LEGAL FIDELITY FUND

New Zealand Herald, Volume LXX, Issue 21540, 11 July 1933, Page 11

LEGAL FIDELITY FUND

RULING ON POINTS OF LAW SOLICITOR AND TRUSTEE APPEAL COURT'S DECISION [BY TKI.KGKAI'H —I'RKSS ASSOCIATION'] WELLINGTON. Monday Tn delivering its decisions upon questions of law arising before trial in the action of Fred Allies Hooker, of New Plymouth, against the New Zealand Law Society, the Court of Appeal today held that before liability under tho Law Practitioners' (Fidelity Guarantee Fund) Act, 1931, could attach in connection with alleged defalcations of a solicitor trustee it must be shown that money or other valuable property was entrusted to or held by the person in a dual capacity of trustee and practising solicitor, and that it was stolen during the co-existence of such dual capacity. That if the money is held by the person in his capacity as trustee only and is stolen by such person during the time that it is held by him only in that capacity the guarantee fund is not liable, although the trustee may be a practising solicitor. Dealing with the actual case before it, which arose out of the defalcations of George Grey, who formerly practised as a solicitor at New Plymouth, the judgment of the Court was delivered by the Chief Justice, Sir Michael Myers. After referring to the fact that the moneys in question were paid out r of the trust account of Grey and Grey and into the account of the defaulting trustee, and were afterwards stolen by him, the judgment proceeds, "It seems to us that from the point of the time when the moneys wqre so paid out of the firm's account the firm and the defaulting person ceased, as far as those moneys were concerned, to have any duties as solicitors, and the defaulting trustee held those moneys as trustee and only as trustee." As regards the question of leave being obtained to commence the action, the Court held on the facts that the Law Society must be deemed to have mJide an election in favour of the plaintiff which it was not in the circumstances of the case entitled to withdraw.

Costs were fixed at 30 guineas, the question as to by whom they are to be borne being left to the Supreme Court upon the hearing of the action.

The plaintiff in the case, Fred Allies Hooker, of New Plymouth, was the present trustee of the deceased estate of William George Grey, brother of George Grey. The material facts set out in the statement of claim filed by plaintiff were that George Grey, after the death of testator, became registered as proprietor by transmission as executor and trustee of the will of testator of two properties under the Land Transfer Act. He also received £656, the proceeds of life policies on testator's life, as well as rents of a trust property amounting to a further £192. The total amount expended by him for purposes of trust came to £312 and it was alleged that the balance of £535 was fraudulently stolen and misappropriated by him for his own purposes. Counsel for the Law Society contended at the hearing that this was not a case of a solicitor trustee receiving trusfa moneys in the course of his practice as a solicitor. Here the moneys in question had been collected by Messrs. Grey and Grey, solicitors, New Plymouth, and then handed to George Grey as trustee of the estate, who banked them in his own account.