or arrange the sale of a prepaid

funeral contract or prepaid funeral service unless that person holds

a licence issued under

section 3 and is acting in accordance with

this Act.

(2) This

section and

section 3 do not apply to a

person acting as an agent or salesperson of a seller who holds a

licence issued under this Act.

Assurance fund

(1) The minister shall establish an assurance

fund to be known as the Consumer Protection Fund for Prepaid Funeral

Services for the purpose of paying in whole or in part, claims

arising out of a prepaid funeral contract against a person who holds

or held a licence issued under this Act.

(2) The assurance fund shall consist of money

paid into it by sellers in accordance with the regulations and

interest, dividends and other returns earned upon the investment of

money in the assurance fund.

(3) The minister, or, where the minister directs,

the association, or the board established under subsection (4),

shall, in accordance with the regulations, be responsible for the

financial management and administration of and disbursement of

payments from the assurance fund.

(4) The minister may establish a board of not

fewer than 5 and not more than 10 persons to administer the

assurance fund.

(5) The assurance fund shall be held in trust for

those persons, who, in accordance with the regulations, are entitled

to receive payments out of the assurance fund.

(6) Money in the assurance fund shall be invested

in investments authorized by the Trustee Act .

(7) The costs and expenses in administering the

assurance fund may, in accordance with the regulations, be paid out

of the assurance fund to the minister, the association, or the

board, whichever is administering the fund.

(8) The assurance fund shall, in accordance with

the regulations, be audited annually and a report on that audit

shall be submitted to the minister not more than 90 days after the

end of the preceding fiscal year established for the assurance fund.

Seller trust fund

(1) A seller shall establish with a financial

institution a trust fund that shall be kept separate and apart from

all other money in the seller's control and that trust fund shall

have deposited with it all

(

a) funds paid to or collected by the

seller with respect to a prepaid funeral contract; and

(

b) money paid to the seller under an

insurance or other agreement or contract by which the seller

is required to use that money to provide funeral goods or

funeral services to a person.

(2) All funds deposited in trust under subsection

(1) shall be held in trust for the buyers and beneficiaries of

prepaid funeral contracts and shall be invested in investments

authorized by the Trustee Act .

(3) Notwithstanding subsection (2), the costs and

expenses of the administration of funds deposited in trust under

this

section may, in accordance with the regulations be paid out of

the trust fund to the trust administrator.

(4) A seller shall annually prepare and submit to

the minister a report on the prepaid funeral contracts entered into

and the trust funds established under this

section for the year

immediately preceding that date.

Seller requirements

(1) A seller shall provide a copy of the

executed prepaid funeral contract to the buyer immediately upon

execution of the contract.

(2) A seller shall maintain, in the required

form, records with respect to each prepaid funeral contract and

every contract of insurance under which funds and proceeds have been

placed in trust under subsection 6(1).

(3) A seller shall not withdraw funds deposited

in a trust account under subsection 6(1) unless the conditions

required under this Act have been met and until the prepaid funeral

contract has been

(

a) fully performed by the seller;

(

b) rescinded under

section 9; or

(

c) cancelled under section10.

(4) Funds deposited in a trust account under

section 6 that are not withdrawn by a seller as permitted under

subsection (3) shall be dealt with in the manner required by

regulation.

(5) A seller shall annually carry out an audit of

the trust funds established by the seller under

section 6 and

provide to the minister a copy of an audited statement of the

prepaid funeral contracts, and the funds,

(

a) collected with respect to those

contracts during the preceding fiscal year;

(

b) paid out from the trust accounts

established under subsection 6(1) during the preceding

fiscal year;

(

c) contained in the trust accounts

established under subsection 6(1); and

(

d) payable to trust accounts established

under subsection 6(1).

Prohibition

(1) A seller shall not call on, telephone or

contact a person cared for or residing in a hospital, long term care

facility or personal care home operating under the Health and

Community Services Act or the Hospitals Act for the

purpose of soliciting prepaid funeral contracts without having

received a specific request to make that call, contact or

solicitation.

(2) Notwithstanding subsection (1), a seller may,

with the prior written approval of a hospital, facility or home

referred to in subsection (1), and in accordance with the

regulations, make a presentation with respect to prepaid funeral

contracts to persons residing at those places.

(3) A seller shall not assign a prepaid funeral

contract to another person unless the seller has obtained the prior

consent, in writing, of the buyer of that contract or where the

buyer is not available, of the beneficiary or his or her legal

representative.

(4) Where a prepaid funeral contract is assigned

at the request of the buyer, beneficiary or the beneficiary's legal

representative, that buyer, beneficiary or representative shall pay

to the seller an amount of money as compensation for that transfer,

calculated in accordance with the regulations.

Rescission

(1) A buyer may rescind a prepaid funeral

contract where the

(

a) buyer serves a written notice of the

rescission upon the seller not more than 10 days after he or

she has entered into that contract; or

(

b) seller

(

i) was not licensed under this Act

at the time that the buyer entered into the contract,

(ii) does not provide the buyer with

a copy of the executed contract, or

(iii) does not comply with the

regulations,

and written notice of the rescission is

served upon that seller.

(2) Where a seller receives a notice under

subsection (1) he or she shall, not more than 15 days after the day

on which the seller receives that notice, pay to the buyer all money

paid to that seller including that paid into the trust account under

paragraph 6(1)(a).

(3) Subsections (1) and (2) do not apply to a

prepaid funeral contract entered into before the coming into force

of this Act.

(1) Where a buyer does not want

funeral goods or funeral services to be provided under a prepaid

funeral contract before the death of the beneficiary, the buyer may,

in writing, cancel the prepaid funeral contract.

(2) Where a prepaid funeral contract is cancelled

under subsection (1), the seller shall, not more than 15 days after

receiving the cancellation, pay to the buyer, in accordance with the

regulations, the funds of the buyer of that contract paid to the

seller or placed into the trust account established under subsection

6(1) together with the interest on those funds.

(3) Where funds and interest are paid to a buyer

under subsection (2), the buyer shall pay to the seller, in

accordance with the regulations, an amount of money as a fee for the

cancellation of the prepaid funeral contract.

Seller to provide services

(1) Where, after the death of a beneficiary,

the funeral services or funeral goods to be provided under the

contract are not provided because they are not available at the time

the funeral goods and funeral services are to be provided by the

seller, the seller shall, at the option of the buyer or, where

applicable, the personal representative of the beneficiary,

(

a) provide, at the time that they are

required, funeral goods and funeral services of an equal or

greater value than those contracted for, at no additional

cost to the buyer or personal representative of the

beneficiary; or

(

b) return to the buyer or personal

representative of the beneficiary the funds given to the

seller or deposited in the trust account under subsection

6(1) and interest on those funds, not more than 15 days

after receiving a request for that return from the buyer or

the personal representative of the beneficiary.

(2) Where funds are to be returned to a buyer or

personal representative under paragraph (1)(b), the seller shall pay

to the buyer or personal representative, in accordance with the

regulations, an amount of money as a fee for the return of the funds

and failure to provide the prepaid funeral contract.

(1) Where it is reasonably necessary

to ensure compliance with this Act, an auditor, or other person whom

the minister may authorize, may at reasonable times enter the

premises of a seller and

(

a) require the production of books,

records or other documents applicable to prepaid funeral

contracts sold by that seller or its agent or salesperson

and may examine those books, records or documents or remove

them for the purpose of making copies of them;

(

b) interview employees and agents of a

seller to determine if the seller is complying with this

Act; and

(

c) inquire into all matters relating to

prepaid funeral contracts, funeral goods and funeral

services related to those contracts.

(2) Where a person removes books, records or

other documents under paragraph (1)(a), he or she shall give to the

person from whom those items were taken a receipt for those items

and shall immediately make copies of those items and return the

originals to the person who was given the receipt.

(3) The minister may require the annual

inspection of a seller under this

section or more frequent

inspections where he or she considers it necessary.

(1) Where an auditor or other person

authorized by the minister believes on reasonable grounds that a

person is contravening or has contravened this Act, or, where entry

onto a seller's or other public or private premises where a

contravention of this Act is believed to occur or have occurred is

refused or denied, the auditor or person authorized by the minister

may, with a warrant issued under subsection (2), enter those

premises and do all those things referred to in

section 12.

(2) A Provincial Court judge or a justice of the

peace who is satisfied on oath or affirmation that there are

reasonable grounds for believing that a contravention of this Act

has occurred, or that entry onto public or private premises has been

refused or denied, may issue a warrant authorizing the person named

in the warrant to enter the private or public premises, including a

dwelling house, and search for and inspect anything that shall

provide evidence with respect to a contravention of this Act and do

all things referred to in

section 12.

(3) A seller and the owner or operator of private

or public premises referred to in this

section and

section 12 and a

person found there shall give the auditor or person authorized by

the minister reasonable help to enable him or her to carry out their

duties and functions under this Act and shall provide the

information that they may reasonably require.

Regulations

14. The Lieutenant-Governor in Council may make

regulations

(

a) respecting the establishment and

administration of trust accounts and funds to be paid into

trust accounts required under this Act;

(

b) respecting the establishment of a

financial administration board under

section 5 and the

administration and duties of that board;

(

c) respecting the administration and

auditing of the assurance fund, books and records required

to be maintained under this Act and the fiscal year of the

assurance fund;

(

d) respecting the administration and

audit of trust accounts and the books and records to be

maintained by sellers with respect to those trust accounts;

(

e) respecting prepaid funeral contract

rescission, cancellation and transfer compensation, fees and

penalties;

(

f) respecting the content and soliciting

of prepaid funeral contracts;

(

g) respecting the receipts, records and

reports to be given and maintained with respect to prepaid

funeral contracts;

(

h) requiring the posting of security or

bonds by sellers and the amount and type of security or

bond;

(

i) respecting the disposition and

management of unclaimed funds paid with respect to prepaid

funeral contracts and the period for which funds are to be

maintained in a trust account;

(

j) respecting the establishment and

maintenance of the assurance fund, requiring sellers to

contribute to the assurance fund and prescribing the amount

and manner of making contributions to that fund;

(

k) respecting the time by which audits,

statements, records, information and payments into trust

accounts and the assurance fund are to be made;

(

l) respecting the transfer, rescission

and cancellation of prepaid funeral contracts;

(

m) respecting audits of sellers who

entered into prepaid funeral contracts before the coming

into force of this Act, the information required and amount

and manner of contributing to the assurance fund with

respect to those contracts; and

(

n) generally to give effect to the

purpose of this Act.

Fees and forms

15. The minister may set fees and establish forms

and the information to accompany those forms for the purpose and

administration of this Act.

Offence

(1) A person who is not a corporation who

contravenes a provision of this Act is liable on

summary conviction

(

a) for a first offence, to a fine of not

more than $2,000 or to a term of imprisonment of not more

than 2 months or to both the fine and imprisonment; and

(

b) for a subsequent offence, to a fine

of not more than $5,000 or to a term of imprisonment of not

more than 4 months or to both the fine and imprisonment.

(2) Where a corporate person contravenes this Act

that person is liable on

summary conviction to a fine of not less

than $5,000 and not more than $25,000.

Transitional

(1) Notwithstanding that a seller entered into

a prepaid funeral contract before the coming into force of this Act,

that seller shall, not later than a time required by the

regulations,

(

a) provide to the minister an audited

statement and record of those prepaid funeral contracts

entered into before the coming into force of this Act for

which no funeral goods or funeral services have been

provided; and

(

b) pay into the trust account required

under

section 6 an amount of money determined in accordance

with the amount of outstanding prepaid funeral contract

liability of the seller immediately before the coming into

force of this Act.

(2) Money paid into a trust account under

paragraph (1)(

b) shall be paid in the manner required by the

regulations and over a period of not more than 5 years after the

coming into force of this Act.

(3) Notwithstanding subsections (1) and (2), the

minister may, where, due to the extenuating circumstances of the

seller, the minister is of the opinion that payment into the trust

account as required under

section 6 and this

section would cause

unusual hardship to the seller, vary the amount of money to be paid

into the trust account and extend the time required to make the

payments into the trust account.

Commencement

18. This Act shall come into force on a date to be

proclaimed by the Lieutenant-Governor in Council.

Earl G. Tucker, Queen's Printer