Lawyer broke rules, but not a thief—defence

Press, 29 August 1980, Page 8

Lawyer broke rules, but not a thief—defence

Although a former solicjitor had breached the Law Society regulations governing the operation of his (trust account, that certainly 1 did not make him a thief, Mr B. McClelland, Q.C., said] in his address to the jury in' the High Court yesterday. li

Mr McClelland was (appearing for Robert Fred- : erick Arthur Powell, aged 38, a former solicitor, who had pleaded not guilty to 14 charges of theft by failing to account and misappropriation involving $76,800. At the conclusion of the | Crown case yesterday Mrj Justice Jeffries dismissed] three of the charges under; section 347 of the Crimes; Act after stating that the' evidence on those counts was unsatisfactory. The charges which were dismissed involved $lO,OOO and two of $2OOO.

The trial began on Monday and finished sooner than was expected. The defence called no evidence and the jury retired to consider its verdicts late yesterday afternoon.

Messrs C. B. Atkinson and K. G. Hales appeared for the Crown, and Mr McClelland and K. M. MacDonald for Powell.

The Crown alleged that Powell had committed the offences in the operation of his trust account by using money which had been paid in by clients for specific purposes for other purposes which were not authorised.

In his address to the jury Mr McClelland said that members should try and put themselves in Powell’s place when he carried out the various transactions. In most of the cases he had obtained the necessary authority to make the loans.

The proceedings were not those of a Law Society dis-

iciplinary hearing but a trial, on criminal charges which I alleged that Powell was a] thief, something which the] Crown had failed, to prove. I When the over-all picturewas looked at it was clear; (that the money had not gone! I into Powell’s pocket but had] (been used to provide other! I clients with short-term ! 1 bridging finance. It was not denied that Powell had] breached the Law Society; regulations regarding the] operation of his trust] account, but that did not make him a thief, 1

i Powell had merely transiferred one man’s money to (another’s so that it would be (earning interest oh shortterm mortgage and he knew 'it would be repaid. None of the money went to him. He was subject to audit three times a year and he never knew when the audits would take place.

All transactions had been faithfully recorded in his books and that was certainly not the actions of a thief who would have been intent on covering up what he was doing by falsifying records and destroying documents. The details were there for everyone to see.

All Powell’s books, ledger cards and records had been thoroughly examined in an effort to try and find evidence against him. Yet that most rigorous search had revealed only four sums of money which Powell had lent to different persons. The search had involved the; Law Society, the police and an audit of records.

Against that background it was reasonable to assume that Powell honestly believed that the money which he lent to other people was not wanted at the time by its owners. If he did not have the authority at the time, he lent the money out!

!on the basis of getting the! (authority later, and in the! (meantime the funds were] (earning interest for the (client. i Dealing with $2OOO held in (Powell’s trust account for a (marine engineer who was (overseas for long periods, ■Mr McClelland said that. it.

‘ was perfectly reasonable in , those circumstances that (Powell should invest it on jhis behalf so that it was (earning interest and then obI tain the engineer’s authority later when he returned. The alternative was to leave the money lying idle and “eating its head off” as money in a solicitor’s trust account earned no interest.

Although Powell did not conform to the rules for] handling clients’ money, in that the authority should] have been obtained first,; that was not theft. “At the time he lent out the money, Powell genuinely. believed that the engineer] would O.K. it when he returned,” Mr McClelland said. He cited examples of auditors approving records after asking that signed authorities be produced in loan transactions. One client had

. subsequently signed the spe- . cific authorities for the ad- ' vances that Powell had made earlier. j “If the rules say that you ] should obtain a written, • authority and you produce!' one, that is enough,” said; Mr McClelland. ;■ He referred to. evidence of a discussion between Powell; and a client in which he told the client that he would in- ’ i vest the money. Any normal 1 person would take that to ( j mean investing money to i earn interest, rather than i place it in the trust account. One man, an! old client of c Powell, had stated that he i (left it to Powell to do his r

(best for him. I Referring to a client receiving a loan from a bank, which was placed in Poweil’s trust account, Mr McClelland said that theo< reticaliy if there was a delay of more than a month or. sc in using the money “something should have been don« about it.” ; Powell was asked if he (had obtained the authority |of the bank to invest the I'money. At that stage, howlever,: it was by no means ' certain whose money it was. Did the bank still own it or did it belong to the client? j The money was sitting in the trust account earning no interest, but the client was

t' being charged interest by H the bank so Powell invested iit on his behalf to earn 11interest. . ,( The client had not authorised a particular investment, t but on the question of crimi'.nal liability Mr McClelland ■|suggested that Powell did • 'iave authority and he genuinely believed that, he was ■ authorised to put the money ■ out at interest. Mr McClelland asked the jury not to look’ at the transactions as a book-keep- ■ ing exercise and criticise Powell for being an incompetent, evasive lawyer. (They had to view the transactions through Powell’s .mind at the time; the advances were made with the ; nroblems he had in his office ;— behind with his work and with the money sitting about. In those circumstances were members of the jury to brand Powell as a thief, or just a person who should not be, and was not now practising law? he asked. On Tuesday and Wednesday evidence was heard about the transferral ofmoneys between accounts.