FIDELITY GUARANTEE FUND

Otago Daily Times, Issue 21990, 27 June 1933, Page 7

FIDELITY GUARANTEE FUND

SOLICITOR'S DEFALCATIONS QUESTION OF LIABILITY ARGUED f (I'i:k 1/Nlted Press .Association.i WELLINGTON, June 26. Arising ■ out of the defalcations of George Grey, who formerly practised as a solicitor in New Plymouth, and some time ago was struck off the rolls of solicitors of the Dominion, is a claim which is being 'made against the New Zealand Law Society under the Law Practitioners (Fidelity Guarantee Fund) Act by Fred Allies Hooker, of New Plymouth, the present trustee of the deceased estate of William George a brother of George Grey. The material facts set out in the statement of claim.filed by the plaintiff are that George Grey, after the death of the testator, became registered as the proprietor (by transmission as executor and trustee) of the will of the testator of two properties under tile Land Transfer Act. He also received £656, the proceeeds of life policies on the testator's life, as well as the rents of a trust property amounting to a further £192. The total amount expended by him for the purposes of the' trust came to £312, and it is alleged that a of £535 was fraudulently, stolen and misappropriated, by him for his own purposes. In addition to this, it is alleged that he fraudulently mortgaged two properties belonging to the estate, and misappropriated the amounts received (approximately £812) to his own use. To facilitate disposal of this claim 'certain questions of law were stated by the parties for the opinion of the court, and these questions, having been removed by the order of Mr Justice MacGregor, were argued in the Court of Appeal to-day. ';'. \' \ Ah important question for the decision of the court is: Assuming that the persons entitled to the estate of William George Grey have suffered pecuniary loss by reason, of theft in the circumstances set out in the statement of .claim, and have given all necessary notice, are they entitled to reimbursement from the Solicitors' Fidelity Guarantee Fund under section 84 of _ the Act? A further question to be decided is whether or not, in fact, the plaintiff had the consent of the council of the New Zealand Law Society to commence the action. ■ Mr O'Leary, for. the plaintiff, said the point was whether " solicitor trustee" (whose defalcations are covered by section. 84) means any solicitor whohappens to be trustee, or only a solicitortrustee who acts as solicitor to an estate. For the plaintiff it was submitted that theft by a solicitor-trustee need not be of moneys, received in the course of his practice as a solicitor. The society, on the other hand, contended that the moneys must be received in the-course,of his practice as a solicitor. , Counsel said that on his reading of the section it appeared that any solicitor who happened to be a trustee, whether or not he rendered legal services to an estate, came within the wording of the section. He admitted that this interpretation resulted in a very wide liability on the part of the Law Society, and must of necessity extend to solicitors who received trust moneys in their private capacity, and not as legal practitioners. - • Mr von Haast, for the society, contended that this was not a case of a solicitor trustee receiving trust moneys in the course of his practice as a solicitor. Here, "the moneys in question had been collected by Messrs Grey and Grey, solicitors, of New Plymouth, and then handed to George Grey as trustee of the estate, who banked them in his own account. He submitted that the Fidelity, Guarantee Act was intended to coyer a person who was practising as solicitor who was also acting as a trustee, and who received trust moneys entrusted to him as a solicitor. The court reserved its decision.